OUTDOOR SYSTEMS ADVERTISING, INC., FOR PUBLICATION
December 3, 1999
Plaintiff-Appellant, 9:05 a.m.
v No.210281
Wayne Circuit Court
JOHN J. KORTH, a/k/a 579 E. LC No.97-707328 CK
JEFFERSON PROPERTIES, INC.,
Defendant-Appellee.
Before: Jansen, P.J., and Saad and Gage, JJ.
SAAD, J.
Plaintiff appeals as of right the trial court’s order
denying, in part, its motion for summary disposition and
granting, in part, summary disposition in favor of defendant. We
affirm in part and reverse in part.
I. FACTS AND PROCEEDINGS
Plaintiff is in the outdoor advertising business. It is the
successor in interest to billboards located on the roof and east
wall of defendant’s building. Plaintiff and its predecessors in
interest have continuously maintained the billboards and related
components since the time the original lease agreements were
executed in 1922 and in 1946.1 Defendant’s predecessors in
interest renewed the lease agreements and eventually entered into
new leases which included the following provision:
All signs, structures, materials and equipment placed
upon the said premises by the Lessee shall always
remain the personal property of and may be removed by
the Lessee any time prior to or within a reasonable
time after the expiration of the term hereof or any
extension thereof.
In October 1996, defendant became the new owner of the
building where plaintiff’s signs are located. On January 17,
1997, defendant wrote to plaintiff and stated that his ownership
of the building included ownership of the billboards. Defendant
also demanded that the advertisements, or panel boards, attached
to the billboard structures be removed by February 1, 1997.
Plaintiff thereafter provided defendant with copies of its lease
agreements and with copies of canceled rent checks, but defendant
continued to assert ownership over the billboards.
To preserve its interest in the billboards, plaintiff
brought this action on the ground that defendant sought to
wrongfully evict plaintiff. Plaintiff also styled its action as
one for claim and delivery. In response, defendant averred that
the original lease agreements “manifested an intention that any
structures placed on the property were to become permanent
fixtures simulated to the real estate and annexed thereto.” Both
parties moved for summary disposition.2 The trial court
partially granted summary disposition to plaintiff by ruling that
the panel boards (a component of the billboards) were plaintiff’s
personal property. However, the trial court partially granted
summary disposition to defendant by ruling that the billboard
structures themselves were part of defendant’s realty.
Apparently, the trial court’s decision was based on evidence that
though the panel boards could be removed, the billboard
structures either could not be removed or removed only with great
difficulty. Plaintiff now appeals.
II. ANALYSIS
This Court reviews decisions on motions for summary
disposition de novo. Spiek v Dep’t of Transportation, 456 Mich
331, 337; 572 NW2d 201 (1998). Motions under MCR 2.116(C)(10)
test the factual support of the plaintiff’s claim. Id. The
court considers the affidavits, pleadings, depositions,
admissions, and other evidence submitted to determine whether a
genuine issue of any material fact exists to warrant a trial.
Id. Both this Court and the trial court must resolve all
reasonable inferences in the nonmoving party’s favor. Bertrand v
Allan Ford, Inc., 449 Mich 606, 618; 537 NW2d 185 (1995).
Plaintiff maintains that the billboards were trade fixtures,
and therefore plaintiff’s personal property as a matter of law.
We agree. This Court has defined “trade fixtures” as follows:
A trade fixture is merely a fixture which has been
annexed to leased realty by a lessee for the purpose of
enabling him to engage in a business. The trade
fixture doctrine permits the lessee, upon the
termination of the lease, to remove such a fixture from
the lessor's real property. [Michigan National Bank,
Lansing v Lansing, 96 Mich App 551, 555; 293 NW2d 626
(1980), aff’d 414 Mich 851 (1982).]
A trade fixture is considered to be the personal property of the
lessee. Wentworth v Process Installations, Inc, 122 Mich App
452, 465; 333 NW2d 78 (1983). A chattel is a trade fixture if
devoted to a trade purpose, regardless of its form or size. Id.;
See also Waverly Park Amusement Co v Michigan United Traction Co,
197 Mich 92; 163 NW 917 (1917). The question if a given object
is a trade fixture is a mixed question of law and fact, which we
review de novo on appeal as issues of law. 35 Am Jur 2d Trade
Fixtures § 40 (1967); Johnson v Harnischfeger Corp, 414 Mich 102,
121; 323 NW2d 912 (1982).
The Supreme Court long ago addressed the policy behind
allowing a tenant to remove trade fixtures installed in
furtherance of the tenant’s business:
The right of the tenant to remove the erections
made by him in furtherance of the purpose for which the
premises were leased is one founded upon public policy
and has its foundation in the interest which society
has that every person shall be encouraged to make the
most beneficial use of his property the circumstances
will admit of.
* * *
The reason property of this kind is personal,
rather than real, is based upon the rule the law
implies [that the parties made] an agreement that it
shall remain personal property from the fact the lessor
contributes nothing thereto and should not be enriched
at the expense of his tenant when it was placed upon
the real estate of the landlord with his consent.
There is no unity of title between the owner of the
land and the owner of the structures, and the buildings
were not erected as permanent improvements to the real
estate, but to aid the lessee or licensee in the use of
his interest in the premises. [Cameron v Oakland Co
Gas & Oil Co, 277 Mich 442, 452; 269 NW 227 (1936).]
In Wentworth, supra at 467, this Court held that “trade
fixtures remain the personal property of the lessee as long as
the lessee remains in legitimate possession of the property
unless: 1) it is expressed or clearly implied in a second lease,
executed after the term in which the fixtures were erected, that
the fixtures belong to the leasehold, or 2) such a fundamental
change in the nature of the tenancy has occurred that it would
not unjustly enrich the lessor to include the fixtures as a
permanent part of his real property.”
Here, plaintiff presented evidence that the billboards were
erected by the original lessee and that there was continuous
possession by its predecessors in interest without any period of
abandonment. Defendant presented no competent evidence in
rebuttal. Furthermore, defendant does not argue that the lease
entitled defendant to keep plaintiff’s trade fixtures at the
expiration of the lease. Rather, defendant contends that the
billboards are not trade fixtures as a matter of law.
In In re Acquisition of Billboard Leases and Easements, 205
Mich App 659, 661-662; 517 NW2d 872 (1994), involving just
compensation for a local government’s eminent domain taking of
certain leaseholds that included billboards, this Court noted
that there was “no dispute that all the billboards in question
are trade fixtures.” Id., 661-662. However, this statement does
not settle the issue before us. It appears that the parties
there did not dispute the issue, obviating the need for the Court
to decide the issue as a matter of law. Lacking Michigan case
law on this matter, we consider how our sister states have
resolved the issue.
We found several cases which addressed this issue. In each
case, the court had to decide if a billboard was personal or real
property for purposes of determining just compensation in
condemnation proceedings. In Rite Media, Inc v Secretary of
Massachusetts Highway Department, 429 Mass 814; 712 NE2d 60
(1999), the Court held that a billboard was a trade fixture, and
therefore personal property for eminent domain purposes. The
court concluded that because the owner had the right to remove
the billboard, the billboard had not been taken by eminent
domain. Id., 817. Likewise, in State Commissioner, Dep’t of
Transportation v Teasley, 913 SW2d 175 (Tenn App 1995), the Court
held that the billboard in question was a trade fixture, and
therefore not compensable in eminent domain. Id., 177-178.
In Lamar Corp v State Highway Comm’n, 684 So2d 601 (Miss
1996), contrary to Rite Media and Teasley, the Court held that
billboards were realty for purposes of eminent domain, and that
the owner was entitled to just compensation. Id., 604. However,
the Court’s remarks in dicta firmly support the conclusion that
the billboards at issue here should be treated as trade fixtures:
the property here involved does not become “personal
property” [for eminent domain purposes] . . . simply
because it may be classified as a “trade fixture” and
therefore treated as personal property for ownership
purposes as between lessor and lessee. [Id.]
Thus, while the Lamar court declined to hold that billboards were
non-compensable personal property in eminent domain cases, it
expressly commented that billboards are trade fixtures for
purposes of establishing ownership between lessor and lessee.
The case In re Condemnation by the Commonwealth of
Pennsylvania, Department of Transportation, of Right of Way for
State Route 0060, Section A01, 720 A2d 154 (Commonwealth Pa,
1998) presented the trade fixture/personalty/realty issue in a
slightly different context. Although the parties acknowledged
that the billboard owner was entitled to compensation for the
taking, they disputed whether the owner of condemned billboards
should be compensated according to the “sales comparison
approach” used for valuation of realty, or the “reproduction cost
less depreciation” approach used for personalty. Id., 156. The
Court held that that the billboards were trade fixtures, and
should therefore be valued as personalty. Id., 158.
In sum, the jurisdictions which have specifically addressed
the question--are billboards trade fixtures--clearly hold that
billboards are trade fixtures. The majority have drawn this
conclusion in the context of eminent domain cases; even the
minority jurisdiction has stated that billboards are trade
fixtures in the context of lessor-lessee relations. We join
these states in holding that billboards are properly
characterized as trade fixtures and personal property rather than
as realty.
Defendant erroneously argues that the billboards cannot be
trade fixtures because they were large and could only be removed
with a crane. The cases defendant cites all involve non-trade
fixtures.3 This Court has held that form and size are not
determinative of whether a chattel is a trade fixture.
Wentworth, supra at 465. “Whatever is affixed to the land by the
lessee for the purpose of trade, whether it be made of brick or
wood, is removable at the end of the term. Indeed, it is
difficult to conceive that any fixture, however solid, permanent,
and closely attached to the realty, placed there for the sole
purpose of trade, may not be removed at the end of the term.”
Cameron, supra at 459-460, quoting Wiggins Ferry Co v Ohio & M Ry
Co, 142 US 396; 12 S Ct 188; 35 L Ed 1055 (1892).
The documentary evidence established plaintiff’s ownership
of the billboards and the billboard structures. Therefore, we
find that plaintiff owned the billboards, that the billboards
were trade fixtures and, consequently, were the personal property
of plaintiff subject to removal by plaintiff in accordance with
the terms of the billboard lease agreements. We affirm that
portion of the trial court’s decision ruling that plaintiff owned
and could remove the billboard panels. We reverse that portion
of the trial court’s decision ruling that the billboard
structures were permanently attached to the building and could
not be removed by plaintiff.
Affirmed in part and reversed in part.
/s/ Henry William Saad
/s/ Kathleen Jansen
/s/ Hilda R. Gage
_______________________________
1 Plaintiff is successor in interest to four outdoor advertising
companies: Walker & Co., Naegle Outdoor Advertising Co., Inc.,
Eller Outdoor Advertising Co. of Michigan, and Gannett Outdoor
Co. of Michigan. In 1922, Walker entered into a lease agreement
with defendant’s predecessor in interest, A.E. Hashburn, for the
east wall of 579 East Jefferson Avenue. In 1946, Walker entered
into a lease agreement with defendant’s predecessor in interest,
Minnie Assaro, for the roof of 579 East Jefferson Avenue.
2 Plaintiff moved for summary disposition under MCR 2.116(C)(10),
but defendant’s cross-motion was brought under MCR 2.116(C)(8)
and (C)(10). The trial court did not specify under which subrule
it was granting or denying summary disposition. However, because
it appears that the court went beyond the pleadings in making its
determination, this Court should consider the motion granted or
denied pursuant to MCR 2.116(C)(10). Swan v Wedgwood Christian
Youth and Family Services, Inc, 230 Mich App 190, 194; 583 NW2d
719 (1998).
3 One case defendant cites, Michigan National Bank, Lansing v
City of Lansing, 96 Mich App 551; 293 NW2d 626 (1980),
acknowledged the exception for trade fixtures, but held that it
did not apply in the particular facts of that case.
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