POPULAR LEGAL FALLACIES.[1]

POPULAR LEGAL FALLACIES.[1]

BY AN EXPERIENCED PRACTITIONER.

DEEDS OF GIFT AND WILLS.—I.

One of the most universally believed fallacies is that it is better to make a deed of gift than a will for the disposal of property. Nothing can be more dangerous than this delusion, as we have often had occasion to observe in the course of our experience. A deed of gift—pure and simple—is a document under seal evidencing the fact that certain property specified therein has been absolutely given by the donor to the donee, without any reservation for the benefit of the former, or any power for him to revoke the gift or resume possession of the property in any circumstances. If the deed contains a condition that the donor shall have the enjoyment of the property during his life, and that he shall have a right to recall the gift thereby made, and dispose of the property in some other way, then the document is to all intents and purposes a will; and if it is only executed and attested as an ordinary deed, it is altogether void, in consequence of non-compliance with the directions contained in the Wills Act, 1837, which very properly requires more precautions against fraud and forgery in the case of a will than in the case of a deed. We say ‘very properly,’ because the will does not take effect during the lifetime of the testator; and therefore the greatest safeguard is removed by his death before the document can be acted upon or its authenticity be likely to be questioned. This is a common oversight. The deed is prepared and duly stamped; and in consequence of the insertion of the powers alluded to above, it proves to be utterly useless, when, after the decease of the donor, his property is claimed by his heir-at-law and next of kin because of his having died intestate. It may occasion some surprise that any solicitor will prepare a deed which he knows cannot stand the test of litigation; but this is not altogether the fault of the profession. In many cases, the danger is pointed out; but if the donor is determined to dispose of his own property in his own way, who can gainsay him? If he cannot get what he requires in one office, he will go to another; and we have several times lost clients in consequence of our refusal to prepare such a deed; all our arguments being met by the reply that there would be no duties to pay to the government if the deed were executed; a complete fallacy in many cases, as we have afterwards had occasion to know, when we have seen what followed the decease of the misguided donor.

On the other hand, if there is a genuine gift, and possession is given in accordance with the deed, what then? One case which came under our notice may illustrate the danger against which we have frequently protested in vain. A retired merchant invested the whole of his savings in a freehold estate which would produce sufficient annual income to supply all his wants and leave a good margin for future accumulations. Being a widower, in somewhat infirm health, he took up his residence in the house of his younger son, the elder being an irreclaimable reprobate. Unfortunately, the wife of this younger son was an artful and avaricious woman, whose sole reason for consenting to the arrangement as to residence was the hope of future gain. The old gentleman had an insurmountable objection to making a will—not an uncommon weakness—as it reminded him too forcibly of the time when he would have to leave his fine estate and go over to the great majority. At length, after urgent and repeated representations as to the risk of his estate being sold by his dissipated heir-at-law in case of his dying intestate, he was persuaded to execute a deed of gift to his younger son, to whom at the same time he handed the title-deeds relating to the estate. Soon afterwards, a quarrel arose between the donor and his daughter-in-law; and the latter persuaded her husband—whose moral principles were as weak as those of his brother, though in a different way—to sell the estate, and then turn his father out of his house. After his ignominious dismissal, the poor old gentleman went to the house of a nephew, who soon tired of supporting him; and eventually he was obliged to go into the workhouse, altogether neglected to the time of his death by all his relatives, except his graceless elder son; and alas! he could not assist his aged parent, as he was himself almost destitute. This may appear to be an extreme case; but it is not a solitary one, although it is one of the worst of those which have come under our own observation.

This brief narrative may serve as an introduction to the explanation of one remarkable peculiarity in the practical working of a deed of gift of real estate. Personal property may of course be sold, and the sale completed by delivery of the goods or other chattels to the purchaser; but actual possession of land is no clue to the ownership thereof, the title being evidenced by deeds in the general way, the exceptions being those cases in which land has descended to the heir in consequence of the intestacy of the former owner; and also those cases in which long-continued possession has given an impregnable title to a person who was originally a mere trespasser, or at the most a tenant whose landlord has been lost sight of. When the freehold estate above mentioned was given away and the gift was evidenced by deed and actual possession, the donor lost the power of again giving it away either by deed or by his will. But he might have sold the property if he could have found a purchaser willing to complete without actual possession of the title-deeds; which, however, he might afterwards have recovered from the holder thereof; the reason for this being, that where there are two inconsistent titles, both derived from the same person, but one depending upon an actual sale and payment by the purchaser of the price agreed upon, while the other rests upon no better foundation than a mere voluntary act on the part of the donor, the title of the purchaser will prevail, because of the valuable consideration which he has paid; while the other person has paid nothing. On the other hand, if the donee, before he is dispossessed or his title superseded by a conveyance for value, were to sell the property, and if the sale were completed and the purchase-money paid, the donor would have lost his right to sell. Having placed the donee in a position to make a good title to the property, he must take the consequences of his own folly. We once had the pleasure of saving for the benefit of the vendor the value of an estate which he had previously given away; greatly to the astonishment of the donee, who supposed himself to be safely possessed of the whole estate.

It will be understood that our remarks have no application to marriage settlements or similar documents in which extensive though limited powers of appointment are generally reserved to the settler, the power extending over the whole estate or a specified part thereof; while the persons to be the beneficiaries are strictly defined; and powers are also given to him to direct the payment of portions to his younger children, and to charge them upon the estate which is comprised in the settlement. This is the legitimate way in which a landed proprietor can provide for his family; and the only serious objection which has ever been made thereto is that it has a tendency to perpetuate the descent of the estates, instead of their distribution and subdivision into smaller properties. But these documents are beyond the scope of this paper. What we strongly object to are voluntary deeds of gift, which are generally made for the purpose of avoiding the payment of legacy and succession duty, but lead too frequently to disastrous consequences. They are beneficial to the legal profession, often leading to costly and harassing litigation; but to the intended recipients of the bounty of the donor, and sometimes to the donor himself, they are in a corresponding degree injurious.

Attention may here be called to the provisions of the Customs and Inland Revenue Act, 1881, on the subject of voluntary gifts of personal property made for the purpose of avoiding the payment of the duties accruing due on the death of the owner of personal estate. By this Act, duty is payable at the like rates as the ordinary probate duty on voluntary gifts which may have been made by any person dying after 1st June 1881, whether such gift may have been made in contemplation of approaching death or otherwise, if the donor has not lived three calendar months afterwards; or by voluntarily causing property to be transferred to or vested in himself and some other person jointly, so as to give such other person benefit of survivorship; or by deed or other instrument not taking effect as a will, whereby an interest is reserved to the donor for life, or whereby he may have reserved to himself the right, by the exercise of any power, to reclaim the absolute interest in such property. This enactment removes the last argument in favour of deeds of gift, for they do not now have the effect of avoiding the payment of probate duty; and in any event, since 19th May 1853, succession duty has always been payable in respect of the benefit acquired by the successor by reason of the decease of his predecessor in title. The case of a voluntary settlement in respect of which the stamp duty has been paid is provided for by a direction that on production of such deed duly stamped, the stamp duty thereon may be returned. Personal estate includes leasehold property.

With respect to wills, the position is very different. Every man who has any property of any kind ought to make a will, especially if he desires his property to be distributed in any way different from the mode prescribed by law in case of his intestacy. Many cases occur in which the neglect to make a will is not only foolish but positively wrong. A husband has a duty to perform towards his wife which cannot be omitted without culpability; and the same may be said of the duty of a parent to his children. As to the former, there is a danger which is often unsuspected by the owner of real estate. The law provides that on the death of such a person intestate, leaving a widow, she shall be entitled to dower out of such estate; that is to say, one-third of the rents thereof during the remainder of her life; but this right to dower is subject to any disposition which the owner of the estate may have made thereof, or any charges which he may have created thereon. In England, there is no inalienable share of property which the widow and children can claim, even as against the devisee, as is the case in Scotland. But there is a power to bar the right of the widow to her dower by means of a declaration to that effect in the conveyance to a purchaser, or in any deed subsequently executed by him relating to the property. It must be observed that the declaration in bar of dower is not necessary for the purpose of creating charges upon the estate, because dower is expressly made subject to such charges. But if the declaration has been inserted in the conveyance—without the knowledge of the purchaser—his widow will have no claim to any provision out of such estate unless it shall be made for her by the will of her husband, who, in ignorance of the necessity for making a will, dies intestate, thus leaving his widow dependent upon his heir-at-law; in numerous cases, a distant relative, who is not disposed to acknowledge that the widow of his predecessor has any claim upon him.

Again, as to his children, the possessor of real estate ought not to forget that in the case of freehold property it will descend upon his eldest son as heir-at-law; thus leaving his younger sons and his daughters unprovided for except as to their respective shares of his personal estate, which may be of small value, or even insufficient for the payment of his debts. If the property should be copyhold, it would descend to the customary heir, who might be the eldest son, the youngest son, or all the sons as tenants in common in equal undivided shares; but in any event, the daughters would remain unprovided for.