In re Smith

Marvin and Sharon Smith (debtors) signed a promissory note to a bank for funding construction of a house. The house was to be constructed as real estate on a Georgia island. The Smiths also signed a deed transferring the real estate to the bank. The deed applied to “all existing and future improvements, structures, fixtures, and replacements that may now, or at any time in the future, be part of the real estate.” The bank assigned the deed to Atlantic Southern Bank (Atlantic Southern) (creditor). After the island house was constructed, the Smiths had a chandelier installed in the foyer of the house. There was recessed lighting in the foyer, but the Smiths had previously purchased the chandelier and decided to have it installed in the house foyer for decoration. The Smiths had from time to time bought other chandeliers and had moved chandeliers from home to home. Sometime later, the Smiths filed a Chapter 11 bankruptcy petition, which was subsequently converted to a Chapter 7 bankruptcy. During the bankruptcy proceeding, the Smiths removed the chandelier from the island house. Removal involved unclipping the electrical wiring and detaching the chandelier from the hanging chain. Atlantic Southern then foreclosed on the island house. Separately, the bankruptcy trustee proposed to sell the chandelier at auction. Atlantic Southern objected to the sale and claimed ownership of the chandelier as a fixture of the island house.