
    Henry O. Gilbert and George M. Ives v. Andrew J. Port.
    1. A lease of real estate, with tlie privilege reserved therein to the lessee to purchase within the term, and which contains specific covenants and stipulations touching the obligations of the parties as lessor and lessee, and as vendor and vendee in the event of such election, is both a lease and an option to purchase, and should receive that construction which will preserve the rights of the parties under the contract in either aspect.
    2. In such a contract, in the absence of provisions therein to-the-contrary, it should receive that construction which will preserve in full force the obligations of lessor and lessee while that relation subsists, and in like force the obligations of vendor and purchaser after the election to purchase is exercised.
    3. In such case, the relation of lessor and lessee subsists as provided therein until the election to purchase has been made, when the optional contract becomes an absolute contract of sale, and is to be construed and .enforced as such.
    
      4. Where the right to exercise the privilege of purchase is, by the terms of the contract, made to depend on the performance of specified covenants as lessee, such right can not be exercised without performance, or an offer to perform such covenants.
    5. After such election, the right of the purchaser to a specific performance of such contract is subject to the same principles of equity as if it had been an absolute contract of purchase, instead of a lease, with an option to purchase.
    6. The relation of vendor and vendee, and the obligations in equity growing out of that relation between the parties, does not exist until such optional contract becomes an absolute contract of sale. Then the nature and extent of such obligations are to be determined by the terms of the contract and the equities growing out of it.
    7. The contract of insurance does not attach to the property insured, nor, in case of sale, either before or after loss, does it pass to the purchaser by operation of law, in the absence of a stipulation to that effect. It is a contract of indemnity against the loss covered by the policy, and inures to the benefit of the person with whom it is made or those falling within its terms. As soon as the interests of such persons cease, it is at an end.
    8. As between vendor and vendee, under a valid and subsisting contract of sale of real estate, covered by a policy of insurance, where a loss insured against occurs after the date of the contract and before conveyance, the true test for determining to whom the money recovered on the policy belongs, in the absence of stipulations governing, is to determine who was the owner and which party actually sustained the loss.
    9. If, in such case, by the terms of the contract of sale, tho loss insured against falls on the person contracting to sell, the indemnity belongs to him, but if the purchaser is, in fact, the owner, and must sustain the loss, he is, as between the parties, entitled to the indemnity.
    10. This principle applies as well to an optional contract of purchase, and to a lease with an option to purchase reserved to the lessee, as to an absolute contract of purchase. In case of such lease, when a loss insured against occurs before the relation of vendor and vendee is created by such election, the loss falls on the lessee, and the indemnity belongs to him where the insurance is expressly for his benefit, unless, by the terms of the contract, the lessee stipulates for an interest in the insurance in the event of his electing to purchase.
    11. The lessee, by a subsequent election, can not, in the absence of stipulations to that effect, change the status and rights of the parties as they existed when the loss occurred; therefore, when the loss occurred, and the money was collected by the insured within the terms of the tenancy, upon a policy taken out especially for the lessor’s benefit, and the lessee is in default of payment of installments of rent, he can not, by a subsequent election and relation back, make the loss his own, and the money so received by the lessee inure to his benefit in payment of past due rents as well as on the purchase-money, and compel a specific performance, with a credit on his obligations to the amount received by the insured .
    Error to the Superior Court of Cincinnati.
    This action was commenced by Andrew J. Port against the plaintiffs in error, on the following agreement:
    “ This indenture, made the 18th day of March, a. d. 1867, between Henry O. Gilbert, party of the first part, and Andrew J. Port, party of the second part, witnesseth : That the party of the first part, in consideration of the rents and covenants hereinafter reserved and contained, hath demised to the party of the second part, and his representatives and assigns, all that tract of land in the city of Cincinnati, in the county of Hamilton and State of Ohio, and in section nineteen (19), township three (3), fractional range two (2), of the Miami Purchase, containing about four (4) acres, and which is more particulai’ly described in a deed by which an undivided half thereof was conveyed by A. H. Smith to the party of the first part, recorded in book No. 220, page 47, of the records of Hamilton county aforesaid, fronting on the west side of the Hamilton pike, north of the Brighton House, and well known as the Queen City Mills and Distillery property, together with the mill and all other buildings and improvements thereon, and the machinery and fixtures of every kind now therein, and all the privileges and appurtenances to the same belonging or appertaining ; to have and to hold the same to the party of the second part, his representatives and assigns, for the period of one year from the 20th day of this month, the party of the second part, his representatives and assigns, yielding and paying therefor as rent to the party of the first part, his heirs and assigns, the sum of $20,000, in equal monthly installments, payable in advance, and all taxes and assessments levied upon the said premises during the said year, and the premium of insurance, to be obtained by the party of the first part for his benefit, upon the said mill and improvements, any sum not exceeding $50,000.
    “ And the party of the first part covenants that the party •of the second part, paying the rent and keeping his covenants herein specified, shall have peaceable and quiet possession of the said premises during the said year; and the party of the second part hereby covenants that he will pay the rents, taxes, and assessments and premiums aforesaid, as hereinbefore provided, and that he will immediately put, and throughout the said year will maintain, the said mill and other improvements in complete order and repair.
    “And it is further agreed that if, at or before the expiration of the said year, the party of-the second part shall elect to purchase the said premises, and having paid all the said rents, taxes, assessments, and premiums, as herein provided, shall then pay to the party of the first part, or his representatives, the sum of ten thousand dollars, and shall execute his notes to the party of the first part, secured as hereinafter provided, for the sum of fifty-two thousand five hundred dollars, payable monthly in advance in twenty-four equal installments, with interest beginning at the time of purchase; then the party of the first part, his heirs or assigns, shall convey the said premises in fee simple to the party of the second part, his heirs or assigns, by a deed with covenants of general warranty.
    “ It is further agreed that the notes last aforesaid shall be secured by a mortgage on the said premises, and by one or more policies of insurance, payable in case of loss to the party of the first part or his representatives, to the extent of the unpaid portion of said notes, which insurance shall be not less in amount than the unpaid portion of said notes, provided that amount of insurance can be obtained.
    “And it is further agreed that if the said premises shall be destroyed or damaged by fire during the said year commencing on the twentieth day of this month, and the party of the first part shall not repair or rebuild the same within a reasonable time thereafter, then the party of the second part may, at his option, surrender the possession of said premises to the party of the first part, or his representatives, and thenceforth be released from the payment of any further installments of said rents.
    “And in ease of damage by fire, to the brick mill the rent shall cease for the time required to repair it, if it exceeds fifteen days, in case the purchase is not made.
    “And it is further agreed that if the party of the second [part] shall elect not to purchase the said premises, but shall surrender the same on or before the expiration of’said year, then the party of the first part shall pay the taxes and assessments levied for that year.
    “And it is further agreed that the party of the second part may, out of the sums to be paid by him as herein provided, pay oft' any valid liens upon the said premises.
    “In witness whereof, the parties have hereunto, and to a duplicate hereof, set their hands and seals, on the day first herein named, at Cincinnati, in the county of Hamilton, and State of Ohio aforesaid.
    “ The words ‘ with interest ’ written before execution. (Signed,) “ Henry O. Gilbert, [seal.]
    “ In presence of
    “ E. P. Bradstreet,
    “ R. H. Harshman.
    “ I execute this subject to the approval by George M. Ives, of Connecticut, mortgagee of above lease.
    (Signed,) “ Andrew J. Port, [seal.]
    “ In consideration of the within lease having been executed by Henry O. Gilbert, at our request, we hereby guarantee to him the faithful performance by the grantee of the conditions imposed on him therein, provided the lease is approved and ratified by Geo. M. Ives.
    “ Witness our hands and seals, at Cincinnati aforesaid., this 8th day of March, A. d. 1867.
    (Signed,) “ William Port, [seal.]
    “ In our presence. John C. Bindley, [seal.]
    “ E. P. Bradstreet, David W. Brant, [seal.]
    ‘R D. Harshman.
    
      “ Cincinnati, March 8,1867.
    “ I hereby consent to the ivithin lease, and agree to receive payment of my judgment against H. O. Gilbert from the within named rents, and not press said judgment claim.
    (Signed,) “ A. Ii. Smith, [seal.]
    “Witness: E. P. Bradstreet.
    “ The State of Ohio, Hamilton County, ss.
    
    “ On the eighth day of March, a. d. eighteen hundred and sixty-seven, personally came before me, the subscriber, a notary public in and for above county and state, Henry O." Gilbert, Andrew J. Port, William Port, John C. Bindley, and David W. Brant, the lessor, lessee., and securities in the foregoing lease, and acknowledged the signing and sealing thereof to be their free and voluntary act for the uses and purposes therein named.
    “ Witness my hand and seal at Cincinnati, Ohio, this twenty-fifth day of March, a. d. 1867.
    (Signed,) “ E. P. Bradstreet,
    
      “Notary Public, Ham. Co., O.
    
    “ Recorded in lease book No. 81, page 604, Hamilton County Records, March 29, 1867.
    “New York, March 16, a. d. 1867.
    “ I consent to and hereby ratify the above lease, and all its provisions and conditions, and agree to carry them out in good faith so far as I am concerned.
    (Signed,) “ George M. Ives, [seal.]”
    The original contract has upon it the following indorsement :
    “ In consideration of the amount collected being credited on my indebtedness to Geo. M. Ives, I hereby assign all my right, title, and interest in and to the within agreement to George M. Ives, of Stafford Springs, Connecticut. New York, March 16,1867.
    (Signed,) “ Henry O. Gilbert.
    “ Witnesses present: Geo. W. Brown, T. S. Knapp.”
    The plaintiff avers that it was a part of said contract that he was to pay the premiums on the insurance mentioned, and that in compliance therewith insurance was effected on the property in the sum of $45,000 in the name of Gilbert, but payable to said “ George M. Ives, mortgagee.” This insurance was on separate parts of the property; that on the mill machinery, etc., being $37,285.65 — this property being valued at more than one-half the value of the entire premises; that it was distinctly agreed between them that this insurance was for additional security to said Gilbert and assigns under the contract of lease, and that if plaintiff elected to purchase, he should, in case of loss by fire, have the benefit of the insurance money, but if he did not so elect, it was to go to Gilbert or his assigns. .
    He avers that although this was definitely agreed to before the contract was reduced to writing, it was, through an oversight, not expressed in the contract in so many words; although he claims that by a proper construction of the writing, he is entitled to such insurance. He further avers that he took possession, made repairs at a cost of about $6,000, and. run the distillery until September 25, 1867, when it was totally destroyed by fire; that thereupon Ives collected $33,785.65 on the insurance, having abated by way of compromise $3,500 ; that he had paid $11,666.67 rent due to October 20, 1867, before the fire, making with the insurance money $45,452.32 received by Ives ; that on the 12th of March, 1868, he exercised the option to purchase, on the basis that he was entitled to have this insurance money treated as part payment of the purchase-money in case of such election. The plaintiff therefore asks for a specific performance, after making such application of the insurance money ; and if the written contract does not sufficiently express the right to have such application, then that it be so reformed as to authorize such application.
    The answer of Gilbert denies any agreement that the insurance money was, in case of loss by fire, and subsequent election to purchase, for the benefit of Port; but was for the exclusive benefit of himself and his assigns, and as matter of law denies the right to have such application.
    He avers that the plaintiff, at the time the insurance money was collected, disclaimed any interest in the property other than as lessee.
    The answer of Ives, mortgagee, who resided in Connecticut, is that he consented to said contract as written, and never approved of any other, and denies the right of plaintiff to have such application of the money which he, as assignee of the lease, and payee of the policies, had received, and which he has applied to debts of Gilbert to himself.
    On the trial of the case, the following was the finding of the court on the question of fact as to whether there was any mistake or omission in the written contract:
    “ The court find that, by the terms of the contract as verbally made, and by the contract as reduced to writing between plaintiff and defendants, Gilbert and Ives, the insurance money first described therein, and which has been collected by defendant George M. Ives, was to inure to the benefit of plaintiff, as a credit on the purchase-money, if he elected to purchase the property, and that the plaintiff and defendants never modified or agreed to change their original agreement in this behalf; and that there was no mistake, neglect, oversight, or omission to reduce said agreement to writing, but the writing expresses the said agreement between the parties.”
    It further appears from the special finding that, at the time of the lease, Ives held a mortgage on the premises for $75,000, and also prior liens thereon by purchase, in all $97,410 and several years’ interest, which was more than the premises were worth; that to protect this interest of Ives in said premises, this insurance was effected at his instance ; that Ives ratified such lease, and the same was assigned to him, and the rents and insurance paid to him. It appears from the correspondence between him and Port, that he had, before the election to purchase, on the 12th of March, 1868, applied the insurance money to the payment of Gilbert’s debts to him, for money advanced since his mortgage.
    The superior court found that, upon the facts specially stated, the plaintiff' had elected to make the purchase within the time that he had the right so to elect after the fire, and was entitled to a credit on the purchase-money of the amount received by Ives from the insurance and to a specific performance, and decreed accordingly.
    To reverse this judgment this action is brought.
    
      C. D. Coffin, for plaintiffs in error:
    I. The contract is a lease, with a mere privilege to purchase within a given period. No contract of sale existed until the lessee, Port, elected to purchase, and then he must not only elect in the time specified, but strictly perform all the conditions upon which he is authorized to elect. These are conditions precedent, and their performance strictly, as well as time, is made the esseuce of the contract in equity. Davis v. Thomas, 1 Russell & Mylne, 506; Sparke v. Liverpool W. U. Co., 13 Vesey, 428; Roberts v. N. E. Life Ins. Co., 1 Disney, 365; Longworth v. Mitchell, 26 Ohio St. 334.
    It follows that when the party who has the right elects to make the purchase, then, and not till then, does it become a contract of sale. The day of the election, assuming that he has the right to make one, is the date of the purchase. The election is the foundation of his title; it changes the tenure by which he holds the property. Until the election, he is a tenant, holding under a demise, and paying rent as a tenant; then, and not till then, he becomes a purchaser, holding under a contract of sale. Breckwalter v. Klein, 2 Am. L. Reg. 350; Townley v. Bidwell, 14 Vesey, 591; Laws v. Bennett, 1 Cox, 167.
    The contract of sale, under such a privilege, does not relate back to the commencement of the term provided for in the lease. Boston and Maine R. R. v. Bartlett, 3 Cush. 224.
    To entitle the vendee to claim the benefit of the insurance, there must be a provision in the contract securing him that right. The mere fact of a purchase gives him no right in the insurance money, though the loss occurs after the contract of sale is made and before its completion.
    Insurance of a building against fire is a personal contract. It is a contract of indemnity with the person whose interest in the building is insured, to indemnify him against any loss which he may sustain in case the building is destroyed or damaged by fire. It does not pass to a purchaser of the building insured. Bunyon on Fire Ins. 142, 143; Wilson v. Hill, 3 Met. 66, 68; Ætna Ins. Co. v. Tyler, 16 Wend. 385; Desbrow v. Jones, Harring. Ch. 48; Carpenter v. P. W. Ins. Co., 16 Pet. 495; Wyman v. Prosser, 36 Barb. 368; Lees v. Whitely, 35 Law J., Ch. 412; Pool v. Adams, 12 Weekly Rep. 633; same case, 33 Law Jour., Ch. 638.
    II. Did the court err in finding that Port elected to purchase the property within the terms of the contract giving him the right to purchase?
    The fire occurred September 25, 1867; loss adjudicated and insurance money paid December 16, 1867. After all this had occurred, Port elects to purchase, upon the condition that the insurance money is treated by Gilbert and Ives as a payment on the purchase-money, and he offers to pay and secure the amount due on the contract price over and above that sum.
    There is no election to purchase and pay the consideration of $82,500. The petition offers to pay all the purchase-money, upon credit being given to plaintiff on the $82,500, for the $83,785.65. If he is not entitled to that credit, then he has not made an election within the terms of the contract, and he has not availed himself of the right to purchase, and his petition must be dismissed.
    The offer in the contract to sell requires an election upon the exact terms of the offer. The declaration of the option in favor of the purchase is necessarily the option there offered.
    The contract is not perfected by the election to purchase, if that election be accompanied by any new condition. 1 Duer on Ins. 67, sec. 12; Eleason v. Henshaw, 4 Wheat. 228; Ocean Ins. Co. v. Carrington, 3 Conn. 567; Hutchinson v. Bouker, 5 M. & W. 535; Vassar v. Camp, 1 Kern. 441; 1 Parsons on Con. 476, 477.
    Here the election is accompanied by the new condition, that this insurance is to be credited upon the consideration, and therefore it is not an election within the terms of the offer in the contract; and not having made an election upon the exact terms of the offer within the year, it is too late to make it afterward. Davis v. Thomas, 1 Russell & Mylne, 506; S. C., 4 E. Cond. Ch. 533.
    
      Stanley Matthews, also for plaintiff in error.
    
      Hoadly, Johnson & Colston, and E. P. Bradstreet, for defendant in error:
    The question in the case is this: Was Port entitled, in making payment for the land he elected to purchase from Gilbert, to the benefit of the sum of $33,785.65, collected by Ives from the underwriters ? Our contention is that he was, and that the court below were right in so holding, and thi's we affirm upon several grounds.
    I. Upon Port’s election to purchase; the lease to him from Gilbert was converted into a sale, taking effect as of its date, by virtue of which Gilbert became trustee of the title for the benefit of Port, and the policies of insurance and the money collected thereon inured to the benefit of the vendee, Port.
    1. In case of the executory sale of improved real estate, the vendor is trustee of the policies of insurance for the vendee’s benefit, at least where the premium has been paid by the vendee, the duty to execute the trust being conditioned, of course, upon payment of the stipulated price by the vendee, according to the terms of the contract. Sugden on Vendors, 8 Am. ed. [175], ch. 5, sec. 1; Ib., ch. 7, sec. 2; 26 Penn. St. 178; Lombard v. Chicago Sinai Cong., 64 Ill. 477; Dawson v. Solomon, 1 Drewry & Smale, 1.
    It may be claimed that an unpaid vendor, who recovers from ’the underwriter a loss by fire happening to the property agreed to be sold, must, in cases where he placed the risk himself, assign to the insurance company all his securities for the debt, if the amount thus collected be equal to or more than the debt. This was held in Etna Ins. Co. v. Ty
      ler, 16 Wend. 385, and in Sussex Co. Mut. Ins. Co. v. Woodruff, 2 Dutcher, 541; Hart v. West. Railroad Corp., 13 Met. 99; Mer. Mar. Ins. Co. v. Clark, 118 Mass. 288.
    But where, as here, the premiums have been paid by the vendee, a different rule prevails. In such cases, the underwriter is denied the benefit of any subrogation, and this for this reason, among others, that the payment of premiums by the vendee is sufficient notice to the underwriter that the policy is for his benefit. Concord Union Fire Ins. Co. v. Woodbury, 45 Maine, 447; Benjamin v. Saratoga Co. Mut. Ins. Co., 17 N. Y. 415; Kernochan v. N. Y. Bowery Ins. Co., Ib. 428; Wood v. N. W. Ins. Co., 46 Ib. 421; Excelsior Ins. Co. v. Royal Ins. Co., 55 Ib. 359; Fowley v. Palmer, 5 Gray, 549; Gordon v. Ware Savings Bank, 115 Mass. 588; 33 Upper Canada, Q. B. 364; Carter v. Rockett, 8 Paige, 437.
    Our contention is that the policies inure to the vendee’s benefit by virtue of two rules: First, that the vendor is a trustee, and therefore, if he insure, his cestui que trust is entitled to the benefit; and secondly, that if he be not called a pure trustee, but one only sub modo, this is simply because of the condition that unless the vendor be paid the purchase price, he may hold the premises for his own benefit. In other words, he is a trustee until the conditions of sale be complied with. In this aspect his position is that of a lienholdei’, and as he may not gamble in insurance, should he collect from the underwriter, he must account to him for the security he hold; or if the vendee paid the premium, the vendee is entitled to the benefit of that compensation for the loss which his premium purchased. Ins. Co. v. Updegraff, 21 Penn. St. 513; Reed v. Lukens, 44 Penn. St. 200; 59 Penn. St. 474; Wood v. N. W. Ins. Co., 46 N. Y. 421; 17 N. Y. 415, 420; McKechnie v. Sterling, 48 Barb. 335; Garden v. Ingram, 23 L. Jur. Ch. 479; Reynard v. Arnold, L. R. 10 Ch. App. 386.
    The case of goods insured by a factor, or commission merchant, having only a limited interest, is analogous. Although he insure in his own name, yet he may recover the whole amount of the insurance, and after satisfying his own claim, hold the balance as trustee for the owner. Hough et al. v. People’s Ins. Co., 36 Md. 398; De Forest v. Fulton Fire Ins. Co., 1 Hall, 84; Siter v. Morse, 13 Penn. St. 218; London and Northwestern Railway Co. v. Glyn, 1 Ellis & Ellis, 652; Waters & Steel v. Monarch Assurance Co., 5 Ellis & Bl. 870.
    2. The effect of the exercise by Port of his privilege or option to purchase was, by relation, to convert the agreement into an executory contract of sale, taking effect as of its date. Weeding v. Weeding, 1 Johns. & Hemming, 424; Daniels v. Davidson, 16 Ves. Jr. 249; Sudgen on Vendors (8 Am. ed. 188), ch. 5, sec. 1; Lawes v. Bennett, 1 Cox, 167; Ripley v. Waterworth, 7 Vesey, Jr. 425; Townley v. Bedwell, 14 Vesey, Jr. 591; Collingwood v. Row, 26 Law Jour. N. S. Ch. 649 ; S. C., 3 Jurist N. S. 785; In the matter of Louisa Crofton, a minor, 1 Irish Eq. 204.
    II. The insurance procured by the payment of premiums by Port was, by the manifest intention of the contract, to inure to the benefit of Port as well as Gilbert.
    And we contend that a reasonable construction of the contract requires that the $33,785.65 collected upon the policies be credited upon the mortgage debt as being realized “ out of the sums ” paid by Port.
   Johnson, J.

Three leading questions were decided by the court below:

1. A question of fact, as to whether there was any mistake or omission of any of the terms of the contract, in the indenture executed by the parties.

2. Upon the contract actually made, was the plaintiff below, under the circumstances of the case, legally entitled, upon electing to purchase, to have the insurance-money received by Ives credited on the purchase-money?

3. If he wTas, then did he make a case entitling him to a specific performance of the contract ?

1. On this question of fact the supreme court finds, “ that there was no mistake, neglect, oversight, or omission to reduce said agreement to writing, but the writing expresses the said agreement between the parties.”

The defendant in error does not complain of this finding, and it is therefore conclusive in this action. The contract, as written, is to be taken as the only one between the parties.

2. The plaintiff in error complains of the conclusion of law, drawn from a construction of the contract, to the effect that the insurance-money collected by Ives, was “ to inure to the benefit of plaintiff, as a credit on the purchase-money, if he elected to purchase the property,” and that under the facts as found, he was entitled to have a specific performance, with a credit on the purchase price to the amount of the insurance-money received by Ives.

In considering whether the plaintiff' is entitled to a specific performance with such credit, there necessarily arises two considerations: 1. Whether, by a fair interpretation of the terms of this agreement, it was the intention of the parties that this insurance money was to inure to plaintiff’s benefit in case of an election to purchase, made after the fire; and 2. Whether the plaintiff who comes into a court of equity seeking a specific relief in equity, is entitled, upon the particular facts of this case, to the relief asked.

It appears that at the time he negotiated for the lease, Port knew the relation Ives stood to the property as a mortgagee, and that the stipulations as to this insurance on the property were insisted on and insei’ted in the lease at Gilbert’s instance and for Ives’ security and safety, and not at the instance of Port, who, as appears by the evidence, was reluctant to pay for so much insurance.

It further appears that the policies of insurance provided for, were taken out by Port, through his agent, Bradstreet, in the name of Gilbert, “ loss, if any, payable to George M. Ives, mortgageeand that the monthly installments of rent, due October 20th, November 20th, December 20th, January 20th, and February 20th, amounting to $8,333.33, were unpaid.

It also appeared that lie had continued in possession of the premises, and had not availed himself of his right to surrender the premises and determine the contract, which he might have done upon failure to rebuild.

Under these circumstance, could the defendant make an election to purchase on the 12th of March, 1868, and be then entitled to have the insurance-money credited on the purchase-money ?

By tbe terms of the contract, the time within which tbe election to purchase might be exercised, was expressly fixed, “ at or before the expiration of the year,” from March 20, 1867.

This election was made within that time, but the right to make such election and demand performance depended on his having performed all conditions precedent on his part.

If during the year he elects to purchase, “and having paid all the said rents, taxes, assessments, and premiums, as herein provided, shall then pay to the party of the first part, or his representatives, the sum of $10,000, and shall execute his notes to the party of the first part, secured as hereinafter provided, for the sum of $52,500,” etc.

When Port made his election he was in default, as a lessee, for the non-payment of five months’ rent, which should have been paid monthly in advance.

When the money was received by Ives from the insurance companies, December 16, 1867, Port was in default for two months’ rent, due October 20th and December 20th, = $3,333.33.

lie neither paid nor offered to pay within a reasonable time; but he claims that the election to purchase, -made in March following, operates by relation as a payment of these past due rents, and relieves him. from fault in that regard; that such election relates back to the date of the lease, and cures any defaults of which, as a tenant, he was guilty, and that this election, subsequently made, operates in equity as a full performance of all his obligations as a tenant as well as his covenants as a vendee.

We think it too clear for argument that this instrument was a lease, with the privilege of purchase, and that until option declared, the relation of lessor and lessee existed, with all the advantages and liabilities which that relation imposed. Until such election was rightfully made, Port was a lessee, with an option to purchase, and nothing else, so far as the question before us is concerned.

As such lessee, when the fire occurred, the contract gave him no right to the insurance, and the evidence tends strongly to show that he did not then claim it.

The only question, therefore, really in the case is, whether the election he made, March 12, 1867, relates back beyond the date of the fire, so as to give Port the benefit of the insurance.

It is claimed that upon making this election, in March, 1867, the relation of vendor and vendee subsisted, and as Port had paid a consideration for the right of election, and also had paid the premiums for the insurance, he must be regarded as, in equity, a vendee when the fire occurred.

As a sequence, it is further claimed that Gilbert and Ives became trustees for the vendee by this election, and that the insurance money, which up to that time belonged to them, subject to his optional rights, was converted into a payment on the back rents and an advance payment of the purchase-money.

This being a lease, with an option to purchase, it must receive such construction as will efieet both purposes.'

Some of its provisions apply to a lease only, some to a simple option to purchase, and some to both characters of the paper.

No construction is admissible which would defeat or ignore this double aspect.

As a lessee, Port was to pay, as rent, $20,000 for the term of one year, in monthly installments, in advance, as well as the taxes, assessments, and premiums of insurance to be obtained for “ Gilbert’s benefit,” not exceeding $50,000; and wras to put and keep the premises in good repair, except in case of fire, when he might abandon.

These obligations he was bound to perform, whether he elected to purchase or not.

The right to purchase could not be exercised except on the terms stated. It depended on Port’s having paid all the rents, taxes, and assessments, and upon his paying $10,000 in cash, and securing the residue of the purchase-money, $52,500.

At the time of the election he owed $8,333.83 rent, and by such election he owed $10,000 more. These amounts, it is claimed, are paid by such election, and it is further claimed that the residue of the insurance money shall be applied toward the payment of the $52,500.

This claim is based on the application of a recognized principle in equity, that, as between vendor and vendee, the former is a trustee of the latter, and as such, the receipt of insurance money on account of loss to the estate is for the benefit of the vendee.

The rule is thus stated in Sugden on Vendors, .8 Am. ed. (291), ch. 7, sec. 2:

A vendee, being equitable owner of the estate from the time of the contract for sale, must pay the consideration for it, although the estate itself be destroyed between the agreement and the conveyance; and, on the other hand, he will be entitled, to any benefit which may accrue to the estate in the interim, although this was not always the rule. But, now, if after the contract, and before the conveyance, the houses were burned down, the loss will fall upon the purchaser, although the houses were insured at the time of the agreement for sale, and the vendor permitted the insurance to expire without giving notice to the vendee. If, however, the vendor has, before the fire, broken his contract, e.,g. to repair or alter the property, the subsequent loss will not fall on the purchaser. And where the estate is leasehold, and the want of an insurance gives the lessor a right to enter for a forfeiture, the conduct of the seller, in insuring only for a short period without notice to the purchaser, may induce the court to refuse to enforce the contract after the policy has expired; but the case in which this point was decided shows that a purchaser should himself inquire about the insurance, at all events after the time appointed for completing the contract, and should, if necessary, advance the money to keep the insurance on foot after that time.”

In such case: “ Equity looks upon things agreed to be done, as actually performed; consequently, when a contract is made for sale of an estate, equity considers the vendor as a trustee for the purchaser of the estate sold, and the purchaser as a trustee of the purchase-money for the vendor.” Insurance Co. v. Updegraff, 21 Penn. St. 513; Reed v. Lukens, 44 Penn. St. 200; Hill v. Cumberland Valley Ins. Co., 59 Penn. St. 474.

In Etna Fire Ins. Co. v. Tyler, 16 Wendell, Chancellor Walworth says : “ If this be the true principle upon which, notwithstanding an alienation by executory contract of sale, the vendor, under a valid and subsisting contract for the purchase thereof, whether he has paid the whole of the purchase-money and gotten the legal title or not, is called the owner thereof, and the property is usually called his by others. In equity, it is, in fact, his, and the vendor has only a lien thereon for the security of Ms unpaid purchase-money; and I am yet to learn that the person who is in the actual possession of property as the real owner thereof in equity, and who must sustain the whole loss primarily in case of its destruction by the perils insured against, can not insure it as owner, unless there is something in the terms of the policy, or in the conditions referred to therein, requiring the true state of the legal title to be disclosed.” Wood v. N. W. Ins. Co., 46 N. Y. 421.

The vendee, because he is the equitable owner, and, as such, is compelled to sustain the loss, occurring after the sale and before the conveyance, is entitled to any benefit that may accrue to the estate.

The rule can not go beyond the reason of it. At the time of the loss, and when the money was received by Ives, Port was not the owner; there was then no subsisting contract for the purchase, the loás did not fall on him, and the reason did not then exist for giving him the benefit of the insurance.

In equity, things agreed to be done are looked on as actually performed, and if the vendee is not in default, the vendor is his trustee of the estate, and the vendee is trustee of the purchase-money.

In this case, no such relation subsisted. The test for the application of this rule is, who was the owner, and upon whom did the loss fall? If there was a valid and subsisting contract of sale, whether the purchase-money was all paid or not, so that, in equity, the vendee was owner, then the loss by fire fell on Port, and the receipt of indemnity for that loss by the vendor is for the benefit of the vendee.

“Where property, real or personal, is destroyed by fire, the loss falls on the owner at the time.” Wills v. Culvan, 107 Mass. 514.

“ Where the contract has been completely made, the thing sold is at the risk of the purchaser, who must bear all subsequent losses, and is entitled to all subsequent gains.” Ery on Specific Perf. 600.

“ The true test in determining which party should bear the consequences of an accidental fire pending a contract of sale is, which was the owner at the time ?”

The provisions of the contract strongly negative the claim of Port, and give force almost unanswerable to the opposite view.

It was stipulated that this insurance was for “ Gilbert’s benefit.” He was the owner, and because, in case of fire, the loss would be his, he insisted urgently on this insurance Both parties knew that it was for the security of Ives, who, as mortgagee, was the real party in interest. The petition states it was “ to keep good Ives’ mortgage security.”

The contingency insured against was loss to Gilbert, in case he was the owner at the time.

Had the purchase been absolute, the insurable interest of Gilbert would have been to the extent of his lien for the unpaid purchase-money only. In this state of things, Port executes this contract, without any provision giving him the benefit of the insurance in case of his election to purchase.

Tie agrees, in case of purchase, to effect other insurance, to secure the balance of the purchase-money, and for his especial benefit provides for this very event, not by an interest in the insurance, but by giving him the right to abandon in case of fire, and be released from further payment of rents.

It seems clear that, at the time of the fire, Gilbert was the owner of the property, and the loss was his loss. The insurance money was the indemnity for that loss. When it was paid to his assignee, it was for his benefit, as expressed in the contract. As the purchase was to be at Port’s option, it became necessary that Gilbert’s interest as owner should be insured.

It seems equally clear that at the time of the fire the relation of vendor and vendee did not exist. Port was not the equitable owner; his possession was as tenant of Gilbert, and all the loss he sustained by the fire, not expressly provided against by the lease, was the damages resulting to him, as the holder of such option, by being deprived of his right to exercise it, unless he chose to exercise it, notwithstanding the fire.

The contract provides for two kinds of insurance, both to be paid for by Port, and both for Gilbert’s benefit.

This shows the minds of the parties were directed to this point, and the absence of any provision for Port’s benefit, in case of his election to purchase, is suggestive. The fact that he agreed to procure this new insurance in case of purchase, to secure the unpaid purchase-money, and the further fact that there is provision for his benefit in case of fire and failure to repair by Gilbert, whereby he was released from further payment of rent, very strongly tend to show that it was not contemplated by Port that he would elect to purchase in case of fire. This view comports with the covenants of the contract as expressed, and the legal relations created by it under the circumstances.

In Paine v. Meller, 6 Ves. 349, Lord Eldon says, in speaking of the rights of a vendee to the insurance in case of loss: “ If the party, by the contract, has become the equitable owner of the premises, they are his to all intents and, purposes. They are vendible as his, chargeable as his, capable of being indumbered as his; they may be devised as his, they may be assets, and they would descend to his heirs.”

In Gates and others v. Smith, 4 Ed. Ch. 702, this language of Lord Eldon is declared to be “the true and correct doctrine of equity” to determine the right of a vendee to the insurance in case of loss.

The principles invoked relating to equitable conversion do not aid us in the determination of this ease.

The rule is : Equity looks upon things agreed to be done as actually done, consequently when a contract is made for the sale of an estate equity considers the vendor as a trustee for the purchaser of the estate sold, and the purchaser as a trustee of the purchase-money for the vendor.

What was agreed to be done, and of what estate sold is the vendor a trustee, depends on the contract. So, if we concede that these rules apply to optional contracts, as well as to those absolute, still we must look to the contract to determine to what extent a conversion takes place, and in doing so it must be remembered that this equitable fiction rests upon the principle that it enables a court of equity to give the vendee all the relief to which by his contract he is entitled. It is not an invention to confer upon him rights he does not possess, but to furnish relief which a court of law could not give arising out of the contract.

It goes only to the form of relief, and not to create an estate in the vendee.

It converts the title and estate with all the incidents annexed in the hands of the vendor into a trust estate for the vendee, and shapes the relief to make that trust beneficial. It holds the trustee accountable as such according to the terms of the contract by considering that done which he has contracted to do. The vendee, as owner in equity, sustains whatever losses happen, and is entitled to all the gains and profits of the estate contracted to be sold. It relates to the estate sold, and to such fixtures, appurtenances, and incidents as adhere to it, and to such provisions as are found expressed in the contract relating to the sale of the estate; but it does not attach incidents not granted nor insert stipulations not found in the contract. We are therefore remitted back to the terms of the contract* in order to ascertain its terms before we can apply this doctrine instead of applying the doctrine to find out the terms of contract.

The contract of insurance is not attached to nor an incident of the estate contracted to be sold. It is purely a personal indemnity to the owner of the property insured, and does not pass to the purchaser of the thing insured. McDonald v. Adm’r of Black, 20 Ohio, 192.

In Pool v. Adams, 33 Law Jour. Ch. 638, it was held that, in the absence of a provision in his contract of purchase of real estate, the purchaser is not entitled to the benefit of an existing insurance against fire, though the loss happened between the date of the contract and the conveyance, and that the amount received by the vendor could not be applied as a credit on the unpaid purchase-money.

This was placed on the ground that there was no provision in the contract that the purchaser shall have the benefit of the insurance, and therefore it was clear that the vendor had an action at law to recover the whole purchase-money, though the property had burned down.

Townley v. Bedwell, 14 Vesey, 591, was the case of a lease with an option to purchase. It was held that the rents until the option was declared belonged to the heir; but from that time the conversion takes place, and the purchase-money belongs to the personal representative.

Equity only regards that done which was contracted to be done. As the insurance was not attached to, nor an incident of the thing contracted to be sold, but is purely personal, we must look to the terms of the contract to determine Port’s right to an interest in the insurance. There is no express stipulation for such interest. Does it arise by implication of law?

Gilbert’s insurable interest as owner would cease on completion of the contract of sale. The policies were taken out by Port in the name of Gilbert for the benefit of Ives’ mortgage, without reserving to himself an interest in case of' election. They provide that no assignment of them shall be valid without the assent of the insurers.

The completion of this contract as a purchase would have avoided the policies. By its terms there was to be an immediate conveyance with mortgage back. They never contemplated a subsisting executory contract of sale, nor any relation of vendor and vendee to which an equitable trust could apply, as Port would become the legal owner of the property by a performance by the parties of what each contracted to do upon election made.

There would then be nothing of the estate contracted to be sold in Gilbert’s hands to which the doctrine of equitable conversion could apply, or could be held in trust, except upon default of one or both the parties. The relation of vendor and vendee, out of which equity creates a trust in certain cases, would not exist. Port, by stipulating for a deed, thereby relieves Gilbert from holding the estate for him, and he becomes the legal owner. There would be no estate, title, or interest in Gilbert to hold in trust, nor any “ subsisting contract for the purchase,” nor anything “ agreed to be done no time “ between the agreement and the conveyance,” as the rules quoted require to create the trust.

The contract also provides that the deferred payments in case of election, $52,500, should be “payable monthly in advance in twenty-four equal installments, with interest from the time of purchase.” The “ time of purchase ” is the time when Port elects to purchase. It does not by election relate back to the date of the contract, and impose upon the lessor a trust that did not then and might never exist.

Upon election to purchase, the contract becomes an absolute agreement for the sale of the real estate, and in such case Sugden [188] says: “ When an estate is contracted to be sold, it is in equity considered as converted into person-alt]) from the time, of the contract, and this notional conversion takes place although the election to purchase rests merely with the purchaser.” This sentence is supported by a citation of numerous cases, and is relied on to support the claim here made.

Conceding its correctness, and applying to the case at bar, it only operates to convert the real estate into personalty.

The learned author is discussing the effect of a devise of real estate, on lands contracted to be sold and not conveyed.

Thus, in Fletcher v. Ashton, 1 Bro. Ch. Cas. 497, it is said nothing is better settled than that land directed to be sold and turned into money is to be considered as converted into money. To the same effect is Craig v. Leslie, 3 Wheat. 577; Postell v. Ex’r of Postell, 1 Desaus. 173; Pegg v. Wisden, 16 Beav. 243.

As to the time when this contract became a purchase and the effect of the doctrine of notional conversion, we refer to Pegg v. Wisden, 16 Beavan, 243. That was a lease with an option to purchase within nine years, upon giving three months’ notice.

The Master of the Rolls says: “I am of the opinion that at the expiration of the three months from the 14th of May (the date of the notice), the relation of vendor and purchaser loas constituted between the parties, and that the plaintiff ceased to be tenant and in equity became the owner of the estate.”

The effect of the application of this rule as to conversion extends only to the estate contracted to be sold. It does not operate to create new rights, nor operate backward so as to destroy the relation of lessor and lessee, which continued until election. No case can be found where this principle is applied, unless the trust relation existed as to the estate or property sold. When that relation exists, and the loss is sustained by the purchaser, the receipt of the insurance money inures to the benefit of the vendee.

The conversion operates on the estate and not on personal rights of the vendor not contracted to be sold. It is evident that the parties did not contemplate an election in case of fire nor until the end of the year, and these facts would make Post indifferent as to any provision giving him the benefit of this insurance in case of loss, as he intended to rely on his right to abandon and be released from the obligation.

His contract after the fire, as shown by the evidence, until after the money had been received and otherwise applied, confirms this view. The claim, therefore, that upon the election to .purchase, made five months after the fire5 and three months after the money received and otherwise applied, creates the relation of vendor and vendee from the date of the lease, so as to constitute the former a trustee from the beginning and accountable as such for insurance effected for his benefit, and relieve the vendee from his defaults as a lessee by converting Gilbert’s loss into a loss by Port, who was only lessee at the time, is, in the opinion of the court, untenable.

Judgment reversed and cause remanded.  