Opinion
07-29-1901
CAMPBELL et al. v. JOHN W. TAYLOK MFG. CO.
E. P. Budd, for receiver. C. K. Chambers and Mr. Abbott, for petitioners Prentiss & Co.
Action by Harry L. Campbell and others against the John W. Taylor Manufacturing Company. From a determination of the receiver of defendant against a claim of preference as a creditor, the Prentiss Company appeals. Affirmed.
E. P. Budd, for receiver.
C. K. Chambers and Mr. Abbott, for petitioners Prentiss & Co.
GREY, V. C. (orally). I have gone over this matter since counsel have submitted it, and I think I can dispose of it now. The Taylor Manufacturing Company was a corporation doing business in this state, at Mt. Holly, in the manufacture and production, among other things,—being the greater part of its business,—of power wheels and water wheels. Incidental to that business, which had been conducted for a short period of time by the Taylor Manufacturing Company, but for a very much longer period by its predecessor, the Risdon Works, the Taylor Manufacturing Company made certain purchases. It had a machine shop before these purchases were made, and it had machines and tools and the ordinary equipment of such a shop. The tools were not satisfactory, and the Taylor Company replaced them by purchase from the Prentiss Company. They consist of five different pieces: No. 1, the Lodge and Shipley lathe; No. 2, the Rogers bore mill; No. 3, the Sibley field drill; No. 4, the Bickford boring mill; No. 5, the Giant key seater. Each of these machines had its separate function and use, and when they were purchased they were forwarded by the vendor, the Prentiss Company, to Mt. Holly, to be set up in the machine shop of the Taylor Manufacturing Company. Before this had been completely done as to some of the machines, the Taylor Manufacturing Company went into the hands of a receiver, and the Prentiss Company then filed with the receiver its claim for payments for the price of the several machines, asserting a right to preference in payment because of an alleged mechanic's lien claim filed by virtue of the debt created by the purchase. The receiver heard the parties, and refused it preference as a lien claim, but admitted it as a general claim, entitled to share with other general creditors of the defendant company. From that adjudication of the receiver the Prentiss Company has taken its present appeal. On that appeal additional testimony has been taken upon the question of the lienability of the debt, which the Prentiss Company asserts. The amount due is not disputed, unless, possibly, upon the question of the nondelivery of a turret,—one of the auxiliary portions of the Lodge and Shipley lathe No. 1, but not, apparently, an essential part of the lathe proper, being rather an auxiliary appliance, affording a convenient method of operating the lathe, and not doing the work itself. It may be that some deduction may be necessary as to the nondelivery of this turret, but as to all the rest the amount of the claim is undisputed.
The whole question of argument before this court on the appeal has been addressed to the lienability of this debt. That is placed by the appellant upon its claim that, under the first, fifth, and eighth sections of the mechanic's lien act, it has a right to a lien for this debt, because the appellant says that it was contracted for the furnishings of material for the erection of fixed machinery; and it is entitled to enforce that debt by lien because it furnished materials for fixed machinery, and such a debt is a lien whether the materials were actually used on the premises in the erection of a fixed machine or not. It became a lien because the debt was incurred for that purpose. Whether this construction of the statute, as stated by the appellant, should be accepted need not be determined in this case, because I take it to be perfectly clear that the things furnished were not, within the meaning of the statute, materials for the erection of fixed machinery. The proof is entirely clear that the five different articles furnished were, when they left the shop of the Prentiss Company and arrived at the shop of the Taylor Company, each, in itself, separately perfect and entire. They were not materials, in any sense, out of which something was to be constructed. They were the temporarily separated component and adjustable parts of a single machine, each part having its own related place, and, when put in that related place, making a perfect machine, for the accomplishment of a single, separate, and perfected function. Materials, in the meaning of the statute, and in the view taken in the discussion in the case of Morris Co. Bank v. Rockaway Mfg. Co., 14 N. J. Eq. 189, cited by appellant, are essentially different from the things delivered in this case. In the Morris County Bank Case the materials claimed for were, as I gather from the report, bricks and building stuffs, which in the condition in which they were delivered had no perfected function, and were simply something out of which a building might be constructed. No brickhad when delivered any relation to any other brick; each was separate and distinct until the construction was begun. The component parts of these machines were utterly different. Each part before it was shipped had been properly fitted to the other, and tested as an entirety, and when the temporarily separated parts were again assembled, they again constituted a perfected entirety. The separation into component parts, and delivery in that condition, was not as materials for purposes of construction, but as an entire and complete machine, temporarily separated for convenience of transportation and delivery. Under no construction could such a transaction be held to be a furnishing of materials. What were furnished were five different, separate, and perfected machines. I shall deal with the matter, therefore, as a deliverance by the Prentiss Company to the Taylor Company of five different machines, each a perfect entity in itself, usable and complete for the accomplishment of certain work.
At this point some notice should be taken of the condition of things at the machine shop of the Taylor Company at the time when these machines came there. The proof is that the establishment was then in the full and active conduct of business for the manufacture of wheels, and had been a plant for that purpose a considerable while before the purchase of these machines from the Prentiss Company. These machines were not part of the original equipment of the shop. They were not built in and incorporated into the realty as part of the original structure. When they got there, the building in which they were to be placed had long been erected. Other machines had been there, which had performed the functions which these new machines were to perform. The other machines were taken down, and the new ones were to be installed in their places. They were, therefore, so far as the location and use to which they were to be put, substitutions for, and improvements upon, the previous equipment of the shop. Each of these machines had, as stated, its own separate function, and it is claimed that, even if the delivery in parcels did not constitute it "materials," yet it must be held to be within that section of the mechanic's lien law which grants a lien for the price of fixed machinery.
The appellant insists that the debt was incurred for the delivery of fixed machinery, and that this must secure it a lien. According to my understanding of the decisions in this state, in order that a machine, which is personal property, shall be converted into real estate, there must be several coincident circumstances. The thing claimed to have become real estate must be of a nature to be adapted to the uses of the freehold. There must be indications of the intent on the part of the owner to make it part of the realty. That must be made evident by some connection, whether it be slight or great, Indicating the actual carrying into effect of that intent by annexing it to the realty.
Pending the taking of testimony in this matter, I was invited by counsel of both parties to go and see these machines, in order that the testimony might be fully understood. The counsel of both parties attended, and very frankly exhibited the location of these various machines. They were, part of them, still in boxes, unassembled; some of them were partially erected. One was entirely set up, and, I think, had been in actual use. The testimony shows that under the floor on which two of them had been placed a solid brick wall had been built, and under the floor on which two others stood brick piers had been put. These brick walls or brick piers formed no part of the machines, and the machines formed no part of the brick wall or piers. The walls and piers were obviously erected for the purpose of enabling the floor to carry the weight of the machines, and keep them steady and support them. There was no constructive connection between the foundations and the machines, for the floor intervened between them. The foundation, as I understand the testimony, held the same relation to the floor that heavier joists, of like construction, for the purpose of more effectually carrying the floor, would have occupied. The machines were set up on top of an unfinished floor, and were bolted down or screwed down or blocked down, as the case might be, to the floor. There was no structural incorporation of the foundation into, and making it part of, any of the machines. This was so of the machine which was actually put up and in use, and it was so, in a very much greater degree, of those machines which were only partially put up and in use. Those which were in place were fastened in their places, to prevent swaying and movement, and were no part of the construction of the real estate. Others were not even put in place, but were still, as to parts of them, in the boxes in which they had arrived, or were lying in their separated component parts, unassembled. The machines were obviously of such character that they were completely finished before sale, and were, when delivered, ready for use when set up, and power was applied to them. They could have been set up anywhere else where power was used, just as well as in the Taylor Company's shop, and can now be taken away without altering either the machines themselves or the structure of the real estate. Their attachment to the freehold is in no sense structural; on the contrary, it is merely casual and convenient.
The principle upon which the mechanic's lien law is based is to give a lien upon the building and land, because the thing done for which the lien is claimed increased the value of the property of the owner. Coddington v. Dock Co., 31 N. J. Law, 489. As the partyfurnishing the goods had specially contributed to increase the value of the land, it was deemed equitable that he should, to the extent of his claim thus arising, have a lien upon the land. All the modes of procedure prescribed by the lien statute contemplate the enforcement of a lien upon land. This has not been changed by the extension whereby "fixed machinery" and "fixtures for manufacturing purposes", are considered to be buildings, for the purpose of the lien act. No lien can be maintained for a debt owing for "fixed machinery" unless that machinery has so become part of the real estate as to pass by a sale under the lien act. It follows that the decisions which determine whether machines and tools have, by the circumstances of the dealing with them, been converted from personal property into real estate, are applicable in this cause to define whether the facts proven show that the machines in question have become, in the sense of the lien statute, "fixed machiuery." All these machines are of the same class as to their attachment to the realty Whatever annexation was given them was for the purpose of staying them in their places,—holding them, so that they could not move on the floor,—as when so swaying they would not effectually do their work.
The court of appeals in the leading case of Blanche v. Rogers, 26 N. J. Eq. 563, declared the law in such matters. Where from the whole case it appeared that the annexation was intended to be for the purpose of staying the machine in its place, to overcome the tendency to motion, and where the machine was not by its structure and manner of building incorporated into and made part of the realty, it remained personal property, capable of being chattel-mortgaged, and did not become part of the freehold. The same rule was recently declared by the supreme court in the case of Iron Works v. Wilkes, 6-1 N. J. Law, 193, 45 Atl. 1033. There the machines consisted of a large lathe, a large planer, a small planer, and a number of other lathes, apparently of very much the same nature as the machines here in question. That court, in discussing the relation of these machines to the land, for the purpose of ascertaining whether they had become part of the realty, cited the case of Blanche v. Rogers as the leading case on the point, and the cases of Insurance Co. v. Semple, 38 N. J. Eq. 575 (which was a foreclosure ease, and petition for injunction to stay removal of machinery); Feder V. Van Winkle, 53 N. J. Eq. 370, 33 Atl. 399 (which arose between a mortgage holder and a receiver of an insolvent estate); and Erdman v. Moore, 58 N. J. Law, 445, 33 Atl. 958 (a mechanic's lien case),—as turning upon the tests above applied. The supreme court also held in the Crane Iron Works Case that complete machines, purchasable on the market as such, and capable of being used wherever power can be supplied, if placed in the owner's machine shop for use, and not fastened to the realty, or, if fastened, only by being screwed to the floor, so as to keep them steady while in operation, do not thereby become part of the realty. These incidents attend upon all the machines for which this lien claim is asserted. They were stayed in their place for the purpose of making them steady, and not for the purpose of incorporating them into, and making them form part of, the realty. They were complete when they were brought there. They were not built into the machine shop, they were simply put there as complete things. Their predecessors had been taken away, and these were supplied in their places, and the time may come when they themselves may be taken away, and others put in their places.
I think, therefore, the lienability of the debt incurred by the delivery of the machines has not been established, and that the receiver's adjudication should be sustained, and the appeal dismissed.