73 Colo. 30 | Colo. | 1923
delivered the opinion of the court.
IN Cause No. 10197, The Colorado Vanadium Corporation v. The Western Colorado Power Company, et al., decided at this Term, the opinion being reported in 73 Colo. 24, 213 Pac. 122, the plaintiff in error here, The
The principal question for decision is whether, under the facts and the applicable law, the properties seized under the attachment writs are, or are not, “trade fixtures” as distinguished from “fixtures” that have become a part of the realty to which they are affixed. If they are “trade fixtures”, they were properly attached as belonging to the defendant lessee. If “fixtures” of the latter kind, they belong to the intervener, lessor, and were not subject to the seizure. The trial court held them trade fixtures and we think the evidence sustained the finding, and the judgment rendered was right.
The facts are that in the year 1918, the plaintiff in error, The Rare Metals Mining & Milling Corporation, intervener below, was the owner of Vanadium mines and certain buildings thereon, and of a mill site in the town of Sawpit, on which there was an old gold mill that had been used, and was adapted only for treating metallif
“Should the man’f’r., (the lessee in this memorandum was designated as manufacturer), without written consent of the company, default in the terms of this contract for six (6) months, in any one calendar year, then the Company shall have the. right to cancel this agreement and shall have the option to purchase the mill or mills of the man’f’r. at an agreed upon or appraised price.”
Under these instruments in writing, the Colorado Vanadium Corporation, so formed by Gardner and to which his rights were assigned, as therein provided, took possession of the leased properties. The evidence tended to show, and presumably the court found, that this corporation, with the knowledge and the tacit or implied consent of intervener, proceeded to tear down the old gold mill, obliterating the same as a structure, except as to an ore
From the time of the assignment of the lease the lessee corporation remained in exclusive possession of the leased premises and conducted thereon the business of mining and reducing vanadium ores until late in the year 1920, when financial embarrassment caused it to cease operation. The lessee was indebted to the different plaintiffs in the combined action, and each of them brought a separate suit, the writ of attachment in each being levied upon the reduction plant, claiming such property as trade fixtures of the defendant lessee. The intervener, lessor,
Upon sufficient legal evidence, which is not in serious conflict, 'the trial court held the properties now in dispute to be trade fixtures. This general finding,—a mixed finding of law and fact,—includes a specific finding of every material fact, within the issues raised by the pleadings, essential to the judgment pronounced on the general finding.
Whether that which was once a chattel but which, by being affixed to the realty, becomes thereby accessory to, and a part of the realty, or still retains its character as a chattel or a trade fixture, has often been before the courts of England and this country. No two cases are exactly alike, hence no general rule applies to every case. It is, of course, a general rule that whatever is affixed to the realty becomes part thereof, and partakes of its incidents and properties and may not be severed and removed without consent of the owner. To this general rule there are exceptions as well established as the rule itself, and one of the exceptions is that this doctrine does not obtain in its fulness as between landlord and tenant. The argument of intervener takes a wide range. Many authorities are cited and discussed at length. Even a meagre resume of them would unduly lengthen this opinion. None of them is decisive of this case. All of them, in their material facts, may easily be distinguished from it. As furnishing the tests by which to ascertain if chattels attached to realty are fixtures, intervener relies upon Teaff v. Hewitt, 1 Ohio St. 511, (S. C. 59 Amer. Dec. 634).
They are: 1. Actual annexation to the realty, or something appurtenant thereto. 2. Application to the use or purpose, to which that part of the realty with which it is connected, is appropriated. 3. The intention of the
“The rule of law as to removing fixtures is most liberal when applied between tenant and landlord. And, as a general proposition, whatever a tenant affixes to leased premises may be removed by him during the term, providing the same can be done without a material injury to the freehold.”
The opinion cites, with approval, Van Ness v. Pacard, 2 Peters, 141, 7 L. Ed. 374, where Justice Story, with his usual thoroughness, discusses the doctrine of trade fixtures. In speaking of the exception noted to the general rule, Justice Story said:
“But an exception of a much broader cast, and whose origin may be traced almost as high as the rule itself, is of fixtures erected for the purposes of trade. Upon principles of public policy, and to encourage trade and manufactures, fixtures which were erected to carry on such business, were allowed to be removed by the tenant during his term, and were deemed personalty for many other purposes.”
In this case it was held that a large house which had been built by a tenant upon demised premises and used in part as a family residence, was a trade fixture. The dwelling house was affixed as firmly to the realty as was the mill and other structures in the instant case. The Supreme Court of the United States, in Wiggins Ferry Co. v. Ohio & Miss. Ry. Co., 142 U. S. 396, 415, 416, 12 Sup. Ct. 188, 194, (35 L. Ed. 1055) in approving the doctrine in the Van Ness case, supra, said:
*37 “As between landlord and tenant, or one in temporary possession of lands under any agreement whatever for the use of the same, the law is extremely indulgent to the latter with respect .to the fixtures annexed for a purpose connected with such temporary possession. * * * The earlier authorities are'reviewed in that case by Mr. Justice Story, and the conclusion reached, that whatever is affixed to the land by the lessee for the purpose of trade, whether it be made of brick or wood, is removable at the end of the term. Indeed, it is' difficult to conceive that any fixture, however solid, permanent and closely attached to the realty, placed there for the mere purposes of trade, may not be removed at the end of the term.”
In Updegraff v. Lesem, 15 Colo. App. 297, 62 Pac. 342, Judge Thomson quotes with approval part of the foregoing excerpt of the opinion in the Wiggins Ferry Company case, and emphasizes the fact that the exception to the general rule is peculiarly applicable as between landlord and tenant. In Carper v. Risdon, 19 Colo. App. 530, 78 Pac. 744, Judge Thomson again applies the doctrine of the Wiggins Ferry Company case, and that of Updegraff v. Lesem, supra, and says:
“Articles affixed by a tenant to the demised premises, for the purpose of carrying on the business for which they are leased, are removable by him, however firmly they may be attached.”
Of course, the removal must be made during the tenancy, or within a reasonable time thereafter; but that limitation is not important in this case for the term has not yet expired.
In Royce v. Latshaw, 15 Colo. App. 420, 424, 62 Pac. 627, 628, referring to the element of the intent of the tenant who erects a building on leased premises, Judge Wilson, says:
“Besides, whilst possibly the, intent with which structures of any kind are erected upon real estate should not wholly control, although some cases have even gone so far as that, yet it is now universally held that such intent*38 may be considered in connection with other evidence to determine the character of the structure.”
In Foote v. Carroll, 64 Colo. 182, 170 Pac. 954, this court cites with approval the Updegraff case, supra, and is direct authority for the proposition that the exception to the general rule, where the relation is that of landlord and tenant, applies equally between the attaching creditor of a lessee and the owner of the fee, or the lessor, and that fixtures which a tenant may remove are subject to attachment. A large list of cases of like import is collated in 13 Amer. & Eng. Encyc. of Law, (2d ed.), p. 644. Such being the law in this jurisdiction and generally throughout this country, let us apply it to the facts of the case we are considering.
The lessee, the Vanadium Company, whose rights are-now vested in the attaching creditors, to comply with its contract with the lessor, the intervener, was obliged to erect upon the demised mill site, a mill and a complete reduction plant, and to equip the same for treating vanadium ores, and to build certain other structures upon the vanadium mine from which the ores were to be extracted. All of this property was not only adapted to, but was absolutely necessary for, the carrying on of the trade or business of reducing or refining ores for which the lease was granted, and was to be used and operated as a unit. The structures, equipment and machinery were as firmly attached to the realty as such structures, so to be used, ordinarily are; just as firmly attached as was the dwelling house in the Van Ness case, supra. Confining the discussion to the new mill and its equipment, for it is virtually conceded that if they are trade fixtures, (and this would be so even if not conceded), the other articles affixed are also trade fixtures, the further facts are that these structures are substantially new, not substitutes for, or mere additions to, buildings that were on the realty when the lease was given. The erection of such structures did not constitute any part of the consideration for the lease. The chief, if not the only, consideration there
But the twelfth clause of the written memorandum, a part of the leasing contract, clearly and expressly shows that it was the'intention, not only of the lessee, but of the lessor also, that the reduction plant, when erected, was to be a trade fixture and to be the property of the lessee. If, as intervener, the lessor, now says, this plant, by its annexation to its realty, became its property, why did it reserve, in writing, an option to purchase it from the lessee? This provision, in legal effect, recognizes that it was the intention of both parties that the plant should not become accessory to, or' a part of, the realty, but should remain chattels and be the property of the lessee, and might be removed during the tenancy, if it could be done—as it could be—without material injury to the realty. Intervener, however, says that the mill and machinery could not be removed without material injury to the old gold mill for which the new mill is only a substitute, or an addition. The court was justified in finding that the lessor knew of, and at the time acquiesced in, the utter destruction of the old mill, before the lessee began to build the new vanadium mill, and that the latter is a new structure throughout. It is injury to the freehold, the realty, not injury to some demolished building, to whose destruction the lessor consented, that might, if it was shown, prevent a removal.
This is not the only instance of a construction by the parties. The lessee, as its owner, took out an insurance policy upon the attached property. In its tax schedule to the county assessor the property was listed as its property. In the annual return to the Secretary of State, which our statutes require, the Vanadium Company reported this reduction, plant as a part of its property interests. The same claim of ownership was asserted in the Receivership proceeding.
During a part of the time that the plant was in operation the same man was the secretary or superintendent of both companies, and Gardner, to whom the leasing contract was made, and who assigned it to the Vanadium Corporation which he organized, was at one time a director, both of the lessor and the lessee. The same person was the attorney of The Rare Metals Company," intervener, and lessor, and of the Vanadium Corporation, defendant and lessee, from the time of their organization. He appeared as attorney for defendant in the main action, verified the traversing affidavit and contested the attachment on the, theory that lessee was the owner of the attached property. As attorney for defendant lessee he filed an answer to the petition of intervention admitting the averment therein that the intervener lessor was its owner. We have then, not only the express agreement of the par