Commercial Law

DESTRUCTION OF GOODS SOLD.—The question sometimes arises as to the effect of the destruction of the goods sold or contracted to be sold. The Sales Act in Sections 7 and 8 governs this:

Section 7. (1) Where the parties purport to sell specific goods, and the goods without the knowledge of the seller have wholly perished at the time when the agreement is made, the agreement is void.

(2) Where the parties purport to sell specific goods, and the goods without the knowledge of the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the buyer may at his option treat the sale:

(a) As avoided, or

(b) As transferring the property in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the full agreed price if the sale was indivisible, or to pay the agreed price for the goods in which the property passes if the sale was divisible.

Sec. 8 (1) Where there is a contract to sell specific goods, and subsequently, but before the risk passes to the buyer, without any fault on the part of the seller or the buyer, the goods wholly perish, the contract is thereby avoided.

(2) Where there is a contract to sell specific goods, and subsequently, but before the risk passes to the buyer, without any fault of the seller or the buyer, part of the goods perish or the whole or a material part of the goods so deteriorate in quality as to be substantially changed in character, the buyer may, at his option treat the contract:

(a) As avoided, or

(b) As binding the seller to transfer the property in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the full agreed price if the contract was indivisible, or to pay the agreed price for so much of the goods as the seller, by the buyer's option, is bound to transfer if the contract is divisible.

CONDITIONAL SALES.—Certain transactions in which personal property is held as security, which are somewhat analogous to mortgages and which are very common, may now be referred to. They may be classed thus: Conditional sales, consignments, leases and chattel mortgages. A conditional sale, as that term is commonly used, is a transfer of the possession of personal property under an agreement to sell, the seller expressly retaining the title. Here we have possession and title divided. If it were not for the express agreement that title should remain in the seller, the delivery of the goods to the buyer, with his agreement to pay for them, would indicate a transfer of title to the buyer. The purpose of the seller in making a conditional sale is to retain security for the price which the buyer cannot pay all at once. Conditional sales are most common in regard to furniture and machinery of various kinds. Creditors of the buyer naturally suppose that the goods in his possession are his, and it is to avoid deception, or possible deception, that most States require that the conditional sale be recorded, so that creditors and everybody else may have notice that, although the buyer seems to be owner of this property, he is not so in reality. But, in Massachusetts, record is not required, and conditional sales, other than those of household furniture, need not even be in writing. The seller is secured by this sort of bargain in several ways. If the buyer does not pay the price when it is due, the seller may take the goods back. They are his goods and therefore he may reclaim them. Or the seller may conclude that it is better to sue for the price, and may decide to let the buyer keep the goods and himself collect a judgment for the price by levying on any property the buyer may have, including that which was conditionally bought. Even though the buyer has paid a large part of the price of the goods, the seller may, nevertheless, reclaim the goods. The seller's course will be dictated largely by how much of the price has been paid. If a large part has been paid, the seller will very likely prefer to reclaim the goods unless they are household furniture. Why, it may be asked, does a buyer enter into a conditional sale, which is rather a poor bargain as far as he is concerned? The reason, of course, is that he cannot pay cash and he wants the use of the goods at once, and the conditional sale enables him to get them. By statute, in some jurisdictions, the conditional buyer is protected after he has paid a considerable portion of the price; either by extending the time within which he may pay the balance due, or by requiring a sale of the goods and the return to the buyer of any surplus.

CONSIGNMENT.—How does a consignment differ from a conditional sale? When goods are sent or consigned it means that the person to whom they are sent is agent for the person who sends them. The consignment is like the conditional sale in this respect, that the person who has possession of the goods has not the title. The consignment differs vitally from a conditional sale in this respect, however, that the consignee is not a debtor for the price. If the consignee sells the goods, then he, of course, must turn over the price to the consignor less such commission as he takes, or if the transaction was not on commission, then the consignee must pay to the consignor the price it was bargained the consignor should receive. But until the goods are resold they remain the consignor's and at his risk. If goods conditionally sold are destroyed, the conditional buyer must, nevertheless, pay for them. They are at his risk and he is an absolute debtor for the price; but the consignee merely holds the goods as agent until a purchase takes place.

LEASES OF CHATTELS.—Sometimes goods are leased. Here, again, we have the same point of similarity, that the person who has possession of the goods is not the owner. The lessee, like a consignee, is not a debtor for the price; he is a debtor for rent, but he is not a debtor for the price of the goods. Often leases contain an option to purchase, and a lease with an option to purchase is used by piano dealers and others as an alternative mode of dealing with customers unable to pay cash, instead of a conditional sale; but it is not the same thing, for if a piano were destroyed without fault of either party after it had been leased with an option to purchase, the loss would be on the seller. If the option to pay had been exercised, of course, the loss would be on the buyer.

CHATTEL MORTGAGES.—The goods are here owned originally by the mortgagor, and they ordinarily remain in his possession after he has transferred them by the mortgage. The fundamental principles governing chattel mortgages are the same as those which govern mortgages of real estate. Chattel mortgages must be in writing and recorded, or the mortgaged property must be delivered to the mortgagee; otherwise they are invalid against the creditors or trustee in bankruptcy of the mortgagor; that is, one may mortgage his chattels, either by delivering them to the mortgagee or by making a writing and having that recorded. Even without record or delivery it is good between the parties, but it is not good in case of bankruptcy against the trustee in bankruptcy of the mortgagor, nor is it good against attaching creditors if there is no bankruptcy.

MORTGAGES OF FUTURE GOODS.—An agreement is sometimes made to make a mortgage of goods which do not at the time exist, or are not at the time defined. This is especially common in regard to a stock of goods. A wants to borrow money on his stock of goods in his shop. His stock may be worth $25,000 and A has not capital enough to get along without mortgaging it. Of course, he can mortgage the existing stock of goods without difficulty, but the trouble is he wants to keep on doing business, and sell in regular course of business the mortgaged stock of goods. That, too, would be easy enough if the mortgagee were willing to agree to it, but the mortgagee is not willing to agree unless equal security is substituted for any goods that are sold. What they would like to provide is that the mortgagor shall have power to sell the existing goods if he chooses in the ordinary course of business, provided he always keeps a stock of goods on hand equal to that on hand at the time the mortgage was made, the idea being that as one thing is released from the lien of the mortgage other things, of at least equal value, shall replace it. It is not an unreasonable transaction, from a business standpoint, but the law generally does not allow it validity except to this extent. It is valid as between the parties so far as to give the mortgagee a power at any time to take possession, and when he does take possession the mortgage is valid as to the goods of which he takes possession against creditors or anybody else. The mortgagee may thus take possession right up to the time of the mortgagor's bankruptcy, or at any time prior to actual seizure of the stock of goods on an attachment. This gives the mortgagee some security if the mortgagor will be good enough to give the mortgagee a hint when it is wise for the mortgagee to take possession, because, as the mortgagee can take possession just before bankruptcy or just before an attachment, the mortgagee will be protected. But, of course, there is a chance that the mortgagee may not get the goods, and therefore this form of security, in most States, is not now advised, although it has been much attempted in the past. In some States, however, such a mortgage gives a right against goods afterwards acquired, which is superior to that of attaching creditors or of a trustee in bankruptcy, even though the mortgagee does not take possession.

GIFTS.—A gift is the immediate voluntary transfer of personal property. To make a valid gift, therefore, it must be voluntary, gratuitous, and absolute. As has been explained, a gift is distinguished from a sale or a contract to sell by the fact that it is gratuitous. Gifts are usually divided into two classes: gifts "inter vivos" and gifts "causa mortis." There is no distinction between these two kinds of gifts, so far as the necessity of the intent to deliver title and delivery of the property are concerned, but the distinction lies in the fact that in gifts "causa mortis," the change in title is defeasible upon certain conditions. The ordinary gift "inter vivos," "between living people" is irrevocable when completed. The gift "causa mortis," that is, one made by a person in immediate apprehension of death, is always subject to the condition that if the person recovers, the title to the property, which he has given away, reverts to him. For A, who is in his last illness, to say to B, who is sitting near his bedside, "I wish you to have my gold watch when I am gone, but my brother is wearing it now in Europe" would not be a gift "causa mortis." There is no delivery. It would not pass title, upon his death, to his friend because in order to dispose of property after one is dead, a will is necessary. Even between the parties gifts are invalid unless accompanied by delivery, or made by deed under seal. The transaction without delivery or deed is, in effect, a promise to give, and there being no consideration the promisor may subsequently refuse to keep his promise. If a savings-bank book, a bond, a stock certificate, a life-insurance policy, a note or check of a third person (but not one made by the giver), or any chattel property is delivered to the donee, the gift is binding and irrevocable; but otherwise the donee gets absolutely nothing and the donor's executor is entitled to the property attempted to be disposed of by gift, and must treat it as part of the assets of the estate.

ILLUSTRATION.—A recent case in New Jersey shows clearly the effects of the application of the rules just described. In Bailey v. Orange Memorial Hospital, 102 Atl. 7, the facts were that the testatrix died about June 10, 1893, leaving a will, which had been duly probated, and under which the complainants had qualified as executors. Among the papers, which the executors found in the testatrix's safe deposit box after her death, was a certificate made in her name for fifty shares of the capital stock of the United N. J. Railroad and Canal Co., bearing the following indorsement, "For value received I hereby assign and transfer unto the Orange Memorial Hospital fifty shares of the capital stock represented by the within certificate and do hereby irrevocably constitute and appoint ................ attorney to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

Mary Campfield.

"Dated Oct. 28, 1911.

"Witnessed by James C. MacDonald."

In the same envelope containing this certificate the executors also found the following letter in the handwriting of Mrs. Campfield: "To my executors: The accompanying certificate of fifty shares of the United, etc. Co. is my gift to the Orange Memorial Hospital for a bed to be called the 'Mahlon Campfield Bed.' The stock has been retained since its date of transfer because I desire to be benefited by the dividends thereon as long as I live.

Mary Campfield.

"Dated Oct. 28, 1911."

In this box Mrs. Campfield kept her bonds and mortgages, stock certificates, and other valuable papers relating to her own property and to the estate of her husband, of which she was executrix. There were two sets of keys to the box, one of which was in Mrs. Campfield's possession, and the other in the possession of one of her executors, who assisted her for some time in the management of her affairs. Shortly before the indorsement on the certificate was made, and the letter written, Mrs. Campfield requested Mr. Everett, the executor, to take the stock certificate from her box and deliver it to her attorney, stating that she would let her attorney know in a few days what to do about it. A few days later the attorney handed Mr. Everett an envelope containing the stock certificate, and told him there was a letter with it. Mr. Everett saw the certificate but did not see the letter, and he placed the envelope containing the certificate in the safe deposit box. The attorney had sealed the envelope after showing him the certificate. After Mr. Everett had told Mrs. Campfield what had been done, she said, "Well, that is for the hospital and that settles it," and she added: "It is in an envelope, as you probably saw, and addressed to my executors, and they will find a letter inside telling them what to do with it." After this, Mrs. Campfield continued to receive the dividends paid on these shares, and there is some evidence to indicate that she had access to the safe deposit box and examined its contents during the winter preceding her death. The court, in its opinion, said: "I do not think there can be any doubt of Mrs. Campfield's donative intention regarding these shares of stock, and it is equally clear that she never consummated that intention to make the gift, by the actual delivery of the stock to the hospital, or to any one as trustee for it; and it also appears that she intended the gift should be effective only after her death. She expressly retained the ownership and dominion over the stock for the purpose, at least, of collecting and enjoying the dividends paid thereon. * * * The gift of the stock not having been completed by delivery, or by the relinquishment of control over the certificate representing it, the stock must be declared to be an asset of the estate."

CHAPTER IX
Real Property

DISTINCTION BETWEEN THE LAW GOVERNING SALES OF REAL AND PERSONAL PROPERTY.—The main distinction between the law governing real and personal property is the increased formality necessary in transactions governing real estate. Contracts for the sale of real estate must be in writing and actual conveyances of an interest in land must not only be in writing, but, except where seals have been abolished by statute, must be executed under seal. In order to make the transaction valid against third persons, record in the Registry of Deeds in the county where the land is situated is also requisite. Unless a contract for the sale of real estate is recorded, a subsequent conveyance to a purchaser, for value and without notice, will destroy the right of the buyer under the first contract to get the land, though he will still have an action for damages against the seller. So, in many jurisdictions, creditors of the man contracting to sell may by attaching the land as the seller's property satisfy their claims from it to the detriment of the buyer's right. Therefore, an actual conveyance of real estate must be recorded in order to protect the grantee. As a pre-requisite for record it is generally required that contracts and deeds of real estate shall be acknowledged before a notary public or other official authorized by law.

DUTIES OF BUYER AND SELLER UNDER CONTRACT TO CONVEY REAL ESTATE.—The primary duty of the seller in a contract to convey real estate is to transfer a good title. It is important for the buyer to determine before the time for performance whether the seller's title is good in order to determine whether he himself will accept the deed and pay the price. Accordingly, the buyer has the title examined by search in the Registry of Deeds. If the search discloses that the seller's title is defective the buyer does not on that account necessarily have a right to rescind the contract. The defect of title may be removed before the time of performance, and if the nature of the defect is such that this is possible, the buyer can only give notice of the defect and request its removal. If the title of the seller is so defective that it cannot be cured, or if the seller manifests by his conduct an intent to repudiate the contract, as by selling the land to another, the buyer need not wait for the time for performance, but may at once give notice that he rescinds the contract. Unless the seller has expressly contracted to convey by warranty deed, his obligation is generally satisfied by a quit claim deed. It is well, therefore, for a purchaser, when he contracts to purchase a piece of real property, to insert in the contract a clause to the effect that the seller agrees to convey by a sufficient warranty deed. The seller is also bound not to commit waste on the premises between the time of the contract and the time of performance. The rule in regard to accidental injury is stated hereafter, but as to intentional or negligent injury of the premises, the law is clear that such an injury is a breach of duty by the seller. The buyer's duty is to pay the price according to the terms of the contract. The obligations of the seller to convey, and of the buyer to buy, are concurrent, unless the contract expressly provides the contrary; that is, the buyer in order to acquire a right against the seller must tender payment, as he demands a deed; and the seller in order to acquire a right against the buyer must tender a proper deed when demanding payment. The obligation of either party to tender may, however, be excused by circumstances showing that tender would be useless. Thus, if the buyer is insolvent, the seller need not tender a deed, and if the buyer has repudiated the contract or committed waste to a material extent, or conveyed the premises to a third person, the buyer need not tender payment, in order to acquire a right of action. But if there is any doubt at all, the purchaser or the seller, as the case may be, should make a tender, so as to preserve his legal rights.

DOWER AND CURTESY.—By the common law a wife on her marriage acquired a right in her husband's land, which, though not vesting until his death, encumbered the title immediately. On his death she became entitled to a life estate in a one-third interest of all the lands of which he had been possessed since the date of their marriage. Accordingly, where the common law rule of dower still prevails, a husband cannot give an unencumbered title to real estate unless his wife joins in the conveyance. Similarly a husband was entitled at common law to a life interest in the lands of his deceased wife if they had had a child born alive. This was called the estate by curtesy. Its extent, it will be observed, is not the same as that of dower. The husband's life interest extended to all the lands of the wife, but on the other hand, it did not arise at all unless there was a child born alive; whereas the wife's dower right arose immediately on marriage. The rules of dower and curtesy have been changed by statute to a greater or less extent in most States, but it is still almost universally important that a wife should join in her husband's conveyance of real estate, and that a husband should join in a wife's conveyance of her real estate.

DEFAULT IN PERFORMANCE.—The law regards more leniently a default in time in carrying out contracts for the sale of real estate than it does a similar default in the sale of personal property. In sales of personal property, especially if it is of a character which rapidly fluctuates in value, time is said to be "of the essence;" that is, the failure of either party to perform at or about the agreed day is fatal to his rights to enforce the contract; but in the case of real estate it is generally held that time is not of the essence of the contract unless it is either expressly so provided in the contract, or the circumstances of the case are such as to show that time was a matter of vital importance.

DESTRUCTION OF PREMISES.—Where personal property, which the owner has contracted to sell, is destroyed, the loss is the seller's provided the title is still in him, and the buyer has committed no default; but in most jurisdictions, if real estate is similarly destroyed, the buyer must nevertheless pay the price. In the absence of special provisions in a contract of sale, if a house on the premises sold has burned between the time of the contract and the time for its performance, without fault of the seller, the seller can compel the buyer to accept a deed of the land without the house and pay the full price. This rule has been much criticized, and it is not universally in force; for example, it is not the law of Massachusetts. In some other States the loss will not fall upon the buyer unless possession of the premises has been delivered to him under the contract, but in New York, and probably a majority of the States, even though the seller still has possession, as well as title, the risk of accidental loss rests upon the buyer. Where risk of destruction of the premises is thrown on the buyer, immediately after he has made a contract to purchase, it is of obvious importance that he should immediately insure the premises. The insurance of the seller, unless transferred to the buyer at that time with the company's assent, will not protect the buyer. Insurance is a contract of personal indemnity, and the seller's insurance only protects the seller's interest. The result is that if the premises are destroyed, the insurance company will not be obliged to pay the seller his insurance, since the seller, under the contract of sale, can recover from the buyer; and even if the insurance were paid to the seller, the buyer could not claim the benefit of it.

SPECIFIC PERFORMANCE.—In addition to the ordinary remedy for a breach of contract, namely an action at law for damages, another remedy, that of specific performance, is permitted in the case of contracts for the sale of land; that is, the court will actually compel one who has contracted to sell land to make a conveyance thereof on receiving the agreed price, and will similarly compel one who has contracted to buy to pay the agreed price on receiving a deed of the premises. Specific performance of such contracts is granted on the theory that money damages are an inadequate remedy, and that the nature of the situation is such that it is possible to compel the actual performance of the contract. In contracts for the sale of personal property, damages are generally considered adequate, but contracts for the sale of a painting or a race-horse would be specifically enforced. Sometimes the seller is unable fully to perform his agreed contract. He may not be able to give a title free from encumbrances, or he may have committed waste on the premises. In such a case, though the buyer need not carry out the contract unless he wishes, he can if he chooses get a conveyance decreed to him and an allowance deducted from the price commensurate to the injury caused by the encumbrance or waste. Specific performance will be granted not only against the seller, but if the seller in violation of his contract has conveyed the land to a third person who had notice of the contract or who did not give value in exchange for the land, the court will compel the grantee of the premises to convey them to the person who had the original contract to buy. If, however, one who has agreed to sell the premises actually sells and conveys them to another who is a purchaser for value without notice of the prior contract, such a purchaser gets an indefeasible title, and the person having the prior contract to buy must resort, for his only relief, to an action for damages against the seller. For this reason it is important to record a contract to buy or sell. This record operates as notice to all the world, and no purchaser subsequent to the record will have the rights of a purchaser for value without notice.

VENDOR'S LIEN.—In some States a seller of land who has not been paid the price is entitled to what is called a vendor's lien on the land. This enables him to compel a sale of the property to satisfy his claim for the purchase money unless the land has been conveyed, before proceedings are brought to enforce the lien, to a purchaser for value without notice that the original vendor is still unpaid. In many States, however, the seller has no vendor's lien and must take a mortgage back for any unpaid portion of the purchase price if he desires security for its payment.

DEFINITION OF MORTGAGE.—A mortgage is a transfer of property to a creditor to secure a debt. Unless there is a debt there can be no mortgage, and the original idea of a mortgage, still preserved in the forms of conveyance in many States, is that the mortgagor or debtor transfers the title to the mortgagee or creditor. In popular understanding the mortgagor owns the mortgaged premises but the mortgagee will take or sell them if the debt is in default. The theory of the common law, however, was that the mortgagee became the owner of the premises as soon as the mortgage was made, but that the mortgagor was entitled to re-acquire the ownership by payment of the debt at maturity. Indeed, early mortgages were often made by two separate instruments: (1) an absolute deed of conveyance to the mortgagee, and (2) an instrument called a defeasance which provided that on payment of the amount of the debt, on a given day, the property should revest in the mortgagor.

MODERN AMERICAN MORTGAGES.—At the present day in many jurisdictions a mortgage still remains, both in the form of the instrument and in the legal conception of the rights of the parties fundamentally, the same as under the early doctrines just outlined. In other jurisdictions, of which New York may be taken as a typical State, the theory is no longer that the mortgagee has title to the property, but that he has only a lien on it, which he may enforce if the debt is not paid. The difference in actual results under the two theories, however, is less than might be supposed. Where the mortgagee is still regarded as having the title, his power to make use of that title is limited so that he can only make use of it for the purpose of securing payment of what is due him. On the other hand where the mortgagee is regarded as having only a lien, the lien is a legal right against the real estate which enables the creditor to enforce his claim against it in practically the same way which he would do were he the owner of the real estate.

COVENANTS AND STIPULATIONS.—A mortgage of real estate ordinarily contains the same covenants of warranty as a warranty deed of real estate. Where a mortgage still has its common law effect of transferring title to the mortgagee, it is essential that the mortgage should contain a provision that until default the mortgagor shall be entitled to the possession of the premises. Covenants in regard to the payment of taxes by the mortgagor and the keeping of the premises insured for a certain amount, are usual and important provisions. There is also commonly contained in a mortgage a power of sale; that is an authority or agency given to the mortgagee to sell the premises free of the mortgagor's right of redemption in case default of payment is made, or in case such default continues for a certain specified time. In all States printed forms of mortgages are ordinarily used. These forms are prepared with care to suit the requirements of local law; and if you are sure that the printed form is prepared and sold for use in the State where the mortgaged land is situated, you may feel satisfied that the terms of the instrument are suitable to protect the rights of both parties.

EXECUTION AND RECORD OF MORTGAGE.—A mortgage of real estate must everywhere be executed with the same formality that is necessary for an ordinary deed of conveyance. Different forms are in use in different States, and it is always desirable to use the form of mortgage customary in the State where the land lies. It is important to ascertain whether a seal is necessary in that State, and the instrument must ordinarily be acknowledged before a notary public having a seal, or before a commissioner of deeds for the State in which the land lies. There is in every State a recording act by virtue of which unrecorded mortgages are made invalid against subsequent purchasers and sometimes against attaching creditors. Though an unrecorded mortgage is, as between the parties, as effective as if recorded, it is of vital importance promptly to record every mortgage in the Registry of Deeds in the county where the land lies.

SPECIAL CASES.—Where a mortgage is executed by an agent or by a corporation, it is essential that the agent or corporate officer have authority to act. In the case of a corporation it is necessary both that the corporation have power to make the mortgage in question and also that the particular officer or officers who attempt to exercise the power are authorized so to do. The principles here involved, however, are not different from those generally governing the acts of agents and corporations. The same may be said in regard to mortgages by husband or wife, by a partnership, or by trustees. In the case of mortgages executed by any such person it is necessary to take special precautions. A mortgage by husband or wife should generally be also executed by the other. A mortgage by a partnership should be executed in the same form in which the title is held by the partnership, and if the title is held by less than all the partners, it is desirable that the other partners should express their assent to the transaction either in the mortgage itself, or in a separate instrument executed with the same formality.

INTEREST IN PROPERTY.—Any kind of interest in real estate may be mortgaged and mortgages of property, not yet acquired by the mortgagor, have generally been held to attach to the property when acquired by the mortgagor, and then to give the mortgagee as full a right as if the mortgagor had owned the premises at the time he purported to mortgage them.

OTHER PARTICULARS.—The description of land in a mortgage should have the same exactness as is necessary in a deed. Unlike deeds, mortgages ordinarily state their consideration and must of course state the indebtedness which they are given to secure. A mortgage may be given to secure a past debt if the mortgagor, when he makes the mortgage, is solvent. If he is then insolvent, to give such a mortgage would be a preference, which is an act of bankruptcy, and subject the mortgagor to possible bankruptcy proceedings. If the mortgagee in such a case had reasonable cause to believe that the mortgagor was insolvent, the mortgage could also be set aside by a trustee in bankruptcy.

EQUITY OF REDEMPTION.—By the terms of the mortgage the mortgagor's right is ordinarily made dependent on payment of the debt on a fixed day, or of installments on fixed days. A day thus fixed in the mortgage is sometimes called the "law day." According to the terms of the instrument the only way in which the mortgagor can be revested with title to the property is by complying with the express terms of the mortgage and paying the debt on the law day. The result of this provision, if enforced, would be that if the debt is not paid exactly when it is due, the mortgagee remains the absolute owner of the mortgaged premises. Courts of equity, however, long ago limited the mortgagee's right, holding that the real object of the transaction is to secure a debt, and that if the mortgagee obtains his debt and interest he ought to be satisfied. Accordingly if the mortgagor was in default in the payment of the debt, he was allowed to redeem the property by payment of the debt and interest until the time of tender. If the mortgagee refused to accept his debt and interest, the mortgagor could bring a suit in equity to redeem the property and the court would order the reconveyance to him of the property on payment of the debt. Because of this right on the part of the mortgagor, his interest in the property came to be called an equity of redemption, and it is often so called at the present day. The position taken by courts of equity, permitting redemption, might work a hardship on the mortgagee because he could never feel sure of his title to the property, however long the debt might remain unpaid. This difficulty was met by allowing the mortgagee to bring a suit to foreclose the debtor's right of redemption. We speak of foreclosing a mortgage, but, strictly, it is the debtor's right to redeem which is foreclosed. When such a suit of foreclosure was brought equity would fix a time within which the debtor might redeem the premises by paying the debt and interest, and then the decree provided that if the debtor failed to pay within the named period, his right of redemption should be forever foreclosed. At the present time there are in practically all jurisdictions statutory rules, in regard to the foreclosure of mortgages, which we shall presently describe, but it is important to remember the fundamental nature of the mortgage transaction, and the original remedies of redemption and foreclosure.

A RECONVEYANCE IS NOT NECESSARY ON PAYMENT OF THE MORTGAGE.—If a mortgage is regarded as a mere lien to secure a debt, it is obvious that a payment of the debt discharges the lien, and the title already vested in the mortgagor becomes free from any incumbrance. On the theory of the common law, though the title passed to the mortgagee, it was subject to a condition subsequent which would revest the title in the mortgagor if payment of the debt was made at maturity. By mere operation of law, therefore, payment of the mortgage when due revested title in the mortgagor without reconveyance. After a default, however, a subsequent payment is not strictly a performance of the condition upon which the mortgaged deed provided that title should revest. Accordingly a reconveyance was necessary in such a case at common law, but at the present day it is generally not requisite even in case of payment after default.

THE MORTGAGOR IS LIABLE AS A DEBTOR.—The mortgagor is bound as a debtor ordinarily by a bond or promissory note in which he expressly agrees to pay the amount of his debt. It is perfectly possible that the debt secured by the mortgage should not be represented by such an instrument, but should rest merely in oral agreement or should be contained in a covenant in the mortgage deed itself, but it is usual and desirable to have a separate obligation. The fact that the debtor has given the mortgage does not in any way limit the rights of the mortgagee as an ordinary creditor. He may sue on the mortgage debt when it is due, in the same manner as if there were no mortgage. It is his option whether he will foreclose the mortgage, as a means of collecting his claim, or whether he will get judgment on the debt, and seek to collect that judgment in the same way that an ordinary judgment creditor would. This rule is changed by statute in California, and one or two other States, where by statute the mortgagee is required to realize from the mortgaged property what he can before seeking a personal judgment against the mortgagor. In many jurisdictions the creditor may, in a single proceeding, obtain foreclosure of the mortgagor's rights by sale of the property, and a personal judgment against the mortgagor for any deficiency which the proceeds of the property may leave. This is called a deficiency judgment.

RIGHTS OF MORTGAGOR AND MORTGAGEE IN MORTGAGED LAND.—Even though the mortgagor is regarded by the law as having no longer the legal title to the premises, but only an equity of redemption, his interest is regarded as real estate and descends on his death according to the laws governing real estate. The mortgagee's interest, on the other hand, is regarded as personal property since the debt which the mortgagee is intended to secure is personal property, and even a legal title to the real estate held by the mortgagee is held merely for security, and is an incident to the debt. So the mortgagor's interest in mortgaged property is subject to be seized on execution by his creditors while the mortgagee's interest can not be so seized. The mortgagee's creditors must reach his interest by means appropriate to realize upon the debt, not upon the land. The mortgagor's interest being regarded as real estate will give rise to the same estates of dower in favor of the wife of the deceased mortgagor or curtesy in favor of the husband of a deceased mortgagor, as are allowed by the law in the case of real estate generally. The mortgagor may, while in possession, deal with the property in any way in which an owner may, except that he will not be permitted to imperil the mortgagee's security by any kind of waste. The mortgagor may, subject to the mortgage, lease, sell or devise it. He may collect the rents and profits and use them as his so long as he is in possession. Where, however, the mortgagee is regarded as having the legal title to the premises, he may eject the mortgagor at any time from possession, even though the mortgage is not due, unless prohibited by statute or by the express terms of the mortgage deed. In fact he usually is so prohibited. Even when not so prohibited, it is not always well for a mortgagee to take possession because, if he does so, he is bound to account not only for all profits actually received from the premises, but also for all that might have been received. He becomes liable for any waste of the premises or any failure to deal with them in a reasonably prudent manner.

SALE BY MORTGAGEE OR MORTGAGOR OF REAL ESTATE.—Either the mortgagee or the mortgagor may assign his interest. The mortgagee in assigning his interest is in legal contemplation doing two things: (1) assigning the debt; (2) assigning the title or lien which he holds on the mortgagor's real estate as security for the debt. As to the assignment of the debt, the matter is governed by the same principles as govern the assignment of choses in action generally. That is, if the mortgaged debt is represented by a negotiable instrument, the instrument may be negotiated to the purchaser in the ordinary way, and with the ordinary effects of such instruments. If the mortgaged debt is not represented by a negotiable instrument, the assignment of the debt is an assignment of a chose in action. Where the common law view of mortgage still prevails, that the mortgagee has the legal title, he can only transfer it to an assignee by a deed executed with the same formalities necessary for the transfers of real estate. As, however, the law recognizes that it is the debt which is the essential feature of the relation between mortgagor and mortgagee, and that the mortgaged estate is held merely as security for a debt, a valid assignment of the debt is held to make the assignee equitably entitled to the mortgaged property as security. And, in effect, one who obtains the mortgage debt will secure the benefit of the mortgaged property even though the local law regards a mortgagee as having the legal title. Where the mortgagee is regarded as having merely a lien, the assignment of the debt involves a transfer of the lien.

INCIDENTS TO MORTGAGE.—If the mortgagor wishes to convey his interest, he transfers the estate by deed exactly as if it were unmortgaged, except that the conveyance is stated to be subject to a specified mortgage, and it is sometimes added "which the grantee assumes and agrees to pay." It is desirable for the seller that the grantee shall assume and agree to pay the mortgage while it is desirable for the buyer that he shall buy the premises merely subject to the mortgage without assuming it. The difference between the two transactions is this: In either event the grantee receives the premises burdened by a mortgage, the amount of which will be deducted from the consideration paid as the agreed value of the premises. In either event, if the debt is unpaid, the mortgagee will foreclose and the grantee will lose the premises. In order to save the premises, the grantee will have to pay the mortgage.

ASSUMPTION OF MORTGAGE.—The distinction is only seriously important when the mortgaged premises are worth less than the amount of the mortgage. In that event the mortgagee will be entitled to a deficiency judgment against the mortgagor. The mortgagor was the original debtor and cannot escape from his obligation to the mortgagee without the latter's assent. If the mortgagor is forced to pay, he cannot recover the amount from his grantee unless the latter assumed and agreed to pay the mortgage. If, however, the grantee did make such assumption, he will ultimately have to pay the deficiency. If the mortgagee, without foreclosing the property, should sue the mortgagor directly on the debt, the latter would be compelled to pay. Even if the sale to the mortgagor's grantee had been made merely subject to the mortgage, the mortgagor on paying the debt would be subrogated to the mortgage and would himself be enabled to foreclose the property. But if the property failed to realize enough to reimburse him for the payment of the debt, he would lose this deficiency unless the grantee had assumed and agreed to pay the mortgage. Whether the mortgagee may sue directly a grantee of mortgaged premises who has assumed and agreed to pay the mortgage, is a question which has been much litigated; but it is now held almost everywhere that the mortgagee may do so. Sometimes a succession of grantees, each in turn on buying the premises, assumes and agrees to pay a certain mortgage. The mortgagee, in such a case, is generally allowed to recover from any one of these grantees so far as is necessary to satisfy his claim; but the ultimate liability will rest upon the last purchaser who has assumed the debt. As against a grantee who has not assumed the debt, the mortgagee has no rights. He can deprive such a purchaser of his land, so far as is necessary to collect the debt, but he cannot hold him personally liable.

FORECLOSURE OF REAL ESTATE MORTGAGES.—According to the original theory of the law, the mortgagee became the absolute owner of the mortgaged premises by the failure of the mortgagor to pay the debt when due, and by the foreclosure or termination of the mortgagor's right of redemption. Foreclosure of this character is still possible in a few States, but in most States it has been wholly abolished, and everywhere the ordinary method of foreclosure is by sale of the mortgaged property. Frequently the sale is made by virtue of an authority or power of sale given in the mortgage itself, but sometimes it is made under authority of a decree of court in foreclosure proceedings. Where a mortgage contains a power to the mortgagee to sell on default of the mortgagor, he is acting not simply on his own behalf but as agent for the mortgagor in transferring title to the property. The proceeds will be applied first to the payment of the debt with interest and the expenses of the sale. Any surplus will be held by the mortgagee in trust for the mortgagor and must be paid over to the latter. The situation is entirely analogous to that created by a collateral note where stock or other personal property is transferred as collateral to secure a debt. The statutes of all States contain regulations in regard to the foreclosure of mortgages, which must be observed. They are aimed generally to protect the mortgagor from forfeiture of his property to any greater extent than is necessary to insure the payment of the mortgage debt. In any case of foreclosure the local statute and practice must be consulted.

DEEDS OF TRUST.—In some States what are called deeds of trust have been largely substituted for mortgages. The temptation to make such a substitution is greatest in jurisdictions which refuse to recognize the mortgagee as the legal owner of the premises. If the law denies the mortgagee this recognition, he can, by insisting, as a condition of his loan, that the premises shall be conveyed to a third person as trustee, achieve the result that the mortgagor at least is no longer the legal owner of the premises. Essentially the situation is the same under a deed of trust as under a common law mortgage. In both cases the legal title is held merely to secure the debt, and the court will secure to the debtor all the value of the property which can be realized from its sale over and above the amount of the debt. If the debt is paid of course the debtor is entitled to the return of the security whether it is real estate or personalty, and whether held directly by the creditor or by a third person as trustee.

THE TORRENS LAW.—The Torrens system of registration of land titles received its name from Sir Robert Torrens who drew the first Torrens law enacted in South Australia in 1858. The practice of searching titles has gone through this development. In country districts the person purchasing real estate frequently accepted the grantor's deed without any search of the title. Of course, if there were judgments against the grantor, or other claims against the real property, the purchaser or the grantee takes the property subject to these claims. Ordinarily, however, the careful purchaser employs a lawyer to make a search of the title before he accepts it and pays the purchase price. In New York City to-day, and in some of the other large cities of the country, most of the title searching has passed out of the hands of the lawyers into the hands of the title companies. The title company makes the search now, the same as the lawyer formerly did, with an added advantage. Suppose I am to buy Blackacre, and employ attorney Blackstone to search the title. He reports it as being free and clear. I take possession and pay the purchase price. Six months later the wife of the grantor appears on the scene. When the grantor conveyed, he stated in the deed that he was single. The wife establishes the validity of her marriage, and her husband's, my grantor's, death. She is, of course, entitled to dower. I am obliged to make some kind of settlement with her, and there is no way, probably, by which I can hold my lawyer for failing to find that the grantor was married, when he made the search for me. If the title to my property had been searched for me by a title company, it would have issued a title insurance policy in my name which would have protected me, in this instance, and I would have been reimbursed by the title company for the loss which I sustained in having to pay the dower claim of my grantor's wife.

ECONOMY OF TITLE SEARCHES.—Economically, the title company is a big step in advance of the former practice of having lawyers make a search. The title company can do it much cheaper. If Blackacre was sold, when lawyers alone were making searches, probably a different lawyer would be employed at each sale, and he would make a search back to the earliest deed. After a title company has made its search, the result is in its records and the next time it is on the same piece of property, the search would simply be what is called a continuation, which would carry the search from the last time the company was on the title down to the present time. This enables the title company to make its fee more reasonable than the lawyer, and we can now secure a title company's search and insurance policy frequently for less than formerly was paid to the lawyer for the search alone.

ESCHEAT.—However, the policies issued by the title companies are not absolutely satisfactory, and the next, and perhaps final, step is for the State to come in and guarantee the title. This is perfectly logical. The ownership of all land is in the State, theoretically, the same as under the English common law. The King, in those days, owned all the land. This is more than theory, even to-day. If a man dies, leaving no heirs and no will, his real property escheats to the State, this being based simply on the theory that the property goes back to its original owner, the State. If this is true, why should not the State insure the title? This is the theory of the Torrens' system.

EFFECT OF TORRENS LAW.—The first Torrens law, enacted in this country, was in Illinois, and similar acts have been passed in a number of the States, including New York. When such laws are on the statute books, generally the business of a title company will be legislated out of existence. For that reason, opposition to the passage of such laws has developed in some States. Perhaps the next fifty years may see them generally adopted throughout the country.

CHAPTER X
Estates and Trusts

CHARACTER OF PROPERTY.—It is very essential to distinguish carefully between the two kinds of property, real and personal, which the deceased leaves. Real property, as we have explained, consists of land with the buildings permanently attached to it, and all other property is personal property, although it may relate to real property. Thus, a mortgage on land is personal property, also the shares of stock in a corporation, although the corporation may be organized to engage exclusively in the ownership of real property, is personal property. Where a person dies leaving a will, his real property goes directly to the persons to whom he leaves it in the will. In the case where he dies intestate, his real property passes directly to his heirs at law, who are designated by statute. In neither case is any formality necessary, beyond the probate of the will, to vest the devisee of the testator or the heirs at law of the intestate with the title to the real property. The situation in regard to personal property is quite different. Where the deceased died leaving a will, his executor immediately has title to all the personal property. If he dies intestate, the administrator will take title as soon as appointed. The personal property is used by the executor or administrator to pay debts, and the real property, whether a man dies testate or intestate, is never used to pay debts unless the personal property is insufficient.

WILLS DEFINED.—The definition of Jarman is commonly used in defining a will: "A will is the instrument by which a person makes a disposition of his property to take effect after his decease, and which is, in its own nature, ambulatory, and revocable during his life." This definition is open to one criticism. It does not include oral wills which, as we shall see, are sometimes legal. We shall also use other terms in this chapter which must be defined. A testator is the man who makes the will, while the testatrix is a woman making a will. A codicil is a supplement to a will, made and executed with the same formality as the original will, and it becomes a part of the original will, adding to it, or altering it, as the case may be. A devisee is a person who takes real property under a will, while a legatee takes personal property under a will, and the real property passing under the will is called a devise, and the personal property a bequest. A legacy refers to money passing under a will. This is why the ordinary will uses this phrase: "I give, devise, and bequeath." It is not fatal, however, to make a mistake of having the will read, "I hereby devise," referring to personal property. It is more a mistake in the use of English, than a mistake in law to make a wrong choice of these terms which we have just defined. A holographic or olographic will is a will which is wholly written in the testator's or testatrix's own hand. The statutes of a few States recognize these wills as valid without the formal execution or attestation if they are wholly written, signed, and sealed by the testator's own hand. A nuncupative will is an oral will. While most wills must be in writing, in many jurisdictions the oral wills made by sailors at sea, and soldiers in actual service are recognized as valid without being reduced to writing and without any specified number of witnesses. It is perfectly apparent why these exceptions are made, because of the difficulty of securing the materials with which to make a written will by these two classes of people. Nuncupative wills are good only to dispose of personal property, unless a special statute has been enacted which provides otherwise, but this is not commonly done.

A WILL AND A GIFT CAUSA MORTIS DISTINGUISHED.—We have already referred to gifts causa mortis which are gifts of personal property made by the donor under apprehension of immediate death, coupled with the delivery of the property. The gift is defeated by the recovery of the donor. A gift causa mortis may be made orally, while, with the exception of nuncupative wills, all wills must be in writing. A gift causa mortis must be made under fear of pending death, whereas a will is ordinarily made with a view of the fact of death but not of its immediate happening. Again, delivery is necessary to make a gift causa mortis, whereas under a will delivery never takes effect until after the person dies, and then the legatee's title comes through the executor or administrator, and not directly from the testator. Real property is not the subject of a gift causa mortis, whereas a will may dispose of both real and personal property.

WHO MAY MAKE A WILL.—As a general rule, any person of sound mind and of the age of twenty-one years may make a will. In some States, a person eighteen years of age may make a will of personal property. Formerly a married woman could not make a valid will excepting in a few instances, but today, by statute, this common law disability has been either wholly or largely removed. The statutes of the particular State in which the married woman resides, or in which her property is situated should always be consulted.

TESTAMENTARY CAPACITY.—Another qualification is that the testator must have sufficient intellectual powers to enable him to be said to have "a sound and disposing mind, memory, and understanding." The case of Whitney v. Twombly, 136 Mass. 145, gives us as good a general statement as there is concerning the nature of testamentary capacity: "A testator has a sound mind for testamentary purposes, only when he can understand and carry in mind, in a general way, the nature and situation of his property, and his relations to the persons around him, to those who naturally have some claim to his remembrance, and to those in whom, and the things in which, he has been chiefly interested. He must understand the act which he is doing, the disposition which he wishes to make of his property, and the relation in which he stands to the objects of his bounty and to those who ought to be in his mind on the occasion of making his will." The ability to make a will is not necessarily gone because the testator is old, weak or ill, even practically at the point of death. The physical condition is simply significant in determining the mental condition, but of course a very weak physical condition does not necessarily mean a weak intellectual condition. Insane persons are not capable of making wills, but a person who is insane may still have a "lucid interval" during which time he is sufficiently restored to his normal condition to enable him to act with such reason as to make a valid will, although he may, very soon, relapse into his former insane condition. Ordinarily most peculiarities and eccentricities on the part of the testator do not affect his ability to make a will; neither do peculiar religious beliefs have any effect unless, in any of these cases, the person's mind is so completely controlled as to prevent the exercise of rational judgment in disposing of his property. His eccentricities must amount almost, in such cases, to a form of insanity to have this effect.

HOW A WILL MUST BE EXECUTED.—There are four requirements for the execution of a valid will:

(1) It must be in writing.

(2) It must be signed by the testator.

(3) The testator's signature must be made by the testator or the marking acknowledged by him in the presence of the necessary number of witnesses.

(4) It must be declared by the testator to be his last will in the presence of the necessary number of witnesses, who are present at the same time and who subscribe their names as witnesses in the presence of the testator.

OTHER FORMALITIES.—No particular form of writing is necessary. Probably typing is the most common form in use to-day. As a precaution, lawyers sometimes have the testator sign at the bottom of each typewritten page, where the will is of several pages, or the document is fastened together with silk, the two ends of which are carried to the last page and imbedded in a wax seal. The testator should sign the will himself unless he is unable to, from lack of education or feebleness, in which case, the statute generally makes provision for another form of signing. It is better practice for the testator to sign the will in the presence of his witnesses, acknowledge the signature, and then the testator should declare, in the presence of his witnesses, that this is his last will and testament. In many States, two witnesses are all that are necessary; a few States require three. Careful practice generally calls for three.

ILLUSTRATION.—A testator lives in New York. He has two witnesses to his will. His will is valid as far as his real property in that State is concerned, but should it happen that he also owns real property in a State where three witnesses are required, his will would not pass title to the real property in that State and, as far as that State is concerned, he would die intestate, and that real property would descend to his heirs in accordance with the laws of that State, which would quite likely not be what the testator intended to happen. By having three witnesses, his will is just as good in New York, where only two are necessary and the presence of the third witness makes the will good, and passes the real property situated in the State where three are required. It is always best to have the witnesses add their addresses to their signatures. This is not required by statute in many States, but after a person's decease, it may help in locating the witnesses by having addresses to which to refer. It is, of course, wise to use some care in the selection of witnesses, although almost any person is competent. Adults, of course, are preferable as witnesses, but an infant is a perfectly good witness, but he should possess sufficient intelligence to be able to appreciate the importance of the act he is witnessing. In view of the formalities to be observed in the execution of a will, and the technical niceties in the use of the proper word or phrase, often required to insure the expression of the testator's exact intention, the drafting of a will should never be left to a layman, but should always be entrusted to a lawyer.

THE FORM OF A WILL.—In our discussion it is well to keep in mind the form of a will. A simple will reads as follows:

IN THE NAME OF GOD, AMEN:

I, John Jones, of the Borough of Manhattan, City and State of New York, being of sound and disposing mind and understanding, do make, publish, and declare this my last will and testament, as follows:

First. I direct that all of my just debts and my funeral expenses be paid as soon after my death as conveniently may be.

Second. I give, devise and bequeath all the rest, residue and remainder of my estate, whether real, personal, or mixed, of whatsoever kind, character or description, and wheresoever situated, unto my wife, Emma Jones, for and during the period of her natural life.

Third. Upon the death of my said wife Emma, I give, devise and bequeath the said residue and remainder of my estate to my children, Alice Jones, Sarah Jones, and George Jones, to them, their heirs, executors, administrators and assigns forever, share and share alike, per stirpes and not per capita.

Fourth. This will shall remain in full force and effect notwithstanding children may hereafter be born to me.

Fifth. I nominate, constitute, and appoint my said wife Emma, and the Institute Trust Company, executors of this my last will, giving to them full power and authority to sell and convey any and all real estate, whereof I may die seized, at such times and for such prices as they may consider for the best interests of my estate.

Sixth. I hereby revoke any and all wills at any time by me heretofore made.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this first day of July, 1921.

(Signed) JOHN JONES (L. S.).

Signed, sealed, published and declared by John Jones, the above-named testator, as and for his Last Will and Testament, in the presence of us, and each of us, and at the same time declared by him to us, and each of us, to be his Last Will and Testament, and thereupon we, at his request, and in his presence and in the presence of each other, have hereunto subscribed our names as witnesses, this first day of July, 1921.

RALPH ROE, 3921 Broadway, New York, N. Y.
JOHN DOE, 65 Fifth Avenue, New York, N. Y.
JAMES SMITH, 130 Post Avenue, New York, N. Y.

REVOCATION.—A will may be revoked at any time at the pleasure of the testator. The ordinary ways of accomplishing a revocation of a will are: (1) The testator executes a later will, and in express terms says, "I hereby revoke all former wills by me made." Even if such an expression is not put in the second will, if its terms are wholly inconsistent with the former will, this in itself, will act as a revocation. Again, a will may be revoked by mutilation, as by being burned, torn, or otherwise mutilated by the testator himself, or in his presence and by his direction. The mutilation of the will, however, if not accompanied by an intent thereby to revoke it, is of no effect. I think I am tearing up an old insurance policy, but because of poor eye-sight, discover later that I have torn my will. This would not amount to a revocation of the will. As has been said by a writer on the subject of wills, "No amount of cancellation or destruction without the intent to revoke, and no amount of intent without the actual destruction, will suffice to revoke a will. Both the intent and the actual destruction or cancellation must coexist."

Sometimes changes in the circumstances and conditions of the testator's life will work a revocation. For example, at common law, the marriage of a woman worked an absolute revocation of her will. This has now been changed in most States by statute. In a great many States, however, today, if a testator, having no children, should make his will, and after the execution of the will, a child is born, the will is revoked in toto, when no provision for such child is made in the will. However, as above stated, this rule is not uniform in all States, and local statutes should therefore be consulted on this point. Where a testator already has children, the birth of additional children will not affect his will except, that such after-born children will inherit the same as though he had left no will. These rules in regard to after-born children apply only where the will does not make any mention of possible issue, and for this reason it is well to insert the clause, in many jurisdictions, providing that the will shall remain in full force and effect notwithstanding the fact that children may thereafter be born to the testator.

PROBATE OF WILLS.—Every State has a probate court for the settlement of decedents' estates. Such a court is variously named as the probate court, the surrogate's court, and the like, according to the nomenclature adopted in a particular State. Before an executor named in a will has any authority to act, he must produce the will, and after the proper proceeding has been had, the will is admitted to probate, and he may then qualify under it by giving the necessary bond. If the deceased died intestate, the proper person will apply to the probate court for the appointment of an administrator, and after a hearing, the court will appoint the person entitled to receive letters of administration. The administrator will then qualify, give the necessary bond, and then proceed with the settling of the estate.

A testator may name anyone in his will as an executor. In the large cities, in recent years, it is becoming quite common to name a trust company as executor, because its facilities for handling estates render it more efficient than the average individual. If, on the other hand, the testator is unwilling to place the sole care of his estate in the hands of a trust company, he may name two executors, a trust company and his wife, if he is a married man, or a very close friend in whose judgment he has great confidence, and, together, the two act as executors. The fees which the executors receive are generally fixed by statute. If the deceased dies intestate, the letters of administration are granted by the court in accordance with a definite statute. While the law in the various States is not uniform, generally, the priority of the right to administration is arranged by statute something like this:

(1) On the estate of a husband:

(a) To the widow, if there is any.

(b) If there is no widow, or if the widow renounces, then to the children.

(c) If there are no children, then to the issue of deceased children.

(d) If no issue of deceased children, then to the nearest of kin.

(2) On the estate of a wife:

(a) To the husband, who has an absolute right. If the husband for any reason does not desire to act as such administrator, he may select any fit person to administer the estate.

(b) If there is no husband, then to the children.

(c) If no children, then to the issue of deceased children.

(d) If no issue of deceased children, then to the nearest of kin.

(3) On the estate of an unmarried child:

(a) To the father, who has an absolute right. If for any reason the father does not wish to act, the court may select any fit person to administer the estate.

(b) If there is no father, then to the mother and brothers and sisters, whether of whole or half blood.

(c) If no mother or brothers or sisters, then to the nearest of kin in equal degree.

PER STIRPES AND PER CAPITA.—Where the subject of a testamentary disposition is directed to be "equally divided" or to be divided "share and share alike," or where similar words are used which indicate an equal division among a class of persons, the persons among whom the division is to be made take per capita, unless a contrary intention is discoverable from the will. Where the individuals of a class are specifically named, or are designated by their relation to some ancestor living at the date of the will, whether the testator or another, they take per capita, unless the context of the will shows an intention that they should take per stirpes. But where the gift is to an individual, or several named individuals, and to others as a class, the latter take per stirpes; unless the testator uses language indicating an intention that the members of the class shall share equally with the named individuals. A gift to a class of persons or on their death to their heirs or children will be distributed among such heirs or children per stirpes; but a gift to one person and the children of other deceased persons will be divided per capita, unless it appears from the context or circumstances shown by extraneous evidence that the testator intended a distribution per stirpes.

ILLUSTRATION.—A gift to children of testator, A. B. and C., or on their death to their heirs or children will be distributed, in the event of the death of C. before the testator, among heirs or children of C. per stirpes. (In other words, they will divide the share of their father between them.) But a gift to A. and to X. Y. and Z., the children of B. deceased, will be divided per capita.

THE CONSTRUCTION OF WILLS.—It sometimes happens that wills are not carefully drawn, and even if they are, their meaning is not always perfectly clear. Ordinarily, any person who is interested in the meaning of a clause of a will may bring a suit in the proper court asking for a construction of the will. Of course, each case is governed more or less, by its own facts, but there are certain general rules which the courts follow in trying to arrive at the testator's intent. For example, a will is ordinarily presumed to speak as of the time of the testator's death. Thus, reference in a will, to the arrival of the testator's youngest child at the age of twenty-five years, will apply to the youngest child at the time of the testator's death, although such child is born after the execution of the will. Ordinarily, a testator is presumed to have intended to dispose of all of his property, and if a will can be so construed, this will be done, rather than to adopt a construction which will make him testate as to part of his property and intestate as to another part. If there are two irreconcilable parts, the latter part is the one which prevails. Words are to be understood in their ordinary meaning, unless there is something to clearly show contrary intent. If, between two possible constructions, one of which would disclose a legal purpose, and the other an illegal purpose, the court will adopt the former.

DOWER.—Under the rules of the common law, a wife was entitled, on the death of her husband, to an estate for life in one-third of the lands of which her husband was seized of an estate of inheritance at any time during the marriage. This dower right still exists in most States, although it may differ in some particulars. For example, in Connecticut, a dower right exists only in the real property which the husband owns at the time of his death, and not, as at common law, in all the real property of which he was seized during the whole marriage. Therefore, reference to the statutes must be made in each State, to know the exact rule in a particular jurisdiction. Where the State adheres closely to the common law, this right, on the part of the wife, is a right of which her husband cannot deprive her; if the husband disposes of all his real property in his will to his friend, John Jones, such disposition is not valid and the wife would still be allowed her dower right by the probate court. It must also be borne in mind that dower refers only to real property. Generally, a husband may dispose of his personal property without any reference to his wife. Ordinarily, two things are necessary to establish the right of dower: (1) A legal marriage, and (2) seizin by the husband of an estate of inheritance in lands, or, in a layman's terms, the absolute ownership of a piece of real estate.