Can I form a trust under general Amreican common law, since I live in the United States?
Take a guess.

No. Sorry. You can't.

First you need to consult an attorney to see whether the united States really exists and whether you live there. If you are comfortable with the proposition that the united States is as real as Atlantis, El Dorado, the Kingdom of Prester John, Shangri-La, etc., we can move on.

This is merely an aside. Perhaps one of our pure-trust afficionados will come up with the idea of adopting the common law of the Kingdom of Prester John under which to found pure trusts. Perhaps the term, "Johnian" common law, would impress a revenue officer. But I like "Presterian" common law, myself.

Assuming that you discoveer to your satisfaction that you live in the United States (and concurrently in one of the 50 states), you need to determine whether you can set up your trust under "American common law." I will call this the common law of "Anywhere, USA."

In 1938, the United States Supreme Court held that the law of Anywhere, USA would not be used in diversity-jurisdiction cases tried in federal courts. Erie R. v. Tompkins, 304 U.S. 64 (1938). In Erie, the case turned on whether the federal court would apply the state law of the place where the accident happened, or whether it would apply federal common law. As our pure-trust bretheren would put it, the question turned on whether the common law of one of the united States would be followed, or whether the common law of the United States would be followed. The Supreme Court took the States Rights position, holding that federal common law had evolved too much differently from the varying common laws of the "united States." Under the Erie doctrine, as our friends would put it, there is no "United States" common law, only common law of each of the "united States."

Before Erie, the Supreme Court had refused to allow federal appellate jurisdiction over state courts ruling on state law, including state common law. Murdock v. Memphis, 87 U.S. (20 Wall.) 590 (1874).

Finally, section 34 of the Judiciary Act of 1789 established the so-called Rules of Decision Act (today codified at 28 U.S.C. § 1652), which provided that "The laws of the several states...shall be regarded as the rules of decision in civil actions in the courts of the United States, in cases where they apply."

Federal common law ("United States" common law, as opposed to common law of any of the "united States") was first officially sanctioned in 1840 in the case of Swift v. Tyson, 41 U.S. (16 Pet.) 1 (1840). In that case the Supreme Court decided that a case arising in New York not on New York common law, but rather on "the general principles and doctrines of commercial jurisprudence" which state courts, like other common law courts, endeavored to apply. 41 U.S. (16 Pet.) at 18. The Court, through Jusitce Story, held that the grounding of the decision in general common law did not violate the Rules of Decision Act, since the decisions of New York courts were not law, but merely evidence of law.

Over the years, the common law of the united States began to vary widely from the common law of the United States. Our friends, the pure-trust crowd, literally can't stand the Erie doctrine. Why do these people bemoan the fact that the federal judiciary cannot create common law contrary to that of the states (or States, I suppose)? The answer is beyond me. Be that as it may, there is no such thing as general American tust law as to anything like a "pure" trust.

Consult a lawyer to find out whether a "pure" trust can be set up under amorphous American trust law. Run from anyone who tells you not to consult a lawyer on such matters.

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