McGILL LAW JOURNAL
Volume 21
Montreal
1975
Number 2
THE QUEBEC TRUST AND THE CIVIL LAW
Daniel N. Mettarlin *
If there is anything more interesting
than that famous chapter on snakes in
the complete history of Ireland, it is
a trust code in a Civil Law Jurisdiction.
1. M. WISDOM 1
This is the first of a two part article on the law of trusts in
Quebec. In the first part the author will attempt to demonstrate that
the trust of articles 981a C.C. and following should be regarded as a
purely Civil Law institution. The author will try to show that the
trust of articles 981a C.C. and following was not suddenly introduced
into Quebec law in 1879, but was an institution with roots in early
Civil Law. Basing himself on the continuity of the trust in Civil Law,
the author will attempt to construct a theory which will indicate who
owns the trust property and which will integrate the trust into the
Civil Law. In the second part of the article, the author will indicate
how the doctrine and jurisprudence have regarded the trust, and
will discuss the practical consequences of his theory with regard to
the problems which have plagued the trust in Quebec.
INTRODUCTION
The introduction of articles 981a C.C. and following to the Quebec
Civil Code has engendered a host of disputes. Are the articles based
on Common Law or Civil Law? Who owns the trust property? Can
the donor be a trustee? Are the provisions of the Civil Code dealing
* Member of the Notarial Bar of the Province of Quebec.
1 Cited in Lepaulle, “The Strange Destiny of Trusts” in Perspectives of Law,
Essays for Austin Wakeman Scott (1964), 226, 238.
McGILL LAW JOURNAL
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with executors applicable to trustees? Can one create inter vivos
trusts in favour of unborn persons? For what period of time and for
how many beneficiaries in succession may a trust exist? The solution
to such questions requires an extensive examination of the history
and nature of the Quebec trust.
“Pure” Civil Law2 has always considered the trust to be incom-
patible with its basic principles. Those Civilian jurisdictions which
have no legislation permitting trusts have consistently held any
attempt by a donor or testator to create a trust to be null. Moreover,
the grounds of nullity have not been based on minor and easily sur-
mountable technical difficulties; they have been founded on the basic
incompatibility of the trust with the principles of the Civil Law:
Nous concluons donc, en definitive … h l’impossibilit6 juridique de crder
un Trust … ;3
… le Trust est … inassimilable en droit frangais…;4
… le Trust… a
milation sur le continent europden.
Consequently, those Civilian jurisdictions, such as Quebec, which
have wished to allow its citizens to create trusts have found it
necessary to enact special legislation permitting them to exist.,
t6 consid6r6, en effet, comme rdfractaire h toute assi-
However, the enactment of enabling legislation cannot remove
the trust’s incompatibility with certain basic principles of the Civil
Law. In those Civilian jurisdictions which permit the trust, this
incompatibility is translated into endless, seemingly insoluble pro-
blems, such as determining who owns the trust property or indeed
whether anyone owns it; whether the rights of the beneficiaries are
real or personal; and whether the trust is to be interpreted in
accordance with the Common Law, the Civil Law, or as a special
institution with rules of its own.
Of course it would be possible to ignore the philosophic un-
certainties and through detailed legislation solve the practical pro-
blems of the trust. However, in order to remain within the spirit of
2 By “pure” Civil Law the author means Civil Law unaffected by any legis-
lation dealing with trusts; that is, as if arts.964, 869, and 981a C.C. et seq.
had never been enacted.
3 Motulsky, De l’impossibilitg juridique de constituer un “Trust” (1948) 37
Rev. crit. dr.int.pr. 451-467; see also Merryman, Ownership and Estate (1974)
48 Tul.L.Rev. 916, 940 (“The phenomenon of the trust is … an ‘alien concept’ “).
4Ibid., 464.
. Mankiewicz, La fiducie qudbecoise et le trust de Common Law (1952) 12
R. du B. 16, 17.
6crit”).
G Ibid., 17 (“… Quebec a 6t6 obligde de le rdgler dans le cadre d’un droit
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
the Civil Law, to encourage predictable and orderly solution of
problems, and to avoid unwieldy legislation (in the United States the
major work on trusts runs to six volumes) ,7 it is desirable to have
reference to a philosophical framework.
We may divide into two camps those Quebec jurists who have
attempted to analyze the trust theoretically.
One group, whom we shall call the “Civilists”, believe that the
rights and duties of the trustees and beneficiaries can be deduced
from the principles of the Civil Law, particularly from the principles
of the law of property. They accept as applicable to the trust the
Civil Law maxim that all property must have an owner and every
owner must be a legal person. According to the “Civilists”, once
the question of who owns the trust property is answered, most of
the problems relating to the trust can be solved.
In opposition, the group we shall call the “Institutionalists” have
argued that the trust cannot be successfully analyzed in Civilian
terms, but is to be regarded as a special and somewhat alien
institution with its own rules and principles deducible from logic,
specific legislation and perhaps even from the Common Law.” The
“Institutionalists” hold to the view that no one owns the trust
property and that its rules can be determined apart from the Civil
Law.
THE CIVILIST POSITION
Those who regard the trust as part of the Civil Law must deal
with two difficulties: an interpretive difficulty and a substantive
difficulty.
7 Scott, The Law of Trusts 3d ed. (1967).
8 Those who regard the trust as being inspired by the Common Law are
difficult to categorize. Ironically, the author would categorize them as
Civilists because they have hitherto accepted as applicable to the trust the
basic Civilian principle that all property must have an owner. The quest
for ownership of the trust is a purely Civilian preoccupation; Common Law
does not demand that trust property have an owner and no legal conse-
quences would flow from ownership even if it could be found within the trust.
If those who believed the trust was of Common Law inspiration were to
truly import the Common Law of trusts, they would simply note that the
trustee (who has “legal title”) has certain rights and duties and the bene-
ficiaries (who have “equitable title”) have other rights and duties. They
would thus conclude that the Quebec trust is really an ownerless, legislatively-
created institution with its own special rules and principles derived from
the legislation of arts.981a C.C. et seq. and from the Common Law.
McGILL LAW JOURNAL
[Vol. 21
The Interpretive Difficulty
It is, of course, a basic principle of the Civil Law that ownership
cannot be in suspense at any time. However, most trusts for some
reason do not appear to vest ownership in anyone. For example,
examine the following trust (which we will refer to as “Trust A”):
To my trustees to pay the income to my wife, and on her death to
deliver the capital to my son if he is living, and if he is not living, to
deliver the capital to his children.
In this trust, the settlor does not appear to have vested ownership
of the trust property in anyone during the wife’s lifetime; nor indeed
does he appear to have created any real rights at all while she is
living.
However, we may compare a trust which was created by Jonathan
(later Judge) Wurtele, who introduced articles 981a C.C. and follow-
ing to our law. His trust reads:
Secondly:
I will, devise and bequeath the usufruct of my Estate to my beloved
wife…;
Thirdly:
I will, devise and bequeath my Estate … to my sons and daughters…;
Tenthly:
I constitue my said Executors trustees of my Estate; and I invest
them with the seizin and possession of all the property… of which
I may die possessed.10
One can readily see the difference between the Wurtele trust
and Trust A. In the Wurtele trust the settlor expressly vested owner-
ship in a person or persons (his sons and daughters); in Trust A
the question of ownership is left unsettled and one must interpret
the document to find the owner.
The interpretive problem for the Civilist is that he must find
someone whom the settlor intended or is deemed by law to have
intended to be owner. If ownership is in suspense during the wife’s
lifetime, we are forced to arrive at one of the following conclusions:
9 There is no need to quote authority for this basic principle; however, the
reader may wish to consult the following sources:
Mignault, La Fiducie dans la Province de Quibec (1937) 5 Travaux de la
semaine internationale de droit 35, 45, f.n.1; Fraser v. Fraser (1907) 16 B.R.
304, 312; La Socidtd d’Administration Gingrale v. Delle Hdbert (1925) 39 B.R.
124, 126; Breard v. Mongeau (1936) 61 B.R. 199, 203; Prdfontaine v. Dillon
(1922) 33 B.R. 314, 320: “La propridt6 des biens, sous notre droit, doit toujours
reposer sur la tAte de personnes vivantes, meme dans le cas de legs dont
l’effet est suspendu….
10 See Appendix, infra, Wurtele Testamentary Trust.
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
(a) Trusts such as Trust A are invalid on the grounds that owner-
ship can never remain in suspense. The consequence of this
conclusion is that the only type of trust that would be valid in
Quebec is one similar to that created by Jonathan Wurtele; or
(b) Trusts such as Trust A are valid despite the hiatus in ownership,
aiid the Institutionalists are correct. On this view the trust will
be an ownerless institution outside the basic principles of pro-
perty law, to be interpreted in accordance with its own special
rules and principles, many of which lie outside the Civil Law.
In reality, the interpretive difficulty is easily surmountable. One can
always find someone whom the settlor intended or is deemed to
have intended to be owner. The more difficult question is whether
that person is really an owner under the Civil Law. This is the
substantive difficulty.
The Substantive Difficulty
Even assuming one can interpret Trust A so as to find someone
whom the settlor intended to be the owner (whether wife, son,
settlor or trustee), is such a person in reality the owner of the
property? Or put differently, if one studies the essence of the trust
institution as created -in articles 981a C.C. and following and one
analyzes the rights and powers of the beneficiaries and trustees, one
is compelled to ask whether it is possible for anyone to truly own
trust property.
One can go further and ask whether any of the normal Civilian
methods of holding property or having real rights therein, namely
usufruct, substitution or ownership, are compatible with the nature
of the trust as permitted under articles 981a C.C. and following.
The Interpretive, Difficulty Analyzed
As mentioned above, in some trusts it is clear whom the settlor
intended to be the owner or holder of a traditional real right:
I give the usufruct to my wife, the ownership to my son; X is to be
trustee with the powers of articles 981a C.C. and following.
I give the property to my wife, and on her death to my son; X is to be
trustee with the powers of articles 981a C.C. and following.
In the first trust the settlor obviously intended his son to be the
owner and his wife the usufructuary; in the second trust he clearly
wished his wife to be the institute and his son the substitute.
However, suppose a trust reads:
To my trustees, to pay the income only to my wife, and on her death to
deliver the capital to my son if he survives my wife, and if he does not,
to deliver the capital to his children, if they survive my wife.
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Can it be said that the testator intended anyone to own the property
subject to the trust? An answer may be suggested by looking at a
similarly drafted clause in a document which, however, does not
create a trust. For example, assume the testator had left the follow-
ing bequest:
I give the revenues only to my wife, and my son is to inherit the property
on her death if he survives her; if my son does not survive my wife, on
her death, the capital is to belong to his children if they survive her.
Further assume that the court finds the wife is not an institute
subject to a substitution, but the legatee of a right to revenues
only” (which would be the most logical conclusion since a bene-
ficiary of revenues who is not charged to deliver capital cannot be
considered as an institute). Since the wife is not an institute, it
therefore appears that during the wife’s lifetime the testator has
not bequeathed the ownership to anyone mentioned in the will. In
such circumstances the court would not find the will null on the
grounds that ownership is in suspense; instead, it would find the
testator’s intestate heirs to be the owners, based upon article 838
C.C.,12 on the presumption against intestacy, and upon a desire to
11 In the author’s opinion, our courts would find the wife is not an institute
because a beneficiary of revenues not charged with delivery over of the capital
cannot be considered as an institute. The case of Dame Cogne v. Trust Gdndral
du Canada [1969] B.R. 591, which dealt with a similar legacy contained within
a trust, held:
“Les ldgataires qui regoivent des revenus … ne sont pas tenus de les
rendre. Il n’y a pas de biens substituds…. Le testateur a dtabli, non
une substitution au sens de la loi, mais une succession de ldgataires qui
ont droit aux revenus…” (per Salvas J., 597).
“Les lgataires … n’ont donc aucuns biens a conserver ni h rendre …. En
rdsum6, les l6gataires … sont des lgataires des revenus … ” (per Cho-
quette J., 595).
A similar conclusion, again involving a trust will, was reached in Masson v.
Masson (1912) 47 S.C.R. 42, where the court held that the revenue beneficiaries
were not institutes but legatees of income rights only.
It is further the author’s view that the wife could not be considered to
be a usufructuary since she is given only the right to revenues, and not a
usufruct in the property. For a distinction between a usufructuary and a
beneficiary of revenues, see Proudhon, Trait des droits d’usufruits, d’usage,
d’habitation, et de superficie (1824), vol.1, 2 and 53-4.
12Art.838 C.C. states:
“The capacity to receive by will is considered relatively to the time of the
death of the testator; in legacies the effect of which remain suspended after
the death of the testator, whether in consequence of a condition, or in
the case of a legacy to children not yet born, or a substitution, this
capacity is considered relatively to the time at which the right comes
into effect.
…Even in the case of suspended legacies, already referred to in this
19751
THE QUEBEC TRUST AND THE CIVIL LAW
maintain the deceased’s testamentary plan. The court probably would
interpret the will as a substitution in which the intestate heirs are
institutes, the son a substitute and the wife the holder of a personal
right to claim revenues from the testator’s heirs.13
This was the solution the court arrived at in Robert v. Martin;14
it has been sanctioned by Quebec doctrine15 and finds its textual
article, it suffices that the legatee be alive or conceived, subject to the
condition of being afterwards born viable, and that he prove to be the
person indicated at the time the legacy takes effect in his favour” (em-
phasis added).
13As indicated supra, f.n.11, it is the author’s view that the wife is not a
usufructuary but a beneficiary of a right to claim revenues only. Proudhon,
supra, f.n.11, has stated:
“… le legs d’usufruit diffire essentiellement du legs des revenus … lequel
n’a que la nature d’une pension h payer par l’h6ritier qui jouit lui-m~me
de l’h6ritage.”
“La perception des revenus ne se rattache point h la d6tention du fonds:
lui-m~me de
elle ne suppose point que celui qui en profite, jouisse
l’hdritage … dolt 6tre payde par le tiers d6tenteur ..
For a distinction made by the Quebec courts between a usufruct and the
right to claim revenues, see Guaranty Trust Company of New York v.
The King [1948] S.C.R. 183, 196 et seq. per TaschereauJ., and Laverdure v.
Tremblay [1937] A.C. 666, 678 et seq. per Lord Maugham.
14 (1918) 27 B.R. 54. In this case, the testator left his property to his brother
Mdfric as institute, with the obligation to deliver the property on Mdd6ric’s
death to the latter’$ children born and to be born, and failing such children,
to the testator’s nephews and nieces. The brother Md6ric renounced to the
estate and had no children. The court was faced with the question of the
disposition of the revenues until the brother’s death. The court held (at 58-9):
“II est clair, tr~s clair, que nous sommes mis en pr6sence d’une substitu-
tion fid~icommissaire dans laquelle Md6ric Longtin est le grev6 et ses
enfants possibles les appel6s. Ses neveux… n’auront ces biens que si
Md6ric, leur oncle, n’a pas d’enfants. Ils n’hdriteront pas, h un moment …
n6cessairement arriver, mais i une date ind6terminde dont l’ch6ance
. Et…
d6pend d’une condition …
leurs droits possibles sont suspendus … ils n’ont droit, pour le moment,
ni aux capitaux, ni aux revenus. Alors, h qui les attribuer dans l’inter-
valle … ? Car ii faut que les biens appartiennent … a quelqu’un. … Vu la
jusqu’h son ddc~s –
renonciation de Mdric Longtin, les revenus –
vont aux h6ritiers ab intestat de Julien Longtin [the testator]. Ces der-
niers, au ddc~s de Mdd6ric Longtin, remettront le capital A ses enfants,
s’il en a, si non aux demandeurs” (emphasis added).
The Court found the ab intestate heirs of the testator to be the owners
charged with handing over the property on the brother’s death to the
substitutes.
ils sont des hdritiers conditionnels …
15 Mignault, in Le droit civil canadien (1899), vol.4, 263-4, also indicates
that in such a case the ownership of the property would be vested in the
testator’s intestate heirs. However, Mignault suggests that the intestate heirs
are not charged with a substitution but rather are owners subject to a
McGILL LAW JOURNAL
[Vol. 21
basis in article 838 C.C., which permits conditional bequests and
bequests to persons not existing at the time of the testator’s death.
This conclusion is likely to be closer to the testator’s intention than
any other, as it results in his testamentary plan being held valid and
his heirs inheriting the property if his son predeceases his wife.,
With the above analysis in mind let us examine the following
trust will:
To my trustees to pay the income to my wife during her lifetime, and on
her death to deliver the capital in ownership to my son, if he is living,
and if he is not living to his children then living.
Except for the trust aspect there is no difference between this
bequest and the previously examined non-trust will:
I give the revenues only to my wife, and my son is to inherit the property
on her death if he survives her; if my son does not survive my wife, on
her death, the capital is to belong to his children if they survive her.
In the non-trust will we concluded that the court would find the
intestate heirs to be the owners. Since we are assuming for the
moment that ownership is compatible with and indeed mandatory
in a trust will, in the latter situation the logical conclusion is that
the court similarly will find the intestate heirs to be the owners,
subject to the trust. 7
If the trust is inter vivos rather than testamentary, the problem
is somewhat more complicated but also results in a satisfactory con-
resolutive condition. Faribault, in La Fiducie dans la province de Qudbec
(1936), 182-4, para.169, agrees with Mignault that the intestate heirs are the
owners but disagrees that they are owners under a resolutive condition. He
believes they would be institutes subject to a substitution. The author tends
to favour the view of Faribault, particularly since superior protection is given
beneficiaries under a substitution.
16 A further question arises: which of the testator’s ab intestate heirs are the
institutes? Since ownership cannot remain in suspense, on the testator’s
death it must pass to the intestate heirs who are living at his death.
Assuming the testator had only one child, this would mean the testator’s
wife and son would inherit. The result is that on his wife’s death (assuming
the son dies before the wife), the successors to the property would be the
son’s heirs and the wife’s heirs.
17 The heirs, would either be owners under a resolutory condition or owner-
institutes subject to a substitution (see supra, f.n.14). Whether a substitution
is compatible with a trust and the rights of the institutes in a substitution
subject to a trust will be dealt with infra. The court could, of course, find
the trustees to be the owners, but we will assume for the present discussion
that they will follow the basic concepts of the Civil Law and therefore will
not find them to be the owners. See also infra for a discussion of the possi-
bility of ownership vesting in the trustees and the author’s rejection of this
alternative.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
clusion. For example, assume the creation of the following inter vivos
trust:
To my trustee to pay the income to my wife, and on her death to deliver
the capital to my son if he survives my wife, and if he does not to such
of his children as survive my wife.
It is extremely difficult, if not legally impossible, to interpret this
trust as a substitution, since the only possible institute is the donor
and it is probably impossible to create a substitution in which the
donor is also institute.'”
The obvious conclusion is that the donor has retained ownership
while donating ownership under a suspensive condition to his son.
18 A substitution inter vivos can only be created by way of gift (929 C.C.),
and one cannot give a gift to oneself. However, it is not entirely clear that
the creation of a substitution in which one is the owner involves a gift to
oneself. One can give the ownership to another and retain the usufruct (art.
777 C.C.). Why cannot one give rights as a substitute to others and retain
the rights of an institute for oneself? The traditional answer has been that
a substitution requires a gift of ownership and therefore one cannot create
a substitution by giving only personal rights to the substitutes, retaining
ownership for oneself. By retaining the rights of an institute, one is simply
unilaterally restricting one’s rights as owner (namely, by restricting alienation
and preventing waste), but one has not divested oneself of ownership.
This analysis is not entirely convincing, but it does appear to be sanctioned
by the Civil Code of Quebec. Thus art.925 C.C. states, “La substitution fiddi-
commissaire est celle oii celui qui regoit est charg6 de rendre la chose…”
(emphasis added); and art.934 C.C. states, “The testator may impose a
substitution either upon the donee or the legatee whom he benefits, or upon
his heir on account of what he leaves him as such” (emphasis added). Other
articles of the Civil Code, such as 933 and 935, reinforce the impression that
a substitution can only be created by a gift of ownership.
One can also argue that if one attempts to create a substitution and retains
ownership, one has created an illegal gift mortis causa. In other words,
the donor, by retaining ownership and granting only personal rights to the
substitutes, has in effect stated that the donees will inherit only if they
survive the donor; if not, the property will remain with the donor. This is a
traditional gift mortis causa, to which has been added a restriction on the
donor’s rights of alienation and abutendi.
While this argument does have merit, it does not apply to all substitutions.
It would not apply to a substitution in which a donor remained as institute,
but stated that the substitution would open, not on the donor’s death, but
on the death of another person. The only argument against the validity of
such a substitution is that the creator thereof must totally divest himself of
ownership.
If the courts should hold such a substitution valid, then the above inter
vivos trust may validly be interpreted as a substitution in which the donor
is the institute. If, however, such a substitution is impossible, then the only
solution is to find that the above trust contains a gift of conditional owner-
ship to the children, the donor having retained the ownership until the con-
dition occurs. This is permitted by art.782 C.C.
McGILL LAW JOURNAL
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In other words, the settlor is owner and the son conditional owner
under the suspensive condition of surviving his mother.19 This is
permitted by article 782 C.C., which allows the donor to stipulate
… that a gift inter vivos shall be suspended, revoked, or reduced under
conditions which do not depend solely upon the will of the donor.
Thus the inter vivos trust also can be interpreted to satisfy the
principle that ownership cannot remain in suspense.2 However, this
leads into the next and more difficult question. Are what appear to
be “usufructs”, “substitutions” and “ownership” really such? In
other words, are ownership and the other real rights incompatible
with the trust?
The Substantive Difficulty Analyzed
The Usufruct within a Trust
Let us examine a usufruct contained within a trust.
I give the usufruct of my property to my wife and the ownership to my
son; I appoint X as trustee with the powers of articles 981a C.C. and
following.
19 This is not a gift in contemplation of death, since the person the son
must survive to inherit is not the donor but a third party.
20 A difficult question arises with regard to gifts of conditional ownership
to persons not living at the time the trust is created, because arts.771 and 929
C.C. state that, except in marriage contracts, gifts inter vivos in favour of
unborn persons are only permitted if a substitution is created. For example
in the trust,
“To my trustees to pay the income to my son and on his death to deliver
the capital to his children then living”,
there has been no substitution created since the donor has retained owner-
ship (see supra, f.n.18). Therefore, the gift to the unborn would be invalid.
The problem results no matter what theory of trust ownership is adopted.
If we determine that the trustees are owners of the trust it is obvious no
substitution can exist; the only possible institutes are the trustees, and they
cannot be institutes since they do not inherit the property if the son dies
without children, nor do they ever benefit from the income. If one accepts
the Institutionalist view that the trust property is ownerless, clearly no
substitution exists.
Whatever theory of the trust one supports, one is left with the problem
that in the above trust no substitution has been created, yet only through a
substitution can one make an inter vivos gift to the unborn. No theory of
the trust can solve this problem. It is therefore not possible to deny the
validity of the theory of conditional settlor ownership on the grounds that
as a consequence of this theory no inter vivos trust can be validly created in
favour of the unborn.
In the second part of this article we will discuss whether gifts to the
unborn can be made in trusts in which no substitution has been created.
We will see that Quebec doctrine and jurisprudence have validated such
gifts, on the grounds that the trust itself is a special legislative exception to
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
Is the wife really a usufructuary? It does appear that the classic
administrative trust envisaged and created by articles 981a C.C. and
following2 l and the usufruct are incompatible.
The essence of the usufruct is the usufructuary’s right to per-
sonally and directly hold and enjoy the property, and his obligation
to preserve it for the naked owner:
the rule that one must have a substitution to benefit the unborn by way of
inter vivos gift.
2 1 The reader will note that the author has not stated that all trusts are
incompatible with the usufruct, but only those trusts which the author has
called “administrative trusts” envisaged by arts.981a C.C. et seq. However,
the reader should note that “administrative trusts” are almost the only type
of trust created by settlors in Quebec.
By “administrative trust” the author means a trust created to administer
property for beneficiaries. It seems to be the only type of trust dealt with
or indeed contemplated by arts.981a C.C. et seq., which define a trustee as
a person seized as “depositor and administrator” and constantly refer to the
trustee’s administration. As is clear from the text, the usufruct is incom-
patible with the “administrative trust”.
It does however seem possible to create certain types of non-administrative
trusts in which a valid Civil Law usufruct and naked ownership could be
incorporated. A settlor could create a “bare trust” in which the duties of
the trustee would be to receive the property and immediately turn it over
to the true possessor and administrator, the usufructuary. The settlor could
also create a “conditional administrative trust” in which a true Civil Law
usufructuary would administer and possess the property until the occurrence
of a certain event, at which time an administrative trust would be created.
Such a trust could read:
“I give the usufruct of my house to my wife, and the ownership to my
son. My wife is to live in the home, enjoy it, administer it, and pay all
charges of upkeep; I appoint X as trustee. My trustee, but only with the
consent of my wife, may sell the property. In the event of a sale or
destruction by fire or other cause, the proceeds are to be administered
by my trustee.”
One could also create what the author would term a “watchdog trust”. In
a “watchdog trust”, the settlor would expressly create a valid Civil Law
usufruct; the usufructuary would be given the minimal essential rights of
direct enjoyment, possession and administration, but would be subject to
the supervision of a trustee whose powers would be so denuded as to be
compatible with a usufruct.
One can imagine a settlor giving his wife a true usufruct and his son the
naked ownership. At the same time he might be fearful that the property
would be wasted and that the son would be reluctant to sue his mother to
prevent this, or that the mother might be deprived of her rights by her
son, whom she would be anxious to please. Thus he might create the
following type of trust:
“I give the usufruct of my home to my wife and the ownership to my
son. My wife is to have the right to live in and enjoy my home, to
administer it, and to pay all charges of upkeep. I appoint X as trustee
subject to the above. Neither my wife nor my son may sell or borrow
McGILL LAW JOURNAL
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I1 faut donc, pour v6ritablement caractdriser une constitution d’usufruit,
que la d6livrance de la chose doive 6tre faite ii l’usufruitier pour en
jouir par ses mains … et en cela le legs d’usufruit diff6re essentiellement
du legs des revenus …
lequel n’a que la nature d’une pension h payer
par l’hritier qui jouit lui-mAme de l’hdritage.22
It is also of the essence that the usufructuary must have the right to
possess the property without intermediary and be able to reven-
dicate it against all persons:
… qu’a l’usufruitier appartient la possession … [il] ddtient rdellement
la chose, … de ses propres mains … .23
… I1 r6sulte … que l’usufruitier … doit avoir tous les avantages des
interdits possessoires …. =a
upon their rights, either outright or by anticipation, or terminate the
trust, without the trustee’s consent.”
Under the above trust, administration and possession would fall to the
usufructuary and the naked owner would have the right to prevent waste.
(If these rights were not granted to the usufructuary and the naked owner,
a Civil Law usufruct would not have been created.) The trustee would have
only those rights which are compatible with a usufruct, such as the right
to sue the usufructuary to force him to administer the property if the naked
owner did not exercise his rights, perhaps the right to revendicate
the
property from third parties in certain circumstances, and perhaps the right
to assume administration in the cases provided in art.480 C.C. either as
sequestrator or as a true administrative trustee (in which case one could
state that a conditional administrative trust had been created). In view of
the fact that the naked owner cannot be compelled to make repairs, it is
difficult to see what actions the watchdog trustee could take on behalf of
the usufructuary, other than protecting her against unwise alienation of her
rights.
One could even imagine granting the watchdog trustee certain limited
specific rights of administration, which by law one could take away from
a usufructuary or naked owner without destroying the essence of the
usufruct. Thus one could perhaps grant the trustee the right to improve the
property without diminishing the usufructuary’s enjoyment, or perhaps the
right to make major repairs provided it was done in a manner compatible
with the usufructuary’s rights.
The conclusion to be drawn from the above analysis and the text is that
the usufruct is essentially incompatible with all but the watchdog, bare or
conditional administrative trust.
Since the author is only at this moment attempting to demonstrate that
the system of real rights envisaged by our Code to convey future rights,
such as the usufruct and substitution, is incompatible with all but a few
inconsequential trusts which have been grafted on to true usufructs and
substitutions, it is not necessary at this point to analyze what new types of
real rights might be compatible with the trust and are implicitly created
by arts.981a C.C. et seq.; nor will the author at this point discuss what real
rights, if any, the beneficiaries of administrative trusts may have.
22 Proudhon, supra, f.n.11, 2 (emphasis added).
23 Ibid., 1.
23a Ibid., 21.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
Moreover, the usufructuary must also personally and directly ad-
minister the property and be able to preserve it against waste:
Le droit de jouissance appartenant h 1’usufruitier implique naturellement
le droit d’administration ….
24
Indeed, it is of the essence of the usufruct that a donor or testator
be unable to deprive a usufructuary of his right of administration:
le testateur ne pourrait pas s6parer l’administration de la jouis-
–
sance ……
A usufructuary without the plenitude of these rights is not a
usufructuary as envisaged by the Civil Law. Thus, if one gives a
trustee the right of administration, one has not created a usufruct;
furthermore, if one deprives the beneficiary of possession, reven-
dication and the ability to preserve the property, one has not created
a usufruct. Articles 981a C.C. and following effectively vest all these
rights in the trustee; therefore, although the settlor may call the
beneficiary a usufructuary, this will not make him so. The author
submits that the rights possessed by the beneficiary of an admi-
nistrative trust do not amount to the real right of usufruct, or indeed
to any real right envisaged by the Civil Law.26
In reality, the “usufructuary” within the classic administrative
trust appears to have little more than personal rights against the
trustee to receive revenues and, in certain circumstances, to be
maintained in occupation of specific property (much like the per-
sonal claim-of a tenant against the landlord to be maintained in
occupancy).
The concept of usufruct is thus incompatible with the ad-
ministrative trust as set forth by articles 981a C.C. and following, at
least as regards the “usufructuary”. The author would also suggest
that the trust is incompatible with the essence of “naked ownership”.
There exist certain rights of which the naked owner cannot be
deprived.
First, it is of the essence of naked ownership that if the usu-
fructuary commits waste or permits the deterioration of the property,
the naked owner may take direct action to obtain
24 Huc, Commentaire du Code Civil, vol.4, 258, quoted in Guaranty Trust Co.
of New York v. The King [1948] S.C.R. 183, 199.
25 Ibid.
26 Whether or not the beneficiary may by intention or by law have real
rights in the property subject to a trust will be discussed later. However,
even assuming that a beneficiary may have real rights, such as the right
to revendicate in the event of a prohibited alienation by the trustee or in
the event of the trustee’s failure to act, the type of real right given would
not be one envisaged by the Code, but would be a special type of real right
which could be created only within a trust.
McGILL LAW JOURNAL
[Vol. 21
either … the absolute extinction of the usufruct … or the entry of
the proprietor into possession … subject to the obligation of annually
paying to the usufructuary … a fixed sum …
27
If the naked owner cannot prevent the usufructuary from wasting
the property, the donor or testator would not have created a usufruct
but a substitution de residuo.
It is also of the essence of naked ownership that the naked
owner have during the usufruct all the rights of ownership which are
not dismembered or taken away by the usufruct:
‘usufruit ….
Le nu propridtaire conserve l’exercice de tous les droits de propri6td
compatibles… [avec 1’usufruit]. Ii peut donc … exercer …
toutes les
actions qui appartiennent au propri6taire … par exemple une action en
bornage.
Le nu propri6taire est autoris6 hi faire, sur la chose grevde d’usufruit, les
actes matdriels tendant h sa conservation, lors m me qu’il en r6sulterait
pour l’usufruitier quelque … diminution de jouissance … ainsi …
le
nu propri6taire peut procdder aux grosses reparations des bttiments
soumis h
… propridtaire est en droit de faire reconstruire les bftiments d6truits
par un incendie ou par tout autre accident. 28
A “naked owner” without the right to make necessary repairs,
to take direct action to prevent extinctive prescription or to assume
personal administration in case of waste is not a naked owner. In
an administrative trust subject to naked ownership, these rights
belong to the trustees. The sole right apparently belonging to the
naked owner is the right to appoint a new trustee in case of poor
administration; however, this is a right which belongs to all bene-
ficiaries under the trust, including the holder of a merely personal
right to receive revenues.
In a non-trust situation, if the testator or donor were to create
a “usufruct” but state that the naked owner could not make repairs
or prevent waste, the court would either consider these clauses as
not written, or hold the whole gift or legacy null, or consider the
usufructuary to be owner subject to a substitution. The courts would
not consider that a usufruct had been created, and there is no
reason to assume the decision would be otherwise in a trust
situation.2 9
27 Art480 C.C.
2 8 Aubry et Rau, Cours de droit civil frangais (1869) vol.2, 508, para.233.
29 One could conceive of the possibility of creating a usufruct and sub-
jecting the naked ownership only to a trust. Thus the property would be
administered by a usufructuary, but the naked owner’s rights would be
subject to an administrative trust in which he could not prevent waste or
make repairs, these being the duties of the trustee. However, in such a case
the beneficiary would not be an owner but the holder of a new type of
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
The Substitution within a Trust
Is it possible to create a substitution within the administrative
trust envisaged by articles 981a C.C. and following? Let us examine
the following trust subject to a substitution:
I give the property to X and on his death to Y. A is to be trustee with the
powers of articles 981a C.C. and following.
An essential characteristic of a substitution is that the institute
be seized as owner of the property, 30 subject to the obligation of
delivering it over to the substitute. An “institute” without control,
possession, direct enjoyment of the property or the ability to pre-
vent waste is not an institute, any more than the “usufructuary”
without these rights is a usufructuary.31 The “institute” subject to an
administrative trust has none of the real rights which are of the
essence of the substitution, and in reality has no more rights than
a mere beneficiary with a personal right to receive income from the
trustee.
2
Thus the substitution as envisaged by the Civil Law is in-
compatible with the administrative trust set forth in articles 981a
C.C. and following. The institute does not have the necessary
minimal rights required by Civil Law to be an institute, nor does
he seem to have any real right envisaged by the Civil Code.33
Undismembered Ownership and the Trust
There are only two kinds of ownership: undismembered and
dismembered. We have observed that the customary dismemberments
of ownerhip, such as usufruct and substitution,34 are incompatible
with the normal administrative trust. But what of undismembered
real right not envisaged by the Code. At this moment the author is not
attempting to analyze what types of new real rights, if any, might be compati-
ble with a trust but only to demonstrate that the real rights known to Civil
Law are incompatible with all but the bare trust, the conditional trust and
the watchdog trust (see supra, f.n.21).
3o See art.944 C.C.
31 See arts.947, 949 and 958 C.C.
32 See Masson v. Masson (1912) 47 S.C.R. 42, and Dame Cogne v. Trust Gd-
ndral du Canada [1969] B.R. 591, esp. at 597.
33 The same comments in f.n.21 concerning the usufruct would apply to
the substitution. A settlor could thus create a substitution within a non-
administrative or watchdog trust by denuding the trustee of his powers of
administration and possession.
34The substitution is not technically a dismemberment since the institute
is considered a full owner subject to a resolutive condition; the substitute
is not considered the holder of a real right until the substitution opens. See
Mignault, Le droit civil canadien (1901), vol.5, 108 et seq. For a discussion
of a possibly compatible dismemberment, sec infra, 218.
McGILL LAW JOURNAL
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ownership? If neither dismembered nor undismembered ownership
are possible within an administrative trust, what remains of the
Civilian principle that all property must have an owner?
Article 406 C.C. defines undismembered ownership 35 as
… the right of enjoying and of disposing of things in the most absolute
manner [emphasis added].
Neither the settlor (in the case of an inter vivos trust) nor his heirs
(in the case of a testamentary trust) nor any of the beneficiairies
have the rights of absolute ownership as defined in article 406 C.C.
They neither administer nor possess the property; they do not enjoy
it; they cannot control, sell, or destroy it; they cannot even collect
revenues from it. Clearly none of these persons are undismembered
owners.
The same situation prevails even in the simplest trust, such as
the following:
I give the ownership to my son; however X is to be trustee of the property
with all the powers of articles 981a C.C. and following, and is to pay
income to my son until he reaches the age of 30 years.
The son has no right to alienate, destroy or control the property
nor has he any direct right to prevent waste, to administer or to
enjoy it. It is his, and yet it is not his, until he is 30 years old. What-
ever rights he does have are not undismembered ownership within
the meaning of article 406 C.C. Undismembered ownership is thus
incompatible with the trust, at least as regards the settlor, his heirs
and the beneficiaries .3 The only other potential owner would appear
to be the trustee. Is this possible?
The Trustee as Civil Law Owner
Some jurists have maintained that the trustee is the owner of the
property subject to a trust. Apart from the negative argument that
the trustee, by elimination, is the only person who can own the trust
property, these jurists have based their arguments on the fact that
at Common Law the trustees have “legal title”, and on the wording
of article 9811 C.C.
However, in the author’s opinion their arguments are incorrect.
As will be demonstrated, articles 981a C.C. and following are based
35 Once ownership cannot be dismembered by creating a valid usufruct or
substitution (which, as we have seen, can only be personal rights within a
trust), the only kind of ownership which remains possible within an adminis-
trative trust is full and undismembered ownership as defined at art.406 C.C.
Cf. Succession of McCan 19 South. 220 (1896), 222.
36 Of course, undismembered ownership would not only be incompatible
with an administrative trust but with a watchdog trust as well.
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
not on the Common Law but on the Civil Law.37 Any attempt to
explain the trust in Common Law terms is historically inaccurate.3 8
37 The jurists who believe the trust to be inspired by Common Law include
Mignault, A propos de fiducie (1933-34) 12 R. du D. 73; Graham, Some Peculi-
arities of Trusts in Quebec (1962) 22 R. du B. 137; Gagn6, (1952) Tray.
Assoc. H. Capitant 192, 201; Mankiewicz, supra, f.n.5, 33; Curran v. Davis
[1>-z,j b.C.R.
10 z per Rinfret J.
An-ong those who believe that the trust is not based on Common Law
is Billette, La fiducie (1933-34) 12 R. du D. 159; and La fiducie des articles 869
et 964 (1932-33) 11 R. du D. 532. See also his Traitd thdorique et pratique de
droit civil canadien (1933), vol.1, 194 and 197, para.264. Sharing this view
are Surveyer, Pouvoirs et obligations des dxdcuteurs et administrateurs (1950)
10 R. du B. 7, 13; Faribault, supra, f.n.15, 66 et seq., paras.49 et seq.; and
Mathison v. Shepherd (1908) 35 C.S. 29, 52-3.
3s The view that the trust is either based on, or inspired by, the Common Law
is an example of an all too common tendency to make seemingly logical but
unsubstantiated historical speculations without adequate historical research.
No evidence of any nature has ever been brought to show that the trust was
based on or inideed inspired by the Common Law; yet Quebec law is replete
with statements such as “il est indubitable que le legislateur s’est inspir6… du
droit anglais…” (Mignault, supra, f.n.37, 76; emphasis added) or “il est
difficile de ne pas conclure que le chapitre de la fiducie… est vraiment
d’inspiration anglaise” (Curran v. Davis [1933] S.C.R. 283, 302 per RinfretJ.;
emphasis added). Perhaps the most speculative of these comments is that
of Mankiewicz, supra, f.n.5, 33, who has written, “L’auteur du projet de loi,
qui 6tait un canadien anglais, n’a probablement pas fait de recherches sur
1’ancien droit frangais. Son but a 6t6 d’6tablir dans le droit civil qu6becois
une institution tr~s famili~re aux canadiens anglais…” (emphasis added).
Faribault, supra, f.n.15, 66 et seq., paraA9, gives an excellent policy reason
reason why the legislature should not be presumed without any tangible
evidence to have based the trust on the Common Law. After analyzing the
complicated nature of the Common Law trust with its origins in the intricate
English land law, its division between equitable and legal rights, and its
constructive, resulting and implied trusts, he concludes:
The Quebec legislature in art.981a C.C. defined
“On n’insire pas d’un seul coup, sans explication, toute une institution
nouvelle, avec ses principes, ses formes, sa procedure, ses pr6c~dents, ses
applications et ses arr6ts, dans un corps de doctrine organis6 rationnelle-
ment, harmonieusement, d’origine et de conception diff6rentes … “.
However, reasons of policy aside, the view that the trust is based on or
inspired by the Common Law is historically invalid, as shown below.
the trust in the exact
same terms as did the ancient French authors. Moreover, Jonathan (later
Judge) Wurtele, who introduced the legislation as a Private Member’s Bill,
drafted a trust one month after the enactment of the legislation in which
he expressly used the Civil Law terms “usufruct” and “substitution” to apply
to the rights of the beneficiaries and clearly vested ownership in other
beneficiaries. (Wurtele, a leading Quebec Civilist, was educated at Laval
University. He was one of the founders of the Credit Foncier and became
Attorney-General of Quebec and later a judge of the Appeal Court of Quebec.
He was an English sneaking Civilian in the tradition of Francis Walton,
Thomas McCord and Charles W. Day.)
McGILL LAW JOURNAL
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This will be discussed at length below. Moreover, the Common Law
concept of “legal title” is not in any way equivalent to the Civil Law
concept of ownership.3 9 At Common Law the beneficiaries are spoken
of as having “equitable title” and the trustee as having “legal title”.
When Common Law lawyers state that the trustee has “legal title”
they mean only that the trustee has a bundle of rights which are
known as legal title, which is different from the rights comprised
within Civil Law ownership. Indeed, it is possible for legal title to
vest at Common Law in depositaries, agents, etc.
Another argument, a textual one based on article 9811 C.C., is
equally without foundation.
Textual Argument
To begin our analysis, it is helpful to look to the words of the
Code itself. Articles 981a and 981b C.C. give the trustees the seizin
of the trust property; however, these articles expressly state that
the trustees are seized only as administrators and depositaries. No-
where does the law state that the trustees are owners or have
the rights of owners.
However, some have argued that despite the clear wording of
articles 981a and 981b C.C., article 9811 C.C. implies that the trustees
are the owners. The article reads as follows:
Only conjecture supports the view that the trust was of Common Law
inspiration. One can theorize that since the trust was well known at Common
Law, Wurtele must have turned to the Common Law when he drafted the
legislation; one can further theorize that his fellow English speaking Que-
beckers had been longing for the flexibility of the Common Law trust and
that Wurtele met this need. This speculation, of course, ignores the facts
that what was introduced was nothing like the Common Law trust; that
there is a distinction between wishing to have the flexibility of a trust and
introducing it in a way that is compatible with Civil Law; and that a Civil
Law trust had existed in Quebec for centuries.
The verbatim use of the French texts, the use of the Civilian terms in
the trusts that Wurtele himself drafted, the fact that a trust in one form or
another had been in existence in ancient French law and in Quebec for
centuries, and the fact that what was finally introduced bears almost no
similarity to the Common Law trust but is strikingly similar to the Civilian
trust, demands more from those who believe the trust to be of Common
Law inspiration than mere conjecture. There is no evidence that the trust
of arts.981a C.C. et seq. is based on the Common Law; there is abundant
and convincing evidence to the contrary.
39 See Philbrick, Changing Conceptions of Property in Law (1937-8) 86 U. of
Pa. L.Rev. 691, 702: “…title is no more than relatively better right to im-
mediate possession (and so of user…)”. See also Dias, Jurisprudence (1970),
ch.13, and Waters, Law of Trusts in Canada (1974), 10-16.
19753
THE QUEBEC TRUST AND THE CIVIL LAW
At the termination of the trust, the trustees must render an account, and
deliver over all moneys and securities in their hands to the parties entitled
thereto ….
They may also execute all transfers, conveyances, or other deeds necessary
to vest the property held for the trust in the parties entitled thereto.
If the trustees are not owners, it is argued, why must they “vest the
property” (“transfdrer la proprit6”) in the beneficiaries?
The answer is evident. When a trust is created, most of the
assets are registered in the trustees’ names and kept in their pos-
session. On termination of the trust, it is necessary for the trustees
to transfer possession and registration to the beneficiaries so ti at
they may deal with the property. Article 9811 C.C. simply sets out
the requirements of this transfer and delivery, which may take
place either by physically handing over the trust assets (paragraph
one) or by transferring registration (paragraph two).
This interpretation is clear from the wording. The article speaks
of “property held for the trust”, which refers to the property itself
and not to the transfer of ownership. 40 When the Code refers
to ownership it does not use the term “property” (406 C.C.).
It is evident from the wording of articles 981a C.C. and 981b C.C.
that the legislature has taken great pains to avoid giving ownership
to the trustees. The legislature has expressly stated that the trustees
are seized only as depositaries and administrators and has never
described them ag owners. If the text of the law supports any argu-
ment, it is that the trustees are not the owners. 41 There thus appears
40 The use of the term “proprit6” in the French version of art.9811 C.C.
is more ambivalent, since the French version of art.406 C.C. uses the term
“propridt6” to denote ownership. However, if one reads the term “propridt6”
with the words that follow, “proprit6 tenue en fiducie”, the meaning becomes
clear. The article is referring to the actual goods and assets held in trust,
not the ownership thereof. As further evidence, the term “propri~t6” is used
throughout the French versions of arts.981a, 981b, 981d, 981j and 981m C.C.
to apply to assets and not to ownership.
41 Mankiewicz, supra, f.n.5, 36 et seq., gives a number of textual arguments
why the trustees are not the owners; his argument based on art.981j C.C. is
particularly interesting (at 39). Faribault, supra, f.n.15, 76 et seq., paras.54
and 55, also gives useful textual arguments why the trustees are not the
owners. However, one cannot better analyze the text of arts.981a C.C. et seq.
than by quoting from Billette, Etudes de jurisprudence (1932-3) 11 R. du B.
38, 39:
“Le ‘transport’ de biens au fiduciaire n’est pas une alienation. On peut
transporter son bien h un emprunteur, h un mandataire… ou par les
contrats de nantissement, de louage, etc. Dans aucun de ces cas on n’ali6-
ne… . Le fiduciaire n’acquiert la propri~t6 d’aucune chose. Ce n’est pas
‘la propri6t6’, le droit de propri~t6, qui lui est transportS, mais uniquement
McGILL LAW JOURNAL
[Vol. 21
to be little textual basis for trustee ownership.42
des choses ou ‘propri6t6s mobiliires ou immobili~res’ (art.981a). On n’est
pas possesseur du droit de propri6t6, mais de choses ou ‘propri6tds’.
… Le fiduciaire n’acquiert que la possession. Il n’est saisi que comme
possesseur. I1 ne revendique que la possession. I1 n’est que l’administra-
teur et le d6positaire de la chose … : la possession, l’administration et
le ddp6t, et rien de plus. …. Les mots possession, administration, ddp6t
sont, on nous l’accordera, bien connus de notre syst~me de droit frangais.
Et, vu que le l6gislateur nous dit, en termes expr~s, que le fiduciaire n’est
qu’un possesseur, qu’un administrateur, donc qu’un mandataire, qu’un
d6positaire, et rien de plus ….
42The main proponent of the theory of trustee ownership is Mignault. He
argues that since ownership cannot remain in suspense, someone must be
owner. Who, therefore, is the owner?
“Assur6ment, pas le donateur, qui, dans une donation, doit se dessaisir
de son droit de propridt6…. S’il s’agit d’un testament, le testateur n’existe
plus … et ses hdritiers Idgaux sont sans droit, car la succession testa-
mentaire exclut la succession Idgale (art.597) ….
Ce droit de propri6t6 n’appartient pas, non plus, au b6ndficiaire,
la chose n’est pas transportde par la donation ou le testament …… It
ne reste que le fiduciaire, car nous ne pouvons supposer que le titre
de propri6t6 ne soit nulle part.” (Mignault, supra, f.n.37, 76).
qui
Mignault then proceeds to give various textual arguments to support this
position.
With the greatest respect, the learned author appears to be incorrect in
several elements of his analysis. First, a donor can retain ownership of the
property by virtue of art.782 C.C. Further, as we have seen, if in a will
ownership is not vested in a legatee, it will be vested in the intestate heirs
subject to the rights bequeathed in the will. Therefore, it does appear that
a donor can give ownership under a suspensive condition, and a testator
can bequeath ownership to his intestate heirs either expressly or implicitly
by failing to bequeath it in his will.
Mignault does recognize that the so-called ownership of the trustee is not
a true Civil Law ownership, since the trustee receives no benefits whatsoever
from his ownership and his non-beneficial ownership is merely temporary
(see Mignault, supra, f.n.9, 43 and supra, f.n.37, 78). In other words, to arrive
at the concept of trustee ownership, Mignault has had to postulate a tempo-
rary ownership without any benefits. This completely contradicts the Civil
Law concept of ownership. In a sense Mignault is an Institutionalist. He
admits that the trustee is not a Civil Law owner but is owner because the
legislator has wished to create an ownership without any right to benefit or
inherit. There is essentially no difference between saying that the trust is
ownerless but the trustee and beneficiaries possess certain rights, and saying
that the trust is owned but the owner has no rights to ever benefit.
Mignault’s views have been followed by RinfretJ. both in the case of
Curran v. Davis [1933] S.C.R. 283, and in Intervention (1937) 5 Travaux de la
semaine internationale de droit 143. This view has been rejected by many,
including Mankiewicz, La fiducie qudbecoise et le trust de Common Law
(1952) 12 R. du B. 16; Faribault, La fiducie dans la province de Qudbec (1936);
and Billette, La fiducie (1933-34) 12 R. du D. 159.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
Trustee Ownership by Default
The last argument which has been put forth in support of trustee
ownership is that, since all property must have an owner and since
no one else possesses the minimal requirements of Civil Law owner-
ship, by elimination the trustee must be owner. However, the co-
gency of this argument depends upon the trustee’s possessing the
minimal requirements of ownership. The author submits that the
trustee does not possess these minimal rights.
First, it is of the essence of ownership that it be perpetual; owner-
ship cannot be temporary:
Le Droit de Propri6t6 est un Droit Perp~tuel. … il n’existe pas de droit
de proprigtg temporaire; on ne peut pas c6der la propri~t6 de sa chose
pour un temps limit6.43
However, the trustee’s rights can only be temporary; the cases
of Masson v. Masson” and Dame Cogne v. Trust Ggngral du Canada4 5
are irrefutable authority for this proposition.46
Further, it is of the essence of ownership that the owner must
have some right to personally benefit from his property. While the
right to benefit may be- in temporary abeyance (as in the case of
naked ownership), when the benefits granted to others cease, as
they must, the owner ultimately must enjoy at least some of the
benefits of ownership described in article 406 C.C.4 7
43 Mazeaud et Mazeaud, Legons de droit civil 3d ed. (1966), 1106, para.
1347; see also Planiol et Ripert, Traitd pratique de droit civil frangais (1952),
222, para. 213, where it is stated, “De sa nature, le droit de propri~t6 est
perpdtuel”.
44 (1912) 47 S.C.R. 42.
45 [1969] B.R. 591.
46 It is possible to create an ownership which is resoluble and therefore
in that sense temporary. Thus Mignault, supra, f.n.37, 78, has written:
“Ii peut 8tre temporaire et r~soluble, comme dans le cas du grev6 de
de substitution, ou resoluble d’une fagon absolue, comme le droit de
l’acheteur dans une vente h r~m~r6. Pourquoi le l~gislateur ne pourrait-il
pas crier un droit de propridt6 temporaire et restreint quant h ses
effets?” (emphasis added).
Ownership can only be temporary if it is conditional and subject to a
resolutory clause. It cannot be temporary in the sense that it is subject
to a term. One cannot sell property to someone for 20 years, but one can
sell property subject to a condition. Trustee ownership is not subject to a
it must end. This is to be contrasted with substitu-
condition, but to a term –
tion, where the ownership of the institute is subject to a resolutory condition,
and the institute may remain owner if the condition fails.
47 See Noyes, The Institution of Property 1st ed. (1936), for one of the most
interesting theoretical discussions of ownership.
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The author submits that the trustee has no such right to benefit
from the trust property and possesses only the rights of administra-
tion and possession.
Indeed, the Civil Code itself seems to deny him this right. Article
981a C.C. states:
All persons … may convey property … to trustees … , for the benefit
of … persons in whose favour they can validly make gifts or legacies
[emphasis added].
Article 981b C.C. states:
Trustees, … are seized … for the benefit of the donees or legatees of
the property … [emphasis added].
These articles clearly suggest that the trust property is to benefit
the donee or legatee, but not the trustees themselves.
Analysis confirms the trustee’s inability to benefit from the
property. For example, we may examine the following trust:
Income to my wife during her lifetime; capital to my son on her death
but only when and if he reaches the age of 30. The X Trust Company is
to be trustee, and in the case of vacancy shall be replaced by a judge of
the Superior Court.
Let us assume that the trustee is the owner of the trust property.
Since the son is to be owner on the wife’s death, during the wife’s
lifetime the trustee must be either an institute-owner within a substi-
tution or an owner subject to a resolutive condition. If the testator’s
son predeceases the testator’s wife, the Trust Company or a court-
appointed replacement will inherit the property as absolute owner.
This is a logically tenable but highly undesirable conclusion.4 8 Fur-
thermore, it is contrary to article 964 C.C., which states that the
trustee:
does not retain the property in the event of the lapse of the ulterior
disposition …. The property in such cases passes to the heir….49
48 In the text wefhave discussed the trustee’s inability to benefit in case
of a lapse of the capital bequest. A similar conclusion applies in the case
of a lapse of the income bequest. If the trust had read,
“Income to/ny wife for 20 years, and capital to my child but only on
the expiry of the 20 year period and only if he is then living and married.
I appoint X to be trustee”,
and the wife had died during the 20 year period, the income would not belong
to the trustee but to the intestate heirs or, in the case of a donation, the donor.
49 It can be argued that art.964 C.C. does not apply to arts.981a C.C. et
seq., or if it does, that it does not apply to inter vivos trusts. To support this
view it can be maintained that art.964 C.C., enacted in 1866, applied only
to the ancient or pre-1866 fiducie and that arts.981a C.C. et seq., enacted in
1879, created a totally different institution. As further evidence for this view
it should be noted that art.964 C.C. speaks of “ministres” whereas art.981a
C.C. speaks of “fiduciaires”. Moreover, art.964 C.C. refers only to trusts
created by will, whereas arts.981a C.C. et seq. apply to trusts created both
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THE QUEBEC TRUST AND THE CIVIL LAW
If one is willing to grant the trustee the right to inherit, one
perhaps logically could state that the trustee is the owner. However,
this appears to be contrary to the text and spirit of articles 981a and
981b C.C., to the text and spirit of article 964 C.C., and to the history
by will and by gift.
One difficulty with accepting the above arguments is that they would apply
with equal force to art.869 C.C. and would lead to the possible conclusion
that inter vivos charitable trusts are impossible in Quebec. This is because
arts.981a et seq. speak of trusts in favour of “persons”, and one could there-
fore contend that the “purpose” trust is excluded from the scope of these
articles. Thus, a charitable trust would remain subject to the ancient law
and could be created by will alone. The author submits that this view is
ill-founded.
Furthermore, there was little doubt that the trustee or “hdritier fiduciaire”
could not inherit trust property before 1866 and that the codifiers recognized
-this principle in art.964 C.C. That the codifiers regarded the article as being
a codification of existing law is evidenced by the lack of square brackets and
the reliance upon ancient French authors as the sole sources of the article.
The Supreme Court of Canada in the case of Masson v. Masson, supra,
f.n.44, 77 and 89, also indicated that art.964 C.C. was a codification of existing
law and applied to the testamentary trust which existed in Quebec before
1879.
Thus there is little doubt that the pre-1879 testamentary trust was governed
by art.964 C.C. In 1879 the testamentary trust was made subject to arts.981a
C.C. et seq. These a-ticles do not indicate who will inherit a testamentary
trust if the beneficiaries predecease the testator or the trustee; however,
art.964 C.C. was not abrogated. Can it be assumed that the legislature intended
to abrogate the law of testamentary trusts as it existed prior to 1879 and
permit trustees to inherit to the exclusion of the testator’s heirs? If so, why
did the legislature leave art.964 C.C. intact, remain completely silent on the
subject in arts.981a C.C. et seq. and continue to define trustees in exactly the
same manner as ancient law (namely as “depositaries and administrators”)
when it was clear in ancient law that “depositaries and administrators”
could not inherit the property? One cannot attribute to the legislature’s silence
the intention to abrogate the previous law and to permit testamentary trustees
to inherit to the exclusion of the testator’s family. Such an intention must be
expressly stated.
If one admits that the trustees should not be able to inherit in the case
of a testamentary trust created by virtue of arts.981a C.C. et seq., there appears
to be little reason to distinguish the case of an inter vivos trust. It would
be contrary to common sense to make such a distinction and thus permit a
trust company or court-appointed person or group of persons to inherit the
property to the exclusion of the settlor and his family.
Faribault, supra, f.n.15, 378, para.326, arrives at a similar conclusion:
“L’article 964 n’est rddig6 que pour les legs parce qu’il s’applique d’abord
h la vieille fiducie du droit frangais qu’il 6tait impossible de crder par
donation. Mais ses termes sont assez gdndraux pour embrasser la fiducie
organis~e en 1879 par les articles 981a et suivants, et comme celle-ci peut
&tre cr66e par donation, l’article 964 s’appliquera 6galement dans ce
cas . …..
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of the trust. Such an absurd conclusion would have to be expressly
stated and not merely presumed.
Moreover, even those who argue that the trustees are owners
admit that the trustees can neither benefit from nor inherit the
property. Thus Mignault writes:
le fiduciaire … ne peut jamais devenir propri6taire pour lui-m~me. La
…
caducit6 qui ne peut provenir que de la personne de la bdn~ficiaire, fait
remonter le patrimoine au disposant ou a ses h~ritiers.50
Rinfret J. states:
…. les “trustees” ont vdritablement tous les droits du propridtaire sur
la chose donnde, sauf qu’ils ne peuvent en tirer aucun avantage per-
sonnel … 51
It therefore appears that, in order to find that ownership vests in
the trustee, Mignault and Rinfret J. have been forced to postulate
a temporary ownership without any benefit, along with an “owner”
whose only right is to administer the property that he “owns”. The
author respectfully suggests that denuding the trustee of all rights
of ownership yet calling him an owner does nothing to solve the
problem, since an owner who can never benefit from his property
simply is not an owner under the Civil Law. This is not ownership,
but administration called by another name. 2 We may therefore
conclude that the trustees cannot be Civil Law owners of the trust
property.
What possibilities then remain in terms of finding the owner of
the trust? There are two:
(a) The Institutionalists 53 are correct and the trust is an ownerless
institution which is incompatible with both the traditional real
rights of the Civil Law and with the principle that property must
be owned. In other words, the trust is a special legislative crea-
tion with its own rules and principles. This is the conclusion of
Faribault and Lepaulle, and will be discussed in detail below. 4
(b) Trusteeship is in itself a new form of dismemberment of owner-
ship. In the same way that an owner can be deprived of certain
50 Mignault, supra, f.n.9, 43; see also supra, f.n.37, 78, where Mignault
has stated, “il n’en b~n6fice pas personnellement, il n’en profite pas, au cas
de caducit6 de la fiducie”.
51 Curran v. Davis, supra, f.n.37, 294.
52 As was suggested supra, f.n.42, in a sense Mignault is an Institu-
tionalist. As stated above, to denude the trustee of essential rights of owner-
ship but to call him an owner is not to solve the problem that ownership as
defined by the Civil Law cannot remain in suspense.
53 See discussion infra: “The Institutionalist Position”.
54 Faribault, supra, f.n.42; Lepaulle, Traitd thdorique et pratique des
trusts (1932).
19751
THE QUEBEC TRUST AND THE CIVIL LAW
real rights by a permitted dismemberment such as usufruct or
a prohibition to alienate, so may the owner be deprived of
certain real rights through the creation of a trust. As we will
indicate, the trustee may be regarded as the holder of a real
right or power of administration. Under this theory, ownership
and the trust are compatible and the trust can be integrated
successfully into the Civil Law. In other words, article 405 C.C.,
viewed in the light of articles 981a C.C. and following, would be
interpreted to read:
A person may have over property either a right of ownership, or a simple
right of enjoyment or a right to administer as trustee, or a servitude to
exercise. 55
However, logical analysis alone will not indicate which of these
theories is superior. For this we must turn to history, from which
we will see that the trust has had a long existence in Civil Law, and
is derived from an ancient Civil Law institution known as the fiducie.
The author also will attempt to show that the trust is subject to
ownership, but not by the trustee.
HISTORY OF THE QUEBEC TRUST
There existed under pre-Napoleonic French law an institution
known as the “fiducie”. 6 The fiducie was an institution which
permitted a testator to charge a person (“le fiduciaire”)
to hold
property on deposit and administer it for a minor until the minor
attained a specified age, which probably could not extend beyond
majority. The fiduciaire was simply an administrator and was not
permitted to benefit in any way from the property or its revenues.
If the minor were to predecease the testator, the property would
belong to the testator’s heirs; if the minor survived the testator but
died before the specified age, the property would belong to the
minor’s heirs. It could never belong to the fiduciaire.
55The author has
indicated and will discuss more fully that a true
usufruct and a true substitution are compatible only with what he has called
a “watchdog trust” but not with the “administrative trust”. The extent to
which beneficiaries may have real rights will be discussed in the second
part of this article.
56 This institution still exists under modern French law. It is considered
to be one of the exceptions to the French rule prohibiting substitutions. See
Graulich, La fiducie en Belgique (1937) 5 Travaux de la semaine internationale
de droit 9; see also Baudry-Lacantinerie et Colin, Traitg thdorique et pra-
tique de droit civil 3d ed. (1905), vol.2, 490.
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Henrys described the fiduciaire as a “dipositaire et administra-
teur57
… [qui] est cens6 … possdder … pour un autre .. .”.”a Simi-
larly, Merlin described the fiduciaire as a person “…. chargde… d’ad-
ministrer la succession et de la tenir en d~p6t jusqu’au moment ou
elle doit la remettre au vdritable hdritier” 8 The similarity between
the definition of the pre-Civil Code fiduciaire and that of the Civil
Code trustees, who are described as “d6positaires … et administra-
teurs pour… des donataires et ldgataires” (981b C.C.) is striking,
and this exactitude in wording seems to suggest that the modem
Quebec trust is derived from the ancient “fiducie”. It is therefore
helpful to examine the pre-1879 fiducie in some detail.
La Fiducie
The fiducie formed part of the law of both les pays de droit
coutumier and les pays de droit jcrit, and had its source in the
Roman law. 9 Under Roman law all property bequeathed to minors
had to be administered either by a paterfamilias or a tutor. The
one exception was that a testator could appoint a relative or close
friend to hold the property for the minor and administer it for the
minor’s benefit:
… Polidius n’avoit 6t6 institut6 que pour conserver les biens A la fille
de la testatrice, et pour emp~cher qu’elle ne tombit sous la charge des
tuteurs …. f0
En la Loy Sejus comme au s. Polidius, le testateur apprehendoit que son
fils ne tombit en la tutelle de quelque personne qui dissipat ses biens:
et c’est pourquoi il y chercha ce remede … un guardien et d6positaire,
pour lui en commettre l’administration ….61
57 fHenrys, Oeuvres 5th ed. (1738), vol.1, 748 (emphasis added).
57a Ibid., 736.
58Merlin, Rdpertoire universel et raisonng de jurisprudence 4th ed. (1812),
vol.5, 214.
59 In ancient France there was a feudal institution known as the “garde
noble”. This institution enabled the “gardien” to benefit from and administer
a minor’s property, sometimes to the detriment of the minor. Renusson, “Le
trait6 de la garde noble et bourgeoise” in Oeuvres (1780), 16, indicates that
the fiducie was a legitimate method of avoiding this institution. See also Guyot,
Rdpertoire universel et raisonni de jurisprudence civile, criminelle, canonique
et b~ndficiale (1784), vol.8, 61. Thus it is conceptually possible that the fiducie
developed in les pays de droit dcrit as a method of avoiding the “garde”. How-
ever, in both les pays de droit dcrit and les pays de droit coutumier, the
fiducie was adopted from Roman Law.
The ancient French authors who commented on the fiducie based their
analysis on the Roman institution and considered it as being derived from
the law of Rome; see infra, f.ns.60, 61, 62.
60 fHenrys, supra, f.n.57, vol.3, 70.
61 Ibid., 71.
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
.62
La testatrice avait d6clar6 disposer de cette mani~re, afin de confier la
fortune de sa fille [la fille de la b~n6ficiaire] h l’intrt qu’y prendrait
son parent, plut6t qu’a des tuteurs …
The ancient French authors who commented on the fiducie based
their analysis on the Roman institution. French doctrine stated that
a fiducie could only be created for the benefit of minors, and that
it had to terminate either upon the minor’s death or upon his
attaining the age specified in the document creating the fiducie, which
probably could not extend beyond majority. 3 The powers of the
fiduciaire could not exceed those of administration, and he probably
had no power to alienate. Although there has been some dispute on
the point, a fiducie probably could be created only by will.’> If the
settlor violated the above criteria, the bequest would either be null
or deemed a substitution in which the so-called fiduciaire would be
put in the position of an institute entitled to the revenues.”5
Maynard, one of the first French authors to comment on the
fiducie, indicated that the property must be left to
le fils du testateur
… mis dans les mains de sa mere, ou d’autre
…
proche parent, ou d’un ami intime, et qu’il l’ait charg6 [le fiduciaire]
de rendre sans rien retenir, et h certain tems; ce sont les trois circons-
tances requises, pour reconnaltre l’hritier fiduciaire, et s’il est simple
d6positaire de l’hdredit. 0
02 Merlin, supra, f.n.58, 214.
3Most authors simply stated that a fiducie could only be created for a minor
6
and had to terminate at a time certain; very few expressly dealt with the
problem as to whether the time certain could extend beyond minority. Henrys,
supra, f.n.57, vol.1, 736, seems to suggest that the time must be puberty or
majority and this seems logical. Faribault, supra, f.n.15, 37, states categorically
that the fiducie could not extend beyond the age of majority. Merlin, supra,
f.n.58, 215, suggest indirectly that the time fixed for delivery need not be
puberty or majority and bases himself on Roman law. It is possible that
since patria potestas could extend beyond majority, Roman law may also
have permitted the fiducie to extend beyond majority, but it appears doubtful
that this principle would have been imported into the ancient Civil Law. Since
the fiducie could only be created for minors, it appears illogical to conclude
that it could extend beyond majority, especially as the fiducie was an exception
to the principal that testamentary administration could not be permitted
beyond a year and a day, and as an exception should be interpreted restric-
tively.
lement de Toulouse (1751), vol.1, 814.
6
4Baudry-Lacantinerie et Colin, supra, f.n.56, 490, suggest that the modem
French fiducie can be created by gift. Graulich, supra, f.n.56, 9, disagrees.
Faribault, supra, f.n.15, 37, also states that the fiducie could only be created
by will. The author has been unable to find any express indication as to
whether or not the fiducie could be created inter vivos.
65 If the document could not be interpreted so as to permit the fiduciaire
to keep the revenues, the bequest could only be interpreted as being null.
6 Maynard, Notables et singuligres questions de droit dcrit, jugdes au Par-
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Similarly, Henrys indicated that, in order to create a fiducie,
… ce soit un pere qui laisse des enfans mineurs, et qu’il les d6laisse sous
la charge d’une personne proche, comme … une mere, … que cette per-
sonne proche … soit chargde de leur remettre les biens dans un tems cer-
tain … lorsque les enfans seront faits puberes, ou qu’ils seroient devenus
majeurs.0 7
Guyot also demanded the same criteria:
… il faut qu’elle soit faite par un pore dont les enfans soient mineurs et
que I’h~ritier soit charg6 de rendre apr~s un certain temps.68
All the ancient French commentators agreed that it was the
beneficiaries who owned the property and not the fiduciaire. These
authors regarded the fiduciaire as a simple administrator with no
right to benefit from revenues or the principal:
[est] …
la propri6t6
… il r~pugne qu’il ffit … fiduciaire, et propri6taire, ces deux qualitds
n’6tant pas compatibles …. 69
… l’hdritier fiduciaire … est … guardien et ddpositaire …
des biens ne lui est pas acquise …. 70
… fiduciaire …
d’administrer la succession et de la tenir en d6p6t jusqu’au moment ohi
elle doit la remettre au vdritable hdritier … ce n’est pas sur sa tate que
repose la propridt6 des biens du d6funt; il n’en est que l’administrateur 1
… le fils, h qui l’heredit6 doit 6tre remise dans un certain tems, est cens6
deslors heritier …. 72
The fruits belonged to the minor as a consequence of his owner-
la personne que le testateur a chargde …
ship, and not to the fiduciaire:
fiduciaire ne fait pas siens les fruits … il doit les rendre avec l’hd-
…
rddit6 mme, h l’6poque r~gl~e par le testamentis
A further consequence of the fiduciaire’s lack of ownership was that
if the beneficiary predeceased the testator, or survived the testator
but died before the age he was to inherit, the property belonged
not to the fiduciaire but to the testator’s heirs in the first case, and
to the minor’s heirs in the second:
De ce que l’h6ritier Fiduciaire n’est pas saisi de la propri6t6 … i1 suit
encore que la fiducie n’est pas 6teinte par le pr6ddc~s de la personne b.
qui il est charg6 de rendre; et que, dans ce cas, l’effet s’en transmet de
plein droit h l’hdritier de cette personne.1 4
67 Henrys, supra, f.n.57, vol.1, 736.
08 Guyot, supra, f.n.59, vol.7, 364.
69 Henrys, supra, f.n.57, vol.1, 742.
70 Ibid., 736.
71 Merlin, supra, f.n.58, 214.
72 Henrys, supra, f.n.57, vol.3, 71.
73 Merlin, supra, f.n.58, 215.
74Merlin, ibid.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
La Fiducie in Quebec prior to 1879
After the British victory over the French in 1763, Quebec juris-
prudence (probably through erroneously interpreting the “freedom
of willing” legislation of 1774 and 1801)75 began to expand the scope
of the fiducie but in wills only.
As we have seen, the fiducie had extremely limited scope in
ancient French law. It permitted administration of property during
minority only, and if the minor died during minority, the fiducie
had to terminate. Quebec jurisprudence after 1763 expanded both the
testamentary executorship and the testamentary fiducie by per-
mitting testamentary executorship beyond a year and a day and
by allowing the fiduciaire to administer property for both majors and
minors, even during the lifetimes of several beneficiaries in suc-
cession.
The most instructive case dealing with the pre-Codification ex-
pansion of the fiducie is Freligh v. Seymour.76 Mr Freligh left his
property in trust, directing the trustees to pay part of the income
to his daughter and to accumulate the rest. On the daughter’s death
the trustees were directed to deliver the capital to the daughter’s
issue, and if none were living, to use the capital for charitable
purposes.
An intestate heir attacked the validity of the trust on the
grounds, inter alia, that is was not a valid fiducie as permitted by
the Coutume de Paris since it permitted property to be administered
for the lifetime of a major and then ordered that on the major’s
death the property was to be delivered over to persons other than
the major’s intestate heirs.
The court found the trust to be valid despite its violation of the
principles of the fiducie. Meredith J. stated:
… as to the capacity of the respondent, I hold he is a fiduciary legatee;
a quality which, in my opinion is recognized in our law, and which, to my
knowledge, has been upheld in all the Courts of the Province in cases in
which I have been interested.77
Duval J. held:
The appellant not being able, in the opinion of the testator, to administer
the estate, would have required an agent to do so; the testator as he had
a right to do, appointed that agent, whatever be the name given to him,
whether executor, administrator, trustee, or any other… .78
75 Billette, Au sujet des origines historiques de la fiducie (1932-3)
11 R.
du D. 365, 368.
76 (1855) 5 L.C.R. 492.
77Ibid., 506 (emphasis added).
78 Ibid., 505.
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The view expressed by the Court in Freligh v. Seymour was
confirmed by the Supreme Court of Canada in the case of Masson v.
Masson.79 The Masson case involved a will executed in 1841 which
became executory in 1847 (the year of the testator’s death). The
Supreme Court held that a testamentary trust which was to be ad-
ministered during the lifetime of the testator’s children and grand-
children was valid in Quebec in 1847, despite the Coutume de Paris.
The Court held that the testator had created a valid “fiducie or
trust”8 0
In view of the cases of Freligh v. Seymour and Masson v. Masson,
there is little doubt that by 1866 testamentary trusts as we now
know and use them were valid in Quebec. The Codifiers of 1866 were
directed to base the Civil Code not only on the Coutume de Paris but
also upon the “d6cisions, les usages et la pratique de nos diverses
81 Unfortunately, the Codifiers were extremely laconic
cours …
concerning the fiducie. Article 869 C.C. would at first glance appear
to be the relevant article codifying the existing law:
A testator may name legatees who shall be merely fiduciary [“1dgataires
seulement fiduciaires”] or simply trustees [“simples ministres”] for
charitable or other purposes within the limits permitted by the law … ;
he may also deliver over his property for the same objects to testamentary
executors.
Fitzpatrick C.J. in the case of Masson v. Masson8 2 assumed that
the article applied to the expanded fiducie; Billette is of the same
opinion.8 3 However, the opinion has more recently developed that
the words “or other lawful purposes” are to be read ejusdem generis
with the word “charitable” and that the article therefore applies only
to charitable or benevolent public trusts. Faribault is of this view,8
and it has some support from the Codifiers’ comments. In light of the
comments of Rinfret J. in Valois v. de Boucherville, it appears to
be the dominant view in Quebec:
II n’est pas … ndcessaire en cette cause, de ddfinir la portde des mots
“autre fins permises”. Une trop grande gdndralisation pourrait 6tre em-
p6chde par rapplication de la r~gle ejusdem generis. I1 nous suffit de
savoir que l’article s’adresse
toutes fins semblables “aux fins de
bienfaisances”, qui y sont expressdment mentionndes …. Les Com-
i
79 (1912) 47 S.C.R. 42.
80 Ibid., 87, 88, 90 (Anglin J.), 69 (Fitzpatrick C.J.).
81 Second Report of the Commissioners for the Codification of the Laws
of Lower Canada, 140.
82 Supra, f.n.79, 73.
83 Billette, supra, f.n.75.
84 Faribault, supra, f.n.15, 40 et seq., esp. at 44 (“… 869 … se rapporte exclu-
sivement aux legs pieux et aux fondations et ne touche en rien h la fiducie
pour le bdndfice d’individus spdcifiquement ddsign6s ou nommds”).
19751
THE QUEBEC TRUST AND THE CIVIL LAW
missaires ont voulu, par cet article, introduire dans le code la loi qui
jusque-l
r~gissait les legs pour des objets pieux, de charit6 ou de bien-
faisance. C’est donc l’ancien droit en mati~re de charitd ….. Les Commis-
saires pr~cisent que l’article expose “la loi sur les legs pour objets pieux,
de charit6 ou de bienfaisance”. Cela confirmerait qu’il faut entendre les
“autres fins permises” comme signifiant autres fins du mane genre.8 5
This would leave only article 964 C.C., which is rather obscure,
as having any relevance to the pre-1879 trust. Article 964 C.C. reads:
The legatee who is charged as a mere trustee, [“simple ministre”] to
administer the property and to employ it or deliver it over in accordance
with the will, even though the terms used appear really to give him the
quality of a proprietor … rather than that of a mere executor or ad-
ministrator, does not retain the property.
The Supreme Court of Canada in Masson v. Masson6 stated that
article 964 C.C. was a codification of the pre-1866 jurisprudence
expanding the fiducie. However, whether it was or not, the article
only deals with one point, lapse, and does that somewhat unsatisfac-
torily.8 7 The article does not concern itself with the rights, powers,
duties and liabilities of trustees, such as their right to grant power
of attorney, to act by majority or to alienate without the consent of
the beneficiaries. Clearly a draftsman who attempted to create a
trust prior to 1879 would be faced with many uncertainties.8 8
85 Valois v. de Boucherville [1929] S.C.R. 234, 263.
s6Supra, f.n.79, 77 (Fitzpatrick CJ.) and 89 (Anglin J.); contra, Faribault,
supra, f.n.15, 44-5, believes it concerns only the ancient fiducie.
87 All the ancient’authors agreed that if the beneficiary survived the testator
but predeceased the trustee, the trustee could not inherit. However, d’Theve-
not d’Essaule, Traitg des substitutions (1889), 162, suggested that if the bene-
ficiary predeceased the testator and the fiduciaire survived the testator, the
property would belong to the fiduciaire. His view is isolated and in the
author’s opinion incorrect. Faribault, supra, f.n.15, 378, suggests that the
term “lapse” as used in art.964 C.C. applies only to the situation in which
the beneficiary predeceases the testator. The article in the author’s opinion
cannot be limited to such a situation.
All the ancient authors, including d’Essaule, agreed that the trustee would
not inherit if the beneficiary survived the testator.
By explicitly rejecting the isolated view raised only by d’Essaule, the
Codifiers clearly did not intend to change the law to permit the trustee to
inherit if the beneficiary survived the testator but predeceased the trustee.
In such a case it was quite clear that the beneficiary should transmit the
property to his heirs.
88 What the Codifiers intended with respect to the fiducie, or whether they
had any specific intention at all with regard to the fiducie, is unclear. One
would have thought that, since art.869 C.C. specifically uses the term “lga-
taires seulement fiduciaires” (the very term ancient law used to apply to
the fiducie), art.869 C.C. was intended to apply to both public and private
trusts. However, the Codifiers’ comments on art.869 C.C. suggest that the
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comments of Rinfret J. in Valois v. de Boucherville, supra, f.n.85, are correct
and the article only applies to charitable and benevolent public trusts.
This would leave art.964 C.C. as the sole article concerned with
the
fiducie. As we have seen, the Supreme Court of Canada in Masson v. Masson,
supra, f.n.79, viewed this article as codifying the pre-1879 Quebec law on the
fiducie. By contrast, Faribault, while regarding the article as applicable to
the fiducie, felt that it applied only to the ancient fiducie of the Coutume
de Paris. The author agrees with the view taken by the Supreme Court that
the article includes the expanded pre-Codification fiducie.
Art.964 C.C. does not refer to the “h6ritier fiduciaire” but to the “simple
ministre” (translated in English as “mere trustee”). Art.869 C.C. speaks of
both the “simple ministre” and the “1dgataire fiduciaire”. Can it then be
argued that art.964 C.C. is not dealing with the “h6ritier fiduciaire” at all
but with another institution, the “simple ministre”?
In the author’s opinion art.964 C.C. does deal with the h6ritier fiduciaire.
The terms “hdritier fiduciaire” and “simple ministre” had well defined mean-
ings in ancient law. The term “simple ministre” was used as a generic
term to describe persons who did not benefit personally under a will but had
certain duties to perform. Examples are executors,
“… le simple ministre de sa volont6, comme sont nos executeurs testa-
mentaires … aucune lib6ralit6 en leur endroit” (Ricard, Traitd des dona-
tions (1771), vol.2, 418, para.753);
institutes “pur et simple” (an institute who was obliged to turn over the
property immediately on the death of the testator to the substitute, no
term or condition being attached to the substitution; see d’Thevenot d’Essaule,
supra, f.n.87, 102 et seq.); and perhaps the hdritier fiduciaire,
“gardien et ddpositaire… comme il ne fait que prater son ministare”
(Henrys, supra, f.n.57, vol.1, 736).
d’Thevenot d’Essaule, whom the Codifiers quoted as a source of art.964
C.C., defined the “ministare” as:
“Si cependant il paraissait que celui qui a 6 charg6 de rendre, n’a 6t6
choisi que pour exdcuter la volont6 du testateur, sans que celui-ci eut
entendu le gratifier … est simple ministre” (supra, f.n.87, 162-3, paras.
538-9).
There is some slight basis for arguing that art.964 C.C. does not apply
to the fiduciaire. The Codifiers cite as sources for art.964 C.C. d’Thevenot
d’Essaule and Ricard. In pages not cited by the Codifiers, d’Essaule suggests
that the hdritier fiduciaire can benefit from the administered property in one
specific case, thus suggesting that the h6ritier fiduciaire is to be distin-
guished from the ministre (supra, f.n.87, 164, para.541). However, d’Essaule
himself expressly recognizes that this view is contrary to that of Ricard,
whom the Codifiers also cite.
If d’Essaule’s view is correct and the “simple ministre” does not include
the hdritier fiduciaire, there would be no article in the Civil Code prior to
the year 1879 dealing with the fiducie. This would not mean that the fiducie
did not exist, but simply that the Codifiers did not deal with it.
However, the author submits that d’Essaule’s view of the h6ritier fiduciaire
was incorrect. Therefore, there appears to be little basis for arguing that
the h6ritier fiduciaire is not a “simple ministre”. As mentioned above, this
was the view taken by the Supreme Court in Masson v. Masson.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
The Legislation of 1879
As the reader will have realized, the legislation of 187989 did not
suddenly introduce the trust into Quebec law. Rather, it was simply
the latest step in the history of a Civil Law institution which had
existed for centuries. The legislation was designed to further codify
the existing trust and to clarify certain problems which the existing
law of trusts had left unsettled.
As we have seen, by 1866 Quebec had developed a sophisticated
form of testamentary trust, similar to testamentary trusts created
today. For example, the following trust was held valid in Freligh v.
Seymour:
Unto his … friend John Brush Seymour … all … his property …
to
have and to hold … upon trust, …
the said John Brush Seymour
shall … pay … unto his daughter Mrs Jane Freligh … the annual sum
of seventy-five pounds … for and during the natural life of the said Jane
… [S]hould his daughter …
Freligh …
depart this life, leaving issue … the said issue … shall be the universal
legatee of the said testator of all his property … and if the said Jane
Freligh should depart this life without leaving any such issue …
to …
a Grammar School. 90
Such trusts were regarded by the jurisprudence as an expansion
[any surplus to be invested]
of the existing fiducie.91
Unfortunately, the Codifiers of 1866 left unsettled a myriad of
questions concerning the rights, powers, duties and liabilities of the
trustees and beneficiaries, and failed to take the opportunity to
extend the trust to gifts inter vivos. 92 Evidently further legislation
was necessary, and in 1879 Jonathan (later Judge) Wurtele intro-
duced An Act respecting Trusts93 which subsequently became articles
981a C.C. and following.
The new legislation indicated how trustees were to be replaced,
clarified their powers, stated that decisions could be by majority,
and defined the liability of the trustees and the beneficiaries. For
89 In 1879 the Legislature of Quebec passed “An Act Respecting Trusts”,
S.Q. 4243 Vict. 1879, c.29, which was almost a verbatim copy of what are
now arts.981a C.C. et seq. This Act was later incorporated into the Civil
Code with slight changes by R.S.Q. 1888, art.5803.
0 Supra, f.n.76, 493495, f.n.3.
91 Supra, f.ns.76 and 79.
92 Further confusion existed because the Codifiers also failed to distinguish
between testamentary executors and testamentary administrators (see art.921
C.C.) and failed to indicate to what extent if any arts.905 C.C. et seq., dealing
with testamentary executors and administrators, applied to testamentary
trusts. Indeed, even today it is uncertain if art.913 C.C. applies to trusts either
in its terms or in its principles.
93 S.Q. 4243 Vict. 1879, c.29.
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the first time, the trust was expressly extended to gifts. However, its
continuity with the fiducie is obvious. As was seen above, the legisla-
tion uses words to describe the trust which are identical to those
used in ancient law to describe the fiducie. Article 981b C.C. reads:
… sont saisis comme ddpositaires et admi-
Les fiduciaires [“trustees”]
nistrateurs, pour le bdndfice des donataires ou ldgataires … [emphasis
added],
while the French authors Henrys94 and Merlin
(who synthesized
ancient French pre-Revolutionary law) described the fiduciaire in
similar terms.
For these reasons alone it would seem that articles 981a C.C. and
following were simply an extension and refinement of the existing
Civil Law fiducie by which the trustees held and administered pro-
perty for the benefit of the beneficiary, who was the true ownerf0
As Hutchinson J. stated in Mathison v. Shepherd:
there is not a word .. to indicate that it introduces a new system, in-
…
compatible with our prior law on the subject … . The conclusion seems
to be unavoidable that the statute … certainly extended our law … “as
one continuous whole”.97
Any doubts as to the Civilian nature of the Quebec trust may be
resolved by examining the terms of the two documents in the
Appendix to this article. These are a testamentary trust and an inter
vivos trust, both drafted by Jonathan Wurtele himself. The former
was created in 1876 and the latter in 1879, one month after the
passage of the legislation. In both of these documents Jonathan
Wurtele indicated quite clearly that he intended certain beneficiaries
to own the trust property, and that he further desired real rights
such as usufruct, substitution and ownership to apply to the trust.
This suggests compatibility with the Civilist viewpoint that all pro-
perty must have an owner, and further suggests that, as in the
ancient fiducie, the trustee is not the owner. Of course, we have
seen already some of the problems which arise in connection with
the granting of such real rights in a trust, but a solution will be
discussed later.
The creation of the inter vivos trust of 1879 apparently was
closely linked to the introduction of the new trust articles into the
Civil Code. In private conversation the author learned that Mr Wur-
tele’s brother-in-law was in serious financial difficulty at the time and
wished to create an inter vivos trust to protect his wife (Jonathan
94 Henrys, supra, f.n.57.
95 Merlin, supra, f.n.58.
96 Henrys, supra, f.n.57, vol.1, 742: ” …
il r6pugne qu’il fut hdritier fiduciaire
et propri6taire ces deux qualit6s n’6tant pas compatibles”.
97 (1908) 35 C.S. 29, 52, 53.
1975″I
THE QUEBEC TRUST AND THE CIVIL LAW
Wurtele’s sister). The family wanted to have the property ad-
ministered for her benefit yet removed from her husband’s creditors.
As we have seen, it was probable that under the existing law of
Quebec an inter vivos trust could not be- created validly. In 1879
Jonathan Wurtele introduced as a Private Member’s Bill what
are now articles 981a C.C. and following.8 On October 27, 1879, one
month after the legislation was enacted, Jonathan Wurtele’s brother-
in-law, by Deed of Trust executed before Notary Baynes and re-
gistered at Montreal West under number 2073, created an inter vivos
trust for his wife. Jonathan Wurtele was named one of the trustees.
The preamble of the trust reads:
… in pursuance of the Act of the Legislature of the Province of Quebec
assented to on the eleventh day of September last, intituled “An Act
respecting Trusts” conveyed to Jonathan … Wurtele … in trust … for
the use and purposes hereinafter mentioned ….
Let us examine both the testamentary trust created in 1876 and
the inter vivos trust of 1879.
The relevant parts of the 1876 testamentary trust read as follows:
I will, devise and bequeath the usufruct of my Estate to my beloved wife …
until her death ….
I will, devise and bequeath my Estate, (but subject to the usufruct given
to my beloved wife,) to my sons and daughters and to the lawful issue
of any of my children who may predecease me, to be divided by roots,
but subject to the substitutions hereinafter created, instituting my said
sons and daughters and the issue of any predeceased children, my universal
legatees.
I substitute the shares of my said daughters in my said Estate to their
lawful issue, respectively.
I nominate and appoint … Jonathan Wurtele … to be the Executor[s] ….
I constitute my said Executors trustees of my Estate ….
After the death of my said wife, … to pay … net annual income … of
my Estate, to my children, or the issue of my children … until their
respective shares in the capital of my said Estate are paid.
From these provisions it appears quite clear in Wurtele’s mind that
the trustees were not owners and that ownership was vested in
certain beneficiaries, subject to a usufruct and a substitution.
The inter vivos trust created one month after enactment of the
legislation contained, inter alia, the following provisions:
Who in pursuance of the Act of the Legislature of the Province of Quebec
assented to on the eleventh day of September last, intituled “An Act
… Wurtele of the City of
respecting Trusts” conveyed
Montreal, Esquire, Queens Counsel … and … present and accepting, in
to Jonathan
9s Enacted as S.Q. 42-43 Vict. 1879, c.29, imported into the Civil Code with
slight alteration by R.S.Q. 1888, art.5803.
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trust …
. All the household furniture and effects now contained in the
dwelling house … situated on Ontario Avenue … and the other moveable
property mentioned … in the schedule hereunto annexed ….
This conveyance in trust is made … to the said trustees for the benefit of
the children issue of his said marriage, to wit Louisa … James … Archibald
… John … Norman … Allan … Arthur … to whom … by these pre-
sents gave the same in consideration of the love he bears them.
This gift and conveyance in trust is made subject nevertheless to the
usufruct and enjoyment of the said furniture and other moveable property
by the said [donor] and his said wife Dame Louisa Sophia Campbell
Wurtele and by the survivor of them …. 99
This gift is made subject to a substitution in favour of such children as
may hereafter be born of his marriage … and consequently any such
children and his children hereinabove named shall together own and have
the said furniture and other moveable property share and share alike ….
While the wording of this trust is less clear, it seems that the
intention here also was that the beneficiaries were to be the owners
insofar as ownership is compatible with the trust, and that usufruct,
naked ownership, and substitution could be created within a trust. 10
Thus, not only did Wurtele use wording identical to that used
by the ancient Civilian authors in devising the new trust legislation,
but he also designated certain beneficiaries as owners in the very
documents he drafted. Historically, it appears, therefore, that the
trust is a child of the Civil Law and was intended to be compatible
with the principle that all property must have an owner. Yet, as we
have seen, no one –
has sufficient rights to be owner at Civil Law. This leaves two
possible solutions: the Institutionalist view that the trust is owner-
less, but is to be interpreted as much as possible within the principles
of the Civil Law, and the view that the trust is owned but that the
donor, testator, beneficiaries or trustees –
09 In reality this was a true usufruct, since it was stated that “The trustee
will allow the said… [donor] and Dame Louisa Sophia Campbell Wurtele
to have the use and employment of the said furniture and moveable proper-
ty…”. However, the trust went on to state that if there was destruction by
fire, or sale of the furniture with the consent of the usufructuaries (but note
that the consent of the naked owners was not required), the proceeds would
be invested and any income paid to Dame Wurtele for her use and expenditure.
The trustees were obliged to keep the furniture insured in the names of
the trustees but to collect all premiums from the donor and his wife.
This donation seems to suggest that Wurtele was aware of the distinction
between a usufruct and a right to income in property subject to a trust.
In the author’s opinion, the trust of the furniture should be regarded as
a true usufruct within a watchdog trust, which would become an adminis-
trative trust in the case of fire or sale.
100 However, in the author’s opinion the usufruct contemplated by Wurtele
would be a true usufruct within a watchdog trust. We will discuss infra the
concept of a substitution within an administrative trust.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
rights of ownership have been reduced by a new dismemberment –
the real right of administration of the trustee.
THE INSTITUTIONALIST POSITION
As mentioned above, it is not possible to “own” trust property
under an administrative trust within the Civil Law definition of
ownership. This is true even of trusts where the settlor expressly
has vested ownership in someone, as in the Wurtele trusts. The
rights so granted do not amount to ownership. Yet it is a fundamental
principle of the Civil Law that all property must have an owner. We
are thus faced with a dilemma.
Some authors have attempted to cut the Gordian Knot by sug-
gesting that no one owns the trust property on the grounds that
the trust is a special institution created by law with its own rules
and principles, one of which being that the property can be owner-
less. The main proponents of this view are the French author Pierre
Lepaulle’ 0 ‘ and the Quebec author Marcel Faribault
2
Lepaulle states that the trust cannot be integrated into the Civil
Law theory of ownership. He regards the trust as an ownerless fund
(“un patrimoine … sans maitre”) watched over and administered
by guardians (the trustees) who must use the assets for the purposes
for which the trust was created. He defines the trust as ” … un
patrimoine inddpendant de tout sujet de droit … constitude par
une affectation”. 0 3 Lepaulle gives as examples of such “patrimoines”
the vacant succession, the succession under benefit of inventory and
the foundation. He argues that the trust is simply another example
of this concept.
However, the weight of French doctrine has rejected the view
that one can create ownerless patrimonies under French law. It has
been argued in opposition to Lepaulle’s theory that the examples
given are not unowned patrimonies but are perfectly compatible with
Civil Law ownership and that the very idea of an ownerless patrimony
or fund is incompatible with the Civil Law.0 Thus Planiol and
Ripert wrote:
II faut se garder toutefois de tomber d’un exc:s dans l’autre et, parce que
la doctrine classique a tendu h l’extr~me le lien qui unit le patrimoine h la
personnalit6, vouloir que le patrimoine devienne tout h fait inddpendant
101 Lepaulle, Traitg thgorique et pratique des trusts (1932); for an interesting
commentary on this work, see Rheinstein, (1934) 43 Yale L.J. 1049.
102Faribault, supra, f.n.15.
103 Lepaulle, supra, f.n.101, 31.
104 See Faribault, supra, f.n.15, 101-3; also Motulsky, supra, f.n.3, 459 et seq.
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de la personne … toutes ses traditions l’dloignent de l’idde d’un patri-
moine qui n’appartiendrait A personne.5 0
Mazeaud summed up this view when he wrote:
0
II n’est pas de patrimoine sans une personne, physique ou morale, qui
serve de support A ce patrimoine … masse de biens ne constitue pas un
patrimoine par le seul fait qu’elle est affectde h une oeuvre. II est nd-
cessaire que l’oeuvre regoive d’abord la personnalit6; ….
Dans le syst~me frangais, la personne domine le droit: on ne congoit pas
un droit dont une personne ne serait pas titulaire. D’aucuns hdsiteront
donc h adopter la conception, … d’un patrimoine sans maitre et, par
suite, de droits n’ayant pas une personne pour titulaire. Encore faut-il
remarquer que, en crdant des personnes morales, notre droit, depuis
longtemps, a implicitement tourn6 le principe qui donne h tout droit une
personne pour titulaire: lh oit la personne manquait, on l’a cr66e. 07
However, Lepaulle did perform a valuable service. Writing for a
jurisdiction which had no special legislation permitting the trust,
he demonstrated that the trust could be analyzed in Civil Law terms
and was not inextricably linked to the Common Law. Lepaulle’s
theory probably would have fared better in Quebec. If one admits
that trust property is ownerless, the argument of French doctrine
that an unowned patrimony is illegal can be met in Quebec with
the argument that articles 981a C.C. and following have permitted
the trust, and hence specifically permit the creation of an ownerless
patrimony.
Because Marcel Faribault was writing in Quebec, he did not have
to develop a theory to validate the trust, but simply had to re-
concile the trust as legislated with the principles of Quebec Civil
Law. Faribault agrees with Lepaulle that no one owns the trust
property; however, he also agrees with French doctrine that an
ownerless patrimony is contrary to the essence of the Civil Law
“patrimoine” and hence impermissible108 He therefore does not
accept the possibility that the Quebec legislature intended to in-
troduce the concept of an unowned patrimony into Quebec law in
1879.
Faribault instead developed his own theory of the trust. He
maintains that under articles 981a C.C. and following no one owns
the trust. He also agrees that it is a basic principle of our law that all
property must have an owner. However, the answer to this conun-
drum is simple. Since articles 981a C.C. and following have been
105 Planiol and Ripert, Traitd pratique de droit civil frantais 2d ed. (1952),
vol.3, 26-27, para.21.
1O Mazeaud, Legons de droit civil 4th ed. (1967), vol.1, 319, para.286,
10 Ibid., 327, para.297.
108 Faribault, supra, f.n.15, 101-103.
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
enacted by the legislature, the trust must be regarded as a special
institution expressly created by law in which the legislature has de-
cided to permit unowned property. The trust is therefore strictly a
creature of the legislature and should be considered apart from any
concept of “patrimoine”. Faribault observes that throughout Quebec
law there are various unincorporated entities or bodies which,
without “owning” property, have rights of administration and
alienation therein. The trust, he concluded, is such an unincorporated
entity (which he calls an “institution … organisme”),309 Like other
legislatively-created non-incorporated entities, such as unions, syn-
dicates and co-operatives, the trust does not have legal personality
and hence cannot “own” the trust property (since property can only
be owned by legal persons), but can administer and alienate pro-
perty, sign contracts and incur liabilities.
Faribault describes the trust as:
Une institution … organisme constitu6 pour atteindre un butO … une
entit6 distincte des individus qui la composent ….
111
He goes on to state that not only legal persons have been given
legal rights:
La loi positive devra donc r~glementer les institutions qui s’impose …
Notre legislation positive a d’ailleurs employ6 … deux moyens. Le plus
simple est 6videmment de reconnaitre … la personnalit6 morale. C’est ce
qu’on a fait toutes les fois qu’on parle de corporation.
… L’autre moyen consiste h n’employer aucun terme qui reconnaisse
express~ment la personnalit6 morale ou l’existence corporative, mais a
ddicter suffisamment de r~gles, autrement inexplicables, pour qu’il faille
conclure sans conteste h une reconnaissance de la personnalit6 … syndi.
cats coopdratifs … nous r~servons le nom de personnes morales, ou de
corporations, h celles des institutions que la loi qualifie sp~cifiquement
de telles, et nous emploierons le mot institution pour designer celles oil
la reconnaissance expresse fait d~faut, si la r6glementation existe, puis.
que cette derni~re suffit.112
Faribault’s importance is not his definition of the trust as “un or-
ganisme constitu6 pour atteindre un but.. .”, but rather his concept
of the trust as an unincorporated entity expressly created and
regulated by law, in which the property subject to a trust is owner-
less because the law permits this. Faribault’s contribution is his
insight that just as the law expressly permits the union, syndicate
and co-operative, which are not legal persons, to have rights, ad-
minister and alienate property, so the law expressly permits the
same for the trust.
109 Faribault, supra, f.n.15, 106, para.75; 148, para.120.
110 Ibid., 107.
111 Ibid., 128.
112 Ibid., 135-7 (emphasis added).
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Faribault’s view that there could exist an unincorporated entity
with powers to hold, administer and alienate property without
owning it was not original with him. The possibility of an unincor-
porated entity either endowed with legal personality or with some
form of legal status was much discussed in early twentieth century
legal thought. As unions and other unincorporated organizations
proliferated, serious practical problems arose with regard to their
funds, their legal liability, and their right to sue and be sued.
In this context, many authors denied that there was any legal
principle that only physical or State-created persons could possess
rights, deal with property, incur liabilities and sue and be sued.
They argued that human beings by themselves and without State
intervention could create bodies possessing these powers as well
as legal status. Thus Harold Laski wrote:
Surely it is but a limitation of outlook not to extend the conception of
personality … [Ilt is a strange notion that a Roman Church … a Standard
Oil Trust … should be … devoid of group will because … certain mystic
words have not been pronounced over them by the State …. 113
… we [meaning the proponents of Laski’s views] treat the personality of
… group persons as real and apply … that reality throughout the … law;
we say that the distinction between incorporate and voluntary associa-
tion must be abolished. We say that the trust must be made to reveal
the life that glows beneath ….
Similar views were expressed by jurists in almost all Western
countries, although different jurists formulated these views
in
varying ways. In France some jurists, such as Renaud, spoke of the
theory of the Institution. These jurists stated that there existed at
Civil Law numerous bodies or organisms which, whether incor-
porated or not, had a legal existence. For the proponents of this
view, the test of legal existence was not incorporation, but whether
each body or organism formed
114
… un groupement d’individus assujettis h un ordre dont la raison d’6tre
est l’obtention d’une fin par les m~mes moyens …. 115
Organisms or bodies which met this test were defined as “institu-
tions” and were held to have legal existence whether or not they
were incorporated.” 6
113 Laski, The Personality of Associations (1910-11) 24 Harv.L.Rev. 404, 417.
114 Ibid., 424.
115Faribault, supra, f.n.15, 116. Faribault on the the same page quotes from
Delos, who defines it as “un groupe organis6, ou du moins en mal d’organisa-
tion”. Actually, the theory of the Institution attempted to fit most legal
activity under its aegis. It even regarded contracts as organisms for the
benefit of its members.
116See Faribault, supra, f.n.15, 135-7.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
The proponents of these views lost the theoretical battle. Most
courts rejected their theories.117 However, they did win the war.
Many legislatures began to enact statutes recognizing the existence
of many unincorporated associations, granting them legal status
without going so far as to grant them legal personality. Thus in
Quebec, numerous statutes regulate unions, co-operatives, syndicates
and the like, granting them the right to hold and alienate property,
to have limited liability and to sue and be sued.
It is against this background of theoretical debate and practical
legislation that Faribault constructed his theory. Faribault adopted
Renaud’s theory of the Institution, arguing that the trust is an ex-
ample of an institution which, like the union and the co-operative,
has been recognized by law and expressly given the right to hold
and alienate property, despite its lack of legal personality.
His theory has been criticized on the grounds that Quebec law
has never accepted the theory of the Institution or any similar
theory; nor, it was argued, has the Civil Law granted unincorporated
entities or organisms rights over property which only legal persons
can possess. Thus Mignault has written:
F’ai eu l’avantage d’6couter la lecture d’une these pour le doctorat oti
l’auteur se pr6valait de la nouvelle thdorie de l’institution pour dire que
c’est la fiducie elle-m~me, en tant qu’institution, qui devient propridtaire
des biens donn6s ou 16gu6s. La thdorie de l’institution n’a pas encore 6t6
admise chez nous, et il me semble impossible de reconnaitre la person-
nalit6 h la fiducie qui constitue une alienation sui generis et non un sujet
de droit.” 8
However, with respect, in the author’s opinion this criticism
misses the point. Faribault’s view does not depend on the validity
of the theory of the Institution or the unincorporated entity. His
concept in essence is that the trust is a creation of the legislature
permitting ownerless property. However, Faribault’s view is subject
to three different criticisms, one serious but answerable, and the
other two unanswerable.
First, the principle that all property must have an owner is not
merely a theoretical dogma but has important practical implications.
117 In Quebec the battle was lost in the case of Society Brand Clothes Ltd.
v. Amalgamated Clothing Workers of America et al. [1931] S.C.R. 321; an
echo of this battle is found in the argument as to whether a partnership is
a person and whether it has legal status. See also Caron, “De Faction rdcipro-
que du droit civil et du common law dans le droit des compagnies de la
Province de Qu6bec”, in Ziegel, Studies in Canadian Company Law (1967),
102, 110-111.
1S Mignault, La fiducie dans la province de Qudbec (1937) 5 Travaux de la
semaine internationale de droit 35, 45 (emphasis added).
McGILL LAW JOURNAL
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It is particularly crucial to the law of gifts and successions. For
example, let us examine the following bequests:
I give my property to my wife and on her death to my son.
Income to my wife and on her death the capital is to belong to my son.
In both cases the testator has not indicated who is to inherit
should his son predecease his wife. Such lapses are common in
testamentary bequests, and each legal system has developed over the
centuries its own principles and rules to determine how the property
will devolve in such a situation. The Civil Law concept which de-
termines devolution in such a case is ownership. To the question
“Who will inherit?”, the answer is “The owner”: in the first case,
the property would devolve to the wife as institute-owner; in the
second, the testator’s heirs would be the beneficiaries. If we abandon
the concept of ownership in the trust, we have no other mechanism
for determining one of the most important problems of the will or
the gift.” 9
There is, however, a response to this argument. Faribault could
answer that although there is no owner of the trust, rules of de-
volution could be evolved as if there were an owner. In other words,
we would determine who would have been the owner in accordance
with the ordinary rules of Civil Law, and then conclude that the
property would devolve as if it were owned by that person. We would
bestow on that person the rights of ownership without his actually
having the ownership. Thus in the legacy,
Income to my wife and on her death the capital is to be delivered over
to my children ….
if the children predecease the wife, the trust property would remain
in the intestate heirs in accordance with article 838 C.C. It is there-
fore possible to construct a general theory of devolution without
ownership, 2 ‘ although this raises further problems such as whether
1 9 The concept of ownership would have some utility in determining the
rights of revendication of the beneficiaries and the extent to which the
beneficiaries could terminate the trust prior to its specified termination
date, but these are not as crucial as the question of devolution. In abandoning
ownership, one is also led
to conclude that the beneficiaries’ rights are
moveable in nature, a conclusion which has many consequences, especially
with regard to matrimonial regimes.
120 Faribault does develop a rather complicated theory of the devolution of
property, different from that stated in the author’s text above.
Faribault, supra, f.n.15, states that there is implied in every trust a pro-
hibition to alienate which prevents the beneficiary from alienating either the
trust property or the beneficiary’s interest in the trust (i.e., his right in the
present or future to receive trust property). He concludes at 385:
“Cette prohibition rdsulte des instructions donndes aux fiduciaires de ne
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
or not to permit other consequences of ownership, for example owner
revendication (which Faribault himself rejected).
However, there are two other criticisms of the theory which are
more difficult to answer. The first is that Faribault’s theory is re-
futed by the history of the Quebec trust. As we have seen, the trust
in Quebec is rooted in the ancient French fiducie, under which owner-
ship was vested in the minor-beneficiary. Historically there is no
support for the ownerless trust concept. The second criticism is that
remettre le capital qu’h une 6poque d6termin6e, ou de payer subsdquem-
ment les revenus b un autre. Ne poss6dant un droit acquis dans les biens
de la fiducie qu’h l’arrivde du terme le b6n6ficiaire ne peut en disposer;
il ne peut meme pas disposer de son int6r6t, parce que s’il le pouvait,
le tiers acqudreur pourrait bien, lui, demander la remise du capital…
[Cleci explique … toute la ddvolution de l’int6rt b6n6ficiaire.”
He gives several examples of trusts in which it is difficult to determine to
whom the property devolves. Three of his examples are:
‘To my trustees to pay the income to my wife.’
‘To my trustees to pay the income to my son until he is thirty-five.’
1.
Nothing is said in the trust document as to what is to happen to the
capital; to whom the capital devolves is a question of interpretation.
2.
Nothing is stated in the trust document as to whom the capital devolves
if the son dies before 35.
3.
and finally to deliver the capital to my grandchildren.’
Nothing is stated in the trust document as to whom the property will
devolve if the children die without children.
‘To my trustees to pay the income to my wife then to my children,
Faribault states that in the first example the prohibition to alienate creates
a right in favour of the donor or of the testator’s heirs to inherit the prop-
erty. He bases himself on art.972 C.C. which states:
“When the prohibition is not made for another motive, it is interpreted as
establishing in favour of the party disposing and his heirs a right to
get back the property.”
In the second example Faribault argues that the prohibition to alienate
is established in favour of the son, so that if the son dies a substitution opens
in favour of the son’s heirs.
In the third example he argues that the prohibition to alienate results in
the children, or rather their heirs, inheriting the property if the children die
without children of their own.
Faribault’s theory is subject to certain difficulties. Firstly, it cannot
explain the devolution of property in a case where alienation is permitted.
Secondly, since his theory depends on determining for whose benefit the
prohibition to alienate was created, one can imagine a Pandora’s box of
distinctions in complicated trusts which would lead to endless litigation.
The concept of presumed ownership would have made Faribault’s theory
of the devolution of property more definite.
McGILL LAW JOURNAL
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it is possible to integrate the trust into the Civil Law of ownership,
thus rendering Faribault’s theory unnecessary. The author respect-
fully would propose a theory which he feels can integrate fully the
trust into the Civil Law and which is consistent with the history of
the trust.
THE TRUST AS A DISMEMBERMENT OF OWNERSHIP
The author submits that a solution to the dilemma surrounding
the ownership of the trust in Quebec is to regard the trust as a
permitted method of dismembering administrative powers or rights
from ownership. Put another way, the rights or powers granted to
the trustee are a dismemberment of the owner’s rights, just as the
rights granted the usufructuary are a dismemberment of the owner’s
rights. Whereas the dismemberment of the right of enjoyment does
not negate ownership, so the dismemberment of the right of ad-
ministration similarly does not deny ownership. The dismemberment
which is a usufruct is defined as ” …
the right of enjoying things of
which another has the ownership … “,121 while a trust may be defined
as “…
the right of administering things of which another has the
ownership”. 22
Civil Law permits certain of the benefits of ownership to be
dismembered from ownership and granted to persons other than
the owner; hence the usufruct. However, Civil Law traditionally did
not permit the dismemberment from ownership of only a right or
power to administer without any right to benefit from the property
administered. Before administration could be dismembered, Civil
Law required as a matter of public order that it be joined to en-
joyment:
121 Art.443 C.C.
122 One can argue that the term “right” implies benefit and the trustee
does not benefit from his administration, so that “power” might be a better
word. However, there is no doubt that administration is a dismemberment.
There is some similarity between the dismembered administration permitted
by art.981a C.C. and the dismembered alienation created in art.970 C.C.
However, in the latter case, the power of alienation is simply taken away
without being vested in anyone, while in art.981a C.C., administration
is
granted to another who can regain it if lost through the right of revendication.
The trustee is not the only “administrator” of a dismembered ownership
recognized in Quebec law; the executor is in a similar position. Moreover,
under ancient law, the fiduciaire for a minor was in an identical position.
Certainly nobody would assert that French law in 1600 had a theory of the
Institution or the ownerless fund.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
Le droit de jouissance appartenant A l’usufruitier implique naturellement
le droit d’administration … le testateur ne pourrait pas s6parer P’admi-
t une personne autre que
nistration de la jouissance pour l’attribuer
l’usufruitier …. 12
Le droit 2 h’usage suppose n6cessairement le droit d’administrer12 4
In ancient law there was one exception to the rule that adminis-
tration alone could not be dismembered from ownership or enjoy-
ment: the fiducie. The fiduciaire could administer for the true owner
without receiving any benefits whatsoever.’25 He was the holder of a
right or power of pure administration. The modern trustee or
“fiduciaire” (as he is called in the French version of article 981a
C.C.), who is the descendant of the ancient fiduciaire, is likewise
the holder of a dismembered right or power of pure administration
for the benefit of the true owner and the other beneficiaries. The
trust may therefore be regarded as a legislatively-created dismember-
ment of ownership, recognized for centuries and regulated and ex-
panded after 1763.
The author would suggest that the trustee be considered as the
holder of a “Real Right of Administration”; however, since no
benefits are granted to the trustee, an equally acceptable termi-
nology could be a “Real Power of Administration”. Whether one
calls the trustee the holder of a real right or a real power, there is
little doubt that a disniemberment from ownership of administra-
tion is involved, and that the power of administration given the
12 3 Huc, Commentaire du code civil, vol.4, as quoted in Guaranty Trust
Co. of New York v. The King [1948] S.C.R. 183, 199.
124 Guaranty Trust Co. of New York v. The King, ibid.
125 The fiduciaire was not a tutor; see Merlin, supra, f.n.58, 215. The tutor
is the legally-created personal representative of an incapable person. He
stands in the place of the minor-owner for the purpose of exercising the
the privately-imposed administrator of
latter’s rights. The fiduciaire is
property for the owner and his legal representatives. He cannot deprive the
tutor of the right of administration. Thus in the Louisiana case of Succession
of McCan 19 South. 220 (1896), 228 (quoting and approving In Succession of
Fouchet 30 La.Ann. 1020 (1878)), it was stated:
“… by the laws of the state the tutor is alone and exclusively entitled
to administer the property belonging to his wards … [and] cannot be
deprived of the administration of their property by the appointment of
… administrators ….
The Court also stated in Succession of McCan, 231:
“… a tutor has the absolute right to administer the property of his
wards, and that it is out of the power of a testator to deprive him of it.”
This reasoning would apply to any Civil Law jurisdictions which permit
testamentary tutorship. The fact that one can appoint a testamentary tutor
to exercise an incapable’s right of ownership is irrelevant to the question of
whether one can deprive an owner (or in the case of incapacity, an owner
through his legal representative) of the right to administer.
McGILL LAW JOURNAL
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trustee is not only given to him personally but is attached to the
property subject to the trust, as is any real right. We shall now
examine the difference between an ordinary or “personal” adminis-
tration and an administration attached to property, which we shall
term “real” administration.
Personal and Real Administration
The Civil Code calls the trustee “an administrator… of the
in trust”.12 However, the trustee is more
property … conveyed …
than the usual administrator or mandatary in that his administra-
tion is attached to the property and, like the executor, he has the
right to sell.
Ordinarily, a person can give another a mandate to administer
property. The mandator can even oblige himself not to revoke the
mandate.2 7 However, the obligation to submit to the mandatary’s
administration is a personal obligation, binding only on the manda-
tor, and does not follow the property. If the mandator were to sell
the property, even if the mandate were registered against it, the
purchaser would not be obliged to suffer the administration unless
he so agreed.
Similarly, if a donor gave property to his wife as usufructuary
and to his son as naked owner, and all three agreed that X would
administer the property until the wife’s death, if the usufructuary
were to sell her interest, the purchaser would not be obliged to
suffer X’s administration without so agreeing. By contrast, if a valid
trust were created, the alienation of the usufruct would not affect
X’s right or power to administer the property even if the purchaser
did not consent to it. It is this ability to follow or be attached to
the property which gives the trustee’s power its character of being
real.
It should be emphasized that such a dismemberment of adminis-
tration from ownership is not contrary to any provision of the Civil
Code. Article 406 C.C. states that ownership is the complete right to
enjoy, use, alienate and even destroy property. Just as article 443
C.C. allows the owner to grant another the right of enjoyment,
articles 981a C.C. and following permit the owner to grant another
the right to administer it:
126 Art.981b C.C.
127The obligation not to revoke cannot be perpetual; a perpetual irrevoc-
able mandate of administration is illegal. See Planiol et Ripert, Traitd prati-
que de droit civil frangais 1st ed. (1932), vol.11, 845, para.1492, and Sal16 de
la Mamierre, Le Mandat irrevocable (1937) 36 Rev.trim.civ. 241.
19751
THE QUEBEC TRUST AND THE CIVIL LAW
Trustees … are seized as depositaries and administrators
property … and may claim possession of it …
.128
… of the
Indeed, many authors who have attempted to analyze the Common
Law trust and relate it to the Civil Law have perceived the essence
of the trust as the creation of a purely managerial or administrative
interest in property. Thus H.R. Hahlo has written:
The trust of English law … is but one species of the genus “trust”. As
the very word indicates, the characteristic feature of the trust is not the
division between legal and equitable ownership –
this is the specific
device employed by English law to achieve the purposes of the trust –
but the separation between the control which ownership gives and the
benefits of ownership.129
The Trust and the Traditional Real Rights
It is now in order to draw certain conclusions regarding the trust
as a dismemberment of ownership and its relationship to the Civil
Law of property.
128 Art.981b C.C.
2
1
0 Hahlo, The Trust in South African Law (1961) 78 S.Afr. L..
195. See
also Nussbaum, Sociological and Comparative Aspects of the Trust (1938)
38 Colum.L.Rev. 408, 410, and Ryan, An Introduction to the Civil Law (1962),
“The [Civil] Law is a Jealous Mistress”
221. Minz, Succession of Simms –
(1966-67) 41 Tul.L.Rev. 885, 908-909, states:
to adopting
the trust because it created
“However, the opposition
legal and equitable rights was probably only a
foreign concepts -of
formalistic technique employed by the courts. For the essential functional
or substantive character of the trust can be understood in any legal
system as a separation of control of property and interest in property”
(emphasis added).
The reader should note that because of special enabling legislation, trusts are
now valid in Louisiana. Previously they were illegal.
The view that the trust is really a dismemberment of ownership has been
criticized on the grounds that the creation of a real right or power of ad-
ministration instead of merely dismembering ownership diminishes it, and
therefore is not a true dismemberment. Thus Merryman, Ownership and
Estate (1974) 48 Tul.L.Rev. 916, 941, f.n.65, has written:
“… it should be pointed out that the parts do not add up to the whole.
In the typical private trust, the corpus is immune from the general
creditors of both trustee and beneficiary; it cannot legally be wasted,
abusdd or invested in highly speculative ventures nor allowed to lie idle
if there is a reasonable prospect of productive use …
. Thus, when
property is placed in trust, there may be not only a division, but also a
contraction of ownership.”
Actually this very criticism can be made of the usufruct or the substitu-
tion and does not appear to be valid.
McGILL LAW JOURNAL
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The Trust and Ownership
The trust, regarded as a dismemberment from ownership of
the real right or power of administration, is perfectly compatible
with the principle that all property must have an owner.
For example, in a testamentary trust such as
To my trustees to pay the income to my wife and on her death to deliver
the capital to my children …
,
the owners are the intestate heirs, the whole in accordance with
article 838 C.C.130 If this trust were inter vivos, the owner would be
the settlor in accordance with article 782 C.C. and the children would
be owners but under a suspensive condition. In both of these trusts,
a real right or power of administration would lie in the hands of the
trustees.
The Trust and Real Rights other than Ownership
We have seen that, under the proposed theory, ownership is
compatible with the administrative trust. Is the system of real rights
constructed by the Civil Law to convey future interests, e.g.,
usufructs and substitutions, compatible with the administrative
trust?’ 3 ‘
If so, what rights do usufructuaries and institutes have
within a trust?
The Usufruct within a Trust
Let us examine the following trust:
I give the use and usufruct of my home to my wife during her lifetime; I
give the ownership to my son. X is to be trustee.
Assuming that this trust is to be interpreted as an administrative
trust contemplated by articles 981a C.C. and following, what are the
rights of the usufructuary?
To answer this question, we must first ask two preliminary
questions:
(i) Was it really the settlor’s intention to create a usufruct within
the above trust?
(ii)
Is it possible to create a usufruct within the above trust?
(i) The intention to create a usufruct within an administrative trust
As we have seen, article 981b C.C. states:
130Whether the heirs are institute-owners or owners under a reslutory
condition depends upon the interpretation to be given to art.838 C.C.
131We have seen that usufructs and substitutions would be compatible
with non-administrative trusts such as watchdog trusts, bare trusts and
conditional administrative
trusts. These are discussed supra, f.n21 and
infra, f.n.141.
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THE QUEBEC TRUST AND THE CIVIL LAW
Trustees, for the purposes of their trust, are seized as depositaries and
administrators ….
The article also- gives the trustees extensive rights of possession and
revendication of the trust property:
Trustees … may claim possession of it, even against the donees or
legatees for whose benefit the trust was created…. trustees may sue and
be sued and take all judicial proceedings for the affairs of the trust.
Article 981j C.C. states that the trustees’ rights may be exercised
without the consent of the beneficiaries:
The trustees, without
the intervention of the parties benefited, ad-
minister the property vested in them and dispose of it, invest moneys
which are not payable to the parties benefited, and alter, vary and
transpose, from time to time, the investments, in accordance with the
provisions and terms of the document creating the trust.
Other articles of the Civil Code also refer to the trustees’ duties and
obligations of administration. 1 32
A bequest of a usufruct necessarily involves a bequest of posses-
sion, administration, control and revendication in favour of the
usufructuary. Yet articles 981a C.C. and following give all these
rights to the trustee. What can a knowledgeable settlor have in mind
when he creates a usufruct subject to an administrative trust?
Surely he must know the rights created are incompatible.
We may return to the trust set forth above, namely:
I give the use and usufruct of my home to my wife during her lifetime; I
give the ownership to my son. X is to be trustee.
One possibility is that the settlor did not intend to create a usufruct
at all, but used the term “usufruct” incorrectly as a poorly worded
direction to the trustees to maintain his wife in occupation of the
home, just as a landlord is obliged to maintain a tenant. On this
view, the wife would have only a personal right to be maintained in
occupancy of the home; while her right would be greater than that of
the normal income beneficiary to receive income or living space at
the trustees’ discretion, it would still amount only to a personal
right against the trustees and not to a real right in the property.
3
A detailed examination of the trust document, particularly the
powers given the trustee and the rights given the so-called “usufruc-
tuary”, would be required to determine whether the settlor really
intended to create a usufruct. This point is made by article 928 C.C.
in another connection:
132 Arts.981e, 981k, 981m and 981n C.C.
133 See the discussion of usufruct supra, with respect
position.
to the Civilist
McGILL LAW JOURNAL
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A substitution may exist although the term usufruct be used to express
the right of the institute. In general the whole tenor of the act and the
intention which it sufficiently expresses are considered ….
That the courts will look behind the words used to analyze the
substance of the instrument is seen in the cases of Masson v.
Masson1 ” and Dame Cogne v. Trust Gdndral du Canada. ‘ 5 In these
cases, the Supreme Court of Canada and the Quebec Court of Appeal,
respectively, held that despite the use of the term “substitution” to
describe the rights of certain beneficiaries under a trust, the bene-
ficiaries were really only holders of personal claims to income.
Thus, given the essential nature of the trust, it could be argued
that in some circumstances the use of the term “usufruct” was merely
a poor choice of words designed to distinguish the wife’s rights
from those of a mere income beneficiary, and not intended to grant
the true rights of a usufructuary.
(ii) The possibility of creating a usufruct within an administrative trust
a) Incompatibility with usufruct
Let us return to the following trust:
I give the use and usufruct of my home to my wife during her lifetime;
I give the ownership to my son. X is to be trustee.
Assuming the intention to create a valid usufruct,” ‘
possible to create a usufruct within an administrative trust?
is it legally
We have seen that the trust can be regarded as a real right or
power of administration. We have also seen that this real right can
be dismembered from ownership. Is it also possible to dismember
the real right of administration from a usufruct? If this is possible,
it would leave the usufructuary with a real right of direct enjoyment
in the property which is protected by a right to revendicate the
enjoyment, the whole subject to the administration of the trustee.
It could be argued that this is impossible because possession,
control and revendication are necessary for proper administration
of the trust property. Therefore, permitting direct control and reven-
dication of trust property by the beneficiary would inhibit proper
administration by the trustee, which is the essence of the trust
mechanism.
This argument does have some support. First, the Code seems to
demand that the trustees possess and control the trust property
so that they may administer it. Article 981b C.C. states:
1 4 Supra, f.n.79.
135 [1969] B.R. 591, esp. at 597.
‘:;; In the text the author has discussed only the usufruct; however, the
same reasoning will apply to the substitution.
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
Trustees, for the purpose of their trust, are seized as depositaires and
administrators for the benefit of the donees or legatees of the property,
… and may claim possession of it even against the donees or legatees for
whose benefit the trust was created. … and while it lasts, the trustees
may sue and be sued and take all judicial proceedings for the affairs of
the trust.13 7
Articles 981j, 9811 and 981d C.C. all strongly suggest that the trustees
must have some control and possession of the trust property.
Further, the jurisprudence has insisted that no trust can be
created without a transfer or delivery of the trust property to the
trustees. 138 A logical corollary of this proposition is that the trustees
must keep possession and control of what is delivered to them. This
viewpoint has been set forth by St. Jacques J. in the case of Brissette
v. Dame Brissette:
….
139
Les biens dont les trois l6gataires n’ont pas l’administration, ni le con-
tr6le, ne sont pas transport6s h l’ex6cutrice testamentaire fiduciaire, ce
qui est l’essence de la fiducie (art. 981a C.C.)
There also appear to be strong public policy arguments against
permitting the usufruct within an administrative trust. First, as we
will see, the complexity of the questions and solutions involved ii
permitting the co-existence of a real right of enjoyment protected by
revendication and an effective right of administration suggests that
the legislator did not intend such a situation to exist. Secondly, Civil
Law has a policy interest in the effective administration of property.
It can be argued that it is against public policy to allow one person
to completely control and possess property but to leave the ad-
ministration with6ut possession or control in the hands of another.
Thus one can argue that the logical consequences of a mandatory
conveyance to administrative trustees, and the complexities and
policy consequences resulting from a real right of administration
divorced from possession, revendication and control, demand that
the administrative trustee have control and possession, and that this
is implied in articles 981a and 981b C.C.
If this conclusion is correct, it would be impossible to create a
usufruct within a trust. The so-called “usufructuary” would be
unable to have administration, possession, or control of the property.
He would have no real rights at all, except possibly a right to re-
vendicate the property for the trust in case of a prohibited trustee
alienation. 140 However, we shall now look at the other side of the
137 Art.981b C.C.
1380’Meara v. Bennett [1922] 1 A.C. 80.
139 (1936) 6E B.R. 557, 562.
14OWhat rights the beneficiaries of trusts can have will be discussed in
the second part of this article.
McGILL LAW JOURNAL
[Vol. 21
coin, and analyze the argument that the usufruct is compatible with
the trust.
b) Compatibility with usufruct
We have seen that the administrative trust and ownership are
compatible. This compatibility is achieved by regarding the rights
of the trustee as a real right of administration dismembered from
ownership. Perhaps the same may be said for the usufruct. Given
freedom of willing and the right to create a trust, why cannot one
within a trust dismember the right to administer from usufruct,
leaving a residual real right of enjoyment protected by revendica-
tion, but subject to trustee administration? One can argue that it is
not against public order to endow a person with a real right of
enjoyment but to free him of administrative burdens, particularly
since freedom from administration is what the trust is designed to
achieve.14 ‘
However, certain practical problems arise which raise doubts as
to the possibility or legal desirability of such a trust. To explore
these problems, we shall examine three types of usufruct within an
administrative trust: a usufruct of a home, of an apartment building
and of common shares.
One can readily imagine a settlor granting his wife the right to
possess and live in a home, and appointing a trustee to free her of
the administrative burdens. In such a case the settlor would probably
wish the wife to be able to protect her right to live in the home by
141 We are discussing only the administrative trust. We have seen that
true Civil Law usufructs are compatible only with certain non-administrative
trusts, namely:
a)
the bare trust in which the trustee is simply obliged to immediately
deliver the property to the usufructuary;
the conditional administrative
b)
the usufructuary
administers until a certain event, at which time the trustee’s administration
begins. In such a trust, of course, the administrative trust does not really begin
until the event occurs;
in which
trust
c)
the watchdog trust in which a true Civil Law usufruct with the
minimum essential rights of administration, possession, direct enjoyment
and revendication is created, with a watchdog trustee who has only super-
visory powers. The duties of a watchdog trustee are not to administer but
to ensure that both usufructuary and naked owner are protected and not
despoiled by one another. Such a watchdog trust could be combined with a
conditional administrative trust such that in the case of abuse by the
usufructuary, the trustee would assume administration.
We have seen that Jonathan Wurtele in 1879 created what would either
be a conditional administrative trust, or a watchdog trust combined with a
conditional administrative trust. (See the Appendix to this article.)
19753
THE QUEBEC TRUST AND THE CIVIL LAW
revendication against all persons, including the trustee.142 Further,
the wife should be able to deprive the trustee of his right to sell
the property free of the usufruct; otherwise, the trustee effectively
could deprive the wife of her right to live in the home.
However, serious problems arise in such a trust with regard
to repairs, maintenance and expenses. The trustee as administrator
would have the right (and the obligation) to execute contracts for
repairs and upkeep, such as heating, painting and snow removal.
How are these contracts to be paid for in a usufruct subject to an
administrative trust?
Article 468 C.C. indicates that the “usufructuary is… liable for
the lesser repairs”, and article 471 C.C. states that the “usufructuary
is liable.., for all ordinary charges”. Article 475 C.C. adds that the
“usufructuary is … liable for the costs of such suits as relate to
the enjoyment”. Do these articles lead to the conclusion that the
trustee has the power to execute contracts, but that the usufructuary
alone, and not the trust, is to be held liable on them towards third
parties ?143 Or are we to consider that in executing such contracts, the
trustee binds the trust, but has a right on behalf of the trust to
recover “usufructuary” expenses from the usufructuary? 144 In either
case, the trustee would have the power to render the usufructuary
liable and even bankrupt as a result of contracts and expenses the
usufructuary might not have desired to incur. 45
A possible solution would be that the trustee has the power to
bind only the trust, and that neither the trustee nor third parties
have a recourse against the usufructuary. This solution seems logical
142 If the beneficiary were denied the ability to protect her right by
revendication, it should not be considered as a real right valid against third
parties.
143 On this view neither the trustee nor the trust would be liable for such
contracts. Of course, the trustee is never personally liable for contracts
executed within his powers: “Trustees are not personally liable to third
parties with whom they contract” (art.981i C.C.).
144 The reader will remember that the example postulated is a usufruct
of a home in which there are no revenues for the trust from which can be
deducted usufructuary expenses. The solution is not simplified if a revenue-
bearing property is made subject to the trust, since the usufructuary and not
the trust would be entitled to the revenues.
145 In the second case, third parties would have certain direct rights against
the usufructuary to ensure payment. If the trustee failed to sue the usufruc-
tuary for the costs incurred, the third parties could sue the usufructuary on
behalf of the trust by virtue of art.1031 C.C. (“… Creditors may exercise
the rights and actions of their debtor when to their prejudice he refuses
or neglects to do so; with the exception of those rights which are exclusively
attached to the person.”)
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and more in keeping with the nature of the trust. 14 However, its
adoption violates two aspects of the usufruct. Firstly, it violates
articles 468, 471 and 475 C.C. Secondly, under the Civil Code, the
naked owner cannot lose his capital for debts incurred by and
properly chargeable to the usufructuary. In an administrative trust
which could not claim usufructuary expenses from the usufructuary,
the capital could be subject to seizure for debts properly chargeable
to and incurred for the sole benefit of the usufructuary.147
Presumably, in such circumstances the trustee might be able to
sell the property subject to the usufruct and pay such usufructuary
expenses out of the income realized from the invested proceeds of
sale, if sufficient.14 However, the possibility remains that the
capital could be diminished due to usufructuary debts, which is a
result in keeping with the nature of a substitution de residuo and
not with a usufruct. Moreover, it is not clear whether a trustee
subject to a usufruct has the power to sell the property free of the
usufruct; it is doubtful he would have this power if it were not
expressly given him.
Possibly the best solution is to regard the trust property as liable
for debts incurred by the trustee for the benefit of the usufructuary,
146 It would seem that normally trustees bind only the trust and have no
power to bind the beneficiaries; nor would the trustees normally have the right
to recover expenses incurred for the trust from the beneficiaries who are not
personally liable either to the trustees or to third parties for acts done on
behalf of the trust: See Faribault, supra, f.n.15, 370, para.316.
It could be argued that the use of the term “usufruct” derogates from the
above principles and gives the trustee the right to sue a usufructuary for
usufructuary expenses if revenues are insufficient. This is especially so if the
direct control and possession of the usufructuary, and his right to prevent
a sale free of the usufruct, prevent a proper and efficacious administration
of the property.
147Normally,
the trustee does not have the power to encroach upon
capital to pay debts properly chargeable to income. If this power is given him,
the usufruct approaches the substitution de residuo in which the capital
can be diminished by expenses chargeable to an income beneficiary. If this
power is not given the trustee, his only recourse would be to sell the property
and charge income expenses to the income realized from the reinvestment
of the proceeds. This, of course, assumes that the bequest permits the trustee
to sell free of the usufruct. If the trustee is unable to sell without the consent
of the usufructuary, all that can be done if the usufructuary refuses to give his
consent is to await judicial sale by the creditors, or to claim that there is
a duty upon the usufructuary to consent to the sale in certain circumstances.
Of course, if the revenues after sale were insufficient, the consequences would
be a seizure and sale of the trust capital to pay usufructuary debts.
14s If the trustee had the power to charge such expenses to the capital,
the settlor would have created a substitution de residuo rather than a usufruct.
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THE QUEBEC TRUST AND THE CIVIL LAW
but to permit the trust (and indirectly the creditors under article
1031 C.C.) to have recourse against the usufructuary. While such a
solution seems in keeping with the nature of the usufruct, it still
would allow a trustee to render a usufructuary liable and perhaps
bankrupt for expenses for which the trustee contracts but which
the usufructuary might not have desired.
Assuming one can satisfactorily solve this problem, a further
difficulty arises. Will tradesmen deal with a trustee whose only
method of paying them is to sue the usufructuary or to sell the
property? If not, how can the property be effectively administered?
This problem becomes even more acute in an administrative trust
subject to the usufruct of a revenue-bearing property. Suppose the
wife no longer wishes to live in the home and it is rented by the
trustee, or suppose an apartment building is subject to a usufruct
and an administrative trust. Presumably if the trustee is to effectively
administer the property, he must be in receipt of revenues to pay the
bills. But the revenues go to the usufructuary, not to the trustee.
The problem of bill payment and effective administration in an
administrative trust subject to a usufruct arises even in the simplest
of trusts. For example, in an administrative trust of common shares
subject to a usufruct, questions would arise as to payment of ac-
counting and valuation fees, expert advice and brokerage com-
missions. Further, in some instances proper administration would
involve physical access to stock certificates. Thus, effective ad-
ministration would seem to involve the right to collect revenues and
some physical possession by the trustees. One may well ask how
these requirements may be reconciled with the rights of the usufruc-
tuary.
It could be argued that the situations posited above are not truly
trust problems, but result from the principle of freedom of willing
and its inherent concomitant, poor draftsmanship. One could argue
that any testamentary institution, whether it be a usufruct, substitu-
tion or trust, will involve certain problems, especially if one permits
freedom of willing, but that these problems can be solved by proper
draftsmanship. For example, in the above case the settlor could
have given the trustee access to sufficient funds. Failing wise
draftsmanship, the problem is left to be solved by the courts.
Thus two views seem possible:
1) One view would be that freedom of willing would permit
a settlor to give a direct right of enjoyment protected by re-
vendication to a usufructuary and to grant the right of ad-
ministration to another. If the settlor does not provide the
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trustee with direct access to sufficient funds to carry out his
administration, it is not a matter of public order or a situation
contrary to the essence of the trust. After all, the trustee would
be able to sell or hypothecate the trust assets and perhaps would
have the right to sue the usufructuary for recovery of expenses.
This, of course, raises the question whether a trustee in this si-
tuation can sell the property without the usufructuary’s consent,
or sue a beneficiary personally for recovery of expenses. While
these problems are difficult, the courts could evolve subtle dis-
tinctions to make both these recourses possible, depending upon
the circumstances. Certainly they do not appear to be against
public order.
2) A second view is that there is a public interest in the effica-
cious administration of property, and therefore it would be illegal
to permit direct enjoyment in such a manner as to prevent
effective administration. According to this view, a settlor could
either create a watchdog trust (with certain limited powers in
the trustee not incompatible with the usufructuary’s administra-
tion), or an administrative trust (subject to certain limitations
on the trustee’s powers if the testator so desired), in which the
trustee could collect the revenues, pay expenses and deliver the
balance to a beneficiary whose rights could not include direct
enjoyment. If more than one property were subjected to a trust,
e.g., a revenue-bearing property and a property to be used directly
by the beneficiary, one could state that the usufructuary only
could have a true usufruct on the “use” property (subject ex-
clusively to a watchdog trust), and only a right to revenues or
other benefits from the second property, but no usufruct therein.
While the second view could lead in certain cases to a Pandora’s
box of subtle difficulties and distinctions, the author prefers it on
the grounds that one of the primary goals of the Civil Law has been
to provide for efficacious administration of property.
Although there is some dispute concerning the extent to which
the concept of the numerus clausus –
or limited numbers of
nominate real rights –
exists in Quebec, it is the author’s view that
it is not possible under Quebec law for individuals to create real
rights at will. Generally most Civil Law systems state that the Civil
Law recognizes only a limited number of real rights which it has
expressly or implicitly created, and it is not possible for individuals
to add to their number or change their content drastically. While the
case of Matamajaw Salmon Club v. Duchaine,149 in which the creation
149 [1921] 2 A.C. 426.
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THE QUEBEC TRUST AND THE CIVIL LAW
of a real right of fishing was upheld by the Privy Council, has added
some confusion to this matter in Quebec, it is the author’s view that
the case should be confined strictly to the situation therein con-
templated, in view of the fact that such rights were permissible under
the law of Quebec prior to codification.
Mazeaud has written:
… les personnes sont libres, en principe, de crier entre elles n’importe
quel lien de droit, de telle sorte qu’il n’est pas possible de donner une
6numeration limitative des droits personnels. I1 n’en va pas de m~me pour
les droits rdels … ii ne peut appartenir qu’au lgislateur de ddfinir les
pouvoirs que l’homme est en droit d’exercer sur une chose. Ii a donc
donng une gnumdration limitative des droits r~els.150
… les droits rdels sont en nombre limit6 … (la volont6 du titulaire du
droit peut transf6rer ce droit rdel h autrui, mais non le cr6er); c’est la
loi qui, seule, est susceptible de cr6er les droits rdels, de pr6ciser les
pouvoirs d’une personne sur une chose ….
161
Similarly, Josserand has stated:
… la liste des droits r6els est fix6e, ne varietur, par le 16gislateur. En
effet, l’organisation et les modalit6s de la propri6t6, droit r6el… int6-
ressent l’ordre public; et d’ailleurs, si l’on comprend que les parties
puissent, h leur gr6 6tablir des rapports juridiques qui ne lieront qu’elles-
memes, on s’expliquerait moins volontiers qu’elles fussent autorisdes h
instituer h leur guise, des droits qui, 6tant opposables h tous, constitue-
raient une gene pour la collectivit6 …
In creating the usufruct, the substitution and the real right of
ownership, Quebec law has developed a well defined system of
administration resulting in efficacious use of property. Although
administration may be dismembered through the trust, there should
be some attempt to limit the number of bizarre administrative divi-
sions that may be devised in the name of freedom of willing. The law
must reflect the public interest in the proper administration of
property and in the limiting of lawsuits.
.152
In another context it has been stated that “Le droit de jouissance
appartenant a l’usufruitier implique naturellement le droit d’admi-
nistration”,’15 3 and that “le testateur ne pourrait s6parer l’adminis-
tration de la jouissance”. 54 If it is against public order to prevent
a person from administering property which he enjoys, it also should
be contrary to public order to permit a person who simply enjoys
150 Mazeaud, Legons de droit civil 3d ed.
(1966), vol.2, 1054, para.1287
(emphasis added).
151 Ibid., (1963), vol.1, 192, para.164.
‘5 2 Josserand, Cours de droit civil positif frangais 3d ed. (1938), vol.1, 744-745.
153 Huc, quoted in Guaranty Trust Co. of New York v. The King, supra,
f.n.123, 199.
154 Ibid.
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a property to possess and control it free of all administrative burdens
and duties.
Because of these extreme complexities and for the reasons above
stated, it is the author’s view that it would be best to cut the
Gordian knot and state that a usufruct and administrative trust are
incompatible. 5
The Substitution within a Trust
A substitution subject to an administrative trust has two ele-
ments: the element of institute ownership and the element of ins-
titute direct enjoyment protected by revendication.
We have seen that under the proposed theory, the element of
ownership is compatible with an administrative trust. Thus in the
following administrative trust,
I give the property to my trustees in trust, my son to be institute and his
children substitutes ….
if the children predeceased the son, he would keep the property as
owner.
In our discussion on usufruct we have noted the serious problems
that arise from the division of direct enjoyment from administrative
rights and burdens, and have reached certain conclusions. In the
author’s opinion the same reasoning and analysis would apply to
the substitution, and it is therefore the author’s view that the element
of institute direct enjoyment is incompatible with an administrative
trust.
Summary
The following conclusions may be drawn regarding the compati-
bility of the two major Civil Law dismemberments of property,
namely the usufruct and the substitution, with the trust as a dis-
memberment of the “real right of administration”:
1. Ownership by the institute and the naked owner is compatible
with the trust. This is because the trust is a Civil Law institution
and subject to the principle that all property must have an owner.
I-, The author’s opinion
that
the usufruct should be considered
in-
compatible with the administrative trust seems to run counter to the fact
that Judge Wurtele in 1879 created a trust containing a usufruct. The answer
is that the Wurtele trust does not create an administrative trust but a
watchdog trust combined with a conditional administrative trust (see f.n.21).
It is a watchdog trust because the wife is a true usufructuary with power of
possession, direct enjoyment and administration; it is also a conditional
administrative trust because upon sale of the trust property, the trustees
are given the power of administration and the usufruct ends.
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
2. Usufruct and substitution are compatible with the watchdog and
conditional trusts.156
3. With regard to the administrative trust, two approaches seem
possible:
i) The direct enjoyment of the usufructuary and the institute
is compatible with the administrative trust. According to this
view, it would be possible to divorce administration from direct
enjoyment. In the administrative trust subject to a usufruct or
substitution, the trustee would have the right to sue the usufruc-
tuary or institute for the normal charges of enjoyment, or to
charge the capital for such expenses. Enjoyment would be pro-
tected by revendication, which could be exercised by the usufruc-
tuary or the institute.
ii)
It is contrary to the Civil Law to divorce administration from
direct enjoyment, since this would prevent efficacious administra-
tion of property and would render litigation within the trust a
constant possibility. Under this view, the usufructuary or institute
could not have direct rights of enjoyment but only the right to
demand net revenue or perhaps to be maintained in peaceable
occupation by the trustee. It is possible, however, that the use
of the terms “usufruct” or “substitution” could be evidence of
the settlor’s intention to prohibit trustee alienation without
beneficiary consent; therefore in the case of an invalid alienation,
the beneficiaries might have a right of revendication.
The author prefers, the second conclusion.
CONCLUSION
Historically and intellectually, the Quebec trust is a Civil Law
institution which permits the appointment of administrators who do
not benefit. Consequently, its problems should be interpreted solely
in the light of the Civil Law. For example, the duration of the trust
must be governed by article 932 C.C.; the trust must have an owner;
and ownership must be analyzed in the light of articles 838 C.C. and
782 C.C.
Why then have so many theoretical problems been raised regard-
ing the nature of the trust? The answer flows from a failure to
examine the history of the trust and the insistence upon either
regarding it as an import from the Common Law (which is histori-
cally incorrect) or as an institution which suddenly appeared in 1879,
156 See the discussion of these types of trusts supra, f.ns21 and 141.
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without background or past. An examination of its history shows us
that trusts have existed under Quebec law for centuries, and that
the Code articles are based upon the early Civil Law trust, particu-
larly the fiducie.
The difficulty which courts have had in analyzing the Quebec
trust is compounded by the manner in which most trusts are drafted.
Drafting provides the basis for the division of the trust into two
classes, distinguishable because of their wording. We will call one
class the “Wurtele Trust”, and the other the “Customary Trust”.
In the Wurtele Trust, the draftman clearly vests ownership in
is expressly
a specific beneficiary. For example, the ownership
vested in the children in the following trust:
I give the usufruct of my property to my wife and the ownership to my
children. I name X as trustee with all the powers of articles 981a C.C.
and following.
In the Wurtele Trust there is no doubt whom the settlor
wishes to be owner. The problem is that because of the possessory
and administrative rights granted the trustees, the owner has not
the essential minimal rights required of an owner by Quebec law.
As we have seen, the conundrum is solved by regarding the trust as
a valid method of dismembering ownership by granting purely
administrative rights over property to trustees. In the above trust,
the Civil Law owners are the children subject to the administrative
rights of the trustees. This is, of course, similar to the situation
which existed under the fiducie of ancient French law.
Of course, as pointed out above, there are problems which arise
even in the Wurtele Trust. Is the person who is called a “usufruc-
tuary” but denuded of administration and possession a valid usufruc-
tuary? Or is he simply a holder of a right to personal revenues? To
what extent can the “usufructuary” or the owner revendicate
property improperly alienated by the trustee? Are the “usufruc-
tuary’s” and owner’s rights moveable or immoveable? I 7
The author submits that the fact that problems exist in no way
detracts from the nature of the trust as a Civil Law concept in which
administration is dismembered from ownership or enjoyment. Such
problems will remain no matter which theory of the trust is adopted.
In the author’s opinion, it is preferable that the solution be within
the context of the Civil Law.
157This latter point will be important in determining whether the rights
of the beneficiaries form part of community of property or not (see arts.1275
and 1276 C.C.) and will have relevance in other cases where it is important
to determine whether the rights of beneficiaries are moveable or immoveable.
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THE QUEBEC TRUST AND THE CIVIL LAW
It is not, however, the Wurtele Trust, which clearly indicates who
is the owner, which has led to the confusion surrounding the trust.
Rather, it is the Customary Trust which has done so.
The Customary Trust, unlike the Wurtele Trust, does not vest
ownership in anyone expressly, and it is this failure which has
engendered the greatest confusion as to who owns the trust. A typical
Customary Trust reads as follows:
To my trustees to pay the income to my wife during her lifetime, and then
to pay the income to my children in equal shares; on the death of each
child, the trustees are to deliver his share to his issue then living, and if
none of his issue are then living, to my issue then living, by roots. I name
X to be trustee with the full powers granted him by articles 981a C.C.
and following.
This type of trust could readily lead one to the conclusion that
until the death of the wife and children, no one owns the trust
property (except perhaps the trustees). However, if we apply the
Civil Law to the trust and regard the trustees as holders of ad-
ministrative rights only, there is no real obstacle to determining
the owner of the property. The relevant Civil Code articles are 838
C.C., if the trust is testamentary, and 782 C.C., if it is inter vivos.
Article 838 C.C. states that a testator may name persons to
become owners subsecuent to his death, and may even name as
owners persons not living at the date of his death on the condition
that they be born later. Of course, during the interval the owners
will be the testator’s intestate heirs. Assuming the above trust was
testamentary, it is clear that the testator has bequeathed the owner-
ship to his children’s issue, but only on the condition that they
survive the testator’s wife and children. They are owners under a
suspensive condition. However, upon the testator’s death the persons
seized with immediate ownership, subject to a resolutive condition,
are the testator’s intestate heirs.158
Assuming that the trust set out above is inter vivos, then the
solution may be found by applying article 782 C.C., the relevant Civil
Code article. This article states that ownership may be granted upon
a suspensive condition. In the above trust, the settlor has clearly
given his children’s issue ownership under a suspensive condition
only, retaining ownership subject to a resolutive condition in him-
self.
Of course, problems remain to be solved in the Customary Trust
as well. If the heirs are considered owners, does this trust not create
15 8 As
the author has previously stated, they could be regarded as
institutes under a substitution.
McGILL LAW JOURNAL
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four successive degrees of beneficiaries, in violation of article 932
C.C.? In an inter vivos trust, could the settlor have named himself
trustee? Could he make a gift in favour of unborn children without
creating a substitution? These problems will be among those ex-
plored in the second part of this article.
The first part of this article has been a discussion of the theory
of the trust and its relationship to the Civil Law of property. In the
second part, the author will turn to the practical problems sur-
rounding the trust and discuss them in the light of the above
analysis and the relevant jurisprudence. He will indicate also how
the trust has been interpreted by the courts and authors in Quebec.
APPENDIX
Inter vivos Deed of Trust
On this twenty-seventh day of October, one thousand eight hundred and
seventy-nine. –
Before Mtre O’Hara Baynes, Notary Public, for the Province of Quebec,
residing in the City of Montreal,
Came and appeared John Rankin of the City of Montreal, Esquire,
Merchant,
Who in pursuance of the Act of the Legislature of the Province of Quebec
assented to on the eleventh day of September last, intituled “An Act respecting
Trusts” conveyed to Jonathan Saxton Campbell Wurtele of the City of
Montreal, Esquire, Queens Counsel, and John Beattie of the same place,
Esquire, Merchant, present and accepting, in trust for the children issue of
his marriage with Dame Louisa Sophia Campbell Wurtele and subject to the
reservations and for the use and purposes hereinafter mentioned, to wit: –
All the household furniture and effects now contained in the dwelling
house of the said John Rankin situated on Ontario Avenue in the said City
of Montreal and the other moveable property mentioned and described
in the schedule hereunto annexed and signed by the parties for identification.
This conveyance in trust is made by the said John Rankin to the said
Trustees for the benefit of the children issue of his said marriage, to wit
Louisa Sophia Margaret Campbell Rankin, James Luther Rankin, Archibald
John Rankin, John Rankin, Norman Scott Rankin, Allan Coats Rankin,
Arthur Glen Ernest Rankin to whom the said John Rankin by these presents
gave the same in consideration of the love he bears them.
This gift and conveyance in trust is made subject nevertheless to the
usufruct and enjoyment of the said furniture and other moveable property
by the said John Rankin and his said wife Dame Louisa Sophia Campbell
Wurtele and by the survivor of them during their lives, but with the condition
that they will use the said furniture and moveable property in a proper
manner and renew such things as may be broken or destroyed in the use
thereof and pay the premiums for the insurance thereon.
1975]
THE QUEBEC TRUST AND THE CIVIL LAW
This gift is made subject to a substitution in favor of such children as
may hereafter be born of his marriage with the said Dame Louisa Sophia
Campbell Wurtele and consequently any such children and his children
hereinabove named shall together own and have the said furniture and
other moveable property share and share alike; and in event of any of the
children now born or to be born dying before the death of both of the
said John Rankin and the said Dame Louisa Sophia Campbell Wurtele, the
share of such child shall revert and devolve to the surviving children,
subject to the substitution in favor of such children as may be afterwards
born.
The said Trustees will during their lives allow the said John Rankin
and Dame Louisa Sophia Campbell Wurtele to have the use and enjoyment
of the said furniture and moveable property but shall keep the same insured
in their, the said Trustees, names for such amount as may to them seem
the premiums for such insurance from the said
sufficient and recover
John Rankin and after his death, should she survive him, from the said
Dame Louisa Sophia Campbell Wurtele.
In the event of the said furniture and other moveable property being
destroyed by fire, the said Trustees shall invest the insurance money in
accordance with the Act hereinabove mentioned and during the life of the
said John Rankin, they shall invest the revenue in like manner but after his
death should the said Dame Louisa Sophia Campbell Wurtele survive him
they shall pay over the income of the investments to her for her use and
expenditure.
The trust hereby created shall last until the death of the said John
Rankin and his said wife and afterwards until the youngest of the said
children shall have attained the age of twenty-one; and upon the termination
of the said trust, the said Trustees shall, if the furniture and moveable
property have not. been destroyed by fire, sell and realize the same and
divide the proceeds among the children of the said John Rankin, issue of his
said marriage, share and share alike, giving in the case of the death of any
of them leaving issue their share to such issue; and if the said furniture and
moveable property should have been destroyed by fire, they shall divide the
investments of the insurance money in like manner.
If at any time the said John Rankin and after his death the said Dame
Louisa Sophia Campbell Wurtele should consent to the sale of the whole or
any part of the said furniture and moveable property the said Trustees shall
then sell and dispose of the same and deal with the proceeds in the same
manner as they are instructed to deal with insurance money.
Should the trust last after the death of the said John Rankin and the
said Dame Louisa Sophia Campbell Wurtele, the said Trustees shall thereupon
sell and dispose of the said furniture and moveable property and invest the
proceeds; and the income of the investments whether from the proceeds of
the sale of such furniture and moveable property or from the insurance
money should the same have been destroyed by fire shall be paid over yearly
to the said children or to the tutor of such of them as are minors.
In case it should be necessary to replace Trustees under this deed the
remaining Trustee shall have the power to appoint but during the life of the
said John Rankin with his concurrence and after his death with that of the
said Dame Louisa Sophia Campbell Wurtele. It shall not be necessary to
give any notice to the benefited parties before replacing any Trustee.
McGILL LAW JOURNAL
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Whereof act
Thus Done and Passed at the said City of Montreal in the office of the
undersigned Notary where these presents are to remain of record under the
number four thousand nine hundred and sixty-three on the day month and
year first hereinbefore written and signed by the said parties with me the
said Notary after being duly read.
(Sgd.) JOHN RANKIN
J. WURTELE
JOHN BEATTIE
O’HARA BAYNES, N.P.
Unprobated Testamentary Trust
I substitute the shares of my said daughters in my said Estate
I, John Rankin, of the City of Montreal, Esquire, Merchant, being of
sound intellect and capable of alienating my property, do make and publish
this my will in manner following:
First: –
I direct that all my just debts and my funeral and testamentary
expenses be paid and satisfied by my Executor and Trustees hereinafter
named, with all convenient speed after my death.
Second: –
I will, devise and bequeath the usufruct of my Estate to my
beloved wife Louisa Sophia Campbell Wurtele, until her death, or in the
event of a second marriage being contracted by her, then only until such
second marriage.
Thirdly: –
I will devise and bequeath my Estate, (but subject to the usufruct
given to my beloved wife,) to my sons and daughters and to the lawful issue
of any of my children who may predecease me, to be divided by roots, but
subject to the substitution hereinafter created, instituting my said sons and
daughters and the issue of any predeceased children, my universal legatees.
Fourthly: –
to their lawful issue, respectively.
Fifthly: –
I have made provision in the deed of partnership formed between
me and my nephew John Beattie, for two of my sons to enter into partnership
with him, and to continue with him the business of our firm. In consequence
of the advantage thus given I will, order and direct that in the event of any of
my sons availing themselves of the said right, one-third shall be deducted
from the share of my Estate devolving to them and shall be added in equal
proportions to the share of my sons who may not become members of the
firm to be so formed to continue the business of our said firm.
Sixthly: –
I will, and ordain should any of my sons die without lawful issue
before receiving the whole of his share of my said Estate and of any additions
thereto, that the whole or such portions thereof as may not have been
conveyed, transferred and paid over to him, shall fall and devolve and I
substitute the same to his surviving brothers and sisters, and to the lawful
issue of any of his brothers and sisters who may have predeceased him, to
be divided by roots, and the proportions falling and devolving to his sisters,
to be substituted in the same manner as their own shares in my said Estate.
I will and ordain in the event of any of my daughters dying
Seventhly: –
without lawful issue, that her share of my said Estate and any additions
thereto, shall fall and devolve, and I substitute the same to her surviving
brothers and sisters and to the lawful issue of any of her brothers and sisters
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who may have predeceased her, to be divided by roots, and the proportion
falling and devolving to her sisters to be substituted in the same manner as
their own shares in my said Estate.
In the event of default of survivorship in the cases mentioned
Eighthly: –
in the sixth and seventh articles, I substitute my brother; my sister, and the
lawful issue of my deceased sister Sarah and the lawful issue of my said
brother and sister, should they have previously died, to be divided by roots.
Ninthly: –
I nominate and appoint my beloved wife, my nephew John Beattie,
and my friends George Stephen and Richard B. Angus, both of the said City
of Montreal, Esquires, to be the Executors of my will with power beyond the
year and day limited by law, and until the full execution and accomplishment
of all its provisions.
I constitute my said Executors trustees of my Estate; and I
Tenthly: –
invest them with the seizin and possession of all the property, moveable and
immoveable of which I may die possessed, or to which I may be in any wise
entitled, to be held by them and by the survivors or survivor of them and by
the substitute and substitutes who may be appointed to replace them, in trust
for the following uses, purposes and intents, to wit:
10 To administer and manage my Estate during the continuance of the
trust thus created, with power to sell any and all immoveable property and
receive the proceeds thereof, –
to sell and transfer all stocks and all debts,
and receive the price thereof; –
to invest all moneys forming part of my
capital, and to vary and change all and any investments made or held by my
Estate, the whole as may see[m] fit in their discretion, but subject to the
limitation hereinafter expressed; and to collect and receive all sums and
claims due to, and also the revenue and income of my said Estate.
20 To deduct the costs and charges of the administration and management
of my Estate, and to pay over to my said beloved wife quarterly, during
her life, or so long as she shall remain a widow and no longer, the Balance
or net annual income or revenue of my said Estate.
30 After the death of my said wife, or should she contract a second marriage,
then after such second marriage, to pay over after deduction of the costs and
charges of administration and management, such net anuual income or
revenue of my Estate, to my children, or the issue of my children, in the
proportions in which they may be entitled to share my said Estate, and
until their respective shares in the capital of my said Estate are paid.
40 When and so often as any of my said sons attains the age of twenty-three
years, to allot to him his share in the capital of my said Estate; and to convey,
transfer and pay over to him one-half of such share forthwith, and the other
half when he reaches the age of twenty-five years; provided however that my
beloved wife be dead or have forfeited the enjoyment of my Estate by a
second marriage, and otherwise, on the occurrence afterwards of either of
such events.
5′
In case any of my sons should die leaving lawful issue, before his share
in my Estate shall have been allotted to him, when the eldest of such issue
attains the age of majority, to allot to such issue their share in the capital
of my said Estate; and to convey, transfer and pay over to each of such issue
his proportion of the said allotment as fast as they respectively become of
age; provided also however that my beloved wife be dead or have forfeited
the enjoyment of my Estate by a second marriage, and otherwise on the
occurrence afterwards of either of such events. In case any of my said sons
McGILL LAW JOURNAL
(Vol. 21
should die leaving lawful issue after the allotment of his share has been
made, but before the whole thereof has been conveyed transferred and paid
over to him, to transfer convey and pay over to each of such issue his
proportion of the said balance as fast as they respectively attain their majority.
6″ After the opening of the substitutions created of the shares of my
daughters, when the eldest of the substitutes of such shares respectively
attains the age of majority, to allot to such substitutes respectively, their
share in the capital of my Estate, and to convey, transfer and pay over to each
of such substitutes his proportion of the said allotment as fast as they
respectively become of age; provided also however that my beloved wife be
dead or have forfeited the enjoyment of my Estate by a second marriage;
otherwise, such allotment shall only be made on the occurrence afterwards
of either of such events. And
In the event of any portion in their hands of my said Estate falling and
70
devolving, under the substitution hereinabove created, to my brother and
sister and to the issue of my deceased sister Sarah, or to the issue of my said
brother and sister, to convey, transfer and pay over to them forthwith such
portions of my said Estate.
Eleventhly: –
I will and ordain that the trust created by me shall subsist
and last until the whole of my Estate has been allotted, conveyed, transferred
and paid over by my said Executors and Trustees to the parties respectively
entitled thereto under the bequests hereinabove made and the substitutions
hereinabove created.
Twelfthly: –
I give my Executors and Trustees full power to compound,
arbitrate, or otherwise compromise or settle any demand or claim either
belonging to or against my Estate; I direct and order that all investments
to be made by my Executors and Trustees shall be confined to Real Estate
in the City of Montreal, debentures or other securities of the Dominion or
Provincial Governments, debentures or stock of the said City of Montreal,
Montreal or Quebec Harbour debentures and first mortgages on real property
in the Island of Montreal.
Thirteenthly: –
I will and order that the act of a majority of my said
Executors and Trustees or of my said Executors and Trustees and the
substitutes to be appointed, or of such substitutes, as the case may be, at
any time shall be equivalent to the act of the whole of them, and that the
survivor and survivors or such Executors and Trustees, or such survivors and
to be appointed, or such
survivor with the substitute and substitutes
substitutes as the case may be shall exercise all the powers conferred upon
my said Executors and Trustees as effectually as if they were all living and
acting as such; and I declare that my said Executors and Trustees and the
substitutes to be appointed shall in no wise be held liable for the acts and
deeds of each other; but that each shall be liable for his or her own acts only
and that no one of them shall be liable for any act, matter or thing done or
omitted to be done by him or her as such Executor and Trustee or substitute,
unless in the doing or omitting to do the act matter or thing for which he
or she may be attempted to be made chargeable, he or she shall have been
guilty of manifest and wilful misconduct.
Fourteenthly: –
In the event of the death, refusal to accept or resignation
of any of my said Executors and Trustees, I will and ordain that a substitute
or substitutes may be appointed by the remaining Executors and Trustees or
Executor and Trustee, by notarial deed, naming, designating and appointing
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THE QUEBEC TRUST AND THE CIVIL LAW
such substitute or substitutes and that such replacing of such Executors and
Trustees shall be continued successively and as long as the duration of the
Trust hereinabove created may require, in the same manner by my said
Executors and Trustees and such substitutes or by such substitutes alone,
whenever a vacancy may occur.
Fifteenthly: –
I will and ordain that the income or revenue of the shares
of my Estate bequeathed to my daughters shall be an alimentary allowance,
and that the same shall be exempt from seizure and incapable of being
assigned and transferred; I also will and ordain that the said shares of my
said daughters shall not fall into but shall on the contrary be excluded
from any community of property which may exist between them and their
respective husbands and that the said Income or revenue thereof shall be
paid to them on their own receipts, without the intervention or assistance
or authorization of their respective husbands being required, and that the
same shall be free from the control of their said respective husbands and in
no way liable for their debts.
Sixteenthly: –
this to be my last will and testament.
I revoke all wills which I may have previously made, declaring
In testimony of all which I have hereunto set my hand and seal this
in
twentieth day of June, One thousand eight hundred and seventy-six,
duplicate.
JOHN RANKIN
Signed, Sealed, published and
Declared by the above named John Rankin,
as and for his last will and testament in the
presence of the undersigned witnesses who have
hereunto subscribed their names as witnesses at
the request of the said testator,
in the presence of’ him and of each other.
Three marginal notes initialed are good and
eight words struck out are null.
J. WURTELE
Q.C. Montreal
A. BRANEHAUD
Advocate, Montreal
In a codicil dated April 19, 1880, the testator substituted Jonathan Wurtele
as an executor of his will and trustee of the Estate, replacing Richard B.
Angus and George Stephens.
