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314 of 630 DOCUMENTS
Restatement of the Law, Second, Torts
Copyright (c) 1979, The American Law Institute
Case Citations
Rules and Principles
Division 11 - Miscellaneous Rules
Chapter 43 - Rules Applicable to Certain Types of Conduct
Restat 2d of Torts, § 874
§ 874 Violation of Fiduciary Duty
One standing in a fiduciary relation with another is subject to liability to the other for harm
resulting from a breach of duty imposed by the relation.
COMMENTS & ILLUSTRATIONS: Comment:
a. A fiduciary relation exists between two persons when one of them is under a duty to act for
or to give advice for the benefit of another upon matters within the scope of the relation. (See Restatement, Second, Trusts, § 2).
b. A fiduciary who commits a breach of his duty as a fiduciary is guilty of tortious conduct to
the person for whom he should act. The local rules of procedure, the type of relation between the
parties and the intricacy of the transaction involved, determine whether the beneficiary is entitled to
redress at law or in equity. The remedy of a beneficiary against a defaulting or negligent trustee is
ordinarily in equity; the remedy of a principal against an agent is ordinarily at law. However, irrespective of this, the beneficiary is entitled to tort damages for harm caused by the breach of a duty
arising from the relation, in accordance with the rules stated in §§ 901-932. In addition to or in
substitution for these damages the beneficiary may be entitled to restitutionary recovery, since not
only is he entitled to recover for any harm done to his legally protected interests by the wrongful
conduct of the fiduciary, but ordinarily he is entitled to profits that result to the fiduciary from his
breach of duty and to be the beneficiary of a constructive trust in the profits. Further, when there is
a contract between the parties or when there has been an assumption of duty by a trustee, guardian
or executor, the beneficiary may be entitled to what the fiduciary should have made in the prosecution of his duties. Special application of these rules to agents and trustees respectively is made in
the Restatement, Second, Agency, §§ 401-407 and in the Restatement, Second, Trusts, §§ 197-226A.
See also Restatement of Restitution, §§ 138 and 190. The same underlying principles apply to the
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Restatement of the Law, Second, Torts, § 874
liability of other fiduciaries, such as administrators and guardians; the liability is not dependent
solely upon an agreement or contractual relation between the fiduciary and the beneficiary but results from the relation.
c. A person who knowingly assists a fiduciary in committing a breach of trust is himself guilty
of tortious conduct and is subject to liability for the harm thereby caused. (See § 876). The
measure of his liability, however, may be different from that of the fiduciary since he is responsible
only for harm caused or profits that he himself has made from the transaction, and he is not necessarily liable for the profits that the fiduciary has made nor for those that he should have made.
Specific applications of the rule are made in the Restatement, Second, Agency, §§ 312 and 313 and
in the Restatement, Second, Trusts, §§ 280-326. The same principles are applicable when one has
colluded with other types of fiduciaries.
REPORTERS NOTES: Some fiduciary relations, such as those of trustee and beneficiary, principal and agent and director and corporation are the subject of a considerable group of substantive
rules of law; and a breach of fiduciary duty has usually been regarded as controlled by the substantive law rules governing the relationship. But the action may properly be regarded as in tort for
damages, being an equitable tort even when the action is in the traditional scope of equitable jurisdiction. Appropriate sections of the Restatements of Agency and Trusts, for example, are cited in
the text.
One breach of fiduciary duty that is more commonly regarded as giving rise to an action in tort
is the disclosure of confidential information. See, for example, Horne v. Patton, 291 Ala. 701, 287
So.2d 824 (1973); Cannell v. Medical & Surgical Clinic, 21 Ill. App.3d 383, 315 N.E.2d 278
(1974); Felis v. Greenberg, 51 Misc.2d 441, 273 N.Y.S.2d 288 (1966); Doe v. Roe, 93 Misc.2d 201,
400 N.Y.S.2d 668 (1977); Schaffer v. Spicer, 215 N.W.2d 134 (S.D.1974).
Comment c. One who assists a fiduciary in committing a violation of his duty is also guilty of a
tort. See Rowen v. Le Mars Mutual Ins. Co. of Iowa, 282 N.W.2d 639 (Iowa 1979).
CROSS REFERENCES: ALR Annotations:
Bank's duty to customer or depositor not to disclose information as to his financial condition.
92 A.L.R.2d 900.
Liability of public accountant. 54 A.L.R.2d 324.
Liability of incompetent's estate for torts committed by guardian, committee, or trustee in managing
estate. 40 A.L.R.2d 1103.
Digest System Key Numbers:
C.J.S. Trusts § 252.
West's Key No. Digests, Trusts 235.
Legal Topics:
For related research and practice materials, see the following legal topics:
GovernmentsFiduciary Responsibilities