1902 Encyclopedia > Settlement

Settlement




SETTLEMENT, in law, is a mutual arrangement between living persons for regulating the present or future enjoyment of property. It also denotes the instrument by which such enjoyment is regulated. The prevailing notion of a settlement is the dealing with property in a manner different from that in which the law would have dealt with it apart from the settlement. Definitions of settlement for the purposes of the Acts are contained in the Acts of 1856, 1877, and 1882 (see below). They are, however, scarcely sufficient for a general definition. On the one hand they are too extensive, and include wills; on the other they are not comprehensive enough, as they apply only to real estate. They also include only cases of successive limitations, but the idea of succession does not in itself seem a necessary part of the conception of settlement, although no doubt most settlements contemplate successive enjoyment. Settlements may be either for valuable consideration or not: the latter are usually called voluntary, and are in law to some extent in the same position as revocable gifts; the former are really contracts, and in general their validity depends upon the law of contract. They may accordingly contain any provisions not contrary to law or public policy.

The elements of the modern settlement are to be found in Roman law. The vulgaris, pupillaris, or exemplaris substitutio (consisting in the appointment of successive heirs in case of the death, incapacity, or refusal of the heir first nominated) may have suggested the modern mode of giving enjoyment of property in succession. Such a substitutio could, however, only have been made by will, while the settlement of English law is, in the general acceptation of the term, exclusively an instrument inter vivos. The dos or donatio propter nuptias corresponds to a considerable extent with the marriage settlement, the instrument itself being represented by the dotale instru-mentum or pacta dotalia. In the earliest period of Roman law no provision for the wife was required, for she passed under manus of her husband, and became in law his daughter, entitled as such to a share of his property at his death. In course of time the plebeian form of marriage by usus, according to which the wife did not become sub-ject to manus, gradually superseded the older form, and it became necessary to make a provision for the wife by contract. Such provision from the wife's side was made by the dos, the property contributed by the wife or some one on her behalf towards the expenses of the new house-hold. Dos might be given before or after marriage, or might be increased after marriage. It was a duty enforced by legislation to provide dos where the father possessed a sufficient fortune. Dos was of three kinds :—profectitia, contributed by the father or other ascendant on the male side; adventitia, by the wife herself or any person other than those who contributed dos profectitia; receptitia, by any person who contributed dos adventitia, subject to the stipulation that the property was to be returned to the person advancing it on dissolution of the marriage. The position of the husband gradually changed for the worse. From being owner, subject to an obligation to return the dos if the wife predeceased him, he became a trustee of the corpus of the property for the wife's family, retaining only the enjoyment of the income as long as the marriage continued. The contribution by the husband was called donatio propter nuptias.1 The most striking point of difference between the Roman and the English law is that under the former the children took no interest in the contributions made by the parents. Other modes of settling property in Roman law were the life interest or usus, the fideicommissum, and the prohibition of alienation of a legatum.

The oldest form of settlement in England was perhaps the gift in frankmarriage to the donees in frankmarriage, and the heirs between them two begotten (Littleton, § 17). This was simply a form of gift in special tail, which became up to the reign of Queen Elizabeth the most usual kind of settlement. The time at which the modern form of settlement of real estate came into use seems to be doubtful. There does not appear to be any trace of a limitation of an estate to an unborn child prior to 1556. In an instrument of that year such a limitation was effected by means of a feoffment to uses. The plan of granting the freehold to trustees to preserve contingent remainders2 is said to have been invented by Lord Keeper Bridgman in the 17th century, the object being to preserve the estate from forfeiture for treason during the Commonwealth.3 The settlement of chattels is no doubt of consider-ably later origin, and the principles were adopted by courts of equity from the corresponding law as to real estate.

At the present time the settlement in England is, so far as regards real estate, used for two inconsistent purposes, —to "make an eldest son," as it is called, and to avoid the results of the right of succession to real property of the eldest son by making provision for the younger children. The first result is generally obtained by a strict settlement, the latter by a marriage settlement, which is for valuable consideration if ante-nuptial, voluntary if post-nuptial. At the same time it should be remembered that these two kinds of settlement are not mutually exclusive : a marriage settlement may often take the form of a strict settlement and be in substance a resettlement of the family estate.

There are three possible varieties of the marriage settlement:— (1) the dotal system (régime dotal), under which the husband generally has the usufruct but not the property in the dos ; this is the system generally followed in countries where the Roman law prevails ; (2) the system of community of goods (communauté de Mens), by which the wife becomes a kind of partner of the husband; this system, said to have been originally the custom of ancient Germany, is in vogue in France and Louisiana; (3) the system of separate property, by which (subject to contract) the wife's pro-perty is free from the control of her husband ; this system prevails in the United Kingdom and the United States. An ordinary English marriage settlement of personalty is a deed to which the parties are the intended husband and wife and trustees nominated on their behalf. It generally contains the following clauses:— a power to vary the investments of the settled property within limits; trusts of the income for the benefit of the husband and wife during their lives; trusts for the issue, usually according to the appointment of the husband and wdfe or the survivor, and in default for sons attaining twenty-one and for daughters attaining that age or marrying, equally, subject to a "hotchpot" clause, charging the children with the amount of any previous appoint-ments ; a power of advancement of the portions of children in anticipation; a trust for the maintenance of infant children after the death of the parents, with a direction for the accumulation of surplus income; ultimate trusts fixing the destination of the settled property in default of issue. The receipt and trustee clauses, at one time usual, have been rendered unnecessary by recent legislation. The Conveyancing Act, 1881, superseding Lord St Leonard's Act of 1859 and Lord Cranworth's Act of 1860, gives power to appoint new trustees, and makes a trustee's receipt a sufficient discharge. Trustees were formerly much restricted in their investments, but various Acts of Parliament have now increased their powers of choice of investment (see TRUST). The settlement of real estate is still a matter of greater difficulty than that of personalty, though it has been considerably simplified by recent legislation. A short statutory form of settlement of real estate is provided by the Conveyancing Act, 1881 (Fourth Schedule, Form iv.). The Act further enacts that a covenant by the settlor for further assurance is to be implied. This takes the place of those covenants usually inserted in settlements before the Act, which were the ordinary covenants for title. (See REAL ESTATE.) The Settled Land Act, 1882, gives statutory authority to certain provisions generally inserted by conveyancers. The clauses must, however, still vary infinitely according to the circumstances of particular cases. Where the settlement is of copyholds, the usual course is to surrender them to the use of trustees as joint tenants in fee upon such trusts as will effect the desired devolution of the property.

A strict settlement of real estate usually takes place on the coming of age or marriage of the eldest son, if it be the intention of the parties that the estate should continue undivided. The consideration for the settlement in the first case is usually an immediate allowance made to the son, in the second the marriage itself, a valuable consideration. It will appear on referring to the articles ENTAIL and REAL ESTATE that an estate cannot be entailed for a period exceeding a fixed number of existing lives and an additional term of twenty-one years, but that if it be sought to bar the entail within that period the consent of the protector of the settlement must be obtained. The process of resettlement is thus described by Lord St Leonards : " Where there are younger children, the father is always anxious to have the estate resettled on them and their issue, in case of failure of issue of the first son. This he cannot accomplish without the concurrence of the son; and, as the son, upon his establishment in life in his father's life-time, requires an immediate provision, the father generally secures to him a provision during their joint lives as a consideration for the resettlement of the estate in remainder upon the younger sons." The settlement usually takes the form of a life estate for the father, followed by a life estate for the son, with remainder in tail to the unborn child of the son, the continuance of the estate in the family being further secured by a series of cross-remainders. There is often'a name and arms clause, under wdiich, by means of a shifting use (see TRUST), every person succeeding to the settled estate as tenant in tail is forced to assume the name and arms of the settlor under penalty of forfeiture of his estate. Certain parts of the personalty of the settlor are often settled upon trusts to devolve with the real estate. In order to attain this end, the chattels are not simply subjected to the same limitations as the real estate. If so subjected, they would vest absolutely in the first tenant in succession, as no estate can be limited in personalty (see PERSONAL ESTATE). A declaration is added that they shall not vest absolutely in any tenant until he shall attain twenty-one, and in case he should die under that age that they shall devolve as nearly as possible in the same way as the lands. By means of strict settlement the actual possessor of a settled estate at any given time is in general only a tenant for life. It is a rule of law that in a settlement of this nature there should be a full and com-plete communication of all material circumstances by the one party to the other.





It is only within a comparatively recent period that any dissatisfaction at the system of settlement has been felt. In 1829 the Real Property Commissioners saw no reason to recommend any alteration of the law as it then existed. To use the words of the First Report, p. 6, " Settlements bestow upon the present possessor of an estate the benefits of ownership, and secure the property to his posterity. The existing rule respecting perpetuities has happily hit the medium between the strict entails which prevail in the northern part of the island, and by which the property entailed is for ever abstracted from commerce, and the total pro-hibition of substitutions' and the excessive restriction of the power of devising established in some countries on the Continent of Europe. In England families are preserved, and purchasers always find a supply of land in the market." This optimistic view, it is scarcely necessary to say, is not the one generally accepted at present. The inconveniences inseparable in an economical point of view from the settlement of land have been proposed to be met in two ways,—(1) by a total prohibition of the creation of life estates (see LAND), and (2) by an extension of the powers of the limited owner. The latter is the one which has hitherto com-mended itself to the legislature of the United Kingdom.
Up to thirty years ago a settled estate in England or Ireland could be sold or leased only under the authority of a private Act of Parliament. The dealings of the limited owner with his property were practically confined to certain powers of raising money for draining conferred by 8 and 9 Vict. c. 56 and the Public and Private Drainage Acts (now repealed). The first general Act was the Leases and Sale of Settled Estates Act, 1856, which proceeded on the principles generally followed in the private Acts. The Act allowed the tenant for life to demise the premises (except the principal mansion house) for various terms, and to sell with the approval of the court. Several amending Acts were passed, and finally the law was consolidated and amended by the Settled Estates Act, 1877 (40 and 41 Vict. c. 18). Meanwhile the Improvement of Land Act, 1864 (which applies to the United Kingdom), and the Limited Owners' Residence Acts, 1870 and 1871, had been passed. The Act of 1864 allowed the owner of a settled estate to charge upon the land, by way of rent-charge, the expenses of certain improvements, such as drainage, irrigation, inclosing, reclamation, clearing, erection of labourers' cottages and farmhouse buildings, planting for shelter, construction of any buildings wdiich will increase the value of the land for agricultural purposes, and construction of jetties or landing-places on the sea-coast or navigable rivers and lakes. This list of improvements has been since extended by the Settled Land Act, 1882. The Act of 1870 enabled the owners of settled estates to charge such estates with the expense of building mansions as residences. The building of such mansions is by the Act of 1871 an improvement within the meaning of the Act of 1864. The Settled Estates Act, 1877 (40 and 41 Vict, c. 18), allowed the tenant for life, or for a greater estate, of a settled estate, to demise settled land on an agricultural lease for a term not exceeding twenty-one years (in Ireland thirty-five years). The lease must not be without impeachment of waste. This is the only case in which the powers of the Act may be exercised without the leave of the court. The court may authorize leases of any settled estates or of any rights or privileges over or affecting any settled estates, subject to the conditions that—(1) the lease be made to take effect in possession at or within one year next after the making, and be for a term for an agricultural lease as above, for a mining lease not exceeding forty years, a repairing lease sixty years, a building lease ninety-nine years, with power for the court to grant for a longer term if in accordance with the custom of the district and beneficial to the inheritance ; (2) the best rent must be reserved; (3) in a mineral lease three-fourths of the rent is to be invested (one-fourth where the limited owner is entitled to work the minerals for his own benefit); (4) the lease is not to authorize felling of trees except for the purpose of clearing for building ; (5) the lease is to be by deed, and is to contain a condition for re-entry on non-payment of rent for twenty-eight days. The court may also authorize sales of settled estates and of timber, and dedication for streets, roads, squares, gardens, sewers, and other works. The application to the court (which in England is the Chancery Division or the Chancery of Lancashire, in Ireland the Chancery Division) is by petition in a summary way with the consent of the persons having any beneficial estate under the settlement, and all trustees having any estate on behalf of any unborn child. The court may dispense with consent under certain circumstances. No application is to be granted by the court where a similar application has been refused by parliament. Money received on sale under the Act is to be invested as the Act directs, for the benefit of the settled estate. Inl882thepowers of the limited owner were still further increased. In that year was passed the Settled Land Act, 1882 (45 and 46 Vict. c. 38), since amended by 47 and 48 Vict. c. 19. For this very valuable Act the statute book is indebted to the late Earl Cairns. It does not repeal the Act of 1877, but gives cumulative powers. The Act of 1877 must still be brought into action in certain cases to which the Act of 1882 does not apply. The broad distinction between the two Acts is that the powers given by the Act of 1877 are based entirely, except in agricultural leases, on judicial proceedings, while those given by the Act of 1882 may be exercised by the tenant for life at his option, generally without the consent of trustees or the court. The powers are those usually inserted in settlements of real estate, and are conferred upon every tenant for life beneficially entitled to possession. This includes a tenant in tail by Act of Parliament restrained from defeating an estate tail, but not a tenant in tail where the land in respect of which he is restrained was purchased with money provided by parliament, a tenant in fee simple subject to an executory limitation, a person entitled to a base fee, a tenant for years determinable on a life, a tenant pur autre vie, a tenant in tail after possibility of issue extinct, a tenant by the curtesy, &c. A married woman may exercise the powers given by the Act in spite of any restraint on anticipation contained in the settlement. The Act does not apply to corporations, whether sole or aggregate. The chief powers given by the Act are those of sell-ing and leasing. A tenant for life may sell settled land or any part of it, or any easement, right, or privilege over it, or the seignory of a manor, and may make exchange or partition. A sale must be for the best price, and an exchange or partition for the best con-sideration ; the sale may be in one lot or several, and by auction or private contract. A reservation as to user or as to mines and minerals may be imposed. Settled land in England may not be exchanged for land out of England. A lease is not to exceed for building ninety-nine years, mining sixty, any other kind twenty-one. The regulations as to leases are in general correspondence with those of the Act of 1877. The time for which non-payment of rent gives a right of re-entry is thirty instead of twenty-eight days, and there are additional regulations as to building and mining leases. Where the tenant for life is impeachable for waste in respect of mines, three-fourths of the mining rent is to be set aside as capital money, in other cases one-fourth. The tenant for life may surrender and regrant leases. The principal mansion house and the demesnes thereof, and other lands usually occupied therewith, cannot be sold or leased without the consent of the trustees of the settlement or the order of the court. The Act pro-vides for three kinds of sale:— (1) by the tenant for life mero motu, the ordinary case; (2) with consent of trustees or the court, as in the case of the principal mansion and of the application of money paid for a lease or reversion; (3) by order of the court, as in the case of the variation of a building or mining lease according to the circumstances of the district, of parliamentary opposition for the protection or recovery of settled land, and of the sale or purchase of chattels as heirlooms to devolve with land. Land acquired by purchase, exchange, or partition is to be settled as far as possible on the same trusts as the other settled property. Capital money is to be applied as the Act directs, generally for the benefit of the settled property. The tenant for life may enter into a contract for carrying into effect the purposes of the Act. A contract not to exercise the powers of the Act is void. As to procedure, an ap-plication to the Chancery Division is to be made by petition or summons. Jurisdiction is conferred upon county courts (in Ireland civil bill courts) in respect to land or personal chattels settled or to be settled, not exceeding in capital value £500 or in annual value £30. Rules of court have been framed for the purpose of carrying into elfect the provisions of the Acts of 1877 and 1882. For more minute information than can be given in this place the Acts and rules themselves must be consulted.





The necessity for a settlement, as far as the wife's interests are concerned, has been diminished by the Married Women's Property Act, 1882 (45 and 46 Vict. c. 75). It is still, however, usual to have a settlement on marriage, especially where there is property of any considerable value. The Act contains a saving of existing settle-ments and a power to make future settlements with or without restriction against anticipation (not to be valid against a married woman's ante-nuptial debts). No settlement or agreement for a settlement is to have greater validity against a married woman's creditors than such settlement or agreement would have when made or entered into by a man. A future or reversionary interest in settled personalty is specially excepted from the operation of Malins's Act (20 and 21 Vict. c. 5), under which a married woman may by deed acknowledged dispose of her future or reversionary interest in unsettled personalty. The former law as to equity to a settlement seems to have been rendered obsolete by the Married Women's Property Act. The doctrine of equity formerly was in accordance with the maxim, " He wdio seeks equity must do equity,"— that, wdiere a husband was forced to obtain the assistance of a court of equity to reach property to wdiich he was entitled in right of his wife, equity would only aid him on condition of his settling a certain portion on his wife. Now that a husband cannot succeed to any property in right of his wife during her lifetime, the reason for the doctrine of equity to a settlement has dis-appeared.

As a rule a settlement can only be made by a person not under disability,—therefore apart from statute not by a lunatic, or a bankrupt, and generally not by an infant. But by the Infants' Settlement Act (18 and 19 Vict. c. 43) infant males of twenty or over or infant females of seventeen or over may with the approbation of the Chancery Division obtained by petition make a valid settle-ment or contract for a settlement of all or any part of their pro-perty. By the Acts of 1877 and 1882 the powers of the Acts may in certain cases be exercised by trustees of a settlement, trustees in bankruptcy, committees of lunatics, and guardians of infants.

Where the parties are not in a position to make an immediate settlement, articles for a settlement are sometimes entered into, but more rarely than formerly on account of the facilities offered by the Infants' Settlement Act. The court wull enforce the execution of a settlement in accordance with the articles, and will reform one already made if not in accordance with them. The court will also enforce the specific performance of any contract on the faith of which a marriage has taken place, in spite of the provisions of § 4 of the Statute of Frauds (see FRAUD). It should be noticed that marriage itself is not such a part performance of a contract as to give the court jurisdiction. An imperfect obligation arising from an informal ante-nuptial agreement can be made binding as between the parties by a post-nuptial settlement; but this will not protect such a settlement from being treated as a voluntary settlement against creditors.

A settlement or contract for settlement made in consideration of marriage or for other valuable consideration is as a rule irrevocable by the settlor and good against creditors. The only exception or apparent exception is the provision in the Bankruptcy Act, 1883 (46 and 47 Vict. c. 52, § 47 (2)), that any covenant or contract made in consideration of marriage for the future settlement on or for the settlor's wife or children of any money or property wdierein he had not at the date of his marriage any estate or interest, and not being money or property of or in right of his wife, shall, on his becoming bankrupt before the property or money shall have been actually transferred or paid, be void against the trustee in bankruptcy. "With regard to voluntary settlements, 13 Eliz. c. 5 avoids as against creditors conveyances of lands or chattels con-trived to delay, hinder, or defraud creditors or others, with a proviso protecting estates or interests conveyed on good considera-tion and bona fide to persons not having notice of fraud. 46 and 47 Vict. c. 52, § 47 (1), enacts that any settlement of property, not being a settlement made before and in consideration of marriage or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within two years after the date of the settlement, be void against the trustee in the bankruptcy, and shall, if the settlor becomes bankrupt within ten years, be void against the trustee unless the parties claiming under the settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the settled property, and that the interest of the settlor in such property had passed to the trustee of the settlement on the execution thereof. 27 Eliz. c. 4 was passed for the benefit of purchasers, as 13 Eliz. c. 5 was for that of creditors, but refers to real estate and chattels real only. It enacts that every conveyance of lands with intent to defraud purchasers shall be void as against such purchasers only, and that conveyances with power of revocation shall be void against subsequent purchasers. The Act has been construed to mean that a voluntary conveyance of real estate is void as against a subsequent purchaser, mortgagee, or lessee for value. With these exceptions a voluntary settlement is good as between the settlor and the objects of the settlement, and as between them and third persons. So far is this the case that the court will not assist a settlor to destroy the effect of a voluntary settlement by compelling specific performance against a subsequent purchaser. On the other hand the court will not enforce specific performance of a voluntary settlement, in spite of its being a contract under seal. Such an instrument, however, creates a debt and will be admitted to proof in a creditors' suit.

Scotland.—A disposition and settlement is a mode of providing for the devolution of property after death, and so corresponds rather to the English will than the English settlement. The English marriage settlement is represented in Scotland by the contract of marriage, wdiich, like the English settlement, may be ante- or post-nuptial. The main difference between the ante- and the post-nuptial contract is the extent to which the property the subject of the contract may be withdrawn from creditors. In the former case a preference or jus crediti is according to circumstances conferred on the wife or children ; in the latter case the wife or children cannot compete with the creditors. A post-nuptial con-tract is also liable to revocation by the husband or wife. The Married Women's Property Act, 1881, while it makes the wife complete mistress of her property, at the same time does not exclude or abridge the power of settlement by ante-nuptial contract of marriage.

A contract of marriage may be made with or without the creation of trustees, the latter being the more usual form. If the contract settle heritable property, it generally contains a narrative or inductive clause, containing the names of the parties with an obligation to celebrate the marriage, a disposition of the estate with its destination, provisions as to the wife and younger children and a declaration that these provisions shall be in full of their legal claims, a conveyance by the wife of her whole means and estate to her husband or the trustees, an appointment of trustees to secure implement of provisions to the wife and children, a registration clause, and a testing clause. If the contract settle movables, it is, mutatis mutandis, in much the same form, with the addition of a clause excluding the jus mariti of a future husband of the wife (see Juridical Styles, vol. i. p. 174, vol. ii. p. 498). The Ruther-ford Act (11 and 12 Vict. c. 36) and the Entail Act, 1882 (45 and 46 Vict. c. 53), specially provide that settlements by marriage contract are not to be disappointed until the birth of a child, who by himself or his guardian consents to disentail, or until the marriage is dissolved, unless with the consent of the trustees of the contract. Improvements by limited owners were allowed by law much earlier than in England. 10 Geo. III. c. 51 enabled heirs of entail to charge the entailed estates with the sums of money laid out by them in building mansions. This principle was expressly adopted for England, as the preamble of the Act shows, by the Limited Owners' Residence Act, 1870. The Rutherford Act and other Acts empowered heirs of entail to excamb, to feu, to lease, to charge by bond and disposition in security, to sell, to grant family provisions, and to erect labourers' cottages. The Settled Estates Act and Settled Land Act do not apply to Scotland. Substitution, as in Roman law, can only be made by testamentary or mortis causa disposition. The Rutherford Act and the Entail Amendment Act, 1868 (31 and 32 Vict. c. 84), more strict than the law of England against perpetuities, forbid the creation of a life-rent interest in heritables or movables except in favour of a party in life at the date of the deed creating such interest.

United States.—Marriage settlements are not in as common use as in England, no doubt owing to the fact that the principle of the Married Women's Property Act was the law of most of the States of the Union long before its adoption by England. In Louisiana, in the absence of stipulation to the contrary, community of goods is the rule. Settlements other than marriage settlements are practically unknown in the United States. Property cannot, as a general rule, be tied up to anything like the extent still admis-sible in England. In those States where entail is allowed the entail may be barred by simple means of alienation. (J. W†.)


Footnotes

1 See Hunter, Roman Law, p. 150 ; Maine, Early History of Institutions, lect. xi.
2 The appointment of such trustees has been rendered unnecessary by 8 and 9 Vict. c. 106 and 40 and 41 Vict. c. 33.

3 This sketch of the history of settlement is abridged from a paper by the late Mr Joshua Williams, Papers of the Juridical Society, vol. i. p. 45.

4 That is to say, the Act would appiy to the estates tail of the marquis of Abergavenny or the earl of Shrewsbury, but not to Blenheim or Strathneldsaye, purchased with public money for the dukes of Marlborough and Wellington (see REAL ESTATE).



The above article was written by: James Williams.



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