John A. Roebling's Sons Company v. Nebraska Electric Company

• Decision Date: 06 June 1921
• Docket Number: 21362
• Parties: JOHN A. ROEBLING'S SONS COMPANY, APPELLEE, v. NEBRASKA ELECTRIC COMPANY ET AL.: CHICAGO SAVINGS BANK & TRUST COMPANY ET AL., APPELLANTS
• Court: Nebraska Supreme Court

183 N.W. 546

106 Neb. 255

JOHN A. ROEBLING'S SONS COMPANY, APPELLEE, v. NEBRASKA ELECTRIC COMPANY ET AL.: CHICAGO SAVINGS BANK & TRUST COMPANY ET AL., APPELLANTS

No. 21362

Supreme Court of Nebraska

June 6, 1921

APPEAL from the district court for Knox county: ANSON A. WELCH JUDGE. Reversed.

REVERSED.

Fisher Boyden, Kales & Bell, Albert M. Kales, W. D. Funk and William K. Otis, for appellants.

Newman Poppenhusen, Stern & Johnston, Montgomcry, Hall & Young, Charles T. Farson and Raymond G. Young, contra.

OPINION

FLANSBURG, J.

Action by plaintiff Roebling's Sons Company to foreclose a mechanic's lien upon an electric transmission line, the property of the Nebraska Electric Company, and for the construction of which plaintiff had furnished copper wire. The Chicago Savings Bank & Trust Company, hereinafter called defendant, claim a prior lien by virtue of a trust deed. The sole controversy presented is between these two lien claimants. The trial court found that the mechanic's lien was the superior one, and from that decision and the decree in accordance therewith the trustees for the defendant and for others holding bonds secured by the trust deed bring this appeal.

In March, 1917, the Nebraska Electric Company purchased the electric light and power plants situated, respectively, in the towns of Creighton, Wausa, Bloomfield, Hartington, Wakefield, and Emerson, all in Nebraska. During that month, and, in fact, to procure funds to apply upon the purchase price, the Nebraska Electric Company executed and delivered to the defendant Chicago Savings Bank & Trust Company the trust deed in question. This trust deed, or mortgage, as we shall call it, was, during April, 1917, filed of record in the several counties where the properties were situated. The mortgage by its terms covered, by specific description, the real estate of each one of the electric lighting plants and, by general terms, all buildings and improvements, the distribution systems in and about said towns, together with all the appurtenances of said plants and systems. There was superadded to these several descriptions the following general description of property intended to be covered by the mortgage:

"All engines, boilers, stacks, tanks, condensers, heaters, pumps, switchboards, dynamos, batteries, generators, pipes, connections, transformers, boilers, wires, meters, machinery, fixtures, tools, appliances and equipment of every kind and nature constituting the electric light and power plants in each of the above-named cities and villages and the distribution systems connected therewith or appertaining thereto, with all the appurtenances and property of every kind relating to or used or intended for use in connection with said plants and systems, and all contracts, accounts, and other things of value pertaining to the business heretofore conducted through or in connection with any of said plants, and the good will of such business.

"All ordinances, contracts, franchises, instruments, licenses, privileges, revenues, income, profits and rights of every kind now or hereafter in any manner held, owned or enjoyed by said Nebraska Electric Company; and all property, real, personal and mixed, of every kind and description, not hereinabove specifically described, now owned or hereafter acquired by said Nebraska Electric Company."

The mortgage provided for the immediate issuance of $ 100,000 in bonds, which bonds were issued and sold and the net proceeds delivered to the Nebraska Electric Company. The mortgage further provided for the immediate issuance of another $ 25,000 in bonds. The proceeds from the sale of these bonds, it was provided, should be paid to the Nebraska Electric Company from time to time, and only in payment or to reimburse the company "for expenditures for, not more than four-fifths of the actual cost, and in no event for an amount exceeding the reasonable value, of property constructed or acquired as and for permanent additions to and extensions of the property of the company."

In September, 1917, the Nebraska Electric Company began the construction of the high tension electric transmission line in question. This line was to extend from Creighton for a distance of 3 1/2 miles to Bazile Mills, thence 17 1/2 miles to the town of Wausa, and thence several miles to the town of Bloomfield, with the object of connecting the several electric lighting plants of the company for the purposes of economy and efficiency in operation, and for the purpose of allowing the steam generating plant at Creighton to furnish power to the other plants connected by this line.

During the time that this work of construction progressed, the expenditures upon this and other improvements of the several plants were certified to the trustee under the mortgage. The $ 25,000 in bonds was issued and sold on the receipt of these certificates, and from time to time the net proceeds of these sales were remitted to the Nebraska Electric Company until, on November 14, 1917, the company had received the remainder of the proceeds of these bonds owing to it under its agreement.

The certificates upon which the proceeds of this $ 25,000 in bonds were issued did not cover expenditures made upon the transmission line alone. There are items, some in the certificate of August 28, 1917, amounting to a total of $ 149.80, which are attributable to the expense of construction of this transmission line, and, in the certificate of November 14, it appears that $ 21,380.71 had been expended upon the transmission system "connecting Creighton, Bazile Mills, Wausa, and Bloomfield." In that certificate, it may be further said, expenditures on improvements, other than on the transmission line in question, were also shown, making the total of the expenditures certified for improvements and extensions $ 30,909.38. On receiving this certificate the trustee remitted a balance of $ 20,407.48 as proceeds from the sale of bonds.

It was upon these certificates of August 28 and November 14, and thus in part upon the faith of these expenditures in the construction of the transmission line in question, that the trustee remitted the proceeds of the sale of the $ 25,000 in bonds.

The Nebraska Electric Company continued with the construction of the transmission line, and on January 8, 1918, poles had been set the entire distance, except for 1 1/2 miles between Wausa and Bloomfield, and wire had been strung for some 2 miles distant beyond Bazile Mills toward Wausa.

It was at that time and at that stage of the construction of this transmission line that the plaintiff, under contract of December 8, 1917, delivered its copper wire. The wire so delivered was used on that part of the line from a point 1 1/2 miles east of Bazile Mills to Wausa Junction, a point just outside of the town of Wausa. On March 1, 1918, plaintiff filed a claim for a mechanic's lien.

The trial court held a mechanic's lien attached to that portion of the transmission line extending from Bazile Mills to Wausa Junction, but that such lien attached to no other part of the Nebraska Electric Company's property, and that such lien was superior to defendant's mortgage.

Plaintiff contends that the transmission line across the country and along the highways, not constructed upon real estate belonging to the Nebraska Electric Company, but upon property in which the said company had only a license and no title interest, was personal property, and that defendant's mortgage would not attach to such personal property acquired by the Nebraska Electric Company after the mortgage had been given.

This court has held that a mortgage, which is given to cover personal property to be afterwards acquired, or which is not in existence, as on crops yet to be planted, or on the future increase of live stock, will not attach to such properties which are afterwards acquired or afterwards come into existence, unless there is some new and intervening act on the part of the mortgagor, after he has become possessed of the property, sufficient to subject the property to the lien of the mortgage. Cole v. Kerr, 19 Neb. 553, 26 N.W. 598; Battle Creek Valley Bank v. First Nat. Bank, 62 Neb. 825, 88 N.W. 145.

In these cases the court pointed out that, to allow a person to mortgage properties which were to be acquired through his labor, would virtually be allowing him to mortgage his labor in advance of its performance, and it seems such was the primary reason given in this state for refusing to give such mortgages any validity. The principle has been extended, however, to the mortgaging of personal chattels generally, such as furniture to be afterwards acquired and placed in a hotel (New Lincoln Hotel Co. v. Shears, 57 Neb. 478, 78 N.W. 25), and to building materials which were to be afterwards purchased for the construction of extensions to a street railway system, but which materials were, in fact, never so used. Steele v. Ashenfelter, 40 Neb. 770, 59 N.W. 361.

In these cases the court has taken the position that it is against public policy to permit a person to mortgage what he does not have. A mortgage of future acquisitions might deter one from the effort of making acquisitions or of producing such property.

In each of these cases the after-acquired property, sought to be subjected to the lien, had no potential existence at the time the mortgage was given, and the property sought to be covered was in no sense an after-acquired accessory or appurtenance to property already in existence and covered by the mortgage.

We think the above-mentioned cases are quite different from the case of a...