The U.S. as common-law trustee. At common law as enhanced by equity, a “use,” the trust’s ancient doctrinal predecessor, could not be enforced against the Crown. Today, jurisdiction over any suit against the U.S., as trustee or otherwise, requires a clear statement from the U.S. waiving sovereign immunity, together with a claim falling within the terms of the waiver. While the U. S., in theory, may have common-law, statutory, or constitutional authority to hold property in trust, the absence of the critical element of credible enforceability makes such trusteeships all but illusory. Moreover, a sovereign’s trusteeship of an item of property cannot constrain the sovereign’s power to de-entrust it by eminent domain. Nor is it helpful that a court of equity, understandably, will not issue an unenforceable specific-performance order, such as to a legislature. Consider the interminable litigation over the U.S.’s incompetent trusteeship of Native American properties. See Jalonick, Federal Judge Says Interior Dept. Delayed Indian Trust Accounting, Boston Globe, Jan. 31, 2008, at A16 (“The federal agency ‘has not, and cannot, remedy … [its breach of fiduciary duty]… to account for the Indian money,’ US District Judge James Robertson said in a 165-page decision …,” the judge also blaming Congress for failing to appropriate enough money for a proper forensic accounting). That trust law is primarily state-specific further complicates matters when it comes to federal trusteeships. Too bad those properties belonging to the Native Americans had not long ago been entrusted to private entities, entities that could easily be compelled to carry out specific-performance orders issuing from the equity courts.
The state as common-law trustee. In 2021, a matter came before the Sup. Ct. of Washington involving the State’s trusteeship of a common-law charitable trust that had been settled by the U. S., effective Nov. 11, 1889. The subject property was thousands of acres of land that initially had been granted to the State by the U.S. pursuant to the Omnibus Enabling Act of 1889. Their entrustment had been a statehood pre-condition. Third parties, unhappy with how the trust is now being administered, had brought a declaratory-judgment action. The Sup. Ct. of Washington affirmed the trial court’s dismissal of action. See Conservation Northwest v. Comm’r of Public Lands, 199 Wash.2d 813 (2022). No fault was found with State’s administration of trust. Had the Court found fault with how, say, the State’s legislature had been involving itself, or not involving itself, in trust’s administration, the separation of powers doctrine could well have prevented the Court from doing much about it, a situation reminiscent of the ongoing maladministration by the U.S. of the properties of the Native-Americans.
The municipality as a common-law trustee. True, in the case of property entrusted to a municipal corporation, the state’s attorney general would have standing to seek judicial enforcement. The practical, political, and legal realities are, however, that an AG, even if so inclined, would find it challenging, say, getting the municipality judicially fired and replaced as trustee. Political influence and press oversight are generally the only practical means of getting a municipality to cease maladministering its trusteeships. The Rest. (Third) of Restitution and Unjust Enrichment, however, proffers an optimistic illustration of a municipality successfully being judicially compelled in a taxpayer suit to honor its fiduciary responsibilities as a charitable trustee. See §17, illus. 1. The illustration is based on Cohen v. City of Lynn, 33 Mass. App. Ct. 271(1992). See also The Woodward Sch. for Girls, Inc. v. City of Quincy, 469 Mass. 151, 177 (2014) (“[W]hen Quincy agreed to serve as trustee, it assumed the fiduciary duties of that role, including the consequences for not fulfilling these duties. The policy purposes of sovereign immunity are not served where, as here, a municipality takes on a responsibility beyond its inherent or core government functions and therefore serves in a capacity that could just as easily be accomplished by a nongovernmental entity.”). Enforcing a trust against a municipality as trustee is one thing, against a sovereign state as trustee is quite another.
Faux public trusts. Some public-sector initiatives are falsely advertised as true trusteeships. Social Security is a prime example. SS is nothing more than two autonomous schemes: A welfare scheme and a taxation scheme. Neither involves actual entrustment of segregated enforceable property rights. See §9.9.3 of Loring and Rounds: A Trustee’s Handbook (2023). Section reproduced in appendix below. Handbook available at https://law-store.wolterskluwer.com/s/product/loring-rounds-trustees-hanbook-2023e/01t4R00000Ojr97QAB