chaser, the inference is that the testator meant his property to go according to the state to which it would be reduced by the exercise of that option, and the specific devisee will not take.1 Until the option to purchase is exercised, the intermediate rents will go to the persons who were entitled to the property up to that time as real estate.2 322. The last topic which requires notice under the head of Conversion is that of Reconversion, which has been defined to be "that notional or imaginary process by which a prior coustructive conversion is annulled and taken away, and the converted property restored in contemplation of equity to its original actual quality." In other words, a reconversion is where the direction to convert is countermanded by the parties entitled to the property, or by act of law. And, first, the reconversion may take place by act of the party, or by election as it is termed. The simplest case is where there is a trust to sell and pay the entire proceeds of the sale to A. Here A. has a right to say that he prefers to take the property in its original instead of its converted state; in other words, he elects to take the land. 4 323. This election may take place either by express declara tion, or by some act indicating a preference to enjoy the land in its actual state. The act, however, must be clear and unequivocal, and of such a character as to leave no reasonable doubt of the intent. No inference, for example, can be drawn from mere lapse of time. Nor can a reconversion take place as a general rule, unless all the parties in interest unite to elect; for where several persons have an interest in the proceeds of a sale, it does not lie in the power of any one of them to disappoint the others by preventing the sale from taking place." Where, however, there was a direction to lay out a certain sum of money in land, to be equally divided between A., B., and C., and A. died leaving an infant heir, and B. and C. together with the infant heir filed 1 Weeding v. Weeding, 1 Johns. & H. 424. 2 Townley v. Bedwell, 14 Ves. 591; Ex parte Hardy, 30 Beav. 206. Snell's Principles of Equity, 160. 4 Davies v. Ashford, 15 Sim. 42. 5 Beatty v. Byers, 6 Harris (Pa.), 105. 6 Beatty v. Byers (supra). 7 Holloway v. Radcliffe, 23 Beav. 163; Willing v. Peters, 7 Barr, 290; Beatty v. Byers, 6 Harris, 105. a bill for the money, it was held (although an infant cannot elect) that B. and C. were entitled to take their shares (twothirds) in money.1 324. A remainder-man cannot elect so as to affect the interests of owners of prior estates. A lunatic cannot elect;3 nor can an infant ordinarily, but may do so when it is found to be for his benefit.5 Married women were, in England, formerly only able to effect a reconversion either by means of the pious fraud of a sham purchase of real estate, and a subsequent levying of a fine, or by coming into court, and there giving their consent to take the money as personal estate. The inconvenience attending these methods of effecting a reconversion finally led to the passage of a statute by which a married woman was permitted, by deed executed in compliance with its provisions, to make her election to take or dispose of money to be laid out in land." 325. Reconversion sometimes takes place by operation of law. This occurs when a fund directed or covenanted to be laid out in real estate comes into the hands of the person for whose benefit the purchase is to be made, and in whom the entire right is vested, and he dies without making any declaration of his intention. The fund is then said to be " at home,” and “being in the hands of one without any other use, but for himself it will be money, and the heir cannot claim."8 Chichester v. Bickerstaff' is a case which illustrates the doctrine of reconversion by operation of law. In that case Sir John Chichester, on his marriage with the daughter of Sir Charles Bickerstaff, covenanted to advance £1500 within three years to be laid out in land of which the ultimate limitation was to his right heirs. Within a year after the marriage the wife died childless, and Sir John died three days after his wife. By his will he made Bicker Seeley v. Jago, 1 P. Wms. 389. 7 3 & 4 Will. IV., c. 74, s. 77; Forbes v. Adams, 9 Sim. 462; Snell's Eq. 163, 164. 2 2 Spence Eq. 271; Crabtree v. Bramble, 3 Atk. 686; Cookson v. Cookson, 12 Cl. & Fin. 146; Snell's Prin. of Eq. 162. 3 Ashby v. Palmer, 1 Mer. 296. Seeley v. Jago, 1 P. Wms. 389; Ro- 530; Rich v. Whitfield, L. R. 2 Eq. 583; binson v. Robinson, 19 Beav. 494. 5 Robinson v. Robinson, ut sup. 6 Oldham v. Hughes, 2 Atk. 452. 8 Per Lord Thurlow in Pulteney v. Darlington, 1 Bro. Ch. C. 223; 7 Bro. P. C. note to Fletcher v. Ashburner, 1 Lead. Cas. Eq. 838. 92 Vern. 295. staff his executor, and his sister, Frances Chichester, his residuary legatee. His heir-at-law then filed a bill against Bickerstaff, claiming that as the £1500 was to have been laid out in land, it ought to go to him under the limitations in the settlement. But Lord Somers said that the money, though once bound by the articles, yet when the wife died without issue became free again; in other words, that it was then to be considered as at home in Sir John's hands. The bill was therefore dismissed. CHAPTER VI. ADJUSTMENT. 326. Equities to be considered under | 338. Qualifications. Adjustment: Set-off, Contribution, 339. Surety can compel a creditor to make a prompt use of his remedies. 340. Marshalling. 341. Usually enforced through the medium of subrogation. 327. Set-off. 328. Contribution; application most frequent in case of sureties. 342. 329. No contribution originally enforce How the equity of marshalling is sometimes qualified. able at law; advantages of equitable 343. Its application in cases of bankruptcy. 330. General rules as to right of contri- 344. Cases in which this equity is usually bution. applied in the United States. 331. Exoneration; not originally enforce- 345. Marshalling as applied to estates of able at law. decedents. 332. Cases in which these equities are 346. Order in which assets of a decedent 326. THE equities which may be classed under the general head of Adjustment are those which are applied mainly to the determination of the rights and liabilities which grow out of the relation of debtor and creditor, although they are also appli cable to those which arise out of various other relations. Taking. the position of debtor and creditor as a type, it is plain that the rights and liabilities arising therefrom may exist either between the debtor and creditor simply; or between debtors inter sese; or between debtors of a certain class on the one hand, and their co-debtors and the creditor on the other; or, finally, between creditors of a certain class on the one hand, and their co-creditors and the debtor, and volunteers claiming under them, on the other; and that these rights and liabilities may thus be of a greater or less complicated character, and be affected by a few or many considerations. From these different positions which parties may thus occupy towards each other, spring the different equities of Set-off, Contribution, Exoneration, Subrogation, and Marshalling. They may all be conveniently classed under the general head of Adjustment of Liabilities; for they all depend upon the application of certain general maxims which tend to throw burdens upon those who should justly bear them, but only in their due proportion and in their proper order, and to secure benefits to those who are of right entitled thereto, consistently with, and with just regard to the rights of others. The maxims referred to are such as express the general principles of law and equity that he who reaps the benefit should also incur the burden, that equality is equity, and the like; and they all look to the orderly and equitable enforcement of liabilities against the parties by whom, and in favor of those to whom they are justly due. 327. The right of set-off, although it did not originally exist at common law, was, nevertheless, so effectually introduced by statute, that it now, perhaps, furnishes no ground for interference by a chancellor as an equitable right. It is, indeed, largely applied in equity in bills for an account; but that is, as will be seen, an equitable remedy which depends for its existence and 1 For an account of the principles upon which equity originally allowed the right of set-off, and the manner in which the necessity for the exercise of its jurisdiction came to be superseded by statute, see Ex parte Stephens, 11 Ves. 27; Green v. Farmer, 4 Burr. 2220, 2221; Freeman v. Lomas, 9 Hare, 116. See, also, Duncan v. Lyon, 3 Johns. Ch. R. 358; Dale v. Cooke, 4 Id. 11; Howe v. Sheppard, 2 Sumn. 133; Greene v. Darling, 5 Mason, 207; Gordon v. Lewis, 2 Sumn. 628; Blake v. Langdon, 19 Verm. 485; Story's Eq., ¿ 1430 et seq. exercise, not upon the refusal of courts of law to recognize a right, but from their inability, conveniently and properly, to administer it. Some claims, also, could be set off in equity which might not have been allowed at law, as, for example, a debt which had been assigned, and which (being a chose in action, and, therefore, not assignable at law) could be treated as belonging to the assignee in equity alone, and, therefore, in equity alone could be made available as a set-off. But it is obvious, that cases such as these depend upon certain equitable titles or equitable rights, already noticed; and that the enforcement of the right of set-off in bills for an account is referable to the equitable remedy, and will be considered under that head. See Haynes's Outlines of Equity, 158. Perhaps no clearer or more succinct statement of the origin of the doctrine of set-off can be found, than that contained in this little treatise, and it may be here quoted with advantage. "By the civil law," says Haynes, "if A. was indebted to B., and before he discharged his liability B. became indebted to him, what was called 'compensation' took place, that is to say, A.'s liability to B. became ipso facto extinguished partially or wholly according to the amount of B.'s liability to him. This doctrine of compensation was founded on a principle of natural equity or good sense, which forbids that a man should be compelled to pay one moment what he will be entitled to recover back the next; or, to use the words of the civil law, 'Ideo compensatio necessaria est quia interest nostrâ potius non solvere quam solutum repetere.' Now the common law utterly refused to recognize this principle of justice. If B. owed A. money and A. owed B. money, A. was entitled to recover from B., although the amount of his debt was greater, and although he might himself be in insolvent circumstances, and thus by being first in the case he might obtain judgment and payment of the amount recovered, leaving B. to sue subsequently for his own debt, and recover a judgment of his own bearing no fruits. Nay, even if A. had actually become bankrupt, so that his assignees had become entitled to what was owing from B., the law allowed A.'s assignees to recover from B. the whole amount, leaving B. to go in under the bankruptcy and prove against A.'s estate, and recover a dividend only. The glaring injustice of these results in cases of bankruptcy led to the first legislative mitigation, viz., that effected in Anne's reign of allowing a set-off in cases of mutual credits and mutual debts between the bankrupt and any person. About a quarter of a century later, by a short and unobtrusive section in an act which is entitled' An Act for the relief of debtors, with respect to the imprisonment of their persons' (2 Geo. II., c. 22, ¿ 13), a most important alteration was effected in the law by enacting that in cases of mutual debts between the plaintiff and defendant, or if either party sue or be sued as executor or administrator, where there are mutual debts between the testator or intestate, and either party, one debt may be set off against the other. And it is under this enactment, made perpetual and extended by a subsequent act (8 Geo. II., c. 24, ¿? 4, 5), that the right of set-off still exists at law." Haynes's Outlines of Equity, 153, 154. See, also, notes to Rose v. Hart, 2 Sm. Lead. Cas 293. |