The statute that had been designed to kill the use instead pushed the Chancery into the center of English property law. Across the sixteenth and seventeenth centuries — through the chancellorships of Thomas More, Francis Bacon, Lord Ellesmere, Lord Nottingham, and others — the court of equity built up a body of doctrine that turned the trust from a clever evasion into a disciplined legal institution.
Three developments matter for the school-trust lineage. First, the chancellors fixed the principle that a trustee owed duties enforceable against him personally and against the trust property in his hands. He could not lawfully use the property for his own benefit; he could not lawfully prefer one beneficiary over another in the absence of explicit authorization; he was required to account for what he did with the trust. These duties did not rest on the language of any particular instrument. They flowed from the structure of the relationship itself: where one person held property for another’s benefit, equity attached obligations to the holding.
Second, the seventeenth century saw the chancellors articulating the conceptual distinction between trust and contract. A contract was a bargain between parties dealing at arm’s length, each protecting his own interest. A trust was something different in kind — a relationship in which one party was bound to subordinate his own interest to another’s. The remedies were different, the standards of conduct were different, and the duration was different. Trusts could endure across generations; contracts generally could not.
Third, the period produced the early shape of what would later be called the duty of loyalty. Lord Nottingham, who served as Lord Chancellor from 1673 to 1682 and is often called the father of modern equity, was particularly insistent that a trustee could not put himself in a position where his personal interest and his trust duty conflicted. The trustee who bought trust property himself, who took a commission from a third party for trust business, or who used trust information to make a private profit was answerable to the beneficiary. The trust could be set aside; the profit could be disgorged.
The seventeenth-century English Chancery was thus building, case by case and chancellor by chancellor, the conceptual furniture of modern fiduciary law: the split of legal and equitable title, the personal liability of the trustee, the distinction from contract, and the prohibition on self-dealing. By 1700, an English barrister could speak of trust law as a coherent body of doctrine, even if not yet systematized. The systematization would come in the next century, in the chancery of Lord Hardwicke.
“The trustee must subordinate his own interest to that of his cestui que trust; equity will not permit him to make a profit out of his trust.” — distilled from the seventeenth-century Chancery, as restated in modern treatises.
Primary source. Keech v. Sandford, Sel. Cas. Ch. 61 (1726), reported text at the Bailii historical archive — bailii.org/ew/cases/EWHC/Ch/1726/J76.html.
References. D.E.C. Yale (ed.), Lord Nottingham’s Chancery Cases (Selden Society, 1957, 1961); J.H. Baker, An Introduction to English Legal History (4th ed. 2002), ch. 6.
