ADAMSON v. MCILVANIE.

(IN EQUITY.)

Fixtures.-Machinery in sash and door factory.

The boiler in a sash and door factory was set upon timbers for a foundation, suspended by rods to a frame, and covered over with brick-work. It could not be removed without taking down a portion of the building.

The rest of the machinery was not attached to the building, but was kept in position by sockets and cleats nailed round the feet of the machines to steady them. The whole constituted a sash and door factory and planing mill.

Held, upon question between a mortgagee of the realty after the machinery was in operation and a subsequent purchaser from the mortgagor by bill of sale, that all the machines were fixtures and part of the realty.

This was a bill asking for foreclosure, and claiming that certain machinery situate in a planing mill upon the property was part of the freehold. The bill was pro confesso against all the defendants except the Ontario Bank. The Bank claimed the machinery as chattels under a bill of sale executed by the mortgagor subsequently to the plaintiff's mortgage.

J. S. Ewart, Q. C., and W. J. Cooper for plaintiffs.

F. Beverley Robertson for the defendant, the Ontario Bank.

[20th April, 1885.] WALLBRIDGE, C. J.-The plaintiffs produce the mortgage from McIlvanie to them, which is made in pursuance of the Act respecting Short Forms of Indentures. Con. Stat. Man. c. 61. This mortgage on its face simply professes to convey the land, and plaintiffs rely upon the machinery, the subject in dispute in this suit, being their property as fixtures, passing, by virtue of the mortgage, to them. At the time of the execution of the mortgage, a building stood upon the land in which this machinery then was, consisting of boiler, engine, shafting, pulleys and belting for the machinery of a planing machine and other machines, making up what McIlvanie in his evidence calls a sash and door factory and planing mill. The machinery is enumerated in the bill filed. The mortgage to the plaintiffs was given before the bill of sale was given under which the Bank claims. The evidence shows that the boiler was set upon timbers for a foundation, and built in, wholly with brick, being suspended by rods fastened to a

frame; these rods held the boiler in position whilst the brickwork was being put up, and also served a similar purpose if the brick-work should give way. There was no opening in the building through which this boiler could pass, and to remove it some part of the walls of the building would require to be taken down. The machinery was kept in position by what are called sockets, which are described as cleats, so nailed down as to steady it. Its own weight also served to keep it in position.

He says the boiler and engine are put in as if intended to be permanent. The machinery is that usually used in a planing mill, the whole constitute a sash and door factory and planing mill, and were in the building when this mortgage was given, and it was then in operation as such, that the machinery could not be taken away without spoiling the whole mill. The 3rd section of the Act referred to declares that deeds executed in pursuance of that Act, unless exception be specially made therein, shall be held and construed to include all houses, out-houses, edifices, &c., and appurtenances whatever to the lands therein comprised, or in any wise appertaining or with the same demised, held, used, occupied, or enjoyed or taken or known as part or parcel thereof. It is, I think, clear, that if the boiler and engine and the machinery were used and enjoyed as part or parcel of the building or as appurtenant thereto, the building passing with the land, these things passed also. The evidence of Mr. McIlvanie proves that they were so used and enjoyed. He also says that the mortgage was given first, and does not speak of any intention in reference to the machinery, as he thought the mortgage had been signed in blank, in which, I hold, the evidence shews him to be mistaken. Whilst the machinery, here disputed, remained wholly the property of the mortgagor, he might have made it from time to time personalty or realty, as he might. choose to do, but as soon as he executes a mortgage of the property on which the boiler and machinery were then placed his right in the chattel is gone; and it must then be determined by law whether the machinery has become fixtures or remains personalty. As he has the right to determine in the first instance: what their character shall be, we look to what he has done. Has he placed them so in the building that they have become part of the freehold, and thus has he manifested an intention. There is no question but that the building passed by the deed. He swears

himself that the boiler could not be got out without taking down part of this building; and this is one of the tests applied in McCausland v. McCallum, 3 Ont. R. 305. He could have

no right to take that down after giving the mortgage. He says it was put in the building in the same manner as it would have been if intended to be permanent; that the whole formed a sash and door factory and planing mill, and it would have lost this character if deprived of the machinery. Burke v. Taylor, 46 U. C. Q. B. 371, declares that the burden lies on the defendant to shew that this kind of property was to continue personalty. That case was, as this is, one between mortgagee and a purchaser of the articles as chattels from the mortgagor. Were not these things part of the fabric as an integral portion of the architectural design. This is the test applied in Keefer v. Merrill, 6 Ont. App. R. 121. McIlvanie's evidence seems to me conclusive on that point. He says this sash and door factory had been in operation from six to nine months before the mortgage was given; and again he says, the whole constituted a sash and door factory, and that it was the usual machinery used in a planing mill. If it were possible to make them fixtures, McIlvanie's evidence shews that he did so, for he says they were put in as if intended to be permanent. It is true that whilst the property was his he might have changed the character of it from fixtures to chattels, but not after the mortgage. No evidence was given of values to shew on what the mortgagees relied, but the whole was spoken of as of far less. value than the mortgage money.

The reasoning in Dickson v. Hunter, 29 Gr. 73, is applicable to this case, and in this case also the machinery was kept in place by its own weight. In my opinion, these machines, in the words of Keefer v Merrill, were articles which form part of the fabric, as an integral portion of the architectural design, and are fixtures and go with the land.

The decree will be that the enumerated articles be declared fixtures and subject to the mortgage. An injunction restraining defendant from interfering with or removing the machinery; foreclosure and reference, and that defendants have six months to redeem. Ontario Bank pay only costs above ordinary foreclosure; that is, such costs as are occasioned by their defence.

Upon re-hearing by the Ontario Bank, the decree was affirmed with costs.

CANADA PERMANENT LOAN AND SAVINGS COMPANY v. HILLIARD.

Compound interest.

Construction of mortgage.

This was a mortgage suit. In taking the account a question arose as to the construction of the following clause in the mortgage: "And it is hereby further agreed, that on default in payment of any instalment of interest, such interest shall at once become principal and bear interest at the rate aforesaid."

By the terms of the mortgage, interest was payable half-yearly. The master ruled that a rest should be made only once for each overdue instalment of interest; that is, an instalment of overdue interest should bear simple interest only. And the interest on such overdue interest would not bear interest. In effect, that the overdue interest did not become part of the principal money secured by the mortgage.

From this ruling the plaintiffs appealed.

G. G. Mills for the plaintiff.

18th September, 1885.]

TAYLOR, J.-It seems to me that under the proviso in the mortgage any interest in default becomes principal money and has all the quality of the original principal in bearing interest. Thus, if half a year's interest is due and unpaid the mortgage at once stands as security for the principal money then due plus six months interest. The total amount of that then bears interest at the same rate as is secured by the mortgage. If at the end of another six months default is again made, the amount of interest, which then becomes principal, is the interest on the original principal and on the six months interest which became principal the preceding six months. And so it will go on each six months that default is made.

The account should be taken as contended for by the plaintiffs.

WOODS v. WOODS.

Infant.-Partnership.—Representations.

The law as to the circumstances under which an infant may be liable as a member of a partnership.

J. W. H. Wilson for plaintiff.

J. S. Ewart, Q. C. and R. L. Ashbaugh for defendant Jessie Ovens.

[6th January, 1885.]

TAYLOR, J.-On an application by the plaintiffs for leave to sign judgment under the 46 & 47 Vic. c. 23, s. 16, an order was made referring the cause and all matters in difference between the parties to arbitration. The order contained a clause directing the arbitrator to take any and all evidence that might be produced by or on behalf of the parties, or any of them, as to whether or not the defendant, Jessie Ovens, was, on the 13th day of March, 1883, and at the commencement of this suit and now is a member of the firm of Woods, Ovens & Co., and in partnership with the other defendants, this evidence to be laid before a judge in chambers, for whose decision and judgment the question was by the order reserved.

That evidence having been taken, the question of the liability of Jessie Ovens has been argued before me, and is now to be determined.

It appears that there was first a firm of McBain, Woods & Co., which existed under partnership articles dated 31st March, 1882, and was composed of three partners, D. G. McBain, Alex. Woods, aud W. J. Ovens. Then another partnership seems to have been formed and a deed of partnership drawn up, which bears date 2nd of March, 1883. The name of this firm was also McBain, Woods & Co., and the members of it were D. G. McBain, Alex. Woods, and Jessie Ovens. The partnership deed was executed by all the three parties to it.

A few days after, the firm of Woods, Ovens & Co. seems to have been formed, and a deed of partnership drawn up, dated 20th March, 1883. The members of this firm are Alex. Woods,

M. L. R. VOL. III.

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