Rudolph Wurlitzer Co. v. Cohen

Adkins, J., delivered the opinion of the Court. The appellees, Aaron Cohen, Michael Hartz, and Joel Grebhart, on the 6th day of September, leased the land and improvements on the south side of Baltimore Street, known at that time as the Victoria Theater, unto Nixon’s Victoria Theater Company, Inc., for a term of ten years, beginning on Oct. 1st, 1916, at and for a yearly rental of $16,000. In the lease it was expressly agreed, among other things, “that all additions and alterations made to said premises and all fixtures (save office fixtures, signs and moving picture machines installed by the tenant Nixon) should belong to the landlords at the end of the term.” This lease was duly recorded among the Land Records of Baltimore City. Later, on June 6th, 1922, an agreement was entered into by the lessors and Nixon’s Victoria Theater Company, Inc., and Fred S. Nixon-Nirdlinger, which was also recorded among the Land Records of Baltimore City.

In this last agreement Nirdlinger joined so as to be bound as principal and not as surety on the personal covenants contained therein, as well as in the lease aforesaid, and by that agreement, the term of the lease was extended until and including Sept. 30th, 1932, and it was agreed and covenanted therein, “that when the lease or this renewal shall expire, everything on said demised premises shall become the property of and belonging to the then landlords.” On November 13th, 1925, another agreement was made ³⁷¹ between the same parties, and it too was recorded among the Land Records of Baltimore City. In it was stated that the tenants proposed to sublease the property and permission was thereby given the Rixon Victoria Theater Company, Inc., and Fred S. Rixon-Rirdlinger by the lessors to make certain improvements named therein to the leased property, and, if the Rixon Victoria Theater Company, Inc., and Fred S. Rixon-Rirdlinger desired “to pnt in said premises another organ in lieu of the present organ,” they were permitted to do so, but if the alterations and improvements were made, they were to “be and immediately become the property of the landlords, including any organ substituted for the present organ.” The demised property was, on the same day, subleased by Rixon’s Victoria Theater Company, Inc., to one Lewis Berman, for the remainder of the lease, as extended, which was likewise duly recorded among the Land Records of Baltimore City, in which sublease is found this provision: “There is now an organ on said demised premises and it is agreed that if another organ should be put in sgid demised premises in lieu of the present organ, that the organ as substituted shall belong to the owners * * * of the building upon the completion of the lease.” Thereafter, as alleged in the answer of the Rixon Victoria Theater Company, Inc., Berman assigned the sublease to the Embassy Theater Corporation, of which he was president. This last named company failed to pay the rents due under said sublease, and, on the 5th day of August, 1926, Rixon’s Victoria Theater Company, Inc., re-entered and took possession of the theater and, on the same day, subleased it to the American Theater Corporation. In the sublease of the property by Rixon’s Victoria Theater Company, Inc., to the American Theater Corporation, it was agreed that “all additions and alterations that were permitted to be made by the owners thereof, on the demised property and all fixtures (save office fixtures, signs and moving picture machines, installed by said sublessee) should belong to the owners of the building at the end of such sublease.” The sublessee further cove ³⁷² nanted and agreed “to be bound by all the terms and conditions contained in the original lease of said theater from Aaron Cohen and others, landlords to Rixon’s Victoria Theater Company, Inc.,” and the agreement extending said lease, as well as the additional agreement executed on the 13th day of Rovember, 1925, between the said Aaron Cohen and others and Rixon’s Victoria Theater Company, Inc., and Fred S. Rixon-Rirdlinger, which said agreement was duly recorded among the Land Records of Baltimore City, but it was further agreed therein that the sublease should not be construed to permit the American Theater Corporation to make any alterations or changes in, about, or upon said demised premises without the written consent of the said Rixon’s Victoria Theater Company, Inc., and said Fred S. Rixon-Rirdlinger.

After the lease of the theater to Berman on the 13th day of Rovember, 1925, extensive improvements were made to the theater building by Berman, or the Embassy Theater Corporation, of which he was president, and among the improvements made was the installation of a new organ. This organ was installed under an agreement in the nature of a lease or conditional contract of sale, dated the 25th day of Rovember, 1925, between the Independent Theater Company, of which Berman was likewise president, for and on behalf of the Embassy Theater Corporation and the Rudolph Wurlitzer Company, the appellant in this case, by the terms of which the title to the organ was to remain in the Rudolph Wurlitzer Company, from whom it was obtained, until the installments mentioned in the agreement were all paid, with the right of the last named company to repossess the organ upon default of the other party to the agreement to pay any of said installments or charges provided for in the contract, when and as the same became due and payable. This agreement or paper, in which the organ was fully described, was recorded on April 7th, 1926, among the Chattel Records of Baltimore City. The Independent Theater Company, or the Embassy Theater Company, for whom the organ was obtained, defaulted in the payment of the installments provided in said agree ³⁷³ inent, and the appellees, claiming ownership of the organ under the terms of their lease, upon hearing that the appellant was about to retake and repossess tbe organ and remove the same from the leased premises, filed their bill asking that the defendant, the Rudolph Wurlitzer Company, or the other defendants named in the bill, be enjoined from removing the organ from the demised premises.

Upon this bill the court granted a preliminary injunction. Thereafter Nixon’s Victoria Theater Company, Inc., the Embassy Theater Corporation, the Independent Theater Corporation, the American Theater Corporation, and the Rudolph Wurlitzer Company answered, and the last named corporation moved that the injunction be dissolved. Ered 8. Nixon-Nirdlinger, Louis Berman, and the American Seating Company were not summoned.

Thereafter a decree was granted overruling the motion to dissolve the injunction, and granting a perpetual injunction against the Rudolph Wurlitzer Company and the other defendants who had answered the bill. From that decree the Rudolph Wurlitzer Company alone appealed to this Court. We have carefully examined the record and all of the numerous authorities cited by counsel, and others which we have found. Oar conclusion is that the decree appealed from must be reversed. 1.

Aside from any effect the terms of the leas© from the landlord to the tenant may have upon the question, the organ did not become a fixture when it was placed in tbe theater. None of the tests indicated in Dudley v. Hurst, 67 Md. 44 , and in later cases, including Solter v. MacMillan, 147 Md. 580 , are met. (a) The organ was not actually or constructively attached to the realty. The uncontradicted testimony shows that the alterations in the theatre, including the removal of the boxes, were made without regard to the purchase of a new organ, and that the laying of the foundation and the arrangement for connecting pipes were at the expense and under the direction of the tenant.

When the organ was delivered, it rested on a floor frame which was set on strips which had ³⁷⁴ been nailed by the tenant’s superintendent to the floor of the chamber that had been provided. On the frame the chests were set and in the chests were the pipes. The organ can be removed without in any way damaging the premises, by lifting the pipes out and passing them through the door, or by lifting out the movable grill which was placed there for that purpose. The organ is not fastened to anything that would have to be tom apart. .The pipes which lead to the organ were not installed by the Wurlitzer Company, but by the purchaser of the organ, and are not the property of the Wurlitzer Company.

The platform on which the organ rests is about an inch and a half thick and, according to the weight of the testimony, is not spiked or nailed to the floor. The only witness that testified that it was in any way fastened to the floor said it was screwed to the underlying strips. (b) The organ is not peculiarly adapted to the use of the theatre in the sense that it would not be equally useful elsewhere, or that it could not be replaced by any ordinary pipe organ of approximately the same size. The new organ and the old one were about the same in bulk.

There was more space provided for the new organ than was needed or asked for. As said above, the changes made in the theatre were not made primarily for the purpose of providing a place for the organ. By the terms of the lease the changes were permitted without regard to whether the tenant subsequently elected to purchase a new organ or not, and under the permission to make these changes the tenant spent from $70,000 to $100,000, according to the opinion of one of the landlords, and about $150,000 (including the new organ) according to the witness who had charge of the work for the tenant, in improvements which ultimately were to become the property of the landlord. (c) It is clear from the provision of the conditional sale contract between the tenant and the vendor of the organ, and all the testimony in the case, that it was not the intention of the party making the annexation to make the organ a permanent accession to the freehold. “Of those tests the most ³⁷⁵ important is the question of intention.” Dudley v. Hurst, supra.

In support of the proposition that the organ is not a fixture, see Abramson v. Penn, 156 Md. 186, where the question was between the conditional vendor and a purchaser of the real estate for value without notice. Even in such a case, wdien the radiators rested upon brackets screwed to the wall of the building and were connected with a gas supply pipe-belonging to the owner of the building, it was held that the radiators were net fixtures. A fortiori, the organ is not a fixture, where a purchaser of the real estate is not involved. In our opinion, apart from the agreement in the lease, the organ would, at the termination of the lease, remain the property of the lessee, if the question of ownership were between the lessor and lessee alone, even without invoking the doctrine applicable to trade fixtures. 2.

As to the conditional vendor, even if the organ could be considered as a fixture, the provision of the lease, that property subsequently acquired by the tenant should at the termination of the lease become the property of the lessor, does not give the lessor a claim as against the conditional vendor, unless the fact that an old organ which belonged to the lessor was taken by the conditional vendor, and a credit given by it to the tenant by reason thereof, is to control. The author of the note in 37 L. R. A. (N. S.), 119, says: “The preponderance of authority is to the effect that where the removal of the fixture will not materially injure the premises, a seller thereof retaining title thereto may assert his right as against a prior mortgagee of the- realty.” And the author calls this the modern equitable rule as distinguished from the so-called Massachusetts rule to the contrary. The author also says: “The fact that a prior mortgage of real estate contains a provision that it shall cover additions thereto does not give the mortgage a superior claim to chattels annexed thereto as against the vendor by conditional sale contract, since the after acquired property clause in a mortgage attaches only to such interest as the mortgagor acquires,” citing a number of cases in support of that view and a few cases ³⁷⁶ to the contrary.

The reason for the preponderant view, as expressed in one or more of