SPECIAL COLLECTIONS
UNIVERSITY RESEARCH LIBRARY UNIVERSITY OF CALIFORNIA LOS ANGELES
Ex Libris
W.W. RobinsonTALKS ON REALTY LAWS OF CALIFORNIA
by
MELVILLE P. FRASIER
Member of Los Angeles Bar
Actively Engaged for Thirty-five Years in Title Work
Second Edition 1923
Price $5.00, Postpaid
MELVILLE P. FRASIER Room 303 Story Building, Sixth and Broadway Los Angeles, California.CONTENTS
REFERENCE BY PARAGRAPHS
CHAPTER I.
History and Nature of Estates in Land in California
Acquisition from Mexico: Title to Tide Lands: Title to lands under Navigable Waters............................... 1,4
Grants before Admission: Missions: Confirmation......... 2, 3
Other Titles Acquired by Grant, etc.: Listing: Patent...4,5,6
Community System: Where Obtains........................... 7
Constitutional Provisions ................................ 8
Act 1850: Effect of Divorce: Examples—..................9,	15
Amendments 1891: 1917: Effect of: Rule in Spreckels Case:
New Sec. 172 A. C. C.: Property from another State..	10
Mortgages by either Spouse.............................11,	14
Inquiry as to Consideration: Effect of Statute........... 12
Deeds and Agreements between Spouses: Separation Agree-
ments: Earnings of Wife.............................. 13
Liability of Spouses for Debts........................... 14
Kinds of Tenancy.......................................   16
Joint Tenancy Defined: Tax Upon: Destruction of Parties
to ........................................17,18,19, 34, 41
Partnership Interest Defined: How Created................ 20
Interest in Common Defined............................... 21
Distinction Between Joint Tenancy and Tenancy in Common.. 22
CHAPTER II.
Essentials of a Deed
Form of Deed: Effect of Grant Deed: Of Quit Claim.......... 24
Transfer Defined: What Transferable: Of U. S. Homestead:
Of after Acquired Lands................................ 25
Who May Make Deeds To and From Corporations................ 26
Deeds after Forfeiture: Vesting upon Forfeiture: Trustee un-
der Forfeiture ........................................ 28
Deeds by Minors: Right of Disaffirmance.................... 29
By Incompetents: Obtained by Fraud: Aliens: Inquiry Nec-
essary: Notice ......................................30,37
Who may be Grantees: Identity: Change of Name:
Status ............................................31,	32, 35
Deeds by Trustees, Administrators: Guardians............... 33
Consideration : Gift Deeds................................. 36
Rights of Innocent Purchaser............................... 37
Use of Habendum: Signature: By Mark: Attorney in Fact:
By Corporation ......................................38,	39
Delivery: Delivery in Escrow............................40,169
Acceptance by Grantee...................................... 41
Notice by Possession: Acknowledgment by Married Woman.... 42Notice by Record: Faulty Acknowledgment: Actual Notice:
Curative Acts ....................................... 43
Deeds to “Trustee,” “Treasurer,” etc...................44,	184
Precautions ............................................. 45
CHAPTER III.
Covenants, Conditions and Restrictions
Covenants of Grant Deed: Caution.......................:... 46
Encumbrances and Liens Defined: Visible Burdens............ 47
Real and Personal Covenants Defined........................ 48
Enforcement of Personal Covenants: Notice of........49, 50,51,52
Covenants and Conditions Distinguished..................51,	54
Real Covenants Created by Grant or Agreement............... 53
Conditional Estates: Forfeiture Generally.................. 54
Conditions Precedent and Subsequent Distinguished. ........ 55
Certain Conditions Void.................................54,	56
Conditional Estates and Conditional Limitations Defined:
Reversion to Stranger Void............................. 57
Suspension of Power of Alienation.......................... 58
Restrictions as to Use: Notice: Forfeiture: Relief: Owner
Bound by Map: Sale Liquors: Race Restrictions: Building Lines: Cost: Character and Location: Outbuildings: Dwellings: Flats: Tenements, etc...............59,60,61,62
Rules of Construction: Time Limit: Suggestions.........60,62,63
Zoning Ordinances ......................................... 64
CHAPTER IV.
Description of Land
General Comment: Cautions: Interpretation................. 65
Rules of Construction: Intent of Parties.................. 66
Boundary by Physical Monuments Defined.................... 67
Description Must Identify................................. 68
Monuments Prevail: Line of Improvement as Boundary:
Water as ............................................69, 81
General and Particular Descriptions....................... 70
False and True Statements: Inconsistencies...............71, 72
Statement as to Area: When Controlling: Sales by.......... 73
Indefinite Exception Void: Exception out of Exception....	74
Reference to other Instruments and Maps................... 75
Meaning of Terms of Direction............................. 76
Boundary by Agreement..................................... 77
Boundary by Pond: Lake: Streams: Tide Waters: Hills:
Highway: Meander Lines.........................78, 81, 69, 81
Ownership to Center of Way or Stream: Intent: Words of
Inclusion and Exclusion..............................79, 82
Accretions : Shifting Boundaries: Added Lands............. 80
Islands formed in Streams: Tide Waters and Streams........ 81
Public Way: Dedication by Map: Easement Only: Intent to
Exclude: How Described after Vacation................82, 84
Rights of Abutting Owner.................................. 83Area Computed to Street Centers........................... 85
Exceptions and Reservations Distinguished................. 86
Suggestions to Draftsman.................................. 87
CHAPTER V.
Mortgages and Trust Deeds
Mortgages and Trust Deeds Distinguished................... 88
Strict Foreclosure: Power of Sale......................... 89
Statute of Limitations : Extension of................89, 90,91
Outlawed Mortgage: Right of Third Party................... 92
Trust Deeds Upheld......................................   93
Default: Election to Sell: Notice: Recitals in Deed....... 94
Title of Trustee under Trust Deed......................95,182
Successors in Trust: Appointment: Acceptance.............. 96
Certification of Notes.................................... 97
Advantages of Trust Deeds as Security..................... 98
Power of Sale only Remedy unless Trust Fails.............. 99
Suit on Notes: Deficiency: Liabilities of Parties........ 100
Parties: Corporations: Liability of Directors: Liability of Stockholders: Public Utilities: Blue Sky Law: By Guardians : Executors: Administrators: On Interests of Minors must be Separate........................................ 101
Satisfaction by Joint Payees: By Husband and Wife: By Administrators and Executors: To Alternative Mortgagees ............................................. 102
What May Be Pledged: After Acquired Property............. 103
Deed as a Mortgage: Waiver of Right of Redemption........ 104
Deed in Satisfaction of Debt: Date of Note............... 105
Note and Mortgage Read Together: Assignment of Note
Carries Security: Equities: Inquiries: Possession....30, 106, 161 Priorities of Liens over Unrecorded Mortgage.........107,	170
Renewals and Extensions:	Rights	of Parties: Consideration.108
Advancements in General.................................. 109
Interest: Excessive Rate:	Usury	Law.......... 110
Precautions ............................................. Ill
CHAPTER VI.
Homestead Exemptions
Character Of: Purposes................................... 112
Of What Consists: Who May Declare: Limit of Value........ 114
Who May Select........................................... 115
On Joint Tenancy: On Tenancy in Common : Effect after Sale:
Right of Wife........................................ 116
As Against Judgments: Creditors: Mortgagees...............117
Conveyance of: Rights of Second Wife: Inquiry Necessary:
Deeds between Husband and Wife................11,	118,161
Abandonment ............................................. 119
Effect of Divorce.............................-.......... 120
Effect of Death: Proceedings.........................121,	123
Probate Homestead: Rights of Widow....................... 124Appraisement of: Rights of Creditors..................... 125
Mortgage on: Claim must be Presented on Death............ 126
Precautions ...........................................11,127
CHAPTER VII.
Landlord and Tenant
What may be Leased: Term...............................128,129
Renewals: Notice of....................................130,131
Duties of Landlord: Dilapidations: Repairs............133,	135
Who may Lease: Covenants................................. 132
Use: Unlawful Purposes: Red Light Act.................... 134
Term of: When Presumed................................135,136
Rent Must be paid to Landlord............................ 137
Lessee bound by Acceptance: Change of Term............... 138
Assignment and Sub-letting: Liabilities.................. 139
Remedies of Landlord: Damages............................ 140
Lien of Inkeepers, etc. Lien for Rent.................... 141
Fixtures ................................................ 142
Re-entry: Tenancy at Will. Notice........................ 143
Forcible Entry: Forcible Detainer: Unlawful Detainer:
Notice: Remedies .................................... 144
CHAPTER VII.
Contracts of Sale: Options: Escrows:
Essentials of a Contract................................. 145
Parties: Minors: Incompetents............................ 146
Consent: Rescission: Use of Words.................147, 164, 165
Must be in Writing: Receipts...........................148,149
With Brokers: Between Brokers............................ 150
Inducements: Promises: Precautions....................... 151
What Contract Should Contain: Intent..................... 152
Interpretation .......................................153,	154
Executed Contract: Option and Agreement of Sale Dis-
tinguished .......................................... 155
Consideration for Option: For Contract of Sale........... 156
Time for Performance .................................157,	158
Damages: Money Forfeited................................. 159
Rights of Buyer: Time for Performance: Tenders: Possession:
Notice: Homestead by Seller...................160,161,163
Rights of Seller: Remedies........................162,166,167
Rescission ............................................164,165
Stipulations as to Forfeiture............................ 168
Escrows and Executory Agreements Distinguished........... 169
CHAPTER VIII.
Mechanics Liens
Act 1911: Who Entitled: Character of Lien: Contract: Bond:
Liability: Notice: Completion: Duration of Lien..l70,171, 107 Notice of Non Liability by Owner......................... 172
Rights of Contractor..................................... 173CHAPTER IX.
Trusts and Agency
Trusts Defined: Origin.................................... 175
Trusts Distinguished: Notice: Code Trusts...........44, 176, 177
Invalid Trust Under a	Will............................... 178
Executed Trusts Valid: Construction of Will: Lawful Trusts:
Requirements ......................................... 179
Title of Trustee: Alterations: Termination................ 180
Spendthrift Trusts ....................................... 181
Beneficiary as Trustee: All Trustees Must Act: Successors:
Compensation: Duties: Powers: Notice...............182,	183
Precautions .......................,...................... 184
Agents Authority: Power of Attorney: Powers Generally....... 185
Revocations .............................,•............... 186
Delegation of Powers: Duties: Rights of Agent: Commissions:
Illegal Sales: Licenses............................187,188
Escrows: Deposits: Agency Created: Rights of Parties..4O, 189, 190
CHAPTER X
Wills and Law of Succession
Community Interest: Effect of Will: Widow’s Election: Rights
of Parties ....................................190,200,208
Who May Make Will......................................191,208
Who May Take Under Will. Charitable Institutions: Statutory
Provisions ........................................... 192
Execution of Wills: Statutory Provisions: Holographic Wills:
Nuncupative Wills: Attestation........................ 193
Revocation: Marriage of Testator.......................... 194
After Born Children: Pretermitted Heirs................... 195
Rank of Beneficiaries. Gifts.............................. 196
Rights of Purchaser from Heir..........................197,	198
Succession .............................................199,201
Advancements: Aliens ..................................... 200
Estates $2500 or Less: Claims...........................200, 203
Devise to Trustee: Powers of Administrator, etc.....205, 206, 207FOREWORD
These so-called “talks’” were originally in form of oral lectures delivered by the writer in the spring of 1916 to a body of representative business men of Los Angeles County. These lectures, by request, were put in printed form and furnished mainly to those who contributed to the course. The very marked favor with which they were generally received has prompted the writer to review, amplify and bring down to date, the small book which was then printed to the end that this edition shall be more comprehensive, more convenient for ready reference and consequently of more practical value.
This work is not intended as a text-book for lawyers. It is a book of reference only, in the sense that some suggestion of the writer concerning some topic may open the way for further research. Rather has the writer sought to set forth in as clear a form as he might, the outstanding and elemental rules of law governing transactions in real property in this state.
In his thirty-five years’ experience in the title business, the writer has seen so many instances of loss of money and rights through ignorance of these elemental rules, that he deems it not unwise to give to the profession and the public at large, the benefit of his research and observation. He distinctly wishes it understood that this book does not purport to contain the law, but merely his comments on the law as he finds it, and his suggestions as to safeguards to be observed by his readers.
MELVILLE P. FRASIER.
Los Angeles, Cal., July 1st, 1923.I.
History and Nature of Estates in Land in California
1.	The territory now embraced within the lines of the State of California once belonged to Spain. Whatever law governing the ownership, transfer and succession of property which may have been applied during the period of her sovereignty, was the Civil law, derived, almost in its entirety, from the ancient Roman Laws. Under this ancient Spanish law, all real estate was deemed to be owned by the king. No individual could own, what is termed by the common law of England, a fee simple: that is to say, an absolute ownership of and dominion over the land itself. Under the Spanish system, the king granted out to his subjects the use of lands on consideration of services, courtly favor, or for a lump sum. The title to these lands, however, as we understand the term, did not pass from the sovereign. When Mexico threw off the yoke of Spain and established her independence, the titles to all lands within her borders became vested in the State as sovereign, and thereafter, the state made such concessions and grants as were formerly made by the King of Spain.
2.	The system of granting lands in California from the sovereign, arose sometime about 1780. The public authorities were permitted to grant out to individuals, tracts of land to be used for stock raising in areas not to exceed three leagues, or nine miles square, provided the same did not interfere with the rights of any mission or pueblo already established. It may be noted here that the grants to the several missions of the lands surrounding them, were of the mere right of use and occupancy. The missions were broken up by 'action of the Mexican Government between 1834 and 1840. Practically all of the personal property belonging to them was confiscated and their grants of lands were forfeited. Allotments were also made to citizens dwelling in pueblos of parcels for residence and for farms and gardens outside of pueblos. These grants were usually very vague and indefinite. Evidently, it was considered that every man knew where he lived and where his garden might be, and it did not appear to be of any concern to other persons. Land was of little or no intrinsic value and notmuch heed was given to questions of title or boundary. These matters were governed almost entirely by physical possession and but few disputes arose, we may imagine, except as to actual occupancy.
3.	California was during all these years, and up to the time of the American occupation, a colony of Spain, and later of Mexico, and was governed accordingly. It existed in theory for the use and benefit of the mother country. About 1830, the practice of granting titles by writings began. But very few were given before that date and they were of doubtful validity and were not held in much regard. Gradually, it became the custom of the pueblo authorities to grant such titles to such of the citizens as desired them, and gradually, it became the practice of the Mexican Government to grant such titles to ranches. After the United States succeeded to the sovereignty of Mexico over this territory, a Land Commission was created by Act of Congress wherein claimants could advance their claim to titles to these lands, disputes as to ownerships, and boundaries were determined, and upon recommendation of the Commission, confirmatory patents were issued by the United States. So far as the writer is informed, every such grant in the state has been confirmed. It has been the practice of the municipalities which were once pueblos, to ratify the early grants of pueblo property by deed or ordinance. The general practice in Los Angeles is for the claimant to implead the city in an action to quiet title. The city invariably disclaims, except as to such rights as the public may have by reason of public ways or tax claims. It is safe to say there is but little land in this category within the boundaries of the City of Los Angeles, the title to which has not been confirmed in the owner by deed from the city or decree against the city. The troubles and disputes over Mexican titles, speaking in a general sense as to inception and confirmation, are forever buried. Here and there may arise disputes as to the actual location of boundary lines, or as to individual interests of claimants of which our courts have cognizance, but in the sense of confirmation by governmental authority, the titles to the grants themselves are forever settled.
4.	The United States succeeded to the sovereignty over these lands by the treaty of Guadalupe Hidalgo, entered into at the close of the war with Mexico, and at that time, became the owner of all lands theretofore undisposed of. We have seen that by patents, the United States confirmed such valid grants as had theretofore been made by the Spanish or Mexican Governments, ' On September 9th, 1850, California was admitted to the Union and by virtue of her sovereignty, on that day became the absolute owner of alllands over which the tides of the sea ebb and flow: that is to say, all lands lying between the line of ordinary high tide and ordinary low tide, and of all lands lying under navigable streams and lakes, without necessity of a formal grant from the United States. This ownership is in the nature of a trust, however, for the public uses of navigation, and these lands cannot be alienated by the state except the grant be subject to such public uses. Franchises may be granted to individuals and corporations for use, and formal grants may be made, but always there exists this inalienable ownership for public uses. By Acts of the Legislature from time to time, under the authority of law, the right of the state has been vested in municipalities, on the theory that these public rights are best protected where local interests are at stake—notably the grants of such state rights by Acts of the Legislature to the Cities of Oakland, San Francisco, Los Angeles, Long. Beach, San Diego and others.
The state becomes the owner of other lands by grant from the United States, purchase or condemnation, and may hold lands for public buildings and the like as any other proprietor, save that such state owned lands are not subject to liens of any character which cannot attach for reasons of public policy.
5.	By an Act of Congress, approved March 3rd, 1853, there was ceded by the general government to the state the 16th and 36th Sections in every governmental township in aid of schools. These are known as “School Sections.” The title vested in the state as to the particular sections, upon being surveyed under the official system of the United States, the surveys approved and filed in the United States Land Office. No patent was necessary to convey the title to the state, as the Act of Congress was a grant in itself in terms. In cases where the 16th and 36th Sections had been disposed of before the act became effective, the state was given other lands in lieu thereof. Title to these so-called “lieu lands” does not vest in the state or a purchaser from the state until properly selected and listed to the state as provided by the Act of March 3rd, 1853.
6.	On September 28th, 1850, there was given by Act of Congress to the state all of the swamp and overflowed land lying within her borders. What constituted swamp and overflowed land could only be determined as the Government surveys were made. The Act provides that surveys of such lands be made by Government surveyors and lists and plats thereof returned to the General Land Office. As these lists were approved from time to time, patents for the lands therein described were issued by the United States to the state. The decisions are conflicting as to the necessity for patent, but the Department holds that such necessity exists. Other smaller grants have been made from time to time by the United States to the State of California for University purposes and the like. In all cases, when dealing with state lands, inquiry should be made and the law examined to ascertain if the grant under which the state claims title requires patenting or listing by the United States in order to pass title. The lands so granted to the state are sold outright, or leased by the state to citizens under laws relative thereto contained in the codes. These grants from the United States to the state, passed all mineral rights and title, and the patents from the state pass all mineral rights unless specially reserved. By statute these rights may be reserved in grants by the state and leases thereof made. (Chap. 303, Stat. 1921.) It might be well to state in this connection that no lands are open to mining locations except vacant lands of the United States.
7. When California became United States territory we inherited from Spain and Mexico, and adopted as our own, certain laws governing estates in real property which are in direct opposition to the common law of England, which applies in most of the States of the Union, except as modified by statutes. In many features the tenure of lands in California bears no relation to that of the so-called Common Law States. The estate of dower in the wife and curtsey in the husband, whereby each have certain vested rights in the property of the other, never existed in California. Under the theory of the Common Law husband and wife are but one person. The identity of the wife is sunk in that of her husband upon marriage and while the marriage relation exists. Not so under the Civil Law which was handed down to California by Spain and Mexico. Under the community system, so called, which has always prevailed in California, husband and wife are considered and treated somewhat as members of a partnership. The identity and individuality of the wife is not sunk in that of her husband and she has individual rights and privileges under the law as has the husband. This American Community system prevails today in Louisiana, Texas, California, Nevada, Arizona, Washington, Idaho and New Mexico with some differences caused by statutory enactments./As said, a marked distinction exists between the Civil Law and the Common Law in respect to the legal rights and capacities of husband and wife. The Civil Law which to that extent prevails in California, does not recognize in the spouses that union of persons by which the rights of the wife are incorporated during coverture with those of her husband. On the contrary it regards the husband and wife as distinct persons,possessing separate rights and capable of holding distinct and separate estates, and the community laws are applicable to a man and woman who cohabit together as husband and wife under an illegal marriage. (36 App. Dec. 20.)
8.	The first Constitution adopted by the State in 1849, contains the following clause: “All property both real and personal of the wife, owned or claimed before marriage, and that acquired afterwards by gift, devise or consent shall be her personal property.” (Sec. 14, Art. XI.)
Sec. 8, Art. XX, of the Constitution of 1879 reads: “All property, real and personal, owned by either husband and wife before marriage, and that acquired by either of them afterwards by gift, devise or descent, shall be their separate property.”
9.	By an Act of the Legislature passed April 17th, 1850 (Acts 1850, Chap. 103), it was declared that all property, both real and personal, of the wife owned by her before marriage, and that acquired afterwards by gift, devise or descent shall be her separate property, and all property, both real and personal, owned by the husband before marriage, and that acquired by him afterwards by gift, devise or descent shall be his separate property, and that all property acquired after marriage except as may be acquired by gift, devise or descent shall be common property. Tn case rights of husband and wife are not adjudicated in action for divorce the decree of divorce does not conclude either party in respect to their claims otherwise existing as to such property. (35 App. Dec. 322.)
A homestead under United States Laws is held to be the separate property of the husband. (35 App. Dec. 322.)
Damages for personal injury to husband or wife are community property. (44 App. 258; 31 App. Dec. 47).
By the Act of 1850 the husband was given the entire management and control of the common property, with the like absolute power of disposition as of his own separate estate. Thus we see that under this law any conveyance to either husband or wife or to both, after marriage, unless it could be shown that the acquisition was by gift, devise or descent, vested the title absolutely in the husband who could make deeds alone, even, it would appear, in cases where the deed ran to the wife in her name alone.
10.	In 1891 the Code was amended to read as follows: “Sec. 172 C. C. The husband has the management and control of the community property with the like absolute power of disposition other than testamentary, as he has of his separate estate; provided, however, that he cannot make a gift of such communityproperty, or convey the same without a valuable consideration unless the wife in writing consents thereto.” This proviso was extended to furniture, furnishings and fittings of the home, clothing and wearing apparel of the wife or minor children, which is community property, by amendment of 1901, and by amendment of 1917.
The Supreme Court of California has construed the amendment of 1891 in the case of Spreckels vs. Spreckels (116 Cal. 339), and decided in said case that prior to said amendment to Sec. 172 C. C. of 1891, the Codes vested in the husband all the elements of absolute ownership of the community property to the exclusion of the wife, and as to all the world, except the wife, there was, prior to said amendment, no distinction between the common estate and the separate estate of the husband as respects the power of disposition and the amendment cannot be construed retroactively so as to deprive the husband of his vested right to dispose by gift of community property, which was acquired prior to the amendment, without the written consent of the wife. This decision was followed in Scott vs. Austin (38 App. Dec. 723) and declared to be a rule of property. A new section was added to the Code effective May 23, 1917, known as Sec. 172 A. “The husband has the management and control of the community real property, but the wife must join with him in executing any instrument by which such community real property, or any interest therein, is leased for a longer period of one year, or is sold, conveyed or encumbered, provided, however, that the sale, lease, contract, mortgage or deed of the husband holding the record title to community real property to a lessee, purchaser or encumbrancer in good faith and without knowledge of the marriage relation shall be presumed to be valid; but no action to avoid such instrument shall be commenced after the expiration of one year from the filing for record of such instrument in the Recorder’s Office in the County where the land is situate.
A deed executed by the husband alone purporting to convey community property acquired subsequent to the enactment of this new section is void. (36 App. Dec. 815.)
Sec. 162 of the Civil Code declares that all property of the wife owned by her before marriage and that acquired afterwards by gift, devise or descent together with the rents, issues and profits thereof is her separate property, and that the wife may without the consent of her husband convey her separate property.
Sec. 163 C. C. declares that all property owned by the husband before marriage and that acquired afterwards by gift, devise or descent, with the rents, issues and profits thereof, is his separateproperty. Sec. 164 C. C. prior to the amendment thereof which became effective July 27, 1917, declared that all other property acquired after marriage by either husband or wife, or both, is community property, but whenever any property is conveyed to a married woman by an instrument in writing, the presumption is that the title is thereby vested in her as her separate property, and in case the conveyance be to such married woman and to her husband, or to her and any other person, the presumption is that the married woman takes the part conveyed to her as a tenant in common unless a different intention is expressed in the instrument, and this presumption is conclusive in favor of a purchaser or encumbrancer in good faith and for a valuable consideration. It is further provided that in cases where the married woman acquired title before May 19, 1889, the husband and his heirs are debarred from maintaining any action to show that the property was community property as follows: In cases where the married woman deeded before the passage of the Act, within one year after May 9, 1889, and in cases where she deeded after the passage of the Act, within one year after the date of record of her deed. This section was amended by Act effective July 27, 1917, to read as follows: “All other property acquired after marriage by either husband or wife, or both, including real property situated in this State and personal property wherever situated acquired while domiciled elsewhere, which would not have been the separate property of either if acquired while domiciled in this State, is community property, but whenever any property is conveyed to a married woman by an instrument in writing the presumption is that the title is thereby vested in her as her separate property, and in case the conveyance is to such married woman and to her husband, or to her and any other person, the presumption is that the married woman takes the part conveyed to her as tenant in common, unless a different intention is expressed in the instrument, and the presumption in this section mentioned is conclusive in favor of a purchaser or encumbrancer in good faith and for a valuable consideration. And in cases where married women have conveyed, or shall hereafter convey real property which they acquired prior to May 19, 1889, the husband or their heirs and assigns, of such married woman, shall be barred from commencing or maintaining any action to show that said real property was community property, or to recover said real property as follows: As to conveyances heretofore made from and after one year from the date of the taking effect of this Act; and as to conveyances hereafter made from and after one year from the filing for record in the Recorder’s Office of such conveyances respectively.”Property which is separate property under the laws of the State where acquired remains separate property when brought to California in absence of gift. (26 App. 35.) But this applies to personal property acquired after the going into effect of amendment of July 27, 1917 (62 C. D. 405), but see Estate of Arms (62 C. D. 146) wherein it is held that where husband brings into this State money or property acquired by him after marriage in another State by whose laws it was his separate property, it remains his separate property in this State, and any property acquired therewith in this State either by purchase or exchange is also his separate property.
These provisions barring actions are for the sole purpose of protecting innocent purchasers for value and are applicable only in such a case (38 App. 586: 178 Cal. 6).
The objects of these amendments is obvious. The law permits the husband to take the title to community property in the name of the wife. So long as she holds it and does not deal with it either with purchasers, or encumbrancers, in good faith and for value, the husband, his heirs, or his creditors are permitted to show that the property is in fact the property of the community and subject to control and disposition of the husband. But where she has been held out to the world as an owner entitled to deal with the property, the husband, his heirs and creditors are estopped to deny this when she has sold or encumbered in good faith for a valuable consideration. Therefore, in cases where the wife acquired title since May 19, 1889, it is not necessary that her husband join with her in any deed or mortgage, unless the property be a homestead. The presumption in favor of a purchaser or encumbrancer in good faith and for value is conclusive and final, and the husband, his heirs or creditors, can never overcome it. The Act was passed to relieve such purchasers or encumbrancers from the necessity of making inquiry as to the nature of the estate. He is in no way concerned, for, if it be her separate estate in fact, her husband never had any interest in it, and if it be in fact community property the law protects one so dealing with her by a conclusive, undeniable presumption that the property was in fact her separate estate. A clear understanding of this will facilitate such transactions. Often the signature of a wife or husband is demanded to a deed or mortgage when there is absolutely no necessity for it.
11.	A married woman may borrow money to invest in real property, but the money borrowed during the marriage for that purpose will be regarded as community property unless it be borrowed by her upon the faith of existing separate property belonging to her. (182 Cal. 185.)
We have seen then that if the conveyance be to either husband or wife, or both husband and wife before May 19, 1889, or to the husband alone since May 19, 1889, and prior to May 23, 1917, the date upon which the new Sec. 172-A C. C. took effect, and the property be community property, the husband can mortgage without the consent of the wife. If the deed be to husband and wife, or to the wife alone since May 19, 1889, the wife can convey or mortgage her interest without the husband joining. All this, however, in the absence of declaration of homestead, for when the property has been declared a homestead at any time the husband and wife must join in any conveyance or mortgage.
12.	It clearly appears in the light of the decision in the Spreckels Case (116 Cal. 339) and of the case of Roberts vs. Wehmeyer (36 App. Dec. 815), that in cases where the husband has executed deeds of community property acquired subsequent to March 13, 1891, the date when the amendment to Sec. 172 C. C. went into effect, and prior to May 23, 1917, the date on which the new Sec. 172-A C. C. went into effect, without the written consent of the wife, that it is necessary to ascertain that the consideration for such conveyance, unless it is apparent that the right of the wife to recover is barred by Statute, was valuable— not necessarily adequate. If tendered a deed of community property since March 15, 1891, which said property was acquired between the dates above mentioned, executed by the husband without the written consent of the wife, a purchaser is safe in accepting the deed if he be paying a valuable consideration, but a record of the fact that the consideration was valuable should be preserved in some manner—by placing the transaction in escrow or the like, that the fact can be proven if subsequently questioned. The husband cannot be heard to deny his own act, and the wife may be estopped. It was held in Giuffre vs. Lauricella (25 App. 422) that where community property is conveyed by the husband to the wife on express agreement that she would hold it in trust for him during his life and at his death to convey a half interest therein to parents of the husband, she to retain a half, she is estopped after his death to assert the invalidity of the deed because of her lack of consent in writing.
The proviso added in 1891 to Sec. 172 C. C. to the effect that the husband cannot make a gift deed of community property without the consent of the wife does not render such a deed void, but voidable. The husband, his heirs or personal representatives cannot revoke it. The wife has the power of revocation and ifnecessary to maintain action to recover for the community—not as her separate estate, but her right of action is barred by statute as in all other cases if she has knowledge of the transaction and fails to assert the right within the statutory time. (172 Cal. 775.)
Where the husband makes conveyance of community property without consideration and without consent of the wife it is not void as to himself, and he cannot during his life, or his representatives after his death, revoke the conveyance and recover the property. The conveyance is not void, but voidable only at the option of the wife, and that right is limited to the one-half which could pass to her upon his death. (176 Cal. 714.)
It thus appears that should the wife having knowledge of the transaction fail to assert her right to recover her interest by suit begun within the statutory period, which is five years, or should die before her husband’s death, her right is lost and may be ignored, for her interest in the community is an estate in expectancy only. (44 Cal. 703.)
A husband has no power to revoke his gift of community property for the reason that his wife did not consent to the gift. (33 App. Dec. 313.)
A husband who has executed a deed of trust of community property to secure a note cannot contend that because his wife did not consent the title cannot pass by a default sale. (35 App. Dec. 174.)
13.	A deed from one spouse to the other, or a proper contract for that purpose, has the effect to vest the property dealt with in the spouse receiving it as separate property. (Secs. 158-159 C. C.)
The rights of husband and wife in property are governed by the statutory provisions unless there is a marriage settlement contrary thereto (Sec. 177 C. C.). These marriage settlements must be in writing, executed, acknowledged and recorded in like manner as a grant of land. (Secs. 178-179-180, C. C.).
The husband by taking title to lands purchased with community funds in the name of the wife may be estopped to deny that the title becomes vested in her as her separate property. Property purchased with community funds and title taken in the name of the wife will be presumed to have been intended as a gift to her in the absence of evidence showing contrary intention, and the fact that the husband continued thereafter to manage the property is no evidence of contrary intent. (26 App. 598.)
Under Sec. 164 C. C. as amended in 1897, a deed to a man and his wife presumptively vests the title to them as tenants in common, and a deed to the wife alone presumptively vests the title in her as her separate property. (172 Cal. 239.)An agreement between a husband and wife whereby one or the other relinquishes his or her inheritable interest in the estate of the other is not required to be in writing in order to be enforceable. (31 App. Dec. 680.) But ante nuptial agreements to convey property after the marriage must be in writing. (33 App. Dec. 1).
Although the earnings of the wife during the marriage are as a rule community property, the husband may relinquish to the wife the right to such earnings without any consideration other than mutual consent, and they then become her separate property. Such an agreement may be proved by evidence as to acts and conduct of the husband, indicating that he did not regard them as community property. The expenditure by the husband of either his separate funds or community funds in the improving of his wife’s separate property does not operate to change the title, for as between them in the absence of any specific agreement to the contrary the title to the improvements follow the land. (32 App. Dec. 336.) A contract between husband and wife making no provision for a separation but granting him immunity from financial charge whether they live together or apart is against public policy and void. (36 App. Dec. 971.)
Where property is purchased with community funds and conveyed to the wife alone, with the husband’s consent, by a deed describing it as her separate estate, it is as if the husband himself had conveyed the property to her, and is her separate property. Where it is purchased partly with wife’s separate funds and partly with community funds and deed taken in the name of husband and wife, one-half is the separate property of the wife and one-half community (62 C. D. 57), and except for the purpose of showing fraud, evidence that the husband did not intend to make a gift to his wife is wholly inconsequential. (Same.)
14.	It may be well to note here to what extent the property of the spouses is liable for the debts of either. The community property is not liable for the contracts of the wife made after marriage unless secured by a mortgage or pledge thereof executed by the husband, and since the adoption of Sec. 172-A, by both husband and wife. The separate property of the husband is not liable for the debts of the wife contracted before the marriage. The separate property of the wife is liable for her own debts contracted before or after her marriage, but is not liable for her husband’s debts; but such property is liable for the payment of debts contracted by the husband and wife for the necessaries of life furnished to them, or either of them, while they are living together. But this proviso applies only to such of her separate property as may be such by reason of a gift from her husband. For civilinjuries committed by a married woman, damages may be recovered from her alone, and her husband is not liable therefor, except in cases where he would be jointly liable with her if the marriage did not exist. (Sec. 171-A C. C.) The wife must support the husband, when he has not deserted her, out of her separate property, when he has no separate property, and there is no community property, and he is unable from infirmity to support himself. (Sec. 176 C. C.)
Where the wife signs a mortgage given as security for the payment of a community debt she is not merely a surety but one of the principal obligors. (40 App. 753.)
A mortgage on the wife’s separate property to secure antecedent debt of the husband is void. (109 Cal. 211.)
15.	A word as to effect of a decree of divorce upon property rights of the spouses:
Ordinarily the divorce court has no jurisdiction to dispose of separate property, but where the parties seek an adjudication of character of property as well as a divorce, and absolutely submit the issues to the court, it has jurisdiction to quiet the title in the rightful owner thereof. (39 App. 53.)
Otherwise the court is without power to award separate property in a divorce action. (39 App. 62.)
If a divorce be granted without any disposition of community property, the husband and wife become tenants in common therein-(181 Cal. 667.)
The interlocutory decree in divorce is final as to settlement of property rights of the spouses after time for appeal has passed, and the court is without jurisdiction to alter this in the final decree unless the interlocutory decree provides that this may be done, or where parties expresly agree that it may be done. (Gates v. Gates, 35 App. Dec. 189.) (35 App. Dec. 596.) (44 App. 39.)
16.	Reverting to the topic of ownership of estates. The ownership of property by a single individual or corporation is known as a sole or several ownership. Here no question as to interest arises. The ownership of property by several persons is either:
1.	Of joint interests.
2.	Of partnership interests.
3.	Of interests in common.
4.	Of community interest of husband and wife. (682 C. C.) Husband and wife may be joint tenants, tenants in common,
or as owners of community property. (161 C. C.)17.	A joint interest, or joint tenancy, as it is usually termed, is a peculiar estate in this: It is one owned by several persons, in equal proprietorship, by a title created by a single will or transfer when expressly declared in the will or transfer to be a joint tenancy, or when granted to executors or trustees as joint tenants (Sec. 683 C. C.). The essentials to the creation of such an estate are these: That the title be conveyed by one instrument which expressly declares that the same is to be held in joint tenancy. The effect of such a grant is to vest the full title in each and all of the grantees; that is to say, that each grantee or devisee, as among all, and as to succession, owns all the title at all times, so that the death of any one grantee, or devisee does not change the title at all. It rests as under the original creation in the survivors. This fiction of the law has no bearing on the rights of strangers to the title. It only exists to give the right of succession to survivors. This theory of joint ownership is of no concern to a grantee, mortgagee, or creditor of any joint tenant. It applies only to the rights of tenants themselves and among themselves. The share of one of the tenants dying does not descend to his heirs, nor can it be willed away from survivors. The last survivor holds all as he did from the creation of the estate. (117 Cal. 211.) This plan of vesting an estate is most often resorted to in the creation of trusts or in devises to executors. It has become, however, a common practice to create such an estate in husband and wife in cases where it is desired that the survivor shall take all.
18.	By the Act of 1917, in effect July 27, 1917 (Chap. 589), an inheritance tax is imposed upon successions in joint tenancy, except in cases where it can be proved by the surviving joint tenant that the property originally belonged to him and never belonged to decedent.
This tax must be ascertained and paid before decree is made establishing the succession. (Sec. 1723 Amend. July 30, 1917.
19.	The joint tenancy may be destroyed at any time by the act of one of the joint tenants conveying his interest to a stranger, or by deed by either spouse to the other if the joint tenancy be in husband and wife, or by execution sale of the interest of any party.
A corporation cannot be a joint tenant but can hold in common (2 Cal. 289), nor can a joint tenancy be created by any other person than the grantor or devisor. It cannot be created by agreement nor by deed between the tenants themselves. It MUST be by transfer or will, in one instrument, and the estate created by the grantor or devisor. In CANNOT be created by the granteesor devisees. Personal property, such as notes, bonds and shares of stock may be held in joint tenancy, for the execution and delivery of the security or shares of stock is equivalent to a grant (127 Cal. 142). By special statute bank accounts may be held in joint tenancy.
The estate of joint tenancy is not favored in law as it tends to cut off the natural rights of heirs, and great care should be exercised in their creation as we shall point out when we come to the subject of deeds. (12 Cal. 348.)
20.	A partnership interest is one owned by several persons in partnership for partnership purposes. (Sec. 684 C. C.) It must be remembered that a partnership, as such, or any association of individuals, as such, cannot take title. Those who compose a partnership or association may own property, but as such partnerships or associations they cannot be grantees, under such designation, as there is no legal entity. In case of conveyance to a partnership to vest a title in the several partners, the deed must run to them in their individual names. Whether or not it be partnership property is only the concern of the partners and their creditors. One taking a deed from all partners interested is in no wise concerned. If a deed run to “Sunset Realty Co.,” the deed is void. If it run to “Sunset Realty Co., a partnership composed of John Smith and William Jones,” the deed is good, as the individuals take title. The deed out must be from them. If the deed run to “George Smith & Co,” a partnership, the title vests in George Smith. Purchasers dealing with partnership property may treat the partners as tenants in common.
21.	An interest in common is one owned by several persons, not in joint ownership or partnership (Sec. 685 C. C.), and every interest created in favor of several persons in their own right is an interest in common unless acquired by them in partnership, for partnership purposes, or else declared in its creation to be a joint interest, and it follows that the possession of one co-tenant is the possession of all unless a hostile intent of one is clearly manifested and brought home to all. (24 App. 35.)
22.	The difference between joint tenancy and tenancy in common is this: In a tenancy in common each tenant owns a proportionate share of the property, which descends to his heirs or devisees, his interest being severed from that of his co-tenants. His conveyance of his interest to a stranger does not destroy the estate. He may hold, say, one-third in interest and his co-tenants two-thirds. Under a joint tenancy, strictly speaking, there are no shares; as between the tenants each owns all. Upon a sev-erence of a joint tenancy by the conveyance of one tenant the estate then becomes a tenancy in common among the owners. Where there be three joint tenants and one conveys, his grantee takes a third interest as tenant in common; the others holding between themselves the remaining two-thirds as joint tenants. There is but little practicable difference between these estates except so far as they affect trusteeships and heirs and creditors of a tenant after his death. Upon his death his estate is terminated— there is no estate in him. While alive he can deal with the property by deed or mortgage and his interest is subject to execution. In no case can property held in co-tenancy or joint tenancy be subject to homestead except in cases where husband and wife are the joint tenants or co-tenants (38 C. D. 237; 156 Cal. 195). In every other instance such estates may be as freely dealt with as sole estates.
23.	Concluding this chapter we call to your attention some points you will do well to remember.
Remember that an estate in lands cannot be held by a partnership, as such, or an unincorporated association, as such; that a deed, say to “Sunset Realty Co.,” if the grantee be not a corporation is void. When tendered a deed from a grantor described in any like manner, refuse it, for it conveys no title.
Remember that prior to May 19, 1889, the wife had no control over the community property and has not now as to such community property as was acquired before said date. Remember that the wife must join in all conveyances or encumbrances of community property acquired since May 23, 1917. Do not therefore extend her credit where her only claim to the property is a community interest, without the contract of her husband.
Remember that the husband’s separate property is not liable for the debts of the wife contracted before marriage, so do not extend credit to a lady without separate property on the strength of her impending marriage to a rich man.
Remember that the wife’s separate property is not liable for her husband’s debts. There is nothing in the law which forbids or prevents the wife from paying her husband’s debts out of her separate estate if she choose to do so, but all contracts with a stranger whereby her separate estate is sought to be bound for her husband’s debts are void unless the consideration moves to her. Therefore when you know, or have reason to believe, that the separate property of the wife is being mortgaged or pledged to secure the debts of the husband, require the wife to sign the note and mortgage, or other security, and pay the proceeds to herALONE. When she has received the consideration it is of no concern to the one dealing with her what use she makes of her money.
Remember that the wife can convey or mortgage her separate property, or that which is presumed to be her separate property in cases where she has acquired title since May 19, 1889, without the consent of her husband.
Remember that the husband can convey or mortgage his separate property at all times without the consent of the wife, and that as to all community property acquired prior to May 19, 1889, his power of disposition is absolute. That as to community property acquired after May 19, 1889, he is prohibited from making any conveyance or gift of the same, unless the wife consent thereto, unless he receive a valuable consideration and that conveyances and encumbrances of community property acquired since May 23, 1917, must be the joint act of husband and wife.
Remember that the interest of a joint tenant in lands held in joint tenancy ceases upon his death. The estate does not descend to his heirs. There is nothing to administer upon. This estate dies with him. Be cautious then in extending a liberal credit to one whose property is so held unless you take a mortgage or pledge of the property so held. A lien will survive his death, but an unsecured debt is not basis for a claim against the property after his death.
Remember that in all cases where the property is homestead, husband and wife must join in deeds and mortgages (1242 C. C.) no matter what the nature of the estate may be, and their act must be a personal one, by one instrument (54 Cal. 496). They cannot act in such a transaction by an Attorney in Fact (31 App. 509).II.
Essentials of a Deed
24.	Any form of written instrument which contains apt words
of conveyance such as “grant,” “transfer,” “sell and convey” and the like is sufficient to pass title to lands in California. There is no fixed and absolute form. Sec. 1092 C. C. provides that a grant in real property may be made in substance as follows:	“I, A. B.
grant to C. D. all that real property situated in (insert name of County) County, State of California, bounded or described as follows: (here insert description). Witness my hand this........—day
of............... Signed A. B.”
This form of deed is much used and is sufficient to pass the full fee, and any title which the grantor may afterwards acquire adverse to that granted. (Sec. 1106 C. C.) A quit claim deed may be in the same form, changing the word “grant” to “remise and quit claim,” or simply “quit claim.” A quit claim deed passes the title of a grantor as fully as a grant deed as to all interest owned by him at the date of the deed, but does not pass any title which he may subsequently acquire (30 Cal. 344; 95 Cal. 227).
A deed containing the words “grant all my right, title and interest in,” etc., is a quit claim. (82 Cal. 247).
Care must be exercised in using the Code form of deed to insert the proper personal pronoun, either “I” or “We,” as the case may be, before the names of the Grantor or Grantors, in the body of the deed.
25.	A transfer is defined by the Civil Codes to be an act of the parties, or by the law, by which the title to property is conveyed from one living person to another (1039 C. C.). Property of any kind may be transferred except a mere possibility not coupled with an interest (1045 C. C.). Thus the possible future interest of a son in his father’s property, which may upon the death of the father vest in the son, is not transferable. Likewise the possible interest of the wife in the community property which may be her’s upon the dissolution of the community by death of the husband or divorce, is not transferable by her alone. (112 Cal. 387.)
A deed of lands taken up under United States Homestead Laws before final proof is made is void, and a subsequent patentto the grantor does not feed the title. (162 Fed. 926; 136 U. S. 483.)
A conveyance may be made of all property owned by the grantor at the date of the conveyance in general terms, but such a conveyance will not pass title to property subsequently acquired by the grantor, for there can be no valid legal delivery as to such property when the deed passes, and, as we shall presently see, a deed without delivery is a nullity.
26.	We come now to consider who may acquire and dispose of property. There must be a legal capacity in the grantor to convey and in the grantee to receive, otherwise the instrument is invalid. (1 Cal. 254.) In general, every person who is legally competent to bind himself by contract may convey his property by deed, or may empower another to do so for him. There are certain disabilities under which persons may be laboring which render them incapable of making a valid contract; such as the disability of infancy or insanity. Corporations may acquire and convey property as freely as natural persons, except that the law weaves about their transactions certain formalities which must be observed. There are statutes restricting nearly every corporation in the amount and nature of property which may be owned by a corporation, but these are of no concern to the person dealing with its property. No individual is permitted to question the legal right of any corporation to acquire or dispose of its property. This is a question for the State alone. The State may at any time proceed against a corporation to compel it to dispose of its property held contrary to the statutes and may forfeit its franchise for disobedience of the statutory mandates, but no individual is required to ascertain when dealing with a corporation if it holds property in excess of the statutory limit. A deed to pass title to a corporation must name the corporation as such, as grantee. A deed to the directors or officers or stockholders will not vest title in the corporation. In conveying land the corporation can act only through its board of directors or trustees, acting as such at lawful meetings. The directors cannot act individually—they must act as a board. The officers of a corporation have no power to convey property without the authority of the board of directors or trustees, acting as a board. It follows that one dealing with a corporation whereby he receives a conveyance or mortgage must be assured that the officers executing the instrument are legally authorized so to do by the governing body of the corporation. The recital in the deed that the same was duly authorized is prima facie evidence of the fact, and may be safely relied upon if no other circumstance appear to excite inquiry. Where such recitalsdo not appear inquiry must be made to ascertain if in fact the conveyance was legally authorized. A conveyance executed by any officer or officers, and not in the name, and as the act and deed of the corporation is a nullity, and no subsequent act of the governing board can make it good, as a void deed cannot under any circumstances be made a good deed. Under certain circumstances, as where the corporation has received the proceeds of the transaction, it will be estopped from denying the deed, but this doctrine of estoppel does not operate to make good a void deed. It is merely an application of the doctrine that no man shall be permitted to take advantage of his own wrong. If the public records do not disclose the contrary one is entitled to rely upon the presumption that his grantor holding itself out and describing itself as such in its deed is a legally organized and existing corporation. The Certificate of Incorporation by the Secretary of State is sufficient evidence of the legality of the corporation and its right to do business, as no individual can question these matters when the State has once granted a charter.
27.	In California, where corporation charters are forfeited automatically upon failure to pay franchise or license taxes, one must ascertain by examination of the records of the County Clerk’s office, or of the office of the Secretary of State, whether or not the charter of the grantor has been forfeited. Upon forfeiture of its charter the corporation no longer exists. The board of directors as such, and all officers, as such, of the defunct corporation, have no powers. A corporation may by proper proceedings taken in court be dissolved and the court will appoint a trustee for the stockholders and creditors to wind up the affairs of the corporation. The title to all property of the late corporation is vested in the trustee for that purpose by deed of all property made by the corporation before its dissolution or by operation of law after its dissolution. He does not act in an individual capacity. His deeds must contain recitals as to his capacity and authority, otherwise his deed passes only such individual interest as he may own. His title is only as trustee for certain purposes, the equitable title is in the stockholders. Sec. 400 C. C. was amended July 27, 1917, and now provides that unless other persons are appointed by the court, the directors or managers of the affairs of the corporation at the time of its dissolution are trustees of the creditors and stockholders of the corporation dissolved and shall have full powers to settle the affairs of the corporation, collect and pay outstanding debts, sell the assets thereof in such manner as the court shall direct and distribute the proceeds of such sales and allother assets to the stockholders. Such trustees shall have authority to sue for and recover the debts and property of the corporation and shall be jointly and severally personally liable to its creditors and stockholders or members to the extent of its property and effects that shall come into their hands. Death, resignation, failure or inability to act shall constitute a vacancy in the position of trustee, which vacancy shall be filled by appointment by the Superior Court on petition of any person or creditor interested in the property of such corporation. Such trustees may be sued in any court of the State by any person having a claim against said corporation or its property. Trustees of corporations heretofore dissolved, or whose charters have heretofore been forfeited by law, shall have and discharge in the same manner and under the same obligations all the powers and duties herein prescribed. Vacancies in the office of trustees of such corporation shall be filled as hereinbefore provided.
28.	When the charter is automatically forfeited the title to corporate property is vested in the members of the governing board in office at date of forfeiture, as joint tenants, and as trustees for the creditors and stockholders of the late corporation. They only take a legal title for such purpose,the equitable title being vested in the stockholders, subject to the trust (62 C. D. 140). They no longer act as a body, but individually they and the survivors are vested with sufficient title to carry out the trust. Under the amendment of Sec. 400 C. C. in effect July 27, 1917, it appears that upon proper petition of any person in interest, vacancies in case of death or disability may be filled by appointment by the court. Such trustees cannot deed in the name of and as the act of the corporation, for it no longer exists. (62 C. D. 385.) However, by amendment to Sec. 400 C. C. in effect July 29, 1921, it is provided that any deed executed in the name of a corporation by the President or Vice President and Secretary or Assistant Secretary after dissolution thereof, or after forfeiture of the charter of such corporation, or after the suspension of corporate rights, privileges and powers of the corporation, which deed shall have been duly recorded in the proper book of record of the County in which the land or any part thereof so conveyed is situated for a period of five years shall have the same force and effect as if executed and delivered prior to such dissolution, forfeiture or suspension.
This act has not yet been construed by the Supreme Court so far as we have been able to learn. It is a grave question and one to be carefully considered until it shall receive the sanction of the highest court whether or not such an act be constitutional. It israther startling to say the least, to read that a deed made by officers of a corporation no longer in existence, void under all rules of law at it’s date, may become valid by the act of recording and the lapse of time. Were it possible to determine from the terms of the act that it was the intent of the Legislature to fix a date beyond which action might be maintained, no question might arise. The Legislature has power to say within what period of time that right shall be asserted, but has no power to divest an owner of his property. Until this Act is construed, we advise it be not relied upon as conclusive.
The Court held in Rossi vs. Cane (186 Cal. 544) that Subdivision 3 of Sec. 341 C.C.P. adopted in 1917, which bars an action to set aside or invalidate any action taken or performed by a majority of the trustees of any corporation theretofore or hereafter dissolved by operation of law, including the revivor of such corporation, unless brought within six months, cannot be accepted as absolutely destroying any right of action existing at the time of it’s adoption. The property is vested in stockholders upon death of the corporation, and the provisions of the License Tax Act of 1913 for the rehabilitation of a corporation which had forfeited its charter prior to the passage of the Act for non-payment of tax cannot be enforced against a non-dissenting stockholder. He has a vested property right secure against impairment by subsequent legislation.
A new section 402 C. C. provides that if upon dissolution of a corporation by forfeiture of charter or otherwise, the identity of the directors or managers of the affairs of the corporation shall not be otherwise judicially established, proceedings may be had by any interested person to determine who such trustees may be and the court is empowered to determine this fact and appoint trustees in place and stead of those who may be dead, or who cannot act for any reason. The hearing shall be had on notice prescribed, not exceeding 30 days. The procedure is simple, effective and in line with other provisions of the Code relative to dissolved corporations. Where one brings action against such trustees the amendment of July 29, 1921, to Sec. 416 C. C. P. permits the service of summons upon one of the trustees which is equivalent to service on all, and the trustees may be sued in the name of the corporation as if no forfeiture had occurred.
Here again we suggest the advisability of awaiting a construction by the courts. To say that service upon one defendant is service upon all in cases where each has a property right is something of an innovation.Aside from the proceeding authorized by amendment to Sec. 416 C. C. P. the statutes provide no method of giving public notice of the identity of such trustees. One dealing with property of a defunct corporation, particularly in cases where it’s charter has been automatically forfeited, must make investigation to ascertain who were the directors or trustees in office at the date of dissolution. It is upon the knowledge gained from this investigation and the recitals in his deed that he must reply. Hence it is important, and in our opinion necessary, that the deed from the trustees recite the fact of forfeiture, the names of the persons who became trustees by reason of that fact, the names of those who survive, or have been substituted and the capacity in which they act. The deed must be executed and acknowledged as trustees for the creditors and stockholders of the defunct corporation. It must be remembered there is no statutory form for such a deed, hence it is highly important that the deed contain every detail of devolution of title and capacity of the grantors, for upon these recitals which prima facie establish the fact, the grantee is compelled to a great extent to rely. Remember that all of the trustees, or substitutes must act as the full title for the purpose of the trust is vested in each one of them. The execution by a majority is not sufficient. All must join in the deed. No one of the trustees can convey his interest to the others, nor can he delegate his powers to any of the others for his is a personal trusteeship. Such trustee powers cannot be delegated in absence of statute authorizing such delegation. This rule is elemental and requires no citations in support.
29.	Minors in this State are males under twenty-one years of age and females under eighteen years of age. (Sec. 25 C. C.). A minor cannot give a power of attorney, nor being under the age of eighteen years make a contract relating to real property. (Sec. 33 C. C.: 22 App. 655). Such a contract made by a minor under the age of eighteen years need not be disaffirmed by the minor, either before majority or afterward, by the minor, or in case of death by the heirs or personal representatives of the minor, as the contract is void from the beginning, (Sec. 35 C. C.) and even if the minor makes payment of installment after reaching the age of eighteen years, it is not a ratification and he may disaffirm and recover monies paid. (39 App. 79). If a contract be made by a minor over the age of eighteen years, it may be disaffirmed by the minor himself upon reaching the age of twenty-one years, or within a reasonable time thereafter, or by his heirs or legal representatives in case the minor die within the period, upon restoring the consideration to the party from whom it was received, or paying it’s equivalent. (Sec. 35 C. C.) It thus appears that any contract inrelation to real estate entered into by a female minor, or a male minor under the age of eighteen years, is void absolutely, and no disaffirmance or restitution is necessary. (177 Cal. 656.) However, a minor cannot disaffirm a contract otherwise valid to pay the reasonable value of things necessary for his support, or that of his family, entered into by the minor when not under the care of a parent or guardian able to provide the same; (Sec. 36 C. C.), or where otherwise valid and entered into by him under express authority or direction of a statute. (Sec. 37 C. C.)
The deed of a minor over the age of eighteen years is not void but voidable only. The title passes subject to be defeated by disaffirmance by the minor, or his heirs or personal representatives. (24 Cal. 195). The time within which disaffirmance must be made is not settled. It depends upon the circumstances governing each individual case. The term “within a reasonable time,” is an elastic one. It is therefore wise in taking a deed to know that your grantor is of full age.
30.	A person entirely without understanding has no power to make a contract of any kind, but he is liable for the reasonable value of things furnished to him necessary for his support or the support of his family. (Sec. 38 C. C.) A conveyance or other contract of a person of unsound mind, but not entirely without understanding, made before his incapacity has been judicially determined may be rescinded by such person if he proceed promptly to restore to the other party, or offer to restore everything of value which he has received. (Sec. 39 C. C.). After his incapacity has been judicially determined a person of unsound mind can make no conveyance or other contract, nor delegate any power nor waive any right, until his restoration to capacity. A certificate from the medical superintendent, or resident physician of the insane asylum to which such person may have been committed, showing that such person has been discharged therefrom cured and restored to reason, is sufficient to establish the presumption of such facts, and that the person so discharged was sane from the date of discharge. (Sec. 40 C. C.).
It follows then that the deed of one who has been adjudged insane, executed after such judgment and before restoration to capacity is void. So, also, is the deed of an incompetent while he has a guardian. Secs. 172 b, 172 c and 172 d C. C. in effect July 28, 1919, provide a method for conveyance, lease or encumbrance of community property in cases where one of the spouses is insane. The question naturally suggests itself what inquiry should one make when tendered a deed as to the legal status and capacity of all persons who may appear in the chain of title. Manifestly it is
3impossible in every case to investigate with any degree of certainty, or hope of success in ascertaining if every grantor in the chain of title was an adult of sound mind and under no legal restraints. We conceive it to be the duty imposed by law on one purchasing land to ascertain by proper inquiry if the person from whom he is about to take a deed has legal capacity to execute a deed. Surely this duty is not onerous. If one be a purchaser in good faith and for value, and without notice actual or constructive, of defect in title, he is protected, provided he exercises ordinary care and diligence. The law does not impose upon him impossible conditions, but the law does not protect him if he has actual knowledge of such facts and circumstances as would put a prudent man upon inquiry. Actual notice consists in express information of a fact and constructive notice is that imputed by law, (Sec. 18 C. C.) and every person who has had actual notice of circumstances sufficient to put a prudent man upon inquiry as to the particular fact has constructive notice of the fact itself in all cases in which prosecuting such inquiry he might have learned the fact. (Sec. 19 C. C.). If the defects appear of record he is bound whether he has actual knowledge or not. (Sec. 1213 C. C.). The notice given by public records is termed “constructive notice” and such facts as are disclosed by the public records are notice to the whole world of claims of right, or possible claims of right, and one dealing with the land affected thereby, is bound by such notice regardless of search of the records or other inquiry. He is not an innocent purchaser in the eyes of the law if facts appear of record which are sufficient to put a prudent man upon inquiry.
Thus if it appears by the public records that “A,” the grantor in a chain of title, was a minor at the date of the deed, any purchaser is held to know that “A” may disaffirm and recover the land from him if he proceeds in time for he has notice of that right in “A” by the record. Likewise, if it appears from the record, we will say, in proceedings wherein “A” was adjudged insane and committed, and it appears from the record that he was insane at the time he made his deed, this fact is sufficient to give notice to any grantee that “A” has the legal right to rescind upon restoration to capacity. Again if the record discloses that the deed was made by “A” after commitment or after the appointment of a guardian, any grantee must be held to have notice that the deed of “A” is void and that he may recover the land from any grantee. Not so, however, if the record be silent. If there be no record notice of disability of any character and one purchases for a valuable consideration and without actual knowledge of defect, he isprotected by law in his purchase and the one seeking to disaffirm or rescind, must look to the proceeds of sale—not to the recovery of the land. It must be borne in mind that a purchaser will not be deemed innocent who has knowledge of a defect, or has such information relative thereto that by careful inquiry he could learn the true facts. He is held in law to be bound by such facts as he might have discovered had he made inquiry.
In this category fall deeds executed by a person in such state of intoxication as renders him incapable of giving an intelligent consent to a contract, and those executed by persons acting under duress, restraint or undue influence and deeds secured by fraud and misrepresentation, all such deeds are voidable—not void. As the record by the very nature of things, will not disclose such facts, an innocent purchaser for value is protected. But any circumstance or fact coming to the knowledge of an intending purchaser sufficient to put him upon notice of such defects takes him out of the class of innocent purchasers.
We have a statute in this State termed the “Alien Land Law” in effect Dec. 9th, 1920, (Stat. 1921) prohibiting the owning or leasing of lands in the State by certain classes of aliens. It would serve no practical purpose to set out in detail here the several provisions of the act. Suffice it to say that no individual can take advantage of or enforce the act. That power rests in the State alone. We shall consider here only the application of this act as it affects rights of a purchaser or encumbrancers. An alien, or association of aliens, prohibited by the act from owning or leasing property in the State who violate the terms of the act, are as a matter of course, bound by the terms thereof and stand to suffer confiscation when the State exercises her rights. We are not concerned then with the rights of such persons. We find no penalty imposed upon one who conveys to the alien, nor upon a grantee from him. As we see it, a conveyance by an alien forbidden to own land, is a strict compliance with the law. While he holds the property it is a matter solely of public concern and the penalty he suffers is forfeiture of title in proceedings to escheat taken by the State. If he divest himself of title has he not fulfilled the spirit of the law? We are inclined to the opinion that a mortgagee in good faith and without notice, actual or constructive of the status of the mortgagor would be protected in case of escheat to the State, and that the lien of the mortgage would follow the land even if forfeited, and here we have again presented, somewhat emphasized, as to what inquiry a mortgagee is bound to make when he loans his money. We have seen that he is bound by any record notice, whether he hasknowledge of the record or not. He is just as surely bound by notice of facts outside the record sufficient to put a prudent man upon inquiry. We then venture to lay down this rule for guidance of mortgagees or creditors, in the confidence that the same is sound law. Certainly it must be taken as a sound rule in business. If you are tendered a note and mortgage, or asked for credit, from persons, associations or corporations whom you know are violating the law, or if there be any circumstance or fact which raises a suspicion as to the right of ownership, then decline to deal. On the other hand, if the morgagee or creditor were obliged to secure absolute proof that his debtor were a citizen of the United States, or an alien entitled to own land in the State, no mortgage could be safely made nor credits safely extended. The name of the debtor is of no consequence. John Smith may be a native of Japan, while Ah Sing may be an American citizen. It follows then that in loaning money or extending credit you must be satisfied that your debtor is not violating the Alien Land Law. This duty is not onerous. You are not obliged to give credit unless you are satisfied with the security offered. It must not be understood that one may safely convey lands to an alien prohibited from owning for the statute provides a penalty for conspiracy to avoid its terms. Therefore one who makes a sale to a prohibited alien, thereby knowingly aiding and abetting in a violation of the law may expect to suffer the heavy penalties prescribed by the Act. For light on this point see “People vs. Cockrill et al. 41 App. Dec. 135.”
31.	Persons who because of some legal disability are unable to make a valid deed may nevertheless in most cases take as grantees. The legal capacity of a grantee is less restricted than that of a grantor. Infants and persons non compos mentis may take as grantees. It is not essential that a deed be dated as it only becomes valid and effective when delivered but the date if given is prima facie evidence of the date of delivery. It is essential to the validity of a contract not only that the parties should exist but that it should be possible to identify them. (1558 C. C.) A careful conveyancer will in the drafting of a deed designate the grantor in the body thereof by the same name under which he acquired title. For example, if the deed run to George Johnston, and the true name of the grantee be Johnson, the deed from him should describe the grantor as “George Johnson, who acquired title under the name of George Johnston,” or in similar words in order to establish prima facie the identity of the party.
32.	It is provided by the Code that any person in whom the title to real estate may be vested who shall afterwards from anycause have his or her name changed, must in the conveyance of any real estate so held, set forth the name by which he or she derived title. (1096 C. C.) I apprehend that this provision would be held to apply to a corporation the name of which has been changed after the acquisition of real property. Certainly it would be good conveyancing to follow this Code rule. This statute has not, so far as we have been able to learn, been construed by the Supreme Court. We are of the opinion that it would be held that the failure to so describe the party would not render the deed void, for it is the identity of person not of name which governs in law. At best the Statute operates to change the rules of evidence only. The statement as to change of name is but prima facie evidence of the fact.
One may acquire title by the name of “John Jones” and convey by the name of “John Smith” (84 Cal. 239: 25 Cal. 76: 38 Cal. 44,) and if the grantee in the first deed be identical with the grantor in the second, the deed is good. (38 Cal. 316). The burden of proof in case of attack is upon the one claiming under the deed to prove identity of person. Were the deed to follow the Code rule and describe the grantor in the latter deed as “John Smith, who acquired title as John Jones,” the burden of proof would be upon the person attacking the conveyance to show that John Jones was not the identical person who executes the deed under the name of John Smith.
If the grantee be single the fact should appear in the deed as prima facie evidence; this establishes the status when the grantee comes to convey. If Sarah Scott be described in a conveyance to her as a spinster or a single woman, and she afterward conveys as Sarah Robbins, married, the record on its face shows the property to be her separate estate. One dealing with the property is entitled to rely upon these recitals and a careful conveyancer will insert them. The recital in the deed that the property is conveyed to a grantee as separate property is not conclusive. It simply shifts the burden of proof in case of attack. Yet if it be a fact that the consideration is paid, we will say, by a married woman with money or property received by devise or descent, it is a good rule and certainly excellent practice to recite the facts that they may be traced if necessity demands.
33.	Where parties act in a trust relation or trustees, guardians, executors, administrators and the like it should clearly appear that the conveyance is made to them, or by them, as such, in representative capacity, otherwise it will be held that the deed is personal. It is often desired in the administration of estates to cleartitles and to take deeds for that purpose. We will take a case where the deceased in his lifetime had made contract of sale and it is desired to take a deed from his vendee who wishes to surrender. It is a common mistake to make the deed to the “estate of” the deceased. Such a deed passes no title, as there is no such thing- as an “estate” of a deceased person as a legal entity. The deed should run to “John Doe” we will say, “as administrator (or executor) of the estate of James Roe, deceased, subject to the administration of his estate,” or “to the heirs or devisees of James Roe, deceased, subject to the administration of his estate.” It must be remembered that upon death of the ancestor the title to all property owned by him at the date of his death vests instantly in his heirs or devisees, subject to administration. The object of administration is to judicially determine the identity of the heirs or devisees and to save the rights of creditors of the deceased. The administrator has by virtue of the laws of California a qualified estate sufficient to enable him to maintain or defend actions in relation to the property, but his title is transitory and when distribution is legally made, passes automatically to the heir, or, speaking in a stricter sense, dies when the administration is complete. A devise of all title may be made to an executor, but to all intents and purposes his title is that of an administrator. It is not ordinarily required that he deed over to heirs or devisees when the administration is complete. Sec. 1555, C. C. P. provides that conveyances made by an executor or administrator in cases where sales are made under order of court, or confirmed, must refer to the order of court confirming the sale and to the record of the order of confirmation in the office of the County Recorder either by the date of such recording or by the date, volume and page of the record.
34.	In cases where it is desired to create a joint tenancy in the grantees the words of grant should be to them “as joint tenants with the right of survivorship.” It is customary to add the words “ and not as tenants in common.” This is simply an extra precaution and the addition of these descriptive words is not essential to the validity of the grant. If the deed contain a habendum it should follow the granting words exactly. It is not proper to say “to have and to hold to them and their heirs” for the estate does not descend to heirs. It is better practice to exclude the habendum but if used care should be taken that it be not repugnant to the granting clause.
35.	In cases where the identity of the grantees cannot be established the deed is void. Thus a deed running to “the Citizens of Inglewood” is void for the identity of the persons intended as grantees could never be established. (Sec. 1558 C. C.) A conveyance to “the Republican Party,” would be void on the same grounds. It is an ancient rule of the Common Law which governs such cases in this State that a deed to two grantees in the alternate, as, to “John Jones or Mary Jones” is void for the reason that it does not appear which person was intended as grantee (Sec. 1614 C. C.) This rule is so well established that we cite no authorities. A deed in which the name of the grantee is left blank and afterwards inserted without grantor’s authority is void. (67 Cal. 447.)
36.	It is not necessary to state the amount of consideration in the deed, as a written instrument presumes a consideration. (67 Cal. 536). Yet it is a good practice in case of gift by deed to state in the deed the fact that the conveyance is by way of gift, that it may affirmatively appear that the property so conveyed is vested in the grantee as separate estate. It is a general rule that a deed of gift is valid if the grantor is not indebted at the time of making gift or had other means outside the property given to pay his debts, but a deed of gift is fraudulent in its inception if made to defraud a future creditor and is void as to him. (38 App. Dec. 166).
Love and affection is a good consideration, as is better maintenance and support.
37.	It must be borne in mind that a deed is always assailable so long as the property remains in the grantee and the consideration be inadequate, or there be fraud of any nature coloring the transaction between the grantor and grantee. When the property has passed from the grantee who holds under a fraudulent deed, to an innocent purchaser for value, (one who has no notice of the defect) the title in this purchaser is clear of taint. The reason for this is obvious. It is not possible that one purchasing lands could know all the secret intentions and motives of the parties who preceded him in the title, or have knowledge of all the actual circumstances surrounding the various transactions. There never could be security in the ownership of real property if every purchaser should be held to have knowledge of every circumstance and fact which governed every transaction relating to it. Hence the law says that one who has not actual notice of infirmities or that constructive notice which is imparted to him by public records is protected when he has in good faith parted with value in exchange for the land.
38.	Under the California system of conveyancing the habendum or the “to have and to hold” clause has no place in a deed. A careful draftsman will not insert it in a deed as it frequentlycreates confusion. The simple words of grant are sufficient. If the form be used great care should be exercised that no words appear therein repugnant to the granting clause. We repeat that the safest course is to exclude the habendum altogether. It is unnecessary and dangerous. To disclose the sex of grantee let the granting clause of the deed run to the grantee, his or her heirs and assigns. It is true that all clauses in a deed must be given effect if possible in such a way as to disclose the true intent of the parties and this rule must be applied when there are apparent contradictions in terms. Deeds are to be construed like any other contract and the intent of the parties arrived at by a consideration of the whole instrument and not of detached clauses. (28 App. 399: 30 App. 629). One example of reconciliation of clauses will suffice. It was held in Hilborn vs. Soale (44 App. 115), that a deed running to grantees as joint tenants with the right of survivorship and ending with a habendum clause “to have and to hold to the said grantees and the survivor of them forever” creates a joint tenancy in fee and not a joint life estate in each grantee and a contingent remainder in fee in the survivor.
The signature to a deed should be identical with the description of the grantor in the deed, but this is not vitally important as we have seen that it is identity of person and not of name which governs. Where the body of the deed describes the grantor as “George Jones” the signature may be “Geo. Jones” or “G. Jones” so long as the identity of the party is otherwise sufficiently established. The signature may be written by one other than the grantor if it be done at his instance and request. A signature by mark or any character is sufficient. A signature to a deed by mark constitutes a legal signature where the name of the grantor followed by the words “ her mark” were written for her at her request and she had hold of the pen. A signature by mark is sufficient where the grantor directed the signing of her name by another which was done in her presence and in the presence of two witnesses. Signature to a deed by the hand of another is adopted where the grantor acknowledges execution to the officer taking the acknowledgment. The method of making signature by mark is addressed primarily to unacknowledged instruments, and a signature is good between the parties although not witnessed by two witnesses as provided by Sec. 14 C. C. (39 App. Dec. 667).
Sec. 14 C. C. provides that signature or subscription includes mark when the person executing cannot write; his name being written near it by a person who writes his own name as a witness; provided, that when a signature is by mark, it must, in order thatit be acknowledged, or may serve as the signature to any sworn statement, be witnessed by two persons who must subscribe their own names as witnesses thereto. I recommend the following form for use in such cases. “John (X) (his mark) Smith,” and near the signature: “John Smith being unable to write, I have at his request, subscribed his name thereto, and the said John Smith hereto affixed his mark in the presence of the witnesses who subscribe their names below. (Signed) Abel Jones. Witnesses: William Adams, Abel Jones.”
39.	Where the deed is by a corporation such a signature as “William Evans, President, etc.” is insufficient. It must be in the name of the corporation by its officers. It is essential that the corporate seal be attached if the corporation has adopted a seal. If it has not done so the instrument should state that the corporation has adopted no seal. The execution by an attorney in fact must be in the name of the principal, otherwise it is the personal deed of the attorney. If there be two grantors in the deed, one of whom acts as attorney in fact for the other, such attorney must sign his name twice; once as attorney in fact for his principal, and once for himself. (Sec. 1095 C. C.)
It is not necessary under California law to affix a private seal. (Sec. 1629 C. C.) nor are witnesses necessary except in cases where signature be by mark. It is often desirable, however, to secure a witness, as proof of execution may be made by a subscribing witness, and this proves convenient many times when it is difficult or impossible to secure the acknowledgment of the grantor.
40.	We now come to consider the subject of delivery of a deed; a very important subject as we shall presently see. Before a deed can operate at all, for any purpose, it must be delivered, and having been delivered, the delivery cannot be destroyed and property revest in grantor by re-delivery or destruction of the deed. Destruction or cancellation of a deed after delivery does not revest the title in grantor by consent of parties. The title cannot be restored to grantor except by reconveyance in writing. (41 Cal. 462: 34 Cal. 36).
xAdthough the deed in all other respects has been properly executed it is a nullity unless an absolute, unconditional delivery has been made. A grant deed cannot be delivered to grantee conditionally. Delivery to him or his agent as such is necessarily absolute, and the instrument takes effect thereupon, discharged of any condition on which the delivery was made. (1056 C. C.).
It is not essential that an actual physical transfer of the instrument be made. As said by Devlin: “The act of delivery is notnecessarily a transfer of the possession of the instrument to the grantee and an acceptance by him, but is the act of the grantor indicated either by acts or words, or both, which shows an intention on his part to perfect the transaction by a surrender of the instrument to the grantee, or to some third person for his use and benefit. The whole object of a delivery is to indicate an intent upon the part of the grantor to give effect to the instrument. It is sufficient that a grantor intends when executing a deed to be understood as delivering it. Hence a grantor is not permitted to say that a deed is inoperative for want of a formal delivery where he has induced the grantee to believe in its execution and allows the grantee to act under that belief.” It is a question purely of intent to deliver and no manual delivery is operative unless accompanied by an intent to deliver absolutely and unconditionally. It is a favorite custom where husband and wife own a certain piece of land as tenants in common to execute deeds simultaneously, one to the other, of their interests, with the understanding that upon the death of either grantor, his or her deed shall be recorded to vest title in the surviving trustee. This device is futile for there is no valid delivery. There is no intent to deliver presently and unconditionally, and such deeds are void as against an attacking heir or creditor. Where a deed by a wife to her husband was deposited with a bank with instructions signed by both to be delivered to the survivor it was held to be no delivery. (181 Cal. 571).
Deeds between husband and wife deposited to be delivered on death of either held ineffectual. (186 Cal. 410.)
A valid delivery of a deed may be made to take effect in possession after the death of the grantor but there is no such a thing as an estate to begin in the future. (49 Cal. 369). The possession and enjoyment may be postponed, but a present estate must pass. Such deliveries must be absolute and unconditional with a bona fide intent to pass the title at once, but as said, possession may be postponed. Such a deed may be delivered to a third person to be delivered to the grantee upon the death of the grantor, but the original delivery must be absolute. A grant may be deposited by the grantor with a third person to be delivered on performance of a condition and a delivery by the depositary will take effect. While in the possession of the third person and subject to condition it is called an escrow, (1057 C. C.) and when second delivery is made the deed relates to the first delivery (62 Cal. 496).
When one makes a valid delivery to a third person to be delivered to the grantee after death of the grantor, the effect of the deed is to pass a present title to the grantee to be possessed byhim on the death of the grantor and there is left a life estate in the grantor. Any conditions attached to the first delivery which imply a want of intent to make absolute delivery are sufficient to render the deed void. For example; “A” executes a deed to “B” and delivers it to “C” with instructions to deliver to “B” on a certain date or upon the death of “A,” provided I do not sooner demand return of the deed” or, “provided I do not sell the land in the meantime,” or “provided “B” lives until that date,” or the like. Here is an implication that “A” did not intend to make absolute and unconditional delivery and no title passes by the deed. The subject of delivery to third person for the benefit of a grantee is more fully discussed under the head of “Escrows.” We wish at this point to impress this fact upon your minds that no deed is operative which is not legally delivered, and this in short means a full and absolute intent on the part of the grantor, that his deed shall be operative when he makes delivery and surrenders all dominion over the instrument. A thousand cases arise in which circumstances differ. The test in every case is “did the grantor intend to deliver and did he surrender dominion over the instrument?” We quote from a few decisions of the Courts on this point.
It is absolutely essential to the validity and effectiveness of a deed in escrow that it be delivered to a third person for the grantee beyond any power of the grantor to recall or revoke it. (29 App. 63).
Where a grantor delivered a deed to a Notary Public with instructions to hold until grantor called for it, or upon her death to deliver it to grantee, held to be no delivery and deed void. (37 App. 439).
To constitute valid delivery it is essential that grantor have intended to finally part with the title. (41 App. 400).
The fact that grantor requested deed be not recorded until the happening of some future event would have no effect on delivery. (42 App. 100). The fact of delivery or non-delivery of a deed can be proved by, parol evidence (31 App. Dec. 818). It is a question of fact (34 App. Dec. 183). A deed executed and delivered, though not recorded, passes title against subsequent attachment or judgment. (33 App. Dec. 477).
A mere delivery of possession of a deed is not sufficient to constitute delivery. It must be accompaned with the intent to part with the dominion or control over it and to presently pass the title to another without the reservation of any right of revocation or recall. (33 App. Dec. 529).
The question of delivery of a deed is essentially one of factand depends upon the intention of the parties to unconditionally transfer the title to the property. No set form of delivery is necessary and whether a delivery has been effected in a particular case must be determined by the facts and circumstances including the conduct of the parties ( 62C. D. 429).
41.	There is no set form or method of acceptance by a grantee. It is a question of fact. His acquiescence and acceptance of the grant to him may be inferred from circumstances. Grants to a political corporation or government agency of land or easements must be accepted by grantee by proper resolution attached to grant before recordation. (1158 C. C. effect July 29, ’21).
Where after recordation a deed is mailed to grantee by the Recorder this is a good delivery .	(43 App. 716).
A deed may be delivered to third party to be delivered finally after death of grantor to grantee and acceptance by grantee after death of grantor will relate back to date of first delivery and be effective, provided rights of third parties do not intervene. An interesting example is a case where one who held in joint tenancy with another made a deed of one half of the property to his grandson and delivered it to a third person to be delivered to his grantee after his death. The grantee had no notice of the deed until after the death of his grantor. It was held that his acceptance at that time was ineffective against the rights of the other joint tenant who took all by right of survivorship. (185 Cal. 435).
Where deed is delivered to grantee in person his acceptance will be implied. (40 App. 290) and where the grantee directs or agrees that the deed may be left for him with a thrid party the delivery to the latter is equivalent to a delivery to the grantee. (31 App. Dec. 884).
42.	Deeds are effective against the parties to them and all persons having actual knowledge of them (96 Cal. 298). To impart constructive notice of their contents the law requires that they be properly acknowledged and recorded, whether one who subsequently deals with the property ever sees them or not. Possession is the highest form of notice and one dealing with property must always inquire into the rights of parties in possession whether the record discloses any interest in them or is silent. One in possession either personally or by tenant is not required to record his deed or other instrument under which he claims title. His physical possession of the land is the best notice to the world of his claim of right to occupy the land. This possession must, however, be open, notorious, exclusive, visible and not consistent with therecord title. (180 Cal. 298). Where a person other than the vendor is in the actual, open, exclusive and adverse possession of real property the purchaser is chargeable with knowledge of all that an inquiry as to the rights and claims of such person might have developed. (182 Cal. 214).
An instrument of conveyance or contract by a married woman unless acknowledged in form required before March 14, 1895, is invalid and not her deed. (123 Cal. 491: 83 Cal. 521: 80 Cal. 65: 79 Cal. 7).
43.	Deeds not properly executed or acknowledged do not impart notice of their contents to one who has no actual knowledge of them. Many instruments are copied into the public records from time to time which by reason of faulty execution or acknowledgment are not entitled under the statutes to be recorded. Acts are passed from time to time to cure such defects in the record. These acts provide that in cases where instruments which by reason of defect in execution or acknowledgment, or which are not acknowledged at all, have been recorded in the proper books of record before a certain date, shall be deemed to impart notice of their contents after that date irrespective of the defect. These acts, as passed, have always reserved the rights of third parties. Thus if “A” conveys to “B” and there be a defect in the execution or acknowledgment of his deed, and the deed be recorded in the proper book of record, and should “A” convey the same land to “C” before the taking effect of the curative act and “C” have actual knowledge of the prior conveyance to “B” the curative act does not operate to validate the deed to “B” as against “C.” Should “C,” however, by examination of the record ascertain that the deed to “B” is not entitled to record he cannot take advantage of this fact and deal with “A” claiming to be an innocent purchaser. His actual knowledge of the attempted conveyance to “B” thus gained is sufficient to put him on inquiry as much as if the deed to “B” had been entitled to record. Actual knowledge of any such conveyance derived from any source is enough to bind “C” to all he might have learned had he pursued his inquiry.
As the forms of certificate of acknowledgement are frequently changed it is enough to say that these forms as prescribed by the codes must be constantly scanned in the preparation of deeds and in their examination. Remember also that each State has its own requirements. In certifying acknowledgments of instruments to be used in another State, investigation should be made of the laws of the particular State that parties may not suffer loss or inconvenience.44.	Another point more fully discussed under the heading of “Trusts.” It is a common practice to take a deed to a grantee as “trustee,” without other designation and without attempt to disclose any trust. In such case the question arises as to what notice is imparted to a purchaser from the person so described by such nomenclature, and what inquiry should be made as to possible existing interests of other persons. Very frequently such deeds are taken under the mistaken idea that the property is thus protected from attack by creditors. In such cases, the word “trustee” may be considered merely as descriptive—a sort of identification of the grantee. He may be a trustee of a church or the like although it is not probable that he would so describe himself. Such a deed wherein the word may be considered only as descriptive, the full title, legal and equitable, is vested in the grantee, individually. It may be that he holds as trustee for another, in which case he is trustee under a resulting trust, and while he is a trustee, he has no powers except to convey to the one who has paid the consideration and who holds the equitable title. He holds but a naked legal title and one who takes from him gains but the same and holds for the equitable owner.
It may be disclosed that he holds under an express trust created by another writing, and if so, his powers are measured by that instrument, and an intending purchaser or encumbrancer must inspect that document to ascertain if it be a valid trust. In cases where such deeds occur in the chain of title and the title has passed long since from the trustee, and all parties appear to have acquiesced in the transaction, and there be nothing indicative of a trust, we judge it be a safe rule to ignore the term and assume that the full title passed. Not so, however, when the transaction is a recent one, or where such a deed is presented. A purchaser is not safe in ignoring the word “trustee” when the person who offers to sell exhibits a title in himself as trustee. The purchaser is distinctly put upon inquiry as to the possible rights of others and buys at his peril. Do not make or accept such deeds in the absence of a valid express trust. They but lead to doubt, confusion and possible loss. A deed which attempts to convey property to a person named as Treasurer of a given organization without designating purpose is insufficient to create a specific trust in real property under the Codes, but it is sufficient to put a prudent man on inquiry as to what was intended. (31 App. Dec. 108).
Section 869A, C. C. which will go into effect August 18, 1923, provides that whenever a conveyance of real estate or any interest therein has been or hereafter is made to a person or persons intrust, or where such person is designated “Trustee” or “As Trustee,” or when such persons are designated “Trustees” or “As Trustees” and regardless of whether a joint tenancy or right of survivorship as between such persons is expressed or not, then if no beneficiary be indicated or named in said conveyance it shall be presumed that the grantee or grantees as the case may be holds or hold the title to the estate or interest therein absolutely in his or their own individual right, and free from any trust, and a conveyance executed by such grantee or grantees whether purporting to be the act of such grantee or grantees in his or their individual right, or in his or their capacity as Trustee or Trustees shall prima facie convey such title or interest to his or their grantee or grantees in his or their individual right as to such conveyance last mentioned such presumption shall be and become conclusive as to such undisclosed beneficiary, and the original grantor or trustor and any one claiming under them in favor of the purchaser or encumbrancer in good faith and for a valuable consideration upon the filing of the conveyance last mentioned for record in the office of the County Recorder of the County wherein the land affected thereby is situated; provided, however, that as to such conveyances so filed for record prior to the taking effect of this act such presumption shall not become conclusive except in favor of a purchaser or encumbrancer in good faith and for a valuable consider-x ation until one year after the taking effect of this Act when it shall become conclusive without any qualifification whatsoever, and no action to avoid or impugn any such conveyance last mentioned shall be commenced after the time when such presumption becomes conclusive.
In our opinion, the above can only be considered as a Statute of Repose—a Statute of Limitation of the period in which actions can be maintained. Certainly there is nothing contained in the Act which relieves one dealing with property purported to be held in trust from proper inquiries as to possible interests of third parties. The effect of the Act cannot be to destroy property rights or estates. It can operate as a Statute of Limitation whereby one may be barred from asserting a claim after a certain period, but as we point out, this does not relieve the purchaser or incumbrancer from inquiries when he has notice of a possible Trust.
45.	As general precautions. Remember that in buying property, or loaning money you must know the one with whom you are dealing is of full age and legally competent to contract. If the property be homestead, you must know that the parties, if claimant assumes to be married, are in fact husband and wife. You mustknow that the party with whom you are dealing is the identical person described in the deed under which he claims. These things are not disclosed by the records and hence are not in the ken of title companies. You cannot rely upon your guaranty of title as to these things. You are entitled to rely upon your guaranty of title up to the time your dealings begin with individuals. It is the only safe and sound business rule in such dealings to secure an examination of the title, as all matters of record are notice to you whether you know of them or not.Ill
Convenants, Conditions and Restrictions in Deeds
46.	This subject is a very wide one and we cannot hope to do more than treat of a few of its most salient features. We shall aim to discuss the important points from the viewpoint of a grantee or of one who examines the deed for him.
The law imposes upon the grantor certain liabilities by his very act of transfer. These liabilities are fixed by the Codes in this State.
Section 1113 of the Civil Code reads: “From the use of the word ‘grant’ in any conveyance by which an estate of inheritance or fee simple is to be passed, the following covenants and none other, on the part of the grantor for himself and his heirs to the grantee, his heirs and assigns are implied unless restrained by express terms contained in such conveyance.
1.	That previous to the time of the execution of such conveyance the grantor has not conveyed the same estate, or any right, title or interest therein to any person other than the grantee:
2.	That such estate is at the time of the execution of such conveyance free from encumbrances made or suffered by the grantor or any person claiming under him. Such covenants may be sued upon in the same manner as if they had been expressly inserted in the conveyance.”
These implied covenants may, of course, be nullified by proper recitals in the conveyance, and any further covenants as to general warranty as to all persons or claims of all persons, and against all encumbrances at any time, whether made or suffered by grantor, or others, may be inserted in the conveyance and be made binding upon the grantor and his heirs. As all such covenants do not bind the land, but create a personal liability only, it is important for one dealing with the land to know what these covenants stand for and their true meaning . (37 Cal. 183).
The word “grant” in a deed is not a warranty against encumbrances which were on the property when grantor acquired title (41 App. 509), and a covenant as to the exact quantity of land conveyed is personal and does not run with the land (41 Cal. 481).It will be observed then, that under the form of Grant Deed in general use in California, there is no covenant of warranty on the part of the grantor that he is the owner of the property. He only covenants by use of the word “grant” that he has not conveyed the same property or any right, title or interest therein previous to his conveyance to any person other than the grantee. This and the implied covenant against encumbrances are personal covenants and may be sued upon by the grantee or his heirs. It would appear therefore, that one may make a deed of grant who is not the owner of the property and the law imposes upon him no liability for warranty of title. Again, it must be observed that his implied warranty under the statute by such deed applies only to such encumbrances or liens made or suffered by him. His warranty does not extend to any lien or encumbrance which may have attached before he acquired the title, nor to any which may attach after he sells on contract and before deed if it were not in his power to prevent same. (38 App. Dec. 66). Thus if “A” acquire title from “B” in May of a certain year, the State and County taxes which are declared by law a lien upon the lands from and after the first Monday in March are rtot made or suffered by “A” for he did not own the title on the first Monday of March. These taxes are subsequently levied. This has no bearing upon “A’s” liability as the taxes were a lien before he acquired the title. Therefore, when “A” deeds to “C,” we will say in September of the same year, he is not liable under the implied warranty of a grant deed for these taxes. A mortgage is made upon the promises by “A’s” predecessor of interest. He conveys to “C” by grant deed and makes no mention of this encumbrance. “A” is not liable on his warranty for the encumbrance was not made or suffered by him. All of the foregoing leads to the statement that in dealing with property the purchaser is not entitled to rely wholly upon his deed, or personal examination of the premises. He must if he will be protected, cause the title to be examined to ascertain whether or not his grantor is in fact the owner of the property, and whether as a matter of fact it be subject to lien or encumbrance; otherwise he deals at his peril, for the law does not impose upon the grantor, in the absence of special covenants of warranty, a liability for failure of title, or cloud of title under such circumstances as cited above. It will thus be seen how important it is that examination of the title be made to ascertain the true facts. If upon examination it be shown that “A” is in fact the owner and no liens or encumbrances exist, “A’s” grant deed is of as high value as if he had in terms warranted against every possible defect; otherwise any assurances made byhim outside of his deed are of no avail against him if his deed be in fact subject to matters for which the law does not hold him personally responsible under his warranty.
47.	The term “encumbrances” includes taxes, assessments, and liens of every character, but these are not the only encumbrances to be considered, there are other matters and things treated as encumbrances: for instance, a right of way is an encumbrance; likewise a dam, a foot path or any right in the land resting in a third person. Building restrictions are encumbrances, (31 App. Dec. 809) and one may refuse a deed where his contract calls for delivery of a deed free and clear of encumbrances if any such matters appear in the deed or the chain of title.
A lien is a charge imposed in some mode (other than by a transfer in trust) upon specific property by which it is made security for the performance of an act. It should be borne in mind that a conveyance in trust does not create a lien. It passes a title. This difference is further distinguished under the heading, “MORTGAGES AND TRUST DEEDS.” Devlin in defining an encumbrance says: “It is sometimes extremely difficult to determine whether or not a particular right in another is an encumbrance within the meaning of the covenant against encumbrances, this difficulty arises from the fact that the word ‘encumbrance’ does not admit of a general and at the same time an accurate definition. Thus a lease outstanding might add greatly to the value of the property from an investment standpoint, but if the purchaser desired immediate possession, the existenece of the lease might detract from its market value, and the lease might under such circumstances be deemed an encumbrance.”
Bouvier defines an encumbrance as: “Any right to or interest in land which may subsist in third persons to the diminution of the value of the estate of the tenant but consistently with the passage of the fee.” (See 40 App. Dec. 271).
In other words, if the third person had any vested right or title in the land, it would not be considered an encumbrance but a title, but if a third person is possessed of some right or interest in the land which does not prevent a passage of a full title in fee simple, his right or interest is an encumbrance. The circumstances of each particular case must govern, and no general rules can be laid down to govern absolutely in every case save those above cited.
A general agreement to convey land free and clear of all encumbrances does not refer to visible, physical burdens upon the land, permanent in character, and in the absence of an express agreement vendee is presumed to have contracted to accept theland subject to physical encumbrances of an open and notorious nature. (184 Cal. 194). In this case the encumbrance consists of an existing pipe line.
48.	Covenants are of two characters: Covenants which are said to run with the land, binding the land itself to their observance, sometimes called “Real Covenants,” and personal covenants which are enforceable only as between parties and not as to the land. The question arises, what are real covenants, or covenants running with the land. The simple assertion in a deed that covenants therein expressed shall run with the land is not sufficient to create such covenants unless the subject matter treated is such as the law allows to be so dealt with. (160 Cal. 569). The only covenants which run with the land in this State are those specified in the Code. (Sec. 1461 C. C.) Section 1460 C. C. is as follows:
“Certain covenants contained in grants of estate in real property are appurtenant to such estates and pass with them, so as to bind the assigns of the covenantor and to vest in the assigns of the covenantee, in the same manner as if they had personally entered into them. Such covenants are said to run with the land.”
Section 1462 C. C. reads:
“Every covenant contained in a grant of an estate in real property, which is made for the direct benefit of the property or some part of it then in existence, runs with the land.”
It will be observed that the property to be benefited is the estate granted. This must be borne in mind. These so-called real covenants run with the land and are binding upon subsequent grantees. They must have relation to the estate granted and the act to be so done must concern the interest created or conveyed and by our Statutes must be of benefit to the land conveyed. To create such covenants there must be a privity of estate or mutuality of benefit: that is to say, the parties must be in such a relation, one to the other, that each is under some obligation, or that each is to receive some benefit from the covenant. It must clearly appear from the deeds or other muniments of title that covenants and conditions as to the use are for the benefit of other lands of grantor, and to give other lot owners in the same tract right of enforcement it must clearly appear that restrictions were imposed for their benefit. When the owner of a subdivided tract conveys the various parcels in the tract by deeds containing appropriate language imposing restrictions on each parcel as part of a general plan of subdivision, restriction common to all the parcels and designed for their mutual benefit, mutual equitable servitudes are thereby created in favor of each parcel as against all the others.There must be a privity of interest. It is not grantors interest which governs. It must be mutual and expressed in instruments showing title, (Werner vs. Graham, 181 Cal. 174) (see 65 C. D. 465) and these rights will be strictly enforced, and this without any showing of actual damage or substantial injury. (44 App. 394).
49.	As we have seen that by our statutes a covenant running with the land must be of benefit to the estate granted (Sec. 1422 C. C.), thus it would appear that a covenant restricting the use of the land conveyed is not such a covenant, but it must be borne in mind, however, that a personal covenant will be enforced by a court of equity against a subsequent grantee with notice of the covenant, but this is only in particular cases. The court in Los Angeles, etc. vs. Muir (136 Cal. 36) used this language: “That there are personal covenants enforceable in equity against the grantee of the covenanter (that is to say, the grantee of the first grantee) is conceded, but the proposition is far from being applicable in all cases, for if it were, it would result that all purely personal covenants in any way relating to land would have the same effect as those which do run with the land. The vendor and purchaser have the undoubted right to bestow such benefits and impose such burdens and restrictions upon the land sold and that retained by the seller as they see proper, unless some wrong or injury thereby result to third parties or it be against public policy.” The Court refused to enforce the personal covenant against a subsequent grantee who had notice of it only by record, on the ground that the grantor, if it was its intention to bind subsequent grantees could have inserted in its deed a condition subsequent, the violation of which would have involved a forfeiture. In this case it did not appear that defendant had actual knowledge, outside the record notice, of a general plan of subdivision by which he might have been bound.
50.	We find no case decided in this jurisdiction bearing directly upon the point as to whether any grantee with actual knowledge of a general plan of subdivision would be held bound by such personal covenants as he finds in the deed to his grantor. The language used by the courts in decisions in cases where it is held that these covenants must be expressed in his deed in order to give a grantee a remedy against the creator of the covenant strongly indicates the likelihood that the courts in cases where the grantee had such actual knowledge, would give great weight to such fact. We should hesitate to say, until the court of last resort has so held, that a grantee with actual knowledge of restrictions imposed in a general plan of subdivision in form of personal covenants wouldbe safe in ignoring them, if it be inequitable so to do. It was held in the Muir case above cited, that in the absence of any words in the deed, or any reference to a plan showing a general scheme of improvement, the grantee will take without notice, express or constructive, that the restriction inserted in the deed was for the benefit of the adjoining estate. We are of the opinion that this case cannot be taken alone as authority. There are other elements entering into a logical discussion of this which were not within the purview of the court, the chief being want of personal actual knowledge of such a plan on the part of grantee. This rule is again laid down in Berryman vs. Hotel Savoy Co. (160 Cal. 569), touching a covenant in a deed from Kinney and Dudley, that any building erected on the granted premises should not be nearer than twelve feet from a certain line. Subsequently Kinney and Dudley with the obvious purpose of clearing the title, quit-claimed to the then owners any interest they then had for the purpose of removing the restriction. A grantee from Kinney and Dudley owning the adjoining lot sought to enjoin a violation of the agreement on the ground that the restriction was created for the benefit of the lands retained by Kinney and Dudley, and this benefit inured to the benefit of every other grantee from them; that the covenant created reciprocal obligations enforceable in equity either as a covenant running with the land or as a personal covenant with which a court of equity will compel compliance by persons taking the respective parcels with due notice of the mutual agreements. This contention was not sustained, the Court pointing out that there was no mention of any other property of the grantors in their deeds; nothing in their deeds to show that they had any interest in any property other than that mentioned in the deed. The Court said: “Examining the words of the covenant itself we cannot see that it creates an easement running with plaintiff’s land. It purports to be a covenant running with the land conveyed, and there is nothing in the deed itself to show that the grantors owned another foot of land in that vicinity. Defendant therefore, as a subsequent purchaser of the land, could not be charged with knowledge derived from the record that grantors owned any other property to be benefited (The bold type is ours). It will be observed that the deed declared in terms that the covenant was one running with the land. It was held that it was not such even though so termed. It will also be observed that the evidence adduced showed no knowledge of defendant as to possible benefits of other lands of Kinney aand Dudley from sources outside the record. This point did not arise.A covenant running with the land cannot be created by mere agreement of parties if there be no privity of estate or mutuality of interest and as pointed out, a court of equity will enforce a purely personal covenant as against subsequent grantees, as it will real covenants if the grantee has knowledge of the covenant and it be equitable.
51.	Here it is proper to distinguish between a covenant and a condition subsequent. A covenant is an agreement to do or not to do certain things, while a condition subsequent is a grant upon condition that if certain things are done or not done, the grantor has a reversion and may enforce a forfeiture. In case of a covenant he does not reserve to himself any interest or title in the land he conveys, relying only upon the personal liability of grantees in event of breach. In case of a condition subsequent he retains a certain estate in himself which may be under proper procedure ripened into a full estate when breach occurs. This distinction between covenants and conditions must be clearly borne in mind, as all the law bearing upon such matters rests upon the fact of whether recitals in a deed be in the nature of personal agreement or of a condition which leases a certain title in the grantor.
52.	It appears, as we have seen, that a covenant directly and fundamentally concerning land, or its use, if all equities are satisfied, may be enforced irrespective of the question as to whether the covenant is one which runs with the land. The equitable doctrine is that a covenant between a vendor and purchaser on the sale of the land that the purchaser and his assigns shall use or abstain from using the land in a particular way, will be enforced in equity against all subsequent purchasers with notice, and this “notice” as we construe the decisions, means constructive notice by record or actual notice outside the record. Under this rule such covenants are sustained and enforced against assignees with notice, stipulating for a particular mode of improvement, occupation or use of lands, and it is especially applicable to restrictive covenants. Thus, covenants in respect to the mode up building upon, or the occupancy of parts of a large tract; certain stipulations made by owners as to the use of ways, for light and air, etc.; reserving premises exclusively for dwelling houses; prescribing manner of improvements ; agreements not to carry on particular trades or business as for example, that lands shall not be used for sale of liquor, for an inn, tannery, gas house, etc. Such stipulations or restrictions, which are sometimes termed equitable easements, servitudes or amenities, are enforced by injunction irrespective of the question of privity of estate, or the nature of the tenure. Thus they may beenforced by injunction whether the stipulation be a personal covenant or a condition subsequent, but they must be such as relate to or concern the use or enjoyment of the land. It is not enough that the easement affects the use of the land or the enjoyment of an easement thereon, or the value or profitableness of the use thereof, in a collateral way, but they must primarily and fundamentally relate to the use and enjoyment of the land. It is not necessary to give notice to a subsequent grantee of any such covenants or conditions by express recital in the deed to him. The covenant as originally created is sufficient, and if one finds it in the chain of title it is as effective against him or in his favor as if it appeared in his own deed.
Personal covenants will be enforced against any grantee in the chain, who has notice, actual or constructive, only when it can be ascertained from the language of the deed itself and from surrounding circumstances that the intent of the parties was to create a covenant affecting directly and fundamentally the use or occupancy of the land and the language employed must be apt and clearly expressed to produce this result, or the facts and circumstances surrounding the transaction must clearly point to such intent. Courts are slow to declare covenants imposing building restrictions burdens on lands, unless it appears not only that a general scheme of improvement was contemplated, but also, if a grantee of the one who created or imposed the condition seeks to enforce the restriction that it is not a mere personal covenant but passed with the land (178 Cal. 96). There must be a sound, equitable reason for the enforcement of a personal covenant under any circumstances. Mere whims of a grantor will not be regarded. When he has delivered his deed there is no privity of estate between a grantor and his grantee, even if the deed contain a covenant. The grantor has no estate left in him as we would have were the deed made on a valid condition subsequent. If not a privity of estate, there must at least, we apprehend, be a mutuality and interest before a purely personal covenant will be enforced against subsequent grantees. I am not permitted when I have parted with my estate to impose upon my successors in interest for all time to come, restrictions upon the use of the property simply because I have once been the owner of it, and through some fancy or whim conceive that it shall only be put to certain uses. Primarily it is against public policy that the use of land be unnecessarily restricted; secondarily, the law declares I have no further interest in the estate after delivery of my deed, and therefore it can be no concern of mine to what use it may be devoted, unlessI be peculiarly affected by the subsequent use, and then I must show a reason for imposing the restriction which will stand in equity.
A few examples of purely personal covenants, not binding upon subsequent grantees of the first grantee, will not be amiss here, but serve to emphasize our point. ‘‘A” conveys to “B” with a covenant that “B” will support “A” during his lifetime. There is an agreement binding upon “B” but there is nothing to prevent “B” from conveying the property and his grantee will not be bound, as the covenant is not such as goes to the use, occupancy or enjoyment of the estate. So long as “B” retain the estate, “A” may sue to recover the lands conveyed upon breach of the covenant. Not so when “B” has conveyed. “A” must then look to the proceeds of the sale and cannot follow the lands in the hands of the purchaser. “A” conveys to “B,” his son, upon the covenant that “B” shall continue a member of a certain church. “B’s” grantee may ignore this agreement. A provision in a deed to the effect that grantee shall build a house on granted premises within limited time and that such agreement is a part of the consideration is a personal covenant and not a condition subsequent (148 Cal. 393).
I deed land to a corporation, “to be used for church purposes,” or upon the covenant, “that a schoolhouse be erected thereon,” or “that a railroad shall be constructed thereon within two years.” These covenants are not binding upon subsequent grantees and the title is cleared of them when my grantee conveys. One reading a deed must determine, if possible, where covenants are recited whether they be personal or real. This is a sound rule which we venture to say is sustained by authorities. If it be determined from the intent of the deed or from surrounding circumstances that it was the intent of the parties contracting to create a covenant having direct and immediate reference to the land, relating to the mode of occupying and enjoying the same mutually beneficial to the parties, and is, in truth, inherent in and attached to the land itself, then it must be regarded no matter in whose hands the land may be. If it be desired to clear the title, a deed effective for the purpose must be secured from the grantor who created the covenant, his heirs or assigns, of that particular right. If the covenant has none of these essentials it may be disregarded entirely after the land has passed from the original grantee, who made the agreement, or his heirs.
53.	Sec. 1468 C. C. enacted in 1905 is as follows: “A covenant made by the owner of land with the owner of other land to do or refrain from doing some act on his own land, which doingor refraining is expressed to be for the benefit of the land of the covenantee, and which is made by the covenantor expressly for his assigns, or to the assigns of the covenantee, runs with both parcels of land.”
This in simple language means that two owners of separate tracts may make contracts each with the other to do or not to do some particular act on their own lands, and if in the contract it is expressed to be for the mutual benefit of the parties, their heirs or assigns, a covenant is then made which runs with both parcels of land; therefore, where “A” conveys to “B” a certain lot, making it subject to certain restrictions, and in the same conveyance agrees that he will so use his own land or impose such restrictions upon his own land, the land remaining in “A”, after his conveyance to “B”, is clearly bound equally with that he has conveyed to “B” and subsequent purchasers from “A” of his remaining lands, their heirs or assigns, take with this notice and are bound. The rule was before the adoption of this section that covenants running with the land would be created only by grant. Although this section has not so far as we have been able to discover been construed by our Supreme Court, it would appear, and there is no sound reason to the contrary, that since the adoption of the section real covenants—covenants running with the land and binding upon the land and all parties at all times can be created in this State by contract, either in deeds or executory contracts. So, if it be found in any deed that the grantor has in appropriate words bound his remaining lands in the same respect as he binds the property conveyed by the deed, or in any executory contract between parties in which the lands of each are bound by reciprocal covenants, then one dealing with the grantor in subsequent purchases of other lands affected takes the same subject to the covenant whether it be contained in the deed to him or not. One instance will suffice for illustration. “A” conveys to “B” with a covenant that “B” shall not erect a building on the premises conveyed to cost less than a thousand dollars, and the further covenant that “A” will not build any house on any other lot in the same tract to cost less than that amount and that he will impose similar conditions or covenants in conveyance of other lots in the same tract. Here “A” has bound himself equally with “B”. To clear “A’s” title it will require a deed from “B”, his heirs or assigns, as the covenant is reciprocal. “B” has the same interest in enforcing the covenant as “A”. Not many cases of this kind arise, as it is the common practice in this community at least, to impose the covenants upon the grantee only. To insure a grantee protection against violation of verbal agreements, inducements or representations, a careful conveyancer will in the preparation of such deeds insert reciprocal covenants.
54.	We come now to consider conditions imposed by a grantor in his conveyance which may or may not run with the land, whereby a conditional estate is granted. In cases where a valid condition is imposed in appropriate and apt terms, an interest is left in the grantor transmissible to his heirs or assigns, a sort of estate as there is a possibility of reversion. This is not true when the matter is a pure covenant and not a condition as, for instance where a deed is given containing this clause: “This deed is given by the parties of the first part and accepted by the second party upon the express agreement of the second party to build or cause to be built upon said premises within six months from date a house, etc.” This was held to be a personal covenant and forfeiture of title was denied (148 Cal. 393). A deed contained a provision that the land should be used as a street and not as a building lot. This was held to be a covenant only and that the title did not revert upon breach. (160 Cal. 518.)
Any covenant or condition for the forfeiture of title in satisfaction of a debt is void. The bare legal title will pass, but the instrument is in effect a mortgage. In a broad sense and broadly speaking a condition is of higher order than a personal covenant. It will be observed that the statute limiting covenants which may run with the land to such as benefit the land conveyed does not apply to conditional estates. Most frequently the language employed by the parties in forming a condition imports an intention to create something more than a personal covenant. Difficulty is met in distinguishing in many cases between a purely personal covenant and a covenant or condition which binds the land owing to faulty expression. It is a cardinal rule that to hold an estate to be on condition, the intent to create such an estate must be expressed in clear and apt language, as courts are hostile to forfeitures. It would serve no good end to cite instances, as each particular case must be decided in the light of its own peculiar circumstances. It is a safe guiding rule that it must appear from the language used in the deed clearly and beyond question that the parties intended to create a conditional estate involving a right of forfeiture, or forfeiture will not be declared. In the leading case of Quatman vs. McCray (128 Cal. 285), forfeiture was declared for the breach of the following condition or covenant, whichever it might be deemed to be, although it is our best judgment that the language used created a covenant and not a condition subsequent: “And this conveyance is made upon the following express condi-tion, viz.: That any building to be used as a dwelling house erected upon these premises within two years shall cost not less than $1,200.00 and shall be located not less than 20 feet from the front line of said lot.” The language of the deed does not purport to bind assigns, and there is no provision for forfeiture. While the clause is termed a condition it does not follow that it is such. Two things must be considered here to clearly understand the judgment. The action was between the original parties to the deed and the decision does not go to the point of construing the language of the deed either as a condition subsequent or a personal covenant. The evidence was only as to the breach of the agreement and the point was not raised as to whether it was purely personal or run with the land. This case has been often cited as sustaining the doctrine that forfeiture can be enforced upon a purely personal covenant, but we do not consider it weighty authority for the reason spoken of, that the only evidence presented to the court was as to the breach, and no attempt was made, nor argument advanced, seeking to avoid forfeiture on any other grounds. As we have said, forfeitures are not favored in the law and courts will not declare an estate to be upon condition unless the intent of the parties as expressed in the deed is too clear and convincing to allow of any other construction. Forfeitures, as such, are never enforced if couched in ambiguous terms. Conditions involving forfeitures are construed strictly against the parties for whose benefit the condition is created, and are construed with the utmost jealousy to prevent restraint going beyond expressed stipulations, and the intention of-the parties as shown by the instrument must be looked to determine the nature of the agreement and no other evidence can be taken. It must clearly appear from the language of the deed itself that it was the intent to make a condition whereby the title could be forfeited, and not a personal covenant. Language which merely describes the use to which the property is to be devoted does not create a condition, such as “to be used for church purposes,” and the like, unless this be made upon the express condition that the property be used for such purposes, and if not so used that the title shall revert to the grantor, his heirs or assigns.
55.	Conditions which may be lawfully imposed are of two classes: conditions precedent and conditions subsequent. A condition precedent is one which is to be performed before some right dependent thereon accrues or some act dependent thereon is performed. (Sec. 1436, C. C.) A condition subsequent is one referring to a future event upon the happening of which the obligation be-comes no longer binding upon the other party if he chooses to avail himself of the condition (Sec. 1438 C. C.), and where an estate or interest is so given as to vest immediately, subject only to be divested by some subsequent act or event (Sec. 1349 C. C.). Broadly speaking, as applied to conveyances wherein a condition precedent is imposed, title does not vest in the grantee until performance of the condition (1439 C. C.). Where a condition subsequent is imposed, the title vests at once in grantee upon delivery of the deed, subject to defeat in case of breach of the condition. Thus, if I deed to “A”, upon the condition that he shall within six months erect a house on said premises, the title does not pass to him until the condition be performed. If, however, I deed to “A”, upon the condition that in case any house be erected thereon it shall cost a certain sum, or the like, the title passes to “A” on delivery of my deed, subject to be defeated upon breach of the condition.
A condition subsequent which is impossible of performance is void (1441 C. C.) The title passes free of condition, but not so if the condition be precedent. If a condition precedent is impossible from the beginning, or for any reason incapable of performance no title will pass. If a condition precedent requires the performance of an act wrong in itself, the deed is void and passes no title. If it requires the performance of an act not wrong of itself, but otherwise unlawful, the deed passes the title freed of the condition (709 C. C.). To establish of record the fact that title has actually vested in the grantee, upon performance of any condition precedent, a quit claim deed, reciting the fact of performance, from the grantor imposing the condition, his heirs or assigns should be recorded that any subsequent examiner of the title will not be put upon inquiry to ascertain if the condition precedent was actually performed.
56.	In addition to those above cited certain conditions are void ab initio. Those imposing restraints upon marriage, except of a minor are void (710 C.C.), but this does not affect conditions where the intent was not to forbid marriage, but to give the use of the property until marriage (710 C. C.). Conditions restraining the alienation of the property, where repugnant to the estate granted are void (711 C. C.). Thus a condition inserted in a deed that the grantee shall not sell without consent of grantor is void (64 Cal. 363), likewise a condition that the grantee shall sell to grantor only at a stipulated price is void.
57.	There is a distinction between estates upon condition and conditional limitations of estates which must be borne in mind. Ina purely conditional estate, created by a valid condition, the right of reversion or forfeiture is retained, the whole estate does not pass out of the grantor. He reserves enough to enforce the performance of condition or recover the full estate by forfeiture. There is left to him by his grant a possibility of reverter to himself, his heirs or assigns. This is a sort of estate in the land, descendable to his heirs, or assignable by the grantor, or his heirs, and not a mere possibility. The reservation in a grantor of the right of re-entry on abandonment by the grantee of the designated purpose and use for which land is granted is a contingent estate and not a mere possibility of a future right, and such an estate may pass by will or transfer (176 Cal. 479). This right of re-entry and reverter lies dormant and comes into life upon breach of the condition whereby the owner of the right may enforce the penalty. It does not restrain the alienation of the grantee’s title. The right as such, is of as high order as the grantee’s right to the land. A purely conditional estate then is one where the right of reversion is in the grantor creating the condition, his heirs or assigns. For obvious reasons this right cannot be saved to a stranger by the same instrument which creates the condition. Additional limitations in the conveyance whereby upon breach an estate arises to become vested in a third party upon a contingency at a future uncertain period are void. Nothing is left in the grantor. His whole estate passes by the conveyance, and this being so, the additional limitation is void for uncertainty. This sort of an attempted limitation over, or conveyance over, must not be confounded with those which are to take effect upon a date certain or the certain happening of an event. It is lawful to convey the estate over to a third person upon the certain determination of a prior estate granted to another, and by the same instrument, as where “A” conveys to “B” for life, with remainder over to “C” upon the death of “B”, but any attempted creation of a condition which depends upon the happening of some event at an uncertain time, or by which it is attempted to restrain the power of alienation beyond the period prescribed by statute is void and may be ignored. For example. Should a deed be made to the trustees of a certain church upon the express condition that the minister should constantly dwell on the property at all times, and in case he did not do so that the grant should be void, and that the land should revert to the grantor, and by the same instrument, he gives the same to John Smith and his heirs forever, this condition is void and may be ignored; the full title vesting in the trustees of the church free of condition. This upon the theory that the entire estate by the same deed passed out of the grantor. The firstestate granted to the trustees vests immediately, but the expectant interest of John Smith is not to accrue until the uncertain happening of a contingency, but both owe their existence to the same grant or gift, and being an ultimate disposition of the entire fee as well after, as before, the breach of condition, there is nothing left in his heirs and Smith takes nothing by reason of uncertainty of the happening of the breach. The material difference therefore, between an estate in fee on condition, and on conditional limitation is briefly this: That the creation of the former leaves in the grantor a vested right which by its very nature is reserved to him as a present existing interest in the land, descendable to his heirs, while the latter attempts to pass the whole interest of the grantor at once and to create an estate to arise and vest in a third person upon contingency at a future and uncertain time, and as we have seen there is no such thing as an estate to begin in the future. The possibility of reverter in an estate upon condition is a vested right and is capable of being released to the person holding the estate on condition, and if so released conveys an absolute title thereto in him. The grant in fee on condition even though it leave an estate in the grantor does not on that account fetter and tie up estates so as to prevent their alienation, and do not contravene the policy of the law which aims to secure the free and unembarrassed disposition of real property. It is otherwise with grants with a limitation over upon a condition or event of an uncertain or indeterminate nature. The gift over to Smith in the case above cited, depending upon a condition or an event which may never happen, passes no vested interest or estate. It is impossible to ascertain in whom the ultimate right to the estate or whether it will ever vest at all, and therefore no conveyance or mode of alienation can pass an absolute vested title, because it is wholly uncertain in whom the title will vest on the happening of the event or breach of condition upon which the ulterior grant is to take effect. The true test by which to determine whether the grant over is void for remoteness is very simple. It does not depend upon the character or nature of the contingency or event upon which it is to take effect. These may be varied to any extent, but it turns on the single question whether the prescribed contingency or event may not arise until after the time allowed by law within which the grant over may take effect, that is to say, after the time during which the power of alienation is permitted to be suspended under the statute. Conditional limitations therefore as defined above, or conditions which by a possibility may suspend the power of alienation beyondthe period permitted by the statute may be ignored and no steps need be taken to clear the title of them.
58.	Sec. 716 of the Civil Code is to the effect that every future interest is void in its creation which by any possibility may suspend the absolute power of alienation for a longer period than is prescribed by the charter; such power of alienation is suspended when there are no persons in being by whom an absolute interest can be conveyed.
Sec. 715 C. C. prior to the amendment of 1917 read: “The absolute power of alienation cannot be suspended by any limitation or condition whatever for a longer period than during the continuance of the lives of persons in being at the creation of the limitation or condition except the single case mentioned in Sec. 772.”
Sec. 772 C. C. provides that a contingent remainder in fee may be created on a prior remainder in fee, to take effect in the persons to whom the first remainder is limited die under the age of 21 years, or upon any other contingency by which the estates of such persons may be determined before majority.
Sec. 715 C. C. was amended July 27, 1917, by the addition of Clause 2, “or for a period not to exceed 25 years from the time of the creation of the suspension.”
What the exact effect of this amendment may be we are unable to hazard an opinion. In face of the code provisions and the decisions of the courts to the effect that conditions in restraint of alienation are void, we should hesitate to advise any one to attempt the creation of a trust which shall continue for a period of 25 years without qualification or reservation.
59.	We come now to a consideration of covenants and conditions in deeds which relate to the use, occupancy and manner of improvement of the property granted, and as most commonly found in modern conveyances. Of late years, it has become a common custom in California, and particularly in this community, to grant lands upon conditions making for the betterment of the neighborhood. It has indeed become such a custom that it may be said to be a matter of common knowledge that such conditions are invariably imposed in first class residential districts. It is not unlikely that courts will take judicial knowledge of this fact. It is of the greatest importance to determine what notice, or knowledge of restrictions a purchaser or encumbrancer shall be deemed to have. These points must first be emphasized:
1.	It is lawful to create covenants and conditions which may not run with the land, which will be binding upon all subsequentowners with notice, actual or constructive, for all time to come. The law permits the use of property to be restricted within reason and will enforce such restrictions so long as the equitable reason therefore exists . (36 App. Dec. 903; 62 C. D. 385.)
2.	Courts will not permit a forfeiture of title unless he who has the reverter comes into court with clean hands. That is to say, he cannot violate his own agreement or acquiesce in the violation of his agreement to the prejudice of any owner, nor will the court enjoin or abate any violation at the suit of one who by laches, or tacit consent to a breach, has estopped himself in equity.
3.	Courts are prompt to relieve property from such restrictions where the character of the property or the surroundings of the property have so changed since the creation of the condition as to render the restriction unnecessarily burdensome, or of no benefit to him in whose favor they operate. (84 N. Y. s. 592.)
4.	In cases where a general plan of subdivision is shown to be contemplated, either by reference in deed to such a plan, or to a map; or, if it be ascertained from surrounding circumstances that conditions have been imposed in deeds of lands in the same tract, in pursurance of the general plan of improvement, it must be held in the light of the decisions that any grantee with notice, actual or constructive, or conditions or covenants in prior deeds in his own chain of title, or in the chain of title of other lots in the same tract, takes title subject to the restrictions and is bound by them. (181 Cal. 174.) The grantor in such case gives to his several grantees in the tract what has been termed a “negative easement” in all lots in the tract, which enables them in equity to restrain or abate any violation of the condition, and this whether it be so expressed in the deeds or not. Where a grantor in accordance with the general plan for the improvement of the tract inserts in the general deeds to lots in said tract, restrictions and conditions as to the kind of building be erected, a grantee violating such restriction may be enjoined by the other grantees through it is not expressly stated in the deed that the restriction is created for the benefit of all the lot holders. (39 App. Dec. 532.) But see 65 C. D. 465. Where an owner subdividing a tract under a general plan of improvement, records a map showing the sizes of the lots with streets delineated thereon, also ground reserved for public parks, and sells the land upon the representation of conditions as the plat exhibits, then he will be estopped from re-subdividing portions which may remain in his hands as to change the arrangement in a way detrimental to those who have purchased from him or to their vendees, since the purchasers have an equitable easement in thewhole to the extent that such conditions are mentioned shall not be changed or varied. (39 App. Dec. 671.)
6. The common grantor who has created the conditions cannot, even after he has parted with his remaining land, destroy this easement by his own acts. (39 App. Dec. 671.) He can release his right of reverter but no more.
60.	There is much conflict in the decisions as to whether a grantee is bound to look further than to the deeds in his own chain of title for covenants or restrictions in other deeds which might put him upon notice of matters affecting his own title. It would be an absurdity to say that he is required to examine every conveyance made by his grantor to ascertian if by any chance he entered into covenants which might put the inquirer on notice of some right. The weight of authority seems to be that he is bound by actual knowledge of such covenants, whether they be in his deed or not, and by such surrounding circumstances attending the execution of deeds from the common grantor, such as advertising, signs on the property or the like, or by such physical condition of the property and the vicinage as might put a prudent man upon inquiry as to possible restrictive covenants affecting all the lands in the neighborhood. He cannot shut his eyes and ears and say he had no means of knowing what is apparent to any observer, or what is a matter of common cognizance. We believe these rules to be too apparent to require citations of bolstering authorities. It is true that there are decisions of the courts of this state to the effect that in the absence of recitals in the deed from the common grantor, it cannot be inferred that the grantor intended that the restrictions imposed in any deed from him should operate in favor of other property owned by him. (See 65 C. D. 465.) But it is by no means clear in these cases that there were no circumstances pointing to such intent, or that evidence was adduced to show intent from surrounding circumstances. Restrictive covenants inserted in deed as part of a general building scheme, affecting a whole tract and expressly made binding on every lot in the tract from the benefit of every owner run with the land for the benefit of other lots in the tract, and where owner or owners of the tract make such deeds, they limit their title to that extent and cannot thereafter convey more than they have, and purchasers are bound by such restrictions even if not contained in deeds to them, if they have actual notice, or had such knowledge by the appearance of the neighborhood as to put a prudent man on inquiry. (44 App. 539.) Such features of title are new in this State and until the point is well settled by the Supreme Court, it will not be safe, in our
opinion, to assume that a grantee is bound only by such notice as he finds in his deed or chain of title. (But see 65 C. D. 465.) Owing to the fact that it has been the custom only of late years in this State, to insert restrictive covenants and conditions in deeds relating to chacter of buildings, use, occupancy, etc., there have been but few cases before the courts involving construction of such covenants or conditions. We are, therefore, compelled to look to other jurisdictions to see what interpretation other courts have given to such clauses in deeds, and from this investigation to make a surmise or guess at what our courts would say under similar circumstances. We shall not attempt, therefore, to cite cases as illustrations which are to be taken as conclusive, but merely as pointers. We have not even attempted to cite supporting authorities, save in a few instances, to bolster our hints and suggestions; most that we have to say on this topic is pure suggestion. The cases are legion in which covenants and conditions are construed and we cannot hope in the scope of this work to do more than offer suggestions and hints for the use of practitioners. For general information, we cite a few California cases which treat of outstanding conditions.
Restrictive conditions against the sale of liquors on lands conveyed, with provisions for reverter to the grantor upon breach when imposed for the benefit of other lands of grantor are valid. (178 Cal. 242.) (As to right of injunction see 65 C. D. 465.)
Great interest centers about the legal affect of conditions so often contained in deeds to the effect that the property shall never be owned by, sold to, leased to or rented to a person other than of the Caucasian race. This and similar conditions have been the subject of many conflicting decisions in other jurisdictions, but the law appertaining thereto in California has lately been laid down in the case of Los Angeles Investment Company vs. Gary, 181 Cal 686. This case is very interesting as it is the first of its nature to be considered by our courts, and foreshadows future decisions when like matters come up for hearing on facts and merits. In this case the judgment was upon the sufficiency of the complaint tested by demurrer. As alleged in the complaint the recitals in the deed were as follows: “It is hereby covenanted and agreed by and between the parties hereto and it is a part of the consideration of this Indenture, that the said property shall not be sold, leased or rented to any persons other than of the Caucasian race, nor shall any person or persons other than of the Caucasian race be permitted to occupy said lot or lots,” followed by appropriate words relating to forfeiture in case of breach. The court says: “There can be noquestion but that the foregoing provision amounts to a condition, or rather to conditions subsequent. It will be noted that there are two conditions: one that the property shall not be sold, leased or rented to one not of the Caucasian race, and the other that it shall not be occupied by one not of that race. Inasmuch as a breach of both of these conditions clearly appears from the complaint, the real questions presented by the demurrer and therefore by this appeal, are as to the validity of these conditions,” and holds: The condition that the property be not sold, leased or rented to one not of the Caucasian race is clearly a restraint on alienation, citing Sec. 711 C. C. The question, however, that the property should not be occupied by a person not of Caucasian birth, is in a different category. It is not a restraint upon alienation, but upon the use of property. (Citing numerous authorities.) The court decides that the condition that the property should not be sold, conveyed or leased to a person not of the Caucasian race is invalid, but that the condition that the same shall not be occupied by such person is good and enforceable.
It is well established in every jurisdiction so far as we have observed that restrictions as to location of buildings on a given building line are universally upheld. So also those conditions or restrictions relating to cost of buildings and covenants forbidding the sale of intoxicants on the premises granted.
61.	It is a rule of construction of covenants and conditions that all questions of doubt must be resolved in favor of a free use of property and against restriction, and must be strictly interpreted against the party for whose benefit it is created. (1442 C. C.) It is a tendency of the courts to discourage restrictions on the free alienation of property and its free use, and the wording of the deed must be construed as nearly as possible according to the obvious intent of the parties contracting, but the rule that when all other means fail, doubts are to be resolved in favor of the grantee, do not apply in the construction of restrictive covenants. The opposite is the rule, and such construction must be given which would defeat a forfeiture in case of doubt. The primary rule governing the interpretation of restrictive covenants is to gather the intention of the parties from their words by reading not simply a single clause of the agreement, but the entire contract must be ascertained and determined from the language of the covenant itself, considered in connection with surrounding circumstances at the time the covenant was made. It must be remembered that a court can take evidence outside of the instrument to enable the court to place itself in the position of the parties at the time of making thecovenant for the purpose of ascertaining their true intention, but one who deals with a deed without this judicial construction is confined entirely to the words used in the instrument itself. In this construction the words used are to be taken in their ordinary and popular sense unless they have acquired a peculiar or special meaning in the particular relation in which they appear, or in respect to the particular subject matter, or, unless it appears from the context that the parties intended to use them in a different sense. We will cite a few instances where courts have construed the words used by parties, not as authority, but merely as instances which point to a probable holding by our Supreme Court under similar conditions.
It appears to be generally held that when a person covenants that he will not erect a building within a specified distance from a line, he necessarily covenants that he will not erect any part of a building within the distance named. That it is a violation of the covenant if he erect a massive porch, or a line of bay windows within the prohibited distance. The erection of a fence along the side of the lots, within the prohibited distance, high enough to shut off the view of the adjoining property would be held to be a building in the intent of the parties. In one case, it was held that a bill board of a permanent nature 15 feet high and 125 feet long erected along the boundary of the land was a building within the meaning of the covenant prohibiting building within a certain distance of the line. Merely incidental encroachments on the space by way of steps or even or ornamental projection might not amount to a violation of the agreement not to build within a certain line, yet a projecting porch extending the full width of the house as a substantial part, we think, would be held to be in violation. If it could occupy any part of the prohibited space, it could occupy all of it. It is held in a California case, Alderson vs. Cutling, 163 Cal. 503, that a restriction prohibiting the erection on the premises in question of any building other than a residence with the customary outbuildings, and that such residence should not be erected less than a specified distance from the front line of the premises, was violated by the erection of a residence so that the roof of its porch extended 2 feet and 4 inches over the restricted space, and the pillars of which encroached 5 inches thereon. In this case it was held that the placing of steps within the restricted space was not a violation.
The words “outbuilding” or “outhouse” has been defined as a building adjoining or belonging to a dwelling house. It is something to be used on connection with the main building. (160 Cal.257.) A stable cannot be held to be an outbuilding unless there be a main building on the lot. The word “dwelling” in its broadest significence denotes a building used as a settled human abode, and in common parlance, when not qualified, conveys the notion of a home; that it is a house occupied as a residence in distinction from a store, office or other building. In any proper sense, there is always one controlling idea in the use of the word “dwelling house,” and that is, it is a house intended for human habitation, so that a covenant that no building orother structure whatsoever other than a dwelling should be erected, is violated by the erection of a private garage.
The restriction against any use other than for a private dwelling restricts the character of buildings by eliminating all buildings for business purposes, and also by force of the word “private” excludes buildings for residence purposes of public character, such as hotels, general boarding houses or public lodging houses. The weight of authority seems to be that the erection of a flat or tenement house, or apartment house does not constitute a violation of a covenant, restricting use to dwellings only. A restriction prohibiting the erection of any buildings other than a dwelling house was held to forbid the erection of a double house with one entrance. Observe that the restriction was against “a dwelling house.” A covenant that no building other than a first class private residence shall be erected is violated by the construction of what is commonly known as a “double house” or “duplex,” or “two family residence.” A building planned and designed for residence of two families cannot be properly described as one residence. It cannot be deemed a private residence or private dwelling. (44 App. 394.)
There is a distinction between the term “flat” and “apartment house.” The latter term denotes an entire building, while the former means only the separate residential portions inside the building. (98 N. Y. S. 88.) There can be no exact or general rule of construction laid down where conditions are met. It is the only safe rule to observe that courts will hold the parties strictly to their agreement, but will not expand or enlarge their words to give them a meaning other than their popular or accepted meaning. Every case must be construed by itself, and it is a safe practice to take into consideration the surrounding circumstances, and the surrounding neighborhood, the character of other buildings in the tract, where reliance cannot be placed upon the exact language of the deed. It must be borne in mind that there are two rights created by such restrictive covenants; one in the grantor who retains to himselfthe right of forfeiture, and the other given to all other owners in the tract, or to such owners to which the right has been limited, when the plan is one of general improvement of the subdivided tract, and it can be shown that it was the intent to restrict and govern the use of property in all the tract under one plan.
62.	No property owner in a tract can maintain a suit to enjoin or abate a violation of restrictive covenants if he himself has violated them or stood by without objection to violation by other owners. Neither can the original grantor enforce his right of forfeiture against any particular owner if he- has waived his right in favor of any other owner, or if he himself has violated the conditions.
63.	We venture to suggest the following general rules for your guidance in determining the effect of deeds containing covenants and conditions. Conditional limitations as defined above, and all covenants and conditions which may by any possibility suspend the power of alienation beyond the period allowed by statute, may be ignored. Where it can be ascertained from the nature of the deed in all its terms, that the covenant or condition is purely personal, not directly and fundamentally affecting the land itself, and the title has passed from the grantee in whose deed it appears, the covenant or condition may be ignored. In cases where the operation of a covenant or condition is limited as to time, the same may be ignored after the expiration of the time limit, provided that there has occurred no breach; otherwise the same must be regarded until such time as an action for breach is barred by the statute. In many cases it will be found on investigation, that upon expiration of the time limit or restrictions, no further rights of grantors or third persons remain and the covenant may be ignored. Each must be governed by its peculiar circumstances. In cases where it is evident from the language of the deed and from surrounding circumstances, or other evidences of intent that the deed was not made pursuant to any general plan or subdivision, or that the creator did not intend the same to operate for the benefit of other lands owned by him, a quit claim deed from the grantor his heirs or assigns will clear the title. Not so however, if it be ascertained that the grantor held out to the world by representations, inducements, advertisements and the like that he intended the same as a part of a general plan of improvement, or in cases where it is found that the covenant was intended to inure to the benefit of his remaining land. If by clear expression in his deed it appears that the restrictions were created for his benefit alone, or for the benefit of owners of adjoining lots, or lots on the same street, or thelike, then it will be necessary to obtain quit claims from the original owner, and all owners of lots named as having the benefit. If he does not in his deed limit the benefit to any particular lots, or if by his deed he gives the benefit to all lots, in terms, then quit claim deeds must be had from all owners in the tract and from the original grantor, even if he be not then an owner. This final word may be said: That one dealing with lands is bound by actual notice of such facts which might lead to information concerning possible restrictive covenants outside the deed submitted to him. This means that one is bound to inspect the property and the neighborhood. If he receives a deed, we will say in Westmoreland Place, containing no restrictive covenants, and there be no restrictive covenants in any deed in his chain of title, yet in our opinion, he would be held to actual notice of restrictive covenants in other deeds by the very character of the property and its surroundings, He could not go into this beautiful place where the houses are all of permanent and costly character, all set on certain building lines and a certain distance apart, and seeing all this, say that he had no notice of possible restrictions, simply because his deed did not contain a reference to them. We may concede that the grantor, his heirs or assigns, could not enforce a forfeiture, unless the particular deed was on such condition, but we will not admit at this time, in the light of the decisions, that other owners in the tract, whose deeds are upon such conditions, could not enjoin a violation of them as fully as if they appeared in the particular deed which does not contain them.
In short, we should hesitate to advise a purchaser, who takes a deed to a lot in this tract, clear of restrictions, from the original creator of restrictive covenants in other deeds for lots in the same tract, that he, the purchaser, might ignore these restrictions. Do not advise a client or customer that restrictive covenants are void where there is no time limit fixed for their termination. Covenants will continue so long as there is a reason for their existence.
64.	Lately there have been attempts made to govern the erection of buildings, and the character of use of property by municipal ordinances. Such ordinances have been adopted by the governing body of Los Angeles, and in other communities. Certain so called “zones” have been designated within which only certain classes of houses may be erected or certain classes of business conducted. Until the constitutionality of such ordinances is determined by the courts of highest resort, it would be unwise to ignore their mandates unless one desires to figure as a party to a “leading case,” and become a pioneer. Personally, we are of theopinion that such attempts at government are wholly invalid as being attempts to deprive an owner of his property rights without due process of law in contravention of the provisions of the 14th Amendment to the constitution of the United States. We admit that a municipality in exercise of its police power may enact such ordinances as inure to the public good, such as ordinances regulating the height of buildings, the character of construction, the character of use, and the like, but we doubt the authority of a city council to decree that in the improvement of private property that all buildings shall be set upon a certain line, or that certain private property shall be devoted to residence uses only, and certain other to business uses only; that in certain designated districts private property shall only be devoted to certain uses. In our opinion such ordinances are wholly inoperative and that it will be so held when they are brought to the attention of the courts. It goes without citation of decisions, that a municipality under its police power may go to certain lengths in regulating the use of privately owned property, as for example, the city council may by ordinance lawfully prohibit the maintenance of a powder works, a slaughter house, or a tannery at the corner of 6th and Broadway in Los Angeles. It may lawfully decree that no building in the city limits shall be more than 150 feet in heighth; likewise that tenements designed for rental shall be constructed in such a manner that each tenant shall have at all times so many cubic feet of air, and the like.
These powers of the public governing body, extend only to such matters as affect the public health and safety; they cannot be extended to gratify the whims or desires of a few citizens, nor of the body of citizens as a whole, unless these elements enter. In short, it is our opinion that an ordinance which declares that privately owned property located, say on Wilshire Boulevard, otherwise unrestricted, shall not be devoted to lawful business purposes is absolutely void, as infringment of a property right. Since the above was written the Superior Court as we are- informed has sustained the doctrine laid down here but as yet the Appellate Courts have not touched upon it so far as known to the writer.IV.
Descriptions of Land
65.	It is a matter of astonishment when we consider the number of deeds which are rendered uncertain or void by reason of mis-description of the land sought to be conveyed. One would naturally think that the most particular care would be exercised when parties come to determine the very identity of the thing to be dealt with.
In nearly every instance the exact location and dimensions of the land conveyed are of first importance to the parties; yet the cases are legion where through carelessness or ignorance of the draftsman, the deed is rendered inoperative by errors in description, while the deed may be otherwise perfect. Very frequently the fault arises from excess of caution. The draftsman in seeking to more fully describe the property, multiplies words and attempts two or more descriptions which may be repugnant one to the other, and in his attempt to make the description certain, defeats his purpose and makes the deed uncertain or void. Too much cannot be said of the need of care in framing descriptions. It should be that any one may read and know what is intended by the language of the instrument itself. A court has power to inquire into facts and circumstances surrounding latent defects in description. That is to say, in cases where the defect is not patent or apparent from the face of the deed itself, but where it is necessary to determine what the parties intended by certain phrases used. This evidence the courts can take outside the recitals of the deed itself, but even the courts cannot do this when the defect is apparent on the face of the deed. (34 App. 400). The law makes no presumption concerning the title of a grantee under his deed. He holds by force of his grant. If there is anything equivocal in the language of the grant, the courts have power to declare its proper meaning. But if the parties have used language plain and explicit—if they have thereby fixed a boundary which no man can mistake—courts have nothing to say in the way of interpretation. This is not to be confused with the power which the courts possess to ascertain the true intent of the parties from competent, extrinsic evidence, as in cases where a court is able to ascertain from such evidence that the defect or misdescription occurred through mutual mistake, and decree a reformation to carry into effect the true intent of the parties. Thus, if I own lot one and sell it, and by mutual mistake my deed describes lot two, the defect is patent. No court can say that by the use of the word “two’* I meant “one.” But the court may in a proper action take evidence wholly outside the deed that it was the intent to describe lot one; that the error occurred through mutual mistake and will reform the deed so that it may read lot one instead of lot two. The court can do this— an individual cannot. It is seen that most of the rules of construction of conveyances laid down by the authorities are for the guidance of courts in interpretation, and where the same bear upon latent defects which may be removed or explained by evidence other than the instrument itself, they cannot with safety be relied upon by individuals dealing with the lands. No individual may usurp the powers of the court save at his peril. When a court of competent jurisdiction has construed a conveyance in accordance with the intent of the parties the matter is solved and settled, and thereafter the words of the court in construction are to be deemed the words of the parties themselves. However, as pointed out, a grantee before such judicial utterance be had, cannot safely rely on the rules by which the court reached a decision. He should not attempt to decide the matter for himself for his decision is not binding. The decision of the court is binding.
66.	What are boundaries is a matter of law—where they are is a matter of fact. (75 Cal. 610). This discussion will be confined to those rules of law which apply strictly to the intent of parties as disclosed by their instruments. These elemental rules of construction as we have pointed out, are the only ones an individual dealing with property may safely apply. Where he seeks to determine the intent of parties by any other evidence he does so at his peril. His judgment may not be that of the court if the deed be assailed.
It is cardinal rule of construction to arrive, if possible, at the true intent and meaning of the parties from a fair consideration of the whole instrument. (10 Cal. 589). It must be read from the “four corners” and every word must be given meaning and effect, if such can be given to it not inconsistent with the general terms of the whole instrument when taken together. (47 Cal. 52: 186 Cal. 151).
67.	We have now to do with such rules as apply to such construction. The general doctrine as to boundary by physical monuments is tersely stated by the Supreme Judicial Court of Massachusetts as follows:“Whenever land is described as bounded by other land, or by a building, or structure, the name of which according to its legal or ordinary meaning includes the title in the land of which it has been made a part; as a house, a wharf, or the like, the side of the land or structure referred to as the boundary is the limit of the grant, but where the boundary line is simply by an object, whether natural or artificial, the name of which is used in ordinary speech as defining a boundary and not as describing a title in fee, and which does not in its description or nature, include the earth as far down as the grantor owns—and yet which has width—as in the case of a way, a river, a ditch, a wall, a fence, a tree, or a stake— the center of the thing running over or standing on the land is the line of boundary of the lot granted.”
68.	A description is sufficient by which the identity of the premises can be established. (46 Cal. 101.) The office of a description is not to identify the land, but to afford means of identification, and when this is done it is sufficient. To be valid on its face a deed must contain a description of the property intended to be conveyed and the instrument is void if the description is so vague and uncertain that the property cannot be located therefrom, and the writing itself does not furnish the means whereby the description may be made sufficiently definite and certain readily to locate the property. The imperfections in descriptions cannot be supplied through evidence extrinsic to the writing itself. (34 App. 400.)
Where a lot is delineated on a map, or a map is referred to, and the designation cannot apply to any other lot shown on the map, there is no ambiguity. Thus, Lot 18 as shown on a certain map was referred to. It was shown that there were several parcels shown on the map numbered up to 33, some of these were shown to be subdivided and several contained lots numbered 18—held to be good. (38 App. 219.)
If I deed the “Malibu Ranch,” this is a means of identification, for it can be determined that I intended to convey a body of land the dimensions and location of which could be ascertained outside the instrument. It is not necessary that I literally define the boundaries, for they may be identified from sources outside the grant, but a careful conveyancer will at all times, if possible, give an ample and simple description of the premises dealt with, rendering inquiry aside from the deed unnecessary. It follows that where there is not enough in the deed to denote upon its face the identity of the land to be conveyed the deed is void. Thus if I describe “a lot in Los Angeles,” or “a tract near Santa Monica,” without further words which supply means of identification, my deed is void.In the hands of one who has paid a consideration and who can prove that I intended to convey a particular piece of property, a court upon proper proceedings would reform my deed to truly describe the land intended to be conveyed. Such matters, however, are only in the cognizance of the courts, and such evidence as might induce a court to reform my deed cannot be safely relied on by a grantee, or those claiming under him, in the absence of such judicial determination.
If the means of identification of the land to be granted clearly and satisfactorily from any part of the description, the addition of any. false circumstances of description may be disregarded, and if enough remain to identify the particular tract intended to be conveyed the deed will be operative.
69.	The most certain boundaries which exist are by natural objects or permanent artificial objects. (108 Cal. 179). These are called “monuments,” and when aptly made the boundaries, or stations in boundary lines, prevail over all other calls in the deed. (9 App. 370: 80 Cal. 281: 38 Cal. 491: 28 Cal. 175: 27 App. 776).
All lines between monuments, unless qualified, are to be taken as straight lines, and the actual measurement between monuments prevails over statement as to distance. (32 Cal. 219). It is incumbent upon one dealing with land to ascertain if possible, the location of original monuments, and where they cannot be found and the original survey is known to be inaccurate, the lines of buildings and improvements long established and acquiesced in, may be taken as true lines of the original survey. (125 Cal. 383).
The location of monuments may be proved by parol evidence. (36 App. 229). They govern whether seen by contracting parties or not, and where the boundary is uncertain and owners by parol agreement fix the boundary, they or those claiming under them, are bound by the agreement. (37 App. 363). Where known monuments are referred to as boundaries, or as stations in boundaries, they govern, though courses, distances, angles or computed area, fail to correspond with such boundaries. Thus, if a description runs, “North 45° East 150 feet to the intersection of center lines of A and 10th Street,” the call carries to the intersection point, although it be North 30° East and 100 feet from the point of beginning. Again where the call is, “North 45° East along the North line of 10th Street” and this course does not coincide with the lines, the line of the street prevails and the declared course is ignored.
In patents from the government it is the rule, where land is bounded by navigable water, to describe the meandering line ofthe water by courses and distances, but this is only for the purpose of calculating the amount of acreage paid for by the patentee, and where the water is referred to as the boundary, the courses and distances given may be disregarded, as the water itself, or the given line of the water itself, is the true boundary at any instant of time. (87 Cal. 23). (182 Cal. 652).
Again, where the description was beginning 298 feet from the intersection of two streets, at middle of a wall, the wall must be considered the initial point though it be but 293 feet from the intersection of the streets. Where grant was made of 120 feet on a certain street “including stable situate on the rear of the premises,” and to include the stable, the lot should be 131 feet, the deed conveys 131 feet. This rule is modified where there is a doubt as to what monument was intended, in which case courses and distances should be regarded to ascertain the true intent. Thus, in the case above cited. If there be two barns on the rear of the premises, one within 120 feet, and one within 131 feet of the beginning point, the call for 120 feet would govern.
70.	A particular description controls and renders certain a general description. Thus, if I describe the property as “Lot A,” and follow this with a mete and bound description which describes more than Lot A, if I own what is particularly described, the mete and bound description prevails. If a general description be definite and certain in itself, and a particular description uncertain and un-definite, the general one prevails. (94 Cal. 195). Where there are two descriptions, one of which describes the property by name or lot number, and the other by metes and bounds, which is erroneous and does not cover all the land described in the first, the latter must be rejected. (44 Cal. 132: 27 Cal. 57). A grant by metes and bounds describing accurately a certain tract, the description being followed by the words, “being an undivided one half” of a certain larger tract, conveys an undivided half of the whole tract, and the mete and bound description must be disregarded.
71.	It is a sound rule that a perfect description which fully describes the property is not to be defeated by the addition of a further and false description and by words added out of extra caution which have no tendency to make a general description uncertain. Thus, a deed accurately describing land by proper section, township and range which actually lies in Los Angeles County is not void by reason that it is falsely stated that it lies in Kern County. (108 Cal. 529). A conveyance of land by metes and bounds in the NE% of the section, and the monuments be fixed and certain is not vitiated by the statement that the land is in theSEX the section. (76 Cal. 476). If a grant contains different descriptions, one of which applies to lands which grantor owns and the other to land which he does not own, the former shall be taken as true and the latter false. (36 Cal. 606).
72.	If there be two clauses which are inconsistent with each other and they cannot be reconciled, the first, if it be complete in itself, prevails, but if further matter of description is added which modifies and colors what precedes it, it is not rejected as repugnant, but the whole if possible, must be construed together. (66 Cal. 15 : 34 Cal. 624). Courses laid down which are repugnant to the remainder of the description may be rejected if the remainder is sufficient and consistent to uphold the grant according to the evident intention of the parties. (66 Cal. 15). The law will construe that part of a deed to precede which ought to take precedence in whatever part of the instrument it be found. Words cannot be transposed unless there is something in the deed itself which shows that reading the deed as it is will defeat the intention and that by transposing words and sentences the true intent will be found though badly expressed. When all other means fail and a doubt remains, that construction must prevail which is most favorable to the grantee, and this is held to be true as to descriptions even in government grants. (11 Pet. U. S. 544). It must be remembered that in grants from the State or the United States, the intendments are in favor of the grantor, while between individuals they are in favor of the grantee. It would appear from some authority that this doctrine or strict construction of statutory requirements does not apply to descriptions.
73.	The statement as to area is not controlling, except where the grant is by area alone, as of “South 10 acres” of a particular tract without qualification. This part of a description is the last to be resorted to; (76 Cal. 169: 12 Cal. 148), but where the description equally admits of two constructions, one of which would make the quantity agree with that stated in the grant, while the other would not, the former must prevail. (66 Cal. 379).
It is well to observe here that where sale is made on basis of area, this is governing, and surveys and other measurements yield to this. Where a deal is made by acreage, that governs despite government surveys and a purchaser is held entitled to a rebate. (172 Cal. 61). Where the exact dimensions or area of a tract are made the basis of transaction, they prevail, but where sale is in gross, that is to say, when the price is not fixed upon dimensions or area, the contract does not bind vendor to convey any particular quantity, as where land is described as a particular farm, or a certain tract, or quarter section or the like. (31 App. Dec. 20). Unless the sale is made at so much per acre, or so much per front foot, the dimensions to be determined, the buyer cannot complain if there be a shortage under, nor the seller if there be an excess over record surveys and measurements. One who buys land in gross, such as a certain parcel or lot, buys as he would any other physical thing which he can see and examine for himself. The statement of a seller that the tract contains so many acres, or the lot has so many feet frontage is immaterial if the bargain be not made on that basis. The statement of a surveyor appearing on a map as to area or dimensions is not controlling. It is overcome by the actual measurements on the ground as established by monuments, courses and distances.
74.	Where a description is followed by an exception which is uncertain, the exception may be void for uncertainty, but the main description will stand, as for instance, a grant of the S.W.% “except one acre.” If there be nothing in the chain of title, or physical visible evidence on the ground as to what particular acre was intended to be excepted, the exception is void and the title to the whole of the S.W.% passes.
There may be an exception out of an exception and title to the part secondly excepted will pass, as, “except the South 10 acres except that part North of the fence.” In such a case “that part North of the fence” is included in the grant.
75.	It is very important to know that if a description refers to any other deed, or to a map, or to a survey, that this has the effect to incorporate in the deed the instrument referred to as fully as if it were copied therein verbatim, and what is described in the instrument to which reference is made must be taken as part of the grant. Thus a deed describing the land by courses and distances with the addition of the words, “being the same premises described in a deed to ‘A’ ”, conveys the whole premises described in the deed to “A,” though a small strip was omitted in the mete and bound description. It is therefore necessary to examine all maps and surveys to which reference is made, as frequently it will be found that they may show matters as to rights of way, easements, building lines and the like, which are not disclosed by deed under examination. Remember, that everything referred to in a deed is of the same import as if it were described in terms. This point cannot be too strongly emphasized.
76.	Much confusion arises from misuse of terms of direction. The amateur in framing descriptions apparently is unable to distinguish the difference between the terms “North” and “Northerly.” The rule is simple, and when intelligently applied, no confusion can arise. The terms “Northerly,” “Easterly,” etc., when used without qualification, and without reference to monuments are to be construed as meaning due “North,” due “East,” etc. (35 Cal. 96: 94 Cal. 195: 96 Cal. 505; 42 Cal. 326: 32 Cal. 219).
The terms “North,” or “East,” etc., when controlled by other well defined description, or monuments, will be read “Northerly,” “Easterly,” etc. By statute in this state the words “North,” etc., denote true courses and refer to true meridians unless otherwise declared. (Secs. 3903-3904 P. C.). The variation of the magnetic needle is approximately 15 degrees in this localtity. All descriptions governed wholly by courses and distances should be qualified accordingly.
77.	Boundary lines may be established by agreement of owners. This may be done only where the description of the boundary line is indefinite and uncertain and its true location cannot be ascertained, and where parties to the agreement own on both sides of the agreed line. Not so, however, when the description and location of the boundary line is certain, for no subsequent agreement will vary the terms of the grant and title to land does not pass by agreement. While this is true, yet where the parties have agreed upon a certain line as the original boundary line, and acquiesced in the agreement for a time equal to the period of limitation in which action might be brought, they are estopped to assert the contrary. (37 App. 363: 178 Cal. 495: 180 Cal. 566).
78.	Unless there be contrary intent expressed all grants bounding on a natural pond or a lake extend to the ordinary line of low watermark; on navigable streams and tide waters to line of ordinary high watermark, except that boundaries on navigable lake or stream where the tide extends to edge of the lake or stream at low water mark (830 C.C.). The same rules as to meandered lines and shifting boundaries applies here. When a range of hills is the boundary the summit line is the true boundary unless otherwise expressed. The mouth of a stream where it empties into another stream is the point of intersection of center lines; where it empties into a natural lake, or into tide waters at point of intersection of its center line with the line of ordinary low water, or ordinary line of high water, as the case may be. Where the bound.-ary is by a stream not navigable, or by a public highway, the title conveyed extends to the center of such stream or highway unless a contrary intention is clearly manifest from the grant itself. (Sec. 830 C. C.) ; and this rule is applicable when the land conveyed is a fractional government subdivision, or any government lot, or anylot designated on a plat by number or otherwise and shown by the plat to abut a public way or an innavigable stream. (99 Cal. 303). Now the question of intent, here, to be gathered from the instrument, is often a close one. It is of the highest importance that such descriptions be submitted to the closest scrutiny as we shall show later in discussion of shifting boundaries and vacation of highways. We repeat, that government “meander” lines are run, not for the purpose of accurately fixing boundary lines upon the ground, but to determine the amount of acreage granted and to be paid for by the patentee. Hence, when the meander calls are with reference in terms to the stream, or body of water, even though the courses do not exactly agree with the course of the stream, or the water line, and monuments be set at considerable distance from the water line, yet the thread of the stream, or the body of the water will be the true boundary. Where the call is say, “on the East by Tule Creek,” the thread, or center line of the stream at any instant of time is the boundary. Where the land is shown by plat to be bounded by an innavigable stream and grant is made with reference to the plat the boundary is the thread of the stream. In cases, however, where meander lines are run without reference in terms to the stream, and there be no accompanying map to show the meander line is intended to be in fact the water line, then the stream must be deemed to be excluded and the grantee is confined to the exact lines of the survey and the calls in his deed.
79.	It is the general rule of law founded on public policy, that proprietors, in the absence of intent to the contrary expressed in grants to them, shall own to the center of all bordering innavigable streams and public ways. It is of the first importance to know what construction should be put upon words denoting intent. In the absence of any reason to the contrary the grantor, when he delivers his grant will be held not to have reserved anything that could be of no great value to him, but which would be of great value to his grantee, and courts are alert to give every advantage in construction to uphold this doctrine; but no rule of construction or sympathy of court can alter the effect of words or terms which in their ordinary and accepted sense are plainly and unequivocally those of exclusion. (See Am. & Eng. Ency. 805 and Citations).
It is, therefore, held that where the call is “by the margin,” “the edge,” “the bank,” “the side,” “East line” or “outer line,” “near line,” and the like, the grantee does not take to the thread of the stream, but is stopped at the monument called for. However, such terms as “Bounded by,” “running along,” “with the stream,”“running by,” “to the stream,” “to the line of the stream,” “with the meander line,” “fronting on,” “lying along,” “abutting on,” and the like, are those of inclusion, (Sec. 3906 P.C.), on the principle that where a natural monument is called for, without expression of intent to the contrary, the call goes to the center of the monument. If the stream by any apt words of inclusion is made the monument, the call goes to the center: but if apt words of exclusion be used, and a certain line of the stream be called for, the line, not the stream itself, is the monument. The importance of this distinction is manifest when change occurs in the location of the water boundary. In cases where the parties must be held to have determined upon a fixed and certain line of boundary other than by the body of the water itself, the boundary line is not affected by the shifting in location of the body of the water. In cases, however, where the boundary is the body of the water itself, without restriction to the contrary, the title follows the shifting boundary if the change be from natural causes and by slow and imperceptible degrees. Where the change occurs from artificial causes or from sudden, abrupt natural causes, as by floods, or tidal waves, or by earthquake, no change occurs in line of boundary in the eyes of the law.
80.	By the ancient Common Law, which in this particular governs in this State, where land is added either by the accretion of alluvian, or reliction of the water, from natural causes and by slow and imperceptible degrees, the lands so added become the property of the upland owner on the theory that by reason of his riparian ownership he should profit by the addition as he would suffer loss if the water encroached upon his lands; and upon the further theory that being deemed to have purchased his upland with a view to the peculiar advantages to him from water frontage, he should, as a matter of right, continue a riparian owner, when land is formed between his upland and the water’s edge as changed. The U. S. Circuit Court of Appeals ( in Western Pac. Ry vs. S. P. Co., (151 Fed. 400), held that since the adoption of the codes, this common law rule no longer obtains so far as the same applies to shores other than those of rivers and streams. This decision is disapproved in Strand Improvement Co. vs. Long Beach, (173 Cal. 765), wherein the court, after careful analysis of the codes and of the above opinion, holds that the common law rule as to accretions to sea shores is the law of this State. In any event, should this latter case be overruled and the decision in the railway case above cited be affirmed, in our opinion it would be of little moment in cases where the grant in apt terms calls for the water as the trueboundary. It is only in cases where the boundary is fixed without reference to the water itself, that is to say, by a fixed and immovable line that the question could arise. Such grants by government as describe lands bounded by water, invariably, so far as the writer has observed, make the water itself the true boundary by some illusion thereto. As we have said above, the body of the water itself shall be considered the true boundary unless there be something clearly and unmistakably expressed in the grant which shows a contrary intent. Where the water is the boundary at the time of the grant it always remains the boundary no matter how it may shift in position. On running streams or tide waters, the call to the water line creates a shifting boundary (180 Cal. 182). The grantee whose lands are bounded by the line of the water and are not restricted to a fixed line is the owner at all times to the line of his boundary wherever it may be located at any instant of time. There is such a thing as a moveable freehold, and a water line, though it may gradually and imperceptibly change, is just as fixed a boundary in the eyes of the law as a street or wall. Hence, it follows that where accreted lands are added the owner of the uplands becomes their owner by the very terms of his grant—his boundary line is extended to include them. In such cases the law of boundary would apply. In cases where the boundary line is fixed and certain and without regard to the water itself, and the boundary in fact be the line of the water, the upland owner becomes the owner of accreted lands under the common law applying to accretion, but in such a case, the accreted lands gained are held by him under a different title, and under a different designation, from those acquired by his grant and must be included in the description when he comes to make grant, otherwise the title will not pass, as land does not pass an appurtenant to land. This caution then must be observed. In all cases where land is added to a holding either by accretion of alluvian or reliction of the waters, from natural causes, by slow and imperceptible degrees, examination must be made to ascertain how the added land has been dealt with. In grants of such added lands where the water line is the boundary and there be no contrary extent expressed, a deed by the original description carries the title to such added lands without special designation, upon the theory before expressed, that the boundary line of the original grant is extended to embrace them. This is not true, however, in cases where the original line of boundary is fixed without reference to the water line, as stated above and the point is emphasized, the upland owner, in such a case, takes under a different title and by a different designation.81.	By statute in this State islands and accumulations of land formed in the bed of navigable streams belong to the State, if there is no title or prescription to the contrary. (1016 C. C.) If formed in a stream not navigable the same belongs to the owner of the shore on that side where the island or accumulation is formed; or if not formed on one side only, to the owners of the shore on the two sides divided by an imaginary line drawn through the center of the stream. (1017 C. C.)
The rule of construction fixed in this State by statute (830 C. C.), is that where tidewater is the boundary the rights of the grantor to ordinary high water mark are included in the conveyance; when a navigable lake, where there is no tide, is the boundary, the rights of the grantor to low water mark are included in the conveyance, but in following this rule, the distinction between fixed and shifting boundaries must be borne in mind. Where a stream of water, not navigable, is the boundary, the rights of the grantor to the middle of the stream are included in the conveyance, except where held under another title.
82.	We come now to consider the subject of boundary by a public way. Where a road is the boundary the rights of the grantor to the middle of the road are included in the conveyance, except where held under another title (380 C. C.). Section 831 C. C., declares : “An owner of land bounded by a road is presumed to own to the center of the way, but the contrary may be shown.” The title goes to the center of highway even if it be not named as a boundary (26 App. 485). Section 1112 C. C. C., declares : “A transfer of land bounded by a highway passes the title whose estate is transferred to the soil of the highway in front to the center thereof, unless a dififerent intent appears from the grant.”
When an owner of a tract plats it upon a map designating certain portions as streets or highways, and thereafter records the map, he is deemed to have made an offer of dedication to the public for highway purposes, and if such dedication is accepted by formal action of the public authorities, or impliedly, by public use, the dedication is irrevocable. The mere filing of the map does not constitute acceptance. After acceptance a deed by grantor by reference to the map carries title to center of adjoining street. Not so, however, if there be no acceptance. (41 App. 763.) Where land is described in a conveyance as a lot shown on a certain map and the map shows the land to be bounded by a street, the fee to the center of the street is thereby conveyed, in the absence of a clear intention to the contrary, regardless of the fact that such street has been previously abandoned as a public street if the grantorowns to the center of the street. Under such circumstances, a street is created as between grantor and grantee regardless of any dedication to the public. (185 Cal. 386.)
In some of the States the ownership of lands in public ways is arbitrarily fixed by statute for reasons of public policy. By statute in this State the public acquires but an easement whether by deed, dedication or condemnation. (24 App. 193.) However, it is held in Cooper vs. Selig (32 App. Dec. 604), that a grant to the city of a strip of land in absolute terms followed by the habendum clause that premises were to be had and held “for the purposes of a public road of said city” was a grant in fee simple, and upon abandonment no change of title was effected. This by the rule, that where the asserted modifying or limiting clause of a deed is of doubtful import, the fee contemplated by the granting clause will not be cut down and that such grants are to be interpreted in favor of the grantee. (See also Parks vs. Gates, 32 App. Dec. 725.)
Now, the grantor of land adjoining a public way, is presumed to grant the fee to the center of the way unless a contrary intent appear in the deed (95 Cal. 661), and again, the presumption that the grantee takes to the center does not obtain if his grantor did not in fact own to the center of the way; for, the law will not presume that the grantor intended to convey that which he did not own. When the conveyance in terms conveys soil in the highway, there is of course, no question, for in such case the grantee takes by the express terms of the grant; but when the same is not included in the description in terms and there be nothing in the deed to indicate that it was not grantor’s intention to convey to the center of the way, the law assumes that he did so intend, and gives the soil in the street to the grantee by reason of his grant and peculiar location, and for reasons of public policy. (22 Cal. 484; 50 Cal. 31.) It will not be presumed in the absence of words indicating clear and unmistakable intent to the contrary that the grantor intended to reserve that which could be of no practical use to him, as we shall presently see that even if he retain the fee in the way, and the way be abandoned, he cannot use the land to the detriment of his grantee.
The construction placed upon the meaning of the words indicating an intent to exclude any part of the way is highly important. Where the call is a certain line of the street, as say the “East line” the fee to the land in the street will not pass (51 Cal. 194; 178 Cal. 440), but where the call is to the lot line, though it be in fact the “East line” of the street; and where it is to the East line of the street “and thence along the street,” or “street line” or “lineof the lot” the fee to the center will pass even though the call for distance is insufficient to carry to the center line of the street. It must be remembered that all intendments here are taken most strongly in favor of the grantee and the language must be clear and explicit to justify the exclusion of any part of the way. Often in cases where the street has been widened, there occurs after an otherwise definite description some such clause as “Except the South 10 feet within the line of First Street.” Here is a clear exception of the land itself, and title to excepted part does not pass; but where by any reasonable construction it can be determined that it was attempted to except the easement for the way, as, ‘“except the South ten feet taken for First Sreet” or, “to be used as a street” or “deeded for First Street,” or the like the fee passes. It should be borne in mind that the act of vacation of a public way confers no title. There is no reversion. If the deed to the abutting land owner is sufficient to vest the title in him in land in the way before vacation, it rests in him after vacation, freed of the easement. It is a part of his original holding but by a different designation; hence, the grant of land abutting a public way after vacation of the way does not pass title to land formerly in the way without being specifically included in the description. It was never a part of the lot and dot lines are not extended by the vacation to include it. (31 App. Dec. 718.) J
83.	The owner of a fee in a highway may exercise dominion over it in any way not inconsistent with the easement. He cannot destroy trees in the highway serving a useful or ornamental purpose (175 Cal. 6), and the abutting owner has a peculiar right in the way distinct from that of the public, whether he owns the fee in the way or not; and this is a property right of which he cannot be deprived without due process of law and compensation to him. (112 Cal. 306;; 11 Cal. 559; 113 Cal. 614; 112 Cal. 309; 115 Cal. 557; 126 Cal. 20; 124 Cal. 280.)
If the public use of the way be terminated by vacation, the abutting owner still has the right of ingress and egress over the way, if the fee thereof be in his grantor, even if the abutting owner consents to the vacation, and his grantor cannot after vacation exercise dominion over the strip formerly in the street in derogation of his grantee’s right. As between the grantor and grantee it is a street no matter if the public use be terminated, and so remains until changed by further contract. Thus, if the grantor owns the fee to all the land in the way and a new way be opening adjoining the old—the West line of the new way, we will say, being the East line of the old—and the old way be abandoned, the owners of landsadjoining the old way on the West has yet his easement over the lands in the old way to reach the new, and the owner of the fee in the old way cannot build upon them, or otherwise exercise dominion over it to prevent this use. This is not true, however, where the grantor owned but half the land in the way, for the lot owner cannot by simply consenting to vacation acquire rights in the lands of a stranger. In any case, his rights are confined in such cases to the lands in the vacated way owned by his grantor. He cannot claim right to cross lands of another to reach the new way.
If he be cut off from access to a public way by reason of the vacation of the old way he cannot be heard to complain if he has consented to the vacation, or been given an opportunity to object and demand compensation. It is possible to deprive the abutting owner of all rights in the way public or private, by due process of law upon compensation, and he may be cut off from access to any way, if the proceedings be legally conducted and he be given an opportunity to defend and demand compensation, for the compensation may go to the full value of the property, and the right of condemnation of private property for public use always exists. It is not necessary to the validity of the decree that the owner be in fact compensated if he be given his day in court and the opportunity to demand compensation. If this is not done, and in strict compliance with statutory requirements, vacation is not effected as to him, and he has the same use of the way as formerly, whether he own the fee in the way or not, and despite the fact that the public use is terminated. The leading case fully setting forth this rule is the case of Bigelow vs Ballerino. (119 Cal. 559).
84.	In computing the area owned by an abutting owner in an adjoining way which is vacated the boundary lines of added lands are the front line of the lot, the center line of the street and side lines drawn at such angles to the frontage of the lot as will give an equal frontage on the new line in order to conform to Sec. 1512 C. C. In other words the side lines of the lots cannot under all circumstances be continued in a straight line on the same course to the center line of the street. The rule is that the abutting owner takes in front of his property to the center of the street and lines must be drawn to give him an equal frontage on the center line of the street as he has in his lot.
85.	Cases are found where the map of a subdivision contains the statement that the area of lots is computed to street centers. Where grants of fractional portions of such lots are found the construction must be that the lot is the parcel bounded by theexterior lots lines shown on the map, and the statement as to area on the map may be disregarded unless the grant in terms includes the land in the street. A simple reference to the map is not sufficient. While such reference serves to incorporate the whole map in the grant the statement on the map as to computation of area shown thereon, does not have the effect to extend lot lines. They must be taken as delineated. The Supreme Court in Earl vs. Detour, (181 Cal. 58), settled this question when they held that the term “lot” means the land enclosed in lot lines as delineated on the map and cannot be extended to street centers even though it be declared on the map that lot measurements extend to street centers, unless it clearly appears from the deed that it was so intended, “Lot means Lot.” Great care must be exercised in such cases and all grants of parts of the lot be examined for possible conflicts. For example, a grant of the East half of a twenty-acre lot, where such statement is made on the map, and the description be further unqualified, conveys the East half of the parcel shown to be within the lot lines and does not contain ten acres. In like case a deed of the East 10 acres of the lot conveys more than the East half. Descriptions beginning on the line of such lot a certain distance from the corner of the lot must be construed as beginning that distance from the intersection of lot lines and not from the intersection of street center lines. The grant itself must disclose the intent to compute acreage to street centers or that result will not be accomplished and this must be done in clear and explicit words to include the part in the street in terms if the bargain is for a certain number of acres, otherwise, if only a portion of the lot be described and the words added “containing 10 acres computed to street centers,” the last clause is surplusage.
86.	No general rule can be laid down for construction of exceptions and reservations in grants applicable in every case. Each case must be considered alone in the light of its own peculiar circumstances. To properly construe such clauses every word must be weighed, every shade of meaning considered and every part of the grant scanned. The books are filled with decisions of the courts upon disputed construction of such clauses and some of the finest learning in the law bears upon the question. Any appropriate words as “except,” “besides,” “saving,” and the like, which clearly indicate the intent, will be sufficient to create an exception. So an exception may be made in the form of a reservation, or a reservation in form of an exception. (91 Cal. 74). An exception in a grant withholds from its operation some part, or parts of the thing, which, but for the exception, would pass by the general description to the grantee. A reservation on the other hand, is the creation of some new right, issuing out of the thing granted and which did not exist before as an independent right in behalf of the grantor. In distinguishing between a reservation and an exception the words “reserving” and “excepting” are not conclusive in determining which is intended. The character and effect of the provision itself must determine which is intended. If the intent of the deed is to vest in the grantor some new right or interest which did not before exist in him independently of his ownership of the land, it is a reservation no matter what language is used; but if it be the plain purpose not to create such a new right or interest which may vest in grantor, but to recognize and withhold from the grant an existing right which would otherwise pass to the grantee, an exception is made whatever language is used. An exception is always some part of the estate not granted at all, a reservation is always of something taken back out of that which is granted, no matter what name the parties may give to them.
Whenever possible, then, by the words of the grant which must be taken most strongly against the grantor, where the thing treated does not belong to some one other than the grantor, or is not held by the grantor independently of his ownership of the premises granted, the construction should be that the intent was to reserve the right rather to except the land, as, where the exception is of a burial ground described by metes and bounds, or of “South 40 feet to be used as a right of way,” or of “South 12 feet for alley way,” the easement only is reserved.
87.	We come now to descriptions framed by the draftsman. It should be the aim of the one who prepares the deed to clear away all uncertainties so far as possible and to furnish his client an accurate, professional description for future use. As we have seen, no little ingenuity is necessary in reconciling vague and uncertain descriptions in instruments of record, and so far as possible, the draftsman should confine himself to the record. Unless there should be a clear exception in some grant in the chain of title that portion in a public way should not be excepted from the description—the fee title should pass and the deed be made subject to the easement. Where there has been a grant of a right of way, as to a railroad, canal company, or the like, the deed should be made subject to the easement and no exception made that the grantee in the deed to be made shall have the reversion. While the draftsman must of necessity rely upon the record as he finds it, yet he should so far as he is permitted, frame the description to avoid entanglements and complications in actual measurement of the ground.This is rendered necessary by reason of inaccurate surveys and incomplete maps. He is called upon, we will say, to divide a lot into several parcels. The beginning point for each successive description should be the closing point of the one immediately preceding and “ties” made. There should not be one description running from the East and another from the West without “ties.” The reason for this is obvious when we come to consider that there may be an excess or shortage in ground measurement over or under the record distances. Take the case where “A” is the owner of a lot 100 feet in depth, North and South, as shown by the recorded plat. He conveys the South half. By the record he has 50 feet remaining in him but the draftsman should describe in a subsequent deed as the North half. Should a prior conveyance be found of the South 50 feet, then the draftsman preparing a deed for the same land should so describe it and not as the South half of the lot. Called upon for a description of the remainder of the lot he should describe the property as all of the lot except the South 50 feet. If deeds be found of record describing the North 50 feet and the South 50 feet, the draftsman should follow these descriptions in subsequent deeds. When framing a description of a certain part of a lot, the lines of which are not with the cardinal points of the compass as “Northerly 50 feet,” it should be qualified by apt words to show intent to convey a strip of uniform width of 50 feet. If the conveyance be, we will say, of “Northerly 50 acres,” the Southerly line thereof should be described as being parallel with the Northerly line of the tract. Care should be taken in writing descriptions by metes and bounds where the courses are not with the cardinal points to fix accurately the courses by angles or by tie to record monuments. For example, where the Westerly line of a lot is not at right angles with the Northerly line and it is desired to begin on the Westerly line 50 feet from the Northerly line, the call should be “beginning at a point in the Westerly line distant Southerly 50 feet, measured along said line from Northerly line,” otherwise without the qualifying words “along said line” the construction must be that the begining point is 50 feet South of the Northerly line, measured at right angles thereto. Again, in all descriptions of fractional parts of lots, the acreage of which is stated to be computed to street centers, it must be borne in mind that the boundaries of the lot do not extend to street centers, and if it be intended to make center lines of the streets the boundaries apt words to that effect must appear in the deed itself. In bounding by streets in cases where grantor owns the fee in the street, reference to certain lines of the streetshould be avoided. Any call to the street will be sufficient if it be not a certain line described in terms. The same rule applies to water boundaries, where it is the intent to make the thread of the stream or the body of the water itself as a boundary. Describe the street or stream as a boundary and you cannot go wrong. Where a vacation of a way has been had, or accretion to a fixed boundary line has been made, the land formerly in the way, or the added lands, should be specifically included in the description. So far as possible, only those monuments which are shown of record should be mentioned and reference be made to official maps and surveys of record. The multiplying of words and the writing of two descriptions for the same land should be avoided. In short, and as a final word, that description is the best which in simplest terms furnishes identification of the premises in question and none other.V.
Mortgages and Trust Deeds
88.	There are important distinctions to be observed between a mortgage and a trust deed given to secure a debt. While in practice both work as a security, there are certain rights and remedies under such instruments which are sharply distinguished. A mortgage under the laws of this state creates but a lien. The mortgagee takes no title no matter in what form the instrument is made. This is not true in all states. In many jurisdictions a mortgage conveys a defeasible title to the mortgagee; that is to say, he holds the legal title until the debt is paid. This gives him many higher rights than are conceded by the laws of this state. Here he has a lien only (2927 C. C.), but if he takes possession of the property he cannot be ejected until the debt is paid (88 Cal. 437). A mortgage under the ordinary form of mortgage in use in this State, has a right of entry upon the premises to protect his security. Usually the covenants of the mortgage give him the right to prevent waste, to irrigate and the like, if the mortgagor neglects or refuses to do these things. He has not the right to enter by reason of any title, but only by reason of the contract between him and the mortgagor; hence, the mortgagee cannot maintain or defend suits relating to the title of the property. He can only enforce or defend his lien. To acquire title he must foreclose the equity of redemption of the mortgagor by an action in the Superior Court. Then is set in motion the machinery which in time will transfer the title from the mortgagor to a purchaser at the sale made by the Sheriff or a Commissioner appointed by the court for the purpose of making sale when a decree of foreclosure has been entered. The law provides that when a suit is begun lis pendens may be filed in the office of the County Recorder, giving notice of the action, description of the property and names of parties to the action, and from and after the date of such filing all persons dealing with the property are deemed to have notice of the action and they deal with it subject to the rights of the plantiff. A plantiff is not required to give heed to the claims of any person dealing with the property after this notice has been filed, either purchasers, judgment creditors or other lien holders. The deed made to him, or to any purchaser upon foreclosure sale, cuts off the right of any parties dealing with the land subsequent to the filing of such notice.
However, the mortgagee in bringing his action, if he desires to cut off all rights accruing subsequent to the date of his mortgage, must make careful inspection of the premises for notice of rights given by possession, and of the record for notice of rights disclosed by the record, and make all parties claiming rights, liens, or title, defendants in the action; otherwise they are not bound by the decree.
89.	Under our laws strict foreclosures are permitted. (Sec. 2932 C. C.) That is to say, a mortgage may contain a power of sale given to the mortgagee under which he is empowered upon default to proceed to advertise and sell the property, and this in lieu of a foreclosure by judicial process. This form of mortgage is rarely used, and is practically obsolete. The power of sale in such ta mortgage dies when action on the note secured by the mortgage is barred by the statute of limitations. (45 C. D. 373.) This is also true in the case of any pledge of property with a power of sale given (45 C. D. 373). It is a common practice in the pledging of personal property, to execute and deliver with the note a collateral agreement, pledging the property for the payment of the debt, and giving to the pledge holder power of sale in case of non-payment. This power of sale dies when the statute has run against the principal obligation. This is for the reason that no actual title is transferred, but merely a lien given as security, with the power attached. This is not true, however, where the title is conveyed in trust under a trust deed made to a trustee, as security as in such case title passes. There is no lien strictly speaking although it has the practical effect of a lien, ranking in every respect with the lien created by a mortgage or other contract, but in law it is of a higher character than a lien. The powers and authorities delegated by the trust deed do not expire until the object of the trust be accomplished. In other words, a debt is never barred by the statute of limitations, and the rights and remedies and powers given to such a trustee do not die until the debt be paid or released. It is true that the note secured by the trust deed cannot be sued upon when the time has run within which suit could have been brought on the note if it were not secured.
In short, the statute may have run against any suit on the note, yet the payment may be enforced by a sale under the terms of the trust deed, and if the property fails to bring at the sale a sufficient amount to pay the debt, suit cannot be maintained on the note for any deficiency after the statute has run.90.	The statute of limitations is four years from and after the date of maturity of a promissory note, if it be executed in this state, and two years if it be executed outside the state. It must be borne in mind that the statute of limitations does not affect the debt, it is merely a bar to any suit at law upon the note itself after the expiration of the time limited by the statute. This period may be extended by a clear acknowledgment of the debt on part of the debtor, but to affect this the acknowledgment must be definite, unqualified and made in writing. (33 App. Dec. 141; 39 App. 628.) (See 9 App. 503.) (40 App. Dec. 326.)
It is important that you bear in mind that a note executed outside the state is barred two years after its maturity. We can give no logical reason for this distinction, yet it is a statutory provision and has been upheld even to the extent that a renewed promise to pay, even if executed in this state, does not change the rule where the original obligation was executed outside the state. (176 Cal. 572.)
The importance of this distinction may be illustrated by a simple case. You have a client, resident of the state, owning property in the state, who negotiates a loan from you. Pending the closing of negotiations he is called to Chicago. To facilitate the business you forward him the note and mortgage for execution. He executes the documents there and returns them to you. Your right of action on that note is barred in two years after its maturity.
91.	As we have before emphasized no debt is ever barred in equity. It follows that even after the statute of limitations has run and the right of action of the mortgagee thereon is forever gone, the mortgagor, or any one claiming under him, cannot quiet title against the mortgagee, his heirs or assigns, without paying the debt. This rule applies in cases where those deriving title from the mortgagor have assumed the payment of the debt, or in dealing with their immediate grantor, have taken into consideration the debt in paying for the land and in proportionately reducing the purchase price.
92.	It has been held that one dealing with land is entitled to rely upon the record as he finds it. That where he inspects the the record and finds a mortgage on the premises shown by its terms to be barred by the statute of limitations, and the mortgagor has conveyed the title, and there is nothing in the chain of title to show that the subsequent grantees assumed the payment of the debt, he may ignore the mortgage, and in our opinion, could maintain an action to quiet title against the mortgagee to clear the title. He is permitted by law to assume that the debt has been paid. Hecannot rely upon this presumption, however, if the title still remains in the mortgagor, or his heirs or devisees. (140 Cal. 29; 134 Cal. 441.)
93.	Trust deeds to secure the payment of money are somewhat of an anomaly in California. The courts have repeatedly held that no specific trust in real estate is valid in California unless it falls under some one of the classifications of the statute. Suffice it to say at this point that the statute does not define or permit in express terms, or by implication, such form of security, but the Supreme Court has held that by reason of the long continued use of such deeds as security, affecting at this time untold millions in value, that they will be upheld as a rule of property despite the statutes and the oft repeated declaration that no specific trust in real estate is valid unless it fall under the statutory classification. All this upon the consideration that such a great amount of property would be affected by a contrary decision and so much loss incurred by people who have dealt in good faith, that the courts will not after this lapse of time hold such trust invalid. The court has said in so many words that were the question before them in the first instance where such a deed had been used it would pronounce it void. It may be taken therefore, as well established law in this state that such conveyances are valid, or at least permissible, but this attitude of the court is very distinct notice to all that the powers given to a trustee in such a deed must be strictly followed, and the trustee and the beneficiary will be held to the strictest account and in all respects be held to the highest good faith, that the debtor may not suffer imposition or deprivation.
94.	Sec. 2924 C. C. was amended April 27, 1917, and now provides that in cases where a power of sale is given in an instrument, except where such power is given pursuant to an order, judgment or decree of a court of record, or where the instrument is given to secure bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations, or is made by a public utility subject to provisions of the Public Utilities Act, that this power of sale conferred upon a mortgagee, trustee or other person shall not be exercised after breach of the obligation until: (A) The mortgagee or beneficiary shall first record in the office of the County Recorder of the County wherein the mortgaged or trust property, or some part thereof is situated, a notice of such breach and of his election to sell, or cause to be sold, such property to satisfy the obligation. (B) Not less than three months shall thereafter elapse and (C) the mortgagee, trustee, or other person authorized to make the sale, shall give notice of the time and placethereof in the manner and for the time not less than that required for sales of real property under execution. The language of the act is somewhat obscure, but we take it to mean that the one vested with the power of sale, cannot proceed to sale without filing the notice three months in advance. Unquestionably it would be held that the one exercising the power must give notice of the sale as provided in the instrument under which he acts, but in view of this act this notice must be not less than that required in cases of sale upon execution. By amendment effective August 17, 1923, notice^ of sale must be posted in a conspicuous place on the property.
It is held that this amendment applies only to instruments made after act went into effect and by amendment effective August 18, 1923, applies to trust deeds made after July 27, 1917. (38 App. Dec. 376.) We emphasize then, this rule, that in foreclouse under such instruments, every possible notice and indulgence should be given the debtor before sale is made, for, when the hammer falls he is absolutely without right of redemption unless he is able to show in an equitable action that the sale was fraudulent. He cannot in any action where the sale has been fairly conducted question the right of the beneficiary to order a sale, or the right of the trustee to sell, or the price obtained at the sale. It is not encumbent upon the beneficiary or the trustee to indulge the debtor after he is in default, but a court of equity will carefully inquire into all the steps, and if it find that the debtor has been oppressed or unfairly treated it will lean toward him. The courts will not enlarge any of the language or terms of the instrument, but will measure the powers and authority of the one making the sale strictly by the terms of the instrument. The recitals in the deed made upon sale of all the preliminary steps leading up to the sale; such as demands upon the debtor, the exercise of the option to declare the debt due, the notice, the manner and time and place of sale, and as to sale and the amount of bids received, are conclusive against the debtor, and those claiming under him, if it be agreed in the instrument securing the debt that they shall be so, but these recitals can be overcome if the debtor can show fraud or collusion causing detriment to him.
95.	As stated before, a trustee under a trust deed given as security, takes the full title thereto, legal and equitable but only for the purposes of the trust. (44 App. 315.) Here we have another fiction of the law and a seeming anomaly, for while it is true that the trustee takes the full title, yet a title is left in the grantor which is as of high order as that he had before he executed the deed, subject only to the right conveyed to the trustee, which right
7in its nature is analagous to a lien. Thus, after the grantor has executed such a trust deed the property is subject to Declaration of Homestead; he can convey it subject to the trust deed; it is subject to judgment liens; it descends to his heirs and he can make mortgages or other trust deeds to secure other debts, yet there is always in the trustee such an estate as we may designate a dormant title which may at any instant of time be brought into full life if it be necessary for the trustee to take any action to protect his estate. We think, therefore, that we are justified in saying that this dormant title which rests in the trustee springs into full vigor and life at the very instant the hammer falls at the trustee’s sale, and passes from him at the same instant of time, for at that time it is necessary that the trustee have the full title, legal and equitable, to the exclusion of his grantor and all claiming under him in order that he may pass such title to a purchaser. That this would seem to be the true rule is borne out by the facts that a trustee under such a trust deed cannot maintain action against a trespasser on the land. He cannot sue to collect rents payable to his grantor; he can exercise no dominion over the land so long as the debtor be not in default. To say that one has full title to property and yet cannot exercise these acts of dominion over it is to state an absurdity, hence, in our opinion, it must be deemed that the trustee’s title only comes to life when the necessity of protection of the trust arises and that he is no wise concerned with any other feature of the title.
96.	It is good business policy to name as trustee in such instruments a corporation authorized by law to act as trustee. This for the reason that such companies almost invariably continue in business and the creditor is relieved from the risk of annoyance and expense which he takes in case of death or disability of a personal trustee. Under the laws of this state no trust is allowed to fail for the want of a trustee, and upon the death, removal or resignation of a trustee of any specific trust, the trust falls into the Superior Court of the County in which the property, or some part thereof, is located, and the judge thereof is empowered upon proper petition to name a successor in trust. This often causes annoyance and expense which may be avoided by the employment of corporation trustees. If it be desired, a successor or successors in trust can be provided for in the instrument by simple agreement to the effect that upon the death, removal, refusal or inability, to act of the trustee named that another trustee may be selected by the parties, or by the holder of the note, and that upon such appointment being certified, signed and acknowledged by the party or parties authorized to name the trustee and recorded in the office where the trust deed is recorded, the title vested in the original trustee will then vest in the successor named, but no method of appointment of a trustee, unless it be otherwise contracted in the trust deed, can be employed other than by petition to the Superior Court.
It is not necessary that the trust deed be formally accepted by the trustee unless it is so formally contracted in the instrument. A performance of any of the duties imposed upon the trustee implies his acceptance of the trust. Under the forms in common use in this state, however, it is provided that the trust shall not be operative until accepted by the trustee on the face of the instrument. Where this is found it is essential that the trustee make formal acceptance, although we are inclined to the opinion that if the trustee did in fact proceed and carry out the trust, and thus signify his acceptance, that the debtor would be held bound if all the other steps were regular.
97.	It is also the practice in this state to have the note certified by the trustee as being the identical note secured by the trust deed. This is not a legal requirement, but it is certainly a safe and conservative business practice and one to be commended. It is also the custom of trust companies to retain in their possession trust deeds running to them. This is also a safe and commendable practice as they are thus rendered less liable to loss or destruction, and are readily available when the trustee comes to reconvey or foreclose. The trustee is legally entitled to the possession of the instrument as he is the grantee. The matter of certification of the notes by the trustee is of high importance. It prevents over-issue of notes where there are a number secured. One dealing with such notes is put upon notice of the terms of the trust deed, and he must in protection to himself read the instrument and if he find by so doing that no note is deemed to be secured thereby which is not certified by the trustee, and he be offered a note which is not so certified, he deals with it at his peril.
98.	It is often alleged that these trust deeds by reason of their provisions for strict foreclosure whereby the equity of redemption is cut off, are drastic and oppressive. The answer of this criticism is that in live communities such as California, it has been demonstrated that they do not operate as instruments of oppression in the hands of grasping creditors, but as a distinct aid and benefit to the borrowing public. True, there may be isolated cases where men have suffffered wrong at the hands of a grasping and unscrupulous creditor, but we believe that it is your observance, as it has been ours, that in practically all cases such securities haveoperated for the benefit of the borrower. When the creditor has a speedy method of recovery of his money or the possession of the property, naturally he will loan larger sums upon the security. It is a well known fact that the dockets of the courts are constantly crowded, and in consequence one seeking to foreclose a mortgage in many instances is required to wait from one to three years to recover his money, or possession of property. If the only means of recovery was by judicial foreclosure men would hesitate to loan money, or sell land on time payments. As the matter stands now, the lender is justified in taking junior liens for he knows that he can recover by a speedy method of foreclosure. It is not too strong a statement to say that one of the greatest factors in the upbuilding and development of California as a state of homes is the practice of employing trust deeds as security. Many, many thousands of instances can be cited where people have been able to secure homes under such a plan as this: A building company will place upon the property a first lien, sell the property subject to this lien and take back a trust deed for at least a part of the purchase price, giving the buyer an opportunity to pay for his home in installments. One has to but look about in any live, progressive community in California to see the wisdom of such a practice. Constant attempts are made to prevail on the Legislature to enact laws permitting redemption as in case of judicial foreclosures. In our judgment such legislation would be unwise and a distinct obstacle in the path of progress in substantial development of the commonwealth.
99.	The power of sale given in a trust deed is the only remedy where the trust has not failed or the security become worthless. Such an instrument cannot be foreclosed as a mortgage. (38 App. 376.) However, there are certain forms of trust deeds usually employed in the case of bond issues, giving alternative remedies, that is to say, power is given to the trustee to sell at public auction, thus effecting a strict foreclosure without right of redemption, or to proceed in a court of equity to foreclose by judicial process.
100.	The notes secured by either a trust deed or mortgage cannot be sued upon separately and apart from the instrument securing them so long as the security remains. (141 Cal. 308.) However, if the title fail, or the trust deed or mortgage from any cause become valueless, then suit may be maintained upon the note, (141 Cal. 308; 109 Cal. 427; 84 Cal. 154). but where such is not the case, but one action can be maintained, and that is for foreclosure. In judicial foreclosures in case the property does not bring sufficient at the sale to pay the debt, a deficiency judgment may be docketed without further suit against those defendants who arefound to be personally liable for the debt. Where the property does not bring enough at a trustee’s sale to pay the debt, action may be then maintained upon the note to recover the deficiency, if the statute of limitations has not run.
It is not necessary that there should be a formal promise on the part of the grantee to pay an obligation encumbering the land conveyed in order to render him liable therefor if his obligation so to do appears from a consideration of the entire conveyance. The obligation may be made orally or in a separate instrument: it may be implied from the transaction between the parties or it may be shown by the circumstances under which the purchase was made as well as by the language used in the instrument. (37 App. 693.)
Where a grantor is not personally liable for a mortgage debt, and his grantee agrees to assume and pay the debt, the grantee does not become personally liable on the note (38 App. Dec. 31). The purchase by a mortgagee at a sale of the premises under a prior deed of trust held by another, extinguishes the lien of the mortgage and action may be maintained thereafter by the mortgagee on the note without foreclosure. (36 App. Dec. 555.)
101.	Now, as to the parties to such instruments. Broadly speaking any person capable of contracting can make or receive them. The same rules apply here as apply to grantors in deeds. Thus, one under legal disability such as minority, or one who is mentally incompetent, is incapable of contracting. Corporations, are permitted to make mortgages and trust deeds as freely as individuals. It is true that the statute prohibits a corporation from creating debts beyond its authorized capital stock, but this statutory prohibition does not render void mortgages, or other instruments, made in violation of it. The directors of a corporation are personally liable for debts created by them in excess of authorized capital stock, but where a corporation has received the proceeds of its notes, bonds or mortgages it cannot plead that its act in creating the debt was not permitted by law. All such debts of a corporation must be created by its Board of Directors, or Board of Trustees, acting as such board, not by individual directors or trustees, and proper authority must be given by the governing body acting as such to the officers executing the evidences of indebtedness and the instruments securing the same, yet if these formalities be not observed, and the instruments are executed in the corporate name, and the corporation receives the proceeds, it is bound. It must be remembered in taking notes of a corporation, or extending a general credit to a corporation, that the stockholdersare relieved from personal responsibility for the debt at the end of three years from and after the date the debt is incurred—not from the maturity date. Stockholders in a corporation having a capital stock, under the law of this state, are personally liable for a proportionate share of debts incurred while they are stockholders, based upon the ratio the amount of stock owned by each bears to the whole amount of issued stock, and members of non-stock corporations, or societies, are personally liable for the proportionate amount of the debts incurred while they are members, but this liability, being one created by statute, expires three years from and after the debt is incurred.
Corporations, other than business corporations having a capital stock, can pledge their property only upon authority given by the Superior Court. Public Utility Corporations, such as water companies, railroad companies, gas companies, and the like, are not permitted to mortgage certain of their properties without permission of the State Railroad Commission. All corporations issuing bonds, or other evidences of indebtedness, other than notes not to be offered to the public, must secure permission of the State Corporation Commissioner so to do. The rules as to procedure before these officials can be secured from their offices, and will not be touched upon here, as there are constant changes made in requirements and it would serve no good end to discuss them here in detail.
Guardians, administrators and executors can only mortgage the property of the estate by authority of the Probate Court, and mortgages made by them must contain a recital of such authority. There is no personal liability of the maker and no deficiency judgment can be had against the estate. Mortgages made upon the interests of minors must be made on their separate interests. (133 Cal. 257.) That is to say, each minor must be given the right to redeem his particular property, or interest in the mortgaged property, upon his payment of his proportionate amount of the debt. An administrator, executor or guardian cannot deal with the property of the estate for his own benefit. It is therefore encumbent upon one dealing with such to pay him the proceeds of the loan in his representative and not his individual capacity.
102.	A mortgage made to joint payees may be satisfied by payment to either and a release by either is good (see 127 Cal. 151), except in cases where the mortgage runs to a husband and wife, or to a married woman and another. Under the provisions of Sec. 164 C. C., each take a half. (22 App. 921.) In such cases, you should require a release from both mortgagees and you shouldmake payment one-half to each. This rule does not apply in cases where the note and mortgage express in terms that the same are taken by the mortgagees as joint tenants with the right of survivorship.
An administrator or executor cannot make a valid release of a mortgage given by himself without an order of court authorizing him so to do.
Mortgages should not be made to run to alternate mortgagees as to “John Smith or Mary Smith,” for the question then arises as to which one furnished the funds and to which one the mortgage was delivered. Many times parties are put to trouble and expense to ascertain these facts. It is a cardinal business rule that notes and mortgages should not so run. Mortgages made to trustees should be made in their representative capacity and recitals made of such capacity.
103.	Any interest in property may be pledged. The same
rules apply here as apply to deeds, a mere possibility of interest cannot be pledged. A mortgage is valid which purports to cover property acquired subsequently by the mortgagor. The rule as to delivery does not apply here; the future lien being created by a present contract. These contracts are held valid. They are specially applicable to the property of public service corporations. A deed purporting to convey after acquired property is void for want of delivery, but this rule is relaxed as regards liens.	y
104.	Any instrument, other than a conveyance in trust, is to be deemed a mortgage if it be given to secure a debt. If a deed is made as security for a debt it is a mortgage no matter how strong the language of the deed. (39 App. 158; 178 Cal. 132; 37 App. Dec. 556.) Here we desire to point out the illegality of such a transaction as this: One borrows money from another, giving to his creditor a deed of his property, or depositing a deed to his creditor with a third party, with the understanding that if the debt is not paid when due that the deed is to be delivered and the creditor deemed the owner of the property. Such a transaction is wholly void as a conveyance of the title. Even in case of personal property a chattel mortgage which provides that upon default mortgagee may take possession of mortgaged property and thereupon become vested with absolute title and indebtedness be fully paid, is void. (62 C. D. 182.)
However, in a case where a note became due and the maker made a deed to the holder under express agreement that unless debt was paid by a certain date grantee should sell the property and pay the debt, it was held not to be a mortgage requiring foreclosure—that the remedy is governed by the written agreement. (43 App. 735.) This would be upon the theory that a trust was created.
The debtor is not permitted by law in this state to waive his right of redemption in advance or by the instrument creating the debt. If he does waive his right of redemption it must be in a separate and later transaction. (114 Cal. 593.) The law does not permit forfeiture of title upon non-payment of a debt without legal process foreclosing the debtors equity of redemption. The mortgagor himself cannot demand a foreclosure, but he has the right to maintain an equitable action for redemption, and if he redeems the mortgage is no longer effectual.
105.	It is a common practice to avoid foreclosure for the mortgagor and mortgagee to agree that the mortgagor will convey the property to the mortgagee and take back from him an agreement of sale and purchase within a stated time for the amount of the debt and accrued interest. This is but another form of security and does not accomplish the end intended, for the mortgagee has a deed which he must foreclose, instead of a mortgage, and the debtor still has his right of redemption. The mortgagee has a poorer form of security than he had before, for he is not likely to recover attorney’s fees in case of foreclosure. It is perfectly lawful for the parties to agree that the debtor surrender his property in full payment of his indebtedness, but the transaction must be bona fide and beyond all question in full satisfaction of the debt. The deed should so express the intention, when the parties have once settled and the debt is extinguished, they can then deal as any other individuals. When a deed is taken in satisfaction of the debt, the mortgage should be released of record, as the law does not presume that it was the intent to merge the two interests. (36 Cal. Dec. 395.) (See generally, 135 Cal. 277; 128 Cal. 399; 127 Cal. 254.)'
It is not necessary to set out in the mortgage a copy of the note, although it is good practice so to do. It is sufficient if it appears on the face of the instrument what the debt secured may . be. A note may be dated before or after the date of the mortgage, and it is lawful to draw the mortgage to secure notes to be there-L—after executed.
106.	The note and mortgage must be read as one instrument (151 Cal. 553; 126 Cal. 549; 92 Cal. 674), the note may pass without endorsement but by assignment, and the assignment of the note carries all mortgage security with it. (126 Cal. 47; 117 Cal. 412; 109 Cal. 50.) One dealing with a note secured by a mortgageis bound by every recital in the mortgage. An assignee of a non-negotiable note takes the same subject to all outstanding equities and defenses even though he takes without knowledge of them. (44 App. 365.)
A note secured by a mortgage or trust deed is non-negotiable. (133 Cal. 681; 132 Cal. 582.) It is assignable and transferable, but does not fall under the protection of the law merchant. The law merchant applies only to negotiable paper, and a negotiable instrument is one certain in its terms, payable at a certain date in money, without any qualifications. Such an instrument in the hands of a purchaser in the ordinary course of business, in good faith and for value, before maturity, and before notice of any infirmity, is clear of any equities existing between the maker and the payee. This is not true, however, of a note secured by a mortgage or trust deed. Any one dealing with such a note at any time must make inquiry to discover if there are any equities existing, such as a failure of consideration, or as to any payments which may have been made and not endorsed on the note. Thus, it is encumbent upon one buying such a note to make inquiry of the maker if he has received the full consideration, if he has any defenses to an action on the note and what payments he may have made thereon. If he stand mute and refuse the information he is then barred from afterward asserting any such equities or claims, for he has been given an-opportunity to be heard and failed to disclose his rights. Where an assignment of note and mortgage is taken the assignment should be recorded (109 Cal. 42), and the maker notified, for, in the absence of such notice, he may make payments to the original holder.
Where a mortgage is given for a certain sum, say for $1500, and but $1000 is advanced to the mortgagor, and the mortgagee subsequently sells the note, his assignee can collect only what has been advanced to the mortgagor. He is not entitled to rely wholly upon statements made by the assignor. Many cases of this class have come to the writer’s notice, mostly arising out of transactions where building loans are made where assignees suffered loss. (For advances generally see 134 Cal. 466; 135 Cal. 277; 123 Cal. 500; 99 Cal. 153.)
Too much stress cannot be laid on the statement that one loaning money upon real property must look to the possession, and if any person is found in possession, must ascertain by what right he holds. Possession is the highest form of notice of right known to the law. It is not uncommon in communities where a great deal of property is sold on contract to find the contractholders living on the premises and nothing of record to disclose their rights. A mortgagee of the record owner takes subject to their rights and stands to lose his money, as the contract holder is not bound to pay to any one except his vendor. He may pay up the entire contract obligation and hold the property against the mortgagee. Many instances of this have occurred, and we point out that it is absolutely necessary for a mortgagee to ascertain the rights of parties in possession; otherwise he deals at his peril. Any evidence of occupancy is sufficient to put him upon inquiry.
107.	In making loans in contemplation of the erection of a building on the premises it is encumbent upon the mortgagee to see that no labor has been performed thereon and that no material has been placed thereon prior to the recordation of the mortgage. If he does not do so, his mortgage is subject to all liens for labor and material that may subsequently attach. If the mortgage be recorded before any labor is performed or any material placed upon the premises it is superior to all subsequent liens. (39 App. Dec. 94.)
108.	The maker and payee of a note secured by a mortgage or trust deed may mutually agree upon an extension Qr renewal. Renewal is effected by the execution of new instruments, and if it be in fact simply a security for the same debt is held to be a continuance of the former lien. The maker and the payee may agree to extend the due date of the note any period of time. These agreements must be entered into by all parties concerned, that is to say, the maker, the payee, any endorser or guarantor and any subsequent lien holder. If a wife file a homestead after the giving of the mortgage by herself and husband the lien of the mortgage cannot be extended against her homestead right without her consent. (32 App. Dec. 18.) When a note is endorsed by the payee thereof in blank without any other contract, his liability is that of an endorser only, and he is entitled to notice of subsequent changes in the contract. If he be an accommodation endorser he is in the same situation as the maker of the note, even if his endorsement appear on the back of the note, and he is entitled to notice of any change in the contract. The contract of guarantee, however, is an entirely separate obligation from that incurred by the execution of the original note. Where endorsers guarantee the payment of the note their contract is a separate one and may be sued upon without suit being brought on the original obligation, but they are entitled to notice of any change in the original contract. It must be borne in mind, and it is an important point, that a contractof guarantee must be founded upon a consideration. If it be entered into simultaneously with the original obligation which is guaranteed, that is a sufficient consideration, and no other consideration is required. However, if the contract of guarantee be entered into after the creation of the first obligation, at any time later, it requires a separate consideration moving to the guarantor to support the contract. The holder of the note cannot alone extend the statute of limitations by simply stating that he will extend the due date of the note; neither can the period be extended to the prejudice of a second lien holder without his consent. (126 Cal. 198.) He is entitled to rely upon the record as he finds it at the time he takes his second lien, and the subsequent act of the maker and payee of the first obligation cannot operate to his detriment without his consent, and if the period of limitation be extended and foreclosure be not brought upon the first obligation before the expiration, the second lien holder takes precedence and has a first lien. We will give a simple illustration: “A,” the mortgagor, executes his note and mortgage to “B,” payable in two years. The statute limiting the period within which “A” can sue upon the obligation is four years from the date of maturity of the note, provided it be executed in this state, and two years if it be executed outside the state. “A” then borrows on a second mortgage from “C.”	“C” examines the record and discovers the
facts upon which he is entitled to rely. Afterwards “A” and “B” cannot make an agreement to extend the time for payment of the first mortgage, which will affect “C” without his consent. Should “A” and “B” extend the time for payment of the first mortgage, we will say for three years, as between them, a new period of limitation would begin, to-wit., at the last named maturity date, but as to “C,” he not having consented, the statute begins to run from the original due date. If “A,” therefore, after having given the extension does not begin his action to foreclose within the prescribed time from and after the original date of maturity he is barred so far as “C” is concerned, and when “C” forecloses his second mortgage “A” cannot even set up a claim. It would be demurred out of court on the ground that his action being barred as to the first obligation, he could not assert it against “C.” It is therefore very important to bear this in mind, that when extension agreements are to be made, the property itself and the record must be examined and the consent of all interested parties obtained. If it be impossible to secure consent of a second lien holder, then do not extend the time of payment of your note, so that it will fall due at a time beyond the period of limitation reckoned from theoriginal due date. Renewals and extensions require a consideration to support them as does any other contract. Thus, a forbearance on the part of a mortgagee to bring action to foreclose is a good consideration and will support an agreement of extension between the parties and their successors in interest. (137 Cal. 408.) Many mortgages read that they are given to secure renewals of the original obligation. This contract is binding as between the parties, but in our opinion is no notice to any other person, and a second lien holder is not put upon notice of pos--sible renewals. In other words, the contract for renewals does away with the necessity of execution of new papers, but the legal requirements are the same and the doctrine of notice to and consent of interested third parties applies as if no mention had been made of it.
109.	Many mortgages and most trust deeds in common use in the state provide for further advancements, the instrument to stand as security therefor. It is important to observe certain rules of law here. If the advancements to be made are optional with the payee, any advancements which he may make after he has received actual notice of intervening rights of subsequent lien holders are subject to rights of such lien holders and become junior to their claims. This must be actual notice to him and not record notice. (106 Cal. 515.) This is not true’ when it is obligatory to make advances. In short, if the payee is under a legal obligation to make advances in any event then the law contemplates that the money was actually paid over at the date of the instrument. No subsequent lien holder can take advantage of the fact that the money was not actually paid over upon delivery of the note. Thus, where it is obligatory upon the payee to make advances, as in case of a building loan where a mortgage is given, say for $5000, and but $1000 is advanced upon delivery of the note, the mortgagee may pay out the balance from time to time without regard to notice, actual or constructive, from any subsequent lien holder. (See generally 77 Cal. 383; 2 App. 288; 39 App. Dec. 89; 44 App. 149.)
110.	The question of rate of interest concerns all parties, and the law touching upon the subject is illuminating. When an excessive rate of interest is charged upon interest, as for example, where the note reads that the interest is 6% per annum, payable annually, and if not so paid said interest shall bear interest at the rate of 12% per annum, renders the entire contract for interest void (153 Cal. 64), and no interest can be collected; for the statuteprescribes that if the interest is not paid when due, it shall thereafter bear the same rate of interest as the principal.
The so-called Usury Law went into effect Dec. 10, 1918 (Stat. 1919), wherein it is provided that the legal rate of interest is 7% per annum, but parties may by express terms agree to pay not exceeding 12% per annum, and same shall not be compounded unless specially agreed to be paid, and any agreement or contract in conflict with the provisions of the act is null and void as to any contract to pay interest, and no action to recover interest in any sum shall be maintained, and the debt cannot be declared due until the full period of time it was contracted for has elapsed. The borrower may recover treble the amount paid in violation of the provisions of the act if suit be brought within one year after such payment. The lender cannot charge more than 5% on amount loaned in sums of $1000 or less, and 3% on all sums over $1000 in full, for all examinations, views, fees, appraisals, commissions, renewals made within one year from date of loan, and charges of any kind or description, except for abstracts or certificates of title, in the procuring, making and transacting the business connected with said loans. It would appear from a reading of the act that no charge of any kind whatsoever, fee, bonus or commission can be charged for any loan made for less than six months when said loan is not secured by a mortgage or pledge upon real estate. Penalties by way of fine and imprisonment are provided by the act for violation of the terms thereof.
111.	I would urge these points upon you in closing this topic. In taking a mortgage ascertain whether or not the property be a homestead. If so, husband and wife, if the claimant be married, must join in the note and instrument securing it. Make the check for the proceeds payable to both, or take receipt from both. Make inspection of the premises and ascertain if any one other than the mortgagor is in possession and claiming rights. If the property is community property standing in the name of the husband, or husband and wife, acquired since May 23, 1917, both husband and wife must join in the note and mortgage. If such was acquired before that date and title stands in name of husband alone, and it be not homestead, it is not necessary for the wife to join. If the title be acquired by the wife prior to May 19, 1889, the husband must join. If acquired by her since that date it is not necessary for him to join, for it is presumed to be her separate property, and this presumption is final and conclusive in favor of an encumbrancer in good faith and for value. When she has so dealt with the property the gate is closed. In granting extensions of theoriginal obligation secure the consent of all interested parties, including subsequent lien holders. In purchasing a mortgage, inquire of the maker as to any existing equities or set-offs and record your assignment. In every case examine the premises, and the record for notice of any existing claims or liens. When you have done this the law protects you because you are vigilant. If you fail to do so, and thereby you suffer loss, the law imposes upon you a penalty for your negligence.Homestead Exemption
112.—It has always been the policy of the law to protect and save to the family a place for a home, and in this State the law is very indulgent in this matter. In many of the states of the Union the land becomes a homestead simply by the fact that it is occupied as a home—a place of residence for the family. Where such law prevails a removal from one residence to another has the effect to destroy the homestead character of the property left, and such character immediately attaches to the new premises occupied. This is not true in this State. To impress real estate with the character of a homestead in California, it is necessary to follow the statutory provisions. A Declaration of Homestead must be executed and filed in the recorder’s office before the property becomes a homestead, and this property remains the homestead of the claimant until conveyed or abandoned by an instrument of abandonment, executed and recorded in the recorder’s office of the county where the original Declaration was filed.
The homestead interest in land is the offspring of the Statute in this State, and is not an inherent right. This interest is created by Statute for the humane and benevolent purpose of furnishing a home for the family, and the law makes the home a sanctuary for the family, safe from attacking creditors, and safe from the danger of a conveyance by one or the other of the spouses alone. The power of a stranger to enter as a tenant in common, to interfere with the occupancy, enjoyment and control by the homestead claimants, and his power to have the land partitioned or sold if it could not be divided, is inconsistent with the very nature of a homestead, and is violative of the very purpose for which the homestead is created; hence it follows that no conveyance of the homestead can be made unless the deed is joined in by both husband and wife, if the claimant be married. To hold that one could convey an interest to a stranger without the consent of the other would undermine the very principle of the protection of the home.
The very liberal homestead exemptions under the California laws have been often the subject of criticism by the unthinking. At first blush it would appear somewhat unjust to permit a manto sequestrate from his creditors by this means a very considerable amount of his property. It is true that in some instances the exercise of this exemption right works a hardship on the creditor. On the other hand, California is a new, growing commonwealth. The country is rich; the per capita wealth is large; money is ordinarily easy; and credits are correspondingly extended. There is a reason that exemptions from forced sale of either real or personal property should be greater here than in other communities. It is but one factor in the growth, wealth and prosperity of the State. It has been the personal observation of the writer that more liberal credits are given in California where the exemptions are large than in states allowing trifling exemptions. The liberal exemption of real and personal property from execution in California is but another example of the liberality of her people and her laws.
113. The Code prescribes the method of declaring a homestead. (Sec. 1262 C. C.) In order to select a homestead, the husband, or the other head of the family, or in case the husband has not made such declaration, the wife must execute and acknowledge in the same manner as a grant of real property is acknowledged, a declaration of homestead and file the same for record. (Sec. 1264 C. C.) It will be observed that one of the requirements is that declaration must be acknowledged. (Sec. 1269 C. C.) The declaration must contain a statement that the person making it is the head of a family, and, if married, it must show the name of the spouse (Sec. 1263 C. C.), or, when made by the wife, it must show that her husband has not made such declaration (122 Cal. 101), and that she therefore makes the declaration for their joint benefit. It must also contain a statement that the person making it is residing on the premises and claims them as a homestead, also a description of the premises, and an estimate of their actual cash value. All these requirements are vital and a declaration which omits any one of them is void. A statement as to “cost value” has been held to be insufficient. (134 Cal. 419.) This illustrates the point advanced that the Code must be strictly followed. (83 Cal. 23.) It is absolutely essential that the claimant reside on the premises, at the time the declaration is made (6 Cal. 125; 92 Cal. 1; 82 Cal. 226; 32 App. Dec. 119), and the residence of the husband is that of the wife. (178 Cal. 40.) The description of the premises must be sufficient to identify the very property claimed. After declaration is made the claimant may remove from premises and they still will retain homestead character. (121 Cal. 582.)114.	The homestead consists of the dwelling house in which the claimant resides, and the land on which it is situated, selected in the statutory method. A homestead cannot be legally declared by a trustee on property held in trust. (38 App. 212.)
The homestead is not limited by the law, except as to value of the exemption. Thus a homestead may be declared on land of any value, and to any extent, so long as the premises are used for residential purposes. If the premises claimed in addition to being / lived upon are also used as a place of business by the family, and this frequently happens, they do not therefore necessarily cease to be homestead property. (33 Cal. 220; 171 Cal. 329.) Thus, where the house was partitioned and one-half was used for a millinery store conducted by the wife, and also for living purposes of the family, and the other half was occupied by a tinshop conducted by the husband, it was held that the property did not lose its homestead character. (105 Cal. 95.) Where a building was enlarged after the declaration was filed and used as a hotel, and the claimant continued to reside on the premises it was held to continue a homestead. (94 Cal. 291.) It must be remembered, however, that the hotel business must be incidental to the primary use, that is to say, to use as a residence. Where a building had been used for business purposes for many years before the declaration was filed and the business was discontinued after the filing and the building thereafter used as a dwelling, it was held that the premises remained a homestead. (142 Cal. 245.) (As to use for business purposes, generally, see 105 Cal. 99; 103 Cal. 264; 9 App. 640 ; 78 Cal. 293; 78 Cal. 483.)
Where one is the owner of a flat building and lives in one of the flats, he may declare a homestead on the whole building and the land, even where there are separate entrances to the building, provided his residence there be in good faith solely for the purposes of a home, and not incidental to the business of conducting an apartment house. (141 Cal. 646.) Roomers and lodgers may be taken, and yet, if the claimant resides on the premises, they remain a homestead (62 Cal. 286). An occupancy by a tenant, however, is not sufficient. The residence must be bona fide and the main purpose to which the property is devoted. (71 Cal. 273.) Where the premises are occupied by two families, the homestead can only apply to one. (62 Cal. 286.) The claimant may lease a portion of the building and yet retain his homestead. A second building may be erected on the premises after the declaration is filed, and used for other purposes, yet, if the claimant continue to reside on the premises, it is still a homestead. (82 Cal. 226.)The test would seem to be whether the business is incidental to the residence or the residence merely incidental to the business; the question to be determined in each case as it arises. The right of homestead is not confined to any particular title or interest. Any equitable interest of the claimant may be impressed (172 Cal. 432; 172 Cal. 123; 37 Cal. 96), as where one holds possession under a contract to purchase, or under a lease, his declaration will attach to such interest to the extent that the interest will be protected against creditors. A garden attached to the land may be included in the declaration. (76 Cal. 315.) More than one lot may be selected where they are all used legitimately and bona fide for residence purposes. (60 Cal. 319.) Where part of the land described in the declaration is actually used and appropriated as a home for the family, the remainder not so used and appropriated, forms no part of the homestead. The physical fact of claimant’s occupancy, as well as the intention with which he occupies, are to be taken into consideration. It is the principal use to which the property is put and not its extent which governs. (78 Cal. 293). A homestead may be filed on a mining location. (98 Cal. 472). Where the declaration covers the whole of a farm and the major portion of the farm is used for grazing; the fact that the farmer takes in other stock for grazing for a consideration does not destroy the homestead. (98 Cal. 143). When the homestead comes to be set apart under statutory proceedings on execution, then it may be limited in extent to the dwelling house, necessary outbuildings and a sufficient amount of land necessary to the claimant for living purposes, but this must not be confounded with the right to occupy and claim any amount of property as a homestead primarily.
115.	Homesteads may be selected and claimed of not exceeding $5000 in value by any head of a family, and of not exceeding $1000 in value by any other person. (Sec. 1260 C. C.) An unmarried woman who has the care and custody of her minor child may select as head of a family even though she has never been married and the child is a bastard. (47 Cal. 73).
Here again it must be distinguished that these are exemption values if the homestead be attacked and not the value of the property itself. There is no limit on the value of the property which may be selected as a homestead. The limit is only upon the exemption. (82 Cal. 226: 61 Cal. 125). Sec. 1261 C. C. defines the phrase, “head of a family to include within its meaning:
1.	The husband, when the claimant is a married person.
2.	Every person who has residing on the premises with him or her, and under his or her care and maintenance, either his orT

her minor child, or grand child, or the minor child of his or her deceased wife or husband, a minor brother or sister, a father, mother, grandfather or grandmother, the father, mother, grandfather or grandmother of a deceased wife or husband, an unmarried sister or any other relatives who have attained the age of majority and are unable to take care of or support themselves.
116.	A homestead cannot be carved out of property held in
joint tenancy, or tenancy in common, (31 App. Dec. 679), unless the tenancy be between husband and wife (38 C. D. 237: 156 Cal. 195), but cannot be created or set apart from land owned by husband and wife and a thrid party as joint tenants, or tenants in common, since the adoption of the Codes Jan. 1, 1873.	(181 Cal.
15).
While the law forbids the carving out of a homestead from land held in undivided interests for obvious reasons, this rule does not apply in cases where the interests are of husband and wife. The homestead is intended as a protection of those very interests. Land held in such tenancy can be created a homestead by the joint declaration of the husband and wife, or by the wife alone, but not by the husband alone. (38 C. D' 237: 156 Cal. 195.) If the claimant be married, the homestead may be selected from the community property, or from the separate property of the husband, or with the consent of the wife from her separate property. Thus, it will be seen that a declaration made by the husband on the wife’s separate property is void. The wife, however, may declare a homestead upon her own separate property, or upon her husband’s separate property, or upon property which is both community and separate without the consent of the husband, but under no circumstances can the husband impress his wife’s separate property without her joining in the declaration. In cases where the husband had made sale on option, or contract, of either community property, or of his separate property, and vendee has paid part of the purchase price, a subsequent declaration of homestead by the wife is void as against the purchaser. (35 App. 64:	156
Cal. 359.) Where a wife for a valuable consideration waives and relinquishes to her husband all interest in his separate property, she has thereafter no right to declare homestead on any of the property, although they continue to live together as husband and wife. (34 App. Dec. 488.)
117.	The homestead is exempt from execution or forced sale, (26 App. 52: 38 App. 365), except in cases where a judgment was obtained before the declaration was filed for record, and which constituted a lien upon the premises at the time the declaration


1was made, (Sec. 1241 C. C.), and except on debts secured by mechanics, contractors, sub-contractors, artisans,, architects, builders, laborers of every class, material or men or vendors’ liens upon the premises, and except debts secured by mortgages or trust deeds upon the premises executed and acknowledged by the husband and wife, and recorded before the declaration was filed for record, and a purchaser of a homestead steps in to the shoes of the grantor so far as the liability of the property cannot be reached in his hands for debts of the grantor which could not have been enforced against it before the sale. It was contended in the case of Martin vs. Hildebrand et al., (37 App. Dec. 10), that the sale of a homestead operates as an abandonment, and immediately the property in the hands of a third person, becomes subject to judgment liens which could not have been enforced against the homestead in the hands of the claimant. The court in that case held that the property could not be reached after the sale if it could not be before sale and states that this is true even if there be no consideration for the transfer. _
In cases where execution has been levied on homestead property over and above the exemption to the payment of the debt, the plaintiff may proceed under the statute to do so by certain proceedings taken in the Superior Court. It would serve no good purpose here to set out in detail the steps to be taken. Suffice it to say that the court will upon proper application appoint appraisers to determine the value of the property, set apart the dwelling and land necessary for the use of the claimant for living purposes to the value of the exemption, if the land can be divided without material injury, and the remainder of the land will be subjected to the execution. If, however, division cannot be made without material injury to the land, the court will order a sale of the whole thereof and no bid can be accepted unless it exceeds the amount of the homestead exemption. (1256 C. C.) If the sale is made the proceeds thereof to the amount of the exemption must be paid to the claimant and the balance applied to the satisfaction of the execution. The money paid to the claimant is entitled for the period of six months thereafter to the same protection against legal process and the voluntary disposition of the husband which the law gives to the homestead. (Sec. 1257 C. C.).
If there be a mortgage on the homestead at the time of the execution sale, this mortgage must first be paid before the claimant is paid. Thus, if the homestead covers property of the value of $15,000 and there be a mortgage thereon for $5,000 and a creditorproceeds to sell under execution, the mortgage is first paid out of the proceeds of the sale, the next $5,000 or $1,000 as the case maybe is paid to the claimant, and the remainder applied to the satisfaction of the execution. The surplus, if any, to the claimant. (154 Cal. 103).
A declaration of homestead prevails over an attachment levied before the declaration was filed where the judgment is not entered until after filing of the declaration. (Sec. 1241 C. C.). A vendor’s lien takes precedence over a declaration of homestead only when rights of third parties have not intervened. A mortgage given by the husband alone to secure purchase money is defeated by a declaration of homestead recorded before the mortgage is recorded.
118.	The homestead of a married person cannot be conveyed or encumbered unless the instrument is executed and acknowledged by both husband and wife. Sec. 1242 C. C.: 83 Cal. 657). Observe the requirement that it must be acknowledged by both husband and wife. (102 Cal. 202). The conveyance, or encumbrance, must be by one instrument, and must be the personal act of the parties. It cannot be done by an attorney-in-fact. (54 Cal. 496). It is not necessary that the instrument be signed at the same time by both husband and wife, or acknowledged at the same time, but both must join in one instrument and both acknowledge. (6 Cal. 71: 126 Cal. 471: 47 Cal. 371). A subsequent abandonment will not operate to validate an instrument executed without these formalities. (81 Cal. 214).
It is not necessary that the second wife of the claimant join in any deed or mortgage. The homestead does not inure to the benefit of the wife other than the one who was the wife at the time of the declaration, and if it is desired that she have such benefit a new declaration must be filed. (113 Cal. 26).
One dealing with the parties must know that the woman who joins is in fact the wife of the claimant. (108 Cal. 214).
Deeds between husband and wife do not work abandonment of homestead. (96 Cal. 397). Under foreclosure of any mortgage made by the husband alone before homestead is declared, the wile must be made a party, or the decree will be void as to her. (116 Cal. 278).
119.	A homestead can only be abandoned by a declaration of abandonment or a deed thereof executed and acknowledged by the husband and wife, if the claimant be married; and by the claimant if unmarried. Sec. 1243 C. C.). This act must be personal, not by attorney-in-fact, and where claimant is married it must be the jointand concurrent act of husband and wife. Removal from the premises does not work an abandonment. The homstead continues so long as it is not legally abandoned in the manner prescribed. (74 Cal. 266: 65 Cal. 365). While the statute uses the term “grant” applying to abandment by husband and wife, the court has held that abandonment may be made by quit-claim deed. (93 Cal. 664).
It has been held that where the husband deserted the wife and she made a deed alone of homestead property and the purchaser entered and occupied the premises for the prescribed time he acquired title against the husband by adverse possession. 82 Cal. 72)	' '
x^120. The homestead may be destroyed by divorce. In case of divorce, if the homestead was selected from the community property, it may be assigned by the court to the innocent party either absolutely ,or for a limited period, subject in the latter case to the future disposition of the court, (146 C. C.) ; or it may in the discretion of the court be divided, or be sold and the proceeds divided, and thereafter the property loses its homestead character. An order setting aside a homestead out of the separate property of the spouse without limit as to time, is erroneous, not void. It vests title in fee simple after time for appeal has passed. (127 Cal. 275). If the homestead was selected from the separate property of either, then the court upon divorce may assign it to the former owner of the property, subject to the power of the court to assign it for a limited period to the innocent party. This period cannot extend beyond the life of the party. (117 Cal. 407). We will take an instance where the homestead was selected from the separate property of the husband. By the decree the court will assign it to him as his property, and may assign it to the wife if she be the innocent party, for a limited period, and upon assignment to the husband, or at the expiration of the period it may be assigned to the wife, the property loses its homestead character. In such a case as instanced, if the wife fails to assert her right to have it assigned to her for a limited period, and the time for appeal has passed, she loses that right and it follows that the property7 then loses its homestead character.
It is only the community property which can be assigned absolutely to the one not the original owner, but if the court err, and make absolute assignment of separate property we have seen that the decree is not void, and after the time for appeal has passed it becomes final and the homestead is destroyed. (127 Cal. 275). The court has no jurisdiction to award community property in an action for separate maintenance (33 App. 93). It has been heldthat the homestead right may be terminated by seperation agreement (121 Cal. 92.) If there be no adjudication of homestead rights in the divorce action, the property continues to be homestead of the spouses, (111 Cal. 482); but it was held to be destroyed where the husband had deeded to the wife before the suit. (78 Cal. 310).
121.	If the selection is made by a married person from the community property, or from the separate property of the spouse making the selection, or joining therein, the land so selected upon the death of either of the spouses vests in the survivor. In other cases upon the death of the person whose property was selected, it goes to his heirs or devisees, subject to the power of the court to assign the same for a limited period to the family of the decedent. (Sec. 1474 C. C. P.).
Upon the death of either spouse, and administration be had, then, upon return of the inventory of the estate, or at any subsequent time during the administration, the court may, upon petition therefor, set apart for the use of the surviving husband or wife, or in case of his or her death, to the minor child or children of the decedent, all of the property exempt from execution, including the homestead selected and recorded, provided such homestead was selected from community property, or from the separate property of the person selecting or joining in the declaration. The right of a widow to a probate homestead is an independent right which she has in addition to any other right of property which the law gives her, whether acquired under the husband’s will or otherwise and when set apart by court, and no appeal taken, is absolute and not subject to collateral attack. (30 App. 170).
Under the provisions of Sec. 1265 C. C. and Sec. 1474 C. C. P. when the selection of a homestead is made by a married person from the separate property of the spouse selecting it, the property on the death of either spouse vests in the survivor. It does not pass by succession and is not subject to testamentary disposition. (178 Cal. 54).
It must be remembered that under the circumstances above recited, that upon death of one spouse, the property vests absolutely in the surviving spouse without administration, but the court has jurisdiction to entertain a petition to set the same aside. This is not an administration of the homestead property, but it is merely a process whereby it is excluded from the estate. This is a safe course, as upon petition to set apart the homestead the court is given jurisdiction to determine the validity of the homestead. Sec. 1723 C. C. P. provides that if any person has died who, at the timeof his death, was one of the persons owning land as a homestead, which lands by reason of the death of such person vested in the surviving spouse, any one interested in the property, or the title thereto, may file in the Superior Court his verified petition setting forth such facts, and thereupon and after notice, the court may take evidence, and if it appear that the party is dead, the court will make a decree to that effect. The whole effect of procedure under the code section is to establish of record the fact of death. The section does not purport to give the court jurisdiction to determine the validity of the homestead. The homestead may be invalid for a number of reasons, yet by this proceeding the facts would not be judicially determined. If there is any question as to validity of the homestead, and it be desired to secure a judicial determination as to its validity, probate the estate of the claimant and have the property set apart under the sections of the code authorizing such procedure.
122.	When a person dies leaving a widow or minor children, the widow and children, until letters are granted and the inventory returned, are entitled to the possession of the homestead. (Sec. 1464 C. C. P.). The status of the property at the time of declaration determines the question of succession. The homestead is not subject to payment of any debt or liability contracted by, or existing against the husband and wife, or either of them, previous to the death of such husband or wife, except as provided in the Civil Code. (Sec. 1474 C. C. P.). This means that general creditors cannot reach assets of the estate in excess of the statutory exemption unless they see to it that the appraisers act in setting apart homestead as hereinafter set forth.
123.	A homestead selected from community property, or from separate property of the spouse making or joining in the selection, vests absolutely in the survivor no matter what the value of the property may be, (118 Cal. 299) ; and the fact that the excess in value, over the exemption might have been reached by creditors by appropriate proceedings during the lifetime of the deceased, and the fact that creditors are placed in a worse position by his death does not alter the statute. The creditor is presumed to know the law in relation to homestead and as to debts contracted in relation thereto. He is held to know that the survivor of husband and wife takes the homestead free of all debts. This of course does not apply to such debts as are excepted by the statute, or to a debt secured by deed or mortgage executed by both spouses.
124.	When no homestead has been selected, designated and recorded, or in cases where the homestead was selected out of theseparate property of the decedent, the decedent not having joined therein, the court upon administration must select, designate and set apart and cause to be recorded a homestead for. the use of the surviving husband or wife, and the minor children, or if there be no surviving husband or wife, then for the use of the minor children, out of the community property, or if there be no community property, then out of the real estate belonging to the decedent. (Sec. 1465 C. C. P.).
When property is thus set apart the same, if the decedent leave a surviving spouse and no minor child, becomes the property of the surviving spouse. If the decedent leave also a minor child or children, one half of such property belongs to the surviving spouse, and one half to the child, or, in equal shares to the children if there be more than one. If there be no surviving spouse the whole belongs to the minor child or children. Prior to 1873 the property under such cimcumstances vested only in the widow or minor children. The Code was amended in 1873 by inserting the words, “or surviving husband.”
It is not essential in setting apart a “Probate Homestead;” that is to say, a homestead set apart under Sec. 1465 C. C. P., that there be a dwelling on the premises, and such homestead cannot be set apart where Declaration was made in the lifetime of the decedent. (73 Cal. 590.). The Probate Homestead cannot be carved out of land which could not have been impressed with a homestead during the lifetime of decedent, (107 Cal. 618), but the character of the property at the time of setting apart as a homestead is not essential. (73 Cal. 590). Money cannot be set apart out of the estate in lieu thereof. (30 Cal. 105). When minors have an interest, each minor is entitled to possession until reaching majority and this against any grantee of the widow. (100 Cal. 158).
It is mandatory upon the court, upon petition, to set apart such a homestead. This right cannot be defeated by will of the decedent. The deed by the widow of all her interest in the estate made after the death of her husband does not convey this right of Homestead, and she can, after delivery of her deed, proceed to have the identical property set off to her as a homestead, and this setting apart takes precedence over her deed. (See generally 45 Cal. 696: 145 Cal. 236: 30 App. 176: 69 Cal. 458: 86 Cal. 151: 145 Cal. 236).
125.	It is important that the fact be borne in mind that it is not the value but the character of the property which governs when the property is set apart by the court as a homestead. (128Cal. 380). The Code provides that if the homestead which was selected in the lifetime of the decedent be returned in the inventory of the estate appraised at more than $5,000, the appraisers must before they make their return, ascertain and appraise the value of the homestead the time was selected, and if such value exceed $5,000, the appraisers must determine whether the premises can be divided without material injury, and if so, must set apart to the parties entitled thereto such portion ofthe premises, including the dwelling house, as will amount in value to $5,000 and make report thereof to the court. If they find the premises cannot be divided without material injury they must so report and thereafter the court may take an order for the sale of the homestead and disposition of the proceeds; that is to say $5,000 to those entitled to the exemption, and the balance is property in the estate and subject to the claims of creditors. Now, if these proceedings be not had and the whole of the homestead be set apart and no appeal be taken from the order within 60 days from the date of its entry, the judgment is final, (10 App. 91), and thereafter the property is not liable for the claims of general creditors no matter what the value of the homestead be. It thus behooves one who is extending credit to ascertain the value of the homestead when his debtor dies, and if it be in excess of $5,000 to see to it that steps are taken under the statute to subject the excess to his claim. We will take a case like this. Your customer owns a fine residence, or apartment house worth say, $75,000. It is subject to homestead. You know this fact, but you consider any excess over the legal exemption available to you if you are obliged to sue. The owner dies and his estate is probated. During the course of the administration a petition is filed to set apart the property as a homestead. If this is not resisted by you the cotirt will order it so set apart and that order is final in 60 days. Thereafter the property is no part of the estate. It is no longer subject to control by the court. The court has lost jurisdiction over it and it is no longer subject to claims of creditors. Your remedy is to see to it that the appraisers act as directed by the statute. You can always do this upon proper representation to the court who will compel the appraisers to act. This means you must be vigilant when your debtor’s estate is probated to see that the court takes such action as regards the homestead which was declared before death, or, if the petition for setting apart of a “Probate Homestead” is filed, that property is not set apart to the detriment of general creditors. If you do not do this you cannot pursue the property even though the estate be insolvent.126.	If your mortgage be upon property declared a homestead, either before or after the execution of the mortgage, and the mortgagor dies, you must present the claim against his estate or your right of foreclosure is lost. This is for the reason that other property of the estate must first be exhausted in the payment of debts before recourses be had to the homestead property. But where the property be community and a Declaration be filed by the wife subsequent to the execution of the mortgage it is not necessary to file claim against her estate. (136 Cal. 525).
Sec. 1475 C. C. amended July 27, 1917 makes it the duty of an executor or administrator within 60 days after first publication of notice to creditors to notify in writing the record holder of any lien or encumbrance and unless so notified the right of the holder is not affected by his failure to file claim.
127.	We urge upon you these vital points: The doctrine of “Caveat Emptor” applies to those dealing with homestead property. That is to say, “the purchaser must beware.” The question as to whether property is homestead or not is one of fact. We emphasize here again the wisdom of inspecting the premises and of examining the title before purchasing or loaning. It might not occur to one loaning money on security of a flat building, apartment house or hotel, that the same might be homestead.
It must be remembered that the statutory requirements are absolutely essential to the creation of a valid homestead. Residence on the property at time of Declaration is necessary. Remember that the homestead can only be abandoned by Declaration of Abandonment filed, or by deed from husband and wife by the same deed and as their personal act. Removal from the property does not work an abandonment, and if you remove from the premises and not abandon your first homestead by Declaration of Abandonment, or by deed, you cannot file a second declaration which will be valid. When taking a mortgage on such property do not require an abandonment of the homestead, for if a Declaration be filed subsequent to the execution of the mortgage, the mortgagee is placed in exactly the same position as to necessity of filing claim in case of death. In such cases see to it that both husband and wife sign the note and mortgage personally and pay the proceeds to both. You are then as fully protected as if the homestead had been abandoned and in many instances it would work a hardship upon the borrowers to require them to abandon their declared homestead. Remember that a husband cannot declare a homestead on his wife’s separate property without her joining, but that the wife can declare upon her husband’s separate property, her ownseparate property, or the community property, without her husband joining. Do not in cases where the property is in the name of the wife, and she be deserted by her husband permit her to file a homestead declaration. She by doing so gives her husband a right in the property which he did not before possess. Personally, the writer has seen so many instances where misguided wives have done this that he deems it wise to call particular attention to the point.VII.
Landlord and Tenant
128.	Any property which is capable of being conveyed is capable of being leased, and a leasehold estate becomes personal property no matter for what length of term it is written, although a long term lease, such as one from 50 to 99 years approaches very nearly to the dignity of a fee title. Hence in leases for such terms great care is exercised in the drafting of the instrument that every possible contingency may be foreseen and provided for. Usually such investments are made in long term leases that the lessee is practically the owner of the property during the term of his lease and it is usually provided that there are no liabilities or responsibilities on the part of the lessor, all of the burden of improvement and cost of maintenance of the property being imposed upon the lessee, the landlord receiving but the agreed rental at stated periods. Thus, many of the questions which continually arise touching the respective rights of landlord and tenant are practically done away with in these long term leases. It is then with short term leases, either verbal or by writing, with which this chapter shall deal.
129.	Leases of agricultural or horticultural land cannot be made in this State for a longer period than 15 years, except of lands used for agricultural or horticultural purposes, or owned by a municipality, upon which is discharged waste water or sewerage from any municipality, such lands may be leased for 25 years. City lots may be leased for not longer than 99 years and any real estate belonging to a municipality other than that herein noted, of a minor or incompetent person cannot be leased for a longer period than 10 years. On July 27th, 1917 Sec. 718 C. C., governing these matters was amended to permit tide lands, submerged lands and lands adjacent thereto, owned by a municipality to be leased for not more than 40 years, provided the grant from the State to the municipality does not otherwise provide, and then only for industrial purposes and harbor improvement.
A trustee of an express trust cannot lease the land beyond the period of his trust. A trustee of an express trust has power to lease the property for the benefit of annuitants, devisees, legateesor other beneficiaries, or for the purpose of satisfying any charge thereon.
130.	A clause in a lease providing for perpetual renewals at the option of the lessee is enforceable when it appears that it was clearly the intention of the parties that the lessee should have such right and if uncertain in that regard will be construed as importing but one renewal. (36 App. Dec. 1035).
A provision in a lease that the lessee should give written notice of his election to renew “within 90 days prior to the expiration of this lease,” means that the lessee should give lessor notice of his intention at least 90 days prior to the expiration of the lease. (37 App. Dec. 826). On all cases the right to renew must be exercised before expiration of term of the original lease. (34 App. 143).
131.	Any person competent to make a deed is competent to make a lease, therefore it is well to bear in mind that the rules governing the powers of individuals or corporations to make deeds are applicable here. A lease for a longer period than one year must be in writing, and if made by an agent of the owner, the agent’s authority must be in writing, else the lease is invalid. (1624 C. C. 26 App. 128). Therefore, if you are taking a lease through an agent for a period longer than one year, it is incumbent upon you to call for the written authority of the agent and determine therefrom what his powers may be.
132.	The lessor when he lets or leases the property is held to have covenanted that he is entitled so to do, and that so long as the lessee complies with the terms of the lease he shall have peaceable and undisturbed possession of the premises, so, it follows, that if the title fail, or it develop that some one other than the lessee has the right of possession, the lessee is relieved from the obligations of the contract and may recover damages from the lessor if he has been misled to his injury.
This covenant for peaceful possession applies only to the acts done by the lessor, or those claiming under him, whereby the right of possession of the lessee is interfered with, and the lessor is not held to covenant against the acts or depridations of a stranger. He must himself be responsible for the disturbance, otherwise he is not liable. Thus, if a lessor lease to a tenant a store room and thereafter proceeds to make such alterations of the stories above the store room, or of adjoining rooms, that the occupation and peaceable possession of his lessee is disturbed, and the lessee suffers detriment and inconvenience, the lessor is held liable for the damages suffered thereby. The lessor is not held liable on thisT
covenant if the premises be destroyed, or damaged by the act of God, or by any agency not under the control of the lessor. If the leased building is injured by excavations made by an adjoining owner and should tumble down, the lessor is not liable on this covenant if the tenant have knowledge of the excavation and risk thereof and elects to remain in the building. All this, of course, in the absence of any express covenant between the parties as to liability.
133.	The lessor of a building intended for human occupation must, in the absence of an agreement to the contrary, put it in a condition fit for such occupation and repair all subsequent dilapidations thereof except those caused by the want of ordinary care on the part of the lessee. (Sec. 1941 C. C.). After the lessor has placed the premises in such condition he cannot thereafter be held liable for dilapidations caused by the tenant, or for delapidations of any additions or improvements made by the tenant himself. The tenant is entitled to the possession of the demised premises, free of any interference by the landlord, so long as he is not in default; otherwise the lessor has no more right to enter upon the premises than a stranger, in the absence of express agreement to the contrary. (41 App. 463: 40 App. 471).
One who hires part of a room for a dwelling is entitled to the whole of the room, any agreement to the contrary notwithstanding. If the landlord lets a room as a dwelling for more than one family, the person to whom he first lets any part of it is entitled to the possession of the whole room for the term agreed upon, and every tenant in the building under the same landlord is relieved from all obligation to pay rent to him while such double letting of any room continues.
134.	The lessee impliedly covenants to use the leased property only for lawful purposes and should he put it to an unlawful use the lessor may cancel the lease and recover possession. There is a penalty imposed upon the lessor if he leases or lets the premises for unlawful purposes, the first being that he cannot recover rent or enforce the covenants in the lease, as such contracts are against public policy. A lease restricting the business to be conducted becomes inoperative if the business become unlawful as under the Prohibition Amendment, but the lessee cannot continue to hold possession after the business becomes unlawful and escape payment of rent on the ground of such illegality. C. D. 511).
There appears in the books a statute enacted April 7, popularly known as the “‘Redlight Abatement Act” whichconsiderable interest to landlords, as one who leases property is bound to know to what purpose it is to be devoted and proof of the general reputation of the place is sufficient to put him on notice. (35 App. 194). Particular attention is directed to this statute as a full recital of its provisions and penalties would serve no good purpose here. Suffice it to say that by its terms it shall be deemed and held to mean that every building or place used for the purpose of lewdness, assignation or prostitution is a nuisance which shall be enjoined, abated and prevented whether the same be public or private. The act provides in case of violation for the seizure of furniture found on the premises and the closing of the building for one year.
135.	If within a reasonable time after notice to the owner of dilapidations which he ought to repair he neglects to do so the lessee may repair the same himself where the cost of the repairs does not exceed one month’s rent of the premises and deduct the expense of such repairs from the rent. (Sec. 1942 C. C.) but this does not apply to total destruction of the building (31 App. Dec. 315), at his option the lessee may vacate the premises, in which event he is discharged from further payment of rent or performances of any other covenants of the lease. But the tenant cannot do this and be relieved from obligation unless he give notice to the lessor, and the lessor is not liable to the tenant for injuries caused by defects of which he has no knowledge, nor in cases where the tenant fails to give notice of defects in the building. It is otherwise where the premises are under control by the landlord, for in such case he is liable without notice from the tenant. Where after a fire the tenant continues to pay rent he treats the premises as tenantable even though the law is that the hiring terminates by destruction of the thing hired and it is stipulated in the hiring that upon destruction of the building the lease shall terminate; the lessee is not entitled to recover the proportionate amount of rental which he has paid in advance in the absence of express agreement to the contrary. Though it be stipulated that in case of destruction that the lessee shall be released from the obligation to pay rental during the time the premises remain untenantable this applies only to the rents which are payable after destruction, and not to any rentals paid in advance, unless of course, there be a specific contract to that effect The liabilities and rights of the parties in case of destruction by the elements are governed by their contract and in the absence of express contract, then upon destruction by the elements, the lease is terminated and each relieved from its obligations.136.	A hiring of real property, other than lodging or dwelling houses, in places where there is no usage on the subject, is presumed to be for one year from its commencement unless otherwise expressed in the hiring. (Sec. 1943 C. C.). Thus, in communities where lands are let, we will say, for the growing of vegetable, or for some specific purpose for a short time and it is the cus-ton of the community to rent for only six months this statutory period would not apply. The hiring of lodging and dwelling houses for an indefinite term is presumed to have been for such length of time as the parties adopt for the estimation of the rent. (Sec. 1944 C. C.). Thus, a hiring at a monthly rate of rent is presumed to be for one month. If the lessee remains in possession after the expiration of the hiring, and the lessor accepts rent from him the parties are presumed to have renewed the hiring on the same terms and for the same time, not exceeding one month, when the rent is to be paid monthly, but not in any case exceeding one year. (Sec. 1945 C. C.). When there is no usage or contract to the contrary, rents are payable at the termination of the holding when it does not exceed one year. If the holding is by the day, week or month, or year, rent is payable at the termination of the respective periods, as it successively becomes due. In case of tenancy from month to month the estate does not terminate by mere lapse of time and neither party can terminate the relation without giving to the other party one month’s notice before the expiration of the term. (31 App. Dec. 53). Where a house is under the direct control and supervision of the owners nad where rooms are furnished and attended by the owner and he or his servants retain the keys thereto, a person renting makes himself a lodger and not a tenant. (30 App. 162).
137.	The lessee cannot pay his rent to any one other than the landlord without his consent, or in consequence of a judgment of a court of competent jurisdiction. (Sec. 1948 C. C.). The right to receive rents and the right to possession run with the land and inure to the benefits of owner and are binding upon the successors and assigns of the respective parties to the contract of hiring. Every tenant who receives notice of any proceedings to recover real property occupied by him, or the possession thereof, must immediately inform his landlord thereof, and must deliver the notice if it be in writing to his landlord and the tenant is responsible to his landlord for all damages which the latter may sustain by reason of his failure to do so. (Sec. 1946 C. C.: Ses. 827 C. C.).
138.	A written lease is binding on the lessee where he has accepted its terms and entered into possession, even though he donot sign the instrument. (31 App. Dec. 161: 38 App. Dec. 160).
In all leases of lands or houses, or of any interest therein, from month to month, the landlord may, upon giving notice in writing at least 30 days before the expiration of the month, change the terms of the hiring to take effect at the expiration of the month and this notice if served upon the tenant binds him to all the terms, rents and conditions specified in the notice if he continues to hold the premises after the expiration of the month. (Sec. 1946 C. C.: Sec. 827 C. C.). This course is often resorted to rid the premises of an undesirable tenant and is very effective if the tenant be financially responsible.
139.	Very often it is provided in leases that the tenant may not sublet or assign the lease without the consent of the lessor. A tenant who violates this covenant forfeits his rights under the lease, provided the landlord does not acquiesce. In other words, upon violation of the covenant the landlord cannot be heard to object if he afterward accept rent from the assignee or sub-tenant. This covenant against assignment only applies to voluntary assignment by the tenant. (79 Cal. 575).
The assignment of a lease, or a sub-letting of the premises, does not in the absence of contract to the contrary annul the lessee’s obligation to pay rent, even if the landlord accept rent from the assignee or sub-lessee. (135 Cal. 36). The assignees or sublessees are also bound to the payment of rent to the landlord, but they are relieved if they re-assign or surrender to the lessee. The landlord can recover the rents from the original lessee even in the face of an express covenant against sub-letting, in a case where the landlord has accepted rent from the sub-lessee. The original lessee stands as surety for the sub-lessee unless the lessor release him. It is usual, particularly in long term leases, to make provision that upon assignment of the lease that the assignor after consent by the lessor, shall be relieved from all obligations under the lease from and after the date of assignment, and also to make provision that any assignee shall upon receipt of his assignment, agree in terms to pay the rent and perform the obligations of the lease. This is particularly good practice in framing long term leases, as by the very nature of the estate it rises almost to the dignity of a fee, and the lessee has the practical ownership of the premises, and in cases where successive assignees of the original lessee have assumed the payment of rent, he should not in fairness be held to continue liable after he has parted with his estate.
140.	Where the lessee abandons the premises and refuses to perform the terms of the hiring the landlord has two remedies. Hemay sue for each installment of the rent as it becomes due, or he can take possession of the premises and re-let the same upon the best terms obtainable and recover the difference between the amounts thus received and the amount agreed to be paid by the lessee who has abandoned. He cannot sue under the terms of his lease for the entire amount of the rents therein expressed. He can sue only upon installments as they become due, and where he takes possession and again lets the property, for less than the rent agreed to be paid by the one who has abandoned he does so not for himself, but the tenant, and the lease is not terminated, (43 App. 738) ; and he must give the tenant some sort of notice of his intent to do so. (31 App. 695).
The lessor can recover only the actual damage suffered by him. (26 App. 371).
Where a lessee deposits money with the lessor as security for the performance of a lease, the provision that the deposit shall be forfeited upon default of the lessee in payment of rent, or performance of any covenants of the lease is void under Secs. 1670-1671 C. C. as an attempt to determine in advance amount of damages on breach. The agreement is not illegal but lessor can recover out of fund so deposited only rent due him and actual damage. He holds the money as bailee for the depositor. (176 Cal. 259).
Where in a lease by two or more lessors, it is provided that failure on part of lessee to perform conditions thereof shall render lease null and void, forfeiture can be declared only by joint and concurrent act of all the lessors. (176 Cal. 1).
141.	By special act hotel, inn, boarding house and lodging house keepers have a lien upon the baggage and other property of value of their guests, or boarders, or lodgers brought into such hotel, inn, boarding or lodging house by such guests, or boarders or lodgers, for the proper charges due from them for accommodation, board, lodging, room rent, and such extras as are furnished at their own request, with the right to the possession of such baggage or other property of value until such charges be paid, and this lien extends to the property of a stranger, provided the landlord had no knowledge of the fact, and extends to sample goods carried by a traveling salesman. A new section 1861A was added to the Civil Code effective July 31, 1917 which reads as follows: “Keepers of furnished apartments shall have a lien upon baggage and other property of tenants or guests for proper charge for accommodation, rent, services, meals and such extras as are furnished at their request, and for the costs of enforcing lien, with the right of possession of such baggage and other property until such charges are paid.” Within sixty days the keeper may sell at public auction in the manner and upon the notice prescribed by the Act.
In all other cases household goods and articles of wearing apparel and adornment cannot be seized or levied upon for rent. A chattel mortgage may be made on personal property including growing crops, and upon all kinds of personal property capable of manual delivery, articles of wearing apparel and personal adornment and upon a stock of goods of a merchant. It often occurs in leases of farming lands that the landlord shall have a certain percentage of the crops as rent, and that the title to all crops shall remain in him until sold, or there is an agreement that the tenant shall not sell his share without consent of the landlord. This covenant does not create a lien upon the share of the tenant as against an attacking creditor of the tenant, even if the crops have been harvested, sacked or stored. If the landlord desires to protect himself against general creditors of his tenant, he must take a chattel mortgage on the crop and file it for record. Of course, any sort of security may be taken for the performance of the covenants of any lease, but it must be borne in mind that the lessor cannot recover more than the actual damage suffered by him under any circumstances.
142.	In the discussion of the subject of fixtures there is a distinction to be borne in mind. The term, “fixtures” in a strict sense applies to that which is affixed to and is a part of the land itself, while the term in a more general sense means such appliances, structures or articles placed upon the property which may be removed and do not constitute a part of .the land. Under this category fall trade fixtures, for immovable property consists of land and of that which is affixed to land, incidental or appurtenant thereto and which is immovable by law. Thus, a building placed upon land by a lessee with the privilege of removing it at the termination of the lease is real property until it be severed. A thing is deemed to be affixed to land when it is attached to it by roots, as in the case of trees, vines or shrubs, or imbedded in it as in the case of walls, or permanently resting upon as in the case of buildings or permanently attached to what is thus permanent by the means of cement, nails, plaster, bolts or screws. (Sec. 660 C. C.). A fixture has been defined as an article of personal property attached to the freehold. An annexation is necessary to constitute a fixture. (See generally 14 Cal. 59: 40 N. Y. 287:	4
L. R. A. 284).Any personal property affixed to the land for the purpose of permanent improvement, or for the use of the real estate makes the fixture appurtenant to the land and is not removable by the tenant except under express agreement. Whether a structure is a fixture depends upon the nature and character of the act by which it is put in place, and the purpose for which it is intended to be used. Thus, if the owner place permanent structures on the land, or other improvements which by their very nature show they were intended for permanent use, and for the better use of the land permanently they become immovable fixtures. The intention of the party making the annexation is the chief factor to be considered in determining what are fixtures. If a-tenant, no matter what his intention might be, should build permant, substantial structures upon the land, or make additions or annexations to the structures already thereon, and in such manner as to give any one the impression that it was his intention that they be permanent, he cannot remove the same at the end of the term. The intention must clearly appear to make an article of personal property part of the land. While the term “trade fixtures” is usually applied to tools, implements, and other contrivances, yet it also includes structures erected on the leased premises for the purposes of trade by the tenant and he may remove them at any time before the end of the term in the absence of an agreement to the contrary. The intention of the parties as to whether or not a building erected on leased premises is a trade fixture may be inferred from the nature of the thing annexed, the situation of the party making the annexation, the mode and purpose of annexation. (37 App. Dec. 438).
Whether or not in any case a building is permanently resting upon the soil so as to be deeemed affixed to the land within the meaning of Sec. 660 C. C. is a question of fact to be determined in each case and the intention of the parties is a controlling criterion. (62 C. D. 659).
As between lessor and lessee, whether a building or other improvement becomes a fixture is a matter of agreement and of intention of parties. It is a general rule that any fixture which by its nature does not become an integral part of the premises may be removed by the tenant during his term. If he fails to do this at the expiration of the term, or before, so far as he is concerned it becomes a part of the realty.
All fixtures annexed by the owner pass to a mortgagee whether they be fixtures for trade, manufacture, agriculture or habitation. (14 Cal. 59; 16 Am. Dec. 456). The machinery in a factory held in place and steadied by screws to the floor and connected with the


Jrest of the building with shafting or belting, but removable without injury to the building is not appurtenant to the land. (42 Am. Rep. 446). Buildings or cabins set upon blocks resting on the ground, not attached to the soil and removable without disturbance of the land in any way are not fixtures and are not appurtenant to the land. (48 Cal. 160).
It is the rule then, that all appliances, structures or additions of a permanent character, attached to and made an integral part of the land cannot be removed by the lessee; nevertheless, all trade fixtures, all things brought upon the land for the purpose of conducting the tenant’s business, and which may be removed without disturbing the property, and which have not been permanently and substantially attached to the land, or to buildings thereon, may be removed by the tenant. Thus, the building of a marble front to a building, or the placing therein of plate glass, while easily removable, such must be considered a permanent improvement and cannot be removed by the lessee. Awnings, swinging doors, screen doors and the like, may be removed by the lessee, if placed on the premises by him, and not intended as permanent improvements. Pipes placed in the building for conducting water therein belong to the land as does a permanent furnace built in the house. A portable furnace placed on the premises and easily removable is not a part of the land. Tanks placed on the land, if intended to be for permanent use upon the land and which add value to the land for all purposes, belong to the land. Not so, however, if they are placed upon the land by the tenant simply for use in his own business and they do not add to the intrinsic value of the land. All sluice boxes, flumes, hose pipes, railway tracks, cars, blacksmith shops, mills and all other machinery used in working or developing a mine are deemed affixed to the mine. (661 C. C.).
When a person affixes his property to the land of another without an express agreement permitting him to remove it, the thing affixed belongs to the owner of the land, unless he chooses to require the former owner to remove it, but a tenant may remove from the demised premises at any time during the term, anything affixed thereto for the purposes of trade, ornament or domestic use if the removal can be affected without injury to the premises, unless the thing has by the manner in which it has been affixed become an integral part of the land. It will be observed that this right of removal exists only during the continuance of the term. If he forfeit his lease, and the landlord re-enter on account of the forfeiture, the tenant has not the right to remove any fixtures placed upon the premises by him.143.	A mere trespasser upon land is not a tenant and to evict him no notice to him to vacate is necessary. If one enters the premises while negotiating with the owner for a lease, and one who enters with permission of the owner and without stipulation as to the time he is to occupy the premises, or one who enters under a void contract of sale, is a tenant at will of the owner, but not one in possession under valid contract who defaults in payments. (174 Cal. 168). A tenant who holds over his lease without the consent of the landlord is not a tenant at will. A tenancy, or other estate at will, however created,may be terminated by the landlord by giving the statutory notice of not less than thirty days and the additional notice of three days as required to terminate a tenancy from month to month .(See 1162 C. C. P.; 137 Cal. 603).
Where the right of re-entry is given in the lease, the landlord may make such re-entry before the termination of the lease by its terms, if the covenants of the lease have been broken by the lessee, by giving him three days’ notice in writing of the intention so to do, but at the expiration of the term of the lease he may re-enter or maintain an action for possession without any notice to lessee. (98 Cal. 422).
144.	Every person is guilty of forcible entry, who either by breaking open doors, windows or other parts of a building, or by any kind of violence or circumstances of terror enters upon or into any real property, or, after entering peaceably upon real property turns out by force, threats or menacing conduct the party in possession. (See 1159 C. C. P.). Every person is guilty of forcible detainer, who either by force or by menace and threats of violence unlawfully holds and keeps possession of any real property, whether the same was acquired peaceably or otherwise, or who in the night time or during the absence of the occupant of any lands unlawfully enters upon any real property and who after a demand made for the surrender thereof for the period of five days refuses to surrender the same to such former occupant. (Sec. 1160 C. C. P.).
The occupant of real property within the meaning of this statute is one who within five days preceding such unlawful entry was in the peaceable and undisturbed possession of such lands. One cannot be guilty of forcible entry or forcible detainer if he enter upon the premises with permission of the owner, or any one in possession for the owner, but one may be guilty of forcible detainer if he peacefully enter premises which are unoccupied and refuse to surrender possession to the one entitled thereto after five days’ notice to surrender. He is held to disturb the right of the one entitled to possession although the premises be vacant at the time



of entry. One who has occupied under a lease or a letting from the one entitled to let the property and holds over after the term has expired, is not guilty of forcible entry or forcible detainer and the five days’ demand referred to need not be made on him.
A tenant of real property is guilty of unlawful detainer (Sec. 1161 C. C. P.), first, when he continues in possession in person, or by sub-tenant, without the permission of his landlord, or the successor in estate of his landlord, if any there be, after default in the payment of rent pursuant to the lease or agreement under which the property is held, and three days’ notice in writing requiring its payment (stating the amount which is due) or possession of the property shall have served upon him, and if there is a sub-tenant in actual occupation of the premises, also upon the sub-tenant. Such notice may be served at any time within one year after the rent becomes due.
In all cases of tenancy upon agricultural lands where the tenant has held over and retained possession for more than 60 days after the expiration of the term without any demand of possession or notice to quit by the landlord, or the successor in estate of the landlord, if any there be, he is deemed to be holding by permission of the landlord, or such successor, and is entitled to hold under the terms of the lease for another full year, and he is not guilty of unlawful detainer.
Third; when he continues in possession in person or by subtenant after a failure or neglect to perform other conditions or covenants of the lease, or agreement under which the property is held, including any covenant not to assign or sub-let, and after three days’ notice in writing requiring the performance of such covenants or conditions, or for the possession of the property shall have been served upon him, and if there be a sub-tenant in actual possession of the premises, also upon such sub-tenant. Within three days after the service of such notice the tenant, or any subtenant in actual possession of the premises, or any mortgagee of the leasehold, or other person interested in its continuance may perform the conditions or covenants of the lease or pay the stipulated rent as the case may be, and thereby save the lease from forfeiture, provided that if the conditions and covenants of the lease violated by the lessee cannot afterward be performed then no notice need be given to the lessee, or his sub-tenant, demanding the performance of the violated conditions or covenants of the lease as a precedent to forfeiture. Any tenant may take similar proceedings to obtain possession of the premises let to a sub-tenant in case of unlawful detention of premises under-let to him.Fourth; any tenant, or sub-tenant assigning or sub-letting or committing waste, contrary to the conditions or covenants of his lease, thereby terminates the lease, and the landlord or his successor in estate upon service of three days’ notice to quit upon the person or persons in possession is entitled to restitution of possession.
Where a tenant enters agricultural land under oral agreement for lease of two years and pays rent the tenancy must be terminated by notice from the owner as prescribed in Sec. 789 C. C., i. e., for 30 days before tenant can be sued for unlawful detainer. (37 App. 350). Where violated condition or covenant of lease is one that can be performed the lessor must give notice requiring performance and in any event must give the three days’ notice required by Sec. 1162 C. C. P. demanding possession before he can maintain suit. (44 App. 108). Where two or more parties hold as co-parties a notice served on one addressed to all is sufficient to terminate the tenancy. (36 App. 288).
The notices required to be served may be served either by delivering a copy to the tenant personally, or if he be absent from his place of residence and usual place of business by leaving a copy with some person of suitable age and discretion at either place and sending a copy through the mail addressed to the tenant at his place of residence, or if such place of residence and business cannot be ascertained, or a person of suitable age and discretion cannot be found thereat then by affixing a copy in a conspicuous place on the property and also delivering a copy to any person there residing, if such person can be found, and also sending a copy through the mail addressed to the tenant at the place where the property is situated. Service upon a sub-tenant may be made in the same manner. These points should be remembered. It is not necessary to give notice to the tenant where the term if fixed by the lease, and the term has expired, but it is necessary to give him three days’ notice if the lease is terminuated by breach of any covenant before expiration of the term, all of course, in absence of stipulation for notice in the lease. Where one is a tenant at will of the landlord, thirty days’ notice and three days’ notice is required to terminate the tenancy. Where one is a tenant from month to month, thirty days’ notice to quit and three days’ notice and demand for payment of rent is necessary before suit can be brought. In cases of forcible entry or forcible detainer five days’ notice must be given before suit may be maintained.
The proof of service of these notices must be made in the trial; proof cannot be made by affidavit. If the tenant or occupant re
IOfuses to vacate the premises after legal notice is given, the landlord has his right of action for forcible entry, forcible detainer or unlawful detainer as the case may be, the proceedings being outlined in the Codes. Suffice it to say that this is a summary action. The summons requires but three days’ service, and if the complaint establishes to the satisfaction of the court that fraud, force or violence in the entry or detainer occurs and that the possession held is unlawful, the court may make an order for the arrest of the defendant. On the trial in any proceeding for forcible entry or forcible detainer, the plaintiff is required only to show in addition to the facts of forcible entry, or detainer, that he was peaceably in the actual possession at the time of the forcible entry, or was entitled to possession. If the unlawful detainer be after default in the payment of rent, judgment may be entered against defendant either for amount of damage found by the court or jury, or for three times the amount so found and no counterclaim can be allowed. (37 App. 358). When the proceeding is for unlawful detainer after default in the payment of rent under a lease which has not by its terms expired, the judgment will not be enforced for five days after the entry within which time the tenant, or subtenant, or any mortgagee of the leasehold, or any person interested in its continuance may pay into court the amount of the judgment and the tenant will be restored to his estate.
It should be remembered that these actions have no bearing on the title to the land. They go only to the right of possession hence, the landlord himself may be guilty of forcible entry if he disturbs the possession of the one entitled to possession. The object of the summary proceeding is to give a quick remedy to one entitled to possession who is lawfully excluded therefrom, thus saving him long delays and consequent loss if he were left to the ordinary actions in ejectment or to quiet title. They are devised and intended to prevent disturbances, personal encounters and violence. No one is entitled to enter and disturb the possession of another by threats or actual violence, no matter what his legal rights may be. If one is excluded from his land by an unlawful intruder, and if at any time he find the intruder off the land he himself can make entry, take possession and thereafter exclude the intruder without process of law.VII.
Contracts of Sale—Options—Escrows
Parties capable of contracting.
Their consent.
A lawful object.
A sufficient cause or consideration. (85 Cal. 11.)
All persons are capable of contracting, except minors,consent which is free, mutual and communicated by each party to the other (Sec. 1565 C. C.) A consent which is not free is not absolutely void, but voidable and gives the right of recission to the aggrieved party. (85 Cal. 11; Sec. 1556 C. C.) An apparent consent is not real or free if obtained through duress, menace, fraud, undue influence or mistake (Sec. 1567 C. C.) Consent is not mutual unless all the parties agree upon the same thing in the same sense. (Sec. 1580 C. C.) All words used are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning, unless a special meaning is given to them by usage.
148.	We cannot be expected to go deeply into the law governing contracts in general, hence the discussion here simply touches upon the law relating to contracts of sale and purchase of lands and to escrows. As to the first of these topics it is well in the beginning to emphasize these points: To constitute a valid contract of sale and purchase of lands there must be parties capable of contracting, there must be a meeting of minds, a mutual understanding, and a mutual consent and agreement; there must be a lawful consideration and a lawful object; the contract must be equitable and ordinarily must be in writing. There are circumstances under which a court of equity will enforce a verbal contract for the sale and purchase of property. (114 Cal. 310). As where the parties have in good faith acted upon such an agreement and the one seeking to enforce has performed the obligations imposed upon him, or has partially performed and offers in good faith to fully perform (181 Cal. 286). Where a contract is prevented from being put into writing by the fraud of the party thereto, any other party who is by such fraud led to believe that it is in writing and acts upon such belief to his prejudice may enforce it against the fraudulent party. (Sec. 1623 C. C.) This discussion will be confined to the ordinary forms of contracts for sale and purchase of lands as are commonly used, and to such agreements as are incidental to every day business transactions.
149.	An agreement for the sale of real property, or of an interest therein, must be in writing subscribed by the party to be charged, or his agent, authorized thereto in writing. Thus, a contract cannot be enforced against the vendor unless the instrument is subscribed by him, or by his agent authorized in writing to execute it in his behalf. Many instances occur where the seller gives to the buyer a receipt for a small part of the purchase price, balance to be paid later. This, if signed by the seller, or by his agent, authorized in writing, might be held to be a sufficient memorandum in writing to satisfy the statute so far as the buyer is concerned, and if he tender the balance of the purchase price, he can compel a conveyance; but not so as concerns an action against the buyer to compel him to complete his bargain if he has not agreed so to do by an instrument in writing subscribed by himself or by his agent authorized in writing to subscribe for him. Such a receipt is a poor thing even for the buyer, as usually it does not contain covenants as to warranty of title, and while the law imposes upon the seller the obligation to deliver a good and sufficient deed of conveyance, it does not necessarily follow that he is obliged to convey an unencumbered title. Therefore, in buying or selling land upon contract see to it and insist upon it, that the contract be in writing, subscribed by all parties interested or their agents, and if it be signed by an agent that he exhibit his written authority so to do signed by his principal.
150.	An agreement authorizing or employing an agent or a broker to sell real estate for a compensation, or a commission must be in writing. (Sec. 1624 C. C.). It is important, if you are the agent, in taking such an agreement to specify fully therein your authority to sell the land and to enter into contracts of sale in the name of your principal. Remember, that you cannot recover your commission from the seller, even if he complete the transaction and receive the purchase price unless your contract with him be in writing. Contracts between brokers or agents as to a division of commission are not required to be in writing.
151.	See to it in buying or selling land that all the matters of agreement are contained in the written contract, for when the parties have reduced their agreements to writing, they cannot be varied by oral agreements. The terms of a written contract can only be varied by another written instrument executed by the parties to the original contract, or by their successors in interest. The execution of a contract in writing whether the law requires it be in writing or not, supersedes all the negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument. (Sec. 1625 C. C.).
Often a tract of land is subdivided and placed in the hands of agents for sale. The property is advertised and boomed,” salesmen are employed by the owner, or by his agent, to induce people to buy. These salesmen very naturally have no interest beyond receiving commissions. In their zeal in this behalf, they are frequently led into misrepresentation as to the character of improvements to be made, or as to the effect of restrictions placed upon the use of the property and the like. The writer has known instances where the salesman, without authority, has represented



to buyers that streets are to be improved in certain ways, or water or gas mains laid to the lots, when these things were not contemplated by the owner. Again he has known of representations made to a buyer that certain restrictions were to be placed upon the whole tract—these to be valid and binding if the intending purchaser desires such restrictions; but if he object the same salesman has been known to declare that if such restrictions were imposed they would not be binding. Not in many instances does the buyer deal directly with the seller. Naturally he is inclined to rely upon the representations made by the selling agent, and often he is not careful to see that the promises and agreements made by and with the agent are carried into the written contract. When they are not, disputes almost invariably follow; the buyer attempting to rescind because the promises have failed, and the seller insisting upon the terms of the contract as written for the very good reason, perhaps, that he never authorized the alleged promises of the selling agent. If you be the buyer see to it that all promises, agreements and inducements are written in the contract. If you are the seller, insert words in the written contract to the effect that you are not bound by any promises, inducements, representations or agreements not set forth in the instrument you execute. The provisions of a contract as to improvements by grading streets and the like are not merged in the deed, made in pursuance of the contract, which makes no mention of such agreements. Such agreements are not dependent covenants merely entitling purchaser to damages on breach, but are grounds for the recission of the contract. (37 App. Dec. 580).
152.	Care should be taken in the preparation of contracts that the instrument may disclose in unmistakable terms the interest of the parties. The multiplying of words should be avoided. The simplest form is the best. When A and B, who are competent to contract, agree for a lawful consideration that A will sell land on certain terms to B, and B agrees to buy on those terms, and the use to which B proposes to put the land be lawful, the contract is complete when both have signed a written instrument to that effect. A is then bound to convey when B pays the consideration. The law imposes upon A the obligation to convey and upon B to pay the consideration and accept the conveyance. Upon failure of B to pay, A is relieved of his obligation to convey. If A by any reason is unable to convey, B is relieved from his obligation to pay and may recover anything he may have paid with damages. These legal rights and remedies flow from the very act of the parties, and it is not essential to the validity or force ofa written contract that they be set forth. The multiplying of words then in seeking to define these rights and remedies, is superfluous and dangerous. Any special agreements and covenants must, of course, be set forth in the instrument, but it is pointed out that it is not necessary or advisable to undertake to define the rights and remedies of the parties under such agreements which the law itself gives. Do not undertake to bind the buyer to such agreements as these: That the buyer shall not sell or assign the contract without consent of the seller, or that he shall not record his contract. Such agreements are wholly void and courts are alert to detect anything savoring of undue advantage or oppression. As we shall see later one who comes to enforce a “ one sided ” contract finds a hostile court. If then it be necessary to insert in the instrument special covenants let them be fair and equitable and let them appear in simple, direct, unmistakable language, and having once so stated the matter, it is not advisable to repeat it in another form.
153.	A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of the contracting so far as the same is ascertained or lawful, (Sec. 1636 C. C.), and in ascertaining the intent of the parties, the language of the contract is to govern its interpretation if the language is clear and explicit and does not involve an absurdity. (Sec. 1638 C. C.). A contract must receive such an interpretation as will make it lawful, operative, definite and capable of being carried into effect, if it can be done without violating the intention of the parties, and the whole of the contract is to be taken together so as to give effect to every part, if reasonably practicable; each clause helping to interpret the other. (Sec. 1641 C. C.). We speak now of the intent of the parties to be determined from the language of the instrument itself. Courts may take evidence of facts and circumstances outside of the instrument to determine the circumstances under which it was made and the matter to which it relates and construe the contract accordingly, but without judicial construction the individual called upon to construe the contract cannot do this except at his own risk. He must determine, if possible, the intent of the parties as he finds it in the language of the instrument. These rules apply when through fraud, mistake or accident the written agreement fails to express the real intent of the parties.
154.	However, broad may be the terms of a written contract, it extends only to those things concerning which it appears that the parties intended to contract, (Sec. 1648 C. C.), and the particular clauses are subordinate to the general intent, (Sec. 1650 C.C.) ; therefore, any repugnancy must be reconciled if possible by such an interpretation as will give some effect to the repugnant clauses, unless they denote an absurdity, subordinate, however, to the general intent and purpose of the whole contract. (Sec. 1652 C. C.). In short, the instrument must be read as a whole, read from the “ four corners,” and the general purpose and intent of the contract must prevail. Words, which are wholly inconsistent with the nature of the contract, or with the main intent of the parties, are to be rejected; (Sec. 1653 C. C.) but effect must be given to every word if possible in order to ascertain the true intent of the parties. In cases of uncertainty which cannot be removed by these rules, the language must be construed against the party who caused the uncertainty to exist. (Sec. 1654 C. C.). The one who makes the promise is presumed to be such party; except in a contract between a public officer or body, as such, and a private party, in which case the presumption is that all uncertainty was caused by the private party. Where a contract is partly written and partly printed, or where part of it is written or printed under the special direction of the parties, and with a special view to their intention, and the remainder is copied from a form originally prepared without special reference to the particular parties and the particular contract in question, the written parts control the printed parts, and the parts which are purely original control those which are copied from a form. If the two are absolutely repugnant, the latter must be disregarded. (Sec. 1651 C. C.). If the contract is silent on the point, all stipulations and agreements which are necessary to make a contract reasonable are implied and imposed by law. (Sec. 165 C. C.). All things that are in the law implied and considered incidental to a contract or as necessary to carry it into effect are implied by the very act of the parties in contracting unless they are expressly excluded in terms in the contract (Sec. 1656 C. C.)
155.	An executed contract is one the object of which is fully performed, all others are executory. (Sec. 1661 C. C.). The distinction between an option to purchase land and an agreement for its sale and purchase is this. In the first instance, an owner may obligate himself to sell his property upon certain terms, while there is no reciprocal obligation on the other party to purchase. It is a mere privilege acquired by the buyer which he can exercise or not as he sees fit and the seller cannot compel the holder to complete the purchase, for there is no promise on his part to do so, and the fact thdt the buyer signs the option agreement adds nothing to the character of the instrument. (35 App. Dec. 295.)There being no promise on the part of the buyer to complete the bargain, there must be a consideration paid for the privilege, otherwise it is of no value. A naked promise without a consideration is void in law; (134 Cal. 448: 129 Cal. 283) but it has been held that a mere naked voluntary option may be enforced when accepted before withdrawal. (35 App. Dec. 691).
156.	What consideration is adequate to support an option is a matter governed wholly by the particular circumstances of each case. Courts will not inquire into what value a property owner sets upon the privilege he has granted. He will be held to have acted on his own judgment. If I grant an option on my property worth $150,000 for a period of 90 days for 1.00 or $1,000, the courts will not inquire into the reasonableness of the transaction. The property is mine. I am the best judge of its value to me. But we concede that under certain circumstances where the contract was induced by fraud or misrepresentation, or was against good conscience, the court would be prompt to relieve me if the consideration moving to me was trifling and not commensurate with the importance of the transaction. For the very reason that the grantor of an option cannot enforce exercise of it by the grantee, to make such an agreement enforceable against the grantor, he must receive a consideration. It is otherwise in a contract for sale and purchase, for here the promises are reciprocal. One agrees to sell—one agrees to buy. These reciprocal promises constitute a consideration even though no money passes at the time of the making of the contract and the obligations are enforceable against each party.
157.	If the time for the exercise of the option is definitely fixed it must be exercised within that time or the seller is relieved from all obligation to convey, unless the fault be with him. There being no reciprocal obligations, equity does not extend to him who has the option any indulgence in the matter of time, unless the grantor of the option has placed it beyond the power of the grantee to perform within the time limit. It follows then that to secure the benefit of the option and to bind the grantor the grantee must strictly perform. He cannot complain if the grantor refuse to perform if he, himself, be in default. There are marked distinctions between an option and an agreement of sale and purchase as we shall see. Suffice it to say here that the grantee under an option obtains by his contract no interest in the land until he exercise the option and comply with its terms, while under an agreement for sale and purchase, the purchaser upon the making of the contract becomes the owner of the full equitable title to the land, leavingbut the bare legal title in the seller, and when the full purchase price is paid he holds it in trust for the buyer. The vendee takes this equitable title at once upon entering into the contract whether he makes any payment or not at that time and as we shall presently see, his rights are higher than those of one who has merely purchased a privilege to buy. Under options then time is strictly the essence of the agreement, and in the absence of any act on the part of the seller which prevents its exercise, the grantee of the privilege must exercise it within the time limited or lose it. He is granted no indulgences in law. His right to purchase is measured strictly by the terms of the option agreement and equity will not enlarge them, if the grantor be not in default.
158.	It is usual to insert in contracts for sale and purchase that time is of the essence of the contract. This means that the payments must be made when due or the contract may be declared terminated and the property forfeited. The courts will not declare a forfeiture, however, unless words have been used which show a clear and unmistakable intention on the part of the grantor to create an estate on condition. (28 App. 399). This provision for forfeiture is for the benefit of the seller and may be waived by him. Where time is not expressly made of the essence of the contract, the buyer has a reasonable time after the due date of purchase price to make payment. Where the seller has in any instance accepted payment of any installment after its due date he is deemed to have waived his right of forfeiture, and if he desires to regain it, he must notify the purchaser that thereafter the payments must be made when due, and that he will not accept after their due date. (27 App. 125: 35 App. 549). This is a common case. “A” sells to “ B ” upon monthly payments to be made on the first day of each month. It is expressly declared in the contract that time is of the essence thereof. “ B ” makes payments and “ A ” accepts them at any time. Sometimes B ” pays during the month; perhaps, two or three months elapse during which he makes no payments. “ A ” accepts all arrears and thereafter B ” makes no further payments. A ” cannot declare a forfeiture until he has given “ B ” notice to pay all arrearages, and that thereafter all payments must be paid strictly on the due date. If “ ‘B ” after notice pay up, and he has the legal right to do so, the right of “ A ” to forfeit is gone until “ B ” be again in default, and after notice to him that no more indulgence will be granted. Care should be taken by the seller to give the buyer an opportunity to pay arrearages .before forfeiture is declared, otherwise the buyer may within a reasonable time after such declaration make a tender of the purchase price andcompel a conveyance to him and this from any grantee who may have purchased from the seller with notice of the contract actual or constructive. Where time is expressly declared to be of the essence of the contract, upon forfeiture the seller is entitled to retain all monies theretofore paid to him on account of the purchase price.
159.	Every contract by which the amount of damage to be paid, or other compensation to be made for the breach of an obligation is determined in anticipation thereof, is to that extent void. (Sec. 1670 C. C.).
Where a contract for sale of land provides for payment of cash deposit, and that upon failure of the purchaser to pay the next installment of purchase money the contract should be void so far as the purchaser is concerned, and that the deposit should be retained by the vendor as liquidated damages, is void under Secs. 1670-1671 C. C. When such contract is abandoned or rescinded by the parties, the purchaser, even if in default may recover all except actual damage suffered by vendor. (100 Cal. 75). The parties, however, may agree in the contract upon the amount of damage sustained by a breach thereof when from the nature of the case it would be extremely difficult to fix the actual damage. (Sec. 1671 C. C.) It is not often attempted to stipulate in the ordinary contract of sale and purchase for payment of so called “ liquidated damages ”; that is to say, for the payment of a certain sum, fixed in advance to be forfeited to the seller in case the buyer fails to perform. Ordinarily the only penalty imposed is the forfeiture of all monies paid to the seller before breach. We can conceive circumstances under which such an agreement as to liquidated damages might be enforced. We will take a case where the contract is made without any payments being made to the seller. The buyer agrees to put the land to certain uses and the enterprise is uncertain and hazardous. We should say that it is legal for the parties to agree upon a sum which shall be the amount of damage suffered by the seller in case the enterprise fails and the buyer fails to perform, which shall be forfeited to the seller, but where the actual damage is certain of ascertainment the law will not enforce the forfeiture of a stipulated sum. The one damaged can only recover the actual damage suffered. It is a common practice for parties to agree upon a sale and purchase and place the preliminary papers with a third person pending the consummation of the deal and often we find this case. “ A ” agrees to enter into a contract of sale and purchase with B ” at a certain time provided B ” put up, we will say, $5,000 to bind the bargain. This is done with the agreement that unless “ B ” carry out the bargain heshall forfeit this sum to “ A.” Such an agreement cannot be enforced. “ A ” can recover only his actual damage despite the agreement as to forfeiture. Whenever by the terms of an obligation a party incurs a forfeiture by reason of his failure to comply with its provisions, he may be relieved therefrom upon making full compensation to the other party, except in a case of a grossly negligent, willful or fraudulent breach of duty, and on the breach of a contract the measure of damages is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which in the ordinary course of things would be likely to result therefrom. Thus, where the seller is unable to convey the land he has agreed to convey, even if he has agreed to pay a certain sum as liquidated damages, he can be held only for actual damage suffered by the buyer. The damage in such a case is deemed to be price paid and the expenses properly incurred in the examination of the title and preparation of papers with interest thereon; but adding thereto in cases of bad faith, the difference between the price agreed to be paid and the value of the estate agreed to be conveyed, determined at time of the breach, and all expenses properly incurred in preparing to enter upon the land. The damage caused by breach on the part of the buyer is deemed to be the excess, if any, of the amount which the buyer has agreed to pay under the contract, over the value to the seller. This value to the seller must be established by competent evidence. It does not rest in his judgment. These remedies must not be confused with the other remedies given to the respective parties to such a contract. Damages upon breach can only be recovered when the party claiming them is not himself in default and the other party has placed himself in a position preventing performance by him and refuses to carry out the contract. Thus, if I agree to sell certain property to you and afterwards I convey to another who had no knowledge of the contract, for a valuable consideration, you cannot compel a conveyance to you, but you may recover damages from me to the amount which you have paid me on account of the purchase price and any amounts legitimately expended by you in and about the transaction with interest. I, as the seller, have several remedies as we shall show later.
160.	It is encumbent upon the buyer that he be ready, able and willing to make his payments before he can place the seller in default. Thus if the seller still own the land when the buyer is ready to pay, the buyer must make a tender of the money due before he has a right of action against the seller. He must make the tender in good faith and keep it good. This he is not required todo if the seller has placed himself in such a position that he cannot convey. The law requires no idle act. He must make this tender for, until he has paid, or offered to pay amount due from him, there is no mutuality of agreement and he cannot sue. The seller must in certain instances tender a deed to the buyer before he can maintain an action to forfeit or foreclose the interest of the buyer, or compel the buyer to perform. Thus, where the contract provides that upon default in payment of any installment of the purchase price the whole amount of the purchase price shall become due and payable at the option of the seller, the buyer is entitled to notice of the exercise of this option and the seller must, before buyer is put in default, notify him of this election, tender him a deed and demand payment of the whole sum. In cases where the last installment of purchase price is due and unpaid the seller must tender a deed before he can maintain his action. In cases where time is not expressly made of the essence of the contract, and default be made in any payment, the seller must demand payment and give a reasonable length of time to the buyer to pay before he can take action. He is not obliged to tender a deed unless the contract gives him the option to declare the whole purchase price due and he exercises the option; or, where time is not of the essence of the contract; or where time is of the essence, and he has indulged the buyer in matter of prompt payment. When demand for payment and tender of deed is necessary, and the seller fails in this, the buyer, even after forfeiture is declared, or suit begun to foreclose, make tender within a reasonable time of the amount any payment due and be reinstated. What constitutes “reasonable time” in such cases will always be determined by the court.
When the contract recites that time is of the essence thereof, this implies that the payments are to be made on the due date and not later, and the provision will be enforced unless expressly waived, or it be waived by the conduct of the vendor. (42 App. 513, 39 App. 184). If the payments be not so made and the seller has granted no indulgence in the matter he need not make demand for payment, nor need he make a tender of a deed before declaring forfeiture or beginning his action for foreclosure, specific performance or damages; (44 App. 644: 173 Cal. 176) nor need he give notice, unless the contract expressly provides for notice, or where the contract expressly provides that the execution of the deed is a condition, in which case he must make tender of a deed (181 Cal. 6). Any tender made by either party must be made by the party himself, or by some person on his behalf, and with his assent. In theabsence of any agreement to the contrary the tender may be made at any place where the person sought to be bound thereby may be found, and if he cannot with reasonable diligence be found within the State, and within a reasonable distance from his residence or place of business, or if he evades the party seeking to make the tender, then by leaving notice at his residence or place of business. All tenders must be made in good faith and must be free of conditions which the one sought to be charged is not bound to perform. It is not necessary to produce the deed, or money unless the tender is accepted. The tender is of no effect if the party making it is not able and willing to perform. If the one to whom tender is made makes no objections, if he be given the opportunity, and these objections could be obviated by the party making the tender, and he fail to advance them, he is deemed to have waived such objections. The seller cannot sue for the purchase price independently of his action to foreclose or for specific performance, and then he cannot recover unless he can comply with the contract and deliver the land. The seller cannot retain the land, the money already paid him on the contract, forfeit the contract, and then sue to recover the balance of the purchase price.
161.	We come to consider the precuations to be exercised by the buyer under such contracts. Very often notes are given for installments of the purchase price in addition to the obligation to pay contained in the contract. This practice is unsafe for the buyer unless it appear on the face of the notes that they are given for such purpose. Reference should be made in the note to the contract, for if this be not done, and the note be negotiable in form, the seller may dispose of them and, if a purchaser take them in good faith, for value, before maturity, without notice of the contract, the maker is bound whether the seller fulfills his contract or not. Do not sign notes for the purchase price unless they show in terms that they are to evidence the payments to be made under the contract. The buyer must know that the one from whom he is buying has legal capacity to contract, that he is in fact the owner of the property, and the condition of the property as to liens and encumbrances. Where there has been no fraudulent misrepresentation as to the vendor’s title, the fact that he has an imperfect title, or no title at all, at the time of the execution of the contract of sale does not invalidate the contract, since it is sufficient if the vendor has a good title at the time he is called upon to perform. (181 Cal. 6).
Many, many people have suffered loss by failure to make proper investigation of the seller and the condition of the title before parting with their money. If, upon the title being exhibited, the buyer finds it encumbered by a mortgage, to save himself in law he must see to it by stipulation with the seller that he has the right to apply his payments toward the mortgage. The mortgagee is not bound to take any notice of the contract, and the buyer must depend upon the integrity of the seller unless he protect himself by agreement that he himself may pay the mortgage and receive corresponding credits on his contract. If the buyer does not go into possession of the property he should record his contract, that everyone subsequently dealing with the property may have notice of his rights. If he go into possession openly and notoriously and in such a manner that any person can know that he is in possession, it is not necessary to record the contract, as physical possession is the highest form of notice. Do not record your contract unless you mean in good faith to comply with its terms. Do not record it merely for the purpose of clouding the title, for there is such a thing as slander of title and the seller may hold you in damage if he suffer loss by your act.
When the buyer has given notice, actual or constructive, any mortgagee loaning money to the seller thereafter takes subject to the rights of the contract holder, and unless he deals with him runs the risk of losing his money. When the contract holder comes to seek specific performance of his contract, he can show payment to the seller and the mortgagee who has taken subject to his rights cannot enforce his lien against him.
If the property be the homestead of the seller and the seller be married, the contract must be executed by both spouses personally. The execution by an agent or attorney in fact is not binding.
If, after the contract be entered into, a homestead be filed, it does not defeat the contract. The homestead right is deemed to be subject to rights of the buyer. It often occurs that after a man enters into a contract to convey the community property, or his separate property, that the wife, at the instance of the husband who may desire to repudiate his bargain, or upon her own volition seeking to prevent a conveyance, files a declaration of homestead on the property agreed to be sold. This does not prejudice the rights of the buyer, for upon performance on his part he may compel conveyance by both spouses, and should they refuse the court will appoint a commissioner to convey for them. (See Chapter on Homestead Exemption). See to it that all special promises, agreements and inducements appear in your contract. Do not accept oral assurances in lieu.162.	Now as to precautions to be observed by the seller. He must first of all know that the buyer has legal capacity to contract. Do not enter into a contract with a minor or one demented. Do not enter into a contract with an alien, prohibited from owning land. Take care that the terms of your contract be fair and equitable. While you are not called upon to indulge your purchaser in the matter of extending times fixed for payment or in any other regard, if you do so, see to it that he has ample notice of any change in your attitude, that he may govern himself accordingly. No Court will enforce a contract which is not fair and equitable and which is not supported by an adequate consideration (175 Cal. 37), nor will a Court grant relief to one who does not come into Court with clean hands. Here again stands out the maxim “ He who seeks equity must do equity.” We have touched before upon the danger of inserting stipulations in the contract which are drastic in their nature and oppressive upon the buyer. It must be remembered that when the buyer when he has made any payment under his contract is the owner of the full equitable title; the seller is the owner of the purchase price, and when all is paid to him, or lawfully tendered to him, equity adjudges that the seller holds the bare legal title in trust for the buyer. It is true that many times irresponsible or dishonest persons will enter into such contracts without the ability or intent to carry out their contracts, thus causing annoyance and expense to the seller when he is obliged to oust them from the premises, but there is a duty resting upon the seller to ascertain with whom he is dealing and to govern himself accordingly. These cautions are of interest to the seller when he comes to forfeit the contract, or when he seeks to foreclose it or compel performance. A Court of law will scan the contract and the surrounding circumstances to see that no undue advantage is being taken before it declares a forfeiture. Courts of law are hostile to forfeitures. Courts of equity which never declare forfeitures, will when the action is brought to foreclose the contract or compel specific performance, look to the conscience of the parties and not to the letter of the law, and if it be found that the stipulations are unfair, unjust, oppressive and against good conscience will refuse to give them effect. A plaintiff who exhibits a contract wherein the stipulations are substantially all in his favor meets a hostile court.
163.	These are rights of a buyer under a contract of sale and purchase. To rescind or sue for damages as above stated, or to compel specific performance on the part of the seller. Recission means the abrogation of the contract and the placing of the partiesin the same position as before the execution of the contract. First then, we will consider rescission as it affects the buyer. Where the contract has been mutually abandoned or rescinded by the parties, and no new agreement made, the buyer can recover the monies theretofore paid by him (41 App. 620; 181 Cal. 119). He cannot retain possession and refuse to make payments (44 App. 703). He cannot retain both land and the purchase price. He must act promptly on discovering the facts entitling him to rescind and must restore to the other party everything of value received from him (178 Cal. 17).
164.	Rescission may be made as a matter of right, in cases where there is no other cause for the act, in such cases as these: Where the contract is made by a minor over the age of 18 years upon his attaining majority, or within a reasonable time thereafter, or in case of his death, within the period by his heirs or personal representatives upon restoration of the purchase price if he be the seller, or surrender of the land if he be'the buyer. A contract made by one of unsound mind, but not entirely without understanding, made before his incapacity has been judicially determined may be similarly rescinded by him on restoration to capacity. A contract made with him after judicial determination of his incompetency, or after a guardian is appointed for him, is void from the beginning and requires no rescission. It must be borne in mind at all times that a minor under the age of 18 years can make no binding contract and need make no restoration if he or she desires to repudiate the bargain. He or she is not even required to even signify such a desire. Such a contract is void from the beginning. So when one deals with a girl or boy under the age of 18 years he runs the risk of losing both the land and the money. If with a boy between the ages of 18 and 21 years he runs the risk of rescission as above outlined.
165.	Any party to a contract who is legally capable of ing into it is legally entitled to rescind in the following only: (Sec. 1689 C. C.).
1.	If the consent of the party rescinding or of any4.	If such consideration before it is rendered to him fails in a material respect from any cause; or
5.	By consent of all other parties. Any stipulation in the contract that the same shall not be rescinded but shall be compensated in damages does not take away this right of rescission for fraud, nor for mistake, when such mistake is in a matter essential to the inducement of the contract and is not capable of exact and entire compensation. (Sec. 1690 C. C.). Rescission when not effected by consent of the parties can be accomplished only by the use on the part of the party rescinding of reasonable diligence to comply with the following rules: (Sec. 1691 C. C.).
1.	He must rescind promptly upon discovering the facts which entitle him to rescind, if he is free from duress, menace, undue influence, or disability and is aware of his right to rescind; and
2.	He must restore everything of value which he has received from the other party under the contract; or must offer to restore the same upon condition that such party shall do likewise unless the latter is unable or positively refuses so to do. (178 Cal. 17).
The contract may be rescinded when it is unlawful for causes not apparent on its face and the parties are not equally in fault, or when the public interest will be prejudiced by permitting it to stand. Rescission cannot be adjudged for mere mistake unless the party against whom it is adjudged can be restored to substantially the same position as if the contract had not been made, and on adjudging the rescission the Court may require the party to make any compensation to the other which Justice may require. The buyer after he has made his payments may compel a conveyance from the seller, or his assignee, or grantee with notice, upon refusal to make a deed, in action for specific performance. The Court, if the buyer be not in default, and the contract be fair and equitable and the consideration adequate, will direct the seller to convey, and if he refuse to do so will appoint a Commissioner to make deed for him.
166.	If the buyer is in default the seller has several remedies in addition to his right to sue for damages, as above stated. He has the right to sue to collect each unpaid installment as it falls due (36 App. Sec. 399).
If time is expressly made of the essence of the contract, and default be made in payments when due and no waivers or indulgences have been granted by the seller, and there be agreements to the contrary, and the seller being no way at fault, he may stand upon the letter of the contract and declare a forfeiture, without demand for payment, notice or judicial proceeding of any kind.Under such circumstances he is entitled to retain all money theretofore paid to him on account of the purchase price. A vendee under a contract for the purchase of real property cannot continue to hold possession after making default in agreed payments regardless of whether the vendor has title or not the vendee cannot refrain from making payments as provided by the contract and continue to hold possession of the land, nor can he recover monies theretofore paid if he continues in possession, nor can he after making default in payments without legal excuse, recover any money he may have paid while the vendor was not in default, except where there has been a mutual rescission, and this although the contract does not contain an express agreement that vendor may retain the money. Notice by vendor and demand for return of possession do not constitute rescission of the contract (38 App. 592.) But in case of default on part of vendee, and vendor without offering to perform and without in any manner protecting rights of the vendee, sells to a third person the vendor is liable to the vendee for all amounts paid. (39 App. 11). This would apply in cases where no forfeiture was declared. It would appear to be a safe and sound business rule at least to give the buyer notice of intent to forfeit and demand for payment coupled with an offer on part of vendor to perform before declaring forfeiture or selling to another that no question as to fairness can be thereafter raised by the vendee. There may be circumstances under which this rule cannot be followed, as where the vendee has abandoned the property and cannot be found. As we have pointed out, these steps are not strictly essential under the law, merely safeguards. The buyer is deemed to know the exact terms of the contract as they stood when made, and if there have been no changes therein—no waivers, indulgences or side agreements, he cannot claim that he is entitled to notice of his own default. This is not true, however, in cases where the seller has accepted payments after due dates and thus waived the strict performance. When he has once done this he must before he can declare a forfeiture or bring any action, notify the buyer to pay up all arrearages and thereafter make payments strictly on the due dates. If the buyer pays up, his rights are saved, but he must thereafter strictly comply with the original terms of the contract if he avoid forfeiture. If the seller does not again indulge the buyer and refuses any further payment tendered after its due date, he again has the right of forfeiture as originally given him. This is a swift and drastic remedy and is most often employed where the buyer is not in possession and has not recorded his contract, hence we repeat, that care must be taken in such a casethat the buyer’s rights be not infringed. No particular form of notice is required. Any notice which a person of ordinary understanding can comprehend is sufficient. Remember that courts are hostile to forfeitures and will hold the one seeking the remedy in court, or in declaring forfeiture without legal process to the highest account. In cases where the contract has been recorded and it is desired to clear the record of the apparent cloud, an action for forfeiture may be brought and upon proof of such facts as would warrant a forfeiture without action, the Court will declare a forfeiture and the record is cleared.
167.	An action for equitable foreclosure may be maintained in cases where the seller has no grounds for forfeiture, or waives his right to forfeit, and it be desired to clear the record and recover possession. The Court will upon a proper showing, decree that the buyer pay up all arrearages within a certain time determined by the circumstances of the case, or stand foreclosed. The buyer may then pay up and be reinstated. He would be compelled to pay up the whole purchase price of the contract provided that upon default in payment of any installment the whole should become due at the option of the seller, and that option be exercised. No notice of the exercise of this option need be given other than the filing of the complaint. If the buyer does not pay up, then a further decree should be obtained setting forth this fact and that plaintiff is entitled to possession and, if the buyer continue in possession, a writ of possession may be obtained whereby he will be dispossessed by the Sheriff. An ordinary action to quiet title may be maintained by the seller, if it be desired to clear the record or obtain possession. Upon entry of a decree in such an action he may secure a writ of possession.
Lastly, the seller may stand upon the contract and compel the purchaser to complete his bargain, take the land, and the seller can recover judgment for the purchase price. But this he cannot do unless he can show that the contract is fair and equitable (64 C. D. 3) and unless he tender a deed and title in all respects as agreed in the contract, and no personal judgment can be taken against any assignee. Where a vendor in his contract agrees unqualifiedly to furnish certificate of title by a particular company it is a breach of the contract if he fail to do so, even if the company refuses to issue certificate, and the purchaser can recover. He is not compelled to accept a Torrens Title Certificate in lieu of the one contracted for (39 App. 621.)
168.	No stipulations in the contract that upon assignment of the same, or upon recordation of the same, that it shall be for-feited are of any effect, nor is an agreement that a declaration of forfeiture filed in the Recorder’s Office be conclusive evidence of such forfeiture in law and one which a Court would enforce. Such clauses in a contract work detriment to the seller and should be avoided.
169.	Confusion is apt to arise as to distinction between escrows and executory agreements. Agreements are executed when all is done which is contemplated by the parties. An executory agreement is one which is yet to be performed and something is yet to be determined between the parties. At law a contract under certain circumstances is deemed to be executed when there is nothing further to be done requiring further consent of the parties or further meeting of minds, but yet there remains something to be done to render effective the agreement as it stands. Under this head fall escrows, and we shall distinguish between a pure escrow at law, which is in law an executed contract, and so called “ escrows ” which are executory agreements.
Sec. 1057 C. C. defines an escrow as follows:
“ A grant may be deposited by the grantor with a third person to be delivered upon the performance of a condition and on delivery by the depositary it will take effect. While in the possession of the third person and subject to condition it is called an escrow.”
The first point to be observed is that the agreement is complete. The condition referred to is one upon which the parties have agreed. The delivery to the depositary must be absolute and complete with intent to surrender dominion over the deed and with full intent that it be effective when the condition is performed. (See Chapter “Essentials of a Deed”).
It is delivered for the benefit of the grantee. Any instruction to the escrow holder, except to deliver the deed when condition is performed renders the escrow void. Where a valid delivery has been made in escrow a delivery back to the grantor by the escrow holder does not cancel the deed. A deed cannot be delivered in escrow to the grantee, his agent or attorney. The deed must be delivered to a third person. Here is an example of a perfect escrow: “ A ” delivers his deed to “ B ” to be delivered to “ C ” upon payment of a certain amount of money within a certain time. There is nothing left to be determined by further agreement—there is to be nothing further involving agreement of minds. The contract is executed, and nothing remains to be done, except the manual acts of the exchange of the deed for the money, and when “ C ” pays and “ B ” delivers the deed to him the law considers this to have been done in the first instance, and that the second delivery relates back to the first, as if the acts had been simultaneous with
the first. The legal maxim “ that which ought to be done is regarded as done ” applies. The reason for this is obvious. The transaction being complete, nothing to be done in the way of agreement, the second delivery is considered to be the first to cut off rights of intervening parties. If “ A ” die while the deed is in escrow yet “ B ” may make payment and the property is his from the date of the first delivery. It is equally obvious that this could not be so if there yet remained anything to be settled upon between the parties, for in such case the first delivery could not be considered absolute. Hence it follows that if any conditions are imposed other than those which have been settled and finally agreed upon at the time of the first delivery, such as, “ deliver this deed to “ B ” in case I show a good title satisfactory to him,” or “ provided “ B ” and I do not otherwise agree,” or unless “ I do not recall this deed,” etc., there is no delivery and hence no escrow. In such cases “ B ” is simply a depositary of the deed and should “ C ” take over the deed the second delivery does not relate back to cut off intervening rights. If “ C ” pay the money to “ B ” with instructions to pay it to “ A,” if the title be found in a condition to be approved by him, or the like, the same result is brought about. To create a true escrow then the grantor must deposit his deed with a third party with full intent to surrender dominion over it and to pass title to his grantee under conditions certain at the date of delivery to the escrow holder, and there must be nothing left to the determination of the parties.
Where the deed is not placed in escrow, but is placed in the hands of a third party to be delivered to the grantee when certain things are to be assented to and further agreed upon, such as the terms of a mortgage to be taken back, and the like, or when the grantee deposits his money with the depositary conditioned that it be paid to grantor on the order of the one depositing, or when the title can be shown in a certain condition, there is no escrow as the law knows it, but the depositary is the agent of the parties.
It is a common business practice in this State for parties to deal through a third disinterested depositary. Transactions under modern conditions are rarely such that every detail of a sale and purchase are determined upon before the deposit of papers and money.
While such agency agreements commonly called “ escrows ” have not the legal elements of a true escrow, they are of great convenience in the transaction of business and in practically every particular serve the purpose of a true, legal escrow. The deposit of a deed with a third person to be delivered to the grantee only upon payment of the price fixed by the grantor is not an escrow wherethere was no prior or contemporaneous contract of which the deed was to be the consummation. It is a mere offer which grantor may withdraw before acceptance. (173 Cal. 597).
It must be remembered that it is absolutely essential to the validity of a deed in escrow that it be delivered to a third person for the grantee beyond any power of the grantor to recall or revoke it. (29 App. 63).
Analagous to an escrow is a transaction where a grantor delivers a deed to a third person to be delivered to the grantee upon death of the grantor. In such a case there must be no conditions but the intent must appear to pass the title at once, the enjoyment thereof postponed. When this appears the effect of the deed is to pass the title from the grantor at the date of the first delivery, leaving in him a life estate only. When such deeds are delivered to a third party and thereafter the land be sold or encumbered the instrument should be executed by the grantor and grantee in the first deed. Such deeds are often made and deposited with intent to avoid probate proceedings. This is perfectly lawful and commendable. In many such cases several parcels are included in the deed. It may be desirable to sell some of the property before the death of the grantor. In such case both grantor and grantee under such a deed should join in any conveyance so that when the original deed is placed of record after the death of the grantor, no question will arise as to priority of deed and delivery. For further discussion on the subject of so-called escrows you are referred to the Chapter on Trusts and Agency.VIII.
Mechanics Liens
170.	A new Mechanics Lien Law went into effect June 30, 1911, and it is of this law we shall speak, as many changes were made in the then existing law, most of the decisions of the courts interpreting the law as it then stood are not pertinent now. The chief distinction between the old law and that now prevailing is, that under the present law the property is liable for the full amount of the reasonable value of the lien, and is not in any way limited by the amount of any contract price agreed upon between the owner and the contractor. Under the new law an owner may protect himself against any liens beyond the agreed contract price by filing a copy of the building contract in the Recorder’s Office, and requiring the contractor to furnish a bond with sufficient sureties, which shall inure to the benefit of all lien claimants, and any lien claimant may look to this bond for any sums due him over and above the contract price. If he is not paid out of the agreed sum he must be paid by the bondsman or his sureties. Again, under the law as it stands now it is not necessary to retain any of the money or to fix periods at which it shall be paid. The full amount of the agreed price could be paid at once upon the signing of the contract without interference with the rights of lien claimants. Under the present law there is no distinction or priority of liens, except that the contractor is the last to be paid. We will set out in full the main clauses of the law as they are practically self explanatory.
Mechanics, material men, contractors, sub-contractors, artisans, architects, machinists, builders, miners, teamsters, draymen and all persons and laborers of every class performing labor upon, or bestowing skill or necessary services, or furnishing materials to be used or consumed in, or furnishing appliances, teams and power contributing to the construction, alteration, addition to or repair, either in whole or in part, of any building, wharf, bridge, ditch, flume, aqueduct, tunnel., fence, machinery, railroad, wagon road or other structure, shall have a lien upon the property upon which they have bestowed labor or furnished materials, for the value of such labor done and materials furnished and for the value of the use of such appliances, teams or power, whether at the instance of the owner, or by any other person acting by his authority or underhim, as contractor or otherwise. And every contractor, sub-contractor, architect, builder or other person having charge of the construction, alteration, addition to or repair, either in whole or in part of any building or other improvement as aforesaid, shall be held to be the agent of the owner for the purposes of the statute.
Any person who performs labor on any mining claim or claims, or in or upon any real property worked as a mine, either in the development thereof or by working thereof by substractive process, or furnishes materials to be used or consumed therein, has a lien upon the same and the works owned and used by the owners for milling or reducing the ores from the same, for the value of the work or labor done, or materials furnished by each respectively, whether done or furnished at the instance of the owner, or his agent. •
And every contractor, sub-contractor, superintendent or other person having charge of any mining work or labor performed in or about such mining property shall be held to be the agent of the owner for the purposes of the statute.
The liens provided for in the statute are direct liens. They are not in the case of any claimants, other than the contractor, limited as to amount by any contract price agreed upon between the owner and any contractor, except as provided in the statute. But said several liens shall not exceed in amount the reasonable value of the labor done or materials furnished, or both, for which the lien is claimed, nor the price agreed upon for the same between the claimant and the person by whom he was employed. Nor in any case where a claimant was employed by a contractor, or sub-contractor, shall the lien extend to any labor or materials not embraced within or covered by the original contract between the contractor and the owner, or any modification thereof, made by and with the consent of the owner, and of which the claimant shall have had actual notice before the performance of such labor or the furnishing of such materials.
The filing of such original contract, or modification thereof, in the office of the County Recorder of the County wherein the land is situated, before the commencement of the work shall be equivalent to the giving of actual notice by the owner to all persons performing work or furnishing materials thereunder.
In case said original contract shall, before the work is commenced, be so filed, together with a bond of the contractor in sum not less than fifty per cent, of the contract price, with two sureties, which said bond shall, in addition to any condition for the performance of the contract, be also conditioned for the payment in full of the claims of all persons performing labor upon or furnishing mate

11rials to be used in such work, and shall also by its terms be made to inure to the benefit of any and all persons who perform labor upon or furnish materials to be used in the work described in the contract, so as to give such persons a right of action to recover upon said bond in any suit brought to foreclose a lien provided for in the statute, or in a separate suit brought upon said bond. In such cases the court must, where it would be equitable so to do, restrict the recovery under such liens to an aggregate amount equal to the amount found to be due from the owner to the contractor, and render judgment against the contractor and his sureties on the bond for any deficiency or difference there may remain between said amount so found to be due to the contractor and the whole amount found to be due to claimants.
No change or alteration of the work or modification of any contract between the owner and the contractor shall release or exonerate any surety upon the bond given under the statute. But it has been held that material changes will release the surety. (175 Cal. 124.	182 Cal. 69).
It is the intent and purpose of the statute to limit the owner’s liability, in all cases, to the measure of the contract price where he shall have filed, or caused to be filed in good faith with his original contract, a valid bond with good and sufficient sureties, in the amount and upon the conditions provided.
It is lawful for the owner to protect himself against any failure of the contractor to perform his contract and make full payment for all work done or materials furnished thereunder, by exacting such bond or other security as he sees fit. The owner is not obliged to rely upon the statutory bond solely. He may demand such further security as he may deem sufficient.
Any of the persons above mentioned as entitled to liens, except the contractor, may at any time give to the owner a notice that they have performed labor or furnished materials, or both, to the contractor or other person acting by the authority of the owner, or that they have agreed to do so, stating in general terms the kind of labor and materials furnished and the name of the person to or for whom the same was done or furnished, or both, and the amount in value, as near as may be, of that already done or furnished, or both, and of the whole agreed to be done or furnished, or both, and any of said persons who shall on written demand of the owner refuse to give such notice shall thereby deprive himself of the right to claim a lien. Such notice may be given by delivering the same to the owner personally, or by leaving it at his residence or place of business with some person in charge, or by delivering it to his architect, or by leaving it at the latter’s officewith some one in charge. No such notice is invalid by reason of any defect in form, provided it is sufficient to inform the owner of the substantial matters provided for. Upon such notice being given it is lawful for the owner to withhold, and in the case of property which for reasons of public policy or otherwise, is not subject to the liens in the statute provided for, the owner or person who contracted with the contractor shall withhold from his contractor sufficient money to answer such claim and any lien that may be filed therefor, including the reasonable cost of any litigation thereunder. The owner is not obliged to retain the money claimed when he is so notified, but he is permitted to do so if he be doubtful of the contractor’s ability to pay.
The liens provided for in the statue are preferred to any lien, mortgage or other encumbrance which may have attached subsequent to the time when the building, improvement or structure was begun, work done or materials furnished. (31 App. Dec. 108). Also to any lien, mortgage or other encumbrance of which the lien holder had no notice, and which was unrecorded at the time the work of building was commenced, or materials commenced to be furnished.
Every original contractor claiming the benefit of the law, within sixty days after completion of the contract, and every person save the original contractor, claiming the benefit of the law within thirty days after he has ceased to labor or furnish materials, or both, or, at his option, within thirty days after the completion of the contract, if any, under which he was employed, must file for record with the County Recorder a claim of lien containing a statement of his demand after deducting all just credits and offsets, with the name of the owner or reputed owner, if known, also the name of the person by whom he was employed, or to whom he furnished the materials, with a statement of the price, if any, agreed upon for the same, and when payable and of the work agreed to be done, and when the same was to be done, if agreed upon, and also a description of the property to be charged with the lien, sufficient for identification, which claim must be verified by the oath of claimant or of some other person.
Any trivial imperfection in the work, or in the completion of any contract by any lien claimant, or in the construction of any building, etc., is not deemed such a lack of completion as to prevent the filing of any lien.
And in all cases the following is deemed equivalent to a completion for all the purposes of the statute: The occupation or use of a building, improvement or structure by the owner or his representative or the acceptance of the owner, or his agent of thebuilding or improvement; or the cessation from labor for thirty days upon any original contract or upon any building, improvement or structure, or the alteration, addition to or repair thereof: the filing of the owners notice provided for. (185 Cal. 355. See 34 App. Dec. 568. 37 App. 533. 38 App. 508. 39 App. Dec. 25. 40 App. 80. 37 App. Dec. 461).
171.	The owner may within ten days after completion of any contract, or within forty days after cessation from labor thereon file for record in the County Recorder’s office, a notice setting forth the date when the same was completed, or on which cessation of labor occurred, together with his name and the nature of his title, and a description of the property sufficient for identification; Which said notice must be verified by him, or by some one in his behalf. In case such notice is not filed, then the owner and all claiming under him shall be estopped in any proceedings for the foreclosure of any lien provided for in the statute from maintaining any defense therein based on the ground that said lien was not filed within the statutory time; provided, that all claims of lien must be filed within ninety days after the completion of any building, improvement or structure, or the alteration, addition, or repair, whether notice of completion be filed or not. (37 App. 533. 38 App. 508.)
In every case in which one claim is filed against two or more buildings or other improvements owned by the same person, the one filing the claim must at the same time designate the amount due to him on each of the same; otherwise the lien of such claims is postponed to other liens. The lien of such a claimant does not extend beyond the amount designated as against other creditors having liens by judgment, mortgage or otherwise, upon either of such buildings or other improvements, or upon the land upon which the same are situated.
No lien provided for in the act binds any property for a longer period than ninety days after the same has been filed, unless proceedings be commenced in the proper court within that time to enforce the same; or, if a credit be given, then ninety days after the expiration of such credit; but no lien continues in force for a longer time than one year from the time the work is completed, by any agreement to give credit, and in case such proceedings be not prosecuted to trial within two years after the commencement thereof, the court may in it’s discretion dismiss the same for want of prosecution, and in all cases the dismissal of such action, unless it be expressly stated that the same be without prejudice, or a judgment rendered therein that no lien exists, is equivalent to a cancellation of the record of such lien.
Any person, who at the request of the reputed owner of any lot in any incorporated city or town, grades, fills in, or otherwise improves the same, or the street or sidewalk in front of or adjoining the same, or constructs any areas or vaults, cellars or rooms under said sidewalks, or makes any improvements in connection therewith, has a lien upon said lot for the work done or material furnished.
172.	Every building or other improvement, or work constructed, altered or repaired upon any land with the knowledge of the owner or of any person having or claiming any estate therein, and the work or labor done, or materials furnished with the knowledge of the owner or persons having or claiming any estate in the land, is held to have been constructed, performed or furnished at the instance of such owner, or of the persons having or claiming any estate in said lands, and such interest owned or claimed shall be subject to any lien filed in accordance with the act, unless such owner, or person having or claiming an estate therein shall, within ten days after he shall have obtained knowledge of such construction, alteration, repair, work or labor, give notice that he will not be responsible for the same by posting a notice in writing to that effect in some conspicuous place upon the property and shall also within the same period file for record a verified copy of said notice in the Recorder’s Office. Said notice shall contain a description of the property sufficient for identification, and may be verified by any one having knowledge of the facts. (36 App. Dec. 464. 43 App. 718).
173.	Any contractor is entitled to recover upon a lien filed by him only such amount as may be due him according to the terms of his contract, after deducting all claims of other parties for work done or materials furnished, as aforesaid, and embraced in his contract. Contracts cannot be tacked together: each must stand alone. (40 App. Dec. 72).
In all cases where a lien shall be filed for work done or materials furnished to any contractor he must defend any action brought thereon at his own expense. During the pendency of such action the owner may withhold from the contractor the amount of money for which said lien is filed; and in case of judgment against the owner or his property upon the lien, the owner shall be entitled to deduct from any amount due by him to the contractor the amount of such judgment and costs, or he may recover the amount from the contractor or his sureties if he has theretofore settled with the contractor.
No act done by the owner in compliance with any provisions of the act shall be held to be a prevention of the performance of
I
any contract by the contractor, or to have exonerated the sureties on any bond given for faithful performance, or for the payment of liens of persons performing labor or furnishing materials, or both; provided that such act was done in good faith and without design to injure or harass anyone.
Deficiency judgment may be had in suit to foreclosure as in case of foreclosure of mortgage.
Any number of persons claiming liens may join in one action to enforce them, and where several actions are filed the court may consolidate them.
Whenever materials shall have been furnished for use in the construction, alteration or repair of any building, or other improvement such material is not subject to attachment, execution or other legal process, to enforce any debt due from the purchaser except a debt due on account of the purchase thereof, so long as in good faith the same are about to be applied to the construction, alteration, or repair of the building or other improvement.
174.	Personal action may be maintained to collect any debt due for work done or materials furnished against the person liable therefor; and attachment will lie notwithstanding a claim of lien be filed, and such action will not be held to merge or impair any lien, but all money collected by such a suit must be credited on the lien claim.
It is not competent for the owner and contractor, or either of them by any term of their contract, or otherwise, to waive, alter, affect or impair the claims and liens of other persons, whether with or without notice, except by their written consent, and any term of the contract to the contrary is void.
Any person who willfully gives false notice of his claim to the owner forfeits his lien. Any person who shall willfully include in his notice of claim work not performed, or materials not furnished for the property described in the notice forfeits his lien.
No mistake or errors in the statement of the demand, or of the amount of credits and offsets allowed, or of the balance asserted to be due the claimant, nor in the description of the property, invalidates the lien, unless the same appears to the court to have been made or done with intent to defraud.IX.

Trusts and Agency

175.	We treat of these subjects together as in many respects the law applies alike to each. A trustee has all the powers of a general agent for the property held by him added to his ownership. An agent in many cases has as high duties and responsibilities as a trustee.
First as to Trusts: These states are of very ancient origin and it would seem that the law touching them should be fairly well understood by all, yet it is doubtful if there is any estate in land concerning which there is more confusion in the unprofessional mind. The very mention of the terms “trust” or “trustee” in connection with a title to land seems to cast a fog about the title in the popular mind.
The elementary notion of trusts was borrowed from the Roman law and was introduced into England under the name of “Uses” during the reign of Edward III. They were designed to evade the law and were resorted to at the first for mere purposes of fraud. The burdens of the fuedal estate were great and men would cover up their possessions to avoid them. It was not long after the introduction until the greater part of all the land in England was so held. In the beginning these conveyances to use were made for the benefit of a third person, and when these conveyances were pronounced valid by the Chancellor, conveyances to use were made for the benefit of the original owner, as, where “A” conveyed to “B” for the use of “A.” This converted his estate which was theretofore subject to fuedal burdens into an equitable estate which was unknown to the common law. This estate was upheld by the Chancery Courts and many frauds were committed and great injustice done. Various Acts were passed from time to time, including the famous “ Statue of Uses ” paused during the reign of Henry VIII, and after a bitter warfare between the Courts of Law and the Chancery Courts the doctrine was finally settled that one may deed to a second party for the benefit of a third; that the second party has the legal title and the third party the equitable title. Through long years of enactments and decisions the law of trusts in land has been fairly cleared and the former evils done away with. In this state trusts are defined by the statute and any

attempted trust which does not fall within the classification of the statute is void.
176.	There are classes of trusts which must be distinguished. An express trust sometimes termed a “ specific ” trust, is created by agreement of the parties expressed in the deed or declaration of trust executed concurrently with the deed. It can be creatd only for certain purposes and within certain bounds as we shall see later. This express trust must not be confounded with the trusts which the.law imposes under certain conditions. Thus, one who wrongfully detains land is an involuntary trustee for the benefit of the owner. He has no powers whatever except to convey to the owner, so likewise, one who gains land by fraud, accident, mistake, undue influence, the violation of an express trust, or any other unlawful means, holds as trustee for the true owner.. A resulting trust arises where the consideration for a transfer is paid by one party and the deed taken in the name of another. Frequently a number of parties unite in a purchase taking the title in the name of one for convenience. The one so taking is trustee for the others under a resulting trust. He has no powers except to convey to his coowners. The trustee under a deed which attempts to create an express trust and fails in the statutory requirements is a trustee under a resulting trust for the one who paid the consideration. No such trustee has any power to deal with the land except to convey to the person entitled thereto. Suffice it to say that any trustee, other than one holding under a valid express trust, has no powers as such. Of course one dealing with a trustee who has no knowledge of an existing trusteeship, in good faith and for value, will be protected. (Sec. 856 C. C.). But where one has notice of a trust of any character he is accordingly bound, and if he acquire title from any other than a trustee under a valid express trust he but steps into the shoes of his grantor and becomes himself such a trustee. (See Par. 44).
An instance of notice to a purchaser is of value. A very interesting case is Hassey vs. Wilke reported in 55 Cal. 525. Here Mrs. Hassey brought suit to have the defendant Wilke decreed to be a trustee for her in respect to certain real property and to compel a conveyance from him to her. Hassey conveyed the property to his wife in 1868. It thus became her separate property. Later the husband borrowed $10,000 of Luning, executed his note therefor, and Mrs. Hassey, at her husband’s request, joined in a mortgage on the property to secure it. This mortgage was foreclosed and the husband furnished the money to one Burling to bid in the property. A sheriff’s deed was executed to Burling, and immediately afterwards Burling deeded to the husband and the deed to him was recorded. Some two years later, Hassey who was indebted to the defendant Wilke, executed to Wilke a deed of the property in satisfaction of the debt. Wilke testified that he had no actual knowledge of the fact that the land was the separate property of Mrs. Wilke when she executed the mortgage and that he made no examination of the title. The court held that in mortgaging her separate property to Luning, as between herself and her husband, she was surety only, and that when the husband purchased the property through Burling at the foreclosure sale he was but paying his own debt and that he took the property in trust for his wife; that Wilke, who was deemed to have notice of this fact, simply stepped into the husband’s shoes and became the trustee under a resulting trust for Mrs. Hassey.
When one takes title from such a trustee with notice of the trust he must see to the application of the proceeds and must know that they reach the one entitled thereto, and knowledge of the agent of the purchaser is notice to the purchaser. A purchaser, however, from the trustee under a valid specific trust, authorized to sell, is not bound to see to the application of the purchase money. And where one buys from any other trustee without knowledge or notice of existing equities, he takes the title free of equitable claims, as no implied or resulting trust can prejudice the rights of a purchaser or encumbrancer in good faith and for value and without notice of the trust. Any notice or information received by one dealing with the land that the one with whom he is dealing is not the true owner of the land is sufficient to take him out of the class of innocent purchasers, and if he take over the land where he has means of acquiring such knowledge on proper inquiry and fails to make inquiry he takes the same title as the trustee held and must account to the true owner. (See Par. 44.)
177.	Sharply distinguished from the class of trusts above treated of is an express, or specific trust created by the agreement of the parties, either set forth in the deed, or in a declaration of trust executed by the parties contemporaneously with the execution of the deed, and as a part of the same transaction.
It is of the utmost importance to know what stipulations and agreements are permitted to be entered into between the parties to such a trust. The laws of California are rigid and many trusts which would be perfectly lawful in other jurisdictions are unlawful in this state by reason of the prohibitions of the statute. The courts of this state have held repeatedly that no express trust in real estate is valid in California unless it be one of the classes
12enumerated in the statute, and that all trusts which are not specifically authorized by the statute are void in their creation. Thus it happens that lawyers in other jurisdictions, not knowing of these decisions are misled very frequently into thinking that the laws of this state in this regard are the same as their own. The penalty for the avoidance of the statutes, or failure to strictly comply with their provisions, are very severe. If “ A ” make a deed to “ B ” for the benefit of “ C ” and “ C ” paid no consideration, and the attempted trust be not of a class permitted by the statute, the deed is void and “ B ” has no title for any purpose, but he should reconvey to clear the record. If, however in such a transaction “ C ” pays a consideration “ B ” holds for him as a resulting trustee and must convey to “ C.” Any one dealing with “ B ” with notice of the trust must see to it that the trust created is valid, otherwise the deed to him is of no effect, and he simply holds as a resulting trustee for the owner of the land. (See generally 33 App. 710: 43 App. 716: 73 Cal. 510: 40 App. 782.)
178.	If one in making a will attempts to create a trust not permitted by the statute, then as to the property affected he dies intestate, and the property goes to his heirs at law regardless of the will. In nearly all jurisdictions if a trust be invalid by reason of prohibition of any statute or of the common law, the trustee yet has title to carry out the trust as nearly as may be; at least he is vested with a title, but in this state under similar circumstances he takes no title at all, the devise to him being void.
179.	An express trust may be void in the beginning, yet if the pprties proceed under it and it be fully executed and carried out in all respects as equity would demand, then it can no longer be questioned, as the parties will not be permitted after they have once dealt with the property in accordance with the trust, to say that it was invalid. This is wholly based on the doctrine of estoppel. The rule does make a void trust a valid trust. Likewise where an invalid trust is created by a will and the court in ordering distribution of the estate construes the will, and the trust be carried into the decree, after the time for appeal has expired the decre governs and supersedes the provisions of the will, and is safe from attack when the lands are in the hands of a purchaser for value.
Formerly a trust to convey over to another was void under the laws of this state. This point was fought out in the Fair Will Case. Now, however by statute such a trust is valid, but it should appear in the instrument creating the trust that it is the intent to vest a present interest in the beneficiary, subject to the terms of the trust. (37 App. Dec. 306.)Remember then that no express trust in real estate will be upheld unless it falls under the classification of the statute.
Now as to these classes: Sec. 857 C. C. declares that express trusts may be created for any of the following purposes:
1.	To sell real property and apply or dispose of the proceeds in accordance with the instrument creating the trust.
2.	To mortgage or lease real property for the benefit of annuitants or other legatees, or for the purpose of satisfying any charge thereon.
3.	To receive the rents and profits of real property and pay them to or apply them to the use of any person whether ascertained at the time of the creation of the trust or not, for himself, or for his family during the life of such person, or for any shorter term, subject to the rules of Title 2 of this Part. Or,
4.	To receive the rents and profits of real property and to accumulate the same for purposes and within the limits prescribed by the same Title.
Now as to the first clause. It has been held that in a trust to sell real property that the power of sale must be mandatory. (32 App. Dec. 746.) It cannot be left to determination by agreement whereby the powers of the trustee are taken away from him, as for instance, that the trustee cannot sell without the consent of the beneficiary, or some other person. The trust need not recite that the property be sold forthwith, but it must appear in plain terms that the property is to be sold. It may be expressed that the trustee shall sell at such time, or on such terms as he shall deem best, and a price at which he shall sell may be fixed, yet the trust will be mandatory if positive direction and power be given to sell in any event, and the trust is valid even in case the trustee never sell; at least the trustee takes a title under such an instrument. After the trust has been lawfully created the parties thereto can do as they see fit in regard to sale, or in the matter of any agreement relating thereto, but these matters must not appear in the instrument creating the trust, otherwise no trust is created at all and the trustee has no title. It follows that the instrument creating the trust must not provide for a disposition of the proceeds of any sale in any manner in which it would be unlawful to devote the land.
A trust, however, may be invalid as to part and valid as to the remainder, in which case if the trusts can be separated; if they be not so interwoven that should one fall, all must fall, then the trust will not be held wholly void on that account.Up to July 27, 1917, the statute declared that any trust is void in its creation which by any possibility suspends the power of alienation beyond the lives of those in being at the date of the creation and interested in the trust. Sec. 715 C. C. was amended on that date and fixes a period of twenty-five years from and after creation of the trust during which this power may be suspended, but as pointed out in the discussion of the subject of Covenants and Conditions, it will not be wise to rely upon this amendment until it has been sustained by the courts. This for the reason that it appears to be in conflict with other sections of the Codes. The power to mortgage or lease property is for the benefit of annuitants or other legatees or for the purpose of satisfying any charge thereon. The trustee has not the power to lease for a longer term than the period of his trust, unless the declaration of trust provides in terms to the contrary, nor is he permitted to mortgage except for the purposes enumerated in the statute. A trustee cannot mortgage the trust property simply to supply funds to the beneficiary if the demand does not fall under the statute. Hence it behooves one loaning money to a trustee to know the scope of his powers and whether or not they are being properly exercised. The trustee must pay out all the income, and is not permitted to accumulate, except that income payable to minors may be accumulated until they arrive at legal age. These provisions do not apply to charitable trusts such as foundations for schools, churches and the like such trusts may be in perpetuity. Understand this clearly: Any beneficiary may compel the distribution of income, but if he be competent to contract, and sees fit to leave the income with the trustee for accumulation or investment, no one else can complain, but the instrument creating the trust must not so provide, otherwise the trust is void.
Such a trust cannot be revoked by the creator unless he reserve that right in terms in the instrument creating the trust. A trust may be always terminated at any time by consent of all parties in interest, but this does not mean that the trust can be terminated or altered after the death of the creator, for his consent can no longer be obtained, and the beneficiaries and the trustee cannot simply because they are dissatisfied with the terms of a trust terminate the trust, or alter the conditions at their pleasure. There are cases, however, where the object of the trust was accomplished and nothing remained to be done to carry out the will of the testator, where the trust was terminated by consent of the beneficiaries alone. In such a case it would not be requisite to secure the consent of the trustee, as after the trust be fulfilled he holdsbut a bare, naked title which he may be compelled to convey; but let it be well understood that this rule does not apply in cases where it is sought to alter or defeat the purposes and intent of the testator after his death.
A trust to sell is not a trust to exchange. (Devlin 3rd. Ed. 1-659.) Without doubt in a case where the parties in interest are legally competent to contract, and all agree upon an exchange of property held in trust for other property to be held under the same trusts, that equity would support such a transaction by application of the doctrine of estoppel, but a trust to exchange not being named in the statute as permissible, it is more than probable that the courts called upon to construe a trust delegating such powers in terms, would pronounce the trust void as not falling under the statute. We find no case where this point was directly involved but the court has held that a power to sell is not a power to exchange. The disposition of income cannot be left to the discretion of the trustee, as in a case where a testator directs his trustee to pay to certain beneficiaries the income at such time and in such amounts as the trustee shall deem best. The income must all be disposed of, except in the case of that payable to minors, which may be accumulated until they reach legal age.
181.	Spendthrift trusts are lawful in this state. That is to say, the creator may provide in the trust instrument that the interest therein of a beneficiary shall not be subject to assignment, advancements or demands of creditors. This does not apply to cases where the creator of the trust is himself the beneficiary; as in a case where “ A ” deeds to “ B ” and it be stated in the deed that the income is to be paid to “ A,” free from the demands of creditors, this would be but an attempt to sequestrate his own property, (72 Cal. 182) whereas if he make a deed creating a valid trust for the benefit of a third person he may make it upon such terms as he sees fit as to the use of it. This of course applies only to voluntary trusts.
182.	The beneficiary under a trust may be the trustee, but it is not good practice ordinarily to so constitute him. The courts will very carefully scan the acts of a trustee acting in his own behalf. Where there are several trustees, all must act together, but in case any one or more of them is dead, the survivor or survivors may act, unless it be otherwise prescribed by the instrument creating the trust. Upon the death of a trustee, or in case of his inability to act, or in case of resignation, the power falls upon the Superior Court, and a new trustee may be appointed upon petition.

A trustee who has accepted an express trust cannot resign at his will. He must continue to act unless there is some good reason for his resignation, but where the trust is gratuitous he may resign at will.
The trustee is entitled to compensation depending upon the circumstances of the trust. He cannot delegate his powers but he may employ others to perform purely ministerial acts. Cases have been known where trustees conveyed the trust property to others in an attempt to substitute a new trustee. This deed is void for the purpose as no trustee can delegate his powers, and a person so designated as the new trustee has no power whatsoever.
As stated above a beneficiary under a valid express trust takes no interest or estate in the property, the subject of the trust, but he may enforce the performance of the trust. Note the difference here between the effect of a deed to a trustee under a valid specific trust authorized by the statute and a deed given to a trustee to secure the payment of money. In the first instance the trustee has the full title, legal and equitable, at all times. In the second instance the trustee has such title as is necessary to the trust to protect it, and which does not come into force and vigor until the necessity arises. The trustee in the latter case has the title at the time the hammer falls on foreclosure sale, and can pass the title to the buyer but until that instant of time he has no title that he can deal with as an owner.
Where an express trust is created in fact, and the terms thereof do not appear in the deed to the trustee, or by an instrument signed by him and recorded, such grant must be taken as absolute in favor of a purchaser from such trustee who had no knowledge of the trust and who pays a valuable consideration.
One who in good faith transfers any money or other property to a trustee, as such, under a valid specific trust, is not bound to see to the application thereof, and his rights can be in no way prejudiced by misapplication thereof by the trustee, but such a one must know that the trust is valid and that the trustee is not violating its provisions, for any act of the trustee, or any transfer by the trustee in contravention of the trust is void, and one who is aware of this violation and yet pays money to the trustee stands a very good chance of losing it.
183.	A trustee must fulfill the purposes of the trust as declared in its creation, and must follow all the directions of the creator given at that time, except as modified by the consent of all parties interested, in the same manner and to the same extent as an employee. A trustee, whether he receive any compensation or not,must use at least ordinary care and diligence in the execution of his trust, and he must look to it before he resign or is discharged that a trustworthy successor be selected before accepting his own final discharge. He must invest money received by him as fast as he collects a sufficient amount in such manner as to afford reasonable security and interest for the same, and if he omits to do this he is held for simple interest thereon, if such omission be negligent only, and compound interest if it be willful. A trustee cannot enforce any claim against the trust property which he purchases after or in contemplation of his appointment as trustee, but he may be allowed by the court to charge to the trust property what he has paid for the claim upon his making discharge.
A discretionary power conferred upon a trustee is presumed not to be left to his arbitrary decision but may be controlled by the court if not reasonably exercised unless an absolute discretion is clearly conferred by the trust instrument.
A trustee cannot deal with the trust property for his own benefit, nor can he acquire any title thereto adverse to the trust, nor accept any other trust which is hostile to the one first held by him. A trustee is also held to the highest good faith and is responsible for the wrongful acts of a co-trustee to which he consents or which by his negligence he enabled the latter to commit. If he uses the trust property, or disposes of it in any manner not authorized by the trust, but in good faith, and with intent to serve the interest of the beneficiary he is liable to make good only what is lost to the beneficiary by his error. If he uses or disposes of the property for his own benefit he may, at the option of the beneficiary, be required to account for all profits and with interest. He may not obtain an advantage over the beneficiary by the slightest misrepresentation, concealment, threat, or adverse pressure of any kind, and he must not use influence which his position gives him to obtain any advantage from the beneficiary, and all transactions between the trustee and his beneficiary are presumed to be entered into by the latter without sufficient consideration and under undue influence. The trustee who willfully and unnecessarily mingles the trust property with his own so as to make it appear that he is the absolute owner is liable for its safety in all events and for the value of its use.
184.	Remember these things:
An express trust (and this means a specific trust) in real estate is void if it does not fall under the provisions of Sec. 857 C. C. It is void in other than charitable trusts if the property isto be held perpetually, or the proceeds of any sale are to be held perpetually, or for any term beyond that permitted by statute.
Remember that a trust which by any possibility suspends the power of alienation beyond the statutory period is void in its creation. That the power of sale given to the trustee must be absolute and mandatory and not dependent upon the consent of any other person. That a trust for the accumulation of income except for the use of minors is void. That prior to August 19, 1913, a trust to convey over is void.
Remember that a deed to a person or persons as trustees for an unincorporated association vests the title in them individually. They have no powers as they would have under a valid express trust. They hold merely in trust for the individuals who furnish the money and upon death of such a trustee his interest descends to his heirs. (38 App. Dec. 779.) In such a case where no consideration is paid the grantee either takes no title at all or is trustee under a resulting trust for the grantor. (124 Cal. 418.)
Remember that a trustee under an express trust cannot create a trusteeship in another by conveying all the trust property to him, and that a trust once lawfully created cannot be terminated or amended only by the consent of all parties thereto, and if the trust be a gratuitous one, as under a will, and the one creating be dead, the trust cannot be terminated or amended by agreement of the trustee, and the beneficiaries unless the whole object of the trust be accomplished and there remains nothing further to do in the matter (182 Cal. 177.)
Remember that the trustee’s powers are measured by the terms of the instrument creating the trust. A trustee has always power to do anything necessary to the preservation of the trust estate, but these implied powers in cases where doubt arises should only be exercised under direction of a court having jurisdiction.
185.	The discussion on Agency will be confined to such agencies as pertain to real estate. There is a vast deal of law governing the subject and we cannot hope to touch on more than the salient features. Anyone capable of contracting may appoint an agent or act as agent. Where the thing to be done by an agent is required by law to be by an instrument in writing, the agent’s authority must be in writing and his powers are strictly measured by the terms of the writing. Thus the authority of an agent to sell land must be in writing or he cannot recover commissions or other compensation (35 App. 177), but this does not apply to agreements between brokers to pay for services. (24 App. 270: 30A defective description in the written authority to a broker may be corrected by parol evidence. (37 App. 720.)
A written description to an escrow holder to pay a broker’s commission from proceeds of the escrow when completed, and the escrow is never completed, is not a sufficient ratification of a previous oral agreement to pay a commission. (37 App. 418.)
The authority is often granted by power of attorney or by a writing giving the agent particular powers to act for the principal. These instruments are strictly construed and the agent has none of the implied powers of a trustee. He can only act within the scope of his authority as shown by the instrument. For example, a writing authorizing a broker to sell real estate upon certain terms and receive deposit, does not authorize him to execute a contract of sale. (32 App. 4: 43 App. 748.) Much confusion arises and often loss is suffered from omissions or inapt use of language. It is a cardinal rule that such instruments should clearly express in terms what may be done by the agent. If he has authority to convey it must so appear, as a power to sell is not a power to convey. When the power of attorney is special, it cannot be enlarged by the general terms. Thus, if the power be to sell a certain piece or land, followed by the words “ and to make, do and transact every kind of business of what nature and kind soever, giving and granting to said attorney full power and authority to perform all and every act and thing whatsoever requisite in and about the premises,” these latter clauses do not authorize the attorney to make conveyance unless the power be otherwise given. They are held to apply only to the exercise of the special power to sell (82 Cal. 1.) A power to mortgage does not imply a power to convey by trust deed, for the principal may well give power to mortgage whereby he has the equity of redemption after sale on foreclosure, and net intend to authorize a trust deed whereby he would lose that right. A power to transfer is not a power to mortgage. (119 Cal. 531.) A power of sale is not a power to exchange for obvious reasons. The principal may be satisfied with a cash sale and yet not be willing to take his agent’s judgment of value of property taken in lieu of cash (Devlin 3rd Ed. 1-659). An attorney in fact or other agent cannot deal with the property for his own benefit without the consent of his principal and any attempt to do so is presumed to be fraudulent. The attorney in fact, or other agent, cannot act in any manner without a full and adequate consideration moving to his principal unless it be otherwise stipulated in the power. (79 Cal. 115). He cannot deed in settlement of disputed claims (40C. D. 267). A power to sell may be held to imply power to dedicate ways. (Devlin 3rd Ed. 1-659).
186.	An agency of any character can always be revoked at any time by the principal unless it be coupled with an interest held by the agent. A principal has the power to revoke an agent’s authority at any time before the agent has completed performance, save in the case of an agency coupled with an interest, but that interest must be in the land and not in the proceeds of sale. There must be a consideration for an irrevocable power. The principal may be liable for damages to the agent, if he arbitratily revokes authority which he has given for a certain period. The power may not be binding by reason of no consideration but the liability of the principal to the agent whom he has permitted to act under it is another matter. (185 Cal. 415.)
A writing authorizing an agent to negotiate an exchange of property for the property of a particular person which provided that the offer expressed in the writing should become revoked unless accepted within a specified period indicates an intention that the agent should have the right during that period to procure an acceptance and the owner has not the right during such period to revoke the agency so as to deprive the agent of compensation. (31 App. Dec. 870.) A broker’s contract of employment is subject to revocation by the seller at any time before full performance is offered, unless it contains some condition giving to the broker a particular and stated time within which to perform. (38 App. Dec. 701.)
One can pay a valuable consideration for an agency, or may have an interest with his principal in the property which would be affected to the agent’s detriment by revocation. In such cases the principal cannot revoke without the consent of the agent unless the instrument creating the agency expressly provides that he may do so.
Automatically a revocation is worked by the death of the principal or upon his being adjudged incompetent or a bankrupt. Likewise is the agency terminated upon the agent being adjudged incompetent, and if the powers and authority granted rest upon a personal confidence reposed in the agent, upon his being adjudged a bankrupt.
One then dealing with an agent must look to his powers and authority to act. He must examine the records and otherwise make diligent inquiry to see if the authority has been revoked, or if it has been terminated by the death, incompetency or bankruptcy of the principal, or the incompetency or bankruptcy of the agent.The extent of this inquiry must be governed by the circumstances of each case.
187.	An agent cannot delegate his authority to another unless he is especially authorized so to do and the power of substitution granted authorizes an agent to take his place and perform his duties as agent for the principal. (101 Cal. 367: 7 Cal. 535).
An agent must deal in highest good faith with his principal and is held to account for everything he receives for his principal’s account, and this even when the agency is gratuitous (44 App. 390)
An agent cannot, except with the full knowledge and consent of his principal, assume any duties or enter upon any transaction concerning the subject matter of the agensy representing interests adverse to those of his principal. (32 App. 25.) The right of an agent to recover commission on effecting an exchange of property is lost when he deliberately sets about to force his principal to pay more to the other party than he is willing to accept. (33 App. Dec. 1.) Thus, where the contract is that “ A ” shall have the exclusive right to sell land belonging to “ B ” for a certain sum, any amount received over and above that sum belongs to “ B ” unless the contract is to the effect that “ A ” shall have as his own all over and above such sum. If you are taking a contract to sell property under such circumstances, and it is agreed that you are to have as your own all over and above the set sale price, see to it that it is so declared in the contract.
An agent who simply brings buyer and seller together and they make their own contract, and the agent be not clothed with some discretion in the matter of advising or negotiating the sale, he is not precluded from taking commissions from both parties. (24 App. 229; 38 App. 71), but otherwise he cannot do so unless each party has full knowledge of the facts concerning the agreement of the other to pay compensation (37 App. 319.) And the payment of a commission by the agent of the vendor to the agent of purchaser by agreement unknown to the purchaser renders the contract voidable at election of purchaser, provided he acts in a reasonable time after discovery of the fraud. (31 App. Dec. 932.)
188.	When an agent for the sale of land has secured a purchaser ready, able and willing to purchase or in case he is an agent to procure a loan and secures a person who is ready, able and willing to make the loan he has earned a commission, and it has been held that he has earned his commission when he has procured the consent of an intending purchaser or mortgagee to an offer of sale, exchange or to mortgage if the contract provides in terms that he shall be so entitled upon obtaining the more consent of theacceptor. When the seller accepts the purchaser procured by the broker he is estopped from denying the purchaser’s ability or willingness to complete the purchase and the broker has earned his commission. (37 Cal. 381: 37 App. 709.)
Under an agreement to pay a broker a commission when sale is consummated the commission is earned when a purchaser ready, able and willing to purchase is produced regardless of consummation of sale by passing deed (175 Cal. 746). Where the principal accepts terms offered by a buyer produced by an agent the agent is entitled to his commission, although the terms vary from those given in the authorization. (35 App. Dec. 357.)
A broker cannot recover commissions from a vendor for negotiating a contract of sale the terms of which the vendee cannot perform and where the broker induces the vendor by means of false representations as to the financial ability of the vendee to enter into the contract (38 App. Dec. 636.) A refusal of the wife of a vendor to join in a deed conveying the subject to the agency does not deprive the broker of his right to compensation. (39 App. Dec. 241.)
(See generally 37 App. Dec. 421: 37 App. Dec. 579.)
The above are cardinal rules and the cases in which it is sought to enforce them are legion. The question of liability is to be determined by the facts and circumstances in each particular case, always considered from the standpoint of fairness, good faith and square dealing. An exclusive agency, where there is a consideration paid for it, entitles the agent to commissions even when the land is sold by the principal without intervention by the agent if the contract so provides, if not, so provided the agent cannot recover in such a case. (29 App. 246.) As we have seen before the agency can be terminated at any time by the principal, unless it be given for a consideration, but only when the principal acts in good faith and before the agent finds a purchaser, and it may be so revoked if the owner sell to one who is a purchaser not found by the agent.
If an agent sells by an unrecorded map he cannot collect commissions as the act is unlawful (22 App. 512: 30 App. 63.) A real estate broker cannot collect commissions if he has no license as such broker. As to whether the provision of the Real Estate Brokers Act requiring that plaintiff allege in his complaint to recover that he has a license is constitutional remains an open question. On petition for hearing after judgment in Circuit Court of Appeals in case of Beebe vs. Kistler, (35 App. Dec. 92), the Supreme Court held that this point is not decided. (62 C. D. 56.)Since the passage of the Act of 1919, (Stat. 1919, Page 1252), creating a State Real Estate Department a broker or salesman cannot sue to recove commissions without alleging that he was duly licensed under the law at the time his cause of action arose. (35 App. Dec. 92). But he is not precluded from recovering at time his cause of action arose although his contract may have been executed prior to that time when he had no license. (35 App. Dec. 470.) One desiring to engage in the real estate business must secure a license as a broker under recent acts. Application should be made to the State Real Estate Commissioner.
189.	Now as to transactions which are popularly denominated “ escrows.” It must be borne in mind that a purely legal escrow is created by the deposit of a grant with a third person to be delivered to the grantee upon performance of conditions certain and determined in advance and all agreements made and there be nothing further requiring consent or meeting of minds. When this is done, the grantor has surrendeed all dominion over the deed and he cannot recall it. (See paragraph touching delivery of deeds.) However, where such a deposit is made and there yet remains something to be agreed upon between the parties; in short, if the contract is not executed and complete, the depositary holds as agent for the grantor, and when the grantee deposits his documents or money the depositary is then the agent of the grantee as well. When a deed is deposited under a legal escrow the authority of the depositary cannot be revoked without the consent of both parties, but where the instruments and money are deposited under such circumstances as constitute the depositary the agent only of the one making deposit, this authority is revocable. Bear in mind, here the sharp distinction between an escrow which is an executed contract and nothing rmeains as a matter of agreement, and a so-called “ deposit in escrow ” where the contract is executory and there remain further matters of settlement and agreement. In the first case the authority of the depositary cannot be revoked, and in the second case it can be. The depositary being the agent of the parties the principals are bound by all notices or matters coming to the knowledge of the agent which affects their inteest or the title. The agent is held to the highest good faith. He must know that the instruments deposited are not forged. (36 App. 699.) He must act in an absolutely impartial way and not attempt to act as judge in case of disputes between the parties. Where parties under valid consideration make a delivery of a deed conditioned upon the payment of money, or the rendering of further consideration to the grantor they may, as a part of the transaction, create avalid escrow. The escrow holder is the agent of the grantor for the purpose of holding the deed and receiving the purchase price to be paid by the purchaser, and it has the obligation to return the deed at the end of the time fixed if payment is not made. Under such circumstances the vendor has no right to withdraw the deed until the expiration of the stated time as by such an escrow deposit the depositary becomes a trustee under an express trust and when the vendee has rendered the consideration required into the hands of the trustee, the escrow holder becomes the agent of the grantee in the holding of the deed and the grantor loses his right of property therein. The wrongful delivery by an escrow holder contrary to instructions under which he holds the instrument will confer no title, particularly against those who take with notice. (37 App. Dec. 27.) Observe that in this case there was a legal escrow and a consideration paid.
While it is true, that in cases where a purely legal escrow is not created that the instruments or money deposited may be withdrawn at any time upon demand of the depositor, that it is to say, it is his legal right so to do, and one enforceable by legal action, the depositary should not surrender either instruments or money after the conditions of the deposit have been met and the parties have once agreed. This as a matter of pure business policy. We will take a case where “ A ” deposits his deed with B ” with instructions to deliver to “ C ” within ten days if “ C ” pay the consideration or to secure for him a note secured by mortgage for the balance of the purchase price. He can withdraw the deed and instructions any time before “ C ” has met these conditions. At any time before the transaction is completed either party may demand return of his deposit and the holder can surrender without laying himself liable. However, after the transaction is completed and everything is in the depositary’s hands, the contract be executed all save actual delivery, he should not surrender either documents or money without the consent of both parties. It is a growing practice in the State to conduct real estate transactions under conditions cited above. It is a highly commendable practice, one facilitating business and making for the safety of the parties, and such practice should be understood in all its details and legal aspects and encouraged. It is not in our opinion advisable to tell your client that when he has deposited his money or his documents that he has lost control of them. It appears to us much better to have him know the respective legal rights of the parties and for him to know what the duties and responsibilities of the depositary really are. Very frequently parties disagree and fall apart in their negotiations andeach demands of the depositary that he do something for his benefit, as, where having failed of agreement on some point, the grantor insists that the escrow holder shall retain the money deposited by the grantee until receiving further orders from the grantor, or the grantee demands that the deed be held by the depositary until he orders differently. The duty of the agent is, if possible, to obey the directions of both his principals, but if he cannot do this and the demands be conflicting, he is entitled to keep all deposits, suspend all operations under the combined instructions, and leave the parties to their legal rights. In such a so-called “ escrow ” the death of the principal terminates the agency. We advise that in all cases where it be possible a valid executed agreement for the sale and purchase of the land be first entered into and deposited with the papers with the agent.
The depositary, as we have seen, is trustee for all parties and must be in all things fair and impartial. Many cases arise where the depositary by exercise of good judgment is able to reconcile differences between the parties. No iron bound rule can be laid down for handling of such transactions, bearing in mind however, this one rule applies to all: that the “escrow holder” is the agent for both parties and owes each an equal duty.X.
Wills and Law of Succession
190.	It must be borne in mind that until the adoption of the amendment of 1923 upon the death of the wife before the husband, all the community property was vested in the husband without administration of her estate. Her’s was but an expectancy during the life of the husband and died with her. (See Amendment of 1923 Par. 208). Upon the death of the husband, leaving a wife, one-half of the community property is vested in the wife, subject to payment of the debts of the community, and the husband can dispose of but one-half of the community by his will. But he may in his will charge his half with the debts of the community. (184 Cal. 307). If he attempt to dispose of all the community, the widow may claim her half or accept the provision of the will as she may elect, but it must plainly appear from the language of the will that the testator intended to deal with the whole of the community and not his half of it before she is required to elect. It has been held that where the testator devised “all my property” that he intended to devise only his half of the common property. If it clearly appear from the language of the will that he did intend to deal with the whole of it and the provisions of the will are inconsistent with the legal rights of the wife, she is put to an election. She cannot accept the benefits of her succession and of the will as well if they be inconsistent. As I have said, it must clearly appear, however, that it was the intent to put her to an election before she will be held to do so. The will should clearly show then that the testator intends to deal only with his separate property and his one half of the common property, if that be the intent. If otherwise, the will should so state that the widow will know of the testator’s intent and act accordingly. Many instances occur in the books where sales have been made by the executor ,either under power in the will, or by order of court, of the whole of the property and afterward the widow has recovered half of it from the purchaser or his successors. See to it then if you purchase land at an executor’s sale that he is not attempting to sell the whole of the community without the widow’s consent. The will does not operate on the homestead if it be such as vestsabsolutely in the survivor. Every other estate or interest in real or personal estate to which heirs, husband, widow or next of kin might succeed can be disposed of by will.
191.	Every person over the age of 18 years, of sound mind may dispose of property by will. (Sec. 1270 C. C.) A will or part of a will procured to be made by duress, menace, fraud or undue influence may be denied probate and a revocation procured by the same means may be declared void. A married woman may dispose of all her separate estate by will without the consent of her husband (Sec. 1273 C. C.) and perhaps one half of the community (Amendment 1923).
192.	Any person capable in law of taking property may take under a will, except that corporations other than counties, municipal corporations, and corporations formed for scientific, literary, or solely educational or hospital purposes, cannot take under a will unless expressly authorized by statute. (Sec. 1275 C. C.). No estate can be bequeathed or devised to any charitable or benevolent society, or corporation, or to any person or persons, on trust for charitable uses, except the same be done by will duly executed at least 30 days before the decease of the testator, and no such devises, or bequests shall collectively exceed one third of the estate of the testator leaving legal heirs and in such case pro rata reduction shall be made to reduce the aggregate to one third of the estate, and all disposition contrary to the statute is void and the property goes to the residuary legatee or devisee, next of kin, or heirs, according to law. (Sec. 1313 C. C.).
This section was amended July 27th, 1917 by adding the words: “provided further that bequests and devises to the state, or to any state institution for the use and benefit of the state, or any state institution ,are excepted from the restrictions of htis section.” As these prohibitions are in the interest of a residuary legatee, devisee or heir at law and may be waived by them, and after time for attack has passed, such prohibited devises or requests would stand. This section provides no limitation upon gifts in general for charitable purposes but places such limitation only upon gifts to charitable corporations or societies or in trust for charitable purposes. (181 Cal. 758). A charitable corporation is one organized for the purpose among other things of promoting the welfare of mankind at large or of a community, or of some class forming a part of the whole indefinite as to number or individuals. A bequests made to a charitable or benevolent corporation within 30 days prior to the death of the testator is valid under Sec. 1313 C. C. (186 Cal. 64: 186 Cal. 826). A bequest to the use of a municipalityof an estate for erection of a purely municipal improvement is not within the provisions of the section. (186 Cal. 643).
193.	Now as to execution of wills.
The due execution of a will is a question of fact to be determined by the court . (183. Cal. 284).
An holographic will is one that is entirely written, dated and signed by the hand of the testator himself. The date must be the day, month and year but the will is not invalidated by error in any. (174. Cal. 122).
It is not subject to any other form and may be made in or out of the State, and need not be witnessed, but if witnessed it is valid. (78 Cal. 497).
Here we call attention to certain vital features. The statute must be exactly followed or such a will is void. Observe that it must be the hand of the testator himself. It cannot be typewritten, and if the paper contain anything not written by the hand of the testator, except the signatures of witnesses, such as a date line or letter head, it is void. A recital in the body of such a will such as, “I, John Doe,” etc., has been hold to be sufficient signing, even if not signed at the end, but this does not apply to other wills which must be signed at the end (146 Cal. 455: 112 Cal. 513). It was held in Estate of Manchester (174 Cal. 417) that such a will must be signed by testator; that the writing of his name in the body of the instrument is not sufficient, but in the Estate of McMahon (174 Cal. 423) the court says that if by apt language it can be made to appear that the name written in the body of the will was intended as a signature, it is sufficient. But in the absence of anything on the face of the will showing that testator intended his name in the body of the will to be his signature an holographic will cannot be deemed valid unless actually signed. (178 Cal. 713).
More litigation over estates has arisen, and more property diverted contrary to the intent of the owner through the practice of the testator drawing his own will than from any other cause. In such a solemn and important act one should have the best of guidance, for after the death of the testator his intentions are to be determined from the cold words of his will—no court can read words into a will. The one who wrote the words cannot be heard. The law, for reasons of public policy, permits persons to dispose of their worldly goods within certain limits, but it must always be remembered that this is an indulgence granted by the State, and that in truth and in fact a dead man owns nothing. One should at least give a share of the caution and care in the disposal of his estate that he gives in acquiring it. You will not accept a deed until youare satisfied it conveys title to you. If you desire the property to pass to your beneficiaries, without entanglement, common prudence would prompt you to take precautions. The books are full of cases where men have defeated their purposes through ignorance of the elemental rules which goven wills. The rules are simple enough but they are vital. We offer this sincere advice. Do not attempt to draw your own will unless the emergency be great. If you do, see to it that every word on the paper is written in your own hand. Use an absolutely blank sheet. Remember that it must be dated in your own hand; that everything written on the paper must be in your own hand, and that you must sign it in your own hand, either in the body of the instrument or at the bottom. The safest rule to follow is not to attempt to draw such a will at all. Instances are very rare where nuncupative, or unwritten wills are probated, yet there are allowed under the laws of this State under certain circumstances. The requisites are that the estate bequeathed must not exceed $1000.00 in value. The will must be proved by two witnesses who were present at the making thereof, one of whom was asked by the testator at the time to bear witness that such was his will, or to that effect. The decedent must at the time of making the will have been in actual military service in the field, or doing duty on shipboard at sea, and in either case in actual contemplation, fear or peril of death, or the decedent must have been at the time of his declaration in expectation of immediate death from an injury received the same day. Such a will cannot be probated unless offered within six months of speaking the testamentary words, nor unless the words or substance thereof be reduced to writing within 30 days after they are spoken.
A will should clearly identify the testator. It should state whether he is married or single; what descendants he may have; and the character of the property sought to be disposed of, whether community or separate. While these statements are not conclusive they are of great value in determining the intent of the testator in case of dispute. The language of the will should be simple and direct and such as no man can misunderstand. The will should in terms revoke all former wills made for the last expression of the testator is deemed to be his true intent.
No will made out of this state is valid as a will in this state unles executed in accordance with the statutes of this state, except that where a will is executed by a non-resident in accordance with the laws of his place of domicile at the time of his death it is valid in this state so far as the same relates to personal property, barring the prohibitions against devise for charitable and similar uses asabove outlined. Foreign wills which have been admitted to probate in another jurisdiction may be admitted here upon production of the record of the original probate, and have the same effect as if probated originally, but this does not mean that a devise which would be valid as to real estate in the foreign country would be given effect here if contrary to our statutes.
Every will other than a nuncupative will must be in writing and every will, other than a nuncupative or holographic one, must be executed and attested as follows: 12 P. C. C.)
1.	It must be subscribed at the end thereof by the testator himself, or some one in his presence and by his direction who must subscribe his name thereto.
2.	The subscription must be made in the presence of the attesting witnesses, or be acknowledged by the testator to them to have been made by him of by his authority.
3.	The testator must at the time of subscribing or acknowledging the will, declare to the attesting witnesses that the instrument is his will, and there must be two attesting witnesses, each of whom must sign the same as a witness at the end of the will, at the testator’s request and in his presence, and the witnesses must be present at the same time, (175 Cal. 238), but it is not necessary that the witnesses sign in the presence of each other. (181 Cal. 106).
An attestation clause is not absolutely essential as facts of execution, etc., may be proved outside the instrument but it is good practice to affix one as it is at least prima facie evidence of the facts. We suggest the following form of attestation clause:
“The above and foregoing instrument was on this--------------
day of-------------signed by WilhelmKaiser in our presence and
the said Wilhelm Kaiser at the time of such signing, declared the same in our presence to be his last will and testament, and we, at the request of said testator and in his presence, and in the presence of each other, have signed our names as subscribing witnesses thereto.” Then follow with names of witnesses and places of residence of each.
A person who writes the name of the testator by his direction must sign as a witness and should state the fact. All beneficial devises, legacies and gifts whatever made or given in any will to a subscribing witness thereto are void, unless there be two other competent witnesses to the same, but a mere creditor is a competent witness. Sec. 1282 C. C.). If a witness to whom any beneficial devise, legacy or gift, void by the statute is made would have been entitled to any share of the estate if the will should not beestablished he succeeds to so much of the share as would be distributed to him, not exceeding the devise or request made to him in the will, and he may recover the same of the other devises or legatees in proportion to and out of the parts devised or bequeathed to them. Sec. 7283 C. C.). The witnesses to a will should be those persons who would be competent witnesses in any action. Their subsequent death or incompetency does not prevent the probate of the will as the court can always take other testimony. The law throws about the execution of wills certain formalities to prevent frauds. If you are called upon to witness the execution of a will see to it that you are not a beneficiary thereunder. Sign it only in the presence of the testator, and preferably in the presence of the other witness. See to it that the testator acknowledges the instrument to be his last will and testament and that he requests you to sign as a witness. If you write the name of the testator see to it that you so state and also state that it was done at his request. See to it that the signature of the testator and of any subscribing witness is at the bottom of the instrument. If you do not see to these requirements, the execution may be void.
194.	A prior will is not revoked by a subsequent will unless the latter contains an express revocation, or contains provisions wholly inconsistent with the terms of the former will; (Secs. 1922 C. C.: 1296 C. C.), but in other cases the prior will remains effectual so far as consistent with the provisions of the subsequent will, and if after making a will the testator duly makes and executes a second will, the destruction, cancellation or revocation of such second will does not revive the first unless the intent to do so appears. (Sec. 1296 C. C.). If, after making a will the testator marries, and has issue of such marriage, and the wife or issue survive him, the will is revoked unless provision has been made for such issue by some settlement, or unless such issue be provided for in the will, or in some such way mentioned therein as to show an intention not to make such provision. (Sec. 1298 C. C.).
If, after making will, the testator marries, and his wife survives him the will is revoked unless provision has been made for her by marriage contract, or unless she is provided for in the will, or in such a way mentioned therein as to show an intention not to make such a provision. (Sec. 1299 C. C.). husband as well. (Sec. 1300 C. C.). (See 44 App. 289).
A will made by a woman is revoked
marriage and is not revived by the death of her husband. 1300 C. C.).A contract of sale or a mortgage by the testator is not a revocation, neither is a deed before his death whereby his interest is not wholly divested before his death, but if he so expresses the intent in the instrument, or if his grant be by its terms inconsistent with the testamentary disposition, it is a revocation. (Secs. 1301 C. C.: to 1304 C. C.).
195.	Whenever a testator has a child born after the making of the will, either in his lifetime or after his death, and dies leaving such child unprovided for by settlement, and neither provided for nor in any way mentioned in his will, the child succeeds to the same portion of the estate that he would have taken had the ancestor died intestate. (Sec. 1306 C. C.: 119 Cal. 571: 83 Cal. 222: 176 Cal. 238).
Sec. 1310 C. C. as amended July 29th, 1921 provides: When any estate is devised or bequeathed to any child or other relation of the testator, and the devisee or legatee dies before the testator leaving lineal descendants, or any such child or other relative is named in a will as devisee or legatee and is dead at the time such will is executed but leaves lineal descendants surviving the testator, such descendants take the estate given by the will in the same manner as the devisees or legatees would have done had they survived the testator.
Where the testator omits in his will to provide for any of his children, or for the issue of any deceased child, unless it appears in terms that such omission was intentional, such child, or the issue of such child has the same share in the estate as if the ancestor had died intestate; (Sec. 1307 C. C.) but in all such cases the share must be taken from the property not disposed of by the will, and if that be not sufficient all legatees and devisees must contribute ratably. (Sec. 1308 C. C.) Except in the cases above mentioned, no will, nor any part thereof, can be revoked or altered otherwise than by a written will, or other writing of the testator declaring such revocation or alteration and execution with the same formalities with which a will is executed, or by being burned, torn, cancelled, obliterated or destroyed with the intent and purpose of revoking the same by the testator himself, or by some one in his presence and by his direction, when this is done by one other than the testator himself at his direction, it must be proved by two witnesses.
196.	It must be remembered that the estate of a decedent is first subjected to the payment of his debts before he is permitted to bestow benefactions. It therefore becomes important to know in what order the beneficiaries stand. Frequently it is desired thatone shall have the main benefit as to all the estate not otherwise disposed of. When such is the case, care should be taken that the whole estate, or the main portion thereof is not disposed of by specific gifts, legacies, or devises, for these take precedence. You might subject the main portion of the estate to the payment of the costs and expenses of administration and the payment of your debts, when you did not so intend. We will take a single case.
“A” desires by special mention to bestow a gift on a certain friend. He says I give to “B” $5,000.00, or a certain piece of land. All the rest and residue of my estate I give to my son. Here he has given precedence to “B” over his son, for the property which would be first subjected to the costs and debts would be that of the son. The beneficiaries do not share ratably. The statute prescribes in what order the debts shall be paid and who pays. First comes the expenses of administration and the family allowance if any. They take precedence over all claims. Next the property of the estate is subjected in this order. (Sec. 1359 C. C.).
1.	The property which is expressly appropriated by the will for the payment of debts.
2.	Property not disposed of by the will.
3.	Property which is devised or bequeathed to a residuary legatee.
4.	Property which is not specifically devised or bequeathed and,
5.	All other property ratably.
The same rules apply to legacies. (Sec. 1360 C. C.) Legacies to husband, widow, or kindred are chargeable for debts and expenses only after legacies to persons not related to the testator. The legacies to strangers must be exhausted before recourse be had to those of the kindred. Legacies are due and deliverable at the expiration of one year after testator’s decease. Annuities commence at testator’s decease. Legacies bear interest after one year from testator’s decease, except that legacies for maintenance or to the testator’s widow bear interest from his death. (Sec. 1368 C. C.) One may make a gift of personal property in view of death and, even if the same property be otherwise disposed of by a will made either before or after the gift is made, the gift is not affected by the will, unless the gift be revoked. A verbal gift is not valid, unless the means of obtaining possession and control of the thing are given. Nor, if it is capable of delivery then, until it is delivered. A valid gift, other than a gift in view of death, cannot be revoked by the giver. A gift in view of death is one which is made in contemplation, fear or peril of death, and with intent that itshall take effect only in case of the death of the giver, and a gift which is made during the last illness of the giver or under circumstances which would naturally impress him with an expectation of a speedy death, is presumed to be a gift in view of death. A gift in view of death may be revoked by the giver at any time, and is revoked by his recovery, from the illness, or escape from the peril under the presence of which it is made, or by the occurrence of any event which would operate as a revocation of a will made at the same time; but if the gift has been delivered to the donee, then a bona fide purchaser from him, the donee, before the revocation, is not affected by the revocation. This sort of gift is treated as a legacy where the creditors of the giver are to be satisfied. The property is subject to their claims. (Sec. 1367 C. C.).
197.	The rights of a purchaser or encumbrancer of real property, in good faith and for value, derived from any person claiming the same by succession are not impaired by any devise made by the decedent from whom succession is claimed unless within four years after the devisor’s death, the instrument containing such devise is duly proved as a will and recorded in the office of the clerk of the Superior Court, having jurisdiction thereof, or written notice of such devise is filed with the clerk of the county where the real property is situated. Sec. 1364 C. C.). This has no bearing we take it, where an administration has been had, and a decree of distribution has been entered, and time for appeal has passed all within the period of four years after the death of the one from whom succession is claimed, for these proceedings are final and conclusive, and no subsequently discovered will could be probated after this has been done. But instances occur where on purchases from another who claims as a successor from an ancestor. No probate is had for four years after the death of the ancestor or the probate is not completed within that period. No will of the deceased is effective against this purchaser from the heir, in good faith and for value, unless the same be proved and recorded within four years from the decedent’s death. This means that one who purchases from an heir during administration takes subject to the administration, and if the administration be not complete such a purchaser runs the risk that a will may be produced, depriving his grantor of any interest within four years of the decedent’s death.
198.	We shall not go into any of the proceedings leading up to probate of wills or the appointment of executors or administrators. Suffice it to say that after probate of a will anyone in interest may contest it, and if no contest be made within one year, the probate is conclusive, except that infants and persons of unsoundmind have one year after their disability be removed to atttack the will, but this does not mean that they can follow the property into the hands of an innocent purchaser for value. If their rights have been invaded by the probate of the well they have the equitable right for one year after their disability is removed to sue for the land if they find it in the hands of the original distributees, or to follow the proceeds of sale, if the property has been sold to innocent purchasers for value.
All acts of an administrator which have been approved by the Court, or are in ordinary course of administration, are not invalidated by the production of a will after his appointment. Thus, a purchaser at an administrator’s sale is protected, if it be subsequently learned that the deceased left a will. Where money is on deposit in a bank not to exceed one thousand dollars, it may be paid out under certain conditions, and upon certain affidavits. It would serve no good purpose to recount these matters here as the law is apt to be changed at any session of the Legislature. One can always be guided by the bank’s requirements. When no executor is named in the will, an administrator with the will annexed will be appointed. By the Code he is given the same authority over estates as an executor would have, and these acts are as effectual for all purposes. These powers, however, have been construed by the courts as to extend only to such cases where the duties of the executors are mandatory and do not lie in discretion of the executor, or to matters necessary to the administration, such as payment of debts, family allowance, and costs of administration. In all other cases he must file a petition if it be necessary or desirable to sell the real estate of the deceased even if a power of sale be given by the will to the executor.
199.	Now, as to succession, where the decedent die without making a will. Remember that one-half of the community property belongs to the wife on the death of the husband, but subject to administration and payment of the debts of the community. Remember that upon death of the wife before the death of her husband the community property vests in the husband without administration. Remember that where a homestead is declared in the lifetime of the deceased upon the community property by either spouse, or upon the separate property of the spouse who declares it, or consents to it, then upon the death of either spouse it vests absolutely in the survivor, and is no part of the estate. It is, however, to be subjected to the claims of creditors, over and above the $5000.00 exemption under proceedings outlined under our paper on Homesteads.
13A child legally adopted is an heir. Every illegitimate child is the heir of the person who, in writing, in the presence of a competent witness, acknowledges himself to be the father of such child; and in all cases is the heir of his mother; and inherits his or her estate, in whole or in part, as the case may be, in the same manner as if he had been born in lawful wedlock; but he does not represent his father or mother by inheriting any part of the estate of his or her kindred, unless before the death of such child, his parents have intermarried and his father, after such marriage, acknowledges him as his child or adopts him into his family, in which case such child and all the legitimate children are considered brothers and sisters.
The estate of one who has been legitimated as above, and who dies intestate, is succeeded to as if he had been born in lawful wedlock. If he has not been so legitimated, and he dies intestate, his estate goes to his issue, if he leave issue; if not, to his mother, or if she be dead, to her heirs. (Sec. 1388 C. C.)
There is no distinction between children on the half and whole blood unless the inheritance come to the decedent by descent, devise or gift from some of his ancestors, in which case all of those who are not of the blood of such ancestors are excluded. (65 C. D. 37.)
200.	Any advancements of any estate, real or personal, given by the decedent in his lifetime to any heir is a part of the estate of the decedent for the purposes of division, and must be taken by such heir as his share of the estate. These advancements can only be enforced if the one making them has expressed them as such in writing, or the one receiving them has acknowledged them as such| If they exceed the amount the heir would be entitled to on distribution the excess cannot be recovered from him, but if they be less he is entitled to so much more as will give him the full share of the estate and these matters are true if the heir die before the ancestor has applied to his representatives.
This representation occurs when the descendants of any deceased heir take the same share of right in the estate of another person that their parents would have taken if living. A child born after the death of the father is in this class. Resident aliens may take in all cases as civilians, but non-resident aliens under a will, or by the laws of succession, must appear and claim their inheritance within five years after the death of the decedent, or his share in the estate is forfeited to the state. Bearing in mind, then that either spouse may by will dispose of his or her separate property, and the husband his half of the community property, as he or she sees fit, provided the will does not contravene the rules above setforth, we will pass to the Law of Succession, which applies when either spouse dies without leaving a will. Upon the death of the wife before her husband’s death there is no succession of the community property, the law operating only upon her separate property. Upon the death of the husband the law operates upon his half of the community, his separate property, and the wife’s half of the community only so far as it is subject to the rights of creditors. This half belongs to her not by succession, but by reason of her ownership, but it is subject to debts of the community, as indeed it is when the wife die before the husband. Upon death then without will the separate property of either spouse and the one-half of the community belonging to the husband except where limited by marriage contract, descends as follows: (Sec. 1386 C. C.).
201.	1. If the decedent leaves a surviving husband or wife,
and only one child, or the lawful issue of one child, in equal shares to the surviving husband, or wife and child, or issue of such child. If the decedent leaves a surviving husband or wife, and more than one child living, or one child living and the lawful issue of one or more deceased children, one-third to the surviving husband or wife, and the remainder in equal shares to his children and to the lawful issue of any deceased child, by right of representation; but if there is no child of decedent living at his death, the remainder goes to all of his lineal descendants; and if all of the descendants are in the same degree of kindred to the decedent, they share equally, otherwise they take according to the right of represntation. If the decedent leaves no surviving husband or wife, but leaves issue, the whole estate goes to such issue; and if such issue consists of more than one child living, or one child living and the lawful issue of one or more deceased children, then the estate goes in equal shares to the children living, or to the child living and the issue of the deceased child or children by right of representation.
2.	If the decedent leaves no issue, the estate goes one-half to the surviving husband or wife, and the other half to the decedent’s father and mother in equal shares, and if either is dead the whole of said half goes to the other. If there is no father or mother, then one-half goes in equal shares to the brothers and sisters of decedent and to the children or grandchildren of any deceased brother or sister by right of representation. If the decedent leaves no issue, nor husband nor wife, the estate must go to his father and mother in equal shares, or if either is dead then to the other.
3.	If there is neither issue, husband, wife, father, nor mother then in equal shares to the brothers and sisters of decedent and tothe children or grandchildren or any deceased brother or sister, by right of representation.
. If the decedent leaves a surviving husband or wife, and neither issue, father, mother, brother, sister, nor the children or grandchildren of a deceased brother or sister, the whole estate goes to the surviving husband or wife.
5.	If the decedent leaves neither issue, husband, wife, father, mother, brother, nor sister, the estate must go to the next of kin, in equal degree, except in that, when there are two or more colateral kindred, in equal degree, but claiming that through different ancestors, those who claim through the nearest ancestor must be preferred to those claiming through an ancestor more remote.
6.	If the decedent leaves several children, or one child and the issue of one or more children, and any such surviving child dies under age and not having been married, all the estate that came to the deceased child by inheritance from such decedent descends in equal shares to the other children of the same parent and to the issue of any such other children who are dead, by right of representation.
7.	If, at the death of such child, who dies under age, not having been married, all the other children of his parents are also dead, and any of them has left issue, the estate that came to such child by inheritance from his parent descends to the issue of all other children of the same parent; and if all the issue are in the same degree of kindred to the child, they share the estate equally, otherwise they take according to the right of represntation.
8.	If the deceased is a widow, or widower, and leaves no issue, and the estate, or any portion thereof, was common property of such decedent, and his or her deceased spouse, or such spouse was living, such property goes in equal shares to the children of such deceased spouse and to the descendants of such children by right of representation, and if none, then one-half of such common property goes to the father and mother of such decedent in equal shares, or to the survivor of them if either be dead, or if both be dead, then in equal shares to the brothers and sisters of such decedent and to the descendants of any deceased brother or sister by right of representation, and the other half goes to the father and mother of such deceased spouse in equal shares or to the survivor of them if either be dead, or if both be dead, then in equal shares to the brothers and sisters of such dceeased spouse and to the descendants of any deceased brother or sister by right of representation. If the estate, or any portion thereof, was separate property of such deceased spouse, while living, and came to such decedent from suchspouse by descent, devise, or bequest, such property goes in equal shares to the children of such spouse and to the descendants of any deceased child by right of representation, and if none, then to the father and mother of such spouse, in equal shares, or to the survivor of them if either be dead, or if both be dead, then in equal shares to the brothers and sisters of such spouse and to the descendants of any deceased brother or sister by right of representation.
9.	If the decedent leaves no husband, wife or kindred, and there are no heirs to take his estate or any portion thereof, under subdivision eight of this section, the same escheats to the State of the support of the common schools.
It will be observed, that if the decedent die leaving neither issue, husband, wife, father, mother, brother nor sister, the estate goes to the next of kin in equal degree. The degree of kindred is established by the number of generations, and each generation is called a degree. The series of degrees form the line, and the series between persons who do not descend from one another but spring from a common ancestor, as in case of brothers and sisters, constitute collateral kindred. In the collateral line the degrees are counted by generations, from one of the relations up to the common ancestor, and from the common ancestor to the other relation. In such computation the decedent is excluded, the relative included and the ancestor counted but once. Thus brothers are related in second degree, uncle and nephew in the third degree, first cousins in the fourth degree, and so on. In the direct line there are as many degrees as there are generations. Now, where the decedent dies leaving no husband, wife, issue, father, mother, brother nor sister, the estate goes to the collateral kindred of the same degree. Thus where one die leaving Mary, Richard and Lucy, children of a deceased brother, Edward, a son of a deceased brother, and James, a grandson of deceased brother, this grand nephew takes nothing and the others take all in equal shares, they being in the third degree; James being in the fourth degree. Likewise, those who succeed take in equal shares, not by right of representation, but per capita. This construction has lately been put upon the section in Estate of Nigro. (172 Cal. 474).
Likewise, under subdivision 3 of section, which is that if there is neither issue, husband, wife, father no mother, then in equal shares to the brothers and sisters of decedent and to the children or grandchildren of any deceased brother or sister by right of representation. It has been held in Estate of Ingram (78 Cal. 586) that the children or grandchildren of a deceased brother or sister cannot inherit unless there be a brother or sister of decedent surviving. The Court says it is vain to argue against the injustice of the rule as succession to estate is purely a matter of statutory regulation. (62 C. D. 595).
Clause 8 of this section is of great interest, for it is therein provided that if the decedent be a widow or widower and die without issue, and if the property of which the decedent died seized was the separate property of a deceased spouse, while living, and came from the deceased spouse by descent, devise or bequest the property does not go to the heirs of the one who died seized of it, but descends to the heirs of the deceased spouse. The one who receives it from the deceased spouse has a full title which he or she can convey or dispose of by will, but not having done either, and dies without issue, the property falls into the line of descent from the spouse whose separate property it was. (See 62, C. D. 595).
202.	If the estate be of less net value than $2,500.00, and there be a widow, or a minor child, or minor children, the whole estate can be set apart, subject to the incumbrances, to the widow if there be a widow. If not, then to the minor child or children. The person to whom it is so set apart is the owner free of claims of general creditors. Sec. 1469 C. C. P. Amend. July 29, ’91.
203.	Claims must be filed in the estate or they are forever barred. The time for filing is four months from date of first publication of notice to creditors, when the estate of if less value than $10,000.00, and ten months if the estate exceed said sum. Claims which are not due should be presented as contingent claims, else the heirs will not be bound after the estate is settled. Mortgages on the homestead must be presented or the right of foreclosure is lost. Mortgages on other lands need not be presented if the mortgages waive the right to a deficiency judgment.
204.	Taxes are now imposed upon inheritances. The law has been changed from time to time and it would be of no avail to set out the provisions here.
205.	Upon the death of the decedent, all his property vests immediately in his heirs if he die without making a will, and in his devisees if he make a will. A devise may be made of the property to a trustee which will vest all the title in the trustee upon the death of the testator, but in all cases these ownerships are subject to the administration of the estate. Therefore, when one deals with an heir or a devisee before the estate be closed and distributed either by purchase or by making a loan, he runs the risk of losing the property or security, as it can always be taken to satisfy creditors.206.	A devise may be made to a trustee of the full title with power of sale, without order of Court or without confirmation of Court, but where the mere power of sale in the will is given to an executor, the sale can be made without order of Court therefor, but it must be confirmed by the Court. It is the safer and better practice where an administrator with will annexed is making the sale, to first secure an order of Court for sale, even if the will gives a power of sale, for he can sell only for administrative purposes and the necessity of such a sale is always a matter of proof.
207.	No administrator or executor, unless he is given the power in the will, can deed or mortgage the property of the estate without an order of Court, and the instruments must show his authority. Any sales made by order of Court by an administrator are under proceedings fixed by the statute, and these statutes must be strictly followed. It is incumbent upon a purchaser at an ad-administrator’s or executor’s sale to see that all the steps leading up to the sale have been properly taken, as the purchaser buys at his peril. He must see to it that, if the community interest of the wife is being sold that it is with her consent, or that it is necessary to the payment of costs of administration and debts of the community. If it be found that the sale is being made of her interest, require from her a deed. These same cautions apply where the property is homestead.
208.	Remember these points.
Any person over the age of 21 years may be an executor. It is not required that executors be residents of this State. No nonresident, however, can be appointed administrator of an estate.
If there are two or more executors acting, each is liable for the acts of the other.
Remember then an administrator cannot make a deed or mortgage of the property of an estate without order of Court.
Remember that the deed made by an heir or devisee before the estate is distributed may be defeated by an administrator or executor’s sale to pay debts or legacies.
Remember that the husband cannot dispose of his wife’s community interest in the property by will, or deprive her of the homestead.
Remember that in trusts created in wills other than charitable trusts that they cannot be for a longer period than allowed by statute, and that no accumulations of income are permitted except for the benefit of minors.
And do not, and this is a final word, become the “Best Friend of the Lawyer,” “the man who draws his own wilk”Section 1401, C. C. Effective 90 days from and after May 18, 1923.
Upon the death of either husband or wife, one-half of the community property belongs to the surviving spouse: the other half is subject to the testamentary disposition of the decedent and in the absence thereof goes to the surviving spouse subject to provisions of Section 1402 C. C.
1402 C. C. Community property passing from the control of the husband either by reason of his death, or by testamentary disposition by the wife, is subject to administration, his debts, family allowances and expenses of administration, but in the event of such testamentary disposition by the wife the husband pending administration shall retain the same power to sell, manage and deal with the community personal property as he had in her lifetime, and his possession and control of the community property shall not be transferred to the personal representative of the wife except to the extent necessary to carry her will into effect. After forty days from the death of the wife, the surviving husband shall have the full power to sell, lease, mortgage or otherwise deal with or dispose of the community real property unless a notice is recorded in the county in which the property is situated to the effect that an interest in the property, specifying it, is claimed by another under the wife’s will. Until the constitutionality of these acts is determined by the Supreme Court we advise compliance with their terms.Torrens Act
We have upon the statute books of this state an Act popularly called the “Torrens Act.” The true title is the “Land Title Act.” The first of these acts was adopted in 1897, but as there appears to have been little done under this it requires no more than mention. However, by an iniative measure approved by the electors, effective December 19th. 1914 (Statutes 1915—Page 1923) there was adopted a system of land registration elaborate in detail and far reaching in it’s effect. This modest volume would not be complete if it ignored this measure which by it’s very nature has excited wide spread interest. As a preliminary to any discussion of the topic the writer states frankly that as a result of such analysis as he has been able to make, and the application of established rules of law as he understands them, he is of the opinion that in at least two of it’s most important features the Act is unconstitutional and therefore inoperative. He wishes it distinctly understood, that such comment as he shall make, except where he has used the language of courts, is a mere expression of individual opinion to be considered and weighed as to it’s worth by the reader. Perhaps of more value than a legal opinion are conclusions drawn from experience and observation, for after all is said, practical workings of such a statute are of more interest than it’s philosophy. Without going into details we will say that from observations made during a long period of time in two states where this system obtains, to-wit: Illinois and California, we have never known of one single instance where the so-called “Torrens Law’ operated for the benefit of a land owner. On the other hand we have observed scores of cases where land owners were prsuaded to submit their titles to it’s burdens and uncertainties with resulting annoyance and loss. If the views here expressed are subjected to adverse criticism; if there be attributed to the author bias and prejudice; all he asks is, that you believe they are honestly expressed in the sincere desire to reveal the truth, with no thought of personal gain or favor. If the Act be law it is proof against assault—if it be not law it is a fair mark for condemnation. If it be not law it should be stricken from the books.
It is a significant fact that the measure was adopted by a popular vote, which means that it’s provisions were not digested and considered in advance—their legality being left to the future de
14termination of the courts as questions arise. A most unsatisfactory and disquieting state of affairs to say the least. The slogan of the framers and active proponents of the measure which rang in the ears of unthinking or indifferent citizens was this: “Get a title from the state. The state will guarantee your title. Put your land under a system that will enable you to deal with it as readily as a share of stock.” We all remember these arguments and we hear them today in somewhat modified tones. The most casual reading of the Act discloses that the State of California has absolutely nothing to do with any title, and as to insurance of title, or against damage to one who is deprived of title, there is nothing which even hints of a liability on the part of the state. On the contrary, as we will show, there is one provision of the Act whcih permits the state to confiscate the property after has been registered. This is “putting the state behind your property” in somewhat too literal a sense to square with justice. If you should doubt this statement read Section 81. “In case a tax deed of registered land is issued to the state or any municipal corporation in pursuance of any sale for a tax assessment made after the taking effect of this act, the register shall upon the filing of such deed in his office cancel the certificate for the land in said deed described and issue a new certificate to the purchaser.”
How can this be termed “State protection?” Observe that all a purchaser of a tax title from the state is required to do is to take his deed to the registrar who must cancel the outstanding certificate and issue a new one to the holder of the deed. All this without a judicial or other determination of the title—without his being required to prove title at all. The sale under which deed was issued may be void. There may have been no sale at all, yet, if one produce such a deed he can wipe out all other title. Section 8 does away with any necessity for possession under such a deed and Section 35 puts the padlock on the closed door. This section reads: “After land has been registered no title thereto or adverse to the title of the registered ownr shall be acquired by any length of possession.” We naturally ask what do these provisions signify? Are they plain?
Suppose your property is sold to the state for taxes. The sale may be void. You may never have had any notice whatsoever. After five years the state sells the property; the purchaser takes the deed to the registrar who must cancel your certificate and issue a new one to the purchaser and thereafter, even if you continue to occupy the property, this Act says that your possession counts for nothing against this purchaser. Is that what is meant by the statement that the state stands back of your title? Will any sane man argue that such a statute is law?
The charge has been frequently made that this Act was fostered, promulgated and carried in the interest of a coterie of tax sharks who have preyed on hte people of the state for years. Is there any feature of the sections cited which would seem to justify such suspicion? We venture to say there is; particularly when we come to review some other sections.
Now as to “State Insurance.” Sub. 2 of Sec. 100 provides that upon original registration a sum equivalent to one tenth of one per cent of the assessed value of the land including permanent improvements shall be collected by the registrar, and by Sec. 3 he is directed to pay this money over to the State Treasurer for an “Assurance Fund,” and then under Sec. 105, Sub. 1, we find the latter directed to keep this money in a separate fund, which under Sub. 2 may be reached by any party who, without fraud or negligence on his part, is deprived of any interest or estate in land through the operation of the Act, or by reason of the fraud, forgery, negligence, omission, mistake or misfeasance of any person, and who is precluded from recovering such interest or estate, may commence on action to recover not over the fair market value of the interest or estate of which he has been so deprived. If such deprivation has been caused solely by reason of any act of the registrar, the State Treasurer shall be the sole defendant, or if by other persons they must be joined as defendants. In case of final judgment against these other defendants execution shall first issue against them and if the execution is returned unsatisfied, then the court, if it is satisfied that the judgment cannot be collected from the other defendants, shall make an order for it to be paid out of the Assurance Fund. If this fund is at any time insufficient to pay the amount of any judgment in full, so much thereof as can be paid out of such fund shall be paid, and the unpaid balance shall bear interest at the legal rate and shall be paid out of the first moneys coming into such Assurance Fund.
It would be an outrage of the language to call this “insurance,” yet it is the only thing in the Act even hinting at liability on the part of the state.
Review this provision carefully and consider what it really means, for this is one of the so-called “advantages” of the Act. If you should be defrauded by any of the provisions of the Act you have the legal right, not to recover your land, but the fair market value thereof at the date you lose it, by a suit against those who have defrauded you. You must pursue them whether they be ableto respond in damages or not, and when you have failed to collect from them by execution you can go and tell the court about it, and if the judge is of the opinion that further pursuit of your debtors would be vain, he will give you an order on the “Assurance Fund,” which will be paid, provided there is any money in the Fund. You will take your turn, and if people generally decide not to register their lands, there is little likelihood of the fund ever becoming very large. There appears to be no provision made for replenishment from any other source. You must exhaust every other remedy (Sub. 2, Sec. 105) and then bring this suit against the Fund within four years from the date of your injury or you are barred. Not one word in the Act even hints at “State Insurance” or “State Protection.” The only assurance that a registered owner seems to be offered is, that in case he is deprived of his property by reason of the workings of the system, he has a long, tortuous, uphill road to recover what it might have been worth in the market at the time of the robbery. In such a case you may, if you so desire, lay a complaint with the proper officer and if you are able to prove the fraud and apprehend the wrongdoer, you may be able to have him fined up to $5000, and imprisoned for five years. Secs. Ill and 112 provide these penalties as a sort of balm if you lose out. This you may have in lieu of your property. The above is the nearest thing to guarantee that appears in the Act. What other advantages accruing to you if you care to submit your property to the workings of the Act will now be considered.
Should the provisions of the Act be strictly followed; if you have laid the proper action and bring into court by legal service all persons who can possibly claim any right, title or interest in the land, the decree will establish of record the facts relating to the title—no more, no less. It must be borne in mind that no title can ever be created by decree of court. The only effect of a decree in a suit to establish or quiet title is to show by rceord what the title really is. No court, no matter what allegations are laid, no matter what testimony is taken, no matter what facts are disclosed, has jurisdiction or power in such an action to take title from one party and give it to another. When this truth is grasped we will have gone far to explain the effect of judgment under this Act, and any other proceeding under the Codes whereby title may be quieted in the true owner. Very often titles are clouded by adverse claims and apparent encumbrances and it is desirable to bring all claimants into court and clear the record. There is no action of the character above mentioned known to our laws by which titles may be transferred. This truth is fundamental and axiomatic. Whenfully considered you will comprehend why a so-called “Torrens Certificate” cannot be conclusive evidence of title. Courts can only deal with titles as they exist. They cannot make title. It is true titles may be assailed and claims laid, and if the true owner fails to defend and protect his property, he may lose his right so to do after the lapse of time. But this is by the doctrine of estoppel and not by reason of power of court to deprive him of title. Hence our codes provide, and these provisions are in consonance with the tenets of the Common Law, the epitome of human wisdom, that where apparent defects appear in the record the owner of real property may summons the whole world to appear and show right of title or claim, and in the absence of proof of adverse claims submitted, secure a decree establishing of record his right of ownership clear of the claims of all men. When the owner has done this he has added nothing to his title—he has but cleared the record of false and pretended claims. Such proceedings in law are known as actions in rem, which liberally contrued, means that they affect the thing itself. In theory the land itself is the plaintiff and all such decrees affect the property primarily. Now the Codes provide for such procedure and the Code provisions are in line with the orderly plan of jurisprudence outlined by the Constitution and the Codes. These Sections are but the crystalization of the great rules of law and equity which are the outgrowth of centuries of human experience. At this point we make the deliberate statement and challenge refutation, that one who brings his action under the provisions of this Act, making all persons, known and unknown, parties thereto; who obtains legal service of summons and makes proper proof and secures a decree, is in no different position than had he proceeded under the law as laid down and upheld for years in this state; except that has thereby involved himself in entanglements that he might have avoided had he proceeded in accordance with the Codes. Of these entanglements we shall have something to say later. At this point suffice it to say that by electing to proceed under this Act the owner has let himself into a number of conditions and provisos which may be of interest to him but which do not necessarily concern or interest any other person, for as yet the most ardent partizan of the measure has not had the temerity to assert that the holder of a “Torrens Certificate” can legally compel another to accept it as conclusive evidence of title.
Before proceeding to a discussion of the features of this particular act it may be well to know something of the origin and real meaning of such legislation. This system of land registration takes it’s name from one Torrens, an English barrister of note, andbecame the law in some at least of the British Dependencies, notably in Australia and Canada. Let it be said here that the system as adopted in these countries was lawful and effective. Let it also be said in this connection that the same system viewed in the light of our Constitution and the Code of Laws in force in the United States is unlawful and ineffective. When this premise is established there is no room for argument and the air is cleared. The system of jurisprudence governing England and her Dependencies and that governing the United States, while identical in principle in many respects in others are as far divided as the poles. England has no written constitution, nor has any of her Dominions or Dependencies. The mother country and her children are ruled by the ancient Common Law, which is likewise unwritten, and the acts of parliament. Every act of parliament is a constitutional provision. Every act of a colonial parliament is a constitutional provision so far as that particular colony is concerned. It is possible, but wholly improbable, that any of these parliaments by Act may deprive any citizen of his property without compensation. This cannot be done in the United States by act of Congress, act of a legislature, by any court or by any measure adopted by popular vote as was the one in question. The fundamental, basic law of the land is found in the written Constitution framed and adopted with the intent that no act of any legislative body, no statute however adopted, and no rule of court shall ever contravene it’s simple, well defined mandates. This Constitution provides, and the adoption of the provision marked one great step in the progress of justice and human wisdom, that no man shall be deprived of his property without due process of law. Every state constitution embodies this principle, either in terms or by implication, and whether they do or not they are subordinate to the Federal Constitution. This clause of that great compendium of human rights has been construed time and again to mean that no man can be deprived of his property except by an orderly proceeding in a court of justice having jurisdiction, and then only after he has had his “day in court.” Until this provision of the fundamental law is abrogated no legislative act, no statute adopted by popular vote, and no decree of any court, is of any value if in any particular it is sought to modify it’s mandate. Bear in mind the party must be given his day in court. This means he must be lawfully summoned and given an opportunity to be heard. If he be given this opportunity and fails to appear he cannot be heard to complain. Fraud, concealment, false testimony and chicanery never can nor never will prejudice his rights, so long asthis law exists, the provisions of this Act to the contrary notwithstanding.
We are not attempting to prove that this Act is unconstitutional on the ground that it permits actions to be brought to determine title, but if by it’s terms it seeks to declare that a decree rendered in such an action is valid, and that the certificate of title issued in pursuance thereof must be accepted as conclusive evidence of title no matter what frauds may have been committed in it’s procurement, then we unhesitatingly say that the Act is unconstitutional in that regard. The Act in terms provides these very things. Let us be clearly understood here. The Act so far as it permits an action to be brought is legal. It’s provision that the certificate of title in the hands of an innocent purchaser for value after registration is conclusive evidence of ownership no matter what frauds were committed in its procurement is illegal. Courts cannot create titles, much less a County Recorder; nor can any court or County Recorder create conclusive evidences of title. Owners after a decree of court has been rendered in an action wherein they were given the opportunity to be heard may be estopped in time from asserting claims by statutes of limitation which are statutes of repose. There must be an end to litigation some time, and what this time shall be is left to the wisdom of the law-making body. This is a far different thing from taking title from one to vest in another by decree of court. It is possible that this might be done by act of parliament in Australia or Canada, where the Torrens Law prevails, but it cannot be done in the United States in any proceeding.
The provisions of the Act are contrary to the spirit of our laws and institutions. They seek at one fell blow to undo and render nil a system of land tenure built up and perfected by the experience of wise men since the dawn of modern civilization. King John led the way perhaps not as reluctantly as we have been taught to believe, for by the granting Magna Charta he went a long way in defining his own rights. From the day of the signing of that famous document down to the present hour, kings, princes, lords, commoners, lawmakers, courts and lawyers have contributed to a system which, if nothing else be said of it, stands a monument to human wisdom derived from human experience.
Complaint is often voiced that circumlocution and delays attend transactions in real property; that title must be examined and parties identified. This is advanced as a reason for simplification of governing laws and processes. When properly considered it will be apparent that this is the strongest argument in favor of themethods which at present exist. We, in California, are not hampered with useless and obsolete statutes or by hair-splitting decisions of courts. In ordinary transactions no extraordinary delays occur.
We want to know that when we buy land we get a title to it and we want to know that when we have acquired a title that we are not going to have it taken away from us. No human interest in the matter of ownership equals that which all men have in the dominion over some portion of the earth’s surface. It has always been so and will remain so. Sentiment is most often the ruling factor. Stocks and bonds may be lost, stolen or destroyed. These can be replaced. One argument with which we are all familiar was advanced when this measure was proposed. We were told that once adopted and in general use it would be possible to dispose of real estate with as little ceremony as of a share of stock. In our opinion this is the strongest argument against the system. The law has surrounded your home, or other prized possession, with safeguards that you do ill to dispense with. To abolish all record of your title, except the last certificate of registration which might be issued by a registrar, is to destroy the very foundation and ramparts of your security, for by it you may prevent the perpetration of fraud or mistake. If land is worth anything it is worth keeping track of at least. After keeping a history of each separate parcel for centuries we fail to see the wisdom of destroying that history. It is common knowledge that the record is the greatest factor of safety in dealing with lands. This point should be taken into consideration; if it be made as easy to acquire title to land as it is to acquire title to a share of stock it may be possible to lose it just as easily.
The initial registration is made after a decree of the court in an action which in procedure and effect is an action to quiet title. Unquestionably, if the steps provided by the Act be strictly followed, and proper service had on all parties in interest the decree is valid and conclusive, provided no fraud has been committed in it’s procurement, and at this stage in our opinion the value of the Act ends. Should an owner desire to clear his title of any apparent defects of record he has the same right of action under Code provisions which do not involve his title in subsequent complications and uncertainties. So far then, we may say that the Act is in harmony with the Constitutions of the United States and the State of California and with our system of jurisprudence.
When subsequent registrations come to be made doubt arises as to legality. In opinion of many lawyers and jurists the onlyway that the certificate of registration can be given legal value is by decree of court in every case of transfer. In other words that every transfer subsequent to the first registration must be subject to judicial determination and the certificate issued only pursuant to a decree of court after a full hearing as in the first instance. It goes without saying that such a procedure would be cumbersome, expensive and in practically every instance a sheer waste of time and money. It is not likely that such a plan will ever be adopted.
Now the question arises as to the powers delegated to the County Recorder. Can he, a purely ministerial officer, be clothed with judicial powers by simply making him a Registrar? We think not. Section 1, Art. Ill of the state constitution prohibits one department of state from exercising powers of another. It requires no argument to prove that judicial functions conferred by the constitution solely upon the courts cannot be exercised by any other department of government. The case of Robinson vs Kerrigan (151 Cal. page 40) is cited by advocates of the system as decisive of the point. The claim is advanced that the court in that case decided that no attempt was made by the Act to confer judicial powers on the Registrar. A careful reading of the opinion will show the fallacy of this claim. The court says that the claim was advanced but not argued that the Act of 1897 confers judicial powers on the Registrar and states that there is no merit in the contention; that the Recorder is constantly required to determine whether an instrument presented for record is a deed etc. The decision did not rest upon this point. The court expressly says that the question was not argued and presumably it was not considered in making up the judgment. Evidently the following point was not advanced and was not in the minds of the judges, that is, that in cases where the instrument is presented to the Recorder which purports by it’s contents to be a deed the Recorder must judge the purport. He has no power to pass upon and adjudge the legal effect of the instrument. He simply says: “This purports to be a deed therefore I will record it in the deed book.” Should he err in judment and fail to record it in the proper book of record, or should he fail to record it at all, we are very certain that the court would not say that thereby the grantee lost his title.
The main purpose of the Act as disclosed by constant reiteration is to make the certificate of registration conclusive evidence of the facts stated therein and one in whose name the land is registered is entitled to possession. (See particularly Sec. 42.). If this is the result of registration it necessarily implies a power in the Registrar to finally adjudge the legal effect of all instrumentssubmitted to him. Until the court shall affirm this doctrine and the court is called upon to finally determine this point in some case where a party has been deprived of a right by the action of the Registrar it will not be wise to rely upon the decision above cited.
The ultimate object of all laws relating to ownership and the right of possession is to protect the owner, or the one entitled to possession, against frauds and chicanery and to punish the wrongdoer. Under the Code action may be brought to recover lands obtained through fraud within three years after the discovery of the fraud. By this Act no suit of any kind, or apparently any circumstances, can be maintained after expiration of one year from the date of the first registration. (Sec. 45. See 186 Cal. Page 330). While the Act constantly refers to absence of frauds by it’s very terms, as we read them, the perpetration of fraud is invited. If this statement be reckoned too strong we will call attention a few outstanding features which seem to say to one contemplating commission of fraud, “you must not do this or that, but if you do, and are successful in your attempt, the law will shield the one who buys from you if he can show himself to be an innocent purchaser under the definition and classification set forth in this Act.”
Now let us look more fully into the several provisions scattered along through the Act and see if there be justification for this aspersion. We will begin with Sec. 34. “The registered owner of any estate or interest in land brought under this act shall, except in case of fraud to which he is a party, or of the person through whom he claims without valuable consideration paid in good faith, hold the same subject only to such estates, mortgages, liens, charges and interests as may be noted in the last certificate of title in the Registrar’s office, and free from all others except:
1.	Any subsisting lease or agreement for a lease for a period not exceeding one year where there is actual occupation of the land under lease. The term ‘Lease’ shall include a verbal letting.
2.	All land embraced in the description contained in the certificate which has theretofore been legally dedicated as, or declared by a competent court to be a public highway.
3.	Any subsisting right of way or other easement created within one year before issue of the certificate upon, over or in respect to the land.
4.	Any tax or special assessment for which sale of the land has not been had at the date of the certificate of title.
5.	Such right of action or claim as is allowed by this Act.
6.	Liens, claims or rights arising under the laws of the UnitedStates which the statutes of California cannot require to appear of record upon the register.”
Now pay particular attention to the following:
Sec. 35. “After land has been registered no title thereto adverse or in derogation to the title of the registered owner shall be acquired by any length of possession.”
Here is a particularly bright, sparkling gem in this collection. Mark it well.
Sec. 36. “Except in case of fraud, and except as herein otherwise provided, no person taking a transfer of registered land, or any estate or interest therein, or of any charge upon the same from the registered owner shall be held to enquire into circumstances under which, or the consideration of which such owner or any previous registered owner was registered, or be affected with notice, actual or constructive of any unregistered trust, lien, claim, demand or interest; and the knowledge that any unregistered trust, lien, claim, demand or interest is in existence shall not of itself be imputed as fraud.”
Sec. 37. “In case of fraud any person defrauded shall have all the rights and remedies that he would have had if the land were not under the provisions of this act: provided, that nothing contained in this section shall affect the title of a registered owner who has taken bona fide for a valuable consideration, or of any person bona fide claiming through or under him.”
Note carefully this proviso. You will see it’s importance later.
Sec. 38. “If a deed or other instrument is registered which is forged, or executed by a person under legal disability, such registration shall be void; provided that the title of a registered owner who has taken bona fide for a valuable consideration, shall not be affected by reason of his claiming title through some one, the registration of whose right or interest was void, as provided in this section.”
Here again carefully note the proviso.
Sec. 39. “No unregistered estate, interest, power, right, claim, contract or trust shall prevail against the title of a registered owner taking bona fide for a valuable consideration, or of any person bona fide claiming through through or under him.”
Sections 40, 41 and 42 provide that in suits affecting title to registered lands, the certificate of registration shall, except as otherwise provided by the act, be taken as conclusive evidence that the registered owner has a good and valid title to the land and is entitled to possession.”And as if all the foregoing was not enough we have the following :
Sec. 45. “‘Noperson shall commence any action at law or in equity for the recovery of land, or assert any interest or right in, or lien or demand upon the same, or make entry thereon adversely to the title or interest certified in the first certificate bringing the land under the operation of this act after one year following the first registration. It shall not be an exception to this rule that the person entitled to bring the action or make the entry is decased, an infant, lunatic or is under any disability, but action may be brought by such person by his next friend, or guardian or by the administrator or executor of a deceased person. It shall be the duty of the guardian, if there is any, to bring an action in the name of his ward whenever it is necessary to preserve or enforce the ward’s rights in registered land; provided, however, before such action shall proceed it must be made to appear to the court that the person bringing such action, or those under whom he claims had no actual knowledge of the proceedings to register such lands in time to appear and file his objections or assert his claim. The provisions of this section shall in no way affect or disturb the right of any person in said land subsequent to the registration thereof, bona fide and without knowledge and for a valuable consideration.”
Now let us glance back over these provisions. Constantly it appears that no frauds, no matter by whom committed, shall effect the title of an innocent purchaser for value from the registered owner and who in turn has his title registered. What constitutes one an innocent pjurchaser in law? Certainly the term “innocent” is not synonomous with “feeble minded.” One who without thought or consideration parts with value simply because the seller exhibits to him a “Torrens Certificate” is not, in our opinion, to be classed as innocent. By Sec. 36 such a purchaser is relieved from the duty of making enquiry as to possible frauds and by the same section it is provided that should he by chance, either by inquiry or accident discover that fraud had been committed, he must not deem it fraud. In short, the knowledge that fraud has been committed precludes him from imputing fraud to any person. By Sections 40, 41 and 42 he is precluded from going back of the certificate in his search, for these Sections the certificate is made conclusive evidence of title, which in law means that it cannot be overcome by other evidence. An innocent purchaser then, as defined by the Act is one who bona fide, for a valuable consideration, takes title from the registered owner, and one who blindly relies upon the certificate, freed from all obligations which the law imposesupon one who purchases unregistered land, and freed of all consequences even if he have notice of frauds. He, according to the terms of this Act, is at all times protected no matter how others may have been robbed, for it is expressly stated in Sec. 36 that he is not affected by notice, actual or constructive, of any unregistered trust, claim, demand or interest.
As the Act reads now, and in view of the well known fact that registrations are most commonly made under it in an attempt to annuli some claim of interest, or to correct some apparent defect in title, we say without hesitation that the proffer of a certificate under the Act is sufficient in itself to put a prudent man upon inquiry as to possible defects of title. We should feel justified in so advising a client.
The innocent purchaser seems to be well enough protected and we can readily see how in a well laid plain to defraud an owner of his property such an “innocent purchaser” could readily be found, but how about the rights of the wronged owner?
We turn to Sec. 45 and learn that he may bring an action against anyone, except the innocent purchaser, within one year from the date of the first registration. The question naturally suggests itself how is it to be determined that the purchaser is innocent if the owner cannot summons him? It will also be noted that this Section applies to dead people, lunatics, infants and persons under any sort of disability. It is provided that actions may be brought by administrators or executors of dead men and by guardians of the living. So if after death the late owner discovers within the year that some one has obtained a certificate for his lands by fraud, and he can get this information to his administrator or executor, or if any infant in arms, or a lunatic gets the same information and proceeds to have a guardian appointed for himself, and these representatives bring the action within the prescribed time, there is a chance for recovery. It appears therefore that the injured one must act promptly, and then he cannot recover from a bona fide purchaser for value from the holder of the certificate, even if this bona fide purchaser had actual knowledge of the death, infancy, lunacy or other legal disalibility.
Regarding the “open door” read this :
Sec. 58. “The transferee shall furnish the registrar with an affidavit stating whether the transferee is married or not married, and if married the name of the husband or wife, and whether or not the croperty is community property, and the fact shall be recorded on the certificate of title before the transfer is made on the register.”Evidently it is intended that this fact noted on the certificate becomes conclusive evidence. It is scarcely necessary to add further comment on that Section.
The one who loans money on registered lands will be interested in the following:
Under this system, after property has been registered, an original mortgage is left with the Registrar and filed under a document number in his office. It is not transcribed. Only a brief notation of its contents is endorsed upon the certificate of title. No permanent record is made. The mortgagee has neither the original document, nor can he be certain that it will always be available. His only safe method would be to procure a copy showing endorsements certified by the Registrar. In the event of loss of the original from any cause such a copy would be treated as the original, but its exact status is not defined by the Act. Under this plan the mortgagee can at the best secure nothing more than a certified copy of an instrument of which there is no permanent record, even though it be in the Registrar’s office it might be hopelessly misplaced if the system should ever come into general use, as the task of filing several hundred instruments a day would be a difficult one and errors would necessarily occur. Consideration should also be given to the fact that under the provisions of the Act ordinarily the petition for registration is based upon declarations of the owner that he and his predecessors in interest have owned the land and have been in actual and adverse possession of the same, and paid all taxes and assessments levied thereon for more than five years preceding the application. Where this allegation is made in the petition no abstract or proof of the early title is required, and if these facts be alleged and shown, as they ordinarily are, by the testimony of one witness, no investigation is made at all as to the antecedent title.
In accordance with the theory of the Act (Sec. 16) a decree based upon such an application and showing is binding upon the whole world, and terminates without other or further notice any valid existing easement or adverse right or claim. The original application made by owner of the fee title must set forth, among other things, whether the property is subject to any easement, lien or encumbrance, and if so, the name and post office address, if known, of each holder; the nature and amount of the same and book and page of the record, if recorded. While this requirement is found in the Act there is no method provided for enforcing compliance, because as above stated, in the ordinary application no investigation is made of the title beyond ascertaining the facts ofpossession and payment of taxes for the period of five years. The Act further provides that while the fee simple title must be first registered the fact that land is encumbered is no objection to bringing it under the system; that all liens must be noted on the certificate of title by the Registrar and that the title so certified by him shall be subject only to the liens therein set out, except as otherwise provided in the Act; also that filing of the application in the county clerk’s office shall be sufficient notice to all subsequent purchasers or encumbrancers. When satisfied with the sufficiency of the application the court orders issuance of notice which shall be directed to all parties appearing by the application and abstract and by the report of the examiner of titles to have any interest in the land or any part thereof. No service of any notice upon a mortgagee or the holder of any encumbrance or lien upon the premises is required, or provided for, although the decree must determine the rights of these parties. Apparently it is contemplated that this be done without their being brought into the proceedings. After service is complete the court after a hearing enters its decree in such manner as to show the relative priority of all mortgages, liens or encumbrances of any kind. A certified copy of this decree is deposited with the Registrar who thereupon issues his certificate bringing the land formally undr the Act. He issues this certificate in duplicate, retaining the original in his office and delivering the duplicate to the owner. Thereafter no voluntary transaction can affect registered land unless the following requirements be met:
The instrument offered for filing must have noted upon it a statement that the land sought to be affected is registered, the name of the registered owner and number or numbers of the last certificate of registration, otherwise such instrument must not be filed, or if filed is of no effect. In addition every voluntary instrument must contain or have endorsed thereon the name, residence and post office address of every person who acquires or claims an interest under such instrument. Papers thus prepared and presented to the Registrar will not then be filed by him unless there also be presented the owner’s duplicate certificate of title in order that the same endorsement which is made on the original may be made on the copy. It therefore follows that a mortgagee of registered land could not make an assignment of his mortgage unless he present the owner’s duplicate certificate. Moreover, if he sought either to assign or release a mortgage by an attorney in fact, in addition to the other requirements, the power of attorney must not only have been filed with the Registrar, but a notation thereof must havebeen entered on the original certificate and also upon the duplicate in the hands of the owner. No method is'provided for preserving in the Registrar’s office a record of the fact that notations have been made on the duplicate. The Act simply directs that it shall be done. The duplicate certificate of title in the hands of the owner is his only evidence of title, as he would have no deed, except perhaps a certified copy of his deed on file. The mortgagee must obtain this certificate from the mortgagor and retain it in his possession or he may be put to great trouble in executing any instrumeftts relating to the mortgage. No release or assignment, even if executed in person and complying otherwise with all the requirements of the Act, would be received for filing by the Registrar, nor would they be entered on the register without production of the duplicate certificate, and until so entered they are declared to be of no effect, even if a consideration was paid. Even a deed between the parties, until filed and registered, is declared to take effect only as an agreement to convey. The status of a mortgagee of unregistered property after an application to register the title thereto has been filed is difficult to determine. As above noted filing of the application has the same effect as filing Lis Pendens so far as subsequent purchasers or encumbrancers are concerned. Nothing is said of prior encumbrancers. It is provided that encumbrances on registered land may be enforced as now, or hereafter, provided by law, and that the laws referring to release or satisfaction of mortgages, or foreclosure of mortgages shall apply to mortgages on registered land, except, that until notice of the pendency of a suit to foreclose is filed in the Registrar’s office and noted upon the certificate of title the filing of such action to foreclose is not notice to any person dealing with the land. Apparently this makes it impossible to foreclose upon land for which application to register has been made and no decree entered or certificate issued. In drafting the Act no thought seems to have been given to the status of the title during the period intervening between the filing of the application to register and the entry of the decree. This period is not less than sixty days and may be much longer in some cases. Reference has been made to the necessity of producing the owner’s duplicate certificate in every transaction. If it be lost or destroyed a copy cannot be obtained but application must be made to the court, proof made and a decree entered authorizing the issuance of a duplicate before the Registrar can issue the same. If the registered owner changes his or her name application is required to be made to the court and decree entered accordingly, and new certificate issued before any further notations can be made upon the original register.No person may bring an action to assert an interest or right in registered land or any lien or demand upon the same adverse to the interest certified after one year has elapsed following the first registration. Just what effect this might have upon the rights of a mortgagee under a mortgage executed prior to registration is not clear, but whether executed prior or subsequent to the issuance of the first certificate it will doubtless be subject to the Act if the' mortgagee is served with notice of proceedings.
If a mortgagee should through excess of caution on the part of the applicant be served with notice of the proceedings it is absolutely necessary for him to appear and protect his interest. He cannot be heard to object to registraiton, but he can see to it that his claim is protected. Registration may not only be had without his knowledge but despite his protest, and it is of the greatest importance that the lien holder see that the certificate of title issued correctly sets forth his claim. This involves the employment of an attorney at the expense of the mortgagee as under the form of mortgage commonly used this charge could not be made to the owner. The importance of this appearance must not be overlooked. In fact it would appear that a mortgagee must be constantly on the look out, as, if registration be had without his knowledge, and if the Act be held to be law, and his interest be incorrectly stated in the certificate, he would be precluded after the lapse of one year from the date of issuance from asserting any interest not shown in the certificate.
Here is a provision of peculiar interest to one who takes a mortgage on registered land: Sec. 44. “ All dealings with land or any estate or interest therein after the same has been brought under this Act, and all liens, encumbrances and charges upon the same subsequent to the first registration thereof shall be deemed to be subject to the terms of this Act and to such amendments and alterations as may hereafter be made. The bringing of land under this Act shall imply an agreement which shall run with the land, that the same shall be subject to the terms and provisions of this Act and of amendments and alterations thereof.”
Does it interest an investor that his contract may be changed or abrogated at any time? If his contract can be altered in any particular it can be wholly destroyed. Would you consider this an inducement to loan money on registered lands?
The framers of this Act are guilty of one sin of omission in this: they failed to insert a clause making it obligatory upon a purchaser or encumbrancer to accept the certificate of title as conclusive evidence of ownership. As a complete method of confiscation it lacks this element: for by the terms of the Act if one secure such a certificate by any means, lawful or unlawful, and he can make no use of it, he has taken his pains for nothing. The act has not yet been passed which attempts to compel one to buy property or loan money. That discretion still remains in the individual.
As a final word, if the certificate of registry is not what the Act declares it to be, i.e.: conclusive, undisputable evidence of its contents, the whole plan and object of the Act has failed and it remains but a cumbrance on the statute books; a menace to the public good and a source of loss and distress to those who in good faith are persuaded to bring their property under its provisions. An applicant may withdraw his application to register before hearing (Sec. 20) but we fail to find any method provided for taking the land from under the provisions of the Act after registration.
The Supreme Court has settled the question of the legal value of the certificate. This should, in all reason, be the death knell of the Act.
The point was squarely before the court in Follette vs. Pacific Light and Power Company in the case decided in bank June 27, 1922. The clear judgment rendered appears to be decisive.
The facts, as found by the court, are as follows: On Nov. 18,
1915,	Bogart, then owner of the land, made a deed to the Power Company of an easement fo a right of way over the same. The conveyance was recorded and the grantee took possession for its purposes and since has been in the actual and visible possession and occupancy thereof. On Sep.t 8, 1916, Bogart filed his petition for registry of his land under the Torrens Act which did not in any way refer to the easement nor to the Power Company, but alleged that he himself was, and had for more than five years last past been, in the actual, exclusive and adverse possession of the premises, and the whole thereof, claiming to own the title thereto as against all the world. Notice was published as required by the Act, but no other notice was given the Power Co. On Dec. 18,
1916,	the court entered decree in accordance with the prayer of the petition and certificate of title was issued to Bogart. On Jan. 17, 1917, he sold the premises to Gibbs, who paid full value therefor and who relied exclusively upon said certificate of title to support his claim of being an innocent purchaser for value. On Feb. 6, 1917, Gibbs sold the premises to Follette, who similarly relied upon the certificate of title as supporting his claim as being an innocent purchaser for value. Neither said Gibbs or Follette went upon or examined the premises they were thus purchasing, nor did either of them have any actual knowledge of the claim, interest,easement, occupancy or possession of the Power Company. Shortly after his purchase Follette inspected the premises and finding the Power Co. in possession of a portion by virtue of its easement commenced suit in ejectment. The trial court found for the defendant and that as to the defendant, the first certificate of registration, and all subsequent certificates based thereon were void. Plaintiff appealed. Beside other argument in support of appellant’s claim the final contention was made that notwithstanding the infirmities in the Bogart degree he is still protected by virtue of the finding of the court directing registration, and that he took the title to the premises for full value and without any actual knowledge of respondent’s rights, and also by virtue of the provisions of the Land Title Law upon which he particularly relies. The court in its decision here quotes Secs. 34, 36, 37, 38, 39 and 41 set out above and disposes of the contention as follows:
“It is the contention of the appellant that these sections of the act in question entitle the purchaser of a registered title to the premises for which he has paid full value, to hold the same by a title which shall be superior to every claim,* title or interest which has not been protected in the decree of registration or which is not expressly excepted from the application of the foregoing sections of the act; and hence that even though the respondent herein was in the open, actual and visible possession and occupancy of the portion of said premises upon and over which its said easement was being exercised; and even though said decree of registration of the title to said premises was void as to his predecessor, Bogart, because obtained without that personal service of notice of the proceedings leading up to said decree, which could alone constitute due process of law, plaintiff’s asserted title as the sole and exclusive owner of said premises in fee simple, founded upon said decree must prevail over the respondent’s easement by virtue of the foregoing provisions of the Land Title Law. To give such a broad and far-reaching interpretation to these provisions of said law would be to sweep away all of those ancient safeguards which the person in the open, actual, visible, notorious possession and occupancy of the real property under whatever claim of interest or title had, against being deprived of his right or claim of right therein, without his day in court; and would be to go so far as to declare that such a possessor and occupant of real property under a claim of right, interest or ownership, however well founded, would be defenceless against the holder or transferee of a registered title under this act who had acquired the same, for a full consideration but without any examination of the premises or any inquiry as to its actual possession and occupancy by another; and it would go so far as to compel the conclusion that the purchaser of such a registered title, even with actual knowledge of the possession, occupancy and claim of ownership of another, could still obtain by such purchase a superior title to the land. It is needless to say that such a destructive interpretation of the provisions of this law should not be adopted unless such a conclusion is found to be inevitable after a most searching scrutiny of the language and intendment of the law, since it is not to be presumed that the legislature in the enactment of statutes, or the people in the adoption of laws, intend to overturn long-established legal principles, unless such intention is made to clearly appear by express declaration or necessary implication.
A cursory reading of the several sections of the Land Title Law above set forth discloses that in each of these the phrase “ good faith” or its equivalent “ bona fide,” is employed in relation to purchasers of registered titles. If it were possible to so construe these terms as used in said law as having the same scope and meaning as that given them by the long course of decisions prior to the adoption of this law, the case would be simplified, for the reason that such purchasers of such registered title would still be required to take notice of the actual possession and occupancy of the premises by another and would still be bound to all that such notice imported, and hence could not be a bona fide purchaser of the premises as against the prior and superior rights and interests of such actual possessor thereof. But the framers of this law evidently intended that such should not be the interpretation to be placed upon these terms. By the provisions of Section 34 of this law the only actual possession and occupation of the premises to which the title of the registered owner or his successor is:
(1) Of the holder of a lease or agreement for a lease for a period not exceeding one year. (2) Of a public highway. (3) Of a subsisting right of way or easement created wihtin one year before issue of the certificate of title relied upon, over or in respect to the land. (4) The lien of taxes and special assessments. (5) Liens, claims or rights arising under the laws of the United States. The only two of the foregoing exceptions with which we are at present concerned are those relating to leases and easements. It might be well questioned in passing, whether the selection of these two classes of occupants of premises claimed under a registered title as exempt from its terms does not deprive this law of that uniformity of operation which the state constitution requires in all general laws. (Const. I, Sec. II.) There would seem to be no reason why the actual occupant of premises under a lease for aterm greater than one year should not be as much entitled to the protection which his actual occupancy thereunder would otherwise afford as would an occupant under a lease for less than a year; nor why an actual occupant of the premises under a contract of purchase should not be entitled to the same protection as that accorded the occupant under a lease for less than a year; or why a tenant in common or a holder of a life estate in possession, or in fact any owner of any interest in the fee should not be entitled to rely as safely upon his occupancy of the premises as this section of the act permits the lessee for less than a year to do. Nor does there appear to be any substantial reason why the owner and user of a right of way or other easement in, upon, or over the premises created more than one year before the issue of the certificate relied upon should not be as fully protected as the holder of such easement created within one year before the issuance of such certificate. This phase of the subject has, however, not been adequately presented upon this appeal, and hence will not be finally be passed upon at this time, since the decision, we think, can be placed upon other and broader grounds.
To reutrn, then, to the purposes of the framers of this law as disclosed by its express terms, it would appear from a reading of Sec. 36 thereof, above quoted, that except as to the favored classes of occupants above referred to, the purchaser of a registered title shall not be held to inquire into the circumstances under which any previous registered owner was registered, and shall not be affected with notice actual or constructive of any unregistered interest; and this section further declares that knowledge that any unregistered interest is in existence shall not of itself be imputed as fraud. It is thus positively and expressly stated by this section of the law, not only that the actual possession and occupancy of the premises by the holders of interests therein other than those excepted by the earlier section shall not impart notice of the rights of such possessors and occupants, but that even actual knowledge of their said possession and occupancy on the part of a purchaser of a registered title shall furnish no protection against such title. Applying this inescapable interpretation of these sections of the law to the case at bar, it would follow that even though the plaintiff had actual knowledge of the occupant’s possession and occupancy of said premises in the exercise of its easement therein, and even though the plaintiff actually knew that the respondent was the owner of such easement by the purchase of the same from the plaintiff’s predecessor, Bogart; and even though the plaintiff actually knew that the right and interest of said respondent and itsactual occupancy of said premises thereunder antedated the proceedings for the registration of Bogart’s title thereto, the plaintiff could still rest serenely upon his registered title as superior to the respondent’s right and interest in the premises and could maintain this suit in ejectment and oust the respondent therefrom. What then becomes of the ancient doctrine of bona fides and good faith in the purchases of real property? What of due process of law? Under this section of the law in question as thus interpreted these would no longer exist. It may be contended, however, that under Sec. 37 of said law these ancient meanings and safeguards thus expressly destroyed have still been restored and preserved. That section reads as follows:	‘ Sec. 37. In case of fraud, any person
defrauded shall have all rights and remedies that he would have had if the land were not under the provisions of this act; provided, that nothing contained in this section shall affect the title of a registered owner who has taken bona fide for a valuable consideration, or of any person bona fide claiming through or under him.’
It may be pertinently inquired what the term bona fide, as twice employed in this section is intended to mean. Was it intended that a purchaser having actual knowledge of the full extent of the prior rights and interests in the premises to be purchased could not with such knowledge be a purchaser in good faith If so, what then becomes of the express terms of the former section declaring that such actual knowledge shall not be imputed as fraud? If not, then these two sections of the law are in open antagonism and confusion. This state of confusion is not relieved, but is rather increased and intensified by Sec. 39 of this act, which declares that no unregistered estate, interest, power, right, claim, contract or trust shall prevail against the title of a registered owner taking bona fide for a valuable consideration, or of any person bona fide claiming through or under him. In the effort to relieve ourselves of this confusion we are necessarily brought to the determination of the question whether a purchaser of property which is in the actual, open, exclusive, notorious possession and occupancy of another can be or become a bona fide purchaser of such property, so as to acquire title thereto which shall be superior to the rights and interests of such possessor. In the course of this inquiry it is essential to take note of the important place which the fact of possession has always held under our Anglo-American system of laws in relation to real property. The earliest mode of conveyance of corporeal hereditaments known to the common law was that of feoffment, to which livery of seizin or delivery of possession of the property was essential. This method of conveyance prevailed during all those earlier centuries when writings were infrequent, and persisted down to the time of Charles II when the first statute of frauds was enacted. Persons out of possession of real estate under these ancient modes of conveyance could not transfer title to the same, and hence, necessarily, possession was the best and most often was the only indicia of title which the owner had. From these ancient times down to the present, by the unbroken rule of common law and by the uniform current of both English and American authority, the actual possession and occupancy of real property imparted to all the world notice of the rights and interests of the possessor.
It must therefore be taken to be the long and well settled law of this state that the actual, open, notorious and visible possession and occupancy of real property imparts notice to those dealing with the title thereto of the rights and interests of such possessor and that a person attempting to obtain title to such premises wih such knowledge, or duty to acquire such knowledge, as such notice imparts, cannot as to such possessor be or become a bona fide purchaser thereof to the extent of being able to assert a better right or title thereto than that which his predecessors had or could have asserted. . . .
Our conclusion therefore is: I. That the registration of the title to the premises in question by Bogart, under whom the Apel-lant claims, was, as to the respondent herein, void as obtained by fraud and without such service of notice upon the respondent in the actual possession and occupancy of the premises as was required by the terms of the Torrens Land Law in order to constitute due process of law. (2) That the respondent was entitled to assert the invalidity of said proceeding in this action. . . .	(3) That the
appellant, as the successor in interest of said Bogart, taking title under said void decree, was not, as to the respondent in the actual possession and occupancy of the premises, a purchaser in good faith of said title. (4) That the provisions of the Land Title Law which purport to entitle the purchaser of a registered title to the premises in the actual possession and occupancy of another to hold the same superior to the prior rights and interests of said possessor, notwithstanding that such registered title is subject to the infirmities shown to exist in the instant case, are obnoxious to the provision of the Federal Constitution, which provides that persons shall not be deprived of their property without due process of law. The judgment is affirmed.”
We have not attempted to quote the opinion verbatim. The conclusion stated is sufficient. Nothing remains to be said.Copyright 1916
MELVILLE P. FRASIER