commerce business from relieving themselves from liability by special
provision in the bills of lading. This is a very salutary act, since
it was the common custom of carriers to place many provisions in their
bills of lading by which they endeavored to evade their liability
as common carriers. It was practically impossible for a shipper to
comprehend all the printed stipulations contained in a bill of
lading. This provision of the act compelling a common carrier doing an
interstate or foreign commerce business to issue a bill of lading by
which he is liable, in case of loss, for the real value of the goods
lost, is as follows:
"Any common carrier, railroad or transportation company receiving
goods for transportation from a point in one state to a point in
another shall issue a receipt or bill of lading therefor, and shall
be liable to the lawful holder thereof for any loss, damage or injury
to such property caused by it, or by any common carrier, railroad or
transportation company to which such property may be delivered, or
over whose lines such property may pass, and no contract, receipt,
rule or regulation shall exempt such common carrier, railroad or
transportation company from the liability hereby imposed; provided,
that nothing in this section shall deprive any holder of such receipt
or bill of lading of any remedy or right of action which he has under
existing law."
The act also provides that every person or corporation, whether carrier
or shipper, who shall knowingly grant, give, solicit, accept or receive
any such rebates, concession or discrimination shall be deemed guilty
of a misdemeanor, and on conviction thereof shall be punished by a fine
of not less than one thousand dollars ($1,000.00), nor more than twenty
thousand dollars ($20,000.00).
The act also provides that the willful failure, upon the part of any
carrier, to file and publish the tariff or rate and charges required by
said act, or the failure strictly to observe such tariffs until changed
according to law, shall be a misdemeanor, and upon conviction thereof,
the corporation offending shall be subject to a fine of not less than
$1,000.00 for each offense, nor more than $20,000.00 for each offense.
The act also provides that agents or officers of a corporation
convicted of violating the act may be imprisoned not more than two
years in addition to the fine. A person delivering property to a
carrier for transportation to another state or to a foreign country
who shall accept a rebate or offset from the regular scheduled charge
shall, in addition to the above described penalties, forfeit to the
United States a sum of money three times the amount received from the
carrier.
CARRIERS OF PASSENGERS
=271. Carriers of Passengers Defined.= One who holds himself out as
ready and willing to carry from place to place for compensation, all
who desire to employ him for this purpose is a public carrier of
passengers. The liability of a public carrier of passengers is not the
same as that of a common carrier of goods. A common carrier of goods is
liable as an insurer of the goods, while a common carrier of passengers
is obliged to exercise a high or extraordinary degree of care, only in
the protection of passengers. Railroad, steamboat, ferry and omnibus
companies are common examples of public carriers of passengers. Owners
of buildings operating elevators are in the position of public carriers
of passengers. While, strictly, they are not obliged to carry all
persons, they operate the elevator publicly for the convenience of
their tenants, and their tenants' clients. The liability for injury to
passengers of owners of buildings in which elevators are operated is
the same as that of public carriers of passengers.
=272. Who Are Passengers?= A person does not have to be on board a
public conveyance to be a passenger. Steamboat companies provide
depots, waiting rooms, and wharves for the convenience of passengers.
Railroad companies provide depots, rest rooms, and waiting rooms for
persons desiring to make use of the railroad. It is said to be the
rule, that when a person enters the premises of a public carrier for
the purpose of becoming a passenger, he is a passenger from the time
he enters upon the property of the public carrier. If a person enters
the premises of a public carrier not for the purpose of purchasing
a ticket, nor to become a passenger, he is a mere trespasser, and
is not entitled to the rights and privileges of a passenger. A
person traveling on a pass is a passenger. A carrier of passengers
is permitted to enforce reasonable regulations for acceptance of
passengers. Until these reasonable rules are observed a person is not
a passenger. A person is a passenger until he has a reasonable time to
leave the public conveyance and premises of the carrier after reaching
his journey's end.
=273. Rights and Liabilities of Carriers of Passengers.= A public
carrier of passengers is obliged to carry all suitable persons who
desire to become passengers, so far as the carrier has facilities for
their accommodation. The carrier is also obliged to furnish reasonable
facilities to accommodate all who may reasonably be expected to present
themselves as passengers. A carrier may refuse to carry drunken or
disorderly persons, as well as those who, by reason of contagious
diseases or for other reasons, are not proper passengers. A carrier
may require passengers to purchase tickets before admitting them to
the vehicle of conveyance. The carrier is permitted to pass reasonable
rules and regulations for conducting his business. Unlike a carrier of
goods, a carrier of passengers is not liable as an insurer. A carrier
of passengers is bound to exercise extraordinary care in the protection
of the passengers, and is liable for any negligence resulting in a
passenger's injury, and which is not contributed to by the passenger.
If a passenger refuses to pay his fare, or becomes disorderly, he
may be removed by the carrier. The carrier is entitled to use only
the force necessary to effect the removal of the passenger. If the
passenger is injured by reason of excessive force used by the carrier
in, his removal, the carrier is liable in damages. Some states require
by statute that carriers remove obnoxious passengers only at regular
stations. In the absence of such statutes, a carrier may remove a
passenger at any place where he may be removed without injury. If a
passenger is injured by reason of his own negligence, or if his own
negligence in any way contributed directly to the injury, he cannot
recover damages from the carrier.
=274. Baggage.= A public carrier of passengers may pass reasonable
rules and regulations governing the control and amount of personal
baggage a passenger is permitted to carry with him. The contract
between a passenger and an ordinary public carrier impliedly gives
the passenger the right to carry with him on his journey, baggage
consisting of articles to be used on his journey. The business of the
passenger, his social position, and the purpose of the journey largely
determine the question of what articles properly constitute personal
baggage. A workingman would not be permitted to claim that jewels and
fancy dresses were a part of his personal baggage Such articles would
properly constitute the personal baggage of an actress or a society
woman.
If the personal baggage is placed in trunks and packages, and placed
in the absolute control of the carrier, the latter is liable for
their protection as an insurer. If the articles are retained by the
passenger, the carrier is liable only as a bailee for hire. That is,
the carrier is liable only for ordinary negligence, and is obliged to
exercise only ordinary care.
[Illustration: THE SHIPPING DEPARTMENT AT THE PLANT OF THE SAMUEL C.
TATUM CO., CINCINNATI, OHIO]
A carrier is permitted to charge for excess baggage, and becomes liable
as an insurer of such baggage. A carrier is not obliged to carry any
baggage not necessary for the convenience or comfort of a passenger,
and if attempt is made to carry it as personal baggage, the carrier
does not become liable for loss or injury thereto. Sample goods carried
by traveling salesmen do not constitute personal baggage. A carrier is
not permitted to carry these samples free of charge. If the freight is
paid by the salesman, the carrier becomes liable as an insurer.
INNKEEPERS
=275. Innkeeper Defined.= An innkeeper is a person who keeps a public
house for the entertainment, for compensation, of all fit persons who
desire to become guests and who are willing to pay the regular price.
An innkeeper furnishes both food and lodging to guests. Persons who
furnish one or the other, only, are not innkeepers. Innkeepers are
classed as exceptional bailees. They are liable as insurers of their
guests' baggage entrusted to their care. A boarding-house keeper is not
an innkeeper. A restaurant keeper is not an innkeeper.
=276. Duties and Liabilities of Innkeeper.= Innkeepers are obliged
to receive all fit persons who present themselves as guests and who
offer the regular price for entertainment. An innkeeper is obliged by
reason of his public profession, to keep food and lodging facilities
sufficient to meet all reasonably expected demands. Like a carrier of
passengers, an innkeeper is not obliged to receive obnoxious persons.
After a traveler has been received by an innkeeper for the purpose
of obtaining food and lodging, he is a guest. The innkeeper is then
obliged to use reasonable care for the protection of the guest. A
person who boards at an inn is not a guest, neither is one who rooms at
an inn, but does not board there.
An innkeeper is liable as an insurer, for the loss of, or damage to,
the goods entrusted to his care by his guest. If the goods are lost
or injured without any negligence on the part of the guest himself,
and not by an Act of God (see _Act of God_, chapter on Carriers), or
by a public enemy, the innkeeper is liable to the guest. If the goods
are retained by the guest, and remain in his possession and control,
the innkeeper is not liable as an insurer for their protection, but is
obliged to exercise only ordinary care.
=277. Lien of Innkeeper.= An innkeeper has a right to retain possession
of the goods of his guests until he receives his compensation. This is
called an _innkeepers' lien_. At common law, a boarding-house keeper
has no lien on the goods of the boarder. Some states provide by statute
for a boarding-house keeper's lien upon the goods of a boarder. Even
though the goods brought to an inn are the goods of a third person,
the innkeeper has a lien thereon for the charges of the guest, unless
the innkeeper knows at the time of receiving the guest, that the goods
belonged to another. Unless otherwise provided by statute, an innkeeper
cannot sell the goods of a guest upon which he has a lien, but must
file a bill in equity, a petition in a court of equity requiring the
goods to be sold under order of court for the payment of his charges.
REAL PROPERTY
=278. Real Property Defined.= The great English legal writer,
Blackstone, divides all property into two kinds, _real_ and _personal_.
The latter embraces everything of a movable nature, while the former
embraces everything of a permanent nature. Blackstone defines real
property as consisting of _lands_, _tenements_ and _hereditaments_. By
land is meant the soil, and everything above and beneath the soil, the
trees and vegetation above as well as the deposits beneath the soil.
By tenement is meant anything that may be held, such as a franchise
or right of way. By hereditament is meant everything that can be
inherited. It includes lands and tenements. Under the English law,
heirlooms were considered hereditaments. They are not so considered
under our law.
=279. Trees, Growing Crops, and Emblements.= Growing trees are part of
the land and are considered real property. Nursery trees may be planted
by a tenant for the purpose of the tenancy. In this event, they are
considered personal property. Trees cut down and cut into logs are
personal property. Trees blown down or cut down, but not cut into logs
are real property. Trees sold, but not cut, are regarded as personal
property. A practical distinction between real and personal property
is that real property passes to the heirs at the death of the owner,
while personal property passes to the executors or administrators
of the owner's estate. Personal property is first subjected in the
satisfaction of judgments at law against the owner.
_Emblement_ is the term applied to crops which must be planted
annually. Such crops as corn, potatoes, wheat, and melons are
emblements. They are personal property even though not severed from
the soil. They belong to the tenant who plants them. Apples, peaches,
clover, and similar things which are harvested annually, but are grown
from roots or trees which are not planted annually, are real property.
They are a part of the real estate, and pass with it when the latter is
transferred.
=280. Party Walls.= A wall between two estates standing partly on the
land of each estate is a _party wall_. If injured or destroyed by one
of the adjoining owners, the other has an action for damages against
him by reason thereof. If a wall stands wholly upon the land of one
owner, and another constructs his house using a part of the wall as
a foundation, he is a trespasser and is liable in damages, or may be
compelled to remove his house therefrom. If, however, he is permitted
to use the wall in such a manner for twenty years, the wall is regarded
as a party wall. The party so using the wall for twenty years is said
to acquire an _easement by prescription_. Party walls are owned in
common by adjoining owners. Each party does not own half the wall. Both
parties own the entire wall together.
=281. Fixtures.= By attaching a piece of personal property permanently
to the land, or to something permanently connected with the land, the
personal property, in law, becomes a part of the realty. A tenant may
so attach personal property to the land of his landlord as to lose
title thereto. No distinct line can be drawn between articles which
may constitute fixtures and those which may not. It is something of a
matter of intention of the one so attaching the articles to the land.
It is now usually conceded by the courts that a tenant may attach such
articles to the real property as are necessary and desirable for the
purpose of his tenancy, and may remove them at or before the expiration
of his lease, if the same can be done without injury to the real estate
or to the fixtures to which they are attached. A different rule is
applied in case of an owner as against a purchaser or mortgagee. For
example, if _A_ leases a building for the purpose of operating a dry
goods store, he is permitted to put in shelves and to remove them at
the expiration of the tenancy. If _A_ were the owner, and permanently
attached the shelves, he could not remove them as against a purchaser
of the building or a mortgagee.
=282. Fences.= Most of the states have statutes regulating the
building and maintenance of fences. Parties may enter into a contract
relating to partition fences if they choose. The duty to maintain
certain portions of a partition fence may result from usage. If _A_
and _B_ are adjacent owners of a farm, and _A_ has for a period of
twenty years maintained a certain portion of the partition fence, he
may be compelled to continue to maintain that portion of the fence. A
partition fence constructed jointly by the adjacent owners is their
common property. It is their joint duty to keep it up. Either one has a
right to go upon the premises of the other for that purpose. One person
may construct a fence on his own premises, which he may rebuild or take
away at pleasure. A person constructing a fence must use reasonable
care in seeing that it is so constructed and kept up that stock coming
in contact with it is not injured.
=283. Private Ways.= The right to go over the land of another is known
in law as a _way_. Originally, ways were of three kinds, a mere foot
way, a foot and horse way, by which a horse might be ridden over the
way, and a cart way. The last two classes are now treated as one. Ways
are classified as _ways of necessity_ and _ways of convenience_ or
_easements_.
If _A_ sells land to _B_ and the only access _B_ has to a highway is
over _A's_ land, _B_ has a way of necessity over _A's_ land. If _A_
sells land to _B_ and the only access to a highway left to _A_ is over
the land of _B_, _A_ has a way of necessity over _B's_ land.
A way of convenience may arise by continuous usage under a claim of
right for a period of twenty years. If _A_ for an uninterrupted period
of twenty years, under claim of right uses a path over _B's_ premises,
he acquires a way of convenience or easement which gives him the right
to continue the use of the path.
=284. Highways.= Ordinarily, highways are established by public
officials acting under statutory authority. Land is taken from the
owners by order of court granted upon a petition properly filed and
heard. It is said that the public has an _easement in a highway_, a
right to use the highway as a roadway. The absolute title remains in
the original owner. If the highway is abandoned, the property reverts
to the original owner or to his grantees or assignees.
A highway may be created by declaration or admission of the owner that
a certain piece of property is to be used as a highway. It must also be
accepted as such by public officials. The public may also obtain the
right to use certain property as a highway by adverse user for a period
of twenty years. This is called _obtaining the right by prescription_.
_285. Estates in Land._ The extent of the interest of a person in
a certain piece of land or real estate is said to be his _estate_.
Estates are designated by different names, depending upon the amount
of the interest held. In general, estates in land are divided into
_freehold estates_ and _estates less than freehold_. Freehold estates
are in turn divided into _estates of inheritance_, and _estates less
than inheritance_. Estates of inheritance are divided into _estates in
fee simple_, and _estates in fee tail_. Estates less than inheritance
consist of _dower estates_, _estates curtesy_, _estates for the life of
another_, and _estates for one's own life_, and _homestead estates_.
Estates less than freehold or leasehold estates consist of _estates for
years_, _from year to year_, _at sufferance_ and _at will_.
=286. Freehold Estates.= Freehold estates embrace estates of
inheritance and estates less than inheritance. They are estates of
uncertain periods of duration. The estate may be one of inheritance,
that is, forever, or for a lifetime. The term, _freehold_, is taken
from the name, _freeman_. A freehold estate originally applied to the
estate of a freeman. A freeman, that is, a person permitted to go
anywhere he chose, belonged to the only class of persons permitted to
hold estates of this character. The meaning of the term has lost its
significance. Under our law, all persons are freemen.
=287. Estates in Fee Simple.= Absolute ownership in land is termed
an _estate in fee simple_. It means that the owner has absolute and
unconditional ownership of the land in question. It is an estate of
general inheritance. At the owner's death, the estate passes to the
general heirs of the owner, unless particular persons are designated by
will of the owner to take the title.
=288. Estates Tail.= It was formerly the custom in England for wealthy
land owners to give land to the oldest son to be given by him to his
oldest son, a particular person or his direct heirs. That is, instead
of giving the entire interest in the land to a person in such a manner
that the latter could sell or dispose of it as he chose, it was given
by deed or will to a particular line of heirs or persons. If _A_ gave
his property by will to =B= and _B's_ direct heirs, the estate created
did not permit _B_ or his direct heirs to dispose of the estate in
such a manner that the direct heirs designated could be deprived of
the estate at _B's_ death. Granting estates to a particular person or
heir rather than to heirs generally, is called _entailing estates_.
The estate granted is called an _estate tail_. The result of entailing
estates is to continue them in the hands of a few.
England no longer permits the entailing of estates for long periods.
In this country, the matter is controlled by statutes of the different
states. A person is permitted to give real estate, by will, to a person
for the latter's life, and then to a person not yet born. The latter
takes the estate in _fee_. A person is not permitted to give property
to _A_, and to the unborn child of the unborn child of _A_. If this is
attempted, when _A_ has a child, the latter takes an _estate in fee
simple_. The above doctrine is called the rule against perpetuities.
=289. Life Estates.= An estate created to exist during the life of the
holder, during the life of a third person, or until an uncertain event
happens or fails to happen, is called a _life estate_. Life estates
embrace homestead estates, dower estates, and estates by the curtesy.
If _A_ gives _B_ a farm for life, remainder in fee to _C_, _B_ takes a
life estate. He may sell or transfer his life estate, but no more. If
_A_ dies leaving a will, by the terms of which _B_, his wife, is given
a farm for life, or during widowhood, _B_ takes a life estate in the
farm. If she marries, she loses her estate. This estate may be created
by deed as well as by will.
=290. Estates by the Curtesy.= At common law, the husband, at the
wife's death, has a life estate in the real property owned by the wife,
if issue has been born alive during the life of the wife. The husband
may waive his right to the estate if he signs a deed with the wife,
whereby he expressly waives his right to his estate by the curtesy. The
interest of the husband in the estate of his wife, is at the present
time in most states regulated by statute.
=291. Dower Estates.= At common law, at the death of her husband, a
wife takes a life interest in one-third the real property owned by her
husband during the marriage. If _A_ owns one hundred acres of land,
and dies, leaving a wife, _B_, _B_ takes one-third interest for life
in the one hundred acres of land. This interest of _B_ is called her
_dower estate_. Some states by statute provide that the wife shall have
a definite share of the husband's estate at the latter's death. In the
states having these statutes, the wife is not entitled to dower, but
takes the prescribed share in place thereof. The husband cannot deprive
the wife of right of dower, by transferring his real estate. If she
does not expressly release dower in the deed of conveyance, it may be
enforced against the estate, if she survives her husband.
=292. Exempt Estates.= The states generally provide by statute that
certain property shall be exempt from execution on judgment obtained
by creditors of the owner. Exemption statutes usually provide that a
certain amount of real estate used as a home by the owner shall not
be subjected to the satisfaction of judgments of creditors. If the
debtor has no real property used as a home, he is sometimes permitted
to retain a certain amount of personal property in place thereof. This
statutory right to keep a certain amount of real property exempt from
creditors is sometimes called a _debtor's homestead estate_. It exists
during the life of the owner.
=293. Estates for Years.= The right to the possession, or the contract
for possession of land for a definite period of time is called an
estate for years. Originally in England, only freemen could hold
freehold estates. Freehold estates are those of inheritance and those
less than inheritance. Persons occupying a position inferior to that of
freemen under the early English law, sometimes called _villeins_, were
permitted to hold estates for years, but not freehold estates.
If _A_ leases his farm to _B_ for five years, _B_ has an estate for
years. If _A_ leases his house and lot to _B_ for one month, _B_ has an
estate for years. If _A_ leases his house and lot to _B_ for two years,
and to _C_ for three years, _C's_ estate to follow _B's_, _B_ and _C_
have estates for years. Estates for years are also discussed under
_Landlord and Tenant_. Estates for years are commonly called leases or
leaseholds. A holder of an estate for years may assign or sublet his
estate, unless it is provided otherwise in his lease.
=294. Waste.= If persons have estates for years or life in real
property, certain rules for the use of such property are recognized
in order that they may not destroy or injure the remaining estate.
That is, if _A_ has an estate for life in a farm, and _B_ has the
remainder, _A_ is not permitted to destroy _B's_ interest. If a tenant
for life or years so treats the estate as permanently to injure it,
he is said to commit _waste_. A tenant for life is not permitted to
cut off the timber. He may cut out underbrush. If such is the custom
in the vicinity, he may cut timber for fuel and to repair buildings
and fences. The general rule is, that a tenant for life or years may
so use the estate as not permanently to injure or destroy it. He is
entitled to the fruits and crops, to cultivate the estate to advantage,
but not to destroy the buildings or fences, or to so treat the land as
ultimately to destroy its productiveness.
=295. Estates at Will and at Sufferance.= Estates at will and at
sufferance are discussed under the title of _Landlord and Tenant_. They
are estates in land, and are classified as estates less than freehold.
An estate which may be ended at the desire or will of either party
is known as _an estate at will_. If _A_ and _B_ agree that _A_ may
occupy _B's_ house, _A_ to pay thirty dollars per month, the tenancy
to cease at the desire of either party, _A_ is said to be a tenant at
will, and the estate he possesses is called _an estate at will_. It
is not transferable. If _A_ attempts to assign his lease, it ceases.
An estate at will is terminated by either party notifying the other
of his intention to terminate the lease or by either party doing
anything inconsistent with the estate. If the owner dies, the estate is
terminated.
If a person has a lawful estate in land, and retains possession
without right after his interest ceases, he is said to be a _tenant
at sufferance_. If _A_ rents _B's_ house for one year, and, at the
expiration of the year he still occupies the house without _B's_
consent, he is a tenant at sufferance. He, in fact, has no estate in
the premises except that which the owner suffers him to enjoy. This
interest is called an _estate at sufferance_. A tenant at sufferance
is a wrongdoer. He may be ejected at the will of the owner. The owner
is not permitted to use excessive force in ejecting a tenant at
sufferance. He may use the force necessary to eject him. At the present
time, most of the states have statutory provisions by which unlawful
tenants may be ejected by legal process.
=296. Estates in Remainder.= There may be many estates in the same
piece of real property. If an owner of an estate in fee simple by one
instrument grants an estate less than fee simple to one person and
the balance of the fee simple estate to another, the latter estate is
called a _remainder_. If _A_, an owner in fee, by the same instrument
grants _B_ an estate for life, remainder in fee to _C_, _C_ has an
estate in remainder. If _C_ is living at the time the estate is
granted, the estate in remainder vests in him at the time of the grant,
and is called a _vested remainder_. If the estate in remainder depends
upon any contingency, or is conditional in any way it is said to be
a _contingent remainder_. If _A_ grants a life estate in his farm to
_B_, and the remainder to the heirs of _C_, the heirs of _C_ cannot be
determined until _C's_ death. The estate in remainder is said to be
_contingent_.
=297. Estates in Reversion.= An owner of an estate in real property
in fee simple is permitted to grant his interest in the form of as
many estates as he pleases. As long as the total of his grants do not
equal his interest, he is said to retain an _estate in reversion_. If
_A_ owns a farm in fee simple, and grants _B_ an estate for ten years,
_A's_ remaining interest is called an estate in reversion.
=298. Title to Real Property.= Title to real property or the right of
the owner eventually to obtain possession of it may be acquired in
several ways. Mere occupancy under claim of title will, under certain
circumstances, if for a certain uninterrupted period of time, give the
occupant title. An uninterrupted possession of real property, under
a claim of right for a period in excess of twenty years will in most
states give the occupant title by _adverse possession_.
Civilized nations provide by law that the heirs of the owner of real
property shall take the title to the property at the owner's death.
Estates less than freehold pass as personal property to the executors
of the estate of the deceased owner. The statutes of the different
states designate who are heirs.
Title to land owned by the government is transferred by public grant.
Title by an owner may be conveyed to another by voluntary gift, by
devise or will, or by deed. Title by devise or will is discussed in the
chapter on Wills.
=299. Deeds.= The customary method of transfer of real property is
by deed. A deed is a written instrument sealed and delivered for the
conveyance of land. Deeds were originally divided into _deeds-poll_,
and _indentures_. Deeds-poll were mere written obligations of the
grantor delivered to the grantee, the grantee making no covenants. An
indenture, on the other hand, consists of mutual obligation on the part
of grantor and grantee. The obligation of each was reduced to writing,
signed, sealed, and delivered, the one in exchange for the other. A
lease is an example of an indenture. The term, _indenture_, originated
from the custom of writing the obligation of both parties on the same
piece of paper, and by writing some letters of the alphabet between
the two agreements, and by cutting the paper through these letters at
sharp angles. The separate obligations could be identified by fitting
together the saw-tooth edges of the different instruments. At present,
duplicate copies are made designating them as indentures. Leases are
discussed more at length in the chapter on Landlord and Tenant.
At present, the form of deeds in common use are _quit claim deeds_ and
_warranty deeds_. Some states provide forms of deeds by statute. Even
in the absence of statute, a written instrument, properly signed and
delivered by the grantor, containing a description of the property,
and an expression of intention to convey the real estate described, is
probably sufficient to constitute a deed. A formal deed is customarily
used. Transfers of real property are important transactions. A formal
deed contains several formal parts known by different names. These
formal parts have resulted from well recognized customs and practices,
some of them dating back a great many years. The formal parts of a
warranty deed are the _premises_, the _habendum_, the _redendum_, the
_conditions_, the _warranties_ or _covenants_, the _conclusions_ and
the _acknowledgment_.
=300. Premises of a Deed.= The premises of a deed contain the name
and description of the parties. If a deed is given by an unmarried
person, he should be designated in the premises of the deed as _A B_,
unmarried. This enables abstractors of titles to determine that a
complete transfer of title has been made. Otherwise there is nothing
to show that _A B_ did not have a wife at the time the transfer was
made. In this event, the wife would retain her right of dower. The
premises usually contain the date of instrument. Sometimes, the date
is placed at the end of the instrument. The consideration is also
contained in the premises. The consideration of a deed may be either
good or valuable. If the grantor receives something of value, as money
or an article of value, the consideration is said to be _valuable_. If
a parent grants real property to a child or relative and states the
consideration to be love and affection, the consideration is adequate,
and is known as _good consideration_. The receipt of the consideration
is also acknowledged in the premises of a deed. The language by which
the grantor conveys the estate, such as "give," "grant," "set over,"
and "release" is contained in the premises as well as the description
of the estate granted.
=301. Habendum and Redendum Clauses.= The premises of a deed are
followed by the _habendum_ and _redendum_ clauses. The _habendum_
clause describes the estate granted, whether an estate in fee, an
estate for life, or an estate for years. It is not necessary to repeat
the description of the estate in the _habendum_ clause. The _habendum_
clause usually commences with the words, "To have and to hold."
The _redendum_ clause contains any interests or rights retained by the
grantor. If the grantor reserves to himself the right to use a certain
driveway, he places this reservation in the _redendum_ clause.
=302. The Conditions, Warranties and Covenants of a Deed.= A warranty
deed may not be an absolute transfer of real property, but may be
conditional. For example, if the deed is absolute in form, but contains
a condition that the transfer is to be of no effect if the grantor
pays the grantee a certain sum of money by a certain time, the deed is
a conditional one. The conditions above described constitute the deed
a mortgage. This class of conditional transfer is discussed in the
following chapter. Most deeds are without conditions.
The next formal part of a warranty deed is the covenant of warranty.
The grantor covenants that he is lawfully seized of the estate. This
means that the grantor has the legal title and right to possession,
which right he conveys to the grantee. The grantor also covenants that
the grantee shall have quiet enjoyment of the estate, that the estate
is free from incumbrance, and that the grantor and his heirs warrant
the title to the estate.
=303. The Conclusion of a Deed.= The conclusion of a deed contains
the signature of the grantor and the statement that he has signed and
sealed the deed. Most states require by statute that a deed must be
signed in the presence of two witnesses. The signature and statement of
the witnesses to the effect that the deed was signed in their presence
is a part of the conclusion. The mere statement that the grantor signs
and seals the deed makes it a sealed instrument. Seals were originally
impressions made in wax affixed to the instrument. A scroll or flourish
of the pen was regarded as a seal, but at present a deed is in itself
regarded as a sealed instrument, and requires no seal nor substitute
therefor.
=304. Acknowledgment of a Deed.= The states of this country require
by statute, deeds to be recorded by the public recorder, if parties to
the deed desire to give notice of the transfer to third persons. Third
persons are deemed to have notice of deeds so recorded even though they
have no actual notice. For the purpose of having a deed recorded, the
grantor must acknowledge his signature before a notary public who adds
his statement to that effect to the deed, and signs and seals the same.
A quit claim deed contains no warranties nor covenants. It is merely a
release of the grantor's interest to the grantee.
QUIZ QUESTIONS
BAILMENT
1. Define _bailment_.
2. For whose benefit may bailment be made?
3. Distinguish a _bailment_ from a _sale_.
4. Give an example of a bailment.
5. Name and define the parties to a bailment contract.
6. May an infant enter into a bailment contract?
7. Is an infant liable for his torts?
8. Classify bailments.
9. Give an example of a bailment for the mutual benefit of both bailor
and bailee.
10. Is a bailment a contract?
11. What is the consideration in a bailment for the sole benefit of the
bailor?
12. What party to a bailment contract has possession of the property?
13. Is a finder of lost property a bailee?
14. In whom is the title to bailed property?
15. Are the title and possession in the same person?
16. May a person not the owner of property bail it?
17. Give an example of a bailment for the sole benefit of the bailor.
18. What degree of care is required of a bailee in case the bailment is
for the sole benefit of the bailor?
19. Give an example of a bailment for the sole benefit of the bailee.
20. What degree of care is required of a bailee in a bailment for his
sole benefit?
21. _A_ hires of _B_ an automobile for $3.00 per hour. Is the bailment
for the sole benefit of the bailor, the bailee, or for the mutual
benefit of both parties?
22. In the above example what degree of care is required of _A_?
23. What implied warranties accompany mutual benefit bailments?
24. Define and distinguish public and private warehousemen.
25. What are government warehouses?
26. Are warehouse receipts negotiable?
27. What degree of care is required of warehousemen?
28. What degrees of care are recognized in bailments?
29. How is the standard for determining degrees of care arrived at?
30. Is ordinary care the same in the bailment of different kinds of
property?
31. If a third person takes property away from a bailee may the latter
recover possession?
32. What are the rights of a person purchasing from a bailee?
33. What is meant by _liens_ on personal property?
34. _A_ leaves his watch with _B_ for repairs. _B_ repairs the watch.
Can _B_ retain possession until he receives his pay?
35. May a bailee sell property to satisfy his lien?
PLEDGES
1. Is a pledge a bailment?
2. Define a _pledge_.
3. Does title to property pledged remain in the pledgor?
4. Distinguish _pledge_ from _chattel mortgage_.
5. Name and define the parties to a contract of pledge.
6. May an infant pledge property?
7. What kinds of personal property may be pledged?
8. Can a person pledge personal property which he expects to purchase?
9. Can a person pledge a growing crop?
10. What is the purpose of a contract of pledge?
11. Can there be a pledge which is not security for an existing debt?
12. If _A_ delivers possession of personal property to _B_ but does not
owe _B_ anything, is the transaction a pledge? If not a pledge,
what is the transaction?
13. Who has possession of pledged property?
14. Does the pledgee have title to property pledged?
15. In case of a chattel mortgage who has title to the mortgaged
property?
16. In case of pledge of negotiable instruments, who has title to the
instruments?
17. What is meant by _loans on collateral securities_?
18. What is a _collateral note_?
19. By whom are collateral notes commonly used?
20. After payment of the debt for which property is pledged, who is
entitled to possession of the pledged property?
21. Who is entitled to possession of property pledged before payment of
the debt secured?
22. In case of pledge of negotiable instrument who must collect the
interest and instrument when due?
23. What degree of care is required of a pledgee in the protection of
pledged property?
24. If the pledgor fails to pay the debt when due, what may the pledgee
do with the property?
25. In selling pledged property what notice, if any, should the pledgee
give the pledgor?
26. What is meant by _foreclosing a lien in equity_?
27. Define and explain _redemption_.
28. When may the right of redemption be exercised?
MORTGAGES ON PERSONAL PROPERTY
1. Define _chattel mortgage_.
2. In case of a mortgage of personal property, who has possession of
the property? Who has title?
3. Define _mortgagor_ and _mortgagee_.
5. Distinguish _chattel mortgage_ and _sale_.
4. Distinguish _chattel mortgage_ and _pledge_.
6. Distinguish _pledge_ and _sale_.
7. May _choses in action_ be mortgaged?
8. Define and distinguish _choses in action_ and _choses in
possession_. May both be mortgaged?
9. What is the purpose of a chattel mortgage?
10. Does a chattel mortgage require a consideration?
11. Can there be a chattel mortgage without a debt to be secured?
12. Must a chattel mortgage be in writing?
13. _A_ mortgages his horse to _B_ to secure a debt of $40.00. _A_
delivers the horse to _B_. The mortgage is oral. Is it binding?
14. What is the reason for filing or recording a chattel mortgage?
15. Does a chattel mortgage of property, possession of which is given
the mortgagee, have to be recorded to be binding?
16. Who is entitled to possession of mortgaged personal property?
17. _A_ mortgages his household furniture to _B_, later he stores
the furniture with _C_. _C_ acquires a storage keeper's lien.
Is the latter's lien superior to _B's_?
18. Does a mortgagor retain an interest which he may dispose of?
19. Does a mortgagee have absolute title to the property mortgaged?
20. If _A_, the mortgagee of personal property, sells the debt secured
by the mortgage to _B_, what becomes of the mortgage?
21. When the mortgagor defaults in payment of the secured debt, how may
the mortgagee obtain possession of the property?
22. Define _equity of redemption_.
23. Can a mortgagor enforce his equity of redemption after the
mortgagee has obtained possession of the property?
24. Can a mortgagee enforce his equity of redemption without paying the
mortgage debt?
25. Define _foreclosure_.
26. What is the purpose of foreclosure?
27. How is foreclosure enforced?
CARRIERS
1. Define and give an example of _common carrier_.
2. Define and give an example of _private carrier_.
3. What constitutes a person or company a common carrier of goods?
4. Is a common carrier of goods obliged to carry goods of all kinds?
5. Distinguish _common carrier_ and _private carrier_.
6. What is the exceptional liability of a common carrier, and what is
the reason for this liability?
7. If goods intrusted to a common carrier are lost without negligence
of the carrier is the latter liable to the owner?
8. Is the exceptional liability of an insurer a matter of express or
implied contract?
9. What are the exceptions to the liability of a common carrier as an
insurer of the goods intrusted to his care?
10. Define and give an example of _public enemy_.
11. Define and give an example of _Act of God_.
12. Is a common carrier permitted to limit his common law liability as
an insurer of the goods by special contract?
13. Is a common carrier permitted to stipulate against the carelessness
of his agents or servants?
14. Is a common carrier permitted to limit his liability as an insurer
of goods by stipulating in the bill of lading issued that the
valuation is limited to a certain amount, unless informed otherwise
by the shippee?
15. What does the Interstate Commerce Act provide relative to the above
question?
16. What is a _bill of lading_?.
17. Distinguish bill of lading and shipping receipt.
18. What are the two essential features of a bill of lading?
19. In what sense, if any, is a bill of lading a negotiable instrument?
20. _A_, in Cleveland, orders a car of hogs from _B_, in Buffalo. _B_
delivers the hogs to the railway company in Buffalo, to be shipped
to _A_ in Cleveland. In whom is the title to the hogs?
21. If _A_ stipulates that the hogs are to be delivered F. O. B.
Cleveland, in whom is the title to the hogs after they are
delivered to the railway company, and before they reach Cleveland?
22. What goods, and under what circumstances, is a carrier obliged to
accept for shipment?
23. Explain the meaning of _stoppage in transitu_. Under what
circumstances is a shipper permitted to exercise the right?
24. What carriers are obliged to make delivery at the residence or
place of business of the consignee, and what carriers are obliged
only to deliver at their depots or warehouses?
25. Define and explain _carrier's lien_.
26. How may a carrier enforce his lien?
27. Why is a common carrier not permitted to discriminate between
shippers?
28. When, if at all, is a carrier of mail liable for negligence?
29. Is the government liable to an owner of mail for its loss?
30. What are the principal features of the Interstate Commerce Act of
1906?
[Illustration: ENTRANCE TO THE ADMINISTRATION BUILDING OF THE WERNER
COMPANY, AKRON, OHIO]
CARRIERS OF PASSENGERS
1. Is every person or company carrying passengers for compensation a
common carrier?
2. Are owners of buildings operating elevators common carriers of
passengers?
3. When does a person become a passenger?
4. Is a person traveling on a pass a passenger within the legal meaning
of the term, passenger?
5. Is a public carrier of passengers obliged to accept all who present
themselves as passengers?
6. When, and how, may a public carrier eject a passenger?
7. What degree of care is a public carrier of passengers obliged to
exercise?
8. What constitutes baggage?
9. What is the liability of a carrier of passengers for loss or injury
to baggage?
INNKEEPERS
1. Must a person represent himself as being ready and willing to
furnish both food and lodging to all who desire to become guests,
in order to be an innkeeper?
2. Are boarding-housekeepers innkeepers?
3. Are innkeepers obliged to receive all persons who present themselves
as guests if the regular price is tendered?
4. What degree of care in the protection of guests is required of
innkeepers?
5. What degree of care is required of innkeepers in the protection of
the baggage of guests?
6. What is an _innkeeper's lien_?
7. How may an innkeeper enforce his lien?
REAL PROPERTY
1. Define _real property_.
2. What is included in the term, real property?
3. Define and give an example of _hereditament_.
4. Define and give an example of _tenement_.
5. Are standing trees real or personal property?
6. Are trees blown down real or personal property?
7. What is the practical distinction between real and personal property?
8. Define _emblements_.
9. Do emblements belong to the tenant or to the landlord?
10. Are apples emblements? If not, why not?
11. How may a wall become a party wall by prescription?
12. Define _fixtures_.
13. Are fixtures real or personal property?
14. Does the rule as to fixtures differ in case of a tenant, and in
case of an owner?
15. Do owners of adjoining property own a partition fence jointly or
does each one own a particular part of the fence?
16. Define and give an example of a _way of necessity_.
17. Define and give an example of a _way of convenience_.
18. How are highways ordinarily established?
19. How may a highway be established by prescription?
20. Into what classes are estates divided as to the quantity of
interest held?
21. What is a _freehold estate_?
22. From what is the term, freehold, derived?
23. Define and give an example of an _estate in fee simple_.
24. What is meant by _entailing an estate?_
25. What was the reason for the practice of entailing estates?
26. To what extent may an estate be entailed in this country?
27. What is the rule against perpetuities?
28. Define and give an example of a _life estate_.
29. What claims do life estates embrace?
30. Define _estate by the curtesy_.
31. Define and give an example of _dower estate_.
32. Define and give an example of _homestead estate_.
33. Define and give an example of an _estate for years_.
34. Is a lease for two months an estate for years?
35. May a holder of an estate for years transfer it?
36. What is meant by _waste_?
37. What is the general rule relating to waste?
38. Give an example of an _estate at will_.
39. Distinguish an _estate at will_ from an _estate at sufferance_.
40. How may an estate at will be terminated?
41. Define and give an example of an _estate in remainder_.
42. Distinguish _vested_ and _contingent remainder_.
43. Distinguish _estates in reversion_ from _estates in remainder_.
44. How may title to real property be acquired?
45. Define _deed_.
46. Define _deed poll_.
47. Define _indenture_.
48. What are the formal parts of a deed?
49. What things are included in the premises of a deed?
50. What is meant by the _habendum_ and _redendum clause_ of a deed?
51. What is a _warranty of a deed?_
52. What are the general warranties of a deed?
53. What things are included in the conclusion of a deed?
54. What is meant by the _acknowledgment of a deed?_
[Illustration: A CORNER IN THE JOHN CRERAR LIBRARY, CHICAGO, ILL.]
COMMERCIAL LAW
PART V
MORTGAGES OF REAL ESTATE
=305. Mortgage Defined.= By the common law, a mortgage was an
absolute deed of conveyance, by the terms of which the debtor was
entitled to receive a reconveyance of the property upon payment of the
debt described in the mortgage, or upon performing the conditions for
which the mortgage was given. For example, _A_ owes _B_ one thousand
dollars, _A_, to secure the debt, gives _B_ an instrument of conveyance
of his house and lot, the instrument containing a provision that if _A_
pays _B_ one thousand dollars ($1,000.00) on or before January 1st,
1911, _B_ is to reconvey the house and lot to _A_. The above represents
a mortgage at common law. As explained later, a present day mortgage is
somewhat different.
At common law, the creditor had possession of the property from the
time the mortgage was given, unless it was expressly agreed that the
debtor was to remain in possession. The real purpose of a mortgage
is to give security for a debt or obligation. To permit a creditor
to keep the mortgaged property upon default of the debtor to pay the
debt when due, is unjust in many cases. For example, if _A_ gives a
mortgage to _B_ upon property worth one thousand dollars, to secure
a debt of three hundred dollars, and _A_ defaults in payment, it is
unjust to permit _B_ to keep the property. Courts of equity have for
a long time regarded this transaction as a mere security for a debt,
and not an absolute transfer of title to property. Courts of equity
long ago permitted the debtor to file a petition in a court of equity
asking that the property be reconveyed to him upon payment of the debt,
and damages due the creditor. Courts of equity recognize this right
of the debtor, which is called _equity of redemption_. At the present
time mortgages are, in form, an absolute conveyance of real estate,
with a condition that the title is to revest in the debtor, or that
the conveyance is to be void and of no effect, if the debtor pays
the debt or performs the condition. If the debtor fails to perform
this condition at the time stipulated, he is still able to enforce his
equity of redemption. This, in effect, makes a mortgage of real estate
a mere security for a debt. The creditor is permitted to cut off the
debtor's right of redemption by foreclosure, which is discussed under a
separate section.
=306. Parties to a Mortgage Contract.= A mortgage of real estate
is a contract. Like any contract, it requires competent parties, a
consideration, mutuality, etc. (See _Essentials of a Contract_, chapter
on Contracts.) The party conveying the real estate to another as
security for the debt is called the _mortgagor_, the party to whom the
mortgage is given is called the _mortgagee_.
=307. Possession of Mortgaged Property.= Originally at common law, the
mortgagee was entitled to the possession of the mortgaged premises as
soon as the mortgage was given, and before default of the mortgagor
to pay the debt described in the mortgage. At the present time,
the mortgagor is entitled to possession of the mortgaged premises
until after default of payment of the mortgage debt. After default,
the mortgagee may take possession of the premises. Some states now
provide by statute, that the mortgagor shall have possession of the
mortgaged premises until he defaults in payment of the mortgage debt.
Independently of such a statute, the mortgagor has the right to
possession of the mortgaged premises before default of payment of the
mortgage debt. This is by reason of the fact that the law regards the
transaction as a security for a debt rather than an absolute transfer
of title.
Parties are permitted to enter into any contract they choose so long as
the provisions are legal. Parties to a mortgage may stipulate who is to
have possession before default or payment on the part of the mortgagor.
If it is stipulated that the mortgagee is to have possession, he
is entitled to it under the terms of the mortgage contract. If no
stipulation is made, the mortgagor impliedly is given the right of
possession before default.
=308. Deeds as Mortgages.= If a deed, absolute on its face, is given
by a debtor to a creditor to secure a debt, it will be treated by a
court of equity as a mortgage. Equity regards the substance of things
rather than the form. (See _Courts of Equity_ under chapter on Courts,
Remedies, and Procedure.) Courts of equity were originally created
for the purpose of granting justice where the rules of the common law
failed. In England, they were called _courts of chancery_. A judge sits
alone as a court of equity, without the aid of a jury. When there is
no remedy at law, and a wrong exists, equity affords a remedy. In this
country, the same court frequently sits as a court of equity as well as
a court of law. In the case of deeds absolute on their face, if it was
the intention of the parties that the conveyance was to constitute a
security for a debt, rather than a sale, a court of equity will permit
the grantor to secure a return of the property upon payment of his
debt. Equity looks at the substance of the transaction disregarding
the form. If mortgages are not in proper legal form, and either party
is not permitted at law to enforce his right, equity will enforce the
transaction according to the intention of the parties. Informal or
incomplete mortgages are called _equitable mortgages_.
=309. The Debt Secured.= A mortgage is a contract, and like any
contract, must be supported by a consideration. (See _Consideration_,
chapter on Contracts.) The consideration of a mortgage may be anything
of benefit to the one giving the mortgage, or any detriment to the one
receiving the mortgage. The consideration of a mortgage ordinarily is
an advancement or loan, past or present, made by a mortgagee to the
mortgagor. That is, a mortgage is given as security for some debt or
obligation in favor of the mortgagee. This debt is usually described in
the mortgage as a promissory note. Even though no note has been given,
if the amount described in the mortgage as a promissory note is the
amount of the debt, or if any debt exists, the mortgage is valid. A
mortgage may be given to cover future advances, or for a pre-existing
indebtedness. If a mortgage is given as security for a promissory note,
it will secure all renewals of the note as well.
=310. Essentials of a Mortgage.= A mortgage is an instrument for
the conveyance of land. By the provisions of the Statute of Frauds,
such instruments must be in writing to be enforceable. (See _Statute
of Frauds_, chapter on Contracts.) The states provide by statute that
mortgages must be recorded to be effective as against subsequent
innocent purchasers, mortgagees or creditors. Mortgages must be in
writing for the purpose of recording, as well as to comply with the
Statute of Frauds. When a mortgagee takes possession of the mortgaged
premises, this is sufficient notice to creditors and subsequent
purchasers of his interests. In this event the mortgage need not be
reduced to writing nor recorded.
Mortgages are usually written in the form of formal deeds. (See _Form
of Deeds_, chapter on Real Property.) Although it is good business
practice to follow these well recognized forms in drawing mortgages, an
informal instrument describing the parties and the property mortgaged,
and showing an intent to make a mortgage is sufficient. Some states by
statute provide a short statutory form. This form may be used, but does
not prevent the common law form from being used.
A mortgage is given to secure a debt or obligation. This debt or
obligation should be set forth in the mortgage, and the time when it
is to be paid or performed should be set forth. The mortgage should
also contain a description of the property mortgaged. A complete and
accurate description, such as is used by surveyors, is the best form.
By this means, a person can locate the property directly from the
description given in the mortgage. It is sufficient if the description
given enables a person to locate the property either by reference
to another record containing a description, or by its own terms. A
surveyor's description is better, however. A mortgage should contain
the names of the grantor and the grantee.
The mortgagor is entitled to his equity of redemption. That is, he is
entitled to the right to file a petition in a court of equity, offering
to pay the mortgage debt, interest, and damages to the mortgagee, and
asking for a return of the property. This may be done at any time
before foreclosure by the mortgagee. Foreclosure is discussed under a
separate section.
=311. Power of Sale and Delivery in Escrow.= If a mortgagor
stipulates in the mortgage that he waives, or will not enforce his
equity of redemption, the law does not permit the mortgagee to enforce
such a stipulation. It is regarded as against public policy, and
illegal. Whenever there is a mortgage, there is an equity of redemption
in favor of the mortgagor.
Some mortgages contain a stipulation that in case the mortgagor fails
to pay the mortgage debt when due, the mortgagee may sell the property,
deduct his claim costs and expenses, and return the balance to the
mortgagor. Such mortgages are called _power of sale mortgages_. They
are valid and enforceable. The mortgagor's equity of redemption is
protected, in that he receives the balance of the proceeds of the sale
of the mortgaged premises, after the mortgage debt and expenses are
paid. The sale, under a power of sale mortgage, must be public and
_bona fide_.
A mortgage must be signed by the mortgagor. This is called in law,
_execution of the mortgage_. The mortgage must also be attested.
This means that the signing must be in the presence of a witness or
witnesses. This requirement is a statutory one. Some states require
only one witness, others two. If a mortgage is to be recorded, the
signature of the mortgagor must be acknowledged before a notary
public or officer authorized to administer oaths. This is called
_acknowledgment_. It means that the mortgagor acknowledges the making
of the signature in the presence of an officer authorized to administer
oaths. The officer writes a certificate of this acknowledgment on the
mortgage. Acknowledgment is a statutory requirement. A mortgage will
not be received for record by the public recorder, unless it has been
acknowledged.
A mortgage given by a married man must contain a waiver of dower by
the mortgagor's wife, or the wife will have a dower estate therein if
her husband dies before she dies. The mortgage of a married man should
contain a statement that the wife waives her dower interest, and the
wife should sign the mortgage before witnesses, and acknowledge her
signature. A mortgage, like any written contract, does not become
effective until delivered. By _delivery_ is meant giving possession of
the instrument to the mortgagee or his agent, with intent that it is to
become effective from that date. If a mortgage or written instrument is
delivered to a third person to be held for a certain purpose or until a
certain time, this is called _delivery in escrow_.
=312. What Interest in Real Estate May be Mortgaged.= Any interest in
real estate which is the subject of transfer or sale may be mortgaged.
One who has the absolute title, called _fee simple interest_, in real
estate may mortgage it. A mortgage is not regarded as a transfer but
merely as a security for a debt or obligation. The mortgagor retains an
interest called his equity of redemption. For all practical purposes, a
mortgage of real estate means that the mortgagee may sell the property
mortgaged upon failure of the mortgagor to pay the mortgage debt when
due. The mortgagee may keep enough of the proceeds of the sale to
satisfy the mortgage debt. The equity of redemption of a mortgagor and
the remainder must be returned to the mortgagor, or his right to the
proceeds of the sale of mortgaged premises, after the mortgage debt is
paid, is an interest which in turn may be mortgaged.
A mortgagor may give successive mortgages so long as he finds persons
willing to accept them as security. In practice, second and third
mortgages on real estate are common. Not only may real estate be
mortgaged, but anything permanently connected with real estate, such
as crops, trees, horses, and buildings. Articles of personal property
which have become permanently annexed to real estate are called
_fixtures_. (See _Fixtures_, chapter on Real Estate.) If title to real
estate has been obtained by fraud, a valid mortgage may be given to one
who has no notice of the fraud. The principle involved is that a title
obtained by fraud or duress is voidable. The party defrauded may obtain
a reconveyance of the property as against the party practicing the
fraud, but not as against innocent purchasers who have had no notice
of the fraud. If, however, a conveyance is attempted by means of a
forgery, no title to the property passes to the purchaser, who in turn
can convey nothing by mortgage or otherwise. Similarly, a party who has
conveyed his interest in real estate absolutely, by deed or contract,
has nothing left to convey, and cannot give a mortgage. An interest in
real estate less than absolute ownership, as a life interest, or a mere
lease, or term for years, is an interest which may be mortgaged.
=313. Recording Mortgages.= To be effectual against creditors,
subsequent purchasers, and mortgagees, most of the states require by
statute, that mortgages be recorded with the public recorder of the
county where the property is located. These statutory provisions do not
render mortgages ineffectual as between original parties. _A_ gives a
mortgage on his house and lot to _B_. _B_ does not have the mortgage
recorded. If _A_ fails to pay the mortgage debt when due, _B_ may
foreclose. As against _A_, _B's_ mortgage is enforceable without being
recorded. If, however, _A_ gives a subsequent mortgage to _C_, and _C_
records his mortgage, _C's_ mortgage is superior to _B's_. If _A_ sells
the property to _D_ after mortgaging it to _B_, _B_ not recording the
mortgage, _D_, upon having his deed recorded, takes the title free
of _B's_ mortgage. If _A_ gives _B_ a mortgage, _B_ not having the
mortgage recorded, and _E_ obtains a judgment against _A_ and levies
upon the real estate mortgaged to _B_, _E_ obtains a lien superior to
_B's_.
The statutes of a few states provide that mortgages become effective
from the time they are left with the recorder for record. The recorder
stamps on the mortgage the time it is left for record, and the mortgage
becomes effective from that time. Suppose _A_ on the second of February
gives a mortgage on his house and lot to _B_, for $500.00, and then
on the fifth of February gives a mortgage on his house and lot to _C_
for $500.00. If _C_ has his mortgage recorded February sixth, and
_B_ has his mortgage recorded February seventh, _C's_ mortgage is
superior to _B's_. In the few states where a mortgage does not become
effective until received for record, the one first received for record
is superior to others, even though the mortgagee first leaving his
mortgage for record takes his mortgage with actual notice of the prior
mortgage. The general rule is that one who takes a mortgage with actual
notice of other mortgages, takes subject to such mortgages.
To be received for record, a mortgage must be acknowledged. This means
that the mortgagor must acknowledge the signature to the mortgage
before a notary public or officer authorized to administer oaths. The
officer makes a certificate of the acknowledgment on the mortgage.
=314. Transfer of Mortgages and Mortgaged Premises.= While, in form,
a mortgage is a transfer of real estate, it is regarded merely as
security for a debt. The mortgagee is not permitted to transfer title
to the real estate. He is, however, permitted to transfer the interest
which he possesses in the mortgaged premises. Such a transfer is called
an _assignment_. It is a contract of sale by which the mortgagee sells
his interest in the mortgage. (See _Assignment of Contract_, chapter on
Contracts.) For example, if _A_ mortgages his farm to _B_ as security
for a one-thousand-dollar promissory note, _B_ cannot convey title to
the property mortgaged, to _C_, but he may sell his interest in the
mortgage to _C_. The mortgage cannot be sold separately from the debt
secured. The mortgage, separated from the debt, represents nothing
of value. If, in the example above given, _B_ endeavors to sell the
note to one person, and the mortgage to another, the purchaser of the
mortgage takes nothing. A sale of the debt secured by the mortgage,
carries with it the mortgage security, unless it is expressly agreed
that the debt is transferred without the security of the mortgage.
If _A_ mortgages his farm to _B_ to secure a promissory note for
one thousand dollars, and _B_ sells the note to _C_, _C_ takes the
security of the mortgage as well as the note, unless it is expressly
agreed between him and _B_ that the security of the mortgage is not
transferred with the note. After _B_ sells _C_ the note, _B_ cannot
cancel the mortgage. The mortgage now belongs to _C_. If _A_ mortgages
his farm to _B_ to secure two promissory notes of $500.00 each, and _B_
sells one of the notes to _C_, in the absence of an agreement to the
contrary, _C_ has one-half interest in the mortgage as security for his
note. _B_ may, however, expressly stipulate in the sale of his note to
_C_, that _B_ is to retain the entire mortgage security for his own
note.
When a debt secured by a mortgage is assigned, the assignee should
immediately notify the mortgagor of the assignment, in order that
the mortgagee shall pay him, and not the assignor. This is the safe
policy to follow, although technically, the mortgagor before paying the
mortgage debt should be sure that the mortgagee is still the owner of
the note, debt, or other obligation, secured by the mortgage.
A mortgagor is permitted to sell his interest in the mortgaged
premises before satisfying the mortgage. He may sell his equity of
redemption, or he may sell in such a manner that the purchaser assumes
the mortgage. If the mortgagor sells the mortgaged premises, the
purchaser agreeing to assume the mortgage as between the mortgagor and
the purchaser, the purchaser must pay the mortgage. The mortgagee,
however, is not bound by this agreement. He may disregard it. He may
accept the benefit of it if he chooses and sue the purchaser on this
contract. (See _Contract for the Benefit of Third Persons_, chapter on
Contracts.) If, however, the mortgagee agrees to accept the purchaser
of the mortgagor's interest as the debtor, the original mortgagor is
relieved thereby.
=315. Satisfaction of Mortgages.= A mortgage is given as security
for a debt or obligation. It is satisfied by payment of the debt,
or fulfillment of the obligation. The mortgage debt may be paid by
the mortgagor himself, by a purchaser of the mortgagor's interest,
by a subsequent mortgagee, or by any one having an interest in the
real estate mortgaged. If anyone, other than the mortgagor, pays the
mortgage debt to protect his own interest, he is thereby entitled to
the benefit of the mortgage. This is called _subrogation_. If _A_ owes
_B_ $5,000.00, and gives _B_ a note for that amount, secured by a real
estate mortgage on a farm, _C_ signing the note as surety or guarantor,
in case _C_ pays the note upon default of _A_, _C_ is entitled to _B's_
benefit in the mortgage. Payment of a mortgage debt may be made to a
mortgagee, himself, his assignee of the mortgage debt, or any agent
or authorized representative of the mortgagee. A party not having
an interest in the land cannot voluntarily pay a mortgage debt, and
claim the benefit of a mortgage by subrogation. A party interested in
the land, even the mortgagor, himself, cannot compel the mortgagee to
accept payment before the mortgage debt is due.
Upon payment of a mortgage debt, the title to the mortgaged premises
by this act becomes absolute in the mortgagor. At common law, if
the mortgagor paid the mortgage debt when due, the mortgagee had to
reconvey by deed the mortgaged premises to the mortgagor to give the
latter title. But at the present time, a mortgage is not regarded as
a conveyance of title, but merely as a security for a debt, the title
vesting absolutely in the mortgagor any time he pays the debt before
the actual foreclosure of this right by the mortgagee.
When the mortgagor pays the mortgage debt, he is entitled to a written
satisfaction of the debt. This is a mere written statement that the
mortgage is satisfied, signed by the mortgagee. The mortgagor is thus
enabled to have the mortgage cancelled of record, which gives the
public notice that the mortgage is no longer effective. The mortgagor
presents his written statement of satisfaction to the public recorder,
who enters it in his record of the mortgage.
=316. Equity of Redemption.= A mortgagor does not lose his interest
in the mortgaged property by failure to pay the mortgage debt when due.
Courts of equity regard a mortgage as a security for a debt, and not
a transfer of real property. Even though the mortgagor fails to pay
the mortgage debt when due, and in spite of the fact that the mortgage
purports to be a transfer of real estate, conditioned only on the
payment of the debt described, equity refuses to regard the transaction
as a sale, and permits the mortgagor to recover the property by paying
the debt, interest, and expenses connected with the mortgage, at any
time before the statute of limitations cuts him off. The states have
statutes requiring suits of different kinds to be brought within
certain periods. These statutes vary somewhat in the different states.
Most states require an action by which a mortgagor enforces his equity
of redemption, to be brought in about twenty or twenty-one years after
the debt becomes due. The mortgagor himself or anyone to whom he
transfers, or who acquires his interest, is entitled to the equity of
redemption.
If _A_ mortgages his farm to _B_, to secure a promissory note of one
thousand dollars due in one year, _A_ does not lose his right to the
property by failure to pay the note when due. He may bring a suit in
equity at any time, usually within twenty-one years, after the note
becomes due, offering to pay the mortgage debt, interest, and costs,
and asking for a return of the property. Equity now gives the mortgagee
a right to cut off the mortgagor's right of redemption by foreclosure.
This is discussed in the following section.
=317. Foreclosure of Mortgages.= A mortgagor has the right to redeem
the property at any time within the statute of limitations, after the
mortgage debt becomes due. The mortgagee does not have to wait the
pleasure of the mortgagor to redeem or abandon the right. Equity gives
the mortgagee the right to cut off the mortgagor's equity of redemption
by foreclosure. By foreclosure is meant the mortgagee's right to file
a petition in a court of equity asking that the property be sold, and
that from the proceeds, the amount of the mortgage debt and costs first
be paid, and that the balance be paid the mortgagor. The court orders
the property advertised and sold, and the proceeds distributed as above
described.
Some mortgages contain a stipulation concerning foreclosure. These
mortgages are called _power of sale mortgages_. It is stipulated
that when the mortgagor is in default of payment, the mortgagee may
advertise and sell the property, deducting from the proceeds the
mortgage debt, interest, and expenses, and paying the balance to the
mortgagor. These power of sale mortgages are enforceable. The sale must
be free from fraud, public, and the mortgagee cannot become a purchaser
unless so stipulated in the mortgage, or so provided by statute. The
states usually provide by statute a method of foreclosure. These
statutes frequently provide that a mortgagee may enforce his mortgage,
and obtain a judgment against the mortgagee on the mortgage debt in the
same action. If the mortgaged premises do not bring enough to satisfy
the judgment, the balance may be enforced against the mortgagor by
seizing any property subject to execution that he possesses.
TRUSTS
=318. Defined and Classified.= In a popular sense, the term, _trust_,
is often used to designate combinations of capital or combinations
among business men for the purpose of destroying competition, or for
the purpose of regulating prices. This is not the meaning of the term
as used in this chapter. It is here used to mean an estate of some kind
held for the benefit of another. A trust has been defined to be "An
obligation upon a person, arising out of a confidence reposed in him,
to apply property faithfully according to such confidence." _A_, by
will, appoints _B_ trustee of his farm, for the benefit of _C_. Upon
_A's_ death, if _B_ accepts the duty imposed upon him by the will, a
trust is thereby created in which _B_ holds the legal title to the
farm, for the benefit of _C_.
Trusts are sometimes classified as _general_ and _special_. If the
property is conveyed by deed or will to another to be held in trust
for a third person, without specifying any of the duties of the second
person, it is said to be a general or simple trust. If, however, the
duties of the second person or trustee are defined, the trust is
called a special trust. A trust for the benefit of an individual or
individuals is called a _private_ trust, while one for the benefit of
a public institution, or for the public, is a _public_ trust. If _A_
gives his property to _B_ to care for the poor of the city of Chicago,
the trust is public. As to their method of creation, trusts are usually
divided into _express_, _implied_, _resulting_ and _constructive_
trusts.
=319. Parties to Trusts.= The party creating a trust is called the
_grantor_ or _settlor_. The party to whom the title to the property
is given to hold for the benefit of another is called the _trustee_.
The party for whose benefit the trust is created is called the _cestui
que trust_. If the beneficiaries are more than one in number, they are
termed _cestui que trust_. If _A_ deeds his land to _B_ for the benefit
of _C_, _A_ is the settlor, _B_ is the trustee, and _C_ is the _cestui
que trust_.
=320. Who May be Parties to a Trust.= Persons of lawful age, and
competent to make contracts, including corporations, may create trusts.
Any person competent to make contracts, including corporations, may act
as trustee. Even infants (persons under legal age) may act as trustees
if the duties require the exercise of no discretion. An infant may hold
the legal title as trustee, and if the duties require the exercise of
discretion, the court will remove him or appoint a guardian to perform
his duties. Anyone capable of holding the legal title to property may
be a _cestui que trust_. This includes corporations, aliens, and, in
case of charitable trusts, infants. Any kind of property, whether
real or personal, may be given in trust. This includes lands, chattel
property, promissory notes, accounts, and kindred property rights,
regardless of where the property is located.
=321. Express Trusts.= An _express trust_ is one created by the express
written or oral declaration of the grantor. If _A_ gives a deed of his
farm to _B_, by the terms of which _B_ is to hold the farm in trust for
_C_, _A_, the grantor, has created an express trust in favor of _C_,
_B_ as trustee holds the legal title to the farm, and _C_, as _cestui
que trust_ or beneficiary, holds the beneficial or equitable interest.
_A_, before giving the deed of trust, was the absolute owner of the
farm. That is, _A_ held the legal title and the equitable interest
in the farm. By creating the trust, he placed the legal title in one
person and the equitable or beneficial interest in another.
Originally, in England, at common law, trusts could be created by
oral declaration as well as by written instruments. At that time,
land could be transferred without written instruments. The seller
took the buyer on to the land to be conveyed, and in the presence of
witnesses delivered to him a symbol of the land, such as a piece of
turf or a twig. About 1676, the Statute of Frauds was passed by the
English Parliament, requiring among other things, that conveyances
of lands, including the creation of trusts therein, must be by
written instruments. This provision of the Statute of Frauds has been
re-enacted by most of the states of this country. At the present time,
trusts in real estate must generally be created by written instrument.
Trusts may be created by will to take effect at the grantor's death.
Trusts may be created in personal property. Except when created by
will, trusts in personal property may be created by oral declaration
of the grantor. A grantor may create a trust voluntarily. If actually
carried out, or if the grantor's intention to create the trust is
expressed as final, it requires no consideration to support it. If
the declaration of trust amounts to a mere agreement to create a
trust, and is not carried out, it requires a consideration to enable
the beneficiary to compel its execution. After an express trust is
completed, it cannot be revoked by mutual agreement between the grantor
and trustee without the consent of the _cestui que trust_.
[Illustration: THE ASSEMBLING DEPARTMENT IN THE COMPTOMETER FACTORY,
CHICAGO FELT & TARRANT MFG. CO.]
The most common forms of express trusts are created by deed, by will,
or by contract. Any declaration of the grantor, no matter how informal,
if expressing his intention to create a trust, is sufficient to create
a trust. A trust cannot be created for an immoral or illegal purpose.
=322. Implied Trusts.= When a person by deed or will does not use
language expressly creating a trust, but uses language showing his
intention to create a trust, one will be implied. Such a trust is known
in law as an _implied trust_, as distinguished from an _express trust_.
If _A_ devises all his property to his son, _B_, the will containing
the following language: "I request my son, _B_, to pay his cousin, _C_,
$10.00 per month during his life," this language is held to create a
trust in favor of _C_, wherein _B_ is trustee.
=323. Resulting Trusts.= One party may so conduct himself, or so deal
with another, that a court will declare the transaction to be a trust,
even in the absence of any express declaration, or of an intention
on the part of the parties to create a trust. Such a trust is known
in law as a _resulting trust_. _J_, to avoid paying his creditors,
purchases property in the name of his wife, _K_. _K_ is a trustee for
her husband, _J_, and creditors can by suit in equity subject _J's_
interest in the property.
If _A_ purchases property, and takes the deed in the name of _B_, _B_
is trustee for _A_. _B_ is the legal owner, and _A_ is the beneficial
or equitable owner. If a third person purchases the property from _B_,
without notice of _A's_ rights, and for value, the third person takes
good title to the property free from _A's_ claim.
In this country, the states generally require by statute, that deeds
and mortgages of real estate must be recorded. If an equitable
owner does not have a properly recorded written instrument showing
his interest in the real estate in question, thereby giving future
purchasers notice of his interest, he cannot complain unless the third
person has actual notice of his rights or purchases without giving a
valuable consideration. A resulting trust is not created by agreement
or contract to that effect, but is created by the trustee using money
or funds of the _cestui que trust_ in the purchase of property in his
own name.
=324. Constructive Trusts.= If one person is in a confidential relation
to another, and misappropriates the money of the other, this act is
said to create a _constructive trust_, in which the defrauding party is
trustee, and the defrauded party is beneficiary, or _cestui que trust_.
A constructive trust differs from a resulting trust in that the former
involves fraud on the part of the trustee, exercised on the _cestui
que trust_, while a resulting trust never involves fraud between the
trustee and _cestui que trust_, although created for the purpose of
defrauding third persons.
If _A_, an attorney, is employed by _B_ to collect a note of $500.00,
and fraudulently reports a collection of $300.00, keeping $200.00,
a constructive trust results, in which _A_ is trustee for _B_, for
$200.00. If _A_, for the purpose of defrauding his creditors, deposits
his money in bank in _B's_ name, a resulting trust arises in which _B_
is trustee for _A_, and _A's_ creditors can subject the property.
Anyone defrauding another by duress, by taking advantage of old age or
of mental weakness, or by fraud, becomes the trustee for the wronged
party in the amount the latter has lost.
=325. Rights and Liabilities of Trustee.= A trustee of an express trust
need not accept the trust against his will. If _A_ by deed, will, or
written declaration, names _B_ as trustee of certain property for _C_,
_B_ need not accept unless he so desires. If _B_ refuses to act as
trustee, the trust does not fail by reason thereof. A court may appoint
another trustee or may itself administer the trust. After accepting a
trust, a trustee cannot resign without the consent of the _cestui_.
He may be removed by the court for misconduct, or he may transfer his
duties, if so stipulated in the instrument creating the trust.
In England during the reign of Henry VIII, a statute was passed called
the _Statute of Uses_, declaring that real property given to one person
and his heirs in trust for another and his heirs, should vest the legal
title in the trustee. Thus, if _A_ gives real estate to _B_ and his
heirs in trust for _C_ and his heirs, _C_ takes the legal title. The
Statute of Uses is in force in most of the states of this country. It
does not apply to personal property, and if the trustee is given some
duties, such as to collect rents, or to do anything except to hold the
legal title as trustee, the case is not within the Statute of Uses, and
the trust will be carried out.
A trustee holds the legal title to the trust estate. Suits against
the estate must be brought against him as trustee, and suits for the
protection of the estate must be brought by him as trustee. A trustee
has the right to possession of all personal property covered by the
trust, and to possession of the real property, if necessary to execute
the terms of his trust. A trustee must protect the estate and perform
his duties with care, or be liable to the beneficiary for any damages
resulting. He is not permitted to make any profit out of his office.
Any profit made by him through his connection with the trust estate
belongs to the beneficiary.
=326. Rights and Liabilities of Beneficiary.= A _cestui que trust_
has the right to receive the benefits of the trust estate as outlined
in the instrument creating the trust. If the trustee fails properly
to perform his duties, the _cestui que trust_ may bring legal action
to have him removed. A trustee has legal title to the trust property,
and may convey good title to one who purchases for value, and without
notice of the trust. The _cestui que trust_ can follow and regain trust
funds or property, if the latter are conveyed to persons not _bona
fide_ purchasers.
LANDLORD AND TENANT
=327. In General.= The term, _landlord and tenant_, is applied to the
relation existing between one who obtains the right to the possession
of the real property of another, under a contract by the terms of which
the title or ultimate right to possession, or at least some interest
in the property, remains in the grantor. The relation existing between
landlord and tenant is contractual. Like all contracts, there must be a
consideration, competent parties, and legality of purpose.
The contract by which one party becomes a tenant is called a _lease_.
The party granting a lease is called the _landlord_. The owner to whom
the lease is given is called the _tenant_ or _lessee_. A lease of
property is not a sale. By a lease of real property, the lessor grants
but a portion of what he possesses. By making a sale of real property,
the grantor transfers his entire interest. If a tenant transfers his
entire interest in the lease, it is a sale, and is usually called an
_assignment_. If a tenant sublets a portion of his interest in the
lease, he, himself, becomes a landlord, and the sublessee becomes a
tenant.
=328. Rights of a Tenant.= The form and contents of a lease are
discussed under a separate section. Parties to a lease may agree to
any terms they choose, if the terms are legal. In the absence of
express stipulations in a lease, many things are implied. A tenant is
entitled to the possession and use of the premises leased, from the
time mentioned in the lease for it to take effect. By possession is
meant the right to take actual possession of the premises without being
prevented by one having a right superior to that of the tenant.
A tenant is permitted to rent any premises he chooses. A landlord, on
the other hand, may lease to a tenant any premises he possesses. There
is no implied warranty on the part of the landlord that premises leased
are in good condition, or that they are fit for any particular purpose.
The tenant makes his own bargain, and, as in the case of making a
purchase of goods, or in making any contract, he must take care of
his own interests. The tenant may stipulate in the lease that the
premises are to be in a certain condition, that they are adapted to a
certain purpose. In this event, the tenant is not obliged to accept the
premises if they do not comply with the terms of the lease, or he may
bring an action for damages against the landlord for not complying with
the terms of the lease. In the absence of any express stipulation as to
the condition of the premises, or their suitableness for the purpose
for which they are to be used, the law implies nothing.
A landlord is not permitted to defraud a tenant. He cannot conceal
or misrepresent material facts relating to the lease. If there is
a misrepresentation of a material fact by the landlord, which is
relied upon by the tenant to the latter's injury, the tenant has been
defrauded. He may refuse to accept the property, or he may repudiate
the lease as soon as he discovers the fraud. A tenant impliedly has
the right to quiet enjoyment of the premises leased. The landlord
must not disturb the tenant's right to quiet possession. If the
landlord, himself, or one who legally claims a right to possession of
the premises disturbs the tenant's possession, the latter may sue the
landlord for damages. If a mere trespasser or one who wrongfully claims
the right, disturbs the possession or quiet enjoyment of the tenant,
the landlord is not liable. The acts of strangers are beyond his
control. The tenant may use the premises for the purposes stipulated
in the lease. In the absence of express stipulation, he may use the
premises for the purpose and in the manner in which the property leased
is customarily used.
=329. Taxes, Repairs, and Insurance.= The general rule is, that in the
absence of express stipulation in the lease to the contrary, all taxes
are to be paid by the landlord. Even though the lease provides that the
tenant is to pay all taxes, this does not include special assessments,
such as assessments for city paving and sewers. Water rent is not
included in the general term, _taxes_. The landlord is obliged to pay
all taxes on the property unless the tenant expressly assumes them. In
the absence of any express stipulation, the tenant must pay water-rent.
There is no implied duty on the part of the tenant to insure the
property leased.
A tenant is, in the absence of any express stipulation, required
to keep the property in repair. He is not liable for ordinary wear
and tear of the property, but must make ordinary repairs at his own
expense. If the property is destroyed by fire without the fault of the
tenant, the tenant is not liable for the loss. He is not obliged to
rebuild the property destroyed. The lease is ended by the destruction
of the property by fire, and the tenant is not obliged to pay further
rent. The above is the rule fixed by statute in most states. The common
law rule was that a tenant was not relieved from paying rent by the
destruction of the building by fire.
=330. Liability for Injuries Arising from Condition of Leased
Premises.= In the absence of any stipulation in the lease relative to
the condition of the premises leased, the tenant is presumed to make
the lease on his own judgment. There is no implied duty on the part
of the landlord to deliver the premises in any particular condition.
This rule is subject to the limitation that a landlord is not permitted
to deliver possession of premises containing latent defects of such a
character as would be liable to cause injury to a tenant. If injury
results from such latent defects, the landlord is liable in damages to
the tenant. As a rule, however, the tenant takes the premises as they
are, and if injury results to himself by reason of apparent defects
in the premises, he has no right of action against the landlord. The
tenant has control of the premises. If persons are injured by reason
of accummulations of snow or ice on the walks, the tenant, and not the
landlord, is liable therefor.
=331. Rent.= The compensation given by a tenant to a landlord for the
use of leased premises is called _rent_. A tenant may become liable
for rent without any express agreement to that effect. If one person,
with the consent of another, occupies the premises of the latter as a
tenant, he is liable to pay the reasonable value of such occupancy,
as rent. This obligation is implied from the relation of landlord and
tenant existing between the parties.
Ordinarily, the matter of rent is expressly agreed upon and, until
the tenant is evicted, his lease surrendered, or he is released, he
is obliged to pay the landlord rent. The tenant's liability to pay
rent does not necessarily depend upon actual occupancy of the leased
premises. He may rent the premises for the use of another, or he may,
without excuse, refuse to accept possession of the premises. In either
event, he is liable for rent. If the lease expressly stipulates that
the premises are in a certain condition as to plumbing, etc., the
tenant may refuse to accept the possession if the conditions are not
fulfilled. If, on the other hand, the tenant leases premises, nothing
being said about their condition, the tenant is presumed to rely upon
his own judgment, and the fact that the premises are uninhabitable by
reason of defective plumbing, by reason of unhealthful conditions, or
for any reason, does not release him from his contract. He is liable
to pay the rent agreed upon. The landlord is not permitted to defraud
the tenant. He cannot mislead the tenant by false or fraudulent
representations. Fraud enables a tenant to avoid a lease.
If a tenant refuses to accept possession of premises leased, or
abandons the premises without excuse, he is still liable for the rent
for the balance of the term. If he surrenders the lease, and the
landlord consents to the surrender, the tenant is relieved from further
liability. But a voluntary abandonment by the tenant, not consented
to by the landlord, does not relieve the tenant from liability to pay
rent. If a tenant abandons the premises leased, the landlord may permit
the premises to remain vacant and compel the tenant to pay the balance
of the rent when it is due under the lease. The landlord may, on the
other hand, accept the premises, and cancel the remainder of the lease.
Again, the landlord may take possession of the premises and relet them
for the benefit of the tenant, notifying the tenant of his intention.
He may collect any deficiency in the rent from the original tenant. For
example, if _A_ rents _B's_ house for one year for $300.00 and at the
expiration of six months _A_ abandons the premises, _B_ may relet the
premises to _C_ for _A's_ benefit. If _B_ relets for _A's_ benefit, he
must obtain the best terms possible. If he obtains only $100.00 rent
from _C_ for the balance of the term, he can collect $50.00 from _A_.
=332. Distress.= At common law, a landlord had the right to take
possession of the personal property of a tenant who was in arrears for
rent, and hold the personal property until the rent was paid. This
remedy is known as _distress_. When a landlord makes use of this remedy
he is said to _distrain for rent_. A landlord cannot deprive the tenant
of possession, and then distrain for rent. It is not an action against
the tenant personally, as an action for debt. It is a mere right of a
landlord to take possession of the tenant's personal property after
rent is due, and while the tenant is still in possession of the leased
property as tenant. The landlord may retain possession of his property
as security for the rent. At common law, a landlord could not sell the
property, but could hold it as security for the rent.
At the present time, the right to distrain for rent is not recognized
by many states. Where recognized, it is regulated largely by statute.
The landlord is usually required to give bond, and file an affidavit
with a court to the effect that the rent of a certain amount is justly
due. The property is then seized by an officer of the court, and upon
final termination of the case, may be sold, and the proceeds applied to
the payment of the rent. This action is now treated in the nature of an
attachment. (See _Attachment_, chapter on Courts and Legal Remedies.)
The remedies of a landlord commonly recognized at the present time are
actions for rent, and actions to recover possession of the premises.
These remedies are discussed under a separate section.
=333. Leases.= _Lease_ is the term applied to the agreement by which
one person becomes a tenant, and another a landlord. Leases are usually
in the form of formal written instruments in which the rights and
duties of the parties are quite fully set forth. No particular form of
language is required to make a valid lease. If the agreement shows an
intention on the part of the parties to create the relation of landlord
and tenant, it is sufficient to constitute a lease. Parties may make
oral leases covering short periods of time. Most of the states provide
by statute that leases beyond certain periods must be in writing to be
enforceable. This period varies in the different states. Some require
leases in excess of three years to be in writing; others fix the limit
at one year. Some of the statutes which do not specially require
leases to be in writing, make them void as against purchasers or
incumbrances if not recorded. Such statutes in effect require the lease
to be in writing. A lease does not require a seal. By statute, most
states require leases to be witnessed, usually by two witnesses, and
acknowledged before a notary public. Witnessing is called _attesting_,
or _attestation_. By _acknowledgment_ is meant an admission of the
signature by the parties to a lease before a notary public. The notary
writes his certificate upon the lease, stating that the parties
acknowledged the signature in his presence. The notary signs and seals
the certificate of acknowledgment. The states generally require by
statute that leases beyond a certain time, usually one or more years,
be recorded with the public recorder of the county where the property
leased is located, to be effectual as against subsequent purchasers or
incumbrances.
Certain requisites are recognized in formal lease. The names and
description of the parties, the terms of the lease, the description of
the property, the signing, delivery, and acceptance of the lease, and
the witnessing and acknowledging are regarded as essential features.
_Covenants_ are express or implied terms of a lease. If parties
expressly agree to do certain things enumerated and set forth in
the lease, the covenant is said to be _express_. The law implies
certain obligations on the part of the parties to a lease. There is
an _implied_ covenant on the part of the tenant to pay rent, and to
make all ordinary repairs subject to the reasonable wear and tear of
the premises. The landlord impliedly consents to give the tenant quiet
enjoyment, and to pay taxes and assessments.
=334. Transfer of Leases.= A landlord may transfer his interest in a
lease. A tenant may, unless the lease stipulates otherwise, transfer
his interest in a lease. A transfer of an interest or right in which a
third person, not a party to the transfer, has an interest is usually
called an _assignment_. For example, _A_ owes _B_ $100.00, _B_ may
assign his claim to _C_. By notifying _A_ of the assignment, _A_ is
obliged to pay _C_, instead of _B_. Any defense that _A_ has against
_B_ is available against _C_. As a rule, partial interests cannot be
assigned so as to be binding upon the obligor, without the latter's
consent. If _A_ owes _B_ $100.00 _B_ cannot assign $10.00 of this claim
to ten different parties. This would compel _A_ to pay ten different
persons, while the original obligation bound him to pay but one. _A_
may have a counter claim amounting to $50.00. To obtain the benefit of
this counter claim, he would have to set it up in five different suits,
whereas if the claim were sued by the original owner, or by one owner
he would have to make a defense in but one suit.
An assignment may be made orally, if not in conflict with the
provisions of the Statute of Frauds. It may be made by written
contract. No particular language is required to make a valid
assignment. Any words expressing the intention of one party to make an
assignment, accepted by the one to whom the assignment is to be made,
is sufficient. A landlord may assign a lease. Upon receipt of notice
of the assignment from the landlord or the assignee, the tenant must
pay to the assignee the rent subsequently coming due. If an assignment
is made by a landlord, and no notice is given the tenant, the latter
discharges his liability under the lease by paying the original
landlord. Originally at common law, a landlord could not assign his
rights without the consent of the tenant. The tenant could not be
compelled to recognize a new landlord. Recognition of a new landlord
was called _attornment_. A tenant may assign his interest in a lease if
the lease does not expressly provide otherwise. This does not relieve
the tenant from liability under the lease, even though the landlord
consents to the assignment, and accepts rent from the assignee. The
original tenant is a surety for the rent. After an assignment of a
lease by the tenant, the landlord, if he does not expressly release the
original tenant, may collect the rent from either party.
=335. Leases for Years.= A _lease for years_ is a lease for a definite
and ascertained period of time. If _A_ rents _B's_ farm for five years
commencing June 1, 1910, the lease is for years. If _A_ leases _B's_
house for a year, a month, or a week, to commence on a certain date,
the time of the lease is definite and ascertained and constitutes a
lease for years. If _A_ rents _B's_ house for a year commencing June
23, 1910, at $25.00 per month, the rent to be monthly in advance,
the lease is one for years. The fact that the rent is to be paid in
installments does not render the lease one from month to month.
A lease is regarded as personal property and, while it is an interest
in real property, it is usually called a chattel real, and is treated
as personal property. When the owner of a lease dies, the lease is
personal property in the hands of the executor or administrator of the
owner, and does not descend to the heirs of the owner as real property.
In some states, long time leases, such as leases for ninety-nine years,
are by statute made real property.
The practical distinction between leases for years and leases from
month to month, is that in the former, the lease ends when the time
covered by it expires. In a lease from month to month, a new lease is
created by implication, if a tenant is permitted to hold over. This
question is discussed more at length under the section, _Tenancies from
Year to Year_.
=336. Subletting.= Some states by statute refuse to permit a tenant to
sublet any portion of his lease, without the consent of the landlord.
A landlord may stipulate in his lease that a tenant shall not sublet
any portion of the premises. In the absence of statutory provisions,
or stipulations in the lease, a tenant may sublet the leased premises.
A transfer by a tenant of an interest in the leased premises may be an
assignment, or it may be a sublease. An assignment is a transfer by a
tenant of his entire interest in the premises. If _A_ rents _B's_ farm
for five years, and sells his lease for five years to _C_, the transfer
is an assignment. A transfer of only a portion of a tenant's interest
is a sublease. If _A_ rents _B's_ farm for five years, and leases the
farm for three years to _C_, the transfer is an assignment. If _A_
leases the farm to _C_ for five years, the transaction is a sublease.
An assignment is a transfer of the tenant's entire interest in the
leased premises. A sublease is a transfer of a part of a tenant's
interest in the leased premises.
A tenant may mortgage his interest in the leased premises. A creditor
of a tenant may levy upon the lease in satisfaction of a judgment, the
same as upon any article of personal property.
The purpose of the statute and stipulations in a lease, forbidding a
tenant to sublet the leased premises, is for the protection of the
original lessor. A subtenant is not permitted to avoid a lease on
the ground of such a statutory provision, or by reason of such a
stipulation in a lease. For example, if _A_ rents _B's_ farm for five
years, and the lease contains a stipulation that _A_ cannot sublet,
if _A_ sublets the farm for three years to _C_, _C_ cannot avoid the
obligation to _A_ by reason of the stipulation in the lease. The
stipulation is a privilege in favor of _B_. It may be exercised by
_B_ if he chooses to avail himself of the privilege. He may waive the
privilege, or refuse or neglect to exercise his right. Neither _C_ nor
anyone else can avail himself of this privilege.
It is sometimes quite difficult to tell just what constitutes a
subletting in violation of a statutory provision or a provision
in the lease. Mere privileges granted to others do not constitute
sublettings. Permission granted a neighbor to use a barn for a short
period, or taking roomers by the week, has been held not to constitute
a subletting.
If a tenant in violation of his lease sublets a part of the premises,
the original lessor may eject the sublessee, and sue the tenant for
damage for breach of contract.
If a tenant exercise his right of subletting a part of the premises, he
is not thereby relieved from his responsibility to pay rent under the
lease. Even though the tenant agrees to accept rent from the sublessee,
and apply the same on the obligation of the original lessee, this does
not relieve the original tenant from his obligation to pay rent. For
example, if _A_ rents _B's_ house and lot for three years for $25.00
per month, payable monthly in advance, and _B_ agrees to accept the
rent from _C_, and does accept payments from _C_, this does not relieve
_A_ from liability to pay _B_ the rent. _A_ is a surety, and his
obligation to pay the rent to _B_ is the same as the obligation of _C_.
If _B_ expressly agrees to relieve _A_ and to accept _C_ in place of
_A_, he can no longer hold _A_.
=337. Tenancies at Will and at Sufferance.= A lease may be entered
into, the terms of which may be terminated at the will of either party.
It is for an indefinite period. Such a lease creates a _tenancy at
will_. (See _Estates at Will_, chapter on Real Property.) Tenancies
at will are uncommon. The usual tenancies are tenancies for years and
tenancies from year to year. If _A_ permits _B_ to take possession of,
and to occupy his house under an agreement that either he or _B_ may
terminate the lease at the desire of either party, the tenancy is one
at will. _B_ may agree to pay rent at the rate of $10.00 per week,
$40.00 per month or $500.00 a year, or at any rate, without affecting
the estate at will. If the estate is for an indefinite period, but is
terminable at the wish of either party, no matter what the arrangement
for paying the rent, it is an estate at will, as distinguished from an
estate for years, and an estate from year to year.
It is sometimes held that a person who holds over with the consent of
the landlord after the termination of a lease for a definite period,
called _an estate for years_, is a tenant at will. For example, if
_A_ rents _B's_ house for one year, and at the expiration of the
year, _A_ with _B's_ consent retains possession, _A_ is a tenant at
will. The tenancy may be terminated at the desire of either party,
and upon notice by either party. In most jurisdictions, however, this
constitutes _A_ a tenant from year to year. (See following section.)
A _tenancy at sufferance_ is created by a tenant unlawfully retaining
possession of the premises after the termination of his lease,
without the consent of the landlord. If _A_ rents _B's_ house for one
year, and at the expiration of the year _A_, without _B's_ consent
retains possession of the house, he is a tenant at sufferance. He is
a trespasser, and may be ejected by _B_. Tenancies at will and at
sufferance are estates in land. They are also discussed under the
chapter on Real Property.
=338. Tenancies from Year to Year.= A tenancy may be created for
a definite period of time to continue for similar periods unless
terminated by notice of either party. Such a tenancy is called a
_tenancy for years_. The tenancy may involve any definite period with
the understanding that it is to continue for similar periods if not
terminated by notice of the landlord or tenant. While the estate is
called an estate from year to year, or a tenancy from year to year, it
may be for a week, a month, a year, or a series of years, or for any
definite period. If _A_ rents _B's_ house for one year, the rent to be
paid at the rate of $30.00 per month, payable monthly in advance, the
lease to continue for yearly periods unless either _A_ or _B_ notifies
the other to the contrary, the tenancy is from year to year. If, at the
expiration of the year, _A_ retains possession of the premises, having
received no notice from _B_ to leave, _A_ has a lease for another year
under the same terms, and so on, for succeeding years. The period
may be a week, or a month, as well as a year. Sometimes leases are
spoken of as leases from month to month, or from week to week, in case
the lease is to continue for a month, or a week. The same principle
is involved as in leases from year to year. If the tenant holds over
after the expiration of the week or month, he has a lease for a similar
period at the same terms.
A tenancy for years may be created by express or by implied contract.
It is sometimes difficult to tell whether a tenancy is for years, from
year to year, or at will. If a lease specifies that it is to cover a
definite period only, it is a lease for years, and terminates at the
expiration of that period. If the lease stipulates that it is to cover
a definite period, and continue for similar periods unless either party
terminates it by notice to the other, it is a lease from year to year.
If the lease stipulates that it can be terminated at the will of either
party, it is a lease at will. When the lease is oral, or created by
implication, the intention of the parties must determine the nature of
the lease.
Some difficulty arises in determining whether a lease is one at will,
or from year to year when a tenant for years is permitted to hold over
with the consent of his landlord. For example, if _A_ rents _B's_
farm for one year, and is permitted by _B_ to remain in possession
after the expiration of the year, in theory, _A_ is a mere tenant at
will, and can be ejected at the will of _B_. This is the law in a
few jurisdictions. Most jurisdictions, however, hold that _A_, when
permitted to hold over by _B's_ consent, becomes a tenant from year to
year.
=339. Termination of Leases.= A lease for years is terminated by
expiration of the period covered by the lease. The lease may contain
covenants, breach of which may by stipulation constitute a ground of
forfeiture. For example, a lease may contain a stipulation that the
landlord may declare a forfeiture in case the tenant fails to pay the
rent when it is due. If the tenant commits a breach of this or any
other covenant made by special stipulation, a ground of forfeiture,
the landlord may by notice declare the lease forfeited. This renders
the balance of the lease void. Leases for years, definite periods of
time, require no notice to terminate. Leases at will, and from year to
year require notice on the part of the party seeking their termination
to be given to the other party. For example, suppose _A_ rents _B's_
house for one year, to continue for similar periods if agreeable to
both parties. To terminate the lease at the end of the year, _B_ must
notify _A_ to quit the premises at the expiration of the year. If _A_,
on the other hand, desires to terminate the lease at the expiration of
a year, he must notify _B_ previous to the expiration of the year, of
his intention to terminate the lease at the expiration of the year. If
_A_ holds over without notice to _B_, or without _B's_ consent, _A_ has
a lease for another year at the same terms as before.
To terminate a lease from year to year or at will, the party seeking
the termination of the lease must notify the other party of his
intention to terminate the lease. The states generally provide by
statute the time and manner of giving such notice. In general, the
notice must be in writing and must be served on the interested parties
or their agents a reasonable time before the expiration of the period
of the lease.
A lease may be terminated by a subsequent agreement between the
parties. This is commonly known as a _surrender_. A surrender is a
release of possession of the premises by the tenant, and an acceptance
by the landlord. A mere abandonment of possession by a tenant without
the express or implied acceptance or assent of the landlord is not a
surrender. Such an abandonment might constitute a breach of contract
on the part of the tenant, but it requires the assent of the landlord
to terminate the lease. If _A_ rents a farm for three years at $500.00
a year, and at the expiration of two years agrees to pay _B_ $100.00
to cancel the lease, and _B_ accepts, the transaction constitutes
a surrender, and terminates the lease. If _A_ merely abandons the
premises without the consent of _B_, the lease still exists. _B_ can
collect the rent for the remaining period covered by the lease. If _A_
abandons the premises, and notifies _B_ that he will not carry out
the lease, _B_ may refuse to accept the breach, permit the premises
to remain vacant, and collect the rent from _B_. _B_ may accept _A's_
breach of the contract, and terminate the lease, or he may take
possession of the premises, and relet them for _A's_ benefit, notifying
_A_ that he takes possession for _A's_ benefit, and not for his own. In
this event, _B_ must use reasonable diligence in obtaining the highest
rent possible, and if he is obliged to rent for a less amount than _A_
was to pay, _B_ can collect the difference from _A_.
=340. Liability of Parties to a Lease for Breach.= If the landlord
fails to fulfill the conditions of the lease, he is liable in damages
to the tenant. The damages are the difference between the rent paid
under the lease, and the market value of the premises furnished. For
example, if _A_ rents his house and lot to _B_ for one year at $25.00
per month, and agrees to redecorate the house, but fails to do so, _A_
may recover from _B_ the difference between $300.00, the rent paid
under the lease, and the market rental of the house undecorated. If
a tenant abandons the lease, the landlord may recover from the the
deficiency between the rental named in the lease, and the rental he is
able to obtain for the balance of the time covered by the lease.
For example, if _A_ rents _B's_ farm for three years at $500.00 a year,
and at the expiration of two years, _A_ abandons the lease, if _B_ is
able to obtain but $300.00 for the remaining year covered by the lease,
he can recover $200.00 and expenses from _A_.
A suit for damages is not the only remedy the landlord has against a
tenant for the latter's abandonment of the premises. The landlord may
refuse to accept the breach on the part of the tenant, let the premises
remain vacant, and collect the rent under the lease.
The landlord may enter the premises for the purpose of preventing
loss or destruction of the premises without accepting the breach. The
landlord may accept and cancel the remaining portion of the lease, or
he may again lease the premises for the benefit of the tenant, and
collect the deficiency in the rent from the tenant. This question is
also discussed in the previous section.
=341. Actions for Recovery of Rent and Possession of Leased Premises.=
A landlord may sue and recover judgment by bringing an ordinary action
for debt when rent or any installment is due. If _A_ rents _B's_ house
for one year at the rate of $25.00 per month, payable at the end of
each month, and fails to pay any installment, _B_ may sue him. The
judgment may be satisfied out of any property _A_ may have. If married,
_A_, by statute in most jurisdictions, is entitled to a certain amount
of exempt property.
If the landlord has failed to perform all of the terms and conditions
of the lease, _A_ may bring a counteraction against _B_ when sued
by _B_ for rent. For example, if _B_ has failed to repair the house
according to the terms of the lease, _A_ may counterclaim for damages
when sued by _B_ for the rent.
When the period of the lease expires, the landlord is entitled to
possession of the premises. At common law, he was entitled to use the
force necessary to recover possession. He is not permitted to commit
a breach of the public peace in obtaining possession. Most of the
states provide statutory methods for obtaining possession. A complaint
is filed with a court and an officer of the court ejects the tenant
by order of court. Non-payment of rent does not entitle the landlord
to terminate the lease, unless the lease expressly so provides. When
the lease is forfeited according to its provisions, the landlord is
entitled to take possession.
TRADE=MARKS AND NAMES
=342. Trade=Marks in General.= Persons are permitted to place marks
on goods manufactured or sold by them, which indicate their origin or
ownership. By this means, they are able to obtain the benefit of any
superiority which their goods have over goods of other manufacturers
or sellers. These marks placed on goods by owners or manufacturers are
called _trade-marks_. A court has defined a trade-mark to be "A word,
symbol, figure, form or device, or a combination thereof adopted or
devised and used by a manufacturer or seller of goods to designate the
origin or ownership of the goods, and used by him to distinguish the
goods from those sold or manufactured by others."
A manufacturer or seller of an article is not permitted to appropriate
as a trade-mark a name commonly used to describe the article. Flour
is manufactured and sold by many persons. Anyone has the right to
manufacture and sell flour by that name. No one is permitted to
appropriate to himself as a trade-mark the name _Flour_. A person may,
however, apply an arbitrary term, not describing the thing produced,
for the purpose of designating his brand of flour as distinguished from
other brands of flour. While a manufacturer of flour is not permitted
to appropriate as a trade-mark to be used on flour the name _Flour_, he
may be permitted to use the term _Ideal_. The person first adopting the
name _Ideal_ as a trade-mark in the sale of flour, acquires a property
right in the name. The law will protect him in the use of this name in
connection with the sale and manufacture of flour.
Any arbitrary name, sign, mark, symbol, letter or number used for
the purpose of designating the origin or ownership of goods may
be appropriated as a trade-mark by the person first adopting and
continuing its use. A person is not permitted to adopt as a trade-mark
anything which indicates the grade or ingredients, or which is
descriptive of the article sold or manufactured. The reason for this
rule is that otherwise a person adopting the name would have a monopoly
on the production of such articles. _Crack-Proof Rubber Goods_, as
applied to rubber goods; _A1 Honey_, as applied to honey, are terms
descriptive of quality of goods and cannot be appropriated.
A proper name of a person is not the subject of a valid trade-mark.
Persons of the same name are permitted ordinarily to use their name in
the manufacture of goods of the same nature. A party is not permitted,
however, to manufacture or sell his goods as the goods of another. He
may not be permitted to use his own name in the sale of certain goods
if another has long made and sold goods under the same name, and if
purchasers are defrauded thereby, or if confusion results. This is
not by reason of a person having a trade-mark in his own name, but by
reason of unfair trade. This is discussed under the section on _Unfair
Trade_.
=343. Trade=Marks= (CONTINUED). A name of a place or locality cannot
be appropriated as a trade-mark. Any person is permitted to use the
name of a place or locality to designate the origin of the goods and
it is the common property of all as much as any descriptive name. A
geographical name cannot be appropriated as a trade-mark. A common
example of this principle is the use of the term, _Lackawanna_. This is
the name of a district in Pennsylvania. A coal company endeavored to
appropriate the name, but was not permitted to use it as a trade-mark.
Others, mining coal in the Lackawanna district have an equal right to
designate their coal by the same name. Any fanciful or arbitrary name
not describing the article, may, however, be adopted as a trade-mark.
A person first using such an arbitrary mark in the manufacture or
sale of a particular class of goods acquires a trade-mark. He may use
the mark without any intention of acquiring a trade-mark therein. If
another person attempts to use the mark, no matter if without intent to
defraud, he may be enjoined from its use. The owner of a trade-mark has
no greater right than any other person to use the trade-mark on classes
of goods different from the class on which it has been acquired. A
trade-mark used on flour may also be used on stoves by another person.
This principle is subject to the limitations that one person is not
permitted to deceive purchasers in leading them to believe that they
are purchasing the goods of another. This question is discussed under
the section on _Unfair Trade_.
A trade-mark is acquired by the person first using it in connection
with the sale or manufacture of goods. It is not necessary that it be
adopted with the intention of being used as a trade-mark. A trade-mark
may be lost by discontinuance. A trade-mark will not be allowed on an
article which it is against public policy to manufacture. An example of
this principle is adulterated food or medicine. A trade-mark which does
not indicate that the goods manufactured or sold are the result of the
personal skill of a particular person, may be sold with the business in
connection with which the trade-mark is used.
=344. Trade Names.= A person is permitted to use a name other than
his own for the purpose of trade. For example, John Smith may use
the name _The John Smith Co._, _The Eureka Co._, _The L. X. Co._,
or any arbitrary or fanciful name he may choose, so long as it
does not conflict with the rights of others. Such names are called
_trade names_. Their adoption and use are governed by the same
legal principles as trade-marks. Trade names, however, are applied
to a business, while trade-marks are brands applied to articles
of manufacture or sale. As in the use of trade-marks, a person is
not protected in the use of trade names which describe the article
manufactured or sold. The use of the name, _Cleveland Fertilizer Co._
by John Smith, does not prevent others from using the same name.
The law does not permit one party to monopolize the use of the term
_fertilizer_; neither does it permit him to monopolize the geographical
term, _Cleveland_. The party first adopting a trade name other than
a descriptive geographical, individual, or proper name, acquires the
right to use it as a trade name.
While a person cannot acquire such a right in a geographical or
descriptive name, he may, by long use of it, acquire the right to
prevent others from using it in such a manner as to deceive purchasers.
A person is not permitted to sell his goods as the goods of another.
This right to prevent others from using a name which deceives the
public is not by reason of any trade name acquired, but by reason of a
person unfairly making others believe they were purchasing the goods of
one person, when, in reality, they are purchasing the goods of others.
=345. Unfair Trade.= A trade-mark, or a trade name cannot be
descriptive of the articles sold or manufactured. Neither can a proper
name or a geographical name be appropriated to a trade-mark or name.
To enable a person to acquire a trade-mark or trade name, a mark or
name must be adopted which in no way describes the article manufactured
or sold. It must be one that is not taken from the place where the
goods are manufactured or sold, or from the name of the inventor or
manufacturer. It must be an arbitrary or fanciful name or mark. A
manufacturer of flour may use as a trade-mark the name _Beauty Flour_,
but not _Minnesota Flour_, or _Pure Flour_. A party may use as a
trade-mark for men's collars the picture of a lion, but not the word
_linen_. When a trade-mark or a trade name has once been used as such,
the owner, unless he loses or transfers the right, acquires the sole
right to its use, and may compel others to cease using it, regardless
of actual damages or confusion. At the present time, the courts
recognize a principle known as _unfair trade_. Even though a person
has adopted a geographical name, or a name descriptive of the articles
manufactured or sold as a trade name, he is permitted to enjoin others
from the use of this name, if the use of the same enables the latter
to sell his goods as the goods of the former. A person cannot use the
name _Cleveland Fertilizer Co._, so as to acquire a trade name therein.
But if the name _Cleveland Fertilizer Co._, is used by a person so long
and so extensively as to acquire for its owner a broad reputation as a
manufacturer of an excellent quality of fertilizer, another who adopts
the name may be enjoined from its use, if purchasers are deceived
thereby. This is on the ground of unfair trade.
=346. Unfair Trade= (CONTINUED). The same principle applies in the
use of individual names. A person may not acquire a trade-mark in
his own or in any individual or proper name, since others have the
right to the use of their own name. But a person may acquire such
a reputation as a manufacturer of a particular article, that if
others of the same name are permitted to use their name in the same
connection without distinguishing features, the public will be deceived
in making purchases. For the purpose of protecting the public from
being deceived, the courts sometimes enjoin persons from the use of
their own name in connection with the manufacture and sale of certain
articles. For example, Thomas Edison has acquired fame as an inventor
and manufacturer of _Edison Batteries_. A person by the name of Edison
would not be permitted to manufacture and sell electric batteries under
the name of _Edison Electric Batteries_, for the reason that the public
would be deceived thereby. This would be what is known as unfair trade.
The same principle applies to geographical names. A geographical,
individual, proper, or descriptive name cannot be used as a trade name,
or a trade-mark, but they can be so used as to prevent others from
using them, by reason of violating the law of unfair trade.
=347. Registration of Trade=Marks.= In 1906 the United States Congress
passed the present statute relating to the registration of trade-marks.
The act provides that the owner of a trade-mark used in commerce with
foreign nations, the several states, or the Indian tribes may register
said trade-marks by filing the same with the Commissioner of Patents. A
trade-mark is acquired in the same manner as at common law. The United
States act does not change the method of acquiring trade-marks, nor
does it designate what constitutes trade-marks. It simply permits a
person to register a trade-mark already acquired. In case of dispute,
the owner has the advantage of a public record of his claim, and until
he has lost his right in the trade-mark to some one who proves to have
a better right, the registration is _prima facie_ evidence of ownership.
Before registering a trade-mark, the owner is required to file with
the Commissioner of Patents at Washington, an application showing the
nature of the trade-mark, on what goods used, and when acquired. A
fee of $10.00 is required. The owner must file a verified statement
that he is the owner of the trade-mark sought to be filed. Trade-marks
which consist of the name of an individual, firm, or corporation,
or words descriptive of the articles manufactured or sold, a
geographical term, or a photograph of any living person, except with
such person's consent, shall not be registered as trade-marks. When
such application is filed, if the Commissioner of Patents finds that
it is proper to register the same as a trade-mark, he publishes the
mark in the official gazette. Anyone may oppose the registration by
filing objections within twenty days after said publication. If no
objection is filed, the trade-mark is registered, and a certificate of
registration is furnished the applicant.
If objection to the registration of a trade-mark is made, the
applicant is notified by the Commissioner of Patents. If the trade-mark
interferes with another, or is descriptive of the article to which it
is to be applied, the commissioner will refuse to register it. A person
whose application for registration of a trade-mark has been refused
by the Commissioner of Patents may appeal from the decision of the
Commissioner of Patents by filing applications of appeal with the Court
of Appeals of the District of Columbia.
Registered trade-marks may be assigned in connection with the good
will of the business in which the trade-mark is used. Notice of such
assignment must be filed with the Commissioner of Patents within three
months from the time the assignment is made, to render it valid as
against other innocent purchasers. Certificates of registration shall
be effective for twenty years, and may be renewed for like periods upon
payment of the registration fee.