Ottumwa Iron Works v. Muir

JOHNSON, J. Action to enforce a mechanics’ lien for a part of the purchase price of hoisting machinery erected on mining property by the lessees thereof. Plaintiff, the manufacturer of the machinery, sold it to the lessees with knowledge of the fact that they intended to employ it in the operation of the mine. Facts appearing in the record material to our present inquiry thus may be stated: On May 17, 1905, the owner in fee of certain mining property situated' in Adair county executed and delivered a lease to E. H. Scriven and Robert Caswell by which he conveyed to the said lessees the coal beneath the surface of the land described and the right to mine it for a period of fifteen years. Among the provisions of the lease are the following: “Second parties (the lessees) shall have the use of two acres of surface on said land around where the shaft is now sunk, for the purpose of handling coal »and loading the same into wagons, and may put up any — 585 — buildings on said two. acres and sink any shaft or shafts that may be necessary for the handling of the coal. . . . Second parties are to have the privilege of removing any buildings, machinery or tools that they may purchase and use on said premises at the termination of this lease.” The lease was duly acknowledged and filed for record three days after its execution. On the day it was filed, the lessees conveyed by deed an undivided two-thirds interest in the leasehold to Andrew Steele, O. E. Pierson, Margaret Muir and Robert Muir. On August 4, Scriven conveyed his one-sixth interest to his co-lessees. On the 26th day of August, the lessees conveyed an undivided one-sixth interest to H. W. Riggin. On November 8th, Pierson, Caswell and Steele conveyed to W. A. Harle an undivided one-half interest, and on November 10th, Robert and Margaret Muir conveyed to said Harle an undivided one-third interest, all of which were promptly recorded, so that by these various conveyances, an undivided five-sixths of the leasehold became vested in Harle and the remaining one-sixth in Riggin. On or about September 12, 1905, and before Harle acquired an interest in the leasehold, the owners thereof, Steele, Pierson, Caswell, Riggin and Robert and Margaret Muir, purchased of plaintiff (a corporation engaged in business at Ottumwa, Iowa) a hoisting engine and boiler, together with connections and appurtenances, and agreed to pay therefor the sum of seven hundred dollars. The machinery was received in due time by the lessees at Kirksville and hauled out to the mine where it was erected and placed in operation. Half of the purchase price was paid but the lessees failed to pay the remainder. The president of plaintiff company testified that shortly before the lien was filed, he visited the mine and saw the boiler and engine in position at the shaft. He states that “the boiler was on — 586 — a brick foundation, set up and connected on the foundation for hoisting the coal. It was at the shaft and appeared to have been there in that position for sometime. There is a shed over the engine and boiler and Mr. Harle was using the engine and boiler in operating the coal plant at that time.” The manner of the attachment of the boiler and engine to the foundation, if any, is not disclosed. The claim for lien was duly filed and it is stated therein that “a lien is claimed upon said leased premises and upon said improvements so sold and delivered and so erected upon said leased premises for the said balance of $350 and interest so due and unpaid on said account. Said Robert Muir, Margaret Muir, Andrew Steele, O. E. Pierson, Robert Caswell and H. W. Riggin were the owners as assignees of said leasehold in said lands leased to them as aforesaid, and at the time they were so erected as improvements on said leased premises as aforesaid and they were then holding said premises under a lease executed by the owner of the fee of said premises expiring about May 20, 1920.” It will be observed that Harle, who, at the time of the filing of the lien paper, was the owner of an undivided five-sixths interest in the leasehold, is not mentioned as one of the owners thereof, but in the petition subsequently filed, he was made a party defendant arid his interest in the leasehold is attempted to be held subject to the lien therein asserted. Other facts appear in the record, but those stated control the disposition of the case. At the conclusion of the evidence, the jury, under a peremptory instruction, returned a verdict for defendant Harle, and it is from the judgment entered in his favor that the present appeal is prosecuted. As no claim is made that error was committed in the judgment as to the other parties defendant, it is not necessary to state the conclusion of that branch of the case. One of the grounds urged by defendant Harle in — 587 — support of the judgment in his favor thus is stated in his brief. “Under the statutes of this state a lien can be enforced only against lands, and inasmuch as the persons who purchased the machinery and put the same upon the lands were lessees only and having by the terms of the lease the right to • remove the machinery and improvements at the expiration of their lease, then such machinery and improvements do not become a part of the realty and are not lienable.” Machinery furnished to the owner of a building, factory or mine which is not intended by the owner to become an immovable fixture to the land does not lose its character of personal property and cannot be made the subject of a mechanics’ lien since the intention of the law is to give a lien only in cases where the machinery is converted from personalty into a part of the realty. And in contests between lessor and lessee “the weight of the modem authorities establishes the doctrine that the tme criterion for determining whether a chattel has become an immovable fixture consists in the united application of the following tests: (T) Has there been a real or constructive annexation of the article in question to the realty? (2) Was there a fitness or adaptation of such article to the uses or purposes of the realty with which it is connected? (3) Whether or not it was the intention of the party making the annexation that the chattel should become a permanent accession to the freehold, this intention being inferable from the nature of the article, the relation and situation of the parties interested, the policy of the law in respect thereto, the mode of annexation, and purposes or use for which the annexation is made. And of these three tests, pre-eminence is to be given to the question of intention to make the article a permanent accession to the freehold, while the others are chiefiy of value as evidence as to this intention.” [Press Brick & Mach. Co. v. Brick & Quarry Co., 151 Mo. l. c. 512; Hutchins v. Masterson, 46 Tex. 554: Ewell — 588 — on Fixtures, 21; Investment Co. v. Cunningham, 113 Mo. App. 519.] Unquestionably, the lessor and lessee may stipulate in the lease that machinery placed by the latter on the leased premises during his occupancy shall continue to be his personal property and such agreement will be enforced between the parties to the contract regardless of the nature of the attachment of the machinery to the land. If the present action were between the parties to the lease, we would hold that the agreement giving to the lessees the right to remove any machinery they might install for use on the demised premises evidenced an intention of the parties to treat such machinery as a chattel of the lessees and, therefore, that it could not be treated as a fixture to the freehold. Cases in other jurisdictions may be found in which it has been held that a provision of this nature in the lease cannot serve to change the character of the property so far as third parties are concerned, and that the vendor of machinery which the lessee attached to the premises in a manner to constitute it a fixture but for such provision is entitled to a mechanics’ lien against the machinery and the leasehold. Thus in Dobschuetz v. Holliday, 82 Ill. 371, the Supreme Court of that State said: “Whatever may have been the private agreement of the parties, it is very clear the engine when set up and attached to the realty as it was became a part of the estate the lessee had in the premises. No doubt the parties could agree among themselves they would treat the engine and other fixtures as personalty, but their private agreement could not change the character of the property so far as third parties were concerned. The engine and superstructure when attached to the soil became a part of the estate of the lessee and, unless expressly reserved, would pass to his grantee with the estate. Under the agreement of the parties, the lessee had the privilege of removing all machinery and fixtures used in and — 589 — about tbe mines in prosecuting tbe work, but until severed, they constituted a part of the estate itself. Of this, we think there can be no question:” The same view was entertained by the Supreme Court of Iowa in Nordyke v. Woolen Mills, 53 Iowa 521. Plaintiff argues that when the hoisting machinery in question was placed at the shaft and connected with, the operation of the mine, it became an integral part thereof and, as it could not be removed without putting the mine out of condition to be operated, it was transformed into a fixture and was not a tool such as a. pick or shovel which could be removed without injury to the mine itself; that, a coal mine is not merely a hole in the ground, but is made up of shafts, drifts, slopes, engines, machinery, platforms, cars, tracks, scales, etc., which in combination form a single entity, and in its entirety the mine is a building or improvement within the meaning of the mechanics’ lien law since the term “building” as employed therein is not so restricted in its meaning that it refers only to a superstructure but may also describe a construction wholly underground. ' By this process of reasoning, plaintiff arrives at the conclusion that the engine and boiler in controversy are fixtures to the leasehold and therewith, subject to the operation of the mechanics’ lien law. All of this except the final conclusion may be conceded for argument (though we decided differently in Meistrell v. Reach, 56 Mo. App. 243), and still we are unable to find in the argument of plaintiff or in the authorities of which the Illinois and Iowa cases to which we have referred are typical, a sufficient reason for sustaining the lien. In Press Brick & Mach. Co. v. Brick & Quarry Co., supra, the Supreme Court, speaking through Judge Marshall, held there can be no lien “where a tenant puts in machinery under a lease which reserves to him a right of removal, for in such cases a chattel never becomes a part of the realty.” Though — 590 — the statement of this unqualified rule may not have been necessary to the decision of that case, we are satisfied with the correctness of the rule itself and think it should be applied to the present case. As we observed before, for an improvement to be the subject of a lien, it must become a part of the freehold. If it become merely an attachment to the leasehold under the contract of the parties to the lease that it may be removed during the term, it is not real, but personal property. “Though a lessee has an estate in the land, it comprises no more than his interest in the term, and gives him merely a right to occupy the ground for the time agreed. . . . The interest in the lease is a right of occupancy, and hence it is a chattel real; but fixtures which are not part of the freehold as to the lessor or anyone else, are chattels personal, which cannot be bound as a part of the lessee’s estate in the ground, even if his lease were bound.” [Church v. Griffith, 9 Barr. 117; White’s App. 10 Barr. 252.] By no sort of logic may it be said that a chattel annexed to a chattel may, by the fact of annexation, become realty. The clear purpose expressed in section 4206, Revised Statutes 1899, which provides for “a lien in cases of leased property” is to confer the right to a lien against a building or improvement to the leasehold term only where the building or improvement is annexed to the freehold and not where personal property such as machinery and the like is placed on the land for use during the term for which the property is leased. What we have said necessitates the conclusion that no error was committed in sustaining the demurrer to the evidence and, accordingly, the judgment is affirmed. All concur.