McCloskey v. Henderson

The plaintiff brought this action to recover for the alleged conversion of certain property conceded to have been in the possession of defendant. It consisted of a considerable amount of material supplied by plaintiff for the purpose of constructing and installing heating plants in a large number of dwelling houses and part of which had been actually installed and attached to the buildings and part of which was lying loose and

The substantial facts presenting the questions which we aró to consider are as follows:

Defendant sold to the Renslaw Realty Company two pieces of land in the borough of Brooklyn and took back two purchase-money mortgages, each to secure payment of the sum of $21,250. The purpose of the realty company in purchasing this land was to erect thereon a considerable number of dwelling houses, and in order to carry forward this purpose three agreements were made which enter into the present controversy.

A building loan agreement was made with the Lawyers’ Title Insurance and Trust Company to advance from time to time in installments on each of the buildings to be erected a certain sum to be secured by mortgage, and in said agreement it was expressly agreed “ that all * * * furnaces, ranges, mantles, grates and similar fixtures and articles and every fixture and improvement attached to or placed in the said buildings to be used in connection therewith shall in each case form part of the mortgaged premises and shall be respectively covered by and subject to the liens of the mortgages given to secure the advances herein provided for.” It, secondly, was agreed that if certain initial payments were made upon the above-mentioned mortgages given to defendant he would subordinate the liens thereof to mortgages to be given to the Title Company above mentioned to secure the advances by it from time to time

The various parties entered upon the performance of the agreements above mentioned. The plaintiff supplied materials for the construction of heating plants in the different houses and partially completed the installation thereof. Between the dates when such materials were so supplied and affixed to the realty in the process of installing such plants and the date when the conditional sales agreement between plaintiff and the Realty Company was filed in the register’s office the Title Company under its mortgages advanced various installments of moneys used in the erection of said buildings and the defendant, the initial payments having been made upon his mortgages, executed various agreements subordinating the liens thereof tó the mortgages taken by the Title Company to secure payment of the installments by it thus advanced.

After a while the building scheme of the Realty Company collapsed and operations thereunder were suspended. The defendant went into possession of the premises, whether strictly as mortgagee in possession or not it does not appear, and subsequently on the foreclosure of his mortgages became the purchaser of said premises subject to the liens of the mortgages held by the Title Company which so far as appears have never been paid. While he was thus in possession before the foreclosure sale and again after purchase under the latter, demand, assumed to have been sufficient in form, was made upon

Upon the record and arguments as now presented we do not see any opportunity for debate of the proposition that plaintiff was entitled to recover the value of his tools which had been brought upon the premises for carrying on his work and which defendant refused to surrender. We, therefore, pass this branch of the case without further discussion in order to proceed with the consideration of the questions which arise in connection with the property delivered by plaintiff on the premises under his conditional -bill of sale and of which part had been attached to the realty and part had not. We shall take up first a consideration of the property which had been attached.

It seems to have been thought at the Trial Term and still to be thought by counsel that the question whether plaintiff can recover for the value of this property depends upon the further query whether it can be removed without injury to the realty and this was one of the questions submitted to the jury. But we prefer not to make that the controlling question. The evidence quite conclusively indicates that the property which had been actually installed and affixed to the real estate would have become part thereof and not removable unless this result was prevented by special circumstances indicating a different and controlling intention. It will be assumed that if it was operative the conditional character of plaintiff’s contract for furnishing the heating plants would have been such proof of the intention of the parties as would have prevented the property from becoming realty. (Fitzgibbons Boiler Co. v. Manhassett Realty Corp., 125 App. Div. 764 ; reversed on dissenting opinion, 198 N. Y. 517 .) A decisive question, therefore, becomes the one whether plaintiff lost the benefit of the conditional sales provisions. of his contract and was prohibited from detaching and taking away such prop

That company advanced certain installments under its mortgages between "the times when the plaintiff’s property was attached to the realty and the. date when the conditional sale agreement was filed, as provided by the statute, and there is no suggestion that it was otherwise chargeable with knowledge of the conditional character of plaintiff’s contract. The statute applicable to such conditional sales provides that “ Every such contract for the conditional sale of any goods and chattels attached, or to be attached, to a building, shall be void as against subsequent bona fide purchasers or incumbrancers of the premises on which said building stands, and as to them the sale shall be deemed absolute, unless, on or before the date of the delivery of such goods or chattels at such building, such contract shall have been duly and properly filed and indexed as directed in this article,” etc. (Personal Property Law [Cons. Laws, ch. 41], section 62.) Under these circumstances in our opinion the Title Company as to its mortgages covering the installments which have been mentioned was plainly a bona fide incum- . brancer under the statute; the lien of its said mortgages covered the property affixed to the realty and it would have been an act of waste for the plaintiff to tear out the same which said Title Company could have forbidden and enjoined. , (Kirk v. Crystal, 118 App. Div. 32 ; affd., 193 N. Y. 622 ; Schmaltz v. York Mfg. Co., 204 Penn. St. 1 .)

We then consider what position defendant had acquired at the time of the alleged conversion as to such attached property. We do. not think that by subordinating his mortgages to the installments advanced by such Title

First, as it now appears defendant originally was in possession of the premises, so far as this question is concerned, in the general character of a mortgagee in possession and undoubtedly it was his duty to the first mortgagee, the Title Company, to refrain from committing waste himself and within certain limits to preserve the property from waste and destruction by other causes. As such he had a perfect right and an undoubted duty to refuse to aid plaintiff in his unlawful purposes by helping to detach and defiver to him the property in question. He would have made himself personally fiable for waste if he had done otherwise than he did. (Barnett v. Nelson, 54 Ia. 41 ; Turner v. Johnson, 95 Mo. 431 , 438; Miller v. Ward, 111 Me. 134 ; Benham v. Rowe, 2 Cal. 387 ; Shaeffer v. Chambers, 6 N. J. Eq. 548 ; Morse v. Whitcher, 64 N. H. 590 ; Place v. Sawtell, 142 Mass. 477 .)

Furthermore, and in the second place, we think that under the circumstances of this case the defendant in his own right and for the protection of the lien of his own mortgages was justified in refusing to consent to the proposed acts of waste by plaintiff. The evidence fairly justifies the inference that the mortgagor had become insolvent and that the premises were insufficient security for the mortgage liens. The defendant had subordinated his mortgages to the lien of the mortgages of the Title Company under circumstances and statutory provisions which gave the latter a lien for payment of its advances, so given priority, upon property which we are assuming was not subject to the lien of defendant’s

There is some evidence of a renewed demand by plaintiff upon defendant for this property after the latter had become a purchaser at the foreclosure sale, but it does not appear to us that the situation had then so changed as to require any further discussion or different conclusions of or as to the rights of the parties. If defendant was guilty of conversion in not complying with the first demand plaintiff’s cause of action then became complete and he gained nothing by a further demand. If, as we think, defendant had the right to refuse plaintiff’s demand when he was in possession as a mortgagee, this right was not diminished or lost when he became seized and possessed of the premises as a purchaser at the foreclosure sale.

This leaves for final consideration the rights of the 'parties in respect of materials which had been delivered upon the premises but not installed as a part of the heating plants or attached to the premises, but which are described as “ lying loose ” thereon. The evidence in .respect of this class of materials is so indefinite and the discussion so incomplete that we can only speak in a tentative manner and subject'to further consideration hereafter if the question becomes material.

Assuming that this so-called loose material had not in any manner been attached to the realty and that it was not so connected with that which had been attached as

Therefore, as stated,1 without finally determining this question beyond the opportunity for a reconsideration if it shall be material, it seems to us upon the evidence as now presented that the plaintiff was entitled to- retake this detached property and that defendant was guilty of conversion in refusing to surrender it to him.

These views lead to the conclusion that the judgment of the Appellate Division dismissing plaintiff's complaint should be reversed and a new trial ordered, with costs to abide event.

This action was brought to recover sixteen hundred dollars, the value of certain chattels alleged to be the property of plaintiff and to have been wrongfully detained by defendant.

The defendant was owner of two certain pieces of land in the borough of Brooklyn, one piece two hundred by one hundred feet situated on the easterly side of Bedford avenue about two hundred and forty feet south of Farragut

On March 17th, 1914, defendant conveyed the two several tracts of land to the Renslaw Realty Company, hereinafter referred to as the “ Realty Company.” On the same day the Realty Company executed two purchase-money mortgages, each mortgage to secure the sum of $21,250; one of said mortgages covered the easterly premises and the second one of the mortgages the westerly premises. The two mortgages were duly recorded in the office of the register of Kings county March 18th, 1914. Each of the mortgages provided for the payment of $6,250 thereon July 10th, 1914, and $15,000 and interest on May 1st, 1916. The premises described in each of the mortgages was vacant property, and as appears by recitals contained therein the Realty Company, mortgagor, contemplated the erection of eleven houses on each of said two tracts of land. That the Lawyers Title, Insurance and Trust Company, hereinafter designated as the “ Title Company,” was to advance from time to time on twenty-one building loan mortgages a sum not exceeding $4,500 on each of the buildings to be erected on the two several pieces of land. The defendant ■ mortgagee covenanted in each of the two mortgages that upon .the payment to him of the sum of $6,250 on account of principal, to be paid July 10th, 1914, he would subordinate each mortgage to the different advances as the same are made from time to time on the building loan mortgages by the Title Company.

In July, 1914, defendant received from the Realty Company $12,500 on account of the principal of said mortgages.

On April 30th and June 12th, 1914, the Realty Company and the Title Company entered into two agreements

The agreement of April 30th was filed in the office of the register of Kings county and the mortgage accompanying the same recorded in the same office on May first.

April 15th, 1914, the plaintiff submitted to the Realty Company a proposal in writing to furnish and complete the steam heat apparatus as per specifications for the net sum of $3,366. Houses were to be built in groups of eleven each, i. e., on the easterly premises and the westerly premises. Payments were to be made on each at enumerated times. All materials furnished under this contract were to remain the property of plaintiff until fully paid for in cash and the agreement fully satisfied. In case of default of payment of any sum due under the contract plaintiff was authorized to remove the material from the premises, The proposal was accepted by the

The plaintiff continued to deliver articles, materials, etc., and to perform labor incident to an installation of the steam apparatus in the houses on the easterly premises until late in August, when all work was discontinued by the Realty Company. At that time, according to the evidence of plaintiff, the boilers were in place and set up" by the flues, some of the boilers were not connected and water connections had not been made, the smoke stacks were there but were not in, all rising pipes were up through the floors, some special radiators were wanting there and forty-three or forty-four radiators were lying around loose in various rooms, and there was very little stuff to be furnished but certain loose material was lying around the premises. Upon the westerly premises the only articles delivered were rough piping that had been strung and some riders run up. September 12th, 1914, the defendant commenced an action to foreclose his mortgages. Judgment was thereafter and on November 25th, 1914, entered and the lands covered by the mortgages were sold December 31st, 1914, to defendant subject to the rights of the holders of conditional bills of sale or chattel mortgages if any.

Work on the houses having been stopped by the Realty Company late in August, the plaintiff early in October asserted ownership of the various articles and materials delivered by him upon the premises and made demand of defendant therefor. He was not permitted to remove the property and thereupon brought this action for a wrongful detention of the same.

Upon the trial there arose a conflict of evidence as to whether or not the articles in place could be removed

The order of the Appellate Division and the consequent judgment thereon must be reversed and a new trial granted.

The complaint alleged a wrongful detention by. defendant of articles, material, etc., together with a tool chest containing steam fitter’s tools, all of which were enumerated in a bill of particulars.- Evidence of a detention by defendant of the chest and tools after a demand for the same and that the value thereof was ninety dollars was offered by plaintiff and was ample to justify a recovery for the chest and tools irrespective of any inaterial or articles.

Counsel in his brief urges that by reason of the intention of the parties to the conditional bill of sale, i. e., the plaintiff and the Realty Company, the materials and articles delivered by plaintiff were a part of the realty; that the conditional bill of sale not having been filed until after the delivery of such materials and articles was void under the provisions of section 62, Personal Property Law (Cons. Laws, ch. 41), which provides in substance that a contract for the conditional sale of any goods and chattels attached, or to be attached, to a building shall be void as against subsequent bona fide purchasers or incum

As to the first class, the record does not disclose advances of money without notice, after the delivery of chattels and performance of work by plaintiff, by a prior mortgagee unless it be by the Title Company whose rights, remedies or liability as between it and plaintiff are not involved in this action, the Title Company not being a party thereto.

The second and third classes may be considered together. Concededly the defendant was a prior mortgagee. His mortgage was recorded March 18th, 1914, several weeks before the conditional bill of sale was entered into on April 23d. Under the terms of the mortgages, defendant covenanted that upon payment of a certain amount on account of principal of the mortgages on July 10th, 1914, he would subordinate' the mortgages held by him to the different advances as the same should be made from time to time by the Title Company on the building loan mortgages.

. Payments of the amount agreed upon on account of principal on the mortgages held by defendant were made July 10th, 1914. Prior to such payments and between April 30th and July 10th defendant executed six several subordination agreements, some of which were executed prior to the delivery of any material by plaintiff.

By the terms of the same agreement the houses of the Realty Company were each to cost a sum in excess of the amount to be advanced by the Title Company. These facts do not justify the suggestion that the defendant

My conclusion is that defendant is not entitled to invoke the protection of the Personal Property Law. A reference to the remaining subordination agreements is unnecessary.

The plaintiff and the Realty Company were at liberty to contract that the goods and chattels to be furnished by plaintiff should retain their character as personal property even though they should be attached to the realty, subject, however, to the limitation that such contract would not extend to such portion of the chattels as could not be removed without practically destroying them or when they were essential to the support of that to which they were attached. (De Bevoise v. M'aple Ave. Const. Co., 228 N. Y. 496 .)

Upon the trial of the action evidence pro and con was given bearing upon the question as to whether or not any of the articles furnished by plaintiff were so attached to the buildings that they could be removed therefrom without injury to the same and the controverted fact was submitted to the jury who by answer to the specific question found in the affirmative.

The action being one for a wrongful detention of property it was incumbent upon plaintiff to establish a right of possession to the same. That proof he offered through the conditional bill of sale, and evidence tending to show that the property could be removed without injury to the realty or. the articles together with evidence tending to show a demand made by him of defendant for the property, a refusal on the part of defendant to permit a removal of the same and an assertion of ownership by defendant of the property and command that plaintiff leave the premises. The nature of the action,

McLaughlin and Crane, JJ., concur with Hiscock, Ch. J., and Cardozo and Pound, JJ., also concur, limiting themselves, however, in respect of right of defendant to refuse to deliver possession of property affixed to the real estate to ground first stated in opinion, and Hogan, J., reads opinion concurring in result; Andrews, J., dissents and votes to affirm judgment of Trial Term.

Judgment reversed, etc.