Case ID: ohio-st_15/html/0446-01.html
Source: Caselaw Access Project
Author: {"author": "White, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James Brennan and John Brennan v. John H. Whitaker et al.
    Where the owner of the fee erected a building for a steam saw-mill, which, without substantially altering the structure, would have been, comparatively, of little value for any other purpose j and, the boilers, engines, saws, and gearing, and other machinery for applying the power, were so attached and adapted to the structure as to show they were designed to be permanent, and, without which the mill would be incomplete — Held:
    1. That as between the owner of the fee as mortgagor, and his mortgagee, in a real estate mortgage, such property is to be regarded as fixtures.
    2. Where the annexation of said property to the mill was made by the owner, with the consent of the holder of a chattel mortgage upon the property so annexed, such mortgage, though duly filed and renewed, is inoperative, as against a subsequent bona fide mortgagee of the real estate, without notice.
    3. Actual severance before the making of the real estate mortgage, or notice of a binding agreement to sever, is required, in such case, to deprive the mortgagee of the freehold of the right to fixtures.
    Error to the district court of Lucas county
    The original action was prosecuted by the Brennans, plaintiffs, in'the court of common pleas of Lucas county, to recover from Whitaker and Phillips, defendants, damages for the alleged wrongful conversion, by the defendants, of two steam engine boilers, one large steam engine, a quantity of mill shafting, one drum, one balance wheel, the gearing for an upright saw, one muley saw and the gearing, and one poney engine.
    
      The facts, as they appear in the record, are substantially as follows:
    On the 9th of July, 1857, Earley & Ketcham, parties of the first part, executed a mortgage to the plaintiffs, parties of the second part, by which “ the said parties of the first part for and in consideration of the sum of $1231.51, to them in hand paid by the said parties of the second part ... do grant, bargain, and sell unto the said parties of the second part, all and singular the goods and chattels hereinafter described, that is to say: The steam engine boilers now in the possession of said parties of the first part, designed to be used in their sawmill in Oregon township, Lucas county, Ohio, being the same purchased by them of the said J. & J. Brennan this day, together with the engines and machinery attached to said boilers. To have and to hold all and singular the said goods and chattels hereinbefore bargained and sold, or mentioned, or intended so to be, unto the said parties of the second part forever; said goods and chattels now remaining and continuing in the possession of the said parties of the first part, in said Lucas county, Ohio.”
    The mortgage was given to secure the payment of the note of Earley & Ketcham to the plaintiffs, bearing the date of the mortgage, for the sum of $1231.51, payable, with the interest, in one year; it being the amount due for the purchase money of the boilers mortgaged, and was subject to the condition that if default was made in the payment of the note according to its tenor, the plaintiffs might “ enter upon the premises of the said parties of the first part at any place or places where the said goods and chattels or any part thereof may be, and take possession thereof, whether the same shall have been attached to the freehold, and in law become a part of the realty or not, and to remove the same to any place or places they may deem best, and to sell and dispose of the same ”
    The mortgage was filed in the office of the recorder of Lucas county, on the 9th of July, 1857, and copies, with the requisite statements, again filed by the plaintiffs in the same place each year thereafter up t-o the time of the commence ment of this action.
    After the execution of the mortgage, the boilers? v ere put by Farley & Ketcham into a saw-mill, erected by them on land of which they were the owners in fee. They were placed' in an engine house, built principally of brick, on one side of and attached to the main building of the mill. The roof of the mill extended over and formed the covering of the engine house. The boilers were placed — one end on a cast-iron frame, called the fire-front, which formed the front of the furnace, and stood upon brick, the other end on iron stands also resting on the brick. Under the boilers were built, to support them, piers of brick, and the whole was inclosed in brick arches nearly surrounding the boilers, one end of which came up to the fire-frame, and the other was built into the end brick wall of the building. Usually the boilers are attached to the fire-front and brick work by stay bolts, but the witnesses were not able to say whether that was done in this case. The boilers could not be removed, without taking down the brick work around them and a part of the building to make room for them to be taken out. To take the boilers out through the mill would not require the walls of the building to be taken down, but they could be taken out by removing a part of the wood work in front, or by making a hole in the lean-to or engine house, at the rear end of the boilers
    The engines were placed on' wooden foundations and fastened to them with bolts. The large engine was in the brick building with the boilers, the other inside the main building. They were connected with the boilers by steam pipes. The main shaft was connected with the large engine by a connecting rod fastened with keys. The drum and balance wheel were placed on the main shaft and run with it. The gearing for the upright saw was connected by a belt running on the drum. The other saw connected directly with the shaft without any belt. The engines could be taken out; but there was no opening large enough to take out the fly wheel; and perhaps the drum would be too large for the doors.
    
      The mill was completed in the fall of 1857, and was after that time occupied by Earley & Ketcham as a saw-mill, the motive power being furnished by the engine and boilers. The building was designed for a saw-mill, and in its form and structure was adapted to the business of such a mill; and, as appears from a description of the building contained in the record, it would, without material alterations and additions, be comparatively of little value for any other purpose.
    There was no water power connected with the mill, and it depended wholly on steam for its power.
    On the 14th of January, 1859, Earley & Ketcham executed to the defendants a mortgage upon the real estate on which the mill was located and all its appurtenances, to secure an indebtedness owing by them to the defendants. The mortgage was duly recorded in the record of mortgages of Lucas county. This indebtedness was unpaid at the time of the commencement of this action, and the defendants were in the' possession of the mill. The plaintiffs demanded possession, of the property, but the defendants refused to permit them to-take it away.
    The plaintiffs claim that, at the time of receiving their mortgage, the defendants had notice of the mortgage to the plaintiffs. This is denied by the defendants. On the trial the court of' common pleas found this issue in favor of the defendants.
    Upon this state of facts and finding the court of common, pleas gave judgment for the defendants.
    To reverse this judgment a petition in error was filed by the plaintiffs in the district court, where the judgment was affirmed, and the plaintiffs now seek in this proceeding to reverse this action of the district court.
    
      Sill <5* Pratt, for plaintiffs in error:
    I. The finding of the court below upon the issue as to whether the defendants, at the time of taking their mortgage, had notice of the prior chattel mortgage to the plaintiffs, is clearly unsupported by the evidence, and for that reason the-judgment ought to be set aside, and a new trial ordered.
    
      That this is a material issue will not be questioned. Paine, Kendall & Co. v. Mason, 7 Ohio St. Rep. 198.
    II. As to the remaining questions in the case, we say:
    
      First. That this property was not so attached to the freehold as to become necessarily a part of the realty.
    
      Second. That it was competent for the parties to contract with reference to property of this nature,, that, notwithstanding its annexation to the freehold in the manner contemplated, it should continue to be personal property so far as should be necessary to give effect to the mortgage.
    
      T.Jiird. That such agreement, having been made, and acted under by the parties, is binding upon them, and all persons ■claiming ander them.
    
    We cite Sturges v. Warren, 11 Vermont, 433; Brearly v. Cox, 4 Zab. 287; Smith and Britton v. Benson and Peck, 1 Hill, 176; Wells et al. v. Banister et al., 4 Mass. 514; Osgood v. Howard, 6 Maine, 391; Tapeley v. Smith, 18 Maine, 12; Russell v. Richards et al., 10 Maine, 429; Ford v. Cobb, 20 N. Y. Rep. 344; Teaff v. Hewett. 1 Ohio St. Rep. 511.
    
      M. R. & R. Waite, for defendants in error:
    I. Before a judgment will be reversed because the finding ■of the court is against the evidence it must be clearly so. Breese v. State, 12 Ohio St. Rep. 156.
    The finding of the court below in the present case is certainly not so clearly against the evidence as to make it proper for this court to disturb it.
    II. The mortgage to the plaintiffs did not create a lien upon the engines and machinery. Chapman v. Weimer, 4 Ohio St. Rep. 485.
    III. The boilers, engines and machinery, when placed in the mill, were attached to the freehold and became part of the realty.
    A chattel becomes a fixture and part of the freehold when:
    1. It is actually annexed to the realty or something appurtenant thereto.
    
      2. It is appropriated to the use or purpose of that part of the realty with which it is connected.
    3. It is the intention of the party making the annexation, to make the article a permanent accession to the freehold. Teaff v. Hewitt, 1 Ohio St. Rep. 530. Brearly v. Cox, 4 Zab. 289; Allison v. McCune, 15 Ohio St. Rep. 732; Winslow v. Merchants’ Insurance Co., 4 Met. 307, 310.
    IV. The property having been annexed to the freehold, and thus having lost its character as chattels, passed under the mortgage of the -realty to the defendants, having no notice of the plaintiffs’ mortgage, discharged of any lien in favor of the plaintiffs. Fryatt v. The Sullivan Co., 5 Hill, 116; Richardson v. Copeland, 6 Gray, 536.
   White, J.

I. The plaintiffs seek to recover for a tort arising from the conversion of the property in controversy; and, in order to establish their title to such property, as against the defendants Whitaker and Phillips, rely upon the chattel mortgage. In order to ascertain the relation in which Whitaker and Phillips stand to this mortgage, it is proper, in the first place,- to determine whether they had notice of its existence at the time they received their real estate mortgage. The issue, upon this question of notice, has been twice found in favor of the defendants, by the court of common pleas, and this finding we are now asked to review, on the ground that it is against the evidence. On this point, we only deem it necessary to state, that the testimony in the court below was conflicting; and while, as original triers of fact, we would have been inclined to find differently, yet we can not say that the finding is so manifestly wrong as to warrant this court in reversing the judgment on this ground.

II. The next question is whether as .between Earley & Ketcham, the mortgagors, and Whitaker and Phillips, the mortgagees, in the real estate mortgage, the property in controversy, became a part of the freehold ? We are of opinion that it did. A discussion of the general principles to be regarded in determining when additions of personal property become a part of the realty, is here deemed unnecessary. The only difficulty arises in the application of these principles to the solution of particular controversies as they arise; and whether an article has been annexed to the realty so as to become a permanent accession to it, must, in a great degree, be determined by the circumstances of each particular case.

Farley & Ketcham who made the annexations in the present case, were the owners of the fee; and the question we are now considering arises between them, as mortgagors, and their mortgagees, Whitaker and Phillips, who, for the purposes of their security, are to be regarded as purchasers.

The building was erected for a saw-mill, and, in the form and nature oí its structure, was adapted to the business of a mill of that description. The boilers and engines were the only motive power, and were designed so to be when the mill was built. They performed the office of a wheel and waterpower, and their adaptation to the structure and the uses for which it was designed, as well as the mode of their annexation, show that they werp intended to be permanent. They could not be removed without leaving the saw-mill incomplete. The building, itself, for any other purpose, would, without material alterations and additions, be comparatively of little value. The shafting, drum, balance-wheel, gearing for the upright saw, and the muley saw and gearing,' though differing from the boilers and engines in the mode of annexation, yet are to be regarded as fixtures.

The mode of annexation, alone, does not determine the character of the property annexed; but the appropriateness of the articles named to the mill, and their necessity to its completeness, are also to be looked to.

III. The remaining question is, whether the chattel mortgage to the plaintiffs, as against the real estate mortgagees, deprives the property in controversy of the character of fixtures? The plaintiffs claim that this is the effect of the chattel mortgage; and that they have the same right to recover the property from the mortgagees (Whitaker and Phillips), without notice, as they would have had against Earley & Ketcham, if the real estate mortgage had not been given.

It is not necessary to inquire what, as against mortgagees without notice, would have been the right's of a party, other than the owner of the freehold, who might have placed, in the same manner upon the premises, the property in question, under some agreement with the owner, for a temporary purpose, and with the right of removal; nor as to what would have been the effect, if the property had been annexed by the tortious act of Farley & Ketcham. The facts in this case raise neither of these questions, and we forbear entering into an examination of the authorities cited bearing upon them. Here it was not only the intention of Earley & Ketcham to annex the property to, and make it a part of, the freehold, but their so doing was according to the understanding of the parties when the mortgage to the plaintiffs was executed. In the mortgage it said the boilers are “ designed to be used in their (F. & K’s) saw-mill,” and power is given the plaintiffs on default of payment, “to take possession thereof (mortgaged property) whether the same shall be attached to the freehold and in law become a part of the realty or not.” The right1 given to the plaintiffs, by the mortgage, to enter upon the premises and sever the property would, doubtless, have been effectual as between the parties. But the defendants were purchasers without notice of this agreement. The filing of chattel mortgages, is made constructive notice, only, of incumbrances upon goods and chattels. The defendants purchased, and took a conveyance of real estate, of which the property now in question was, in law, a part; and, in our opinion, it devolved upon the plaintiffs who sought to change the legal character of the property, and create incumbrances upon it, either to pursue the mode prescribed by law for incumbering the kind of escate to which it appeared to the world to belong, and for giving notice of such incumbrance, or, otherwise, take the risk of its loss in case it should be sold and conveyed as part of the real estate to a purchaser without notice. It is true that in the case of Ford v. Cobb (20 N. Y. Rep. 344), it was held that an agreement which was evidenced by a chattel mortgage was effectual against a subsequent purchaser of the land, without notice. But it seems to us to be the sounder rule, and more in accordance with principle, and the policy of our recording laws, to require actual severance, or notice of a binding agreement to sever, to deprive the purchaser of the right to fixtures or appurtenances to the freehold. Fortman v. Goepper, 14 Ohio St. Rep. 565; 2 Smith’s L. C. 259; Fryatt v. Sullivan Co., 5 Hill, 116 ; Richardson v. Copeland, 6 Gray, 536; Frankland et al. v. Moulton et at., 5 Wisconsin Rep. 1.

In the case last named, the owner of a steam engine, sold and assisted to annex the same to the realty, reserving a chattel mortgage on the same for a part of the purchase money; and it was held that the chattel mortgage was inoperative as against a prior mortgagee of the real estate. The mode of annexation was very similar to that existing in the case under consideration; and the holding that the chattel mortgage was inoperative as against a prior mortgagee of the real estate, as was likewise done in Copeland v Richardson, supra, restricts the operation of agreements to sever what would otherwise be regarded as fixtures, more than is required to be done for the decision we make, in the present case. Whether the restriction upon the right of removal, that was applied in these cases, can be properly applied in favor of a mortgagee of the real estate, claiming the property added to the premises after his mortgage, as fixtures, and against a party claiming the same property as personal chattels under a chattel mortgage from the owner, when the removal would leave the realty claimed by the mortgagee as a security, in as good plight as when his mortgage was taken, it is unnecessary now to inquire ; and, upon this question, we express no opinion.

The judgment of the district court will be affirmed.

Brinkerhoee, C.J., and Scott, Day, and Welch, JJ., con curred.