## Facts

- A five-story brick commercial building in Newark was leased in 1929 by owners Henry and Augusta Horns to their son, Fred Horns, for use in meat processing, refrigeration, and sales.
- The lease expressly allowed Fred to alter the building for that business and required return of the premises and fixtures in as good condition as at the lease’s start, ordinary wear excepted; Fred also had an unexercised purchase option.
- Fred installed an extensive refrigeration and cold-storage system at substantial cost, including basement compressors and ammonia equipment; piping to upper floors; insulated partitions; bricked-in windows; ceiling beams, rails, and coils supporting meat-hanging tracks; upper floors functioned as cold-storage rooms.
- After Augusta Horns died, the property was devised to three children as tenants in common, including Fred and two sisters; Hazel Handler later became owner of a one-third interest through her mother’s devise.
- Fred remained in possession after the original term ended and, in 1939, his corporation executed a new lease with the co-tenant owners.
- The 1939 lease stated that tenant-made “additions and improvements” belonged to the landlords, but also granted the tenant a right to remove “trade fixtures” at lease end, subject to limits where removal would cause material damage.
- After Fred’s death, his son Henry claimed ownership of the business and fixtures under Fred’s will and continued operating in the building.
- In a partition action seeking sale of the property, Hazel Handler asserted the refrigeration installations had become part of the realty and must be sold with the building; defendants claimed they were removable trade fixtures.

## Issues

1. Whether the refrigeration system and related installations were removable trade fixtures or had become part of the realty to be included in a partition sale.
2. Whether the lease provisions allocated ownership of the disputed items to the landlords or preserved the tenant’s right of removal.
3. What standard governs which installed items must remain because removal would cause material injury to the premises.

## Decision

- The Supreme Court of New Jersey modified the Chancery decree that had effectively treated the installations as part of the realty.
- The court held that trade fixtures installed for the tenant’s business are generally removable while the tenant (or successor) remains in possession, if removal can occur without material injury and the premises can be substantially restored.
- The court required a more item-specific determination: only components whose removal would cause material damage must remain with the realty.
- The matter was remanded for further proceedings consistent with these rules and for an appropriately structured partition sale.

## Legal Principles

- Trade fixtures installed by a tenant for purposes of trade or manufacture are presumptively removable during the tenant’s possession if removal can be accomplished without material injury to the freehold and with substantial restoration.
- Physical annexation is relevant but not controlling; the key inquiry is removability without material damage and the ability to restore the premises to a usable condition.
- Lease terms addressing “additions and improvements” may be read consistently with separate provisions preserving removal of “trade fixtures”; clear contractual surrender of the removal right is required to defeat it.
- In partition involving co-owners, the decree should distinguish removable tenant-owned trade fixtures from nonremovable components that have become part of the realty so the sale reflects correct ownership interests.

## Conclusion

The court recognized that extensive commercial refrigeration installations could remain tenant-owned trade fixtures despite substantial attachment, so long as they were removable without material damage and the building could be substantially restored; it therefore modified the partition decree and remanded for an item-by-item classification and sale consistent with those property rights.


Handler v. Horns, 65 A.2d 523 (N.J. 1949)