CHAPTER XXVI.

CONVERSION.

The Principle.-"Money 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 articles, 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." Leading case, Fletcher v. Ashburner (1779), 1 B. C. C. 497, at p. 499.

To take a very simple example: If a man die, having contracted to sell land, and the purchase has not been completed at his death, the money for which he has contracted to sell the land passes under a residuary bequest or to his next-of-kin, and not to his residuary devisee or heir-at-law, although the legal title to the land still remained in the testator or intestate. For the purpose of devolution from the testator or intestate that land had been converted into money from the date of the contract.

Since equity considers that as done which ought to be done, the consequences of a direction to convert came into force immediately, that is to say, upon

the

signing of an agreement if the direction is contained in a document inter vivos, or upon the death of a testator in the event of the direction being contained in a will.

Double Conversion.-Upon the same principle a direction to sell land and to re-invest the proceeds in other lands does not effect any conversion; for the double operation if carried out instantaneously leaves the land in its original state, and it makes no difference if the first part of the operation, namely the conversion of the land into money, is effected, while the second part of the operation, namely the re-conversion of the money into land, is postponed.

Until a conversion is in fact carried out, the direction to convert effects what is called a "notional" or "constructive conversion.

A direction to convert may be either "imperative or "discretionary" in form; most directions to convert are in fact "imperative," that is to say, the testator contemplates that the conversion will in fact be carried out sooner or later. It is only an “imperative" direction to convert which effects a constructive conversion. A mere discretionary power to convert or not to convert at the option of some person effects nothing until de facto the conversion is carried out.

I. What is an "imperative" direction to convert, or in other words, what effects a "constructive" conversion?

i. A plain trust for sale does so.

Example. "I devise the residue of my real estate to trustees upon trust to sell the same and to stand possessed of the proceeds upon trust for my wife for life," &c.

ii. A trust for sale where the time or manner of the sale only is left to the discretion of some person. Doughty v. Bull (1725), 2 P. W. 320; In re Raw (1884), 26 C. D. 601.

as, and

Example.-Devise to trustees upon trust to sell " when they shall think most expedient for the benefit of my estate."

A mere power of sale (as distinguished from a trust for sale) does not, however, effect a constructive conversion; unless controlled by other words, it is merely discretionary.

But taking the whole of a will into consideration it may frequently be shown that a mere power of sale ought to be construed as a trust for sale (i.e., it does effect a constructive conversion), and conversely it may occasionally be shown that a trust for sale ought to be construed as a mere discretionary power of sale; and in this respect the form of the ultimate gift is important, as it may show whether the testator contemplated that the power of sale would certainly be exercised, or, on the other hand, that the trust for sale might not be exercised. See In re Hotchkys (1886), 32 C. D. 408.

66

Sometimes a trust for sale or power of sale is vested in a trustee to be exercised with the consent or upon the request of some other person. This should be construed as having been inserted for the purpose either of enforcing obligation or of giving discretion as the context of the instrument may require"; and therefore it may or may not effect a constructive conversion according to the general tenor of the will. In re Taylor's Settlement (1852), 9 Hare 596.

Again the form of the ultimate gift and the position

of the person to make the request or give the consent is important.

For instance, if there is a power of sale with the consent of a tenant for life entitled to occupy a house upon the land, the construction would probably be that a sale was intended at some time or another, the provision for consent being inserted to prevent the tenant for life being turned out by a sale without his consent, i.e. the trust is imperative.

In the following, however: " upon trust with the consent of L. to lay out such monies in Government securities or in the purchase of freehold premises," with an ultimate trust for a person "his heirs or assigns or his executors administrators or assigns," the testator obviously contemplated that the ultimate form of the property might be realty or personalty, and the trust is, therefore, discretionary, or rather it is not a trust for conversion at all but a mere power not effecting a constructive conversion. See Van v. Barnett (1812), 19 Ves. 102; In re Taylor's Settlement, ubi supra.

II. How a constructive conversion may be put an end to while the property is yet unconverted :

First." Whenever property is nominally converted under this doctrine it must descend in such character, unless some person who is absolutely entitled to it has shown in some way that he has elected to take it in its original character. Almost anything will be enough to show such intention, but there must be something." Wheldale v. Partridge (1803), 8 Ves. 227; In re Lewis (1885), 30 C. D. 654.

66

Secondly. If the property, still nominally subject to the trust for conversion, is actually transferred to the person entitled thereto, the property is said to be at home," and it at once loses the quality of personalty or realty with which it has been nominally impressed. See Pulteney v. Darlington (1783), 1 B. C. C. 223; and Wheldale v. Partridge, ubi supra.

The distinction between the two classes of case is that in the first the person entitled to the property may elect to take it in an unconverted form while the title to it is still outstanding in third parties, and by his election can do away with the impressed quality (i.e., he reconverts it), while in the second the whole interest in the property having been transferred to the person entitled, no election is necessary, but the trust for conversion ceases automatically.

Examples. First class. Legal estate outstanding in trustees; the person beneficially entitled to the land which is subject to a trust for conversion enters into possession, executes, repairs and lets parts of it, &c. These acts are evidence of an election to take it as land, i.e. to abolish the trust for conversion. In re Gordon (1877), 6 C. D. 531.

Election may therefore be by conduct as well as by writing; no doubt, also, a sufficiently definite verbal election would be sufficient.

Second class. Property "at home." Trustees hold cash or securities upon trust to invest in land. A. would be absolutely entitled to the land in possession if the investment were made. The trustees pay him the cash and transfer the securities; the property is "at home," and the trust for conversion is at an end. Pulteney v. Darlington, ubi supra.

It must be understood, however, that a person cannot by his election put an end to a trust for conversion where there are any prior beneficial interests in the property in front of his own; and again, if there are two or more tenants in common of property, it requires the election of all to do away with the trust for conversion. In re Davidson (1872), 11 C. D. 341.

The principles chiefly apply where the will of the person entitled to property, which is subject to a trust for conversion, is silent as to that property, and the