45^t•UBKAKT6//' J^ LUJ^VIUlllJv^, '^J^DNVSO^^ ■%iUA)Nn3ViV' ^5vWEUNIVER% ^lOSANCEUf^ "^/SHJMNnmV s ^ AWEUNIVER5/A ^lOSANCEUr^ 5>JXUBRARY0^ ^lUBRARYO/^ ^<5U3NVS01^ %aaAINIl3ttV^ ^QWrn-i^"^ '^.aOJIlVDJQ'^ ^^WEUNIVERS/4 ^IDSANCElf/^ o — 'I I' £? >}9JlHVH8nA^ vi*r ^^ ^lUBRARYQ^ ^OFCAUFOft^ o ^&Aavaani^ ^OFCAllFOff^ ^^MEUNIVER% ^lOSANCEl^y. • ^m\sm^ ^loSANCEUr^ -5^1UBRARY(9/ ^>nMIBRARYQc ^fJUDNVSOl^ "^AaaAINfl-JV^^ '^.aOJIlVDJO^ %0JI1V3J0'»^ ^^WE•UNIVER5•/4 ^lOSANCEl^;^ 1^1 K^fel ^OFCALIFO/?^^ ^OFCAIIFO/?^ ■0/-. ^lUBRARY^k AV\tUNIVtKVA I; - ^ " o o'^ '^•aojiivDjo'^ ^lUBRARYQ/v ^AOdllVDJO'*^ ff^ \^.OfCAllF0M^ <^KA\EUKIVERy/^ ^lOSANCEl^^ '^TiUONVSOl^ '^/Ja3MNfl3WV^ aofcaiifo% ^ ^10SANCEI% % 5;^'EUBRARY(9/- l^ %a3AINn3^V^ "^^OJIIVDJO^ ^.tfOJIlVJJO'^ r3 oe aa < <^iU3NV■S0^^^ % ^lOSANCEU-JV. ^OFCAllFOff^ ^.OFCAIIFO/?^ .^WEUNIVER% %M3AiNft-3WV' ^CAavjiani^ >&Aavaaiii^ ^ o -^^iUBRARYQ^^ § 1 l<— ^ ^ 1^^ ^(PAHvaani'^ rice 21. 2s. cluth. (Vol. VII. in the Press.) Dale and Lehmann's Digest of Cases Overruled, not Followed, Disapproved, Approved, Distinguished, Commented on, and Specially Considered in the English Courts, from the year 1756 to 1886 inclusive, arranged according to Alphabetical Order of their Subjects ; together with Extract from tlie Judgments delivered thereon, and a complete Index of the Cases, in which are included all Cases Reversed, from the year 1856. By CHARLES WILLIAM MIT- CALFE DALE, M.A., LL.B., and RUDOLF CHAMBERS LEHMANN, M.A., assisted by CHARLES H. L. NEISH, M.A., and HERBERT H. CHILD, B.A., Esqrs., Barristers-at-Law. Royal Svo. 1887. Price 21. 10s. cloth. *#* For7ns a Supplement to " Chitty's Equity Index" and Fisher's Common Law Digest. Hamilton's Law of Covenants.— A Concise Treatise on the Law of Covenants. By G. BALDWIN HAMILTON, Esq., Bamstor-at-Law. Bemy Svo. 1888. Price 7s. 6d. cloth. *^* AU Standard Law Works are kept in stodTin law calf and other bindings. odri -M- ^-Y ^■' W^-^^£^. afeL-f^ THE DUTIES OF SOLICITOE TO CLIENT AS TO PARTNERSHIP AGREEMENTS, LEASES, SETTLEMENTS, & WILLS. P~4?; as/ 8 BY THE SAME AUTHOR. In Demy ^vo. (1883.)- Price \os. 6d. Cloth. PUBLISHED BY PERMISSION OF THE COUNCIL OF THE INCOR- PORATED LAW SOCIETY. THE DUTIES OF SOLICITOE TO CLIENT AS TO SALES, PURCHASES, & MORTGAGES OF LAND. Extracts feom Notices of the Work. '• His lectures are full of thought and accuracy, they are lucid in exposition, and -what is more, though unfortunately rare in law works, attractive in their style and composition." — Law Magazine. "A careful perusal of these lectures cannot fail to he of great advantage to students, and more particularly, we think, to young practising solicitors." — Laiv Times. "We cordially recommend the work to the stiident and young practitioner." — Laiv Xotes. " This is an excellently well written book, containing a clear and accurate statement of the law and a generous exposition of the practice which should be adopted by solicitors in all matters relating to their clients' interests as dealers in land. The book can he recommended to the student as a sensible and sound exposition of the duties of a soUcitor, and the way in which he should fulhl them." — Laiv Journal. STEVENS AND SONS, 119, Ch.v>'Cery Lane, London. PUBLISHED BY PERMISSION OF THE COUNCIL OF THE INCORPORATED LAW SOCIETY. THE DUTIES OP SOLICITOR TO {UWl AS TO PARTNERSHIP AGREEMENTS, LEASES, SETTLEMENTS, AND WILLS. BY EDWAPvD F. TURNER, SOLICITOR, LECTUTtEIl OS EEAL PROPERTY AND COXVEYASCIXG, AND OXE OF THE ASSISTANT EXAJII.NERS FOR HONOURS TO THE IXCOBPORATED LAW SOCIETY. LONDON : STEVENS AND SONS, 119, CHANCERY LANE, llato ^ubltsfjcrs anti 13oofesdIcrs. 1884 ■ 783152 T L0^^)0^' : ITOXTED BY C. F, EOWOETH, BEEAll'S BXjrLDIXGSj CHAJN'CEEY LAXE. PREFACE. This Yolume, like my previous work on the duties owed by a solicitor to his client in connection with Sales, Purchases, and Mortgages of Land, is a revised and enlarged version of a course of Lectures delivered at the Law Institution. The reason which has induced me, with the permission of the Council of the Incorporated Law Society, to publish it is identical with that by which I was before influenced ; viz., my belief that students in my own branch of the profession, while amply furnished with the means whereby to pass ex- aminations, do not possess adequate aids, in the shape of books, to the mastery of what may be termed the higher duties, as distinguished from the minute details, peculiarly attaching to the Conveyancing work of solicitors. My resolution has derived additional strength on the present occasion from the favourable reception accorded to my earlier effort. I have, as before, adhered to the mode of personal address originally adopted for purposes of oral delivery. Although, no doubt, to some extent anomalous in the altered circum- stances of a printed publication, it possesses, I think, the advantage of conveying the meaning in a more direct and forcible way to the reader. I must plead guilty to having designedly introduced some- what daring innovations upon the style of composition which has come to be regarded as inseparable from law books. «2 VI PREFACE. I have certainly had no desn-e to trifle with important and serious subjects; but I venture to hold, and have endeavoured to act upon, the view that, as medicines do not produce beneficial results in proportion to the degree of their un- pleasantness to the taste, so the driest educational books do not command the closest attention, or leave behind the most durable impressions on the student's mind. I am indebted to my friend Mr. Joseph Addison for many valuable suggestions with which he has most kindly favoured me both before and during the passage of this work through the Press. E. F. T. 2ra>j, 18Si. TABLE OF CONTENTS. FIRST LECTUEE. GENERAL INTRODUCTIOX PAGE 1—9 PARTNERSHIP ARTICLES. GENERAL OBSERVATIONS LEGAL COMPETENCY OF PARTNERS THE TWO CLASSES OF PARTNERSHIP ENTRANCE OF PARTNER INTO ESTABLISHED BUSINESS CREATION OF NEW PARTNER- SHIP BUSINESS — DRAFTSMANSHIP OF ARTICLES. PAGE Observations on Partnership Re- lation . . . . . Advice at Preliminary Stage First Principles of Partnership Law . . . . . Illustration of their Application . Practical Conclusion to be dra\^Ti from them . .... Knowledge needful for Draftsman How Partnership may be Created As to legal Competency of in- tending Partners : — Infants .... Lunatics Married Women Nature of intended Partnership Two primary Divisions 9 10 12 12 U 14 1.5 16 16 16 18 18 Principal distinction between them Position of New Partner as to Debts of Old Firm . Adjustment of Old Assets and Lia- bilities—Two Methods : First Method Second Method . . . Solicitor's function in these Mat- ters Transfer of Assets of Old Firm when taken over . . . . Old Firm's Liabilities . Negociation of Terms of Partner- ship . . . . . . Usual Length of Partnership Arti- cles — Whether necessary . Suggested true aim of Draftsman PAGE 18 18 21 23 25 25 26 26 27 30 YIU CONTENTS. SECOND LECTUEE. PAR TXERSHIP AR T/CZi'-S— continued. LENGTH OF TERM — RETIREMENT OF PARTNER — NATURE OF BUSI- NESS — PERSONAL STATUS MONETARY ARRANGEMENTS ACCOUNTS — TERMINATION AND ITS CONSEQUENCES — GOOD- "NVILL — ARBITRATION. PAGE 35 Date of Commencement Length of Term . . . . 35 Right of Retirement . . .36 Nature of Business . . . . 38 Personal Status and Acts of Part- ners ...... 41 Monetary Provisions . . . 42 Capital distinct from Profit and Loss 43 Capital Debt due from Firm . 43 Interest on Caj^ital . . .44 Accounts . . . . . 44 Dissolution of Partnership . .46 "What Events may bring it about . . . . . 47 Events ipso facto dissolving Partnership . . .47 Grounds for Dissolution made by Agreement i2)so facto Disso- lution 49 Events specially stipulated to dis- solve Partnership . . .49 Ho-w far Provisions for Contin- gencies desirable . . . 50 Consequences of Dissolution . 51 The general Law on this Subject. 52 PAGE Its Application usually inconvenient : To the Survivor . . .53 To the Representatives of De- ceased Partner . . . Express Provisions as to Conse- quences of Dissolution Where Business to be carried on after Dissolution . . . . Payment of Deceased Partner's Capital ..... Goodwill ... . . General Principles of Law as to Goodwill ..... Their Practical Result . . . Express Provisions as to Good- will — Considerations affecting them ..... Trade Name Trade Marks .... Partnership Premises Arbitration Clause : — Why desirable . . . How formerly regarded by Court .... How affected by 1 7 & 18 Vict. c. 125 68 Draftsmanship of this Clause 69 Concluding Observations . 70 CONTENTS. IX THIRD LECTUEE. LEASES AND AGREEMENTS FOR LEASES. THEIR RELATION TO EACH OTHER — DEDLCTION AND INVESTIGA- TION OF INTENDING LESSOR's TITLE — COMPETENCY OF PAR- TIES EFFECT OF LEGISLATION ON DRAFTSMANSHIP OF LEASES. Class of Leases dealt -with . Treatment of Sixbject . Distinctions between Leases and Agreements for Leases Practical Conclusions : — As to Leases by word of mouth . . . . As to wben Lease and when Agreement for Lease ap- propriate . . . . Hight to investigate intending Lessor's Title : — Former Law . . . . Present Law Practical Duties in this Matter : Of Lessor's Solicitor Of Lessee's Solicitor PAGE 75 75 78 83 84 85 85 PAGE 87 89 89 90 As to legal Competency of Lessor As to legal Competency of Lessee Amount of Rent ... Responsibility of Tenant Observations on Stat. 8 & 9 Vict c. 124 . The Conveyancing Act, 1881 General Words Language of Covenants : — " Executors and Adminis- trators " " Heirs" 95 "Assigns . . , .95 How affected by Conveyancing- Act, 1881 96 Other Provisions of the Act affect- ing Leases . . . .98 95 lOXTEXTS. FOUETH LEOTUEE. XBASES AXD AGREE3IEXTS FOR LEASES— continued. TERM OF LEASE — RATES AND TAXES FIXTURES — REPAIRS — AGRICULTURAL LEASES RESTRICTION ON ASSIGNMENT. PAGE As to Term of Lease . . .101 General Law as to Rates and Taxes : — Property Tax . . . . 103 Land Tax . . . .104 Sewers Rate . . . . 104 Statutory Rates . . .104 How Rates and Taxes generally adjusted : — Duty of Lessor's Solicitor . 106 Duty of Lessee's Solicitor . 106 General Law as to Fixtures : Trade Fixtures . . .113 Domestic Fixttu'es . . .113 Agi-icultural Fixtures . .114 Question whether Fixtui-e or no Fixture . . . . . 116 Duty of Lessor's Solicitor in con- nection with Provisions as to Fixtures 117 Duty of Lessee's Solicitor . .117 General Law as to Repairs : — Unfurnished House Fui'nished House Usual Repairing Obligations of Lessees The Proviso for Re-entry . . How affected by Conveyancing- Act, 1881 .... Construction of Double Covenant to Repair . .... Duty of Lessor's Solicitor in con- nection with Provisions as to Repairs . . . . .125 121 122 123 124 124 125 Duty of Lessee's Solicitor . . Agricultural Leases : — The Agriciiltiu'al Holdings Act, 1883 .... " Custom of the Country" . Covenant against Assignment Its Advantages to Lessor Its Disadvantages to Lessee As to Special Classes of Lease 126 127 128 129 130 131 132 CONTENTS. XI FIFTH LECTUEE. SETTLE2IEXTS. INTRODUCTORY MATTER. ANTE-NUPTIAL SETTLEMENTS OF REAL ESTATE — RIGHTS OF HUS- BAND ANJ) WIFE IN REAL ESTATE IRRESPECTIVE OF SETTLE- MENT — OBJECTS AND FRAME OF STRICT SETTLEMENT — HOW AFFECTED BY LEGISLATION. ANTE-NUPTIAL SETTLEMENTS OF REAL ESTATE CONVERTED AND OF LEASEHOLDS AND OTHER PERSONAL ESTATE — CONVERSION — ITS LEGAL AND PRACTICAL INCIDENTS — RIGHTS OF HUS- BAND AND WIFE IN PERSONAL ESTATE IRRESPECTIVE OF SETTLEMENT — OUTLINE OF SETTLEMENT. PAGE Classification of Settlemeuta . 137 Treatment of Subject . . .137 Legal Position of Husband and Wife where no Settlement : As to Husband's Real Estate 139 As to Wife's Real Estate .140 Strict Settlements of Real Estate : Their Object Their Contents . . . How affected by Settled Land Act, 1882 .... And by Conveyancing Act, Act, 1881 .... The Solicitor's functions with regard to them . Investigation of Title — how far to be carried Negociation of Terms of Real Es- tate Settlement . . . . 149 142 142 143 144 145 146 PAGE Real Estate settled as Personalty. 151 Settlements of Leaseholds . .152 Settlements of Personal Estate generally : — Their Characteristics . .155 Preliminary Points for Consi- deration . . . . 15G Negociation of Terms . .157 Rights of Husband in Wife's Per- sonalty where no Settlement . 159 Rights of Wife in Husband's Per- sonalty where no Settlement . 161 Outline of ordinary Settlement : — Vesting of settled Property in Trustees . . . .161 Importance of Notice in cer- tain Cases . . . . 163 Xll COXTENTS. SIXTH LECTUEE. SETTLEJfJEXTS—continncd. ANTE-NUPTIAL SETTLEMENTS — OUTLINE OF PERSONAL ESTATE SETTLEMENT (continued) — POINTS ARISING SPECIALLY ON SETTLEMENTS OF LIFE POLICIES AND FURNITURE — VOLUNTARY SETTLEMENTS — THE OFFICE OF TRUSTEE. Outline of Ordinary Settlement [contd.) : Trusts for Investment . . 167 Trusts of Income . 170 Trusts of Capital . . 170 Hotchpot .... . 170 Maintenance . 170 Advancement . . 172 Trusts in Default of Issue . 173 Appointment of new Trustees 175 Special provisions : — For Settlement of Wife' s after- acquired Property . .175 Variations of usiial Trusts of "Wife's Property . .179 Variations of usual Tiiists of Husband's Property . . 180 For Contingency of premature Death of either Parent . 182 For Investment of Tiiist Funds in Real Estate . . 185 Settlement of Life Policy : — Payment of Premiums . .187 Bonuses 188 Trusts of Policy *Ioney .189 .Statutory Settlement of PoUcy Settlement of Fiu'niture PAGE . 189 . 190 Voluntary Settlements : — ■ How they differ from other Settlements . . . . 191 How affected by 13 Eliz. c. 5 191 And by 27 Eliz. c. 4 . . 192 And by Bankruptcy Acts . .193 Necessity for perfecting' the Assurance of Settled Pro- perty .... 194 As to Power of Revocation . 195 "When they are desirable . .197 Their Contents . . .193 The Office of Trustee: — Its Liabilities . . . . 200 Difficulty of resigning it .201 "What Information proper be- fore accepting it . . .203 Custody of Trust Property . 205 Selection of Investment for Trust Funds . . .207 CONTENTS. XIU SEVENTH LECTUEE. WILLS. WHAT PROPERTY MAY BE LEFT BY THEM — WHO MAY MAKE THEM THE FORMALITIES ATTENDING THEM THE TAKING OF INSTRUCTIONS FOR THEIR PREPARATION. PAGE Right of Testamentary Disposi- tion 211 Competency of Testator : — Infants 212 Married Women . . .212 Lunatics . . . . . 214 Felons, Traitors and Outlaws 218 Formalities attending a Will : — Mode of Execution . .219 Witnesses . . . . 220 Attestation Clause . . 221 Obliterations, Interlineations and Alterations . . .222 Draftsmanship of Wills . . 225 Knowledge requisite for Drafts- man 22G Client's Instructions . . . 226 Will to speak from Death . .227 PAGE Information as to Testator's Pro- perty 228 Considerations affecting his Eeal Estate 228 Relevancy of his Marriage Settle- ment ..... Intended Objects of Will . . As to Limitation of Wife's In- terest to Widowhood Immediate Legacy to Wife . . Control over Capital — as to Sons and Daughters Adjustment of Interests between Wife and Children , . . Gifts to Childi-en as a separate Subject Provisions as to Business and Foreign Property Concluding Observations as to Will-making . . • . 235 229 229 230 231 231 231 233 234 XIV CONTENTS, EIGHTH LECTUEE. IFILIS —continued. MATTERS OF DRAFTSMANSHIP — GIFTS TO CHILDREN OR ISSUE — PERPETUITIES — ACCUMULATION OF INCOME — CONVERSION — THE WILLS ACT — PRECATORY WORDS — PERIOD OF PAYMENT OF ANNUITIES AND LEGACIES LEGACY DUTY ON ANNUITIES AND LIFE INTERESTS. PAGE Limitations to Childi'en or Issue . 239 Two main points arise ia framing them . . . . .240 Also third point of minor import- ance 241 First point — Ascertainment of Class 241 Propositions as to this stated and iUustrated 241 Second point — Period of Vesting . 245 Propositions on this point . Observations upon it . . . Knowledge needful as to these two points ..... Third point — Application of In- come where Vesting de- ferred : — Affected formerly by 23 & 24 Vict. c. 145 . And now by Conveyancing Act, 1881 .... Observations of Messrs. Wol- stenholme & Turner on latter Act considered Practical Matters for Drafts- man's Attention 245 246 248 249 250 251 253 The Law of Perpetuities : — Its Origin . . . . How finally Settled Its Incidents . ... Partial exception to it — the Cy-prh Doctrine The Law as to Accumulations of Income . . . . . Practical Lesson for Draftsman . The Doctrine of Conversion : — Actual Sale of Heal Estate may be deferred Provision for this contingency 259 Disposal of Hents pending Sale — in ordinary and ex- ceptional Cases The Wills Act: — Sect. 27 ... . Sect. 29 Sect. 33 .... Precatory Words . . . . Period for Payment of Legacies and Annuities .... Legacy Duty on Annuities and other Life Interests . . . 268 254 255 255 256 256 257 258 259 263 264 266 266 2C7 CONTENTS. XV NINTH LECTUEE. WIZ L S — continued . MATTERS SPECIALLY CONNECTED AVITH BEQUESTS OF HEAL ESTATE — THE LEX LOCI THE MORTMAIN ACTS — THE WILLS ACT CHARGES FOR PAYMENT OF DEBTS AND LEGACIES. MATTERS SPECIALLY CONNECTED WITH BEQUESTS OF PERSONAL ESTATE — THE TESTATOr's DOMICIL — EXECUTORS — LEGACIES — SATISFACTION. PAGE The lex Loci . . . .273 Land in Scotland . . . . 273 Land elsewhere . . . .273 The ]\Iortmain Act : — How judicially construed . 275 Practical Lessons for Drafts- man ..... 275 The Wills Act :— Sect. 26 .... 277 Sect. 28 278 Sect. 25 . . . .281 Sect. 30 281 Sect. 31 . . . .281 Sect. 32 281 Importance of Studying the Act 281 Charge of Debts or Legacies : — General Rule as to Source for Payment of Debts . .283 May be varied . . .283 Authorities conflicting on this Subject . . . . 283 True State of the Law . . 284 Provisions of 22 & 23 Vict. c. 35, ss. 14—17 . . . 285 Observations on these Sections 286 Practical Lesson for Drafts- man ..... 286 Bequests of Personal Estate . . 287 Their general Characteristics . 287 Law of Personal Estate follows the Domicil 288 Cases in which no Question of Domicil 288 Cases in which Question does arise 289 The Law of Domicil . . . 289 Definitions of Domicil . . . 289 Domicil not necessarily synony- mous with Residence . . . 290 PAGE 290 Modes of Acquiring it Its practical Application to Will of Personalty . . . . 291 Eules of Law on this Subject . 292 Practical Lessons : — Where Client domiciled Eng- lishman . . . . 294 Where Client domiciled Fo- reigner . . . .295 Where Client's Domicil in doubt 296 Probate 296 Legal Competency of Executors : — Infants 297 Married Women . . .297 Lunatics and Idiots alone incompetent . . . . 298 Corporation . . . .298 Choice of Executors . . .299 Powers of and Protection to Exe- cutors and Trustees : — 22 & 23 Vict. c. 35, s. 31 . 300 23 & 24 Vict. c. 145, s. 30 . 301 Conveyancing Act, 1881, s. 37 301 General Result of this Legis- lation 302 Legacies of Personal Estate : — General Legacy . . . 304 Specific Legacy . . . 304 Demonstrative Legacy . . 305 Practical Lessons . . . 306 The Doctrine of Satisfaction . 309 When it arises as to Wills : — (1) Gifts subsequent to Will . 310 (2) Gifts previous to Will . 310 (3) Legacy to Creditor . .312 Practical importance of mastering this Doctrine . . .314 TABLE OF CASES. Anstruthee v. Chalmer, 295 Arundel v. Bell, 59 Ashbumer r. Macguirc, 303, 3U4 Bedfoed Union, Guardians of r. Bed- ford Improvement Commissioners, 106 Belchier, Rv parte, 302 Buckland f . Butterfield, 113 Cadell v. Palmer, 255 Clarke v. Glasgow Assurance Co., 127 Cleather v. Twisden, 1 3 Darke, In h., 298 Dench r. Dench, 224 Doe V. Ludlow, 278 Dowson V. Earle, 127 Elwes r. Mawe, 114 Evans v. Taylor, 298 Few v. Perkins, 125 Eraser v. Ehrensperger, 70 Freme v. Clement, 281 George, In re, 249 Godfrey, In re, Godfrey v. Faulkner, 302 Hampshire v. Wickens, 82 Hartley v. Hudson, 108, 111 Heniy v. Annstrong, 196. Jones v. Owens, 302 Julius V. The Bishop of Oxford, 68 Langston r. Ollivant, 207 Luiy V. Pearson, 69 Luxmore v. Robson, 127 Paxmee v. Earith, 106 Palmer v. Halford, 255 Patman v. Harland, 85 Payne v. Burridge, 108, 109 Payne r. Harris, 127 Pennell v. Walker, 69 Phillips V. Mullings, 195 Poole's Case, 113 Porter v. Drew, 120 Pye, Ex parte, 310 EoBEETSON V. Broadbent, 304 Speight, In re, Speight i\ Gaunt, 302 Spencer's Case, 95 Sutton v. Sadler, 215. Talbot v. Duke of Shrewsbury, 312 Thatcher's Trusts, In re, 254 Thellusson r. Woodford, 256 Turner v. Major, 64 Wallis r. Hirsh, 69 Walsh V. Lonsdale, 80 Waters v. Taylor, 67 Wheatley v. Westminster, &;c. Coal Co., 69 Wigglesworth v. Dallison, 128 Wilkinson v. Duncan, 263 Wilson V. Finch Hatton, 122 Wilson V. Whateley, 118. Wormald v. llaitland, 147 Page 141, line 17 — For ERRATUM. ' 32 & 33 Vict," read " 33 & 34 Vict." FIRST LECTURE. INTEODUCTORY MATTER. f rRELIMINARY ADVICE. LEGAL COMPETENCY OE INTEND- ING PARTNERS. PARTNERSHIP ARTICLES. THE TWO CLASSES OF PARTNER- SHIP :— (A) ENTRANCE OF NEW PARTNER INTO ESTABLISHED BUSINESS. (B) CREATION OF NEW P.VRTNER- SHIP BUSINESS. DR.XJ'TSMANSHIP OF ARTICLES. FIRST LECTURE. Ix selecting the subject-matter of these Lectures I pur- Introductory, posely, and for very ohvious reasons, chose ground widely removed from that of the Lectures, which, by the favour of the Licorporated Law Societj^, I delivered on a previous occasion (a). But I also purposely, and for reasons which will, I hope, commend themselves to you as we proceed, looked at my new subject from my old point of view, and as I was at some pains to explain in my first course of Lectures what that point of view was, I will preface this Lecture by repeating the sub- stance of a few observations of a general or introductory character of which I before made use. I do so because they strike as clearly as I am able to do the key-note of my method of lecturing, and will, I think, enable us to turn to our subject with a better mutual understanding than would be the case if I were to plunge in mcdias res at once. At the commencement of my first Lectm'e I said : — "In preparing the com^se of Lectures of which I am " about to deliver the first, I considered at the outset " somewhat anxiously how I inight best hope to attract " the attention of all my listeners. I felt that if I were *' to make at starting some such observation as that an " estate in fee simple is an estate to a man and his heirs, " and is the nearest approach to the absolute ownership " of land of which the law theoretically permits, I should " probably not be adding to the stock of knowledge («) See Turner's Duties of Solicitor to Client tis to Sales, Pui"- cliases, and Mortgages of Laud. 15 2 INTRODUCTORY. " wliicli you already possess. On the other hand, if I . " w.ere to go to the opposite extreme and cite without " explanation some complicated passage taken, let us " say, from Mr. Lewis's book on Perpetuities, I should, " perhaps, not -s^Tong some among you who may not " have been travelling so long on the highway of the " law as others, or who, from a variety of causes, may " be less advanced in your studies, if I were to anticipate " that you would follow me with difficulty. I am free " to confess, however, that in the particular matter to " which I am referring — the importance of endeavouring " to present to you the right medium in point of diffi- " culty between the A B C of my subject and the X Y Z " — my task is easier than was that of the Incorporated " Law Society's Lecturers before the institution of the " Elementary Classes. For whereas they were wholly " without the means of knowing how far the students " who heard them had mastered the first principles of " the law of Real Property, I am able to assume con- " fidently — as I do — that many of you have attended " the Elementary Classes, and that all of you have, " more or less, made yourselves acquainted "with the " poi-tion of Stephen's Commentaries selected for the " Intermediate Examination. " This being so, it appeared to me that my best course " would be to assume that I should, as it were, be " addressing myself to rows of animated Stephen's " Commentaries — in other words, to credit you at start- '' ing with such an amount of knowledge as a student " might reasonably be expected to have gained from an " intelligent perusal of that work. I am well aware " that some of you may have already pursued your " course of reading to much greater lengths, while to " others that book alone, which is not a small one, " may have been rather a difficult problem to solve. " But I would say to those who fall under the first " heading that if I appear to you here or there to INTRODUCTOKY. " lay stress on points with wliicli your minds are " already stored, I would ventui-e to recommend you " not on that account to let youi* attention languish. " If the principle itself be good, yon cannot have it " too much at your fingers' ends, and familiarity " will certainly not breed contempt. And those again " of you — if any such there be — who may not easily " be able to follow every part of every Lecture, I " would beg not to be discouraged by your inability to " understand clearly any particular sentence or idea. If *' you give your whole attention to it the difiicidty will " be certain to dissolve — if not now, a little later on. " Many an articled clerk has completed his course and " carried into the practice of his profession valuable " knowledge owing its foundation to something which " he did or heard or read in the earliest days of his " student's life, and of the real meaning and object of " which he had, perhaps, at the time, only the dimmest " perception. The great thing is to try your hardest *' and best to take in and understand what you read " and hear, and never to let an available opportimity " pass of obtaining an explanation as to anything which " you cannot understand. But to that advice I would " add my earnest counsel to you not to reject one atom " either of principle or practice merely because you do " not at first appreciate its full bearing. " There is one other point also as to which I wish to " say a very few words by way of general introduction. " In addressing myself in these Lectures to the duties of " solicitors, it is my purpose to deal in a broad and " comprehensive spirit, to the best of my ability, with " what I may term the larger and higher duties rather " than with the minutia3 of the daily routine of a " solicitor's office work, although in a sense these latter " may of course just as appropriately come under the *' denomination of a solicitor's duties. My reasons for " this are twofold, and both will I think be obvious to INTRODUCTOEY. " you. One is that the best, and indeed the only place " in which to study with advantage the smaller details " of your professional work is the office in which you " are serving your Articles. The other is, that if I " were to attempt to dwell on petty incidents of Con- " veyancing Practice, such matters for instance as the *' use of coloured inks for showing distinctive alterations " in a draft— I should need the permission of the Council " to deliver not nine but ninety Lectures, and I doubt " whether many of you could endure their intolerable " dulness. My object, briefly, is to assist you to a com- " prehension of those duties of a solicitor of which the " competent performance is not to be ensm-ed merely " by watching and imitating what you see others in the " same office doing around you, but which, on the con- " trary, can only be adequately discharged if you " approach them with an understanding mind," At another part of my Lecture I referred to the employment of counsel in conveyancing matters in the following terms : — " It may perhaps be well if I say at this point that " throughout my Lectures I shall draw no distinction " between the cases in which a solicitor resorts for " assistance to counsel and those in which he does not, " but shall assume that every step is taken by the " solicitor alone. His responsibility at various stages " of conveyancing work is frec[uently lightened by " recourse to the skill and experience of coimsel, and I " am not for a moment saying that you may not have " a great number of cases in practice in which at all or " most of the successive stages you will be very "svise to *' avail yourself of that assistance. On the other hand, " in conveyancing work, unlike contentious business, " there is no line drawn as to what solicitors may and " may not do personally ; and it is the fact that many *' conveyancing transactions are carried out in a " solicitor's office without the employment of counsel INTKODUCTOKY. " at all. It would be impossible for me to attempt to " define any particular class of cases in which a vendor's " solicitor should avail himself of the services of counsel. " If I were to advise you to let the degree of difficulty " be your test, I should fail to cover the many instances *' in which, though the difficulty is perhaps great, the " smallness of the amoimt involved, or the circumstances " of your client, render it most desirable that you shoidd " save him from any expense which can possibly be " avoided. Again, if I were to recommend you to be " guided by the amount and importance of the trans- " action. I should perhaps be nearer the mark ; but " the advice would have no apt bearing upon many *' cases in which, though the amount is large, the work " happens to be peculiarly light and easy. In truth it " is a matter as to which you must judge each case on " its merits, and exercise your own discretion to draw " the line at the right point between avoiding, on the " one hand, entailing unnecessary expense on your " client, and on the other hand, assuming a weight of " responsibility which you may fairly share with some " counsel learned in the law. " While, therefore, excluding any further reference " to the employment of counsel, otherwise than per- " haps incidentally, from my Lectures, you will under- " stand that my observations are all made subject to *' this tacit reservation, that when the circumstances " reasonably require it, a solicitor will avail himself of " the assistance of counsel, and you will of course also " understand that, as a necessary consequence of his so " doing, his personal responsibility A\ill be propor- " tionately diminished." The third and last passage which I will venture to quote is a confession of my unalterable faith as to the extent to which it behoves a solicitor for his clients' best interests, and the sake of his own reputation, to master the law of England. I said on this poiui : — INTRODUCTORY. Bearing' of principles of law on duties of solicitor. "As I may probably use more than once, in tlie " course of my Lectm-es, the expression ' general " principles of law,' I will at once explain what I mean " by those words in connection with the professional " duties of a solicitor. It is a somewhat disputed point " as to how much of the law of England solicitors " ought to know. There are those who are good enough " to say that very few solicitors know an}i;hing about law " at all ; and again there is another class of philosophers " who assert with great confidence that solicitors need " not know anything about law — that if they possess " sound judgment and common sense, and a capacity " for business generally, all the rest may be left to " counsel. "Now I emphatically dissent from both of those " articles of faith, and I as emphatically advise you not " to enter upon your professional lives "^ath any such " false doctrines in your minds. That it is possible, or " necessary, or even desirable for a solicitor — dealing as " he has to do with every form and variety of non- " contentious and contentious practice — to be as pro- " found a master of any particular branch of the law " that comes before him as the barrister whose practice " lies more or less in that particular branch, and who " can pursue his researches without any of the thousand " and one petty distractions of a solicitor's business, I " do not for a moment assert. What I do contend is " that the aim of student and practitioner alike in our " branch of the profession should be to master the great " abiding principles of law. The infinite varieties of " the transactions of men, or the refinements of this or " that doctrine, may render the application of those " principles difficult at times ; but if they are rooted in " your minds you will possess the solid foundation of " sound knowledge and understanding of your work ; "you will be able to judge whether in any given " circumstances there is something which in the interests THE TARTNEKSHir RELATION. y " of your client should be avoided, or desired, or looked " into critically, or submitted for tlie mature con- • " sideration of some counsel versed in the special class " of case ; and more than that, you will be infinitely " better able to deal with those sudden emergencies " which arise in every solicitor's practice, and call for " instant and imaided decision upon matters of perhaps " the gravest importance." I turn now from the general to the particular, and it Subject of is my purpose in this and my next following Lecture to second Lec- invite your attention to the practical duties owed by a t™es. solicitor to his client in connection with the formation of a private partnership, by which I mean a partnership in the ordinary sense of the expression as distinguished from the artificial semblance of that relation represented by the ownership of shares in a joint-stock company. No one who attempts to master the leading principles Observations (. , 1 • 1 11 !• 1 • onpartnership 01 partnership law, or who has any practical experience relation. of the formation and incidents of a partnership, can fail, I think, to be struck with this one reflection above all others — that when every provision which ingenuity and experience can suggest has been introduced into partnership articles — when clauses providing for every possible foreseen contingency, and defining in the most minute way the rights and obligations of the pai-tners, have been piled on each other — there still remains from the necessities of the case an open field of risk and insecurity whicli owes its existence in part to the imperfections of human nature, and in part to the cardinal distinctions of law between the relations in which partners stand towards each other, and those which they occuj)y with reference to the outside world. A skilful and experienced solicitor may perform very effective services to his client in connection with the adjustment of the terms of a partnership agreement, but the key-note of 4he arrangement first and last must 10 PKELIMINAKY ADVICE. be the mutual confidence of the partners in each other. If they do not possess that when they start, or if they lose it afterwards, tlien the sooner they part company the better. And if confidence reposed in a partner proves to be thoroughly misplaced, the consequences will be made little if at all less disastrous by the provisions of the partnership ai-ticles, no matter how carefully they may have been framed. Solicitor's Now it may be said and in one sense truly said, that it prelminary ^^ ^° P''^^*' °^ ^ solicitor's duty to concem himself with any stage. question as to the degree of confidence which intending partners may have in each other — that this is a matter personal to the parties and lying outside the province of their professional advisers. But it seems to me that that is a very narrow and inaccurate conception of the position which a solicitor occupies to his client. I should hardly be prepared to concur in it to its full extent even if the point involved no appreciation of legal principles, and the solicitor's function in this respect could only at the most be described as the expression of an opinion by a man of the world who has had special means of form- ing a sound judgment upon the business affairs of life generally. But that is not in truth the limit at all. The opinion which a well-instructed solicitor may express to his client on this subject, if the opportunity offers for doing so, will be based at least as much upon his knowledge of the law as upon his experience of life — for the conclusive reason that the need of profound mutual confidence is largely necessitated by the legal power which one partner possesses of plunging another into dangers and difficulties. There are partnerships and partnerships, and in many cases it would be quite inappropriate, in some wholly out of the question, for a solicitor to give advice upon these preliminary considerations to which I am now directing your attention. The character and position of the business, or the personal relations of the parties to each rKKLIMlXAKV ADVICE. other, or tlie ciremnstances in -wliieli your client is entering into the arrangement, or other causes, may reduce your functions strictly to those of preparing or advising upon the provisions of the proposed partner- ship articles, and may preclude the consideration of any question as to whether there is or is not to he a partner- ship at all. In a rather lesser degree the same observa- tion will apply also where your client is self-reliant and does not seek the benefit of your judgment, but merely asks you to register and give practical effect to his own decision. I refer rather to the cases with which you will have to deal, where yoiu' client does wish to be guided more or less by your judgment and experience, and where also the circumstances appear to }"ou to call for the exercise of care and caution on his part before he is irrevocably committed to the step which he proposes to take. If he is purposed to join a concern already established, you might with advantage to his interests press upon him the need of his being well assm-ed of its stability and soundness ; and in the same case, and also where the object of the proposed partnership is to start a new business, you would lay stress iipon the importance of his being thoroughly satisfied of the character and responsibility of those with whom it is his intention to associate himself. If there appears to you reason to fear that he is being led by a sanguine temperament into a visionary or impracticable scheme, or the adoption of an occupation for which he has no training or aptitude, you would harp upon tlie string of caution and reflection, and bid him consider well how easy it is to create, and how difHcult often to dissoh-e, the partnership relation. Such advice as this savours at first blush of the more generalities of worldly wisdom, but I venture to assert that many and many a man has gone with a light heart into wliat has ]a-oved to bo his ruin for want of it, and many a man has been saved from ruin by it ; and I 11 12 PRELIMINARY ADVICE. First prin- ciples of partnership law. Their appli- cation illustrated. repeat what I said just now, that to a great extent the source and fount of it spring from nothing more or less than scientific legal principles, which should be thoroughly familiar to you and would certainly not be familiar to your client, though here and there he may have gained an imperfect smattering of them — I mean the principles of law which, though they operate in various shapes and forms, resolve themselves always into these : — First, that the internal relations of partners to each other, the stipulations and provisions and restrictions, whether made by a written instrument or verbally as between themselves, do not bind a third person unless brought to his knowledge ; and Secondly, that each partner, so far as the outer world is concerned, is the accredited agent of the rest, and as such has authority to bind them by simple contracts respecting the goods or business of the firm, falling in kind within the ordinary course of the firm's business to any person dealing hona fide, and who is not aware that the transaction is in violation of the partnership stipulations ib). Let us apply that law to an imaginar}^ case, and you will follow my reason for laying stress upon it and my anxiety that you should have it thoroughly in yom* minds when you are consulted, in the larger sense which I am supposing, as to an intended partnership. A young man is anxious to go into some business, and he sees an advertisement in the paper which states that a gentleman is desirous of being joined by another gentleman possessed of capital to develop and work a lucrative business which cannot fail to produce all sorts of wonderful results. He has some capital, and he thinks that the advertisement points to the very thing he wants. Communications ensue. The advertiser seems to him to be everything desirable, and the matter [h) See Smith's Mercantile Law, 8th edit. p. 37. PRELIMINARY ADVICE. 13 is brought to you as the solicitor of the young man's family to carry out the arrangement. We will suppose in the particular case that neither the young man nor anyone who instructs you on his behalf is an acute man of business, though even acute men of business do rash things at times when handling imfamiliar subjects, and the young man's parents will probably consider that they are showing a great deal of severe sense if their instructions comprise a request to you to be very particular about the terms of the partnership agree- ment. Will you prepare it right out of hand without a word of warning or not ? Is it no affair of yours that your client may be — not necessarily will be, but may be — entangling himself with a man who ^^ill plunder and ruin him, and to whom at least, and this is the point, the power to do so is being given without any sufficient investigation to afford a reliable opinion that he will not avail himself of it ? Surely you will make it youT affair to place the matter in its true light before those whom it so \itally concerns. I am not of course saying that there is no limit to the power of which I speak — it must be exercised within the compass of the partnership business — but that will almost surely be a sufficiently wide limit to spell ruin readily enough if any partner lays himself out for its doing so. It is easy enough to see that if I join a solicitor in partnership I cannot be held liable if he chooses to buy race-horses in the name of the firm without my knowledge ; but suffer me to give you an illustration of the other side of the pictm-e. I take it almost at random from a reported case of Cicafher v. Ticisckii (L. E. 24 Ch. Div. p. 731). The head-note of the report, which is sufficient for the purpose I have in view, is as follows : — " Trustees deposited with a solicitor certain bonds " payable to bearer. His partner Jiad no actual knoic- " ledge of t/iif!, but letters referring to the bonds were 14 ] ) 1 { AIT.SM an' S KNOWLEDG E. rs Practical conclusion to be drawn. lijiowledge needful for draftsman. " charged for iu bills of costs delivered by the firm ; " letters referring- to the bonds were also copied into " the letter-book of the firm ; and cheques for money " received as interest on the bonds were drawn on the " account of the firm. The solicitor made aAvay with " the bonds. Held, that under the circumstances his " partner was liable." That case coming home as it were to our ©"wti door as solicitors will, I think, inspire you with a due sense of the immense responsibilities of joartnership. Briefly, then, I think that your knowledge of the all-important principle of law to which I have referred may well and rightly be used in fitting circumstances to enlighten a client who labour's, as most laymen do, under the delusion that the partnership articles will be an effective charter of safety to him, and that acts done in contravention of them will be nidi and void as against him ; and beyond that you may, I think — though I do not press this so confidently upon you or pretend to describe it as falling within the four corners of your strictly professional duties — usefidly go to the extent of expressing your opinion where it is sought, or at least is not repelled, upon other points as to which 3^our training as men of business — your habits of accurate thought and observation — may enable you to state your views with advantage to your client. We will now lay aside this preliminary aspect of my subject and assume, as our starting-point, that a part- nership is to be formed between two or more persons. In an edition of B}-thewood's Precedents, published upwards of fifty years ago, the observation was made that without some knowledge of the principles govern- ing the general rights and obligations of partners, a person coidd not satisfactorily sit down to the task of drawing the instrument by which those rights and obligations were intended to be defined and regulated. Since those ^^■ords were written great changes have LEGAL COMPETENCY OF PARTXERS. 15 taken place iu every department of our system of jui'isprudence, but the force of the observation itself is imperishable, and applicable alike to the law of that time, of our time, and of all times, without exception or qualification, and I adopt it as my key-note. All of you, no doubt, are well aware that notwith- How partner- standing the importance of the contract of partnership, created? the relationship may be created in all sorts of informal ways, and that the two questions — first, A\hether or not people arc partners inter sc, and secondly, whether they are partners in so far as third persons are concerned, are not by any means identical, and are in many cases not easy to answer, but, on the contrary, as difficult as any that present themselves to tlie lawyer. But adher- ing, as I wish to do, as closely as I can to the metes and bounds of my subject, I must needs leave that field of law imexplored, because I can only proceed in a Conveyancing Lectm-e upon the supposition that the parties resort to a solicitor to have theii' bargain deliberately carried out by a fitting instrument defining their rights and liabilities to each other, and with the intention of entering into a partnership which will, beyond question, present them in that light to third persons. Now, the first question \\hieh will arise in a lawyer's As to legal mind when he is asked to carry out this contract must ^utcudin'^^^ ° naturally and properly be — Are the - proposed partners pai'tuors. legally competent to enter into a partnership agreement which shall be mutually binding upon tliem ? Let me clear the ground at once here by saying, that the deter- mination of this question ^^'ill be dependent upon no statute or common law applicable to partnership as distinguished from any other sort of contract, but strictly upon principles which apply to contracts generally. The jtractical results of these principles on the matter of competency in partnership contracts may be shortly summarised as to the principal disabilities — 16 INFANTS — LUNATICS. Infants. ^ Lunatics. Married women. those of infants, lunatics and married women, as follows : — First, that a partnership should under no cir- cumstances be entered into with an infant, for the very sufficient reason that to do so is an almost literal ex- emplification on the infant's part of that species of speculation in coinage, known as " heads I win and tails you lose." For he will be at liberty to avoid the contract at any time before or within a reasonable time after he attains full age. And although on equitable principles he mil not, as against his partner, be allowed to take credit for profits, while at the same time he repudiates losses, he will, except in extreme cases of decej)tion on his part amounting to fraud, be free to repudiate the liabilities both as between himself and his partner, and as between the firm and third persons (c). It follows that the position both internally and ex- ternally of a person who takes unto himself an infant partner is about as undesirable as it can well be. Secondly, as to lunatics, it is well settled, both that a lunatic is capable of being a partner, and also that a partnership is not ipso facto dissolved by the fact of one of the partners becoming a lunatic, though the Coiu't will generally, if its aid be invoked, grant a decree for dissolution on that ground (c/). It may be presumed that no client of yours is likely to come to you and say, " I want you to prepare a partnership agreement " between myself and Mr. A. B. I may just mention " that he is out of his mind ;" and it is hardly needful therefore that I should dwell on the question of a lunatic's competency ; but you may, at all events, profitably bear in mind that lunacy does not dissolve a partnership without recourse to a Chancery suit. Thirdly, as to married women. The first principle to bear in mind is, I think, this — that, apart from her (f) LincUej' on Partnersliip, 4th edit. p. 81. {d) Ibid., p. 224. MAERIED WOMEN. 17 separate estate, and except when the husband is a con- victed felon, or the husband and wife are judicially separated, or the wife has obtained a protection order under the Divorce Acts, or the husband is an alien enemy and abroad, or where the custom of London applies, by which a married woman is placed as to her contracts in the same position as a feme sole, a married woman is unable to make any binding contract (e). But whereas the qualification as to separate estate in that sentence amoimted formerly to very little for practical pui-poses, it now possesses a most important meaning, for the simple reason that the doctrine of separate estate has received immense impetus from modern legislation, and in particular of course from the Married Women's Property Act, 1882 (45 & 46 Yict. c. 75). If you study that Act with care yoiu' reflections upon the logical result of its provisions will, I think, lead you to the conclusion that in the matter of contract it revolutionizes the relative positions of husband and wife, both by the wide area over which it spreads the definition of separate estate, and by the facilities which it affords for enabling married women to bind that estate, and to be held liable to their obligations even to the gates of bank- ruptcy. I take it that at the present moment a married woman may do whatever she pleases, wise or unwise, with her own property, and that if she chooses to enter into a partnership contract she is at perfect liberty to do so. But I imagine that whatever may be the case with contracts not involving the expenditure of per- sonal time, the husband would still, in his marital capacity, have the power, if he desired to exercise it, of declining to allow his wife to enter into a partnership agreement containing the usual engagement to devote ( her whole time and attention to the partnership busi- * (c) Lindley on Partnership, 4th edit. p. 84, T. C 18 PRIMARY DIVISIONS OF PARTNERSHIPS. Nature of intended partnership. Two primary divisions. Principal distinction between them. Position of new partner as to debts of old firm. ness, and that lie would be witliin his legal rights in pointing out respectfully that she was ah-eady under an implied legal obligation to stop at home and mind the baby. Short, however, of interference on the husband's part, upon personal or marital, and not upon financial, grounds, and within the limit — and although it is now a very extended one it still is a limit — that she can only contract so as to bind her separate estate, you may take it to be clear that a married woman is competent to enter into a partnership agi'eement. Assuming either that there is no question as to the competency of tlie contracting parties, or • that any question which you have thought it necessary to raise on that head is disposed of, the next subject to engage your attention will be the nature of the partnership, and fi'om this point of view it is ob- vious, in the first place, that every partnership must fall within one or other of two primary divisions. The transaction must either represent the admission of a partner into a business already established, or the formation of a partnership to cany on a new business. Many considerations will apply equally to both of these classes, but there is one important distinction between them which should always be present to your mind, viz., that in the first case it will, and in the second it will not, be necessary to provide by the partnership articles for the mode of dealing as between the old and new firms with the assets and liabilities as existins: at the date on which the fresh partnership commences. Where you have to deal vdth the former class of partnership, then this matter will claim your first attention ; and I think that you may, in the first place, usefully store your minds with a principle simple enough in itself, but not by any means always easy of application — that, so far as liability to third persons is concerned, an incoming partner is not liable for any of the debts of the old firm, no matter what may be NEW PARTNER — OLD FIRM. 19 the terms of the partnership articles. He may, of course, as between himself and his partners make him- self liable for such debts, and it was formerly con- sidered that such an agreement was evidence of his having made a similar agreement with the creditor ; but, as is pointed out in Lindley on Partnership (_/'), "this " is certainly not enough, for the agreement to be " proved is an agreement with the creditor, and of such " an agreement an arrangement between the partners is of itself no evidence," The difficulty in applying this principle arises, as you may suppose, in cases in which it is open to dispute, upon the facts, whether there is or not sufficient evidence of an express or implied contract between the incoming partner and the creditor that the former shall be liable for a debt contracted before his entrance into the firm, and as to this there are a good many authorities. But I do not feel at liberty to elaborate the point, because it does not bear otherwise than in a general sense upon my present subject, and I am more concerned to point out the aspect which the matter assumes practically as between the partners themselves. Now, of course, it is competent for the members of an existing firm and a new partner who is joining it to make any arrangement they please, and if they are acute men of business, and have had some experience of partnership relations, you may not have very much Solicitor's more to do with this matter of adjusting old assets and Jnent"if'^old*' liabilities than to express in clear and accm'ate language assets and a cut-and-dried arrangement, of which the outline is already determined on. But in most cases you will have the opportunity of exercising your inventive and suggestive faculties more freely in connection with the terms of partnersliip articles than with almost any other class of instrument, and of this, as in many other (/) 4tli edit. p. 392. c2 20 OLD ASSETS AND LIABILITIES. things, it may be said tliat the more you save your client tlie trouble of thinking out details for himself the better he will like it, and the more will he come to repose confidence in you. And even where you are not called upon to take much or any responsibility in the particular matter of suggest- ing and originating the principles or details of the part- nership scheme, you may depend upon this, that if you have acquii-ed some familiarity with the different methods in which the more important features of a partnership arrangement are usually dealt with, and the considerations bearing upon them, your task as a draftsman will be infinitely facilitated by the clearness of your perception of what it really is that you are asked to develop into a logical and complete document ; and you will be able not only to save yourself a good deal of trouble, but you ^^ill also — which is very im- portant in your own interests — be able to save your clients a good deal of trouble by relieving them from the necessity of explaining all sorts of minute details to you. It is a natural attribute of a great number of clients, that what they understand themselves they will expect their legal advisers to understand also, almost by intuition, and I am persuaded that nothing pleases a man better than to be able to easily instruct his solicitor. A shipbroker who wishes to be advised about a charter- party, or a Mincing Lane broker who has a knotty point upon a trade contract which, to the uninitiated, looks like a concise problem in double Dutch, is generally drawn by a soii of process of selection to some solicitor who is supposed to be well versed in the technicalities of the particular sort of document, and hence it is that in the City of London and other large cities so many legal practitioners work largely in a particular groove, and have the reputation of being specialists. Now it may not fall to the lot of all, or even of OLD ASSETS AND LIABILITIES. 21 many of you, to become specialists, but it will certainly fall to your lot to experience the need of becoming active- minded men of business, no matter what may be the sphere of your practice, and I am anxious to impress upon you that you will be wise in your generation if you avail yourselves of all the opportunites which come in your way, or which you can gain by going out of your way, to obtain a good all-round knowledge of the business aif airs of men ; and the expediency of acquiring a general understanding of what is involved in a partner- ship agreement — over and beyond the actual principles of law involved in it — furnishes a conspicuous illustra- tion of my meaning. I shall therefore, I think, usefully employ a little of Points for ;• • T • 1. £ £ £ lA ' L coiisideratioii our tnne m placmg beiore you a lew or the pomts un^er this which suggest themselves upon this part of my subject, l^ead. It is evident that, generally speaking, in the case of Alternative admitting a new partner into an existing business, the ™nsidered. assets and liabilities of the old firm would be linked together, and that both would, in some shape or other, either be taken over by the new firm, or would be retained and dealt with by the old firm ; in which latter case the new firm would start as if it were, in this respect at least, an entirely new concern. Where the former plan is adopted, it is important Fii-st method that the nlembers of the new firm, and in particular, of i^^fi'it'eg''of^ course, any fresh partner who is coming into the concern, old firm taken should be placed in possession of an accurate and reliable °^^^' statement, in the form of balance sheet or otherwise, of the assets and liabilities, and that on the faith of this statement, and in point of draftsmanship by reference to its contents, the arrangements as to such assets and liabilities should be made. The nature of those arrangements would of course depend greatly on circmustanccs. One method is to transfer to the new firm at a valuation all the assets subject to the liabilities, and to leave to the new firm C 22 OLD ASSETS AND LIABILITIES. the profit or loss whicli tlie actual realisation may show as compared with the valuation figure. In this case the members of the old firm would be credited in what- ever might be their agreed shares with the estimated surplus of the assets over the liabilities, as being in whole or in part, as the case may be, their contribution to the capital of the new firm. A very simple illustra- tion will show you the working of that arrangement. A. and B. having been in partnership for some time, admit C. into partnership. The assets of A. and B., including the value of a lease of the partnership pre- mises, outstanding debts due to them, good-"s\'ill, stock- in-trade, everything, are valued at £10,000, and the liabilities are computed at £2,000. The assets would all be made over to the new firm, and the surplus of £8,000 would be carried as capital to the credit of A. and B. in whatever shares they may under 'their ovm arrangements be entitled to it, while C. vrill of course contribute whatever may be his agreed share of capital in the new firm. If it should ultimately turn out that the surplus assets are worth more than £8,000, so much the better for the new firm ; if otherwise, so much the worse. This arrangement may, of coiu'se, be modified in all ■ sorts of ways. C, for instance, instead of bringing in his share of capital as cash, may pay A. and B. for some agreed share in the surplus assets taken at the valuation figure, in which case his interest in the con- cern will be carved out of the existing interest of A. and B., instead of his entrance into the firm represent- ing an accession of capital. In this case if 0. were to come into a fourth share of the business, and A. and B. were interested in the £8,000 in equal shares, C. would pay them each individually £1,000, and then the assets would be held in the proportions of £3,000 each to A. and B., and £2,000 to C. Or, again, instead of the new firm standing the OLD ASSETS AND LIABILITIES. 23 diances of loss if, on the realisation of the surplus assets, they fall short of the amount at which the members of the old firm are credited, a guarantee may of course be given by the old members that all, or some, of the old assets shall not realise less than so much. I mentioned as an alternative plan that of the old Second partners retaining their own assets and liabilities — or, firm's assets in other words, winding-up the old partnership inde- and liabilities pendently of the new concern altogether. In this case over if, as may often happen, the capital of the members of the old firm is locked up for a more or less extended period, and they are unable or unwilling to provide capital for the new firm from any other soui'ce, the plan may be adopted of theii* guaranteeing, by the partner- ship articles, to bring in specified amounts at fixed dates which are calculated so as to afford time for the realisa- tion of the surplus assets of the old firm ; but this, of course, is a matter for consideration, and to be dealt with by the light of the particular circumstances. Now of com'se it is for the parties interested to choose between these two modes of dealing with the assets and liabilities of an old firm when a new one is formed. The members of the old firm may desire to retain the assets or they may not ; the new partner may be anxious that they should be brought in, or he may prefer that the business should start afresh with a capital of so much cash. But I may usefully draw youi' attention to one very important factor in the calculation — the nature of the business. With some classes of business there is practically no connecting hnk between the actual business transacted to-day and the business transacted to-day month. Take the case of a stock- broker. His capital is not represented by costly plant, machinery or stock-in-trade. He makes his profit in an office consisting perhaps of a couple of small rooms, and the tenancy of that office, the length of i 24 OLD ASSETS AND LIABILITIES. notice to he given to a couple of clerks, and the current transactions which will culminate on the next settling day, may be the only tangible matters which stand between him and the winding-up of his business at any moment. It is obvious that if he takes a partner, the determination of the question whether that partner shall be directly or indirectly concerned with business wholly or partially transacted before the date of his admission into the firm will present little difficulty. But reverse the picture, and let us suppose that the capital of the business is largely represented by plant, machinery, goods and business premises — or that the capital of the old firm is sunk in advances made abroad to colonists on the security of land, which advances may not be paid off for years, aud the gradual realisa- tion of which will carry with it the profit of the transaction, and necessitate so much care and attention, that it mil in fact represent in itself the carrpng on of a business for a long time to come. In such cases as these a totally new departure — the dramng of a line hard and fast between the old business and the new would be almost impossible. In the instance which I last supposed it might be years before the new firm would raise up a fresh business imconnected with the transactions existing when it commenced, while such of the partners as belonged to the old firm would be, of necessity, giving a large part of theii' time and attention to the realisation of their outstanding assets. The illustrations which I have given represent / extremes between which of course lie many inter- mediate cases differing in degree, and as to which the mode of dealing with this subject of old assets and liabilities may present very debateable features. But extreme instances serve well to elucidate a principle, and you may usefully bear in mind as a guiding rule that the solution of the question whether a new firm is to be concerned viiih the assets and liabilities of an old OLD ASSETS AND LIABILITIES. 25 one will largely, though not conclusively, depend upon the degree of ease or difhculty with which the transac- tions or the trade property of the old firm can be severed or kept distinct from the new partnership concern. I should be very sorry if any of you were misled by The solicitor's ii.Ti 1 • J 1.1 n ij. j.ii true functions what i have been saying, and, thereiore, let me at the jq these mat- risk of repeating myself say once more, and once for *^^'^^- all, that in these matters of bargaining I do not for a moment suggest that it is your duty to decide for your client whether it will or will not suit his pm-pose to enter into partnership on any given terms. The decision and the responsibiHty for it must be his, and you would be very foolish to assume it. I am only seeking to convince you that you may render him great ser\dce, enhance your reputation in his eyes, and lighten your ovm task of preparing or settling partner- ship articles by bringing to bear upon the subject the intelligence of a competent man of business, and by being able with confidence, when the opportunity offers, not to decide such points as I have mentioned, but to suggest to your client considerations which should influence his decision, and to steer his mind into the right channel for coming to a sound conclusion. In the case which I am supposing of a taking Need for over of the assets by the new firm there is one matter tra^s^fjr of requii'ing attention which appertains to the lawyer old firm's strictly — I mean the task of seeing that any assets taken over!^ the transfer of which requires special formahties are effectively transferred. If, for instance, the value of freehold or leasehold premises belonging to the old partnership is brought into account, obviously the new partnership should have them properly conveyed, and it woidd be your duty to see that this is done. Conveyancing work of that sort would of course fall necessarily to you as the soHcitor concerned, but in the case of a transfer to the new firm of pure personalty, as. 26 NEGOCIATION OF TERMS. As to old firm's liabilities. Negociation of terms of partnership. for instance, shares of ships, the mode of transfer, even where it is attended by some necessary formality, is often so simple that the client will be tempted to save the lawyer's charges and do it himself. But at all events the transfer of the assets, whether real or personal, is a matter for you to bear in mind, to point out, and, if it be so desired, to practically carry out. I have said that the assets and liabilities are closely connected, and, with regard to the latter, I think you may take it that when a new firm absorbs the assets it should in terms agree to discharge the liabilities — assuming, of course, that in the particular case such is in fact the intention of the parties. It is only fair that where the old firm parts with its assets on the faith of, among other things, being relieved from its liabilities, the intention should be clearly and un- equivocally expressed in the matter of the liabilities. These matters of arrangement as to assets and liabilities, and many other provisions of a partnership agreement, need of course delicate handling, and espe- cially where, as is frequently the case with partner- ship agreements, all parties are represented by one solicitor. It is easy in such cases to wound the sus- ceptibilities of your clients, or to lead one partner to think that you are leaning unduly in favour of another partner — and the position is more difficult still where you have to use your influence and tact to restrain within bounds a demand which jou think inequitable or unfair. But there is one rule by which to guide your course, and which will generally keep you straight if you hold steadily to it — to remember yourself, and to impress on your clients, that in the end an arrange- ment fair and just to all parties is the best for all. It will generally profit a man very little to gain some extreme point, upon which he has insisted in his own interests and without regard to the consideration due to others, if he has carried it mth the result of DRAFTSMAN. SHIP OF ARTICLES. 27 leaving a bm^uing sense of injustice in the mind of the man to whom he is linked in what must be a most intimate, and should be a most cordial and confidential, relation. You cannot too strongly — though of course always within the limits of your proper function — use your influence in the direction of bringing about what apj)ears to you, if you have the means of judging about it, to be right and reasonable in view of all the cir- cumstances — and it is my belief that a reputation for calm judgment and conspicuous fairness of mind is as important to a solicitor as a reputation for knowledge of law, although, as I have already said, I utterly dissent from the proposition, which is sometimes confidently put forward, that few solicitors do, and no solicitors need, know anything about the science of law at all. I have devoted, but not I hope unprofitably, a good deal of space to this matter of old assets and liabilities, because in a large proportion of cases it is an important element in the scheme of a partnershij), and is often, I think, not very clearly understood. But we will now leave it behind and proceed to consider the subject of partnership articles in a more extended sense, and upon a footing applicable alike to partnerships in old and new businesses. As a general rule, partnership articles are of very Tartnership great length. This fact is not to any considerable ^^^^fiiy ^f extent due to the vice, which formerly pervaded all great length, deeds, of pure and simple outrageous manufactured verbosity, but to a different cause. It has been observed by Lord Justice Lindley, in liis Xcccssity for work on the Law of PartnershiiWv), that partnership "^=>"y y^^^-^l ■1- \<' /' i i proviMons articles are not intended to define, and are not construed considered, as defining, all the rights and obligations of the partners infer se ; that a great deal is left to be understood, and that although the maxim expression facit cessare taciturn, (ff) 4th edit. p. 817. DRAFTSMANSHIP OF ARTICLES. applies to partnership articles as to other agreements, the rights and obligations of partners, so far as they are not expressly declared, are determined by general principles which are always applicable where not clearly excluded. But in a later passage the same writer lays down a proposition which, if I may take the liberty of saying so, scarcely seems to me to be in harmony with this view. He says : — " In framing articles of partnership it should always " be remembered that they are intended for the guidance " of persons who are not lawyers ; and that it is, there- " fore, unwise to insert only such provisions as are " necessary to exclude the application of rules which " apply where nothing to the contrary is said. The " articles should be so drawn as to be a code of directions " to which the partners may refer as a guide in all their " transactions, and upon which they may settle among " themselves differences which may arise without having " recourse to courts of justice." I am not able to reconcile this with the earlier state- ment that partnership articles are not intended to define all the rights and obligations of the partners, because if they are so framed as to be a guide in all the partner- ship transactions, I hardly see what rights and obliga- tions they would fail to embrace. But we need not concern ourselves with straw-sj)litting ; and the question to which I really wish to draw your attention is, whether the task of preparing partnership) articles should be approached by you and me from the point of view of inserting in them not only pro\'isions applicable to the particular circumstances, but also provisions of a general kind, importing into the document nothing which would not without them be implied by law. I have already shown you that Lord Justice Lindley answers this question upon the whole in the affirmative, and in doing so he confirms the opinion of a much earlier writer — Mr. Jarman — who said, fifty years ago, DRAFTSMANSHIP OF ARTICLES. 29 in a dissertation upon articles of partnership {/i), tliat many of the clauses usually inserted in them did no more than express the obligations legally incident to the partnership relation, but were not on that account wholly useless, as they drew the attention of the parties to the duties which they contracted in becoming partners, and, therefore, were calculated to prevent misunder- standing. I should feel even greater hesitation than I do in dissenting from such high authorities as I have cited, if it were not for a strong conviction on my part that upon such matters as these counsel, however learned in the law, cannot be considered to be the best judges. Between them and the ultimate client, the solicitor is always interposed — their connection "^ith partnership articles begins and ends within the walls of their chambers or of a court of law — and it is not possible for them to see the practical working of partnership matters, or to appreciate the views of the lay client in the same way as the solicitor with whom he comes into direct confidential intercourse. While, however, I feel at liberty to express my own opinion on this subject, as I am about to do, I would impress upon you that it is only my own opinion ; and that I cannot pretend to say how far it would be in accordance with the general voice of our own branch of the profession. I do not myself think that any sufficient object is gained, generally speaking, by inserting in partnership articles provisions which are implied by the general law. My experience is that men of business like to have their arrangements expressed in the shortest practicable quantity of words, and that most of the ordinary pre- cedents of partnership articles contain a deal of matter which may very well be omitted. (/() Jarmau & Bythewood's Precedents, Vol. VII. p. 30. 30 DRAFTSMANSHIP OF ARTICLES. Let me illustrate wliat I mean by one of the commonest of common form provisions — a clause wliich solemnly declares tliat A., B. andC, who are entering into partnership, shall be true and just to each other in all their dealings. Can it seriously be contended that in order to be quite sure whether he ought to be true and just to his partner a man should have to unlock his safe and examine his partnership articles ? Surely the ten commandments or the chm'ch catechism would supply the desired information ! This is perhaps the most extreme of the class of provisions of which I am speaking, but to all of them alike the observation, as I think, applies, that it is a fallacy to regard partnership articles as being practically a code of constant reference. I believe that in ninety- nine cases out of a hundred a man does not look at his partnership articles from one year's end to another, unless the occasion arises for doing so upon some point connected v.dth the special provisions, which apply to his particular partnership as distinguished from partner- ships generally. Depend upon it, too, that when the time has arrived at which a partner can have any reason to learn such matters as that he ought to be just and true, and ought not without his partner's concm-rence to draw or accept a bill in the firm's name otherwise than in the ordinary course of business and for the benefit of the firm — depend upon it, I say, that in such a case the relations of the partners and the interests of the firm will have fallen into dangers from which all the partnership articles in the world would afford but the slenderest protection. Draftsman's To my mind, therefore, your aim as draftsmen should ^^^^ ested ^® ^^ express a consistent scheme of partnership, based upon the wishes and intentions of the parties, and providing as far as may be for the contingencies which may arise, and to avoid for the most part super-adding 6U DRAFTSMANSHIP OF ARTICLES. 31 to the document tlie mere expression of wliat are well settled principles of general law. With that observation I exhaust what I have to say upon partnership articles from a purely general point of view, and conclude my first Lecture. I shall ask you in my next Lecture to turn your attention to the task of dissection, and travel with me over the most important points which arise upon the different clauses of such an instrument. SECOND LECTURE. PARTNERSHIP ARTICLES. {continued.) f LENGTH OF TERM. RETIREMENT OF PARTNER. NATURE OF BUSINESS. PERSONAL STATUS. MONETARY ARRANGEMENTS. < ACCOUNTS. DISSOLUTION AND ITS CONSE- QUENCES. GOOD-WILL. l^ ARBITRATION CLAUSE. ( 35 ) SECOND LECTURE. As indicated in my last Lecture, I propose now to direct Subject of your attention more in detail to the most important points upon which your minds should be clear when you have to discharge the duty of preparing or perusing partnership articles. It is manifest that first of all you would recjuire to i'irst points 1 iiiip ji -I ^ ^^ fordi'aftsman. Know the date or commencement and proposed length of the partnership term, and the circumstances, if any, on which, and terms upon "\^•hich, any partner is to have the power reseryed to him to retire from it. All these terms, of course, may be arranged before you are consulted, but many people who agree to go into partnership together walk off to a solicitor and ask him to prepare articles as if he sold them over the counter like boots, and in such a case you will, of course, have to point out the various matters which should be specified in the agreement and the considera- tions which bear upon them. Now, as to the date of commencement, you will Date of eom- readily see that in the case of an entirely new partner- ship it will generally not be very material what date the parties fix upon so long as they do settle some date. But in the case of the admission of a fresh partner into an existing firm, it is important to see that the date of commencement fits in consistently with the other pro- visions of the articles, as to the interest of the new partner in pending contracts and so forth. The length of the partnership term is eminently a Length of matter for the parties interested to agree upon for ^^^' 1)2 36 COMMENCEMENT AND LENGTH OF TERM. themselves ; but if you are asked to express an opinion upon it, you may, I think, bear in mind as a sound axiom that very short and very long terms are both, in ordinary cases, undesirable. The former do not allow of the establishment of that settled feeling which is so essential to true partnership) relations — the partners are apt to be constantly thinking to themselves what next, and what next. Against very long terms it may be forcibly urged that they discount the futm^e too much. Circum- stances may alter in a hundred ways not possible to be foreseen, which, while they will not in law serve as ground for dissolution, may cause a man to lastingly regret having formed a permanent tie from which he cannot escape. Ten years is, I think, a term which should rarely be exceeded. The point to impress on your clients is generally, I suggest, this — if you all want to go on you can always agree to do so ; if any one of you does not, it will in most cases be much better for all of you that you should be apart. Right of The reservation to any of the partners of a right to retire, and the terms upon which they may do so, is a matter for consideration according to the circumstances. If the parties do not themselves originate such a term, it would certainly not be for you to suggest it in a case in which they stand on anything like equal terms in point of age and in other resj)ects. But if a man of sixty is taking to himself a partner of twenty- four, the laws of nature will suggest plainly enough that at no distant date the senior partner may desii'e to take his rest, and leave the heat and burden of the day to be borne by younger shoulders ; and that he will be acting unwisely if he pledges himself to continue for a definite term of years personally and actively to carry on business. In such a case it ■will be matter for careful consideration upon what terms he is to be at liberty to retire, and these terms will of course vary according to the nature of the business and the several interests of retii'ement. RIGHT OF RETIREMENT. the partners. If, for instance, the partner to whom it is proposed to give the right has a large capital embarked, and the character of the business is such that it cannot be speedily realized without annihilating the business as a going concern, it would manifestly be unjust to the younger partner that the senior partner should be placed in a position to say, " I give you notice that I am going " to retire next Monday, and that the assets of the firm " must be realized forthwith to pay me out." Again, it may be that the senior partner has a son whom he wishes to bring forward, and that he may desu-e to secui'e the right to retire in his favour, and may be in a position fairly to impose this term. Perhaps the most extreme form which the right of retirement can take is that which gives to a partner a right to sell his share without even imposing any con- dition upon the mode of exercising the right. How any sane person can consent to be a party to an agree- ment conferring such a power on his partner, is a mystery which I will not pretend to solve, but the power is given sometimes, though not, I need hardly say, in partnerships which involve skilled personal attention on the part of all the partners. Another and much more rational arrangement, which not unfrequently accompanies the provision for right of retirement, is that the other partner shall have an option of purchas- ing the share of the retiring partner. The goodwill of the business is an element which also arises in connection with the retirement of a partner ; but I will only ask you to make a mental reservation of the fact here, as I propose to deal with that important subject separately. Having satisfied yourself when the partnership is to date from, how long it is to last, and in ^hat, if any, foreseen contingencies, and on what terms it may be dissolved — I lay stress on the word "foreseen" as, of course, a partnership may be brought to dissolution 37 38 NATURE OF BUSINESS. by a thousand unforeseen contingencies which the part- nership articles do not provide against — when you have Nature of the reached this point, the next matter to claim your atten- business. ^^^^ ^-^^l he the nature of the business, and a very important matter it is. All of you probably are aware that, in the case of joint stock companies formed under the Limited Liability Acts, the objects of the company — the precise • purposes for which it is formed — are required to be specified in the memorandum of association, and that by no possible means can the company afterwards lawfully alter or deviate from those objects, although they may by special resolution change the regulations embodied in their articles of association as much and as often as they please. If any single act is done which does not fall within the four corners of the objects specified in the memorandum, any shareholder — even though he holds only one £5 share out of a capital of £1,000,000 — may come to the Court to stop it, by injunction, as being i'ill do well to bear this in mind for personal guidance. So much as to the extent to which the events by Consequencea which a partnership may bo terminated have to do with the provisions of partnership articles. Let us now con- sider the consequences of dissolution. The most convenient mode of doing so will, I think, E 2 of dissolution. 52 DISSOLUTION — LEGAL CONSEQUENCES. The general law on this subject. be f( r me to point out to you as to eacli of the matters to whicli I am going to draw yoiu" attention on this head, first, how the law stands in the absence of express agreement, and secondly, in what respect it may be desirable to modify it by stipulation. I ought, however, to say by way of preface, that in the largest sense the branch on which we are now entering is, like most other branches of partnership law, of a two-fold character. To exhaust the subject, the consequences of dissolution would have to be considered both in their effect upon the relations of the firm mth third persons, and also as between the partners themselves. In so far, however, as these consequences concern third persons, they do not closely touch the subject of partnership articles, because of the general principle of law which I have already mentioned, that the rights of third persons are not affected by the provisions of partnership articles, and I therefore purposely exclude that aspect of them from our consideration. The first and foremost legal consequence of dissolution is that each partner is entitled to require that the whole of the partnership assets shall be realised by sale, the debts paid, and the sui'plus divided {J). I lay stress on the word " sale " because it is the essence of this right. It is not competent in law for any surviving partner, or the representatives of a deceased partner, to substitute for realisation by sale a scheme of valuation or of division in specie, unless, of course, where all parties consent. This absolute right is subject, however, to the quali- fication that the Court will not allow it to be exercised in such a way as unduly to injure any of the parties interested. For example, where a decree is made for a sale, an enquiry is frequently directed as to the best mode and time for it, and if it appears that an im- mediate sale will not be for the benefit of all parties, ;./) Lindley on Partnership, 4th edit. pp. 1015, 1040. DISSOLUTION LEGAL COXSEQUEXCES. 63 the Court will, iu a proper case, dii-eet that the business shall be carried on, but only for winding-up purposes, by a manager (/•■) . Another incident of dissolution which I may con- veniently link with that which I have just mentioned is this — that the right to wind-up the affairs of a part- nership is a right personal to the members of the late firm ; whence it follows, that neither the executors of a deceased partner nor the trustee of a bankrupt partner will be permitted to take any share in the management of the affaii's of the partnership (/). Now I think it may be said generally that these Application rules of law, applicable in the absence of agreement to °a-(\?usually dissolution, do not commend themselves as being appro- inconvenient, priate in actual fact, and that it is, in the large majority of cases, a misfortune to all or some of the members of a firm when they are remitted on dissolu- tion to the legal consequences of that event. In saying that, I do not mean to convey that I have any quarrel with the law as it stands. On the contrary, I hardly see what other principles could be applied where the Court has nothing in the shape of bargain to guide it. Partnership is eminently a matter of arrangement, and if those who enter into it do not take the trouble to think out the reasonably probable contingencies which lie before them and provide accordingly, they can hardly complain afterwards if the Court applies a some- what drastic method of winding up their affairs. Let me illustrate by the case of the death of a partner how these legal consequences of dissolution are liable to produce inconvenience and loss. As a rule, when two or more people enter into part- To the nership, it is contemplated that if one of them dies the ^"'^"^or- survivor or survivors will continue to carry on business, (k) Lindlcy on Partncrsliip, 4th edit. p. 1017. (/) Ibid., p. 1041. 64 DISSOLUTION — LEGAL CONSEQUENCES. and of course tlie observation applies with special force to the case of a firm containing more than two part- ners. But if their partnership articles do not con- tain provisions to meet the case, the death of a member of the firm will bring the whole concern to an end. Not only may the whole of the firm's assets have to be realised, but the surviving partners, if there be more than one, will, as between themselves, have no longer any legal tie to bind them together. Of com^se there is no legal principle to prevent the surviving partners from making an arrangement, if they can, with the representatives of the deceased partner, which will obviate the necessity for a sale, but, on the other hand, neither is there any legal principle to compel the repre- sentatives of the deceased partner to assent to any such arrangement. Again, there is nothing to prevent the sm'viving partners from making a fresh partnership agreement, but even if they can come to terms in that respect they may be terribly hampered if they are not able to make satisfactory arrangements with the repre- sentatives of their deceased partner, so as to obviate a winding-up of the partnership affairs by the only mode which, in the absence of agreement, the Court can recognise. To the repre- So much for the Surviving partner or partners. But sentatives ^-^e position of the representatives of a deceased partner of aeceased _ J- _ -l _ ■•■ _ partner. is by no means in all cases an en\dable one. Their only alternative to insisting on the strict legal mode of winding-up the partnership is to make an arrange- ment which, if they represent any parties not sui Juris, may involve them in considerable responsibility. Sup- pose, for instance, in the case of a trading partnership, they agree that instead of having the assets realised as soon as may be, and their testator's capital and so forth paid out, they wall accept payment of his share from the surviving partners by instalments at stated intervals, and before the payments are all made the surviving DIaSOLUTION LEGAL CONSEC^UENCES. partners fail. In such a case, if tlie deceased partner's rexDresentatives have acted with reasonable prudence and entire bona Jjcles, and have not exceeded the powers given by their testator's will, they may escape any personal consequences ; but you will readily see that they might be put upon their defence and have their conduct subjected to searching investigation in the interests of beneficiaries. Again, let us assume that for some reason no arrangement of this sort is made, and the partnership affairs are to be liquidated upon the principles recognised by the Court. I mentioned to you just now, as being one of those principles, that the winding-up of a partnership is a right personal to the surviving partners, who cannot be controlled by the representatives of a deceased partner. In the exercise of this right the surviving partners may act wisely or unwisely, honourably or dishonourably. They may postpone for various reasons or pretexts the realisa- tion of the partnership assets — they may, in the mis- taken belief, or on the colourable pretence that the business may be best disposed of as a going concern, carry it on, ostensibly, at all events, only for winding- up purposes, at ruinous loss, and involve the estate of their deceased partner in that loss. It is quite true that the deceased partner's executors, if they see that the winding-up is not progressing satisfactorily, may come to the Court for relief. But although the observation of the late Mr. Joshua Williams concerning the Court of Chancery that the remedy was apt to be worse than the disease would hardly, perhaps, hold good in these days of cheaper and speedier process, yet no one can pretend to say that a suit for the winding-up of a partner- ship is a matter for unalloyed gratification to the parties interested, however agreeable it may be to the feelings and pockets of their solicitors ; and we may take it that in the case which I am supposing the representatives of the deceased partner would hesitate before invoking 55 56 DISSOLUTION — STIPULATED CONSEQUENCES. the remedy, and would be mucli harassed between their responsibility for winding-up to the best advan- tage their own testator's estate and their disinclination to be involved in litigation with his surviving partners. I have, I think, now paved the way sufficiently to enable you to appreciate my meaning when I impress upon you the wisdom of pointing out to a client who comes to you to prepare partnership articles, that the instrument should, generally speaking, take into account and provide for the consequences of dissolution. Express pro- As to the manner of this provision, I am compelled loisequenles ^^ ^^^^ ^^^^ ^^^^ ^0^® ^P^^ ^^ observation which I of dissolution, have made several times already — it must depend upon the particular circumstances. The nature of the business may be such that the outstanding debts can readily be got in, or it may be such that, in the ordinary course of things, it will take a long time to recover them. The principal or only assets may be represented by lands and buildings, by plant, by goods, by advances on mortgage or otherwise, by anything, in fact, which is capable of being the subject of ownership. Perhaps the most usual arrangement where there are several partners, is to provide for a continuance of the part- nership, or, as I should prefer to call it, the creation of a fresh partnership between the surviving or continuing partners, with provisions for ascertaining by valuation, and, if necessary, arbitration, the amount due to the estate of the partner who has died, or become bankrupt, or otherwise gone out of the firm, and for payment of the amount by stated instalments. When the firm consists of only two members, there is, of course, no question of a continuing partnership, although there may be an intention to carry on the business ; and it is a matter for consideration with reference to the nature of the business and all the surrounding circumstances how far, if at all, the surviving or continuing partner is to be trusted in regard to the conduct of the DISSOLUTION — STIPULATED CONSEQUENCES. 57 ■winding-up and the payment out of the other partner's share. There must, of course, he an account taken in the event of dissolution, and it is matter for arrangement and adjustment in the partnership articles whether this account is to be taken as at the death, or from the foot of the last preceding balance sheet, with an addition for any estimated profits less any sums which the deceased or out-going partner may have drawn subsequently to that date on account of profits. It is a pity to leave such matters open, because it may save much confusion and trouble to have them provided for, and they are well within the border-line which separates probable from remote contingencies. I often think that if draftsmen would give their whole attention to the consideration of what terms are really necessary and proper to put the particular partnership on a satisfactory footing, with a due but not an excessive regard for the contin- gencies of the unknown future, partnership articles would frequently be minus a great deal of immaterial padding and rank rubbish which have survived as common form clauses, and plus some really useful provisions not to be found in them. Where it is intended that siu'viving partners, either Where busi- alone or in conjunction with a son or representa- °*^®®*ob6 tive of a deceased partner, shall carry on the business, after dissolu- the shares in which they will be interested should be carefully specified, as otherwise there may be a great risk of the arrangement breaking down ; and again, in the case of the arrangement extending to the admission of a new partner, he should execute a supplemental instrument wlien the time has anived at which he has the opportunity of electing to enter the firm, and he does elect to do so, in order that he may become bound by the provisions of the old articles so far as they are apphcable to the new arrangement ; and again, pro- vision should be made for payment by the continuing partners of the debts of the firm in due com'se — that is 58 DISSOLUTION — STIPULATED CONSEQUENCES. Payment of deceased partner's capital. I Goodwill. to say, in accordance with, the usual coui'se of business — and for releasing the estate of the deceased partner from liability to any claims of the surviving partners. The engagement to pay the debts would of course, however, not bind any creditors, and would only protect the deceased partner's estate as between himself and the surtiving partners. In adjusting arrangements for pajTuent out of a deceased partner's capital there are two points to be prominently borne in mind, and while their application is not always easy, your task, so far as you are called upon to originate or advise upon, as well as to give effect to, such an arrangement, will, I think, be lightened by keeping them constantly before you. On the one hand, it is in most cases opposed to the consideration justly due to a surviving partner that he should be obliged to pay out instantly, or very speedily, a share of capital considerable perhaps in amount, and also perhaps sunk in partnership property not able to be realised hurriedly without great injmy to the concern. On the other hand, so long as the share of the deceased partner's capital is in the business, it is necessarily at a risk — perhaps a considerable risk — without producing profits (other than some moderate interest which is usually stipulated for), and its realisation ought not, therefore, to be too long delayed. The next subject to which I propose to draw your attention is that of goodwill, the recognition and mode of dealing with which often give rise to questions of considerable nicety in connection with the dissolution of a partnership. It is not easy to give a satisfactory definition of good- will, and yet it may, and in many cases unquestionably does, represent a very important element in a partner- ship business. It is described in Lindley on Partner- ship (w?) as the term generallj^ used to denote the benefit (m) 4th edit. p. 8o9. GOODWILL. 59 arising from connection and reputation, and, in the same passage, its value is stated to be what can be got for the chance of being able to keep that connection and improve it. In Smith's Mercantile Law (;?), it is referred to as a species of interest arising from various and often accidental cuxaimstances, such as the situation of a house, the changes in a neighbourhood, and the prejudices of customers ; and this writer adds, that where the profits of the business result almost entu'clj from confidence placed in the personal skill of the party employed, as in the case of surgeons or attorneys, the goodwill is too insignificant to be taken notice of. I cannot, however, assent to that proposition, put in that way, for a moment. It is a matter of common knowledge that on the death of a surgeon or solicitor, large sums are often paid to his representatives for the practice, which means nothing more or less than a purchase of the chance that the purchaser may bo able to step into the shoes of the deceased practitioner, as to the patients in the one case and the clients in the other ; and it is idle to say that the goodwill is in such a case too insignificant to be taken notice of. But there does attach to the case of a profes- sional business dependent on personal skill a difiiculty — in the absence of agreement — in computing the goodwill as a partnership asset, because it is difficidt to get hold of anything tangible. The late Master of the Rolls was forcibly impressed with this in a case of Arundell v. Bell (o2 L. J. R., Ch. Div. 537), in which a question of the goodwill of a solicitor's business came before the Court of Appeal; and he laid it do^\^l, as a general rule, that in the absence of express contract there is not, in a partner- ship between solicitors, any partnership asset Avhich is capable of being sold or valued as the goodwill of the partnership business. Sir George Jessel's judgment in that case is very instructive, and I strongly recommend (») 8th edit. p. 193. GO GOODWILL. General principles of law as to goodwill. Practical result of fore- going pro- positions. >( you to read it ; but I must not omit to point out that his ruling on this head was not necessary for the decision of the particular case, and that Lords Justices Baggallay and Lindley purposely refrained from expressing any decided opinion on the point one way or the other. I think that the leading principles of the law as to the goodwill of a business, where there is no express agree- ment on the subject, may fairly be put in this way : — First, that in the ease of a mercantile business or any other business not dependent entirely on personal skill, the goodwill is clearly recognized as an asset of the partnership, and not as a right passing to the surviving or continuing members of a firm to the exclusion of a deceased or out-going partner. Secondly, that in the case of a business dependent on personal skill, it is at least doubtful whether the good- will can be so made available as a partnership asset ; and — Thirdly, that a goodwill where it is capable of being sold, must, on dissolution, be sold for the benefit of all the partners, if any one of them insist upon it ; but — Fourthly, that in no case is there any obligation on the part of any of the partners of a dissolved firm to retii'e from business, merely because the partnership is dissolved, although so far as is possible consistently with that circumstance, the Court will interfere to protect and keep intact the goodwill of a business imtil it is sold (o). If you analyse these propositions, two things will, I think, strike you forcibly ; one is that, in the absence of agreement, the goodwill of a business must in the large majority of cases be at the mercy of the sm'vi'sdng or continuing partners. Entitled as they are to carry on the self-same occupation on their o^ti account, next door to the dissolved firm's business premises if they please, and possibly also (though this is not clear) in the name (o) Lindley on Partnership, 4th edit. pp. 859 — 861. GOODWILL. 61 of the old firm, it is manifest tliat a pureliaser of the \^ ->" goodwill must have a very slender chance of gaining ^ anything by his bargain should this formidable com- petition be started against him, and, indeed, that it would be hard to find a purchaser who would buy at all in such circumstances. Then another observation is this, that if the goodwill is an important asset of the dissolved firm, and represents to the surviving or continuing partners a source of considerable gain, and, in the absence of competition by them, represents also what may be a valuable subject for sale to an outside purchaser, it is only just and equitable that the deceased or out-going partner should not, as it were, have his share of this joint property abstracted from him or his representatives, as the case may be, by the exercise on the part of the surviving or continuing partners of a right to carry on the same business and do their best to appropriate the connection. The means of avoiding such a result are not provided for by law, nor is it easy to see how they could be. But they are ready to the hands of all who enter into partnership agreements, because it is competent for the partners to make any arrangement as to goodwill that they please ; and I may add most unwise of them not to do so where, as is almost invariably the case, there is any likelihood that the business will survive the dissolution of the particular partnership. In considering the best practical mode of dealing in Considera- partnership articles with the subject of goodwill, the tioiis affecting •■• ^ ^ o J express first point to which attention should be turned is the clauses as to character of the business, the extent to which, if at all, ^°° ^ " the value of the goodwill would be dependent upon its association with the premises on which the business is carried on, and the relation which personal skill on the part of the partners may reasonably bear to other elements of prosperity. There are some businesses which represent almost the characteristics of a pro- 62 GOODWILL. perty to be handed down from generation to genera- tion, from partner to partner. Tliere are others which can only be sustained or increased by the personal qualities aad skill of the partners for the time being, and others lie mid-way between the two extremes. The extent to which goodwill may fairly be made by stipula- tion a subject of ownership and of purchase on the dissolution of a firm would be largely dependent upon the view taken of the business from the aspect in which I am now presenting it. The more it possesses, as it were, inert properties of smTival and continued exist- ence, and the less it is and is likely to be dependent on the personal characteristics and exertions of the partners for the time being, the greater must be the value to be attached to the goodmll as a partnership asset. I in no-wise mean to detract from the personal ability of those engaged in commercial pursuits, or to suggest that they do not in many cases show consj^icuous energy and talent, when I say that in so far as it is possible to mark the distinction which I am drawing with a broad line, I think it may fairly be said that the goodwill of a business is usually a more important and. valuable asset in the case of a mercantile than in that of a purely professional partnership. Writing on the subject of goodwill Lord Justice Lindley says {p), that it is generally valued at so many years purchase on the amount of profits, but the observation is hardly elastic enough, perhaps, to be an accurate guide to you as draftsmen, because the nature of the business and the other circumstances of each particular case can alone give the materials for judging as to what is a right and proper provision to make as to goodwill. The plan pointed out by Lord Justice Lindley is, however, at all events, one mode, and in the absence of special circumstances seems to afford as good a basis as any other upon which to work. (ju) Lindley en Partnership, 4th edit. p. 863. GOODWILL. 63 There is another passage in the same work which contains valuable advice to the draftsman : — " In framing articles of partnersliip too great care " cannot he taken to express as clearly as possible what " is intended to be done with respect to goodwill, and *' in order to avoid all ambiguity, the word itself should " be made use of. There are cases which show that an " agreement to take a retiring partner's share in the " property and effects of the partnership, or in the " partnership premises, do not entitle him to anything " in respect of goodwill. But in another case, a clause " authorising a surviving partner to take the stock of " the partnership at a valuation, was held to entitle the " executors of a deceased partner to a share of the " value of the goodwill of the partnership, and of a " trade mark belonging to it " {q). It is not easy for me to give you any guiding rules to go by in the particular matter of determining what the clause as to goodwill in partnership articles should contain, beyond the passages to which I have just referred, and, except in so far as I have indirectly indicated them in my observations as to the results which follow, as to goodwill, upon dissolution in the absence of special agreement. There is no magic about the matter, and it must resolve itself at last into what is fair and just to all parties. But there are two suggestions at all events which I may usefully make. The first is, that the parties should be made thoroughly to understand what their legal position will be if they omit mention of goodwill altogether, so that they may know in what respect they will be altering, l)y express stipulation, what would otherwise be their relative positions. For example, if they propose to adopt the expedient of having the assets and good- will sold by some selected person, they ought to be {(]) Lindley on Partnersliip, 4th etlit. p. 864. 64 ^ GOODWILL — TRADE XAME. a"ware that by such a clause each partner will be de- priving himself of the right to caiTj on business on his owa account after the dissolution. This was expressly so decided in a case of Tarner v. Major (3 Griff. 442), where an injunction was granted to restrain one of the pai'tners from doing so before the goodwill of the partnei-ship had been disposed of. The second is this. There is a growing, and on the whole I think a wise tendency to depute to arbitrators the adjustment of any question of difference as between partners, whether before or after dissolution. I have a word to say on that presently, but I introduce the subject here as leading to the observation, that in this matter of goodwill the right and proper thing to be done can generally be judged of very much better by the light of events at the end of a partnership than in anticipation of them at its commencement ; and I am myself disposed to think that the best thing to do is to refer in articles of pai'tnership to the element of good- will with sufficient clearness, to show that in the event of dissolution it io to be taken into accoimt ; but instead of attempting to legislate beforehand as to the precise method in which it is to be arrived at, to leave that to be adjusted by arbitration, if, and of coui'se only if, the parties concerned cannot come to a satisfactory arrange- ment without the intervention of third persons. I must not leave this subject without saying a very few words as to two important elements of goodwill — ^e right of user of the trade name of the dissolved— firm, and of any trade marks attaching to its businesgj^ Both of these matters may be of the utmost importance Trade name, in the computation of the value of goodwill. As to the first, several of the authorities are referred to in Lindley on Partnership (>•), but I must humbly confess that a perusal of the cases left me very little wiser (>•) 4th edit. p. S62. TRADE NAME — TRADE MARKS. 66 than it found me, and that I cannot pretend to have formed, and vnR not, therefore, attempt to express any confident opinion as to whether on a dissolution of partnership a partner is entitled to continue the old business in the old name for his own benefit. Lord Justice Lindley bases upon the fact that a purchaser of a goodwill is imdoubtedly entitled to represent him- self as the successor of those who carried on the business, and to prevent anyone else from doing so, the argument that a continuing partner ought not to be able to acquii-e that same right for nothing as against an outgoing pai-tner, or the representatives of a deceased partner; and although this view is not altogether in harmony with the authorities, I cannot but venture to think that it is the sound one, and would prevail if the matter were now to be judicially decided. In any event I am sure that this is a matter which may be best dealt with and set at rest, once for all, by the partnership articles. As to trade marks you will all be aware, from your Trade marks, own personal observation, of the fact that they may possess great value, because you will have seen what immense sums are spent in advertising goods in special connection with them, and what immense pains ^r. A. will frequently take to imitate Mr. B.'s trade mark as closely as possible without actually bringing himself within the meshes of an injunction, and how valiantly Mr. B. is apt to resent any trespasses on his trade mark domain. It is well settled that a trade mark is as much an asset of the firm as anything else, and any provisions in the partnership articles as to goodwill should, in an appropriate case, declare, as to any trade marks which may at the time of dissolution belong to the firm, how they are to be dealt with. I have ali'cady mentioned that the good'^iU of a The partner- business is often very closely identified with the parti- ^^^^ ^^^' cular premises on which the partnership business is T. F clause. C6 AEBITRATIOX CLAUSE. carried on. So mucli is this the case, that in a great many trades the goodwill, without possession of the identical premises, is for all practical purposes* valueless. From this it follows that the mode in which the partner- ship premises are to be dealt with on dissolution should not be lost sight of, and if it is contemplated that the business will be carried on after dissolution, the provi- sions on this head should secure to the surviving or continuing partners the right to retain the premises in connection with the goodwill upon the terms of making proper stipulated compensation to the outgoing partner, or the estate of a deceased partner, in respect of their acquisition of his interest in both. Arbitration I tm'u now to the last subject on which my limits will permit me to dwell — that of an arbitration clause in a partnership agreement. It has, as I indicated just now, become more and more the custom, in modern times, to inseii in partner- ship articles a clause of which the effect is to substitute a tribimal of private arbitration in place of recourse to the Coiu't for the adjustment of differences. Why desir- The relations between partners are from the nature of things so complicated, and they assume such varying phases from causes altogether outside the possibilities of calculation or anticipation when partnership articles are framed, that experience shows it to be beyond human ingenuity to provide for all contingencies. It follows that matters often arise, both during the continuance of a partnership and upon its dissolution, for the adjust- ment of which there is no charter, and that if the good sense and mutual forbearance of the persons interested can find no other solution, there is nothing for it but the interposition of the Court or of private arbitrators. As a rule it is recognized to be much wiser, in the in- terests of all parties, that partnership dirty linen should be washed as quietly and unobtrusively as possible, and hence it is that arbitration clauses have steadily able. ARBITEATION CLAUSE. 67 grown in favour, and that it is the rule and not the exception to find such a clause in a partnership agree- ment. In former times those arbitration clauses, whether in Howregardcd partnership articles or other instraments, though not formerly, actually looked upon with avowed disfavour by the Court, received hut a very faint measure of approval. The specific performance of such a provision could not be enforced in equity, nor could damages for the breach of it be recovered at law, nor could it be pleaded in bar either at law or in equity ; and the utmost extent to which the Courts were disposed to recognize it was this — that the conduct of a party who insisted on seeking the Court's aid without first attempting to obtain redress under an arbitration clause did not commend itself (s). In one case of Waters v. Taylor (15 Yes. 10), Lord Eldon went the length of refusing to appoint a receiver and manager of the Italian Opera House upon an interlocutory motion, on the ground that there were special provisions for referring to 'arbitration the par- ticular matter in dispute ; and in delivering judgment he made these observations, which illustrate exactly how the law then stood on this subject : — " As a general proposition, it is true that an agree- " mcnt to refer disputes to arbitration will not bind the " parties even to submit to arbitration before they come " into Court. I would not, therefore, say that the conse- " quence of this provision in the instrument is that a " suit cannot be instituted, without adding this quali- " fication, that the Court, if bound to administer relief, " is fully justified in pausing before it takes upon an in- " terlocutory motion a step that is, in truth, the greatest " part of the relief .... It is much more wholesome, " where the parties have contracted for this mode of " settling their differences, and the point in dispute is (s) Notes ill Jarman and Bytliowood's Prcccdouts, Edition of 1830, Vol. VII. 11. 31. f2 68 ARBITRATION CLAUSE. " one wliieli is expressly provided for, to let tliem try " whether they cannot so settle it, than that this Court " should interpose upon this sort of summary applica- " tion." How affected go stood this matter down to the passing of the V^ct. c. 125. Common Law Procedure Act, 1854 (17 & 18 Yict. c. 125). Sections 11 to 18 of that Act contain very important provisions still in force as to the law of arhi- tration, and they are all very well worthy of your attentive perusal, but the eleventh section is the most material one for my particular purpose. The substance of it is, that whenever the parties to any deed or instrument in writing agree that any existing or future differences between them shall be referred to arbitration, and any one or more of the parties nevertheless com- mence an action against the others in respect of any of the matters so agreed to be referred, it shall be lawful for the Court, on application by the defendant after appearance and before plea or answer — which would now read before Statement of Defence — upon being satisfied that no sufficient reason exists why the matter in dispute should not be referred to arbitration, and that the defendant is willing so to refer it, to stay all proceedings on such terms as to costs and otherwise as to the Couii seems fit. The section concludes with a proviso that an order made under it may at any time afterwards be discharged or varied as justice may require. If you examine this section a little carefully you will see that it leaves the Coui't entirely unfettered. Even when a judge is satisfied that no sufficient reason exists for not referring a matter to arbitration, it is only a case of " it shall be lawful," and I daresay most of you are aware that in the leading modern case of Julius v. T/ie BishojJ of Oxford (L. E., 5 App. Cas. 214), that expression was held to leave discretion quite un- fettered — in other words, to be permissive only and not imperative. ARBITRATION CLAUSE. 69 Tlie practical result of the Act has, however, been How regarded this — that it has freed the Court from many of its old ^q^,_ ^ doctrines and decisions, and set the current of authority- running in the other dii-ection. The law, as stated by Lord Justice Lindley, stands at present in this way — that where there is a bona fide dispute within the mean- ing of an agreement to refer, and there is no satisfactory reason why such dispute should not be settled by arbitration, legal proceedings will be stayed, even though the agreement to refer is contained in articles of partnership for a term of years which has expired (f ) . Merely to give you a few samples of the mode in which the Court exercises its discretion, I may mention that, in the following instances, it has declined to inter- fere — where there have been several matters in dis- pute, only some of which fell within the agreement to refer {u) ; where one of the parties had become bank- rupt (r) ; where there was a ho)u\ fide suggestion of fraud {iv) ; and where the Court was satisfied that the defendant's only object was delay, and there was really nothing in dispute {x). So much then as to the law bearing upon the abstract Draftsman- matter of an arbitration clause. With regard to its ^ "P ° draftsmanship there is not very much to be said. In some cases of course the partners are willing to make it embrace wider issues than in others — for example, it is entirely a matter for personal choice whether they will remit to arbitration the value and terms of payment for the interest in goodwill of an outgoing or deceased partner, or whether they will declare by the articles upon what principle it is to be valued and paid for. Some- times the arbitration clause goes the length of giving power in terms to arbitrators to award a dissolution ; (<) Lindley on Partnership, 4th edit. p. 869. [u) Whcatley v. Wentminstcr, ^-c. Coal Co., 2 Dr. & Sm. 347. {v) Pcmieltv. Walker, 18 C. B. G51. [w) Wallis V. Hirsh, 1 C. B., N. S. 31G. [x) LuDj V. Fcarson, ibid. G39. 70 ARBITRATION CLAUSE. and there is apparently some authority for the pro- position, that even without this clause an arbitrator may, imder a general submission of all matters in difference, award a dissolution, though I should not myself feel very confident of the award standing in the absence of express power to the arbitrator to dissolve. In so far as you have any discretion in the matter, I think that you will exercise it wisely in the dii'ection of making the clause as comprehensive and wide as possible, and for the rest the great thing above all others is to make it clear and free from all possible ambiguity. It is bad enough for partners to be plunged in a suit or a hostile arbitration, and it is a cruel addition to the situation when the determination of the matters really in dispute has to bo preceded by the determination of the meaning of the clause under which those differences have to be adjusted. I must not omit to point out that, in order to prevent a reference to arbitration from becoming revocable at pleasure by either party, at any moment prior to the actual making of the award, it is essential that the clause should in terms provide for the agreement being made a rule of Court. The very recent case of Frascr v. Ehrcnspcrgcr (53 L. J. R., Q. B. D. p. 73), affords a striking illustration of the importance of bearing this in mind. Concluding ^ fg-^ words in conclusion upon the subject of this and my pre\dous Lecture. You may probably have gathered from what I have here and there said that I do not regard partnership articles as falling mthin the class of instrument in which the services of counsel may, generally speaking, with any great advantage be em- ployed. Nor do I. To me it seems that, in order to get partnership articles properly drawn by counsel, it is necessary to place before him instructions as trouble- some and difficult to prepare as the articles themselves. The arrangement is of a character dependent upon the intentions and wishes of the partners. In so far as the solicitor's function. 71 articles should embrace any common form provisions applicable to partnerships in general, your clerk can copy them out for you just as well as a barrister's clerk can copy them out for him ; and in so far as the terms are special and appropriate to the particular circumstances, the solicitor must either prepare the clauses, or, as I just said, prepare heads or instructions virtually embracing the clauses. Like most general observations, this one is of course subject to exceptions ; and I am very far indeed from saying that, where the interests are important, or the provisions very com- plicated, you may not with advantage bring another mind to bear upon them, even if it be only as a critic upon your own method of expressing the terms. I am rather warning you against the supposition that if two or more persons are going into partnership, your duty will be discharged by sending a back sheet to counsel with an endorsement requesting him to settle partnership articles between them. You, the solicitor, must think the matter out, must bring your own mind to look at it in all its bearings ; and if it seems fitting to you to invoke the assistance of a learned counsel, you must bo sui'o that you provide him with accm-ate materials. You will not suppose that all you need learn on the subject of partnership articles, even from a con- veyancing point of view, can be compressed into two Lectures. I shall have gained the utmost I can hope to accomplish if I have succeeded in leaving upon your minds a lasting impression of general principles and rules by which to guide your steps. Suffer mo to advise you earnestly not to rest and be content with this groundwork of knowledge, but to supplement it by reading and personal observation, so far as you can do so consistently with a due regard for the many branches of learning which claim the law student's attention. THIRD LECTURE. LEASES and AGREEMENTS FOR LEASES. r THEIR RELATION TO EACH OTHER. DEDUCTION AND INVESTIGATION OF INTENDING LESSOR'S TITLE. COMPETENCY OF PARTIES. EFFECT OF LEGISLATION ON DRAFTSMi\J^SHIP OF LEASES. ( 75 ) THIRD LECTURE. In this and my next following Lecture yoiir attention ^vVJ^^^ ^t -, 1 1 • , P T T A Thu-d and Will be dn-ected to the subject o± Leases and Agree- Fourth Lec- ments for Leases from the special point of view in *^^^®- which the preparation and perusal of these documents should be approached by the solicitors for the lessor and lessee. In order to clear the ground at starting, let me Class of say at once that in speaking of leases I shall confine -nrith. myself to those intended to create in solid reality the relationship of landlord and tenant, and put out of sight altogether those, in a sense, artificial terms of years of which Mr. Joshua Williams says {a) that they are created by settlements, wills or mortgage deeds, that no rent is usually reserved in respect of them, that they are frec[uently for 1,000 years or more, that they arc often vested in trustees, and that their object is usually to secure the payment of money by the owner of the land. There are so many principles of law and matters of Treatment of practice common to leases and agreements for leases, ^^^ ^'^^ ' and the distmctions to be drawn between them are so plainly marked and easily grasped now — though, as I shall show you, it was not so formerly — that I think my best course will be first to explain shortly the relation which they bear to each other, and then for the most part to turn your attention to points more or less common to both. "We shall best arrive at a clear understanding of our As to distiuc- duties, in so far as they turn upon any distinction leases and ^^"^ between leases and agreements for leases, by consider- agi-ecments " for leases. ((?) Williams' Ileal Trcpcrty, 13th edit. p. 389. 76 STATUTE OF FRAUDS. Statute of Frauds. How evaded by Courts. ing how the law stands in this matter, and for this purpose we must needs go back to the Statute of Frauds (29 Car. 11. c. 3). Before the passing of that Act a tenancy for a tenn of years of whatever length might be created by verbal agreement. This state of things, which was a relic no doubt of the small regard paid in olden days to interests in land which did not involve any feudal obligations, was put an end to by the Statute of Frauds, the fii'st and second sections of which declared that a lease by parol, unless it were a lease for a tenn not exceeding three years, at a rent of at least two-thirds of the full improved value, should have the force and effect of an estate at will only, while the fourth section enacted in substance that no action should be brought whereby to charge any person upon any contract or sale of lands, or any interest in them, or upon any agreement not to be performed within a year, unless the agreement, or a memorandum or note of it, should be in writing and signed by the party chargeable or his authorised agent. These two sections led to this odd result — that under the first and second sections a good lease could be made for any period up to three years by word of mouth, while under the fourth section a verbal agreement for a lease was void, however short the term might be. In both cases the Courts managed, to a certain extent, to get round the Act ; for although the first section declared that a lease by parol for more than three years should have the effect of an estate at will only, it was held at law that a good tenancy from year to j'ear on the terms, in other respects, of the void lease might be created where entry was made under it ; and the Court of Chancery went as usual a step farther, and where the tenant had entered imder a void lease, compelled the landlord in many cases to grant a valid lease upon the principle that the part performance of one party entitled him to specific performance by the other. LATER ACTS. 77 The same doctrines were applied substantially to void agreements for leases under the fourth section of the Act. Inasmuch as no special form of words was ever necessary to constitute a valid lease, the intention however expressed by the one party to give, and by the other party to take possession, being in fact pn'md facie sufficient for the pui'pose, it fell out that after the passing of the Statute of Frauds questions constantly arose in the Coiu'ts of Law as to whether in a given case, and especially of course where the document was informal, an instrument in writing amounted to an actual present demise, or only to an agreement to grant a future lease ; and it is not an exaggeration to say that the varieties of the language in which the mean- ing of the parties might be expressed, and the refine- ments of which the construction of different words used admitted, resulted in a perfect forest of decisions. This state of things lasted down to the year 184-1, 7 & 8 Vict, when the Statute 7 & 8 Yict. c. 76 was passed. That ^' '^' Act was, however, repealed and superseded in the follow- ing year by the well-known Eeal Property Act of 1845 8 & 9 Vict. (8 & 9 Yict. c. 106), and the way in which this particular matter was dealt with by the latter Act was to require that all leases then required by law to be in WTiting should thereafter be void at law imless made by deed. This, as you will see, excludes the possibility of con- struing as a lease any instrument not under seal to the validity of which writing would have been necessary under the Statute of Frauds. I need hardly say that a great many instrimients not under seal have been entered into since this Act as to which it has been difficult to collect from the langua^-e used whether the parties intended them to operate as leases — in which case they would have been void at law — or as agreements for leases, in which case they would not have been open to objection. Of the decisions c. 106. T'S ' pkactitioner's duty. to whicli ambiguity of this sort has given rise, it is observed in the 12th edition of Woodfall on Landlord and Tenant (p. 119), that since this Act " Courts of " Law will construe a writing rather as a valid agree- " ment for a lease than as a void lease " ; and to that observation I would only add, that under the equitable doctrines which now prevail, it is very difficult to imagine a case in which effect would not be given, whether by way of specific performance or otherwise, to a written document in which the intentions of the parties to create a tenancy is expressed, and especially of course where they have in any way acted upon it. Present state The state of the law on this subject may, therefore, of the law. , i • , i • be summed up m this way : — (1) An agreement for a lease falls within the fourth section of the Statute of Frauds, and must, therefore, be in writing and signed, although effect may be given to a verbal agreement, on equitable principles, where it is complete in its terms, and the parties have acted on it. (2) A lease may be made by parol for any term not exceeding three years if a rent be reserved of two-thirds of the full value. (3) All other leases will be void as leases unless made by deed, but when not so made will generally be con- strued as agreements for leases and have effect given to them in that character. Practical con- Taking these, then, to be the first principles, what elusions moral should we, as practitioners, deduce from them for our guidance ? First, with regard to such leases as may, if the parties so please, be made by word of mouth, we may safely assume that, when so made, they will not come before you at the stage of their creation, but at the almost inevitable later stage of the lessor and lessee being at loggerheads and Contracts for disputing tho terms of the letting. But it may be worth shonld^be in while for me just to remind you in passing that many ■uTitmg. things which arc lawful are not expedient, and that if practitioner's duty. 79 you ever do have occasion to deal with the point, as professional advisers yon should set your faces most emphatically against the creation of a tenancy for how- ever short a time, unless it bo a mere question of weekly lodgings, without writing. All may, of course, go well in this or that particular case without this pre- caution, but experience most abundantly shows that the frailties of human nature render it, in the vast majority of cases, essential to preserve written evidence of the terms of a bargain of any importance which is not per- formed right out of hand ; and of all the bargains to which the observation applies, that between landlord and tenant needs perhaps more than all others to be incorporated in a written instrument. I remember not long since acting for the lessor in a case in which a furnished house was being let for a term — unusually long for a house let in that way — of three years. The tenant was in his own esteem, and in that of his wife, a gentleman of some position, and he was very in- dignant because I insisted, in the interests of the land- land, on having a written agreement for a lease. He declared, in effect, that he had not had such an agree- ment in the case of the house ho was leaving, that the landlord of that house regarded him Avith feelings of profound respect, that his word of honour as a gentle- man ought to be more than enough to satisfy me, and much more to the same effect. He was good enough even to suggest that my requirement was animated by a desu-e to promote the interests of my pocket, and by no other consideration whatsoever. It is a literal fact that this individual had not been inside the house for one week before he raised a contention directly at variance with the terms of lotting, and which I was only able to defeat without a long wrangle, and probably expensive litigation, by the aid of the agreement. I mention this just as a simple instance of what may happen to any one of you in practice. 80 COMPAEISON OF LEASES AND AGEEEMENTS. Assuming that the terms of tenancy are expressed in •writing — whether as a matter of prudence, though not of necessity, in a case falling within the exception to the Statute of Frauds, or as a matter of legal necessity, in a case to which that Act and the Statute 8 & 9 Yict. When lease c. 106 apply — the Cjuestion arises, when would a lease ao-reement for ^^^ when would an agreement for a lease be the appro- lease appro- priate instrument ? And this, of coui'se, is a question which every well-instructed practitioner should be able to answer. I am not able to suggest any appreciable difference in point of legal force or value between the two classes of instrument. In so far as the more liberal doctrines of equity were at variance with the technical rules of law as to the position of a tenant holding under an agreement for a lease as compared with that of an actual lessee, I apprehend that the 25th section (sub- section 11) of the Supreme Court of Judicature Act, 1873 (36 & 37 Yict. c. 66), which declares in effect that the rules of equity are to prevail wherever they are in con- flict with the rules of law, has clearly swept away any distinction {h). At the same time it is not, I think, absolutely clear that a lessee may not still possess some very shadowy advantages, as, for instance, in the case — a very extreme illustration, I admit — of his being ousted from possession by a third person and compelled to bring an action for recovery of the property. I am not by any means sm'e that he could, even now, maintain such an action in the absence of his being clothed with the legal ownership of the term. Again, for pui-poses of marketable dealing with the leasehold interest, I think that a lessee who can execute an assignment of a legal term occupies in some slight degree at least a better position than a man holding only an executory contract to grant a lease. (b) See TFahh v. Lonsdale, 52 L. J. E., Ch. Div. 2. COMPARISON OF LEASES AND AGREEMENTS. 81 Putting aside refined technical considerations, and looking at the matter in a practical way, it is, I think, tolerably evident that, all other things being equal, two people who desire to create the relations of lessor and lessee in fact may just as well enter into a lease while they are about it, as into an agree- ment for a lease, followed or not followed, as the case may be, by a lease. In a good many cases it would be difficult to say why the other j)lan is adopted, especially when it is borne in mind, as to leases for terms not exceeding thiiiy-five years, that the same stamp duty is imposed upon an agreement for a lease, as if it were an actual lease by deed. But there may be reasons more or less sufficient for entering first into an agreement and then into a lease, or for entering into an agreement which entitles either party to require a lease to be executed, but without any actual intention on either side of making that requirement. It may be that the granting of a lease is to be conditional on the performance of some act by the tenant which is stipu- lated for in the agreement, as, for instance, that the tenant is to build a house within a certain stipulated time, and is then to have a lease granted to him on such and such terms. Or perhaps the granting of a lease is one of several stipulations of an agreement involving other matters also, as where a partnership is formed or reconstructed and an-angements are made as to the premises used for carrying on the business, which belong perhaps to one member of the firm. Or again, time or economy may be a great object, and the more concise mode of expression used in an agreement under hand may be considered on that account desirable. But this last reason does not commend itself to me, and I will tell you why. The difference in length between an agreement for a lease so framed as to bo capable of forming a clear and therefore easily expressed contract, and an actual lease, is not at all considerable now, what- T. G visions. 82 COMPARISON OF LEASES AND AGREEMENTS. ever it may have been in tlie days when every deed was framed on the principle of stuffing- ten words into it everywhere to express the meaning of one, and it can only be made considerable at the cost of giving the parties a contract which may afterwards form the subject of a very pretty suit. When it is said in an agreement that a future lease is to contain certain pro- visions, it is imperatively necessary that it should state with sufficient clearness what those pro\'isions are to be, but this is just exactly what agreements frequently do not do ; and the consequence is that when one party calls on the other to carry out the contract, it is dis- covered that it is not by any means clear what the contract means. In some cases a desii-e to cultivate brevity has even led to the insertion in such an agree- ment of the expression " &c.," of which I need hardly '' V^^al pro- say, perhaps, that it is not calculated to facilitate the construction of the instrument. Another very fruitful source of trouble is a trick of using in an agreement such expressions as " usual provisions " or " usual covenants ; " a class of phrase which nearly always results in a wrangle when the lease comes to be settled, and, as the Reports abundantly testify, not unfrequently ends in litigation. For although no doubt — as the result of litigation — the law is tolerably well settled as to the " usual provisions " of an ordinary lease granted to- day ((■), it may be very difficult to reconcile provisions expressed in an agreement with these incorporated "usual provisions," and it may also be very difficult to determine how far any given provisions are usual when applied to some particular subject-matter of letting. Remember, I am not saying for a moment that there is any reason why an agreement for a lease should not answer all practical purposes. I am only warning you not to suppose that it is an instrument which can be expressed, as of course, in a few elliptical sentences; and {(•) See JTamjisIiire v. Widens, L. E., 7 Ch. Div. 155. COMPARISON OF LEASES AND AGREEMENTS. 83 to take care when you have to prepare or peruse such an instrument that it so clearly and definitely embodies the terms of the tenancy as to he capable without a shadow of ground for dispute of being relied upon for all purposes as the chrysalis of a lease. By all means express yourself as concisely as you please within the limits of a good and sufficient contract, but do not, as is sometimes done, carry the worship of brevity to the length of leaving out really necessary provisions. In each case then, as it arises, you must ask yourself Practitioner's whether there is any really good and sufficient reason why an agreement for a lease should be entered into, as distinguished from an actual demise. "Where no such reason exists, you will be wise, I am sure, to lean in the direction of a lease ; and where there is such a reason, you will most certainly do well to be very careful to see that its terms are clear, definite, and in all respects sufficient to give effect to the wishes of your client, with such superadded clauses as may seem to you to be necessary or desirable in his interests, whether upon general principles or with reference to the particular facts. So much as to the distinctions between the two classes of instruments. But before leaving the subject of agreements for leases, I must not omit to direct your attention to one important point bearing upon them which has no relation to leases, but, on the contrary, can only arise where an agreement for a lease is entered into, 01-, at all events, at a stage anterior to the granting of a lease. Before the Vendor and Purchaser Act, 1874 (37 & 38 Former and Yict. c. 78), came into force, an intending lessee would to ri<^it to have been entitled, in tlie absence of stipulation to the investigato . . . intending' contrary, to call for and investigate the lessor's title, lessor's title. By the 2nd section (sub-section 1) of that Act, the onus was shifted to the other side. It was provided that under a contract to grant a term of years, whether g2 84 INTENDING LESSOR S TITLE. Practical duty of in- tending lessor's soli- citor as to investigation of lessor's title. derived or to be derived out of freehold or leasehold estate, the intended lessee should not be entitled to call for the title to the freehold. This provision was extended by the 13th section of the Conveyancing and Law of Property Act, 1881 (44 & 45 Vict. c. 41), by excluding the lessee from calling for the title to the leasehold reversion upon a term of years derived out of a leasehold interest in land. Both pro^dsions are, however, limited strictly to leases for a term of years, and have, therefore, no application to leases for lives or for any other measurement of time or interest than a fixed period of so many years. As the law now stands, therefore, if I agree to grant a lease, the intended lessee cannot, if I am 'a freeholder, call for the title to my freehold reversion, unless the contract gives him in express terms a right to do so ; and if I hold an underlease, he is similarly precluded from calling for the title to the leasehold reversion* The practical questions which arise on this state of the law obviously are. When ought a solicitor for a lessor to insist on precluding the lessee from inserting a clause giving him the right which, in the absence of express provision, is taken away by the statute ? And, conversely, when ought the solicitor for a lessee to stipulate on his client's behalf for the right to investigate the lessor's title ? We may, I think, dispose of the duties of the lessor's solicitor in both these cases in a few words. Ordinarily speaking, his client has nothing to gain or lose by the investigation if his title is a good one, and, if it is not a good one, he manifestly ought not to attempt to grant the lease. As to the expense involved it may in many cases — for instance where an ordinary rack-rent lease is the subject of the bargain — be fairly stipulated on the lessor's side that, if the lessee chooses to investigate the title, he must bear the expenses incurred in deducing it to him. And where this stipulation is carried the lessor will take no harm generally from conceding the investigation, though he may, of course, be subjected to INTENDING LESSOR's TITLE. 85 the annoyance of delay, and be put to trouble, which he would rather avoid. I have looked with some curiosity into the leading books of precedents published before the Vendor and Purchaser Act, 1874, to see whether it was then regarded as the right practice to preclude the lessee by stipulation from exercising his right of investigating the lessor's title, and I have satisfied myself that the large majority of precedent writers did not then insert such a clause as an appropriate common form provision. Whether it was considered that the lessor had no great object generally to gain in resisting the lessee's right to such an investi- gation, or that the expense to which the lessee would be put by adopting that course would be prohibitory in ninety- nine cases out of a hundred, I am not prepared to say, but I should imagine that both of those reasons con- duced to the result of commonly, though not invariably, leaving the parties in that respect to their rights and liabilities under the general law. When we come -to consider the, matter from the Practical lessee's point of view we are met by some, but not, I te^Jino- ^' think, very great difficulty in arriving at a conclusion lessee's soli- as to the course which his solicitor ought to take. Now, to begin with, it is a fundamental principle of real property law that a lessee has constructive notice - of his lessor's title. If, for example, I accept a lease of property, the ownership of which is affected by any restrictive covenant, I am supposed to have notice of the restrictive covenant, whether I do, as a matter of fact, know of its existence or not. This principle has not been affected — remember this, pray — by the Vendor and Purchaser Act, 1874. That point was very forcibly put by the late Master of the Rolls in a case of Patman V. Uavland (L. R., 17 Ch. Div. 3^3 ; 50 L. J. R., Ch. 642) in this way : — " All the Vendor and Purchaser Act does is this — " it makes an express stipulation necessary to see the 86 INTENDING LESSOK's TITLE. " lessor's title ; whereas formerly the rule was the " other way, that without express stipulation the lessee " had a right to see it. Formerly if the lessee had " expressly stipulated not to look into his lessor's title, " it would not have affected the doctrine of constructive " notice. A man may bargain to shut his eyes, hut if " he does wilfully shut his eyes, whether as a bargain " or not, he will still be liable to the consequences of " shutting his eyes .... Under the statute, where there " is no proviso entitling the lessee to look at his land- " lord's title, it is exactly the same as if he had expressly " bargained not to look into his lessor's title." You will see, therefore, that when settling an agree- ment for a lease on behalf of a lessee, you now have to consider whether or not to insist on or, at all events, endeavour to procure the insertion of a clause giving your client this right of investigation of title ; or, again, in the alternative case of an agreement being entered into, whether to demand this investigation as a preli- minary to the acceptance of a lease. Speaking generally, I have no hesitation in sajing that you may with propriety refrain from any attempt to secure the right. Taking the case of an ordinary occupation lease of a dwelling-house, for instance, you woidd incur the just censure of your client if you were to put him to the heavy expense of an investigation of the lessor's title ; such a thing in practice is unheard of. But there are leases and leases ; and it is quite a different matter where your client is taking, we will say, a building lease of a piece of land at a ground rent and entering into covenants to lay out a very large sum in erecting houses on it, or a lease for ninety-nine years of a piece of land on which he is going to sink a pit at an expense of a great many thousands of pounds. In such cases as this — whenever the consequences of the lessee's being ousted by a title superior to that of his lessor would be of grave moment — his solicitor is not INTENDING LES.SOR's TITLE. 87 only justified iu satisfjdug himself as to the lessor's title, unless it is, so to speak, a matter of public know- ledge that the title is a good one, but it is, in my opinion, a matter of common prudence that he should do so. If the lessee objects — if he prefers to take the small chance of his lessor's title proving to be a bad one in preference to the certain expense involved in setting that point at rest — well and good. Clients may, as Sir George Jessel expresses it, bargain to shut their eyes if they please. But it is one thing for the client to shut his eyes with knowledge of the certain or possible consequences, and another thing for his solicitor to allow him to do so in ignorance of them. And therefore I am anxious to impress upon you that there are some descriptions of lease as to which the security of the lessee in the enjoyment of the property leased may be every whit as important as that of a man who has purchased right out a piece of freehold land, and that this is a point to be practically kept before your eyes when you are dealing with an agreement for a lease. From this point I propose to speak of leases only, Agreements but I may just point out to you that in doing so I included in necessarily cover agreements for leases also. If, for observations 1 T • p 1 • • • i ^^ leases example, I satisfy you that m given circumstances a from this particular covenant should be inserted in a lease, it will P*^"^*- be a necessary deduction in your minds that an agree- ment for a lease should in the same circumstances con- tain a corresponding stipulation that such a covenant should be inserted. Now the first matter of all must obviously be whether As to legal the lessor is competent to make a lease at all. Is fS^^''''^ ''^ he under no legal disability ? Again, is he a free agent in the matter, or, if restricted by the tenns of any instrument, acting within the limits of whatever conditions may be imposed on his leasing capacity ? I could not, however, enter into this subject without COMPETENCY OF LESSOR. trespassing, at too great length, on domains wliich lie outside the limits of my subject, and I must needs assume for my purpose the competency of the lessor. Nevertheless, I would ask you to store up in your minds the fact that clients very often do propose to grant leases in excess of their powers, and that a competent conveyancer must always he on the look-out to keep matters straight in this respect. I am not refemng so much to such inherent legal disabilities as infancy or lunacy, because it is hardly needful for me to warn you that if you were instructed by a child of ten or a gibbering lunatic to prepare a lease, you could hardly act on the instructions with propriety ; but I have rather in mind the artificial or partial disabilities which arise from restrictions contained in settlements, wills or mortgages, and in the case of property held by copyhold tenure, and which affect trustees, tenants for life, mortgagors, copyholders, and so on. Wherever the proposed lessor's interest in the property is aifected by any limitation or restriction, it is always necessary to consider carefully whether he is in a position, either alone or with the concurrence of some other person or persons, to grant a lease, and if so, whether any special limit attaches to the exercise of the right in respect of the length of the term or of the other provisions of the lease. I woidd just draw your attention in passing to the important effect of the eighteenth section of the Conveyancing and Law of Property Act, 1881 (44 & 45 Vict. c. 41), upon the leasing powers of mortgagors, of which I treated fully in my former course of Lectures {d). The competency of the lessee to accept the lease is, of course, also a matter which concerns the lessor, as it cannot serve his purpose to grant a lease only to dis- (d) See Turner's Duties of Solicitor to Client as to Sales, Piir- chases and Mortgages of Land, pp. 279 — 285. COMPETENCY OF LESSEE. 69 cover afterwards that it is void or voidable by reason of some legal disability on the part of the lessee. It is obvious that the disability of a lessee does not As to com- stand on the same ground, in all respects, as that of a lessee, lessor, because, while nothing is commoner than to tie up the owTiership of any given property in such a way as to affect, more or less, the power of leasing it, no one would dream of fettering the power of a person, other- wise legally competent, to accept a lease either of a particular property or of property in general, unless in circumstances so exceptional that we may discard them from consideration. For all practical purposes, therefore, the disability of a lessee turns only upon the general principles of law which curtail the power of ecclesiastical persons, trustees, infants, lunatics, and others to occupy the position of lessees. It is not prac- ticable for me to enter into the nature and extent of these disabilities consistently with doing justice to other matters which fall more appropriately within my subject, but you will find them enumerated and dealt with exhaus- tively in the second chapter of the twelfth edition of Woodfall on Landlord and Tenant, pages 62 — 72. Kindly, then, understand that the competency of both parties to the lease, and the fact that the lessor is acting within his power, in so far as the provisions of the instrument are concerned, will now be assumed by me. We wall suppose that yoiu' client is proposing to grant a lease, and that he instructs you to act for him in the matter. I need hardly say, perhaps, that to his mind the two First con- most important points of all will be the amount of the £tendSg'^°'' rent and the respectability and financial repute of the lessor— T ^ 1 •! 1 p J^ amount of proposed lessee, ana it may be — lor there are some rent and clients who expect a solicitor to do everything: under responsibility i.ini ,. of intending the sun — that on botli these matters he will seek your lessee. advice. Now, as to the amount of rent which should be paid, you may or may not be in a position to express 90 RENT. a reliable opinion ; your ability to do so will depend on such matters as the extent of your knowledge of the property and the neighboiu-hood, and of your practical experience in that particular way ; but I would say to you of this, as I said in my former Lectures on the subject of estimating the value of a mortgage security, that such advice does not fall within the compass of your professional duties as la^^yers, and that no one of you need be ashamed of feeling unable to give it. Indeed, for myself, I would go a step farther and maintain that the less solicitors meddle, generally speaking, mth matters for which they have had no professional training, the better is it for the dignity of the profession to which they belong. At the same time there is, of course, in all these things, room for the exercise of discretion and tact, and within the limits of what is honourable and right clients must be pleased if possible. I remember a friend of mine telling me once that he acted for some ladies who lived in a remote country district, and knew very little of the ways of the world. The consequence was that they looked on him as an admirable Crichton, and thought he could do anything and everything they wanted. He had accepted the situation as far as possible, and executed a good many commissions, the remuneration for which is not recognized in any scale with which I am acquainted, when behold, one day he received at his office a large packet, and on opening it discovered the manuscripts of two novels which these worthy females had composed, and a letter requesting him to be good enough, as the solicitor of the writers, to get the books published. I am sorry to have to confess that he did so, and let loose on the world two of the most hopelessly bad novels I ever attempted to read. As to the other matter which I mentioned — that of the responsibility, and so forth, of the tenant — a solicitor may render very useful service, and I cannot but think EESrO^t^lUlLlTV OF LESSEE. 91 that this is a matter about which lessors have a tendency to be far too Lax, and may often receive a warning note from their solicitors with advantage. Tempted, perhaps, by a high rent, a lessor looks with blinded eyes at what- ever evidence of the tenant's responsibility is placed before him — forgetting that nothing is easier, in general, than to get one or more letters of reference, which may mean anything, and tie the writers to nothing — that it matters nought, Avhether the rent be fixed high or low, if the tenant does not pay it — and that the recovery of possession of premises back from a tenant is still one of the most troublesome proceedings in law. It is, I think, obvious that a solicitor should, from his training and habit of weighing the statements of third persons, be better qualified than the lessor himself to judge of the fitness of a proposed lessee, and that this may fairly be regarded as falling within the range of his pro- fessional duties ; though, of course, the lessor must decide for himself whether or not he will commit tliis particular task to his solicitor, and again, ulthuately, whether or not he will accept the proposed tenant. These preliminaries adjusted, it will be the duty of Treparation of the lessor's solicitor to prepare the draft lease, and 5 ment of rent and performance of covenants until sale as a primary part of the scheme of the settlement. Sometimes, indeed, the nature of the lease may render it desirable for the protection of the trustees to adopt the special course of settling it by way of un- derlease, so that the trustees may not be drawn into the legal obligations to which assignees of a lease are subject. This method and the reasons for it are well expressed in a note which I have found in an edition of Bythewood's Precedents, published in 1833 (//), and I will quote it, partly because it is not of great length, and partly because it is a refreshment in these days to find any law fifty years old which still holds good. The writer says : — " Where the leaseholds about to be settled are subject " to a rent and covenants of an onerous nature, it is " advisable to make tlio settlement by way of under- " lease in order to exempt the trustees from the liability " which tlie}' would incur by taking an assignment ; but " this is a praetico not proper for universal and indis- " criminate adoption, being productive of inconveniences *' which indeed may be outweighed by the propriety of " protecting the trustees, but ought not to be incuiTcd " without occasion. Whenever the settlement is by way " of demise it should be distinctly shown that the rent *' and covenants of the lease are to be discharged by the " grantees, because otherwise there is reason to contend " that they, as underlessees, are entitled, as between " them and the settlor and his representatives, to take " the property free from the obligations of the lease — " or, in other words, to call on the lessor to save them " liarmless under tlic implied warranty resulting from " the words of demise, which is never the intention of " the parties." (/() Vol. IX. p. 187. 156 SETTLEMENTS OF PERSONALTY. Settlement of I liave directed your attention to these few matters °0Dal estate whicli relate specially to freehold and leasehold property as subjects of personal estate settlements, because I have thought it better to point them out at starting rather than to interrupt the general thread of what I have to say upon that class of settlements ; but I will ask you, for the purpose now in view, to consider both freeholds converted into personalty and leaseholds as merged into and not distinguishable from other personal estate. I mentioned at the commencement of my Lecture that strict settlements of real estate are for the most part made by large landed proprietors anxious to keep up a family name and estate. No such class peculiarity applies to Their general settlements of jDcrsonal estate. They are made by people tics^^^ ^"^' i^ ^^^ ^^^'^^ ^^^ conditions of life. They embrace all grades, from the settlement made on the marriage of a young couple about to start in life upon the strength of a policy of life insurance belonging to the intended husband, and a small reversionary interest belonging to the intended wife, which may jorobably come into pos- session about thirty years hence, to the settlement made on the marriage of a couple who, to use a homely ex- pression, are rolling in wealth. Points for Now, looking to this fact, I take it that the first duty consideratwn which a solicitor owes to his client is to consider carefully the situation in life and relative means of the parties, and in particular the nature of the husband's occupa- tion. If all, or the bulk of, the property is settled by the husband the provisions of the settlement will naturally lean in his direction ; and if the converse is the case, the converse will be the result. But whatever may be the disparity of means, it may, I think, be fairly taken that by the act of marriage the parties interested assume to each other a relation in which the object of SETTLEMENTS OF TERSONALTY NEGOCIATION. 157 making a settlement should be to make suitable provi- sions for the husband, wife and issue of the marriage, according to the means available for settlement, and in default of issue to restore the corpus ultimately to the source from whence it originally proceeded. And there is one piece of advice which I would impress upon you as applicable without distinction to all marriage settle- ments, that what is right and just — and even, it may be, from a dry business point of view, generous — is best and wisest in the end for all parties, and that it is no part of a solicitor's duty to seek for his client, and that it is his duty to resist firmly on his client's behalf the taking of, any undue advantage. Great as is the need for tact and judgment on the Need of tact part of a solicitor in many of the duties which he tion. ° is called on to perform, the exercise of these qualities is perhaps as pre-eminently needed in the negociation of a marriage settlement as in any other kind of business that falls to his lot. The intended husband and wife arc usually, though not invariably, disposed at that particular period to look upon such prosaic matters as settlements with indiffer- ence, if not with actual disgust ; but there are gene- rally, and very properly, parents or friends in the back- ground who champion their interests and strike the bargain embodied in the settlement : and it is a matter of common experience to lawyers that many proposed marriages are broken off in consequence of a dispute arising upon the adjustment of the terms of the mar- riage settlement. Now I am very far from tracing these fiascoes alto- gether, or even principally, to the solicitor's door. No one has yet, I think, attempted to fix solicitors with responsibility for the pride or poverty or avarice of their clients. But at the same time I have liad occasion sometimes to think that solicitors do not always exhibit the tact and taste essential for dealing- with sucli delicate 158 SETTLEMENTS OF PERSONALTY — NEGOCIATION. matters. Take the case, for instance, of a projected marriage where the lady is not in a position to make any contribution to the settled property. In such cii*- cmustances the one-sideduess of the means will natm-ally have an effect upon the provisions of the deed, and the terms will be more or less dictated by the ad^-isers of the gentleman. But sometimes the advantage taken of the situation on the gentleman's side exceeds the limits of reason and even of common proj)riety ; the fact that the lady has been thought worthy to assume the position of his wife is lost sight of, and provisions are insisted upon which excite just resentment on the part of the lady's friends and advisers. Reverse the example, and the observation applies at times with still greater force. Not only is the property of the intended mfe sought to be secm^ely tied up beyond the reach of her husband, but over and beyond that provisions which place upon him positive humiliations are strenuously supported. I am speaking, remember, of the many cases in which a solicitor does in fact exercise an important influence in the matter. He may of course have no option but to carry out instructions which are at vari- ance with his own personal views ; his opinion may be overruled, or may not even be asked for : and it is an old saying, available of course as a rule of conduct only up to the point at which self-respect makes its appear- ance, that a client is always right. But, on the other hand, the solicitor's advice may be, and often is, not only invited but implicitly followed, and where this is the case I would impress upon you that zeal for your client's interests should, like everything else, have limits founded on justice and right feeling, and that your duty does not, and never can, demand of you that you should voluntarily outstrip those Kmits. So much as to the general aspect from which, as it appears to me, the negociation and preparation of mar- riage settlements shoidd be approached. Let us now wife'.s personalty — husband's rights. 1^*9 look into the matter somewhat more particularly, and Treatment of consider first how the parties stand in the absence of a ^^iHi^ ^ settlement, and then some of the points which arise wliere a settlement is made ; and let me once more say that, except where I invoke the past by way of contrast with the present law, I speak only of marriages taking place, as it were, now, because I am dealing with the duties which attach to the solicitor who prepares or peruses a settlement to-day. The rights of a husband in the personal estate of his Rights of . p p T i 1 J 1 1 1 husband in wire were lormerly paramount, and contrasted remark- -n-ife's person - ably with his small stake in her real estate — a fact altv where no . ^ ^. settlement. which was well demonstrated by Mr. Joshua Williams in his work on Personal Property (/), in the following observations, among others : — " The husband's rights in his wife's property still " materially vary according as it may happen to be " invested in real or personal estate. If it consists of " real estate he has only a life interest as tenant by the " curtesy, provided he has issue by his wife born alive, *' who might by possibility inherit as her heir. If it be " personal estate he has a right to appropriate to himself " all that he can lay hands on. Again, the real estate " of the wife is protected from alienation by the most " careful provisions .... But in all cases not within " the Act" (20 & 21 Vict. c. 57, which rendered the wife's acknowledgment of the deed necessary where she released her equity to a settlement, or assigned her reversionary interest) " the assignment of her personal " estate, if made at all, can only be made by her hus- " band, and her concurrence or objection is quite imma- " terial." In the course of his observations the writer expressed his disapproval of the difference in the legal principles applicable to the husband's right to his wife's real and (i) 6th edit. p. 36J. 160 wife's personalty — husband's rights. Settlement still desirable for "vrife and children. personal estate ; but lie probably would have scarcely ventured to predict that, very soon after he had laid down one of the ablest pens that ever contrived to infuse something of life into the dry bones of law by the aid of attractive literary composition, an Act would be passed which would reduce the husband's rights to zero both in his wife's real and personal estate. Such, however, as we have seen, has been the case, and the Married Women's Property Act, 1882 (45 & 46 Yict. c. 75) has given the wife complete ownership of and dominion over her real and personal estate during her life, and full powers of testamentary disposition at her death. It has even been gravely doubted whether, when the wife does not exercise her testamentary power, the Act has not swept away the husband's right to administer to his wife's effects and stand in the position of her next of kin. An eminent conveyancer has, I believe, advised that the statute does produce this startling result, although I think the balance of opinion leans the other way. The point can only be set at rest by a judicial interpretation of the first section of the Act (sub-sect. 1) read in connection with the second section. Upon the law as it now stands it may be asked with some colour of reason what need there is for tying up the wife's property by settlement at all if it be made separate estate by the Act, and is free alike from the hus- band's control and his debts. But whatever the statute may have done in the way of freeing a wife from her hus- band's legal control, no legislation can protect her from his persuasion or the weight which his position gives him in her eyes ; and the intervention of trustees, by whose impartial and independent hands the wife's settled property will be dealt with in accordance with trusts devised for the mutual benefit of herself, her husband and her issue, must ever remain a wise and salutary measure of protection, unless indeed the change husband's personalty — wife's rights. 161 in the relations of husband and wife with regard to the ownership of property should lead to a social reversal of their positions — in which case we shall perhaps have to turn our attention to protecting the husband's property from the debts, control, and engagements of his wife. With regard to the wife's interest in her husband's Wife's rights personal estate, it is and always has been nil dming personalty, his life, except in so far as her right to be supported by him is concerned, while, in the absence of his making a will, she is entitled, under the Statutes of Distribu- tion, to a third share of her husband's personalty if he leaves children, and to a half share if he leaves no chil- dren. This, as you will observe, is a much more tangible right than that of dower in real estate, but resembles that right in that it leaves the wife entu-ely at her husband's mercy. Applying this state of the law to the practical duties of a solicitor acting for either party to an intended marriage, and bearing in mind that, marriage being a valuable consideration, an ante-nuptial settlement can very rarely be upset by creditors, you will, I think, have no difficulty in arriving at the conclusion that a properly-framed marriage settlement is generally most desirable in the interests both of husband and wife where there is any property in possession or reversion to settle. If all goes well the settlement is rarely a burden or restraint on the due enjoyment of the settled property, while it may be of incalculable value in times of disaster and diffi(;ulty. Having reached this point, I propose to bring before Outline of you a sketch of an ordinary settlement of personal settlement of estate, with some few comments upon its provisions. personalty. The first matter, I need hardly say, is to vest the Vesting of settled property securely in the trustees, and the mode property in of doing this must, of course, depend entii-ely on the trustees, character of the property. We have seen that, in the case of real estate settled as personalty, the approved T. M 162 VESTING PERSONALTY IN TRUSTEES. device is a conveyance of it upon trust for sale. If the property consists of bonds payable to bearer, it is obvious that the delivery of the bonds into the custody of the trustees will answer all purposes, while if it be inscribed stock or shares in a company, the transfer will be in the approved ordinary method of dealing with such securities. In the three cases which I have last supposed, and in others falling in the same cate- gory, the settlement will contain no operative words of transfer, but the recitals will refer to the transfer as an accomplished fact, or as an act about to be done, and the operative part will consist of a declaration of the trusts on which the settled property is to be held. It may be, however, that the nature of the property settled, or the title to it, may involve (not only in the case of real or leasehold estate, but in the case of other classes of property) the insertion in the settlement of operative words of assignment, and in some cases, also, the execution of a deed of appointment, immediately preceding the actual settlement. A common instance of this occurs where all or part of the settled property con- sists of a reversionary interest held upon the trusts of a settlement or will, under which one or both of the parents of the intended husband or wife have a power of appoint- ment among children or issue. We will suppose, for ex- ample, that the mother of the intended wife is in receipt of the income of a trust fund, which, on her death, will go to her children or issue in such shares as she and her husband may appoint by deed, or she may appoint by will, and failing appointment, equally between them. The intended wife may be one of six childi'en, and it may be arranged as a term of the i.narriage settlement that the parents will exercise their power by appointing a sixth share to her in contemplation of her marriage. To give effect to this, they will execute a deed of appointment, and the intended wife will, by the settlement, assign to the trustees the appointed share. The two instruments NOTICE. 1^^ will of course be executed almost or quite simul- taneously, and the assignment will be made complete by giving notice of it to the trustees of the instrument under the powers of which the appointment has been made. Upon the mention of that word "notice " I may hinge Importance of PI" 1-1 • • J 1 i J 1 • giving notice a piece oi advice which comes in appropriately at this in certain point, because it has a direct bearing upon the operation ^^®'^*^- of vesting the settled property in the trustees. In the equitable doctrines relating to ownership, the question of notice plays often a most important part, as it also does under some statutes relating to particular species of property ; and there is no commoner expression in text-books than that of " pm'chaser for value without notice." It would be impossible for me to analyse the doctrine of notice or the statutes from which in some cases it derives its existence ; but in truth it is a matter as to which the exercise of a little care will always keep you on the right side. You have only to think for yourself whether the natui'e of the property is such as to entail the necessity for giving any notice, and if you have the least doubt you can readily solve it by reference to the authorities. In the instance which we have just been supposing, it would be an essential part of your duty to give notice of the appointment, and of the assignment of the appointed share, to the trustees who hold the fimd and will ultimately have to divide it. If, again, it be a policy of insurance, notice of the assignment must be given to the Life Office. Or, to take an instance of a statutory class of notice, if land in a register county is conveyed on trust for sale, a memo- rial must bo registered. In short, it must always be present to the practitioner's mind that, in addition to the actual making over of property to trustees, whether by the settlement or by a deed executed side by side with it, some notice or other formal stop may be neces- sary to perfect the litlo, and iliat in all sueli cases he u 2 164 NOTICE. must be on the alert to see that everything is done com- pletely and regularly. And let me add this : that to the best of my powers of observation, nine out of ten of the slips made in such matters as these owe their origin not nearly so much to ignorance as to careless- ness — in the omission to think out all that has to be done. No man can be called a competent conveyancer until he has learnt the lesson that the practice of that art admits of no happy-go-lucky mode of execution, and that however important rapidity may be in these days, it is better to be a sure than a quick workman. "With increased opportunities of gaining experience, the gap between those two widely different characteristics of labour will gradually disappear, and you will be able to work both quickly and siu-ely ; but I earnestly advise you in your student days, when you are, as it were, engaged in mapping out the country which lies before you, to concentrate your minds upon the effort to possess the latter rather than the former capacity. I close this Lecture at the point of our having seen that the trust property is safely consigned to the legal ownership of the trustees, and we will, in my next Lecture, resume the thread of the subject from that as our starting point. SIXTH LECTURE. SETTLEMENTS {continued). j- ANTE-NUPTIAL SETTLEMENTS OF EEAL ESTATE CONVERTED, AND OF LEASEHOLD AND OTHER PERSONAL ESTATE— {continued) : — OUTLINE OF SETTLEMENTS— (ro^i - tinued). POINTS ARISING SPECIALLY ON SETTLEMENTS OF— {a) LIFE POLICIES. {b) FURNITURE. VOLUNTARY SETTLEMENTS. I THE OFFICE OF TRUSTEE. ( 167 ) SIXTH LECTURE. At the conclusion of my fifth Lecture we had reached the point of vesting in the trustees of a marriage settle- ment, whether of personal estate or of real estate con- verted into personalty by means of a trust for sale, the property brought into settlement. I therefore take up my subject in this Lecture from that as our starting point. The step next in order to that of making over the Trusts of property to the trustees will obviously be to declare ^^ °™^^ ' what the trusts are upon which they are to hold it, and of these the first has reference to its investment. If the property settled consists of so much money Trust for paid to the trustees now, or to be paid to them on the happening of some future event, it must obviously be invested before it will produce income. If, again, it consists of some investment, such as stock or bonds, then it will probably be producing income in its existing state, but it may be desired that the present nature of the investment shall be changed, and it certainly will be desired to give the trustees a discretionary power to change it with or without the consent or request of beneficiaries, as the case may be. Hence the obligation of investment, whether it be immediate or discretionary in point of time, will be the primary duty cast upon the trustees, and the mode of expressing this obligation, as, no doubt, all of you are aware, is to specify in the settlement the classes of securities in one or more of which the trustees may invest the trust funds, and at 168 . TRUST FOE INVESTMENT. tlie same time to give power to them to vary or trans- pose the securities. Now the question of the mode of investment is one in which the beneficiaries are naturally much interested, it being a very material consideration for their pockets whether the trust property is dealt with so as to produce income at the rate of three per cent, or some higher rate ; and the investment of money is, moreover, a matter about which some people know, and many more people think they know, a great deal. It follows, there- fore, that the choice or range of investments to be authorized may theoretically be said to be a question for the client rather than the solicitor. But, as a dry matter of fact, it is the exception, rather than the rule, for clients to express any individual views on this sub- ject, or to relieve their solicitors from the responsibility of specifying the securities, beyond this, perhaps, that the large majority of people prefer the investment clause to be vnde in its terms, and the small minority entertain the opposite view and aim at safety, not only as if it were the paramount, but as if it were the only object of the investment. In former days, indeed, the latter view appears to have prevailed, and if you turn to a settlement or will made fifty years ago you will generally find the powers of investment limited to the public funds, or Grovern- ment or real securities in England or Wales. These narrow limits owed their origin no doubt to the few avenues formerly available for the safe investment of money at a higher rate of interest. But, like many rooted customs, it outlived the cause of its existence, and it is only of comparatively recent date that the means of investing money afforded by railways and many other modern outlets for capital have been re- cognized by conveyancers in framing investment clauses. It cannot be said that there is any settled practice on the point, but you will not, I think, err if, in the TRUST FOR INVESTMENT. 1^9 absence of special instructions, you adopt, with one exception, Mr. Charles Davidson's view {a), which is, that the clause may be appropriately framed so as to embrace investments in the funds and government securities of the United Kingdom or India, or any colony or dependency of the United Kingdom or India, upon real or leasehold securities in England, "Wales, or Ireland, and in the stocks or shares, or upon the debentures, mortgages, or seemities of any corpora- tion, company or public body, municipal, commercial or otherwise, in the United Kingdom or India, or any colony or dependency of the United Kingdom ; thus in fact, as Mr. Davidson observes, extending the powers of the trustees in this respect to most descriptions of investment or security, within the protection of the law of England, or any British dependency, and calculated to cii'culate in the English market for in- vestment. You will not, I think, have much difficulty in guess- ing the exception which I just reserved in this list. The passage from which I have quoted it was published in 1873, but, had it been written to-day, I think we may confidently assume that real and leasehold securities in Ireland would not have been included in the list. At all events, I entertain myself the strongest possible opinion that those securities are not in the present day such as the heart of any man would desire who could invest his money in anything else. I shall have a few words to say later on as to the actual investment of trust funds, but, for my present purpose, I pass from the investment clause now to the trusts which map out the successive interests of the beneficiaries, and terminate with the ultimate payment over of capital, by which, of course, the trusts of the settlement are brought to an end. (a) Davidson's Precedents, 3rd edit. Vol. III. p. 16. 170 TRUSTS FOR BENEFICIARIES HOTCHPOT. Usual trusts for bene- ficiaries. Trusts of income. Trusts of capital. Hotchpot clause. Maintenance. I will first take the usual limitations of these trusts, and then refer to some of the causes which may operate as reasons for departing from them. First, the income of the fund brought into settlement by the husband would be given to him for life. Then the income of the fund brought into settlement by the wife would be given to her during her life for her separate use, without power of anticipation. Then the income of both funds woidd be given to the survivor for life. Next, the capital would be made divisible between the children or remoter issue, in such shares, at such ages, and upon such conditions, as their parents may appoint by deed, or the survivor of the parents may appoint by deed or will ; and, failing the exercise of this power to appoint, the trustees would hold the capital in trust for division among the children in equal shares. At this point, and before the declaration of a final trust as to the property, to take effect in default of children, would come in important provisions haAing reference to the foregoing trusts for children or issue. Thus there would be a hotchpot clause precluding a child in favour of whom or whose issue any aj^point- ment may have been made from sharing in the unap- pointed part of the trust funds without bringing the appointed share into account, or, to speak familiarly, without giving credit for it. It would also formerly have been essential that a maintenance clause should be inserted, of which the effect would have been to provide for the destination of the income of the trust funds after the deaths of the parents during the minority of the children if that contingency occurred. The scheme of this clause was, broadly, to empower the trustees in the suj)posed event to apply all or part of the income of the expectant share of any minor for his or her maintenance and education, with liberty to pay it to the infant's MAINTENANCE. 171 guardian without being answerable for its application, and to invest the residue, if any, of the income at compound interest, and add the accumulations to the capital of the share, but with power to resort to any accumulations of preceding years, and apply them for the pm^poses of maintenance and education. I have spoken of this clause in the past tense for a reason which I will now explain. The 26th section of Lord Cran worth's Act (23 & 24 Yict. c. 145), contained provisions for enabling trustees to apply income for purposes of maintenance or education, imder certain conditions. The section was undoubtedly intended to supersede the necessity for inserting express powers of maintenance, but it was too limited in its terms to meet with general approval from the conveyancers, and the statutory provision was not usually relied on as render- ing needless the express clause. Now, however, this section has been repealed and replaced by the 43rd section of the Conveyancing and Law of Property Act, 1881 (44 & 45 Yict. c. 41), which enacts that, where any property is held by trustees in trust for an infant, either for life or for any greater interest, and whether absolutely or contingently, on his attaining the age of twenty-one years, or on the occur- rence of any event before his attaining that age, the trustees may, at their sole discretion, pay to the infant's parent or guardian, if any, or otherwise apply for or towards the infant's maintenance, education, or benefit, the income of that property or any part thereof, whether there is any other fund applicable to the same ]3urpose, or any person bound by law to provide for the infant's maintenance or education or not. Then follows a direction that the trustees are to accumulate all the residue of the income in the way of compound interest, b}^ investing the same and the resulting income from time to time on authorized securities, and are to hold the accumulations for the benefit of the person who 1 72 MAINTENANCE ADVANCEMENT. ultimately becomes entitled to the property from which they arise, but with liberty to apply the accumulations, or any part of them, as if they were income of the current year. The section concludes with a proviso that it shall apply only if, and as far as, a contrary intention is not expressed in the instrument under which the interest of the infant arises, and shall have effect subject to the terms and provisions of that instrument. This new provision is, in several important respects, wider in its terms than the repealed section of Lord Cranworth's Act (i), and it would not, I think, be rash to anticipate that an express power of maintenance will drop out of settlements, unless in exceptional circum- stances. I would point out to you, as a corollary to what I have just been saying, that when it is desired in any case to curtail the large powers of maintenance conferred by the Act (as, for instance, by specifying a fixed maxi- mum sum for maintenance), it will be necessary to express the contrary intention carefully in the instru- ment. I shall have occasion hereafter, in one of my Lectures upon Wills, to recur to this subject of maintenance in its bearing upon legacies (c). Advancement The third and last of the group of provisions which clause. ^g g^Pg j^Q^ considering is what is termed the advance- ment clause, which empowers the trustees, with the consent of the parents or sm-viving parent, and after the death of the latter, at their own discretion, to advance some given proportion of the expectant share of an infant child or remoter issue of the capital of the trust funds for the infant's advancement in life. The proportion over which this power is given varies, but is usually not less than one-third, and rarely, if ever, more {b) See Gierke and Brett's Conveyancing- Acts, 2ud edit. p. 157. {c) See post, Lecture VIII. ULTIMATE TRUSTS. 173 than one-half of the share. I need hardly say that it is a most important and valuahle power. Reverting next again to the main thread of the trusts, Final trusts there will now come the final trust, to take effect in [qs^q, default of issue of the marriage, and this will, as to the fund settled by the husband, take the simple form of a trust for him absolutely. And in the case of the wife's fund, there will be a corresponding absolute trust in her favour, in the event of her sm'viving her husband, but the trust, to take effect as to her fund if she should die in her husband's lifetime, needs a little more explanation. Before the Married Women's Property Act, 1882, came into force, the usual trusts in this event were as follows : — First, that the fund should be held upon such trusts as the wife should, notwithstanding covertm-e, appoint by will ; and, secondly, in default of appointment, that the fund should be held in trust for the wife's next of kin, exclusive of her husband. You will readily see that the necessity for these trusts has been largely affected by the statute, and that they were intended mainly to meet the difference, in the legal position, of a wife as to her own property where she died in her husband's lifetime, and where she Survived him ; but I think that there is still a good deal to be said in favour of retaining them, and I will try to explain my reasons for that conclusion. Suppose that the trust is in favour of the wife absolutely, irrespective of whether she survives her husband or dies in his life- time, and apply that to the latter case which we are considering. The wife would now, under the Act, be entitled in the supposed case to deal with this absolute interest during her life, subject, of course, to the life interests of herself and her husband, as well as by her will. Is it desirable to place it in the wife's power to dispose, otherwise than by will, of that which cannot ^ come into possession until her death, which, if dealt >A^ .')vl^//4-c. with inter vivos, can only be dealt with as a reversionary 174 ULTIMATE TRUSTS. interest ? That is a question to wliicli some people would give an affirmative and some a negative answer, and I am very far from asking you to accept my own conclusion as infallible, but it is my personal view tbat it is better, on the whole, in the interests of both parties, that the wife's powers of disposition should be limited to a power to appoint by her will, as under the trust in use before the statute, because it ajopears to me that the few cases in which the larger power might be used wisely, and without undue pressure or influence from the husband, or imprudence on the part of the wife, would be counterbalanced by a much larger number of cases in which the existence of the power might furnish a temptation to exercise it improvidently, and to sacrifice the true interests of the wife and her family. Then, as to the second trust— that, in default of appointment, the property is to go to the wife's next of kin, exclusive of the husband — this is clearly traceable to the general principle that the settled fimds should, in default of issue, revert ultimately to the source from which they proceeded. If, under the Married Women's Property Act, 1882, a husband is still entitled to his wife's per- sonal property in the event of her dying intestate, then the trust is still necessary if the old result is to be attained, because if the wife is made absolute owner the husband will only have to administer to her effects to entitle himself to the whole of the settled fund. JBut then, as I have pointed out, it is said to be doubtful whether a husband married to-day is still entitled to his wife's personal estate as her next of kin, and until that doubt is judicially solved it is impossible to declare with absolute certainty whether the form of trust_ hitherto in use, by which he is excluded in terms, is or is not necessary to produce the result expressed in its language. Upon the whole, therefore, you will see that while one at least, and possibly both, of these ultimate trusts APPOINTMENT OF NEW TRUSTEES. 175 of tlie wife's settled fund may be said to be affected by modern legislation, there are weighty reasons why the draftsman should still retain them. To the provisions which I have enumerated as those Appointment of UGW most ordinarily to be found in a settlement may next be trustees, added, not a power to appoint new trustees, because that is now by universal practice omitted, in reliance upon the statutory powers given by the 31st section of the Conveyancing and Law of Property Act, 1881 (44 & 45 Vict. c. 41), but a clause which declares by whom the statutory power is to be exercised. In the absence of any provision on the point, the statute confers the right of exercising this power iipon the survi"sang or con- tinuing trustees, or the personal representatives of the last surviving trustee, as the case may be, but it is very commonly wished that the power, or at all events a voice in exercising it, shall rest with one or more of the beneficiaries, and, in this event, a clause must be inserted giving effect to the desire. I have dwelt so far entirely upon the usual everj''- day provisions of a marriage settlement of personal estate, provisions which you would expect to find as a matter of course, and none of which should be left out without some sufficient and special reason ; but there is one important clause which, before the Married Women's Property Act, 1882 (45 & 4G Vict. c. 75), became law, was so commonly inserted that, but for that Act, I should have had no hesitation in placing it among the group of clauses which I have brought before you, and, even now, it is of sufiicient importance to merit a special place mid-way, as it were, between usual and more or less unusual provisions. I refer to a provision for the Provision for settlement of the after-acquired property of the wife. ^^-fewte °-^ We have already seen what was and is the position of acquired the husband with regard to his wife's personal estate ^^ irrespective of any settlement ; that, having once had paramount rights, ho is now reduced to complete 176 wife's after-acquired property. Considera- tions beaiing upon it. nonentity. Under tlie former law it was usually con- sidered wise and just, in the wife's interests, that any property which might come to her during the coverture should not find its way into her husband's pockets, but should be made secure by being, as it were, incorporated by anticipation into the marriage settlement, in the shape of its being agreed that it should be paid to the trustees and held upon the trusts which I have described as attaching to the wife's settled funds, or, less com- monly, that it should become the wife's absolute separate estate. We may dispose of the latter of these two plans at once. As the law now stands, any property accruing to the wife is her separate estate, and if the protection is to stop at that point, no provision in any settlement is needed to secure it. But upon the other method, as upon the trusts of the wife's property generally, arises the point which we have already considered. Does the statute go far enough to afford reasonable protection to the wife, as compared with that which can be secm-ed by the machinery of a continuing trust ? I have already expressed my opinion in the negative upon this as a general question, and need only say that my view applies just as strongly to the case of after-acquired as to existing property of the wife ; indeed, it is obvious that in principle there is practically no distinction between the two cases. If the wife has absolute control over her means, and her husband wishes her to exercise it improvidently, she must either yield to pressure which may end in disastrous results, or she must decline to do so, which, according to the ordinary experience of human nature, is not calculated to promote domestic bhss. If, on the other hand, her property is in the hands of Mr. A. and Mr. B. as trustees, she is in a position in which she has no power to gratify her husband's desire to make ducks and drakes of her property, and cannot be subjected "Wife's after-acquired property. 177 to any risk of disagreeable consequences for refusing to do so. Of coiu'se there are exceptions to this as to every rule. There are cases here and there in which the tying up of a fund in trust proves, in the events which happen, to be detrimental to the interests of the husband and wife ; but I am pursuaded that such cases are the exception, and cannot for a moment be weighed in the scales against the benefit conferred by these provisions for the protection of the wife's property. I have said thus much as to what may be called the policy of this provision, both because of the bearing of the Married Women's Property Act, 1882, upon it, and because the subject is one upon which a solicitor is often called upon to express his views and as to which he possesses opportunities, such as fall to the lot of few clients, of forming a sound opinion. The ordinary lay client may be supposed to be capable of understanding the purport of this term of the settlement when it has been explained to him, but he will certainly need to have it brought to his attention, and you cannot possibly dis- charge yourselves efficiently of the duty of placing it before him unless you have a clear appreciation of the state of the law which the provision would modify, and of the practical considerations involved in it. As to the form of the provision, the use of loose and Form of the careless language has given rise to a great deal of liti- gation. The questions litigated have, as you would guess, been such matters as these — within what limit of time it has been confined, to what description of property it has extended (especially in connection with reversionary interests), and whether it has been so framed as to bind the husband or wife, or both. Treating the subject, as I do, from the point of view of your having occasion to prepare a settlement, and looking to the fact that many of the cases turn upon points which, since the Married Women's Pro- T. N 178 \yife's aftek-acquired property. perty Act, do not possess the same practical importance as formerly, it would hardly serve any useful purpose to examine in detail the results which have followed from the use of inappropriate language, and I would rather direct your attention to the consideration of what is the proper frame of the provision. With regard to what may be called the operative words, the most approved plan is to frame the clause as a declaration and agreement, which of course carries with it the legal result of a covenant both of the husband and wife (d). Again, as to the period over which the covenant is to extend and the property which it is to embrace, the approved method is to make it include all real or per- sonal property, exclusive of property acquired at one time and not exceeding in value a certain minimum amount, and excluding also such subjects of property as furniture or jewellery, which the wife is, or she or her husband in her right may during the coverture become seised, or possessed of, or entitled to, or acquire a power of disposition over, for any estate or interest in posses- sion, reversion, remainder or expectancy (c). This scheme, as you will observe, is very comprehensive, and, with the exceptions which I have mentioned, sweeps in every interest to which the "wife is entitled at the time of the marriage, or may afterwards acquire during the covertiu'e. It is to be borne in mind that there may be instances here and there — I refer more especially to the case of your being concerned for the husband — in which there may be a sufficient reason for not depriving the husband and wife of the control of the capital of any fortune that may come to the latter during the marriage. But the practical course to adopt where any general rule applies is, I think, to walk by the light of [d) Davidson's Precedents, 3rd edit. Vol. III. p. 196; Prideaux's Precedents, 12th edit. Vol. 11. p. 235. {e) Davidson's Precedents, 3rd edit. Vol. III. p. 200. KXfKl'TluNAL TKUSTS — WIFe'jS PKOrEKTV. 179 that rule, and wlien exceptions arise to deal with them as exceptions, and to be satisfied of the sufficiency of the reason for so treating them. So far we have been travelling on ordinary lines. I Variations now propose to turn aside a little from the beaten track provisions. and to ask you to consider the principal variations from the most ordinary provisions of a settlement of per- sonal estate. As compared with the clauses of which I have been speaking, they may be considered as excep- tional ; but the cases to which they may with practical advantage be aj)plied are quite sufficiently numerous to render it a matter of necessity that you should be familiar with them. They fall conveniently into the two divisions of variations of the ordinary trusts of a settlement irrespective of the natui-e of the property settled, and of special points attaching to particular classes of property put into settlement. We have seen that the usual plau is to give the Variations husband the first life interest in his property and the nature of m-o- wife the first life interest in hers. This rule of course P"'^}' settled. may be departed from at the pleasure of the parties, and, upon the question of general principle, it is said that the weighty opinion of Lord St. Leonards was adverse to giving the wife the first life interest in her own fortune. But the general voice of the profession (i) As to has long since pronounced itself in favom- of the ride as perty. I have stated it, and, as we need not concern ourselves either with exceptional views or with the caprices of individuals, I limit mj'self strictly to the consideration of those cases in which a proposed variation has some- thing like a general principle in its favour. I know of no such principle applied to the rule of giving to the wife the first life interest in her own personal property. In the case of the wife owning considerable landed pro- perty, the social position which the ostensible owner for the time being occupies is sometimes considered a sufficient reason for giving lier liusband tlio first life N 2 180 EXCEPTIONAL TRUSTS — HUSBAND's PROPERTY. interest and confining her interest during his life to a jointure ; but this special reason has no application to personalty, and I am unable to suggest another pos- sessing any general application. (2) As to "With regard to the husband's property, however, it own property. i^^J ^^ desirable to shift the first life interest to the wife for a reason which you will quickly appreciate. The object of a marriage settlement, as I have said, is to make a provision for the husband, wife, and children. Now, generally speaking, the husband, wife, and children will all derive their due share of benefit from the income of the settled fund while it is paid to the husband. But suppose that the husband is in trade, and he fails in business and becomes insolvent, his life interest will be a target for his creditors to shoot at, and may, by process of law, be made available for payment of his debts. For remember that, although marriage is a good consideration, and a marriage settlement holds good against creditors on that account, there is no equity on the part of wife or children to protect any interest given by the terms of the deed to the husband from being made available to meet his obligations. Accord- ingly, wherever there is any cause to fear that the in- come of the husband's property, if given to him, may be diverted from the purposes of home expenditui'e, which may be supposed to have been in the contemplation of the parties at the time of the marriage, to the prejudice of the wife and children, and for that matter to the husband's own prejudice — it is deemed prudent to give the first income of the whole of the settled property to the wife, and to run the lesser risk of her making an unwise or improper use of the power placed in her hands rather than the greater risk of the income being swept away by the husband's creditors. Perhaps I need hardly say that the husband's creditors do not quite appreciate this view of the situation, and are apt, when he fails in business, and they find that his home, EXCEPTIONAL TRUSTS — HUSBAND'.S PROPERTY. 181 bis furniture, and the income on whicli he is living are carefully protected from their claims, to use unparlia- mentary language about marriage settlements. As to property brought into settlement by himself — by which I mean actually belonging at the time of the marriage to him personally and not settled by his father or anyone else on his behalf — the method which I have just described is the only one by which the settled income of the husband can be protected from his own debts and engagements, but in so far as his interest in (3) Astopro- any property settled by or on the wife's part or on the orims^band's husband's side, but not by him, is concerned, there are side but not yet two other plans, the validity of both of which has become firmly settled, though, as to the latter, after considerable doubt. I may explain these devices, by applying them to the case of the husband's usual life interest in his wife's settled fund, in the event of his surviving her. The first method would be, to insert a provision in tlie trusts of the settlement, declaring that this interest shall be determined in favour of the next limitation, not only at the husband's death, but also in the event of his bankruptcy, insolvency, or, as Mr. Davidson comprehensively expresses it {/), any act or event in- consistent with his personal enjoyment. This, as you will see, defeats the husband's creditors, but it also puts an end to his own interest, and lets in the next limita- tion. The second device is much more favourable to the husband, and its abstract morality is, to my mind, open to very considerable question, but the law has after much hesitation upheld it. It is to provide that, in the event of the husband's bankruptcy and so forth, his interest shall determine, but that the trustees may, in the exercise of a discretionary power given to them, (/) Davidsou's Picccdcuts, 3rd edit. Vol. III. p. 125. 182 EXCEPTIONAL TllU.STS — SECOND :MAlUiIAGE. apply the income with power of exclusive selection in favour of the husband and issue, or whatever objects of the trust may be specified. It is said by Mr. David- son {(/), that under such a trust as this, the trustees may, in fact, actually pay the income to the husband himself, for the purposes of personal or family ex- penditure, thereby virtually giving him a protected life interest, differing very little from the inalienable interest confeiTcd on married women, by means of a direct restraint upon anticipation. Provision for The next deviation from ordinary trusts, to which I contingency -^^igj^ to draw voiu' attention, has reference to the con- oi premature _ "^ ' _ death of either tingency of the premature death of either parent. The paren . usual trusts, as I have pointed out, would, on the happening of a death, give the income to the survivor, and then the capital among the children of the marriage. But, suppose, as is frequently the case, that everything the wife possesses is swept into the settlement, and that the husband dies when she is still young, leaving her, perhaps, with one child. It may reasonably be supposed, that she will very likely marry again, and have a second family. But, under the ordinary tnists, her one child by the first marriage, will get the whole of the trust property, and her children by her second marriage, will not get a shilling of their mother's fortune — a result of which the in- equality and injustice are too obvious to need com- ment. If we suppose the death of the wife, instead of that of the husband, we find the same result ; but there is this practical difference between the two cases, that the husband will, presumably, be more likely, and better able by his exertions and earning poAvers, to make a provision for the childi-en of his second marriage than the wife. Still, as I say, the result is the same, so far (cf) Davidson's Precedents, 3rd edit. Vol. III. p. 191. EXCEPTIONAL TKUST«— SECOND MARRIAGE. 183 as the settlement fund is concerned, and the likelihood of its working unjustly, according as the hushand or Avife survives, is only a question of degree. The case which I am supposing is manifestly not very unlikely to arise, dependent as it is on no more remote contingency than the death of either the husband or wife, followed by the marriage of the sm'vivor, and the birth of issue of that marriage. As to the mode of dealing with this matter, the point to bear in mind at starting is that the provision should be reasonable, and it is obvious, that the datum point from which to calculate what is reasonable, would be furnished by the amount of the settled property, and the number of children of the first marriage, who may become objects of the settlement. The most approved method, I think, is to give to the wife, if it be the wife's fund in question, a power exerciseable in the event of her surviving her husband, to appoint by deed or will, to any futm'e husband, the income of any part of the trust funds, not exceeding the proportion presently mentioned, and to aj)point, in like manner, any part of the capital not exceeding the same proportion, for the benefit of the childi-en, or remoter issue of any future marriage, and in the instrument of appointment, to confer on herself and her husband and the survivor a power of appointment among their issue ; and also to give to the trustees of the settlement powers of advance- ment for the benefit of such issue ; thus, as you see, engrafting on the settlement a sort of contingent power of making a fresh settlement applicable to a futm-e husband, and issue by him. Then would follow the provision defining the extent of the proportion. This, I need hardly say, admits of no settled rule, and is essentially a matter for discussion, but the right principle is, I think, a sort of sliding scale by which the provision for the children of a subsequent marriage is made to bear a maximum relative proportion to tho shares of the 154 EXCEPTIONAL TRUSTS — SOLICITOR'S DUTY. eliildren of the first marriage. The form of clause is necessarily long and complicated in language, but you will find a good illustration of it in Prideaux's Pre- cedents, 12th edit. Vol. II. pp. 268—270. In sketching the outline of this group of provisions I have taken the case of the power being given to the wife. The same provisions apply convertibly to the case of its being given to the husband. You will, I think, agree with me that this variation of the ordinary clauses of a marriage settlement may, in some cases, be very right and just, and that the matter is one to be carefully borne in mind by a solicitor who is called upon to prepare or peruse such a settle- ment. As to the cases in which it should be suggested to your client that the settlement should contain pro- visions applicable to a second marriage, there is not very much to be said. As I have already indicated, the finger of common sense points rather in the direction of the wife's than of the husband's settled fund, and especially where the whole of her probable fortune is brought into settlement. You will also readily see that elaborate provisions of this kind are scarcely appropriate where the settled property is of small amount, or, again, where the settled fund does not re- present all, or nearly all, of the settlor's fortune, and other means therefore exist out of which the children of a future marriage may be provided for. In concluding what I have to say upon this part of my subject I would impress upon you that no special provisions of this, or any other kind, should ever be inserted in the draft of a settlement without the full knowledge and approval of your client, however much you may be persuaded of their justice and propriety, even where he places his interests in your hands unre- servedly. The right course, whenever you propose to depart from a beaten track, is to submit the point to your client, to give him yoiu' reasons for the view which INVESTMENT IN EEAL ESTATE. 185 you entertain, and then to leave the decision to him. When you have suggested all the points which call for his determination, and have placed them before him, with the arguments which appear to }■ ou to be capable of enforcement jn'o and co)i, you will have discharged your duty, no matter whether his decision be right or wrong. But you will not discharge your duty, in the true sense of the expression, if you journey along your road looking neither to right nor left, paying no regard to S23ecial circumstances, and using the same precedent as a model for a dozen different settlements, as if it had some magic power of fitting all alike without distinc- tion. The young solicitor who seeks to be a master of his professional work, and not a drudge, must give his whole mind to each individual matter, and realize that ingenuity and suggestiveness are never thrown away. The next and last departure from the ordinary clauses Provision for of a settlement of personal estate to which I desire to irisfflJ^dt ki draw your attention is a group of provisions sometimes real estate, inserted where it is desired to confer on the trustees a power, exerciseable at the request of the life beneficiaries or one of them, to invest all or part of the trust funds in the purchase of real estate. The mode in which this may be effected consistently with preserving the per- sonal estate character of the settlement is to declare that the real estate, when purchased, shall be held in trust for sale, and then will follow provisions as to the sale, the letting of the property, and application of the rents until sale, and so forth, closely analogous to those of which I have already explained the piu'port in connection with the bringing of real estate into settle- ment as personalty. Now this power is one for which a client here and there may possess a strong liking, and in such a case you will, of course, be acting rightly in fulfilling his wishes ; but I do not, for my own part, regard it with favour, and I do not think that in ordinary circumstances 186 INVESTMENT IX KEAL ESTATE. a solicitor is called upon to suggest it of his own accord ; on the contrary, I think that he will better discharge his duty by resisting its insertion and pointing out the arguments against it where a reasonable opportunity of doing so is afPorded to him. To see what those arguments are we must come back once more to first princi23les, and remember that the object of a marriage settlement of personal estate is to provide a sure means of subsistence for husband, wife, and children, and not the acquisition of landed pro- perty. The investment of trust funds in real estate carries with it of necessity a great increase in the trouble and responsibility cast upon the trustees, and more or less probable contingencies of futm'e difficulties in the administration of the trust. The property pur- chased may deteriorate in value or marketable C|ualities and situation. It may be left on the trustees' hands for a more or less extended period, and perhaps during the minority of infant beneficiaries, unlet and requiring an expenditure in repairs and upkeep which the trustees have no means of meeting at all or without crippling funds sorely needed for other purposes. The question whether this or that outlay would properly fall on income or capital may be one of considerable nicety. And last, but not, I think, practically least, the trustees may be subjected to the importunities of beneficiaries Avith limited interests, by whom the machinery and restrictions of a trust are often regarded with im- patience even where created by their o-snti act, to pur- chase some particular property where the judgment of the trustees is opposed to the project. Then follows an almost inevitable soreness and the establishment of relations, the reverse of pleasant, between the trustees and the cestuis que trust or between the trustees them- selves, all the more to be deplored when it is remem- bered that they presumably start those relations on terms of mutual intimacv and confidence. SETTLEMENT OF LIFE POLICY. 187 For all which reasons I venture to think that this power to purchase freehold or leasehold property is, in the vast majority of cases, not a desirable adjunct to a settlement of personal estate. Let us turn now to the consideration of a few parti- Particular cular subject-matters of settlement which leave their settlement. impress on the provisions of the deed. Among these come first and foremost a very common Policies of life subject of settlement — policies of life insurance. insurance. Now, you are all well aware that a policy of in- surance, unless it has been in existence for a great many years, possesses little value during the life on which it is effected, for the simple reason that in order to keep it in force periodical premiums have to be paid, and that it may be forfeited by a breach of its provisions in other respects. It follows that, as a subject of settle- ment, a ncAv policy can only be regarded as of value to the extent to which it can be reasonably anticipated that these premiums will be regularly paid and the other conditions of the policy performed. To secure this Payment of there will be as of course a covenant by the person who Premiums, brings a policy into settlement to pay the premiums and to do no act to invalidate it. But this personal cove- nant may, like any other personal covenant, break down, and it is very desirable to bolster it up in some way, as far as the payment of premiums is concerned, with collateral powers which may enable the trustees to meet the emergency. One obvious mode of doing this, if other funds are brought into settlement, will be to empower the trustees to apply income arising from them in payment of premiums. Failing that resource, there is nothing for it but to authorize the trustees in general terms to pay the premiums out of any monies available for the purpose, and, if they think fit, to surrender the policy to the life office so as to secure for the settlement purposes, in tlie last resort, some salvage at least out of it. 188 SETTLEMENT OF LIFE POLICY. You will observe that in seeing to the keeping up of a policy the trustees of a settlement undertake a good deal of responsibility, and it is usual and proper to insert special provisions absolving them from any obligation to enforce the covenant to pay the premiums, and even from any liability for the consequences of the policy becoming void from any cause. How far this last clause would be held to absolve trustees in the event of their simply abdicating their functions and allowing the policy to become void without even inform- ing themselves on the point, or lifting a finger to prevent it, is a question to which I should await a judicial answer with some trepidation if the remark applied to myself, because the Court has a way of very much narrowing down the effect of sweeping words of in- demnity. Bouuses on The profits declared periodically in the shape of ^° ^^' bonuses upon a policy put into settlement are, in the absence of special agreement, treated in law as part of the capital of the trust fund ; the Court, as Mr. Joshua Williams, in his work on the Law of Personal Pro- perty (//), observes, usually considering every bonus, whether of additional joint stock or shares or simply of money, as part of the capital, unless it appears to be nothing more than an increased dividend arising from the increased profits of the year. The same writer adds that, in the absence of any special provision to the con- trary, every bonus ought to be invested upon the trusts of the settlement, and the income only paid to the tenant for life. I would pause here to ask you to note in passing that the words which I have just read have a wider applica- tion than to policies alone, although they certainly include them, and may on that account also be usefully remembered. (h) nth edit. p. 311. SETTLEMENT OF LIFE POLICY. 189 It is not, however, at all clear to my mind, upon prin- ciple, that bonuses declared on a policy ought, in the absence of its being so declared, to be treated as capital. They are mere accumulations of profits periodically divided, and in the American offices they are, I think, actually divided every year. But doubt upon such a point as this can never arise iipon a properly drawn settlement, because the mode of dealing with bonuses will be in terms provided for. One very reasonable plan is to give the trustees a discretion, or the person who has to pay the premiums an option, to have the bonuses applied in reduction of the premiums. Another method is to give the person who settles the policy an absolute option as to the mode of dealing with bonuses. And a third, and I think not desii^able because not sufficiently elastic, way is to declare without qualification that they are to be added to the sum assured, or are to be paid to some object of the settlement. I need hardly say that the trusts of a life policy must Trusts of necessarily differ from those of settled funds generally ^° ^^^' in the matter of dropping out the life of the person on whose life the insurance is effected. Thus, where the husband effects the insurance the only life interest will usually be that given to the vnie in the CA'ent of her surviving him, and then will come the trusts for the issue. But this observation has, of course, no applica- tion to what are called " Endowment Policies " — that is, policies payable at a certain age, or after payment of a certain number of premiums. Here a life interest should obviously be given to the husband, to take effect if he lives to complete the period or the paj'ments. I must not leave the subject of policies of insm'anee Statutory in connection with settlements without pointing out to poUcl^^ you that they are specially favoured by the legislatm-e, a circmnstance which may be supposed to rejoice the heart of the Thrift Societ}'. If you tm-n to the 11th section of the Married AVomen's Property Act, 1882 190 SETTLEMENT OF FURNITURE, (45 & 46 Vict. c. 76), whicli replaces a similar section in the Act of 1870 (33 & 34 Yict. c. 93, s. 10), you will find provisions for making a sort of settlement of a policy, on the part of a husband, by the simple expedient of expressing in the policy itself that it is for the benefit of his wife and children, or any of them ; and the same power is given to a wife as to a policy expressed to be effected for the benefit of her husband and children, or any of them. The machinery of a trust is impressed in a rough and ready fashion on such a policy, and it is declared concerning it that it shall not be part of the estate of the person effecting it so long as any object of the trust is unfulfilled, or be subject to his or her debts. The life offices give every facility for carrying out these provisions, and some of them, I believe, will accept the actual trusteeship of the policies issued by them under the Act. The statute may well be made use of where the means are small, a policy tlie only subject of settlement, and the expense of an ordinary settlement deemed to be more than commensurate with the advantages gained by its more elaborate provisions for contingencies ; and I commend the section to yom* careful notice, and advise you to impress it upon your minds, by getting hold of the forms made use of by some life office for policies issued under the Act. Settlement of To go to another subject, it is not very unusual to furniture. include furniture in a marriage settlement. G-enerally speaking, the advantages of protection gained by settling furniture are, I think, a good deal more than weighed down by the objections which the shifting and wearing out nature of the property, and the difficulty of exercising any real guardianship over it necessarily entail ; but where the husband is in trade the expedient may perhaps be prudently resorted to as a protection from his debts. One method — perhaps the best — of shaping the settlement, where the furniture VOLU.NTAKV SETTLEAIEMTS. 191 is settled by the wife, is to impress an immediate trust for sale upon it, and declare the trusts of the purchase- money, and then add a provision that the sale should not take place during the life of the wife without her consent, and that she may Use the furniture for her sej)arate use, and so on. The settlement would also contain clauses for enabling any one article to be sub- stituted for another, for insuring the furniture from fire, and for relieving the trustees from responsibility for its safe custody. These are the usual and proper precau- tions, but even when they have been taken there must still always remain from the inherent nature of the settled property, many objections which no ingenuity of draftmanship can surmount. You will remember that I divided settlements at the Voluntaey outset into the two broad divisions of settlements in con- sideration of marriage or of some other valuable con- sideration, and voluntary settlements — that is to say, settlements not made for any of the valuable considera- tions of marriage, money, or money's worth. This second class of settlement may now claim our attention for a short space. The one essential distinction of all others between How they these settlements and those which we have been con- ^ff^^'from sidering is their liability to be defeated by creditors, and other settle- by the subsequent acts of the settlor himself. This liability, so far as it relates to creditors, is dependent partly on very old and partly on modern statute law. The Statute 13 Eliz. c. 5, to begin with, renders void all 13 Elii!. c. 5. conveyances whether of real or personal estate made with intent to defeat, hinder, or delay creditors, as against such creditors ; but with a saving in favour of purchasers for value without notice. This Act extends even to settlements made for valuable consideration ; but you will not fail to observe that it applies only where there is at the time, and in connection with the making of the instrument, an infoitioii to defeat, hinder, or 192 VOLUNTARY SETTLEMENTS. delay creditors. It would have no bearing, therefore, upon a voluntary settlement made to-day by a man who is perfectly solvent and who becomes gloriously the re- verse three months hence. Upon the heels of this statute followed another of the 27 Eliz. e. 4. same reign also still in force, the Act 27 Eliz. c. 4. This provides in substance that all voluntary convey- ances of real estate — to which class of property the statute is limited — and also all conveyances of real estate, with any clause of revocation at the grantor's pleasm-e, are void as against subsequent purchasers for money or other valuable consideration. This statute rides rough-shod over the tender consideration which the Court of Chancery has always displayed to the doctrine of notice, the effect of it, as described by Mr. Joshua Williams (/), being that any person who has made a voluntary settlement of landed property even on his own children may afterwards sell the same property to any purchaser ; and the purchaser, even though he have full notice of the settlement, will hold the lands without danger of interruption from the persons on whom they had been previously settled. So far we have it then that a voluntary settlement, whether of real or personal estate, made for the purpose of defrauding creditors, would be declared void, and that a voluntary settlement of real estate, for whatever purpose made, may afterwards be defeated by the settlor at his pleasure. But the bankruptcy laws have gone an important step further in the direction of protecting creditors. It was found that voluntarj^ settlements became a favomite contrivance among reckless and dis- honest traders, and were constantly interposed between them and their creditors. A speculative trader who netted a large haul over some virtually gambling trans- action was often immediately seized with a virtuous (i) Williams' Real Property, 13th edit. p. 80. VOLUNTARY SETTLEMENTS. 1!53 desire to settle the XDroceeds upon his wife and children. He could then go into another similar venture with a light heart, because if it eventuated in his total in- solvency he was in the satisfactory position of being able to offer his creditors a shilling in the pound and then retire to tlie bosom of his family to live on the income of the settled money until another speculation tempted him from that seclusion. To meet this state of things — though onl^^, I must add, in a partial degree — the bankruptcy laws came to the rescue of creditors for the first time by a section in the now repealed Bankruptcy Act, 1869 (32 & 33 Yict. c. 71, s. 91). Bankruptoy This section was limited in its application to traders, ^ ' and it declared as to them that any settlement of pro- perty, not being a settlement made before and in con- sideration of marriage, or made in favour of a purchaser or incumbrancer in good faith and for valuable con- sideration, or a settlement made on the wife or children of the settlor of property which had accrued to him after marriage in right of his wife, should, if he became bankrupt within two years after the date of the settle- ment, be void as against his trustee, and should also be void against his trustee if he became bankrupt at any subsequent time within ten years after the date of the settlement, unless the parties claiming under the settle- ment could prove — thereby, as you see, throwing on them the onus which, under the Act of 13 Elizabeth, would have rested on those who sought to upset the deed — that the settlor was, when he made it,' able to pay all his debts without the aid of the property com- prised in the settlement. The section concluded mth a provision which I need not state at length, but of which the object was to bring within the net of the trustee any property which a trader might have covenanted or contracted, in consideration of marriage, to settle at a future time on his wife and children, but in which pro- T. O 194 VOLUNTARY SETTLEMENTS. Bankruptcy- Act, 1883. Necessity for perfecting the assurance. perty he liad no estate or interest at tlie time of his making such an engagement. This section in the Bankruptcy Act, 1869, has, with the rest of that Act, now been repealed, but is virtually repeated in the 47th section of the new Bankruptcy Act, 1883 (46 & 47 Vict. c. 52), with this one important exception — that in the new Act the distinction formerly existing for some purposes of banlu'uptcy law between traders and non-traders has been swept away altogether, and accordingly the operation of the new section ex- tends to all bankrupts alike. This change in the law came into force on the 1st January, 1884. I have explained somewhat at length how the law stands on this subject, because it is manifest that you cannot effectively advise a client as to the expediency of making a voluntary settlement unless you can yourself apply the general law to the special circumstances, and see how far they fit in ; and, from the same point of view, I will just trespass on the confines of an equity, rather than of a conveyancing, lecturer's province to impress upon you that, in order to bind the settlor, every voluntary settlement must be attended by the doing of every act, whether it be the transfer of shares or of a mortgage debt, or anything else the subject of settlement, necessary for perfecting the assurance — a doctrine the application of which to cases where the subject-matter of transfer has consisted of mere equitable interests has given the Court much difficulty in the matter of determining what does, and what does not, constitute a perfect assiu-ance. Several cases well illus- trating this difficulty are cited in Prideaux's Precedents, 12th edit. vol. 2, pp. 221 and 222. From what I have already said you will, I think, have no difficulty in arriving at the conclusion that a voluntary settlement has not very much to recommend it. But there is yet another undesirable feature attach- ing frequently to these settlements which points still PUWEK OF REVOCATION. 1^^ fui'ther in the direction of their comparative uselessness in many cases. They very often reserve to the settlor Power of a power to revoke the deed at pleasui'e, so that he may, in fact, make it to-day and put it behind the fire to- morrow. At one time, indeed, the authorities all hut went the length of saying that the absence of a power of revocation of itself made a voluntary settlement voidable by the settlor, but modern decisions have disapproved of this view, and, in a case of PJiiUips v. MuUings (L. R., rhunpsv. 7 Ch. App. 244), in which it was unsuccessfully at- ^^"'''"^7*. tempted to set aside a voluntary settlement upon the ground, among others, that it contained no power to revoke. Lord Ilatherley laid down these propositions, which may, I think, be very usefully taken to heart by you and me : — "It is clear that a solicitor who advises a client, for ' his own protection, to take a particular step of this ' nature does assume a very responsible duty, and where ' a person is induced to execute such a deed it must, in ' order to support the deed, be shown that the nature of ' the deed was thoroughly imderstood by the person * executing it ... . Whether there should be a power ' of revocation or not must depend upon the circum- ' stances, and it cannot be laid down as a general rule ' that such a deed would be voidable unless it contained ' a power of revocation." Speaking a little later on of the circumstances of the particular case. Lord Hatherley said : — " As to a power of revocation, it seems to me that if " such a power had been inserted the young man's " money would merely have been wasted, and that no " one but the solicitor would have derived any benefit " from the deed, for of what advantage would it be to " place the money in this way out of the young man's " control, and then give him power to destroy the " limitations whenever he pleased ? All that the law ** reqiiii-es in a deed of this description is that it should ,, o 19G POWER OF REVOCATION. " be effective, and sliould not contain any extraordinary " clauses unless those clauses are shown plainly and dis- " tinctly to have been brought to the notice of the " settlor, and to have been understood by him." A somewhat similar attemj^t to upset his own act was Henry v. made by a settlor in the more recent case of Hcnni v. Armstrong. ^ Armstrong (L. E., 18 Ch. Div. 668), but he fared no better than the plaintiff in the case to which I have referred, and Mr. Justice Kay did not even call on the defendants. The grounds relied on were, first, that the plaintiff did not understand the pui'port of the deed, and secondly, that it was irrevocable. The first point, which was of course a question of fact, the judge decided against the plaintiff on the evidence, and on the other matter he said this : — " I was told that at the time when he executed the " deed he was going on the Stock Exchange, and his " object in executing the deed — which, it is said, was " pressed upon him by his father-in-law — was to protect " his wife and chilcben. It is very common that a man " should execute such a deed when he goes into busi- " ness, and the ordinary way is that the deed should be " drawn without any power of revocation, because, if " there is a power of revocation and he falls into diffi- " culties or becomes banki-upt, the assignment of his " property would be practically useless I dis- " regard the circumstance that in this settlement there is " not any power of revocation, for any such power would " be inconsistent with the objects of the settlement." It is clear from these cases that a power of revocation is by no means a sine qua non in the ease of a voluntary settlement ; but it is also, I think, obvious that a client who irrevocably conveys his property away should know that he is doing so, and his solicitor's duty is to see that the settlor clearly comprehends the consequences of his act and exercises a deliberate choice in the matter, and it is not perhaps going too far to say that the ques- VOLUNTARY SETTLEMENTS — WHEN DESIRABLE. 197 tion whether the settlement shall or shall not contain the clause is a matter for the client and not the solicitor to decide, although the latter may, of course, with perfect proprietj^ express his views upon it. If the power of revocation is inserted, the value of the instrument, as Lord Hatherley pointed out, is necessarily not very great, and, upon the whole, I think you may take it as a sound general, but not by any means inflexible, rule that voluntary settlements are not de- sirable. It is not practicable to reduce to any order or scheme Wlien the cases in which the rule may wisely be departed settlements from. Let me instance to you, however, such a case as desirable, this : — A widowed mother has an extravagant son, whose importimate calls on her purse-strings she has not the moral courage to resist, though she is conscious that she is yielding to a weakness that may spell ruin both to herself and her son, and in this state of things she con- sults you. I suggest to you that in such a case the expedient of a settlement, with its attendant machinery of a trust and trustees, and the consequent preservation of the due relations of income and capital, may be well and wisely availed of, even to the exclusion of a power of revocation. To take another class of instance altogether : — It happens at times that complications have arisen in the adjustment of family settled funds, or that irregularities have been committed in their administration which it is desired to condone, or that trust funds have been lost with or without some negligence or omission. If the parties concerned are all sid jitris and legally in a posi- tion to put an end to or vary the existing trust, and they genuinely desire to make mutual concessions and set matters straight, the object in view may often be attained by a deed of family arrangement amounting, in fact, to a re-settlement of the funds in such wise as to VOLUNTARY SETTLEMENTS — DRAFTSMANSHIP. put tlie trust again on a right footing, or as nearly so as the events which have happened will permit. A case came under my own notice, not long since, in which this course was adopted with the best results. The widow of a testator was his sole executrix and trustee, and was also entitled to a life interest in his property. She had so mismanaged the trust estate, in the best of faith but on the most extraordinarily wrong system, that she had committed, figui'atively speaking, enough breaches of trust to make Lord Eldon turn in his grave. She had (among other things) spent more than the income, retained property which she was bound to sell, bought property which she had no right to invest in, and lent money on hopelessly unauthorized secuiities. In this state of things her children grew up, and when the facts were known, and the legal results pointed out, they all united in executing a deed in which the trusts of the testator's will were cancelled, fresh trusts closely resem- bling them declared, the mother released from all obligations, and policies on her life brought into settle- ment to make up for the loss sustained by the testator's estate through her irregularities. Their From the special natm'e of voluntary settlements and the varying circumstances in which they are executed, it follows of necessity that their actual provisions do not admit of classification any more than the circum- stances themselves. A volimtary settlement by a husband on wife and children will uatm-ally bear a close resemblance in form, except as to recitals, to an ordinary marriage settlement, while a deed executed ■under circumstances such as I have just described will involve all sorts of special recitals, and present as close features of similarity to a release as to a settle- ment. They embrace every rank in the degrees of draftsmanship, from the most simple and easy to the most complicated and difficult, and I can only advise contents. THE OFFICE OF TRUSTEE. 199 you to exercise carefally your discretion in each case, according to its circumstances, in determining whether the extent of the property at stake, or the difficulties of draftsmanship and of the questions of law involved, do or do not render it fitting that you should avail yourselves of the assistance of counsel. I have reserved as the last topic of this Lecture Observations 1 , . 1 • i. 1 • 1 T, on the office some observations upon a subject which embraces of trustee. equally settlements of all kinds, voluntary or otherwise, and which, in one shape or another, will constantly come before you in practice — I mean the office of trustee. When a man is asked by an intending testator whether he will consent to act as trustee of his will, he usually has to say " yes " (if he does say it) at random, in the sense that, generally speaking, he can form no guess either as to the period at which he will be likely to have to act — assuming that he survives the testator at all — or as to the nature of the duties which he will have to discharge ; and distance, if it does not lend enchant- ment to, at least removes disagreeable features from, the view. But when the same enquiry is made with reference to an intended settlement, it is quite a dif- ferent thing. It may, of course, be that the duties of trustee will probably be nil for a considerable period of time, as for instance, where the settled property is entirely of a reversionary character. But in the large majority of cases the active duties of trusteeship com- mence at once, and it is therefore obvious that an intending trustee should accurately inform himself of what those duties are. He is very often foolish enough to do nothing of the sort, to say " yes " without a thought, and to execute the documents put before him with as much unconcern as if they represented nothing but a trifling matter of form, ranking in importance a little above the appointment of the bridemaids and best man. But we are not concerned now with people 200 THE OFFICE OF TRUSTEE. who do these foolish things, but with people who act with reasonable prudence and caution, and who, before committing themselves to the office of trustee, seek the advice of their solicitor ; and I am anxious to assist you, if I can, to a right understanding of what that advice should be, and also of the practical guidance which may usefully be given at the later stage of a trustee's having agreed to accept or having actually assumed that office. Liabilities of Now, in the first place, no one who has ever read anything about the rules of equity can fail to arrive at the conclusion that the office of a trustee is very far removed indeed from a bed of roses — so far, that the simile of a plank-bed would perhaps be nearer the mark. He is responsible to the uttermost farthing that he possesses, not merely for the discharge of his duties without dishonesty or fraud, but for a thousand lesser degrees of failure which graduate to so fine a point that he is frequently fixed with grievous responsibility for an act absolutely devoid of moral blame, and which may only subject him to liability because he is judged by a remorseless standard of law, consisting of cases decided often on narrow issues by narrow-minded judges. In very modern days some attempt has been made to break in upon these traditions. The late Master of the EoUs — who was as conspicuous for his breadth of mind as for his profound knowledge — set his face resolutely against the harsh treatment of trustees in om^ Courts, and I remember hearing him express in Court only a few months before he died, in most em- phatic terms, a hope that the office of trustee would in time cease to be attended with liabilities and respon- sibilities which made men of the highest integrity and business capacity shrink from accepting it. But the judge who expressed the hope has gone ; the paradise for trustees which he pictured is not yet reached ; and many more doctrines must be up-rooted and decisions trustee's retirement. 201 reversed tlian is likely to be the case in my day or even in yours before bis words can be fully accomplished. Therefore I say that if any client of yours who is asked to be a trustee has no special reason or binding- cause to say " yes," if it is indifferent to him whether he accepts or declines, and the scale will be turned by the expression of an opinion from his professional adviser, then I conceive that your right course is to advise him to keep clear of the trust. I must not omit, as bearing upon the propriety of Difficulty of that advice, mention of one point which is often over- tr^"°° ^^°™ looked at the time of entering upon a trust. It is easy enough to become a trustee, but often very diffieidt to obtain release from that position. Mr. Joshua "Williams says on this point (J) : " When a trustee has once ac- *' cepted the office he has no right to retire, unless the " person having the power to appoint another trustee in " the event of his retiring should consent to do so ; or " unless from unforeseen circumstances the duties of " the trust should have become more onerous than was " contemplated by the trustee when he accepted the " otfice." I ought, however, to say, in qualification of this passage, first, that it was ^^Titten before the passing of the Conveyancing and Law of Property Act, 1881, the 32nd section of which has, in some small measure, facilitated the retirement of a trustee by providing that, where there are more than two trustees, one may retire without being replaced by a new trustee, where his co-trustees and any other person who may be empowered to appoint trustees shall consent to his doing so ; and, in the second place, I venture to think that the circum- stances in which a trustee may insist on retiring -uithout consent are somewhat narrowly stated by the writer. There are, in truth, only three modes by which a trustee can divest himself of that character : — {J) Williams' Personal Property, lltli edit. p. 342. 203 trustee's ketirement. First, by consent of all parties interested — a consent, however, which can only be given if they are sui juris. Secondly, where there is some special power or pro- vision in the trust instrument enabling him to do so. This would, of course, be conclusive, but such a pro- vision is rarely found. Thirdly, by application to the Court. It is with reference to this third ground that Mr. Joshua AVilliams' observation appears to me to be a little misleading, and you will, I think, gain a more accurate view as to how the matter stands from the following passages which I have extracted from Lewin on Trusts (A-) :— " The trustee may in every proper ease, though the ' contrary appears to have been at one time supposed, ' get himself discharged from the office by the substi- ' tution of a new trustee in his place on application to ' the Court. . . . Where no new trustee can be found ' willing to act, the trustee's right to be discharged ' must depend upon the circumstances of the case. ' ' It is a mistake,' observed Lord St. Leonards, ' to ' suppose that a trustee who is entitled to be discharged ' is bound to show to the Court that another person is ' ready to accept the office But if no one can ' be found who will accept the trust the Court may find ' itself obliged to keep the old trustee before the Court, ' but will take care to protect him in the meantime.' " Mr. Lewin then emerges from Lord St. Leonards' dictum, and observes : — " If a trustee wish to retire " from mere caprice, it is not clear that the Court can " or will discharge him, unless another trustee can be *' found in substitution. It is certain that the Coui't " cannot divest him of the estate before someone can be " found to take it ; and, even as to the office, it is not " unreasonable that if a man once engages to undertake {k) oth edit. pp. 47''j, 476. INFORMATION BEFORE ACCEPTING OFFICE. 2C3 " it, he sliall not retii-e from it without any reason, and " so leave the estate without a trustee." You will notice that Mr. Lewin does not express himself with much certainty, nor have I been able to clear up the point to my satisfaction on looking into the cases, but I think we may safely draw the conclusion, on the whole, that a reason, and, if I may use the ex- pression, a reasonable reason must exist to enable a trustee to get discharged from his office, unless there happens to be a willingness on all sides to fall in with his wishes ; and the fact that people who are prudent and well-advised are slow to assume the post often acts and reacts in the shape of rendering it difficult to re- place an acting trustee with a suitable substitute. The foxes in the fable were not, as you will remember, per- suaded by the fox whose tail had been cut off in a trap to undergo the same operation voluntarily, in spite of his glowing description of the pleasiu-es which he had experienced from going without it. But the preliminary advice of which I have spoken is sometimes out of place, or cannot from a variety of causes be followed. Few solicitors would advise a brother to refuse to act as a trustee of his sister's marriage settlement ; and if A. has become B.'s trustee, and A. in turn finds himself in want of a trustee, he naturally turns to B. to fill the place with a confident expectation that the request will be acceded to. Such an obligation may well be expected to be mutual. But, next, supposing this point to be got over in If office favour of an acceptance, the question arises, how far a accepteTwhat proposed trustee should ascertain the nature of the trust infomiation before committing himself irrevocably to the actual required, terms of the particular instrument. I answer this by saying that he shoidd most certainly gain this informa- tion fully and completely, and that he should do so, if possible, at the stage when the settlement is in draft, so that his solicitor may have the opportunity of consider- ing whether it needs any modification in the trustee's 204 solicitor's duty. interests. I have known a most important alteration to be made in the draft of a marriage settlement at the in- stance of an intending trustee. Again, the terms of the settlement may disclose trusts of an unusual or onerous character which cannot perhaps admit of modi- fication by reason of the peculiar circumstances, or the character of the property. This observation applies with special force to voluntary settlements, which, as I have explained, are of all sorts and kinds ; and it entails upon a solicitor the duty of pointing out to his client what are the special difficulties of the trust. He can only do this effectively by going carefully through the instrument and putting himself in his client's shoes, and where the terms of the settlement impose an excep- tional measure of responsibility on the trustees, his advice may, I think, be summed up in this way : — " The office of trustee is one which you will be wise " to keep out of in any case in which you can do so " consistently with good taste and kindly feeling, or a " sense of moral obligation; but if you feel bound to " accept it in this case, provided that there is no very " onerous or unusual duty attaching to the trust, then I " must point out to you that the settlement does entail " special obligations upon you." And you would then explain the natm-e of those obligations, express yom' views upon them, and afford your client all the materials for deciding whether to act or not. A little careful thought on your part, which you will of course come to apply with greater facility as you grow in experience, will enable you without much diffi- culty to put your finger on any provisions of an objec- tionable character. If you carry your minds back for a moment to what I have said in treating of other points, you will recall the difficulties attaching, for ex- ample, to a trust of such a class of property as furniture ; the objections, again, which apply to the importation of a power to purchase land into a settlement of personal estate, and the difficulties in which trustees may be placed solicitor's duty— custody of trust property. 205 both by refusing and consenting to exercise such a power. As surely as any trust is in itself specially complicated or open to any serious question or likeli- hood of difficulty in the future, so surely must the acceptance of the office of trustee involve the assump- tion of a liability to special risk and trouble. I should be very sorry to mislead you upon any point of conveyancing practice, and I would therefore again remind you of what I said at starting upon this subject, that trustees very often do not take the precautions to which I have referred. It is the exception, and not the rule, for the draft of a settlement to be deliberately perused on behalf of a trustee. But, on the other hand, it is very clear that if a client proposed to be made a trustee asks your advice as to the acceptance of the office you can give him no counsel really worth having unless the opportunity is afforded to you of carefully looking through the instrument, and you will act rightly in requiring to adopt that course. With regard to such matters as are incidental to a Matters trusteeship actually started — these, of coiu'se, in the i^^^f'^^^^v ^'^ widest sense, open an almost boundless field quite out of place in a Conveyancing Lecture. But there are two practical points within my limits on which I may fitly say a word in concluding this Lecture — the necessity of making proper provision as to the custody of the trust property, and of exercising discretion and prudence as to the mode of investment of the trust funds. As to the first of these matters. If the property con- As to custody sists of Grovernment stocks or inscribed funds of any pTOpertV kind, this will be a comparatively light responsibility, because the most important evidence of ownership is really represented by entries in books not in the trustees' possession. I am, of course, by no means sug- gesting that such documents as share certificates need not be kept with care, but only that they are, relatively 206 CUSTODY OF TRUST PROPERTY. speaking, of mucli less importance than bonds payable to bearer, or title-deeds, or other evidence of ownership capable of being fraudulently dealt with. It is the duty of trustees to place all such documents in some proper place of deposit — such as, for instance, a banker's strong-room — under their joint control, and you cannot too often or too strenuously impress upon a trustee client — because nothing is more frequently disregarded, or so likely to bring a trustee to harm when it is dis- regarded — that the Court shows no mercy to a trustee by whose supineness or ignorance it has been placed in the power of a co-trustee to misappropriate trust funds. I know, of course, that in the nature of things the management of a trust very frequently falls upon the hands of one of the trustees to the practical exclusion of the others ; three or four trustees, scattered perhaps all over the country', cannot and will not act together in every little detail. But the line of what is reasonable and right is overstepped at once when this is carried the length of placing the trust property bodily in the hands of one of several trustees. The Coiu-t holds — and rightly holds, if I may say so — that the ccsfnis que trust are entitled to what may be termed the joint integrity of all the trustees put together, and that they are not justified in remitting the beneficiaries to the powers of resisting temptation possessed by one of the trustees only. You will be doing valuable service to any trustee on. whom you are able thoroughly to im- press this important fact. A man may decline to be a trustee ; he may hesitate long and anxiously before he accepts the ofiice. But when he has accepted it he must discharge its duties, and he should be made to realize thoroughly that his responsibilities cannot be shifted on to the shoulders of others — that he holds a distinct individual position from the personal burden of which there can be no escape while he remains in the trust. INVESTMENT OF TRUST FUNDS. 2U7 Next and last as to the investment of trust funds. As to selec- The starting-point must obviously be this — that in no ment' for trust circumstances should trust money ever be invested in a funds, security not falling clearly and unmistakeably "within the power of investment conferred on the trustees by the trust instrument. That is an inflexible rule admitting of no variation, and a departure from it may be disas- trous. But we may go a step further. Trustees are expected not only to adhere to the letter of the trust, but to use their discretion in the choice of securities, not so much from a strictly financial point of view, as with reference to any particular circumstances attending the investment, and I would specially impress upon you that large general words of indemnity and language wide enough to confer an apparently boundless discre- tion can never be relied on as over-riding the general principles by which the acts of trustees are judged, and absohdng them from a proper and responsible perform- ance of the duties of their office. Mr. Charles Davidson mentions (/) a case within his knowledge in which a most eminent conveyancer had advised that trustees authorized to lend upon any security, real or personal, in their discretion could not safely invest in railway bonds. That advice seems to savour a little of extreme caution, but it forcibly illustrates what I have been saying. The same writer mentions also that in a reported case of Langdony. OlUvant (G. Cooper, 33), in which trustees who were authorized to lend money on sufficient personal security lent it to a trader, the hus- band of the tenant for life, on his bond, the loan was held to be a breach of trust on the groimd that it was made as an accommodation, and did not therefore fall ■within the trustees' authority. The need of caution in the selection of investments applies in an especial degree to investments on real {I) Davidson's Precedents, Srd edit. Vol. ITT. p. 55. 208 INVESTMENT OF TRUST FUNDS. securities. I liad occasion, in another course of Lectures, to treat of this subject at some length in dealing with mortgages (m), and as I do not feel justified in repeating myself I will only say now that all the text writers, with Mr. Le-\vin at their head, concur in condemning the lending of trust money on second mortgage, by reason of the legal disadvantages which attach to the position of a second mortgagee ; and that trustees are never justified in advancing on the security of any pro- perty of a speculative or unmarketable kind, such as imfinished houses, taverns, warehouses, and so forth. Sound practical advice to clients on such points as these will often be of inestimable service to them, and you may be sure that a clear appreciation on your part of the considerations attaching to the acceptance of the office of trustee, and the doctrines applied to the dis- charge of its duties, will repay you a hundred-fold in the course of your professional career for any trouble you may have bestowed, as a student, upon the effort to gain it. {»i) Tamer's Duties of Solicitor to Client as to Sales, Purchases and Mortgages of Land, pp. 222—227, 304. SEVENTH LECTURE. WILLS. f WHAT PROPERTY MAY BE LEFT BY THEM. WHO MAY MAKE THEM. THE FORMALITIES ATTENDING THEM. THE TAKING OF INSTRUCTIONS FOR THEIR PREPARATION. ( 211 ) SEVENTH LECTUliE. I PROPOSE, in this and my two remaining Leetnres, to Subject of direct jour attention to the subject of your professional duties in connection with the preparation of wills both of real and personal estate ; and I think that the most con- venient plan for me to work upon will be, first, to deal with such matters as are more or less common to all wills, whether of real estate or personal estate, or both, and then to point out some of the special characteristics of bequests of each of those two great classes of pro- perty. The right of testamentary disposition in this country Eight of Vv as once upon a time a plant of slow growth ; and if I JSpIStion^^ felt at liberty to treat of historical rather than of prac- tical topics I might, perhaps, succeed in exciting your interest by tracing its development. But the last land- marks of any restriction upon the right of a testator to dispose by will of property of any sort or kind were swept away nearly fifty years ago by the celebrated Wills Act, 1837 (7 Will. IV. & 1 Vict. c. 26), and however attractive the task might be to me, I do not feel justified in expending any of yom* time in reviA-ing the lights of bygone laws and statutes only to ex- tinguish them again, and tell you that their day is long past, and that they have no practical bearing now upon the professional duties of a solicitor. I take, then, as my starting point, the third section of the statute to which I just referred, under which the power to dispose by will, both of real and personal p2 212 TESTAMENTARY COMPETENCE — INFANTS. estate, is derived at this day. The short substance of the section is, that it gives a power of testamentary dis- position over all real and personal estate belonging in law or equity to the testator at the time of his death ; and that in the case of real estate the j)ower is extended to estates of the nature of customary freehold, or tenant right, or customary, or copyhold, notwithstanding the omission on the testator's part to comply with certain formalities connected with property of such tenure, or any testamentary disability which might attach to the particular species of ownership but for the Act ; and it is also extended to estates 2mr autre vie, contingent, executory and future interests, whether in real or per- sonal estate, and even to such an extremely shadowy and intangible subject of ownership as a right of entry for a condition broken, or otherwise. In short, a man may leave by his will any conceivable sort of interest in property to which he may be entitled at the time of his death. Competency But although all sorts of property may be the subject of bequests, all persons are not legally capable of making a bequest of any sort of j^roperty at all. No doubt when I mention the word disability the usual little legal family circle of infants, married women, lunatics, traitors, felons, and outlaws, will occur to your minds immediately as being the persons who, in all the text- books, are perpetually being presented to us in connec- tion with legal disabilities ; and, in the main, your sur- mise would be right. But the disabilities in the case of wills do not, as I shall show you, quite correspond with those which attach in the case of other written instru- ments. Infants. The disability of infants, as to their contracts, is, as you will no doubt remember, of a qualified descrijition. In the case of wills it is (under the 7th section of the Wills Act) absolute, and without exception of any kind, other than perhaps the case of a soldier on active service. MARRIED WOMEN. 213 or a seaman at sea (a). As it is higlily improbable that you will be asked, professionally, to stop into the middle of a battle or a bombardment to prepare the will of an infant soldier or sailor, the qualification does not seem of practical moment for my purpose. With regard to married women, the 8th section of Married the Wills Act provided that no will made by a married woman should be valid except such a will as might have been made by a married woman before the passing of the Act. The statute, therefore, left untouched the law as it then stood, which amounted to this, that a married woman could dispose by will of personal pro- perty held for her separate use, and might exercise a testamentary power of appointment over real as well as personal estate ; and she might also, if an executrix, appoint an executor to continue the representation. Whether she could dispose by will of real estate to which she was entitled for her separate use was a matter which, upon the authorities, was not free from doubt, but the doubt is not of moment now, as the testamen- tary powers of married women have been placed on a new and much enlarged footing by the Married Women's Property Act, 1882 (4o & 4G Yict. c. 75). The first section of that statute enables a married woman to dispose by will of any real or personal pro- perty, being her separate estate, in the same manner as if she were n/cnie isolcy and the 2nd and 5th sections so widely increase the area of what separate estate is, as almost, but not, I think, quite, to justify a conclusion which is expressed in these terms in the 9th edition of Hayes & Jarman's Concise Precedents of Wills (p. D) : — " Although a married woman obtains no new or different " power to make a will than she possessed before the " Act, the effect is, by making all her property separate («) Hayes k Jarmau's Concise Prccedcuts of Wills, 9th edit. jip. 8, 26, 27. 214 MAEEIED \yOMEX — LUXATICS. " estate, to give her complete testamentary dominion as " if she were a feme sole.^' I qualified my adoption of this passage, because, if you carefully study the 2nd and 5th sections of the Act, you will see that in declaring what property is to he considered separate estate, they do not include any real or personal estate, either in possession, rever- sion or remainder, of a woman married before the Act came into operation, to which her title also accrued before then. Supposing therefore, for instance, that a woman married before the Act became entitled, also before it came into operation, to a reversionary interest in person- alty not settled to her separate use, her husband would clearly still have a right to it if it fell into possession at any time during the coverture, and it is, therefore, not quite accurate to say that all a married woman's property has been made separate estate by the Act, nor consequently that she has coniplete testamentary dis- position, as if she were a feme sole, over all her property. Once satisfy yourselves, in any case, that you are dealing with separate estate, and you may take it that the right of testamentary disposition is now clear and absolute, but as to the property of any woman married before the Act of 1882 became law, make sure in the fii'st instance, when you are considering the question of testamentary capacity, that the property to be dealt with is separate estate, whether by virtue of the Act or of some instniment impressing it with that character. LimaticB. Next, as to lunatics, the incapacity is clear when it is once established that the testator or testatrix was not of sound disposing mind, from whatever cause. The question of sanity is very often a matter of extreme difficulty to deal with. One writer has, I think, been good enough to express it as his dehberate conviction that every one is mad in some degree ; and certainly in probate causes judges and Juries often have an anxious LUXATICS. task to discharge in drawing the line between mere eccentricities and the degree of mental derangement which amounts to testamentary incapacity. In so far as a matter so full of uncertainty admits of any accui'ate definition, I think it may fairly be said — but in saying it I do not pretend to do more than express the best con- clusion at which I have been able to arrive for myself — that the degree of insanity or mental derangement which will be suificient to upset a will is a somewhat lesser degree than would have the same result upon a contract entered into by the same person, and that judges and juries are somewhat exacting in the tests by which a testator's capacity is judged. There is another point, too, connected with the question of the soundness of a testator's mind, which does not de- pend upon any impressions of my own, but is a matter of established law — viz., that the presumption of sanity is not a presumption of law, but of mixed law and fact, and that although, when a will is attacked on this ground, the assailant must bring evidence to prove his case, yet the Coiu't will require, first, to be satisfied of the testator's competency by those who support the will, so that the onus of proof can hardly be said to lie alto- gether upon those who oppose it. This principle was laid down in the case of Sutton v. Sadler (5 W. E. 880 and3C. B., N. S. 87). I have no intention of stepping over my boundary and transporting you from the conveyancer's seat to the Probate, Divorce and Admiralty Di vision, but I have said thus much of the contentious aspect of this matter because it adds point to a practical warning which I am now going to give you, and which I am anxious that you should take to heart for your guidance at the stage of preparing a will and getting it executed. The cases in which any question of insanity or mental incompetence present themselves to a solicitor as elements for consideration in the case of contracts are 215 216 LUNATICS. very few and far between. Not so in the case of a will, because the conditions are altogether different. Con- tracts are made for the most part between men in the enjoyment of health and strength, or, at least, with all their faculties alert and unimpaired. "Wills speak only from tJie death, and many people have a morbid dis- inclination to place on record their testamentary wishes until that event is within very measurable distance indeed. Hence it is that wills are often made in a last illness, and the intimate connection of mind and body renders it doubtful in some cases how far the even balance of the one may be disturbed by the sickness of the other. Again, it is a matter of common knowledge that a strong mind often gains an extraordinary in- fluence over a weak one, and a testator, whether in health or sickness, may be making his will when his mind is so much under the control of others that he is deemed not to be in possession of sound disposing power. There is no more common ground of attacking a will than that of what is commonly called " undue influence." And, once again, it is a matter of observa- tion in life that eccentricities of mind and character have a peculiar tendency to break out in wills — as, for example, in the love of making a will to-day only to revoke it a few weeks or days afterwards in favour of a totally different mode of disposition. I remember per- sonally one instance in which a testator had made on four successive days residuary bequests, to different people, of property to the amount of about 200,000/., and yet he had been a very shrewd and successful man of business, and had never come under a suspicion of insanity among those who knew him. Now a little reflection apjDlied to what I have said will show you that, in connection with this subject of a testator's competency, you may readily be placed, as solicitors, in a position of great delicacy and difficulty. You may be summoned to the bedside of a dying man LUXATICS. 217 whose iutellect is dimmed by physical causes ; you may receive instructions in circumstances which may lead you to the conclusion that the testator is acting under the influence of others to such an extent as to exclude his own free will altogether, or you may have reason to beheve, from the testator's acts or wishes, that he is not of sound disposing mind ; and if in such a case 3'ou prepare a will in accordance with the instructions given to you, you may find yourselves afterwards assailed — perhaps in a Court of law — with all sorts of ugly insinuations by those who consider themselves to be aggrieved by the instrument. What should you do, then, where any such elements of doubt exist ? You should emphatically walk with wary steps and preserve evidence at every turn that you did everything which reasonable prudence, and a nice sense of professional honour and uprightness, could sug- gest. If you are in doubt as to whether the state of the testator's health justifies you in carrying out his testamentary wishes, you may reasonably ask to be satisfied on the point by the opinion of his physicians ; and some practitioners in such circumstances make a point of insisting, if possible, upon the wiU being attested by a medical man as one of the witnesses. If you see good cause to believe that undue influence is at work, you will be wise to wash youi' hands of the matter altogether, rather than lay yourselves open to grave imputations upon yoiu- professional character. Perhaps the most difficult case to deal with is that in which the testator's acts and wishes are your only ground for doubting his mental comj^etency. Of course, if a client who has a wife and children comes to you and says that he wishes you to prepare a will leaving all his property to the Emperor of Morocco, you will not have much difficulty in arriving at a conclusion as to the state of his mind. But I do not think that it is any part of your professional duty to form a judgment as to 218 FELONS, ETC. — FOKMALITIES OF WILL. Felons, traitors and outlaws. Formalities attending a will. tlic niceties of the dividing line between eccentricity and mental incompetence, and, so that you adopt all reasonable precautions, you may, I think, properly leave such matters to be raised, if at all, when the will comes into operation, l>y whomsoever it personally concerns to do so. Taking as an illustration the case which I just now mentioned, there is nothing to prevent a testator from changing his mind as often as he pleases as to the objects of his bounty, and in the absence of other special circumstances there is, I think, clearly no reason why you should not prepare in succes- sion as many wills as a changeable and capricious testa- tor chooses to be foolish enough to make. I will only add on this subject that the best vindica- tion which, ordinarily speaking, a solicitor can have where there is any suspicion of undue influence or weakness of intellect, will be written instructions under the testator's own hand. These, in conjunction with other facts, wall furnish evidence of free will in the one case and (if in themselves reasonable) of mental capa- city in the other ; and, in the absence of special circum- stances, depriving them of the importance which they would otherwise possess, they will go far to justify a soli- citor who acts upon them, even if the conclusion arrived at as the result of litigation be adverse to the v>^ill itself. I need not dilate upon the remaining disabilities of felons, traitors, and outlaws, because I do not imagine that you will ever be called upon to deal with them, and there is certainly no sufficient probability that you will to make it worth while for me to dilate upon them. Having now considered what property may be be- queathed, and who is competent to make a will, let us next see what are the necessary formalities attending the instrument. To do so we must turn partly to statute law and partly to the established law and prac- tice of the Probate Division of the Court, and I would observe here again as to the latter source of information FOEMALITIES OF WILL. 219 that I do not intend to toiicli upon any matter pertain- ing to the Probate Division, except in so far as it prac- tically and directly bears upon the discharge of what I may term your conveyancing duties. In so far as the contents of a will are concerned, it has been the aim of the Legislature and the Courts to dispense as much as possible with technicalities and to give effect to the intentions of the testator however crudely or imperfectly they may be expressed, if there bo any reasonable means of gathering them from the document taken as a whole. I shall have more to say upon that matter at another stage of my Lectiu'es, and I introduce it in a general way here only by way of contrast to my next observation, which is that, for reasons which commend themselves to common sense and prudence, the same tolerance of carelessness and igno- rance has not been extended to the attendant formalities of the instrument. These formalities may be considered under the two heads of the mode of execution, and the mode of dealing with alterations and obliterations. First, as to the mode of execution, there was formerly Mode of a difference in the requirements applicable to wills of execution, real and of personal estate, but the distinction was done away with by the "Wills Act, the 9th section of which says that every will must be in writing, and must bo signed at the foot or end by the testator, or by some other person in his presence, or by his direction, and that this signature must be made or acknowledged by the testator in the presence of two or more witnesses present at the same time, and that they must attest and subscribe the will in the presence of the testator, but that no form of attestation is necessary. Upon this section the late Mr. Joshua "Williams, in his work on the Law of Heal Property (b), justly ob- serves that one would have thouglit it sufficiently clear, (i) 13th edit. pp. 20G, 207. 220 FORMALITIES OF WILL. aud especially that part of it whicli directs the Avill to be signed at the foot or end, but that some very careless testators and very clever j udges have contrived to throw upon it a discredit which it does not deserve. Aud he then proceeds to refer to the statute which has been 1.5 & 16 Vict, passed by way of explanation on this point — 15 & IG ^' ' ' Vict. c. 24. If you read this Act you wall find that in a perfect labyrinth of words it declares that every will shall, so far as regards the position of the signature, be valid if the signature shall be in any one of a large number of laboriously enumerated places, and shall not be invalid by reason of the signature being in any one of several more laboriously enumerated places. It is far from my purpose to encourage you to be careless as to the mode of getting a will executed, but I will just illustrate, by one curious example which came under my notice, the wide interpretation given to the testator's signature under these provisions. The Wills Act, as we have seen, simply uses the expression " at " the foot or end." Among the tangled expressions in the later Act there are words which declare that no will shall be affected by, among other things, the cii-cum- stance that " the signature shall be placed among the " words of the testimonium clause." In the case of which I speak the testator had omitted to sign the will at all in the proper sense of the term, but he had, in his own writing, and in the presence of the witnesses, put in an attestation clause which began " Signed by the " testator, John Stiles, as his will, in the presence of, " &c., &c." And the witnesses had signed. Upon an affidavit of the facts which I have stated probate was granted without even, I think, requiring the Coui-t to be moved. It was, no doubt, considered that the case fell in terms, however unintentional!}-, Avithin the pro- vision as to placing the signatui'e among the words of the testimonium clause. Witnesses. With regard to the witnesses, I am able to spare you FORMALITIES OF WILL. 221 another lengthy disquisition upon the subject of com- petency. The only requirements are that there must be a bodily presence; and it is laid down in Taylor on Evidence (/•) that there must also be a mental presence, and that the Act will not be satisfied if either of the witnesses be insane, intoxicated, or asleep, or, it would seem, even blind or inattentive at the time when the will is signed or acknowledged. To this I may add, that on the same principle it is laid down in Sir J. F. Stephens's Digest of the Law of E^idence that a minor may attest a will, unless incompetent from extreme youth to under- stand and testify. There must, as you w^ell know, be two witnesses at least. One will not suffice, and more than two are not necessary or desirable ; and the witnesses must be pre- sent together when the testator signs or acknowledges. It is usual, and very proper, for the witnesses also to sign in the presence of each other — to do all the signing together in fact — and the ordinary form of attestation clause assumes this to be the case, but the statute does not, in terms, require this (d) . I dare say you are familiar with this attestation Attestation clause. It is not compulsory to have any attestation '■^'*^'*^- clause at all, but an attestation clause containing a sufii- cient statement of the fact of compliance wdth the provisions of the Act possesses this very important advantage, that when the time comes for obtaining probate, a special affidavit proving compliance with those provisions — which affidavit, if the death takes place long after the will is made, may not be by any means easy to obtain — will be necessary where the clause is absent, but not otherwise. It is very probable that you may here and there during your professional lives have to prepare a will in some emergency, when it is impossible for you to turn (f) 5th edit. p. 920. (rf) Hayes & Jannan's Coucise Precedents of Wills, 9tli edit. p. 85. 222 FORMALITIES OF WILL. to a precedent, and you cannot, therefore, too soon or too surely commit to memory the approved form of attestation clause to a will. Legacy to Finally, as to witnesses, you must always bear in ^'^''^''- mind that, under the loth section of the Wills Act, where any person attests a will to whom, or to whose wife or husband, any benefit is given by it, the attesta- tion is valid, but the benefit will be absolutely forfeited. An odd instance of the application of that rule came across me some time ago. The will of a client of mine was executed in Paris very shortly before his death, and one of the witnesses was an old friend of his to whom he had left a gold watch as a little token of remem- brance. The residuary legatee, as you may suppose, did not seek to take advantage of the technical failure of the legacy, and the watch was duly handed OA'er. Some time afterwards, when I came to pass the legacy duty accounts, an astute gentleman at Somerset House discovered the fact that the legatee and witness were identical, and insisted on the payment of legacy duty by the residuary legatee on the value of the watch, upon the ground that the legacy had lapsed and the watch had fallen into the residue. Had the legacy taken effect no duty at all would at that time have been payable, because the value of the watch was something under 20/. The contention was not noble, and it made me very unphilo- sophically indignant at the time, but it was legally right, and, after expressing my views to one official after another on a sort of ascending scale of appeal until I got to the top gentleman of all and poured out my soul to him in a final peroration, I had to submit to the payment. Obliterations, I tui'u now to the other branch of this head of my interlinea- subiect — the mode of dealing with obliterations, inter- tions, and "^ . . alterations. lineations, and other alterations m a wdll, all of which, to avoid needless repetition, I wdll call alterations. Should be Now the first piece of advice to give on this point is, FORMALITIES OF WILL. 223 I think, the oLvious truism that you should, as far as avoided if possible, avoid having any alterations at all; and I P*^^"^"^°- would certainly go the length of saj'ing that, A\'here you have the opportunity of doing so, it is much better to have all or part, as the case may be, of a will re-copied when it has to be altered before execution, than to have it executed with any considerable number of alterations in it, and especially where they are of material impor- tance. But it is not always practicable to act on this plan, and it is therefore essential that you should bo thoroughly aware of the view which the Court takes of alterations in a will presented for probate, so that you may know exactly what your own duties are in the matter. The law as to the effect of alterations made after the When omitted execution of a will is to be found in the 21st section ^'^"^^^^ of the Wills Act, by which such alterations are made invalid, and are omitted from probate, unless they have been afterwards executed and attested in the same way as the orisfinal will. In order to give eif ect to this enactment, the duty is of course cast upon the Court, whenever an alteration appears in a will, of determining whether or not as a matter of fact the alteration was made before or after the will was executed. If afterwards, then the altera- tion cannot be admitted to probate, unless it has been executed and attested as required by the 21st section ; if before, it will be incorporated in the probate. In the discharge of this duty the Court acts upon certain recognized principles and rules, which may, I think, shortly be expressed in this way : — First, the presumption is against the alterations ; Eulcs of law they will be taken to have been made after execution in |^PP"^^^^° to the absence of evidence to the contrary (/ decide for himself quite irrespective of, and, it may be, quite at variance with, your own opinion of what Is just or prudent, yet there are many oases in which, for all practical pm-poses, he will rely like a child on your judgment ; and there are few cases — I pray you to mark this — in which he will not attentively listen to any views which you ma}', within the limits of delicacy and propriety, express to him ; and even where he does not adopt them, you may depend upon It that you will not lose in his estimation by showing that you bring to boar upon the discharge of your professional duties the judgment of a reflective man of the world as well as the technical skill of a lawyer. Having said so much by way of vindication of the lines on which I have travelled in this Lecture, let me add that I propose in ni}' two remaining Lectures to ask you to follow me Into toohulcal regions in whicli most clients are left behind In a state of total inability to follow the why and wherefore, though they may, to some extent, comproheud the result. EIGHTH LECTURE. WILLS {coiiiuuied). f MATTERS OF DEAFTSMANSHIP :— GIFTS TO CHILDREN OR ISSUE. PERPETUITIES. ACCUinJLATION OF INCOME. CONVERSION. THE WILLS ACT. PRECATORY WORDS. PERIOD OF PAYMENT OF AN- NTJITIES AND LEaACIES. LEGACY DUTY ON ANNTTITIES AND LIFE INTERESTS. ( 239 ) EIGHTH LECTURE. In my Seventh Lecture I dii-ected tout attention to the Resxime of right of testamentary disposition, both as to the classes Lecture, of property -which may be left and the legal competency of individuals to bequeath them ; the formalities attend- ing the execution of a "will ; the rules of law which bear on the subject of obliterations, interlineations, and alterations in it, and the practical lessons to be drawn from them ; and, lastly, the considerations, dependent partly on principles of law and partly on policy and worldly wisdom, which should govern you in the dis- charge of the important task of taking instructions for the preparation of the instrument. In my two remaining Lectures I purpose to deal with Subject of the less attractive, though not less important, subject of Lectures." the points which it behoves us to bear in mind at the stage of actual draftsmanship. Probably there is no more fertile soiu'ce of litigation Limitations than limitations in wills intended to define the interest j^^jp to be taken by the children or issue of specified persons. The difficulty of construction to which such bequests give rise originates, no doubt, most frequently — as is also true of all other difficulties in the construction of wills — in the case of instruments prepared without pro- fessional aid, but by no means exclusively in those cases ; and it may arise, moreover, so very easily from the least want of clearness and accm-acy of language, that it is one against which you should most carefully guard. Decisions, so to speak, lie heaped round almost every possible form of words that can be used to express such a bequest, but cases still arise almost every day which 240 LIMITATIONS — CHILDREN OE ISSUE. present just that hair's breadth of difference from some other decided case to furnish au argument for dis- tinguishing and applying a different construction to them, and you cannot take up a volume of reports with- out coming upon some new decision, of which at fu'st blush you would say, " Surely this point has been " decided over and over again." It would be quite out of my power, in the compass available to me, to enter into the minute intricacies and refinements of this subject, which are legion in number and exceedingly complicated in difficulty ; nor do I think that you would derive from my doing so any great benefit as conveyancers. It is one thing to have before you a will which has taken effect, and as to which you have to consider, or to instruct counsel to consider, or, if need be, to invoke the aid of the Com^t to determine by the light of a number of reported cases, the construc- tion of a clause which is difRcult, because it is badly drawn; and it is another thing to store yom* minds with sound rules and principles, in order that you may not yoiorselves prepare ill-drawn clauses. To construe a will it is often needful to examine the authorities almost with a legal microscope : to prepare one so that it shall not have to be hereafter subjected to that operation calls for no such minute intricacy of verbal comparisons. "We shall therefore, I think, better occupy ourselves with the general lessons taught us by the authorities as a whole than by any attempt to dissect them. Now, from this point of view, I think it may be said that the two great points which the draftsman of a will should have clearly in mind, when framing a bequest in favour of children or issue as a class, are these : — The two main Fii'st, what are the precise limits, in point of time framin^^sucli ^^^ class, within the four corners of which the objects of bequests. the bcqucst are intended to be included ? Secondly, if the enjoyment of the legacy is to be deferred by the will to a period subsequent to the LIMITATIONS — CHILDREN OR ISSUE. 241 testator's death, is the vesting of it also to be postponed ? Upon the answer to this important question it will de- pend whether, if the legatee dies after the testator but before the period at which he would succeed to the enjoyment of the legacy, it will fall back into the testator's estate, or whether, although the legatee has not lived to enjoy it, it has become his vested property and will pass to his representatives. There is also a third point, not comparable in impor- Third point tance with the others, but still quite worthy of men- i*in^rtaiice tion in their company : — If the answer to the second question is, that the vesting, as well as the enjoyment, is to be deferred, what is to be done with the income during the period of svispense ? The consideration, even in the broadest sense, of the two main questions which I have suggested takes us on to difficult and slippery ground, but it is evident that they are questions as to which you ought to be alive to the necessity both of asking them, and of expressing the testator's wishes, when you clearly understand them, in language which will surely accomplish his object. With regard to the first question, there are passages Tho first main scattered in Jarman on "Wills {a) which state the result toi^nm^^t^or* of the authorities as clearly and concisely as the circum- class. stances will permit, and I cannot do better than quote them to you, with some few comments of my own, which may perhaps assist you to follow the writer's meaning. These are his propositions: — Fii-st, an immediate gift to childi-en, whether it be to Propositions the children of a living or a deceased person, and point stated whether to chikben simply, or to all the children, and JJ'^^J^^^"^" whether there be a gift over in case of the decease of any of the children under age or not, comprehends the children liL-iiig at the testator's death (if any), and those only. (a) Vol. II. p. 12G el seq. T R 242 LIMITATIONS — CHILDREN OR ISSUE. That sounds rather a severe paragraph at first blush, but a very little reflection will make clear to you the meaning of it, which I take to be this — that if by my will I leave a sum of 1,000/. to the children of my friend John Smith, the children of John >Smith entitled to share will be those, and only those, who are living at the time of my death, and this result will equally follow, even where, instead of calling them the children of John iSmith, I refer to them as " all the children of John Smith," or again, where my will contains a gift over to take effect in case of the decease of any of John Smith's children under age, which latter expression might seem to point to my intention to include all his children who attain twenty-one, whether living at my death or not. The second proposition is this : — Where a particular estate or interest is carved out with a gift over to the children of the person taking that interest, or the children of any other person, such gift will embrace not only the objects living at the death of the testator, but all who may subsequently come into existence before the period of distribution. This proposition serves, you see, to show us that if, in the case which I just now supposed, I had given a life interest in the 1,000/. legacy to John Smith, followed by a gift of the corpus to his children, not only the children of John Smith who are living at the time of my death, but also any children of his who are after- wards born, will be entitled to share in the legacy. The third proposition is, that where the period of distribution is postponed until the attainment of a given age by the children, the gift will apply not only to those who are li-vang at the death of the testator, but also to those who come into existence before the first child attains that age — i.e.^ the period when a share of the fund becomes payable to any one object or member of the class. LIMITATIONS CHILDREN OR ISSUE. 243 This means in oiu* supposed example tliat if I give a legacy of 1,000/. to be divided among the childi-en of John Smith on theii' attaining the age of twenty-one, the legacy will be divisible between the children of John Smith living at my death who have then attained, or who afterwards attain, twenty-one, and any other children of his who may be born after my death, but before his eldest child attains the prescribed age. Of course, upon this principle, if at the time of my death any child of John Smith has attained twenty-one, his after-born children would be excluded. I was rather puzzled at first to know why the line should be dra-^-n at the exact point of children born before the eldest living child attains twenty-one ; but it is really referable to a sufficiently plain reason. The will has in efi'ect said that any child of John Smith who attains twenty-one is to share there and then in the legacy. But how can he do so if, when he reaches that age, it is uncertain of how many objects the class will consist at the most ? If he is to wait imtil it is seen whether John Smith will have any more children, it is practically deferring the ascertainment of his proportion, not merely until he attains twenty-one, but until John Smith dies. Consequently, the ride comes in and says, " The first child who attains twenty-one fulfils the con- " dition attaching to him, and is entitled to immediate " enjoyment of his share. That share cannot be ascer- " tained when he is twenty-one, if children born after " that date are to be let in to disturb the fractional " proportions in which the legacy is divisible. There- " fore the testator must be taken to have intended that " the line for ascertaining the number of the class " should be drawn at the point at which he has said that " a legatee is to take his share." The f om-tli proposition is this : With regard to imme- diate gifts, it is well settled that if there be no object in esse at the death of the testator the gift must embrace r2 244 LIMITATIONS — CHILDREN OR ISSUE. all the children who may subsequently come into exist- ence by way of executory gift ; and with regard to gifts preceded by an anterior interest, the weight of authority is in favour of the position that in all such cases, except in the instance of a legal remainder of real estate, if there is no object at the time of the vesting in possession, all the children subsequently born will be let in. Applying our illustration to each of the two branches of this proposition, it will work out as follows : — First, if I leave 1,000/. to the children of John Smith, and there are no childi'en of John Smith living at my death, his after-born children, if any, will all be entitled to share in the legacy, by way of what is termed executory gift. Secondly, if I give John Smith himself a life interest in the 1,000/., and, subject to that life interest, I leave it to the children of James Smith, if at the time of John Smith's death James Smith has no chikben, all children of his born subsequently will share in the legacy. I have shifted this second illustration to the children of another person for the obvious reason that John Smith cannot have a family of children after his own death. The fifth and last proposition is as follows : — " Where the words ' to be born ' or ' to be begotten ' " are annexed to a devise or bequest to children, if the " gift be immediate so that it would but for the words in " question have been confined to children (if any) in " existence at the date of the testator's death, they will " have the effect of extending it to all the children who " shall ever come into existence." The meaning of this proposition I take to be this, that if, to use our illustration once more, I leave 1,000/. to the children of John Smith and add any such words as " to be born " or " to be begotten," the addition of those words will negative the application of the first proposi- tion and make the legacy distributable between all the PERIOD OF VESTING. 245 cliildren of John Smith, whether born before or after my death. These five propositions all have reference to the first point which I pressed upon jou — the ascertainment of the objects of a legacy to a class of children. My Second main second point, as you will remember, has reference to the of vesting. period of vesting of such a legacy, upon which, as I pointed out, will depend the question whether, if a legatee dies before the period for payment has arrived, the legacy will pass to his representatives or fall back into the testator's estate. As to this also, certain propositions have been esta- blished by the authorities, which, so far as the subject admits of it, are very clearly and concisely stated in one of Mr. Prideaux's excellent dissertations {b), sub- stantially in the following terms : — (1) Where there is a gift complete in itself, with a Propositions T«i» TIT Jill' P J 'P tiS to tills flS direction superadded as to the time oi payment, as ii a stated by legacy is given to the children of A., to be paid to them Mr.Prideaux. as and when they shall respectively attain twenty-one, the legacy vests immediately, and the payment only is postponed. (2) Where the time of payment is annexed to the gift itself, or w^here there is no gift except in the du'ec- tion to pay or divide — as, for example, where a legacy is given to the children of A. when they shall respec- tively attain a certain age, and there is notJting more — the legacy is contingent. (3) Very slight circumstances in the context will alter the construction, particularly where the bequest is of a residue, and not of a legacy merely. . Thus, if a legacy is given to a person " at " or " when " he attains a certain age and is accompanied by a gift of the interest in the meantime, or by a direction to apply such interest, or any part thereof, for his maintenance, [b) Prideaux's Precedents, 12th edit. Vol. II. pp. 373—376. 246 PERIOD OF VESTING. or if the legacy is directed to be immediately separated from the estate, the legacy vests at once. (4) Where the payment of the legacy is postponed for the convenience of the estate — as if a legacy is directed to be paid to A. after the decease of B., to whom a life interest is bequeathed — A. takes a vested interest on the testator's decease, the payment to A. being postponed only for the purpose of enabling B. to enjoy a prior life interest in the legacy. From the refined subtleties of this subject it naturally follows that in almost every case of construction which arises as to the period of vesting of a legacy ingenious advocates are able to adduce plausible arguments in favour of whatever view it is their professional duty to advance, and the law reports bear copious witness to the result. Key-note as Honey-combed as the law on this point is with Stention^"^*" decisions, a broad principle is both difficult to gather and dangerous to trust to, but, at least, I will venture to point out for your guidance, as draftsmen, that the key-note is intention. A testator is at perfect liberty, within the limits of the rule against perpetuities, to which I shall presently refer, to defer the period of payment of a legacy, while permitting the legacy to vest at once, or, on the other hand, to make the right to the legacy, and not merely the period at which it is to fall into possession, depend on a future event ; and whenever the Court has to find out whether he has done the one thing or the other, its endeavour always is to gather, as far as possible, from the instrument what the testator's intention was. No doubt, in doing this, a judge who decides a case to-day is much fettered by the decisions of other judges, by which a particular con- struction has been applied to a particular form of words, and may feel bound to follow an authority which does not commend itself to his own mind. But the quali- fication only amounts to this — that, for the sake of PERIOD OF VESTING. 247 uniformity of decision, if a given phrase lias received from the Court, in one case, the construction that the testator must have been supposed to mean so and so, it is opposed to our system of jurisprudence that another judge should apply to precisely the same phrase, where there is no distinguishing context, a totally different construction. I say advisedly where there is no dis- tinguishing context, because it is a rare thing to find two cases upon the construction of wills so identical that one is, in all respects, governed by the other. One of the greatest judges that ever lived — the late Sir Greorge Jessel — used constantly to lay stress upon this fact, and his custom, when he had to construe a doubtful will, was to bring his masterly intellect to bear upon the instru- ment before him without troubling himself much with what any other judge had said about any other will, except in the few instances in which the case cited was directly and unmistakeably in point, and even then I am bound to add that where the decision was only that of a judge of first instance he treated it with scant ceremony if his own views did not lean in the same direction. The testator's intention being thus the key-note, the The practi- draf tsman's aim must be to express that intention clearly. ^°^^^ ^ u y. It will not do to attempt this task by the light of natm'e, but it will, at least, serve you in good stead to re- member that the starting-point is to be quite clear as to what the testator means, and then to turn to some approved precedent and find the precise approved terms in which to give effect to his wishes. There is no great difficulty in doing this, because, although the doctrines as to the vesting of legacies are, as I have said, full of refinements, there are well-settled forms in which, be- yond a possibility of question, the period at which a legacy is to vest may be defined in accordance with a testator's wishes. It cannot, I think, be doubted that the cases of disputed construction arising upon wills prepared by lawyers are traceable in part to carelessness 248 PKACTICAL DUTIES. in thoroughly grasping the testator's wishes, and in part to carelessness in resorting to the use of the right form of words to fit the particular case. If you do not know what your client wishes, how can you possibly express it ? And if you do not, when handling a matter so delicate that one case is distinguishable from another by a difference of expression almost imper- ceptible, make siu'e that you are walking in the right path, how can you hope to avoid disaster ? Knowledge In dealing with the two principal points which affect necessary for legacies to a class, I have, as in my Lectures generally, solicitor assumed the case of a solicitor's preparing a will for where counsel ict->i t ^ ii employed. himself. Perhaps I need hardly say that, where the limitations are intricate and difficult, a solicitor is certainly wise to have recourse to the assistance of counsel. But whether you perform the task of drawing any given will yourself, or whether, having possessed yourself of your client's instructions, you commit the actual draftsmanship to counsel, a general knowledge of the doctrines embraced in the two points which I have brought before you is imperative. It is im- perative, whether to enable you to take yourself and to furnish to counsel intelligent and complete instruc- tions, or to apply your own mind to the considera- tion of a draft will when it comes to you from your counsel's chambers, or to enable you properly to prepare it yourself, or lastly — though this does not fall strictly within my present subject — to enable you intelligently to master the contents of any will that comes before you, and if, in a special case, not necessarily to take upon yourself to construe it, at least to direct your attention to the consideration of what are the material points which arise upon it. I venture therefore to say that you will not have given me your attention in vain if you gather from this Lecture nothing more than a firmly-rooted appreciation of the fact that, in the case of any bequest, whether of VESTING DEFERRED — INCOME. 249 real or personal estate, to a class of children or issue, it is the paramount duty of the solicitor charged with the preparation of the will to ascertain within what limits the testator desires to confine the class, and at what period the legacy is to vest where its payment is de- ferred, and having done so, to make it his special care that the testator's wishes are carried out by the use of approved accurate language. I will only add upon this subject, in conclusion, that I would also have you keenly alive to the fact that, while the performance of your duty does not involve any brilliant qualities, but only the good old weapons of patient study and close atten- tion, the slightest neglect of it is more likely to result in a Chancery suit than almost anything in a written document that I know of. I mentioned a third point which is of considerable The third practical importance — the application of the income of a cation~onn-' legacy where the vesting is deferred to a period sub- ^°™? "^^i*^^ sequent to the testator's death, I will now endeavour' deferred. to explain how this matter stands. It has long been a settled rule of law — independently of statute — that a contingent legacy, that is to say, a legacy the right or title to which does not vest until the happening of a future event, which may or may not take place, as distinguished from a legacy which vests at once, but of which the period of payment is deferred, does not carry any interest in the meantime in favour of the legatee, except in the case of a legacy given by a person in loco parentis to the legatee, and even then the exception is subject to another exception, that it does not take effect where the testator has by his own will fixed a sum for maintenance. This principle, already well established, was expressly afiii-med, almost in the words which I have used, by the Court of Appeal in the case of In re George (L. R., 5 Ch. Div. 837). The 26th section of Lord Cranworth's Act (23 & 24 How affected Yict. c. 145) declared that where property was held by £jS.''cran^ worth's Act. 2o0 VESTING DEFERRED — INCOME. trustees in trust for an infant, either absolutely, or contingently on his attaining the age of twenty-one years, it should be lawful for the trustees to apply towards his maintenance or education the whole or any part of the income to which he might he entitled in re- spect of such property. Now at first it might seem as if that section had upset the old law as I have stated it, but if you analyse it a little closely you will find that it did nothing of the sort. It only enabled trustees to apply the in- come of a contingent legacy for maintenance where the infant might be entitled to such income — in other words, in those cases, and only those cases, in which, under the existing law, the legacy carried interest in the legatee's favom- ; and it gave no greater power to the Court. This point was expressly so decided in the case of In re George, which I just mentioned, and in which a fixed sum for maintenance had been given by the testator. This section of Lord Cranworth's Act was repealed by the Conveyancing and Law of Property Act, 1881 (44 & 45 Yict. c. 41), in favour of the larger enactment of sect. 4'3 of the latter Act, of which I have in an earlier Lecture stated the substance (c) . And now by Comparing this section with that in Lord Cranworth's £^188?''°^ Act, which it replaces, you will find that it is wider in several respects, but for my particular purpose I am only concerned with one of its distinctive featm-es, which is, that there is no limitation as before to income to which an infant may be entitled, and I confess that I should personally have read the section as being, with- out doubt, large enough to enable trustees in all cases of a contingent legacy, where the testator has not ex- pressed a contrary intention, to apply the income, or part of it, for the benefit of the infant prospective legatee. But in their note upon the section, Messrs. Wolsten- (c) ^ee ante, Lecture V. p. 171. VESTING DEFERRED — INCOME. 251 holme and Turner, in tlie second edition of their work on the Conveyancing Acts {d), make tlie following obser- vations : — " This section replaces sect. 26 of Lord Cranworth's Observations Act, and is so worded as to avoid the question raised "sVolsteiiholme in the case of In re George on the words in that Act — and Turner on ' the income to which such infant may be entitled in considered. ' respect of such property.' In the case of a simple pecuniary legacy to an infant contingent on his attaining twenty-one, and carrying interest in the meantime, the executors being bound to set it apart and accumulate the income, it is conceived that, in the absence of any direction to the contrary, the effect of this section is that, if the infant dies under twenty- one, the residuary legatee takes only the accumula' tions representing the unapplied residue of the income. On the other hand, if no interest is payable on the legacy till the infant attains twenty-one, there is no income to which the section can apj)ly, and the residuary legatee takes the income of the residue without deduction till the legacy becomes vested. The short effect of the section seems capable of being stated thus : Where the income will go along with the capital, if and when the capital vests, then the income is applicable under this section for the benefit of the infant, otherwise not." I have puzzled over that note a great many times, and have referred to several other works in the hope of solving my doubts, but I confess that I am faiiiy unable to reconcile the beginning of it with the end. The writers start by saying that the section is so worded as to get over the question raised in the case of In re George, and conclude by observing that where the income goes along with the capital, if and when the capital vests, then, but not otherwise, the income is appHcable for the {d) Page 86. 252 VESTING DEFERRED IN'COME. benefit of the infant. But that last observation strikes me as covering the very identical ground of the decision in In re George. There the Court of Appeal said, " We cannot give maintenance out of this income, be- " cause, under the rules of equity, the infant is not and " wUl never be entitled to the income." Surely that is exactly tantamount to saying that where the income \Yill go along with the capital if and when the capital vests, then the income is applicable for the infant, but otherwise not. I am very diffident of expressing an opinion at vari- ance \\ith that of two learned writers (c), but I venture to think that the section does in fact clearly operate to brush away the restriction as to the infant's being entitled to the income in order to enable it to be applied for his benefit, and that the true way of summing np the section is to say that wherever a legacy is given to an infant contingently on his attaining the age of twenty- one years, or on the occurrence of some earlier event, then, unless a contrary intention is expressed, the income or part of it may be applied for the main- tenance, education, or benefit of the infant. I am somewhat supported in this view by the fact that Messrs. Gierke and Brett, in their excellent little work on the Conveyancing Acts (/), make this observa- tion on the section : — " Under Lord Cranworth's Act it " was decided that maintenance might be given out of " a fund to which the infant was contingently entitled " on attaining twenty-one, but not unless the infant on " coming of age would be entitled to both the priucipal " and the intermediate income. It is submitted, how- " ever, that this case would be covered by the present " section." ('- be restricted was only settled finally in the year 1833 by a decision of the House of Lords in the leading case of Cadell v. Palmer (1 C. & F. 372). It was there held that a limitation which postponed the vesting of property for a period represented by the duration of any number of existing lives and a term of twenty-one years from the death of the survivor was valid, but that a limitation exceeding that period was absolutely void. There is one curious feature of this rule which I Incidents of must not omit to mention. The limit, as I have said, ^j^jg subject. is a life or lives plus a period of twenty-one years ; but if a testator does not take advantage of the first part of the permission, he is not on that account allowed to add a single hour to the second. A bequest of property to vest in the legatee twenty-one years and one day after the testator's death is void, though there is no life estate interposed before the commencement of the twenty-one years. This was settled by the case of Palmer v. HaJford (4 Euss. 403). There is also attaching to the rule against perpetui- ties another incident which points to the need of the utmost care on the draftsman's part not to exceed the prescribed limit. It is this, that except in one class of cases a limitation which offends against the rule is absolutely void, and does not hold good, so to speak, 2>ro tanto. So hard and fast is the line, that even where it is possible or probable that the limitation may, and ■where in the events which happen it does in fact fall 256 LAW OF PERPETUITIES. Partial excep- tion to the rule — the cy pris doc- trine. Law as to aceumula- tioas of income. witliin tlie allotted period, it will nevertlieless be void if it may in any event be capable of exceeding it. It must, on the face of it, be a limitation which will, of necessity, fall ■s\ithin the limit, or it will fail altogether. Let me show you what I mean by an example. Property is given to the eldest son of A. (who at the time of the testator's decease has no son), and in case such son shall die under twenty-two, then to the second son of A. Here, if A. afterwards has a son, and the son lives to attain twenty-one years, the gift over would clearly fail under the rule. But, of course, A.'s eldest son may die under twenty-one, in which case the limita- tion to his second son would be ready to take effect ■vvithin the prescribed period. Nevertheless the limi- tation would be wholly void because it might exceed that period. I mentioned that there was one exception to the strict application of this sweeping rule. This occurs where what is called the cy j^'es doctrine applies. Out of con- sideration for that pet idol of the Courts, the ignorant testator, a limitation of land — and remember, please, that this indulgence applies only to real estate — to the unborn son of a living person for life and then to /lis sons in tail will shift the estate tail to the life- tenant [/>). "With regard to accumulation of income, the Act 39 & 40 Greo. 3, c. 98 was passed in consequence of a great case of Thellusson v. Woodford (4 Yes. 227), in which the will of Mr. Thellusson was before the Court. That eccentric person thought fit to direct that the in- come of his property should be accumulated dming the lives of all his children, grand-children, and great grand-childi'en, who were living at the time of his death, for the benefit of some future descendants who should be living at the decease of the survivor. This, as you see, was strictly within the rule against per- {h) Williams' Real Property, 13th edit. pp. 289, 290. LAW OF ACCUMULATIONS — CONVERSION. 257 petuities. The Court was obliged to uphold the limita- tion, and the injustice of the bequest led to the passing of the Act to which I just referred. By this statute the accumulation of income, whether of real or per- sonal estate, is prohibited, in so far as wills are con- cerned, for a longer period than twenty-one years fi'om the testator's death, or during the minority of any person lixing at the testator's death, or dming the minority of any person who, under the will, would, if of full age, be entitled to the income directed to be accu- mulated. The Act does not, however, extend to the case of any provision for paj-ment of debts, or for raising portions for children, or to any direction touching the produce of timber. It is worthy of note that where the direction to accu- mulate exceeds the statutory limit, it is not altogether void, as in the case of the rule against perpetuities, but only in so far as it exceeds that limit (/'). The existence of these strict limits to the lawful Practical tying up of the corpus and income of proj^erty casts ^^aftsmen upon us, as draftsmen, the important practical duty of keeping strictly within legal bounds any desu-e on the part of a testator to make dispositions stretching into the future, and it is on this accoimt that I have intro- duced them into this Lecture. I now turn to quite another matter — the doctrine of conversion. In the fii'st place, let me remind you that in its The doctrine primary and fundamental sense the rule of conversion, conversion, whether applied to real or personal estate, is identical — that is to say, a man by his will may so convert real estate into personalty, or personal estate into realty, that from the moment of his death the one species of pro- perty will, for all legal purposes, assume the character of, and devolve according to the rules applicable to, the (f) Jarman on Wills, 3rd edit. p. 280. 258 CONVERSION — TIME OF SALE. Illustration . Cases in Tvhicli advan- tage taken of the doctrine. Actual sale may be deferred. other, irrespective of the time when the actual literal conversion directed by the testator takes place. That is the principle which lies at the root of conversion, and colours every incident arising out of it. To take the simplest possible illustration of this — if, by my will, I direct my estate Whiteacre to be sold, and the proceeds to be paid to A., then, in the event of A. dying before the sale takes place, his personal repre- sentatives, and not his heu", will be entitled to the pro- ceeds of sale, unless, indeed. A., being absolutely entitled and sui Juris, has, in his lifetime, elected to take the property in its actual state. Conversely, if I leave 5,000/. to be laid out in the purchase of land for the benefit of A., his heir, and not his personal representa- tives, will be entitled to the legacy if he dies before the land is purchased, unless here again A., being sin Juris, has elected to take the money as money. In the case of a large landed proprietor, the aid of the doctrine of conversion is seldom invoked as to his real estate, the desire of the testator usually being to perpetuate the ownership of the land in his family, and, as it is popularly termed, make an eldest son. But there are a great many cases in which the testator's wish is to make one common fund of his real and per- sonal estate, and this object, naturally, can be attained only by means of a sale of the real estate. But then there may, and often does, arise this state of things — that those who are charged by the testator with the duty of turning his land into money may be actually unable to do so at all, or not without ruinous sacrifice, for some time after his death, or, at least, may have ex- cellent reasons, in the interests of the beneficiaries, for postponing the sale to some more or less extended date ; and it is very desirable that you should clearly under- stand how the draftsman should provide for such con- tingencies in framing the will. Now I take it that the points to which you have to CONVERSION EENTS PENDING JSALE. 259 direct your attention are twofold. First, there is the need for giving such elasticity to the testator's direction as that the trustees may be able to exercise a reasonable discretion as to the time of sale, without imperilling the operation of the doctrine of conversion with all its attendant incidents. Secondly, there is need to provide for the. disposition of the rents and profits during the interval between the testator's death and the actual sale. "With regard to the first point, there is little difficulty Mode of in dealing with it. The approved method of draftsman- this con- ship is, first, to insert a direction for the conversion of tingeucy. the real estate into money by sale, and to follow this up immediately by providing for the disposition of the sale monies in accordance with the testator's wishes. This "will have the effect of bringing into play all the equit- able principles attaching to conversion. Provisions should then be tacked on, giving the trustees a discretion to postpone the conversion either without limit or (but this plan is less frequent) within a limit not to exceed some specified period, and, in the meantime, with or without any special directions, to manage the property, grant leases of it, insure it from fire, and so forth. The extent to which these last powers should be elaborated would, I need hardly say, depend very much upon the nature of the real property of which the testator is, or is likely to become, possessed ; but, however large they may be — pray bear this in mind — they will not in the least weaken the legal effect of the earlier trust for sale, if that be clearly and unmistakeably expressed. The second point is one which, in some cases, calls for Disposal of very careful consideration, and trustees maybe placed ^alc^^^'^" '"° in a great difiiculty, and perhaps have no alternative but to seek the Court's guidance where this consideration has not been bestowed on the matter at the stage of tlio preparation of the will. This point arises in the very common case of a testator's giving tlie income of his 260 CONVERSION — EENTS PENDING SALE. Usual plan. ■\Vlien not appropriate. property for life to one or more persons, and making a disposition of the corpus to take effect on the termina- tion of the life interests. In such a case we may take it as a starting-point that all purposes will generally be answered by providing in effect that the rents and profits of the real estate, until the actual sale and the income of any personal estate not literally converted and invested in accordance with the trusts of the will, shall be deemed to be annual income of the trust pro- perty, in the same way as if it were the income result- ing from an investment of the proceeds of sale, and be ajiplied accordingly, I apprehend that, even in the absence of such a pro- vision, the Cornet would adopt that construction of the will, if possible, in preference to the obvious injustice of depriving the life tenant of any beneficial enjoyment until after the actual sale, although this latter result would be consistent with the language of a will which only directs conversion, investment of the proceeds, and payment of the income of the investment to the life tenant, and does not in terms go on to give him the income of the property until sale [j). But suppose that the real or leasehold or other pro- perty of which the sale is dii-ected is of a wearing-out or wasting character — as, for instance, in the case of land, where the annual profits are derived from the working of minerals, or the rent of a' leasehold interest which has only a few years to run. Or, conversely, sup- pose again that the property is of a more or less rever- sionary character and produces no present income at all, or no income comparable with that which will be derived from it when some ground lease falls in, or some other event happens, at a date not far distant. In the first of these supposed cases the payment to a life tenant of its annual rent or income until sale would obviously be {j) Hayes Sc Jarman's Concise Precedents of Wills, 9th edit. pp. 255 et seq. CONVEESION — RENTS PENDING SALE. 261 f avoui'able to him ; in the second case it would be as obviously unfavourable. Whenever, therefore, the How excep- income of any property does not bear the ordinary ratio should be^^ of income to capital, it is matter for careful considera- ■) Hayes and JaiTaan's Concise Precedents of Wills, 9tli edit. 554. (s) 9th edit. pp. 550—553. {() Dicey's Law of Domieil, p. 125. u2 293 LAW OF DOMICIL. practical application to a will of personalty, in so far as broad general rules will enable me to do so. Distinction In approacbing tbis subject it is important to bear in validity and i^^^^l ^^^^ ^^^^'^ ^^ ^ material distinction between tbe interpretation validity of a will and tbe interpretation of its contents, and tbat tbere is notbing in common between tbem, except in tbe case in wbicb tbe invalidity arises from tbe circumstance tbat tbe internal provisions of tbe instrument are contrary to tbe law of tbe testator's domicil. By validity I mean validity in tbe sense of testamentary capacity, compliance witb tbe formalities required by law, and provisions not contrary to law («). Dealing first witb tbe question of validity, it is obvious tbat tbe draftsman of a will can only guide bis steps by tbe state of tbings existing at tbe time wben tbe will is made, and I bave, tberefore, looked into tbe subject from tbat special point of view. You must not bold Mr. Dicey responsible for my metbod of treatment or language, but I tbink I may say tbat in substance tbe following rules would be in barmony witb bis views as to tbe law. Rules of law (1) Any will of personalty, wbicb is valid according bearing on ^ ^^ ^siVf of tbe testator's domicil at tbe time of bis this subject. making it, is valid, and tbe validity will not be affected by reason of a subsequent cbange of tbe testator's domicil, except possibly in tbis one remote case, tbat a will wbicb is invalid on account of its provisions being contrary to tbe law of tbe testator's domicil at tbe time of bis deatb, migbt perbaps be beld to be invabd, al- tbougb it would bave been valid according to tbe law of bis domicil at tbe time of its execution (r) . (2) Conversely, subject to tbe important exceptions wbicb I win presently mention, any will of personalty, wbicb is invalid according to tbe law of tbe testator's domicil at tbe time of bis making it, is invalid. {u) Dicey's Law of Domicil, p. '2G. {v) Ibid. pp. 27, 312. LAW OF DOMICIL. 293 "Whether such a will can become valid by a subsequent change of the testator's domicil depends on considera- tions too far removed from my practical purpose, and too much surrounded by doubts as yet unsolved by judicial decision for me to enter into them here, but you will find this matter exhaustively treated of in pp. 310—313 of Mr. Dicey's book. Of the exceptions to which I referred, one, at least, is of great moment to the draftsman of a will. It is, that every will made within the United King- dom by a British subject shall, as regards personal estate, be held to be well executed, and be admitted to probate in England, and in Ireland and Scotland to confirmation, if executed according to the forms required by the laws for the time being in force in that part of the United Kingdom in which it is made. The authority for this exception is the Statute 24 & 25 Yict. c. 114, and it relieves us, as you see, from all trouble in the case of any question as to whether a testator's domicil is English, Welsh, Irish, or Scotch ; and I may mention that, before the Act, questions of Scotch domicil were frequently brought before the Court for determination. The other exception, which has reference to wills made out of the United Kingdom, arises under the same statute, and as it has no direct bearing on my subject, I will only refer you for it to the Act. So far as to the actual validity of wills of personal estate. But assuming it to be established that such a wiU is valid, by what rules of law will its contents bo interpreted ? The general rule as to interpretation is this — that a will of personalty is to be interpreted with reference to the law of the testator's domicil at the time of making his will. To this rule there are certain qualifications and exceptions, as to which the writers are not altogether in harmony, and which are far too intricate and lengthy for me to introduce them here, 294 DOMICIL PKACTICAL CONCLUSIONS. Practical lessons. Where client domiciled Englishman. even in tlie most compressed form. You will find the subject dealt with in Mr. Dicey's book (pp. 306 — 308), and in Mr. Westlake's work on Private International Law (pp. 125 — 129), and I sincerely hope that those of you who refer to those authorities, as I have done, will gain a more clear and satisfactory knowledge of the state of the law than I have been able to do, and will not rise from the task with quite such a bad headache as I did. But whatever may be the difiiculties in the construc- tion of wills to which complications of domicil may give rise, there are certain practical lessons to be drawn from the law of this subject which you and I will be wise to lay to heart. You do not need me to tell you that, unless in some extraordinary emergency in which nothing better can possibly be done, no solicitor ought to prepare a will in ignorance as to the law by which its provisions will be construed ; which is only another way of saying that an English lawyer should only prepare a will which will certainly be interpreted by English law, unless in the exceptional cases of his being either acquainted with the foreign law applicable to the particular circumstances, or of there being no practicable alternative to his pre- paring the will for what it may be worth. For an English lawyer to attempt to prepare a will by which personal estate in Spain or Grermany is intended to pass, without any knowledge of the interpretation which will be put upon its provisions in Spain or Grermany, is a manifest absurdity. Bearing in mind, then, the rule that a will of personal estate is interpreted according to the law of the testator's domicil, the matter seems to resolve itself, for practical purposes, into the following tolerably simple proposi- tions : — (1) If your client is a domiciled Englishman, you will prepare his will without hesitation, but in so far as it may deal with personal estate situate in a foreign DOMICIL — PRACTICAL CO^X•LUSIONS. 295 country, you will not pledge yourself, as an English lawyer, to the construction which will he placed on it, in so far as the foreign personalty is concerned, and you will advise your client to take steps, or allow you to take steps on his behalf, to ascertain what will he the effect of the will, and whether he should make a sepa- rate disposition in some other form of his personal estate situate in the foreign country. (2) If yoiu" client is domiciled in a foreign country. Where client you will act rightly in admitting your inability to pre- foreigner. pare his will with any certainty that it will give effect to his wishes, unless and until you have ascertained the law bearing on the subject in that country ; and the result of doing so may be to satisfy you that his right course will be to act under the advice of someone skilled in the laws in force there. Mr. Dicey, indeed, holds (ic) that, where a will is expressed in the technical terms of the law of a country where the testator is not domiciled, the will should be construed with reference to the law of that country. If this view were adopted all the world over, an English draftsman might with all boldness prepare here the will of a testator domiciled abroad bequeathing personal estate wherever situate. But I am not aware that this is a recognized principle of international law, acted upon in the Courts abroad when dealing with wills prepared in this country, and, even as a principle of English law, I do not find it to be by any means free from doubt. Mr. Westlake, for instance, in his book on Private International Law, cites a case of A)isfriit//cr v. Chalmer, decided in 1826, and reported in 2 Simon, in which, the testator's domicil being English, a legacy lapsed under the English ride of construction, though it would not have lapsed by the law of the country where, and in the technical language of which, the will was made. If that decision is good (iv) Dicoy's La-\v of Doniicil, p. 307. 296 DOMICIL — PEACTICAL CONCLUSIONS. Where client's doini- cil in doubt. Probate. law, it follows that the Court here would not pay regard to the English rules of construction, as heing applicable to the "udll of a domiciled foreigner, made here in the technical terms of English di'aftsmanship. Upon the whole, I cannot venture to advise you to rely on Mr, Dicey's proposition as a qualification of the general rule that a will is interpreted according to the law of the domicil. (3) The third and only remaining case with which you may have to deal does not often arise. It is that in which any doubt exists as to where your client is domiciled. If there is a real substantial doubt on this point, it will be beyond your power to solve it conclusively, but as the question of a man's domicil turns largely on his intention, you may place valuable evidence on record by inserting in his will a declaration by him that he is domiciled in such and such a country. For the rest, I can only advise you to walk carefully in such a case, to weigh the question of domicil in all its bearings, and, if it is open to grave doubt whether a will made according to English law will, either as to its validity in point of testamentary capacity and formali- ties of execution, or as to the interpretation to be put upon it, pass the testator's personalty in accordance with his wishes, then it will be your duty to place yoiu' client in possession of your doubts, and to impress upon him the need of allowing you to ascertain by inquiries at the consular office of any foreign country in which he may be held to have been domiciled, or by consulting some expert in the law of that country, or in some other way, how the law stands as to testamentary dispositions in that country ; and, as the result of doing so, it may be found very necessary that he should execute not only a will in English form and with English formalities, but also one, or possibly even more contemporary wills, in a different form and attended by different formalities. To pass to my next subject. You are all aware that, PEOBATE — executor's LEGAL COMPETENCY. 297 apart from all the differences of construction and lan- guage in devises and bequests of real and personal estate, there is a very important distinction in point of form, which is thus expressed by Mr. Joshua Williams (x) : — "A " will of lands has always operated, and still operates, as " a mode of conveyance, requiring no extrinsic sanction " to render it available as a document of title. But " a will of personal estate has always required to be " proved." The writer then proceeds to deal with the subject of proof of a will, but that is beside my pur- pose, which is, to refer very shortly to the appointment of an executor, without which no will is complete, though the omission of such an appointment is not fatal to the instrmnent. The first question which crops up in this, as in all As to legal other cases, when one is dealing with any class of executors'^ ° persons to whom the performance of a legal act is entrusted, is that of competency. Neither the legal disabilities which apply to the making of contracts, nor those applicable to the making of wills, furnish the test of the legal competency of an execu- tor to accept that office. Not only every person of full age, siii Juris and compos mentis, may be an executor, but even married women, infants, felons, outlaws, and bank- rupts are not incompetent to take the office (y). In the case of infants, however, the Statute 38 Greo. 3, Infants, c. 87, sect. 6, provides that if an infant be appointed sole executor, he is disqualified during his minority, and administration cum testamento anncxo is to bo granted to his guardian, or such other person as the Court thinks fit, until the executor reaches the ago of twenty-one. With regard to the appointment of a married woman Married as executrix, the text writers were not all agreed, before '^°'^^°- the Married Women's Property Act, 1882 (45 & iQ> (j-) Williams' Personal Property, 11th edit. -p. 38o. {y) See Browne's Principles and Practice of the Court of Probate, p. 128. 298 executok's legal competency. Lunatics and idiots alone incompetent. Corporation. Yict. c. 75), became law, as to whetlier a married woman could or could not accept the office of executrix without her husband's consent. But we need not cudgel our brains on the point, as the statute in question has, by the conjoint operation of the 1st, 2nd, and 24th sections, clearly emancipated married v/omen from any real or supposed marital control, and rendered them fully competent to accept the office whether their hus- bands like it or not. If I were to hazard a guess, I should say that, as a general rule, a husband would decidedly not like it, and in spite of the Act would, b}^, we will say, a process of gentle persuasion, induce his wife not to act in the character of an executrix against his wishes. By an odd juxtaposition of ideas, you will find that the word " contract " is, in the Married Women's Pro- perty Act, 1882, made by the 24th section to do duty in the very extended sense of including " the acceptance of " any trust, or of the office of executrix or administra- " trix," and it is in the application of this signification to it that the statute confers on married women the right to which I have just referred. Practically, then, I think you may take it that luna- tics and idiots are the only persons incapable of being executors, and it has even been held as to this sort of incompetency that mere weakness of mind, especially if it were known to the testator, does not amount to a disability {z) . So wide, indeed, is the legal area within which to select a competent executor, that a corporation may be appointed executor, and in such a case letters of ad- ministration will be granted to a syndic nominated by the corporation to take the grant {a). Thus you will see that, as a question of law, the selection of an executor gives no trouble. But from (;:) JSvans y. Taylor, 2 Robert, p. 132. (a) In b. Drrkr, 1 Sw. & Tr. 516. CHOICE OF EXECUTOK. 299 another point of view it is often a difficult and anxious matter — I mean the choice of fit and proper persons. It is self-evident, to begin with, that however lawful Choice of p X f f ' i_iij ors may be the appointment of an infant, a bankrupt, a felon, or a person of weak mind not amounting to idiotcy, such an appointment would, as a matter of common sense, be the height of folly. And, as to the appoint- ment of a married woman, speaking generally and with all respect and gallantry to the other sex, I think it is undesirable, except as between husband and wife, to appoint a female executor, whether married or single, for this reason if for no other, that in ninety-nine cases out of a hundred she will, from ignorance of business matters, and almost from the necessity of the situation, act merely as the echo of others, and do and sign whatever she may be advised without having any real means or opportunity of forming an independent judgment. The selection of an executor is, of course, a matter which must rest with the testator. But it appears to me that a very inappropriate and undesirable selection is often made, not exactly owing to any fault on the solicitor's part, but because it has not been clearly brought home to the testator's mind, by his advice, what is involved in the office. Many laymen have naturally only a very shadowy idea on this point, and limit them- selves in making the appointment solely to the con- sideration of choosing trusted relatives or friends, who will not misappropriate the funds which come to their hands, and will have a kindly feeling towards the bene- ficiaries. But however important these points may be, they siu-ely do not cover all, or nearly all, the ground. To me it seems that a testator, in selecting his executors, should, if possible, have regard also to the nature of the duties which they will have to discharge. Suppose, for instance, that your client is engaged in commercial pur- suits, is a member of one or more firms, or, as the case may be, is carrying on business alone, and there is a 300 EXECUTOE — POWERS AND PROTECTION. probability that at the time of his death complicated matters will have to be adjusted, or his business may have to be carried on as a going concern, for a while at least, for the purpose of realising and winding up his estate. In such a case it is very desirable, in the interests of the beneficiaries, that one at least of his executors should have some familiarity with business affau-s — if possible, of the same description of business affairs as that in which the testator is engaged — and that the whole bm-den of administration should not be cast upon the rector of a country village, or a captain in the army, however efficiently he may be supported by professional advice and assistance. I do not wish to press this point too far, but I suggest that a solicitor may have the opportunity of giving sound and valuable advice upon it, and, consequently, that you may usefully bear it in mind. Powers of and In close connection with the subject of the appoint- executorTand ^^^^^ 0^ ^^ cxecutor is that of the powers and protection trustees. afforded to him, and also to the trustee of a will, in the discharge of his duties. In former times it was an essential part of the draftsmanship of a properly-framed will to insert provisions for the indemnity of trustees in respect of involuntary losses and otherwise, and for entitling them to deduct all expenses incurred in carry- ing out the trust, and also provisions empowering executors to compound debts and make arrangements as to their testator's estate. Lord St. The insertion of what were commonly called indem- Act'^^^ nity and reimbm-sement clauses was, however, rendered unnecessary by a provision of Lord St. Leonards' Act (22 & 23 Yict. c. 35, s. 31) still in force, which enacts that every deed, will, or other instrument creating a trust, either expressly or by implication, shall, without prejudice to the clauses actually contained therein, be deemed to contain a clause in the words or to the effect stated in the section. The section then sets out fairly EXECUTOR — POWERS AND PROTECTION. 201 comprehensive clauses, sucli as were up to that time customarily inserted in deeds and wills. In the following year Lord Cranworth's Act (23 & Lord Cran- 24 Yict. c. 145) was passed, and the 30th section of that ^ Act rendered unnecessary the common clause for en- abling executors to compound debts and make arrange- ments. But the 30th section has given place to a wider and larger provision in the Conveyancing and Law of Conveyancing Property Act, 1881 (44 & 45 Yict. c. 41, s. 37). You ^''^' i*^^^- will find, on referring to this section, that it empowers executors to pay or allow debts and claims on any evi- dence they think sufhcient, and also confers powers on executors and trustees to accept a composition or security for a debt, or for any property claimed, to allow time for payment of debts, to compromise, compound, abandon, submit to arbitration, or otherwise settle any debt, ac- count, claim, or thing relating to the testator's estate or the trust, and to enter into such instruments and do such things as they may consider expedient in the exer- cise of these powers without being responsible for any loss occasioned by any act or thing so done in good faith. The effect of this section is suggested by Messrs. Gierke and Brett {b) to be to shift the onus of proof, where any particular transaction is impeached, from the trustee to the ccsttd que trust, so that, whereas formerly a trustee had to justify his action in compromising and compounding, a dissatisfied cestid que trust must hence- forth prove impropriety of motive. Messrs. Hayes and Jarman in their Concise Pre- cedents of Wills (c) write of this same section in the following terms : — " Apparently this section will afford " to trustees acting in good faith a much-needed pro- " tection against many thiugs which are technically " breaches of trust, and for the consequences of which (i) Gierke & Brett's Conveyancing Acts, 2nd edit. p. 142, (c) 9th edit. p. 110. 302 EXECUTOR — POWERS AND RROTECTION. " trustees liave been heretofore held liable." They add that in Jones v. Oiccns (before the Court of Appeal in July, 1882) it was suggested by the Master of the Rolls (Sir Gr, Jessel) that, for the future, in cases falling within the section, the question would not be " Was it a breach of trust? " but " "Was it done in good '' faith ? " General result To sum up, from the draftsman's point of view the on^mSuS'' matter comes, I think, to this, that the legislature has ject. now given to executors and trustees as large a measure of protection as the most ingenious draftsman could have hoped to secure for them — I would rather say a larger measure, because the statutory provision is natui'ally likely to have a much greater effect upon hitherto-received general principles than the language used in an individual case. Consequently, provisions of this nature may properly disappear from a will prepared to-day. And from the larger point of view of the lesson to be learnt from it by a lawyer, it may be said that the section has dealt a heavy blow to the so-called, and, in my opinion, so falsely called, equitable prin- ciples by which the acts of executors and trustees were judged by the Court, and against which the strong sense and powerful intellect of the late Sir Greorge Jessel revolted, before this Act was passed, as you will, I think, gather from more than one of his judgments, and particularly from that delivered in the Court of Appeal in the case of In re Sjyeight, Speight v. Gaunt (d), of which case it was observed, in the course of the argu- ment of a later case {e), that the Court of Appeal had by its decision restored to its old vigour Lord Hard- wicke's rule in H.r parte BelcJiier (7 Amb. 218), which had been overlaid by decisions of Courts of first instance. From the executor I now pass to my next stage — the subject of legacies of personal estate. [d) L. E., 22 Ch. Div. 727. (f) In re Godfrey, Godfrey v. Faulhier, L. R., 23 Ch. Div. 491. THREE CLASSES OF LEGACY. 803 I suppose that no articled clerk ever went up to pass The three even his Intermediate Examination without having at leo-acy. the tips of his fingers the three classes into which legacies are divided — that is to say, general, specific, and demonstrative, of which the last is a sort of hybrid mixture of the other two. But knowledge acquired for examination purposes has a tendency to melt when the occasion has passed, and is not always stowed away for practical use afterwards. At the risk, therefore, of handling a subject with which most of you are abeady familiar, I propose to refer shortly, and as practically as I can, to the characteristics of these different kinds of legacy. The leading authority upon the distinction between a general, a specific and a demonstrative legacy, and upon the question what amounts to an ademption of a specific legacy, is the case of Aslibiinicr y. Macguire, decided in 1784 by Lord Thurlow, and reported in Tudor's Leading Cases in Equity (/). And a leading case it certainly ought to be if deliberation on the part of the judge has anything to do with the ingredients of a leading case ; for, according to Lord Alvanley {(j)^ Lord Thurlow took two years to consider his judg- ment. It is often a matter of nicety to determine upon the construction of a will under which of these three classes a legacy falls, but the fineness of distinction which, in given cases, exists between them affords little excuse to the draftsman of a will who confounds one with the other, because it is his clear and manifest duty to give effect to the testator's wishes, and inasmuch as each class of legacies possess, as I shall show you, some special characteristics which distinguish it from the other, it cannot be said that the testator's wishes are fulfilled when, for instance, a legacy, meant by the testator to (/) 3rJ edit. Vol. II. p. 2L3. ((7) 4 Vcs. oGG. 304 GENERAL LEGACY — SPECIFIC LEGACT. be specific, is, by careless draftsmanship, suffered to * assume tbe shape of a general or demonstrative legacy. It MT.11 be well for us to bear clearly in mind the points of difference between these several classes of legacy ; and I will therefore now proceed to state them, and will then add a few words as to the practical lesson which they teach us. General A general legacy is a legacy which does not amount egacy. ^^ ^ bequest of any particular thing or money, distin- guished from all others of the same kind (A). It is payable only out of the general assets of the testator, and ranks after payment of his debts and of his specific and demonstrative legacies. From this it follows that if the testator's assets are not sufficient to meet his debts as well as legacies of the other two classes in full, his general legacies will abate. On the other hand, a general legacy, not being payable out of any specified fund or asset, will not be liable to the incident of ademption which I am about to explaim. Specific A specific legacy is defined by Mr. Joshua Williams (/) legacy, ^^ |^g ^ bcquest of a specific portion of the testator's personal estate, but that definition strikes me as being singularly incomplete, and, I would even venture to add, misleading. I much prefer the description of this class of legacy in the notes to As/ibitrner v. Maeguire, in Tudor's Leading Cases (/), viz., that it is "a bequest " of a particular thing or sum of money or debt as dis- " tinguished from all others of the same kind," and still more a very recent definition propounded by the j)resent Lord Chancellor, in a case of Robertson v. Broadheni (53 L. J. R., Ch. Div. p. 267), viz., that a specific legacy includes "everything which a testator, identify- " ing it by a sufiicient description and manifesting an " intention that it should be enjoyed or taken in the (A) Tudor's Leading Cases, 3rd edit. Vol. II. p. 252. ((■) Williams' Personal Property, lltli edit. p. 401, {j) 3rd edit. Vol. II. p. 252, y ^ECIFIC LEGACY — DEMONSTRATIVE LEGACY. 305 " state and condition indicated by that description, " separates in favour of a particular legatee, from the " general mass of his personal estate, the fund out of " which pecuniary legacies are, in the ordinary course, " payable." As I have abeady indicated, a specific legacy possesses over a general legacy the advantage that, upon a deficiency of general assets to pay debts, it will not be obliged to abate until after the general legacies have been exhausted ; but, on the other hand, as compared with general legacies, it has this disadvan- tage, that if the particular specific thing given is after- wards adeemed by the testator, whether by his disposing of it in any way or changing its character, the legatee will lose his legacy, and will have no right of recourse to the general personal estate to have it in any way made up to him. A demonstrative legacy was described by Lord Thiu-low, Demonstra- in Ashhurner v. Macguire, as being " a legacy in its nature ^^° eg-acy. *' a general legacy, but where a particular fund is " pointed out to satisfy it " (A-). This is the most favoured of the three classes. It does not ab'ate like a general legacy, and it is not liable to ademption like a specific legacy, for if the particular fund pointed out by the testator is not in existence at the testator's death, the legatee is entitled to have his legacy made good out of the general assets. Thus, if a testator says, " I leave my 1,000/. London and North " Western Railway Stock to A. B.," and afterwards disposes of that stock, the legacy is specific, and A. B. gets nothing ; but if he leaves a legacy of cash, with a direction that it is to be paid " out of " a particular stock — as if he says, "I leave 1,000/. out of my London " and North Western Railway Stock to A. B.," and afterwards sells all that stock — the legacy is demonstra- tive, and A. B. will get his 1,000/. out of the general (k) Tudor's Leadiiig Cases, 3nl edit. Vol. II. p. 246. T. X 306 LEGACIES — draftsman's DUTY. assets. The distinction between the two cases may be referable to the highest principles of justice, but it is too delicate and subtle for my limited comprehension, and I must confess that in the case of wills not prepared with professional aid — to which sort of will, remember, the law is by way of showing every kind of indulgence — most testators would be rather astonished at the im- portant result of this comparatively slight difference in their mode of expressing themselves. But it is the law, and that is enough for you and me. So much as to the special features of each class of legacy. It is, 1 think, obvious that a thorough know- ledge of them may usefully be applied as between a solicitor and his client, first at the stage of taking instructions for a will, and secondly at the later stage of draftsmanship. Solicitor's ^ client, when he instructs you to prepare his will, may jot down his wishes on paper, or he may express them verbally, and you will take written notes of their substance. If in either mode you learn from him that he wishes to leave John Smith a legacy of 1001. simply, there will be no difficulty in divining that he means to leave John Smith a legacy of that amount payable out of his general assets. If, again, he tells you that he desires to leave to John Smith this or that picture or piece of plate, or other specific article, you will accept the instructions as clearly indicating an intended specific legacy. But if he refers to stocks or shares, or any other species of property, in such terms as to raise the least doubt whether he would desii-e the legacy to fall under one or the other of the different classes, then it will be your duty to clear uj) the doubt, and, so far as may be necessary for that end, to explain to him the legal consequences of one and the other of the different classes of bequest. When you have reached the point of being quite clear as to your client's wishes, there will remain the LEGACIES draftsman's DUTY. 307 duty of giving effect to them. In most cases this will present no great difficulty. You will easily enough express, with or without the aid of any standard book of precedents, or other assistance of the same description, a general legacy of 100/., a specific legacy of some par- ticular picture or sum of stock belonging to the testator, or other specific subject distinct from anything else owned by him, or even the less common demonstrative legacy of a sum of cash to be raised from some par- ticular fund. The most important matter to bear in mind for general guidance is, I think, this — that the Court leans somewhat against construing a legacy to be specific or demonstrative, unless it is very clearly so expressed, because of the position of vantage which such legacies occupy as compared with general legacies. For example, you might perhaps suppose — I certainly should — that if a testator leaves to A. B. a diamond ring, or a horse, without identifying any particular ring or horse, the legacy would, nevertheless, be con- sidered demonstrative, and the legatee entitled to have his ring or horse purchased, without being subjected to abatement in common with ordinary money legacies. Such is not, however, in fact, the case (/) . The absence of reference to a specific ring or horse would reduce the legacy to the level of a general legacy, and if the testator desires to give it priority over general legacies in the matter of abatement, he must either identify the gift specifically with something belonging to him, or ho must create the priority in express terms (w^)- I^^ the examples which I have just given, the matter is, of course, comparatively unimportant, but it is of real substantial importance in some cases. For instance, a bequest of a sum of money to be laid out in the pur- chase of an annuity is, -without more, a mere general legacy, liable to abatement with the rest. But it may (/) Tudor's Leading Cases, 3rd edit. Vol. II. p. 2.53. {>») Ibid. p. 252. x2 308 LEGACIES — draftsman's DUTY. be that in a particular case the testator may desire this annuity to have a preference over all his other legacies, and that his intention will be defeated if it is liable to abatement in common with them. In such a case it will be necessary to insert words expressly giving such a priority to it. And remember, that in this, as in so many other things, the point may not even occur to the testator himself. He may be supposing in his own mind, until and unless you enlighten him, that the gift will have a priority over any other legacy without express words, or the contingency of abatement may not even have crossed his mind. Men who have lived out of the business world are often like children in such matters, and look to their solicitor to play the part of guide, philosopher and friend in all their affairs ; and many men, again, whose thoughts are filled with a thousand other things, expect their solicitors to save them the trouble of thinking about their wills by suggesting all needful points. I do not multiply instances of forms of words which do and do not amount to the one or the other of these classes of legacy. If I gave you a thousand particular illustrations I should probably leave out just that thousand and fii'st which may be the very one you will have to deal with. Moreover, I should be stepping far over the line, within which it has been my effort through- out to keep, if I passed from general principles to par- ticular cases. My purpose is not to attempt the hope- less task of showing you, in the compass of nine Lectures, how to deal with this, that and the other special combination of individual cii'cumstances, but to do my best to encourage you to arm yourselves with those general principles which apply in the largest sense to all circumstances. Once master them thoroughly, and all the rest will be added in any particular case by reference to the Treatise, the book of Precedents, or, as the case may be, to some decision in another case which draftsman's duty DOCTRINE OF SATISFACTION. 309 governs your own, or again, by recourse to some learned counsel. Neglect them, and though you have all the law-books ever published at your command for reference, you will not do your duty effectively, for this one con- clusive reason, that the practitioner to whose mind the general principles of law are not familiar ^vill stumble blindly on his way, and will in countless instances fall short of protecting his client's interests and giving effect to his wishes, because, when a given state of circum- stances is presented, he will not be alive to the points to which he should direct his attention. It may, perhaps, cross the minds of some of you, as you read these words, that you have already encountered a good many solici- tors who seem to get along somehow without knowing much about any general principles. So have I. But they do get along, and that is all ; and even if they succeed in satisfying their clients, you may be quite sure that they would, with few exceptions, take a much higher and worthier position in the profession than they do, and serve their clients infinitely better, if they acted upon the golden rule of thoroughly mastering first principles. Moreover, my duty is not discharged by pointing out to you the ka.•) . In short, the Court will seize upon the most minute artificial circum- stances as a way of escape from a still more uiiificial doctrine, of which it is heartily ashamed, though unable, as it seems, to abolish this and some other mischief — making rules of equity which I should extremely like to see despatched about their business. It will be evident to you from what I have said that this third and last class of satisfaction is not, in degree of importance to the draftsman, comparable to the second class, because of the Court's leaning against it, and of its consequently applying only in a limited range of cases. But it is only a question of degree, and it behoves every solicitor to bear in mind the existence of the doctrine, and to give practical effect to his know- ledge of it when proper occasion arises at the same successive stages to which I referred just now — first, when receiving instructions ; and secondly, when cany- ing them out. If it is within the bounds of what is reasonably probable that your client is indebted to a person to whom he leaves a legacy, it will be your clear duty to make enquiry as to the fact, and, granting the ■ fact, to learn the testator's wishes as to whether it is his desire that the legacy is, in actual fact, to be a legacy, or merely the payment of a debt which his executors would have to pay whether he desired them to do so or not ; and you would, if necessary, point out to liim that, by (>•) Haynes' Outlines of Equity, pp. 341—344 ; Williams' Personal Property, 11th edit. p. 403 ; Tudor's Leading Cases, 3rd edit. p. 367 et seq. 314 DOCTRINE OF SATISFACTION. a process of reasoning wliich has been a fearful and wonderful marvel to all sane lawyers ever since, a learned judge in the year 1714 laid down a rule of interpretation which necessitates the exercise of care in dealing with a gift by will to a creditor. Importance of I need not dwell further on this subject, and I leave practitioner, it with the expression of a hope that I may have con- vinced you that you have need of being familiar with the equitable doctrine of satisfaction, not merely because you may think that it is a likely subject for an exa- miner to pitch upon, but for the very much more important and serious reason that you will have occa- sion to bear in mind its leading general principles — I do not say its intricate refinements and distinctions, because they do not, in my judgment, concern the draftsman however necessary it may be to refer to them where a question of doubtful construction is concerned — if you aspire to be competent legal practitioners and sound draftsmen. I dry the ink on the last page of these Lectures with reluctance. Their preparation has for many months engrossed a large proportion of the scanty hours of leisiu'e permitted to a practising solicitor ; but the task has been one of ever-increasing attraction to me. The best hope I can have for the result is that it may con- tribute, in however small a degree, to promote in those who are entering my profession, a desire to gain at the outset of their career the measure of sound knowledge which can alone enable them to grapple successfully with the difficulties and stumbling-blocks which lie in front of the young solicitor. INDEX. ACCOUNT, provision as to, in partnershii) articles, 44, 45 wlien not binding, 45 object of taking, 46 value of express provisions as to, in partnersbij) articles, 46 must be taken in event of dissolution of partnership, 57 partnership articles should state when to be taken, 57 ADMINISTEATOES, need not be mentioned in covenants, 95 " ADVANCEMENT " CLAUSE, in a settlement, 172, 173 AGREEMENT FOE A LEASE, must be in wiiting and signed, 78 when appropriate, 80, 81 bears same stamp duty as lease, when term does not exceed 35 years, 81 expression " usual provisions " in, 82 should state clearly what provisions are to be contained in lease, 82 ANNUITY, as to period for payment of, 267 legacy duty payable on, 268 bequest of sum of money to be laid out in purchase of, is a "general" legacy, 307 does not take j)riority unless expressly provided for, 30S APPOINTMENT, general devise in will, operates as execution of power of, 263 AEBITEATION, agreement to submit to, should be made a rule of Court, 70 316 INDEX. ABBITEATION CLAUSE, in partnersliip articles, 66 wliy desirable, 66 tow formerly regarded by the Court, 67, 68 now regarded by tbe Court, 68, 69 affected by 17 & 18 Yict. c. 125 ... 68 instances wbere Coiu't has declined to interfere wdth regard to, 69 draftsmanship of, 69, 70 should provide for agreement being made a nile of Court, 70 AEBITEATOE, tendency to depute to, the adjustment of questions between partners, 64 AETICLES OF PAETNEESHIP. See " Partneeship Articles" ASSETS AND LIABILITIES, solicitor's part in adjustment of old, 19 taken over by new firm, 21 points for consideration under this head, 21 statement of, 21 transfer of, to new firm, 21, 22 retained by old firm, 21, 23 illustrations of mode of taking over of, by new fii-m, 22, 23 result of not taking over old firm's, 23 need of effectual transfer of old firm's, where taken over, 25, 26 intention of old firm being relieved from, should be clearly ex- pressed, 26 right of jiartner to require a sale of assets on dissolution, 52 ASSIGNEE, not bound by covenant personal between covenanting parties, 96 when bound by covenant, 96 can avail himself of covenant which concerns thing demised. 96 ASSIGNMENT, covenant against, in lease, 129 not affected by Convej^ancing Act, 1881 .. 130 advantages of covenant against, to lessor, 130 covenant against, often modified in terms, 131 disadvantages of covenant against, to lessee, 131 importance of giving notice of, 163 ASSIGNS, use of word in covenants, 95, 96 INDEX. 317 BALANCE SHEET, provision in partnership articles for making binding, 45 BANKEUPTCY, eiSect of transfer of partner's share hj, 47 BILLS, preclusion of junior partner from drawing or accepting, 41 BONUS, on policy of insurance, how to be dealt with in absence of special provision in settlement, 188, 189 BUSINESS, natiu-e of, should be strictly defined, 40 devotion of partner's time to, 41 when an order will be made by Court for carrying on, and winding up, 52, 53 right of winding up, is personal to partners, 53 winding up of, by Court, 55 special provisions in a will as to testator's, 234 C. CAPITAL, distinct from profit and loss, 43 is a debt due from firm, 43, 44 interest on, 44 should have a cash denomination in partnership articles, 44 payment of deceased partner's, 58 trusts of, in a settlement, 170 CHEQUES, preclusion of junior partner from signing, 41 CHILDEEN, limitations to, in a will, 239 what comprehended in immediate gift to, as a class, 241, 242 COMPENSATION, right of tenant to, how affected by Agricultural Holdings Act, 1883... 127, 128 CONTEACT, how far infant partner can avoid, 16 for tenancy should bo in writing, 78, 79 318 INDEX. CONYEESION, doctrine of, not applicable to leaseholds, 152 doctrine of, 257, 258 illustration of, 258 cases in whicli advantage taken of, 258 actual sale of real estate may be deferred, 258, 259 mode of providing for postponement of sale, 259 disposal of rents pending sale, 259, 260 mode in -wliicii exceptional cases sbould be dealt ^\-ith, 261, 262 COPYHOLDS, "will pass under general devise of all testator's lands, 277 COEPOEATION, may be executor, 298. COVENANTS, old form of, in leases, 94 executors and administrators need not be mentioned in, 95 assignee bound by, if named, 96 in lease, when assignee can avail Hmself of, 96 assignee not bound by, when personal between covenanting parties, 96, effect of Conveyancing Act, 1881 on, 94, 96, 97 legal value of word " heirs" in, 95 use of word " assigns " in, 95, 96 two sorts of, connected with real estate, 95, 96 in lease, mention of heirs, executors and administrators of cove- nantor, and covenantee, and of assigns of covenantee, may be omitted from, 97 double, to repair, construction of, 125 in lease, against assignment, 129, 130 against assignment, advantage of, to lessor, 130 disadvantage of, to lessee, 131 often modified in terms, 131 CEEDITOE, legacy to, doctrine of satisfaction in case of, 312, 313 CUETESY, estate by, 141, 142 CUSTOM, of country, 128 proof of, before 1848... 128 where schedule of, can be found, 129 INDEX. 319 D. DEATH, of partner, iucouveuieuce of legal consequences on, 53, 54, 55 brings pai'tnership to an end in absence of provision to contrary in partnership articles, 54 DEBTS, of old firm, position of new partner as to, 18, 19 payment of, rigbt of partners to requii-e, on dissolution, 52 engagement by continuing partners to pay, not binding on credi- tors, 58 charge of, on real estate, 282 general rule as to source for payment of, 283 may be varied, 283 what words will operate as charge of, on real estate, 284 true state of law as to charge of, on real estate, 284 DISSOLUTION, of partnershiiD, 4G what events may involve, 47 effect of qualifying words in partnership articles, on causes of, 48 equitable grounds for, 49 grounds for, operating as ipso facto dissolution where agreed, 49 misconduct ground for, 49 events specially stipulated to cause, 49, 50, 51 consequences of, 51, 52 right of partners to require sale of assets on, 52 general law on subject of, 52 qualification of right of partners to require sale of assets on, 52 right of partners to require payment of debts on, 52 application of general law usually inconvenient, 53 express provisions in partnership articles as to con- sequences of, 50, 57 where business to bo carried on after, 57 where arbitrator may award, 70 DOMICIL, law of personal estate follows law of, 288 law of, 289 cases in which no question of, arises, 288, 289 cases in which question of, does arise, 289 definitions of, 289, 290 320 INDEX. DOMICIL— coHfuuffcZ. not necessarily synonymous witli residence, 290 mode of acquiring, 290, 291 practical application of, to -will of personalty, 291, 292 rules of law bearing on subject of, 292, 293 bearing of, on interpretation of will of personal estate, 293 bow law of, affected by 24 & 25 Yict. c. 1 14, with regard to will of personal estate, 293 practical lessons as to, 294 preparation of will where testator domiciled in England, and where he is a domiciled foreigner, 295 preparation of will where testator's, is doubtful, 296 DOWEE, 139 in gavelkind lands, 140 E. EXECUTION, effect of taking partner's share in, 47 EXECUTOR, need not be mentioned in covenant, 95 as to legal competency of, 297 disqualification of infant during minority, 297 married woman can be, 297, 298 lunatic and idiot alone incompetent to be, 298 corporation can be, 298 choice of, 299 powers of, and protection to, 300, 301 protection of, general legislation on this subject, 302 F. FELON, disability of, to make a will, 218 FIXTURES, general rule of law as to, 112 old rule of law as to, has been relaxed. 111, 112 trade, may be removed, 113 qualification as to right of removal of, 113 ornamental or domestic, 113, 114 INDEX. - 321 VLXTVRES— continued. agricultural, 114 . how affected bj^ 14 & 1 j Vict. c. 25 ... 114, 115 38 & 39 Yict. c. 92... 115 46 & 47 Yict. c. G1...115 definitions as to what are, IIG duty of lessor's solicitor as to, 117 lessee's solicitor as to, 117, 118 special care to be taken by lessee's solicitor with regard to, in case of an underlease, 119 FOOTWAYS, rate for paving of, 108, 109 lessee's solicitor should inquire whether, properly paved, 1 1 1 FRAUDS, STATUTE OP, 7G how evaded by Courts, 7G FREEBENCH, right of wife to, 140 G. "GENERAL WORDS," in leases, 93 when Conveyancing Act, 1881, applicable with respect to, 93, 94 GOODWILL, 46 definition of, 58, 59 difficulty of computing, as a partnership asset, 59 in case of partnership between solicitors, 59, GO general principles of law as to, GO, 61 considerations affecting express clauses as to, 61 — 64 how valued, 62 effect of sale of, on right of partners to carry on business after dissolution, 63, 64 purchaser of, entitled to represent himself as successor of those who carried on the business, 65 often valueless without possession of the partnership premises, 66 H. HEIRS, legal value of word in covenants, 95 HOTCHPOT CLAUSE, 170 T. * Y 322 INDEX. HUSBAND, right of, in wife's personalty where no settlement, 159 how affected by 45 & 46 Vict. c. 15 , 160 INCAPACITY, of partner, clause in partnership articles as to, 49 INCOME, law as to accuniiilations of, 256, 257 trust of, in a settlement, 1 70 INFANT, should not be a partner, 16 partner can repudiate liabilities, 16 how far can avoid contract, 16 absolute disability of, to make a will, 212 disqualified dixring minority to be a sole executor, 297 INSANITY, groixnd for dissolution of partnership, 49 INTEREST, on capital, 44 payment of, 44 INVESTMENT, trust for, in a settlement, 167 what securities, clause for, in a settlement should embrace, 169 of trust funds in real estate, 185, 186 selection of, for trust funds, 207 ISSUE, limitations to, in a will, 239 J. JOINT STOCK COMPANY, objects of, must be specified, 38 power of shareholder in, 38 cannot alter object for which formed, 38 INDEX. 323 L. LANDLOED, of unfximisliecl house, no implied, covenant to repair, by, 121 of furnished house, implied contract by, that house fit for occupa- tion, 122 LAND TAX, 104 statute affecting, 104 who paid by, 107 LEASE, classes of, 75 distinction between, and agreement for lease, 75, 76 effect of Statute of Frauds on, 76 how affected by 8 & 9 Yict. c. 106 .. . 77, 78 observations on effect of 8 & 9 Vict. c. 106 on, 78 present state of law with regard to, 78 may be made by parol for term not exceeding three years, 78 practical conclusions as to, 78 what are void as leases unless made by deed, 78 when, and when agreement for lease appropriate, 80, 81, 82 practitioner's duty with regard to competency of lessor to grant, 87, 88 practitioner's duty with regard to competency of lessee to accept, 88, 89 preparation of di-aft, how far affected by legislation, 91 effect of 8 & 9 Yict. c. 124 on, 92 how affected by Conveyancing Act, 1881 . . 92 et seq. *' general words" in, 93 covenants in, effect of Conveyancing Act, 1881, on, 94, 95 when assignee can avail himself of covenants in, 96 bearing of sects. 10 — 14 of Conveyancing Act, 1881, on, 98 term of, 101 • commencement and termination of teiTa of, must b^fixed, 101, 102 may commence at any time, 102 an intention to cast on tenant taxes otherwise payable by laud- lord, must be clearly expressed, 105 superior, should be inspected by solicitor of underlesseo, 119, 120 provisions as to re-entry in, 124 language in, as to repairs should be clear, 126 agricultural, how aft'ected by custom of countiy, 128 covenant against assignment in, 129 observations on special classes of, 132 y2 324 INDEX. LEASEHOLDS, settlement of, 152, 153 conversion of, same principle with regard to, applicable to settle- ments as to mils, 153, 154 when settlement of, should be made by underlease, 155 will pass under general devise of all testator's lands, 277 LEGACY, to a witness to execution of a will, 222 propositions as to period of vesting of, 245, 246 keynote as to period of vesting of, 246 application of income of, where period of vesting deferred, 249 contingent, when carries interest, 249 contingent, interest on, how affected by Lord Cranworth's Act and by Convej^ancing Act, 1881 . . . 249, 250, 251 period of vesting of, practical matters for draftsman, 253 as to period for payment of, 267, 268 charge of, on real estate, 2S2 three classes of, of personalty, 303 " general," definition of, 304 •' specific," definition of, 304 " demonstrative," definition of, 305 bequest of sum of money to be laid out in purchase of annuity is a "general," 307 doctrine of satisfaction with regard to, 310, 311, 312 immediate money, to wife, 231 LEGACY DUTY, payable on annuities, and life interests, 268, 269 LESSEE, how affected by 44 & 45 Yict. c. 41 ... 84 has constructive notice of lessor's title, 85 practical duty of solicitor of, 85, 86, 87 competency of, to accept lease, 88, 89 responsibility of intending, 89, 90, 91 obHgation with regard to repairs usually incurred by, 123 LESSOE, former and present law as to right to investigate title of, 83, 84 practical duty of solicitor of, with regard to investigation of title, 84, 85 expense of investigating title of, 84, 85 legal competency of, 87, 88 first considerations for intendins:, 89 INDEX. 325 LUNATIC, can be partner, IG incapacity of, to make a will, 214, 215, 216 incompetent to be an executor, 298 M. MAINTENANCE, clause in a settlement, 170, 171 how affected by, 44 & 45 Vict. c. 41 . . . 171, 172 qualifications in statutory power of, 253, 254 MARRIAGE, effect of, of female jjartner, 47, 48 MARRIED WOMAN, when, and in respect of what, can bo a partner, 17, 18 power of, to make a will, 213, 214 can be an executrix, 297, 298' MORTGAGE, * trust funds should not be lent on security of a second, 208 MORTMAIN ACTS, 274 judicial construction of, 275 practical lessons fi'om, 275 mode of evading, 276 N. NEGOTIATION, of terms of partnership, 26, 27 NOTICE, of assignment, importance of giving, 1G3 P. PARTNERS, necessity for mutual confidence of, 9, 10 internal relations of, do not bind third iDcrsons, 12 eaclj is accredited agent of rest, 12 how far each has authority to bind rest, 12 inter se, 15 legal competoncj' of intending, 15 how dotenninod, 15, 16 326 INDEX. TAHTNEHS—continutd. infant, can repudiate liabilities, 16 should not be, 16 lunatic can be, 16 wben, in resj^ect of wbat, and how far married women can be, 17, 18 incoming, not liable to third persons for debts of old firm, 18, 19 determination of rights of, when not declared by partnership articles, 28 right of retiring, to sell share, 37 option of continuing, to purchase share of retiring, 37 right of, to retire, 37 nature of business should be understood by, 40 personal status and acts of, 41 preclusion of junior, from signing cheques, dra^dng or accepting bills, 41 death of, effect of, 47 marriage of female, effect of, 47, 48 legal consequences of dissolution on death of, produce incon- venience and loss, 53, 54 position and responsibility of representatives of, 55 new, should execute supplemental articles when entering firm, 57 payment of capital belonging to deceased, 58 estate of deceased, should be released from claim of surviving, 58 PAETNEESHIP, observations on partnershij) relation, 9 illustration of first principles of law of, 12, 13 responsibilities of, 13, 14 how may be created, 15 should not be entered into with an infant, 16 not ipso facto dissolved by one partner becoming lunatic, 16 two primary divisions of, 18 nature of intended, 18 negotiation of terms of, 26, 27 as to date of commencement of, 35 length of, 35, 36 objects of, should be accui-ately defined, 38 nature of business of, 38 objects of, may differ, 39 what events may involve dissolution of, 45 dissolution of, 46 insanity is ground for dissolution of, 49 misconduct is ground for dissolution of, 49 events specially stipulated to dissolve, 49, 50, 51 INDEX. 327 PAETNEESHIP AETICLES, advice of solicitor at prelimiuary stage of preparation of, 10, 11 knowledge needful for di'aftsman of, 14 provisions iu, for dealing with, assets and liabilities, as between old and new firm, 18 solicitor's part in adjustment of old assets and liabilities, 19, 20 true function with regard to the preparation of, 25 should clearly express any intention that old firm to bo relieved of liabilities, 26 cause of length, of, 27 many usual provisions in, not necessary, 27 do not define all the rights of partners inter se, 27 use of many clauses in, 29 advantage of brevity in, 29 no object gained by inserting provisions implied by general law, 29 true aim of di'aftsman of, 30 first point for draftsman of, 35 nature of business should be impressed on, 41 provisions in, for devotion of partners' time to business, 41 special pro\isions in, 41, 42 restrictive provisions in, 41, 42 monetary provisions in, 42 thorough understanding of intention of partners necessary to accurate di'aftsmanship of, 43 capital should have a cash denomination in, 44 should contain provisions as to accounts, 44, 45 making balance sheets binding, 45 claixse in, as to incapacity of partner, 49 dissolution, should be clear and accurate, 50 how far provisions in, against contingencies desirable, 50, 51 over elaboration of, should be avoided, 51 length of , 51 consequence of absence of special provisions on death of partner, 54 express provisions in, as to consequences of dissolution, 56, 57 provisions where business to bo can-ied on after, dissolution, 57, 58 best practical mode of dealing with subject of goodwill iu, 61, G2, 63 should contain provisions as to trade-marks of firm, 65 provisions in, as to right to retain partnership premises, 66 draftsmanship of arbitration clause in, 69, 70 concluding observations on subject of, 70, 71 PAETNEESHIP LAW, first principles of, 12 328 INDEX. PEEPETUITIES, law of, 254, 255 . exception to general rule as to, 255, 256 PEESONALTY, real estate settled as, 151, 152 general characteristics of a settlement of, 156 right of husband in wife's, where no settlement, 159 wife in husband's, 161 outline of ordinary settlement of, 161 charitable gifts should be thrown entirely on, 275 primarily liable for payment of debts, 283 bequests of, 287 their characteristics as compared with devises of realty, 287, 288 law of, follows the domicil, 288 practical application of domicil to will of, 291 three classes of legacies of, 303 PIN MONEY, 145 POLICY OF INSUEANCE, settlement of, 187 responsibility of trustees of settlement of, 188 bonus on, how should be dealt -udth in absence of special pro- visions, 188, 189 statutory settlement of, 189 PEECATOEY WOEDS, in a will, 266, 267 PEEIkOSES, partnership, 65, 66 PEOBATE, 296, 297 PEOFIT AND LOSS, capital distinct from, 43 PEOPEETY TAX, payment in resj^ect of, by tenant, may be deducted from rent, 103 statute affecting, 103 E. EATES, under Public Health Acts and other statutes, 104, 105 for paving footways, 104. 105 INDEX. 329 EATES AND TAXES, can be transferred from landlord to tenant, or vice versa, 103 how generally adjusted between landlord and tenant, 105 '^ duty of lessor's solicitor with regard to, 106 lessee's solicitor with regard to, 106 EEAL ESTATE, wife's right in husband's, 139 husband's right in wife's now, 140, 141 formerly, 141 how far investigation of title to, put into settlement should be carried, 146, 147, 148 settled as personalty, 151, 152 provisions in settlement for investment of trust funds in, 185, 186 effect of voluntary settlement of, 192 actual sale of, may be deferred, 258 first rule of law as to wills of, 273 legal restrictions imposed on gifts of, for charitable j^urposes, 274 distinction between real and personal estate before Wills Act, 277 effect of devise of, without words of limitation, 278 charge of debts or legacies on, 282 true state of law as to charge of debts on, 284 EE-ENTEY, provisions as to, 124 how effect of Conveyancing Act, 1881, on, is qualified, 124 EEGISTEATION, of conveyance, when necessary, 163 EENT, how far solicitor should advise as to amount of, 89, 90 . disposal of, pending sale, 259, 260 EEPAIES, general law as to, 121 extent of implied contract on part of tenant, 122 construction of, double covenant to do, 125 . obligations as to, usually incurred by lessees, 123 duty of lessor's solicitor with regard to, 125 lessee's solicitor with regard to, 126 language as to, in lease should be clear, 126 effect of covenant to do, 127 330 INDEX. EEPRESENTATIYES, of deceased partner, position of, 54, bb EETIEEMENT, right of, of partner, 36, 37 terms of, 36, 37 REYOCATION, power of, in voluntary settlement, 195, 196 RULE OF COUET, agreement to submit to arbitration sbould be made a, 70 S. SALE, of assets, right of partner to require, 52 legal position of representatives of deceased partner as to, 54 SATISFACTIOX, doctrine of, 309 arises in three cases, 310 in case of gift subsequent to will, 310 previous to -svill, 310, 311, 312 legacy to creditors, 312, 313 importance of, to practitioner, 314 SETTLEMENT, classification of, 137 legal position of husband and wife where no, 139, 142 object of strict, of real estate, 142 contents of strict, of real estate, 142, 143 strict, of real estate, how affected by Settled Land Act, 1882 . . 143, 144 Conveyancing Act, 1881 . . 144 of real estate, solicitor's functions as to, 145 how far investigation of title to real estate put into, should be carried, 146, 147, 148 negotiation of terms of, 149, 150 where real estate settled as personalty, 151, 152 of leasehold property, 152, 153, 154 when should be by underlease, 155 of personalty, general characteristics of, 156 points for preliminary consideration, 156 need of tact on part of solicitor on negotiation for, 157 INDEX. 331 SETTLEMENT— conii/uteJ. desirable for wife and children in spite of Married Women's Pro- perty Act, 1882 . . 160 of personalty, outline of ordinary, 161 vesting of settled property in trustees by, 161 trusts of, 167 trust for investment in, 167 investment clause in, what securities it should embrace, 169 usual trusts for beneficiaries in, 170 hotchpot clause in, 170 maintenance clause in, 170, 171 advancement clause in, 172, 173 final trusts in, in default of issue, 173 how affected by Married "Women's Property Act, 1882 .. 173 provision in, for wife's after-acquii'ed property, 175, 177, 178, 179 aijpointment of new trustees of, 175 variations from ordinary provisions in (1 ) as to wife's property, 179; (2) as to husband's property, 180 ; (3) as to property settled on husband's side but not by him, 181 provisions in, for contmgency of premature death of either parent, 182, 183, 184 for investment of trust funds in real estate, 185, 186 particular classes of, 187 of policies of insui-ance, 187 covenant in, to pay premiums on policies settled, 187 statutory, of policies, 189 of policies, trusts of, 189 of furnitm-e, 190, 191 voluntary, how differs from other settlements, 191 when void against creditors, 191 of real estate, effect of, 192 how affected by Bankruptcy Acts, 193 acts necessary to bind settlor, 19-i powers of revocation in, 195, 196 when desirable, 197, 198 contents of, 198 SEWER, rate, 104 lessee's solicitor should ascertain if main, made, 111 SHAEEHOLDEE, J in joint stock company, power of, 38 332 INDEX. STATUTES CITED, 6 Edward I. c. 5 (Statute of Gloucester), 112 13 Elizabetli, c. 5 (An Act against fraudulent deeds, &c.), 191 27 Elizabeth, c. 4 (An Act against fraudulent and covinous con- veyances), 192 29 Car. II. c. 3 (Statute of Frauds), 76 38 George III. c. 5 (An Act for raising a land tax), 104 39 & 40 George III. c. 98 (Thellusson Act), 254, 256 3 & 4 Will. lY. c. 105 (An Act for the amendment of the law relating to dower), 139 7 Will. rV. & 1 Vict. c. 26 (An Act for amendment of the laws with respect to wills), 211 Sec. 15. Gifts to an attesting witness to be void, 222 Sec. 21. No alterations in a will shall have any effect unless executed as a ■will, 223 Sec. 26. A general devise of testator's lands shall include copyholds and leaseholds, as well as freeholds, 277 Sec. 27. A general gift shall include estates over which tes- tator has a general power of appointment, 263 Sec. 29. The words "die without issue" or "die without leaving issue" shall be construed to mean die without issue living at the death, 264 Sec. 30. No devise to trustees or executors, except for a term, shall pass the chattel interest, 281 Sec. 31. Trustees under an unlimited devise where the trust may endure beyond the life of the person bene- ficially entitled for life, to take the fee, 281 Sec. 32. Devise of estates tail shall not lapse, 281 Sec. 33. Gifts to childi-en or other issue who leave issue living at testator's death, shall not lapse, 266 Sec. 35. Act not to extend to Scotland, 273, n. (a) 5 & 6 Vict. c. 35 (An Act for granting to Her Majesty duties on profits arising from property) Sec. 73. Contracts between landlords and tenants and other persons not to be binding contrary to Act, 103 Sec. 103. Penalty on refusing to allow deductions, 103 7 & 8 Vict. c. 76 (An Act to simplify the transfer of property), 77 8 & 9 Vict. c. 106 (An Act to amend the law of real property), 77 8 & 9 Vict. c. 124 (An Act to facilitate the granting of certain leases), 92 14 & 15 Vict. c. 25 (An Act to improve the law of landlord and tenant in relation to emblements, &c.) Sec. 3. Tenant may remove buildings and fixtures erected by him on farms, &c.. 114 INDEX. 333 STATUTES CITED— continued. 17 & 18 Vict. c. 125 (Common Law Procedure Act, 185-1) Sec. 11. If action commenced by one party after all have agreed to arbitration, Court or judge may stay proceedings, 68 Sec. 12. On failure of parties or arbitrators, judge may ap- point single arbitrator or umpire, 68 Sec. 13. "When reference is to two arbitrators and one party fail to appoint, other party may appoint arbitrator to act alone, 68 Sec. 14. Two arbitrators may appoint umpire, 68 Sec. 15. Award to be made in three months, unless parties or Court enlarge time, 68 Sec. 16. Rule to deliver possession of land pursuant to award to be enforced as a judgment in ejectment, 68 Sec. 17. Agreement or submission iu writing may be made a rule of Court, unless contrary intention appears, 68 Sec. 18. Speeches to the jury, 68 20 & 21 Vict. c. 57 (An Act to enable married women to dispose of reversionary interests in personal estate), 159 22 & 23 Vict. c. 35 (Lord St. Leonards' Act) Sec. 14. Devisee in trust may raise money by sale notwith- standing want of express power in will, 285 Sec. 15. Powers given by last section extended to sui'vivors, 285 Sec. 16. Executors to have jiower of raising money where there is no sufficient devise, 285 Sec. 17. Purchasers, &c. not bound to inquire as to powers, 286 Sec. 31. Every trust instrument to be deemed to contain clauses for the indemnity, &c. of trustees, 300 ' 23 & 24 Vict. c. 145 (Lord Cranworth's Act) Sec. 26. Trustees may apply income of property of infants, &c. for their maintenance, 171, 249, 253 24 & 25 Vict. c. 1 14 (An Act to amend the law with reference to wills of personal estate made by British subjects), 273, n. (6), 293. 31 & 32 Vict. c. 101 (Titles to Land Consolidation (Scotland) Act) Sec. 20. De prsesenti words or words of style unnecessary in mortis causa deeds, 273, n. (6) 32 & 33 Vict. c. 71 (Bankruptcy Act, 1869) Sec. 91. Avoidance of voluntary settlements, 193 334 INDEX. STATUTES ClTm)— continued. 33 & 34 Vict. c. 93 (Married Women's Property Act, 1870) ... 190 36 & 37 Vict. c. 66 (Supreme Court of Judicature Act, 1873) Sec. 25, sub-sec. 11 ... 80 37 & 38 Vict. c. 78 (Vendor and Purchaser Act, 1874) Sec. 2, sub-sec, 1. Pules for regulating obligations and rights of yendor and purchaser, 83 37 & 38 Vict. c. 94 (Conveyancing (Scotland) Act, 1874) Sec. 46. Trustees or executors may complete title where no direct conveyance of lands to them, 273, n. (6) Sec. 51. Probate equivalent to will or extract for completing title, 273, n. {b) 38 & 39 Vict. c. 92 (Agricultural Holdings (England) Act, 1875) Sec. 53. Tenant's property in fixtures, machinery, &c., 115 44 & 45 Vict. c. 41 (Conveyancing and Law of Property Act, 1881), 92, 143, 144 Sees. 10, 11, 12, 13, 14. Leases, 84, 98, 125, 130 Sec. 30. Trust and mortgage estates on death, 301 Sec. 31. Trustees and executors, 175 Sec. 43. Application by trustees of income of property of infant for maintenance, «S:c., 171, 250, 253 45 & 46 Vict. c. 38 (Settled Land Act, 1882), 142, 143 45 & 46 Vict. c. 75 (Married Women's Property Act, 1882), 17, 47, 160 Sec. 1. Married woman to be capable of holding property and contracting as a feme sole, 213, 298 Sec. 2. Property of a woman married after the Act to be held by her as a feme sole, 140, 213, 298 Sec. 5. Property acquired after the Act by a woman married before the Act to be held by her as a feme sole, 213 Sec. 11. Moneys payable under a policy of insurance not to form part of estate of insured, 189 Sec. 24. Interpretation of terms, 298 46 & 47 Vict. c. 52 (Bankruptcy Act, 1883) Sec. 47. Avoidance of voluntary settlements, 194 46 & 47 Vict. c. 61 (Agricultural Holdings (England) Act, 1883), 127 Sec. 30. Charge of tenant's compensation, 115 INDEX. 335 T. TAXES, what are landlord's, 104, 105 TENANCY, contract for, should be in writing, 78, T9 TENANT, right of, to compensation, how affected by Agricultural Holdings Act, 1883... 128 may deduct property tax from rent, 183 imi^lied contract on part of, to commit no waste, and to keep pre- mises wind and water tight, 122 TESTATOR, competency of, 212, 215, 216, 217 will speaks from death of, 216 TITLE, foi-mer and present law as to right to investigate intending lessor's, 83, 84 expense of investigating lessor's, 84 lessee has constructive notice of, 85 right of investigating lessor's, how affected by Vendor and Pur- chaser Act, 85, 86 when lessor's, shoidd be investigated, 86, 87 how far investigation of, of real estate pxit into settlement should be carried, 146, 147, 148 TRADE MARK, of dissolved firm, right of user of, 64, 65 TRADER, voluntary settlement by, 193, 194 distinction between, and non-trader now done away with, 194 TRANSFER, of assets from old to new firm, 25, 26 TRUSTEE, vesting of settled property in, 161 importance of giving notice of assignment to, 163 appointment of new, 175 responsibilities of, in case of a settlement of policies of insurance, 188 observations on the office of, 199 liabilities of the office of, 200 difficulty of, in retiring from trust, 201 336 INDEX. TnVSTEE'-continited. modes in -wliicli, can retire from, trust, 201, 202 if office of, unconditionally accepted, what information should be required, 203, 204 custody of trust property by, 205 selection hj, of investments for trust funds, 207 power of, and protection to, 300^ 301 general legislation on subject of protection of, 302 TEUSTEESHIP, matters incidental to, 205, 206, 207 TRUSTS, of a settlement, 167 for investment, 167 usual for beneficiaries in a settlement, 170 of capital, 170 of income, 170 final, in a settlement in default of issue, 172 how affected by Married Women's Property Act, 1882. . . 173 of policy of insurance in a settlement, 189 W. WASTE, tenants were formerly not punishable for, 112 implied contract on part of tenant not to commit, 122 WIFE, right of, in husband's real estate, 139 to dower, 139 to freebench, 140 effect of Married Women's Property Act, 1882, on husband's rights in real estate belonging to, 140, 141 right of husband in real estate "belonging to, before that Act, 141 provision for settlement of after-acquired property of, 175; and considerations bearing upon it, 176, 177 form of provision for settlement of after-acquired property of, 177, 178 limitation of interest of, in husband's estate, to widowhood, 230 immediate money legacy to, 231 WILL, power to dispose of real and personal estate bj', 211, 212 absohxte disability of infant to make, 212 competency of testator to make, 212, 215, 216, 217 INDEX. 337 "SyiLL — continued. power of maiTied womau to make, 21o, 21 1 incapacity of lunatic to make, 214, 2\.d, 21G speaks only from death of testator, 21G disability of felons, traitors, and outlaws to make, 2 IN formalities attending, 218, 219 mode of execution of, 219, 220 witnesses to execution of, 220, 221 advantage of attestation clause, 221 obliterations, interlineations and alterations in, sliould be avoided, 222, 223 when alterations in, omitted from probate, 22;> rules of law applicable to alterations in, 223, 22-1 practical conclusion as to alterations in, 224 actual draftsmanship of, 225 duties attaching to jn-eparation of, 225 kno-wledge requisite for draftsman of, 22G as to client's instructions for, 226, 227 will should speak from death in fact as in law, 227, 228 solicitor should obtain information as to testator's property when prei)aring, 228, 234 relevancy of marriage settlement to dispositions proposed by, 229. considerations as to real estate when preparing, 228, 229 intended objects of, 229, 230 limitation of wife's interest under, to widowhood, 230 should give control over capital to sons, not to wife or daughters, 231 should contain trusts securing daughter's share, 231 should give immediate money legacy to wife, 231 adjustment of interests under, as between wife and children, 231 , 232 gifts to children in, 233 special provisions in, as to testator's business and foreign proi^erty, 234 necessity of receiviiig proper instructions for, 235 limitations to children or issue in, 239 ct seq two main points in preparing bequests in favour of children or issue as a class, 240, 241 immediate gift to "children" in will, comprehends only those living at testator's death, 241, 242 propositions as to ascertainment of class to be benefited by, 241 et seq. who entitled under, when particular estate carved out with gift over to children, 242 who entitled under, when period oi distribution of gift postponed, 242, 243 T. Z 338 INDEX. WILL — cord in ued effect of words " to be born " annexed to devise to children, 2-i-4 propositions as to period of vesting of legacy given by, 245, 246 keynote as to period of vesting of legacy, 24G practitioner's duty to clearly exjn-ess testator's intention, 247 application of income of a legacy wbere period of vesting deferred, 249 general devise in, operates as execution of power of appointment, unless contrary intention appears, 263 statutory rule of construction of, 264, 265, 266 precatory words in, 266, 267 as to period for pajTuent of legacies and annuities given by, 267 devise of land in Scotland, 273 of realty, first rule of law as to, the lex loci, 273 devise of land elsewhere than in Great Britain and Ireland, 274 legal restrictions imposed on gifts of land for charitable purposes, 274 sjieaks from date of death, 277 of personalty, 292 is generally interpreted •with reference to law of testator's doraicil at time of making it, 293 preparation of, where client domiciled Englishman, 295 ; where domiciled foreigner, 295, 296 preparation of, where client's domicil is doubtful, 296 solicitor's duty with regard to preparation of, 306, 307 WILLS ACT, general observations on, 278—283. WINDIXa UP, of business, order of Court for, 53 right of, is personal to members of lirm, 53 of business by Coiu't, 55 WITNESS, to execution of will, 221 legacy to a, 222 C. f. EOWOETH, PKIXTER, BKEAM S BUILDIXOS, CHAXCEEY LAXE, W.C. CO CO STEVENS AND SONS, 119, CHANCERY LANE, LONDON, W.C. Addison's Treatise on theLawof Contracts.— ^z'^Mi Edition. By HOKACE SMITH, Esq., Barrister-at-L&w, Recorder of Lincoln. Author of " The Law of Negligence," &c. Royal 8vo. 1883. (16U0 pp.) Price 21. 10s. cloth. Arnould on the Law of Marine Insuraneefc— /Sicc^A Edition. By DAVID MACLACHLAN, Esq., Barrister-at-Law. 2 Vols. Royal 8vo. 1887. Price 3L cloth. Archbold's Pleading and Evidence in Criminal Cases.— With the Statutes, Precedents of Indictments, &c., and the Evidence necessai-y to support them. Txcentieth Edifion, including the Practice in Criminal Proceedings by Indictment. By WILLIAM BRUCE, Esq., Barris(er-at-Law, and Stipendiary Magistrate for the Borough of Leeds. Royal \2mo. 1886. 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