The American colonies had no Court of Chancery in the English sense, but they had English equity nonetheless. Colonial lawyers were trained on Coke, Blackstone, and the chancery reporters; colonial judges, whether sitting in dedicated equity courts (as in New York and the Carolinas) or hearing equity claims on the common-law side (as in Massachusetts and Pennsylvania), applied English equitable doctrine as a matter of course. Trusts of land for the benefit of churches, charities, towns, and individual families were familiar features of colonial landholding. The intellectual machinery of the trust came over with the first generation of trained lawyers and never left.
What changed after independence was the public character of trust law. The early states inherited from England not only the private trust — the family settlement, the charitable bequest — but the conceptual vocabulary for thinking about public property held for public purposes. Town commons, parish glebes, college endowments, and reserved tracts for ministers and schools were all understood, by the late eighteenth century, as a kind of trust property. The town was a trustee for its inhabitants; the college was a trustee for its scholars; the parish was a trustee for its parishioners. The structural relationship was the same as the private trust: legal title in one entity, beneficial interest in another, enforceable obligation of loyal and prudent management.
Three lines of development matter for what came next. First, the early state courts applied the duty-of-loyalty principle to public bodies holding property for charitable or educational purposes. The trustees of a college or an endowed school could not lawfully divert trust assets to other purposes, however attractive, without legislative authorization that itself conformed to the original trust. Second, the courts began to recognize that a legislature might be a trustee — that when public property was conveyed in trust, the legislative body that held administrative control over the property was bound by the trust’s terms and could not legislate them away. Third, the doctrine of cy pres — the equitable rule that a charitable trust whose original purpose had failed could be redirected to a similar purpose rather than allowed to lapse — was adopted with varying degrees of enthusiasm, establishing that charitable trusts were understood as enduring beyond their founding generation.
By 1787, when the framers of the Northwest Ordinance turned to the question of how to secure land for schools in the territory north and west of the Ohio River, they were drawing on a fully formed Anglo-American tradition of public-purpose trusteeship. The trust, as a legal device for binding present and future officeholders to honor a long-term commitment of public property to a public purpose, was a tool the founding generation knew how to use and understood the limits of. When they wrote that “schools and the means of education shall forever be encouraged,” they were not making a hope. They were creating a trust.
“Schools and the means of education shall forever be encouraged.” — Northwest Ordinance, Article III (1787) — the public-purpose trust principle the founding generation drew from the Anglo-American chancery tradition.
Primary source. Joseph Story, Commentaries on Equity Jurisprudence (1836), vol. II, chs. 23–25 (charitable uses and trusts) — HathiTrust digital edition.
References. Stanley N. Katz, “The Politics of Law in Colonial America,” Perspectives in American History (1971); Joseph Story, Commentaries on Equity Jurisprudence (1836).
