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Albert Sidney Bolles
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Title: Putnam's Handy Law Book for the Layman
Author: Albert Sidney Bolles
Release Date: July 5, 2010 [EBook #33088]
Language: English
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* * * * *
BY ALBERT SIDNEY BOLLES,
PH.D., LL.D.
THE MODERN LAW OF BANKING
BANKS AND THEIR DEPOSITORS
BANK OFFICERS
BANK COLLECTIONS
THE NATIONAL BANK ACT AND ITS JUDICIAL INTERPRETATION
Putnam's Handy Law Book
for the Layman
Putnam's
Handy Law Book
for the Layman
By
Albert Sidney Bolles, Ph.D., LL.D.
Formerly Professor of Commercial Law and Banking in the
University of Pennsylvania, also Lecturer on the
Same Subjects in Haverford College
G.P. Putnam's Sons
New York and London
The Knickerbocker Press
Copyright, 1921
by
Albert Sidney Bolles
Published September, 1921
Reprinted December, 1921
" March, July, 1922
" April, 1923
[Illustration]
Made in the United States of America
FOREWORD
What useful purpose can this book serve? Most of the laws under which
we live are kept, not from knowing them, but because the good sense of
individuals leads them along legal ways. Yet in many cases their good
sense fails to discover the right way. Thus, the receiver of a check
on a bank must present it within a reasonable time after receiving it,
and if he keeps it longer the risk of loss, should the bank fail, is
his own. What is this reasonable time? One man says three days,
another a week, another a month. So one's common sense fails to
establish a definite reasonable time. It is needful to have the time
fixed, and the law therefore has established a reasonable time. There
are many cases like this in which one's common sense fails to furnish
a correct, yet needful guide.
This little book contains many of the legal principles that are in
most frequent use, as readers will learn who carefully read it. Again,
if they do not always find an answer to their questions, it is
believed that in many cases they will find enough law of a general
nature from which they can safely solve their questions. They are
therefore besought to do something more than merely consult this book
for the purpose of finding ready and complete answers to their
questions, to read it and become familiar with its contents.
Besides the law presented here the reader should learn to be cautious,
and not trust too much his own judgment when no rule can be found for
his guidance. Many a person has written his own will, as he has a
right to do, and after giving a legacy to a relative or friend has
nullified the gift by having the legatee, through the testator's
ignorance, sign as a witness. The writer knew a railway president who
had the temerity to draw the writing containing an important contract
between his railroad and another, and who, by unintentionally putting
a comma in the wrong place, made his road instead of the other
responsible for large losses. If this book shall make the reader
cautious concerning the legality of his undertakings, it will be worth
to him many times its price.
A.S.B.
CONTENTS
PAGE
EXPLANATION OF TERMS 1
ADOPTED CHILD 5
AGENCY 6
AGREEMENT TO PURCHASE LAND 15
AUCTIONEER 16
AUTOMOBILE 19
BAILOR AND BAILEE 26
BANKRUPTCY 31
BENEFICIAL ASSOCIATIONS 38
BROKER 45
CARRIER 48
CHATTEL MORTGAGE 52
CHAUFFEUR 57
CHECK 58
CITIZEN 62
CONTRACTS 64
CORPORATIONS 72
CURTESY 101
DECEIT 102
DEEDS 104
DIVISIONAL TREE 113
DOWER 113
DRUNKENNESS 116
EQUITABLE REMEDIES 118
FACTOR 123
FIRE INSURANCE 124
FIXTURES 132
GARAGE KEEPER 133
HOMESTEAD 135
HUSBAND AND WIFE 137
INNKEEPER 147
LAND LICENSE 149
LEASE 151
LEGAL REMEDIES 164
LIFE INSURANCE 167
MINOR 176
MORTGAGE 177
NEGOTIABLE PAPER 183
PARENT AND CHILD 197
PARTNERSHIP 198
PATENT 202
PAYMENT 211
PRESCRIPTIVE RIGHTS 214
QUASI CONTRACTS 218
SALE 227
SHIPPING 235
STATUTE OF FRAUDS 242
STATUTES OF LIMITATION 243
TELEGRAPH AND TELEPHONE 246
TORTS OR WRONGS 248
WARRANTY 260
WILL 262
WORKMEN'S COMPENSATION ACTS 266
LEGAL FORMS FOR EVERYDAY USE 277
INDEX 321
Putnam's Handy Law Book for the Layman
=Explanation of Terms.=--At the outset the explanation of a few terms,
often used, may be helpful to the reader. Among these are the terms
statute and common law. Statute law or statutes mean the laws enacted
by the state legislature and by the federal congress. Common law means
the decisions made by the state and federal courts. These decisions
may relate to the interpretation and application of statutes, or to
the application of former decisions or precedents, or to the
qualification and application of them, or to the making and
application of new rules or principles where none exist that are
needed to decide the case in hand.
It is a rule of the most general application that legal decisions are
precedents which are to be followed in other cases of the same
character. The decisions of the highest court in each state must be
followed by the lower courts, but no courts in any state are obliged
to follow the decisions of the courts in any other state. The courts
in every state must also follow the decisions of the federal courts in
all matters of a national character. Thus if a federal court decides
the meaning or interpretation of a federal statute, a state court must
follow the interpretation in a case requiring the application of that
statute.
Again, common law decisions are not binding on the courts that make
them like statutes or legislative commands. A decision may be modified
or set aside when it is regarded as no longer applicable to the
present condition of things. It may also be set aside or changed by
legislative action. The common law is therefore always slowly changing
like the ocean and is never at rest.
The common law forms much the largest part of the great body of law
under which we live. This book is a collection chiefly of common law
principles; a few statutes are interwoven here and there to complete
the subjects presented.
The distinction also between civil and criminal law requires
explanation. Nearly all criminal law is founded on statutes, in other
words the statutes, state and federal, define nearly all legal crimes
known to society. It is therefore true that the field of crime is not
fixed, is in truth always changing. Thus formerly if a man bought
goods on credit of another on the statement that he was worth fifty
thousand dollars and the seller afterward learned that he was not
worth fifty cents, the seller could sue the buyer to recover the value
of the goods and for any additional loss, but could do no more. Many,
perhaps all the states, now declare by statute that such an act is a
crime, and the offender can be prosecuted by the state and fined or
imprisoned or both. And the wrongdoer may still be sued in a civil
action for the loss to the seller as before.
All crimes are prosecuted by the officers of the state chosen or
appointed for that purpose. Again, as in the case mentioned, the
wrongful act has a double aspect. An individual who has been wronged
may proceed against the wrongdoer to recover his loss; the state also
has been wronged and may also proceed against him. A good illustration
is a bank defaulter. The bank may proceed through a court of law to
recover the money lost by him, or from those who have promised to make
the bank good should he wrongfully take anything; the state may also
proceed against him as a criminal for breaking a statute that forbids
him from doing such a thing. Furthermore, should the bank, as often
happens, agree to accept a sum from the defaulter and not trouble him
further, the agreement would be no bar to an action by the state
against him.
The terms law and equity are frequently used in the law books and
require explanation. Formerly there was no such term as equity in the
common law. It came to be used as a supplement to the law to indicate
ways of doing things unknown to the law, which ought to be done. Thus
if a man threatened to fill up your well because it stood, as he
claimed, on his land, you had no preventive remedy at law. You could
use some force to prevent him, you could not kill him, or put out his
eyes, or treat him roughly. The law only gave you the right to proceed
against him to recover money damages for the legal injury. A court of
equity has a preventive remedy. If one threatens to fill up your well
you can petition or pray the court to order that he shall refrain
until there has been a legal hearing to determine whether he has any
right to do so and the court will order him to desist until it has
heard the case, and will enforce its order with a fine or penalty
should he disobey.
The term equity contains a larger element of justice than law; and the
courts often say that an act is just or equitable, meaning that an act
which is just or equitable may not always be a legal act. Equity
therefore is a broader term, and is in constant use in legal
proceedings.
Another word frequently used in this book is action. When a person has
wronged another, for example, has not paid a promissory note that is
due, and the wronged party wishes to collect it through the courts, he
brings an action, so called, against the wrongdoer for that purpose.
Sometimes the word suit is used. Suit, or case in court, is a common
expression.
Finally something should be said about courts of law. Every state has
three kinds or classes of courts. First a court in which suits are
brought and tried relating to small matters, the recovery of money,
for example, for one or two hundred dollars or less, also for small
petty criminal offenses. Next is a higher court in which suits for all
larger matters are begun and tried, as well as appeals from the lower
court. Lastly is a third court of review, usually called the supreme
court, composed in most of the states of five, or more often, seven
judges, who review the decisions of the court below whenever
application is made founded on erroneous matters, the wrongful
admission of, or refusal to admit, evidence and the like, and their
decisions form the great body of the common law.
The federal government also has three courts corresponding somewhat to
the courts established by the states. First is a court existing in
every state called the district court, while some states, like New
York, are divided into several districts. An appeal lies from its
decision to the court of appeals consisting of three judges. There are
nine of these courts, one for each circuit into which the United
States is divided. Lastly appeals may be taken from their decisions
and also from the decisions of the supreme courts of the states to the
supreme court of the United States consisting of nine judges. An
appeal does not lie in every case decided by a state court or by the
federal courts of appeal; only such cases as the highest court shall
decide after application, made in proper form, may be appealed and
heard by that tribunal.
We have already explained the term equity. Formerly there were courts
to try and decide equity cases. England still maintains such courts
and a few exist in the United States; New Jersey and Delaware are two
of these states. The chief official of the court is called a
chancellor, the others vice chancellors. Instead of an action, as in a
court of law, the preliminary proceeding is called a petition or bill,
and while in substance it is similar to an action or complaint, used
in a court of law, the form is quite different. The modern tendency of
the law, considered in the most general way, is to fuse law and
equity, and to endow law judges with equity powers. For further
explanation see _Legal Remedies and Equitable Remedies_.
=Adopted Child.=--Children are sometimes adopted. By doing so the
natural parents lose all personal rights and are relieved from all
legal duties. The adopted parents acquire the right to the adopted
child's custody and control, to his services and earnings, and they
must maintain and educate him. In some states he becomes the heir of
the adopted parent like a natural child, with some limitations. Who
can inherit an adopted child's property is not clearly settled. He can
also inherit from his natural parent and kindred as if he had not been
adopted. In Massachusetts the courts hold that an adopted child will
take like a natural child under a residuary clause in an adopted
father's will giving all the property not otherwise devised to his
child or children. See _Parent and Child_.
=Agency.=--Much of the business of our day is done by agents or
persons who represent others. The most general division is into
general and special agents. A general agent is one who has authority
to act for his principal or person he represents in all matters, quite
as the principal himself could do; or in some of his matters. Thus if
a principal had a farm he might have a general agent to act as his
farmer; if he owned a mill, another general agent who had charge of
it. If he had two mills, he might have a general agent for each, and
so on.
A special agent is authorized to do a specific thing, to sell a home,
buy a horse, or effect some particular end or purpose. While this
distinction is plain enough in many cases, in others the lines run so
close together that it is difficult to decide whether one is a general
or special agent.
Whenever one acts as a general agent he is supposed to have all the
authority that general agents possess who thus act for their
principals, unless the person who is dealing with him knows of the
restriction on his authority. Suppose one goes to the office of a
general insurance agent to get insurance on his home. A policy is
taken and afterwards the house burns up. The company declines to pay
because the agent made a lower rate than was authorized by his
company. The insured however knew nothing about the restriction, and
supposed that the agent had the same authority as other insurance
agents have concerning rates. The company would be obliged to pay. But
if the insured knew that restrictions had been put on the agent and
that he was violating them in giving him the lower rate, the company
would not be liable.
One who deals with a special agent must find out what authority he
possesses; therefore more care is needful in dealing with a special
than with a general agent. His authority must be strictly pursued.
Thus it is said that a person dealing with him "acts at his own
peril," is "put upon inquiry," "is chargeable with notice of the
extent of his authority," "it is his duty to ascertain," "he is bound
to inquire," "and if he does not he must suffer the consequences."
In some cases the law creates an agency. Thus an unpaid vendor of
goods sometimes has authority to sell them, so has a pledgee of goods
outside the authority conferred by the contract pledging them. A
married woman whose husband does not supply her has a limited power to
buy necessaries on her husband's credit, which prevails
notwithstanding any objection he may make. A minor sometimes has the
same power.
A person can act as an agent for another who cannot act for himself.
Minors therefore can thus act. Besides individuals, corporations often
act for others.
The authority of an agent may be given in writing, a power of attorney
so called, or he may act, and often does, without written authority,
especially a general agent. To this rule there is one well understood
exception. If an agent is required in executing his authority to sign
a deed or other writing, especially a sealed writing, his authority
must also be equally great. In executing a deed therefore his
authority must be in writing under seal, and when the deed is
recorded, the agent's written authority should also be recorded; this
is the usual practice. If this is not done, some person who afterward
wished to purchase the land might object because the recorded title
was defective.
A particular usage or custom also affects an agent's powers. If the
principal confers on him authority to transact business of a
well-defined nature, bounded by well-defined usage and customs, the
law presumes the agency was created with reference to them. This
protection affects agents and third persons alike, the latter
therefore who act in good faith in such dealings are protected against
secret limitations of which they had no notice.
An agent has no authority to purchase his principal's property. To do
this, in a sense, would be to purchase of himself. The temptation to
do this is sometimes very great, too great for him to withstand, and
so he resorts to a crooked method for accomplishing his end. He sells
the property to another party who afterward sells it back to him. The
worst violators of this principle have been railway receivers, who
have taken advantage of their position to get control of the property
entrusted to them at a sum much less than its real value. Such sales
can be set aside by proper legal procedure. By the modern rule they
are not void but are voidable, that is, can be set aside if the
creditors or other interested parties wish to do so.
Whenever therefore one deals with a general agent and his authority is
disputed, unless there be restrictions known to the person dealing
with him, the liability of his principal turns on the answer to the
general question, what authority do general agents like himself have.
This is simply a question of fact, to be determined like every other
question of fact by the court in which the controversy is pending.
Another way of rendering a principal liable for the act of his agent
is by ratifying it. Suppose A professed to be the agent of B in
building a house for C, and built it so badly that C sued B to recover
damages, whose defense was, that A was not his agent. Suppose,
however, that B accepted payment for the house, this would be a
ratification of A's authority to act for B even if he did not have
proper authority in the beginning. Suppose A had authority to sell
goods for B but not to collect payment, and someone should pay him and
he ran off with the money, could his principal still collect the money
of the buyer of the goods? This is a hard case, and has happened many
times. The buyer usually is required to pay the second time. But if B,
notwithstanding his direction to his agent not to collect payment,
should receive it such conduct would operate as a ratification.
Whether the authorized act arises from a contract or from a wrong or
tort, whoever with knowledge of all the facts adopts it as his own, or
knowingly appropriates the benefits, which another has assumed to do
in his behalf, will be deemed to have assumed responsibility for the
act. Of course, such action does not render an act valid that was
invalid before; its character in this respect is not changed by
anything the ratifier may do.
Can a forgery be ratified? The right of the state to pursue the forger
cannot be defeated by its ratification, but so far as the act may be
regarded merely as the act of an unauthorized agent, it may be
ratified like any other. Mechem says that if at the time of signing,
the person doing so purported to act as agent, the act might be
ratified.
Again, a principal cannot accept part of an agent's act and reject the
remainder. The acceptance or rejection must be complete.
In appointing an agent the principal has in mind the qualifications of
the person appointed, he cannot therefore without his principal's
consent, designate or substitute another person for himself. This rule
though does not prevent him from employing other persons for a minor
service. Indeed, in many cases a general agency requires the
employment of many persons to execute the business. How far one may go
in thus employing others to execute the details, and how much ought to
be done by the general agent himself, depends on the nature of the
business. The inquiry would be one of fact, to what extent is a
general agent in his particular business expected or assumed to do the
things himself.
One rule to guide an agent is this: when the act to be done is purely
mechanical or ministerial, requiring no direction or personal skill,
an agent may appoint a subagent. Thus an agent who is appointed to
execute a promissory note, or to sign a subscription agreement, or to
execute a deed, may appoint another to do these things. Likewise an
agent who is authorized to sell real estate with discretionary power
to fix the price and other terms, may employ a subagent to look up a
purchaser, or to show the land to one who is desirous of purchasing.
When a person is really acting as an agent, but this is not known by
the persons with whom he is doing business, he is liable to them as if
he were the principal. It often happens for various reasons that
agents do not disclose their principals. Suppose a dealer finds out
that the agent presumably acting for himself was, in truth, acting
for another, could the real principal be held responsible and the
agent escape, or could both be held? The answer is, after discovering
the real principal, both can be held, or either of them. The failure
of an agent to disclose his agency will not make him individually
liable if the other party knew that he was dealing with a principal
with whom he had had dealings through the agent's predecessor. Notice
of the agency to one member of a firm is not sufficient notice to the
firm to release the agent from personal responsibility in subsequent
transactions with another member who did not know and was not informed
of the agency. Again, the liability must be determined by the
conditions existing at the time of the contract, his subsequent
disclosure will not relieve the agent. Finally, while the agent may be
held in such a case, the principal also is liable, except on
instruments negotiable and under seal, on the discovery of his
relationship as principal.
While secret instructions to an agent that are unknown to persons
dealing with him do not bind them, the principal is liable for any
acts within the scope of his agent's authority connected with the
business conducted by his agent for him. Some very difficult questions
arise in applying this rule. A car conductor is instructed to treat
passengers civilly and to use no harsh means with them, save in
extreme cases. How far may a conductor go with a disorderly passenger?
Very likely he would be justified in putting him off; suppose the
conductor was angry and administered hard and needless kicks in the
operation? His principal surely would not be liable, though the
conductor doubtless would be. Suppose in buying a railway ticket the
agent loses his temper and calls you a liar and a thief, you would
have an action against him for slander, unless you happened to be one,
but you would have no action against his principal for the company did
not employ him to slander its patrons; to do this was clearly not in
the scope of his employment.
An agent must not act for both parties in any transaction unless this
is understood by both of them. Nor can an agent receive any personal
profit from a transaction. Whatever profit there may be should be
given to the principal. Thus if an agent is authorized to buy a piece
of property for his principal and buys it for himself, or hides the
transaction under the name of another, the principal, after
discovering what his agent has done, can proceed to obtain the
property.
An agent must be faithful and exercise reasonable skill and diligence.
Money belonging to the principal should be deposited in the
principal's name, or, if in the agent's name, his agency should be
added; otherwise if the bank failed the agent would be responsible for
the loss. Again, if the agent deposited the money in his own name the
true owner could proceed against the bank to recover it.
A principal is liable for the statements and representations of his
agent that have been expressly authorized. He is also liable even for
false and fraudulent representations made in the course of the agent's
employment, especially those resulting in a contract from which the
principal reaped a benefit. Even though the statements may not have
been expressly authorized, such authority may be implied by law
because they are the natural and ordinary incidents of the agent's
position. Thus the position of a business manager often calls for a
great variety of acts, orders, notices, and the like, and statements
made while performing them are regarded as within the line of his
duty.
An agency may end at a fixed time, or when the particular object for
creating it has been accomplished, or by agreement of the parties. In
many cases an agency is created for an indefinite period, and in these
either party can terminate it whenever he desires. There are some
limitations to this principle. Neither party can wantonly sever the
relation at the loss of the other; and if one of them did he would be
liable for the damage sustained by the other. Likewise if the agent
has an interest of his own in the undertaking the principal cannot
terminate it before its completion without the agent's consent. Such a
rule is needful for his security. The bankruptcy of a business agent
operates as a revocation of his authority, but not when the act to be
done is of a personal nature like the execution of a deed.
If the principal becomes insane and unable to exercise an intelligent
direction of his business, his condition operates as a revocation or
suspension for the time being of his agent's authority. If on
recovering, he manifests no will to terminate his agent's authority,
it may be considered as a mere suspension, and his assent to acts done
during the suspension may be inferred from his forbearing to express
dissent when they come to his knowledge. Likewise an agent's insanity
terminates or suspends the agency for the time being unless he has an
interest of his own in the matter. Partial derangement or monomania
will not have that effect unless the mania relates to the agency, or
destroys the agent's ability to perform it.
Again, the marriage of a principal in some cases, unless a statute has
changed the common law, will revoke the power previously given,
especially when its execution will defeat or impair rights acquired by
marriage. Thus should a man give a power of attorney to another to
sell his homestead, but before effecting a sale the principal should
marry, his marriage would revoke the power. By marrying the wife
acquires an interest in the property which cannot be taken away from
her without her consent by joining in a deed of conveyance with her
husband. Likewise the marriage of a woman would operate to revoke a
power of attorney previously given by her whenever its execution would
defeat the rights acquired by her husband. An agent's marriage usually
will not affect the continuance of his agency.
When an agency is terminated it is often needful for the principal to
notify all customers for his protection, otherwise they might continue
to do business with the agent, supposing he was thus acting, and
involve him perhaps in heavy loss. This rule applies especially to
partnerships, each member of which is an agent with general authority
to do the kind of business in which it is engaged.
If the authority of an agent in writing is revoked, but is still left
with him and is shown to a third person who, having no knowledge of
the revocation, makes a contract with him, the principal will be held
for its execution.
Another rule of law may be given. The law assumes that any knowledge
acquired by an agent concerning his principal's business, will be
communicated to his principal, who is bound thereby. This rule though
is often difficult to apply. Thus, if a cashier of a bank should learn
that a note was defective, which was afterward discounted by his bank,
it would be regarded as having knowledge of the defect, because it
was the cashier's duty to inform the proper officials before they
discounted it.
The death of either agent or principal terminates the agency except in
cases of personal interest. And when an agent has appointed a
substitute or subagent without direct authority, and for his own
convenience, the agent's death annuls the authority of the subagent or
substitute, even though the agent was given the right of substitution.
But if the subagent's authority is derived directly from the
principal, it is not affected by the agent's death.
=Agreement to Purchase Land.=--An agreement to purchase land must be
in writing to be valid. Oral or parol agreements may be made to do
many things, but everywhere the law makes an exception of agreements
relating to land purchases. A statute that is quite similar in the
states requires this agreement to be in writing and signed by the
party against whom it is to be enforced. Thus if the seller wishes to
enforce such an agreement, he must produce a writing signed by the
purchaser; if the latter wishes to hold the seller, he must do the
same thing. The better way is to have the writing signed by both
parties.
How complete must the writing be? It need not mention the sum to be
paid for the land; it can be signed with a lead pencil: a stamp
signature will suffice. The entire agreement need not be on one piece
of paper. If it can be made out from written correspondence between
the two parties this will be enough.
To this rule of law are some exceptions. Therefore if an oral
agreement for the sale of land is followed by putting the buyer into
possession, the law will compel the seller to give him a deed. The
proceeding would consist of a petition addressed to a court of equity,
which would inquire into the facts, and if they were true, would
compel the seller to give the purchaser a deed of the land. The reason
for making this exception is, the purchaser would be a trespasser had
he no right to be there: to justify his possession the law permits him
to prove, if he can, his purchase of the land; and if he has bought
it, of course he ought to have a deed of his title.
Once, a purchaser who made an oral agreement and paid part of the
purchase money could compel the seller to give him a deed, and many
still think such action is sufficient to bind the bargain. This is no
longer the law. The practice gave rise to much fraud: A would assert
that he gave money to B to pay for land when in truth it was given for
some other purpose. So the courts abandoned the rule founded on the
part payment of the purchase price. A can however get back his money.
An option to purchase land, contained in an agreement to sell, must be
exercised within a reasonable time, if none is fixed in the agreement.
See _Deed_.
=Auctioneer.=--An auctioneer, employed by a person to sell his
property, is primarily the owner's agent only, and he remains his
exclusive agent to the moment when he accepts the purchaser's bid and
knocks down the property to him. On accepting the bid the auctioneer
is deemed to be the agent of the purchaser also, so far as is needful
to complete the sale; he may therefore bind the purchaser by entering
his name to the sale and by signing the memorandum thereof. His
signing is sufficient to satisfy the Statute of Frauds in any state
conferring on an agent authority to make and contract for the sale of
real and personal property without requiring his authority to be in
writing. His agency may begin before the time of the sale and continue
after it. Again, the entry of the purchaser's name must be made by the
auctioneer or his clerk immediately on the acceptance of the bid and
the striking down of the property at the place of sale. It cannot be
made afterward. The auctioneer at the sale is the agent of the
purchaser who by the act of bidding calls on him or his clerk to put
down his name as the purchaser. In such case there is little danger of
fraud. If the auctioneer could afterward do this he might change the
name, substitute another, and so perpetrate a fraud.
A sale by auction is complete by the Sales Act when the auctioneer
announces its completion by the fall of the hammer, or in other
customary manner. Until such announcement is made, any bidder may
retract his bid; and the auctioneer may withdraw the goods from sale
unless the auction has been announced to be without reserve.
Authority may be conferred on an auctioneer in the same manner as on
any other agent for the sale of similar property, verbally or in
writing. Even to make a contract for the sale of real estate, oral
authority to the auctioneer is sufficient, in the absence of a statute
to the contrary.
Authority to sell property does not of itself imply authority to sell
it at auction, and the purchaser therefore who has notice of the
agent's authority or knowledge sufficient to put him on inquiry,
acquires no title to the property thus purchased. If goods are sent
to an auction room to sell, this is deemed sufficient evidence of
authority to sell them in that manner and to protect whoever buys
them.
As an auctioneer is ordinarily a special agent, the purchaser is
supposed to know the terms and conditions imposed by the seller on the
agent. The seller or owner therefore is not bound by any terms stated
by the auctioneer differing from those given to him. If the owner has
imposed no terms on him, then he has the implied authority usually
existing in such cases.
An auctioneer has authority to accept the bid most favorable to the
seller when the sale is made without reserve and to strike down the
property to the purchaser. He cannot therefore consistently with his
duty to his principal refuse to accept bids, unless the bidder is
irresponsible or refuses to comply with the terms of the sale. He is
justified in rejecting the bids of insane persons, minors, drunken
persons, trustees of the property, and perhaps in some cases of
married women.
An auctioneer cannot transfer his duty to another. This rule does not
prevent him from employing others to do incidental things connected
with the keeping and the moving of the property. He cannot sell on
credit contrary to his instructions or custom; nor would he be secure
in following custom if instructed to do otherwise. After the bid has
been accepted the bidder has no authority to withdraw it without the
owner's consent, nor can he be permitted to do so by the auctioneer.
Nor can he sell at private sale if his instruction is to sell
publicly, nor can he justify himself even if he acted in good faith
and sold the property for more than the minimum price fixed by the
owners. Nor can he sell the property to himself, nor authorize any
other person to bid and purchase for him either directly or
indirectly. It is impossible with good faith to combine the
inconsistent capacities of seller and buyer, crier and bidder, in one
and the same transaction.
He has no authority to warrant the quality of property sold except
custom or authority is expressly given to him. Nor is he an insurer of
the safety of the goods entrusted to him for sale; he must however use
ordinary and reasonable care in keeping them. Lastly, an auctioneer
should disclose his principal and contract in his name. If one bought
property therefore supposing it belonged to A, when in fact it
belonged to B, through any manipulation of the auctioneer, the bidder
would not be bound.
=Automobile.=--The members of the public have a right to use the
public avenues for the purpose of travel and of transporting property:
nor has the driver of horses any right in the road superior to the
right of the driver of an automobile. Each has the same rights, and
each is equally restricted in exercising them by the corresponding
rights of the other.
Again, the public ways are not confined to the original use of them,
nor to horses and ordinary carriages. "The use to which the public
thoroughfare may be put comprehends all modern means of carrying
including the electric street railroad and automobile." It has been
declared that the fact that motor vehicles may be novel and unusual in
appearance and for that reason are likely to frighten horses which are
unaccustomed to see them, is no reason why the courts should adopt the
view of prohibiting such machines.
The general rule is that all travelers have equal rights to use the
highways. An automobile therefore has the same rights and no more than
those of a footman.
The mere fact that automobiles are run by motor power, and may be
operated at a dangerous and high rate of speed, gives them no superior
rights on the highway over other vehicles, any more so than would the
driving of a race horse give the driver superior rights on the highway
over his less fortunate neighbor who is pursuing his journey behind a
slower horse.
There is no authority or power in the state to exclude non-resident
motorists from the public ways, nor have the states power to place
greater restrictions or burdens on non-resident automobilists than
those imposed on their own citizens.
A license to operate an automobile is merely a privilege. It does not
constitute a contract, consequently it does not necessarily pass to a
purchaser of the vehicle, and may, for a good reason, be revoked.
Moreover the charge imposed for the privilege of operating a motor on
the highway is not generally considered a tax, only a mere license or
privilege fee.
An automobile may be hired from the owner. This is called in law a
bailment. The bailor is not responsible generally for any negligence
of the hirer in operating the car. Nor is the rule changed should the
hirer be an unskilled person, unless he was an immature child or
clearly lacking in mental capacity, or was intoxicated. Where the
owner of an automobile delivered it to another by agreement, who was
to pay the purchase price from the money derived from its use, and
thereafter had complete control of the machine, his negligence could
not be charged to the seller.
Again, where an automobile is hired and the chauffeur is also
furnished by the owner, who pays him for operating the car, and the
hirer has no authority over him except to direct his ways of going,
the chauffeur is regarded as the servant of the owner. He, therefore,
and not the hirer is responsible for the negligence of the chauffeur.
Of course, the rule would be changed if the hirer assumed the
management of the car: then the hirer alone would be liable for the
chauffeur's negligence.
A party who hires an automobile from another is bound to take only
ordinary care of it and is not responsible for damage whenever
ordinary prudence has been exercised while the car was in his custody.
If lost through theft, or is injured as a result of violence, the
hirer is only answerable when these consequences were clearly the
result of his own imprudence or negligence. The hirer though must
account for the loss or injury. Having done this, the proof of
negligence or want of care is thrown on the bailor.
If the hirer should sell the automobile without authority to a third
party, the owner or bailor may bring an action against even an
innocent purchaser who believed that the hirer had the title and power
to sell.
There is an implied obligation on the hirer's part to use the car only
for the purpose and in the manner for which it was hired. And if it is
used in a different way and for a longer time, the hirer may be
responsible for a loss even though this was inevitable.
Suppose the hirer misuses the car, what can the owner do? He can
repossess himself, if this can be done peaceably, otherwise he must
bring an action for the purpose. As the hirer acquires a qualified
title to the property, he can maintain an action against all persons
except the owner, and even against him so far as the contract of
letting may set forth the relations between them.
When an owner or hirer undertakes to convey a passenger to a specified
place and, while on the way, the car breaks down, if it cannot be
properly mended at the time and the owner or hirer is able to furnish
another, the law requires him to do so and thus fulfil his contract.
"The owner of a motor vehicle," says Huddy, "is of course entitled to
compensation for the use of the machine. If a definite sum is not
stated in the contract between the parties, there arises an implied
undertaking that the hirer shall pay a reasonable amount. One who uses
another's automobile without consent or knowledge of the owner, may be
liable to pay a reasonable hire therefor. In case the hirer is a
corporation, there may arise the question whether the agent of the
company making the contract has authority to bind the company. Where a
machine is hired for joy riding on Sunday, it has been held that the
contract is illegal and the hirer cannot recover for the use of the
automobile."
The speed of automobiles along the public highways may be regulated by
law. A municipality may forbid the use of some kinds of motor vehicles
on certain streets, but it cannot broadly exclude all of them from all
the streets. The rules regulating travel on highways in this country
are called, "the law of the road." The object of these rules is to
prevent collisions and other accidents, which would be likely to occur
if no regulations existed.
A pedestrian who is about to cross a street may rely on the law of the
road that vehicles will approach on the proper side of the street.
This rule however does not apply to travelers walking along a rural
highway. Huddy says: "When overtaking or meeting such a person, it is
the duty of both the pedestrian and the driver of the machine to
exercise ordinary care to avoid a collision, but no rule is, as a
general proposition, definitely prescribed as to which side of the
pedestrian the passage shall be made."
The law of the road requiring vehicles to pass each other on the
right, contrary to the English custom, has been reënforced in many or
all the states by statutory enactments, and applies also to
automobiles. When, therefore, two vehicles meet and collide on a
public highway, which is wide enough for them to pass with safety, the
traveler on the wrong side of the road is responsible for the injury
sustained by the other. But a traveler is not justified in getting his
machine on the right-hand side of the road and then proceeding
regardless of other travelers; on the contrary, the duty of exercising
reasonable care to avoid injuries to others still continues.
Not only must each one pass to the right, but each must pass on his
own side of the center line of the highway, or wrought part of the
road. And when the road is covered with snow, travelers who meet must
turn to the right of the traveled part of the road as it then appears,
regardless of what would be the traveled part when the snow is gone.
After passing the rear of the forward vehicle an automobilist must
exercise reasonable care in turning back toward the right into the
center of the highway, and if he turns too soon he may be liable for
damages caused by striking or frightening the horses. "If two vehicles
meet in the street, it is the duty of each of them, as seasonably as
he can, to get each on his own right-hand side of the traveled way of
the street."
The rights of travelers along intersecting streets are equal, and each
must exercise ordinary care to avoid injury to the other. An
automobilist nearing an intersection should run at proper speed, have
his car under reasonable control, and along the right-hand side of the
street. If two travelers approach the street crossing at the same time
neither is justified in assuming that the other will stop to let him
pass. When one vehicle reaches the intersection directly in advance of
the other, he is generally accorded the right of way, and the other
should delay his progress to enable the other to pass in safety.
The driver of an automobile may be charged with negligence if, without
warning to a vehicle approaching from the rear, he turns or backs his
machine and causes a collision. Indeed, it is negligence for a
chauffeur to back his machine on a city street or public highway
without looking backward; and especially if one backs his car on a
street car track without looking for street cars.
If an obstruction exists on the right-hand side of a highway, the
driver of a car may be justified in passing to the other side, and in
driving along that side until he has passed the obstacle. Under such
circumstances he has a right to be on the left side temporarily; and
if he exercises the proper degree of care while there, is not liable
for injuries arising from a collision with another traveler. But if
the obstruction is merely temporary, it may be the duty of the driver
to wait for the removal and not to pass on the wrong side of the
highway.
An automobilist must exercise reasonable or ordinary care to avoid
injury to other persons using the highway. What this is depends on
many circumstances, and each case to some extent is decided by its own
facts. Consequently thousands of cases have already arisen, and
doubtless they will still multiply as long as automobiles are used and
their users are negligent.
The competency of the driver is one of the unending questions. Of
course he should be physically fit, not subject to sudden attacks of
dizziness, possessing sufficient strength and proper eyesight and a
sober non-excitable disposition. It is said, that a chauffeur is not
incompetent who requires glasses. But he certainly would be if his
eyesight was poor and could not be aided by the use of them.
The driver must at all times have his car under reasonable control so
that he can stop in time to avoid injury. He must keep a reasonably
careful lookout for other travelers in order to avoid collision; also
for defects in the highway. If by reason of weather conditions, lights
or other obstructions, he is unable to see ahead of him, he should
stop his car. If there be no facilities for stopping for the night, a
driver is not negligent should he proceed through the fog.
Passing to the liability of the owner of a car for the acts of his
chauffeur, the general rule is, he is then liable when the chauffeur
is acting within the scope of his owner's business. When the owner
himself is riding in the car there is less difficulty in fixing the
liability, but when the chauffeur uses the car without the owner's
consent, he is not liable for the conduct of the driver. And this is
especially so in using a car contrary to the owner's instructions and
for the chauffeur's pleasure; or in using it for his own business with
the owner's consent. And the same rule generally prevails whenever a
member of a family uses his parent's car without his knowledge and
consent, and especially when forbidden. But the parent is liable for
the running of a car with his knowledge by a member of his family and
for the convenience or pleasure of other members. See _Chauffeur_;
_Garage Keeper_.
=Bailor and Bailee.=--To create this relation the property must be
delivered to the bailee. Though a minor cannot make such a contract,
yet if property comes into his possession he must exercise proper care
of it. Should he hire a horse and kill the animal by rash driving, he
would be liable for its value. A corporation may act as bailor or
bailee, and an agent acting therefor would render the corporation
liable unless he acted beyond the scope of his authority.
Suppose one picks up a pocketbook, does he become the owner? Is he a
bailee? Yes, and must make an honest, intelligent effort to find the
owner; if failing to do so, then he may retain it as his own,
meanwhile his right as finder is perfect as against all others. Should
the true owner appear, whatever right the finder may have against him
for recompense for the care and expense in keeping and preserving the
property, his status as finder does not give him any lien unless the
owner has offered a reward to whoever will restore the property. To
this extent a lien thereon is thereby created.
The statutes generally provide what a person must do who has found
lost property. Suppose a person appears who claims to be the owner of
the thing found, what shall the finder do in the way of submitting it
to his inspection? In one of the recent cases the court decided that
it was a question of fact and not of law whether the finder of lost
property had given a fair and reasonable opportunity for its
identification before restoring it, and whether the claimant should
have been given an opportunity to inspect it in order to decide
whether it belonged to him.
The finder does not take title to every article found and out of the
possession of its true owner. To have even a qualified ownership the
thing must be lost, and this does not happen unless possession has
been lost casually and involuntarily so that the mind has no recourse
to the event. A thing voluntarily laid down and forgotten is not lost
within the meaning of the rule giving the finder title to lost
property; and the owner of a shop, bank or other place where the thing
has been left is the proper custodian rather than the person who was
the discoverer.
If a lost article is found on the surface of the ground, or the floor
of a shop, in the public parlor of a hotel, or near a table at an
open-air place of amusement, or in the car of a railroad it becomes,
except as against the loser, the property of the finder, who
appropriates it regardless of the place where it was found. Once a
boat was found adrift and the finder made the needful repairs to keep
it from sinking, yet the owner was mean enough to refuse to pay for
them. The court compelled him to make good the amount to the finder.
The law regards the possession of an article which is lost as being
that of the legal owner who was previously in possession, until the
article is taken into the actual possession of the finder. If the
finder does not know who the owner is and there is no clue to the
ownership, there is no larceny although the finder takes the goods for
himself and converts them to his own use. If the finder knows who the
owner is or has a reasonable clue to the ownership, which he
disregards, he is guilty of larceny.
Another class of cases must be noticed. Very often articles are
delivered to another to have work done on them, hides to be tanned, or
raw materials to be worked up into fabrics. Can a creditor of the
bailee pounce on tanned hides or completed fabrics as belonging to him
and take them in satisfaction of his debt? Both parties have in truth
an interest in the goods, and in general it may be said that the
bailor cannot thus be deprived of his interest and may follow the
goods and recover them or their value.
If they are destroyed while executing the agreement, who must lose? If
the bailee is not negligent or otherwise at fault, and the loss
happened by internal defect or inevitable accident, the bailor would
be the loser. And if workmen had been employed thereon, the bailor
would also be obligated to pay for their labor.
To what extent can a bailee limit his liability by agreement? A bailee
who was a cold storage keeper, stated in his receipt "all damage to
property is at the owner's risk." This limitation related, so a court
decided, to loss resulting from the nature of the things stored. A
bailee received some cheese and gave a receipt slating that it was to
be kept at the owner's risk of loss from water. It was injured from
the dripping of water from overhead pipes. The bailee was,
notwithstanding his receipt, held liable.
A bailor need not always be the owner of the thing bailed. He may be a
lessee, agent, or having such possession and control as would justify
him in thus acting. He should give the bailee notice of all the
faults in the thing bailed that would expose him to danger or loss in
keeping it. For example, if it were a kicking horse, he should warn
the bailee to keep away from his legs.
The courts have been often troubled about the degree of care required
of bailees, as it differs under varying circumstances. A bank that
permits a depositor to keep a box of jewelry or silver in its vault
for his accommodation, while absent from home and without receiving
any compensation therefor, is not required to exercise the same degree
of care as a safe deposit company whose chief business is to do such
things and is paid for its service. Nevertheless a bank must exercise
reasonable care, such care as is used in keeping its own things.
Suppose your package is stolen by the cashier or paying teller, is the
bank responsible? That depends. If the bank knows or suspected the
official was living a gay life, it ought not to keep him, and most
banks would not. It is the better legal opinion, that a bank ought not
to keep a president, cashier or other active official who is
speculating in stocks, for the temptation to take securities not
belonging to them has been too great in many cases for them to
withstand. On the other hand if a long-trusted official, against whom
no cause for suspicion had arisen, should steal a package from the
safe, the bank would not be responsible for the loss any more than if
it had been stolen by an outsider. The bank did not employ him to
steal, but to perform the ordinary banking duties.
A bailee is usually a keeper only. But the nature of the property may
require something more to be done. If he is entrusted with a milch
cow, he must have her milked, or with cattle in the winter time which
require to be served with food, he must supply it, otherwise they
would starve. If he is keeping a horse which is taken sick, proper
treatment should be given.
When the period of bailment is ended, the thing bailed must be
returned. If it consisted of a flock of sheep, cattle and the like,
all accessions must also be delivered. In many cases the bailee is not
required to return the specific property, but other property of the
same kind and quality. Thus if one delivers wheat for safekeeping,
which is put in an elevator, the contract is fulfilled by delivering
other wheat of similar kind and quality; or, if the wheat is to be
made into flour, by delivering the proper amount of the same quality
as the specific wheat bailed. A bailee has a lien for his service and
proper expenditures in caring for and preserving the thing bailed, but
not for any other debt the bailor may owe him. And if the bailee is a
finder who has bestowed labor on the article found in good faith, the
same rule applies.
Agisters and livery-stable men have no lien at common law, like
carriers for keeping the animals entrusted to them because they are
under no obligation to take them into their keeping. In Pennsylvania a
different rule was long ago declared, and has ever since been
maintained. As he can agree on terms, he may make such as are
agreeable to both parties. Elsewhere he can impose his own terms, and
may demand his pay in advance, or create, by contract, a lien if he
pleases. A person who is hired as a groom to a horse for a specified
time and at a fixed price, has no lien on the horse for his service,
but has a lien for feed, keeping and shoeing, which should have been
furnished by the owner. A contract to do this is not necessary to
create the lien, it arises as if the horse had been left for keep and
care without saying more.
=Bankruptcy.=--Before the enactment of the federal Bankruptcy Act of
1898, every state had a bankruptcy act of its own, which was generally
called an insolvency law. The federal act has superseded these by
virtue of the power granted to congress in the federal constitution
"to establish uniform laws on the subject of bankruptcies throughout
the United States."
The United States district courts in the several states are made
courts of bankruptcy and have power to adjudge all persons bankrupt
who have their principal places of business, residence and domicile
within their respective districts; and jurisdiction also over others
who simply have property within their jurisdiction.
Any person who owes debts, or business corporation, may become a
voluntary bankrupt. So may an alien. He may also become an involuntary
bankrupt if he has had his principal place of business here, or has
been domiciled within the jurisdiction of the court for the preceding
six months, or has property within its jurisdiction. Some corporations
are still denied voluntary action, as well as minors and insane
persons.
Who may become an involuntary bankrupt? Any person, except a
wage-earner, or farmer, any unincorporated company, and any
corporation engaged principally in manufacturing, trading, printing,
publishing, or mercantile pursuits, owing debts to the amount of one
thousand dollars. What is a manufacturing corporation, within the
meaning of the law, is not even yet fully known. A corporation engaged
principally in smelting ores is one; and a mining corporation, whose
principal business is to buy and sell ores, is deemed a trading
corporation and may become an involuntary bankrupt.
Next we may inquire, what are acts of bankruptcy? One of them is an
admission of a person's inability to pay his debts. And this may be
done by a corporation through its properly organized officers. Another
act of bankruptcy is to convey, transfer, conceal or remove property
with the intention to defraud creditors. And by concealment is meant
the separation of some tangible thing like money from the debtor's
estate, and secrete it from those who have a right to seize it for
payment of their debts. The transfers of property covered by the act
are those which the common law regards as fraudulent. If, for example,
at the time of the transfer of his property one is so much indebted
that it will embarrass him in paying his debts, the transfer will be
deemed fraudulent; but a voluntary transfer, made by one who is free
from debt, cannot be impeached by subsequent creditors. The intention
to hinder, delay or defraud creditors is a question of fact to be
ascertained by proper judicial inquiry.
A general assignment for the benefit of creditors is an act of
bankruptcy. Likewise a general assignment for the benefit of creditors
made by the majority of the board of directors and of the stockholders
is an act of bankruptcy. A petition for the appointment of a receiver
of a corporation under a state statute is not an assignment for the
benefit of creditors and therefore is not an act of bankruptcy.
Another act of bankruptcy is to suffer or permit, when one is
insolvent, any creditor to acquire a preference through legal
proceedings. The term preference includes not only a transfer of
property, but also the payment of money within four months from the
time of filing his petition in bankruptcy. It is immaterial to whom
the transfer is made if the purpose be to prefer one creditor to
another. Like a fraudulent transfer the intent to prefer must be
proved, though this may sometimes be presumed, as when the necessary
consequence of a transfer or payment made by an insolvent debtor is to
liquidate the debt of one creditor to the entire or partial exclusion
of others.
Passing to the filing of the petition a voluntary petitioner should
file his petition in the court of bankruptcy in the judicial district
where he has principally resided for the preceding six months. When
there is no estate and no claim has been proved and no trustee has
been appointed, a bankrupt may withdraw his petition on paying the
costs and expenses. The petition must be accompanied by a schedule of
the petitioner's property, showing its kind and amount, location,
money value, and a list of his creditors and their residences when
known, the amount due to them, the security they have, and a claim to
legal exemptions, if having any. After filing a voluntary petition the
judge makes an adjudication. He may do this ex parte, that is without
notice to creditors.
A petition may be filed against a person who is insolvent and has
committed an act of bankruptcy within four months after such action.
Three or more creditors who have provable claims amounting to five
hundred dollars in excess of securities held against a debtor may file
the petition, or if all the creditors are less than twelve, then one
of them may file the petition provided the debtor owes him the above
stated amount. Creditors holding claims which are secured, or have
priority, must not be considered in determining the number of
creditors and the amount of claims for instituting involuntary
proceedings. The petition should state the names and residences of the
petitioning creditors, also that of the bankrupt, his principal place
of business, the nature of it, his act of bankruptcy, that it occurred
within four months of the filing of the petition, and that the amount
of the claims against him exceed five hundred dollars. The petition
must be signed and properly verified, and may be afterward amended for
cause in the interest of justice. On the filing of the petition a writ
of subpoena is issued addressed to the bankrupt commanding him to
appear before the court at the place and on the day mentioned to
answer the petition. The next step, after serving the petition, is for
the bankrupt to file his answer. Meanwhile his property may be seized
by a marshal or receiver on proof that he is neglecting it or that it
is deteriorating.
Within ten days after one has been judicially declared to be a
bankrupt, he must file in court a schedule of his property, including
a list of his creditors and the security held by them. Then follows
the first meeting of the bankrupt's creditors, within thirty days
after the adjudication. The judge or referee must be present at this
meeting, also the bankrupt if required by the court. Before proceeding
with other business the referee may allow or disallow the claims of
creditors presented at the meeting, and may publicly examine the
bankrupt, or he may be examined at the instance of any creditor. At
this meeting the creditors may elect a trustee.
Subsequent meetings may be held at any time and place by all the
creditors whose claims have been allowed by written consent: the
court also may call a meeting whenever one fourth of those who have
proved their claims file a written request to that effect.
Only a creditor who owns a demand or provable claim can vote at
creditors' meetings. Nor can other creditors through filing objections
to a claim prevent a bona fide claimant from voting. A creditor of an
individual member of a bankrupt partnership cannot vote. Nor can
creditors holding claims that are secured or that have priority vote
only to a limited extent, so far as their claims are on the same basis
as other creditors. To entitle secured and preferred creditors to vote
at the first meeting on the whole of their claims, they must surrender
their securities or priorities. If a portion of a creditor's debt is
secured and a portion is unsecured, he may vote on the unsecured
portion. An attorney, agent, or proxy may represent and vote at
creditors' meetings, first presenting written authority, which must be
filed with the referee. The referee who presides at the first meeting
makes up or decides on its membership. Matters are decided at the
meeting by a majority vote in number and amount of claims of all the
creditors whose claims have been allowed and are present.
The next stage in bankruptcy proceedings is the proving and allowance
of claims. Only such debts are provable as existed at the time of
filing the petition. Every debt which may be recovered either at law
or in equity may be proved in bankruptcy. A claim barred by the
statute of limitations is not provable, nor is a contingent liability.
On the other hand a debt founded on a contract express or implied may
be proved, for example, damages arising from a breach of a contract
prior to the adjudication in bankruptcy. Again, if there are
agreements or covenants in a contract of a continuing character the
bankrupt is still liable on them notwithstanding his discharge in
bankruptcy. If the amount of a claim is unliquidated the act sets
forth the mode of proceeding. Among other claims that may be proved
are judgments, debts founded on an open account, and rents.
The claims of creditors who have received preferences are not allowed
unless they surrender them. Thus money paid on account by an insolvent
debtor must be surrendered before a claim for the balance due on the
account can be proved. If proceedings are begun by the trustee to set
aside a preferential transfer to a creditor who puts in a defense, he
cannot thereafter surrender his preference and prove his claim. If a
creditor in proving his debt fails to mention his security, if he has
any, he will be deemed to have elected to prove his claim as
unsecured.
Claims that have been allowed may be reconsidered for a sufficient
reason and reallowed or rejected in whole or in part, as justice may
require, at any time before the closing of the estate. The
reëxamination may be had on the application of the trustee or of any
creditor by the referee, witnesses may be called to give evidence, and
the referee may expunge or reduce the claim or adhere to the original
allowance.
The appointment of the trustee by the creditors at their first meeting
is subject to the approval or disapproval of the referee or the judge.
Should the creditors make no appointment the court appoints one. As
soon as he has been appointed it is the duty of the referee to notify
him in person or by mail of his appointment. If he fails to qualify
or a vacancy occurs, the creditors have an opportunity to make another
appointment. If a trustee accepts he must give a bond with sureties
for the faithful performance of his duties. He may also be removed for
cause after notice by the judge only. Should he die or be removed
while serving, no suit that he was prosecuting or defending will abate
but will be continued by his successor.
The trustee represents the bankrupt debtor as the custodian of all his
property that is not exempt; also the creditors, and gathers all the
bankrupt's property from every source and protects and disposes of it
for the best interests of the creditors, and pays their claims. In
short, he succeeds to all the interests of the bankrupt, is an officer
of the court and subject to its orders and directions. He must deposit
all moneys received in one of the designated depositories, can
disburse money only by check or draft, and at the final meeting of the
creditors must present a detailed statement of his administration of
the estate. During the period of settlement he must make a report to
the court in writing of the condition of the estate, the money on
hand, and other details within the first month after his appointment,
and bi-monthly thereafter unless the court orders otherwise.
The federal Bankruptcy Act prescribes what property passes to the
trustee and also what is exempt. Whatever property on which a levy
could have been made by judicial process against the bankrupt passes
to the trustee. On the other hand, the income given to a legatee for
life under a will providing it shall not be subject to the claims of
creditors does not pass to the trustee. If the bankrupt has an
insurance policy with a cash surrender value payable to himself or
personal representatives he may pay or secure this sum to the trustee
and continue to hold the policy. And a policy of insurance payable to
the wife, children, or other kin of the bankrupt is no part of the
estate and does not pass to the trustee.
After one month, and within a year from the adjudication of
bankruptcy, the bankrupt may apply for a discharge. The petition must
state concisely the orders of the court and the proceedings in his
case. Creditors must have at least ten days' notice by mail of the
petition, and then the judge hears the application for discharge, and
considers the proofs in opposition by the parties in interest. Unless
some creditor objects and specifies his ground of objection, the
petition will be granted. The Bankruptcy Act states several reasons
for refusing a discharge, especially when the bankrupt has concealed
his property instead of making an honest, truthful statement
respecting it, or has not kept proper books of account with the
fraudulent intent to conceal his true financial condition and defraud
his creditors.
Lastly a person may be punished by imprisonment for two years or less
on conviction of having knowingly and fraudulently concealed, while a
bankrupt or after his discharge, any property belonging to his estate
as a bankrupt, or made a false oath in any bankruptcy proceeding, or
made any false claim against his estate or used such a claim in making
a composition with his creditors.
=Beneficial Associations.=--Beneficial associations possess a varied
aspect, they are both social and business organizations. Often the
members are bound together by secret obligations and pledges.
Trades-unions have a double nature, they are created for both
beneficial and business purposes. Originally their beneficial
character was the more important feature. Benefit societies may be
purely voluntary associations or incorporated either by statute or
charter.
The articles of association formed by the members are essentially an
agreement among them by which they become bound to do specified things
and incur liabilities. They thus establish a law for themselves
somewhat like a charter of a corporation. They may adopt such rules as
they like provided they are not contrary to the laws of the land. As
the members, having made the rules, are presumed to know them, they
are therefore bound by them.
The legal status of such associations, their right to sue and be sued,
the liability of the members to the public for the debts of the
association, though most important questions, are not as well settled
as they might be. In many states statutes exist defining their right
to sue and be sued, and their liability to creditors. Yet these
statutes do not cover all cases. Generally persons who associate for
charitable or benevolent purposes do not regard themselves in a legal
sense as partners. Nevertheless in fixing their liability to
creditors, dividing their property, and closing up their affairs, the
courts often, though not always, treat their association as a
partnership, and the members as partners. Thus the highest court in
New York declared that an unincorporated lodge, which had been
mis-managed, was not a partnership. The members sought to dissolve the
lodge, and distribute its property. The court said there was no power
to compel the payment of dues, and the rights of a member ceased after
his failure to meet his annual subscription. On the other hand, the
supreme court in the same state held that the members of a voluntary
association were liable to its creditors by common law principles.
"Where such a body of men join themselves together for social
intercourse and pleasure, and assume a name under which they commence
to incur liabilities by opening an account, they become jointly liable
for any indebtedness thus incurred, and if either of them wishes to
avoid his personal responsibility by withdrawal from the body, it is
his duty to notify the creditors of such withdrawal."
If one or more members order work to be done or purchase supplies, he
or they are personally liable unless credit was given to the
association.
What can the members do? They cannot change the purpose for which the
association was formed without the consent of all, still less can the
executive board convert the association into a corporation. No member
has a proprietary interest in the property, nor right to a
proportionate part while he is a member, or after his withdrawal.
Should an association dissolve, then the members may divide its
property among themselves.
Sometimes a quarrel springs up in one of these associations, the
members divide, who shall have the property? The members of more than
one church organization have fought this question, first among
themselves, afterwards in the courts. Suppose a quarrel breaks out in
a branch association and two parties are formed, which of them is
entitled to the property? The party that adheres to the laws and
usages of the general organization is regarded as the true
association, and is therefore entitled to the enjoyment of the
property. Though that party may be a minority of the faithful few, the
members are enough to continue the organization.
Sometimes societies of a quasi religious character exist which persons
join, surrendering their property and receiving support. Suppose a
member should leave, and afterwards sue to recover his property. This
has been attempted, and usually ends in failure.
Are benefit societies charities? This question is important from the
taxpayer's view, as charitable associations are taxed less than others
or perhaps entirely relieved. An Indiana court has decided that a
corporation which promises to pay a fixed sum as a benefit during a
member's illness--he of course paying his dues--is not a purely
benevolent organization, and therefore not exempt from taxation.
Masonic lodges on the other hand, are generally regarded as charitable
institutions. "The true test," says a judicial tribunal, "is to be
found in the objects of the institution."
Again, a voluntary association may conduct in such a way as to create
the impression or belief that it is a corporation, and is forbidden
from denying its corporate liability for an injury or loss to a third
person. It is a familiar rule that a person who transacts business
with a partnership in the partnership name may hold all the members
liable as partners, though he did not know all their names. This rule
has sometimes been applied to a voluntary association, making it
responsible as a corporation.
The articles of association regulate the admission of members. A
physician who applied for membership in a medical society was rejected
because of unprofessional conduct. A code of medical ethics adopted by
the society was declared to be binding only on the members, and
therefore did not touch the conduct of one prior to his becoming a
member of the society. If the membership of a society is confined to
persons having the same occupation, a false representation concerning
one's occupation would be a good reason for his expulsion. In
admitting a member, if no form of election has been prescribed, each
candidate must be elected separately. This must also be done at a
regular meeting or at one properly called for that purpose. A call
therefore to transact any business that may be legally presented is
not sufficient.
If a society requires a ceremony of initiation, is the election of a
member so complete that he is entitled to benefits without proper
initiation? In one of the cases the court said: "The entire system,
its existence and objects, are based upon initiation. We think, there
can be no membership without it, and no benefit, pecuniary or
otherwise, without it."
Controversies concerning property rights of religious societies are
generally decided by one of three rules: (1) "was the property a fund
which is in question devoted to the express terms of the gift, grant
or sale by which it was acquired, to the support of any specific
religious doctrine or belief or was it acquired for the general use of
the society for religious purposes with no other limitation; (2) is
the society which owned it of the strictly independent or
congregational form of church government, owing no submission to any
organization outside of the congregation; (3) or is it one of a number
of such societies, united to form a more general body of churches,
with ecclesiastical control in the general association over the
members and societies of which it is composed."
Many benefit societies provide for the payment of money to their sick
members. The rules providing for the payment of these may be changed
at any time as the constitution or articles of association of a
society may prescribe. Consequently an amendment may be made
diminishing the weekly allowance to a member who is sick, and also the
time of allowing it. Of course in applying for the benefits a member
must follow the modes prescribed.
The power to expel members is incident to every society or association
unless organized primarily for gain. Gainful corporations have no such
power unless it has been granted by their charter or by statute. The
revision of the list of members by dropping names is equivalent to the
expulsion of those whose names are dropped, and by a majority vote or
larger one as the rules of the society may require. Nor can the power
of expulsion be transferred from the general body to a committee or
officer. The power to expel must be exercised in good faith, not
arbitrarily or maliciously, and its sentence is conclusive like that
of a judicial tribunal. Nor will a court interfere with the decision
of a society except: first, when the decision was contrary to natural
justice and the member had no opportunity to explain the charge
against him; secondly, when the rules of the association expelling him
were not observed; thirdly, when its action against him was malicious.
Nor will a court interfere because there have been irregularities in
the proceedings, unless these were of a grave character.
The charges must be serious, a violation of a reasonable by-law is a
sufficient charge. To obtain, by feigning a qualification which did
not exist, membership in a trades-union is sufficient cause for
expulsion; so is fraud in representing one's self in his application
for membership when in fact he has an incurable disease. On the other
hand, the following charges are not sufficient to justify expulsion or
suspension: slander against the society, illegally drawing aid in
time of sickness, defrauding the society out of a small sum of money,
villifying a member, disrespectful and contemptuous language to
associates, saying the lodge would not pay and never intended to pay,
ungentlemanly conduct. In harmony with a fundamental rule of law, a
member who has once been acquitted cannot be tried again for the same
offense.
As subordinate lodges of a benefit society are constituent parts of
the superior governing body, there may be an expulsion from membership
in a subordinate lodge for violating laws which generally caused
expulsion from the society itself, and there may be a conditional
expulsion or suspension. If an assessment is not paid at the fixed
time, its non-payment, by the laws of the order, works a suspension,
though a member may be restored by complying with the laws of the
order.
An appeal by a member of a subordinate lodge from a vote of expulsion
does not abate by his death while the appeal is pending. If,
therefore, the judgment of the lodge is reversed, the beneficiary of
the member is entitled to the benefits due on the member's death. A
member who has been wrongfully expelled may be restored by a mandamus
proceeding issued by a court. Before making the order the court will
inquire into the facts and satisfy itself whether in expelling the
applicant the society has properly acted in accord with its rules.
Unless some rule or statute forbids, a member of a voluntary
association may withdraw at any time. When doing so, however, he
cannot avoid any obligations incurred by him to the association. On
the other hand, it cannot, after his withdrawal, impose any other
obligations on him.
It has often been attempted to hold the members of an association
liable personally for a promised benefit in time of sickness. Says
Bacon: "It may be a question of construction in each particular case
whether the members are personally liable or not. The better rule
seems to be that the members are not held personally liable."
An association cannot by its constitution or by-laws confer judicial
powers on its officers to adjudge a forfeiture of property rights, or
to deprive lodges or members of their property and give it to another,
or to other members. To allow associations to do this is contrary to
public policy. For the same reason an agreement to refer future
controversies to arbitration cannot be enforced; it in effect deprives
a party of his rights under the law. He may do this in a known case,
this indeed is constantly done, but one cannot bar himself in advance
from a resort to the courts for some future controversy of which he
has no knowledge at the time of the agreement. This is a rule of law
of the widest application.
=Broker.=--A broker, unlike an auctioneer, usually has no special
property in the goods he is authorized to sell. Ordinarily also he
must sell them in the name of the principal, and his sales are
private. He receives a commission usually called brokerage. He can act
only as the agent of the other party when the terms of the contract
are settled and he is instructed to finish it. Brokers are of many
kinds. They relate to bills and notes, stocks, shipping, insurance,
real estate, pawned goods, merchandise, etc. A bill and note broker
who does not disclose the principal's name is liable like other agents
as a principal. He is also held to an implied authority, not only to
sell, but that the signatures of all the parties thereon are genuine.
Unless he indorses it he does not warrant their solvency.
An insurance broker is ordinarily employed by the person seeking
insurance, and is therefore unlike an insurance agent, who is a
representative of an insurance company, and usually has the authority
of a general agent. A delivery of a policy therefore, to an insurance
broker, would be a delivery to his principal. He is a special agent.
Unless employed generally to keep up his principal's insurance, he has
no implied authority to return a policy to be cancelled, and notice to
him that a policy had ceased, would not be notice to his principal.
An insurance broker must exercise reasonable care and diligence in
selecting none but reliable companies, and in securing proper and
sufficient policies to cover the risks placed to be covered by
insurance; and if he selects companies which are then in good standing
he would not be liable should they afterward become insolvent.
Merchandise brokers, unless factors, negotiate for the sale of
merchandise without having possession or control of it. Like other
agents they must serve faithfully and cannot act for both parties,
seller and buyer, in the same transaction, without the knowledge and
consent of both. In many transactions he does thus represent both by
their express or implied authority, and therefore binding both when
signing for them.
A real estate broker in the employ of his principal is bound to act
for his principal alone, using his utmost good faith in his behalf.
And a promise by one of the principals in an exchange of real estate,
after the completion of the negotiations, to pay a commission to the
other party's broker, to whom he owed nothing, is void for lack of a
consideration.
To gain his commission a broker must produce a person who was ready,
able and willing both to accept and live up to the terms offered by
the owner of the property. Nor can a property owner escape payment of
a broker's commission by selling the land himself and at a price less
than the limit put on the broker.
The business of a pawnbroker is legally regulated by statute, and the
states usually require him to get a license. As the business may be
prohibited, a municipality or other power may regulate and control his
business. The rate of interest that he may charge is fixed by statute.
The pawnee may lose his right by exacting unlawful interest. Nor has
the pawnee the right to retain possession against the true owner of
any article that has been pawned without his consent or authority. If
the true owner has entrusted it to someone to sell, who, instead of
selling, pawns it, the pawner is protected in taking it as security.
The sale of pawned goods is usually regulated by statute. If none
exists, and there is no agreement between the parties, the sale must
be public after due notice of the time and place of sale. If there is
any surplus, arising from the sale, he must pay it to the pawner, and
not apply it on another debt that he may owe the pawnee. The pawner,
or an assignee or purchaser of the pawn ticket may redeem it within
the time fixed by law or agreement, or even beyond the agreed time if
the pawnee has not exercised his right of sale. Subject to the
pawnee's claim, the pawner has the same right over the article pawned
as he had after pawning it, and may therefore sell and transfer his
interest as before. Lastly the pawner is liable for any deficiency
after the sale of the thing pawned, unless released by statute. See
_Agency_.
=Carrier.=--Carriers are of two kinds, private and public. A private
carrier may contract orally or in writing, and must use such care in
carrying the goods entrusted to him as a man of ordinary intelligence
would of his own property. If he carries these gratuitously his
obligation is still less, nevertheless he must even then take some
care of them. Suppose he agreed to carry a package for another to the
latter's home, and on the way, being weary or sleepy, should sit down
by the wayside where people often pass and fall asleep and on
awakening should find the package missing, would he be responsible?
Authorities differ. Suppose the package was a very valuable one. A
court might hold that the man who gave it to him was a fool for
entrusting such a package voluntarily with him. Suppose however that
he was a highly trustworthy man, well known throughout the
neighborhood, then no fault could be imputed to either, and the owner
would be obliged to bear the loss.
Common carriers are far more numerous and important. Receiving a
reward they are required to exercise more care in the business. The
old rule of the common law was very strict, but this has been greatly
modified. A carrier may modify the rule by contract, and the bill of
lading received by the shipper is regarded as one, and sets forth his
liability. In a general way he can relieve himself from all liability
except from his own negligence, and there are cases which hold that he
can relieve himself even from that if the shipper, for the sake of
having his goods carried at a lower price, is willing to relieve him,
in other words is willing to assume all the risk himself.
A carrier can limit his liability for the loss of baggage entrusted to
his care and when one receives a receipt describing the amount of the
carrier's liability in the event of loss. Nor can he hold the company
on the plea of ignorance by declaring he has not read it, for it is
his duty to read the receipt. Again, a carrier is thus liable only
when a traveler's baggage is entrusted to his care; if therefore he
keeps his grip or umbrella and on looking around makes the painful
discovery that he has been relieved of them, he cannot look to the
carrier for compensation.
The law requires carriers to carry all who pay their fare, and are in
a sufficiently intelligent condition to take care of themselves. In
like manner the law requires them to take all freight that may be
offered, though it may make reasonable rules with regard to the time
of receiving it, mode of packing, etc. A regulation therefore that
furniture must be crated is reasonable, and a carrier may refuse to
take it unless it is thus prepared for shipment. So also is a rule
requiring glass to be boxed though the distance may be short for
carrying it. A carrier may also object to carrying things out of
season, potatoes or fruit for example in the winter in the northern
states where there is great danger of freezing, unless the shipper
assumes the risk. Vast quantities of perishable goods are carried, but
usually under definite regulations and contracts. So, too, the shipper
must declare the nature of the thing carried. Should he put diamonds
in his trunk, he could not recover for their loss, for he has no
business to carry such a valuable thing in that way. He must make
known the contents for the carrier's protection. He cannot carry an
explosive in secrecy. To attempt to do such a thing is a manifest
wrong to the carrier.
A carrier has a lien or right to hold the freight until the charge
for transporting it is paid, but if it is delivered, the lien ceases
and cannot be restored. If the carrier keeps it until the freight
charge is paid discretion must be used, and unnecessary and
unreasonable expense must not be incurred in so doing.
A different rule applies to carrying passengers than applies to
freight, because the latter is under its complete control, while
passengers are not. Nevertheless the law requires a high degree of
care in carrying passengers, and is responsible in money damages
should injury occur through the carrier's negligence. In many states
statutes exist limiting the amount that a carrier must pay when life
is lost through its negligence to five thousand dollars or other sum,
while a much larger sum is often recovered for an injury, loss of a
leg, arm or the like. From the carrier's point of view therefore it is
often obliged to pay less for killing than for injuring people; this
is one of the strange anomalies of the law.
When a passenger is injured and no agreement can be made with the
carrier for compensation, a suit is the result and the chief question
is one of fact, the extent of the injury, and the degree of negligence
of the carrier. If, on the other hand, the passenger was in fault
himself and contributed to the injury then the more general rule is he
can recover nothing. In some states the courts attempt to ascertain
the negligence of both parties, when both are at fault, and then award
a verdict in favor of the one least in fault. This is a difficult rule
to apply however just it may seem to be.
A passenger who stands on a platform or on the steps of a street car,
when there is room inside, assumes all the risks himself. But if there
is no room within and the conductor knows he is outside, and permits
him to ride, he is under the same protection as other passengers. An
interurban car had stopped and A who was carrying two valises
attempted to board it. The act of the conductor, who was on the rear
platform, in reaching down and taking one of the valises amounted to
an invitation to A to board the car. In signaling to the motorman to
start the car when A was stepping to the vestibule from the lower
step, thus causing the injury to him, was negligence for which the
company was liable.
A sleeping car company operating in connection with ordinary trains is
not a common carrier, nor an innkeeper as to the baggage of a
passenger. Yet it is liable for ordinary negligence in protecting
passengers from loss by theft. In a well-considered case the judge
said: "Where a passenger does not deliver his property to a carrier,
but retains the exclusive possession and control of it himself, the
carrier is not liable in case of a loss, as for instance, where a
passenger's pocket is picked, or his overcoat taken. A person asleep
cannot retain manual possession or control of anything. The invitation
to make use of the bed carries with it an invitation to sleep, and an
implied agreement to take reasonable care of the guest's effects while
he is in such a state that care upon his own part is impossible. I
think it should keep a watch during the night, see to it that no
unauthorized persons intrude themselves into the car, and take
reasonable care to prevent thefts by occupants."
There is a distinction between the great express companies of the
country and local express companies receiving baggage from travelers
for transportation to their immediate destination. In the latter case
there is nothing in the nature of the transaction or the custom of the
trade which should naturally lead the shipper to suppose that he was
receiving and accepting the written evidence of a contract, and
therefore he is not bound by the terms of the receipt received, unless
there is other evidence that he assented thereto.
Though the United States is a common carrier for carrying mails, it
cannot be held liable because it is a branch of the government. Mail
matter may be carried by private persons, but this is limited to
special trips. By statute no person can establish any private express
for carrying letters or packets by regular trips or at stated periods
over any post route, or between towns, cities or other places where
the mail is regularly carried.
A public officer in performing his duties is exempt from all
liability. But a postmaster is liable to a person injured by his
negligence or misconduct and for the acts of a clerk or deputy
authorized by him. The assistant unless thus shielded must answer for
his own misconduct. A rider or driver employed by a contractor for
carrying the mails is an assistant in the business of the government.
Although employed and paid, and liable to be discharged at pleasure by
the contractor, the rider or driver is not engaged in his private
service; he is employed in the public service and therefore the
contractor is not liable for his conduct.
=Chattel Mortgage.=--A chattel mortgage is a conveyance of personal
property, as distinguished from real property, to secure the debt of
the lender or mortgagor. The essence of the agreement is, if the
mortgagor does not repay the money as he has agreed to do, the
mortgagee becomes the owner of the property. Until the mortgagor
fails to execute his part of the agreement, he retains possession of
the property. By statutes that have been enacted everywhere, the
mortgagee's interest, or conditional title in the property conveyed to
him, is secure by recording the deed even though the mortgagor still
retains possession.
The usual form of a chattel mortgage is a bill of sale with a
conditional clause, stating the terms of the loan and that, on the
mortgagor's failure to pay, the mortgagee may take possession of the
property. Any persons who are competent to make a contract may make a
chattel mortgage, and an agent may act for another as in many other
cases. When thus acting his authority may be either verbal, or
written, or may be shown by ratification. Persons also who have a
common ownership in chattels, tenants in common or partners for
example, may mortgage either their common or individual interests. A
husband may give a chattel mortgage to his wife, and she in turn can
give one to him. Likewise a corporation may make such a mortgage.
The law is broader in the way of permitting a minor, married woman, or
corporation to be mortgagees when they cannot act as mortgagors of
their property. Two or more creditors may join in such a mortgage to
secure their separate debts. If the debt of one of them is fraudulent,
his fraud, while rendering the mortgage fraudulent as to him, will not
affect its validity as to the other.
How must the mortgaged property be described? With sufficient
clearness to enable third persons to identify the property. The
description must contain reasonable details and suggest inquiries
which if followed will result in ascertaining the precise thing
conveyed. A description of a baker's stock "stock on hand," would be
too meager, so would be a description of "our books of account, and
accounts due and to become due," but cattle described by their age,
sex and location will satisfy the law, though the cattle of other
owners should form part of the same herd, when they can be ascertained
by following out the inquiries suggested by the mortgage. Again, a
description that is wholly false avoids the mortgage, but if it is
false only in part, this may be rejected and the mortgage remain valid
for the remainder.
More generally the nature of the chattels conveyed determine largely
the character of the description. Thus animals may be described by
weight, age, height, color and breed; vehicles by their style and
manufacturer's name; furniture by piece or set; crops growing or to be
grown by their location and year. A general claim of "all" articles in
a stated place is regarded as sufficient. Oral evidence is admissible
to aid the description in identifying the subject-matter of the
mortgage, and to explain the meaning and extent of the terms of the
description.
A mortgage may be given for a future advance of money. Nor need the
mortgage state that it is thus given; and the fact may be proved
orally. But when the right of third parties are affected, such a
mortgage is not valid against them unless the specific sum that is to
be secured is set forth. Likewise to render a mortgage secure against
attaching creditors of the mortgagor, there must be a distinct
statement of the condition or terms of the mortgage; in other words
the creditors have a right to know what interest the mortgagee really
has in the property that secures to him rights superior to their own.
The rule should also be stated that where the rights of third parties
are in issue, it must appear that the mortgagee acquired the mortgage
before they had any rights to the property.
The statutes require that chattel mortgages should be acknowledged and
recorded. In some states the requirements are strict in respect to the
disinterestedness of the official who takes the acknowledgment. An
affidavit is another requirement. This must state several things,
especially that the mortgage was given in good faith, and the nature
and amount of the consideration.
What may be mortgaged? In general, any personal property that may be
sold; many of the statutes define it. They cover a life insurance
policy, corporation stock, railway rolling stock, seamen's wages,
growing crops and trees, profits from the use of a steamboat, premiums
earned by a horse, book accounts, leasehold interests, nursery stock,
besides many other things. Whenever fixtures annexed to real estate
retain the character of personal property they may be mortgaged. And
when animals are mortgaged their natural increase are included. A
mortgage made of an unfinished article will hold the article when
finished if it can be identified.
By the common law nothing could be mortgaged that was not in existence
at the time of the mortgage. By statute a mortgage may cover
after-acquired property, and this statute has become very important
especially with merchants, manufacturers, and others who are
constantly changing their stocks of goods.
When the mortgagor fails to pay his debt, the right of the mortgagee
to proceed in taking the property is usually regulated by statute,
except when the parties have agreed themselves and in conformity with
statute. The rights of the mortgagee depend in many cases on the
title, whether that has passed to him by virtue of the mortgage, or
whether it still remains conditionally in the mortgagor. Where the
mortgagor still retains the title, a clause is often put into the
mortgage to the effect that, should the mortgagor default in payment,
the mortgagee may take possession of the property and sell it; and
such a provision is valid and enforcible. Where the title is vested or
transferred to the mortgagee by virtue of the mortgage, this is
equivalent to giving him possession whenever he chooses to demand it.
In other states the mortgagee's discretion is not so broad, before
taking possession he must have reasonable grounds for believing
himself insecure, that the mortgagor has done, or threatens to do,
something that would impair the mortgagee's security.
Where the common law prevails and no statute has been enacted
regulating the rights of parties, an important question is still
unsettled in cases of a mortgage given on a stock of merchandise which
permits the mortgagor to remain in possession and to sell the property
mortgaged in the course of trade. Can he do this? In many states such
a mortgage is regarded as fraudulent to creditors, in other states if
such a mortgage is not, on proper judicial inquiry, proved to be a
fraud, it will be upheld.
A provision in a mortgage that it shall cover after acquired property
is regarded in some states as an executory agreement that it shall be
held by the mortgagee as security; and the mortgagee may take
possession of it, should the mortgagor fail to pay his debt, in
accordance with his promise, before the rights of third persons have
intervened. See _Mortgage_.
=Chauffeur.=--In many states minors are forbidden by statute to run
automobiles. If therefore the owner of a car permits a minor to drive
his car, he may be held liable for the injuries resulting from the
driver's negligence. Should a chauffeur's license not disclose
physical disabilities the license is not void, nor is he a trespasser
in operating the machine on the highway. Such a license though
defective is valid until revoked by the proper authority.
If discharged before the expiration of the term of his employment, an
employer is still liable for his chauffeur's pay unless he has been
unwilling or unable to fulfill his contract. If, however, he has been
prevented by sickness or similar disability, he can recover, not
perhaps the amount stated in the contract, but the worth of his
services during the period of serving his employer.
A chauffeur may recover damages from his employer for injuries
received while operating his car. The basis of the action is his
employer's negligence. If the engine "kicks back" while he is cranking
the car, and the employer contributed to the result by moving the
spark lever, he is liable. If he is injured while running a car from a
defective brake of which he had knowledge, he cannot recover. But if
the employer knew, and the chauffeur did not know that the brake was
defective, he could recover if injured in consequence of it. The
employer is under no duty to warn his chauffeur of obvious dangers, or
instruct him in matters that he may be fairly supposed to understand.
If a chauffeur is riding at the owner's request, who is driving the
car, he may recover if injured by the negligence of the owner in
running the machine. Under the Workmen's Compensation Laws a chauffeur
who is injured while running his car beyond the speed limit
prescribed by statute can recover nothing. Nor is he justified by the
custom of other chauffeurs in disregarding the rule. Lastly, if the
owner of a car is injured, physically or financially, by reason of the
wrongful conduct of his chauffeur, he has a remedy against him. See
_Automobile_; _Garage Keeper_.
=Check.=--A check should be properly signed. A check signed by an
individual with the word "agent," "treasurer," or other descriptive
term, has sometimes been regarded as the check of the individual
signer, and not that of a principal or company. The proper way is to
sign the name of the principal or company, adding the name of the
person by whom this is done, thus: "John Smith by John Doe, agent," or
"The Atlas Co. by John King, Treasurer," or other official
designation.
The statement will not accord with the view of many a reader, that a
bank on which a check is drawn is under no legal agreement with the
holder to pay it, whether the maker has a sufficient deposit or not.
Consequently, should the bank refuse to pay, the holder has no cause
of action against the bank. The agreement to pay is between the bank
and the depositor, and if the bank fails to fulfill its agreement with
him, he has a just cause for complaint. Sometimes a bank declines to
pay supposing, through an error of bookkeeping perhaps, that the
depositor has not money enough there to pay his check. In such a case,
as the bank is in the wrong, if the depositor has suffered from loss
of credit or in any other way from the bank's action, it must respond
and make the loss good.
Suppose a person presents a check and the maker's deposit is not
enough to pay the full amount, what can be done? Usually the bank
declines to pay. Suppose the holder says he is willing to give up the
check and take the amount in the bank? There is no reason why the bank
should not accede to his wishes. Suppose a bank should pay more than
the amount on deposit through no fraud of the holder, from whom can it
recover the amount? If the holder has been free from wrong in
presenting the check, the bank cannot look to him, but to the drawer
for repayment. If the maker of a check has no money in the bank,
perhaps he may not be a depositor, he commits a fraud in making and
giving his check to another, and the offense in many states is deemed
a crime: likewise a person who receives such a check knowing its true
nature is equally deep in the wrong.
The law is very strict in its requirement of banks when paying the
checks of customers. After a check has been delivered and has
therefore passed beyond the maker's control, the law requires the
greatest care on the part of a bank in paying it. The bank must be
especially careful in examining the signature and the amount, and if
the signature has been forged, or the amount changed, the bank is
liable for an improper payment. Once an employer gave his trusted
clerk a post-dated check, which he was to present on the day
specified, and, after drawing the money, was to pay this to his
employees. The clerk changed the date to an earlier one, drew the
money, kept it and fled. The court said the bank should have detected
the alteration. The bank contended that had the clerk waited until the
proper day, and then drawn the money, it would not have been liable.
The court said that was not the case presented, the clerk did not
wait. Banks suffer, far more than the public knows, from the payment
of raised checks, for it is quite impossible always to detect them,
yet banks are held liable therefor.
There are two rules relating to the payment of checks worth
mentioning. One is, the maker of a check should use proper precaution
in making it. He should write in a way that will not be likely to
confuse the paying official. For instance, if in the above case the
maker, intending to give a post-dated check, had written the date so
imperfectly that the teller was misled, the bank would not have been
liable for paying it, or for refusing to pay because there was not
money enough in the bank at the time of presentation for payment. Some
persons are very careless in making figures; when they are, they
cannot look to the bank for the ill consequence of their own neglect.
Again, if a bank paid forged checks, for example, which were returned
with other checks on the balancing of a depositor's book, and months,
perhaps years afterward, the depositor discovered the forgeries or
forged indorsements, he could, notwithstanding the lapse of time,
demand of the bank the sums wrongfully paid. This was a great hardship
to banks, and has been corrected in many states by statutes and by the
courts in others. The rule now is, the depositor must, within a
reasonable time after the return of his bank book, examine it, also
his checks, and, if payments have been improperly made, demand
immediate correction.
The holder of a check should demand payment within a reasonable time
after he has received it. He may keep it longer if he pleases, but if
he does, and the bank should fail, he cannot demand payment again from
the maker of the check. He in effect says to the holder of the check
when giving it to him, "present this check to the bank within the
proper time and it will be paid, if you keep it longer, you do it at
your risk." What is a reasonable time? The law has fixed it. If the
bank is in the town or city where the holder of the check dwells, he
must present it the day he received it, or the next day. If it is
drawn on a bank outside, the check must be forwarded for presentment
at the latest on the day after it is received. With respect to the
first class of checks therefore if the maker and receiver are both
depositors of the same bank, the operation on the part of the bank
consists simply in debiting one account and crediting another with the
amount; if checks are drawn on another bank in the same city the
receiver usually deposits them in his own bank and they are paid
through the clearing house the next day.
A drawer may stop the payment of his check. And when he requests the
bank to do so it must heed his instruction, and is liable if
neglecting, though not always for the whole amount of the check.
Suppose the check was given for a bill which the maker actually owed,
yet for some reason, after giving the check, he did not wish to pay.
If it was actually due and undisputed it would be hardly just to
require the bank to pay the check over again to the holder, this would
be too much. But for whatever injury the maker of the check may have
sustained the bank must make good.
When a check has been certified by the bank on which it is drawn, the
effect of the certification after the drawer has parted with it "is
precisely as if the bank had paid the money upon that check instead of
making a certificate of its being good." The check is charged up to
the maker, or should be, and therefore as between him and the bank has
been paid.
=Citizen.=--In modern usage this means a member of the body politic
who owes allegiance to the nation and is entitled to public
protection. One may be a citizen of the United States without being a
citizen of any state, for example, a citizen of the District of
Columbia, or the territory of Alaska. Citizen-ship implies the duty of
allegiance to the government, and the right of protection from it. A
citizen of the United States who resides in a state owes a double
allegiance, and can demand protection from each government. For the
ordinary rights of person and property he looks to the state for
protection. The rights for which he can seek the protection of the
United States are only such as are established by the constitution and
federal laws. For some purposes even a corporation may be included
within the term citizen, for example the right to sue in the federal
courts as a citizen of the incorporating state.
By the fourteenth amendment of the federal constitution, all persons
born in the United States and subject to its jurisdiction are citizens
of the United States. In 1855 Congress passed an act conferring
citizenship on alien women who should marry American citizens. An
American woman therefore who marries an alien takes the nationality of
her husband. When her marital relation ends she may elect to retain
her marital or her original citizenship. Since minor children follow
the status of their parent, by the marriage of an alien widow to an
American citizen, her children also become American citizens.
An alien may be naturalized. To do this he must have continuously
resided in the United States for five years before his application,
and he must have appeared in court at least two years before, and
there declared his intention to become a citizen of the United States
and to renounce allegiance to his former sovereign. He must prove by
the oath of at least two persons his residence, also during that time
that he has behaved as a man of good moral character and attached to
the principles of the federal constitution. He must take an oath to
support and defend the constitution and laws of the United States and
renounce allegiance to any foreign prince. The naturalization of a
person confers citizenship on his minor children if dwelling in the
United States, also on his wife, unless she is of a race incapable of
American citizenship.
The rights of aliens, from the very beginning of the American
government, have been expanded by treaty provisions and by liberal
legislation. In nearly all the states resident aliens were given the
right to take title to land, whether by deed or by inheritance, to
hold such real estate and to transfer it by law or by descent. In some
states they were given the right to vote and hold office. And at
common law they were entitled to purchase, own and sell personal
property, engage in business and to make contracts and wills. By the
fourteenth amendment to the federal constitution their rights and
privileges have been further secured.
Aliens owe to the country in which they reside a temporary and limited
allegiance, that is, an obligation to obey its laws and subject
themselves to the jurisdiction of the courts. A non-resident alien is
not within the terms of the fourteenth amendment, indeed it is
doubtful if he can ask any aid or relief under the state or federal
constitutions. A statute therefore imposing a higher inheritance tax
on property passing to a non-resident alien than on his property if he
resided here is valid. Non-resident aliens can acquire no rights
incident to residence here except as permitted by the federal
government. This power may be exercised, either through treaties made
by the president and senate, or through statutes enacted by congress.
So congress has excluded not only diseased, criminal, pauper and
anarchist immigrants, but also contract and Chinese laborers.
=Contracts.=--At the outset the various kinds of contracts should be
explained so that the principles which apply to them may be better
understood. One of the divisions is into simple contracts and
specialties. A simple contract may be verbal or it may be in writing,
but no seal is appended to the signatures of the parties. A specialty
is in writing and a seal is added to the signature. A written contract
may be a duplicate of another with a seal, yet the two belong to
different classes and different rules of law apply to them as we shall
learn.
Another classification is into executed and executory contracts. An
executed contract, as the name implies, is completed, an executory
contract is to be executed or completed. An unpaid promissory note is
an executory contract, when paid it becomes an executed one.
Another classification is into express or implied contracts. An
express contract is one actually made between two or more persons or
parties; an implied contract is one that the law makes for the
parties. Suppose a man worked a day for another at his request, and
nothing was said about payment, the law would require him to pay a
reasonable sum for his day's work. Another kind of contract
technically called quasi contract differs somewhat from an implied
contract and will be explained in another place.
To every contract there must be two or more parties, who have the
legal right to make it. Not every person therefore who wishes to make
a contract can legally do so. Of those whose ability to contract are
limited are minors or infants. The period of infancy is fixed by law,
and is therefore a conventional, yet needful regulation. In most
states infancy ends at the age of twenty-one, though some states fix a
younger period, eighteen for women. A person becomes of age at the
beginning of the day before his twenty-first birthday. The reason for
this rule is, the law does not divide a day into a shorter period or
time except when this is required in judicial proceedings. Another
class of incapable contractors are married women. Their disability
however has been largely removed by statutes in all the states, as we
shall learn in another place.
Insane and drunken persons also are under disability to make
contracts. By the old law a drunken man who made a contract was still
liable, and required to fulfill as a penalty for his conduct. A more
humane rule now prevails and he can be relieved, though like a minor,
if he wishes to avoid a contract, he must return the thing purchased,
in other words he can take no advantage of his act to the injury of
the other contracting party. If however he has given a negotiable note
that has passed into the possession of an innocent third person, who
did not know of his drunkenness at the time of making it, he can be
held for its payment. It is not quite so easy to state rules that
apply to insane persons because their conditions vary so greatly. A
person may be insane in some directions and yet his insanity may not
be of a kind affecting his capacity to make at least some kind of
contracts. Again, he may have lucid intervals during which he is
quite as capable of contracting as other persons. And again when an
insane man has made a contract, the relief to which he is entitled
depends on circumstances. In some cases he may repudiate it, a partial
fulfillment only may be required.
The law has much to say about the consideration that is an element in
every contract; in other words, there must be a cause, something to be
gained by the parties in every contract to sustain it. If A should
promise to give to B a house next week, and on the day fixed for
transferring it A should change his mind, he could not be compelled to
transfer it, for the promise would be without any consideration or
thing coming from B. But if the house had been transferred, A could
not afterwards repent of his act and demand its return. An executed
gift therefore, free from all fraudulent surroundings, is valid: the
donor of an executory gift is free to withhold its execution.
A consideration need bear no relation or adequacy to the other thing
that is to be received. Nothing is more frequent than a one-sided
contract, in which one party has gained far more than the other. If
the law attempted to adjust these cases, many more courts would be
needed than now exist.
We will briefly note the need of consideration in some classes of
cases. First, a voluntary undertaking to work for another without
compensation cannot be enforced. Under this head is the promise to pay
the debt of another. Why should one do such a thing? Let us remember
that should one make such a promise and keep it, the money could not
be recovered back, that is quite another thing. Again, if A owed B a
debt and delayed payment, and B should say to him, "if you will pay me
half of it next week I will give up the rest," B would not be bound
by his promise. Suppose that B learning that A had ample means to pay,
should sue him, A could not relieve himself from liability by offering
to pay the amount A promised to take in settlement of the debt. But
should B accept one half, in fulfillment of his promise, that would be
the end of the matter.
Again should a bank defaulter make good the amount taken, and the
directors, in consideration thereof, promise to take no steps towards
his prosecution by the government, there would be no valid
consideration to sustain the promise. The state would be just as free
to prosecute him as before. Very often such criminals are not
prosecuted after returning all or a part of their unlawfully taken
money, nevertheless no settlement of this kind stands in the way of
prosecution.
Suppose A agreed to work for B for a month and, after working a week,
should leave him without good reason, can he recover for his week's
work? If he can get anything, he cannot claim it under his contract
for he has broken it and therefore a court could not enforce it. If he
can recover anything it is on the implied contract which the law
makes, the worth of his work after deducting the loss to his employer.
Suppose the employer should prove that he had lost more by A's going
away when he did than he had gained by his week's work, he could
recover of B, for the rule works both ways. In some states he cannot
recover anything, for, having broken his contract, he has no standing
in court.
Suppose one signs his name to a subscription paper, calling for the
payment of money, to build a church, for example, and the designated
amount has been subscribed, can a subscriber refuse to pay? He
cannot. Suppose he withdraws before the subscriptions have been
completed, what then? He can refuse. If a subscription has not been
completed, death operates as a revocation and the subscriber's estate
is not held for the amount. Sometimes a moral obligation to pay money
is a good consideration for a promising to pay it. Thus if one owes
another for a bill of goods, and the debt has ceased to be binding by
lapse of time, yet he should afterwards promise to pay, he could be
held on his promise because there was a good consideration for the
debt. Lastly a contract may be modified by mutual agreement without
another consideration.
Another element in a contract is mutuality, a meeting of minds in the
same sense. In every contract there is an offer made by one party and
an acceptance or refusal by the other. When an acceptance occurs,
there is a meeting of minds, or an assent. Very often the parties do
not understand each other, they acted hastily, ignorantly perhaps,
their minds did not really meet in the same sense. In such cases there
is no contract.
Generally the acceptance must be at the time of receiving the offer.
If it is not, there is no meeting of minds, no assent. A person
however may make an offer on time, this is common enough. When this is
done the other party must furnish some kind of consideration to make
the offer good for anything, otherwise the offerer can withdraw his
offer whenever he pleases. Many an offeree has been disappointed by
the action of the other party in withdrawing his offer, yet the
offerer has been clearly within his rights in doing so when he has
received no consideration for giving the other party time to think
over his offer.
An eminent jurist has said "that an offer without more is an offer in
the present to be accepted or refused when made. There is no time
which a jury may consider reasonable or otherwise for the other party
to consider it, except by the agreement or concession of the party
making it. Until it is accepted it may be withdrawn, though that be at
the next instant after it is made, and a subsequent acceptance will be
of no avail."
If no time is given, or no consideration for the time given, an offer
therefore may be withdrawn as soon as made if not accepted. A person
may suddenly think of something which leads him to withdraw his offer
as soon as it is out of his mouth, and in doing so is within his
rights, but if he does not, how long does his offer last? A reasonable
time. What this is depends on many things, one of the questions like
so many others in the law to which no definite answer can be given. An
offer to sell some real estate was accepted five days afterward, this
was held to be within a reasonable time. One can readily imagine cases
in which five days would not be thus regarded, or even five hours.
When does assent occur in contracts made by correspondence? The rule
is in nearly every state (Massachusetts being the chief exception)
where an offeree has received an offer by letter and has put his
acceptance in the postoffice, the minds of the parties have met and
made a contract. The post-office is the agency of the offerer both to
carry his offer and bring back the return. If the offeree should use a
different agency, the telegraph for instance, to convey his
acceptance, it would not be binding until the offerer had received and
accepted it. Of course, an offerer by letter may withdraw his offer at
any time. Suppose he should receive an acceptance by letter or
telegraph but deny it, and insist that no contract had been made. Then
the controversy would turn on the proof. If the acceptance had been by
letter, and the offeree could prove that the offeree had written and
mailed it, the offeree's proof would be complete. If the offeree sent
a telegram, then he would be obliged to prove the delivery of the
dispatch. Suppose one should mail a letter of acceptance, but before
its receipt by the offerer, should send a telegram declining the offer
which was received before the letter of acceptance? The acceptance
would stand, for as there had been a meeting of minds when the letter
was put into the postoffice, the offeree could not afterwards withdraw
his offer. A person who makes an offer cannot turn it into an
acceptance. An old uncle wrote to his nephew that he would give thirty
dollars for his horse and added, "If I hear no more about the matter,
I consider the horse is mine." The game did not work, for no man can
both make and accept an offer at the same time, and that is what the
foxy uncle tried to do.
Offers and rewards are often made through the newspapers. Thus the
owner of a carbolic smoke ball offered to pay a specified sum to any
one who suffered from influenza after using one of his smoke balls in
accordance with directions if he was not cured. A person who failed to
receive the benefit advertised recovered the reward. Two other cases
may be mentioned that illustrate the uncertainty of the law. An
excited farmer offered the following reward, "Harness stolen! Owner
offers $100 to any one who will find the thief, and another $100 to
prosecute him!" The farmer cooled off and declined to pay after the
thief was caught and the court relieved him, declaring that his
advertisement was not an offer to pay a reward, but simply an
explosion of wrath. In another case a man's house was burning, and he
offered $5,000 to any one who would bring down his wife dead or alive.
A brave fireman accomplished the feat. This offerer too cooled off and
declined to pay, but he did not escape on the ground that this was
only an explosion of affection, and was obliged to pay.
Lastly a contract dates from the time of acceptance, and is construed
or interpreted by the law of the place where it was made. If it is to
be performed in another place, then the parties must be governed by
the law of that place in performing it.
A contract having been made, next follows its execution. When a
contract is not executed, or not executed properly, the party injured
usually may recover his loss. Sometimes the contract states what the
offending or wrongful party must pay should he fail to execute it.
Many questions have arisen from such agreements. Suppose a contractor
agrees to build a home for another and to finish it within a fixed
time, and, failing to do so, shall forfeit or pay to the other $5,000
as a penalty for his failure. One would think that if he failed to
execute it the other party could demand the $5,000. But the courts
have a way of their own in looking at things. Suppose the contractor's
failure did not in fact result in any loss whatever to the other
party? The courts in such a case are very reluctant to enforce the
agreement. If there had been a loss, something like that amount, then
the courts would compel him to pay. In other words, the most general
rule is, notwithstanding such a clearly written agreement, the courts
seek to do justice between the parties. Whenever the parties do not
attempt to fix the damages themselves, should their contract not be
fulfilled, then the amount that may be recovered depends on a great
variety of circumstances. Suppose a woman should go to a store to buy
a piece of silk. She asks if the piece shown to her by the saleswoman
is all silk, who makes an affirmative reply. The buyer knows much more
about it than the saleswoman, which is often the case in buying
things, and knows it is half cotton, can the buyer recover anything?
Surely she has not been deceived. The seller may have tried to fool
her but did not, and having failed, the buyer has no legal ground for
an action. On the other hand, if the buyer was ignorant, knew nothing
about silk and had been deceived by the seller, then she would have a
clear case. This is one of the fundamentals in that large class of
cases growing out of deceit. The party seeking redress, must have been
deceived, and also injured by the deceit in order to recover. The
remedies that may be employed whenever contracting parties have
failed, or partly failed to fulfill their agreements or promises will
be considered under other heads. See _Deceit_; _Drunkenness_; _Quasi
Contract_.
=Corporations.=--There are many kinds of corporations. Those most
generally known are business corporations; and though many of them are
very large, legally they are private corporations. A railroad
corporation, though performing a public service, nevertheless is a
private corporation.
Public corporations are formed for governing the people and are often
called municipal corporations. They are created or chartered by the
legislatures of the states wherein they exist. Formerly, all private
corporations in this country were granted charters by the legislative
power, and many corporations are doing business by virtue of the
authority thus granted to them. More recently general statutes have
been enacted whereby individuals may form such corporations without
the aid of a legislature. Authority has been conferred on the courts,
secretary of state, or other official to grant to individuals, who may
apply for them, charters on complying with the requirements of these
statutes. There are other kinds of corporations, religious, charitable
and the like; only one other need be mentioned, to which the term
quasi has been applied. These resemble corporations in some ways, and
this is the reason for calling them quasi corporations. A county or
school district is such a corporation. The supervisors of a county, or
the trustees of a school district, can make contracts, own and manage
real estate for their respective bodies, sue and be sued like the
officers of other corporations.
By the general comity existing between the states corporations created
in one state are permitted to carry on any lawful business in another,
and to acquire, hold and transfer property there like individuals.
FORMATION OF CORPORATIONS.
Formerly charters were granted to corporations for a long term of
years, or forever. The policy of the law has changed in this regard,
and the duration of their existence is limited to a comparatively
short period. The life of a national bank is only for twenty years; at
the end of that period the charter is renewed, and the charters of the
older national banks have been renewed several times. Perpetual
charters are infrequently granted, and some of the older ones have
been limited by legislative or judicial action. A private corporation
had perpetual authority to build and maintain a bridge across the
Susquehanna River at Harrisburg, nor could any other company build one
within the distance of ten miles above or below. Notwithstanding this
clear and exclusive grant, another company was formed which attempted
to build a bridge within a mile of the other. The old company tried to
prevent by law the new company from building the bridge. The court
said that "perpetual" did not mean literally perpetual, but a long
time, that the old company had enjoyed its exclusive grant a long
time, long enough, and that the new company was justified in its
undertaking.
A corporation has no heirs like an individual; it continues through
succession, one sells his interest or stock to another, and thus it
lives to the end of its charter unless it fails or, through some other
event, comes to an end. Suppose a stockholder buys all the stock of
the other members, does the corporation still exist? It does for a
limited time. How long? No court has answered this question. It
depends on the particular case. The courts also say, that he can sell
his stock to other individuals and thus practically revive a dying
corporation. A stockholder who had bought all the stock of a
corporation claimed that he should be taxed as a corporation, which
was at a lower or favored rate than that paid by individuals. The
court said the game would not work, that for the purposes of taxation
the concern must be regarded as an individual. So the stockholder knew
more after that decision than he did before.
CAPITAL.
Every private corporation has a capital composed usually of money,
which is advanced or paid by its members or shareholders. Among the
reasons for forming corporations two may be stated. It is a way for
collecting money from many sources needful for an enterprise; the many
contributors are like the small streams that unite and create a great
reservoir. The other reason is, the contributors are free from the
liabilities that attach to every member of a partnership for its
entire indebtedness. A stockholder may indeed, if his corporation does
not succeed, lose a part or all of the capital he has contributed, but
no more or only a fixed amount, as will be hereafter explained.
Almost anyone can subscribe for stock, with a few limitations. A minor
cannot subscribe for stock, nor can his guardian act for him.
Doubtless they do subscribe in some cases; the practical difficulties
will be shown in another connection. A married woman cannot always
subscribe, unless by virtue of a statute. What usually happens when
she wishes to subscribe is to act through a friend, who, after the
corporation is fully formed, transfers the stock to her. There is no
legal stone in the way of such a course.
Sometimes fictitious subscriptions are made to induce others to
subscribe for stock. Whenever the fraud is found out an innocent
subscriber can do one of three things. If he has paid for his stock,
he can bring an action to recover it; if he has not paid, he can
refuse to do so, and set up the fraud as a defense. He can do another
thing, accept the stock and sue for the damage he has sustained by the
deceit that has been practiced on him. The discovery of a fictitious
subscriber among the number, after all have subscribed, where his
action in subscribing did not affect their action, will not justify
them in not fulfilling their obligation to pay for their shares.
The issuing of a share certificate is not an essential condition of
ownership. It is merely evidence of it, like the deed of a piece of
real estate. All the shareholders of a corporation are the owners
whether any certificates are issued to them or not. Of course a
stockholder desires to have his certificate for obvious reasons.
Whenever the capital stock of a company is increased, each shareholder
has a right to his proportionate number of the new shares on
fulfilling the terms on which they are issued before they can be
offered to the public. Occasionally a clique seeks to get control of a
corporation by the issue of new stock and taking it among themselves.
They can be defeated for the courts carefully guard the rights of all
stockholders to take their shares of new stock before it can be
offered to, and taken by others.
Of late years private corporations have been issuing a kind of stock,
called preferred, that must be explained. Formerly such stock was more
like a loan of money to a company, and was issued primarily as the
most feasible way of getting a fresh supply of money capital. The
lenders or takers of the stock received a fixed per cent. on their
money, which was paid before the common shareholders received
anything. His preference or dividend was not guaranteed, but the
probability of regular payment was so strong in most cases that his
shares usually possessed a real value. Preferred shareholders are not
liable for the debts of their corporations, and the right to vote at
any meeting of the shareholders is sometimes given to them, though not
always. The tendency of the day is to confer this right on them.
Whether, when the amount of the preferred stock is increased, the
preferred shareholders are entitled to subscribe for their
proportionate amount, like common shareholders, is an open question.
The authority of agents or commissioners to receive subscriptions is
strictly regarded. They cannot refuse to receive a subscription made
by a competent person, nor release a subscriber, nor vary the terms of
subscription to anyone.
A subscription for shares is a contract in writing and cannot be
proved by oral evidence unless the original subscription paper has
been lost. As the contract is an open one, any subscriber must inform
himself of the legal consequences of subscribing, and cannot therefore
refuse to execute it on the ground of ignorance or misunderstanding.
Suppose an agent who was soliciting subscriptions, in reply to
questions concerning the laws relating to the proposed company, should
give incorrect answers to a subscriber, these would furnish no ground
for refusing to pay, as he has promised to do, for he could have found
out what the laws were without inquiring of the agent. This may seem a
hard rule, yet it has a wide application. In one sense it is true that
every person can find out the law for himself, the books are open, the
statutes especially may be easily found, but how many know enough to
find the laws in which they are interested?
Of course if a person has been deceived by an agent, if a fraud has
been practised on him, he can avoid his contract. Thus a person who,
unable to read a subscription paper, was induced to subscribe through
misrepresentation of its contents, was not bound by it. If he wishes
to act, he must lose no time after discovering the fraud that has been
practiced on him. He cannot say, "I will abide by a company if
successful, and will leave it if it fails." He must therefore decide
at once either to continue his membership or withdraw.
A company cannot purchase its own shares unless by charter or statute
such action is clearly authorized. For, to do this is to reduce its
assets or fund for paying its indebtedness, which the law will not
permit to be done. If a company has no debts, a reduction in its
capital made in an open manner in accordance with law, is legal. The
tendency of the times everywhere is to increase the capitals of
private corporations; reductions though are sometimes made to lessen
especially the burden of taxation.
A corporation has no lien on its stock for the indebtedness of the
owner unless conferred by charter or statute. Once such a lien could
be established by usage or by-law under authority given to a
corporation to regulate the transfer of its stock. The national
banking law prohibits the creation of such liens, and the strong
current of the law runs in this direction. But a bank can retain a
dividend that has been declared to reduce the indebtedness of the
owner to the bank for his stock.
LIABILITY OF SHAREHOLDERS.
The liability of the shareholders of a corporation is very unlike that
of members of a partnership. It was the liability of each partner for
all the debts of a concern that kept many persons from forming that
relation. The shareholders of many corporations are liable only for
the amount they have contributed and paid, or have agreed to pay.
National bank shareholders are liable for another sum, equal to the
par value of their stock, provided as much may be needed to pay its
debts should the bank fail. Thus if a shareholder owned ten shares,
having a par value of $100 a share, he might be required to pay,
should the bank fail, $1,000 more provided as much was needed to pay
its debts. In a few states shareholders are required to pay twice the
amount of the par value of the stock if as much may be needed to pay
its indebtedness.
If a corporation fail, one or more persons are usually appointed by a
court to settle its affairs, who are called receivers. Several years
are sometimes required to settle the affairs of a corporation. First
an inventory is made of its property, names of the debtors and
creditors, and the amounts due from and to them, and as soon as its
property can be converted into cash, dividends are declared and paid
to the creditors; and this work is continued until there has been a
disposition of all the property, and the amount received therefrom
less the expense of the receivership, has been paid to the creditors.
When the shareholders are required to pay more, as above explained, on
the failure of their corporation, they are notified by the receiver
how much and when they must pay. This requirement is based on an order
from the court that appointed him, which, in turn, is based on
information which he has furnished to the court of the amount that may
be needed to pay the debts of the corporation. Several assessments may
be ordered, but they never exceed in the aggregate more than the
amount of liability fixed by law, the amount or twice the amount of
the par value of the stock subscribed. Should shareholders decline to
pay these assessments as ordered, the receiver sues them and obtains
judgments, the proceeds of which are paid to the creditors.
MEETINGS.
The power of a corporation vests or rests in its members. The charter
and statutes provide that they shall meet, organize, elect officers,
and adopt by-laws for the more detailed governing of the corporation.
One of the most general principles pertaining to them is, the majority
shall rule. This however may be modified by charter or statute. There
are a few ancient charters which provide that, notwithstanding the
quantity of stock a shareholder may own, he is entitled to only one
vote. The writer knows of a case in which a shareholder bought nearly
all the stock of a corporation and went to the annual meeting
supposing that he could and would do as he pleased. On learning the
unwelcome truth that he had only one vote like the others he quickly
put on his hat and walked out.
The statutes usually prescribe how notice of the joint meeting shall
be given. They are not mandatory, but directory, hence if all the
persons in a corporation should come together without any notice or
call whatever, and accept the charter, and do any other thing needful
to form the corporation, their action would be valid. Where the
regulations of a corporation definitely fix the place, the day, and
hour of the annual meeting at which the directors are to be elected,
no further notice of the meeting to the stockholders is needed unless
required by its charter or by-laws.
A case may arise in which other persons than those designated by
statute may call a meeting. Suppose a statute prescribes that the
persons named in the certificate of incorporation, or any three of
them, may call a meeting of the shareholders, and before giving notice
all of them had died? Then the meeting could be called by others.
Again, authority to create a corporation may fail through long delay
in calling a meeting and organizing. Should the notices for the first
meeting not be given as the law requires, it is nevertheless valid if
the shareholders have notice and join in waiving the mailing of the
required notices. Likewise a subscriber waives his notice of the first
meeting when he afterwards offers to pay for his shares.
If the by-laws require that an annual meeting shall be held at a
particular time, and those whose duty it is to call it, forget to do
so, it may be held afterwards, and the officers elected and other
business transacted would be as valid as if the meeting had been held
at the proper time.
Should the officer who ought to call a meeting refuse to do so he may
be compelled by law to call it. This proceeding is called a mandamus,
and is issued at the instance or request of the shareholders.
"Besides annual meetings, corporations hold many stated or regular
meetings at monthly or other times. Thus if a meeting of proprietors
must be called by twelve of them, a call signed by eleven is
defective. If a statute requires a committee of a society to sign the
call, it cannot be signed by the clerk, nor by him for them. If the
trustees of a corporation must issue the call, this cannot be done by
the president. If exclusive authority to issue the call is vested in
the directors, it cannot be exercised by the president and secretary.
If the articles of association provide that meetings of shareholders
may be called by the board of directors, or by any three shareholders,
the president and cashier cannot issue a valid call. But if a board
consists of three members and there is a vacancy, the other two may
act and give the notice."
A well understood distinction exists between the calling of regular
and special meetings. Regular meetings are held in the way set forth
in the charter and by-laws of a corporation; special meetings are
called at irregular times on proper authority. A notice for a special
meeting must state the object of it, and no other business can be
transacted. On the other hand unless the regular meeting is of great
importance no mention need be made of its object in the notice.
An authorized meeting may be adjourned from time to time without
giving further notice, for it is only a continuation of the original
meeting. Says an eminent judge: whether a meeting is continued without
interruption for many days, or is adjourned from day to day, or from
time to time, many days intervening, it is evident that it must be
considered the same meeting.
A meeting may be legally held though one of its members is incapable,
physically or mentally, from receiving notice. "The law cannot look
into the capacity of the stockholders to transact business, but can
only regard the capacity of the aggregate body when duly assembled."
On the death of a stockholder, the purchaser, if the stock has been
sold, should have it transferred, or give distinct notice to the
company how notices of its meetings should be sent to him; if
neglecting to do this, he cannot charge the corporation with neglect
should it continue to send notices to the former address.
Two other points may be mentioned concerning notices. One is, they may
be waived and this is often done. Many a question though arises, what
action amounts to a waiver of notice. If each shareholder attends in
person or by proxy and participates in the meeting, he cannot
afterward question its legality because he received no notice of it.
An improper notice may also be cured by ratification. Thus if a
secretary calls a meeting instead of the directors, and his action is
properly ratified by them, the call is effective. More generally, the
action of a meeting will be declared valid where it appears that every
stockholder who did not participate in the meeting ratified its action
afterwards. An election of trustees of a church may be valid even
though the notice lacked the proper length of time and the names of
the trustees whose seats became vacant at the election, if it was
fairly conducted and all who had the right to vote were present.
Likewise a stockholder who knows of the sale of his railroad, though
not legally notified of the meeting which authorized its sale, and was
not present, may be bound by its action through acquiescence. And a
stockholder who, after receiving notice of a meeting called by the
directors to consider their neglect of duty and who decides not to go,
is not thereby prevented from taking action against them by the
stockholders who did attend and authorized their unauthorized action.
Lastly a stockholder who was present cannot complain that notice was
not given to others; the objection is personal.
Next we may inquire, who can vote at such meetings? Unless prevented
by charter, statute or by-law a stockholder may vote at any corporate
meeting even though no certificate of stock has been issued to him.
Nor does his indebtedness for his stock prevent him from voting. On
the other hand if inspectors were not bound by the record of ownership
in the company's books and went behind them to find out the real
ownership of the company's stock, they would often have a grave task
before them. Consequently in many, perhaps all of the states, only
stockholders or those holding proxies for them can vote at a general
election. By statute the stock record of ownership is usually made the
conclusive test of the right to vote. Stockholders who thus appear on
the stock books at the date of a meeting are entitled to vote the
stock.
A trustee is the legal owner of stock standing in his name and may
vote the stock for all purposes; but a testator may impose limitations
on his voting power. Should trustees under a will holding a majority
of the stock of a corporation disagree, and one of them should be
enjoined from voting it, a minority stockholder would be entitled to
an injunction to restrain the other trustee from holding an election
or voting the stock alone until the right to vote the stock had been
legally decided.
A different rule applies to a naked trustee who holds the title to the
stock without any real interest in it. He can indeed vote, but in the
way directed by the beneficiary or real owner. In Colorado, by
statute, perhaps in some other states, a person to whom stock has been
issued as trustee without the knowledge of the owner, is not a bona
fide stockholder and cannot vote.
An executor has the power to vote the stock of his testator. And if
one of joint executors issues a proxy authorizing the vote of the
stock belonging to the estate, and the other executor is present at
the stockholders' meeting, the vote of the stock by the executor who
is present is deemed a revocation of the proxy given by his
co-executor. And if a will gives to one of three executors the power
to vote the stock, and directs the other two to give him a proxy for
that purpose, which they decline to do, a court will order the proxy
to be given. And whenever stock is held by executors who are not
united in voting it, they cannot vote at all. A foreign executor
should present to the inspectors of election an exemplified copy of
his letters of administration, and having done so may vote on the
stock standing in the testator's name. An administrator has the right
to vote stock belonging to the estate, even though it has not been
transferred to him in the corporation's books.
A partner of a firm who owns stock in a corporation may represent the
stock in all meetings. He may therefore receive and waive notice of
them, vote when attending them, in short, participate in all matters.
And on the death of a partner the surviving partner has the right to
represent the partnership and vote on its stock.
Two other kinds of stockholders still require mention, sellers and
purchasers of stock and pledgors and pledgees. Until a transfer is
entered on the books of a corporation, "the transferee, as between
himself and the company, has no right beyond that of having the
transfer properly entered. Until that is done, the person in whose
name the stock is entered on the books of the company is, as between
himself and the company, the owner to all intents and purposes, and
particularly for the purpose of an election."
Many questions have arisen between pledgors and pledgees about their
rights to vote the pledged stock. Of course, whenever an agreement has
been made by them this must be respected. In other cases, if the
record remains unchanged, the pledgor can vote the stock. But if the
pledgor has transferred his right to vote the stock, he cannot ask a
court to restore his right to vote it until the purpose for which it
was pledged has been satisfied. Again a pledgor who pledges his stock
not in good faith as security for a loan, but to enable the pledgee
to vote it and effect an unlawful purpose, cannot do this and so
defeat a statute which provides that the real owner, the pledgor, may
vote his stock.
Passing to the pledgee, whenever he is registered as owner of the
stock on the company's books, its officers will not look behind these
to ascertain whether he is the real owner or not when he is voting his
stock. A court of equity though may do this, and enjoin a pledgee from
voting the stock whenever the pledgor's rights would be affected.
Should the pledgor acquiesce for years in the control of the stock by
the pledgee, who is the record owner, and not inform the company of
his ownership until the holding of a contested election, he would be
too late to claim the right to vote. Finally when a certificate of
stock has been assigned in blank as collateral security, which is
often done, and never transferred to the pledgee on the books of the
corporation, a memorandum only having been made on the stub of the
certificate in the stock book, the pledgee is not a stockholder and
cannot vote the stock. It may be added that notices of meetings should
be sent to whoever has the right to vote the stock, to the pledgor if
the stock still stands in his name, to the pledgee if the stock has
been transferred to him and stands in his name.
DIRECTORS.
Shareholders manage their corporations through directors or trustees
elected for that purpose. The business of some corporations is managed
by trustees who are named in the charter and who fill vacancies in
their number by electing others themselves, a self-perpetuating body.
Many savings banks especially are thus organized and continued. From
their number they usually select a smaller number to manage or direct
its affairs.
The directors are always shareholders, unless the charter of a
corporation permits the election of outsiders, a thing that rarely
happens. The national banking act requires that every director shall
own at least ten shares of stock, and many other corporations have
similar requirements. The charter or statutes prescribe at least the
minimum number that must be elected, but the maximum number is left to
the stockholders themselves. A national bank must have five directors,
not infrequently the board is composed of ten, fifteen, or even more.
A director is chosen for some real service that he is likely or
willing to perform. An individual may be chosen a bank director who
may not be able to do much in directing the affairs of the bank, yet
by reason of his wealth or business relations he may be able to
attract business to the bank and thus greatly promote its prosperity.
He is elected by a majority of the votes of the shareholders. More
recently the cumulative system of voting has come into general favor.
By this system a voter may cast as many votes for each of the
candidates as he holds shares of stock, or he may distribute or
cumulate his votes on a smaller number. "Where the votes under such a
system are cast and counted, the validity of the election must be
determined precisely as in all other cases." Where the shareholders
have failed, whether voting cumulatively or otherwise, to elect a
quorum of the new board, at an annual meeting of stockholders, it is
the privilege of the shareholders to ask for successive voting for
directors to fill the board. The ruling of a chairman on one occasion,
that because of a tie further balloting could not proceed, and that
the old board held over was arbitrary and illegal. A stockholder who
has votes enough to elect himself and other directors by cumulating
his shares in voting, but refrains from doing so in consequence of a
verbal agreement among the stockholders that he shall be chosen
president, which they fail to carry out, cannot obtain any
satisfaction from a court. A court says in effect stockholders should
not be trusted to make such agreements, and will not aid the tricked
stockholder by ordering a new election. Probably he will be fooled
only once.
Having elected directors, the management of a corporation is confided
to them. What authority do they possess? This is defined by charter,
statute, by-law, and custom. Says Morawetz: "The rule limiting the
authority of the power of the majority to the general supervision of
the affairs of the corporation is established for the protection of
the individual shareholders, as well as for reasons of practical
consequence." Directors also have wide discretion in delegating their
authority. Their rights and limitations in this regard are also
bounded by charter, by-laws and usage. Formerly bank directors loaned
the money of their bank; this was their most important duty. Of late
years, especially in the larger cities, this business has been largely
delegated to a committee, chosen from their number, or to two or three
officials of the bank. The directors continue to meet, very much as
before and at their meetings the action of those who have been
entrusted with power to lend the bank's money is ratified. More and
more authority to direct or do the greater things in a corporation are
concentrated in the hands of a smaller number of individuals. Time is
ever becoming a more important element, a smaller number of men can
act more quickly than a larger number, and so business must be more
and more concentrated to be done efficiently.
A director has no authority to act separately and independently. Only
as a board, properly convened, does he represent his corporation.
While this is the law, he can and does in fact often act singly, and
his action becomes effective to bind his corporation by ratification.
Such action plays a great part in the modern corporation.
Though a principal may at any time, as a general rule, revoke the
authority he has given to an agent, this does not apply to the
directors of corporations. Says Morawetz: "The majority of the board
clearly have no power to expel an individual director, or to exclude
him from inspecting the company's books and participating in its
management, although they may believe him to be hostile to the
interests of the association." A president or other official is chosen
pursuant to the charter to serve for a year or other period, and is
simply an agent in serving the corporation, he cannot be turned away
like an ordinary agent. If he conducts fraudulently, he may be
removed, but this is not an easy process as corporations long ago
found out.
Directors in most cases receive no compensation though the practice is
growing of rewarding them. Unless this is fixed by charter or by the
stockholders they can get nothing, for they cannot legally vote
salaries to themselves. A director who performs a different service,
serves as an attorney, for example, may receive compensation for it.
This is a salutary rule of the law, which the courts everywhere do not
hesitate to enforce. By another rule, hardly less important, directors
cannot bind their corporation by any contract made with themselves, or
represent their corporation in transactions wherein they have an
interest. This is only another application of a rule of agency, that
an agent cannot act at the same time for both parties. Yet there is
increasing difficulty in applying this rule because the business of
corporations has become so intermingled, and also the business of
directors, directly or indirectly, with that of the corporations they
represent. From this state of things has come another rule, that the
transactions between directors and their corporations are not actually
void but voidable, in other words if they are tainted with fraud, they
can be set aside provided proper action is taken as soon as the fraud
is discovered.
Suppose directors had defrauded their corporation, but the fraud was
not discovered until several years afterward. Once it was held that
they could shield themselves behind the Statute of Limitations (see
_Statute of Limitations_) if the discovery of the fraud did not occur
until after the Statute had become effective to protect them. This is
no longer the law. Action however must be begun against them within
the proper time after discovering the fraud, otherwise the Statute may
be interposed as a bar to proceeding against them.
The complication of business has led to the adoption of another
principle in managing corporations. A majority of the directors may
lawfully act as opposed to the minority; in other words if a majority
are not interested in a matter that concerns one or more of the
minority directors, the interests of the corporation are supposed to
be properly safeguarded. Yet an illustration discloses the dangerous
character of this method of doing business. Suppose each director of a
bank wished to obtain a loan of money from it. They could not legally
make such loans, for no one would represent the bank. Suppose a
single director made such an application, that would be a proper thing
for him to do and for them to grant, for the bank would be represented
by all the directors except the applicant. Suppose it were agreed in
advance that each would make an application at different meetings that
should be favorably regarded, the series of loans would be in fact
only a single transaction in which the bank was not represented.
The knowledge of a director or other officer is imputed to, or
regarded in the law as known by the bank on all matters relating to
it. Thus if a director knew that a note was signed by a minor which
was afterwards presented for discount at a directors' meeting at which
this director was present, and he forgot to tell the directors what he
knew and it was discounted, the bank would be regarded as having
knowledge that the maker was a minor, who of course could not be held
on the note. This principle has a very wide application, yet is very
difficult to apply. The tendency of the law is to narrow the
application of the rule, for directors do not in many cases impart
their knowledge, either through forgetfulness or other cause, and it
is not just to hold their corporation always for their unintentional
neglect. Often they are busy men, have greater interests of their own,
and do not remember the things they learn about matters relating to
their corporation, and if it were always held as knowing as much as
they do on all occasions, the way of a corporation would be fraught
with a grave peril.
A proper distinction is made in the imputation of knowledge between
that of a bank director for example who is engaged chiefly in some
other business, and that of its president whose chief employment is
the management of his bank. Suppose he should learn about a defective
note before it was presented for discount, the bank would be very
properly charged with his knowledge, because it would be his clear
duty to remember what he had learned and impart it to his fellow
directors.
Directors sometimes go astray and cases are constantly arising to
determine their liability. When a corporation has failed or passed a
dividend nothing is more common than to accuse its directors of
negligence, incompetence or fraud. The legal rule of liability is
quite a different thing. Let us try to give this in the fewest words
possible. The charters of corporations, or statutes that apply to
directors, prescribe some definite things which they must do or not
do, and if these are violated they are clearly liable. The directors
of a bank are required to make a statement of its affairs to a
government official at a stated period, and if they neglect to do it,
or intentionally make a wrong and deceptive one, they are liable. By
many statutes they are forbidden to make loans above a certain amount,
or a fixed proportion of their bank's capital, and if they violate
this plain law they are liable. In all other cases where by charter or
statute a plain rule of duty is prescribed for directors, they are
liable, should they disregard it.
Besides these clearly defined lines of duty are other lines of duty in
which the proper course of action is not so clearly defined, indeed is
largely discretionary. From the nature of the business of almost any
kind of corporation, it is impossible to prescribe in detail the
course of action directors must follow. Much must be left to their
judgment. They must on all occasions be honest and free from fraud.
This is one limitation. If they are guilty of doing things tainted or
marked with fraud, they are liable. Fraud may be of two kinds,
omission and commission. If a director knew that his fellow directors
were doing fraudulent things, and he kept away from directors'
meetings because he did not wish to participate in their wrongdoing,
or dared not go and try to stop them, or kept silent when he should
have exposed them, he must suffer in the end as one of the number
though entirely innocent of actual participation in the fraud. Many a
director knowing or suspecting with good reason that his fellow
directors were running the corporation in an illegal manner, has
quietly sold out leaving the stockholders to find out afterwards and
from some other source about the wrongdoing of their agents. In all
such cases of omission of duty a director is held responsible for the
wrongs of his associates.
Recently a court has declared that a director who desires to escape
further responsibility by resigning his position must make sure that
his resignation reaches the board. If therefore he should send it to
the secretary, who failed to deliver it to the board, his resignation
would not be effective and he would still be responsible like the
other directors for whatever the board might do.
What acts are fraudulent are sometimes difficult to determine.
Different courts interpret the same act sometimes in different ways.
They do not differ so much on the application of the principle--for
all acts of fraud, whether of omission or commission, directors are
liable.
There is another series of acts for which they are liable, those of
gross negligence. How gross must the act be? If it is so gross as to
amount to a fraud, they are liable; if not so gross, if no fraud is
found of any kind, nothing but negligence pure and simple, they are
not liable at all. Most courts though go further and declare that if
they are guilty of gross negligence, even though the smell or taint of
fraud is not perceptible, they are liable. What, then, is the nature
of the acts that constitute gross negligence? These cannot be easily
defined, they differ in each case; so each case stands by itself. This
is the conclusion of the highest court in the land and which is
followed by many others. The same case therefore may be regarded
differently by different tribunals. Thus some directors were tried not
long since for wrecking a national bank. The lower court decided that
all the directors were guilty of gross negligence, on appeal the
reviewing court decided that the president only was guilty of fraud
and acquitted the others.
DIVIDENDS.
One of the most cheerful things a corporation can do is to declare a
dividend, especially if it be a large one. Until a dividend is
declared the profits of a corporation are simply its assets, do not
belong to the stockholders, and should it become insolvent must be
used to pay creditors. But if a dividend has been declared and the
corporation afterwards becomes insolvent before paying it, the
stockholders may insist on its payment to them instead of paying it to
the creditors.
Dividends must be paid from net profits. They can never be taken from
the capital, for this would impair it and, if continued, result in the
insolvency of the corporation. The laws everywhere forbid this, and,
if violated, the directors are usually penalized. It is not an
infrequent thing to declare a dividend that has not been earned in
order to keep up the value of the stock, and enable the directors and
their friends to sell out before the true condition of things has
become public. Such action is a palpable fraud which the law
recognizes and for which the guilty ones must answer.
Nor can dividends be declared out of borrowed money, for this is no
profit, though money may be temporarily borrowed for this purpose. A
profit may have been actually made, which may not have been reduced to
money, that will justify a corporation in borrowing to pay a dividend,
assured that the loan will soon be repaid. But the rule or practice is
hedged about with limitations. Thus the premiums received by an
insurance company and interest on its capital stock constitute the
fund from which dividends are paid. Unearned premiums that have been
paid do not form a part of that fund, for, while the risk is still
running, the company may be obliged to pay them out in settling
losses.
The profits of coal and other mining corporations may be divided
without making any deduction for decrease in the value of the mine
from extracting minerals. The same principle applies to all
corporations organized to operate wasting property like a mine or
patent, though in thus dividing all its net profits and accumulating
no surplus the value of the property is lessened. Except such cases,
before a corporation can lawfully set apart its profit as a dividend,
a sufficient sum must be set aside to represent the wear and tear for
the purpose of creating a fund to renew and improve the property of
the corporation.
Dividends illegally declared and paid, not based on profits may be
recovered either by the corporation or by its representative for the
benefit of creditors. The fact, says Clark, that the directors acted
in good faith under a misconception of the amount of profits possessed
by the company or that were available for that purpose is immaterial.
And if the capital stock of a company has been wrongfully paid away by
the directors as dividends, it may be recovered by the creditors from
anyone who is not an innocent receiver.
Whether a dividend shall be declared, and also the amount, are
questions lying largely within the discretion of the directors. A
company may earn a large net profit, yet the directors may think it
should be used for improvements or kept for a future contingency in
business, perhaps a time of business depression. Courts will not
interfere in such cases. Corporations are sometimes organized with the
well understood intention that the earnings shall be kept until a
large surplus has been accumulated. On the other hand directors are
not permitted to abuse their power; they must act in good faith. They
cannot withhold dividends in order to depress the value of the
property and buy its stock at a lower price.
Dividends must be distributed among the stockholders without unjust
discrimination. "The dividends," said a court, "must be general on all
the stock so that each stockholder will receive his proportionate
share. The directors have no right to declare a dividend on any other
principle. They cannot exclude any portion of the stockholders from an
equal participation of the profits of the company." A stockholder
cannot be deprived of his dividend because he purchased his stock a
very short time before the action of the directors in declaring a
dividend. On one occasion a person held bonds convertible into stock.
Shortly after the conversion a dividend was declared. He was as much
entitled to his dividend as any other stockholder.
To whom should the dividend be paid? To the person whose name appears
as owner on the books of the company. But if a company has notice of a
transfer of stock, a dividend subsequently declared should be paid to
the purchaser even though the transfer was not registered. In pledging
stock it is a common practice to declare that the pledgee shall be
entitled to the dividends that are declared. If nothing is said, and
the stock has been transferred on the books of the company, the
pledgee is entitled to the dividends following the general rule above
mentioned.
A dividend may be payable in cash or property or a stock dividend may
be made. Such a dividend, if the stock is issued only to the extent of
the surplus profits, is not a violation of the prohibition against
reducing or withdrawing the capital stock by distribution among the
stockholders.
During recent years some important questions have arisen about
dividends or income on stock given by will to the legatees or friends
of the testator. Dividends that are declared after a grant or bequest,
though earned before, go to the legatee as income. This is not the
rule everywhere. In some states the surplus profits accumulated during
the testator's life, though not divided until after his death, belong
to the estate, while the dividends or income earned and declared after
his death are paid to the legatee or beneficiary mentioned in the
will. Again, a somewhat different rule applies to stock dividends. In
some states these are regarded as an increase of capital and must be
kept as a part of the estate; in other states such stock is regarded
simply as another form of income and goes to the legatee like any
other income flowing from the investment. The highest federal court
has declared that when a distribution of earnings is made by a
corporation among its stockholders, the question whether such
distribution is an apportionment of additional stock representing
capital, or a division of profits and income, depends upon the
substance and intent of the action of the corporation, as manifested
by its vote or resolution; and ordinarily a dividend declared in stock
is to be deemed capital, and a dividend in money is to be deemed
income of each share.
A will bequeathed stock in a corporation in trust to pay the dividends
as they accrued to a daughter of the testator during her lifetime.
Stock dividends were declared by the corporation from time to time and
after the death of the testator, and these accumulated earnings were
invested by the company in permanent works. After the testator's death
the corporation was authorized by statute to increase its capital
stock. The dividends were held to be accretions to the capital, and
the income only was payable to the daughter for life.
WRONGS.
Passing from the action of directors in declaring dividends, the
wrongs done by corporations may be stated. As it is an impersonal,
artificial thing, a corporation cannot possibly commit a wrong or tort
like a natural person. For many years this conception of a
corporation, that it could not commit many of the well-known wrongs,
could not slander a person for example, led to perplexing
consequences. Finally the principle was established that through its
agents or servants a corporation could do wrong quite like an
individual. Thus a corporation may be guilty of malice, and may be
punished for slander or libel, for a malicious prosecution, false
representation, for trespass should its agents unlawfully enter on the
land of another, for maintaining a nuisance and the like. A national
bank is forbidden to certify the check of a depositor unless he has
the amount of money stated in the check in the bank. And if this is
done the certifying official and all others who participated with him
in disregarding the law are made criminally liable, and on several
occasions the law has been enforced.
Again, a corporation is liable for the negligence of its servants in
performing their duties, and are constantly sued for their failures. A
railroad company is sued for injuries to its passengers caused by the
improper running of its trains; for its failure to carry and deliver
freight in accordance with its obligations or agreements. Street
railways are constantly sued by passengers who are injured through the
negligence of its officials.
By statutes corporations are required to do many things and, if they
fail, are liable for the consequences. These duties may be divided
into two classes, those toward the public and those that affect their
stockholders. Their public duties may again be divided into those that
are imposed on them by statute, and a still larger number by the
common law. As we have seen, stockholders confide necessarily the
management of their corporation to directors, who in most cases must
necessarily have a largely discretionary power, and who, in turn, must
appoint other agents to execute the details of the corporate business.
These not infrequently fail through incompetence or neglect to perform
their duties properly, and consequently corporations are subjected to
lawsuits in which redress is sought by the injured parties. Some of
these wrongs for which they are liable to the public have been
mentioned, it would require too much space to mention all.
The injuries done to stockholders by their directors remain for
consideration. Unless directors are restricted by action of the
stockholders at a stockholders' meeting, they have the authority
prescribed by charter and statute; outside these, their authority is
largely discretionary, and must be so. If, therefore, stockholders are
dissatisfied with their directors, as they often are, their remedy is
to elect others at the end of their term of service. If at the time of
choosing them, the annual meeting, none are chosen, the directors hold
over until they are again elected, or others are chosen in their
places. After they have been chosen, no stockholder can interfere in
any way with their discretionary authority unless he has a clear case
calling for judicial action. "Until a mistake," says Morawetz, "on the
part of the directors, individual stockholders have no right to appeal
to the courts to define the line of policy to be pursued by the
company. The courts therefore are quite unanimous in sustaining the
action of directors so long as they act within the discretionary
authority given them."
Occasions happen when the removal of directors is essential to the
welfare of a corporation. Suppose they are pursuing a course clearly
ruinous to the company? In such a case the court will grant relief on
the request of the stockholders whenever the corporation itself is
unable or unwilling to do so. Primarily the corporation should proceed
against the directors, for the wrong is a corporate one. In many cases
the corporation is so completely in their control that the
stockholders are unable to do anything through it. In such case they
must act in the name of, and in behalf of the company. And if they
succeed in establishing their case, the courts will order the removal
of the directors.
Sometimes the courts, instead of going so far, will enjoin them from
doing wrongs that are feared. Suppose it is feared that directors will
declare a dividend that has not been earned, the courts on proper
proof would enjoin them from making it. Suppose it is feared they will
issue more stock and divide all the shares among themselves instead of
proportionately among all the stockholders as the law requires, in
order to get control of the company, a court would not hesitate to
restrain them.
Lastly may be considered a stockholder's rights to inspect the books
of his company. This he may do at all proper times and for reasonable
purposes. And if the right is refused the courts will aid him in
making an inspection. What then is a proper purpose that justifies him
in making the request? He cannot do so to satisfy some freak, or to
annoy an official with whom he may be on bad terms. Nor can he do it
to obtain information to be used for stock-jobbing purposes. Suppose
he has reason for supposing that the books were falsified, that the
stockholders were not receiving correct accounts of the expenditures
and earnings of the company, a stockholder would certainly have a
right to make an examination, and could also employ an agent,
attorney, or expert accountant to do this for him, for his ignorance
of bookkeeping methods might debar him from making an efficient
examination were the right confined exclusively to himself.
=Curtesy.=--A husband acquires an interest or estate in land belonging
to his wife after her death. To be entitled to it, there must be a
legal marriage. Even though it be unlawful, if not set aside during
her life, his interest in her estate cannot be defeated by afterwards
declaring the marriage void. Curtesy does not extend to land nominally
held by her, or as trustee. The wife must have had a child who might
have inherited the estate. It is immaterial whether she acquired her
estate before or after the birth of the child. As soon therefore as a
child is born, his estate or interest begins and is perfected or
consummated by her death, and may be taken at any time afterward for
his debts. What may be the effect of a divorce is not well settled. In
some states even though he is an innocent party, he forfeits his
estate. This rule is founded on the idea that he is a voluntary party,
and therefore need not have one; in other states his interest
continues. As the husband's rights to such an estate have been
abolished in many states, we refrain from adding more principles.
=Deceit.=--A seller is not liable for deceit when the knowledge, or
way of obtaining it, is equally known by both parties. If one goes
into a store to buy a bushel of apples that he has seen by the door
and inquires the price and pays for them without making any inquiry
concerning their quality, he cannot recover his money if half of them
prove to be rotten unless the seller intentionally deceived him, for
he might have inquired whether they were all like those on top and of
good quality. But if the merchant should put fine ones on top in order
to deceive a purchaser, he could recover for his loss. This rule has a
wide application. Suppose a seller keeps his store dimly lighted
intentionally so that the inferior quality of his goods cannot be
discerned, and a person should thereby be deceived and injured, he
would have a good cause of action against the seller. Suppose a ship
was decayed in places, and these were intentionally so concealed that
they could not easily be seen by one who was examining with the
intention of purchasing, and he was thereby misled, the seller would
be liable for the loss to the purchaser. Of course, the prudent course
is to obtain a warranty, or better still, whenever practicable, buy of
one who has established a reputation for honest, fair dealing.
Suppose a man purchases a piece of land, generally supposed to be an
ordinary farm, which contains, as he knows, a valuable coal mine, can
the seller after the public knowledge of the mine, recover the land or
a larger purchase price therefor? Has the purchaser deceived him? Did
the law require the purchaser to make known his superior knowledge
before purchasing? No, if it did, there would be no end to the
confusion to which such a rule would lead. It is within ordinary
experience that purchasers buy either knowing or supposing they will
reap advantages from their contracts of which the seller is ignorant.
There is no deception in this; but there is in withholding knowledge
from the buyer of the quality or condition of a thing that affects its
value, and which if known by him would probably prevent him from
purchasing. Suppose a horse is blind in one eye and the prudent horse
trader says nothing. Can the buyer recover? Ordinarily he could not,
for he ought to have looked, and if he did not know enough to look,
either he should have obtained a warranty, or have employed a
competent agent to purchase for him. Suppose the old trader, skilled
in his business, intentionally put his horse in the shadow so that the
defective eye could not be seen, then the seller would surely have
his remedy against him. If he put his horse there accidentally he
would not.
Is a wink a deception for which the winker must answer in the law? A
hardened dealer once went near a large meeting of men with a wagon
load of bottles containing cold tea. The thirsty crowd soon came
around. "One dollar a piece," he announced with a wink. The wink was
effective and the bottles were quickly sold. They were filled with
cold tea, and the buyers sued for the deceit that had been practiced
on them. They failed, the court said that a wink was not enough.
Another court might have decided otherwise.
=Deeds.=--In selling and buying land several deeds are in use. The
forms differ considerably in the different states. The most important
of them is called a warranty deed, in which the seller not only
conveys the title, but warrants or agrees to defend it against all
attacks. Suppose A sells a piece of land by warranty deed to B, who
makes the unwelcome discovery that a mortgage is existing thereon. He
notifies A and asks him to clear the title. Suppose the mortgage has
been paid, but the lender of the money, the mortgagee, forgot to give
the proper deed to show that he had received payment. And suppose he
was an ugly fellow who would not give the proper release. B could
compel him to do so, and the expense must be borne by A because his
deed of warranty required him to give a clear title.
In such a deed the grantor or seller agrees or covenants to do usually
four or more specific things: first, he asserts that he has a right to
convey the land at the time of the sale. Of course, if he has not, the
agreement or covenant is at once broken and the buyer can proceed
against him to make the title good, or to recover damages if he cannot
retain the premises. The second covenant or agreement is to the effect
that the seller has both the quantity and quality of land mentioned in
the deed. The third covenant is that there are no encumbrances on the
land, that is, no mortgages, no rights of others to pass over it, or
to take earth, water or other things from the land. The fourth
covenant is for the quiet enjoyment of the land, which is the most
general form of warranty. There may be other covenants, often there
are, while the four mentioned may be, and often are, modified.
Does such a warranty bind other persons than the warrantor, in other
words are his heirs and persons to whom he may devise his lands also
indefinitely bound by his warranty? The statutes in some states fix
his liability. Where none exist the law limits the liability of
parties to the amount of assets or property they have received from
the warrantor; if they have received nothing they are not liable for
anything.
A covenant to protect the buyer from encumbrances, claims, etc., does
not always relieve him from the expense of a lawsuit. Suppose A claims
a right of way over B's land and insists on using it. B brings his
action of trespass against him and wins. He cannot sue his grantor or
seller to recover the expense of the suit, for the latter would reply,
"You have won your case which is proof that the title is good as
warranted, and therefore you have no claim against me." If, on the
other hand, A had won his case B would then have a good cause of
action against his covenantor.
Another kind of deed used in selling land is called an indenture. This
is signed by all the parties, and copies are usually made and
delivered to all of them. This deed also contains warrants or
covenants like the one first described.
Another kind of deed is called a release or quit-claim. By this the
grantor or party giving it conveys whatever interest he may have in
the land. It is the deed always given by a mortgagee on the payment or
discharge of his mortgage. It contains no warrants to do anything and
therefore differs from a deed of warranty. Sometimes a person conveys
a piece of land knowing that the title is defective which the
purchaser, notwithstanding the defect, is willing to buy. The seller
may safely give a quit-claim deed for he thereby sells only whatever
interest he may have.
All the deeds above mentioned except an indenture, are signed only by
the selling or granting party. They become effective by delivery. They
are often called poll deeds.
Every grantor must append to his name a seal. Once a seal was of the
utmost importance in the days of ignorance when persons knew not how
to write and each person had a seal of his own. As distinctive seals
have long since disappeared, seals have less significance than
formerly, nevertheless many legal rules are founded on the distinction
between sealed and unsealed instruments. Thus two written contracts
may be exact duplicates except that one of them may have no seal. The
law in most states regards the unsealed one as a mere oral or
unwritten contract, to which are applied the same rules of evidence.
The use of L.S., enclosed in brackets, thus [L.S.] is just as
effective as a seal of wax or a wafer. In many states a corporation
need not use its corporate seal, any other may be substituted. The
federal rule especially requires the use of the corporate seal and
that it be affixed by someone who was properly authorized to do this.
By statute the names of two witnesses are required, and when omitted
the deed is not only defective, but in some states at least is void. A
witness need not write his name in the grantor's presence, if asked to
sign in the proper place as a witness this will suffice.
A lease of land is also a deed differing from those mentioned in
conveying the use of land for a fixed period and on varying terms.
A deed should be completed before delivering it, the same rule applies
to most legal writings. Unimportant alterations may be made, and if
any are made, the question may prove difficult, are they important or
not. Of course if both parties agree to them, the validity of the deed
is not impaired. Whenever they do appear, in some states the law
presumes they were made before delivering the deed, but this is not
the rule everywhere.
Who can make or execute a deed? A minor cannot make a legal deed, and
if he attempts to do so he can avoid or set it aside after he becomes
of age whenever he acts with reasonable promptitude. If he does not
thus act, his delay will be regarded as a ratifying of his previous
action. What action will have this effect is a fact to be proved
whenever the controversy arises.
Usually a deed need not be read to the grantee, nor can he avoid it
because he did not know the contents, except when fraud has been
practised on him. To a blind or ignorant man a different rule applies.
The deed should be read to him, and if this is not done, or if it is
wrongly read to him, he can have it set aside in a proper legal
proceeding.
Delivery is essential; to do this two things are required. The
grantor must give up the deed and the grantee must actually accept it,
consequently the delivery of a deed after the grantor's death would
not be valid. There must be an actual delivery by him, and though a
deed may be completed in every other respect, it is not an effective
deed. A deed therefore stolen from one's drawer and delivered to the
grantee would not be valid, however innocent the grantee might be in
receiving it. Many difficulties have arisen in applying this rule.
When the question comes before a court, it seeks after the intention
of the parties, and is guided by it when ascertained. If therefore a
deed were lying on a table and the grantor should say to the grantee,
take it, and he did so, the delivery would be complete; but if he
should get it in a surreptitious way there would be no legal delivery.
Suppose a deed were mailed to the grantee, or handed to another person
to deliver to the grantee, this would be a good delivery.
As soon as the deed has been delivered, it should be taken to the
recorder's office to be recorded. Every state has offices in the towns
or counties for keeping a perfect copy of all deeds relating to the
transfer of the lands within the limits of the town or county. The
object of this is to protect purchasers, for, if this were not done,
the owner of land might sell it to a purchaser a second time who knew
nothing of the previous sale, and then someone would be the loser. To
guard against such frauds the system of registration was established
at an early day in American history. A purchaser therefore should take
his deed at once to the proper recording office for record, and this
is regarded as notice to the world from the time of delivering the
deed to the recorder, who makes a note thereon of the day and hour it
was left with him. Suppose that some creditor of the grantor, not
knowing of the sale, should attach the land as the property of the
grantor to secure a debt due to him, could he hold it as against the
purchaser? Ordinarily the purchaser could still retain the land, and
the same rule would apply between him and a second purchaser, though
buying in good faith supposing the grantor was the real owner. In some
states a statute protects the purchaser by giving him a fixed period
of two or three months or more to record his deed. The safe rule is to
leave the deed with the recorder as soon as possible after receiving
it.
It is a general practice to do another thing with deeds, to make or
take an acknowledgment of them, and in some states this must be done
before they can be recorded. This consists on the part of the grantor
going before a proper officer, often a notary public, justice of the
peace, clerk of a court of record, commissioner of deeds, and making
oath that he has duly executed the above deed. This oath appears in
the form of a certificate at the bottom of the deed or appended
thereto and is signed by the officer, who also attaches his official
seal. When a deed has thus been acknowledged it can be used in a legal
proceeding as evidence without requiring further proof of its
execution. But if it had not been acknowledged, then a court would
require some proof that the deed had been made and delivered before
accepting it as proof of the fact.
When a married woman executes a deed the officer who took the
acknowledgment of the deed must make an examination, apart from her
husband, to ascertain whether or no her act was voluntary, and he must
also record the fact. The acknowledgment should be made after the
examination. A defective acknowledgment by a married woman is
worthless, nor will any court compel her to make another one. Should
she make another deed, however, with a proper acknowledgment this
would be legal.
The officials who take acknowledgments possess different authority,
some can take them only of land situated in their respective states;
others have authority to take acknowledgments of deeds of land in
every state. In all the states are commissioners of deeds, so called,
who are authorized to act outside their own state. Some persons who
have an important conveyancing business have qualified themselves to
thus act as commissioners for many states, and perform a highly useful
service.
If a mistake has been made in a deed can it be corrected? The general
rule is it can be amended in all cases of fraud, accident, or mistake.
How can this be done? If the grantor is unwilling to do right, the
purchaser can by a proper application to a court, or court of equity,
ask for the correction of the deed or such other relief as justice
requires. Suppose the grantor has declared in his deed that the land
contains a hundred acres and a survey finds only fifty. This would be
a palpable fraud and a court would, if requested, order the
reconveyance of the land and return of the money. Suppose the deed
covered no land at all belonging to the grantor, this would be a still
greater fraud. Suppose the deed said one hundred acres more or less,
and a survey found only fifty acres. The purchaser bought supposing
that there was no such deficit, but perhaps a small one, what would a
court do? Doubtless it would hold that the grantor tried to deceive
the other party and would grant relief.
The land sold must be bounded or described. As land is increasing
everywhere in value more pains is taken in describing it, than
formerly. Large tracts have been surveyed by the government and are
indicated as sections, quarter sections, yet even these boundaries are
sometimes imperfect, caused by incorrect surveys, whereby lands
overlap, or otherwise have defective boundaries.
One of the well-known rules is, monuments control corners and
distances. This is founded on much experience, for this shows that
courses differ from variations in the compass, changes in the surface,
etc. Though monuments may be moved intentionally or by natural causes,
they can be more trusted in the long run of things.
The location of a monument is a question of fact. It is sometimes said
that natural monuments possess higher value than artificial ones, this
depends on the character of the artificial one. A large stone set in a
secure place surely is a better boundary than a wayward stream whose
course is changed by every freshet. In marking the public lands of the
western territories by statute monuments must designate the corners of
the tract. But when these are lost then corners and distances become
the guide. Oral evidence may be admitted to establish the location of
monuments, and even hearsay evidence may be used for the purpose.
In a city lot courses and distances play a larger part in fixing the
boundaries, and are more carefully defined. Often the boundary is to
the center of a dividing wall.
The boundary of land by a non-navigable stream is to the center; and
if one owns on both sides of such a stream he is the owner also of the
bed. But if land is bounded by the bank or shore of a stream, or by
other words of clearly evident exclusion, the stream is excluded. The
rule is different that applies to a tidal navigable stream. In some
states the boundary is high-water mark; in other states low-water. In
both cases the riparian owner, so-called, may erect a wharf extending
from his land subject to public control. The boundary of a natural
pond or lake, either in its natural state or raised artificially, is
low-water mark. Nor is the law changed by the conversion of a fresh
water pond into a salt pond by the hand of man. The boundary to an
artificial pond is through the center.
The title to the bed of all lakes, ponds, and navigable rivers to the
ordinary high-water mark is vested in the states. Thus the people who
live around them may enjoy the waters the same as others enjoy tidal
waters. Nor is the state title affected by any manipulation of the
land above the surface of the water.
The same rules of law apply to land situated along public highways. If
a deed should bound the land "by or along a highway," it would include
the land to the center; only words of clearly intending exclusion have
a different effect. If a deed should say "by the side" of a highway,
it might be excluded and it might not, the courts do not agree. All
agree that the intention of the parties should govern, but differ as
to intention expressed in the words they have used. The law is full of
such difficulties. If a highway is abandoned, the adjoining owners can
extend their lines to the center, unless one of them can prove that he
is entitled to more than one half.
In investigating the title to real estate it is the duty of an
attorney employed for that purpose, says Justice Trenchard, "to make a
painstaking examination of the records and to report all facts
relating to the title. He is, therefore, liable for any injury that
may result to his client from negligence in the performance of his
duties--that is, from a failure to exercise ordinary care and skill in
discovering in the records and reporting all the deeds, mortgages,
judgments, etc., that affect the title in respect to which he is
employed."
=Divisional Tree.=--When the base of a tree is wholly on the land of
one owner the whole tree belongs to him. An adjoining owner, however,
may cut off at the divisional line such branches as over-hang his land
without notice and without reference to the length of time they have
been growing. To do this he cannot go on the land of his neighbor, but
must stay on his own land. A different rule applies to a tree that
stands on a divisional line and both owners have an interest therein.
=Dower.=--Dower is the interest that a wife has in her husband's land
after his death, and consists, unless modified by statute, of the use
of one third during her life. While both live her interest is so
secured to her by law that he cannot sell and convey any of his land
unless she unites with him in signing a proper deed of conveyance. In
most states this interest or dower is paramount to the claims of her
husband's creditors. But if there is any lien on the land at the time
of his death, like a mortgage, she cannot claim a preference or
priority over the mortgagee.
She can claim her dower in any land belonging to her husband which her
children, if she had any, could have inherited as the heirs of their
father. When her dower is in mortgaged land, she cannot get possession
until the mortgage has been paid. Again, where land, wherein she has
a dower interest, must be sold, her right to the proceeds follows the
sale. If her husband was not in possession of the land claimed by him
before and after marriage, her dower will not become effective until
gaining possession. If he were only the nominal and not the real
possessor, her dower will not attach to the land, nor if he were in
possession as trustee, the real ownership belonging to another.
A legal marriage is necessary to sustain a dower estate. Whenever a
marriage can be set aside for some illegality, and is not, it will
sustain her dower on his death. So, too, her dower may be lost or
barred by a legal separation; if she should re-marry, or the divorce
is set aside, her dower would revive. Her dower may also be lost
should her husband legally part with his estate, or by any legal
proceeding it should be taken away from him; thus, should another
claim it and prove that he had the better title. In other words she
loses her dower whenever her husband has no estate from which her
dower can be carved out. It is true that an adverse claimant cannot
give any title to her husband's land that would bar her right thereto.
The reason for this rule is that, like a minor, her rights cannot be
acquired against one who is unable by reason of age or other infirmity
to protect himself.
The wife is entitled to have dower assigned to her immediately after
her husband's death. Until this is done, she has the right of common
law for the period of forty days, called quarantine, to reside in her
husband's house, provided she does not marry during that time.
Dower may be assigned to her in two ways. One way is by direction of
the court, which ascertains by proper evidence the extent, location
and value of the husband's lands, and then directs the sheriff to
carry out its order in assigning to her a specific portion for her use
during life. The other way is by agreement. In some states money is
assigned to her instead of land as dower.
Dower may be barred by agreement made before marriage. These
arrangements, marriage settlements, are becoming more frequent with
the increase of wealth and complexities respecting the holding of
property. Sometimes a testator provides for his widow in lieu of
dower. In such a case she may accept the gift, or reject it and claim
her dower rights. Suppose a testator should own a large amount of
land, and in his will should give her only a small amount of money in
lieu of dower. If eager to get the most possible, she would reject the
gift of money and claim her dower rights. On the other hand, suppose
he had but very little or no real estate, then she doubtless would
accept the money gift, unless she could claim a still larger sum by
virtue of some statute made to fit such cases.
Dower does not exist in crops or trees severed from the land, but does
exist in mines and quarries belonging to the husband which were opened
and worked during his life. If lands have been exchanged by the
husband, she can elect in which she shall take her dower, but not in
both. There can be no dower in a mere personal privilege, or in a
revocable license pertaining to land. The widow of a partner is
ordinarily entitled to dower in so much of the partnership land as is
left after the payment of the firm's debts and the adjustment of
matters between the partners. But if an agreement among them that the
land shall be considered as personal property for all purposes, then
no dower therein can be claimed by the widow of any partner.
A wife can release her inchoate dower or future expectation of
receiving it by joining in a conveyance with her husband for that
purpose. In order to make the election binding, it must be made with
full knowledge on the widow's part of her husband's estate, and the
relative value of her dower interest. The election is personal, and
cannot be exercised by her representatives after her death, nor by
creditors; and if insane, this cannot be done by any committee or
guardian acting under the authority of a court.
An absolute divorce, even though for the husband's fault, divests the
wife of dower, unless her right is saved by statute. Quite frequently,
the statute provides that there shall be no dower in case of divorce
for the wife's fault. Occasionally it is provided by statute that
divorce for the husband's fault shall not bar dower; and sometimes a
statute requires dower to be assigned immediately upon divorce without
awaiting the husband's death. It may be added that the principles of
the common law relating to dower have been largely modified by statute
in all the states.
=Drunkenness.=--The courts are reluctant to recognize intoxication as
an excuse either for committing a crime or for repudiating a contract,
but if from long continued intemperate habits a man has become
actually insane or incompetent, his actual mental condition will be
recognized whatever may have produced it.
Again, in making a contract the other party could hardly deal with a
man badly intoxicated without knowing his condition, consequently the
element of fraud appears, and the contract may be declared invalid
either for lack of contracting capacity on the part of the drunken
man, or for fraud on the part of the other in taking advantage of his
condition. His fraud would be still greater if he had designedly
caused the drunkenness of the other. Either objection, however,
renders the contract voidable rather than void, and should an
intoxicated party, after he became sober ratify his contract, or fail
to repudiate it and restore the consideration, if any, within a
reasonable time, he would become bound.
The courts are still more reluctant to admit intoxication as an excuse
for criminal acts. The courts hold that one who voluntarily deprives
himself of self-control must have intended the consequences, therefore
it is everywhere held that one who voluntarily becomes intoxicated,
although he did so with no purpose to commit a crime when intoxicated,
cannot claim immunity from criminal responsibility, or even a
mitigation of the penalty, though having no capacity to distinguish
between right and wrong. And yet, like so many legal rules, there are
some marked exceptions to this one. Thus, since burglary is the
entering of a house with the intent to commit a felony therein, one
who blunders into a strange house because he is too drunk to know
where he is or what he is doing has not committed the crime of
burglary. So one who carried off the property of another through
drunken ignorance does not commit larceny, as there is no intent in
such a case to convert the property to the taker's own use. Another
application has been made in cases of assault with intent to kill a
person.
Again, says Peck, "if one is visibly intoxicated, it is the duty of
those who come in contact with him to take his condition into account,
and their use of due care will be judged in view of that fact. Even if
the drunken person and the other are both negligent, the sober party
may be liable under the doctrine of the last clear chance, if he fails
to exercise toward the drunken man the degree of care which is
evidently required to avoid injuring him. Especially is a common
carrier, in dealing with a passenger who is on its car in an
intoxicated condition, bound to take his helpless condition into
account in removing him from the car or otherwise handling him, and
not put him in a place of manifest danger to one in his condition."
It has also been held that the intoxication of one who uttered a
slander may be admissible in mitigation of the damages, as utterances
of a drunken man could not seriously impair the reputation of any one.
=Equitable Remedies.=--Elsewhere we have told how courts of law differ
from courts of equity. In some states no separate courts exist, and
wherever legal proceedings are established by a code or system of
statute law, the form of complaint addressed to a court is quite the
same in an equity case as in any other. But in states where code
practice has not been established, the mode of setting forth one's
grievance or wrong is by a bill or petition, ending with a prayer for
relief. We will now briefly state some of the things for which relief
in equity may be sought.
One of the most common things is to compel persons who refuse to
perform their contracts to execute them. Suppose one has agreed in
writing properly signed to sell his farm to another, but is unwilling
to give him a deed. It may be that he can get more for his farm, or he
has made the discovery since selling it that it is worth much more, is
underlaid with coal or oil, or that a railway is soon to be built
near it that will enhance its value. If he went to a law court, all
that it could do would be to compel the seller to give the purchaser
such damages as he could prove he had sustained from the seller's
failure to execute his agreement. But a court of equity can go further
and compel the seller to give the purchaser a proper deed, the kind of
deed mentioned in the agreement; or, if none was specified, the kind
of deed usually given in such cases.
This remedy cannot be always sought whenever the seller fails to
execute his contracts. The important limitation is, when the law has
an adequate remedy, and the injured person has no need of resorting to
a court of equity. All the ordinary agricultural and manufactured
products fall within this class, cotton, cattle, lumber, fruits, stock
in trade and the like. But if a chattel has a sentimental value to the
purchaser, a court of equity will decree that it must be delivered to
him, because in such a case the damages would obviously be inadequate.
The same rule applies to all articles of a unique or rare value that
cannot be duplicated; also to patented or copyrighted things that
cannot be procured in the open market.
Suppose one has purchased the stock of a bank or railroad company,
which the seller refuses to deliver, has the buyer a legal remedy for
damages, or an equitable remedy to compel the seller to deliver the
stock, or has he the choice of remedies? The courts have divided on
this question. The better rule is, if the stock can be readily bought
in the open market, the buyer has only a law remedy to recover damages
from the seller's failure to execute his contract; if the stock cannot
be thus purchased, a money damage is not an adequate remedy, the
purchaser wants the stock and he can, through a court of equity,
compel the seller to deliver it to him. As government bonds can always
be bought in the open market, a court of equity will not decree the
specific execution of a contract for the delivery of the actual bonds
purchased.
If A has agreed to erect a building for B on his land and fails to do
it, money damages are usually an adequate remedy, but if B cannot find
any one else to do the work as well, or in as satisfactory manner,
then a court of equity would compel A to fulfil his agreement.
Likewise if a landlord has agreed to repair his tenant's premises and
neglects, the legal remedy is usually more satisfactory than a
specific execution of the agreement, because work done under
compulsion is not likely to be as well done as that done voluntarily.
A contract to render personal services will not be enforced against a
person who has agreed to perform them, for several reasons, one is
that another person can be employed, another is that the thirteenth
amendment to the federal constitution, forbidding involuntary
servitude, cuts off the equitable remedy in such cases; of course the
legal remedy for damages is still effective. A contract to give a
mortgage to secure a loan of money may be enforced by the creditor,
but a contract to lend money cannot be enforced by either party,
because there is usually an open market for the lending and borrowing
of money. Likewise a contract to form a partnership cannot be
enforced, for, if it were, the unwilling partner could dissolve it and
thus nullify the action of the court.
Where one sells out his business, whether commercial or professional,
and agrees not to compete with the buyer, equity will compel the
seller to observe his contract unless it was illegal or an
unreasonable restraint on trade. This limitation is important. Thus A,
a dentist in Philadelphia, agreed with B, another dentist, not to
practice in the city for ten years a certain method of extracting
teeth. A continued to practice as before and B applied to a court of
equity to enjoin him. He failed for the reason that no one ought to
have a monopoly, so the court said, in any means or method for
relieving human suffering, like the process in dispute. If an employee
agrees not to divulge the trade secrets of his employer, equity will
enforce the agreement, for damages given in a law court would be
wholly inadequate.
Another class of cases must be mentioned relating to injuries to land.
By the common law the only relief a landowner had against one who
injured it in any way was an action of waste to recover money damages.
A court of equity has power to issue a command to the person who
threatens or attempts to commit injury ordering and directing him to
desist from his purpose. This has been often used by the owners of
land against their tenants who attempted to do things that would
materially injure the property. This remedy is now often used to
secure the owner and occupier of land in its proper use against those
who attempt to commit a nuisance. While the occupier could recover
damages if he sought the aid of a law court, equity will order the
wrongdoer to abate the nuisance. Such a remedy is much more effective
than the legal one, because damages that may be recovered relate only
to a past offense, while the equitable one prevents it from happening
or from its continuance.
Promises not to do some particular act on a piece of land are often
made in deeds conveying them; they are called covenants. Equity will
usually enforce these covenants, and will compel the wrongdoer to undo
what he has done provided that relief is sought promptly. Thus if a
purchaser agrees not to build nearer the street than a stated line, he
can be enjoined from disregarding it. A purchaser therefore who built
two houses three feet beyond the agreed line was compelled to remove
them.
The remedy in such a case is an injunction. It may be temporary or
permanent. Quite often when one applies for an injunction, if the
injury threatened is immediate, the court will immediately enjoin the
party from proceeding and fix a time for a future hearing to decide
whether the injunction shall be dissolved or made permanent. The time
fixed for such a hearing is within the discretion of the court, and
depends on the nature of the case. Usually the time is quite short,
enough to enable the parties to collect the evidence relating to the
controversy. The hearing is conducted very much like any other trial,
witnesses appear, all the evidence is given, and is reviewed by
contending counsel, after which the judge announces his decision. Some
of the more noteworthy injunctions of recent days have been rendered
against labor unions or their members who, having struck for higher
wages, or other ends, have sought to picket the works of their
employers and thus prevent them from employing other workers to take
the places of the strikers. The unions contend that this is an
improper use of the judicial power, whether it is or not no one will
deny that it has been long exercised.
In the early days of administering the patent law injunctions were
granted against infringers. Judges soon grew more cautious when they
learned that patents were sometimes erroneously granted, and that, on
acquiring a fuller knowledge of the controversy, there had been no
infringement. The modern practice therefore is, unless the proof is
very clear, to require a party who applies for an injunction to try
his case first and establish his patent and then, if it has been
infringed, an injunction will be issued.
=Factor.=--A factor receives and sells goods for a commission, is
usually entrusted with their possession, and sells them in his own
name. He has a special interest or property in them, and a lien
thereon for advances in money that he may make to the owners. No
formal mode of authorizing him to act is required, usually this is
done by word only, and his authorized acts may be ratified by his
principal. This authority is largely the outgrowth of usage. The
authority of a factor to fix the terms of selling may be by agreement
or by usage, like any other agent. Limitations fixed by the principal
are ordinarily binding on the factor, and, so far as they are
chargeable with notice of them, third persons also. Where goods are
confided to a factor without instructions, authority to exercise a
fair and reasonable discretion is implied. Unless restricted by his
principal, or by contrary usage, he may sell goods on a reasonable
term of credit. If he is restricted to cash sales only, or is not
protected by usage in selling on credit, he cannot do so. Secret
instructions would not affect the rights of a purchaser ignorant of
them and relying on customary authority.
A factor is employed to sell goods, and not to barter or exchange
them, and if he should do this his principal could recover them. He
may insure the goods, but is not required to do so unless instructed
or is required by usage, which plays a large part in this matter and
must be observed except as qualified by instructions.
He cannot compound or compromise a claim for the purchase price, or
discharge the debt on payment of a part only, or submit a disputed
claim for arbitration, or rescind a sale, or discharge a purchaser
from any part of his obligation, or extend the time of payment, or
make, accept or indorse negotiable paper contrary to instructions or
usage, or sell the goods thus entrusted to him for sale to himself.
See _Agency_.
=Fire Insurance.=--Insurance against loss by fire is now effected in
companies organized for that purpose. Two kinds exist, stock and
mutual. In mutual companies the persons insured act together to insure
each other. The members of some of the largest mutual companies are
manufacturing corporations. The more general mode of conducting them
is to require each member to pay a premium in advance for the amount
insured which, unless unusual losses occur, will be enough to pay all
the losses for the year. If it is not all needed, the balance is
returned to the parties who paid the premiums, or is credited to them
for the following year. If the losses exceed the premiums thus paid in
advance, then an assessment is made on each member to cover the
deficiency. Generally the premium paid is more than enough to cover
the losses, and a balance is returned or credited to the insured as
above mentioned. As mutual companies do not take such risks as stock
companies, the cost of insurance is less and therefore is carried in
preference to insurance in stock companies, whenever it can be
obtained.
There is another way for paying for losses in mutual companies.
Instead of paying cash premiums in advance, the insured gives a bond
or note well secured that he will pay in cash whenever a call is made
on him to cover the losses that have been incurred at the end of the
year or other period. This method is in vogue in some sections,
because still less money is required to keep property insured. Of
course besides the money to pay losses another sum is required to pay
the expense of management. It will be seen that the mutual plan is
purely for protection against loss and no profit in the way of
dividends is forthcoming, for the companies have no capital. It is
true that some companies, instead of returning the unexpended premiums
for losses retain them or a part of them and by so doing accumulate a
surplus. Many companies, however, return all the contributions not
expended for management or losses and have no surplus, or only a very
small one.
Stock insurance companies proceed on a different principle. They are
organized to make money, a capital is subscribed, the rates of
insurance or premiums are fixed and after paying the expense of
management and loss, the balance is paid to the stockholders in the
way of dividends. The business is one of unusual hazard, and only a
rich person, who can afford to lose his money, ought to invest in the
stock of such companies. Their profits and losses vary greatly from
year to year; and failures have been frequent. Nevertheless some
companies have a fine record, enough to tempt them to continue
notwithstanding their trying reverses.
As the contract of insurance is for an indemnity, the insured must
have some interest in the property insured, otherwise the contract is
a mere wager, which the law condemns. Moreover the interest must
continue and exist at the time of the loss. Who, therefore, has an
insurable interest? A bailee, a carrier of goods, a consignee who has
authority to sell them, a factor, pledgee, warehouseman, an assignee
for the benefit of creditors, an executor or administrator, an
attachment creditor, but not a general creditor, a landlord, tenant,
mortgagee of real or personal property, a lienor, for example, the
holder of a mechanic's lien, a receiver, residuary legatee or devisee,
a trustee, vendees and vendors of real and personal property, the
owner of stock in a corporation, any agent who has the care and
management of his principal's property, besides many others. But a
fire insurance policy may be assigned as collateral security with the
company's consent, and continue valid though the assignee has no
interest in the property. This rule therefore is fundamental, and if
the interest of the insured in the property has been extinguished
after making his contract and prior to its loss by fire, he can get
nothing from the company. Likewise the property must have been in
existence at the time of making the contract, if it was not, the
policy is void. Many stories are told of insuring ships after learning
of their loss; such conduct is a palpable fraud.
An insurance policy is a contract, of which the policy is evidence. A
standard policy has been prescribed in several states by statute: in
other states the parties are still free to make such terms as they
please. It is usual for companies to execute blank policies in due
form to be filled out and delivered by their agents. Such policies are
not valid until countersigned, unless the countersigning is waived.
When does the policy become valid or binding on the insured? Says a
competent authority: "Where a policy has been duly executed in
compliance with an application on the part of the insured, so that the
minds of the parties have fully met as to the terms and conditions of
the contract, a manual delivery of the policy to the insured is not
essential to render it binding on the company. If the contract has
become binding by the issuance of the policy and the placing it in the
hands of an agent for delivery, then the fact that such delivery is
not actually made to the insured until after the loss has occurred,
will not defeat recovery by the insured."
The premium usually must be paid at the time of issuing the policy,
unless a different agreement is made concerning it. Credit may be
given, and an agent generally has authority to do this. A valid
payment may also be made in other means than money; a check or note
may be given for it.
An insurance policy may be assigned, though it usually contains a
clause that the consent of the insurer is needful. When the policy
contains this clause and the insurer without valid reason refuses to
consent to an assignment, "the assignee acquires the same right as
though consent had been given."
Consent to an assignment may be given by the president of the company,
without formal vote by the directors. It may also be given by the
secretary or by any other agent duly authorized.
When can a policy be canceled? Unless this right is reserved in the
contract, or given by statute, the insurer cannot cancel the contract
without the consent of the insured. It often is reserved, and if
exercised, this must be done before a loss occurs, and a cancellation
made afterwards, though without knowledge of it, is void. The motive
for making it is not important. If, as a condition of cancellation,
the unearned portion of the premium is to be returned, the failure to
return it renders the cancellation worthless. Nor is this effective
until notice has been given to the insured.
A court of equity will reform a contract of insurance on the ground of
accident, fraud, and mistake. Oral evidence is admissible to prove the
fraud or mistake; it must, however, be clear before a court will grant
relief. If mistake is the ground for asking relief, the insured must
not have been guilty in causing it, and must act promptly after his
discovery. This rule does not prevent him from seeking relief when the
agent of the insurer has been negligent. Furthermore it may be granted
even after the happening of a loss.
Should there be a conflict between the written and printed portions of
a policy, the written portion will be presumed to represent the intent
of the parties. If, therefore, the printed portion excludes certain
articles from the risk, and the written portion covers them, they are
included. Conditions also written or printed on the margin or back of
the policy are regarded as portions of it, and these too will control
the printed portions. Besides, the written application is usually
considered a part of the contract and the policy is construed or
interpreted in connection with it. This is especially so where the
proposals and conditions are attached to the policy. If the intent of
the policy is not clear from the language used, the surrounding
circumstances may be shown for the purpose of ascertaining the intent
of the parties. The known usage of trade may also be taken into
account in construing the language of a policy.
The language of the policy should be so construed as to cover the
property within the intention of the parties, and support, if
possible, the contract of indemnity. Mere clerical errors or mistakes
in describing it may be corrected even after it has been destroyed.
The location is an essential element, and the policy will not be
stretched to cover property not within the description. If a building
is described this does not include separate structures used in
connection with it, nor fixtures constituting no part of the
structure. Unless expressly excepted, however, insurance covers those
things which have been so annexed as to become a part of the realty
but none others. The term store fixtures covers fittings, fixtures,
furniture used in the course of trade, whether they are part of the
realty or not. Likewise the term "stock" used in a mercantile business
includes everything usually kept for sale, in that business, but
nothing more; while household furniture includes all articles
necessary and convenient for housekeeping. With respect to future
additions these are covered by the policy unless it is so drawn as to
show a clear intent to exclude them.
The risk usually begins with the date of the policy, unless it is
effected by a preliminary contract. In such a case the risk begins
from the date of the preliminary contract, and continues for the
period fixed in the policy, or, if none has been fixed, for a
reasonable time.
A misrepresentation voids a policy generally. It must not only be
false in fact, but the insured must have known that it was false when
making it in a substantial and material respect. The misstatement of
an agent of the insured will have the same effect. Indeed, any fraud
of the insured in procuring the policy has the effect of voiding it if
the insurer chooses to do so. Of course, the wrongful facts or acts of
the insured possess a varied character. His conduct in concealing
facts that ought to have been made known to the insurer may have that
effect. Thus to conceal a fact of which the insured had knowledge, and
which, if known by the insurer the risk probably would not have been
taken, is a fraud rightly available to the insurer.
The parties to an insurance contract may agree that the questions put
by the insurer and the answers given by the insured shall become a
warranty. This, as experience has shown, is a simpler way of effecting
a policy of insurance. When this is done a misrepresentation
constitutes a breach of warranty and the contract becomes void.
The modern policy provides that it shall be void if the insured "now
has or shall hereafter make or procure any other contract of
insurance, whether valid or not, on property covered in whole or in
part by this policy." If the insured effects other insurance he must
not forget to obtain consent of the insurer, and should he forget his
good intention will not preserve his policy. Nor can the insured
protect himself by canceling the prior policy if he breaks the
condition. Nor does its expiration revive the subsequent policy. An
overstatement of existing insurance under an express warranty will
also violate the policy. While forgetfulness or good intention will
not save the insured in such cases, insurance obtained by a third
person without the knowledge of the insured on the same property will
not endanger his rights under his policy.
If a fire occurs and a loss results, this may be total or partial. In
every case of loss fire must be the proximate cause of the loss. What
loss is covered by a policy has been the subject of frequent
controversy. Damage by water used to extinguish a fire is usually
covered; also damage to or loss of goods removed to prevent their
destruction from fire in the insured or another building. Likewise
the loss caused by blowing up a building to check a fire, likewise
damage from an explosion which is the direct result of a fire, "but an
explosion due to the ignition of a match or spark of an explosive
substance, no fire resulting, is not within the terms of an ordinary
fire policy." The standard policies contain a clause relieving the
insured from liability to pay for property stolen during the progress
of a fire, or during the removal of property necessitated by fire.
An exception of liability from lightning, unless followed by fire,
excludes recovery unless there is loss from burning, but it is quite
common to insure against loss from lightning as well as fire.
Unless there is a stipulation in the policy the insurer is not
relieved from liability by mere negligence or carelessness of the
insured or his servants though directly contributing to the loss; on
the other hand, the insured who does not take reasonable care to avoid
loss from his negligence or that of his servants may defeat recovery
under his policy. This rule is not easy of application, cases of
clearly proved negligence are numerous, also cases free from
negligence, a third class of a doubtful nature. The field of the law
is open in every direction to these.
For a total loss the insurer is liable for the entire value of the
property to the limit covered by the insurance. Thus the loss of a
building is total though some of the walls remain standing, but not
when the remnant can be restored. In some states the statutes provide
that in case of total loss the insurer shall be liable for the full
amount of insurance, and shall not be allowed to show that the
property was of less value than the amount insured.
When the loss is partial the insurer is liable only for the amount of
the loss, not exceeding the insurance. The policy may limit the amount
of recovery to the cost of restoring or replacing the property, and in
such cases this is often done instead of paying the loss in money. If
each of several classes or items is separately valued, thereby
separating the liability for them, the recovery for any one class or
item is limited to the damage to the same.
Lastly, in fixing the loss the distinction between open and valued
policies must be explained. A fire policy is generally written in such
a way that the liability of the insurer depends on the amount of the
loss to be determined after the loss has occurred. When this is done,
the valuation of the property in the application for a policy or in
the policy, does not fix the liability of the insurer, even though the
loss be total. This is called an open policy. On the other hand the
loss may be fixed by a stipulation in the policy, and which binds the
insurer to pay the whole sum insured in case of total loss. This is
called a valued policy. A policy is regarded as an open one, unless it
appears to have been the intention of the parties on a fair and
reasonable construction of its terms, to value the loss and so fix by
contract the amount that may be recovered.
=Fixtures.=--A fixture is something annexed to land either temporarily
or permanently. Different rules apply to persons in different
relations. The law favors removal by a tenant presuming that he does
not put in things for the landlord's benefit, unless there is an
agreement to that effect between them. On the other hand a different
rule applies between the seller and purchaser of real estate. As
between them the law presumes that the seller intended to keep the
things affixed to the house, especially ranges and the like. On the
other hand a somewhat different rule applies between mortgagor and
mortgagee. The former is favored, but not so much as the tenant.
Suppose the mortgagor was a nurseryman, and the land was taken for the
debt by the mortgagee, would it include the trees and shrubs that had
been planted for sale? The courts have given an affirmative answer.
The facts that are of special value in finding out whether a thing is
a fixture or not are: (1) the actual annexation of the article to the
realty; (2) the immediate object or purpose of the annexation; (3) the
adaptability for permanent or mere temporary use; (4) and whether the
article can be removed without material injury to the property to
which it is annexed. See _Lease_.
=Garage Keeper.=--The garage has been said to be the modern substitute
for the ancient livery stable. A garage man who receives the
automobile of another to keep or repair--a service for which the owner
is to pay a compensation--is a bailee for hire. While this relation of
bailor and bailee exists, the owner is not ordinarily responsible for
the negligence of the garageman or his servants in the care or
operation of the automobile.
A public garage is not a nuisance. Even the storage of gasoline in
suitable tanks set down in the earth is not a nuisance. Yet the
business may become a nuisance when conducted in some localities, or
in an improper manner. The operation of a public garage may therefore
be enjoined in a purely residential section within a short distance of
large churches, a parochial school and houses. Likewise the odors, the
noise, and the fire hazard, which are occasioned by the construction
and management of a garage, create a situation which justifies public
regulation.
A garage keeper is generally allowed a lien on an automobile for
storage and repairs. If no price has been fixed in advance, the garage
keeper is entitled to recover of the owner the reasonable value of the
services and materials furnished. When the automobile is brought to
the garage by a chauffeur, the garage keeper should assure himself of
the chauffeur's authority to order repairs, especially those of a
permanent nature.
The garage keeper when storing a car for another for compensation must
exercise reasonable care and prudence. If negligent he is liable for
the damage. It is said that the liability of a garage keeper for hire
is not affected by reason of the knowledge of the owner as to the
place where the property is kept. Its acceptance by the garageman
imposes on him the duty of exercising due care for its safety and
protection. But he is not an insurer of the property; and therefore is
not liable for loss by fire unless he has been negligent. Generally,
in such a case the burden of proof is on the owner of the machine to
show that the fire was caused by the negligence of the garageman.
Sometimes one keeps a car for another for accommodation, receiving no
compensation therefor. One who thus serves another is liable only for
gross negligence.
The garage keeper must protect the property from theft. If he permits
a machine to remain in an alley when it ought to have been inside his
garage, he is liable. In one case a motorcyclist left his machine with
a garage keeper to be kept over night, and also gave permission for
its inspection by any one whom he might send around. A person
appeared with a permit to inspect it who, under the permission, stole
it and rode away. The garage keeper was rightfully held not liable.
If a garage keeper or his servant negligently runs a machine left in
his custody for storage or repairs, the garageman is liable for the
damage resulting to the owner. At the expiration of the bailment he
must deliver the machine to the owner or person authorized by him to
receive it, and is liable if neglecting or refusing. He is also liable
if delaying unreasonably to make repairs, or for making them
unskillfully. Lastly, if the car is driven by the garageman's servant
while the bailment continues, the bailee, and not the owner, is
responsible for any injury done to a third person by the servant's
negligence. Of course, if the driver was acting outside the scope of
his authority, and was using the car for personal purposes, neither
the garageman nor the owner would be responsible for whatever
happened. See _Automobile: Chauffeur_.
=Homestead.=--A legal homestead is the home or residence of a family
land owner, and includes a specific area varying in the several
states. By the more general rule the land must be connected in a
single piece, though in some states the pieces may be distinct. Though
divided by a highway this does not effect a separation, as the land
therein belongs to the owner subject to the public rights to pass and
repass and also use to keep the highway in repair. The peculiarity
about a homestead is, it is protected by law from seizure by the
owner's creditors.
One of the most important questions relating to a homestead is, the
meaning of the head of a family. The term is not limited to a man
having a wife and children. It includes an unmarried man with whom
his widowed sister and children reside; or a man who supports his
mother; likewise an unmarried woman with whom the children of a
deceased sister are living. Nor need they live under the same roof,
the essential thing is the relation and dependence existing between
them. On the death of a husband owning a homestead the right survives
to the widow, and usually to the minor children. Some statutes give
her the absolute estate, others a life interest; in some states she
loses the homestead by a subsequent marriage. In most states the
rights of surviving children end on attaining their majority. In many
states the surviving husband is entitled to the homestead right, even
though there be no children. A husband does not lose his homestead
when his wife withdraws from the family under a decree of divorce.
Non-residents as a rule are not within the privilege of the homestead
laws.
On the dissolution of a marriage by divorce, as the wife ceases to be
a member of the husband's family, she loses her rights to the
homestead. The decree of divorce may, in the dissolution of the
marriage, reserve to her the right, and if she is the owner of the
homestead she may continue to occupy it as one. The mere desertion of
husband or wife by the other spouse will not, in itself, destroy the
character of the homestead although an entire dissolution of the
family will have that effect.
By the federal law every head of a family, or a person twenty-one
years old and a citizen, or intended citizen, of the United States, if
not the owner elsewhere in the United States of one hundred and sixty
acres of land and has not previously obtained a federal homestead, is
entitled to a quarter section or less of the public land. Three things
are necessary: (1) An affidavit showing that the applicant comes
under the law; (2) a formal application; (3) payment of the land
office charges. When these things are done, the certificate of entry
is delivered to the applicant and the entry is made. Then the entryman
must actually reside on and cultivate the land for three years, and at
the end of that period, he is entitled to a patent. The lands thus
acquired are not liable for any debts contracted prior to the issuing
of the patent.
The head of a family can sell or mortgage his homestead, whether he is
solvent or not, nor can his creditors prevent its sale since they have
no rights therein. And if he sells his homestead and with the proceeds
buys another, the second is as fully protected from creditors as the
other.
From liability for most debts a homesteader is exempt, but not for
all. Generally the homestead is not exempt from taxes, but not
everywhere from fines for public offenses or liability on official
bonds. Debts contracted prior to the acquisition of the homestead and
pre-existing liens in most states are enforceable against the
homestead. So are debts contracted in improving or preserving the
homestead. These include materials furnished, also the wages of
clerks, servants, laborers and mechanics.
=Husband and Wife.=--The law, while regarding marriage as a contract,
adds something more, for it cannot be terminated by the will or
consent of the parties; a contract on the other hand in most cases can
be. To constitute a marriage there must be an agreement or mutual
assent by the parties. This agreement must be made freely, seriously
and not as a joke. False representations of health, wealth, etc., do
not invalidate the agreement, yet these may be grave enough to have
that effect. Consent may be obtained by deceit or compulsion so gross
as to justify a court in declaring that the parties were never legally
married. A person may be too defective mentally to give an intelligent
assent. A subsequent mental weakening would be no ground for annulling
a marriage. An Illinois court recently remarked, it is a harsh rule
that would permit a married man whose wife later in life became insane
to put her away on account of her misfortune. If one were so
intoxicated that he did not act intelligently, he could avoid his
marriage.
A male at common law can marry at fourteen, a female at twelve. By
statute a later date, twenty-one for males and eighteen for females
has been fixed in many states. The right to disaffirm a marriage on
the ground of non-age, unlike the parties to a contract, applies to
both parties.
In this country marriage is regulated largely by the states, though a
movement has been started to make marriage and divorce a matter of
national regulation.
As marriages are of higher character than other contracts relating to
the ordinary dealings of men, even those that are prohibited by law
are for reasons of public policy not always void. They are therefore
not void, simply because the formalities prescribed by statute in
obtaining the license and solemnizing the marriage have not been
observed, when the parties afterward live together like other married
people.
A marriage ceremony is not void though performed by one outside his
jurisdiction, or not having a license obtained at the proper place.
Persons who improperly grant licenses and solemnize marriages may
themselves suffer legally, but their wrongful action cannot be
visited on others. The principle still prevails in most states that a
marriage which is good by the common law, though contrary to statutory
forms unless there is an express prohibition, is a valid marriage. In
a few states a common law marriage is invalid.
A marriage that is valid by the law of the state where it was made, is
valid everywhere. Nevertheless, the courts have great difficulty in
applying the principle. Suppose that the resident of a state, for the
purpose of evading its marriage laws, should go into another state and
have the marriage solemnized, and then return, is the marriage valid
in that state? No, but to lessen the rigor of the rule, the courts
hold that both parties must have intended to evade the law, if,
therefore, one of them was innocent the marriage was valid.
After marriage the husband's domicile becomes that of his wife, and
her refusal to follow him without good cause, would be in law a
desertion. It is said that a promise before marriage not to take her
away from her mother and friends will not justify her in refusing to
go with him. If, however, she had immediately after marriage,
determined to separate from him and to take legal steps to that end,
she could legally remain.
A married woman by the common law is answerable personally for her
crimes as though she were unmarried, unless they were committed in her
husband's presence. When together the law presumes she acted from his
coercion, he therefore must be the sufferer, while she escapes. This
rule though does not apply to the gravest crimes; for these both are
liable. Like so many other legal rules the difficulty is in applying
it. How near to the husband must she be when committing a wrong to
render him liable and escape herself. In one of the cases a married
woman was properly indicted for unlawfully selling intoxicating
liquors. At the time of selling them she was alone in the room, though
she had sold them by her husband's order.
As the law regards husband and wife as one person, many peculiar
things flow from this relation. Thus one cannot steal from the other;
but either is criminally liable for an assault committed on the other.
By statute in some states the right of either party to sue the other
for wrongs has been greatly extended; nor is the husband liable for
wrongs committed by his wife unless he participated in them. For
example, in some states he is not liable for slanderous words spoken
by her in his absence; in other states his liability continues. On the
other hand, a wife who can manage and control her separate estate may
in turn be liable for the wrongs of her husband while he is acting
with authority as her agent.
A husband has a right of action for damages against any person who
alienates his wife's affections. Nor can he be defeated by showing
that he and his wife did not live happily together. Such facts though
may be used to prove that her society was worth less than it would
have been had they lived happily, in fact, by money valuation was not
worth three cents. A husband forfeits his right to sue others for
entertainment when his own misconduct justified and actually caused
the separation, otherwise his remedy is complete against all persons
whatsoever who have lent their countenance to any agreement for
breaking up his household. On the other hand, this is a one-sided rule
in some states; in others a wife has the same right to sue for the
alienation of her husband's affections as he has for the alienation of
hers.
By statute great changes have been made in the way of permitting
married women to retain their property and manage it, and to do
business. Formerly, all the personal property of a married woman went
immediately by law to her husband, and he became responsible for her
debts. She still retained her real estate and the management of it.
Now, very generally, she also retains her personal property, also the
income, very much as if she were unmarried. She often appoints him as
her agent to manage her property, and when thus acting he is
responsible to others and to her like any other agent. He may contract
for erecting any building or improvement on her land, but should he
contract in his own name for such improvement she cannot be held
therefor, nor can any one who has done work or furnished materials put
a lien thereon for them. It may be added that his right to act as her
agent is never implied solely from the marital relation.
A wife may act in a representative capacity as agent for her husband,
or for other persons, and may execute a power conferred on her by deed
or will. She may also be appointed to act as executor, administrator
or guardian, though under the common law theory her husband's consent
was needful to her acceptance of any of these undertakings.
The common law relations of husband and wife have been greatly changed
by statute since about 1844. "It is now," says Peck, "the usual rule
of law throughout the United States, established in each state by its
own statutes that the wife retains title to the property owned by her
before marriage or acquired by her during the marriage, and the right
to manage, use or sell it, without the concurrence of her husband.
The right to contract, and to sue and be sued, naturally follows from
her ownership and control of her property; in most of the states these
rights are expressly conferred by statute; and in some they have been
held to result by necessary implication."
The husband is generally relieved from liability for her debts or for
her torts, except for such debts as are for her support or that of the
family, or are within her express or implied agency to act for him.
The common law estate of dower and curtesy are retained in some of the
states, in the larger number they are materially modified by statute,
or wholly abolished and replaced by a right of succession to each
other's property as defined by statute.
The distinctive duties resting on a husband are to provide a home, to
support his wife and children, to protect her and them from injury or
insult. Thus a husband has the same right to protect his wife, to
assert and maintain her rights, even to kill a person, if necessary in
her defense, that he would have in his own behalf.
The duty of a husband to provide a home implies his right to select
and fix the marital abode. The wife must live with him, and a refusal
on her part to live in the home provided by him would constitute her a
deserter. But he must select a home in good faith and in reasonable
accordance with his means and their accustomed mode of life.
It is his duty to maintain order and law in his household. He is
therefore liable to prosecution should his wife carry on the illegal
sale of liquor, or in other ways defy the law.
A husband cannot chastise his wife, but he may use force to restrain
her from committing a violent criminal wrong. Says a competent author:
"That depends rather on the right of every one to use reasonable
efforts to prevent violence and crime than on any peculiar power of
the husband over the wife, and it would also justify like restraint of
the husband by the wife."
It is the duty of the wife to assist in the maintenance of the family
by such reasonable labor as the necessities of the family and their
circumstances in life and financial position require; while the
husband has no right to require her to do more than to care for the
house and the family in the customary and proper manner. He cannot
compel her to engage in business, to work for wages, nor to work for
him in his business. The services of any kind which either may render
to the other, or for the family, are rendered in consideration of the
marriage relation, and of the mutual benefit received therefrom and
neither has any right of action against the other for them.
It should be noted that the legislative revolution for the benefit of
married women has chiefly affected the property relations of husband
and wife, while their personal rights remain quite as before. Probably
no single rule of the common law was so bitterly resented and so
difficult to defend, as the vesting in the husband of the sole
guardianship of their children. By statute in many states both parents
are made guardian of them, and if they separate, the welfare of the
children is regarded as the decisive question in fixing their
guardianship, rather than the superior right of either parent.
A husband and wife by the modern law may agree to live separately. The
arrangement in some states is effected through a trustee, in others
this may be done by the parties themselves. By this the parties may
agree on the disposition and division of their property when this can
be done freely and intelligently. A separation agreement made through
fear of her husband cannot be sustained.
A wife who voluntarily enters into an agreement of separation covering
all property rights cannot, after her husband's death, have it set
aside and then claim her rights in his estate, except in some states
where community rights exist. On the other hand, her right to share in
her husband's estate is not lost though she lives apart from him by
agreement, unless this shows a clear intention to relinquish all
claims to his estate.
The husband must support his wife. This is the law everywhere. While
they live together the law presumes that he has given her authority to
purchase necessaries on his credit, and therefore a tradesman can
recover who shows that they were thus living and that the things
furnished befitted their condition in life. When she is living apart
from her husband the presumption is the other way, and a tradesman
cannot recover without proof of the fact of her husband's authority to
let her have the goods. But when she is living apart from him for good
cause, and would starve if the things needful to sustain life did not
come from some source, she has an absolute right to pledge her
husband's credit for them.
What are the things for which she may pledge her husband's credit?
Those required to sustain life and preserve decency, besides other
things to maintain her in her social condition. Wearing apparel,
furniture, jewelry, even legal expenses incurred in regaining her
conjugal rights have been included.
Besides agreements to live separately, the law for several causes
permits absolute separation. These are prescribed by statute, and
vary greatly in the different states. Adultery is a cause recognized
in all of them, for which an absolute divorce can be granted. Cruelty
is another cause, almost as general, though more difficult to define.
Actual violence is not necessary to constitute cruelty, threats of
violence with an intention to do bodily harm will suffice. Again, the
cruelty must be unmerited. If she has justly provoked the indignation
of her husband, then his cruelty presents a different aspect.
Nevertheless, if his cruelty bears no relation to her wrongful
beginnings, she still has good ground for separation.
Desertion is a general ground of divorce, the law in every state
prescribing a period of time, quite often three years. The period must
be continuous. An offer to return made by the deserted spouse in good
faith at any time before the separation has run for the statutory
period will bar a divorce, but not if the offer is made afterward.
Again, a husband who drives his wife away from him by his misconduct
deserts her as clearly as if he had left her. To cease living together
for the time fixed by statute is not desertion unless this was done
intentionally. For example, separation on account of business,
sickness, etc., is not desertion. Not only must there be an intention
to leave the other party, this must be without consent.
Another cause for divorce, quite generally recognized, is habitual
drunkenness. This must be of a gross and confirmed nature. While other
causes exist the most general have now been mentioned. In some states
there is a more general ground, any reason rendering married life a
failure. Of course, much depends on the discretion, mental and moral
make-up of a judge in applying the facts to a cause for separation
that is so general. An agreement in advance to make a cause of divorce
is everywhere condemned by the law.
Divorces are of two kinds: from the bond of marriage, often called
absolute divorces, which put an end to the marriage relation and
render the parties single; and divorces from bed and board, limited
divorces, more accurately called judicial separations, in which the
marriage relation is not dissolved, but the injured party is given the
right to live separate from the other. In more than half of the
American states no distinction is made between kind of divorce, all
divorces are absolute, from the bond of marriage.
The legal effect of divorces is still a grave matter. When a divorce
has been legally granted by a state, the courts of every other state
for obvious reasons recognize and try to uphold the decree or
judgment, though not all of them, and consequently strange results
follow. Thus a person who was married and living in New York leaves
his wife for good reason and goes to Connecticut. After acquiring a
legal residence there and proper standing in a court, he applies for a
divorce, the proceedings are regular in every respect and a divorce is
granted. He marries again and takes his wife to New York for a visit.
There he is sued by the first wife for support, moreover, by the laws
of New York he is an adulterer. In New York he is still married to the
first wife, in Connecticut to the second. If children are born of the
second marriage they are legitimate as long as they live in
Connecticut, illegitimate should they go to New York. One of the
latest legal writers on this difficult subject says: "Foreign divorce
judgments granted in states where the plaintiff had obtained an
actual, bona fide residence, will doubtless continue to be recognized
by the great majority of our states, but the states of New York,
California, Maryland, Massachusetts, Vermont, South Carolina,
Pennsylvania, and possibly some other states, which have adopted the
extreme New York doctrine, are permitted by the rule established in
the Haddock case--a decision by the Supreme Court of the United
States--to continue to refuse recognition of divorce judgments in
other states."
=Innkeeper.=--An innkeeper's house is a public place to which
travelers may resort. He cannot therefore prohibit persons who come
under that character in a proper manner and at suitable times from
entering, so long as he can accommodate them. He is not obliged to
receive one who cannot pay for his entertainment. Indeed, he must
exclude some persons who apply, notably thieves. He can refuse to
admit all whom he has reason to believe will disturb the peace and
safety of his guests; and can afterward exclude all who, though
admitted, prove to be noisy and disturbers of the comfort and safety
of others. And if having a stable he is under the same obligation to
receive and care for horses as he is to receive the person to whom
they belong. Again, he is not required to provide a guest with the
precise room he may select, but only reasonable and proper
accommodations. If he refuses to do so he is liable in law to the
applicant.
In caring for the baggage of a guest, the law is not as well settled
as it might be. A competent writer has said: "They are insurers of the
property of their guests committed to their care, and are liable for
its loss, unless caused by the act of God, a public enemy, or the
neglect or fault of the owner or his servants." This strictness of
liability, it is said is necessary to protect travelers against any
collusion between the innkeeper and his servants, and to compel him to
take care that no improper persons are admitted into his house. His
charge for the entertainment of his guests is sufficient to cover this
risk; he also has a lien on their property entrusted to his care to
indemnify him against loss.
By statute in many states innkeepers are exempt from loss by fires
which are in no way caused by their own negligence or that of their
servants. If a horse dies while in the innkeeper's charge, he is
liable unless he can show facts that excuse him.
If the goods of a guest are stolen by the innkeeper's servants or
domestics, by another guest, or by someone outside the inn, the
innkeeper must make restitution, for it is his duty to provide honest
servants, and to exercise an exact vigilance over all persons coming
into his house as guests or otherwise. His responsibility extends to
all his servants and domestics, and he is bound in every event to pay
for them if stolen, unless they were stolen by a servant or companion
of the guest. Illness or absence of the innkeeper does not excuse him.
An innkeeper is not liable for the loss of a guest's property when
this loss is due to the fault or negligence of the guest himself. Thus
an unnecessary display of money or valuables, or leaving them where
they would tempt thieves, may be negligence. But failure to lock or
bolt his door is not necessarily negligence on the part of a guest. It
is only evidence of negligence. Nor is an innkeeper exonerated when a
theft is committed by a fellow guest with whom the owner of the
property stolen had consented to occupy the same room.
An innkeeper may make needful and reasonable regulations that are to
be observed by his guests to secure the safety of his property. When
they are made and brought to the knowledge of a guest he is bound by
them. By contract, custom and statute the responsibility of an
innkeeper may be changed. In many states by statute an innkeeper
avoids liability for the valuables of his guest unless they are
deposited with him. These statutes are construed strictly in favor of
the guest. Nor can an innkeeper even by these exempt himself from
everything, for if a guest were required to deposit all he had to
secure such protection, he would be in a strange fix. Said a Georgia
court: "Is the guest to deposit his valise there, and go and send for
it to get out a clean shirt?"
If a guest goes away, leaving his valise or other things with an
innkeeper, he is not required after a reasonable time to observe such
diligence in keeping them as he receives nothing in the way of
compensation for so doing.
Keepers of lodging and boarding houses are not innkeepers, nor subject
to their liabilities. The proprietor of such a house does not hold
himself out to the world as prepared to supply accommodations for all
who may apply, nor is he required to receive any persons unless he
chooses to do so; an innkeeper's freedom is restricted in this
respect. A house may have a double character of boarding house and
inn. With transient persons who, without a definite contract, remain
from day to day it is an inn; with those under definite contract it is
a boarding house.
=Land License.=--A license is an authority to do something on
another's land without acquiring ownership therein, and may be given
orally, or it may be simply a permission to use or occupy. A license
may be executory, relating to a future act, or it may relate to an act
already done or executed. An executory license may be revoked at any
time. Thus A laid a water pipe by permission across B's land who
afterward rendered the pipe useless by cutting it. A had no redress,
for B was acting within his rights. A ought to have obtained written
authority for such action. He could, however, remove the pipe or any
other improvement he had made on the strength of the license granted
to him.
A license may be to do many things on another's land. Thus one may
have a license to flood land, erect buildings, pass overland, maintain
a ditch, cut timber, use land for railroad purposes. A common form of
license is a ticket of admission to enter another's land to witness a
spectacle or similar purpose.
No formality is needed to create a license. It may be in writing or be
oral, or implied from the relations or conduct of the parties, as
where a land owner assents to the doing of certain acts on his land. A
person by opening a place of business licenses the public to enter
therein for the purpose of transacting business. And a license to do a
particular act necessarily involves any act essential thereto.
A license is usually revocable at the pleasure of the licensor, even
though it be in writing and under seal, or a consideration has been
given. If the licensee has expended money and made improvements on the
faith of the license, can it be revoked? On this question the courts
divide. The more general opinion seems to be that a license coupled
with a grant or interest cannot be revoked. Or, if a license has in
effect been so used as to become an easement it remains a burden on
the land though sold to a purchaser, unless he had no knowledge of
it. A license cannot be assigned by the licensee to another.
Again it is said that the revocation only affects the future exercise
of the privilege, and does not prevent the licensee from removing
structures or other movable articles placed by him thereon relying on
the license, provided he does this within a reasonable time after the
revocation. Even should the owner of land sell, the sale would not
operate as a revocation to one to remove trees that he had already cut
under a contract of sale and removal.
If a person grants a license to another to come on his land, he owes
no duty to him except the negative one of not wantonly injuring or
exposing him to danger. Merchants invite the public into their stores
to buy wares, but those who accompany them without any intention of
purchasing are not invitees, they are mere licensees. The duty of the
storekeeper to one who enters his premises by mere license is not to
keep the premises in a non-hazardous state, but only to abstain from
acts willfully injurious to him.
=Lease.=--A lease is for the use of land, usually for a few years or
shorter period. The lessor is more generally known as the landlord,
and the lessee as the tenant. The lease may be oral, though the better
way is to put the agreement in writing. If it be for a house or other
building the lessee should insist on this, otherwise he would fare
much worse should the building be destroyed by fire. Doubtless many do
not know that, unless the lessee makes a specific agreement relieving
himself, he is liable for the rent of a building, just the same if it
is burned down as if he were still the occupier. This is the common
law, which has been changed in some states by statute.
If the lease is for more than a year, or other short period, the
Statute of Frauds, so called, requires that it must be in writing. If
the time be less, a verbal lease may be made, even though the lessee
does not take immediate possession of the premises. If on the other
hand, it exceeds the statutory period, it is not absolutely void, but
continues during the joint wills of both parties, and may therefore
cease at the will of either party. If the landlord wishes to terminate
it, he must give the tenant notice to quit; should he disregard the
law and take immediate possession he would be a trespasser.
When the terms of a lease are in doubt, they are construed in favor of
the tenant. A lease to a specified day continues during the whole of
it, though custom or statute may prescribe a different rule. A term
may also continue during the option of either of the parties to be
ended on notice by the party exercising the option.
The most usual agreements or covenants in a lease are on the part of
the lessor for quiet enjoyment, which secures the tenant against any
hindrance or disturbance of his possession and enjoyment of the
premises from persons deriving their title from the landlord, or from
any one else who claims to be the owner. Also against all
encumbrances, in other words, that no one has any easements or other
rights in the premises. The landlord also usually agrees to repair,
and often to renew the lease, and the lessee to pay rent, to insure
and not to assign or underlet, without the landlord's consent. The
parties may of course agree to do any other lawful thing, for example,
sometimes the tenant agrees to make repairs, to reside in the
premises, not to engage in some kinds of business, to cultivate the
land, if the lease be of a farm, in a specified way. Again though an
oral lease for a term of years at a stated annual rent may not fulfill
the requirement of the Statute of Frauds, the parties may conform to
it and thus create a tenancy in fact from which the law will imply a
leasing from year to year. If therefore the tenant with the
acquiescence of the landlord continues in possession for several
months after the expiration of the original term, a tenancy for
another year will be created with a corresponding liability on the
part of the tenant for a full year's rent. And the measure and extent
of the tenant's liability would be the same, whether his continued
occupancy related to the original lease, or to a subsequent one just
like it, made as the first was soon to expire.
The definite period for which a lease is given is called a term. If a
lease is from the first day of January, it begins on the second day
and lasts through the last day mentioned; in carefully drawn leases
the number of days is fixed to avoid all dispute. A lease for a year
with the privilege of remaining three years or longer does not mean a
single period of three years, but three yearly periods as the tenant
may elect.
A lease may be made to take effect in the future, provided the time
for taking possession is not so far away as to violate some statute to
the contrary. A lease for an hundred years in some states is deemed a
parting with the absolute title to lands though railroads make long
leases running for ninety-nine years. If the length of the term is not
definitely expressed in the lease, the time may be ascertained by
other evidence. When a lease is to run for one or more years "from" a
specified day, the corresponding day of the year is excluded from the
term, unless a contrary custom exists. A lease to a specified day ends
with its expiration. If there be a doubt on which of two days a lease
terminates, the lessee may decide. More generally, leases of doubtful
duration are construed in favor of the tenants. By statute in New York
leases which do not specify the length of occupation, extend to the
first of the following May after taking possession.
A lease must describe clearly the premises, nor can a defective
description be cured by outside evidence. Any language will suffice
that shows the intention of the parties. The words "grant," "demise,"
and "to farm let," have a technical meaning, and are generally used,
but other words may be and often are used. A memorandum expressing the
consent of the owner that another shall have immediate possession of
the premises, and shall continue to occupy them at a specified rent
and for a definite term, is a sufficient lease; in general, any
agreement under which one person obtains the right of enjoyment to
property of another, with his consent and in subordination.
A distinction exists between a lease and an agreement for a lease,
which should be understood, though it sometimes is not by the parties
themselves. If the agreement is a lease, it cannot be changed by other
evidence, for it is a completed contract; but if it is an agreement
for a lease, then it is not complete and other evidence may be
produced to show what the parties intended. How can the nature of the
agreement be tested? By ascertaining whether it is complete or not.
Thus A wrote to B that he would take his home at a stipulated rent for
two years if he would put in a furnace, with which offer B at once
complied.
This was a lease, for by putting in the furnace nothing more remained
to be done. If he had not put in the furnace, or not before the time A
was to take possession, there would have been no lease, unless A had
waived his offer and taken possession.
Of course to make a valid lease there must be competent parties. A
lease made by a minor is not void, but he may avoid or cancel it by
some positive act. Can he do this before attaining his majority? On
this the authorities differ. Again appears the risk of making
contracts with minors, though the situation many times seems clearly
to justify such action. A guardian may lease his minor's land for the
period of his minority; if leased beyond, the ward may have the lease
canceled for the excess. A lease terminates on the death of the ward,
whatever may be the length of the term. A parent cannot lease the land
of his minor child like a guardian.
By common law a lease made by a married woman was avoided after her
husband's death. The modern statutes excluding her husband's power of
control over her property and authorizing her to take and hold
property as if she were an unmarried woman, have abolished both his
power to invalidate the lease and also her power to repudiate it after
his death.
A private corporation may make a lease of its property provided that
in doing so it acts within its charter. A municipal corporation, while
it may lease property belonging thereto of a private nature, cannot
lease property which has been devoted to public use. A corporation
whether public or private may take a lease of property so far as this
may be a proper means of carrying out the purposes for which the
corporation was created.
Executors and administrators may dispose of a lease belonging to the
deceased, or make new leases for terms within the period covered by
it. Trustees have a still larger authority to lease the lands
entrusted to them, unless restricted by the terms of their
trusteeship, or by statute. Though a member of a partnership, as we
have seen, is an agent, he cannot make valid lease of partnership
land.
What may be leased? Besides land, the right to a wharf, to flow with
water the land of another, to go over another's land. An ordinary
boarder, who has a room and boards in the house of another and who
retains the possession and care of his room, is not a tenant. On the
other hand the letting of an entire floor for lodgings may create a
tenancy, and so may even a single room. A lease for an unlawful
purpose is void, for example, for the sale of spirituous liquors
contrary to law.
If the premises are occupied by the lessee and his rent is paid as
specified in the lease, this is regarded as a ratification by him of
an invalid or void lease. To this rule are some exceptions.
A rule of construction may here be added; if a blank form is used in
making a lease and the printed and written parts or agreements are
inconsistent, the matters written are regarded as expressing the
intention of the parties.
Much might be said concerning the use of the premises. If a farm is
rented and the lease is silent on the matter, the law presumes that
the tenant will use it in a proper and husbandlike manner, like other
exemplary farmers in that vicinity. He must cultivate the soil
properly, preserve the timber, consume the hay as fodder to the
cattle, if such be the custom, and keep the buildings and fences in
repair. Manure in the ordinary course of farming belongs to the farm.
To manure made in livery stables a different rule applies and the
tenant can remove it. If the lease be of a mill it usually provides
how it shall be run, if it be a house in the city and nothing is said
about its use the law implies that there shall be no waste or
destruction beyond the ordinary wear and tear. To use the doors for
firewood is not uncommon with tenants, unless they are not burnable,
though surely it is not a proper use of a leased house.
A farm tenant has the right to take and use material found on the land
suitable and needful to repair the buildings, fences, also dead and
fallen timber for fuel. He cannot use shrubbery and ornamental trees
for this purpose, nor cut standing timber for this purpose. He is
entitled also to the way going crop, but must remove it during his
lease. He cannot go on the land afterward and remove crops, unless he
was prevented by some good reason from removing them while he was in
possession.
Can a lessee assign or sublet his lease? Of course this may be
forbidden, and often is by the lessor, without his consent. If the
lease is silent this can be done. If the lessee die, his executor or
administrator can assign the remainder of his term. A lease may also
be assigned if the lessee become insolvent, also by a new partnership
created by the addition or retirement of a member. A transfer by the
lessee of the whole or a part of his interest for a part of the time
is a sublease and not an assignment. And whenever a sublease is made,
the rights of the original lessor are not changed, nor does he
recognize in any way the sub-tenant unless by agreement, nor has he
any right of action against him. Of course there is nothing to prevent
the parties from making any arrangement that may be agreeable to
them.
As the lessee may assign or sublet unless forbidden, so may the lessor
part with his interest in the leased premises. When an assignment of
it is made, the assignee may sue in his own name for rent accruing
after the assignment.
The lease of a private residence is not a warranty that it is
reasonably fit for occupancy. Thus saith the law. Nor can a lessee,
unless the lessor has misrepresented the healthfulness of the place,
leave after the unwelcome discovery that it is not healthful. This
seems to be rather harsh, but the rule is founded on the presumption
that the lessee will examine the house before leasing and make proper
inquiries about its healthfulness.
By the common law the lessor was not required to make repairs. This
has been changed in some states by statute. He is not required to make
repairs needed and known to the tenant at the time of making his
lease. Hallways, staircases, elevators, and the like that are used in
common by the tenants of a building and are under the landlord's
control, must be kept in repair by him. If he shall let a many storied
building to several tenants, to each tenant a story, who have
exclusive possession thereof, the lessor will not be liable to any
lessee for the damage caused by another.
If the landlord agrees to make repairs and keep the tenement in good
condition, he is required to keep it in essentially the same condition
as it was when the tenant took possession. Should the house or other
building be destroyed by fire what then? An agreement to keep it in
good repair imposes an obligation on the landlord's part to rebuild.
But an agreement by the lessee to keep and leave it in good repair,
does not require him to rebuild should it be destroyed by fire, or
other cause without any fault of his own. If the lease provides that
the insurance money, when the landlord has insured the premises, shall
be applied to rebuild in the event of fire, he must regard his
agreement, but if there be no such agreement, the tenant cannot compel
his landlord to thus apply it. Should the lessor fail to fulfill his
agreement to repair, the tenant is not excused from paying his rent,
nor justified in leaving the premises. His remedy is to sue his
landlord for the damages or injury to himself. And even if the
premises be destroyed by fire the tenant must continue to pay his rent
unless he has been wise enough to relieve himself by a proper clause,
or unless some kindly statute has been passed relieving him on the
happening of such an event. No oral stipulation, that the parties
should make covering the effect of loss by fire or other contingency,
would be binding if contrary to the terms of the written lease. As
this is the highest form of the agreement, all verbal stipulations to
the contrary must give way.
A tenant can make no permanent alteration without his landlord's
consent; and should he do so and injure the premises the landlord may
recover damages, or, if such an alteration is feared or threatened, he
may prevent it by obtaining an injunction from a court ordering the
tenant not to make it and penalizing him should the order be
disobeyed.
When a lease is renewed, the new lease may be regarded in two
different ways. It may be considered as the continuation of the lease,
and thereby protecting all the interests created under it. And this
will be the case whenever the old lease clearly shows that if a
renewal should be made this was the intention of the parties. When
nothing is said, a renewed lease is a surrender of the old one and
different conditions may arise. It is important therefore when
providing for the renewal of a lease to specify what the parties
intend, whether a renewal or continuation on the old terms, or a
renewal on other terms to be fixed at another time.
Usually a lease specifies not only the amount of rent to be paid, but
the time of payment. If silent, yearly rent is not due until the end
of the year, quarterly rent at the end of the quarter, monthly rent at
the end of the month. When a lessee is evicted or turned out of
possession by his landlord, he is excused from paying rent. What,
therefore, is an eviction? Any act by the landlord, or by his agent,
impairing the worth of the premises to the tenant, for example, the
destruction of a summer house, turning rooting pigs into the premises,
the erection of a new building rendering the leased premises unfit for
occupation. One of the curious cases is the lease of a distillery
which could not be run because the landlord prevented the lessee from
getting a license. In like manner if the landlord is to furnish heat
and fails to do so, the tenant is justified in leaving. More
generally, any act by the landlord whereby the leased premises are
rendered unfit or impossible for the purpose intended, and affecting
the health and comfort of the tenant, is an eviction.
The eviction must be done by the lessor. An act done by a wrongdoer,
not under the lessor's order, will not justify the lessee in quitting.
Thus the darkening by an adjacent owner of the lessee's premises by
erecting a structure, however injurious it might be, would not justify
the lessee in quitting and refusing to pay his agreed rent. This is
one of the risks taken when making the lease.
Suppose a person occupying state land is evicted by the state, must
he continue to pay rent? In Missouri the rent ceases, or if evicted of
a part, he must pay rent on the remainder. In some states he must
still continue to pay his rent and then demand compensation for his
loss.
Sometimes land is rented on shares, a very common way in the olden
time. When this is done, the relation of landlord and tenant may be
created, or perhaps a partnership relation. If the farmer is to do the
work of a servant of the owner of the farm, receiving in return
therefor, a specified part of the crops, the agreement is one of
hiring and not a lease. If the farmer has rightful possession of the
use of the land, then the payment of his rent in produce does not
affect his relation as a tenant. The natural increase of stock leased
with a farm belongs to the tenant, and a landlord cannot recover for
the death of cattle in the tenant's possession, unless he can prove
his tenant's negligence. And if a lessee should sell part of the stock
contrary to the lease, the purchaser would be liable therefor.
A landlord often leases separate parts of a building to different
tenants, while the stairways and passages to them, though intended for
their use, are still under his control. He thus invites the tenants
and other persons having relations with them to use the approaches to
obtain access to their rooms or apartments, and is accordingly liable
when they are not kept in proper repair; the same as any owner of
structures either expressly or impliedly invites persons to enter
them. If therefore he should leave elevator shafts, or hatchways
unguarded, he would be clearly liable for the consequences. So, too,
should a mill owner have a defective bridge to his mill, forming part
of a common way thereto, he would be liable for the consequences.
The lessor is liable if he leaves his premises with a way or cellar
entrance, or coal hole inadequately guarded at the time the lessee
takes possession, but not if the guard or covering gets out of repair
during the tenancy, or is temporarily left unguarded by the tenant or
some third person. If the hole or other dangerous place is made
without proper authority, it is considered a nuisance and the owner is
liable for all injuries whether he has rented the premises or not. Who
is liable for injuries caused to travelers by ice and snow on the
pavement? This is a hard question to answer in a short space. If the
ice or snow has accumulated by reason of a defective roof, then the
landlord is liable because of its faulty construction. In some parts
of the country it is most difficult to keep the walks safe in winter.
Experience has led the parties to make stipulations defining and
fixing their liability. Many states also have statutes and cities
ordinances regulating the duties and liabilities of landlords and
tenants.
When a lease is about to expire a difficult question sometimes arises,
what can the tenant take away with him? Of course he can remove all
his furniture and the things that can be separated without injury to
the premises, but during his tenancy, he may have added things
possessing a more permanent nature, called fixtures, these he cannot
remove. The courts have had great difficulty in deciding in some cases
what these are. In a general way it may be said that whatever a tenant
adds to the premises can be removed, while he is still in possession,
without material injury to it, but he cannot remove anything
afterwards. Suppose the tenant erects a building, can he remove it?
One would not think of his building this for the benefit of his
landlord. Suppose he had built it on a foundation from which it could
be easily removed, a court would have no difficulty in deciding that
it belonged to the tenant. Many cases have arisen about ranges and
stoves. An ordinary stove of course can be removed; suppose it is
affixed to the house in such a way that some portion of the wall will
be detached by the removal, can this be done? Not if the wall will be
badly injured. How badly? This is a question of fact to be answered by
inquiry in every case. Among the fixtures that can be removed are
hangings and tapestries, ornamental chimney pieces, wooden cornices,
wainscoting affixed to the wall by screws and spikes, bells and bell
wires, chandeliers, cisterns and sinks though fastened by nails and
set into the floor, fire frame fixed in the fireplace, pipes for gas
or water, grates removable without injury to the building, pumps,
stoves, ranges and furnaces, gas ranges and water closet appliances,
washtubs fastened to the house, gas fixtures and shelves. A greenhouse
is not removable, nor gutters placed in the roof of a dwelling, nor a
stairway, nor flowers, shrubs, or bushes planted for ornamental
purposes.
Chattels placed by a tenant on leased premises for the purpose of
carrying on his business or trade are generally regarded as personal
property. Annexations of this kind are called trade fixtures and the
law is liberal in permitting their removal. Show cases, counters and
shelves, engines, boilers, machinery, tanks in a distillery, a bowling
alley, bar fixtures, even buildings are removable. The same liberal
rule applies to agricultural implements. A tenant, therefore, if
wishing to remove whatever he may have added, should be careful about
their nature, or protect himself by an effective agreement.
=Legal Remedies.=--Elsewhere we have shown how civil and criminal law
differ. In criminal proceedings the state is a party and prosecutes
offenders through agents or attorneys who are chosen or appointed for
that purpose. In all civil offenses the person injured prosecutes the
offender, through the courts established by the state for that
purpose. Suppose A owed B one hundred dollars for which he gave his
promissory note payable in ninety days from date, and which on its
maturity A declined to pay. B could then have recourse to a court of
law to collect the money. If knowing nothing about the mode of
proceeding he would employ a lawyer; if he was familiar with legal
proceedings he could do this himself.
What is the first step taken by a lawyer? He makes out a writ or
complaint stating B's course of action against A--that he has loaned
him a sum of money which he has not paid as he promised to do, and he
is summoned to appear in court at a certain time and place and answer
why he does not pay and the court is asked to render judgment against
him, if there is no defense, for the money due with the addition of
the costs incurred in seeking the aid of the court to collect the
money. This writ, declaration, or complaint is given to the sheriff of
the court where either A or B lives, who "serves" it on A. This
service consists in reading a copy of it by the sheriff, or by one of
his deputies or a constable, or other authorized person, to A, or in
leaving a true and attested copy thereof with him, which has become
the universal practice. This is the ordinary mode of beginning a legal
action against a person or corporation.
An action thus begun is followed by a trial of the case unless it is
settled. Usually the trial comes off within a few months, but not
infrequently long delays occur. If, after the introduction of
testimony, judgment is rendered in favor of B, an "execution" or order
is issued by the court directing the sheriff to levy on A's property,
whatever he may have, save a small sum, household furniture and the
like, and sell it and turn over the proceeds to B in payment of his
debt. If there was a balance left from the sale of A's property after
satisfying the judgment of the court and the costs of the legal
proceedings, it would be paid to A. This, in fewest words, is the mode
of proceeding in a court of law to obtain redress in a civil suit or
action.
There are several kinds of actions or remedies used in different cases
and these will now be explained. First, is the action of assumpsit.
This is the form of action used whenever one sues to recover on all
kinds of promises, those implied by the law as well as express
promises, not under seal. They include all ordinary promises to do
things either orally or in writing. Next, is the action of covenant.
This is used whenever one sues to recover for some failure on the part
of a person who has given a deed or other sealed writing. Suppose the
purchaser of land discovered there was an unpaid mortgage thereon,
though the deed covenants or declares that it is free from all
encumbrances. The vendee or purchaser would sue to recover for a
broken covenant. Another action is replevin which is used to recover
specific goods. Suppose someone had taken my horse and refused to
deliver the animal to me. The proper remedy would be replevin. Suppose
I did not wish to have the horse back, but only its value or worth.
Then the proper remedy would be an action of trover. Another form of
action in much use is called trespass. This is used to recover
damages for injuries to persons and property. If a person knocked me
down and I sued him to recover for the injury, trespass would be the
proper form of action. In many states an action in tort instead of
trespass is the proper remedy. If one should come upon my land and
take away wood, grass, stone, or in any way injure it, trespass also
would be the form of action. Ejectment is the action employed to eject
or turn out a wrongful possessor and recover possession of land. In
this action the title or ownership of the land lies at the foundation;
and the title to many a piece has been settled in an action of
ejectment. One of the most familiar actions is habeas corpus, which is
employed to recover a person's liberty from illegal restraint. As the
actions of slander and libel have been described, only two others
require notice, mandamus and quo warranto. The first of these is used
to compel one to do something. A familiar example is that of a city
which refuses to pay a judgment that has been rendered against it. The
court in this action commands the city to pay, and it must obey unless
there exists a legal defense. A quo warranto is the form of legal
action to which a person resorts to get possession of an office to
which he is entitled, but is denied him. Suppose one is elected mayor
of a city, but for some reason or other, the one in possession is
determined to keep him out. He would bring this action and a court
would then decide whether he was entitled to it or not, and if he
were, the court would proceed to put him in possession.
In many of the states, especially the newer ones, not all of these
different forms of action are used. Only one form, called a complaint,
includes most of them. While the substitution of this has simplified
the modes of redress, the substance of the complaint really embodies,
as before, the different kinds of injuries above explained.
=Life Insurance.=--The contract of life insurance is a mutual
agreement whereby the insurer agrees on the payment of a fixed sum or
premium to pay to a person designated in the policy on the happening
of a contingency, usually death, a sum of money. By another form of
insurance the insurance may be made payable at a fixed time, or
before, should the insured die before that period.
The contract to be valid must be for the benefit of one having an
insurable interest, otherwise the contract is a wager, which the law
condemns. This is sufficient if the person taking the insurance has
such an interest arising from his relation to the insured as creditor
and surety, or from the ties of blood or marriage that will justify a
reasonable expectation of advantage or benefit from the continuation
of his life. It is not needful that this expectation or benefit should
possess a pecuniary valuation. The mutual legal rights and liabilities
of father and minor child are sufficient to create an insurable
interest on the part of each in the life of the other; also the
relationship of brother and sister, and that of husband and wife.
Likewise a man and a woman who are engaged to be married; and a
creditor has an insurable interest in the life of his debtor. And this
interest covers not only the amount of the indebtedness, but also
future advances, and the cost of taking out and keeping up the
insurance. A partner who has advanced the capital of the business has
an insurable interest in the life of his partner. More generally any
person who invests money relying on the efforts of another to produce
a return has an insurable interest in such person's life. A surety
therefore has an insurable interest in the life of his principal; an
executor in the life of a person who has granted an annuity to the
testator; a common carrier even may insure against loss from injuries
to passengers. But the relationship between uncle or aunt, nephew and
niece and that of cousin is not sufficient to support a policy taken
by one in the life of the other.
A policy may be assigned to one who has no insurable interest if made
in good faith, and not as a cloak for the procuring of insurance by
one having no insurable interest. This rule does not prevail
everywhere, but the courts which do not accept this rule usually
protect the assignee who has paid the premiums to the amount of his
payments, while the estate of the insured takes the balance that may
come from the insurer, whenever the assignment of the policy is not
invalid. An assignment to one who has an insurable interest as
relative, creditor and the like, is always valid.
A general agent, says Justice McClain, "may bind the company by an
agreement as to rate of premiums, or other terms of the contract, even
as against the express provisions of a policy subsequently issued,
there being no negligence on the part of the insured in failing to
advise himself as to the terms of the policy; but if the want of
authority of the agent to vary the terms of the application is brought
home to the applicant, oral communications of the insured to the agent
are not to be considered in determining the validity of the insurance.
If the agent has exceeded his authority as to the terms of the
proposed contract, the company cannot reject that part which the
agent was without authority to make and enforce the rest, but must
accept or reject in toto."
Until a proposition for insurance has been accepted by the company
there is no contract. Delay in accepting an application which is
subject to approval does not effect an acceptance. There may be a
binding contract of insurance as soon as the company has accepted the
application, or on the delivery and acceptance of it by the company's
agent, when he has authority to do so. In order to complete the
contract before issuing the policy there must be an agreement to this
effect, and before the death of the applicant. The receipt by an agent
for the first premium, or of a note therefor, subject to the approval
of the application by the company, does not effect a contract between
insurer and insured.
Some states have enacted statutes prescribing requirements for life
insurance policies, or standard forms. Delivery to a third person for
the insured may be sufficient. The contract becomes complete when the
policy is put in the mail, postage prepaid, for delivery in due course
to the insured. Delivery to the insured for examination of course does
not effect any engagement on the part of the insurer, nor does a
delivery on condition.
It is often stated that the delivery shall not be effectual to create
a contract unless the insured is alive and in good health when the
policy is delivered and the first premium is paid. Indeed, how could
it be valid if the insurer is dead? And if the contract is with a
person other than the insured as beneficiary, it would be void on the
ground of mistake. Likewise, under such a condition, a policy does not
become effective, without a waiver, if the insured is in ill health at
the time of its delivery or payment of the premium.
Unless waived by the company, there is usually a stipulation to the
effect that the company shall not become bound until the first premium
has been actually paid and accepted by the company or its authorized
agent. But if the premium is actually paid by the agent of the company
for the insured by virtue of an agreement between them, this will bind
the company. The payment of the premium by a third person without the
knowledge of the insured does not have the same effect.
A general agent has authority to waive the stipulation, that the
policy shall not take effect until the first premium is paid, though
of course he may be restricted in this regard, but a special agent
cannot waive this stipulation; though if he acts otherwise and the
company ratifies his act, it is bound. A provision also that a policy
shall not be valid unless the premium is paid when the insured is in
good health may be waived by an agent who has authority to take
applications, collect premiums and deliver policies.
Passing to the nature of the contract, if made in violation of a
statute, or if contrary to public policy and this is known by both
parties, it is void. Thus a stipulation that a policy shall be payable
though the insured may be executed for a crime is contrary to public
policy and is therefore void. The same is true of a stipulation
insuring against death by suicide while sane. It is against public
policy to allow one person to have insurance on the life of another
without his knowledge. A policy issued on a person beyond a specified
age is prohibited by statute.
What is the effect of fraud in negotiating and issuing policies? If
the company or its agent perpetrates a fraud whereby one is induced to
take out a policy, he can at his option declare it void, unless so
negligent in acting as to work an acquiescence of it. But if acting in
a proper way and time he can set up fraud as a defense in an action to
get the premium for which the contract has stipulated; or he may sue
to have the policy declared void and his premiums returned to him; or
he may bring an action against the company or its agent, or both, to
recover the damages he may have sustained by the fraud that has been
practiced on him.
On the other hand, if the insured has been wronged, the courts furnish
relief, and perhaps may set the policy aside. Mistake is a common
ground of relief; it must in all cases be clearly proved. And if a
policy is susceptible of two constructions, the ambiguity is to be
resolved in favor of the insured. As the company framed the policy all
of its provisions in its favor are strictly construed. It may be added
that the construction which the parties themselves have put upon a
contract of life insurance will be generally followed in determining
their intention. Again, the entire contract is to be construed
together for the purpose of giving effect to each clause and as
between general and specific provisions relating to the same matter
the specific provisions control.
In determining who is the beneficiary under the terms of a policy of
life insurance the courts are governed by the intentions of the
parties. They need not be named if they can be otherwise identified,
and may be designated in a separate paper prepared for that purpose.
The amount named in the policy generally fixes the liability of the
company. To obviate the wager feature, the amount of insurance
effected for a creditor on the life of his debtor ought to be limited
to the amount of the debt with interest and premiums during the
expectancy of the life insured.
The risk is presumed to begin from the date of the policy and to
continue until the happening of the contingency or time when payment
is to be made by the insured. It may be added that words or figures
written or printed on the margin of a policy of life insurance, on its
back, or on a slip, with reference to the terms and conditions of the
contract, constitute a part of it and must be considered in deciding
its meaning. But representations made in a prospectus or circular
issued by a life insurance company are no part of a contract.
The payment of premiums to a general agent without notice of any
limitation of his authority to receive payments will bind the company,
but a different rule applies to a special agent. The premiums may be
paid by the insured, or the beneficiary, or by the agent of the
company whenever he has agreed to pay them for the insuring party. A
discount allowed by the company for the punctual payment of premiums
belongs not to the agent, but to the insured. Cash is usually paid,
though other arrangements also exist for taking notes, that are
ultimately paid in cash or from the earnings of the company, and
belong to the insured and would be paid to him. In mutual life
insurance companies a portion of the premium is often paid in this
manner.
A policy of life insurance payable to the insured, or in the event of
his death to his personal representatives, may be assigned unless
forbidden by statute, therefore a policy payable to the wife of the
insured, or another may be assigned by the united act of the insured
and the beneficiary. Thus a policy taken out for a wife's benefit is
often assigned by her and her husband to his creditors to secure
their debts. In some states statutes forbid the assignment of such
policies for the benefit of creditors. The written assignment must be
delivered to the assignee to be effective. On some occasions
assignments have been declared valid where the intention was clearly
proved though both the written assignment and the policy remained in
the possession of the assignor. An assignee who holds a policy as
security is entitled on its payment only to the amount of his claim
and advances with interest, including premiums paid to keep the policy
alive and thus preserve his security. More generally premiums paid for
this purpose are chargeable on the proceeds of the insurance, but a
mere volunteer who pays the premiums acquires no lien on the proceeds
of the policy when it is paid. Nor can one who ought to pay the
premiums give a lien on the policy to another for money advanced by
him to pay them; and an assignee who has promised to pay the premiums
may be liable should he fail to keep the policy alive.
Contracts of reinsurance are often made by all insurance companies. In
some states the reinsuring company becomes liable to an action by the
beneficiary named in the original policy. Where the reinsuring
company, by agreement, undertakes to reinsure the members of the other
company should they execute applications for that purpose, any member
who does this is not required to be reexamined or comply with other
conditions respecting his age or health.
A policy may be canceled or surrendered by mutual agreement. After the
death of the insured the rights of the parties become fixed, and there
can be no cancellation. During his lifetime the insured may abandon
his contract by refusing to pay the premiums, but an intention to
abandon will not be presumed, nor will the taking out of a second
policy before his failure to pay the premiums on the other establish
an abandonment. If both parties treat the contract as void, neither
can revive it without the consent of the other. As the beneficiary has
a vested or definite interest in the contract, the insured cannot, by
surrendering the policy, cut off the rights of the beneficiary without
his or her consent unless permitted to do so by the contract itself.
A surrender or cancellation of a policy may be avoided on the ground
of mutual mistake. But the insured cannot seek cancellation on the
ground that he thought it was something else when his mistake was
simply his own in not reading the release.
A policy may be rescinded whenever fraud has been practiced by either
party. Thus, should a greater premium be demanded than that stated in
the contract this would be a good reason for rescinding on the part of
the part of the insured. Likewise, if he was induced to take out the
insurance by the fraud of the company or its agent, unless he has lost
his right to rescind through inaction or negligence. Likewise, the
company may rescind for fraud practiced by the insured by
misrepresentation or other fraudulent acts concerning his age, health,
etc. Concealment of facts may and often does operate as a fraud on the
company. Says Justice McClain: "If the applicant has answered the
questions asked in the application he is justified in assuming that no
other information is desired. On the other hand if he wholly fails to
answer questions the company waives information as to matters thus
asked for by accepting the application without objection. If,
however, the applicant purports to answer a question by giving only an
incomplete answer, concealing facts which should properly be stated in
response to the question, and these concealed facts are material, the
policy is voidable." If a material change for the worse in the health
of the applicant takes place after the application and medical
examination, it is the duty of the applicant to disclose it. The
failure to disclose facts of which the applicant is ignorant, or which
are immaterial to the risk, is not ground for avoiding the policy.
When a policy is surrendered or canceled by the contract or by
statute, the insured may be entitled to the surrender value of his
policy. The amount is to be determined by the period for which the
policy has to run, the amount of the annual premium, the age of the
insured, and the probability of the continuance of his life stated in
the usual life tables. The value of an immatured paid-up policy is the
unearned premium called the reserve and is to be computed in the same
manner as that of a policy on which annual premiums are paid. The
beneficiary is entitled to the surrender value as against the insured,
as well as the creditors, unless the beneficiary has consented to
giving them the preference.
By a clause in the contract of insurance or by statute, the insured
can convert his policy into a paid-up policy for such an amount as the
premiums would have secured. These conversions often happen where the
insured is unable or unwilling to continue to pay the premiums
required to maintain the policy. Formerly on the failure of the
insured to pay, policies lapsed or were forfeited, and the insurance
companies gained large sums from this source. This led to legislation
and to the creation of paid-up policies. These are issued on somewhat
different terms, but the principle in all of them is the same.
=Minor.=--The contracts of a minor are of two kinds, those for
necessaries and other things. Contracts for necessaries made by him
the law will uphold. They are really implied contracts which the law
will sustain for his benefit and protection. What are necessaries is a
question of fact, not always easily answered. Much depends on a
minor's place in society and condition. The question is for a jury to
decide, also whether the prices for them are reasonable or not. One of
the well-known cases occurred many years ago. The bill against the
minor was for more than a thousand dollars for twelve coats, seventeen
vests, twenty-three pairs of trousers, five canes, fur caps, chip hats
and other things, in less than six months. The jury rendered a verdict
for almost the entire amount, but the reviewing court remarked that
the bill made the members shudder, that the seller must have known
that all these things were not needed for the minor's comfort within
that short period, and the verdict was therefore set aside.
The question is constantly arising, what are necessaries? A thing
might be to one and not to another. Thus a bicycle merely for pleasure
would not be a necessity; one that is used to go to and from an
individual's daily work would be. A dentist's bill for repairing one's
teeth has been disputed, the law, though, generally favors the
preservation of human teeth. Education furnished to a minor may be a
necessary thing, yet only when it is suitable to his wants and
condition. Should a minor repudiate a contract, the law is observed
if he restores all that he has received, or that is capable of
restoration.
With respect to contracts for other things, they are not always void,
but may be avoided. If they have not been executed, he can disavow
them at any time. If nothing is done during infancy inaction operates
generally as an affirmation. If he disaffirms a contract, he must
return the thing purchased or received, or make the best restitution
he can, for it would not be just to retain possession and refuse
payment.
A different rule applies to a minor who makes a fraudulent contract.
Suppose he buys goods assuring the seller that he is twenty-one years
of age when in fact he is not, though nearly so. Can the seller
recover on his contract? No, but the law has another way of reaching
him. He is liable in an action of deceit, and the amount or damage
that may be recovered is that of the goods sold to him.
A minor who has a parent or guardian cannot make a contract even for
necessaries, nor is he under any obligation to pay his bills for them.
Should he be in need of such things and his guardian or parent be
unwilling to furnish them, they can be compelled by law if having the
means to provide him with whatever he requires.
=Mortgage.=--Two kinds of mortgages are given, one kind is secured by
real estate, the other kind by personal property. In both the borrower
of money pledges his property as security while the money remains
unpaid. During this period he usually remains in possession and
control of the property, though not always. The borrower is called the
mortgagor, the lender the mortgagee. The contract is in writing
sealed, is in fact a deed. Sometimes the contract is in two writings,
the conveyance of the land and security in one, and the conditions or
defeasance on which the conveyance is made in another. It is more
usual, however, to set forth the transaction in a single writing or
conveyance.
A mortgage may be so made as to cover future advances, but it will not
cover them in preference to advances or loans made by another without
any knowledge of them. Nor need another person who makes such a loan
inquire whether a mortgagor has made any other loan, or for a larger
amount than that stated on the public record, where the mortgage deed
is recorded. For, it should be added, a mortgage deed is recorded like
any other for the benefit of all parties, not only to secure the
mortgagee from a later purchaser who might buy if knowing nothing of
the prior mortgage, but from another who might be willing to lend on
such security like himself; or from a creditor of the mortgagor who
might attach the property as belonging to him, if he did not know of
the existence of the mortgage. As the record is public, and may be
examined by everyone, all who are interested in the property are
supposed to examine it and thus find out whether it has been
mortgaged, and if it has been, the conditions of the mortgage, and if
they do not, their neglect is their own.
Improvements, additions of every kind to property after it has been
mortgaged, become a part of it, and if the mortgagee takes future
possession, they pass to him. But a difficult question arises
sometimes, what additions or improvements are included? We have
learned what they are whenever a tenancy relation exists. The law does
not favor a mortgagor to the same extent. The test to apply is that
of intention. If a mill has been mortgaged, the rule is very broad and
the mortgage covers machinery attached by bolts and screws though
removable without injury to the premises. If a mortgage has been
given, by no evidence can it be shown that the deed was intended as an
absolute or entire conveyance of the property. On the other hand by
proper evidence it can be shown that an absolute conveyance was
intended to be only a mortgage. This has been often done. One may ask,
why does the rule not work both ways? There is a much stronger
probability of making a mistake in the second case than in the other.
One of the facts of great importance in such a dispute is the amount
of the consideration or money paid. Suppose a piece of land was worth
$1000 and the deed mentioned only $100, unless there was some other
explanation, there would be a strong probability that the parties
intended only a mortgage which for some reason or other was not
completed.
Again, it is a rule of law that an agreement which is in fact a
mortgage cannot be changed in character by any other agreement made at
the time between the parties relating to the repayment of the money
and the return of the property. The law presumes that the entire
transaction was embodied in the agreement. "Once a mortgage always a
mortgage." Of course this rule does not prevent the parties from
making any later arrangement they please about the property.
A mortgage may be made with a power of sale whereby, should the debt
be not paid at the time fixed, a valid title may be acquired by a
purchase from the mortgagee. The mortgagee thus becomes a kind of
trustee or agent for the debtor. This is a great responsibility to
repose in the mortgagee, and he must perform the trust in good faith
in every respect. He must proceed in a way that will best serve the
interest of the mortgagor, and strictly observe the terms stated in
the mortgage, otherwise the sale will not be valid and the mortgagor
can recover his property. If there is a surplus after satisfying the
mortgage debt it must be paid to the mortgagor, or, if he is dead, to
his heir. Such deeds of trust are made by large corporations to secure
loans, and may be made to secure future advances as well as present
ones.
If the property is sold to satisfy the mortgage debt, the mortgagee
cannot purchase it, unless authorized by statute, or by the terms of
the mortgage; but if it is sold by an officer of the law, the
mortgagee is as free to purchase it as any other individual. This
rule, though, is denied by some courts, which hold he cannot because
the officer is acting as the mortgagee's agent.
A vendor or seller of property, may have for the money he is to
receive a lien, which is nearly the same thing as a mortgage. A
subsequent purchaser would be affected by this lien, however innocent
he might be of its existence. But if the purchaser should mortgage the
property to a third person, who should put his deed on record, he
would gain a valid lien over the vendor. This lien is founded on the
idea that the vendor holds the land in trust for the purchaser until
he has paid for it, but is not recognized in every state. It is
reasonable to suppose that the owner will not sell his land until he
has been paid, or the purchase money has been secured. The lien will
also prevail against any assignment that the vendor may make for the
benefit of creditors, provided he enforces his lien before the
assignee begins to execute his trust.
Much has been said about the notice of the vendor's lien. Any
reasonable notice will suffice, but what is such a notice to charge,
for example, a second purchaser with knowledge? Payment of a part of
the money is held to be knowledge of the lien. Again, a vendee who has
paid any part of the purchase money before the delivery of the deed to
him has a lien for the amount advanced. A third party who pays the
purchase money to the vendor for the purchaser and takes a note for
the amount does not have such a lien.
The mortgagor in most states is regarded as the real owner and remains
in possession; and the mortgagee has a lien, or security for his
advance of money or whatever it may be. The mortgagor may sell his
land at any time subject to the mortgage, in other words he cannot by
any sale impair the mortgagee's security. On the other hand, the
mortgagee can transfer, sell or assign his mortgage to another, and
this is often done.
Both parties may insure the premises though the mortgagee cannot
exceed his debt. If they are destroyed by fire, the mortgagor cannot
claim to have the insurance applied in liquidation of the mortgage
debt. The mortgagee, therefore, can first collect the insurance money
and then proceed to collect the debt that is due to him from the
mortgagor. If the sums collected from the two sources exceed the
amount advanced to the mortgagor that is only the mortgagee's affair.
But if he insures the property at the mortgagor's request or at his
expense, then the mortgagor would have the benefit of the insurance.
Frequently several mortgages are made of the same property. The one
that is the first recorded has the first lien, the one recorded next
the second lien, and so on. And if the property is subsequently sold
to pay the mortgage, the first mortgagee has the first claim to the
money received, the second mortgagee next and so on. If there is not
enough to pay all, the last mortgagee is the first to be cut off, or
to receive less than the full amount due to him.
If a testator devises mortgaged land, is the devisee or person who
receives the land also entitled to the money due from the mortgagor?
Generally, but not everywhere. A bequest of money securities includes
a note secured by mortgage. The mortgagor's interest in the land on
his death, if leaving no will directing who shall take it, goes to his
heirs, and not to his executor or administrator like other personal
property. Of course, if there were no other property that could be
used to pay his debts, if he had any, it could be claimed and taken by
his creditors for that purpose.
The mortgage usually states a time for paying the debt, and if the
terms are not observed, the mortgagee may proceed to take the
property. This he cannot do in an arbitrary way, except in the case of
mortgages in which the mortgagee is entrusted with power to sell the
property and apply the money in payment of the debt. In other cases
the mortgagee must apply to the court to fix a time for the sale of
the property, if the mortgagor fails to make payment. The courts
usually give the mortgagor a period of several weeks or months to pay,
and if payment is not made at the end of this period, the land is sold
by an officer of the court, who conveys the title to the new
purchaser, and if there is any surplus left after satisfying the
mortgage, this is returned to the mortgagor. If there is a deficit, he
is still liable therefor. Any person who is interested in a mortgaged
estate has the right to redeem it; heirs, devisees, creditors. On the
death of a mortgagor his heirs may call his executor or administrator
to pay the mortgage out of the personal estate if there is any, and
not from the sale of real estate, because it was given, so the law
presumes, for the benefit of the personal estate belonging to the
mortgagor. Or, if the land has been given to a devisee, he can require
the executor or administrator to pay the mortgage. Again, if two
persons are jointly liable for the debt, and one of them pays it, he
may call on the other to contribute his portion. See _Chattel
Mortgage_.
=Negotiable Paper.=--By negotiable paper is meant paper that can be
sold and transferred. The law on this subject is now regulated by a
statute that is nearly uniform in almost all the states of the Union.
The courts are constantly applying it, and in doing so are putting
their meaning or interpretation on the words of the statute. Thus far
they have looked with quite similar eyes, and no serious differences
have arisen.
The statute declares that a promissory note must be in writing and
signed by the maker or drawer; that it must contain an unconditional
promise or order to pay a certain sum of money on demand, or at a
fixed future time to order or to bearer. And if the note is addressed
to a drawee he must be named or indicated with reasonable certainty. A
note may be written payable with interest or by stated installments,
or with exchange, or with costs of collection, or an attorney's fee in
case payment shall not be made at maturity.
An unqualified order or promise to pay is unconditional within the
meaning of the law even though it indicates a particular fund from
which it is to be paid, or a statement of the transaction on which the
note is based. Thus the indorsement of the words "per contract" on the
back of a note written at the time of its execution does not affect
its negotiability.
A note payable at a fixed future time may be at a fixed period after
date or sight, or on or before a fixed future time specified therein,
or on or at a fixed period after the occurrence of a specified event
which is certain to happen, though the time of happening be uncertain.
A note that is payable on a contingency is not negotiable, and the
happening of the event does not cure the defect. Likewise a note which
contains an order or promise to do any act in addition to the payment
of money is not negotiable. To this rule, though, are some exceptions.
Thus a note may be negotiable that authorizes the sale of collateral
securities that have been delivered to the holder if the note is not
paid at maturity. But a note stating that the title to property for
which it is given shall remain in the payee, and that he shall have
the right to declare the money due and take possession of the property
whenever he may deem himself insecure "even before the maturity of the
note," is not negotiable.
Again, the validity and negotiable character of a note is not affected
by the fact that it is not dated, or does not specify the value given
or the place where it is drawn, or the place where it is payable, or
bears a seal, or designates a particular kind of current money in
which payment is to be made. Furthermore, a note is payable on demand
when it is thus stated, or is payable at sight or on presentation.
Also an overdue note accepted or indorsed is regarded as payable on
demand, so far as the maker is concerned.
A note may be drawn payable to the order of a specified person, or to
him or his order, or it may be drawn payable to the order of a payee
who is not the maker, drawer or drawee, or it may be drawn payable to
the order of the drawer or maker, or to the drawee, or to two or more
payees jointly, or to one or some of several payees, or to the holder
of an office for the time being.
Again, a note is payable to the bearer when it is thus expressed, or
to a person named therein or bearer, or when it is payable to the
order of a fictitious or non-existing person, and the fact is known to
the person making it so payable, or when the name of the payee does
not purport to be the name of any person, or when the only or last
indorsement is an indorsement in blank. On one occasion funds were
deposited in a bank in the name of a federal disbursing agent under
treasury regulations that "any check drawn by a disbursing office upon
moneys thus deposited must be in favor of the party by name to whom
payment is to be made and payable to order." The disbursing officer
fraudulently drew checks payable to fictitious payees and cashed them
under forged indorsements of the fictitious payees' name. The court
held that the checks were not payable to bearer and that the bank was
not protected in paying them.
A note is not invalid for the reason only that it is ante dated or
post dated, provided this is not done for an illegal or fraudulent
purpose. The person to whom it is delivered acquires the title from
the date of delivery. If a note expressed to be payable at a fixed
period after the date is issued undated, or the acceptance of such a
note is ante dated, the holder may insert the true date of issue or
acceptance. Nor does the insertion of the wrong date avoid the note in
the hands of a regular subsequent holder. More generally, when a note
is wanting in any particular material, the holder or possessor has the
authority to complete it by filling up the blanks. This authority
extends to every incomplete feature of the note and may be used for
inserting the date, amount, name of the payee, and time and place of
payment. When authority is conferred on another to fill blanks it must
be strictly followed. If a note is drawn payable with interest at the
rate of __ per cent, it draws interest at the legal rate, although the
blank is not filled. The presumption that a note was completed before
it was signed and not afterwards does not arise in a note written in
several inks and by different hands. And the purchaser of a note with
an unfilled blank is put on inquiry respecting the authority of a
person entrusted with an incomplete note. Thus A signed blank forms of
notes and left them with his attorney, but with no authority to
complete and issue them until instructed. The attorney filled them up
without further instructions and issued them to a person who knew they
had been signed, that the attorney had a power of attorney to act for
A, but did not attempt to read or otherwise ascertain its terms. A was
not prevented from denying the validity of the notes. In another case
a person who signed a number of notes in blank as to date, payee and
amount, and left them in his desk in his office, whence they were
stolen, filled in and indorsed to B for value before maturity and
without notice of any defects, was nevertheless not liable on them.
When therefore an incomplete instrument has not been delivered it
cannot be completed and negotiated without authority, and if it is, it
is not a valid contract in the hands of any holder as against the
person whose signature was placed thereon before delivery.
Every contract on a negotiable note is incomplete and revocable until
its delivery. As between the immediate parties, and also a remote
party other than a holder in due course, the delivery, in order to be
effectual, must be made either by the authority of the party making,
drawing, accepting or indorsing as the case may be. The delivery may
be shown to have been conditional, or for a special purpose only, and
not for the purpose of transferring the property of the note. But
where the note is in the hands of a holder in due course, a valid
delivery thereof by all parties prior to him is conclusively presumed.
When the language of a note is ambiguous the following rules of
construction are applied: (a) if there is a discrepancy between the
words and figures in expressing the amount, the words control, if the
words are ambiguous or uncertain, reference may be had to the figures
to fix the amount; (b) if the note provides for paying interest
without specifying the date from which it is to run, the interest runs
from the date of the note, if this is undated, from the issue of it;
(c) if not dated a note will be considered as dated from the time of
issue; (d) if there is a conflict between the written and printed
provisions, the former will prevail; (e) if it is doubtful whether the
instrument is a bill or note, the holder may elect which it shall be;
(f) it is not clear in what capacity the person making the note
intended to sign he is to be deemed an indorser; (g) when a note
containing the words "I promise to pay" is signed by two or more
persons, they are deemed to be jointly and severally liable thereon.
The signature of any party may be made by a duly authorized agent. No
particular form of appointment is necessary for this purpose, and the
authority of the agent may be established as in other cases of agency.
If, however, one signs as agent without disclosing his principal, he
is personally liable. Thus, a husband signed a note in his own name
without adding more. As he had disclosed no principal, he was
personally bound, and his wife, for whom he claimed to have signed the
note, was not liable. The maker of a note added to his signature,
"Pastor of St. Frances' church." This was regarded as his personal
note, all besides his name were words merely of description. A person
signed a note thus: "Estate of William R. Clark by William R. Clark,
Jr., Trustee." As he was not authorized to borrow on behalf of the
trust and give a note as trustee, he was individually liable
notwithstanding the form of the note.
Where the signature is forged or made without the authority of the
person whose signature it purports to be it is wholly inoperative.
Thus A cashed a number of drafts and checks payable to B's order on a
forged indorsement of B's name by B's bookkeeper, who appropriated the
money to his own use. Nevertheless, B recovered the amount of the
drafts and checks from A, nor was his negligence in not examining the
bookkeeper's books or accounts a good defense. In another case before
a note was delivered to and accepted by the payee, A, whose name
appeared on the back, was shown the note who said, "Everything is all
right." Afterward he resisted payment on the ground of forgery. As the
payee was induced to take the note on A's statement of its
genuineness, he could not escape payment.
Every negotiable note is deemed to have been issued for a valuable
consideration, and every person, whose signature appears thereon, to
have become a party for the value. An accommodation party is one who
has signed the note as maker, drawee, acceptor or indorser without
receiving value therefor, and for the purpose of lending his name to
some other person. Such a person is liable on the note to a holder for
value, though the latter knew he was only an accommodation party.
What is meant by negotiating a note? By transferring it in a way
whereby the transferee becomes the holder or owner. If payable to
bearer it is negotiated by delivery; if payable to order it is
negotiated by indorsement and delivery. An indorsement may be either
special or in blank; and it may also be either restrictive, or
qualified, or conditional. A special indorsement specifies the person
to whom, or to whose order the note is payable. An indorsement in
blank specifies no indorsee, and a note thus indorsed is payable to
bearer and may be negotiated by delivery. The holder may convert a
blank indorsement into a special one by writing over the signature of
the indorser in blank any contract consistent with the character of
the indorsement. By a qualified indorsement the indorser becomes a
mere assignor of the note, and is made so by adding to his signature
the words "without recourse," or others of similar import. Such an
indorsement does not impair the negotiable character of the note. When
a note is payable to the order of two or more payees or indorsers who
are not partners, all must indorse unless the one indorsing has
authority to indorse for the others. Again, where a note is drawn or
indorsed to a person as cashier or other fiscal officer of a bank or
corporation of which he is the officer, it may be negotiated by either
the indorsement of the bank or corporation or by the indorsement of
the officer. And where the name of a payee or indorser is wrongly
designated or misspelled he may indorse the note as therein described,
adding, if he thinks fit, his proper signature. The holder may at any
time strike out any indorsement which is not necessary to the title.
When this is done, he and all subsequent indorsers are thereby
relieved from liability on the note.
The holder of a negotiable note may sue thereon in his own name; and
payment to him in due course discharges it. Who is a holder in due
course? One who holds a note on the following conditions: (a) that it
is complete and regular on its face; (b) that he became the holder
before it was overdue and without notice that it had been dishonored;
(c) that he took it in good faith and for value; (d) that at the time
of its negotiation to him he had no notice of any infirmity in the
note or defect in the title of the person negotiating it. A note
therefore, providing that any delinquency in the payment of interest
"shall cause the whole note to immediately become due and collectable"
is made overdue by the maker's failure to pay the interest when due,
and a subsequent taker cannot be a holder in due course.
To constitute notice of an infirmity in a note or defect in the title
of the person negotiating it, the person to whom it is negotiated must
have had such actual knowledge of the infirmity or defect that his
action in taking the note amounted to bad faith, but merely suspicious
circumstances are not enough to put a prudent man on inquiry.
On the other hand if the purchaser does suspect and fails to
investigate, lest a defense be disclosed to the maker of the note, he
is not a purchaser in good faith. The maker of a note engages that he
will pay it according to its terms and admits the signature of the
payee and his capacity to indorse, and engages that on due
presentation the draft will be accepted or paid or both, according to
its terms, and that if it is dishonored, and the needful proceedings
in consequence are taken, he will pay the amount. A person placing his
signature on a note otherwise than as maker, drawer or acceptor is
deemed to be an indorser unless he clearly indicates his intention to
be bound in some other way. The Negotiable Instruments Act fixes the
liability of a person who is not a party to a note, and who indorses
it before delivery. The law was in great confusion before this act
established a definite rule. Such a person is now liable as indorser
in accordance with the following rules: (a) if the note is payable to
the order of a third person, he is liable to the payee and to all
subsequent parties; (b) if payable to the order of the maker or
drawer, or if payable to bearer he is liable to all parties subsequent
to the maker or drawer; (c) if he signs for the accommodation of the
payee he is liable to all parties subsequent to the payee.
Presentment for payment is not necessary in order to charge the person
primarily liable on a note, but if it is payable at a mentioned place
and he is able and willing to pay it there at maturity, such action is
equivalent to a tender of payment on his part. Presentment for
payment, of course, is needful to charge the drawee and indorsers.
When the note is not payable on demand, presentment must be made on
the day it falls due. When it is payable on demand, presentment must
be made within a reasonable time after its issue. This rule does not
apply to all bills of exchange. Thus unreasonable delay in presenting
a check will discharge the indorser whether such delay is a cause of
loss to him or not. Likewise a certificate of deposit payable on
demand must be presented for payment within a reasonable time after
its issue in order to hold the indorser. "The usage of trade or
business includes the usage of banks relating to presentment of checks
for payment. It is sufficient diligence to charge an indorser if a
check on the bank in another place is forwarded through various banks
for collection in accordance with the regular usage of the business,
although presentment might have been more promptly made if a more
direct course had been taken." Presentment for payment must be made by
the holder or by some person authorized by him to receive payment, at
a reasonable hour on a business day and at a defined place, and to the
person primarily liable thereon. And if he is absent or inaccessible
then to any person who is at the place where presentment is made. If a
note is payable at a bank the payor has until the close of banking
hours to pay it, and if, before the close of the bank day, he deposits
money enough to pay it a demand earlier in the day is premature. Delay
for presenting a note for payment is excused where the delay is caused
by circumstances beyond the holder's control, and he is in no way
negligent. Nor need presentment for payment be made when after using
reasonable diligence it cannot be made, or where the drawee of a bill
is a fictitious person, and lastly where presentment, express or
implied, has been waived.
Every negotiable note is payable at the time fixed therein. When the
day of maturity falls on Sunday or a holiday, the note is payable on
the next succeeding business day. Notes falling due on Saturday are to
be presented for payment on the next succeeding business day, except
that notes payable on demand may, at the option of the holder, be
presented for payment before twelve o'clock noon on Saturday when that
entire day is not a holiday.
When the note is payable at a fixed period after the date, after
sight, or after the happening of a specified event, the time of
payment is determined by excluding the day from which the time is to
begin to run, and includes the date of payment. And where a note is
made payable at a bank it is equivalent to an order to the bank to pay
it for the account of the principal debtor thereon. In accordance with
the notation on the margin of a note the holder sent it for collection
to a bank which held, as a special deposit, the maker's money. The
cashier at maturity notified the maker who directed the cashier to pay
the note. The cashier said "All right, your note is paid." The note
was regarded as paid.
When a negotiable note has been dishonored by non-acceptance or
non-payment, notice of dishonor must be given to the drawer and to
each indorser, and any drawer or indorser to whom such notice is not
given is discharged. A written notice need not be signed and an
insufficient notice may be supplemented by verbal communication. Nor
does misdescription of the note vitiate the notice unless the party to
whom the notice is given is in fact misled thereby. The notice may be
in writing or merely oral, and may be given in any terms which
sufficiently identify the note and indicate that it has been
dishonored by non-acceptance or non-payment. It may be delivered
personally or through the mails. Where the parties to be notified are
partners, notice to any one of them is notice to all even though there
has been a dissolution. But notice to joint parties who are not
partners must be given to each of them, unless one of them has
authority to receive the notice for the others.
When the person giving, and the person who is to receive notice reside
in the same place, it must be given within the following times: (a) if
given at the place of business of the person who is to receive notice
this must be done before the close of the business hours on the day;
(b) if given at his residence it must be given before the usual hours
of rest on the day following; (c) if sent by mail it must be deposited
in the post office in time to reach him in usual course on the day
following. If the parties reside in different places the notice must
be sent within the following times: (a) if sent by mail it must be
deposited in the post office in time to go by mail the day following
the day of dishonor, or if there be no mail at a convenient hour on
that day by the next mail thereafter; (b) if given otherwise than
through the post office then within the time notice would have been
received in due course of mail if it had been deposited in the post
office had it been deposited in the post office as above described.
If a party had added an address to his signature the notice must be
sent to that address, if he has not, then the notice must be sent as
follows: (a) either to the post office nearest to his place of
residence or to the post office where he is accustomed to receive his
letters, or if he lives in one place and has his place of business in
another, notice may be sent to either place, or if sojourning in
another place, the notice may be sent there. In any event if he
receives the notice within the time specified, it will satisfy the
law.
Of course notice may be waived; sometimes, also, it is quite
impossible to give notice; whenever this happens the law does not
require notice to be given.
Something should be added concerning alterations that are made
occasionally in negotiable instruments. Any alteration which changes
the date, the sum payable either of principal or interest, the time or
place of payment, the number or the relations of the parties, the
medium or currency in which payment is to be made, or which adds a
place of payment where no place of payment is specified, or any other
change or addition which alters the effect of the instrument in any
respect is a material one and ought not to be made. To add the words
"with interest," with or without a fixed rate, is a material
alteration. But the insertion by the payee of the words "interest"
after the making of a note by authority of maker will not vitiate it.
And if a note had the clause, "interest at __ per cent," the insertion
of the legal rate would not be a material alteration since the legal
import would not be changed.
The position of a writing on a note is not important, for the effect
of the contract is to be gathered from the four corners of the paper.
The general rule is, if a memorandum written on an instrument in the
margin or at the foot is made before or at the time of its execution,
it is considered a part thereof, and if it affects the operation of
the terms of the body of the instrument it is a material part. It
follows that words written by a party on the margin of an instrument
after its execution and delivery, constitute an alteration if
intended to affect the terms of the instrument and would have such
effect if they were there when the instrument was executed.
A bill of exchange is an unconditional order in writing addressed by
one person to another, signed by the person giving it, requiring the
person to whom it is addressed to pay on demand or at a fixed
determinable future time a certain sum of money to order or bearer. A
bill of itself does not operate as an assignment of the funds in the
hands of the drawee available for its payment, nor is the drawee
liable on a bill until he accepts or agrees to pay it. An inland bill
is one drawn and payable within a state. Any other is a foreign bill.
An indorsed promissory note and an accepted bill are very much the
same thing, and that is why the law always treats of both together.
The maker of a note incurs the same obligations as the acceptor of a
bill, both are the parties primarily liable thereon, and the indorser
of a note and the drawer of a note are both secondarily liable on
proper notification of the failure of the primary parties to pay, as
we have learned. The payees in both cases are the same. The acceptance
of a bill is the signifying by the drawee that he has assented to the
drawer's order, and must be in writing. An unconditional promise in
writing to accept a bill before it is drawn is deemed an actual
acceptance in favor of every person who on the faith thereof receives
the bill for value. The drawee is allowed twenty-four hours after
presentment to decide whether or not he will accept the bill; but the
acceptance, if given, dates from the day of presentation. Furthermore,
an acceptance may be qualified as to time, acceptance of payment in
part only and in other ways. When a foreign bill is not accepted it
must be protested, which must specify the time and place of
presentment, and other particulars, and is usually made by a notary
public, though this can be done by other persons.
=Parent and Child.=--A parent is legally as well as morally bound to
support his children who are incapable to care for themselves. Should
a wife be divorced from her husband his duty to maintain the children
would not fall on her, unless she also had the custody of them. A
father's obligation to maintain his child continues until he is able
to provide for himself. The legal obligation ceases by common law as
soon as a child attains majority, however helpless he may be or great
may be his father's wealth.
A child that has property of his own, while his father's means are not
enough, may be supported from his own means. Even the principal may be
used in this manner. Generally if the father has ample means, he must
use them to educate his child. When the father can use the child's
fortune and how much, is sometimes a difficult question to answer. The
education of a child is now largely regulated by statute.
A parent may protect his child, even a homicide is justifiable. A
parent can also correct his child. Says an excellent authority: "The
rights of parents result from their duties. As they are bound to
maintain and educate their children, the law has given them such
authority, and, in support of that authority, a right to the exercise
of such discipline as may be requisite to the discharge of the sacred
trust." See _Adopted Child_; _Husband and Wife_.
=Partnership.=--There may be a partnership in a single transaction,
for example, to buy and sell a load of potatoes. Persons may be liable
as partners to others who had no intention of creating that relation.
If A acts in such a way by speech or deeds as to create the belief in
B that he is a partner, and thus believing B sells goods to the
partnership, A is liable as a partner for them. On the other hand if B
knew that A was not a partner, he could not hold him as one. In many
cases it is difficult to determine whether one is a partner or not.
Many tests have been applied. The most general is that of intention.
Simply sharing in the profits and losses will not always suffice. This
was long considered a proper test but it broke down after many
applications. Thus, suppose a clerk is paid by giving him a fixed
percentage of the profits as a compensation, is he a partner? He was
so regarded on one occasion, and the firm having failed he was made
liable for all its debts. That is one of the consequences attending
the relation, every partner is liable for the entire indebtedness of
the amount he may have contributed. The clerk contributed nothing,
nevertheless he was liable like the others. Today the courts would
decide such a case differently. It would inquire whether the partners
intended to make him a partner, or only gave him a share of the
profits as a mode of paying him for his service. The recent
Partnership Act contains this test.
A partnership may usually hold any kind of property, real and
personal, and not infrequently is formed to cultivate or deal in land.
A partner is a general agent. Hence the risk of creating the relation.
Being a general agent he can bind his partnership for any acts within
the scope of his authority. Yet there are limitations. If a
partnership was engaged in selling dry goods, a partner could hardly
bind his partners by making a contract with a person for a quantity of
iron, unless it was needed in rebuilding the store, or in some other
connection with the business. He can make and indorse negotiable paper
that is used in connection with the business. Suppose he borrows money
on his own note and he gives the money to his firm, is it responsible
for the amount? This has proved a hard question for the courts. If the
money though loaned on his note was for the benefit of the
partnership, and it was known at the time that it was to be used in
that way, the partnership would be liable; but if the money was to be
used by the borrower and this was known and believed by the lender he
could look only to the borrower for payment.
The receiving of a new member constitutes a new partnership. It may
reorganize the old partnership and become responsible for its debts,
or it may not. Unless recognized in some way by paying interest on
them and the like, the new member does not become responsible for
them.
A partnership is formed usually by a definite agreement that is put in
writing. Yet it may be simply an oral agreement with very general
terms about the contribution of capital or skill of the respective
partners and their division of profits. They may and usually do have
distinct fields of employment, each doing the thing for which he is,
or supposed to be, best prepared. By reason of their general
liability, in the olden days persons who wished to thus engage and yet
not be responsible, were kept in the background, and were known as
secret and dormant partners. If found out they were liable because
they were to share in the profits. The fact that they were unknown
when credit was given to the partnership at the time of selling goods
to the concern did not shield them from liability after the discovery
of their relation.
The difficulty has since been removed in two ways, by incorporating
the partners into a corporation whose powers and liabilities are fixed
by law and therefore known to all, and by forming limited liability
partnerships. These consist of two or more general partners, also
special partners who contribute an amount of capital, of which the
public is publicly informed. If such an association is unsuccessful,
the special partners may indeed lose all, or a part of the capital
they have contributed, but are liable for no more. This is a great
improvement over the secret and dormant methods of getting the capital
needed for partnership purposes. One of the matters that should be
carefully guarded in forming a limited liability partnership is to
contribute the full amount of capital advertised. If any deception is
practiced, or mistake made, whereby a smaller amount is contributed,
should the partnership not succeed, the special partners become liable
as general partners for the full amount. Once such a partnership was
formed with three special partners who contributed each $100,000, and
at the end of two years were told that their profits individually were
$60,000. Each was asked to contribute $100,000 more, and feeling happy
over his venture, he put in $40,000 more, which, added to his profits,
made up the required amount. When the concern failed a few years
afterwards the books showed that neither special partner was ever
entitled to $60,000 as profits. Though innocent, for they had never
examined the books, they were held as general partners for the entire
indebtedness of the concern.
An illegal contract made by a partner will not bind his partnership,
for all parties are supposed to know the law, and an illegal bargain
cannot be enforced, for example, an agreement to pay usurious
interest.
How may a partnership be dissolved? Unless the time is fixed by
agreement, it may be dissolved by any member whenever he pleases to do
so, though he cannot act wantonly to the manifest injury of the others
without making himself responsible for their loss. And if a partner
should attempt to transfer his interest before the time fixed for
ending the relation without good reason, to the manifest injury of the
other partners, he can be legally restrained from taking such action.
The death of a partner causes a dissolution. Nor can executors or
administrators succeed to his place, though they often do so for a
short period to prevent the interruption of the business and to enable
all parties to fare better than they would by its sudden ending. Yet
it is awkward for these officials to thus act, and in so doing they
incur an unpleasant personal responsibility. To relieve them from this
some states have passed statutes permitting them to thus act with the
other partners under the direction and orders of the court having
charge of the estate.
A partner who retires should give notice of his retirement to relieve
himself from future liability. For, should he neglect, and persons
continued to sell on credit to the firm, supposing he was a member, he
would be liable as before. The statutes in some states regulate his
duty in this regard; it is one that he cannot safely omit.
Should a partnership fail, the general rule with respect to the assets
is the partnership property must be used to pay partnership debts, and
the individual property of partners to pay their individual debts. If
a partner has anything left after paying his individual debts, it must
be devoted to paying the partnership debts. If the partnership has
anything left after paying its debts, this belongs to the partners in
accordance with their agreement in contributing it and the earnings,
and must be devoted to the payment of their individual debts.
Lastly concerning the authority of a liquidating partner. He can do
many things, give renewal notes, make indorsements, collect debts due
the partnership, and even revive an outlawed debt. Of course the
affairs of a partnership may be settled by some other person than a
partner; not infrequently a receiver is appointed who acts under the
order of the court that appointed him.
An agreement between a liquidating partner and the other partners, to
take all the property and pay all the debts, is limited in its effect
to themselves and does not affect others. After the partnership assets
have been transferred to a liquidating partner, or to any other person
for liquidation, a debtor who has notice of the transfer is not
justified in making a settlement with any one else. And if he should
do so, the liquidator could require him to pay again to himself.
=Patent.=--In the United States the thing patentable is a new and
useful art, machine, manufacture or composition of matter, or new and
useful improvement thereof, or new, original and ornamental design for
an article of manufacture. An idea, principle or law of nature is not
patentable, but only the means for utilizing the idea or principle.
Many a great discovery has slipped away from the inventor or
discoverer, because he sought to hold the discovery or invention of
the principle as his own, instead of limiting his claim to the means
or methods of putting his principle into use. Morse's invention of
telegraphy is one of them. An art or process is patentable as well as
machinery, though the inventor may not know the abstract principles
involved in his art. But he must know and describe the steps by which
the result is accomplished. A composition of matter is a mechanical
mixture or chemical combination of two or more substances; and an
improvement is an addition to, or change in, a known art, machine,
manufacture or composition of matter, which produces a useful result
and is patentable if it amounts to invention. Lastly "a patentable
design may consist of a new and ornamental shape given to an article
of manufacture, or of an ornamentation to be placed upon an article of
old shape." It is said that the law relating to this subject intends
that the patentability of a design shall be determined by its appeal
to the eyes of the ordinary man, and not to the eyes of a jury of
artists. Design patents are granted for different periods, three years
and a half, seven years and fourteen years, as the applicant may
elect.
The subject matter of a patent must be new and useful. It must be new
not only to the patentee, but to all the people in this country, and
at the time he filed his invention. The federal law, however, secures
a patentee who had no knowledge that his invention had been discovered
abroad and which had not been patented there, nor described in a
printed publication. Before the enactment of this law a patent was not
granted without showing that the applicant was the original inventor
with relation to every part of the world.
Much has been said concerning the novelty of an invention. This may be
in the use of an old means in a new way; or a change of shape or form
to produce new functions and results, but the changes must amount to
invention, which is more than mere novelty.
A foreign patent in order to invalidate an American patent must
antedate the invention patented. A foreign patent exists as a patent
only as of the date when the invention was published. In England an
invention is not patented within the meaning of the act of Congress
until the enrollment of the complete specification.
What is meant by a prior publication? It is a printed book, newspaper
or document of a public nature disclosing the invention intended and
actually employed for the purpose of informing the public. Publication
in a book of general circulation is sufficient; business catalogues or
circulars are not such publications as are meant in the law.
To defeat a patent on the ground of want of novelty the proof of prior
use or knowledge must be convincing, sufficient to establish the fact
beyond a reasonable doubt. The recollection of one witness concerning
the peculiar construction of a piece of machinery, especially if the
structure is one of complex character, is not enough evidence to
defeat a patent. Much less evidence, however, might be sufficient to
prove that a very simple invention had been anticipated.
To justify the granting of a patent it must be useful. If the
invention be frivolous or pernicious, the inventor cannot secure for
it legal protection. The use of the invention must not be contrary to
public health or morals. It is not needful that the invention should
be the best of its kind, or that it should accomplish all that the
inventor claims for it. Furthermore, its utility depends on the state
of the art at the time of making the claim or issuing the patent; its
subsequent inutility does not invalidate the patent. Extensive use is
evidence of utility. The presumption of law favors a patent, and the
burden of proof is on the one attacking it to show that it is not
useful. The infringement of an invention is in effect an admission of
utility, because use implies utility.
A patent also calls for the exercise of inventive power. Though
invention must be seen in every patent, it is difficult to define.
Says a former commissioner of patents, Justice Duell: "It is a matter
resting in judgment and therefore no fixed rule for its determination
is possible." Some principles, however, assist in defining the term.
"Thus, it is declared that an act of invention is primarily mental and
involves the conception or mental construction of a means not
previously known for accomplishing a useful result. It is not the mere
adaptation of old means by common reasoning, but is the construction
of new means through an exercise of the creative faculties of the
mind." Between invention and discovery the patent laws draw no
distinction. Again, it has been often said that the design of the
patent laws is to reward those who make a substantial invention or
discovery, which is an additional step in the useful arts. The law
never intended to grant a monopoly for every trifling device which
would naturally occur to a skilled mechanic in the ordinary progress
of manufacture.
An article of manufacture is not patentable because means have been
devised to make it more perfectly than before; it must be new in
itself and not merely in its workmanship. A machine-made article
therefore is not patentable simply because it is thus made, and no
longer by hand.
The substitution of an art, manufacture, or composition of matter of
one element or device for another which does the same thing in the
same way and accomplishes a similar result is not invention. Even if
the substituted part performs the function better, there is no
patentable invention unless some new function or result is secured.
Changes therefore of the relative location of parts without changing
the functions performed by them are not an invention, nor is the
omission of a part with a corresponding omission of function.
A patent can issue only to the inventor, or if he is dead to his
executor or administrator. If there be two original inventors the one
who first made it or brought it to this country is entitled to a
patent. A patent granted on the application of a non-inventor is void.
By first inventor is meant the one who first had a mental conception
of the invention provided he exercised diligence in perfecting it. If
there be a rival claimant the party who first reduced to practice the
invention was, until the contrary fact is shown, the first inventor.
One who merely utilizes the ideas of others is not an original
inventor and is not entitled to a patent. In the United States any
person, regardless of residence, citizenship or age may obtain a
patent.
An invention is reduced to practice when it is so far perfected that
it may be put into practical and successful use. The machine may not
be perfectly constructed, but it embodies all the essential elements
of the invention. Demonstration of its success by actual use is
usually necessary, but not always. The reduction to practice must be
by the applicant for a patent, or by his agent; to do this by a third
party will not suffice. The person who first conceived the invention,
but was later than his rival in reducing it to practice, is not
regarded as the first inventor unless he exercised due diligence to
perfect his invention after the time that his rival entered the field
against him.
Two or more parties may contribute in developing an idea and producing
an invention, which is truly the result of their joint mental efforts,
and not the separate invention of either. In such case both must apply
for the patent, which is granted to them jointly. But if a patent is
thus issued to two and only one of them is the inventor, the patent is
invalid. Nor can one of two joint inventors make application and
secure the patent on assignment from the other; both must join.
The patent must issue on the application of and in the name of the
real inventor even though he was employed to make it for the benefit
of another. Notwithstanding, the employer is the owner of the patent
and may compel the patentee to transfer it to him. Of course their
respective rights may be changed by agreement. If no agreement exists,
a company that employs a skilled workman to make improvements on its
machinery is not entitled to the patents granted to the workman. Says
Justice Duell: "An employee, performing all the duties assigned to him
in his department of service, may exercise his inventive faculties in
any direction he chooses with the assurance that whatever invention he
may thus conceive and perfect is his individual property. The
company, however, has an implied license to make, use and sell the
invention."
Where a party employs another to assist him in perfecting an invention
the presumption is that the employer is the real inventor of the thing
produced by their joint effort. On the other hand, where a person is
employed to exercise his inventive skill, because he is known to be
the possessor of it, Edison for example, the presumption is in favor
of the employee. Government employees may secure patents on inventions
made by them during their employment, after their relationship has
ceased. The government may have an implied license to use the
invention without any title thereto.
Patents may be issued and reissued to assignees on the application of
inventors. On the death of an inventor before a patent has been issued
to him, his executor or administrator may apply therefor, who takes
the patent in trust for the heirs. A foreign executor or administrator
may make a similar application. He must, however, present a proper
certificate of his authority to act. Likewise, a legally appointed
guardian or conservator of an insane inventor may apply for and obtain
a patent in trust for him.
The inventor must apply to the commissioner of patents for letters
patent which secure to him his invention. The application comprises a
petition, specification, claims, oath, drawings if the nature of the
invention may be thus shown, and a model, when this is required by the
patent office. A fee of fifteen dollars also must be sent with the
papers. The application must be signed by the inventor and two
witnesses.
The specification is the written description of the invention and of
the manner and process of making, constructing, compounding, and
using the invention; whatever it may be. He must describe not merely
the principle of the invention, but the mode of applying it in such a
clear, intelligible manner that those who are "skilled in the art"
can, without other aid, use the invention. Nothing should be left to
experiment. The phrase "skilled in the art" means persons of ordinary
skill. Whether a description is clear, exact and sufficient is a
question for the jury whenever it is a matter of legal contention.
In describing an improvement the same rule is applied. The description
should show clearly the nature of it. The description should
distinguish between the old and the new. "A description in a patent
for an improvement is sufficient if a practical mechanic acquainted
with the construction of the old machine in which the improvement is
made, can, with the aid of the patent and diagram, adopt the
improvement." If an inventor intentionally conceals facts or misleads
the public by an erroneous description, his patent is void.
Concerning the claim or claims with which the inventor concludes his
specification many questions have arisen. First, the claim must be
clearly stated so that the public may know what it is. The claim
should not be too broad. Several claims may be made, but they should
not be varying phraseology for the same thing. They should state the
physical structure or elements of mechanism by which the end or result
is produced.
The inventor must make oath that he believes himself to be the
original and first inventor, that he does not believe that the thing
was ever before known or used, and as to his citizenship. If dead or
insane, the oath must be made by his executor, administrator, or other
representative. After the application is granted another fee of twenty
dollars must be paid.
The commissioner of patents must make an examination for the purpose
of deciding whether a patent may be granted or allowed. This
examination is made by an examiner, whose decision, however, is not
conclusive and may be set aside by the commissioner. The patent office
is not confined to technical evidence in rejecting applications, but
may base its action on anything disclosing the facts relating to the
matter.
When objection is made to the form of the application, an amendment
may be made by the applicant or his attorney to correct the error; and
this may be done at any time prior to the entry by the first examiner
of a final order of rejection, and within one year from the date of
the preceding action by the patent office.
When two parties apply for a patent for substantially the same thing
an interference is declared and the respective parties must present
proofs in support of their claims. The question between them is
priority of invention. The proceeding then is much like an equity
trial with perhaps a wider latitude in admitting evidence bearing on
the inquiry.
The applicant, if dissatisfied with the rejection of his claim by the
first examiner, or with the decision in an interference case, can
appeal to the board of the examiners-in-chief, and if dissatisfied
with their decision he may appeal to the commissioner in person, and
if still dissatisfied he can appeal to the Court of Appeals of the
District of Columbia. All appeals must be taken from the patent office
within a year, or a shorter period, if one has been fixed in a
decision.
The decision of the commissioner of patents in granting a patent is
not conclusive that the inventor is the first and original inventor,
but only prima facie, that is, in the absence of other evidence to the
contrary. Consequently, the question of patentability in every case
may be reexamined in the courts. In the early days of administering
the patent law an inventor often applied to a court for an injunction
to prevent an infringer from continuing his work. The court, assuming
that the patent had been properly granted, did not hesitate, on
adequate proof of the infringement to grant the injunction. The courts
were not slow in finding out that patents were sometimes granted that
ought not to have been, and so the practice was changed and patentees
were required to establish their right to a patent in a court of law
before a court would enjoin an infringer, except in very clear cases.
These hearings in the courts to decide the claims of patentees, are
often prolonged, running through years to collect testimony, and are
appealed from one court to another finally reaching the supreme
federal tribunal. After a patent is thus judicially established
injunctions are readily granted against all infringers.
=Payment.=--In making payment the parties to an agreement always have
in mind cash, unless they otherwise agree. Not every kind of money can
be used, nor only in limited amounts. Thus, if one owed another a
thousand dollars he could not deliver to him, unless he were willing
to accept them, one thousand silver dollar pieces, but only ten of
them. Nor can a debtor compel his creditor to receive one cent and
five cent pieces to a greater amount than twenty-five cents. National
bank notes may be paid or tendered to the government, and by one bank
to another, yet they may be refused by an individual in payment of his
debt. It is important, when one owes another and there is a dispute
over the amount, that the debtor should tender or offer to pay his
creditor the proper kind of money, because should he offer him some
other kind, national bank notes for example instead of United States
notes, or those issued by the federal reserve bank, and he declined to
take them and should afterwards sue his debtor for the amount, the
latter's offer to pay in national bank notes would be regarded as no
payment, or even offer of payment.
A note or check given for a bill of goods is not payment. In everyday
affairs a check is thus given and received, in fact it is only a
payment conditioned on payment of the check. Consequently if it is not
paid, the creditor can sue to recover on the check, or for the
original goods as he might elect. In most cases he would ignore the
check and sue for the original bill. Suppose some one had endorsed the
maker's check, then the creditor would probably sue on that in order
to hold both parties.
Does a debtor who turns over a note to his creditor in payment,
thereby cancel the debt? If he does not, of course the creditor can
still sue the debtor; but if he turned the note over in actual
payment, then his right to sue his debtor is gone. What was the
intention of the two parties? This is a question of fact to be
ascertained like any other.
How shall the money be applied of one who owes several debts to the
same person and makes a general payment? The debtor can make the
application, if he does not, the creditor can do so; if neither does
this, then the law applies it, first to the payment of interest that
may be due on any of the debts, and the balance left, should there be
any, to the payment of the principal. Of several debts the law applies
it to the oldest debt. Again, if there is a surety for any of the
debts, he may insist on the application of the money in order to be
relieved.
If a depositor in a bank has made a note payable there this is
regarded very much like a check, it is a direction to the bank to pay
it, especially by the Negotiable Instruments law. Unless the maker of
a note is insolvent, a bank can never pay the unmatured note of a
depositor. Nor can a bank apply a deposit, which is known to be trust
money, or belonging to another person than the depositor to the
payment of his note. Generally a bank declines to pay a note that is
overdue though there is no law, except in a few states, against paying
it should the bank decide to do so. In all cases a depositor may make
any application of his deposit he desires, for it is his own and the
bank cannot divert it in any way against his direction.
A receipt taken in payment of a debt is not conclusive evidence of
payment and may be contradicted by other evidence, though it is
regarded on its face as payment. When received, a receipt should be
kept for at least six years, because it is such strong evidence of
payment. After that period the statutes of limitation in most states
have the effect of canceling a debt, on the theory or presumption that
it has been paid. If the debtor afterward promises to pay, his new
promise is valid though there is no consideration therefor, and he is
legally required to pay the debt.
Should a receipt also contain any other statement or contract beside
the payment of money, this would have the same effect as any other
contract between the parties, and would be equally binding on them.
The effect of a seal after the receiptor's name may be explained in
this connection. A sued B and C for a debt. Before trial he gave C a
receipt stating that if he did not recover from B he would
nevertheless not hold C liable. Having failed in his suit against B,
he sought to hold C notwithstanding his receipt releasing him. And he
succeeded for the reason that his release was given without
consideration and therefore was worthless. Had A added after his name
a seal this would have imported or implied a consideration and the
receipt would have been an effective release.
=Prescriptive rights.=--A person may gain rights in the land of
another by acting in such a way as to indicate that he clearly makes a
claim to them. Thus, if a man goes over the land of another in the
same direction to his own land for a period of fifteen years or
longer, the period differing in the several states, he acquires the
right to continue, in other words he acquires a permanent right of way
by such action. As such a right is contrary to the interest of
another, it cannot be gained against a person who is incapable of
preventing the acquisition of such a right if he pleases. Such a
right, therefore, cannot be gained against a minor, nor an insane
person, nor any one who is incapable of defending his possessions.
Whether the right has been fully acquired is not always easily
determined. Suppose one claims a right of way over another's land, and
the right is disputed. How often has he traveled that way? Has the
other person known of his going and said nothing? Again, suppose a man
sells another a piece of his farm away from a road, the law presumes
that he intended to grant or permit the buyer to have ingress and
egress to his land, otherwise he would not have purchased. This is
called a way of necessity. Can the purchaser choose any outlet he
pleases? The law says he must exercise reasonable discretion in making
his selection.
When a way has been acquired by such use, the law is strict in
confining the gainer in the use of it. Thus A buys a piece of land of
another for the purpose of erecting a house thereon. The use of the
way thereto must be confined to A and his family, friends and those
who come to see him on business. Suppose A should decide to divide it
into building lots, which would require a greatly increased use of the
way. This could not be done without a new agreement with the seller.
Again, a tenant cannot by any use of the land acquire a right therein
that will continue beyond his lease. If he had a long lease, say
thirty years, and could gain a prescriptive right by an adverse use of
fifteen or twenty years, he would, if gaining any prescriptive rights,
be obliged to give them up at the end of his tenancy. In claiming a
right of way the use need not be exclusive. Other persons may also use
the way with the same claim of right.
The owner of land has no natural right to light or air and cannot
complain that either has been cut off by the erection of buildings on
adjoining land. He may, however, acquire, by grant or some other way,
a right to have light and air enter a particular window, or other
place, without interruption by the owner of adjacent land. Nor can he
acquire a right to light and air across another's land for his own
house by simply erecting it on the edge of his own land while the
adjoining land is unoccupied. To erect windows on that side is not an
adverse use of the land adjoining. But a person may gain a right to
light and air by presumption, and if one has acquired the right to
maintain a window in a specified place he loses his right by closing
it up and opening another of a different size in another place. And
the same thing happens to one who tears down his house and builds a
new one with windows of the same size and in the same places as in the
old one. A person cannot maintain an action against another for
cutting off his view unless the right has been expressly acquired.
The general rule with respect to the use of water is, any person
through whose land flows a stream may use it in a reasonable manner.
What is such a use has occasioned many a legal dispute, especially
among mill owners. Each one of them located on a stream may use the
water, but can they hold it back for any length of time? As a general
rule this can be done for a short time in order to get the use of the
power, if they could not, the water could run to waste and no one
would derive any benefit. Again, can any diversion be made of it? Any
use, almost, is a diversion. If one used water even to supply his
cattle, it would be a diversion, yet such a use ordinarily is lawful.
Suppose one had a very large herd, then the use might be excessive
especially in view of the needs of other users on the stream. A still
more important question has arisen of late concerning the fouling of
water. Has a factory the right of putting its dyestuffs into the
water, impairing its quality and rendering it unfit for use by all
below? This cannot be legally done. Can a stream be used as a sewer?
Naturally all the water in a valley flows downward and at last
reaches a stream running through it. As population increases the use
of streams becomes greater, and questions concerning their use more
difficult.
Suppose a land owner on the hillside wishes to use all the surplus
water, can he gather it and thus prevent its flowing to the land
below? He can. Can he build ditches or other obstructions whereby he
can collect the water and pass it to the land below in other than the
natural way? He cannot. On the other hand, the lower proprietor can,
if he pleases, make an embankment that will prevent the water from
coming upon his land. This, though, is not the law everywhere.
The owners of a well may prevent its overflow and thereby cut off
water that formerly ran into a stream. But the owner of a spring that
flows into the land of another cannot change its course, nor exhaust
the water, nor pollute it to the injury of another. Nor can surface
water be changed into a water course by impounding it. On the other
hand this rule does not apply to water or springs beneath the surface.
If in digging a well the source of supply to another is cut off, it is
a loss for which there is no redress, unless the well has been dug
maliciously. But where percolating water abounds and is obtained by
artesian wells a land owner has no right to sink wells on his land and
draw off the water supply of his neighbor. The right to cut ice is a
natural one, and the owner of a lake or stream may cut a reasonable
quantity, but not enough to diminish the water appreciably to the
lower proprietor.
While a person has the natural right also to the lateral support of
his land, yet he cannot use it to the injury of another. This is a
legal maxim. If, therefore, he should excavate to the edge of his
land and his neighbor's building should in consequence fall down,
would he be without redress? The rule is, the excavation must be made
in a reasonable manner. This is a question of fact in every
controversy of the kind. The owner of land adjoining a highway has no
right to the lateral support of the soil of the street. Therefore, if
the grade of a street were lowered by proper authority and one's house
located by the side of it should fall, he would have no redress
against the city or other public body.
=Quasi Contracts.=--A quasi contract is a legal obligation arising
without the assent of one from the receipt of a benefit which, if
retained, would be unjust. The law therefore compels him to make
restitution. He is required to do this, not because he has promised to
make restitution, but because he has received a benefit which he
cannot justly retain.
If one at the time of conferring a benefit on another confers it as a
gift, it cannot afterward be claimed that the gift was conferred
relying on a supposed contract. Consequently, though the donor's
intention may be subsequently altered, no obligation to make
restitution will arise. Nor does the failure of the donee to
reciprocate the donor's generosity or indirectly reward him, create
any right or claim on the donor's part to a return from the donee.
Where one, in the preservation of his own property or the promotion of
his own interests, bestows some incidental advantage to another, there
is no legal obligation to pay for the value of it. Thus the owner of
the lower part of a house is not liable for the advantage resulting to
him from the repair of the roof by the owner of the upper part and
roof. Nor is one who has thickened and strengthened that part of an
ancient party wall which is on his own land, in order to sustain the
building he is erecting, entitled to recover from the adjoining owner
who used the wall. Nor can anything be recovered from the owner of a
vessel by the underwriters who had her docked for repairs though by
such docking the owner gained an important benefit. Nor can one who in
pumping out his quarry frees another quarry from water recover
anything for the service. Nor can one who is benefited by experiments
made by another to test the value of patented inventions, in which
both are interested, be legally required to pay for the benefit he has
received.
As no expectation of payment does presumptively arise when services
are rendered by one member of a family to another member, one who
claims payment for them must prove that they were not rendered as a
gratuity, but on the legal supposition that he had a right to
compensation.
One who knows or who has reason to believe that compensation is
expected for goods or services tendered to him ought not to accept
them unless he intends to pay for them. If he does his act of
acceptance will be regarded as a promise of payment, and can be
enforced. But if one accepts goods or services without knowledge or
reason to believe that compensation will be expected, what then?
Suppose A sends a barrel of apples to B supposing, from their previous
course of dealing, that B will return them if he does not want them? B
should either return them or pay. Suppose B is misinformed and learns
that A is giving a barrel of apples to each of his customers? Then he
would be justified in keeping them until he learned the truth.
If, in making a contract it is taken for granted by both parties that
a certain fact exists, which, if not existing, would make the contract
impossible of execution, the contract is void. Thus, in contracts for
the sale of specific personal property, its existence at the time of
the sale is generally assumed. If the property has perished or been
destroyed, the contract is void. The same rule has been applied to the
sale of non-existent reality, of the transfer of void or spurious
securities, of the assignment of a void lease. In all these cases the
money paid in misreliance on the void contract is recoverable.
Premiums paid on a policy of marine insurance by one who in reality
had no goods on board, or for a voyage that was never begun, may be
recovered. The existence of a risk is assumed by both parties, in fact
there is no risk, consequently there was nothing to which the contract
of insurance related.
"A promise," says Woodward, "which is so general or indefinite that it
does not enable the courts to determine the nature and extent of the
obligation assumed must be regarded as no promise at all. Such has
been the fate of a promise to pay good wages; a promise to convey a
hundred acres of land, the land not being described; a promise to
divide profits, no rate of division being indicated. Instances might
be multiplied. A benefit conferred, in the honest, though mistaken,
belief that such a promise is binding ought in justice to be restored.
Restitution is accordingly enforced."
The law requires some kinds of contracts to be executed in a
particular manner. Thus, by statute, many municipalities can make
contracts, or those of a particular kind, only on sealed bids or
proposals and after proper advertising for bids, etc. If these things
are not done, the contract made in disregard of them is invalid. The
courts of this country have got into deep confusion in applying this
rule to private corporations. Suppose a corporation makes a loan
without proper authority and receives the money, can the lender
recover it? The corporation had no right to borrow, of this the lender
knew as well as the borrower. Both parties are in the wrong. The
highest court in this country has been more consistent than many of
the state courts, and holds that a contract it cannot make for lack of
legal power is not made and cannot be ratified. "No performance on
either side can give the unlawful contract any validity, or be the
foundation of any right of action upon it." Nevertheless though a
contract is unlawful and void because the corporation was unable to
make it, a court strives to do justice between the parties by
permitting property or money, parted with on faith of the unlawful
contract, to be recovered back, or compensation to be made therefor.
The lack of another legal requirement in making contracts gives rise
to serious consequences. We have learned that the Statute of Frauds
requires for the validity of many contracts that a memorandum of them
be made in writing and signed by one or both contracting parties. By
English law the statute provides a rule of evidence, that a writing
must be shown as proof of a contract before the courts will consider
it as having been made; by some of the American courts a contract that
does not meet the requirements of the statute is held to be void; by
other courts they declare that though the contract is not void it
cannot be enforced.
While the Statute of Frauds in some states is regarded as completely
nullifying contracts not conforming to its requirements, they are not
anywhere held to be illegal, that is, are not made in violation of
law. "There appears," says Woodward, "to be no reason of policy,
therefore, for denying to a party thereto in a proper case, the aid of
the court in obtaining quasi contractual relief, or the right to
establish the justice of his quasi contractual demand by proving the
terms of the unenforceable agreement. True, the evidence of the
agreement in such a case, must be oral; but since the evidence is for
the purpose of proving, not a contract as such, but a transaction
resulting in an unjust benefit to the defendant, its introduction
would seem not to contravene the statute."
A purchaser of land under an oral contract, who is given possession
and subsequently fails to pay, is liable for the use of the land to
him while he has occupied it. Though the act of the seller in giving
the purchaser possession without conveying the title may not be
regarded as a part performance of the contract of sale, yet the
benefit resulting to the purchaser creates an obligation to make
restitution which the courts will enforce. The improvement of land by
the purchaser under an oral contract is an act which enables him to
enforce the contract in equity. Improvements made by a lessee under an
oral lease within the statute are governed by the same rules as those
of improvements made by a purchaser.
If no benefit has been derived from the contract, nothing can be
recovered. Thus, a son worked for his father on his father's farm
under an unenforceable contract with his uncle. The latter was under
no quasi contractual obligation to pay the value of such service,
since he had derived no benefit from them. Likewise one who, relying
on an unenforceable contract, constructed a wood-chopping machine that
was not accepted could not recover for the value of his labor and
materials.
Again, where one party by his own act or default has prevented the
other party from fully performing his contract, the party thus
preventing performance cannot take advantage of his own act or
default, and screen himself from payment for what has been done under
the contract. Thus, if one party agrees with another to work on a
house the law implies that the employee owns the building in which the
work is to be done. This is a part of the contract whether the house
is clearly specified or not. Therefore, an employer who does not own
the house, or parts with it before the work is completed, is liable to
the other party.
The destruction of a thing in the course of alteration or repair
without the fault of the bailee is a case like that above mentioned.
The labor and materials are expended in response to the desire of the
owner of the property, and therefore it is just that he should pay for
the property he destroyed. In one of the old cases a horse was sent to
a farrier to be cured and was burnt before a cure was completely
effected. Nevertheless, the farrier was entitled to payment for what
he had done. Likewise, the owner of a ship that is destroyed by fire a
few hours before the completion of repairs, cannot escape payment on
the ground that he has reaped no advantage.
As the illness or death of a contractor does not, like fire or
shipwreck, deprive the other party of the fruits of what has been
already done, the benefit resulting to him is more obvious, and the
element of hardship is wanting that appears in many of the cases. The
value of his services or the materials he may have used may therefore
be recovered. In one of the cases A agreed that he and his wife should
live in B's house and maintain him for life. As A's wife died the
contract could not be performed. Nevertheless, A recovered the value
of the service he had rendered to B during the lifetime of his wife.
Wagering contracts either by statute or judicial decision are illegal
and void in most or all the states. In many of them the statute
permits the recovery of the money from the stakeholder or the winner.
Payment over to the winner after notice or demand by the loser is not
a good defense in an action against the stakeholder. Again, the winner
is liable who, when receiving the money, knows that the stakeholder
has been notified not to pay it over, or has received notice not to
take it.
The legality of contracts made or to be performed on Sunday is
determined generally by statute. Generally, when a contract is made on
Sunday, or is fully performed on both sides, the money paid or other
thing done in execution of it cannot be recovered. Again, one who is
induced by fraudulent representations to enter into a contract which
is in violation of a Sunday law is not so much in the wrong as the
other, and consequently may recover a benefit he has conferred on the
other party in performing the contract.
If a member of a firm gives a promissory note signed by the
partnership name, for a debt of his own, which his partner is
compelled to pay, he may recover the money from the other. So, if a
carrier by mistake delivered goods to the wrong person who keeps them,
and the carrier is obliged to pay for their value, he can recover the
amount of the other person who thus wrongfully keeps them.
Whenever a person makes a payment to another under such a mistake of
the material facts as to create a belief in the existence of a
liability which does not really exist, the money may be recovered
back. Such an obligation arises where money is paid as due on the
basis of erroneous accounts, and on a true statement of account is
found not to have been due. A voluntary payment with knowledge of all
the facts cannot be recovered, even though there may have been no
obligation to pay.
A person cannot recover money paid under a mistake of fact who has
received the equivalent for which he bargained, because there is no
failure of consideration. Nor is the fact immaterial that he need not,
and would not have made the payment had he known the true state of
things. A bank, for example, that pays the check of a depositor under
the erroneous belief that it has sufficient funds, may not recover
from the payee the excess to the depositor's credit. But if the
purchaser of goods has paid the price, and the seller fails to deliver
them, the purchaser may recover his money. And in any case, a person
who has paid money under an agreement which he may rescind and does
so, because there was a failure of consideration, may recover what he
has paid. An action will lie against a person who sells goods as his
own, but which do not belong to him, whenever the real owner claims
them from the purchaser. In like manner an action will lie against a
person who sells bills, notes, bonds, stock or other securities which
prove to be worthless, or against a person who agrees to transfer the
title to land which, for lack of title or other reason, cannot pass.
As a rule, the consideration of a contract must totally fail to
entitle a person to recover back the money he has paid. If the
consideration has only partly failed, the remedy, if there is any, is
for a breach of the contract, and not to recover back the money he has
paid. Thus, if an article is sold with a warranty of its quality, and
it is not worthless, his remedy is an action to recover damages for a
breach of the warranty, and not an action to recover back the money
paid for the thing purchased.
A liability cannot be imposed on a person without his act or consent.
One man cannot force a benefit on another without his knowledge or
consent, and then compel him to pay for it. "If a person," says Clark,
"intentionally and knowingly performs services for another or
otherwise confers a benefit on him without his knowledge, so that he
has no opportunity to refuse the benefit, the law will not create a
liability to pay for it. So, where a person supplies another with
goods, the latter supposing that he is being supplied by another
person with whom he had contracted for the goods, the law will not
even imply a promise to pay for the goods." Where benefits are
conferred by one person on another under such circumstances as to
raise no promise in fact or in law to pay for them, he may,
nevertheless, become liable by retaining them. Thus, if a person were
to receive goods from another reasonably but mistakenly believing them
to be intended as a gift, and, after learning of his mistake, should
retain them, when he might return them, or if he should receive part
of the goods purchased from another, and retain them after failure of
the latter to supply the rest of the goods, the law would compel him
to pay for them. And the same rule applies where benefits are in any
other way received under such circumstances as to create no
contractual obligation, and are retained when they should in justice
be returned. If, however, the benefits thus received are incapable of
being returned, as where they consist of services, or of materials
which have been used in repairing a house, no liability is created.
=Sale.=--By a contract to sell goods the seller agrees to transfer the
property in them to the buyer for a consideration called the price.
There is an important distinction between a contract to sell in the
future and a present sale. The first is called an executory, the other
an executed, sale. If the goods are to be transferred, there is an
executed sale even though the price is not to be paid at the same
time. But if the price is paid, and the goods are not then to pass,
the transaction is a contract to sell, or an executory sale. Both
kinds of sales may be by deed or sealed contract as well as by parol
or orally.
Sales and contracts to sell are based on mutual assent, the intent,
therefore, of the parties fixes the nature and terms of the bargain.
If the offerer understood the transaction to differ from that which
his words plainly expressed, it is immaterial, "as his obligation must
be measured by his overt acts." Thus, if an offer to buy or sell is
sent by telegraph, and is improperly transmitted by the telegraph
company, an acceptance by the offeree creates a binding bargain. By
using the telegraph as an agency of communication, the offerer makes
himself responsible for the offer actually delivered. Of course the
telegraph company would be responsible to the offerer for any damage
he may have suffered unless relieved by some neglect or fault of the
sender of the message.
A contract of sale may be conditional, for example, that the property
shall not be transferred until the price is paid. Though the property
is transferred by the sale, promises or obligations may still be
unperformed by the seller. Or the transfer of the title may be
conditional on payment of the price. In such sales the goods are
delivered to the buyer, but the title is retained by the seller until
payment.
The capacity to buy and sell is regulated by the general law
concerning the capacity to contract, transfer and acquire property.
When necessaries are sold and delivered to a minor, or to an insane or
drunken person, or to a married woman, who is lacking in mental
capacity to make a contract, he must, by the general Sales Act, pay a
reasonable price therefor. Necessary goods by this act mean those
suitable to the condition of the life of the minor or other persons
above mentioned at the time of their purchase and delivery.
As we have seen (See _Minor_) a minor may avoid his contracts. The
right to do this is given for his protection, and should not be
stretched beyond his needs. Therefore the right is confined to himself
or his legal representatives. Neither creditors, nor trustees, nor
assignees in bankruptcy can do this, but his heirs can do this, and
probably his guardian. By the common law a purchaser for value who did
not know that the seller bought them of a minor could not retain them
if the minor wished to reclaim them as his own. This rule has been
changed by the Sales Act, and a bona fide purchaser is therefore safe
in purchasing such goods even though the seller did buy them from a
minor.
As a minor may disaffirm his contract, any act clearly showing this
intent is sufficient. "It was early settled," says Williston, "that an
infant's conveyance of realty could be avoided only after he attained
his majority. In the case of personal property a sale may be avoided
during his minority by an infant seller or buyer. Though an infant may
thus avoid his sales, purchases or contracts during infancy, he can
make no effective ratification until he becomes of age, for an
infant's ratification clearly can be no more effective than his
original bargain."
In the Sales Act the Statute of Frauds (See _Statute of Frauds_) has
been reënacted, and provides that in a sale or contract to sell goods
amounting to five hundred dollars or more, it cannot be enforced
unless the buyer shall accept a part of the goods, or give something
in earnest to bind the contract, or in part payment, or makes some
note or memorandum in writing of the sale which is signed by the party
or his agent against whom the other party seeks enforcement.
This statute applies to a contract for goods that may be intended for
future delivery, but not to goods that are to be manufactured by the
seller especially for the buyer and are not suitable for sale to
others in the ordinary course of the seller's business.
The Sales Act contains an important section relating to the sale of an
undivided share of goods. If the parties intend to effect a present
sale, the buyer becomes an owner in common with the owner of the
remaining shares. How important is this section may be easily learned.
The grain of many owners is often mingled in an elevator. It is
delivered to those who call for it, the kinds and quantities mentioned
in the receipts given to them at the times of storing it. The grain in
the elevator may be delivered many times before a particular depositor
makes his demand. The elevator company must keep on hand enough grain
to meet all outstanding receipts. Each depositor thus retains title
to some portion of the grain in the elevator. The company is the
bailee with the power to change the bailor's separate ownership into
an ownership in common with others of a larger mass, and back again.
At any given moment all the holders of receipts for the grain are
tenants in common of the amount in store, each owning a share and all
owning the entire amount, each having the right to sell his share and
demand its separation and delivery in accordance with custom and the
terms of the receipt.
When a party has specific goods which, without his knowledge, have
perished partly or wholly, the buyer may treat the sale as avoided, or
as transferring the property in all of the existing goods and as
binding him to pay the full agreed price if the sale was indivisible,
or if divisible the agreed price for the goods in which the property
passes. One can readily imagine trouble when none of the goods have
been destroyed but all are in a condition inferior to that supposed at
the time of the bargain. In such a case the "only question is whether
the article has been so far destroyed as no longer to answer the
description of it given by the contract."
The price may be fixed by the contract or in such a manner as the
parties may agree, and may be made payable in personal or real
property. When the price is not determined in the way mentioned in the
Sales Act, the buyer must pay a reasonable price. This is a question
of fact in each case. Usually, the price, either in an executed sale
or in a contract to sell, is fixed by the parties at the time of
making the bargain. In the agreement to sell there must be a
consideration on both sides to sustain it. Sometimes the parties agree
that the amount of the price shall vary according to the happening, or
failure to happen, of a future event. Such a contract may be a wager,
which is forbidden by law, or it may be legal, as we shall soon learn.
Whenever no price has been fixed the law has established a rule, a
reasonable price. It is the intention and understanding of the parties
that a buyer who orders a barrel of flour from his grocer will pay a
reasonable price. Likewise a buyer who orders a carriage to be made
for him and says nothing about the price.
What is a reasonable price? Generally the market price at the time and
place fixed by the contract or by law for delivering the goods, but
not always. Under unusual conditions the market price does not furnish
the only test. Said the court in one of these cases: a reasonable
price may or may not agree with the current price of the commodity at
the place of shipment at the precise time of making it. The current
price of the day may be highly unreasonable from accidental
circumstances, by the action of the seller himself in purposely
keeping back the supply.
With respect to warranties the Sales Act provides that when the sale
is made on a condition which is not performed, the party for whose
benefit the condition was made may refuse to proceed with the contract
or sale, or may waive performance of the condition. The nonperformance
may be treated as a breach of warranty. Thus time may be an important
element in a contract, and an agreement to deliver goods by a
specified time is a condition or warranty. And if there is a delay in
delivering, unless it may be a trifling one, the buyer may refuse to
accept the goods.
A common condition in more recent times qualifying the obligation of
the buyer is that the goods shall be satisfactory to him. By this is
meant the satisfaction of the buyer after the exercise of an honest
judgment. In New York and some other states a somewhat different rule
prevails. Unless the things covered by the contract involve personal
taste, the contract imposes on the seller the requirement only that a
reasonable man would be satisfied with performing it, thus not leaving
the question of its satisfactory performance entirely to the buyer.
This, Williston says, is an arbitrary refusal of the court to enforce
the contract that the parties made and seems unwarranted.
Warranties may be express or implied. By the Sales Act any affirmation
of fact or any promise by the seller relating to the goods is an
express warranty if the natural tendency of such affirmation or
promise is to induce the buyer to purchase the goods, and if the buyer
purchases the goods relying thereon.
In a contract to sell or a sale, unless a contrary intention appears,
there is an implied warranty on the part of the seller that in the
case of a sale he has the right to sell the goods, also, in the case
of a contract to sell them, he will have the right to do this at the
time of passing the property. More briefly the seller warrants the
title to the property which is the subject of sale. Whether the seller
is in or out of possession of the property, he can by appropriate
words sell such interest as he may have therein. But persons also sell
property not owned by themselves by authority of others or of the law.
Unless they expressly warrant the title they are not liable for lack
of it. Sales of this nature are made by a sheriff, or other judicial
officer, auctioneer or mortgagee, assignee in bankruptcy, executor or
administrator, guardian, or simply an agent.
When there is a contract to sell, or a sale of goods by description,
there is an implied warranty that they shall correspond with the
description; and if the contract or sale is by sample, as well as by
description, it is not sufficient that the bulk of the goods
corresponds with the sample if these do not also correspond with the
description. The Sales Act contains elaborate provisions relating to
implied warranties of the quality of things sold. There is no implied
warranty of the quality or fitness of goods for any particular purpose
unless the buyer makes known to the seller the purpose for which they
are required, and he also relies on the seller's judgment of their
fitness for the use he intends to make of them. Again, if the buyer
has examined the goods there is no implied warranty of the defects
which such an examination ought to have revealed. An implied warranty
as to quality or fitness for a particular purpose may also be annexed
by the usage of trade. There is an implied warranty that the bulk
shall correspond with the sample in quality, and that the buyer shall
have a reasonable opportunity of comparing the bulk with the sample.
When does the transfer of ownership occur? When there is an
unconditional contract to sell them the property therein passes to the
buyer on the making of the contract, regardless of the time of payment
or delivery or both. When goods are delivered to the buyer "on sale or
return," giving the buyer an option to return them instead of paying
the price, the property passes to the buyer on delivery, but the
property may go back to the seller by returning or tendering the goods
within the time specified in the contract. When the goods are
delivered to the buyer on approval or on trial or other similar terms,
the property passes to the buyer, (1) when he signifies his approval
or acceptance of them, (2) or if he retains them beyond the time fixed
for their return, or if none has been fixed, beyond a reasonable time.
It is the duty of the seller to deliver the goods, and of the buyer to
accept and pay for them, in accordance with the terms of the contract
of sale. Unless otherwise agreed, delivery of the goods and payment of
the price are concurrent conditions, the seller, therefore, must be
ready and willing to give possession of the goods to the buyer in
exchange for the price, and the buyer must be willing and ready to pay
the price in exchange for the possession of the goods.
Whether it is for the buyer to take possession of the goods or for the
seller to send them to the buyer, is a question depending in each case
on the contract, express or implied, between the parties. Apart from
contract, or usage of trade to the contrary, the place of delivery is
the seller's place of business, if he have one, and if not, his
residence. Again, when by the contract of sale of goods no time for
sending them has been fixed, the seller must send them within a
reasonable time.
Vast quantities of goods are bought and sent forward to buyers, which
are not to be delivered until payment. The Sales Act provides that
where goods are shipped and by the bill of lading that is given for
them they are to be delivered to the order of the buyer or of his
agents, but possession of the bill of lading is to be retained by the
seller or his agent, he thereby reserves his right to the possession
of the goods as against the buyer. Very often a buyer of wheat, for
example, will draw a bill of exchange on his principal or company
living in the place where the goods are to be delivered and will have
it discounted by a bank using the money to pay the seller. The wheat
may be in an elevator, or it may be in transit. In either case the
bank receives a document, elevator receipt, or bill of lading, and
thus becomes the real owner of the wheat, and can control it afterward
until it is actually delivered to the consignee, whoever he may be.
This is the bank's security for making the loan. The bank sends
forward the bill of exchange to its correspondent bank in the place
where the consignee lives and the wheat is to be delivered with
instructions to deliver it when the bill is paid.
With respect to speculative sales of stock, so well known by every
one, a contract, says Williston, giving one party or the other an
option to carry out the transaction or not at pleasure, is not a
wager, unless forbidden, as in some states is done by statute. A
contract to sell goods in the future, which the seller does not own at
the time is, aside from the statute, not only legal but common. "The
test," says Williston, "adopted in the absence of statute,
distinguishes between contracts to buy and sell in which the actual
delivery of the property is contemplated, and similar contracts in
which it is contemplated merely that a settlement shall be made
between the parties based on fluctuations in the market price. A
contract of the former kind is legal; one of the latter kind is a
wagering contract, and illegal."
=Shipping.=--The federal statutes require that every ship or vessel of
the United States shall be registered or enrolled in the office of the
collector of customs of the district that includes the home port of
the vessel. None but citizens of the United States can have their
vessels registered. Consequently the sale of a vessel to a foreigner
denationalizes her. If sold to an American, she must be registered
anew. On arriving at a foreign port masters of vessels must deposit
their registers with the consul or commercial agent at that port.
Enrollment is the term used to describe the registry of a vessel
engaged in coastwise or inland navigation or commerce. Registration is
applied to vessels engaged in foreign commerce. License means the same
as enrollment, but is applied to small vessels of twenty tons burden
or less. The federal laws on this subject do not apply to vessels that
are used on nonnavigable waters of the country.
The title to a vessel may be acquired by purchase or building. If a
vessel is built for a party no title thereto passes until she is ready
for delivery and has been approved and accepted by him. This, however,
is no arbitrary rule, and is often modified especially when payment is
made in installments and during the construction of the vessel.
Nowadays many vessels are owned by corporations, and the rules that
apply to corporations of course determine the ownership of their
property. In other cases the several owners of a vessel are tenants in
common, and not co-partners, unless by agreement they have established
other relations among themselves. They may, of course, become partners
and be governed by the rules that apply to persons thus related. When
they are related as tenants in common one part owner has no power to
bind the others in any way beyond the necessary and regular use of the
vessel. He cannot sell or mortgage the interests of the others, draw
drafts or notes in their name, apply the freight money earned to pay
his individual debt, or procure insurance for the other owners.
The majority rule governs in employing the vessel. The majority
therefore have the right to control the use of the vessel on giving
security to the minority, if required, to bring back and to restore to
them the vessel, or if lost to pay them for the value of their shares.
The minority owners in like manner may use the vessel if the majority
are unwilling to employ her. A court of admiralty will in such a case
act for the parties.
Each part owner is entitled to his share of the profits, and is also
liable for the expenses of the vessel unless he has dissented from the
voyage. But part owners who dissent from the voyage and take security
for the safe return of the vessel are not entitled to share in the
profits, nor are they liable for the expenses.
A part owner may bind the others for necessary supplies and repairs
required that are procured on credit, unless his general authority to
do this has been restricted. The ship's husband or managing owner has
authority to do whatever is necessary for the prosecution of the
voyage and earning the freight money. For such purposes he is the
agent of the owners and can bind them by his contracts, unless his
authority is revoked or modified.
Any owner can sell his interest whenever he pleases, and all of them
may authorize the sale of the entire vessel. A writing is required to
pass the title, but as between the parties an oral sale and delivery
will suffice, at common law. In many cases a bill of sale is required
by statute. The writing should describe what things are transferred,
but general terms such as appurtenances and necessaries have a fixed
meaning which are understood. Intention is the guide to determine what
passes in such a sale, as in cases of fixtures already considered.
When the bill of sale is executed the purchaser becomes entitled to
all the benefits of ownership, and incurs all the liabilities. If the
sale is unconditional, the purchaser is liable for supplies though he
may never have taken possession of the vessel, and neither the master
nor the merchant furnishing the supplies knew of the sale. The
purchaser is not liable for repairs made and supplies furnished before
the sale, unless he has agreed to pay for them, or the vessel was at
sea at the time. If she was, the purchaser takes her subject to all
encumbrances on her, and to all lawful contracts made by the master
before learning of the purchase.
A vessel may be mortgaged, and the federal statutes state how this
shall be done. A shipbuilder may make a contract whereby he mortgages
the vessel to be built in advance of its construction, and a lien
attaches as it comes into existence. Such a mortgage is postponed or
comes after a maritime lien, that will soon be explained, but comes
before the debts of general creditors.
The mortgagor, so long as he retains possession, has all the rights of
ownership, and all contracts made by him are valid which do not impair
the security of the mortgage. When the mortgagee takes possession of
the vessel he is entitled to all the earnings that accrue, but not to
those which the mortgagor has reserved, even though they are for the
current voyage. Furthermore, his interest may be attached by his
creditors. The discharge and foreclosure of mortgages on vessels are
governed for the most part by the rules that apply to chattel
mortgages. A mortgage on a vessel should be recorded, and many of the
rules and usages that apply to the recording of deeds apply also to
such mortgages.
A contract may be made for a loan of money on the bottom of a vessel
at a rate much greater than the usual rate of interest. Such a loan is
sanctioned to enable the master to obtain money for supplies or
repairs at some foreign port where they could not be otherwise
obtained. The loan is on the security of the vessel and if she never
arrives, the lender loses his money. If she does arrive at the port of
her destination, the borrower personally, as well as the vessel, is
liable for the repayment of the loan with the agreed interest thereon.
This maritime loan is highly regarded in legal tribunals, and is
liberally construed by them to carry into effect the intention of the
parties.
Such a loan or bond can be given by the master of the vessel only in
case of necessity and great distress in a foreign port, where the
owner is not present and has no representative with funds, and where
the master has no other means of getting money. The master has a large
discretion. "The necessity must be such as would induce a prudent
owner to provide funds for the cost of them on the security of the
ship, and that if the master did not take the money the voyage would
be defeated or at least retarded." The general purpose of the loan is
to effectuate the objects of the voyage and the safety of the ship.
The appointment and employment of a master is wholly within the
discretion of the owners. On his death or removal in a foreign port a
successor may be appointed by the consul resident there of the country
to which the vessel belongs, or by an agent of the owners, or by the
consignees of the cargo who have advanced money for repairing the
vessel. The registry acts of the United States require the putting of
the master's name in the register, but if this is not done his
authority is not impaired; and the one to whom the navigation and
control of a vessel is entrusted is considered her master, although
the name of another appears on the register. His contract may contain
any stipulation to which the parties may agree. The right of a master
to command his vessel is personal to him; and a sale by a master who
is part owner of the vessel of his interest therein transfers no right
to the command of the vessel which the other owners are bound to
respect. Whenever he becomes incapable of commanding by reason of
sickness, insanity, or other reason, the command with the duties
pertaining thereto devolves on the first mate until the appointment of
another master; should he be absent or incapable of acting, then the
second mate and so on down the rank of officers.
The master must do all things for the protection and preservation of
the several interests entrusted to him, the owners, charterers, cargo
owners, underwriters. He must render a full and satisfactory account
to the owners of the vessel of moneys secured and his disbursements
before demanding any wages. At sea he is the supreme officer, has sole
authority over both officers and crew to do justice to all persons
under his command, and to protect passengers and seamen from bad
treatment while they are on board. It is said that in respect to
passengers he owes a higher and more delicate duty than he owes to the
crew, but at the same time he has the necessary control over his
passengers and may make proper regulations for their government to
ensure their safety, promote their comfort and preserve decent order.
He has authority to bind the owners when they are not present for
expenditures needful in the way of repairs, supplies and other
necessaries reasonably fit and proper for the safety of the vessel and
the completion of the voyage.
As the seamen who serve on a vessel are generally ignorant and
improvident, the execution of shipping articles are required by
federal statute where the vessel is bound on a foreign voyage, or from
a port in one state to a port in another. If these articles are not
made seamen have the right to leave the vessel at any time, and may
recover the highest rate of wages paid at their shipping port. The
articles must be signed by the seaman and by the master, and the
contract must be executed before the vessel proceeds on its voyage.
The seaman is not bound by any new or unusual stipulation put into the
articles affecting his rights without full knowledge of it, and
especially when he cannot read and the stipulation is not read and
explained to him. Once executed, the articles cannot be varied by a
verbal agreement between master and seaman.
The articles must specify clearly and definitely the nature of the
intended voyage, the port at which it is to end and its duration.
Indefinite articles, leaving to the option of the master whether the
voyage shall be long or to one or more foreign ports, or short to
nearby domestic ports, are void. The articles must also state the
amount of wages each seaman is to receive. Articles are void that fix
a forfeiture of wages in excess of the amount named in the statute, or
restrict the time in which seamen must sue for their wages. The
contract may be dissolved by cruel treatment by the master and by an
abandonment of the vessel without the master's consent, but not by the
death, disability, removal or resignation of the master and the
substitution of another. Besides the wages a seaman may recover,
should the master break the contract, are his expenses in returning to
the port of shipment including also general damages.
Claims for wages are "highly favored in admiralty courts," and
discharges are not justified for trivial causes, nor for a single
offense unless it is an aggravated one. Such causes are continued
disobedience or insubordination, rebellious conduct, gross dishonesty,
embezzlement or theft, habitual drunkenness, habitually stirring up
quarrels, or by his own fault rendering himself incapable of
performing duty. The master must receive back a seaman when he has
thus been discharged who repents and offers to return to his duty and
make satisfaction, unless the offense was of an aggravated character.
This is the general rule, though from its nature there is much room
for its application.
=Statute of Frauds.=--Some contracts must be in writing to comply with
a statute called the Statute of Frauds, which has been enacted with
variations in all the states. One of the most important sections
relates to the conveyance of real estate. This requires that the
agreement for its sale must be in writing. (See _Agreement for Sale of
Land_.)
Another section relates to the sale of goods, wares and merchandise.
This has not been enacted in every state. If the amount is above that
mentioned in the statute, thirty to one hundred dollars, there must be
a written contract or delivery and acceptance of the goods to
constitute a contract. If A sells a bill of goods to B, who declines
to receive them, and the contract is wholly verbal, he can shield
himself behind this statute wherever it prevails. Many questions
therefore arise, what is a delivery and acceptance? A delivery of a
key of a building containing the property is sufficient. The delivery
of a bill of lading of goods properly indorsed, making entries of the
goods sold, pointing them out or identifying them is enough to comply
with the statute. Whenever there has been a transfer of possession and
control by the seller to the purchaser to which the latter has
assented there has been a sale. Or, more broadly, whenever there has
been such action as to show clearly an intention to sell and accept
the property the sale is complete. Part payment of the purchase money
for personal property is generally regarded as showing such intention.
To a contract for the manufacture of a thing the statute does not
apply. Simple as this answer may be, the law soon gets into
difficulties in deciding whether a contract is for the making of a
thing, or for the thing itself; whether the important element is the
skill or labor that is to be expended, or the thing without regard to
the process of making. Thus, if a contract is with one to paint a
portrait, the statute would not apply, for the skill of the artist is
the important thing purchased, and not the canvas, paint, etc., he
must use. To a contract for a locomotive the statute would apply. "If
the contract states or implies that the thing is to be made by the
seller, and also blends together the price of the thing and
compensation for work, labor, skill and material, so that they cannot
be discriminated, it is not a contract of purchase and sale, but a
contract of hiring and service, or a bargain by which one party
undertakes to labor in a certain way for the other party," and the
statute does not apply to it.
=Statutes of Limitation.=--In all the states statutes have been
enacted which provide that if the rights of parties to legal redress
are not enforced within a specified period, the courts are closed to
them. Thus, in most states a statute provides that a holder or owner
of a promissory note who neglects to sue the debtor within six years
from its maturity cannot do so afterwards. The note is not absolutely
void, though the law presumes it has been paid. As the note is not
void, payment may be effected as we shall soon learn.
Suppose one is indebted to a merchant, if the debt is not paid within
six years in most states and nothing has happened, the debt in popular
language is outlawed, in other words cannot be collected by resort to
law. The time begins to run as soon as the debt has accrued; if it be
a debt to a merchant, as soon as one has stopped trading with him. To
the operation of this rule are some important exceptions. It does not
run in favor of a minor, married woman or insane or imprisoned person;
or not whenever or wherever they are not capable of contracting. But a
disability arising after the statute has begun to run in his favor
will not prevent it from running.
The Statute of Limitations generally bars the remedy or right to
pursue the debtor in a court of law, it does not extinguish the right
or debt, and therefore the right to pursue a debtor may be revived by
a new promise to pay. One may ask, is not a debtor a foolish man to
acknowledge that he is a debtor after the law has released him from
his debt? Yes, from a purely selfish point of view. Nevertheless, the
moral obligation remains, and happily all morality has not yet fled
from the world. One may ask, is not such a promise void because there
is no consideration received for it? No, for the reason that there was
a consideration for the original obligation, and this is sufficient
to sustain the renewed promise to pay it. In some states the statutes
provide that such an acknowledgment to pay a debt after the statute
has barred it, must be in writing, and signed by the debtor or his
agent. The most general rule is, to remove the bar of the statute,
there must be either an express promise to pay, or an acknowledgment
of the debt accompanied by an expression of willingness to pay it. To
simply acknowledge the existence of a debt is not enough, there must
be indicated or expressed a willingness to pay.
A debt may also be revived by part payment. Payment on account of the
principal, or payment of interest on the debt will prevent the statute
from running against it. Payment to have that effect must be made with
reference to the original debt and in such a way as to effect an
acknowledgment of it.
While a debtor may always apply a payment to any one or more of
different debts he owes his creditor, if he fails to do so the
creditor can make the application even to a debt which is already
barred by the statute, but his application will not remove the bar to
the remainder of the debt. To have that effect the appropriation must
be made by the debtor himself.
Statutes of limitation apply to many obligations, and the times or
dates at which they become outlawed or outside the scope of legal
redress, vary in the different states. In many of them an ordinary
book account or negotiable note is outlawed after six years, and
cannot be enforced after that time unless the debtor has revived it by
a new promise or part payment. A judgment against one usually runs
twenty years.
=Telegraph and Telephone.=--Though the business of a telegraph company
is public in its nature, it is not a common carrier, and it may
therefore set up reasonable regulations for the reception,
transmission and delivery of messages. As it is a quasi public
corporation, it must extend its services to all that apply therefor
and offer to pay the charges. And if refusing it may be compelled to
do these things. The company may charge more to one person than to
another when the service is unlike, though not enough to amount to an
unjust discrimination. The difference in charges must bear some
relation to the different services rendered.
A telephone company cannot legally discriminate between two competing
telegraph companies by giving one the telephone call word "Telegram"
and thereby depriving the other telegraph company of business. Nor can
a telephone company legally charge a higher rental for a telephone to
a telegraph company than to any other patron. Nor can a telegraph
company discriminate against another in refusing credit which is given
to other responsible parties.
A strike may be a sufficient excuse for failure to have sent messages
promptly, though not excusing a railroad company for failure to
deliver freight as if no strike had happened. A state may impose a
penalty on a telegraph company for failure to deliver promptly in the
state messages coming from other states. And a state may impose a
penalty on a telegraph company for failure to perform its clear common
law duty to transmit messages without unreasonable delay, and this
statute applies to messages to points outside the state if it relates
to delay within the state. A state statute prohibiting telegraph
companies from limiting their liability for the transmission of
telegrams within the state is constitutional. The state may prohibit a
telegraph company from transmitting racetrack news. A telegraph
company must transmit a message unless it contains indecent language.
Nor is it liable for libel in transmitting a telegram stating that a
person had been bought up.
It is reasonable for a telegraph company to close its office on
holidays, except two hours in the morning and two hours in the
afternoon, and therefore is not liable for delay in transmitting a
message because of this delay. The unauthorized writing out and
sending of a telegram in another person's name is a forgery.
When a telegram must pass over two connecting lines the receiving
company may require the sender to designate what route the message is
to take, and to pay an extra charge for the words indicating such
route. A telegraph company is not privileged in transmitting messages,
but they should not be made public, except to produce them when
legally required in court. Under the New York statutes it is a
criminal offense for a telegraph employee to divulge the contents of a
telegram to any other person than the addressee, except when it
relates to unlawful business. In that case the employee may give
information to the public officer who is prosecuting the unlawful
sender. It is a criminal offense to open or read a sealed telegram, or
to tap a telegraph wire in order to read messages in course of
transmission.
In regulating the receipt, transmission and delivery of telegraph
messages, the rules differ from those that are to be transmitted
within the state from the rules for interstate messages. The rules
with respect to the latter are governed by the Interstate Commerce
Act of 1910, state messages are governed by the laws of their
respective states. By the federal law, therefore, a telegraph company
providing one rate for unrepeated messages, and another and higher
rate for those repeated, may stipulate for a reasonable limitation of
its responsibility when the lower rate is paid. And if the contract
provides that for any damage resulting from sending the telegram, the
sender must give notice within sixty days, he is bound by this
stipulation, and is without redress if he delays to act beyond the
time.
=Torts or Wrongs.=--"A tort is an act or omission which unlawfully
violates a person's right created by the law, and for which the
appropriate remedy is a common law action for damages by the injured
person." The right that is violated is private and not public, which
marks off a tort from a crime. Again, the wrongful act may be a
violation of both a private and public right, in which case both the
individual and the state have a remedy against the wrongdoer. Thus A
without excuse attacks B and bruises his nose. B has an action to
recover damages against him for despoiling his countenance; the state
also may proceed against him in a criminal action for his breach of
the public peace. Another illustration may be given. A clerk embezzles
money from his bank. It sues him and perhaps his bondsmen and recovers
the money. Embezzlement, however, is a criminal offense, and the
recovery of the money taken does not affect in any way the right of
the state to proceed against the embezzler. Indeed, an individual who
has been wronged cannot by any restitution or settlement that he may
make with the wrongdoer impair the right of the state to punish him.
Torts or wrongs are very numerous for which the wrongdoer may be held
liable. The first to be mentioned is false imprisonment. The law
punishes false imprisonment as a crime; the person unlawfully
imprisoned also has a civil action for damages. A person is said to be
imprisoned "in any case where he is arrested by force and against his
will, although it be on the high street or elsewhere and not in a
house." Mere words are not an arrest. If an officer says, "I arrest
you," and you run away, there is no arrest. But if an officer touches
you and takes you into custody there is an arrest even though you run
away afterward.
A malicious prosecution is another wrong. A person who brings his
action for this wrong must prove four things: first, that the
prosecution has terminated in the complainant's favor; second, that it
was instituted maliciously; third, that it was brought without
probable cause; fourth, that it damaged or injured the complainant.
The term malice means something more than "the intentional doing of a
wrongful act to the injury of another without legal excuse." It means
that the original prosecutor was actuated by some "improper or
sinister motive." The term "probable cause" requires explanation.
Nothing is better settled, says one of the courts, than this, that
when the person who brings such an action against another "submits his
facts to his attorney, who advises they are sufficient, and he acts
thereon in good faith, such advice is a defense to an action for
malicious prosecution." That such advice may be a good defense a full
and honest disclosure of all the facts must be made to him. Such
advice will not serve as a screen if based on a fragmentary,
incomplete statement of facts.
A very common tort is an assault and battery. A person who threatens
another with immediate personal violence, having the means and
opportunity for executing the threat, commits an assault for which
damages may be recovered in a proper action. To raise a club over the
head of another and threaten to strike if he speaks, would be an
assault. "Absence of intent," says Burdick, "on the part of the
defendant to put the plaintiff in fear of bodily harm, is pertinent to
the defense that the injury was accidental, or due to a practical
joke."
A battery, as distinguished from an assault, is the inflicting of
actual violence on a person, though the degree of violence is
immaterial. The least touching of another in anger, or as a
trespasser, is a battery. Forcibly cutting the hair of a person
without legal authority, or injuring the clothing on a person, or
snatching an article from his hand, or cutting a rope or belt attached
to him, or striking a horse on which one is riding, or that is
attached to his carriage, or overturning a chair in which he is
seated, is a battery; likewise, if the assailant throws a stone or
missile which hits the other, or spits in his face.
There may be a justifiable assault, the law has long recognized this.
A public officer is justified in using force in performing his duty,
so is a private individual in defending himself, his family or his
property, or in enforcing lawful discipline at home, in school, on
board a ship, or other public conveyance, or in restraining one
mentally or physically incapacitated.
Another injury for which the law furnishes redress is that affecting
reputation and character. It is true that the damages one may recover,
however great, may be an inadequate redress, yet it is the best the
law can do. The party injured by a libel or slander brings his action
and wins his victory over his enemy, yet the battlefield remains and
the scar of the wound inflicted. The issue in an action for defamation
is not the character of the plaintiff, but the wrongfulness of the
particular statement. Therefore "it is not a defense to a libel or
slander that the plaintiff has been guilty of offenses other than
those imputed to him, or of offenses of a similar character; and such
facts are not competent in mitigation of damages."
As the gist of the tort consists of the injury done to one's
reputation, the defamatory statement must have been published. A
person has no cause of action against another for defamatory words
spoken to him; they must have been heard by a third person. The
plaintiff may make out a case by showing that the libel was contained
on the back of a postal card, or by other evidence that makes it a
matter of reasonable inference that the libelous matter was brought to
the actual knowledge of a third person.
A person who voluntarily engages in the interchange of opprobrious
epithets and mutual vituperation and abuse has been held to license
his antagonist to reply in like manner. "The right to answer a libel
by libel is analogous to the right to defend one's self against an
assault upon his person. The resistance may be carried to a successful
termination, but the means used must be reasonable." Common carriers,
news-vendors, proprietors of circulating libraries and others who are
merely unconscious vehicles for carrying defamation generally escape
liability for its publication.
If the publication of a libel is the result of the joint efforts of
several persons, each is responsible for the wrong done to the
plaintiff. If A writes a libel, and B prints it and C publishes it,
the person wronged may sue all jointly, or either one of them
separately. The publication of the same slander by different persons
is not a joint tort, it is a distinct wrong done by each slanderer.
There are distinctions between libel and slander that must be now
stated. Slander is applied to oral speech or its equivalent, libel to
matters expressed in writing or print, pictures, effigies or other
visible and permanent forms. Libel is a criminal offense as well as a
tort, while the slander of private persons is not a common law crime;
but some forms of slander are crimes by statute. Falsely and
maliciously to charge one with committing a felony or other indictable
offense involving moral turpitude is in some states a crime.
Scandalous matter is not necessary to make a libel. "It is enough if
the defendant induces an ill opinion to be held of the plaintiff, or
to make him contemptible or ridiculous." Says Burdick: "Any censorious
or ridiculing writing, picture or sign made intentionally and without
just cause and excuse is a libel upon its victim. The degree of
censure or ridicule is not material. If the language is such that
others, knowing the circumstances, would reasonably think it
defamatory of the person complaining of and injured by it, then it is
actionable."
In many cases of libels which affect the victim chiefly or solely in
his office or vocation their tendency to cause injury is so clear that
proof may be unnecessary. Thus, to import insanity or incompetency to
a professional man, or that a public official is dishonest and corrupt
is actionable. And when a libelous publication is directed against a
class or body of persons, for example, the medical staff of a public
hospital, any member of the body may maintain an action for the wrong.
A corporation has no character like a natural person to defend, but a
defamatory charge which directly affects its credit and injures its
business reputation is an actionable one. On the other hand as a
corporation must transact its business and perform its duties through
natural persons it is now well settled that a corporation is liable in
damages for slander, as it is for other torts.
Slanderous words that are actionable have been thus classified by the
United States Supreme Court: "(1) words falsely spoken of a person
which impute to the party the commission of some criminal offense
involving moral turpitude, for which the party, if the charge be true,
may be indicted and punished; (2) words falsely spoken of a person
which impute that the party is infected with some infectious disease,
where, if the charge is true, it would exclude him from society; (3)
defamatory words falsely spoken of a person which impute to the party
unfitness to perform the duties of an office or employment of profit
or the want of integrity in the discharge of his duties of such office
or employment; (4) defamatory words falsely spoken of a party which
prejudice such party in his or her profession or trade."
The damages may be either nominal, one dollar is often given in such
cases, or compensatory, larger damages, as a punishment. The amount
rendered is within the province of the jury, but courts do not
hesitate to modify or set aside verdicts which are deemed excessive or
too meager.
The defenses in such actions may be briefly described. The truth of
the charge is a complete defense to a civil action for slander or
libel, because "the law will not permit a man to recover damages in
respect to an injury to a character which he either does not or ought
not to possess." A privileged communication is another defense. The
heads of the executive departments of government are absolutely
privileged for defamatory statements made by them while acting within
the limits of their authority. Their motives do not become the subject
of inquiry in a civil suit for damages. Judicial officers are shielded
by this rule while discharging their duties. The publication of
judicial proceedings is conditionally privileged. The condition is
that the proceedings are public, are decent and fit for publication,
that the reports are full and fair, and that their publication is not
inspired by malice. Says Burdick: "The reports of such proceedings are
usually made without reference to the individuals concerned, and for
the information and benefit of the public. The law, therefore,
presumes that they are made in good faith." The full and fair reports
of parliamentary and legislative proceedings are also conditionally
privileged as well as the reports of judicial proceedings, and for the
same reasons. The publication of the proceedings of quasi public
bodies, like state, medical, and ecclesiastical societies has been
deemed conditionally privileged. But "professional publishers of news
are not exempt, or a privileged class, from the consequences of damage
done by false news. Their communications are not privileged merely
because made in public journals." Statements rendered by mercantile or
collection agencies to inquirers for business purposes are clearly
privileged. But whether the circulation among all their subscribers of
a sheet containing such statements is privileged is a disputed
question among the courts. Again, every statement made with the
object of protecting some interest of the writer or speaker and which
is reasonably necessary for such purpose is conditionally privileged.
Fair comment is another defense. The most frequent subjects of fair
comment from which spring actions for defamations are the character
and conduct of public men or candidates for office; and literary,
artistic, or commercial productions offered to the public. Whether a
particular statement is an unfair aspersion of one's personal
character, or a fair comment on his public conduct, is a question
usually for the jury.
At common law a defamer could not insist on an opportunity to retract
or apologize, but he could give in evidence any apology or retraction
to lessen the damages. This rule has formed the basis of a statute in
some of the states. Though attacked on constitutional grounds, it has
been sustained in Minnesota, North Carolina and perhaps in other
commonwealths. Where it can be made, the apology and retraction must
be full, fair, prompt.
Passing to private nuisances, a wrong or tort consists in wrongfully
disturbing one in the reasonably comfortable use and enjoyment of his
property. Ordinarily the motive of the wrongdoer is not material in
determining his maintenance of a nuisance. Some things and trades are
considered as nuisances of themselves, for example, a slaughter house
in a large town, a pigsty near a dwelling house, a house of ill fame,
the fouling of a spring, well or stream; keeping a large quantity of
explosives near a public dwelling, or animals or other property
dangerous to human life. Likewise, a hospital that operates to destroy
the peace, quiet and comfort of those in adjoining residences, affects
their health and value of their property is a private nuisance,
against which action may be taken for its removal or abatement. Public
cemeteries come under the same ban. They will not be adjudged a
nuisance simply because they offend the fancy, delicacy, or
fastidiousness of neighbors, or even depreciate the value of adjoining
property.
When a business is carried on, structures are erected, or excavations
are made which are nuisances, the actor is liable in damages for them
whether he exercised due care in constructing and maintaining them or
not. The same rule applies to the owner or keeper of a savage and
dangerous animal.
Acts of discomfort that amount to a nuisance are such as produce this
effect to persons of ordinary sensibility who live in the locality
where the nuisance exists. Noises, odors, smoke, or dust may
constitute an actionable nuisance in one locality and not in another.
If the nuisances are from ordinary musical instruments in the dwelling
of a neighbor, or from his children, yet are only of a kind that may
be expected in such a neighborhood, they must be borne, unless
prohibited by law. On the other hand, the same amount of noise caused
by horses in the basement of an adjoining house is an actionable
nuisance.
A temporary annoyance is quite another thing. The erection of an iron
building near a dwelling might, during the period of construction,
cause great noise and discomfort, yet the occupier of the dwelling
would have no remedy. But there is a limit to the conduct of the
annoyer. He must act reasonably. He cannot blast rock, or hammer
metal, or operate noisy steam drills at all hours of the day and
night. He must conform to the habits of the community, and not
unreasonably disturb his neighbors, during ordinary working hours.
There is a distinction also between acts that annoy and those that
injure adjoining property. Generally acts of the latter kind are
actionable. If one fixes his residence near a nuisance, formerly he
had no remedy. This is no longer the law. When, however, a court is
asked to enjoin or stop a useful and lawful business in a place, the
court will inquire whether the business has long existed and the place
has grown up by reason of its existence. If this prove to be the case
a court will reluctantly interfere. Yet, if the business is actually
harmful to health or injurious to property, it will be enjoined
however great the loss may be to the owner.
While a land owner is not liable for a nuisance created on his land by
a stranger, whose acts cannot in any way be attributed to him, he is
liable for a nuisance resulting from a licensee's use of his property.
Thus, if a licensee by attaching a wire to a chimney converts it into
a nuisance to passers-by, the land owner who knowingly permits the
nuisance to continue will be liable for the damages that result. Nor
can one who has fouled a stream or the air, or who indulges in
disturbing noises, defend himself for doing these things by showing
that others did them before he began.
As a person acts at his peril in maintaining a nuisance, so is the
owner of trespassing cattle liable for all the harm done by them,
whether he knows of their disposition to do harm or not. But he is not
liable for harm done by them while they are driven along the highway
without negligence on the driver's part; nor is he liable for mischief
done by them to the person or personal property of one at other times
without knowledge of their viciousness or other proof of negligence.
Nor is he liable by the common law as an insurer against all damage
done by them when they escape from his land.
When vicious animals are kept for any purpose and are a menace to
human beings they are a nuisance. Hence, they may be killed without
incurring liability, and should they do damage their owner or
responsible keeper must answer for it. If the animal be a vicious dog,
the owner must exercise a degree of care commensurate with the danger
to others following his escape from custody, and must secure it from
injuring anyone who does not unlawfully provoke or intermeddle with
the animal.
By the early common law a person who started a fire, even for a
needful and lawful purpose, was responsible for the consequences. This
rule has been modified with time. "A person," says Burdick, "does not
start a fire on his land at his peril. If it spreads beyond his
premises and harms others his liability for the harm must be grounded
on his negligence. The same is true of his liability for electricity
escaping from his control. In both cases the care he must exercise in
guarding the dangerous element varies with the hazard to which it
exposes others."
The liability of a person who keeps explosives is not absolute, unless
he is maintaining a nuisance. Otherwise he is liable only when
negligent. If he is ignorant of the character of the explosive, and
without fault in not knowing, his duty of care is fixed by the
apparent character of the article. Suppose a carrier was carrying a
trunk containing an explosive of which he had no knowledge or reason
for supposing was there, surely he would not be held liable if it
exploded and caused injury.
The liability of a manufacturer, seller, lender, or user of things is
not that of an insurer in making, selling, lending or using them. But
he does incur liability whenever he fails to exercise such care as is
fairly needful to protect others against the hazard in buying and
using them. A druggist, therefore, who affixes a wrong label to a
bottle of medicine and thereby injures a person who uses it is
responsible. And the rule would apply whether the taker was the
purchaser or some other person.
When persons are invited on one's premises for mutual advantage, the
inviter owes the duty of ordinary care. He is not an insurer of their
safety, nor need he exercise extraordinary care in guarding them from
harm, unless there was unusual danger. Suppose a man had a way which
persons used in going to and from his business, and he began to dig a
well near the way and left the place unprotected during its
construction, undoubtedly the owner would be liable. Suppose the well
was a considerable distance from the way where persons did not usually
go and had no occasion for going. Then he would not be liable. How far
away from the road could he dig without thought of the public? The
answer would depend on the facts in the case.
A somewhat different rule has been applied to children. Although a
child of tender years who meets with an injury on the premises of a
private owner may be a technical trespasser, yet the owner may be
liable, if the things causing the injury have been left exposed and
unguarded, and are of such a nature as to be attractive to children,
appealing to their childish curiosity and instincts. Unguarded
premises, which are thus supplied with dangerous attractions, are
regarded as holding out implied invitations to children. There has
been a great deal of controversy over this important rule. Those
opposed say, if everywhere applied, it would render the owner of a
fruit tree, for example, liable for damages to a trespassing boy who,
in attempting to get the fruit, should fall from the tree and be
injured. Professor Burdick, after a full review of the cases, says
that the tide of judicial opinion is setting the other way. Children,
therefore, who invade the premises of a person without any right are
trespassers like older people. The duty of caring for children remains
with their parents and guardians; and if they are injured while
unlawfully going on the land of others their parents cannot visit the
consequences of their neglect on the owners of the land where the
injuries happened.
=Warranty.=--The law, assuming that the purchaser knows or can find
out the quality and worth of things, does not make an implied warranty
of them generally. The legal maxim is, "Let the purchaser beware." He
must take care of himself. In many cases, though, he does obtain a
warranty. He must, however, distinguish between this and a mere
representation. It may be difficult to draw the line always, but it
exists. A statement that is not intended as a warranty, made simply to
awaken the buyer's interest in the thing for sale, is not a warranty.
Nor does the law imply a warranty from the payment of a full price.
Formerly, when a commodity was adulterated, it could be returned, and
the courts became sorely troubled to defend an adulteration. More
recently, statutes have cleared away the difficulty, and are a great
protection to buyers. In many cases, doubtless, they know more about
the quality and condition of the things they buy than the
inexperienced salesmen who are behind the counters, so they need no
protection from the law; when they do need it a warranty may serve a
good purpose. In articles concerning which the seller does possess a
superior knowledge, precious stones, drugs, medicines, and the like,
the modern law has raised an implied warranty for the buyer's
protection. In this class of cases the buyer and seller do not deal on
equal terms. The vendor is professedly an expert.
In a sale of food there is no longer an implied warranty of fitness,
unless the buyer expressly or by inspection acquaints the seller with
the purpose of the purchase and unless it appears that the buyer
relies on the seller's skill and judgment. Even then, if the buyer has
examined the goods and has discovered a defect, there is no warranty.
The burden of showing that he has made known his purpose and that he
has relied on the seller is on the purchaser who claims the existence
of an implied warranty.
There is another implied warranty, that of the seller's title, when he
is in possession of the goods. This is limited to persons who are
acting for themselves, and not agents, trustees, officers of the law,
who are acting for others. An innocent purchaser of goods, therefore,
for a good consideration obtains a good title, even from a vendee who
has obtained them by fraud, as against the original vendor. This rule,
though very broad, does not prevent a lawful owner from recovering his
property. Thus, if a farmer's oxen were stolen and the thief should
sell them as his own, and the purchaser should pay for them,
nevertheless the farmer could recover them. The only exception to this
rule is negotiable paper. This is made in order to surround it with
greater protection.
Where goods are sold by sample there is a warranty that the goods will
be like the sample, but there is no warranty of the sample itself. In
one of the well-known cases hops were sold by sample, and after the
hops had been delivered the discovery was made that they had been
injured by heating. The buyer sued though failed to recover anything,
for it was proved that they were like the sample, which had been shown
several months before, and at that time the heating had not begun. As
they were sold at the earlier period, their condition at the time of
the delivery did not affect the sale. See _Deceit_; _Sale_.
=Will.=--A will is a disposition of one's property to take effect
after his death. He is called a testator, and must possess a sound
mind to make an effective will. He must be able to comprehend what he
is doing. Wills are often contested on the ground that the testator's
mind was feeble and that undue influence was exercised over him in
disposing of his property. Married women can make wills like their
husbands and so can a minor in many states.
All of the states have enacted statutes on the subject which require
various things; one of the most important is the witnessing of wills.
Generally, three witnesses are required. An eminent judge, not long
since, made a will to please his wife leaving a large sum to found an
institution. He was opposed to the thing. The astute judge had no
witnesses, so he both fooled his wife and pleased himself, for his
will was worthless. The statutes require the witnesses to sign in the
testator's presence, who often give important testimony of his
competency whenever his will is contested. As they may be called for
this purpose, intelligence should be used in selecting persons to
become witnesses. A witness who is competent at the time of signing
does not become incompetent by reason of anything that may happen to
him afterward. A witness should not be given anything in the will,
for, if this is done, his act of witnessing in perhaps all the states
violates the gift. Though this may be the consequence the rest of the
will is not thereby impaired. The property given is either real or
personal. Real property consists of land extending indefinitely upward
and downward, every building thereon, every growing thing, likewise
all minerals and in some cases even ice. Personal property includes
everything of a movable nature. A transformation is often effected. A
tree while standing on the land is a part thereof; cut down it becomes
personal property.
A will should be in writing; and this in most states is a statutory
requirement, to guard against the wrongs and frauds that might
otherwise arise. A testator may write his own will, indeed to do so
would be a good test of will-making capacity. If he is unable to write
his name, he may make his mark. When this is done, there should be
ample proof that he did so, for a mark can be so easily made by any
one.
A person to whom real estate is given is called a devisee; the
receiver of personal property a legatee. When the testator gives real
estate he must have regard to the laws of the state where it is
situated; in giving personal property he is governed by the law of the
state where he resides, his domicil. Many a devise has been declared
invalid, because the testator in devising it did not comply with the
law of the state where the land was located.
The principal ground on which wills are attacked is feebleness of
mind, lack of mental capacity. The question assumes this form: did the
testator at the time he executed his will have sufficient mental
capacity to do it. An eminent jurist, Chief Justice Redfield, has said
that he must have undoubtedly sufficient active memory to perceive the
more obvious relations of things to each other. Even if unable to
manage his business, he can nevertheless make a will if he knows what
he is doing.
Again an insane person may make a will provided this is done during a
lucid interval. Many a person is insane only at times or on particular
subjects and therefore may be competent to make a rational disposition
of his property. Some persons have curious religious beliefs,
prejudices against persons, governments and institutions, and yet
these vagaries may not impair their capacity to dispose of their
property in a legal and rational manner.
Another requirement of a testator is that he must declare in the
presence of the witnesses that it is his last will and testament. This
is called a publication of the will. Of course, his will must be
completed when this is done. Suppose a person makes several wills,
which one of them is effective? The last one. A will should be dated,
suppose this has been forgotten, what then? The last will must be
established, if possible, by other evidence. Suppose it is believed
that the last will has been destroyed, and a prior will is found, can
this be set up as establishing the testator's disposition of his
property? It is not his last will, for he has made another.
Any person may be a devisee or legatee including married women, minors
and corporations. If a bequest is made to a corporation not in
existence, is it valid? By some courts this can be done, by others
this power is denied to a testator. Many a well-meant bequest to a
noble charity has been smitten down because there was no legal donee
then existing to receive the gift. A testator may bequeath property
to a trustee who shall select the objects of the testator's bounty.
The thing bequeathed must be described with sufficient clearness to
identify it, nothing more is required. In some cases proper evidence
may be used to identify things where the description in the will is
ambiguous.
A devise of lands may consist of the entire estate or interest of the
testator, or he may give the devisee a lesser interest in them. It is
a common thing for a testator to devise the use of land to a person
during his lifetime, and after his death the entire interest or fee to
another. He usually adds a final or residuary clause to his will to
the effect, that all he may have which has not been bequeathed to any
one specifically shall be given to one or more persons or objects
named in his will. Or, if a legacy shall lapse, that is, the person to
whom it has been given shall die, or for any other reason cannot, or
will not take it, it falls into the residuary portion and goes to the
residuary legatee.
If a will does not contain such a clause, and there is no statute in
the way, then a lapsed legacy or other property, not covered by the
will, goes to such persons as the law has prescribed whenever persons
die leaving no will, or, in legal language, die intestate.
A will takes effect from the testator's death and so does the validity
of all the bequests. Thus, should a person mentioned as legatee die
before the testator, the legacy would be invalid. But many or all of
the states have provided by statute for the continuation of these in
many cases. Thus, should a son, to whom his father has devised some
land, die leaving children, they take it in place of their father.
These statutes vary much, some limiting the substitution to the
lineal heirs of the deceased, son, grandson, etc., others extending
the substitutes to the collateral heirs of any devisee or legatee.
Again, by statute and common law a wife is entitled on the death of
her husband to a specific portion of his property. Should he not give
her as much by his will, unless he had made an agreement with her
before marriage with respect to what she was to receive, she may
renounce her rights under her husband's will and claim what the law
would give her as if he had made no will.
A will can be revoked any time. The common way is to destroy it.
Another way is to dispose during his lifetime of his property. In one
of the cases a testator had indorsed on his will in his own
handwriting "canceled." Though this was not signed, it was held to be
a revocation. In another case a blind testator called for his will
which was handed to him. He gave it back with the direction to put it
in the fire. Instead of doing so another piece of paper was
substituted and burned. This was a downright fraud, and the court
justly held that the will had been revoked.
=Workmen's Compensation Acts.=--Who is entitled to compensation by
these acts? The proper test to apply is, whether the employer
possessed the power to control the other while at work at the machine
or other thing from which the injury arose. Says Honnold: "In the
ordinary acceptance of the term, one who is engaged to render services
in a particular transaction is not an employee; the term employee
embracing continuity of service and excluding those employed for a
single and special transaction. It does not usually include
physicians, pastors or professional nurses. It may, however, include
those not engaged in manual labor, such as a school-teacher. The fact
that a workman furnishes tools and materials, or undertakes to do a
specified job will not prevent his being an employee. A deaconess,
living and working in a hospital and receiving an annuity to cover
clothing and expenses, is not an employee of the hospital," nor is an
employee of a religious home for the aged who works around the house
for which he is not paid any fixed amount. A director of a bank is not
an employee within the meaning of the acts under consideration.
To be an employee there must be a contract of service. This is not the
same thing as a contract for services. By the latter relationship one
is an independent contractor and excluded from the acts. The contract
of service need not be actually made, it may be implied, for example,
the case of a substitute who is engaged by an employee in accordance
with custom. A contract of service is not created by the relation of
landlord and tenant, carrier and passenger, bailor and bailee, nor by
professional service, nor by forming a partnership, nor by performing
manual labor beyond the employer's control. Whether a contract of
service arises from charitable work depends on the circumstances of
the particular case. State employees are within these acts in some
states, and excluded in others, likewise municipal employees. By the
federal act the term "laborer" is used to designate men who do work
that requires but little skill as distinguished from an artisan who
practices an industrial art. The act includes a storekeeper, an
inspector who performs no manual labor, a messenger in the government
printing office, the master of a dredge, the matron of an Indian
school, a transit man, a surveyor, a clerk engaged in office work, an
assistant veterinarian, a laboratory assistant, a dock master.
Compensation legislation is not limited to healthy employees. One's
previous physical condition is of no consequence in determining the
amount of relief to be afforded. Nevertheless, it is a circumstance to
be considered in ascertaining, when one has been injured, whether the
injury resulted from the work or from his health.
In some of the compensation acts minors are excluded, in other acts he
is protected by them. An apprentice who is qualifying himself to
operate an elevator is an employee within the Minnesota Act. Many of
the acts provide that the term employee shall include every person in
the service of another under any contract of hire, except one whose
employment is casual, or is not in the usual course of the trade,
business profession or occupation of his employer.
Farm laborers are outside these acts in some states. Thus, in
Massachusetts "the workmen's compensation act was not intended to
confer its advantages upon farm laborers, or to impose its burdens
upon farmers." But a farmer may adopt it if he desires. And any
contract of insurance made by him under its terms is valid and
enforceable. Such an exemption, however, does not except employees
working for one who is engaged in a commercial or other
non-agricultural enterprise though he be a farmer. Likewise, a farmer
carrying on a market garden may procure insurance covering his drivers
and helpers employed in distributing the produce of his farm without
insuring other employees who are merely farm laborers. The right to
compensation is determined by the character of the labor one is
actually doing when the accident occurs, rather than by the fact that
the employee occasionally does farm labor. Thus, plowing is usually
farm labor, but if it is done to make land ready for building a house
it is not. If a farmer does not avail himself of the act for all of
his employees, he may procure insurance for a limited portion of them.
"If there are those," says Chief Justice Rugg, "separable from others
by classification and definition, whose labor is more exposed and
dangerous, or whom he may desire to protect for any other reason,
there is nothing in the act to prevent him from doing so."
Likewise, domestic servants are excluded by some of these acts, who
are they? "A household servant is one who dwells under the same roof
with the family under circumstances making him a member thereof." And
his status is determined rather by his relation to the family than by
his relation to the service. Thus, a workman who is hired to tend the
furnace, mow the lawn, and do odd jobs about the house, who has a room
therein and eats at the family table, is a household servant. On the
other hand, a chauffeur who is hired by the month to run the
employer's private automobile, but is not living as a member of the
family, is not a household servant. In many cases, however, he is one.
While it is doubtful whether the test of living in the employer's
house is the sole test of household service, it is essential that he
is engaged in rendering service in the house, such as cleaning,
cooking or washing. On one occasion, a porter in a saloon was sent
upstairs by the proprietor to wash the windows in the apartment where
the proprietor lived with his family. While thus engaged he fell to
the sidewalk and was injured. The court regarded him as a household
servant.
Many of the acts exclude from their protection casual employees. This
term is a difficult one to define, and has been omitted in many of the
acts. Where this is done all employees engaged in the usual course of
the trade, business, occupation, or profession of their employer, with
some exceptions, receive compensation. Ordinarily, an employment is
casual when it is for a single day, or by the hour, but does not apply
to one who is employed to render a service that recurs with some
regularity. Thus, one who is employed as a workman in a sawmill on
such days as it was in operation for four months was not a casual
employee. Casual employment in the Connecticut act means occasional or
incidental employment. In California, if the length of employment is
less than a week it is casual, even though contrary to agreement the
employee took more than a week to do the work for which he was hired,
and which a skillful employee could have finished within a week.
"The question whether an employment is casual must be determined with
reference to the scope and purpose of the hiring rather than with sole
regard to the duration and regularity of the service. One who enters
into a contract of employment for an entire season is not a casual
employee merely because he may be required to work for only short and
irregular periods." Thus, a longshoreman who is employed at a certain
sum per hour to help load a ship, having frequently rendered a similar
service on other occasions, is not a casual employee; nor is one who
keeps machinery and boats in order at an amusement park; nor is a boy
who is called at irregular intervals for service in a butcher's shop
when extra help is needed, or in the absence of a regular employee;
nor is one who is employed during a packing season to drive for a
packer whenever he is needed.
The compensation law does not apply to independent contractors. It is
difficult, however, to draw the line in many cases. Generally, an
independent contractor is one who exercises an independent employment
and contracts to do a piece of work according to his own method,
without being subject to the control of the employer. A test that is
sometimes applied is, who has the right to direct what shall be done
and when and how, and who has the right of general control. When,
therefore, one exercises an independent employment, selects his own
help and has the control of them, and the method of conducting the
work, he is an independent contractor. Again, he may change his
relation for a time, and become an employee, or he may be a contractor
for a part of his service and an employee for a part. Thus, one who
was injured while operating a launch to bring supplies to a dredge for
his employer was an employee and not an independent contractor, though
he was one in conducting the work of dredging. Likewise, a physician
who is employed on a salary by another physician, who in turn is
serving a manufactory, is an employee of the latter and not an
independent contractor, though he is still engaged to some extent in
his own private practice.
By the Federal act an employee must be "employed by the United States
to be entitled to its benefits." Thus, a plate printer in the bureau
of engraving and printing who is paid by the piece, and who bonds
himself and hires and pays his own help, also the owner of a power
boat chartered to the government and operated by the owner in its
service, are contractors, and not federal employees. A workman,
therefore, who is employed by a government contractor is not an
employee of the government. On the other hand, one who is employed and
carried on the pay rolls of the reclamation service, though working
for the contractor, is employed by the government, likewise, a workman
employed in the forest service who is working with others for county
supervisors who, in turn, are executing a contract with the
government.
As public officers are not employees within the meaning of the
compensation acts, they may be distinguished from others who are
employees. Unless the statute says so, a policeman is not an employee
of the city which he serves, but an officer holding a public trust. On
the other hand, a night policeman or marshal is an employee by the
Wisconsin law. Firemen and deputy sheriffs on a fee basis are officers
rather than employees.
The compensation acts secure compensation not only for injured
workmen, but should they die, to their dependents. Who then is a
dependent? "Dependency," says Honnold, "does not depend on an answer
to the question whether the alleged dependents could support
themselves without the earnings of the person who is no longer living,
but whether they were in fact supported in whole or in part by such
earnings intentionally by him. Occasional gifts do not prove
dependency, yet purely voluntary contributions may establish
dependency. Voluntary contributions of money, support or service by a
brother to a sister or by a sister to a brother are not complete
evidence of the dependency of either. Compensation cannot be awarded
to dependents who do not belong to the classes of relatives mentioned
in the statutes."
The phrase, actual dependents, means dependents in fact whether they
are wholly or partially dependent. Partial dependency, giving a right
to compensation may exist though the contributions are at irregular
intervals and of irregular amounts, and the dependent has other means
of supporting himself. An employee contributed all of his earnings to
his mother who was partially dependent on him for support. Five other
children contributed to the family fund. It was held that the mother
was entitled to a weekly compensation equal to one half of the weekly
compensation of her deceased son. A dependent who is an alien living
in a foreign country is not debarred from receiving compensation. By
some of the acts such compensation to nonresidents is limited to a
father or mother.
Children who are entitled to compensation as dependents include
stepchildren, illegitimate children, children adopted by the workman,
also posthumous, legitimate and illegitimate.
The federal act provides that if the injured artisan or laborer die
within the year after his injury "leaving a widow, or a child or
children under sixteen years of age, or a dependent parent, they shall
be entitled to compensation." The word parent, while including both
parents, does not include a stepfather or a stepmother, or a foster
parent who has not been legally adopted. The question of dependence is
one of fact; contributions by the deceased tend to establish this, but
are not conclusive. The word child or children used in the act is not
limited to a child or children born in wedlock, but includes
illegitimate offspring, and children legally adopted. If an injured
workman dies before he has made application for or received
compensation, it may be paid from the date of the injury to the date
of his death, as well as for the remainder of the year to his widow or
family.
The earnings of a workman are the basis for computing the amount of
compensation he is to receive for an injury. These include anything
that he receives for his labor that possesses a money value. In the
way of illustrating more clearly what he may receive the outline of a
section of the Massachusetts Act may be given. It provides what the
workman may receive when his injury is partial from the insurance
association which has become liable therefor. A weekly compensation
equal to one half the difference between his average weekly wages
before the injury and the average weekly wages which he is able to
earn thereafter; but not more than ten dollars a week, nor for a
longer period than three hundred weeks from the date of the injury.
Formerly, when injured, he received as compensation a sum fixed by
agreement between himself and his employer; and if they could not
agree, as often happened, then he sued his employer and the court
decided the amount the employer must pay. These suits were often
costly, long contested, and if the employee won his counsel often took
such a large share as to leave a disappointing amount to the employee.
On the other hand, many an employee magnified his injury, juries were
usually sympathetic, especially if the employer was a corporation, and
from the general dissatisfaction has been created the new system.
Having stated in the most general way what the law provides for a
workman who has been injured, there remains the statement of what is
done when the workman dies from his accident. The Arizona law
illustrates this as well as any other. When he dies within six months
thereafter and leaves a widow, and a minor child or children
dependent on his earnings for support and education, then the employer
must pay to the personal representative of the deceased workman for
the benefit of the widow and children a sum equal to twenty-four
hundred times one half of the daily wages or earnings of the deceased,
not exceeding in any case more than four thousand dollars. If the
employer has insured the lives of his employees in an insurance
company, for which the acts quite generally provide, then of course
payment of the benefits are paid by the company to those who are
entitled to them.
Some of the compensation acts provide compensation for both total and
partial incapacity resulting from injuries which do not prove fatal.
Thus the Connecticut act provides that loss of sight, the loss or
paralysis of certain physical members, and incurable imbecility or
insanity, resulting from the accident shall be "considered as causing
total incapacity." For these and all other injuries resulting in total
incapacity to work, there must be paid to the injured employee weekly,
while incapacitated, compensation equal to half of his earnings at the
time of the injury, for a maximum and minimum period. Another section
provides that in cases resulting in partial incapacity there must be
paid to the injured employee a weekly compensation during his
incapacity, equal to half the difference between his average weekly
earnings before the injury and the amount he is able to earn
thereafter with a maximum and minimum limitation of the amount within
a limited period.
Legal Forms for Everyday Use
1
Agreement for Sale of Land
This agreement, entered into this ____ day of ________, 19__, by and
between A.B. and C.D., witnesseth: That said A.B. has this day sold to
C.D. the following described tract of land, to-wit: (describe) for the
sum of $________, to be paid as hereinafter set forth, and upon the
payment of which said A.B. agrees to convey to said C.D. the premises
above described, free and clear from all incumbrances, by a deed of
general warranty.
And the said C.D. agrees to pay said A.B. for said premises the sum of
$________, as follows: $________ with interest at ____ per cent on the
____ day of ________, 19__;
The said A.B. agrees that said C.D. shall have immediate possession of
said premises for the purpose of residence, cultivation, and
improvement.
In witness whereof we have hereunto set our hands this ____ day of
________, 19__.
A.B.
C.D.
2
Agreement Concerning Party Wall
This agreement, made this ____ day of ________, 19__, by and between
A.B. and C.D., of the city of ________ ________, witnesseth: That,
whereas, the said C.D. is the owner of the house and lot on the south
side of ________ Street, second lot east of ________ Street, and the
said A.B. is the owner of the lot adjoining the same next easterly
thereof, on which said lot there now stands a party wall on a line
parallel with ________ Street; and forty-four feet easterly from said
________ Street; and, whereas, the said A.B. has erected his
dwelling-house several feet (one story) higher than the said C.D.,
whereby greater advantage may accrue to the said A.B. from said party
wall. Now, therefore, the said C.D., in consideration of the sum of
$1, to him in hand paid, the receipt whereof is hereby acknowledged,
doth grant, covenant, promise, and agree with the said A.B., that he
may peacefully and lawfully enjoy such party wall, to himself, his
heirs, and assigns, the said C.D. reserving to himself the right to
use the said portion of the party wall built by the said A.B.,
whenever he may wish to build higher than his house now is.
It is further mutually understood and agreed, between the respective
parties, that this agreement shall remain so long as the houses last,
and shall pass to the heirs and assigns of the respective parties to
these presents.
Witness our hands and seals, the day and year first above written.
A.B. (L.S.)
C.D. (L.S.)
3
Agreement for Building
This agreement, entered into this ____ day of ________, 19__, between
A.B. and C.D. witnesseth: That the said A.B. hereby agrees with the
said C.D. to erect for him on (describe land) a (dwelling-house) in
conformity with the drawing and detailed specifications of one E.F.,
architect, the work to be performed in a substantial and workmanlike
manner, and with the best materials of their respective kinds, the
same to be furnished, together with all things necessary to erect and
complete said building, at the cost and expense of the said A.B.,
payments to be made as follows: (specify terms) upon the certificate
of the architect, provided that said estimates shall not at any time
before the completion of said building exceed the basis of 85 per cent
of the value of the work so executed.
And the said C.D. hereby agrees with said A.B. to pay to him the sum
of $________ for the erection and completion of said building in the
manner aforesaid, (monthly) estimates to be made by said E.F.,
architect, of the amount then due to said A.B. thereon, upon the
presentation of which estimate said C.D. agrees to pay 85 per cent of
the same, the remaining 15 per cent to be retained until the
completion of said building. And on the completion of said work in the
manner aforesaid to the satisfaction of said architect, and upon the
presentation of his certificate to that effect, said C.D. agrees to
pay said A.B. the balance remaining unpaid on said contract, including
the fifteen per cent retained until the completion of the work. The
said A.B. further agrees to complete said building as aforesaid and
deliver the same to said C.D. on or before the ____ day of ________,
19__.
In witness whereof we have hereunto set our hands this ____ day of
________, 19__.
A.B.
C.D.
4
Claim of Lien by Workman of Sub-Contractor
A.B. to C.D., Dr.
June 1st, 19__. To twenty-five days' labor at carpenter work, at $5
per day, upon the dwelling-house situated on lot B in block 350, in
the city ________, ________ county, ________, which services were
rendered on and before the 1st day of June, 19__, and then payable.
(Signed) C.D.
5
Agreement for Work and Labor
This agreement, entered into this ____ day of ________, 19__, by and
between A.B. and C.D., witnesseth: That the said A.B. agrees
faithfully to labor for C.D. for the term of (six) months from the
first day of ________, 19__, at farm labor, on the farm of said C.D.,
in ________ county, and to perform such other services as may be
reasonable and just, for which services said C.D. agrees to pay said
A.B. the sum of $________ per month (on the ____ day of ________,
19__.)
In witness whereof we have hereunto set our hands this ____ day of
________, 19__.
A.B.
C.D.
6
Bond to Perform a Contract
Know all men by these presents, that, we A.B., as principal, and C.D.,
as surety, are held and firmly bound unto E.F., in the sum of
$________, for the payment of which well and truly to be made we bind
ourselves jointly and severally by these presents.
Dated this ____ day of ________, 19__.
Whereas, said A.B. had, by an agreement of this date, contracted in
writing with said E.F. to (here describe the contract).
Now, therefore, the condition of this obligation is such that if the
said A.B. shall do and perform all the stipulations and agreements
contained in said written contract then this obligation to be null and
void. Otherwise to remain in full force and effect.
In witness whereof we have hereunto set our hands this ____ day of
________, 19__.
A.B.
C.D.
7
Bill of Sale
Know all men by these presents, that ________, of the first part, for
and in consideration of the sum of ________, lawful money of the
United States, to ________ in hand paid, at or before the ensealing
and delivery of these presents by ________, of the second part, the
receipt whereof is hereby acknowledged, ha____ bargained and sold, and
by these presents do grant and convey, unto the said part ________ of
the second part, ________ executors, administrators, and assigns
(description of property; or if detailed description is contained in
schedule annexed, say, the goods and chattels particularly described
in a schedule hereunto annexed and made a part of this instrument), to
have and to hold the same unto the said part ________ of the second
part, ________ executors, administrators, and assigns forever. And
________ do____ for ________ heirs, executors, administrators,
covenant and agree, to and with the said part ________ of the second
part, to warrant and defend the sale of the said property ________
hereby sold unto the said part ________ of the second part, ________
________ executors, administrators, and assigns, against all and every
person and persons whomsoever.
In witness whereof, ________ have hereunto set ________ hand ________
and seal ________ the ____ day of ________ in the year one thousand
nine hundred and ________.
Sealed and delivered in the presence of
(Acknowledgment clause.)
8
Bill of Sale--Shorter Form
Know all men by these presents, that I ________ of the county of
________, in the state of ________, do hereby bargain, sell, and
convey to said ________, the following described personal property
now belonging to me, to-wit: (describe in detail). And I hereby
covenant with said ________ ________, to warrant the title of said
property to said ________ against the lawful claims of all persons
whomsoever.
In witness whereof I have hereunto set my hand this ____ day of
________, 19__.
(Signed)
In the presence of ________
9
Warranty Deed
Know all men by these presents, that we ________, and ________,
husband and wife, in consideration of the sum of $________, in hand
paid, do hereby grant, bargain, sell, and convey to ________, of
________ county, ________, the following described real estate situate
in the county of ________, and state of Iowa, to-wit: (describe
premises), to have and to hold to his heirs and assigns forever.
Together with all the tenements, hereditaments, and appurtenances
thereto belonging. And we hereby covenant with said ________ that we
are lawfully seized of said premises; that they are free from
incumbrances; that we have good right and lawful authority to sell the
same, and we covenant to warrant and defend the same against the
lawful claims of all persons whomsoever. And the said ________, hereby
relinquishes her right of dower in said premises.
In witness whereof we have hereunto set our hands this ____ day of
________, 19__.
In presence of ________
________ ________
State of ________}
________ County. }
On this ____ day of ________, 19__, before me, a justice of the peace
in and for said county, personally came the above named ________, who
are known to me to be the identical persons whose names are affixed to
the above deed as grantors, and severally acknowledge the instrument
to be their voluntary act, and deed.
In witness whereof I have hereunto set my hand the day and year above
written.
A.B.
Justice of the Peace.
10
Warranty Deed in Common Use in New England
Know all men by these presents, that I, (the grantor) of (residence,
town or city, county and state), (occupation), in consideration of
(the amount paid) to me paid by (here name the grantee or purchaser,
giving in like manner his residence and occupation), the receipt
whereof is hereby acknowledged, do hereby give, grant, bargain, sell
and convey unto the said (name the grantee, and then describe the
premises granted, minutely and accurately):--
To have and to hold the above-granted premises, to the said (name the
grantee), his (hers or their) heirs and assigns, to his (or her or
their) use and behoof forever. And then, the said (name the grantor),
for (myself) and (my) heirs, executors, and administrators, do
covenant with the said (name of the grantee), and with his heirs and
assigns, that I am lawfully seized in fee simple of the aforegranted
premises; that they are free from all incumbrances (if there be any
incumbrances, as a mortgage or lien, or right of way, or drain, or
air, or light, say excepting, and then describe the incumbrance), that
I have good right to sell and convey the same to the said (name of the
grantee), and his (or her) heirs and assigns forever as aforesaid; and
that I will, and my heirs, executors, and administrators shall,
warrant and defend the same to the said (name of the grantee), and his
heirs and assigns forever, against the lawful claims and demands of
all persons.
In witness whereof, I the said (name of the grantor) and (name of his
wife), wife of said grantor, in token of her release of all right and
title of or to dower in the granted premises, have hereunto set our
hands and seals this ____ day of ________ in the year of our Lord
________
(Signature) (Seal)
Signed, Sealed, and Delivered in the Presence of
11
Deed of Indenture--Short Form
This indenture, made the ____ day of ________, 19__, between ________
(insert occupation and residence), of the first part, and ________
(insert occupation and residence), of the second part,
Witnesseth: That the said part____ of the first part, in consideration
of ________ dollars, lawful money of the United States, paid by the
part____ of the second part, do ____ hereby grant and release unto the
said part____ of the second part, ____h____ heirs and assigns forever
(description of land). Together with the appurtenances and all the
estate and rights of the part____ of the first part in and to said
premises.
To have and to hold the above-granted premises unto the said part____
of the second part, ____h____ heirs and assigns forever.
And that said part____ of the first part do____ covenant with said
part____ of the second part, as follows:
That the part____ of the first part will forever warrant the title to
said premises.
In witness whereof, the said part____ of the first part ha____
hereunto set ____h____ hand ____ and seal ____, the day and year first
above written.
In the presence of
(Acknowledgment clause.)
12
Quit Claim Deed
Know all men by these presents, that we, ________ and ________,
husband and wife, in consideration of the sum of $________, in hand
paid, do hereby sell and quit claim to ________ all our right, title
and interest in and to the following described real estate, situate in
the county of ________, and state of ________, to-wit: (describe
premises) to have and to hold the above described premises to the said
________, and his heirs and assigns forever.
In witness whereof, we have hereunto set our hands this ________ day
of ________, 19__.
In presence of ________
________ ________
State of ________}
________ County. }
On this ____ day of ________, 19__, before me, a justice of the peace,
in and for said county, personally came the above named ________, who
are known to me to be the identical persons whose names are affixed to
the above deed as grantors, and severally acknowledged the instrument
to be their voluntary act and deed.
Witness my hand the date above given.
A.B.
Justice of the Peace.
13
Quit Claim Deed--Another Form
This indenture, made this ____ day of ________, in the year of our
Lord, 19__, between ________, of the first part, and ________, of the
second part, witnesseth: That the said part____ of the first part, in
consideration of the sum of ________ dollars, to ________, in hand
paid by the said part____ of the second part, the receipt whereof is
hereby confessed and acknowledged, ha____ bargained, sold, remised,
and quitclaimed, and by these presents do____ bargain, sell, remise,
and quitclaim unto the said part____ of the second part ________ and
to ________, heirs and assigns forever, all ________ together with all
and singular the hereditaments and appurtenances thereto belonging, or
in anywise appertaining, and the reversion and reversions, remainder
and remainders, rents, issues, and profits thereof, and all the
estate, right, title, interest, claim, and demand whatsoever, of the
said part____ of the first part, either in law or equity, of, in, and
to the above-bargained premises, with the said hereditaments and
appurtenances, to have and to hold the said ________ to the said
part____ of the second part, ________ heirs and assigns, to the sole
and only proper benefit and behoof of the said part____ of the second
part, ________ heirs and assigns forever.
In witness whereof, the part____ of the first part ha____ hereunto set
________ hand ____ and seal ____, the day and year first above
written.
Sealed and delivered in the presence of
(Acknowledgment clause.)
14
Quit Claim Deed--Short Form
In consideration of $100, to me in hand paid by C.D., I, A.B., hereby
sell, grant, release, and quitclaim to said C.D., that certain lot
(here insert description). To have and to hold the said released
premises unto the said C.D., and his heirs and assigns forever.
Witness my hand and seal, this ____ day of ________, 19__.
(Acknowledgment clause.)
A.B. (L.S.)
15
Mortgage
Know all men by these presents, that ________ and ________, husband
and wife, in consideration of the sum of $________, to us in hand
paid, do hereby grant, bargain, sell, and convey to ________ of
________, the following described real estate, to-wit: (describe
premises). Together with all the tenements and appurtenances thereunto
belonging. And we do hereby covenant with said ________ that we are
lawfully seized of said premises; and we will warrant and defend, the
same against the lawful claims of all persons whomsoever.
Provided, however, and these presents are upon this express condition.
That whereas ________ on the ____ day of ________, 19__, executed and
delivered to ________ promissory notes, as follows: The first of said
notes for the sum of $________, with interest from date, is due and
payable ________, 19__, and the second of said notes for the sum of
$________ with interest from date, is due and payable on the ____ day
of ________, 19__. Now if said ________ shall pay said notes and
interest thereon, when they shall become due, then this conveyance
shall be null and void, otherwise to remain in force and effect.
In witness whereof we have hereunto set our hands this ________ day of
________, 19__.
In presence of ________
________ ________
Acknowledgment as to deed.
16
Mortgage with Power of Sale
This Indenture, made the ____ day of ________ in the year ________
between ________ (name, residence, and occupation of mortgagor) party
of the first part, and ________ (name, residence, and occupation of
mortgagee) party of the second part, Witnesseth: That the said party
of the first part, in consideration of the sum of (the amount of the
debt) to him duly paid before the delivery hereof, has bargained and
sold, and by these presents does grant and convey to the said party of
the second part, and his heirs and assigns forever, all (here describe
the premises minutely and accurately) with the appurtenances, and all
the estate, right, and title, and interest of the said party of the
first part therein.
This grant is intended as a security for the payment of (here describe
the debt) which payments, if duly made, will render this conveyance
void. And if default shall be made in the payment of the principal or
interest above mentioned, then the said party of the second part, or
his executors, administrators, or assigns, are hereby authorized to
sell the premises above granted, or so much thereof as will be
necessary to satisfy the amount then due with the costs and expenses
allowed by law.
In witness whereof, the said party of the first part has hereunto set
his hand and seal the day and year first above written.
(Signature) (Seal)
Sealed and delivered in the presence of
STATE OF }
COUNTY OF } SS.
On the ____ day of ________ in the year one thousand nine hundred and
________ before me personally came (name of mortgagor) who is known to
me to be the individual described in, and who executed the foregoing
instrument, and acknowledged that he executed the same, as his free
act and deed.
17
Chattel Mortgage with Power of Sale
Know all men by these presents, that I, A.B., in consideration of the
sum of $________ paid by C.D., have bargained and sold, and by these
presents do hereby sell and convey to said C.D. the following goods,
and chattels, to-wit: (describe the articles mortgaged, or refer to
them as the goods and chattels mentioned in the schedule hereto
annexed), and which is now in my possession.
Whereas, the said A.B. is justly indebted to C.D. in the sum of
$________, payable on the ____ day of ________, 19__, with interest at
ten per cent from the ____ day of ________, 19__ (upon a promissory
note of even date herewith, or for goods sold and delivered).
Now the condition of the above obligation is such that if the said
A.B. shall well and truly pay said C.D. said sum of money and interest
when the same shall become due, then this conveyance shall be void,
otherwise to remain in full force and effect. It is also agreed that
said A.B. may retain possession of the said mortgaged property until
said debt becomes due. But if default be made in the payment of said
sum or any part thereof, the said C.D. and his assigns are hereby
authorized to sell said goods and chattels, or so much thereof as will
be necessary to satisfy the amount then due, together with the costs
and expenses incurred by reason of said default.
(Signed) A.B.
In the presence of E.F.
18
Mortgage on Goods and Chattels--Another Form
Know all men by these presents, that A.B., residing at ________, of
the first part, for securing the payment of the ________, hereinafter
mentioned, and in consideration of the sum of $1, to ________ in hand
paid, at or before the ensealing and delivery of these presents, by
C.D., of the second part, the receipt whereof is hereby acknowledged,
ha____ granted, bargained, sold, and assigned, and by these presents
do ____ grant, bargain, sell, and assign unto the said part____ of
the second part, all ________ now remaining and being ________.
To have and to hold, all and singular, the goods and chattels above
bargained and sold, or intended so to be, unto the said part____ of
the second part, ________ executors, administrators, and assigns
forever. And the said part____ of the first part, for ________ heirs,
executors, and administrators, all and singular, the said goods and
chattels above bargained and sold unto the said part____ of the second
part, ________ executors, administrators, and assigns, against the
said part____ of the first part, and against all and every person or
persons whomsoever shall and will warrant, and by these presents
forever defend.
Upon condition, that if the said part____ of the first part shall and
do well and truly pay, or cause to be paid, unto the said part____ of
the second part, ________ executors, administrators, or assigns, the
sum of ________, then these presents and everything herein contained
shall cease and be void. And the said part____ of the first part, for
________ executors, administrators, and assigns, do ________ covenant
and agree to and with the said part____ of the second part, ________
executors, administrators, and assigns, to make punctual payment of
the money hereby secured ________. And in case default shall be made
in payment of the said sum above mentioned, or in case the said
part____ of the second part shall sooner choose to demand the said
goods and chattels, it shall and may be lawful for, and the said
part____ of the first part do ________ hereby authorize and empower
the said part____ of the second part, ________ executors,
administrators, and assigns, with the aid and assistance of any person
or persons, to enter and come into and upon the dwelling-house and
premises of the said part____ of the first part, and in such other
place or places as the said goods and chattels are or may be held or
placed, and take and carry away the said goods and chattels to sell
and dispose of the same for the best price they can obtain, at either
public or private sale, and out of the money to retain and pay the
said sum above mentioned, with the interest and all expenses and
charges thereon, rendering the overplus (if any) unto the said
part____ of the first part, ________ executors, administrators, and
assigns. And until default be made in the payment of the aforesaid sum
of money, the said part____ of the first part to remain and continue
in quiet and peaceable possession of the said goods and chattels, and
the full and free enjoyment of the same, unless the said part____ of
the second part, ________ executors, administrators, or assigns, shall
sooner choose to demand the same; and until such demand be made, the
possession of the said part____ of the first part shall be deemed the
possession of an agent or servant, for the sole benefit and advantage
of his principal, the said part____ of the second part.
In witness whereof, the said part____ of the first part, ha____
hereunto set ________ hand ____ and seal ________ this ____ day of
________, 19__.
Sealed and delivered in the presence of
________ County of ________ss.:
On this ____ day of ________, 19__, before me came ________, to me
known to be the person____ described in and who executed the foregoing
instrument, and ________ acknowledged that ____ he ________ executed
the same.
19
Notice of Sale under Chattel Mortgage
Notice is hereby given that by virtue of a chattel mortgage, dated on
the ____ day of ________, 19__, and duly filed in the office of the
county clerk of ________ county, ________ on the ____ day of ________,
19__, and executed by A.B. to C.D. to secure the payment of the sum of
$________, and upon which there is now due the sum of $________.
Default having been made in the payment of said sum, and no suit or
other proceeding at law having been instituted to recover said debt or
any part thereof, therefore, I will sell the property therein
described, viz.: (here describe the articles substantially as in the
mortgage) at public auction at the house of ________, in the (city,
town, or precinct) of ________, in ________ county, on the ____ day of
________, at one o'clock P.M. of said date.
C.D.
Mortgagee.
Dated ____, ________, 19__.
20
Assignment of Mortgage
This instrument, made this ____ day of ________, 19__, between
________, of the first part, and ________, of the second part,
witnesseth: That the part____ of the first part, for a good and
valuable consideration, to ________ in hand paid by the part____ of
the second part, ha____ sold, assigned, transferred, and conveyed, and
do____ hereby sell, assign, transfer, and convey to the part____ of
the second part, a certain mortgage, bearing date the ____ day of
________, 19__, made by ________, recorded in the clerk's office of
________ county, in liber ________, of mortgages, at page ________, on
the ____ day of ________, 19__, at ____ o'clock ____m., together with
the bond accompanying said mortgage, and therein referred to, and all
sums of money due and to grow due thereon. And the part____ of the
first part hereby covenant that there is ________ due on the said bond
and mortgage the sum of ________.
In witness whereof, the part____ of the first part ha____ hereunto set
________ hand ____ and seal ____ the day and year first above written.
(Assignment clause.)
21
Agreement for Lease
This is to certify that I have, on this 1st day of ________, 19__, let
and rented to C.D., lot ________, in block ________, in the city to
________, ________, together with the dwelling-house thereon, with all
the appurtenances, and the sole and uninterrupted possession thereof
for one year from this date, at the yearly rent of $________, payable
quarterly in advance; rent to cease in case of the destruction of the
premises by fire.
(Signed) A.B.
22
Lease
This agreement, entered into this first day of ________, 19__, between
A.B. and C.D., witnesseth: That the said A.B., in consideration of the
covenants of the said C.D., hereinafter set forth, does hereby lease
to the said C.D., from the first day of ________, 19__, to the ____
day of ________, 19__, the following described property, to-wit: (The
southeast quarter of section 15, in township 12 north, range 14 east
of 6th principal meridian). And the said C.D., in consideration of the
leasing of the premises as above set forth, does hereby covenant and
agree to pay said A.B. the rent following, to-wit: (Insert terms and
mode of payment). The said C.D. also covenants with the said A.B. that
he will cultivate said land in a good and husband-like manner; that he
will keep said premises in as good a condition as they now are; the
usual wear and incidents by fire excepted, and that he will yield
peaceable possession of the same to said A.B. at the expiration of
said term.
In witness whereof we have hereunto set our hands this ________ day of
________, 19__.
A.B.
C.D.
In presence of E.F.
23
Lease--Another Form
Landlord and Tenant's Agreement
This instrument, made and executed this ____ day of ________, 19__,
between ________, of the ________, part____ of the first part, and
________, of the ________, part____ of the second part, witnesseth:
That the part____ of the first part ha____ hereby let and rented to
the part____ of the second part, and the part____ of the second part
ha____ hereby hired and taken from the part____ of the first part,
________ for the term of ________ years ________ ---- to commence the
____ day of ________, 19__, at the yearly rent of ________ dollars,
payable ________. And the part____ of the second part hereby
covenant____ to and with the part____ of the first part to make
punctual payment of the rent ________ in the manner aforesaid, and
quit and surrender the premises at the expiration of said term, in as
good state and condition as they are now in, reasonable use and wear
thereof, and damages by the elements excepted, and further
covenant____ that ____he____, the part____ of the second part, will
not use or occupy said premises for any business or purpose deemed
extra hazardous on account of fire.
And further covenant____ that ____he____, the part____ of the second
part, will not assign this lease or underlet the said premises, or any
part thereof, to any persons whomsoever, without first obtaining the
written consent of said part____ of the first part, and in case of not
complying with this covenant, the part____ of the second part
agree____ to forfeit and pay to the part____ of the first part the sum
of ________ dollars, as and for liquidated damages which are hereby
liquidated and fixed as damages and not as a penalty.
This lease is made and accepted on this express condition, that in
case the part____ of the second part should assign this lease or
underlet the said premises, or any part thereof, without the written
consent of the part____ of the first part, that then the part____ of
the first part, his heirs or assigns, in his option, shall have the
power and the right of terminating and ending this lease immediately,
and be entitled to the immediate possession of said premises, and to
take summary proceedings against the part____ of the second part, or
any person or persons in possession as tenant, having had due and
legal notice to quit and surrender the premises, holding over their
term.
It is further agreed between the parties, that in case said premises
should be destroyed by fire before or during said term, that then this
lease is to cease and determine; the rent ________ to be paid up to
that time.
In witness whereof, the parties have hereunto set their hands and
seals the day and year first above written.
In the presence of
________ ________
________
24
Farm Lease
This indenture, made the ____ day of ________ in the year of our Lord,
19__, between A.B., of the city of ________, party of the first part,
and C.D., of the same place, party of the second part, witnesseth:
That the said party of the first part, in consideration of the rents,
covenants, and agreements hereinafter mentioned, reserved, and
contained on the part of the said party of the second part, his
executors, administrators, and assigns, to be paid, kept, and
performed, has demised and to farm let, unto the said party of the
second part, his executors, administrators, and assigns, all (insert
description), with the appurtenances, unto the said party of the
second part, his executors, administrators, and assigns, from the ____
day of ________, 19__, for the term of ten years then next ensuing,
yielding and paying therefor, unto the said party of the first part,
his heirs or assigns, yearly and every year during the said term
hereby granted, the yearly rent or sum of $________, in equal
half-yearly payments, to-wit: on the 1st days of October and April in
each and every year; provided, that if the yearly rent above reserved,
or any part thereof, shall be unpaid on any day of payment whereon the
same ought to be paid as aforesaid; or if default shall be made in any
of the covenants or agreements herein contained, on the part of the
said party of the second part, his heirs or assigns, to re-enter upon
the said premises, and the same to have again, as in their first and
former estate.
And the said party of the second part does covenant and agree, with
the said party of the first part, his heirs and assigns, that he, the
said party of the second part, his executors, administrators, or
assigns, will yearly and every year during the said term, pay unto the
said party of the first part, his heirs or assigns, the yearly rent
above reserved, on the days and in manner limited and prescribed as
aforesaid, for the payment thereof, without any deduction or delay.
And that the said party of the second part, his executors,
administrators, or assigns, will, at his own proper costs and charges,
bear, pay, and discharge all taxes, duties, and assessments, as may,
during the said term hereby granted, be charged, assessed, or imposed
upon the said demised premises. And that on the determination of the
estate hereby granted, the said party of the second part, his
executors, administrators, or assigns, shall and will leave and
surrender unto the said party of the first part, his heirs or assigns,
the said demised premises in as good stage and condition as they are
now in, ordinary wear and damages by the elements excepted.
And the said party of the first part does covenant and agree, with the
said party of the second part, his executors, administrators, and
assigns, that the said party of the second part, his executors,
administrators, and assigns, paying the said yearly rent above
reserved, and performing the covenants and agreements aforesaid on his
part, the said party of the second part, his executors,
administrators, and assigns, shall and may at all times during the
said term hereby granted, peaceably have, hold, and enjoy the said
demised premises, without any manner of trouble or hindrance of or
from the said party of the first part, his heirs or assigns, or any
other person or persons whomsoever.
In witness whereof, the parties to these presents have hereunto set
their hands and seals.
Sealed and delivered in the presence of
________
A.B. (L.S.)
25
Lease of Furnished Rooms
Memorandum. It is agreed by and between A.B. and C.D., as follows,
viz.: The said A.B., in consideration of the rent hereinafter
mentioned and agreed to be paid to him, hath letten to the said C.D.
one room, up two flights of stairs forward, part of the now
dwelling-house of the said A.B. situate on ________ Street, in the
city of ________, together with the furniture at present standing
therein--that is to say: (insert furniture). To hold to the said C.D.
for the term of two years, to commence from ________, 19__, at the
yearly rent of $100, to be paid quarterly to the said A.B.
The said C.D., in consideration hereof, agrees to pay the aforesaid
yearly rent of $100, at the times above limited for payment thereof;
and at the end of the term, or in case of any default in the payment,
shall and will, on the request of the said A.B., or his assigns,
immediately yield and deliver up to him or them, the peaceable and
quiet possession of the said room, together with the whole furniture
he, from the first entrance thereon, there found and possessed, in
good, and sufficient plight and condition, reasonable wear and tear
only excepted.
In witness whereof the parties have signed this agreement, this ____
day of ________, 19__.
A.B.
C.D.
26
Assignment of Lease
For and in consideration of the sum of $________, to me in hand paid
by E.F., I hereby assign and transfer to said E.F. a certain lease,
bearing date ________, 19__, and made by A.B. to me, C.D., for
(describe the premises), together with all and singular the buildings
and appurtenances thereunto belonging, or in any wise appertaining,
subject, however, to the rents hereafter to accrue and the covenants
and conditions contained in said lease.
C.D.
27
Assignment of Lease--Another Form
Know all men by these presents, that I, A.B., the within-named lessee,
for and in consideration of $50, to me in hand paid by C.D., of the
town of Franklin, County of Albany, at and before the sealing and
delivery hereof, the receipt whereof I do hereby acknowledge, have
granted, assigned and set over, and by these presents do grant, assign
and set over, unto the said C.D., his executors, administrators, and
assigns, the within indenture of lease, and all that house and farm
therein described, with the appurtenances, and also my estate, right,
title, term of years yet to come, claim and demand whatsoever, of, in,
to, or out of the same. To have and to hold the said house and farm,
and the appurtenances thereof unto the said C.D., his executors,
administrators, and assigns, for the residue of the term within
mentioned, under the yearly rent and covenants within reserved and
contained, on my part and behalf to be done, kept and performed.
Witness my hand and seal, this June 20, 19__.
A.B. (L.S.)
(Acknowledgment.)
28
Notice to Quit
To C.D.:
I hereby notify you to leave the premises now occupied by you, to-wit:
(Lot 8 in Block 144, in the city of ________, ________ county,
________.) If you fail to comply with this notice within three days
after its service, I shall instigate legal proceedings to obtain
possession of said premises.
(Signed) A.B.
29
Subscription to Build a Church
Whereas, the trustees of the church corporation, known as the "Church
of the Puritans," are about erecting a church edifice for such
corporation; now, we, the undersigned, for the purpose of such
erection, hereby agree to and with such trustees and to and with each
other, to pay to B.B., the treasurer of said corporation, the several
sums by us set opposite our several names, for the purpose of such
erection, and we hereby authorize and direct the said trustees to
expend such sums in the erection of the same. The said sums are to be
paid to the said treasurer on or before the 1st day of March, 1900.
NAMES AMOUNT
A.B. $600
C.C. 400
30
Power of Attorney
Know all men by these presents, that we ________ and ________, husband
and wife of the county of ________, and state of ________, have made,
constituted and appointed, and do hereby make, constitute and appoint
________ of the county of ________, and state of ________, our true
and lawful attorney for us and in our names, place and stead, to sell
and convey by a good and sufficient deed, with full covenants of
warranty the following described real estate, to-wit: (describe),
hereby giving and granting to our said attorney full power to do and
perform every act and thing necessary to be done in the premises as
fully as we could do if personally present, hereby ratifying and
confirming all that our said attorney shall do by virtue hereof.
In witness whereof we have hereunto set our hands this ____ day of
________, 19__.
In the presence of ________
________ ________
State of ________}
________ County. }
On this ____ day of ________, 19__, before me, a justice of the peace
in and for said county, personally came the above named ________ and
________, who are known to me to be the identical persons whose names
are affixed to the above power of attorney as makers thereof, and
severally acknowledged the instrument to be their voluntary act and
deed.
In witness whereof I have hereunto set my hand the day and year above
written.
A.B.
Justice of the Peace.
31
Power of Attorney to Transfer Stock
Know all men by these presents, that ________, for value received,
ha____ bargained, sold, and assigned, and by these presents do
bargain, sell, and assign unto ________, the following described
stock, to-wit: ________ unto ________, belonging and held by
certificate No. ________, in ________ name, and hereunto annexed, and
do hereby constitute and appoint ________, true and lawful attorney,
irrevocably, for ________, and in ________ name and stead, to ________
use, to assign and transfer the said stock unto ________ and for that
purpose to make and execute the necessary acts of assignment and
transfer, and an attorney, or attorneys under ________, for that
purpose, to make and substitute, and to do all other lawful acts
requisite for effecting the premises, hereby ratifying and confirming
the same.
In witness whereof ________ have hereunto set ________ hand ____ and
seal ____ in the city of ________, the ____ day of ________, in the
year of our Lord, 19__.
State of Ohio,
City and County of ________ss.:
On the ____ day of ________, 19__, personally appeared before me
________, to me known to be the person ________ described in, and who
executed the within instrument, and acknowledged the execution of the
same for the uses and purposes therein mentioned.
32
Certificate of Stock
No. ________ No. of shares ________
Par value of each, $________
The ________ Company:
This is to certify that ________ is the owner of ________ ________
shares of the capital stock of the ________ Company, transferable only
on the books of the company by the holder thereof, in person or by
attorney, on the surrender of this certificate.
In witness whereof, the said company has caused its corporate seal to
be affixed, hereto, and this certificate to be signed by its president
and treasurer.
________, N.Y. ________, 19__.
________ President.
________ Treasurer.
On back of the certificate a blank transfer, in following form, should
be printed.
For value received, ________ hereby sell, assign, and transfer
unto ________ shares of the within-mentioned stock, and do
hereby constitute and appoint ________, attorney to transfer
the same on the books of the company.
Witness my hand and seal, this ____ day of ________ ________,
19__.
Witness: ________
________ (SEAL)
33
Agreement to Sell Shares of Stock
Memorandum of agreement, made this ____ day of ________, 19__, between
A.A., of the city of New York, of the first part, and B.B., of the
same place, of the second part, witnesseth: That the said A.A. agrees
to sell and convey to the said B.B., on or before the 1st day of May
next, 1,000 shares of the capital stock of the New Haven Bank, for the
price or sum of $110 per share, and to make, execute, and deliver to
the said B.B. all assignments, transfers, and conveyances necessary to
assure the same to him, his heirs and assigns.
In consideration whereof, the said B.B. agrees to pay unto the said
A.A. the price or sum or $110 for each and every share of the said
stock so assigned, whenever, and as soon as the said assignment and
the scrip of stock so assigned shall be properly executed and
delivered to the said B.B.
In witness whereof, the said parties have hereunto set their hands and
seals, the day and year first above written.
A.A. (L.S.)
B.B. (L.S.)
34
Transfer of Shares of Stock
Know all men by these presents, that I, A.B., ________ for value
received, have bargained, sold, assigned, and transferred, and by
these presents do bargain, sell, assign, and transfer unto C.D.,
sixteen shares of the capital stock, standing in my name on the books
of the ________ First National Bank, and ________ do hereby constitute
and appoint the said C.D., ________ my true and lawful attorney,
irrevocable, for me and in my name and stead, but to his use, to sell,
assign, transfer, and set over all or any part of the said stock, and
for that purpose, to make and execute all necessary acts of assignment
and transfer, and one or more persons to substitute with like full
power, hereby ratifying and confirming all that my said attorney, or
his substitute, or substitutes, shall lawfully do by virtue hereof.
In witness whereof, I have hereunto set my hand and seal the ____ day
of ________, 19__.
A.B. (SEAL)
35
Assignment of Policy of Insurance
Know all men by these presents, that I, A.B., of the village of
Coxsackie, for and in consideration of $25, to me in hand paid by C.D.
of the same place, the receipt whereof is hereby acknowledged, have
sold, assigned, transferred, and set over, and by these presents do
sell, assign, transfer, and set over, unto the said C.D. the policy of
insurance, known as policy No. 23,685 of the Indemnity Insurance
Company, and all sum and sums of money, interest benefit and advantage
whatsoever, now due, or hereafter to arise, or to be had or made by
virtue thereof, to have and to hold the same unto the said C.D., and
his assigns forever.
In witness whereof, I have hereto affixed my hand, this June 20, 19__
(A.B.)
(Acknowledgment.)
36
Assignment of Patent Right
"Whereas, letters-patent, bearing the date the 10th of January, 1921,
were granted and issued by the Government of the United States, under
the seal thereof, to A.B., of the town of Bristol, of the State of
Pennsylvania, for (here state the nature of the invention) a more
particular and full description thereof is annexed to the said
letters-patents in a schedule; by which letters-patents the full and
exclusive right and liberty of making and using the said invention,
and of vending the same to others to be used, was granted to the said
A.B., his heirs, executors, and administrators, or assigns, for the
term of seventeen years, from the same date.
Now, know all men by these presents, that I, the said A.B., for and in
consideration of the sum of $100, to me in hand paid, the receipt
whereof is hereby acknowledged, have granted, assigned and set over,
and by these presents do grant, assign, and set over unto C.D., of the
said town of Bristol, his executors, administrators, and assigns,
forever, the said letters-patent, and all my right, title and interest
in and to the said invention, so granted unto me: to have and to hold
the said letters-patent and invention, with all benefit, profit and
advantage thereof, unto the said C.D., his executors, administrators,
and assigns, in as full, ample, and beneficial manner, to all intents
and purposes, as I, the said A.B., by virtue of the said
letters-patent, may or might have or hold the same, for and during all
the rest and residue of the term for which said letters-patent are
granted.
In witness whereof, I have hereto affixed my hand and seal, this 10th
day of June, 19__.
A.B. (L.S.)
In the presence of
E.F.
G.H.
(Acknowledgment.)
37
Bond for Payment of Money
(As in Form No. 6, and then as follows):
The condition of this obligation is such, that if the above-bounden
A.B., his heirs, executors, and administrators, or any of them, shall
well and truly pay, or cause to be paid, unto the above-named C.D.,
his executors, administrators, or assigns, the just and full sum of
$1,000, lawful money, as aforesaid, in manner following, to-wit: $300
part thereof, on the ________ ____ day of ________ next ensuing the
date hereof; $300 more thereof on the ____ day of ________, the next
following; and $400, the residue, and in full payment thereof, on the
____ day of ________, which will be in the year of ________; then this
obligation to be void; but if default shall be made in payment of any
or either of the said sums on the days and times hereinbefore
mentioned and appointed for payment thereof, respectively, then this
bond shall remain in full force and virtue.
A.B. (L.S.)
38
Articles of Co-Partnership
This agreement entered into this ____ day of ________, 19__, by and
between A.B. and C.D., witnesseth, that said parties have formed a
co-partnership for the purpose of carrying on the business of &
________ at ________, upon the following terms and conditions:
First: The name and style of said co-partnership shall be A.B. & C.D.,
and shall continue ________ years from this date, unless sooner
terminated by the death of either of said partners.
Second: The said A.B. shall contribute to the capital stock of said
firm the sum of $________, and the said C.D. the sum of $________, and
said partners shall be the owners of the stock in that proportion, and
any further increase of the capital stock shall be contributed by said
partners in the same ratio.
Third: All the profits which shall accrue to said partnership shall be
equally divided between said partners; and all losses from whatever
cause shall be borne by them in proportion to their interests in the
stock of said firm.
Fourth: Neither of said partners shall sign or in any manner become
liable upon any promissory note or other obligation, for the
accommodation of any person whatsoever, nor lend any of the
co-partnership funds without the consent in writing of the other
partner.
Fifth: Neither party shall withdraw from the funds of the firm to
exceed the sum of $________, per annum, in ________ in installments of
not to exceed the sum of $________, but neither shall at any time be
entitled to draw in excess of his share of the profits then earned.
Sixth: All transactions and accounts of the firm shall be kept in
regular books, which shall be open at all times to the inspection of
either party or their representatives.
Seventh: An invoice of stock shall be taken on the first day of
January of each year, and the account between the parties settled at
that time. And an invoice be taken and an account had at any other
time when either partner shall demand the same in writing.
Eighth: No transaction outside of the ________ business shall be
entered into by either of said partners without the consent in writing
of his co-partner. And any violation of the terms of this agreement
shall be sufficient cause for a dissolution of this co-partnership.
In testimony whereof we have hereunto set our hands this ____ day of
________, 19__.
A.B.
C.D.
In the presence of G.H.
39
Articles of Co-Partnership--Another Form
Articles of co-partnership, made this ____ day of ________, 19__, by
and between A.B. and C.D. both of the city of ________, witnesseth
that:
The said parties hereby agree to form, and do form a co-partnership,
for the purpose of carrying on the general produce and commission
business on the following terms and articles of agreement, to the
faithful performance of which they mutually engage and bind
themselves, each to the other.
The style and name of the co-partnership shall be B. and D., and shall
commence on the ____ day of ________, 19__, and continue for the
period of five years.
Each of the said parties agrees to contribute to the funds of the
partnership the sum of $3,000 in cash, which shall be paid in, on or
before the ____ day of ________, 19__, and each of said parties shall
devote and give all his time and attention to the business, and to the
care and superintendence of the same.
All profits which may accrue to the said partnership shall be divided
equally, and all losses happening to the said firm, whether from bad
debts, depreciation of goods, or any other cause or accident, and all
expenses of the business shall be borne by the said parties equally.
All the purchases, sales transactions, and accounts of the said firm
shall be kept in regular books, which shall be always open to the
inspection of both parties and their regular representatives
respectively.
An account of stock shall be taken, and an account between the parties
shall be settled as often as once a year, and as much oftener as
either partner may desire, and in writing request.
Neither of the said parties shall subscribe any bond, sign or indorse
any note of hand, accept, sign, or indorse any draft or bill of
exchange, or assume any other liability, verbal or written, either in
his own name or in the name of the firm, for the accommodation of any
other person or persons whatsoever, without the consent in writing of
the other party; nor shall either party lend any of the funds of the
co-partnership without such consent of the other partner.
No large purchase shall be made, nor any transaction out of the usual
course of the business shall be undertaken by either of the partners,
without previous consultation with, and the approbation of, the other
partner.
Neither shall withdraw from the joint stock, at any time, more than
his share of the profits of the business then earned nor shall either
party be entitled to interest on his share of the capital; but if, at
the expiration of the year, a balance of profits be found due to
either partner, he shall be at liberty to withdraw the said balance,
or to leave it in the business, provided the other partner consent
thereto, and in that case be allowed interest on the said balance.
At the expiration of the aforesaid term, or earlier dissolution of
this co-partnership, if the said parties, or their legal
representatives, cannot agree in the division of the stock then on
hand, the whole co-partnership effects, except the debts due to the
firm, shall be sold at public auction, at which both parties shall be
at liberty to bid and purchase like other individuals, and the
proceeds shall be divided, after payment of the debts of the firm, in
the proportions aforesaid.
For the purpose of securing the performance of the foregoing
agreements, it is agreed, that either party, in case of any violation
of them, or either of them, by the other, shall have the right to
dissolve this co-partnership forthwith, on his becoming informed of
such violation.
In witness whereof, we, the said A.B. and C.D., have hereto set our
hands, the day and year first above written.
Executed and delivered in the presence of
(Acknowledgment.)
A.B.
C.D.
40
Letter of Credit
A.B. & Co ________:
_Gentlemen._--We will be responsible to you for goods sold to C.D., of
________, to an amount not exceeding ________ dollars (or, for cash
advanced to C.D., of ________ not exceeding ________ dollars), (or,
for credit secured by you to C.D., of ________, in the purchase of
(describe the kind of goods), not exceeding the sum of ________
dollars) at any time before ________, 19__, unless this letter is
revoked prior to said date; and providing you send notice to us by
mail within ten days of the granting of such credit or making such
payment, and also in case said C.D. should default in making payment
of any part of any debt created by reason of this agreement when such
payment shall become regularly due, then notice of such default shall
be sent by mail to us within five days of such default.
Dated, ________ 19__. (Signature)
41
Agreement for Sale of Physician's Practice
Agreement made this ____ day of ________, 19__, between ________,
hereinafter called the vendor, and ________, hereinafter called the
purchaser.
1. Whereas the said vendor has for many years past exercised his
profession of physician and surgeon at ________, in the county of
________, and is now desirous of retiring from his practice at
________ aforesaid, and the said purchaser is desirous of establishing
himself as a physician and surgeon at said ________, now therefore,
the said vendor agrees to sell to the said purchaser, who agrees to
purchase, the said practice and the good will and benefits thereof
from the ____ day of ________ next, together with all the fixtures,
furniture, medical books, surgical and other instruments and
apparatus, and all the drugs, medicines, bottles, and other things now
used therein, for the sum of ________ dollars; in confirmation of
which purchase the purchaser, upon the execution of these presents,
has paid the sum of ________ dollars by way of deposit and in part of
the purchase money.
2. The said vendor further agrees that, on the payment of the residue
of the said purchase money as hereinafter mentioned, he will fully and
absolutely deliver over and assign to the said purchaser, his
executors, administrators, or assigns, the said practice or business,
and the good will thereof, for his and their own absolute use and
benefit; and likewise the full and uninterrupted possession of the
office in which the said practice is now carried on by him, together
with the fixtures, furniture, books, instruments, apparatus, and
things now used in and relating to the said practice.
3. The said vendor will introduce and recommend the said purchaser to
his patients, friends, and others, as his successor; and will use his
best endeavors to promote and increase the prosperity of the said
practice or business.
4. The said vendor will not reside or practise either as physician or
surgeon, or act directly or indirectly as partner or assistant to or
with any other physician or surgeon practising ________ either at
________ aforesaid, or elsewhere, within ________ miles thereof.
5. The said purchaser, in consideration of the agreements on the part
of the vendor hereinbefore contained, hereby further agrees to pay
him, his executors, or administrators, ________ dollars, by
installments as follows: one-half part thereof on the ____ day of
________ next, upon receiving the full and peaceable possession of the
said practice, office, good will, fixtures, furniture, books, and
things hereinbefore mentioned, and the remaining half part thereon on
the ____ day of ________ next.
In witness, etc.
42
Agreement Between Merchant and Traveling Salesman
Agreement made this ________ of ________, between ________ of
________, and ________ of ________, merchants and co-partners, doing
business under the firm name and style of ________ & Co., of the one
part, and ________ of ________, traveling salesman of the other part.
1. The said salesman shall enter into the service of said firm as a
traveler for them in their business of ________ merchants, for the
period of ________ years from the ____ day of ________ 19__, subject
to the general control of said firm.
2. The said salesman shall devote the whole of his time, attention,
and energies to the performance of his duties as such salesman, and
shall not, either directly or indirectly, alone or in partnership, be
connected with or concerned in any other business or pursuit during
the said term of ________ years.
3. The said salesman shall, subject to the control of the said firm,
keep proper books of account, and make due and correct entries of the
price of all goods sold, and of all transactions and dealings of and
in relation to the said business, and shall serve the said firm
diligently and according to his best abilities in all respects.
4. The fixed salary of the said salesman shall be the sum of ________
dollars per week for the first year, payable by the said firm weekly
from the commencement of the said service, on the ____ day of
________, and ________ dollars per week for the third year, payable
weekly in like manner, from the commencement of such respective years.
5. The reasonable traveling expenses and hotel bills of the said
salesman, incurred in connection with the business of said firm, shall
be paid by the said firm, and the said firm shall from week to week
pay to the said salesman the said traveling expenses and hotel bills
in addition to the said fixed salary.
In witness, etc.
________
________
43
Agreement for the Adoption of Children
This indenture made the ____ day of ________, 19__, between ________
of ________, party of the first part, and ________, of ________, and
________ his wife, parties of the second part.
Whereas the said party of the first part has two daughters, ________
and ________, now aged ________ and ________ years, respectively; and
whereas the said parties of the second part are willing to adopt the
said children subject to the conditions hereinafter contained, and on
the part of the party of the first part to be observed: Now this
indenture witnesseth that the said parties covenant and agree as
follows, that is to say:
1. The said parties of the second part shall adopt the said children,
and shall, until the said children shall respectively attain the age
of twenty-one years, or marry under that age, maintain, board, lodge,
clothe, and educate them in a manner suitable to their station, and as
if they were the lawful children of the parties of the second part and
shall at the cost of the parties of the second part, and of the
survivor of them, provide the said children with all necessaries, and
discharge all the debts and liabilities which the said children or
either of them may incur for necessaries, and indemnify the said party
of the first part against all actions, claims, and demands in respect
thereof.
2. The said party of the first part hereby nominates and appoints the
said parties of the second part, during their lives, and after their
respective deaths the person or persons to be nominated in that
behalf, as is hereinafter mentioned, to be the guardians of the
persons and estates of the said children until they shall attain the
age of twenty-one years, or until they shall marry under that age
respectively.
3. The said party of the first part shall not revoke the appointment
hereby expressed to be made, and will not, by deed, will, or
otherwise, appoint or apply for the appointment of any other person or
persons to be guardian or guardians of the said children or either of
them, or of their respective estates.
4. In case of the death of either of the parties of the second part
before the said children shall attain the age of twenty-one years, or
marry under that age respectively, it shall be lawful for the survivor
of them, the said parties of the second part, by deed or will, to
nominate and appoint any person or persons, from and after the decease
of such survivor, to be guardian or guardians of the said children or
either of them.
5. The said party of the first part shall not himself, nor shall any
person or persons claiming under him, or acting under his authority,
at any time or in any manner interfere with the training or management
of the said children or either of them, or with their or her moral,
intellectual, or religious education or instruction.
6. If the said party of the first part shall not perform and observe
all and every of the stipulations herein contained and on his part to
be performed and observed, then and in every such case it shall be
lawful for the said parties of the second part, and the survivor of
them, by notice in writing under their, his or her hands or hand, and
addressed either to the party of the first part or to the person
setting up such claim or demand, or so interfering as aforesaid, to
put an end to the agreement hereby expressed to be made, and thereupon
the same shall absolutely cease and determine; provided that in such
event the said party of the first part, or his estate, shall be liable
to pay and satisfy all debts and liabilities incurred by or in any
wise for the benefit of the said children, or either of them, which at
the time of such determination of this agreement shall not have been
paid and satisfied. In witness, etc.
44
Release by Ward of His Guardian
Know all men by these presents, that I, A.B., of ________, son and
heir of ________, deceased, in consideration of ________, by these
presents remise, release, and forever discharge C.D., of ________, my
guardian, of and from all manner of actions, suits, accounts, debts,
dues, and demands whatsoever, which I ever had, now have, or which I
or my executors or administrators, at any time hereafter, can or may
have, claim or demand against the said C.D., his executors or
administrators, for, touching, or concerning the management and
disposition of any of the lands, tenements, or hereditaments of the
said A.B., situate, etc., or any part thereof, or for or by reason of
any money, rents, or other profits by him received out of the same, or
any payments made thereof, during the minority of the said A.B., or by
reason of any matter, cause or thing whatsoever, from the beginning of
the world to the day of the date hereof.
In witness whereof, I have hereunto set my hand and seal, this ____
day of ________, one thousand nine hundred and ________.
(Signature and seal)
________
In presence of
(Signature of witness)
________
________
45
Will
In the name of God, amen: I, A.B., of the city of ________, in the
county of ________, and state of ________, considering the uncertainty
of this mortal life, and being of sound mind and memory, blessed be
God for the same, do make and publish this my last will and testament,
in manner and form following, that is to say:
First: I direct that my funeral charges, the expenses of administering
my estate, and all my debts be paid out of my personal property. If
that be insufficient I authorize my executors, hereafter named, to
sell so much of my real estate as may be necessary for that purpose.
Second: I give and bequeath to my beloved wife, C.B., the sum of
$________, in lieu of dower, and of any distributive share in my
estate to which she would otherwise be entitled. I also give and
bequeath to my beloved wife the dwelling-house and lot on which I now
reside.
Third: I hereby give the custody of my infant children during their
minority, and while they remain unmarried, to my beloved wife, so long
as she remains my widow; but if she shall die or marry again during
the infancy of said children, then in that case, I commit their
custody and tuition to my friend E.F., of said city and state.
Fourth: I give and bequeath all of the residue of my estate, real and
personal, to my children, share and share alike, as tenants in common,
to be paid to them as they respectively come of age. In case any one
of my children shall die in my lifetime, leaving issue of descendants,
I direct that his share shall not lapse, but shall be paid to such
descendants, in equal proportions.
Fifth: I appoint my friend G.H. executor of this, my last will and
testament, hereby revoking all former wills by me made.
In witness whereof I have hereunto subscribed my name this 1st day of
________, in the year of our Lord ________.
A.B.
We, whose names are hereunto subscribed, do hereby certify that A.B.,
the testator, subscribed his name to this instrument in our presence
and in the presence of each of us, and declared at the same time in
our presence and hearing that this instrument was his last will and
testament, and we at his request, sign our names hereto in his
presence as attesting witnesses.
L.M., of the city of ________
N.O., of the city of ________
46
Will--Another Form
I, A.B., of the town of ________, in the county of ________, and state
of________, declare this to be my last will and testament:
I give and bequeath to my wife, C.B., ________ dollars, to be received
by her in lieu of dower.
To my son, E.B., ________ dollars (which said several legacies I
direct to be paid within ________ after my decease).
I give and devise to my son, E.B. aforesaid, his heirs and assigns,
all (here designate the property), together with all the hereditaments
and appurtenances thereunto belonging or in anywise appertaining.
To have and to hold the premises above described to the said E.B., his
heirs and assigns forever.
I give and devise all the rest, residue, and remainder of my real
property, of every name and nature whatsoever, to my said daughter,
M.B. (and my daughter, O.B., to be divided equally between them, share
and share alike).
I give and bequeath all the rest, residue and remainder of my
personal property, of what nature or kind soever, to my said wife,
C.B.
I hereby appoint E.B. the sole executor of this will, revoking all
former wills by me made.
In witness (etc., as in Form 45).
47
Will Bequeathing Legacies and Appointing Residuary Legatee
I, A.B., of ________, declare this to be my last will and testament.
I bequeath to my wife, C.B., all the fixtures, prints, books, plate,
linen, china, wines, liquors, provisions, household goods, furniture,
chattels, and effects (other than money or securities for money),
which shall at my death be in or about my dwelling-house and premises
at ________.
I bequeath to my said wife the sum of ________ dollars, to be paid to
her within one month after my death, without interest.
I also give and bequeath to my said wife the sum of ________ dollars.
I also bequeath the following legacies to the several persons
hereafter named: To my nephew, E.F., the sum of ________ dollars; to
my cousin, G.H., the sum of ________ dollars; and to my friend, J.K.,
the sum of ________ dollars (and so on with other pecuniary legacies).
I also bequeath to each of my domestic servants who shall be living
with me at the time of my death in the capacity of (state the
description of servants to whom the legacies are to be given), one
year's wages, in addition to what may be due to them at that time.
All the rest, residue and remainder of my real and personal estate, I
devise and bequeath to R.S., his heirs, executors, administrators, and
assigns, absolutely forever.
I appoint T.U. and V.W. executors of this my will.
In witness, etc.
48
Articles of Incorporation
Know all men by these presents. That we, ________, ________, ________,
________, ________, ________, do associate ourselves together for the
purpose of forming and becoming a corporation in the state of
________, for the transaction of the business hereinafter described.
1. The name of the corporation shall be (give name). The principal
place of transacting its business shall be in the city of ________,
county of ________, and state of ________.
2. The nature of the business to be transacted by said corporation
shall be the (give name of business) and the erection and maintenance
of such buildings and structures as may be deemed necessary, and to
purchase real estate as a site therefor, and especially to ________.
3. The authorized capital stock of said corporation shall be (state
amount) thousand dollars in shares of $________ each, to be subscribed
and paid as requested by the board of directors.
4. The existence of this corporation shall commence on the first day
of ________, A.D., 19__, and continue during the period of ________
years.
5. The business of said corporation shall be conducted by a board of
directors not to exceed five in number, to be elected by the
stockholders; such election to take place at such time and be
conducted in such manner as shall be prescribed by the by-laws of said
corporation.
6. The officers of said corporation shall be a president, secretary
and treasurer, who shall be chosen by the board of directors, and
shall hold their office for the period of one year, and until their
successors shall be elected and qualified.
7. The highest amount of indebtedness to which said corporation shall
at any time subject itself shall be not more than ________ thousand
dollars.
8. The manner of holding the meetings of stockholders for the election
of officers, and the method of conducting the business of the
corporation, shall be as provided by the by-laws, adopted by the board
of directors.
In witness whereof, the undersigned have hereunto set their hand this
____ day of ________ A.D., 19__.
________, ________, ________
________, ________, ________
State of ________}
________ County. }
On this ____ day of ________, 19__, before me, A.B., a justice of the
peace, in and for the said county, personally appeared the above named
________, ________, ________, ________, who are personally known to me
to be the identical persons whose names are affixed to the above
articles, as parties thereto, and they severally acknowledged the
instrument to be their voluntary act and deed.
Witness my hand the date aforesaid.
A.B.
Justice of the Peace.
Index
Acceptance and delivery, what constitutes, 242
Action, defined, 4
Actions, different kinds of, 165 166
Administrator, may dispose of lease, 155, 156;
can assign remainder of lease, 157
Adoption of children, form for or agreement for, 312.
See _Child, Adopted_
Adulteration of a commodity, 260
Advantage, incidental, 218
Agency, 6;
how created, 7;
post-office agency of offerer of contract, 69, 70
Agent, when authority must be in writing, 7;
cannot purchase principal's property, 8;
power affected by usage or custom, 8;
invalid act of, cannot be ratified, 9;
ratifying a forgery, 9;
cannot appoint a substitute, 10;
liability of, 10;
secret instructions to, 11;
cannot act for both parties, 12;
cannot receive profit from transaction, 12;
must be faithful, 12;
termination of relation of, 13, 14, 15;
duties of affected by insanity of principal, 13;
marriage of principal, 13;
must keep principal informed, 14;
liability of principal for acts and statements, 9, 10, 11, 12, 13, 14;
auctioneer owners, 16;
auctioneer purchaser's, 16, 1;
length of term of, 17;
for corporation, 26;
bailor as, 28;
broker as, 45;
may make chattel mortgage, 53;
how should sign checks, 58;
authority of to receive stock subscriptions, 77;
deception of releases subscriber, 77, 78;
corporation can do wrong through, 98;
can be appointed to examine books, 101;
has insurable interest in goods, 126;
state prosecutes through, 164
Agent, general, 6, 7, 8, 10;
partner is a, 198
Agent, special, 6, 7, 18;
insurance broker is a, 46
Agisters, 30
Alien, may become voluntary or involuntary bankrupt, 31;
woman who marries American, 62;
may be naturalized, 62, 63;
rights of, 63;
owes temporary and limited allegiance, 63;
non-resident, 63, 64
Animals, vicious, a nuisance, 258
Annoyances, temporary, 256
Apologies for slander and libel, 255
Appeals, court of, 4
Apprentices, and Compensation Acts, 268
Arbitration, 45
Assault and battery, a wrong, 250
Assent, mutual, basis of sales and contracts to sell, 227
Assets, disposition of in partnership failure, 202
Assignment. See _Bankruptcy_: _Patent_
Associations, beneficial, 38;
social and business, 38;
voluntary, 39;
incorporated, 39;
articles and rules, 39;
legal status, 39;
members not partners, 39;
liability to creditors, 39, 40;
rights of members, 40;
recovery of property by members, 41;
exemption from taxation, 41;
admission of members, 41, 42;
initiation, 42;
property rights of religions, 42;
benefits to sick members, 42, 43;
power to expel, 43, 44;
expulsion in subordinate lodges, 44;
restoration of members, 44;
withdrawal of members, 44;
liability of members for promised benefit, 44, 45;
cannot confer judicial power on its officers, 45;
cannot defer future controversies to arbitration, 45
Assumpsit, action of, 165
Attorney. See _Power of Attorney_
Auctioneer, 16;
owner's agent, 16;
purchaser's agent, 16, 17;
must bind purchaser, 16;
completes sale, 17;
authority, how conferred, 17;
a special agent, 18;
authority of, 18, 19;
has properties in goods to be sold, 45
Automobile, 19;
rights of owner,19, 20;
no superior rights, 20;
non-resident driver, 20;
license, 20;
liability of bailor, 20, 21;
responsibility of hirer, 21;
sale of, by hirer, 21;
obligation on hirer's part, 21;
owner's redress of car misused, 21;
duty of owner or hirer when carrying passengers, 22;
compensation of owner, 22;
liability for using without owner's consent, 22;
liability of a corporation hirer, 22;
liability for joy riding, 22;
speed of, 22;
exclusion of, 22;
"the law of the road," 22, 23;
rights of pedestrian, 22, 23;
passing each other, 23;
backing, 23, 24;
meeting in street, 23;
at intersecting streets, 24;
obstructions in road, 24;
driver must use care to avoid injury, 24, 25;
competency of driver, 25;
must be under reasonable control, 25;
driving in a fog, 25;
liability of owner, 25
See _Chauffeur_, _Garage Keeper_
Bacon, quoted, 45
Bailee, liability of a minor, 26;
corporation as, 26;
finder of lost property is, 26, 27;
rights of creditor of, 28;
liability of, 28, 29;
must be informed of all faults, 28, 29;
liability of bank as, 29;
liability of a safe deposit company as, 29;
usually a keeper only, 29;
exceptions, 29, 30;
return of property at end of bailment, 30;
lien for services, 30;
has insurable interest in goods, 126;
garage keeper is a, 133
Bailment, 20, 26-30
Bailor, not responsible for negligence of hirer, 20;
may bring action against innocent purchaser, 21;
corporation as, 26;
and bailee, 26;
rights of, 28;
not always owner of thing bailed, 28;
must explain all faults, 28, 29
Bank, custodian of lost property, 27;
liability as bailee, 29;
not legally bound to pay check to holder, 58;
agreement to pay check is with depositor, 58;
responsible for payment of checks, 59;
not responsible for checks carelessly written, 60;
liability for forged checks, 60;
is liable if makes payment on stopped check, 61;
life of a national, 73;
can retain dividend, 78;
liability of national shareholders, 78, 79;
directors of national, 87;
directors of, 88, 91, 94;
who loans money of, 88;
president, 91, 92;
national cannot always certify a check, 99
Bankrupt, voluntary and involuntary defined, 31;
filing of petition of voluntary, 33;
withdrawal of petition, 33;
what must accompany petition, 33;
filing of petition against, 33, 34;
must file schedule of property, 34;
first meeting of creditors, 34;
subsequent meetings, 34;
represented by trustee, 34, 36, 37;
proving and allowing claims against, 35, 36;
insurance policy of, 37;
discharge of, 38;
punishment of, 38
Bankruptcy, 31;
Federal Act 1898, 31, 37, 38;
courts of, 31;
voluntary and involuntary, 31;
acts of, defined, 32, 33;
procedure in, 33-38
Beneficial associations. See _Associations, Beneficial_
Benefit, conference of a, 218
Bid, authority of auctioneer to accept, 18
Bill and note broker, 45
Bill of exchange, definition, 196;
assignment of drawee's funds, 196;
similarity of, and endorsed note, 196
Bill of Lading, 48, 243
Bill of sale, form for, 281
Boarding house, liability of keeper of, 149
Bonds, government, equity does not require delivery of actual bonds
purchased, 120
Bottomry loan, 239
Broker, 45;
has no property in goods to be sold, 45;
must sell in principal's name, 45;
commission, 45, 47;
acts as agent, 45;
kinds of, 45, 46, 47.
See _Agency_
Brokerage, 45
Building, form for agreement for, 278.
See _Real Estate_, _Land_
Burglary, excused by drunkenness, 117
Buy and sell, regulations concerning capacity to, 228
By-laws, neglect of, in holding meeting, 81
Capital, 74, 78, 94
Carrier, 48;
kinds, 48;
authority of private, 48;
required to use great care, 48;
may modify common law by contract, 48;
can limit liability, 48, 49;
must carry all responsible passengers, 49;
regulations for carrying freight, 49;
have lien to hold freight, 50;
statutes regarding loss of life, 50;
liability for injuries, 50, 51;
sleeping car company not common, 51;
liability for loss of baggage, 51;
distinction between general and local express companies, 51, 52;
United States common, for mails, 52.
See _Mails_
Carrier common, duty to an intoxicated person, 118
Cattle, trespassing, liability of owner of, 257
Car, liability of principal for acts of conductor of, 11
Certificate of stock, form for, 301
Charities. See _Associations, Beneficial_
Charters, of national banks, 73;
perpetual, 73
Chattel mortgage with power of sale form for, 288.
See _Mortgage, Chattel_
Chauffeur, physical fitness of, 25;
employer's liability for, 25;
minor as, 57;
license, 57;
liability of employer for pay of, 57;
employer's liability for injury to, 57;
injured, when speeding, 57, 58;
liable for injury to employer, 58;
authority of, to make repairs in garage, 134.
See _Automobile_; _Garage_
Check, 58;
signing of, 58;
bank not legally bound to pay, to holder, 58;
payment of, when funds insufficient, 58, 59;
banks responsible for payment of, 59;
two rules relating to payment of, 60;
forged, 60;
holder of, should deposit immediately, 60, 61;
drawer may stop payment of, 61;
certified, 61;
when given in payment, 212
Child, adopted, 5;
rights of natural and adopted parents, 5;
rights of inheritance, 5
Children, must be supported by parent, 197;
who have property, 197;
protection of, by parent, 197;
of workmen, and Compensation Acts, 273;
form for agreement for adoption of, 312.
See _Adopted Child_, _Husband and Wife_
Church, form for subscription to build a, 299
Citizen, 62;
definition of, 62;
duty of, 62;
double allegiance of, 62;
state protects ordinary rights of, 62;
protection of, defined by constitution and Federal law, 62;
corporation may be included in term, 62;
who is, of United States, 62;
alien woman as, 62;
American woman loses rights by foreign marriage, 62;
alien may be naturalized, 62, 63
Coin, legal limit of, in payment, 211
Cold storage, 29
Compensation Acts, Workmen's, 266;
basis for computation of compensation under, 274
Complaint, action of, 166
Contract, 64;
kinds of, 64;
parties to, 65, 66;
consideration of, 66, 67, 68;
mutuality of, 68;
acceptance of, at time of offer, 68;
offer made on time, 68;
offer can be withdrawn, 68, 69;
acceptance after reasonable time, 69;
by correspondence, 69, 70;
acceptance of, by telegraph, 69;
withdrawal of, by telegraph, 69;
offers and rewards, 70, 71;
dates of, 71;
interpreted by law of place when made, 71;
execution of, 71;
damages for failure to execute, 71, 72;
effect of drunkenness on, 116, 117;
equity enforces, 118, 119, 120;
insurance policy is, 125, 126;
of insurance can be reformed by court of equity, 128;
responsibility of innkeeper may be changed by, 149;
life insurance, 167;
of a minor, 176;
to sell in the future, 227;
when necessary to be within, 242;
for manufacture not included in Statute of Frauds, 243;
form for bond to perform a, 280.
See _Deceit_, _Drunkenness_, _Quasi-Contracts_
Contract of service, 267
Contract, Quasi. See _Quasi Contract_
Contractors, independent, and Compensation Acts, 271
Conveyance of real estate, in Statute of Frauds, 242
Co-partnership, form for articles of, 305, 307
Corporate owners of vessels, 236
Corporation, cannot become a voluntary bankrupt, 31;
an involuntary bankrupt, 31;
definition of manufacturing, 31;
trading, 32;
through its officers can admit inability to pay debts, 32;
when paying benefits not exempt from taxes, 41;
liability for injuries, 41;
as mortgagee, 53;
may be included in term citizen, 62;
kinds of, 72, 73;
formation of, 73, 74;
perpetual charters, 73, 74;
has no heirs, 74;
continues through succession, 74;
purchase of stock by one member, 74;
capital of, 74;
reasons for forming, 75;
who can subscribe to stock of, 75;
fictitious subscriptions to stock of, 75;
stock certificates 76, 86;
capital stock increased 76;
rights of stockholders, 76;
preferred stock, 76;
subscriptions
to shares is a contract, 77;
cannot purchase own shares, 78;
has no lien on its stock, 78;
liability of shareholders, 78, 79;
appointment of receivers, 79;
assessments on stock, 79;
meetings, 80;
power of, 80;
charter of, 80;
majority shall rule may be modified, 80;
who may call meetings, 80, 81;
annual meetings, 81;
regular meetings, 81;
special meetings, 82;
notices waived, 82, 83;
who can vote, 83, 84, 85;
right of transferee, 85;
directors of, 86-93, 94, 96, 100, 101;
affairs handled by few men, 88; failure of, 92;
dividends, 92, 94-98;
wrongs of, 98;
liability for acts of agents, 98, 99;
owner of stock has insurable interest in goods, 126;
when private may make lease, 155;
municipal, and leases, 155;
may take lease, 155;
can sue for slander or libel, 253;
may be a devisee, or legatee, 264
Court, federal and state, 1, 4;
district, 4;
of appeal, 4;
of equity, 16, 118-122, 128;
United States district, 31;
civil, 164
Covenants, 104, 105, 122, 165.
See _Deeds_
Credit, letter of, form for, 309
Creditor, of bailee, 28;
assignment for benefit of, 32;
filing of petition against bankrupt, 33, 34;
claims of, 34, 35, 36;
election of trustee by, 34, 36;
right to vote at meetings, 35;
may object to discharge of bankrupt, 38;
liability of beneficial associations to, 39, 40;
several may join in giving mortgage, 53;
attachment has insurable interest in goods, 126
Crime, drunkenness as excuse for, 117;
how prosecuted, 2, 3.
See _Husband and Wife_, _Tort_
Curtesy, 101, 102
Custom, when no defense to chauffeur, 58;
liability of innkeeper changed by, 149.
See _Usage_
Damages, nominal and compensatory, 253
Death, of principal or agent, 15;
of stockholder before transfer, 82;
of partner, 85;
of husband, 114;
of homesteader, 136;
separation agreement cannot be set aside by, 144;
of ward terminates lease, 155;
lease made by wife terminated by husband's, 155;
of mortgagor, 182, 183;
of partner, 201;
of inventor, 206;
of a contractor, 223;
of master of vessel, 239;
of workman, 274
Debts and Statutes of Limitation, 244;
revival of, 244, 245
Deceit, 102;
when seller not liable, 102;
purchaser of land not liable, 103;
a wink not deception, 104
Decisions, highest court, 1
Deed, 7, 104;
several, used in land deal, 104;
warranty, 104;
what warrantor agrees to do, 104, 105;
encumbrances, 105;
indenture, 105;
release or quit-claim, 106;
poll, 106;
use of seal, 106;
witnesses, 107;
lease, 107;
completed before delivery, 107;
executor of, 107;
when must be read, 107;
delivery essential, 107, 108;
should be recorded, 108, 109;
acknowledgment, 109, 110;
execution of, by married woman, 109, 110;
Commissioner of, 110;
correction of mistake, 110;
land must be bounded, 110, 111;
equity compels delivery of, 119;
of warranty, form for, 282, 283;
of indenture, form for, 284;
of quit-claim, form for, 285, 286;
of mortgage, form for, 287;
of mortgage with power of sale, form for, 287;
of mortgage on goods and chattels, form for, 289
Defenses, in actions for slander and libel, 254
Delay in telegraph messages, 246
Dependents of workmen, and Compensation Acts, 272
Deposits, how made by agent, 12.
See _Bank_; _Check_
Desertion, its effect on homestead, 136
Devise of lands, 265
Devisee, of mortgaged land, 182;
who may be a, 263, 264
Director, of corporation, 86-93, 94, 96, 100
Discomfort acts of, wrongs, 256
Dividends, 94-98, 125.
See _Corporation_
Divisional tree, law relating to, 113
Divorce, effect of on dower right, 116;
effect of on homestead, 136;
for what causes granted, 144, 145;
absolute, 146;
legal effect of, 146, 147.
See _Husband and Wife_
Domicile, of bankrupt, 31;
husband's becomes wife's, 139
Dower, 113;
defined, 113;
paramount to claims of husband's creditors, 113;
mortgage has preference, 113;
legal marriage necessary, 114;
assignment of, 114;
may be barred, 115;
non-existence of, 115;
in exchanged lands, 115;
rights of partner's widow, 115;
can be released, 116;
effect of divorce, 116
Drunkenness, 116;
effect of, on contracts, 116, 117;
as excuse for crime, 117;
liability of sober party, 117, 118;
responsibility of common carrier, 118;
slander, 118
Earnings, the basis for computation of compensation, 274
Ejectment, action of, 166
Elevator, sale of grain in, 229
Employees, casual, and Compensation Acts, 270;
Federal and Compensation Acts, 271
Employer and employee, relations as to patents, 207, 208;
Compensation Acts, 266, 267
Enrollment, of vessels, 235
Equitable remedies, 118-122
Equity, court of, 3, 16, 118-122, 128;
law and, 3
Eviction, 160, 161
Exchange, bill of. See _Bill of Exchange_, _Note_, _Negotiable Paper_
Executor, authority to vote at corporate meetings, 84;
a foreign, 85, 208;
may dispose of lease, 155, 156;
can assign remainder of lease, 157;
when, gets mortgagor's interest, 182;
when heirs may require, to pay, 183
Explosives, liability of keeper of, 258
Express company, distinction between general and local, 51, 52
Factor, 123;
employed to sell goods, 123;
has a lien on goods, 123;
authority of, 123;
limitations on, fixed by principal, 123;
use of credit, 123;
cannot exchange goods, 123;
may insure goods, 123;
cannot compound claim, 124;
has insurable interest in goods, 126.
See _Agency_
Farm, tenant of, 157
Farm lease, form for, 295
Federal courts, 1
Federal employees, and Compensation Acts, 271
Finder, obligation of, as to lost property, 26, 27;
of property lost in hotel or railroad car, 27;
when has lien for services, 30;
See _Bailor_
Fire insurance. See _Insurance, Fire_
Fires, starters of, liability of, 258
Fixtures, 132;
defined, 132, 133;
law favors tenant, seller, mortgagor, 132, 133;
what tenant can remove, 162, 163
Food, warranty in sale of, 261
Forgery, ratification of, 9;
of signature to negotiable paper, 188;
in a telegram, 247.
See _Check_; _Negotiable Paper_
Forms, legal:
Agreement for sale of land, 277
Agreement concerning party wall, 277
Agreement for building, 278
Agreement for work and labor, 280
Agreement for lease, 293
Agreement to sell shares of stock, 302
Agreement for sale of physician's practice, 309
Agreement between merchant and traveling salesman, 311
Agreement for adoption of children, 312
Articles of co-partnership, 305, 307
Articles of incorporation, 318
Assignment of mortgage, 292
Assignment of lease, 298
Assignment of policy of insurance, 302
Assignment of patent right, 304
Bill of sale, 281
Bond to perform a contract, 280
Bond for payment of money, 305
Certificate of stock, 301
Chattel mortgage, with power of sale, 288
Claim of lien by workman, 279
Deed of indenture, 284
Deed of quit-claim, 285, 286
Deed of mortgage, 287
Deed of mortgage with power of sale, 287
Deed of mortgage on goods and chattels, 289
Deed of warranty, 282, 283
Lease, 293, 294
Lease, farm, 295
Lease of furnished rooms, 297
Letter of credit, 309
Notice of sale under mortgage, 291
Notice to quit, 299
Power of attorney, 299
Power of attorney, to transfer stock, 300
Release by ward of his guardian, 314
Subscription to build a church, 299
Transfer of shares of stock, 303
Will, 315, 316, 317
Frauds, Statute of. See _Statute of Frauds_
Furnished rooms, form for lease of, 297
Garage, keeper of a bailee for hire, 133;
owner's liability for car when in a, 133;
public, not a nuisance, 133;
lien of keeper of, for storage and repairs, 134;
care keeper of must use, 134;
liability of keeper of for negligence, 134;
keeper of not an insurer, 134;
keeper of must protect from theft, 134;
liability of keeper of for leaving car in alley, 134;
and for using car without permission, 135;
delivery of car by keeper of, 135;
liability of keeper of for delay in repairing, 135;
and for acts of servant, 135.
See _Automobile_, _Chauffeur_, _Bailment_
Gift, cannot be recovered, 218
Grain, sale of, in elevator, 229
Guardian, who can act as, 143;
may make lease, 155;
of a minor, 177;
may apply for a patent, 208;
form for release of, by his ward, 314
Habeas corpus, action of, 166
Health of employees in relation to Compensation Acts, 268
Highway, 112, 135, 218.
See _Automobile_
Homestead, agent's authority to sell, affected by owner's marriage, 14;
definition of, 135;
cannot be seized by creditors, 135;
head of family owning definition of, 135, 136;
effect of desertion and divorce on a, 136;
what land is included in, 136;
steps necessary to procure a, 136, 137;
residence required on a, 137;
liability of owner of, for debts, 137;
can be mortgaged, 137;
can be sold and other land bought, 137;
exemption from taxes, 137
Huddy, quoted, 22, 23
Husband and wife, 137;
marriage a contract, 137;
essentials of marriage, 137;
false representations, 137;
effect of deceit in obtaining consent, 138;
of compulsion, 138;
of insanity, 138;
legal age for marriage, 138;
void marriages, 138;
marriage license, 138;
marriage performed outside jurisdiction, 138;
common law marriage, 138, 139;
husband's domicile becomes that of wife, 139;
when wife can retain her domicile, 139;
husband's liability for wife's crimes, 139, 140;
wife still liable, 139;
cannot steal from each other, 140;
right to sue each other, 140;
wife's liability for husband's wrongs, 140;
alienation of affection, 140;
wife's right to retain and manage her estate, 141;
can appoint husband to act for her, 141;
may act for husband, 141;
and as executor, administrator or guardian, 141;
wife's right to sue and be sued, 142;
husband's liability for wife's debts, 142;
duty of husband to provide home, 142;
his right to defend wife, 142;
his duty to provide home, 142;
wife must live with husband, 142;
duties of husband and wife toward each other, 142, 143;
guardian of children, 143;
husband and wife may live separately, 143;
may divide property, 143, 144;
when separation agreement cannot be sustained, 144;
death and share of estate, 144;
right of wife to use husband's credit, 144.
See _Divorce_
Ice, liability for, on pavement, 162
Imprisonment, false, a wrong, 249
Imprisoned person, and Statute of Limitation, 244
Incapacity of workman, partial or total, compensation for, 275
Incorporation, form for articles of, 318
Indecent language in a telegram, 247
Indenture, 105;
form for deed of, 284
Indorsement, see _Negotiable Paper_
Infancy, period of, defined by-law, 65
Inheritance, adopted child, 5
Injunction, temporary and permanent 22;
against directors, 101;
against infringer of patent, 122;
to forbid tenants making alterations, 159
Innkeeper, 147;
persons must receive, 147;
persons must exclude, 147;
keeping of horses, 147;
liability for baggage, 147, 148, 149;
exempt from loss by fire, 148;
may make certain regulations, 148, 149;
keeper of boarding house not, 149
Insane person and Statute of Limitation, 244
Insanity, of principal, 13;
of agent, 13;
how affects bid at auction, 18;
of master of vessel, 240;
and wills, 264
Inspector, 83, 101
Insurance Broker, 45, 46
Insurance, fire, when liable for acts of agent, 6;
kinds of companies, 124, 125;
mutual company preferred, 124;
mutual plan protects against loss only, 125;
stock company pays dividends, 125;
insured must have interest in property, 125;
who has insurable interest, 126;
policy, as collateral security, 126;
policy void, 126;
policy a contract, 126;
standard policy, 126;
when is policy binding, 126, 127;
premium, 127;
policy may be assigned, 127;
when policy can be cancelled, 127, 130;
contract reformed, 128;
written and printed parts of policy, 128;
written application part of contract, 128;
interpretation of meaning, 128;
language of policy, 128, 129;
clerical errors, 129;
what policy covers, 129, 130;
when risk begins, 129;
misrepresentation, 129, 130;
concealment of facts, 130;
questions and answers a warranty, 130;
policy void, 130;
loss, total or partial, 130;
damage by water, 130;
from explosion, 131;
from theft, 131;
from lightning, 131;
from negligence, 131;
total loss, 131;
partial loss, 132;
open and valued policies, 132;
see _Agency_
Insurance, life, 167;
definition, 167;
validity of the contract, 167;
assignment of policy, 168, 172;
authority of general agent to vary the agreement, 168;
no contract until policy accepted by company, 169;
state requirements, 169;
delivery of policy, 169;
authority of general and special agents, 170;
payment of first premium, 170;
void under conditions contrary to public welfare, 170;
proceeds on which policy may be set aside, 171;
determination of beneficiary, 171;
date of commencement of risk, 172;
payment of premiums, 172;
reinsurance contracts, 173;
cancellation or surrender, 173, 174;
rescinding of a policy, 174;
surrender or cancellation value, 175;
conversion of policy, 175
Insurance money, provision for, in lease, 159
Insurance policy, of bankrupt, 37;
form for assignment of, 302
Insurer, garage keeper not an, 134;
innkeeper is, 147
Interstate Commerce Commission, controls interstate telegraph
business, 248
Invention, patentable or not, 202, 203;
requirements necessary to obtain a patent, 203;
element of novelty, 204;
prior publication, 204;
usefulness, 204;
exercise of inventive power necessary for a patent, 205;
reduction of to practice, 206;
employer presumed to be the real inventor, 208;
inventor must apply for a patent, 208;
specification of, 208;
improvement on, 209
Jewelry, keeping of, by bailor, 29;
see _Carrier_, _Innkeeper_
Key, delivery of, constitutes delivery of goods, 242
Laborers, farm, and Compensation Acts, 268
Lake, title to land under and around, 112
Land, title to, bounded by navigable river, 112;
equity can forbid injuries to, 121;
equity will enforce covenants, 122;
devise of, in wills, 265;
form for agreement for sale of, 277
Land, agreement to purchase, 15;
must be in writing, 15;
how signed, 15;
how complete, 15;
oral agreement, 15, 16;
part payment, 16;
period of option to purchase, 16;
see _Contract_, _Statute of Frauds_
Land license, see _License_
Land owner, liability of, for nuisances on his property, 257;
for safety of persons and children, 259
Landlord, see _Lease_
Larceny, 27
Law, common, 1, 2, 3;
statute, 1, 2;
courts of, 4;
civil and criminal, 2, 164;
and equity, 3, 5;
insolvency, 31
Lawsuit, mode of conducting, 164
Lease, 151;
defined, 151;
oral or written, 151, 152, 153;
liability of lessee, 151, 159;
agreements in 152, 153;
year to year tenancy, 153;
term, defined, 153;
for a future period, 153, 154;
description of premises, 154;
distinction between, and agreement, 154;
valid, 155;
made by married woman, 155;
private corporation may make, 155;
municipal corporation restricted, 155;
corporation may take, 155;
executor may dispose of, 155, 156;
trustees may make, 156;
partner cannot make, 156;
for what can be made, 156;
ratification, 156;
construction of, 156;
presumes care on part of tenant, 156, 157;
rights of a mill tenant, 157;
rights of a farm tenant, 157;
assignment of, 157;
sublease, 157;
lessor may part with his interests in, 158;
not a warranty of good condition, 158;
lessor not required to make repairs, 158;
agreement to make repairs, 158, 159;
agreement to rebuild, 159;
alterations by tenant, 159;
renewal, 159;
rent, 160;
eviction, 160, 161;
land rented on shares, 161;
of parts of building separately, 161;
liability of lessor, 161, 162;
removals by tenant at expiration of, 162, 163;
form for agreement for, 293;
form for a, 293; 294;
form for a farm, 295;
form for assignment of, 298;
of furnished room, form for, 297
Legal remedies, 164-166
Legatee, property given to, disposition of, 37;
and cash dividends, 97, 98;
and stock dividends, 97, 98;
definition of, 263;
who may be, 264;
see _Will_
Lessee, see _Lease_
Lessor, see _Lease_
Letter of credit, form for, 309
Libel, is a wrong, 250, 251, 252;
and slander, 252
License, land, 149;
defined, 149, 150;
for what granted, 150;
granted informally, 150;
revocation, 150, 151;
duty of licensor to invitee, 151;
of vessels, 236
License to operate automobile, 20
Lien, of agister, 30;
of livery stable man, 30;
of groom, 30;
of freight carrier, 49;
on bank stock, 78;
of factor, 123;
of garage keeper, 134;
of innkeeper, 148;
on real estate, 180, 181;
form for claim of, by workman, 279
Life Insurance, see _Insurance, Life_
Limitation, Statutes of, 243, 244, 245
Livery stable, no lien on animals, 30
Lodging house, liability of keeper, 149
Lost property, 26-28
McClain, Justice, quoted on life insurance, 168, 174
Mail, United States common carrier for, 52;
United States is not liable for loss of, 52;
private express cannot be established for, 52;
liability of postmaster and assistant and clerk, 52;
liability of driver of, 52;
assent in contracts sent by, 69, 70;
delivery of insurance policy, 169;
see _Negotiable Paper_
Malice, liability of corporation for, 99
Mandamus, issue of, 81;
action of, 166
Manufacture, contract for, not included in Statute of Frauds, 243
Manufacturer, liability of, 258
Margin, sale of stock on, 235
Marriage, 13, 14, 115, 137;
see _Husband and Wife_
Massachusetts courts, decision in respect to adopted child, 5
Masters, of vessels, law governing employment, 239;
duties and successors of, 240;
authority of, 240
Meetings, 83-86
Merchant, duty of, towards public, 151;
and traveling salesman, form for agreement between, 311
Merchandise Broker, 45, 46
Messages, telegraph, should not be made public, 247;
may be produced by order of a court, 247;
criminal offense to divulge, 247;
to open or read a sealed, 247;
repeated and unrepeated, 248
Minor, limited power of, 7;
bid made by, 18;
as bailee, 20;
cannot become a voluntary bankrupt, 31;
as mortgagee, 53;
as chauffeur, 57;
citizenship of, 62;
ability of to sign contracts limited, 65;
period of infancy of, fixed by law, 65;
cannot subscribe to stock, 75;
cannot be held for note, 91;
cannot make legal deed, 107;
lease made by, void, 155;
contracts of a, 176;
necessaries and luxuries supplied to a, 176;
disaffirmation of contract of a, 177;
fraudulent contract of a, 177;
can avoid sales contracts, 228;
and Statute of Limitations, 244;
may be a devisee or legatee, 264;
as employee in Compensation Acts, 268
Morawetz, quoted, 88, 89, 100
Mortgage, creditor, can force contract to give, 120;
kinds of, 177;
may cover future advances, 178;
improvements covered, 178, 179;
not an absolute conveyance, 179;
not changed by contemporaneous agreement, 179;
with power of sale, 179, 180;
how the power must be executed, 180;
mortgagor cannot purchase property sold, 180;
lien of vendor for purchase money, 180;
how subsequent purchaser is affected, 180;
notice of vendor's lien, 181;
mortgagor real owner, 181;
both parties may insure premises, 181;
rights of several mortgagees to same property, 181;
right of deviser to money due on, 182;
mode of foreclosure on a, 182;
payment by joint contributors to discharge, 183;
who can redeem a, 183;
payment by executor, 183;
rights of mortgage of vessel, 238;
form for deed of, with power of sale, 287;
form for deed of, 287;
form for notice of sale under, 291;
form for assignment of, 292;
see _Deed_, _Chattel Mortgage_, _Shipping_
Mortgage, Chattel, 52;
definition of, 52, 53;
form of, 52;
who may make, 53;
creditors may join in giving, 53;
description of property, 53, 54;
may be given for future advance of money, 54;
to render secure from creditor 54;
Statutes of, 55, 56;
what is included in, 55;
rights of mortgagee, 55, 56;
form for, with power of sale, 288;
form for deed of, 289;
see _Mortgage_
Mortgagee, 55, 56;
has insurable interest in goods, 126
Mortgagor, 55, 56;
favored by law in regard to fixtures, 133
Motorist, non-resident, 20
Naturalization, 62
Negotiable Instruments Law, 213
Negotiable paper, definition, 183-197;
see _Note_, _Promissory_
Newspapers, offers and rewards in, 70, 71
Note, promissory, definition, 183;
requirements for a, 183;
unqualified promise in a, 184;
payable on a contingency, 184;
payable at a fixed future time, 184;
dating of a, 184;
seal of a, 184;
payable on demand, 184;
overdue, 185;
payable to order; 185;
payable to bearer, 185;
ante or past-dated, 185;
title to, acquired from date of delivery, 185;
a wrongly dated, 186;
authority of holder to fill blanks, 186;
incomplete until delivery, 187;
mode of delivery, 187;
ambiguity of a, 187, 188;
signature to a, 188;
signature by agent, 188;
a forged, 188;
forged indorsement on a, 188;
consideration for a, 189;
accommodation party to a, 189;
negotiation of a, 189;
negotiation by delivery of a, 189;
by indorsement and delivery, 189;
kinds of indorsement of a, 189;
striking out indorsement of a, 189;
indorsing to bank or cashier, 190;
misspelled or incorrect indorsement, 190;
holder in due course, 190;
bad faith in negotiating, 190, 191;
agreement of maker, 191;
liability of indorser, not a party to, 191;
presentment of a, for payment, 191, 192, 193;
exclusion of days in reckoning due date of, 193;
payable at bank, 193; notice of dishonor of a, 193, 194;
notice of, to joint parties, 194;
notice of, to address as directed, 194;
notice of waived, 195;
alterations in a, 195;
memorandum on a, 195;
similarity of indorsed, and bill of exchange, 196;
given in payment, 212;
and Statute of Limitations, 244
Non-resident Alien, 63, 64
Notice, of sale under mortgage, form for, 291;
of meetings, see _Corporation_;
to quit, form for, 299
Nuisances, private, are wrongs, 255
Obligations, various, included in Statute of Limitations, 245
Officer, public, liability of, 52
Option, to purchase land, 16
Owners, in common, of vessels, 236, 237
Parent, natural and adopted, 5;
cannot lease land of minor child, 155;
of a minor, 177;
obligations of, toward child, 197;
cessation of, 197;
protection of child by, 197;
use of child's property by, 197;
and child, relations between, 197;
see _Adopted Child_, _Husband and Wife_
Partner, a member of beneficial association not a, 39;
what surviving may do, 85;
may waive notice of corporate meeting, 85;
dower rights of widow of, 115;
cannot lease partnership land, 156;
non-investing, not liable for debts, 198;
a general agent, 198;
limitations of authority of a, 199;
silent or secret, liability of, 199, 200;
general or special, 200;
illegal contract made by a, 201;
death of a, 201;
succession to by executor, 201;
retiring, 201;
liquidating, authority of, 202
Partnership, rules for termination of agency, 14;
liability of members, 75, 78;
stock owned by, represented by partner, 85;
contract to form, cannot be enforced, 120;
member of, cannot make lease, 156;
between tenant and landlord, 161;
in a single transaction, 198; Act, 198;
liability of non-investing partners in, 198;
can hold any kind of property, 198;
partners in, are general agents, 198;
limitations of authority of partners in, 199;
reception of a new member in, 199;
formed by definite agreement in writing, 199;
silent or secret partners in, 199, 200;
limited liability, 200;
dissolution of a, 201;
death of a partner in, 201;
retiring partner in, 201;
failure of, disposition of assets, 202;
liquidating partner in, 202
Party wall, form for agreement concerning, 277
Passenger, duty of automobile owner or hirer, in carrying, 22;
compensation for carrying, 22;
see _Carrier_
Patent, 202;
design, 203;
invalidation of an American by a foreign, 204;
prior publication for a, 204;
defeat of on ground of lack of novelty, 204;
must be useful to get a, 204;
exercise of inventive power necessary for a, 205;
to whom can a be issued? 206;
a joint, 207;
must be issued in name of real inventors, 207;
rights of employee with a, 207;
may be issued to assignees, 208;
inventor must apply for a, 208;
specification of invention to get a, 208, 209;
duties of inventor to get a, 209;
duties of commissioner and examiner before granting a, 210;
right of appeal if not granted, 210;
infringement of, and injunction to prevent, 211;
form for assignment of right, 304
Pawn Broker, 45, 47
Payment, when can double be required, 9, 211;
legal forms of, 211, 212;
note or check given in, 212;
applications of general on several debts, 212;
receipt not conclusive evidence of, 213;
effect of a seal in a receipt for, 214;
on receipt of documents, 235;
partial, of purchase money completes sale, 243;
partial, revives debt barred by Statute of Limitations, 245;
of money, form for bond for, 305
Peck, quoted, 117
Pedestrian, rights of, 22
Physician, admission of, to beneficial associations, 41;
form for agreement for sale of practise of a, 309
Pledgee, authority of, 7;
has insurable interest in goods, 126
Pledgor, of stock, 85, 86
Policy, insurance, 168-176;
form of assignment of, 302;
see _Insurance, Fire_; _Insurance, Life_
Poll deed, 106
Possession and control, transfer of constitutes delivery, 243
Postmaster, liability of, 52
Post office, is agency of offerer of contract, 69, 70
Pond, title to land under and around, 112
Power of attorney given to an agent, 7;
given by a homesteader, 14;
revoked by woman's marriage, 14;
form for, 299;
to transfer stock, form for, 300
Precedent, nature of, 1
Preference, defined, 32
Preferred stock, see _Corporation_
Premium, see _Insurance, Life_; _Insurance, Fire_
Prescriptive Rights, 214;
to land, how gained, 214;
how determine whether or not fully acquired, 214;
to light and air, 215;
to use of water, 216;
to lateral support of land, 217;
excavations, 218
Price, fixing of, in a sale, 230;
determination of reasonable, 231
Promise to pay a debt, renewal of, 244, 245
Property, lost, 26, 27;
fraudulent transfer of, 32, 33;
real and personal, in wells, 263
Prosecution, liability of corporation for, 99;
malicious, is a wrong, 249
Prosecutor, State as, 164;
injured person as, 164
Publication, prior, of an invention, 204
Public Officers, and Compensation Acts, 272
Purchasers of vessels, liability of, 238
Quasi Contract, 218;
definition, 218;
gift cannot be reclaimed, 218;
recovery for incidental advantage to another, 218, 219;
for service rendered as gratuity, 219;
for goods accepted without intended payment, 219;
for perished property, 220;
premium on insurance policy, 220;
recovery in case of indefinite promise, 220;
contract not executed as law requires, 220, 221;
especially Statute of Frauds, 221, 222;
recovery for use of unpaid for land, 222;
recovery impossible in case of no benefit, 222;
recovery impossible by taking advantage of one's own default, 223;
recovery for loss in course of alteration and repair, 223;
in case of illness or death of contractor, 223;
in wagering contract, 224;
in contracts made on Sunday, 224;
on partnership note given for benefit of partner, 224;
of goods delivered by carrier to wrong person, 224;
of payment made by mistake, 225;
when consideration has totally failed, 225;
voluntary payment, 225;
recovery of check not covered by deposit, 225;
goods sold as own which are not, 225;
goods that are worthless, 225;
forced benefit cannot be recovered, 226
Quit, form for notice to, 299
Quit-claim, 106;
form for deed of, 285, 286
Quo warranto, action of, 166
Race track news by telegraph, 217
Railroad receivers, 8
Ratification, defective notice of meeting may be cured by, 83
Real Estate, broker, 45, 46;
deeds, 101-112;
monuments, 111;
boundaries of, in cities, 111;
non-navigable stream, 111;
tidal navigable stream, 112;
natural or artificial pond as boundary, 111, 112;
title to land in public highway, 112;
liability of examiner of title, 112, 113;
equity awards money for failure of contract, 120;
equity will enforce covenants, 122;
seller favored by law in regard to fixtures, 132, 133;
conveyance of, in Statute of Frauds, 242.
See _Lease_
Receipt not conclusive evidence of payment, 213
Receiver, duties of, 79;
has insurable interest in goods, 126.
See _Corporation_
Registration of vessels, 235
Release, 106;
by ward of his guardian, form for, 314
Rent, 160
Replevin, action of, 165
Representation, as distinguished from warranty, 260
Retraction, of slander and libel, 255
Revocation of wills, 266
Right of way, 214;
to light and air, 215;
to use of water, 216;
to lateral support of land, 217
Riparian owner, rights of, 112
Roads, public, 19
Safe Deposit Company, as bailee, 29
Sale, 227;
future contract to sell and present sale, 227;
based on mutual assent, 227;
executory, 227;
executed, 227;
based on mutual assent, 227;
may be conditional, 227;
regulation of capacity to buy and sell, 228;
contracts of a minor, 228;
Sales Act and Statute of Frauds, 229;
limit of enforcement of sale, 229;
an undivided share, 229;
specific goods, 230;
fixing of price in a, 230;
determination of reasonable price, 231;
and warranties, 231;
satisfaction of buyer necessary, 231;
implied warranty in a, 232, 233;
transfer of ownership in a, 233;
delivery and acceptance in a, 234;
delivery of goods or documents on payment, 234;
speculative stock, 235;
of goods, wares, and merchandise in Statute of Frauds, 242;
various modes of completing, 243;
of land, form for agreement for, 297;
Bill of, form for, 281;
form for notice of, under mortgage, 291
Sales Act, 17, 228;
and undivided share of goods, 229;
and Statute of Frauds, 229;
and specific goods, 230;
fixing of price in, 230;
determination of reasonable price, 231;
satisfaction of buyer necessary, 231;
warranty and implied warranty, 232, 233;
delivery and acceptance, 234;
delivery of goods or documents on payment, 234
Seal, use of, 106;
effect of, in a receipt for payment, 214
Seamen, of vessels, laws pertaining to, 241
Separation, between husband and wife, 143, 144
Servants, domestic and Compensation Acts, 269
Service, contract of, 267
Shareholder, rights of, 101.
See _Corporation_
Shares, land rented on, 161;
of stock, form for agreement to sell, 302
Shipping, 235. See _Vessels_
Shipping Broker, 45
Slander, liability of corporation, 11, 12, 99;
in case of drunkenness, 118;
and libel, action of, 166;
and libel, distinctions between, 252;
is a wrong, 250, 251;
definition of, 253
Sleeping car, 51
Snow, liability for, on pavement, 162
Spring of water, restrictions of owner, 217
Statute of Frauds, and auctioneer, 17;
and lease, 152;
and recovery on contract, 221, 222;
and sale of goods, 229, 242, 243;
and delivery and acceptance, 242;
and sale of real estate, 242;
and manufacturer, 243
Statutes, 1, 2;
pertaining to lost property, 26, 27;
to beneficial associations, 39;
to pawn-brokers, 47;
limiting amount carrier must pay for lost life, 50;
regarding mail carrying by private express, 52;
pertaining to chattel mortgages, 55, 56;
imposing higher inheritance tax for non-resident aliens, 63;
allowing individual to form corporations with legislative aid, 73;
pertaining to married women's subscriptions to stock, 75;
provisions for corporations, 80, 81, 83, 99;
controlling bank directors, 92;
fixing liability of parties, 105;
requiring two witnesses to deed, 107;
modifying dower rights, 116;
giving insurer right to cancel fire insurance policy, 127;
providing for total loss, 131;
exempting innkeepers from loss by fire, 148;
changing responsibility of innkeeper, 149;
in New York relative to termination of leases, 154
Statutes of Limitation, claim barred by, and bankruptcy, 35;
application of, to directors, 90;
operation of, to cancel debt, 213;
various provisions, 243, 244, 245
Stock, 75;
who can subscribe to, 75;
fictitious subscriptions, 75;
certificates, 76, 86;
capital increased, 76;
preferred, 76;
subscription to, a contract, 77;
corporation cannot purchase own, 78;
corporation has no lien on its, 78;
national banking law, 78;
assessments on, 79;
majority shall rule may be modified, 80;
purchaser of, should give notice to company, 82;
sale of, 83;
trustee legal owner, 84;
executor can vote, of testator, 84, 85;
administer can vote, 85;
owned by partnership represented by partner, 85;
seller and purchaser, 85;
pledgor and pledgee, 85, 86;
transferee, 85;
dividends, 94;
owners of, can examine books, 101;
equity compels delivery of stock, 119, 120;
owner of, in corporation has insurable interest in goods, 126;
speculative sales of, 235;
form for power of attorney to transfer, 300;
certificate, form for, 301;
form for agreement to sell, 302;
form for transfer of, 303.
See _Corporation_
Stolen property, resale of, 261
Strike, excuses telegraph company for delay, 246
Sub-agent, 10, 15
Sublease, 157
Subscription to build a church, form for, 299
Subtenant, 157
Taxes, of beneficial associations, 41;
on homestead, 137
Telegraph, 246, 248;
not a common carrier, 246;
must serve all who apply and offer to pay, 246;
cannot discriminate against another telegraph company, 246;
strike sufficient excuse for delay, 246;
can be penalized for delay in interstate business, 246;
prohibited by statute from limiting their own liability, 246;
may be prohibited from transmitting racetrack news, 247;
must transmit all messages except those containing indecent
language, 247;
may close at reasonable hours, 247;
may require sender to designate route of message, 247;
messages should not be made public, 247;
rules for within the state business differ from the rules for
interstate business, 247;
repeated and unrepeated messages, 248
Telephone, 246-248;
company cannot favor any telegraph company, 246;
cannot legally charge a telegraph company more than any other
patron, 246;
cannot discriminate against another telephone company, 246
Tenant, favored by law in regard to fixtures, 132.
See _Lease_
Term of lease, defined, 153
Terms, explanation of, 1
Testator, must possess sound mind, 262, 263, 264;
requirements of, 264
Title to bed of lakes, 112;
to real estate, 112, 113;
warranty of seller's when in possession of the goods, 261
Tort, action in, 166
Torts (or wrongs), 248-260;
definition, and examples, 248;
false imprisonment, 249;
malicious prosecution, 249;
assault and battery, 250;
defamation of reputation and character, slander, 250, 251;
must be brought to the knowledge of a third person, 251;
libel, vituperation, and abuse, 251;
distinctions between libel and slander, 252;
a corporation may be slandered, 253;
defenses in actions for slander or libel, 253;
apologies or retractions, 255;
private nuisances, 255;
motives not material, 255;
acts of discomfort amounting to nuisances, 256;
temporary annoyances, 256;
distinction between acts that annoy, and acts that injure, 257;
liability of land owner, 257;
trespassing cattle, 257;
vicious animals, 258;
starter of a fire, 258;
keeper of explosives, 258;
liability of a manufacturer, 258;
users of other persons' property, 259;
liability for acts of children, 260
Trades-unions, 38
Transfer of shares of stock, form for, 303
Tree, divisional, law relating to, 113
Trenchard, Justice, quoted, 112, 113
Trespass, action of, 165
Trespasser, 152
Trustee, appointment of, in bankruptcy, 36;
must give bond, 37;
removal of, 37;
death of, 37;
represents bankrupt debtor, 37;
duties, 37;
may make lease, 156;
powers of, 265
Undivided share of goods, and Sales Act, 229
United States, common carrier for mails, 52;
liability of, for conduct of a private mail driver, 52;
citizen of, defined, 62;
act conferring citizenship on alien women, 62;
naturalization laws, 62, 63
Usage, affects agent's power, 8;
sales of auctioneer, 18;
may take into account in insurance policy, 128;
in presenting check for payment, 192;
creates implied warranty, 233;
delivery of goods affected by, 234
Vendor, when can sell goods, 7;
may have lien for purchase money, 180;
notice of lien, 181
Vessels, must be registered, 235;
can be registered only by citizens of United States, 235;
sale to a foreigner, 236;
enrollment of, 236;
license of, 236;
title to, how acquired, 236;
when owned by corporations, 236;
owners or tenants in common of, 236:
limitations of authority of owners in common of, 236;
majority and minority of owners in common of, 237;
liability of purchaser of, 238;
mortgaging of, 238;
rights of mortgagor of, 238;
borrowing money on, 239;
appointment of masters of, 239;
duties, and successors of, 240;
authority of, 240;
seamen, laws pertaining to, 241, 242
Vituperation and abuse, a wrong, 251
Voluntary service, recovery for, 219
Voting, cumulating, described, 87, 88
Ward, death of, terminates lease, 155;
form for release from guardian, 314
Warranty, deed of, 104, 105;
and Sales Act, 231, 232, 233, 260;
distinction between and representation, 260;
statement made simply to awaken a buyer's interest not a, 260;
implied in all cases where vendor is an expert, 261;
in sale of food, 261;
of the seller's title, when in possession of the goods, 261;
when goods are sold by sample, 261;
form for deed of, 282, 283.
See _Deceit_, _Sale_
Water, use of stream of, 216.
See _Prescriptive Rights_
Widow, rights of, 136. See _Dower_
Wife, rights of in will, 266;
rights in marriage.
See _Husband and Wife_
Will, mortgagor dies without leaving, 182;
definition, 262;
requirements for testator, 262;
witnesses of, 262;
real and personal property in, definitions of, 263;
should be in writing, 263;
devisee and legatee in, 263;
must be in accordance with laws of states, 263;
grounds on which are attacked, 263;
made by the insane, 264;
requirements of, 264;
when several are made, 264;
authority of trustee of, 265;
devise of lands in, 265;
date on which take effect, 265;
rights of wife in, 266;
revocation of, 266;
forms for, 315, 316, 317
Williston, quoted, on stock sales, 235
Witnesses of wills, number required, 262
Woman married, limited power of, 7;
as mortgagee, 53;
and contracts, 65;
as subscriber to stock, 75;
husband of, entitled to curtesy, 101, 102;
execution of deed by, 109, 110;
and dower, 113;
lease made by, 155;
and Statute of Limitations, 244;
may be devisee or legatee, 264.
See _Husband and Wife_
Work and labor, form for agreement for, 280
Workmen's Compensation Acts, injury to chauffeurs, 57, 266;
who is compensated under, 267;
who is not, 267;
contract of service necessary, 267;
condition of health of no consequence, 268;
minors, apprentices, and farm laborers, 268;
domestic servants, 269;
casual employees, 270;
independent contractors, 271;
Federal employees, 271;
public officers, 272;
dependents of workers, 272;
children of workmen, 273;
earnings the basis for computation of compensation, 274;
death of workman, 274;
total and partial incapacity, 275;
form for claim of lien by, 279
Wrongs. See _Torts_, 248-260
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