Hooven, Owens, Rentschler Co. v. City of Atlantic

144 N.W. 635, 163 Iowa 380

• Court: Supreme Court of Iowa
• Decided: December 15, 1913
• Status: Published

Opinion

Withrow, J.

I. This is an action in replevin, brought by the appellant to recover one tandem compound condensing engine, valued at $5,160, or to recover the value thereof, and $5,500 damages for the wrongful detention thereof. The appellant claimed to be the absolute owner of the engine in controversy, and that the actual market value thereof was $5,160. That it contracted said property to one J os. A. Bortenlanger, conditionally, appellant retaining the title to or ownership of said property, until full and final payment therefor should be made, according to the terms of said contract, which was as follows: 85 per cent, cash on delivery of engine at Atlantic, balance on completion of contractor’s work for the city, and no part of the consideration has ever been paid to it. That appellee the city of Atlantic was and still is in the possession of and using said engine. Before the commencement of this action, demand was made of appellee for the possession of said property, which was refused by the said appellee. In defense, the appellee pleads that appellant is barred and estopped from maintaining this action, because it first clothed Jos. A. Bortenlanger with the indicia of ownership by delivering the property in question to him, and then without objection stood by and permitted appellee, without any notice actual or constructive of the claim made thereto by appellant, to pay Jos. A. Bortenlanger, its contractor, $4,644, or 90 per cent, of the actual market value of said engine. Also, that Jos. A. Bortenlanger, who had agreed with the appellee to furnish the material and build for it an electric light and power plant, had installed in said appellee’s power house on appellee’s land said engine, and the same had become a fixture thereto, and thereby had become and was the absolute property of the appellee. There was a trial to a jury resulting in a verdict for the defendant, from which plaintiff appeals.

II. The appellant is a corporation organized under the laws of the state of Ohio', and the appellee is a municipal corporation, organized under the laws of Iowa. On the 21st day of March, A. D. 1911, the appellee the city of Atlantic, Iowa, entered into a written contract with Joseph A. Bortenlanger Company, which contract provided that Jos. A. Bortenlanger Company was to furnish all labor, material, equipment, and supplies necessary for the construction and completion of an electric light and power plant for the city of Atlantic, Iowa, the terms of which, so far as they have bearing upon the case, will be noted in this opinion. After having entered into the contract with the city of Atlantic, Bortenlanger, who was the company, contracted with the appellant for the engine to be used’in such construction, the title to which is now claimed to be in it because of the failure of Bortenlanger to pay for it as agreed, and because of the following provision which was a part of the contract between Bortenlanger and the appellant: “The title or ownership of the machinery called for under the terms of this proposal shall remain with the company (appellant), until full and final payment therefor shall have been made according to the terms herein stated and until notes, if any, shall have matured and have been settled for in full. In case of default of any of the payments above provided for, the company may repossess itself of above-mentioned machinery wherever found. ’ ’ The contract was filed for record in the office of the recorder of Cass county, at Atlantic, on September 7, 1911, and duly recorded. The appellant and Bortenlanger both were nonresidents of the.state of Iowa. After entering into the contract, the appellant shipped the engine to Bortenlanger, and ft was received at Atlantic July 24, 1911. There was evidence showing that the appellant knew the purpose for which the engine was being furnished, and that it was to become a part of the permanent light plant of the city of Atlantic. There also was evidence tending to show that, while formal notice of appellant’s reserved title was not served upon the city of Atlantic through its proper officers, certain of its officers were told by Bortenlanger, and learned prior to the receipt and installation of the engine, that as to all the machinery furnished by him the sellers reserved title until they were paid. This latter claim, however, was not admitted to be true, and it was a question of fact which arose in the case. The city of Atlantic-, employed the W. K. Palmer Company Engineers to prepare the plans and specifications, and to assist in making the contracts, because of their technical knowledge of such matters, and also to supervise the work, and approve estimates upon which payments should be made to the contractor during,, the progress of the work. In estimate No. 4, made in July, 1911, was included the engine in controversy, and tinder the contract payment was made by the city to Bortenlanger of 90 per cent, of the said estimate. Before having completed his contract Bortenlanger became insolvent and unable to proceed further with it, and thereupon the city, as was its right under its contract, completed the work, at a total cost largely in excess of that fixed in the Bortenlanger contract. To indemnify the city for failure arising out of his default, Bortenlanger had upon entering into the contract with it given bond as required by its terms.

1. Replevin : fixtures: condi: tional sale: m-er eprioprityhofS" right-III. From the foregoing statement of facts, it will be seen that the case is in many of its features like that of Allis-Chalmers Co. v. Atlantic (Iowa), 144 N. W. Rep. 346, decided by this court at the present term, and the law as there announced must control as to this case> s0 ^ar as ^ is applicable under the facts and the record presented. We restate the governing rule announced in that ease, “where á vendor sells machinery which it is understood will become a part of the realty by being attached to it, and that it cannot be removed without injury, and thereby places it within the power of the vendee to so attach it, and sell or mortgage it to innocent purchasers,” as against the purchaser under such conditions, who in this instance would be the city, without actual notice of the reserved title the vendor must suffer upon failure of the vendee to pay for the same. The cause was tried in the court below in the main, under this theory of the law, and many of the errors now presented are based upon a different and contrary claim of right.

2. Same : instructions. IY. In instruction No. 4, given by the trial court, the jury were told that to entitle the defendant to hold possession of the engine, the burden of proof was upon it to show by the preponderance of the evidence: (l) That the defendant received possession of the engine, relying upon the ownership of Bortenlanger; (2) that Bortenlanger installed the engine upon the foundation prepared for it within the building located on the real estate of defendant, with the intention of Bortenlanger to make it a permanent part of the power plant; (3) that at such time the city had no knowledge or notice of the claim of the plaintiff; (4) that relying upon the ownership of Bortenlanger, and without knowledge or notice of plaintiff’s claim, the city paid to Bortenlanger 90 per cent, of the value, under the estimate; (5) that prior to entering into the contract with Bortenlanger the plaintiff, appellant, knew of the terms and conditions of the contract between Bortenlanger and the city, and that it was his intention to permanently install the engine as a part of the improvement upon property belonging to the defendant city.

This instruction is assailed by the appellant on several grounds, charging omission to include in it the right of the original owner, and as to how such right would be forfeited, and also the omission to include the intention of the original owner as to the use to which the property was to be put. In instruction No. 4, above noted, the court instructed the jury that failure on the part of the city to prove any one or more of the matters necessary to its defense would entitle the plaintiff to recovery. In this the right of the original owner was expressly recognized as being absolute in the absence of proof of any one of thé necessary defensive facts; in other words, the entire burden of proof in the case was placed upon the defendant, city, and unless as to any one of the material facts thus required to be proven by it there was a failure in the proof, or uneontradicted evidence against the defendant’s right, the instruction was not erroneous.

3. Same : bona fide purchaser : evidence. An inspection of the record reveals that the question of notice at and prior to the time when the city would be affected by it, if other submitted and necessary ultimate facts were proven, was the subject of dispute, and therefore a question for the jury.

4. Same : fixtures : use intention of seller. The intention of the appellant as to the use to which the engine was to be put was not a necessary element in determining whether it became a fixture, if the apparent ownership and control of Bortenlanger were such as to presumptively fix the title in him, although its knowledge of such purpose was material. Assuming that the appellant permitted him to take such control, with knowledge that it was to be used in the manner claimed, and permitted it to be so used, its right could not be enlarged or affected by any undisclosed intention or want of intention, and this is especially true when, as under the facts which defendant was required to prove, the burden was upon it to show that the appellant knew that such was the intention of Bortenlanger. We find no error in instruction No. 4.

5. Conditional sales : fixtures : rights of subsequent purchaser. V. The eighth instruction given by the trial court is criticised. It states, in substance, that if all the facts are found by the jury as is required by instruction No. 4, plaintiff could not recover, and in much but not unnecessary detail set out the particular facts, so far as evidence tended to establish them. It is particularly urged that there was no evidence that the appellant furnished the engine to Bortenlanger for the purpose of having it used in the construction of the plant, without payment of 85 per cent, of its price first being made, nor that it was to be so installed. The evidence was such that the jury might properly find from it that it had such knowledge. Its contract with Bortenlanger recognized that it was to be installed in the building, upon a foundation to be built in accordance with its own drawings, and it was to furnish the necessary foundation bolts and nails for the purpose. It was contracted for in March and delivered in July, for that particular purpose, and so far as the city was concerned, if it had no notice of a reserved title, the payment of 85 per cent, of the contract price by Bortenlanger to the appellant would not as to it be a condition precedent to its being rightfully made a part of the equipment of the plant. The instruction as given was correct.

6. Same : confition urecedent. VI. The plaintiff requested the giving of ten instructions submitted by it to the trial court, and because of the refusal as to each it assigns error. Instruction No. 1, as requested, made the test and acceptance of the property j^y the city, as provided in the contract, a necessary requirement to the passing of title to the city; or, stated differently, when the contract provided for test and acceptance, that title did not pass until both of. such conditions had been met. In support of this claim, among the eases cited by appellant is that of Wesco Supply Company v. Allerton, decided by this court, and reported in 156 Iowa, 695. That case was one in which suit was brought against the town of Allerton to recover for a producer gas engine with its equipment for the production of electric light, and defense was made that it had not been accepted, and that such was a necessary condition before the plaintiff could recover. In that ease we held that as a general rule the title does not pass until there has been a test and approval, and, holding the rule applicable to the situation there presented, the finding of the lower court' that the defendant was not liable had our approval. But provision for test as a prerequisite to acceptance is generally for the benefit of the purchaser. * Had Bortenlanger, immediately after the payment on the estimate, sought to retake the engine as his own, before test and acceptance, his inability to complete his contract being then known, it would not be held that he had such right, for he would be estopped by his conduct, and as applied to the present case we are of opinion1 that the question of test and acceptance does not properly arise.

VII. Instruction No. 2 requested by appellant in effect stated that title to the property had not passed, and in substance required the jury to so find. It did not offer a correct statement of the law, and the refusal was proper and to the same effect is instruction No. 4 asked by appellant.

7' to recoraacon-e tract: replevin. VIII. The third instruction asked by appellant stated that the law did not require the contract between it and Bortenlanger to be recorded, and the fact that it was not recorded until September 2d would not impair its validity. As between the parties to it, ■, ... . £ . ... there can he no criticism ox this proposition, waiving the assumption that the record of a contract between nonresidents may impart notice; but the instruction could not, under the rules governing this case, have aided in its solution.

8. Sale : replevin : question of fact. IX. Instruction No. 6, which was requested, assumes as undisputed the right of plaintiff to possession of the receiver, which was a part of the equipment furnished. ,. In the instructions given we think the trial court correctly left to the jury the determination of that question, connected as it was with'the entire equipment, .and having been included in that for which payment had been made by the appellee.

X. Requested instructions Nos. 7 and 8 related to the question of the intention of Bortenlanger, as to permanently, attaching the engine to the real estate, and No. 9 was upon the theory that the engine remained personal property. They were not in harmony with the theory of the law adopted by the trial court, under the evidence, and there was no error in the refusal.

Other instructions requested and denied were substantially given by the court.

9. Replevin : evidence. XI. Plaintiff, this appellant, offered in evidence the bond executed by the Bortenlanger Company to the city of Atlantic to insure the performance of the work according to the contract, which upon objection was excluded, and error is assigned. Whatever may be the rights under it as between the city and Bortenlanger, they cannot reach to and be material in an action in replevin, unless it should appear, which it does not, that as to the property sought to be recovered the appellee had been recouped in value. It was without relevancy to this action and its exclusion was right. Ind. Dist. v. Bank, 68 Iowa, 350, cited by appellant, does not state a contrary rule.

10. Same. XII. Different members of the city council of Atlantic were, over appellant’s objection, permitted to' testify that in voting to allow Bortenlanger the amount of the estimates they relied upon his being the owner of the Corliss engine. The defendant pleaded an estoppel. To sustain it, it was proper to show that its officers in expending the public money did so without knowledge of any claim of ownership superior to that of the contractor. This, in effect, was the testimony now subject to objection, as . it tended to negative the fact of notice, and a reliance upon possession as evidence of ownership. There was no error in the respect charged.

11. Same : payment : evidence. XIII. A witness, Harlan, was permitted to testify, over appellant’s objection, that after the city took over the work it expended nearly $23,000 in its completion. The city had paid to Bortenlanger in cash a sum in excess of $23,600. The expenditures incurred by the city in addition to the amount paid to Bortenlanger exceeded the contract price. We think it was not incompetent for the city to prove that it had made such payments, as showing that it had paid to Bortenlanger all that it was required to do under the contract with him.

12 conditional edge oi agent": effect. XTV. W. K. Palmer, of the Palmer Company Engineers, prepared the specifications, and supervised the preparation of the contract between Bortenlanger and the city, and was ™ supervisory charge of the work, so far as related to inspection and making estimates upon which to base payments. ■ The claim is made that he had knowledge of the contract between Bortenlanger and the appellant, and that such would be the knowledge of the defendant city. He was in effect the supervising architect. He was in no manner authorized to act for the city in the purchase of the material, and his uneommunicated knowledge of the claims of third parties would not bind it. Lumber Co. v. Garmer, 132 Iowa, 282.

XV. Appellant’s motion for a directed verdict was based upon tbe theory presented by its appeal, and in overruling it there was no error. Upon the pivotal questions there was such dispute of facts as required the submission of the cause to the jury.

The judgment of the trial court is Affirmed.

Weaver, C. J., and Deemer and Gaynor, JJ., concurring.