Case Name: 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)
Court: Supreme Court of Wyoming
Jurisdiction: Wyoming
Decision Date: 1988-07-21
Citations: 759 P.2d 1230
Docket Number: No. 87-173
Parties: 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).
Judges: Before CARDINE, C.J., THOMAS, URBIGKIT and MACY, JJ., and BROWN, J. (Retired).
Reporter: Pacific Reporter 2d
Volume: 759
Pages: 1230–1243

Head Matter:
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).
No. 87-173.
Supreme Court of Wyoming.
July 21, 1988.
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).

Opinion:
BROWN, Justice.
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 equip ment 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?"
We affirm.
THE PIPE
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 lightweight 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
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. 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." 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.
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.
The Board's lien on the pipe is said to arise out of a mortgage on the real proper ty 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.)
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 county Book of Deeds, and there was no U.C.C. filing.
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.
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
The Board, in its brief, has not set forth any explanation for the legal significance of its issue. We will discuss this briefly.
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. 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 Lau-den 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.
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 filing 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:
"(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, 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
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).
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
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. See School District No. II, Laramie County 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. Lib erty Lake Sewer District No. 1 v. Liberty Lake Utilities Company, Inc., 37 Wash.App. 809, 683 P.2d 1117, 1120 (1984).
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.
Whether there has been a constructive annexation depends on the following standard:
" ' [Constructive 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.
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.
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.)
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.
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. Con sequently, that case is not on point, and our research finds no other cases directly supporting the Board's assertion.
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.
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.
Affirmed.
URBIGKIT, J., filed a dissenting opinion.
. Chief Justice, Retired, June 30, 1988.
. 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
. Section 34-21-909(a)(ii), W.S.1977, define"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, in struments, accounts, chattel paper, general intangibles, contract rights and other things in action. 'Goods' also include the unborn young of animals and growing crops
.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))."
. 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."
. See supra note 4.
. "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.