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property to a legatee and then add a wish, a hope, a desire, or a request, that the legatee will give or transfer a certain portion to someone else. If it seems to the court that the intention was to impose an obligation on the legatee, it will be held to be an implied trust. If, instead, the intention seems to be merely to suggest a gift, leaving it to the discretion of the legatee, no trust will be implied. (See Chapter XLV, "Implied Trusts.")

A resulting trust arises when property is purchased in the name of a party who did not own the purchase money. If a trustee took funds that he had in trust and bought land in his own name, a court of equity would imply a trust for the benefit of the one for whose benefit the funds were held. This case of property deeded to someone other than the owner of the purchase money occurs not infrequently, and the rights of the true owner are saved by the device of a resulting trust.

Another form of implied trust is where a fraud has been perpetrated and to rectify it the courts declare a constructive trust for the benefit of the person defrauded. If a guardian bought in the property of his ward in fraud of the ward's rights, the courts would imply a trust and decree that he held it as trustee for his ward. This class of trusts arises in many forms and illustrates the wide range of the powers of a court of equity in correcting fraud.

§ 366. Duration of Trusts

A private trust, that is, a trust for a man's family or dependents, that concerns only a few private persons, is limited in its duration. It is not regarded as advantageous or for the public good that property should be tied up and withdrawn from sale for long terms of years or in perpetuity. The usual limit on the duration of a private trust is a life or lives in being and twenty-one years more.

When as in New York express trusts in real estate cannot be made for a term of years, but must be made for the life

or lives of some persons living when the trust is created, the attempt to create a trust for a definite number of years is void and the trust fails. The direction in the statute prohibits any suspension "by any limitation or condition whatever, for a longer period than during two lives in being at the creation of the estate."

A public trust is one for the public good, for education, hospitals, religious institutions, or charity. Such trusts as these are not limited as to duration but may continue indefinitely. This subject is considered at greater length in Chapter LIII.

§ 367. Powers of Trustees

It is not uncommon for land to be left to trustees, in trust, to sell and invest the proceeds in good, income-producing stocks, the income to be paid over, etc. In such case the exercise of the power is imperative, and must be carried into effect. In other cases the trustees are given an optional power, which they can exercise or not at their discretion. For instance, it might be provided that "said trustees may at their discretion sell the securities included in the trust property and buy other securities with the proceeds, and in the purchase of such other securities shall not be limited to securities by statute prescribed for savings banks and trustees."

In New York the statute prescribes that every trust power must be exercised unless its execution is made to depend on the will of the trustee.

§ 368. "Trusts" as Meaning a Trade Monopoly

With many the word "trust" has an opprobrious meaning in consequence of its popular use as a designation for any kind of trade monopoly. The first large aggregations to control industry were formed by uniting under one management

Garvey v. McDevitt, 72 N. Y. 556.

practically all the important corporations engaged in the particular line, in what was literally a trust. A board of trustees was selected, composed of the shrewdest managers in the industry. Then, enough shares of stock to control each of the corporations concerned were made over to this board under a uniform trust agreement, in trust, to vote the same, to receive all profits, and to pool the same and pay over the proportionate share of the profits to each of the persons who had placed his stock in the hands of the trustees. The board of trustees elected their own men as directors of the controlled corporations and dictated their management so as effectually to prevent competition. The arrangement, the disregard of public interest, and the high-handed suppression of competitors. caused much indignation. The courts soon dissolved the trusts and directed the distribution of the stocks held in trust.7 Those interested in monopolizing industry were forced to seek other forms of combination, which they did, but the name "trust" unfortunately continued to be attached to these new forms though they were not in any sense "trusts," and so a majority of the people in this country attach an unpleasant signification to the word.

REVIEW QUESTIONS

1. What is a trust? What are the parties to a trust? What may be held in trust? What is the distinction between the legal and equitable estate? In what courts are suits relating to trusts brought?

2. Did the common law recognize trust estates? How were trust estates established?

3. What resulted from the king's chancellor taking jurisdiction of cases that the common law would not relieve? Is equity procedure simpler than common law procedure? In your state, do the same courts try both law and equity cases?

People v. North River Sugar Ref. Co., 121 N. Y. 582; State v. Standard Oil Co., 49 Oh. St. 137.

4. Under what system are suits relating to trusts bronght? What kind of title has the beneficiary of a trust?

5. What kind of title has a trustee? If the estate is land, in whose name would the deed be recorded? If there are several trustees, what effect would the death of one have?

6. What title has the cestui que trust? How can he be prevented from selling his interest?

7. What is a common reason for creating a trust? What is the instrument by which a trust may be created? Who would be likely to be selected as a trustee? When would a court of equity interfere? What could such a court do? Who may make a trust?

8. How are trusts created? What is a testamentary trust? What is a voluntary trust?

9. What is an express trust? What is an implied trust? How are express trusts in land created? Why? Can an express trust in realty be created by parol?

10. When is a trust implied? When is a resulting trust implied? When is a constructive trust implied?

11. Why is the duration of trust estates limited? What is the limit in your state? Can a trust for a specified term of years be made in your state? What is a public trust? Are these limited in duration?

12. What are the usual duties of trustees? When are such duties.

imperative? When optional?

13. How did the word "trust" come to be applied to a combination to

restrict competition?

CHAPTER XLI

WHY TRUSTS ARE FORMED

§ 369. The Objects of Trusts

Most of the trusts created are formed for a specific purpose, and when that purpose is accomplished they terminate. Their duration in most of these cases is limited by the fulfilment of their purpose. These general objects may be enumerated as follows:

1. To furnish an income for the life of the creator or for the life of his wife, or for the life of his widow, or for the life of some other relative or dependent. All such trusts would end with the death of the beneficiary.

2. To provide for minor children, till of age. All such trusts would end with the coming of age of the beneficiaries.

3. To provide an income for life, to children, grandchildren, or other relatives. All such trusts would be for the life of the beneficiaries, and could be extended thereafter until the youngest child of any of the beneficiaries came of age. This gives the general rule that no estate, legal or trust, can be held together for longer than the duration of a life or lives in being and twenty-one years after. This time may be extended in case of a child born after the death of the father, to allow for the period of gestation.

4. To conduct a business. The trust associations of Massachusetts are examples of this kind of trust. They are not limited by the foregoing rule to a life or lives in being and twenty-one years after.

5. To provide a foundation for or an income to be applied to some educational, philanthropic, or religious object.

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