TITLE IX. TRUSTS. CHAPTER I. Trusts in general. II. Trusts for the benefit of third persons. CHAPTER I. TRUSTS IN GENERAL. ARTICLE I. Trust, what, and how created. III. Obligations of third persons. ARTICLE I. TRUSTS, WHAT, AND HOW CREATED. SECTION 937. Trusts, voluntary or involuntary. 938. Voluntary trust defined. 939. Involuntary trust defined. 940. Author of trust and trustee, who may be. 941. What constitutes one a trustee. 942. For what purpose a trust may be created. 943. Voluntary trusts how created, as to author of trust. 945. Involuntary trustee, who is. 946. Involuntary trust resulting from negligence, &c. § 937. Trusts are: 1. Voluntary; 2. Involuntary. trust defin § 938. A voluntary trust is an obligation arising from a Voluntary personal confidence reposed by one, who is called the ed. author of the trust,' in another who is called the trustee, for the benefit of a person who is called the beneficiary. 1 The phrase "author of the trust" is cumbrous. Perhaps "trustor" would be a good substitute, but we have preferred not to insert a new term of this kind. Lewin, Hill, and other writers, call the creator of the trust the "settlor," a very objectionable word. Involuntary trust defin ed. Trustor and trustee, who may be. What constitutes one a trustee. For what purpose a trust may be created. Voluntary trust how § 939. An involuntary trust is an obligation of the same nature imposed by law without regard to the consent of the trustee. An involuntary trustee, who becomes such through any fault of his own, has all the obligations without any of the rights of a voluntary trustee. § 940. The author of the trust may be its beneficiary, but the trustee cannot. One of several co-beneficiaries may however be trustee for the others.' 1See ex parte Clutton, 17 Jur., 988. § 941. Every one who voluntarily assumes a relation of personal confidence with another is deemed a trustee within the meaning of this chapter,' not only as to the person who reposes such confidence, but also as to all persons of whose affairs he thus acquires information which was given to such person in the like confidence, or over whose affairs he, by such confidence, obtains any control.3 2 1 Gardner v. Ogden, 22 N. Y., 343; Anderson v. Lemon, 8 N. Y., 236; Moore v. Moore, 5 N. Y., 256; Blisset v. Daniel, 10 Hare, 493, 536. 2 Gardner v. Ogden, 22 N. Y., 350. 3 Bulkley v. Wilford, 2 Clark & Fin., 102. § 942. A trust may be created for any purpose for which a contract may lawfully be made, except as prescribed by the titles on USES AND TRUSTS and on TRANSFERS. § 943. A voluntary trust is created, as to its author and created, as beneficiary, by any words or acts of its author indicating with reasonable certainty: to trustor. As to trustee. 1. An intention on the part of the author of the trust to create a trust; 2. The subject, purpose, and beneficiary of the trust.' 944. It is created, as to the trustee, by any words or acts of his, indicating with reasonable certainty: 1. His acceptance of the trust, or his acknowledgment, founded upon a valuable consideration, of its existence; 2. The subject, purpose, and beneficiary of the trust. Day v. Roth, 19 N. Y., 453. § 945. One who wrongfully detains a thing is an involun- Involuntary tary trustee thereof, for the benefit of the owner.' 1 Brown v. Lynch, 1 Paige, 147; see Anderson v. Lemon, trustee, who is. ing from negligence, &c. § 946. One who, being employed by another, by his ig- Involuntary norance, negligence or fraud, gains an advantage at the expense of his employer, or of any person whom his employer intended to benefit, holds all that he thus gains as an involuntary trustee for the person who would otherwise have possessed it.' 1 1 Bulkley v. Wilford, 2 Clark & Fin., 102, 177, 181. The § 946. One who, by negligence, gains an advantage ARTICLE II. OBLIGATIONS OF TRUSTEES. SECTION 947. Trustee's obligation to good faith. 948. Trustee not to use property for his own profit. 949. Liability to account for profits, &c. 950. Trustee's interest adverse to that of beneficiary. 951. Gifts from beneficiary to trustee. 952. Trustee not to assume a trust adverse to interest of beneficiary. 955. Presumptions against trustees. 956. Trustee's responsibility for co-trustee. 957. Trustee mingling trust property with his own. obligation faith. § 947. In all matters connected with the trust, the trustee Trustee's is bound to act in the highest good faith toward the benefi- to good ciary. He may not obtain any advantage over the latter in such matters by the slightest misrepresentation, concealment,' threat or adverse pressure of any kind. Trustee not to use pro § 948. The trustee may not use or deal with the trust perty for his property for his own profit, in any manner.' own profit. Holridge v. Gillespie, 2 Johns. Ch., 33; Van Horne v. Liability to profits, &c. Anderson v. Lemon, 8 N. Y., 236; Burhans v. Van 949. If he uses or disposes of the trust property for account for his own purposes, he must account for the profits so made,' or pay interest, at the option of the beneficiary, besides restoring the property originally taken by him. Trustee's 2 2 1 Docker v. Somes, 2 Myl. & K., 665; Crawshay v. Collins, 15 Ves., 218. Duffy v. Duncan, 32 Barb., 593; Mumford v. Murray, 6 Johns. Ch., 452. Heathcote v. Hulme, 1 Jac. & W., 128. § 950. He may not take part in any transaction concerninterest ad- ing the trust, in which he, or any one for whom he acts as that of the agent, has an interest adverse to that of the beneficiary,' except as follows: verse to beneficiary. 1 Ex parte Bennett, 10 Ves., 399, 400; N. Y. Central Ins. Co. v. National Pro. Ins. Co., 14, N. Y., 85. 2 Gardner v. Ogden, 22 N. Y., 327; Moore v. Moore, 5 N. Y., 256; Schenck v. Dart, 22 N. Y., 423; Lewis v. Hillman, 3 H. of L. Cas., 607, 629; Aberdeen R. R. Co. v. Blaikie, 1 Macq., 461; Rothschild v. Brookman, 5 Bligh (N. S.), 190, 197, 202; Ex parte James, 8 Ves., 337. 1. When the beneficiary, having capacity to contract, with a full knowledge of the motives of the trustee,* and of all other facts concerning the transaction which might affect his own decision, and without the use of any influence on the part of the trustee," permits him to do so;" 1 Campbell v. Walker, 5 Ves., 678; 13 id., 601. 2 Coles v. Trecothick, 9 Ves., 247. 3 Coles v. Trecothick, 9 Ves., 246; Randall v. Errington, 10 Ves., 427; Morse v. Royal, 12 Ves., 373. Gibson v. Jeyes, 6 Ves., 276. Dobson v, Racey, 8 N. Y., 218. 2 2. When, the beneficiary not having capacity to contract,' the supreme court, upon the like information of the facts, grants the like permission ; 8 3. When some of the beneficiaries having capacity to contract, and some not having it, the former grant permission for themselves, and the supreme court for the latter, in the manner above prescribed. § 951. He may not use the influence which his position Gifts from gives him to obtain gifts from the beneficiary. Huguenin v. Basely, 14 Ves., 271; Walmesley v. Booth, § 952. No trustee, so long as he remains in the trust, may undertake another trust adverse in its nature to the interest of his beneficiary, without the consent of the latter. § 953. If a trustee acquires any interest adverse to that of his beneficiary in the subject of the trust, he must immediately inform the latter thereof, and may be at once removed. § 954. Every violation of the provisions of the preceding sections of this article by a trustee, is deemed a fraud. beneficiary to trustee. Trustee not a trust to assume adverse to interest of beneficiary Trustee acquiring interest adverse to that of ben eficiary. Trustee guilty of a fraud, when. Presumption against 955. All transactions between a trustee and his beneficiary, during the existence of the trust, or while the influ- truste ence acquired by the trustee remains, by which he obtains. any advantage from his beneficiary, are presumed to be entered into by the latter without sufficient consideration, and under undue influence. Morse v. Royal, 12 Ves., 369; Randall v. Errington, mingling perty with § 956. If the trustee wilfully and unnecessarily mingles Trustee the trust property with his own, so as to constitute himself trust proin appearance its absolute owner, he is liable for its safety his own. in all events. Duffy v. Duncan, 32 Barb., 593. 957. A trustee is not responsible for the acts of a cotrustee, in which he has had no part. Lewin on Trusts, 302; Leigh v. Barry, 3 Atk., 584; Trustee's responsibility for cotrustee. |