The usual form of a chattel mortgage is a bill of sale with a conditional clause, stating the terms of the loan and that, on the mortgagor's failure to pay, the mortgagee may take possession of the property. Any persons who are competent to make a contract may make a chattel mortgage, and an agent may act for another as in many other cases. When thus acting his authority may be either verbal, or written, or may be shown by ratification. Persons also who have a common ownership in chattels, tenants in common or partners for example, may mortgage either their common or individual interests. A husband may give a chattel mortgage to his wife, and she in turn can give one to him. Likewise a corporation may make such a mortgage.
The law is broader in the way of permitting a minor, married woman, or corporation to be mortgagees when they cannot act as mortgagors of their property. Two or more creditors may join in such a mortgage to secure their separate debts. If the debt of one of them is fraudulent, his fraud, while rendering the mortgage fraudulent as to him, will not affect its validity as to the other.
How must the mortgaged property be described? With sufficient clearness to enable third persons to identify the property. The description must contain reasonable details and suggest inquiries which if followed will result in ascertaining the precise thing conveyed. A description of a baker's stock "stock on hand," would be too meager, so would be a description of "our books of account, and accounts due and to become due," but cattle described by their age, sex and location will satisfy the law, though the cattle of other owners should form part of the same herd, when they can be ascertained by following out the inquiries suggested by the mortgage. Again, a description that is wholly false avoids the mortgage, but if it is false only in part, this may be rejected and the mortgage remain valid for the remainder.
More generally the nature of the chattels conveyed determine largely the character of the description. Thus animals may be described by weight, age, height, color and breed; vehicles by their style and manufacturer's name; furniture by piece or set; crops growing or to be grown by their location and year. A general claim of "all" articles in a stated place is regarded as sufficient. Oral evidence is admissible to aid the description in identifying the subject-matter of the mortgage, and to explain the meaning and extent of the terms of the description.
A mortgage may be given for a future advance of money. Nor need the mortgage state that it is thus given; and the fact may be proved orally. But when the right of third parties are affected, such a mortgage is not valid against them unless the specific sum that is to be secured is set forth. Likewise to render a mortgage secure against attaching creditors of the mortgagor, there must be a distinct statement of the condition or terms of the mortgage; in other words the creditors have a right to know what interest the mortgagee really has in the property that secures to him rights superior to their own. The rule should also be stated that where the rights of third parties are in issue, it must appear that the mortgagee acquired the mortgage before they had any rights to the property.
The statutes require that chattel mortgages should be acknowledged and recorded. In some states the requirements are strict in respect to the disinterestedness of the official who takes the acknowledgment. An affidavit is another requirement. This must state several things, especially that the mortgage was given in good faith, and the nature and amount of the consideration.
What may be mortgaged? In general, any personal property that may be sold; many of the statutes define it. They cover a life insurance policy, corporation stock, railway rolling stock, seamen's wages, growing crops and trees, profits from the use of a steamboat, premiums earned by a horse, book accounts, leasehold interests, nursery stock, besides many other things. Whenever fixtures annexed to real estate retain the character of personal property they may be mortgaged. And when animals are mortgaged their natural increase are included. A mortgage made of an unfinished article will hold the article when finished if it can be identified.
By the common law nothing could be mortgaged that was not in existence at the time of the mortgage. By statute a mortgage may cover after-acquired property, and this statute has become very important especially with merchants, manufacturers, and others who are constantly changing their stocks of goods.
When the mortgagor fails to pay his debt, the right of the mortgagee to proceed in taking the property is usually regulated by statute, except when the parties have agreed themselves and in conformity with statute. The rights of the mortgagee depend in many cases on the title, whether that has passed to him by virtue of the mortgage, or whether it still remains conditionally in the mortgagor. Where the mortgagor still retains the title, a clause is often put into the mortgage to the effect that, should the mortgagor default in payment, the mortgagee may take possession of the property and sell it; and such a provision is valid and enforcible. Where the title is vested or transferred to the mortgagee by virtue of the mortgage, this is equivalent to giving him possession whenever he chooses to demand it. In other states the mortgagee's discretion is not so broad, before taking possession he must have reasonable grounds for believing himself insecure, that the mortgagor has done, or threatens to do, something that would impair the mortgagee's security.
Where the common law prevails and no statute has been enacted regulating the rights of parties, an important question is still unsettled in cases of a mortgage given on a stock of merchandise which permits the mortgagor to remain in possession and to sell the property mortgaged in the course of trade. Can he do this? In many states such a mortgage is regarded as fraudulent to creditors, in other states if such a mortgage is not, on proper judicial inquiry, proved to be a fraud, it will be upheld.
A provision in a mortgage that it shall cover after acquired property is regarded in some states as an executory agreement that it shall be held by the mortgagee as security; and the mortgagee may take possession of it, should the mortgagor fail to pay his debt, in accordance with his promise, before the rights of third persons have intervened. See Mortgage.
Chauffeur.– In many states minors are forbidden by statute to run automobiles. If therefore the owner of a car permits a minor to drive his car, he may be held liable for the injuries resulting from the driver's negligence. Should a chauffeur's license not disclose physical disabilities the license is not void, nor is he a trespasser in operating the machine on the highway. Such a license though defective is valid until revoked by the proper authority.
If discharged before the expiration of the term of his employment, an employer is still liable for his chauffeur's pay unless he has been unwilling or unable to fulfill his contract. If, however, he has been prevented by sickness or similar disability, he can recover, not perhaps the amount stated in the contract, but the worth of his services during the period of serving his employer.
A chauffeur may recover damages from his employer for injuries received while operating his car. The basis of the action is his employer's negligence. If the engine "kicks back" while he is cranking the car, and the employer contributed to the result by moving the spark lever, he is liable. If he is injured while running a car from a defective brake of which he had knowledge, he cannot recover. But if the employer knew, and the chauffeur did not know that the brake was defective, he could recover if injured in consequence of it. The employer is under no duty to warn his chauffeur of obvious dangers, or instruct him in matters that he may be fairly supposed to understand. If a chauffeur is riding at the owner's request, who is driving the car, he may recover if injured by the negligence of the owner in running the machine. Under the Workmen's Compensation Laws a chauffeur who is injured while running his car beyond the speed limit prescribed by statute can recover nothing. Nor is he justified by the custom of other chauffeurs in disregarding the rule. Lastly, if the owner of a car is injured, physically or financially, by reason of the wrongful conduct of his chauffeur, he has a remedy against him. See Automobile; Garage Keeper.
Check.– A check should be properly signed. A check signed by an individual with the word "agent," "treasurer," or other descriptive term, has sometimes been regarded as the check of the individual signer, and not that of a principal or company. The proper way is to sign the name of the principal or company, adding the name of the person by whom this is done, thus: "John Smith by John Doe, agent," or "The Atlas Co. by John King, Treasurer," or other official designation.
The statement will not accord with the view of many a reader, that a bank on which a check is drawn is under no legal agreement with the holder to pay it, whether the maker has a sufficient deposit or not. Consequently, should the bank refuse to pay, the holder has no cause of action against the bank. The agreement to pay is between the bank and the depositor, and if the bank fails to fulfill its agreement with him, he has a just cause for complaint. Sometimes a bank declines to pay supposing, through an error of bookkeeping perhaps, that the depositor has not money enough there to pay his check. In such a case, as the bank is in the wrong, if the depositor has suffered from loss of credit or in any other way from the bank's action, it must respond and make the loss good.
Suppose a person presents a check and the maker's deposit is not enough to pay the full amount, what can be done? Usually the bank declines to pay. Suppose the holder says he is willing to give up the check and take the amount in the bank? There is no reason why the bank should not accede to his wishes. Suppose a bank should pay more than the amount on deposit through no fraud of the holder, from whom can it recover the amount? If the holder has been free from wrong in presenting the check, the bank cannot look to him, but to the drawer for repayment. If the maker of a check has no money in the bank, perhaps he may not be a depositor, he commits a fraud in making and giving his check to another, and the offense in many states is deemed a crime: likewise a person who receives such a check knowing its true nature is equally deep in the wrong.
The law is very strict in its requirement of banks when paying the checks of customers. After a check has been delivered and has therefore passed beyond the maker's control, the law requires the greatest care on the part of a bank in paying it. The bank must be especially careful in examining the signature and the amount, and if the signature has been forged, or the amount changed, the bank is liable for an improper payment. Once an employer gave his trusted clerk a post-dated check, which he was to present on the day specified, and, after drawing the money, was to pay this to his employees. The clerk changed the date to an earlier one, drew the money, kept it and fled. The court said the bank should have detected the alteration. The bank contended that had the clerk waited until the proper day, and then drawn the money, it would not have been liable. The court said that was not the case presented, the clerk did not wait. Banks suffer, far more than the public knows, from the payment of raised checks, for it is quite impossible always to detect them, yet banks are held liable therefor.
There are two rules relating to the payment of checks worth mentioning. One is, the maker of a check should use proper precaution in making it. He should write in a way that will not be likely to confuse the paying official. For instance, if in the above case the maker, intending to give a post-dated check, had written the date so imperfectly that the teller was misled, the bank would not have been liable for paying it, or for refusing to pay because there was not money enough in the bank at the time of presentation for payment. Some persons are very careless in making figures; when they are, they cannot look to the bank for the ill consequence of their own neglect.
Again, if a bank paid forged checks, for example, which were returned with other checks on the balancing of a depositor's book, and months, perhaps years afterward, the depositor discovered the forgeries or forged indorsements, he could, notwithstanding the lapse of time, demand of the bank the sums wrongfully paid. This was a great hardship to banks, and has been corrected in many states by statutes and by the courts in others. The rule now is, the depositor must, within a reasonable time after the return of his bank book, examine it, also his checks, and, if payments have been improperly made, demand immediate correction.
The holder of a check should demand payment within a reasonable time after he has received it. He may keep it longer if he pleases, but if he does, and the bank should fail, he cannot demand payment again from the maker of the check. He in effect says to the holder of the check when giving it to him, "present this check to the bank within the proper time and it will be paid, if you keep it longer, you do it at your risk." What is a reasonable time? The law has fixed it. If the bank is in the town or city where the holder of the check dwells, he must present it the day he received it, or the next day. If it is drawn on a bank outside, the check must be forwarded for presentment at the latest on the day after it is received. With respect to the first class of checks therefore if the maker and receiver are both depositors of the same bank, the operation on the part of the bank consists simply in debiting one account and crediting another with the amount; if checks are drawn on another bank in the same city the receiver usually deposits them in his own bank and they are paid through the clearing house the next day.
A drawer may stop the payment of his check. And when he requests the bank to do so it must heed his instruction, and is liable if neglecting, though not always for the whole amount of the check. Suppose the check was given for a bill which the maker actually owed, yet for some reason, after giving the check, he did not wish to pay. If it was actually due and undisputed it would be hardly just to require the bank to pay the check over again to the holder, this would be too much. But for whatever injury the maker of the check may have sustained the bank must make good.
When a check has been certified by the bank on which it is drawn, the effect of the certification after the drawer has parted with it "is precisely as if the bank had paid the money upon that check instead of making a certificate of its being good." The check is charged up to the maker, or should be, and therefore as between him and the bank has been paid.
Citizen.– In modern usage this means a member of the body politic who owes allegiance to the nation and is entitled to public protection. One may be a citizen of the United States without being a citizen of any state, for example, a citizen of the District of Columbia, or the territory of Alaska. Citizen-ship implies the duty of allegiance to the government, and the right of protection from it. A citizen of the United States who resides in a state owes a double allegiance, and can demand protection from each government. For the ordinary rights of person and property he looks to the state for protection. The rights for which he can seek the protection of the United States are only such as are established by the constitution and federal laws. For some purposes even a corporation may be included within the term citizen, for example the right to sue in the federal courts as a citizen of the incorporating state.
By the fourteenth amendment of the federal constitution, all persons born in the United States and subject to its jurisdiction are citizens of the United States. In 1855 Congress passed an act conferring citizenship on alien women who should marry American citizens. An American woman therefore who marries an alien takes the nationality of her husband. When her marital relation ends she may elect to retain her marital or her original citizenship. Since minor children follow the status of their parent, by the marriage of an alien widow to an American citizen, her children also become American citizens.
An alien may be naturalized. To do this he must have continuously resided in the United States for five years before his application, and he must have appeared in court at least two years before, and there declared his intention to become a citizen of the United States and to renounce allegiance to his former sovereign. He must prove by the oath of at least two persons his residence, also during that time that he has behaved as a man of good moral character and attached to the principles of the federal constitution. He must take an oath to support and defend the constitution and laws of the United States and renounce allegiance to any foreign prince. The naturalization of a person confers citizenship on his minor children if dwelling in the United States, also on his wife, unless she is of a race incapable of American citizenship.
The rights of aliens, from the very beginning of the American government, have been expanded by treaty provisions and by liberal legislation. In nearly all the states resident aliens were given the right to take title to land, whether by deed or by inheritance, to hold such real estate and to transfer it by law or by descent. In some states they were given the right to vote and hold office. And at common law they were entitled to purchase, own and sell personal property, engage in business and to make contracts and wills. By the fourteenth amendment to the federal constitution their rights and privileges have been further secured.
Aliens owe to the country in which they reside a temporary and limited allegiance, that is, an obligation to obey its laws and subject themselves to the jurisdiction of the courts. A non-resident alien is not within the terms of the fourteenth amendment, indeed it is doubtful if he can ask any aid or relief under the state or federal constitutions. A statute therefore imposing a higher inheritance tax on property passing to a non-resident alien than on his property if he resided here is valid. Non-resident aliens can acquire no rights incident to residence here except as permitted by the federal government. This power may be exercised, either through treaties made by the president and senate, or through statutes enacted by congress. So congress has excluded not only diseased, criminal, pauper and anarchist immigrants, but also contract and Chinese laborers.
Contracts.– At the outset the various kinds of contracts should be explained so that the principles which apply to them may be better understood. One of the divisions is into simple contracts and specialties. A simple contract may be verbal or it may be in writing, but no seal is appended to the signatures of the parties. A specialty is in writing and a seal is added to the signature. A written contract may be a duplicate of another with a seal, yet the two belong to different classes and different rules of law apply to them as we shall learn.
Another classification is into executed and executory contracts. An executed contract, as the name implies, is completed, an executory contract is to be executed or completed. An unpaid promissory note is an executory contract, when paid it becomes an executed one.
Another classification is into express or implied contracts. An express contract is one actually made between two or more persons or parties; an implied contract is one that the law makes for the parties. Suppose a man worked a day for another at his request, and nothing was said about payment, the law would require him to pay a reasonable sum for his day's work. Another kind of contract technically called quasi contract differs somewhat from an implied contract and will be explained in another place.
To every contract there must be two or more parties, who have the legal right to make it. Not every person therefore who wishes to make a contract can legally do so. Of those whose ability to contract are limited are minors or infants. The period of infancy is fixed by law, and is therefore a conventional, yet needful regulation. In most states infancy ends at the age of twenty-one, though some states fix a younger period, eighteen for women. A person becomes of age at the beginning of the day before his twenty-first birthday. The reason for this rule is, the law does not divide a day into a shorter period or time except when this is required in judicial proceedings. Another class of incapable contractors are married women. Their disability however has been largely removed by statutes in all the states, as we shall learn in another place.
Insane and drunken persons also are under disability to make contracts. By the old law a drunken man who made a contract was still liable, and required to fulfill as a penalty for his conduct. A more humane rule now prevails and he can be relieved, though like a minor, if he wishes to avoid a contract, he must return the thing purchased, in other words he can take no advantage of his act to the injury of the other contracting party. If however he has given a negotiable note that has passed into the possession of an innocent third person, who did not know of his drunkenness at the time of making it, he can be held for its payment. It is not quite so easy to state rules that apply to insane persons because their conditions vary so greatly. A person may be insane in some directions and yet his insanity may not be of a kind affecting his capacity to make at least some kind of contracts. Again, he may have lucid intervals during which he is quite as capable of contracting as other persons. And again when an insane man has made a contract, the relief to which he is entitled depends on circumstances. In some cases he may repudiate it, a partial fulfillment only may be required.
The law has much to say about the consideration that is an element in every contract; in other words, there must be a cause, something to be gained by the parties in every contract to sustain it. If A should promise to give to B a house next week, and on the day fixed for transferring it A should change his mind, he could not be compelled to transfer it, for the promise would be without any consideration or thing coming from B. But if the house had been transferred, A could not afterwards repent of his act and demand its return. An executed gift therefore, free from all fraudulent surroundings, is valid: the donor of an executory gift is free to withhold its execution.
A consideration need bear no relation or adequacy to the other thing that is to be received. Nothing is more frequent than a one-sided contract, in which one party has gained far more than the other. If the law attempted to adjust these cases, many more courts would be needed than now exist.
We will briefly note the need of consideration in some classes of cases. First, a voluntary undertaking to work for another without compensation cannot be enforced. Under this head is the promise to pay the debt of another. Why should one do such a thing? Let us remember that should one make such a promise and keep it, the money could not be recovered back, that is quite another thing. Again, if A owed B a debt and delayed payment, and B should say to him, "if you will pay me half of it next week I will give up the rest," B would not be bound by his promise. Suppose that B learning that A had ample means to pay, should sue him, A could not relieve himself from liability by offering to pay the amount A promised to take in settlement of the debt. But should B accept one half, in fulfillment of his promise, that would be the end of the matter.
Again should a bank defaulter make good the amount taken, and the directors, in consideration thereof, promise to take no steps towards his prosecution by the government, there would be no valid consideration to sustain the promise. The state would be just as free to prosecute him as before. Very often such criminals are not prosecuted after returning all or a part of their unlawfully taken money, nevertheless no settlement of this kind stands in the way of prosecution.
Suppose A agreed to work for B for a month and, after working a week, should leave him without good reason, can he recover for his week's work? If he can get anything, he cannot claim it under his contract for he has broken it and therefore a court could not enforce it. If he can recover anything it is on the implied contract which the law makes, the worth of his work after deducting the loss to his employer. Suppose the employer should prove that he had lost more by A's going away when he did than he had gained by his week's work, he could recover of B, for the rule works both ways. In some states he cannot recover anything, for, having broken his contract, he has no standing in court.
Suppose one signs his name to a subscription paper, calling for the payment of money, to build a church, for example, and the designated amount has been subscribed, can a subscriber refuse to pay? He cannot. Suppose he withdraws before the subscriptions have been completed, what then? He can refuse. If a subscription has not been completed, death operates as a revocation and the subscriber's estate is not held for the amount. Sometimes a moral obligation to pay money is a good consideration for a promising to pay it. Thus if one owes another for a bill of goods, and the debt has ceased to be binding by lapse of time, yet he should afterwards promise to pay, he could be held on his promise because there was a good consideration for the debt. Lastly a contract may be modified by mutual agreement without another consideration.
Another element in a contract is mutuality, a meeting of minds in the same sense. In every contract there is an offer made by one party and an acceptance or refusal by the other. When an acceptance occurs, there is a meeting of minds, or an assent. Very often the parties do not understand each other, they acted hastily, ignorantly perhaps, their minds did not really meet in the same sense. In such cases there is no contract.
Generally the acceptance must be at the time of receiving the offer. If it is not, there is no meeting of minds, no assent. A person however may make an offer on time, this is common enough. When this is done the other party must furnish some kind of consideration to make the offer good for anything, otherwise the offerer can withdraw his offer whenever he pleases. Many an offeree has been disappointed by the action of the other party in withdrawing his offer, yet the offerer has been clearly within his rights in doing so when he has received no consideration for giving the other party time to think over his offer.
An eminent jurist has said "that an offer without more is an offer in the present to be accepted or refused when made. There is no time which a jury may consider reasonable or otherwise for the other party to consider it, except by the agreement or concession of the party making it. Until it is accepted it may be withdrawn, though that be at the next instant after it is made, and a subsequent acceptance will be of no avail."
If no time is given, or no consideration for the time given, an offer therefore may be withdrawn as soon as made if not accepted. A person may suddenly think of something which leads him to withdraw his offer as soon as it is out of his mouth, and in doing so is within his rights, but if he does not, how long does his offer last? A reasonable time. What this is depends on many things, one of the questions like so many others in the law to which no definite answer can be given. An offer to sell some real estate was accepted five days afterward, this was held to be within a reasonable time. One can readily imagine cases in which five days would not be thus regarded, or even five hours.
When does assent occur in contracts made by correspondence? The rule is in nearly every state (Massachusetts being the chief exception) where an offeree has received an offer by letter and has put his acceptance in the postoffice, the minds of the parties have met and made a contract. The post-office is the agency of the offerer both to carry his offer and bring back the return. If the offeree should use a different agency, the telegraph for instance, to convey his acceptance, it would not be binding until the offerer had received and accepted it. Of course, an offerer by letter may withdraw his offer at any time. Suppose he should receive an acceptance by letter or telegraph but deny it, and insist that no contract had been made. Then the controversy would turn on the proof. If the acceptance had been by letter, and the offeree could prove that the offeree had written and mailed it, the offeree's proof would be complete. If the offeree sent a telegram, then he would be obliged to prove the delivery of the dispatch. Suppose one should mail a letter of acceptance, but before its receipt by the offerer, should send a telegram declining the offer which was received before the letter of acceptance? The acceptance would stand, for as there had been a meeting of minds when the letter was put into the postoffice, the offeree could not afterwards withdraw his offer. A person who makes an offer cannot turn it into an acceptance. An old uncle wrote to his nephew that he would give thirty dollars for his horse and added, "If I hear no more about the matter, I consider the horse is mine." The game did not work, for no man can both make and accept an offer at the same time, and that is what the foxy uncle tried to do.