31 Barb. 590 | N.Y. Sup. Ct. | 1858
(After discussing some questions not necessary to be mentioned here.) The most important question in this case remains to be considered. That question relates to the nature of the property known as the rolling stock of the company, including its engines and cars of various kinds and the property described as shop-tools, machinery, &c.; all of which is used, in one way and another, in the operations of the rail road; and so far as the title to this class of property is involved in the case, it turns upon the question Whether such property is personal property or fixtures; or, to state the question in a simpler form and so as to present its precise legal aspects in a clear light, and the opposing views of the parties in plainer contrast, whether it is personal or real property. If such property, after it is purchased for the use of the company and put upon its road, is ipso facto, so affixed to the realty as to become, in judgment of law, a part of the realty, the lien of the mortgage attached to the property in questibn, as fast as it was acquired, and the- plaintiffs are eptitled to it, without regard to the time of its acquisition.
If, on the contrary, after it is placed on the road, it retains its character of personal property, which it clearly -was before, the plaintiffs’, claim must fail, irrespective of the question whether a mortgage of personal property to be acquired after its execution is sufficient to giv§ a title to or create a lien upon such property, in equity. For if such title or lien can be so created, it relates to personal property, and the law applicable to that species of property is controlling on questions both as to the original and continuing validity of the title or lien. The plaintiff’s mortgage was in its terms a good chattel mortgage as to all personal property to which it was applicable, but it was never filed as a chattel mortgage, as our statute requires, (Laws of 1833, p. 402, § 1,) in order to preserve its lien as against creditors; and as this question arises between the mortgagee and a creditor of the mortgagor, the mortgage, so far as it relates to the personal property, is void under the provisions of the statute last cited, and the plain
As an original question, I confess I should find it difficult to suggest a plausible ground of doubt in relation to it. Hone of the property in dispute is or can be affixed or attached to the real estate for any purpose for which it was intended to be used; nor indeed, without entirely defeating that purpose, within any sense of those terms as they ai’e used as distinctive tests of the difference between personal property and fixtures. The engines, cars &c., composing the rolling stock, it is well known, are manufactured for sale to the different roads in the process of construction and in operation throughout the country. They are as well adapted for use on one road as another of the same width or gauge as the road for which they were built or on which they are in use; and partly worn stock of
But within the last year it has been claimed for the first time, that the universal opinion of the legal profession and the business community, which has been acted upon so often and by so many parties, and has been sanctioned by the acquiescence of all, including the courts* the legal profession and parties for the last twenty-five years, is founded in a radical mistake as to the nature of such property; and in addition to all this, it is claimed that property in familiar us'e long before rail roads were known, which has always been and is now held, and is by the parties who advance this new doctrine conceded to be personal property under other circumstances and when held by other owners* is, by reason of the fact that it is owned and in the use of rail roads converted into real estate. In a word that by such use its nature is, ipso facto, changed. The proposition is a novel one, to say the least of it, and the sanction, direct and indirect, which it has received from judicial opinions and authority, if nothing else, entitles it to grave consideration. I will, therefore, proceed to examine some of the cases which have been cited as authority for this position.
The case of Coe v. Hart and others, (Am. Law Reg. Nov. 1857,) decided in the circuit court of the United States for the northern district of Ohio, by Mr. Justice McLean, in July term, 1857, presented a controversy between the mortgagees named in the first mortgage (which included all property connected with the róad) and the holders of certain bonds secured by a subsequent mortgage, who had obtained a judgment at law on their bonds and issued an execution, which had been levied on some of the cars and engines belonging to the com-.. pany which executed the mortgage. Some of the property levied on was acquired by the company after the execution, of'
The case of Mitchell v. Hinslow, (2 Story’s Rep. 630,) upon the authority of which Coe v. Hart was decided, presented the question whether, a mortgage of personal property, to be acquired after the. execution of the mortgage, constituted such a lien in favor of the mortgagee, upon such subsequently acquired property, as was protected by the provisions of the 2d section of the general bankrupt law of the United States. The question arose between the mortgagee and the assignee of the bankrupt mortgagor. Mr. Justice Story held" that the mortgage attached in equity as a lien or charge upon the particular property, as soon as the mortgagor acquired a title, as against him and all persons claiming under him, either voluntarily or with notice or in bankruptcy.
The case of Corey v. The Pittsburgh, Fort Wayne and Chicago Rail Road Company, a newspaper report of which has been furnished to us, presented a similar question to that decided in Coe v. Hart. An execution creditor had levied upon, certain rail's that had been temporarily removed from their place in the road bed for repairs, and upon a small quantity of iron chairs which were placed on the road and were intended for- use there, but had never been affixed to the road bed. The president of the company, on its behalf and on behalf of the mortgagees, in a mortgage similar to the plaintiffs’ mortgage in this case, moved to set aside the levy. As to the rails the case admitted of no doubt; they had been permanently affixed to.the realty, and their removal for the purpose of necessary repairs did not deprive them of their character of fixtures,. and the court so held. The court further held that the mortgage was valid as a chattel mortgage, under the statute of frauds, as against creditors, and cited the case of Coe v.
The cases prove no such proposition as that now under consideration. Indeed it is nowhere affirmed or intimated that property of the kind, or situated like that in controversy in. this action, is real estate. On the contrary the learned judge, who delivered the opinion in the case last cited, assumes that the rolling stock of a rail road is “ personalty by nature,”' and puts its exemption from sale on execution,- not on the ground that its nature is changed by placing it on the road, but ony the ground of its necessity to the operation of the road. This is substantially the view which Justice McLean takes of the question, in Coe v. Hart. The question will be considered in this aspect hereafter. The case of Seymour v. The Canandaigua and Niagara Falls R. R. Co. (25 Barb. 284) involved a question as to the lien of the mortgage upon lands acquired by the company subsequent to the execution of the mortgage; and Mr. Justice Smith, at special term, held that the lien at
The case of The Farmers’ Loan and Trust Co. v. Hendrickson (25 Barb. 484) is directly in point and in favor of the plaintiff’s position. It is a decision of a general term of this court upon a case submitted - by the parties without action. The case does not show what points were presented by counsel, or how elaborately the merits were argued. But the opinion delivered by Mr. Justice Strong shows that the case was thoroughly considered by him. And as the decision was concurred in by his associates, it should be received with the same respect here, as a decision made by us, and should not be overruled, except under the same circumstances that would induce us to review and overrule our own decision. That this should rarely be done, and that when done, it should be upon mature deliberation and for cogent reasons only, I concede. But that cases will occur when justice to parties interested and to the law requires it, the experience of all courts proves.
The controversy in that case arose between the plaintiff as the mortgagee in trust for the bondholders, to secure whom the two mortgages to the plaintiff were executed, and certain judgment creditors whose executions had been levied upon the rolling stock of the Flushing Bail Boad Company, the mortgagor. The mortgages under which the plaintiff claimed were substantially like that under consideration here, the cars, engines, tools and machinery being mortgaged. The question whether future acquisitions of personal property would be included in such a mortgage did not arise, because one of the plaintiffs’ mortgages was executed after all the property was acquired and before the levy under the executions was made. It was conceded also, that the plaintiffs could not hold the property as personal property under the mortgages, for the reason that they had not been filed as chattel mortgages. The learned judge who delivered the opinion came to the conclusion that the rolling stock was fixtures and passed as necessary incidents in a conveyance of real estate.
It is virtually conceded by the learned judge whose opinion has been so often referred to, that this kind of rail road property does not come within the general definition of fixtures; that is, that it is not annexed or attached to the freehold, as the general rule on that subject requires it to be. If this is true of such property in general it is"peculiarly so of the property in controversy. This road connects at its eastern terminus with the New York and Erie Bail Boad, which runs thence to the city of New York, passing in its route through the states of Pennsylvania and New Jersey. We are informed by-the plaintiffs’ case that some of the cars in question have been run from Hornellsville to New York over the New York and Erie Bail Boad, in the transaction of business. It is fair to infer, from the statement in the case and the well known course of business in such cases, that these cars have been uniformly used in this manner; that many, and possibly all of them, have been not only off from the road where they were owned, but out of the state where thaf road is located, and in the temporary possession and control of other companies, and that they are continually used in this manner. The statement of these facts, in connection with the proposition sought to be sustained by them, that these cars are so annexed to the road as to be a part of the realty, is in my judgment the most conclusive argument with which the proposition can be combated.
The facts of the case then before the court presented that precise case for adjudication. It was apparent from the case,
, The case? on the subject of the law of fixtures are not a little conflicting, and in consequence of this conflict in cases, and the numerous and anomalous exceptions to its general rules that have been established, it is often very difficult to discriminate between ■ personal property and fixtures. But we shall greatly increase that difficulty if we do not entirely obliterate the distinction between the two kinds of property by multi.plying exceptions. I think we are called upon in this case to take about the last step that remains to be taken towards the accomplishment of that result. I agree to the rule laid down in Farrar v. Stackpole, that the principles of the law should •be applied to new kinds of property in such a manner as the nature- and incidents of the property and the peculiar necessities under which the application is to be made, may require. .But I can see no necessity in this case, nor any thing in the character or incidents of the property requiring or justifying the application to it of a rule different from that which is applicable to all other property. It has been suggested in several of the cases cited, and- it is undoubtedly true, that the mortgagees lent their money upon the security of all the property of the road. It is equally true that the mortgage was originally a valid lien upon all the property owned by the company at the time of its execution; that that lien has attached upbn all the real property acquired since and comprehended by the description in the mortgage. As to the personal property, the lien could have been perpetuated upon such property as the company then owned, by filing the mortgage as a chattel mortgage, in pursuance of the requirements of the statute on that subject; and if the mortgage did not attach, proprio vigore, to subsequently acquired personal property, the covenants contained in it created an. obligation on the part of the company, which equity would have enforced, to-execute the
The argument that rail road corporations are created to serve the public, and that the public has such an interest in their maintenance and operation that the law will not,, upon principles of public policy, permit a separation of the rolling stock from the road by means of a sale on execution, admits in my opinion of a very brief answer. The franchise granted to a rail road company, to construct and operate a rail road, is undoubtedly accompanied with an implied obligation on the part of the company to construct and operate such road, and for a failure to fulfill this obligation the franchise may be forfeited and the grant may be annulled by the legislature. But that the law will permit the company to hold property for its own private emolument which the labor and money of creditors has contributed to furnish, in defiance of those very creditors, on the ground that the public is interested in the success of the company and the continuance of its operation, is a novel and to me á startling proposition. Private property may be taken for public use on making adequate compensation to the owner. This prerogative of sovereignty has been in many cases delegated to corporations, on the idea that the enterprises for the promotion of which they were incorporated, were of a public nature and for the public benefit.- But the idea that such corporations may acquire and retain property without compensation, and without such property being amenable to the ordinary process of the law, is one for which I think no
j~. The rolling stock, shop-tools and machinery not affixed to the realty, being personal property, and the plaintiff’s mortgage not having been filed as a chattel mortgage, it is void as against creditors, as a conveyance of personal property. ■. The referee, therefore, decided correctly in holding that the plaintiffs were not entitled to a judgment for the sale of the rolling stock, &c. acquired subsequent to the execution of the mortgage. But I am not able to concur with him in his decision that the plaintiffs were entitled to a judgment for the sale of the rolling stock and other personal property on hand when the mortgage was executed. The mortgage of the plaintiff, so far as that property is concerned, must be sustained as a chattel mortgage, if at all. As such, it was void as against .the defendant Patchin, for the reason that it was not filed in pursuance of the provisions of the statute. There would have been no question about this.if the judgment creditor had been any one else than an officer of the road. But I understand that the referee put his decision upon the' ground that as Patchin was at the time the mortgage was executed and negotiated, a director and the chief financial officer of'the road, and as such negotiated the mortgage, he is estopped from questioning its validity as a mortgage upon all the property, real and personal, that the company then owned. With great deference to the opinion of the learned referee, I am not able to concur with him in this conclusion. An estoppel of this kind consists in the representation of some matter in pais (a mere matter of fact as distinguished from a legal conclusion) known to the party making the assertion, but unknown to the party to whom it is made, td be untrue, and made for the purpose of influencing the action of such party. Where such a representation has been made and has induced the party to whom it was made to act upon it in such a way that he will be injured if it is untrue, the party making the representation will be estopped from controverting its truth. How
On the ground last stated I think the plaintiffs’ appeal should be dismissed with costs, and the judgment should be modified on the appeal of the defendant Patchin, by striking out so much "as directs the sale of the engines, tenders, cars, shop-tools, and other personal property therein directed to be sold, and affirmed as to the residue, with costs.-
It appeared on the trial that at the time of' the execution of the mortgage^ the rail road company owned several locomotives, and passenger and other cars, all of which the referee decided were bound by the mortgage; and he directed judgment for the sale thereof, with the other property embraced in the mortgage. It was further shown that after the mortgage was given to the plaintiff Stevens, the company became the owner of other engines and cars, which they had used upon the road, between Buffalo and Hornellsville, and the plaintiffs claimed that these were subject to the mortgage, and should be adjudged to be sold with the other property. The referee decided that they were not subject to the mortgage, to which the plaintiffs excepted, and their appeal is founded solely upon this exception. The following facts were shown upon the trial: That after the mortgage was given to the plaintiff Stevens, and before the commencement of the suit, the defendant Patchin recovered a judgment in this court against the rail road company, and executions were issued upon the judgment, and levied upon all the engines, cars, &c. ■ in question, as personal property, and that the same were sold-upon said executions, by the sheriffs of Erie, Wyoming and other counties, wherever, the same were found, and that the defendant Patchin became the purchaser at such sales. The plaintiff’s mortgage had never been filed as a chattel mortgage. If the engines and cars are personal property, then Patchin acquired a good title to them by his purchase upon the execution. If they are fixtures, then Patchin acquired no title by his purchase; and the inquiry would be, to what portion of the road these engines and cars pertained' as fixtures.. The road extended from Hornéllsville to Buffalo. The plaintiff’s mortgage only covered the road from Attica to Buffalo, almost one third of the entire road. The questions arising in various forms, between the owners of the realty claiming prop-erty as fixtures, and those claiming the same property as per-' sonal, have been very numerous. The books abound in cases,: and yet after the lapse of centuries no certain rule has been
In my opinion, engines, cars, &c. are not fixtures, but personal property ; and the defendant Patchin acquired a title
If I am right in this conclusion, then Patchin acquired, a perfect title to the property, by his purchase upon the execution. The engines and cars were his, discharged of the lien of the mortgage. That never having been filed as a chattel mortgage, it is void as to judgment creditors, so far as relates to personal property.
The appeal of the plaintiffs should be dismissed, and the judgment modified by omitting the engines and cars from the decree of sale.
Marvin, J. concurred.
Judgment accordingly. .
Marvin, Greene and Grover, Justices.]