Eastwood, Bigelow and Freund. The opinion of the court was delivered by Bigelow, J.A.D.
[4 NJSuper Page 91] James W. Bailey, of Haddonfield, died in March, 1926, leaving a will in which the First National
State Bank of Camden was named trustee of his residuary estate. Not long after Mr. Bailey's death, the bank and another financial institution, the Camden National Bank, merged into the First Camden National Bank and Trust Company, and the Trust Company has been administering the residuary estate as trustee under the will. Its first intermediate account was allowed by the Camden County Orphans' Court in 1939. Some years later, on petition of infant beneficiaries, the County Court opened the decree and permitted exceptions to be filed. The court has now overruled the exceptions save for one minor item, and the infants, by their guardians ad litem appeal.
In the summer of 1927, the executors were considering a loan of $25,000 on mortgage covering property in Ocean City, New Jersey. But as they would shortly be turning over the estate to the Trust Company, they consulted that company before making the loan. Mr. Ambruster, trust officer of the Trust Company, suggested that a certain real estate broker, Mr. Brick, make an appraisal of the property. Mr. Brick made the appraisal, reporting in a letter addressed, however, to a Mr. Fox, the agent of the borrower. Upon Mr. Brick's appraisal and an inspection by one of the executors, Mr. Hilliard, the loan was granted. By arrangement between the executors and the trustee, the bond and mortgage ran directly to the latter. The appellants except to the loan on the ground that the trustee failed to obtain an independent appraisal but relied on the mortgagor for the appraisal. They argue that Mr. Brick appraised the property for the mortgagor and not for the trustee, inasmuch as his report was addressed to Mr. Fox and not to the trustee. But the proofs are to the contrary and so this exception was properly overruled.
The next exception relates to mortgages on property in Camden. About the time these mortgages were made, a local improvement, namely, a new pavement in front of the mortgaged premises, was completed, but the assessment was
not confirmed until six months later. The assessment, or such part as the owner did not pay himself, the trustee paid with moneys of the trust estate. The County Court sustained the exception to the extent of requiring the trustee to reimburse the estate for the amount so expended, $126. But the appellants are not satisfied. They argue that because of the improvement, the mortgage was not a first lien and that the trustee should be held liable for the entire loss that resulted from this investment. Actually, the mortgage was a first lien, since the improvement assessment did not become a lien until confirmed. Irvington v. Ollemar , 128 N.J. Eq. 402; affirmed, 131 Id. 189 (1942). The decree provides full compensation to the estate for any negligence of the trustee in respect to these mortgages.
Three exceptions object to the trustee's retention of certain investments that testator owned at the time of his death. The question of the trustee's liability for the resulting loss is affected by the Sixth paragraph of Mr. Bailey's will:
"My said executors and my said trustees or trustee, are hereby vested with full power, authority and discretion with reference to holding or selling or transferring such stocks, bonds and other securities as may belong to me or in which I may have any interest, at the time of my death and I specifically direct that my said executors and trustees or trustee, shall be under no responsibility by reason of their decision either to hold or to sell any of such stocks or bonds or interests therein. This clause in my said will is, by me, therein placed because I desire that my said executors and trustees or trustee, may not be in any way embarrassed in their efforts to conserve my said estate."
Provisions in trust instruments restricting the liability of trustees have been considered by our courts on several occasions. The general rule was stated in the leading case of Tuttle v. Gilmore , 36 N.J. Eq. 617 (E. & A. 1883). "In my judgment it is clear, both from principle and authority, that the liability imposed on and accepted by a trustee may be limited by the terms of the ...