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Trusts - Effect Of Exculpatory Clauses On The Liability Of Corporate Trustees, Milton A. Kramer

Michigan Law Review

The average investor doubtlessly relies upon the fact that some banking institution is a trustee for the bond issue in which he places his savings, and expects a degree of care commensurate with the confidence he has in that institution. The fact is, however, because of innumerable exculpatory clauses found in the corporate mortgage, the trustee's duties in regard to the protection of the bondholders' interests are practically negligible. But before proceeding further with the subject, it is necessary to distinguish two situations: first, a case where the trustee has no duty whatsoever to act; and secondly, where a duty …