This action was brought to recover sixteen hundred dollars, the value of certain chattels alleged to be the property of plaintiff and to have been wrongfully detained by defendant.
The defendant was owner of two certain pieces of land in the borough of Brooklyn, one piece two hundred by one hundred feet situated on the easterly side of Bedford avenue about two hundred and forty feet south of Farragut *Page 139 road. The second piece was about two hundred by one hundred feet located on the westerly side of Bedford avenue about three hundred feet southerly from Farragut road, which premises will be referred to as the easterly and westerly premises.
On March 17th, 1914, defendant conveyed the two several tracts of land to the Renslaw Realty Company, hereinafter referred to as the "Realty Company." On the same day the Realty Company executed two purchase-money mortgages, each mortgage to secure the sum of $21,250; one of said mortgages covered the easterly premises and the second one of the mortgages the westerly premises. The two mortgages were duly recorded in the office of the register of Kings county March 18th, 1914. Each of the mortgages provided for the payment of $6,250 thereon July 10th, 1914, and $15,000 and interest on May 1st, 1916. The premises described in each of the mortgages was vacant property, and as appears by recitals contained therein the Realty Company, mortgagor, contemplated the erection of eleven houses on each of said two tracts of land. That the Lawyers Title, Insurance and Trust Company, hereinafter designated as the "Title Company," was to advance from time to time on twenty-one building loan mortgages a sum not exceeding $4,500 on each of the buildings to be erected on the two several pieces of land. The defendant mortgagee covenanted in each of the two mortgages that upon the payment to him of the sum of $6,250 on account of principal, to be paid July 10th, 1914, he would subordinate each mortgage to the different advances as the same are made from time to time on the building loan mortgages by the Title Company.
In July, 1914, defendant received from the Realty Company $12,500 on account of the principal of said mortgages.
On April 30th and June 12th, 1914, the Realty Company and the Title Company entered into two agreements *Page 140 in writing in each of which was recited that the Realty Company had applied to the Title Company for a loan of $49,500, or so much of the principal sum as shall at any time be advanced, to be secured by eleven bonds, each of said bonds to be secured by a first mortgage, and that the Realty Company covenanted to erect buildings on the lands, eleven in number, at a cost of not less than $57,750. Each mortgage was to be executed by all persons necessary to make it a valid first lien on the premises to be covered for the advances to be made on account thereon, and "it is expressly understood and agreed that all gas fixtures, bath tubs, dressers, wardrobes, furnaces, ranges, mantles, grates and similar fixtures and articles and every fixture and improvement attached to or placed in the said buildings to be used in connection therewith shall in each case form part of the mortgaged premises and shall be respectively covered by and subject to the liens of the mortgages given to secure the advances herein provided for." Advances were to be made by the Title Company at stated periods as the work of construction of the house progressed. The final advance on completion.
The agreement of April 30th was filed in the office of the register of Kings county and the mortgage accompanying the same recorded in the same office on May first.
April 15th, 1914, the plaintiff submitted to the Realty Company a proposal in writing to furnish and complete the steam heat apparatus as per specifications for the net sum of $3,366. Houses were to be built in groups of eleven each, i.e., on the easterly premises and the westerly premises. Payments were to be made on each at enumerated times. All materials furnished under this contract were to remain the property of plaintiff until fully paid for in cash and the agreement fully satisfied. In case of default of payment of any sum due under the contract plaintiff was authorized to remove the material from the premises. The proposal was accepted by the *Page 141 Realty Company on April 23d 1914, but the conditional bill of sale was not placed on file until a date subsequent to the recording of the mortgages held by the defendant and the Title Company. The first delivery of materials, articles, etc., was made by plaintiff subsequent to May 15th, 1914.
The plaintiff continued to deliver articles, materials, etc., and to perform labor incident to an installation of the steam apparatus in the houses on the easterly premises until late in August, when all work was discontinued by the Realty Company. At that time, according to the evidence of plaintiff, the boilers were in place and set up by the flues, some of the boilers were not connected and water connections had not been made, the smoke stacks were there but were not in, all rising pipes were up through the floors, some special radiators were wanting there and forty-three or forty-four radiators were lying around loose in various rooms, and there was very little stuff to be furnished but certain loose material was lying around the premises. Upon the westerly premises the only articles delivered were rough piping that had been strung and some riders run up. September 12th, 1914, the defendant commenced an action to foreclose his mortgages. Judgment was thereafter and on November 25th, 1914, entered and the lands covered by the mortgages were sold December 31st, 1914, to defendant subject to the rights of the holders of conditional bills of sale or chattel mortgages if any.
Work on the houses having been stopped by the Realty Company late in August, the plaintiff early in October asserted ownership of the various articles and materials delivered by him upon the premises and made demand of defendant therefor. He was not permitted to remove the property and thereupon brought this action for a wrongful detention of the same.
Upon the trial there arose a conflict of evidence as to whether or not the articles in place could be removed *Page 142 from the premises without injury to the buildings. The court submitted three questions to the jury, (a) was the plaintiff's heating apparatus of such a nature that it could be removed without injury to the realty, (b) what was the value of the plaintiff's heating apparatus at the time of the conversion, and (c) what was the value of the articles which were not affixed but which were on the property on October 5th? The jury answered "Yes" to the first interrogatory, to the second interrogatory $1,536.54, and to the third interrogatory $890.09. Upon receipt of the special verdict the court granted judgment to plaintiff in the sum of $1,536.54. Upon appeal, the Appellate Division ordered and adjudged that the judgment and order denying motion for a new trial be reversed and the complaint dismissed.
The order of the Appellate Division and the consequent judgment thereon must be reversed and a new trial granted.
The complaint alleged a wrongful detention by defendant of articles, material, etc., together with a tool chest containing steam fitter's tools, all of which were enumerated in a bill of particulars. Evidence of a detention by defendant of the chest and tools after a demand for the same and that the value thereof was ninety dollars was offered by plaintiff and was ample to justify a recovery for the chest and tools irrespective of any material or articles.
Counsel in his brief urges that by reason of the intention of the parties to the conditional bill of sale, i.e., the plaintiff and the Realty Company, the materials and articles delivered by plaintiff were a part of the realty; that the conditional bill of sale not having been filed until after the delivery of such materials and articles was void under the provisions of section 62, Personal Property Law (Cons. Laws, ch. 41), which provides in substance that a contract for the conditional sale of any goods and chattels attached, or to be attached, to a building shall be void as against subsequent bonafide purchasers or incumbrancers *Page 143 of the premises on which the said building stands, and as to them the sale shall be deemed absolute unless, on or before the date of the delivery of chattels at such building, such contract shall have been duly and properly filed as provided in said section, and argued that under said section the bill of sale was void, (1) as against a prior mortgagee, without notice, who made advances after the delivery of the chattels, (2) as to a prior mortgagee who subordinates his mortgage to the building loan mortgage without notice of the conditional bill of sale, (3) as to the purchaser at a foreclosure sale under a mortgage where the mortgagee had no notice of the conditional bill of sale.
As to the first class, the record does not disclose advances of money without notice, after the delivery of chattels and performance of work by plaintiff, by a prior mortgagee unless it be by the Title Company whose rights, remedies or liability as between it and plaintiff are not involved in this action, the Title Company not being a party thereto.
The second and third classes may be considered together. Concededly the defendant was a prior mortgagee. His mortgage was recorded March 18th, 1914, several weeks before the conditional bill of sale was entered into on April 23d. Under the terms of the mortgages, defendant covenanted that upon payment of a certain amount on account of principal of the mortgages on July 10th, 1914, he would subordinate the mortgages held by him to the different advances as the same should be made from time to time by the Title Company on the building loan mortgages.
Payments of the amount agreed upon on account of principal on the mortgages held by defendant were made July 10th, 1914. Prior to such payments and between April 30th and July 10th defendant executed six several subordination agreements, some of which were executed prior to the delivery of any material by plaintiff. *Page 144
Unless defendant is embraced within the class specifically enumerated in section 62 of the Personal Property Law as "subsequent bona fide purchasers or incumbrancers" he is not protected by the provisions of that statute. Defendant was not a subsequent bona fide purchaser of the premises. True, he bid in the property covered by the mortgages held by him at the foreclosure sale in December, 1914, subject to the rights of holders of conditional bills of sale or chattel mortgages, if any, but as such purchaser he did not acquire any right or interest in the premises other than that acquired by him under the mortgages of March 18th. Neither did he by reason of the execution of subordination agreements become a subsequent bonafide incumbrancer of the premises. The term "incumbrancer" in its application to real estate has a well-defined meaning in law, as a right or interest which may subsist to the diminution of the estate of the fee owner, in this case the Realty Company. An incumbrancer in good faith must of necessity part with value as a consideration for the incumbrance existing in his favor. In the case at bar the estate of the Realty Company on March 18th when defendant's mortgages were recorded was diminished to the extent of the amount secured to be paid thereunder. On April 30th when defendant subordinated his mortgages to the extent of advances made that day on the building loan mortgages, the execution of such instrument did not operate to a diminution of the estate of the fee owner or impair the security of the mortgages held by defendant. On that day six houses had been inclosed and under the terms of the building loan agreement the building company was entitled to an advance of $2,100 on each house inclosed, or a total of $12,600.
By the terms of the same agreement the houses of the Realty Company were each to cost a sum in excess of the amount to be advanced by the Title Company. These facts do not justify the suggestion that the defendant *Page 145 parted with value as a consideration for a right or interest which would diminish the estate of the fee owner or transform him from the status of a prior mortgagee to that of a subsequentbona fide incumbrancer.
My conclusion is that defendant is not entitled to invoke the protection of the Personal Property Law. A reference to the remaining subordination agreements is unnecessary.
The plaintiff and the Realty Company were at liberty to contract that the goods and chattels to be furnished by plaintiff should retain their character as personal property even though they should be attached to the realty, subject, however, to the limitation that such contract would not extend to such portion of the chattels as could not be removed without practically destroying them or when they were essential to the support of that to which they were attached. (De Bevoise v. Maple Ave.Const. Co., 228 N.Y. 496.)
Upon the trial of the action evidence pro and con was given bearing upon the question as to whether or not any of the articles furnished by plaintiff were so attached to the buildings that they could be removed therefrom without injury to the same and the controverted fact was submitted to the jury who by answer to the specific question found in the affirmative.
The action being one for a wrongful detention of property it was incumbent upon plaintiff to establish a right of possession to the same. That proof he offered through the conditional bill of sale, and evidence tending to show that the property could be removed without injury to the realty or the articles together with evidence tending to show a demand made by him of defendant for the property, a refusal on the part of defendant to permit a removal of the same and an assertion of ownership by defendant of the property and command that plaintiff leave the premises. The nature of the action, *Page 146 i.e., unlawful detention, would admit of defendant establishing a right of possession in himself or in a stranger. (Griffin v.L.I.R.R. Co., 101 N.Y. 348; Whitney v. Whitney, 171 N.Y. 176. ) According to the evidence of plaintiff, the defendant claimed ownership of the property and it is important to consider the attitude of defendant as bearing upon his alleged ownership and right of possession. In the answer served by defendant he affirmatively alleged that he and his successors in title were the owners of the goods subject to the lien of the mortgage of the Title Company, and further affirmatively alleged that the Title Company was entitled to the present possession of the articles sued for. The position of defendant was not wholly consistent. As a witness referring to the demand made by plaintiff, defendant testified that he told plaintiff he could not consent to a removal of the goods for the reason that the property was in litigation, evidently referring to the fact that he had commenced an action to foreclose his mortgage. He denied that a watchman on the premises was his employee and stated that the watchman was the employee of the Realty Company, the owner, thus indicating possession as that of the company mortgagor. The record is barren of facts tending to establish a right of possession of the premises in the defendant or a third party. As mortgagee of the real estate defendant under the facts in this case did not assert or establish that he had a legal right to possession of the property as such mortgagee. Neither did he offer any direct evidence of ownership or right of possession in the goods. The counsel for defendant urged as one of the grounds upon a motion for a nonsuit at the close of the evidence: "At the time of the alleged demand, the defendant was not in possession of the property and could not deliver the property." The affirmative defense of ownership by defendant and his successors in title was not established. The title to the premises covered by the mortgages of defendant *Page 147 was acquired December 31st, 1914, sometime subsequent to the demand, and the sale under foreclosure was as stated in the deed to defendant, subject to the right of the holders of conditional bills of sale or chattel mortgages if any. The question on the trial was the right of defendant to withhold possession of the articles on the day the demand was made, and such rule is applicable to the affirmative defense that the Title Company is entitled to the present possession of the goods. The term "present possession" refers to the date of the verification of the answer, January 31, 1916, some fifteen months subsequent to the demand made by plaintiff. While the record discloses a lien by mortgages on the premises it is silent as to any possession or right of possession of the articles in controversy in the Title Company in October, 1914. For the reasons stated I vote for a reversal of the judgment and order of the Appellate Division and a new trial.
McLAUGHLIN and CRANE, JJ., concur with HISCOCK, Ch. J., and CARDOZO and POUND, JJ., also concur, limiting themselves, however, in respect of right of defendant to refuse to deliver possession of property affixed to the real estate to ground first stated in opinion, and HOGAN, J., reads opinion concurring in result; ANDREWS, J., dissents and votes to affirm judgment of Trial Term.
Judgment reversed, etc. *Page 148