Can a fiduciary or passive trustee of an estate be sued for loss of funds by a broker who had no knowledge of the breach of fiduciaries duties?

In MacDonald v. Hauer (supra), A was one of three executors of an estate. He took assets from the estate and made them available to H a broker who had knowledge that such an arrangement was a breach of A’s duties as a trustee. H was to use these estate assets to trade in speculative securities and split the anticipated profit with A to his personal benefit. The money was lost and A was sued by the two passive trustees who had no knowledge of the breach.

The court distinguished this case from Bahin v. Hughes (1886), 31 Ch. D. 390 (C.A.), because the two passive trustees in MacDonald were without fault. A was found to be in fraudulent breach of trust and H, a constructive trustee arising out of “knowing assistance” to that breach. The passive trustees were entitled to a joint and several judgment against A and H (page 130).