CHAPTER III.

GUARANTEES.

GUARANTEES by way of indemnity are usually effected by bond. Indemnities of this kind are generally given for the faithful discharge of the duties of clerks and confidential servants; or for the purpose of securing the value of goods supplied by wholesale dealers to retail traders, or to secure balances of banking accounts; as also for the fulfilment of contracts by builders, engineers, tradesmen or others, who have entered into any undertaking.

Where the guarantee is for the faithful discharge of the duties of a clerk or servant.]—Where the guarantee is for the faithful discharge of the duties of a clerk or servant, the bond is usually entered into by the clerk and his surety, which recites the engagement of the clerk or servant, and that the obligee has required security for the faithful discharge of the clerk's duties with a condition for avoiding the bond in case he discharges his duties accordingly: (see forms of this kind, 2 Con. Prec., Part IX., Nos. II. III. and IV., pp. 582, 584, 586.)

Guarantees for securing the payment for goods, &c.]—The form of guarantee for the payment of goods supplied to traders is by bond with one or more sureties, in which the agreement to supply the principal with goods, upon he and his sureties giving their bond to secure the payment, is to be followed by a condition for avoiding the bond in case such payments are duly made: (see the form, 2 Con. Prec., Part IX., No. I., p. 580, 2nd edit.)

Where the guarantee is to secure the balance of a banking account.]-Bonds by way of guarantee to secure the balance of a banking account may be very concisely penned. They are entered into with one or more sureties, and after reciting

that the sureties have agreed to become bound with the obligor to secure the balance of his running account, the bond is conditioned to be void on his paying his balance accordingly: (see the form 2 Con. Prec., Part IX., No. V., p. 588, 2nd edit.)

Where the guarantee is for the specific performance of a contract by builders, &c.]-Where a guarantee is given for the specific performance of a building contract, or any other undertaking in which labour, skill, and materials are to be employed, two or more sureties are usually required. The nature of the contract ought to be concisely but accurately set out, and it should then be recited that the principal with his sureties have agreed to enter into the bond for the due performance of the contract, concluding with a condition for avoiding the contract if such contract is performed accordingly: (see the form 2 Con. Prec., Part ÎX., No. VI., p. 590, 2nd edit.)

CHAPTER IV.

ASSURANCE OF TITLE.

THE application of the principle of assurance to the security of property and the guarantee of title is of modern invention, but its convenience is so great, its advantages so obvious, that it must, ere long, supersede all other forms of indemnity. The security provided by a wealthy corporation, beyond that which could be given by the bonds or covenants of individuals, is so obvious, that it only needs to be understood to be universally preferred. I have, therefore, thought it to be desirable to introduce into this treatise on the Practice of Conveyancing a sketch of this form of indemnity, with some of the applications which have been already made of it.

The application of the principle of assurance to the security of title, and the facilitating of dealings with real property and the practice of conveyancing, is due to Mr. Cox, the editor of the Law Times, who, having first invited discussion of the plan, found it to be so well received, that he formed a company for the purpose of carrying it into practical operation. This company, known by the name of the Law Property and Life Assurance Society, has now been six years in existence, and has conducted its operations with entire success. Every branch of this assurance of property, as originally planned, has borne the test of practice, and, as the facilities afforded by it become more widely known, and the applications of it better understood, the business is steadily increasing, and ultimately it must supersede all other less safe and less convenient methods of securing property to purchasers and mortgagees. I propose to describe briefly the various uses to which the principle of assurance has been made applicable in aid of the conveyancer.

1. Assurance of title.]-The Society does not, of course, assure titles that are positively bad, but only such as are good holding titles, but rendered unmarketable or unmort

gageable by reason of some defect in evidence, or where the cost of proof is greater than the value of the property will bear. This is effected by a policy of assurance, whereby the company assures the purchaser or mortgagee against any loss by reason of the defect specified. The premium charged varies with the risk, ranging from 5s. to 5l. per cent., and it is received either in one sum, or by annual premiums, at the option of the assured. The various contingencies to which this form of assurance may be applied, will be best exhibited by some specimens of the defects against which assurances have been actually effected by the company, and for these I am indebted to the courtesy of the intelligent secretary, Mr. Barnes, who is himself a solicitor.

Examples of Assurances of Title effected with the Law Property and Life Assurance Society, 30, Essex-street, Strand.

1.-The assignees of a bankrupt objecting to pay over certain moneys unless released by trustees, who were under certain disabilities, which could not be removed without considerable expense and delay, the Society guaranteed the assignees against any possible loss by reason of their paying over the same.

2.-A. died intestate, leaving freehold property, which his widow took possession of and enjoyed for twenty-five years; no heir-at-law could be found. The Society assured the title to a purchaser.

3.-Property was devised to A. and B. A question arose upon the terms of the will, whether they took as joint tenants, or tenants in common. A. died intestate. B. continued in possession for more than twenty years. A.'s heir-at-law had made no claim. The Society assured the title to a purchaser from B.

4.-A mortgage deed was lost-no re-assignment had been made, but there was good reason to believe that the mortgage had been paid offno interest had been demanded or paid for many years. The Society assured against any claim under such mortgage deed.

5.-A. died intestate, leaving freehold property, which his widow took possession of, and devised to B. More than twenty years having elapsed since A.'s death, and thirty years since his heir was heard of, the Society assured B.'s title to a purchaser.

6.-A. B. bequeathed to C. D. one-fourth of the rents arising from a certain estate, to be enjoyed by the said C. D. for life, unless he should at any time be in receipt of an income of 500l. per annum or upwards (from other sources), and in such case his interest was to go to his brothers and sister. C. D. being about to borrow a sum of money on mortgage of his life interest in the estate, the mortgagee required a policy from the Society assuring to C. D. his then present income (arising from his share of the estate), during the term of the mortgage.

7.-A. B., having a power of appointment by will over certain estates, became lunatic. C. D., who was his heir-at-law in default of appointment, being about to mortgage a portion of the estate, the mortgagee required to be guaranteed against the probability of A. B. exercising

the power, and for that purpose effected an assurance with the Society. Proof was given to the Society that no appointment had ever been made, and that A. B. was then a confirmed lunatic.

8.-A. B., the owner of a presentation, under a family deed of arrangement, covenanted, without consideration, to present same to C. D. on death of the then incumbent. A. B. subsequently became bankrupt, and his assignees sold the right of presentation to E. F., who proposed to the Society to assure his title thereto against the above covenant.

9.-A. B. (aged about 60) was possessed of a freehold estate, out of which his widow would be entitled to dower; his wife (then about his own age), owing to their not being on terms, refused to join in the conveyance to a purchaser. The Society assured the latter against any claim in respect of dower.

10.-A. B., being entitled to the interest of a large sum of money for life, with an absolute power of appointment in the event of his leaving no issue, or if such issue should not attain the age of 21, was desirous of exercising his power for the purpose of raising a sum of money by way of mortgage, A. B. being at the time nearly 50 years of age, and unmarried. The Society guaranteed the mortgagee against loss by reason of either of the said contingencies.

11.-A. B. was robbed of two bills of exchange drawn by the Commissariat Department of a colony on the Lords Commissioners of the Treasury; he gave notice to the Treasury to stop payment of the bills, which was done, but they declined to pay the amount to A. B. without a guarantee of indemnity. The Society gave the necessary guarantee.

12.-A. B. died intestate, leaving a freehold estate. His eldest son had gone abroad, and had not been heard of for thirty years previous to the death of A. B. The second son took possession of the estate, and held it for twenty years undisputed. The Society assured the tie to a purchaser.

13.-A. B. by his will devised certain estates to trustees, subject to certain prior uses, in favour of C. D. and others for life, with power to the said trustees to sell the fee of the said estates, with the consent of the tenant for life. The tenant for life (C. D.) sold his life interest, and the trustees afterwards sold the fee. An objection was raised that C. D., having divested himself of his life estate, had no longer the power to authorize the trustees to sell the fee. The Society assured the title.

14.-A. B. was passenger in a ship sailing from Australia, which was supposed to be lost, nothing having been heard of her for three years, and the underwriters having paid the insurance effected on her. Letters of administration were granted to the widow, but on the sale of a portion of his estate, a purchaser objected to the title on the ground that A. B. might still be alive. The Society guaranteed the purchaser against that risk from such contingency.

It will be observed that the contingencies thus assured against are not merely defects in evidence of title, but such as may possibly occur in relationship to the acts of individuals, as marriage, death with or without heirs, survivorship, and so forth.