1902 Encyclopedia > Trust

Trust




TRUST. In Roman and English law alike that legal relation between two or more persons implied in the word trust was of comparatively late growth. The trust of English law is probably based upon a combination of the Roman conceptions of usus and fideicommissum. To usus is perhaps due the name as well as the idea of that right over property, coordinate with the right of the nominal owner, possessed by the person having the use. To fidei-commissum appears to be due the name as well as the idea of that confidence reposed in another which is the essence of the modern trust. Usus was in Roman law a personal servitude, or right of one person over the land of another, confined to his personal wants and without the right to the produce and profits which ususfructus carried. It has little in common with the use of English law but the name and the conception of a dual ownership. The fideicom-missum is more important; see ROMAN LAW, vol. xx. p. 707. By the legislation of Justinian the law of legata was practically assimilated to that of fideicommissa. The only thing that distinguished the one from the other was the mode in which the gift was made : if by words of direct bequest, it was a legatum, if by precatory words, a fideicommissum. It may be noticed, as an illustration of the course afterwards taken by the law in England, that fideicommissa in favour of the church were so far favoured over others that if paid over by mistake they could not be recovered. In addition to usus and fideicommissum, the Roman division of ownership into quiritary and bonitary (to use words invented at a later time) may perhaps to some extent have suggested the English division into legal and equitable estate. The two kinds of ownership were amalgamated by Justinian. Legal and equitable estate are still distinct in England, though attempts have been made in the direction of amalgamation. The gradual manner in which the beneficiary became subject to the burdens attaching to the property of which he enjoyed the benefit was a feature common to both the Roman and the English system.
Uses in Early English Law, —The use or trust is said to have been the invention of ecclesiastics well acquainted with Roman law, the object being to escape the provisions of the laws against MORTMAIN (q.v.) by obtaining the conveyance of an estate to a friend on the understanding that they should retain the use, i. e., the actual profit and enjoyment of the estate. Uses were soon ex-tended to other purposes. They were found valuable for the defeat of creditors, the avoiding of attainder, and the charging of portions. A use had also the advantage of being free from the incidents of feudal tenure: it could bo alienated inter vivos by secret conveyance, and could be devised by will. In many cases the feoffee to uses, as he was called, or the person seised to the use of another, seems to have been specially chosen on account of his rank and station, which would enable him to defy the common law and protect the estate of his cestui que use, or the person entitled to the beneficial enjoyment. The Act of 1 Ric. II. c. 9 was directed against the choice of such persons. This alienation of land in use was looked upon with great disfavour by the common law courts, in whose eyes the cestui que use was only a tenant at will. Possibly the ground of their refusal to recognize uses was that the assizes of the king's court could only be granted to persons who stood in a feudal relation to the king. The denial of the right followed the denial of the remedy. The use was on the other hand supported by the Court of Chancery, and execution of the confidence reposed in the feoffee to uses was enforced by the court in virtue of the general jurisdiction which as a court of conscience it claimed to exercise over breach of faith. Jurisdiction was no doubt the more readily assumed by ecclesiastical judges in favour of a system by which the church was generally the gainer. A double ownership of land thus gradually arose, the nominal and ostensible ownership,—the only one acknowledged in the courts of common law,—and the beneficial ownership protected by the Court of Chancery. The reign of Henry Y. to a great extent corresponds with that of Augustus at Rome, as the point of time at which legal recognition was given to what had previously been binding only in honour. The means of bringing the feoffee to uses before the court was the writ of subpcena, said to have been invented by John de Waltham, bishop of Salis-bury and master of the rolls in the reign of Richard II. By means of this writ the feoffee to uses could be compelled to answer on oath the claim of his cestui que use. The doctrine of the Court of Chancery as to the execution of a use varied according as there was transmutation of possession or not. In the former case it was unnecessary to prove consideration ; in the latter, generally a case of bargain and sale, the court would not enforce the use unless it was executed in law, —that is, unless there was a valuable considera-tion, even of the smallest amount. Where no consideration could be proved or implied, the use resulted to the feoffor. This theory led to the insertion up to a recent date in deeds (especially in the lease of the lease and release period of conveyancing) of a nominal consideration, generally five shillings. Lands either in possession, reversion, or remainder could be granted in use. Most persons could be feoffees to uses. The king and corporations aggregate were, however, exceptions, and were entitled to hold the lands dis-charged of the use. On the accession of Richard III., who from his position of authority had been a favourite feoffee, it was necessary to pass a special Act (1 Ric. III. c. 5), vesting the lands of which he had been feoffee either in his co-feoffees or, in the absence of co-feoffees, in the cestui que use. The practical convenience of uses was so obvious that it is said that by the reign of Henry VII. most of the land in the kingdom was held in use. The freedom of uses from liability to forfeiture for treason must have led to their general adoption during the Wars of the Roses. The secrecy with which a use could be transferred, contrary as it was to the publicity required for livery of SEISIN (q.v.) at common law, led to the inter-ference of the legislature on several occasions between the reigns of Richard II. and Henry VIII., the general tendency of the legislation being to make the cestui que use more and more subject to the burdens incident to the ownership of land. One of the most important statutes was the Statute of Mortmain (15 Ric. II. c. 5), forbidding evasion of the Statute De Religiosis of Edward I. by means of feoff-ments to uses. Other Acts enabled the cestui que use to transfer the use without the concurrence of the feoffee to uses (1 Ric. III. c. 1), made a writ oi forrnedon maintainable against him (1 Hen. VII. c. 1), rendered his heir liable to wardship and relief (4 Hen. VII. c. 17), and his lands liable to execution (19 Hen. VII. c. 15). At length in 1535 the famous Statute of Uses (27 Hen. VIII. c. 10) was passed. The preamble of the statute enumerates the mischiefs which it was considered that the universal prevalence of uses had occa-sioned, among others that by fraudulent feoffments, fines, recoveries, and other like assurances to uses, confidences, and trusts lords lost their feudal aids, men their tenancies by the curtesy, women their dower, manifest perjuries in trials were committed, the king lost the profits of the lands of persons attainted or enfeoffed to the use of aliens, and the king and lords their rights of year, day, and waste, and of escheats of felons' lands. To remedy this state of things it was enacted, inter alia, that, where any person was seised of any here-ditaments to the use, confidence, or trust of any other person by any means, the person having such use, confidence, or trust should be seised, deemed, and adjudged in lawful seisin, estate, and possession of such hereditaments. Full legal remedies were given to the cestui que use by the statute. He was enabled to distrain for a rent charge, to have action, entry, condition, &c. The effect of this enactment was to make the cestui que use the owner at law as well as in equity (as had been done once before under the ex-ceptional circumstances which led to 1 Ric. III. c. 5), provided that the use was one which before the statute would have been en-forced by the Court of Chancery. For some time after the passing of the statute an equitable as distinct from a legal estate did not exist. But the somewhat narrow construction of the statute by the common law courts in Tyrrel's case (1557) enabled estates cognizable only in equity to be again created. In that case it was held that a use upon a use could not be executed ; therefore in a feoffment to A and his heirs to the use of B and his heirs to the use of C and his heirs only the first use was executed by the statute. The use of B being executed in him, that of C was not acknowledged by the common law judges ; but equity regarded C as beneficially entitled, and his interest as an equitable estate held for him in trust, corresponding to that which B would have had before the statute. The position taken by the Court of Chancery in trusts may be compared with that taken in MORTGAGE (q.v.). The Judicature Act, 1873, while not going as far as the Statute of Uses and combining the legal and equitable estates, makes equit-able rights cognizable in all courts. From the decision in Tyrrel's case dates the whole modern law of uses and trusts. In modern legal language use is restricted to the creation of legal estate under the Statute of Uses, trust is confined to the equitable estate of the cestui que trust or beneficiary.
3 The use, as in later times the trust, was, however, forfeited to the crown on attainder of the feoffee or trustee for treason.
4 It was adopted in Ireland exactly a century later by 10 Car. I.
Uses since 15S5.—The Statute of Uses is still the basis of conveyancing. A grant in a deed is still, after the alterations in the law made by the Conveyancing Act, 1881, made "to and to the use of A." The statute does not, however, apply indiscriminately to all cases, as only certain uses are executed by it. It does not apply to leaseholds or copyholds, or to cases where the grantee to uses is anything more than a mere passive instrument, e.g., where there is any direction to him to sell the property. The seisin, too, to be executed by the statute, must be in another than him who has the use, for where A is seised to the use of A it is a common law grant. The difference is important as far as regards the doctrine of POSSESSION (q. v.). Constructive possession is given by a deed operating under the statute even before entry, but not by a common law grant (at any rate sufficient to entitle the grantee to be registered as a voter), until actual receipt of rent by the grantee. The operation of the Statute of Uses was supplemented by the Statute of Inrolments and that of Wills. (See WILL.) The Statute of Inrolments (27 Hen. VIII. c. 16) enacted that no bargain and sale should pass a freehold unless by deed indented and inrolled within six months after its date in one of the courts at Westminster or with the custos rotulorum of the county. As the statute referred only to freeholds, a bargain and sale of a lease-hold interest passed without inrolment. Conveyancers took advan-tage of this omission (whether intentional or not) in the Act, and the practical effect of it was to introduce a mode of secret aliena-tion of real property, the lease and release, which was the general form of conveyance up to 1845. (See REAL ESTATE, SALE.) Thus the publicity of transfer, which it was the special object of the Statute of Uses to effect, was almost at once defeated. In addition to the grant to uses there were other modes of conveyance under the statute which are now obsolete in practice, viz., the covenant to stand seised and the bargain and sale. Under the statute, as before it, the use has been found a valuable means of limiting a remainder to the person creating the use and of making an estate take effect in derogation of a former estate by means of a shifting or springing use. At common law a freehold could not be made to commence in futuro ; but this end may be attained by a shifting use, such as a grant (common in marriage settlements) to A to the use of B in fee simple until a marriage, and after the celebration of the marriage to other uses. An example of a springing use would be a grant to A to such uses as B should appoint and. in default of and until appointment to C in fee simple. The difficulty of deciding where the seisin was during the suspension of the use led to the invention of the old theory of scintilla juris, or continued possibility of seisin in the grantee to uses. This theory was abolished by 23 and 24 Vict. c. 38, which enacted that all uses should take effect by force of the estate and seisin originally vested in the person seised to the uses. The most frequent instances of a springing use are powers of appointment, usual in wills and settlements. There has been much legislation on the subject of powers, the main effect of which has been to give greater facilities for their execution, release, or abandonment, to aid their defective execution, and to abolish the old doctrine of illusory appointments.
Trusts.—A trust in English law is denned by Mr Lewin, adopt-ing Coke's definition of a use, as "a confidence reposed in some other, not issuing out of the land, but as a thing collateral, annexed in privity to the estate of the land, and to the person touching the land, for which cestui que trust has no remedy but by subpoena in Chancery." The term trust or trust estate is also nsed to denote the beneficial interest of the cestui que trust. The term truster is not used, as it is in Scotland, to denote the creator of the trust. A trust has some features in common with CONTRACT (q.v.); but the great difference between them is that a contract can only be enforced by a party or one in the position of a party to it, wdiile a trust can be, and generally is, enforced by one not a party to its creation. It has more resemblance to fideieommissum. But the latter could only be created by a testamentary instrument, while a trust can be created either by will or inter vivos; nor was there any trace in Roman law of that permanent legal relation which is suggested by the position of trustee and cestui que trust. The heir, too, in Roman law was entitled, from 70 A.D. to the reign of Justinian, to one-fourth of a hereditas fidcicommissaria as against the bene-ficiary, while the very essence of the trust is its gratuitous charac-ter. Trusts may be divided in more than one way, according to the ground taken as the basis of division. One division, and per-haps the oldest, as it rests on the authority of Bacon, is into simple and special, the first being where the trust is simply vested in a trustee and the nature of the trust left to construction of law, the second where there is an act to be performed by the trustee. Another division is into lawful and unlawful, and corresponds to Bacon's division into intents or confidences and frauds, covins, or collusions. A third division is into public and private, the former being synonymous with charitable trusts. A division often adopted in modern text-books and recognized by parliament in the Trustee Act, 1850, is into express, implied, and constructive. An express trust is determined by the person creating it. It may be either executed or executory, the former where the limitations of the equitable interest are complete and final, the latter where such limita-tions are intended to serve merely as minutes for perfecting the settlement at some future period, as in the case of marriage articles drawn up as a basis of a marriage settlement to be in conformity with them. An implied trust is founded upon the intention of the person creating it; examples of it are a resulting trust, a precatory trust, and the trust held by the vendor on behalf of the purchaser of an estate after contract and before conveyance. In this case the vendor is sometimes called a trustee sub modo and the purchaser a cestui que trust sub modo. A constructive trust is judicially created from a consideration of a person's conduct in order to satisfy the demands of justice, without reference to intention. The dis-tinction between an implied and a constructive trust is not always very consistently maintained. Thus the position of a vendor towards a purchaser after contract is sometimes called a construc-tive trust. The present law governing trusts rests upon the doc-trines of equity as altered by legislation. Its great importance has led to its becoming one of the most highly developed departments of equity. The devolution of successive interests in wills and settlements is almost wholly attained by means of trusts.
Who may be a Trustee or Cestui que Trust.—The modern trust is considerably more extensive in its operation than the ancient use. Thus the crown and corporations aggregate can be trustees, and personalty can be held in trust. Provision is made by the Muni-cipal Corporations Act, 1882, for the administration of charitable and special trusts by municipal corporations. The crown does not appear to be a trustee to as complete a degree as a subject may be. Unsuccessful attempts' have recently been made to impress the crown, or a secretary of state as agent of the crown, with trusts of funds voted by parliament for the public service, of booty of war granted by royal warrant, and of money paid over by a foreign state in pursuance of a treaty. There are certain persons who for obvious reasons, even if not legally disqualified, ought not to be appointed trustees. Such are infants, lunatics, persons domiciled abroad, felons, bankrupts, and cestuis que trustent. The appointment of any such person, or the falling of any existing trustee into such a position, is generally ground for application to the court for ap-pointment of a new trustee in his place. Any one may be a cestui que trust except a corporation aggregate, which cannot be a cestui que trust of real estate without a licence from the crown.
Creation and Extinction of the Trust.—A trust may be created either by act of a party or by operation of law. Where a trust is created by act of a party, the creation at common law need not be in writing. The Statute of Frauds (see FRAUD) altered the common law by enacting that all declarations or creations of trusts or con-fidences of any lands, tenements, or hereditaments shall be mani-fested and proved by some writing, signed by the party who is by law enabled to declare such trust, or by his last will in writing, or else they shall be utterly void and of none effect. Trusts arising or resulting by implication or construction of law are excepted, and it has been held that the statute applies only to real estate and chattels real, so that a trust of personal chattels may still be declared by parol. The declaration of a trust by the crown must be by letters patent. Trusts created by will must conform to the require-ments of the Wills Act (see WILL). Except in the case of charitable trusts, the cestui que trust must be a definite person. A trust, for instance, merely for keeping up family tombs is void. Alteration of the trust estate by appointment of a new trustee could up to 1860 only be made where the instrument creating the trust gave a power to so appoint, or by order of the Court of Chancery. But now by the Conveyancing Act, 1881 (superseding Lord St Leonards's Act of 1860), the surviving or continuing trustee or trustees, or the personal representative of the last surviving or continuing trustee, may nominate in writing a new trustee or new trustees. On such appointment the number of trustees may be increased. Existing trustees may by deed consent to the discharge of a trustee wishing to retire. Trust property may be vested in new or continuing trustees by a simple declaration to that effect. By the Conveyancing Act, 1882, a separate set of trustees may be appointed for any part of the property held on distinct trusts. Trusts created by opera-tion of law are either those wdiich are the effect of the application of rules of equity or those which have been constituted by a judicial authority. They include resulting and constructive trusts. A resulting trust is a species of implied trust, and consists of so much of the equitable interest as is undisposed of by the instrument creating the trust, which is said to result to the creator and his representatives. An example is the purchase of an estate in the name of the purchaser and others, or of others only. Here the beneficial interest is the purchaser's. An example of a constructive trust is a renewal of a lease by a trustee in his own name, where the trustee is held to be constructively a trustee for those interested in the beneficial term. An instance of a constructive trust upon which the courts have often been called upon to decide is the fiduciary relation between the promoter of a proposed joint-stock company and the members of the company wdien formed. The other trusts falling under the head of trusts by operation of law would be those imposed upon a trustee by order of a court, even though they are imposed in pursuance of provisions contained in a trust created by a party. Such would be the trusts which have come within the cognizance of the court by virtue of the Trustee Act, 1850, or in any other way. The powers of the court over trusts have been much extended by legislation. The Act of 1850 (13 and 14 Vict. c. 60) enabled the Court of Chancery to appoint new trustees where expedient, and to make vesting orders in many cases where such orders could not previously have been made, as where a trustee was a lunatic, or an infant, or refused to convey. This Act was extended by the Trustee Extension Act, 1852 (15 and 16 Vict. c. 55). By the Conveyancing Act, 1881, a trustee ap-pointed by the Chancery Division is to have the same powers as if he had been originally appointed a trustee by the instrument creating the trust. The Bankruptcy Act, 1883, enables the court to appoint a new trustee in the place of a bankrupt trustee. Besides being duly created, it is necessary for the validity of the trust that it should be a lawful one. An unlawful trust is one which contravenes the policy of the law in any respect. Examples of such trusts are trusts for a corporation without licence, for a per-petuity, and for purposes subversive of morality, such as trusts for illegitimate children to be hereafter born. Superstitious uses (see ROMAN CATHOLIC CHUECH, vol. xx. p. 632) also fall under this head. There are also certain trusts which are avoided by statute under particular circumstances, such as settlements in fraud of creditors (see BANKRUPTCY, SETTLEMENT). The law cannot be evaded by attempting to constitute a secret trust for an unlawful purpose. If an estate be devised by words prima, facie carrying the beneficial interest, with an understanding that the devisee will hold the estate in trust for such a purpose, he may be compelled to answer as to the secret trust, and on acknowledgment or proof of it there will be a resulting trust to the heir-at-law. In the case of an advowson suspected to be held for the benefit of a Roman Catholic patron, there is a special enactment to the same effect (see QUAKE IMPEDIT). The rules of equity in charitable trusts (which include all those mentioned in the preamble to 43 Eliz. c. 4) are less strict than those adopted in private trusts. Charitable trusts must be lawful, e.g., they must not contravene the Statutes of Mortmain ; but a wider latitude of construction is allowed in order to carry out the intentions of the founder, and they will not be allowed to fail for want or uncertainty of objects to be benefited. The court, applying the doctrine of cy pres, will, on failure of the original ground of the charity, apply the funds as nearly as possible in the same manner. On this principle gifts originally made for purely charitable purposes have been extended to educational pur-poses. Further, trustees of a charity may act by a majority, but ordinary trustees cannot by the act of a majority (unless specially empowered so to do) bind a dissenting minority or the trust pro-perty. A trust estate is subject as far as possible to the rules of law applicable to a legal estate of a corresponding nature, in pursuance of the maxim, "Equity follows the law." Thus trust pro-perty is assets for payment of debts, may be taken in execution, passes to creditors in bankruptcy, and is subject to dower and curtesy, to the rules against perpetuities, and to the Statutes of Limitation. This assimilation of the legal and equitable estates has been produced partly by judicial decisions, partly by legisla-tion. A trust is extinguished, as it is created, either by act of a party or by operation of law. An example of the former mode of extinction is a release by deed, the general means of discharge of a trustee when the purposes of the trust have been accomplished. Extinction by operation of law takes place when there is a failure of the objects of the trust: e.g., if the cestui que trust die intestate without heirs or next of kin, the trustee retains the property dis-charged of the trust if it be real estate, if it be personalty it falls to the crown. Equitable interests in real estate abroad are as a rule subject to the lex loci rei sitae, and an English court has no jurisdiction to enforce a trust or settle a scheme for the administra-tion of a charity in a foreign country. An English court has, however, jurisdiction to administer the trusts of a will as to the whole real and personal estate of a testator, even though only a very small part of the estate, and that wholly personal, is in England. This was decided by the House of Lords in a well-known case in 1883.2
Rights and Duties of the Trustee.—The principal general properties of the office of trustee, as given by Mr Lewin, are these :—(1) A trustee having once accepted the trust cannot afterwards renounce. (2) He cannot delegate it. (3) In the case of co-trustees the office must be exercised by all the trustees jointly. (4) On the death of one trustee there is survivorship : that is, the trust will pass to the survivors or survivor. (5) One trustee shall not be liable for the acts of his co-trustee. (6) A trustee shall derive no personal benefit from the trusteeship. The office cannot be renounced or delegated, because it is one of personal confidence. It can, however, be resigned, and recent legislation, as has been already stated, has given a retiring trustee large powers of appointing a successor. In the case of the death of a single or last surviving trustee of real estate, the trust estate by the Conveyancing Act, 1881, now devolves upon his personal representative instead of upon his heir or devisee. The liability of one trustee for the acts or defaults of another often raises very difficult questions. A difference is made between trustees and executors. An executor is liable for joining in a receipt pro forma, as it is not necessary for him to do so, one executor having authority to act without his co-executor ; a trustee can show that he only joined for conformity, and that another received the money. A trustee's receipt in writing is, under the Conveyancing Act, 1881 (superseding Lord St Leonards's Act of 1860), a sufficient discharge, and exonerates the person paying from seeing that the money paid is duly applied according to "the trust. If one trustee be cognizant of a breach of trust committed by another, and conceal it or do not take active measures to protect the cestui que trust's interests, he will be liable for the breach of trust. An indemnity
1 See CHARITIES, where the preamble of the statute is set out in full.
2 Ewing v, Orr-Ewing, Lavj Reports, 9 Appeal Cases, 34.
clause is now implied by statute in every trust deed, but this does not protect a trustee against liability which would attach at law. A trustee, if ho commit a breach of trust at the request of his cestui que trust, may secure himself by an indemnity, provided that the cestui que trust has been fully informed of the facts of the case, and is not under any disability to consent, such as infancy. The rule that a trustee is not to benefit by his office is subject to some ex-ceptions. He may do so if the instrument creating him trustee specially allows him remuneration, as is usually the case where a solicitor is appointed. Where the trust entirely fails, as has been said above, the trustee is indirectly remunerated by his right to retain the trust estate. The main duties of trustees are to place the trust property in a proper state of security, to keep it (if per-sonalty) in safe custody, and to properly invest and distribute it. A trustee must be careful not to place himself in a position where his interest might clash with his duty. As a rule he cannot safely purchase from his cestui que trust while the fiduciary relation exists between them. In all purchases with trust money he is bound to obtain the best price, unless wdiere an Act of Parliament, like the Housing of the Working Classes Act, 1885, specially authorizes sale at an under value. Investments by trustees demand special notice. The general rule is that a trustee must take as much care of the trust property as of his own. He is, therefore, justified in following the usual course of business adopted by prudent men in making investments, e.g., by employing a stock-broker in the ordinary way. At the same time he has not an uncontrolled power of investment, for (unless authorized by the instrument creating the trust) he cannot lend trust money on personal security or invest in shares of a private company. A trustee of shares may be liable as a beneficial owner, even though his name appears on the register of the company as a trustee. By recent legislation trust-ees, where not expressly forbidden by the instrument creating the trust, have either an absolute or qualified right to invest in certain securities. They have an absolute right to invest in real securities in the United Kingdom (but not on a second mortgage), in charges or mortgages under the Improvement of Land Act, 1864, in con-sols, exchequer bills, or any security the interest whereon is guar-anteed by parliament, in Bank of England, Bank of Ireland, East India, and Metropolitan Board of Works stock. They have a qualified power of investment (that is, an extension of powers already given in the instrument) in debentures or debenture stock of railway and other companies, and of corporations and local authorities under the Local Loans Act, 1875, in mortgage deben-tures under the Mortgage Debenture Acts of 1865 and 1870, and in securities of the Isle of Man Government. Trustees under the Settled Land Act, 1882, have somewhat larger powers as to railway stock. In many cases there are restrictions on investment in stock certificates payable to bearer, although in authorized securities. A power of varying investments is generally implied, though not expressly given by statute, as in Scotland. The duties of trustees in the distribution of trust funds have been made less onerous by the Trustee Relief Acts of 1847 and 1849, which enabled trustees or a majority of them to pay into the Bank of England to the account of the particular trust any moneys belonging to the trust, thus bringing the property within the jurisdiction of the court, from which it can only be obtained on petition. Similar powers were conferred upon trustees of charities by 18 and 19 Vict. c. 124. By more recent Acts (22 and 23 Vict. c. 35, 23 and 24 Vict. c. 38) application for advice may be made by a trustee to a judge of the Chancery Division on a petition or summons. The liability of a trustee to his cestui que trust on any claim for property held on an express trust or in respect of breach of such trust is not barred by any statute of limitations, 36 and 37 Vict. c. 66, s. 26 (2). The powers of trustees have lately been considerably extended by the Conveyancing Act, 1881, and the Settled Land Act, 1882, in other matters besides those that have been already noticed. One of the most important of the new powers is that of compounding, compromising, or abandoning claims relating to the trust. For the trustee in bankruptcy, see BANKRUPTCY. The trustee to pre-serve contingent remainders, at one time common in conveyancing, has ceased to be necessary (see REMAINDER, TERM). A bare trustee is one to whose office no duties were originally attached, or who, though such duties were attached, would on the requisition of the cestui que trust be compellable to convey the estate to him or by his direction. The term is used in some Acts of Parliament, for instance the Vendor and Purchaser Act, 1874.3
3 The phrase "bare trust" occurs as long ago as 16S6, Nevil v. Saunders,
Rights and Duties of the Cestui que Trust.—These may be to a great extent deduced from wdiat has been already said as to the correlative duties and rights of the trustee. The cestui que trust has a general right to the due management of the trust property, to proper accounts, and to enjoyment of the profits. He can as a rule only act with the concurrence of the trustee, unless he seeks a remedy against the trustee himself. Thus the trustee must be a party to an action brought in respect of the trust estate, and must join in presenting a petition in bankruptcy on account of a debt due to the estate, but the cestui que trust on giving indemnity can require the trustee to lend his name as a party. He may also require the trustee to execute conveyances of the legal estate according to his directions. Trust property, if parted with by the trustee in fraud of the trust may be followed by the cestui que trust, even into the hands of a purchaser for value with notice of the trust. The cestui que trust may lose his rights by fraud, by laches, and by concurrence or acquiescence in a breach of trust. Though no lapse of time bars his remedy against the trustee personally, he cannot, by the terms of the Real Property Limitation Act, 1874, recover land or rent vested in a trustee upon an express trust after twelve years from the time when the right accrued or six years after the cesser of any disability. The equitable right of the cestui que trust has sometimes been recognized by statute in cases where it would be manifestly unjust that he should suffer dis-ability by virtue of his having merely an equitable interest. The cestui que trust has the right of voting for members of parliament, and is qualified to serve as a juror. On bankruptcy of the trustee the trust estate is not affected. Nor was it affected even before the Felony Act, 1870, by the conviction and attainder of the trustee for felony. Attainder of the trustee for treason involved, however, forfeiture of a trust estate of inheritance. (See TREA-SON.) The recognition of the cestui que trust as owner is still not complete. Thus no notice of a trust is recognized in certain public documents, as the books of the Bank of England and the registers kept under the Merchant Shipping Act, 1854, the Com-panies Act, 1862, the Land Transfer Act, 1875, and the Colonial Stock Act, 1877.
Procedure.—This is regulated almost entirely by legislation. Proceedings relating to a trust may be brought in different courts of first instance,—(1) the Chancery Division of the High Court of Justice or the Chancery Court of the County Palatine of Lancaster, (2) a court of bankruptcy, (3) a county court, (4) a criminal court. (1) By the Judicature Act, 1873, § 34, the execution of trusts, charitable or private, is assigned to the Chancery Division. The rules of the Supreme Court, 1883, provide for special indorse-ment in an action on a trust, for the parties to the action, for interrogatories and pleading, and for proceeding by originating summons. (See SUMMONS. ) Forms of pleading are given in the appendix to the rules. An injunction rather than an action may sometimes be the proper remedy, as in the case of threatened breach of trust. The Trustee Relief Acts, the Trustee Act, and Lord St Leonards's Act of 1859 provide for proceeding by petition or sum-mons. Applications under the Conveyancing Act must be in chambers in the first instance, and so must applications under the Trustee Relief Acts where the money or securities in court do not exceed £1000 or £1000 nominal value. The procedure in charit-able trusts differs to some extent from that in use in private trusts. The most usual course of proceeding is by information in the name of the attorney-general. Another mode is by petition under Sir Samuel Romiliy's Act, 52 Geo. III. c. 101, superseding the cumbrous procedure by commission which had been previously in Use under 43 Eliz. c. 4. A third mode is under the powers of the Charitable Trusts Acts, the first of which was passed in 1853. No proceeding under these Acts can be taken without the authority of the charity commissioners. (2) The equitable debt due from the trustee to the cestui que trust will support a petition in bankruptcy, and is a debt provable in bankruptcy. An order of discharge in bankruptcy does not release the bankrupt from any debt or liability incurred by means of fraudulent breach of trust, nor does it release a co-trustee of the bankrupt. (3) The County Courts Equitable Jurisdiction Act, 1865, confers on county courts the authority of the High Court in the execution of trusts and proceedings under the Trustee Acts where the trust estate does not exceed £500 in amount or value. By the County Courts Act, 1867, applications may be made at chambers for transfer to a county court of an action pending in the High Court where the property does not exceed £500 in amount or value. The same Act allows trust funds not exceeding that limit to be paid into the post office savings bank in a county court town in the name of the registrar. A county court has jurisdiction in charitable trusts where the income of a charity does not exceed £50. The county court rules, 1886, contain orders regulating the practice with respect to both private and charitable trusts. Powers similar to those given to county courts in England have been conferred upon the civil bill courts in Ireland. (4) At common law trustees committing a fraudulent breach of trust could not be punished criminally. This was altered by the Fraudulent Trustees Act of 1857, now superseded by the Larceny Act, 1861, under which a trustee on an express trust, whether public or private, created by deed, will, or instru-ment in writing, who with intent to defraud converts to his own use or benefit or the use or benefit of any other person than the cestui que trust, or for any purpose other than the public or charit-able purpose, or otherwise disposes of or destroj's such property or any part thereof, is guilty of misdemeanour and punishable with penal servitude for a term not exceeding seven years. No prosecu-tion is to be commenced without the sanction of the attorney-general or—where civil proceedings have been already taken against the trustee—without the sanction of the civil court. The offence cannot be prosecuted at quarter sessions.
Scotland.—The history of the law differs considerably from that of England, though perhaps the position of the Scotch trustee is now not very different from that of the trustee in England. The Statute of Uses did not apply to Scotland, since neither that nor any similar legislation was necessary in a system in which law and equity were administered by the same tribunals. Trusts seem to have existed from time immemorial, and have been frequently regulated by statute. The policy of the English Statute of Frauds was no doubt intentionally imitated in the Act 1696, c. 25, enacting that no action of declarator of trust should be sustained as to any deed of trust made for thereafter, except upon a declaration or back-bond of trust lawfully subscribed by the person alleged to be trustee and against whom or his heirs or assignees the declarator should be intended, or unless the same were referred to the oath of the party simpliciter. The Act does not apply to all cases, but only to those in which by the act of parties documents of title are in the name of a trustee, but the beneficial interest in another. The person creating the trust is called the truster, a term unknown in England. On the other hand the term cestui que trust is unknown in Scotland. The office of trustee is prima facie gratuitous, as in England, it being considered to fall under the contract of mandate. Some of the main differences between English and Scotch law are these. There is no presumption in Scotland of a resulting trust in favour of a purchaser. A trust which lapses by the failure of a beneficiary goes to the crown as ultimus heres, not to the trustee. The office of trustee is not a joint office, therefore there is no right of survivorship, and on the death of a trustee the survivors are in-competent to act, unless a certain number be declared or presumed to be a q\uorum, or the office be conferred on trustees and the accedors and survivors of them. Sometimes the concurrence of one trustee is rendered absolutely necessary by his being named sine quo non. The Court of Session may appoint new trustees, but generally appoints a judicial factor. There has been a considerable amount of recent legislation, chiefly in the direction of extending the powers of trustees and of the court, in trust matters. By 24 and 25 Vict. c. 84 (amended by 26 and 27 Vict. c. 115) an appointment of gratuitous trustees by deed or local act was to be held to include certain provisions usually included in deeds of appointment, i.e., powers of resignation and of assumption of new trustees, and provisions that the majority of trustees accepting and surviving should be a quorum, and that each trustee should only be liable for his own acts and intromissions and should not be liable for omissions. The Trusts Act, 1867 (30 and 31 Vict. c. 97), added to the common law powers of trustees by giving them authority to appoint factors and law agents, to discharge trustees who have resigned, to grant leases for a limited period, to uplift, discharge, or assign debts, to compromise claims, to grant all necessary deeds, and to pay debts due by the truster or the trust estate. It also gave the Court of Session power (exercisable by the lord ordinary in the first instance) beyond what it possessed by its nobile officium, in cases of expediency, of selling the trust estate, of granting feus or long leases, and of borrowing and excambion. Power was given to trustees to appoint additional trustees by deed of assumption, and where such assumption could not be made the court might appoint. Authority was conferred upon the beneficiary of a lapsed trust to complete title on petition. The powers of investment given to trustees have since been largely increased by the Trusts Amendment Act, 1884. They are now much the same as those allowed in England. The principal differences are that in Scotland there is a statutory power to vary securities, and that statutory investment by a Scotch trustee is not allowed in Bank of Ireland stock or on real security in Ireland. The Titles to Land Consolida-tion Act, 1868 (31 and 32 Vict. c. 101), contained provisions as to the mode of completing title by a judicial factor on a trust estate and by trustees in sequestration and as to the vesting in trustees of heritable property conveyed for religious or educational purposes. The Conveyancing Act, 1874 (37 and 38 Vict. c. 94), dealt with compositions payable by trustees on the death of a vassal, and with completion of title by the heir of a sole or last sur-viving trustee, by a successor of an ex officio trustee, and by trustees where words of conveyance are not expressed to be in favour of such trustees. Forms of documents relating to trust property will be found in Juridical Styles and in the schedules to the Acts of 1867, 1868, and 1874. A conveyance in trust may be either absolute with a back-bond or in form a conveyance in trust. A trustee is responsible for the due execution of the trust, subject to the limitations contained in 24 and 25 Vict. c. 84. The provision of the Companies Act, 1862, that no trust is to be entered on the register, does not apply to Scotland. A trustee, a member of a joint-stock company, though entered on the register as a trust disponee, may incur personal liability as a partner, unless the con-trary be expressed. Liability under such circumstances was established in the litigation which followed the suspension of the City of Glasgow Bank in 1878. A sheriff court has jurisdiction over actions of declarator, relating to questions of heritable right or title, where the value of the subject in dispute does not exceed £50 by the year or £1000 in value (40 and 41 Vict. c. 50). A judicial factor may be appointed by the sheriff court where the yearly value of the estate does not exceed £100 (43 and 44 Vict, c. 4). Fraudulent trustees are criminally liable at common law, not by statutory enactment, as in England. Adjudication on a trust bond is a mode of obtaining the decision of the Court of Session on a bond by a fictitious creditor, for the purpose of giving title to the heir, by preventing his liability to possible passive representation. It is regulated by 1695, c. 24.
United States.—In New York and some other States uses and
trusts have been abolished (with certain exceptions), and every
estate, subject to those exceptions, is deemed a legal right cogniz-
able in courts of law. The exceptions are in New York implied
trusts and express trusts to sell land for the benefit of creditors, to
sell, mortgage, or lease lands for the benefit of legatees, or for the
purpose of satisfying any charge thereon, to receive the rents and
profits of lands and apply them to the use of any person during
the life of such person or any shorter term, or to receive such
rents and profits, and accumulate the same within the limits
allowed by the law. Trusts of personalty for public purposes are
very generally allowed in States where private trusts do not exist.
Provisions similar to those of the English Statute of Frauds have
been generally adopted by the States which recognize private trusts.
Some States go further than the statute and allow the creation of
trusts (other than those arising by implication or operation of law)
only by means of will or deed. Where the trust is of real estate,
the deed must generally be registered (see REGISTRATION). Forms
of deeds of trust are given in the Statutes of Virginia and other
States. The English doctrine of cypres seems to have been adopted
only in Pennsylvania. Conveyances in trust for the settlor are
generally void against creditors by the policy of the Acts of Eliza-
beth. By the legislation of some States a freehold may commence
in fiduro without the operation of the Statute of Uses. Societies
of professional trustees, receiving a percentage of the income of the
property as payment for their trouble and liability, are frequently
recognized by law. Such soeieties are generally under an obliga-
tion to make periodical returns of their receipts and expenditure.
A public trustee as a corporation sole exists in some States. Trustee
process in the New England States is what is generally known as
garnishee process in England, that is, a means of reaching pro-
perty and credits of a debtor in the hands of third persons for the
benefit of an attaching creditor. (J. W+.)


Footnotes

Use seems to be an older word than trust. Its first occurrence in statute law is in 7 Ric. II. e. 12, in the form ceps. In Littleton " confidence " is the word employed. The Statute of Uses seems to regard use, trust, and confidence as synonymous. According to Bacon, it was its permanency that distinguished the use from the trust.
Feoffment, though the usual, was not the only mode of conveyance
to uses. The preamble of the Statute of Uses mentions fines and recoveries, and other assurances.
c. 1 (Ir.). The law of uses and trusts in Ireland is practically the same as that in England, the main differences being in procedure rather than in substantive law. 5 Dyer's B,eports, 155a.

3 The use, as in later times the trust, was, however, forfeited to the crown on attainder of the feoffee or trustee for treason.
4 It was adopted in Ireland exactly a century later by 10 Car. I.

Vernon's Hep., 415.

3 The phrase "bare trust" occurs as long ago as 16S6, Nevil v. Saunders,

The principal authority is Lewiu's Law of Trusts (8th ed., 18S5). The powers of trustees under the Conveyancing and Settled Land Acts will be found summarized in the treatises on these acts by Wolstenholme and Turner. The principal authorities 011 charitable trusts are Shelford and Tudor (1802). For the history may be consulted Bacon, Law Tracts; Reading, On the Statute of Uses ; Gilbert, On Uses ; Sanders, On Uses and Trusts ; Spence, Equitable Juris-diction, vol. i. p. 435 ; Digby, Hist, of the Uiw of Heal Property, chaps, vi. vii.








Search the Encyclopedia:



About this EncyclopediaTop ContributorsAll ContributorsToday in History
Sitemaps
Terms of UsePrivacyContact Us



© 2005-17 1902 Encyclopedia. All Rights Reserved.

This website is the free online Encyclopedia Britannica (9th Edition and 10th Edition) with added expert translations and commentaries