finding trustee liable when it failed to take action to recover wrongfully dispersed trust property
How later courts described this case
- finding trustee liable when it failed to take action to recover wrongfully dispersed trust property
Written by the judges who cited it.
The opinion
Stern, J.,
dissenting. Although I have no quarrel with the broad, legal principles relied upon by the majority, those principles must be recognized for what they are, i. a., guidelines that give only general direction to a judicial inquiry. The fiduciary duty of a trustee, or executor, is usually couched in terms like “reasonable” and “prudent,” and therefore, in a particular case, a more meticulous examination of the facts is required.
The controversy in this case centers about a testamen *67 tary trustee’s failure to redress an alleged breach of duty by the executor. Appellant claims that appellee, in its capacity as executor, negligently overpaid the Ohio inheritance tax due on decedent’s estate, and that appellee, in its capacity as trustee, was subsequently negligent in failing to recover that overpayment from itself as executor. Appellant’s entire case is premised upon the conclusion that the executor was personally liable for what is admitted by both parties to be an overpayment of taxes. I disagree with that conclusion.
It is undisputed that the inheritance tax form was prepared by William A. Calhoun, counsel for the executor. There is substantial support for the concept that an executor who reasonably relies upon the advice of counsel, in an area peculiarly requiring legal expertise, is not personally responsible for his attorney’s mistakes. See 31 American Jurisprudence 2d 117, Executors and Administrators. Section 218; annotations, 47 A. L. R. 3d 507, and 28 A. L. R. 3d 1191. Paragraph two of the syllabus in In re Estate of Butler (1940), 137 Ohio St. 96 , contains general language to the contrary, but that case is readily distinguishable, on its facts, from the instant case.
The error made by Mr. Calhoun was judgmental, not arithmetic or accounting. It involved a failure to appreciate the consequences of a contingent interest in computing the decedent’s inheritance tax. As such, the executor would not have been personally liable for the resultant tax overpayment. In relying upon its attorney, the executor acted reasonably. *
Having determined that appellee, in its capacity as executor, was not negligent, it necessarily follows that appellee, in its capacity as trustee, breached no fiduciary duty in failing to recover the tax overpayment.
P. Brown, J., concurs in the foregoing dissenting opinion.
It should be noted that appellant has never asserted that the executor was negligent in choosing to employ M':. Calhoun as counsel.