Weiss's Concise Trustee Handbook PDF

WEISS’S CONCISE TRUSTEE HANDBOOK 1 CONTENTS INTRODUCTION Page 1 UNDERSTANDING COMMERCE Page 21 TRUST BASICS Page 2...

WEISS’S CONCISE TRUSTEE HANDBOOK 1 CONTENTS INTRODUCTION Page 1 UNDERSTANDING COMMERCE Page 21 TRUST BASICS Page 2 DOING BUSINESS Page 24 EXPRESS TRUSTS UNDER THE COMMON LAW Page 2 LIMITING LIABILITY & RISK Page 26 DECLARATION OF THE EXPRESS TRUST Page 4 BANKING Page 27 THE TRUST CORPUS Page 6 TRANSFERRING ASSETS Page 29 CERTIFICATES Page 8 ISSUING CERTIFICATES & BONDS Page 32 TRUSTEE BASICS Page 10 KEEPING MINUTES Page 34 POWERS & DUTIES OF THE TRUSTEE Page 11 PREVAILING IN LEGAL AFFAIRS Page 34 PRIVILEGES & LIABILITIES OF THE TRUSTEE Page 13 MAINTAINING PROPER I.R.S. RELATIONS Page 41 AUTHORIZED REPRESENTATIVES Page 16 CONCLUSION Page 43 EXPRESS TRUST vs. CORPORATION Page 17 SAMPLE FORMS Page 45 INTRODUCTION THIS HANDBOOK is about the administration of Express Trusts created under the original American common law and functioning within the unique system of commerce in the American states, i.e., the general law merchant,1 as it stands in twenty-first century America. The material presented herein has been reduced from various sources which the reader is encouraged to examine for his own knowledge and further understanding. The material herein has been rendered into a concise handbook format, intended to allow the reader to refer to each section for guidance on decisions regarding the most pertinent aspects of the administration of an Express Trust. So, only secondary attention has been given to all other matters. All in all, the author’s objective by this handbook is to devise a simple guide, with clearly outlined methods and sample forms, for the effective handling of affairs of Express Trusts, while also showing the many options for growth and prosperity, and profound protections afforded by Express Trusts when created and administered properly. This book is written in a somewhat unconventional manner in order to accommodate this objective. If the reader should find, after examining the sources, that this work has failed in its objective, then let it be attributed to a fault of the author, not to any supposed faultiness of the sources or the Express Trust itself. It will be admitted by all honest and learned2 lawyers (as it once was when a lawyer, by definition, was “learned in the law”3) 1 The general law merchant is embraced under general common law, i.e., the original and unique system of commercial law in the American states, in which there is no commerce regulation of Express Trusts accept in connection with income derived from corporate stock and physical franchises under art. I, § 8, cl. 1 and 3 of the Constitution. See William A. Fletcher, THE GENERAL COMMON LAW AND SECTION 34 OF THE JUDICIARY ACT OF 1789: THE EXAMPLE OF MARINE INSURANCE, 97 Harv. L. Rev. 1513, 1514 (1984). 2 It was the strongly held belief of U.S. Supreme Court Chief Justice Warren E. Burger that seventy-five to ninety percent of all trial lawyers are either incompetent, dishonest, or both. See 102 REPORTS OF THE AMERICAN BAR ASSOCIATION, 205-206 (1978). 2 WEISS’S CONCISE TRUSTEE HANDBOOK that the Express Trust, especially one created with proper care to its instruments, is a far superior form of security, or organization in general, for individuals who desire to exercise their natural rights. TRUST BASICS FIRST, it must be understood that any trust, regardless of the many designations applied to them, is, in its most basic sense, “a property interest held by one person (the trustee) at the request of another (the settlor) for the benefit of a third party (the beneficiary).”4 The classification applied to a trust is based primarily upon its mode of creation, in which it may be created either by act of a party or by operation of the law. In the case of the former, trusts are divided into two types: express or implied. Without getting into the various Creating a Trust subclasses of express and implied trusts, the basic difference between one created by BY ACT OF A PARTY express act of a party and one created by implied act of a party is that the former is stated fully in language (oral or written), IMPLIED EXPRESS while the latter is inferred solely from the conduct of the parties. These are very oral written generalized definitions so presented for want of space, since there are many BY ACT OF THE LAW intricacies concerning the true meaning of the term implied. (It has been shown that, in a sense, the classification of “express” trust can only be applied based on what is RESULTING CONSTRUCTIVE implied by the language of the instrument which created the trust.)5 So, we won’t get into that. Our focus is on a particular written express trust type, and even though the above definition is essentially accurate, it does little to define the Express Trust as it is known in its fullest sense under the protections of the common law. EXPRESS TRUSTS UNDER THE COMMON LAW THE MOST ADEQUATE DEFINITION of the Express Trust is to be understood from the earlier case law which has been eloquently summed up and restated into a clear, concise 3 Black’s Law Dictionary, p. 695 (1st ed. 1891). 4 Black’s Law Dictionary, p. 1513 (7th ed. 1999). An even more basic definition is provided therein as “[t]he right, enforceable solely in equity, to the beneficial enjoyment of property to which another person holds the legal title[.]” There are many more sub-definitions, as well as expansions upon the nature of a trust relationship, being a fiduciary one, but we won’t get into them for want of space. 5 See George P. Costigan, Jr., CLASSIFICATION OF TRUSTS, 27 Harv. L. Rev. 437, 438-439 (1914).  WEISS’S CONCISE TRUSTEE HANDBOOK 3 definition by Alfred D. Chandler, Esq.6 in a report submitted to the Tax Commissioners of Massachusetts on unincorporated associations.7 His study was conducted as part of a legislative investigation into their economic effect on the state in 1911; in the first part of the report, at pages 6-7, he offers the following definition: Express Trusts... put the legal estate entirely in one or more [persons], while others have a beneficial interest in and out of same, but are neither partners nor agents. This simple, adequate, common-law right, any person or group of persons sui juris8 may exercise, the Trustees issuing certificates of beneficial [and capital] interest divided into shares, as well as issuing bonds and other obligations, as freely as they open a bank account, have a pass book, and draw and circulate checks, or make whatever contractual relations are allowed to persons as a natural right. [Italics emphasis supplied in original; bold emphasis and bracket information added.] What becomes clear from this definition is that the Express Trust is not merely a property interest held by one for the benefit of another like any basic trust. Rather, it is a trust created by private contract for the holding of a divisible property interest wherein the trustee is empowered by the settlor to do for a beneficiary of his (the trustee’s) choosing whatever he may do for himself as an individual sui juris.9 What has been created here is a trust organization, lawfully, by natural right. “As a general proposition, it may be asserted that one who creates a trust may mold it into whatever form he pleases, and that whatever one may lawfully do himself he may authorize another to do for him.”10 Doing so requires no benefit, privilege or franchise from any government or other outside-party;11 and, therefore the parties owe no duty to any government or other outside-party to the extent that no common-law criminal or civil wrong is the purpose of 6 EXPRESS TRUSTS UNDER THE COMMON LAW: A SUPERIOR AND DISTINCT MODE OF ADMINISTRATION, DISTINGUISHED FROM PARTNERSHIPS, CONTRASTED WITH CORPORATIONS (1912). 7 Mr. Chandler lucidly brought to the attention of the Massachusetts Tax Commission the misapplication of the term voluntary association to the Express Trust. It is well-settled that “[t]he term ‘association’ for income tax purposes taxable as a ‘corporation’ embraces ‘business trusts’ and what Congress did not intend to embrace within the term ‘association’ was a pure [express] ‘trust’ that is a trust of traditional pattern where property is conveyed by will, deed, or declaration to a trustee[.]” PENNSYLVANIA CO. FOR INSURANCE ON LIVES AND GRANTING ANNUITIES V. U.S., 138 F.2d 869 (C.C.A.3 (Pa.) 1943). In CROCKER V. MALLEY, 249 U.S. 223, 63 L.Ed. 573 (1919) the court made it clear that a pure Express Trust, active and functioning as such, has standing in law as a trust, not an association. 8 This is defined as: “Of his own right;... not under any legal disability, or the power of another or guardianship. Having capacity to manage one’s own affairs, not under legal disability to act for one’s self.” Black’s Law Dictionary, p. 1135 (1st ed. 1891). 9 See Pres. Woodrow Wilson’s address before the American Bar Association, at Chattanooga, Tenn. (Aug. 31, 1910), entitled THE LAWYER AND THE COMMUNITY. He says: “... liberty is always personal, never aggregate; always a thing inhering in individuals taken singly, never in groups or corporations or communities. The individual unit of society is the individual.” It has long been held that trustees of Express Trusts have greater latitude than ordinary trustees, simply because such trusts, created by individuals sui juris, may do whatever individuals sui juris may do. 10 HARWOOD V. TRACY, 118 Mo. 631, 24 S.W. 214, 216; see also SHAW V. PAINE, 12 Mass. 293; “... a person who creates a trust may mould it into whatever form he pleases.” PERRY ON TRUSTS, I, §§ 67, 287 (4th Amer. ed.); UNDERHILL ON TRUSTS, p. 57 (Amer. ed.). 11 See HALE V. HENKEL, 201 U.S. 43, 74 (1906). 4 WEISS’S CONCISE TRUSTEE HANDBOOK the contract.12 When done properly the trust is afforded all the common-law protections ordinarily given to private contracts, particularly the obligation of them.13 Now, the question is whether the parties to the contract are truly acting sui juris, i.e., of their pure, unadulterated common-law (natural) rights, because if the parties import or associate benefits which grant an outside party a vested interest in the proposed contract, then the contract has acquired a third-party overseer/intervenor.14 DECLARATION OF THE EXPRESS TRUST THE DECLARATION OF TRUST15 is the trust instrument that constitutes the trust. It has been noted in trust law that no technical expressions are required to create a valid declaration, so long as the words used make clear the settlor’s intent to create the trust or confer a benefit of some sort that would be best carried out in the form of a trust.16 A trust instrument doesn’t necessarily need to be a declaration either, for a trust may be, and often is, formed out of a simple agreement or even a will.17 But with an Express Trust, the declaration has been preferred since the beginnings of trusts under the common law of England, which otherwise shunned fictions of law. This is where careful attention to detail is most crucial, because in order to properly construe the intent of the settlor, the objects, property, and manner in which all is to be carried out must be set forth in unambiguous, precise language so as to particularly create the Express Trust; and where the intent of the settlor is unclear, under equity, interpretation is required to construe the intent of the parties, and the trust may be deemed invalid, depending on 12 LAWSON ON CONTRACTS § 294, p. 381 (3d ed. 1923). 13 In BERRY V. MCCOURT, 204 N.E.2d 235, 240 (1965) the court held that the Express Trust is a “contractual relationship based on trust form” and in SMITH V. MORSE, 2 Cal. 524, it was held that any law or procedure in its operation denying or obstructing contract rights impairs the contractual obligation and is, therefore, violative of Article I, Section 10 of the Constitution. Because the Express Trust is created by the exercise of the natural right to contract, which cannot be abridged, the agreement, when executed, becomes protected under federally enforceable right of contract law and not under laws passed by any of the several state legislatures. In ELIOT V. FREEMAN, 220 U.S. 178 (1911), the court made it clear that the Express Trust is not subject to legislative control. It went further to acknowledge the right-wise stance of the United States Supreme Court that the trust relationship comes under the realm of equity, based upon the common-law right of contract, and is not subject to legislative restrictions as are corporations and other organizations created by legislative authority. To clarify the equity and common-law distinctions, the basis for Express Trusts under the common law in this instance, is not that such organizations are creatures of common law, as distinguished from equity, but that they are created under the common law of contracts and do not depend upon any statute. 14 See Lee Brobst et al., U.S.A. THE REPUBLIC, IS THE HOUSE THAT NO ONE LIVES IN, available at (last visited Jan. 8, 2007). 15 This is sometimes referred to as the trust indenture for the purpose of denoting that it outlines the terms and conditions governing the conduct of the trustee as an indentured servant to the beneficiary under contractual arrangement (referred to in this sense as an indenture trustee). 16 See Underhill, supra at art. 3, p. 10; see also CHICAGO M. & ST. PR. CO. V. DES MOINES UNION R. CO., 254 U.S. 196, 65 L.Ed. 219 (1920). 17 UNDERHILL ON TRUSTS, art. 5, p. 19 (Lond. ed. 1878).  WEISS’S CONCISE TRUSTEE HANDBOOK 5 the degree of ambiguity.18 However, when all is done properly, obviously, there can be no lawful impairment of the obligations of contract.19 Moreover, the declaration, by its terms and provisions, serves to establish the entire contractual arrangement, including the identities and positions of the parties, the trust’s name, jurisdiction and situs, and all particulars of administration, all of which the courts of equity will fully support by the principle that equity compels performance.20 The ultimate result is the creation of a bona fide legal entity21 with its own separate and distinct juridical personality;22 with standing to sue and be sued,23 and to function as a person in commerce by and through its trustee(s). The term natural person has been applied to Express Trusts by courts of equity because of its administration, being carried out by men acting as natural persons.24 Under this application, the trust’s right of 18 Id. at p. 11. 19 See the Constitution for the United States of America, art. I, § 10 (1789): “No State shall... pass any... Law impairing the Obligation of Contracts[.]” 20 See CLEWS V. JAMIESON, 182 U.S. 461, 21 S.Ct. 845, 45 L.Ed. 1183 (1901). 21 See BURNETT V. SMITH, S.W. 1007 (1922); and MUIR V. C.I.R., 182 F.2d 819 (C.A.4 1950). 22 See BRIGHAM V. U.S., 38 F.Supp. 625 (D.C.Mass. 1941), appeal dismissed 122 F.2d 792 (reported in Title 26 I.R.C. 31, p. 356). 23 See WATERMAN V. MACKENZIE, 138 U.S. 252 (1891). 24 A generally unknown fact is that there are several types of citizens now existing in America. The trustee(s) of an Express Trust may seek protection under the Constitutions as state citizens throughout the “Union” of states, a jurisdiction outside the scope of the 14th Amendment which we will discuss in a later section. However, it should also be noted of all citizenship, 14th Amendment or otherwise, that jurisdiction over natural and artificial persons is distinguished without a fundamental difference. This stems, surprisingly, from the operation of in rem jurisdiction which underlies all Civil Law. Though all courts are familiar with the action in personam (against persons), it is the action in rem (against things) which, though practiced only in Maritime Law, stealthily operates in every civil and criminal court. This principle is one of the least understood in its entirety. In rem jurisdiction over a man or woman can only exist if the man or woman is a slave, i.e., property or res (an object), in which case his or her disposition at law is no different than if he or he were a horse or other goods. See THE ZONG (GREGSON V. GILBERT), 99 E.R. 3:233 (K.B. 1783). In nature, in rem jurisdiction is exercised over men and women by their Creator, exclusively. Governments can therefore gain only a fictional in rem jurisdiction over men by creating various legal devices (personas) for those men to assume limited control of (e.g., citizen, taxpayer, driver, etc.). Since the device is legal fiction, a falsehood made true by force of law, this persona is in-fact a legal object or res. Just as in theatre, the persona (“person”) is separate from the man or woman playing the part; therefore, there may be artificial persons, but not artificial men; natural persons, but not natural men. AMERICAN LAW & PROCEDURE, vol. XIII, ch. V, § 65, pp. 156-157: “The word ‘person’ defined. Gaius says ‘De juris divisione’ (the divisions of law) immediately preceding his division of the law; then follows, ‘De conditione hominum’ (meaning the condition or status of men). “In the Institutes ‘De jura personarum’ precedes the expression ‘all our [civil] law relates either to persons, or to things, or to actions.’ The words persona and personae did not have the meaning in the Roman which attaches to homo, the individual, or a man in the English; it had peculiar reference to artificial beings, and the condition or status of individuals.” [Citations omitted; bold and italics emphasis added.] In footnote 33, we get at the modern application and its implications: “... The word ‘person,’ in its primitive and natural sense, signifies the mask with which actors, who played dramatic pieces in Rome and Greece, covered their heads. These pieces were played in public places, and afterwards in such vast amphitheatres that it was impossible for a man to make himself heard by all the spectators [and later by all judges]. Recourse was had to art; the head of each actor was enveloped with a mask, the figure of which represented the part he was to play, and it was so contrived that the opening for the emission of his voice made the sounds clearer and more resounding, vox peronabat, when the name persona was given to the instrument or mask which facilitated the resounding of his [legal] voice. The name persona was afterwards applied to the part 6 WEISS’S CONCISE TRUSTEE HANDBOOK contract is alienable, whereas its creators’ natural right of contract obviously is not.25 The Express Trust nevertheless possesses, inter alia, the right to all enjoyments stemming from the contracts into which it enters, as well as all the obligations imposed under such contracts. The Express Trust possesses the ability to hold/own property, engage in business transactions, and incur liabilities (including tax liabilities) as well as assume creditorship (including secured party status), like any other legal person. THE TRUST CORPUS THE CORPUS is the “body” of the trust, i.e., the property being held in trust for the beneficiary(s), the very subject-matter of the declaration. It should be noted that virtually any thing26 may be held in trust, however, there are certain things which, given their innate traits recognized in Law, make for better subject-matter, so to speak. Initially, the legal minds who perfected the Express Trust in America did so to accommodate for the great obstacles in procuring special charters for corporations intended to deal in real estate, which trusts eventually came to be known as the “Massachusetts Land Trusts.” It was when those individuals came to realize the immense benefits of employing the trusts for the purpose of holding land, that they eventually expanded their utility to include the holding of personal property; these eventually came to be known as the “Massachusetts Electric Companies.” As an aside, when considering the presently hostile official attitude toward non-statutory trusts, what is interesting to note is that much of the Express Trust’s perfection is attributed to Attorney General and later United States Secretary of State Richard Olney;27 but the itself which the actor had undertaken to play, because the face of the mask was adopted to the age and character of him who was considered as speaking, and sometimes it was his own portrait. It is in this last sense of personage, or of the part which an individual plays, that the word persona is employed in jurisprudence, in opposition to the word man, homo. When we speak of a person, we only consider the state of the man, the part he plays in society, abstractly, without considering the individual.” 1 Bouv. Inst., note 1. [Bold and italics emphasis, and bracket information added.] Logic follows that if the man plays no part in a society, then he has no personal attachment or obligation thereto. The trustee(s) under a declaration of an Express Trust are only persons in the private sense because he is only a person once he has accepted the role offered to him by the settlor. Private persons may also pursue constitutional protection as natural persons, “citizens” within the meaning of Article IV, Section 2 of the Constitution, and may thereby claim entitlement to all the “privileges and immunities” of same. See generally PAUL V. VIRGINIA, 75 U.S. 168 (1868). Even though, in today’s economic situation the term “citizen” is presumed to signify the 14th Amendment citizen, the term cannot be applied to Express Trusts when administered properly. In contrast, corporations, as artificial persons, are “citizens of the United States,” within the meaning of the 14th Amendment per SANTA CLARA COUNTY V. SOUTHERN PACIFIC R. CO., 118 U.S. 394, 396 (1886). 25 Man’s right of contract is considered so fundamental that even under Roman law, in its system of domestic slavery, all men, citizen or not, with the exception of slaves (the only non-persons) retained this fundamental right ius gentium. It is understood to derive from a man’s Creator, and therefore is unalienable, even with his own consent/waiver. Man’s right of contract, logically, is held by him in trust to his Creator as property which has been settled upon him, and thus can never be contracted away because such would invalidate the original contract itself. 26 The “thing” held in trust is referred to as the trust res, the subject-matter of the trust. 27 See John H. Sears, DECLARATIONS OF TRUST AS EFFECTIVE SUBSTITUTIONS FOR INCORPORATION, § 1, p. 4 (1911). Olney served as Attorney General in 1893-1895, U.S. Secretary of State in 1895-1897, and prior to that in the Massachusetts House of Representatives in 1874.  WEISS’S CONCISE TRUSTEE HANDBOOK 7 fact that the Express Trusts were initially, primarily utilized for purposes of holding and handling real estate is very significant, especially to our present situation. The significance derives, in pertinent part, from the integral relationship between the law and the land. It is a fundamental principle of law that the land and the law go hand in hand; and, in America, without the 14th Amendment, the Law of the Land is the Constitution with its common-law principles and its substance of gold and silver.28 Referred to in this sense, precious metals are regarded in law as portable land. The basic principle of law holds that land includes everything of value extracted from it, and without getting too deep into the operation of common law, it is this principle regarding the relationship of land and law which, by its operation, threw up an obstacle to corporate real estate ownership. In order to charter a statutory (civil law) entity to handle the substance of the common law (land), special, if not extraordinary, legal circumstances must exist. These circumstances did not exist prior to the post-Erie Federal Common Law29 whose imposition was made possible by loss of the gold standard (the substance of the law) in 1933.30 A statutory entity is inherently accountable to courts of civil (legislative) jurisdiction, deriving subject-matter jurisdiction from the corporate charter, over which the legislature holds in rem jurisdiction as well by way of possession of the charter documents themselves. Whereas, an Express Trust is obviously inherently accountable to courts of common law and equity,31 deriving subject-matter jurisdiction from the trust instrument and corpus. As logic follows, in rem jurisdiction remains with the trustee at all times unless the trust instrument and corpus are surrendered to a third-party voluntarily. In rem jurisdiction, i.e., actual possession, is the key. This brings us to today. In the jurisdiction of the 14th Amendment United States public trust, precious metal, the substance of the common law, is legally merely a commodity. Back in the Republic, however, it remains the staple for payment of debts,32 though surface gold and silver are in considerably lesser quantity and without a fixed standard upon which to be traded. The Express Trust under the common law, holding real estate, silver or gold, is holding the very substance of the law under which it was 28 Referred to in this sense, it is regarded in law as portable land. The basic principle of law is that the land includes everything of value extracted from it. 29 See Lee Brobst et al., THE LAW, THE MONEY AND YOUR CHOICE (2003), available at (last visited Jan. 8, 2007). 30 See House Joint Resolution 192 of June 5, 1933; Pub. L. 73-10. Prior to that, silver had already been de-monitized, in practice but not in fact, by the Coinage Act of 1873 (commonly referred to as the “crime of ‘73” which, it is blatantly obvious, would have been unconstitutional if done in-fact. It is said to have been a tactic of congress to place in the public mind the perception of the currency as being solely backed by gold, presumably for the purpose of the eventual passing of H.J. Res. 192, which congress knew would effect a removal of the substance of law). Silver was later withdrawn from circulation in certain coins by the Coinage Act of 1964, and was removed entirely by amendment to the Coinage Act of 1964 by the Bank Holding Company Act of 1970. Then, all silver-backed certificates were discontinued in 1972. 31 It should be noted that though the Express Trust is created under common law, it is not a creature of the common law as distinguished from equity, but rather, it is created under common law of contracts and not dependent upon any statutes; Equity supplements the common law. See generally SCHUMANN-HEINK V. FOLSUM,328 Ill. 321. And though the trust may bring an action in Admiralty, it is not inherently accountable to that jurisdiction. 32 See Constitution for the United States of America, art. I, § 10 (1789). 8 WEISS’S CONCISE TRUSTEE HANDBOOK created, thus ensuring that bond between law and land, and the powers and guarantees that come with it.33 CERTIFICATES WHAT MAY COME as a surprise is that any trust may divide its trust property into shares and issue certificates.34 The power to issue certificates and bonds, and employ the use of an official seal35 never has been restricted to corporations.36 It is well-settled law that whatever else most corporations possess beyond their artificiality and right of suit in a corporate name is a mere incident or consequence of incorporation, and not a “primary constituent.”37 In fact, most attributes now commonly held as “corporate” in nature, such as the power of issuing transferable shares, limiting liability of officers, using an official seal, making by-laws, purchasing lands and chattels, are merely the legislative recognition and adoption of natural common-law rights any man or woman sui juris may exercise without permission (much less a charter) from the state. The court in Warner v. Beers38 clarified this principle most effectively: There are several very useful and beneficial accessary [also spelled accessory] powers or attributes, very often accompanying corporate privileges, especially in moneyed corporations, which, in the existing state of our law, as modified by statutes, are more prominent in the public eye, and perhaps sometimes in the view of our courts and legislatures,39 than those which are essential to the being of a corporation. Such added powers, however valuable, are merely accessary. They do not in themselves alone confirm a corporate character, and may be enjoyed by unincorporated individuals. Such a power is the transferability of shares.... Such, too, is the limited responsibility [liability].... So, too, the convenience of holding real estate for the common purposes, exempt from the legal inconvenience of joint tenancy or tenancy in common. Again: There is the continuance of the joint property for the benefit and preservation of the common fund, indissoluble by death or legal disability of any partner. Every one of these attributes or powers, though commonly falling within our notions of a moneyed corporation, is quite unessential to the legality of a corporation, may be found where there is no pretense of a body corporate; nor will they 33 See Bill of Rights, amend. VII (1791). 34 See HART V. SEYMOURE, 147 Ill. 598, 35 N.E. 246; and VENNER V. CHICAGO CITY RY. CO., 258 Ill. 523, 101 N.E. 949. 35 As a side-note, the right of an individual using a seal has never been challenged, based upon the universal understanding that it is used as a matter of right. Once the trustee has adopted the seal and has used it, it is automatically presumed that the use is lawful, until proven otherwise. See JOHNSON V. CRAWLEY, 25 Ga. 316, 71 Am.Dec. 173; and MULLANPHY V. SCHOTT, 135 Ill. 655, 26 N.E. 640. 36 See THOMPSON-BUSINESS TRUSTS § 23; SEARS TRUST ESTATE § 105 (2d ed.); and PHILLIPS V. BLATCHFORD, 137 Mass. 510. 37 See WALD’S POLLOCK ON CONTRACTS, pp. 126, 296. 38 23 Wend. 103, 145-146 et seq. 39 I will show you in the conclusion why this is the state of affairs today, as it was back then, and why the principles interpreted by the court in this case apply now more than ever.  WEISS’S CONCISE TRUSTEE HANDBOOK 9 make one if all were combined, without the presence of the essential quality of legal individuality[.] [Italics and bold emphasis, and bracket information added.] The trustee of an Express Trust is empowered by the terms and provisions of the trust instrument to issue certificates not only of beneficial interest,40 but also of capital interest.41 Generally speaking, beneficial interest is that which is held by the beneficiary(s) of the trust, who is entitled to a certain proportional share of the trust assets during the life or at the termination of the trust; while capital interest is that which is held by the exchanger(s) who has invested property into the trust, and thus becomes entitled to a certain proportional share of any profits and assets remaining at the termination of the trust. As a rule, the terms and provisions of the trust instrument control the manner in which beneficial and capital interest are to be administered. It should define the rights of interest-holders, who, incidental to their acceptance of the interest, are bound under the trust instrument to that extent.42 But there are certain principles which govern these interests in construing the fundamental classification of the trust. For instance, it is held that where the certificate-holders have control over the trust property and/or administration of the trust’s affairs, the trust arrangement is, in fact, a partnership, in which the shareholders become liable for the acts of the trust.43 The basic principle is that if it is free from the control of its interest-holders, then it is an Express Trust.44 This is commonly referred to by courts of equity as the “Control Test,”45 in which, control must ultimately rest with the trustee(s) of the trust in order for it to be properly classified as an Express Trust. The well-settled principle applied by courts of equity is that interest-holders, by full legal title and control over the trust property being vested absolutely in the trustee(s), cannot be considered partners nor agents,46 and therefore cannot be held liable for the debts of the trust in that manner.47 40 Also referred to as trust certificates or certificates of trust units. 41 Also referred to as capital certificates or certificates of capital units. 42 See HARDEE V. ADAMS OIL ASSN., 254 S.W. 602 (1923); TODD V. FORD, 92 Colo. 392; and WEIMER & CO. V. DOWNS, INC., 77 Colo. 377. 43 See RAND V. MORSE, 289 Fed. 339 (C.C.A.8 (Mo.) 1923); GOLDWATER V. OLTMAN, 210 Cal. 408; SCHUMANN-HEINK V. FOLSOM, supra; FIRST NATIONAL BANK V. CHARTER, 305 Mass. 316; and NEVILLE V. CLIFFORD, 242 Mass. 124. See, for examples of what will constitute a co-partnership, TAFT V. WARD, 106 Mass. 518; and PHILLIPS V. BLATCHFORD, supra. 44 Id. 45 See BANK OF AMERICA NAT. TRUST & SAVINGS ASS’N V. SCULLY, 92 F.2d 97 (C.C.A.10 (Colo.) 1937); RAND V. MORSE, Id.; GOLDWATER V. OLTMAN, 210 Cal. 408; SCHUMANN-HEINK V. FOLSOM, Id.; FIRST NATIONAL BANK V. CHARTER, Id.; COMMERCIAL CASUALTY INS. CO. V. PEARCE, 320 Ill.App. 221; ROSEMAOND V. MARCH, 287 Mich. 580 (Rehearing denied, 287 Mich. 270); NELVILLE V. CLIFFORD, Id.; CARLING V. BUDDY, 318 Mo. 784 (IN RE WINTER, 133 N.J.Eq., 245); and RHODE ISLAND TRUST CO. V. COPELAND, 39 R.I. 193. 46 See MAVO V. MORITZ, 151 Mass. 481, 484, 24 N.E. 1083 (1890); MASON V. POMEROY, 151 Mass. 164, 7 L.R.A. 771; JOHNSON V. LEWIS, 6 Fed. 27, 28 (C.C.Ark. 1881); TAYLOR V. MAYO, 110 U.S. 330, 334-335, 28 L.Ed. 163, 165 (1884); LACKETT V. RUMBAUGH, 45 Fed. 23, 29 (C.C.N.C. 1891); and SMITH V. ANDERSON, L.R. 15, Ch. D, 247, 275-276, 284-285. 47 See IN RE CONOVER, 295 Ill.App. 443; and GRECO V. HUBBARD, 242 Mass. 37. 10 WEISS’S CONCISE TRUSTEE HANDBOOK Furthermore, the certificates have no determinable fair market value, and, therefore, no gain or loss is recognized until the cost or other basis of the property disposed of has been recovered.48 In Commissioner of Internal Revenue v. Marshman,49 the court held that fair market value is determined by property received by the taxpayer, not the fair market value of the property transferred by the taxpayer into the trust. What’s more is that certificates are considered not necessarily as chattels, but as documentary evidence of ownership and intangible rights;50 and, in and of themselves, they are only personal property,51 not the actual interest or share itself.52 The interest in an Express Trust, cannot be traded without the approval of the trustee(s). This is contrasted with the certificate of stock, which courts have long held may be dealt with in the market as a “commercial document of value.”53 TRUSTEE BASICS FIRST AND FOREMOST, anyone (man or person) capable of taking physical possession of or legal title to property can be a trustee.54 And there is no limit to the number of trustees who may serve in any one trust. Generally, where there is more than one trustee, the trustees, with respect to each other, are referred to as co-trustees,55 and when acting jointly as a collective body are referred to as the Board of Trustees. Furthermore, there is no law prescribing the character of a trustee, and while it has been held that a trust cannot be invalidated simply due to incompetence, the trustee should be at least someone capable and fit for executing the powers and duties honorably.56 (This is the basis for the general rule that beneficiaries are not desirable as trustees, though there is no law to forbid such appointment. Equity will generally avoid all temptation to a breach of trust.) The trustee should be stationed within the jurisdiction of the court of equity in which the estate is located, if indeed the trust corpus is an estate. But where the trust corpus is portable land, the trustee need not be stationed 48 See Master Tax Guide, para. 910. In regard to Capital Certificates, the courts have long upheld the doctrine of exchange, in that certificates in exchange are not taxable until a realized gain has occurred. See BURNET V. LOGAN, 283 U.S. 404 (1931); and TRENTON COTTON OIL CO. V. COMMISSIONER, 147 F.2d 33 (C.C.A.6 1945). 49 279 F.2d 27 (C.A.6 1960). 50 See GOODHUE V. STATE ST. TRUST CO., 267 Mass. 28. 51 See PARKER V. MONA-MARIE TRUST, 278 S.E. 321; and IN RE PITTSBURG WAGON WORKS’ ESTATE, 204 Pa. 432, 54 A. 316. 52 See MALLEY V. BOWDITCH, 259 Fed. 809 (C.C.A.1 (Mass.) 1919). 53 See Joseph H. Beale, THE EXERCISE OF JURISDICTION IN REM TO COMPEL PAYMENT OF A DEBT, 27 Harv. L. Rev. 107, 111 (1913), citing STERN V. QUEEN, (1896) 1 Q.B. 211; PINNEY V. NEVILLS, 86 Fed. 97 (C.C.Mass. 1898); et cetera. 54 See BEACH’S COMMENTARIES ON THE LAW OF TRUSTS AND TRUSTEES, vol. I, ch. III, § 23, p. 30 (1897). Even a thief is considered, by operation of trust law, to be a constructive trustee. 55 This term is sometimes used to denote that the co-trustee has less authority than the trustee. In that sense, the co-trustee is called a passive trustee, and the trustee an active trustee. But Express Trusts usually employ the term co-trustee simply to denote that there are several trustees of that trust. 56 Beach, supra. Beach describes this concept as “in such a manner as to subserve the interests of the beneficiary[.]”  WEISS’S CONCISE TRUSTEE HANDBOOK 11 within any single jurisdiction. Non-residency will not disqualify or preclude the trustee from carrying out his position.57 As far as accepting the appointment is concerned, this should be done formally, expressly in writing, even though it will always be implied “if the individual intermeddles with the trust property, or performs any act to carry out the trust.”58 Once acceptance has been tendered, no court of common law or equity can prevent the trustee from holding that office, except for breach of trust59 or good cause dependent upon clear and lawful necessity.60 Removal must be procured pursuant to the provisions of the declaration, or, where no such provisions are made, by decree of a court of equity. Lastly, it should be noted that the office of trustee is not always a desirable one. When the trust instrument conveys a burdensome obligation, the trustee is miserable and at risk of breach by failure to perform; when the trust instrument has been constructed poorly, the trustee is miserably confined and inhibited and he may well be held liable for trust contracts with outside parties. The trustee has a duty of care toward the beneficiary(s), and must harbor no biases or resentment in administration; therefore, it is prudent to empower the trustee with enough discretion to carry out his position to the best of his ability and responsible creativity. To put it plainly, the settlor must truly trust the trustee to carry out his duties, and use his powers justly. POWERS & DUTIES OF THE TRUSTEE THE POWERS of a trustee are divided into three categories: general, special and discretionary. The general are all those inherent in trustees virtute officii, i.e., ordinarily conferred by trust law; the special are all those conferred by the trust instrument; and the discretionary are all those arising out of the necessity of personal judgment (though broad discretion may also be conferred by law and as well as by trust instrument).61 It is well-settled law that under a declaration of trust, the trustees must have all the powers necessary to carry out the obligation of that private contract which they have assumed.62 Furthermore, it is settled that the trustees of an Express Trust are afforded greater latitude to carry out their duties than ordinary trustees.63 The trustees are 57 Id. at § 19, p. 28. 58 August P. Loring, A TRUSTEE’S HANDBOOK, pt. I, § 3, p. 5 (1898). 59 See IN RE TEMPEST, (L.R. 1 Ch. 487), 31, 1431: Lord Justice Turner settled the rule of law that “[f]irst the court will have regard to the wishes of the persons by whom the trust has been created, if expressed in the instrument creating the trust, or clearly to be collected from it.... If the author of the trust has in terms declared... a particular person... [t]he court in those cases conforms to the wishes of the [creator].” A Breach of Trust does not include a technical breach of trust, e.g., one made through mistake. 60 See Loring, supra at § 8, p. 19. The reasons are generally for guilt of willful breach of trust, waste or mismanagement of trust property, refusal to account to beneficiary, lunacy, drunkenness, bad habits or carelessness which endangers the trust property, or improvidence. 61 See Beach, supra at vol. II, ch. XXI, §§ 427-435, pp. 986-1006. 62 See BOYD V. U.S., 116 U.S. 616 (1886); and SILVERTHORNE LUMBER CO. V. U.S., 251 U.S. 385 (1920). 63 See ASHWORTH V. HAGAN ESTATES, 181 S.E. 383 (1935). 12 WEISS’S CONCISE TRUSTEE HANDBOOK empowered to control every aspect of the trust according to the trust instrument and equity, and retain the power to remove even the beneficiary(s) from the premises.64 These powers include, but are in no way limited to— y The power to bind the trust in a contract, especially where such obligation is implied-by-law,65 and the power to contract with the beneficiary(s); y The power to partition, exchange, sell, pledge or mortgage the trust property, either in whole or in part;66 y The power to lease trust property;67 y The power to issue, change, or otherwise dispose of securities of the trust; y The power to support the beneficiary(s) in all reasonable manner; y The power to prosecute and defend in the trust’s name or trustee’s name; y The power to make gifts out of trust property; y The power to delegate all unessential powers and duties; and y The power to exercise personal judgment and every discretionary power not prohibited by the trust instrument.68 He may do whatever a man or woman may lawfully do according to natural right. The fundamental principle of law is that for every power there is a correlative duty. The trustee, as a fiduciary to the beneficiary(s), assumes certain basic duties outside of the management of trust property, and other general duties aside from whatever specific duties may be conferred upon the trustee in the trust instrument. These duties include, but are not limited to— y The duty to support the beneficiary(s) in any essential needs which it may have, out of the funds which would otherwise be paid to it in distribution. And if such funds are not available, the duty to accumulate any balance needed;69 y The duty to refrain from taking advantage of peculiar knowledge or position when dealing directly with the beneficiary(s); y The duty to exercise the utmost good faith in all concerns of the trust, whether dealing with the trust property itself, or directly with the beneficiary(s) in matters concerning the trust,70 including to care for, protect and secure the trust property; 64 See DEVEN V. HENDERSHOTT, 32 Iowa 192. 65 See DURKIN V. LANGLEY, 167 Mass. 577; PERRY ON TRUSTS, supra at § 437, p. 120; HAPGOOD V. HOUGHTON, 10 Pick. 154. Cf. Comp. Law Dak. (1887), § 3946; Rev. Code N. Dak. (1895), § 4289; and Civ. Code Cal. (1885), § 2267. 66 See Loring, supra at pt. II, § 3, pp. 54-69. It should be noted that even though the trustee may have sold the entire trust estate, the trust is not necessarily terminated until all obligations of the trust arrangement have been fulfilled, especially the transferring of the proceeds to the interest-holder(s). 67 It is a general rule that the if, without adequate provision, the trustees lease property outside of the powers granted to them by the trust instrument, such an act will constitute breach of trust. Again, it all comes back to the design of the trust instrument. 68 See James Hill, A PRACTICAL TREATISE ON THE LAW RELATING TO TRUSTEES, THEIR POWERS, DUTIES, PRIVILEGES AND LIABILITIES, pt. III, div. I, ch. II, § 3, pp. 471-495. 69 See Loring, supra at pt. II, § 4, p. 69. “[The trustee’s] fealty is to the trust, and all his acts must be governed by strict loyalty to it and the interests of the beneficiaries; and any act which is not in the interest of the beneficiaries is a breach of trust.” 70 Id. at p. 72.  WEISS’S CONCISE TRUSTEE HANDBOOK 13 y The duty to preserve, protect and further the trust’s interests according to the purposes designated in the trust instrument, including pressing all reasonable demands and prosecuting and fending off all claims, and claiming all available exceptions and taking all available remedies and advantages in trust matters; y When delegating unessential powers and duties, the duty to exercise at least a general supervision of the trust affairs, and to perform any ministerial acts which require the exercise of discretion or judgment;71 y The duty to keep minutes, and separate accounts of the trust, even if kept in a book with other accounts, with minutes showing decisions and resolutions reached, and accounts showing the state of the trust and pertinent details of transactions (generally in the form of schedules of income received, income paid, additions to principal, deductions from principal, principal on hand, and changes in investment consisting of debtor and creditor sides);72 y Upon acceptance of the trusteeship, the duty to secure and protect the trust property and trust documents;73 y When investing trust funds, the duty to invest them securely, “so that they shall be preserved intact for the remainderman,” and to invest productively, “so that they shall yield [at least] the current rate of interest to the life tenant;”74 and y The duty to concur with all co-trustees, except where authorized to act individually.75 PRIVILEGES & LIABILITIES OF THE TRUSTEE IN ADDITION TO POWERS AND DUTIES, there are certain privileges (including allowances), rights and liabilities of the trustee. These are all those which are enumerated in the trust instrument and naturally extended to the trustee of an Express Trust. As was noted earlier, certain restrictions placed upon trustees of ordinary trusts do not apply to the 71 See PERRY ON TRUSTS, supra at § 409, p. 49. It is completely lawful and equitable for a trustee to appoint an Authorized Representative to act as agent in collecting rents and dividends, keep books and minutes, and, in general, act for the trustee wherever there is a moral or legal necessity to employ such an agent. (Necessity may be determined to exist where the ordinarily prudent business man would employ an agent in his own affairs. See EX PARTE BELCHIER, Amb. 219.) 72 This is not required, but the rule of thumb is that the more detail kept, the better the accounting. The trustee is accountable to the beneficiary(s), and the accounts must ultimately balance out in the end. And an account settled in a court of equity is final; it cannot be reopened except to correct a mistake or fraud, and its correctness cannot be questioned in a collateral proceeding in equity or in a court of law. See STETSON V. BASS, 9 Pick. 26, 29; DODD V. WINSHIP, 144 Mass. 461; SEVER V. RUSSELL, 4 Cush. 513; and PARCHER V. BUSSELL, 11 Cush. 107. 73 See HALLOWS V. LLOYD, 39 Ch. Div. 686, 691; Underhill, supra at p. 219. 74 Loring, supra at pt. II, § 4, p. 95. Generally, where it is impossible to comply with the investments required by the trust instrument, a trustee has recourse to apply to a court of equity for directions. See MCINTIRE’S ADM’N V. ZANESVILLE, 17 Ohio St. 352. 75 See James Hill, supra at pt. III, div. I, ch. I, § 1, pp. 305-309; BROWN V. DONALD, 216 S.W.2d 679 (1949); MELDON V. DEVLIN, 31 App.Div. 146, 53 N.Y.Sup. 172; BARROLL V. FOREMAN, 88 Md. 188, 40 A. 883; and APPEAL OF FESMIRE, 134 Pa. 67, 19 A. 592. 14 WEISS’S CONCISE TRUSTEE HANDBOOK trustee of an Express Trust pursuant to the doctrine of greater latitude.76 These, aside from those allowed by the trust instrument, include, but are not limited to— y The inherent, unquestionable right to full compensation, including reimbursement of all out-of-pocket and other expenses incurred in the discharge of duties. (And unduly withheld reimbursement results in a lien on the trust for the amount plus interest);77 y The privilege of residing within the trust estate and allowance of rates and taxes “although he [the trustee] has the benefit of residing in the house;”78 y The right to employ a solicitor79 for assistance and guidance in the administration of the trust, and, in the case of any doubt or difficulty, to seek the opinion of competent counsel, and, in the case where the trust’s accounts are intricate and complicated, to seek the assistance of an accountant—to the charge of the trust; y The right to apply to a court of equity for directions in the execution of the trust, or to obtain a declaratory judgment in order to establish the meaning and intent of the trust instrument;80 y The right to carry on in separate business for the benefit of the trust given certain conditions; y The allowance of remuneration for loss of time under certain circumstances; y The right not to be compelled by subpoena or review to produce and show records or books to outside parties;81 y The right to further limit his liability in particular contracts, even beyond the limitation made in the trust instrument; y The right to relocate, move trust property, or change the trust’s domicile;82 and y The inalienable right to disclaim the office at the execution, or resign at a later date. With regard to the personal liabilities of a trustee, basically, the inherent liabilities (and non-liabilities) are all those incident to ownership at law83 and imposed or exempted under contract law, for it is a maxim of law: le contrat fait la loi.84 Therefore, a trustee’s liability is largely determined according to the particular circumstances of the 76 See ASHWORTH V. HAGAN ESTATES, supra. 77 James Hill supra at pt. IV, div. II, ch. IV, pp. 570-571. “Such is the rule of courts of equity, and such also is the rule at common law.” Quoting Lord Cottenham in ATT.-GEN. V. MAYOR OF NORWICH, 2 M. & Cr. 406, 424. See also REX V. INHABITANTS OF ESSEX, 4 T.R. 591; and REX V. COMMISSIONERS OF SEWERS, 1 B. & Adolph 232. 78 Id. “However a trustee who employs a park-keeper, or other servant, for his own purposes, must pay him himself, and will not be allowed his wages out of the estate. And so a trustee, with the most ample powers of management, cannot of his own authority keep up a mere pleasurable establishment, such as gamekeepers, &c.” 79 This is defined as “[a] person who conducts matters on another’s behalf; an agent or representative.” Black’s Law Dictionary, p. 1399 (7th ed. 1999). 80 See DUNBAR V. REDFIELD, 7 Cal.2d 515. 81 See BOYD V. U.S., supra; and SILVERTHORNE LUMBER CO. V. U.S., supra. 82 See Beach, vol. I, supra at § 19, p. 28; RICE V. HOUSTON, 80 U.S. 66 (1871); Fost. Fed. Pr. Sec. 19; and Story, Fed. Pr. Sec. 19. Also, in NEW ORLEANS V. WHITNEY, 138 U.S. 595, 34 L.Ed. 1102 (1891) the court said “[w]e have repeatedly held that representatives may stand upon their own citizenship in the federal courts irrespective of the citizenship of the persons whom they represent—as executors, administrators, guardians, trustees, receivers, [etc.]” 83 See Loring, supra at pt. II, § 1, p. 23. 84 “The contract makes the law.” See, generally, Bouvier’s Law Dictionary, pp. 770-790 (1928). The basic principle is that all man’s law is contractual in nature, regardless of the particular classification of the law, and can acquire force only by consent: consensus facit legem.  WEISS’S CONCISE TRUSTEE HANDBOOK 15 situation, especially contracts wherein the trustee has properly limited his liability via qualified signature. (I will discuss the principles of and procedure for properly qualifying one’s signature in a later section.). For now we will entertain the general liabilities, which may include, but are not limited to— y Liability on all contracts made, whether signing as “trustee” or signing individually;85 y Liability of removal for breach of trust, waste, mismanagement, or good cause shown in an action for removal in a court of equity,86 or according to trust instrument; y Liability for losses sustained by the trust as a result of negligence;87 y Liability for torts and common-law criminal and civil wrongs, or acts of bad faith;88 y Liability in all cases of co-mingling of trust funds;89 and y Liability for all mischief of his agents contracted to exercise discretionary powers.90 But, the trustee is not at all liable for any losses sustained in the proper discharge of duties,91 and, in the case of other losses due to negligence or tort, the trustee may be able to be bonded in the manner ordinarily used by executors and administrators. They are generally not liable for— y Contracts in which liability was properly limited using the methods to be shown later. Such contracts may also encompass the codes and statutes of various jurisdictions, given that all manmade law is, by its nature, fundamentally contractual; y The debts of the trust incurred requiring the creditor to look solely to the trust for payment.92 (Conversely, the trust is not liable for the personal debts of the trustee either,93 except to the extent of attachability of the trustee’s interest in the trust94); 85 See Loring, supra at pt. II, § 3, p. 65. Simply using the title “trustee” will not sufficiently limit liability in certain contracts such as debt instruments and agreements which fail to specify the non-personal capacity of the trustee. That without some express stipulation he is personally bound is well-settled law. See FELDMAN V. PRESTON, 194 Mich. 352, 160 N.W. 655; BRIED V. MINTRUP, 203 Mo.App. 567, 219 S.W. 703; HUSSEY V. ARNOLD, supra; CARR V. LEAHY, 217 Mass. 438, 105 N.E. 445; also KNIPP V. BAGBY, 126 Md. 461, 95 A. 60. 86 Any such action would have to be instituted by an interest-holder, as a last resort. And the burden of proof rests with the party bringing the action. 87 See HOLMES V. MCDONALD, 226 Ill. 169, 80 N.E. 714; and NORLING V. ALLEE, 10 N.Y.Sup. 97. But it must also be noted that this, as with all of the others can be limited. In FISHERIES CO. V. MCCOY, 202 S.W. 343 it was held that it is lawful for liability to be limited even in certain cases of tort and negligence, except where the relation of master-servant or passenger-carrier exists. 88 See Loring, supra at § 1, p. 26. However, in torts and civil wrongs, limitation of liability is amply available as per FISHERIES CO., supra. Common-law crimes are strictly of an in personam nature, going against the officer personally. 89 Generally, in cases of co-mingling of the trustee’s personal funds with trust funds, courts will follow the trust property, unless co-mingled beyond separation, in which case the courts will treat the trust as the alter-ego of the individual acting under the assumed alias of “trustee” and will ignore the trust arrangement completely. See GREGORY V. HELVERING, 293 U.S. 465 (1935), XIV-1 C.B. 193; and HELVERING V. CLIFFORD, 309 U.S. 331 (1940). Mixing trust property with personal property is co-mingling. See PERRY ON TRUSTS, vol. I, ch. XV, § 447 (6th ed.). In many cases, however, it should be noted that, co-mingling or not, in rem jurisdiction is waived by the defendants giving way to these at-law actions; ignorance of procedural defects relating to in rem jurisdiction is the real cause. 90 See Beach, vol. II supra at ch. XXV, § 548, p. 1243; and WINTHROP V. ATT.-GEN., 128 Mass. 258. 91 Equity will always follow the law. And the trustees can never be penalized for properly discharging their duties. 92 See TAYLOR V. MAYO, 110 U.S. 330, 4 S.Ct. 147, 28 L.Ed. 163 (1884); and FROST V. THOMPSON, 219 Mass. 360, 16 WEISS’S CONCISE TRUSTEE HANDBOOK y The independent, non-preventable acts of co-trustees, of which he had no prior knowledge;95 y The acts of his agents when properly contracted; y Taxes on income of the trust;96 and y Lawsuits against the trust. AUTHORIZED REPRESENTATIVES AS SHOWN ABOVE, it is well within the power, discretion, and, often times, duty to contract an Authorized Representative, Managing Agent or Attorney-in-fact to deal with certain affairs of the trust. And the basic rule which courts of equity have laid down is that a trustee may contract such agents to handle all affairs which require no discretion, be they ministerial or not, and he may not delegate the essential part of a power unless, of course, he is permitted to do so by the trust instrument.97 In clarifying the discretionary power rule, it must be noted that there is no law against delegating discretionary powers to agents. The rule is simply that a trustee who does so, “does so at his own peril,”98 for he is liable for all losses generated by the agent, if any. To clarify what constitutes the essential and unessential parts of a power, the essential part is defined as the exercise of discretion, the determining of needs of the trust, or the appropriateness of an action. The unessential part is that “not requiring the exercise of discretion,” etc., etc. However, there is a simple solution, allowing for greater flexibility in this rule. The solution is to “authorize the agent to contract [on behalf of the trust] subject to the assent of the trustee.”99 And, as noted in the previous section, if the trust instrument makes provisions for the contracting of an Authorized Representative, then the trustee cannot be liable for his acts.100 Now, the method for contracting such agents may be either by formal appointment if mandated by the trust instrument, or by execution of a limited power of attorney, letter of authorization or even certificate of verbal authorization documented by 106 N.E. 1009. 93 See WRIGHT V. FRANKLIN BANK, 59 Ohio 80, 51 N.E. 876. 94 See Loring, supra at pt. II, § 1, p. 41; MAVO VS. MORITZ, supra; and HUSSEY V. ARNOLD, 70 N.E. 87 (1904). 95 See James Hill, supra at pt. III, div. I, ch. I, p. 309. If the acts were indeed preventable, and he had prior knowledge, then the trustee is co-liable and accountable for the loss. See also IN RE ADAMS’ ESTATE, 221 Pa. 77, 70 A. 436; and IN RE COZZENS’ ESTATE, 15 N.Y.Sup. 771. 96 Again, the trustee must be indemnified by the trust instrument from taxation for trust gains. If the trustee holds interest in the trust, he is taxable only at the realization of an actual gain, not at the point of investment. Cf. BURNET V. LOGAN, supra; and TRENTON COTTON OIL CO. V. COMMISSIONER, supra. 97 See Loring, supra at pt. II, § 2, p. 49. 98 Id. at § 4, p. 74. 99 Id. at § 2, pp. 48-49. 100 It should be noted here that in the previous section it was shown to be a general duty of the trustee to minimize any potential risk not only to the trust, but also to himself, when contracting agents. In cases of uncertainty, the trustee may require that the agent be bonded for a certain amount which would satisfy any potential general or specific loss, assuring the trustee and trust of the good-faith performance of the agent.  WEISS’S CONCISE TRUSTEE HANDBOOK 17 minutes of meeting. The most effective, secure method of contracting such an agent would obviously be an actual appointment with written contract setting forth the specifics of the position. But, a letter of introduction is, for most purposes, sufficient, as is a simple power of attorney when the agent is acting specifically under the title of Attorney-in-Fact.101 EXPRESS TRUST vs. CORPORATION FIRST, I MUST CLARIFY, though I am referring primarily to corporations, included in the reference are all organizations which owe their existence to legislative acts, not limited to Limited Liability Companies, Limited Partnerships, Agencies, Associations, etc.; though not classified as corporations, they avail themselves of benefits, privileges, and franchises of the state for their very creation and existence. Second, since we have already shown the distinct juridical personality of the trust as a legal entity,102 we will not reexamine it until we consider its personality under the Roman civil law of the 14th Amendment in a later section. But it must be noted the well-settled law that the Express Trust is a lawful,103 legal, valid business organization,104 with the right to hold property and sue in its business name.105 And its uses in modern business have some of their strongest roots in England, Germany and many of the United States where it has been recognized for its superiority, and even praised, by such notable authorities as the Ohio Supreme Court for its effectiveness in the business of life insurance.106 The declaration of trust has been held to be an effective substitute for incorporation, for its many advantages, which will undoubtedly shine though to the reader by the following table. I have prepared this table based upon the work by John H. Sears who, after discussing the impact of the twin landmark cases107 on the grave lack of profitability of using corporations for, inter alia, dealing in real estate, went to task in 101 I have supplied the reader with a sample multipurpose letter of introduction for opening a bank account in the sample forms section. All the reader need do is modify the letter to encompass the particular purpose for which the authorization may be necessary. A sample limited power of attorney is also provided in that section. I have also provided a sample Authorized Representative contract, specifying the particular authorization, power, and limitation of liability, etc., for said agent. (When used with Managing Agents, modification to the contract’s language may be necessary.) 102 See BRIGHAM V. U.S., supra; and BURNETT V. SMITH, supra. 103 The lawfulness of the Express Trust created under the common law is obvious, however, the allegation to the contrary has often been made in the past and, occasionally, by the ignorant nowadays. Among the long list of precedents confirming its lawfulness is PALMER ET AL. V. TAYLOR ET AL., 269 S.W. 996 (1925), offered here simply to add to the collection. 104 See BAKER V. STERN, A.L.R. 462; REEVES V. POWELL, 267 S.W. 328 (1924); WEEKS V. SIBLEY, 269 Fed. 155 (D.C.Tex. 1920); PHILLIPS V. BLATCHFORD, 137 Mass. 510 (1884); and BURNETT V. SMITH, supra. 105 See U.S. V. CARRUTHERS, 219 F.2d 21 (C.A.9 (Or.) 1955). 106 “There was no class of business, the transaction of which, as a matter of private right, was better recognized at common law than that of making contracts of insurance upon the lives of individuals.” STATE V. ACKERMAN, 51 Ohio St. 163, 37 N.E. 828, 24 L.R.A. 298. 107 ELIOT V. FREEMAN, supra; and MAINE BAPTIST MISSIONARY CONVENTION V. COTTING ET AL., 220 U.S. 178 (1911). 18 WEISS’S CONCISE TRUSTEE HANDBOOK outlining the distinct benefits of Express Trusts. The works by William C. Dunn,108 Guy A. Thompson,109 and Sidney R. Wrightington110 are cited as well. Mr. Sears says:111 The decision of the United States Supreme Court... holding that the [Express] Trusts are not subject to the Federal excise tax on corporations, has emphasized this method of conducting business as compared with corporations... [T]he best legal talent was soon impressed into the service of devising a means of affording the usual advantages belonging to a corporation without the authority of any legislative act. A method of placing the property into the hands of trustees, who held the legal title and issued certificates, similar to shares of stock, to the cestui qui trust, showing the interest owned by each, possessed nearly all the advantages desired. [This excluded the use of limited liability companies, joint-stock associations, and co-partnerships, which are] organized under enabling statutes which [merely] enlarge the privileges possessed at common law, and they are, therefore, subject to State regulations, which may be equally burdensome to those imposed on corporations. [Italics emphasis supplied in original; bold emphasis and bracket information added.] Express Trust Corporation Governed under equity. Trust law is the most Governed under statute. Forever changing well-settled body of law in America. according to political agendas and schemes. Board of Directors are managers with limited, Trustee(s) are sole authority, except where defined powers to conduct business, hold regular delegated to Agents or a Board of Directors. meetings, etc. Trustees afforded more leverage and powers are Relatively broad powers, such as with holding generally broader than corporate officers. Law companies. But corporation may not do whatever provides that whatever any individual may lawfully any individual may lawfully do; they can only do do, the trust can do. The sky (nature) is the limit. what is legal. The statute (legislature) is the limit. Trustee’s liability is limited by trust instrument and Corporate officers personally liable to legislature by signature on all contracts and instruments. and to creditors for all ambiguous indorsements. Remember Boyd and Silverthorne— trustees not Remember Enron and Global Crossing—cannot subject to subpoena. escape service of process.112 108 TRUSTS FOR BUSINESS PURPOSES (1922). 109 BUSINESS TRUSTS AS SUBSTITUTES FOR BUSINESS CORPORATIONS (1920). 110 THE LAW OF UNINCORPORATED ASSOCIATIONS AND BUSINESS TRUSTS (2d ed. 1923). 111 supra at § 1, p. 3. 112 Although corporate officers reserve the relative-right to plead the fifth, they have merely the relative-right to plead the congressionally interpreted “spirit” of the amendment, not the letter of the law, due to their 14th Amendment citizenship. Trustees of an Express Trust have the absolute-right to directly refuse self-incrimination as well as indirectly on a jurisdictional basis. See Lee Brobst et al., supra; BOYD V. U.S., supra; and SILVERTHORNE LUMBER CO. V. U.S., supra.  WEISS’S CONCISE TRUSTEE HANDBOOK 19 Life-span of 20-25 years at a time in order to avoid Life-span is perpetual or certain number of years rules against perpetuities. Death of settlor or according legislative requirements. All officer trustee has no effect on life or affairs of trust. changes must be reported, which records are open Succession of power is quiet and private. for public review. Trust is not required to obtain business license.113 The opposite is the case. Trustees are not required to file reports with any Required to file statements and reports quarterly, entity, and are accountable only to the beneficiary, etc. governed strictly under principles of equity. Business name is naturally protected by injunction. Must apply for and secure fictitious firm name, and (May also use trade-name or trademark for trust must register all trade-names and trademarks. purposes without registration.)114 The opposite is the case, except for state taxes in All Federal excise tax and state organization and certain states. In either respect, all corporations franchise taxes are legally avoided. are taxed indirectly via inflation.115 Not subject to foreign corporation laws of any state. Not inherently subject to commercial regulation except for “income” derived from Inherently subject to all foreign corporation laws corporate stock and physical franchises under and public policy regulation. Article I § 8 Clauses 1 and 3. Express Trust is a valid legal entity in all States of the Union.116 Corporation is 14th Amendment citizen,119 Trust may function as an Article IV § 2 citizen of regardless of citizenship of corporate officer. the United States via its trustee, not a 14th Generally state corporations require officers to be Amendment citizen.117 This citizen is understood in citizens as well. This citizen is inherently public constitutional law as the private citizen.118 due to the nature of the amendment.120 113 See PEOPLE V. ROSE, supra. Once trust is executed, it is an existing “express business,” and, unless the trust instrument requires the trustee to obtain a business license, one is not needed except for new (i.e., heretofore nonexistent) express business. 114 See PEOPLE V. ROSE, 219 Ill. 46, 76 N.E. 42; YWCA V. YWCA, 194 Ill. 194, 62 N.E. 551; MCLEAN V. FLEMING, 96 U.S. 245 (1877); LANE V. BROTHERS, ETC., 120 Ga. 355; AIELLO V. MONTECALFE, 21 R.I. 496; and RUDOLPH V. SOUTHERN BENEFICIAL LEAGUE, 23 Abott’s N.C. 199. 115 “[I]nflation is a ‘method of taxation’ which the government uses to ‘secure the command over real resources, resources just as real as those obtained by [ordinary] taxation’. ‘What is raised by printing notes,’... is just as much taken from the public as is... an income tax.’” 1980 ANNUAL REPORT, Federal Reserve Bank of Richmond, p. 10, quoting John Maynard Keynes’ THE ECONOMIC CONSEQUENCES OF THE PEACE (1920). 116 See JONES V. HABERSHAM, 107 U.S. 174, 27 L.Ed. 401 (1883); FELLOWS V. MINER, 119 Mass. 541; SOHIER V. BURR, 127 Mass. 221; SEWALL V. WILMER, 132 Mass. 131; and CROSS V. U.S. TRUST CO., 131 N.Y. 330, 349, 30 N.E. 125. A trust invalid where created, but valid where to be administered will be upheld where made. HOPE V. BREWER, 136 N.Y. 126, 143, 32 N.E. 558. 117 See FARMERS LOAN & TRUST CO. V. C. &. A. RY. CO., 27 Fed. 146 (C.C.Ind. 1886); and SHIRK V. CITY OF LAFAYETTE, 52 Fed. 857 (CC.Ind. 1892). For an understanding of the profound superiority of Article IV § 2 citizenship over 14th Amendment citizenship, see Lee Brobst et al., supra. 118 See HALE V. HENKEL, supra. 119 See SANTA CLARA COUNTY V. SOUTHERN PACIFIC R. CO., supra. 120 14th Amendment citizens, under the Roman civil law (private international law/admiralty-maritime law), are inherently public, with only relative-privacy. 20 WEISS’S CONCISE TRUSTEE HANDBOOK Trustees have absolute-rights and privileges to Corporate officers have relative-right and engage in commerce under protection of the privileges to do so, and incur more taxability by Federal Constitution.121 doing so. Trustees issue certificates in the manner Must go “public” in order to issue stock. prescribed by trust instrument. Certificate holders Stockholders have a relative say in affairs have no say in the administration of trust affairs. depending on the extent of their holdings. Interests of the beneficiary(s) well protected by Stockholders rights protected by courts, yet the equity. Power to secure information as to the basic statutory nature of corporations allows for actions of the trustees and trust affairs is, no abuse. Stockholders are generally at the mercy of doubt, superior to the rights and remedies of someone. stockholders in corporation. Units of interest in the trust are not personal Shares of stock are personal property in hands of property of certificate holder and carry no liability owner and taxes issue on same property against as such. both owner and corporation. No legal obligation to maintain the capital and refrain from paying dividends out of capital. Trust The opposite is the case. instrument governs. May prosecute/defend litigation in trust or trustee May bring and defend litigation in the corporate name without compromising legality. Same rules name and entity only. The process of piercing as to parties and procedure at law and in equity corporate veils succeeds mostly due to confusion are applicable. of personal and official capacities by officers. While the mortality rate of corporations and the like have historically remained high, Express Trusts remained, and indeed to this day, continue to remain vital.122 Also, as the table shows, many of the powers of an Express Trust are substantially the same as those of a corporation in effect, but without the legislative requirement of registration in order for those powers to be activated. These advantages and more have been and are still seized by some of the shrewdest, wealthiest individuals and families in America and from abroad. But the widely perceived, yet untraceable, wealth of such individuals and families like the Rothchilds, Rockerfellers, Kennedys, Forbes, and many of the American founding fathers, plus countless modern day politicians, are strong 121 Any statute enacted by a state which prohibits this right is in conflict with the Constitution. See BRUANT V. RICHARDSON, 126 Ind. 145, 25 N.E. 807; ROBEY V. SMITH, Ind.Sup. 30 N.E. 1093; and FARMERS’ LOAN & TRUST CO., supra. 122 See Chandler, supra at p. 11. Reportedly, the oldest Express Trust in America is the North American Land Company, formed by Patrick Henry, with the aid of John Nicholson and James Greenleaf, for Robert Morris of Virginia (popularly known as the “Financier of the American Revolution,” distinguished from Virginia Colony Governor), circa 1764, roughly a decade prior to the signing of the Declaration of Independence (1776) and Mr. Henry’s compelling address to the Virginia Legislature, GIVE ME LIBERTY (1775). North American Land Company was later expanded in 1795, but was dissolved in 1798, at which time its land holdings consisted of roughly 4 million acres scattered over Georgia, the Carolinas, New York, and the states in between. See PLAN OF ASSOCIATION OF THE NORTH AMERICAN LAND COMPANY: ESTABLISHED FEBRUARY 1795 by Peter Force (1795). Another, and possibly more noteworthy, Express Trust was the Merchants Bank of New York, formed by Alexander Hamilton, circa 1810. As an aside, this Express Trust made full use of transferability of shares, i.e., certificates, and limited liability (see HAMILTON’S WORKS, Congressional ed., VII, 838), whereas Mr. Morris ultimately served time in debtors prison after the trust revenues from installment sales and share sales did not come in quickly enough to meet the loan and tax deadlines. George Washington is reported to have had many a dinner in debtors prison with Mr. Morris, where he visited him frequently; the two were good friends.  WEISS’S CONCISE TRUSTEE HANDBOOK 21 circumstantial evidence of this. One may find many articles and information, as well as quotes,123 attesting to this. Lastly, it should be mentioned that, unlike the corporation, there is no lawful method by which to pierce the trust without the express permission or implied consent of the trustee, or some unlawful activity on the part of the trust giving rise to a bona fide cause of action. As a result, virtually no direct evidence of the trust’s existence can be found unless it is made to be found via recording— even then it can only be heard by a court of competent jurisdiction, which, as you shall see in the sections ahead, is very hard to find nowadays. This is protection at its finest, hiding in plain sight, for as the maxim goes: bene vixit, qui bene latuit.124 UNDERSTANDING COMMERCE HERE IS WHERE we begin to address the Express Trust in action. As shown above, the trust may engage in all manner of trade and commerce,125 but before taking the step of doing so, the reader would greatly benefit the trust by understanding the nature of commerce in twenty-first century America. And for my brief explanation of the subtle intricacies involved, I will rely upon the two works by Lee Brobst et al.126 I will not go into a detailed explanation of the constitution or the history of commerce for want of space, but I would suggest that the reader read the works relied upon herein. When the trustee is engaging in trade or commerce in behalf of the trust, acting under general common law, the trust is within the jurisdiction over which the literal and absolute protections of the Bill of Rights extend, and he has no direct contact with the federal government. Under right of contract law protected by the Federal Constitution, the trustee may enter into the 14th Amendment jurisdiction via contract, i.e., by willfully availing the trust of benefits like the quasi-corporate privilege/franchise of limited liability for the discharge of debts using Federal Reserve Notes, pursuant to the economic system established under former H.J. Res. 192.127 (Contrast discharge with the payment of debts with standard gold-backed currency under the original Coinage Act of 1792.) 123 One such quote is that of John D. Rockerfeller who is reported to have said that the key to true wealth and power is to “own nothing and control everything.” Your author is confident that the reader will see the self-evidence of this truth; and the Express Trust throughout the relatively short history of America has served to facilitate this practice. A search for the assets of the Rockerfeller family will prove the truth of this philosophy. 124 “He lives well who conceals himself [his assets] well.” Ovid (c. 43 B.C.-A.D. 18). 125 “The words ‘trade’ and ‘commerce’ are often used interchangeably; but, strictly speaking, commerce relates to intercourse or dealings with foreign nations, states, or political communities, while trade denotes business intercourse or mutual traffic within the limits of a state or nation, or the buying, selling, and exchanging of articles between members of the same community.” Black’s Law Dictionary, p. 336 (4th ed. Rev. 1968). 126 supra, see footnotes 14 and 29. 127 H.J. Res. 192 was tacitly repealed on October 27, 1977 as codified at 31 U.S.C. § 5118(a)(1) and (d)(2). And though gold clauses have since been upheld as legally enforceable again (see FAY CORP. V. FREDERICK & NELSON SEATTLE, INC., 896 F.2d 1227 (C.A.9 (Wash.) 1990)) it successfully put in place a system which survived the repeal, and thus today most participants make no noticeable use of the now legally enforceable gold clause. Therefore, all discussion relating to H.J. Res. 192 remains valid in the sense that nothing has changed materially since its repeal thirty years ago. 22 WEISS’S CONCISE TRUSTEE HANDBOOK Under this jurisdiction, the federal government (Congress) has full and direct contact with the trust, “as they see fit, for the benefit of public policy regulations (known as codes & statutes) of this jurisdiction.”128 This makes the federal government a third-party intervenor in the affairs of the trust by operation of law,129 because the trust (as with the 14th Amendment citizens) is being allowed to get away with not truly fulfilling its commercial contracts as is required under the common law of contracts. (I will show how this can all be avoided, in a later section.) The resulting nexus or “confederacy developed under [H.J. Res. 192]... is an affiliation known better as an association.” “And the ‘common enterprise’ of this unincorporated society, is to offer all Americans a so-called ‘privilege’ in the form of what is better known as a ‘[quasi-contract]’ to participate in commerce without ‘Payment of Debts’ for ‘social security’ purposes. Moreover, this unincorporated society is outside the literal common-law principle that demands the ‘Payment of [D]ebts’ as stated in Article 1 Section 10, but is allowed, upheld and protected by Article 1 Section 10 that upholds [the] ‘Obligation of Contracts.’”131 This amounts to a “federated unincorporated society by operation of law [which] is contractually protected by the Constitution [in the same way the Express Trust and its trustee(s) are].” And the trust and/or trustee reserves the right to “domicile themselves in... the Union under Article IV Section 3 [C]lause 1, [and] thus to contract under Article I Section 10 despite the fact that [they]... cannot ‘Pay’ [their]... debts. In other words, Congress cannot compel [the trust or its trustee(s)]... to participate in a federal interstate unincorporated banking association under Article IV Section 3 [C]lause 2 and [H.J. Res. 192]... for the NON payment of debts. The choice of law is up to each person still.”132 Corporations are “artificial creations of the state or federal government under physical charter (franchise) issued via state or federal civil law for commercial regulation under Article I Section 8 [C]lauses 1 & 3. They are not under the literal common law because of the charter (franchise). Any legal action against the corporation is legally called an ‘in rem’ action, because it is against the thing or property (also called res) of the corporation under charter. The courts have automatic subject[-]matter jurisdiction, because the physical charter is the subject[-]matter.”133 “Under the letter of the constitutional law there is no commercial regulation, but [H.J. Res. 192]... along with 15 USC brought in a third party for commercial regulation for the social security public policy. Remember, ‘equity compels performance.’ The law 128 THE LAW, THE MONEY AND YOUR CHOICE, p. 3. 129 The federal government’s power of regulation in this manner is fully constitutional, deriving its authority from art. I, § 8, cl. 1 and 8, being one of the general legislative powers. The relationship between congress and the 14th amendment citizen is controlled under art. IV, § 3, cl. 2 because there is no physical federal or state charter issued to regulate the relationship. 130 Brobst et al., supra at pp. 7-8. An association is defined as “[a]n unincorporated society; a body of persons united and acting together without a charter, but upon the methods and forms used by incorporated bodies for the prosecution of some common enterprise.” Black’s Law Dictionary, p. 156 (4th ed. Rev. 1968). 131 Brobst et al., Id. 132 Id. 133 Id. at p. 9.  WEISS’S CONCISE TRUSTEE HANDBOOK 23 views unincorporated associations as a danger to the substance of the common law, because of their debt/credit system. This is because there is no counter balance to the demands the association puts on the substance of the earth, thus the reason for all the federal and state regulatory agencies. In other words, there is a presumption by implication in the civil law that a charter (a metaphysical/abstract/unreal type) exists, because persons are availing themselves (volunteering) of the privileges pertaining to [H.J. Res. 192]. Therefore, these persons come under a ‘quasi in rem’ jurisdiction of the civil law in order to regulate, control (including compel) those that are outside the literal common[-]law principles.”134 The many participants under this system, especially the 14th Amendment citizens from each state, together form an unincorporated federation of state associations operating under interstate commerce as addressed in Article IV § 3 cl. 2, and reinforced by the landmark Erie R. Co. v. Tompkins135 decision. This is the basis for the federal (and state) government’s compulsion of persons to its private international law (i.e., the spirit, not the letter, of the common law mixed with public Roman civil law, under Law of Nations per Article I § 8 cls. 3 and 10, and Article VI cl. 2) nowadays commonly known as codes and statutes (state or federal), to regulate everything as a matter of commerce.136 Without getting into the history of religion, and speaking purely from an analytical perspective, the Roman civil law, as a base-model for commerce regulation, was developed out of necessity of the church to avoid political scrutiny for its handling of ever increasing amounts of precious metals. It had become a “‘storehouse’ for the money and property the people were persuaded to give in exchange for limited liability — go directly to heaven instead of hell. As the people became more educated and saw what was really behind the power of religion [in generating wealth], the Roman Church fell under greater and greater criticism. This led to the development of a banking system to handle and control church wealth and take the critical focus [away from the church.]”137 “The bank learned from the church about limited liability. If you could get people to borrow money beyond their ability to pay back, you could get them to keep performing [paying interest in one form or another] on a debt (liability) without ever 134 Id. at pp. 9-10. 135 304 U.S. 64 (1938). 136 This can be better understood from PROPELLER GENESEE CHIEF V. FITZHUGH, 53 U.S. 443, 451-453 (1851), wherein the court said that, within the letter of the constitution, “[t]he law contains no regulations of commerce.... It merely confers a new jurisdiction on the district courts; and this is its only object and purpose.... It is evident... that Congress, in passing [the law], did not intend to exercise their power to regulate commerce.... The statutes do no more than grant jurisdiction over a particular class of cases.... Now the judicial power in cases of admiralty and maritime jurisdiction, has never been supposed to extend to contracts made on land and to be executed on land. But if the power of regulating commerce can be made the foundation of jurisdiction in its courts, and a new and extended admiralty jurisdiction beyond its heretofore known and admitted limits, may be created on water under that authority, the same reason would justify the same exercise of power on land.”; see also VERLINDEN V. BANK OF NIGERIA, 461 U.S. 496 (1983). Roman civil law is also why the I.R.S. continually refers to income taxes as voluntary although, to the ignorant, it appears to be the exact opposite. 137 U.S.A. THE REPUBLIC, IS THE HOUSE THAT NO ONE LIVES IN, p. 9. 24 WEISS’S CONCISE TRUSTEE HANDBOOK demanding it [the principal] back, thereby, loaning out that same credit to more than one individual or company. This meant that the bank was limiting the liability of the borrower so he was not fully responsible for the debt as long as he continued to perform to paying the interest. This way real money (gold) became credit (paper money) by loaning to more than one person. Being involved in this sort of commerce was called ‘private commerce.’ With the church’s control over wealth, this private commerce became standard practice in world trade upon the sea — private international or admiralty/maritime law became known as Roman civil law as it began to figure heavily in the politics of every city and country it touched through international commerce.”138 By operation of this body of law, particularly its in rem element, all persons subject to its jurisdiction are not necessarily regarded as fictional “vessels” per say, but are more so as objects of the State, discussed earlier (see footnote 24). These objects, like vessels in traditional Admiralty practice, are vested with a distinct quasi-corporate, juridical personality, but, unlike vessels, are capable of suing and being sued in personam.139 14th Amendment citizens of the United States, whether state or federal chartered corporations or metaphysical-chartered corporate-colored public persons, therefore, are akin to public vessels of the United States within the broad meaning of the Public Vessels Act, and are regulated accordingly. The United States, as with the Roman Church, is considered in international law as a “ship of state”. The Express Trust, then, is akin to a private vessel of the united states of America, navigating through the often hostile waters called interstate commerce (which is international commerce via the United States treaties). DOING BUSINESS EVEN THOUGH the Express Trust is technically not a “business trust”140 within the established meaning of the term, this in no way prevents or inhibits the trust from engaging in all manner of business the trustee is permitted to under declaration, and it need only obtain the franchise of a business license if it anticipates doing express business in the above-described jurisdiction.141 The trust may operate a business, acquire a business, sell or otherwise dispose of its business, or even contract under the limited liability system and become a taxable entity— the choice is yours. The only thing which may bar the trust from conducting a particular kind of business in any certain jurisdiction is the public policy of that jurisdiction, regarding which, it has been admitted, most states have not passed upon the subject directly.142 138 Id. 139 See THE CHINA, 74 U.S. 53 (1868); and THE BARNSTABLE, 181 U.S. 464 (1901). For an esoteric perspective, see also WHY WE ARE IN THE ADMIRALTY JURISDICTION (April 18, 2004), available at (last visited May 1, 2007). 140 PENNSYLVANIA CO. V. U.S., supra. 141 See PEOPLE V. ROSE, supra. 142 No state has ever made any attempt to prohibit Express Trusts (i.e., impair the contract rights of persons sui juris). However, many states have attempted successfully to prohibit “associations,” the most notable being the Ohio Attorney General in STATE V. ACKERMAN (supra), against C.F. Ackerman and ninety-nine other persons who  WEISS’S CONCISE TRUSTEE HANDBOOK 25 Regardless of the nature of the business, there is a due notice rule which confers a duty upon the trustee under equity. The rule consists of two parts: The first is that he should sufficiently distinguish and represent the nature of the trust to the party with whom he is doing business. It is of the utmost importance, in the forming of business contracts, that full disclosure be made—on all letterheads, business cards, checks, bills and order blanks, papers, etc.—so as to prevent any claims of lack of disclosure from arising in the future. But prudence dictates that a trustee must not disclose every fact regarding the trust, its declaration, and its affairs. The first part of the due notice requirement can be sufficiently accomplished simply by employing the designations “Irrevocable Express Trust Organization,” “Express Trust Organization,” “Trust Organization,” or “Organized under Declaration of Trust,” beneath or next to the trust’s name. It must not be excessively revealing about the trust (the trustee has a duty to protect the privacy of the trust), but it also must not be misleading (the trustee has a duty to not compromise the integrity of the trust). He is in no way prohibited from exercising the utmost shrewdness.143 The second part is that he should stipulate in plain and certain language, in all written contracts and obligations that the trust only is liable for its obligations and that neither the trustee nor interest-holders are to be held to any personal liability in the contract.144 He may also wish to cite the provision of the trust which so limits his and/or the interest-holders’ liability, but this is often unnecessary. And the trustee should always designate his title either under or immediately next to his name and signature.145 were transacting business of guarantee and accident insurance in the state under the name of the Guarantee and Accident Lloyds, New York. The Attorney General alleged that they were doing business without having complied with the laws of the state or receiving proper authority from the state to do business of that kind. The court found that because the defendants were acting under mere association (as opposed to under declaration of trust), they were an association unlawfully exercising a franchise within the state, acting as a corporation therein without being legally incorporated. The court indirectly affirmed the well-understood principle scarcely in need of restatement that Express Trusts may engage in any manner of business allowed to individuals as a natural right. In fact, to restate this principle over and over again would be “ostentatious.” CHISHOLM V. GEORGIA, 2 U.S. 419, 453 (1793). As public policy is a form of regulation, it should be noted the case of MUNN V. ILLINOIS, 94 U.S. 113, 126 (1876) in which the court expounded on the principle of regulation. Because the trust is of private property, and its business is private as well, the trust business is not “affected with a public interest.” It does not become affected with a public interest until the trustee participates in behalf of the trust in the unincorporated interstate banking association, obtains a business license or other franchise, contracts under it, or conducts the private business of the trust in a “manner to make it of public consequence, and affect the [14th Amendment] community at large. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use and must submit to be controlled by the public [policy]... to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use; but, so long as he maintains the use, he must submit to the control.” 143 See McCoy, supra at p. 1. 144 Id. 145 It has been suggested that whether the trustee designates his title or not, he is in-fact acting as trustee, because the substance not the form is what controls. However, for security purposes, I would argue that the designation should be applied in all situations, regardless. Doing so will avoid any superficial confusion. 26 WEISS’S CONCISE TRUSTEE HANDBOOK The trustee should obtain a mailing address for the trust, and though he is the principal and holder of the trust property, it is generally prudent to refrain from mixing the trust’s affairs with his own. He should also obtain all separate business necessities (telephone service, utilities, etc.) for the trust. (Logic follows that he should do these things regardless of whether he is operating trust busi