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Equibank v. United States IRS - 749 F.2d 1176 (5th Cir. 1985)

Rule:

Physically attached light fixtures are electrical installations and, as such, are component parts of the residence.

Facts:

Equibank held a mortgage on a house owned by Norman Johnson and Gayfred Dorthea McNabb Johnson. Further, the house was primed by a first mortgage in favor of Hibernia National Bank. When the Johnsons defaulted on the mortgages, the Internal Revenue Service (“IRS”) made jeopardy assessments, secured a lien and served notices of levy and seizure of the residence. Hibernia brought a foreclosure action and Equibank intervened. The Louisiana state court ordered the foreclosure of both mortgages and the sale of the property to satisfy the mortgage indebtednesses. The mortgages primed the IRS lien. Prior to the auction sale ordered by the court, IRS took physical possession of the residence with the consent of the Johnsons. The IRS removed and stored the contents of the house, including the furniture, fixtures, appliances and decorations. It further took the chandeliers, some valued as high as $75,000, and other light fixtures. In order to remove these electrical units, it was necessary to disconnect the internal house wiring from the wiring of the chandeliers and other fixtures. Equibank filed a state court injunctive action seeking the return of the chandeliers. The IRS removed the suit to federal court. After hearing, the district court denied the injunction requested, based on a finding that the chandeliers were not component parts of the residence and were thus not covered by Equibank’s mortgage.

Issue:

Were the chandeliers component parts of the Johnson residence, and were covered by Equibank’s mortgage?

Answer:

Yes

Conclusion:

The United States Court of Appeals for the Fifth Circuit reversed the district court's denial of the bank's petition for an injunction. The court noted that under Article 466 of the Louisiana Civil Code, things permanently attached to a building or other construction, such as plumbing, heating, cooling, electrical or other installations, were its component parts. Things were considered permanently attached if they could not be removed without substantial damage to themselves or to the immovable to which they were attached. In the case at bar, the court held that the chandeliers were electrical installations. They were component parts of the residence despite the fact that they could be removed without damage to the chandeliers or the residence. Therefore, the court held that they were subject to Equibank’s mortgage.

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