side of the purposes of this book, and the two classes, resulting and constructive trusts, are here touched upon only to round out the treatment of the general subject as a whole. § 400. When a Trust Is Implied There are many cases where the courts imply a trust from the nature of the transaction and from the words used. If in any case it can fairly be implied that a trust arrangement was intended, the courts will enforce a trust. Usually such trusts arise from the use of what are called "precatory" words in wills. It happens many times that a testator makes a bequest to someone and adds, "I desire," or some other words indicating the same thing, that the legatee shall pay the income or a part of the income or a special sum of money to another. In most of the states any such expression is held to show an intention to create a trust, and the implied trust will be carried into effect by declaring the first taker a trustee for those whom the testator desired to benefit. The following words have been held to justify an implied trust: "wish and request," "entreat," "most heartily entreat," "authorize and empower," "recommend," and "trust and confide." Such language is held to show an intention that a trust should be created. The words are held to be a polite form of command rather than merely a request. The question is always: What was the intention of the testator? And if this intention can be gathered from the will, no such trust estate will be implied. Where the intention is not clear, and to imply a trust is likely to bring to pass what the testator desired, a trust will be implied. § 401. Wills Should Avoid Ambiguity If a testator intends to create a trust he should do so by using the usual words "in trust," and should thus make sure that there is no doubt as to what he really means. If instead he wishes to leave it to the discretion of the legatee and not to create a trust, it is a simple matter so to express it. It is also easy to express a wish or request in ambiguous shape, thereby giving the court much trouble in deciding whether or not it creates a trust, for: 1. Precatory words may create a trust. 2. Discretionary expressions may prevent a trust from being implied. 3. Failure or uncertainty in the object may be an element that will prevent an implied trust." The testator should point out the objects, the property, and the way in which it is to go, so clearly that his intention cannot be doubted. Trusts are sometimes implied when property is given to a parent for the care and maintenance of his family or children. This is a peculiar form of trust, for the amount to be used for the beneficiaries is uncertain and the trustee is entitled to any residue. Where a legacy is left to a person to buy a house, to start a business, or to pay his way through college, the legatee takes it absolutely, and free of any trust, and may apply it to other purposes. A court cannot supervise expenditures. It is worth while to repeat that definiteness in all matters affecting money or property saves much trouble. A few well chosen words will save costs, litigation, and possible failure of a good plan. § 402. 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." • Hill on Trustees (4th Am, ed.), p. 73. 8 39 Cyc. 26. When in order to do justice it is necessary to imply a trust, it is a resulting trust; that is, from the circumstances a trust results. If a trustee used trust funds to purchase real estate in his own name, it is presumed that he holds it as a trustee for the original cestui que trust. A trust results from his action. If a partner uses the firm funds to buy a piece of land, and he takes title in his own name, there is a resulting trust in favor of the partnership. If an estate is taken in the name of one person, while the price is paid by another, there is a resulting trust in favor of the person who furnished the price, unless there is some good reason otherwise to explain the transaction. § 403. Constructive Trusts Under certain circumstances of fraud, the courts, to right the wrong, construe a trust. That is, a constructive trust is a trust forced upon a party who has obtained property by fraud in favor of the person who has been defrauded. If anyone, by fraud, deceit, or crooked dealing of any kind, secures a conveyance or transfer of another's property to himself, he will be held to have made himself trustee for the benefit of the one who has been defrauded, and a court of equity will force him to account for income or to do whatever a trustee could be compelled to do in similar case. If a guardian bought property of his ward, a court of equity would construe it as prima facie fraudulent and would make the guardian a trustee of the property for the benefit of his ward. If an attorney had dealings with his client, they would be viewed with suspicion and the attorney might be held to be a trustee. If an agent employed to buy a property for his principal buys it for himself, he will be held to hold as a trustee for his principal. Broadly, no one will be allowed to hold a benefit acquired by fraud or a breach of his duty. The cases where this doctrine has been invoked are manifold, and courts of equity avoid closely defining the fraud on which they will act, in order to prevent the ill-disposed from evading the letter of the definition. The leading principle of this remedial justice is by way of equitable construction to convert the fraudulent holder of property into a trustee, and to preserve the property itself as a fund for the purpose of recompense. REVIEW QUESTIONS 1. When is a trust implied? How are implied trusts classified? What are implied trusts, proper? What is a resulting trust? What are constructive trusts? Which classes of trusts are discussed in this book? 2. What are precatory words? "I leave my entire personal estate to my wife Isabel Lloyd, in confidence that she will in her discretion provide an adequate support for my niece Ada during her life." In your opinion, would this be an implied trust? If the widow gave the niece $500 per annum, would a court of equity be likely to increase the amount? 3. How can a testator avoid possible lawsuits and ill-feeling? How can a legacy be left for a special purpose? 4. What is a resulting trust? Give a case where the courts would construe a resulting trust? What is the object of the court in implying a resulting trust? 5. When do the courts construe a trust? Give a case where a trust would be construed. Why do courts of equity avoid defining fraud too closely? Perry on Trusts, § 170. CHAPTER XLVI THE TRUST PROPERTY § 404. Property That May Be Held by a Trustee Every kind of valuable property, both real and personal, that can be assigned at law may be the subject matter of a trust. Every kind of vested right which the law recognizes as valuable may be transferred in trust, as a receipt for a medicine, the copyright of a book, a patent right, a trade secret, or growing crops.' Generally, anything that can be bought or sold may be assigned in trust. § 405. Personal Property Outside of State If the subject matter of the trust were a herd of thoroughbred cattle on leased land in Kentucky and these had been left by will to a citizen of New York, in trust for the testator's wife, also a citizen of New York, the trustee would take under the will and would be under the control of the Surrogate's Court of New York. Having jurisdiction over the parties, this court could enforce the execution of the trust. § 406. Real Estate Outside of State If part or all of the trust estate is land in another state, and the trustee is within the jurisdiction of the court, the court will enforce its decrees. A trust created by a citizen of, say, Massachusetts, by will probated in Massachusetts, would give that probate court the right to regulate and control the administration of the trust estate, though both the trustee and the trust estate should 1 Perry on Trusts, § 67. |