Binkley v. Forkner

• Decision Date: 30 January 1889
• Citation: 117 Ind. 176,19 N.E. 753
• Parties: Binkley v. Forkner et al.
• Court: Indiana Supreme Court

117 Ind. 176

19 N.E. 753

Binkley

v.Forkner et al.

Supreme Court of Indiana.

January 30, 1889.

Appeal from superior court, Marion county; N. B. Taylor, Judge.

Action by Charles C. Binkley against John L. Forkner and others, to foreclose a chattel mortgage. Plaintiff appeals.

Vinson Carter, for appellant. A. B. Cole and Harris & Calkins, for appellees.

Mitchell, J.

On the 3d day of March, 1883, John M. Kemper, then a resident of Marion county, purchased of Eckert Bros. a tract of land embracing two acres in Dubois county, for the consideration of $1,000, upon which to locate a heading factory. He executed to the vendors two notes for $500 each, in consideration of the purchase price, and secured them by a mortgage, bearing date March 7th, upon the real estate purchased. The mortgage was duly recorded. Before purchasing the land Kemper had given an order to Hadley, Wright & Co., manufacturers, of the city of Indianapolis, for an engine and boiler, and for saws, shafting, pulleys, and other machinery to be used in the factory. At the time the order was given Kemper told the manufacturers that he had found ground which he could lease upon which to place the mill he contemplated erecting in which to use the machinery. On the 5th day of March, 1883, while the machinery was yet in the possession of Hadley, Wright & Co., they having agreed to deliver it to Kemper on board the cars at Indianapolis, the latter executed to the former a chattel mortgage in the usual form to secure the purchase price of the machinery, which aggregated $1,700. It was orally agreed by Kemper that the machinery should be treated as personal property until the notes were paid, and the mortgage contained a stipulation authorizing the mortgagees, in case of default, to take possession of the mortgaged chattels wherever found, etc. This mortgage was duly recorded in Marion county, where Kemper resided. The latter erected a building upon the land conveyed to him by the Eckerts, the main part of which was 52 by 28, with an engine-room adjoining, 24 by 24 feet. The building consists of a light frame, boarded up and down, with a shingle roof, and rested upon posts or blocks which rest on or set in the ground. It is estimated to be worth $200 or $300. The 40 horse-power stationary engine, and the boiler, which was 4 by 20 feet, weighing 4,000 pounds, were placed in or upon brick foundations in the usual manner, and were bolted into the masonry in which they were imbedded. The saws were fastened on foundations imbedded in the soil, there being an earth floor. The shafting and pulleys were secured to the building in the customary manner, and so, also, was the iron chimney or smoke-stack held in place. Other customary conveniences and appointments for conducting the business were provided. It appeared in evidence that the machinery could be removed without material injury to the building, except the masonry which supported the engine and boiler, and without material detriment to the machinery, and that the value of the real estate would not be appreciably diminished otherwise than by the absence of the machinery.

After the building had been completed, and the factory put in operation, Kemper executed a second mortgage on the real estate to John L. Forkner and others, to secure a debt due the Dubois County Bank. In this last mortgage the real estate is properly described by metes and bounds, and after the description of the land we find the following: “And said mortgagor also mortgages and warrants all machinery and appurtenances, including steam-boiler, engine, saws, trucks, and all tools in and about and necessary to carry on the heading factory situate on said real estate, and that none of said machinery or tools are to be removed until this mortgage is paid and satisfied.”

The controversy here is between the appellant, Binkley, the assignee of the notes secured by the chattel mortgage to Hadley, Wright & Co., and the Eckerts, and the Dubois County Bank, who were made parties defendant, by Binkley, to a suit brought in the superior court of Marion county to foreclose the chattel mortgage. On the one hand, the insistence is that, not withstanding the annexation of the machinery to the real estate, as already described, it retained the character of personalty in consequence of the prior chattel mortgage and the contemporaneous agreement that it should be treated as personal property until the notes given for the purchase price to Hadley, Wright & Co. had been paid. Admitting that Hadley, Wright & Co. held a valid chattel mortgage upon the machinery prior to its annexation to the realty, the result to which the argument leads on the other hand is that because the machinery was annexed to the freehold by the owner, and was peculiarly adapted to use in connection with the building in which it was placed, the law will raise a conclusive presumption that the owner intended it as a permanent accession to the land. Hence the conclusion insisted upon is that the character of the machinery as personal property came to an end when it was annexed to the land, and that of realty became inevitably fixed upon it.

The question thus presented has been the subject of much discussion, and the result deducible from the reported cases is not in every respect harmonious, or of so definite and precise a character as could be desired. Very much depends upon the relation which the persons between whom the question arises sustain towards each other,-whether it be that of personal representative and heirs of a deceased person, landlord and tenant, vendor and vendee, mortgagor and mortgagee, or some other which may give a peculiar character to the case.

While some rules of general application have been formulated, in the very nature of the subject each case must in some degree be controlled by the varying circumstances peculiar to it. The united application of three requisites is regarded as the true criterion of an immovable fixture: (1) Real or constructive annexation of the article in question to the freehold; (2) appropriation or adaptation to the use or purpose 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. Teaff v. Hewitt, 1 Ohio St. 530;Potter v. Cromwell, 40 N. Y. 296; Ewell, Fixt. 21; Tyler, Fixt. 114; McCrea v. Bank, 66 N. Y. 489.

According to the elementary rule of the common law, whatever is annexed to the freehold becomes, in legal contemplation, a part of it, and is thereafter subject to the same incidents and conditions as the soil itself. But the diversity of trade and the development of manufactories required that the strict rules of the common law be measurably relaxed, and it may now be said that the nature of the articles, and the manner in which they are affixed, and the intention of the party making the annexation, together with the policy of the law, are controlling factors in determining whether an article which may or may not be a fixture becomes part of the realty by being annexed to the freehold. The purpose or intention of the parties, the effect and mode of annexation, and the public policy in relation thereto, are all to be considered. When the parties immediately concerned, by an agreement between themselves, manifest their purpose that the property, although it is annexed to the soil, shall retain its character as personalty, then, except as against persons who occupy the relation of innocent purchasers without notice, the intention of the parties will prevail, unless the property be of such a nature that it necessarily becomes incorporated into and a part of the realty by the act and manner of annexation. Taylor v. Watkins, 62 Ind. 511;Yater v. Mullen, 24 Ind. 277.

Thus if, in the course of constructing a house, brick should be placed in the walls, and joists and beams in their proper places, the brick-maker and sawyer would not be permitted to despoil the house by asserting an agreement with the owner that the brick and beams were to retain their character as personalty notwithstanding their annexation. In such a case the mental attitude of the parties cannot modify the legal effect resulting from the annexation. Campbell v. Roddy, (N. J.) 14 Atl. Rep. 279;Henkle v. Dillon, 17 Pac. Rep. 148; Jones, Chat. Mortg. § 125.

But when chattels are of such a character as to retain their identity and distinctive characteristics after the annexation, and do not thereby become an essential part of the building, so that the removal of the chattels will not materially injure the building, or destroy or unnecessarily impair the value of the chattels, a mutual agreement in respect to the manner in which the chattels shall be regarded after annexation will have the effect to preserve the personal character of the property between the parties to the agreement. Rogers v. Cox, 96 Ind. 157;Price v. Malott, 85 Ind. 266;Hendy v. Dinkerhoff, 57 Cal. 3;Haven v. Emery, 33 N. H. 66; Ewell, Fixt, 66; Malott v. Price, 109 Ind. 22, 9 N. E. Rep. 718.

Accordingly, the proposition is well sustained that one who purchases machinery with a view that it shall be annexed to or placed in a...