People's Sav. & Trust Co. v. Munsert

• Decision Date: 29 June 1933
• Court: Wisconsin Supreme Court
• Parties: PEOPLE'S SAVINGS & TRUST CO. ET AL. v. MUNSERT ET AL.

212 Wis. 449

249 N.W. 527

PEOPLE'S SAVINGS & TRUST CO. ET AL.

v.MUNSERT ET AL.^a1

Supreme Court of Wisconsin.

June 29, 1933.

Appeal from a judgment of the Circuit Court for Oconto County; Arold F. Murphy, Circuit Judge.

Action by the People's Savings & Trust Company, as trustee, against W. J. Munsert, receiver of the Northern Manufacturing Company, and others, wherein defendant the Sheboygan Machine Company and certain other defendants filed cross-complaints against the receiver of the Northern Manufacturing Company. From so much of a judgment as authorized defendants who were cross-complainants to remove certain properties sold under conditional sales contracts and dismissal receiver's answer to such complaints, plaintiff, defendant receiver, and certain other defendants appeal.--[By Editorial Staff.]

Affirmed.

This action was commenced on August 4, 1930, to foreclose a trust deed executed by the Great Northern Pail Company, a corporation. The trust deed, dated June 1, 1927, was recorded June 8, 1927. Numerous persons, copartnerships, and corporations were joined as party defendants. The defendants, other than Northern Manufacturing Company, successor to the pail company, were lien claimants, judgment creditors, and sellers of goods under conditional sales contracts. The defendants Sheboygan Machine Company, J. J. Nartzik, Inc., and Globe Automatic Sprinkler Company, sellers of goods (machinery and equipment) under conditional sales contracts, were permitted by the court to file cross-complaints against the receiver of Northern Manufacturing Company in which they asserted title to various properties under their contracts and also the right to recover them. Several pending actions brought to foreclose claims for mechanic's liens were consolidated with this action for purposes of trial. From so much of the judgment entered November 2, 1931, as authorized defendants Sheboygan Machine Company, J. J. Nartzik, Inc., and Globe Automatic Sprinkler Company to remove from the plant of the Northern Manufacturing Company all of the properties sold by them under conditional sales contracts, and dismissed the answer of the receiver and the complaints (treated as answers) of the lien claimants, the trustee, the receiver, and certain other defendants appealed. The facts appear in the opinion.Otto P. Lehner, of Green Bay, Bagley, Spohn, Ross & Stevens, of Madison, and Victor J. O'Kelliher, of Oconto, for appellants.

Allan V. Classon, of Oconto (Werner & Clemens, of Sheboygan, White & Hawxhurst, of Chicago, Ill., Frederic W. Crosby, of La Crosse, of counsel), for respondents.

NELSON, Justice.

The principal facts are not in dispute. On June 1, 1927, Great Northern Pail Company executed a deed of trust or mortgage, on its real estate, buildings, machinery, and equipment comprising an industrial plant located in the village of Gillett, to Seymour State Bank, as trustee, to secure a bond issue of $95,000. The mortgage covered the buildings, machinery, equipment, fixtures, “and other tangible property now or hereafter located upon said real estate.” The bonds secured by the trust deed were issued and sold. On October 15, 1928, Seymour State Bank resigned as trustee, and People's Savings & Trust Company was appointed as trustee in its stead. The pail company, mortgagor, was succeeded by Northern Manufacturing Company. On November 1, 1928, the pail company entered into a conditional sales contract with J. J. Nartzik, Inc., for the purchase of certain machinery and equipment described as one Coe veneer dryer, one capital veneer hog, and one Smalley bolting saw. The contract was filed with the village clerk on December 5, 1928, but no description of the real estate was appended thereto. On November 27, 1928, the pail company entered into a conditional sales contract with Sheboygan Machine Company for the purchase of one Sheboygan Veneer jointer and one Cutter grinder. The contract was filed with the village clerk December 28, 1928, but no description of the real estate was appended thereto. On December 28, 1928, the mortgagor purchased of Globe Automatic Sprinkler Company under a conditional sales contract a wet and dry fire extinguishing system. This contract was filed with the village clerk on June 2, 1929. It had a description of the real estate appended thereto. All of the machines and equipment were installed in the plant and affixed to the realty. Several lien claimants who, as principal contractors, had furnished materials and supplies to the mortgagor, subsequent to the date of the recording of the trust deed, filed claims for liens, and in actions brought to foreclose them sought to obtain priority to the trust deed. Some of the claims for liens were for materials and supplies furnished prior to the dates of the conditional sales contracts, and some of them were for materials furnished subsequent to the dates of said contracts. The trial court held that the plaintiff was entitled to a judgment of foreclosure and sale, that the claims for mechanic's liens were subordinate to the trust deed, and that both the trust deed and the claims for liens were subordinate to the rights of the conditional sales sellers to remove their several properties from the plant. The trustee, under the trust deed, the receiver of Northern Manufacturing Company, successor to the mortgagor and certain holders of bonds appealed from so much of the judgment as authorized the conditional sales sellers to remove their properties.

The sole question for determination is whether the defendants, J. J. Nartzik, Inc., Sheboygan Machine Company and Globe Automatic Sprinkler Company, sellers of the machinery, etc., hereinbefore described, may retake their properties which were sold, delivered, and installed pursuant to conditional sales contracts as against the trustee under a prior deed of trust, the trustee, as assignee of the claims for mechanics' liens, certain holders of the bonds secured by the trust deed, and the receiver.

It is contended by appellants that under the well-established law of this state the several machines, by virtue of their actual physical annexation to the realty, their adaptability to the use and purposes to which the realty is devoted, and the intention of the parties to make a permanent accession to the freehold, were fixtures, and as such were subject to the mortgage--citing Taylor v. Collins, 51 Wis. 123, 8 N. W. 22;Gunderson v. Swarthout, 104 Wis. 186, 80 N. W. 465, 76 Am. St. Rep. 860;State ex rel. Gisholt Machine Co. v. Norsman, 168 Wis. 442, 169 N. W. 429;Anglo American Mill Co. v. Wisconsin Hydro-Electric Co., 189 Wis. 120, 207 N. W. 276;Thomsen v. Cullen, 196 Wis. 581, 219 N. W. 439, and numerous other decisions found in our reports.

[1] That the machines and equipment were fixtures which would pass to a purchaser of the real estate without notice, or which would be subject to the lien of a subsequent mortgage without notice is, under our decisions, entirely free from doubt; but we are not here dealing with the right of a subsequent purchaser or mortgagee without notice to claim the machines in question. Moreover, in the view we take of this controversy, it is not ruled by the law of fixtures but by the law of conditional sales contracts; and consequently the well-established common law applicable to fixtures has, in our opinion, little to do with this controversy.

By chapter 672, Laws of 1919 (sections 122.01 to 122.31, St. 1929), the Legislature adopted the Uniform Conditional Sales Act. Section 7 of the Uniform Conditional Sales Act is as follows: “If the goods are so affixed to realty, at the time of a conditional sale or subsequently as to become a part thereof and not to be severable wholly or in any portion without material injury to the freehold, the reservation of property as to any portion not so severable shall be void after the goods are so affixed, as against any person who has not expressly assented to the reservation. If the goods are so affixed to realty at the time of a conditional sale or subsequently as to become part thereof but to be severable without material injury to the freehold, the reservation of property shall be void after the goods are so affixed as against subsequent purchasers of the realty for value and without notice of the conditional seller's title, unless the conditional sale contract, or a copy thereof, together with a statement signed by the seller briefly describing the realty and stating that the goods are or are to be affixed thereto, shall be filed before such purchase in the office where a deed of the realty would be recorded or registered to affect such realty. As against the owner of realty the reservation of the property in goods by a conditional seller shall be void when such goods are to be so affixed to the realty as to become a part thereof but to be severable without material injury to the freehold, unless the conditional sale contract, or a copy thereof, together with a statement signed by the seller briefly describing the realty and stating that the goods are to be affixed thereto, shall be filed before they are affixed, in the office where a deed would be recorded or registered to affect such realty.”

Section 122.07, Stats., is identical with section 7, above quoted, except as to the provision in the third sentence relating to the place of filing. Section 7 of the Uniform Conditional Sales Act, hereafter simply called section 7, contains three sentences, each of which obviously applies to a different situation. The first sentence relates to conditional sales of goods which are affixed to realty so “as to become a part thereof and not to be severable wholly or in any portion without material injury to the freehold,” and provides that as to such goods, after they are so affixed, the reservation of property as to any portion not so severable shall be void as against any person who has not expressly assented to the reservation. The second sentence relates...