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The Law of Fixtures Common Law and The Uniform Commercial Code
The Law of Fixtures Common Law and The Uniform Commercial Code
Volume 15 | Issue 2
Article 2
1987
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Squillante: The Law of Fixtures: Common Law and the Uniform Commercial Code-P
I.
II.
INTRODUCTION ....................................
DEFINITION OF A FIXTURE ..........................
ELEMENTS OF FIXTURE STATUS ......................
192
193
A.
B.
199
C.
D.
Overview ..................................
Annexation To The Realty or Something Appurtenant Thereto .............................
Adaptation or Appropriation to the Use of the
R ealty ....................................
Intention to Make the Chattel a Permanent Accession to the Freehold......................
1. Nature of the Article Affixed .............
2. Relationship of the Parties ...............
a. Real estate vendor as annexor ........
b. Real estate mortgagor as annexor .....
c. Lessee as annexor ..................
i)
Domestic Fixtures ........
ii)
Agricultural Fixtures .....
iii)
Trade Fixtures ...........
3. Degree and Purpose of Annexation ........
199
203
208
214
219
222
223
226
233
233
238
239
246
COPYRIGHT 1987 by Alphonse M. Squillante. All rights reserved. The author wishes
to acknowledge the work of his research assistants, Gerald F. O'Connell, Jr., Associate,
Graydon, Head & Ritchey, Cincinnati, Ohio and Thomas W. Coffey, Associate, Buchanan
Ingersoll, Pittsburgh, Pa.
** Part II of this article, entitled The UCC And Fixtures,will appear in volume 15:3 of
the
*** Wald Professor of Contract Law, University of Cincinnati College of Law. A.B.,
Wagner College, 1954; L.L.B., Fordham Law School, 1954; M.L.S., Columbia University,
1957; L.L.M., New York University School of Law, 1970.
III.
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247
247
250
252
254
257
261
INTRODUCTION
Compare Commercial Credit Corp. v. Gould, 275 Mass. 48, 175 N.E. 264 (1931)
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COMMON LAW OF FIXTURES
1987]
DEFINITION OF A FIXTURE
9. "[G]oods are fixtures when they become so related to particular real estate that an
interest in them arises under real estate law." U.C.C. 9-313(I)(a)(1978).
10. See 5 AMERICAN LAW OF PROPERTY 19.2, at 5-9 (A. Casner ed. 1952).
11. Id. at 9. See generally M. EWELL, A TREATISE ON THE LAW OF FIXTURES
(1876)(tracing history of fixture law).
12. See, e.g., R. BROWN, supra note 1, 16.1, at 516.
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rule of law. 8 Thus, salt pans affixed to a brick floor with mortar
passed with the realty.14 In emphasizing actual physical attachment,
the English law also long recognized the concept of constructive annexation.15 Thus, a house key, although not attached to a house, was
also held to be a fixture."6
American law has developed a variety of definitions and tests to
distinguish fixtures from personal property. One definition provides
that "a fixture is a former chattel which, while retaining its separate
physical identity, is so connected with the realty that a disinterested
observer would consider it a part thereof."11 Another definition tells
us that "[a] fixture is an article of personal property brought in and
upon and annexed to real property, which retains its separate identity and becomes realty, but which under certain circumstances may
become personalty again."" Still another provides, "[a] fixture can
best be defined as a thing which, although originally a movable chattel, is by reason of its annexation to, or association in use with land,
regarded as a part of the land."'19
At common law, an item of personalty so attached that it could
not be removed without substantial injury to the freehold, became
part of the realty. 20 In this respect, American cases followed English
law by emphasizing physical attachment.2 Other American cases
have emphasized the injury to the fixture itself upon removal .22
Even after chattels become fixtures, they may regain their status as
personal property by severance.2 Personalty can retain that status as
13. Id.
14.
15.
Kaczmarek v. Mesta Mach. Co., 324 F. Supp. 298, 300 (W.D. Pa. 1971)(noting
that this principle is fundamental but, nevertheless, has many exceptions); Holt v. Male, 29
N.Y.S.2d 111 (Sup. Ct. 1941); Fuson v. Whitaker, 28 Tenn. App. 338, 190 S.W.2d 305
(1945); Auto Acceptance & Loan Corp v. Kelm, 18 Wis. 2d 178, 118 N.W.2d 175 (1962).
21. See supra note I and accompanying text.
22. See, e.g., Futrovsky v. United States, 66 F.2d 215, 216 (D.C. Cir. 1933); McFarlane
v. Foley, 27 Ind. App. 484, 60 N.E. 357 (1901); Smith v. Bay State Say. Bank, 202 Mass.
482, 88 N.E. 1086 (1909); Clayton v. Lienhard, 312 Pa. 433, 167 A. 321 (1933); Neufelder v.
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fixture; but, originally, the annexation test was the most important.
Most courts now view intent as the paramount criterion and use the
other two prongs as indicators of intent.2
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a minority view state. Its application of the test yields only two classes of property: personalty and realty, with fixtures not a separate
class, but merged into the realty.29 In Massachusetts, the common
law doctrine of Clary v. Owen30 determined vendor-mortgagee conflicts'for a century before the UCC was adopted."' This approach
also posits only two classes of property, asserting that fixtures are
chattels which have been merged into, and are, realty.3 2 In Clary,
the existing real estate mortgagee acquired priority over a secured
chattel creditor once the goods became part of the realty.3" Thus,
Ohio and Massachusetts both favor real estate creditors over chattel
creditors. The harshness of the Ohio and Massachusetts rule, however, can be circumvented by a court, by simply maintaining that the
article in question is classified as personalty, and is detachable from
the realty.3 4 Otherwise, the mortgagee would have a windfall.
The common law majority position, a position that the UCC
eventually endorsed, was that there are three classifications of property: realty, fixtures and personalty.3 5 The New Jersey "institutional
test" was one common law test espousing this position." In rejecting
the Massachusetts test of Clary v. Owen, New Jersey held that the
secured creditor's interest in goods which were added to real estate is
superior to the mortgagee's interest.3 7 The secured creditor's priority
arose, however, only in cases where removal of the goods would not
harm the freehold (or institution) to which they were affixed. If removal harmed the affixed goods, then the real estate mortgagee was
harmed; and the test therefore would not allow removal. Thus, the
rights of the mortgagee were superior to those of the secured
29. See Coogan, Fixtures -Uniformity in Words or in Fact?, 113 U. PA. L. REV. 1186,
1212-1218 (1965)(describing fixture law in two minority view states, Ohio and California);
Note, The Definition of Fixture in Article 9 of the U.C.C., 31 CASE W. RES. L. REV. 841, 851
(1981) (majority recognize tripartite classification). As the Teaff court stated, "A removable
fixture as a term of general application, is a solecism-a contradiction in words .
Teaff,
I Ohio St. at 524.
30. 81 Mass. (15 Gray) 522 (1860).
31. Id.
32.
33.
34.
35.
36.
Id. at 524-25.
Id. See Coogan, supra note 29, at 1207-08.
Coogan, supra note 29, at 1208.
See supra notes 5, 7 and accompanying text.
See Coogan, supra note 29, at 1219.
37.
See Campbell v. Roddy, 44 N.J. Eq. 244, 14 A. 279 (1888); Provident Bldg. &
Loan Ass'n. v. William Day Sons Realty Co., 122 N.J. Eq. 326, 194 A. 53 (1937); General
Elec. Co. v. Transit Equip. Co., 57 N.J. Eq. 460, 42 A. 101 (1898); Rogers v. Brokaw, 25 N.J.
Eq. 496, affd, 26 N.J. Eq. 563 (1875). See also Coogan, supra note 29, at 1218-20.
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creditor. 8
Prior to its adoption of the UCC, Pennsylvania employed a peculiar doctrine, known as the "assembled industrial plant mortgage
doctrine," which was first announced in Voorhis v. Freeman39 in
1841. Voorhis held that all machinery of a manufactory necessary
for its operation as a going concern must pass as part of the freehold.
40 Thus, empty beer kegs waiting to be refilled at a brewery
were
fixtures. 41 It did not matter, under the doctrine, that the machinery
could be removed without any injury to the building in which it was
placed. 42 If the doctrine had been limited to machinery in manufactories, it would not have had as wide an effect as it has had, but the
Pennsylvania courts also applied the rule to other buildings, such as
apartment houses, restaurants and offices.4 3
One of the first statutory attempts to address the fixture problem in the context of secured transactions, was the Uniform Condi-
LAW OF PROPERTY,
[Vol. 15:191
ment of fixture law in the states that adopted it.49 Section 7 of the
UCSA did, however, supplement the law. In general, the UCSA provided for the removal of fixtures from real estate by the vendor/
secured creditor if the removal would not cause "material injury to
the freehold." 50
This standard of removal without "material injury to the freehold" became the key test in determining fixture status in UCSA
states. Most of the states that adopted the UCSA followed the intent
of its drafters, and construed the phrase to mean removal causing
actual physical injury to the land. 1 But New Jersey courts, interpreting the phrase in light of their "institutional test," gave it a very
broad meaning, so that the removal of articles essential to the functioning of the institution was an injury.52 "If the severance will prevent the structure from being used for the purposes for which it was
intended, then the chattel is not removable without material injury
to the freehold." 53
The importance of classifying items as fixtures, through the use
of such tests as those mentioned above, is that such a decision determines which of two or more conflicting interests in such items will
prevail. Absent statutes, which generally determine priority rights in
conflicts between heir and executor, grantor and grantee, mortgagee
and secured party, or landlord and tenant, the question of who has
superior rights in the items depends on whether they are personal
property or fixtures. While "to brand a thing a fixture is not to determine the jural rights of all who may be interested in it," 54 some
commentators think that the designation of an item as a fixture is a
55
conclusion of rights, and not the result of a definitional analysis.
One writer concludes that the courts analyze the relationship of the
parties, the purpose of the transaction, the nature of the goods, and
their relationship to the property, to determine whether the mortgagee or secured party prevails, and then labels the item fixture or per49. See id. at 402, 405 n.41.
50. UNIF. CONDITIONAL SALES AcT 7 (1918). For a more complete quotation of the
relevant provision see text accompanying note 95.
51. Kleps, supra note 44, at 405 n.41.
52. Id. at 405.
53. Id.
54. Miles, The Intention Test in the Law of Fixtures, 12 N.Y.U. L.Q. REv. 66, 99
(1934).
55. See, e.g., R. BROWN, supra note 1, 16.1, at 515; Coogan, supra note 29, at 122021.
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COMMON LAW OF FIXTURES
1987]
A.
Overview
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68. For a discussion of the institutional test, see supra text accompanying notes 35-38.
69. Walker v. Tillis, 188 Ala. 313, 66 So. 54 (1914); Gomez v. Dykes, 89 Ariz. 171, 359
P.2d 760 (1961); Bank of Mulberry v. Hawkins, 178 Ark. 504, 10 S.W.2d 898 (1928); Los
Angeles v. Klinker, 219 Cal. 198, 25 P.2d 826 (1933); Moul v. Thompson, 91 Colo. 323, 14
P.2d 1004 (1932); Warrington v. Hignutt, 42 Del. 274, 31 A.2d 480 (Super. Ct. 1943); Commercial Fin. Co. v. Brooksville Hotel Co., 98 Fla. 410, 123 So. 814 (1929); Baker v. McClurg,
198 III. 28, 64 N.E. 701 (1902); Citizens Bank v. Mergenthaler Linotype Co., 216 Ind. 573,
25 N.E.2d 444 (1940); Thomson v. Smith, 11 Iowa 718, 83 N.W. 789 (1900); Pennington v.
Black, 261 Ky. 728, 88 S.W.2d 969 (1935); Ridgeway Stove Co. v. Way, 14 Mass. 557, 6
N.E. 714 (1886); Readfield Tel. & Tel. Co. v. Cyr, 95 Me. 287, 49 A. 1047 (1901); Dermer v.
Faunce, 191 Md. 495, 62 A.2d 304 (1948); Grinde v. Tindall, 172 Mo. 199, 562 P.2d 818
(1977); Swift Lumber & Fuel Co. v. Elwanger, 127 Neb. 740, 256 N.W. 875 (1934); Reno
Elec. Works, Inc. v. Ward, 51 Nev. 291, 274 P. 196 (1929); Bell v. City of Corbin City, 164
N.J. Super. 21, 395 A.2d 546 (1978); Porter Lumber Co. v. Wade, 38 N.M. 333, 32 P.2d 819
(1934); Cochran v. Flint, 57 N.H. 514 (1877); Ingold v. Phoenix Assur. Co., 230 N.C. 142, 52
S.E.2d 366 (1949); Teaff v. Hewitt, I Ohio St. 511 (1853); Kay County Gas Co. v. Bryant,
135 Okla. 135, 276 P. 218 (1928); Metropolitan Life Ins. Co. v. Kimball, 163 Or. 31, 94 P.2d
1101 (1939); Vail v. Weaver, 132 Pa. 363, 19 A. 138 (1890); Metropolitan Life Ins. Co. v.
Jensen, 69 S.D. 225, 9 N.W.2d 140 (1943); Union Bank & Trust Co. v. Fred W. Wolf Co.,
114 Tenn. 255, 86 S.W. 310 (1905); W.J. Hutchins v. Masterson & Street, 46 Tex. 551
(1877); Workman v. Henrie, 71 Utah 400, 266 P. 1033 (1928); Danville Holding Corp. v.
Clement, 178 Va. 223, 16 S.E.2d 345 (1941); Standard Oil Co. v. La Crosse Super Auto
Serv., 217 Wis. 237, 258 N.W. 791 (1935); Holland Furnace Co. v. Bird, 45 Wyo. 471, 21
P.2d 825 (1933). See supra note 24 and infra note 121.
70. See infra note 209 and accompanying text.
71. See infra note 218 and accompanying text.
72. See Van Ness v. Pacard, 27 U.S. (2 Pet.) 137 (1829); Roberts v. Mills, 56 Cal App.
556, 205 P. 872 (1922); Morey v. Hoyt, 62 Conn. 542, 26 A. 127 (1893); Lawson v. Southern
Fire Ins. Co., 137 Kan. 591, 21 P.2d 387 (1933); McClelland v. Murphy, 204 Ky. 329, 264
S.W. 733 (1934); Searle v. Roman Catholic Bishop, 203 Mass. 493, 89 N.E. 809 (1909);
Cameron v. Oakland County Gas & Oil Co., 277 Mich. 442, 269 N.W. 227 (1936); Handler
v. Horns, 2 N.J. 18, 65 A.2d 523 (1949); Radey v. McCurdy, 209 Pa. 306, 58 A. 558 (1904);
11
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73. See, e.g., Holt v. Henley, 232 U.S. 637 (1914); Cain v. Country Club Delicatessen,
Inc., 25 Conn. Supp. 327, 203 A.2d 441 (Super. Ct. 1964)(holding the rights of parties dictated by the sales agreement that provided for item to remain personalty); Snouffer & Ford v.
City of Tipton, 161 Iowa 223, 142 N.W. 97 (1913); Madfes v. Beverly Dev. Corp., 251 N.Y.
12, 166 N.E. 787 (1929)(refinancing agreement by which a refrigeration system retained character of personalty); Hall v. Woody, 180 Okla. 370, 69 P.2d 379 (1937); Mattechek v. Pugh,
153 Or. I, 55 P. 2d 730 (1936). See also infra note 169 and accompanying text. But see infra
politan Life Ins. Co. v. Kimball, 163 Or. 31, 94 P.2d 1101 (1939).
75. See, e.g., Anglo-American Mill Co. Inc. v. Community Mill Co., 41 Idaho 561, 240
P. 446 (1925); Andover v. McAllister, 119 Me. 153, 109 A. 750 (1920); Hopewell Mills v.
Taunton Say. Bank, 150 Mass. 519, 23 N.E. 327 (1890); Edwards & Bradford Lumber Co. v.
Rank, 57 Neb. 323, 77 N.W. 765 (1899); Tibbetts v. Horne, 65 N.H. 242, 23 A. 145 (1891);
Cox v. New Bern Lighting & Fuel Co., 151 N.C. 62, 65 S.E. 648 (1909); Landigan v. Mayer,
32 Or. 245, 51 P. 649 (1898); First Nat'l Bank v. Reichneder, 371 Pa. 463, 91 A.2d 277
(1952).
76. U.C.C. 9-313 (1978).
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13
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"in one of the early decisions recognized the economic waste involved in dismantling a functioning economic unit ....
[T]he eco-
nomic fact is that it may be wasteful to allow the removal of valuable annexations from the land." 87
This economic argument seems implicit in both the New Jersey
institutional test8" and the Pennsylvania assembled industrial plant
doctrine. 89 Both of these state law concepts recognize that functioning economic units are cases of the whole being greater than the sum
of the parts. This view is less persuasive in the current commercial
climate than it was before. Modern techniques of manufacturing and
production seem to rely less upon cumbersome economic units, and
more upon skilled labor, working with more movable equipment. In
addition, modern equipment is generally more movable and more interchangeable so that less economic waste is likely to occur from dismantling a given production unit. Such production units are now
more physically and economically suited to reconstitution in different
environments.
While the economic waste factor was probably a consideration
in some decisions, and probably will continue to influence some
courts, its importance seems to have diminished. Pure economic factors, such as lease agreements, cost of replacement factories as opposed to labor costs at current sites, and other such considerations
often bear more weight than mere physical assembly and attachment. It would seem that the diminished importance of the strict
annexation test may have paralleled the economic history of manufacturing; however, this analysis borders on speculation. It is also
possible that the diminished status of the strict annexation test is a
logical result of the development of a better fixture status test. In
any event, annexation, once the entire fixture status determinant, is
now merely one prong of a three prong test.90
An alternative to the strict annexation test, the "material injury
test," probably developed to give the fact trier greater flexibility.
Under the material injury approach it is possible to hold that an
annexed chattel was not part of the realty to which it was attached,
but rather was personalty, free of fixture or realty considerations.
The material injury test provides that a chattel, attached in such a
87. Comment,
618 (1967).
88. See supra
89. See supra
90. See supra
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manner to the realty that removal of the chattel would result in material injury to itself or to the realty, became part of the realty, and
lost its chattel status.9
In Mogul Producing & Refining Co. v. Southern Engine &
Pump Co.,92 the court held that gasoline pumps fastened to beds of
concrete were not fixtures, but personalty.93 The court reasoned that
"the pumps could be removed easily without damage to the freehold." 94 The method and degree of annexation thus became important factors.
The Uniform Conditional Sales Act adopted the "material injury test" in section 7, and provided that a purchase money security
interest in goods could defeat a pre-existing real estate mortgage
except:
If the goods are so affixed to realty, at the time of a conditional
sale or subsequently as to become a part thereof and not to be severable wholly or in any portion without material injury to the freehold, the reservation of property, as to any portion not so severable
shall be void after the goods are so affixed
.... 9'
occurred when removal of the article renders the remaining realty useless or lessens its practical value for the purpose for which it was used. State Highway Comm'n. v. Empire Bldg.
Material Co., 17 Or. App. 616, 523 P.2d 584 (1974).
92. 244 S.W. 212 (Tex. Civ. App. 1922).
93. Id.
94. Id. at 214.
95. UNIF. CONDITIONAL SALES AcT 7 (1918). See supra notes 44-53 and accompanying text. The Uniform Conditional Sales Act was adopted by the National Conference of
Commissioners on Uniform State Laws in 1918. Kleps, supra note 44, at 401.
96. Meyer v. Pacific Machinery Co., 244 F. 730, 733 (9th Cir. 1917).
97. Strain v. Green, 25 Wash. 2d 692, 172 P.2d 216 (1946). Permanency is not so much
a matter of non-removability as it is of whether removal would leave the premises damaged or
less than they were represented as being. See, e.g., Paul v. First Nat'l Bank, 52 Ohio Misc.
77, 369 N.E.2d 488 (1976). See also Seatrain Terminals of Cal., Inc. v. County of Alameda,
83 Cal. App. 3d 69, 147 Cal. Rptr. 578 (1978) (permanent does not mean perpetual but
fastened until worn out, purpose accomplished, or article superceded by another more suitable
15
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Bank, 220 Va. 844, 263 S.E.2d 408 (1980)(assuming that electrical supplies on the construction site are not fixtures).
104.
For a listing of such cases, see Snitzer, supra note 81, at 469 n.13.
105. For a discussion of Pennsylvania's assembled industrial plant doctrine, see supra
text accompanying notes 39-43.
106. See Voight v. Ott, 86 Ariz. 128, 341 P.2d 923 (1959) (modern tendency deem-
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The Supreme Court wrote in 1914 that "[t]o hold that the mere
fact of annexing the system to the freehold overrode the agreement
that it [sprinkler system] should remain personalty and still belong
to Holt [purchase money creditor] would be to give mystic importance to attachment by bolts and screws. 107
The Supreme Court of Florida in 1930 also enunciated the more
modern trend of discounting the importance of annexation. in Greenwald v. Graham,108 the court noted that:
The general course of modern decisions, in both English and American courts, is against the common law doctrine that the mode of
annexation is the criterion, whether slight and temporary, or immovable and permanent, and in favor of declaring all things to be
fixtures which are attached to the realty with a view to the purposes for which it is held or employed.'
This case foreshadowed the realization by the courts that the
intent of the parties, and not the degree of annexation, should be the
dominant consideration in determining fixture status. 110 The annexation test alone did not always yield equitable results, even under the
flexible "material injury" approach.
The doctrine of constructive annexation may have been the earliest judicial formulation regarding the importance of intent in determining the status of a good. The constructive annexation doctrine
invokes the second element of the fixtures test - appropriation to
use.1 ' Accordingly, a house key, although not "annexed," was a fixture, as was a mill stone, even though it was not attached to the
mill, 1 because these items were appropriated to use in their freeholds, and a reasonable person would expect such a use. Indeed, the
parties intended these items to be used with the accompanying real
estate because apart from their freeholds they would have little or no
phasizes annexation and emphasizes intent); Dawson v. Scruggs-Vandervoort Barney Realty
Co., 84 Colo. 152, 268 P. 584 (1928); Dutton v. Ensley, 21 Ind. App. 46, 51 N.E. 380 (1898);
Finley v. Ford, 304 Ky. 136, 200 S.W.2d 138 (1947); Cumberland County Power & Light Co.
v. Hotel Ambassador, 134 Me. 153, 183 A. 132 (1936); Reno Elec. Works, Inc. v. Ward, 51
Nev. 291, 274 P. 196 (1929); Porter Lumber Co. v. Wade, 38 N.M. 333, 32 P.2d 819 (1934);
Killian v. Hubbard, 69 S.D. 289, 9 N.W.2d 700 (1943); Leisle v. Welfare Bldg. & Loan
111.
112.
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value. As courts came to realize the importance of intent in determining the status of a chattel, intent emerged as the dominant element of the fixture status test.
Annexation is still one of the three considerations; today, however, the method of annexation usually raises either an inference as
to the annexor's intent to make the item a permanent accession to
the freehold, or it effects the burden of proof.113 One court has written that "[the present day tendency is to regard the manner of annexation taken by itself as of relatively small significance, and to
give much weight to the adaptation of the machine to the use of the
realty, considered in connection with the intention with which the
annexation has been made."114 Another court, however, wrote that
"the general rule is that whatever is attached to the realty, though
but slightly, is prima facie a part thereof. ' "'1
Fact triers have come to use a sliding scale in their determination of fixture status. Under the three-prong test, some annexation or
constructive annexation of personalty is required. 1 ' The more permanent the annexation, the less intent or appropriation to the use
will have to be proved. The slighter the annexation, the stronger the
proof of intent and appropriation needed to show that the personalty
17
has turned into realty.1
C. Adaptation or Appropriation to the Use of the Realty
The second prong of the three-prong test used to determine
whether a chattel has become a fixture in a tripartite property state,
or part of the realty in a minority state that has only two property
classifications,"18 is whether the chattel has been appropriated to the
use or purpose of the realty to which it is annexed. 19 This test is
generally the least important of the three, or at least the one factor
to which courts and commentators have given the least attention. In
contrast, the annexation test was formerly the sole determinant of
113. 35 AM. JUR. 2D Fixtures 6, at 704 (1967)(where an object is annexed in such a
way as to induce a reasonable person to believe that it is a part of the realty, there is a prima
facie presumption that it is a fixture).
114. First Nat'l Bank v. Nativi, 115 Vt. 15, 20-21, 49 A.2d 760, 763 (1946).
115. Silverman v. Mazer Lumber & Supply Co., 252 Ala. 657, 659, 42 So. 2d 452, 454
(1949).
116. See supra text accompanying note 27.
117. See 35 Am. JUR. 2D Fixtures 6 (1967).
118. For a discussion of the property classifications, see supra text accompanying notes
29-35.
119. See supra text accompanying notes 25-27.
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the issue, 12 0 and the intention of the annexor is now regarded as the
The court rejected that line of authority because it relied exclusively on the adaptation test. In coming to that conclusion, the court
used the argument that:
If adaptation and necessity for the use and enjoyment of the realty
be the sole test of a fixture, then the implements and domestic animals necessary for the cultivation of a farm, and a great variety of
other articles subject to the use of the land or its appurtenances,
which never have been and never can be recognized as such, would
be fixtures. It would utterly confound the rule ....125
'is
devoted primarily to the business conducted on the premises, or
whether it is devoted primarily to the use of the land upon which the
business is conducted.' "126 This is in accordance with the adaptation
120. See supra notes 79-115 and accompanying text.
121. See infra notes 153-81 and accompanying text.
122. See supra notes 39-43 and accompanying text.
123. 1 Ohio St. 511 (1853).
124. Id. at 528-29 (citing Voorhis v. Freeman, 2 Watts & Serg. 114 (Pa. 1841) (emphasis in original)).
125. Id. at 529. See, e.g., Danville Holding Corp. v. Clement, 178 Va. 223, 16 S.E.2d
345 (1941) (holding bakery machinery fastened to floor with bolts, conveyor and dough-divider
screwed into floor, and oven bolted to the floor with pipes and wires interconnecting, to be
fixtures). Accord Choate v. Kimball, 56 Ark. 55, 61, 19 S.W. 108, 109 (1892); Jordan v.
Myres, 126 Cal. 565, 570, 58 P. 1061, 1063 (1899); Manwaring v. Jenison, 61 Mich. 117, 134,
27 N.W. 899, 903 (1886); First Nat'l Bank v. Nativi, 115 Vt. 15, 20, 49 A.2d 760, 763
(1946); Shields v. Hansen, 201 Wis. 349, 352, 230 N.W. 51, 52 (1930).
126. Wheeling-Pittsburgh Steel Corp. v. Jefferson County Bd. of Revision, 27 Ohio St.
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Feder v. Van Winkle, 53 N.J. Eq. 370, 33 A. 399 (1895); Danville Holding Corp. v. Clement,
178 Va. 223, 232, 16 S.E.2d 345, 349 (1941).
128.
Lawton v. Salmon, 126 Eng. Rep. 151 (K.B. 1782); see Snitzer, supra note 81, at
129.
130.
469.
S.W.2d 957 (1928) (holding an organ in a residence is a fixture because the owner had a room
built for it, it was permanently installed therein, and the owner intended it for his own permanent use and enjoyment).
131.
132.
Gould v. Springer, 206 N.Y. 641, 645-46, 99 N.E. 149, 151 (1912).
Cornell College v. Crain, 211 Iowa 1343, 235 N.E. 731 (1931).
133.
Id.
134. See, e.g., Fenlon v. Jaffee, 553 S.W.2d 422 (Tex. Civ. App. 1977); Commercial
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Pennsylvania assembled industrial plant doctrine. 39 The PennsylvaFin. Co. v. Brooksville Hotel Co., 98 Fla. 410, 123 So. 814 (1929); Jones v. Bull, 85 Tex. 136,
19 S.W. 1031 (1892).
135. Premonstratensian Fathers v. Badger Mut. Ins. Co., 46 Wis. 2d 362, 175 N.W.2d
237 (1970). See also McCorkle v. Robbins, 222 Wis. 12, 17, 267 N.W. 295, 297 (1936)
("intent may be considered established conclusively by the fact that the machines in question
were clearly adapted to ... the use to which he devoted the realty .... "). The adaptation test
clearly overrides any last vestiges of the "material injury test," as seen in an excerpt from
Metropolitan Life Insurance Co. v. Kimball, 163 Or. 31, 94 P.2d 1101 (1939) (holding machinery to be fixtures):
"It is true the screws and bolts with which it was annexed could have been
taken out, and the machinery removed, without serious damage to it or the building,
but . . . [i]t was, in its very nature, adapted to the business for which the land was
used. The party making the annexation must have intended that it should remain
163 Or. at 35, 94 P.2d at 1106-07. For a discussion of the "material injury test," see supra
notes 91-96 and accompanying text.
136. Teaff v. Hewitt, I Ohio St. 511, 528-29 (1853).
137. Peninsular Stove Co. v. Young, 247 Mich. 580, 226 N.W. 225 (1929). See Recent
Case, 5 NOTRE DAME L. REv. 35 (1929)(discussing the PeninsularStove Co. case).
138. Glueck Co. v. Powell, 227 Mo. App. 1226, 61 S.W.2d 406 (1933).
139. For a discussion of the Pennsylvania assembled industrial plant doctrine, see supra
text accompanying notes 339-43. See also In re Cooperstein, 7 Bankr. 618 (S.D.N.Y. 1980)
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create this doctrine which deals with the machinery in a manufacturing plant. In the landmark case of Voorhis v. Freeman,14 1 the
parties in conflict were the purchaser of a mill at a foreclosure sale
and the creditor of the mortgagor, who had a security interest in
some individual machinery inside the mill. 142 The machinery was
slightly annexed and could be removed without any harm to the mill
or the machine. 43 Nevertheless, the Supreme Court of Pennsylvania
held that the 106 detachable iron rollers were included in the sale of
the mill. 144 The court stated that without different size rollers and
duplicates, it would not be a complete mill.1 45 The essence of Voor-
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manufactories, but has been "applied to a private house, a multistory office building, a five-story apartment house, an ornamental
iron works, a food wholesaler, a restaurant, a stone quarry, and was
considered in the case of a church and a hotel."'150
While appropriation to use is the heart of the assembled industrial plant doctrine, it must be reemphasized that appropriation is
not the only factor influencing the doctrine. Standing alone, appropriation and annexation can cause some misunderstanding of the law
relating to fixtures. Both elements must be combined with the element of expressed or inferred intent. The policy behind the assembled industrial plant doctrine is to protect buyers of the premises
who intend to use the facility for the purpose to which the fixtures
are suited. Without the element of intent, the appropriation test becomes meaningless, as illustrated by the "farm animals as fixtures of
15
the farm" example. '
Further, without the element of intent, the assembled industrial
plant doctrine can become confused with the trade fixtures doctrine, 152 resulting ina seemingly irreconcilable conflict. Once intent
of the parties is considered, however, the confusion is resolved. The
reasonable man may readily discern, for example, that when the employer sells the garage, the garage mechanic has no intent to give up
his tools or his tool bench, which contains the tools in special compartments and is anchored to reduce vibration, despite the fact that
they are well appropriated to use in the garage.
The financing of industrial plants is a policy goal of the assembled industrial plant doctrine. Financing would be sharply limited, or
even absent, if financiers of chattels used in production stood to lose
their interest or priority in the event that the equipment buyer's business failed. Nevertheless, such a result is possible if the intent of the
parties to remove the equipment upon termination of business is not
considered. The equipment, whether considered as fixtures or realty
depending on the jurisdiction, would remain in the plant, while the
bankrupt buyer would be judgment proof against the creditor. Cutting off the secured party from the collateral, while giving the building owner a windfall, would be one result of ignoring the intent of
760 (1946); Danville Holding Corp. v. Clement, 178 Va. 223, 16 S.E.2d 345 (1941); Scalzo v.
Marsh, 13 Wis. 2d 126, 108 N.W.2d 163 (1961).
150. Leary, FinancingNew Machineryfor Mortgaged PennsylvaniaIndustrial Plants,4
VILL. L. REV. 498, 523 (1959).
151. See supra note 125 and accompanying text.
152. See infra notes 330-79 and accompanying text.
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the parties and considering only the appropriation element of the fixtures test. Fortunately, courts have considered the intent of the parties as the most important and most equitable method of determining
fixture status. Inequitable results are uncommon when the intent of
the parties is considered in fixtures cases.
D. Intention to Make the Chattel a Permanent Accession to the
Freehold
1 53
The third prong of the Teaff test to determine fixture status,
the intention of the annexor to permanently affix the good to the
freehold, is today almost universally recognized as the crucial element in determining if a good has become a fixture. 5 The intent
test is more congruent with modern equitable principles of unjust
enrichment and estoppel, and even in cases decided under the UCC,
which purports to deemphasize the classification of an item as a fixture and emphasize priority perfecting, the intention test has some155
times been expressly followed.
The intention test was promulgated in Teaff v. Hewitt. 56 In
Teaff, machinery in a woolen factory, consisting of power looms and
carding and spinning machines, was attached to the floor with cleats,
yet removable without injury.1 57 The court determined that these
items were intended to be chattel property rather than fixtures. 58
The building, slightly affixed to the ground that housed the machinery, was not intended to be an accession to the freehold, but rather a
removable chattel.159 On the other hand, a boiler and steam engine,
bolted and firmly affixed to timbers on foundations erected for them,
were fixtures.' 60 The Teaff court inferred the annexor's intention in
all three situations from the method by which property was affixed to
153.
For a discussion of the three-prong Teaff test, see supra text accompanying notes
25-27.
154.
E.g., Wo Co. v. Benjamin Franklin Corp., 562 F.2d 1339 (1st Cir. 1977) (holding
intent is preeminent under New Hampshire law); Rowlen v. Hermann, 129 I11.App. 2d 45,
262 N.E.2d 739 (1970) (holding intention most important); Trans-Nebraska Corp. v. Cummings, Inc., 595 S.W.2d 922 (Tex. Civ. App. 1980) (holding intent of annexing party is preeminent factor); see also I G.W. THOMPSON, supra note 15, 59, at 203 (modern rule empha-
sizes intention).
155. See, e.g., In re Park Corrugated Box Corp., 249 F. Supp. 56 (D.N.J. 1966); In re
Particle Reduction Corp., 5 U.C.C. Rep. Serv. (Callaghan) 242 (Bankr. E.D. Pa. 1968).
156. I Ohio St. 511 (1853). For a discussion of Teaff, see supra text accompanying
notes 25-28.
157. I Ohio St. at 522-23.
158. Id. at 534-35.
159. Id. at 535.
160. Id. at 542.
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permanence").
165. See, e.g., McCorkle v. Robbins, 222. Wis. 12, 267 N.W. 295 (1936) (machinery
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(1934)("a more liberal construction is now given in favor of holding fixtures personal property
where that intent can be gathered from the conduct or actions of the parties"); Stansdard Oil
Co. v. LaCrosse Super Auto Serv., 217 Wis. 237, 241, 258 N.W. 791, 792 (1935).
169. Id.
170. 312 Pa. 433, 167 A. 321 (1933).
171.
172. See I G.W. THOMPSON, supra note 15, 59, at 211. See generally Comment, Effect of Lessee's "Covenant to Leave Improvements" On the Doctrine of Trade Fixtures, 24
WASH. L. REv. 154, 158 (1949) ("the intention of the tenant-annexor, implied from the
circumstances").
173.
(Me. 1978). See also R. BROWN, supra note 1, 16.5, at 537; Bingham, Some Suggestions
Concerning The Law of Fixtures, 7 COLUM. L. REV. 1, 16 n.1 & 17 (1907) ("the 'reasonably
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27
seller and the mortgagee manifesting their intent that the attached
chattels remain personalty, then the third party would be entitled to
ownership of the chattels. 18 2
The chattels in this situation would be adjudicated fixtures because the intent of the parties is, as observed by a third party, for
the chattels to pass with the realty. Only in this manner does the
third party receive the benefit of the bargain. The third party gets
what was purchased, including the fixtures. Protection for innocent
mortgagors and mortgagees in these circumstances may also be obtained through compliance with Code filing procedures, which insure
that third parties have actual or constructive notice of intent to preserve chattel status.
Commentators have noted that some courts seem to adopt the
intent standard, but in reality courts often use the material injury
test to determine whether the chattel is a part of the freehold or
not.1 83 In such cases, the "material injury test" reasserts itself and
the court finds that the chattels are fixtures, because to remove them
would cause material harm to either the chattel or the freehold. 184 In
Dudzick v. Lewis, 8 5 a controlling consideration was whether the removal of the buildings in question would cause substantial damage
to the realty. 86 The court believed that their removal would cause
such damage, and held that the buildings were fixtures.' 8 7 Note well,
however, that the use of the material injury test is often limited to
special circumstances concerning trade fixtures. 88
Defining a fixture today requires consideration of annexation/
affixation, adaption/appropriation, and intention, and the interaction
among these three elements. The relevant intention might be defined
as that which would be inferred by a reasonable person in light of
(a) the nature of the article, (b) the relationship between the parties
involved, and (c) the degree and purpose of annexation. 8 " The nature of the article is loosely associated with adaptation; the relation182.
183.
CASE
W. REs. 841,
850 (1981); Note, supra note 87, at 622-23 ("although courts often speak in terms of 'objective intent,' the underlying consideration is the amount of damage caused by removing the
chattel").
184.
For a review of the material injury test, see supra text accompanying notes 91-96.
185.
186.
187.
Id.
188.
For a discussion of trade fixtures, see infra text accompanying notes 330-78.
189.
Teaff v. Hewitt, I Ohio St. 511, 530 (1853); Waldorf v. Elliot, 214 Or. 437, 443,
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192. Haydock, Kripke, Coogan, Edmonds, A Second Look at the Amendments to Article 9 of the Uniform Commercial Code, 29 Bus. LAW. 973, 983 (1974).
Greene v. Lampert, 274 Mass. 386, 387-88, 174 N.E. 669, 669 (1931)
(holding
heating and plumbing equipment "wrought into" a building yet removable without substantial
injury to building are fixtures).
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. .
. is its character .
. it being re-
One writer has gone so far as to place the nature of the article
on the same plane as the mode of annexation. George Thompson
wrote:
The nature of the article and the uses to which it is to be put furnish very important evidence of the intention with which it is annexed to the freehold. It would seem that more depends upon its
nature and character and its use as connected with the realty than
upon the mode of annexation.19
Apparently, these commentators are suggesting that the nature
of the chattel and the appropriation or adaptation of it to the use of
the property, are synonymous tests. Courts also make the mistake of
not distinguishing between the two criteria2 00 because the two tests
are very similar. However, the "adaptability to the use of the realty
to which it is attached" test relates to both the article's nature and
the property's use, and to the relation of one to the other. The "nature of the article" test refers only to the article. Herbert Tiffany,
one of only a very few commentators addressing the question of
196. The U.C.C. has conclusively adopted this analysis. See U.C.C. 9-313(2) & Official Comment 3 (1978).
197. 2 H. TIFFANY, THE LAW OF REAL PROPERTY 610, at 571 (3d ed. 1939); 1 G.W.
THOMPSON, supra note 15, 62, at 220.
198. 2 H. TIFFANY, supra note 197, 610, at 571.
199. 1 G.W. THOMPSON, supra note 15, 62, at 220. Accord Danville Holding Corp. v.
Clement, 178 Va. 223, 16 S.E.2d 345 (1941) (emphasis placed on nature of article, while
annexation receives only slight consideration and then only to deduce intention).
200. See, e.g., Peninsular Stove Co. v. Young, 247 Mich. 580, 582, 226 N.W. 225, 226
(1929) ("consideration must be given to the nature of the structure and the use to which it was
to be put").
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whether the nature of the article can create a fixture," 1 also discussed this distinction:
A distinction has however occasionally been asserted, in this connection, between the use to which the land is devoted by the construction of a building of a particular character, and the use to
which the building itself is at the time devoted, with the result that
when machinery in a factory building was adapted to but one class
of manufacturers, while the building might be used for others as
well, the machinery was not regarded as appropriated or adapted to
the use to which the land was devoted, so as to be a part of the
land.2 o2
Today, courts and commentators tend to avoid such niceties when
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For a discussion of real estate vendor as annexor, see infra text accompanying notes
For a discussion of real estate mortgagor as annexor, see infra text accompanying
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possession.
Whether the article is a fixture may be determined by examin-
ing the parties' relationship."1 As to an owner, there is a strong inference raised by adaptation and annexation of the article to the
freehold, that an accession has occurred. 219 This inference can rise to
a presumption that the owner intends any improvement to his property to become a permanent part of the real estate. If the conveyor
notes 243-80.
214. For a discussion of lessee as annexor, see infra text accompanying notes 282-378.
215. For a discussion of third party rights, see infra text accompanying notes 456-85.
216. See, e.g., Lesser v. Bridgeport-City Trust Co., 124 Conn. 59, 198 A. 252 (1938);
Young v. Hatch, 99 Me. 465, 59 A. 950 (1905); Gar Wood Ind., Inc. v. Colonial Homes, Inc.,
305 Mass. 41, 24 N.E. 2d 767 (1940); Frost v. Schinkel, 121 Neb. 784, 238 N.W. 659 (1931);
Metropolitan Life Ins. Co. v. Kimball, 163 Or. 31, 94 P.2d 1101 (1939); First Nat'l Bank v.
Reichneder, 371 Pa. 463, 91 A.2d 277 (1952). The annexation test may be applied through
the use of a legal presumption that one who owns land and attaches an item to it has made
that item a part of the freehold. See supra notes 163-64, 174 and accompanying text.
217. See, e.g., Anderson-Tully Co. v. United States, 189 F.2d 192 (5th Cir.), cert. denied, 342 U.S. 826 (1951) (eminent domain case; oil storage structures erected by tenant
during tenancy remained tenant's property at end of term); United States v. Shelby County,
385 F. Supp. 1187, 1189 (W.D. Tenn. 1974); Cornell v. Sennes, 18 Cal. App. 3d 126, 133, 95
Cal. Rptr. 728, 732 (1971); Teaff v. Hewitt, 1 Ohio St. 511, 530 (1853); State v. Feves, 228
Or. 273, 278, 365 P.2d 97, 99 (1961).
218. United States v. Shelby County, 385 F. Supp. 1187, 1189 (W.D. Tenn 1974); Cornell v. Sennes, 18 Cal. App. 3d 126, 133, 95 Cal. Rptr. 728, 732 (1971); Teaff v. Hewitt, 1
Ohio St. 511, 530 (1853); State v. Feves, 228 Or. 273, 279, 365 P.2d 97, 99 (1961); First
Nat'l Bank v. Jacobs, 273 N.W.2d 743 (S.D. 1978).
219. See 35 Am. JUR. 2D Fixtures 5, 8 (1967). See also Cornell v. Sennes, 18 Cal.
App. 3d 126, 133, 95 Cal. Rptr. 728, 732 (1971).
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wishes to retain the chattel then the burden is on the owner to prove
that he intended the item to keep its chattel status. 22 0 The ownervendor has the burden of disclosing to prospective purchasers that
affixed chattels are to be excluded from the sale of the realty. 221 If
the owner fails to so disclose, the purchaser takes the affixed
222
chattels.
In addition to the presumption of intent raised by owner-annexation, and the strong inference raised by adaptation and annexation,
other considerations would also lead courts to conclude that an article has become a fixture. If the item is necessary for the realty to
function in its current manner, then it is a fixture and passes with
the conveyance.2 23 Thus, a home furnace was indispensible to the
enjoyment of a home; and, a bona fide purchaser would expect that
the owner intended the furnace as a permanent part of the realty.2 24
If a chattel is in a place' created for it, or is part of an architectural
design such that removal would create an unsightly appearance, then
it is deemed to be permanently annexed tc the realty.2 25 Accordingly, specially adapted lights placed around a pool, and bolted-down
statues, easily removable, but whose absence created a barren appearance, were considered as fixtures passing with a conveyance of
the real estate. 226 The owner-annexor was required to compensate
220.
Joiner v. Pound, 149 Neb. 321, 31 N.W.2d 100 (1948) (owner who sold realty and
removed carpet, padding, curtain rods and light fixtures after sale held liable to buyer for
removal of fixtures). Accord Merchants Loan & Trust Co. v. Merchants Safe Deposit Co., 167
Ill. App. 315, 320 (1912); Shipler v. Potomac Copper Co., 69 Mont. 86, 279, 220 P. 1097,
1100 (1923); Ingold v. Phoenix Assur. Co., 230 N.C. 142, 145, 52 S.E.2d 366, 368 (1949);
McGowan v. McGowan, 59 Ohio App. 397, 399, 18 N.E.2d 418, 420 (1938).
221.
Chestnut v. Hammatt, 157 So. 2d 915, 918 (La. Ct. App. 1963). In Chestnut, the
owner had sold the articles to the real estate agent, who intended to remove them later. The
agent conducted negotations for the sale of the realty while the articles were still attached. The
court held the agent liable for conversion upon his subsequent removal of the articles. Id.
222. Id. at 918-19.
223.
Wiggins v. Proctor & Schwartz, Inc., 330 F. Supp. 350, 352 (E.D. Va. 1971);
Southern Cal. Tel. Co. v. State Bd. of Equalization, 12 Cal. 2d 127, 136, 82 P.2d 422, 427
(1938); Citizens Bank v. Mergenthaler Linotype Co., 216 Ind. 573, 584, 25 N.E.2d 444, 449
(1940); Danville Holding Corp. v. Clement, 178 Va. 223, 232, 16 S.E.2d 345, 349 (1941).
224. Holland Furnace Co. v. Trumbull Say. & Loan Co., 135 Ohio St. 48, 19 N.E.2d
273 (1939).
225. R. BROWN, supra note 1, 16.2, at 521-22. See e.g., New York Life Ins. Co. v.
Allison, 107 F. 179 (2d Cir. 1901)(mirrors forming part of the architectural scheme of a
theatre); Hinton v. Bryant, 232 Ark. 688, 339 S.W.2d 621 (1960)(platform scales set into
specifically prepared pits in the ground); Doll v. Guthrie, 233 Ky. 77, 24 S.W.2d 947 (1930)
(wall beds fitting into specifically prepared closets); Commercial Credit Corp. v. Commonwealth Mortgage & Loan Co., 276 Mass. 335, 177 N.E. 88 (1931) (electric refrigerators in
spaces specifically prepared for them).
226. Paul v. First Nat'l Bank, 52 Ohio Misc. 77, 369 N.E.2d 488 (1976).
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ing that the removal of the attached article did not cause any material injury to the freehold.236
Some courts have held that for an owner to retain an attached
article upon the sale of the realty, there must be an express written
agreement between the owner and the buyer specifically reserving
such right in the owner.237 For example, in Coffill v. Bach, 238 an
agreement ancillary to a deed stated that one party had the right to
buildings on the land, and could remove the buildings before the
buyer took possession.
When parties such as a real estate seller and a chattel financier
agree that a fixture may retain its chattel character, as in a chattel
secured sale, the bona fide purchaser of the real estate, without notice of the agreement, will not be bound by the unexpressed (as to
him) intent of those parties. Thus, a mortgagee, who became a bona
fide purchaser of the home at a sheriff's foreclosure sale, defeated
the interest of a chattel conditional seller who had notice of the
home mortgage, because the mortgagee-purchaser did not have notice of the conditional sale.239 In another case, an owner bought some
wall-to-wall carpet that was attached to unfinished plywood subfloor
by staples, stretched, and affixed to the walls with smoothing
strips. 240 The owner financed the purchase of the carpet with a chattel mortgage. The owner subsequently sold the house to a bona fide
purchaser, who had no notice of the chattel mortgage.24 1 The court
held that the purchaser took the carpet as a fixture over the chattel
mortgagee's claim on the carpet.242
b. Real Estate Mortgagor as Annexor. - When a landowner
has attached chattels to mortgaged real estate, the test for determining whether the items become fixtures, subject to a real estate mort236. In re Lincoln Square Slum Clearance Project, 24 Misc. 2d 190, 201 N.Y.S.2d 443
(Sup. Ct. 1959).
237. Fleishel v. Jessup, 244 N.C. 451, 94 S.E.2d 308 (1956); Premonstratensian Fathers
v. Badger Mut. Ins. Co., 46 Wis. 2d 362, 175 N.W.2d 237 (1970) (fixtures pass by transfer of
deed unless specifically reserved in writing); Lafleur v. Foret, 213 So. 2d 147 (La. Ct. App.
1968) (clear contractual intent).
238. 159 Cal. App. 2d 163, 323 P.2d 873 (1958).
239. Holland Furnace Co. v. Trumbull Say. & Loan Co., 135 Ohio St. 48, 19 N.E.2d
273 (1939). Contra Holt v. Henley, 232 U.S. 637 (1914). In Holt, the prior mortgagee did not
lend money in reliance on a sprinkler system and was not a bona fide purchaser but had only
the same interest as the mortgagor. The seller, even without registering the conditional sale,
had a superior interest. Id.
240. Merchants & Mechanics Fed. Say. & Loan Ass'n v. Herald, 120 Ohio App. 115,
201 N.E.2d 237 (1964).
241. Id. at 118, 201 N.E.2d at 239.
242. Id. at 120, 201 N.E.2d at 240.
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ate a fixture, which the courts infer from the relationship of the parties.245 The status of mortgagor is sufficient for courts to infer that
the intention of the mortgagor who annexes chattels to property is to
permanently affix the chattels.24 Another relationship implying intent arises when the real estate owner annexes chattels to land and,
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chattels to become fixtures.2 49 Similarly, the intention to create a fixture is presumed to exist when the landowner is a mortgagor.2 50 The
mortgagor-annexor relationship to a mortgagee is more complex
than a seller-annexor relationship to a purchaser of the realty because there are several types of mortgagees. There are real estate
mortgagees who attain that status prior to the attachment, and those
who become mortgagees subsequent to the attachment. There are
also chattel mortgagees who may have become mortgagees prior or
subsequent to the real estate mortgagee.2 5 1 The mortgage documents
may also vary from case to case, containing after-acquired property
clauses or express provisions to treat an attached item as personalty
or realty.2 52
The issue of whether a chattel has become a fixture as between
an annexing mortgagor and a real property mortgagee, is treated
substantially similarly to the same issue between an annexing seller
and a buyer. 53 The basic question still remains: has the chattel become a fixture, so that it is now part of the real estate and goes with
the land upon sale to the buyer, or upon foreclosure, to the mortgagee? The basic presumption still remains: the law presumes that an
annexing mortgagor intends for the chattel to become a fixture and
pass with the real estate, enabling the mortgagee to take the fixture
with the real property.25 4 There are, however, two distinctive fact
patterns involving mortgagors and mortgagees that are sometimes
analyzed differently by courts. The distinction is between the situation involving a mortgagor/annexor and a subsequent mortgagee,
and the situation involving a mortgagor/annexor and a prior mortgagee. 255Some courts treat the two situations similarly whether or not
the annexation occurs before or after the mortgage is executed. 258
249. See, e.g., Tifton Corp. v. Decatur Fed. Say. & Loan Ass'n, 136 Ga. App. 710, 222
S.E.2d 115 (1975); Leisle v. Welfare Bldg. & Loan Ass'n, 232 Wis. 440, 287 N.W. 739
(1939).
250. See supra note 246.
251. These are discussed under the section "Third Party Rights." See infra notes 456-85
and accompanying text.
252. See I G.W. THOMPSON, supra note 15, 72, at 271.
253. See also Fuson v. Whitaker, 28 Tenn. App. 338, 341, 190 S.W.2d 305, 307 (1945)
("rule for determining what is a fixture is construed strongly against the mortgagor or vendor
and in favor of the mortgagee or purchaser").
254. See, e.g., Mortgage Bond Co. v. Stephens, 181 Okla. 419, 74 P.2d 361 (1937);
Metropolitan Life Ins. Co. v. Jensen, 69 S.D. 225, 9 N.W.2d 140 (1948).
255. See R. BROWN, supra note 1, 16.7, at 543.
256. See, e.g., Bond v. Coke, 71 N.C. 97 (1874); Metropolitan Life Ins. Co. v. Kimball,
163 Or. 31, 94 P.2d 1101 (1939); Adams, An Historical Perspective of the Mississippi Law
Regarding Fixtures Prior to Introduction of the Uniform Commercial Code, 46 Miss. L.J.
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affixed chattel is part of the realty. Decisional law supports that assumption if there is no notice of contrary interests. 60 In fact, the law
will pass the affixed chattel as a fixture, even if the subsequent mortgage agreement does not mention the article.
61
This is analogous to
907, 921 (1975); Comment, supra note 60, at 366; 35 AM. JUR. 2D Fixtures 51 (1967).
257. See supra note 256. See also Mallory v. Agee, 226 Ala. 596, 147 So. 881 (1932);
Lavenson v. Standard Soap Co., 80 Cal. 245, 22 P. 184 (1899); Tifton Corp. v. Decatur Fed.
Say. & Loan Ass'n, 136 Ga. App. 710, 222 S.E. 2d 115 (1975); Hopewell Mills v. Tauton Say.
Bank, 150 Mass. 519, 23 N.E. 327 (1890); Frost v. Schinkel, 121 Neb. 784, 238 N.W. 659
(1931); Mc Fadden v. Allen, 134 N.Y. 489, 32 N.E. 21 (1892); Muehling v. Muehling, 181
Pa. 483, 37 A. 527 (1897); Danville Holding Corp. v. Clement, 178 Va. 223, 16 S.E.2d 345
(1941); Parrish v. Southwest Wash. Prod. Credit Ass'n, 41 Wash. 2d 586, 250 P.2d 973
(1952); Butler v. Keller, 88 Wash. 334, 153 P. 15 (1915).
258. See infra notes 259-70 and accompanying text.
259. See Hill v. Farmers & Mechanics Nat'l Bank, 97 U.S. 450 (1878); Stone v.
Suckle, 145 Ark. 387, 224 S.W. 735 (1920); Lesser v. Bridgeport-City Trust Co., 124 Conn.
59, 198 A. 252 (1938); Young v. Hatch, 99 Me. 465, 59 A. 950 (1905); Consolidated Gas,
Elec. Light & Power Co. v. Ryan, 165 Md. 484, 169 A. 794 (1934); Gar Wood Indus., Inc. v.
Colonial Homes, Inc., 305 Mass. 41, 24 N.E.2d 767 (1940); Frost v. Schinkel, 121 Neb. 784,
238 N.W. 659 (1931); Metropolitan Life Ins. Co. v. Kimball, 163 Or. 31, 94 P.2d 1101
(1939); First Nat'l Bank v. Reichneder, 371 Pa. 463, 91 A.2d 277 (1952); Planters' Bank v.
Lummus Cotton Gin Co., 132 S.C. 16, 128 S.E. 876 (1925); Leisle v. Welfare Bldg. & Loan
Ass'n, 232 Wis. 440, 287 N.W. 739 (1939); 5 AMERICAN LAW OF PROPERTY, supra note 10,
19.7, at 28-32.
260. 1 G.W. THOMPSON, supra note 15, 72, at 271, 274.
261. See, e.g., Mortgage Bond Co. v. Stephens, 181 Okla. 419, 74 P.2d 361 (1937). But
see Gas & Elec. Shop v. Corey-Scheffel Lumber Co., 227 Ky. 657, 13 S.W.2d 1009
(1929)(electric range, attached to the freehold, is not part of the realty; removal did not damage freehold). See generally I G.W. THOMPSON, supra note 15, 72, at 274-76 (giving exam-
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the situation where the seller has neglected to discuss with a buyer
the status of a chattel attached to the freehold; there too, the article
is a fixture and passes with the realty to the vendee.262
The policy reasons supporting this strong presumption of intent
to create a fixture are based on several considerations. First, the law
will not presume that the mortgagor-annexor intends to default on
the loan and take the fixtures as personalty upon foreclosure. 263 The
law instead presumes that the annexor will remain on the freehold to
enjoy the use of the fixture.26 4 Second, a subsequent mortgagee relies
on the attached fixtures as part of the security in advancing a loan.
The mortgagee is entitled to have the lien extend against all of the
realty existing when the loan was made. 65
The court must look to the mortgagor-annexor's intent at one
specific point in time. Decisional law consistently holds that it is not
the annexor's intent at the title of drafting the loan agreement, but
rather the intention of the annexing owner at the time of annexation
that determines whether an affixed chattel has become part of the
realty. 26 These decisions give support to the theoretical basis for the
presumption that mortgagor-annexed chattels are fixtures vis-a-vis a
subsequent mortgagee. By looking at the mortgagor's intent at the
time of affixation, before any mortgage has attached, it would seem
likely that the mortgagor attached the chattels with the expectation
that they would be permanent attachments. The annexor, at that
time, has no fear of loss by foreclosure. The subsequent creation of a
mortgage lien should not enable the mortgagor to remove those fixtures against the mortgagee who relied on them as security for the
loan.
There are two exceptions to this general rule of presumed intent. These exceptions consist of clear evidence either that the mortgagor intended the items to remain personalty at the time of attachment, or that the mortgagee and mortgagor by agreement have
pies of chattels that have passed with the realty).
262. For a discussion of fixture status in the vendor-vendee relationship, see supra note
222 and accompanying text.
263. See 5 AMERICAN LAW OF PROPERTY, supra note 10, 19.7, at 28-30; Comment,
supra note 256, at 366.
264. See 5 AMERICAN LAW OF PROPERTY, supra note 10, 19.7, at 28-30.
265. See I G.W. THOMPSON, supra note 15, 72, at 274.
266. See, e.g., Beeler v. C.C. Merchantile Co., 8 Idaho 644, 74 P. 942 (1904); Cross v.
Weare Comm'n. Co., 153 III. 499, 38 N.E. 1038 (1894); Wilson v. Boyer, 275 Mich. 667, 267
N.W. 760 (1936); Gray v. Krieger, 66 N.D. 115, 262 N.W. 343 (1935); Planters' Bank v.
Lummus Cotton Gin Co., 132 S.C. 16, 128 S.E. 876 (1925).
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subject to the mortgage, is to give the mortgagee additional, unbargained-for security for his loan. These courts believe that the mortgagee would then receive a windfall, consisting of the fixture, upon
foreclosure.17 0 The majority of courts, however, hold that the attached chattel becomes a fixture if the basic provisions of the threeprong test are met: annexation, adaptation, and intention. 2 71 This is
267. See infra note 268.
268. Kenneally v. Standard Elecs. Corp., 364 F.2d 642, 646 (8th Cir. 1966). Kenneally
does not elaborate on exactly how the parties evidenced their agreement. In Horn v. Indianapolis National Bank, 125 Ind. 381, 25 N.E. 558 (1890), the owner annexed chattels to realty
and subsequently mortgaged the property. The mortgage agreement expressly stated that it
was subject to a document which specified that the items remained personalty. The Horn court
held that the stated intention of the parties defeated the presumption that annexed chattels are
fixtures vis-a-vis a subsequent mortgagee, writing:
It cannot be successfully denied that the factory and its equipments were
treated by all the interested parties as personal property long prior to the time the
appellee's mortgage was executed.... [t]he intention to fix upon the heading factory and its equipments the character of personalty had been fully and unequivocally manifested .... We are not, therefore, dealing with a case where a purchase is
made or a mortgage accepted where there is no notice of the character of the property, and appearances indicate that it is a part of the realty.
Id. at 389, 25 N.E. at 560-61. See also Russell v. Golden Rule Mining Co., 63 Ariz. 11, 159
P.2d 776 (1945).
269. Westmore Supply Co. v. Frum, 316 Ill. App. 306, 44 N.E.2d 949 (1942) (abstract
only) (prior mortgagee of real estate has no claim to chattels subsequently annexed to realty);
Union Bank v. Emerson, 15 Mass. 159 (1818) (holding similar to Frum).
270. See I G.W. THOMPSON, supra note 15, 81, at 366; see also Adams, supra note
256, at 922.
271. See, e.g., Simms v. County of Los Angeles, 35 Cal. 2d 303, 309, 217 P.2d 936, 940,
cert. denied, 340 U.S. 891 (1950); Waterbury Petroleum Prod., Inc. v. Canaan Oil and Fuel
Co., 193 Conn. 208, 216, 477 A.2d 988, 993 (1984); Board of Educ., Unified School Dist. No.
464 v. Porter, 234 Kan. 690, 695, 676 P.2d 84, 89 (1984); Metropolitan Life Ins. Co. v.
Reeves, 223 Neb. 299, 302, 389 N.W.2d 295, 296-97 (1986); Saver's Bank v. Anderson, 125
N.H. 193, 195, 480 A.2d 82, 84 (1984); Metromedia, Inc. v. Tax Comm'n, 60 N.Y.2d 85, 90,
455 N.E.2d 1253, 1254, 468 N.Y.S.2d 457, 459 (1983); Logan v. Mullis, 686 S.W.2d 605,
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For a discussion of the material injury test, see supra notes 91-96 and accompany-
279. See, e.g., Intermountain Food Equip. Co. v. Walter, 86 Idaho 94, 383 P.2d 612
(1963) (prior real estate mortgagee cannot foreclose on subsequently attached property when
removal of fixtures would not cause damage to the mortgagees security, i.e., the realty).
280. See e.g., Home Owner's Loan Corp. v. Eyanson, 113 Ind. App. 52, 46 N.E.2d 711
(1943) (furnace merely sitting on floor so that its removal would not cause material injury to
freehold not covered by prior mortgage); Taylor v. Townsend, 8 Mass. 411 (1812); Cooke v.
Copper, 18 Or. 142, 22 P. 945 (1888).
281.
third situation involving a chattel mortgagee, a real estate mortgagee, and the annexor-mort-
gagor. This situation is discussed under "Third Party Rights." See infra notes 456-85 and
accompanying text.
282. For a discussion of divided ownership situations, as opposed to common ownership
situations, see supra notes 211-15 and accompanying text.
283. See 1 G.W. THOMPSON, supra note 15, 77, at 315.
284. This paper analyzes each category independently, because there are differences in
the law applicable to each of the categories. Some of the analysis, however, is applicable to all
three categories.
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For a discussion of this maxim, see supra note I and accompanying text.
286.
See Niles, The Rationale of the Law of Fixtures: English Cases, I I N.Y.U. L.Q
There has been a manifest tendency to divide this class of cases, and to apply very
different rules, according to the relations of parties to each other. A rule which is
prescribed for the case of a landlord and tenant is rejected as between grantor and
grantee. And this distinction is observed in the case between mortgager and mortgagee ....
Id.
290. Id. For a discussion of the role of the relationship of the parties in determining
fixture status, see supra notes 209-17 and accompanying text.
291. "[T]he presumption being prima facie that the tenant did not intend to enrich the
fee, but intended to reserve the title of the article to himself, whereas in case the annexation is
by the owner of the fee, a contrary presumption occurs." 2 H. TIFFANY, supra note 197, 617,
at 599.
292. See, e.g., Andrews v. Williams, 115 Colo. 478, 482, 173 P.2d 882, 884 (1946);
Wetjen v. Williamson, 196 So. 2d 461, 464 (Fla. Dist. Ct. App. 1967); Empire Bldg. Corp. v.
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lessee can remove them at will before the expiration of the lease.293
This distinction exists because the law favors the tenant in divided
ownership situations, but favors the mortgagee and buyer in the
common ownership cases.
Not all chattels annexed by tenants to the property of the landlord fall into the tenant fixtures exception to the general rule that
annexation implies fixture status. For example, domestic fixtures are
limited to articles affixed for the comfort, convenience, or esthetics of
at the end of the lease term. If the lessee-annexed fixtures are essential and permanent to the freehold, improving the premises for
whomever the occupant may be, then they are not domestic tenant
fixtures, but removable fixtures which pass to the lessor's leasehold.295 Articles falling within the domestic fixtures category, affixed
for the tenant's comfort and convenience, have included carpeting, 296
bath tubs and sinks, 297 chandeliers, 29 a water closet in an office, 9
and draperies.300 Articles excluded from this category, and which
pass with the leasehold, have included awnings, 30 1 a new room addition, 02 and a wire fence.303
Courts allow the lessee to remove the attached domestic fixtures
Orput & Assoc., Inc., 32 III. App. 3d 839, 841, 336 N.E.2d 82, 84 (1975); Uttinger v. Koopman, 46 N.J. Super. 443, 134 A.2d 824 (1957); Ilderton Oil Co. v. Riggs, 13 N.C. App. 547,
549, 186 S.E.2d 691, 693 (1973); Strain v. Green, 25 Wash. 2d 692, 700, 172 P.2d 216, 22021 (1946).
293. See, e.g., Empire Bldg. Corp. v. Orput & Assoc., Inc., 32 I1l. App. 3d 839, 841,
336 N.E.2d 82, 84 (1975); Cabana, Inc. v. Eastern Air Control, 61 Md. App. 609, 615, 487
A.2d 1209, 1212 (1985); Wentworth v. Process Installations, Inc., 122 Mich. App. 452, 468,
333 N.W.2d 78, 84 (1983); In re Estate of Horton, 606 S.W. 2d 792, 795 (Mo. Ct. App.
1980); Towne v. Sautter, 326 N.W.2d 694, 696 (N.D. 1982); Neely v. Jacobs, 673 S.W.2d
705, 707-08 (Tex. Ct. App. 1984).
294. See, e.g., 1 G.W. THOMPSON, supra note 15, 77, at 315; 35 AM. JUR. 2D Fixtures
41 at 731 & n.16. See also Whitney v. Hahn, 18 Wash. 2d 198, 138 P.2d 669 (1943)
(articles for tenant's own comfort and convenience are removable).
295. See R. BROWN, supra note 1, 16.10, at 522 n.2; See also Stockton v. Tester, 273
S.W.2d 783 (Mo. Ct. App. 1954)(holding door and beef track became part of building and
were not removable at end of tenancy).
296. See United States v. Baptist Golden Age Home, 226 F. Supp. 892 (W.D. Ark.
1964).
297. See Frederick v. Smith, 147 Miss. 437, 111 So. 847 (1927).
298. See Raymond v. Strictland, 124 Ga. 504, 52 S.E. 619 (1905).
299. See Hayford v. Wentworth, 97 Me. 347, 54 A. 940 (1903).
300. See Larkin v. Cowert, 263 Cal. App.2d 27, 69 Cal. Rptr. 290 (1968).
301. See City of Knoxville v. Hargis, 184 Tenn. 262, 198 S.W.2d 555 (1947).
302. See Wright v. Du Bignon, 114 Ga. 765, 40 S.E. 747 (1902).
303. See Tolar v. Burkett, 32 Ala. App. 434, 26 So. 2d 629 (1946).
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sally agreed upon. a1 8 Second, the tenant and lessor can agree to allow the tenant an extension of time in which to remove his fixtures.""0 Third, if a lease agreement is terminated by the lessor
prematurely or wrongly, the lessee is given a reasonable time after
the termination of the lease in which to remove the fixtures.3 20
Fourth, if there are other factors beyond the control of the lessee
which preclude the lessee from removing domestic fixtures from the
leasehold, courts will allow the lessee more time in which to remove
the fixtures.32 '
ii) Agricultural Fixtures. - The second sub-category of tenant fixtures is agricultural fixtures. Agricultural fixtures are those
erected by a tenant on his lessor's realty for agricultural purposes.3 22
Whereas domestic and trade 323 fixtures were generally presumed to
remain the tenant's personalty, subject to removal before the end of
the lease term, the common law concerning agricultural fixtures did
not adhere to such a presumption. In the English case of Elwes v.
Maw,3 24 Lord Ellenborough applied the strict annexation test and
held that the agricultural tenant's beast-house, carpenter's shop,
wagon house, fuel-house and brick wall, erected by the tenant during
his term to assist him in his agricultural pursuits, were part of the
landlord's realty. Although England still adheres to the rule that agricultural fixtures are not removable from the realty, on the policy
ground that the rule prevents waste and economic loss, 3 25 courts in
America have rejected this doctrine.3 28 American courts have re318. Compare McLeon v. Wells, 207 Ark. 303, 180 S.W.2d 325 (1944) (13 months
reasonable) with Henderson v. Robbins, 126 Me. 284, 138 A. 68 (1937) (more than two
months later is unreasonable). But see Revzen Business Interiors, Inc. v. Carrane, 72 Ill. App.
3d 601, 391 N.E.2d 24 (1979) (when lease has no reasonable time provision, tenant must
In re Site for Library, 254 Minn. 358, 95 N.W.2d 112 (1959) (after condemnation,
325. See id. at 116 (quoting McCullough v. Irvine's Executors, 13 Penn. St. 438
(1850))(allowing tenant to remove agricultural fixtures would "convert realty into a solitary
waste for the winds to moan over"),
326. See, e.g., De Charette's Guardian v. Bank of Shelbyville, 218 Ky. 691, 291 S.W.
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fused to apply one doctrine to domestic and trade fixtures and another doctrine to agricultural fixtures.3 27 Commentators also have
generally rejected the English common law rule in this area.-2
Overall, the law in America governing agricultural fixtures coincides with the law concerning domestic and trade fixtures. Because
most courts treat agricultural fixtures as trade fixtures, 329 however,
the agricultural category is a very small one, with not much case
law. As a result of the smaller base of decisional authority, the area
is less settled than other, more frequently litigated, issues. Nonetheless, the case law suggests that agricultural fixtures, erected by a
tenant for agricultural purposes, should be removable by the tenant
at the end of the term, just as domestic fixtures are.
iii) Trade Fixtures. - The third sub-category of tenant fixtures is trade fixtures.3 30 Trade fixtures were recognized in early English common law as the first exception to the strict annexation rule.
Under the common law, if a tenant annexed goods to rented land,
and those goods were to be used in the trade in which the tenant was
engaged, the tenant could remove the annexed goods at the end of
the lease term even though the goods were firmly attached to the
1
soil. 33
Today, to qualify as a trade fixture, a chattel must be necessary
to the operation of the annexing tenant's trade or business for profit,
added for the tenant's use and not that of the freehold, and annexed
with the sole purpose of enabling the tenant to conduct his business
appropriately and effectively. 3 2 Trade fixtures retain their chattel
1054 (1927) (holding cream separator and milling plant installed by tenant dairy farmer are
removable by tenant).
327. See Harkness v. Sears, 26 Ala. 493 (1855); Holmes v. Tremper, 20 Johns. 28
(N.Y. 1822); Old Line Life Ins. Co. of Am. v. Hawn, 225 Wis. 627, 275 N.W. 542 (1937); see
also Van Ness v. Pacard, 27 U.S. (2 Pet.) 137 (1829)(principles applied to trade fixtures
See, e.g., 2 H.
TIFFANY,
R. BROWN, supra note 1, 16.9 at 551 (preference for business over agriculture seems less
likely today); see also I G.W. THOMPSON, supra note 15, 70 (trade fixtures concept has been
held applicable though there seems to be some disagreement in this area).
329. See supra note 327.
330.
See I G.W. THOMPSON, supra note 15 77, at 314. For a discussion of the ramifi-
cations of divided as opposed to common ownership, see supra notes 211-15 and accompanying
text.
331.
BROWN,
332. See, e.g., Lemmons v. United States, 496 F.2d 864, 869 n.7 (Ct. Cl. 1974); In re
Park Corrugated Box Corp., 249 F. Supp. 56 (D. N.J. 1966); Bank of Shelbyville v. Hartford,
268 Ky. 135, 104 S.W.2d 217 (1937); Rosenblum v. Terry Carpenter, Inc., 62 Wyo. 417, 174
P.2d 142 (1946).
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and vents,3 33
character, despite annexation by such means as bolts
5
33
33 4
wiring, ducts, concrete slab bases, or even burial.
The test used to determine whether an attached chattel has be-
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344. Id.
345. See 2 H. TIFFANY, supra note 197,
346.
617, at 601.
Central Chrysler Plymouth, Inc. v. Holt, 266 N.W.2d 177 (Minn. 1978).
347. See Van Ness v. Pacard, 27 U.S. (2 Pet.) 137 (1829). See also Sullivan v. Demas,
124 Vt. 397, 205 A.2d 818 (1964) (diner attached to realty is a trade fixture); Milburn ByProducts Coal Co. v. Eagle Land Co., 141 W. Va. 866, 93 S.E.2d 231 (1956) (dwelling houses
and garages erected for use of employees are trade fixtures).
348. See Tilchin v. Boucher, 328 Mich. 355, 43 N.W.2d 885 (1950). The tenant's right
of removal, however, was not enforceable against bona fide purchasers of the land without
notice. The tenant's remedy was limited to damages from the landlord. But see Appliance
Buyers Credit Corp. v. Crivello, 43 Wis.2d 241, 168 N.W.2d 892 (1969) (trade fixtures removable by tenant even against third parties who have acquired an interest in the realty).
349. See, e.g., Revzen Business Interiors, Inc. v. Carrane, 72 Ill. App. 3d 601, 391
N.E.2d 24 (1979); Handler v. Horns, 2 N.J. 18, 65 A.2d 523 (1949); Roberts v. Yancey, 209
Va. 537, 165 S.E.2d 399 (1969).
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This limitation to the trade fixtures rule is based upon the presumption that the landlord and tenant would not have intended for a
chattel to be removable if its removal would materially damage the
realty. 35 0 Therefore, trade fixtures are removable only if, removal
causes no material damage to the landlord's leasehold; 351 this phrase,
though, is rather ambiguous. What, precisely, is material damage?
For example, what if no damage is done to the freehold, but only to
the fixture? One writer's interpretation of material damage is that
there must be no lasting injury to the strength or appearance of the
building, and that the tenant must leave it fit for occupation by another tenant for similar use.3 52 It is fairly well settled law that removal is precluded if material injury would occur to the landlord's
freehold. 5 3 Some courts allow removal of trade fixtures, even if removal would wreck the item, as long as there is no material injury to
the realty.3 54 Thus, a Pennsylvania tenant was allowed to cut a tram
rail system into pieces, remove it from a building, and sell it for
3 55
scrap at considerably less than its in-place value.
How much damage constitutes material damage is another issue
about which courts are uncertain. Questions concerning the nature
and extent of the damage which removal would cause may be a significant factor in a court's determination of whether an item is a
chattel or a fixture. One court determined that a tenant, lessee of a
tavern, who replaced a bar without the owner's consent, under a
lease providing that unauthorized alterations become the property of
350. See Sutton v. Frost, 432 A.2d 1311, 1314 (Me. 1981). See also 2 H. TIFFANY,
without damage to real property); Wetjen v. Williamson, 196 So. 2d 461 (Fla. Dist. Ct. App.
1967) (unattached stadium seats, despite heavy weight, are trade fixtures, removable without
damage to property); Antonowsky v. State, 14 Misc. 2d 689, 180 N.Y.S.2d 966 (Ct. Cl. 1958)
(removal of trade fixtures contingent on removal without material injury to landlord's premises), See also supra note 20 and accompanying text.
352. Miles, supra note 54, at 86.
353. See supra note 20 and accompanying text.
354. See, e.g., United States v. Certain Land, 357 F. Supp. 1382 (S.D.N.Y. 1972)
(trade fixtures include those items removable without material injury to the realty but which
are themselves materially damaged upon removal); Frost v. Schinkel, 121 Neb. 784, 238 N.W.
659 (193 1) (removal of gasoline pumps allowed if landlord's property is not damaged). But see
Della Corp, v. Diamond, 58 Del. 465, 210 A.2d 847 (1965) (carpeting which would be seri-
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the lessor, "intended" for the new bar to become part of the building. 56 The new bar, whose removal would damage the building by
leaving twelve holes in the floor where water and electrical connections were made, became an accession. 3 57 The damage in this instance, though, is minor when compared to what other courts have
reasoned to be non-material damage. 358 It seems likely, that the
court believed the damage was that the removal of the bar would
leave the tavern without any bar, and in worse shape than it was
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can prevent even trade fixtures from being removed. For example,
where a tenant leasing a garage installed elevators, the elevators became realty because they were not uniquely adapted to a garage business, but were useful to the building in whatever capacity it might
be used.361 When a tenant installed a beef tracking system from the
ceiling of his leased meat locker plant, the doors and tracking from
which beef was hung were deemed to be attached to make the building itself useful for, and adapted to, that kind of business, rather
than to enable the tenant to carry on his business.36 2 Similarly,
where a tenant built a tire factory, incorporating two brick walls already in existence, the building was considered an improvement of
the land itself, rather than a trade fixture useful only to the tenant's
business. 3 3
These cases present the issue of how to distinguish a chattel annexed to help a tenant carry on a trade or business from one annexed
to render the building more usable, in itself, for that business. Must
one then conclude from surveying these cases that because fire safety
regulations require sprinkler systems in all restaurants, a tenant who
adds one to leased premises loses the right to remove the system, in
light of the fact that it was added to make the premises usable as a
364
restaurant
The intention of the parties, expressed in a lease agreement or
otherwise, as to whether the tenant's addition is to remain the tena 5 An agreement between lessor
ant's property, will usually control.36
and lessee that any additions to the realty made by the tenant are to
be treated as trade fixtures, removable by the tenant, is binding. 66
An agreement of this sort can even be enforceable against third parties in certain circumstances.367 Similarly, an agreement that trade
fixtures annexed by the tenant shall become part of the landlord's
realty is binding.366 Of course, these agreements should be in writing. Some courts, however, may not only impose a writing requirement, but may also require that the writing express this intention in
361. Frost v. Schinkel, 121 Neb. 784, 238 N.W. 659 (1931).
362. Stockton v. Tester, 273 S.W.2d 783 (Mo. Ct. App. 1954).
363. Ingold v. Phoenix Assur. Co., 230 N.C. 142, 52 S.E.2d 366 (1949).
364. See Romich v. Kempner Bros. Realty Co., 192 Ark. 454, 92 S.W.2d 215 (1936)
(holding that $8016.00 sprinkler system installed by tenant during lessor's foreclosure is trade
fixture).
365. See supra note 24 and accompanying text.
366. Haywood v. Briggs, 227 N.C. 108, 41 S.E.2d 289 (1947).
367. Id. at 115, 41 S.E.2d at 295.
368. See Eckstine v. Webb Walker Jewelry Co., 178 S.W.2d 532 (Tex. Civ. App. 1944).
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plain terms. a
Generally, the law concerning time limitations on a tenant's removal of trade fixtures, vis-a-vis the end of the tenancy, is similar to
that under domestic fixtures. 2 Overall, tenant fixtures are removable during the lease and within a reasonable time after the expiration of the lease.373 A tenant who remains in possession after the
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courts hold that the tenant has forfeited the trade fixtures to the
lessor.376 There is no recognition of trade fixtures being "tacked" or
"carried over" from one tenant to the next. If a tenant leaves his
trade fixtures on the realty and the landlord rents the realty to a
subsequent tenant, then the second tenant does not have the right to
remove the fixtures from the landlord's property. 3 7
The objectivity of a court's application of the definition of a fixture to the facts of a case is open to question. As one writer observes,
fixture status is a conclusion: the court analyzes the relationship between the parties, the purpose(s) of their transaction(s), the nature
of the goods, and, in a limited sense, the physical relationship of the
goods to the realty to determine who prevails, and then classifies the
item as either a fixture or chattel.3 78 The classification may have less
to do with the purpose, annexation, or adaptation of an item than it
does with what the court sees as a just resolution of a conflict.
As to cases involving secured transactions in goods which become fixtures, the UCC tries to lessen the confusion by classifying
the items, regardless of the results of the classification. Superiority
of rights in the fixture is determined by whether the parties properly
3791
perfected their security interest.
3. Degree and Purpose of Annexation. - The degree and purpose of annexation is the third factor from which to infer the intention of a party to make a permanent addition to the freehold.380 At
this point, the definition of a fixture begins to appear circular. Recall
that Teaff listed three criteria for a fixture: annexation to the realty,
adaptation or appropriation to the use of the realty, and intent to
make the chattel a fixture.381 Modern law has almost universally
made the third criterion, the intention to make the chattel a fixture,
the dominant test.382 The other two criteria, annexation and approR. BROWN, supra note 1, 16.11, at 554.
377. United Mut. Say. Bank v. Riebli, 55 Wash. 2d 816, 350 P.2d 651 (1960), overruled on other grounds, Washington Hydroculture, Inc. v. Payne, 96 Wash. 2d 322, 635 P.2d
138 (1981).
378. Schroeder, Security Interests in Fixtures, 1975 ARIz. ST. L.J. 319, 324.
379. U.C.C. 9-313 (1978).
380. Teaff v. Hewitt, I Ohio St. 511 (1853) states that "intention being inferred from
the nature of the article affixed, the relation and situation of the party making the annexation,
the structure and mode of annexation, and the purpose or use for which the annexation has
been made." Id. at 530 (emphasis in original). See supra note 27 and accompanying text.
381. For the exact quote from Teaff, see supra text accompanying note 27.
382. For a discussion of the predominance of the intent prong of the Teaff test, see
supra notes 153-89 and accompanying text. See also Pacific Metal Co. v. Northwestern Bank,
667 P.2d 958 (Mont. 1983) (character of the item and manner in which it is annexed are
376.
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COMMON LAW OF FIXTURES
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A. Parol Evidence
The general rule is that chattels classified as fixtures pass to the
buyer upon conveyance of the real estate. The chattels classified as
factors of lesser weight than the intent of the parties).
383. See supra note 162 and accompanying text. See also In re Estate of Horton, 606
S.W.2d 792 (Mo. Ct. App. 1980).
384. For a discussion of the application of the three prong test, see supra notes 27-28,
59-60 and accompanying text. See also Bank of Valley v. United States Nat'l Bank, 215 Neb.
912, 341 N.W.2d 592 (1983).
385. The last factor listed, the degree and purpose of annexation, and the first criterion,
actual annexation or something appurtenant thereon, are both listed in Teaff. See supra note
27.
386. 215 Neb. 363, 338 N.W.2d 752 (1983).
387. Id. at 367, 338 N.W.2d at 754.
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fixtures become part of the realty and pass by deed from the seller to
the buyer. 88 The general rule may be inapplicable, though, if the
parties agree that an affixed chattel is not to become a fixture, but is
to remain personalty, severable from the realty. 89 A written agreement between the parties relating to the status of the chattel is enforceable."' 0 This is congruent with the definition of a fixture, which
includes the "intention of the parties." ' Today the universal trend
is to give effect to the intention of the parties, and there is no better
way to do this than to follow their agreement as to how they wish to
treat property.
An oral agreement between the parties, however, may not be
given effect. The parol evidence rule disallows any parol exceptions
3 92
to a deed if they would contradict or vary the terms of the deed.
The Supreme Court of North Dakota has stated that "the parol evidence rule prohibits the varying or contradicting of a written contract by extrinsic evidence.., generally, a parol exception of fixtures
will not preclude the passing of fixtures with conveyance of the
land."393 In that case, the court refused to allow the seller to introduce oral evidence that certain fixtures were not to pass to the buyer
of a farm.39
If the nature of an article is not fixed with certainty, or if there
is fraud, mistake or accident, parol evidence might be used to show
an absence of intent for the item to become a fixture and pass with
the realty. 95 Moreover, parol evidence is always admissible to attack
388. See, e.g., Schrampfer v. Lindal Cedar Homes, Inc., 118 Ga. App. 92, 162 S.E.2d
806 (1968).
389.
See, e.g., Dakota Harvestore Sys., Inc. v. South Dakota Dep't of Revenue, 331
N.W.2d 828 (S.D. 1983) (parties are free to agree whether silos anchored to concrete slabs are
realty or personalty); Bolin v. Laderberg, 207 Va. 795, 153 S.E.2d 251 (1967) (parties can
control both character and disposition of property by agreement). This agreement between
parties, that an annexed article shall be regarded as personalty rather than realty, is known as
"constructive severance." Blehm v. Ringering, 260 Or. 46, 488 P.2d 798 (1971).
390. See, e.g., Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App.
266, 246 S.E.2d 354 (1978) (contract expressly stated goods were to remain personalty); Public Serv. Mut. Ins. Co. v. Royal Burglar & Fire Alarm, Inc., 90 Misc. 2d 517, 394 N.Y.S.2d
524 (1977) (burglar alarm system not a fixture, as expressly agreed on by parties). But see
Allentown Plaza Assocs. v. Suburban Propane Gas Corp., 43 Md. App. 337, 405 A.2d 326
(1979) (limiting the free'tom of the parties to agree on the status of a chattel by applying the
terms of the "material injury to the realty" test). See also supra notes 24, 196 and accompanying text.
391.
392.
393.
394.
395.
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397. Groves v. Segars, 288 Ala. 376, 381, 261 So. 2d 389, 393 (1972). See also Nicholson v. Altona Corp., 320 F.2d 8 (3d Cir. 1963) (agreement may be express or implied); LeeMoore Oil Co. v. Cleary, 295 N.C. 417, 245 S.E.2d 720 (1978) (agreement can be express or
See, e.g., Leawood Nat'l Bank v. City Nat'l Bank & Trust Co., 474 S.W.2d 641
(Mo. Ct. App. 1971) (agreement not effective against third parties who had no notice); Johnson v. Hicks, 51 Or. App. 667, 626 P.2d 938 (1981) (agreement fixing annexed chattel as
Appliance Buyers Credit Corp. v. Crivello, 168 N.W.2d 892 (Wis. 1969) (third
party must have knowledge). Some states have codified these common law rules. Maine, for
instance, has a statute that provides "[n]o agreement, that a building erected with the consent
of the landowner by one not the owner of the land upon which it is erected shall be and remain
personal property, shall be effectual against any person, except . . . persons having actual
notice thereof...." ME. REV. STAT. ANN. 33 455 (1978).
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B. Severance of Fixtures
Historically, annexation of personalty to realty has resulted in
the creation of a fixture. The creation of a fixture transformed the
personalty into a part of the realty.400 Conversely, the general rule is
that severance of a fixture from realty transforms it back into personalty. 40' But, like other rules concerning fixtures, this rule is not so
simple, and the law governing severance is replete with exceptions
and complicated regulations.
Severance can be accomplished either through actual physical
severance of the fixture from realty or through constructive severance, which is analogous to constructive annexation. 0 2 Constructive
severance occurs in several circumstances. There is constructive severance when a building or other fixture is sold apart from the realty,
when a chattel mortgage is created on a building or fixture, when, in
a deed of the realty, an exception to the sale of the building or fixture is reserved, or, when in a deed of the realty, the building or
fixture is separately sold.40 3
A constructive severance must be supported by an intention to
permanently sever the chattel at some time.404 Thus, an owner of
real estate who conveyed the land by deed, and excepted buildings
therefrom, reserving the right to remove the buildings from the realty within one year, was held to have constructively severed the
buildings from the land and returned them to the status of
405
personalty.
400. For a discussion of the annexation prong of the Teaff test see supra notes 79-117
and accompanying text.
401. Peiser v. Mettler, 50 Cal. 2d 594, 328 P.2d 953 (1958); Marsh v. Spradling, 537
S.W.2d 402 (Mo. 1976).
402. For an explanation of constructive annexation, see supra notes 103-05 and accompanying text.
403. See R. BROWN, supra note 1, 16.6(b), at 539.
404. See 1 G.W. THOMPSON, supra note 15, 79, at 340. This intention to constructively
sever must be made by both parties. Id. at 342.
405. Esbjornsson v. Buffalo Ins. Co., 252 Minn. 269, 89 N.W.2d 893 (1958).
This example raises an unresolved issue concerning the manifestation of the intent to
sever. The issue is whether the sale of the fixtures is a sale of an interest in realty. A sale of
realty is governed by the statute of frauds for realty, while a sale of goods is governed by the
Uniform Commercial Code. Sections 2-107 and 2-201 of the U.C.C. require the application of
the U.C.C.'s statute of frauds for the sale of goods when the seller is to remove the building or
fixture. If the buyer is to sever, one writer has concluded, the implication of 2-107 is to make
applicable the real estate statute of frauds. See R. BROWN, supra note 1, 16.6(b), at 540.
The importance of this issue cannot be overstated. One writer has noted that "[t]here is a vast
difference between the law that governs real estate transactions and the law of sales." T.
QUINN, UNIFORM COMMERCIAL CODE COMMENTARY AND LAW DIGEST, 2-107(A), at 2-35
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against the seller or any other party if the fixture is wrongfully severed or removed. 40 8 Of course, the same rights attach when the fixture has been actually severed from the land, as when the fixture is
constructively severed. The action for conversion arises at the time of
severance, and even if the fixture is subsequently reattached to other
realty, the claim remains valid.409
The general rule that fixtures, once annexed but now severed
from realty, return to their previous status as personalty is modified
when the rights of third parties are involved. A bona fide purchaser
of land with no notice or knowledge usually takes all fixtures annexed to the realty, in spite of any agreements between the seller
and a potential chattel buyer of the fixture. 410 This is true if the
fixture has not been severed at the time of the conveyance or the
realty purchaser has no notice of the agreement. 11 If the fixture has
already been severed, or if the realty purchaser has notice of the
agreement to sever and sell the fixture, or, most importantly, if the
chattel buyer has perfected an interest with a fixture filing, then the
realty purchaser should not also be able to take the fixtures actually
or constructively severed.412
(1978).
406. See Kolstad v. Ghidotty, 212 Cal. App. 2d 313, 28 Cal. Rptr. 123 (1963). In Kolstad the buyer purchased a sawmill from the seller but only leased the land upon which it
rested for a term of years. Pursuant to the doctrine of constructive severance, the sawmill was
considered the personal property of the buyer.
407. See Melton v. Fullerton-Weaver Realty Co., 214 N.Y. 571, 108 N.E. 849 (1915).
408. Lane v. Davis, 337 S.W.2d 292 (Tex. Civ. App. 1960).
409. Insilco Corp. v. Carter, 245 Ga. 513, 265 S.E.2d 794 (1980).
410. By definition, a bona fide purchaser takes without actual or constructive notice or
knowledge of the personalty status of the fixture. Cf. Wilkins v. McCorkle, 112 Tenn. 688,
696, 80 S.W. 834, 835 (1904) (the expression bona fide purchasers is to be understood as the
equivalent of purchasers without notice).
411. U.C.C. 2-107(3) provides for third party rights to prevail. See also Greenwald v.
Graham, 100 Fla. 818, 130 So. 608 (1930) (purchaser of fixture annexed to freehold takes
subject to mortgage); Leawood Nat'l Bank v. City Nat'l Bank & Trust Co., 474 S.W.2d 641
(Mo. Ct. App. 1971) (mortgagee can recover in conversion when he has no notice of a severance provision in the mortgagor's contract for the purchase of fixtures which are subsequently
annexed to the realty and then severed).
412. See, e.g., Groves v. Segars, 288 Ala. 376, 261 So. 2d 389 (1972) (notice to realty
purchaser enables chattel buyer to take); Betz v. Verner, 46 N.J. Eq. 256, 19 A. 206 (1890)
(once fixtures are severed by bona fide purchaser, mortgagee rights cannot be asserted against
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421.
Id. at 769. The court stated that the boats "cannot rationally or properly be char-
426. United States v. Certain Land, 357 F. Supp. 1382 (S.D.N.Y. 1972).
427. Id. at 1385.
428. Id.
429. United States v. 967,905 Acres of Land, More or Less, 447 F.2d 764, 770 (8th Cir.
1971), cert. denied, 405 U.S. 474 (1972).
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ket value of the unexpired term of the lease, less the rent
which the
43 0
continued.
lease
the
had
pay
to
had
have
would
tenant
Earlier in this article, the Pennsylvania assembled industrial
plant doctrine was discussed. 43 ' Under this unique doctrine, all of
the machinery of a manufactory, whether or not fastened to the realty ("fast or loose"), is considered to be fixtures and part of the
realty.4 32 In a taking of the realty through an eminent domain action, however, the assembled industrial plant doctrine is modified so
that only the unremovable fixtures (those firmly attached to the realty, including machinery and equipment) are compensable as part
of the realty.4 33 The removable fixtures are not compensable. This
segments the industrial assembled plant doctrine into removable and
non-removable trade fixtures, bringing it more closely in line with
the fixture law in the majority of states.434 Pennsylvania law has not
entirely foresaken the assembled industrial plant doctrine in eminent
domain proceedings, because if the removable trade fixtures would
not "constitute a comparable economic unit in a new location, then
all machinery, equipment and fixtures, whether loose or attached
. . . will be considered part of the realty . .
435As
part of the
As previously discussed, annexation of an article to realty generally transforms the attached article into a fixture. 437 The status of
the person accomplishing the annexation, or the relationship of the
parties, will often have an effect on how the annexation is treated.
For example, a mortgagor is presumed to create a fixture upon annexation, but a lessee creates only a removable fixture. 438 Licensors,
430. Lemmons, 496 F.2d at 873.
431. See supra notes 39-43, 105 and accompanying text.
432. Voorhis v. Freeman, 2 Watts & Serg. 116 (Pa. 1841).
433. Singer v. Redevelopment Auth. of Oil City, 437 Pa. 55, 70, 261 A.2d 594, 600-01
(1970).
434. See supra notes 330-78 and accompanying text.
435. See Singer, 437 Pa. at 66-67, 261 A.2d at 600.
436. Kansas City S. Ry. Co. v. Anderson, 88 Ark. 129, 113 S.W. 1030 (1903); City of
Los Angeles v. Klinker, 219 Cal. 198, 25 P.2d 826 (1933); City of Pause v. Atlanta, 98 Ga.
92, 26 S.E. 489 (1896); State v. Peterson, 134 Mont. 52, 328 P.2d 617 (1958); Jackson v.
For a discussion of annexation, see supra notes 79-117 and accompanying text.
438. For discussions of annexation as affected by different party relationships, see supra
notes 243-81, 330-79 and accompanying text.
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For a discussion of divided ownership situations, see supra notes 211-15 and ac-
companying text. One commentator has stated that the fundamental rule of fixtures is that "in
order to render a chattel a part of the realty, the annexation should be made by the owner of
the chattel or with his consent." I G.W. THOMPSON, supra note 15, 64, at 227. Nonetheless,
that commentator then lists "a strong line of authority to the contrary." Id.
440. J. DUKEMINIER & J.E. KRIER, PROPERTY 970 (1981).
441.
442.
443.
1978).
444.
Id.
See R. BROWN, supra note I, 16.14, at 567.
See Milford v. Tennessee River Pulp & Paper Co., 355 So. 2d 687, 690 (Ala.
See R.
BROWN,
445. See 2 A. M.
SQUILLANTE
& J.FONSECA,
THOMPSON,
KRIER,
supra note 440, at 109-10. See also Buswell v. Hadfield, 202 Ark. 200, 203, 149 S.W.2d 555,
557 (1941)(true owner of land entitled to improvements made to that land by mistaken
possessor).
447. See I G.W. THOMPSON, supra note 15, 64, at 228.
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See Pargas of Longview, Inc. v. Jones, 573 S.W.2d 571, 575 (Tex. Civ. App. 1978).
450. For a general discussion of eminent domain, see supra notes 415-36 and accompanying text.
451.
Nagel v. Texas Pipe Line Co., 336 S.W.2d 265 (Tex. Civ. App. 1961). In Nagel
the court wrote that "[o]rdinarily, whatever a trespasser annexes to the land of another becomes the property of the owner of the land. There is, however, an exception to this rule.
Where one with the right of condemnation, without consent of the owner or the condemnation,
affixes improvements to the realty, the owner is not entitled to compensation for the improve-
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removal.455
459. See, e.g., Frank v. Schaff, 123 N.W.2d 827, 829 (N.D. 1963)(noting that owner of
land may require annexor of property to remove affixed items); National Cold Storage Co. v.
Boyland, 28 Misc. 2d 205, 207, 212 N.Y.S.2d 319, 321 (Sup. Ct. 1961) (finding exception to
general rule, when "clear and explicit language [is] employed, indicating with precision that
the builder retains the right of removal and remains the owner)(emphasis in original), rev'd
on other grounds, 227 N.Y.S.2d 147 (1962).
460. See generally R. BROWN, supra note I, 16 at 560.
461.
For a discussion of the weight accorded the annexation test, see supra notes 79-115
462. Commonwealth v. R.S. Noonan, Inc., 82 Dauphin County Common Pleas Ct.
Reps. 234 (1964), affd as modified, 213 A.2d 787 (Pa. 1965).
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secured party can remove his collateral upon default, provided that
46 3
he reimburses any encumbrancer or owner who is not the debtor.
A situation which complicates the general rule involves a chattel
financier conditionally selling the chattel to the annexor, who attaches it to the landowner's property, or to a real estate mortgagee's
property. In cases involving these parties, there are two contrary results, depending on the parties involved, even though only one article
is involved. The article may be considered a chattel by the conditional seller and the buyer, but considered a fixture and part of the
realty between the buyer who is also a mortgagor and the buyer's
mortgagee. 464 Likewise, the affixed article, as between the conditional seller of the article and the purchaser, may be considered personalty, but between the same seller and the owner of the realty, the
article may be considered realty. 465 The two parties to the conditional sales agreement can expressly agree to treat an item as personalty for the protection of the seller, even if the item is firmly annexed to realty.4 6 The agreement to treat the fixture as personalty
will not, however, be binding on the owner of the land if he is not the
buyer of the chattel, or the mortgagee.467
Of course, a mortgagee may permit title to a fixture to remain
vested in the conditional seller.468 Without the consent of a mortgagee to an agreement by the annexor-buyer, specifying that a fixture
is to remain the conditional seller's personalty, the mortgagee is not
bound by the agreement. 46 9 "It is not enough that the mortgagee
have knowledge of the contract," one court wrote, "he must consent
' '470
to the retention of the specific property as personalty.
The preceding rules, when applied to disparate fact patterns,
sometimes yield different results. For example, one result arises
when there is a prior mortgage on realty, and the mortgagor annexes
chattel-mortgaged goods to the realty. In a priority conflict between
the chattel financier and the mortgagee, the chattel financier should
463. City of Bayonne v. Port Jersey Corp., 79 N.J. 367, 377, 399 A.2d 649, 654 (1979).
464. See Merritt-Chapman & Scott Corp. v. Mauro, 171 Conn. 177, 185, 368 A.2d 44,
48 (1976). See generally Berry, Priority Conflicts Between Fixture Secured Creditors and
Real Estate Claimants, 7 MEM. ST. U.L. REv. 209 (1977)(discussing the evolution of priority
conflicts in Tennessee wrought by adoption of the U.C.C.).
465. See Cornell v. Sennes, 18 Cal. App. 3d 126, 133, 95 Cal. Rptr. 728, 732 (1971).
466. See Hartlin v Cody, 144 Conn. 499, 506, 134 A.2d 245, 249 (1957).
467. Stibor v. Farrell, 177 Neb. 437, 129 N.W.2d 449 (1964).
468.
Corbett v. Appliance Buyers Credit Corp., 172 So. 2d 257, 258-59 (Fla. Dist. Ct.
App. 1965).
469.
Appliance Buyers Credit Corp. v. Crivello, 168 N.W.2d 892, 898 (Wis. 1969).
470.
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prioi mortgagees is also true if, rather than the security lien arising
from the sale of the chattel, the security lien arises by operation of
law. Thus, it has been held that a mechanic's lien and a materialman's lien are superior to a recorded mortgagee's deed, even though
the mortgagee has priority over the supplier's materialman's lien.47 4
Even an after-acquired property clause in a prior mortgage has
been held not to defeat the conditional seller's interest in subsequently attached fixtures that are subject to a conditional sales
agreement.
47 5
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The conflict between a realty mortgagee and a chattel mortgagee is analagous to the situation of a tenant who has affixed financed
goods to his leasehold. The notice and reliance factors used in the
preceding factual situations are also applicable herein. The seller retaining a security interest in a tenant fixture has the right to remove
the fixture only if the tenant has such right.8 4 Otherwise, the landlord has received an accession to his realty.
Where the annexing tenant's fixtures replace those of the landlord, there is a split of authority concerning whether the chattel
mortgagee or the landlord has priority. 8 5
IV.
See First Nat'l Bank v. Jacobs, 273 N.W.2d 743 (S.D. 1978).
484. See Goldie v. Bauchet Properties, 15 Cal. 3d 307, 124 Cal. Rptr. 161, 540 P.2d 1
(1975) (chattel mortgagee's rights against the lessor to machine sold to tenant who annexed it
on the landlord's premises are derivative and no greater than the lessee's right against the
lessor); Exchange Leasing Corp. v. Finster N. Aegen, Inc., 7 Ohio App. 2d 11, 218 N.E.2d
633 (1966) (landlord of apartment, through sale and leaseback, cannot vest another with
greater interest than that of mortgagee).
485. See 35 Am. JUR. 2D Fixtures 71 (1967).
486. 35 AM. JUR. 2D Fixtures 128, at 797 (1967).
487. Paul v. First Nat'l Bank, 52 Ohio Misc. 77, 369 N.E.2d 488 (1976).
488.
Roberts v. Yancey, 209 Va. 537, 165 S.E.2d 399 (1960). See also 35 AM.
JUR.
2D
489.
R.G. Equipment Corp. v. Gursha, 60 Misc. 2d 240, 303 N.Y.S.2d 275 (1969).
490. Ferganchick v. Johnson, 28 Colo. App. 448, 449, 473 P.2d 990, 992 (1970); Stubbs
v. Hemmert, 567 P.2d 168, 170 (Utah 1977).
491. Davis v. Jackson, 264 Md. 668, 287 A.2d 768 (1972). The replacement cost of
severed fixtures, however, would have a bearing on the value of the fixtures at the time of their
severance.
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these cases.4 98
A tenant whose trade fixtures have been wrongfully removed
may sue to recover damages, or to replevy the goods, or may recover
for conversion. 499 The landlord, of course, can likewise recover from
the tenant, if the tenant has wrongfully removed the landlord's fixtures. 500 A landlord proceeding against a tenant need not prove a
decrease in the fair market value of the building because the fixture
was removed,50 1 but may recover damages equal to the value of the
fixture in-place. 50 2 A lessee is also liable to the landlord for any damages caused by any assignee of the lease. 503
A chattel secured creditor should also be able to recover damages, or to replevy the fixtures, upon their wrongful removal. The
chattel mortgagee, however, must use care not to incur liability to a
real estate mortgagee for wrongful removal, if the chattel mortgagee
repossesses any fixtures.50 4 If the chattel mortgagee does wrongfully
remove (as to the realty mortgagee) fixtures from the realty, then
the realty mortgagee can recover from the chattel mortgagee. Such
recovery may include damages for the value of the fixture at the
time of removal, damages for trespass onto the realty mortgagee's
property when removing the fixture, and even damages for mental
distress caused by the wrongful removal. 505 A chattel mortgagee,
therefore, would be wise to be extremely certain of having priority
rights before repossessing any fixtures upon mortgaged property.
In Part II of this article the relationship between the Uniform
Commercial Code and the law of fixtures is analyzed. The long discussion of the common law of fixtures was necessary because the
Code, in defining fixtures in section 9-313, tells us only about priori498. Herrin v. Bunge, 336 S.W.2d 281 (Tex. Civ. App. 1960).
499. Schrampfer v. Lindal Cedar Homes of Georgia, Inc., 118 Ga. App. 92, 162 S.E.2d
806 (1968). See also 35 AM. JUR. 2D Fixtures 130, at 798-99 (1967).
500. Falcon Enterprises Inc. v. Precise Forms, Inc., 509 S.W.2d 170 (Mo. Ct. App.
1974).
501. Buhl v. Sandy Springs Medical Center, 147 Ga. App. 176, 248 S.E.2d 238 (1978).
502. Rose v. State, 24 N.Y.2d 81, 246 N.E.2d 735, 298 N.Y.S.2d 968 (1969). See also
supra notes 500-01 and accompanying text. But see Blackwell Printing Co. v. Blackwell-Wielandy Co., 441 S.W.2d 433 (Mo. 1969)(new trial must be granted upon failure to prove diminution in value of premises caused by tenant's wrongful removal of ventilating system and
wash basins).
503. Kornblum v. Henry E. Mangels Co., 167 So. 2d 16 (Fla. Dist. Ct. App. 1964).
504. See supra notes 464-85 and accompanying text for a discussion of this topic.
505. Pargas of Longview Inc. v. Jones, 573 S.W.2d 571 (Tex. Civ. App. 1978). Cf.
Metropolitan Say. & Loan Ass'n v. Zuelke's, Inc., 46 Wis. 2d 568, 175 N.W.2d 634 (1970)
(recovery by realty mortgagee against repossessing conditional sales vendor limited to losses
suffered in the loan transaction and foreclosure).
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506. Part 11of this article, entitled The UCC And Fixtures, will appear in volume 15:3
of the HOFSTRA LAW REVIEW.
http://scholarlycommons.law.hofstra.edu/hlr/vol15/iss2/2
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