| Ill. App. Ct. | Feb 26, 1892
A petition for a lien for material was filed against the Salem Coal & Mining Company and others as defendants, and appellants being defendants to that petition, filed their cross-bill to foreclose a chattel mortgage made by the Salem Coal & Mining Company, and the petitioners'for lien, with the Salem Coal & Mining Company and certain of its mortgagees, were made defendants. Certain defendants to the cross-bill of appellants answer, denying equitable right to foreclose the chattel mortgage by decree, and claiming the real estate mortgage is superior to the chattel mortgage. A decree was entered on the petition and the lien and amount found, and finding the property, consisting of a boiler, engine and other machinery in the chattel mortgage mentioned, was attached to the realty so as to become a part thereof, and finding the liens in the order of seniority to be, first, the lien for material, second, a real estate mortgage, and third, the lien of the chattel mortgage. The questions presented by the assignment of errors arise on the finding of the court that the property in the chattel mortgage was so attached that it became part of the realty, and in finding the lien of appellants to be subject to the lien of the real estate mortgage, and the material-man. The appellants entered into a contract in writing with the Salem Coal & Mining Company on the 14th day of June, A. D. 1887, by which they were to furnish and set up the engines, boilers, and other machinery in the mortgage mentioned, and the company was to pay a certain sum in cash when the work was completed and execute notes for the residue, which notes by the terms of the contract were to be secured by a chattel mortgage on the machinery purchased.
On the same day that the contract in writing was entered into, the Salem Coal & Mining Company executed a mortgage on certain real estate to certain parties, which mortgage included the land on which the machinery, engine and boiler was subsequently placed. That mortgage contains this clause : “ This mortgage is given subject to a chattel mortgage given by the company to William Ellison & Son, on engine and machinery purchased from him.” After the machinery was furnished and placed in position according to the contract, the company paid the cash payment and executed their notes, and on the 28th of November, 1887, executed their chattel mortgage to secure the note which was duly acknowledged and recorded. The evidence shows the manner the property is attached to the land, and is conflicting as to whether it could be removed without injury to the buildings in which it is, and whether a part of the realty. On the same day the real estate mortgage was executed, the written agreement by which the machinery was to be furnished was entered into. By the terms of that agreement, personal property of the appellants was to be furnished and set up and a chattel mortgage to be executed thereon. At the time of the execution of the real estate mortgage, the machinery to be furnished under the contract was personal property, and it clearly appears to have been the intention of the appellants and the Salem Coal & Mining Company that it should retain its character of personal property after it was set up ready for use, as by the contract it was treated as personal property, and a. chattel mortgage to be executed thereon. The intention of the parties that it should retain its character of personal property must influence in case of doubt. Kelly v. Austin, 46 Ill. 156" date_filed="1867-09-15" court="Ill." case_name="Kelly v. Austin">46 Ill. 156; Dooley v. Crist, 25 Ill. 551" date_filed="1861-04-15" court="Ill." case_name="Dooley v. Crist">25 Ill. 551; Smith v. Moore, 26 Ill. 392" date_filed="1861-04-15" court="Ill." case_name="Smith v. Moore">26 Ill. 392; Arnold v. Crowder, 81 Ill. 56" date_filed="1876-01-15" court="Ill." case_name="Arnold v. Crowder">81 Ill. 56; Thielman v. Carr, 75 Ill. 385" date_filed="1874-09-15" court="Ill." case_name="Thielman v. Carr">75 Ill. 385.
In the case of Sword v. Law, 122 Ill. 487" date_filed="1887-11-11" court="Ill." case_name="Sword v. Low">122 Ill. 487, it is said : “ There seems to be great unanimity in the authorities that things. personal in their nature may retain their character of personalty by the express agreement of the parties although attached to the realty in such manner as that, without such agreement, they would lose that character, provided they are so attached that they may be removed without material injury to the article itself or to the freehold. It is not held that parties may, by contract, make personal property real or personal at will, but that where an article personal in its nature is so attached to the realty that it can be removed without material injury to it, or to the realty, the intention with which it is attached will govern; and if there is an express agreement that it shall remain personal property, or- if from the circumstances attending, it is evident or may be presumed that such was the intention of the parties, it will be held to have retained its personal character.” It has been held that where chattels are sold to the owner of the soil on an agreement that their character as personal property is not to be changed, and a chattel mortgage is taken, thereon to secure the purchase money, a prior mortgagee of the land can not claim them, although subsequently annexed to the freehold. Tifft v. Horton, 53 N.Y. 377" date_filed="1873-09-23" court="NY" case_name="Tifft v. . Horton">53 N. Y. 377; Voorhis v. McGinnus, 48 N.Y. 278" date_filed="1872-01-05" court="NY" case_name="Voorhees v. . McGinnis">48 N. Y. 278. So, also, in a proceeding to foreclose a chattel mortgage on a steam mill, it was held that subsequent purchasers of the mill and land with notice of the mortgage, took the premises subject to that chattel mortgage. Grether v. Alexander, 15 Iowa 470" date_filed="1863-01-05" court="Iowa" case_name="Greither v. Alexander">15 Ia. 470. A subsequent mortgagee would stand in no better position than a subsequent purchaser.
The written agreement and the chattel mortgage shows the intention of the parties in this case. Some of the officers of the coal company who executed the' mortgage and written agreement in behalf of the company are also mortgagees. In the real estate mortgage it is expressly provided that it is subject to a chattel mortgage given by the company to William Ellison & Son on the engine and machinery purchased from him. That provision in the deed is notice to the mortgagee. It is urged, however, that as the chattel mortgage was not then executed, that that provision of the real estate mortgage was not true. It is, however, notice that will protect Ellison & Son by way of estoppel. Ill. Ins. Co. v. Littlefield, 67 Ill. 369; Pinckard v. Milmine, 76 Ill. 453" date_filed="1875-01-15" court="Ill." case_name="Pinckard v. Milmine">76 Ill. 453.
But it is not necessary for appellants to invoke that provision by way of estoppel, as we hold that the prior mortgagee can not claim this property as realty, although subsequently attached to the freehold, where purchased as personalty, and by agreement to retain that character. The appellants had a right to file their cross-bill to foreclose their mortgage by decree of court. McCauley v. Rogers. 104 Ill. 578" date_filed="1882-11-20" court="Ill." case_name="McCauley v. Rogers">104 Ill. 578; Gaar, Scott & Co. v. Hurd, 92 Ill. 315" date_filed="1879-06-15" court="Ill." case_name="Gaar, Scott & Co. v. Hurd">92 Ill. 315. The property in the chattel mortgage described was not attached so as to become a part of the realty; nor was the lien of appellants on that property subject to either the lien of the material-man or the real estate mortgagees. The court erred in so decreeing. The decree is reversed and the cause remanded.
Reversed and remanded.