Title: Wyoming State Farm Loan Bd. v. Farm Credit System Capital Corp.,

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Wyoming State Farm Loan Bd. v. Farm Credit System Capital Corp.,1988 WY 94759 P.2d 1230Case Number: 87-173Decided: 07/21/1988Supreme Court of Wyoming

 WYOMING STATE FARM LOAN BOARD, AN AGENCY OF THE STATE OF 
WYOMING, 
APPELLANT (DEFENDANT), JAMES R. RUMERY AND SHARON L. RUMERY, HUSBAND AND WIFE, A 
& I EQUIPMENT, FIRST INTERSTATE BANK, AND LOUISE RUMERY 
(DEFENDANTS),

 

v.

FARM CREDIT SYSTEM 
CAPITAL CORPORATION, APPELLEE (PLAINTIFF).

Appeal from the District 
Court, FremontCounty, Elizabeth A. Kail, 
J.

Joseph B. Meyer, 
Atty. Gen., Clinton D. Beaver, Asst. Atty. Gen., Cheyenne, for appellant 
(defendant).

Les Bowron of 
Donald R. Winship & Associates, P.C., Casper, for appellee 
(plaintiff).

Before CARDINE, C.J., THOMAS, URBIGKIT and MACY, 
JJ., and BROWN, J. (Retired).

BROWN, Justice.1

1 Chief Justice, Retired, 
June 30, 1988.

[¶1.]     Appellant Wyoming Farm 
Loan Board (Board) challenges an order granting partial summary judgment in 
favor of appellee Farm Credit System Capital Corporation (FCSCC). The trial 
court found that certain gated plastic irrigation pipe was not a fixture to the 
debtor's real property, and found FCSCC owned the pipe. FCSCC's interest in the 
pipe is based on both an "after acquired property" clause in a 1969 security 
interest in farm and ranch equipment that was perfected and properly continued, 
and a 1985 security interest in the pipe that attached, but does not appear to 
have been perfected. The Board's interest in the pipe is said to arise from 
language in a real estate mortgage covering the pipe as a fixture to the real 
property it irrigated. The Board frames its sole issue as:

"Has the gated pipe 
irrigation system in question become a fixture by virtue of its installation and 
use?"

[¶2.]     We 
affirm.

THE 
PIPE

[¶3.]     The gated pipe involved 
in this dispute is plastic pipe with gates, or windows on one side that can be 
opened to regulate water flow onto a field. This pipe comes in lengths of twenty 
or thirty feet and diameters of six, eight and ten inches. A farmer or rancher 
uses the pipe by moving the needed lengths to the field on a special trailer, 
and laying them out end-to-end in the proper location. The pipe is then 
connected to riser pipes that are permanently attached to water lines buried 
underground. While the installation of the water mainline and the riser pipes 
clearly involves substantial earthwork, the gated pipe is specifically designed 
to be light-weight and portable for use in more than one field. A farmer or 
rancher using this system needs the gated pipe to irrigate. However, any farmer 
or rancher with a riser pipe connection could attach the gated pipe and irrigate 
his field with it. The pipe remains above ground at all times, and it is stored 
away from the field when not in use. One of FCSCC's affidavits in support of the 
motion for summary judgment suggests that the Rumerys' gated pipe was not always 
stored on their property. One of the Board's affiants states that the pipe is 
worth about $11,310.

THE 
TRANSACTIONS

[¶4.]     FCSCC is the present 
owner of all right, title and interest in two security agreements, executed in 
1969 and 1985, between its predecessor in interest, the Wyoming Production 
Credit Association (WPCA) and James and Sharon Rumery.2 The 1969 security agreement is evidenced in the 
record by a financing statement filed by WPCA on December 24, 1969, perfecting a 
security interest in "All of the Debtor's farm and ranch machinery and 
equipment."3 This security interest remains 
valid today as a result of continuation statements filed in 1974, 1979 and 1984. 
Perfected security interests in other specific farm and ranch equipment, not 
involved in this case, were executed on June 20, 1979, and May 20, 
1983.

[¶5.]     In March 1985, the 
Rumerys borrowed $379,400 from WPCA, securing the debt with feed, hay, grain, 
other crops and "Any and all machinery and equipment * * *" they owned. The 
March 4, 1985, security agreement included an appendix listing specific farm and 
ranch equipment considered collateral under the agreement. The gated pipe is on 
that list. The agreement also contains a dragnet and future-advance clause. On 
October 12, 1985, the Rumerys received an additional loan of $10,000 from WPCA 
secured as a future advance under the 1985 security agreement. The record does 
not show that this latter security agreement has ever been 
perfected.

[¶6.]     The Board's lien on the 
pipe is said to arise out of a mortgage on the real property owned by the 
Rumerys. On January 24, 1978, the Board loaned the Rumerys $87,000 to purchase 
and install an irrigation system on their property. That purchase included the 
gated pipe. The Board secured the debt on the loan by filing an "Irrigation Loan 
Mortgage" on the real property irrigated by the new system. This mortgage was 
recorded in the Fremont County Book of Deeds on January 24, 1978. The Board 
never filed on the pipe under the Uniform Commercial Code 
(U.C.C.)

[¶7.]     On July 9, 1982, the 
Board loaned the Rumerys $143,000 to pay off the balance on the $87,000 Board 
loan and mortgage, and, to refinance some of their debt to WPCA. This loan was 
also secured by an Irrigation Loan Mortgage on the real property irrigated by 
the system. The mortgage includes the irrigated real 
property,

"* * * together with all 
buildings and improvements thereon and all other privileges, hereditaments, and 
appurtenances belonging unto said land or in any way thereto appertaining, and 
including all water and water rights, adjudicated or unadjudicated, stored, used 
upon, or appropriated for the above-described lands together with all irrigation 
reservoirs, ditches, laterals, canals, flumes, aqueducts and syphons complete, 
or any interest therein regardless of how owned or represented * * * with rights 
of way therefor, also all other irrigation works, drainage systems, artesian 
wells and water flowing therefrom, windmills and all other property and property 
rights of every kind and character, real and personal, pertaining to or used in 
connection with the irrigation and drainage of the lands mortgaged herein, or 
which may be appurtenant to said lands, whether owned by the MORTGAGOR at the 
date of this mortgage or hereinafter in any manner acquired by the MORTGAGOR 
during the life or term of this mortgage; it being understood that when the word 
"premises" is hereafter used it covers all property of every kind and character 
contained in this paragraph."

Again, the 
mortgage was recorded in the countyBook of Deeds, and there was no U.C.C. 
filing.

[¶8.]     By 1986 the Rumerys 
were in default on the two WPCA loans. FCSCC filed an action seeking foreclosure 
on certain mortgage deeds that had been executed between WPCA and the Rumerys as 
additional security for the loans, and seeking disposition of the collateral 
listed in the 1969 and 1985 security agreements on May 21, 1986. FCSCC later 
amended its complaint to include the Board as a defendant. The Board answered on 
October 7, 1986, asserting a superior lien in the pipe under the July 9, 1982, 
Irrigation Loan Mortgage.

[¶9.]     FCSCC moved for partial 
summary judgment on January 5, 1987. The Board responded, asserting that the 
gated pipe had become a fixture on the irrigated land and was covered by the 
real estate mortgage. On May 14, 1987, the trial court entered partial summary 
judgment favoring FCSCC. Final judgment was entered on May 27, 1987, and this 
appeal followed.

FCSCC SECURITY INTERESTS 
AND FIXTURE FILING REQUIREMENTS

[¶10.]  The Board, in its brief, has not set 
forth any explanation for the legal significance of its issue. We will discuss 
this briefly.

[¶11.]  FCSCC relies primarily on its perfected 
1969 security interest in after-acquired farm and ranch equipment. That interest 
was created when WPCA and the Rumerys executed a valid security agreement 
containing a general description of relevant collateral as after acquired farm 
and ranch machinery and equipment.4 See §§ 
34-21-920, W.S. 1977; 34-21-922, W.S. 1977 (Cum. Supp. 1987); 34-21-923(a)(b), 
W.S. 1977, (Cum.Supp. 1987); and Landen v. Production Credit Association of the 
Midlands, Wyo., 737 P.2d 1325, 1328-1330 (1987). The 
interest was properly perfected under §§ 34-21-931 and 34-21-951, W.S. 1977 
(Cum.Supp. 1987), when WPCA filed a general financing statement showing a 
security interest in "* * * [a]ll of the Debtor's farm and ranch machinery and 
equipment * * *." Under our recent holding in Landen v. Production Credit 
Association of the Midlands, supra, this financing statement was sufficient 
notice to a subsequent lender that a security interest in after acquired 
equipment existed.

[¶12.]  The existence of perfected security 
interest in after-acquired property provides the legal basis for the Board's 
issue. If the pipe has become a fixture on the irrigated real property, FCSCC's 
1969 security interest can only establish priority in the pipe if there has been 
a timely fixture filing5 under § 
34-21-942(d), W.S. 1977 (Cum.Supp. 1987), which provides:

"(d) A perfected security 
interest in fixtures has priority over the conflicting interest of an 
encumbrancer or owner of the real estate where:

"(i) The security 
interest is a purchase money security interest, the interest of the encumbrancer 
or owner arises before the goods become fixtures, the security interest is 
perfected by a fixture filing before the goods become fixtures or within ten 
(10) days thereafter, and the debtor has an interest of record in the real 
estate or is in possession of the real estate; or

"(ii) The security 
interest is perfected by a fixture filing before the interest of the 
encumbrancer or owner is of record, the security interest has priority over any 
conflicting interest of a predecessor in title of the encumbrancer or owner, and 
the debtor has an interest of record in the real estate or is in possession of 
the real estate; or

"(iii) The fixtures are 
readily removable factory or office machines or readily removable replacements 
of domestic appliances which are consumer goods, and before the goods become 
fixtures the security interest is perfected by any method permitted by this 
article; or

"(iv) The conflicting 
interest is a lien on the real estate obtained by legal or equitable proceedings 
after the security interest was perfected by any method permitted by this 
article."

A fixture 
designation of the pipe might also raise an issue under § 34-21-942(f), 
concerning construction mortgages:6

"(f) Notwithstanding 
paragraph (i) of subsection (d) of this section but otherwise subject to 
subsections (d) and (e) of this section, a security interest in fixtures is 
subordinate to a construction mortgage recorded before the goods become fixtures 
if the goods become fixtures before the completion of the construction. To the 
extent that it is given to refinance a construction mortgage, a mortgage has 
this priority to the same extent as the construction 
mortgage."

On the other 
hand, if we hold the pipe to be goods,7 but 
not a fixture, FCSCC would have the only valid security interest in the pipe 
under exclusive application of the U.C.C. § 34-21-904, W.S. 1977 (Cum.Supp. 
1987).

STANDARDS OF 
REVIEW

[¶13.]  Our well-established standard of review 
of an order granting summary judgment is that: 

"A motion for summary 
judgment places an initial burden on the movant to make a prima facie showing 
that no genuine issue of material fact exists and that summary judgment should 
be granted as a matter of law. Rule 56(c), Wyoming Rules of Civil Procedure. Once a prima 
facie showing is made, the burden shifts to the party opposing the motion to 
present specific facts showing that a genuine issue of material fact does exist. 
England v. Simmons, Wyo., 728 P.2d 1137, 1140-1141 (1986). We 
analyze challenges to a grant of summary judgment by reviewing the record in a 
light most favorable to the party opposing the motion giving him all favorable 
inferences that can be drawn from the facts. * * *" Boehm v. Cody Country 
Chamber of Commerce, Wyo., 748 P.2d 704, 710 
(1987).

[¶14.]  When the issue involves determining 
whether chattels become fixtures we have stated that:

"* * * Whether a chattel 
is a fixture or has in any case become a part of the realty is a mixed question 
of law and fact, and is to be determined from a consideration of all the facts 
and circumstances attending its annexation and use. [Citation.] * * *" Anderson 
v. Englehart, 18 Wyo. 409, 108 P. 977, 979 
(1910).

As the Board 
points out in the opening paragraph of its brief, the facts in this case are not 
in dispute. Our review of the Board's issue is, therefore, confined to review of 
the trial court's application of the law of fixtures to those 
facts.

WYOMING LAW OF 
FIXTURES

[¶15.]  The logical starting point to analyze the 
Board's issue is § 34-21-942(a)(i), W.S. 1977 (Cum.Supp. 1987), which 
provides:

"Goods are `fixtures' 
when they become so related to particular real estate that an interest in them 
arises under real estate law."

This court has 
not had occasion to discuss this aspect of the law of fixtures for nearly 
forty-eight years. SeeSchool 
District No. II, LaramieCounty v. Donahue, 55 Wyo. 220, 97 P.2d 663, 664 (1940). When 
presented with this issue, however, we still rely on the three-part test first 
set forth in the landmark case of Teaf v. Hewitt, 1 Ohio St. 511, 525 
(1853):

"It has been said upon 
abundant authority that, generally speaking, the proper criterion of an 
irremovable fixture consists in the united application of three tests, 
viz:

"`1st. Real or 
constructive annexation of the article in question to the 
realty.

"`2d. Appropriation or 
adaptation to the use or purpose of that part of the realty with which it is 
connected.

"`3d. The intention of 
the party making the annexation to make the article a permanent accession to the 
freehold, this intention being inferred from the nature of the article affixed, 
the relation and situation of the party making the annexation and policy of the 
law in relation thereto, the structure and mode of the annexation and the 
purpose or use of which the annexation has been made.' [Citations.] * * *." 
Holland Furnace Co. v. Bird, 45 Wyo. 471, 21 P.2d 825, 827-828 
(1933).

Although all 
three parts of this test bear upon classification of chattels as fixtures in any 
given case, we follow a majority of jurisdictions in placing the most emphasis 
on the intention of the person making the annexation. Holland Furnace Co. v. 
Bird, supra at 828; Squillante, The Law of Fixtures: Common Law and the Uniform 
Commercial Code, Part I: Common Law of Fixtures, 15 Hofstra L.Rev. 191, 195, 201 
n. 69 (1987). This intention does not refer to the annexor's subjective state of 
mind; rather, it is the objective intention the law can infer an ordinary 
reasonable person to have based on the facts and circumstances in the record. 
Holland Furnace Co. v. Bird, supra, at 827-828; and Boothbay Harbors 
Condominiums, Inc. v. Department of Transportation, Me., 382 A.2d 848, 854 
(1978). Circumstances bearing on a determination of objective intent include the 
nature of the article affixed, the way it was affixed, the purpose it serves on 
the land and the annexor's relationship to the article and to the land. Liberty 
Lake Sewer District No. 1 v. Liberty Lake Utilities Company, Inc., 37 Wn. App. 809, 683 P.2d 1117, 1120 (1984).

[¶16.]  We first hold that the gated pipe has 
never undergone a real annexation to the irrigated land. It was attached to the 
riser pipes only intermittently during each irrigation 
season.

[¶17.]  Whether there has been a constructive annexation depends on the 
following standard:

"`* * * [C]onstructive 
annexation may be found where the objects, although not themselves attached to 
the realty, comprise a necessary, integral or working part of some other object 
which is attached * * * [Citation]." Rayl v. Shull Enterprises, Inc., 108 
Idaho 524, 700 P.2d 567, 571 (1984).

Constructive 
annexation must also be considered in light of the three-part fixture test, 
which stresses that affixation to the land be permanent in character. Holland 
Furnace Co. v. Bird, supra, at 827-828. A good example of an article that is 
constructively annexed to realty is a house key. The key is not permanently 
attached to the house, but when in physical contact, is a necessary and integral 
part of the house as a permanent fixture on the land. Apart from the house, the key has little 
or no value. See Squillante, Common Law of Fixtures, supra, at 
206-208.

[¶18.]  The gated pipe in this case arguably does 
not have the same kind of relationship to the property as the key does to the 
house. It is possible that the land could be irrigated without it, and the 
record is unclear whether other types of irrigation pipe, i.e., sprinkler pipe, 
could be attached to the rise pipes in the Rumerys' field. The gated pipe is 
also readily marketable at a substantial value when separated from the 
land.

[¶19.]  The Board's argument on part two of the 
fixture test is that the pipe is necessary for irrigating the Rumerys' semi-arid 
land, and because irrigating the Rumerys' land increases its value, the pipe is 
adapted to that use. On its face this argument is logical, taken to its ultimate 
conclusion; however, it is flawed. Strong reliance on this kind of adaptation 
argument as evidence of an annexor's intent would allow the Board to classify 
any item on the farm "necessary" for irrigation of the land receiving water from 
the rise pipes as a fixture. This flaw in placing heavy reliance on the 
adaptation test was recognized long ago in Teaf v. Hewitt, supra, at 
529:

"This rule is in conflict 
with those authorities which make the mode of the physical annexation the test, 
and it will not bear examination as a criterion of general application. If adaptation and necessity for the use and 
enjoyment of the realty, be the sole test of a fixture, then the implements and 
domestic animals necessary for the cultivation of a farm, and a great variety of 
other articles subject to the use of the land or its appurtenances, which never 
have been and never can be recognized as such, would be fixtures. It would 
utterly confound the rule by which the rights of the vendor and vendee, heir and 
executor, & c., have been heretofore governed." (Emphasis 
added.)

[¶20.]  The real question here is whether the 
Rumerys showed sufficient objective intent to make the pipe a fixture. Arguably 
the pipe could be viewed as being both constructively annexed to the irrigated 
land and adapted to use on the land. Such conclusions, when viewed in light of 
our search for the Rumerys' objective intent to make the pipe a fixture, 
however, are of little value. Further, the intent we can infer from the 
character of the pipe itself is weak. The pipe is specifically designed to be 
portable and useful in any field with a suitable water hook-up. It is stored on 
a trailer away from the irrigated land in winter, and has immediate value apart 
from the land.

[¶21.]  The Board counters these conclusions by 
citing the case of Johnson v. Hicks, 51 Or. App. 667, 626 P.2d 938 (1981), for 
the proposition that the constructively annexed portion of an irrigation system 
is a fixture. The irrigation pipe at issue in that case, however, was a 
partially buried portion of the water mainline that fed water to portable 
sprinkler pipes. Id., at 939, n. 4. Consequently, that case is 
not on point, and our research finds no other cases directly supporting the 
Board's assertion.

[¶22.]  The most convincing evidence of objective 
intent in this case can be inferred from the way the Rumerys treated the pipe in 
financial transactions. The two security agreements are illustrative. The 1969 
security agreement created an interest in after acquired farm and ranch 
machinery and equipment as personalty apart from the land. The 1985 security 
agreement expressly listed the gated pipe similarly as equipment securing their 
debt to WPCA on a second security agreement.

[¶23.]  Viewing all of this evidence together, we 
can only conclude that the Rumerys never showed an objective intent to make the 
pipe a fixture. Because the pipe is not a fixture, FCSCC has priority to it 
under the security agreements.

[¶24.]  Affirmed.

URBIGKIT, J., filed a dissenting 
opinion.

FOOTNOTES

2 These agreements were 
executed pursuant to the Wyoming adoption of the Uniform Commercial 
Code, Art. 9 (U.C.C.), codified at § 34-21-901 to 34-21-966, W.S. 1977 (Cum. 
Supp. 1985). Each provision from Art. 9 cited in this opinion, contains 
identical language as currently codified unless otherwise 
indicated.

3 The 1969 security 
agreement is not in the record. The parties, however, have stipulated to its 
existence and to the coverage of all of the Rumerys' farm and ranch machinery 
and equipment, pursuant to Rule a 4.04, Wyoming Rules of Appellate Procedure, 
order from this court. The stipulation includes recognition of the following 
clause in the 1969 agreement:

"The Secured Party and 
Debtor agree: that to the maximum extent permitted by law, any and all 
collateral of like type or kind as that described herein as part of the 
collateral, now owned or hereafter acquired by the Debt shall secure all 
obligations covered by this Security Agreement, and Secured Party shall have a 
security interest in all such collateral by reason of this Agreement, for the 
purposes herein described * * *."

4 Section 
34-21-909(a)(ii), W.S. 1977, defines "equipment" as 
"goods"

"* * * used or brought 
for use primarily in business (including farming or a profession) or by a debtor 
who is a nonprofit organization or a governmental subdivision or agency or if 
the goods are not included in the definitions of inventory, farm products or 
consumer goods * * *."

Section 
34-21-905(a)(vi), W.S. 1977, defines "goods" as:

"* * * all things which 
are movable at the time the security interest attaches or which are fixtures 
(section 9-313 [§ 34-21-9421]), but does not include money, documents, 
instruments, accounts, chattel paper, general intangibles, contract rights and 
other things in action. `Goods' also include the unborn young of animals and 
growing crops * * *."

5 Section 
34-21-942(a)(ii), W.S. 1977 (Cum. Supp. 1987), provides:

"A `fixture filing' is 
the filing in the office where a mortgage on the real estate would be filed or 
recorded of a financing statement covering goods which are or are to become 
fixtures and conforming to the requirements of W.S. 34-21-951[(e)] 
(9-402(5))."

6 Section 
34-21-942(a)(iii), provides:

"A mortgage is a 
`construction mortgage' to the extent that it secures an obligation incurred for 
the construction of an improvement on land including the acquisition cost of the 
land, if the recorded writing so indicates."

7 See supra note 
4.

URBIGKIT, Justice, 
dissenting.

[¶25.]  I differ from the majority in their 
dispositive conclusion that the gated pipe, as part of the farm-loan-purchased, 
state-funded irrigation system, was not a fixture. The decision is erroneous in 
advancement of an after-acquired property clause as a personalty mortgage 
concept in affording a prior security interest to Farm Credit System Capital 
Corporation (FCSCC) over an asset purchased by a Wyoming State Farm Loan Board 
(Board) loan. In application of more modernized concepts, my analysis affords 
the real estate property fixture criteria to the mortgage security given as 
collateral for the state-financed-farm-real-estate improvement as an irrigation 
system in the arid west.

[¶26.]  My dissent is based on two foundations: 
(1) the relationship of the parties in the transaction as shown through the 
evidence to be a purchase money mortgage which should deny partial summary 
judgment for the dragneting operational funding chattel security lender by 
demonstrating an intent to install and finance as a fixture (transactional 
status); and (2) the entity concept which alternatively would require rejection 
of the summary judgment (unit fixture status). For this court's analysis of 
summary judgment see: Cordova v. Gosar, 
Wyo., 719 P.2d 625, 719 (1986) and Davenport v. Epperly, Wyo., 
744 P.2d 1110 (1987). For interesting discussions of the purchase money mortgage 
in relation to fixtures, see: Shanker, An Integrated Financing System For 
Purchase Money Collateral: A Proposed Solution To The Fixture Problem Under 
Section 9-313 Of The Uniform Commercial Code, 73 Yale L.J. 788 (1964), and 
Gilmore, The Purchase Money Priority, 76 Harv.L.Rev. 1333 
(1963).

[¶27.]  Factually, this case is the converse of 
the normal contest between the holder of the broad real estate mortgage and 
contestee chattel financier who supplied the funding for the installed property. 
Here, the holder of the real estate mortgage funded the purchase and 
installation of the irrigation system and the chattel lender provided no part of 
the consideration for acquisition of the improvement asset against which it 
seeks to impress a prior lien by dragnet or anaconda characteristics found 
within its loan documents. For a general discussion of the nature of the 
anaconda or dragnet clauses, see First National Bank, Cortez v. First Interstate 
Bank, Riverton, Wyo., 758 P.2d 1026 
(1988).

[¶28.]  The policy of the Uniform Commercial Code 
(UCC) to afford priority to the party supplying purchase money financing is 
consequently frustrated. See Gilmore, supra at 1371 and Comments to the UCC § 
9-312 as that section is now found as § 34-21-941, W.S. 1977 (1987 Cum.Supp). 
See also § 34-21-907, W.S. 1977 (UCC § 9-107), which defines a purchase money 
security interest. The unsettled nature of the subject of when does personal 
property become a fixture is identified in Coogan, Fixtures - Uniformity In 
Words Or In Fact?, 113 U.Pa.L.Rev. 1186 (1965) and his earlier analysis, Coogan, 
Security Interests In Fixtures Under The Uniform Commercial Code, 75 Harv.L.Rev. 
1319 (1962).

I. MODERN STATUS OF 
FIXTURE SECURITY LAW

[¶29.]  The statement in the majority's opinion 
that this court has not discussed the law of fixtures for nearly 48 years is not 
wholly complete. While the discussion has not been extensive, fixtures did play 
a part at least tangentially in several cases during this supposed dormant 
period. See Tri-State Nat. Bank v. Saffren, Wyo., 
726 P.2d 1081 (1986); Sannerud v. First Nat. Bank of Sheridan, Wyo., 708 P.2d 1236 (1985); Security Bank and Trust Co. v. Blaze Oil Co., Wyo., 463 P.2d 495 
(1970); Hill v. Salmon, 69 Wyo. 1, 236 P.2d 518 (1951); and Rosenblum v. Terry 
Carpenter, Inc., 62 Wyo. 417, 174 P.2d 142 (1946). The subject of fixtures has 
been twice addressed by the Wyoming Law Journal: Rudolph, Secured Transactions 
Under the Commercial Code, 14 Wyo.L.J. 220, 229 (1960) and Note, Some Aspects of 
the Law of Fixtures in Wyoming, 10 Wyo.L.J. 119 (1956). Excluding the 
case of Holland Furnace Co. v. Bird, 45 Wyo. 471, 21 P.2d 825 (1933), earlier 
Wyoming litigation more frequently involved trade fixtures and improvements 
which come into controversy at the end of a leasehold term. LaramieCounty, School Dist. No. 11 v. Donahue, 55 Wyo. 220, 97 P.2d 663 (1940); Slane v. Curtis, 41 
Wyo. 402, 286 P. 372 (1930); Slane v. Curtis, 
39 Wyo. 1, 269 P. 31 (1928). The exceptions being the somewhat similar circumstances to this 
case resulting from mortgage foreclosure in Federal Land Bank of Omaha v. Sells, 
40 Wyo. 498, 280 P. 98 (1929) and Anderson v. Englehart, 18 Wyo. 409, 108 P. 977 
(1910), where the notice of the improvements included whether the mortgage 
coverage was persuasively comparable.

[¶30.]  Moreover, I would today find the 
majority's reliance on the three-part test of a fixture taken from Teaff v. 
Hewitt, 1 Ohio St. 511, 525 (1853)1 to be insufficient as too rigid and 
constraining around which to mold an informed twentieth century analysis of 
fixtures. The current California approach to the concept of fixtures is found to 
be more appropriate in today's world of business transactions because it is more 
expanded and reflective of the precarious nature of fixtures which, at times, 
lie in the "twilight zone between things real and things personal." See Frost v. 
Schinkel, 121 Neb. 784, 238 N.W. 659, 664 (1931). California utilizes four 
conjunctive tests to determine whether or not an article is a 
fixture.

"The first test is the 
manner of the article's annexation to the realty. [Citations omitted.] The 
second test is the article's adaptability to the use and the purpose for which 
the realty is used. [Citations omitted.] The third test is the intention of the 
party making the annexation. [Citations omitted.] The fourth test is the 
relation of the parties to the annexed property. [Citations omitted.]" In Re 
Arlett, 22 B.R. 732, 734 (E.D.Cal. 1982).

See also Kruse 
Metals Mfg. Co. v. Utility Trailer Mfg. Co., 206 Cal. App. 2d 176, 23 Cal. Rptr. 514, 518 (1962).

[¶31.]  We will consider the tests in converse 
order as a relative demonstration of basic importance.2 See Planter's Bank v. Lummus Cotton 
Gin Co., 132 S.C. 16, 128 S.E. 876, 878 (1925) as an earlier analysis to now be 
in essential concurrence with the modern rule as it quoted Montague v. Dent, 10 
Rich.Law, 135, 67 Am.Dec. 573 in stating:

"`So various are the 
considerations which enter into the interpretation of the law fixtures, 
dictating varying and opposite conclusions as to the same or like articles, 
which may become the subject of controversy, that an adjudicated case may fail 
to be of any authority, where the subject-matter of contest may be the same, as the particular case must be considered 
with reference to the relation of parties. * * *'" (Emphasis in original.) 
Planter's Bank v. Lummus Cotton Gin Co., supra, 128 S.E.  at 
878.

II. RELATION OF THE 
PARTIES TO THE PROPERTY TO WHICH THE CHATTEL IS ANNEXED AND FOR WHICH THE 
CHATTEL WAS ACQUIRED

[¶32.]  The majority concedes it only looks at 
the application of the law because the facts are not in dispute; however, in 
doing so the majority loses sight of the unique circumstances of the individual 
case requiring separate analysis to determine whether a tangible personal 
property has become a fixture when used to serve a real estate purpose. Clearly, 
whether an item is a fixture is a mixed question of law and fact to be 
determined on the evidence presented in each individual case. Anderson v. 
Englehart, supra, 108 P.  at 979; Corning Bank v. Bank of Rector, 265 Ark. 68, 
576 S.W.2d 949, 952 (1979); Rayl v. Shull Enterprises, Inc., 108 Idaho 524, 700 P.2d 567, 570 (1984); Cook v. Beermann, 201 Neb. 675, 271 N.W.2d 459, 461 
(1978), modified by 202 Neb. 447, 276 N.W.2d 84 (1979); Western Ag Land Partners 
v. State Dept. of Revenue, 43 Wn. App. 167, 716 P.2d 310, 311 (1986); Nearhoff 
v. Rucker, 156 Wn. 621, 287 P. 658, 661 (1930). The majority's analysis of 
analogizing a key as possibly being annexed to the realty only underscores the 
need to fully develop and examine each individual case by a jury.3 Unless the security agreement 
evidences a clear intent, summary judgment is rarely justified when dealing with 
the issue of whether goods have become fixtures since the inquiry is fact 
dependent and "more for the jury than for the court." See Frost v. Schinkel, 
supra, 238 N.W. at 670-671; and 9 Hawkland, Uniform Commercial Code Series, § 
9-313:02, at 206-207 (1986). One cannot blindly ignore the facts of this case 
and uphold the partial summary judgment when weighing of facts is required for 
decision. 

[¶33.]  The facts show that the Board 
unquestionably had a purchase money mortgage in the pipe by providing the money 
for purchase and taking a real estate mortgage on the property and installed 
irrigation system. The record demonstrates that on January 24, 1978, the Board 
loaned the Rumerys $87,000 for the specific purpose of purchasing and installing 
an irrigation system on their farm property. This acquisition of an irrigation 
system included the gated pipe and the entire system was a real estate 
improvement. The majority glosses over the relationship of the parties and 
totally disregards it apparently in favor of simplicity sake by applying one 
rule to all relationships concerning whether a chattel has become a fixture. 
However, the area of fixtures is complex because of the various relations which 
can arise. Simply stated, the same rule regarding fixtures cannot apply to all 
parties across the board without regard for the variant relationships that may 
exist. Planter's Bank v. Lummus Cotton Gin Co., supra. As Judge Thornton 
dissenting in Far West Modular Home Sales, Inc. v. Proaps, 43 Or. App. 881, 604 P.2d 452, 456 (1979) astutely phrased the law:

"Whether or not an 
article annexed to the real property is a fixture is a question of fact to be 
determined upon the evidence in a particular case, and the question is 
determined not only by the manner in which the article is affixed to the realty, 
but also by the relationship of the 
parties to the controversy. Bell v. Bank of Perris, 52 Cal. App. 2d 66, 125 P.2d 829, 833 (1942)." (Emphasis added.)

[¶34.]  The relationship of the parties is also 
important because when an owner or mortgagor attaches a tangible item to real 
estate, a presumption arises that it was annexed with the intention of enriching 
the freehold and thus, it becomes a part of the realty. Energy Control Services, 
Inc. v. Arizona Dept. of Economic Sec., 135 Ariz. 20, 658 P.2d 820, 823 (1982); 
Corning Bank v. Bank of Rector, supra; Frost v. Schinkel, supra; Planter's Bank 
v. Lummus Cotton Gin Co., supra; Western Ag Land Partners v. State Dept. of 
Revenue, supra; Nearhoff v. Rucker, supra; Hall v. Dare, 142 Wn. 222, 252 P. 926, 928 (1927). Consequently, with no evidence to rebut the presumption which 
derived from the relationship of the parties in the evidentiary material 
supporting the partial summary judgment motion, it was improvident to grant 
summary judgment at this stage.

[¶35.]  The manner and circumstance of 
installation principles should not be ignored as has been done by this court in 
majority opinion. See Hall v. Dare, supra. Irrigation pipe is not unnoticed in 
fixture litigation. Energy Control Services, Inc. v. Arizona Dept. of Economic 
Sec., supra; Rayl v. Shull Enterprises, Inc., supra; Johnson v. Hicks, 51 Or. 
App. 667, 626 P.2d 938 (1981), as a solar water heating system; Western Ag Land 
Partners v. State Dept. of Revenue, supra, 716 P.2d 310.

III. 
INTENTION

[¶36.]  The majority determines that the Rumerys 
had no objective intent to treat the pipe as a fixture because of its treatment 
in financial transactions as "equipment." Support for this conclusion is not to 
be found factually from this record as demonstrated by the purchase money nature 
of the original transaction.4 However, equipment can also be a 
fixture. 2 Alderman and Dole, A Transactional Guide To The Uniform Commercial 
Code, § 7.14, at 906 (2d ed. 1983). As well, the objective intent is derived at 
the time of annexation.

"* * * Neither the 
intention existing at the time of procuring the article nor that which exists 
while the same is being transported to the real property where it is designed to 
be placed, nor the secret plan in the mind of the person making the annexation, 
govern. The controlling intention is that which the law deduces from all of the 
circumstances of the installation of the article upon the land. * * *" 
FirstState & Savings Bank v. 
Oliver, 101 Or. 42, 198 P. 920, 922 (1921) citing Roseburg Nat. Bank v. Camp, 89 
Or. 75, 173 P. 313, 315 (1918).

[¶37.]  See also Rayl v. Shull Enterprises, Inc., 
supra and Johnson v. Hicks, supra. Thus, it is irrelevant how the parties 
treated the pipe in 1969 and 1985 since the loan was made in 1978. It is the 
intent when purchase was made by state loan funds that is now significant. A 
similar argument is unpersuasive that even if ordinarily the chattels would be 
considered fixtures, they lost that character by the fact the Rumerys had 
previously executed chattel mortgages on personal property. The Washington 
supreme court disposed of this argument as not applicable in a similar situation 
in Parrish v. Southwest Washington Production Credit Ass'n, 41 Wn.2d 586, 250 P.2d 973, 975-976 (1952). See also Planter's Bank v. Lummus Cotton Gin Co., 
supra, 128 S.E.  at 881. Therefore, intent is to be determined at the time of 
installation and the circumstances of any previous or subsequent treatment is 
not meaningful as to the purchase money lender in characterization whether the 
pipe was a fixture upon acquisition and installation.

IV. 
ADAPTABILITY

[¶38.]  The majority finds that the Board's 
argument is logical, but flawed when taken to its ultimate conclusion because of 
the heavy reliance on this part of the test to determine whether the pipe is a 
fixture. However, no "heavy reliance" needs to be given in this case when the 
facts are properly analyzed. Additionally, this is not and should not be the sole criterion to determine when a 
chattel has become a fixture.

"* * * The question most 
frequently asked is whether the real property is peculiarly valuable in use 
because of the continued presence of the annexed property thereon. [Citations 
omitted.] Thus, it has been said that an object placed on the realty may become 
a fixture if it is a necessary or at least a useful adjunct to the realty, 
considering the purposes to which the latter is devoted. This principle, 
variously referred to as the `adaptability test' or the `integrated industrial 
plant doctrine' or `institution doctrine,' is often given great weight in 
determining whether a particular object has assumed the status of a fixture. 
[Citations omitted.]" Seatrain Terminals of California, Inc. v. AlamedaCounty, 83 Cal. App. 3d 69, 147 Cal. Rptr. 578, 582 (1978).

The gated pipe 
in the instant case is undeniably necessary to allow the irrigation system to be 
utilized. Certainly, if this pipe was not used, some other pipe would need to be 
attached to make the irrigation system operative on the farm. Thus, the pipe is 
absolutely necessary to the operation of the present system to achieve the goal 
of bringing irrigation to this semi-arid piece of farm land. See Frost v. 
Schinkel, supra, 238 N.W.  at 671. In accord with this result, see Ver Plank v. 
Bouwens, 6 Misc.2d 965, 164 N.Y.S.2d 596, 598 (1957), where the court pointed 
out:

"Regarding the pumps in 
the house, I reach the same conclusion. Without the pumps, the water supply in 
the house would not work, except for a small hand pump that was also located in 
the house. Again, while these pumps could be removed without injury to the pumps 
or to the real property, I find that they were annexed with the intention of 
permanently improving the property in such a manner as to become 
fixtures."

The entire 
entity which included the gated pipe became a fixture since all the components 
are indispensable parts of the operative system. Without question, the property, 
because of the presence of the irrigation system which is at least a useful 
adjunct to the realty, is peculiarly more valuable than dry farm land. See Rayl 
v. Shull Enterprises, Inc., supra, 700 P.2d 567. The adaptation required to be 
shown is amply demonstrated when considering from a common sense5 perspective alone the great 
enhancement of value in land in Wyoming occasioned by the availability of 
water.

V. 
ANNEXATION

[¶39.]  While the majority recognizes that a 
constructive annexation can occur, they conclude that the required permanence is 
not shown with the gated pipe because of its mobility. Although the majority 
analysis never specifically holds that a constructive annexation did not occur, 
they do "* * * hold that the gated pipe has never undergone a real annexation to the irrigated land. 
It was attached to the riser pipes only intermittently during each irrigation 
season." In other words, the majority characterizes either a constructive or 
actual annexation as a "real" annexation based upon the intent of the parties as 
evidenced by the mobility of the chattel. However, the court in Seatrain 
Terminals of California, Inc. v. AlamedaCounty, supra, 147 Cal. Rptr.  at 583 when 
faced with this issue pointed out:

"Appellant's next 
contention that the movability of the cranes demonstrated that they were not 
intended to be permanent installations, is likewise ill-founded. As repeatedly 
emphasized in cases, permanence is to be distinguished from perpetuity. In order 
to make an article a permanent accession to the realty, its annexation need not 
be perpetual. It is sufficient if the article appears to be intended to remain 
where fastened until worn out, until the purpose to which the realty is devoted 
has been accomplished, or until the article is superseded by another article 
more suitable for the purpose. [Citations omitted.] * * *"

Furthermore, the 
Oregon court 
of appeals has recognized:

"Since there is 
no requirement that a chattel actually be attached to the real property to 
satisfy the annexation test, Marsh v. Boring Furs, Inc., supra, 275 Or. at 582, 
551 P.2d 1053, testimony illustrating the ease with which the modular home could 
be removed is not controlling. * * *" Far West Modular Home Sales, Inc. v. 
Proaps, supra, 604 P.2d  at 454.

Whether a good 
is seasonally removed to protect it from the weather is not controlling whether 
the chattel was intended to be permanently attached to the realty so as to 
become a fixture.

"The first requirement of 
a fixture, set out in Teaff v. Hewitt, supra, is actual annexation to the 
freehold. But the exceptions are numerous. Doors, windows, shutters are often 
hung but not fastened to a building, and at certain seasons may be stored 
elsewhere, yet they are a part of the real estate; and in Roderrick v. 
Sanborn, 106 Me. 159, 76 A. 263, 30 L.R.A. (N.S.) 1189, 20 Ann.Cas. 469, it is 
held they will pass under a mortgage. Retention by gravity is sufficient. * * *" 
(Emphasis added.) Frost v. Schinkel, supra, 238 N.W.  at 
670.

"* * * This 
requirement of permanence does not mean that the goods cannot be removed; 
rather, that they are intended not to be removed." (Emphasis in original & 
footnote omitted.) 9 Hawkland, supra, § 9-313:02, at 206. Thus, the majority 
improperly concentrates on the fact that the pipe in this case can be removed, 
and concludes from that fact that it was not intended to be a permanent 
annexation. However, this limited view does not distinguish between the kinds of 
mobility that can be present when dealing with chattels in today's world. There 
is a

"* * * definite 
distinction between generalized and localized mobility, and equipment with the 
latter properties has consistently been held to constitute fixtures. For 
example, in Titus v. Poland Coal Co., supra, 119 A. 540, pit cars used in a coal 
mine which, similar to the railroad wagons, moved on embedded rails were held to 
be fixtures because they performed a function of a localized rather than a 
general nature. In United Pacific Ins. Co. v. Cann, supra, 129 Cal. App. 2d 272, 
276 P.2d 858, in a comparable situation, a cradle which ran on tracks by use of 
a cable attached to an electrically operated winch and thus had only limited 
mobility was also held to be a fixture. * * *" Seatrain Terminals of California, 
Inc. v. AlamedaCounty, supra, 147 Cal. Rptr.  at 584.

The irrigation 
pipe in the instant case has localized mobility in that the evidence revealed 
that the pipe was removed and placed in a shelter each fall and replaced in the 
spring. With the localized mobility of the pipe, the characteristic of removal 
cannot defeat the permanence of annexation. Moreover, the value of the pipe when 
removed is not an indicia of whether it has become a 
fixture.

"* * * It is true that 
the machinery was such as is used in other laundries, and that it was not made 
for, or specially adapted to, this building. But in the language of Mr. Justice 
Van Syckel in Feder v. Van Winkle, supra, [53 N.J. Eq. 370, 372, 33 A. 399, 51 
Am.St.Rep. 628] neither is the fact that the things in question may be removed 
and sold for other uses, or that they were not made for special adaptation to 
the building in which they were placed, decisive of their character. Those 
qualities are mere circumstances to be considered, and the mere presence of them 
does not necessarily withdraw machinery from the real estate mortgage. * * *" 
Atlantic Safe D. & T. Co. v. Atlantic City Laundry Co., N.J., 53 A. 212, 213 
(1902).

Consequently, 
the analysis in this case cannot rest alone on the movability of the gated 
pipe.

[¶40.]  The persuasion of the majority in 
considering annexation is also faulty in failing to recognize the entity concept 
of annexation. In First State & Savings Bank v. Oliver, supra, 198 P.  at 
923, the court discussed the non-novel concept in quoting 19 Cyc. 
1045:

"`* * * if the realty is 
equipped with a complicated plant, some of which is so attached to the realty as 
to be a part thereof, and some not physically annexed, then on a transfer of the 
realty the entire plant is transferred, including the unattached parts, on the 
principle whereby an indispensable part of a machine is 
transferred.'"

[¶41.]  This is the entity theory of fixture 
annexation which equally applies to the gated pipe as used in the irrigation 
system. Without the pipe, the pump riser and delivery system become 
meaningless.

"It is the trend of 
judicial opinion to regard all of those things as fixtures which have been 
attached, whether physically or constructively, to the realty, with a view to 
the purposes for which the real property is held or employed, however slight or 
temporary the connection between the articles and the land. * * *" First State 
& Savings Bank v. Oliver, supra, 198 P.  at 922.

[¶42.]  See the similar rule application for the 
cranberry bog irrigation system as an integrated entity in which priority was 
denied to the Washington PCA chattel mortgage in Parrish v. Southwest Washington 
Production Credit Ass'n, supra, 250 P.2d 973 and the monorail system in Nearhoff 
v. Rucker, supra, 287 P. 658.

[¶43.]  In application of the integrated or 
entity doctrine, I would certainly find an issue as a question of fact whether 
the jury might determine that the gated pipe portion of the irrigation system 
"while retaining its separate physical identity, is so connected with the realty 
that a disinterested observer would consider it a part thereof." See 5 American 
Law of Property, § 19.1, at 3-4 (1952). Cf. White and Summers, Uniform 
Commercial Code, § 25-8, at 1054 (2d ed. 1980).

VI. 
CONCLUSION

[¶44.]  From the annexation of the pipe, its 
adaptability, the intention of the parties, and especially the relation of the 
parties to this transaction, it is apparent that the pipe was meant by the 
lender (the state) and the borrower (the farmer) to be a permanent accession to 
the freehold in irrigation system usage. Otherwise, by legal concept and factual 
fiction, we would cannibalize the system from switch plate to valve. The court 
misapplies a mixed issue of fact and law ascertainment to justify entry of 
summary judgment. Furthermore, the decision gives a windfall to the undeserving 
chattel security lender from an asset purchased by use of trust funds loaned 
from resources of the people of the State of Wyoming to improve farm land values. I cannot 
find a sufficiently egregious mistake by administrators and lawyers of the state 
in loan documentation so that this is required to happen.

[¶45.]  The partial summary judgment was 
improvidently granted and should be reversed.

FOOTNOTES

1 As noted in Western Ag 
Land Partners v. State Dept. of Revenue, 43 Wn. App. 167, 716 P.2d 310, 312 n. 2 
(1986):

"White and Summers 
present two other `objective,' although unheralded, tests to determine whether 
an item is a fixture: the `half-inch formula' and the 
`screwdriver-crescent-wrench-one-hour' rule. J. White & R. Summers, Uniform 
Commercial Code 1056 n. 66 (2d ed. 1980). Under the former, `anything which 
could be moved more than a half inch by one blow with a hammer weighing not more 
than five pounds and swung by a man not more than 250 pounds would not be a 
fixture.' Under the latter, anything would be deemed a fixture unless one could 
loosen the item from the floor or wall with a screwdriver and a crescent wrench 
within one hour. While we do not endorse either test, we question whether the 
[central pivot irrigation system] could be moved more than a half inch by such a 
hammer blow. On the other hand, it may be possible to loosen the main arm from 
the cement pivot within an hour. Even the `objective' tests fail in providing a 
clear determination whether an item is a fixture."

2 The Teaff criterion and 
modern test of general application are not especially antagonistic since 
criteria of the former included a sub-definition to define inference of 
intent:

"`* * * from the nature 
of the article affixed, the relation and situation of the party making the 
annexation, the structure and mode of annexation, and the purpose or use for 
which the annexation has been made.' * * *." Beebe v. Pioneer Bank & Trust 
Co., 34 Idaho 385, 201 P. 717, 718 (1921), quoting Boise-Payette Lumber Co. v. 
McCornick, 32 Idaho 462, 186 P. 252 (1919).

Actually, the modern 
approach, as defined in more organized enumeration by the California rule, deletes 
subsidiary inferences in deriving the four aspect inquiry. See Far West Modular 
Home Sales, Inc. v. Proaps, 43 Or. App. 881, 604 P.2d 452 (1979). This 
adaptation encompasses the "elaboration of the [three point] test" to be applied 
to the facts of the case as is further enumerated in Holland Furnace Co. v. 
Trumbull Savings & Loan Co., 135 Ohio St. 48, 19 N.E.2d 273 (1939), where 
the warm air furnace became a fixture by slight physical attachment in pursuance 
of the situation and surrounding test. See discussion of inference from the 
relationship of the parties to determine intent, Squillante, The Law of 
Fixtures: Common Law And The Uniform Commercial Code, 15 Hofstra L.Rev. 191, 222 
(1987).

This case requires 
comparison with the earlier Wyoming case, Holland Furnace Co. v. Bird, supra, 45 
Wyo. at 479-480, 21 P.2d 825, where the identical Teaff rules were cited and the 
exact opposite result achieved as the third intent principle is 
stated:

"`3d. The intention of 
the party making the annexation to make the article a permanent accession to the 
freehold, this intention being inferred from the nature of the article affixed, 
the relation and situation of the party making the annexation and the policy of 
the law in relation thereto, the structure and mode of the annexation and the 
purpose or use for which the annexation has been made.'" Quoting Ewell on 
Fixtures (2d Ed.) 27-28.

The Wyoming court did not ask about the utility of an 
Evanston, Wyoming house without heat in the winter but 
did give consideration to repayment to the property purchaser for the "value" of 
the removed coal furnace.

3"A carpet is not a 
fixture although nailed to the floor, and a key carried in the vest pocket may 
be a part of the realty, therefore each particular case of fixtures must be 
determined by its own facts and is more for the jury than for the court. * * *" 
Frost v. Schinkel, supra, 238 N.W.  at 670-671.

4 In the nature of complex 
default and resale problems, a careful lender nearly always takes a security 
agreement and financing statement for purchase money security purposes to avoid 
argument and contest. Flag poles and light switch plates are known to disappear. 
However, little question can rationally be derived in this case but that the 
Board desired to leave no security assets unencumbered for which state loan 
funds had been provided for purchase. At most, the transaction shows a mistake 
in administrative and legal draftsmanship by omission of extraordinary care, not 
in denied intent or demonstrated satisfactory draftsmanship. See recommendation 
of 24 years ago in Shanker, supra, 73 Yale L.J. at 798, recommending the use of 
both the real estate and chattel security documentation.

5"`* * * As suggested by 
Lindley, L.J., in the case of Viscount Hill v. Bullock, 2 Chancery 482, where it 
was claimed certain stuffed birds were fixtures: "After all there is such a 
thing as common sense, and it must be brought to bear upon the question of 
whether these birds are or are not fixtures."'" Beebe v. Pioneer Bank & 
Trust Co., supra 201 P.  at 719, quoting Boise-Payette Lumber Co. v. McCornick, 
supra.