Trust

BIBLIOGRAPHY.-The

principal authority is T. Lewin, Law of Trusts (13th ed. W. Banks, 1928) ; see also H. Godefroi, On the Law of Trusts and Trustees (5th ed. 1927) and A. Underhill, Law of Trusts (8th ed. 1926). For American law see J. W. Perry, A Treatise on the Law of Trusts and Trustees (2 vols., 2nd ed. 1874). The principal authority on charitable trusts is 0. D. Tudor, The Law of Charities and Mortmain (4th ed. of Charitable Trusts, ed. L. S. Bristowe, C. A. Hunt and H. G. Burdett, 1906). For the history see Francis Bacon, Reading upon the Statute of Uses (1642, later ed. 1804) and Law Tracts (1737) ; G. Gilbert, The Law of Uses (1734; 3rd ed. 1811) ; F. W. Sanders, On Uses and Trusts (1799; 5th ed. 2 vols., 1844), and G. Spence, Equitable Jurisdiction (2 vols., 5846-49). (X.; W. A. B.) United States.—It is generally true that the institutions of the English law were adopted bodily by the American colonists and became part of their jurisprudence modified only in such details as the exigencies of the new country demanded. That this was true of trusts is, however, somewhat remarkable in view of American hostility during the 18th and early 19th centuries to the English system of equity jurisprudence. Indeed, several colonies possessed no chancery courts and not until the late 59th century had full equity powers been vested in State courts such as Massa chusetts and Pennsylvania. Despite this, however, the trust as developed in England was well-known in America. Remedies were administered in the absence of equity powers by law courts through their own legal forms. The institution consequently fol lowed the English law in its major outlines and only the more important differences need here be considered.

Passive trusts, in which the trustee performs no active duties but is simply a receptacle of the legal title, have under various theories ceased to exist for practical purposes, such a grant being deemed to vest the beneficiary with legal title. This result, reached in the American States through a judicial extension of the Statute of Uses or by local legislation, has in substance done away with all passive trusts except such resulting or constructive trusts as are created by operation of the law. Consequently for the effective creation of a trust it is necessary to impose affirmative duties of administration upon the trustee. Furthermore legisla tion in the several States similar to the provisions of the English Statute of Frauds requires trusts of real property to be in writing, though trusts of personal property unless created by will may be established by oral evidence.

Notable American legal doctrines concern the purposes for which trusts may be created. The spendthrift trust, a distinct American institution, seeks to secure the beneficiary against his own improvidence or incapacity by providing against alienation by anticipation of the trust income by the beneficiary either by his own voluntary act or in invitum by his creditors. The bene

ficiary cannot assign his right to receive future income nor can such income be subjected to the payment of his debts. In Eng land such trusts have been held invalid on the ground that it is against public policy to permit the ownership of property without permitting its alienation nor burdening it with liability for its owner's debts. The majority of the American States have upheld the validity of such trusts, following the views enunciated by the Massachusetts court in Broadway Nat. Bank v. Adams, 133 Mass. 170 and the Supreme Court of the United States in Nichols v. Eaton, 91 U.S. 716. American legal doctrines surrounding the creation of charitable trusts have had a curious development. After intimating that their validity depended solely upon statute, the Supreme Court of the United States in the famous Girard Will Case (2 How. 127) concluded that the English Statute of Charitable Uses of 16o 1, 43 Eliz. c. 4, was but declaratory of the common law and that such trusts were valid in the absence of legislation. Several State courts had theretofore repudiated the Statute, and the early legislation of these States failed to recognize the existence of charitable trusts. The failure of the famous Tilden trust devising several millions for charitable purposes to the city of New York under a decision of the Court of Appeals of New York led in 1893 to legislation in that State and similarly situated States restoring the old English system of charitable trusts. Indeed, since then the American courts have generally been more liberal than the English courts in their interpretation of what uses may be regarded as charitable. The policy involved in the English mortmain statutes finds its counterpart in different types of American statutes. Some restrict the amount of prop erty a charitable corporation may hold ; others prohibit a testator from giving more than a certain portion of his fortune to charity; and still others invalidate all gifts to a charity made within a brief period before the death of the donor.

There are numerous distinctions between English and American law concerning the rights of the trustee, of which the more im portant may be noted. Unlike the English rule, the trustee even in the absence of a provision in the trust deed for remuneration, is entitled either by statute or under equity rules to a reasonable compensation for his services. Such remuneration is commonly calculated on a commission basis, and the trustee possesses a lien upon the trust property for his services. Two or more trustees are entitled to one commission only. Strict rules, however, pre vent a trustee from deriving any personal benefit from his trustee ship by action antagonistic to the best interests of the beneficiary.