Summary
finding laid track materials and railroad signs and signals were of such a large and/or firmly affixed nature that those items were intended to become a permanent part of the real property and were fixtures
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No. 92-3465.
Decided November 17, 1993.
Spengler Nathanson, Gary McBride, James R. Jeffery and Shane A. Farolino, for plaintiff.
Barkan Robon, Marvin A. Robon and Cynthia Godbey Teznar, for defendant.
This appropriation case is before the court on the plaintiff's motion for summary judgment filed September 30, 1993. The plaintiff seeks an order "providing" that certain items owned by defendant Waterfront Electric Railway, Inc. ("Waterfront") are personal property rather than fixtures. Upon review of the pleadings, memoranda of counsel, appropriate evidence, and applicable law, the court finds that it must grant the motion in part and deny it in part.
Essentially, the plaintiff seeks summary judgment on Count 7 of Waterfront's second amended counterclaim ("the counterclaim"), which, itself, seeks a declaration that the above-mentioned items are fixtures and not personalty. The court shall treat the instant motion as one addressing Count 7.
I
For purposes of this motion, the following facts shall be taken as true. The state of Ohio, through its Attorney General, Lee Fisher, brings this appropriation proceeding at the request of the Ohio Department of Administrative Services and the University of Toledo ("the university"), in order to obtain land owned by defendant Waterfront. The university seeks the land to permit future expansion of its Bancroft Street Campus.
Waterfront is a non-profit corporation, approved for tax-exempt status pursuant to Section 501(c)(3), Title 26, U.S. Code, which runs a railway museum on the property sought in this action ("the property" or "the real property"). Waterfront currently provides, or at one time did provide, historic railroad memorabilia for viewing, tours of its equipment, and train rides.
At issue in this motion is whether certain items of personal property owned by Waterfront ("the personalty") are fixtures to be properly included in the valuation of the real property. Unless personal property has attained fixture status, it is not properly included in the property taken by the government and, therefore, is not compensable in an appropriation action. Masheter v. Boehm (1974), 37 Ohio St.2d 68, 72, 66 O.O.2d 183, 185, 307 N.E.2d 533, 537. In this case, the personalty includes several locomotives, rail cars and cabooses, a crane, track and track materials, railroad signs and signals, and various tools, parts and equipment related to Waterfront's museum operation.
Attached to this Opinion and Journal Entry, as the Appendix, is a partial list of the personalty.
II
To succeed on a Civ.R. 56(C) motion for summary judgment, the movant must demonstrate:
"(1) that there is no genuine issue as to any material fact; (2) that the moving party is entitled to judgment as a matter of law; and (3) that reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, who is entitled to have the evidence construed most strongly in his favor." Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 66, 8 O.O.3d 73, 74, 375 N.E.2d 46, 47.
Where the movant has made this tripartite showing, summary judgment is appropriate. Id. A motion for summary judgment may force the nonmoving plaintiff to produce evidence on an issue for which she bears the burden of production at trial. Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St.3d 108, 570 N.E.2d 1095, paragraph three of the syllabus. The moving defendant may shift the burden of production to a nonmoving plaintiff by pointing to an element missing from the plaintiff's claim. Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 526 N.E.2d 798, syllabus.
III
Preliminarily, the court notes that the question of whether an item is a fixture is a mixed question of law and fact. Kim v. Pyrofax Gas Corp. (Feb. 3, 1988), Medina App. No. 1619, unreported, 1988 WL 14050, citing 50 Ohio Jurisprudence 3d (1984) 129, Fixtures, Section 27. As will be discussed below, there are several factors to consider when determining whether an item is a fixture. If no issues of material fact exist regarding these factors, a court may grant summary judgment on the fixture issue. Kim, supra. See, also, Masheter, supra, 37 Ohio St.2d at 77, 66 O.O.2d at 188, 307 N.E.2d at 540. If such issues do exist, however, the finder of fact (in this case the jury) must make factual determinations on the factors, and, then, the court makes a ruling as a matter of law. See Cary v. Bohl (Oct. 28, 1988), Allen App. No. 1-87-5, unreported, 1988 WL 116333; 50 Ohio Jurisprudence 3d, supra, at 129-130; Kim, supra.
"A fixture is an article which was a chattel, but which, by being affixed to the realty, became accessory to it, and parcel of it." Teaff v. Hewitt (1853), 1 Ohio St. 511, paragraph one of the syllabus. The Teaff court articulated three factors to consider when making a determination of whether an item is a fixture. These are: (1) is the item actually annexed to the property or something connected to the real property; (2) is the item put to the use or purpose to which the realty has been dedicated; and (3) did the annexing party intend the item to become a permanent accession to the property. Id. at paragraph two of the syllabus. Courts now view the intent of the party who placed the item on the property to be of most importance in making a "fixture" determination. See Masheter, supra, 37 Ohio St.2d at 74, 66 O.O.2d at 186, 307 N.E.2d at 538. The other two factors, the purpose of the chattel and annexation, are often viewed as indicators of intent. 35 American Jurisprudence 2d (1967) 710, Section 14, Fixtures, citing Teaff, supra.
Once considered a primary factor, physical annexation has become less important than intent and purpose; a chattel may properly be determined a fixture even if it is only slightly attached. Masheter, supra, 37 Ohio St.2d at 73, 66 O.O.2d at 185-186, 307 N.E.2d at 537-538; Holland Furnace Co. v. Trumball S. L. Co. (1939), 135 Ohio St. 48, 13 O.O. 325, 19 N.E.2d 273 (a furnace, though merely sitting on the floor, can be a fixture).
In an appropriation action, when the appropriating authority has announced its intention to take only the real estate, "it will not be required to pay for other annexed property which it does not want and for which it has no need unless fundamental notions of fairness require it to do so." (Emphasis added.) Masheter, supra, 37 Ohio St.2d at 75, 66 O.O.2d at 187, 307 N.E.2d at 539. Thus, a trial court must apply the law of fixtures flexibly to ensure that neither party "enjoy[s] a windfall gain nor suffer[s] unfair deprivation." Id. at 76-77, 66 O.O.2d at 187-188, 307 N.E.2d at 539-540. And, while non-appropriation precedent may be of some guidance on this issue, the results reached in such cases are not "automatically appl[icable]" to appropriation cases. Id. at 73, 66 O.O.2d at 185-186, 307 N.E.2d at 537-538.
The Masheter court set forth six factors to weigh in an appropriation action when determining whether an item is a fixture:
"We reaffirm that such a determination must be made in light of the particular facts of each case, taking into account such facts as [1] the nature of the property; [2] the manner in which it is annexed to the realty; [3] the purpose for which annexation is made; [4] the intention of the annexing party to make the property a part of the realty and dedicate it irrevocably to the realty for a particular use; [5] the degree of difficulty and the extent of any economic loss involved in thereafter removing it from the realty; and [6] the damages to the severed property which removal would cause." Masheter, supra, at 77, 66 O.O.2d at 188, 307 N.E.2d at 540.
Again recalling that the intent of the landowner is given predominance, Masheter, supra, 37 Ohio St.2d at 74, 66 O.O.2d at 186, 307 N.E.2d at 538, and that the factors going into a fixture calculus serve as indicators of such intent, 35 American Jurisprudence 2d, supra, at 710, a review of Masheter's six factors is helpful. Cary, supra.
A. Review of Masheter Factors
1. Nature of Property. There is no dispute that the locomotives and rail cars weigh many tons. See Sheets October 14, 1993 Affid.; the Appendix. Similarly, there is no dispute that these rail pieces are museum pieces, not modern rail fare with practical uses; to be permitted to operate on Conrail lines these pieces must be inspected and made road-worthy. Sheets October 14, 1993 Affid.; Minnich Affid. Other than the fixed historic railroad signals and signs, and laid track, the remainder of the personalty, which is either equipment or unannexed track material, is of a movable nature. See Appendix, Schedules D and E.
2. Manner Affixed. There appears to be no dispute that the rail pieces are on rails and not cemented down, and that some signals and signs are set in the ground. Three to four thousand feet of track are laid and in place, but it is uncertain in what manner this track is affixed to the ground. The remainder of the personalty, which is described in the Appendix, Schedules D and E, is in uncertain locations and in undisclosed degrees of annexation.
3. Purpose of Annexation. There is also no dispute that the purpose behind the placement of the disputed items on the Waterfront land is for museum purposes, i.e., restoration and public viewing. See Sheets October 14, 1993 Affid. The personalty is not intended for commercial freight or passenger use, or any other use off the Waterfront property. Id.
4. Intent of Annexing Party to Make Property Part of Realty. Waterfront's principal, Charles Sheets, testifies that the real property and disputed items are for the museum, which was intended to continue without interruption "for the foreseeable future." Sheets October 14, 1993 Affid. at para. 14.
5. Degree of Difficulty/Cost of Removal. There is no evidence on the cost to connect the Waterfront track to the adjacent Conrail siding; currently there is no such connection. It can be done. Flannery Affid. The plaintiff's expert, Virgil Flannery, testified that all of the rail pieces can be moved. Sheets testified that the cost to truck the large items would be in excess of $100,000; Waterfront's annual income, derived mostly from donations, is $10,000.
For the big pieces to be moved by rail, Conrail's permission would be required. Waterfront's expert, Joseph Minnich, testified that Conrail is often unwilling to allow historic pieces on its lines. In an earlier affidavit, Sheets testified that the cost of inspection and minor repairs necessary to bring the rail pieces up to Conrail standards would exceed $100,000.
6. Damage to Severed Property. Sheets and Minnich testified that the large rail pieces would have to be dismantled in order to truck them out; this in itself involves some damage. These pieces would require torching for disassembly and rewelding for reassembly. The remainder of the personalty, other than the laid track and track materials, and railroad signs and signals attached to the ground, are items of a nature that either are not normally affixed in a permanent way or are not currently annexed (if they are a type that is ordinarily affixed). Appendix, Schedules D and E.
With no direct evidence on the manner in which the standing railroad signs and signals are affixed to the ground, the court cannot conclude that these signs and signals would be damaged significantly by removal.
Although the parties offered testimony regarding what they believe the likelihood to be that Conrail would cooperate with moving the personalty, neither party contacted Conrail regarding the cost and feasibility of using its rails. Intuitively, one would think that removing the rail pieces by rail would cause no damage. Similarly, it is difficult to imagine damage to the smaller pieces of equipment and track material if properly moved by rail.
B. The Plaintiff's Argument
The plaintiff argues that there is no evidence that Waterfront intended to make the personalty a part of the museum realty. In support, the plaintiff relies on the seemingly analogous cases of Zangerle v. Std. Oil Co. (1945), 144 Ohio St. 506, 30 O.O. 151, 60 N.E.2d 52, and Zangerle v. Republic Steel Corp. (1945), 144 Ohio St. 529, 30 O.O. 160, 60 N.E.2d 170, which found that heavy business equipment and machinery, such as huge stamping presses, used in a manufacturing or commercial business context retain their status as personalty. The Standard Oil and Republic Steel court concluded that such pieces are primarily intended for the benefit and furtherance of the business operation and its products rather than the realty. See Standard Oil, supra, at paragraph five of the syllabus; Republic Steel, supra, at paragraph seven of the syllabus. The plaintiff contends that Waterfront's personalty is devoted to Waterfront's ongoing museum enterprise rather than to the realty upon which the enterprise is conducted.
The conclusions reached in Standard Oil and Republic Steel are, however, properly distinguishable. Both cases were property tax cases, not appropriation cases. Each case involved an attempt by the State Auditor to have equipment classified as fixtures so as to increase the value of the business' realty and, thus, to increase the state's property tax receipts. The court in those cases focused on the imputed intent of the landowner as determined by a review of the surrounding circumstances. See Standard Oil, supra, 144 Ohio St. at 518-519, 30 O.O. at 156, 60 N.E.2d at 57-58.
"In arriving at the presumed intention of the owner of the land with reference to permanence with which he annexes a chattel thereto, the court may take into consideration the tax advantage which automatically accrues to him by keeping the chattel as such rather than making it a part of the realty." Id. at 520, 30 O.O. at 157, 60 N.E.2d at 58.
In that case, such a presumed intent required a finding that the heavy machinery remained personalty. Id. at 521, 30 O.O. at 157, 60 N.E.2d at 59.
In this appropriation case, on the other hand, it seems equally proper for the court to presume that Waterfront would intend its personalty to become fixtures if such a result would compensate Waterfront for the otherwise uncompensable loss of its museum due to appropriation of the site by the plaintiff. Without evidence of contrary intent, such a presumption would require a determination by this court that Waterfront intended to make the annexation of the personalty permanent.
C. Conclusions
In the absence of testimony to the contrary, and upon the testimony of Charles Sheets and the presumed intention to avoid the loss of Waterfront's museum operation which would arise from the appropriation, the court finds that Waterfront, in furthering its historical railroad museum, intended to restore and maintain the personalty and to place it on the museum land for public viewing for an indefinite duration. Further, the court finds that the locomotives, cars and cabooses, laid track materials and historic railroad signs and signals (that are affixed to the ground) are of such a large and/or firmly affixed nature that Waterfront intended to have them become a permanent part of the museum's real property. Thus, the court finds that those items are fixtures. Accordingly, the plaintiff's motion shall be denied as to these pieces.
These rail pieces are listed in the Appendix, Schedules A, B, and C.
As to the "Other Equipment, Parts, Tools," listed in Schedule D and the "Track Track Materials" listed in Schedule E (except for the "Rail line in place"), the court finds that most of these items are not fixtures because of their generally portable and/or impermanent nature. Accordingly, the plaintiff will be granted judgment as to these items.
The court is without sufficient information to determine whether the "Overhead wire and hardware," "Fairmont Mowing Car," "Motor Car — Fairmont Model M-19," and "Kary Crane" are either solidly affixed (as to the overhead wire hardware), or are historic rail museum pieces (as to the Fairmont pieces and Kary Crane) rather than items used to maintain the museum pieces or premises. The plaintiff's motion shall be denied as to these pieces as issues of fact preclude judgment in plaintiff's favor.
The plaintiff is entitled to a declaration that the items listed in the Appendix, Schedules D and E of the Appendix (except for "Rail line in place" and those four types of personalty mentioned in footnote 6, supra), are not fixtures. Because Waterfront has not moved for summary judgment on the fixture issue, the court finds that it cannot make a declaration in Waterfront's favor regarding the rail pieces listed in the Appendix, Schedules A, B and C, the "Rail line in place," or the standing signs and signals. See State ex rel. Cuyahoga Cty. Hosp. v. Ohio Bur. of Workers' Comp. (1986), 27 Ohio St.3d 25, 28, 27 OBR 442, 444, 500 N.E.2d 1370, 1373 (Civ.R. 56 does not ordinarily authorize courts to grant summary judgment in favor of the nonmoving party).
The court would look favorably upon such a motion were Waterfront to file one.
JUDGMENT ENTRY
It is ORDERED that the motion of the plaintiff for summary judgment is granted in part and denied in part.
It is therefore DECLARED that the items listed in SCHEDULES D and E except for "Rail line in place" and those four types of personalty listed in footnote 6, of this opinion, are not fixtures.
Judgment accordingly.
APPENDIX
SCHEDULE A — Diesel/Electric Locomotives DESCRIPTION MFG/YEAR RR # 1. Diesel Locomotive Also 1949 # 101 Ton Model S-1 2. Diesel Locomotive G.E. 1949 # 1234 80 Ton 80 Ton 3. Diesel Locomotive G.E. 1949 # 102 44 Tons 44 Ton 4. Locomotive Crane Amer. Hoist # 200 70 Ton 1947 SCHEDULE B — Traction and Trolley Cars/Locomotives DESCRIPTION MFG/YEAR RR # 5. Steel Freight Motor Cinn. Car Co. 640 40 Ton 1930 CALE 6. Steeple Cab Locomotive Baldwin # 403 62 Ton 1915 T.E. 7. Wood Street Sweeper Brill # 124 1924 PTA 8. Elevated Passenger Car Cinn. Car Co. # 4257 1922 CTA 9. Elevated Passenger Car Cinn. Car Co. # 4439 (Restored) 1924 CTA 10 One (1) Set Freight Taylor Trucks Type C-80-P 1928 SCHEDULE C — Freight Cars DESCRIPTION MFG/YEAR RR # 11. Caboose (Wood) Std. Steel Car 90781 (Restored) 1924 HVRR 12. Caboose (Wood) Std. Steel Car 90952 1929 C O 13. Tank Car (10,000 gal) ULTX 52243 1912 ULTX 14. Box Car (Steel) Pressed Steel 9742 Car Co.1930 C O 15. Box Car (Wood) X-23 PRR 1913 499320 PRR 16. Box Car (Wood) X-23 PRR 1913 499389 PRR 17. Box Car (Wood) Std. Car 419217 1910 GTW 18. Flat Car (Steel) Bethlehem Steel 60573 1927 D TS 19. Refrigerator Car Fruit Growers 59166 (Wood) 1924 FGEX SCHEDULE D — Other Equipment, Parts, Tools DESCRIPTION Track tools Overhead wire hardware (14,000 ft.) Transmission wire (14,000 ft.) Electric passenger car parts Freight car trucks — 4 sets Wheels Sets 33" — 7 sets Fairmont Mowing Car Baggage Carts (3) — Toledo Union Terminal Motor Car — Fairmont Model M-19 Larry cars (3) Drill Press Bench Grinder Wood Shaper Radial Arm Saw Brice Industrial Saw Hyster Fork Lift Cutting torches tanks Misc. Tools and equipment SCHEDULE E — Track Track Materials DESCRIPTION Rail line in place (3,089 ft.) Rail — Stored (9,538 Ft.) Cross ties — Stored (1,062 @ $5) OTM — Stored (24.2 tons @ $80/ton) Scrap Steel Junk — 10 tons @ $80/ton