Campbell v. Roddy

• Decision Date: 26 May 1888
• Citation: 44 N.J.E. 244,14 A. 279
• Parties: CAMPBELL et al. v. RODDY et al.
• Court: New Jersey Supreme Court

14 A. 279

44 N.J.E. 244

CAMPBELL et al.

v. RODDY et al.¹

Court of Errors and Appeals of New Jersey.

May 26, 1888.

(Syllabus by the Court.)

Appeal from court of chancery.

This was an appeal from a decree of foreclosure of a real estate mortgage advised by BIRD, V. C. For opinion, see 6 Atl. Rep. 806.

J. D. Bedle, for appellants. A. V. Schenck, for appellees.

REED, J. The question presented by this appeal arises out of the circumstances that a mortgagor of real property, after making the mortgage, had annexed to the real estate certain chattels in which a third person claimed to have an interest. On a bill filed to foreclose the mortgage a contest arose as to the right of the mortgagee to have all the property applied primarily to the payment of his mortgage, regardless of the interest which any person may have had in the annexed property before its annexation. The facts, as they appear more in detail, are the following: Riley A. Brick and wife gave a mortgage to Roddy and Meinzers, trustees, on a certain lot of land, with the buildings and improvements thereon erected. The buildings were designed for use as an iron foundry. The mortgage was dated May 17, 1880, and was made to secure the payment of notes, to the amount of $10,000, made by Brick to these trustees. On May 29th, 12 days after this mortgage was executed by Brick and wife, Brick purchased of one Robert Campbell a large lot of machinery and other personal property for the sum of $30,000. Ten thousand dollars of the consideration was paid in cash. Four promissory notes were given by Brick to Campbell, each dated May 1, 1880, each for the payment of $5,000, and each containing the following words: "It is further agreed that the title to the property for which this note is given shall remain in said Robert Campbell until this note is fully paid." As security for a portion of these four notes, Brick gave to Campbell, on the day of the sale, May 29th, a mortgage for $10,000 on the same real estate already mortgaged to the trustees. The sale of the chattels was evidenced by a writing given by Campbell, the vendor, to Brick, the vendee, also dated May 29, 1880. It is a bill of sale with the following proviso: "Provided, however, that this sale is made upon the express condition and agreement that, in case of default of payment of either of the said notes, then this conveyance to be void and of no effect, and the possession of the goods shall revert to the party of the first part." Then follows a power, conferred upon the vendor in such case, to take possession and sell and pay himself out of the proceeds; rendering the surplus, if any, to the vendee. A part of the chattels so sold by Campbell to Brick was, with Campbell's knowledge, placed in the buildings on the premises already mortgaged to the trustees. They were so annexed to the mortgaged real estate that, as between the mortgagor Brick, and the trustees, the mortgagees, they became a part of the mortgaged premises. Butler v. Page, 7 Metc. 40; Clary v. Owen, 15 Gray, 522; Murdoch v. Gifford, 18 N. Y. 28; Walmsley v. Milne, 7 C. B. (N. S.) 115. There was, indeed, no denial, on the argument of the appeal, that, as between the mortgagor and mortgagee, the steam boiler, engine, jacks, and those chattels which the trustees claim in their bill of foreclosure as a part of the real estate, were so attached as to become incorporated into the realty. But, as already remarked, the contest is not between the mortgagees of the realty and the mortgagor, claiming that he had an interest in the property which he had annexed, and claiming that that interest was unaffected by the preexisting mortgage. A third person, namely, the vendor of the chattels, claims that he had an interest in them which was not lost or impaired by reason of their annexation to the mortgaged real estate by the act of the vendee of the chattels, who was at the same time the mortgagee of the real estate. It is admitted that Campbell had an interest in the chattels previous to their annexation. What the character of that interest is, may afford some ground for discussion. If the agreement which is found in the body of the several notes is to be resorted to for the purpose of establishing the extent of his rights, it appears that the title to all these chattels remained in him until divested by payment of the notes. Cole v. Berry, 42 N. J. Law, 308. If, however, the bill of sale signed by both the vendor and vendee is the source from which he derives his interest, it is difficult to see how the vendor had anything, apart from a naked power to take possession and sell upon the happening of a certain event. The bill of sale did not provide that the title should remain in the vendor. By its terms, the title passed to the vendee absolutely, with the proviso that the possession should revert to the vendor upon default in payment of the notes. A chattel mortgage at law arises only when the title rests with the mortgagee, with a defeasance upon performance of a condition. By the terms of the bill of sale, the title resided in the vendee, and the vendor only retained a right to take possession and sell in the future, which power was one not coupled with a present interest. Parshall v. Eggart, 52 Barb. 367; Holmes v. Hall, 8 Mich. 66; Bonsey v. Amee, 8 Pick. 236; Hunt v. Rousmanier, 8 Wheat. 174. But, in reaching the intention of the parties in respect to the character of the sale, we must read the papers together; and if, from the language used in the notes, read in connection with the proviso in the bill of sale, it appears that it was understood that the title should remain in the vendor, but for a specified purpose only, namely, to secure the notes, then the transaction should in equity be regarded as a chattel mortgage. It may be laid down as a general rule, says Judge Story, subject to few exceptions, that whenever a conveyance, assignment, or other interest transferring an estate is originally intended between the parties as a security for money or for other incumbrance, whether the intention appear from the same instrument or from any other, it is always considered in equity as a mortgage, and consequently is redeemable upon the performance of the conditions and stipulations thereof. 2 Story, Eq. Jur. § 1018. Coupling the clauses which 1 have mentioned contained in the contemporaneously executed papers, I think that there is exhibited an intention to leave the title in Campbell as a security only, with a power of sale upon the part of the vendor, and the power to redeem by payment on the part of the vendee. This would fix upon the transaction the character of the chattel mortgage. The chattel mortgage was not refiled, in conformity with the statute, so as to preserve its validity against creditors and purchasers. The mortgage, however, was good as between the parties thereto at the time of the annexation of the chattels, and the mortgagees of the real estate stand neither in the light of. creditors nor of the subsequent purchasers. The facts, then, present the bare question, what is the position of a mortgagee of real estate into which mortgaged chattels have become incorporated, by the act of the mortgagor, subsequent to the execution of the real estate mortgage?

The elementary rule of the common law was, quic quid plantatur solo solo cedit. It may be stated as a rule of great antiquity, that whatever is affixed to the soil becomes, in contemplation of law, a part of it, and is subsequently subjected to the same rights of property as the soil itself. Brooms, Leg. Max. 268. But many exceptions have become ingrafted upon this rule. The law of fixtures, says Kent, is in derogation of the original rule of common law, which subjected everything affixed to the freehold to the law governing the freehold; and it has grown into a system of judicial legislation, so as almost to render the right of removal of fixtures a general rule, instead of being an exception. 2 Kent, Comm. 343. The question whether property is or is not a fixture arises most frequently between a tenant of a particular estate and those in reversion or remainder. As between these parties, it is held, by a well-settled line of cases, that the intention of the tenant making the annexation is one of the three tests to be resorted to in ascertaining the nature of the property. It is equally well settled that, in instances aside from those, the mental attitude of the person making the annexation cannot modify the legal effect resulting from an incorporation into the realty of that which was personal property. Thus, a structure erected on the land of another will become the property of the owner of the land, although built with a view of enforcing an adverse right in the land. Sudbury v. Jones, 8 Cush. 184; Lee v. Risdon, 7 Taunt 188; Overton v. Williston, 31 Pa. St. 155. An intent existing alone in the mind of him who makes the annexation differs from another feature which is recognized in the cases as preserving the personal character of the property annexed. That feature consists in the existence of a mutual agreement, expressed or implied, between the owner of the real estate and the chattels in respect to the manner in which chattels shall be...