The common law knows no objection to what is commonly called a
Chattels, such as tanks, furnished for a brewery under a
contract of conditional sale duly recorded, although indispensable
as part of the completed structure and attached to the real estate
as between the mortgagor and the mortgagee, are not so attached to
the realty as to become a part thereof and subject to the lien of a
prior mortgage as between the vendor of the tanks and the
mortgagee, if, as in this case, they can be removed without the
physical disintegration of the building. Holt v. Henley,
232 U. S. 637
An owner of a chattel may lose title thereto without his consent
by its incorporation into a structure in such manner that its
removal would destroy the structure.
The mere knowledge that a chattel, delivered under a contract of
conditional sale, will be attached to the freehold is of no
importance, except as against innocent purchasers for value before
the sale is recorded.
195 F. 447, 1023, reversed.
The facts, which involve claims of the vendor and the holder of
a mortgage bond to certain tanks and fixtures delivered to the
owner of brewery under a conditional sale, are stated in the
Page 233 U. S. 715
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a bill in equity for an injunction against the sale of
certain tanks, fixtures, and fittings supplied by the petitioner to
the defendant brewing company, and for a return of the same. The
bill was dismissed by the circuit court, and the decree was
affirmed by the circuit court of
Page 233 U. S. 716
appeals. 195 F. 447, 1023, where Pritchard, J., dissented from
the refusal of a rehearing.
The contract under which the tanks were furnished provided that
the title should remain in the petitioner until they were fully
paid for, and that the petitioner might remove them on default. It
was made on August 8, 1908, and duly recorded on December 7 of the
same year. Before those dates, the brewing company had made a
mortgage of its land, brewery, "and all the buildings, machinery,
and appliances thereon erected or to be erected," and the mortgage
had been recorded. There were subsequent mortgages, judgment liens,
etc., but they do not need special mention. A bill was brought to
foreclose the first mortgage, to which the petitioner was not made
a party. A receiver was appointed and a sale ordered and
advertised. The petitioner then brought this bill against the
various adverse claimants, joining the receiver by leave of court.
The statute of West Virginia makes a reservation of title such as
the petitioner's "void as to creditors of, and purchasers without
notice from, such buyer" unless a notice of the reservation is
recorded as therein required. Code (1906) § 3101.
In Holt v. Henley, 232 U. S. 637
Court had to consider a similar question of priority in view of a
Virginia statute like that of West Virginia upon which the
petitioner relies, and, although in that case the conditional sale
had not been recorded, it was held that the vendor was to be
preferred. The main question now before us is whether this case is
to be decided differently on the ground that the tanks were "an
essential, indispensable part of the completed structure
contemplated by the mortgage," a question left open in the former
decision. 232 U. S. 232
U.S. 641. The tanks were essential to the working of the brewery,
and after they were installed, the opening into the recess in which
they stood was bricked up. It may
Page 233 U. S. 717
be assumed that they became part of the realty as between
mortgagor and mortgagee, but that is immaterial in equity, however
it may have been at the old common law. The question is not whether
they were attached to the soil, but, we repeat, whether the fact
that they were necessary to the working of the brewery gives a
preference to the mortgagee. We see no sufficient ground for that
result. This class of need to use property belonging to another is
not yet recognized by the law as a sufficient ground for authority
to appropriate it. If the owner of the tanks had lent them, it
would be an extraordinary proposition that it lost title when they
were bricked in. That it contemplated the ultimate passing of title
upon an event that did not happen makes its case no worse except so
far as by statute recording is made necessary to save its rights.
The common law knows no objection to what commonly is called a
conditional sale. William W. Bierce, Ltd. v. Hutchins,
205 U. S. 340
205 U. S.
The cases to which the possible exception left open in Holt
applies are principally those in which the property
claimed has become so intimately connected with or embodied in that
which is subject to the mortgage that to reclaim it would more or
less physically disintegrate the property held by the mortgagee --
e.g., Porter v. Pittsburg Bessemer Steel Co., 122 U.
. A man sometimes may lose title without his
consent, and it has been held that he loses it even to an innocent
converter who has added labor of a value far in excess of that of
the original chattel. Wetherbee v. Green,
22 Mich. 311.
When the obvious destination of an article is to be incorporated
into a structure in such a way that to remove it would destroy the
other work, like bricks or beams in a building, there is still
stronger ground for not giving to title an absolute right of way.
But unless we give a mystic importance to bolts and screws, the
mere knowledge that the chattel will be attached to the freehold is
of no importance,
Page 233 U. S. 718
except, perhaps, as against innocent purchasers for value before
the sale was recorded, which the mortgagees were not. Holt v.
Henley, 232 U. S. 637
232 U. S.
-641. The damage that will be done by removal in this
case is trifling and the petitioner offers to make it good.
The West Virginia decisions that had been rendered before the
petitioner's contract, was made, like those of Virginia, favored
the petitioner's right, Hurxthal v. Hurxthal,
584. We do not understand Lazear v. Ohio Valley Steel Foundry
65 W.Va. 105, to lay down a different doctrine. We take
it, rather, as turning on the special effect of a sale to receivers
whose certificates it was thought were backed by a promise of the
court that they should constitute a first lien. Therefore, we find
it unnecessary to consider whether otherwise the doctrine of
Burgess v. Seligman, 107 U. S. 20
coupled with our own opinion that the rule applied in the earlier
decision is correct, would require us to follow that, rather than
the later case.
MR. JUSTICE LURTON dissents.