56 N.J. Eq. 309 | New York Court of Chancery | 1897
It appears to be undisputed that coincidently with the change from an agreement to lease the bars and cabinet work to the mortgagors, to the making of an absolute sale to them for cash, there was also an arrangement that the whole or a considerable part of the purchase-money should be advanced by the defendant the Trenton Brewing Company, which it was agreed should be secured by a mortgage upon the articles sold to the mortgagors. This proposition was indeed the.occasion of the change from the plan to lease to that finally adopted of an absolute sale, and the Trenton Brewing Company’s money was so obtained and used, without any knowledge on its part that the lease from the complainant contained the provision on which she based her claim. The money of the Trenton Brewing Company was thus made the means whereby the title to those
The principle under which, in a court of equity, a purchase-money mortgage is given precedence is not dependent upon the instant carrying into effect of the agreement to give the mortgage, provided no superior equities have intervened during the period of delay. The saloon-keepers were for a time in possession of the articles named under the lease, with an apparently uncharged title, but this fact was not acted upon by the complainant in any way. She claims the articles not under the lease
The brewing company’s mortgage is a chattel mortgage. When it was given the goods named had been brought upon the demised premises. To be effectual as a chattel mortgage it must appear that the articles named in it were chattels at the time the mortgage was given and had not become a part of the demised premises.
The testimony of the witness Van Cleef, who prepared the chattel mortgage, is that at the' time it was executed he
“ examined the front and back bar and partition screen and found them all movable and in nowise attached to the realty, resting upon the floor of the saloon as any other piece of furniture would and as did the tables and chairs in the said saloon.”
No other witness testified as to the relation of these articles to the realty at the time the mortgage was executed, nor do any define with precision the time when the attachments were applied. If it were the actual condition, at the time the chattel mortgage was given, that there was no attachment whatsoever of the articles in dispute to the realty for any purpose, their subsequent attachment by the mortgagor tenant could at most only add to the realty the interest which the mortgagor tenant had in them — that is, his equity of redemption. Campbell v. Roddy, 17 Stew. Eq. 251. And even where the chattel mortgagee took his mortgage knowing the goods were to be annexed to the realty, if the detachment of the annexed articles will occasion no substantial damage he will be protected as against a previous real estate mortgagee, so far as his protection will not diminish the security held by the real estate mortgagee before the goods were annexed. Campbell v. Roddy, 17 Stew. Eq. 253.
I prefer not to rest the case upon this limited view and will consider all the points presented by the pleadings and proofs and discussed in the arguments of counsel. The complainant, by her bill, states her equity to be that the articles constituting the bars and beer-supplying apparatus became and were in fact part of the demised premises under the terms of that provision in the lease which declares that in case any alterations, repairs or improvements were made upon the premises they should be left undisturbed at the expiration of the term. It becomes a question of the first importance, in the further consideration of this case, to ascertain the construction of this contract as applied to the circumstances of this case. It is not contended by the lessor complainant that the articles claimed to have become part of the realty are either alterations or repairs of the premises. The lessee did not change or alter the premises by taking away anything that was there when the lease was made and putting in its place any of the articles in question. Nor were the latter supplied as repairs of any worn-out or injured part of the demised premises. The complainant contends that the bars and beer apparatus were improvements within the meaning of the clause referred to, and that under its operation they have become part of the real estate demised. I think there is a clear distinction between an improvement upon lands which from its very nature becomes a part of the realty, as a house built by a trespasser upon the lands of another, and an apparent addition to realty which retains some of the essential incidents of a chattel though annexed to realty. Fixtures are all within this latter class, and as to such articles inquiry is permitted to ascertain whether the particular thing in question remains a chattel or has become real estate. The word “ improvements ” used in the
The latest exposition of the law by the court of errors upon, the kindred subject of the lien of a real estate mortgage upon articles having some of the characteristics of chattels, is to be found in the case of Feder v. Van Winkle, 8 Dick. Ch. Rep. 372. The three rules of guidance to determine what in such a case the lien of a real estate mortgage covered, are there restated thus: First, that the articles must be actually annexed to the realty; second, they must be applied to the purpose which that part of the realty to which they were annexed was appropriated ; third, they must be annexed with the intention to make them a permanent accession to the freehold. I think the first and third of these rules are aids in this case in seeking to ascertain the operation of the covenant in the lease upon the disputed articles. To constitute an improvement made upon the premises under the terms of this lease, it must have been actually annexed to the realty and intended to be a permanent accession to the freehold. The second rule is not, in my view, applicable to the case under consideration, because if there was any actual annexation to the premises, which was intended to become part of the realty, it must, under the agreement, be left, whether it was applied to the uses of the realty to which it was attached or not.
First. Were the articles in question actually annexed to the realty ?
Second. Was that annexation intended to be a permanent accession to the freehold ?
First, as to the annexation to the freehold. There must have been some sort of actual annexation. The manner of attachment may of itself be of so permanent a nature as to be almost conclusive evidence of a purpose permanently to incorporate the chattel with the realty, or it may be of such an adjustable character as to rebut that conclusion and support other evidence of the intention of the party not to incorporate the chattel with the realty. In this case the bars and their equipment, the partitions, doors and mirrors, and the beer pump and its attendant pipes were each and all perfect and complete in themselves for the uses to which they were adapted before they were brought upon the demised premises. The length of one partition at the back end of the bars and the length of the beer pipes seem to be the only things which required adjustment to fit them into the demised premises. They were all stock articles, capable of being' put into any saloon large enough to hold them. None were brought upon the premises as material to be used for the construction of an improvement of the demised premises. When they came thus complete and ready for use, it was found that the front bar, which, in its use, was likely to be jostled by men leaning on it, and the back bar, which ran up to so considerable a height that it might readily topple over, needed to be stayed in their places. It was also found that the pipes to and from the beer pump, and to supply water and carry off waste water, required holes to be cut in the floor corresponding to the position in which they were placed. For the purpose of preventing the front bar from being shaken or pushed out of its place, it was made firm by the use of several angle-irons, one member of which was screwed to the bar and the other to the floor. The back bar was also prevented from falling over by screwing it to stay-irons which were driven into the wall. Pipe holes, which
I think the method of annexation of these completed stock articles was of such a temporary and adjustable character, under the circumstances proven, that it was not effective as an incident to make them part of the realty.
Upon the second question, of the intention of the lessee to make the chattels a part of the realty, the conduct of the parties interested at the time they acted seems to be wholly irreconcilable with any intent to improve the real estate. It might be that the acts of annexation and conversion were of such a clear and definite character that no room would be left to consider evidence of intention not to convert. The complainant contends that the fact of annexation in this ease was of this character. I think the case shows no such physical attachment as of itself works a conversion, and that evidence of the existence of a pur
In the case of Feder v. Van Winkle, above cited, the court of errors declared that to effect a conversion the intention must exist to incorporate the chattels with the real estate for the uses to which the real estate is appropriated, and there must be the presence of such facts as do not lead to but repel the inference that it is intended to be a temporary annexation. It will be thus seen that the element of intention is the controlling factor in determining whether additions to real estate, which retain apparent indications that they are still personalty, have become incorporated into the realty. Each case must be controlled by the evidence of annexation and intention exhibited in that particular instance; the difficulty arises, as the court in the last-cited case declared, in applying the rule.
In this case there are several undisputed facts which I think show conclusively that the lessee never intended to incorporate any of the articles claimed by the chattel mortgagee as part of, or an improvement upon, the realty. The original purchase of
In my view, neither the Feder Case nor the Lee Case differs from the essential principle declared in the Blancke Case. Where the annexation is of such a character as to indicate a purpose to make the chattels part of the realty, as in the Feder and Lee Cases, they will be held to have become realty. Where the annexation does not indicate such an intent, and is proven to have been made for a different purpose, as in the Blandee Case and that now under consideration, the chattels do not become part of the realty. In Parker v. Wulstein, 3 Dick. Ch. Rep. 94, a lease provided “ that all improvements of the building shall belong to the landlord at the expiration of the term.” Vice-
I have heretofore considered the status as chattels of the articles in dispute, other than the two chandeliers, the brass gas-fixtures and the electric-light globes. These latter articles, I think, differ from the bars and their equipment in their relation to the realty in all the respects noted. They were not within the articles which were obtained to be sold to the mortgagors upon the agreement to give the chattel mortgage. I do not understand that they were unattached when Van Cleef examined the premises and had the chattel mortgage executed. Their attachment to the realty was not casual and for a purpose consistent with their continued use as chattels. They were as solidly and permanently connected with the gas-pipes (which were a part of the realty) as the nature of their use would permit. This part of the realty (the gas-pipes) was not usable without these gas-fixtures, nor could the gas-fixtures be used without the gas-pipes. They became on their attachment so entirely an improvement of the realty that they were within the operation of the covenant, and were, when the chattel mortgage was given, real estate, and as to them the chattel mortgage was inoperative.
I will advise that an injunction be allowed to restrain only the sale of the two chandeliers, the brass gas-fixtures and the electric-light globes.