Premonstratensian Fathers v. Badger Mut. Ins. Co.
| Decision Date | 31 March 1970 |
| Docket Number | No. 59,59 |
| Citation | 175 N.W.2d 237,46 Wis.2d 362 |
| Parties | The PREMONSTRATENSIAN FATHERS, a Wis. corp., Respondent, v. BADGER MUTUAL INSURANCE CO et al., Appellants. |
| Court | Wisconsin Supreme Court |
This is an action to recover upon a fire insurance policy, the coverage clause of which provides:
'When the insurance under this policy covers a building, such insurance shall cover on the building, * * * all permanent fixtures, * * *'
The Premonstratensian Fathers, called Fathers, are the owners of a one-story building, insured by the property insurance policy in question, which is used as a supermarket. The building was originally constructed in 1958 by the Jacobs Realty Corporation, which was the record titleholder to the property. The Jacobs Realty Corporation is a family corporation, completely owned by members of the Jacobs family. At the time of the construction of the supermarket building, Jacobs Brothers Stores, Inc., was also in existence, completely owned by the members of the Jacobs family, and used as the legal entity through which the supermarket business was to be conducted. Following the construction of the supermarket, the business has been continually run as a retail grocery business, offering a wide variety of canned goods, frozen goods, produce and meats.
On February 20, 1960, the Jacobs Realty Corporation deeded, by warranty deed, the land and the improvements to Jacobs Brothers Stores, Inc. On March 7, 1960, Jacobs Brothers Stores, Inc. deeded, by warranty deed, the land and the improvements to the Fathers. On March 7, 1960, the Fathers leased the premises back to the Jacobs Brothers Stores, Inc. for a term of twenty years. The lease further provided that the lessee was to provide fire insurance on the building and the fixtures in the name of the lessor. Following this lease, the premises were operated in exactly the same manner as it had been since the initial construction. The lessee then provided the insurance which is the subject of the instant lawsuit.
On June 1, 1964, the building and improvements were severely damaged by a major fire. Following the fire, the building was replaced with a new building, and the interior of the building is substantially the same as that prior to the fire and is still run as a supermarket. The defendant-insurers paid to the plaintiff the sum of $83,000 for the loss suffered to the building, but have refused to pay a claim in the amount of $23,551.02 for the destruction of five Hussman walk-in coolers which were situated in the building. The grounds upon which the insurers have refused to pay the claim of the Fathers, and upon which they relied in both the trial court and in this court are: (1) The coolers are not the property of the Fathers, and (2) even if the coolers are the property of the Fathers, they are not insured property. There is no issue as to the amount of the damages, or whether the policy was in full force and effect on the date of the fire. The trial court concluded that the coolers are insured property and granted judgment for the plaintiff.
The coolers which are the subject of this dispute are walk-in type coolers. There are five of these: two meat coolers, a deep-freeze, a produce cooler, and a dairy cooler. A further description of the coolers is set forth in the opinion.
Kenneth M. Kenney, Wolfe, O'Leary, Kenney & Wolfe, Milwaukee, for appellants.
Everson, Whitney, O'Melia, Everson & Brehm, Green Bay, for respondent.
Although the insurers have divided their argument into two sections, the basis of the entire appeal is a consideration of the legal status of the coolers. If the coolers are determined to be common-law fixtures, and were such at the time of the construction of the building and the installation of the coolers, then they would have passed to the Fathers under the warranty deed of March 7, 1960, and they would be insured under the terms of the policy. 1 The issue then is whether these coolers constitute fixtures.
The rule which has developed in Wisconsin as to what constitutes a fixture is not really a comprehensive definition, but rather a statement of the factors which are to be applied to the fact and circumstances of a particular case to determine whether or not the property in question does constitute a fixture:
'* * * Whether articles of personal property are fixtures, i.e., real estate, is determined in this state, if not generally, by the following rules or tests: (1) Actual physical annexation to the real estate; (2) application or adaptation to the use or purpose to which the realty is devoted; and (3) an intention on the part of the person making the annexation to make a permanent accession to the freehold.' 2
It is the application of these tests to the facts of a particular case which will lead to a determination of whether or not an article, otherwise considered personal property, constitutes a common-law fixture, and hence takes on the nature of real property. The trial court in the instant case concluded that the evidence adduced at the trial established that the coolers in question are fixtures and hence part of the realty. Such findings cannot be set aside unless they are contrary to the great weight and clear preponderance of the evidence. 3 The trial court clearly enunciated the reasons for its decision in a thorough and well-reasoned opinion.
ANNEXATION.
Annexation refers to:
'* * * the act of attaching or affixing personal property to real property and, as a general proposition, an object will not acquire the status of a fixture unless it is in some manner or means, albeit slight, attached or affixed, either actually or constructively, to the realty.' 4
It has been held in Wisconsin that physical annexation, although a factor to be considered in the determination, is of relative unimportance:
'* * * it has often been said by this court that the matter of physical annexation of the article to the freehold is relatively unimportant. * * *.' 5
The trial court ably pointed out the physical facts which led to its conclusion that there is indeed annexation in this case. The more important of these are as follows: (1) The exterior walls of the cooler, in four instances, constituted the interior wall of another room. (2) In the two meat coolers, a meat hanging and tracking system was built into the coolers. These tracks were used to move large cuts of meats from the cooler area into the meat preparation areas, and were suspended from the steel girders of the building structure by means of large steel bolts. These bolts penetrated through the roof of the cooler supporting wooden beams, which, in turn, supported the tracking system. The tracking in the coolers was a part of a system of tracking throughout the rear portion of the supermarket. (3) The coolers were attached to hardwood plank which was, in turn, attached to the concrete floor of the supermarket. The attachment of the plank to the floor was accomplished through the use of a ramsetting gun. The planks were laid on the floor, and the bolts were driven through them into the concrete floor, where they then exploded, firmly fixing the coolers into place. There was a material placed on the planks which served both as an adhesive and as an insulation. (4) The floor of the coolers was specially sloped during the construction of the building so that the slope would carry drainage into a specially constructed drain in the concrete. In addition, four of the coolers were coated with a protective coating to seal the floors. In the freezer, a special concrete buildup was constructed in the nature of a trough, the purpose of which was to carry away moisture as frozen chickens melted. (5) A refrigeration unit was built into each cooler. The unit was suspended from the ceiling of the cooler, and tubing was run through the wall of the cooler to compressors located elsewhere in the store. (6) Electric lights and power receptacles were built into each cooler and were connected by electrical wiring through the walls and the ceiling of the cooler to the store's electrical power supply. (7) The walls of the cooler were interlocked, and set into the splines, the hardwood planks ramset into the concrete floor, in tongue and groove fashion.
These factors adequately support the conclusion that the coolers were indeed physically annexed to the premises. The insurers argue that the coolers were removable without material injury to the premises, which detracts from the annexation. There was a dispute in the evidence introduced at the trial, with the insurers' expert testifying that this type of cooler was easily severable from the building, while one of the members of the Jacobs family testified that when he removed some of the bolts from the floor following the fire, large sections of concrete would crack on the floor. This was a conflict for resolution by the trial court. In any event, the element of removability without material damage to the building no longer enjoys the position of prominence in the law of fixtures which it once held. It is now only one of the factors which is to be considered by the trial court. 6 Based on the evidence introduced, the finding of the trial court that the coolers were physically annexed to the premises is not contrary to the great weight and clear preponderance of the evidence.
ADAPTATION.
Adaptation refers to the relationship between the chattel and the use which is made of the realty to which the chattel is annexed. The use of the realty was that of a retail grocery, commonly known as a supermarket. This was the intent of the parties at the time of the construction of the building, and the intent of the parties throughout the entire history of the business. The fact of operation has borne out this intent. In a business which carries fresh foods, frozen foods, produce, meats and butter, coolers used for storage and handling of these perishables are patently related to the use of the...
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