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Other rela

cipal and

terms an

nexed by law to original contract.

with authority and one made without authority and subsequently ratified. The consent of the principal is referred back to the date of the original act by a beneficent and necessary fiction.

Here would be the proper place to consider who can sue and be sued on contracts made by agents: but as this discussion would take up such an amount of space as to interfere with the proportion and connexion of the different parts of the subject, it is reserved for an appendix which will be found at the end of this chapter.

B.

There are certain relations created by contract, of which tions: prin- that of creditor, principal debtor, and surety may be taken as surety; the type, in which the rights or duties of one party may be varied by a new contract between others. But when a surety is discharged by dealings between the creditor and the principal debtor, this is the result of a condition annexed by law to the surety's original contract. There is accordingly no real anomaly, though there is an apparent exception to the vague maxim that the legal effects of a contract are confined to the contracting parties and there is not even any verbal inconsistency with any of the more definite rules we have stated. However it seems proper not to omit the mention of such cases, inasmuch as they have been considered as real exceptions by writers of recognized authority (a).

Anoma

of bank

Insolvency and bankruptcy, again, have various consequences lous effects which affect the rights of parties to contracts, but which the ruptcy and general principles of contract are inadequate to explain. We insolvency allude to them in this place only to observe that it is best to

regard them not as derived from or incidental to contract, but as results of an overriding necessity and beyond the region of contract altogether (b). Even those transactions in bankruptcy and insolvency which have some resemblance to contracts, such as compositions with creditors, are really of a judicial or quasijudicial character. It is obvious that if these transactions were merely contracts no dissenting creditor could be bound.

(a) See Pothier Obl. § 89.
(b) A striking instance is fur-
nished by the rule in Waring's case,

19 Ves. 345 sce per Lord Cairns, Banner v. Johnston, L. R. 5 H. L. at p. 174.

C. The case of trusts presents a real and important exception, Trusts: a real exception, if

contract

trust and

if a trust is regarded as in its origin a contract between the author of the trust and the trustee. It is quite possible, and trust a may for some purposes be useful so to regard it. The Scottish between institutional writers (who follow the Roman arrangement in the author of learning of Obligations as elsewhere) consider trust as a species trustee. of real contract coming under the head of depositation (a). So treated Conversely deposits, bailments, and the contract implied by law and Amewhich is the foundation of the action for money received, are rican writers: anaspoken of in English books as analogous to trusts (b). A logy sugchapter on the duties of trustees forms part of the best known gested in American text-books on contracts, though no attempt is made, so books. far as we have ascertained, to explain the logical connexion of this with the rest of the subject.

English

It is more important to observe that Lord Selborne in a recent Authority case, where the question was of mortgagee's costs, made the following observations:

"The contract between mortgagor and mortgagee, as it is understood in this Court, makes the mortgage a security . . . for the costs properly incident to a suit for foreclosure or redemption. In like manner the contract between the author of a trust and his trustees entitles the trustees, as between themselves and their cestuis que trust, to receive out of the trust estate all their proper costs incident to the execution of the trust. These rights, resting substantially upon contract, can only be lost or curtailed by such inequitable conduct on the part of a mortgagee or trustee as may amount to a violation or culpable neglect of his duty under the contract."

This involves the statements

1. That a trust is in its inception a contract.

2. And a contract such that third persons, namely the cestuis que trust, acquire independent rights under it: which gives to the transaction that exceptional character with which we are now concerned.

of Lord Selborne for so re

garding it.

contract.

And in fact the relation of a trustee to his cestui que trust is General closely analogous to that of a debtor to his creditor, in so far as analogy to it has the nature of a personal obligation and is governed by the general rules derived from the personal character of obligations.

(a) Sic, though no such abstract term is known in Roman law. See

Erskine, Inst. Bk. 3, Tit. 1. s. 32.
(b) Blackstone, Comm. 3. 432.

Exception

ren.

Thus the transfer of equitable rights of any kind is subject, as regards the perfection of the transferee's title, to precisely the same conditions as the transfer of rights under a contract.

nd the true way to understand the nature and incidents of equitable ownership is to start with the notion not of a real ownership which is protected only in a court of equity, but of a contract with the legal owner which (in the case of trusts properly so called) cannot be enforced at all, or (in the case of constructive trusts, such as that which arises on a contract for the sale of land) cannot be enforced completely, except in a court of equity ().

The

However although every trust may be said to include a contract, it includes so much more, and the purposes for which the machinery of trusts is employed are of so different a kind, that trusts are distinct in a marked way not merely from every other species of contract, but from all other contracts as a genus. complex relations involved in a trust cannot be conveniently reduced to the ordinary elements of contract, and there seems to be sufficient justification (independently of the historical reason supplied by the exclusive jurisdiction of Equity) for the course hitherto adopted by all English writers in dealing with trusts as a separate branch of law.

D. Closely connected with the cases covered by the doctrine of certain of trusts, but extending beyond them, we have the rules of provisions for child equity by which special favour is extended to provisions made by parents for their children. This exception has already been noted in stating the general rule (p. 172 above). In the ordinary case of a marriage settlement the children of the contemplated marriage itself are said to be "within the consideration of marriage" and may enforce any covenant for their benefit contained in the settlement. Where a settlement made on the marriage of a widow provides for her children by a former marriage, such children, though in the technical language of equity volunteers, or persons having no part in the consideration, are likewise entitled to enforce the provisions for their benefit :

(a) See per Lord Westbury, Knox v. Gye, L. R. 5 H. L. at p. 675; Shaw v. Foster, ib. at p. 338 (Lord

Cairns), and at p. 356 (Lord
Hatherley).

but it is doubtful whether this extends to the case of a husband making a provision for his children by a former wife («).

The question how far limitations in a marriage settlement to persons other than children can be supported by the consideration of marriage, so as not to be defeasible under 27 Eliz. c. 4 against subsequent purchasers, is a distinct and wider one, not falling within the scope of the present work (b).

tions:

public offi

cers, &c.

E. There is also a considerable class of statutory exceptions in Statutory cases where companies and public bodies, though not incorpo- exceprated, are empowered to sue and be sued by their public officers powers to or trustees. The enactments of this kind relating to companies sue by are collected and commented on by Mr. Justice Lindley (c). The trustees of Friendly Societies and Trade Unions are likewise empowered to sue, and may be sued, in their own names, in cases concerning the property of the society or union (d). In a recent case in the Queen's Bench an enactment that a local authority might recover certain expenses, such authority not being incorporated and no special remedy provided, was held to make the local authority a quasi corporation for the purpose of suing (e). This however was not on a contract, but on a purely statutory cause of action.

By the 8 & 9 Vict. c. 106, s. 5 a person who is not a party to Covenants an indenture may nevertheless take the benefit of a covenant in relating to real proit relating to real property. This enactment has not, so far as perty.

we know, been the subject of any reported decision (ƒ).

Having disposed of these special exceptions, we may now General proceed to examine the rule in its ordinary application, which application

(a) Gale v. Gale, 6 Ch. D. 144, 152.

(b) The references in Gale v. Gale (last note) will guide the reader, if desired, to the authorities, including the full discussion in Mr. May's book on Voluntary and Fraudulent Conveyances.

(c) Lindley, Ptnp. 1. 509 sqq. See also Leake on Contracts, 225.

(d) Friendly Societies Act, 1875, 38 & 39 Vict. c. 60, s. 21; Trade Union Act 1871, 34 & 35 Vict. c. 31, s. 9. It is the same with building societies formed before the Act

of 1874 and not incorporated under

it.

(e) Mills v. Scott, L. R. 8 Q. B. 496.

(f) For an example of the inconvenience provided against by it see Lord Southampton v. Brown, 6 B. & C. 718, where the person who was really interested in the payment of rent on a demise made by trustees, and with whom jointly with the trustees the covenant for payment of rent was expressed to be made, was held incapable of joining in an action on the covenant.

of rule.

Contract

for benefit of third person.

may be expressed thus:-The agreement of contracting parties cannot confer on a third person any right to enforce the contract.

There are two different classes of cases in which it may seem desirable, and in which accordingly it has been attempted, to effect this: (1) where the object of the contract is the benefit of a third person: (2) where the parties are numerous and the persons really interested are liable to be changed from time to time.

It was for a long time not fully settled whether a contract between A. and B. that one of them should do something for the benefit of C. did or did not give C. a right of action on the contract (a). And there was positive authority that at all events a contract made for the benefit of a person nearly related to one or both of the contracting parties might be enforced by that Third per person (b). However the rule is now distinctly established, so son cannot far as any common-law right of action is concerned, that a third person cannot sue on a contract made by others for his benefit even if the contracting parties have agreed that he may, and that near relationship makes no difference. This was decided by the Court of Queen's Bench in Tweddle v. Atkinson (c). The following written agreement had been entered into :

sue at law.

"Memorandum of an agreement made this day between William Guy," &c., "of the one part, and John Tweddle of the other part. Whereas it is mutually agreed that the said William Guy shall and will pay the sum of £200 to William Tweddle his son-in-law, railway inspector, residing in Thornton, in the county of Fife in Scotland, and the said John Tweddle father to the aforesaid William Tweddle shall and will pay the sum of £100 to the said William Tweddle each and severally the said sums on or before the 21st day of August 1855; and it is hereby further agreed by the aforesaid William Guy and the said John Tweddle that the said William Tweddle has full power to sue the said parties in any Court of law or equity for the aforesaid sums hereby promised and specified."

(a) See Viner Abr. Assumpsit, Z. (1. 333-7); per Eyre, C. J. Co. of Feltmakers v. Davis, 1 Bos. & P. 98; note to Pigott v. Thompson, 3 Bos. & P. 149.

(b) Dutton v. Poole (Ex. Ch.), 2 Lev. 210, Vent. 318, 322. Ap

proved by Lord Mansfield, Cowp 443. There appears to have been much difference of opinion at the time.

(c) 1 B. & S. 393, 30 L. J. Q. B.

265.

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