Opinion
12-02-1885
SCHMITZ v. SCHEIFELE and others.
Bill for injunction. Slape & Stephany, for complainant. Samuel E. Perry, for defendants, who claimed articles in dispute were personal property,—First, are separate and entire by themselves from the building; second, were made without any reference to the building in question; third, could be used in any building for a like purpose; fourth, they were placed in this building subsequent to the giving of the mortgage; fifth, all the articles can be removed without injury to the freehold.
Bill for injunction.
Slape & Stephany, for complainant.
Samuel E. Perry, for defendants, who claimed articles in dispute were personal property,—First, are separate and entire by themselves from the building; second, were made without any reference to the building in question; third, could be used in any building for a like purpose; fourth, they were placed in this building subsequent to the giving of the mortgage; fifth, all the articles can be removed without injury to the freehold.
BIRD, V. C. This bill was filed to obtain an injunction directed to the sheriff, restraining him from making sale of certain articles levied upon by him as personal property which were used in a brewery, and were constructed and placed therein at the time of the erection of the brewery building itself, and were and are essential to the successful brewing of malt liquors. The complainant is mortgagee, and his mortgage is entitled to priority over the judgment upon which the execution in the sheriff's hands issued to the extent that the articles in dispute may properly be considered as part of the real estate because they are fixtures. The land upon which the present building stands was sold and conveyed to the mortgagor by the mortgagee, and $11,000 of the purchase money was secured to the vendor by the vendee. Before that mortgage, or any part of it, was paid, the brewery and fixtures, and all other appliances, were destroyed by fire. There was an insurance of $3,000. The company was willing that that should be devoted to the construction of a new brewery, to which the mortgagee assented, and accepted a new mortgagein place of the former for $7,000. This mortgage was recorded only as a mortgage of real estate.
Whatever might be the rights of the mortgagee as against the mortgagor, he can only hold those articles which are attached to the freehold in such a manner as to be regarded fixtures within the purview of the decisions in this state, whether they be necessary to the successful manufacture of beer in that particular establishment or not, as against a judgment creditor who has seized upon them by his execution. The true doctrine is laid down by the court of errors and appeals in the case of Penn Mut. Ins. Co. v. Semple, 38 N. J. Eq. 578, which is but a repetition of former declarations of the same tribunal. Following that case, I must adjudge the engine and boiler, the copper beer-kettle, all the copper and iron pipes running from the engine and pump, and supplying hot and cold water and steam; the iron flat cooler, the malt-mill, the wash-tub, the two pumps and appurtenances necessary to their successful operation, the wind-mill and attachments necessary to its proper use, the plunger, and one iron elevator. The other articles, though cumbersome, remain in position by their own weight, and if otherwise connected with the freehold, are but slightly so connected. It is true the large wash-tub rests in position by its own weight, but the testimony is that it is connected with a large shaft in the center of it, and thereby with the gearing below, and so, I think, distinguished from machinery supported by its own weight or slight attachments, and connected with the gearing by means of belting simply. If I understand the cases aright, all gearing and shafting, and all machinery immediately connected therewith and operated thereby, and not operated by belting, is regarded as much a part of the realty as the gearing or shafting. The complainant's counsel insisted that the rule laid down by the chancellor in Delaware, L. & W. R. Co. v. Oxford Iron Co., 36 N. J. Eq. 452, should control this case, and give to the mortgagee a prior lien upon all the other heavy articles; but the contest in that case was not between a mortgagee and a judgment creditor. There the receiver of an insolvent corporation was before the court on his own motion, asking for instructions with respect to his duty in disposing of property which was included in the mortgage. The land was not only mortgaged, but the machinery as well, (see page 455,) and, although that was the case precisely in Penn Mutual Ins. Co. v. Semple, the court of errors and appeals gave all the machinery which either rested by its own weight, or was slightly secured to the floor by screws or bolts, to the judgment creditor.
I will advise a decree in accordance with these views. The injunction should go according to the extent above indicated.
NOTE.
Fixtures—As between Mortgagor and Mortgagee.
Machines which have been separately constructed, and are adapted for use in any building, when placed in a mill and secured in position in such a way that they may be removed without injury to themselves or the building, do not necessarily become part of the realty, but may continue to be treated as personal property. Maguire v. Park, (Mass.) 1 N. E. Rep. 750. The parties concerned may, by agreement in due form, give to fixtures the legal character of realty or personalty at their option, and the law700will respect and enforce their understanding whenever the rights of third persons will not be prejudiced. Thus, a house constituting a part of the realty may be mortgaged or sold separate from the land, and the mortgage or sale be perfectly valid if made in the proper form to satisfy the statute of frauds. Myrick v. Bill, (Dak.) 17 N. W. Rep. 268. The owner of machinery, or other things in the nature of fixtures, which may be easily severed from the realty, may treat them as such, and, by the execution of a chattel mortgage on them, estop himself from asserting, as against the mortgagee, that they are part of the real estate. Corcoran v. Webster, (Wis.) 6 N. W. Rep. 513. Thus, where machinery put in for the purposes of manufacturing specified articles was treated by the successive purchasers and owners as personalty and not a part of the realty, it was held to be personalty and not realty, and not to pass to mortgagee, in Ferris v. Quimby, (Mich.) 2 N W. Rep. 9. But where the owner of a woolen-mill mortgaged such mill, and the machinery therein, describing the latter as personalty, and on foreclosure the machinery was offered first as personal property, but was not sold for want of bidders, and was afterwards sold with the mill as a part of the realty, it was held that such machinery was realty, and properly sold under the mortgage as such. Lyle v. Palmer, (Mich.) 3 N. W. Rep. 921. It has been said that the casks or hogsheads and fermenting tubs and copper coolers used in a brewery were held to be personal property and not fixtures, and not covered by a mortgage upon the land. Wolford v. Baxter, (Minn.) 21 N. W. Rep. 744. The United States circuit court for the Eastern district of Louisiana say in Weill v. Thompson, 24 Fed. Rep. 14, that machinery attached to a plantation, and used for plantation purposes, though included in a mortgage, if purchased and removed, even during the pendency of a suit to enforce the mortgage, were withdrawn from the operation of the mortgage; and that where machinery i3 removed from a plantation it again becomes a movable, and as such could not be susceptible of mortgage, even if the purchaser acted in bad faith; that is, purchased with knowledge of the mortgage. Citizens' Bank v. Knapp, 22 La. Ann. 117.