dissenting. — I do not subscribe to the views of my learned colleague who wrote the majority opinion in this case. I would dismiss the exceptions to the learned auditing judge’s ruling imposing a surcharge for the following reasons:
1. Because in essence the transaction is an investment of trust funds in a mortgage participation without complying with the act then governing such investments, namely, the Act of April 26,1929, P. L. 817; and (2) because apart from the act the circumstances as found by the auditing judge showed a lack of prudent care.
So far as the Act of 1929 is concerned, it must be conceded that the legislature has the power to designate what shall be legal investments for trust funds as well as impose conditions and safeguards governing the margin of safety and the methods of ascertaining the same.
The investments here complained of were “participa-tions” in a first mortgage, and as they were made in October 1931 it follows that they should have conformed to the requirements of the Act of 1929, amending section 41(a) of the Fiduciaries Act of June 7, 1917, P. L. 447. That act, so far as applicable here, reads:
“When a fiduciary shall have in his hands any moneys, the principal or capital whereof is to remain for a time in his possession or under his control, and the interest, profits or income whereof are to be paid away or to accumulate, . . . such fiduciary may invest such moneys in . . . first mortgages on real estate in this Commonwealth, securing bonds or other obligations not exceeding in *348amount two-thirds of the fair value of such real estate; or in ground rents in this Commonwealth; or in bonds, payable not more than twenty years after date, of one or more individuals, secured by a deed or deeds of unencumbered real estate in this Commonwealth conveyed to a corporation organized under the laws of this Commonwealth and authorized to act as trustee, in trust for the benefit of all such bondholders, but the total amount of any such bond issue shall not exceed two-thirds of the fair value of the real estate securing it, and the trustee shall not be exempted, by contract or otherwise, from responsibility for performing the ordinary duties of trustees ; or in trust certificates, issued by a trust company organized under the laws of this Commonwealth, certifying that the holders thereof are respectively the owners of undivided interests in deposits, with such trust company, of securities in which trust funds may be invested under the preceding provisions of this clause . . .
“Within the meaning of this clause, the ‘fair value’ of real estate shall be the value placed thereon, in writing, by a reputable person, who shall be especially familiar with real estate values, shall have actually inspected the real estate before making his valuation, and shall certify that his valuation was made after inspection of the premises.”
While the language of the clause in italics does not, in express language, mention participations in a single mortgage, nevertheless, a somewhat similar clause, in the Act of April 6, 1925, P. L. 152, was held in Guthrie’s Estate, 320 Pa. 530, to apply to participations whether issued against a single mortgage or against a so-called pool of mortgages.
Participation investments must meet the standard fixed by the act in force at the time they are made: Iscovitz’ Estate, 319 Pa. 277; Harton’s Estate, 331 Pa. 507, 519; Erie Trust Company — Mortgage Pool, etc., 17 Erie 9. Here the auditing judge found, and the record clearly shows, that there was no written appraisement by a per*349son “especially familiar with real estate values who actually inspected the real estate before making his valuation”, nor certifying a valuation in accordance with the act.
I do not see that it makes any difference in the application of this act that the trustee merely transferred the mortgage participation from one trust, of which it was trustee, to another. On the contrary, such a situation ought all the more to require strict compliance with the act, so as to give assurance to the beneficiaries of the two trust estates involved that the fiduciary acted without favoritism and with strict impartiality to both.
Nor do I consider it any answer to say that to have complied with the act would have been unduly burdensome or expensive. The suggestion to that effect of the learned opinion judge here is based upon a suppositious case not now before us. We are not now concerned with any supposed hardship or expense which might result from literal observance of the Act of 1929 in the case of a “pool” consisting of a large number of small mortgages. When that case arises it will be time enough to consider whether expense, difficulty, or trouble are sufficient excuses for ignoring a statutory requirement imposed upon a trustee for the protection of beneficiaries. Further, it should be noted that in this case the real estate officer of the corporate fiduciary admitted in answer to an inquiry of the auditing judge that such reappraisement could have been made periodically at a very nominal expense.
The omission of a statutory duty is not supplied by the trustee producing an expert who in 1940 testified that the actual or intrinsic value of the mortgaged property as of October 1931, when the investment for this estate was made, was twice the amount of the mortgage. Especially is this so where, as here, an expert of equal standing testified that the fair value of the mortgaged property then was only $3,185,000, at which valuation the mortgage would have been about 78 percent instead of 66% percent of the property value at the time the funds of *350the Crane estate were invested. Nor do I see how the court is empowered to accept, in substitution for the duty imposed by the Act of 1929, an informal conference between trust company officials who agreed, in effect, that the mortgaged property had not changed in value between October 1929, when the mortgage was made, and October 1931, when the participations complained of were accepted as investments of the Crane estate, and this despite the terrible financial collapse that intervened. Counsel for exceptants press strongly upon us the recent case of Saeger’s Estate, 340 Pa. 73. I do not consider that case as controlling authority here because the Supreme Court carefully points out that investments there reviewed were made before the Act of 1929, the Supreme Court saying (p. 80) :
“It was not necessary to make these mortgages legal investments under the applicable provisions of the Fiduciaries Act then in force (Act of June 29, 1923, P. L. 955, sec. 41 (a) 1) to make any written certification of ap-praisement, nor were there any statutory requirements with respect to inspection of the property or the proportion which the amount of the mortgage should bear to its fair value.”
Apart from the requirements of the Act of 1929,1 am of the opinion that the transfer of an asset from one trust estate to another without a preliminary appraisement to fix the value warrants a finding by an auditing judge of lack of ordinary prudence. Section 170 of the Restatement of Trusts, comment q, reads:
“Duty of trustee under separate trusts.
“Where the trustee is trustee of two trusts if he enters into a transaction involving dealing between the two trusts, he must justify the transaction as being fair to each trust.”
This is but a reflection of the ancient principle long recognized in this State as both good morals and good law that “no man can serve two masters”: Everhart v. Searle, 71 Pa. 256, 259. When an asset of one trust estate *351is transferred to another, there must inevitably be a conflict of interests. There is thus imposed upon the trustee who represents both estates the careful duty of seeing that the estate that sells gets as much as the asset sold is then worth, and on the other hand to see that the estate buying pays no more than the asset is then worth. How this can be accomplished, except by the intervention of a disinterested appraiser, is not clear.
We have indicated repeatedly in this court that such is the duty of trustees, and I see no escape from it. To hold otherwise is to encourage the dangerous practice of shifting investments from one trust estate to another as the exigencies of the situation or importunities of the beneficiaries demand — a practice that results in the last estate being left with a frozen non-income-producing investment. The wholesome check which an entirely disinterested appraisement affords ought not to be deemed unnecessary because of fancied trouble or expense.
The learned guardian ad litem in this case has referred to several cases in which we have so held, among which are Judge Sinkler’s adjudication in Davis’ Estate, 139 October term, 1920, and Abbott’s Estate, 149 July term, 1909 (decided in 1937), to which may be added Benges’ Estate, where Judge Bolger, speaking for this court, condemned the practice of transferring mortgages and par-ticipations therein without appraisement from one estate to another. In Connell’s Estate, 32 D. & C. 20 (1938), we upheld a surcharge against an individual fiduciary who, as cofiduciary in one estate, transferred a mortgage to another estate of which he was sole fiduciary, without an independent appraisement. We ought certainly to hold a corporate fiduciary to no less a measure of duty.
It is difficult to see why the public policy, which precludes a trustee or agent from dealing with himself, is not just as much violated when an agent or fiduciary undertakes to represent both parties. In both relations *352the duty of loyalty and duty to administer the trust solely in the interest of the beneficiary, enjoined by many cases and reasserted in section 170 of the Restatement of Trusts, is put to a severe test. In Meinhard v. Salmon et al., 249 N. Y. 458, 464, 164 N. E. 545, the late Justice Cardozo warned of the necessity of an attitude of uncompromising rigidity when courts are petitioned to undermine the principle of undivided loyalty of fiduciaries “by the ‘disintegrating erosion’ of particular exceptions”, and continued that great jurist: “Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd.”
I do not understand that Saeger’s Estate, 340 Pa. 73, rules differently, for there it was pointed out, as to the mortgage transferred from one trust estate to the other, that it sufficiently appeared from the evidence that the transaction was fair to both trusts, a fact so found by the auditing judge. As to the other mortgages the auditing judge found “on unimpeachable evidence, documentary and otherwise”, that they were acquired solely for the purposes of investment for trust funds and so earmarked until assigned with reasonable promptness to the Saeger estate. There was no transfer of them from one trust estate to another, as here, and apparently the appraisement made when the mortgages were acquired was, as found by the auditing judge, not too far removed in time. It also appears that the transaction in that case took place before the financial collapse of 1929.
I dissent also from the suggestion in the majority opinion that, as the trust here continues, the well-recognized practice of directing the improper investment to be replaced with cash is not the appropriate proceeding. To my mind the contrary is true, for under such circumstances the only method that is fair to both the trustee and beneficiary is to require replacement with cash. It is only when a trust terminates and distribution is in order that the establishment of proof of actual loss might be*353come an appropriate remedy, although even then I incline to the belief that the option still remains with the beneficiary to accept the investment and prove the loss or elect to have it replaced with cash. I am in full accord and approve what the learned president judge has said on this subject in his separate dissent.
In view of the disposition made by the majority, it is unnecessary to express any opinion on the question raised by the other exceptions, viz, whether there was error in imposing the surcharge solely on the corporate fiduciary and exonerating its cofiduciary.