Landigan v. Mayer

51 P. 649, 32 Or. 245, 1898 Ore. LEXIS 35

• Court: Oregon Supreme Court
• Decided: January 10, 1898
• Status: Published

Opinion

Mr. Justice Wolverton,

after setting forth the facts, delivered the opinion of the court.

It is urged that the assignments by J. M. Arthur & Company to the plaintiff transferred their claims or demands only, and that the title to the property, notwithstanding, remained in J. M. Arthur & Company. In'this we cannot concur. The contracts are not only evidences of J. M. Arthur & Company’s demands against Tice, but they contain the condi' tions upon which he may retain the property, and obtain a perfect title thereto, it having been delivered into his possession with the execution of such contracts. The transactions amount to conditional sales, with delivery of possession, the sole purpose of retaining the bare legal title being to secure payment of the purchase price. Tice could not be deprived of his possession or right to acquire the title except for some default in his agreements, and, in view of these conditions, we think that the assignments of the contracts carried with them the' right of property, together with the right of possession for condition broken. Plaintiff could therefore maintain the action, and it could make no difference whether the defaults occurred before or subsequent to the assignments: Ross Foundry Company v. Pascagoula Ice Company, 72 Miss. 608 (18 South. 364); Schlieman v. Bowlin, 36 Minn. 198 (30 N. W. ); Lahmers v. Schmidt, 34 Minn. 434 (29 N. W. 169); Burnell v. Marvin, 44 Vt. 277.

Ordinarily, the personalty sought to be recovered would be classed as fixtures and considered part and parcel of the realty to which they are annexed. But where chattels are of such a nature as that they do not lose their distinctive identity by annexation, and do not thereby become so essentially a part of the structure as that their removal will materially injure or destroy the structure, or destroy or unnecessarily impair the value of the chattels, their original character may be preserved by agreement of the parties interested: Henkle v. Dillon, 15 Or. 610 (17 Pac. 148); Binkley v. Forkner, 117 Ind. 176 (3 L. R. A. 33, 19 N. E. 753); Tiff v. Horton, 53 N. Y. 377 (13 Am. Rep. 537); Sisson v. Hibbard, 75 N. Y. 542.

A purchaser, however, of the realty to which such property has become so annexed, for value, and without notice or knowledge of the distinctive character cast upon it by the agreement, will take it as a part and parcel of the realty, and his title will prevail as against those claiming under the agreement: Muir v. Jones, 23 Or. 332 (19 L. R. A. 441, 31 Pac. 646); Forrest v. Nelson, 108 Pa. St. 481.

Now, if Herrall, as defendant claims, became surety, at the instance of the South Portland Lumber Company upon a redelivery bond for such company, and thereby contracted an actual liability, this would constitute a sufficient consideration for the mortgage given him for his indemnity. That question was properly submitted to the jury.

Defendant in his answer alleged that the South Portland Company, “on -, 1891, being the owner in fee and - in possession of said property, executed and delivered to this defendant, who had no notice or knowledge of plaintiff’s claim or of any of the facts alleged in the complaint, its mortgage on all said real property.” Then, after showing the foreclosure of Failing’s prior mortgage, and of Herrall’s mortgage in the same suit, he having been made defendant, it is further alleged: ‘‘That on March 30, 1893, upon execution sale under said decree, this defendant became the purchaser of all of said real property for $14,500, which he then paid, and on May 18, 1893, the said circuit court confirmed said sale in all respects; that defendant had no notice of plaintiff’s claim, and was an innocent purchaser, for value, of all of said real property.” This latter clause, alleging want of notice and knowledge, is denied specifically by the reply, but the former one is not, and therefore stands admitted. Plaintiff was permitted to prove, over the objection of defendant, that at and prior to the time of the execution of the mortgage Herrall had notice and knowledge of the claim referred to, and this is assigned as error. To meet this claim of error the plaintiff urges that the allegations are both touching the same fact, and therefore that a denial of one is sufficient. If such was the case, it vould not have been necessary to repeat the denials. The former allegation, however, is of the absence of notice or knowledge at the time of the execution of the mortgage, and the latter has reference to the time of purchase at the execution sale. The distinction is marked, and quite material. The doctrine is specifically stated in the headnote to Pierce v. Faunce, 47 Me. 507, that “a mortgage is pro tanto a purchase, and the bona fide mortgagee or assignee of the mortgage, without notice of á prior claim, is entitled to the same protection as a bona fide grantee without notice.” See, also, Porter v. Greene, 4 Iowa, 571; Manufacturing Company v. Chalmers, 2 Utah, 542; and 2 Jones on Mortgages, § 710. And in Plaisted v. Holmes, 58 N. H. 619, the same doctrine is announced as it respects personal chattels. It is also established that a purchaser with notice from a prior bona fide purchaser without notice who is entitled to protection as such, is himself entitled to the same protection as it concerns claims which were invalid as against his grantor: Varick v. Briggs, 6 Paige, 323; Wood v. Chapin, 13 N. Y. 509 (67 Am. Dec. 62); Webster v. Van Steenbergh, 46 Barb. 211; Pierce v. Faunce, 47 Me. 507. It thus appears that if Herrall took and received the mortgage bona fide and for value he would be protected, although he may have had knowledge of plaintiff’s claim at the time he purchased at the sale under the decree. So it cannot be that the allegation of the absence of notice at the time of the execution of the mortgage is of the same fact as the allegation of want of notice at the time of purchase at the execution sale. It may also be predicated of the former allegation that it is of a fact material to the defense, and ought to have been denied if it was designed to controvert it. Not having been denied, it becomes a fact admitted, and is conclusive upon the plaintiff, and it was error in the court to permit the introduction of testimony tending to dispute it. The purchase of Herrall was under the decree of foreclosure, which included the foreclosure of his mortgage, as well as that of Failing, the plaintiff in the suit. The execution must be deemed to have issued at the joint request of himself and the plaintiff therein (subdivision 1, section 417, Hill’s Ann. Laws), and a purchaser at the sale would be entitled to like protection as Herrall would be under his mortgage.

The defendant introduced in evidence in his own behalf the mortgage from the South Portland Lumber Company to Herrall and the judgment roll in the foreclosure suit. The mortgage purported to be given to secure the payment of a promissory note calling for $7,500 executed by said company to Herrall. The judgment roll also showed that the decree was ,in favor of Herrall for a like amount. Evidence was offered in rebuttal by plaintiff, and received over objections, tending to show that the said consideration for the mortgage was different from what it purported to be upon its face. It is claimed that the decree is conclusive against plaintiff, both as to the good faith and sufficiency of consideration for the mortgage. But this cannot be so. The plaintiff was not 'made a party to the foreclosure suit, and, not having had his day in court, could not be bound by the decree, as it may affect the property sought to be recovered. The mortgage stands as to him as though it had never been foreclosed, and he is at full liberty to attack it, for want of good faith or a valid consideration to support it, as though the decree had never been entered. But for the error noted the judgment will be reversed and the case remanded for such further proceedings as may seem advisable, not inconsistent with this opinion.

Reversed.