CHAPTER XL THE NATURE OF TRUSTS § 356. Trusts-Definitions A trust is a legal arrangement by which a person known as the "trustee" holds property for the benefit and advantage of another, known as the "beneficiary" or, in legal phrase, as the cestui que trust. The parties to a trust are: (1) the creator, (2) the trustee, and (3) the beneficiary or cestui que trust. The property or subject matter may be real estate or money, goods, chattels, or choses in action. Anything that can be held legally may be the subject of a trust. Wherever the legal estate or interest is in one person and the equitable interest is in another, a trust exists. It is called a "trust" because it is founded on trust and confidence in the trustee, that he will carry out the wishes of the creator of the trust as expressed in the will or the deed of trust. A trust is not a contract and therefore no suit can be brought in a court of law for what is called a "breach of trust," but in a court of equity a trust can be enforced, and hence all litigation concerning trusts is conducted in the courts of equity or chancery. A beneficiary or cestui que trust holds what is termed in law an "equitable title." To explain this requires that some definition be given of the legal and technical distinction between common law and equitable titles. The vital distinction between trust estates and all other ordinary estates is that in every trust there are two interests. Both these interests are spoken of as estates. That of the trustee is known as the legal estate and that of the beneficiary as the equitable estate. As the legal owner of the property the trustee may be personally liable for any nuisance created by the property or conducted on the property. At the same time the trustee is not allowed to derive any benefit from the property or from the trust. On the other hand, it is not intended that the trusteeship should become a personal burden to the trustee. All the expense which the trusteeship involves, such as repairs, insurance, taxes, legal expense, etc., may be paid for out of the trust funds. § 357. Common Law Titles The common law of England, from which most of our own law has been derived, was simple and direct. It did not recognize anything but direct ownership by the man in possession of property. If property were left by will to Arthur Howe, "in trust," to collect the rents and income and to pay them over to the testator's widow, the common law courts would not enforce the trust, and if Arthur Howe failed to pay over the profits to the widow the courts of common law could give no relief. So far as the common law was concerned, such a thing as property held "in trust" did not exist. It recognized that Arthur Howe had the legal title, and that was the only title the common law courts would enforce. Because the common law would not assist the beneficiary of a trust, and because in many other ways it had no flexibility or adaptability to an advancing civilization, those who could not right their wrongs in the common law courts petitioned the king as the fountain of justice to give them relief. The king referred these various complaints as they arose to his chancellor. The king's chancellor was a church dignitary and was well pleased to administer the principles of the Roman or civil law in which all dignitaries of the church were trained. |