Harvard College v. Amory

Harvard College v. Amory (9 Pick. (26 Mass.) 446, 1830) is a foundational case in American law and trust law, particularly known for establishing the "prudent man rule." This legal principle has had a profound impact on the management of trusts and the duties of trustees in the United States. The case was decided by the Massachusetts Supreme Judicial Court.

Background

The case arose from a dispute over the management of a trust. The trustees, John Amory and Thomas Amory, were accused of mismanaging the assets of the trust, which were intended to benefit Harvard College. The plaintiffs argued that the Amorys had failed to act with the prudence and diligence required of trustees, leading to financial losses for the trust.

Opinion of the Court

The court, in an opinion written by Chief Justice Isaac Parker, held that trustees are not to be held liable for losses in the trust's assets if they have acted with the care, caution, and prudence that a reasonable person would exercise in managing their own affairs. This standard became known as the "prudent man rule." The court emphasized that trustees should not be judged with the benefit of hindsight but rather based on the information available to them at the time of their decisions.

Impact and Legacy

The "prudent man rule" established by Harvard College v. Amory has been incredibly influential in the development of trust law in the United States. It has been codified in various forms, including the Uniform Prudent Investor Act, which modernized the principles to include considerations of portfolio theory and diversification.

The case is often cited in legal discussions about the fiduciary duties of trustees and the standards against which their actions are judged. It has also influenced the legal framework governing the management of institutional funds, including those of universities, charities, and other non-profit organizations.

See Also

• Trust law
• Fiduciary duty
• Uniform Prudent Investor Act
• Massachusetts Supreme Judicial Court