Otis Elevator Co. v. Palmetto Const. Co.

• Decision Date: 05 October 1916
• Docket Number: 1428.
• Parties: OTIS ELEVATOR CO. v. PALMETTO CONST. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

237 F. 769

OTIS ELEVATOR CO. v. PALMETTO CONST. CO.

No. 1428.

United States Court of Appeals, Fourth Circuit.

October 5, 1916

J. B S. Lyles, of Columbia, S.C. (Lyles & Lyles, of Columbia S.C., on the brief), for plaintiff in error.

W. T Aycock, of Columbia, S.C. (Weston & Aycock, of Columbia S.C., on the brief), for defendant in error.

Before KNAPP and WOODS, Circuit Judges, and JOHNSON, District Judge.

WOODS Circuit Judge.

The defendant, Palmetto Construction Company, made an agreement with John Cain, a contractor, for the erection of an office building on its lot in the city of Columbia, S.C. Afterward on July 1, 1912, the plaintiff, Otis Elevator Company, contracted in writing with Cain to sell and install the elevators in the building for $30,822.50. By this contract the Elevator Company stipulated that it should 'retain title to and possession of all machinery, implements, and apparatus furnished by us under terms of this proposal until final payment shall have been made. ' Cain made payments as the work progressed, but at its completion he turned out to be insolvent, owing the Elevator Company a large balance, of which $5,171.46 is still unpaid. In this action the Elevator Company asserts the liability of the Palmetto Construction Company for this unpaid balance, notwithstanding full payment by it to Cain of the contract price of the building and its subsequent sale of the property, including the elevators. The basis of this claim is the averment that the Construction Company's sale to an innocent third party was a conversion. The verdict of the jury was in favor of the defendant, and the case comes up on exceptions to the charge of the presiding judge.

Attention was paid in the argument to some nice distinctions as to the nature and form of the action. These are of no consequence, since it was in effect conceded in the trial court and here that, if the Elevator Company would have had a right to subject the elevators to the payment of the balance of $5,171.46 before the Construction Company sold the property, then that company is liable in this action. Therefore only the merits of the controversy are involved.

The first position taken by the Elevator Company on the merits is that by the undisputed evidence the Construction Company was chargeable with notice of the reservation of title, and that, therefore, the District Court erred in refusing to direct a verdict for the plaintiff. The material evidence in short is this:

On February 12, 1912, Seibels and Matthews, together with Harter, the architect of the Construction Company, in behalf of that company, entered into negotiations in New York with the Elevator Company, which resulted in an agreement for the sale and installment of the elevators at the price of $30,500. This agreement was in the form of a written proposal by the Elevator Company, to be accepted in writing by the Construction Company, setting out the specifications and the price and stipulating for the reservation of the title to the elevators until payment of the price in full. The paper was before all the representatives of the Construction Company, but no feature of it was under discussion, except the price. The reduction of price from that first asked was noted on the margin by Matthews, initialed by Harter, the architect, and dated by Cartwright, the representative of the Elevator Company. Instead of signing the contract, however, the representatives of the Construction Company made known their desire that the contract should be signed by John J. Cain, the contractor for the entire office building, including the elevators. After delay, due to misunderstanding as to the price of the elevators and the height of the building, and to some dissatisfaction on the part of Cain, the contract was at last executed by Cain alone on July 1, 1912. This contract, except as to the price of the elevators and the height of the building, was the same that had been agreed on, but not signed, in February before by the representatives of the Construction Company and the Elevator Company, and contained the same reservation of title until payment of the contract price. The correspondence shows that the Construction Company interested itself in having Cain execute the contract. There was also evidence to the effect that Cain consulted Seibels, who represented the Construction Company, as to the propriety of signing; that Seibels looked over the contract just before it was executed, and that he advised Cain to sign; but, since this was denied by Seibels, it cannot be considered on a motion to direct the verdict. All the representatives of the Construction Company denied having any knowledge of the clause in the contract reserving the title to the elevators, and there is no evidence that it was called to the attention of any of them.

The Construction Company not having become a party to the contract, the knowledge of its representatives that the Elevator Company had agreed with Cain to furnish and install the elevators did not charge them with notice, nor put them on inquiry as to reservation of title, just as knowledge by a purchaser of a previous conveyance of land does not put him on inquiry for a purchase-money mortgage. Whether the discussion of the contract and such examination of it as the representatives of the Construction Company made gave them actual knowledge of the reservation, or such opportunity to know of it as would have put a reasonably discreet man on notice, was a question of fact for the jury, and not for the court. Up to the moment of execution there is no legal presumption that the parties thereto have examined and know the stipulations of a written instrument. And the court could not say in this case that there was conclusive proof of such knowledge by the negotiators for the Construction Company as a matter of fact. Discussion and consideration of the price did not prove conclusively that the stipulation for reservation of title was read by the representatives of the Construction Company; nor were they ever under any legal duty to read it. There was no ground, therefore, for a direction of a verdict, and the instruction was properly given that the plaintiff could not recover, unless the jury should conclude from the circumstances that the representatives of the Construction Company actually knew, or that any average reasonable man must have known, that the contract provided for a reservation of title.

The District Judge further charged the jury that for the plaintiff to recover it was necessary to show, not only notice to the Construction Company of the reservation of title until full payment by Cain, but assent of the Construction Company to the reservation. The decisions and reasonings of the courts of this country and of England on some phases of the law of fixtures are irreconcilable. But the authorities seem to agree on this rule, that when personal property is so affixed to the soil, or the building...