Puzzle Min. & Reduction Co. v. Morse Bros. Machinery & Supply Co.

• Decision Date: 14 April 1913
• Citation: 131 P. 791,24 Colo.App. 74
• Court: Colorado Court of Appeals
• Parties: PUZZLE MINING & REDUCTION CO. v. MORSE BROS. MACHINERY & SUPPLY CO.

131 P. 791

24 Colo.App. 74

PUZZLE MINING & REDUCTION CO. v. MORSE BROS. MACHINERY & SUPPLY CO.

Court of Appeals of Colorado

April 14, 1913

Appeal from District Court, Summit County; Charles Cavender, Judge.

Action by the Morse Bros. Machinery & Supply Company against the Gold Dust Consolidated Mining Company, in which the Puzzle Mining & Reduction Company intervenes. From a judgment for plaintiff, intervener appeals. Reversed.

Charles F. Carnine, of Denver, for appellant.

Elliott & Bardwell, of Denver, for appellee.

CUNNINGHAM P.J.

January 30, 1908, appellee (hereinafter referred to for convenience as the Machinery Company) instituted a replevin suit against the Gold Dust Consolidated Mining Company (hereinafter referred to as the Gold Dust Company) to recover possession of certain mining machinery which the Machinery Company had theretofore sold to the Gold Dust Company, and on which a balance remained due. The Machinery Company insists that the sale was a conditional one, and the title was not to pass from it to the Gold Dust Company until the machinery had been paid for. There were two sales and two written contracts of sale, in all respects alike, in which it was specifically provided that "the entire title and ownership of the machinery should remain in the Machinery Company and vendor until the full payment of all installments due thereon together with interest." And it was further stipulated in said written contracts between the Machinery Company and the Gold Dust Company, vendor and vendee "that the latter received the property as bailee of the former." The Gold Dust Company was in possession of certain placer mining property as lessee, the title to the property being in the Puzzle Mining & Reduction Company appellant here; said company being hereinafter referred to as the Puzzle Company. The machinery in question was purchased for and installed upon this property. The pertinent portions of the lease under which the Gold Dust Company was operating the mine required it "to take possession of the mill then on the property, to add to and install therein such machinery and appliances as might be necessary in the treatment of the ore from the mine, and to increase the capacity of said mill to at least sixty tons daily." Incorporated in the lease was an option which permitted the Gold Dust Company, under certain conditions, to become the purchaser of the mining property covered by the lease. In connection with this option agreement appears the following "It is further understood and agreed that in case of the forfeiture of the said lease, the payments made thereunder shall be considered as rental for said property up to the time of such forfeiture, and that all machinery and appliances installed in, and all improvements made upon, said property shall revert to the first parties hereto"--the first parties being the Puzzle Company.

It will be seen that one of the considerations for the lease and option agreement was the purchase and installation by the lessee, the Gold Dust Company, of such machinery and appliances as might be necessary for the treatment of the ore; said purchase and installation of machinery to be in addition to the machinery on the property at the time the lessee and prospective purchaser, the Gold Dust Company, took possession thereof. This is an important fact which must be borne in mind. It may, we think, be fairly inferred that the machinery here involved was purchased by the Gold Dust Company of the Machinery Company, and added to the plant already upon the property, in fulfillment of that requirement of the lease and option to which we have just directed attention.

Aside from certain objections which it filed to the replevin bond, the Gold Dust Company made no appearance whatever in the case. On February 3, 1908, appellant, the Puzzle Company, filed its petition in intervention, and thereafter the contest was solely between the intervener and the Machinery Company. For the purpose of preventing the Machinery Company from removing the machinery from the mine, the Puzzle Company instituted injunction proceedings, which were, as we view the record, but auxiliary to the replevin proceeding and designed simply to maintain the statu quo. We shall therefore make no reference to the injunction feature of the case, further than to say that it was disposed of on the trial at the same time the issues raised in the replevin suit were heard; the two cases being consolidated by stipulation. The case was tried to the court without a jury; the trial judge finding that there was due the Machinery Company from the Gold Dust Company $1,085.14. By the decree the intervener, the Puzzle Company, was given 30 days in which to pay this amount to the Machinery Company, and in case payment of this sum was not made by the Puzzle Company within the time specified the right of possession of the machinery was awarded to the Machinery Company.

The Puzzle Company defended upon two distinct theories; the first being that the sale was, under the authorities of this state, an absolute one, and that the attempt on the part of the Machinery Company to reserve a secret lien should not be upheld. Its second defense was based upon the contention that the mining machinery had become so affixed to the realty as to become a part thereof; hence could not be recovered in a replevin suit in any event, nor at all as against the intervener, which had in the meantime declared a forfeiture of the lease and re-entered into possession of the mining property. It will thus be perceived that two difficult questions are presented for our determination.

1. The authorities pertaining to conditional sales are far from harmonious; the rule pertaining to fixtures, and when personal property loses its identity as such and becomes merged in the real estate to which it is attached, is made to depend largely upon the facts of each particular case. Hardware Co. v. McCarty, 10 Colo.App. 220, 50 P. 744. The first question has been repeatedly before the courts of this state for consideration. See George v. Tufts, 5 Colo. 165; Weber v. Diebold, 2 Colo.App. 68, 29 P. 747; Tufts v. Beach, 8 Colo.App. 35, 44 P. 771; First Congregational Church v. Grand Rapids Co., 15 Colo.App. 46, 60 P. 948; Andrews v. Colo. Savings Bank, 20 Colo. 313, 36 P. 902, 46 Am.St.Rep. 291; Jones v. Clark, 20 Colo. 353, 38 P. 371; Clark v. Bright, 30 Colo. 199, 69 P. 506; Coors v. Reagan, 44 Colo. 126, 96 P. 966.

It is not necessary that we should analyze these cases, or quote at length from them. Suffice it to say that, contrary to the ruling in many, perhaps the majority, of the states, the doctrine in Colorado has become well established that a conditional sale reserving a secret lien to the vendor is void as against creditors or subsequent holders having no notice thereof, and who are injuriously affected thereby. Mr Justice Maxwell, in the Coors Case, supra, quotes the following with approval from the Weber Case, supra: "Appellee, having vested Wood with the possession and all indicia of ownership, it was not a bailment, but a sale subject to defeasance upon a subsequent condition, an arrangement known only to the parties themselves. A party who, by his own acts, places another in the ostensible position of owner...