Topic 5 - conversion, satisfaction, Performance And Election

Question 1

AGVHubbuck

Answer 1

Partnership property is that which is held by partners. In the absence of a contrary intention or agreement between the partners, such land is treated as personalty. Same position has been enacted inSection 22 Partnership Act 1890(a Statute of General Application) andSection 23 Partnership Law (Western Nigeria) 1959

Question 2

Sweetapple v Bindon (1705)

Answer 2

A Testator (mom) bequeathed £300 to be used for the purchase of land (property) to be used by her daughter and grandchildren. The daughter died and no land had been purchased. The husband of the daughter claimed for the fund of £300 and the claim was upheld. The court held that although no land had been purchased, the doctrine of conversion regarded the money as realty (real property).

Question 3

Seton v Slade

Answer 3

Lord Eldon held that the effect of a contract to sell realty at law is different from equity. In law, the estate remains that of the vendor. In equity however, the estate from the sealing of the contract becomes tgat of the purchaser which may devolve to his heirs by will.

Question 4

Curre v Boyer

Answer 4

The right of an equitable owner of land by way of conversion devolves to his heirs subject to the payment of the purchaser which may Prince upon the death of the equitable owner.

Question 5

Re Carlow

Answer 5

Where devolution is by will and the contract converting a property precedes the will, the heir is deemed entitled by virtue of the will.

Question 6

Farrar v Winterton

Answer 6

Where however, a contract of conversion is made after the will, the heir of the deceased are deemed to be entitled to the converted property by the contract subject to the appropriate devolution law.

Question 7

Re Thomas

Answer 7

There is no conversion where the contract is not valid or specifically enforceable against both parties to the contract. Eg, for want of right to sell upon the rule of Nemo day non quad habet.

Question 8

Ingram v Chandler

Answer 8

The general rule is that there is no conversion where the contract merely gives an option to purchase, except the option has been exercised. It was also held that the option to purchase can only be exercised during the lifetime of the grantor.

Question 9

Lawes v Bennett

Answer 9

The case altered the rule in Ingram v Chandler.

W, in 1758 leased a farm to D for 7 years. The leasehold agreement contained an option to D to purchase the freehold for £3,000, if D should give notice in writing before the 29th September 1765, of his intention to purchase the freehold, W would sell at the stated price. W, the lessor died in 1763, having devised all his realty to B and all his personalty to B and M equally. D subsequently exercised the option and M now claimed from B, half of the purchase price. The success or otherwise of M’s claim depends on the nature and character of the purchase price. If the purchase price were regarded as personalty, M would succeed, otherwise, the entire purchase price would go to B who was entitled to realty under W’s will. Whether the purchase price was realty or personalty would have to be determined by the application or non-application of the equitable doctrine of conversion. It was contended on M’s behalf that at the time of W’s death, the freehold land, the subject-matter of the option must be considered as personalty since the exercise of the option related back to the date of the original agreement granting the option and that from that date conversion would operate. This contention was upheld by Sir Lloyd Kenyon M.R., thus the rule in Lawes v. Bennett was evolved. That where there is a contract giving an option to purchase real estate, and the option is not exercised till after the death of the person who created the option, nevertheless, the purchase price, if and when the option is exercised, goes as part of the grantor’s personal estate and not as part of his real estate. That the exercise of an option to purchase given in a lease has a retroactive effect, in that it relates back to the time the option was granted and, therefore, conversion operates, as between the persons interested in the realty and personalty respectively of the lessor, as from the date the option was granted.

Question 10

Re Isaacs (1894) 3 Ch.D. 506

Answer 10

there was a lease which contained an option to purchase in favour of the lessee. The option was exercisable within 6 months of the lessor’s death. The lessor died intestate and the lessee exercised the option; Chitty, J., held that the purchase money devolved not on the person entitled to realty but to the person entitled to personalty under the deceased’s intestacy.

Question 11

Townley v. Bedwell (1808) 14 Vts. 591; 33 E.R. 648,

Answer 11

Where there is an option to a tenant to purchase the reversion, the rents and profits accruing within the interval, between the date of the lessor’s death and the time the option is exercised, would go to the person entitled to realty under the lessor’s testacy or intestacy and such persons would not be required to account for these.

Question 12

Re walker (1905)

Answer 12

For there to be a conversion by testamentary disposition, the direction must be imperative and clear.

Question 13

Re Twopeny’s Settlement

Answer 13

Where instruction/direction in a will to convert is optional, there would be no conversion

Question 14

Curling v. May (1734) 3 Atk. 255n,

Answer 14

T by his will gave £500 to his trustees with a direction that the money be laid out for the purchase of land or put the same out on good securities for the separate use of his daughter D. D survived T but the money was not invested in any purchase until after D’s death. The question was, as between D’s administrator and her heir, who was entitled to the purchase. If the trust under which D was a beneficiary was imperative, then there would be conversion as from the moment of T’s death, and the purchase would devolve on the person entitled to realty under T’s intestacy otherwise it would devolve as personalty. It was argued that when it is doubtful whether a bequest ought to be considered as money or land the court of chancery will not interfere because of the element of doubt involved. This submission was upheld by Lord Talbot who stated that there could be no conversion on the ground that the direction in the trust instrument was discretionary; there was no sufficient indication in the will as to what was the testator’s principal intention since the direction was one of investing in land or securities.

Question 15

Beauclerk v Mead

Answer 15

Conversion by testamentary disposition takes effect at the time of death of the deceased.

Question 16

Griffith v Ricketts

Answer 16

Conversion by deed takes effect from the day the deed was executed.

Question 17

Re Kempthrine

Answer 17

The court held that, the statutory creation of trust for sale operates to convert an undivided share of realty into personality for the benefit of each joint tenants.

Question 18

Fletcher v. Ashburner

Answer 18

“Money directed to be employed in the purchase of land, and land directed to be sold and turned into money, are to be considered as that species of property into which they are directed to be converted; and this in whatever manner the direction is given; whether by will, by way of contract, marriage articles, settlement or otherwise, and whether the money is actually deposited, or only covenanted to be paid, whether the land is actually conveyed. The owner of the fund or the contracting parties may make land money, or money, land.

Question 19

Fauntleroy v. Beebe (1911) 2 Ch. 257 at 263,

Answer 19

an absolute order for
sale made by a court of competent jurisdiction in an administration action was held to operate as
a conversion from the date of the order and, the interest of the joint-owners were no longer in
the land but in the proceeds to be derived from the sale.

Question 20

Re Hopkinson

Answer 20

The effect of total failure of conversion by will is that there is no conversion at all and the property devolves in its original form to, where there exists a residuary legatee or devisee, to either of them according to the original nature of the property.

Where however, there is no residuary legatee or devisee, the property devolves in its original form on intestacy.

Question 21

Re Lord Grimthrope

Answer 21

The effect of total failure of conversion by deed is that the property reverts back to the settlor or grantor in its original form and devolves thereof on intestacy.

Question 22

Ackroyd v. Smithson

Answer 22

where it was stated that ‘it is admitted, and cannot be denied that where a tes-
tator directs real estate to be sold for special purposes, if any of those purposes became in-
capable of taking effect, the heir-at-Iaw to the realty shall take them, however, as personalty.

Question 23

Ackroyd v Smithson

Answer 23

Effect of partial failure of conversion by will is that the partial undisposed interest devolves to;

Where conversion is from land to money, to the residuary devisee or any person entitled to the realty, however as personalty. (As though there was conversion)

Where conversion is from money to land, to the residuary legatee or anyone entitled to personalty, however as realty. (As though there was conversion)

Where there is no residuary legatee or devisee, it devolves in the converted form by intestacy.

Question 24

Cohan v Stephen’s

Answer 24

Effect of partial failure of conversion by will is that the partial undisposed interest devolves to;

Where conversion is from land to money, to the residuary devisee or any person entitled to the realty, however as personalty. (As though there was conversion)

Where conversion is from money to land, to the residuary legatee or anyone entitled to personalty, however as realty. (As though there was conversion)

Where there is no residuary legatee or devisee, it devolves in the converted form by intestacy.

Question 25

Harcourt.v. Seymour (1851) 2 Sim (NS) 12 at 46; 61 E.R.244,

Answer 25

Lord Cranworth V.C. observed that where by a settlement land has been directed to be converted into money, or money to be converted into land, a character is thereby imposed upon it until somebody entitled to take it in either form chooses to elect that, instead of its being converted into money, or instead of its being converted into land, it shall remain in the form in which it is actually found.

Question 26

Pulteney v. Earl of Darlington (1783) 1 Bro. C.C. 223 at 238; 28 E.R. 1095,

Answer 26

If AB has in his possession £20,000 to be laid out in land for his use, he has nobody to sue; the right and the thing centering in one person, the action is extinguished...

Question 27

Re Cook (1948) Ch. 212,

Answer 27

a freehold land was conveyed to H and W as joint tenants. H pre-deceased W. By her will, W gave all her personal estate to A and B. W died possessed of the freehold land. The question was whether there had been a reconversion of the land so as to make it real estate at the death of W since the land was subject to a statutory trust for sale and had devolved on W absolutely at the death of H or whether it passed under W's will as personal estate. Harman J. held that after the death of H, .the en- tire interest in the land both legal and equitable devolved on W and that no trust for sale could subsist the- reafter; W's beneficial interest became automatically reconverted, by operation of law, from money into land which accordingly was vested in W at her death as real estate. T

Question 28

Phillips v Cameron and Others [1999] 2 All ER 924,

Answer 28

An unusual question relating to double portions was in issue. The court decided that, for the purposes of the rule against double portions, ag gift could be regarded as being for the benefit of a child of the donor even if the child of the donor did not receive it, and it - was thus capable of being a portion. In other words, while the rule required there to be two portions which benefited the same person, a gift could be for a person's benefit even though it was not given directly to him and did not come into his hands. The instant case involved a grandparent (A), one of his children (B) and B's child (C) the grandchild of A. While he was alive the grandfather, A, paid the school fees of his grandchild, C.B was e residuary beneficiary under A's will. It was held that the 1nter V1vos gift by a grandparent A for the benefit of a grandchild C could be taken to be for the benefit of the grandchild's parent, B, that is, for the benefit of the donor's child. The justification for this is that the inter vivos gift will benefit the child, B, as it will, pro tanto, discharge the parent B's duty to maintain the grandchild, C, and to provide for his education. So, the payment by the grandfather, A, of the school fees of the grandchild, C, and a gif of a share in the residue of the grandfather's will to the grandchild's father, B, gave rise to a double portion. The gift in the will and the inter vivos provision for the education of the grandchild, C, were such that it was possible to regard the donor, A, as likely to have regarded both gifts as making substantial provisions, both of which were intended to provide a substantial benefit to the same person, i.e. the donor's child, B. So, both gifts were portions in favour of the child, B, and the rule against double portions applied. As there was no evidence to rebut the rule, the inter vivos provision protanto adeemed the child's (B's) benefit under the will

Question 29

Re Heather [1906] 2 Ch 230

Answer 29

A testator left £3,000 to his adopted daughter, Mary, and divided the rest of his property between Mary and another. The testator had made several gifts during his lifetime to Mary, including one of £1,000. The court held that the doctrine of satisfaction had no to application in the case. First, the court decided that the £1,000 was not a portion. Secondly, even if it had been a portion, it would not have been satisfied by the legacy or the gift of residue. The result of applying the doctrine would have been to increase the benefits flowing to the other residuary beneficiary and the court thought that was not an appropriate application of satisfaction.

Question 30

Race v. Race

Answer 30

A father made a will providing that his daughter could live in his pub rent free for as long as she wanted, after which it would be sold and the proceeds would be divided between the claimant (the testator's son) and the daughter equally. Subsequently, the father executed a deed of gift conveying the pub to himself and his daughter as beneficial tenants in common. The key question in the case was whether or not this subsequent, inter vivos, gift operated to adeem the daughter's half share in the residue under the will. It was held that both the gift in the will and the inter vivos gift amounted to 'portions' This was as distinct from 'pure bounty' and 'giving as a present'. The rule against double portions depended on the presumed intention of the testator and was rebuttable. Prima facie, the rule against double portions would operate, under which rule the testamentary gift would be adeemed. The judge (HH Judge John Behrens) considered that it was difficult to see why there should be any distinction between gifts of realty and gitts of personalty. There was, the judge considered, no rule of law that the rule against double portions did not apply to land. Thus, there was a presumption in this case that the deed of giftof land was an acceleration of the bequest in the will and the presumption had not been rebutted.

Question 31

Blandy v Widmore

Answer 31

By marriage articles, a man covenanted to leave his wife £620 on his death. He died intestate but the wife's share on intestacy was worth more than £620. It was held that this must be taken in performance of the covenant.

Question 32

Clay v. Landreth, 1948

Answer 32

Plaintiff and defendant contracted for sale and purchase of a plot for the purpose of erecting thereon a storage plant for ice-cream and frozen fruits. Subsequently the section was rezoned from business to residential property by municipal ordinance. The plaintiff sought for specific performance by application of doctrine of equitable conversion whereby the plaintiff would be considered the owner of the purchase money and the defendant would be owner of the plot. Trial court denied relief. On appeal, the decision was affirmed. Equitable conversion should not be applied because of resulting hardship to purchaser. In this case, the contract was no longer capable of performance due to the municipal ordinance which rezoned the area from business to residential.

Question 33

Ker v Wanchope

Answer 33

Lord Eldon emphasized the importance of the doctrine of election by holding that “a party cannot chose to accept and reject the same document”

Question 34

Bristow v. Warde (1794) 2 Ves. 336; 30 E.R. 660.

Answer 34

F had a power of appointment over stock in favour of his children. He appointed by his will part of the stock to the children and part to stran- 100 gers, that is, persons who were not objects of the power. The children were entitled in default of appointment. The court held that the children could take both, that is, the part appointed to them and also the part that was ineffectively appointed to strangers; they being entitled to it in default of appointment. Here there was no case of election because the donor gave no property of his own to the children. The part which was improperly appointed to strangers, belonged to the children being the persons entitled in default of appointment and also the part appointed to them did not belong to F and therefore F could not dispose of it as if it were his own property. The decision would have been different if F had given some of his own property by the will to his children.

Question 35

Whistler v. Webstern (1794) 2 Ves. 367; 30 E.R. 676

Answer 35

where the facts were the same as above except that F by his will gave some legacies out of his own property to the children, the court held that the children must elect. If they elect in favour of the instrument, that is, the will, they would keep the legacies bequeathed to them and allow the property wrongfully appointed to strangers to pass in conformity with the will; but if they elect against the will, they would keep the property wrongfully appointed to strangers and also take the legacies given to them by F, but they must compensate the disappointed strangers out of the legacies given to them by F. The principle is that there must always be some free disposable property given to the elector so that if he elects against the instrument he can take out of it to compensate the disappointed person and also if he elects in favour of the instrument the property would be a compensation for what the donor has taken away from him

Question 36

Taylor v. Williams (1935) 12 N.L.R. 67,

Answer 36

where the donor purported to devise her undivided share in a family property, which she had no power to do under customary law, the court held that there was no case for election, for the donor had not given his own property to the person who was being called upon to elect. Under customary law family property is indivisible and a member has no alienable interest in the family property

Question 37

Re Edwards (1958) Ch. 168 at 177,

Answer 37

T by her will devised Blueacre and some other properties to E and six others. Later, T entered into an oral agreement with E whereby Blueacre was given away to E for valuable consideration. T died without having altered her will. The question was whether E should be put on election. On the face of the will it is clear that T had disposed of certain property belonging to E and had also conferred certain benefits on E. But the Court of Appeal held there was no case for election on the ground that the consequence of the inter vivos disposition of Blue acre was that at T's death there was no intention on his part to make a testamentary gift of Blueacre. The devise of Blueacre under the will had been revoked by reason of its disposition inter vivos, so that at T's death Blueacre was adeemed. Jenkins L.J. observed: 'The true position in such a case is, as it seems to me, that the testamentary disposition has clearly gone, and the person in whose favour the disposition of the property inter vivos is made simply takes it under that disposition without any question of his or her thereby taking against the will, and thus, being disqualified from receiving any benefit under the will. Re Wheatley (supra), The donor's property was given to a married woman subject to a restraint upon anticipation. The property was given by the same instrument as that which gives rise to the question of election. Chitty J. held that the woman could not be called upon to elect, as the property given to her has, by the terms of the instrument, been made inalienable and, therefore, there was no property out of which compensation could be made to the disappointed person in the event of an election against the instrument. Where property is given in such a manner, the donor is presumed to have intended it as a personal provision and for the donee's inalienable use; to imply a condition of election in that circumstance would be to imply a condition of election against the express language of the instrument.

Question 38

Re Lord Chesham (supra) at 472,

Answer 38

T by his will gave certain chattels upon trust for sale for the benefit of A and B and gave the residue of his estate to C. The chattels were in fact to be enjoyed by C with a land the subject-matter of a trust of which C was a tenant for life. The question was whether C could be called upon to elect. The court found that if C elected in favour of the will as he was entitled to do under the doctrine of election, he had no disposable interest in the chattels which he could make over to A and B it was, therefore, held that C could not be put to his election.

Question 39

Ogunmefun v. Ogunmefun

Answer 39

There is no case for election where the property sought to be disposed of is a family member's interest in a family property. This is because under customary law a family property is indivisible and a member of the family has no alienable interest in the family property;

Question 40

Cooper v. Cooper (1874) L.R. 7 H.L. 53 at 78, T,

Answer 40

By her will gave Blackacre to X and at the same time gave a legacy to Y. At the time the will was made Z was entitled to the proceeds of Blackacre. Z predeceased T; on Z's intestacy, Y became his sole next-of-kin and, therefore, entitled to Blackacre. On T's death the question was whether Y should elect between Blackacre and the legacy. It was held that he must elect. In that case, Lord Moncreiff said 'It is quite fixed that it is wholly immaterial whether the testator thought that he had the power to convey the property, or knowing that he had not the power, usurped it. The rule in regard to election is in either case precisely the same'.

Question 41

Grissell v Swinhoe (1869) LR 7 Eq 291,

Answer 41

The fund of a settlement belonged half to the testator and half to Elizabeth Swinhoe. The testator left all of the fund to his daughter, Charlotte, and Elizabeth's husband in equal shares. The testator died in 1855 and Elizabeth died a year later. Her husband became entitled on her death to her personalty. The court held that there was no case for election since at the date of the death of the testator the husband did not own the half share of the trust fund and so at that date there was no property of the husband which the testator was purporting to transfer.

Question 42

Sweetman v Sweetman

Answer 42

Election could be express or implied, provided it is proved that the elector had knowledge that he was required to elect.

Question 43

Streatfield v. Streatfield

Answer 43

Prima facie, there is no time limit within which election is to be made; but a time limit may be specified or imposed by the instrument or by the court. Where there is such time limit, a person who is bound to elect but fails to elect within the time stipulated is deemed to have elected against the instrument, and will be under a duty to compensate the disappointed person.

Question 44

Cranner’s Case (1702) 2 Salk. 508; 91 E.R. 434,

Answer 44

The testator, who was indebted to C for a sum of £50, thereafter proceeded to make a will by which he gave C £500. Subsequently, he borrowed £150 from C and died. The Master of Rolls decreed that the legacy was a satisfaction of both debts but Harcourt L.C. reversed the decree 'because a Court of Equity ought not to hinder a man from disposing of his own as he pleases; and when he says he gives a legacy, we cannot contradict him, and say he pay a debt;' therefore, the debt contracted subsequently to the making of the will could not raise a case of satisfaction. If the doctrine of satisfaction is truly based on the presumed intention of the testator, it is impossible for the testator to have intended to satisfy an obligation that was not in existence at the time of making the will. 

Question 45

Talbot v Duke of Shrewsberry

Answer 45

Established the pro tanto rule

Question 46

Re Rattenbery

Answer 46

It was held that although one cant enforce legacy in a will until a year after the death of the testator, a legacy cannot be held to be less beneficial to the debt itself which can be enforced at anytime, since the legacy accrues in interest from the day of the death of the testator.

Question 47

Re fletcher

Answer 47

There is no satisfaction where the debt was discharged of during the testators lifetime.

Question 48

Lawes v Iaes

Answer 48

The father had promised his son a bond of 10000 pounds as a gift but before the due date he got hin partnership in which he had shares of 19000 pounds. It was held at the latter portion satisfied the first one. It should be noted that the doctrine will only apply if the legacy is in a sum as great as or greater than the debtor if there is a direction to pay debts