in Part III.1 The common instance of this kind of a legal power is the case of a power of sale, a few observations as to which will be introduced in the next section.

Operation and Effect of a Power of Sale in a Trustee

156. The power of sale does not exist at law, because the trustee has the entire legal title and all powers connected therewith. He is incapacitated from dealing with that title only because of the superimposed equitable estate of the cestui que trust. The legal title of the trustee is limited in equity and not at law. If he disposes of the legal title to a purchaser for value without notice, the only remedy of the cestui que trust is against the trustee and the proceeds of the sale. If he disposes to a purchaser for value with notice or without value, the cestui que trust can follow the title and enforce the trust. The trustee, therefore, has power to dispose of the title anyhow. The equitable right does not affect the passing of the title at law. The only effect of a power is to enable the trustee to pass the title to a purchaser with notice free of the trust.2

Powers as to the Equitable Estate

157. The act may be with reference to the equitable interest. We may take the same distinction here as in the discussion of acts referring to the legal title. If the act is something of minor importance, which will not interfere with the equitable interest of the cestui que trust, the power to do it is inherent, and any words purporting to confer it, are superfluous. If the act is one which may or necessarily will interfere with, destroy or defeat the estate of the cestui que trust, authority to do it must be expressly conferred, and the authority amounts to a special equitable power. Where the power is to create new equitable estates, as where the trustee is authorized to make advances out of principal or apportion income, the rule against perpetuities is involved. This is a

1 See §§415-430, post. 2 Confer §149, ante.

3 A trustee has large discretion in the matter of the performance of his duty. Thus, a power in the trustee to pay the income quarterly or monthly, is unnecessary, as he may do either without such power being inserted in the

4

settlement, see $658, post. Instances of such superfluous powers in trust settlements are not uncommon, and frequently cause difficulties which would have been avoided had they been omitted.

4 For a discussion of this point, see §§411-413, post.

power to defeat an equitable estate, because the payment to the beneficiary under the power is necessarily a substitution for the interest originally specified in the trust settlement. Where the power simply authorizes an act which is an interference with the equitable estate specifically designated, the case calls for the application of the rule forbidding restraints on enjoyment. The question in such case is, how far the trustee will be permitted to proceed under the power when the act amounts to a restraint on use and enjoyment. This question is discussed in Part IV relating to the rule forbidding restraints on enjoyment.

Discretion

trustee when

158. A discretion is said to be vested in a the doing of an act with respect to the trust is left to his personal judgment. The discretion amounts to a power to be exercised in the option of the trustee, and the same classification of the acts to be done under the discretion may be made here as in the case of a power. A discretion and a discretionary power are the same. The discretion was construed by the Court of Chancery to make the doing of the act personal on the part of the trustee named, and the act, therefore, could not be done by his successor in the trust.3 In the case of a discretion to do an act, with reference to the legal title, the discretion has no effect whatever upon the power of the trustee, but simply results in making the power personal to the trustee upon whom it is conferred. Where the discretion is to create new estates, as where the trustee has discretion to advance out of principal, the discretion makes

5 Thus, suppose a gift to A. in trust to pay the income to B. for life, with power in the trustee to expend the income entirely in the purchase of automobiles for the use of the cestui que trust. This power will restrain the cestui que trust in his otherwise unlimited use of the income. The cestui que trust may not want an automobile.

This is so, no matter how worded. All the following phrases mean the same: the trustee to have discretion to sell; the trustee to have full power to sell in his discretion; the trustee to

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the power in the trustee absolute, and the cestui que trust has no standing to compel the exercise of the discretion in his favor. Where, however, the discretion is to do an act interfering with the use and enjoyment by the cestui que trust of his estate, the distinction between a discretion and a power is of some importance, because in this case the cestui que trust will have a more or less protected right to proceed in a court of chancery to compel a performance of the trust, and in such case the act of interference can be more or less successfully performed by the trustee, according to whether he merely has authority to do it or whether it is left entirely to his discretion. The learned reader will recollect that the duty of a trustee is in its nature imperative, and the chancellor will compel him to perform the terms of the trust. If, therefore, the settlor introduces into the trust any phrase which leaves the performance of the whole or any part of that duty in the discretion of the trustee, he to that extent nullifies the imperative duty previously laid down. The discretion is necessarily inconsistent with the idea of absolute duty. The power vested in the trustee may be so large that it is doubtful whether there is any imperative duty or trust created at all. The reconcilement of the conflicting provisions of such a settlement is a question of construction oftentimes of great difficulty. At this point, the line of cases dealing with the question whether a trust is created, and the cases on precatory trusts, have their origin. With these questions we are not concerned.

Trustees to Preserve Contingent Remainders

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159. There are many cases in Pennsylvania where the Supreme Court has said there was a trust to preserve contingent remainders. It is important to clearly apprehend what is meant by trusts to preserve contingent remainders. A legal contingent remainder was liable to be destroyed at common law. In order to obviate this danger to the contingent remainder, there was an additional clause inserted in the limitations vesting the title in trustees, to preserve the contingent remainder. Such trusts were simply attendant were simply attendant upon and existed

'Read Chap. 23 on discretion.

10 E. g., Wolfinger v. Fell, 195 Pa. 12 (1900); Moore's Est., 198 Pa. 611 (1901); Boyd's Est. 199 Pa. 487 (1901).

1 See 8854-62, ante.

2 First invented in the middle of the seventeenth century: Gray, Rule Perp., 2 ed. (1906), §192, n. 3.

side by side with the legal limitations of the settlement, and are unknown in Pennsylvania. A trust to preserve contingent remainders, therefore, has a different meaning with us, if it has any proper meaning at all.3

Trustees to Preserve Contingent Remainders in Pennsylvania 160. A contingent equitable interest and a vested equitable interest stand on the same footing in this respect. In both cases the interest is indestructible because it is the duty of the trustee to pay to the ultimate beneficiary, and the trust is not at an end until he has made that payment. The life tenant, therefore, cannot in any event have the principal, for the simple reason that the settlor has directed that the principal be paid to some one else. The principal must remain with the trustee as against the ultimate beneficiary, in order to provide for the payment of the income to the life tenant, and as against the life tenant in order to provide for the payment of the principal to the ultimate beneficiary at the expiration of the life estates. To call such a trust, a trust to preserve contingent remainders, is therefore somewhat inaccurate and totally unnecessary. It is no more a trust to preserve the ultimate interests than it is a trust to provide for the intervening life estates; both are equally objects of the donor. Furthermore, the ultimate estates may take effect as vested remainders or as executory devises, and consequently the phrase is entirely too narrow.

Nature of Interest of Cestui Que Trust 161. The interest of the action, and should, therefore, on

3 For a detailed statement of a settlement upon trusts to preserve contingent remainders, the learned reader is referred to Perry on Trusts, 5th ed. (1899), §§522, 523, adopted from Lewin. The following clause taken from the form of a settlement given in Saunders, Uses, Vol. 2, p. 243 (1823), will illustrate the nature of the trust: "To the use of the said Henry Howard and Henry Hunt and their heirs, during the life of the said Francis Frederick, in trust to support and preserve the contingent uses and the estates hereinafter limited from

cestui que trust is a chose in principle, be personal property.

being defeated or destroyed; and for that purpose to make entries and bring actions, as occasion may require; but nevertheless to permit and suffer the said Francis Frederick and his assigns, during his life, to receive and take the rents, issues and profits of the premises, to and for his and their own use and benefit; and from and immediately after his decease."

The rules of the common law have no application here, as to which see §§54-62, ante, on destructibility of contingent remainders.

The conception of the use as an estate in the property still remains in the law, and accordingly the interest of a cestui que trust is personal property or realty, according to the nature of the subject matter. The interest of the cestui que trust has also been brought within the rules of the common law defining the quantum of the estate. If it is the duty of the trustee to pay the income to A. for life, A. has a life estate. If it is his duty to pay it for ten years, A. has a term of years. If it is his duty, after the death of A., in the case first put, to give the principal to B. and his heirs, B. has an absolute ultimate estate, generally called a remainder, or, more properly speaking, a future trust. On the principle that equity follows the law, the same rules of construction are generally applied to equitable interests as are applied at law to legal interests. The chancellor, however, is more liberal in construing the words of the trust than is a judge in the common law courts. The court will generally construe an interest in equity to be vested or contingent, according to the same rules of construction as would apply if the limitations were legal. As the vesting or non-vesting of an interest is the test of the application of the rule against perpetuities, this principle is of vital importance. If the cestuis que trustent are the members of a class, the same rules apply as are applicable to the case of gifts to a class at law.' The principles involved in the case where the cestuis que trustent are indefinite, are discussed in Chapter 26, dealing with gifts to charities.

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6

Attributes of the Equitable Estate

162. The equitable interest of the cestui que trust is assignable, devisable," descends according to the intestate law, 10 and is subject to involuntary alienation.1

5 See $147, ante.

6 See §§328, 329, 360, post.

7 See $867-71, ante, on remainders to a class; see $438, post, on present gifts to a class.

8 Saunders, Uses, Vol. 1, p. 1 (1823); see Phillips's Est., (No. 3), 205 Pa. 515 (1903).

9 This is plainly the law, but no authority has been found.

10 Wylie v. Mansley, 132 Pa. 65 (1890);

Shallcross's Est., 200 Pa. 122 (1901).

1 Creditor must proceed by attachment: Ellwanger v. Moore, 206 Pa. 234 (1903). Is not subject to the lien of a judgment: Handy's Est., 182 Pa. 68 (1897), and creditor must wait until the trust is terminated, when the interest of the cestui que trust is a future trust or a remainder: Foster's Est., 179 Pa. 610 (1897).