First National Bank of McAdoo v. Reese
| Decision Date | 24 March 1947 |
| Docket Number | 3291 |
| Citation | 356 Pa. 175,51 A.2d 806 |
| Parties | The First National Bank of McAdoo, Appellant, v. Reese et al |
| Court | Pennsylvania Supreme Court |
Argued January 8, 1947
Appeal, No. 44, Jan. T., 1947, from judgment of C.P., Carbon Co., Jan. T., 1943, No. 17, in case of The First National Bank of McAdoo v. Otto Reese et al. Judgment reversed.
Replevin proceeding. Before McCREADY, P.J., without a jury.
Adjudication filed finding for defendant Reese. Plaintiff Appealed.
The judgment is reversed and here entered in favor of plaintiff and against defendant. The record is remitted with instructions to the court below (sitting, in accordance with the agreement of the parties, without a jury) to hear and determine the amount owing by Cameron Reese to plaintiff for which the pledged property is security. If plaintiff, within 30 days thereafter, receives payment of the amount thus determined, this judgment shall thereupon be satisfied of record. If plaintiff does not receive said payment within said period it shall promptly expose the replevied articles to public sale, and shall pay to defendant the excess, if any, of the proceeds therefrom over and above the amount thus determined, and, upon such sale being had, this judgment shall be satisfied of record. Costs to be divided equally between the parties.
George A. Shutack, with him John Skweir, for appellant.
Ben Branch, with him Cletus M. Lyman , for appellee.
Before MAXEY, C.J., DREW, LINN, STERN, PATTERSON, STEARNE and JONES JJ.
Otto Reese, defendant in this replevin action, conducted for a number of years an automobile service station on premises in the village of Audenried, Carbon County, which he leased from Lehigh Valley Railroad Company. By a written agreement between him and his son, Cameron S. Reese, dated September 4 1936, he conveyed to the latter the lease, buildings, fixtures, merchandise, accounts receivable and, in general, all the property including the good will, of this business, to be held by Cameron, his heirs, executors, administrators and assigns forever, "subject, however, to the following limitations: That the said Vendee may not and shall not sell or assign the said business during the lifetime of the Vendor and further that if the Vendee shall predecease the Vendor, then and in that case the title to the said business shall, at the option of the Vendor herein, revert to the Vendor and the fee herein granted and sold to the Vendee shall, at the option of the Vendor, determine upon his death". The agreement provided that if the death of the vendee should occur before the death of the vendor and the business should, by the exercise of the option, become reinvested in the vendor, the latter should not be liable for any of the obligations incurred by the vendee in connection with the business, but should repossess and hold the same free and discharged of any such indebtedness, and only the estate of the vendee should be liable for such obligations. As consideration, the vendee was to pay to the vendor $45 per week during the latter's lifetime but his estate was not to be liable for such payments if the business became reinvested in the vendor.
Following the execution of this agreement defendant cancelled his registration of the fictitious name "Audenried Service Stations" under which he had been conducting the business, and Cameron Reese filed a certificate registering this same name for his own use. Lehigh Valley Railroad Company made a new lease to Cameron Reese, who went into possession and carried on the business until his death, which occurred on December 12, 1941, whereupon defendant, exercising the option granted to him in that event by his agreement with his son, took over the business and has since been conducting it under a new lease in his own name which he obtained from Lehigh Valley Railroad Company. The present controversy arises by reason of the fact that, during the period when Cameron Reese was the owner of the business, he borrowed, on January 5, 1939, from plaintiff, the First National Bank of McAdoo, the sum of $3,900, for which he gave his promissory note and at the same time executed in writing a so-called "bill or sale" wherein he recited that, in consideration of the loan, he granted and sold to the Bank a combination gasoline station and dwelling house on the leased premises, also a warehouse and sundry gasoline pumps and underground gasoline storage tanks. By another writing attached to this instrument the Bank agreed that upon the repayment of the loan and interest it would reconvey to Cameron all the buildings and chattels mentioned in the bill of sale. The Bank recorded these documents in the county Office for Recording of Deeds, but it did not take actual possession of the property. How much of the loan and interest still remains unpaid is not disclosed in the record of this case, but apparently some or all of it is still due and owing. In November, 1942, the Bank replevied the articles enumerated in the bill of sale and which were then in defendant's possession as a result of his having taken over the business upon his son's death.
The issue here involved is in regard to the relative rights of plaintiff and defendant in the chattels covered by the writ of replevin. The case was heard by the trial judge sitting, by agreement of counsel, without a jury. Judgment was entered in favor of the defendant and against the plaintiff. The latter appeals.
Although physically annexed to the ground the replevied articles constitute personal property, having been erected for business purposes upon premises leased, first by defendant, and later by Cameron Reese. They are trade fixtures. [1] Such structures, placed by a tenant on demised premises for the purpose of carrying on his business, may be removed by him, or may be replevied or levied on by a writ of execution, during the term of the lease; being built on leased land and therefore on a chattel estate they are themselves chattels in regard not only to the lessor but to everyone else. The criterion is not one of physical annexation, for the rule is the same even though the fixtures consist of steel-framework buildings, buildings with a brick, stone or concrete foundation, furnaces, machinery, casings of gas and oil wells, or similar structures. [2]
The first question for determination is the extent of the rights secured to defendant under his agreement. That agreement imposed an obligation on his son not to sell or assign the business, that is, the enterprise as an entirety, the purpose of this provision being obviously to assure to defendant that the business would not be turned over to a stranger but would be conducted by Cameron during the letter's entire lifetime, so that, if Cameron should prematurely die, he himself could reassume the ownership and conduct of the business. The prohibition was not directed against the sale or assignment of any particular or individual assets, whether goods, tools, apparatus or equipment; if Cameron had not met with such an early death he might normally have been expected to carry on the business for some 30 or 40 years, and it is quite impossible to believe that either the father or the son intended that Cameron was never, during any such possible period, to be allowed to replace or dispose of any of the fixtures or other assets, or, even if necessary, perhaps, in order to obtain money for the operation of the business, to pledge them for that purpose. Whether, if he made any such sale or pledge, but appropriated the proceeds to his own use instead of using them for the benefit of the business, defendant might have recourse against him under the terms of their agreement, is a question which does not enter into the determination of the present issue. ...
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