author: Davis, J.

text:
    The Covington & Cincinnati Bridge Co. v. Magruder et al.

      On petition in error common pleas court reverses judgment of probate court — In appropriation proceedings — It is duty of common pleas to retain cause for trial — Judgment of common pleas without such, trial will be reversed, when — Condemnation proceedings for site of bridge and approaches.

    1. Where on a petition in error the court of common pleas reverses the judgment of the probate court in appropriation proceedings, it is made its duty by the Revised Statutes, section 6438, to “retain the cause for trial and final judgment;” and when, without a trial by jury as in the probate court, the court proceeds at once to render final judgment, the judgment of the court of common pleas will be reversed.
    2. A company organized to construct a bridge over the Ohio river, is authorized to purchase, appropriate and hold any interest in real estate, whether an estate in fee simple or a less estate, which, in the opinion of the directors, will be required for the site of the bridge and of suitable avenues or approaches leading thereto.
    (Decided December 18, 1900.)
    Error to the Circuit Court of Hamilton county.
    George A. Magruder and wife, by a trustee, leased to Abraham M. Taylor one hundred and thirty-five feet of land in Cincinnati, Ohio. The lease contained covenants that the lessee should erect upon the ground demised a good and substantial brick building, not less than three stories high and covering the entire front of said lot, and to insure each of the buildings for at least fifteen hundred dollars against loss by fire. If not so insured by the lessee within thirty days from the completion of the buildings the lessor might cause them to be insured at his expense. The lease was for ninety-nine years, renewable forever, at certain agreed rent. Upon the death of Taylor, his real estate was partitioned among his children, and the east half of the premises above mentioned, being 67 1-2 feet front was allotted to Charles Taylor, he to pay $1,215 per annum for that portion. The plaintiff, The Covington and Cincinnati Bridge Company, being desirous of acquiring that real estate for its purposes, in January, 1895, purchased the leasehold of Charles Taylor, subject proportionately to the number of feet thereby conveyed, to all the terms, conditions and stipulations contained in a lease for ninety-nine years, renewable forever, executed by Abert, trustee, and, Magruder and wife to Abraham M. Taylor, the portion of the rent reserved in said lease assumed by the bridge company, being $1,215 annually. On the 19th of July, 1895, the Covington and Cincinnati Bridge Company filed their petition in the probate court of Hamilton county to appropriate the1 land so leased for the purpose of widening a roadway and extending the approaches to their bridge, _ commonly known as the' suspension bridge. Having made a proposition to the defendants for the purchase of their interest in the said property, which proposition was not accepted, the bridge company, on the 18th of December, 1895, filed a supplemental petition against the defendants, praying for the appropriation of their interest in the premises aforesaid. The defendants answered this petition, setting up, among other things, that the Magruder s, the owners of the fee and of the lease, have assented and do assent and agree to the erection of the bridge and the approaches thereof as a compliance with the covenants of said lease, respecting the kind and description of structure or building that should or may be erected thereon, by the terms of the lease, and have waived and do thereby waive all objections to the same, if any can be made thereto on account of the covenants in the lease.

      The probate court found for the bridge company on the preliminary hearing and ordered the jury to assess compensation. On the trial before the jury the lease to Abraham Taylor, the partition between his'children, and the conveyance to the bridge company were shown, and in addition thereto, two agreements between the bridge company and one Sarah Taylor, as to the use of the premises by the bridge company, a bond by the bridge company and Bradford Shinkle to Charles S. Taylor, reciting the lease of the property in question to Abraham Taylor and its. transfer to the bridge company, reciting, whereas, the said Covington and Cincinnati Bridge Company assumes, in proportion to the number of feet it bought, and agreed to perform all and every of the terms and conditions of' the lease upon the part of said lessee to be performed, and conditioned to be void if the bridge company hold, the Taylors harmless for any breach of the terms and conditions of the original lease by the bridge company. And it was shown that in pursuance of said conveyance and agreements the bridge company ‘entered into possession and continuously occupied said premises.
    The plaintiff offered evidence' tending to show that the interest of the Magruders was limited by the value of the land exclusive of the buildings, which was placed at from $12,000 to $16,000 each. The Magruders asked the probate court to charge the jury, in substance, first, that the bridge company, was bound by virtue of its contract to pay defendants $1,215 annually during the term of the lease; second, that the right to receive the $1,215 per annum, according to the terms of the lease, is, as between the bridge company and the Magruders the measure of damages; third, that neither the salable value of the ground rent nor the nature and value of the land were to be considered in assessing compensation to the Magruders; fourth, that the Magruders were entitled to re ceive a full equivalent for the annual rent of $1,215, for the full term of ninety-nine years, renewable forever, and that the jury should ascertain what sum when securely invested would yield that amount; five, that the jury were to determine from the evidence what sum would be necessary to purchase a well secured income of $1,215 net per annum, and to award that sum to the Magruders; all of which charges were refused. And the court charged that the jury were to determine the market value of the ground rent and award such market value to the Magruders, and market value was, in substance, defined as the fair selling value. The jury awarded $20,250 as compensation.
    Motion to set aside the verdict and award a new trial was overruled and a final order entered awarding the property to the bridge company free and clear from the terms and conditions of the said lease thereupon. On petition in error the common pleas court reversed the judgment of the probate court; and without retaining the cause for trial by a jury, proceeded to render final judgment dismissing the proceedings. The circuit court affirmed the common pleas court and it is now sought here to reverse the judgments of the common pleas and circuit courts and to affirm the judgment of the probate court.

      Robert Ramsey and Ramsey, Maooioell & Ramsey, for plaintiff in error.
    1. It is true that in Ohio, both by statute and decision, a perpetual leasehold estate is to be deemed land for certain purposes. But the discussion of that question is irrelevant. Whatever the nature of the interest of the lessors under the lease, it was still a right of some kind which, until quieted, interposed as complete an obstruction to the public improvement as though it were a fee simple estate unimpaired by lease or otherwise. The statute provides for the appropriation of any “parcel of property, interest, or right” which stands in the way of public improvement. Sec. 6414 Rev. Stat. The right to appropriate any obstruction, whether it be in the form of an estate in the land, or a stone wall on the land, or a personal covenant in a lease affecting the use of the land, is necessarily involved in the very idea of eminent domain. Lewis on Eminent Domain, Sec. 265.
    2. The claim that the company has assumed all the covenants of the lease, and that those covenants must be held inviolate, is unfounded for two reasons: (a) If the company had assumed the covenants of the lease, the appropriation would not amount to a violation of contract; but (b) the company did not assume the covenants in any sense which would establish a privity of contract with the lessor. Railroad Co. v. Kip, 46 N. Y., 546; Decamp v. Railroad Co., 47 N. J. L. 43; Tail’s Exr. v. Asylum, 84 Va., 271; West River Bridge Co. v. Dix, 47 U. S. (6 How.) 507; but the taking of a lessee’s interest in a fractional part of the premises did not create any privity of contract with the lessor. Jones, Admx., v. Smith, 14 Ohio, 606; Crawford v. Chapman, 17 Ohio, 449; Sutliff v. Atwood, 15 Ohio St., 186.
    Nor does the fact that the lessor has accepted the apportioned installments of rent directly from the several assignees of the lessee operate as a novation or establish a privity of contract with him. Harmony Lodge v. White, 30 Ohio St., 569; Taylor v. DeBus, 31 Ohio St., 468; Smith v. Harrison, 42 Ohio St., 180.
    If it were otherwise, then the original lease with all of its covenants and conditions would be split up into separate and independent leasehold estates in the several tracts as to which possession had been severed. But such is not the effect of a severance of possession. 2 Taylor on Landlord & Tenant, section 491; 1 Washburn on Real Property, p. 536, section 15; Eyton v. Jones, 21 L. T. N. S., 789; Clark v. Cummings, 5 Barb. 339.
    It is said that the appropriation is not necessary, for the following reasons:
    First, that the restrictions upon use under the lease are not made conditions of title and may therefore be disregarded by the bridge company without imperiling its possession.
    Second, that those restrictions have been waived.
    1. Upon the first point it is sufficient to say that until this public improvement can be made without breach of contract, a court will not deem a proceeding in eminent domain unnecessary. Giesy v. Railroad Co., 4 Ohio St., 308; Toledo Con. Street Railway v. Street Ry., 6 C. C., 362, 3 Circ. Dec., 493.
    2. The claim that all restrictions upon the use of the premises have been waived, is wholly without foundation.

      (a.) There was no evidence either tending, or designed to show such waiver.

      (I?.) The answer alleging waiver is not effective to put that question in issue, or call for a reply denying the allegation, since the pleadings of the civil action are not appropriate to special proceedings. The expropriator files its application in this particular proceeding. That is all the pleading there is. The statute makes up the issues. Section 6420, Rev. Stat.
    (c.) Nor can the answer be taken as amounting in itself to a waiver. It came too late. The statute requires the corporation to endeavor to agree with the owner. Failing in that, it may invoke the aid of the court. Jurisdiction having once attached by the filing of the application, it can not be defeated thereafter by any act of the defendant.
    (cZ.) But a mere waiver would have been insufficient even if it had been made in time. Public improvements can not be erected upon the faith of a waiver. There must be a title, that is, an independent title, and not a title which is linked by covenants and conditions with the titles of somebody else. The so-called waiver would still leave the bridge company yoked to the Taylors under the original lease.
    (e.) Again, it is a misnomer to speak of waiver. The tests by Avhich the original lease was found to be indivisible and entire in all its parts, show that such consent as would be necessary to enable the bridge company to make its improvement, Avould amount in laAv to the formation of a neAV contract. The law will not compel the parties to enter into a contract of lease. If an existing title is inadequate to the needs of the corporation, then it is for the corporation to say Avhat kind of a title it will offer to buy. If it can not reach a purely voluntary agreement with the owner in that respect, then the law may be invoked for the appropriation of that uniform title which is conferred in every case, to-wit, an easement in the nature of a fee simple estate. The law does not compel the parties to make contracts that are not mutually satisfactory.

      (†.) Finally, waiver implies privity of contract. If there is no privity of contract between the bridge company and these defendants in error, there is nothing for these defendants in error to waive.
    It is claimed that the court erred in holding that the appropriation extinguished the covenant of rent. It is true that where a lease is not in the nature of an obstruction to the public improvement; that is, where its covenants may be performed notwithstanding the improvement, an appropriation of the reversionary interest does not necessarily affect the covenant of rent. But where the public work can not been ter ed upon consistently with the provisions of the lease, the lease must give way, just as a house or a stone wall must give way. The covenants of the lease are mutual and dependent. The court can not. make a decree extinguishing certain of the covenants, and preserving others. Each group of covenants forms the consideration for the other, and they must-stand or fall together. Otherwise, the court would, be making new contracts for the parties.

      Richards, Baer & Richards, and Harper & Allen, for defendants in error.
    The interest the bridge company really wishes to appropriate is a ground rent, which is an interest incorporeal in its nature, separate and independent of the leasehold, and capable of enjoyment apart from and in addition to the use and enjoyment of the land by the lessee. Williams Real Property, 243; Tiedeman Real Property, Sec. 171.
    Along-with and in addition to this incorporeal reversion, or the technical fee, or whatever one may choose to call it, the lessor has a valuable separate and independent property, i. e., the right to receive a certain sum of money annually; the payment of which sum is a charge on the premises superior to all other charges. Williams, R. P., 322; Stephenson v. Haines, 16 Ohio St., 478.
    If it is sought to cancel and extinguish this contract, instead of appropriating the use of the land, another difficulty arises, for that differs widely from the mere act of appropriation. For the cancellation of the agreement and the release of the Taylors, both parties to that agreement, must be parties in this case.
    The effect of condemnations of land for public uses upon rents and leases has been the subject of adjudication in numerous cases. Randolph on Eminent Domain, Sec. 340; Workmen v. Miflin, 30 Pa. St., 362; P. W. & B. Ry. Co. v. Williams, 54 Pa St., 103; Foote v. Cincinnati, 11 Ohio, 408.
    There is no pretense in this case that every interest in or in any way connected with *the land involved herein is to be ascertained and taken in this proceeding. The original lessees are not parties hereto, nor is it contended that they have the least interest in the matter, the bridge company have stepped into their shoes, acquiring all their rights and assuming all their obligations. The bridge company now own by voluntary purchase a perpetual lease on the premises; and they occupied the premises by virtue of this lease before action was commenced against these defendants.
    This proceeding is manifestly for the only purpose of securing the interest of the Magruders; the right to collect rent.
    We shall now consider whether the bridge company has shown the necessity for the appropriation contemplated by section 6420, Revised Statutes. Randolph on Eminent Domain, Secs. 52, 185, 186; Sec. 6416, Key. Stat. Geisy v. Railway Co., 4 Ohio St., 308; Lewis on Eminent Domain, Sec. 163.
    The point we wish to make is that the perpetual lease voluntarily purchased by the bridge company enables them to build and maintain the bridge, that this is the public use contemplated by the statute and the constitution and that any further interest taken by the bridge company would be for their own private benefit and profit. McArthur v. Kelly, 5 Ohio, 139.
    It is well settled that the exercise of the right of eminent domain rests upon public necessity, and is just as broad as that necessity and no broader. Weisenberger v. Miller, 3 Circ. Dec., 714, 7 C. C., 173, 180, affirmed, 61 Ohio St., 561; State v. Railway, 40 Ohio St., 504.
    It seems to me there is a striking analogy between the case at bar and the case of taking water from a river for canal purposes. In each there is a clear public use. and in each the corporation attempted under guise of a proceeding in eminent domain to gain an undue private advantage. Cooper v. Williams, 5 Ohio, 391.
    So in the case at bar the public welfare does not require that more property should be taken than a sufficient estate to support and protect the building and maintenance of the bridge. x\s the leasehold estate already owned by the bridge company is sufficient for this purpose no further estate or property interest can be taken. Buckingham v. Smith, 10 Ohio, 288; Bloodgood v. Railway Co., 18 Wend., 9; Railway Co. v. Felton, 69 Fed. Rep., 273; Railway Co. v. Kip, 46 N. Y., 546.
    And so in all such cases where an appropriation was permitted, the condemning corporation was in possession of the property as lessee, under a contract with the lessor to deliver up possession at a certain time. West River Bridge Co. v. Dix, 47 U. S., (6 How.), 507.
    Now we contend that the bridge company own a sufficient estate and, therefore, it is not necessary to use the property of another. 47 U. S. (6 How.), 537; State v. Railway Co., 55 N. J. L., 194; Lawrence v. Railway, 36 Hun., 467.
    Our interest in this property is capable of enjoyment apart from and in addition to the use of the land for bridge purposes.
    We have seen that the proposed taking is beneficial to the corporation considered as a business enterprise, that this will not authorize a taking. McQuillen v. Hatton, 42 Ohio St., 202.
    Now in order to authorize the condemnation in the case at bar the bridge company must show clearly that “each parcel of property, interest, or right * * * sought to be appropriated” (section 6416, Revised Statutes) is necessary for, and is to be used by, the public (section 6420, Revised Statutes) and that such property, interest or right can not remain in and be enjoyed by the now owner without defeating this use by the public.
    Many cases could be cited in which even after condemnation and payment of award it was held that certain interests remained in and could be enjoyed by the former owner. Lane v. Kennedy, 13 Ohio St., 42; McClelland v. Miller, 28 Ohio St., 488; Railway Co. v. Williams, 35 Ohio St., 168; Platt v. Pennsylvania Co., 43 Ohio St., 228; Daily v. State, 51 Ohio St., 348; Benley v. Sweeney, 64 N. H., 296; Kansas Central Ry. Co. v. Allen, 22 Kan., 285; Lewis Eminent Domain, Sec. 586 et seq.; Randolph Eminent Domain, Sec. 215.

      But, for another reason the bridge company is not entitled to and can not be authorized to condemn the interest of these defendants. The bridge company purchased a perpetual lease of these premises from Taylor, our tenant, and the owner of the lease, and thus acquired the right to use the premises by agreement with the owner.
    Contracts made between owners of property and those vested with authority to condemn the same for public use are subject to the same general rules and principles as though the power to condemn did not exist. Lewis Em. Dom., Sec. 289; Nye v. Railway, 113 Mass., 277;Wade v. Hennesey, 55 Vt., 207; Regents Canal Co. v. Wade, 26 L. J. N., s. c. 566; Leipper v. Railway, 36 L. J., Ch. 841; Harding v. Railway, 41 L. J., Ch. 371; Railway Co. v. Reynolds, 116 Ind., 356; Railway Co. v. Geisel, 119 Ind., 77; Railway Co. v. Sherry, 126 Ind., 334.
    By the same rule it was held a fee passed by a deed purporting and apt to convey a fee. Cushman v. Brownlee, 128 Ind., 266; Vermilya v. Railway Co., 66 Ia., 606; Gray v. Burlington Ry., 37 Ia., 119; State v. Railway Co., 55 N. J. L., 194.
    We claim that by virtue of the assignment of the lease to the bridge company and the entry into possession and occupancy of the land by them there is a privity of estate between the bridge company and these defendants in error; and that a privity of contract exists between the bridge company and these defendants in error by virtue of the deed from Charles Taylor to the bridge company, and the bond from the bridge company to Charles S. Taylor conditioned upon the performance by the bridge company of the terms, conditions and stipulations of the lease under which the land is held. Woodland Oil Co. v. Craw

      ford, 55 Ohio St., 161;Borgman v. Spellmire, 4 N. P., 416; Sutliff v. Atwood, 15 Ohio St., 186.
    The bridge company has acquired all of Taylor’s rights and assumed all Taylor’s liabilities. They are bound to us by privity of estate, and by privity of contract. Section 6416. Such necessity was not made to appear and such necessity does not in fact exist.
    True, the agreement is made Avith Taylor, but it is in favor of the Magruders, and they may adopt and enforce it. Crumbaugh v. Kugler, 3 Ohio St., 544; Thompson v. Thompson, 4 Ohio St., 333; Emmet v. Brophy, 42 Ohio St., 82.
    If the Iuav under which the bridge company is proceeding authorizes the condemnation sought herein, still the condemnation can not be permitted; for then the law impairs the validity of contracts-in violation of section 16, article 8 of the state constitution, and further section 10, article 1 of the constitution of the United States prohibits the passage of such a law. Foote v. Cincinnati, 11 Ohio, 408.
    Certainly under the lease the premises may safely be used for bridge purposes if a license is obtained from the landlord. Hoav can the necessity for this appropriation contemplated by sections 6416 and 6420, Revised Statutes, be found Ain til it appears that the landlord refused to permit the proposed use and when it appears of record that the landlord offers to grant a full license without compensation and that the bridge compar v refuses to accept such license, surely the court should not hesitate to dismiss the proceeding.
    A leasehold estate is a hereditament (section 4181, Revised Statutes), and may therefore be partitioned (section 5754, Revised Statutes). The leasehold was in fact partitioned by the Taylors and enjoyed by them in severalty for many years. The bridge company has acquired the whole estate of one owner in severalty.
    The right to make partition of leasehold estates has been repeatedly considered by the New York courts in various cases, presenting many phases of the question, growing out of the Van Rennselaer lease, from which the following principles may be deduced.
    1. In general, all covenants running with the land are divisible.
    2. If a division is physically impossible such covenants multiply.
    3. A permanent leasehold estate may be partitioned voluntarily or compulsorily.
    4. After partition had each tenant, as between themselves, is answerable for the breach of any covenant in respect to the part assigned to him.
    5. If the landlord is made a party, or recognizes the partition, all covenants are severed and each tenant becomes exclusively liable for the breach of any covenant; and -the rights of the landlord Avill be confined to the several interests in the portion in which the default occurred. Van Rennselaer v. Gallup, 5 Denio, 454; Same v. Jones, 2 Barbour, 643; Same v. Bradley, 3 Denio, 135; Same v. Chadwick, 24 Barb., 333.
    And this is so not only in New York: Farley v. Craig, 11 N. J. Eq., 262; Woodworth v. Campbell, 5 Paige, Ch. 518; Cook v. Webb, 19 Minn., 167, Hunter v. Hazeton, 5 N. H., 216.
    If the partition betAveen the Taylors was not already binding upon us when the bridge company puehased, it certainly is now. For since the institution of these proceedings we have accepted rent from Sarah Taylor independently of the other tenant, then we ratified the partition in open court.
    Even though an answer may not be absolutely necessary in such a case, it is the usual practice and quite proper. Railway Co. v. Railway Co., 17 W. Va., 812; Toledo, Ann Arbor, etc., Ry. v. Railway, 6 C. C., 521, 522, 3 Circ. Dec., 566.
    Every right a man possesses, whether it arises under contract, or as a condition of an estate, he may waive or relinquish without impairing1 the contract or defeating the estate. 2 Blackstone, 155; 1 Wash-burn on Beal Property, 453.
    Like all other conditions, forfeitures can only be reserved to the landlord and his assigns, and they alone can take advantage of the breach. If they elect to waive a forfeiture, the estate continues with all the other obligations attached thereto. Tiedeman Real Property, Sec. 191; Tiedeman Real Property, Sec. 268; Church v. Grant, 3 Gray, 142; Bleaker v. Smith, 13 Wend., 531; 1 Taylor Landl. and T., Secs. 497, 498, 258, 261 and note 1; Hubbard v. Hubbard, 97 Mass., 188; Woodland Oil Co. v. Craawford, 55 Ohio St., 161.
    If wre sought a forfeiture of the lease for breach of any covenant, in this lease a forfeiture would be denied; because the covenants are mere provisions to secure the payment of the rent reserved. Gallaher v. Herbert, 117 Ill., 160; Vanatta v. Brewer, 32 N. J. Eq., 268.
    Now it is clear that, irrespective of the public use to which the land is devoted, we would not be permitted to forfeit the lease if the lessee used the land in the prohibited manner; and it is equally certain that we could agree with the lessee so as to permit any and all uses of the premise and relieve the leasehold from the effect of any covenant without disturbing the operation of the lease in other respects. Fisher v. Smith, 48 Ill., 184; Clark v. Jones, 1 Denio, 517; Cartwright v. Gardiner, 5 Cush., 273; Lawrence v. Railway, 36 Hun., 467; Olmstead v. Aqueduct, 17 Vr., (N. J.), 495; Railway Co. v. Kip, 46 N. Y., 546.
    Indeed, where the appropriating corporation is not the lessee, it is generally held that a landlord is not a proper party to a proceeding to appropriate land held under a permanent lease. Appropriation is not an eviction, nor an incumbrance on the land. It does not divest the tenant of his seisin, and but partially disturbs his possession. The tenant’s liability to pay rent to his landlord continues unimpaired, and the tenant is entitled to a compensation to include his liability to pay rent for the full term. Workmen v. Mifflin, 30 Pa. St., 362; Railway v. Williams, 54 Pa. St., 103.
    To refute the claim of defendant in error, that the arrangement with Taylor amounts merely to a subletting, requires merely a reading of the deed. No reversion remains in Taylor. Under that deed the bridge company take the entire leasehold estate for. the full term of the lease. Tiedeman Real Property, Sec. 182; 1 Washburn Real Property, 334; Hulford v. Hatch, Douglass, 174; St. Louis Public Schools v. Boatman’s Ins. Co., 5 Mo. App., 91.
    That the bridge company do not believe there is a reversion in Taylor is demonstrated by the fact that Taylor has not been made a party to this proceeding.
    But whatever they may be, sub-tenant or assignee, they have the right to use the land forever, and that right satisfies the public necessity.
    There is no necessity for condemning the ground rent belonging to the defendants in error.

      1. Only such interest as is necessary to meet the public wants can be taken; and it can be retained only so long as it is used by the public, and can not be diverted to any other purpose. The power rests upon the public necessity and can be exercised only where such necessity exists. Giesy v. Railway Co., 4 Ohio St., 308.
    It is settled that statutes granting the power of appropriation must be strictly construed. Currier v. Railway Co., 11 Ohio St., 228; Miami Coal Co. v. Wigton, 19 Ohio St., 560; Platt v. Pennsylvania Co., 43 Ohio St., 228.
    The grant of power to the bridge company in this case is now contained in section 3542, relating to bridges over the Ohio river (1868).
    2. The statute does not expressly confer the power to take the fee, and unless such power is expressly given it can secure only an easement; that is, a right to use the ground for bridge purposes, its rights ceasing when the use ceases. McCombs v. Stewart, 40 Ohio St., 647; Corwin v. Corwin, 12 Ohio St., 629; Malone v. Toledo, 34 Ohio St., 541; Vought v. Railway Co., 58 Ohio St., 123.
    3. The perpetual leasehold estate granted in the lease and now held by the bridge company, is one of inheritance, and possesses the substance and dignity of an estate in fee. Loring v. Melendy, 11 Ohio, 355; Worthington v. Hewes, 19 Ohio St., 66; Village of St. Bernard v. Kemper, 60 Ohio St., 244.
    Appropriation for public uses does not discharge the lessee’s liability for the payment of rent. Foote v. Cincinnati, 11 Ohio, 408; Randolph on Em. Dom., Sec. 340; Workman v. Mifflin, 30 Pa. St., 362; Cooley, Const. Limitations (6th Ed.), p. 647; Buckingham v. Smith, 10 Ohio, 288.

      The right of the defendants in error to the rents reserved can not be canceled or discharged without, their consent.
    This contract the bridge company must perform.. It can not set it aside under any scheme of appropriation, because its officers think better terms can be had from a jury. Gray v. Railway Co., 37 Iowa, 119; Jersey City v. Railway Co., 55 N. J. L., 194; Railway Co. v. Kipp, 46 N. Y., 546; Tate’s Exr. v. Asylum, 84 Va., 271.
    In this case there was a transfer from Sarah M. Taylor and the executors of Abram Taylor to-Charles Taylor of the whole interest of the Taylor estate in this property, for the entire term.' That constitutes an assignment, as distinguished from a subletting. Washburn, Real Property (5th Ed.)., p. 529; Williams, Real Property, p. 565, 598, note; Digby’s. History of Law of Real Property, p. 412; Tiedeman,. Real Property, p. 182; Lee v. Payne, 4 Mich., 106; Dartmouth College v. Clough, 8 N. H., 22; Woodhall v. Rosenthal, 61 N. Y., 382; Craig v. Summers, 47 Minn., 189.
    But the question is immaterial, since our clients have approved the partition of the leasehold estate and consented to the public use of the property in question, — the effect of which will be considered tinder the next head.
    All restrictions, if any, upon the use of the premises by the bridge company have been waived by the defendants in error. 2 Lewis Eminent Domain, 2d Ed., Secs. 390, 304; Railway Co. v. Railway Co., 17 W. Va., 812; Sou. Min. Co. v. Russell, 54 Pac. Rep., 140 (Ks.); Railway Co. v. Belt Ry. Co., 6 Ohio Cir. Ct., 521, 3 Circ. Dec., 566.z

      The lease fixes the price which the bridge company is to pay for the use of the property. It is only such covenants as might interfere with that use or result in the bridge company being evicted which it can complain of and seek to have removed.
    Under the authorities, it is settled that our clients would be estopped from interfering with the use of the property by the bridge company; and no question of compensation can arise, because the measure of that is already fixed by the rent reserved. Goodin v. 47 Ohio St., 366; Uncanoonuck Road Co. v. Orr, 41 Atl. Rep., 665 (N. H.); Railway Co. v. Englehart, 77 N. W. Rep., 1092 (Neb.); Railway Co. v. Allen, 113 Ind., 581.
    The bridge company made no effort to secure the extinguishment of the alleged objectionable covenants,, and, therefore, has no right to condemn. 2 Lewis on Em. Dom. (2d Ed.), Sec. 304a.
   Davis, J.

A large amount of interesting, but irrelevant, learning is displayed in supporting the contention of the defendants in error. The case, as we apprehend it, lies within narrow bounds.

By section 6438 of the Revised Statutes, the court of common pleas, if it reverse the judgment of the probate court in appropriation proceedings, is required to “retain the cause for trial and final judgment.” In this case the record shows that the court of common pleas, having heard the cause on “the petition in error, the record and proceedings of the probate court and the arguments of counsel,” reversed the judgment, of the probate court and rendered judgment for the costs against the expropriator, The Covington and Cincinnati Bridge Company; and, without further trial, proceeded to render a final judgment dismissing the supplemental and amended petitions and adjudged that the plaintiffs in error, the defendants in error here, go hence without day and recover their costs. To all of this the bridge company, by its attorney, excepted. There was no bill of exceptions taken. Indeed, none was necessary; for the error, if any, plainly appears in the journal entry of the court of common pleas. A reading of the whole of the section of the Revised Statutes referred to, discloses that the “trial” in the court of common pleas must be a jury trial, as in the trial in the probate court. It does not appear that such a trial was had in the common pleas. On the contrary, it appears that the court of common pleas reversed the judgment of the probate court and retained, the case for trial and heard and considered the premises,” that is, upon further consideration of the “petition in error, the record and proceedings of the probate court and the arguments of counsel,” found that there existed no right nor necessity for the appropriation of the interest of the defendants in the described property, and thereupon rendered final judgment. This was a palpable violation of the statute. The case of Railway Co. v. Bailey, 39 Ohio St., 170, does not apply. In that case the court of common pleas reversed the probate court and retained the case for trial and final judgment. It was held that error would not lie to the judgment of reversal because it was not a final judgment. In this case the court did not retain the case for trial, and erroneously proceeded to final judgment. The judgment of reversal and the judgment of dismissal were one and the same.

This error would dispose of the case here; but we will briefly indicate our conclusions on.the vital question involved in the record.

The right of eminent domain is inherent in the sovereignty, and whatever property is required for the public use, whether real or personal, and whatever extent of interest therein, whether tangible or intangible, may be appropriated. These are settled principles of the law. Lewis on Emient Domain, Secs, 262, 262a; 10 Am. and Eng. Ency. Law, 2nd Ed., 1088.

By the constitution of this state, this power is lodged in the legislature under the general grant of legislative power, and the limitations are few and simple, practically none except that the property shall be taken for a public use only, and that compensation shall be made to the owner in money, without deduction for benefits to any property of the owner. In delegating this power the legislature has regard to the purpose for which it is to be exercised. In some cases it may be a mere franchise, a right of way, in other cases the public interest may require ownership in the property. Hence, while the legislative grant should be strictly construed, it should not be technically construed so as to defeat the purpose of the grant. By the statute of Ohio, Revised Statutes, section 3542, a company organized to construct a bridge over the Ohio river is authorized to purchase, or appropriate, and hold such real estate as, in the opinion of the directors, will be required for the site of the bridge, and of suitable avenues or approaches leading thereto. This grant, when fairly construed, confers the power to acquire any interest in real estate, whether an estate in fee simple or a less estate, which in the opinion of the directors will effectuate the purpose of the grant. In fact, it would seem to be the policy of the state that bridge companies “shall own” the banks of the stream over which the bridge is constructed, unless permitted to occupy by a written grant with tbe owner. Such is' tbe law as to bridges wholly within the state. At any rate, Revised Statutes, section 3542, in our opinion, confers the right to acquire and hold whatever interest in real estate is necessary, in the opinion of the directors of the bridge, company, for the site of the bridge, its avenues and approaches. Beyond the question whether the proposed taking is a public use, or not, the necessity of' the appropriation is not a judicial question. Ranney, J., Giesy v. Railway Co., 4 Ohio St., 325. Boom Co. v. Patterson, 98 U. S., 403, 406. Mere physical occupancy of the land may not, in the judgment of the directors, meet all the needs of the company for a site. It may not be desirable to construct the abutments., and approaches of an interstate highway upon a mere leasehold, although the lease may be with the privilege of renewing it forever. The embarrassment of paying rent forever, for the site, may be a good reason for preferring to own the site of the structure, and for not negotiating for and accepting a mere right, to occupy the land on the terms of the owners. It is nearly certain that the company would not deem it. to be a business-like course to construct and maintain a costly bridge upon a leasehold where the lease not. only did not permit a bridge, but required the owner of the bridge to maintain a block of store buildings, over the whole of the described land. Under such circumstances, it is no more than ordinary prudence to endeavor to extinguish the lease and to obtain the complete title to the land by purchase or appropriation of the outstanding interest. Having the right, to acquire the absolute ownership of the property, by purchase or appropriation, if in their judgment it was needed, the directors proceeded strictly according fco law when they proposed- to buy the interest of the defendants and to so complete the title of the company to the land, and upon refusal by the defendants to accept their proposition, in instituting the proceedings to appropriate. The offer by the defendants, in their answer, to waive compliance with the covenants of the lease respecting the kind of structure to be erected and maintained on the land, avails them nothing. It is in effect an attempt to make a new and different contract; and to compel the company to •abide by this waiver, would be to give to the defendants the option, and'to destroy the right of the plaintiffs to appropriate as in the opinion of the directors may be necessary. The finding of the court of common pleas that there is on the part of said corporation no right nor necessity for the appropriation of the interest of the defendants in error in or to the said described property, and the judgment of the same court dismissing the case, as well as the judgment of the circuit court affirming it, are erroneous.

In its present state of mind the court has been unable to agree to affirm the judgment of the probate court. Members of the court, including myself, would affirm the judgment. The case will therefore be remanded to the court of common pleas for trial as provided by law.

For the reasons stated the judgment of the common pleas court, in reversing the judgment of the probate court and dismissing the amended and supplemental petitions herein, and that of the circuit court affirming the judgment of the common pleas court, should be reversed.

Reversed.

Minshall, J., dissents.


source: Caselaw Access Project

author: Speak, J.

license: Public Domain

text:
    The Union Central Life Insurance Company v. Hilliard, Admr., et al.

      Policy of insurance on life of minor — Payable at maturity if living and to his executors, etc., in case of death before maturity — Is not absolutely void — Nor are notes given by him for premium — Insurance contract not invalid as wagering contract — Though induced by one having no insurable interest in insured — Giving mortgage and assigning policy on life of another as security not regarded as usury, when.

    1. A policy of life insurance issued on the life of a minor, payable to him if living at maturity, and to his executors, administrators, or assigns in case of death before maturity, is not absolutely void, nor are notes given by him for premiums void, although the insured has power to elect to avoid both on arriving at majority. Nor is his written assignment of such policy during minority necessarily void.
    2. The obligation on the part of the company to pay the amount of the policy on the happening of the event contemplated, furnishes a sufficient consideration to support the promise to pay premiums, whether such promise is made by the insured alone, or by another jointly with him. And such insurance contract is not invalid as a wagering contract, though it is induced by one who has no insurable interest in the life of the insured, and who joins in a promise, evidenced by promissory notes, to pay premiums.
    3. Where an applicant for a loan of money from a life insurance. company obtains the same upon a lawful rate of interest, giving a real estate mortgage as security, and also procures the issue by the company of an insurance policy to one in whose life he has no insurable interest, and its assignment to the company as collateral security upon the loan, and signs premium notes with the insured in order to give value to the policy as collateral, 'such policy being upon the usual terms and conditions, the premiums paid and agreed to be paid thereon will not be regarded as additional interest for-the loan, and usurious.
    (Decided December 18, 1900.)
    Error to the Circuit Court of Licking county.
    The plaintiff in error, The Union Central Life Insurance Company, is a corporation organized under-the laws of Ohio, having its principal place of business at Cincinnati. The defendant in error, J. Y. Hilliard, is the administrator of the estate of John Strawn, deceased, and the other defendants in error are the heirs at law of said Strawn.
    The action below was a proceeding in the probate court of Licking by the administrator to sell the lands of John Strawn, deceased, in that county, to pay debts, the petition also declaring upon a certain mortgage given by the deceased in- his lifetime to Hilliard, individually, and making the Life Insurance Company, mortgagee, and the heirs at law of the deceased, parties defendant. In its answer and cross-petition the Company set up and asked to recover upon a note for $10,500, and others not in controversy here, signed by said John Strawn, less certain payments credited, and to foreclose a mortgage on the premises described in the petition given by Strawn to secure the same; also upon two notes for $532 each, signed by one Edward L. Roberts and John Strawn, being two of a series of four notes for like amount, and to foreclose a mortgage on the same premises given by Strawn to secure the last mentioned notes. Issue was taken by the administrator and by the heirs, contesting wholly the last mentioned claim of the Company, and insisting that its recovery should be confined to the sum of $12,500, and some interest, less divers payments alleged to have been received by the Company, particularly stated in their answer. Trial in the probate court resulted in a judgment and decree substantially as claimed by the administrator and heirs, from which the Company appealed to. the common pleas. In the latter court a separate finding of facts and law was had, and a judgment and decree of similar legal effect to that of the probate court was rendered, from which error, was prosecuted by the Company to the eircuitt court where the judgment was affirmed; and the Company brings error here. Additional facts will be stated in the opinion.

      Charles Follett and Maxwell & Ramsey, for plaintiff in error.
    1. The minority of the insured does not render the insurance void, but voidable at his election. There can be no failure of consideration for the premium notes unless that election is made. The record shows that before the commencement of this action, the insured had attained majority. It does not show that he has elected to avoid the contract. The law does not permit third parties to make election for him, as they seek to do in this case.
    2. As anticipated, the question of insurable interest is sought to be made the paramount issue, and the burden of the argument is upon the proposition that a grandfather can not procure insurance upon the life of his grandson.
    The question is foreign to the case.’ The grandson applied for insurance on his own life, payable at death to his owm estate. It Avas not even assigned to his grandfather. It is not unlawful to insure minors. The grandfather advanced the first five premiums, and in return the grandson pledged the policy for the grandfather’s debt to the pledgee. Five premiums paid for the benefit of the grandson Avere a full consideration moving to him in return for the temporary pledge of the policy, at least until he should elect to avoid the transaction.
    If the insured had died, the insurer would have deducted the amount of the advanced premiums and whatever deficit there might have been after foreclosure of the mortgage, and paid the balance of the $12,500 policy to his estate. He would have netted $5,000 or more out of the insurance; his grandfather would have received none of it. How can the question of insurable interest in the grandfather possibly arise?
    3. The third point falls with the other two; for if the insurance contract was valid, supporting a consideration for the premium notes, .those notes can not be treated as representing usurious interest upon the mortgage loan. Since the filing of our original brief, this court has affirmed Morrow v. Union Central Life Insurance Company, to which attention was there called (see 61 Ohio St., 661; 16 C. C. R., 351, 8 Circ. Dec., 419; Insurance Co. v. Manufacturing Co., 25 N. J. Eq., 160.
    1. There is a fatal defect of parties defendant.
    In order to establish usury, it is necessary to adjudicate the contract of insurance, and the holder of the policy is not brought in. This is not such defect as is waived by failure to make the objection by demurrer or answer. Section 5064, Revised Statutes, does not intrench upon section 5013. Church v. Nelson, 35 Ohio St., 638.
    But this point is upon the theory, more favorable to the other side than the record warrants, that the avoidance of the contract of insurance was a part of the relief sought. It was not; which gives rise to the next proposition.
    2. The plaintiff is seeking equitable relief against an alleged usurious contract. Tyler on Usury, 439.
    It is asserted that non payment of the premium notes forfeited the .policy. They did not. By their terms they gave the insurer the option of declaring a forfeiture. This requires an overt act, brought home to the insured. French v. Insurance Co., 30 Ohio St., 240.
    There is no evidence or allegation of such forfeiture; and if there were, it would not be conclusive upon the insured, or bar his action on the policy, since he is not a party to the suit. Plaintiff can only do equity by placing this insurance company where it was before the transaction was entered into. He has restored his own status very nicely, by getting his notes canceled. That is not according to the doctrines of equity.
    3. He does not come here with clean hands. The petition is nominally that of Hilliard “as administrator of the estate of John Strawn, deceased, and individually.”
    In reality it is that of Hilliard individually, brought for the purpose of creating value for a mortgage of his own on this property.
    The sale did not realize enough to pay incumbrances. The estate gets nothing. Plaintiff sought to accomplish this end, first by asserting the priority of his mortgage over those of the defendant, and when that failed, by cutting down those other mortgages on the charge of usury.
    The petition alleged that plaintiff’s mortgage was dated and recorded on Máy 30, 1889. Defendant’s mortgages were dated May 29, 1889, but not recorded until June 1. Hilliard was the agent of the defendant. He made the application for the loan and for the insurance. He represented the company in the whole transaction. He represented the property as unincumbered. The statutes do not permit insurance companies to lend on second mortgage (section 3598, Revised Statutes). These mortgages were delivered to him on May 30th. Mr. Hilliard was also the county recorder at the time. He filed and recorded his mortgage first, and those of his company second. That is the nature of his claim upon which his standing in a court of equity is to be determined. The court below decreed his mortgage junior to those of his company, but did not think there was any reason why it should not go on and give him equitable relief in the interest of that mortgage, by allowing him to stultify himself on the issue of usury. So in the interest of this man’s mortgage, one of the two mortgages which he negotiated for his principal was pronounced usurious and taken out of his way.
    We submit that he has no standing in equity.

      J. Y. Hilliard; John M. Bwarts and Kibler & Kibler, for defendant in error.
    We claim that this transaction was void and not enforcible against the administrator of John Strawn for three reasons:
    1. Because of the minority of Edward L. Roberts and his inability to make a valid contract for insure anee, or to assign the same.
    2. That the insurance was void because John Strawn had no insurable interest in the life of Edward L. Roberts and the same was therefore a wagering policy.
    3. Because the whole transaction connecting the life insurance feature with the loan was a mere shift and device to compass usury and was therefore illegal.
    The case at bar is to be distinguished from a case in which an insured insures his own life for the benefit of another, because the law is that any person may insure his own life for the benefit of another. Gilbert v. Moore, 104 Pa. St., 74, s. c. 49 A. M. Rep., 570; Amer., etc., Ins. Co. v. Robert Shaw, 26 Pa. St., 189; Campbell v. Insurance Co., 98 Mass., 381; Aetna Life Ins. Co. v. France, 94 U. S., 561; Conn. Mut. L. Ins. Co. v. Schaeffer, 94 U. S., 457; Tucker v. Life Ins. Co. (Wis.), 41 N. W. Rep., 968; Franklin L. Ins. Co. v. Sefton, 53 Ind., 380.
    And even a stranger: Johnson v. Van Epps, 110, 111, 551; 26 La. Ann, 326; Langdon v. Insurance Co., 14 Fed. Rep., 272; Valton v. Life Assoc’n, 20 N. Y., 32.
    In the case at bar, however, although the application for the loan states that the insurance is to be upon the life of John H. Strawn, that having abandoned this, insurance was taken upon the life of Edward L. Roberts, who was a minor, who had not the power to insure his own life for the benefit of another and who could not make any valid assignment of the policy. The fact that John Strawn agreed to pay the premiums doesn’t add anything to the validity of the transaction. Aetna Life Ins. Co. v. France, 94 U. S., 561; St. John v. Insurance Co., 13 N. Y., 31.
    It is undoubtedly the rule that the insured must have an interest in the subject matter in the insurance. A policy of insurance obtained upon a subject-in which the insured has no interest is void, whether or not it be so stipulated therein. No action can be maintained upon it; the notes given for the premiums upon such insurance are void for want of consideration. Bersch v. Insurance Co., 28 Ind., 64; Fowler v. Insurance Co., 26 N. Y., 422; Peabody v. Insurance Co., 20 Barb. (N. Y.), 339; Freeman v. Insurance Co., 38 Barb. (N. Y.), 247; Talman v. Insurance Co., 29 How. Pr., (N. Y.), 71; Sawyer v. Mahew, 51 Me., 398; Sweeney v. Insurance Co., 20 Pa. St., 337; Tren

      ton Ins. Co. v. Johnson, 24 N. J. L., 576; Mawry v. Insurance Co., 9 R. I., 346.
    In life insurance as in other kind of insurance the assured must have an interest in the life insured; and where insurance be effected by one person on the life of another the assured must show himself to have possessed an interest in the life of that other at the time the insurance was effected. Revin v. Insurance Co., 23 Conn., 244; Ruse v. Insurance Co., 23 N. Y., 516; Guardian Ins. Co. v. Hogan, 80 Ill., 36; Franklin Ins. Co. v. Sefton, 53 Ind., 380; Trenton Ins. Co. v. Johnson, 24 N. J. L., 576.
    A substantial pecuniary interest is sufficient. Hoyt v. N. Y. Ins. Co., 3 Bosw. (N. Y.), 440.
    The insurable interest of a father in the life of his child is sustained only on the ground that the father is entitled to the services of the child. Mitchell v. Insurance Co., 45 Me., 104.
    But this principle has been denied in the case of Guardian Mut. Life Ins. Co. v. Hogan, 80 Ill., 35.
    It has been held that the relation of nephew and uncle does not constitute an insurable interest to enable either to insure the life of the other. Singleton v. Insurance Co., 66 Mo., 63.
    So a son-in-law has no insurable interest in his mother-in-law, and vice versa, even though she lives with him and is dependent upon him for support. Rombach v. Insurance Co., 35 La. Ann, 233, s. c. 48 Am. Rep., 239; Stambaugh v. Blake (Pa.)/15 Atl. Rep., 705.
    The mere relation of step-son does not create an insurable interest in the life of the step-father. United Brethren v. McDonald, 122 Pa., 324; 1 L. R. A., 238; Keystone Mut. Benefit Assn. v. Norris, 115 Pa., 446; Price v. Supreme Lodge K. of H., 68 Texas, 361.

      That a party having no insurable interest in the life of another cannot receive an assignment of the policy of insurance upon the life of the latter on an agreement merely to pay the premiums or assessments. An insurable interest must be of a substantial character and such as under all the circumstances to take from the transaction all the suspicion of wagering. Amic v. Butler, 111 Ind., 578; Conn. Mut. L. Ins. Co. v. Luchs, 108 U. S., 498; Corsons App., 113 Pa., 438.
    Where a third party, without any insurable interest in the life of another, procures a policy of insurance on the life of such person, either by having a policy issued directly to himself, or by having the person whose life is insured take out a policy to himself and then assign it, the transaction is a mere speculation on the life of another, and, as such, contrary to public policy and void. Lamont v. Grand Lodge, 31 Fed. Rep., 180; Warnock v. Davis, 104 U. 8., 775, 26 L. ed., 924; Seigrist v. Schmaltz, 5 Cent. Rep., 230, 113 Pa., 326; Downey v. Hoffer, 16 W. N. C., 185; 1 Bacon on Ben. Soc. & Life Ins., Sec. 251.
    If Roberts had died the Central Union Life Insurance Company could have defended against payment on the ground that it was a wagering policy — for insurance companies. 1 Bacon, etc., Sec. 248; Ruse v. Insurance Co., 23 N. Y., 516; Loomis v. Insurance Co., 6 Gray, 398; Warnock v. Davis, 104 U. S., 775; Tate v. Commercial B. A., 45 L. R. A., 243.
    This insurance company, being an Ohio corporation and subject to the statutes of Ohio, had no statutory authority whatever to issue his policy of insurance. It is upon the life of a minor who had no authority to assign it, and is payable to the executors, administrators or assigns of the insured.

      Sections 3595, 3628, 3629, 3183, Revised Statutes.
    Where as a condition of making a loan, the borrower is required to take policies of life insurance from the lender, and pay premiums thereon, in addition to the highest legal rate of interest on the amount loaned, it is generally held that the profit thus derived by the lender is equivalent to additional interest, and therefore usurious. Missouri Valley L. Ins. Co. v. Kittle, 1 McCrary (U. S.), 234; National L. Ins. Co. v. Harvey, 2 McCrary (U. S.), 576; Clague v. Creditors, 2 La., 114; 20 Am. Dec., 300.
    It matters not what the name of the transaction is, whether it is called an insurance policy or some other transaction. Union Bank v. Bell, 14 Ohio St., 200; Burt v. Rattle, 31 Ohio St., 116; 13 Wheaton 385. Smith v. Cross, 90 N. Y., 549.
    That the question as to whether the contract is usurious or not may be determined outside of the instruments themselves. Tyson v. Rickard, 5 D., 424; Sylvester v. Swan, 5 Allen (Mass.), 134; Maine Bank v. Butts, 9 Mass., 49; Kilgore v. Dempsey, 25 Ohio St., 413.
    A condition to the loan of money that the borrower shall buy a piece of land from the lender, at an exorbitant price, is evidence of usury. Ernest v. Hoskins, 100 Pa. St., 551.
    A note executed to secure a loan of gold at a higher rate than the market value of gold, in addition to legal interest, is usurious. Austin v. Walker, 45 Iowa, 527.
    An agreement to take an insurance policy and pay the premiums thereon, and in addition to pay the highest legal rate of interest on the money lent on such policy is usurious. Missouri Valley Ins. Co. v. Kittle,
      1 McCrary (U. S.), 234; National Life Ins. Co. v. Harvey. 2 McCrary (U. S.), 576.
   Speak, J.

The contention here relates wholly to the legal effect of the transaction involving the giving of the notes last referred to in the foregoing statement. The first claim of the Company was upon notes and mortgage given for a loan of money to John Strawn, and the other upon notes and mortgage given to sesüre a sum advanced by the Company to enable the deceased to pay premiums upon a policy of life insurance issued by the Company on the life of one Edward L. Roberts, and by him assigned to the Company as collateral security for the loan made to Strawn. it was claimed by the administrator, and heirs, and found by the common pleas and circuit courts, that the loan of money and the issuing of the policy were parts of one and the same transaction, and were a mere device on the part of the Company for securing upon the loan a larger rate of interest than the legal rate; that the transaction was usurious, and that the Company was entitled only to the face of the loan with interest at six per cent., less certain payments which they claimed had been made. Pertinent facts, necessary to an understanding of the questions presented follow:

April 30, 1889, John Strawn applied to the Union Central Life Insurance Company for a loan of twelve-thousand, five hundred dollars for five years with interest at seven per cent., payable annually, tendering as security a mortgage upon two hundred and forty-four acres of land, being part of the land involved in this suit. The Company declined to loan the amount on the security alone of the land, but would do so if added thereto there were given the additional security of a life insurance policy. Thereupon, May 30, 1889, Strawn executed and delivered to the Company five principal notes for the loan, one for $10,500, due in five years, and four for $500 each, due in one, two, three and four years, with interest coupons attached to each for annual interest, and a mortgage to secure the same on the land referred to. Also another mortgage on the same land to secure the payment of four premium notes of $532 each, due in one, two, three and four years, and to bear interest at eight per cent.after maturity,the notes being executed by Edward L. Roberts and John Strawn,and given for the payment of annual premiums on the policy of insurance issued by the Company on the life of Roberts. The policy was a ten-year annual life rate endowment policy which required all payments to be paid up in ten years. In order to give the policy value as collateral the premium for five years was paid in advance; that is, five annual premiums at the regular rate were properly discounted and thus paid at the inception of the policy. This payment was made by the advance of the amount by the Company and evidenced by the notes of the insured (Roberts) and John Strawn, secured by mortgage by Strawn as stated above, the notes being treated by the Company, as between it and the insured, as cash. The policy was then assigned by Roberts to the Company as collateral to the mortgage given to secure the larger loan. Roberts was a minor, eighteen years of age, a grandson of Strawn, and the trial court found Strawn had an insurable interest in the life of Roberts solely from the fact that Roberts was his grandson, no other relation existing between them giving such interest. It further found that the policy is not a wagering policy, and for that reason not illegal, void, or without consideration. Strawn himself was not an insurable subject on account of his advanced age, and hence the requirement that the policy be upon the life of another and that Strawn should secure the payment of the premiums. The grandson was without means and unable to pay them. The policy was made payable to the insured, if living at maturity, and in case of death prior to maturity, to his executors, administrators or assigns. It acknowledged receipt of $532, the first premium, and the four notes of like amount payable in one, two, three and four years, secured by mortgage, and containing a provision that failure to pay any one of the notes at maturity would give the Company the right, at its election, to avoid the policy, but it does not appear that the Company had exercised that right. It was the habit of the Company to require the assignment as collateral security of policies in the manner above mentioned, although there was no written rule to that effect. The court found that the mortgage was ample security at the time the loan was taken independent of the assignment of the policy. Many facts are found by the trial court, but the foregoing statement is believed to embrace all that are necessary to an understanding of the points decided.

No substantial claim of fraud, or deceit, or circumvention practiced by either party, is made; nor is it seriously claimed that the transaction was misunderstood by the parties,, either as to its terms or legal effect. The issues are issues of cold law.

Three grounds are stated and argued by counsel for defendants in error as supporting the conclusion of the courts below that the transaction is void and not enforceable against the administrator of John Strawn, viz.:

1. Because of the minority of Edward L. Roberts and his inability to make a valid contract for insurance, or to assign the same.

2. That the insurance was void because -John Strawn had no insurable interest in the life of Edward L. Roberts, and the same was, therefore, a wagering policy.

3. Because the whole transaction connecting the life insurance feature wdth the loan was a mere shift and device to compass usury and was, therefore, illegal.

As to the first proposition it is sufficient to say that a contract by a minor is voidable only, and that at his election. The other contracting party cannot avail himself of the lack of power on the part of the minor to conclusively bind himself as a reason for refusing performance on his part. Hence the contract cannot be said to be absolutely void. In the present case the record does not show that the insured has elected to avoid the contract, although it does show that he has long since reached his majority. Nor is he a party in the case, and his rights in the matter, ^whatever they may be, cannot be adjudicated here.

Respecting the second proposition, it is apparent that the question of insurable interest on the part of John Strawn in the life of Roberts is not involved in the inquiry. It is true that the grandfather procured the making of the contract of insurance, but the policy was made payable to the grandson (the insured), and, in case of his decease before maturity, to his executors, administrators or assigns. So that, in legal intendment, it wms a contract wholly between the Company and the insured. The courts below held that the contract was not a wagering contract,, and in this we agree with them.

The third proposition is of more gravity. It raises the question whether an insurance company, in the making of a loan of its surplus funds can lawfully require of the borrower that a life policy be taken from that company and assigned to it as collateral security for the proposed loan. It would seem that the matter' of the amount of the security otherwise tendered cannot have weight, for the parties are at full liberty to agree upon the amount of security to be.taken, as they are to make any other contract not inhibited by law,, and a contract, otherwise legal, is not to be invalidated because a court may be of opinion that more security has been exacted than was necessary. Had the policy been taken out in some other company, and assigned as collateral, no one would have thought of interposing the claim of usury. The objection must rest, if well founded, upon some fact other than the quantum of security. Put in other words, the question is: May a loaner of money at the time of agreeing upon the loan,also agree with the borrower,for the execution between them of another contract, by which a part of the money loaned is to be paid to the lender as consideration for the lender’s promise to pay a larger sum on a future contingency (a contract fair in itself and lawful), without tainting the loan transaction with usury? Authorities which seem to hold the negative of this proposition are adduced, and, regarded in the light of principle, the writer might have difaculty in reaching a satisfactory conclusion. But the question seems not to be an open one in this court. In the case of the same plaintiff in error against MorroAv et al.’, reported in 16 O. C. C., 351, it is held by the circuit court that: “Where a life insurance company requires of an applicant for a loan at the same time to take out an insurance policy on his life on the usual terms and conditions, such insurance and the premiums paid thereon will not be considered as compensation in addition to legal interest for the loan, and usurious.” And a recovery was had. On error’ by Morrow to this court the judgment was affirmed, 61 Ohio St., 661. It is suggested that in that case usury was not distinctly pleaded. Whether so or not, the facts were pleaded, and the record sufficiently disclosed facts warranting a holding against the Company had the court been of opinion that an insurance contract of the character indicated could not be made by the parties without tainting the loan with usury.

But it is insisted that the Morrow case is not authority in this case because the insurance contract was different in that in the Morrow case the insurance was effected on the life of the borrower himself, wliile here it was issued upon the life of another in whose life the borrower had no insurable interest. Assuming without holding that the borrower was without insurable interest in the life of the insured, does it follow that the contract of Strawn with respect to the payment of the premium notes was invalid? We confess our inability to see that it does. If the policy had been made payable to Strawn, the point wrould be well taken; but being payable to the insured, and not to Strawn,the rule as to insurable interest is not pertinent. If, then, the insurance contract, and Strawn’s notes for premiums, are not invalid on that score, and if, as we have found, the requiring of a life policy by the Company is not to be regarded as compensation in addition to legal interest for the loan, and so usurious, what is left here but an inquiry as to consideration? Applying the familiar rule that one may lawfully contract with another for the benefit, of a third, it would hardly be doubted that the grandfather might pay premiums on a life policy for the-grandson and present him with the policy. Why not? If the purchase were a horse, oa? a farm, would anyone doubt the legality of it? And if he might buy outright and pay, why might he not buy on credit? Could he, in a suit by the vendor of a horse so purchased, or of a farm, be heard to say that he had no interest in the beneficiary and hence his obligation had no validity? The consideration moving from the Company was its agreement to pay the. policy at maturity, or at death if sooner; and the payment of the first five premiums by the grandfather for the-benefit of the grandson constituted a sufficient consideration to. support his pledge of the policy fo.r the benefit of the grandfather, at least to the extent of premiums paid, and entirely good until he should elect to avoid the transaction.

Decisions are not lacking, and many are cited, to the effect that where the borrower is induced to make with the lender some unusual and unfair additional contract, as to buy a piece of land from the lender at an exorbitant price, or give a note to secure a loan of gold at a higher rate than the market value in addition to legal interest, the contract will be held usurious. But it does not appear that the insurance contract in this case was unusual, or that the rate charged or the terms imposed were other than those which were customary.

It is further urged that the whole contract is unconscionable and its execution would result in great, hardship. The former claim, we suppose, must stand on the question whether or not it is illegal. As to the latter claim, it does appear to work a hardship as it has turned out. But had the young man died soon after the issuing of the policy, or during the time for which the premiums had been paid, the apparent hardship would have been on the other party. It was held by a fast bargain, and would have been compelled to pay, for no court would have listened to a defense by the Company, had such been interposed, based on the ground here urged by defendants in error, viz.: the inability of the minor to make a binding contract. In case of default by Strawn in the payment of his loan the Company would have been required to first exhaust tbe mortgage security, and, only in the event that that proved insufficient, could it have resorted to the proceeds of the policy. The balance would have belonged to the insured’s legal representatives, subject possibly to advances on account of premiums. In this view the question of insurable interest on the part of the grandfather becomes immaterial, and the complaint of wagering contract untenable.

Viewing the case as presenting a legal claim on the part of the Company, and following the former decision with respect to the main point of contention, we are led to the conclusion that the judgments below should be reversed, and the cause remanded to the court of common pleas with direction to enter judgment upon its previous finding of facts and in conformity with this opinion.

Reversed.

Minshall, J., dissents.