Butler v. United Chevrolet, Inc. (In re United Chevrolet, Inc.)

21 B.R. 934, 1982 Bankr. LEXIS 3626
CourtDistrict Court, D. Massachusetts
DecidedJuly 29, 1982
DocketBankruptcy No. 4-80-00246-G; Adv. Nos. 4-81-0020, 4-81-0021
StatusPublished
Cited by1 cases

This text of 21 B.R. 934 (Butler v. United Chevrolet, Inc. (In re United Chevrolet, Inc.)) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Butler v. United Chevrolet, Inc. (In re United Chevrolet, Inc.), 21 B.R. 934, 1982 Bankr. LEXIS 3626 (D. Mass. 1982).

Opinion

MEMORANDUM AND ORDER ON COMPLAINTS TO DETERMINE OWNERSHIP OF PROPERTY

PAUL W. GLENNON, Bankruptcy Judge.

This is a dispute between two lessors and their lessee over personal property sought to be sold by the lessee. The lessors each filed a complaint to determine the ownership to items of personal property claimed to have been so affixed to the realty as to have passed ownership of them to the lessor.

George Butler and others are the trustees of distinct Massachusetts Realty Trusts. The first is Associated Realty Trust (“ART”) which owns the land and building out of which United Chevrolet, Inc. (“United” or “the debtor”) did business as a new car dealer. United also maintained a large service department on the premises to service the cars it sold. Most of the items which are in dispute, if not all of them, were used in some connection with the debtor’s service department. The second party involved is Realty Investment Trust (“RIT”) which owned a large vacant lot [936]*936across the street from the debtor’s showroom, and from which the debtor stocked and sold used cars. The only items in dispute on this property are large items of display and so forth which were affixed to the realty by the debtor for its used car business. Although the trustees of each trust brought suit in their names on behalf of each trust, I will refer to the plaintiffs as ART and RIT.

Prior to the filing of a Chapter 11 petition under the Bankruptcy Code by United on April 29, 1980, both ART and RIT had recovered judgments in the Massachusetts District Court for possession and rent due under written leases signed by the president of United. After filing of its Chapter 11 petition, which stayed execution of the state court judgments, the debtor sold its franchise rights to another auto dealer and, in addition, attempted to sell many items of personal property which remained on the premises. It is as to these latter items, too numerous to list here, that the dispute arose. The Court heard extensive testimony as to the nature of each item of personal property, the nature and degree of each item’s annexation to the realty in question, the difficulty and expense attendant to removing each item, and the purpose for which each item was affixed to the real estate. In addition, the Court took a personal view of each property and of all the items in question. After reviewing briefly the law in Massachusetts as to the matter at hand, and the applicable law on the issue to which I feel bound, I shall discuss my findings as to each item as it is listed in the schedules attached to each complaint.

DISCUSSION OF MASSACHUSETTS LAW

Both sides agree that the leading case in Massachusetts on ownership rights to personal property which is affixed to realty is Stone v. Livingston, 222 Mass. 192, 110 N.E. 297 (Mass.1917). There a trustee in bankruptcy claimed ownership to certain very large machines used in a worsted mill as against a foreclosing mortgagee. Each machine weighed 2800 to 3000 pounds, each was fastened to the floor by lag screws and could be easily removed without damage to themselves or to the building to which they were affixed, and each was adaptable to use in other like businesses. In discussing the cases which had ruled upon the question to that date, the Supreme Judicial Court of Massachusetts found that the decisions as to whether or not a chattel had been converted into realty fell into three classes:

1. Those where the chattel or item of personal property had been so affixed to the realty that its indentity had been lost, or had been so annexed that it could not be removed without material injury to the real estate or itself;

2. Those where the items were manifestly furniture as distinguised from improvements;

3. “Those cases where intention is the controlling fact and where such fact is to be determined upon consideration of all the circumstances”, including the purpose, means, form and degree of annexation, at p. 299. In the first two classes, the facts were held to be capable of rebutting all other evidence of contrary intention. Thus, the court could rule as a matter of law.

In the Stone case it was held that the machines could not be said to have lost their identity, nor could they be said to be incapable of removal without material injury to themselves or the building to which they were attached, and therefore, it could not be said as a matter of law that they were converted into realty (class # 1). Likewise, it was held that they could not be called chattels as a matter of law (class # 2). Thus, and in view of the fact that the machines were not especially designed for use upon the premises, were not peculiar in their pattern, were easily removable, and were equally adapted to use in a like business, the court held that the question was one of intent which was properly left to the fact finder and not to be decided as a matter of law.

The rule of Stone is that unless personal property has been so annexed to the real estate as to have lost its identity or [937]*937the ability to be removed safely and easily, or unless it is clearly furniture, the issue of its classification as either realty or personalty is a question of fact to be determined by the objective intent of the parties manifested by their acts and implied from what is external and visible. See Bay State York Co. v. Marvix, Inc., 331 Mass. 407, 411, 119 N.E.2d 727 (Mass.1954). In determining what was the intent of the parties, consideration must be given to the nature of the chattel and the apparent object, effect, and mode of its annexation to the realty. Id. In that case, the court held that certain air conditioners, and a water tower affixed to the roof to circulate water to the air conditioners, were personalty rather than realty because:

1. The items were of standard design;

2. The items were readily detachable without resulting injury to themselves or the building; and

3. The items were capable of being moved from place to place within the same or other buildings.

As a result, the Court concluded that the separate items were not part of an overall air conditioning system, and therefore, were not installed with any definite purpose or goal of permanent retention.

It should be noted at this juncture that the law in Massachusetts regards with particular favor the rights of tenants to remove articles annexed by them to the freehold, and extends much greater indulgence to them in this respect than to others. Taylor v. Townsend, 8 Mass. 411 (1812); Whiting v. Brastow, 4 Pick. 310, 21 Mass. 310 (1826); Miller v. Baker, 1 Metc. 27, 42 Mass. 27 (1840); Wall v. Hinds, 4 Gray 256, 70 Mass. 256 (1855); Smith v. Bay State Savings Bank, 202 Mass. 482, 88 N.E. 1086 (1890); Looney v. Trimount Theatres, 282 Mass. 275, 184 N.E. 683 (1933); Freitas v. Hebert, 19 Mass.App.Dec. 57 (Mass.App.1960). This rule appears to be so because a tenant’s interest in the realty is much more limited than that of an owner, and therefore the reasonable inference is that it was not his intention to permanently improve the property. As a result, the case law suggests that as between a landlord and a tenant, a tenant may remove any and all trade fixtures which he had annexed to the freehold, provided he do so reasonably and before the end of his term. Wall v. Hinds, supra.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

In Re Tri-State Fabricators, Inc.
32 B.R. 260 (W.D. Oklahoma, 1983)

Cite This Page — Counsel Stack

Bluebook (online)
21 B.R. 934, 1982 Bankr. LEXIS 3626, Counsel Stack Legal Research, https://law.counselstack.com/opinion/butler-v-united-chevrolet-inc-in-re-united-chevrolet-inc-mad-1982.