San Francisco Breweries v. Schurtz

Belcher, C. The defendant, Joseph Schurtz, had a lease for. the term of four years and two months, dated October 5, 1889, of the basement of a building known as the Wilson block, in the city of Los Angeles. He used the leased premises for the purposes of a saloon and [425] restaurant, and bad caused to be attached to them certain personal property used in conducting his business. On June 25, 1891, he executed to the plaintiff his promissory notes for sums aggregating four thousand five hundred dollars, and a mortgage to secure payment of the notes on his said leasehold estate and on all fixtures, improvements, and appliances, which had been attached to or made a part thereof, and also on all personal property, including a piano, used in and about said saloon and restaurant. The mortgage was properly executed as a mortgage of real and personal property, and on the day of its date was by the mortgagee caused to be recorded in the recorder’s office of Los Angeles county. In August, 1892, the plaintiff commenced this action to foreclose its mortgage, making Henry P. Wilson the appellant, and others parties defendant, upon the ground that they had, or claimed to have, some interest in the mortgaged property, which interests or claims, it was alleged, were subsequent and subject to the lien of said mortgage. All of the defendants, except Wilson, suffered their defaults to be entered. He demurred to the complaint, and, his demurrer being overruled, answered. The answer denied some of the averments of the complaint^ and alleged that the only property subject to mortgage was the leasehold interest and the piano, and also alleged that on May 26,1892, one Catherine Wilson recovered a judgment against Joseph Schurtz, the mortgagor, for two thousand three hundred dollars, on which an execution was duly issued and levied upon most of the property involved in this action, other than the said leasehold interest and piano; that under the execution the property levied upon was sold on June 15,1892, and bid in by said defendant, and is now owned by him and in his possession. And the prayer was that it be adjudged that defendant is the owner of the property so bid in by him, and that no part thereof is subject to plaintiff’s mortgage. [426] The court found that the mortgage was a valid lien on all the property described therein, “except such part of the personal property thereof as was purchased by said Henry P. Wilson at sheriff’s sale on June 15,1892, said personal property .... being as follows, to wit: The silverware, safe, and stock of wines, liquors, and cigars.” A decree was accordingly entered foreclosing the mortgage upon and directing a sale of all the property found to be subject to the lien thereof; and .from this decree the defendant Wilson appeals. 1. In support of the appeal it is claimed that the demurrer to the complaint should have been sustained, but we think' it was properly overruled. The mortgage covered real and personal property. Such a mortgage is valid and may be foreclosed, and the real and personal property may be sold under the same decree. (Tregear v. Etiwanda Water Co., 76 Cal. 537; 9 Am. St. Rep. 245.) And the fact that some of the personal property was not mortgageable, under section 2955 of the Civil Code, did not render the mortgage void as to the other property covered by it. (In re Fischer, 94 Cal. 523.) The case of Dufficy v. Shields, 63 Cal. 332, is cited for appellant as declaring a different rule from that last-above stated, and as holding that a mortgage like the one supposed is wholly void. But that case was also cited in In re Fischer, 94 Cal. 523, and, to the extent that it does declare a different rule, it was in effect overruled by the last-named case, and is no longer authority. The averment that the defendant had or claimed to have some interest in the mortgaged property, which was subsequent and subject to the lien of plaintiff’s mortgage, was sufficient, and it cast the burden upon him to set up and show what interest he had. The complaint, in our opinion, stated all the facts required to constitute a cause of action, and it was not ambiguous or uncertain, 2. It is further claimed that all the property purchased by appellant at the sheriff’s sale was the personal property of the judgment debtor, Schurtz, and [427] was subject to seizure and sale under execution against him. And it is said, quoting from Freeman on Executions, section 114: “To determine whether a chattel affixed by the lessee can be seized on execution, we have only to ascertain whether the lessee can lawfully remove it. For whatever rights and interests the lessee has are subject to execution against him.” The rule thus declared is undoubtedly correct when no intervening rights have- accrued. But the fixtures attached by a lessee to leased property become a part of the realty and remain so until they are severed. While so attached a mortgage of the leasehold estate covers the fixtures, and on foreclosure they are sold as a part of the realty. (McNally v. Connolly, 70 Cal. 3; Ewell on Fixtures, 275; Jones on Mortgages, secs. 426, 435.) The case of Boyle Ice Machine Co. v. Gould, 73 Cal. 153, is substantially on all fours with this case, and must be followed so far as the question in hand is concerned. In that case the lessees of land erected machinery thereon and mortgaged the leasehold and machinery to the plaintiff therein. Subsequently the machinery was levied upon and sold as personal property under an execution against the mortgagor. The mortgagee brought suit to foreclose his mortgage, making the administrator of the estate of the purchaser at the execution sale a party defendant. The administrator an-' swered, setting up the execution sale and claiming to be the owner of the machinery by virtue thereof. A demurrer to the answer was sustained, and, on appeal, the ruling was held to be correct. The court said: “ The defendant occupied no position superior to that of the mortgagor, Gould, and whatever interest he acquired by his purchase was subject and subordinate to the mortgage of plaintiff.” 3. The point is made that, as a chattel mortgage, the mortgage sought to be foreclosed was void, because the affidavit required by section 2957 of the Civil Code, which was attached thereto, was made by one E. H. [428] Meyer, for and on bebalf of tbe corporation mortgagee, and it does not appear that he was the agent of the mortgagee. A sufficient answer to this point is that the affidavit expressly states that Meyer was the duly authorized agent of the mortgagee, and was authorized to do all acts for it in reference to the mortgage; and there is a direct averment in the complaint, which is not denied by the answer, that at the time of the execution of the mortgage Meyer was duly authorized to act in regard thereto as plaintiff’s agent. 4. It appears from a hill of exceptions that nearly three weeks after the case was tried and submitted, and findings and decree of foreclosure were ordered, the appellant asked leave to introduce testimony showing that Schurtz’s lease had been broken and canceled; that the lessor had canceled the lease by bringing suit against him for rent due, and that from and after March 10, 1891, he had held the leased premises from month to month as a monthly tenant. The court refused to hear the offered testimony, and its ruling is assigned as error. The ruling was proper, and must be sustained for two reasons: 1. The application was addressed to the discretion of the court (Miller v. Sharp, 49 Cal. 233; Briswalter v. Palomares, 66 Cal. 259; Consolidated Nat. Bank v. Pacific Coast S. S. Co., 95 Cal. 1; 29 Am. St. Rep. 88), and there is nothing tending to show an abuse of that discretion. So far as appears the evidence might as well have been offered during the trial; 2. No issue was raised by the pleadings to which the offered evidence was relevant. It follows that the decree appealed from should be affirmed. Searls, C., and Vanclief, C., concurred. For the reasons given in the foregoing opinion, the decree appealed from is affirmed. De Haven, J., McFarland, J., Garoutte, J.