Case ID: ny-st-rep_31/html/0564-01.html
Source: Caselaw Access Project
Author: {"author": "Parker, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Phillip Kribbs, Resp’t, v. Byron Alford et al., App’lts.
    
    
      (Court of Appeals, Second Division,
    
    
      Filed June 3, 1890.)
    
    Chattel mortgage—Lien of—Does not cover property placed on the. PREMISES BY MORTGAGOR’S ASSIGNEE.
    In May, 1880, Johnson gave a lease to Argue to produce oil and gas from Johnson’s land for twelve years, with the right to Argue to remove any and all tools, boilers, engines and machinery. In October Argue assigned his interest in the lease to Gr and P. Thereafter P., to secure the payment of $950.50, gave plaintiff a mortgage on his undivided interest in the lease, and upon all “his interest in the oil wells now thereon, and to be by him placed thereon, with all his interest in the structures, fixtures, equipments and appurtenances now on said lease, or to be placed thereon.” On August 24th, G-. and P. sold and assigned all their rights under the lease to defendants Alford and Curtis? who finished one well, put down two others, and added largely to the plant by way of engines, boilers and other machinery. Held, that although the chattel mortgage operated to-create a lien as to the chattels purchased and placed upon the property by the mortgagor subsequent to its date, such lien did not attach to the personalty placed upon the property by the assignees of the mortgagor.
    Appeal from judgment of the general term of the supreme court, fifth department, entered on an order affirming a judgment entered upon the report of a referee.
    
      J. H. Waring, for app’lts; J. Arthur Corbin, for resp’t.
    
      
       Reversing 9 N. Y. State Rep., 617.
    
   Parker, J.

On the 15th day of May, 1880, one Johnson, then being the owner in fee of certain lands, executed and delivered to Thomas Argue an instrument in writing (which for convenience will hereafter be termed a lease) which conferred, upon the latter the exclusive right to produce oil and gas from said land for a period of twelve years. For that purpose it permitted him to go upon the land and make necessary erections. But as to any other use Johnson reserved the possession and right of enjoyment It gave to Argue the right to remove any and all tools, boilers, engines and machinery. Also the casing to the wells and drive pipe if Johnson should refuse to pay a fair price therefor.

Pursuant to the terms of the lease Argue and his assignees placed upon the property engines, boilers and other machinery necessary to carry on the operations for which the lease provided, and in view of the intent of the parties as manifested by the terms of the lease and otherwise, these articles retained their character of personalty after annexation. Potter v. Cromwell, 40 N. Y., 287; Murdock v. Gifford, 18 id., 28; Hoyle v. Plattsburgh, & Montreal R. R. Co., 54 id., 314, 324; McRea v. Central Bank, 66 id., 489-495.

In October, 1880, Argue assigned his interest in the lease to Albert Garrett and Adam Prentice. Thereafter Adam Prentice, to secure the payment of $950.50, executed and delivered to the plaintiff a mortgage on his undivided interest in the lease and upon all “his interest in the oil wells now thereon and to,be by him placed thereon, with all his interest in the structures, fixturcs, equipments and appurtenances now on said lease or to be placed thereon.”

On the 10th day of January, 1881, a copy of the mortgage was filed in the town clerk’s office and thereafter it was duly refiled. Subsequently and on the 24th day of August, 1882, Garrett and Prentice sold and assigned all their rights and interests under the lease to the defendants, Alford and Curtis, who thereafter finished one well, put down two others, and added largely to the plant by way of engines, boilers and other machinery.

And the substantial question presented by this appeal is, whether the tubings, casings, engines, boilers, shafting and other machinery purchased and placed upon the property after the giving of the mortgage, are embraced within it ? True, the appellant contends that his title to the chattels is not burdened with the plaintiff’s mortgage, because, as he alleges, Alford and Curtis purchased in good faith and without notice. But this claim is not well founded, for while a search, which failed to disclose the existence of a mortgage, was timely made in the town clerk’s office, the referee has found, upon sufficient evidence to support it, that the mortgage was filed as a chattel mortgage in the prior town clerk’s office, and within thirty days of the expiration of the year thereafter it was refiled with the statement required by statute.

Alford and Curtis are, therefore, chargeable with constructive notice, and the lien of the plaintiff is not affected by their failure to find the mortgage.

In some jurisdictions validity is denied to a contract in so far as it purports to embrace property to be acquired after date. The reason assigned for this holding is tersely stated in Perkins, at § 65 : “ It is a common learning in the law, that a man cannot 'grant or charge that which he hath not.”

In others it is held to be invalid in law, and yet operative in equity. Unexplained this seems to be a solecism, and results from a use of language which fails to accurately convey the idea intended.

Invalidity at law imports nothing more than that a mortgage of property thereafter to be acquired is ineffectual as a grant to pass the legal title. A court of equity, in giving effect to such a provision, does not put itself in conflict with that principle. It does not hold that a conveyance of that which does not exist operates as a present transfer in equity, any more than it does in law; but construes the instrument as operating by way of present contract to give a lien which, as between the parties, takes effect and attaches to the subject of it as soon as it comes into the ownership of the party. Such we deem the rule to be in equity in this state. McCaffrey v. Woodin, 65 N. Y., 459; Wisner v. Ocumpaugh, 71 id., 118; Coats v. Donnell, 94 id., 168-177.

As between the mortgagor, or his assignee, and the mortgagee, therefore, the chattel mortgage operated to create a lien in equity as to the chattels purchased and placed upon the property by the mortgagor subsequent to its date. This lien the trial court rightly enforced by its judgment. But it went further and declared in effect that the lien attached to the personalty placed upon the property by the assignees of the mortgagor as well. This we tbinlr was error. The assignees did not contract that the machinery to be placed upon the property by them should be subject to the provisions of the mortgage. They did not assume or agree to pay the mortgage or carry out its provisions. Indeed the assignment contained no condition or covenant whatsoever, and the assignees-did not even know of the existence of the mortgage. Their acceptance of the lease bound them to fulfill the covenants running with the land. 113 Pa. St., 83 ; Spencer's Case, rule 1, 1 Smith’s Lead. Cases, 138.

But it did not in addition burden them with the obligation to make good the personal covenants given by the lessee to third parties as security for an indebtedness. Because they had constructive notice of the existence of the mortgage the lien of plaintiff can be enforced, and the defendant deprived of the machinery on the premises at the time of the purchase by them of the lease. But the lien provided for by the instrument could in any event only extend to property thereafter acquired by the mortgagor. It could not attach to chattels to which the mortgagor'has not acquired either title or possession. Indeed it does not by its terms purport to embrace any other after-acquired property than that placed thereon by the mortgagor.

, It follows.from the views expressed that the judgment should be reversed and a new trial granted, with costs of this court to the appellant, unless within thirty days the plaintiff stipulate to modify the judgment [by excepting therefrom the articles placed on the property after the assignment to Alford and Curtis, and described in schedule D., in which event the judgment as .modified is affirmed, with costs to the appellant.

All concur, except Bradley and Haight, JJ., not sitting.