Blanchard v. Eureka Planing Mill Co.

113 P. 55, 58 Or. 37, 1911 Ore. LEXIS 15

• Court: Oregon Supreme Court
• Decided: February 7, 1911
• Status: Published

Opinion

Opinion by

Mr. Chief Justice Eakin.

1. The rule that whatever is affixed to the soil becomes a part of the realty has been much relaxed in accordance with trade and modern business requirements. In many instances the personal quality of the chattel is retained, even though there is an appreciable annexation. Whether it shall remain a chattel after it is affixed to the realty depends upon three conditions, annexation, real or constructive, adaptability to the use or purpose of the realty to which it is attached, and the intention of the parties making the annexation to make it a permanent accession to the freehold.

2. As between the vendor and vendee of such personalty, it may, by agreement, be made to retain its personal character, even though affixed to the realty in a manner in which it can be removed without injury to the building. Therefore in this case, as between the defendant, Eureka Planing Mill Company, and defendants, Columbia River Door Company and Tatum & Bowen, the title to the property remained in the vendors until full payment of the purchase price, according to the terms of this agreement. Helm v. Gilroy, 20 Or. 517 (26 Pac. 851); Muir v. Jones, 23 Or. 332 (31 Pac. 646: 19 L. R. A. 441); Alberson v. Mining Co., 39 Or. 552 (65 Pac. 978); Washburn v. Inter-Mountain Min. Co., 56 Or. 578 (109 Pac. 382).

3. But when the chattel is affixed to the realty, the situation is changed as to the rights of a purchaser or an incumbrancer without notice of the terms of the agreement. The condition of the agreement, being unrecorded, is in the nature of a secret lien, which is contrary to the policy of the law, and where the machinery was sold for that purpose and was affixed it became a fixture. This question is fully discussed and decided in the cases above cited. The query arises here as to plaintiff’s rights under the facts disclosed. It appears from the pleadings that this machinery was installed in the building subsequent to the execution of the mortgage. Plaintiff therefore is not a subsequent purchaser for value, and cannot complain of the terms of the sale of the chattel by which the title is retained by the vendor. By the act of 1909 (Laws 1909, p. 237; L. O. L. § 7414), it is now necessary to file notice of sale, but is not applicable to this case.

This question was discussed in Alberson v. Mining Company, 39 Or. 552 (65 Pac. 978), where the lessee under a contract to purchase had placed fixtures upon the property of the lessor subject to a chattel mortgage. It was there contended that after forfeiture of the lessee’s right to purchase the fixtures became the property of the original owner of the mine, and the court say:

“Now, going back to the election to purchase, when that was done, the property became a part of the freehold in the status it had been assumed, the owners paid nothing of value for it, and it is difficult to see how a forfeiture could give them the standing of a purchaser in good faith. We are satisfied that it could have no such effect.”

The rule in all such cases is that to preclude the vendor from claiming the chattel under such an agreement the owner of the realty must have been a purchaser thereof for value subsequent to the annexation of the fixture and without notice that the vendor retained the title. Landigan v. Mayer, 32 Or. 245 (51 Pac. 649: 67 Am. St. Rep. 521); Union Bank, etc., Company v. Wolf Company, 114 Tenn. 255 (86 S. W. 310: 108 Am. St. Rep. 903), to which case there is an exhaustive note in 4 Am. & Eng. Ann. Cas. 1073, where the rule is stated:

“That in the absence of notice a subsequent purchaser or mortgagee of the land is not bound by an agreement between the owner of the land and one from whom he purchases chattels that such chattels, though annexed to the realty, shall retain their character as personalty, and that the title to them shall remain in the seller until he has been paid for them.”

In Boston Safe-Deposit & Trust Company v. Bankers’ & Merchants’ Tel. Co. (C. C.) 36 Fed. 297, referring to telegraph wires stretched upon poles on the railroad right of way, which was subject to mortgage, it is said:

“With respect to this class of property the parties in interest may agree that it shall remain personalty, subject to be removed; and such an agreement determines the real character as against an existing mortgage.”

To the same effect are Brand v. McMahon, 15 N. Y. Supp. 39; Padgett v. Cleveland, 33 S. C. 339 (11 S. E. ); Tifft v. Horton, 53 N. Y. 377 (13 Am. Rep. 537.)

In this case plaintiff is not a purchaser for value or mortgagee of the property subsequent to the annexation of the fixtures, and the title of the defendants thereto is unaffected by the mortgage.

The decree of the lower court will be reversed and the suit dismissed. Reversed : Suit Dismissed.

Mr. Justice McBride took no part in the decision of this case.