Padgett v. Cleveland

• Decision Date: 01 October 1890
• Citation: 11 S.E. 1069,33 S.C. 339
• Parties: Padgett . v. Cleveland et al.
• Court: South Carolina Supreme Court

11 S.E. 1069

33 S.C. 339

Padgett .

v.Cleveland et al.

Supreme Court of South Carolina.

Oct. 1, 1890.

Fixtures—Rights of Mortgagees.

A member of a firm operating a door, sash, and blind factory borrowed money of plaintiff for the purposes of the business, and gave him a mortgage on land owned by such member, and on which the factory stood, "together with all the machinery and buildings on said lot, consisting of one engine, " etc. Subsequently the engine was sold, and another purchased under a contract that title thereto was to remain in the vendor until it was paid for. The factory was burned, and all the machinery removed and set up on other premises. After such removal, the firm gave mortgages on the machinery to different persons. The machinery, when first put in position, was not intended as a permanent improvement, but only to remain so long as the business was profitable. Held, that neither the engine nor the machinery could be followed by plaintiffs as part of the real estate covered by their mortgage.

Appeal from common pleas circuit court of Spartanburg county; Eraser, Judge.

Carlisle & Hydrick, for plaintiffs.

Bo-mar & Simpson for defendants.

McGowan, J. It will be useful to make a short consecutive statement of the factsof this case. In 1885, Alonzo Tanner was the owner of three lots of land at Cow-pens, in Spartanburg county. In December of that year, he and one Lemaster formed a partnership under the firm name of "Tanner & Lemaster, " by which they agreed to go into the business of manufacturing "doors, sash, and blinds." Between that time and February, 1886, they bought in the firm name the necessary machinery, and by February they were ready for business. The machinery was put in position in a house on one of the lots of Tanner. How it was attached, if attached to the freehold, was one of the questions in the case. On February 18, 1886, Tanner gave his note to the plaintiff for $2,000, and secured it by a mortgage of the lot on which the machinery was situated, "together with all the machinery and buildings on said lot, consisting of one engine, one planer, one moulder, one tenanter, morticer, turning-lathe, etc. This mortgage was recorded in the real-estate book, but not in the chattel-mortgage book, of the R. M. C. office of the county. A short time after the plaintiff's mortgage was executed, the engine then in the factory was sold, and a larger one purchased from the Mecklenburg Iron-Works, (Wilkes,) the title to remain in the vendor until paid for. In April, 1886, the factory at Cowpens was consumed by fire, and afterwards, (August,) the engine and the machinery which had escaped the fire were removed to the town of Spartanburg, and there placed in position, as it had been at the Cowpens, in a house rented for three years from one Mills for that purpose, and the business was continued as before. After this removal and location at Spartanburg, Tanner & Lemaster executed the chattel mortgages of the machinery in the shop at Spartanburg to the defendants Cleveland and others, which were regularly recorded, and on March 9, 1887, they gave to Wilkes another mortgage on this same machinery. In September, 1887, a day or two, as stated, before the assignment, at the instance of one of the partners, and with the knowledge and consent of the other, Cleveland for himself and others sold at private sale the property embraced in their mortgage to one Converse, as claimed and found, for full value. And on Septembers, 1887, Tanner & Lemaster made an assignment for the benefit of their creditors to the defendant C. P. Sanders, Esq. This action was commenced on February 29, 1888, to foreclose the plaintiff's mortgage, and asking relief against Cleveland and others for the machinery and engine sold by them, which, as he alleged, was attached to the said soil of the Cowpens lot, and thereby became real estate, " fixtures, " and as such passed under his mortgage, prior to the alleged chattel mortgage. The issues were referred to the master, who found that Lemaster had no interest in the property covered by the plaintiff's mortgage at the time it was given; that the money borrowed from plaintiff went into the business of the factory: that Lemaster knew of and consented to the mortgage to the plaintiff; that the machinery which was in the factory when plaintiff's mortgage was taken was intended to become a permanent improvement to the real property, and was embraced in the mortgage to plaintiff as part of the buildings thereon. These findings were concurred in by the circuit judge, who held (1) that the machinery on Tanner's lot at the execution of Padgett's mortgage was real estate, and could be followed wherever identified, and gave plaintiff judgment against Cleveland and others for its value; (2) that they were not responsible for the machinery afterwards put on the lot, and removed to Spartanburg; (3) that Wilkes was not en titled to any relief against her co-defendants Cleveland and others. From this decree Cleveland and other defendants appealed, on the following grounds: "(1) Because the circuit judge erred in holding that the machinery for the value of which judgment was rendered was attached to the freehold because real estate, and a mortgage thereof on the real-estate mortgage book was constructive notice of such mortgage to all subsequent mortgagees. (2) Because the circuit judge erred in holding that said machinery was intended to become real estate, and in not holding that it was never the intention of either of the partners that any of the machinery owned by them both should ever become a part of and go with the lot on which it was situated. (3) Because the circuit judge erred in holding, even if said machinery had been a part of the real estate after it became detached, that it could be allowed (followed) with the real-estate mortgage, as long as it could be identified. (4) Because the circuit judge erred in making, by his decree, the property for the sale of which he gave judgment liable for Tanner's individual debt to plaintiff, before it could be applied to defendant's partnership debt, when the property was partnership property. (5) Because the circuit judge erred in not ruling that certain testimony (admitted by the master) was improperly admitted. (6) Because the circuit judge erred in not at least ruling one way or the other upon the question of the admissibility of the testimony referred to in the last preceding exception. (7) Because the circuit judge erred in not finding that, if plaintiff was entitled to any relief, it should have been only to have the machinery covered by his mortgage sold for the collection of his debt, and in holding that plaintiff was entitled to judgment absolutely against defendant for illegal sale of same." The plaintiff appeals, charging that the judge committed error: "(1) in not holding that, at least against the defendants [appellants.] the engine and boiler bought by Tanner & Lemaster from Wilke3, and placed on the premises covered by plaintiff's mortgage, became a fixture, and subject to the lien thereof, and that the record thereof was sufficient notice to the defendants of said lien; (2) in holding that, as to all articles of machinery put on the real estate after the execution of plaintiff's mortgage, the mortgagors had a right to sever and recover them, and that they had been so removed, that they at once lost their character as real estate, and became again personalty which could not be followed by the mortgagee of realty." He also gave notice that if the decree could not be sustained in other respects complained of by the defendants, on the grounds stated by the circuit judge, he would ask it be sustained on the grounds "(1) that the defendants [appellants] had actual notice of the plaintiff's mortgage; (2) that the defendants [appellants] did not have valid and legal mortgages of the...