Issue: Under New York law, what elements are necessary for a cause of action for breach of fiduciary duty by one trustee to the other?
|Area of Law:||Estate Planning & Probate|
|Keywords:||Breach of fiduciary duty; Causes of action; Trustee's fiduciary duties|
|Cited Cases:||819 N.Y.S.2d 520; 824 N.Y.S.2d 857; 847 N.Y.S.2d 156; 803 N.Y.S.2d 534; 849 N.E.2d 262; 242 A.D.2d 202; 164 N.E. 545; 787 N.Y.S.2d 678; 799 N.Y.S.2d 356; 877 N.E.2d 960; 816 N.Y.S.2d 403; 827 N.Y.S.2d 50; 890 N.Y.S.2d 369; 776 N.Y.S.2d 609; 110 N.Y.S.2d 763|
The oft-cited case of Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545 (1928), involved a claim by one partner against another for breach of fiduciary duty. Chief Justice Cardozo’s language emphasizes the duty to which a fiduciary is bound:
Joint adventurers, like copartners, owe to one another, while the enterprise continues, the duty of the finest loyalty. Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the “disintegrating erosion” of particular exceptions. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court.
. . .
Equity refuses to confine within the bounds of classified transactions its precept of a loyalty that is undivided and unselfish. Certain at least it is that a “man obtaining his locus standi, and his opportunity for making such arrangements, by the position he occupies as a partner, is bound […]