
    McFadden v. Allen et al.
    
    
      (Supreme Court, General Term, Third Department.
    
    November 20, 1888.)
    1. Fixtures—Improvements—Foreclosure of Mortgage.
    Where a son takes possession of premises belonging to his father under an agreement that he shall become owner on certain conditions, and, with knowledge of an existing mortgage, substitutes new machinery for portions of the old in a saw-mill on the land, and makes additions and repairs to the mill, such improvements, appearing to have been made in reliance upon acquiring title, become a part of the realty, and pass under a foreclosure sale.
    
    3. Same—Evidence—Notice of Adverse Claims.
    Evidence that the purchasers at the foreclosure sale, and those claiming under them, knew that the son did not own the land, but claimed the machinery and improvements, is immaterial.
    Landon, J., dissenting.
    Appeal from circuit court, St. Lawrence county.
    Action by Alexander McFadden against Van Burén Allen and others to recover damages for the conversion of a blacksmith shop, two additions to a saw-mill, the water-wheel, and a large portion of the machinery in the mill, a pump, and the lightning-rods attached to the buildings. The facts referred to in the opinion, as stated at folio 170, which plaintiff offered to prove, related to .the knowledge on the part of the purchasers at the foreclosure sale, and of the defendants at the time they acquired title from them, that the land was owned by Jeremiah McFadden, the mortgagor and father of plaintiff, and that plaintiff claimed to own the machinery and improvements. A nonsuit was entered against the plaintiff, and he appeals.
    Argued before Learned, P, J., and Landon and Ingalls, JJ.
    
      Horace D. Ellsworth, for appellant. John G. Keeler, for respondents.
    
      
       One who has erected a house on land which he holds under contract of purchase, •cannot treat the house as personalty, and maintain trover for its conversion. Bracelin v. McLaren, (Mich.) 26 N. W. Rep. 533. See, also, note, Id. Machinery placed in a factory which is subject to a mortgage, by .the mortgagor, the machinery being intended for use in the business, and to permanently increase the value of the property, becomes part of the realty, and is covered by the mortgage. Bank v. Mason, (Mass.) 18 N. E. Rep. 406, and cases cited.
    
   Ingalls, J.

We think the nonsuit directed at the circuit was proper, under the facts developed at the trial. The action was brought by the plaintiff to recover the value of certain structures, machinery, and other articles described in the complaint, and which the plaintiff placed upon a parcel of land, of which his father, Jeremiah McFadden, held the legal title. The plaintiff claims that the defendants wrongfully detained said property, and converted the same to their use. The evidence shows that when the plaintiff entered upon said premises there was standing thereon a saw-mill, in which there were machinery and fixtures for sawing lumber, and that he removed a portion thereof, and substituted other machinery in its place, and that he added to and repaired the building. Such entry upon the premises seems to have been by virtue of a parol agreement between the plaintiff and his father, by the terms of which the plaintiff, upon performing certain conditions, was to become the owner thereof. It seems quite apparent from the evidence that there was no intention on the part of either the plaintiff or his father to create the relation of landlord and tenant between them; and seemingly the improvements were placed upon the premises by the plaintiff without any expectation on his part to be at liberty to remove the same in the character of a tenant, but rather with the purpose of becoming the owner of the premises, and thereby reaping the benefit of such improvements. Such we deem the reasonable inference to be drawn from the evidence; and upon such state of facts the law would regard the plaintiff as standing, in equity, in the light of a purchaser of the premises. Freeman v. Freeman, 43 N. Y. 34; Martin v. Rector, 30 Hun, 139, affirmed in 101 N. Y. 77, 4 N. E. Rep. 183. At the time the arrangement was made between the plaintiff and his father the premises were subject to a mortgage which had been executed by Jeremiah McEadden to Orson Wallace, to secure the payment of $400, of which the plaintiff had notice. Such mortgage was subsequently foreclosed by action, and the plaintiff herein was made a party defendant thereto, but interposed no defense, nor did be even appear in such action. The premises were sold at public auction, and bid in by the Misses Harrison, who held a subsequent mortgage upon said premises; and, after such sale had become confirmed, they conveyed the premises to the defendants in this action, who went into the possession thereof as purchasers in good faith. The plaintiff undertook by force to remove the machinery and other improvements which he had placed upon the premises, and partially succeeded, but was interrupted before he had fully accomplished his purpose, and now seeks in this action to recover the value of the articles which he was prevented from removing. Whatever may be the rights of the plaintiff, as against his father under their arrangement, we are clearly of the opinion that as against these defendants, who derive their title through the foreclosure of the Wallace mortgage, and the conveyance to them by the Misses Harrison, who purchased at the foreclosure sale, such machinery and other improvements must be regarded, in view of all the facts and circumstances of this case, as a part of the realty, and as such to belong to the defendants. McRea v. Bank, 66 N. Y. 501; Snedeker v. Warring, 12 N. Y. 171. The removal by the plaintiff of the machinery and other articles from the mill, after he went into possession, could but have the effect to impair the security under the mortgage, provided he should be allowed to appropriate to his own use the substituted machinery and fixtures. The plaintiff assumed control of the premises with full knowledge of the mortgage, and we think that his version of the transaction in regard to his right to remove the improvements is inconsistent with the other facts of the case. The letters which he addressed to Mr. Harrison are strongly at variance with the theory upon which he seeks to sustain this action. In those letters he states, in unequivocal terms, that he was the owner in fee-simple of the premises upon which the improvements were placed. One of the letters contains the following: “I have paid father for land, and have deed of same, subject to mortgage. By placing the wood lot and mill lot in mortgage, can give you a mortgage on saíne. Mr. Harrison, will you help me? If so, lean swing; if not, I stand a chance to lose what I have paid on engine and land.” It further appears that the plaintiff united with his father in a mortgage, which embraced the premises in question, on the 16th day of June, 1885. It would seem, from all the facts of the case, that the pretense of the plaintiff that he was at liberty to remove the improvements from the premises was an afterthought, prompted by a desire to save something from the wreck, after his failure to secure money by mortgage, and certainly his conduct does not savor of honesty. If the view which we have taken of the case is sound, it follows that the court properly overruled the offer of plaintiff’s counsel to prove the, facts stated at folio 170 of this case, as such proposed evidence was immaterial and incompetent, in view of the facts established when the offer was, made, and the law applicable thereto. We conclude that the cause was properly decided at the circuit, and that the judgment should be affirmed, with costs.

LeaIined, P. J., concurs.

Landon, J., (dissenting.)

I cannot concur. The testimony on the part ol the plaintiff tended to show that, after the date of the mortgage under which the defendants acquired title to the premises, the plaintiff entered into possession under an agreement with his father, the mortgagor, that the plaintiff might have the premises, provided he could pay off the mortgage; that meantime he could place his improvements thereon, witli the right to remove them, provided he should find himself unable to pay the mortgage. Under such an agreement, it was competent for the plaintiff to place the machinery and trade erections upon the premises with the intention to remove them in case he should not pay the mortgage, or it was competent for him, notwithstanding the agreement with his father, to place them upon the premises without any such intention, and thus make them a part of the realty. One or the other of these inferences was deducible from the evidence, and which one should be drawn it was for the jury to decide. Our laws do not give the mortgagee as great rights in respect to trade erections and machinery, put upon the premises after the date of the mortgage, as the laws of England and Massachusetts do. Tifft v. Horton, 53 N. Y. 377, 385. Clearly, it does the prior mortgagee no wrong to remove such improvements, if the premises are left in as good condition as they were when the mortgage was given. If the mortgagor or his grantee puts such improvements upon the premises, they presumably become a part of the realty; but if a tenant puts them there, or a vendee or donee of the land under an executory or conditional contract, the presumption of absolute merger in the realty is less, because his title to the realty is less, and it is consonant with justice that, so long as he does the mortgagee no wrong, effect should be given to his contract with the mortgagor that he shall not lose title to his improvements, if because of the mortgage or otherwise he fail to acquire title to the land. The plaintiff was not conventionally a tenant, but his tenure was precarious, and he dealt, if his testimony is credible, with reference to his right of salvage from the impending wreck. True, a tenant upon foreclosure sale loses his growing crops. Lane v. King, 8 Wend. 584. The rule is a harsh one, but growing crops consume the season, and perhaps exhaust the soil. Erections and machinery do not, and in our state, in this respect, the rigor of the old laws is relaxed in favor of justice. Tyson v. Post, 108 N. Y. 217, 15 N. E. Rep. 316. The judgment in foreclosure did not bar the plaintiff in this respect. The complaint was in the usual form in foreclosure, and no issue respecting the extent to which the improvements upon the realty had become merged in the realty was tendered by the complaint, and hence none was settled by the judgment. Ho unmortgaged interest was sold, and unmerged improvements were not mortgaged. If these erections passed under the mortgage judgment, it' was because of the intent of the plaintiff to make them part of the realty itself; if under the agreement with his father he had no such intent, they remained personal property; if, as between plaintiff and his father, they were personal property, they remained so against the title acquired under the mortgage, for the foreclosure only passed such title as the father had when he gave the mortgage, and such as was acquired or added under him subsequent to the date of the mortgage. Whether the fixtures were added to the realty, or were kept by agreement and intention separate from it, was for the jury. The declarations of the plaintiff that he owned the premises did not estop him, since nobody acted upon them. They are evidence against him, but are to be weighed in the light of the fact that, in order to borrow the money he solicited, he must have made his declarations true, and he could probably have done so with the co-operation of his father and of the lender. The plaintiff probably hoped to have the lender pay off the old mortgage, then to have his father give plaintiff the promised deed, and then plaintiff could give the lender a new mortgage. This seems to have been practicable, and, if accomplished, no one would have been deceived or injured by the declaration of the plaintiff that he was the owner. The law punishes deceit causing damage, not the harmless fiction which too confidently anticipates the things hoped for.  