Case ID: ohio-st_9/html/0272-01.html
Source: Caselaw Access Project
Author: {"author": "Gholson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joseph Masury v. William P. Southworth et al.
    1. An assignee of a reversion, having also assigned to him, by the terms of his contract of conveyance, the benefit of the covenants in a lease, may bring an action in his own name for a breach of such covenants, as the party beneficially interested, under the code of civil procedure, which, in this respect, supplies the statute 32 H. 8, cap. 34.
    2. A covenant to insure, when the money realized, in case of loss, is to be ex- - pended in rebuilding or repair, is such a covenant as may run with the land.
    3. When such a covenant to insure has for its object a building to be erected after the date of the lease, but which, when erected, is to be used by the lessee, and is an essential ingredient in the agreement of the parties for the creation of the estate, it is not indispensable to make such a covenant run with the land, that “assignees” should be expressly named; but the covenant being *one which may be annexed to the estate, and run with the land, equivalent words, or a clear intent shown by the whole instrument, may suffice.
    In error to the district court of Cuyahoga county.
    The plaintiff in error brought an action against the defendants in error, in the court of common pleas of Cuyahoga county. The petition in that action stated, that on the 25th day of February, 1854, S. A. Powers and Joseph O. Foster executed a lease, which was duly acknowledged and recorded. By this lease, a lot in the city of Cleveland, was demised by Powers to Foster, for a term beginning on the 1st day of April, 1854, and ending the 1st day of July, 1867. The petition alledged “that, by one of the covenants in said lease, the said Foster was to keep said leasehold premises fully insured for the benefit of Powers, and that, if at any time the said Foster should fail to keep the same so insured, that the said Powers might cause an insurance to be made on said premises at the expense of said Foster, and in the name and for the benefit of said Powers. And by a further stipulation in said lease, it was further agreed that, in case that said building should burn down during the continuance of said lease, that the said Foster should have the benefit of said insurance money for the purpose of rebuilding said premises, in case he should elect to rebuild the same.” The petition further stated, that on the 14th of October, 1854, “ Powers assigned and sold to plaintiff all his interest in said lease; ” and “ that the interest of Foster in said premises and lease was ' sold under an order of court to satisfy judgments against said Foster, and that the defendants became the purchasers of said Foster’s interest in said premises at said sale.” It is also stated, that the defendants went into possession of the said premises; that at the time they went into possession, a policy procured by Foster was running; that when it expired the plaintiff notified the defendants to insure the premises, which they neglected and refused to do. The amount «which the plaintiff claims to recover is what it had cost him to procure an insurance on the premises.
    The lease is referred to as a part of the petition. It states that the lease of the lot is made “ at and for the rents and conditions hereinafter specified; to have and to hold the leased and demised premises upon the terms and conditions hereinafter specified.” Among the terms and conditions so specified is found the covenant to insure, stated in the body of the petition. In connection with that covenant, and preceding it, was one that the lessee “ will erect upon said premises a good and substantial brick building, the height of which shall be equal to that of the building on Bank street, known,” etc.; which covenant contained a description of the size and style of the building, and the use to which it was to be put — the rooms on the ground-floor to be “ used and kept for store-rooms, during the continuance of this lease.” It is this building by the terms of the lease, which is to be kept fully insured.
    To the petition of the plaintiff, the defendants filed a demurrer, upon the ground, that it did not contain facts sufficient to constitute a cause of action.
    This demurrer was sustained by the court of common pleas, and judgment entered against the plaintiff.
    To reverse this judgment a petition in error was filed in the district court, where the judgment was affirmed.
    To reverse the judgment of affirmance in the district court, upon leave obtained, a petition in error was filed in this court.
    
      L. O. Thayer, for plaintiff in error:
    1. The defendants are purchasers of Foster’s leasehold estate, at a judicial sale, taking thereby his interest only in the premises. Being permitted to take all the benefits resulting from the lease, 'they should be made to sustain all the burdens and liabilities growing out of the covenants therein, which Foster would have had to bear if he had retained the premises; among those burdens is Foster’s ^engagement to keep the building in good repair, and at the expiration of the period to surrender it to Powers without further consideration. That he might be the more able to fulfill this covenant he was to keep the property fully insured in the name of Powers. Platt on Cov., 3 Law Library, 29.
    2. The covenants to build and keep the buildings at all times fully insured, were, in part, the moving consideration that induced Powers to execute the lease to Foster, and are in the nature of compensation for the use and occupation of the premises, and therefore are covenants running with the land and binding upon the assignee, though not named. Norman v. Wells, 17 Wend. 136, and the cases therein cited; 1 Barn. & Cress. 410; 19 Pick. 459, 464, 465.
    If the covenant to build runs with the land, then is the covenant to keep the building, when erected, fully insured, a covenant binding upon the assignees, for it is in effect but a modified covenant to repair and rebuild. Covenants to repair and rebuild are admittedly covenants running with the land. Being of this character, it would run with the land as would an ordinary and absolute covenant to repair and rebuild. 6 Gill & Johns. 372.
    3. This case does not fall within the class of cases contemplated by the first resolution in Spencer’s case, 5 Coke, 16, as a case of a covenant relating to a thing not in esse, and therefore not binding upon the assignee not named; for if it should be so held, then all covenants to repair and rebuild would for the same reason fail to bind the assignee, for it can not be said that either relate to a thing in esse.
    
    The reason of the rule that a covenant to build in futuro is a covenant not running with the land and not binding upon the assignees not named, is because a breach occurs at once, and as soon as broken becomes a mere chose in action. But can this be said of this covenant? The covenantee actually built the building and actually procured the first policy of insurance. The covenant to ^insure can not be said to be broken until the first covenant to build is broken, and that no't being broken, but actually performed, then this was not broken, while Foster held the property.
    The building being erected and policy of insurance on it in full force at the time the defendants became the purchasers, the right of Powers and Foster under that lease was ascertained and determined. The defendants are therefore precluded from setting up 1 this defense. If the building had burned down during the life of that policy they could, if they had elected to rebuild, have claimed the insurance money; if they had not so elected, Powers would certainly have been entitled to it against any one.
    4. The covenant in this lease to insure, stipulating, as it does, that the money received from such insurance may be laid out in rebuilding on the premises, is in se a covenant running with the land. Platt on Cov., 3 Law Lib. 81; 6 Gill & Johns. 372; Vernon & Smith, 5 Barn. & Ald. 1; Taylor, Landlord and Tenant, 167; Norman v. Wells, 17 Wend. 136.
    
      Kelly & Griswold, for defendants in error:
    1. The petition failing to show either privity of estate or contract between the parties, the demurrer was well taken.
    2. If, however, we are incorrect, and it does appear that the defendants are in the possession of said premises, and are chargeable as the assignees of Foster, we still claim that no action can bo maintained against them on this covenant to insure. The simple covenant to insure buildings on demised premises, is clearly a collateral undertaking. If, however, by the terms of the covenant the insurance money is required to be expended iu rebuilding or repairing the building destroyed or damaged by" fire, then it becomes a covenant 11 extending to the thing in esse, parcel of the demise,” and runs with the land. The fact that the money is required to be expended on *the premises, is what gives it this character. This is the doctrine of all the cases cited by the plaintiff in error. The reasoning is somewhat forced, yet, likening it to the covenant to repair or rebuild, it is held to be a covenant touching the land, and to run with it. But the covenant of this lease entirely fails to come within the rule. The covenant is entirely for the benefit of the landlord, and not for the land. It does not, therefore, run with the land, nor bind the assignees. It is true, there is a clause in the lease providing, though not expressed in very clear language, that in case the building is destroyed by fire, and Foster elects to rebuild, he is to have the benefit of the insurance money. But this is a mere optional matter with Foster. If he does not elect to rebuild, the money goes into the pocket of the landlord. There is nothing in the lease requiring the money to be expended in rebuilding or restoring the building on the premises, in case of its destruction by fire.
    If, however, it can be said to be a covenant running with the land, it has still another defect fatal to the cause of the plaintiff. It will be observed that no assigns are named in the lease. It appears from the lease, made p art of the petition, that the building to bo insured was not on the premises at the time of the demise. The lease, among other things, provides for the erection afterward of this building upon the demised premises, and this covenant to insure relates to this building thereafter to be built. This brings the case at bar precisely within the first rule in Spencer’s case, 5 Coke, 16. Indeed, these defendants, if in possession under Foster’s lease, are precisely in the same condition as the defendants in Spencer’s case. The building was to be newly built after the demise, the assigns were not named, and the latter clause of the first rule is strictly applicable: “ In the case at bar, the covenant concerns a thing not in esse at the time of the demise made, but to be newly built after, and therefore shall bind the covenantor, his executors, and administrators, *and not the assignee, for the law will not annex the covenant to a thing which hath no being.”
   Gholson, J.

In consequence of the rule of the common law, that a chose in action was not assignable, the assignee of a reversion could not maintain an action upon a covenant contained in a lease, against the lessee, though the covenant might run with the land. There was a distinction made between the assignee of the reversion, and the assignee of the lease; and while-tho latter might maintain, and. be liable to, an action upon such a covenant, it was different as to the former. To remedy this, the statute of 32 JEL 8, cap. 34, was enacted, which gave, generally, to the assignee of the reversion the same right of action that the lessor had, upon the covenants in the lease. But this statute did not extend to more personal and collateral covenants; it embraced those only which touched and concerned the thing demised.

It has been decided by this court, that the statute of 32 H. 8, cap. 34, is not in force in this state, and that an assignee of the reversion can not maintain an action upon tho covenants in the lease. But if the covenant be assignable in equity, so that an action might have been maintained in tho name of tho assignor, or relief obtained by a suit in equity, our code of civil procedure operates upon the remedy, even more extensively than the statute of 32 H. 8, cap. 34. For whether the covenant be collateral, or inhere in the land, if it be assigned, the assignee not only may, but, as the party beneficially interested, must sue in his own name. For example, if there bo a contract by a lessee to build a house or a wall upon tho land, at any time, and whether to be used by tho lessee or not, the lessor, in selling tho reversion, may also assign tho benefit of such a contract, and the action of the assignee for a breach would, under tho code, be in his own name.

In the present action, it may be inferred from the pleadings *that the lessor, Powers, has assigned to the plaintiff the covenant to keep tho house insured for tho benefit of the. lessor and lessee. This covenant Powers might well assign; a.nd the plaintiff, being the assignee of tho reversion, and entitled also to the benefit of the covenant, might bring an action for its breach, in his own name, against the lessee of Powers. But does this right of action extend to the assignee of the lessee ? It may be that the lessee would be liable on the covenant, but not the assignee of the lessee. There is a manifest difference between assigning a right of action and creating by assignment a liability to an action. The latter must generally assume the shape of a contract to indemnify, and could not usually affect the rights of the party holding the original claim. It would be really a new contract, and not in the nature of an assignment of another contract. In this view of the liability of an assignee of the lease to the assignee of the reversion, the principle governing the assignment of a chose in action, or the benefit of a covenant, must be thrown out of view, and the inquiry be made on other principles and considerations.

The covenant must run with the land — must be so connected with, be attached to, and inhere in, the land, that the assignee of the reversion or the assignee of the lease, as the case may be, would have a right to the advantage of it, or be bound to perform it. Such is the general principle; but whether a covenant so runs with the land, must depend, in the first place, upon the nature and character of the particular covenant, and of the estate demised, as connected with the respective rights of lessor and lessee, in reference to the subject-matter of the covenant; and, in the next place, upon the intent of the parties in the creation of the estate, as shown by the language of the instrument creating it, construed with reference to the relative position of the parties, and to the subject-matter to which their contract and conveyance is to be applied. Tbe nature and character of the covenant may be such *that it may run with the land; and yet, if it be clearly the agreement of the parties that it shall not so run, it would not be annexed, in despite of the agreement so expressed. And, on the contrary, however clearly and strongly expressed may be the intent and agreement of the parties, that the covenant shall run with the land, yet, if it be of such a character that the law does not permit it to be attached, it can not be attached by the agreement of the parties, and the assignee would take the estate clear of any such covenant.

From this view, it is obvious that, as to the first point, the nature and character of a covenant which may inhere in the land, we are to look at the reason and policy of the law; and, as to the second point, whether it does so inhere as to give a right and create an obligation in the case of assignees, we must look at the intent of the parties creating the estate. The law must say that it may inhei’e, and the parties must say that it shall inhere.

The first point depends upon a question of public policy. It would be mischievous and inconvenient'to allow every species of covenant which wit or caprice might devise, however collateral to the use of the land demised, to be connected with the estate. Therefore, from the earliest times, the distinction between such covenants as may run with the land, and such as are collateral and can not, has been taken and maintained. It has been a matter of some dispute, whether a covenant to insure might run with the land. A covenant, to run with the land, must have for its subject-matter something which sustains the estate and the enjoyment of it, and is therefore beneficial both to lessor and lessee. A covenant to insure, which had for its object the benefit of the lessor only, as where the money paid in the event of a loss would go to him, has been regarded as collateral; but if the money is to be applied to repair or rebuild, then it is in its character like a covenant to repair, which may run with the land. *Under this view, we think the covenant to insure, in the present case, was one which might run with the land.

The second point is one which, in its application to the present case, in view of the decisions and dicta in England and in this country, presents considerable difficulty. When any effect, such as to pass an estate or create an obligation, is dependent upon the intent of parties as expressed in a writing, it is an important inquiry whether the law has prescribed certain words or expressions as essential to be used to indicate that intent. If it bo so, those words must be used, and none others will suffice. The word “ heirs,” in the case of a conveyance to create an estate in fee simple, is an instance. But where the law has prescribed no such words, then the intent of the parties must be ascertained from the whole instrument, inteiqrreted and construed by just and proper rules. In .the latter class of cases, as a general rule, whether the intent be very clearly and plainly expressed, or be ascertained after some difficulty by the rules of construction, can make no difference. It is not a question of degree. The intent is either expressed or it is not, and the effect is the same without reference to the degree of clearness.

In determining whether a particular covenant was intended to run with the land, the fact that its particular subject-matter was not in existence at the time the estate wTas created, is undoubtedly very important and material, and in many instances might be regarded as a controlling consideration. In such a case, though the subject-matter be connected with the land, as a house or wall to be built upon it at a future day during the term, yet if nothing more appeared to indicate the intent, it might be regarded as a personal covenant, and not running with the land. If, however, an intent be shown that the covenant shall run with the land, by binding the “assigns ” in so many words, then the covenant does run with the land, and the assignee of the lease is bound. Thus it was resolved, in the leading case upon this subject: “If the lessee had ^covenanted for him and Ms assigns that they would make a new wall upon some part of the thing demised, that forasmuch as it is to be done upon the land demised, that it should bind the assignee; for although the covenant doth extend to a thing to be newly made, yet is to be made upon the thing demised, and the assignee is to take the benefit of it, and therefore shall bind the assignee by express words.” Spencer’s case, 5 Coke, 16 b.

In the first resolution of the same case it had been said: “ When the covenant extends to a thing in esse, parcel of the demise, if the thing to be done by force of covenant is in any manner annexed and appurtenant to the thing demised, it shall go with the land and bind the assignee, although he be not bound by express words; but where the covenant extends to a thing which is not in being at the time of the demise made, it can not be appurtenant or annexed to the thing which hath no being.” And it was further said as to the ease at bar: “ The covenant concerns a thing (a wall) which was not in esse at the time of the demise made, but to be newly built after, and therefore shall bind the covenantor, his executors, and administrators, and not the assignee, for the law will not annex the covenant to a thing which hath no being.”

Between the first and second resolutions in Spencer’s case, there is an apparent inconsistency; and the unsatisfactory character of the second resolution has been a subject of remark and comment. In the first resolution it seems to be considered that the law will not permit such a covenant as the one under consideration — a covenant to build a wall upon the land demised — -to be annexed to the estate, and run with the land. And if this be so, on the ground that it is to be regarded as a collateral covenant, not proper to be annexed to the land, then the concluding part of the second resolution shows that the agreement of the parties, whether expressed by the word “ assigns ” or otherwise, could not make it a covenant .running with the land and binding upon the assignee. *Yet, in the second resolution, it is said, of a supposed case, if the lessee had covenanted for him and his assigns, it would bind the assignee by express words; and thus showing, apparently, in a ease in which it had been before said, that the covenant could not be appurtenant or annexed to the land, that the parties might make it so. It is to be observed, however, that in the second resolution an element is introduced, not found in the statement of the case in the first resolution, viz: That the building of'the wall would be bene* ficial to the estate demised, and the assignee would have the benefit of it. The result, then, would be, that if the thing to be done upon the land, though not existing at the time of the demise, would be of a permanent nature, connected with the use and enjoyment of the land, and beneficial to the assignee, an intent that it should run with the land and bind the assignee, shown by naming him in the deed, would be effectual.

Thus understood, the two resolutions are not inconsistent, and there may have been some omission in expressing the second resolution which has led to the apparent inconsistency. The question, then, arises, whether an intent to bind the assignee, in the case of such a covenant, may be effectual without the word assigns ?” Whether that word is used in the technical sense, and can not be supplied by other words. If, for example, in the case stated, instead of “ for him and his assigns,” it was said “ for him and any other person or persons to whom the estate demised shall be conveyed,” or other equivalent words.

Our conclusion is, that the word assigns ” is not used in a technical sense and as the only word appropriate for the purpose, but that equivalent words, or any clear manifestation of intent will suffice. We think the real question must be, the covenant being one which may be annexed to the estate and run with the land, whether such was the intention of the parties, as expressed in the deed. The important consideration is, whether the covenant is annexed to the estate and runs with the land. If this be so, the rights *and liabilities of those who take the estate and possess the land during the term, flow from a privity of estate, and not from any assignment of right or contract. If the covenant can not, or does not, run with the land, no words of assignment can create a privity of estate ; if a privity of estate be created, no words of assignment are necessary. The word “ assigns ” could only show that the covenant was intended to run with the land, for if the covenant were otherwise attached to the land and the privity of estate created, as in the ordinary ease of covenant to repair, that word is shown by all the authorities not to be requisite to bind the assignee of the lease.

Upon principle and authority, “ the law does not require any particular form of words to constitute such a covenant which shall run with the land.” Trill v. Eastman, 3 Met. 121-124. “Any words in a deed, which show an agreement to do a thing, make a covenant.” Williams v. Burrell, 1 M. G. & S. 402-429, Comyns Dig., tit. Covenant. “ To charge a party with a covenant, it is not necessay that that there should be express words of covenant or agreement. It is enough if the intention of the parties to create a covenant be apparent.” Wolveridge v. Steward, 3 M. & S. 561 (30 E. C. L. 312); Courtenay v. Taylor, 6 M. & G. 851; Williams v. Burrell, 1 C. B. 402-430; Great N. Railway Co. v. Harrison, 12 C. B. 576-609; Savage v. Mason, 3 Cush. 500-505.

In the present case, that the covenant to keep the building fully insured, was intended to accompany the estate in the event of any assignment, is, we think, shown as well by the immediate object in view as by the language. The land demised was a vacant lot to be rendered more productive and valuable by an improvement corresponding with those on other lots in the neighborhood. It was to be improved with a view to permanent and continuous business — the rooms were to be kept and used for stores. That the lot might lie unimproved, or the building after its erection be burned and not be rebuilt, either by lessor *or lessee, was never contemplated by the parties. The language in the instrument is, that the lease was made “at and for the rents and conditions ” specified; and it was to be held “ upon the terms and conditions ” expressed. We feel, therefore, authorized, for the reasons given and for others on which it is not necessary to enlarge, to use an expression of the American annotators on Spencer’s case, and say, that the covenant to insure in this case did not relate solely to something not in esse at the time it was made, but related to the land so directly and in such manner that it may bind an assignee of the lessee. 1 Smith’s Lead. Cas., Am. ed. 177.

We are aware that there are authorities which may be regarded as in conflict with the views we have taken, and there are others by which they ai*e sustained. Among tho former we have not overlooked the recent case of Doughty v. Bowman, 11 Q. B. 444; and among the latter we may name Kellogg v. Robinson, 6 Vt. 276. We do not think proper to cite, much less to review'and compare, the authorities which we have examined. The most of them contain a mere repetition of the resolutions in Spencer’s case. It may be noticed, however, that one of the earlier cases (Bally v. Wells) is differently stated in the reports, and that one statement would strongly favor the view we have taken, while the other might not. 3 Wilson, 25; Wilmot’s Notes, 344; Allen v. Culver, 3 Denio, 296, 297.

There are several objections to the petition of the plaintiff, relied on in argument, other than the principal one which has been discussed ; but we think they rather go to show defects in the statement of a'case than a defective case, and should be reached by motion. The connection between the plaintiff and the defendants should certainly appear with greater clearness, and the amount of insurance, as compared with the value of the building, should also be disclosed.' We are satisfied, however, that the decision of the principal and most important question in a way which removes what would be, if otherwise decided, an insuperable *obstaele to a recovery by plaintiff, entitles him to a reversal of the judgment; so that if, in other respects, by clearer averments and by proof, he can make out his case, an opportunity may be afforded.

Judgment reversed.

Brinkerhoee, C. J., and Scott, Sutliee, and Peck, JJ., concurred.