(Dissenting):
I am unable to concur m the conclusion reached by my associates in these appeals.
My dissent is not from any rule of law or principle of equity announced by them. The divergence arose when we attempted to apply those principles to the data relating to the transactions disclosed by the record.
That a trustee is required to exercise reasonable diligence and discretion in complete good faith with the single purpose of promoting the nest interest of the trust is indisputable. The rule and the sound policy upon which it is based has not been questioned for centuries. Unless accepted, standards of morality are completely obliterated, it can never be questioned. No court would question it or weaken it by giving to it a narrow application that would exclude a case that comes within the spirit of the rule, even though it might happen that it did not come within its letter.
Therefore, wherever it appears that a trustee has failed to exercise good faith, reasonable diligence or discretion, and the beneficiary of the trust is thereby injured, a court of equity will be quick to compel the trustee personally to suffer the loss and protect the trust estate.
So, also, if a trustee seeks to make a personal profit by reason of any act performed on behalf of the trust, the court will promptly prevent it by requiring him to account to the trust for the profit thus sought to be withheld, and this, without regard to whether such profit is hidden under the title of commission, bonus or premium, or any other designation applied to hide its relation to the trust estate.
To protect the trust estate from loss through failure of the trustee to exercise good faith, due diligence and discretion, and to take away from the trustee all profit that rightfully belongs to the beneficiary, every device of equity is available to the beneficiary. To pre*415vent loss on the one hand and profit on the other, the trustee can not sell his own property to the trust estate, or buy the trust property for himself. This is but a specific application of the general rule that no man can be an impartial judge in his own case. In selling to or buying from the trust estate, judgment and discretion must be erercised in determining the price to be paid. It requires the competition of the open market between buyers and sellers uncontrolled by one another. If a trustee attempts to perform the dual role of buyer-seller, the court will not attempt the task of the psychologist of determining whether in fact the trustee, contrary to the general rule of human nature, leaned in favor of the trust estate and against himself, but will hold that the two attitudes are inherently incompatible, and a purchase or sale made under such circumstances is not binding on the cestui que trust, unless and until he with full knowledge of the facts consents to it. This rule is predicated upon the conciusion based on experience that men generally prefer their own material advantage to that of another. The rule has no application where this element is lacking. It therefore does not preclude dealings between different trusts, although the same person is the trustee.
However, no court has ever held, so far as I am aware, that a trustee after investing trust funds, lawfully and prudently, must guarantee the continuance of the market level at which such funds were invested. The rule requiring good faith, reasonable diligence and discretion, and excluding the trustee from any personal profit, should not be so applied as to impose such a liability upon a blameless trustee.
Now, in this case, it is conceded that the Binder trustee acted in good faith, and that in selecting these land trust certificates, in which to invest trust funds, it exercised sound discretion. Land trust certificates were regarded generally as desirable property because they evidenced an interest m real estate, yielded a satisfactory return and were free of property tax. The legislature had specifically authorized such investment of trust funds. It is conceded that the amount paid for these land trust certificates was reasonable, that the market price at the time was equal to or exceeded the price paid, and continued to be equal to or in excess thereof for a long time thereafter.
So an attempt to impose a personal liability on the trustee and to impose a charge upon the fund in these cases because of mala fides or failure to exercise reasonable discretion in making the investment, must fail because there is no basis for it in the evidence. Indeed the majority opinion is not predcated upon any such theory. The conclusion in favor of the Binder beneficiary is reached solely by the application of the iron rule prohibiting the trustee from self-dealing with reference to the trust without, in my judgment, restricting the ruie to the evil which it was intended to correct.
In a certain sense a trustee is always dealing with himself, in that he must exert whatever force of will is necessary to subordinate any tendency to take advantage of his position to serve a selfish purpose at the expense of the trust. That is simply the self-dealing or inner struggle that arises whenever circumstances present alternative courses between right and wrong. But that is not what is meant by self-dealing, as that term is used in relation to the conduct of trustees. In that connection it is limited to the transfer of the ownership of property of the trust to the person who is the trustee or the property of such person to the trust. It is the transfer of ownership from the individual to the trust or vice- versa, that the rule prescribes.
In the instances in which The Guardian Trust Company oerformed the service of creating these land trust certificates and took the legal title of the real estate, in order to do so, it was not dealing with its own property. It did not own the real estate, the equitable title to which was divided into fractional units in order to make it available to others for investment. It is true that it was paid by the trustor for *416its services in this connection, but that does not make the transaction a dealing in its own property. And if it should be required to account to the trust for the money received for such services, upon the theory that it was a bonus or commission received in connection with the trust fund investments, that is an entirely different thing from holding that it was dealing in its own property, and. therefore, the cestuis have a right to elect to affirm or disaffirm, and upon disaffirmance, the trustee must restore the trust fund to its status quo ante. The difference in the two transactions requires the application of entirely different rules. If these commissions were ootained as a result of investing trust funds, they should have been accounted for to the trusts and the trustee charged therewith. But this could only be done upon the theory that The Guardian Trust Company was acting for its various trusts from the inception of the transaction between it and the owners of the real estate. If it was so acting, its reasonable cormpensation for such services would be a credit justly chargeable against the trusts. As it is conceded, (or, at least the proof does not show the contrary) that the amount received by The Guardian Trust Company was not in excess of reasonable compensation, the debit and credit items would exactly balance. That result is the same as though both items were left out of the account.
Now was The Guardian Trust Company engaged in self-dealing with reference to the specific land trust certificates? These certificates were purchased from the trustors by The Guardian Trust Company. In wnat capacity did it purchase them? Were those purchases made in its individual capacity or as trustee? That is the question. While the'law makes intent the test, it makes and can only make external manifestations the objects of its concern. Now what is the evidence of external manifestations of intent?
In the three instances of the so-' called “closed” issues, the entire transactions were conducted by one trust department. This in and of itself would be evidence that they cam? within the domain of trusts. In each instance before any money was advanced, the purpose was expressly stated in a letter from the trust department to the bond department. In each instance it was stated in the letter that the trust department “had purchased for trust investment purposes” or “were puchasing for trust investment purposes”. The certificates were ear-marked and were not commingled with the securities of which the bank was the beneficial owner. All these indicate that The Guardian Trust Company was acting in its capacity as a trust company and purchasing whole issues in which to invest trust funds. Binder trust funds were so invested and trust certificates thereby acquired by that estate.
Of course, The Guardian Trust Company, as a bank, had a claim or hen against the issues for any balance of its own money used in purchasing them, but that fact and the further fact that after the purchase, a small part of these certificates were sold to other than trust estates does not weaken the force of the conclusion to be drawn from the circumstances and declared purpose that accompanied the purchase.
That it is not sufficient to brand a trustee with self-dealing to merely point to the fact that in the process of acquiring title for the trust estate, the bare legal title has passed through the trustee’s name without the trust capacity being disclosed in the conveyance is abundantly sustained by the authorities. In Matter of Keen’s Estate, 306 Pa. 363, 159 Atl., 713; Dwight v Hazlett, 111 W. Va„ 109, 161 S. E. 434; Roberts v Michigan Trust Co., 273 Mich. 91, 262 N. W. 744; Leathe v Title Guaranty Trust Co., 18 Fed. (2d) 41, cert, denied, 275 U. S. 535; Cox v Camden Safe Deposit & Trust Co., 2 Atl. (2d.) 473.
It is beneficial ownership inconsistent with any right in the trust estate that prevents the trustee as such from bargaining with himself for the transfer of that ownership to the trust estate.
*417What I have said with reference to the “closed” issues is applicable with greater force to the other certificates purchased by The Guardian Trust Company from others and issued directly to the Binder trust. As the útle to these certificates was at no time m the name of The Guardian Trust Company prior to the time when they were conveyed to it as trustee eo nomine, for the Binder estate, there is no vestige of a basis for a claim of self-dealing. The fact that The Guardian Trust Company assisted in marketing the issue of which they were a part is beside the point, w'hen considering the question of self-dealing. Whether it made a profit which it should have accounted for to the trust estate raises another issue, the decision of which, as already pointed out, is attended with other consequences determined by the application of other tests.
Before closing it should be said that it is manifest that the loss resulting from the depreciation of these land trust certificates was occasioned directly by the economic cataclysm through which this country has been passing, and has no relation either directly or remotely to the action of The Guardian Trust Company in acquiring them. Under such circumstances, law and equity concur m holding that the loss must stay where it falls, and that neither will assist in the effort to shift it to other shoulders. In this case, it would not be possible to shift it to the shoulders of the trustee except in a dry, legalistic sense, because the trustee was destroyed by the economic maelstrom. It would be possible only to shift the loss to the shoulders of the depositors. While this might be just and necessary to reimburse the trust estates for losses directly attributable to delinquencies by the trustee, those punitive measures exerted by courts of equity against such trustees should be withheld when they can only operate, if exercised, against depositors who are equally innocent. These considerations were pointed out in Stickle v Guardian Trust Co., 133 Oh St 472, and In The Matter of Ella M. Stone, recently decided by the Court of Appeals of the Eighth Appellate District, the decision in which is in direct conflict with the conclusion of my associates.
I concur with my associates in certifying this case to the Supreme Court because of conflict with the judgment in the Ella M. Stone case.