Case Citation
Legal Case Name

In Re the Estate of Janes Case Brief

New York Court of Appeals1997Docket #2131593
681 N.E.2d 332 90 N.Y.2d 41 659 N.Y.S.2d 165 1997 N.Y. LEXIS 748 Trusts and Estates Fiduciary Law

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Case Brief Summary & Legal Analysis

General Brief
4 min read

tl;dr: A corporate trustee retained a massive concentration of Kodak stock as its value plummeted. The court found this imprudent, holding that failure to diversify can be a breach of fiduciary duty, even with a “blue chip” stock, when it ignores the trust’s purposes and beneficiaries’ needs.

Legal Significance: This case established that under New York’s prudent person rule, a fiduciary’s failure to diversify a concentrated portfolio can be imprudent. It requires a holistic analysis of the trust’s circumstances, not just the quality of the individual stock, presaging modern portfolio theory.

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Case Facts & Court Holding

Key Facts & Case Background

Rodney B. Janes’s will established several trusts, primarily to provide income for his 72-year-old widow for life. The estate’s $2.5 million stock portfolio was heavily concentrated, with 71% of its value in Eastman Kodak stock. The petitioner, a corporate trust company, served as executor and trustee. Shortly after the testator’s death in 1973, the petitioner decided to retain the high concentration of Kodak stock. This decision was made without a formal investment plan, without meaningful consultation with the inexperienced widow, and despite the stock’s low dividend yield (approx. 1.06%), which was insufficient to meet the income beneficiary’s needs. Over the next seven years, the price of Kodak stock fell dramatically, from approximately $135 per share to $47 per share, causing a substantial loss to the estate. The beneficiaries filed objections to the trustee’s accounting, seeking to surcharge it for the imprudent retention of the stock concentration.

Court Holding & Legal Precedent

Issue: Does a fiduciary’s retention of a high concentration of a single stock violate the prudent person standard of care if it fails to consider the overall portfolio risk and the specific needs of the trust beneficiaries, even when the stock is considered a high-quality, “blue chip” security?

Yes. The court held that the petitioner acted imprudently by retaining the Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla

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Legal Issue

Does a fiduciary’s retention of a high concentration of a single stock violate the prudent person standard of care if it fails to consider the overall portfolio risk and the specific needs of the trust beneficiaries, even when the stock is considered a high-quality, “blue chip” security?

Conclusion

This decision modernized the prudent person rule in New York by establishing Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo

Legal Rule

Under the prudent person rule (EPTL 11-2.2 [a] [1]), a fiduciary is Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sun

Legal Analysis

The Court of Appeals rejected the petitioner's argument that a failure to Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna ali

Flash-to-Full Case Opinions

Flash Summary

  • A fiduciary’s failure to diversify a highly concentrated stock portfolio can
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat no

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