454 ROMICH V. KEMPNER 'BROS.. REALTY CO. [192 RbMICH 'KEMPNER BROTHERS REALTY , COMPANY.'
4-4230' • 'OpiniOn delivered March 23, 1936. FirrupE.—A sprinkler sist ' dm installed by :lessee in a ii-Ortgagdd building aftdr foreclosure proceedings' hiid 146n institUted And under a lease providing that at the termination thereof'the lessee should have the .right to remove . all ;machinery and equipment which he might; install, held to be removable fixture. Where the litigants have acquired the rights and, Otle of persons whose originil relation' was that of landlord and tenant What i knoWn as the liberal . ruld is to be ato.Plied.' Appeal from Pulaski Chancery 'Court . ;., Frank H. Dodge, Chancellor; -reversed. • .. -D. -K. Hawthorne, for,,appellaut. „• . House, Moses.&„ Holmes; IT{R-44ace Townsend and Jejferies, for . appellees.. , . -. SMITH, J1 ' L. Saon- owned a factory . . site'.with buildings and machinery thereon which he thortgaged to: the 'Bankers Trust.. Company ,of Little. Rock -on June
' ARK. ROMICEI•V. KEMRNER 'BROS. REAtTY 455 1, : 1926, -to secure a ' debt of $35,000. The truSt cOmpany filed suit to foreclose the mertgage': on. May , 22;1928, and on the Same date . filed the statutory , /is pekciens lien. A decree• of foreclosure was: rendered June 19, • 1929, pursuant to which . the mortgaged . property was %Sold by a comMissioner named . for 'the . purpo'sey . and; Whose: deed to' the purchaser was 'dated 'and approved 'October 16, 1930. On Septeiriber '20, 1928, Saxon 'leased the faCtory site,• buildingS and equipment to' Command-Aire, Inc., for twri years With an option to ieneW and an b'ptibm.to chase,. ThiS last-named coMpany was Ongaged'iri the manufacture and sale of airplane's, arid in the summer' or'au-ttimn Of '1930; : on motion' Of its • president Mid principal stocklielder, a reeeier took . posseSsien- . itS ;property. On December 2,1930, the:receiver sold' all the proPerty'of the corporation' te 'appellant Romich; whO reinained in charge of the factory site; , equiprnent and machinery for at least fifteen or sixteen months; and,' • According to his own testithony, until' March 21933:: On j une 24, 1931, Romich filed apetition in the Chancery coUrt; . reCiting • that a ' dispute: had * arisen . between himself and the owners of thereal estate over a, sprinkle'r system. He prayed the court to adjudge Whether he had pUrchased thiS 'System At the 'reeeiVer' . s Sale. 'Appellees interVened in thiS Proceeding and . alleged theiroWnership of the sprinkler sYstern under . the cenrinisSiorier's deed, executed'POrsuant trithe foreclosure 'decree a the mortgage hereinbefore mentioned. Neither Party pressed the question to . a . decision: On February 2 1933 iriterveneis _ - pi ay ct,t , T2,-m1.111 ' pay :rent . anclbe re: 'Strained frOM reMbyirig , any r property,. and' praYing: that the sprinkler_ system; be . declared their preperty ; No court ; order was , made until , June, 1935; when the dedree .Was rendered; froril whieh 'is this : aPpeal, adjudging the title to the sprinkler . system , IO. be, in the interveners, Mar-ini all the above . time the sprinlder 'system haS remaMed in the buildin . and , has been in use . for more ; than twO YearS past, if pot continuously Since Deceraber, 1930. :It. will -be noted: that ;the lease AVAs .eieented after :the :foreclosure shit lad . beeri !fil ed. ;. H
456 ROMICH V. KEMPNER BROS. REALTY CO. [192. • he lease provided that : "The- lessee, upon expiration of this lease, may remove all machinery and equipment which it has heretofore or may hereafter install upon the premises." The lease required the lessee to carry $20,000 fire insurance on the building. It was ascertained that the insurance premiums could be greatly reduced by the installation . of a sprinkler system. Saxon, the lessor testified that it was installed with the understanding that the lessee might remove it ; the trust company, his mortgagee, knew of the lease when it was made, but the testimony is in dispute as to whether its officers were advised of the agreement whereby the sprinkler system might be removed. The court made no finding upon this disputed- question of fact, but we assume, in view of the decree rendered, that it was found that the trust company had no knowledge of the -agreement between Saxon and his lessee, and had not given consent thereto. It is certain, however, that the trust company was aware of the lease, and that much of the rents paid by the lessee under its provisions was paid over to it as credits on the mortgage indebtedness. These payments appear to have induced the indulgence extended in the foreclosure proceedings. . The testimony shows that the sprinkler system consists of a large elevated tank imbedded in a concrete foundation with pipes running under ground and connecting with the building. The pipes in the building were made to fit it. The overhead pipes are attached to the rafters by screws. But it was shown also- that this tank could be removed without injury to the freehold, and that, while the tank and the pipe system were adapted to use in the building in which they had been installed, they could be installed and used in other buildings: It was decreed that the sprinkler system was a fixture and did not pass to Romich by his purchase from the receiver ; and his -petition that-he be adjudged the owner thereof was dismissed, and it was decreed that the title thereto had passed to the purchasers of the real estate under the foreclosure decree. Stone v. Suckle, 145 Ark. 387, 224 S. W. 735, is a well-considered case which announces the principles which we think are controlling
ARK.] ROMICH v. KEMPNER BROS. REALTY CO. 457 here. It enumerates the classes of persons between whom questions regarding the right of possession to what are called fixtures arise, and states the different rules that are applied to the different classes. It is there said that the strict rule as to fixtures which applies between heir and executor applies between vendor and vendee and between mortgagor and mortgagee. Another class of persons between whom the question frequently arises is the executor of the tenant for life and the remainderman or reversioner and there the right to fixtures is considered more favorably for the executors. Where the strict rule applies, all property attached to and adapted to the uSe of the , property sold or mortgaged passes by the deed or mortgage, although it could he removed Without damage to the property. But it was there said that between landlord and tenant the claim to have articles considered as personal property is received with the greatest latitude and indulgence. It is there further said that there is an exception of broader extent in respect to fixtures erected for the purpose of trade. Now it is not contended that the sprinkler'system is a trade fixture. But the question as to whether it is a fixture at all arises between parties who- have taken the places of persons who were lessor and lessee or landlord and tenant. Appellees, through the mortgage foreclosure, have acquired the title of Saxon, the lessor or landlord. Appellant, through the receiver's sale, has -acquired title of the Command-Aire, Inc., the lessee or tenant.' What is known as the liberal rule is the one therefore to be applied, as the present litigants have acquired the right and title of persons whose original - relation was that of landlord and tenant. Wo think the sprinkler system was not placed in the mortgaged building as a part of it, and did not therefore become a fixture. We are led to this conclusion froth the following facts and circumstances : (a) The lease gave the lessee the -right to remove all machinery and equipment which it had then or might thereafter install upon expiration of the lease. It has expired and a pp ellant owns the lessee's interest, whatever that is. (b) if there is
458 •[192 any.- ambiguity as, to ,,what . .property was included under the description, of .f.' all ; machinery and . ;equipment," •that doubt is -removed by .the testimony of the lessor, ;Saxon,. himself,- to the effect that it Avas expressly agreed that the. sprinliler systemcmight • he removed upon .the termina-tion-of.the.lease:„ . (c) The sprinkler system_ was installed. at- a -cost .of $8,016.. The,. foreclosure : suit was pending wheni the; lease was .executed,:.and , it .would have been highly, improvident, on the, lessee 's part .to incur. this. large_ expense,which would he total.loss as . soon. as this foreclosure was . completed.. .,(d).. The sprinkler , . system may be- remoyed without .damage to the building in, which it was. installed. although some expense- will be . incurred in adapting it. to, and in.ipst,alling it in, another.building. As stated , :in Stone, y. , Suckle, supra, this circumstance is not ,of , controlling . importance, .but..it ; is •one ; be considered in, , determining, the intention of -the parties and the. character. , of the improvement. .(e) The . removal : of the.,,sprinkler. :system., doe , s; ,not deprive . a.ppellee . of, any security which the original mortgage gave,, as-the system .was . installed subsequent to its execution. The equity of the'.'dase, as:Well:as the laW aPPlicable to inaprorements of thiS .eharaoter, :call tor the 'ie-Cre'rsal • of the decree; and it Will 'be' sb Ordered: • • • • . , The deCred is therefore reversed, and the 'cause will be T • e • n :landed:With direetiOnS tO accOrd appellant the I • • • • r . ight . tb .1 . ; . r ." e move „ the . sprinkler system: , •
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.