Appeal from decree of Court of Common Pleas, Orphans' Court Division, of Philadelphia, No. 3351 of 1941, in re estate of Jessie A. Killey, settlor.
Harry R. Nixon, with him Schneider, Nixon & John, for appellants.
J. Pennington Straus, with him Robert H. Louis, W. Joseph Harrison, III, and Schnader, Harrison, Segal & Lewis, for appellee.
Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Chief Justice Jones. Concurring Opinion by Mr. Justice Roberts. Mr. Justice Pomeroy joins in this concurring opinion.
This appeal arises from the final decree of the Orphans' Court Division of the Court of Common Pleas
of Philadelphia sustaining certain exceptions and dismissing certain exceptions to the adjudication entered upon objections to the third account of the Industrial Valley Bank and Trust Company (IVB), successor trustee under an inter vivos deed of trust executed by Jessie A. Killey. The account covered the period from September 22, 1948, to February 16, 1970. The court en banc sustained appellants' exceptions to certain transactions in United States Treasury obligations in 1962 and exceptions to the allowance of commissions to the trustee and of additional counsel fees. All other exceptions were dismissed. This direct appeal followed.
Appellants, remaindermen under the deed of trust, contend that IVB should be surcharged (1) for its total lack of attention in administering the trust during the period from September 22, 1948, through August 2, 1963, and (2) for failing to communicate with the settlor or any trust beneficiary with reference to their preferences as to investments during the period from August 1963 to February 1970, when the corpus of the trust was invested wholly in IVB's common trust fund.
Appellants initially claim that the court below erred in dismissing their exceptions because it applied the incorrect standard for judging the propriety of IVB's stewardship of the trust. We agree. This Court has not heretofore specifically addressed the issue of whether a stricter standard of responsibility should be exacted from trust companies as fiduciaries than from an ordinary trustee. In Linnard's Estate, 299 Pa. 32, 148 A. 912 (1930), this issue was earnestly pressed; however, the Court declined to make a ruling on that issue, opining that the record would not warrant any such advance in the law and that "[r]ulings which involve enlarged application of established principles to new conditions, and, when subsequently followed, give rise to what become known as new or advanced principles,
should be made only in cases where the facts relied on plainly appear and clearly call for such rulings." Id. at 39, 148 A. at 914. The court below recognized that "a detailed review of this record does indicate that this trust did not receive the attention of the trustee as it should have." We concur and therefore believe that this case occasions the appropriate opportunity to clarify the standard of care owed by a fiduciary who either has, or procured his appointment by representing that he has, greater skill than that of a man of ordinary prudence, and to eradicate any misconstructions which may have resulted from this Court's forbearance in Linnard's Estate.*fn1
Since 1941 this Court has recognized that if a fiduciary has greater skill than that of a man of ordinary prudence, then the fiduciary's standard of care must be judged according to the standard of a man with his special skill. See Stirling's Estate, 342 Pa. 497, 504, 21 A.2d 72, 76 (1941). See also Lohm Estate, 440 Pa. 268, 273, 269 A.2d 451, 454 (1970); Mastria Estate, 413 Pa. 278, 281 n.3, 196 A.2d 653, 655 n.3 (1964); Glauser Estate, 350 Pa. 192, 196, 38 A.2d 64, 66-67 (1944); Restatement (Second) of Trusts, § 174. Today we add that one who procures his appointment as trustee by representing that he has greater skill than that of a man of ordinary prudence will be held to have such skill as he had represented. See Restatement (Second) of Trusts, § 174. In the present case, the corporate trustee held itself out as an expert in the handling of ...