 section 22 of Jurisprudence. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Jurisprudence by John Salmond. Chapter 15, Persons Part 1. Section 108, The Nature of Personality. The purpose of this chapter is to investigate the legal conception of personality. It is not permissible to adopt the simple device of saying that a person means a human being. For even in the popular or non-legal use of the term, there are persons who are not men. Personality is a wider and vaguer term than humanity. Gods, angels, and the spirits of the dead are persons no less than men are. And in the law, this want of coincidence between the class of persons and that of human beings is still more marked. In the law, there may be men who are not persons. Slaves, for example, are destitute of legal personality in any system which regards them as incapable of either rights or liabilities. Like cattle, they are things and the objects of rights, not persons and the subjects of them. Conversely, there are, in the law, persons who are not men. A joint stock company or a municipal corporation is a person in legal contemplation. It is true that it is only a fictitious, not a real person, but it is not a fictitious man. It is personality, not human nature, that is fictitiously attributed by the law to bodies corporate. So far as legal theory is concerned, a person is any being whom the law regards as capable of rights or duties. Any being that is so capable is a person, whether a human being or not, and no being that is not so capable is a person, even though he be a man. Persons are the substances of which rights and duties are the attributes. It is only in this respect that persons possess juridical significance, and this is the exclusive point of view from which personality receives legal recognition. But we may go one step further than this in the analysis. No being is capable of rights, unless also capable of interests, which may be affected by the acts of others. For every right involves an underlying interest of this nature. Similarly, no being is capable of duties, unless also capable of acts by which the interests of others may be affected. To attribute rights and duties, therefore, is to attribute interests and acts as their necessary basis. A person, then, may be defined for the purposes of the law, as any being to whom the law attributes a capability of interests and therefore of rights, of acts and therefore of duties. Persons as so defined are of two kinds, distinguishable as natural and legal. A natural person is a being to whom the law attributes personality in accordance with reality and truth. Legal persons are beings, real or imaginary, to whom the law attributes personality by way of fiction when there is none in fact. Natural persons are persons in fact as well as in law. Legal persons are persons in law, but not in fact. Section 109. The Legal Status of the Lower Animals The only natural persons are human beings. Beasts are not persons. They are merely things, often the objects of legal rights and duties, but never the subjects of them. Beasts, like men, are capable of acts and possess interests. Yet their acts are neither lawful nor unlawful. They are not recognized by the law as the appropriate subject matter either of permission or of prohibition. Archaic codes did not scruple it is true to punish with death in due course of law the beast that was guilty of homicide. Quote, if an ox gore a man or a woman that they die, then the ox shall be surely stoned and his flesh shall not be eaten. End quote. A conception such as this pertains to a stage that is long since passed, but modern law shows us a relic of it in the rule that the owner of a beast is liable for its trespasses, just as a master must answer for his servant or a slave owner for his slave. This vicarious liability, however, does not involve any legal recognition of the personality of the animal whose misdeeds are thus imputed to its owner. A beast is as incapable of legal rights as of legal duties, for its interests receive no recognition from the law. Hamanum kausa omne juice constitutum. The law is made for men and allows no fellowship or bonds of obligation between them and the lower animals. If these last possess moral rights, as utilitarian ethics at least need not scruple to admit, those rights are not recognized by any legal system. That which is done to the hurt of a beast may be a wrong to its owner or to the society of mankind, but it is no wrong to the beast. No animal can be the owner of any property, even through the medium of a human trustee. If a testator vests property and trustees for the maintenance of his favorite horses or dogs, he will thereby create no valid trust enforceable in any way by or on behalf of those non-human beneficiaries. The only effect of such provisions is to authorize the trustees, if they think fit, to expend the property or any part of it in the way so indicated, and whatever part of it is not so spent will go to the testator's representatives as undisposed of. There are, however, two cases in which beasts may be thought to possess legal rights. In the first place, cruelty to animals is a criminal offense, and in the second place, a trust for the benefit of particular classes of animals, as opposed to one for individual animals, is valid and enforceable as a public and charitable trust. For example, a provision for the establishment and maintenance of a home for stray dogs or broken-down horses. Are we driven by the existence of these cases to recognize the legal rights and, therefore, the legal personality of beasts? There is no occasion for any such conflict with accustomed modes of thought and speech. These duties towards animals are conceived by the law as duties towards society itself. They correspond not to private rights vested in the immediate beneficiaries, but to public rights vested in the community at large, for the community has a rightful interest, legally recognized to this extent, in the well-being even of the dumb animals which belong to it. Section 110. The Legal Status of Dead Men Dead men are no longer persons in the eye of the law. They have laid down their legal personality with their lives and are now as destitute of rights as of liabilities. They have no rights because they have no interests. There is nothing that concerns them any longer, quote, neither have they any more a portion forever in anything that is done under the sun, end quote. They do not even remain the owners of their property until their successors enter upon their inheritance. We have already seen how, in the interval between death and the entering of the air, Roman law preferred to personify the inheritance itself rather than attribute any continued legal personality or ownership to the dead man. So in English law the goods of an estate, before the grant of letters of administration, have been vested in the bishop of the diocese or in the judge of the court of probate, rather than left to the dead until they are in truth acquired by the living. Yet although all a man's rights and interests perish with him, he does, when alive, concern himself much with what shall become of him and his after he is dead. And the law, without conferring rights upon the dead, does in some degree recognize and take account after a man's death of his desires and interests when alive. There are three things more especially in respect of which the anxieties of living men extend beyond the period of their deaths in such sort that the law will take notice of them. These are a man's body, his reputation, and his estate. By a natural illusion, a living man deems himself interested in the treatment to be awarded to his own dead body. To what extent does the law secure his desires in this matter? A corpse is the property of no one. It cannot be disposed of by will or any other instrument. And no rungful dealing with it can amount to theft. The criminal law, however, secures decent burial for all dead men, and the violation of a grave is a criminal offence. Every person dying in this country, it has been judicially declared, has a right to a Christian burial. On the other hand, the testamentary directions of a man as to the disposal of his body are without any binding force, save that by statute he is given the power of protecting it from the indignity of anatomical uses. Similarly, a permanent trust for the maintenance of his tomb is illegal and void, this being a purpose to which no property can be permanently devoted. Even a temporary trust for this purpose, not offending against the rule against perpetuities, has no other effect than that already noticed by us as attributed to trusts for animals, its fulfillment being lawful but not obligatory. Property is for the uses of the living, not of the dead. The reputation of the dead receives some degree of protection from the criminal law. A libel upon a dead man will be punished as a misdemeanor, but only when its publication is in truth and attack upon the interests of living persons. The right so attacked and so defended is in reality not that of the dead, but that of his living descendants. To this extent, and in this manner only, has the maxim, dey mortuus nil nissy bonum, obtained legal recognition and obligation. By far the most important matter, however, in which the desires of dead men are allowed by the law to regulate the actions of the living, is that of testamentary succession. For many years after a man is dead, his hand may continue to regulate and determine the disposition and enjoyment of the property which he owned while living. This, however, is a matter which will receive attention more fitly in another place. Section 111. The Legal Status of Unborn Persons Though the dead possess no legal personality, it is otherwise with the unborn. There is nothing in law to prevent a man from owning property before he is born. His ownership is necessarily contingent, indeed, for he may never be born at all. But it is nonetheless a real and present ownership. A man may settle property upon his wife and the children to be born of her. Or he may die in testate, and his unborn child will inherit his estate. Yet the law is careful lest property should be too long withdrawn in this way from the uses of living men in favor of generations yet to come, and various restrictive rules have been established to this end. No testator could now direct his fortune to be accumulated for a hundred years and then distributed among his descendants. A child in its mother's womb is for many purposes regarded by illegal fiction as already born, in accordance with the maxim, Nessaturus pro gemnatto habitur. In the words of Koch, quote, the law in many cases hath consideration of him in respect of the apparent expectation of his birth, end quote. To what extent an unborn person can possess personal as well as proprietary rights is a somewhat unsettled question. It has been held that a posthumous child is entitled to compensation under Lord Campbell's act for the death of his father. Willful or negligent injury inflicted on a child in the womb, by reason of which it dies after having been born alive, amounts to murder or manslaughter. A pregnant woman condemned to death is respited as of right until she has been delivered of her child. On the other hand, in a case in which a claim was made by a female infant against a railway company for injuries inflicted upon her while in her mother's womb through a collision due to the defendant's negligence, it was held by an Irish court that no cause of action was disclosed. The decision of two of the four judges, however, proceeded upon the ground that the company owed no duty of care towards a person whose existence was unknown to them and not upon the ground that an unborn child has in no case any right of immunity from personal harm. The rights of an unborn person, whether proprietary or personal, are all contingent on his birth as a living human being. The legal personality attributed to him by way of anticipation falls away ab initio if he never takes his place among the living. Abortion is a crime, but it is not homicide unless the child is born alive before he dies. A posthumous child may inherit, but if he dies in the womb or is stillborn, his inheritance fails to take effect, and no one can claim through him, though it would be otherwise if he lived for an hour after his birth. It often happens that a single human being possesses a double personality. He is one man, but two persons. Unis homo, it is said, pluris personas sustinet. In one capacity, or in one right, as English lawyers say, he may have legal relations with himself in his other capacity or right. He may contract with himself or owe money to himself or transfer property to himself. Every contract, debt, obligation, or assignment requires two persons, but those two persons may be the same human being. This double personality exists chiefly in the case of trusty ship. A trusty is, as we have seen, a person in whom the property of another is nominally vested to the intent that he may represent that other in the management and protection of it. A trusty, therefore, is for many purposes two persons in the eyes of the law. In right of his beneficiary he is one person, and in his own right he is another. In the one capacity he may owe money to himself in the other. In the one capacity he may own an encumbrance over property which belongs to himself in the other. He may be his own creditor or his own landlord, as where a testator appoints one of his creditors as his executor, or makes one of his tenants the trustee of his land. In all such cases, were it not for the recognition of double personality, the obligation or encumbrance would be destroyed by merger, or confusio, as the Romans called it, for two persons at least are requisite for the existence of a legal relation. No man can, in his own right, be under any obligation to himself or own any encumbrance over his own property. Newly rest sua servit. Section 113 Legal Persons A legal person is any subject matter to which the law attributes a merely legal or fictitious personality. This extension, for good and sufficient reasons, of the conception of personality beyond the limits of fact, this recognition of persons who are not men, is one of the most noteworthy feats of the legal imagination, and the true nature and uses of it will form the subject of our consideration during the remainder of this chapter. The law, in creating legal persons, always does so by personifying some real thing. Such a person has, to this extent, a real existence, and it is his personality alone that is fictitious. There is, indeed, no theoretical necessity for this, since the law might, if it so pleased, attribute the quality of personality to a purely imaginary being, and yet attain the ends for which this fictitious extension of personality is devised. Personification, however, conduces so greatly to simplicity of thought and speech that its aid is invariably accepted. The thing personified may be termed the corpus of the legal person so created. It is the body into which the law infuses the animus of a fictitious personality. Although all fictitious or legal personality involves personification, the converse is not true. Personification in itself is a mere metaphor, not a legal fiction. Legal personality is a definite legal conception. Personification, as such, is a mere artifice of speech devised for compendious expression. In popular language, and in legal language also, when strictness of speech is not called for, the device of personification is extensively used. We speak of the estate of a deceased person as if it were itself a person. We say that it owes debts, or has debts owing to it, or is insolvent. The law, however, recognizes no legal personality in such a case. The rights and liabilities of a dead man devolve upon his heirs, executors, and administrators, not upon any fictitious person known as his estate. Similarly, we speak of a piece of land as entitled to a servitude, such as a right of way over another piece. So also, in the case of common interests and actions, we personify as a single person the group of individuals concerned, even though the law recognizes no body corporate. We speak of a firm as a person distinct from the individual partners. We speak of a jury, a bench of judges, a public meeting, the community itself, as being itself a person instead of merely a group or society of persons. But legal personality is not reached until the law recognizes, over and above the associated individuals, a fictitious being which in a manner represents them, but is not identical with them. Legal persons, being the arbitrary creations of the law, may be of as many kinds as the law pleases. Those which are actually recognized by our own system, however, all fall within a single class, namely corporations or bodies corporate. A corporation is a group or series of persons which by a legal fiction is regarded and treated as itself a person. If, however, we take account of other systems than our own, we find that the conception of legal personality is not so limited in its application, and that there are at least three different varieties. They are distinguished by reference to the different kinds of things which the law selects for personification. One, the first class of legal persons consists of corporations as already defined, namely those which are constituted by the personification of groups or series of individuals. The individuals who thus form the corpus of the legal person are termed its members. We shall consider this form of fictitious personality more particularly in the sequel. Two, the second class is that in which the corpus, or object selected for personification, is not a group or series of persons but an institution. The law may, if it pleases, regard a church or a hospital or a university or a library as a person. That is to say, it may attribute personality not to any group of persons connected with the institution but to the institution itself. Our own law does not indeed so deal with the matter. The person known to the law of England, as the University of London, is not the institution that goes by that name but a personified and incorporated aggregate of human beings, namely the Chancellor, Vice Chancellor, Fellows, and graduates. It is well to remember, however, that notwithstanding this tradition and practice of English law, fictitious personality is not limited by any logical necessity or indeed by any obvious requirement of expediency to the incorporation of bodies of individual persons. Three, the third kind of legal person is that in which the corpus is some fund or estate devoted to special uses, a charitable fund, for example, or a trust estate or the property of a dead man or of a bankrupt. Here also, English law prefers the process of incorporation. If it chooses to personify at all, it personifies not the fund or the estate but the body of persons who administer it. Yet the other way is equally possible and may be equally expedient. The choice of the corpus into which the law shall breathe the breath of a fictitious personality is a matter of form rather than of substance, of lucid and compendious expression rather than of legal principle. Section 114, Corporations We have now to consider more particularly the nature and purposes of the legal conception of incorporation in as much as legal personality goes no further than this in English law. Much of what is said in this special connection, however, will be applicable mutatis mutandis to the other classes of legal persons also. Corporations are of two kinds distinguished in English law as corporations aggregate and corporations soul. Persons, says Koch, quote, are of two sorts persons natural created of God and persons incorporate or politic created by the policy of man and therefore they are called bodies politic and those be of two sorts that is either soul or aggregate of many, end quote. A corporation aggregate is an incorporated group of coexisting persons and a corporation soul is an incorporated series of successive persons. The former is that which has several members at a time while the latter is that which has only one member at a time. Corporations aggregate are by far the more numerous and important. Examples are a registered company consisting of all the shareholders and a municipal corporation consisting of the inhabitants of the borough. Corporations soul are found only when the successive holders of some public office are incorporated so as to constitute a single permanent and legal person. The sovereign, for example, is a corporation of this kind at common law while the postmaster general the solicitor to the treasury and the secretary of state for war have been endowed by a statute with the same nature. It is essential to recognize clearly the element of legal fiction involved in both those forms of incorporation for this has been made by some writers a matter of dispute. A company is in law something different from its shareholders or members. The property of the company is not in law the property of the shareholders. The debts and liabilities of the company are not attributed in law to its members. The company may become insolvent while its members remain rich. Contracts may be made between the company and a shareholder as if between two persons entirely distinct from each other. The shareholders may become so reduced in number that there is only one of them left but he and the company will be distinct persons for all that. Quote, may we not go further still and say that a company is capable of surviving the last of its members? At common law, indeed, a corporation is dissolved by the death of all its members. There is, however, no logical necessity for any such rule and it does not apply to corporations' soul for beings of this sort lead a continuous life notwithstanding the intervals between the death or retirement of each occupant of the office and the appointment of his successor. Nor is there any reason to suppose that such a ground of dissolution is known to the trading corporations which are incorporated under the company's acts. Being established by statute they can be dissolved only in manner provided by the statute to which they owe their origin. The representatives of a deceased shareholder are not themselves members of the company unless they become registered as such with their own consent. If, therefore, on the death of the last surviving members of a private company, their executors refuse or neglect to be registered in their stead, the company will no longer have any members. Is it for that reason, if so juré dissolved? If not, it is clear that since a company can survive its members and exist without them, it must be something entirely distinct from them." In all these respects a corporation is essentially different from an unincorporated partnership. A firm is not a person in the eye of the law. It is nothing else than the sum of its individual members. There is no fictitious being standing over against the partners as a company stands over against its shareholders. The property and debts of the firm are nothing else than those of the partners. A change in the list of partners is the substitution of a new firm for the old one and there is no permanent legal unity as in the case of the company. There can be no firm which consists of one partner only as a company may consist of one member. The incorporation of a firm, that process by which an ordinary partnership is transformed into a company, effects fundamental change in the legal relations of its members. It is nothing less than the birth of a new being to whom the whole business and property of the partnership is transferred. A being without soul or body, not visible saved to the eye of the law, but of a kind whose power and importance, wealth and activity are already great and grow greater every day. In the case of corporations soul, the fictitious nature of their personality is equally apparent. The chief difficulty in apprehending the true nature of a corporation of this description is that it bears the same name as the natural person who is its sole member for the time being and who represents it and acts for it. Each of them is the sovereign or the solicitor to the treasury or the secretary of state for war. Nevertheless, under each of these names two persons live. One is a human being administering for the time being the duties and affairs of the office. He alone is visible to the eyes of laymen. The other is a mythical being whom only lawyers know of and whom only the eye of the law can perceive. He is the true occupant of the office. He never dies or retires. The other, the person of flesh and blood, is merely his agent and representative through whom he performs his functions. The living official comes and goes, but this offspring of the law remains the same forever. Quote, the doctrine that corporations are personificte, though generally received, has not passed unchallenged. Attempts have been made in recent years, especially by German jurists, to establish in place of it a new theory which regards corporate personality as a reality and not a fictitious construction of the law. A corporation, it is said, is nothing more, in law or in fact, than the aggregate of its members conceived as a unity. And this unity, this organization of human beings, is a real person and a living organism, possessed of a real will of its own and capable of actions and of responsibility for them, just as a man is. With respect to this theory, it is to be observed that, even if applicable to corporations' aggregate, it must leave corporations' soul and the other classes of legal persons to be explained in the older fashion. And even in the case of corporations' aggregate, it seems impossible to admit that their personality is anything more than the outcome of metaphor and fiction. A society is not a person, but a number of persons. The so-called will of a company is, in reality, nothing but the wills of a majority of its directors or shareholders. Ten men do not become, in fact, one person, because they associate themselves together for one end, any more than two horses become one animal when they draw the same cart. The apparent absurdity of holding that a rich and powerful joint stock company is a mere fiction of the law, and possesses no real existence, proceeds not from the fiction theory, but from a misunderstanding of it. No one denies the reality of the company, that is to say, the group of shareholders. What is in truth denied is the reality of its personality. A group or society of men is a very real thing, but it is only a fictitious person. End of section 22. Section 23 of Jurisprudence. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Jurisprudence by John Salmond. Chapter 15 Persons Part 2. Section 115. The Agents, Beneficiaries, and Members of a Corporation. Although corporations are fictitious persons, the acts and interests, rights, and liabilities attributed to them by the law are those of real or natural persons, for otherwise the law of corporations would be destitute of any relation to actual fact and of any serious purpose. Every corporation, therefore, involves in the first place some real person or persons whose interests are fictitiously attributed to it, and in the second place some real person or persons whose acts are fictitiously imputed to it. A corporation having neither soul nor body cannot act saved through the agency of some representative in the world of real men. For the same reason it can have no interests and therefore no rights save those which are attributed to it as a trustee for or otherwise on behalf of actual human beings. Whatever a company is reputed to do in law is done in fact by the directors or the shareholders as its agents and representatives. Whatever interests, rights, or property it possesses in law are in fact those of its shareholders and are held by it for their benefit. Every legal person therefore has corresponding to it in the world of natural persons certain agents or representatives by whom it acts and certain beneficiaries on whose behalf it exists and fulfills its functions. Its representatives may or may not be different persons from its beneficiaries or these two capacities may or may not be united in the same individuals. The shareholders of a company are not merely the persons for whose benefit it exists. They are also those by whom it acts. In the case of a corporation established for charitable purposes it is otherwise for the beneficiaries may have no share whatever in the management of its affairs. The representatives and beneficiaries of a corporation must not be confounded with its members. These last are as we have seen the individuals who form the group or series personified by the law and who so constitute the corpus or body of the fictitious person thus created. Membership of a corporation does not in itself affect in any way the rights or liabilities of the members for it is nothing more than a matter of form. A man's privileges and responsibilities in respect of a corporation depend on whether he is one of its representatives or beneficiaries not on whether he is formally accounted by the law as one of its members. Municipal corporations are constituted by the incorporation of the inhabitants of boroughs but if by statute it were declared that they should consist for the future of the mayor, aldermen, and councillors the change would not affect the rights, powers, or liabilities of any human being. The extent to which the three classes of persons with whom a corporation is concerned namely its members, its representatives, and its beneficiaries are coincident and comprise the same persons is a matter to be determined as the law thinks fit in the particular case. The members of a corporation may or may not be those by whom it acts and they may or may not be those on whose behalf it exists. It is worth notice that some or all of the members of a corporation may be corporations themselves. There is nothing to prevent the shares of a company from being held by other companies. In this case the fiction of incorporation is duplicated and the law creates a fictitious person by the personification of a group of persons who themselves possess a merely legal and artificial personality. Section 116 the acts and liabilities of a corporation. When a natural person acts by an agent the authority of the agent is conferred and its limits are determined by the will and consent of the principal. In general only those acts of the agent are imputed by the law to the principal which are within the limits of the agent's authority as thus created and circumscribed. But in the case of a corporation it is necessarily otherwise. A legal person is as incapable of conferring authority upon an agent to act on its behalf as of doing the act in propria persona. The authority of the agents and representatives of a corporation is therefore conferred, limited, and determined not by the consent of the principal but by the law itself. It is the law that determines who shall act for a corporation and within what limits his activity must be confined. Any act which lies beyond these legally appointed limits will not be imputed to the corporation even though done in its name and on its behalf. It is said to be ultra-virace of the corporation and as a corporate act it is null and void. Speaking generally we may say that a corporation can do those things only which are incidental to the fulfillment of the purposes for which the law created it. All its acts must be directed to its legally appointed end. Thus the memorandum of association of a company must set forth the purposes for which it is established, and even the unanimous consent of the whole body of shareholders cannot effectively enable the company to act beyond the limits so marked out for its activity. It is well settled in the law of England that a corporation may be held liable for wrongful acts and that this liability extends even to those cases in which malice, fraud, or other wrongful motive or intent is a necessary element. A company may be sued for libel, malicious prosecution, or deceit. Nor is this responsibility civil only. Corporations no less than men are within reach of the arm of the criminal law. They may be indicted or otherwise prosecuted for a breach of their statutory duties and punished by way of fine and forfeiture. Although this is now established law the theoretical basis of the liability of corporations is a matter of some difficulty and debate, for in the first place it may be made a question whether such liability is consistent with natural justice. To punish a body corporate either criminally or by the enforcement of penal redress is in reality to punish the beneficiaries on whose behalf its property is held for the acts of the agents by whom it fulfills its functions. So far therefore as the beneficiaries and the agents are different persons the liability of bodies corporate is an instance of vicarious responsibility and it is to be justified on the same principles as are applicable to the vicarious liability of a principle for the unauthorized acts of his agent principles which will be considered by us at a later stage of our inquiry. For although the representatives of a corporation are in form and legal theory the agents of that fictitious person yet in substance and fact they are the agents of the beneficiaries a company is justly held liable for the acts of its directors because in truth the directors are the servants of the shareholders. A more serious difficulty in imposing liability upon bodies corporate arises from the following consideration the wrongful acts so attributed by the law to fictitious persons are in reality the acts of their agents now we have already seen that the limits of the authority of those agents are determined by the law itself and that acts beyond these limits will not be deemed in law to be the acts of the corporation how then can an illegal act be imputed to a corporation if illegal it cannot be within the limits of the lawful authority and if not within these limits it cannot be the act of the corporation the solution of this difficulty is two fold in the first place the argument does not extend to wrongful acts of omission for these are done by the body politic in person and not merely by its representatives no fictitious person can do in person what by law it ought not to do but it can in person fail to do what in law it ought and in the second place the liability of a corporation for the acts of its representatives is a perfectly logical application of the law as to an employer's liability for his servants the responsibility of a master does not depend on any authority given to his servant to commit the wrongful act it is the outcome of an absolute rule of law that the employer is himself answerable for all rungs committed by his servant in the course and process of doing that which he is employed to do i am liable for the negligence of my servant in driving my carriage not because i authorized him to be negligent but because i authorized him to drive the carriage so in the case of the agents of a corporation the law imputes to the corporation not only all acts which its agents are lawfully authorized to do but all unlawful acts which they do in or about the business so authorized the corporation is responsible not only for what its agents do being there too lawfully authorized but also for the manner in which they do it if its agents do negligently or fraudulently that which they might have done lawfully and with authority the law will hold the corporation answerable section 117 the uses and purposes of incorporation there is probably nothing which the law can do by the aid of the conception of incorporation which it could not do without it but there are many things which it can by such aid do better or more easily than would otherwise be possible among the various reasons for admitting this fictitious extension of personality we may distinguish one as of general and fundamental importance namely the difficulty which the law finds in dealing with common interests vested in large numbers of individuals and with common action in the management and protection of such interests the normal state of things that with which the law is familiar and to which its principles are conformed is individual ownership with a single individual the law knows well how to deal but common ownership is a source of serious and manifold difficulties if two persons carry on a partnership or own and manage property in common complications arise with which nevertheless the law can deal without calling in the aid of fresh conceptions but what if there are 50 or 100 joint owners with such a state of facts legal principles and conceptions based on the type of individual ownership are scarcely competent to deal how shall this multitude manage its common interests and affairs how shall it dispose of property or enter into contracts what if some be infants or insane or absent what shall be the effect of the bankruptcy or death of an individual member how shall one of them sell or otherwise alienate his share how shall the joint and separate debts and liabilities of the partners be satisfied out of their property how shall legal proceedings be taken by or against so great a number these questions and such as these are full of difficulty even in the case of a private partnership if the members are sufficiently numerous the difficulty is still greater in the case of interests rights or property vested not in individuals or in definite associations of individuals but in the public at large or in indeterminate classes of the public in view of these difficulties the aim of the law has been to reduce so far as may be the complex form of collective ownership and action to the simple and typical form of individual ownership and action the law seeks some instrument for the effective expression and recognition of the elements of unity and permanence involved in the shifting multitude with those common interests and activities it has to deal there are two chief devices for this purpose namely trusteeship and incorporation the objects of trusteeship are various and many of its applications have a source and significance that are merely historical in general however it is used as a motive overcoming the difficulties created by the incapacity uncertainty or multiplicity of the persons to whom property belongs the property is deemed by the law to be vested not in its true owners but in one or more determinant individuals of full capacity who hold it for safe custody on behalf of those uncertain incapable or multitudinous persons to whom it in truth belongs in this manner the law is enabled to assimilate collective ownership to the simpler form of individual ownership if the property and rights of a charitable institution or an unincorporated trading association of many members are held in trust by one or two individuals the difficulties of the problem are greatly reduced it is possible however for the law to take one step further in the same direction this step it has taken and has so attained to the conception of incorporation this may be regarded from one point of view as merely a development of the conception of trusty ship for it is plain that so long as a trusty is not required to act but has merely to serve as a depository of the rights of beneficiaries there is no necessity that he should be a real person at all he may be a mere fiction of the law and as between the real and the fictitious trusty there are in large classes of cases important advantages on the side of the latter he is one person and so renders possible a complete reduction of common to individual ownership whereas the objections to a single trusty in the case of natural persons are serious and obvious the fictitious trusty moreover though not incapable of dissolution is yet exempt from the inevitable mortality that afflicts mankind he embodies and expresses therefore to a degree impossible in the case of natural trustees the two elements of unity and of permanence which call for recognition in the case of collective interests an incorporated company is a permanent unity standing over against the multitudinous and variable body of shareholders whose rights and property it holds in trust it is true indeed that a fictitious trusty is incapable of acting in the matter of his trust in his proper person this difficulty however is easily avoided by means of agency and the agents may be several in number so as to secure that safety which lies in a multitude of counselors while the unity of the trusty ship itself remains unaffected we have considered the general use and purpose of incorporation among its various special purposes there is one which has assumed very great importance in modern times and which is not without theoretical interest incorporation is used to enable traders to trade with limited liability as the law stands he who ventures to trade impropriate persona must put his whole fortune into the business he must stake all that he has upon the success of his undertaking and must answer for all losses to the last farthing of his possessions the risk is a serious one even for him whose business is all his own but it is far more serious for those who enter into partnership with others in such a case a man may be called upon to answer with his whole fortune for the acts or defaults of those with whom he is disastrously associated it is not surprising therefore that modern commerce has seized eagerly upon a plan for eliminating this risk of ruin incorporation has proved admirably adapted to this end they who wish to trade with safety need no longer be so rash as to act impropriate persona for they may act merely as the irresponsible agents of a fictitious being created by them for this purpose with the aid and sanction of the company's act if the business is successful the gains made by the company will be held on behalf of the shareholders if unsuccessful the losses must be borne by the company itself for the debts of a corporation are not the debts of its members see quid universitati debitur singolus non debitur ne quad debit universitas singoli debitur the only risk run by its members is that of the loss of the capital with which they have supplied or undertaken to supply the company for the purpose of enabling it to carry on its business to the capital so paid or promised the creditors of the insolvent corporation have the first claim but the liability of the shareholders extends no further the advantages which traders derive is that of the loss of the capital with which they have supplied the advantages which traders derive from such a scheme of limited liability are obvious nor does it involve any necessary injustice to creditors for those who deal with companies know or have the means of knowing the nature of their security the terms of the bargain are fully disclosed and freely consented to there is no reason in the nature of things why a man should answer for his contracts with all his estate rather than with a definite portion of it only for this is wholly a matter of agreement between the parties section 118 the creation and extinction of corporations the birth and death of legal persons are determined not by nature but by the law they come into existence at the will of the law and they endure during its good pleasure corporations may be established by the royal charter by statute by immemorial custom and in recent years by agreement of their members expressed in statutory forms and subject to statutory provisions and limitations they are in their own nature capable of indefinite duration this being indeed one of their chief virtues as compared with humanity but they are not incapable of destruction the extinction of a body corporate is called its dissolution the severing of that legal bond by which its members are knit together into a fictitious unity we have already noticed that a legal person does not of necessity lose its life with the destruction or disappearance of its corpus or bodily substance there is no reason why a corporation should not continue to live although the last of its members is dead and a corporation's soul is merely dormant not extinct during the interval between two successive occupants of the office the essence of a body corporate consists in the animus of fictitious and legal personality not in the corpus of its members section 119 the state as a corporation of all forms of human society this is the state it owns immense wealth and performs functions which in number and importance are beyond those of all other associations is it then recognized by the law as a person is the commonwealth a body politic and corporate endowed with legal personality and having as its members all those who owe allegiance to it and are entitled to its protection this is the conclusion the developed system of law might be expected to attain but the law of England has chosen another way the community of the realm is an organized society but it is no person or body corporate it owns no property is incapable of no acts and has no rights nor any liabilities imputed to it by the law whatever is said to the contrary is figure of speech and not the literal language of our law how then are we to account for this failure of the law to make so obvious and useful in application of the conception of incorporation and legal personality why has it failed to recognize and express in this way the unity and permanence of the state the explanation is to be found in the existence of monarchical government the real personality of the king who is the head of the state has rendered superfluous any attribution of fictitious personality to the state itself public property is in the eye of the law the property of the king public liabilities are those of the king it is he and he alone who owes the principle and interest of the national debt whatsoever is done by the state is in law done by the king the public justice administered in the law courts is royal justice administered by the king through his servants the judges the laws are the king's laws which he enacts with the advice and consent of his parliament the executive government of the state is the king's government which he carries on by the hands of his ministers the state has no army save the king's army save the king's navy no revenues save the royal revenues no territory save the dominions of the king treason and other offenses against the state and the public interest are in law offenses against the king and the public peace is the king's peace the citizens of the state are not fellow members of one body politic and corporate but fellow subjects of one sovereign lord in so much therefore as everything which is public in fact is conceived as royal by the law there is no need or place for any incorporate commonwealth respublica or universitas regni the king holds in his own hands all the rights, powers and activities of the state by his agency the state acts and through his trusteeship it possesses property and exercises rights for the legal personality of the state itself there is no call or occasion the king himself however is in law no mere mortal man he has a double capacity being not only a natural person but a body politic that is to say a corporation soul the visible wearer of the crown is merely the living representative and agent for the time being of this invisible and undying persona ficta in whom by our law the powers and prerogatives of the government of this realm are vested when the king in his natural person dies the property real and personal which he owns in right of his crown and as trustee for the state and the debts and liabilities which in such right and capacity have been incurred by him he has to his successors in office and not to his heirs executors or administrators for those rights and liabilities pertain to the king who is a corporation soul and not to the king who is a mortal man in modern times it has become usual to speak of the crown rather than of the king when we refer to the king in his public capacity as body politic we speak of the property of the crown when we mean the property which the king holds in right of his crown so we speak of the debts due by the crown of legal proceedings by and against the crown and so on the usage is one of great convenience because it avoids a difficulty which is inherent in all speech and thought concerning corporations soul the difficulty namely of distinguishing adequately between the body politic and the human being by whom it is represented and whose name it bears nevertheless we must bear in mind that this reference to the crown is a mere figure of speech and not the recognition by the law of any new kind of legal or fictitious person the crown is not itself a person in the law the only legal person is the body corporate constituted by a series of persons by whom the crown is worn there is no reason of necessity or even of convenience indeed why this should be so it is simply the outcome of the resolute refusal of English law to recognize any legal persons other than corporations aggregate and soul Roman law it would seem found no difficulty in treating the treasure chest of the emperor fictus as persona ficta and a similar exercise of the legal imagination would not seem difficult in respect of the crown of England just as our law refuses to personify and incorporate the empire as a whole so it refuses to personify and incorporate the various constituent self-governing states of which the empire is made up there is no such person known to the law of England as the state or government of India or of Cape Colony the king or the crown represents not merely the empire as a whole but each of its parts and the result is a failure of the law to give adequate recognition and expression to the distinct existence of these parts the property and liabilities of the government of India are in law those of the British crown the national debts of the colonies are owing by no person known to the law save the king of England a contract between the governments of two colonies is in law a nullity unless the king can make contracts with himself all this would be otherwise did the law recognize that the dependencies of the British empire were bodies politic and corporate each possessing a distinct personality of its own and capable in its own name and person of rights liabilities and activities some of the older colonies were actually in this position being created corporations aggregate by the royal charters to which they owed their origin for example Massachusetts, Rhode Island and Connecticut a similar corporate character pertains to modern dependencies such as the chartered company of South Africa even an unincorporated colony of the ordinary type may become incorporate and so possessed of separate personality by virtue of its own legislation in the absence of any such separate incorporation of the different portions of the empire their separate existence can be recognized in law only by way of that doctrine of plural personality which we have already considered in another connection although the king represents the whole empire it is possible for the law to recognize a different personality in him in respect of each of its component parts the king who owns the public lands in Cape Colony is not necessarily in the eye of the law the same person who owns the public lands in England the king when he borrows money in his capacity as the executive government of Australia may be deemed in law a different person from the king who owns the English national debt how far this plural personality of the crown is actually recognized by the common law of England is a difficult question which is not necessary for us here to answer it is sufficient to point out that in the absence of any separate incorporation this is the only effective way of recognizing in law the separate rights, liabilities and dependencies of the crown summary the nature of personality persons, two types natural, legal natural persons living human beings sub points the legal status of beasts the legal status of dead men the legal status of unborn persons double personality legal persons sub points personality based on personification personification without legal personality classes of legal persons one, corporations two, institutions three, funds or estates corporations the only legal persons known to English law sub points corporations aggregate and corporations soul the fiction involved in incorporation the beneficiaries of a corporation the representatives of a corporation the members of a corporation sub points authority of a corporation's agents liability of a corporation for wrongful acts the purposes of incorporation one, reduction of collective to individual ownership and action two, limited liability the creation and dissolution of corporations the personality of the state the personality of the state the personality of the state and of section 23 section 24 of Juris Prudence this is a LibriVox recording all LibriVox recordings are in the public domain for more information or to volunteer please visit LibriVox.org recording by Marianne Spiegel Juris Prudence by John Salman Chapter 16 Titles Part 1 Section 120 Vestive Facts we have seen in a former chapter that every right involves a title or source from which it is derived the title is the de facto antecedent of which the right is the de jure consequent if the law confers a right upon one man which it does not confer upon another the reason is that certain facts are true of him which are not true of the other and these facts are the title of the right whether a right is inborn or acquired a title is equally requisite the title to a debt consists in a contract or a judgment or other such transaction but the title to life liberty or reputation consists in nothing more than in being born with the nature of a human being some rights the law gives to a man on his first appearance in the world but neither in the one case nor in the other can there be any right without a basis of fact in which it has its root and from which it proceeds titles are of two kinds being either original or derivative the former are those which create a right de novo the latter are those which transfer an already existing right to a new owner the catch is that the catching of a fish is an original title of the right of ownership whereas the purchase of them is a derivative title the right acquired by the fisherman is newly created it did not formally exist in anyone but that which is acquired by the purchaser is in legal theory identical with that which is lost by the vendor it is an old right transferred not a new one created yet in each case the fact which vests the right title in the sense already explained for the essence of a title is not that it determines the creation of rights de novo but that it determines the acquisition of rights new or old as the facts confer rights so they take them away all rights are perishable and transient some are of feeble vitality and easily killed by any adverse influence the bond between them and their owners being fragile and easily severed others are vigorous and hearty capable of enduring and surviving much but there is not one of them that is exempt from possible extinction and loss the first and greatest of all is that which a man has in his own life yet even this the law will deny to him who has himself denied it to others the facts which thus cause the loss of rights may be called after them divestive facts this term indeed has never been received into the accepted nomenclature of the law but there seems no better substitute available the facts which confer rights receive from them the corresponding name of investive facts the term already used by us namely title is commonly more convenient however and has the merit of being well established in the law as a generic term to include both divestive and divestive facts the expression vestive fact may be permissible such a fact is one which determines positively or negatively the vesting of a right in the owner we have seen that titles are of two kinds being either original or derivative in like manner divestive facts are either extinctive or alienated the former are those which divest a right by destroying it the latter divest a right by transferring it to some other owner the receipt of payment is divestive of the right of the creditor so also is the act of the creditor in selling the debt to a third person but in the former case the divestive fact is extinctive while in the latter it is alienative it is plain that derivative titles and alienative facts are not two different classes of facts but are merely the same facts different points of view the transfer of a right is an event which has a double aspect it is the acquisition of a right by the transferee and the loss of it by the transferee the vestive fact if considered with reference to the transferee is a derivative title while from the point of view of the transferee it is an alienative fact purchase is a derivative title but sale is an alienative fact yet they are merely two different sides of the same event these distinctions and divisions are exhibited in the following table vestive facts include investive facts or titles and divestive facts investive facts or titles include original titles the creation of rights and derivative titles the transfer of rights divestive facts include alienative facts also transfer of rights and extinctive facts the destruction of rights these different classes of vestive facts correspond to the three chief events in the life history of a right namely its creation its extinction and its transfer by an original title a right comes first into existence being created ex nihilo by an extinctive fact it is wholly destroyed by derivative titles and alienative facts on the other hand these being as we have seen the same facts viewed from different sides the existence of the right is in no way affected the transfer of a right does not in legal theory affect its personal identity it is the same right as before though now it has a different owner section 121 acts in the law vestive facts whether they create, transfer or extinguish rights are divisible into two fundamentally distinct classes according as they operate in pursuance of the will of the persons concerned or independently of it this is to say the creation, transfer and extinction of rights are either voluntary or involuntary in innumerable cases the law allows a man to acquire his rights by a manifestation or declaration of his will and intent directed to that end in other cases it confers rights upon him or takes them away without regard to any purpose or consent of his at all if he dies in test state the law itself would dispose of his estate as it thinks fit but if he leaves a duly executed will in which he expresses his desires in the matter, the law will act accordingly so if he sells his property to him in accordance with his declared intent which the law adopts as its own but if his goods are taken in execution by creditor or vested in a trustee on his bankruptcy the transfer is an involuntary one affected in pursuance of the law's purposes and not of his at all the distinction between these two classes of vestive facts may be variously expressed we may make use for example of the contrasted expressions of the party and act of the law an act of the party is any expression of the will or intention of the person concerned directed to the creation, transfer or extinction of a right and effective in law for that purpose such as a contract or deed of conveyance an act of the law on the other hand is the creation extinction or transfer of a right by the operation of the law itself independent of any consent there too on the part of him concerned the expression act of the party is one of some awkwardness however and it is more convenient in general to substitute for it the technical term act in the law as contrasted with those acts of the law which we have already defined acts in the law are of two kinds which may be distinguished as unilateral and bilateral a unilateral act is one in which there is only one party whose will is operative as in the case of a testamentary disposition the exercise of a power of appointment the revocation of a settlement the avoidance of a voidable contract or the forfeiture of a lease for breach of covenant a bilateral act on the other hand is one which involves the consenting wills of two or more distinct parties as for example a contract a conveyance or a lease bilateral acts in the law are called agreements in the wide and generic sense of that term there is indeed a narrow and specific use in which agreement is synonymous with contract that is to say the creation of rights in personum by way of consent the poverty of our legal nomenclature is such however that we cannot afford thus to use these two terms as synonymous we shall therefore habitually use agreement in the wide sense to include all bilateral acts in the law whether they are directed to the creation or to the transfer or to the extinction of rights in this sense conveyances mortgages leases or releases are agreements no less than contracts are unilateral acts in the law are divisible into two kinds in respect of their relation to the other party concerned for in some instances they are adverse to him not his to say they take effect not only without his consent but not withstanding his descent his will is wholly inoperative and powerless in the matter this is so for example in the case of a re-entry by a landlord upon a tenant for breach of covenant or the exercise of power of appointment as against the persons entitled in default of appointment or the avoidance of avoidable contract or the exercise by a mortgage or a sale in other cases it is not so the operation of the unilateral act is subject to the descent of the other party affected by it though it does not require his consent in the meantime pending the expression of his will the act has merely a provisional and contingent operation a will for example involves nothing save the unilateral intent and ascent of the testator the beneficiaries need know nothing that be in existence but if they subsequently dissent and reject the rights so transferred to them the testament will fail of its effect if on the other hand they accept the provisions made on their behalf the operation of the will forthwith ceases to be provisional and becomes absolute similarly a settlement of property upon trust need not be known or consented to ab initio by the beneficiaries it may be a purely unilateral act subject however to repudiation and avoidance by the persons intended to be benefited by it so I may effectually grant a mortgage or other security to a creditor who knows nothing of it where there are more than two parties concerned in any act in the law it may be bilateral in respect of some of them and unilateral in respect of others thus the conveyance of property by a to b in trust for c may be bilateral as to a and b intersay operating by the mutual consent of these two while it may be at the same time unilateral as between a and b on the one side and c on the other c having no knowledge of the transaction so the exercise of a mortgagee's power of sale is bilateral as between mortgagee and purchaser but unilateral so far as regards the mortgager section 122 agreements of all vestive facts acts in the law are the most important and among acts in the law agreements are entitled to the chief place unilateral acts are comparatively infrequent and unimportant the residue of this chapter will therefore be devoted to the consideration of the grounds modes and conditions of the operation of agreement as an instrument of the creation transfer and extinction of rights a considerable portion of what is to be said in this connection will however be applicable mutatus mutandus to unilateral acts also the importance of agreement as a vestive fact lies in the universality of its operation there are few rights which cannot be acquired through the ascent of the persons upon whom the correlative duties are to be imposed there are few rights which cannot be transferred to another by the will of him they are presently vested there are few which are not extinguished when their owner no longer desires to retain them of that great multitude of rights and duties of which the adult member of a civilized community stands possessed the great majority have their origin in agreements made by him with other men by agreements of contrary intent he may strip himself almost as destitute of rights and duties as when in the scantiest of judicial last year he made his first appearance before the law in veto beneficium non dator said the romans by what reasons then is the law induced to allow this far reaching operation to the fact of agreement why should the mere consent of the parties be permitted in this manner to stand for a title of right are not rights the subject matter of justice and is justice a mere matter of convention the wills of men the reasons are two in number agreement is in the first place evidential of right and in the second place constitutive of it there is in general no better evidence of the justice of an arrangement than the fact that all persons whose interests are affected by it have freely and with full knowledge consented to it men are commonly good judges of their own interests and in the words of Hobbes it ordinarily a greater sign of the equal distribution of anything than that every man is contented with his share when therefore all interests are satisfied and every man is content the law may safely presume that justice has been done and that each has received his own the determination of the law is needed only in default of the agreement of the parties hence it is that he who agrees with another in any declaration of their respective rights and duties will not be suffered to go back from his word and will not be heard to dispute the truth of his declaration the exceptions to this rule are themselves defined by equally rigid rules and he who would disclaim a duty which he has thus imposed upon himself or reclaim a right which he has thus transferred or abandoned must bring himself within one of those predetermined exceptions otherwise he will be held bound by his own words this conclusive presumption of consensual declarations of right is however only one of the foundations of the law of agreement consent is in many cases truly constitutive of right instead of merely evidential of it it is one of the leading principles of justice to guarantee to men the fulfillment of their reasonable expectations in all matters that are otherwise indifferent expectation is a predominant influence in the determination of the rule of right and of all the grounds of rational expectation there is none of such general importance as mutual consent the human will, said a queeness is able by way of consent to make a thing just provided that the thing is not in itself repugnant to natural justice there is an obvious analogy between agreement and legislation the former being the private and the latter the public declaration and establishment of rights and duties by way of legislation the state does for its subjects that which in other cases it allows them to do for themselves by way of agreement as to the respective spheres of these two operations the leading maxim is modus et convencio vindicant legum save when the interest of the public at large demand a different rule the autonomy of consenting parties prevails over the legislative will of the state so far as may be possible of right to be declared and constituted by the agreement of those concerned with it so far as possible it contends itself with executing the rules which its subjects have made for themselves and in so doing it acts wisely for in the first place the administration of justice is enabled in this manner to escape in a degree not otherwise attainable the disadvantages inherent in the recognition of rigid principles of law such principles we must have but if they are established by Pearl Ray Nata by the parties themselves they will possess a measure of adaptability to individual cases which is unattainable by the more general legislation of the state itself amid the infinite diversities and complexities of human affairs the state widely despairs of truly formulating the rules of justice so far as possible it leaves the task to those who by their nearness to the facts are better qualified for it it says to its subjects as to what is just in your individual concerns and I shall enforce your agreement as a rule of right in the second place men are commonly better content to bear the burdens which they themselves have taken up than those placed upon them by the will of a superior they acquiesce easily in duties of their own imposition and are well pleased with the rights of their own creation the law or the justice which best commends itself to them is that which they themselves have made or declared where for instead of binding its subjects the state does well in allowing them to bind themselves section 123 the classes of agreements agreements are divisible into three classes for they either create rights or transfer them or extinguish them those which create rights are themselves divisible into two subclasses distinguishable as contracts contracts and grants a contract is an agreement which creates an obligation or right in personum between the parties to it a grant is an agreement which creates a right of any other description examples being grants of leases, easements, charges patents, franchises powers, licenses and so forth an agreement which transfers a right may be termed generically an assignment one which extinguishes a right to release, discharge or surrender as already indicated a contract is an agreement intended to create a right in personum between the contract and parties no agreement is a contract unless its effect is to bind the parties to each other by the vincolum of a newly created personal right it commonly takes the form of a promise or set of promises that is to say a declaration of the consenting wills of two persons that one of them shall henceforth be under an obligation to the other naturally assumes the form of an undertaking by the one with the other to fulfill the obligation so created not every promise however amounts to a contract to constitute a contract there must be not merely a promise to do a certain act but a promise express or implied to do this act as illegal duty when I accept an invitation to dine at another man's house I make him a promise but enter into no contract with him the reason is that our wills though consenting are not directed to the creation of any legal right or to any alteration of our legal relations towards each other the essential form of a contract is not I promise this to you but I agree with you that henceforth you shall have a legal right to demand and receive this from me promises that are not reducible to this form are not contracts therefore the consent that is requisite for the creation of rights by way of a contract is essentially the same as that required for their transfer or extinction the essential element in each case is the express or tacit reference to the legal relations of the consenting parties taking into account the two divisions of the consensual creation of rights there are therefore four distinct kinds of agreements one contracts creating rights in personum two grants creating rights of any other kind three assignments transferring rights four releases extinguishing rights it often happens that an agreement is of a mixed nature and so falls within two or more of these classes at the same time thus the sale of a specific chattel is both a contract and an assignment for transfers the ownership of the chattel to pay the price so lease is both a grant and a contract for it creates real and personal rights at the same time in all such cases the agreement must be classed in accordance with its chief or essential operation its other effects being deemed subsidiary and incidental a frequent result of the difference between law and equity and between legal and equitable rights and ownership is that the same agreement has one effect in law and another in equity in law it may be a mere contract and in equity an assignment or grant thus a written agreement for the sale of land is in law nothing more than a contract imposing upon the seller a personal obligation to execute a conveyance under seal but not in itself amounting to a transfer of the ownership of the land in equity on the other hand such an agreement amounts to an assignment the equitable ownership of the land passes under it to the purchaser forthwith and the vendor holds the legal ownership and trust for him similarly a contract to grant a legal lease or mortgage or servitude is itself the actual grant of an equitable lease mortgage or servitude for it is a maximum of chancery that equity regards that as already done which ought to be done end of section 24 section 25 of jurisprudence this is a LibriVox recording a LibriVox recordings in the public domain for more information or to volunteer please visit LibriVox.org recording by Mary Ann jurisprudence by John Salmond chapter 16 titles part 2 section 124 void and voidable agreements in respect of their legal advocacy agreements are of three kinds being either valid void or voidable a valid agreement is one which is fully operative in accordance with the intent of the parties avoid agreement is one which entirely fails to receive legal recognition or sanction the declared will of the parties being wholly destitute of legal efficacy avoidable agreement stands midway between these two cases it is not a nullity but its operation is conditional and not absolute by reason of some defect in its origin it is liable to be destroyed or cancelled at the option of one of the parties to it on the exercise of this power the agreement not only ceases to have any efficacy but is deemed to have been void ab initio the avoidance of it relates back to the making of it the hypothetical or contingent efficacy which has hitherto been attributed to it wholly disappears as if it had never existed in other words avoidable agreement is one which is void or valid at the election of one of the parties to it is determinable on notice or on reentry for breach of covenant is not for that reason voidable because when determined it is not destroyed ab initio but merely from then onwards void and voidable agreements may be classed together as invalid the most important causes of invalidity are six in number namely one incapacity two informality three illegality or error five coercion and six want of consideration one incapacity certain classes of persons are wholly or partially destitute of the power of determining their rights and liabilities by way of consent they cannot at least to the same extent as other persons supersede or supplement the common law by subjecting themselves to conventional law of their own making in the case of minors lunatics and convicts for example the common law is peremptory and not to be derogated from or added to by their agreement so the agreements of an incorporated company may be invalid because ultra various or beyond the capacity conferred upon it by law two informality agreements are of two kinds which may be distinguished as simple and formal a simple agreement is one in which nothing is required for its effective operation beyond the manifestation in whatever fashion of the consenting wills of the parties a formal agreement on the other hand is one in which the law requires not merely that consent shall exist but that it shall be manifested in some particular form in default of which it is held of no account thus the intent of the parties may be held effective only if expressed in writing signed by them or in writing authenticated by the more solemn form of ceiling embodied in some appointed form of words or it must be acknowledged in the presence of witnesses or recorded by some form of public registration or it must be accompanied by some formal act such as the delivery of the subject matter of the agreement the leading purpose of all such forms is two fold they are in the first place designed as pre-appointed evidence of the fact of consent and of its terms to the intent that this method of determining rights and liabilities with the safeguards of permanence certainty and publicity in the second place their purposes that all agreements may by their help be the outcome of adequate reflection any necessary formality has the effect of drawing a sharp line between the preliminary negotiations and the actual agreement and so prevents the parties from drifting by inadvertence into unconsidered consent three, illegality in the third place an agreement may be invalid by reason of the purposes with which it is made to a very large extent men are free to agree together upon any matter as they please but this autonomous liberty is not absolute limitations are imposed upon it partly in the interests of the parties themselves and partly on behalf of the public there is much of the common law which will not suffer itself to be derogated from by any private agreement and there are many rules which though they in no way infringe upon the common law cannot be added to it as supplementary that is to say there are many matters in which the common law will admit of no abatement and many in which it will admit of no addition by way of conventional law it is true in great part that modus et convenzio vincant legum but over against this principle we must set the qualification privitorium convenzio jury pubricio nandorogat by juice publicum is here meant that part of the law which concerns the public interest and which for this reason the agreements of private persons cannot be allowed to infringe upon agreements which in this way over past the limits allowed by the law are said in a wide sense to be illegal or to be void for illegality they may or may not be illegal in a narrower sense as amounting in their making or their performance to a criminal or civil wrong 4 error or mistake as a ground of invalidity is of two kinds which are distinguishable as essential and unessential essential error is that which is of such a nature as to prevent the existence of any real consent and therefore of any real agreement the parties have not in reality meant the same thing and therefore have not in reality agreed to anything their agreement exists in appearance only in not in reality this is the case of A which is an offer to B which is accepted in mistake by C or if A agrees to sell land to B but A is thinking of one piece of land and B is thinking of another the effect of error of this kind is to make the agreement wholly void in as much as there is in truth no agreement at all but only the external semblance and form of one there is however an exception to this rule when the error is due to the negligence of one of the parties and is unknown to the other or in such a case he who is in fault will be stopped by his own carelessness from raising the defense of essential error and will be held bound by the agreement in the sense in which the other party understood it unessential error on the other hand is that which does not relate to the nature or contents of the agreement but only to some external circumstance serving as one of the inducements which led to the making of it as when A agrees to buy B's horse because he believes it to be sound whereas it is in reality unsound this is not essential error for there is a true consensus at Edom the parties have agreed to the same thing in the same sense though one of them would not have made the agreement had he not been under a mistake the general rule is that unessential error has no effect on the validity of an agreement neither party is in any way concerned in law with the reasons which induce the other to give his consent that which men consent to they must abide by whether their reasons are good or bad and this is so even though one party is well aware of the error of the other this rule however is subject to an important exception for even an unessential error will in general make an agreement voidable at the option of the mistaken party if it has been caused by the misrepresentation of the other party he who is merely mistaken is nonetheless bound by his agreement but he who is misled has a right to rescind the agreement so procured 5. Coversion in order that consent may be justly allowed as a title of right it must be free it must not be the product of any form of compulsion or undue influence otherwise the basis of its legal operation fails freedom however is a matter of degree and it is no easy task to define the boundary line that must be recognized by a rational system of law we can only say generally that there must be such liberty of choice as to create a reasonable presumption that the party exercising it has chosen that which he desires and not merely submitted to that which he cannot avoid we cannot usefully enter here into any examination of the actual results that have been worked out in this matter by English law 6. Want of consideration a further condition very commonly required by English law for the existence of fully efficacious consent is that which is known by the technical name of consideration this requirement is however almost wholly confined to the law of contract other forms of agreement being generally exempt from it a consideration in its widest sense is the reason motive or inducement by which a man is moved to bind himself by an agreement it is not for nothing that he consents to impose an obligation upon himself or to abandon or transfer a right it is in consideration of such and such a fact that he agrees to bear new burdens or to forgo the benefits which the law already allows him if he sells his house the consideration of his agreement is the receipt or promise of the purchase money if he makes a settlement upon his wife and children it is in consideration of the natural law of an affection which he has for them if he promises to pay a debt incurred by him before his bankruptcy this is the moral obligation which survives his legal indebtedness to his creditors using the term in this wide sense it is plain that no agreement made with knowledge and freedom by a rational man can be destitute of some species of consideration all consent must proceed from some efficient cause what then is meant by saying that the law requires consideration as a condition of the validity of an agreement the answer is that the prior by the law is a consideration of a kind which the law itself regards as sufficient it is not enough that it should be deemed sufficient by the parties for the law has itself authoritatively declared what facts amount to a valid and sufficient consideration for consent and what facts do not if men are moved to agreement by considerations which the law refuses to recognize as good so much the worse for the agreement ex nudo pacto non orator actio to bear consent proceeding from no lawfully sanctioned source the law allows no operation what considerations then does the law select and approve as sufficient to support a contract speaking generally we may say that none are good for this purpose save those which are valuable by valuable considerations meant something of value given by one party in exchange for the promise of the other by English law no promise unless under seal or of record is binding unless the promissor receives a quid pro quo from the promisee contracts which are purely unilateral all the obligation being on one side and nothing either given or promised on the other are destitute of legal operation every valid contract is reducible to the form of a bargain that if I do something for you you will do something for me the thing that's given by way of consideration must be of some value that is to say it must be material to the interests of one or the other or both of the parties it must either involve some gain or benefit to the promissor by way of recompense for the burden of his promise or it must involve some loss or disadvantage to the promisee for which the benefit of the promise is a recompense commonly it possesses both of these qualities at once but either of them is sufficient by itself thus if I promise gratuitously to take care of property which the owner deposits with me I am bound by that promise although I receive no benefit in recompense for it because there is a sufficient consideration for it in the detriment incurred by the promisee in entrusting his property to my guardianship but if the thing given by way of consideration is of no value at all being completely indifferent to both parties it is insufficient and the contract is invalid as for example the doing of something which one is already bound to the other party to do or the surrender of a claim will be unfounded in certain exceptional cases however considerations which are not valuable are nevertheless accepted as good and sufficient by the law thus the existence of a legal obligation may be a sufficient consideration for a promise to fulfill it as in the case of a promissory note or other negotiable instrument given for the amount of an existing debt at one time it was supposed to be the law that a merely moral obligation was in the same manner was a sufficient basis for a promise of performance and though this is no longer true as a general proposition certain particular applications of the principle still survive while others have but recently been abolished by statute thus a promise made by a discharged bankrupt to pay a creditor in full was until recently a binding contract because made in consideration of the moral obligation which survives the legal indebtedness of an insolvent for the same reason a promise made after majority pay debts incurred during infancy was binding until the law was altered in this respect by recent legislation similarly a promise to pay a debt barbed by prescription is legally valid even yet the consideration being the moral and imperfect legal obligation which survives the period of prescription with respect to the rational basis of this doctrine it is to be noticed that the requirement of consideration is not absolute but conditional on the absence of a certain formality namely that of a sealed writing form and consideration are two alternative conditions of the validity of contracts and of certain other kinds of agreements it may be surmised therefore that they are founded on the same reasons and fulfill the same functions they are intended as a precaution against the risk of giving legal efficacy to unconsidered promises and to the levities of speech the law selects certain reasons and inducements which are normally sufficient for reasoned and deliberate consent and holds valid all agreements made on these grounds even though informal in all other cases it demands the guarantee of solemn form there can be little doubt however that our law has shown itself too scrupulous in this matter in other legal systems no such precaution is known and its absence seems to lead to no ill results although the doctrine of consideration in the form received by English law is unknown elsewhere it is simply a modification of a doctrine known to civil law and to several modern systems more especially to that of France article 131 of the French Civil Code provides that this cause or cause is a synonym for consideration and we find the terms used interchangeably in the earlier English authorities there is however an essential difference between the English and the continental principle unlike the former the latter never rejects any cause or consideration is insufficient whatever motive or inducement is enough to satisfy the contracting parties is enough to satisfy the law even though it is nothing more than the cause of liberalitatious of a voluntary gift by an obligation sans clause or contract without consideration French law does not meet a contract made without any motive or inducement for there are none such nor contract made from an inadequate motive or inducement for the law makes no such distinctions but a contract made for a consideration which has failed cause non-sectua as the Romans called it the second ground of invalidity mentioned in the article cited is the falsity of the consideration falsa causa a consideration may be based on a mistake so that it is imaginary not real as when I agree to buy a horse which unknown to me is already dead or a ship which has been already wrecked or give a promissory note for a debt which is not truly owing finally a causotupos or illegal consideration is as fatal to a contract in French and Roman law as in English in English law the failure of consideration cause a non-sectuta and its unreality due to error cause a falsa are grounds of invalidity only when the absence of such failure or error is expressly or impliedly made a condition of the contract in a contract for the sale of a chattel for example the present existence of the chattel is an implied condition of the validity of the sale summary vestive facts are divided into investive facts or titles and divestive facts investive facts or titles are divided into original titles creation of rights and derivative titles the transfer of rights divestive facts are divided into alienative facts the transfer of rights or extinctive facts the destruction of rights vestive facts are divided into acts of the law and acts in the law acts in the law are divided into bilateral or agreements. Agreements are composed of one contracts, creating rights in personum, two grants, creating rights of other descriptions, three assignments, transferring rights, and four releases, extinguishing rights. Grounds of the operation of agreements, comparison of agreement and legislation. Regents composed of valid and invalid, invalid composed of void and voidable. The causes of invalidity being one, incapacity, two, informality, three, illegality, four, error, five, coercion, six, want of consideration. End of chapter 14 and end of section 25.