Sayles v. National Water Purifying Co. — 41 N.Y. St. Rep. 856

Majority

p. 856

Moses T. Sayles, App’lt, v. The National Water Purifying Company, Resp’t

(Supreme Court, General Term, Third. Department,

Filed November 30, 1891.)

Headnote

1. Sale—Conditional—Receiver—Fixtures.

A knitting mill company purchased a filter of a corporation under a written agreement, by which the title was to remain in said corporation until full payment. The knitting mill company did not pay for the filter, and failed. It had attached the filter to its mill, but only by pipes and ordinary connections. Beld, that as between the corporation and a purchaser, from a receiver of the knitting mill company, of its real estate, said purchaser knowing of the agreement as to the title of the filter, it was personal property and belonged to the corporation, the vendor.

2. Same—Purchaser in good faith—Laws 1884, chap. 315.

As the purchaser from the receiver knew that the filter was not the property of the knitting mill until full payment, and as he knew such payment had not been made, he was not a purchaser in good faith and for value within chap. 315, Laws of 1884.

This action is prosecuted by plaintiff as assignee of an alleged cause of action arising in favor of Kennedy B. Dowsley,' plaintiff’s assignor, against the defendant, for an alleged wrongful entry by defendant upon Dowsley’s premises, and removal of machinery or apparatus, known as the “Rational Filter.”

The plaintiff’s assignor claimed title to the real estate on which the filter was placed, and to the filter, under a receiver’s sale of the real estate in question, and also under several mortgage sales of the same premises. At the time of the receiver’s sale the filter was upon the premises, and the plaintiff claims that, as between the defendant and the purchaser at such sale, was a part of the real estate.

p. 857

The court ordered judgment for. the defendant, and the plaintiff .appeals.

E. F. Bullard, for app’lt; M. L. Stover, for resp’t

The principal, and. perhaps the only question arising on this appeal, is as to whether or not plaintiff’s assignor took title to this filter under the receiver’s sale or the foreclosure sales, in which he was purchaser.

On and prior to the 1st day of December, 1887, the Globe Knitting Co. had the legal title and was in possession of the Mill’s premises and real estate which were afterwards sold by the receiver of that company to Kennedy B. Dowsley, plaintiff’s assignor.

On that day the Globe Knitting Go. made an order on the National Water Purifying Go. of which the following is a copy

“Amsterdam, N. Y., December 1, 1887. “National Water Purifying Co.,

“ 141 Broadway, New York :

“Please furnish one National Filter No. 5, eight inches in diameter, seven feet high, capable of sustaining an internal pressure of sixty pounds per square inch and guaranteed to deliver one hundred and five gallons of bright, clear water per minute. The National Water Purifying Go. to deliver and erect the same on the first floor of the Globe Knitting Mill, Amsterdam, N. Y., without any expense whatever to the Globe Knitting Go.

“ The National Water Purifying Co. to supply such valves and immediate piping connections as are shown on the back of this contract. To prepare suitable place for reception of the filter and to make necessary piping connections with the same. For the above we agree to pay the National Water Purifying Go. the sum of $1,300, less $300 as a testimonial, when the water operates as above.

“ Terms of payment: The title to vest in the Globe Knitting Go. only on full compliance with the above terms and conditions, and on non-compliance therewith the filter to be returned.

“ Signed,

“ Globe Knitting Co.,

“Thomas B. Lawson, Secretary

“Accepted:

“National Water Purifying Go.

“ per H. M. Dental, Pres."

The filter was placed in the mill of the. Globe Knitting Go., pursuant to this contract, and was not paid for by the company. Before July, 1888, and prior to the commencement of this action the Globe Knitting Go. became insolvent and John H. Giles was duly appointed receiver of that corporation, and took possession of its knitting mill, and of all of its property and effects, for the purpose of winding up its affairs, and while so in possession, and on the 4th day of September, 1888, an order of this court was

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made on behalf of the Hational Water Purifying Co. (this defendant) directing the receiver to turn over this filter to that company, on the payment to the receiver of an amount claimed to have been expended by the Knitting Co. On the 27th of April, 1889, the receiver sold the real estate of the Globe Knitting Co. to plaintiff’s assignor and conveyed the same to him by deed, reciting one dollar as the consideration in such deed. At the time of the execution of this deed the defendant had not removed the filter from the mill.

Upon this state of facts the learned trial court held that the purchaser under the receiver’s sale got no title to the filter. By the receivership the receiver got no greater or better right than the Globe Knitting Co. had, and could only as receiver convey the interest which vested in him as receiver, and if as between the defendant and the Knitting Co. defendant retained the title to the filter, the same right would remain in the defendant as against the receiver and his grantee. As a general rule, the receiver gets only such title as the defendant or judgment debtor has in the estate of which he takes possession. Beach on Eeceivers, 156, § 204. In Bell v. Shibley, 33 Barb., 614 , Bockes, J., in discussing the rights and powers of receivers, says: “ The receiver is in no better condition, as he stands in the place of the company and has no better rights.”

It has been repeatedly held that a receiver is subject to all the lights and equities existing against the company. In Hyde v. Lynde, 4 Coms., (4 N. Y.,) 392, Bronson, J, says: “ The recovery in this case seems to have gone upon the ground that the receiver had greater rights than those which belong to the company. But for the most, if not for all, purposes he took the place and stood as the representative of the company. He is as much bound by a settlement which the company was authorized to make as was the company itself. It would be strange, indeed, if the legal acts of the corporation did not bind the receiver of its effects.” Adopting, as I think we must, this as the settled law, we must hold that if the defendant by the reservation in the bill of sale reserved the title to this filter, or in other words, if the delivery of the filter under that agreement conferred no title on the Knitting Co., then the receiver got no title by virtue of the receivership and could confer none upon the purchaser of him.

The important question, therefore, is, did defendant by virtue of the contract with the Globe Knitting Co. and the annexation of the filter to the mill, as the same was annexed, so far divest itself of .the title to the filter as that it would pass on the conveyance to the receiver as a fixture of the mill or an appurtenant to the mill property, under the circumstances of the case, after the court had by order directed the receiver to deliver and turn over the filter to the defendant and permit it to remove the same?

We think not, as between the defendant and the Globe Knitting Company it was expressly agreed that no title to the filter should pass until it was paid for.

The Knitting Company, until that condition was complied with, was a mere bailee of the filter as between it and the defendant,

p. 859

and any annexation to the mill by the Globe Knitting Company could not change that character or relation between it and the defendant. But it does not appear to have been so annexed to the mill as necessarily to give it the character of real estate, especially between the bailor and bailee. The judge finds as a fact that in removing the filter the defendant did no damage to the real estate, and the only evidence of annexation was its connection by pipes with other machinery, the filter itself setting loosely upon the floor without any fastening to the same. It is clear that the filter was not a part of the building itself or necessary to the construction, existence or support of the building, and that therefore it was in its nature a chattel, unless by its annexation it had become a part of the realty.

It was, therefore, of such a character as to be the subject of an express agreement between the parties, so that it might retain its character as personal property, although temporarily affixed to the freehold in such a manner that it would pass with the real estate but for the agreement.

In Ford v. Cobb, 20 N. Y., 348 , it was held that bricks to be placed in a wall for the construction of a building could not retain their character as personal property by virtue of any agreement that they should remain such after placed in a building. But it was also in the same case held that salt kettles bought on credit and mortgaged to the seller as personal property, continued to be such after they were set securely in an arch for the manufacture of salt in such a manner as to become real estate but for the mortgage. And the rule is well-settled that erections by the tenant for the purpose of his trade and so affixed to the freehold as to pass on sale if erected and annexed in like manner by the owner, remain as between the landlord and tenant, but trade fixtures, and removable as chattels. Holmes v. Tremper, 20 Johns., 29 ; Miller v. Plumb, 6 Cow., 665 . In Ford v. Cobb, supra, after referring to this class of cases, Denio, J., says: “If a subject which would otherwise be real estate can be made personal by the creation of a special relation between parties, it is clear that parties may effect the same thing by express agreement.”

In Tyson et al. v. Post, 108 N. Y., 221 ; 13 St. Rep., 504 , Andrews, J., says : “ But as by agreement for the purpose of protecting the rights of vendors of personalty, or of creditors, chattels may retain their character as chattels notwithstanding their annexation to the land in such a way as in the absence of an agreement would constitute them fixtures.” Within these authorities and the principles upon which they stand, as illustrated in numerous other cases which might be cited, it is clear that this filter as between the Globe Knitting Company and these defendants was not a part of the real estate, and did not pass to the receiver as such, and as we have seen they retain the same character in his hands as in the hands of the company to whose rights and interests he succeeded, and cannot, therefore, be treated as real estate in his hands under his receivership. But it is insisted that if this filter is to be treated and regarded as personal property, that then the condition in thé contract of sale that the title should remain in the

p. 860

defendant is inoperative under the provisions of chapter -315 of the Laws of 1884, for the reason that it was not filed. That act provides that: “ In every contract for the conditional sale of goods and chattels hereafter made which shall be followed by an actual and continued change of possession of the thing contracted to be sold, all conditions or reservations which provide that the ownership of said goods and chattels is to remain in the person so contracting, other than the one so contracting to buy them, until said goods or chattels are paid for, or until the occurring of any future event or contingencies, shall be absolutely void as against subsequent purchasers and mortgagees in good faith, and as to them shall be deemed absolute, unless such contract for sale, with such conditions and reservations therein, or a true copy thereof, shall be filed as directed in this act”

The contract in this case comes clearly within the provision of the act, and if the plaintiff’s assignor was within the protection of the beneficial provisions of this statute, it would be decisive of this action. But the trial court has found, we think upon sufficient evidence, that the plaintiff’s assignor at the time he became the purchaser of this property knew that the filter was not the property of the Globe Knitting Mills, and was not, therefore, a purchaser in good faith, or for a valuable consideration, of the filter.

As the question of good faith was one of fact, it was for the trial court, and unless this court can clearly see that the finding was against the clear weight of evidence, it should not interfere.

On the whole case we see no sufficient reason for reversing this judgment

Judgment affirmed, with costs.

Learned, P. J., and Landon, J., concur.