Cross v. Weare Commission Co.

Mr. Justice Magruder delivered the opinion of the court: This is a controversy between the appellant as execution creditor, and the appellee, the Weare Commission Company, as mortgage creditor, as to whether the judgment of the one, or the "mortgage of the other, is entitled to priority of lien. Appellee’s mortgage was executed and recorded before appellant’s judgment was rendered. The steam elevator, together with the cribs, office and scales, was unquestionably real estate. The interest of the firm of Druley Brothers in. the real estate described in the mortgages was a leasehold estate where the unexpired term exceeded five years. The elevator and feed mill rested on a solid stone foundation, laid in a trench sunk into the ground below the frost line. The structures and improvements were of a permanent character. The engine and boiler were set on foundations of stone and brick; the boiler was enclosed by brick; the machinery, shafting, etc., were fixed to the elevator by bolts, screws and nails. The engine, boiler, machinery, gearing, office, scales, etc., were necessary to the elevator business, and formed a part of the elevator plant. The structures were affixed to the land in such a way as to be a part of the realty, and constituted a part of the freehold. It is conceded by both appellant and appellee, that the interest of the firm in the elevator plant as a whole was a chattel real. It was, therefore, the proper subject matter of a real estate mortgage. (First Nat. Bank of Joliet v. Adam, 138 Ill. 483). It is shown by the proofs, that the mortgage executed by William M. Druley upon this property on November 21, 1889, was recorded in the recorder’s office of Will County where the elevator was situated, as early as November 21, 1889. It is also shown by the evidence, that appellant had actual notice of that mortgage before his judgment was rendered. Appellant’s attorney, who obtained for him both his note and the judgment thereon, personally examined the record of the mortgage of Novemher, 1889, in the recorder’s office of Will County, on August 12, 1890. The ground, upon which appellant claims that the lien of the mortgages should be postponed to the lien of his judgment, is that the mortgages were in form and phraseology chattel mortgages; that Druley Brothers treated the property as personalty and mortgaged it as such; that the mortgagees accepted security upon the property as personal property; that the court must hold the instruments to be chattel mortgages, and not otherwise ; that, as chattel mortgages, said instruments are of no effect for the reason, that the property mortgaged is real estate and not the subject-matter of chattel mortgage, and for the further reason, that the mortgage of the appellee, Weare Commission Company, was not recorded in Cook County where William M. Druley resided. (Chattel M’tge Act, sec. 4;- 2 Starr & Cur. Stat. 1633). It is not denied, that more than §10,000.00 of bond fide indebtedness is due to the Weare Commission Company upon its mortgage for money loaned, and that a bond fide - indebtedness of more than §4000.00 is due to said Bank upon its said mortgage. There is no doubt, that appellees made a mistake in using blank forms of chattel mortgages when they accepted their securities. It may be true, that they made a mistake in not more definitely describing the mortgaged property as realty; but it is clear from the evidence, that they intended to secure themselves by mortgages which should cover the property, whether it was realty or personalty. Whether the instruments are valid as chattel mortgages or not, they must have priority over appellant’s execution if they can be regarded as valid securities upon the property as realty, appellant having had both constructive and actual notice of them before the entry of his judgment. The question then arises, whether the mortgages contain such words as can be regarded as including within their meaning an interest in realty. It is not essential, that the instrument of -conveyance should follow any exact or prescribed form of words, provided the intention to convey is expressed. To make a conveyance valid it is sufficient, in general, that there be parties able, to contract and be contracted with, a proper subject-matter sufficiently described, a valid consideration, apt words of conveyance, and an instrument of conveyance duly sealed and delivered. In a mortgage, there should be a sufficient condition of defeasance, but this often rests in parol instead of being expressed in the deed itself. The words of conveyance used in the mortgages in this case are: “grant, sell, convey and confirm.” The use of the word, “convey,” is equivalent to a grant at common law, and passes the title; it means a transfer of title from one person to another. The word, “grant,” is a generic term applicable to the transfer of all classes of real property. (Patterson v. Corneal’s Heirs, 3 A. K. Marsh. 618; Lambert v. Smith, 9 Ore. 185). The mortgage describes the property as “the steam elevator, etc., * * * on the * * * railroad elevator lot,” etc. The grant of the steam elevator carries with it, as a part of the grant, the land upon which the elevator is located, and all that is necessarily used in connection therewith. When property is granted, whatever is necessary to the enjoyment of the grant is impliedly conveyed as an incident thereto. (Tinker v. City of Rockford, 137 Ill. 123). The grant of a house, store, mill or other building carries with it the land under the building, and around it, which is necessary for its enjoyment. (Rogers v. Snow, 118 Mass. 118; Trinity Church v. Boston, id. 164; Allen v. Scott, 21 Pick. 25). It has been held, that a mortgage on a “grist and saw mill and gin, together with all the privileges and appurtenances belonging thereto,” included two acres of land upon which the mill and gin were located, and which had always been used in connection therewith and were necessary to the enjoyment thereof. (Kimbrell v. Rogers, 90 Ala. 339; 7 So. Rep. 241; Johnson v. Raynor, 6 Gray, 107; Baker v. Bessey, 73 Me. 472; Davis v. Handy, 37 N. H. 65; Jamaica, etc. v. Chandler, 9 Allen, 159). The leasehold interest of Druley Brothers was necessary to the full enjoyment of the elevator, and the language of the mortgage was broad enough to include it. There is nothing in the mortgages or leases to indicate that it was the intention of the parties to provide for a removal of the elevators from the leased ground. The habendum clause of the mortgage is : “To have and to hold the same unto the said Weare Commission Company, its successors, heirs, executors, administrators and assigns, to its and their sole use forever.” Courts will so construe a conveyance as to give effect to the intention of the parties rather than defeat such an intention by a strict technical construction of the form of conveyance adopted. “A deed that is intended and made to one purpose may enure to another; for if it will not take effect in the way it is intended, it may take effect another way.” (Russell v. Coffin, 8 Pick. 143; Pray v. Pierce, 7 Mass. 381; American Emigrant Co. v. Clark, 62 Iowa, 182). Courts are liberal in construing deeds so as to give them effect. “If they cannot operate as that species of conveyance indicated by the letter, they will generally be held to operate in some other form, so as to effectuate the object, which, from the whole instrument and the circumstances and condition of the title, the parties appear to have intended.” (Thayer v. McGee, 20 Mich. 195; Bryan v. Bradley, 16 Conn. 474). It is claimed by appellant, that appellees are estopped from asserting that the property mortgaged is not personalty, because the mortgages were written upon printed blanks intended for use as chattel mortgages, and the property is referred -to therein as “goods and chattels,” and the instruments were acknowledged as chattel mortgages. It is true that many things ordinarily considered fixtures to the realty may become to all intents and purposes personal property by agreement of all parties interested in both the realty and fixtures. (Jones on Chat. M’tges,—4 ed.—sec. 124). It is also true, that the parties to such agreement may, under certain circumstances, be estopped from denying that the property, treated by them as personalty, is personalty. (Ballou v. Jones, 37 Ill. 95; Davis v. Taylor, 41 id. 405). But as a general rule, it must appear in such cáses, that the person - making the improvement had the intention, at the time of so making it, that it should not become a part of the realty. In many of the cases where a chattel mortgage has been given upon property affixed to the realty and where the property described therein has been held to be personalty, the debt-secured by the mortgage has been for the purchase price of the machine or other article.attached, and the chattel mortgage has been executed before the article was affixed to the realty, or at about the time it was so affixed, or the agreement for security by chattel mortgage has been made before the affixing took place. In some of the cases, the lease of the lessee making the improvement authorizes a removal of the property affixed. In other cases, it appears that the article attached to the realty can be removed without injury to it or to the realty, (Sword v. Low, 122 Ill. 487; Jones on Chat. M’tges,—4 ed.— secs. 125,132; Ford v. Cobb, 20 N. Y. 344; Trull v. Fuller, 28 Me. 545; Tyler’s Law of Fixtures, pages 671, 673; Ewell on Fixtures, page 69; Tifft v. Horton, 53 N. Y. 377; Warner v. Kenning, 25 Minn. 173; Henkle v. Dillon, 15 Ore. 610; Fortman v. Goepper, 14 Ohio St. 558; Sisson v. Hibbard, 75 N. Y. 542). In such cases the agreement, that the personalty attached to the realty shall continue to be personalty, will prevail as between the parties to the agreement. (Ewell on Fixtures, page 68; Dobschuetz v. Holliday, 82 Ill. 371). But where a chattel mortgage is executed upon machinery or buildings or articles after they have been so affixed to the realty as to become a part of it, and where the lease or other instrument of title, under which the mortgagor holds, does not authorize a removal of the thing attached, and where such removal cannot be made without injury to the realty or to the fixture itself, the agreement of the parties will not have the effect of preserving the character of personalty in the things so affixed to the freehold. (Ewell on Fixtures, pages 23, 24, 68, 69, 317, 318; Jones on Chat. M’tges, secs. 130, 131). Where such conditions exist, the case does not come within any exception to the rule, that parties cannot, by their mere agreement, convert into personalty that which the law declares to be real estate. (Docking v. Frazell, 34 Kans. 29). Here, the chattel mortgages were executed long after the elevator had been constructed and the machinery had been placed in it, that is, after the improvements had become a part of the realty; the leases to Druley Brothers granted no authority for the removal of the improvements erected by them; and a removal of the elevator plant could not have been made without injury to it and to the realty. (Sword v. Low, 122 Ill. 487). It is unnecessary to inquire whether or not Druley Brothers, or the survivor of them, or the representatives of either, would be estopped from denying that the elevator plant was personalty if this was a proceeding by appellees to foreclose their mortgages as chattel mortgages ; because both they and appellees claim that the mortgaged property is realty. And not only is this so, but appellant, claiming adversely to both of them, contends that the property levied upon under his judgment is realty. In cases where parties may agree among themselves to treat fixtures as personalty, their private agreement can not change the character of the property so far as third persons are concerned. (Dobschuetz v. Holliday, supra; Row and v. Anderson, 33 Kans. 264; Lacustrine Fer. Co. v. L. G. and Fer. Co. 82 N. Y. 476; Jenny v. JacJeson, 6 Bradw. 33; 8 Am. & Eng. Enc. of Law, page 61, and cases in note.) The language used by Mr. Justice Cooley in Lyle v. Palmer, 42 Mich. 314, is applicable here. In that case it was said: “The circuit judge finds that the machinery was personalty. This finding was no doubt based upon the fact that the parties so believed and considered it. This may generally be conclusive, but not always, and in this case it is clear the parties were mistaken. The machinery was especially adapted for use in connection with the real estate. It was put up for use and actually used with it, and was not severed from the realty in ownership. The fact that in the mortgage it was specially described was unimportant.” For the reasons stated, we are inclined to hold, that the mortgages in this case were sufficient for the purpose of conveying the property described therein as realty, as against the levy made by appellant under his judgment. The point is made, that the mortgage to the Weare Commission Company is executed by William M. Druley, and is not signed by Albert A. Druley; that it does not purport to. be made by the partnership, and therefore only passed such individual interest in the realty as would remain to William M. Druley after the firm debts are paid. The evidence is clear, that the elevator plant was owned by the firm of Druley Brothers; it was built with firm money; the.leases from the railroad companies are to the firm of Druley Brothers ; the notes secured by the mortgages are the notes of the firm; and the advances of money, which the notes represent, were made to the firm. Albert A. Druley testifies that the property was partnership property. The agent of the Weare Commission Company swears that,- when he took its mortgage, Albert A. Druley told him that he had no interest in the elevator, that it was owned by his brother, and that, therefore, it was unnecessary for him to sign the mortgage. Albert denies that he made such statement. The agent is confirmed by several circumstances, and, among others, by the fact that certain warehouse receipts, pledged as collaterals for advances and signed and acknowledged by Albert A. Druley, speak of certain grain as being stored “in the elevator owned, by W. M. Druley.” The lower courts have found, that Albert A. Druley did make the representations here attributed to him, and we are not prepared to say that their finding is not sustained by the evidence. This being so, Albert A. Druley is estopped from denying that William M. Druley had a right to convey the entire interest of the firm, and from questioning the validity of the instrument. Where a person induces another to believe in the existence of a certain state of things and to act on that belief so as to alter his own previous position, he is concluded from averring against such other person a different state of things as existing at the same time. A party, who stands by and sees another acting to his injury, and declares that he himself has no claim, will not be permitted in equity to afterwards assert his title to the injury of the person whom he has thus misled. It is sufficient if there would be a fraudulent effect from the evidence attempted to be set up. A court of equity has power to establish a title to real estate by estoppel against the former owner, who, by his acts and representations, has induced another to purchase or take a mortgage from one holding a defective or partial title. (Hill v. Blackwelder, 113 Ill. 283; Mills v. Graves, 38 id. 455; Wade v. Bunn, 84 id. 117; Robbins v. Moore, 129 id. 30). In Moran v. Palmer, 13 Mich. 367, where a partner conveyed a partnership lot in his own name, and received another lot in exchange therefor, and sold the latter, and the firm received the proceeds of the sale, it was held that the court would presume knowledge on the part of all the partners of such exchange, and that the receipt by the partnership of the proceeds of the lot sold estopped the heirs of the partner not joined in such deed from afterwards setting up a claim to the lot first named. Here, Albert A. Druley, as a member of the firm of Druley Brothers received the benefit of all the advances secured by the mortgage ifiáde by his partner. We think that the appellant is as much affected by the estoppel as Albert A. Druley, for he had notice of the equities of the appellees before his judgment was rendered. The finding of the courts below upon this subject is sustained by the evidence. The statute of frauds cannot be interposed to defeat the apjDlication of the doctrine of estoppel. Title to land may be conveyed by estoppel. Creditors cannot set up .the statute to defeat an estoppel against their debtor. (Singer v. Carpenter, 125 Ill. 117; Hill v. Blackwelder, supra; Robbins v. Moore, supra; Wade v. Bunn, supra). The judgment of the Appellate Court is affirmed. Judgment affirmed.