Knickerbocker Trust Co. v. Penn Cordage Co.

• Decision Date: 20 June 1904
• Citation: 66 N.J.E. 305,58 A. 409
• Parties: KNICKERBOCKER TRUST CO. v. PENN CORDAGE CO. et al.
• Court: New Jersey Supreme Court

58 A. 409

66 N.J.E. 305

KNICKERBOCKER TRUST CO.

v. PENN CORDAGE CO. et al.

Court of Errors and Appeals of New Jersey.

June 20, 1904.

Appeal from Court of Chancery.

Suit by the Knickerbocker Trust Company against the Penn Cordage Company and others. From a decree of the Vice Chancellor (55 Atl. 231) in favor of defendants, complainant appeals. Reversed in part, and affirmed in part.

See 50 Atl. 459.

John B. Humphreys and Davies, Stone & Auerbach, for appellant.

James E. Howell, J. H. Gaskill, and C. V. D. Joline, for respondents.

GUMMERE, C. J. The bill in this case was filed to foreclose a mortgage executed by the Penn Cordage Company to the appellant, the Knickerbocker Trust Company, on the 1st day of February, 1896, to secure the payment of an issue of bonds aggregating 5100,000. This mortgage covered certain lands and premises belonging to the cordage company, situate in Burlington county, with the improvements thereon, the franchises of the company, and all the goods and chattels belonging to it, and being in use about the said lands and premises. At the time of its execution a prior mortgage, covering the same property, held by one Adolph Segal, and which had been recorded in the clerk's office of Burlington county, both as a real estate mortgage and as a chattel mortgage, was paid off. On the 20th of February, 1896, the appellant mailed to the clerk of Burlington county both its own mortgage and also a discharge of the Segal mortgage, with a letter of instructions directing him to satisfy the latter mortgage of record, and to "simultaneously record in your office the inclosed mortgage covering the same property." Upon the receipt of this letter, with its inclosures, the clerk canceled the Segal mortgage in both the real estate mortgage book and the chattel mortgage book. At the same time he recorded the appellant's mortgage in the book kept for the recording of real estate mortgages, but not in that kept for recording chattel mortgages; and, after so recording it, he returned it to the appellant. The Penn Cordage Company became involved in 1897, and a receiver was appointed on December 6th of that year. The bill of complaint was filed in February, 1900. The property embraced in the appellant's mortgage is the cordage works of the Penn Cordage Company, comprising numerous buildings, including a rope walk, together with the machinery, tools, and appliances used therein. The contest is between the appellant, as mortgagee, and the receiver of the cordage company, representing judgment and other creditors.

Two questions are presented: First, whether certain of the machinery and appliances contained in the company's buildings, and used in the manufacture of its product, are fixtures, and consequently a part of the realty; and, if they are not fixtures, then, second, whether the appellant's mortgage became recorded as a chattel mortgage, within the meaning of the chattel mortgage act, by being lodged with the county clerk for that purpose, although it was subsequently returned to the mortgagee without being in fact so recorded. The learned Vice Chancellor before whom the case was tried held that the machinery and appliances which are the subject-matter of this controversy were not fixtures. He further held that the mortgage had not been recorded as a chattel mortgage, and was, therefore, void as against creditors, so far as the chattels covered by it were concerned. The soundness of each of these conclusions is challenged by the appellant. As has already been stated, the machinery and appliances which are the subject of this litigation were contained in the buildings of the Penn Cordage Company, and were used in the manufacture of its product. They consisted of a scutcher, a lapper, two breakers, three coarse spreaders, four fine spreaders, two drawing frames, eight finishers, a large number of double jennys, nine single and double twisters, two marline machines, three house-line machines, ten double bailers, a number of strapping reel bars, several rope machines, one double and one single Boone layer, one cone former, two latches, two drills, one shaper, one oil pump, one grindstone, one emery grinder, one picker, one porgy spinner, eight forming and laying jacks, four reeling machines, one strapping reel stand, one yarn testing reel, one belt driver, one reverse reel, one porgy jenny, one bobbin reel, one platform scale on wheels, a number of windlasses, several reel flyers, and all the belting used in the various buildings which was less than six inches in width. All of these machines, with the exception of the porgy jenny, the platform scale, the windlasses, and the reel flyers, were a necessary part of the company's plant. Most of them were fastened to the floors of the various buildings in which they were located by lag screws. Those which were not so fastened were attached to the buildings by some other method. The belting ran from the various machines to the shafting, supplying them with power. Two of the requisites necessary to constitute these machines and appliances fixtures, therefore, existed, viz., their actual annexation to the freehold, and their application to the use or purpose to which that part of the realty with which they were connected was appropriated. The question remains whether they were annexed with the intention of making a permanent accession to the freehold.

In the earlier cases, decided not only in the Supreme Court and the Court of Chancery, but also in this court, in determining whether such intention existed with respect to a given machine, the conclusion seems to have been rested very largely upon the method adopted in making the annexation, and but little consideration given to the relation which the machine bore to the building in which it was located,...