Recently, an Ohio court answered the question of whether the law allows aprincipal to hold a bank responsible for money that the principal entrusted to a fiduciary that swindled the money. A fiduciary opened an estate account, and gave a bank manager documents indicating he wasthe executor. Subsequently, he opened a trust account. The fiduciary also showed the bank employee paperwork indicated that he was the successor trustee. The trustee in this case then stole over a million dollars from the estate and trust accounts. The bank was put on notice of the fiduciary relationship. As a result, the Ohio Uniform Fiduciaries Act, which provides protection to the bank applies.
In Estate of Barneyv. PNC Bank, N.A., the court affirmed the district court’s decision and held the bank was not responsible to pay for the fiduciary’s breach of duty. The court reasoned that because the beneficiaries could not draw a reasonable inference that the bank acted in bad faith or had knowledge of the fiduciary’s behavior the exceptions to the Fiduciaries Act did not apply.
See Luke Lantta, Bank Not Liable To Beneficiaries For Individual Fiduciary’s Breach of Fiduciary Duty, Bryan Cave Fiduciary Litigation, Jun. 4, 2013.
