Petition of Johns-Manville Sales Corporation
| Decision Date | 12 February 1937 |
| Docket Number | 7110.,No. 7109,7109 |
| Citation | 88 F.2d 520 |
| Parties | Petition of JOHNS-MANVILLE SALES CORPORATION et al. WILSON v. UNION GUARDIAN TRUST CO. |
| Court | U.S. Court of Appeals — Sixth Circuit |
J. R. Brakey, Jr., of Detroit, Mich. (Bishop & Weaver, of Detroit, Mich., on the brief), for appellant.
J. S. Horwitz, of Detroit, Mich. (Miller, Bevan, Horwitz & Des Roches, of Detroit, Mich., on the brief), for appellee.
Before HICKS, SIMONS, and ALLEN, Circuit Judges.
Appeals from an order of the District Court confirming an order of the Referee in Bankruptcy and dismissing appellant's petition to review. While there are two appeals, they are from the same order, and we treat them as one for the purposes of review.
Appellant, as mortgagee of the bankrupt, Mark R. Hanna Company, filed a reclamation petition seeking to have an asphalt plant, a cement bag shaker, a forge and a lathe declared part of the real estate and covered by the mortgage. The Referee decided that all the property in controversy is personalty, and denied the petition.
On May 10, 1928, the bankrupt borrowed $300,000 from appellant, giving as security for the loan a mortgage covering two parcels of real estate situated in Michigan, on one of which are located all items here in controversy. Appellant has foreclosed the mortgage, and the redemption period has expired. On March 1, 1932, Mark R. Hanna Company was adjudicated bankrupt. It owned and used the mortgaged premises in the conduct of a general contracting and paving business.
The controlling question is whether the above items are real or personal property. The contract was made in Michigan, to be there performed, and involves a rule of property as to realty situated in that state. Hence, we follow the state law. Coral Gables, Inc., v. Hanley, 87 F.(2d) 780 (C.C.A.6), decided January 13, 1937.
Under the Michigan decisions three circumstances are principally to be considered in determining whether chattels affixed to real property are realty or personalty. These are (1) the character of the annexation to the realty; (2) the adaptation of the chattel thus affixed to the purpose to which the realty is devoted, and (3) the intention of the one making the annexation that the fixture shall or shall not constitute a permanent accession to the freehold. Morris v. Alexander, 208 Mich. 387, 390, 175 N.W. 264; Peninsular Stove Co. v. Young, 247 Mich. 580, 582, 226 N.W. 225; Wood Hydraulic Hoist & Body Co. v. Norton, 269 Mich. 341, 346, 257 N.W. 836.
The asphalt plant, the most important item, was erected about 1925 at a cost of approximately $52,000, on foundations prepared according to detailed specifications. It includes a smokestack 63 feet high, two large horizontal oil tanks mounted on concrete foundations extending below the frost line and connected with the rest of the plant by pipe lines laid in concrete ducts two and a half feet below the ground surface, a vertical tank embedded in a poured cement foundation, and a boiler-house constructed of concrete, brick and steel from which it would be impossible to remove the boiler without destroying one of the walls or cutting the boiler in sections. It also includes a pug mill or mixer which is supported by steel girders bolted to cement pillars acting as foundations, a lime dust bin of seventy- or eighty-ton capacity standing on concrete pillars which extend to a depth of about four feet below the frost line, a frame structure called the power house which surrounds the transformer to which electric power is brought through a duct about four feet underground, and railroad sidings and paved driveways to facilitate the loading of trucks.
This plant is permanently annexed to the realty. Its installation on these premises by the owner of the land raises a presumption under Michigan law that the accession was intended to be permanent. Cf. Coleman v. Stearns Mfg. Co., 38 Mich. 30; Lord v. Detroit Savings Bank, 132 Mich. 510, 93 N.W. 1063. The removal of the concrete pillars, foundations, driveways and sidings would damage the land itself, as would...
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...part of the realty and title to the fixture is subject to a real estate mortgage. See, e.g., Wilson v. Union Guardian Trust Co. (Petition of Johns-Manville Sales Corp.), 88 F.2d 520 (6th Cir.1937) (chattels annexed to realty became permanent fixtures and part of the realty covered by a mort......
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