TRUSTS-BREACH BY TRUSTEE--LIABILITY OF TRUSTEE TAKING TITLE TO NOTE AND MORTGAGE IN INDIVIDUAL NAME

A corporate trustee, authorized to invest trust funds in mortgage loans, made such an investment, taking title to the mortgage and note securing the same in its individual name. The beneficiary sought to surcharge the trustee for the full amount of the funds so invested, the property having declined in value due to a world-wide depression. The trustee defended on the ground that the trust had been declared in a separate instrument recorded in its files, that such was an established practice, that it acted on expert advice, in good faith and for the best interests of the beneficiary. Held, that the trustee had violated its duty, but since there was entire good faith and the breach was in no way the proximate cause of the loss, the court, would not inflict a penalty by surcharging the trustee.

Chapter House Circle v. Hartford Nat. Bank & Trust Co., (Conn. 1936) 186 A. 543.