Citation. 401 N.Y.S.2d 449, 372 N.E.2d 291 (N.Y. 1977)
Law Students: Don’t know your Studybuddy Pro login? Register here Brief Fact Summary.
Mark Rothko (Rothko) was a famous expressionist painter whose paintings were of substantial value. The issue underlying this matter is the manifestly improper behavior of his three executors. Appellant executors appeal a lower court ruling removing them as executors of the estate.
Synopsis of Rule of Law.
Executors retain a fiduciary duty that prohibits dealings of self-interest.
Facts.
Mark Rothko (Rothko) was a famous expressionist painter whose paintings were of substantial value. The principal sum of his estate was composed of 798 paintings. Within a three week period following Rothko’s death, the three executors whom he had named to manage his estate had dealt with all the paintings via two contracts with interested galleries. Two of the executors had interests in the galleries. Rothko’s children petitioned to have the executors removed from the estate management and sought to enjoin the galleries from disposing of the paintings. The children also sought to rescind the sales contracts and to recover damages for breach of fiduciary duties. The lower court held for the children and held that the appreciated value at the time of the trial should serve as the measure for damages for all unreturned paintings. Appellant executors appeal the lower court ruling removing them as executors of the estate.
Issue.
Should executors who engage in self-dealing that jeopardizes the value of an estate be removed as executors of the estate?
Held.
Yes. Executors retain a fiduciary duty that prohibits dealings of self-interest. Those who engage in such dealings should be removed as executors of the estate. Due to the conflict of interest of two of the executors between the estate and the galleries, there is a breach of fiduciary duty and trust to the estate. Although the third executor did not have the same interest in the galleries, he still breached hid fiduciary duty because he failed to exercise ordinary prudence and attempt to prevent, in some regard, his co-executors’ manifestly wrong behaviors. Moreover, the lower court was correct in using appreciation damages where assets of an estate were sold below value as a result of a conflict of interest.
Discussion.
As the facts mention, Rothko was a famous expressionist painter, and because of this status, his estate received considerable attention. The point to the case is that executors owe to an estate a fiduciary duty that involves not engaging in any self-interested acts, particularly those that jeopardize the estate.
