CHAPTER XII.

OWNERSHIP.

§ 86. =The Definition of Ownership.=

Ownership, in its most comprehensive signification, denotes the relation between a person and any right that is vested in him. That which a man owns is in all cases a right. When, as is often the case, we speak of the ownership of a material object, this is merely a convenient figure of speech. To own a piece of land means in truth to own a particular kind of right in the land, namely, the fee simple of it.

Ownership, in this generic sense, extends to all classes of rights, whether proprietary or personal, _in rem_ or _in personam_, _in re propria_ or _in re aliena_. I may own a debt, or a mortgage, or a share in a company, or money in the public funds, or a copyright, or a lease, or a right of way, or the fee simple of land. Every right is owned; and nothing can be owned except a right. Every man is the owner of the rights which are his.

Ownership, in its generic sense, as the relation in which a person stands to any right vested in him, is opposed to two other possible relations between a person and a right. It is opposed in the first place to possession. This very difficult juridical conception will be considered by us in the succeeding chapter. We shall see that the possession of a right (_possessio juris, Rechtsbesitz_) is the _de facto_ relation of continuing exercise and enjoyment, as opposed to the _de jure_ relation of ownership. A man may possess a right without owning it, as where the wrongful occupant of land makes use of a right of way or other casement appurtenant to it. Or he may own a right without possessing it. Or finally ownership and possession may be united, as indeed they usually are, the _de jure_ and the _de facto_ relations being coexistent and coincident.

The ownership of a right is, in the second place, opposed to the encumbrance of it. The owner of the right is he in whom the right itself is vested; while the encumbrancer of it is he in whom is vested, not the right itself, but some adverse, dominant, and limiting right in respect of it. A. may be the owner of property, B. the lessee of it, C. the sub-lessee, D. the first mortgagee, E. the second mortgagee, and so on indefinitely. Legal nomenclature, however, does not supply separate names for every distinct kind of encumbrancer. There is no distinctive title, for example, by which we may distinguish from the owner of the property him who has an easement over it or the benefit of a covenant which runs with it.

Although encumbrance is thus opposed to ownership, every encumbrancer is nevertheless himself the _owner_ of the encumbrance. The mortgagee of the land is the owner of the mortgage. The lessee of the land is the owner of the lease. The mortgagee of the mortgage is the owner of the sub-mortgage. That is to say, he in whom an encumbrance is vested stands in a definite relation not merely to it, but also to the right encumbered by it. Considered in relation to the latter, he is an encumbrancer; but considered in relation to the former, he is himself an owner.

Ownership is of various kinds, and the following distinctions are of sufficient importance and interest to deserve special examination:

1. Corporeal and Incorporeal Ownership.

2. Sole Ownership and Co-ownership.

3. Trust-Ownership and Beneficial Ownership.

4. Legal and Equitable Ownership.

5. Vested and Contingent Ownership.

§ 87. =Corporeal and Incorporeal Ownership.=

Although the true subject-matter of ownership is in all cases a right, a very common form of speech enables us to speak of the ownership of material things. We speak of owning, acquiring, or transferring, not rights in land or chattels, but the land or chattels themselves. That is to say, we identify by way of metonymy the right with the material thing which is its object. This figure of speech is no less convenient than familiar. The concrete reference to the material object relieves us from the strain of abstract thought. Rights are dim abstractions, while material things are visible realities; and it is easier to think and speak of the latter than of the former, even though the substitution is a mere figure of speech. This device, moreover, is an aid to brevity, no less than to ease of comprehension.

This figurative identification of a right with its object is, however, not always permissible. I may be said to own the money in my hand; but as to that which is due to me, I own not the money, but a right to it. In the one case I own the material coins; in the other the immaterial debt or _chose in action_. So I own my land, but merely a right of way over the land of my neighbour. If we look, therefore, no deeper than the mere usages of speech, it would seem as if the subject-matter of ownership were sometimes a material object and at other times a right. This, of course, would be a logical absurdity. Ownership may conceivably be in all cases a relation to a material object; or it may in all cases be a relation to a right; but it cannot be sometimes the one and sometimes the other. So long as we remember that the ownership of a material thing is nothing more than a figurative substitute for the ownership of a particular kind of right in that thing, the usage is one of great convenience; but so soon as we attempt to treat it as anything more than a figure of speech, it becomes a fertile source of confusion of thought.

In what cases, then, do we use this figure of speech? What is it that determines whether we do or do not identify a right with its object? How is the line drawn between corporeal and incorporeal ownership? The usage is to some extent arbitrary and uncertain. The application of figurative language is a matter not of logic but of variable practice and opinion. Speaking generally, however, we may say that the ownership of a material thing means the ownership of a _jus in re propria_ in respect of that thing. No man is said to own a piece of land or a chattel, if his right over it is merely an encumbrance of some more general right vested in some one else. The ownership of a _jus in re aliena_ is always incorporeal, even though the object of that right is a corporeal thing. I am not said to own a chattel, merely because I own a right to have it transferred to me, or because I own a lien over it or a right to the temporary use of it.

When, on the other hand, a right is not a mere encumbrance of another right—when it is a self-existent _jus in re propria_—it is identified with the material thing which is its subject-matter. It is not difficult to perceive the origin and reason of this usage of speech. In its full and normal compass a _jus in re propria_ over a material object is a right to the entirety of the lawful uses of that object. It is a general right of use and disposal, all _jura in re aliena_ being merely special and limited rights derogating from it in special respects. It is only this absolute and comprehensive right—this _universum jus_—that is identified with its object. For it is in some sense coincident with its object, and exhausts the juridical significance of it. It is the greatest right which can exist in respect of the thing, including all lesser rights within itself, and he who owns it may therefore conveniently be said to own the thing itself.

We have said that in its full and normal compass corporeal ownership is the ownership of a right to the entirety of the lawful uses of a corporeal thing. This compass, however, may be limited to any extent by the adverse influences of _jura in re aliena_ vested in other persons. The right of the owner of a thing may be all but eaten up by the dominant rights of lessees, mortgagees, and other encumbrancers. His ownership may be reduced to a mere name rather than a reality. Yet he none the less remains the owner of the thing, while all others own nothing more than _rights_ over it. For he still owns that _jus in re propria_ which, were all encumbrances removed from it, would straightway expand to its normal dimensions as the _universum jus_ of general and permanent use. He then, is the owner of a material object, who owns a right to the general or residuary uses of it,[203] after the deduction of all special and limited rights of use vested by way of encumbrance in other persons.[204]

What, then, is the name of the right which we thus identify, for convenience of speech, with its material object? What shall we call the right which enables the owner of it to say that he owns a piece of land or a chattel? Unfortunately for the lucidity of legal nomenclature, there is, unless we are prepared to use the somewhat awkward Latin term _jus in re propria_, no other name for it than _ownership_ itself. This is a use of the term which is quite different from that hitherto considered by us. Ownership, as a particular kind of right, must be clearly distinguished from ownership, as a particular kind of relation to rights of all descriptions. We cannot class together the right of ownership and the ownership of a right. This use of the term to denote a right is the natural outcome of the figurative use of it already considered. When we not only speak of the ownership of land, but interpret such language literally, it is clear that ownership must be taken as the name of the right which the owner has in the land.[205]

§ 88. =Corporeal and Incorporeal Things.=

Closely connected with the distinction between corporeal and incorporeal ownership is that between corporeal and incorporeal _things_. The term thing (_res_, _chose_, _sache_) is used in three distinct senses by legal writers:—

1. In its first and simplest application it means merely a material object, regarded as the subject-matter of a right.[206] According to this use, some rights are rights to or over things, and some are not. The owner of a house owns a thing; the owner of a patent does not.

2. In a second and wider sense the term thing includes every subject-matter of a right, whether a material object or not. In this signification every right is a right in or to some thing. A man’s life, reputation, health, and liberty are things in law, no less than are his land and chattels.[207] Things in this sense are either material or immaterial, but the distinction thus indicated must not be confounded with that now to be explained between things corporeal and incorporeal.

3. In a third and last application the term thing means whatever a man owns as part of his estate or property. It is any subject-matter of ownership within the sphere of proprietary or valuable rights. Now we have already seen that according to the current usage of figurative speech ownership is sometimes that of a material object and sometimes that of a right. Things, therefore, as the objects of ownership, are of two kinds also. A corporeal thing (_res corporalis_) is the subject-matter of corporeal ownership; that is to say, a material object. An incorporeal thing (_res incorporalis_) is the subject-matter of incorporeal ownership; that is to say, it is any proprietary right except that right of full dominion over a material object which, as already explained, is figuratively identified with the object itself. If I own a field and a right of way over another, my field is a _res corporalis_ and my right of way is a _res incorporalis_. If I own a pound in my pocket and a right to receive another from my debtor, the first pound is a thing corporeal, and the right to receive the second is a thing incorporeal; it is that variety of the latter, which is called, in the technical language of English law, a _chose in action_ or thing in action; while the pound in my pocket is a chose or thing in possession.[208]

It is clear that if literally interpreted, this distinction is illogical and absurd. We cannot treat in this way rights and the objects of rights as two species of one genus. If we use the term thing in each case to mean a right, then the right of an owner of land is just as incorporeal as is that of his tenant. On the other hand, if the term is to be taken in each case to mean the object of a right, then the object of the tenant’s right is just as corporeal as is that of his landlord. The distinction between corporeal and incorporeal things is based on the same figure of speech as is that between corporeal and incorporeal ownership. Both distinctions become intelligible, so soon as we recognise the metonymy involved in the substitution of the subject-matter of a right for the right itself.[209]

§ 89. =Sole Ownership and Co-ownership.=

As a general rule a right is owned by one person only at a time, but duplicate ownership is perfectly possible. Two or more persons may at the same time have the same right vested in them. This may happen in several distinct ways, but the simplest and most obvious case is that of co-ownership. Partners, for example, are co-owners of the chattels which constitute their stock in trade, of the lease of the premises on which their business is conducted, and of the debts owing to them by their customers. It is not correct to say that a right owned by co-owners is divided between them, each of them owning a separate part. The right is an undivided unity, which is vested at the same time in more than one person. If two partners have at their bank a credit balance of 1000_l._, there is one debt of 1000_l._ owing by the bank to both of them at once, not two separate debts of 500_l._ due to each of them individually. Each partner is entitled to the whole sum, just as each would owe to the bank the whole of the firm’s overdraft. The several ownership of a part is a different thing from the co-ownership of the whole. So soon as each of two co-owners begins to own a part of the right instead of the whole of it, the co-ownership has been dissolved into sole ownership by the process known as partition. Co-ownership involves the undivided integrity of the right owned.

Co-ownership, like all other forms of duplicate ownership, is possible only so far as the law makes provision for harmonising in some way the conflicting claims of the different owners _inter se_. In the case of co-owners the title of the one is rendered consistent with that of the other by the existence of reciprocal obligations of restricted use and enjoyment.

Co-ownership may assume different forms by virtue of the different incidents attached to it by law. Its two chief kinds in English law are distinguished as ownership _in common_ and _joint_ ownership. The most important difference between these relates to the effect of the death of one of the co-owners. In ownership in common the right of a dead man descends to his successors like any other inheritable right. But on the death of one of two joint owners his ownership dies with him, and the survivor becomes the sole owner by virtue of this right of survivorship or _jus accrescendi_.

§ 90. =Trust and Beneficial Ownership.=

A trust is a very important and curious instance of duplicate ownership. Trust property is that which is owned by two persons at the same time, the relation between the two owners being such that one of them is under an obligation to use his ownership for the benefit of the other. The former is called the trustee, and his ownership is trust-ownership; the latter is called the beneficiary, and his is beneficial ownership.[210]

The trustee is destitute of any right of beneficial enjoyment of the trust property. His ownership, therefore, is a matter of form rather than of substance, and nominal rather than real. If we have regard to the essence of the matter rather than to the form of it, a trustee is not an owner at all, but a mere agent, upon whom the law has conferred the power and imposed the duty of administering the property of another person. In legal theory, however, he is not a mere agent but an owner. He is a person to whom the property of some one else is fictitiously attributed by the law, to the intent that the rights and powers thus vested in a nominal owner shall be used by him on behalf of the real owner. As between trustee and beneficiary, the law recognises the truth of the matter; as between these two, the property belongs to the latter and not to the former. But as between the trustee and third persons, the fiction prevails. The trustee is clothed with the rights of his beneficiary, and is so enabled to personate or represent him in dealings with the world at large.

The purpose of trusteeship is to protect the rights and interests of persons who for any reason are unable effectively to protect them for themselves. The law vests those rights and interests for safe custody, as it were, in some other person who is capable of guarding them and dealing with them, and who is placed under a legal obligation to use them for the benefit of him to whom they in truth belong. The chief classes of persons in whose behalf the protection of trusteeship is called for are four in number. In the first place, property may belong to persons who are not yet born; and in order that it may be adequately safeguarded and administered, it is commonly vested in the meantime in trustees, who hold and deal with it on account of its unborn owners. In the second place, similar protection is required for the property of those who lie under some incapacity in respect of the administration of it, such as infancy, lunacy, or absence. Thirdly, it is expedient that property in which large numbers of persons are interested in common should be vested in trustees. The complexities and difficulties which arise from co-ownership become so great, so soon as the number of co-owners ceases to be small, that it is essential to avoid them; and one of the most effective devices for this purpose is that scheme of duplicate ownership which we term a trust. Fourthly, when persons have conflicting interests in the same property (for example, an owner and an encumbrancer, or different kinds of encumbrancers) it is often advisable that the property should be vested in trustees, whose power and duty it is to safeguard the interests of each of those persons against the conflicting claims of the others.

A trust is to be distinguished from two other relations which resemble it. It is to be distinguished, in the first place, from a mere contractual obligation to deal with one’s property on behalf of some one else. A trust is more than an obligation to use one’s property for the benefit of another; it is an obligation to use it for the benefit of another in whom it is already concurrently vested. The beneficiary has more than a mere personal right against his trustee to the performance of the obligations of the trust. He is himself an owner of the trust property. That which the trustee owns, the beneficiary owns also. If the latter owned nothing save the personal obligation between the trustee and himself, there would be no trust at all. Thus if a husband gratuitously covenants with his wife to settle certain property upon her, he remains the sole owner of it, until he has actually transferred it in fulfilment of his contract; and in the meantime the wife owns nothing save the contractual obligation created by the covenant. There is therefore no trust. If, on the other hand, the husband declares himself a trustee of the property for his wife, the effect is very different. Here also he is under a personal obligation to transfer the property to her, but this is not all. The beneficial ownership of the property passes to the wife forthwith, yet the ownership of the husband is not destroyed. It is merely transformed into a trust-ownership consistent with the concurrent beneficial title of his wife.

In the second place, a trust is to be distinguished from the relation in which an agent stands towards the property which he administers on behalf of his principal. In substance, indeed, as already indicated, these two relations are identical, but in form and in legal theory they are essentially different. In agency the property is vested solely in the person on whose behalf the agent acts, but in trusteeship it is vested in the trustee himself, no less than in the beneficiary. A trustee is an agent for the administration of property, who is at the same time the nominal owner of the property so administered by him.

A trust is created by any act or event which separates the trust-ownership of any property from the beneficial ownership of it, and vests them in different persons. Thus the direct owner of property may declare himself a trustee for some one else, who thereupon becomes the beneficial owner; or the direct owner may transfer the property to some one else, to hold it in trust for a third. Conversely, a trust is destroyed by any act or event which reunites in the same hands the two forms of ownership which have become thus separated. The trustee, for example, may transfer the property to the beneficiary, who then becomes the direct owner; or the beneficiary may transfer it to his trustee, with the like result.

Trust-ownership and beneficial ownership are independent of each other in their destination and disposition. Either of them may be transferred, while the other remains unaffected. The trustee may assign to another, who thereupon becomes a trustee in his stead, while the beneficiary remains the same; or the beneficiary may assign to another, while the trust-ownership remains where it was. In like manner, either kind of ownership may be independently encumbered. The trustee may, in pursuance of the powers of the trust, lease or mortgage the property without the concurrence of the beneficiary; and the beneficiary may deal in the same way with his beneficial ownership independently of the trustee.

Whenever the beneficial ownership has been encumbered, either by the creator of the trust or by the beneficial owner himself, the trustee holds the property not only on behalf of the beneficial owner but also on behalf of the beneficial encumbrancers. That is to say, the relation of trusteeship exists between the trustee and all persons beneficially interested in the property, either as owners or encumbrancers. Thus if property is transferred to A., in trust for B. for life, with remainder to C., A. is a trustee not merely for C., the beneficial owner, but also for B., the beneficial encumbrancer. Both are beneficiaries of the trust, and between the trustee and each of them there exists the bond of a trust-obligation.[211]

§ 91. =Legal and Equitable Ownership.=

Closely connected but not identical with the distinction between trust and beneficial ownership, is that between legal and equitable ownership. One person may be the legal and another the equitable owner of the same thing at the same time. Legal ownership is that which has its origin in the rules of the common law, while equitable ownership is that which proceeds from rules of equity divergent from the common law. The courts of common law refused to recognise equitable ownership, and denied that the equitable owner was an owner at all. The Court of Chancery adopted a very different attitude. Here the legal owner was recognised no less than the equitable, but the former was treated as a trustee for the latter. Chancery vindicated the prior claims of equity, not by denying the existence of the legal owner, but by taking from him by means of a trust the beneficial enjoyment of his property. The fusion of law and equity effected by the Judicature Act, 1873, has not abolished this distinction; it has simply extended the doctrines of the Chancery to the courts of common law, and as equitable ownership did not extinguish or exclude legal ownership in Chancery, it does not do so now.

The distinction between legal and equitable ownership is not identical with that mentioned in a previous chapter as existing between legal and equitable _rights_. These two forms of ownership would still exist even if all rights were legal. The equitable ownership of a legal right is a different thing from the ownership of an equitable right. Law and equity are discordant not merely as to the _existence_ of rights, but also as to the _ownership_ of the rights which they both recognise. When a debt is verbally assigned by A. to B., A. remains the legal owner of it none the less, but B. becomes the equitable owner of it. But there are not for that reason _two_ debts. There is only one as before, though it has now two owners. So if A., the legal owner of a share in a company, makes a declaration of trust in favour of B., B. becomes forthwith the equitable owner of the share; but it is the same share as before, and not another. The thing which he thus equitably owns is a legal right, which is at the same time legally owned by A. Similarly the ownership of an equitable mor