Bankers' & Merchants' Credit Co. v. Harlem Park Bldg. & Loan Ass'n

• Citation: 153 A. 64,160 Md. 230
• Decision Date: 15 January 1931
• Docket Number: 65.
• Parties: BANKERS' & MERCHANTS' CREDIT CO. v. HARLEM PARK BUILDING & LOAN ASS'N.
• Court: Court of Appeals of Maryland

153 A. 64

160 Md. 230

BANKERS' & MERCHANTS' CREDIT CO. v. HARLEM PARK BUILDING & LOAN ASS'N.

No. 65.

Court of Appeals of Maryland

January 15, 1931

Appeal from Circuit Court No. 2 of Paltimore City; George A. Solter Judge.

Action between the Bankers' & Merchants' Credit Company and the Harlem Park Building & Loan Association. From the decree the former appeals.

Affirmed.

Argued before BOND, C.J., PATTISON, URNER, ADKINS, OFFUTT, DIGGES PARKE, and SLOAN, JJ.

Theodore C. Waters, of Baltimore (Mullikin, Stockbridge & Waters, of Baltimore, on the brief), for appellant.

Herbert L. Grymes, of Baltimore, for appellee.

PATTISON J.

Nannie C. Payne and Raymond S. Payne, owners of the property known as 2611 N. Calvert street, in the city of Baltimore, on the 11th day of August, 1928, executed unto the appellee, the Harlem Park Building & Loan Association, a mortgage thereon, to secure a loan of $3,510. Thereafter on the 30th day of July, 1929, Payne and wife entered into a contract with Vaile & Young, contractors, for the erection of a metal garage 16 by 18 feet upon the rear premises of the mortgaged property. By the contract so made, Vaile & Young were not only to furnish the necessary equipment and material, but were also to do the work in the construction of the garage. The contract price for its erection was $607.50, payable in forty-eight equal monthly installments of $12.66, for which a note was given; and in accordance with the terms of the agreement, a mortgage was executed by Payne and wife to Vaile & Young upon the Calvert street property, to secure the payment of the note. It was agreed by the parties thereto "that the title to the building * * * no matter whether or by what manner or degree it may be attached to the realty shall not pass to us (Payne and wife) until the aforesaid mortgage has been released." Upon the completion of the building on the 17th day of September, 1929, Vaile & Young indorsed unto the appellant, the Bankers' & Merchants' Credit Company, the note taken from Payne and wife, and assigned to it the contract. On January 3, 1930, the following paper purporting to be a memorandum of the contract was filed for record in the office of clerk of the superior court of Baltimore City, under the law authorizing the recordation of conditional sales contracts:

"Raymond S. and Nannie Payne Agreement with Vaile & Young Vendee, unless otherwise designated, Raymond S., and Nannie Payne, Vendor, unless otherwise designated, Vaile & Young.

Date of Filing, January 3rd, 1930.

Property 1 set pair main entrance doors (folding) 1 service door, 1 wire glass window, etc.

Date of Execution, July 30th, 1929.

Witness

Amount--$607.50. When and How Payable, $12.66 a month.

Assigned Bankers & Merchants Credit Company, July 30th, 1929."

In addition thereto, the mortgage from Payne and wife to Vaile & Young was assigned to the appellant.

Default having been made in complying with the terms and provisions of the mortgage, executed by Payne and wife, to the appellee, a decree was obtained on the 27th day of November, 1929, for the sale of the property.

Thereafter, upon a petition filed by the appellant, the court, on January 25, 1930, by consent of parties, passed an order authorizing and directing the trustees, named in the decree, to sell the property therein mentioned, free of any lien upon the garage, which the Bankers' & Merchants' Credit Company might hold by reason of said contract, and that such lien be transferred to the proceeds of sale of the premises named in the decree; the determination of the validity and priority of said lien and the amount thereof to await the further order of the court.

The property was sold under the decree, and was purchased by the appellee, at an amount less than that owing to it upon the mortgage. An audit was made distributing the proceeds of sale and the claim of the appellant not being allowed therein, it excepted to the ratification of the audit. After a hearing thereon, the court overruled its exceptions and ratified the audit. It is from that order that the appeal to this court was taken.

The question submitted to the chancellor for his decision was: Whether the alleged lien of the appellant, the holder, by assignment of the contract for the erection of the garage (a memorandum of which was recorded January 3, 1930, under the provisions of article 21, § 55, of the Code), was a lien superior to the lien of the mortgage executed by Payne and wife to the appellee, and recorded August 14, 1928?

The statute above mentioned provides:

"Every note, sale or contract for the sale of goods and chattels, wherein the title thereto, or a lien thereon, is reserved until the same be paid in whole or in part, or the transfer of title is made to depend upon any condition therein expressed, and possession is to be delivered to the vendee, shall, in respect to such reservation and condition, be void as to third persons without notice until such note, sale or contract be in writing, signed by the vendee, and be recorded in the Clerk's Office of Baltimore City, or the Counties, as the case may be, where bills of sale are now recorded."

It will be observed that this statute deals only with sales of goods and chattels. It therefore becomes necessary in the decision of the question before us to determine whether the garage, when erected, was a chattel, or whether it was so incorporated with the realty as to become a part of the freehold, and not a chattel.

The garage was built in the rear of the mortgaged premises on Calvert street and covered the greater part of the yard, which before its erection was a grass plot, to some extent, adorned with shrubbery.

From the evidence it is rather difficult to describe with accuracy the exact construction of the garage, but as we gather from the evidence, the building was supported by six steel columns, one at each of the corners and one between the corners on each of the two sides. These columns were sunk into concrete piers to the depth of fourteen inches, and the piers were set in the ground to the depth of three feet. The side and rear walls sank into the concrete base a depth of several inches. In addition thereto, there was what was spoken of as an angle iron one and one-half inches in size, which ran around the building, to which the sides and rear were fastened. This angle iron was embedded in the concrete base of the building to the extent that it was hidden from view.

In the case of Dudley v. Hurst, 67 Md. 44, 8 A. 901, 902, 1 Am. St. Rep. 368, regarded as the leading case in this state upon the subject under consideration, one Thomas Clagett, the owner of a farm in Prince George's county, upon which he had erected a factory for canning fruits and vegetables, mortgaged his farm in July, 1883, to one William B. Bowie. The farm was thereafter, in April, 1885, sold under the mortgage. In March of 1885, Clagett executed a mortgage upon the machinery in the factory, and when in September of that year the mortgagee was about to sell the machinery under the last-named mortgage, a preliminary injunction was obtained by the purchaser at the sale under the earlier mortgage of July, 1883. The question in that case, like the one here presented, was: "Whether the machinery in the canning factory passed to the complainants under the mortgage of July, 1883, or in other words, whether such machinery as between the mortgagor and mortgagee, were or were not fixtures?" The court, speaking through Judge Stone, in that case said:

"The term 'fixture' is generally used in reference to some originally personal chattel which has been actually or constructively affixed either to the soil itself, or some structure legally a part of such soil.

The tests by which a fixture is determined are generally these:

(1) Annexation to the realty, either actual or constructive;

(2) adaptation to the use of that part of the realty with which it is connected;

(3) the intention of the party making the annexation to make the article a permanent accession to the freehold,--this intention being inferred from the nature of the article annexed, the situation of the party making the annexation, the mode of annexation, and the purpose for which it was annexed. Ewell, Fixt.; Tyler, Fixt.; Jones, Mortg.

Of these tests the most important is the question of intention. This is clearly shown by the fact that the law is very different between landlord and tenant and mortgagor and mortgagee, or, what is the same, vendor and vendee; many things being held as fixtures between vendor and vendee which do not lose their character of personal chattels when the question is between landlord and tenant."

The court, after applying the above-stated tests to the evidence produced in that case, reached the conclusion that the...