Green v. Phillips

• Decision Date: 18 September 1875
• Court: Virginia Supreme Court
• Parties: GREEN v. PHILLIPS & als.

67 Va. 752

GREEN v. PHILLIPS & als.

Supreme Court of Appeals of Virginia.

September 18, 1875

The true rule in determining what are fixtures in a manufacturing establishment, where the land and buildings are owned by the manufacturer is-- That where the machinery is permanent in its character, and essential to the purposes for which the building is occupied, it must be regarded as realty, and passes with the building; and that whatever is essential to the purposes for which the building is used will be considered as a fixture, although the connection between them be such that it may be severed without physical or lasting injury to either.

This was an appeal from the decree of the Circuit court of Rockingham county, dissolving an injunction which had been granted to enjoin the sale under executions of fieri facias, of certain machinery in the manufactory of the Harrisonburg Lumber Manufacturing and Merchandise Company of Rockingham. This bill was filed by John T. Green, who claimed as the beneficiary in a mortgage given by the company to secure a debt for $1,045, for money loaned, and it was against a number of the creditors of the company, who had recovered judgments and sued out executions of fieri facias, which were levied on some of the machinery in the company's factory. The case is fully stated by Judge Christian in his opinion.

Berlin and Harnsbarger, for the appellant.

There was no counsel for the appellees.

OPINION

CHRISTIAN J.

The controversy in this case arises between a mortgagee and execution creditors as to certain machinery in the possession of the " Harrisonburg Lumber Manufacturing and Merchandise Company."

Certain persons having entered into a partnership to build and put into operation a sash, blind and door factory, in the town of Harrisonburg, obtained from the Circuit court of Rockingham a charter of incorporation.

This company purchased and paid for four-and-a-half acres of land in the town of Harrisonburg, and erected a building thereon putting into said building a steam boiler and engine, and also planing, morticing and moulding machine, and entire machinery necessary to carry out the purposes of the company in the manufacture of sash, blinds, doors, flooring, and other building material.

The company seems not to have been prosperous in their operations, becoming indebted to numerous creditors, who obtained judgments against it at different times for various amounts.

On the 11th November 1869, the company, through its president and secretary, executed a mortgage upon its property, including land, buildings, machinery, fixtures, & c., to W. E Green, to secure the payment of the sum of one thousand and forty-five dollars. The deed creating this mortgage, (which it appears was for the benefit of John T. Green, the appellant in this case,) was not recorded until December 8, 1870.

In the meantime numerous other creditors had obtained judgments against the company. Upon some of these judgments executions were issued and levied upon certain machinery--one being levied upon what is known as a shaper -- another being levied upon the steam engine, which runs or drives the machinery--another upon a moulding machine and two planing machines.

Upon the levy of these executions the appellant, who is the beneficial mortgagee, filed his bill of injunction addressed to the judge of the Circuit court of Rockingham, in which, after setting forth the incorporation of the company, the objects and purposes for which it was incorporated, the fact that he was a large stockholder in the company, its indebtedness to him evidenced by the mortgage above noticed, and for other debts due him; the levy of the executions upon the machinery attached to the company's building--he alleges that said machinery is all attached to the building, and constitutes fixtures firmly fastened to the same, and absolutely necessary to the purposes for which the factory was established; and if sold under said executions and removed, the factory would be stopped and rendered valueless. He claimed that the machinery thus levied on, was part and parcel of the realty, and not liable to levy and sale, separate and apart from the building and the land. He asserts that his mortgage is prior and superior to the other judgments, and insists that if there is to be a sale, the whole property levied on, buildings and machinery shall be sold, and the different creditors paid according to the priorities of their respective claims. He also prays for an injunction to prevent the sale of the machinery levied upon, and to enjoin all proceedings under the said judgments until the various debts outstanding against the company, and the different liens and their priorities could be ascertained; and that the whole property might be sold and the creditors satisfied according to their respective rights. To this bill the judgment creditors were made parties.

An injunction was awarded according to the prayer of the bill, by the Hon. Robert H. Turner, judge of the 14th judicial circuit. Two of the defendants answered the bill--J. D. Price and R. Ball & Co. Price admitted the large indebtedness of the company, and insisted upon a settlement of its affairs; does not object to a sale of the property to pay its debts, but suggests a private sale, instead of a sale at public auction. He denies the validity of the mortgage set up by the plaintiff in his bill; alleging that the deed exhibited therewith was executed without authority from the company, and was informal, null and void; and that if the debt is due from the company, it must stand upon the same footing as other debts. This allegation, affirmative, in the answer, as to the execution of the deed without authority, is not sustained by any proof, and indeed seems to be abandoned; for when the commissioner reports the debt due to William E. Green as secured by a mortgage, the report is confirmed by the court, without exception.

The only other defendants who answer the bill, are R. Ball & Co. They allege, that they recovered a judgment against the Harrisonburg Lumber and Merchandize Company at the May term of said Circuit court, 1870, for the sum of $460.09, with interest from 31st July 1863, and that on the 10th of June, 1870 they caused an execution of fieri facias to be issued from the clerk's office of said Circuit court, and caused the same to be levied upon sash moulding machines and two planers (Daniel's and Surface's), belonging to said company. They further allege that " they are advised and so answer, that the said property so levied on is, according to the laws of Virginia, not fixtures attached--a realty exempted from levy and sale under an execution of fieri facias --but goods and chattels subject to such levy and sale; and they therefore deny that it is part and parcel of the freehold, or real estate; and deny that the factory would be rendered valueless by the removal of the machinery levied on." They deny that there would be any necessary injury to the complainant, or any one else, by a separate sale of the property levied on by the sheriff to satisfy the execution on their judgment, and ask that the injunction be dissolved. The other judgment creditors whose exetions had been levied upon the steam engine, and the machine known as the shaper, did not answer the bill. A number of depositions were taken, and it was conclusively shown, both, that the different machines and the engine levied upon were firmly fastened to the building in which they were put up, and that they were absolutely essential to the purpose for which the building was erected as a factory of sash, blinds and doors, and other building material.

Two witnesses were examined by the defendants. One of them Thomas W. Basford, in answer to the...