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SATISFACTION AND PERFORMANCE.
Satisfaction," according to a definition which was sanctioned Definition, by the House of Lords in their judgment in a great case (1) upon the subject, is "the donation of a thing with the intention that it is to be taken either wholly or in part in extinguishment of some prior claim of the donee." Satisfaction generally arises in one of two ways:
First, when a father or person in loco parentis (i.e. filling the When place of a parent) (2) makes a double provision for a child or person standing towards him in a filial relation.
(1.) The father or person in loco parentis first gives a legacy by his will, and then subsequently, e.g. on the marriage of the child, makes a provision for it.
(2.) The father, or person in loco parentis, on marriage, or on some other occasion, agrees to make a provision for the child, and then subsequently makes a bequest to the child by will.
Secondly, when a debtor confers by will or otherwise a pecuniary benefit on his creditor.
The principles on which the Court proceeds in cases of this Principles description have been well stated as follows:
on which the Court
Looking at the ordinary dealings of mankind, the Court proceeds. concludes that the parent does not, when he makes that advancement, intend the will to remain in full force, and that he has satisfied in his lifetime the obligation which he would otherwise have discharged at his death; and having come to that conclusion, as the result of general experience, the Court acts upon it, and gives effect to the presumption that a double provision was not intended. If, on the other hand, there is no such relation either natural or artificial, the gift proceeds from the mere bounty of the testator, and there is no reason within the
() Lord Chichester v. Coventry, L. R. 2 H. L. 71-95.
(3) The legal test whether a person has placed himself in loco parentis to another is whether he has taken upon
himself the duty of making a pro-
Statement of the law.
knowledge of the Court for cutting off anything which has in terms been given (1).
In a leading case on the subject, a Mr. Tussaud had covenanted on the marriage of his daughter, Mrs. White, that his executors or administrators would within six calendar months after his own death, if he survived his wife, but if not, within six calendar months after his wife's death, transfer to the trustees of his daughter's settlement a sum of £2000 consols, to be held on certain elaborate trusts for the benefit of his daughter, her husband, and children. Mr. Tussaud paid the trustees £1000, which they accepted in part discharge of his liability to them. On his death some years afterwards it was found that he had made a will by which he had left £2800 on certain trusts for the benefit of Mrs. White and her children. The Court of Appeal (2) considered that the trusts for the benefit of Mrs. White and her children in the will were so widely different from those in the settlement, that the £2800 legacy ought not to be regarded as given in satisfaction for the £1000 still due from Mr. Tussaud, and they decided that Mrs. White and her family were entitled to both benefits, to wit, the benefit of the covenant by her father contained in the marriage settlement and the legacy given by his will.
"I can conceive," said Lord Colonsay, in delivering judgment in the House of Lords in the great case of Lord Chichester v. Coventry, "no consideration more important upon a question of double portions, than the consideration of whether the parties to be benefited by the one are the same as the parties to be benefited by the other, or whether the nature of the benefit conferred in the one case is the same as the nature of the benefit conferred in the other." Slight differences, however, between the two provisions, are not sufficient to rebut the presumption of satisfaction.
Is parol evidence of the intention of the testator or settlor admissible with reference to the presumption of satisfaction? The Court of Appeal, in the leading case to which we have previously referred, cited with approval the statement of the law on this subject which is contained in Taylor on Evidence. The rule is as follows:
"Where there are two instruments and where the circumstances are such that the Court raises a presumption that one is
(') Suisse v. Lowther, 2 Hare, 424, 435.
(*) Tussaud v. Tussaud, 9 Ch. D. 363,
and see Brett's Leading Cases, p. 253, where the authorities are reviewed.
of the law.
in satisfaction of the other, there the Court will receive evidence Statement of declaration of the parties to rebut such presumption, and to shew that such presumption is not in accordance with the intention of the author of the gift, and when evidence is admissible to rebut the presumption of law, counter-evidence is admissible in support of the presumption. On the other hand, where there is prima facie no presumption in equity, there the Court will not allow evidence to be given to raise a presumption and to shew the intention of the parties." Parol evidence, in fact, to put the point shortly, is admissible to rebut, but not to raise the presumption of satisfaction.
A curious case on the law with regard to satisfaction came very recently before the Court of Appeal.
A separation deed had been entered into between husband and wife dated the 7th of September, 1844, by which the husband covenanted that his executors or administrators should, on his decease pay to his wife, if she survived him, £100. There was then a proviso in the deed that if £6 per month was paid her for six months from his death, the balance should only be paid at the end of that period.
The husband's will, which was dated the 5th of September, 1844, i.e. two days before the separation deed, but alleged to have been signed two days after it, contained the following clause :
"After all my just debts, funeral and testamentary expenses are paid, I bequeath to my wife £100, payable within six months after my decease, £6 to be paid to her or her order until my estate is finally settled, the same to be deducted from the said £100 as per indenture stated in our mutual separation." (1)
The Court of Appeal decided that the legacy was not to be taken in satisfaction of the amount payable under the covenant, but that the widow was entitled to both sums. The following principle was laid down: The circumstance that two documents are contemporaneous, so that both are present to the mind of the donor when he executes each of them, is a strong reason against holding a gift in one to be a satisfaction of an obligation under the other to pay a like sum. It is the duty of the Court to look at all the circumstances, and the relative positions of the two documents in point of time may be decisive, is often material, and is always relevant. In the present case the Court considered that the documents were so
(') Horlock v. Wiggins. Wiggins v. Horlock, 39 Ch. Div. 142.
debts by legacies.
closely connected in point of time that they must be treated as contemporaneous, and both present to the donor's mind when he executed one of them, and that though the artificial presumption of satisfaction might be acted upon when the authorities were applicable, yet that it was not the duty of the Court to create fresh artificial presumption.
With regard to the second head of the doctrine of satisfaction, viz. satisfaction of debts by legacies, the Court proceeds upon the principle debitor non præsumitur donare, and accordingly it has been well established by the authorities that if a debtor bequeaths to his creditor a legacy equal to, or exceeding the amount of his debt, it shall be presumed, in the absence of any intimation of a contrary intention, that the legacy was meant by the testator as a satisfaction of the debt.
The rule of presumption of satisfaction of debts by legacies has, however, as mentioned in Williams on Executors, "met with the censure of several eminent judges." The Court, as was said in a recent case, is not disposed" to hold there is satisfaction if it can help it, and has taken hold of slight circumstances to rebut the presumption." Thus the presumption of satisfaction shall not be made when the legacy is of less amount than the debt, or only given contingently or of an uncertain amount, where the debt was not contracted till after the making of the will, where the debt is due upon a current account "because the testator might not know on whose side the balance lay," where the debt is due upon a bill of exchange or other negotiable security (1). In the case to which we have alluded, decided in 1888, a testator had bequeathed his wife a legacy of £625. At the time he owed her exactly that amount. The debt was paid off in his lifetime, and the Court decided that the payment of the debt must be taken as an ademption of the legacy (2).
North, J., in delivering judgment, said: It is clearly established that if there is a legacy of equal amount with a debt, the creditor cannot take both the legacy and the debt unless there is something to take the case out of the general rule. In the present case there is nothing of the sort, and it seems to me that this legacy given by the codicil must be taken to have been given in satisfaction of the debt; and the presumption of law, in the absence of any evidence to rebut it, seems to me to put the matter in precisely the same position as if it had been stated
(1) Williams' Executors, 8th ed., 1302, where the authorities are collected, and see Fairer v. Park, 3
Ch. D. 309. Re Huish, 43 Ch. D. 260. (2) In re Fletcher. Gillings v. Fletcher, 38 Ch. D. 373.
in the codicil that the legacy was to pay the debt.
. It was decided in a case which came before the Court in
Closely connected with the doctrine of satisfaction, but at the Distinction same time to be distinguished from it, is the doctrine of performance. The distinction which is usually taken between the and pertwo is that in cases of satisfaction the thing which is substituted formance.. is different from that which was covenanted to be done, while in cases of performance the actual thing contemplated by the covenant is wholly or partially performed. The doctrine of performance is founded on the principle expressed in the maxim "equity imputes an intention to fulfil obligations." Accordingly where a man covenants to do something and he does that which wholly or partially carries out his covenant he is presumed to have acted with that intention.
tions of perform
The doctrine of performance may be illustrated by the two old Illustraleading cases on the subject. In Wilcocks v. Wilcocks (2) a man covenanted on his marriage to purchase lands of the value of ance. £200 a year, and settle them for the jointure of his wife, and to the first and other sons of the marriage in tail. He purchased lands of that value, and took a conveyance to himself in fee, and did not make any settlement. On his death his heir, who was also entitled under the settlement as eldest son, claimed the purchased lands as heir, and also to have the covenant performed by laying out an adequate portion of the personalty in the purchase of land. The Court decided that the lands descended were to be taken as a performance of the covenant.
In Blandy v. Widmore (3) a man previously to his marriage covenanted to leave his intended wife £620. He subsequently married and then died intestate, and the share which came to the wife under the Statute of Distributions was more than £620. It was decided that this amounted to a performance, and that accordingly the wife could not take her share under the intestacy, and claim the £620 under the covenant.
It has been decided that the circumstance that the money is
() In re Huish. Huish, 43 Ch. D. 260.
(2) 2 Vernon, 558.
1 Peere Williams, 324.