Hyperlawhypertext legal database New York Investment & Improvement Co. v. Cosgrove 47 A.D. 35

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New York Investment & Improvement Co. v. Cosgrove

47 A.D. 35 Court N.Y. App. Div. English

Delivered by Barrett, J.:

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The New York Investment and Improvement Company, Appellant, v. Joseph J. Cosgrove and Others, Respondents.

Headnote

A mortgage to secure future advances as buildings progressed—right of a plumber putting in materials to remove them after advances have been made.
Where an owner of land who is erecting a house thereon, after executing two mortgages upon the premises to secure payment of advances to be made by the mortgagee as the work progresses, enters into a contract for the purchase of certain plumber’s fixtures, capable of being removed from the premises without injury to the freehold, which contract provides that the title to the fixtures shall remain in the vendors until payment is made, and which is filed the day after the work is begun, pursuant to section 112 of the Lien Law (Laws of 1897, chap. 418), the mortgagee who, in. ignorance of the contract, has advanced a further sum upon the substantial completion of the work, is in no better position as to the articles in question than a subsequent purchaser or mortgagee thereof, and cannot restrain their removal from the premises by the plumbers upon the owner’s failure to pay therefor.
Appeal by the plaintiff, The New York Investment and Improvement Company, from a judgment of. the, Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 12th-day of October, 1899, upon the decision of the court, rendered after a trial at the New York Special Term, dismissing the' complaint upon the merits.
On September 10, 1898, the defendant Campbell, the owner of the premises No. 18 Morningside avenue, New York city, executed to the plaintiff two mortgages thereon for $15,750 and $14,250. The latter was made to secure the repayment of sums which the plaintiff agreed to. advance to' Campbell, to aid in the- construction of a build
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ing upon the premises, under a certain building loan agreement. This agreement provided for fourteen payments to be made as the work progressed. The thirteenth installment of $1,100 was to be paid when the plumbing work was fully completed. On March 17, 1899, the defendants Cosgrove and Simons made a contract with Campbell to furnish and put in certain water closets, wash basins, tubs, sinks and similar articles, commonly known as plumbers’ fixtures. The contract provided that title should remain in the vendors until full payment had been made, and that in any case of default the vendors might enter and remove ■ the property. They commenced to supply the articles on March 30, 1899, and on the follovring day duly filed their contract in the register’s office of the county of New York as provided by -statute. Upon substantial completion of the work, the plaintiff, without actual knowledge of the agree-' ment between Campbell and Cosgrove and Simons, made the payment agreed to be made at this period to the former. This action is brought to restrain the removal of the property from the premises by defendants Cosgrove and Simons, defendant Campbell having defaulted in the payments.
Alfred B. Cruikshank, for the appellant.
Joseph A. Flannery, for the respondents.

The plaintiff’s argument rests largely upon the' assumption that the vendors of the plumbing materials by their own act made them a part of the' realty. But this assumption is erroneous. The trial court found upon sufficient evidence that these plumbing matérials could be removed without injury to the freehold. In such a case it has long been settled in this State that articles, which would ordinarily become fixtures bn account of their nature and the manner of their annexation to the realty, may retain their character as personal property by reason of a special agreement to that effect between the parties. (Ford v. Cobb, 20 N. Y. 344 ; Tifft v. Horton, 53 id. 377 .)

The plaintiff also contends that, because the materials had apparently been made a part of the realty by the acts of the vendors, and because its advances were made in reliance upon this condition of the property, without actual knowledge of the reservation of title

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contained in the contract of sale, the vendors cannot now be heard to assert their title. It is, however, well settled that the rights of the mortgagee of the realty are dependent upon the character of the materials as determined by the agreement between the vendor and vendee, regardless of his knowledge or ignorance of that agreement. (Ford v. Cobb, supra; Tifft v. Horton, supra ; Duffus v. Howard Furnace Co., 8 App. Div. 567 ; Kerby v. Clapp, 15 id. 37; Lange v. Pisch, 61 N. Y. St. Repr. 111 ; Tyson v. Post, 108 N. Y. 217 .) In other words, the law recognizes the absolute right of the vendor of personal property to retain his title thereto as security for payment.

Undoubtedly this common-law right has been curtailed by statute (Laws of 1884, chap. 315; Lien Law, Laws of 1897, chap. 418). The latter act. provides (§ 112) that a condition in a contract of sale reserving the title to the vendor until payment, “ shall be void as against subsequent purchasers, pledgees or mortgagees in good faith * * - , unless such contract * ' * * or a true copy thereof be filed as directed in this article.” The statute was, undoubtedly, framed with the view of protecting the rights of subsequent purchasers or mortgagees of chattels, transferred by a conditional bill of sale. It had previously been held that one having possession of personal property under such a conditional agreement for its purchase, could give no title thereto to a purchaser, although the latter acted in good faith and parted with value without notice of the want of title of his vendor. (Austin v. Dye, 46 N. Y. 500 ; Ballard v. Burgett, 40 id. 314.) The statute, recognizing this rule, provided for record notice substantially as in the case of chattel mortgages. The plaintiff cannot be in any better position under its mortgage upon the realty than it would have been in had it advanced its money upon the materials before they were annexed to the building and taken a chattel mortgage thereon. In that case, prior to this statute, even such a subsequent mortgage upon the unannexed chattels would not have availed, it. Nor, since the, statute, would it have availed it, if the conditional vendor had duly filed his contract. Why then should its mortgage upon the realty give it any greater rights ? If this section of the Lien Law is applicable to all contracts for the conditional sale of chattels, where, their personal character, although they may be annexed to the freehold,

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is retained by special agreement — and that we think is its fair construction— then the conditional vendor here has done all that the law required of him to preserve his rights. He could do no more. •And if what he has thus done is in sufficient to protect him, it must be because the annexation of the materials to the freehold takes the case out of the statute and out of the rule as to conditional sales which preceded the statute. But even if the annexation excludes the statute and the rule — which we do not concede—then the ordinary rule laid down in Ford v. Cobb (supra) applies ; and, as the materials can be removed without injury to the building, the “ convention ” of the parties in nowise clashes with the nature of the subject. The reservation in the conditional contract of sale should consequently be enforced. Hpon the effect of the annexation upon the conditional sale, the case of Ford v. Cobb is more directly in point than even Tifft v. Horton. It was there held that certain salt kettles, upon which the vendor had a chattel mortgage for the purchase price (which he duly filed) did not pass to a subsequent grantee of. the salt works, although • the kettles were embedded in brick arches upon the premises. The court said : “ The kettles were originally personal property. The agreement contained in the chattel mortgage preserved their character as personalty, which would otherwise have been, lost by their annexation. They, therefore, continued to be personal chattels^ notwithstanding the annexation; and the plaintiff, by filing the mortgage, observed all the formalities required by law to preserve their lien upon that kind of property. The title to the kettles did not, therefore, pass by the conveyances to the plaintiff.” There can be no reason for distinguishing between the result of a compliance with the statute requiring the filing of chattel mortgages and the present one relating to conditional sales.

The judgment should be affirmed, with costs.

Van Brunt, P. J., Rumsey, O’Brien and Ingraham, JJ., concurred.

Judgment affirmed, with costs.

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