Wayne County v. William G. Britton and Virginia M. Britton Trust

• Decision Date: 17 June 1997
• Docket Number: No. 8,Docket No. 104299,8
• Citation: 563 N.W.2d 674,454 Mich. 608
• Parties: WAYNE COUNTY, Plaintiff-Appellant, v. WILLIAM G. and Virginia M. Britton Trust and William G. Britton, Defendants-Appellees. Calendar
• Court: Michigan Supreme Court

Page 674

563 N.W.2d 674

454 Mich. 608

WAYNE COUNTY, Plaintiff-Appellant, v. WILLIAM G. and Virginia M. Britton Trust and William G Britton, Defendants-Appellees.

Docket No. 104299.

Calendar No. 8.

Supreme Court of Michigan.

Argued April 9, 1997.

Decided June 17, 1997.

Fink, Zausmer, P.C. by Mark J. Zausmer and Gary K. August, Detroit, and Jennifer M. Granholm, Corporation Counsel, and John C. Burchett, Assistant Corporation Counsel, Detroit, for plaintiff-appellant.

Mason, Steinhardt, Jacobs & Perlman, P.C. by Frederick D. Steinhardt, Walter B. Mason, Jr., and H. Adam Cohen, Southfield, for defendants.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Patrick F. Isom, Assistant Attorney General, Lansing, amici curiae, for Michigan Department of Transportation.

Phyllis A. James, Corporation Counsel and Thomas B. Serowik, Assistant Corporation Counsel, Detroit, for City of Detroit.

Ackerman & Ackerman, P.C. by Alan T. Ackerman and Gary D. Strauss, Troy, for defendants.

Opinion

RILEY, Justice.

In this appeal, we address two issues: (1) what constitutes a "fixture" for purposes of the condemnation process, and (2) whether a condemnee can force the condemning agency to pay either the value-in-place or the detach/reattachment costs for his fixtures. ¹ We reaffirm the three-part test enumerated in Morris v. Alexander, 208 Mich. 387, 175 N.W. 264 (1919), for determining what constitutes a fixture. Property is a fixture if (1) it is annexed to the realty, whether the annexation is actual or constructive; (2) its adaptation or application to the realty being used is appropriate; and (3) there is an intention to make the property a permanent accession to the realty.

We further hold that a condemnee may receive either the value-in-place or the detach/reattachment costs for his fixtures. If the condemnee does nothing, he will receive the value-in-place for his fixtures because the condemning agency includes the value-in-place of fixtures when valuing the condemned-

realty. If the condemnee elects to remove his fixtures from the condemned realty, he will receive the cost of detaching the fixtures, moving them to his other realty, and reattaching them. For condemnees who make such an election, the just compensation paid for the condemned realty will simultaneously be decreased by the value-in-place of the fixtures. Thus, the proper measure of damages would be the value of the land as enhanced by the fixtures, less the value of the fixtures in view of the necessity of severing them, plus the cost of detaching and reattaching the fixtures. Accordingly, we affirm the decision of the Court of Appeals.

FACTS AND PROCEEDINGS

Defendants were owners of a one-acre parcel of realty located just west of the Detroit Metropolitan Wayne County Airport, where they operated several small industrial businesses in the industrial building located on the land. In 1992, in the course of acquiring 550 acres of land needed to expand the airport, plaintiff Wayne County offered defendants $188,580 as just compensation for the property pursuant to the Uniform Condemnation Procedures Act (UCPA), M.C.L. § 213.55; M.S.A. § 8.265(5). The offer was based on (1) the county's appraised value of the real estate ($155,000), (2) the county's appraised value-in-place of "immovable fixtures" ($13,075), and (3) the county's appraised estimate of detach/reattachment costs for movable property ($20,505).

Defendants rejected the county's offer on the basis of the county's valuation of defendants' movable property. The county subsequently filed a condemnation action in the Wayne Circuit Court. Defendants stipulated the necessity of the taking, leaving compensation as the only remaining issue. Defendants filed a motion to compel the county to honor their election to be compensated for their movable property ² on the basis of their value-in-place ($190,405), rather than detach/reattachment costs ($20,505). ³ Defendants relied on SJI2d 90.20 ⁴ and SJI2d 90.21 ⁵ in making this election. The county objected, arguing that it was only obligated to pay defendants the lesser value of the cost of moving or the value-in-place for their movable property. The trial court, relying on SJI2d 90.20 and 90.21, ruled in defendants' favor:

The Standard Jury Instruction regarding compensable business property, with regard to fixtures, equipment, machinery and personal property, you are to award the owner the present value-in-place of those items unless the owner has elected to remove some or all of them. Here, he's not elected to remove them. Defendant's motion is hereby granted.

The Court of Appeals subsequently affirmed the trial court's decision. 211 Mich.App. 688, 692, 536 N.W.2d 598 (1995). It held that although the trial court "clearly erred in making its ruling solely on the basis of the Standard Jury Instructions," it reached the right result "when it ordered plaintiff to honor defendants' election to leave their trade fixtures in place and be compensated for their value in place." Id. at 697, 536 N.W.2d 598. The Court of Appeals further defined "fixtures" according to the three-part test established in Morris, supra, and remanded for the trial court's consideration of "whether the objects claimed by defendants to be movable fixtures and movable business property are fixtures and thus compensable on a value-in-place basis in a condemnation action." Id. at 698, 536 N.W.2d 598. On October 30, 1996, this Court granted the county's motion for leave to appeal. 453 Mich. 925, 554 N.W.2d 916.

I

A

Both issues addressed by this Court concern questions of law. Accordingly, our review is de novo. Cardinal Mooney High School v. Michigan High School Athletic Ass'n, 437 Mich. 75, 80, 467 N.W.2d 21 (1991).

B

We first address whether the Court of Appeals was correct in defining "fixtures." "[T]he term 'fixture' necessarily implies something having a possible existence apart from realty, but which may, by annexation, be assimilated into realty." Kent Storage Co. v. Grand Rapids Lumber Co., 239 Mich. 161, 164, 214 N.W. 111 (1927). The Court of Appeals defined the term fixture pursuant to the three-part test enumerated inMorris, supra at 390-391, 175 N.W. 264: Property is a fixture if the following three criteria exist:

"[First], annexation to the realty, either actual or constructive; second, adaptation or application to the use or purpose to which that part of the realty to which it is connected is appropriated; and third, intention to make the article a permanent accession to the freehold."

We note that stocks of goods or personal property are clearly not fixtures. In re Widening of Gratiot Ave., 294 Mich. 569, 577, 293 N.W. 755 (1940).

1. Annexation to realty

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. That is, if the object is not attached to the land or to some structure or appliance which is attached to it, it will retain its character as personalty even though intended for permanent use on the premises. [35 Am. Jur. 2d, Fixtures, § 5, p. 703.]

If an object is not physically affixed to the realty, it may acquire the status of a fixture by constructive annexation. Id., § 11, p. 707. This Court first addressed constructive annexation in Colton v. Michigan Lafayette Building Co., 267 Mich. 122, 255 N.W. 433 (1934). InColton, Lafayette subleased from Shelby Land Company realty on which Lafayette erected an office building. After Lafayette defaulted, it surrendered possession of the building to Shelby and assigned to it all subleases with tenants in the building. Lafayette subsequently sought to recover from Shelby certain property it left in the building. This property included articles such as:

[1.] repair parts to elevator switchboard, elevator rugs, window shades, awnings, double doors and trim, base and shoe, red gum partitions, storm doors, elevator uniforms, window curtains, rubber matting, entrance mats, chain falls, Minneapolis thermostats and clock, wall case and mirror, [and] pump tanks for elevator [.] ... [2.] unused supplies ... such ... as paper towels, soap, paint, and electric light bulbs[;] ... used supplies and detached equipment such as pails, mops vacuum cleaners, ladders, electric grinder, drill press, etc. .... [Id. at 127, 255 N.W. 433.]

The issue before us was whether those articles were fixtures or personal property. Our focus was whether those articles were constructively annexed to the realty. We held that the first set of articles were fixtures because their removal from the realty would impair both their value and the value of the realty:

These articles could not be removed from the building or transported from place to place without impairing their value as well as the value of the building. This building was erected for the purpose of renting stores and offices to the public and in order to be rentable must have various articles or accessories such as those listed above. [Id.]

As to the second set of articles, we concluded that they were personal property, characterizing them as "ordinary movable office furniture." Id.

We next addressed constructive annexation in In re Slum Clearance, 332 Mich. 485, 494-495, 52 N.W.2d 195 (1952), in which we considered whether the condemnee's molten metal and solutions, used in melting pots (a fixture) to create plates, were fixtures. The specific issue was whether the molten steel and solutions were constructively annexed to the realty (or to a fixture on the realty). Relying on Colton, supra, we concluded that the molten metal and solutions were constructively annexed to the melting pots (a fixture on the realty) because the molten metal and solutions were useless without the melting pots and the melting pots were...