Putnam's Handy Law Book for the Layman

by Albert Sidney Bolles

By a clause in the contract of insurance or by statute, the insured can convert his policy into a paid-up policy for such an amount as the premiums would have secured. These conversions often happen where the insured is unable or unwilling to continue to pay the premiums required to maintain the policy. Formerly on the failure of the insured to pay, policies lapsed or were forfeited, and the insurance companies gained large sums from this source. This led to legislation and to the creation of paid-up policies. These are issued on somewhat different terms, but the principle in all of them is the same.

Minor.—The contracts of a minor are of two kinds, those for necessaries and other things. Contracts for necessaries made by him the law will uphold. They are really implied contracts which the law will sustain for his benefit and protection. What are necessaries is a question of fact, not always easily answered. Much depends on a minor's place in society and condition. The question is for a jury to decide, also whether the prices for them are reasonable or not. One of the well-known cases occurred many years ago. The bill against the minor was for more than a thousand dollars for twelve coats, seventeen vests, twenty-three pairs of trousers, five canes, fur caps, chip hats and other things, in less than six months. The jury rendered a verdict for almost the entire amount, but the reviewing court remarked that the bill made the members shudder, that the seller must have known that all these things were not needed for the minor's comfort within that short period, and the verdict was therefore set aside.

The question is constantly arising, what are necessaries? A thing might be to one and not to another. Thus a bicycle merely for pleasure would not be a necessity; one that is used to go to and from an individual's daily work would be. A dentist's bill for repairing one's teeth has been disputed, the law, though, generally favors the preservation of human teeth. Education furnished to a minor may be a necessary thing, yet only when it is suitable to his wants and condition. Should a minor repudiate a contract, the law is observed if he restores all that he has received, or that is capable of restoration.

With respect to contracts for other things, they are not always void, but may be avoided. If they have not been executed, he can disavow them at any time. If nothing is done during infancy inaction operates generally as an affirmation. If he disaffirms a contract, he must return the thing purchased or received, or make the best restitution he can, for it would not be just to retain possession and refuse payment.

A different rule applies to a minor who makes a fraudulent contract. Suppose he buys goods assuring the seller that he is twenty-one years of age when in fact he is not, though nearly so. Can the seller recover on his contract? No, but the law has another way of reaching him. He is liable in an action of deceit, and the amount or damage that may be recovered is that of the goods sold to him.

A minor who has a parent or guardian cannot make a contract even for necessaries, nor is he under any obligation to pay his bills for them. Should he be in need of such things and his guardian or parent be unwilling to furnish them, they can be compelled by law if having the means to provide him with whatever he requires.

Mortgage.—Two kinds of mortgages are given, one kind is secured by real estate, the other kind by personal property. In both the borrower of money pledges his property as security while the money remains unpaid. During this period he usually remains in possession and control of the property, though not always. The borrower is called the mortgagor, the lender the mortgagee. The contract is in writing sealed, is in fact a deed. Sometimes the contract is in two writings, the conveyance of the land and security in one, and the conditions or defeasance on which the conveyance is made in another. It is more usual, however, to set forth the transaction in a single writing or conveyance.

A mortgage may be so made as to cover future advances, but it will not cover them in preference to advances or loans made by another without any knowledge of them. Nor need another person who makes such a loan inquire whether a mortgagor has made any other loan, or for a larger amount than that stated on the public record, where the mortgage deed is recorded. For, it should be added, a mortgage deed is recorded like any other for the benefit of all parties, not only to secure the mortgagee from a later purchaser who might buy if knowing nothing of the prior mortgage, but from another who might be willing to lend on such security like himself; or from a creditor of the mortgagor who might attach the property as belonging to him, if he did not know of the existence of the mortgage. As the record is public, and may be examined by everyone, all who are interested in the property are supposed to examine it and thus find out whether it has been mortgaged, and if it has been, the conditions of the mortgage, and if they do not, their neglect is their own.

Improvements, additions of every kind to property after it has been mortgaged, become a part of it, and if the mortgagee takes future possession, they pass to him. But a difficult question arises sometimes, what additions or improvements are included? We have learned what they are whenever a tenancy relation exists. The law does not favor a mortgagor to the same extent. The test to apply is that of intention. If a mill has been mortgaged, the rule is very broad and the mortgage covers machinery attached by bolts and screws though removable without injury to the premises. If a mortgage has been given, by no evidence can it be shown that the deed was intended as an absolute or entire conveyance of the property. On the other hand by proper evidence it can be shown that an absolute conveyance was intended to be only a mortgage. This has been often done. One may ask, why does the rule not work both ways? There is a much stronger probability of making a mistake in the second case than in the other. One of the facts of great importance in such a dispute is the amount of the consideration or money paid. Suppose a piece of land was worth $1000 and the deed mentioned only $100, unless there was some other explanation, there would be a strong probability that the parties intended only a mortgage which for some reason or other was not completed.

Again, it is a rule of law that an agreement which is in fact a mortgage cannot be changed in character by any other agreement made at the time between the parties relating to the repayment of the money and the return of the property. The law presumes that the entire transaction was embodied in the agreement. "Once a mortgage always a mortgage." Of course this rule does not prevent the parties from making any later arrangement they please about the property.