THE ASSEMBLING DEPARTMENT IN THE COMPTOMETER FACTORY, CHICAGO FELT & TARRANT MFG. CO.
The most common forms of express trusts are created by deed, by will, or by contract. Any declaration of the grantor, no matter how informal, if expressing his intention to create a trust, is sufficient to create a trust. A trust cannot be created for an immoral or illegal purpose.
322. Implied Trusts. When a person by deed or will does not use language expressly creating a trust, but uses language showing his intention to create a trust, one will be implied. Such a trust is known in law as an implied trust, as distinguished from an express trust. If A devises all his property to his son, B, the will containing the following language: "I request my son, B, to pay his cousin, C, $10.00 per month during his life," this language is held to create a trust in favor of C, wherein B is trustee.
323. Resulting Trusts. One party may so conduct himself, or so deal with another, that a court will declare the transaction to be a trust, even in the absence of any express declaration, or of an intention on the part of the parties to create a trust. Such a trust is known in law as a resulting trust. J, to avoid paying his creditors, purchases property in the name of his wife, K. K is a trustee for her husband, J, and creditors can by suit in equity subject J's interest in the property.
If A purchases property, and takes the deed in the name of B, B is trustee for A. B is the legal owner, and A is the beneficial or equitable owner. If a third person purchases the property from B, without notice of A's rights, and for value, the third person takes good title to the property free from A's claim.
In this country, the states generally require by statute, that deeds and mortgages of real estate must be recorded. If an equitable owner does not have a properly recorded written instrument showing his interest in the real estate in question, thereby giving future purchasers notice of his interest, he cannot complain unless the third person has actual notice of his rights or purchases without giving a valuable consideration. A resulting trust is not created by agreement or contract to that effect, but is created by the trustee using money or funds of the cestui que trust in the purchase of property in his own name.
324. Constructive Trusts. If one person is in a confidential relation to another, and misappropriates the money of the other, this act is said to create a constructive trust, in which the defrauding party is trustee, and the defrauded party is beneficiary, or cestui que trust. A constructive trust differs from a resulting trust in that the former involves fraud on the part of the trustee, exercised on the cestui que trust, while a resulting trust never involves fraud between the trustee and cestui que trust, although created for the purpose of defrauding third persons.
If A, an attorney, is employed by B to collect a note of $500.00, and fraudulently reports a collection of $300.00, keeping $200.00, a constructive trust results, in which A is trustee for B, for $200.00. If A, for the purpose of defrauding his creditors, deposits his money in bank in B's name, a resulting trust arises in which B is trustee for A, and A's creditors can subject the property.
Anyone defrauding another by duress, by taking advantage of old age or of mental weakness, or by fraud, becomes the trustee for the wronged party in the amount the latter has lost.