Wild v. Brown

• Decision Date: 20 March 1936
• Citation: 183 A. 899
• Parties: WILD et al. v. BROWN et al. (two cases).
• Court: New Jersey Court of Chancery

183 A. 899

WILD et al.

v. BROWN et al. (two cases).

Court of Chancery of New Jersey.

March 20, 1936.

Syllabus by the Court.

1. A trustee, before determining to retain corporate stock as a part of the trust fund, should ascertain the nature and at least the book value of the assets of the company in which he holds stock, the amount of the bonded debt and other securities ahead of his own. He should study the earnings and in general make whatever inquiry may be necessary to enable him to form an intelligent judgment of the investment. Merely reading market quotations or asking a broker what he thinks of such and such a stock is not enough.

2. Stock of a speculative nature must be disposed of; a trustee should not continue to hold it merely in the hope that the market will go up.

3. General authority given by will or statute to retain investments is not an authority to speculate.

Bills by Frank G. Wild, and another, trustees under the will of William L. Brown, deceased, against William L. Brown, Jr., and another, Robert S. Brown and others, and Marion B. Williams.

Decree in accordance with opinion.

See, also, 112 N.J.Eq. 499, 164 A. 692.

Heine & Laird, of Newark, for complainants.

BIGELOW, Vice Chancellor.

Frank G. Wild and the Hackensack Trust Company, as trustees under the will of William L. Brown, deceased, have filed three bills of complaint which they have brought on together for hearing. The will of Mr. Brown created three trusts of $35,000, for the several benefits of his three children. The will provides: "The trustees of any of the trusts created by this, my will, may, in their discretion, retain as investments of any of said trusts, any of the property and securities which I may own at the time of my death, not hereinbefore specifically devised and bequeathed, but any new investments of any said trust funds shall only be those authorized by law." The executors set up the trusts by turning over to themselves as trustees corporate stocks which the testator owned at his death. See In re Brown's Estate, 112 N.J.Eq. 499, 164 A. 692. The trustees pray instructions as to the retention of these stocks.

The bills present identical questions of law and fact arising from the same will. The three causes should have been joined in one bill. Chancery rule 23. The course adopted by complainants has no advantages and increases expense.

The duty of the court, when asked by trustees to instruct them as to the retention of investments, is much the same as that which rests upon the trustees themselves. First must be made such inquiry into the facts as will justify a judgment as to the stability of the investment, and then the court may instruct the trustees to retain the investment if it appears to be safe, but not otherwise. A trustee, or, in this instance, the court, should ascertain the nature and at least the book value of the assets...