Court Rules on Knox Case

The family of Seymour Knox has a number of trusts. The first trust was created by Seymour Knox II for the benefit of his grandchildren. His children and their children created subsequent trusts. The case also involves those other trusts. Namely, this case involves the two trusts that were created by Seymour Knox IV and his mother. The Erie County Probate Court found that the trustee of these trusts, HSBC, breached their fiduciary duty to the Knoxes and found them liable for making improper investments. The court ordered that HSBC to pay $25.6 million in damage and fees.

The court of appeals overturned the ruling, and determined that HSBC acted prudently and responsibility in managing the trust. However, the court of appeals did not hold that all of the determinations made by the probate court were incorrect. The court disagreed with probate court that HSBC should not continue to invest in the Marine Midland stock, but agreed that HSBC should have stopped investing in F.W. Woolworth Co. stock. Both courts agreed on the latter because the company had failed to continue paying dividends on its stock. One of the major disagreements came about the trusts involving Seymour Knox and his mother. The court of appeals determined that because Mr. Knox and his mother were also involved in the investment decisions, they were also responsible for the trust. The court concluded that that because they were also responsible, they could not effectively sue themselves. The court only upheld the part of the Woolworth stock, and remanded the case to the probate court to determine damages.

See Jonathan D. Epstein, Ruling Nixes Outcome in Probate Case for Knoxes, BuffaloNews.com, June 27, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.