HOLLY MANUF'GCO. V. NEW CHESTER WATER CO.
885
lng in possession and eharge, as desired by the Holly Company. This· testimony of Mr. Bullock is uncontradicted, and there is no reason to doubt its truthfulness. The bill in this case was ·filed September 19; 1888, while Lockman was still in control of the pumping-engines, and he has since maintained his charge and custody thereof in the manner stated, as the representative and under the pay of the Holly Company. In November, 1888, Bullock &Co. assigned ing interest in the bonds and stock of the New Chester .Water Company to Wood & Co., and at the same time delivered to them resignations of the officers of the water company. Thereupon new officers were elected, .and the water company then took the. actual possession of the works, but Lockman's control of the engines continued. Hopper & Co. and Wood & Co. together hold substantially the entire mortgage bond issue of $500,000 of the New Chester Water Company. Sixteen bonds of $1,000 each are, indeed, held by Dyer and Black under a pledge made in JUly, 1887, but only to indemnify them against a claim. -which the water company itself may have against them as sureties for Bullock & Co., touching a lien of $15,000 which they were to remove·. All the bonds and stock of the New Chester Water Company which Bul-· lock & Co. were to receive under their construction contract had. been jeliveredto them probably before the first pumping-engine reached . Chester,and certainly before its erection began. On March 31,1890, .BamueIIR. Bullock and wife executed and delivered to the New Chester Water Company a deed of conveyance of the land upon which the en;gine-house and pumping-engines stand. Upon this state of facts two questions are presented for our determi- , ·nation:First, whether R. D. Wood & Co. are under any personat liability to the Holly Manufacturing Company; and; second, whether that .companyhas a valid lien upon or claim to the pumping-engines at Chester enforceable in this suit. The first question, it setms to us, is not difficult of solution. The Holly Company was not a party to the tripartite agreement of October '26, 1887. That instrument contains no provision expressed to be in its behalf. Neither was any money thereby specifically set apart to pay for pumping-engines either at Chester or Mobile. The agreement was jor the mutual benefit of the three parties who executed it, and to promote a purpose in which they had a common To secure the faithful application to that object of the fund which Hopper & Co. proposed then to advance it was stipulated that it should pass through the hands of Wood & Co., but the paper provided that ultimately the money should be distributed by Bullock & Co. It was then believed that $200,000 would complete the water-works at Chester, Greencastle, ,and Mobile. So Bullock & Co. had represented. Confiding in the cor. ftctness of that estimate, the paper provided forthe apportionment of the fund between the three places. But this did not give third persons ,any right to control the application of the fund, or any vested interest ·therein. The parties to the agreement did not relinquish their joint do.minion over the fund. As between themselves, the agreed apportion-
S86'
FEDERAL REPORTER,
vol. 48.
merit in. the first instance ,Was binding, but it was not irrevocable by theln. Therefore when they discovered that the fund was insufficient to accomplish all that was intended it W8!'1 competent for them to' change the apportionment. This was done by their. mutual consent, and no third person had any right to complain. In point of fact, every dollar by Hopper & Co. was used in the completion of the money so at the three places, although not in the proportions of the originally' contemplated.· We note the recital in the tripartite agreement that "Samuel R. Bullock & Co. and R. D. Wood & Co. have entered into certain contracts by which the said R. D. ,Wood & Co. have agreed to complete the ter-workeat Chester, Greencastle, and Mobile." But ,those contracts are not in evidence. We do not know their contents, and they are not here available to the Holly Company. The stipulation that Wood & Co. would procure the completion of the water-works '!clear of all liens ahead of the securities held by Wm. G. Hopper & Co.," was for the specialbmefit of that firm,and the Holly Company iaa stranger to the consideration upon which it was based. Moreover, Wood & Co. have made advances out of their own pockets to the amount of 8105,000 not contemplated by the parties. Notwithstanding this unexpected result, they may srill be legally answerable to Hopper & Co., but we do not perceive that the Holly Company has any right to equitable relief by virtue of anything contained in the tripartite agreement. Nor does the fact that. Bullock & Co. assigned all· their remaining interest the bonds and stock of the New Chester. Water Company to Wood & Co. affect the· case. The,good faith of that transfer. is not impeached. Neither, under the proofs; can it be maintained that the stock .of the water cOmpany in thehaIids of Wood & Co. is unpaid capifal stock, and hence a trust fund, for ;the payment, of the debts incurred on behalf of the company. We are, then, of the opinion that no equitable ground to charge R. D. Wood'& ,COj personally is shown. We pass now to a consideration of the rights of .the Holly Manufacturing Company under the clause already quoted of the contract of August 3, 1887..The language there used is plain, and the purpose unmistakable. The contract· not only created a lien upon the engines for the purchase price. buUt also.providedthat the Holly Company "may remain in and have full possession" thereof until the price is paid. The privilegethns conferred upon the Holly Company to maintain possession evidently was [or the better seourity of the purchase-money. This right, it is to be assumed, was to be exercised in such a manuel' as' was cOllsistentwith the nature of the property and the use to which it w:asdesigned., But certainly the parties did not contemplate any such unqualified qelirel'yof the pumping-engine's as would wholly deleat the-: exercise by. the. Holly Company of its right to .possession.Manifestly theengineEdverenot to become inseparably incorporated with the real of their Cll.!"O estate until they should, be subjected to the prescribed pacity and efficiency " and were accepted. Had they failed to meet the. would have been compelled to take them away.
HOT,LY MANUF'G CO. V. NEW CHESTER WATER CO.
887
Neither was it intended that the engines should be converted from personalty into realty until they were paid' for,. The Holly Company's right to "remain in and have full possession" of the engines plainly was inconsistent with such a conversion. All this, we think, iavery clear. And we here observe that at the date of the contract Bullock' & Co. were in possession of the real estate, and the legal title was in Bullock, for the transaction between him and H. S. Hopper-the deed to the latter, and his written acknowledgment-constituted only a mortgage. Bullock & Co., then, were in a position to stipulate as they did with respect to the Holly Company's lien f6r the purchase money and its' right to maintain possession of the engines as aJditi<malsecurity. Is there any rule of public policy which will defeat the undeniable intention of the parties as the same appears on the face of the contract? Now while, by the settled la.wof Pennsylvania, where persot1al property is delivered under a conditional sale a provision in the contract preserv:';' ing to the vendor the :title until the property is paid for ie'voiJasrespects execution creditors of the vendee, or an innocent pnrchaser from him, yet,as against the vendee himself, the seller may reserve the of property in the until payment, and in default he' may reclaim them, or resort to legal remedies. Hankv. Linderman,64 Pa. St. Krau8lrv. Com.· 93 Pa. St. 421. Allthe Pennsylvania cases agree that sucb 'a reservation of title to the goods RS security for the price is valid the partiesthemselves.Pee'kv. Heim; J27 ·Pa. St. 500, 17 AtL Rep. 984; Sumrnersonv. Hicks, 134Pa. S1. 566,19 Atl. Rep. 808; Levan v. Wilten, 135 Pa. St. 61, 19 Atl. Rep. 945. In the very latest case on this subject,-Hineman v. Matthews, 138 204, 20At1.Rep. 843,-wherethere was a sale of timber on an agreement that the title was not to pass until payment, butthevendeewll.B permitted to remove the timher and convert it into lumber, and then failed to pay. whereupon the vendor took possesfjion of the lumber; it was ruled that he could ·hold it against a subseq:uElnt, execution creditor of the vendee. In HOffkne8s v. RU88ell, 118 U. S. 663, 7 Sup. Ct. Rep. 51, upon an exhllUstive 'review of the decisions, the conclusion was reached by the BUpreme court of the United States that by the general rule of law, unaffected by local statutes or local decisions, a conditional sale of personal property,accompanied by delivery, is valid both as against theparlies and third persons; and it was further shown that by the almost·unanimous opinion of the courts a purchaser buying with -notice from the conditionalvendee cannot hold the property as against the claim of the original vendor. The case of Gregcrry v.Morris. '96 U. S. 619, is instructive. There a contract of sale of cattle gave the vendor a lien' thereon for the price, and authorized him to designate a person to go along with and retain possession of the cattle, who, upon 'non-payment, was to sell thewhole or a portion of the cattle. The court sustained the Hen as between the parties. ChiefJustice WAITE, speaking for the "The lien at common law of the vendor of personal property to secure: payment. Df .pu rchasemoney oythe volulltary andunconditionlll delivery of tbe property to the purchaser; but this does not prevent the parties from con-
888
FEDERAL REI'ORTER, vol. 48.
tracting fora lien,which, as between themselves. will be good after delivery. So, ordinarily, when the possession of a pledge is relinquished. the rights of the ate gone. In this case. however, Morris was not willing to rely upon thll lien which the law gave him as vendOl', or upon a mere pledge of the property; but'required a special contract on the part of Gregory, securing his rights. This contract created a charge upon the property, not in the nature of a pledge, but of 8 mortgage. The Hen, as between the parties. was not made to depend upon possession, but' upon a contract, which defined the rights both of.Morris and Gregory, and the power of Morris for the enforcement of his lIecurity."
itYV;aB.9Qmpetent for the parties ,here to agree that engine should remain personalty \lntiL paid for, is not to be doubted del' the SheU v. Haywood, 16 Pa. St. 523; Harla'll v. Harlan, 20 Pa. S1. 303. Ip.Shell v. Haywood, 8upra, the court declared that the rule of and removal is Qne subject to the controlltnd modification of the parties representing the property, who may vary, ,same according to their convenience, pleasure, regarg for right;, fQr,(said CHAMBE;RS, J.,) "whether attached to the realty or not, or in whateverlllanner attached, is immatedal, when the parties agree to con'" aidertt personal property." All the Pennsylvania cases(and they deal with poilers:, engines, and machinery generally) concur in the. view that it is not the.charaoter of the physical connection which constitutes the test of /lnnexation, but inteution is the true legal. criterion. Hill v. SewalcJ, 53.Pa.. St. 271; Benedict v. Mar8h, 127 Pa. St. 309, 18Atl. Rep. 26. .It wa$ therefore heJd in Vail v. Weaver, 132 Pa. St. 363, 19 AtL Rep. 138,thl1t the engine, machinery, and appliances of an electric light plant .erected upon and firmly attached to real estate do not pass to a purchaser of the real estate ata sale Qpon a mortgage of the realty, made and recorded before the plant was placed by the mortgagor on the mortgaged prel!Oises, unless it was the intention to make the plant a part of the realty when it was This decision seems to us to be a .decisive answer to the argument that the pumping-engines, as after-acquired property, come within the grasp of the mortgage of April 1, 1887, to the Farmers' Loan & Trust Company, in such a manner that the Holly COmP!lny's lien was This. case belongs rather to that c1asa of cases of which U. S. v. Railroadeo., 12 Wall. 362, is the exponent, than to the class represented by Porter v. Steel Co., 122 U. S. 267, 7 Sup. Ct. Rep. 1206. The subjectmatter of contest in. the former of these two cases was after-acquired rolling stock of a railroad, which by the purchase contractwas charged with a lien for the price. To the proposition that a prior general mortgage which in termS covered after-acquired property attached to this rolling stock as soouas acquired, to the displacement of the contractual lien, the Mr. Justice BRADLEY, said: court, . "That doctrine is. intended to Sll bserva the purposes of justice and not inj,ustice·. A mortgage intended to recover after-acquired property can only attach itself to sllch property in the condition in which it comes into the mortgagor's handll; If that property is already SUbject to mortgages or other liens, the general mortgage does not displace them, though they may be junior to it in point of time." . .