Herron v. Barnard

Missouri Court of Appeals, Western District, 2013 390 S.W.3d 901

Facts

On March 1, 2007, Charles Barnard, acting on behalf of Baltimore Avenue Investors, LLC (collectively Barnard), signed a written lease agreement for a 1,442-square-foot office space at 2000 Baltimore Avenue in Kansas City, Missouri, with Boka Powell, LLC, a Texas-based architectural design firm. David Herron was employed by Boka Powell to run the Kansas City office. The lease agreement was for a two-year term with a monthly rent payment of $1,562.17 and a right of first refusal regarding the lease of additional space within the building. The parties further agreed that Boka Powell, through Herron and at its own expense, would be permitted to remove existing partitions in order to reconfigure space for a kitchenette; relocate the plumbing, electrical, and waste lines for this purpose; add carpet; relocate the entry door; and paint the walls and ceiling. The lease further provided that Boka Powell was responsible for putting in a security system at its own expense. After the space was remodeled, Herron arranged for the installation of a sink, cabinetry, appliances, and shelving in the kitchenette area; he also arranged for the installation of a custom-made, tempered-glass door and matching transom for the entrance, as well as a variety of new light fixtures and bulbs, a picture-hanging mechanism, filing cabinets, and a security system. Of these items, Herron personally purchased the appliances, the sink, the bookshelves, the door and transom, the picture hanger, all of the lighting, the wire storage bin, and the wastebasket. Boka Powell purchased the filing cabinets, the storage cabinets, and the security system but later transferred ownership of these items to Herron as part of a separation agreement.

Before the original two-year term expired, Boka Powell and Barnard agreed to renew the lease for a one-year period with the option for an additional extension of one year. The term of the renewed lease was set to expire on April 30, 2010. Sometime in November 2009, Boka Powell decided to cancel the lease agreement. Boka Powell paid, in a lump sum, the rent due through April 30, 2010, but terminated its lease as of January 30, 2010, advising Herron to vacate the premises no later than January 29. In a separation agreement between Boka Powell and Herron, Boka Powell agreed to compensate Herron for outstanding expenses by giving him eight workstations, eight chairs, eight file cabinets, eight conference chairs, and two file cabinets that were, at the time, located in the leased space, with those items to be removed at Herrons expense.

Property belonging to Herron remained on the premises with Barnards permission while Herron explored ways to take over the lease. On February 24, 2010, Herron advised Barnard that he could not afford the rent on his own. Herron indicated that although the extended lease expired on April 30, 2010, he could make arrangements to move his property before then, and he requested that Barnard identify what he considered a reasonable move-out date. In response, Barnard simply suggested that they meet the next week but provided no move-out date. At that meeting, Herron returned his keys, but Barnard indicated that if Herron needed to reenter the space, all he needed to do was contact Barnard and Barnard would let him in.

On April 29, while Herron (along with a small crew of workers) was in the process of removing various items of property, Barnard advised Herron and his crew to stop what they were doing and leave because they were not authorized to be there, and Barnard considered them to be trespassing.

Thereafter, Herron filed a lawsuit seeking either return of the property or damages. Barnard claimed that he owned the property because the property constituted fixtures that transferred to Barnard pursuant to the terms of the lease agreement. The trial court denied all of Herrons claims. Herron appealed the judgment.

Decision

Judgment affirmed regarding the door and transom, but reversed and remanded for further proceedings as to the remainder of the property in dispute.

Opinion

A fixture is an article of personal property that has been so annexed to the realty that it is regarded as part of the land and belongs to the person owning the land. The elements of a fixture are annexation, adaptation, and intent. Each of the elements must be present to some degree, however slight, and the burden of proof is on the party asserting the property to be a fixture. In examining the three elements, adaptation and intent are more important in determining whether a chattel became a fixture than the method by which the chattel is affixed to a freehold.

The annexation element refers to the physical attachment of the property to the realty, and where structures are removable with minimal or no damage resulting, the mere fact of annexation does not support a finding that the item was a fixture. On the other hand, annexation that may be slight and easily displaced does not prevent an article from becoming a fixture when the other elements are found.

The intent element is of paramount importance, where the controlling question is usually whether the intention in annexing the article to the realty was to make it a permanent part of the land. When an annexation is made by a tenant and is such that the item may be removed without material injury to the realty, there is a presumption that the tenant did not intend to make a permanent annexation to the real estate.

In the context of commercial tenancies, the extent of the furnishings necessary for the operation of a modern business negates an intention to make any gift to the landlord and therefore all ordinary store fixtures, including showcases and shelving, business signs, and miscellaneous other appliances installed by the tenant may be considered to remain the tenants personal property, unless substantial damage would result from removal.

Here there was substantial evidence to support adaptation, but only as to the custom door and transom. As for the remaining items, there was not substantial evidence to demonstrate the element of adaptation. The evidence showed that the door and transom went from floor to ceiling, which was a height of approximately fourteen feet. The transom had to be specially built into the walls by setting it inside a custom-built wooden track and then enclosing and concealing the track within the drywall. Removing the transom would have caused significant damage to the property. It is apparent that the space housing the transom was designed with the view of having that particular transom become an integral part of the building itself. The transom was custom made for the space, and the size of the transom made it unique. Although the door, itself, was only minimally attached to the space, it too was custom-built in combination with the transom. The two items were essentially a package.

As to the remaining items, the evidence did not demonstrate that there was anything peculiar or unique about them or that they were somehow made an integral part of the building. Barnard testified that the picture hanger did not constitute an improvement to the space and that neither the filing cabinets nor the refrigerator were integral parts of the building. And while it is true that the renovations to the space were made with the idea that the new space would be used as a kitchenette and storage, the following facts establish that these items were not peculiarly adapted for use on the real estate in question:

1. the bookshelves, appliances, wood cabinetry, wastebasket, storage bin, sink, lighting, and alarm system easily could have been replaced by different bookshelves, appliances, cabinetry, wastebaskets, storage bins, sinks, lighting, and alarm systems; and

2. these particular items easily could have been used at a different location.

Consequently, there was not substantial evidence to support a finding that the element of adaptation was met as to any of the items except for the door and transom. And without evidence to support this element, the remaining items could not have constituted fixtures.

Interpretation

A fixture is personal property so firmly attached to real property that an interest in it arises under real property.

Ethical Question

• Did the court fairly decide this case? Explain.

Critical Thinking Question

• When should personal property become a fixture? What criteria should be used in the determination? Explain.