Opinion
Rehearing Denied April 8, 1931
Hearing Granted by Supreme Court May 4, 1931
Appeal from Superior Court, Los Angeles County; Thomas C. Gould, Judge.
Action by Al. Dauch, doing business under the fictitious firm name of Dauch Heating & Engineering Company, against Ella K. Ginsburg and another, doing business under the fictitious firm name of Maryella Hotel, and others. From the judgment defendants appeal.
Affirmed.
COUNSEL
Joe Crider, Jr., John M. Martin, and Clarence B. Runkle, all of Los Angeles, for appellants.
Arthur V. Kaufman, of Los Angeles, for respondents.
Paul J. Ziegler, of Los Angeles, amicus curiae.
OPINION
NOURSE, P.J.
Plaintiff sued for the recovery of personal property or for the value thereof in case delivery could not be had, together with damages for its unlawful detention. The cause was tried before the court without a jury and resulted in a judgment in favor of plaintiff for the return of the property or for the sum of $18,500 if the defendants could not make delivery. The defendants Standard Mortgage Corporation and Lincoln Investment Company alone appeal, upon typewritten transcripts.
On February 26, 1926, the defendants Ginsburg executed a promissory note secured by a deed of trust to the Lincoln Investment Company in the sum of $58,000. This security was second to a deed of trust in the sum of $175,000 held by the Mortgage Guarantee Company of Los Angeles, both loans being made for the purpose of enabling the Ginsburgs to erect an hotel building upon a tract of land located in Los Angeles; the value of the unimproved realty at that time being $90,000. On November 24, 1926, the defendants Ginsburg purchased the personal property described in plaintiff’s complaint (consisting of plumbing fixtures) on a lease contract in writing, title being reserved to the plaintiff. By the terms of this contract these plumbing fixtures were so attached to the building by slip joint threaded unions and flanges that they could be easily removed from the premises without causing damage to the building, and the right to so remove was expressly reserved to the plaintiff by the terms of the lease contract. Installation of these fixtures commenced November 24, 1926, and was completed before February 24, 1926, and was completed before February 24, 1927. The Standard Mortgage Corporation made its first advancement to the Ginsburgs under its loan on July 16, 1926, and by November 19 of that year had advanced a total sum of $46,740. After the execution of the lease contract with the plaintiff three additional advancements were made to the Ginsburgs: One on January 3, 1927, in the sum of $1,200; one on February 4, 1927, in the sum of $3,190; and another on the same date in the sum of $5,870. On November 10, 1927, the Standard Mortgage Corporation foreclosed the Ginsburg trust deed and purchased the property at the foreclosure sale. On January 16, 1928, it leased the premises to the Lincoln Investment Company for a period of fifteen years. On March 2, 1928, this action was commenced for the recovery of the plumbing fixtures, the complaint alleging their value to be $21,000. The defendants Standard Mortgage Corporation and Lincoln Investment Company filed general denials of the allegations in the complaint but set up no special or separate defenses.
On this appeal the appellants group their argument in two classifications: First, the priority of the rights of the Standard Mortgage Corporation under their deed of trust, and the rights of Dauch under his conditional sales contract; second, the validity of the conditional sales contract retaining title to personal property when the personal property has been installed in the hotel building as against innocent third parties without notice.
The trial court found that the entire sum of $58,000 was advanced by the Standard Mortgage Corporation pursuant to the requirements of the building loan. The building loan was evidenced by a promissory note and a deed of trust for the full sum without any specifications as to the time or manner in which any portion of that sum was to be advanced by the mortgage corporation. Assuming that the obligation of the mortgage corporation was to make advancements as the building operations progressed, then these advancements were obligatory upon the mortgage corporation and its rights as a mortgagee dated from the time of the execution of the mortgage and not from the time of the separate advancements. 17 Cal.Jur. 898, 899. The mortgage corporation must, therefore, be treated as a prior mortgagee, that is, a mortgagee whose rights accrued prior to the sale and delivery of the personal property described in the plaintiff’s complaint. This being so, the case differs from the case of Oakland Bank of Savings v. California Pressed Brick Co., 183 Cal. 295, 191 P. 524, where the Supreme Court held that title reserved by a conditional vendor is not good against a subsequent mortgagee without notice of the reserved title. The same rule is followed in Bell v. Mortgage Guarantee Co. (Cal.App.) 292 P. 660, under a similar set of facts. We find no authority in this state defining the rights of a prior mortgagee in relation to personal property going into the realty covered by the mortgage but where the vendor of the personalty has reserved title. Authorities from other jurisdictions are in conflict, with an equally respectable array on each side of the question.
The real principle which is determinative of the rights of the parties, and which is the principle involved in the California cases above cited, is the principle of estoppel. But here the defense of estoppel was not pleaded nor proved nor found. The facts unquestionably are that the loan was made long prior to any sale or delivery of the plumbing fixtures. It was made for the purpose of enabling the Ginsburgs to construct the hotel, and no doubt the parties contemplated at the time that some plumbing fixtures would be necessary. But the very fact that the loans of the mortgage corporation were made as the building construction progressed was sufficient in itself to put the mortgage corporation on notice that the building cost must be paid for out of the loans advanced by the corporation. It therefore had every reason to exercise the precaution to see that these costs were paid in time and every opportunity to acquire knowledge of the method and time of payment. If, therefore, it did not have actual knowledge of the agreement made between the plaintiff and the Ginsburgs, it at least had the means of knowledge and every reason to be on notice as to the time and manner of payment. The facts are also undisputed that more than $46,000 was advanced by the mortgage corporation before any contract for the plumbing fixtures had been executed, and that the entire amount of the loan was advanced before these fixtures were fully installed. The definition of "estoppel" is found in subdivision 3, § 1962, Code of Civil Procedure, where it is declared that: "Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act, or omission, be permitted to falsify it." It is hardly necessary to say that estoppel is generally a question of fact and that the burden of proving it rests upon the party relying upon it. 10 Cal.Jur. § 31, p. 656. If the trial court had been asked to find on the question of estoppel upon the facts which appear in the record, it would have been compelled to find adversely to appellant; hence the point is not open to discussion on this appeal.
Eliminating the question of estoppel, the inquiry resolves itself into whether the property described in plaintiff’s complaint is personal property or whether, because of its affixture to the premises, it became a part of the realty. On this issue the trial court held that all this property could be detached and removed from the real property without any damage or injury to the realty, and that from the date of its sale, on November 24, 1926, it remained the personal property of the plaintiff. This, of course, was a question of fact which was squarely placed in issue. It is a question of fact to be determined by the trial court upon all the evidence, the intent of the parties often being a controlling factor. Hendy v. Dinkerhoff, 57 Cal. 3, 40 Am.Rep. 107; Gosliner v. Briones, 187 Cal. 557, 204 P. 19; Jahnke v. Jahnke, 81 Cal.App. 387, 253 P. 752. Our examination of the evidence convinces us that this finding of the trial court was amply sustained by the evidence. In fact, the only real attack made upon the evidence by the appellants is that these plumbing fixtures were necessary for the operation of the hotel as an hotel. The same may be said of beds, rugs, chairs, and other articles which are commonly used in the operation of an hotel. The necessity for the use of an article itself does not determine its character as personalty or realty.
Such being the case, the rule applicable is clearly stated in Oakland Bank of Savings v. California Pressed Brick Co., 183 Cal. 295, 297, 191 P. 524, where the Supreme Court said: "The owner of personal property has the right to make an agreement to sell the same and deliver possession thereof to the buyer, upon the condition that the title thereto shall nevertheless remain in the seller until the price agreed on has been fully paid, and the title so withheld by the owner will until full payment, be superior to that of a subsequent mortgage or purchase of such personal property from the buyer, even if such subsequent mortgage or purchase was made without knowledge or notice of the reservation of title and paid full value for the property."
Thus, upon the second point raised by the appellants, the conditional sales contract retaining title to the personal property to the plaintiff was valid under the express rule announced in the Oakland Bank of Savings Case, because of the court’s finding that this property was the personal property of the plaintiff and because there is not involved in this case, as in the cases cited, the doctrine of estoppel. This being so, the property of the plaintiff did not accrue to the mortgage corporation as additional security under its deed of trust, and the title being reserved in the plaintiff, it did not pass to the mortgage corporation upon the foreclosure sale, because upon this sale the purchaser acquired only such title and interest as the judgment debtor had. Hendy v. Dinkerhoff, 57 Cal. 3, 40 Am.Rep. 107; Jordan v. Myres, 126 Cal. 565, 567, 58 P. 1061. When the mortgage corporation purchased the realty at its own foreclosure sale, it did not acquire title to the personal property specified in plaintiff’s complaint, and this being so, it had no title in the personalty to convey to the Lincoln Investment Company when it executed to the latter a lease of the hotel premises.
The judgment is affirmed.
We concur: STURTEVANT, J.; SPENCE, J.