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Annuity

money, life, granted, payment, pay, law, parties, yearly, principal and payments

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ANNUITY. An annuity consists in the payment of a certain sum of money yearly, which is charged upon the per son or personal estate of the individual from whom it is due ; if it is charged upon his real estate, it is not an annuity, but a rent. [RENT.] A sum of money payable occasionally does not constitute an annuity ; the time of payment must recur at certain stated periods, but it is not necessary that these periods should be at the interval of a year ; an annuity may be made payable quarterly, or half yearly (as is very generally the case), or at any other aliquot portion of a year ; and it may even be made payable once in two, three, twenty, or any other number of years.

It was not unusual among the Romans to give by way of legacy certain annual payments, which were a charge upon the heres or co-heredes : a case is recorded in which a husband binds his heredes to pay his wife, during her life, ten aurei yearly. The wife survived the husband five years and four months, and a ques tion was raised, whether the entire legacy for the sixth year was due, and Modes duns gave it as his opinion that it was due. There were also cases in which the heres was bound to allow another yearly the use of a certain piece of land ; but this bears no resemblance to the annuity of the English law, which, as stated above, is essentially a periodical payment in money. (Digest, xxxiii. tit.

1, De Anomie Lagoa, et Fideicommissis Domat's Civil Law, 2nd part, book iv. tit. 2, sec. 1.) In the middle ages annui ties were frequently given to professional men as a species of retainer; and in more modern times they have been very much resorted to as a means of borrowing money. When the person who borrows undertakes, instead of interest, to pay an annuity, he is styled the grantor; the person who lends, being by the agreement entitled to receive the payments, is called the grantee of the annuity. This prac tice seems to have been introduced on the Continent with the revival of commerce, at a time when the advantages of borrow ing were already felt, but the taking of interest was still strictly forbidden. In the fifteenth century contracts of this kind were decided by the popes to be lawful, and were recognised as such in France, even though every species of in terest upon money borrowed was deemed usurious. (Domaes Civil Law, 1st part, book i. tit. 6.) The commercial states of Italy early availed themselves of this mode of raising money, and their ex ample has since been followed in the national debts of other countries. [NA TIONAL DEBT; FUNDS; &rocas.] An annuity may be created either for a term of years, for the life or lives of any persons named, or in perpetuity ; and in the last case, though, as in all others, the annuity as to its security is personal only, yet it may be so granted as to descend in the same manner as real property ; and hence such an annuity is reckoned among incorporeal hereditaments.

A perpetual annuity, granted in con sideration of a sum of money advanced, differs from interest in this, that the grantee has no right to demand back his principal, but must be content to receive the annuity which he has purchased, as long as it 6211 please the other to continue it :—but the annuity is in its nature redeemable at the option of the grantor, who -is thus at liberty to dis charge himself from any further pay ments by returning the money which he has borrowed. It may, however, be

agreed between the parties (as it gene rally has been in the creation of our own national debt, which consists chiefly of annuities of this sort) that the redemption shall not take place for a certain number of years. The number of years within which, according to the present law of France. a perpetual annuity (rente con stitutucze en perpetuel) may be made irre deemable, is limited to ten. (Code Civil, art 1911.) An annuity for life or years is not re deemable in the same manner ; but it may be agreed by the parties to the contract that it shall be redeemable on certain terms; or it may afterwards be redeemed by consent of both parties ; and where the justice of the case requires it (where there has been fraud, for instance, or the bargain is unreasonable), a court of equity will decree a redemption. When such an annuity is granted in considera tion of money advanced, the annual pay ments may be considered as composed of two portions, one being in the nature of interest, the other a return of a portion of the principal, so calculated, that when the annuity shall have determined, the whole of the principal will be repaid. Annuities for life or years, being the only security that can be given by persons who have themselves a limited interest in their property, are frequently made in consideration of a loan. Besides this advantage, annuities for life, inasmuch as they are attended with risk, are not within the reach of the usury laws, and are therefore often used in order to evade them ; and the legislature has accord ingly required that certain formalities should be observed in creating them. It is enacted (by scat. 53 Geo. HI. c. 141) " That every instrument by which an annuity for life is granted shall be null and void, unless within thirty days after the execution thereof there shall be en rolled in the High Court of Chancery a memorial containing the date, the names of the parties and witnesses, and the conditions of the contract ; and if the lender does not really and truly advance the whole of the consideration money, that is, if part of it is returned, or is paid in notes which are afterwards fraudulently cancelled, or is retained on pretence of answering future payments ; or if, being expressed to be paid in money, it is in fact paid in goods, the person charged with the annuity (that is, the borrower) may, if any action should be brought against him for the payment of it, by applying to the court, have the instrument cancelled." The same statute also enacts that every contract for the purchase of an annuity, made with a minor, shall be void, and shall remain so, even though the minor, on coming of age, should at tempt to confirm it. The provisions of this act are intended to be confined to cases where the annuity is granted in consideration of a loan.

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