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National Insurance Co. v. Irwin & Co.

rendered, and though either or both may have a right to terminate the relation, yet it stands as a contract until determined, and why may not the same rule apply to an obligation to indemnify against a continuing risk to property?

The only question is, as to the consideration, whether the entering into an obligation with the right to terminate it by a notice, is a sufficient consideration? Upon the general principles, governing questions as to the consideration of contracts, I entertain no doubt that such a consideration is legal and sufficient. A prejudice to the promissee, incurred at the request of the promissor, may be a consideration, as well as a benefit to the promissor proceeding from the promissee; the prejudice must be on entering into the contract; 2 E. & B. 75 E. C. L. 475, 487, Gerhard v. Bates. If there be really and actually, and not colorably, a prejudice to the promissee, or a benefit to the promissor, there is a legal and sufficient consideration. With the adequacy of the consideration, or the reasonableness of the particular stipulations in contracts, courts can not properly interfere, or at least only in particular cases, and on grounds which have no application to the present case. The entering into an onerous obligation with another person, from which a party can only relieve himself by a notice given to such person is a prejudice. The entering into the obligation and the giving the notice in themselves prejudice the party: much more the contingent liability while the obligation existed ; and the right to be indemnified against continuous perils for any appreciable time, would be, in law and fact, a benefit to the other party.

Where a contract is a continuing one, as a contract for service, or a contract for indemnity, I can see no reason why it may not be valid, though one of the parties has secured by its terms a right, at his option, to terminate its obligation. Parties may agree to rescind contracts, and this agreement to rescind may be one of the terms of the original contract. This condition attending such contracts has never been supposed to affect their validity. It is not to be supposed that parties will make contracts for the mere idle purpose of

Charles B. Prather v. Erasmus D. Foote, et al.

unmaking them. Nor is it to be supposed that where a party enters into a serious and important obligation, with a right to relieve himself by a notice, he intends to exercise this privilege at the instant of the contract, so as to make his solemn acts nugatory and of no substantial use. But it is sufficient to constitute a legal consideration, that there is an actual obligation requiring an act to be done, the giving of notice, to relieve the party. There is an obligation in the policy in this case, for as has been said in a similar case, "if I take a power to put an end to an agreement, it is because the agreement has begun. The power to dismiss implies that they have engaged to employ;" 15 Mees. & Welsb. 655,659, Pilkington v. Scott. So in this case the power to terminate by a notice, implies an intention that the obligation to indemnify should commence, subject, as to its continuance, to the condition. Such a contract, I think, parties may legally make. The consideration intended, is the obligation to indemnify; this is a good consideration. With its extent as to amount, or time, if the parties are satisfied, I see no grounds for courts to interfere.

The second ground of defense is really involved in the first. If the plaintiff has done no more than by the contract with the principal he had the right to do, the sureties can not complain. There will be a finding of the issue for the plaintiff.

Judgment for plaintiff.

CHARLES B. PRATHER v. ERASMUS D. FOOTE AND THE EXECUTORS OF GEORGE G. BOWEN.

1. A lessor, who has entered upon the leasehold premises, under a clause of forfeiture for non-payment of rent, is not prejudiced by subsequently purchasing at sheriff's sale the interest of the lessee in the same premises. 2. When the lessor has entered for condition broken, and expended large sums of money in permanent improvements, with the knowledge of the

Charles B. Prather v. Erasmus D. Foote, et al.

lessee and without any claim being made by him under the lease, the mortgagee of the leasehold premises, his mortgage having been executed prior to the forfeiture, will not, in a proceeding to subject the premises to sale for payment of the mortgage debt, be permitted to dispossess the lessor for want of proof on his part that the steps required to work a forfeiture were legally taken.

3. In such case, the mortgagee of the leasehold will be permitted to redeem; but the right of redemption only extends to the interest of the lessee at the time of the re-entry for condition broken; and the lessors are entitled to be fully indemnified for the value of all permanent improvements made by them, as well as to be paid all rent in arrear, taxes, and interest. 4. A devise in the following terms: "In the event that it should become necessary, in the opinion of my executors, to improve any of my unimproved real estate, I hereby, to effectuate this my desire, do hereby vest in my executors, full power and authority to dispose of any of my real estate, in fee simple, or for a term of years, or otherwise, in as full and large a manner in every respect as I could myself, if living," authorizes the executors to grant a perpetual leasehold, with the privilege of purchasing.

5. A mortgagee of the leasehold is not liable on the covenants unless he has taken possession.

GENERAL TERM.-Reserved from special term, by Storer, J., for the opinion of the entire court.

Action to foreclose a mortgage: the facts sufficiently appear in the decision.

King, Anderson & Sage, for plaintiff.

Taft & Perry, for defendants.

STORER, J., delivered the opinion of the court.

The questions involved in this case were argued at special term, and have been reserved, by the judge who heard them, for decision here.

The plaintiff seeks to foreclose a mortgage, which he claims to hold, upon certain leasehold property, described in the petition as situated at the north-west corner of Third and Elm streets, executed on January 5, 1850, and recorded on the same day. The plaintiff is the original mortgagee, and

Charles B. Prather v. Erasmus D. Foote, et al.

the defendant, Foote, the mortgagor. The amount claimed as due is $450, with interest since July 4, 1850.

Answers have been filed by several of the defendants, the others are in default.

It appears by the pleadings and the facts agreed upon by the parties, which are made a part of the record, that the leasehold estate intended to be conveyed by the mortgage was held by Foote by a lease from the executors of George G. Bowen, deceased, executed June 30, 1849, and recorded in due time. By the terms of the lease, Foote was to enjoy a term of fourteen years in the property from August 1, 1849, rendering a yearly rent of $1,000, payable quarterly, the first installment to be paid on taking possession of the premises; the privilege of purchasing at any time during the term, was secured to the lessee, and if no purchase should be made, the lease, at the expiration of the term, was to be extended so that an estate for ninety-nine years, renewable forever, was to be created at the annual rental of $1,200, payable quarterly; the lessee to pay all taxes and assessments levied or imposed during the term, subject to the condition that if any quarterly payment should be in arrear for thirty days, or if the lessee should permit waste, either willful or voluntary, the lessors were at liberty to enter upon the premises, and hold them discharged from the lease as of their former estate.

Foote, the lessee, took possession in August, 1849, and made improvements to the value of $450. He paid the first quarter's rent, and gave his note for the second, upon which judgment was afterward recovered, but has not been paid.

In December, 1851, there being more than $1,500 due for rent, the lessors took possession of the premises, and have continued in the possession without any interruption or claim on the part of Foote, to the present time.

Foote, soon after the lease was made, became insolvent, and has never offered to pay any part of the amount due. In the meanwhile all the estate and interest of Foote, in the lease, was sold by the sheriff of Hamilton county, upon

Charles B Prather v. Erasmus D. Foote, et al.

execution, to Gregory, one of the lessors, who received a deed for the same, and afterward released his purchase to the executors of Bowen, for the benefit of the estate.

After the lessors had recovered the possession of the property, and as they supposed, determined by their entry the estate of the lessee, they expended large sums of money in improving the property, the land being nearly, if not all, vacant, the amount of which exceeds $11,000, Foote, the lessee, and the plaintiff setting up no claim under the lease.

On November 25, 1854, when the lessors had thus improved the property, the plaintiff files his petition and claims to subject the entire premises, the leasehold interest as well as the improvements, to the payment of his mortgage.

Several important questions arise upon these facts. First: What is the effect of the mortgage from Foote to the plaintiff? Does it convey any estate? If it does, where is it? Does the description of the property define, with any certainty, the leasehold in controversy? for upon this depends our jurisdiction.

The language of the deed is: "That certain leasehold plot of ground, known as the corner of Third and Elm streets, being situated on the south-west corner of, and consisting of, say, one hundred feet on Elm street and sixty-five feet on Third street aforesaid, with the appurtenances." Where, then, is the property? There is no reference in any part of the deed to Cincinnati. The parties themselves are described as of Hamilton County. There is no reference even to the lease, by which the title of the mortgagor or lessee is asserted. But as the parties have not made the objection, and the case has been argued upon the hypothesis that the property mortgaged is the same that was leased, we may hold, for the purposes of the present controversy, that we have jurisdiction.

Second: The lease is made by the executors of Bowen; It is, in effect, the creation of an estate for ninety-nine

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