Royal Trust Co. v. Tucker

Royal Trust Co. v. Tucker
Collection
Supreme Court Judgments
Date
1982-02-09
Report
[1982] 1 SCR 250
Case number
15949
Judges
Laskin, Bora; Martland, Ronald; Ritchie, Roland Almon; Dickson, Robert George Brian; Beetz, Jean; Estey, Willard Zebedee; Chouinard, Julien
On appeal from
Quebec
Subjects
Trust
Decision Content
Supreme Court of Canada
Royal Trust Co. v. Tucker, [1982] 1 S.C.R. 250
Date: 1982-02-09
Royal Trust Company Appellant;
and
Dame Barbara Tucker Respondent;
and
Judith Mae Buller, Catherine Martha Buller, Patricia Doreen Buller, Pamela Christine Buller, Diane Harding Tucker, Daphney Millicent Tucker and the Registrar of the Registration Division of Montreal Mis en cause;
and
H. Clark Holden Intervener.
File No.: 15949.
1981: February 12; 1982: February 9.
Present: Laskin C.J. and Martland, Ritchie, Dickson, Beetz, Estey and Chouinard JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC
Trusts and trustees—Deed of donation and trust in favour of primary beneficiaries who did not exist when deed of donation and trust was made—Quebec trust of English inspiration—Acceptance of the trust—Ownership of the trust property—Deed of donation and trust in favour of secondary beneficiaries not a gift in contemplation of death—Civil Code, arts. 754, 758, 760, 782, 981a, 981b, 981l.
In 1953 respondent concluded a deed of donation and trust with appellant pursuant to arts. 981a et seq. of the Civil Code. In 1974 respondent challenged the validity of this contract on the grounds that the gift made in favour of the unborn children of the donor (primary beneficiaries) and in favour of the sisters of the donor (secondary beneficiaries) was void: the former because the beneficiaries did not exist when the deed of donation and trust was made; the latter because it is incidental to the former and is a gift in contemplation of death. The Superior Court dismissed the action but respondent’s appeal to the Court of Appeal was allowed.
Held: The appeal should be allowed.
The deed of donation and trust made for the benefit of the unborn children of the donor is valid. The property conveyed in trust is taken out of the grantor’s estate and it is the trustee, whose acceptance sufficed to make the trust irrevocable, who becomes owner of the prop- erty for the duration of the trust. There is thus no further impediment to the validity of the trust, since it is not necessary that there be beneficiaries in whom ownership of the property conveyed is vested. When art. 981a refers to the provisions relating to gifts and legacies, it does so subject to the special characteristics of the trust, and not as if the trust did not exist and this was an ordinary gift or an ordinary legacy. Articles 981a et seq. must be given a wide and liberal interpretation, favouring an extension of the contractual and testamentary freedom of the parties and in keeping with the purpose of the legislation, which is to enable individuals to do by gift inter vivos what it was already possible to do in part by will, including the creation of a benefit intended for a non-existent person. Public order and the law do not prohibit it.
The deed of donation and trust in favour of the donor’s sisters is also valid. This gift, distinct from the first, is not a gift in contemplation of death because in the case at bar the condition accompanying the deed of donation and trust is not the donor’s death, but the absence of any issue of the donor at the time fixed by her for the trust to terminate. As the donor has irrevocably divested herself of the trust property, she has conferred on her sisters a suspensive right which she can no longer take back.
Curran v. Davis, [1933] S.C.R. 283; Harwood v. Moncel (1923), 61 C.S. 497; Estate of the late Thomas Fyshe v. Fyshe, [1977] C.S. 165; Reford v. National Trust Company, [1968] Que. Q.B. 689; Masson v. Masson (1912), 47 S.C.R. 42; O’Meara v. Bennett, [1922] 1 A.C. 80; Laliberté v. Larue, [1931] S.C.R. 7; Laverdure v. Du Tremblay, [1937] A.C. 666; Green-shields et al. v. The Queen, [1958] S.C.R. 216; Crown Trust Co. v. Higher et al., [1977] 1 S.C.R. 418; Abbot v. Fraser, (1874) L.R. 6 P.C. 96; Guaranty Trust Co. of New York v. The King, [1948] S.C.R. 183; No. 199 v. Minister of National Revenue, 54 D.T.C. 488; Taylor v. Royal Trust Company (1936), 74 C.S. 180; Pesant v. Pesant, [1934] S.C.R. 249, referred to.
APPEAL from a judgment of the Court of Appeal of Quebec, [1979] C.A. 308, reversing a judgment of the Superior Court, [1976] C.S. 895. Appeal allowed.
William E. Stavert and James P. Thomson, for the appellant.
Georges Audet and Jean-Pierre Bréard, for the respondent. English version of the judgment of the Court delivered by
BEETZ J.—This Court has to decide, inter alia, as to the validity of a deed of donation and trust made otherwise than by a marriage contract, the primary beneficiaries of which are the unborn children of the donor.
I—Facts and proceedings
The facts are not in dispute.
On March 13, 1953, in Montreal, respondent concluded a deed of donation and trust with appellant pursuant to arts. 981a et seq. of the Civil Code. The chief provisions of this contract are as follows:
The Donor doth hereby transfer, convey and make over by way of gift inter vivos and irrevocable to the Trustee thereof accepting in trust for the purposes and on behalf of the beneficiaries hereinafter set out the stocks, bonds and securities set out in the schedule hereto annexed marked “A” identified by the signature of the parties hereto and the undersigned Notary, which will hereinafter be called “the Trust Property”.
The present Donation has been thus made subject to the following conditions, namely:
(1) During the lifetime of the Donor, the Trustee shall pay to or use for her the net revenues from the Trust Property and in addition such parts of the capital of the Trust Property as the Trustee in its sole discretion may deem advisable to pay to or use for her from time to time to provide for illness, accidents, emergencies, or other needs of a serious nature.
(2) Upon the death of the Donor to divide the Trust Property as then composed among the Donor’s lawful children in the first degree and the Donor’s grandchildren in the first degree, or any one or more of such children or grandchildren in accordance with the terms of the Donor’s Will, and failing such Will or in so far as the said Will may not apply to the Trust Property, to pay the same to the Donor’s lawful children in the first degree in equal parts upon their respectively attaining the age of twenty-five years. Should any child in the first degree of the Donor have predeceased the Donor leaving lawful issue such issue will take the share that would have devolved to their deceased parent and failing issue the same will accrue to the remaining children in the first degree of the Donor and the issue of her predeceased children in the first degree in equal parts by roots. Should any child in the first degree of the Donor survive her but die before reaching the age of twenty-five years leaving lawful issue, such issue shall take the share of their deceased parent and failing issue the same will accrue to the other children in the first degree of the Donor and the issue of predeceased children in the first degree equally by roots. The shares of all such issue of the Donor’s children in the first degree shall be paid over to them as they respectively reach the age of twenty-five years. During the minority of all children and their issue herein referred to the Trustee shall use for their welfare the revenues from their respective shares, in such amounts and through such channels as the Trustee in its sole discretion may decide, and after reaching majority each beneficiary shall be paid his or her share of revenues direct. In addition such parts of the capital of their respective shares as the Trustee in its sole discretion may deem advisable may be paid to or used for such beneficiary from time to time to provide for illness, accidents, emergencies or other needs of a serious nature.
In the event of any beneficiary under this clause (2) dying without issue before attaining twenty-five years of age the share of such beneficiary shall accrue to his or her brothers and sisters or their children representing them.
…
(5) Upon the death of the Donor, should there be no lawful descendants of hers then living, or should all her lawful descendants who survive her die before reaching the age of twenty-five years, the Trustee shall pay over one-half of the Trust Property to LESLIE A. TUCKER, the Donor’s Father, and shall pay the remaining half to the other children in the first degree of the said Leslie A. Tucker, the lawful issue of such children to take the share of any of them who may have predeceased, by representation: the children and issue who are to share hereunder to be determined at the death of the Donor or of the last of her descendants whichever event is the later: but should all such children and their issue have predeceased the said Leslie A. Tucker, and latter shall receive the whole of the Trust Property. Should the said Leslie A. Tucker have predeceased the Donor, and the Donor’s descendants and his own other children in such event the Trustee shall divide the whole of the Trust Property among the other children of the said Leslie A. Tucker or their issue aforesaid. Should the said Leslie A. Tucker and all his other children and their lawful descendants be dead as well as the Donor and her lawfull descendants in such event the Trustee shall divide the Trust Property among the abintestate legal heirs of the Donor, such heirs to be determined as at the death of the Donor or the last descendant of the Donor whichever is the latest.
The contract confers on the trustee the most extensive powers of administration and alienation, in addition to those which he is given by law.
When she signed this agreement, respondent was domiciled in the Province of Quebec, was unmarried and had no children. She now has four minor daughters, Judith Mae, Catherine Martha, Patricia Doreen and Pamela Christine Buller, represented by the intervener, their tutor ad litem.
The mis en cause Diane Harding and Daphney Millicent Tucker, who are both unmarried, of legal age and without issue, are the only other children of the late Leslie A. Tucker, respondent’s father. It is not in dispute that they existed on March 13, 1953.
Appellant trust company continues to be in possession of all the property included in the trust, a portfolio of securities and mortgage loans which it has managed since 1953.
By her action brought against appellant in 1974, respondent asked the Superior Court to void the 1953 deed of donation and trust ab initio, to declare respondent the sole owner of the property conveyed in trust, which she valued at $154,432, to direct appellant to transfer this property to her and to order appellant to pay her the sum of $154,432 if it failed to transfer the trust property to her within sixty days of the judgment.
The grounds of nullity relied upon by respondent include inter alia the following, the only ones that were argued as far as this Court: (a) the gift made in favour of the primary beneficiaries is void because these beneficiaries did not exist when the deed of donation and trust was made; (b) the gift made in favour of the secondary beneficiaries is void because it is incidental to the foregoing and is a gift in contemplation of death.
Appellant submitted its rights to the Court but contended that the deed of donation and trust was valid. In his capacity as tutor of respondent’s daughters, the intervener submitted their rights to the Court.
The other two mis en cause, the respondent’s sisters, did not appear.
II—The judgments of the Superior Court and of the Court of Appeal
The Superior Court judgment has been published: Tucker v. Royal Trust Co., [1976] C.S. 895. Mackay J. dismissed the action of the respondent. He refused to follow two judgments given by the Superior Court in Harwood v. Moncel (1923), 61 C.S. 497; C.S. Mtl. No. 1150, June 29, 1921, in which deeds of donation and trust were voided because the primary beneficiaries did not exist; the gift has been made, as in the case at bar, to the donor’s unborn children. In Mackay J.’s view, the decision of this Court in Curran v. Davis, [1933] S.C.R. 283, overturned the limiting view taken of trusts in the Harwood v. Moncel decisions. Thus, it was held that acceptance by the trustee only suffices to make the deed of donation and trust perfect and irrevocable, and acceptance by the beneficiary is not necessary so long as he does not intend to make use of the benefits conferred on him by the trust. The trustees were also recognized to have a limited right of ownership in the property conveyed to them in trust. It accordingly becomes possible to give the Quebec law on trusts a more liberal interpretation, one which is more in keeping with its English sources. The trial judge referred to Halsbury’s Laws of England, 3rd ed., vol. 38, at p. 817, which recognizes that trusts created for the benefit of persons who do not yet exist are valid.
However, the trial judge did not rule on the validity of the stipulation made for the secondary beneficiaries, the donor’s sisters: it is unlikely that they will survive the primary beneficiaries, and in Mackay J.’s opinion, that situation can be dealt with if and when it arises. Nonetheless, the trial judge held that even if the stipulation for the benefit of the donor’s sisters was void, this would not in any way affect the validity of the gift made for the benefit of the unborn children. In a similar case, Meyer J. of the Superior Court subsequently held as did Mackay J.: Estate of the late Thomas Fyshe v. Fyshe, [1977] C.S. 165. His judgment is now on appeal.
The majority judgment of the Court of Appeal, [1979] C.A. 308, was based on the reasons of Paré J.A. and of Lamer J.A., as he then was.
In Paré J.A.’s opinion, the English origins of trusts and the judgment in Curran v. Davis are not controlling and do not affect the theory accepted in Harwood v. Moncel: the question for decision was different, since primary beneficiaries existed in Curran v. Davis; the only question was as to whether acceptance by the trustee only sufficed. As to the limited right of ownership of the trustees in the property conveyed to them in trust, it does not alter the situation [at p. 311]:
[TRANSLATION] … art. 981a) is not concerned with the nature of the trustee’s right over the property conveyed to him, but it limits the persons for whose benefit property can be conveyed by a trust to those who can be the subject of a gift.
Article 754, the article which introduces the chapter on gifts and which is referred to in art. 981a, provides:
A person cannot dispose of his property by gratuitous title, otherwise than by gift inter vivos or by will.
As any other type of gift is prohibited, a gift accordingly cannot be made by way of trust to benefit unborn and as yet unconceived children.
Paré J.A. considered that the gift made to benefit the secondary beneficiaries is not void as a gift made in contemplation of death, in light of the decision by this Court in Curran v. Davis. However, it is void because it is dependent on the principal stipulation made for the benefit of the unborn children, and falls along with it.
Lamer J.A. expressed no opinion on the origins of trusts, on the limited ownership of trustees in the trust property, or on gifts made to benefit the secondary beneficiaries. He based his decision essentially on arts. 754 and 981a of the Civil Code, concurring in the conclusions of Paré J.A.
Owen J.A., dissenting, did not rule on the validity of the gift made to benefit the unborn children as primary beneficiaries. In his opinion, the stipulation made for the secondary beneficiaries is not incidental to the first stipulation. Even if the first is void, this does not have the effect of voiding the stipulation for the benefit of persons living at the time the trust gift is concluded. Owen J.A. would have dismissed the appeal.
The Court of Appeal accordingly allowed the appeal, reversed the judgment of the Superior Court and allowed respondent’s action in accordance with its conclusions.
III—The deed of donation and trust made for the benefit of the donor’s unborn children
1. Unborn children, whether ranked first or later
It is important to distinguish between a deed of donation and trust, in which the primary beneficiaries do not exist, and those made for unborn children when the latter are secondary or tertiary beneficiaries and there are primary beneficiaries in existence. In these latter cases, the stipulations made in favour of unborn children are valid and effective provided that the children are conceived at the time the benefit stipulated in their favour takes effect, and are subsequently born viable.
In Curran v. Davis this Court did not have to decide the point, but on p. 303 it took for granted that such deeds of donation and trust are valid. A similar ruling was made by the Court of Appeal of Quebec in Reford v. National Trust Company [1968] Que. Q.B. 689, at p. 697. See also Masson v. Masson (1912), 47 S.C.R. 42, which concerned a testamentary trust made before the Civil Code was adopted in 1866: the testator left his property in trust for the benefit of his eight children and their lawful issue, for an indefinite period of time or as long as the law allowed; at pp. 73, 74, 78 and 90 Sir Charles Fitzpatrick C.J. and Anglin J. expressed the view that the limitations regarding substitution should be extended by analogy to this trust, which can thus benefit two ranks of successive beneficiaries as to the income, and the ultimate beneficiaries, who will receive the capital.
Text writers also recognize the validity of deeds of donation and trust for the benefit of unborn children when the latter do not rank first but after other living beneficiaries: Marcel Faribault, Traité théorique et pratique de la fiducie ou trust du droit civil dans la province de Québec, Montreal, Wilson and Lafleur, 1936, p. 190, No. 173; Madeleine Cantin Cumyn, Les droits des bénéficiaires d’un usufruit, d’une substitution et d’une fiducie, Wilson and Lafleur, 1980, p. 19, No. 29.
When, however, the question is as to the validity of a deed of donation and trust made primarily for the benefit of unborn children, as in the case at bar, opinions differ both in the cases and among text writers.
With respect to cases, apart from the case at bar, I have already referred to: Harwood v. Moncel and the Estate of the late Thomas Fyshe v. Fyshe.
Billette (Donations et testaments, Montreal, 1933, at p. 187), Faribault (supra, p. 190, No. 172) and Cantin Cumyn (supra, p. 22, No. 32) conclude that such gifts are invalid. In an unpublished thesis for the Faculty of Law of McGill University, The Law of Trusts in the Province of Quebec, 1935, Lionel Rubin concludes at p. 52 that they are valid. In 1935, Mignault made a presentation to the Faculty of Law of Paris on “La fiducie dans la province de Québec” [Trusts in the Province of Quebec]. The text was published in the Bulletin trimestriel de la Société de législation comparée, January-March 1936 issue, at p. 119. At page 130 we find the following:
[TRANSLATION] I do not think there is any need to give a detailed description of how trusts operate. Their advantage is that they allow an owner of property to make intermediaries responsible for administering property which he hesitates to give directly to individuals about whose character he knows nothing at the time, for example, for children who are under age or, even more so, for unborn children. The tool which it provides is a very flexible one. The profession of trustee has been organized through the establishment of very large companies with unquestioned solvency.
This passage is so general that it can apply to trusts like the one under consideration, but it is not absolutely clear.
Louis Baudouin appears to be of the opinion that trusts established for the benefit of unborn children are all valid; as Mignault, he does not distinguish between primary beneficiaries and those who rank after them: Le Droit civil de la province de Québec, 1953, at pp. 1245-46.
D.W.R. Waters raised the question in Law of Trusts in Canada, Carswell, 1974, c. 28: “The Trust in Quebec”, at pp. 948, 949 and 951, but he offered no solution.
Finally, such authors as Germain Brière and Roger Comtois do not specifically deal with the point, but the principles which they support appear to be more in keeping with the validity of a deed of donation and trust made primarily to benefit unborn children: Germain Brière, Les Libéralités, Editions Thémis, 7th ed., 1977, at p. 55; Roger Comtois, Les Libéralités, Répertoire de droit, Doctrine, Document 1, 1979, No. 688, at p. 238.
2. The introduction of trusts into the civil law
The applicable legislation is to be found in the chapter titled “Of Trusts”, chapter IV(A) of the Title “Of gifts ‘inter vivos’ and by will”. The provisions in question are arts. 981a et seq. of the Civil Code. The chief provisions are as follows:
981a. All persons capable of disposing freely of their property may convey property, moveable or immoveable, to trustees by gift or by will, for the benefit of any persons in whose favor they can validly make gifts or legacies.
981b. Trustees, for the purposes of their trust, are seized as depositaries and administrators for the benefit of the donees or legatees of the property, moveable or immoveable, conveyed to them in trust, and may claim possession of it, even against the donees or legatees for whose benefit the trust was created. This seizin lasts only for the time stipulated for the duration of the trust; and while it lasts, the trustees may sue and be sued and take all judicial proceedings for the affairs of the trust.
…
981l. At the termination of the trust, the trustees must render an account, and deliver over all moneys and securities in their hands to the parties entitled thereto under the provisions of the document creating the trust, or entitled thereto by law.
They may also execute all transfers, conveyances, or other deeds necessary to vest the property held for the trust in the parties entitled thereto.
These provisions were not in the 1866 Civil Code, which only provided for a kind of testamentary trust in arts. 869 and 964:
869. A testator may name legatees who shall be merely fiduciary or simply trustees for charitable or other lawful purposes within the limits permitted by law; he may also deliver over his property for the same objects to his testamentary executors, or effect such purposes by means of charges imposed upon his heirs or legatees.
…
964. The legatee who is charged as a mere trustee, to administer the property and to employ it or deliver it over in accordance with the will, even though the terms used appear really to give him the quality of a proprietor subject to deliver over, rather than that of a mere executor or administrator, does not retain the property in the event of the lapse of the ulterior disposition, or of the impossibility of applying such property to the purposes intended, unless the testator has manifested his intention to that effect. The property in such cases passes to the heir or the legatee who receives the succession.
It was at that time impossible to create a trust by way of an inter vivos gift.
The provisions which were to become arts. 981a et seq of the Civil Code were enacted in 1879, in the Act respecting Trusts, 1879 (Que.), c. 29. With minor changes, they were incorporated into the Civil Code in the 1888 statutory revision.
It has been said that this 1879 statute owed little or nothing to English law: see, for example, J.-Emile Billette, “Etudes de jurisprudence”, A propos de fiducie, (1932) 11 R. du D. 38; Daniel N. Mettarlin, “The Quebec Trust and the Civil Law”, (1975) 21 McGill L.J. 175.
That is an exaggeration. The trust was known in the old French law, but Faribault (supra, at pp. 45-50 and at p. 393) showed that the Quebec trust is of English inspiration, as appears from the English terminology of art. 981a and which is explained by the earlier cases and legal practice in the drafting of wills: see also Armand Lavallée, “Donation fiduciaire”, (1932) 11 R. du D. 227.
It is therefore legitimate to refer to English law, as this Court did in Curran v. Davis. And, as was indicated above, English law regards the deed of donation and trust now under consideration as valid. See also D.W.R. Waters, supra, at p. 96. However, the argument is not conclusive, because the entire English law of trusts was not incorporated into the civil law. Thus, for example, under arts. 981a et seq., it is not possible to make oneself a trustee by means of a “declaration of trust”: O’Meara v. Bennett, [1922] 1 A.C. 80. Additionally, the enactment of arts. 981a et seq. did not have the effect of introducing in Quebec the English distinction between legal title and beneficial ownership, a sort of dual ownership, and a concept foreign to Quebec law under which ownership is indivisible and vested in a single individual: Laliberté v. Larue, [1931] S.C.R. 7 at p. 16. See also Laverdure v. Du Tremblay, [1937] A.C. 666 at p. 682, Greenshields et al v. The Queen, [1958] S.C.R. 216 at p. 217, and Crown Trust Co. v. Higher et al., [1977] 1 S.C.R. 418 at pp. 424-26. English law is relevant only in so far as it is compatible with arts. 981a et seq. of the Civil Code.
These articles refer to the provisions regarding gifts inter vivos and by will, the following of which are the most significant for the purposes of the case at bar, and were still in effect at the time the trust at issue was created:
608. In order to inherit it is necessary to be civilly in existence at the moment when the succession devolves; thus, the following are incapable of inheriting; 1. Persons who are not yet conceived;
2. Infants who are not viable when born.
…
754. A person cannot dispose of his property by gratuitous title, otherwise than by gift inter vivos or by will.
755. Gift inter vivos is an act by which the donor divests himself, by gratuitous title, of the ownership of a thing, in favor of the donee, whose acceptance is requisite and renders the contract perfect. This acceptance makes it irrevocable, saving the cases provided for by law, or a valid resolutive condition.
…
765. All persons capable of succeeding and of acquiring may receive by gifts inter vivos, saving any exception established by law, and subject to the necessity of legal acceptance by the donee, or by a person qualified to accept for him.
766. Corporations may acquire by gifts inter vivos, as by other contracts, such property as they are allowed to possess.
767. Minors become of age, and persons who have been under the control of others, cannot give inter vivos to their former tutors or curators, so long as their administration actually continues and they have not rendered their account; [they may however give to their own ascendants who have exercised these offices.]
768. Gifts inter vivos made in favor of the person with whom the donor has lived in concubinage, or of the incestuous or adulterine children of such donor, are limited to maintenance.
This restriction does not apply to gifts made in a contract of marriage entered into between the concubinaries.
Other illegitimate children may receive by gift inter vivos like all other persons.[1]
…
771. The capacity to give or to receive inter vivos is to be considered relatively to the time of the gifts. It must exist at each period, with the donor and with the donee, when the gift and the acceptance are effected by different acts.
It suffices that the donee be conceived at the time of the gift or when it takes effect in his favor, provided he be afterwards born viable.
772. The favor given to contracts of marriage renders valid the gifts therein made to the children to be born of the intended marriage. It is not necessary that the substitute should be in existence at the time of the gift by which the substitution is created.
…
929. Substitutions may be created by gifts inter vivos, made in contracts of marriage or otherwise, by gifts in contemplation of death made in contracts of marriage, or by will.
The capacity of the persons is governed in each case by the nature of the act.
The disposition which creates the substitution may be conditional like any other gift or legacy.
Substitutions may be appended to dispositions that are either universal, or by general title, or by particular title.
The substitute need not be present at the gift inter vivos which creates the substitution in his favor; he need not even have been born nor conceived at the time of the act.
Not only are these provisions older than the chapter on trusts, but for the most part they are derived from the most characteristic rules of a secular law. The introduction of the trust into such a closely-knit system of civil law was bound to present difficult problems, such as that before the Court, and to give rise to the most lively controversies, some of which still continue.
3. Acceptance of the trust
One of these controversies, which affects the outcome of the case at bar, concerns the acceptance of the trust. Does acceptance by the trustee suffice to render the creation of the trust irrevocable or must the beneficiary accept?
Article 981a provides that the trust can be made by gift, and art. 981b refers to the beneficiary as to a donee. Article 755 provides that acceptance by the donee is necessary and makes the contract perfect and irrevocable. It has thus been argued that acceptance by the beneficiary of the trust is necessary: Billette, Donations et testaments, Montreal, 1933, at p. 341; Mignault held the contrary view, relying primarily on English law: Le droit civil canadien, vol. 5, at pp. 157-58. This Court upheld the view of Mignault in Curran v. Davis.
For the purposes of the case at bar, that case has a negative determining effect: if indeed the opposite conclusion had been reached in Curran v. Davis, the question which the Court has to answer would no longer arise, since a contract cannot be made with non-existent persons whose acceptance is necessary to make the contract perfect and irrevocable.
It is therefore not possible to conclude from Curran v. Davis that the deed of donation and trust at issue is valid, but it removes one obstacle to its validity, since it establishes that acceptance by the trustee suffices to make the creation of the trust irrevocable.
4. The ownership of the trust property
Another controversy resulting from the introduction of the trust into Quebec civil law concerns ownership of the property while the trust lasts.
Since the courts have rejected the English concept of dual ownership in favour of sole ownership vested in a single person, the question has arisen as to who is owner of the property while the trust. lasts. This difficult question has been answered by the writers with various theories, some of which are ingenious and indeed attractive, but none of which may be entirely satisfactory. A description of most of these theories is to be found in a posthumous article by Yves Caron, completed by J.E.C. Brierley, “The Trust in Quebec”, (1980) 25 McGill L.J. 421.
According to the first theory, it is the beneficiary of the trust who owns the property conveyed to him in trust. This was the view of Mignault initially, in his Treatise Le droit civil canadien, vol. 5, at p. 155. It is also the view of Billette, “Etudes de jurisprudence”, “A propos de fiducie”, (1932) R. du D. 38. See also René-H. Mankiewicz, “La fiducie québécoise et le trust de common law”, (1952) 12 R.du B. 16.
If this theory were to prevail, the trust at issue in the case at bar would be void, since for a certain period of time ownership of the property in the trust would have been vested in no one.
Mignault changed his mind following the decision in Curran v. Davis, and espoused another theory: the trust property is owned by the trustee; Mignault, “A propos de fiducie”, (1933) 12 R. du D. 73; “La fiducie dans la province de Québec”, Travaux de la semaine internationale de droit, vol. 5, Paris, Sirey, 1937, at pp. 35-55. See also, to the same effect, Peter E. Graham, “Some Peculiarities of Trusts in Quebec”, (1962) 22 R. du B. 137; Lionel Rubin, supra, at pp. 32-45; Roger Comtois, supra, at pp. 240 and 243.
If this theory is the correct one, there is no further impediment to the validity of the trust at issue, since, while it lasts, it is not necessary that there be beneficiaries in whom ownership of the property conveyed in trust be vested.
The other theories are somewhat more innovative.
According to Faribault’s theory, supra, there is a quasi-personification of the trust, which becomes an authentic institution, and the property conveyed in trust is owned by this institution. See also C.H. Lalonde, Traité de Droit civil du Québec, vol. 6, Montreal, Wilson and Lafleur, 1958, at pp. 449 et seq.:, Louis Baudouin, supra, at pp. 1249 et seq.; No. 199 v. Minister of National Revenue, 54 D.T.C. 488.
Faribault’s theory is somewhat analogous to that of the French jurist P. LePaulle (Traité théorique et pratique des trusts, Paris, Rousseau et Cie, 1932) who contends that the trust is a patrimony not vested in a person or a patrimony of assignment to a purpose. This is the position which Cantin Cumyn seems to approve: supra, No. 101, at pp. 71-72.
Finally, the most recent theory is an attempt to give a complete explanation of the trust purely in terms of the civil law: the powers of the trustee over the trust property are said to constitute a dismemberment of the ownership; the ultimate beneficiaries of the trust are the owners under a suspensive condition, and the grantor of the trust or his estate are owners under a resolutive condition: Mettarlin, supra, at pp. 218-23.
The only one of all these theories which can be said to have received judicial support is Mignault’s second theory, namely that while the trust lasts the trustee is owner of the property conveyed to him in trust. It must also be said that this support has only been given with hesitation and reservations.
Paradoxically, this theory seems to have been taken for granted at the outset, with regard to the testamentary trust authorized by art. 869 of the Civil Code, prior to the enactment of the Act respecting Trusts.
In Abbot v. Fraser, (1874) L.R. 6 P.C. 96, the issue was the validity of a will by which the testator bequeathed the greater part of his fortune to trustees who were required to obtain the incorporation of an institution which would become a public library and museum known as the “Fraser Institute”, and then to convey all the property so bequeathed to this corporation. The Judicial Committee reversed the majority decision of the Court of Appeal of Quebec and restored the judgment of the Superior Court, which had found this will valid. At pages 122 and 123, there are the following passages of the decision of the Judicial Committee, given by Sir Montague Smith:
The devise is, in the first instance, to the trustees, and under it they are empowered, at least for a time, to hold and administer the property for the purpose of the trust, and until, in further execution of the trust, a corporation is created with authority to administer it.
…
It appears to [their Lordships] that the devise to the trustees was meant to be limited and transitory, the property remaining in them only until they could execute the ultimate purpose of the devise.
One of the arguments made against the validity of this will was that it bequeathed property to a corporation which did not exist at the time the succession devolved. The Judicial Committee dismissed this objection as follows, at pp. 124-25: The third and remaining objection is that the gift failed, being a gift to a society not in existence at the testator’s death.
If the devise had been to a society or a corporation to be afterwards called into existence or created without the interposition of fiduciary legatees or trustees, this objection might have given occasion to difficulties of great weight.
It was said by the Court of first instance in Des Rivières v. Richardson [Stuart’s Rep. 218]:—
“It may be admitted that, if by a will an immediate devise is made to a corporation not in existence, it will be void, as there is no such corporate body to receive, and it would be equally void even if the corporation were afterwards created without some special and express law to take the case out of the general principle.”
But it was also said in the same case in the Court of Appeal:—
“The second ground of objection is also untenable, for although it is admitted that a legacy is lapsed (i.e., ‘caduque’) when left to an individual, or to a body politic and corporate, not in esse; yet the principle does not apply to this case, inasmuch as the trustees were all alive when the testator made his will, and they received the bequest for the benefit of the Royal Institution, as soon as it should please the Provincial Government to give to airy nothing ‘a local habitation and a name.’”
That case no doubt differed in some of its facts from the present, as the Royal Institution had been, in some sense, incorporated before the date of the will; but the principle is asserted in it that the intervention of trustees will, in some cases at least, prevent a lapse.
Their Lordships on this point, having regard to Art. 869, which permits the appointment of fiduciary legatees for charitable and other lawful purposes, and to Art. 838, which, in the case of legacies suspended after the testator’s death in consequence of a condition or substitution, declares that the capacity to receive is to be considered relatively to the time when the right comes into effect, are of opinion that there has been no lapse in this case, and that the trustees may carry the purpose of the testator into effect if and when the corporation of the Fraser Institute is duly incorporated. The transfer of the property to the corporation is directed to be made by conveyance from the trustees, who, in then making it, will execute the lawful purpose for which the property was entrusted to them.
Similarly, in Masson v. Masson, speaking of a testamentary trust made before the 1866 Civil Code, Sir Charles Fitzpatrick C.J. considered, at pp. 73, 74, 75 and 76, that property bequeathed in trust is vested in the trustees. Duff J., as he then was, expressed his agreement. Anglin J., as he then was, gave a similar opinion at pp. 83, 84, 87 and 89.
In the case of the trust in arts. 981a et seq., however, the situation at first appears to have been different. The first time that this Court discussed these provisions was in Laliberté v. Larue, and it stated at pp. 16 and 20 that art. 981a does not have the effect of transferring ownership to the trustees. However, this was an obiter dictum which has become incompatible with subsequent decisions.
In theoretical terms, there is no reason why the solution should differ, with regard to the ownership of trust property, depending on whether there is a testamentary trust covered by art. 869 of the Civil Code or a trust covered by arts. 981a et seq. The difficulty arose, however, from the ambiguity of these new provisions. Thus, art. 981a provided that trust property is conveyed to trustees, whom art. 981b describes as depositaries and administrators, whereas the same section refers to the beneficiaries as donees or legatees. On the other hand, art. 981l provides that at the termination of the trust, the trustees must do whatever is necessary to vest the property held for the trust in the parties entitled thereto.
This Court dealt with these problems in Curran v. Davis. That case concerned a deed of donation and trust. The grantor reserved a life interest in the income from the trust. The bene