Reynolds v. Ashby & Son [1904] UKHL 490
(Before the Lord Chancellor (Halsbury) , Lords Macnaghten , James of Hereford, and Lindley .)42 SLR 490Reynolds v. Ashby & Son.(On Appeal From the Court of Appeal in England.)
Subject_ Heritable or Moveable — Fixtures — Machinery — Mortgagor and Mortgagee — Hire and Purchase Agreement. Facts:Under a hire and purchase agreement there was supplied to the lessee of land upon which he was erecting a factory, machines which, having power supplied by gearing, were fastened down to concrete beds by bolts and nuts, and could be removed by undoing the nuts without injury to the building. The land upon which the factory was being erected, “together with the buildings, fixtures, machinery, and fittings erected thereon,” had previously been mortgaged by the lessee, who, after the machines had been fastened down, failed to pay the instalments due under the hire and purchase agreement. The mortgagee having entered into possession, the seller of the machines claimed them.Held that the machines were fixtures which passed with the factory to the mortgagee.On August 30th 1900, Reynolds, a manufacturer of machines, made a hire and purchase agreement with Holdway, a lessee for 99 years of land in Reading, upon which he was erecting a factory for joinery business, whereby Reynolds was to supply certain machines for use in the factory, which were to be paid for by instalments, but were to remain his property until the final instalment was paid. Holdway had on April 7th mortgaged the premises, “together with the buildings, fixtures, machinery, and fittings erected thereon,” and this mortgage had been followed by two later ones, the last dated August 27th to Ashby & Son, who subsequently acquired right to the earlier ones. The machines, which were heavy carpenters' tools, were in due time supplied, and were set down on the ground floor of the factory on concrete beds, and were fastened down with bolts and nuts. Power was supplied to them by means of gearing, and by undoing the nuts the machines could be removed without injury to the building.In November the mortgagees took possession of the premises, and Holdway failed in the payment of the instalments under the hire and purchase agreement. Reynolds terminated the agreement and demanded the return of the machines. The mortgagees having refused this demand, he raised an action claiming the machines or damages. The Judge ( Lawrance ) held that there were no facts to go to the jury, and gave judgment for the defendants, and on appeal this judgment was affirmed by the Court of Appeal ( Collins , M.R., Romer and Mathew, L.JJ .)The plaintiff appealed.At delivering judgment—
Lord Chancellor (Halsbury) —I cannot say that I am satisfied with the mode in which this case has been disposed of. There are various modes by which things when they are trade fixtures can be protected from being absorbed by the owner of the freehold or by a mortgagee, and I should hesitate very much before I agreed that such fixtures as are in question here, which could only be used when fixed, must necessarily belong to the freeholder or to the mortgagee. By an express or implied contract between the parties interested machinery for the purpose of working in a factory might be protected so that an unpaid vendor who has lent on the hire system machinery to a person who wanted to use it in his mill might make it safe from being absorbed either by creditor or landlord. There is nothing, however, here from which I can infer either an express or implied contract for the removal of these articles which undoubtedly were fixed; and under these circumstances I do not dissent from the conclusion at which your Lordships have arrived. I only desire to say that I agree to affirm this judgment upon the special facts which I find, and from the absence of any evidence which can alter the rule, which has been many times affirmed, upon which the learned Judge acted when the case was before him.Lord Macnaghten concurred.Lord James of Hereford —In this case the question for your Lordships' decision is whether certain machines employed for use in a factory had by virtue of their being fixed to the building become a portion of it, or whether they were chattels, and so to be regarded as moveable property. It appears that the plaintiff sold certain machines to a person named Holdway on what is known as a hire-purchase agreement. The plaintiff knew that the machines would be used under ordinary conditions in a factory then in course of erection. This factory belonged to Holdway, who executed three mortgages upon the land upon which the factory was being built, “together with the buildings, fixtures, machinery, and fittings erected thereon.” The defendants were the third mortgagees, but having paid off the two preceding mortgages they are now entitled to the land and building of the factory, the further question being raised whether the machines have or have not become part of the mortgaged property. The purchaser Hold way, the mortgagor of the factory, did not fulfil his contract with the plaintiff, so that the goods were unpaid for. On the other hand, it must be taken that the plaintiff was aware that the machines would be used in a factory and would be fixed in the usual manner to the building. There is also nothing unusual inPage: 491 ↓
Lord Lindley —This is an action brought to recover certain machines bought from the plaintiff by one Holdway on what is called a hire-purchase agreement. Hold-way did not pay the instalments of his purchase money as they became due, and the machines therefore never became his property. The plaintiff knew that the machines were wanted in order to fit up a factory which Holdway was building, and he put the machines into the factory on beds of concrete prepared for them. The machines were worked by steam power transmitted from a steam engine by shafts, wheels, and gearing in the usual way. Each machine was complete in itself. Each was fastened down to its concrete bed by bolts and nuts. The bolts were firmly fixed in the concrete and passed through and projected beyond holes in the machine. The nuts were screwed on the ends of the bolts where they projected, and the machines were thus held fast. By unscrewing the nuts each machine, although heavy, could no doubt be raised up and removed without injury to the building containing it, and without injury to its concrete bed and to the bolts embedded in it. Whilst the factory was being erected, but before any of the machines in question were put into it, Holdway mortgaged to Burrows the land on which the factory was being built, “together with the buildings, fixtures, machinery, and fittings erected thereon.” Holdway afterwards executed a second mortgage to one Hatt, and at a later date he executed a third mortgage to the defendants. The machines in question were put into the factory soon after it was mortgaged to the defendants. After they had been fixed, the second mortgagee took possession, and the defendants then paid off the two prior mortgages and took transfers of them. The purpose for which the machines were obtained and fixed appears to me unmistakable; it was to complete and use the building as a factory. It is true that the machines could be removed if necessary, but the concrete beds and bolts prepared for them negative any idea of treating the machines when fixed as moveable chattels. The question is whether they passed by the mortgage. But for the fact that Holdway had not paid for them the question would not, in my opinion, be open to the slightest doubt.Page: 492 ↓
Judgment appealed from affirmed and appeal dismissed
Page: 493 ↓
Counsel for the Plaintiff and Appellant— Haldane, K.C.— Herbert Reid, K.C.— Rowlatt. Agents— Scott, Spalding, & Bell.Counsel for the Defendants and Respondents— J. A. Hamilton, K.C.— A. Powell, K.C.— Keeling. Agent— Thomas H. E. Foord.