Earl R. Hoover


When the nation's 25th and 47th largest banks, The Union Trust Co. and the Guardian Trust Co. of Cleveland, cracked up in 1933, Ohio's Supreme Court cracked down on the violation of an old but little known rule of fiduciary law: the duty of undivided loyalty. Airing of the principles underlying the rule seems warranted. The rule necessarily is harsh, almost iron-clad. Defenses are few. A defendant inevitably cries on the court's shoulder the same old discredited excuses. Unless the court understands the reasons for the rule, such tears may sway it. Because violation is so costly, a client needs preventative advice. Because the loss may remain on the victim unless his counsel is familiar with the rule's reasons, counsel must know them. Importance also attaches because the rule is violated every day and it applies to all of the many fiduciary relations.