McFadden v. Allen — 48 N.Y. St. Rep. 324

Majority

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Alexander McFadden, App’lt, v. Van Buren Allen et al., Resp’ts.^[1]

(Court of Appeals, Second Division,

Filed October 1, 1892.)

Headnote

1. .Moetgage—Fobeclostjee—When pebsonal pbopeety goes with ' LAUD.

Plaintiff took possession of certain premises by virtue of an oral agreement by which he was to have a deed when he had paid the mortgage, and to make such improvements as he chose, with the right of removing them if he failed to pay the mortgage. He occupied the property eight years, adding new buildings and machinery. While in possession the plaintiff and his father gave a second mortgage, and the mortgagees, who had no notice of the oral agreement, were made parties to the foreclosure of the first mortgage and became the purchasers at the sale, and conveyed to defendant. Meld, that plaintiff cannot be permitted now to assert as against the mortgagees of the second mortgage that the buildings and machinery were not fixtures.

3. Same.

Plaintiff’s position was that of a beneficial owner, subject to the mortgage, and all improvements which he made upon the property were subject to the rules of law applicable to mortgagors and mortgagees.

(Pabkeb, J., dissents.)

Appeal from a judgment of the general term of the third judicial department, affirming a judgment dismissing the complaint on the merits which was entered on a nonsuit.

C. A. Kellogg, for app’lt; John C. Keeler, for resp’ts.

In determining, as between mdrtgagor and mortgagee, whether articles are or are not fixtures, the same rules .prevail which are applicable to cases arising between grantors and grantees. Snedeker v. Warring, 12 N. Y., 170 . Gardner v. Finley, 19 Barb., 317 ; Laflin v. Griffiths, 35 id., 58; Robinson v. Preswick, 3 Edw. Ch., 246 ; Main v. Schwarzwaelder, 4 E. D. Smith, 273 ; 1 Dart. V. and P., 6th ed., 607; 1 Jones Mort., § 428. And as between mortgagor and mortgagee the same rules are applicable to articles placed on the mortgaged premises by the mortgagor after the execution of the mortgage. Gardner v. Finley, 19 Barb., 317 ; Rice v. Dewey, 54 id., 455, 472 ; Sullivan v. Toole, 26 Hun, 203 ; Walmsley v. Milne, 7 C. B., N. S., 115, 135; Winslow v. The Merchants' Ins. Co., 4 Met., 306 ; Ex park Belcher, 4 Dea. & Ch., 703 ; Ex parte Reynal, 2 M., D. & De Gex, 443; 1 Jones Mort., § 436 ; 1 Sug. Vendors, 7 Am. ed., 37, note 1; Phoenix Mills v. Miller, 4 St. Rep., 787 . In the case last cited the rule was well stated as follows: “A mortgagee of real property is entitled to have his lien respected as to all that was realty when he accepted the security ; also, as to all accession to, the realty; save, perhaps, when the accession is made under an agreement with the party that its purchase price or expense shall be secured and is secured by a lien thereon.”

The same rules apply to articles annexed to the premises by a subsequent grantee or vendee in possession under an executory contract to purchase. Eastman v. Foster, 8 Met., 19 ; Lynde v. Rowe, 12 Allen, 100 ; Glidden v. Bennett, 43 N. H., 306 ; Cooper v. Adams, 6 Cush., 87 ; Ogden v. Stock, 34 Ill., 522 ; Poor v. Oakman, 104 Mass., 309 , 318; 1 Wash. R. P., page 2, par. 4.

Bearing these general rules in mind, it remains to apply them to the particular facts involved in the case at bar, which briefly are as follows: Jeremiah McFadden was the owner in fee of eighteen acres of land, upon which was a mill pond, saw mill, •dwelling and barn. December 11, 1878, he mortgaged the property to Orson Wallace to secure the payment of $400 five years thereafter, with semi-annual interest, which mortgage was duly recorded September 2, 1879. The plaintiff, a son of Jeremiah McFadden, occupied the premises from December, 1879, until May 21, 1887, when he was ejected by a writ of assistance, issued in and in pursuance of a sale made by virtue of a judgment foreclosing said mortgage.

The plaintiff testified that it was orally agreed between himself and his father that the former should take possession of the property, have the use of it, and when he had paid the mortgage he was to have a deed. The son was to make such improvements as he chose, with the right of ■ removing them if he failed to pay the mortgage and acquire the property. Under this contract the son occupied the property for nearly eight years, and' added to it some new buildings and machinery. Under this contract the plaintiff became the equitable owner of eighteen acres, and on paying the mortgage could have compelled a conveyance of the legal title by his father. Freeman v. Freeman, 43 N. Y., 34 . The

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plaintiff could have devised the land, and had he died intestate, his interest held under this oral contract would have descended to his heirs subject to the dower right of his widow. Cogswell v. Cogswell, 2 Edw. Ch., 281 —289 ; Griffith v. Beecher, 10 Barb., 432 ; Warren v. Fenn, 28 id., 333 ; Dayton’s Sur. (3d ed.), 630. While in possession of the eighteen acres under this arrangement with the father, the plaintiff and his father-, with their wives, executed a mortgage on the eighteen acres and another parcel of thirty-seven acres, June 16, 1885, to secure $634.26, to Frances L. and Anna'M. Harrison, who were made defendants in the action to-foreclose the first mortgage, and they became the purchasers at the sale and afterward conveyed to the defendant. It is not asserted that Wallace, the first mortgagee, or the Misses Harrison had notice, actual or constructive, of the alleged contract between the father and the son. The son, by the execution of the mortgage, treated the eighteen acres as his own and the building» and the machinery as a part of it, and he cannot now be permitted to assert, as against the Misses Harrison, or the defendant, their grantee, that the buildings and machinery were not fixtures.

The plaintiff, his wife, Jeremiah McFadden, his wife, Frances L. Harrison and Arma-M. Harrison were defendants in the action-brought by Orson Wallace to foreclose his mortgage, and were personally served with the summons and complaint in that action, The complaint contained this allegation : “ The plaintiff further shows upon information and belief that Alexander McFadden, Lunetta McFadden, Frances L. Harrison, Anna M. Harrison and Truman Jones, have, or claim to have, some interest in or lien upon said mortgaged premises, or some part thereof, which interest or lien, if any, has accrued subsequently to the lien of said mortgage."

Hone of said defendants appeared in the action and a judgment of foreclosure was recovered by default, pursuant to which ° the sale before mentioned was made, and the writ of assistance was issued.

The plaintiff’s rights in the eighteen acres were subsequent in time to the mortgage given to and foreclosed by Wallace, which was alleged to be a lien on the property prior in law and equity to the rights of the plaintiff in this and the defendant in the foreclosure action. If the plaintiff intended to assert title to the fixtures he was bound to do it in that action and he could not lie by until a judgment had been entered declaring his rights inferior to the mortgage, and then assert as against the purchaser under the judgment or his grantee that his claim to the buildings and machinery was prior to the lien of the mortgage. On the trial of this action the plaintiff testified that July 7, 1886, he “stated in writing to the Ames Engine Manufacturing Co., for the purpose of obtaining credit, that he owned in fee the fifty-five acres of land covered by said two mortgages, and that March 3. 1887, he wrote to the agents of the Misses Harrison (the second mortgagees), that he had paid his father-for the eighteen acres and held a deed thereof subject to the mortgage.

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This statement was made for the purpose of obtaining a further loan from them. This evidence is entirely inconsistent with the plaintiff’s present claim that he was merely the occupant of the premises, with the right to remove betterments, instead of the •equitable owner with the right to have the legal title upon the payment of the Wallace mortgage; the plaintiff testified that he was not a tenant of his father, and paid no rent. His posiuon was that •of a beneficial owner, subject to the mortgage, and all improvements which he made upon the property were subject to the rules of law applicable to mortgagors and mortgagees.

As an authority for the position that the agreement between the father and son impressed the character of chattels upon the buildings and machinery, we are referred to the case of Tyson v. Post, 108 N. Y., 217 ; 13 St. Rep., 503 . An examination of the record in that case shows that the owner of the premises conveyed them for $70,000, of which $10,000 was paid down, and $60,000 was rsecured' to be paid by the grantee to the grantors by two mortgages on the premises. Post paid to the grantors $6,200 of the $10,000, and then took a deed of the premises from the first "grantee, it being orally agreed between him, the mortgagees and Post, that he might remove the railway; and machinery whenever he chose. This was held sufficient as between the mortgagees and Post to change the railway and machinery, which were immovables or fixtures, into movables or personal chattels, and relieve them from the lien of the mortgages.

In the case at bar, if the mortgagees and the owners of the fee had agreed with the plaintiff upon a sufficient consideration that he might remove the buildings and machinery, then they, as between' the parties to the agreement, would have ceased to be fixtures, would have become movables, and relieved from the lien of the mortgage. But the mortgagees in the case before us were not parties to the alleged agreement between the father and son, who could not by an agreement between themselves affect the lien of the mortgages or the rights of the holder of them.

The judgment should be affirmed, with costs.

The mortgage, through the foreclosure of which the defendants derived their title, was prior to the agreement between the mortgagor and the plaintiff. The title taken by the foreclosure vested by relation as of the time mortgage was made. Rector, etc., v. Mack, 93 N. Y., 488 ; Batterman v. Albright, 122 id., 484 ; 34 St. Rep., 131 . It does not appear that the mortgagee in any manner assented to such agreement.

In Sheldon v. Edwards, 35 N. Y., 279 , the arrangement that the property there in question should be treated as personal was made between the mortgagor and mortgagee.

In Tifft v. Horton, 53 N. Y., 377 , there was a stipulation of the mortgagee made before the- sale that the legal rights of the plaintiff should not be changed by the foreclosure sale.

In Globe M. M. Co. v. Quinn, 76 N. Y., 23 , the plaintiff was assignee of lease of the premises made prior to the mortgage, and in Tyson v. Post, 108 N. Y., 217 ; 13 St. Rep., 503 , the mortgagee

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was a party to the agreement that the property in controversy there should remain personal.

I concur in affirmance.

Judgment affirmed, with costs.

All concur, except Parker, J., dissenting, and Landon, J., not sitting.