Central Housing Inv. Corp. v. Federal Nat. Mortg. Ass'n, s. 5500-5503

• Decision Date: 09 October 1952
• Docket Number: Nos. 5500-5503,s. 5500-5503
• Citation: 248 P.2d 866,74 Ariz. 308
• Parties: CENTRAL HOUSING INV. CORP. v. FEDERAL NAT. MORTG. ASS'N.
• Court: Arizona Supreme Court

Page 866

248 P.2d 866

74 Ariz. 308

CENTRAL HOUSING INV. CORP. v. FEDERAL NAT. MORTG. ASS'N.

Nos. 5500-5503.

Supreme Court of Arizona.

Oct. 9, 1952.

Knapp, Boyle, Bilby & Thompson, and Arthur Henderson, Richard Evans, of Tucson, for appellant.

Hall, Catlin & Molloy, of Tucson, for appellee.

DE CONCINI, Justice.

The sole question on this appeal is whether evaporative house coolers placed on mortgaged property subsequent to the execution of the mortgage are subject to the mortgage on foreclosure.

The facts are undisputed, hence there is only a question of law to decide.

In 1947 the Del Webb Construction Company built 700 houses as a post-war housing project known as Pueblo Gardens, south of Tucson, Arizona. The construction company built the houses but the ownership of the land and the improvements was in other corporations owned by the Del Webb interests. The construction was financed by mortgages on the individual improved lots, insured by the Federal Housing Administration, the notes and mortgages being in form required by F.H.A. and were financed through an Arizona insurance and realty company. Federal National Mortgage Association, commonly known as F.N.M.A. or 'Fanny May', appellee herein and plaintiff below, as transferee of all the mortgages, brought a series of foreclosure actions against Central Housing Investment Corporation, record owner of the mortgaged premises, and hereafter referred to as appellant.

The unsold houses turned into a rental project. The Del Webb companies conveyed their interest in the unsold houses to the appellant, Central Housing Investment Corporation, subject to the existing F.H.A. mortgages.

The houses in the project were built of frame construction, and, although the walls were well-insulated, colling was desirable. Under F.H.A. regulations the construction company had installed the required plumbing, electrical connections and duct work into each house for the purpose of installation of an evaporative air-cooler. It, however, did not require that coolers be installed in the houses to qualify them for F.H.A. insured mortgages.

In order to run a successful rental project the defendant installed 70 evaporative coolers at a cost of $7,000, payable in installments. The defendant later purchased twelve additional coolers, each at $100 to $115 cash, making a total of 82 coolers owned and used by the appellant corporation on the rental project. The appellant leased the houses both by written term leases and on a month to month basis. Appellant leased coolers separately, however, and charged a small monthly rental for the coolers themselves, separate and apart from the rental charges for the houses.

Besides the legal description the mortgage in question carried a provision describing the mortgaged property as 'including all buildings and improvements now or heretofore located thereon, and all heating, plumbing and lighting fixtures and equipment now or hereafter attached and used in connection with the premises herein described.' The defendant in the foreclosure action admitted all of the allegations of the foreclosure complaint except the general allegation that its interest or claim upon the property was subordinate in all respects to the lien of the first mortgage, and in that connection alleged that it was the owner of the evaporative coolers and entitled to the rent therefrom as long as the tenants remained in possession of the premises under the lease agreements, and to possession of the coolers thereafter, as its own property. The appellant, in the lower court, made a motion to have the receiver in the foreclosure action pay over to the defendant all rents received from the use of the coolers. The trial court denied the motion and thereafter rendered a judgment, holding that whatever right, title or interest the appellant had in the coolers was subordinate to the plaintiff's mortgage lien. An appeal was taken from that part of the judgment and by stipulation all of the foreclosure actions (our numbers 5500-01-02-03) were were consolidated for the purpose of this appeal.

The appellant assigns as error the ruling of the trial court in holding that the evaporative coolers in question were fixtures, and as fixtures became part and parcel of the realty and therefore were subject to the plaintiff's mortgage lien.

It is the appellant's contention that, (1) the coolers were not fixtures as a matter of law, or (2) even if they be fixtures as a matter of law, that the realty mortgage in question excludes these coolers as being subject to the mortgage lien.

The F.H.A. form of mortgages in question provide that the mortgage is a lien upon the real property and improvements erected thereon and upon

'all heating, plumbing, and lighting fixtures and equipment now or hereafter attached to or used in connection with the premises herein described.'

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