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COURT OF APPEALS DECISION DATED AND RELEASED MARCH 25, 1997 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-2503
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
DAVID KOSMO,
Plaintiff-Appellant,
v.
STATE OF WISCONSIN
DEPARTMENT OF
TRANSPORTATION
and EAU CLAIRE AREA
SCHOOL DISTRICT, a
quasi-municipal
corporation of the
State of Wisconsin,
Defendants,
CITY OF EAU CLAIRE,
a municipal
corporation of
the State of Wisconsin,
Defendant-Respondent.
APPEAL from a judgment
of the circuit court for Eau Claire County:
GREGORY A. PETERSON, Judge. Reversed
and cause remanded with directions.
Before Cane, P.J.,
LaRocque and Madden, JJ.
PER CURIAM. David Kosmo appeals a summary judgment in
favor of the City of Eau Claire in the sum of $9,600 representing the City's
cost of razing a concrete block warehouse after it terminated Kosmo's
tenancy.
The City argues that (1)
the warehouse is personal property to be removed by the tenant under §
704.05(5), Stats.; (2) Kosmo is
bound by judicial admissions of ownership; (3) the Department of Transportation's
limited rights of acquisition under § 85.09(2), Stats., preclude it from acquiring and conveying the building
through condemnation proceedings; and (4) Kosmo unlawfully "held
over" entitling the City to damages.
We reject these arguments, reverse the judgment and remand with
directions to enter summary judgment in favor of Kosmo.
The material facts are
undisputed and are derived from the pleadings and affidavits of record. Kosmo initially filed an action against the
Department of Transportation, the Eau Claire School District and the City of
Eau Claire, seeking a declaratory judgment that he is entitled to relocation
benefits under §§ 32.19 and § 32.195, Stats.,
from the DOT and the school district, and claiming inverse condemnation.
Kosmo alleged that
beginning in 1977, his business, a commercial warehouse, occupied real estate
in Eau Claire pursuant to an indefinite term lease with a railroad
company. The warehouse consisted of a
building constructed by the railroad and extensions to the building by various
tenants. Kosmo alleged that in 1984,
the DOT exercised its power of eminent domain and acquired ownership of the
property. In 1985, the DOT deeded the
property to the City of Eau Claire, which leased the property to Kosmo for a
period of time before terminating his tenancy. After Kosmo vacated, the City
razed the building and sought compensation from Kosmo for the $9,600 it
incurred razing the building.
The trial court
dismissed Kosmo's claims against the DOT and the school district.[1] Kosmo stipulated to a voluntary dismissal of
his claim against the City. The City
filed a counterclaim alleging that Kosmo was a tenant under a lease with the
City for an initial term of one year, which was extended through the end of
1993. On February 2, 1993, the City
notified Kosmo in writing that the lease would not be renewed after 1993 and
that he would have until January 31, 1994, "to remove all personal property,
including his building, from the leased premises, and that if the property were
not removed by January 31, 1994, the City would have the right to remove the
building at [Kosmo's] expense."
The City does not dispute that Kosmo vacated the warehouse. Nonetheless, its counterclaim alleges that
he failed to remove his building from the leased premises and that the City
incurred $9,600 in damages in order to have it removed.
Kosmo answered the
counterclaim, admitted that the City sent him notification as alleged, but
denied "that said lease imposed any obligation on [Kosmo] to remove
[Kosmo's] building from the leased premises." Kosmo also affirmatively alleged that the City was acting as
condemnor, rather than landlord, to displace him from the real estate.
The lease described the
property as follows: "Parcel No. 7-425, former Milwaukee Road
Right-of-Way. The premises leased
hereby shall be used solely by the Lessee for warehousing purposes." The lease further provides that the lessee
shall be responsible for all maintenance and upkeep on the leased premises,
payment for all taxes, utility bills and bills for all other services, and
"obtain and maintain in force insurance coverage providing fire and
extended coverage on all improvements on the leased premises." It does not provide for removal of the
building at the end of the lease term.
In its motion for
summary judgment, the City relied on § 704.05(5)(a)2, Stats., that provides if a tenant removes from the premises
and leaves "personal property," the landlord may, after giving
notice, dispose of the property by appropriate means. It also relied on
"Chattels owned by the tenant that are left on the leased property
when the tenant leaves may interfere with the landlord's full use of the leased
property. He can recover from the
tenant the cost of removing such chattels ...." Restatement (Second) of
Property § 12.3 cmt. l at 473 (1977).
The trial court granted
the City summary judgment for $9,600 on its counterclaim for expenses incurred
razing the commercial warehouse. It
adopted the City's position that the warehouse was personal property and that
unless Kosmo removed it from the premises, the City, as landlord, was entitled
to damages for the costs associated with removing it. Kosmo appeals the summary judgment.
We review a summary
judgment de novo by applying the standards in § 802.08, Stats., in the same manner as the trial court. Brownelli v. McCaughtry, 182
Wis.2d 367, 372, 514 N.W.2d 48, 49 (Ct. App. 1994). Summary judgment is appropriate when material facts are
undisputed and when inferences that may be reasonably drawn from the facts are
not doubtful and lead only to one conclusion.
Green Spring Farms v. Kersten, 136 Wis.2d 304, 314-15, 401
N.W.2d 816, 820 (1987).
1. WHETHER THE WAREHOUSE BUILDING IS PERSONALTY
Kosmo argues the trial
court erroneously concluded as a matter of law that the warehouse was personal
property that he had an obligation to remove under § 704.05, Stats. We agree. In Premonstratensian Fathers v. Badger
Mut. Ins. Co., 46 Wis.2d 362, 367, 175 N.W.2d 237, 239-40 (1970), our
supreme court stated:
Whether
articles of personal property are fixtures, i.e. real estate, is determined
in this state, if not generally, by the following rules or tests: (1) Actual physical annexation to the real
estate; (2) application or adaption to the use or purpose to which the realty
is devoted; and (3) an intention on the part of the person making the
annexation to make a permanent accession to the freehold.
"Although
the application of this test is normally a question of fact, it becomes a
question of law when only one reasonable conclusion may be drawn from the
evidence." DOR v. A.O. Smith
Harvestore Prods., 72 Wis.2d 60, 68, 240 N.W.2d 357, 360 (1976). Here, the only reasonable conclusion that
may be drawn from the evidence is that the warehouse is not personal property,
but rather a fixture.
The record discloses
that the warehouse consisted of an old engine house owned by the Milwaukee Road
and additions made by tenants up to the mid 1960s. The structures were of a concrete block construction, with
concrete block walls and concrete floors. Total square footage indicated is
approximately 2,794. It is undisputed
that the building was annexed to the land.
However, in Wisconsin, physical
annexation is a factor of relative unimportance. Id. at 67-69, 240 N.W.2d at
360-61.
Adaptation refers to the
relationship between the chattel and the use made of the realty to which the
chattel is annexed. The record
indicates that the original building was used at some point by the railroad as
an engine house. Later the building and
improvements were used as a warehouse.
The building was adapted to the land.
Next, "[t]his court
has repeatedly held that intent is the primary determinant of whether a certain
piece of property has become a fixture.
The relevant intent is that of the party making the annexation." Premonstratensian Fathers, 46
Wis.2d at 371, 175 N.W.2d at 242 (emphasis added; footnote omitted). "This intention is 'not the actual
subjective intent of the landowner making the annexation, but an objective and
presumed intention of that hypothetical ordinary reasonable person, to be
ascertained in the light of the nature of the article, the degree of
annexation, and the appropriateness of the article to the use to which the
realty is put.'" A.O. Smith Harvestore, 72 Wis.2d at 69, 240
N.W.2d at 361. Also, "where the
property is placed upon a foundation particularly prepared for it, the factor
of adaptation is manifest and the intent to make a permanent annexation is
almost certain." Id.
The record discloses the
building was affixed to a concrete foundation and the walls were of concrete
block. The "size, weight and cost
of moving are certainly relevant to the issue of intention." Id.
at 69-70, 240 N.W.2d at 361. The
record shows that it cost $9,600 to raze the building. All of these factors point unequivocally to
the intended permanency of the structure.
The only reasonable inference to be drawn from the construction of the
concrete block warehouse is that it was intended to be a permanent accession to
the realty.
For that reason, the
City's affidavit that it never regarded itself as the owner of the property is
not probative of the intent of the annexor.
Further, any suggested implications of ownership in the lease between
the City and Kosmo are not probative of the intent of the annexor.
The City argues that the
tax assessor's affidavit that the warehouse was taxed as Kosmo's personal
property renders the warehouse personal property. We have rejected a similar argument in Vivid, Inc. v.
Fiedler, 174 Wis.2d 142, 155, 497 N.W.2d 153, 158-59 (Ct. App. 1993), aff'd
as modified, 182 Wis.2d 71, 512 N.W.2d 771 (1994): "Taxing officials may treat fixtures as
personal property in order to assess the property to the person beneficially
entitled thereto." Id. The intent of the taxing official is not the
intent of the person annexing the property.
Because material facts
are undisputed, and the inferences lead only to the reasonable conclusion that
the concrete block warehouse is not personal property, but rather a fixture
under the Premonstratensian Fathers test, we conclude as a matter
of law that § 704.05(5), Stats.,
providing for the disposition of the personalty left by a tenant has no bearing
on the case before us.
Section 704.05(4), Stats., entitled "Tenant's Fixtures" provides that
at the termination of a tenancy, "the tenant may remove any fixtures
installed by the tenant if the tenant either restores the premises to their
condition prior to the installation or pays to the landlord the cost of such
restoration." Here, the fixtures
were installed not by Kosmo, but by earlier tenants. In any event, the section does not impose any obligation on Kosmo
to remove his fixtures. A landlord may
not impose liability for a tenant's failure to remove fixtures absent a lease
agreement to that effect. See Bence
v. Spinato, 196 Wis.2d 398, 403, 538 N.W.2d 614, 615 (Ct. App.
1995).
2. JUDICIAL ADMISSION OF OWNERSHIP
The City argues that
Kosmo is bound by a judicial admission in his claim for relocation benefits
that the building was his property and therefore responsible for the expense of
razing the building. We disagree. In his complaint, Kosmo stated that he
acquired a property right described as "ownership of the building which
the Railroad had constructed on the property" and "ownership of
extensions of the original Railroad building which had been constructed on the
property by previous tenants."
Ownership of fixtures
does not impose any duty on Kosmo to remove them for the benefit of the
City. First, no lease agreement
requires the removal of fixtures.
Second, although fixtures may be removable at the option of the tenant, see
§ 704.05(4), Stats., this
rule is for the protection of the tenant and cannot be invoked by the landlord
absent a lease agreement requiring removal.
See Bence, 196 Wis.2d at 410-11, 538 N.W.2d at 618.
In Bence,
a landlord sought damages from its former tenant for the removal of underground
storage tanks and sludge tank. We
stated:
Trade fixtures ordinarily belong to the
lessee and are removable by the tenant at the expiration of the lease
term. ...
However,
if a lessee fails to remove the trade fixtures within a reasonable time after
the termination of the agreement, it is presumed under common law that the
tenant has abandoned them and the fixtures become part of the realty owned by
the lessor.
Id. at
410, 538 N.W.2d at 617-18 (citation omitted).
We upheld the trial court's denial of the landlord's claim.
Here, there is no
dispute Kosmo abandoned the warehouse after the lease was terminated. The City's proofs contain numerous letters
and notices to Kosmo advising him to remove his property, including buildings,
at the termination of the tenancy.
Kosmo vacated the premises, and did not remove the building the City
later razed. We conclude that Kosmo's
assertions of ownership in the warehouse building fail to demonstrate liability
for its removal after the termination of the tenancy.
Also, we are unpersuaded
that Kosmo's statements in his claims for relocation benefits are judicial
admissions in the sense that they are binding on the issue before us. Statements of ownership are mixed questions
of fact and law. The binding effect of
judicial admissions, however, "is limited to statements or admissions as
to matters of fact. Statements or
admissions relative to questions of law are not admissible ...." Fletcher v. Eagle River Mem'l Hosp.,
156 Wis.2d 165, 179, 456 N.W.2d 788, 795 (1990). "Moreover, they must be germane to and pertinent to the very
issue for which the court wishes to make use of the admissions." Id. at 174, 456 N.W.2d at
793. We conclude that Kosmo's
assertions of ownership in fixtures for the purpose of claiming relocation
benefits from the DOT do not in any way bind him to remove the essentially
immovable warehouse. In any event, even
if Kosmo owned the building during the lease, upon termination of the lease,
the building as an abandoned fixture became "part of the realty"
owned by the City as landlord. Bence,
196 Wis.2d at 410, 538 N.W.2d at 618.
3.
DOT'S AUTHORITY UNDER § 85.09, Stats.
Next, the City argues
that according to § 85.09(4), Stats.,
the DOT can convey only "railroad property" it has previously
acquired, defined as "all fixed property, real or personal, used in
operating a railroad." Section
85.01(3), Stats. It argues that because Kosmo's warehouse was
not used in operating a railroad, the DOT could not acquire it and convey it to
the City.
We conclude that the
issue of DOT's ownership of the tenant's fixtures has no bearing on the
question before us. Under Bence,
if the tenant fails to remove the fixtures within a reasonable time after the
termination of his tenancy, "it is presumed under common law that the
tenant has abandoned them and the fixtures become part of the realty owned by
the lessor." Id. at
410, 538 N.W.2d at 618. Because the
fixtures were abandoned at the termination of Kosmo's tenancy and became part
of the realty at that point in time, it is irrelevant whether the DOT had
authority to acquire them earlier.
4. HOLDING OVER
Finally, the City
argues: "By continuing to permit his building to occupy city property,
Kosmo remained in possession of the leased premises." It contends that the cost of razing the
building constitutes damages recoverable under § 704.23, § 704.25(1) and §
704.27, Stats., providing for
damages for "holding over." We
disagree. The City points to no
evidence that Kosmo did not vacate the warehouse as required. Failure to remove fixtures in absence of a
lease requirement does not constitute "holding over." See Bence, 196 Wis.2d
at 410, 538 N.W.2d at 618.
Based upon the
undisputed facts of record, the City has failed to make any showing that Kosmo
bears responsibility for the costs of razing the warehouse. We therefore reverse the judgment and remand
with directions to enter summary judgment dismissing the City's counterclaim. Cf. § 802.08(6), Stats. ("If it shall appear to the
court that the party against whom a motion for summary judgment is asserted is
entitled to a summary judgment, the summary judgment may be awarded to such
party even though the party has not moved therefor.").
By the Court.—Judgment
reversed and cause remanded with directions.
This opinion will not be
published. Rule 809.23(1)(b)5, Stats.