Newman v. Montrose Realty Co.

This is an action to recover damages for the conversion of electric fixtures alleged to have been installed in a building under a conditional sale agreement to secure payment of the purchase price. The defendant is a purchaser of the premises upon foreclosure of a building loan mortgage and refused to allow the fixtures to be removed. The plaintiff’s assignor sold the fixtures and agreed to install them in an apartment house in course of construction by the Lentz Realty Company. The bill of sale at first provided that title should remain in the vendor until full payment of the purchase price, and was duly filed on March 11, 1912, pursuant to the requirements of the Personal Property Law. The Lentz Realty Company had contracted for advances of money upon the property and building under a building loan mortgage from one Rosenthal. In May, 1912, a payment became due from Rosenthal to the Lentz Realty Company under the building loan agreement, and Rosenthal objected to' the conditional bill of sale upon the electric fixtures. Thereupon the matter was taken up with the plaintiff’s assignor, and a new agreement made for the fixtures at a price which was $75 less than that originally charged.

The second conditional sale agreement was not filed by the vendor until July 30, 1912, several months later, at which time all the advances under the building loan mortgage had been made, the fixtures had been delivered to the premises, and the work of installing them practically completed. It was clear, therefore, that if the building loan mortgage was an incumbrance upon the electric fixtures, the plaintiff’s conditional sale agreement was not binding upon the mortgagee, Rosenthal, unless he had actual notice of - it, since it was not filed in time to charge him with notice.

[1] The building loan agreement provided that the borrower should erect a six-story elevator apartment house, in which all rooms should have gas and electric lights, and one of the conditions of the final payment provided therein was that the gas and electric fixtures should be in and apartments ready for occupancy. This building, so- equipped, was the security for the loan. Though electric fixtures, when installed for the convenience of a tenant in a private house, to be removed by the tenant at his pleasure, have been held to be personal property, and not an improvement upon the real estate (Caldwell v. Glazier, 138 App. Div. 826 , 123 N. Y. Supp. 622 ), I think there can be little doubt that where, as in the casé at bar, an apartment house with accommodations for many tenants is fitted out complete with gas and electric fixtures of a common design, according to a common decorative scheme, the intention is to make a permanent improvement to the building and the said fixtures become a part of the real estate (Wahle-Phillips Co. v. 59th Street Co., 153 App. Div. 17 , 138 N. Y. Supp. 13 , affirmed without opinion 214 N. Y. 684 , 108 N. E. 1110 ). I am of the opinion, therefore, that upon the. undisputed facts the electric fixtures became a part of the security for the loan, and the refusal of the learned trial justice to so charge the jury was reversible error.

[2] Upon the questions 'of fact whether the goods were actually sold under a conditional agreement of sale and whether the mortgagee ■had notice thereof, I think the verdict of the jury was against the weight of evidence. The plaintiff’s explanation of the cancellation of the first conditional sale agreement of record and the vendor’s denial of the transaction with Rosenthal were hardly credible in the face of- the facts that the purchaser’s copy of the contract supported the defendant’s version of the matter. No satisfactory reason was shown why the two ’ so-called “copies” of the contract, both on the vendor’s letter head forms, were not alike.