Blake-McFall Co. v. Wilson

• Decision Date: 07 December 1920
• Parties: BLAKE-MCFALL CO. v. WILSON ET AL. [a1]
• Court: Oregon Supreme Court

193 P. 902

98 Or. 626

BLAKE-MCFALL CO. v. WILSON ET AL. ^[a1]

Supreme Court of Oregon

December 7, 1920

Department 1.

Appeal from Circuit Court, Multnomah County; C. U. Gantenbein Judge.

Action by the Blake-McFall Company against Samuel F. Wilson, Eugene A. Dudley, and Jessie Dudley. Judgment for plaintiff, and defendants appeal. Affirmed as to first-named defendant, and reversed as to last two named defendants.

Blake-McFall Company, a corporation and a wholesale dealer in paper stationery, and wooden and willow ware, brought this action against Samuel F. Wilson, Eugene A. Dudley, and Jessie Dudley, his wife, for the conversion of an Otis elevator which had been installed in a building originally erected by the plaintiff but subsequently conveyed by the corporation to Samuel F. Wilson and Eugene A. Dudley. The plaintiff claims that the elevator was personal property by force of an agreement. The defendants argue that the elevator was an irremovable fixture and a part of the realty.

The Blake-McFall Company owned the southwest corner of the block at Fourth and Ankeny streets in Portland. The plaintiff constructed a six-story building on the land owned by it. The plaintiff moved into the building immediately upon its completion in 1910.

When the plaintiff erected the building, it did so with a view of occupying only a portion of it and renting the remainder and, accordingly, when the plaintiff moved into the building it used only a portion of the structure, and the rest of the building was rented to tenants. When the building was erected, and as a part of its construction, two freight elevators were installed for the use of both the owner and the tenants. These two elevators served every floor in the building, from the basement to the sixth story. The plaintiff purchased from the Otis Elevator Company a circular merchandise chute and caused it to be installed at the time of the construction of the building. This chute was designed for the sole use of the plaintiff; it extended from the basement to the fourth floor, and was located in that part of the building which was occupied exclusively by the plaintiff.

The chute proved to be unsatisfactory for the reason that it frequently delivered goods in a damaged condition; and, when the plaintiff complained to the Otis Elevator Company that the chute had failed to fulfill the guarantee of the seller the Otis Elevator Company offered to install a freight elevator in place of the chute; and, accordingly, in 1911 the chute was removed and the elevator was substituted. This elevator is the subject of this litigation.

In June, 1912, the plaintiff and the defendant Samuel F. Wilson entered into a written contract under the terms of which the latter agreed to purchase the premises owned by the plaintiff at Fourth and Ankeny streets. The contract contained a stipulation by which Wilson agreed to accept the premises with the understanding that the elevator, now in controversy and a certain merchandise chute (other than the one which was removed) and two sheet iron slides, "are not included in the equipment of the building," and "also that no shelving, counters, or fixtures belong to the building." Although the contract for the sale of the premises was made between Blake-McFall Company and Wilson, the contract was carried out by the Blake-McFall Company delivering a deed, dated July 31, 1912, to the two defendants Eugene A. Dudley and Samuel F. Wilson. This deed made no reference to the elevator and contained no provision excepting it from the operation of the conveyance.

Although the record does not disclose just when the Blake-McFall Company determined to build a "new home," it does fairly appear from the transcript of testimony that the company had at some time before making the contract with Wilson concluded to sell the premises at Fourth and Ankeny streets and to construct for its use another building at some other location in the city. After conveying to Dudley and Wilson, the plaintiff continued to occupy the building; but it did so as the tenant of Dudley and Wilson.

In September, 1913, the Hughes Investment Company, a corporation, began negotiations with Wilson and Dudley for the purchase of the premises bought by them from the plaintiff; and as a result of these negotiations the three defendants Samuel F. Wilson and Eugene A. Dudley and the latter's wife, Jessie Dudley, on October 1, 1913, deeded the property to the Hughes Investment Company. The deed to the Hughes Investment Company did not except the elevator from the conveyance. Moreover, none of the representatives of the Hughes Investment Company had any notice that the plaintiff claimed that the elevator had been reserved as personal property when Wilson and Dudley purchased the premises; and, indeed, it was not until the late fall of 1914 that any representative of the Hughes Investment Company was apprised of the claim of the plaintiff. After the property was conveyed to the Hughes Investment Company, the plaintiff continued to occupy the building; but it did so as the tenant of the Hughes Investment Company. The terms of the plaintiff's tenancy, so far as they related to the rentals to be paid, the time of occupancy, and steps to be taken if either the landlord or the tenant wished to terminate the tenancy, were the same under the Hughes Investment Company as they were when the plaintiff was occupying the building under Dudley and Wilson.

On February 27, 1914, the plaintiff notified the Hughes Investment Company of its intention to terminate the lease; but instead of ending the tenancy the parties made a new lease in December, 1914, and this last lease was not terminated until August, 1915, when the plaintiff moved into a new building which it had constructed for its use.

On April 18, 1915, a fire occurred in the building at Fourth and Ankeny streets and so damaged the elevator in controversy that it could not be used. The Hughes Investment Company carried insurance on the building. The Blake-McFall Company held an insurance policy covering the elevator. A suit was begun to determine whether the plaintiff or the Hughes Investment Company was entitled to collect the insurance money due on account of the elevator. That suit resulted in a decree awarding the money to the Hughes Investment Company, for the reason that the latter had purchased the premises without any notice of plaintiff's claim that it owned the elevator. Soon after the rendition of the decree in that suit, the plaintiff commenced this action.

At this point in the narrative it is appropriate to state that under date of April 29, 1915, Wilson wrote, signed, and delivered to the plaintiff a letter saying:

"Confirming my conversation with your Mr. Bruun in reference to the ownership of the elevator located near the south wall in the building No. 41 Fourth St., and regarding the merchandise chute located near the north wall in the building No. 47 Fourth St., I beg to say that this property, under our agreement dated June 7th, 1912, was reserved by and belongs to you and not to the owner of the building.

"Trusting this statement may enable you to satisfy the insurance adjusters, I remain."

The parties consenting, this cause was tried without the aid of a jury. The circuit court found:

"That by express agreement between the plaintiff and the defendants said elevator was personal property with the right on the part of the plaintiff to remove the same at any time from said building."

The trial court also found that the elevator was so attached as to become a part of the real property "as against a purchaser" for value and without notice "of the agreement between the parties hereto by which said elevator retained its character as personalty; that it was of such construction and so annexed and attached to the building and the real property that it could be removed without substantial or permanent injury to the building or real property." Based upon these findings and the added finding of fact that the defendants sold the premises without notifying the Hughes Investment Company of the agreement reserving the elevator, the court concluded that the defendants were liable for the conversion of the elevator, and the plaintiff was entitled to a judgment; and, accordingly, a judgment was entered against the defendants, and they appealed.

J. P. Winter, of Portland (Winter & Maguire, of Portland, on the brief), for appellants.

Warren E. Thomas, of Portland (Chamberlain, Thomas, Kraemer & Humphreys, Wm. S. Nash, and S. J. Graham, all of Portland, on the brief), for respondent.

HARRIS, J. (after stating the facts as above).

What was the character of the elevator in June, 1912, when the plaintiff agreed to sell and Wilson agreed to buy the premises at Fourth and Ankeny streets? Was the elevator personalty, or was it realty? If the elevator notwithstanding its installation in the building, had never lost its character as personal property, then it may be assumed that it was competent for the plaintiff and Wilson to agree, either by parol or in writing, that the elevator should continue to remain personalty and beyond the grasp of the deed. If such was the quality of the elevator, then Wilson and the plaintiff contracted to except from the deed an article which always had been and was then in truth personal property; and, hence, in that situation the contract would be binding at least as against Wilson, although it might not be binding as against Dudley if he purchased without knowledge of the actual character of the elevator and without notice of the agreement. If, however, the elevator lost its character as personalty and was transformed into realty when it was placed in the building, then we have to deal with a problem which is not easy...