First Trust & Savings Bank of Moville v. Guthridge
445 N.W.2d 401, 1989 Iowa App. LEXIS 118, 9 U.C.C. Rep. Serv. 2d (West) 1380 (1989)
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Rule of Law:
An item of personal property attached to real estate does not become a fixture if the intent of the party who annexed it, as evidenced by their actions, was for the item to remain personal property.
Facts:
- Bernice Guthridge held a life estate in a farm, while her son, Larry Guthridge, held the remainder interest.
- Larry farmed the land as Bernice's tenant and placed forty heavy, concrete feed bunks on the property for his livestock business.
- The bunks were set on concrete blocks and connected by a steel cable running through them to wooden posts at each end.
- In 1985, Larry conveyed his remainder interest in the farm to Bernice by quit claim deed in satisfaction of two years of unpaid rent, making Bernice the full owner.
- In 1988, while continuing to farm the land as a tenant, Larry gave First Trust and Savings Bank a security interest in the feed bunks to secure a loan.
Procedural Posture:
- First Trust and Savings Bank of Moville filed a replevin action against Bernice Guthridge in an Iowa trial court to gain possession of the feed bunks.
- The trial court ruled in favor of the Bank, finding that the bunks were personal property.
- Bernice Guthridge, as appellant, appealed the trial court's order to the Court of Appeals of Iowa. First Trust and Savings Bank is the appellee.
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Issue:
Do large feed bunks placed on farmland by a tenant become fixtures that pass with the real estate, or do they remain personal property when the tenant later uses them as collateral for a loan?
Opinions:
Majority - Sackett, J.
No. The feed bunks remained personal property and did not become fixtures. The court determines whether personal property becomes a fixture by applying a three-part test focusing on annexation, use, and intent, with intent being the most important factor. Here, Larry Guthridge's action of giving a security interest in the bunks to the bank is strong evidence that he intended for them to remain his personal property. This conclusion is further supported by the fact that he was a tenant when he granted the security interest, as tenants' improvements are less likely to be considered fixtures, and the physical attachment via an 'easily removable steel cable' was slight. The bunks' use was also more tied to Larry's specific livestock business than to the farm itself.
Dissenting - Donielson, J.
Yes. The feed bunks became fixtures that passed with the real estate. The majority misapplied the controlling legal test. Any physical attachment, however slight, makes an item prima facie realty, shifting the burden to the bank to prove it was personalty. The bunk's use as an integral part of the farm's cattle feeding and containment system, confined to that specific farm, demonstrated an intent to make them a permanent part of the realty. Inferring intent from the security agreement is improper, as the Uniform Commercial Code provides a specific method (a 'fixture filing') for securing loans with fixtures, meaning the act of getting a loan does not prove the item is personal property. Furthermore, Larry was not a 'mere tenant' but the son of the owner and a former holder of the remainder interest, weakening the presumption against fixtures.
Analysis:
This case reaffirms the paramount importance of the annexor's intent in fixture analysis under Iowa common law. The court's decision illustrates that subsequent actions, such as pledging an item as collateral for a personal property loan, can serve as powerful evidence of an original intent for the item to remain personalty. This ruling provides clarity for creditors, showing that the nature of a security agreement can influence a court's characterization of the collateral itself. The dissent highlights a key tension, arguing that relying on the type of security agreement ignores the specific UCC provisions designed to handle security interests in fixtures.
