Vol. 12 · pages 261–265

240 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Roxburghe vs. Cox, (1881) 17 Ch. D. 520. So that— (1) If the Contract between the assignor and the debtor was voidable, the debtor can set up the viodable character of the contract against the assignee, even if the assignment was for valuable consideration. (2) If the debtor had a right of set-off against the assignor, the same would be available to him against the assignee. 3. The assignee is, however, free from equities arising after notice. A debtor cannot diminish the rights of the assignee such as they are, on the date of notice, by any act done after date of notice. Assignment of rights to be acquired in future 1. So far, we have dealt with assignments of rights which had accrued when the assignment had taken place. 2. We must consider the assignment of rights to be acquired in future. 3. Example of such rights : (i) The expectancy of an heir-at-law to succeed to the Estate. (ii) The expectancy of a next of kin to succeed to personality, (iii) Freight not yet earned, (iv) Future Book-debts. 4. At Common Law, they were all void. A man could not assign what he had not got. In equity, they were assignable, if for valuable consideration. 5. Equity treated them not as assignments but as contracts to assign , and when the assignee became possessed of it, he was compelled to perform his contract. 6. When the right was acquired by the assignor, the beneficial interest passed immediately to the assignee. But the legal interest remained with the assignor. So that, if the assignor transferred it to a subsequent assignee who gave value and had no notice of the previous assignment, the title of the subsequent assignee would prevail.

241COMMON LAW Conversion I. NECESSITY FOR THE DOCTRINE OF CONVERSION. 1. The English Law had prescribed a different mode of devolution of the Realty and Personality of the owner, if he died intestate. His Realty went to his heir and Personality went to his next-of-kin. 2. That being so, whether the property will go to the heir or to the next of kin must depend upon the state of the property on the date on which the succession opens. 3. Ordinarily there is no difficulty. The actual state in which the property will be found on the material date will determine its devolution. But suppose, circumstances are such that on the date on which the succession opens, land is to be sold for money but is not sold, or money is to be invested in the purchase of land but is not so invested, how is the devolution of the property to be determined ? If the land is to be treated as land, until it is actually sold, then it will go to the heir. On the other hand, if it is to be treated as money, because it was intended to be sold for money, then although it is land, it will go to the next-of-kin. In other words, the question was whether property was to devolve according to the actual state in which it is found to exist or according to the form in which it was intended to be converted. The answer given by equity was, that property was to devolve, not according to the actual state in which it exists, but according to the form in which it was intended to be converted. 4. This is what is called the doctrine of conversion. There would have been no necessity for the doctrine, had there been no difference in the rules of inheritance for Real and Personal Property. This difference is now abolished by Sections 33,45 and therefore, conversion has lost all its importance. 5. In India there is no such distinction in the inheritance of property—Realty to heir and Personality to next-of-kin. II. THERE ARE FOUR CASES WHICH GIVE RISE TO CONVERSION. (1) By operation of the law. (2) By operation of the order of the Court.

242 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES (3) By operation of a Contract. (4) By operation of a direction in a deed or a will. (1) Conversion by operation of the Law 1. There is only one case in which conversion takes place by operation of the Law. That case is the case of Partners. Under the Partnership Act of 1890, Section 39, every partner has a right to require, that the property belonging to the Partnership shall be sold and the proceeds, after the discharge of all debts and liabilities, shall be divided among the partners according to their shares in the capital. As a result, land which is partnership property is treated as Personality and not as Realty. 2. It is treated as Personality, not only as between Partners themselves and their representatives after death, for the purposes of distribution of the partnership assets, but it is also treated as personality for purposes of inheritance as between the persons entitled to the property of a deceased partner. 3. The conversion of Realty into Personality under the Partnership Act takes place not on the date of the dissolution of the Partnership or the death of a partner but at the moment when it became Partnership Property. 4. The doctrine of conversion applies to Partnership Realty unless the contrary intention appears. The reason why partnership agreements convert Realty into Personality is, because a partner ordinarily is not entitled on dissolution to any specific part of the partnership property. But there may be a proviso in the partnership agreement permitting a partner to have specific property, in which case conversion will not apply, there being intention to the contrary. (2) Conversion by order of the Court 1. Where an order is made by the Court for the sale of Realty, the Realty is treated as being converted into Personality for purposes of succession to the estate of the person whose property was ordered to be sold. Illus. ABC have equal shares in a Realty. The Court orders the sale of the Realty. This order has the effect of converting their

243COMMON LAW shares in Realty into Personality, so that the persons entitled to succeed would be the next of kin and not the heir. 2. The following points must be noted : (i) The order for sale must be within the jurisdiction of the Court (ii) It is immaterial whether the purpose for which it is sold will or will not exhaust the sale proceeds. The sale may be merely to pay cost. All the same, if the order is for sale, within the jurisdiction, it will effect conversion (iii) It is immaterial whether it is actually sold or is merely ordered to be sold. Order for sale is enough to effect conversion. (iv) Conversion takes place from the date of the order and not from the date of the sale. 3. There are two cases in which the order of the Court will not effect conversion for the purpose of inheritance. (i) Where the Court itself makes an order that such change in the nature of the property shall not affect its devolution on death, in which case the sale proceeds will go to the heir and not to the next-of-kin. (ii) Where the provision of some statute prohibits a change in the nature of the property from affecting its devolution e.g. Section 123 of the Lunacy Act, 1890, which provides that if the property of a lunatic is sold, the proceeds will go to persons entitled to them as though it was not sold. (3) Conversion by operation of a Contract 1. When there is a binding contract to sell Realty, the Realty is treated as part of vendors Personality. Conversely, the interest of the purchaser is treated as Realty, even if he dies before completion. 2. This is, however, subject to one condition. That is, the contract must be one of which specific performance would be ordered by the Court— 34 Ch. D. 166. Mere notice to treat does not suffice to bring into operation the doctrine of conversion. There will be no conversion if the contract is abortive or unenforceable. (4) Conversion under a contract to lease with an option to purchase A leases certain property to B for seven years, giving him by the lease an option to purchase the property at a certain price during the term. B exercises his option

244 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Three questions arise : (i) Does the exercise of the option effect a conversion ? (ii) Does it effect a conversion even if the option is exercised after the death of the Lessor? (iii) From what date does such conversion begin to operate ? (i) Does the exercise of the option effect a conversion ? In law, the option given is an offer to sell. The exercise of the option is an acceptance of the offer and when there is an acceptance of the offer, there is a contract. The exercise of the option by resulting in a contract effects a conversion. The answer to the first question is therefore in the affirmative. (ii) Exercise of the option before the death of the Lessee and after the death of the Lessor. 1. If the Lessee exercises his option before the death of the Lessor, i.e., while he is alive, then there is conversion, because the offer conveyed by the option can be legally accepted and a binding contract can arise. 2. If the lessee exercises the option after the death, then, on principle, there ought not to be conversion, because there cannot be a contract. An offer cannot be accepted after the person, who make the offer, is dead. But in Lawes vs. Benett (1785) 1 Cax 167, it was held that the exercise of the option, even after the lessor’s death, is good for the purposes of conversion. 3. The rule in Lawes vs. Benett being anomalous, is confined in its operation. It is applied as between persons claiming under the lessor. But it is not made applicable as between lessor and lessee. Illus. A leased certain property to B with an option to purchase. The premises were insured. They are destroyed by fire before the option is exercised by B. B, on exercising the option, cannot claim the insurance money as part of his purchase. That is claim as between A and B (1878) 7 Ch. D. 858, 10 Ch. D. App. 386.