ferred receiver certificates which the receiv-, er might succeed in having issued, that the business was in effect being run under the guise of a receivership by the Ford interveners, without regard to the interests of creditors, and that the Fords should be held to be estopped to assert the certificates against the prior vendor lien owned by appellant.

Appellant asserts an analogy between the position of Mrs. Ford as an unsecured creditor, adopting the proceedings for the collection of her debt and securing the issuance of the certificates, to that of a mortgagee who secures a receivership to collect his mortgage, and by estoppel is held to have subordinated his mortgage rights to the expenses of a receivership thus procured by him, claiming that where these expenses in the instant case were incurred by an interested creditor like Mrs. Ford, to further her own private ends, that she should be estopped to assert any superior rights under certificates thus issued to meet such expenses.

prior mortgage would leave the junior mortgagee without any security; so that it had nothing to lose, and everything to gain, in experiments to enhance the value of the mortgaged property, so long as the cost of those experiments was made ing was to burden the prior mortgagee with a prior lien thereon. The effect of the proceedthe whole cost of the expenditures and experiments made for the betterment of the property on the petition, and for the benefit of the insolvent corporation and the junior mortgagee. The representation is always made, in such cases, that the receiver can carry on the business much more successfully than was done by the insolvent corporation. This commonly proves to be

an error."

Further in the opinion the court said:

"And if the complainant desired that money be spent, beyond the income of the property, in carrying on the business of the corporation or improving the mortgaged property, it was at liberty to furnish the means for that purpose; but it had no equity to ask that the expense and the hazards of doing so should be saddled on the first mortgagee, and the court had no jurisdic

It was said by this court, speaking through tion or power to place it there.”

Justice Graves, in Farthing Lumber Co. v. Greenwood et al., 197 S. W. 313, where the question of allowance of attorney's fees was involved in a receivership proceeding, after referring to a contract between two of the leading stockholders of the corporation, Greenwood and Farthing, that

"While we deem it unnecessary to recite the full provisions of this contract, the very preamble of it shows, although the two corporations were nominally parties, that appellee Greenwood and J. B. Farthing were the only real parties at interest in the entire receivership litigation, notwithstanding its necessary prosecution through the forms and procedure appertaining to corporations, the machinery by and through which their property and interests were held and operated."

We think the same is true of the instant case, and that it is clear that Mrs. Ford was carrying on the business of the Mugler Manufacturing Company under the guise of the receivership, and that she was the real party at interest. We think the following from the case of Hanna v. Trust Co., 70 Fed. 2, 16 C. C. A. 586, 30 L. R. A. 201, is strikingly in point in the present case, simply substituting in that opinion for the "junior mortgagee" the appellee in the instant case:

"In this case, the company being insolvent, and its property mortgaged for more than it was worth, there was no way of raising money to set the receiver up in business, except by the court giving its obligations, in the form of receiver's certificates, and making them a paramount lien on all the property of the corporation, by displacing the appellant's prior liens thereon. As commonly happens in cases of this character, the receiver, the insolvent corporation, and the junior mortgagee united in urging the court to arm its receiver with the desired powers. They ran no risk in so doing. The corporation was insolvent, and a foreclosure of the

[22] We do not mean to hold that the mere fact that a stockholder and unsecured creditor of a corporation purchases receiver certificates issued for operating expenses of a quasi public corporation, where such certificates are properly and providently issued, as determined on a prior and full hearing in the cause, would be precluded from asserting such certificates against prior mortgage lienholders; but we do hold that where the undisputed facts show that such stockholder adopted the proceedings, and became the chief mover, and where she makes a private agreement with the receiver, who should stand as an impartial representative of all the creditors, whereby the receiver, acting, in affect, as her agent, secures the issuance of certificates with an understanding that such stockholder will purchase the same, and where no notice of such application for certificates was given to any creditors, and where such certificates were not applied for by any creditors of the corporation, and no application to continue the operation of the plant was made by any creditor or by any of the public, and where the undisputed facts show that the operation of the plant was secured by the co-operation of such stockholder and unsecured creditor in the hope of sustaining a hopelessly financially involved corporation, that such certificates, under such circumstances, cannot be upheld as against a prior lienholders, who was not a party to the proceeding and was given no notice.

We think what the Supreme Court held in the case of First National Bank of Houston v. Campbell, 104 Tex. 457, 140 S. W. 430, has application here, wherein, in construing article 1490, Revised Statutes 1895, providing that claims existing against a corporation at the time of the appointment of a receiver shall be paid out of the earnings of such cor

poration while in his hands, to the exclusion | ity given the certificates, which renders it of the mortgage action, and in holding that unnecessary to enter into a discussion of this had reference to a mortgagee who invit- these assignments. It is quite generally ed the proceedings, used this language: held that a person who is in no wise responsible for receivership proceedings, and who does not voluntarily intervene in the proceedings, and voluntarily use them for the collection of his debt, and where such proceeding are improvident, and shown to have not resulted in any good to creditors, that such person, who is no wise responsible therefor, cannot be held liable for the costs there

"It could, we think, have no application to a case where a receiver was appointed, not at the instance of the mortgage holder, and not as a result of a mortgage action, but without the concurrence, co-operation, or consent of the mortgage holder. If it should be held that this statute applied, and would defeat the participation by the mortgage holder in the earnings of the property during receivership, where such receivership had been brought about by the action This proposition holds good to quasi of the unsecured creditor, this would constitute public and private corporations alike. Such an invitation, if not an encouragement, to re- costs do not, constitute operating expenses ceiverships of corporations by unsecured credi- within the purview of the doctrine applied to tors, who in this way could impound the prop- receiverships of quasi public corporations. erty of such companies, secure their operation It appears that all of these fees were incurby a receiver, and, to the exclusion of the mort-red before appellant was made a party to gage holder, apply the earnings of such proper- the suit, as on the same date that the receivties to the payment of their debts."

We think it can be equally said that to hold in this case that the principal stockholder of the corporation, and the largest individual creditor of the corporation, could carry the same on, under the cover of a receivership, at the expense of the prior lienholder, would be an invitation to the stockholders of every private corporation, as well as the unsecured creditors, when such corporation happened to be affected with the slightest public interest, to place it in the hands of a receiver, and, through the order of the court, carry on, at the prior lienholder's expense, a speculative venture, which would otherwise fall on such stockholder and creditor as the sole person who would be responsible for such continuance in business in the absence of the court's assistance. In this connection we add that it is significant of the close relations existing between the Ford interveners and the receiver throughout this litigation that they joined in making all applications to the court for any specific relief in the case, jointly urged motions requiring the appellant to consolidate, and appear in this court in a joint brief to uphold their joint contentions in this case. This is all indicative of practically an agency relation on the part of the receiver to the Fords, and of the fact that the certificates

were issued, and operations conducted, with the view, it is clear, of throwing the result of such speculation on all prior realty and machinery lienholders, and under these special facts we think appellant's contention in this regard should be sustained.

Appellant, by his twentieth, twenty-first, twenty-second, and twenty-third assignments of error and propositions thereunder, complains of the action of the trial court in adjudging the fees of the receiver, his attorney, and master in chancery, respectively, as superior to his vendor's lien.

[23] We think these assignments should be sustained for the reason given for sustaining the assignments complaining of the prior

of.

er and the Fords filed a motion to force appellant to consolidate they joined in a rec ommendation that all of the above fees in the above amounts should be paid. Gulf Pipe Line v. Lasater, 193 S. W. 773; Brewing Co. v. Clint, 159 S. W. 409; Bank v. Railway, 36 S. W. 136; Brewing Co. v. Fuller, 26 Tex. Civ. App. 239, 63 S. W. 1048; High on Receivers, § 796; Frick v. Fritz, 124 Iowa, 529, 100 N. W. 513; McAnrow v. Martin, 183 Ill. 467, 56 N. E. 168; First National Bank v. Cook, 12 Wyo. 492, 75 Pac. 674, 78 Pac. 1083, 2 L. R. A. (N. S.) 1012; Lane v. Washington Hotel Co., 190 Pa. 230, 42 Atl. 697.

[24] We, therefore, sustain appellant's assignments attacking such priorities, it appearing that appellant was involuntarily forced to appear in the proceedings; but we overrule similar assignments on the part of the machinery interveners in so far as their interest under their chattel mortgages thereon may be held to exist, it appearing that said interveners voluntarily appeared in the proceedings and used them voluntarily for the collection of their debts.

contest between Van Valkenburgh's vendor's It now becomes necessary to consider the lien and the chattel mortgagee claims of said machinery interveners:

For a statement of the facts showing the inception of Van Valkenburgh's vendor lien rights on the Mugler property, we refer to the general statement at the inception of

this opinion on the other branch of the case.

We will first consider the case arising between Van Valkenburgh and the Muncie Oil Engine Company.

Subsequent to the sale of the property by Van Valkenburgh to Mugler the Muncie Oil Engine Company sold to the Mugler Company two Muncie oil engines, one a 75 horse power and the other a 40 horse power, partly for cash and partly on credit, retaining purchasemoney notes for the deferred payments secured by a chattel mortgage.

The lower court sustained the position of

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207 SOUTHWESTERN REPORTER

the Muncie Oil Engine Company, and held
that its chattel mortgage lien was superior
to the vendor lien rights of Van Valkenburgh.
By appropriate assignments appellant chal-
lenges the action of the trial court in allow-
ing priority to the Muncie Oil Engine Com-
pany under its chattel mortgage, contending
that said engines constituted fixtures and a
part of the realty, and became subject to
appellant's vendor lien for principally four
reasons: (1) Because of the method of the
fixation of such engines to the realty; (2)
because it was shown that the removal there-
of would cause injury to the realty; (3)
because the same constituted motive power
and (4)
in a manufacturing enterprise;
because said Muncie engines took the place
of other engines in the plant at the time Van
Valkenburgh sold to Mugler, and this appel-
lant's security had been depreciated by the
removal of the other engines.

We will consider these positions in the order stated:

(1) As to the method of fixation: The court found that the 75 horse power Muncie engine was attached to the realty in the following

manner:

"The 75 horse power engine weighs 30,000 pounds. It was fixed or fastened in place in the following manner: It set upon a concrete bed mixed with scrap iron. This concrete bed was 6 feet deep, and was 13 feet in length, by 9 feet in width at its base, and was 11 feet long by 9 feet wide on the surface of the ground. The concrete protruded a short distance above the ground, so as to be shaped up to the engine,

in order to raise the engine above the ground,
so the flywheel will have a clearance. The en-
gine is attached to this concrete by iron bolts
4 feet long, which were laid with a bend in
them, and the concrete poured on top of that.
The bolts were one and one-half inches in
diameter, and came up above the surface, and
were run through a hole in the bed of the en-
gine, and then the bolts are fastened by the
screwing of a nut on the end of them. By un-
screwing the nut you can lift the engine off.
This bolt protrudes about three inches above the
concrete, just enough to bolt the engine down.
The other 4 feet of these bolts are in the con-
crete. In addition to the 9 by 11 feet surface
for said concrete foundation for the 75 horse
power engine there is an extension of said con-
crete foundation known as the outboard bearing,
which is 4 feet below the ground, and which is
also 4 feet square at its base, and slopes up to
3 feet at the surface of the ground. This is
known as the cut-board foundation that sup-
ports the outer shaft pillar. It extends out from
the 9 by 11 concrete foundation at the surface,
and comes above the ground 54 inches."

The court further found that this foundation was first constructed for a Bessemer engine, which was not delivered, and that the foundation was then shaped up to meet the requirements of the Muncie engine, which was the first and only engine which had ever set on the foundation. He further found that the appellee Muncie Oil Engine Com

pany, or its agents, knew the character of said foundation, and the method in which said engine would be attached thereto.

The 40 horse power engine, weighing 15,000 pounds, the court found to be attached in the same manner as the 75 horse power engine, and, further, that the foundation for the 40 horse power engine was constructed especially for said engine according to plans furnished by the Muncie Oil Engine Company.

[25] Appellant contends that by reason of the foregoing facts, showing the method of the attachment of such engine to the realty, upon their becoming installed they became, as a matter of law, part of the realty, and passed under the lien of appellant's purchase-money notes against the property, and we sustain appellant's contention upon the following authorities: Menger v. Ward, 28 S. W. 824; Jones v. Bull, 85 Tex. 139, 19 S. W. 1031; Brown v. Roland, 92 Tex. 54, 45 S. W. 795; Clary v. Owen, 15 Gray (Mass.) 522; Bass Foundry v. Gallentine, 99 Ind. 525; Larue v. American Diesel Engine Co., 176 Ind. 609, 96 N. E. 772; Frankland v. Moulton, 5 Wis. 1; Ottumwa Woolen Mills Co. v. Hawley, 44 Iowa, 57, 24 Am. Rep. 719; Wood v. Whelan, 93 Ill. 153; Southbridge Savings Bank v. Stevens Tool Co., 130 Mass. 547; Phoenix Iron Works v. New York Security & Trust Co., 83 Fed. 757, 28 C. C. A. 76; Reynolds v. Ashby & Son, 73 L. J. K. B. (N. S.) 946, 20 Times L. R. 766, 53 Week. Rep. 129.

The case by the English House of Lords of Reynolds v. Ashby & Son, last cited, is so strikingly in point, and is decided by a court held in such high regard, that we shall take the liberty of quoting from the case somewhat liberally, as fully expressive of our views in this case.

The syllabus in that case is as follows:

"Machines were supplied by the owner of them to the lessee of a factory upon the hire-purchase system, the machines to remain the property of the owner until they had been wholly paid for; upon default in payment the owner to have power to determine the hiring and remove the machines.

They were affixed, as the owner knew, to concrete beds in the floor of the factory by bolts and nuts, and could have been removed without injury to the building or the beds. The lessee made default in payment, and the owner brought an action to recover the machines or their value from a mortgagee of the premises, who had taken possession. Held, that the machines had been so affixed as to pass by the mortgage to the mortgagee."

The court further found that the deed | which the mortgagee was not a party, to which from Van Valkenburgh to Mugler, retaining he never consented, and of which he had not a vendor's lien, was promptly recorded in the proper records in Brazoria county, Tex.