Brief Fact Summary. Florence R. Troland was the beneficiary of a trust created by her husband. Under the trust, If Troland remarried, she was to stop receiving payments. When Troland remarried, she continued to receive payments and did not notify the trustee that she had remarried.
Synopsis of Rule of Law. If a person makes a representation of a fact, as of his own knowledge, in relation to a subject matter susceptible of knowledge, and such representation is not true; if the party to whom it is made relies and acts upon it, as true, and sustains damage by it, it is fraud and deceit, for which the party making it is responsible. This standard is included in cases involving misrepresentations in the accounts of fiduciaries. Fraud will exist where the fiduciary has made no reasonable efforts to ascertain the true state of the facts it has misrepresented in the accounts. If a trustee makes a payment to a person other than the beneficiary entitled to receive the money, he is liable to the property beneficiary to make restitution unless the payment was authorized by a proper court.
Whether the bank committed technical fraud when it issued checks to Florence R. Troland, even though she was not entitled to receive payments because she had remarried?
Whether the bank was properly charged by the Probate Court judge for the amounts erroneously disbursed and the simple interest on the payments
Yes. The bank issued checks to a “Florence R. Troland” and the bank was susceptible to the knowledge that Troland had remarried and the academy relied to its detriment on these representations. Furthermore, the bank never took any efforts in the twenty-two years that it covered the disputed accounts to ascertain if Troland had remarried, even to the extent of annually requesting a statement or certificate from her to that effect
Yes. Because the bank made a payment to Troland and she was not entitled to receive the payment, it is liable to the academy to make restitution.
Discussion. The trustees had a duty to ensure that they were following the rules of the trust. Because they were to transfer the trust upon the beneficiary’s remarriage or death, they had a duty to take reasonable steps to ascertain whether the beneficiary had remarried or died.