In some cases there is trouble in telling when a trust has been perfected so that the creator cannot recall it. There is some conflict in the decisions on this point. When a deed of trust has been executed and delivered and nothing more remains to be done by the grantor, the trust is complete and beyond recall. In case of stocks and bonds, a duly executed transfer and delivery to the trustee would complete the trust. A deposit in a savings bank in the name of the depositor as trustee for a named beneficiary, accompanied by notice to the beneficiary or to somebody representing him, would be sufficient to create a trust. A voluntary deposit of one's own funds nominally as trustee for another, but without notice to that other, will not create a trust. In New York it is held that such a deposit without notice to the beneficiary could be revoked at any time before death, but that at death the gift would go to the beneficiary. A delivery of the pass-book to the beneficiary at any time would pass the title and end any right to revoke.

In all such cases the creator should do whatever he intends to do, positively and completely. If such an arrangement is not to be permanent, the creator of the trust should reserve the right to revoke it. If this is done, the trust may be terminated at any time during the life of the creator. The usual language in such cases is "reserving, however, the right to revoke and recall such trust at any time during the life of said grantor." Any language that expressed clearly the same intention would suffice.

A man may create a trust for himself, the funds being placed in the hands of a financial corporation, usually in trust, to pay the income of the same to the creator during his life and after his death to other beneficiaries, or at his death. the whole property to be transferred to persons or institutions designated by the creator of the trust. The power to revoke should be expressly reserved if it is so desired.

§ 396. Revoking a Trust

A completed trust cannot be revoked without the consent of all the beneficiaries, unless the right to revoke has been expressly reserved. If some of the cestuis que trust are not yet born or are not of age, the trust cannot be revoked for lack of their consent.

If there is any reason for believing that the creator of the trust was unduly influenced or was wrongly advised, or that the power of revocation was omitted by reason of fraud, accident, or mistake, a court of equity will set the trust aside.

If a power of revocation has been reserved, it must be exercised as prescribed, but if merely the right to revoke is reserved to the creator of the trust, he should revoke by an instrument equal in formality and dignity to the instrument by which the trust was created.

§ 397. An Agreement to Create a Trust

If a contract were entered into for a valuable consideration, to create a trust for the benefit of the party giving the consideration or for a third party, the contract would be enforcible and the party obligating himself would be compelled to carry out the agreement. In such case the resulting trust would not strictly be a voluntary trust, though in effect it would be the same.

When there is no consideration, equity will not enforce a promise or an executory trust.

§ 398. Trustees to Carry out Subscription Agreements

Another case of a contract trust is where several parties agree to contribute specified amounts to trustees to form a corporation to build a church, or even to carry out some business operation. In all such cases the contract is a legal contract and can be enforced as any other contract is enforced.

The trust so created is an express trust, the terms of which

may be set forth in the contract to create the trust or in a further instrument signed by the trustees. The interest of the cestuis que trust may be evidenced by transferable certificates signed by the trustees and based on the formal trust agreement. Such a trust was the original Standard Oil Trust, which was declared illegal only because of its illegal purpose-to restrain competition. Such a trust for a legal purpose is not uncommon and has some advantages as a means of business association, whereby the creators and cestuis que trust can invest their means and at the same time avoid partnership liability. They have been most extensively used in Massachusetts for associations holding real estate.2

REVIEW QUESTIONS

1. What is a declaration of trust? In what two ways may a trust in land be created?

2. Can a trust in land be partly written and partly oral? What is a latent ambiguity? What is a patent ambiguity?

3. What is a testamentary trust? What is its usual object? Outline its form. Phrase directions to sell land. To invest the proceeds in securities.

4. What is a trust made before death called? Why is the word "voluntary" used in this connection? How would a deed of trust be executed? According to what laws should a deed of trust be executed?

5. Can a man be compelled to execute a declaration of trust? Can a declaration of trust be revoked? In your state, how could a savings bank deposit be made an effective trust for another? How can a power to revoke be reserved? How can a man create a trust for himself? Can such a trust be revoked? 6. How can a complete trust be revoked? When will a court of

If the reader desires to study this phase of the subject further he can consult the following later works: Thompson, Business Trusts as Substitutes for Business Corporations; Wrightington, Unincorporated Associations; Sears, Trust Estates as Business Companies; Chandler, Express Trusts Under the Common Law; and Wilgus, Corporations and Express Trusts as Business Organizations (an article in 13 Mich. Law Review, p. 70).

equity set a trust aside? Where a right to revoke has been legally reserved, how should it be exercised?

7. Can a binding agreement to execute a trust be made? Will such an agreement be enforced? What may make it void?

8. May trustees enforce subscription agreements? May this form be used to create a business organization? How may the interests of the subscribers be evidenced? Where has this form been used extensively?

CHAPTER XLV

IMPLIED TRUSTS

§ 399. Trusts That Are Implied

In contradistinction to express trusts, there are cases where the courts imply a trust: (1) from the language used, or (2) from the circumstances, or (3) to remedy an attempted fraud. These three cases of implied trusts are outlined as follows:

1. Trusts implied from the language used. These are known simply as "implied trusts." Implied trusts, proper, are "trusts that the courts imply from the words of an instrument where no express trust is declared, but such words are used that the court infers or implies that it was the purpose or intention of the parties to create a trust."

These are

2. Trusts resulting from the circumstances. termed "resulting trusts." "A 'resulting trust' is a trust raised by implication or construction of law, and presumed to exist from the supposed intention of the parties and the nature of the transaction." 2

3. Trusts construed by the courts to remedy an attempted fraud. These are known as "constructive trusts." "Constructive trusts are forced by the courts upon the trustee for the purpose of working out right and justice or frustrating fraud. They have none of the elements of an express trust, but arise entirely by operation of the law without reference to any actual or supposed intention of creating a trust and often directly contrary to such intention.” 8

1

Excepting only the first class, the subject matter is out

39 Cyc. 26.

$39 Cyc. 27.

• Ibid.