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Marsh v. Spradling, 537 S.W.2d 402

Facts

Marsh operated a shop in Pleasant Hill, Missouri, where he constructed wooden cabinets on special order and installed them in homes, primarily kitchens. He had no written contracts and would measure, design, and install the cabinets based on requests from contractors or homeowners. The cabinets were affixed to the walls and floors using nails, and Marsh testified that they were intended to be permanent fixtures in the homes. The dispute arose over whether the sale of the cabinets constituted a sale of tangible personal property or if they became part of the real estate upon installation, which would exempt them from sales tax.

Marsh maintained a shop in Pleasant Hill, Missouri, in which he constructed wooden cabinets on special orders and installed them in homes, usually new homes under construction. It is indicated that these were generally installed in kitchens. He had no written contracts; upon request of a contractor (or occasionally an owner of a building acting for himself) he would go to the home, measure for the cabinets, obtain a selection of the type of wood and hinges and the desired design of the doors, and make a bid.

Issue

Did the cabinets constructed and installed by Marsh constitute tangible personal property subject to sales tax, or did they become fixtures and part of the real estate upon installation?

The basic controversy here is whether Marsh sold tangible personal property or whether, when the transfer occurred, the cabinets had become a part of the real estate.

Rule

A fixture is an article of personal property that has been so annexed to the real estate that it is regarded as a part of the land. The principal elements for consideration are: (1) the annexation; (2) the adaptation of the article to the location; and (3) the intent of the annexor at the time of the annexation.

A fixture is an article of personal property which has been so annexed to the real estate that it is regarded as a part of the land; its status may depend upon the facts and circumstances, but the principal elements for consideration are: (1) the annexation; (2) the ‘adaption’ of the article to the location; and (3) the intent of the annexor at the time of the annexation.

Analysis

The court analyzed the facts surrounding the installation of the cabinets, noting that Marsh intended for the cabinets to become a permanent part of the homes when he affixed them to the walls and floors. The court found no evidence of an agreement that the cabinets would remain personal property after installation. The intent of the annexor, as demonstrated by Marsh's actions, indicated that the cabinets were intended to be fixtures, thus transferring title to the homeowner and exempting them from sales tax.

We observe here that all the facts and circumstances indicate that when Marsh nailed these cabinets firmly into the respective houses he intended that they should become a permanent part of the house. When this occurs, clearly the title to the property passes to the owner of the real estate, in the absence of some agreement to the contrary.

Conclusion

The court reversed the judgment of the circuit court, ruling that the cabinets became fixtures and part of the real estate upon installation, and therefore were not subject to sales tax.

We hold that these cabinets became fixtures, that the title passed to the owner of the real estate when they were installed, and that they had become real estate, not subject to sales taxes, at the time the sales were completed.

Who won?

Marsh prevailed in the case because the court determined that the cabinets became fixtures upon installation, thus exempting them from sales tax.

Marsh installed all of the cabinets by placing them in the house and nailing them to the walls and floors. On the upper cabinets he used nails two and one-fourth inches long; on the lower cabinets he used sixteen penny nails, about three and one-half inches long, fixing the cabinets both to the walls and the floors.

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