In re Albright

214 B.R. 408, 1997 WL 697217
CourtUnited States Bankruptcy Court, N.D. Alabama
DecidedNovember 5, 1997
DocketBankruptcy No. 97-81180-JAC-13
StatusPublished

This text of 214 B.R. 408 (In re Albright) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Albright, 214 B.R. 408, 1997 WL 697217 (Ala. 1997).

Opinion

MEMORANDUM OPINION

JACK CADDELL, Bankruptcy Judge.

This cause came on to be heard on the motion by First Union National Bank of North Carolina (“bank”) for relief from the automatic stay to proceed with foreclosure against debtors’ residence due to default in postpetition payments. The hearing in this matter was held on the 1st day of October 1997. At the hearing, the Abrights testified that they vacated the property and consented to the lifting of the stay with regard to the house; however, debtors did not consent to the lifting of the stay, with regard to two Trane heat pumps purchased by debtors subsequent to execution of the mortgage. The parties were granted thirty (30) days to brief the issue of whether the debtors have the authority to exempt the replacement heat pumps as personal property, or whether the heat pumps are fixtures subject to the mortgage held by the bank. Upon due consideration of the pleadings, arguments of counsel, and relevant law, the Court finds that the heat pumps are fixtures subject to the mortgage held by the bank and cannot be removed from the premises by debtors as exempt property.1

On October 17, 1996, the Abrights executed a note with the bank in the amount of $129,000.00. As security for the note, the debtors executed a mortgage in favor of the bank on the real property described in the mortgage, as well as, a security interest in after-acquired property. Subsequently, the Abrights purchased two heat pumps to replace the existing heating and air-conditioning system in their home. The Tennessee Valley Authority (“TVA”) financed the heat pumps and a third party eo-signed the loan for same. On or about November 8, 1996, TVA filed a financing statement maintaining a purchase money security interest in the heat pumps.

On March 23, 1997, the Abrights filed a voluntary petition for relief under chapter 13 of title 11 of the Bankruptcy Code. On schedules B and C of their petition, debtors listed an “air conditioner unit” as exempt personal property in the amount of $7,500.00 pursuant to section 6-10-6 of the Aabama Code. The debtors seek to remove the subject property from the real estate as exempt personal property.

In determining whether the heat pumps become part of the real estate so as to fall under the after acquired property provisions of the mortgage, “improvements,” it is necessary to determine whether they are fixtures or personal property. To do so, the Court must look to applicable state law. See In re Morphis, 30 B.R. 589, 591 (Bankr.N.D.Ala.1983). The Aabama Code defines fixtures as goods that have “become so related to a particular real estate that an interest in them arises under real estate law.” ALA. CODE 17-2A-309(/, )(a) (1975). Aabama courts have held that a fixture is “ ‘an article which was once a chattel, but which, by being physically annexed or affixed to the realty, has become accessory to it and part and parcel of it.’ ” In re Morphis, 30 B.R. at 590 (citations omitted). In the oft quoted case of Langston v. State, 96 Ala. 44, 11 So. 334 (1892), the Aabama Supreme Court established the criteria for determining whether an item is to become part and parcel of the real estate to which it is attached as follows:

(1) Actual ánnexation to the realty or to something appurtenant thereto;
(2) appropriateness to the use of purposes of that part of the realty with which it is connected;
(3) the intention of the party making the annexation of making permanent attachment to the freehold.

Id. 11 So. at 335; See also Kennedy v. Lane Foods, Inc. (In re Kennedy), 192 B.R. 282 (Bankr.M.D.Ga.1996)(applying the Langston criteria to determine whether a restaurant building affixed to real property qualified as a part of the realty under Aabama law); In re Morphis, 30 B.R. at 590 (utilizing [410]*410the Langston criteria to find a mobile home became a fixture where debtor voluntarily moved the mobile home onto his lot, removed the wheels and attached plumbing lines thereto). For the reasons set forth below, the Court finds that the movant has satisfied these requirements in the ease at bar.

With regard to the first element, actual annexation, the Albrights allege that the financing company required debtors to install the heat pumps so as to allow same to be removed without damage to the realty. It is not essential, however, to the element of actual annexation that a fixture’s “annexation to the freehold be made absolutely permanent.” Langston v. State, 11 So. at 336. Indeed, the Alabama Supreme Court has held that the general rule for purposes of determining whether a good is a fixture is that “whatever is attached to the realty, though but slightly, is prima facie part thereof.” Silverman v. Mazer Lumber & Supply Co., 252 Ala. 657, 42 So.2d 452, 453 (1949).

Although the parties were unable to cite any Alabama eases’ concerning the attachment of heat pumps to realty, the case of Household Fin. Corp. v. BancOhio, 62 Ohio App.3d 691, 577 N.E.2d 405 (1989) is instructive on the issue, in that case an Ohio appellate court determined that a heat pump was a fixture where the heat pump was located outside the house and bolted to a concrete slab with wires and tubes going into the house. The court noted that the element of annexation is satisfied by “slight physical attachment.” Id. 577 N.E.2d at 406 (quoting the case of Holland Furnace Co. v. Trumbull Savings & Loan Co. 135 Ohio St. 48, 19 N.E.2d 273 (1939) in which the Ohio Supreme Court determined whether a warm-air furnace installed by slight physical attachment was a fixture). Although the heat pumps in the present case could undoubtedly be removed from the house, the Court finds the same to be sufficiently, even if slightly, attached to the realty to satisfy the element of actual annexation.

To satisfy the second element of a fixture, the heat pumps must be appropriate to the purpose of the use of the realty to which they are attached. In the Household Finance case, the court discussed the function and purpose of heat pumps for purposes of determining the second test as follows:

[The heat pump is] indispensable for the comfortable enjoyment of a dwelling house in this climate. When installed, it certainly became an integral and necessary part of the whole premises.... The adaptation of the chattel ... to the permanent use and enjoyment of the freehold; the lack of utility of the premises if it were severed and the necessity of replacing it with another or similar kind if it were removed, all indicate that the second test of a fixture is satisfied in the case of this [heat pump].

Id. at 407 (citations omitted). Similarly, the Court finds that the heat pumps in the case at bar are clearly integral to the function and the purpose of the subject house.

With regard to the final element of a fixture, intent can be inferred from the “nature of the article annexed, the relation of the party making the annexation, the structure and mode of annexation, and the purposes and uses for which the annexation has been made.” In re Kennedy, 192 B.R. at 287-88. The intention of the party making the annexation is the controlling factor in determining the character of the article annexed.

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

Related

Milford v. Tenn. River Pulp & Paper Co.
355 So. 2d 687 (Supreme Court of Alabama, 1978)
Kennedy v. Lane Foods, Inc. (In Re Kennedy)
192 B.R. 282 (M.D. Georgia, 1996)
In Re Morphis
30 B.R. 589 (N.D. Alabama, 1983)
Schieffler v. Beshears (In Re Beshears)
182 B.R. 235 (E.D. Arkansas, 1995)
Silverman v. Mazer Lumber & Supply Co.
42 So. 2d 452 (Supreme Court of Alabama, 1949)
Household Finance Corp. v. Bancohio
577 N.E.2d 405 (Ohio Court of Appeals, 1989)
Holland Furnace Co. v. Trumbull Savings & Loan Co.
19 N.E.2d 273 (Ohio Supreme Court, 1939)
Langston v. State
96 Ala. 44 (Supreme Court of Alabama, 1892)

Cite This Page — Counsel Stack

Bluebook (online)
214 B.R. 408, 1997 WL 697217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-albright-alnb-1997.