## Facts

- Cliff’s Ridge Development Corporation (Cliff’s Development) developed a parcel of real property into a ski resort.
- Cliff’s Development obtained a mortgage from First of America Bank–Marquette (FOA) that granted FOA a security interest in the real property and in all existing and future improvements and fixtures.
- FOA properly perfected its mortgage by recording it, and it further perfected its security interest by filing a financing statement.
- Cliff’s Development conveyed the real property to Cliff’s Ridge Skiing Corporation (Cliff’s Skiing) (debtor), subject to FOA’s mortgage.
- Cliff’s Skiing granted Cliff’s Development a mortgage on the property, which Cliff’s Development properly perfected by recording.
- Cliff’s Skiing later borrowed from First National Bank & Trust (First National) to purchase a chairlift and granted First National a security interest in the chairlift.
- To perfect its security interest, First National filed multiple financing statements, including filings with the county register of deeds and filings under Uniform Commercial Code (UCC) procedures.
- Cliff’s Skiing filed for bankruptcy, and the bankruptcy trustee sold the chairlift.
- FOA, Cliff’s Development, and First National each claimed a security interest in the chairlift (and the sale proceeds).

## Issues

1. Whether the chairlift, once installed at the ski resort, was a fixture under Michigan law or remained personal property governed only by Article 9 of the UCC.
2. Whether FOA, Cliff’s Development, and First National held valid, perfected security interests that reached the chairlift and the proceeds from its sale.
3. How priority should be determined among (a) a recorded real estate mortgage covering after-acquired fixtures, (b) a later recorded mortgage on the same real property, and (c) a lender’s Article 9 security interest in a chairlift that became affixed to the real property.

## Decision

- The court treated the chairlift as a fixture associated with the ski-resort real property, rather than as purely personal property.
- The court recognized that FOA’s recorded mortgage, which covered existing and future fixtures, extended to the chairlift once it became affixed to the land, and that FOA had taken steps to perfect its interest.
- The court determined that Cliff’s Development’s recorded mortgage also reached fixtures on the property, but its priority depended on its position relative to FOA’s earlier perfected mortgage.
- The court evaluated First National’s filings under Michigan’s UCC fixture and perfection rules to determine whether First National held a perfected interest in the chairlift as a fixture and whether it could obtain fixture-level priority.
- Applying Michigan mortgage and UCC fixture-priority rules, the court established the relative priority of the competing interests in the chairlift sale proceeds.

## Legal Principles

- Whether goods become fixtures is determined under state fixture law, commonly focusing on annexation to the realty, the relationship of the goods to the use of the land, and the objective intent that the goods remain with the real property.
- A recorded real estate mortgage that expressly covers present and future improvements and fixtures can attach to later-installed fixtures when they are affixed to the property.
- Article 9 governs security interests in goods, including goods that become fixtures, and provides a method (a fixture filing) to perfect and, in some circumstances, to obtain priority as to fixtures.
- Competing claims to proceeds from a trustee’s sale are resolved by identifying (a) the nature of the collateral (fixture vs. personal property), (b) whether and how each claimant perfected, and (c) the applicable priority rules for mortgages and fixture filings under state law.

## Conclusion

In In re Cliff’s Ridge Skiing Corp., the bankruptcy court classified a ski chairlift as a fixture and then applied Michigan real estate mortgage law and UCC fixture-perfection and priority rules to decide how FOA, Cliff’s Development, and First National ranked against each other in the proceeds from the trustee’s sale of the chairlift.


In re Cliff's Ridge Skiing Corp., 123 B.R. 753 (1991)