Paragraphs 7 and 8, on page 61 of the LAW TIMES for November, should be read as of page 60, immediately preceding the title, "Reformation and Mistake."

EQUITABLE CONVERSION.

In certain circumstances equity will treat realty as if it were personalty and personalty as if it were realty, and this gives rise to what is known as the doctrine of equitable conversion.

It is proposed to consider here this doctrine as arising under

1. Wills.

2. Instruments inter vivos.

(a) Trust deeds.

(b) Contracts.

To apply the doctrine of equitable conversion, you must find that the testator, grantor or contractor, intended that the land should be sold or that the money should be invested in land.

Hence the direction to sell or invest must be absolute, and not a matter in discretion.

Curling vs. May, 3 Atk. 255.

Rich vs. Mitfield, L. R., 2 Eq. 583.

The direction to sell or to invest need not be express, it may be implied, e. g., the act which is to be done may require a sale or investment.

Earborn vs. Sanders, Amb. 241.

While the direction to sell or invest must be positive, the time and manner thereof may be discretionary.

Morris vs. Griffith, 26 Ch. Div. 601.
Lent vs. Howard, 89 N. Y. 169.
Delafield vs. Barlow, 107 N. Y. 535.

The conversion takes effect from the time when the instrument directing it, takes effect as an instrument, hence, in the case of a will, the conversion takes place as of the death of the testator. Beauclerk vs. Mead, 2 Atk. 167. In the case of a deed from its delivery. Griffith vs. Ricketts, 7 Hare 299-311.

In the case of a contract for the sale of property, the conversion takes effect from the time when the contract was made.

Keep vs. Miller, 42 N. J. 100.

The same rule applies where an option of purchasing property is given and exercised.

Lawes vs. Bennett, 1 Cox 167.

It has been held, however, that if the vendor dies before the time for the performance of the contract, the heir is entitled to retain the rents and profits accruing between the vendor's death and the time for the transfer of the land. Townley vs. Bedwell, 14 Ves. 591. Ex parte Hardy, 30 Beav. 206.

The contract must be as between the contracting parties an enforceable contract, in order that the doctrine of conversion may be applied in favor of one class of representatives of a deceased party against another class unwilling to recognize the contract.

Broome vs. Monck, 10 Ves. 607.

Garnet vs. Acton, 28 Beav. 333 (semble). If, however, the contract has been, in fact, performed by a representative of the deceased who could not have been compelled to perform, then the doctrine of equitable conversion will apply.

Frayne vs. Taylor, 33 L. J; Ch. N.S. 228. If, however, at the time when the contracting party died, the contract was enforceable, one class of representatives cannot by losing, by laches, their right to enforce the contract against the other contracting party, deprive another class of representatives of the right to insist on the doctrine of equitable conversion.

Keep us. Miller, 42 N. J. Eq., 100. And where property is devised subject to an option of purchase conferred upon another, the devisee will take the proceeds if the option is exercised.

Emuss vs. Smith, a DeG. and Sm. 723. Had the option been given after the devise was made, the devise would have been revoked thereby.

Weeding vs. Weeding, J. and H. 424. Frewer os. Frewer, L. R. 10 Ch. Ap. 610. As the doctrine of equitable conversion rests on intention, where the purpose for which the conversion was to take place wholly fails, then, of course, there is no reason why there should be a conversion in fact, and hence no reason why the fiction of a conversion should be applied by a court of equity to the property, in its unchanged state.

If, however, there is only a partial failure of purpose, then, of course, to carry out the intention of the testator or grantor, there must be a conversion in fact of the property, and the question arises as to how the part shall be treated, as to which the purpose failed.

In the case of will, there being only a partial failure of purpose as to land directed to be converted, the heir would take a moiety, but he would take it as personalty and not as realty.

Smith vs. Claxton, 4 Madd. 484.

So if the partial failure of purpose were as to money directed to be invested in land, the next of kin would take it.

Cogan vs. Stevens, 5 Eq. Ch. N. S. 17. Reynolds vs. Goodloe, Johns. 536-58a. The money being in fact invested in land, the next of kin would take it as land.

Curtiss vs. Wormold, 10 Ch. D., 172.

If there is a partial failure under a deed as to land directed to be converted, the grantor takes a moiety as a resulting trust, but takes it as personalty, and although it remains unchanged at time of grantor's death, it would go to his next of kin and not to his heirs.

Clarke vs. Franklin, 4 K. and J., 257.

KECONVERSION.

When it is said that there has been a reconversion, all that is meant is that the court of equity has ceased to treat realty as if it were personalty and personalty as if it were realty.

When, then, will a court of equity cease to apply this fiction to property?

It may be said, generally, that it will cease to do this when the beneficiaries of the fiction no longer desire it. In other words, the parties can elect to take the property in its original form.

Ford vs. Batley, 17 Beav. 303.

But a party to elect must, of course, be sui juris.

Seeley vs. Jago, 1 P. Wms. 389.

Ashley vs. Palmer, 1 Merivale, 396; 5 DeG. Mc & G. 33.

If the beneficiaries cannot agree that the property shall be taken in its original condition, then in the case of land the doctrine of conversion will still apply and the property will be sold as directed.

Murray vs. Radcliffe, 23 Beav. 163. In the case of money to be invested in law, as the parties could ask for a partition of the land as soon as the investment was made, one of two or more beneficiaries can elect to take his share in its

original form, and thereby reconvert, as it is said, the property.

Seeley vs. Jago, I P. Wms. 389.

As the question of election depends upon intention, evidence showing a desire to have property as it is, is evidence of an election.

Harcourt vs. Seymour, 2 Sim. N. S. 12, 46; 1 Ch. D. 385; 79 N. Y. 478.

TRUSTS.

NATURE OF A TRUST.

To speak of a trust as the separation of the legal and beneficial ownership of property, the former being vested in the trustee, and the latter in the cestui que trust (see Bispham section 49,) is misleading.

The interest of a cestui que trust is not a right in rem but a right in personam with reference to a specific res.

This is made evident by recalling certain doctrines in the law of uses before the statute of uses, of which the modern trust is an outgrowth.

I.-A use was in its origin simply a moral or religious obligation.

Digby, Real Property, 3d ed., 276. 2.-Hence, a use could not be enforced against a corporation.

Bispham, 74; Digby, 283.

3. The interest of the cestui que use, use being merely a chose in action of a personal character, an alienation of the land would defeat his right.

Bispham, 75.

4. For the same reason, he could not assert his claim against the heir of the feoffee to use.

Bispham, 75. Digby, 282.

And, although to day a trust can be enforced against a purchaser with notice, or against a donee, heir or devisee, it because equity considers it against

conscience for such a person to disregard the obligation existing against the trustee, and hence, imposes a similar obligation upon him.

When a person acquires the property in circumstances where his conscience can no longer be affected, the cestui que trust cannot reach the property in his hands.

Thus it is held that a cestui que trust has no claim against a purchaser for value without notice of the trust, nor against a purchaser with notice from one who purchased without notice.

Bumpus vs. Platner, 1 John Ch. 213. Though of course, if the property should come back to the trustee, the claim of the cestui que trust could be enforced against him.

Kennedy vs. Daly, 1 Sch., and Lef., 379. Schutt vs. Large, 6 Barb., 373.

The title to the property being in the trustee, he is the party to maintain actions relating thereto against third parties.

Gbettoff vs. London Assurance Co.,
Bro., P. C. 436.

4

New York Guaranty Co. vs. Memphis
Water Co., 107 U. S. 205.

Western R. R. Co., vs. Nolan, 48 N. Y.
513.

If, however, he refuses or is unable to bring the action, then the cestui que trust can get relief in equity, making the trustee, and the third party co-defendants.

Gandy vs. Gandy, 30 Ch. Div. 57. Hale vs. R. R. Co., 60 N. H. 333. A person cannot, however, by discharging his obligation to the trustee, escape from liability to the cestui que trust, if at the time he discharged his legal obligation he knew that the trustee was acting in fraud of his cestui que trust. In such circumstances he will be treated as a confederate to the fraud.

Roberts vs. Lloyd, 2 Beav. 376.

Farrell vs. Jones, 1 DeG. & J. 208. Since, however, the trustee is guilty, not of a legal, but only an equitable wrong, the remedy of the cestui que trust is in equity only.

So absolutely is the conception of a trust an equitable conception, that

1. A debtor whom the cestui que trust has released from the debt would have in the absence of a statute allowing equitable defences no defense to an action by the trustee to collect the same.

Offly vs. Warde, 1 Lev. 235.

2. A cestui que trust cannot maintain an action to recover possession of land. Peck vs. Newton, 46 Barb. 173.

First Baptist Society vs. Hogen, 100 Mass. 322.

3. In England a cestui que trust cannot recover the money owing to him by the trustee, in a count for money had and received.

Bartlett vs. Diamond, 14 M. & W. 49. In the United States, however, if the duty of the trustee is simply the immediate payment of a liquidated amount, the action may be maintained.

Underhill vs. Morgan, 33 Conn. 105.
Derome vs. Vose, 140 Mass. 575.
Roberts vs. Ely, 213 N. Y. 128.

CREATION OF A TRUST.

Trusts may be divided into-
1. Express or Implied Trusts.
2. Resulting Trusts.

3. Constructive Trusts.

An express or implied trust may be created

1. By the owner of land conveying or devising it to a third person to hold for the benefit of the owner or some third person.

2. By the owner of property declaring himself a trustee thereof for a person named.

In neither case is a consideration necessary.

Milroy vs. Lord, 2 DeG. F. J. 264.
Martin vs. Funk, 75 N. Y. 134.

It is not necessary to the creation of a trust that either the trustee or the cestu que trust be notified thereof.

Way's Trust, 2 DeG. J. & S. 365.
Martin vs. Funk, 75 N. Y. 134.
Mabie vs. Baily, 95 N. Y. 206.

Nor need the grantor have ever parted with the deed, if the evidence establishes that he looked upon the trust as created. Fletcher vs. Fletcher, 4 Hare. 67. Adams vs. Adams, 21 Wall. 185.

And the trust when once created is irrevocable unless the right of revocation is reserved.

Way's Trust, 2 DeG. J. & S. 265. Fletcher vs. Fletcher, 4 Hare. 67. Such a power can be reserved. Jones vs. Clifton, 101 U. S. 225. To the creation of a trust, no particular form of language is necessary. The question is one of intention simply.

In the so called precatory trust, it was once said that if "the subject, object and mode of distribution is pointed out" a a trust is created.

Maline vs. Keighley, 2 Ves. 333.

But to-day this would not necessarily be true, the question being, did the testator intend to impose an obligation enforceable in equity as distinguished from a moral obligation.

Re Diggler, 39 Ch. Div. 253.
Sturgis vs. Paine, 146 Mass. 354.

Conf. Willets vs. Willets, 103 N. Y. 650. By St. 29 Charles II., Ch. 3, §, 7, a trust created by act of the parties as distinguished from a trust arising by act or operation of law, "must be manifested and proved by some writing signed by the party,. or by his last will in writing."

The trust can be declared, however, by the trustee after he becomes a bankrupt.

Gardner vs. Rowe, 2 Sim. & St. 346. And to this his creditors cannot object. Norton vs. Mallory, 63 N. Y. 434. Jamison vs. Miller, 27 N. J. Eq. 586. The statute does not apply to trusts of personal property.

And if a trustee of real estate held under an oral trust converts it into money, and then declares an oral trust of the money, the trust will be enforced.

Colden vs. Moran, 49 Mich. 14.

In case of a conveyance of land upon an oral trust, the trustee refusing to perform the trust will not be allowed to profit thereby.

The cestui que trust cannot however, derive any benefit therefrom, unless the trustee induced the grantee to convey to him, thereby practicing a fraud upon the beneficiary.

Lantry vs. Lantry, 51 Ill. 458.
Wall. vs. Hichey, 112 Mass. 71.
Conf. Moyer vs. Moyer, 21 Hun. 67.
Bull vs. Bull, 31 Hun. 69.

In the absence of such fraud conferring a right upon the cestui que trust, the trustee will be regarded as a constructive trustee for the creator of trust and will be compelled to reconvey to him.

Randall vs. Coustans, 33 Minn. 329. If the trust is for an illegal purpose, equity will not aid the grantor.

Bartlett vs. Bartlett, 14 Gray 277.

In case of a devise of property upon an oral trust, the purpose of the trust must have been communicated to the devisee or he will hold for his own benefit.

Jones vs. Badley, 3 Ch. Ap. 362.

If the purpose has been communicated, the beneficiary can enforce trust.

Riordan vs. Riordan, Ir. Rep. 10 Eq. 469.

But see Olliffe vs. Wells, 130 Mass. 221, where it was held that the trust would result to the next of kin or heir.

To the extent that an intended trust cannot take effect, there will be a resulting trust in favor of the next of kin or heir of the creator of the trust.

Carrich vs. Errington, 2 P. Wms. 361. Digly vs. Legard, 3 P, Wms. 22. Sheedy vs. Rooch, 124 Mass. 472. The heir or next of kin in such a case takes not because of intention, because of the absence thereof.

but

Muckleston vs. Brown, 6 Ves. 63--64. Where the trustee furnished the consideration, the trust failing, it was held that there was no resulting trust. In such a case there would be no unjust enrichment on the part of the trustee in retaining the profits of the trust.

Van Der Volger vs. Yates, 9 N. Y. 219. So if the consideration were furnished by a third party for a trust that fails, the third party would become the beneficiary. Heiskell vs. Trout, 31 W. Va. 810.

Where the trust does not exhaust the property, there is a resulting trust in favor of the creator of the trust.

Ellcock, vs. Mapp, 3 H. L. C. 492.

Of course this rule has no application where property is given, not in trust, but subject to a charge.

Clarke vs. Hilton, LR. 2 Eq. 810.
5 Ch. Div. 746.

Where one pays the purchase money, and the conveyance is taken in the name of another, if the grantee is a stranger, there is presumptively a resulting trust in favor of the party furnishing the purchase money.

The fact that the grantee loaned the money to the plaintiff will not prevent the the application of the doctrine.

108 Mass. 94. 2 John Ch. 405.