CHAPTER II. CONVERSION. Next after the subject of trusts, we may appropriately con- Principle of sider the equitable doctrine of conversion. The doctrine of conversion. conversion which was pronounced more than a century ago to be settled law, "established universally by the cases," is founded upon the equitable principle that when money is directed or agreed to be turned into land, or land agreed or directed to be turned into money, equity will consider that which is agreed to be, or which ought to be done, as done already, and will treat the property thus "notionally verted as if the land were actually changed into money, or the money into land (1). con Money, said Sir Thomas Sewell, directed to be employed in the purchase of land, and land directed to be sold and turned into money, are to be considered as that species of property into which they are directed to be converted; and this in whatever manner the direction is given; whether by will, by way of contract, marriage article, settlement or otherwise, and whether the money is actually deposited or only covenanted to be paid, whether the land is actually conveyed or only agreed to be conveyed. The owner of the fund, or the contracting parties, may make land money, or money land. The Court, in fact, as was stated in a very recent case by the Court of Appeal (2), impresses upon the property that species of character for the purposes of devolution and title into which it is bound ultimately to be converted. The doctrine of conversion cannot be better illustrated than by the famous case of Ackroyd v. Smithson (3), celebrated for the argument of Lord Eldon, then John Scott. In that case a testator, after giving certain legacies, ordered his real and personal estate to be sold, his debts and legacies to be paid out of the proceeds, and the residue to be given to certain legatees. Two of the legatees died in the lifetime of the testator. The Court decided (1) Fletcher v. Ashburner, 1 Bro. C. C. 500, decided in the year 1779. (2) Attorney-General v. Hubbuck, 13 Q. B. Div. 275, at p. 289. VOL. II. (3) Ackroyd v. Smithson, 1 Bro. C. C. 503. See Brett's Leading Cases in Equity, 198. 20 Ackroyd v. Ackroyd v. that the conversion directed by the testator was to be treated Smithson. as a conversion only for the purposes of the will, and that all that was not wanted for these purposes must go to the persons who would have been entitled but for the will. The judgment accordingly was that the lapsed shares went, so far as they consisted of personal estate, to the next of kin, and so far as they consisted of real estate to the heir-at-law. Difference between conversion by deed A deed differs from a will in this material respect. The will speaks from the death, the deed from delivery. If, then, the author of the deed impresses upon his real estate the character and by will. of personalty, that, as between his real and personal representatives, makes it personal and not real estate from the delivery of the deed, and, consequently, at the time of his death. The deed, thus altering the actual character of the property, is, so to speak, equivalent to a gift of the expectancy of the heir-at-law to the personal estate of the author of the deed. The principle is the same in the case of a deed as in the case of a will; but the application is different, by reason that the deed converts the property in the lifetime of the author of the deed, whereas in the case of a will, the conversion does not take place until the death of the testator. It is not a question of actual physical conversion of the property from real estate into personal property, but whatever be the time at which that conversion is directed to take place, whether in the grantor's lifetime, or after his death, the grantor, by executing a deed of this description, says in effect: "From the time I put my hand to this deed, I limit so much of this property to myself as personal property" (1). An interesting case on the doctrine of conversion came before the House of Lords in 1887. The accumulations of the personal estate of a lunatic were invested in the purchase of land by his committees, under the orders of the Lords Justices. By the conveyances made in pursuance of the orders, the lands were conveyed to the use of the committees, their heirs and assigns, upon trust for the lunatic, his executors, administrators and assigns, either until the inquisition as regarded his soundness of mind should be superseded, or until his death, whichever should first happen, and until such time the committees had certain powers of leasing, selling or exchanging. Each conveyance also contained a declaration that the premises were to all intents and purposes to be considered as part of the personal estate of the lunatic, but there was no (1) Clarke v. Franklin, 4 K. & J. 257, quoting judgment in Griffiths v. Ricketts, 7 Hare, 299. trust for sale. Upon the death of the lunatic the Crown claimed Illustraprobate duty on the value of the investment in land. The House of Lords decided (reversing the decision of the Court of Appeal) that the value of the lands was part of the personal estate of the lunatic at his death, and liable to probate duty (1). The effect of the provision they said was to stamp upon the property from the beginning the character of personalty, and accordingly all the incidents of personal property attached to it. The Lunacy Act, 1890, contains the following enactment with regard to the conversion of a lunatic's property: "(1) The lunatic, his heirs, executors, administrators, next of kin, devisees, legatees, and assigns, shall have the same interest in any monies arising from any sale, mortgage, or other disposition under the powers of the Act, which may not have been applied under such powers as he or they would have had in the property the subject of the sale, mortgage, or disposition, if no sale, mortgage, or disposition had been made, and the surplus moneys shall be of the same nature as the property sold, mortgaged, or disposed of. "(2) Moneys received for equality of partition or exchange, or under any lease of unopened mines, and all fines, premiums, and sums of money received upon the grant or renewal of a lease where the property the subject of the partition, exchange, or lease was real estate of the lunatic, shall, subject to the application thereof for any purposes of the Act, as between the representatives of the real and personal estate of the lunatic, be considered as real estate, except in the case of fines, premiums, and sums of money received upon the grant or renewal of leases of property of which the lunatic was tenant for life, in which case the fines, premiums, and sums of money shall be personal estate of the lunatic" (2). The doctrine may be further illustrated by a case which involved the question whether probate of a will was to be granted. Freehold property had been settled on the marriage of a lady upon trust that the trustees should sell it, and stand possessed of the proceeds in trust for such purpose as she should by will appoint. The settlement contained a power for the trustees to postpone the sale and then contained the following provision:-"Notwithstanding any postponement of the sale of (1) Attorney-General v. Marquis of Ailesbury, 12 App. Cas. 672; 36 W. R. 737. () 53 Vict. c. 5, s. 123; and see as to the doctrine of conversion in re spect of lunatics' property, Pope's tion of conversion. Conversion of partner ship property. the said freehold premises, or any part thereof, the same premises shall, for the purposes of enjoyment and transmission, be considered as converted in equity, but without prejudice to the right of the person or persons becoming absolutely entitled to the entire produce thereof to treat the same as unconverted, and require a conveyance thereof." The question was whether probate could be granted of the will, and whether probate duty was payable in respect of it. Sir James Hannen decided this in the affirmative :- "Where freehold property (he said) has had impressed upon it a changed character by reason of the doctrine of equitable conversion, it is to be treated as personalty, and probate duty is payable, and it therefore follows that probate must be granted " (1). And the learned judge, after noticing that Lord Penzance had, in a case decided before the Judicature Act came into operation, altogether refused to recognise the doctrine of equitable conversion in cases in the Probate Court, proceeded as follows:"I should, of course, have felt myself bound to act upon any decision of Lord Penzance if I thought it completely covered the ground here. But it appears to me that a very great change has been worked now by the fusion of all the Courts into one. There is no difference between the law to be administered in this Division and elsewhere, but each Court is to ascertain what the law is: whether legal or equitable, and I think, therefore, it is open to me to establish a different basis to that which existed in the Probate Court. I am of opinion that where freehold property has had impressed upon it a changed character by reason of the doctrine of equitable conversion, it is to be treated as personalty, and probate duty is payable, and it therefore follows that probate must be granted." A very remarkable instance of the doctrine of conversion is that which arises in the case of partnership property. This doctrine has now been made part of the Statute Law by the Partnership Act, 1890, the provisions of which shall be presently noticed. The reason of the rule was stated in an oftquoted case, as follows:-" The principle is well established that if partners purchase land merely for the purpose of their trade, and pay for it out of the partnership property, that transaction makes the property personalty, and effects a conversion out and out. What is the clear principle of this Court as to the law of partnership? It is that on the dissolution of the partnership all the property belonging to the partnership shall be sold, and the (1) In the Goods of Ann Gunn, 9 P. D. 242. proceeds of the sale, after discharging all the partnership debts and liabilities, shall be divided among the partners according to their respective shares in the capital. That is the general rule, and it requires no special stipulation; it is inherent in the very contract of partnership" (1). With regard to this subject, it is now enacted by the Partnership Act, 1890: "Where land or any heritable interest therein has become partnership property, it shall, unless the contrary intention appears, be treated as between the partners (including the representatives of a deceased partner), and also as between the heirs of a deceased partner and his executors and administrators, as personal or moveable and not real or heritable estate" (2). It has been established by a series of cases that when a conversion is rightly made, either by the Court or a trustee, all the consequences of conversion must follow unless there be an equity in favour of reconversion. Accordingly, when land is directed to be turned into money, the property will be treated as money for all purposes unless there be some equity to reconvert it again into land (3). Side by side with the doctrine of conversion comes the doctrine Reconverof "reconversion," by which the effect of the previous notional sion. conversion is undone, and the real or personal estate which had been deemed to be converted is considered to be reconverted with its original character. The principle on which the Court proceeds has been well stated as follows: : "Whenever real estate has been converted into personalty, or, according to the doctrine of a Court of Equity, is to be treated as having been converted into personalty, it must then descend as personalty, unless some person who is absolutely entitled to it has shewn in some way that he has elected to take it as real estate. Almost anything will be enough to shew such an intention, but there must be something" (4). Suppose a sum of money is directed to be laid out in the (1) Darby v. Darby, 3 Drew. 495, cited with approval, Attorney-General v. Hubbuck, 10 Q. B. D. 488; 13 Q. B. D. 275. (2) 53 & 54 Vict. c. 39, s. 22. See as to the law, independent of this nactment, Lindley on Partnership, 5th ed. p. 343, where the authorities are collected. (3) Steed v. Preece, L. R. 18 Eq. 192; Arnold v. Dizon, L. R. 19 Eq. 113; Hyett v. Meakin, 25 Ch. D. 735; and see Brett's Leading Cases (4) In re Lewis. Foxwell v. Lewis, |