Tippett & Wood v. Barham

• Decision Date: 12 July 1910
• Docket Number: 969
• Parties: TIPPETT & WOOD v. BARHAM.
• Court: U.S. Court of Appeals — Fourth Circuit

180 F. 76

TIPPETT & WOOD v. BARHAM.

No. 969

United States Court of Appeals, Fourth Circuit.

July 12, 1910

The question at issue upon this appeal arises between the holders of bonds of the Peninsula Pure Water Company issued under and secured by a mortgage to the Knickerbocker Trust Company and Tippett & Wood, the appellants.

By deed bearing date February 1, 1906, and recorded in the clerk's office of Elizabeth City county, Va., February 16, 1906, the Peninsula Pure Water Company conveyed to the Knickerbocker Trust Company of New York City all of its property, rights, and franchises to secure an issue of $300,000 of first-mortgage bonds. This deed contains what is generally known as the 'after-acquired property clause,' the language being: 'Does grant, bargain sell and convey * * * all other property, real, personal or mixed, of whatsoever kind or description, and wheresoever situated now owned or possessed by it, or which may hereafter be acquired by it, the said Peninsula Pure Water Company also all corporate and other franchises, privileges, rights benefits, immunities and exemptions * * * either by legislative grant or contract, or otherwise. ' By deed bearing date March, 18, 1906, and recorded March 29, 1906 Thomas Harmond and wife conveyed to the Peninsula Pure Water Company a certain tract of land located in the town of Hampton, in the county of Elizabeth City. And by a contract bearing date March 9, 1906, but which was actually executed some time after that date, Tippett & Wood, the intervening petitioners, entered into an agreement with the Peninsula Pure Water Company and Whetstone & Company by which they agreed to erect for the use of the Peninsula Pure Water Company a certain standpipe for the price of $8,148, and according to plans and specifications referred to in said contract, said contract being under the corporate seal of all parties. This standpipe was subsequently erected on the tract of land purchased of Thomas Harmond et ux., and was completed according to plans and specifications, although the water company was placed in the hands of the receivers before there was a formal acceptance of the standpipe by it. The water company prepared a concrete foundation upon which the standpipe was constructed, and to which it was attached by bolts and taps. This contract which was never recorded contained the following clauses: 'No right, or title to said standpipe, or to the material of which the same is composed, shall pass to Whetstone & Company or Peninsula Pure Water Company, or to any other persons or companies until all the payments above mentioned shall be fully made; and, if in any case all the payments are not made, Tippett & Wood may enter upon the property and remove the material or standpipe as furnished by them. ' "If said Whetstone & Company and Peninsula Pure Water Company shall keep and perform all the terms of this agreement and make no default in any of said payments as they become due, and in that case said Tippett & Wood will make, execute and deliver to Whetstone & Company or Peninsula Pure Water Company a good and sufficient bill of sale for said standpipe." Said standpipe was built and completed according to plans and specifications prior to receivership proceedings; but default was made in the payments provided for leaving a balance unpaid of $2,548, with interest from February 1, 1907, and $97.78, with interest from March 1, 1907 (this latter sum was for repairs and labor caused by the alleged delay of the water company to make proper tests after completion of the work), whereupon Tippett & Wood filed its petition setting up its contract and praying leave of court to enter upon the premises and remove the said standpipe according to the terms of its contract.

The decree for sale of the water companies' properties included the standpipe in question, the court reserving 'to all persons claiming a lien or liens against any of the assets or property herein authorized to be sold the same liens, rights, or claim against the money derived from the said sale as such person or persons may have, or could set up and establish against the said assets or properties as if no sale had been had hereunder,' Tippett & Wood consenting, without prejudice, that its claim be paid either in money or by removing the standpipe; the properties of the water companies including the standpipe in question claimed by Tippett & Wood were subsequently sold as a whole and the said sale duly confirmed.

The report of the special master filed on September 29, 1909, allowed the claim of Tippett & Wood as an unsecured debt, and disallowed the priority of the same over the first mortgage bonds. Tippett & Wood, by counsel, filed exceptions to said report of the special master, which exceptions were overruled by the court.

William C. L. Taliaferro, for appellant.

Henry W. Anderson and William H. White, Jr. (Munford, Hunton, Williams & Anderson, on the brief), for appellees.

Before GOFF, Circuit Judge, and KELLER, District Judge.

KELLER District Judge (after stating the facts as above).

In the argument it was admitted that if the standpipe which was the subject of the contract between appellants, Whetstone & Co. (the general subcontractors) and Peninsula Pure Water Company, became a fixture, so as to become annexed to the freehold, it would pass under the lien of the mortgage by virtue of the 'after-acquired property' clause; but it was strenuously insisted that by the terms of the contract it is apparent that no such annexation was contemplated by the parties to that contract. We do not so understand this contract that the subject of it was never to become annexed to the freehold, but rather that there was an attempt to so preserve the status of the subject of the contract as that, in the event of necessity, it might be reclaimed as personal property the title whereto had not been parted with by the appellants. The standpipe was to be erected 'for the use of the Peninsula Pure Water Company,' and when erected in accordance with specifications attached to and made a part of the agreement was to be 'accepted by Whetstone

& Co. and Peninsula Pure Water Company.'

The special master found: That the standpipe in question was erected upon a foundation which is supposed to be 25 feet in diameter and 10 feet in depth, and is attachment to this foundation by anchor bolts 10 feet in length and 2 inches in diameter. These anchor bolts are imbedded in the foundation. The standpipe is 18 feet in diameter and 140 feet high above the top of the foundation. That the standpipe is a part of the original construction work of the system of waterworks intended to be constructed, and an indispensable part of such system, as without such a standpipe it would have been impossible for the water company to have furnished its consumers with water. That it is one of the integral parts of the property which as a whole was to constitute the security of the mortgage creditors.

As between the parties to the contract doubtless the rights reserved to Tippett & Wood would be binding, but as the question here is between the appellants, on the one side, and the trustee under the mortgage and the bondholders, on the other, it is pertinent to inquire whether there is any reason or principle upon which the interests of these latter parties who were not parties to this contract can be affected by it. There is a line of cases which, with more or less unanimity holds that where a mortgage exists on real estate, and an accession is subsequently made of property agreed between the vendor and the mortgagor to be treated as personalty and a reservation of title until paid for agreed upon between vendor and mortgagor-purchaser, such accession, if it can be severed from the realty without injury to the latter or to the value of the security for the mortgage debt as it stood before the improvement was made, will be impressed with the same character as between the vendor and the mortgagee as between the vendor and mortgagor; in other words, that it does not become real estate, and may be removed without invading the rights of the mortgagee. Of this class are Campbell v. Roddy, 44 N.J.Eq. 244, 14 A. 279, 6 Am.St.Rep. 889, Binkley v. Forkner, 117 Ind. 185, 19 N.E. 753, 3 L.R.A. 33, German Sav. & L. Soc. v. Weber, 16 Wash. 95, 47 P....