Rowland v. West

Dwight, P. J. The action was for damage to a freehold by severing therefrom certain articles of machinery. The contest is a familiar one between a mortgagee of the realty and a mortgagee of chattels claimed to have been affixed thereto. The freehold was a small piece of land upon which one Wainwright, who was the owner in 1889, built a frame saw-mill set on blocks, into which he put an engine and boiler and some other machinery, and, later, the articles of machinery mentioned in the complaint. These were two circular saws, with their frames and the carriage belonging to one of them, a fly-wheel, and a piece of rubber belting. They had been formerly used as parts of a portable saw-mill, and, at the time when both the mortgages were given, were lying in the woods adjacent to the mill. Such being the situation, on the 6th day of August, 1889, Wainwright gave to one Ludlow a chattel mortgage on the articles in question to secure a debt owing to him. The chattel mortgage was duly filed in the town-clerk’s office the next day, and was duly assigned, with the notes accompanying it, on the 2d day of June following. On the 30th day of August, 1889, and while the chattels in question still lay in the woods, Wainwright gave to the plaintiff, acting by her husband, to secure a debt owing to her, a mortgage of the real estate, which contained, in addition to a description of the land, the following clause: “Together with the mill building recently erected on said land by said party of the first part, and the steam-boiler and engine, belts, machinery, saws, planer, and implements in and about said building, and belonging to or connected with the business carried on therein and thereabouts,—all of which, for the purposes of this mortgage, is understood and agreed shall be considered and held as real property and fixtures annexed to the freehold.” Wainwright testified that when this mortgage was presented to him to be executed he objected to the clause quoted, giving as a reason that the engine and boiler did not belong to him, and that there was a claim on all the old machinery, which comprised the articles mentioned in the complaint; that this statement was made to the plaintiff’s husband and the attorney employed by the latter to draw the papers, and that he (Wainwright) waived his objection only on the assurance by both of those persons that the execution of the new mortgage would make no difference, and that after the old claim was paid up the new mortgage would be good. This testimony was contradicted by Rowland and by the plaintiff, who testified that she was present a part of the time while the business was being done; but the question was submitted to the jury whether the plaintiff knew, at the time she took her mortgage, that there was a chattel mortgage on this property, and they may be presumed to have given credit to the testimony of Wainwright in this respect. On default in the payment of the notes secured by the chattel mortgage then held by the defendant, he demanded his pay or the property; and Wainwright thereupon, two weeks before the plaintiff’s mortgage fell due, took the articles described in the complaint out of the mill, and delivered them to the defendant. The plaintiff foreclosed her mortgage when it became due, and became the purchaser on the foreclosure sale, and afterwards brought this action for the injury to the freehold by the removal of the property in question. In respect to the manner in which that property was attached to the realty, the evidence shows that the frames of the two circular saws were fastened to the timbers of the building by screw-bolts with burs, that of the slab or cross-cut saw being swung from the timbers overhead; that the carriage of the large circular saw was set (to run back and forth) on a track which lay on the floor joists; that the fly-wheel was an extra one, slipped onto the crank-shaft by the side of the main fly-wheel, and held in place by set-screws, and the belt was, of course, not fastened to anything, except that it passed around a wheel and pulley. These were the material facts upon which the case was submitted to the jury, with instructions which, we think, were in all respects in accordance [332] with the law. The three tests of such an annexation of chattels to the freeholdi as will have the effect to constitute them a part of the realty were stated very clearly, and in accordance with the doctrine of Voorhees v. McGinnis, 48 N. Y. 278, and McRea v. Bank, 66 N. Y. 489, chief importance being ascribed,, as in those cases, and especially by Rafallo, J„ in the latter of them, to the fact of the intention with which the annexation is made; and the jury was instructed that the manner in which the chattels were annexed, though not a, controlling circumstance, might furnish some evidence to the minds of the jury upon the question of the intention, in respect to its permanency, with-which the annexation was made. But the circumstances peculiar to this-case also received proper attention at the hands of the court. The fact that the articles of property in question were chattels when the mortgage to the-plaintiff was given; that they were already subject to the chattel mortgage of which the defendant became the assignee; that that mortgage had been duly filed, so as to be constructive notice to any person who assumed to-deal with that property as chattels; and that there was evidence which tended to show that the plaintiff had actual notice of the chattel mortgage at the time she took her mortgage,—all these facts, or the evidence tending to establish them, received just attention, and were submitted to the jury, with proper instructions as to their effect upon the rights of the parties, if found to be established. We regard those facts as conclusive in support of the verdict actually rendered. The property was chattels only when the plaintiff took her mortgage. It had never been attached to the freehold in question, nor to any other. It could not be converted into realty by simply calling it so, nor by an agreement to consider it such. It might no doubt be included, as chattels, in the real-estate mortgage, and those chattels might subsequently be annexed to the freehold so as to become a part of the realty, and so inure to the benefit of the mortgagee; and that, even with the effect of depriving the defendant of the benefit of the prior lien of his chattel mortgage, and to remit him to his remedy against the mortgagor for his wrongful conversion of the chattels into realty. Fryatt v. Sullivan Co., 5 Hill, 116; Voorhees v. McGinnis, and McRea v. Bank, supra. But, most clearly, this can be done only in favor of one who has no notice, either actual or constructive, of the prior lien. In the ease in 5 Hill, which is the leading one, at least in point of time, cited in support of the doctrine that a chattel mortgagee may be deprived of the security upon which he has parted with his money, in favor of a subsequent lienor, by the wrongful act of the mortgagor in converting the chattels into realty, it was expressly premised that the taker of the mortgage on the real estate had no notice of the chattel mortgage; and that fact is as clearly assumed in the other cases cited. On the question of notice, it is undoubtedly true that, so far as the plaintiff was dealing with real estate in taking her mortgage, she was not affected with notice by the filing of the chattel mortgage. As the court said at the circuit, as a purchaser of real estate she need only to inquire at the county clerk’s office for liens on real estate, and was not required to extend her inquiry to the town-clerk’s office in search of chattel mortgages. But the property in question was chattels when it was included in her mortgage, and the town-clerk’s office is the repository of liens on property of that character. Upon the facts in this case the filing of the defendant’s chattel mortgage was notice to the plaintiff that the lien existed. So, too, if the jury believed the testimony of Wainwright, the plaintiff, by her agents, had actual notice of the claim of the chattel mortgagee, and overcame the scruples of her mortgagor only by assuring him that the former mortgage would hold the prior lien. If such was the case, the plaintiff was herself a party to the wrongful conversion of the personal property into realty, and cannot have the benefit of her own wrong. These views, we think, embrace, in principle, all the points raised by the exceptions taken by the plaintiff on the trial and discussed on [333] this appeal. They lead to an affirmance of the order appealed from. Order •denying the plaintiff’s motion for a new trial affirmed, and judgment directed for the defendant on the verdict. All concur.