BANKRUPTCY -TRUSTEE'S LIABILITY - EFFECT OF REQUIREMENT OF DEPOSIT IN DESIGNATED DEPOSITARY ON TRUSTEE'S COMMON LAW DUTY OF DUE CARE

In a suit to charge a trustee in bankruptcy for the loss of funds of the bankrupt estate caused by insolvency of the depositary bank, the trustee contended that as he had fulfilled the requirement of section 61 of the Bankruptcy Act by depositing the funds of the estate in a "designated depositary," he could not be charged with liability for any loss occurring thereafter; he argued that section 61 repealed, by implication, the trustee's common-law duty of due care in the handling of estate funds after they were deposited in a "designated depositary." Held, the fact that the freedom of choice of the fiduciary is limited by statute does not relieve him of the duty of exercising due care within the field left to his discretion, and he is liable if his negligence caused the loss. United States ex rel. Willoughby v. Howard, 302 U. S. 445, 58 S. Ct. 309 (1937).