Gilbert v. Kolb

Citations

• 85 Md. 627
• 37 A. 423
• 1897 Md. LEXIS 80

Syllabus

<p>Trusts — Liability of Testamentary Trustee for Loss Arising From an Investment not Made in the Exercise of a Sound Discretion.</p> <p>When a testamentary trustee is clothed with discretion in making investments, and such trustee, acting with due diligence, and in accordance with the powers conferred upon him, but without the direction of a Court, makes an investment, he will not be personally liable should a loss ensue therefrom. But if the investment made by such trustee is upon inadequate security and is one which an ordinarily prudent man would not have made, then he is liable for a consequent loss.</p> <p>In making investments, a trustee is not entitled to rely upon the advice of his solicitor as to the value of the property.</p> <p>A sum of money was bequeathed to a trustee in trust to invest the , same in some safe securities with power to reinvest. The trustee was also the executor of the will and as executor he sold a parcel of land belonging to the estate and took for the entire purchase money a mortgage upon the land sold and a second mortgage upon a small farm. The funds of the trust estate were invested in these mortgages and upon foreclosure there was a loss to the estate of about one-third of the amount invested. The value of the property covered by the mortgages was shown to have been less than the amount of the mortgages at the time they were executed. Held, that the investment so made by the trustee was not made in the exercise of a fair discretion such as an ordinarily prudent man would exercise in his own affairs and that the trustee was consequently liable for the deficit.</p>