Surrogate Rejects Breach of Fiduciary Claims Against Bank

In Matter of David Small Trust, 19 Misc 3d 1135(A), __ N.Y.S.2d __, 2008 NY Slip Op 51014(u) (Sur. Ct. Onondaga Co. 2008), the Surrogate dismissed objections concerning the investment of the trust assets and the alleged failure to employ prudent trust management practices. Objections had been filed by the two individual trustees and their issue to a corporate fiduciary’s final accounting in connection with its resignation. First, since the trust instrument required a majority of the three trustees to act and that the corporate fiduciary never acted without the approval of at least one of the individuals, citing Matter of Bloomingdale, (see, post of February 14, 2008), the Surrogate held that the individual trustees have acquiesced in the conduct and are bound thereby. Concerning mismanagement, the Court rejected the testimony of the objectants’ expert and held that none of the investments made were unreasonable or outside of the scope of the powers granted. The Court emphasized the prevailing wisdom that it is not sufficient that hindsight would have suggested a different investment and that a mere error of investment judgment does not mandate a surcharge — investment infallibility is not required and trustees need not have prescience in investment decisions.