Solter v. Macmillan

• Decision Date: 26 February 1925
• Docket Number: 4.
• Citation: 128 A. 356,147 Md. 580
• Parties: SOLTER v. MACMILLAN.
• Court: Maryland Court of Appeals

128 A. 356

147 Md. 580

SOLTER v. MACMILLAN.

No. 4.

Court of Appeals of Maryland

February 26, 1925

Appeal from Circuit Court of Baltimore City; Eli Frank, Judge.

"To be officially reported."

Proceeding by William D. Macmillan to foreclose mortgage executed by the Delion Tire & Rubber Company. To confirmation of sale, George A. Solter, trustee in bankruptcy of mortgagor, filed exceptions, which were overruled, and he appeals. Affirmed.

Argued before BOND, C.J., and URNER, ADKINS, OFFUTT, DIGGES, PARKE and WALSH, JJ.

James Morfit Mullen and Walter H. Buck, both of Baltimore, for appellant.

Joseph T. Brennan and William D. Macmillan, both of Baltimore (Semmes, Bowen & Semmes, of Baltimore, on the brief), for appellee.

ADKINS J.

The appellant is the trustee in bankruptcy of the Delion Tire & Rubber Company, and the appellee is the assignee of a mortgage from that company to the Atlantic Trust Company trustee, dated February 1, 1922. The company was on December 27, 1923, adjudicated a bankrupt on the petition of creditors filed December 26, 1923, and its answer filed the following day, admitting its insolvency.

The mortgage to the trust company conveyed all of the real estate of the mortgagor.

"Also all and singular the buildings, structures and improvements located on the above-described premises, all machinery, equipment and fixtures in said buildings and structures, and on said premises, * * * now owned by the company or which it may hereafter acquire.

Also all patents, patent rights and license, licenses under patents, trade-marks, trade-names, inventions, improvements formulas, patterns, secrets and other processes now belonging to the company or which it may hereafter acquire.

And all other property, real, personal and mixed, which the company may hereafter acquire, except the merchandise materials, supplies, manufactured goods, goods in the course of manufacture, automobiles, automobile trucks, stocks of corporations, bonds and other securities, except notes and accounts receivable, bills of exchange, trade choses in action and except cash other than that due and payable to the trustee under any of the provisions hereof."

The mortgage was duly recorded in both the land and chattel records of Baltimore City. On default under the covenants and conditions of said mortgage appellee on December 22, 1923, instituted foreclosure proceedings, and on February 6, 1924, after due advertisement, sold to the International Bank of Washington, D. C., the holder of a majority of the mortgage bonds, for $65,000--

"all of the real and leasehold estate, plant, equipment, structures, improvements, machinery, fixtures, patents and all other property covered by said mortgage, being and constituting the plant of the Delion Tire & Rubber Company."

Included in the machinery and equipment were certain articles purchased after the date of the mortgage which appellant claimed were personal chattels and which had subsequently been conveyed to the mortgagee, and to these he publicly claimed title at the sale and protested against their sale by appellee. On the sale being reported, he filed exceptions to its ratification.

The trial court in its opinion separated these articles into three classes as follows:

(1) Machinery and equipment physically affixed to the realty costing $2,628.33.

(2) Rings, molds, and cores, costing $11,126.50.

(3) Furniture and office fixtures and equipment costing $419.52.

The first and second classes the learned chancellor held to be fixtures which went with the real estate under the mortgage. The third he held to be merely personal chattels not subject to the mortgage, and he found the value thereof to be $375, and announced that, if the purchaser at the sale would pay or secure the payment of that sum to the trustee in bankruptcy, he would overrule the exceptions and ratify the sale. This having been arranged, the sale was ratified.

This appeal is from the order overruling the exceptions and ratifying the sale.

It is conceded that the ruling of the chancellor was correct as to the first and third classes.

The sole question is, Did title to the articles in the second class pass under the mortgage, or did it go to the trustee in bankruptcy? The determination of this question depends upon whether at the date of the institution of the bankruptcy proceedings these articles were fixtures or merely personal chattels.

There is much discussion in the briefs as to the effect of the amendment of 1910 (Act June 25, 1910, § 8) to the Bankruptcy Act, § 47, vesting a trustee in bankruptcy "with all the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings * * * and * * * with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied. * * *" U.S. Comp. St. § 9631.

Giving that amendment its utmost effect, the position of such trustee could not be better than would have been that of a judgment creditor with an execution duly levied on the property in question at the date of the bankruptcy. And, even if it were conceded, which we do not decide, that the trustee in this case held such a position, our question would not be answered, because the relative positions of the mortgagee and such a judgment creditor, if there were any, would still depend upon whether the articles in question were covered by the mortgage of an earlier date than that of the execution.

It would be different if the controversy were between a trustee in bankruptcy and one holding a defective mortgage. Most of the cases cited deal with situations of that kind, and do not help us in the present situation.

Here the question is the legal character of the articles in controversy as between the mortgagor and mortgagee.

There is no subject as to which the authorities are more hopelessly in conflict.

But the law in Maryland on this subject was settled, in principle, by the case of Dudley & Carpenter et al. v. Hurst, Miller & Co. et al., 67 Md. 44, 8 A. 901, 1 Am. St. Rep. 368. In the much earlier case of Kirwan v. Latour, 1 Har. & J. 289, 2 Am. Dec. 519, it has been held that, in order to constitute a fixture, a chattel must be actually fastened to the soil. In the later case, this court, in overruling the earlier one, said:

"This case was decided in 1802. But since the decision of that case the doctrine of constructive annexation has been much discussed. From the general current of decisions, the following principle seems clearly deducible:

That, where in the case of machinery the principal part becomes a fixture by actual annexation to the soil such part of it as may be not so physically annexed, but which if removed would leave the principle thing unfit for use, and would not of itself and standing alone be well adapted for general use elsewhere, is considered constructively annexed.

Thus the key of a lock, the sail of a

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