Opinion
No. 31388.
October 22, 1934.
1. SALES.
Chancery court had jurisdiction of bill praying for return of property sold under contract whereby seller retained title to secure payment of note, or in alternative for value of property, notwithstanding seller might have resorted to replevin in court of law, since effect of reserving title was to create lien for purchase money, of which chancery court had jurisdiction.
2. TRIAL.
Bill praying for return of property sold under retention of title contract should not have been dismissed even if chancery court had no jurisdiction, since court had duty to transfer case to proper court (Const. 1890, sec. 162).
3. FIXTURES.
Pump and fittings sold to owner of artesian well in connection with digging and installing of well, which property was sold subsequent to execution of mortgage on realty, held not subject to mortgage, where title was reserved and it was stipulated property should remain personalty until payment thereof was made.
4. MORTGAGES.
Mortgagee, in cases of after-acquired property where title is reserved, has only such rights as mortgagor would have if no mortgage had been given.
APPEAL from the Chancery Court of Harrison County.
Eaton Eaton, of Gulfport, for appellant.
The only claim that the prior mortgagee Anticich Packing Company could have to the appellant's pumps, fittings, and equipment was by claiming it as fixtures which passed with the realty. The bill of the appellant, the seller, seeks to set aside the trustee's deed in so far as the rights of the appellant are concerned, and have an equitable lien declared in its favor as superior. Necessarily, only a court of equity could set aside this trustee's deed.
The lien sought to be established by the appellant is equitable in its nature, and its rights, as well as the rights of all of the parties litigant, are purely within the long arm of the chancery court.
26 C.J. 684-685.
An agreement between a landowner and one affixing chattels to the land that such chattels shall retain their character of personalty operates to make the lien of the seller of the chattels superior to that of the prior mortgagee of the premises.
Campbell v. Roddy, 44 N.J. Equity 244, 6 Am. St. Rep. 889; 26 C.J. 684; Roberts v. Caple, 8 Ala. A. 444, 62 So. 343.
In no Mississippi case has there ever been an express agreement that the articles affixed to the realty were to remain personalty until paid for and in no other case has there ever been an issue of a vendor's rights as against a prior mortgagee's rights, the mortgagee having knowledge of an agreement between the mortgagor and seller of the fixtures.
From the footnote under the general rule announced in 26 C.J. 684, 685, footnote 87, twenty-three states have adopted the view that the vendor shall prevail over the prior mortgagee, in addition to its support by the United States Supreme Court and federal decisions.
13 A.L.R. 448-485.
There is no question but that chancery court has jurisdiction to entertain this suit.
Section 363, Code of 1930: Swalm v. Sauls, 141 Miss. 515, 106 So. 775.
Mize, Thompson Mize, of Gulfport, for appellee.
The question that is first involved on this appeal is whether or not the appellee had an adequate remedy at law. There seems to be no dispute between the parties litigant but that the property involved in this case was to remain as personal property. In the event the property remains personal property, and the agreement attached to the bill of complaint bears this out the Layne Central Company had a full and adequate remedy at law.
It is well settled law in this state as well as elsewhere that the recitals of the exhibits attached to the declaration or bill of complaint (as the case may be) are the controlling averments and the ones that have to be regarded.
Columbian Mutual Assur. Soc. v. Harrington et al., 104 So. 297.
A case very much on all fours with the facts in the case at bar is that of McPherson v. Acme Lbr. Co., 70 Miss. 649.
The learned chancellor in the court below was correct in his ruling on the demurrer of the defendants.
Federal Credit Co. v. Boleware, 142 So. 2.
Should the court think that the property in question had become a fixture and that the agreement could not control, and that title is not in the Layne Central Company, then we most earnestly invoke the rule in that line of cases which holds as is so clearly stated in the case of Adams v. Newman, 32 So. 38: "Where machinery has been sold to a planter, and he has attached it to his plantation, and the property to which it was attached has been seized and sold under a pre-existing mortgage, the seller cannot, after the sale, recover the machinery under a claim of ownership as against the purchaser."
The Layne Central Company, a corporation, filed a bill in the chancery court of Harrison county against the Gulf Coast Ice Company, a corporation, Anticich Packing Company, and O.G. Swetman, trustee, alleging that, under a contract with the Gulf Coast Ice Company, the Layne Central Company dug and installed an artesian well with pump and fittings on the premises of the Gulf Coast Ice Company, reserving title to the property affixed to the well until it should be paid for. The Gulf Coast Ice Company executed three promissory notes in which the title was reserved for the machinery and fittings, and in which it was stipulated that they were to remain personal property until the notes were paid.
Prior to the execution of this contract, the Gulf Coast Ice Company had executed a deed of trust to the Anticich Packing Company as beneficiary conveying to O.G. Swetman, as trustee, the premises on which the Ice Company's plant was situated.
It was alleged that after default in this deed of trust, at the instance of the Anticich Packing Company, the trustee, O.G. Swetman, foreclosed said deed of trust and executed a deed to the Anticich Packing Company.
It is further alleged that the Anticich Packing Company claimed all the material furnished by the Layne Central Company as part of the realty which passed under the trustee's deed.
The bill prayed for a return of the property, or, in the alternative, for its value, and for general relief.
There was a demurrer to the bill, alleging that there was no equity on its face, which demurrer was sustained, and the defendant declining to plead further, the bill was dismissed, from which this appeal is prosecuted.
It is claimed in defense of the act of the chancery court in dismissing the bill that the demurrer was correctly sustained, because the complainant had an adequate remedy at law, and also because the Layne Central Company's property, when it was attached to the artesian well, became a part of the realty and passed with the conveyance to the Anticich Packing Company.
We think the chancery court had jurisdiction of the case regardless of the fact that the complainant might have resorted to replevin in a court of law for the recovery of the property sold to the Ice Company with the stipulation above referred to. The effect of reserving title to secure payment of a note is to create a lien for the purchase money, and we think the chancery court has jurisdiction to grant the relief prayed for should the allegations of the bill be sustained. In 10 R.C.L. 350, section 100, it is said that: "The right to a lien was, it seems, first recognized in equity, and although in later times courts of law also assumed jurisdiction in such cases, the better rule, as supported by the weight of authority, is that thereby the ancient jurisdiction of the chancellor was not lost, but that, equity still exercises jurisdiction concurrent with courts of law to enforce liens." See, also, Greil Bros. v. City of Montgomery, 182 Ala. 291, 62 So. 692, Ann. Cas. 1915D, 738, and other authorities cited in Mississippi and Southern Digest, title Equity, 20; and Swalm v. Sauls, 141 Miss. 515, 106 So. 775.
Furthermore, even if the chancery court did not have jurisdiction, it would have been its duty to transfer the case to the proper court and not dismiss it. Constitution of 1890, section 162.
The property sold by the appellant to the Gulf Coast Ice Company, being sold subsequent to the execution of the mortgage, and title being reserved, and it being stipulated that the property should remain personal property until payment therefor was made, did not become, as against the appellant, subject to the prior mortgage. 26 C.J. 684, sec. 50; John Van Range Co. v. Allen (Miss.), 7 So. 499; Duke v. Shackleford, 56 Miss. 552; Cox v. New Bern Lighting Fuel Co., 151 N.C. 62, 65 S.E. 648, 134 Am. St. Rep. 966, 18 Ann. Cas. 936, and numerous authorities cited in these cases.
The removal of the articles sold by the appellant to the Ice Company in no manner prejudiced or diminished the security of the Anticich Packing Company. The mortgagee, in cases of after-acquired property where title is reserved, has only such rights as the mortgagor would have had if no mortgage had been given.
The judgment of the court below will be reversed, and the cause remanded for further proceedings in accordance with this opinion.
Reversed and remanded.