Comparative Law Series

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.

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 3The 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 W&8 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, so 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;

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 58. Milton Colvin, Roman and Civil Law Elements in Sources of the Law of the United States, Cedam, Padova, 1935.

protest against my attempt to fasten the octopus of monopolies onto the Latin American Republics!

Once a name was adopted, the next question was to define the new institution in such a way that the definition met these three requirements: First, that it was easily understood by people who were not familiar with either the trust or the Common Law; second, that it came within the structure, the terminology and the peculiarities of the civil law; and third, that it was broad enough to embrace in its scope virtually the same field covered by the trust.

Now, in order to arrive at such a definition, it was indispensable to interpret as closely as possible and express in accordance with the character of the civil law, first, the nature of the property conveyed in trust; and, second, the nature and character of the institution.

THE CIVIL LAW PERCEPTION OF TRUSTS

The first thing by which the Latin mind is struck in studying the institution of the trust is that it involves a double conception of ownership, the trustee being the "legal owner," according to the Common Law, while the beneficiary holds what is called "the equitable title." In other words, in the same patrimony there is recognized a theoretical or conventional title in the trustee and a real and substantive right in the beneficiary or cestui que trust. This division of the right of ownership is naturally linked with the distinction between Common Law and Equity typical of the Anglo-Saxon juridical system.

All of these concepts are extraneous to the juridical Latin mind. We do not have a common law, but a code or exclusively statutory system. Administration of Equity as something distinct and separate from the administration of Justice, is unknown in our juridical organization. Justice, as the old Romans said, is "the constant and perpetual will to give every one his due." (Constans et perpetua voluntas suum cuique tribuere.) Therefore, we conceive justice as

"It is interesting to note that while the modern conception of Equity as juridical system is altogether Anglo-Saxon, yet its original conception is seen as a development of the Roman law. An American jurist and scholar of great learning, Charles Kerr, gives this lucid view of the Roman conception of Equity within the unity of justice:

The Jus Civile and the Jus Gentium represent the two great phases of Roman development. The Jus Civile was the law of the city, the law that governed the municipality, applicable only to the citizens of a Roman community. But gradually, as Rone developed into a world empire, the Civil Law became the Jus Gentium, the law of mankind. The Romans themselves fully recognized the distinction. The one bound only Roman citizens, while

the other bound all who came under Roman domination. Out of the Jus Gentium came the early conception of equity. There could not, under the impress of the Greek influence, be one kind of justice for a Roman citizen and another for a Roman subject. The Code of Nature never found recognition in the Roman system. With the Roman the edict was law. There was, however, even in the harsh development and execution of the Roman civil and criminal administration of law, a philosophical substratum discoverable in the Roman idea of the rule of reason. The result being that justice, equitable in form and application, is purely Roman. By no other process could harmony have been produced. (Charles Kerr, The Philosophical Side of the Law, in the Virginia Law Review, March 1926.

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.

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.

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