author: Bueket, J.

text:
    The Eureka Fire & Marine Insurance Co et al. v. Baldwin.

      Fire insurance policy — Party to contract must show performance, if averred, in order to recover- — -Condition of insurance contract that it become void if property becomes unoccupied by tenant — Nature of such occupancy — Question of increase of risk if occupancy fail.

    1. Where a party avers that he has performed all the conditions of a contract to be by him performed, his proofs upon the trial must show such performance in order to entitle him to a recovery. Under such an averment it is not competent to prove a waiver of such conditions. If the waiver of- conditions is relied upon, such waiver must be averred in the pleadings.
    2. The condition in a fire insurance policy was, that the property is “occupied, and to be occupied by tenant as a private dwelling,” and to be void if the property should become unoccupied without the assent of the company. The tenant moved out, and the son of the owner slept in the house during the day and worked nights, having only a cot, a chair and an alarm clock in the house; the family of the owner resided next door and obtained their rain water from a cistern in the kitchen of this house, and the owner went through the house every day, the fire occurring late at night. Held: that in legal effect the house was unoccupied, and the court should have so instructed the jury, and then left the question to the jury as to whether the risk was thereby increased.
    3. The power of an agent to waive conditions in a policy of fire insurance is not different from the same power in life insurance. As to such power, Union Central Life Insurance Co. v. Hook, 62 Ohio St., 256, is followed and approved.
    (Decided April 10, 1900.)
    Error to the Circuit Court of Cuyahoga County.
    The pleadings in the common pleas, omitting the captions and signatures, are as. follows:
    PETITION.
    Plaintiff says:
    That each of defendants is a corporation, duly incorporated under the laws of the state of Ohio.

      On the 20th day of April, 1893, plaintiff, being the owner of a house on North Depot street in Nottingham, Cuyahoga county, Ohio, in consideration of the premium of three and 20-100 dollars paid, the defendants, by their policy of insurance, a copy of which is hereto annexed, insured plaintiff .against loss or damage by fire to the amount of four hundred dollars on said property, from the 20th day of April, 1893, at noon, until the 20th day of April, 1896. at noon.
    Plaintiff has duly performed all the conditions on his part to be performed, and on the 16th day of May, 1894, said house was totally destroyed by fire.
    Plaintiff immediately thereafter, on said 16th day of May, notified defendants of said loss, and after-wards, on January 31st, 1895, gave them due proofs of said loss.
    Each of said defendants, for the consideration of one half of said premium paid, in one joint and several policy, insured plaintiff to the amount of one half of said four hundred dollars. No part of said loss has been paid.
    Wherefore plaintiff asks judgment in the sum of four hundred dollars — two hundred dollars against each defendant, with interest from said May 16, 1894;
    ANSWER.
    Now come the defendants, The Eureka Fire and Marine Insurance Company, and The Security Fire Insurance Company, and for answer to the petition of plaintiff, J. L. Baldwin, say, that they admit that each of the defendants is a corporation, duly incorporated under the laws of the state of Ohio; that on or about April 20th, 1893, the defendants issued to the plaintiff the policy of insurance, a copy of which is attached to the petition herein, and that plaintiff paid defendants therefor a premium of three dollars and twenty cents ; that on or about May 16, 1894, plaintiff notified the defendants’ agent that a fire had occurred in or about the house mentioned in said policy; and that defendants have paid plaintiff nothing on account ofi the claim set up in his petition herein.
    Defendants <leny each and every allgeation in said petition contained which is not by this answer expressly admitted to be true.
    SECOND DEFENSE.
    For their second defense defendants refer to the admissions and denials of their foregoing first defense, making the same a part hereof as though herein fully pleaded at length; and say that said policy of insurance contained, among others, the following provisions: That the building' insured thereby was, at the time of the issuance of said policy, and should during the term thereof continue to be, occupied by a tenant as a private dwelling ; and that, if said building should become unoccupied without the assent of the defendants indorsed on said policy, then and in such case said policy should be and become void.
    And defendants say that, long prior to May 16th, 1894, the plaintiff’s tenant and his family, who had theretofore occupied the building insured by said policy, vacated the same; that said building thereafter remained vacant and unoccupied as a private dwelling or otherwise, up to the time of the fire mentioned in the petition herein; and that, at the time of said fire and for a long time previous thereto, said building had been vacant and unoccupied as a private dwelling or otherwise. That the leaving of said building so unoccupied and vacant greatly increased the risk thereon, and enhanced the danger of loss or damage thereto by fire. That assent of the defendants to such vacancy was never indorsed upon said policy; and that neither one of the defendants, through any one of their agents or representatives, or in any manner, ever assented to said building being left unoccupied as a private dwelling, or had notice or knowledge of its being so unoccupied.
    Wherefore, defendants pray that they may be hence dismissed with their costs.
    REPLY.
    The plaintiff, for reply to defendant’s second defense, says that he denies that said premises were vacant and unoccupied at the time of said fire or for a long time prior thereto, and denies that the risk thereon Avas increased, or the danger of loss by fire was enhanced in any way over that assumed by the defendants at the time said policy was issued. And, further replying, plaintiff says that it is the custom, in this community, of these defendants, and of insurance companies generally here to issue and give assents and permits for insured buildings to remain unoccupied temporarily, and for short periods during changes of tenants, and that these defendants gave plaintiff a like permit for an unoccupied dwelling much more exposed to risks and danger than the dwelling that burned; and plaintiff alleges that the fire which consumed his house originated outside of said building and said loss was in no way affected by the question of occupancy or vacancy of said building.
    And as to all other allegations contained in said answer, plaintiff denies each and all of them.
    A copy of the policy Avas attached to the petition, and on the trial the policy Avas offered in evidence by the plaintiff beloAv, as were also the proofs of loss.
    The policy contains the following conditions: That if the premises should at any time be occupied or used so as to ' i crease the risk, or should become unoccupied without the assent of the companies indorsed on the policy, then in every such case the policy should b° void. The premises “occupied, and to be occupied, by tenant as a private dwelling.” “The description of the property herein insured referred to in this policy shall be considered a part of this contract, and a warranty by the assured during the time this policy is kept in force,”
    “Persons sustaining loss or damage by fire shall forthwith give notice of said loss to the companies in the city of Cincinnati, and as soon . after as possible render a particular account of such loss, signed, and sworn to by them, stating Avhether any and what other insurance has been made on the same property, giving copies of the written portion of all policies thereon, also the actual cásh value of the property and their interest therein, for Avhat purpose and by whom the building insured or containing the property insured, and the several parts thereof, were used at the time of the loss, Avhen and how the fire originated, and shall also produce a certificate under the hand and seal of a magistrate or notary public.”
    The loss or damage “to be paid sixty days after due notice and proofs of the same, made by the assured and received at the'office of the companies in the city of Cincinnati, Ohio, in accordance with the terms of this policy.”
    “It is further understood and made part of this contract, that the agent of the companies has no authority to waive, modify or strike from this policy any of the printed conditions, nor is his assent to an increase of risk binding upon the companies, until the same is endorsed in Avriting on the policy and the increased premium paid; nor is his assent to a change of interest, or transfer of property to another location binding upon the companies, until the same is endorsed in writing on the policy; nor, in case this policy shall become void by reason of the violation of any of the conditions thereof, has the agent poAver to revive the same, and that a new policy intended to replace any policy so made void shall be of no effect until its actual issue and delivery thereof to the assured, any contract by parole or understanding with tbe agent to the contrary notwithstanding.”
    As the fire occurred on May 16,1894, and the proofs of loss Avere not furnished until January 31, 1895, the plaintiff claimed upon the trial that the proofs of loss had been Ayaived, and he was allowed to introduce evidence, over the objection and exception of the defendant companies, for the purpose of proving such waiver. The plaintiff claimed that the companies, after the fire, examined as to the loss, and denied liability because the premises were not occupied at and before the fire, and the court charged the jury in effect that such denial if established Avould constitute a Avaiver of proofs of loss, to which charge the companies excepted.
    Upon the trial the plaintiff testified that his tenant moved out of the premises not later than April. 19, 1S94, and that thereafter he had no other tenant in the house, but that his son who was a night' brakeman slept in a bed room of the house upstairs during the day time, getting his meals at the residence of his parents, and sleeping in the house that was burned, which was next door to that of his parents, from about nine o’clock in the forenoon until about five o’clock in the afternoon, and that he had only a cot, a chair and an alarm clock in the house, and that he paid no rent and was not expected to pay any; that he with his family resided next door to the burned property, and obtained all their rain water from a cistern in the kitchen of the property, that he went through the property every day, and that the fire occurred late at night.
    From this evidence the companies claimed that the house was not occupied by a tenant, and asked the court to so instruct the jury, and then submit the question to the jury as to-whether the risk was thereby increased. The court submitted the question as to AAdiether the house was unoccupied, and if so, whether the risk was thereby increased, to the jury, to which the defendants excepted.
    The jury returned a verdict for the plaintiff, the court overruled the motion for a' new trial and entered judgment upon the verdict, to all of which the defendants excepted. The circuit court affirmed the judgment. Thereupon the plaintiffs in error filed their petition in this court seeking to reverse the judgments of the courts below.

      Roger M. Lee, for plaintiffs in error.
    The written slip attached to the policy, describing the risk, provided that the insured building was “occupied and to be occupied by tenant as a private dwelling.” The policy also provided that the description of the insured property contained in the policy should be considered as a part of the contract and a warranty by the assured during the time the policy is kept in force. The policy also provided that, “if the above mentioned premises shall at any time be occupied or used so as to increase the risk * * * or if the premises become unoccupied, without the assent of the companies indorsed hereon * * * this policy shall be void.”
    These provisions constituted a continuing warranty that the insured building should at all times be occupied by a tenant as a private dwelling. Stout v. Fire Ins. Co., 12 Ia., 371; Insurance Co. v. Wells, 42 Ohio St., 519.
    The admission of a lodger does not create a tenancy. There must be the putting of a lessee into the exclusive occupation of the premises. White v. Maynard, 11 Mass., 253.
    The policy provision with reference to occupancy has been uniformly held to entitle the insurer “to have the building occupied as a dwelling, and to have the care and supervision exercised which such occupancy insures.” Poor v. Humboldt Ins. Co., 125 Mass., 124;
      Ashworth v. Builders’ Ins. Co., 124 Mass., 422; Cook v. Continental Ins. Co., 70 Mo., 610; Feshe v. Council Bluffs Ins. Co., 74 Ia., 676; Marsh v. Bristol, 65 Mich., 378; Bonefant v. Ins. Co., 76 Mich., 653 ; Fitzgerald v. Conn. Fire Ins. Co., 60 Wis., 463; Weidert v. State Ins. Co., 19 Ins. Law Journal, 740.
    Performance of this requirement as to proof of loss and magistrate’s certificate is a condition precedent to plaintiff’s right to recover. Home Ins. Co. v. Lindsay, 26 Ohio St., 348; Moody v. Ins. Co., 52 Ohio St., 12.
    This defense is not waived by pleading and relying on other defenses not inconsistent therewith. Farmers’ Ins. Co. v. Frick, 28 Ohio St., 466.
    The provision, that proofs of loss shall be furnished “as soon as possible,” means that they must be furnished within a reasonable time under the circumstances. It is undisputed that nearly nine months elapsed between the date of the fire and the time of serving these proofs of loss; and plaintiff offered no testimony of any sort for the purpose of explaining this delay. So far as the record shows, there was no reason why he could not have served proofs of loss within a week or two after the fire.
    In the following cases, under such a requirement, that proofs of loss be given “as soon as possible,” delays ranging from two, three and four months up to' seven and eleven months have been held, when unexplained, to be unreasonable and fatal, as matter of law. Scammon v. Ins. Co., 101 Ill., 621; Baker v. Ins. Co., 124 Ind., 490; McPike v. Assurance Co., 61 Miss., 37; McEvers v. Lawrence, 1 Hoff. Ch. (N. Y)., 171; Hobson v. Assurance Co., 19 U. C. Q. B., 314; Express Co. v. Ins. Co., 1 Bull., 85; Kim-ball v. Howard Ins. Co., 8 Gray, 33; Inman v. Fire Ins. Co., 12 Wend., 452; Whitehurst v. Ins. Co., 7 Jones Law (N. C.), 433; Trask v. State Ins. Co., 29 Pa. St., 198.
    The question as to what is a reasonable time within which to give notice or serve a proof of loss, when there is no conflict in the testimony as to the circumstances, or when, as in this case, there is no testimony at all on the subject, except the proof of loss and the date when it was served, is a question of law to be determined by the court. Walker v. Stetson, 14 Ohio St., 89; Bassenhorst v. Wilby, 45 Ohio St., 333; Ins. Co. v. Kyle, 11 Mo., 278.
    This court has firmly established the rule that proof of waiver is not permissible under a plea of performance. Eiceman v. Insurance Co., 74 Ill., 11; Fire Ins. Co. v. Hazen, 110 Pa. St., 530; Kimball v. Fire Ins. Co., 8 Gray, 33.
    And so it -was held that waiver of the proof of loss condition could not be proven under a plea of performance.
    The following cases distinctly and clearly sustain this proposition as applicable to the proof of loss requirement in insurance policies. Edgerly v. Ins. Co., 43 Ia., 587; Welch v.Ins. Co., 71 Ia., 337; Bern-hard v. Ins. Co., 40 Ia., 442; Fauble v. Davis, 48 Ia., 462; Bank v. Ins. Co., 74 Fed. Rep., 507; Livesay v. Omaha Hotel, 5 Neb., 50; Ins. Co. v. Batchelder, 32 Neb., 490; Boone v. Ins. Co., 37 Minn., 426; Ins. Co. v. Camp, 64 Texas, 521.
    The record shows that there is no indorsement on the policy as to the proof of loss requirement being, waived. The only testimony upon the subject of waiver was that of the plaintiff and his witness, Mapes, relating to conversations that occurred between them, and the letter written by Mapes to the plaintiff. Life Ins. Co. v. McMillin, 24 Ohio St., 67.
    The following cases expressly .hold that, under similar provisions, the agent of the company cannot waive proof of loss, except by indorsement on the policy, as provided for. Ins. Co. v. Weiss, 106 Pa. St., 20; Smith v. Ins. Co., 60 Vt. 682; Ruthven v. Fire Ins. Co. (Ia), 60 N. W., 663; Kirkman v. Farmers’ Ins. Co., 90 Ia., 457; Quinlan v. Ins. Co., 133 N. Y., 356;
      Gould v. Ins. Co., 90 Mich., 302; Knudson v. Fire Ins. Co., 75 Wis., 148.
    And tlie same provisions are sustained and followed in a multitude of other cases with reference to various other conditions, among which may be mentioned: Kyte v. Ins. Co., 144 Mass., 43; Ins. Co. v. Conover, 98 Pa. St., 384-388; Walsh v. Ins. Co.; 73 N. Y., 5; Messelback v. Norman, 122 N. Y., 578; O’Brien v. Ins. Co., 134 N. Y., 28; Bomgartle v. Ins. Co., 136 N. Y., 547; Wilkins v. Ins. Co., 43 Minn., 177; Gladding v. Ins. Co., 66 Cal., 6.
    Some courts have held that sucb provisions in the policy do not bind the assured as to matters connected with the inception of the contract — that is, with matters which arise before the policy is delivered to the assured, because, as the assured has not then received the policy, he is not presumed to know its provisions. It has been so held in New York. Wood v. Fire Ins. Co., 149 N. Y., 382.
    A mere local issuing agent has no implied authority to take any steps relating to the settlement of a loss under policies issued by him, or to waive proofs of loss. Smith v. Ins. Co., 60 Vt., 682; Lohnes v. Ins. Co., 121 Mass., 439; Bush v. Ins. Co., 63 N. Y., 531; Van Allen v. Ins. Co., 64 N. Y., 469; Bowlin v. Ins. Co., 36 Minn., 433; Harrison v. Ins. Co., 59 Fed., 732; Van Genechtin v. Ins. Co., 75 Ia., 554; Ins. Co. v. Kennedy, 60 Ark., 432.
    Section 3644 of the Ohio Revised Statutes makes the soliciting or issuing agent the representative of the insurer as to matter connected with the issuing of the policy, but not as to any subsequent matters. Stevens v. Ins. Go., 21 Ins. Law Journal, 443.

      J. F. Herrick; F. P. McClure and R. C. Hartshorne, for defendant in error.
    The principal question in this case arises under the 2nd Assignment of Errors, as made by opposing counsel. On this subject, we claim that, “In suit against an insurance company for loss by fire, proof as to waiver of notice of loss, may be made without any special averment of that fact in the pleading.” Levy v. Ins. Co., 10 W. Va., 560; O’Brien v. Ohio Ins. Co., 52 Mich., 131; Schultz v. Ins. Co., 57 Mo., 331; Russel v. Ins. Co., 55 Mo., 585; May on Ins., p. 589; Ins. Co. v. Baldwin (this case), 17 CC., 143.
    The above Michigan, West Virginia and Missouri cases and 102 Pa. St., 568, have the same general averment of performance of all the conditions necessary, as this case.
    All of them hold that waiver may be proved under “the general averment of performance.”
    ’ On the other hand, not an insurance case is cited by opposing counsel in his brief or elsewhere, and we know of no insurance case, that holds that waiver can not be so proved. Not one.
    When an insurance company denies liability or declares its policy void, it is estopped from denying proofs of loss. 52 Mich., 131; 55 Mo., 585; while 62 N. W. (Neb.), 883; 112 Pa. St., 149; 168 Pa. St. I, and Ins. Co. v. State, 113 Ind., 331, all lean strongly toward that doctrine.
    There is a large class of Massachusetts and New York cases, forty years old, which seem to have settled this question as above indicated — most of them holding that,
    No objection made to want of preliminary proof, is waiver. 6 Cowen, 404; 25 Wend., 375 ; 9 Johns, 192;
    16 Wend., 401; 1 Johns, 229; 9 Wend., 163; 7 Johns, 315; 20 Pick., 389; 2 Comstock, 53; 14 Mo., 221, where this question is fully discussed. This accounts for the dearth of recent eastern authorities on this • subject.
    The authorities uniformly hold that “denial of liability operates as a waiver of necessity for proofs of loss.” May on Insurance, p. 469; Pac. R. (Kas.),
      1099; 62 N.W. (Iowa.), 810; NE., (Ind. App.), 417; 108 Ind., 270 and 518; 58 Wis., 508; 32 Neb., 490; 112 Pa. St., 149; 168 Pa. St., 1; 62 N. W. (Neb.), 883; 9 How. U. S.), 391.
    The two latter cases indicate that a defense in court denying liability, or claiming that the policy is void, constitutes a waiver of preliminary proofs.
    If so, it needs neither to be proved nor pleaded.
    Courts seek justice between the parties, not technicalities in pleading.
    Where a pleading may be understood in a way to make it good it must be so understood. I Handy, 181; 5 Ohio St., 450; 14 Ohio St, 417; 4 W. L. M., 105; Stat. 5096.
    The question here is not — what is best pleading — but — what is sufficient pleading.
    The Ohio Code throws some light on this question. Section 121 of code, statutes 5091.
    Such allegation was not controverted, by the answer, but was on the trial. Had it been controverted in the answer, the reply would properly have set up the waiver. That would be proper pleading under that statute. But, whatever is properly alleged in the reply, is not a necessary or proper part of the petition. Hence, pleading waiver in the petition is both unnecessary and improper.
    The words “must establish, on the trial, the facts showing such performance” are significant. It does not say — “Must establish such specific performance in each case,” but “must establish, on the trial, the facts.”
    This statute has been construed in Ins. Co. v. McGookey, 33 Ohio St., 555.
    They (the Ins. Co.) must “bear themselves with all good faith toward the claimant, otherwise they will be held to have waived their rights in this regard,” to-wit: Preliminary proofs. 35 Conn., 310; May on Ins., 468, which says, “And the burden of proof of notice of the defect is on the insurers.”

      Now, in view of the fact that the insurance company refused to communicate at all with the insured for one year after the fire, and of this 33 Ohio St., which puts the company in default, and of 52 Mich; 55 Mo.; 62 N. W., and 9 How.
    A large number of cases brought on commercial paper, where the endorser is sought to be held, and in which the petition alleges that notice has been properly served on the endorser, hold that waiver of that notice by the endorser may be shown under- that allegation, and recovery had. 5 Pick., 444; 6 Mass., 388; 11 Conn., 492; 22 Conn., 219; 1 Fla., 327; 17 C. C., 143.
    The first assignment of error is completely covered by the Moody case, 52 Ohio St., .12, both as to the vacancy or occupancy, and as to the province of the jury, and of the trial judge. Ins. Co. v. Tucker, 92 Ill., 64.
    The house was occupied by a tenant, because he was not the owner; it was certainly a private dwelling, because it was not a public house.
    If not a tenant, under a contract or arrangement with the owner, still that fact would not avail the insurance company unless it increased the risk. This is the doctrine of 52 Ohio St., 12. Closely printed conditions put into a policy as a snare to the unwary can not override the plain rule of justice and law. The jury determined this whole question of occupancy and increase of risk, correctly we think, under instructions from the court, in which, we submit, no errors can be found.
    Further, no sufficient exception was taken by plaintiff in error to raise this question. The trial court was never asked to determine this question of occupancy as matter of law. The record shows that nothing was done except the filing of exceptions to the charge, after it was given, and then this alleged error was not pointed out.

      This point, raised here, is unfair to the trial court. 17 C. C., 548.
    Further complaint is made in their brief, that the jury was not allowed to pass upon “the question of increase of risk.” Increase of risk over what? Of course, it is over that risk which the policy assumes. Well, there was no such increase of risk. The jury determined that in their special finding, demanded by the insurance company, when they found that the occupancy was just that set forth in the policy. The' special finding fully settles that question. There was risk, but no increase of risk.
    Under, the fifth error assigned, it is claimed that there was no refusal to pay the loss, and insufficient denial of liability. But, if refusal to pay was necessary, we claim that the silence of the insurance company for nearly a year, during which time the assured wrote the company two letters about settlement on this policy and finally sent them proofs of loss, and then their answer in, and defense of this case, constitute refusal to pay. 19 Am. Rep., 285; 15 Wis., 170.
    We submit, also, that denial of liability is itself a refusal to pay.
   Bueket, J.

The plaintiff below did not concede upon the trial that the house was unoccupied by a tenant in the sense in which that term is used in the policy, but he conceded facts which when applied to the terms of the policy in legal effect showed that the house was unoccupied by a tenant from April 19 to May 16, 1894. The son’s sleeping in the house, as stated in the evidence, was not an occupancy by tenant, and the family residing nest door and getting rain water at this house and the owner visiting the house each day, and like acts did not aid the matter.

The court should therefore have charged the jury that under the conceded facts the house was unoccupied at and before the fire, and then left the question to the jury as to whether the risk was thereby increased. If increased there could be no recovery, and if not increased there could be recovery, unless prevented by some other question in the case. Insurance Co. v. Wells, 42 Ohio St., 519.

It canot be said as a matter of law that proofs of loss which are furnished on the 81st day of January next after a fire which occurred on the 16th day of May, were furnished as soon as possible after the fire. As soon as possible in such a case means as soon as reasonably practicable under the circumstances, that is within a reasonable time. There might be cases in which proofs of loss could not be furnished sooner than was done in this case, but if such should be the case, the facts which caused the delay should be pleaded.

It was urged below and also here that the delay was caused by the denial of liability on the part of the insurance companies. If that caused the delay the facts should have been set out in the petition. It is also urged that the denial of liability waived all proofs of loss, and that it was not necessary to furnish any proofs of loss in this case, and this was the view taken by the courts below. There are many respectable authorities Avhich hold that a denial of all liability on a policy after a fire is a waiver of all proofs of loss, and that a recovery may be had in such cases without such proofs. Conceding the law to be so for the purposes of this case, Avithout a full examination of the question, still the question remains as to AAdiether that principle of law could be invoked by the plaintiff under the pleadings in this case. The plaintiff did not plead that the defendants had denied liability on the policies and thereby waived proofs of loss. There was no averment of waiver of any of the conditions of the policies, but on the contrary the averment in the petition is that the plaintiff had duly performed all the conditions on his part to be performed. He relied not upon a waiver of conditions, but upon his'performance of them, including the conditions as to proofs of loss. That he did not rely upon a waiver of proofs of loss is shown by his averment in his petition that he gave the companies due proofs of loss on the 31st day of January, 1895. A waiver of a condition is the opposite of performance; it is a good excuse for non-performance. True there might ‘be a performance of a condition by one party after the other had waived performance. In an insurance case there might be a waiver of proofs of loss, and yet a furnishing of such proofs notwithstanding the waiver, and in such a case it would be proper to aver both performance and waiver. But as a rule of pleading if a party avers the performance of conditions only, he must prove performance upon the trial, and cannot succeed by proving waiver instead of performance. If he intends to rely upon and prove waiver he must plead it. In this respect an action upon a contract of insurance is not different from an action upon other contracts. The law as laid down in Mehurin v. Stone, 37 Ohio St., 19, is applicable to insurance cases as well as to actions on building contracts.

It is urged that in actions against indorsers of negotiable paper there can be a recovery against an indorser under an averment of due notice to him, although the proof fails to show notice, but shows waiver of notice, and the following cases are cited: 5 Pick., 444; 6 Mass., 388; 11 Conn., 192; 22 Conn., 219, and 1 Fla., 327. These cases may have been correctly decided under the system of pleading and rules of decision in those states; but in this state our code of procedure requires parties to state the facts constituting their cause of action or ground of defense, and if the fact relied upon in the pleading is notice, that fact should be supplied in the proof, and if the fact is waiver of notice, that fact should be averred and then proven. This is the plain provision of pleading, and it should be followed, so that parties may be advised by the pleadings, as to what they must be prepared to meet on the trial.

The power of an agent to waive conditions in a policy of fire insurance is not different from the same power in a case of life insurance, and as to that question raised in this case reference is made with approval to what is said on that subject in the case of Union Central Life Co. v. Hook, 62 Ohio St., 256.

In the next trial of this case the questions reserved in the record as to testimony are not likely to again arise, because the errors complained of were caused by the erroneous view taken by the court as to the law of the case as above shown. Those questions will therefore not be further noticed here.

There is, however, another matter which calls for a passing notice.

The insurance companies in the second defense of their answer refer to the admissions and denials of their first defense, and make the same a part of the second as though fully pleaded at length therein. This is bad pleading, and such reference and tacking of one cause of action in a petition, or ground of defense in an answer to a former one, should be stricken out. Each cause of action or ground of defense should be separately and independently stated so as to enable the opposite party to take issue by demurrer or otherwise without being hampered by another cause of action or ground of defense.

Judgment reversed.


source: Caselaw Access Project

author: Burket, J. Minshall, J.,

license: Public Domain

text:
    The Union Central Life Insurance Co. v. Buxer.

      Life Insurance — Husband procttres insurance on life payable to himself after term of years — Or to wife at death — Gives premium note with forfeiture clause — Effect on wife’s interest in the insurance — Conditions in policy not varied by subsequent dealings between the parties, when — Insured not entitled to loans on the policy when in default of premiums.

    1. Where a husband procures insurance on his life payable to himself after a term of years, if he shall live so long, and if not, then to his wife at his death, and after paying premiums for some years gives a premium note which has a forfeiture clause therein more onerous, as against the interests of the wife, than the forfeiture clause in the policy, such forfeiture clause in the note will not avail the insurance company as against the wife, unless she assents thereto.
    2. Where a condition in a life insurance policy is to the effect, that “in case of default for non-payment of premium after three years, and no legal surrender having been made, the insured having paid at maturity all notes given for premium, then this policy shall, without surrender, but upon payment of all outstanding premium notes, become a paid-up term policy, without change of terms or conditions,” the payment of all outstanding premium notes, though given after three annual premiums had been paid, is a condition precedent to such policy becoming a paid-up term policy.
    3. Where a policy of life, insurance is issued and accepted upon the conditions and agreements contained therein, such conditions and agreements form the contract between the parties, and will not be varied or controlled by the subsequent course of dealing between them, in the absence of fraud or bad faith.
    4. Where it is provided in a life insurance policy, that the company will loan to the insured on such policy as collateral security, certain sums of money, graded as to amount by the number of annual cash premiums paid, the insured is not entitled to such loan after he is in default in the payment of a premium, or premium note, when such default works a forfeiture of the policy by its terms and conditions, unless such default is waived by the company.
    (Decided April 10, 1900.)

      Error to the Circuit Court of Stark County.
    Benjamin F. Buxer received from the plaintiff in error a life insurance policy on his own life for one thousand dollars, payable to himself at a period in the future to be determined by the premiums paid and accrued profits after deducting losses, if he should then be alive, and in case of his death before that time the'amount to be paid to his wife, the defendant in error. The premium was $38.33, to be paid on or before the 15th day of August in every year during the term of twenty years, and the policy provided that the insurance was made upon the consideration of the payment of said premium “and of the payment when due of any and all notes given for premiums or parts of same.”
    The policy contained the following conditions:
    “After three years’ premiums have been paid, except in case of failure to pay at maturity a premium note, the company will, upon legal surrender of this contract while in force, and the payment of all outstanding premium notes, issue a paid-up, non-participating life policy for the amount named in table “A,” on the following page. In case of default for non-payment of premium after three years, and no legal surrender having been made, the insured having paid at maturity all notes given for premium, then this policy shall, without surrender, but upon payment of all outstanding premium notes, become a paid-up term policy, without change of terms or conditions, except as to the payment of premiums and participation in profits, and continue in force for such time as one annual premium on this policy is contained in its reserve value according to the American four per cent, table of mortality, at the end of which time this contract shall cease. If the insured shall die while the said term policy is in force, the amount of foreborne premiums, with interest at six per cent, shall be deducted from the sum insured.”

      “1st. This policy shall not be valid or binding until the first premium is paid to the company, or its authorized agent, and the receipt hereto attached countersigned by the company’s agent, and delivered during the life-time of the insured; and all premiums, or notes, or interest upon notes given the company for premiums, shall be paid on or before the days upon Avhich they become due, at the company’s office in the city of Cincinnati, or to the authorized agent of the company, he producing a receipt therefor, signed by the president, vice-president or secretary.”
    “6th. Upon the violation of any of the foregoing conditions, this policy shall be null and void, without action on the part of the company, or notice to the insured or beneficiary, and all payments made hereon, and all accrued surplus or profits shall be forfeited to the company, excepting as provided in the foregoing 5th paragraph.”
    “8th. After three years from the date of this policy it shall be incontestable for any cause, excepting the violation of the above conditions regarding the occupation of the insured, his becoming a drunkard or having delirium tremens, non-payment of premium or of notes given for same, or interest thereon, and misstatements as to age.”
    The policy states that it is issued and accepted upon the conditions and agreements therein.
    The premiums Avere paid either in cash or by note to August 15, 1894, and a note was given for the premium which became payable August 15, 1894, at three months, Avhich note was not paid at maturity and was renewed so as to become due May first, 1895, and Avas not paid when due or at all, and on September 30, 1895, the company notified Mr. Buxer that his policy had lapsed for non-payment of said premium note. 'He negotiated with the company for a reinstatement of his policy in December, 1895, but did not succeed, and he died May 6, 1896, leaving his widow, the plaintiff in error, surviving him.

      The premium note which became due May first, 1895, and for the non-payment of which the company declared the policy lapsed, contained the following conditions:
    “Said policy including all conditions therein for surrender, or continuance as a paid-up term policy, shall without notice to any party or parties interested therein be null and void on the failure to pay this note at maturity, with interest at eight per cent, per annum, payable annually.”
    That note was not signed by the wife and she did not known that it had been given.
    The company regarded the policy lapsed and waived proofs of loss and refused payment.
    Thereupon the widow began her action in the court of common pleas against the company, and properly pleaded the policy, its terms and conditions and annexed a copy as an exhibit. ,
    She averred that “said policy of insurance contained a provision to the effect that all premiums or notes or interest upon notes given to the company for premiums should be paid at the company’s office in the city of Cincinnati or to the authorized agent of the company.” She further averred that “said policy of insurance contained a provision to the effect that if any premium or premiums, or premium note or notes or interest upon notes given to the company for premiums shall not be paid at maturity, that said policy should be null and void.”
    She averred that all premiums and premium notes had been paid except the note which became due May first, 1895, being for the premium which was payable August 15, 1894, and she pleaded in excuse for the non-payment of that note, that it was the custom of the company to collect all premiums and notes through agents who would notify the insured that his premium or note was about due and then make demand of payment at the proper time, and give a receipt signed by the officers of the company, and that in this instance no notice was given and no demand made, and that thereby the eompány waived the prompt payment of the note in question. She further averred that other payments of premium and notes were received by the company after the same were due, and that thereby and by the course of dealing he was induced to believe that prompt payment would not be required in order to retain his policy in force.
    The condition in said policy as to term insurance is fully pleaded and the benefit thereof invoked in the petition.
    The ansAver of the company admits the allegations of facts in the petition, but denies the waiver and deductions attempted to be drawn from the course of dealing, and pleads the conditions of the policy and note above shown, and the non-payment of said premium note, and avers that said policy lapsed for non-payment of said note, and that it Avas canceled on the books of the company in September, 1895, and the insured duly notified thereof. The answer also contains the following:
    “Defendant admits that said policy of insurance also contained a provision that in case of default for non-payment of premium after three years, no legal surrender having been made, the insured having paid at maturity all notes given for premiums, then said policy should, without surrender, upon payment of outstanding premium notes, become a paid-up term policy, and should continue in force for such time as one annual premium thereon Avas contained in its reserve value according to the American four per cent, table of mortality; that no legal surrender of said policy had been made; that no other premium note was then outstanding, and that the reserve value of said policy at said time would have been more than sufficient to continue said policy in full force until the death of said Benjamin F. Buxer in the manner and upon the terms and conditions as in said policy provided, had the same not been forfeited for the non-payment of said premium note.”
    The reply denied the answer except as admitted in the petition.
    . A jury was waived and the cause submitted to the court upon the pleadings and evidence. The policy and notes given for premium were introduced in evidence. There was no conflict of testimony, the facts of the case were admitted., even the acts of indulgence as to payments of premiums and premium notes were not contested by the company, but the court regarded that testimony unimportant and the record shows that those facts were not considered in rendering the judgment.
    The court of common pleas rendered judgment in favor of the plaintiff below, and the circuit court affirmed the judgment. Thereupon the insurance company filed its petition in error in this court, seeking to reverse the judgments below.

      Ramsey, Maxwell & Ramsey; Day, Lynch & Day, for plaintiff in error.

      R. W. McOaughey, and Thayer, Webber & Turner, for defendant in error.
   Burket, J.

As this policy was made payable to the husband at maturity if then alive, and to his wife at his death if he died before its maturity, it was to the interest of both to keep the policy in force by the payment of the annual premiums, either in cash or by premium note.

Payment might be made in cash or by note as the parties should determine. As to his interest in the policy -he could give a premium note with a forfeiture clause broader and more onerous than the forfeiture clause in the policy, but as she had a vested interest in the policy, in case she survived him, he could not affect her rights by giving such a premium note without her consent. While the forfeiture clause in the premium note which became due May first, 1895, was binding upon him, it was not binding as to her, because she had no knowledge of the same and did not assent thereto. When he found himself unable to pay the premium in cash it was his interest and duty, as well to himself as to his wife, to keep the policy in force by giving a premium note, and as to himself he could insert such terms of forfeiture in the note as he saw fit, but as to her interest he could not change the contract of insurance without her consent. He might put an end to the policy by failing to pay the premium in cash or note, or by failing to pay the note at its maturity, but so long as he kept the policy alive, the interest therein of the wife remained unchanged, unless she consented to a change. She had the right to stand upon the terms ‘ and conditions of the policy, unchanged and unaffected by any forfeiture clause in a premium note. But while he could not thus affect her interest without her consent, she was equally bound Avith him by the terms and conditions of the policy; and she had no right to insist after payment of three annual premiums that he should refuse to give a premium note to keep the policy alive for both, but let it lapse as to himself so that she might thereby have the benefit of a continued paid-up term policy. The insurance was primarily for his benefit as an endoAvment, and only contingently for her benefit in case he should die before its maturity. In such cases he may do whatever the terms of the policy authorize, without coming in conflict with the authorities as to the inability of the insured or the company to change the vested rights of the beneficiary.

He paid the second and third annual premiums by giving a note therefor in the first instance, and he had an equal right to pay the fourth premium in the same manner, but if it contained a broader forfeiture clause than the terms of the policy, such clause would not be binding on the wife without her consent.

The forfeiture clause in the premium note in this case, however, is not broader, as to the question here involved, than the same clause in the policy. Both provide in effect that upon failure to pay the note given for premium at its maturity, the policy shall be null and void. The forfeiture clause in the policy is in effect that upon failure to pay. the premium, all outstanding premium notes having been paid at maturity, the policy shall become a paid-up term policy, but without the payment of such notes, the policy shall not become a paid-up term policy, but shall be null and void, without action on part of the company or notice to the insured or beneficiary. The forfeiture clause in the premium note in question is that “said policy including all conditions therein for surrender or continuance as a paid-up term policy shall without notice to any party or parties interested therein be null and void on the failure to pay this note at maturity with interest at eight per cent, per annum, payable annually.” The failure to pay a premium note at maturity would prevent the policy from becoming a paid-up term policy, under the forfeiture clause in the policy, and the failure to pay the premium note in question at maturity made the condition as to continuance as a paid-up term policy null and void; so that the failure to pay the premium note in question, prevented the policy from becoming a paid-up term policy, both under the forfeiture clause in the policy and under the same clause in the note. The forfeiture clause in the.note is, therefore, as to the question of the policy continuing as a paid-up term policy, not broader or more onerous than the same clause in the policy, failure to pay an outstanding premium note under either clause preventing its continuance as a paid-up term policy.

The plaintiff below plead the conditions of the policy as to forfeiture, the continuance as a paid-up term policy, and that the premium note which became due May first, 1895, had never been paid, and sought to excuse the non-payment thereof by the course of lenient dealing, the failure to give notice and make demand of payment, and the refusal of the company to make a loan to the insured on his policy as collateral.

The insurance company in its answer plead and relied upon both conditions of forfeiture in the policy and in the note, and admitted that it had failed to give notice of the maturity of the note, and failed to demand payment thereof, and refused to make a loan on the policy.

There was some testimony introduced upon the trial, but it did not change the legal effect of the foregoing conceded facts in the pleadings. Those facts are controlling, and an application of the law to those facts will dispose of the case.

Leaving the forfeiture clause in the note out of the question, it is conceded that the premium note was never paid, and is yet outstanding, and therefore by the terms of the policy there was never a continuance as a paid-up term policy, unless there is to be found something in the transaction which is the equivalent of payment of the note. Two things are plead and relied upon in that connection.

First, the policy provided that after the payment of three annual premiums the insured might borrow certain named sums .from the company graded as to the amount, by the number of premiums paid, pledging his policy as collateral security. The petition averred that he relied upon this means of obtaining money with which to pay his premium, and that he applied for a loan about the 30th day of May, 1895, and was refused, and that such refusal was the cause of his failure to pay the premium note. The date of the application for a loan and the refusal are both admitted in the answer. The premium note became due May first, 1895, and was not paid at maturity and such non-paymeut prevented the policy from becoming a paid-up term policy, and an effort thirty days thereafter to obtain a loan was not the equivalent of payment, especially when payment was never made and never tendered. When the application for a loan was made the policy was lapsed by its own terms, and the company was then under no obligation to make the loan.

Secondly, the claim is made in the petition that the company did not in its dealing with the insured insist upon the prompt payment of premiums and premium notes, and gave no notice and made no demand of payment of this note, as is more fully shown in the statement of facts above. While such a lenient course of dealing with the insured might, under certain circumstances, entitle him to further reasonable time to make payment, it could not serve as payment itself, or the equivalent thereof. In this case there was never any payment of the premium note and no tender of payment, and therefore the policy became null and void by its own terms, and the condition upon which it might continue as a paid-up term policy — the payment of all outstanding premium notes — was never complied with. In such a case the payment of all outstanding premium notes is a condition precedent to the policy being continued as a paid-up term policy.

The policy could not be kept alive as a continued paid-up term policy under the provision of the policy following: “If the insured shall die while said term policy is in force, the amount of foreborne premiums, with interest at sis per cent, shall be deducted from the sum insured.” The insured did not die while the policy was in force, but long after it had lapsed.

It is therefore clear from the conceded and admitted facts, that the policy was not in force at the death of the insured, and that the plaintiff below has no cause of action against the insurance company.

Judgment reversed and judgment for plaintiff in error.

Williams and Minshall, JJ., concur in the first paragraph of the syllabus, but dissent from the remainder of the syllabus and the judgment.

Minshall, J.,

dissenting. The policy sued on in this case was one with many features favorable to the insured and the beneficiary. 1. It insured the life of the hsuband for the benefit of his wife for the period of his natural life, in the sum of $1,000; 2. it was, from its execution, a maturing “endoivment policy” in favor of the insured, in a like sum payable at twenty years from its date on the continued performance of its conditions; 3. after three years’ premiums had been paid, and all notes for the same, it could be converted into “a paid-up, non-participating life policy” for an ^ amount indicated in certain tables, upon the surrender of the policy first given. Again, at its maturity as an endowment policy the insured, instead of receiving payment of $1,000, could apply it to the purchase of “an annual income for life of $95.58;” or, to the purchase of “a paid-up life policy” of $1,491, with particpation in profits on furnishing a satisfactory medical examination, or, on surrendering the policy, the company agreed that it would on August 14, 1911, pay in cash its entire reserve value and its proportion of the company’s profits combined, provided the policy should not have been previously determined by lapse or death. It also contained a provision for a “paid-up term policy” in favor of the wife, in these words: “In case of default for non-payment of premium after three years, and no legal surrender having been made, the insured having paid at maturity all notes given for premium, then this policy shall, without surrender, but upon payment of all outstanding premium notes, become a paid-up term policy, without change of terms or conditions except as to the payment of premiums and participation in profits, and continue in force for such time as one annual premium on this policy is contained in its reserve value according to the American four per cent, table of mortality, at the end of which time this contract shall cease. If the insured shall die while the said term policy is in force, the amount of “foreborne premiums” with interest at six per cent, shall be deducted from the sum insured.”

It is on this provision in the policy that the plaintiff, the wife of the insured, asked a recovery, and on which a judgment was rendered in her favor, which was affirmed by the circuit court.

It is admitted that all the conditions requisite to a paid-up term policy had, on August 15, 1894, been performed — all premiums to that time had been paid, and there were no outstanding notes; and if nothing more had been done, she would, at the date of her husband’s death, have been entitled to $1,000, less the amount of foreborne premiums, with interest at six per cent., as the insured died within the term of such paid-up policy.

This is not disputed by counsel for the company, who has argued the case with much fairness, but I think, on a mistaken construction of the terms of the policy. The claim is that this stipulation was modified by a note given for the premium due August 15, 1894 (premiums being due and payable in advance) ; and which note contained this provision:

“Said policy, including all conditions therein for surrender or continuance as a paid-up term policy, shall, without notice to any party or parties interested therein, be null and void upon failure to pay this note at maturity, with interest at eight per cent, per annum payable annually. In case this note is not paid at maturity the full amount of premium shall be considered earned as premium during its currency, and the note payable without reviving the policy or any of its provisions.”

It is admitted in the pleadings that the wife was no party to the note containing this provision; and that it was given without her knowledge or consent. That it materially varied the terms of the policy as to this particular feature, is apparent — it, in fact, blotted out the provision as to a paid-up term policy.

It is claimed, however, that the husband had the right to give such a note, without the assent of his wife, in the interest of himself and for the benefit of his wife — as the policy would have been void as to everything secured by it, except the paid-up term, unless he were permitted to give a note for the premium. The argument is maintained with much plausibility, but it is not sound. Whether it would have been to the interest of the wife, or not, to surrender the advantage of a paid-up term policy for other possible advantages that might result from giving a note is immaterial. She could not, as we shall presently see, be affected by agreements to which she was not a party, on the ground that it might be to her interest; she had the right to be consulted in the matter and determine for herself whether she would abandon an interest that had vested in her, for some cither advantage that might accrue from giving such a note.

The provision contained in the note is inconsistent with the terms of the stipulation as to a paid-up term policy; and if such stipulations may be avoided in this way, they might as well be stricken from their policies. They would be more deceptive than real. First, it will be observed, that the right to such a policy only arises upon the non-payment of premium after three years, and no surrender of the policy has been made. As it rests upon a non-payment of premium after a certain number of premiums have been paid, a subsequent failure in this regard during the term cannot affect it — the consideration for it being the premiums that had, without default, been paid; and any agreement which requires the subsequent payment of a premium or a note given for it as a condition of its existence, is derogatory to it. To say that payments are required to preserve a paid-up policy, is a solecism in language. It cannot be a paid-up policy so long as payments are required to keep it alive as such policy: Again, it will be observed that foreborne premiums are to be deducted from the amount of the policy. This could not be if their non-payment works a forfeiture. In a case of forfeiture there is nothing to deduct from. It will be further observed, that on the happening of the conditions mentioned, it is to become a paid-term policy “without change of terms or conditions except as to payment of premiums and participation in profitsthat is, it will no longer participate in profits, nor be affected by non-payment of premiums.

The policy does, however, recognize the right of the insured to give, and of the company to receive, premium notes; and provides that a failure to pay them at maturity shall render the policy void; and from this it is argued that the note with the forfeiture clause in it as to the paid-up term policy, was authorized by the policy as issued. This policy, however, must as any other agreement, be construed together and such meaning given to it as will preserve all of its terms without impairing any of them, if that can be reasonably done; and like every instrument imposing a forfeiture it should be construed against the forfeiture, for forfeitures are not favored in law. There is, however, no difficulty in construing the language conferring the right to give notes for premiums with the provision that if not paid at maturity the policy should be void, so as not to affect a paid-up term policy that had previously accrued. As already pointed out, the policy has in it many features securing interests to the insured that are separate from those of the beneficiary; hence, in accordance with settled rules of construction, the effect of giving premium notes that are not paid at maturity, must be confined to the interest of the insured in the policy, and cannot be extended to an interest in the beneficiary that has already vested, unless by the consent of the latter. Unless that be the proper construction, a paid-up term policy would be defeated any time after it accrues, by the insured giving an ordinary note for unpaid premiums; and we should have the absurdity, that, whilst an accrued paid-up term policy would not be affected by a non-payment of premium, the non-payment of a simple note given for the premium would render it void. The company did not think so, else why was a clause forfeiting the paid-up term policy inserted in the note? It was only by the unauthorized clause inserted in the note that the policy in question was to become void by non-payment- — not by any provision in the policy or any note authorized by it to be given. A promissory note in the usual form is one thing, and a note with a forfeiture clause in it, is another and different thing. It is said in the opinion of the majority that as the premium note was not paid, therefore, by the terms of the policy, there was not a continuance of the paid-up term policy. 'The fallacy consists in this: The policy was a paid-up term policy, at and before the note was given. It was such policy in favor of the wife, whether another cent was paid, or note given, for premium for a period that included the death of her husband. The failure to pay the note, had there been no forfeiture clause in it, would not have prevented it from becoming a paid-up term policy — it had become such before the note was given. It is the very essence of a paid-up term policy that it cannot be affected by any default whatever. If the insured dies within the term, the amount is to be paid the beneficiary, after deducting foreborne premiums, and not in case premiums, or notes given therefor, are paid. As then the note given and on which the company founds its defense to the action was not within the purview of the terms of the policy, and was nnauthorzied by the plaintiff, she is entitled to recover.

Where a policy of insurance is taken by one for the benefit of another, it is in the nature of an executed gift, or as said by some, is a settlement in trust for the benefit of the beneficiary; and it is settled laAv that after it becomes vested, it cannot be changed or affected Avitliout the assent of the beneficiary. Bliss Life insurance, section 339; Lemon v. Phoenix Ins. Co., 38 Conn., 294; Ricker v. Ins. Co., 27 Minn., 193; Pilcher v. Ins. Co., 33 La Ann., 322; Chapin v. Fellowes, 36 Conn., 132; Timagenis v. Ins. Co., 21 Fed. Rep., 223; 2 May on Insurance, Sect. 399 P; 2 Joyce on Insurance, Secs. 730 and 1651; Pingrey v. Insurance Co., 144 Mass., 382; Manhattan Insurance Co. v. Smith, 44 Ohio St., 163, 167; The interest of the beneficiary is so distinct from that of the person procuring the insurance, that even the acts or declarations of the latter are not evidence against the beneficiary. Insurance Co. v. Applegate, 7 Ohio St.,, 292; Insurance Co. v. Cheever, 36 Ohio St., 201. Hence, though the hsuband had the right to give a note for the premium that became due August 15, 1894, £e had not the right to stipulate therein that, if it Avas not paid at maturity, the paid-up term policy should become void. This term in the note exceeded his authority and did not therefore affect his AAife. If it had been omitted, the effect of the non-payment of the note would simply have affected his OAvn interest, and there being no authority for its insertion, the effect of the non-payment of the note on the interest of the wife is the same as if it had been omitted.

If, by the taking of a note for the premium (that is, a straight note, which he might have taken without the assent of his Avife) a paid-up policy did not then accrue, it did on the non-payment of the note, for then in the language of the policy “a default for non-payment of premium” occured. The default occnrred May 1, 1895, as the note then matured, and was not paid. And whether the time of the term should be reckoned from the date of the note, or from its maturity and non-payment, is not material; as, in either case, the husband died within the period of the term.

I therefore concur in the first and dissent from the other propositions of the syllabus, and from the reversal of the judgment.

Williams, J., concurs in this opinion.


author: Minshall, J.

text:
    Robinson et al. v. Williams, Etc., et al. Robinson et al. v. Lovegrove et al.

      Mortgage foreclosure — Court of common pleas has jurisdiction — Notwithstanding previous assignment of mortgagor for creditors — Effect where assignment does not include all property covered by mortgage — Objection by mortgagee to suit by assignee to obtain order to sell land assigned.

    1. The court of common pleas has jurisdiction in the foreclosure of a mortgage, notwithstanding a previous assignment of the mortgagor for the benefit of creditors, in all cases where the remedy in the probate court is inadequate. And this is so where the assignment does not include all the property covered by the mortgage; or, as in this case, the mortgagor, after making the mortgage, has platted the land into lots and streets and made of it an addition to a city, without the assent of the mortgagee, and disposed of some of the lots.
    2. Where a suit to foreclose a mortgage is rightly commenced in the common pleas, pending an assignment in the probate court made by the mortgagor, the subsequent commencement in the same court of a suit by the assignee for the purpose of obtaining an order to sell the land as assigned property, can not be sustained against the objection of the mortgagee.
    (Decided April 10, 1900.)
    Error to the Circuit Court of Franklin County.

      Arnold, Morton & Irvine; Robinson & Woodburn and Robert W. McCoy, for plaintiffs in error.

      Any person capable of executing a deed can make an assignment of his property for the benefit of creditors. Upon the execution and delivery of the deed the property assigned is constituted a trust for the benefit of the creditors of the assignor, and the assignee becomes a trustee charged with the proper administration and fulfillment of the trust. 'The title to the property at common law vested in the trustee, but courts of equity asserted and exercised jurisdiction over the trust estate and provided for its proper ádministration by the trustee. This was the law in Ohio prior to the time assignments for creditors were made subjects of statutory provisions. Burrill on Assignments, par. 18, page 23; Brashear v. West, 7 Pet., 608; Giauque’s Manual for Assignees, p. 24; Wambaugh, Trustee, v. Mutual Life Ins. Co., 41 W. L. B., 76; Lindsey v. Coates, 1 Ohio, 243; Kerwhacker v. R. R. Co., 3 Ohio St., 172; King v. Beck, 15 Ohio, 559; Bloom v. Richards, 2 Ohio St., 387; R. R. v. Keary, 3 Ohio St., 201; Pomeroy’s Equity Jurisprudence, par. 994; Perry on Trusts, par. 594.
    In the absence of statute abrogating or limiting his power, the trustee or assignee in an assignment for the benefit of creditors must sell the property in accordance with the provisions of the deed. Burrill on Assignments, par. 365; Pomeroy’s Equity Jurisprudence, par. 1062; Perry on Trusts, par. 598.
    In no one of the assignment law's passed by the legislature has there been any attempt to define what shall constitute an assignment for the benefit of creditors, nor is there any attempt or pretense to confer upon the citizen the right to make an assignment. The statutes prescribe simply the mode of administering the assignment and provision is "made only for the proper execution of the trust. Bishop on Insolvent Debtor, par. 104; Giauque’s Manual for Assignees, p. 25; Harkrader v. Leiby, 4 Ohio St., 602.
    The right and duty of the assignee for the benefit of creditors to sell the assigned property, both real and personal, exists independent of the statutory provisions on the subject. He must sell the property to fulfill the obligations of the trust. The statutes are concerned only with the manner of the sale and its execution in the way that will best protect creditors and subserve the interest of the public in the administration of the assigned estate and the devotion of a man’s property to the payments of his debts. Johnson v. Sharp, 31 Ohio St., 611; Haskins v. Alcott, 13 Ohio St., 214; Cross v. Carstens, 49 Ohio St., 567; Blandy v. Benedict, 42 Ohio St., 299; Saylor v. Simpson, 45 Ohio St., 141; Schuler v. Miller, 45 Ohio St., 325; Wilson v. Swigert, 31 W. L. B., 353; 33 O. L., 13.
    This act was repealed by the act of March 14,1838, 36 O. L., 56, which made all assignments to trustees, in contemplation of insolvency with intent to prefer certain creditors, inure to the equal benefit of all the assignor’s creditors. This statute was then in turn repealed by the act of March 11, 1853, 51 O. L., 57, and by the act of March 14, 1853, 51 O. L., 463, the legislature substantially re-enacted the act of 1838, except that the words “the courts” were substituted for “Of chancery” in committing the administration of such assignments to the control of the courts. But this change was due simply to the fact that the distinctions between the forms of procedure in law and chancery were abolished at that time. Bagaley v. Waters, 7 Ohio St., 359.
    The mortgagee’s interest in the property under the mortgage is transferred to the fund arising from the sale by the assignee, and all creditors, mortgagees of real estate and of personal property, as well as all others must work out their interests through the administration by the assignee under the supervision of the probate court. Lindeman v. Ingham, 36 Ohio St. 1; Ingham v. Lindeman, 37 Ohio St., 218; McLain v. Simington, 37 Ohio St., 660; Sayler v. Simpson, 45 Ohio St., 141; Clapp v. Banking Co., 50 Ohio St., 536; McNeil v. Hagerty, 51 Ohio St., 262; Havens

      v.Horton, 53 Ohio St., 343; Mercer et al. v. Cunningham, 53 Ohio St., 361; Reis v. Bank, 10 C. C. R., 656; 5 C. D., 20; Farwell v. Findlay, 11 C. C. R., 100; 5 C. D., 303; Barker v. Lamkin, 11 C. C. R., 103; 5 C.D., 54.
    In the matter of the administration of assignments for the benefit of creditors, it is the probate court that has the broad and general jurisdiction, while that of the common pleas court is carefully limited and strictly defined . The jurisdiction of the common pleas court is exceptional. If there is a valid assignment, the common pleas court can exercise an, original jurisdiction only in the instances provided for in sections 6343, 6344, 6351 and 6352, R. S., and its jurisdiction under 6351 is concurrent with that of the probate court, and in all these cases granted only to aid the probate court in the administration of the trust. Railroad Co. v. O’Hara, 48 Ohio St., 343; Doan v. Bitely, 49 Ohio St., 588.
    What is held in this case with reference to proceedings by executors and administrators is equally applicable to proceedings to sell instituted by assignees for the benefit of creditors'.
    The term “lien” in section 6351 is to be given an extended meaning, and the jurisdiction of the probate court extends to equitable liens of every kind and nature. The equity powers of the probate court in an action for the sale of real estate are not confined to those expressly conferred by section 6351, and the other sections of the statute, but extend to those conferred by implication in the power given to do some special thing. Woerner’s American Law of Administration, Vol. 1, p. 340, citing Guier v. Kelly, 2 Binn., 294; Dunda’s Appeal, 73 Pa. St., 474; Williamson’s Appeal, 94 Pa. St., 231; Dehart v. Dehart, 15 Ind., 167; Hurd v. Bladen, 43 Ill., 348; Millard v. Harris, 119 Ill., 185; Hales v. Holland, 92 Ill., 494; Donovan’s Appeal, 41 Conn., 551; Blanton v. King, 2 How. (Miss.), 856; Titterington v. Hooker, 58 Mo., 593; Hyland v. Baxter, 98 N. Y., 610; Shoemaker v. Brown, 10 Kans., 383.
    This proposition is supported also by the following authorities: Seaman v. Duryea, 10 Barb., 523, affirmed by N. Y. Court of Appeals, 11 N. Y., 324; Rice on American Probate Law and Practice, par. 3; Shollenbarger’s Appeal, 9 Harris, 341; Lex’s Appeal, 97 Pa. St., 289; Boyden v. Frank, 20 Bradwell’s Ill. App., 176; Doggett v. Dill, 108 Ill., 560; Wilson v. Aaron, 132 Ill., 238; Newlin v. Baily, 15 Ill. App., 199; Field v. Ridgley, 116 Ill., 424; Hewett’s Appeal, 53 Conn., 24; Campbell’s Appeal, 80 Pa St., 298.
    We wish to direct the court’s attention to the statutes and decisions in Illinois where jurisdiction over the administration of assigned estates is vested in the county courts whose powers and limitations are analogous to those of our probate courts, in the exercise of this jurisdiction. Wilson v. Aaron, 132 Ill., 238; Freydenhall v. Baldwin, 103 Ill., 325; Hanchett v. Waterbury, 115 Ill., 220; Colburn v. Shay, 17 Brad-well, 280; Preston v. Spalding, 18 Ibid., 341; Clarke v. Burke, 163 Ill., 334.
    A deed of assignment takes effect from the time it is delivered to the probate judge of the proper county. The jurisdiction of the probate court then attaches, and the assigned property is in custodia legis. Section 6335, R. S.; Betz v. Snyder, 48 Ohio St., 492; Claffin v. Evans, 55 Ohio St., 183; Shoe Co. v. Mercer, 35 Am. St., 331; Wilson v. Aaron, 132 Ill., 238; Hanchett v. Waterbury, 115 Ill., 220; Williams v. Benedict, 8 How., 112; Bank v. Horn, 17 How., 169; Morgan v. Lewis, 46 Ohio St., 1; Barrick v. Gifford, 47 Ohio St., 184; Bronson v. Schneider, 49 Ohio St., 438; Scott v. Dunn, 26 Ohio St., 66.
    The assignee is really but an officer of the court, an instrument to carry into effect the provisions of the statutes for the administration of the assigned estate. Though the title of the property is in him, it is a bare legal title. Dresback, v. Stein, 41 Ohio St., 77; In re Mann, 32 Minn., 60.
    The jurisdiction of the probate court of Union county over the assigned property and the fund arising from the sale thereof once acquired continues until the assigned estate is fully administered and the trustees discharged. 12 Amer. & Eng. Ency. Law, 292.

      B. Woodbury, for defendant in error.
   Minshall, J.

These two cases are so connected that the disposition of one necessarily disposes of the other, as will hereafter appear.

In Robinson et al., Trustees, v. David E. Williams et al., the original suit was commenced January 28, 1897, in the common pleas of Franklin county by Williams against DeWitt C. Postle, assignee and others, to foreclose a mortgage on the property described in the petition, and to enjoin its sale by the assignee under an order made by the probate court of the county in the matter of the assignment of Lewis F. Postle, that had been made in Union county, the residence of the assignor, August 15, 1895. The mortgage had been made January 12, 1891, by Lovegrove and wife, then owners of the land, to one Keim to secure a note of $2,000 and interest, and by him assigned for a valuable consideration to Williams. The principal and part of the interest was due at the commencement of the suit. No question is made as to the validity of the mortgage, or as to the priority of its lien on the land. After the execution of the mortgage, the mortgagors, Lovegrove and wife, on August 17,1894, sold and conveyed the land to Lewis F. Postle, who assumed the mortgage, and shortly afterwards platted the land into lots and streets, and made of it two additions to the city of Columbus. In the second addition a one-fourth of an acre was reserved. The land embraced in the streets amounted to some three acres. He was unable to sell any of the lots, except two, became embarrassed and made an assignment to DeWitt C. Postle. He, the assignor, being at the time a resident of Union county, the assignee filed the same in the probate court of that county on August 15, 1895; and on the same day filed a duplicate thereof in the probate court of Eranklin county. Postle, assignee, obtained an order from the probate court of Franklin county, and was about to sell the land as assignee, when this suit was commenced by Williams. It may be observed that this order was of no avail, as the probate court of Franklin county had no jurisdiction of the matter of the assignment. For the purpose of obtaining an injunction, the plaintiff averred, in addition to the fact that the assignment did not and could not, include all the property covered by the mortgage, that the property is ordered and advertised to be sold in lots as platted; that there is now no market for the premises as subdivided into lots, and that as platted the lots are not desirable, having but a short frontage on High street; that two years have elapsed since the additions were made, and only two of the lots had been sold, having been conveyed back to the Lovegroves in part payment of the purchase money; but that if they are offered for sale under the mortgage as an entirety, there will be a much better chance to find a purchaser; and that great and irreparable injury will be done him by a sale by the assignee, under the circumstances. An injunction was allowed as prayed for.

Afterwards on May 8, 1897, Postle, assignee, having been removed, and Robinson and McCoy appointed trustees, the latter entered their appearance to the action, and moved to dissolve the injunction on the ground that the court had no jurisdiction. This motion was overruled. They afterwards, on July 7, 1897, filed an answer, averring that the court had no jurisdiction; and that on May 5, 1897, they had commenced an action in this court, the Franklin county common pleas, asking for an order of sale of the land by themselves as trustees; and prayed that the action of the plaintiff be dismissed. A demurrer to this answer was sustained. The trustees excepted, and not desiring to plead further, the court ascertained the amount due the plaintiff on his mortgage, and made the usual order of sale to be executed by the sheriff, and requiring him to report his proceedings to the court for its further order.

On error to the circuit court this judgment was affirmed; and error is prosecuted here to reverse the judgment on the ground that the court had no jurisdiction.

The case presents this question: Whether the common pleas had jurisdiction of the suit to foreclose the mortgage, it having been commenced after the assignment had been made in Union county? Quite general powers are conferred by section 6351, Revised Statutes, in connection with sections 6350f and g. on probate courts in administering assignments for the benefit of creditors, where they have jurisdiction of the matter of the assignment. But general as they are, they do not preclude the common pleas, in proper cases, from exercising any of its power as a court of general jurisdiction at law and in equity, when necessary to afford relief to a party that cannot be afforded in a proceeding in the probate court, or so fully and amply as right and justice requires. Dwyer v. Garlough, 31 Ohio St., 158. It is supposed that the rule of this decision has been abrogated by the act of March 24, 1891 (88 Laws, 181). It will be observed, however, that section 6350/ only empowers the court to order a sale of the assigned land free of dower, where the wife, on being made a party “elects” to take the value of her contingent right of dower in money. There is no power to compel her to do so in invitum. And it will be further observed, that section 6350<7 applies to a case only where the assignor and Ms wife have jointly executed a mortgage upon any of the real estate assigned, or the husband has executed a purchase money mortgage. Whether under the latter section the wife’s contingent right of dower can be divested against her consent by a proceeding in the probate court (as it might be to her interest to redeem) need not be considered here, as no such question is presented in this case. It thus appears that the principle of the above decision remains unimpaired, and applies to this case. The probate court is one of limited jurisdiction; it has such powers, and such only, as the statute confers on it. No general power is conferred on it to cause the sale of lands, not the property of the assignor. Here certain of the lots covered by the mortgage as well as the streets of the additions were not included in the assignment, and could not have been as they did not belong to the assignor at the time of the assignment. Justice does not require that the mortgagee should, in such case, wait until so much of his security as is included in the assignment, has been disposed of, before resorting to that not contained in the assignment; nor that he should be compelled to divide up his remedy by becoming a suitor in two courts instead of one. He had the right, therefore, to resort to the court that could give him a full and complete remedy in one suit.

It follows that the judgment in both cases should be affirmed. For, conceding that in the suit subsequently commenced by the trustees in the common pleas, the mortgagee might have obtained an order for the sale of all the land, including the streets, covered by his mortgage by filing a cross-petition and asking for a sale under his mortgage, still, as his suit .had been rightly commenced, the commencement of another suit by the trustees in the same court, however adequate the remedy as to him might have been, could not affect the jurisdiction of the court in the suit previously commenced by himself. The view taken of the case renders it unnecessary to consider the question, at what time the probate court acquires jurisdiction in the matter of an assignment to the exclusion of all other courts, whether it is from the filing of the deed of assignment, or from the qualification of the assignor as required by statute; for, in any case, where the relief that may be had in the probate court is not adequate, the common pleas has jurisdiction.

The superior excellence of a court of general jurisdiction like our common pleas, resides in the fact that whatever the case may be, there will not in general be a failure of justice from the want of power in the court to hear and determine. Its jurisdiction is in all cases easily determined. It possesses all the powers of a court of justice that are not expressly denied to it, or exclusively given to some other tribunal, and in all questions of doubt, jurisdiction is resolved in its favor. Judgment in both cases

Afibrmed.


author: Williams, J.

text:
    Davis v. Davis, Executor, Etc., et al.

      Will — Construction of — Residuary clause read most favorable to heir-at-law, when — Rule as to void or lapsed legacies and void or lapsed devises — Testator’s intention to be given effect — Section 5915 Rev. Stat.

    1. When a residuary clause in a will admits of a limited application as well as of one of a more general character, it should be given that construction which will be most favorable to the heir-at-law.
    2. The rule which adopts a construction more favorable to the residuary legatee with respect to void or lapsed legacies than is applied with respect to void or lapsed devises, does not obtain in this state. The will should be construed, in either case, so as to give effect to the intention of the testator as fairly ascertained from a consideration of all its provisions and his situation at the time of its execution.
    3. Where the residuary clause is limited in terms to “the balance” that remains after the payment of certain legacies from a fund derived from particular property, the amount of such legacies that are void or lapsed, does not pass under such clause, but is subject, as undisposed of property, to the statutes of descent and distribution.
    4. Section 5915 of the Revised Statutes, which avoids legacies and devises of the character therein mentioned upon the happening of the specified event, was designed specially for the protection of the children or adopted child of the testator and their representatives, though it inures to the benefit of the collateral heir when the lineal heir survives the testator and then dies.
    (Decided April 10, 1900.)
    Error to the Circuit Court of Cuyahoga County.
    Action by executor to obtain construction of will and directions for disposition of estate. Judgment of circuit court on appeal, reversed.
    Joseph Davis, as executor of the will of William Hutchings, brought the action below to obtain a judgment giving construction to the will, and directions for the distribution of a portion of the estate. All persons in interest, including Isolina Davis, the sole heir at law of the testator, were made parties; and the cause, after proceeding to judgment in the common pleas, was appealed to the circuit court, where judgment was rendered adverse to the heir, who brings error to this court. The material parts of the will, and such other facts as are necessary to an understanding of the case, are contained in the opinion.

      Jones & Anderson, for the plaintiff in error.

      E. P. Wilmot, for executor.
    No brief for other defendants in error.
   Williams, J.

William Hutchings executed the will in question on the 24th day of November* 1893, and died in Cuyahoga county, where he had theretofore resided, on the 12th day of September, 1894. The will was admitted to probate in that county on the 22nd day of September, Í894, and the executor named therein duly qualified. The testator left neither widow nor lineal descendant, but the plaintiff in error, who had been duly adopted as his child in accordance with the laws of this state, survived him as his sole heir at law. By the will certain pecuniary legacies are given to collateral relatives of his deceased wife, and of his own, and to his adopted child, and to some other persons, which are not deemed important in arriving at a construction of the will. The following are the material provisions of the will:

“charitable purposes,

I give $1,000.00 one thousand dollars for a county poor house when ever built or bought. Until then, safely invest the money and give the annual proceeds to the deserving poor of Chagrin Falls, who do not regularly receive help of the town.

I give $1,000.00 one thousand dollars toward either the purchase or building of a Congregational church parsonage in Chagrin Falls if the trustees so provide.

I give $500.00 five hundred dollars to the Bible Christian Conference in England for their China Mission.

My'will is also that my live stock and farming utensils of every kind be sold within six months of my death. The Enterprise mill, my interest in the business of Stoneman and Hutchins, with what of real estate is not sold of any and all kinds, shall be disposed of and business settled up if possible within (2) two years of my death. And further, the proceeds arising therefrom, with all from any and all sources due to me from mortgage, bank or bills unpaid at my death, be used in paying all before specified as my indebtedness and to my legatees, and the charities. And the balance be divided between the children living at my death of the hereinafter named brothers and sisters of my late wife and myself, viz.: Robert Hutchins, Phillip Hutchins, (2 daughters) William Down, Mary Mont joy, Grace Isaacs, my late sister Elizabeth Noakes, and Catherine Isaacs. P. S. Henry Noakes had 100 dollars deduct and properly divide with others.”

The testator having died within one year after the execution of the will, leaving an adopted child surviving him, the three charitable bequests, amounting to tAventy-five hundred dollars, were rendered void by the operation of section 5915, of the Revised Statutes, which provides that: “If any testator die leaving issue of his body, or an adopted child, living, or the legal representative of either, and the will of such testator give, devise or bequeath the estate of such testator, or any part thereof, to any benevolent, religious, educational, or charitable purpose * * * or to any person in trust for any such purposes, * * * whether such trust appears on the face of the instrument making such gift, devise, or bequest or not; such will as to such gift, devise, or bequest, shall be invalid unless such will shall have been executed according to law, at least one year prior to the decease of such testator.”

The fund derived from the sources named in the provisions of the will immediately following the three charitable bequests, and out of which the testator directed them to be paid, exceeds their aggregate amount, after the payment of the testator’s debts and the satisfaction of all other charges upon the fund, leaving a balance to pass under that clause of the will to the children of the brothers and sisters of the testator and of his late wife, as therein provided. And the question involved in the construction of the will upon which the executor has sought the judgment and direction of the court, is whether the amount of the void legacies fell into the balance above mentioned, or passed as undisposed of property to the adopted child. The circuit court held the amount of those legacies became part of the balance referred to, and directed distribution thereof accordingly, upon the ground that the language disposing of that balance constitutes a residuary clause that includes all of the residuum of the testator’s estate not otherwise effectually disposed of by the will. This conclusion seems at variance with the language of the will and the apparent intention of the testator. The “balance” that is given to the so-called residuary legatees is not the general residuum of all of the testator’s estate, but only what remained of a particular fund derived from specified sources, after deducting therefrom the amount of the charitable legacies and certain other charges upon it. The gift of that balance necessarily excludes from the gift everything that the will provides shall be deducted from the fund in order to arrive at the balance. The testator, when he made his will, evidently expected the bequests to the charities to be valid, and intended the money to be applied to them as provided in the will; otherwise he would not have made such bequests. That he did not expect those bequests to become void by his death within a year from the execution of the will is apparent from the fact that he made no provision for the disposition of the money in that event. And, though the bequests became ineffectual to carry the fund to the expressed objects of the testator's bounty, it seems obvious his'intention was to limit the gift under the so-called residuary clause to whatever balance should remain after they and other charges were taken out of the fund from which they were directed to be paid.

There can be no proper application of the rule that a residuary clause carries all the estate of the testator not otherwise lawfully disposed of by the will, including void and lapsed legacies, when a different intention may be fairly drawn from all the provisions of the will. We are aware a distinction has sometimes been made between the effect of a residuary clause with respect to void and lapsed devises of realty, and such bequests of personalty. In regard to the former, a rule requiring that construction which is most favorable to the heir has been applied, and in the latter, one which is most favorable to the residuary legatee. The reason of this distinction is stated by Sir John Leach, Master of the Rolls, in Jones v. Mitchell, 1 Sim & Stuart, 290, 295, to be, “that the will as to the personal estate speaks at the time of the death of the testator, and the residuary legatee takes not only what is undisposed of by the expressions of the will, but what becomes undisposed of at the death by disappointment of the intention of the will,” while, as to real estate, “the will speaks only at the time of making it,” and the residuary legatee can take “nothing but what at that time was intended for him.” This is not a very satisfactory reason, since, in all cases, the intention of the testator must control, and that is to be ascertained in the light of his situation at the time of the execution of the will, and from a consideration of all of its provisions. It is more probable, as stated in Perry v. Barber, 1 Hill’s Ch., 95, that the distinction grew out of the English law under which personal property not disposed of by the will went to the executor, though not of kin to the testator, and to avoid that result the courts went “very far to favor the residuary legatee, and often strained a point, to include such property in the residuum under the will; but, as undisposed of realty went to the heir the courts applied a more reasonable rule in upholding his rights, and gave him the property included in devises that failed, unless an intention to make a different disposition was shown by the will.” Some American courts have followed the English decisions. Greene v. Dennis, 6 Conn., 292; VanKleek v. Church, 20 Wend., 471; Riker v. Cornwell, 113 N. Y., 115. The reason for the discrimination in favor of residuary legatees in cases of void legacies, has never existed in this state, where the next of kin takes under the law, both real and personal property of which no disposition is made by will. The courts which maintain that discrimination, however, hold the rule to be applicable only where there is a general residuary clause in the will embracing all of the otherwise undisposed of property of the testator. In every case that has been brought to our attention, where that rule has been applied, the will involved contained a residuary clause of that character. In King v. Woodhull, 3 Edw. Ch. 79, 82, it laid down that, “to entitle a residuary legatee to the benefit of a lapsed or void bequest he must be a legatee of the residue generally, and not partially so; for, where it is manifest from the express words of the will that a gift of the residue is confined to the residue of a particular fund or description of property, or to some certain residuum, he will be restricted to what is thus particularly given, since the legatee cannot take more than is fairly within the scope of the gift.” In Kerr v. Dougherty, 79 N. Y., 329, it was held that: “The general rule that in a will of personal property a general residuary clause carries whatever is not otherwise legally disposed of, does not apply to a residuary clause limited by its terms to what remains after payment of specific legacies; in such case if any of the legacies are void there is another residuum which is undisposed of.” The authorities are largely reviewed in that case; and its principle has been approved in the later decisions in that state. The same doctrine is maintained in Peay v. Barber, 1 Hill’s Ch., 95, where there is also a general discussion of the subject, find of the cases bearing upon it. This principle is also declared in Bane v. Wick, 19 Ohio 328, where it was held that: “If the language of the testator, in a residuary clause of his will, will admit of a limited application, as well as one of a more general character, a court of equity will give it that construction which will be most favorable to the heir at law.” 'The residuary clause in that will is not much dissimilar to that in the one before us. There the testator, after making certain devises and bequests, directed that his executors should retain in their possession, all of his bank and canal stock, and the lands and town property the use of which was given to his wife, or as much as should be sufficient to pay all his debts, legacies, and. donations,” and the “balance” to be equally divided among his chidren then living.” A daughter of the testator to whom certain real property was devised by tbe will, died before the testator, and her children brought the suit, claiming as to that, and other property, the testator died intestate, and that they inherited, in right of their mother, as heirs of the testator, their share of the intestate property. The living children of the testator claimed under the residuary clause of the will. The court held that the words “the balance,” in the residuary clause, should be so limited “as to reach nothing more than the particular fund with which they stood in immediate connection, namely, the bank and canal stock, and the lands and town property, the use of which had been given to the wife of the testator.” And, that fund, “after being charged with all the debts, legacies, and donations,” yielded “the only ‘balance’ to be distributed” to the residuary legatees.

The residuary clause in the will in question here does not purport to dispose of the general residuum of the testator’s property, but is, in terms, limited to the disposition of “the balance” of a particular fund derived from certain specified sources; and that “balance” is only what is left after taking from the fund the amount of the charitable bequests, though from the happening of an unexpected event, they became void. The requirement that the amount of those bequests shall be taken from the fund in order to arrive at the balance that shall pass under this clause to. the persons named, clearly evinces an intention of the testator that no part of that amount shall go to them. What disposition the testator would have made of the amount if he had anticipated the charitable legacies might have failed, is left to mere conjecture; and the presumption that he did not intend to die intestate as to any property to which his attention was directed, does not authorize the court to dispose of it as may be supposed the testator would have done. “In the construction of wills, conjecture is not permitted to supply what the testator has failed to indicate; for, as the law has provided a definite successor, in the absence of disposition, it would be unjust to allow the right of this ascertained object to be superseded by the claim of any one not pointed out by the testator, with equal distinctness.” 1 Jar-man on Wills * 326.

If it be a presumption that the testator knew of the provision of the statute already quoted which avoids bequests and devises of the character therein mentioned on the happening of the specified event, it may be inferred that he intended the amount of such bequests in his will to go to his heir, if they became ineffectual, with as much certainty, at least, as that he intended it should pass under the gift of the balance of the designated fund, after deducting the amount therefrom. .The statute evidently was enacted for the special protection of the children or adopted child of the testator, and their representatives, in the cases provided for, though, as held in Patton v. Patton, 39 Ohio St., 596, it inures also to the benefit of the collateral heir when the lineal heir survives the testator and then dies.

We think the fund in question should be awarded to the plaintiff in error.

Judgment reversed and judgment for plaintiff in error.