No. 153 January Term, 1978, Appeal from Final Decree entered March 14, 1978 by the Orphans' Court Division of the Court of Common Pleas of Montgomery County, Pennsylvania, No. 76588.
Philip D. Weiss, Norristown, for appellant.
Morris R. Brooke, Christopher H. Gabsden, Philadelphia, for appellee.
Eagen, C. J., and O'Brien, Roberts, Nix, Larsen and Flaherty, JJ. Larsen, J., concurred in the result.
This is a direct appeal from the approval of an accounting by the Orphans' Court Division of the Montgomery County Court of Common Pleas.*fn1
Leo Niessen died on June 14, 1969, leaving a will which created a testamentary trust for the benefit of his wife (now deceased) and their issue. At the time of his death, the corpus consisted of an interest in commercial real estate and a portfolio of marketable securities valued at approximately three million dollars. Pursuant to a provision in the will,*fn2 Letters Testamentary were issued to the Fidelity Bank and Leo Niessen, Jr. (son of the testator) as co-executors. In March 1975, executors offered their First Account for audit to the Orphans' Court. Four beneficiaries, alleging breach of fiduciary duty in the handling of the securities by co-executor Fidelity Bank, filed objections to the account seeking surcharge. Prior to an evidentiary hearing, two objectors withdrew their claims. On January 6, 1978, based upon the information obtained at the hearing, the Orphans' Court dismissed the objections and affirmed the accounting. The exceptions that were subsequently filed were also dismissed and this appeal then taken. After the present appeal was lodged, but before our consideration, one of the remaining two objectors withdrew, leaving John A. Meyer, Jr. as the sole appellant.*fn3
Appellant contends that the Fidelity Bank failed to exercise the care required of it as a corporate fiduciary in its management of the securities portion of the trust corpus. More specifically, it is asserted, Fidelity's retention of the entire portfolio in substantially similar condition during the entire five year period encompassed in the accounting, constitutes a breach of the fiduciary's standard of care, in that Fidelity did not "manage" the portfolio but merely performed a custodial function. For support, reference is made to five specific blocks of stock in the portfolio: Rohm and Haas Co.; Germantown Insurance Co.; Fidelcor, Inc.; certain "volatile stocks" (A.M.F., ARCO, Pennzoil and Hershey) and several utilities. Had these securities been handled differently, appellant claims, larger profits would have been obtained by the trust. Appellant correspondingly asserts the lower court's conclusion that the corporate fiduciary did not breach its duty of care is unsupported by the evidence.
This Court's responsibility upon appeal in such matters was recently reiterated in Estate of Katkowski, 485 Pa. 378, 381, 402 A.2d 1012, 1013 (1979):
In reviewing a decision of the orphan's court, our task is to assure that the record is free from legal error and to determine if the chancellor's findings are supported by competent and adequate evidence. In re Estate of McCrea, 475 Pa. 383, 380 A.2d 773 (1977).
See In re Estate of Hamill, 487 Pa. 592, 410 A.2d 770 (1980); cf. Adoption of S. H., 476 Pa. 608, 383 A.2d 529 (1978); In re Wertman Estate, 462 Pa. 195, 340 A.2d 429 (1975). After review, we find that the lower court improperly applied a "superior skill" standard of care as a measure of ...