Charles E. Church, Respondent, v. Charles C. Lapham, Appellant

Charles E. Church, Respondent, v. Charles C. Lapham, Appellant. Contract for the sale of land—provision therein that “ improvements,” in ease of default by the vendees, pass to the vendor — acquiescence of the vendees, in the ■ addition by the vendor, after they had signed the contract, of- the words, “ including fixtures and machinery” — a mortgage of the machinery, given by the vendees for an antecedent debt, is subordinate to file rights of the vendor—improvements.. .intermediate the signing of the contract by the vendees and the change therein by the vendor. A contract for the sale of land, upon which the vendees were to erect a heading mill, provided that upon the making of certain stipulated payments the vendees should he entitled to a deed of such land. The contract, as originally drawn by the vendor’s agent and as signed hy the vendees, provided that if they should fail (To perform their contract the vendor'should have the right to declare the contract void and retain whatever might have been paid thereon, “and all' improvements that may have been- made on said premises, and may consider and treat the parties of the second part as his tenants.” The vendor, when the contract, was sent ¡to him. for signature, interlined in tjhe . contract, after the word “improvements,” the words “including fixtures £pid machinery,” and returned it to the vendees. The vendees noticed the interlineation shortly after the return of the contract, but made no objection thereto. About a year after the contract had been signed by the vendees, the vendees executed, as security for an antecedent debt, a chattel mortgage covering “ all cider mill machinery.and fixtures, belting, oil and tools pertaining thereto now contained in a certain building known as the Myers cider mill at Lapham, N. Y.; also, all heading mill machineiy, belting, shafting, pulleys, piping, oil and tools; also boilers, blowers, engine, two water wheels at said place. This mortgage given subject to terms ¡of contract with bf. Lapham Go. (the vendor). / Said property now being and remaining iñ the possession pf said Myers'& Manning (the vendees), who agree to care for same- and keep in good order.” ■ Held, as a matter of law, that the vendees had accepted, hy acquiescence, the contract as modified by the interlineation made hy the vendor, .and that the vendor’s title to the fixtures and machinery in the mill was superior ,to that of the chattel mortgagee; That the chattel mortgagee had notice of the vendor’s rights under the contract, or, at least, notice of sufficient facts to put him upon inquiry; That the fact that, intermediate the time of the signing of the contract by the vendees and the delivery of the contract signed by the vendor to them, they had invested money on the premises did not change the rights of the parties. Qucere, as to the effect upon the mortgagee’s rights of the mortgage having been given for an antecedent debt. Appeal by the defendant, Charles C. Lapham, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Clinton on the 12th day of October, 1903, upon the verdict of a jury, and also from an order bearing date the 10th day of October, 1903, and entered in said clerk’s office, denying the defendant’s motion for a new trial made upon the minutes. In April, 1901, defendant was the owner of a certain parcel of land at Lapham, H. Y. Through his agent, one Clough, a contract was made, subject to defendant’s approval, with the firm of Myers & Manning of Peru, H. Y., for the sale to them of this piece of land, with stipulated payments, upon the making of which the said firm of Myers & Manning were to be entitled to a deed of the land. Myers & Manning were to erect upon this land a heading mill. In the contract as first drawn, subject to the approval of the defendant, it was provided that if the parties of the second part, to wit, Myers & Manning, should fail to perform their contract, the party of the first part, to wit, Lapham, should have the right to declare the contract void and retain whatever might have been paid thereon, “ and all improvements that may have been made on said premises, and may consider and treat the parties of the second part as his tenant holding over without permission, and may take immediate possession of the premises and remove the parties of the second part therefrom.” In this condition the contract was signed by Myers & Manning and sent to the defendant for his signature. By reason of the defendant’s absence from the city of Hew York, to which place it was sent, the contract was not signed by him until some time in June or July of 1901, and when it' was returned, after the word “ improvements ” in the part of the contract quoted, the following words were interlined, “ including fixtures and machinery.” As thus interlined and signed by Lapham, the contract was returned to Myers & Manning, who shortly' thereafter noticed the interlineation. Mo objection was made thereto either to Mr. Lapham, the defendant, or to Mr. Clough, the agent, who was frequently around the premises, and with whom the said firm had numerous dealings. Thereafter, and upon the 26th day of April, 1902, the said firm of Myers & Manning having become involved and being threatened with the prosecution of - a claim, gave to this plaintiff a chattel mortgage. The chattel mortgage recites that the mortgagors “ being justly indebted unto Chas. E. Church in the sum of six hundred twenty-two dollars and ninetyene cents, being for goods had from store, to pay help and notes given for same and their renewal; now, for’ securing the payment of the said debt and interest from the date hereof to the said Chas. E. Church, do hereby sell, assign and transfer to the said Chas. E. Church all the goods, chattels and property described in the following schedule, viz., all cider mill machinery and fixtures, belting, oil and tools pertaining thereto now contained in a certain building known as the Myers cider mill at Lapham, M. T.; also, all heading mill machinery, belting, shafting, pulleys, piping, oil and tools; also boilers, blowers, engine, two water wheels at said place. This mortgage given subject to -terms of contract with M. Lapham Co. Said property now being and remaining in the possession of said Myers & Manning, who agree to care for same and keep in good order.” In December, 1903, the said firm of Myers & Manning having paid nothing whatever upon the land contract, and being indebted to the defendant for upwards of- $1,400 in addition, thereto, surrendered possession of the property to the defendant. The plaintiff foreclosed his mortgage and bid in the property, and thereupon demanded from the defendant the¡delivery of the machinery and fixtures which were covered by his chattel mortgage. This the defendant refused to deliver, whereupon the plaintiff brings this action for conversion. The trial judge submitted to the jury two questions: First, whether this machinery was so annexed to the freehold ás to become a part thereof, charging that if so annexed the plaintiff had no rights under his chattel mortgage. The judge then charged that the plaintiff had knowledge of sufficient facts to put him. on inquiry as to any rights which the defendant had under his’ land contract, and submitted to the jury whether the land contract as thus interlined by the defendant in FTew York before signing and returning had ever become a valid contract by the acceptance and acquiescence of Myers & Manning therein. The jury found with the plaintiff upon both of said questions and rendered a verdict for the value of the property claimed by the plaintiff under his chattel mortgage and withheld by the defendant. From the judgment entered upon this verdict, and from the order denying the defendant’s motion for a new trial, the defendant here appeals. O. J. Vert, for the appellant. H. E. Barnard and G. A. Barnard, for the respondent. [MAJORITY — Smith, J.:] Smith, J.: We are of opinion that the trial judge erred in submitting to the jury the question as to whether there ever became a completed contract between the defendant and Myers & Manning. In the proposed contract, as .first signed by Myers & Manning, the defendant was given the right by default to retain whatever might have been paid upon the contract and all improvements that might have been made on said premises. To this the defendant did not agree, but added to the word “improvements” the words “including fixtures and machinery,” and signed the same. When this contract was returned to Myers & Manning, and they had notice of this interlineation, it was their right to refuse to accept the modification. The fact that in the meantime they had put money upon the premises, and had proceeded as though in ownership thereof, cannot alter the legal situation, as whatever they did before the completion of the contract was done at their peril. They had divers dealings with the defendant and his agent for a year and a half thereafter without one word of protest or objection to this modification, and under the circumstances in this case have, as matter of law, accepted this contract by acquiescence therein. This, we think, follows irrespective of the distinct recognition thereof, either in the letter of Manning dated December 9, 1902, or. in the chattel mortgage in the reference to the contract with the N. Lapham Co., to which the chattel mortgage was made subject. The N. Lapham Co. was the name under which Mr. Charles C. Lapham was doing business as was known both by Myers & Manning and by the plaintiff himself. The trial court correctly held, we think, that the plaintiff had notice of whatever rights the defendant had under this contract, or at least notice of sufficient facts to put him upon his inquiry. It appears that in addition to this land contract there had been a contract between Myers & Manning and the N. Lapham Co., by which Myers & Manning were to work into barrelheads certain timber belonging to the defendant. It seems clear, however, that this contract cannot be the one referred to in the chattel mortgage. It has too remote a bearing upon the title to the machinery. The only reasonable inference is that the contract referred to in the chattel mortgage was the land contract in question. Inquiry by the plaintiff at the time the mortgage was taken would, without doubt, have disclosed the contract in question and the rights of the defendant in the fixtures and machinery. It is difficult to see, however, how the question of notice becomes very material inasmuch' as upon the face of the chattel mortgage it appears to have been given for a precedent debt. For this error, we think, the judgment must he reversed. AH concurred. Judgment and order reversed and new trial granted, with costs to appellant to abide event.