Hobson v. O'Connell (In Re Marianni)

21 B.R. 228, 1982 Bankr. LEXIS 3853
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedJune 25, 1982
Docket18-18472
StatusPublished
Cited by1 cases

This text of 21 B.R. 228 (Hobson v. O'Connell (In Re Marianni)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hobson v. O'Connell (In Re Marianni), 21 B.R. 228, 1982 Bankr. LEXIS 3853 (Pa. 1982).

Opinion

OPINION

WILLIAM A. KING, Jr., Bankruptcy Judge.

This case reaches the Court on a complaint by a purchaser of commercial property founded on breach of contract against the Interim Trustee in the two (2) Chapter 7 cases. After hearing duly held and consideration of the appropriate state law, the Court finds that relief must be denied. 1

On January 15, 1981, the plaintiffs, Robert C. Hobson and Joseph A. Bachman, entered into an Agreement of Sale with the debtors, Frank A. Marianni, Jr., Phyllis M. Marianni, Daniel D. Daltry and Marilyn E. Daltry which involved the sale of commercial real estate owned by the debtors and located at 1611 Manning Boulevard, Levit-town, Bucks County, Pennsylvania. Subsequent to this Agreement of Sale, the debtors filed for relief under the Bankruptcy Code. On February 23, 1981, James J. O’Connell, Esquire, was appointed by this Court as an Interim Trustee and was allowed to assume the aforesaid executory contract which provided that settlement be held on or before May 15, 1981 for the agreed purchase of $160,000.

In April of 1981, the plaintiffs participated in a pre-settlement inspection of 1611 Manning Boulevard and allegedly discovered that the property had been materially altered. Specifically, plaintiffs alleged that three (3) room air conditioners and one (1) rooftop gas hot air heater had been removed from the premises, which eventually cost $1,950 to replace and install; that the trustee failed to maintain the property in a reasonable manner which resulted in excessive debris, trash, water damage and damage to two (2) overhead doors which cost $2,914 to replace; and that trustee failed to remove certain trade fixtures which constituted personalty which resulted in an added expense of $3,400 to the plaintiffs to remove.

As a result, plaintiffs informed the Interim Trustee that it was the plaintiffs’ position that the trustee was in breach of the Agreement of Sale and that therefore, the plaintiffs did not intend to proceed to settlement. In response, the Interim Trustee and the plaintiffs agreed that the Interim Trustee would escrow $9,476 from the purchase price of $160,000 and that said funds would be held in escrow in order to allow the settlement to be completed without jeopardizing the contractual rights of the plaintiffs. Subsequent to the settlement, on August 10,1981, the plaintiffs attempted to recover reimbursement in the amount of $8,264 for expenditures made in repairing or replacing defects in the aforesaid property-

The issue before this Court, therefore, is whether the removal of three (3) air conditioners and a rooftop heater, the failure to maintain property in a reasonable manner, and the failure to remove certain trade fixtures constitute a material alteration of the premises under contract to such an extent that a breach of contract has resulted. We must answer with an unequivocal no.

In addressing this issue, we will first focus on the removal of the three (3) room air conditioners and one (1) of numerous rooftop heaters. The plaintiffs contend that this equipment constitutes part of the real property conveyed by the contract at issue and therefore, its removal breached this instrument. However, case law does not support this contention. “The general rule is that when equipment is so physically annexed to the land that it cannot be removed without material injury to the land or some structure thereon, it is deemed incorporated into the realty.” Kaczmarek v. Mesta Machine Company, 324 F.Supp. 298, 300 (W.D.Pa.1971). Thus, because of the portable nature of this equipment and the ease of removal, it would be unreasonable to argue either that physical annexa *231 tion was present or that removal would result in physical injury to the structure.

In addition, even should this Court find that the aforesaid equipment constituted realty despite the foregoing, the plaintiffs would be hard-pressed to refute the well-reasoned principle set forth in Daly Brothers Shoe Company v. H. Jacob and Sons, 49 F.Supp. 118 (M.D.Pa.1943). Here, it was held that when fixtures are “... intended to be disannexed from the building, - and were in fact so separated and disannexed ... all fixtures become personal property.” Id. at 122. The implication here is that if equipment is severed either expressly or constructively, it is classified as personal property.

In the case at hand, although an express intention to sever this equipment from the realty might not have been present, certainly there was a constructive intention. As previously discussed, in addition to the fact that this equipment was portable and thus easily removable, the room air conditioners were non-essentials because the facility was centrally air conditioned.

In short, therefore, because these room air conditioners were non-essential, coupled with their portability, it is apparent that the debtors did not consider this equipment realty but personal property, resulting in the removal of this equipment. Therefore, based upon the foregoing case law, it is unquestionable that plaintiffs be denied recovery for the removal of the three (3) room air conditioners.

With regard to the heating system, the plaintiffs’ claim that its removal was in violation of the terms of the contract is more credible. Because of the nature of a heating system, it has traditionally been part of the real property conveyed, Schermer v. Wilmart, 282 Pa. 55, 127 A. 315 (1925), and as such, does not conform to either of the above mentioned exceptions of portability or non-essentiality. In addition, Paragraph 7 of the written Agreement of Sale specifically states that “all plumbing, heating, and lighting fixtures” are to be conveyed as part of the realty. Unquestionably, therefore, the removal of the heating system was in violation of the Contract. However, the problem arises in the amount of damages that the plaintiffs seek, that is, the cost of replacement. This Court, following Pennsylvania law, may only confer a measure of damages equal to the value of the property at the time of destruction. “When there is a total destruction [of personal property], the measure of damages would be the actual value of the property itself, taking into consideration its age, condition, and any other circumstances affecting it, less anything salvaged from it.” Russell v. United States, 113 F.Supp. 353, 356 (M.D.Pa.1953). Applied to the case at hand, removal of personal property is tantamount to total destruction of the property. Therefore, the correct measure of damages for the heating system is its value at the time of its removal, which because of age and depreciation, is substantially less than the cost of replacement. Jones v. Monroe Electric Company, 350 Pa. 539, 39 A.2d 569 (1944); Durante v. Alba, 266 Pa. 444, 109 A. 796 (1920).

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Bluebook (online)
21 B.R. 228, 1982 Bankr. LEXIS 3853, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hobson-v-oconnell-in-re-marianni-paeb-1982.