Case Name: James T. Worthington v. Hewes & McCann
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1869-12
Citations: 19 Ohio St. 66
Docket Number: 
Parties: James T. Worthington v. Hewes & McCann.
Judges: Brinkerhoff, C.J., and Scott, White, and Day, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 19
Pages: 66–78

Head Matter:
James T. Worthington v. Hewes & McCann.
.In 1836 B. demised to P. and Ms assigns certain real estate in Cincinnati, for ninety-nine years and renewable forever, reserving to B. and Ms assigns a specified annual rent in money. Tie lease provided tiat at tie end ol' .each fifteen years tie demised premises should be appraised, without ref■erence to tie improvements, by three intelligent and disinterested men, to be chosen by tie parties, and that the rent for the fifteen years next -succeeding eaci appraisement should be six per cent upon tie amount -.thereof. The lease also provided, that in case of the disagreement of the parties, the appraisers should be appointed by the judges of the court of common pleas of Hamilton county, for the time being, on application of either party. In an action for the recovery of rent, brought by the devisee of the lessor against the assignee of the lessee — Held:
'1. That the stipulation in the lease as to the mode of appointing appraisers is a covenant running with the land, and not a collateral covenant.
.2. After an unconditional assignment by the lessee, he is not liable for futpre rents, and has no right to interfere in the appointment of appraisers, which is a matter to be adjusted, not by the original parties to the lease, but by their assignees.
3. A request by the devisee of the lessor, made to the assignee of the lessee, to unite in the appointment of appraisers, and a refusal by the latter, is a “ disagreement ” of the parties, within the meaning of the lease, • such as authorizes the appointment of appraisers by the judges of the .court named
4. The judges of the present court of common pleas come within the purview of the provision in that respect, and, in case of such disagreement, are authorized to make the appointment, upon application by one of the parties, and notice to the other.
B. When it is reasonably practicable, an opportunity should be given the r parties to be heard by the appraisers, before making their valuation; otherwise it will not be binding upon the party deprived of such opportunity.
Error to the court of common pleas of Hamilton county. Reserved in the district court.
The plaintiff in error was plaintiff below. Judgment was rendered against him upon demnrrer to his original petition, and the only question involved is whether that petition sets forth a good cause of action. The allegations of the petition are substantially as follows:
The plaintiff, Worthington, is assignee of the reversion in fee of a certain lot of land in Cincinnati, subject to a lease for ninety-nine years, renewable forever, made by Jacob Bur-net to Henry Pace on the 14th day of March, 1836, the term commencing the 1st day of May of that year. Hewes & McCann are assignees of the lease, and in possession of the demised premises, by conveyances made prior to the 30th day of April, 1866.
The lease contains a covenant for the payment, during the first fifteen years of the term, of a fixed sum as an annual rent, payable quarterly.
It contains a further covenant that at the end of the first period of fifteen years, and of each succeeding period of fifteen years, “ the said lot of ground, without reference to the buildings and other improvements erected and made thereon, should he appraised and valued by three intelligent and disinterested men, to be mutually chosen or agreed to by the said parties ; or, in case of their disagreement, then to be appointed by the judges of the court of common pleas of the State of Ohio within and for the county of Hamilton for the time being, upon the application of either of the said parties; ” the lessee, for himself, his personal representatives and assigns, covenanting that, for and during the continuance of each of said successive terms of fifteen years, he and they should render, yearly, as an annual rent for the demised premises, a sum of money equal to six per centum on the sum of money at which the said premises should be appraised and valued as aforesaid, in quarter-yearly instalments, on the first days of August, November, February, and May, in each year.
The petition also alleges that on the 30th’ day of April, 1866, the plaintiff applied to the defendants to unite with him in the selection of three intelligent and disinterested men, to appraise and value said lot of land, without reference to the buildings and other improvements erected and made thereon, for the purpose of ascertaining and fixing the rent thereof for the period of fifteen years then next ensuing, as provided by the lease; but the defendants refused to unite in such selection. The plaintiff then applied to the judges of the court of common pleas for the county of Hamilton for the appointment of such appraisers, previous notice of the time and place of making said application having been given to the defendants, who appeared then and there, and were heard in respect to the same, when the said judges, in writing, under their signatures, designated and appointed three intelligent and disinterested men as such appraisers, who did thereupon, upon actual view, value and appraise the said lot of ground, without reference to the buildings and other improvements erected and made thereon, at the sum of sixteen thousand two hundred dollars, and delivered their written valuation and appraisement thereof at that sum to the plaintiff and defendants respectively.
It is alleged that thereby the defendants became liable, by virtue of the said lease, to pay as an annual rent for said premises, for fifteen years, beginning on the 1st day of May, 1866, the sum of nine hundred and seventy-two dollars, in quarter-yearly instalments; for one instalment of which, amounting to two hundred and forty-three dollars, falling due on the 1st day of August, 1866, the suit was brought and judgment demanded.
Hoadly, Jackson dó Johnson for plaintiff in error:
1. The provision for appraisement contained in Burnet’s lease to Pace is a covenant running with the land, and binds the assignees both of the lease and the reversion irrevocably. Masury v. Southworth, 9 Ohio St. 340, 348; Piggot v. Mason, 1 Paige, 412; Norman v. Wells, 17 Wend. 136, 150; Roe dem Bamford v. Hayley, 12 East, 469; Best, J., in Vernon v. Smith, 5 Barn. & Ald. 11; Winslow v. Tighe, 2 Ball & B. 205; Bally v. Wells, Wilmot's Opinions, 341; Hyde v. Skinner, 2 P. Wms. 196; Spencer's Case, 5 Co. 16; Gawdy, J., in Moore, 159; Year Book, 42 Edw. III., 3.
2. The “ parties ” to execute this covenant are not Burnet and Pace merely, but their respective real representatives and assigns. • The lease does not contemplate that the method of ascertaining rent thereby provided shall be rendered ineffectual by the decease of or assignment by the original lessor or lessee, but establishes a, scheme of perpetual renewal, binding those who may at the several periods fixed be seized of the reversion or the lease.
3. Pace having parted with his entire interest in the leasehold to Hewes & McCann, cannot be required by them to take part in the valuation, because of his supposed liability upon the covenant to pay rent. If this were a valid objection at all, which we deny, it must come from him, and it is not their place to make it.
Neither can they object that Burnet was no party to the renewal. The lease did not contemplate that he should live forever, and the plaintiff Worthington is his devisee, and represents his entire interest.
But the objection can be made by no one, for the lease, properly construed, is equivalent to a provision for a renewal every fifteen years at the new rent. It is “ renewable forever,” on compliance with its conditions. Each renewal is a new lease, and binds the then owners who make it. The liability of the original lessee terminated with the Renewal.
A The lease does not provide for an arbitration, but an appraisal or valuation. The duty of the judges was to select three “ intelligent and disinterested men ” to “ appraise and value ” the lot. This duty is such as appraisers are often called on under our statutes to discharge, with the single difference that actual view is not required by the lease. The appraisers exercise their own judgment and skill, with such assistance as they choose to procure. No trial, argument, oi witnesses are necessary; hence notice of the time and place of appraisal need not be given to either party. It is not air arbitration, and cannot be revoked. S. & C. 706, 1073, 1579, 1581; 29 O. L. 494; Russell on Arbitration, 180; Johnston v. Cheape et al., 5 Dow, 247; Munday v. Bluck, 9 Com. Bench (99 E. C. L.), 557; Collins v. Collins, 26 Beavan, 306, 312; In re Hopper, Law Rep. 2 Queen's Bench, 367, see pp. 370, 373, 374, 376; Leeds v. Burrows, 12 East. 4, 6, note a; Eads v. Williams, 4 De Gex, McN. & G. 674; 31 E. L. & Eq. 207.
5. The appointment of appraisers was properly made. Notice of the time and place of application (though unneccessary) was in fact given. The present court of common pleas succeeds to the functions of the court of the same name under the constitution of 1802, and a change in the number or mode of election of the judges does not make them any the less “ judges of the court of common pleas of the State of Ohio within and for the county of Hamilton for the time being.” The duty they perform under the lease is no more judicial than when the parties select the appraisers. A lawsuit every fifteen years was not in the contemplation of Burnet and Pace.
S. db S. B. Matthews for defendants in error:
1. The covenant as to the mode of revaluing the demised premises every fifteen years, as a basis for fixing the annual rent, is a personal covenant between the original parties, the lessor and the lessee, and does not run with the land, so as to confer any rights or.liabilities upon the assignee of the reversion and the assignee of the lease.
It is not disputed that the covenant to pay rent inheres in the estate, because the rent is the consideration for the use of the land. Neither is it disputed that the periodical valúa tion of tbe land is an incident of the estate; for there is nc other means provided, in the lease or by the laao, for fixing the amount of the rent to be paid. But the w particular method of valuation stipulated for in the covenant does not also follow the estate so as to govern and bind the assignees of the original parties, for, in reference to that, the same reason does not apply, as in case of a failure of that particular method, the law provides another, namely, by the interposition of a court of equity to ascertain by its own instrumentalities and methods, by means of a reference to a master and a hearing upon evidence, the z’eal value of the property, and so fix the annual rezzt. (See Crawford v. Chapman, 17 Ohio, 449; Masury v. Southworth, 9 Ohio St. 346; Sutliff v. Atwood, 15 Ohio St. 194, 196.)
Ei’om azz examination of the relations to each other of all the parties who have a legal interest in the question, the conclusion, as we think, must be that the covenant, in respect to its character, izr the particular under examinatiozi, is not one which the policy of the law regards as capable of inhering in the estate, and in respect to the terms in which it is expressed, was not intended by the parties so to do.
2. The true eozistz’uction of the covezzant z’equires that the appraisers shall be mutually chosen or agreed to by the said jparties; or in case of their disagreeznent, then to be appointed by the judges, etc., upon the application of either of the said parties.
We claim that the parties refezTed to az’e the paz’ties to the contract — the lessor and the lessee. The word “ parties” does not include the assignees.
Evezr on the supposition that the covenant inheres in and follows the estate, so as to bind the assignees, both of the reversion and the lease, the question of its true meaning z’emains open; and the pz’oper interpz’etation of it in no wise depends upon the quality of the covenant, as being collateral to, or inherent in the estate. It must mean the same, whatever its quality in these respects. The fact that in a given case a covenant follows the estate, does not tend to change the meaning of the tezmzs in which it is expressed.
3. The covenant sued on provides, that in case of the disagreement of the parties, the appraisers are to be selected and appointed by the judges of the court of common pleas of the State of Ohio, within and for the county of Hamilton, for the time being.
The lease took effect on the first day of May, 1836.
At that time the court of common pleas was composed of fom- judges, — a president and three associate judges. They were the persons described in this covenant as those who, it was agreed, should, in the event of disagreement between the parties, make the appointment of appraisers.
The persons who, it is alleged in the petition, made the appointment of appraisers, whose valuation fixes the amount of the rent sued for, were the persons acting as the judges of .the court of common pleas for this county, in the year 1866.
We claim that the reorganization of our judicial system in 1851, by the present constitution, destroyed the office of judges of the court of common pleas, as previously known; so that subsequently there could be no persons answering that description, and that, consequently, the proceedings for the appointment of appraisers, under this covenant, are not valid.
4. The persons to be agreed upon by the parties, or in case of their disagreement appointed by the judges of the court of eommón pleas, to appraise the value of the demised premises, when appointed, are arbitrators, and their authority is subject to the same rules, and to be exercised upon the same principles, as in other cases of a submission to arbitration; and an award made without notice to one of the parties and in his absence, is void. Van Cortlandt v. Underhill, 17 Johns. 405; Peters v. Newkirk, 6 Cowen, 103; Elmendorf v. Harris, 23 Wend. 628; McMahon v. The New York & Erie R. R. Co., 20 N. Y. 463; Collins v. Vanderbilt, 8 Bosworth, 313; Bos v. Helsham, L. R. 2 Excheq. 72; Re Hopper, L. R. 2 Q. B. 367; Anonymous Case, 2 Chitty, 44 (18 E. C. L. 244); Thorburn v. Ames, L. R. 2 C. P. 384; Cooper v. Wandsworth District, 14 Com. Bench, R. N. S. 180; S. & C. Stat. 1581; ib. 329, sec. 10; Ormsby v. Bakewell, 7 Ohio, pt. 1, p. 98.
5. According to the allegations of the petition, the defendants refused altogether to participate in the matter of selecting appraisers; refused to consider the question of the persons to be selected; refused to join the plaintiff in taking any step whatever in the direction of the appraisement. And this being true, as alleged, the case did not arise for an application to the judges to appoint appraisers. That was to be done only in the event, that the parties being desirous of settling the matter in that way, had endeavored to make a mutual selection and failed by reason of a disagreement as to the fitness of the persons proposed on each part, when, to harmonize and settle that difference, the judges might be applied to, to make the appointment for the parties, which they could not between themselves agree on.
This action on the part of the defendants, we claim, constitutes a revocation of the submission. Carey v. Montgomery County, 19 Ohio, 245; Hunt v. Guilford, 1 Ohio, 310; Russell on Arbitrations, 143, 144, and cases cited; Conner v. Drake, 1 Ohio St. 166; Caldwell on Arbitration, p. 46 et seq., and American notes, 2 Amer. ed. 1853; Holliday v. Marshall, 7 Johns. 210.

Opinion:
Welch,- J.
In support of the demurrer, counsel for defendants contend:
I. That the covenant as to the mode of revaluing the demised premises every fifteen years, as a basis for fixing the annual rent, is a personal covenant between the original parties, the lessor and the lessee, and does not run with the land, so as to confer any rights or liabilities upon the assignee of the reversion and the assignee of the lease; and even if it is a covenant running with the land, that by the express words of the covenant the " parties," and not the parties or thei/r assigns, are to select the appraisers; and that therefore any appraisement made by men selected by or at the instance of the assignees of the original parties, is invalid.
We think the covenant regarding the mode of revaluing the premises, equally with the covenants for revaluation, and for payment of a rent based upon the valuation, runs with the land. The three are inseparably connected, and reflect upon each other. The amount of the valuation might well be supposed to depend somewhat upon the manner of its being procured. The terms of renewal, at the end of ninety-nine years, would also be fixed by the valuation to be made at that time; and surely the covenant to renew is inherent. The object of the parties seems to have been to devise a self-executing scheme, and thus avoid the necessity of a lawsuit, and the danger of an expiration of the lease. It was a covenant which tended to support the estate, and affected its value, and which, therefore, they might well intend and declare to be inherent, and not collateral; and that they did so intend, we can, in view of the whole instrument, and of the nature of the estate demised, have no doubt whatever.
A principal reason rendered for holding this to be a collateral covenant is, that the original lessee continues liable for rents after his assignment. It would be a strange proceeding, and unjust to him, it is said, that he should be bound by a-valuation in which he could take no part, while his assignee who procured or assented to it might assign to an ii'responsible person the next day after, and avoid the payment of rent.
If it be true that the original lessee still remains liable for rents, perhaps it would be a sufficient answer to say, that by the assignment the lessee has made the assignee his agent to act for him in that behalf; and also to say, that there would be at least equal injustice in permitting a party with a mere nominal liability for rent, which is amply secured by the estate of the tenant, to. destroy the estate by an exorbitant increase of rents. Upon either construction, therefore, injustice to one party or the other seems unavoidable. In either case one party may fix the amount of rent, and the other party be compelled to pay it.
But is not the plain way out of this dilemma to be found in denying the continuing liability of the lessee ? It is simply a question of intention. Could the parties have intended such continuing liability, or the continuing right of the lessor to control the rate of rents ? In other words, could they have intended either of the unjust results referred to — the fixing of the rent by either party, and its payment by the other % We think not. The nature of the estate granted forbids any such construction. For all substantial purposes, it is a leasehold estate in name and in form only. The lessor, in effect, parts at once with his entire estate, for a stipulated consideration in money, payable in specified instalments, and secured by a lien upon the land; and the lessee takes the entire estate, an estate of inheritance, subject only to the payment of the money. In form merely is it a chattel; it is in fact an estate in fee. Is it not a mistake, then, to hold, that such an estate is subject to all the incidents of an actual estate for a limited term of years ? One by one it has been found necessary, at least in Ohio, to deny these incidents in their application to permanent leasehold titles. What is called an assignment of such a lease, is in fact a sale of the land subject to the payment of money, under the name of rent. We are bound to conclude that the lessor intended to trust to the land and its owner, and not to the lessee, for his security. He could not have expected the lessee to live forever, or even for ninety-nine years; and the latter could not have intended to make promises so far in the future. The parties contemplated " improvements " upon the land, and the rent reserved was a mere ground rent. The lessor might, therefore, well trust to the land alone for his pay. No prudent man would make a lease running forever, unless he were willing to trust to the land alone. The personal liability of the best of lessees would be no security at all, and no man of sense would part with his estate upon any such consideration. Nor, on the other hand, is it reasonable to suppose, that in case of assignment by the lessee, which, it is admitted, was contemplated by the parties, it was intended that one man, the assignee, should be the owner of the land, and another, the original lessee, should fix the amount of rent for which it was liable. Moreover, if we are to regard the renewal at the end of each ninety-nine years, as a new lease, which seems to be the view of counsel, what assurance had the lessor that the new lessee would be a responsible person ? To our minds it is quite clear that the parties never contemplated the continuing interest or liability of the original parties, or their continuing control'over the matter. The fact that the lease they made, and the acts to be done under it, were to outlast the life of any natural person, is a complete negative to any such idea. It is toue, that after the death of the parties a court of chancery could interfere, and do for them what they might do if alive. But the question is not what might a court of chancery do, but what did the parties intend? They evidently intended a permanent self-adjusting scheme, that should steer clear of courts. They intended the owners to be the controllers. They intended that the appointments of appraisers should go fmri passu with the valuations, and the payments of rent, and should be equally permanent with them. All three of these covenants — to pay rents, to have appraisements, and to appoint appraisers — were to outlast the term, of ninety-nine years, and were all to be called into requisition in determining the terms of renewal — with which renewal it is conceded the lessee had nothing to do.
I do not say that a similar interpretation would apply in all cases of permanent leases. It is, of course, competent for the parties, by express words, or otherwise, to rebut the implication, and indicate an intention to continue the rights and liabilities of the original parties. I do not undertake to say, for instance, that the mere fact of the lessee being a corporation, with power of perpetual succession, might not rebut the implication. We confine our decision to the case made, — the case of a perpetual lease made between natural persons; and I have x'eason to kixow, that oxxr ixxtex-pretation is the rntex'pretatioh pxxt xxpoxx sxxch leases by those wlxo deal in them, axxd by the commuxxity where they are xxsed. I refer particxxlarly to the Ohio University lands, which are held by this kind of temxre.
II. Bxxt it is claimed, ixx the second place, that the jxxdges of the court of common pleas, as ox'gaxxized under the px'esent coxistitution, are not the officers designated in the lease, and had no authority to appoint the appraisers. They ave not the same in number, it is said, or appointed in the same manner, as the judges of the court of common pleas of 1836, and are not the successors of the latter.
This provision in the lease should be liberally construed to effect its evident object, which was, to fix a sure method of adjusting the amount of the rent, in case of disagreement. "We may well suppose that the judges of one court would have answered the purposes of the parties, as well as another. The particular object was, not to name the best judges, but to name such as could always and certainly be had, so that there should never be a failure. It seems to us, therefore, although it may not be strictly true in every sense, that the present court of common pleas is the successor of the court of common pleas under the old constitution, that the judges of the court as now organized ought to be held as coming within the province of this provision in the lease, and that the appointment was well made.
III. Another objection is that it is only in case of " disagreement " by the parties that the judges are authorized to appoint, and that there was no disagreement in fact.
The petition alleges that the plaintiff applied to the defendants and requested them to unite in the appointment of appraisers, but that the defendants refused to do so. This was surely a " disagreement," within the meaning of the contract. They did not agree, and could not agree, upon the appointment of appraisers. The one desired the appointment of three appraisers, and the other desired the appointment of none, and they mutually made their minds known to each other to that effect. This was surely a disagreement within the meaning of the lease.
IY. The remaining question made upon the demurrer is, whether it was necessary, in order to the validity of the valuation, that the parties in interest should have an opportunity to be heard by the appraisers, before it was made. We think, with the court below, that it should be made to appear that such opportunity was afforded, or that it was not reasonably practicable. In view of the importance of the interests to be affected, and the length of time for which the appraisement is to last, it seems to us it ought not to be made in the absence of the parties, and without consulting them, where it is reasonably practicable to give them a heai'ing. In so holding it is unnecessary to say whether the proceeding is to be regarded as an arbitration or not. It is surely not in the nature of an arbitration, so far as regards any supposed right of the parties or privies, to revoke the authority of the appraisers. But we think it is a proceeding of that importance, and so liable to possible abuse, fraud, or mistake, that the parties to be affected thereby should have an opportunity to be heard. That such opportunity was afforded to the defendants in the present case, does not appear by the plaintiff's petition, and the demurrer thereto was, therefore, properly sustained.
Judgment affirmed.
Brinkerhoff, C.J., and Scott, White, and Day, JJ., concurred.