Frost v. Schinkel

• Decision Date: 29 October 1931
• Docket Number: No. 27641.,27641.
• Parties: FROST v. SCHINKEL ET AL. (HALDEMAN, INTERVENER).
• Court: Nebraska Supreme Court

121 Neb. 784

238 N.W. 659

FROST

v.SCHINKEL ET AL. (HALDEMAN, INTERVENER).

No. 27641.

Supreme Court of Nebraska.

Oct. 29, 1931.

Syllabus by the Court.

1. Fixtures are chattel property brought in and upon and annexed to real property but which retain their separate identity and become realty, but which may under certain circumstances become personalty again.

2. “Fixture” necessarily implies something having possible existence apart from realty, but which may by annexation be assimilated into realty.

3. At common law all buildings which a tenant in agriculture erected became a part of the freehold. Elwes v. Maw, 3 East (Eng.) 38, discussed.

4. Three criteria of fixtures were announced in Teaff v. Hewitt, 1 Ohio St. 511, 59 Am. Dec. 634: (1) Actual annexation to the realty; (2) appropriation to the use or purpose of that part of the realty with which it is connected; (3) the intention of the party making the annexation to make the article a permanent accession to the freehold.

5. If improvement erected by tenant cannot be removed without considerable injury to the freehold, ordinarily it belongs to the owner of the fee.

6. Tenant's right to remove improvements erected by him may be exercised at any time before he yields possession. Holder of chattel mortgage thereon has no greater rights than tenant.

7. Trade fixtures may be defined as articles annexed to the realty by a tenant for the purpose of carrying on a trade or business, not exclusively agricultural, and are ordinarily removable by him while he is in possession of the freehold, and that such trade fixtures must be taken to pieces or even wrecked to remove them from the premises does not affect the tenant's right of removal, but such removal must never cause substantial damage to the freehold.

8. When an owner of real estate who has placed trade fixtures in his building gives a real estate mortgage thereon, the mortgagee is entitled to claim them as part of his security. And it is the rule that, if they are annexed after the mortgage is given, the mortgagee can hold them as against the mortgagor.

9. Where the removal of chattels will not materially injure the premises, the vendor who retains title may assert his right against a prior real estate mortgage.

10. A chattel mortgage, given in good faith upon a trade fixture by the owner, preserves its status as personalty unless the rights of innocent third persons will be prejudiced.

11. When articles are sold on condition that the title shall not pass until they are paid for, or some other condition in reference to their ownership or use is unfulfilled, such articles do not become a part of the realty, for an agreement reserving the right of removal would in such cases be implied.

12. Parts of property which are not physically attached to the realty, but which are absolutely necessary to the operations of machinery and equipment which is physically attached, become themselves governed by the same rules as that which is annexed to the freehold.

13. Ordinarily it is of great importance to determine the intention of the one who attaches fixtures. Such intention is not the secret purpose of such owner, but it is that intention which should be implied from his acts. The controlling intention is that which the law deduces from all of the facts and circumstances connected with the installation of the article upon the land.

14. Annexations affixed to an estate by the owner before mortgage, of such a character as are apparently calculated to be for the permanent use and enjoyment of the realty, are presumed to be intended to form a part of the realty and to pass with it by a mortgage.

15. Trade fixtures attached to the freehold by the tenant for the purpose of conducting his business therein may be removed, if without substantial injury to freehold, or sold by tenant with right of removal during his term.

Appeal from District Court, Dodge County; Lightner, Judge.

Action by William H. Frost against Elmer Schinkel, Ernest M. Nelson, and others, wherein T. D. Haldeman intervened. From the judgment rendered, the defendants named appeal.

Affirmed in part and reversed in part, and cause remanded, with directions.

C. M. Skiles, of Lincoln, Dolezal, Mapes & Johnson, of Fremont, and Geo. W. Wertz, of Schuyler, for appellants.

J. C. Cook, of Fremont, for appellee Frost.

E. S. Schiefelbein, of Wahoo, and Courtright, Sidner, Lee & Gunderson, of Fremont, for Haldeman.

Heard before GOSS, C. J., and ROSE, DEAN, GOOD, EBERLY, DAY, and PAINE, JJ.

PAINE, J.

This is an action for injunction, brought in the district court for Dodge county by William H. Frost as plaintiff against Elmer Schinkel, the tenant and vendee, Ernest M. Nelson, vendor, Rudolph J. Suchan and the Dodge State Bank, holder of a chattel mortgage, in which the plaintiff asks that the defendants be restrained from selling, incumbering or removing 41 different fixtures, hereinafter set out, which were installed in a garage. Answers and replies were filed, and to a petition of intervention by F. D. Haldeman issues were also joined. By agreement of the parties all extraordinary remedies were dispensed with and a trial had to the court on the merits, and a decree was entered May 31, 1930, finding that all of the machinery set out in plaintiff's petition was attached to the real estate and was a part of it and constituted fixtures, to all of which the defendants excepted and filed a motion for a new trial, setting up, among other things, misconduct, accident, surprise, and that the judgment was not sustained by sufficient evidence and was contrary to law. The facts as disclosed in the evidence showed that Joseph C. Vosacek and his two sons-in-law, Edward Chudomelka and his brother, Frank Chudomelka, built and owned a new two-story tile and brick garage building, 60 by 140 feet, valued by some at $24,000, and also owned and conducted the general garage business therein.

That upon November 17, 1921, they gave a real estate mortgage upon this property, being described simply as lot 7, block 4, town of Dodge, Dodge county, Nebraska, in the sum of $9,000, payable three years after date, and that the same was given to Julius W. Frost. Upon failure to pay the same, petition for foreclosure was filed by the guardian for said Julius W. Frost, who had become an incompetent after the mortgage had been given him. The sheriff sold the premises to the plaintiff guardian, who bid in the property for $9,000; said sale was confirmed on December 1, 1925, and upon appeal to this court mandate was entered March 15, 1927, affirming same. Upon March 30, 1927, the guardian of his incompetent father deeded the property to the plaintiff in the case at bar.

The plaintiff, having become the owner of said lot 7, in block 4, under the sheriff's deed, claims to have taken possession of the garage and also all of the machines and equipment therein, claiming to be the owner thereof by virtue of the foreclosure of the real estate mortgage.

On September 29, 1928, a stipulation was filed by the parties to this injunction suit, agreeing that the fixtures in dispute could be sold by Schinkel, the tenant, to the intervener, F. D. Haldeman, the property to be left in the building and the $7,181.01 paid to be held in escrow by a bank at Dodge, Nebraska, to abide the final decision of this case.

William H. Frost, the plaintiff in the case, testified that he lived in Lincoln, and was in the finance business, and had made the real estate loan on the garage for his father. The front part of the garage was used for storage, accessories, office, and show-room. Most of the equipment in question was in the repair shop in the back room. The second story was used in part for storing cars and as paint shop and for other purposes.

An itemized statement attached to the petition gives a list of the 41 articles claimed by plaintiff as conveyed under the real estate mortgage, as follows: (1) One lathe, shop number 206; (2) Fox No. 10 improved lathe key seating attachment; (3) one power drill; (4) one Universal axle stand, model “F,” No. 451; (5) one small vise, attached to bench; (6) one grinder, attached to bench; (7) one Yankee drill, No. 1005; (8) one brake band riveter, type A668; (9) one air compressor, belted to the line shaft; (10) one power saw, also belted to the line shaft; (11) one forge, attached to the stovepipe; (12) one suction fan or blower; (13) one 20-ton press machine, No. 006217; (14) one burning-in stand, No. 15-C; (15) one Ford motor, No. 19120013, to propel the same; (16) one U. S. Automatic air compressor, No. H-34, DeLux; (17) one emery stand, belted to the line shaft; (18) one 5 horse electric motor, attached to the ceiling, to drive machinery; (19) one “U” track, attached to the ceiling; (20) one small ton hoist; (21) one large two to five ton hoist; (22) one 26-section radiator; (23) two 8-section radiators and one 19-section radiator; (24) one hot water heater and tank; (25) one lavatory; (26) one shower bath complete; (27) one 24-section radiator; (28) one large pressure tank; (29) two 20-section radiators, disconnected, low type; (30) one 18-section radiator, high type, also disconnected; (31) 15 or 20 pieces of gas pipe; (32) one sink located near wash rack; (33) one tank located in southeast corner of storage room; (34) one small elevator, complete, used for handling small packages or passengers; (35) one large elevator, complete, to take automobiles to second floor; (36) one Echo air machine, No. 52,353; (37) one Volcker visible gas pump; (38) one self-measuring gas pump, type 577, model 25, serial No. 16987; (39) eight wall radiators in storage room; (40) one 25-section upright radiator in storage room; (41) one toilet complete, with 11-section radiator.

The plaintiff's evidence was supported by a friend who was also engaged in the loan business and testified at length. Joseph C. Vosacek, who was the first signer of the real estate mortgage but not a defendant in the case,...