OWNERSHIP.
§ 86. =The Definition of Ownership.=
Ownership, in its most comprehensive signification, denotes the relation
between a person and any right that is vested in him. That which a man
owns is in all cases a right. When, as is often the case, we speak of
the ownership of a material object, this is merely a convenient figure
of speech. To own a piece of land means in truth to own a particular
kind of right in the land, namely, the fee simple of it.
Ownership, in this generic sense, extends to all classes of rights,
whether proprietary or personal, _in rem_ or _in personam_, _in re
propria_ or _in re aliena_. I may own a debt, or a mortgage, or a share
in a company, or money in the public funds, or a copyright, or a lease,
or a right of way, or the fee simple of land. Every right is owned; and
nothing can be owned except a right. Every man is the owner of the
rights which are his.
Ownership, in its generic sense, as the relation in which a person
stands to any right vested in him, is opposed to two other possible
relations between a person and a right. It is opposed in the first place
to possession. This very difficult juridical conception will be
considered by us in the succeeding chapter. We shall see that the
possession of a right (_possessio juris, Rechtsbesitz_) is the _de
facto_ relation of continuing exercise and enjoyment, as opposed to the
_de jure_ relation of ownership. A man may possess a right without
owning it, as where the wrongful occupant of land makes use of a right
of way or other casement appurtenant to it. Or he may own a right
without possessing it. Or finally ownership and possession may be
united, as indeed they usually are, the _de jure_ and the _de facto_
relations being coexistent and coincident.
The ownership of a right is, in the second place, opposed to the
encumbrance of it. The owner of the right is he in whom the right itself
is vested; while the encumbrancer of it is he in whom is vested, not the
right itself, but some adverse, dominant, and limiting right in respect
of it. A. may be the owner of property, B. the lessee of it, C. the
sub-lessee, D. the first mortgagee, E. the second mortgagee, and so on
indefinitely. Legal nomenclature, however, does not supply separate
names for every distinct kind of encumbrancer. There is no distinctive
title, for example, by which we may distinguish from the owner of the
property him who has an easement over it or the benefit of a covenant
which runs with it.
Although encumbrance is thus opposed to ownership, every encumbrancer is
nevertheless himself the _owner_ of the encumbrance. The mortgagee of
the land is the owner of the mortgage. The lessee of the land is the
owner of the lease. The mortgagee of the mortgage is the owner of the
sub-mortgage. That is to say, he in whom an encumbrance is vested stands
in a definite relation not merely to it, but also to the right
encumbered by it. Considered in relation to the latter, he is an
encumbrancer; but considered in relation to the former, he is himself an
owner.
Ownership is of various kinds, and the following distinctions are of
sufficient importance and interest to deserve special examination:
1. Corporeal and Incorporeal Ownership.
2. Sole Ownership and Co-ownership.
3. Trust-Ownership and Beneficial Ownership.
4. Legal and Equitable Ownership.
5. Vested and Contingent Ownership.
§ 87. =Corporeal and Incorporeal Ownership.=
Although the true subject-matter of ownership is in all cases a right, a
very common form of speech enables us to speak of the ownership of
material things. We speak of owning, acquiring, or transferring, not
rights in land or chattels, but the land or chattels themselves. That is
to say, we identify by way of metonymy the right with the material thing
which is its object. This figure of speech is no less convenient than
familiar. The concrete reference to the material object relieves us from
the strain of abstract thought. Rights are dim abstractions, while
material things are visible realities; and it is easier to think and
speak of the latter than of the former, even though the substitution is
a mere figure of speech. This device, moreover, is an aid to brevity, no
less than to ease of comprehension.
This figurative identification of a right with its object is, however,
not always permissible. I may be said to own the money in my hand; but
as to that which is due to me, I own not the money, but a right to it.
In the one case I own the material coins; in the other the immaterial
debt or _chose in action_. So I own my land, but merely a right of way
over the land of my neighbour. If we look, therefore, no deeper than the
mere usages of speech, it would seem as if the subject-matter of
ownership were sometimes a material object and at other times a right.
This, of course, would be a logical absurdity. Ownership may conceivably
be in all cases a relation to a material object; or it may in all cases
be a relation to a right; but it cannot be sometimes the one and
sometimes the other. So long as we remember that the ownership of a
material thing is nothing more than a figurative substitute for the
ownership of a particular kind of right in that thing, the usage is one
of great convenience; but so soon as we attempt to treat it as anything
more than a figure of speech, it becomes a fertile source of confusion
of thought.
In what cases, then, do we use this figure of speech? What is it that
determines whether we do or do not identify a right with its object? How
is the line drawn between corporeal and incorporeal ownership? The usage
is to some extent arbitrary and uncertain. The application of figurative
language is a matter not of logic but of variable practice and opinion.
Speaking generally, however, we may say that the ownership of a material
thing means the ownership of a _jus in re propria_ in respect of that
thing. No man is said to own a piece of land or a chattel, if his right
over it is merely an encumbrance of some more general right vested in
some one else. The ownership of a _jus in re aliena_ is always
incorporeal, even though the object of that right is a corporeal thing.
I am not said to own a chattel, merely because I own a right to have it
transferred to me, or because I own a lien over it or a right to the
temporary use of it.
When, on the other hand, a right is not a mere encumbrance of another
right—when it is a self-existent _jus in re propria_—it is identified
with the material thing which is its subject-matter. It is not difficult
to perceive the origin and reason of this usage of speech. In its full
and normal compass a _jus in re propria_ over a material object is a
right to the entirety of the lawful uses of that object. It is a general
right of use and disposal, all _jura in re aliena_ being merely special
and limited rights derogating from it in special respects. It is only
this absolute and comprehensive right—this _universum jus_—that is
identified with its object. For it is in some sense coincident with its
object, and exhausts the juridical significance of it. It is the
greatest right which can exist in respect of the thing, including all
lesser rights within itself, and he who owns it may therefore
conveniently be said to own the thing itself.
We have said that in its full and normal compass corporeal ownership is
the ownership of a right to the entirety of the lawful uses of a
corporeal thing. This compass, however, may be limited to any extent by
the adverse influences of _jura in re aliena_ vested in other persons.
The right of the owner of a thing may be all but eaten up by the
dominant rights of lessees, mortgagees, and other encumbrancers. His
ownership may be reduced to a mere name rather than a reality. Yet he
none the less remains the owner of the thing, while all others own
nothing more than _rights_ over it. For he still owns that _jus in re
propria_ which, were all encumbrances removed from it, would straightway
expand to its normal dimensions as the _universum jus_ of general and
permanent use. He then, is the owner of a material object, who owns a
right to the general or residuary uses of it,[203] after the deduction
of all special and limited rights of use vested by way of encumbrance in
other persons.[204]
What, then, is the name of the right which we thus identify, for
convenience of speech, with its material object? What shall we call the
right which enables the owner of it to say that he owns a piece of land
or a chattel? Unfortunately for the lucidity of legal nomenclature,
there is, unless we are prepared to use the somewhat awkward Latin term
_jus in re propria_, no other name for it than _ownership_ itself. This
is a use of the term which is quite different from that hitherto
considered by us. Ownership, as a particular kind of right, must be
clearly distinguished from ownership, as a particular kind of relation
to rights of all descriptions. We cannot class together the right of
ownership and the ownership of a right. This use of the term to denote a
right is the natural outcome of the figurative use of it already
considered. When we not only speak of the ownership of land, but
interpret such language literally, it is clear that ownership must be
taken as the name of the right which the owner has in the land.[205]
§ 88. =Corporeal and Incorporeal Things.=
Closely connected with the distinction between corporeal and incorporeal
ownership is that between corporeal and incorporeal _things_. The term
thing (_res_, _chose_, _sache_) is used in three distinct senses by
legal writers:—
1. In its first and simplest application it means merely a material
object, regarded as the subject-matter of a right.[206] According to
this use, some rights are rights to or over things, and some are not.
The owner of a house owns a thing; the owner of a patent does not.
2. In a second and wider sense the term thing includes every
subject-matter of a right, whether a material object or not. In this
signification every right is a right in or to some thing. A man’s life,
reputation, health, and liberty are things in law, no less than are his
land and chattels.[207] Things in this sense are either material or
immaterial, but the distinction thus indicated must not be confounded
with that now to be explained between things corporeal and incorporeal.
3. In a third and last application the term thing means whatever a man
owns as part of his estate or property. It is any subject-matter of
ownership within the sphere of proprietary or valuable rights. Now we
have already seen that according to the current usage of figurative
speech ownership is sometimes that of a material object and sometimes
that of a right. Things, therefore, as the objects of ownership, are of
two kinds also. A corporeal thing (_res corporalis_) is the
subject-matter of corporeal ownership; that is to say, a material
object. An incorporeal thing (_res incorporalis_) is the subject-matter
of incorporeal ownership; that is to say, it is any proprietary right
except that right of full dominion over a material object which, as
already explained, is figuratively identified with the object itself. If
I own a field and a right of way over another, my field is a _res
corporalis_ and my right of way is a _res incorporalis_. If I own a
pound in my pocket and a right to receive another from my debtor, the
first pound is a thing corporeal, and the right to receive the second is
a thing incorporeal; it is that variety of the latter, which is called,
in the technical language of English law, a _chose in action_ or thing
in action; while the pound in my pocket is a chose or thing in
possession.[208]
It is clear that if literally interpreted, this distinction is illogical
and absurd. We cannot treat in this way rights and the objects of rights
as two species of one genus. If we use the term thing in each case to
mean a right, then the right of an owner of land is just as incorporeal
as is that of his tenant. On the other hand, if the term is to be taken
in each case to mean the object of a right, then the object of the
tenant’s right is just as corporeal as is that of his landlord. The
distinction between corporeal and incorporeal things is based on the
same figure of speech as is that between corporeal and incorporeal
ownership. Both distinctions become intelligible, so soon as we
recognise the metonymy involved in the substitution of the
subject-matter of a right for the right itself.[209]
§ 89. =Sole Ownership and Co-ownership.=
As a general rule a right is owned by one person only at a time, but
duplicate ownership is perfectly possible. Two or more persons may at
the same time have the same right vested in them. This may happen in
several distinct ways, but the simplest and most obvious case is that of
co-ownership. Partners, for example, are co-owners of the chattels which
constitute their stock in trade, of the lease of the premises on which
their business is conducted, and of the debts owing to them by their
customers. It is not correct to say that a right owned by co-owners is
divided between them, each of them owning a separate part. The right is
an undivided unity, which is vested at the same time in more than one
person. If two partners have at their bank a credit balance of 1000_l._,
there is one debt of 1000_l._ owing by the bank to both of them at once,
not two separate debts of 500_l._ due to each of them individually. Each
partner is entitled to the whole sum, just as each would owe to the bank
the whole of the firm’s overdraft. The several ownership of a part is a
different thing from the co-ownership of the whole. So soon as each of
two co-owners begins to own a part of the right instead of the whole of
it, the co-ownership has been dissolved into sole ownership by the
process known as partition. Co-ownership involves the undivided
integrity of the right owned.
Co-ownership, like all other forms of duplicate ownership, is possible
only so far as the law makes provision for harmonising in some way the
conflicting claims of the different owners _inter se_. In the case of
co-owners the title of the one is rendered consistent with that of the
other by the existence of reciprocal obligations of restricted use and
enjoyment.
Co-ownership may assume different forms by virtue of the different
incidents attached to it by law. Its two chief kinds in English law are
distinguished as ownership _in common_ and _joint_ ownership. The most
important difference between these relates to the effect of the death of
one of the co-owners. In ownership in common the right of a dead man
descends to his successors like any other inheritable right. But on the
death of one of two joint owners his ownership dies with him, and the
survivor becomes the sole owner by virtue of this right of survivorship
or _jus accrescendi_.
§ 90. =Trust and Beneficial Ownership.=
A trust is a very important and curious instance of duplicate ownership.
Trust property is that which is owned by two persons at the same time,
the relation between the two owners being such that one of them is under
an obligation to use his ownership for the benefit of the other. The
former is called the trustee, and his ownership is trust-ownership; the
latter is called the beneficiary, and his is beneficial ownership.[210]
The trustee is destitute of any right of beneficial enjoyment of the
trust property. His ownership, therefore, is a matter of form rather
than of substance, and nominal rather than real. If we have regard to
the essence of the matter rather than to the form of it, a trustee is
not an owner at all, but a mere agent, upon whom the law has conferred
the power and imposed the duty of administering the property of another
person. In legal theory, however, he is not a mere agent but an owner.
He is a person to whom the property of some one else is fictitiously
attributed by the law, to the intent that the rights and powers thus
vested in a nominal owner shall be used by him on behalf of the real
owner. As between trustee and beneficiary, the law recognises the truth
of the matter; as between these two, the property belongs to the latter
and not to the former. But as between the trustee and third persons, the
fiction prevails. The trustee is clothed with the rights of his
beneficiary, and is so enabled to personate or represent him in dealings
with the world at large.
The purpose of trusteeship is to protect the rights and interests of
persons who for any reason are unable effectively to protect them for
themselves. The law vests those rights and interests for safe custody,
as it were, in some other person who is capable of guarding them and
dealing with them, and who is placed under a legal obligation to use
them for the benefit of him to whom they in truth belong. The chief
classes of persons in whose behalf the protection of trusteeship is
called for are four in number. In the first place, property may belong
to persons who are not yet born; and in order that it may be adequately
safeguarded and administered, it is commonly vested in the meantime in
trustees, who hold and deal with it on account of its unborn owners. In
the second place, similar protection is required for the property of
those who lie under some incapacity in respect of the administration of
it, such as infancy, lunacy, or absence. Thirdly, it is expedient that
property in which large numbers of persons are interested in common
should be vested in trustees. The complexities and difficulties which
arise from co-ownership become so great, so soon as the number of
co-owners ceases to be small, that it is essential to avoid them; and
one of the most effective devices for this purpose is that scheme of
duplicate ownership which we term a trust. Fourthly, when persons have
conflicting interests in the same property (for example, an owner and an
encumbrancer, or different kinds of encumbrancers) it is often advisable
that the property should be vested in trustees, whose power and duty it
is to safeguard the interests of each of those persons against the
conflicting claims of the others.
A trust is to be distinguished from two other relations which resemble
it. It is to be distinguished, in the first place, from a mere
contractual obligation to deal with one’s property on behalf of some one
else. A trust is more than an obligation to use one’s property for the
benefit of another; it is an obligation to use it for the benefit of
another in whom it is already concurrently vested. The beneficiary has
more than a mere personal right against his trustee to the performance
of the obligations of the trust. He is himself an owner of the trust
property. That which the trustee owns, the beneficiary owns also. If the
latter owned nothing save the personal obligation between the trustee
and himself, there would be no trust at all. Thus if a husband
gratuitously covenants with his wife to settle certain property upon
her, he remains the sole owner of it, until he has actually transferred
it in fulfilment of his contract; and in the meantime the wife owns
nothing save the contractual obligation created by the covenant. There
is therefore no trust. If, on the other hand, the husband declares
himself a trustee of the property for his wife, the effect is very
different. Here also he is under a personal obligation to transfer the
property to her, but this is not all. The beneficial ownership of the
property passes to the wife forthwith, yet the ownership of the husband
is not destroyed. It is merely transformed into a trust-ownership
consistent with the concurrent beneficial title of his wife.
In the second place, a trust is to be distinguished from the relation in
which an agent stands towards the property which he administers on
behalf of his principal. In substance, indeed, as already indicated,
these two relations are identical, but in form and in legal theory they
are essentially different. In agency the property is vested solely in
the person on whose behalf the agent acts, but in trusteeship it is
vested in the trustee himself, no less than in the beneficiary. A
trustee is an agent for the administration of property, who is at the
same time the nominal owner of the property so administered by him.
A trust is created by any act or event which separates the
trust-ownership of any property from the beneficial ownership of it,
and vests them in different persons. Thus the direct owner of property
may declare himself a trustee for some one else, who thereupon becomes
the beneficial owner; or the direct owner may transfer the property to
some one else, to hold it in trust for a third. Conversely, a trust is
destroyed by any act or event which reunites in the same hands the two
forms of ownership which have become thus separated. The trustee, for
example, may transfer the property to the beneficiary, who then
becomes the direct owner; or the beneficiary may transfer it to his
trustee, with the like result.
Trust-ownership and beneficial ownership are independent of each other
in their destination and disposition. Either of them may be
transferred, while the other remains unaffected. The trustee may
assign to another, who thereupon becomes a trustee in his stead, while
the beneficiary remains the same; or the beneficiary may assign to
another, while the trust-ownership remains where it was. In like
manner, either kind of ownership may be independently encumbered. The
trustee may, in pursuance of the powers of the trust, lease or
mortgage the property without the concurrence of the beneficiary; and
the beneficiary may deal in the same way with his beneficial ownership
independently of the trustee.
Whenever the beneficial ownership has been encumbered, either by the
creator of the trust or by the beneficial owner himself, the trustee
holds the property not only on behalf of the beneficial owner but also
on behalf of the beneficial encumbrancers. That is to say, the
relation of trusteeship exists between the trustee and all persons
beneficially interested in the property, either as owners or
encumbrancers. Thus if property is transferred to A., in trust for B.
for life, with remainder to C., A. is a trustee not merely for C., the
beneficial owner, but also for B., the beneficial encumbrancer. Both
are beneficiaries of the trust, and between the trustee and each of
them there exists the bond of a trust-obligation.[211]
§ 91. =Legal and Equitable Ownership.=
Closely connected but not identical with the distinction between trust
and beneficial ownership, is that between legal and equitable ownership.
One person may be the legal and another the equitable owner of the same
thing at the same time. Legal ownership is that which has its origin in
the rules of the common law, while equitable ownership is that which
proceeds from rules of equity divergent from the common law. The courts
of common law refused to recognise equitable ownership, and denied that
the equitable owner was an owner at all. The Court of Chancery adopted a
very different attitude. Here the legal owner was recognised no less
than the equitable, but the former was treated as a trustee for the
latter. Chancery vindicated the prior claims of equity, not by denying
the existence of the legal owner, but by taking from him by means of a
trust the beneficial enjoyment of his property. The fusion of law and
equity effected by the Judicature Act, 1873, has not abolished this
distinction; it has simply extended the doctrines of the Chancery to the
courts of common law, and as equitable ownership did not extinguish or
exclude legal ownership in Chancery, it does not do so now.
The distinction between legal and equitable ownership is not identical
with that mentioned in a previous chapter as existing between legal and
equitable _rights_. These two forms of ownership would still exist even
if all rights were legal. The equitable ownership of a legal right is a
different thing from the ownership of an equitable right. Law and equity
are discordant not merely as to the _existence_ of rights, but also as
to the _ownership_ of the rights which they both recognise. When a debt
is verbally assigned by A. to B., A. remains the legal owner of it none
the less, but B. becomes the equitable owner of it. But there are not
for that reason _two_ debts. There is only one as before, though it has
now two owners. So if A., the legal owner of a share in a company, makes
a declaration of trust in favour of B., B. becomes forthwith the
equitable owner of the share; but it is the same share as before, and
not another. The thing which he thus equitably owns is a legal right,
which is at the same time legally owned by A. Similarly the ownership of
an equitable mortgage is a different thing from the equitable ownership
of a legal mortgage.
Nor is the distinction between legal and equitable ownership merely
equivalent to that between trust and beneficial ownership. It is true
that, whenever the legal estate is in one man and the equitable estate
in another, there is a trust. A legal owner is always a trustee for the
equitable owner, if there is one. But an equitable owner may himself be
merely a trustee for another person. A man may settle upon trust his
equitable interest in a trust fund, or his equitable estate in his
mortgaged land. In such a case neither trustee nor beneficiary will have
anything more than equitable ownership.
If an equitable owner can be a trustee, can a legal owner be a
beneficiary? As the law now stands, he cannot. But this is a mere
accident of historical development, due to the fact that the courts of
common law refused to recognise trusts at all. There is no more
theoretical difficulty in allowing that a trustee and his beneficiary
may both be legal owners, than in allowing that they may both be
equitable owners. Had the courts of common law worked out a doctrine of
trusts for themselves, this twofold legal ownership would have actually
existed.
The practical importance of the distinction between legal and equitable
ownership is the same as that already indicated as pertaining to the
distinction between legal and equitable rights.[212]
§ 92. =Vested and Contingent Ownership.=
Ownership is either vested or contingent. It is vested when the owner’s
title is already perfect; it is contingent when his title is as yet
imperfect, but is capable of becoming perfect on the fulfilment of some
condition. In the former case he owns the right absolutely; in the
latter he owns it merely conditionally. In the former case the
investitive fact from which he derives the right is complete in all its
parts; in the latter it is incomplete, by reason of the absence of some
necessary element, which is nevertheless capable of being supplied in
the future. In the meantime, therefore, his ownership is contingent, and
it will not become vested until the necessary condition is fulfilled. A
testator, for example, may leave property to his wife for her life, and
on her death to A., if he is then alive, but if A. is then dead, to B.
A. and B. are both owners of the property in question, but their
ownership is merely contingent. That of A. is conditional on his
surviving the testator’s widow; while that of B. is conditional on the
death of A. in the widow’s lifetime.
The contingent _ownership_ of a right does not necessarily involve its
contingent _existence_. It need not be a contingent right, because it is
contingently owned. Shares and other choses in action may have an
absolute existence, though the ownership of them may be contingently and
alternately in A. and B. Money in a bank may be certainly owing to some
one, though it may depend on a condition, whether it is owing to C. or
D. On the other hand, it may be that the right is contingent in respect
of its existence, no less than in respect of its ownership. This is so
whenever there is no alternative owner, and when, therefore, the right
will belong to no one unless it becomes vested in the contingent owner
by the fulfilment of the condition.
It is to be noticed that the contingent ownership of a right is
something more than a simple chance or possibility of becoming the owner
of it. It is more than a mere _spes acquisitionis_. I have no contingent
ownership of a piece of land merely because I may buy it, if I so wish;
or because peradventure its owner may leave it to me by his will.
Contingent ownership is based not upon the mere possibility of future
acquisition, but upon the present existence of an inchoate or incomplete
title.
The conditions on which contingent ownership depends are termed
conditions _precedent_ to distinguish them from another kind known as
conditions _subsequent_. A condition precedent is one by the fulfilment
of which an inchoate title is completed; a condition subsequent is one
on the fulfilment of which a title already completed is extinguished. In
the former case I acquire absolutely what I have already acquired
conditionally. In the latter case I lose absolutely what I have already
lost conditionally. A condition precedent involves an inchoate or
incomplete investitive fact; a condition subsequent involves an
incomplete or inchoate divestitive fact.[213] He who owns property
subject to a power of sale or power of appointment vested in some one
else, owns it subject to a condition subsequent. His title is complete,
but there is already in existence an incomplete divestitive fact, which
may one day complete itself and cut short his ownership.
It is to be noticed that ownership subject to a condition subsequent is
not contingent but vested. The condition is attached not to the
commencement of vested ownership, but to the continuance of it.
Contingent ownership is that which is not yet vested, but may become so
in the future; while ownership subject to a condition subsequent is
already vested, but may be divested and destroyed in the future. In
other words ownership subject to a condition subsequent is not
contingent but determinable. It is ownership already vested, but liable
to premature determination by the completion of a divestitive fact which
is already present in part.
It is clear that two persons may be contingent owners of the same right
at the same time. The ownership of each is alternative to that of the
other. The ownership of one is destined to become vested, while that of
the other is appointed to destruction. Similarly the vested ownership of
one man may coexist with the contingent ownership of another. For the
event which in the future will vest the right in the one, will at the
same time divest it from the other. Thus a testator may leave property
to his wife, with a provision that if she marries again, she shall
forfeit it in favour of his children. His widow will have the vested
ownership of the property, and his children the contingent ownership at
the same time. Her marriage is a condition subsequent in respect of her
own vested ownership, and a condition precedent in respect of the
contingent ownership of the children.[214]
SUMMARY.
Ownership—the relation between a person and a right vested in him.
Ownership }
Possession } The three beneficial relations between persons and rights.
Encumbrance }
.nf l
.nf l
The kinds of Ownership.
1. Corporeal and incorporeal.
The ownership of things and that of rights.
The ownership of rights and the right of ownership.
Res corporales and res incorporales.
Diferent uses of the term res or thing.
(_a_) A material object.
(_b_) The object of a right.
Material and immaterial things.
(_c_) The object of ownership.
Corporeal and incorporeal things.
2. Sole ownership and co-ownership.
Joint ownership and ownership in common.
3. Trust and beneficial ownership.
The nature of trusts.
The purposes of trusts.
4. Legal and equitable ownership.
5. Vested and contingent ownership.
Conditions precedent and subsequent.
Contingent and determinable ownership.