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Page:Harvard Law Review Volume 2.djvu/46

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IT is a commonplace of text-books and cases on trusts that if the trustee converts money or property belonging to the trust and mingles it with other property, the trust is gone. The general theory on this point is well expressed by Lewis, J., in Thompson's appeal : ^ " Whenever a trust fund has been con- verted into another species of property, if its identity can be traced, it will be held in its new form liable to the right of the cestui que trust. So long as it can be identified either as the ori- ginal property of the cestui qu£ trust, or as the product of it, equity will follow it ; and the right of reclamation attaches to it until de- tached by the superior equity of a bona fide purchaser for a valu- able consideration without notice. The substitute for the original thing follows the nature of the thing itself so long as it can be ascertained to be such. But the right of pursuing it fails when the means of ascertainment fail. This is always the case when the subject-matter is turned into money and mixed and confounded in a general mass of property of the same description.** If, how- ever, it can be shown that the trust fund has gone to increase another fund, or has been used in the purchase of property, though what has been bought with trust money and what has not are entirely confused, has the cestui que trust only the rights of an ordinary creditor, or, if he has greater rights, what are they ? It is this question which it is proposed to treat.

Throughout the discussion the word " trustee " is used broadly to indicate any one holding money or property in a fiduciary capacity, and the property is termed the trust fund, and the beneficial owner the cestui que trust. As the principles determining the rights of the parties are the same in every fiduciary relation, whether strictly that of trustee and cestui que trust, principal and agent, executor or administrator, and heirs or legatees, the terminology adopted is convenient and not misleading.

The question most frequently arises when the trustee, after hav. ing used the trust property, becomes insolvent and the cestui que

1 22 Pa. St i6.