Pepin v. City of North Bend

• Decision Date: 18 August 1961
• Docket Number: Civ. No. 9593.
• Citation: 198 F. Supp. 644
• Parties: R. C. PEPIN, individually, and R. C. Pepin, a general partner in the partnership consisting of R. C. Pepin, Guy N. McCauley and Velma V. McCauley, Plaintiffs, v. CITY OF NORTH BEND, a municipal corporation, I. N. Hartley, Frank Leonard Sandine, E. Kenton Thompson, C. Philip Sundbaum, E. J. Costley, Roger T. Duncan, Charles Bentley, Robert L. Thomas, and Robert F. Herrington, Defendants.
• Court: U.S. District Court — District of Oregon

198 F. Supp. 644

R. C. PEPIN, individually, and R. C. Pepin, a general partner in the partnership consisting of R. C. Pepin, Guy N. McCauley and Velma V. McCauley, Plaintiffs, v. CITY OF NORTH BEND, a municipal corporation, I. N. Hartley, Frank Leonard Sandine, E. Kenton Thompson, C. Philip Sundbaum, E. J. Costley, Roger T. Duncan, Charles Bentley, Robert L. Thomas, and Robert F. Herrington, Defendants.

Civ. No. 9593.

United States District Court D. Oregon.

August 18, 1961.

William H. Morrison and Jack H. Dunn, Maguire, Shields, Morrison, Bailey & Kester, Portland, Or., for plaintiffs.

William E. Walsh, Coos Bay, Or., for defendant Hartley.

Manley Strayer, Hart, Rockwood, Davies, Biggs & Strayer, Portland, Or., and Robert L. Thomas, North Bend, Or., for defendant City of North Bend.

EAST, District Judge.

Parties

The plaintiff R. C. Pepin proceeds herein individually and as the succeeding partner of the copartnership lately consisting of R. C. Pepin, Guy N. McCauley and Velma V. McCauley (Pepin), and is a resident and citizen of the province of British Columbia, Canada. On May 20, 1957, said Guy N. McCauley and Velma V. McCauley were each adjudged to be bankrupts, thereby said copartnership was dissolved, and Pepin succeeded to its assets.

At all pertinent times the defendant City of North Bend (City) was a municipal corporation and body politic of the State of Oregon, and defendant I. N. Hartley, and defendants Frank Leonard Sandine, E. Kenton Thompson, C. Philip Sundbaum, E. J. Costley, Robert T. Duncan and Charles Bentley were the duly elected and acting Mayor and members of the City Council of the City, respectively (Officials).

Jurisdiction

This Court has jurisdiction of the cause by reason of diversity of citizenship of the parties and the fact that the amount in controversy exceeds the amount of $10,000. Title 28 U.S.C.A. § 1332.

Statement of the Case

On February 22, 1947, the United States of America (Government) was the owner of the North Bend Naval Auxiliary Air Station (Station), situated northwesterly of the City, and the buildings located thereon. On or about that date, City made application to Government to acquire the Station, with certain structures and facilities located thereon, which had previously been classified as available for disposal under the Surplus Property Act of 1944, 50 U.S. C.A. Appendix, § 1611 et seq. At the conclusion of the negotiations between City and Government, acting through the War Assets Administration, an executed agreement of sale, dated September 15, 1947, was delivered to City, covering land of the Station and certain equipment and structures located thereon. Among the structures included in the sale were buildings designated as numbers 46, 47, 48 and 49.

On November 1, 1947, Ernest L. Frye and Edward Sandine, Mayor and Recorder, respectively, of City, executed in the name of City an executory contract for the sale and purchase of buildings Nos. 46, 47 and 48 to R. C. Pepin, A. R. Pepin and Lillie Pepin, copartners aforesaid, doing business as "New Hotel North Bend." On November 12, 1947, the same persons executed in the name of City a like executory contract for the sale and purchase of building No. 49 to the same purchasers. As part of the same transaction, separate instruments were executed under which City leased to the copartnership the land on which the mentioned buildings were situated. The buildings were originally constructed for use as bachelors officers' quarters on the Station. When the executory agreements for the sale and purchase of the mentioned buildings were entered into it was the contemplation and intention of all parties that the purchasing copartnership would remodel, convert and operate the mentioned buildings in conjunction with the underlying land as hotel and apartment-house premises. Pepin and City, through its Officials, are agreed that immediately prior to the execution of the mentioned executory contract of sale and leases to the copartnership in November, 1947, the mentioned buildings were permanent fixtures upon the land and as such were real property. Pepin contends: "That the buildings became personal property upon and by virtue of the sales contract and ground leases to the copartnership and the attending circumstances." And that on or about May 18, 1957, City, acting through its Officials, without the consent of Pepin, wrongfully took possession of the personal property and converted the same to their use and possession, to Pepin's damage. City, through its Officials, contends that the buildings referred to in the executory contract of sale, remained and continued to be real property, and denies any conversion upon its and their part and any resulting damage to Pepin.

Segregated Issues

The parties to the cause, through a supplemental pretrial order herein, have agreed that the following issues should be segregated and a separate trial thereon shall be had in advance of trial of any remaining issues, viz.:

1) Whether the buildings alleged to have been converted by defendants were real property or personal property.

2) Whether the contracts under which plaintiffs claim title to and right to possession of said buildings were void.

The parties have entered into extensive agreed facts and have offered into evidence upon these segregated issues various documentary evidences.

Discussion

There is a presumption that a building or similar structure is technically a fixture and, therefore, real property. In Waldorf v. Elliott, 1958, 214 Or. 437, 330 P.2d 355, 357, the plaintiff brought an action for conversion of metal grain tanks. Plaintiff and defendant had contracted for the exchange of certain real properties, making no mention of the tanks located on defendant's land. After the making of the contract, defendant sold the tanks and the purchaser removed them from the land. Judgment for the plaintiff was affirmed; the grain tanks were held to be fixtures and a part of the real property passing to plaintiff under the contract. The Oregon Supreme Court quoted with approval the following statement from 22 Am.Jur. 778, Fixtures § 63:

"As a general rule, a building on land is considered as part of the realty, or at least, it is so presumed; and the burden of proof is upon the party who claims that it is personal property to show that it retains that character."

It follows that, where buildings are admitted to have become part of the realty, the burden of overcoming the presumption and proving that there subsequently has been a constructive severance so as to change their status to personalty is upon the party making such contention. Therefore, Pepin carries the burden in this respect.

A search of the Oregon law reveals no case precisely in point with the one at bar. However, I shall review, in chronological order, some of the leading Oregon cases dealing with this general subject. In Van Orsdol v. Hutchcroft, 1917, 83 Or. 567, 163 P. 978, 979, the court stated that "in order to overcome the presumption that a building is real property, a pleading must allege facts showing the structure was placed on a temporary foundation and erected with the intention that it should be removed, or that it had been taken from its original support so as to be moved away." However, this can no longer be regarded as the exclusive test, as will appear from the discussion of more recent cases.

In Enterprise Mercantile & Milling Co. v. Cunningham, 1917, 84 Or. 319, 165 P. 224, 225, appears the following:

"It is fundamental that a constructive severance of a fixture must arise from the intention of the owner as evidenced by his acts, and there is not a vestige of evidence in the record of any intention upon the part of the house owner to sever the house from the land and, in fact, it was never severed. Nor, indeed, could the disclosed purpose of a future severance act to change the character of the building from real estate to personal property."

Accordingly, it was held in that case that negotiations for the sale of a house would not constitute a constructive severance.

In Burdick v. Tum-A-Lum Lumber Co., 1919, 91 Or. 417, 179 P. 245, the court held that a complaint in replevin, seeking possession of a warehouse, is defective unless it alleges facts which would take it out of the classification as real property where, prima facie, it belongs. However, the court went on to decide that the conditional vendee of the warehouse properly could bring an action in replevin to regain possession thereof, where the owner of the land and all other parties interested had treated the warehouse at all times as personal property.

Blake-McFall Co. v. Wilson, 1920, 98 Or. 626, 193 P. 902, 905, 14 A.L.R. 1275, was an action for conversion of a freight elevator which had been installed in a building previously erected by the plaintiff. After installation of the elevator, the building was sold by the plaintiff to the defendant. Subsequently, the premises were conveyed to a third party, who had no notice that the plaintiff had reserved the right to remove the elevator. In its opinion, the court set forth three tests to be used for determining whether personalty has been transformed into realty: (1) annexation, (2) adaptation, and (3) intention. The court concluded that, at the time of the elevator's installation, it became a part of the realty. Although the officers of the plaintiff corporation then had the intention to remove the elevator if the building were sold and the corporation moved its place of business, there was no showing of a definite intention to move. The opinion contains this statement:

"At the most, the intention, whenever formed by the corporation through its officers, was contingent, unexecuted, and inchoate, and hence it cannot control the result."

However, it was held that the agreement to sell the building, with its express exception of the elevator, operated as a constructive severance of the elevator. The elevator was thereby...