Viking Equipment Co. v. Prudential Ins. Co. of America

• Decision Date: 21 May 1936
• Docket Number: 6 Div. 890
• Parties: VIKING EQUIPMENT CO. v. PRUDENTIAL INS. CO. OF AMERICA et al.
• Court: Alabama Supreme Court

168 So. 566

232 Ala. 543

VIKING EQUIPMENT CO. v. PRUDENTIAL INS. CO. OF AMERICA et al.

6 Div. 890

Supreme Court of Alabama

May 21, 1936

Rehearing Denied June 11, 1936

Appeal from Circuit Court, Jefferson County; C.B. Smith, Judge.

Suit by the Viking Equipment Company against the Prudential Insurance Company of America and others. From a judgment for defendants, plaintiff appeals.

Affirmed.

Ritter Wynn & Carmichael and Victor H. Smith, all of Birmingham, for appellant.

W.H Woolverton, of Birmingham, for appellees.

KNIGHT Justice.

Action of detinue and trover brought by plaintiff, appellant here against the appellees.

The cause was tried by the court, without a jury, and judgment rendered in favor of the defendants, and from this judgment the plaintiff prosecutes this appeal.

It appears from the evidence that W.D. McEachern and J.W. Pass borrowed of the appellee Prudential Insurance Company of America the sum of $50,000, and, to secure said loan, executed and delivered to the Prudential Insurance Company of America a mortgage on certain real estate, and the improvements thereon, located in Jefferson county, Ala. This mortgage was executed on September 8, 1927, and duly filed for record on September 17, 1927. After the execution and recordation of this mortgage, and while it was in full force and effect, the said McEachern and Pass entered into a contract with Crawford and Slaten for the installation of an automatic sprinkler system on the property. This contract provided, inter alia:

"The equipment and the materials therefor before, during and after the installation shall be and remain the property of the contractor (seller), and shall remain and be considered as personal property, and not part of the realty, until the title thereto is acquired by the owner, as therein provided. ***

"Upon failure of the owner to make any of the payments as and when they may become due under the provisions of this agreement, or fully to comply with all the terms and covenants of this agreement on its part to be kept and performed, or upon breach of any warranty herein, the contractor may exercise any one or more or all of the following rights:

"(a) Enter the above described premises and remove the equipment or any part or parts thereof;

"(b) Declare the full amount of unpaid installments to be immediately due and payable and to collect the same by suit or otherwise, with its expenses, including reasonable attorney's fees;

"(c) To take such other action as the contractor may deem advisable to enforce its rights hereunder."

This contract fully disclosed the existence at that time of appellee's mortgage.

The sprinkler system was duly installed, as per terms of the contract.

The said McEachern and Pass made default in the payment of the indebtedness secured by appellees' mortgage, and, upon the occurrence of this default, the mortgagee, the said Prudential Insurance Company of America, duly and regularly foreclosed its said mortgage, and became the purchaser at the foreclosure sale, and a deed on said foreclosure was made to the said mortgagee-purchaser. This deed was filed for record on January 11, 1933.

It was agreed that the said sprinkler system was installed without the knowledge or consent of the Prudential Insurance Company of America, or of any of its agents, servants, or employees.

It appears without dispute that the said McEachern and Pass made default in the payment of the installments of the purchase price of said sprinkler system.

It is to be noted also that this contract between McEachern and Pass with the said Crawford and Slaten was transferred to the plaintiff prior to the institution of this suit, but that the sprinkler system was installed by Crawford and Slaten.

It may also be observed that the evidence leaves no room to doubt that, if the sprinkler system had been installed by the mortgagors, owners, without any question of the reserved rights of the said Crawford and Slaten, the installation was accomplished in such way as to constitute the system a fixture, and the mortgagors would not have had the right to remove the same. It would have been regarded as a permanent accession to the real estate, subject to the prior mortgage on the land executed by the owner. Grubbs et al. v. Hawes, 173 Ala. 383, 56 So. 227; Annely v. De Saussure, 12 S.C. 488, 517; Planter's Bank v. Lummus Cotton Gin Co., 132 S.C. 16, 128 S.E. 876, 41 A.L.R. 592; Kentucky Lumber & Mill Work Co. v. Kentucky Title Sav. Bank & Trust Co., 184 Ky. 244, 211 S.W. 765, 5 A.L.R. 391; Graeme v. Cullen, 23 Grat. (64 Va.) 266; Basham v. Goodholm & S. Investment Co., 52 Okl. 536, 152 P. 416; Holloway v. Hendrick, 98 N.J.Eq. 713, 129 A. 702.

This court in the recent case of Mallory et al. v. Agee, 226 Ala. 596, 147 So. 881, 88 A.L.R. 1107, committed itself to the proposition that a mortgagee, who purchases at his own foreclosure sale, does not by such purchase acquire the legal title to the property. Whatever legal title he has in the property is acquired by the mortgage, and the only effect of the foreclosure of the mortgage is to destroy the equity of redemption then in the mortgagor. He does not by the purchase, whether a deed, with warranty, is executed to him or not, become a bona fide purchaser in such way as to be protected against equities accruing after the execution of the mortgage.

The great weight of authority...