History
The business trust made its debut in Massachusetts in 1827. As a result, a U.S. business trust today is often called a "Massachusetts trust" in legal circles. The U.S. Supreme Court defined the Massachusetts trust as a form of business organization, common in Massachusetts consisting essentially of an arrangement whereby property is conveyed to trustees: in accordance with terms of the trust. The business is to be held and managed for the benefit of persons who hold transferable certificates issued by the trustees showing the shares into which the beneficial interest in the property is divided.
This method of transacting business in commercial enterprises originated in Massachusetts as a result of negative laws prohibiting the development of real estate without a special act of the legislature or in other words, without "permission" of the state . So, the Business Trust was created under Common-law right to contract to obtain legislatively constructed business organizations advantages but without having to gain "permission" to enter into a business activity and suffer under the burdens and restrictions that are placed on "statutorily constructed organizations".
It states on page 1681 of Black's Law Dictionary 4Ed., 1957, under the term "Massachusetts or Business Trust"; See "Trust Estate as Business Company." This particular definition is found on page 1684 and it states this:
TRUST ESTATE AS BUSINESS COMPANIES. A practice originating in Massachusetts of vesting a business or certain real estate in a group of trustees, who manage it for the benefit of the beneficial owners; the ownership of the latter is evidenced by negotiable (or transferable) shares. The trustees are elected by the shareholders, or in case of a vacancy, by the board of trustees. Provision is made in the agreement and declaration of the trust to the effect that when new trustees are elected, the trust estate shall vest in them without further conveyance. The declaration of the trust specifies the power of the trustees. They have a common seal; the board is organized with the usual officers of a board of trustees; it is governed by by-laws; the officers have the usual powers of like corporation officers; so far as practicable, the trustees in their collective capacity, are to carry on the business under a specified name. The trustees may also hold shares as beneficiaries. Provision may be made for the alteration or specified manner. In Eliot v. Freeman, 31 Sup. Ct. 360, 220 U.S. 178, 55 L. Ed. 424, it was held that such a trust was not within the corporation tax provisions of the tariff act of Aug. 5 1909 See also Zonne v. Minneapolis Syndicate, 31 S. Ct. 361, 220 U.S. 187, 55 L. Ed. 428 (Black's Law Dictionary 1957, 4Ed., page 1684)
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