CIVIL LAW SUBSTITUTES FOR TRUSTS

PiERR LEPAULLE

Trusts have now pervaded all fields of social institutions in

common law countries. They are like those extraordinary
drugs curing at the same time toothache, sprained ankles, and
baldness sold by peddlers on the Paris boulevards; they solve
equally well family troubles, business difficulties, religious and
charitable problems. What amazes the sceptical civilian is
that they do really solve them! Trusts have become so indis-
pensable to the life of the Anglo-saxon jurist that one of his
first questions when he meets a civilian is: "How do you solve
the problem that we solve in using the trust device?" The aim
of this article is to answer that question. But before answering
it, we must explain that from the mere fact that trusts do not
exist in the civil law, it does not follow that they would not be
recognized or enforced in civil law countries.
It is not the plan here to consider all the principles of con-
flicts of law which would be applicable to trusts; it will be
enough to show the approach to the problem. The law of trusts
appears to the civil law judge to have two aspects, the creation
of personal relations, and the creation of rights in rem. As
for the first, it is a firmly established principle of the civil law
that parties can assume whatever obligations they please as
long as such obligations are not considered against public policy,
and an ordinary trust is not so considered. Of course, certain
clauses of a trust may be against public policy under any system
of law. The significant thing is that in a trust qua trust there
is nothing shocking to the mind of civil law jurists, as far as
rights in personam are concerned.
Considered from the angle of rights in rem, the question ap-
pears to be an entirely different one. Rights established in
property located in a civil law country must be recognized in
that country under its own system. The question therefore is,
does the civil law have rights in rem similar enough to those
created by a trust to render recognition of the latter possible?
To that question it is impossible to give an unqualified answer,
because rights in rem vary greatly in different trusts. All de-
grees may exist between cases in which the cestui que trust has
no legal personality (trust for the care of horses, for erecting
a monument, for saying masses, etc.), and those in which the
cestui que trust has created the trust himself for his own con-
venience and has a substantial control over its administration
and duration. Hence the approach to the solution of the pres-
[1126]
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1127

ent question is to determine what are the rights of trustees

and cestuis que trust against third parties in each particular
trust, and then to see if all of these secondary rights taken to-
gether constitute a primary right in rem in the trustee and the
cestui que trust, recognized by the civil law as a heading in its
property law.
The practical application of such a method is difficult for
two reasons. The first is that we will never find a complicated
set of secondary rights in one legal system that will exactly
correspond to one primary right in another legal system. For
instance, the bundle of secondary rights called possession (pri-
mary right) in the civil law does not include all the rights that
are to be found in the bundle of rights called possession in the
common law. But if an exact identity is not possible, a sub-
stantial similarity may be reached and will suffice. France,
for instance, will only enforce within its territory rights in rem
recognized by the civil law, so that if one wants to create a ten-
ancy for life on French soil, courts will apply the rules of
usufruct, because about the same practical results will follow.
The present article will endeavor to show which civil law rights
in rem may eventually be used as a translation of the rights in
rem created by a trust.
The second reason why the comparison of rights in rem in
two different systems is delicate is that third parties, who are
always concerned with such rights, are protected by dissimilar
rules of public policy. Let us take as an example the French
rule that, as far as movable property is concerned, all bona fide
purchasers are protected even if they have not paid value.
This rule must not be considered an inherent part of each right
in rem created in France, but as an independent rule which
would also limit the common law rights in rem if they were
recognized in France. In other word, it is always difficult to
distinguish between the elements inherent in a right in rem
and those which are external to it. As the policy concerning
the protection of third parties differs with each country, this
distinction must be drawn, if a comparison is to be made possi-
ble.
If one uses such an approach, one will find, as will be shown
later, that there is at least one right in rem that is remarkably
similar to that created by a great many trusts - this is fiducia.
This technique, much closer to trusts than the fidci coinwissin
with which it is generally compared, is no longer in use, but is
still in existence and can be utilized.
Whatever may be the possibility of creating trusts under the
civil law, the fact remains that, up to the present day, very few
have been attempted. Hence the question that this article will
try to answer is: how does the civil law deal with the de facto
1128 YALE LAW JOURNAL

situations that are taken care of by means of trusts in America

and England? The form of the question determines the formula
for its solution; only a functional point of view can furnish
the answer.1 Hence we will attempt neither a historical con-
sideration, nor a comparison in the abstract of trusts with
this or that technique of the civil law. We will attempt a syn-
thesis of the ends for which trusts are created, and a determina-
tion of how far each of these ends can be reached in the civil
law, either by using one of its techniques, or by combining sev-
eral of them.
We shall consider here all types of trusts, but think it well
to abandon the traditional but unscientific classification into ex-
press, resulting, and constructive trusts. There is no clear
distinction between express and resulting trusts, since there
is no clear boundary between cases in which the intention of
the settlor is clearly expressed, those in which it is discovered
through ambiguous words, and those in which it is arbitrarily
construed through stereotyped rules of interpretation. The
-distinction between resulting and constructive trusts is equally
objectionable since artificial rules of construction are usually
nothing more than devices to promote justice.
We therefore submit another classification that seems to us
more scientific and better adapted to our present endeavour:
I. Express trusts, regularly created, in which the intention
of the parties (whether express or implied) is enforced.
These are the trusts that will be considered in the main part
of this article.
II. Express trusts, irregularly created, in which, neverthe-
less, the intention of the parties is enforced, 2 either as a result-
ing trust or 'as a constructive trust.
In such cases, the result will be practically the same as if
We will submit elsewhere (in an article to be published in the COLUMBIA
LAW REVIEW) that the functional approach is the only possible one for
the scientific study of trusts.
2 This happens in seven situations:
(a) Davies v. Otty, 35 Beav. 208 (Ch. 1865).
(b) Reardon v. Reardon, 219 Mass. 594, 107 N. E. 522 (1914).
(c) Ahrens v. Jones, 169 N. Y. 555, 62 N. E. 666 (1902).
(d) SCOTT, CASES ON TRUSTS (1919) 424, n.1.
(e) In re Davidson [1909] 1 Ch. 567.
(f) A purchase money resulting trust when the intention of the payer
was really to create a trust.
(g) When the trust instrument does not cover all the property con-
veyed to the trustee, and a resulting trust is imposed to enforce the prob-
able intent of the settlor. In re West [1900] 1 Ch. 84.
We may also include here the rare resulting trust imposed in favor of
the settlor or hi heirs when the trust fails as illegal. In such cases, it
is still the real-though subsidiary-intent of the settlor that is enforced.
Ayerst v. Jenkins, L. R. 16 Eq. 275 (1873).
 CIVIL LAW SUBSTITUTES FOR TRUSTS 11129

the trust had been properly declared. Such resulting or con-

structive trusts, therefore, are in reality an enlargement of the
ways of creating trusts. As we are not concerned with mat-
ters of form in the present article, we will treat trusts in this
category as express trusts.
III. Devices to avoid injustice when an express trust cannot
be enforced according to the intent of the settlor. Since the
civil law ignores trusts, a fortiori it cannot have special tech-
niques to cure invalid trusts. We shall, however, consider
what would be the situation if the intent of the settlor were
not enforced; in other words, what are the civil law substi-
tutes for such constructive trusts. In order to answer this we
must examine separately the different cases falling within this
category:
(a) A transfers property to B, who agrees orally to hold
it in trust for C, and B refuses to keep his word. If B may
be considered as having committed a criminal offense (for ex-
ample, embezzlement or obtaining money under false pre-
tenses), A will be allowed to prove B's oral promise and re-
cover the property. If such is not the case, B keeps the prop-
erty. A is the victim of his own trustfulness.
(b) A leaves property by will to B who orally agrees to
hold it in trust for C. The performance of the trust becomes
impossible3 In such a case B will keep the property.
If there is no substitute for trusts in cases (a) and (b), it
is because the civil law does not want any,-in other words,
its policy is that it is too dangerous to allow parol evidence to
vary the terms of a formal written document. But it must be
noted that written evidence may be supplemented by oral, and
if it may thus be proven that the cuesa of A's transfer or legacy
has been B's pronse, such transfer will be declared void for
failure of causa, and A (a), or the heirs of A (b), would get the
property, so that exactly the same result would be reached as
in the case of resulting trusts.
(c) A transfers his property by will to B who promises to
hold it in trust for C, and the performance of the trust would
be against public policy. Parol evidence will always be ad-
mitted to prove that the caw'sa was illegal or immoral. If the
proof is made, the transfer will fall and A will recover the
property. Here again the theory of cause- will be used as a
substitute for trusts of this category and the same result will
be reached.
(d) A leaves his property by will to B, asking B to hold it
for a person to be later designated. A dies without having
3 Sweeting v. Sweeting, 10 Jur. N. S.31 (Ch. 1803).
cases cited.
4 SCOTT, op. cit. supra note 2, at 432, n. 1, and
1130 YALE LAW JOURNAL

designated anyone.5 Under the civil law the property goes to

the heirs of A, the legacy being considered void, since it was
made to an undetermined person. The prohibition of legacies
to undetermined persons is then a civil law substitute for trusts
of the present class.
(e) A pays C the price of a sale made by C to B. A really
intends B to hold in trust for him. Under the civil law the
unexpressed trust could not be enforced; the only remedy that
A has is a right to reimbursement in preference to the other
creditors of B for the price which the res would bring at pub-
lic auction. A would have such a right either if C had ex-
pressly subrogated him to his rights, or if it were acknowledged
in the deed and in the receipt for the money that the payment
was made by A. Otherwise A would be without any remedy.
IV. Trusts used as devices to give additional sanction to
preexisting obligations. There are four main types of trusts
falling within this category:
(a) Cases in which equity declares a buyer constructive
trustee for the seller, the sale being vitiated by fraud, error,
duress, or incapacity of one of the parties.6 Here the substi-
tute is found in the very absence of distinction between law
and equity in the civil law: courts will declare the sale void ab
initio.
(b) Purchase money resulting trusts where the payer never
intended a trust, but wanted to make a loan to the transferee.
Gifts are not to be presumed under the civil law. The payer
has the standing of an ordinary creditor of the transferee. To
declare him a cestui que trust is in fact to make him a privileged
creditor to the detriment of other possible creditors of the
transferee. In such cases, the civil law has no substitute for
trusts, because it is not its policy to disturb the equality of
creditors where notice of priority has not been given. But if
the vendor acknowledges in writing that the purchase money
comes from a loan, and if another writing acknowledges the
fact that the loan has been made in order to buy real property,
the lender will have priority and will occupy the same position
toward third parties as that of the beneficiary of a constructive
trust. But in this case, notice of the priority would be given in
7
the public records.
(c) B promises A to sell to him his property some time
in the future, and A pays immediately. The civil law will
5
In re Boyes, 26 Ch. D. 531 (1884).
a Error: Lamb v. Schiefner, 129 App. Div. 684, 114 N. Y. Supp. 34 (2d
Dept. 1908).
Fraud: Smith v. Wright, 49 Ill. 403 (1868).
Duress: Mullin v. Mullin, 119 App. Div. 521, 104 N. Y. Supp. 323 (2d
Dept. 1907).
Incapacity: Lutey v. Clark, 31 Mont. 45, 77 Pac. 305 (1904).
7 See, for example, Art. 2103, § 2, of the French Civil Code.
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1131
reach substantially the same result as would be obtained by
declaring B trustee for A, in using the principle, "the promise
of a sale is a sale." 8
(d) Trusts used as an additional sanction to fiduciary re-
lations. If the person in whom faith has been placed has com-
mitted a breach of duty, the person for whose benefit the rela-
tion has been established will always have some remedy. In
such cases trusts are created only to afford better protection
against the fiduciary; they create a preference over creditors;
and that is why we do not find any civil law substitutes for
such trusts. This is particularly true in the present case, since
the civil law has not developed the notion of a fiduciary relation.
V. Trusts creating new obligations in order to do justice.
This category is entirely distinct from the others, in that it
involves the creation of rights without regard to the intent of
the parties. Such trusts form the transition between law and
morals. Two types of trusts fall within this category:
(a) Those where it would be shocking to let an individual
keep property wrongfully acquired. Such cases may be cov-
ered by statutes or codes of the civil law. But where there is
no legislation, the theory of immoral cazist may be used. If
this theory does not cover such a case, it is because the policy
of the civil law forbids giving the courts the power of regulat-
ing morality. 0
(b) Cases in which the application of technical rules would
be inequitable. There are in fact thiree main instances of such
cases:
1. A does not exercise an option on X's land, and allows B
to buy in his stead, upon B's promise that he will later transfer
the property to A."
2. B orally promises A that he will transfer to A the land
he is going to buy at public auction. Relying upon this promise
A does not bid at the sale.' In neither of these cases would A
have a remedy under the civil law; there again it would be
against its policy to disregard its rules of evidence.
3. A transfers real estate to B, who orally agrees to sell it
and give the purchase money to A. B sells the property and
keeps the money. 3 In such cases A would be protected under
the civil law, since the agreement between A and B would be
construed either as a sale, the price to be determined by what
B can get from a third party, or as a power of attorney granted
to B. In both cases A is considered an unpaid vendor and is
s Other implied trusts of this category may be found in U:mmznUML,
TRUSTS (8th ed. 1926) § 32.
9 For example: when the legatee has murdered the testator. Ellerzon
v. Westcott, 148 N. Y. 149, 42 N. E. 540 (189G).
10 At least openly!
"a Plumer v. Reed, 38 Pa. 46 (1860).
2
1 BoGRT, TRusTs (1921) 132, n. 53.
3. Bork v. Martin, 132 N. Y. 280, 30 N. E. 584 (1892).
1132 YALE LAW JOURNAL

a preferred creditor having substantially the same protection

as a cestui que trust undek a constructive trust.
In our study of express trusts, we will not examine those
whose function has now become obsolete, but will consider the
two legal systems as they stand at the present day. Nor will
we concern ourselves with the public trust of international law.
American publicists often consider that the United States holds
Cuba and the Philippines in trust for their inhabitants. 4
But this is no more than a figure of speech, and no one has
thought of appying the whole law of trusts to the administra-
tion of these countries. In similar instances the League of Na-
tions has adopted the civil law doctrine of mandate, which is also
largely a figure of speech. Trusts have been used in interna-
tional public law in another instance -the Dawes Plan,"
which created the office of trustee of railroad and industrial
bonds. It was indeed a sensational experiment to create a trust
to function in continental Europe. It has certainly been a
great success. Here again, the technique of mandate might
perhaps have been used, but the significant thing is that the
trust device was adopted and understood by civil law countries,
in a matter of national importance.
We will eliminate from our field of study trusts created with
the sole purpose of avoiding some regulation imposed by domes-
tic law; such devices, being a means of evading internal law,
have no international importance, and hence no substitutes in
other countries. We will pass by, therefore, such things as the
business trust formed to avoid statutory prohibition, as, for
instance, the prohibition of corporate ownership of land beyond
a certain limit. We will also leave aside funded insurance trusts,
as they are merely devices to avoid taxation, and as principles of
taxation differ widely in each civil law country. No substitute
can be had under the civil law for the type of trust designed to
avoid embarrassing legal obstacles since it is a well known
principle of the civil law that one cannot do indirectly what one
is forbidden to do directly.

I
In some trusts the aim is to assure to the beneficiary a maxi-
mum of efficiency in the management of the property given to
him. Indeed, as a general rule, the owner is in the best position
to provide for the management of his own property. As the old
proverb puts it: no one is better served than by himself ! But it
happens not infrequently that the donor does not think highly
4 MUNRO, THE GOVERNMENT OF THE UNITED STATES (Rev'd ed. 1925)
428.
I5 RAPPORT DE COMIT§ DES EXPERTS, 33.
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1133

of the beneficiary's capacity. He thinks he is below the standard,

and he creates a trust because he does not trust the beneficiary!
Now, if the latter is really below the standard, it must be be-
cause of congenital deficiency, or lack of experience, or because
other circumstances render the beneficiary incompetent. Let
us consider these three hypotheses:
A. Where the distrust of the donor is based on his belief
that the donee is congenitally deficient, he may or may not be
mistaken. If he is, it is better that he find difficulties in carry-
ing out his plan. If he is not, he should have the beneficiary
declared spendthrift, or feeble-minded. This requires some ex-
planation.
The civil law uses the notion of status to a greater extent than
the common law. The latter, under the influence of puritanism,
adheres to the idea of abstract individual equality, while the
former is not shocked by the idea of imposing on a man below
the average a status corresponding to his ability. A court can
therefore declare any individual spendthrift or feeble-minded
(both have the same status, and we shall therefore use these
two expressions indiscriminately). It is to be remarked that
such a status may be due to other reasons than mental weakness.
So, one who is blind, deaf, paralysed, or a drunkard may be de-
clared feeble-minded. Thus this power in the donor to have
the donee declared spendthrift prior to the making of the gift,
affords a civil law technique which fulfills to a certain extent
the same function as a trust.
In fact, the results of the two systems are astonishingly simi-
lar:
1. In both cases (trust and declaration of spendthriftness or
feeble-mindedness), all property-real and personal--can be pro-
tected.
2. In both there is a real control of its management by a
third party. Indeed, if property is given to one who has been
declared spendthrift or feeble-minded, he will get possession
of the res, while a cestui que trust would not; but he will need
the authorization of a curator in order to do any legal act con-
cerning this property. Accordingly, a third party entering into
a legal transaction with an unauthorized spendthrift will be no
more protected than is one who deals with a cestui que trust
under a "spendthrift trust" in the United States.
3. In both cases there are real checks on the tlird party
who has control of the property. It is needless to tell common
law lawyers how trustees are controlled. As to the curator of
the spendthrift, he is indirectly under the supervision of the
courts, since his dismissal may be asked of the courts by those
allowed by law to file a petition for a declaration of spendthrift-
ness.
1134 YALE LAW JOURNAL

4. In both cases the beneficiary is protected against his own

creditors (even in states where spendthrift trusts are not recog-
nized, the cestui que trust is protected in that the substance of
the res cannot be reached), since the spendthrift can avoid all
important legal transactions entered into without the assent of
his curator.
5. Finally, a fiduciary relation exists in both cases: in case
of a trust, between the cestui que trust and the trustee; in case
of spendthriftness, between the spendthrift and the curator. In
other words, the person who has to protect another may not deal
with him at arm's length.
In spite of these functional similarities, there exist certain
differences which are to the advantage of the trust:
1. The latter is a more adaptable device in two ways:
(a) Anyone can make a trust and impose any limitation he
sees fit. But any donor cannot have his donee declared spend-
thrift: he must be a member of the donee's family and in most
countries must be a blood relation.
(b) In the case of a trust, limitations upon the use of the
property are restricted, of course, to the property granted. But
where the beneficiary is declared spendthrift, a status is im-
posed on him, and therefore his incapacity is general.
2. The trust is more efficient in that the trustee alone has
the power of management. But the curator has not this complete
control; he only participates in the juristic acts of the spend-
thrift; one cannot act without the other, and if they disagree,
there is nothing to be done. Fortunately there is a strong ten-
dency in civil law countries to increase the power of the curator:
he is becoming more and more the real manager of the property.
In conclusion, we may say that a gift or legacy preceded by a
declaration of spendthriftness may be an adequate civil law
substitute for a trust when:
(a) the donee is clearly below the standard, so that it would
be inadvisable to let him manage his own property;
(b) the donor is a member of the family, or the spouse of
the donee;
(c) a conflict between the curator and the spendthrift ap-
pears improbable under the circumstances of the case.
B. Quite outside of the case of congenital deficiency, a donor
mdy distrust a prospective donee because of his lack of ex-
perience due to youth. In such a case, the civil law technique
of tutel fulfills the same social function as a trust. If we draw
a comparison between the two techniques from a pragmatic
point of view, we are again struck by their substantial similarity.
1. In both cases all kinds of property may be protected,-real
br personal, tangible or intangible.
2. In the case of tutela, as in the case of a trust, efficient man-
 CIVIL LAW SUBSTITUTES FOR TRUSTS 11105

agement is assured by giving a third party possession and the

right to manage the property.
3. Again, there are in both techniques, effective checks on the
manager of the property. What these checks are is immaterial,
as long as they are efficient. It suffices to say that the tittor is
supervised by a family council in some civil law countries
(France, Italy, Spain, and Switzerland, for instance), by a super-
visor appointed by the courts at the same time as the tutor and
also sometimes by a board of three lawyers (when the problem
is to compromise the claim of a minor). Moreover, another
check on the manager of the property is found in the general
mortgage imposed on his property by operation of law in favor
of the beneficiary. In short, he who is intrusted with the con-
trol of the res is submitted to checks practically as efficient in
the case of tutela, as in the case of a trust. Their difference
in form is immaterial since we are only interested in their ef-
ficiency.
4. Protection of the beneficiary against his own creditors is
assured just as well under the tztela as by the so-called "spend-
thrift trust", since all legal transactions entered into by the
minor alone can be repudiated by him even after performance,
when such transactions are detrimental to his interests.
5. In both cases a fiduciary relation exists between the man-
ager and the beneficiary,-in one case, between the trustee and
the cestui que trust, and in the other, between the tutoe and his
ward. Indeed, the expression "fiduciary relation" does not exist
under the civil law; but though the word is unknown, the idea is
present, since the thtor is not allowed to deal at arm's length
with his ward.
In spite of these substantial similarities, some differences exist
which are more or less important:
1. Tutela applies only when the beneficiary is a minor.
2. As it creates a status, it determines the management of
all the property and all the rights of the beneficiary.
3. Tvtelu. is created by operation of law. However, since
its technique is not strictly rigid, it can be adapted to the wishes
of the donor. Hence he can appoint as manager of the res some
one other than the tutor, or parents can, in their will, appoint
two tutors, etc.
4. The manager of the property is subject to greater super-
vision under the civil law. He is not only under the control
of the court as is the trustee, but he is checked by the additional
methods mentioned above (supervisor-family council-three
lawyers).
5. But the great difference is that the tutor has control over
the person of the beneficiary, while a trustee is only the man-
1136 YALE LAW JOURNAL

ager of the property. If we examine this difference more closely

however, it appears less important because:
(a) the custody of the minor can be taken away from the
tutor;
(b) although he is supposed to supervise the education of
his ward, the family council or the court has the final say;
(c) it is the family council which authorizes the marriage of
the minor, and passes upon the question of his emancipation.
C. A donor or testator may desire to give the benefit of the
res to the donee or legatee without intrusting him with its man-
agement for reasons more complex than or at least different
from those of congenital deficiency or youth. For example, a
man has a going business. He does not want it to be sold at his
death, but desires its income to go to his wife and children, none
of whom have business experience. Several civil law techniques
may be used to deal with such a situation.
L The donation or legacy with charge or under condition is
one of these. Though the idea of a personal benefit comes to
mind when one speaks of a donee or legatee, it is perfectly pos-
sible, from a legal point of view, to impose on a legatee or donee
such a charge or condition, or to deprive him of all real benefits.
A can, therefore, transfer property inter vivos or causa mortis,
with or without consideration, to B, upon the condition that B
will prudently manage the property for the benefit of C, or to
carry out any other wishes of the grantor. Such a technique
reaches substantially the same result as a trust would when
used to separate the management of the property from its bene-
ficial use:
1. Both apply equally well to real or personal property.
2. Both may be created inter vivos or causa mortis.
3. Both assure proper management of the property by in-
trusting it to one who is not the final beneficiary, but who gets
not only possession but title.
4. Both are sanctioned by the possibility of a suit for specific
performance on the part of the beneficiary against the manager
of the res.
5. Both are very adaptable devices, since the donor or testator
can provide exactly how he wants the property to be managed.
6. Both allow the management to be separated from the bene-
ficial interest.
7. Both-can be made in favor of beneficiaries undertermined
or not in being at the time of the transfer of the property to the
manager.
8. Both can provide for the turning over of the property
to a third party by the manager at some future time.
9. Both, as a general rule, leave the beneficiary free to dis-
pose of his beneficial interest as he pleases.
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1137

There exist, however, two main differences:

1. In case of donation or legacy with charge or condition,
the donor, or the heirs of the testator, can revoke the donation
for non-performance of the charge or condition, and cut off the
beneficiary entirely. No such danger exists in the case of trusts.
But is this difference advantageous to trusts? We do not
think it is, since the donor can always make a new gift to the
same beneficiary, after the revocation of the first one. If he does
not, it will be because of either a failure of the manager to per-
form his duty, or a change of mind on the part of the donor.
Such a result is so rare as to be practically negligible. More-
over, as far as it is an inconvenience for the beneficiary, it may
be an advantage for the donor, who retains a stronger hold on the
situation. The danger is much greater in case of a legacy, since
there is a strong liklihood that the heirs of the testator, or the
residuary legatee, will ask the revocation of the legacy vith
charge or condition. The answer seems to be that if the testator
fears such action, he has the power of depriving his represent-
atives of the right to ask the revocation of the legacy for non-
performance of the charge or condition, leaving them only the
right to request specific performance.
2. There is no fiduciary relation between the holder of the prop-
erty and the beneficiary of the charge; he can deal with him at
arm's length. But when a trust is created, who is distrusted?
The cestui que trust. Who is trusted? The trustee. M1oreover,
the donor or testator can always forbid the donee or legatee with
charge or condition from entering into any legal transaction with
the manager, or allow him to do so only under specified condi-
tions. The civil law does not impose upon the person on whom
the charge is laid anything more than the bona fide performance
of the duties expressly stipulated in the charge. A trustee, on
the other hand, has many duties imposed on him by law. Ac-
cordingly, the creation of a charge or condition must be more
explicit than an instrument establishing a trust.
Of course, some other differences exist between trusts and
donations or legacies with charges. For example, the trust is
linked with the property granted, while the condition imposed
on the gift may have no connection whatever with its subject-
matter. But we are not concerned with such differences. We
are not comparing legal techniques in the abstract; we are con-
sidering how far the same social functions can be performed
by them. We submit that trusts, and donations or legacies with
charge or condition, succeed equally well in separating the bene-
fits of property from its management.
II. A contract for the benefit of third parties can accomnlish
the same end, and the similarities we have enumerated above
could be repeated here, except as to two points:
1138 YALE LAW JOURNAL

1. Such a technique can here only be used inter vivos.

2. The beneficiary must be in existence at the time the con-
tract is made, since his acceptance must be actual, while it is
always implied in the case of a trust. But such a requirement
presents no practical inconvenience in cases where the gift made
in this indirect way is for "charitable purposes", since the state
can accept on behalf of the beneficiaries. Therefore, when a
contract for the benefit of a third party is possible, it may be
used with the same effectiveness as a donation or gift with
charge or condition.
III. A "deposit", coupled with a contract for the benefit of a
third party, will reach the same result. A deposits property with
B, with instructions to do certain things with it and give the
profits to C. The deposit, therefore, is dependent upon the
terms of the contract, and is subject to these further limitations:
1. The res must be corporeal. It must also be of personal
property. As in case of real property, it becomes a sequester,
but as this is nothing more than a difference in name, we are
not much concerned with it.
2. At the time the deposit is made, any stipulation that the
property should be given back to a person other than the de-
positor or his heirs is illegal. But of course property deposited
with a third party can always be disposed of by will. In short,
a deposit alone can not be a civil law substitute for trusts, but
coupled with a contract for the benefit of a third party, it can
strengthen the latter technique and bring it closer to the trust
device.
IV. The scheme that has just been outlined need not be used,
since the civil law affords a technique which achieves the same
practical results in a more direct and easy way. We refer to the
fiducia, which has been considered so much like the trust that it
has been used as its French translation in the province of Quebec.
Curiously enough, the civil law has not understood all the ad-
vantages that can be derived from the use of the fiducia. While
it is now nearly forgotten by textwriters and practitioners, it is
not dead, and has recently been recognized by courts as perfectly
legal. We hope that new life can be infused into this old juris-
tic institution, dormant for centuries, so that substantial social
service may be rendered by it. Fiduci is the real substitute for
a trust; it is its twin institution, since not only are the same
functions fulfilled by it, but the same methods are used to achieve
them. In both there is a transfer of property to one who has
the legal title but derives no personal advantage from it, and
who must manage the property for the benefit of someone else,
while his own creditors cannot attach it. While, however, the
trust is now a thoroughly developed device, and the rights and
duties of each party to it are well settled, the fiducia has never
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1139

been of great importance in civil law countries-except in the

province of Quebec-and rights and liabilities arising under it
are far from being precisely determined. Hence we conclude
that in the fiducia the civil law has a legal technique which can
easily be developed along the same lines as the trust, if text-
writers and practitioners are far-sighted enough to perceive what
can be done with it.
IT. The remarks made above in connection with deposits apply
also to the technique of "mandate". In order to be in any way
a substitute for a trust, it must be coupled with a contract for
the benefit of a third party, otherwise the beneficiar y would
have no right whatever against the mandatary or agent. More-
over, the mandate would always be revoked by the death of the
principal, and the latter would, during his life, be responsible for
the acts of the agent. We may therefore ay that as a general
rule the mandate should not be considered as a proper civil law
substitute for trusts. There is a case, however, in which the
mandate is a very close substitute for trusts, i.c., in bankruptcy.
The mandatary has almost exactly the same powers, the same
duties, and the same liabilities as a trustee in bankruptcy.
Heretofore we have assumed that the beneficiary was not the
creator of the trust. But if the owner does not trust his own
ability as a manager, or if he simply wants to rid himself of
the burden of management while retaining the beneficial in-
terest, he can use the donation with charge or condition, or an
ordinary contract for this purpose. In the first case he gives
his property upon the condition that the net income produced
by it will be turned over to him during his lifetime, and that at
his death the whole property will return to his estate. In the
second case the same acts are performed, but the obligations
of the manager of the property are the consideration for its
transfer.

II

Trusts also have another aim,-the limitation of the benefit

granted. Such a limitation may be for either of two purposes:
(a) To give the donee only the temporary enjoyment of the
property, while retaining for oneself or one's family the sub-
stance of the res. Such is the case, for instance, when a testa-
tor leaves property to an old servant; he creates a trust so that
the subject-matter of the legacy will revert to his own family
at the death of the legatee.
(b) The desire to be twice generous. The aim is not to keep
something, but to grant more,-to give to two or more persons
at the same time. A trust is created so that the s.ae res may
be the subject-matter of several successive gifts. In either case,
1140 YALE LAW JOURNAL

however, the legal techniques are the same and may be con-
sidered together.
But from the point of view of the civil law, another distinction
must be drawn between the cases in which the creator of the
trust wants to make a gift to two persons only, and the cases
in which he wants to benefit more than two.
A Two persons only are to receive substantial interests in suc-
cession. While, up to the present time we have been finding our
points of comparison in the law of status, of obligations, or of
wills, we must now look at several techniques of property law:
L The usufruct, which from an analytical point of view seems
so different from a trust, is remarkably like one if we adopt a
functional point of view. At first glance the usufruct looks very
much like a life estate, but to show how superficial such a view
is, it suffices to say that it applies equally to real and personal,
tangible and intangible property. A life estate is a feudal con-
ception; a usufruct is an analytical division of ownership created
by the logical mind of the Romans. Thus, ownership has been
seperated into three rights: usus, fructus, abusus, i.e., the right
to use the res-the right to gather its fruits and products which
can be taken without endangering its substance-the right to
dispose of the substance by partition, destruction, sale or gift.
Civilians feel that there is no reason why these three rights
must be united in the same individual; one may have the usus
alone, or both the usus and the fructus, or the full ownership-
usus, fructus and abusus. But if these three elements need not
be in the same person, they must all exist in some one. The
most frequent division is usus and fructus in one person, abusus
in the.other.
It is far beyond the scope of this article to consider the nature
of the right of usufruct; we will here consider only how far it
fulfills the functions of a trust in limiting the benefit granted
to one person, and in transferring property to two persons simul-
taneously.
If we compare the case where A transfers the usufruct to B,
and the nude property to C, with the case where A transfers
property to X in trust for B, X to turn over the property to C at
B's death,10 we are struck by the following similarities between
the two techniques:
1. a split in the ownership;
2. the possibility of applying them to all types of assets;
3. the beneficiary gets all the advantages of the res, but not
the substance or the power of endangering it;
:6 The comparison would be the same between cases where A transfers
the nude property to C and keeps the usufruct for himself, and cases in
which A transfers the res to X in trust for A for life, X to turn over the
property to C at A's death.
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1141

4. the beneficial interest may be freely disposed of by the

beneficiary;
5. they can be created either inter vivos or causa mortis;
6. the grantor may reserve the beneficial interest for himself;
7. efficient checks are provided in order to insure that the
substance of the res shall not be endangered.
There are differences, however, which require brief examina-
tion:
1. The beneficiary in a case of -suf'uct has the management
of the property, while the cestui que trust has not. This may
be important when the purpose is to protect the beneficiary
against himself because, for some reason, he is unable to manage
the res properly. But the difference is immaterial when the
only aim is to give the beneficiary a limited interest. Even if
it is necessary to realize these two aims, we think the difference
is unsubstantial, since the only important point is to insure in
an efficient way that the substance will not be wasted. The
methods by which the result is reached are immaterial. The
civil law does this in two ways:
(a) through a guarantor who is personally liable for waste
of the v=ufructuary, or through a mortage on the latter's real
estate;
(b) through the right of the nude-proprietor to ask the end
of the usufruct and the turning over to him of the property if
his rights are endangered by the manner in which the bene-
ficiary uses it.
2. The notion of usufruct is more complex than the notion
of trust in this: the trustee must keep the substance of the res,
while the usufructuary must not only do that, but also must
manage the property as it was managed before the beginning
of the usufruct; in other words, there is an element of "continua-
tion of the tradition" that is unknown in trusts. The materiality
of this difference depends upon the spirit that is back of it. Of
course, such a spirit might vary from one civil law state to
another. In most of them this element is at the present time
very secondary and therefore this distinction is unsubstantial.
II. Instead of creating a usufruct, the grantor can give less to
the first grantee and more to the second, i.e., vsus to one, fructus
and abusv.s to the other. The only practical difference is in the
proportionate distribution of the benefits. We could, therefore,
repeat substantially what we have said above, except that here
the beneficiary of the uvs.s has a non-transferable right, while
the interests of a cestui que trust (spendthrift trusts excepted),
or of a usufru try can be freely disposed of by him.
III. If we dig further into property law we find another legal
technique that may in certain cases be used as a substitute for
trusts, although it may seem quite different at first-we mean
1142 YALE LAW JOURNAL

emphyteusis. What is an emphyteusis? It is a leasehold for

ninety-nine years or the duration of three lives. Such a lease-
hold is a right in rem. It has the following striking similarities
to trusts:
1. There is a split in ownership.
2. The beneficial interest is in one who has no control over
the substance of the res.
3. Each beneficiary has a right that can be freely disposed
of by him (of course, he cannot transfer more rights than he
himself has).
4. Two persons can be granted the same property in succes-
sion; indeed, the reversioner may never get any beneficial in-
terest, but his heirs will; it is thus a way of providing for un-
born persons. If one objects that the reversioner may devise
the property by will to someone else, not at all agreeable to the
grantor, he might be answered, although it is only a partial
answer, that the doctrine of "forced heirs" obtains under the
civil law.
5. The management of the property is as free in the case
of emphyteusis as in the case of a trust; the curious traditional
element which appears in the usufruct is unknown here.
6. There are efficient checks to assure that the substance
of the res will not be wasted, since the reversioner has all the
rights of a bailor.
These similarities must not hide the differences between trusts
and emphyteusis; they are mainly these:
1. Emphyteusis can be established only on real property.
2. The reversioner must be living at the time of the creation
of the emphyteusis, which makes it difficult for the grantor to
determine to whom the reversion will finally go; but de facto and
legal precautions can minimize this uncertainty.
3. The beneficiary must pay a rent to the reversioner, but
such rent may be very small, much smaller indeed than the sal-
ary of a professional trustee.
4. In emphyteusis there is not only the obligation to main-
tain the substance, but also to improve it. This difference seems
on the whole to be an advantage of the civil law technique.
Therefore emphyteusis, which from an analytical point of view
seems very different from a trust, and has such a different his-
tory, in certain cases fulfills the same function.
IV. A fidei commissum is a gift to A, and at a later time to B,
so that A must preserve the substance of the res while he has
it. It is not, as is the usufruct or usus, an analytical division
of the elements of ownership, but is more in the nature of con-
ditional ownership. The second grantee has no vested right; if
he dies before the first grantee, his right disappears, while in
the case of a usufruct or usus, he has an absolute vested right
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1143

which passes to his heirs or legatees. Here again we find sub-

stantial similarities with trusts.
1. The subject-matter of a fidei conmuissum may be either
real or personal, tangible or intangible property.
2. The same property is given to two grantees, each one hav-
ing a right in rem.
3. The second grantee need not be alive at the time of the
creation of the fidei coammissu n.
4. Each grantee can freely dispose of his interest.
5. The first beneficialr cannot endanger the substance of the
res, but must preserve it.
6. The proper management of the res by the first beneficiary
is secured through a third person trusted by the donor and hav-
ing no beneficial interest. Beside the existence of a curator, other
precautions are taken to make the management safe. For ex-
ample, the money must be invested in real property or loaned
on the security of a first mortgage.
The main differences between a trust and a fldci coiission
are:
1. The first beneficiary of a fidei comnmissim has the man-
agement of the property, while a cestui que trust has not. We
have already had occasion to say that in many instances this
does not seem to us an important distinction as long as an effi-
cient and honest management is secured.
2. The fidei cornrnissum.n is much more rigid than the trust
device, since under it the grantor finds it difficult to give special
instructions as to the way in which he wants the property man-
aged. But we must notice that certain instructions can be given,
and their execution insured through the device of conditions, and
in most cases there will be no need for instructions since the law
itself insures an efficient management of the res.
3. The scope of fidei conzinIssum is much narrower than the
field of trusts, since it can only be created causa 2nortis and then
only under certain circumstances, varying in each country.
There are few limitations in the province of Quebec, but in
France fidei comissuzo can only be created for one's son and
grandson, or one's brother or sister and their children.
B. So far we have considered the civil law substitutes for
trusts when there were only two beneficiaries. If the grantor
wants to give an interest to more than two, he can use either a
contract for the benefit of third parties, or a donation or legacy
with charges. In both cases the obligation imposed on the
transferee is to do certain things for an indefinite period of time,
and therefore for the benefit of an unlimited number of persons
in succession. Hence in this connection the civil law is the
more liberal.
 1144 YALE LAW JOURNAL

III
Trusts are also used to build, so to speak, a bridge from the
present to the future, from the land of abstractions to the field
of concrete realities. If a man wants to leave property to un-
born grandchildren, or to a corporation to be formed, or he has,
like Andrew Carnegie, a generous but vague aspiration towards
the establishment of world peace, and wants to devote his for-
tune to its realization after his death, he will, in a common law
country, create a trust. What would he do under the civil law?
Here again the answer is not simple, and we must examine the
different problems presented:
A. If the problem is to grant property to a person who is not
in existence when the transfer is made, it is indeed a very hard
one, and can only be solved in the following limited cases:
1. when the doctrine "infans conceptus jam pro natus habe-
tur" applies;
2. when the donation is made in a marriage settlement and
is in favor of unborn legitimate children;
3. when a fidei commissum is possible;
4. by means of a contract for the benefit of a third party,
when the latter is a charitable institution to be created;
5. through a donation or legacy with charge in favor of a
person or institution not in existence at the time of the gift
or legacy.
B. Where the problem is to transfer property to a corporation
that is not yet in existence, it is satisfactorily settled by statutory
provisions in the various civil law countries. One must consult
the corporation laws in each state on this point.
C. If one wants to realize an abstract idea, to transform into
concrete reality a dream, a hope, a moral or religious belief, one
will undoubtedly create a trust in common law country. In a
civil law state, if one wants to create a charitable, moral, or
social institution, one can accomplish one's aim during one's life
in either of two ways:
1. By the creation of an "association", i.e., a corporation
whose aim is not to make profits, and which can be organized
free from the regulations and limitations that bind business cor-
porations. In such a case, of course, the donor must organize
the corporation himself.
2. If one wishes to avoid this trouble, one may make either
a donation with charge, or a contract for the benefit of a third
party. If the grantor wishes to retain the property during his
life, the only available method is a devise with charge or con-
dition. We have already considered how far these are similar
to trusts in their results.
IV
The history of trusts has been largely one of struggles against
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1145

creditors. It is therefore rather amusing to notice that now

trusts are often used for the protection of creditors! A trust
may be said to have two different social functions in this connec-
tion: (a) it is a method of granting to one creditor a special
security on some definite piece of property; (b) it is also an
efficient method of uniting all the creditors and avoiding onerous
and dangerous bankruptcy proceedings.
The first of these two functions is fulfilled in common law
countries, when a real estate mortgage or a chattel mortgage
is not employed, by trust deeds for real property, and trust
receipts for personal property. As far as trust deeds are con-
cerned, there is certainly an adequate substitute in the law of
mortgages. Indeed, the organization of credit through ownership
of land is a universal practice, and very similar systems exist
in some civil law and common law countries.
As to trust receipts, the question is a different one. They may
be considered as fulfilling the same function as chattel mortgages,
which exist only in exceptional cases under the civil law, such
as mortgages on vessels, crops, or the good will of a going con-
cern. The last exception has become a most helpful instrument
of commercial credit in the civil law countries which have
adopted this form of mortgage. But, notwithstanding these ex-
ceptions, the general rule remains that there is no civil law
substitute for trust receipts. This is again due to a policy against
such mortgages in civil law states.
What is the reason back of this divergence in policy? It seems
to be this: the common law protects the title, while the civil law
wants to protect the security of legal transactions. The point
may be made quite clear by an example,-the French Civil Code
says in Article 2279, "as far as personal property is concerned,
possession is title". So, if A lends his automobile to B, and B
wrongfully makes a gift of it to C, who is ignorant of B's em-
bezzlement, C gets good title. Socially, A represents pre-ac-
quired property; he wants the status quo to be maintained; he
represents a static interest. C, on the contrary, has received the
gift in reliance on the legal transaction he has entered into in
good faith; he may have changed his position; he wants the act
which has changed the status quo sanctioned by law. C repre-
sents the dynamic element. Now, if one can get a bird's-eye view
of both systems, he will see that the common law protects the
static element, while the civil law lays more stress on the dy-
namic point of view. Hence in the present connection, if there
is no equivalent to trust receipts under the civil law, it is because
the latter does not want any; it desires that goods may be bought
freely and safely; it refuses to have a hidden string pull them
from the hands of any one who got them for himself and in good
faith. It also refuses to oblige people to go too often to the
1146 YALE LAW JOURNAL

registrar's office. We may say, therefore, that the absence of

a substitute in this connection is not due to a deficiency of the
civil law, but to a different and deliberate policy.
An assignment in trust for the benefit of creditors is a most
efficient method of avoiding onerous and often fruitless bank-
ruptcy proceedings. Aside from special statutes, this result may
be achieved under the civil law in this way: the debtor bails
his property to X, the agent of the creditors, with powers of
management defined in the agreement, in consideration of the
promise of the creditors not to throw him into bankruptcy. But
there are statutes in all civil law 'countries providing not for
one law on bankruptcy, but for a whole scale of remedies accord-
ing to the circumstances in which the debtor became insolvent;
some of these remedies are more severe than bankruptcy, others
are much milder. The "amicable settlement" reaches practically
the same results as most assignments in trust for the benefit of
creditors.
V
Finally, trusts are used to protect beneficiaries against their
great number. The mere fact that numerous persons have
a common interest in the same res creates ipso facto numerous
difficulties. These are solved under the common law by cor-
poration laws and business trusts.
If business trusts are so much used, it is because the common
law has only one proposition to offer to those who desire to come
together and have the advantage of forming a legal entity, to
wit, a corporation. The civil law has realized that men may
want to form associations under widely different circumstances,
and for very diverse aims; therefore it gives to business men
a choice between several schemes. Indeed, the last thirty years
have shown a most interesting development of commercial law
along these lines in Europe; limited liability companies have
spread from Germany to Austria, England, and France; plans
along the same lines are now being studied in Switzerland and
in Italy. It may then be said that business men can form civil
law legal entities with the same freedom and efficiency as they
can establish business trusts or corporations in a common law
country.
If men come together, not to make profits, but to realize a
purely idealistic aim, they will most often form a charitable
trust in America and England. What will they do on the Con-
tinent? They will form an "association", constituting a separate
legal entity, and will reach the same practical result just as
easily!
There is one case, however, that deserves more attention, be-
cause the difficulty of a great number of persons having a com-
mon interest is coupled with another one: the difficulty of creat-
 CIVIL LAW SUBSTITUTES FOR TRUSTS 1147

ing a mortage without an acceptance by the beneficiary. We are

now referring to the case of a corporate mortage in favor of
bondholders. The best way to meet this situation under the civil
law is as follows: the mortgage offered by the corporation which
is issuing bonds so secured, is accepted by a banker in behalf of
future bondholders. The banker is their "negotiorum gestor".
When the mortgage has thus been accepted, it is completed, the
issue is made, and the bondholders, when they are individual-
ized, can give a "mandate" to somebody to act in their behalf,
or, if they prefer, can form themselves into a "civil society",
whose manager will take care of all the interests involved. The
person appointed will do what a trustee would have done in
England and America.
We may also include in the present class the English trusts
arising under the Settled Land Act of 1925, since their main
aim is to insure an efficient method of dealing with real prop-
erty in spite of the fact that several persons have an interest
in it. The civil law deals with such a situation, first in strictly
limiting the rights in rem that may be created, second in drafting
codified rules to insure the best possible management of the
property and the best protection for the beneficiaries. Such
rights in rem are essentially the usztfrzct and the substitute
which we have already analyzed and compared.

CONCLUSION
If one takes an analytical point of view in the study of com-
parative law, one is in many instances liable to take a road that
leads nowhere. Such would be the case in dealing with the sub-
ject of the present article. But if one takes a decidedly func-
tional viewpoint, things immediately appear in a new light.
From such a point of view we conclude that in several cases
the civil law has no substitute for trusts, because it would be
contrary to its policy to sanction their results, but that in all
other cases the same results may be reached quite adequately,
although often through widely different means.
The civil law has a real substitute for the trust, the fach~e4t,
but it has failed to understand the use that can be made of it.
Civilians have therefore used many different techniques to cope
with situations usually dealt with by trusts in England and
America. The complications, the diversity, the precision and
often the narrowness of these techniques are without doubt a
weakness. It is a great asset in a legal system to have an adap-
table device at the crossroads of all legal institutions, and one
which fulfills many social functions at the same time. It is the
writer's hope that Anglo-saxon jurists will assist their civilian
brethren in reviving and developing the long forgotten fiducki.