I concur in the conclusions of my brethren of the majority on the issues relating to the sale of the Yeast Company.
But I entertain the view that Fletcher's trustees were guilty of culpable negligence in the retention of the common stocks, and should be surcharged with the consequent loss. The proofs demonstrate that the fiduciaries knew these securities were in major part highly speculative, and that the interest of thecestuis required their liquidation, but nothing was done in the face of a continually falling market, primarily for the reason that they were in disagreement as to whether further speculation was advisable. This is indubitably shown by correspondence between the trustees. It is not a question of "good faith," but of "due care." R.S. 3:16-12 is not a shield in these circumstances. In re Ward, 121 N.J. Eq. 555; affirmed, Ibid.606.
And I cannot agree that laches and estoppel preclude thecestuis from holding the fiduciaries to accountability in this regard. The scheduling of the assets of the trust upon the filing of the trustees' several accounts, pursuant to a rule of the Orphans Court, did not impose upon the cestuis the duty of raising the question of reasonable care as respects the management of the investments. The fiduciaries tendered no such issue until the filing of the account now under review. They were under the duty of reasonable discretion; and the law lays no obligation upon the cestuis, on pain of estoppel, to enforce performance of that duty by unremitting vigilance against imprudent administration by the fiduciaries. Vide In re Shaw,122 N.J. Eq. 536. The intermediate accounts did not reveal that losses had been sustained by the retention of the securities. Thecestuis were not thereby advised by all the facts and circumstances attending the handling of the particular investments. The doctrine of res judicata is not invoked; nor is it applicable. In re Hazeltine, 119 N.J. Eq. 308; Weyman v.Thompson, 52 N.J. Eq. 263. In such circumstances, no duty of inquiry or action rests upon the cestuis; they may assume the exercise of reasonable care and diligence in the management of the trust *Page 55 estate. This is precisely what such fiduciaries are employed to do, and undertake to do; and they cannot cast the burden of their negligence upon the cestuis by the simple expedient of thus scheduling the securities constituting the trust res, not under a statute which attaches specific legal consequences to the act, but a mere rule of court which does not purport such an office. The failure of duty long pre-existed the date fixed by the learned Vice-Chancellor; that was an arbitrary selection which has no basis in the proofs.
I would modify the decree accordingly.
Mr. Justice Perskie and Judge Rafferty join in this opinion.
For modification on opinion — THE CHIEF-JUSTICE, PARKER, BODINE, DONGES, COLIE, OLIPHANT, DILL, FREUND, JJ. 8.
For modification, alia — HEHER, PERSKIE, WELLS, RAFFERTY, McGEEHAN, JJ. 5. *Page 56