Stapp v. Carb-Ice Corp.

• Decision Date: 29 July 1950
• Docket Number: CARB-ICE,No. 16308,16308
• Parties: STAPP et al. v.CORP. et al.
• Court: Colorado Supreme Court

Page 935

224 P.2d 935

122 Colo. 526

STAPP et al. v. CARB-ICE CORP. et al.

No. 16308.

Supreme Court of Colorado.

July 29, 1950.

Julius I. Ginsberg, C. R. Froman, Denver, for plaintiffs in error.

Louis G. Isaacson, Hughes & Dorsey, and W. Clayton Carpenter, all of Denver, for Colorado Ice & Cold Storage Co.

Thomas Keely, and Allan R. Phipps, Denver, for First Nat. Bank of Denver.

Louis G. Isaacson, Denver, for defendants in error Theodore H. and C. A. Braukman.

JACKSON, Justice.

This case involves two questions--the effectiveness of foreclosure of a mechanic's lien as against (I) chattel property becoming a part of a manufacturing plant and then subsequently included in a chattel mortgage, and (II) real estate of a landlord upon which lessee, by the express and approving provisions of his lease, had caused a plant to be erected.

The parties appear here in the same order as in the trial court.

The complaint discloses that the Stapp Engineering Company, a copartnership, entered into a contract with the Carb-Ice Corporation 'to design, build and construct a plant to produce liquid and solid carbon dioxide using boiler flue gases as a source of the basic material,' the plant to be constructed on real estate owned by the Colorado Ice and Cold Storage Company upon which property the Carb-Ice Corporation had a twenty year lease.

The engineering company sued Carb-Ice for an alleged balance due on this construction contract, claiming that the total cost of material furnished and labor performed was $278,435.16, that Carb-Ice had paid $263,684.57, thus leaving a balance due of $14,750.59 plus interest from the 3d day of July, 1948. The merits of the controversy between these two primary contracting parties is not before us.

The basis for this litigation was laid when Stapp Engineering Company filed a mechanic's lien against the property of Carb-Ice Corporation to secure the above mentioned sum alleged to be due from Carb-Ice. Subsequently, Stapp Engineering Company sought to foreclose this lien and asked that the claim of each of the other defendants named in the action 'be adjudged subsequent, inferior to, and subject to the lien of the plaintiffs, and that they be barred from ever asserting any right, title or interest in and to said property or any portion thereof as against the plaintiffs.' All defendants moved that the cause be dismissed on the ground that the complaint failed to state a claim upon which relief could be granted. This motion was granted as to all defendants except Carb-Ice. Plaintiffs then were allowed to file an amended complaint. The trial court granted similar motions to dismiss as to this amended complaint, again excepting defendant Carb-Ice. The losing plaintiffs come here, filing ten specifications of points which involve the two questions set forth at the beginning of this opinion.

The agreement of lease, shown in the complaint, was dated July 24, 1947, ran to July 24, 1967, and contained an option to renew for an additional twenty years to July 24, 1987. It also contained the following preamble: 'Whereas, Second party [Carb-Ice] contemplates the construction of a plant for the manufacture of dry ice and desires to lease the hereinafter described real estate from First Party [Colorado Ice and Cold Storage Company] for the purpose of erecting thereon a plant for the manufacture of dry ice, and further desires to purchase from First Party steam and flue gas produced by First Party for use in the manufacture of said dry ice at said plant, and First Party is willing to make such lease and sell such steam and flue gas upon the terms and conditions hereinafter set forth.'

The third paragraph of the lease reads: '3. The parties hereto have examined and approved the plans for the construction of said plant of Second Party for the manufacture of dry ice, as prepared by The Stapp Engineering Company; and said plans bear thereon the signatures of the parties hereto for the purposes of identification and evidence of their approval. Second Party agrees at its own expense to proceed promptly to construct and complete upon the demised premises a structure substantially in accordance with said plans so approved, provided, however, that no substantial change therein shall be made without first securing the written approval of First Party thereto.'

The fourth paragraph of the lease contained, inter alia, a provision that: '4. Second Party shall use the leased premises solely for the purposes of manufacture, sale and distribution of dry ice and liquid carbon dioxide, * * *'

The sixth and seventh paragraphs of the amended complaint read as follows:

'6. That The First National Bank of Denver, a Colorado corporation, claims some right, title and interest in and to the manufacturing plant, machinery and premises by virtue of a certain chattel mortgage recorded February 3, 1948, Book C184 at page 491, in the Office of the County Clerk and Recorder of the City and County of Denver, State of Colorado.

'That said mortgage was received by defendant, The First National Bank of Denver with full knowledge that the items included therein were a necessary part of the plant and machinery necessary to the successful operation of the whole plant of the defendant, Carb-Ice Corporation's dry ice plant, and with full knowledge that all of the parts of said plant were essential to the operation of some part or all of the machinery in the plant and that the machinery in said plant was physically attached to the freehold; and that said items in said chattel mortgage enhanced the value of said plant, without which said plant would be valueless, and further said items of property had been personally contracted for by the plaintiff, paid for by the plaintiff, as well as all costs of construction, costs of machinery, equipment and parts for the manufacturing plant listed in the chattel mortgage above referred to were paid for by the plaintiff, and the plaintiff at no time had ever given a bill of sale thereto or released plaintiff's interest in and to said property.' (Italics supplied).

'7. That Theodore H. Braukman and C. A. Braukman, as Trustees for the Braukman Trust Fund, claim some right, title and interest in and to the plant, building and machinery located upon the premises herein described, by virtue of the chattel mortgage recorded in Book C197 at page 68 in the Office of the Clerk and Recorder of the City and County of Denver; and that the said Theodore H. Braukman and C. A. Braukman, as Trustees for the Braukman Trust Fund, accepted said chattel mortgage on the 26th day of August, 1948, with full knowledge that the plaintiff claimed title to the personalty used in the construction of, and made a part of, the plant of the Carb-Ice Corporation and which had become permanently attached and affixed thereto and made a part of the premises; and further said defendant knew that the said plaintiff had not been paid in full by the defendant, Carb-Ice Corporation, for the costs of construction, machinery, equipment and parts of the manufacturing plant listed in chattel mortgage above referred to, and that the time for filing of the mechanic's lien had not expired.

'That all of the items of personal property mentioned in the chattel mortgage above referred to were used in the permanent construction of the dry ice manufacturing plant and were purchased in the name of and by the plaintiff, and that the plaintiff had not conveyed or released said property to the defendant, Carb-Ice Corporation or The First National Bank of Denver or Theodore H. Braukman and C. H. Braukman, as Trustees for the Braukman Trust Fund or The Colorado Ice and Cold Storage Company, and that all of said items enhanced the value of said plant and without said articles the plant would be valueless.' (Italics supplied.)

(I) With respect to the rights of the chattel mortgagees, both sides agree 'that if the property listed in the chattel mortgage is personal property no mechanics lien would lie against the property, nor could it be enforced.' In the words of counsel, 'the position of the chattel mortgagee is that there is nothing in the record before this court to show that the property listed in the chattel mortgage is other than personal property.' Counsel accordingly object to Stapp Engineering Company's counsel using the description the plant in their several references to the articles covered by the chattel mortgages. But disposition of this case was based solely upon the pleadings, and the only pleading before us is the complaint filed by Stapp Engineering Company. We must assume...