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Medical Tower Corp. v. Otis Elevator Co.

May 9, 1939

MEDICAL TOWER CORPORATION ET AL.
v.
OTIS ELEVATOR CO.



Appeal from the District Court of the United States for the Eastern District of Pennsylvania; Oliver B. Dickinson, Judge.

Author: Kalodner

Before BIGGS and CLARK, Circuit Judges, and KALODNER, District Judge.

KALODNER, District Judge.

This appeal involves the construction of the conditional sales act in force in Pennsylvania as applied to elevators in a thirty-story office building in Philadelphia, "The Medical Tower."

In February, 1931, the appellee, Otis Elevator Company, entered into conditional sale contracts with Arey-Hauser Company as conditional vendee, under the terms of which Otis agreed to supply and install four elevators and elevator equipment in the Medical Tower Building. The elevators were duly installed by December, 1931. The conditional sale contracts were filed in the Prothonotary's office of Philadelphia County in May, 1932. Arey-Hauser Company were general contractors, under contract with Medical Tower Corporation (the owner of the building and one of the appellants) for the construction of the building. The Pennsylvania Company for Insurances on Lives and Granting Annuities, the other appellant, was the trustee under a construction mortgage whereby the construction of the building was to be financed. This mortgage was executed prior to the installation of the elevators and contained an after-acquired property clause covering the elevators and their equipment.

Arey-Hauser Company paid only part of the contract price for the elevators and the equipment referred to, and ultimately the appellee filed a suit in replevin to recover the elevators, joining the Medical Tower Corporation and the Pennsylvania Company (etc.) as defendants, the latter company being in possession as mortgagee at the time suit was filed. At the trial of the cause to the court without a jury, the learned court below filed an opinion, made findings of fact, and filed an order entering judgment for the appellee. The judgment was in special form and contained a provision permitting the plaintiff to remove the elevators and equipment from the building. the appeal is from that judgment.

The court below based its decision upon the conditional sales act of Pennsylvania, Act of 1925, P.L. 603, as amended by the Act of 1927, P.L. 979, 69 P.S.Pa. § 361 et seq., as construed by the Pennsylvania cases. the conclusion was that the elevators in an office building were fixtures not so attached to the realty as not to be severable without material injury to the freehold (section 7 Second of the Conditional Sales Act, 69 P.S.Pa. § 404, second subd.). The court held as a consequence of this conclusion that the reservation of property in the goods attached was not void. With this conclusion we cannot agree.

Section 7 Second of the Conditional Sales Act reads as follows:

"Second. As against an owner, a prior mortgagee, or other prior encumbrancer of the realty, who has not assented to the reservation of property in the goods, if any of the goods are so attached to the realty as not to be severably without material injury to the freehold, the reservation of property in the goods so attached shall be void, notwithstanding the filing of the contract or a copy thereof, unless such injury, although material, be such as can be completely repaired, and the seller before retaking such goods, furnishes or tenders to such owner, prior mortgagee, or encumbrancer, a good and sufficient bond conditioned for the immediate making of such repairs. 'Prior,' as used in this paragraph, refers to the time of attaching the chattels to the realty."

The record establishes that:

(a) Medical Tower Corporation is an owner of the realty within the meaning of the above quoted section.

(b) The Pennsylvania Company is a prior mortgagee of the realty within the meaning of the above quoted section.

(c) Neither appellant assented to the reservation of property in the goods.

The only question then is, Are the elevators so attached to the realty as to be severable without ...


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