Elfelt v. Cooper, 90-1326
| Decision Date | 28 April 1992 |
| Docket Number | No. 90-1326,90-1326 |
| Citation | 168 Wis.2d 1008,485 N.W.2d 56 |
| Parties | , 92-2 USTC P 50,338 James M. ELFELT, Joseph P. Elfelt, Anthony J. Elfelt, Lawrence W. Elfelt, Paul G. Elfelt, David C. Elfelt, and Stephen M. Elfelt, Plaintiffs-Respondents-Cross Appellants, v. Albina COOPER, Defendant-Appellant-Cross Respondent-Petitioner, Dale T. Cooper, Defendant. . Oral Argument |
| Court | Wisconsin Supreme Court |
For the defendant-appellant-cross respondent-petitioner there were briefs by William A. Pangman, Jerome F. Buting and William A. Pangman & Associates, S.C., Waukesha and oral argument by William A. Pangman.
For the plaintiffs-respondents-cross appellants there was a brief by Richard R. Kobriger and Cramer, Multhauf & Hammes, Waukesha and oral argument by Mr. Kobriger.
This case is before the court on a petition for review of a published decision of the court of appeals, Elfelt v. Cooper, 163 Wis.2d 484, 471 N.W.2d 303 (Ct.App.1991). The court of appeals affirmed the judgment of the circuit court for Waukesha County, Clair Voss, Circuit Judge, which declared, after a jury trial, that the plaintiffs (the Elfelts) were owners of an undivided one-half interest in the home of the defendant Albina Cooper (Mrs. Cooper) as tenants in common. The judgment ordered a sheriff's sale of the property and determined an amount of rent due from Mrs. Cooper to the Elfelts.
The issue presented for review is whether Sec. 6331 of the Internal Revenue Code, 26 U.S.C. Sec. 6331 (I.R.C. Sec. 6331), 1 gives the Internal Revenue Service (IRS) the authority to sell Dale Cooper's (Mr. Cooper) undivided one-half interest in Mr. and Mrs. Cooper's homestead held in joint tenancy. We hold that without Mrs. Cooper's consent, and in the absence of court action, I.R.C. Sec. 6331 does not give the IRS the authority to sell Mr. Cooper's interest in the homestead, and we therefore reverse the court of appeals and remand to the circuit court with directions to enter judgment declaring Mrs. Cooper to be the sole owner of the property in fee simple absolute.
The facts are as follows. In 1963, the Coopers purchased the property at 38050 Dolmar Park Road, Dousman, Wisconsin, as husband and wife. 2 In 1969, construction of a home on the property was completed, and the Coopers moved in. As of the time the briefs in this case were filed, Mrs. Cooper was age 70 and had lived in the homestead for over 21 years.
On January 11, 1985, the IRS filed a lien notice against the real estate of Mr. Cooper in Waukesha County. The lien was in the amount of $13,283.22 and was for unpaid income taxes for the year 1982. It is undisputed that Mrs. Cooper was not liable for any taxes unpaid by Mr. Cooper. On November 15, 1985, after Mr. Cooper did not pay the amount in dispute, the IRS mailed notice to Mr. Cooper that the IRS had seized Mr. Cooper's interest in the homestead on Dolmar Park Road. The Coopers continued to live in the home after the seizure.
On June 25, 1986, the IRS conducted a tax sale of Mr. Cooper's interest in the home. The successful bidders were John and Stacey Elfelt. On January 1, 1987, John Elfelt made a written demand upon Mrs. Cooper for a proportionate share of the reasonable rental value of the property. On January 5, 1987, the IRS district director issued a quitclaim deed for the interest of Mr. Cooper to John and Stacey Elfelt. John and Stacey Elfelt issued a quitclaim deed to their seven sons, the plaintiffs in this matter.
On March 28, 1988, the Elfelts filed a summons and complaint, which was later amended, requesting that the court declare the Elfelts owners of an undivided one-half interest in the property with Mrs. Cooper as tenants in common, requesting a partition of the property by its sale with one-half of the proceeds to go to the Elfelts, plus rent in the amount of one-half the reasonable rental value of the property subsequent to January 1, 1987. The Coopers both filed pro se motions to dismiss. After a hearing on March 13, 1989, the circuit court denied the Coopers' motions to dismiss. On April 1, 1989, Mr. Cooper died.
Mrs. Cooper filed a pro se answer and a motion to dismiss on April 25, 1989. The Elfelts responded with a motion for summary judgment. Mrs. Cooper retained counsel, and, after a hearing, the circuit court denied both parties' motions.
On September 6, 1989, Mrs. Cooper filed a third-party summons and complaint, an amended answer, affirmative defenses, and a counterclaim for quiet title. The third-party complaint was dismissed by stipulation of the parties. The amended answer and affirmative defenses alleged that the IRS failed to follow certain procedures mandated by the I.R.C., that the seizure and sale was invalid, and that the quitclaim deed to John and Stacey Elfelt was therefore invalid.
The case was finally tried in April, 1990, to an advisory jury. The court reserved for itself the legal question of whether the IRS had the legal authority to sell Mr. Cooper's interest in the homestead in the manner and form accomplished. The jury was asked to answer one verdict question: Did the Internal Revenue Service comply with the legal requirements in selling to John and Stacey Elfelt all of Dale T. Cooper's interest in the real property located at 38050 Dolmar Park Road, Dousman, Wisconsin?
The jury's answer was "They (the Internal Revenue Service) did comply." Mrs. Cooper filed a motion for judgment notwithstanding the verdict, which was denied. The court entered judgment for the Elfelts, finding that the IRS had legally sold Mr. Cooper's interest in the homestead to the Elfelts; declaring the Elfelts and Mrs. Cooper to be tenants in common, each owning in fee simple an undivided one-half interest in the property; ordering a sheriff's sale to partition the property; and ordering Mrs. Cooper to pay rent to the Elfelts.
The court of appeals affirmed the circuit court judgment and remanded for further findings. Elfelt, 163 Wis.2d at 501-02, 471 N.W.2d 303. We granted Mrs. Cooper's petition for review.
The issue presented by this case, whether I.R.C. Sec. 6331 gives the IRS the authority to sell Mr. Cooper's undivided one-half interest in Mr. and Mrs. Cooper's homestead, involves the application of a statute to an undisputed set of facts. Statutory interpretation is a question of law which we review without deference to the lower courts. Pulsfus Farms v. Town of Leeds, 149 Wis.2d 797, 803-04, 440 N.W.2d 329 (1989). The jury's verdict in this case, which was advisory only, found that the IRS had complied with the legal requirements in selling Mr. Cooper's interest to John and Stacey Elfelt. We do not review that verdict.
Mrs. Cooper argues that the IRS did not have the authority to transfer ownership of Mr. Cooper's ownership interest in the Coopers' homestead to the Elfelts in the manner and form accomplished: that because the property was a jointly held homestead, it may only be sold with Mrs. Cooper's consent or by a court order in the absence of Mrs. Cooper's consent. Mrs. Cooper also argues that homestead property is indivisible and that therefore, under I.R.C. Sec. 6335, it was improper to sell Mr. Cooper's interest without selling the property in its entirety. Finally, Mrs. Cooper argues that I.R.C. Sec. 6331 is unconstitutional as applied because it does not require that the IRS give notice to all parties having an interest in property before the property is sold.
The Elfelts respond that the IRS did have the authority, under I.R.C. Secs. 6331, 6335, 6338, and 6339, to sell Mr. Cooper's undivided one-half interest in the homestead without Mrs. Cooper's consent. In addition, the Elfelts argue that Mrs. Cooper was given remedies by I.R.C. Secs. 6337, 6343, and 7426 that she failed to use, that the constitutionality of I.R.C. Sec. 6331 has long been settled, and that state court is not the proper forum for Mrs. Cooper's arguments.
We first note that the state court was a proper forum for this action and for Mrs. Cooper's defense to the action. The Elfelts, not Mrs. Cooper, commenced this action in the state court, seeking to enforce whatever interest they obtained from the IRS, seeking rent from Mr. and Mrs. Cooper, and seeking to have the home sold. The Elfelts should not now complain about Mrs. Cooper presenting her defenses to the action in a forum that the Elfelts chose. In addition, due to Mrs. Cooper's counterclaim, we view this as a quiet title action. As stated by the U.S. Court of Appeals for the 7th Circuit in a case concerning federal tax sales of parcels of land located in Wisconsin:
Controversies over title to land within a state are particularly appropriate for determination by the courts of that state. We find nothing anywhere to imply that state courts lack power to decide such questions in a quiet title action on the ground that the conveyances were governed by federal law and were an exercise of federal power.
Popp v. Eberlein, 409 F.2d 309, 311 (7th Cir.1969). This controversy is properly in the state court system.
The I.R.C. provides the IRS at least three methods of enforcing collection of unpaid taxes. First, the government may sue for the unpaid amount and, if it obtains a judgment, may exercise the usual rights of a judgment creditor. United States v. Rodgers, 461 U.S. 677, 682, 103 S.Ct. 2132, 2136, 76 L.Ed.2d 236 (1983) (citing I.R.C. Secs. 6502(a), 7401, and 7402(a)).
A second method is a lien foreclosure suit, authorized by I.R.C. Sec. 7403. The suit is a civil action brought in federal district court "to enforce the lien of the United States under this title with respect to such tax or liability or to subject any property, of whatever nature, of the delinquent, or in which he has any right, title, or interest, to the payment of such tax or liability." I.R.C. Sec. 7403(a). Pursuant to I.R.C. Sec. 7403(b), "[a]ll persons having liens upon or claiming any interest in the property involved in such action shall be made partie...
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