Wells Fargo Bank v. Pelton

The sole question presented by this appeal is whether under all circumstances a bank/conservator may discharge its fiduciary obligation to the conservatee by depositing estate assets in excess of $264,000 in one of the bank’s own 5-1/4 percent passbook accounts for a period of 17 months during which a substitution of conservators is being arranged. We conclude there are many factual circumstances in which such action by a bank would constitute a breach of the fiduciary duty. Because the factual findings of the probate court are inadequate for us to determine whether such a breach has occurred here, we endeavor to articulate the correct legal standard to guide the court on remand.

I

From the thin factual record before us, it appears that during the latter part of 1978, Wells Fargo Bank was acting as conservator of the estate of Kathleen Sue Pelton. On November 14, Kathleen’s parents, Winton and Patricia Pelton, informed the bank that they wished to be substituted as conservators of their daughter’s estate. By December 8, Wells Fargo had sold the estate’s common stock and fixed income trust fund units and deposited the proceeds—approximately $264,000—in a 5-1/4 percent…