Planter's Bank v. Lummus Cotton Gin Co.

• Decision Date: 30 July 1925
• Docket Number: 11814.
• Parties: PLANTERS' BANK v. LUMMUS COTTON GIN CO.
• Court: South Carolina Supreme Court

128 S.E. 876

132 S.C. 16

PLANTERS' BANK v. LUMMUS COTTON GIN CO.

No. 11814.

Supreme Court of South Carolina

July 30, 1925

Appeal from Common Pleas Circuit Court of Abbeville County; T. J Mauldin, Judge.

Action by the Planters' Bank against the Lummus Cotton Gin Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded for new trial.

J. M Nickles, of Abbeville, for appellant.

Wm. P Greene, of Abbeville, for respondent.

COTHRAN J.

Action for $5,000 damages, actual and punitive, on account of the alleged wrongful act of the defendant in removing and converting to its own use certain gin machinery, from a ginhouse and lot belonging to one J. P. Clinkscales. The plaintiff held a real estate mortgage upon the ginhouse and lot, executed before the machinery was installed on the lot. The defendant held a chattel mortgage upon the machinery executed after it had been paid for and installed. The plaintiff contends that the machinery was installed in such a way as to constitute "fixtures," and came under the lien of its real estate mortgage then in existence, upon its annexation to the premises. The defendant contends that it remained personal property, and was subject to its chattel mortgage, under which it was seized and sold. The case was tried before his honor, Circuit Judge Mauldin, and a jury. The plaintiff withdrew its demand for punitive damages. At the close of the evidence, upon motion of counsel for the bank, the circuit judge directed a verdict in its favor, holding that there was no issue to be submitted to the jury. The amount of the verdict is not stated in the record of appeal, but it is assumed to have been, from the direction of the court, for the amount of the debt due by Clinkscales to the bank, less a credit for the amount of the proceeds of the sale of the real estate under foreclosure proceedings. Defendant appeals.

There appears to be no controversy as to the following facts: In February, 1920, one J. P. Clinkscales purchased from the Lummus Gin Company, a complete ginning outfit, consisting of engine, gins, press, and other accessories, of the business of a "custom" ginnery. The written contract, evidencing the purchase, provided for the reservation of title to the property in the gin company until the outfit should be paid for. It contained also the following provisions:

"The machinery herein described is to be located and operated at or near 4 miles east of Lowndesville, state of South Carolina, and is not to be a fixture to any realty, and is not to be moved from the county aforesaid during the life of this agreement or without the written consent of the seller."

Later Clinkscales changed his mind as to the location of the ginnery, and on June 4, 1920, purchased from one R. R. Tolbert, Jr., a lot containing one acre of land, situated east of Abbeville, some 20 miles from the Lowndesville location. Upon this lot there was a ginhouse and an old gin equipment which had been used by Tolbert as a public ginnery for about 10 years. The price agreed upon for the lot was $1,500. Clinkscales borrowed from the plaintiff bank the money with which to pay for it, and gave the bank a mortgage upon the lot to secure the payment of his note for $1,570, describing the property as one acre of land situated "and having a ginhouse thereon, together with boiler and gin equipment."

About a month after the purchase of the Tolbert lot, the greater part of the machinery purchased from the gin company (all except the engine) arrived in Abbeville. Clinkscales, in order to pay for it, borrowed an additional sum of money from the bank and gave, as security for his note therefor, a mortgage upon a farm owned by him in McCormick county. He applied the proceeds of this second loan to the payment of the machinery which had arrived, and installed it upon the Tolbert lot covered by the real estate mortgage which he had given to secure the first loan of $1,500. The bank did not take a mortgage upon this machinery. Some weeks later the engine arrived. The bank declined to make any further advances to Clinkscales. In order to enable Clinkscales to obtain the engine from the railroad company, the gin company agreed to allow him to do so upon his giving a mortgage upon it for the purchase price, some $3,300. He then installed it on the Tolbert lot. The note secured by mortgage upon the engine not having been paid at maturity, the gin company granted further indulgence to Clinkscales upon his giving, as additional security, a mortgage upon the other machinery which had been paid for and installed. About two years thereafter, the note for the engine, secured by a mortgage upon it, and by the additional mortgage upon the other machinery, not having been paid, the gin company instituted claim and delivery proceedings against Clinkscales, recovered possession of the entire outfit, sold it at public outcry under the two mortgages, and moved it away. Thereafter the bank foreclosed its mortgage upon the lot, realizing only $177, and instituted the present action against the gin company for damages, claiming that when the machinery, which Clinkscales had paid for, was installed upon the lot, upon which the bank held a mortgage, in existence at that time, the machinery became fixtures, subject to the original $1,500 real estate mortgage of the bank; that the gin company, in selling and removing it, had converted the same to their own use, and became thereby liable in damages to the bank. The engine covered by the mortgage of Clinkscales to the gin company is not involved in this litigation; the bank making no claim to it.

It does not admit of doubt, that if the real estate mortgage was a lien upon the machinery, placed upon the premises after the execution and prior to the date of the additional chattel mortgage given to the gin company to secure payment of the note for the engine, the lien of the real estate mortgage would be superior to the lien of the defendant's chattel mortgage, and the defendant, having removed the machinery, would be liable in damages to the plaintiff, to the extent of the diminution in the value of the bank's security caused thereby.

That the plaintiff had ample authority for bringing the action for damages appears from the case of Heath v. Haile, 45 S.C. 642, 24 S.E. 300, which was a case of this very nature. There the court says, referring to Lavenson v. Standard Soap Co., 80 Cal. 245, 22 P. 184, 13 Am. St. Rep. 147:

"A mortgagee, after he had foreclosed his mortgage and ascertained what deficiency remains due him, may maintain an action to recover damages against a person who had impaired the value of the security afforded by his mortgage by removing fixtures from the mortgaged premises."

That an annexation to the property covered by a mortgage, if a fixture, becomes subject to the lien of the mortgage, notwithstanding the fact that it took place after the mortgage was executed, appears to be settled.

Referring to the case of Annely v. De Saussure, 12 S.C. 517, the court, in the case of Heath v. Haile, 45 S.C. 642, 24 S.E. 300, says:

"That case also recognizes and affirms the doctrine that where improvements, which become a part of the freehold, are put upon the mortgaged premises, either by the mortgagor or a purchaser from him [we interpolate, which necessarily is subsequent to the execution of the mortgage], such improvements become subject to the lien of the mortgage, and constitute a part of the security for the mortgage debt; and the same doctrine was again recognized when the case came again before the court. See 17 S.C. 394."

The determinative issue, therefore, is: Did the lien of the plaintiff's real estate mortgage attach to the machinery, upon its installation, after the execution of the real estate mortgage, and before the execution of the defendant's chattel mortgage upon it? This involves a consideration of the much discussed, confused, and confusing subject of "fixtures." The principal cause of the confusion and apparently conflicting interpretations of the law is a failure to recognize the fact that there are so many various relations under which the question may arise; that the same rule does not apply to all, and in deciding the question which may have arisen under one relation by the rule established as applicable to some other.

In Montague v. Dent, 10 Rich. Law, 135, 67 Am. Dec. 573, the court says:

"So various are the considerations which enter into the interpretation of the law fixtures, dictating varying and opposite conclusions as to the same or like articles, which may become the subject of controversy, that an adjudicated case may fail to be of any authority, where the subject-matter of contest may be the same, as the particular case must be considered with reference to the relation of parties, * * *"

The various relations under which the question arises may be roughly divided into two classes: (1) Where the subject-matter of the controversy has been placed upon the premises by the owner of the fee-simple title; (2) where it has been so placed by one owning an estate less than a fee simple. To the first class belong the relations of vendor and vendee, mortgagor and mortgagee, personal representative and heir or devisee, vendee of the real estate and purchaser or mortgagee of the chattel from the late owner, and other relations. To the second class belong the relations of owner of the fee or his heirs or devisees and life tenant remainderman or reversioner and life tenant, landlord and tenant, licensor and licensee, and perhaps others. The rules applicable to these two classes are not the same. Cases involving the relations suggested in the second class are of little assistance, rather the contrary, in deciding the question arising in relations of the...