Chapter XX: The Law of Property (1)

§ 152. =Meanings of the Term Property.=

The substantive civil law[401] is divisible into three great departments, namely the law of property, the law of obligations, and the law of status. The first deals with proprietary rights _in rem_, the second with proprietary rights _in personam_, and the third with personal or non-proprietary rights, whether _in rem_ or _in personam_. In this chapter we shall consider in outline the first of these branches, and we shall then proceed to deal in the same manner with the law of obligations. The law of status on the other hand is not of such a nature as to require or repay any further consideration from the point of view of general theory.

The term property, which we here use as meaning proprietary rights _in rem_, possesses a singular variety of different applications having different degrees of generality. These are the following:—

1. _All legal rights._ In its widest sense, property includes all a person’s legal rights, of whatever description. A man’s property is all that is _his in law_. This usage, however, is obsolete at the present day, though it is common enough in the older books. Thus Blackstone speaks of the property (_i.e._ right) which a master has in the person of his servant, and a father in the person of his child. “The inferior,” he says,[402] “hath no kind of property in the company, care, or assistance of the superior, as the superior is held to have in those of the inferior.” So Hobbes says:[403] “Of things held in propriety, those that are dearest to a man are his own life and limbs; and in the next degree, in most men, those that concern conjugal affection; and after them riches and means of living.” In like manner Locke[404] tells us that “every man has a property in his own person,” and he speaks elsewhere[405] of a man’s right to preserve “his property, that is, his life, liberty, and estate.”

2. _Proprietary rights (dominium and status)._ In a second and narrower sense, property includes not all a person’s rights but only his proprietary as opposed to his personal rights. The former constitute his estate or property, while the latter constitute his status or personal condition. In this sense a man’s land, chattels, shares, and the debts due to him are his property; but not his life or liberty or reputation. In this sense we may oppose to Locke’s statement, that a man has a property in his own person, the saying of Ulpian: _Dominus membrorum suorum nemo videtur_.[406] This is probably the most frequent application of the term at the present day, but in the case of a word having so many recognised varieties of usage it is idle to attempt to single out any one of them as exclusively correct. They are all of equal authenticity.

3. _Proprietary rights in rem (dominium and obligatio)._ In a third application, which is that adopted in this chapter, the term includes not even all proprietary rights, but only those which are both proprietary and real. The law of property is the law of proprietary rights _in rem_, the law of proprietary rights _in personam_ being distinguished from it as the law of obligations. According to this usage a freehold or leasehold estate in land, or a patent or copyright, is property; but a debt or the benefit of a contract is not.

4. _Corporeal property (dominium corporis and dominium juris)._ Finally, in the narrowest use of the term, it includes nothing more than corporeal property—that is to say, the right of ownership in a material object, or that object itself identified with the right by way of metonymy. Thus property is defined by Ahrens[407] as “a material object subject to the immediate power of a person,” and Bentham[408] considers as metaphorical and improper the extension of the term to include other rights than those which relate to material things.

§ 153. =Kinds of Property.=

All property is, as we have already seen,[409] either corporeal or incorporeal. Corporeal property is the right of ownership in material things; incorporeal property is any other proprietary right _in rem_. Incorporeal property is itself of two kinds, namely (1) _jura in re aliena_ or encumbrances, whether over material or immaterial things (for example, leases, mortgages, and servitudes), and (2) _jura in re propria_ over immaterial things (for example, patents, copyrights, and trade-marks). The resulting threefold division of property appears in the following Table:—

{ Land }
{ Material { } Corporeal property
{ things { Chattels }
{
{ _Jura in re { { Patents }
{ propria_ { { }
{ { Immaterial { Copyrights }
{ { things { }
{ { Trade-marks }
Property { { }
{ { &c. }
{ }
{ { Leases } Incorporeal property
{ { }
{ _Jura in re { Servitudes }
{ aliena_ { }
{ Securities }
{ }
{ &c. }

§ 154. =The Ownership of Material Things.=

The owner of a material object is he who owns a right to the aggregate of its uses. He who has merely a special and definitely limited right to the use of it, such as a right of way or other servitude, is not an owner of the thing but merely an encumbrancer of it. The definition, however, must not be misunderstood. Ownership is the right of _general_ use, not that of absolute or unlimited use. He is the owner of a thing who is entitled to all those uses of it which are not specially excepted and cut off by the law. No such right as that of absolute and unlimited use is known to the law. All lawful use is either general (that is to say, residuary) or specific, the former being ownership, and the latter encumbrance.

The limits thus imposed upon an owner’s right of use are of two kinds. The first constitute the _natural_ limits of ownership. They are the various applications of the maxim: _Sic utere tuo ut alienum non laedas_—a legal principle whose function it is to restrain within due bounds the opposing maxim that a man may do as he pleases with his own. In the interests of the public or of a man’s neighbours many uses of the things which are his are wholly excluded from his right of ownership.

The second class of restrictions upon an owner’s right of use consists of those which flow from the existence of encumbrances vested in other persons. These are artificial limits which may or may not exist. My land may be mortgaged, leased, charged, bound by restrictive covenants, and so on, yet I remain the owner of it none the less. For I am still entitled to the residue of its uses, and whatever right over it is not specifically vested in some one else is vested in me. The residuary use so left to me may be of very small dimensions; some encumbrancer may own rights over it much more valuable than mine; but the ownership of it is in me and not in him. Were his right to determine to-morrow in any manner, my own, relieved from the encumbrance which now weighs it down, would forthwith spring up to its full stature and have again its full effect. No right loses its identity because of an encumbrance vested in some one else. That which is a right of ownership when there are no encumbrances, remains a right of ownership notwithstanding any number of them.

Inasmuch as the right of ownership is a right to the aggregate of the uses of the thing, it follows that ownership is necessarily permanent. No person having merely a temporary right to the use of a thing can be the owner of the thing, however general that right may be while it lasts. He who comes after him is the owner; for it is to him that the residue of the uses of the thing pertains. It is to be understood, however, that by a permanent right is meant nothing more than a right which is capable of lasting as long as the thing itself which is its subject-matter, however long or short that duration may be.

Even as the generality of ownership involves its permanence, so its permanence involves the further essential feature of inheritance. The only permanent rights which can be owned by a mortal man are those which can be handed down by him to his successors or representatives on his death. All others are temporary, their duration being necessarily limited to the lifetime of him in whom they are vested. The right of ownership, therefore, is essentially an inheritable right. It is capable of surviving its owner for the time being. It belongs to the class of rights which are divested by death but are not extinguished by it.

Summing up the conclusions to which we have attained, we may define the right of ownership in a material thing as the general, permanent, and inheritable right to the uses of that thing.[410]

According to the rigour of English legal doctrine there can be no
owner of _land_ except the Crown itself. The fee simple of land—the
greatest right in it which a subject can possess—is not in truth
ownership, but a mere encumbrance upon the ownership of the Crown. It
is a tenancy or lease granted to a man and his heirs. It is a
temporary not a permanent right of user. It will come to its natural
termination on the death of the tenant without leaving an heir or
devisee in whom the right may be continued. The land will thereupon
revert or escheat to the Crown; that is to say, the Crown’s ownership,
which has never been divested, but has merely been encumbered by the
fee simple, will through the destruction of this encumbrance become
once more free and absolute. In the case of chattels it is otherwise.
They can be owned by the subject no less than by the Crown. It is true
that if the owner of them dies intestate without kin, they will go to
the Crown as _bona vacantia_, just as land will go to the Crown as an
escheat. But between these two processes there is a profound
difference in legal theory. In the case of chattels the Crown succeeds
to the right which was vested in the dead man; his ownership is
continued in the Crown, just as it would have been continued in his
next of kin had there been any. But in the case of escheat, as already
said, the right of the dead man has come to an end, and the Crown
succeeds to no right of his, but simply comes into its own again.

This distinction, however, between the fee simple of land and the
ownership of it is a matter of form rather than of substance. In fact,
if not in legal theory, the right of a tenant in fee simple is
permanent; for escheat takes place only on an intestacy, and therefore
can be prevented by the act of the tenant. We are at liberty,
therefore, to disregard this technicality of real property law, and to
speak of the fee simple of land as the ownership of it, the right of
the Crown being viewed, accordingly, not as vested and continuing
ownership subject to an encumbrance, but as a contingent right of
succession to an intestate owner.

§ 155. =Movable and Immovable Property.=

Among material things the most important distinction is that between movables and immovables, or, to use terms more familiar in English law, between chattels and land. In all legal systems these two classes of objects are to some extent governed by different rules, though in no system is the difference so great as in our own.

Considered in its legal aspect, an immovable, that is to say, a piece of land, includes the following elements:—

1. A determinate portion of the earth’s surface.

2. The ground beneath the surface down to the centre of the world. All the pieces of land in England meet together in one terminal point at the earth’s centre.

3. Possibly the column of space above the surface _ad infinitum_. “The earth,” says Coke,[411] “hath in law a great extent upwards, not only of water as hath been said, but of ayre and all other things even up to heaven; for _Cujus est solum, ejus est usque ad coelum_.” The authenticity of this doctrine, however, is not wholly beyond dispute. It would prohibit as an actionable trespass all use of the air-space above the appropriated surface of the earth, at whatever height this use took place, and however little it could affect the interests of the landowner. If a man is carried in a balloon at a distance of half a mile above the ground, does he infringe the rights of those who own the surface? It may be that the law recognises no right of ownership in the air-space at all, or at least no right of exclusive use, but merely prohibits all acts which by their nature or their proximity interfere with the full enjoyment and use of the surface.[412] By the German Civil Code,[413] the owner of land owns the space above it, but has no right to prohibit acts so remote from the surface that they in no way affect his interests.

4. All objects which are on or under the surface in its natural state; for example, minerals and natural vegetation. All these are part of the land, even though they are in no way physically attached to it. Stones lying loose upon the surface are in the same category as the stone in a quarry.

5. Lastly all objects placed by human agency on or under the surface, with the intention of permanent annexation. These become part of the land, and lose their identity as separate movables or chattels; for example, buildings, walls, and fences. _Omne quod inaedificatur solo cedit_, said the Roman law.[414] Provided that the requisite intent of permanent annexation is present, no physical attachment to the surface is required. A wall built of stones without mortar or foundations is part of the land on which it stands.[415] Conversely physical attachment, without the intent of permanent annexation, is not in itself enough. Carpets, tapestries, or ornaments nailed to the floors or walls of a house are not thereby made part of the house. Money buried in the ground is as much a chattel[416] as money in its owner’s pocket.[417]

It is clear that the distinction between movables and immovables is in
truth and in fact applicable to material objects only. Yet, the law
has made an unfortunate attempt to apply it to _rights_ also. Rights
no less than things are conceived by the law as having a local
situation, and as being either movable or permanently fixed in a
definite locality. The origin of this illogical conception is to be
found in the identification of rights of ownership with the material
things which are the objects of them. I am said to own land and
chattels, as well as easements, shares, debts, contracts, and patents.
All these things are equally property, and since some of them have a
local situation and can be truly classed as movable or immovable, the
law has been led by inadvertence to attribute these qualities to all
of them. It has recognised in things which are incorporeal certain
attributes which in truth pertain to things corporeal only. It has
divided the whole sphere of proprietary rights by reference to a
distinction which is truly applicable not to rights at, all, but to
physical objects. Nor is this merely a peculiarity of English law, for
it is found in Continental systems also.[418]

On what principle, then, does the law determine whether a right is to
be classed as immovable or as movable? The general rule is that a
right has in this respect the same quality as its subject-matter.
Every right over an immovable thing, whether it is a right of
ownership, or a lease, or a servitude, or a security, or any other
_jus in re aliena_, is itself immovable, and every right over a
movable thing is itself movable. So far there is no difficulty. What
shall we say, however, of those rights which have no material objects
at all, such as a copyright, a patent, the good-will of a business, a
trade-mark, or the benefit of a contract? The answer is that all such
rights are classed by the law as movable. For the class of movable
property is residuary, and includes all rights which can make good no
claim to be classed as immovable.

The law not merely classifies rights as movable and immovable, but
goes further in the same direction, and attributes local situation to
them. It undertakes to say not merely _whether_ a right exists, but
_where_ it exists. Nor is this a difficult task in the case of those
rights which have determinate material things as their objects. A
servitude or other _jus in re aliena_ over a piece of land is situated
in law where the land is situated in fact. A right over a chattel is
movable property, and where the chattel goes the right goes also. But
where there is no material object at all, what are we to say as to the
local situation of the right? Where is a debt situated, or a share, in
a company, or the benefit of a contract, or a copyright? Such
questions can be determined only by more or less arbitrary rules based
upon analogy, and it is to be regretted that it has been thought
needful to ask and answer them at all. As the law stands, however, it
contains several rules based on the assumption that all property which
exists must exist _somewhere_,[419] and for the application of these
rules the determination of the local situation of rights is necessary,
even though it leads into the region of legal fictions. “The legal
conception of property,” says Lord Lindley,[420] “appears to me to
involve the legal conception of existence somewhere.... To talk of
property as existing nowhere is to use language which to me is
unintelligible.”

The leading principle as to the local situation of rights is that they
are situated where they are exercised and enjoyed. Rights over
material things, therefore, have the same situation as those things
themselves. The good-will of a business is situated in the place where
the business is carried on.[421] Debts are in general situated in the
place where the debtor resides,[422] since it is there that the
creditor must go to get his money.[423]

§ 156. =Real and Personal Property.=

Derived from and closely connected with the distinction between immovable and movable property is that between real and personal property. These are two cross divisions of the whole sphere of proprietary rights. Real property and immovable property form intersecting circles which are very nearly though not quite coincident. The law of real property is almost equivalent to the law of land, while the law of personal property is all but identical with the law of movables. The partial failure of coincidence is due not to any logical distinction, but to the accidental course of legal development; and to this extent the distinction between real and personal property is purely arbitrary and possesses no scientific basis. Real property comprises all rights over land, with such additions and exceptions as the law has seen fit to establish. All other proprietary rights, whether _in rem_ or _in personam_, pertain to the law of personal property.

The distinction between real and personal property has no logical
connexion with that between real and personal rights. There is,
however, an historical relation between them, inasmuch as they are
both derived from the same source, namely the Roman distinction
between actions _in rem_ and actions _in personam_. Real property
meant originally that which was recoverable in a real action, while
personal property was that which was recoverable in a personal action,
and this English distinction between real and personal actions was
derived by Bracton and the other founders of our law from the
_actiones in rem_ and _in personam_ of Justinian, though not without
important modifications of the Roman doctrine.[424]

In connexion with the distinctions between movable and immovable, and
between real and personal property, we must notice the legal
significance of the term chattel. This word has apparently three
different meanings in English law:—

1. A movable physical object; for example, a horse, a book, or a
shilling, as contrasted with a piece of land.

2. Movable property, whether corporeal or incorporeal; that is to say,
chattels in the first sense together with all proprietary rights
except those which are classed as immovable. In this usage debts,
shares, contracts, and other choses in action are chattels, no less
than furniture or stock in trade. So also are patents, copyrights, and
other rights _in rem_ which are not rights over land. This double use
of the word chattel to indicate both material things and rights is
simply an application, within the sphere of movable property, of the
metonymy which is the source of the distinction between corporeal and
incorporeal property.

3. Personal property, whether movable or immovable, as opposed to real
property. In this sense leaseholds are classed as chattels, because of
the special rule by which they are excluded from the domain of real
property.

§ 157. =Rights _in re propria_ in Immaterial Things.=

The subject-matter of a right of property is either a material or an immaterial thing. A material thing is a physical object; an immaterial thing is anything else which may be the subject-matter of a right.[425] It is to things of the former class that the law of property almost wholly relates. In the great majority of cases a right of property is a right to the uses of a material object. It is the chief purpose of this department of the law to allot to every man his portion in the material instruments of human well-being—to divide the earth and the fulness of it among the men who live in it. The only immaterial things which are recognised by law as the subject-matter of rights of this description are the various _immaterial products of human skill and labour_. Speaking generally we may say that in modern law every man owns that which he creates. That which he produces is his, and he has an exclusive right to the use and benefit of it. The immaterial product of a man’s brains may be as valuable as his land or his goods. The law, therefore, gives him a proprietary right in it, and the unauthorised use of it by other persons is a violation of his ownership, no less than theft or trespass is. These immaterial forms of property are of five chief kinds:—[426]

1. _Patents._ The subject-matter of a patent-right is an invention. He whose skill or labour produces the idea of a new process, instrument, or manufacture, has that idea as his own in law. He alone is entitled to use it and to draw from it the profit inherent in it.

2. _Literary copyright._ The subject-matter of this right is the literary expression of facts or thoughts. He to whose skill or labour this expression is due has in it a proprietary right of exclusive use.

3. _Artistic copyright._ Artistic design in all its various forms, such as drawing, painting, sculpture, and photography, is the subject-matter of a right of exclusive use analogous to literary copyright. The creations of an artist’s skill or of a photographer’s labour are his exclusive property. The object of this right is not the material thing produced, but the _form_ impressed upon it by the maker. The picture, in the concrete sense of the material paint and canvas, belongs to him who purchases it; but the picture, in the abstract sense of the artistic form made visible by that paint and canvas, belongs to him who made it. The former is material property, the latter is immaterial. The right in each case is one of exclusive use. The right to the material picture is infringed by destroying it or taking it away. The right to the immaterial picture is infringed by making material pictures which embody it.

4. _Musical and dramatic copyright._ A fourth class of immaterial things consists of musical and dramatic works. The immaterial product of the skill of the musician or the playwright is the subject-matter of a proprietary right of exclusive use which is infringed by any unauthorised performance or representation.

5. _Commercial good-will; trade-marks and trade-names._ The fifth and last species of immaterial things includes commercial good-will and the special forms of it known as trade-marks and trade-names. He who by his skill and labour establishes a business acquires thereby an interest in the good-will of it, that is to say, in the established disposition of customers to resort to him. To this good-will he has an exclusive right which is violated by any one who seeks to make use of it for his own advantage, as by falsely representing to the public that he is himself carrying on the business in question. Special forms of this right of commercial good-will are rights to trade-names and trade-marks. Every man has an exclusive right to the name under which he carries on business or sells his goods—to this extent at least that no one is at liberty to use that name for the purpose of deceiving the public and so injuring the owner of it. He has a similar right to the exclusive use of the marks which he impresses upon his goods, and by which they are known and identified in the market as his.

§ 158. =Leases.=

Having now considered the different kinds of rights _in re propria_ which fall within the law of property, we proceed to deal with the various rights _in re aliena_ to which they may be subject. As already stated,[427] the chief of these are four in number, namely Leases, Servitudes, Securities, and Trusts. The nature of a trust has been sufficiently examined in another connexion,[428] and it is necessary here to consider the other three only.[429] And first of leases or tenancies.

Although a lease of land and a bailment of chattels are transactions of essentially the same nature, there is no term which, in its recognised use, is sufficiently wide to include both. The term bailment is never applied to the tenancy of land, and although the term lease is not wholly inapplicable in the case of chattels, its use in this connexion is subject to arbitrary limitations. It is necessary, therefore, in the interests of orderly classification, to do some violence to received usage, in adopting the term lease as a generic expression to include not merely the tenancy of land, but all kinds of bailments of chattels, and all encumbrances of incorporeal property which possess the same essential nature as a tenancy of land.

A lease, in this generic sense, is that form of encumbrance which consists in a right to the possession and use of property owned by some other person. It is the outcome of the rightful separation of ownership and possession. We have seen that possession is the continuing exercise of a right, and that although a right is normally exercised by the owner of it, it may in special cases be exercised by some one else. This separation of ownership and possession may be either rightful or wrongful, and if rightful it is an encumbrance of the owner’s title.[430]

The right which is thus encumbered by a lease is usually the ownership of a material object, and more particularly the ownership of land. Here as elsewhere the material object is identified in speech with the right itself. We say that the _land_ is leased, just as we say that the land is owned or possessed. The lessee of land is he who rightfully possesses it, but does not own it. The lessor of land is he who owns it, but who has transferred the possession of it to another. Encumbrance by way of lease is not confined, however, to the right of ownership of a material object. All rights may be leased which can be possessed, that is to say, which admit of continuing exercise; and no rights can be leased which cannot be possessed, that is to say, which are extinguished by their exercise. A servitude appurtenant to land, such as a right of way, is leased along with the land itself. The owner of a lease may encumber it with a sub-lease. The owner of a patent or copyright may grant a lease of it for a term of years, entitling the lessee to the exercise and use of the right but not to the ownership of it. Even obligations may be encumbered in the same fashion, provided that they admit of continuing or repeated exercise; for example, annuities, shares, money in the public funds, or interest-bearing debts. All these may be rightfully possessed without being owned, and owned without being possessed, as when they are settled in trust for a tenant for life with remainder to some one else.

Is it essential that a lease should be of less duration than the right
which is subject to it? This is almost invariably the case; land is
leased for a term of years or for life, but not in perpetuity; the
owner of a thing owns it for ever, but the lessee of it possesses it
for a time. We may be tempted, therefore, to regard this difference of
duration as essential, and to define a lease as a right to the
temporary exercise of a right vested in some one else. But this is not
so. There is no objection in principle to a lease of land in
perpetuity, or to a lease of a patent or copyright for the full term
of its existence. It may be objected that a lease of this description
would not be a true lease or encumbrance at all, but an assignment of
the right itself; that the grantee would become the owner of the
right, and not a mere encumbrancer; and in favour of this contention
it may be pointed out that a sub-lease for the whole term is construed
in English law as an assignment of the term, a sub-lease being
necessarily shorter than the term, if only by a single day.[431]

Whatever the actual rule of English law may be, however, there is
nothing in legal theory to justify us in asserting that any such
difference of duration is essential to the existence of a true lease.
A lease exists whenever the rightful possession of a thing is
separated from the ownership of it; and although this separation is
usually temporary, there is no difficulty in supposing it permanent. I
may own a permanent right to exercise another right, without owning
the latter right itself. The ownership may remain dormant, deprived of
any right of exercise and enjoyment, in the hands of the lessor. I am
not necessarily the owner of a patent, because I have acquired by
contract with the owner a right to the exclusive use of it during the
whole term of its duration. So far as legal principle is concerned, I
may still remain the owner of a lease, although I may have granted a
sub-lease to another for the whole residue of the term. To assign a
lease and to sublet it for the whole term are in the intention of the
parties and in legal theory two entirely different transactions. The
assignment is a substitution of one tenant for another, the assignor
retaining no rights whatever. The sub-lease, on the contrary, is
designed to leave the original relation of landlord and tenant
untouched, the sub-lessee being the tenant of the lessee and not of
the original lessor.[432]

§ 159. =Servitudes.=

A servitude is that form of encumbrance which consists in a right to the limited use of a piece of land without the possession of it; for example, a right of way over it, a right to the passage of light across it to the windows of a house on the adjoining land, a right to depasture cattle upon it, or a right to derive support from it for the foundations of an adjoining building.[433]

It is an essential characteristic of a servitude that it does not involve the possession of the land over which it exists. This is the difference between a servitude and a lease. A lease of land is the rightful possession and use without the ownership of it, while a servitude over land is the rightful use without either the ownership or the possession of it. There are two distinct methods in which I may acquire a road across another man’s property. I may agree with him for the exclusive possession of a defined strip of the land; or I may agree with him for the use of such a strip for the sole purpose of passage, without any exclusive possession or occupation of it. In the first case I acquire a lease; in the second a servitude.[434]

Servitudes are of two kinds, which may be distinguished as private and public. A private servitude is one vested in a determinate individual; for example, a right of way, of light, or of support, vested in the owner of one piece of land over an adjoining piece, or a right granted to one person of fishing in the water of another, or of mining in another’s land. A public servitude is one vested in the public at large or in some class of indeterminate individuals; for example, the right of the public to a highway over land in private ownership, the right of the public to navigate a river of which the bed belongs to some private person, the right of the inhabitants of a parish to use a certain piece of private ground for the purposes of recreation.

Servitudes are further distinguishable in the language of English law as being either appurtenant or in gross. A servitude appurtenant is one which is not merely an encumbrance of one piece of land, but is also accessory to another piece. It is a right of using one piece for the benefit of another; as in the case of a right of way from A.’s house to the high road across B.’s field, or a right of support for a building, or a right to the access of light to a window. The land which is burdened with such a servitude is called the servient land or tenement; that which has the benefit of it is called the dominant land or tenement. The servitude runs with each of the tenements into the hands of successive owners and occupiers. Both the benefit and the burden of it are concurrent with the ownership of the lands concerned. A servitude is said to be in gross, on the other hand, when it is not so attached and accessory to any dominant tenement for whose benefit it exists. An example is a public right of way or of navigation or of recreation, or a private right of fishing, pasturage, or mining.[435]

§ 160. =Securities.=

A security is an encumbrance, the purpose of which is to ensure or facilitate the fulfilment or enjoyment of some other right (usually though not necessarily a debt) vested in the same person.[436] Such securities are of two kinds, which may be distinguished as mortgages and liens, if we use the latter term in its widest permissible sense.[437] In considering the nature of this distinction we must first notice a plausible but erroneous explanation. A mortgage, it is sometimes said, is a security created by the _transfer_ of the debtor’s property to the creditor, while a lien is merely an encumbrance of some sort created in favour of the creditor over property which remains vested in the debtor; a mortgagee is the owner of the property, while a pledgee or other lienee is merely an encumbrancer of it. This, however, is not a strictly accurate account of the matter, though it is true in the great majority of cases. A mortgage may be created by way of encumbrance, no less than by way of transfer;[438] and a mortgagee does not necessarily become the owner of the property mortgaged. A lease, for example, is commonly mortgaged, not by the assignment of it, but by the grant of a sub-lease to the creditor, so that the mortgagee becomes not the owner of the lease but an encumbrancer of it. Similarly freehold land may be mortgaged by the grant to the mortgagee of a long term of years.

Inasmuch, therefore, as a mortgage is not necessarily the transfer of the property to the creditor, what is its essential characteristic? The question is one of considerable difficulty, but the true solution is apparently this. A lien is a right which is _in its own nature_ a security for a debt and nothing more; for example, a right to retain possession of a chattel until payment, a right to distrain for rent, or a right to receive payment out of a certain fund. A mortgage, on the contrary, is a right which is in its own nature an independent or principal right, and not a mere security for another right, but which is artificially cut down and limited, so that it may serve in the particular case as a security and nothing more; for example the fee simple of land, a lease of land for a term of years, or the ownership of a chattel. The right of the lienee is vested in him _absolutely_, and not merely by way of security; for it is itself nothing more than a security. The right of a mortgagee, on the contrary, is vested in him conditionally and _by way of security only_, for it is in itself something more than a mere security. A lien cannot survive the debt secured; it ceases and determines _ipso jure_ on the extinction of the debt. It is merely the shadow, so to speak, cast by the debt upon the property of the debtor. But the right vested in a mortgagee has an independent existence. It will, or may, remain outstanding in the mortgagee even after the extinction of the debt. When thus left outstanding, it must be re-transferred or surrendered to the mortgagor, and the right of the mortgagor to this re-assignment or surrender is called his right or equity of redemption. The existence of such an equity of redemption is therefore the test of a mortgage. In liens there is no such right, for there is nothing to redeem. The creditor owns no right which he can be bound to give back or surrender to his debtor. For his right of security has come to its natural and necessary termination with the termination of the right secured.[439]

Mortgages are created either by the transfer of the debtor’s right to the creditor, or by the encumbrance of it in his favour. The first of these methods is by far the more usual and important. Moreover it is peculiar to mortgages, for liens can be created only by way of encumbrance. Whenever a debtor _transfers_ his right to the creditor by way of security, the result is necessarily a mortgage; for there can be no connexion between the duration of the debt so secured and the natural duration of the right so transferred. The right transferred may survive the debt, and the debtor therefore retains the right of redemption which is the infallible test of a mortgage. When on the other hand a debtor _encumbers_ his right in favour of the creditor, the security so created is either a mortgage or a lien according to circumstances. It is a mortgage, if the encumbrance so created is independent of the debt secured in respect of its natural duration; for example a term of years or a permanent servitude. It is a lien, if the encumbrance is in respect of its natural duration dependent on, and coincident with the debt secured; for example a pledge, a vendor’s lien, a landlord’s right of distress, or an equitable charge on a fund.

Speaking generally, any alienable and valuable right whatever may be the subject-matter of a mortgage. Whatever can be transferred can be transferred by way of mortgage; whatever can be encumbered can be encumbered by way of mortgage. Whether I own land, or chattels, or debts, or shares, or patents, or copyrights, or leases, or servitudes, or equitable interests in trust funds, or the benefit of a contract, I may so deal with them as to constitute a valid mortgage security. Even a mortgage itself may be transferred by the mortgagee to some creditor of his own by way of mortgage, such a mortgage of a mortgage being known as a sub-mortgage.

In a mortgage by way of transfer the debtor, though he assigns the property to his creditor, remains none the less the beneficial or equitable owner of it himself. A mortgagor, by virtue of his equity of redemption, has more than a mere personal right against the mortgagee to the reconveyance of the property; he is already the beneficial owner of it. This double ownership of mortgaged property is merely a special form of trust. The mortgagee holds in trust for the mortgagor, and has himself no beneficial interest, save so far as is required for the purposes of an effective security. On the payment or extinction of the debt the mortgagee becomes a mere trustee and nothing more; the ownership remains vested in him, but is now bare of any vestige of beneficial interest. A mortgage, therefore, has a double aspect and nature. Viewed in respect of the _nudum dominium_ vested in the mortgagee, it is a transfer of the property; viewed in respect of the beneficial ownership which remains vested in the mortgagor, it is merely an encumbrance of it.

The prominence of mortgage as the most important form of security is a peculiarity of English law. In Roman law, and in the modern Continental systems based upon it, the place assumed by mortgages in our system is taken by the lien (_hypotheca_) in its various forms. The Roman mortgage (_fiducia_) fell wholly out of use before the time of Justinian, having been displaced by the superior simplicity and convenience of the _hypotheca_; and in this respect modern Continental law has followed the Roman. There can be no doubt that a similar substitution of the lien for the mortgage would immensely simplify and improve the law of England. The complexity and difficulty of the English law of security—due entirely to the adoption of the system of mortgages—must be a source of amazement to a French or German lawyer. Whatever can be done by way of mortgage in securing a debt can be done equally well by way of lien, and the lien avoids all that extraordinary disturbance and complication of legal relations which is essentially involved in the mortgage. The best type of security is that which combines the most efficient protection of the creditor with the least interference with the rights of the debtor, and in this latter respect the mortgage falls far short of the ideal. The true form of security is a lien, leaving the full legal and equitable ownership in the debtor, but vesting in the creditor such rights and powers (as of sale, possession, and so forth) as are required, according to the nature of the subject-matter, to give the creditor sufficient protection, and lapsing _ipso jure_ with the discharge of the debt secured.[440]

Liens are of various kinds, none of which present any difficulty or
require any special consideration.

1. _Possessory liens_—consisting in the right to retain possession of
chattels or other property of the debtor. A power of sale may or may
not be combined with this right of possession. Examples are pledges of
chattels, and the liens of innkeepers, solicitors, and vendors of
goods.

2. _Rights of distress or seizure_—consisting in the right to take
possession of the property of the debtor, with or without a power of
sale. Examples are the right of distress for rent, and the right of
the occupier of land to distrain cattle trespassing on it.

3. _Powers of sale._ This is a form of security seldom found in
isolation, for it is usually incidental to the right of possession
conferred by one or other of the two preceding forms of lien. There is
no reason, however, why it should not in itself form an effective
security.

4. _Powers of forfeiture_—consisting in a power vested in the creditor
of destroying in his own interest some adverse right vested in the
debtor. Examples are a landlord’s right of re-entry upon his tenant,
and a vendor’s right of forfeiting the deposit paid by the purchaser.

5. _Charges_—consisting in the right of a creditor to receive payment
out of some specific fund or out of the proceeds of the realisation of
specific property. The fund or property is said to be charged with the
debt which is thus payable out of it.

§ 161. =Modes of Acquisition: Possession.=

Having considered the various forms which proprietary rights _in rem_ assume, we proceed to examine the modes of their acquisition. An attempt to give a complete list of these titles would here serve no useful purpose, and we shall confine our attention to four of them which are of primary importance. These are the following: Possession, Prescription, Agreement, and Inheritance.

The possession of a material object is a title to the ownership of it. The _de facto_ relation between person and thing brings the _de jure_ relation along with it. He who claims a chattel or a piece of land as his, and makes good his claim in _fact_ by way of possession, makes it good in _law_ also by way of ownership. There is, however, an important distinction to be drawn. For the thing so possessed may, or may not, already belong to some other person. If, when possession of it is taken by the claimant, it is as yet the property of no one—_res nullius_ as the Romans said—the possessor acquires a title good against all the world. The fish of the sea and the fowls of the air belong by an absolute title to him who first succeeds in obtaining possession of them. This mode of acquisition is known in Roman law as _occupatio_.

On the other hand, the thing of which possession is taken may already be the property of some one else. In this case the title acquired by possession is good, indeed, against all third persons, but is of no validity at all against the true owner. Possession, even when consciously wrongful, is allowed as a title of right against all persons who cannot show a better, because a prior, title in themselves. Save with respect to the rights of the original proprietor, my rights to the watch in my pocket are much the same, whether I bought it honestly, or found it, or abstracted it from the pocket of some one else. If it is stolen from me, the law will help me to the recovery of it. I can effectually sell it, lend it, give it away, or bequeath it, and it will go on my death intestate to my next of kin. Whoever acquires it from me, however, acquires in general nothing save my limited and imperfect title to it, and holds it, as I do, subject to the superior claims of the original owner.

A thing owned by one man and thus adversely possessed by another has in truth two owners. The ownership of the one is absolute and perfect, while that of the other is relative and imperfect, and is often called, by reason of its origin in possession, possessory ownership.

If a possessory owner is wrongfully deprived of the thing by a person other than the true owner, he can recover it. For the defendant cannot set up as a defence his own possessory title, since it is later than, and consequently inferior to, the possessory title of the plaintiff. Nor can he set up as a defence the title of the true owner—the _jus tertii_, as it is called; the plaintiff has a better, because an earlier, title than the defendant, and it is irrelevant that the title of some other person, not a party to the suit, is better still. The expediency of this doctrine of possessory ownership is clear. Were it not for such a rule, force and fraud would be left to determine all disputes as to possession, between persons of whom neither could show an unimpeachable title to the thing as the true owner of it.[441]

§ 162. =Prescription.=

Prescription[442] may be defined as the effect of lapse of time in creating and destroying rights; it is the operation of time as a vestitive fact. It is of two kinds, namely (1) positive or acquisitive prescription and (2) negative or extinctive prescription. The former is the creation of a right, the latter is the destruction of one, by the lapse of time. An example of the former is the acquisition of a right of way by the _de facto_ use of it for twenty years. An instance of the latter is the destruction of the right to sue for a debt after six years from the time at which it first became payable.

Lapse of time, therefore, has two opposite effects. In positive prescription it is a title of right, but in negative prescription it is a divestitive fact. Whether it shall operate in the one way or in the other depends on whether it is or is not accompanied by _possession_. Positive prescription is the investitive operation of lapse of time _with_ possession, while negative prescription is the divestitive operation of lapse of time _without_ possession. Long possession creates rights, and long want of possession destroys them. If I possess an easement for twenty years without owning it, I begin at the end of that period to own as well as to possess it. Conversely if I own land for twelve years without possessing it, I cease on the termination of that period either to own or to possess it. In both forms of prescription, fact and right, possession and ownership, tend to coincidence. _Ex facto oritur jus._ If the root of fact is destroyed, the right growing out of it withers and dies in course of time. If the fact is present, the right will in the fulness of time proceed from it.

In many cases the two forms of prescription coincide. The property which one person loses through long dispossession is often at the same time acquired by some one else through long possession. Yet this is not always so, and it is necessary in many instances to know whether legal effect is given to long possession, in which case the prescription is positive, or to long want of possession, in which case the prescription is negative. I may, for example, be continuously out of possession of my land for twelve years, without any other single person having continuously held possession of it for that length of time. It may have been in the hands of a series of trespassers against me and against each other. In this case, if the legally recognised form of prescription is positive, it is inoperative, and I retain my ownership. But if the law recognises negative prescription instead of positive (as in this case our own system does) my title will be extinguished. Who in such circumstances will acquire the right which I thus lose, depends not on the law of prescription, but on the rules as to the acquisition of things which have no owner. The doctrine that prior possession is a good title against all but the true owner, will confer on the first of a series of adverse possessors a good title against all the world so soon as the title of the true owner has been extinguished by negative prescription.

The rational basis of prescription is to be found in the presumption of the coincidence of possession and ownership, of fact and of right. Owners are usually possessors, and possessors are usually owners. Fact and right are normally coincident; therefore the former is evidence of the latter. That a thing is possessed _de facto_ is evidence that it is owned _de jure_. That it is not possessed raises a presumption that it is not owned either. Want of possession is evidence of want of title. The longer the possession or want of possession has continued, the greater is its evidential value. That I have occupied land for a day raises a very slight presumption that I am the owner of it; but if I continue to occupy it for twenty years, the presumption becomes indefinitely stronger. If I have a claim of debt against a man, unfulfilled and unenforced, the lapse of six months may have but little weight as evidence that my claim is unfounded or that it has been already satisfied; but the lapse of ten years may amount to ample proof of this.