dissenting.
I respectfully dissent.
Preliminarily, it seems helpful to explain as clearly as possible just why the plaintiff brought suit. As the majority opinion stated, the will provided that the widow would receive a set amount, a pecuniary amount. This amount will be set at one-half of the gross estate as determined by the Tax Court. The co-executors have the power, under the will, to decide which assets to distribute to the marital trust and when to distribute them. When the testator died, the co-executors knew that news of the merger involving Indiana Telephone Corporation would soon become public. The co-executors also knew that once the merger became public knowledge, the price of the stock would rise dramatically. The will provided that assets distributed to the marital trust would be valued at the date they were distributed. So if the co-executors knew which direction the price of an asset would move, they could affect its valuation by controlling the timing of the distribution of the asset. This is precisely what occurred in this case.
When the testator died the price of the Indiana Telephone stock was in the neighborhood of $35.00 per share. When news of the merger became public, the price went up, as the co-executors knew it would, to about $108.00 per share. As the majority opinion points out, the value of the testator’s estate at his death approached one million dollars. Therefore, the widow’s trust will be set at approximately $500,-000.00. Now, if the co-executors had distributed half of the stock to her trust before the merger became public knowledge, its “value” as defined by the will would have been approximately $107,000.00 (35 X ½ X 6,123 shares). Thus she would still be entitled to about $400,000.00 in additional assets. Since the executors waited until after the merger was announced, the “value” of the stock would be about $330,-000.00 (108 X ½ X 6,123 shares). Thus she would only be entitled to $170,000.00 additional assets. Another way of illustrating her injury is to note that if the co-executors had distributed half the stock to her trust prior to its dramatic jump in price, she would end up with assets in her trust worth about $730,000.00 (stock valued for the pur*896poses of the will at about $107,000.00 but now worth close to $330,000.00 plus $400,-000.00 in additional assets). By delaying distribution, the co-executors insured that she could end up with no more than $500,-000.00 and that the appreciation of the stock would only increase the size of their residuary trust. These figures are not exact but do illustrate graphically how the co-executors’ delayed funding deprived the plaintiff from sharing in the appreciation of the stock. Since the trust for the benefit of the executors was a residual trust, they directly benefited from their failure to distribute any of the stock to her before the price went up.
An executor is held to the same degree of fidelity and diligence required of other trustees. Baker v. Baker, 24 Tenn.App. 220, 240, 142 S.W.2d 737, 750 (1940). A trustee owes a duty of loyalty to the beneficiary of the trust. Restatement (Second) of Trusts § 170 (1959). “One of the most fundamental duties of the trustee is that he must display throughout the administration of the trust complete loyalty to the interests of the beneficiary, and must exclude all selfish interests and all consideration of the interests of third persons.” Bogert, Trusts & Trustees § 543 (1978). As applied to these facts, the co-executors’ fiduciary duties required them to act on behalf of the widow as the beneficiary of Trust A and to act on behalf of themselves and their heirs as beneficiaries of the residuary trust. When the interests of the beneficiaries of the two trusts conflicted, they were under a duty to administer the estate in such a way as to be fair to the interests of both sets of beneficiaries.1 The co-executors knew the merger would soon become public. They knew the price of the stock would dramatically increase. They knew that if they did not distribute any of the stock to the marital trust until it appreciated in value, they could deprive the widow of the benefit of the rise in price. They knew the effect of this delay would be to increase the size of their residuary trust. They knew the assets of the estate other than the stock would be sufficient to pay creditors’ claims, taxes, and administration expenses.2 Instead of placing any of the stock in the marital trust so that plaintiff could share in the appreciation, they delayed distribution knowing that their inaction would be to their own benefit. In short, the co-executors acted solely in their own interest rather than in the interest of the beneficiary of the trust they were charged to administer. Whether their decision was intentional or not, in my judgment, it constituted a breach of their duty of loyalty. In order to be fair to the widow, they should have distributed half the stock to her trust before news of the merger became public.3 In this way, both sets of beneficiaries would have benefited.
As I read the majority opinion, the conclusion drawn therein is based in part upon the fact that the will granted to the co-executors a great deal of discretion. Of course, if executors never exercised discretion, there would be no need for judicial review of their decisions. Fiduciary duties such as the duty of loyalty serve the purpose of insuring that when fiduciaries do exercise discretion, they exercise it on behalf of the beneficiary and not in their own self interest. This is true whether the beneficiary is rich or poor.
The majority opinion also indicates that the will and the circumstances surrounding its execution indicate that the testator would not have desired that the widow end up with any more than one half of the gross estate. In my judgment, the circumstances surrounding the execution of the will picture an extremely tax conscious businessman, who cared equally as much for his wife as he cared for his sons. It is equally plausible to assume that he would want his wife to get as much as she could receive free from estate tax. At this point I would note that early distribution of the stock to *897the marital trust would not increase the estate tax liability of this estate. There is no indication that the testator knew that he would die shortly before the merger was consummated. In fact, there is every indication that he believed he would see it through. If he had lived until the merger was completed, under this will the widow would get precisely what she requests in this lawsuit. It should also not be forgotten that the Chancellor held that the will envisioned funding of the trust within ninety days of the testator’s death. While I agree with the majority that complete funding of the marital trust would be impossible to accomplish within ninety days, if it could have been accomplished that soon, this plaintiff would have shared in the appreciation of the stock unless the co-executors refused to place any of the stock in her trust. Therefore, I would have at least held that the will and the circumstances surrounding its execution do not indicate the testator’s intent one way or another. This is a unique situation which the testator did not anticipate.
I, therefore, would have applied equitable principles to the co-executors’ conduct and required them to place the widow in the same position which she would have been in if they had placed half the stock in her trust before the merger was announced.
. None of the parties has asked this Court to remove the co-executors from their positions.
. Only $19,000.00 in claims were filed against the estate.
.It was at least three months after the testator’s death that the merger was announced.