Everyday law

Preface

The author of this book has briefly, but accurately, stated the elemental principles of the law governing the usual and everyday business transactions in a way that any man or woman of ordinary intelligence can understand.

In view of the fact that the greatest and most comprehensive, yet condensed, summary of law ever published, "The Encyclopedia of Law and Procedure," is in forty large volumes and the fruit of the labors for many years of more than one hundred learned jurists, it cannot be expected that one small volume can answer all the questions that may arise, still it will be found indispensable to every man and woman and give them practical information of incalculable value. It does not attempt to state all the law, but tells enough to answer all ordinary purposes so far as every day people are concerned. It will tell them when a lawyer's advice is required and also how to act with independent judgment if necessary.

The subjects are treated in alphabetical order but a complete index is also added.

iv CONTENTS

Chapter I. What Law Is

LAW may be said to be a code of rules for the regulation of municipal and individual affairs. As commonly used */ the word means "jurisprudence," or the science of the laws prescribed by the state for the conduct of its citizens. In other words, briefly stated, it is a general rule of external human action enforced by a sovereign political authority. This authority may be exercised either by acts of legislatures or Congress, or municipal assemblies, or the decisions of the courts, all done under the powers conferred by a fundamental agreement called "Constitution". The legislature, or Congress, or municipal assembly, makes express and positive enactments commanding, or forbidding, certain acts, while the courts construe and apply these legislative acts, and in so doing, in their opinions in cases brought before them, also lay down rules which have the force of precedents and are followed and observed with almost equal fidelity.

Law is divided into "public" and "private". All rules which define and control the government of a country and the relations between it and its citizens come under the head of public law, while private law defines and controls the relations of one citizen with another.

The Constitution of the United States is the foundation of the laws of the nation and all state constitutions and acts of Congress and legislatures, and city or municipal assemblies, must not be in conflict with any of its provisions. So a state constitution is the fundamental compact between its citizens and

defines and controls all administration of justice and enactments of the legislature in such state.

There are two great systems of law, termed "common law" and "civil law". The latter is in force in Louisiana, and to some extent in other states, and is the old Roman law as modified by the code prepared under the direction of the great Napoleon and by legislative enactments. The common law may be said to be the customs and laws of England and acts of Parliament prior to about A. D. 1700 as construed by the English courts in their reported opinions. It is in force in most of the states and governs when not in conflict with the Constitution of the United States, the express enactments of Congress, or state legislatures, or state constitutional provisions. In a popular sense common law consists of the reported decisions of the courts of the land.

It will be seen, therefore, that law consists of express enactments, or statutes, of the legislatures, or Congress, the ordinances of municipalities, the constitutions of the United States and the several states and the voluminous reported opinions of the courts, all contained in thousands of huge volumes.

It is manifestly impossible for even lawyers to master this enormous mass of often conflicting and abstruse rules and precedents, much less the everyday business men and women, yet every person should have some knowledge of the law so that he may act with a fair degree of intelligence in the ordinary affairs of life. While he may not understand the meaning of the contents of the many law books which fill the shelves of successful lawyers, he should know what is meant by the usual agreements between business men, and the nature of associations, corporations and partnerships, he should know something about wills, administration . and contracts. It is possible to acquire this knowledge in a general way, although experts must be consulted should the need for their assistance arise.

(See also the subject of Courts.)

Chapter II. Administration

THIS is a term applied to the management of the estate of a deceased person, by one appointed for that purpose by the proper court. When one dies leaving property, in order that such property may be collected, preserved and duly accounted for; that all just debts and the charges and expenses of burial and of the settlement of his estate, be paid and the remainder, if anything, be distributed to the parties entitled therto, it is usual for a special tribunal, variously styled in the different states probate, surrogate's, or orphans' court, to appoint an administrator, or, if there be a will, an executor, to administer and settle the estate and make proper distribution among those entitled thereto. The duty of administering the estate under the supervision of the court is conferred upon persons called the "personal representatives' ' of the deceased, who may be either executors or administrators. A man making a will is called the "testator", a woman, "testatrix", and if a person dies leaving no will he is said to die "intestate". An "executor", or if a woman "executrix", is a person appointed by a testator to carry out the directions contained in his will and dispose of his property after his death in accordance with his wishes therein contained. An "administrator", or if a woman "administratrix", is a person appointed by the court to settle the estate of one who dies intestate.

Formerly an executor or administrator, had only to do with the personal property of the deceased, but in modern times all the property left by a deceased person is subject to the jurisdiction of the court and to the payment of debts if required for that purpose.

Administration involves everything that may rightfully be done in the preservation of the assets of an estate, and the dealings of the executor or administrator with creditors, legatees, devisees or heirs. The jurisdiction and functions of the various courts of probate is prescribed by statute and the procedure is different in different states, so that it is necessary to consuit local legal counsel in order to make sure that the proper procedure is followed.

Administration is generally necessary where unpaid debts are left by the deceased, but as a general rule the heirs may, where there are no debts, divide the property in any manner agreed upon by them except in states by the laws of which an inheritance or succession tax is required to be paid after an appraisal of the estate. In such states regular administration of the estate must be had and cannot be dispensed with by agreement of the heirs.

Administration is necessary upon the estate of an infant, although he cannot make a will, but in many states administration is not necessary upon the estate of an adult who has left no debts but the heirs can make partition by mutual agreement.

Administration should be had in the place where the deceased resided at the time of his death. If there is property situated in different states it is usual to probate the will at the place where the deceased lived and then to record a certified copy of the will and its "probate", or procedure by which it is established or proved, in the different places where the deceased had property, or in such other states take out additional or what is termed "auxiliary administration." In case one dies away from home, it is not customary for any administration to be had in the place of death unless the law of the state requires an officer, known as a "public administrator", to take charge of the personal property the deceased may have had in his possession at the time of his death. A court cannot grant administration upon the estate of a non-resident who has left no property within its jurisdiction.

If the deceased has left a will, the person appointed by the will to execute it, is called an "executor," or "executrix," and if he accepts and duly qualifies, he alone is entitled to receive from the proper court what are called "letters testamentary," that is written authority from the court to administer the estate, to which certificate is attached a copy of the will. If the deceased left no will, then the court appoints a suitable

ADMINISTRATION

person who is called an "administrator," or administratrix." to administer under its direction the estate. In most of the states the nearest of kin to the deceased is entitled to be appointed administrator, but in some a married woman is disqualified from acting as "administratrix" and some other person possessing the proper qualifications must be appointed. As a general rule any person who is capable of making a will may be an executor, and unless forbidden by statute, a married woman may with the consent of her husband be an executrix and so may an infant, but state laws often disqualify both married women and infants and generally disqualify a non-resident. Idiots and lunatics are incapable of becoming executors or administrators. A person nominated as executor cannot be compelled to act, but may refuse to accept the appointment.

If a will makes no appointment of an executor, one is appointed to execute the will called an "administrator with the will annexed." If there is no will then the proper court appoints an administrator. There may be one or more executors or administrators, and if there is more than one, they must all act jointly.

Sometimes after an estate has been fully settled and other property not before distributed is found, it becomes necessary to appoint what is called an "administrator de bonis non," that is an administrator of the property which was not previously administered upon and disposed of.

It is always necessary to observe in administration the formalities prescribed by the law of the place where the deceased died, or where the property is situated, and hence an attorney should be consulted, although in many states the probate judge will make suggestions in order to enable the persons interested to avoid expense of counsel.

If the will provides that the executor shall be without bond, it is not necessary for him to give security, but an administrator is always required to give bond for the faithful performance of his duties and his commission, or letters of administration, will not be issued until he has given the required bond. Even though the will provides that the executor shall not be required to give bond, creditors may, upon proper showing to the court, obtain an order requiring the executor to furnish bond.

All the property of a deceased person is held liable for his debts, and the expenses of the last sickness and burial. As a general rule, personal property is first applied to the payment of debts and if sufficient the real estate will not be resorted to, but if necessary the real estate belonging to the deceased may be sold under the direction of the court. Property which the deceased held in a trust capacity does not constitute assets of his estate, but will be taken charge of by a successor in the trust, and if the deceased had only a life estate, the property will go to the person entitled to the remainder, that is to take the property after the life tenant dies.

When an executor or administrator has given bond and received his credentials, he should publish notice of his appointment, if required by local law, and make an inventory of all property belonging to or claimed by the deceased, except property held in trust, and have the personal property appraised if the statute requires it, and thereafter file a supplemental inventory for any additional property that may come to his knowledge. In some states it is not necessary under certain conditions to file any inventory. It is also the duty of an executor or administrator to attend to the decent burial of the deceased and the reasonable expense of such burial will always be allowed. In some states an administrator cannot collect rents unless ordered to do so by the proper court.

An executor or administrator is required to use reasonable diligence and exercise such prudence, care and judgment in attending to his duties, as an ordinarily prudent and skillful man would use in regard to his own property. It is also necessary for him to keep a separate account of receipts and expenditures and deposit the money of the estate in a separate account, or invest it under the direction of . the court. He is not justified in engaging in trade with the funds of the estate or to use the funds of the estate in speculation or a hazardous undertaking, although he may continue the business

G

ADMINISTRATION

of the deceased for a reasonable time under the direction of the court. An executor must follow the directions of the will so as to carry out the wishes of the deceased.

Where the deceased was a partner, it is the general rule that the surviving partner has the right to administer the estate.

An executor or administrator is authorized to employ legal counsel and should obtain the authority of the court in all matters concerning which his duty may be in doubt.

Sales of personal or real estate are usually regulated by statute and these statutory directions should be carefully followed. An executor or administrator cannot lawfully make any personal profit out of the estate of the deceased, but must account for all profits made by him.

The presentation, allowance and payment of claims is regulated by statute and the general rule is that an executor or administrator should pay no claims except under the authority of the court, especially when the estate may prove insolvent. Usually claims against an estate are divided into classes, the first is entitled to priority in payment and embraces the expenses of the last sickness and burial of deceased, next come taxes and debts due the government, next claims reduced to judgment, and after that such other claims as may be allowed by the court, or commissioners appointed for the purpose. It is doubtful whether an executor or administrator has authority to pay for a monument, or tombstone, without the authority of the court. If the estate is insolvent, certain claims are entitled to priority, among which are payments to the widow and minor children which are allowances given by law by way of dower or provision for temporary support and, after payment of the preferred claims, the balance is distributed pro rata among the creditors whose claims have been allowed. After payment of debts, it is the duty of the executor, or administrator to present his final accounts, give such notice as required by law and make distribution of the estate to those entitled thereto under the direction of the court. Care should be taken to make no payment either of legacies or debts without the sanction of the court, in order to avoid personal liability in case the assets of the estate prove insufficient. Generally the compensation of an executor, or administrator, is regulated by law.

[For further information see the subject of Wills.]

Chapter III. Agency

AGENCY is the relation that exists where one party called

£jL the "principal," authorizes another, called an "agent," JL .X* to act for him in dealings with third parties. Anyone who can do an act himself may be a principal and perform such act by an agent, except where there is a personal confidence reposed in him which requires such person to the act himself, as where the employment involves personal trust and confidence, in which case the party cannot appoint an agent to do it for him, or, if he is an agent himself, appoint a sub-agent. As for example, if a person has authority to sell property and make a deed, or where one is a broker, he cannot authorize another to sign a contract in behalf of his principal. No person can authorize another to do an unlawful act or to do something forbidden by law. The capacity to act as agent generally depends upon the capacity in the principal to do the act himself.

Neither idiots nor lunatics can appoint an agent, but a minor can appoint an agent to act in matters concerning which he can act, as for example, to purchase necessaries, such as clothing, or arrange for board or schooling, but all such acts are subject to scrutiny to avoid imposition on the minor. Married women in most states are capable of appointing agents.

Anyone who can act for himself may act as agent and even a minor can be appointed agent and do acts for another which he would not have capacity to do for himself.

Agents may be either "general", that is having authority to act in all matters for their principal, or "special", that is having a limited authority. A principal is bound by all acts within the apparent authority of the agent; that is if a man holds out to the world another as having authority to do certain acts in such a manner as to convey to the world a reasonable inference of the agent's authority, the principal is bound by all the acts done within the apparent scope of his authority.

Again agents may be "express," that is appointed, either verbally or in writing, in express terms, or "implied", as where from the conduct of the parties there is an implied authority on the part of the agent to do an act. An agent may appoint one to act for him who is called a sub-agent, that is an agent for an agent. The latter derives his authority directly from the principal and the sub-agent derives his authority from the agent who has been appointed by the principal.

Agency can only exist by the will of the principal and with the consent of the agent, and hence it is always necessary that the principal shall in some manner, either expressly, or by inference from conduct for which he is responsible, appoint the agent and that this agency shall be accepted by the agent.

There is no particular way in which an agent must be appointed, although in some cases the appointment must be in writing, as where authority is given to sell or convey real estate, sign checks, endorse notes or to act in some matter of that kind.

Sometimes an agent is appointed by a writing called a power of attorney and where written authority is required by law, as to execute a deed or to make or endorse notes, the agency can only be created by such instrument in writing. Sometimes, as in the conveyances of real estate, the power of attorney must be acknowledged and recorded the same as a deed, so that the authority for the act may be on record.

A person may do an act for another without authority, and this unauthorized act may be afterwards ratified by the principal, in which case the result is the same as if authority were originally given. If an act done, or a contract entered into, by an agent without authority is illegal and void it cannot be ratified, but acts which are merely voidable can be ratified. "Void" means something which is without effect: "voidable" means something that can at the option of a party be set aside. Any person may ratify an unauthorized act of another in his behalf if he could originally have given authority to do the act or if he still has power to do it at the time of the ratification. Sometimes ratification will be implied, as where the principal has accepted the beneficial results of the act of the unauthorized agent.

If an agent is appointed to do some particular act, when

AGENCY

this act is performed the agency is terminated by that fact. An agent also may be appointed for a specified period, after which the agency ceases.

The agent's authority may be revoked at any time unless such agent has an interest in the matter entrusted to him, as for example, when property is pledged and the agent is authorized to sell the property in case the conditions of the pledge be not performed, or if he has some pecuniary interest in the subject matter of the agency, as a commission, in such cases the agency cannot be revoked, but continues until the act is performed, if required, or the object of the agency is accomplished. If an agency is created for a consideration, it cannot be revoked by the principal unless the authority for such revocation is reserved. For example, if authority is given an agent to sell certain property and pay over the proceeds to another party. The death of the principal constitutes a revocation of the agency, and as does, in some cases, his insanity. As a rule the revocation of an agency must be communicated not only to the agent, but also in some way to the public so that persons will not be led to deal with him not knowing that his authority has been revoked. The agent can abandon his agency or renounce it. When a partnership is dissolved, it works a revocation of the authority of an agent of a firm.

Every person who deals with an agent is bound to inquire as to his authority and deals with him at his peril. This rule is modified to the extent that acts done within the apparent scope of the authority of the agent are binding upon the principal. For instance, the principal will not be bound by acts in excess of the agent's authority if the facts and circumstances of the case are such as to put persons dealing with the agent upon inquiry as to his authority. If an agent has authority to do an act and in doing it violates secret instructions, the principal will still be bound, if the authority was general enough so as to give the party dealing with him reason to believe that such agent was acting within his authority.

An agent has authority to do all such acts as are reasonably necessary for the transaction of the business in question, for example, the customs and usages in the trade or business in which the agent is engaged form part of his authority and such customs and usages are presumed to have been known to his principal.

Where the authority is given by a writing, the power of the agent is confined to the limits marked out by such writing, and parties dealing with an agent must inform themselves of the extent of his authority.

An agent is bound to act in entire good faith and loyalty to his principal and if he fails to do so, he will be liable for any loss which results. An agent must not, except with his principal's consent, enter into any transaction relating to the subject-matter of his agency in which he represents adverse or hostile interests, nor must he engage in any business on his own account of the same character as that of the principal in opposition thereto. He cannot deal with the subject matter of the agency so as to make a secret profit, but must account for all profits made out of the business of the agency. In all dealings with his principal on his own account the agent must act with entire good faith and make a full and fair disclosure of all the facts relating to the transaction. He cannot act for an adverse party and his principal at the same time, but can, as the Scripture says, only serve one master. He must obey instructions and is liable to his principal for any loss or damage resulting from a violation of instructions, although there may be cases of necessity arising from a sudden emergency, such as not only to justify, but require a departure from the strict letter of his instructions. If the agent under such circumstances acts as an ordinarily careful man would do he will not be liable. An agent must exercise such diligence and care as an ordinarily prudent man would exercise in the performance of his own business.

Although the agent acts without compensation, he is still liable for negligence in the performance of such business, or for breach of duty toward his principal.

The principal is bound to give his agent opportunity and'

AGENCY

all necessary facilities for transacting the business entrusted to him and the agent has a right to compensation.

An agent is personally liable to third parties with whom he deals if he violates his instructions or makes an unauthorized contract, or if he is guilty of fraud or any other act whereby, because of his negligence or wrong, the principal is not bound by his act.

In dealing with corporations it must be remembered that all officers of associations or corporations are agents and persons dealing with the agents, or officers of a corporation are bound to take notice of its charter. A corporation cannot be bound by acts in excess of the powers conferred upon it by the charter. Ordinarily a person dealing with a corporation is not bound to take notice of the limitations contained in the by-laws.

An agent, in signing any note, or contract, for his principal, should be careful to sign the name of the principal first and then add his own name prefixed with the word ''by", or "per". For example, if John Smith executes a contract or note for Peter Jones, he should sign it, "Peter Jones by John Smith agent", and not "John Smith, agent for Peter Jones." In the latter case he might be held personally liable because the words, "agent for Peter Jones" would be only words descriptive of who John Smith is.

Power of Attorney

A "power of attorney" is a formal writing executed by a person authorizing an agent to do some act. It may be in the following form, due care being taken to make the authority definite and certain.

I, John Smith of the City of Detroit, Michigan, hereby appoint Henry Doe of the City and State of New York my true and lawful attorney for me and in my name and with all the power I might exercise if personally present,

x to sign checks on the First National Bank of Detroit, Michigan.

x to execute in my name any and all promissory notes for such amounts and for such length of time and rate of interest as he may deem best.

x to collect any and all debts due me from any and all persons and give proper receipts therefor.

x to collect, compromise or adjust any and all claims I may have against the Jones Manufacturing Company of New York, execute a proper release thereof and endorse and collect any check or draft received in payment thereof.

x to sell any and all real estate I may have in the State of New York and execute a warranty deed therefor in the usual and customary form.

(Insert the desired one of the above specifications marked * which is desired, or name any other act which is to be done by the agent then conclude;)

Hereby ratifying and confirming all that my said attorney may do by virtue of the premises.

I hereby authorize said attorney to substitute by writing signed by him any other suitable person to perform the acts herein specified.

In Witness Whereof, I have hereunto set my hand and seal this 10th day of June, 1913.

John Smith (Seal)

Generally a power of attorney should be acknowledged before a Notary Public or clerk of a court in the following form:

STATE OF MICHIGAN ) ss COUNTY OF WAYNE j

On this 10th day of June, 1913, before me, the undersigned a Notary Public in and for said county, personally came John Smith, to me known to be the same person named in and who executed the foregoing instrument as party thereto and acknowledged the same to be his free act and deed for the uses and purposes therein expressed.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and year first above written. My term of office expires June 10, 1916.

Henry Doe,

Notary Public.

Chapter IV. Arbitration

THE law favors the settlement of disputes out of court and hence two or more persons having a disagreement may submit the controversy to the judgment of one or more persons of their choice who act as judges and are called "arbitrators." In most states the law provides for the submission of disputes to arbitration, and that, when the decision of the arbitrators is made, it may be filed in court and a judgment entered thereon. Men may agree to leave a dispute to arbitrators either by written or verbal agreement, but all agreements to submit a controversy to arbitration are subject to revocation and no executory agreement to submit a matter to arbitration can be enforced. An apparent exception to this rule is the provision in fire insurance policies, that in case of loss the amount of loss shall be determined, in case of disagreement, by appraisers, and no suit shall be brought until the amount of the loss is settled by appraisers. This is what is called a condition precedent to bringing suit and is binding. The appraisers arbitrate the question as to the amount of the loss.