domicile of the settlor, the trustee or the cestui que trust may be, and whatever the place where the contract was made may be.

His

M. Travers did not propose any remedy for such a situation. study is limited to point out the conflict of laws in the matter and to show the errors committed by the French tribunals both in the understanding of the principles of the trust and in the application of the local law in those cases where validity of the trust was recognized.

Some fourteen years later, Mademoiselle Therese Lion, a French lawyer, studied the same problem to reach exactly the same conclusion. Her words were:

The constitution of a trust by English subjects on property situated in France is void. (Journal de Droit International, (Clunet) 1923, p. 677.)

However, both M. Travers and Mlle. Lion state that the tendency of the French courts is to recognize the validity of trusts created by aliens, provided the respective contracts do not contain any clause which violates the French law.

More recently, another Frenchman, Prof. Pierre Lepaulle, who has published a number of important works on the subject of trusts, says in the introduction to one of them:

Before the war, trusts rarely crossed the frontier of AngloSaxon countries. Today they give rise in France to almost daily problems.

Professor Lepaulle does not agree with the conclusions of M. Travers and Mlle. Lion and he is rather of the opinion that there are no insurmountable obstacles in the French law against the validity of trusts. He maintains, as indicated by the title of one of his monographs, that there are "Civil Law Substitutes for Trusts." But on the other hand, such substitutes are partial and imperfect. They can only be resorted to by way of analogy and by forcing, as it were, the meaning and scope of certain concepts or institutions of the civil law. Thus, for instance, in a certain type of trust the trustee may be held to be a mandatary, in other cases, a guardian; in others, a testamentary executor, an usufructuary, a mortgagor or a depositary. On the other hand, these so-called "substitutes" are found and used only when it is a question of enforcing the trust act in the civil law country. But the gist of the problem is that no contract exists within the scope of the civil law that is the direct and complete equivalent of the Anglo-American trust. This means that in civil law countries there are a number of problems or juridical situations that cannot absolutely be solved or dealt with in a satisfactory manner by recourse to the instrumentalities of the civil codes, as they would be by means of a new institution based on the principles of the trust.

Of such problems or cases I presented a number of examples in a paper read before the American Foreign Law Association of New York on October 30, 1925.

In other words this great juridical, financial, commercial and civil problem of the trusts must not be confined to the passive

Traité Théorique et Pratique des Trusts en Droit Interne, en Droit Fiscal et en Droit International, Paris, Rousseau & Cie., 1932, p. VIII, 463.

THE CIVIL LAW

RECEPTION

OF TRUSTS

By Ricardo J. Alfaro*

I am sure that in many different countries governed by the civil law, courts were frequently confronted with the difficulty of enforcing trusts affecting persons residing or property situated in these countries, and lawyers encountered situations and problems that could only be adequately solved by means of an institution similar to the trust feature of the Anglo-American law.

At the time I was proposing a trust law for the Republic of Panama I received a letter from the manager of one of the local banks, who is as well a lawyer, wherein he stated:

That the common law trust or something analogous thereto is desirable, almost necessary here, goes without saying. Almost daily there come up instances of inconvenience and even of injustice, because we do not have it. You in the practice of law have seen many such, and I would be willing to state that we bankers see as many or even more instances where it is impossible to accomplish some sound and worthy object because there is no such thing as a trust in this jurisdiction. I have often wondered why no attempt has been made to introduce it and have presumed that it was due to the inherent difficulty of adapting a peculiar institution of one system of jurisprudence to another and very different system; but on reading your draft of law, it looks simpler than I had supposed.

In France the problem of enforcing foreign trusts within the national jurisdiction arose with considerable frequency. Several cases of importance were decided by the French tribunals between 1880 and 1928 in which the question of the validity of trusts was examined and decided in different ways.

In the year 1909 the noted French jurist, Maurice Travers, discussed the matter in an excellent article published in the Revue de Droit International Privé (Darras-Lapradelle, 1909, pp. 521-533).1 With great juridical perspicacity the author studied the validity of trusts created by aliens on property subject to the French law, or by French citizens on property situated outside France. He reached the conclusion that trusts of the latter category are valid insofar as there is nothing in the French law that voids such a contract executed by French citizens to produce its effects outside French territory. But as to the former he gives this unequivocal opinion:

On the contrary, trusts created on personal or real property situated in France are, at least in the case we have examined, 1.e., where the trustee has the legal ownership, null and void in the eyes of the French law, whatever the nationality and the *Former President of the Republic of Panama and Minister of Panama at Washington. This article is an address that was delivered to the Committee on Latin American Law of the American Bar Association, Section of International and Com parative Law, on November 16, 1938.

De la validité, au point de vue du droit Francais, des trusts crées par des étrangers sur des bien, soumis a la loi francaise ou par des Francais sur des bien situés hors de France, par Maurice Travers, Avocat a la Cour de Paris, Docteur en Droit, lauréat de l'Institut.

1

doubtless a universally admitted notion that the immediate source of the trust is the use. So much so, that it has been said that the best definition of the trust is the one Lord Coke gave of the use. But I agree with our distinguished friend, Dr. Colvin, when he says in an erudite monograph that "the general conception of the systems of uses and trusts in England was made possible by the acquaintance of the clerical Chancellors with the Roman fidei commissa, and they were used for the same purpose, i.e., to evade the narrow rules of strict law as to legacies and succéssions."5

If we examine the elements which gave birth to the two institutions, we find the following points of similarity:

1. The cause:

Laws which in some measure restrict the freedom of individuals to transfer property, by succession or otherwise, to certain heirs or persons;

2. The purpose: To evade such restrictions;

3. The instrumentality:

An intermediary person not attained by the restrictions, in whom confidence is reposed; the Roman fiduciarius and the English trustee;

4. The method: A transfer of property made to such intermediary; 5. The charge: An obligation imposed upon the intermediary agent

to apply or dispose of the property so transferred as directed by the testator or settlor; and

6. The subject: A person for whose benefit the property is received, administered or disposed of by the fiduciary or trustee.

Side by side with these common elements, there are modalities which may cause and in fact have caused profound differences as to the effects of each one of the two institutions in the civil life of the countries where they have been in force, but such differences do not affect the substance of the analogy. Therefore, the presumption that the old English Chancellors were enabled by their knowledge of the Roman Law to devise the means of evading the statutes of mortmain, as successfully as the ancients had evaded the restrictions of the inheritance laws, is one that cannot but appeal very strongly at least to the Latin mind.

THE SELECTION OF A NAME

In carrying into effect the purpose of grafting the principles of the trust on the legislation of civil law countries it was necessary before proceeding to adopt a name for the new institution. After thinking the matter over I decided that the best thing to do was to preserve the good old Latin term fidei commissum, which has its direct equivalent in all the romance languages. Fidei committere means in English to commit by reason of faith or confidence, to entrust. Hence, fidei commissum, etymologically, is the equivalent of trust. Direct use of the English word could be resorted to. But apart from the fact that the use of foreign words in legislative texts is somewhat awkward and inconvenient, it happens that the word trust in contemporary language has an altogether unsympathetic connotation. In this respect I recall that when my paper on the adaptability of the trust was read before the Third Pan American Scientific Congress held at Lima in 1924, one of the delegates very indignantly arose to 5H. Milton Colvin, Roman and Civil Law Elements in Sources of the law of the United States, Cedan, Padova, 1935.

aspect of interpreting more or less happily foreign trusts in order to give them validity in civil law countries. The problem must be tackled in its active phase of enabling the inhabitants of said countries to avail themselves of the principles of such a flexible, ingenious, ample, multifarious and safe institution, in order to satisfy a great many needs that can find no satisfaction under the rigid institutions of the civil law.

This was the problem that preoccupied me some twenty years ago, while practicing law in Panama City. Cases on which I was consulted or of which I was informed, showed conclusively that either they had to be solved by complicated, cumbersome and inefficacious methods, or else that they could not be solved at all. The little I had read about the Anglo-Saxon trust convinced me that such an institution could solve all those cases in a completely satisfactory manner and that, therefore, it was a very desirable thing to find some way of adapting the principles of the Anglo-American trust to our own civil legislation.

Until the year 1916 when the Republic of Panama formulated its own Civil Code, which follows the general lines of the excellent Spanish Code of 1889, Panama's civil relations were governed by the Colombian Code of 1873, based on the Chilean Code drafted by the celebrated jurist and humanist, Andrés Bello, in the middle of the XIX century. The Colombian Code, like the Chilean and other codes based on the latter, is peculiar in that, contrary to all other codes adopted after the Code Napoleon, it contains a whole chapter devoted to the subject of fidei commissa. This appears in Chapter I, of Title 8, Liber II, which has for its caption "Of limitations of ownership and primarily of fiduciary property."3 But the fidei commissum recognized and regulated by the Chilean and the Colombian Code is substantially the old Roman fidei commissum, which was exclusively an act affecting estates, and therefore producing its effects only after the deach of the creator. This antiquated institution could not meet the many necessities of modern life. What was needed above all was to make the fidei commissum an act inter vivos. If hereditary property could be bequeathed by a testator to a person in whom confidence was reposed for the benefit of another person, why could not property be transferred by its owner during his life to that same person for the benefit of a third party? I could see no reason for it and the story of the English uses and of the modern trust made it clear to me that such a transfer for such a purpose could be accomplished. Therefore it was only a matter of transforming the Latin, fossilized fidei commissum into a lively, useful, up-to-date institution fashioned after the Anglo-Saxon trust.

I could not see any essential difficulty in accomplishing such a purpose, since there is such a similarity between the elements of the Roman fidei commissum and those of the English uses and trusts. A great number of authors reject the theory that the origin of the trust must be sought in the Roman fidei commissum.4 Other authors see its source in the Germanic "Treuhand" or "Salman. And it is

The Civil Code of the Republic of Panama, translated by Frank L. Joannini, Isthmian Canal Commission, Washington, 1905.

4 The notation that uses and trusts were derived from the Roman law, as was generally stated in the textbooks of fifty years ago, has been completely exploded." Austin W. Scott, Pifty Years of Trusts in "Selected Essays on the Law of Trusts," Cambridge, 50 Harvard Law Review 75.

doubtless a universally admitted notion that the immediate source of the trust is the use. So much so, that it has been said that the best definition of the trust is the one Lord Coke gave of the use. But I agree with our distinguished friend, Dr. Colvin, when he says in an erudite monograph that "the general conception of the systems of uses and trusts in England was made possible by the acquaintance of the clerical Chancellors with the Roman fidei commissa, and they were used for the same purpose, i.e., to evade the narrow rules of strict law as to legacies and succéssions."5

If we examine the elements which gave birth to the two institutions, we find the following points of similarity:

1. The cause: Laws which in some measure restrict the freedom of individuals to transfer property, by succession or otherwise, to certain heirs or persons;

2. The purpose: To evade such restrictions; 3. The instrumentality:

An intermediary person not attained by the restrictions, in whom confidence is reposed; the Roman fiduciarius and the English trustee;

4.

The method: A transfer of property made to such intermediary; 5. The charge: An obligation imposed upon the intermediary agent to apply or dispose of the property so transferred as directed by the testator or settlor; and

6. The subject: A person for whose benefit the property is received, administered or disposed of by the fiduciary or trustee.

Side by side with these common elements, there are modalities which may cause and in fact have caused profound differences as to the effects of each one of the two institutions in the civil life of the countries where they have been in force, but such differences do not affect the substance of the analogy. Therefore, the presumption that the old English Chancellors were enabled by their knowledge of the Roman Law to devise the means of evading the statutes of mortmain, as successfully as the ancients had evaded the restrictions of the inheritance laws, is one that cannot but appeal very strongly at least to the Latin mind.

THE SELECTION OF A NAME

In carrying into effect the purpose of grafting the principles of the trust on the legislation of civil law countries it was necessary before proceeding to adopt a name for the new institution. After thinking the matter over I decided that the best thing to do was to preserve the good old Latin term fidei commissum, which has its direct equivalent in all the romance languages. Fidei committere means in English to commit by reason of faith or confidence, to entrust. Hence, fidei commissum, etymologically, is the equivalent of trust. Direct use of the English word could be resorted to. But apart from the fact that the use of foreign words in legislative texts is somewhat awkward and inconvenient, it happens that the word trust in contemporary language has an altogether unsympathetic connotation. In this respect I recall that when my paper on the adaptability of the trust was read before the Third Pan American Scientific Congress held at Lima in 1924, one of the delegates very indignantly arose to 5H. Milton Colvin, Roman and Civil Law Elements in Sources of the Law of the United States, Cedan, Padova, 1935.