Self-Dealing by Fiduciary Banks and Trust Companies

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Self-Dealing by Fiduciary Banks and Trust CompaniesSource: Harvard Law Review, Vol. 44, No. 8 (Jun., 1931), pp. 1281-1286Published by: The Harvard Law Review AssociationStable URL: http://www.jstor.org/stable/1332186 .

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NOTES 128Isoundness of the Klein case,28 and it is still possible that the rationalimplications of Teel v. Yost will be recognized.29 That strict observ-ance of the terms of a warrant of attorney would result in a judgmententitled to full faith and credit seems implicit in the two cases in theUnited States SupremeCourt which have considered the subject.30

SELF-J)EALINGY FIDUCIARY ANKS AND TRUSTCOMPANIES.-It is a guiding principleof equity that an individual trustee may deriveno profit from his trust.' As a necessary corollary,the trustee can notpurchase his own goods and securities for the trust estate.2 Such trans-actions are voidable 3 at the instance of any beneficiary4 within areasonable time after notice.5 To remove all temptation to be un-faithful,6 the rule is applied with literal strictness: neither indirectVICT. C. 49 ?? I-I2 (I889); N. Y. ARBITRATION LAW (I920) ?? I-IO, (I930) 43HARV. L. REV.653. In the Klein case the procedure of confessing judgment, valid irPennsylvania, was void in New York. Moreover the full faith and credit clause isinvolved only in suits on judgments of sister states, and not where a foreign

--4.-rw icrarrnf28 See Gilbert v. Burnstine, supra note 26, at 356, 357, I74 N. E. at 708: " The

[U. S. Supreme Court in the Radcliffe case] recognized its duty in a proper caseto enforce such contracts [by non-resident parties to submit to foreign juris-diction]. . . . Public policy would not forbid defendants to appoint an agent toconfess judgment in their behalf."29 Albert Bldg. & Loan Ass'n v. Newman, supra note I7, on facts identical withthose in the Klein case, reached an opposite result.30 See Grover & Baker Sewing Machine Co. v. Radcliffe, I37 U. S. 287, 295(i8go); National Exchange Bank v. Wiley, I95 U. S. 257, 268, 270 (2904).The two cases have frequently been regarded as standing for the proposition thatstrict compliance with the power of attorney would support a judgment entitled tofull faith and credit. See Cuykendall v. Doe, supra note i6, at 459, I05 N. W. at700; Crim v. Crim, supra note 5, at 559, 63 S. W. at 493; Hazel v. Jacobs, supranote I3, at 463, 75 Atl. at 904; SCOTT,op. cit. supra note i, at 40, n.22; 3 BEALE,op. cit. supra note I7, at 5I2.

I Michoud v. Girod, 4 How. 503 (U. S. i846); Magruder v. Drury &Maddox, 235 U. S. io6 (I9I4); see Note (I930) 44 HARV. L. REV. 117, II8;I PERRY,TRUSTS & TRUSTEES (7th ed. I929) ? 427; cf. Geddes v. Anaconda CopperMining Co., 254 U. S. 590 (I920).

2 Cornet v. Cornet, 269 Mo. 298, 190 S. W. 333 (I9I6); N. Y. PERSONALLAW(I909) ? 21; see 2 POMEROY, EQUITY JURISPRUDENCE(4th ed. I915) ?? 957, 958;cf. Dean v. Shingle, i98 Cal. 652, 246 Pac. I049 (1926). A trustee's purchases ofthe trust property for himself are likewise voidable. Clay v. Thomas, i78 Ky. i99,I98 S. W. 762 (I9I7); Chiswell v. Campbell, 300 Pa. 68, I5o Atl. go (1930);(1926) 26 COL. L. REV. 1042.3 Eagle v. Terrell, 95 Ark. 434, 130 S. W. 550 (I9IO); Mitchell v. Reeder,104 Okla. 48, 231 Pac. 268 (I7924); Chiswell v. Campbell, supra note 2; see Note(I919) I A. L. R. 747, 75I.4 Morse v. Hill, 136 Mass. 6o (I883); see I PERRY, op. cit. supra note i, ? 195;cf. Wilmington Trust Co. v. Carrow, I4 Del. Ch. 290, I25 Atl. 350 (1924).5 Hammond v. Hopkins, I43 U. S. 224 (I892); see I PERRY, op. cit. supranote I, ? I95; Note (i919) I A. L. R. 745, 75I.6 See Note (i889) 5 L. R. A. i66.7 A lone exception is made where the trustee, to protect an interest of his ownin the trust property, buys at a court sale with the court's consent after a hearing.Scholle v. Scholle, ioi N. Y. i67, 4 N. E. 334 (i886); Matter of Markle's Estate,

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I282 HARVARD LAW REVIEWpurchase nor good faith 9 serves to protect the trustee, even though hehas given fair value. If any profitsare made, though not at the expenseof the trust fund,'0 the trustee must account to the cestui."- This isfamiliar doctrine; a comparativelynew and obviously importantfield forits application is suggested by the enormous increase in the number ofbanks and trust companiesacting as fiduciaries.12While few cases have reached the appellate courts,13 there seems tobe little doubt that banks and trust companies frequently buy fromthemselves for their cestUis.'4 This practice has some potential ad-vantages. It enables the corporate fiduciary to invest in the securitieswith which it is most familiar 5 and, whenever it can purchase belowmarket prices, to effect some savings.16

But the temptation to profit at the expense of the cestui is evenmorepatent than in the case of the individual trustee.'7 The fiduciarybank or trust company may be content to take a double profit, its feeas trustee plus the ordinaryprofit on such sales.'8 But it may also betempted to buy new unseasoned securities from itself rather than saferseasoned investments on the outside market.'9 Its security issuingdepartment may injudiciously, or for ulterior motives, overbid for itssecurities, confident of selling them, if necessary, to its trust depart-ment.20 It may be tempted to pass securitieson to its cestuis at a priceI82 Pa. 378, 38 Atl. 6I2 (I897); see Note (I889) 5 L. R. A. i66; cf. Plant v.Plant, I7, Cal. 765, I54 Pac. I058 (I9I6); Corbin v. Baker, I67 N. Y. I28, 6oN. E. 332 (I90I). But cf. Linsley v. Strang, I49 Ia. 690, I26 N. W. 94I, I28 N. W.932 (I9IO).8 Davoue v. Fanning, 2 Johns. Ch. 252 (N. Y. i8i6); cf. Hartman v. Hartle,95 N. J. Eq. I23, I22 Atl. 6I5 (I923).9 Smith v. Miller, 98 Va. 535, 37 S. E. IO (I900).10 Magruder v. Drury & Maddox, 235 U. S. IO6 (1914); see i PERRY, p. cit.supra note I, ? 427; cf. Bay State Gas of Delaware v. Rogers, I47 Fed. 557 (D.Mass. I906). But cf. Heckscher v. Blanton, iii Va. 648, 69 S. E. I045 (19II).11 Skinnell v. Mahoney, I97 App. Div. 808, I89 N. Y. Supp. 845 (I92I).

12 They were named 5,899 times in I923; 44,375 times in I928. See Jenney,The Trusteed Estate (I93I) 9 HARV. Bus. REV. 159.13 Beneficiaries are often too ignorant to sue. When they do, the corporatefiduciary will often settle the matter out of court to save its reputation. Cf.Jenney, supra note I2, at I64.

14 See KIRKBRIDE, STERRETT, AND WILLIS, THE MODERN TRUST CO. (6th ed.I925) 376; cf. Feninger, Investing Trust Funds in PROCEEDINGS FIFTH MI-WINTERCONFERENCEF THE TRUST COMPANIES F THE U. S. (I924) i6, I7;SMITH, DEVELOPMENTFTRUSTCOMPANIESN U. S. (I928) I70.

15 The question is whether this knowledge will be used for the benefit of thestockholders or the beneficiary.16 See SMirr, op. cit. supra note I4, at I52; Thompson, The Bond Depart-ment (I924) I TRUSTCOMPANIES76, 378. But the security department, owingto agreement or understanding with other joint-issuing houses, frequently cannot sell to its own trust department at the price paid for the security. SeeFeninger, supra note I4, at i6, I7.17 Corporations are likely to be more partial to their stockholders' than totheir customer-beneficiaries' interests. See Jenney, supra note I2, at I62; Cf.Thompson, supra note i6, at 477, 478.18 See SMITH,op. cit. supra note I4, at I72; Thompson, supra note i6, at 378.'9 Cf. Sedgwick, Investment Advice (I930) 8 HARV.Bus. REV. 468, 469.Though less likely, the market price of seasoned securities might be controlled bya pool of which the trustee was a member.20 For this reason bankers may frequently find it impossible to bid against

a trust company for an issue of securities.



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NOTES I283in advance of that paid.21 If issues obtained from its originatinghousemove slowly,22or if some of its own securities appear to be bad invest-ments, the trust department offers a convenient dumping ground.23

If the advantagesand disadvantagesof self-purchaseweighed equallyin the balance, the firmpolicy of equity to remove all temptation fromfiduciaries 4 should tip the scales against the practice. Also, the dan-ger of a divided interest25 in the case of a corporate fiduciary is aspecial considerationfor making it a guarantorof what it purchases forthe trust from itself. Consequentlythe courtshave, in general, frownedon such transactions.Y In some states, however, transactions of thissort are permitted by statute,27 but are limited to approved invest-ments without profit, made with court sanction; as an additional safe-guard, the securitiesare subject to examinationby the commissionerofbanking.28 Significantly, such statutes are strictly construed.29

21 Cf.KIRKBRIDE,TERRETT,NDWmLIS,op. cit. sUpra note 14, at 376; SMITH,op. cit. supra note 14, at 152. It might be argued that the conflict of interestbetween the officers of the bond and trust department would lessen some of thesedangers. However, the pressure of the bond department is considerable. SeeFeninger, supra note 14, at I6, I7. If the question came to an issue the directorsmight support the bond department in order to increase the company's profit.Cf. Sedgwick, supra note ig, at 470.22 Non-originating houses sometimes take securities of inferior quality to pleasethe originating house in order to be more certain of participating in the next

offering. 23 See note 2 I, supra.24 See CARDOZO,ROWTH F THE LAW (1924) 96; Note (I889) 5 L. R. A.,supra note 6, at i66. 25 See note I7, supra.26 St. Paul Trust Co. v. Strong, 85 Minn. i, 88 N. W. 256 (I9OI); Kelley v.First Minneapolis Trust Co., I78 Minn. 215, 226 N. W. 696 (I929); Larson v.Security Bank, I78 Minn. 209, 224 N. W. 235 (1929); Matter of Long IslandLoan & Trust Co., 92 App. Div. i, 87 N. Y. Supp. 6( (2904), aff'd per curiam,I79 N. Y. 520, 7I N. E. II33 (i904); see Chandler, Corporate Fiduciary ShouldNot Sell Its Own Securities to Its Trusts For Investment (I924) 39 TRUSTCOM-

PANIES 77, 78; (1930) I4 MINN. L. REv. 308, 309; McKinney, Important DecisionDefining Status of Participating Mortgages as Legal Investments for Trust Funds(1914) I9 TRUST COMPANIES 7, 10; SEARS,TRUST COMPANY LAW (I9I7) ? 3I;SMITH, Op. cit. supra note 14, at 172; cf. Shanley's Estate v. Fidelity UnionTrust Co., 138 Atl. 388 (N. J. Eq. 1927). But cf. Commonwealth Trust Co. ofPittsburgh v. First-Second Nat. Bank, 260 Pa. 223, 103 Atl. 598 (i9I8). Similardangers are present where the corporate fiduciary purchases from its trustsfor itself.-7 WIS. STAT.(1929) ? 223.03(00). In the case of investment of trust fundsin participating mortgages, other objections such as mingling, investment offunds in the fiduciary's name, and the problems of insolvency have obscured theobjection that the trustee sometimes buys for the trust from himself. Cf. Mc-Kinney, Legality of Participating Mortgage Certificates as Investments for Trustees(1915) 24 YALEL. J. 286. One state permitted such transactions without statute.Matter of Union Trust Co., 86 Misc. 392, 149 N. Y. SuPP. 324 (1914), aff'd percuriam, I70 App. Div. 953, I55 N. Y. Supp. II45 (I915), aff'd, 2I9 N. Y. 514,114 N. E. 1057 (19I7); see SEARS, op. cit. supra note 26, ?? 33, 35. But cf.St. Paul Trust Co. v. Strong, supra note 26. Today some jurisdictions permitself-purchase in this limited situation with very strict safeguards, including arequirement of prompt notice to the beneficiary. N. Y. Banking Law (19I7) ? I88(7); Matter of Thomson, 135 Misc. 62 (Surr. Ct. 1929).28 WIS. STAT. (I929) ? 223.03(10). If the practice is allowed by statute, aprovision for publication of the holdings of corporate fiduciaries, indicating wheresuch holdings were purchased, might make trust companies extremely scrupulousin purchases from themselves. It would also test the efficiency of corporatefiduciaries by showing how successfully they managed their funds.29 MINN. STAT. (MASON,I927) ? 7738 permits corporate trustees to invest



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1284 HARVARD LAWVREVIEWTo free themselves from suspicion, some corporate fiduciarieshaveno bond department 0 or subsidiary corporation. Others insert provi-sions in the trust agreement that they shall not purchase from them-

selves.31 In the absence of such a provision,where the particularpur-chaseis carriedout with the consent or ratification 2 of the beneficiary,33with full disclosure,good faith, and for a fair price, the corporatefiduci-ary should be relieved of its guarantor's iability.34 On the other hand,some insertprovisionsin the trust agreementpermitting self-purchase.35Such generalconsent given in advance might well be void.36 Generally,trustees can not free themselves by contract from the limitations im-posed to safeguardthe trust device,37and such a provisionwould clearlybe invalid if used to cloak unconscionable ransactions.38Much the same problems are presented where the corporate fidu-ciaries deposit the trust funds in their own savings or banking depart-ments.39 By statute, some jurisdictions sanction the practice if thecestuis' interests are protected by a deposit of securities.40 Even inthe absence of statute, one or two courts have permitted it.41 Somefunds in authorized securities "held" by it. This has been construed not toinclude securities " owned " by it. Kelley v. First Minneapolis Trust Co., supranote 26; see (1930) 14 MINN. L. REv. 308.30 See SMITH, op. cit. supra note 14, at I72, 484.31 See Sedgwick, supra note I9, at 469; cf. SEARS, op. cit. supra note 26, at 277.Another provision that the corporate fiduciary may buy securities in lots andthen alot to its trusts is sometimes inserted to nullify the effects of the limitationson self-purchases. Other subterfuges are discussed later. See notes 53-57, infra.

32 Report of the transaction to the cestui does not constitute ratification.Matter of Long Island Loan & Trust Co., supra note 26.33 A child beneficiary can not give enforceable consent. Clay v. Thomas,supra note 2. Nor can the beneficiary consent where there is a contingent re-mainder in his issue. Skinnell v. Mahoney, stupra note ii.34 This would be the rule for an individual fiduciary. Taylor v. Gordon,I69 Ark. II32, 278 S. W. 26 (I925) ; Bailey v. Waddy, I95 Ky. 4I5, 243 S. W. 2I

(I922) ; see I PERRY, op. cit. supra note I, ? I95; 2 POMEROY, op. cit. supra note 2,?? 956, 957.35 See Feninger, supra note I4, at I7; Trust Agreement, Security Trust & Sav-ings Bank, Los Angeles, California (I923) 9.36 Settlors will frequently, because of ignorance and inexperience, sign a printedform agreement without realizing its significance or their rights.37 See Posner, Liability of the Trustee Under the Corporate Indenture (I928)

42 HARV. L. REV. i98, 209, 2II, 244, 248; cf. Carrier v. Carrier, 226 N. Y. II4,I23 N. E. 135 (I9I9); Green v. Title Guarantee & Trust Co., 223 App. Div.I2, 227 N. Y. SUpp. 252 (I928), aff'd per curiaM, 248 N. Y. 627, I62 N. E. 552(I928). But cf. Bell v. Title Trust & Guarantee Co., 292 Pa. 228, I40 Atl.900 (I928).

38 See Whalen v. Hudson Hotel Co., I83 App. Div. 3I6, 320, I70 N. Y. Supp.855, 858 (I9I8); Matter of Schuster's Estate, 35 Ariz. 457, 47I, 28I Pac. 38, 43(I929); Note (1930) 44 HARV. L. REV. II7, ii8, n.4; cf. Guardian Trust Co.v. White Cliffs Portland Cement & Chalk Co., iog Fed. 523 (W. D. Ark. I90I).39 See SMITH, op. cit. supra note I4, at 424, 425.

40 38 STAT. 264 (19I3), as amended by 40 STAT. 968 (I9I8), I2 U. S. C.? 248(k) (I926); cf. People v. California Safe Deposit &Trust Co., 22 Cal. App. 69,I33 Pac. 324 (1913).

41 Hayward v. Plant, 98 Conn. 374, II9 Atl. 34I (I923); Herzog v. TitleGuarantee& Trust Co., I48 App. Div. 234, I32 N. Y. Supp. III4 (i9ii), aff'd,2I0 N. Y. 531, 103 N. E. 885 (I9I3); seeNote (I923) 23 COL.L. REV. 465,467-68;cf. Tucker v. New Hampshire Trust Co., 69 N. H. I87, 44 Atl. 927 (I897). N. Y.BANKING LAW (I9I7) ? I88(7) clarified the situation in New York by permit-ting such deposit of funds awaiting investment or distribution.



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NOTES 1285jurisdictions even allow the fiduciary to pay the same interest that itpays on ordinarydeposits.42 But decisions holding such deposits to bein breach of trust 43 and charging the corporate fiduciary with theprofits made or the legal rate of interest,45represent a sounder view.Such a practice is open to the objections of self-dealing,46of doubleprofit,47and of the danger of the fiduciary's divided interest.48 Inits support it has been urged that the cestui is better protected in theevent of the fiduciary's insolvency.49 But this argument is based onthe mistaken assumptionthat trust funds so deposited receive a prefer-ence over other deposits.50

42 Hayward v. Plant; Herzog v. Title Guarantee & Trust Co., both supranote 4I; Matter of People's Trust Co., i69 App. Div. 699, I55 N. Y. Supp. 639(I9'5); see SEARS, op. cit. supra note 26, ? 34. The last case illogically bases itsdecision on N. Y. BANKiNG LAW (1914) ? I88(II) requiring that not less than2% interest shall be paid. In Missouri, under a similar statute the court properlyreached the opposite result. Mo. REv. STAT. ANN. (1929) ? 5423 (9); Enright v.Sedalia Trust Co., 20 S. W.(2d) 5I7 (MO. I929).

43 In Pennsylvania this is based on a statute providing that trust companiesmust keep their trust funds separate from their assets. Trust Companies' Depositsof Trust Estates, 8 Pa. D. & C. 225 (I926); Trust Companies as Executors,9 Pa. D. & C. 702 (I927). And it would apply the rule to national banks despitethe Federal Reserve Bank's provision allowing the practice conditionally. Na-tional Banks acting as Fiduciaries, 30 Pa. Dist. Rep. 63 (I920); cf. note 41, supra.44 Enright v. Sedalia Trust Co., supra note 42. See Mitchell, J., in St. PaulTrust Co. v. Kitson, 62 Minn. 408, 4I9, 65 N. W. 74, 78 (I895). The exact meas-ure of profits on such deposits may be somewhat difficult to determine, but itcan be done with perhaps an allowance to the corporate fiduciary for overhead.See the trust company's practice in Hayward v. Plant, supra note 4I, at 390,II9 Atl. at 347.45 Union Trust Co. v. Preston National Bank, 144 Mich. io6, 107 N. W. IIO9

(i9o6); St. Paul Trust Co. v. Kitson, supra note 44. In these cases, it is likelythat the legal rate was decided upon because on their facts it approximated thereal measure of profits. See Mitchell, J., in St. Paul Trust Co. v. Kitson, supranote 44, at 4I9, 65 N. W. at 78. In Pennsylvania, the court held the fiduciaryliable only for the rates of interest on accounts of a like character, but the ques-tion of liability for all the profits was not argued. Reid v. Reid, 237 Pa. I76,85 Atl. 85 (1912).46 A deposit is an exchange of a chose in action for funds. Mills v. Swear-ingen, 67 Tex. 269, 3 S. W. 268 (I887).47 See SMITH, supranote I4, at 425.

48 The fiduciary would be tempted to leave it on deposit with its double profitrather than otherwise invest it. But if the trust funds are deposited anywhere foran unreasonably long period, the fiduciary is liable for a breach of trust. Matterof Whitecar's Estate, 147 Pa. 368, 23 Atl. 575 (I892) (fifteen years); see Boreingv. Faris, I27 Ky. 67, 74, I04 S. W. I022, I024 (I907).49 See Matter of People's Trust Co., supra note 42, at 70I, I55 N. Y. Supp.at 641; SEARS, op. cit. supra note 26, ? 36. Other arguments are given in Note(I923) 23 COL.L. REv. 465, 468. The convenience of the practice is so slightas to seem immaterial. The argument that there is state supervision of depositsapplies equally well to a deposit in another bank. It is also urged that there isimplied authority by the settlor. See Note (0930) i6 VA. L. REV. 392, 398-99.It seems doubtful whether this is true. The settlor probably did not think aboutit; if he had, he would probably not have authorized a practice involving dangerand resulting in no real service to himself or to the beneficiary. See SmITH,op. cit. supra note 14, at 425.50 Where such a deposit is legally made, it should not and does not receive apreference. Madison Trust Co. v. Carnegie Trust Co., I67 App. Div. 4, I52 N. Y.SUPP. 5I7 (I915); Mills v. Swearingen, supra note 46; see Note (1928) 56 A. L. R.8o6, 8o9; Note (I930) i6 VA. L. REv. 392, 396-40I; cf. Matter of Lebanon Trust



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1286 HARVARD LAW REVIEWWhere the fiduciary deals directly with its own concern " there islittle difficulty in the application of the general rule. On principle, itshould be immaterial that the corporatefiduciary deposits in, or pur-

chases from, its own subsidiary corporations 2 or corporationswhichit owns or controls directly or indirectly.53 Equity can disregardthecorporatefiction to avoid such transactions.54 Attempts to profit indi-rectly by agreements55to exchange business should be similarly void-able; the fiduciary should be charged as guarantor of all purchases,and should be compelledto deliver up all profits on the same principlesthat govern the case of direct dealing.56& Safe Deposit Bank's Estate, i66 Pa. 622, 3I Atl. 334 (I895). In some juris-dictions savings department depositors get a preference over other depositors inthe bank. CONN. GEN. STAT. (1930) ? 3935; Bank Commissioners v. SecurityTrust Co., 75 N. H. I07, 7I Atl. 377 (I908). Fiduciary funds in that departmentshare the preference but that would be true of a deposit in any outside bank'ssavings department in the same jurisdiction. If such deposits are illegal, it mightbe possible to follow the res and thus get a preference, but to permit such apractice because of an advantage that accrues only if it is a wrong is absurd.It is also urged that since the fiduciary bank is in a position to learn morequickly of its own financial weakness if any, than of another's, its duty to with-draw the trust funds would be performed at an earlier date. It would be con-trary to human nature to expect such withdrawal, which would further weakenthe bank. And if there were a breach of this duty there would be no res tofollow on the theory that the savings department had become the debtor of thetrust department. Cf. Note (I930) i6 VA. L. REV. 392, 398. N. Y. BANKINGLAW (I914) ? i88(8) apparently gives a preference to trust funds so deposited,doubtless causing the misapprehension on this score, but it is limited to the fundsof trusts arising by judicial order. Madison Trust Co. v. Carnegie Trust Co., supra;cf. Note (1930) i6 VA. L. REV. 392, 4oo, n.29. A general preference to trust fundsso deposited would seem unfair to other creditors of the bank.51 See note 14, supra.52 SMITH, op. cit. supra note I4, at I72.53 B bank may own or control both fiduciary bank A and C bank. There is acase of self-purchase if bank A buys from C's bond department or corporation.Or A may own B and B own C. There is self-purchase if any one buys fromanother's bond department or corporation. Many different situations will befound where the fiduciary and the seller are substantially one and the same inownership or control, if corporate fictions are disregarded.54 Skinnell v. Mahoney, supra note ii; cf. Strong v. Dutcher, i86 App. Div.307, I74 N. Y. Supp. 352 (I919); Hartman v. Hartle, supra note 8. Today manybanks are more or less connected. Where to draw the line in piercing corporatefictions is a question of degree. Clearly if the trustee and issuing house are undercompletely or substantially the same ownership or control, the corporate fictionwould be disregarded. The same should be true where there is such part owner-ship or control that a danger arises of a divided interest influencing the fiduciarycorporation's purchases. A conservative jurisdiction might not permit any con-nection at all. Cf. Shanley's Estate v. Fidelity Union Trust Co., supra note 26.

55 A bank buys for its trusts from B bank, and B bank for its trusts from Abank. See Sedgwick, supra note I9, at 469.56 These agreements are often mere tacit understandings, but that shouldmake no difference since the profits to the fiduciary and the dangers to thebeneficiary are in effect the same.

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Self-Dealing by Fiduciary Banks and Trust Companies