Columbian Steel Tank Co. v. Vosika

• Decision Date: 02 February 1945
• Docket Number: 31850.
• Parties: COLUMBIAN STEEL TANK CO. v. VOSIKA et al.
• Court: Nebraska Supreme Court

17 N.W.2d 488

145 Neb. 541

COLUMBIAN STEEL TANK CO. v. VOSIKA et al.

No. 31850.

Supreme Court of Nebraska

February 2, 1945

Syllabus by the Court.

1. Conditional sales contracts are entered into primarily for the protection of vendors of personalty where the parties to such contracts contemplate that the property shall retain its character as personalty. They are, however, not intended to and cannot apply to such articles of personalty as are sold for the purpose of being incorporated into a building and becoming a part of realty.

2. Where removal of property sold under conditional sales contract with title remaining in the vendor is sought, such vendor may exercise his right of ownership and obtain possession thereof as against the owner of the real estate on which the property sold is located or against a prior real estate mortgage if such possession may be obtained and removal had without material injury to the premises.

3. The trial court is required to consider any competent and relevant facts revealed by a view of premises as evidence in the case, and a duty is imposed on this court on review of findings made by the trial court to give consideration to the fact that the trial court did view the premises; provided that the record contains competent evidence to support the findings.

4. While the law requires this court, in determining an appeal in an equity action involving questions of fact, to reach an independent conclusion without reference to the findings of the district court, this court will, in determining the weight of the evidence, where there is an irreconcilable conflict therein on a material issue, consider the fact that the trial court observed the witnesses and their manner of testifying.

Stewart Stewart & Whitworth, of Lincoln, and Roy W. Crimm, of Kansas City, Mo., for appellant.

John E. Mekota, of Crete, and Perry, Van Pelt & Marti and Joseph O'Gara, all of Lincoln, for appellees.

Heard before SIMMONS, C. J., and PAINE, CARTER, MESSMORE, YEAGER CHAPPELL, and WENKE, JJ.

YEAGER Justice.

This is an action by Columbian Steel Tank Company, a partnership plaintiff and appellant, against Joseph A. Vosika, Frank H. Tavis, trustee, and Lincoln Steel Works, a corporation, defendants and appellees. The action was to foreclose a conditional contract of sale on equipment sold to and placed in a brewery at Crete, Nebraska. Trial was had to the court at the conclusion of which a decree was rendered granting foreclosure of the contract as to a part of the equipment and denying it as to the remainder. From this decree the plaintiff has appealed. There is no cross-appeal.

The factual background of the action is substantially as follows: On August 25, 1933, the Dr. Miller Company, a corporation, was the owner of certain real estate in the city of Crete, Saline county, Nebraska, on which was located certain buildings, a portion of which had been previously used for a grain elevator and mill. The buildings were redesigned and made over into a brewery. On the said August 25, 1933, the Dr. Miller Company executed and delivered to the defendant, Frank H. Tavis, as trustee, a real estate mortgage on the real estate for $9,000.

On October 5, 1933, the Dr. Miller Company, under conditional contract of sale, purchased equipment to be installed in the brewery, the agreed price of which was $10,990. After deduction of down payments there remained a balance due the plaintiff in the amount of $6,990. For this amount, in accordance with the contract, the Dr. Miller Company executed and delivered to plaintiff 12 promissory notes each for $582.50 with interest at seven per cent per annum until paid. By the terms of the contract it was agreed that title should remain in plaintiff until all payments were made, that the property should remain personal, that for failure of the Dr. Miller Company to make payment the full purchase price became due, and in that event plaintiff was empowered to take possession. This contract was filed for record November 29, 1933. A total of $5,796.96 was paid on the notes and interest. The last payment was made in August, 1939. At the time of the commencement of this action the amount remaining due and owing was $3,491.47.

In December, 1934, the Dr. Miller Company filed its petition in the United States District Court for reorganization under section 77B of the federal Bankruptcy Act 11 U.S.C.A. § 207, whereupon a reorganization was effected and pursuant to the plan therein adopted certain of the payments to plaintiff were made. The details of this reorganization are not important. The reasons will become apparent later on in this opinion.

In February, 1942, the Dr. Miller Company was adjudicated to the Bankrupt under the federal Bankruptcy Act and in August of that year the trustee of the bankrupt sold the real estate and equipment to the defendant Vosika, subject to liens and encumbrances.

The action here is against Tavis as prior mortgagee of the real estate, Vosika as purchaser at the bankruptcy sale and Lincoln Steel Works, a corporation, mechanic's lien holder. The Lincoln Steel Works defaulted for failure to appear or answer.

The petition was for foreclosure with right to remove the property in accordance with the terms of the conditional contract of sale.

At the conclusion of the trial the court found that there was due and owing the sum of $3,735.95 and rendered a decree accordingly. It did not, however, grant foreclosure as against all of the property sold under the conditional sales contract and installed in the buildings referred to.

In their answers defendants alleged as a defense that the property against which foreclosure was sought was firmly attached to the buildings and became a part thereof and a part of the realty and that removal would irreparably damage and meterially injure and weaken the buildings.

On this defense the trial court held in part in favor of plaintiff and in part in favor of defendants.

It should be pointed out here that the issue raised by this defense is the only one presented for determination on this appeal. The defendants did not cross-appeal. In fact in their brief they have asked that the decree of the district court be affirmed. The right of foreclosure of the conditional contract of sale for the balance claimed thereon was sustained, but it was decreed that by reason of the condition and character of attachment of a part of the property to the realty such part could not be removed and applied to the satisfaction of the obligation. It is only of this portion of the decree that plaintiff in truth complains.

The applicable rules of law declaring the rights of parties to secure possession of property under conditional sales contracts are the following: 'Conditional sales contracts are entered into primarily for the protection of vendors of personalty, where the parties to such contracts contemplate that the property shall retain its character as personalty. They are not intended to and cannot apply to such articles of personalty as are sold for the purpose of being incorporated into a building and becoming a part of the realty.' Geer Co. v. Wolcott, 124 Neb. 306, 246 N.W. 456, 457. Where the removal of property sold under a conditional sales contract with title remaining in the vendor is sought, such vendor may exercise his right of ownership and obtain possession thereof as against the owner of the real estate on which the property sold is located or against a prior real estate mortgage if such possession may be obtained and removal had without material injury to the premises. See Frost v. Schinkel, 121 Neb. 784, 238 N.W. 659, 77 A.L.R. 1389; Geer Co. v. Wolcott, supra; Swift Lumber & Fuel Co. v. Elwanger, 127 Neb. 740, 256 N.W. 875.

For other cases where the right of removal is dependent on the question of damage or injury to the realty, see Arlington Mill & Elevator Co. v. Yates, 57 Neb. 286, 77 N.W. 677; Edwards & Bradford Lumber Co. v. Rank, 57 Neb. 323, 77 N.W. 765, 73 Am.St.Rep. 514; Rothery v. Dohrse, 122 Neb. 259, 240 N.W. 296.

By application of these rules to the evidence in this case we are called upon to determine whether or not the court erred in denying to plaintiff the right to foreclosure and possession of a portion of...