Mogilka v. Jeka
| Decision Date | 16 April 1986 |
| Docket Number | No. 85-0912,85-0912 |
| Citation | 389 N.W.2d 359,131 Wis.2d 459 |
| Parties | , 86-1 USTC P 9466 Dr. Bernard A. MOGILKA, Plaintiff-Respondent, William Judge, Purchaser-Respondent, v. Ralph J. JEKA and Ruth Jean Jeka, Defendants-Appellants and Cross-Respondents, Patrick T. Sheedy, as Personal Representative of the Estate of Nan Lowe and Bernice Degner, as Personal Representative of the Estate of Lucille Kaminski, Defendants and Cross-Appellants, United States of America Internal Revenue Service, Defendant and Cross-Respondent, d State of Wisconsin Department of Revenue, Girard Bank, a foreign banking corporation, Edward Monday, Lawrence A. Czaplewski, Herbert A. Genthe, City of Milwaukee, County of Milwaukee, Village of Fox Point, Towne Realty, Inc., Christine Hofmeister, and Northwestern National Co., Defendants. |
| Court | Wisconsin Court of Appeals |
Ralph J. Jeka and Ruth Jean Jeka, Milwaukee, for defendants-appellants and cross-respondents.
Michael T. Sheedy, Milwaukee, for defendants and cross-appellants Patrick T. Sheedy, personal representative of estates of Lucille Kaminski and Nan Lowe.
Michael T. Sheedy, Milwaukee, for defendants and cross-appellants estates of Nan Lowe and Lucille Kaminski; Techmeier, Sheedy & Associates, Milwaukee, of counsel.
Joseph P. Stadtmueller, U.S. Atty. and Elsa C. Lamelas, Asst. U.S. Atty., Milwaukee, for defendant and cross-respondent.
Before MOSER, P.J., and WEDEMEYER and SULLIVAN, JJ.
This appeal and cross-appeal arise from a trial court order confirming the foreclosure sale of the homestead of Ralph J. Jeka (Ralph) and his wife, Ruth Jean Jeka (Ruth). The Jekas appeal from those parts of the order denying Ruth's claim to a homestead exemption and granting a homestead exemption to Ralph despite his waiver. The estates of Nan Lowe and Lucille Kaminsky (the Estates) cross-appeal from those parts of the order providing first priority status to tax liens of the United States Internal Revenue Service (IRS) and denying William Judge (Judge), the successful bidder at the sheriff's sale, the right to use the Estates' judgments against Ralph as partial satisfaction of the bid price.
Because Ruth had standing to assert her homestead rights and did not waive these rights through inaction, and because Ralph properly waived his homestead exemption, we reverse the order and remand to the trial court with directions to determine the extent of Ruth's homestead exemption. Because the IRS tax liens were valid and enforceable, and because Judge had no statutory authority to use the Estates' judgments to pay part of the bid price, we affirm those parts of the trial court's order.
To facilitate an understanding of the issues presented in this appeal, a brief recitation of the procedural history is in order. Dr. Bernard A. Mogilka (Mogilka) commenced a mortgage foreclosure action against the Jekas. 1 The real estate involved was the Jekas' residence and homestead. The Jekas did not contest the claim and a default judgment was entered against them. Because Mogilka's mortgage claim was only $42,575.53, Judge's successful bid of $69,942.67 at the foreclosure sale created a surplus. Mogilka moved to confirm the sheriff's sale and, contemporaneously, the IRS moved to obtain the surplus funds to satisfy its tax liens. The trial court scheduled a hearing for February 11, 1985. The IRS, the Estates, and the Jekas filed claims for the surplus money. Ralph also made an oral claim for a homestead exemption at the February 11 hearing. One week later he filed a homestead claim for both Ruth and himself, but he alone signed it.
At the February 11 hearing Ralph asserted that Ruth, a joint owner, was not responsible for any of the tax liens or judgments on the property and that, consequently, she should receive one-half of the surplus sales proceeds. The trial court confirmed the sheriff's sale but declined to rule on the priority of claims and adjourned the case until February 27. The court requested that the parties be prepared to address Ralph's homestead exemption and Ruth's claim to any surplus funds. Subsequent to the February 11 hearing, the trial court signed an order confirming the sale and permitting Judge to pay the bid price in the form of cash and/or satisfaction of the judgments held by other judgment creditors in the foreclosure action, i.e., the Estates. On February 27, however, the trial court reversed itself as to the acceptable manner of payment and vacated the order confirming the sale. The trial court then adjourned the matter until April 1, 1985, when it would address the applicability of the statutory homestead exemption to a tax lien, the timing of homestead claims in foreclosure proceedings, and whether Ruth's failure to appear had deprived her of standing to assert her homestead exemption. On March 4, 1985, Ruth filed both a claim asserting her homestead rights and a notice of claim to surplus monies. In the same document, Ralph withdrew his claim to a homestead exemption.
After the April 1 hearing, the trial court entered an order that reconfirmed the foreclosure sale, vacated Judge's partial payment
by satisfaction, granted a homestead exemption to Ralph, and denied standing to Ruth to claim a homestead exemption. The court further ordered that Ralph's $25,000 homestead exemption be disbursed to those entities holding tax liens against him and that any remaining surplus be placed in a trust account with the clerk of court.
On appeal, the Jekas claim that the trial court erred in ruling that Ruth did not have standing to claim a homestead exemption. In considering this issue, the trial court made the following findings:
On March 4, 1985, a Notice of Claim to Surplus Monies and Consent allegedly bearing the signature of defendant Ruth J. Jeka was filed in this action.
Defendant Ruth J. Jeka has not appeared pro se or by an attorney at any hearing before the Court or in connection with the homestead exemption. In light of her failure to appear pro se or by an attorney at the hearings held in connection with this matter the Court cannot ascertain defendant Ruth J. Jeka's position concerning the homestead exemption, or even whether the signature on the above-referenced Notice is legitimate.
On the issue of Ruth's failure to appear, we initially note that allegations with respect to homestead rights "in law constitute a general appearance." Northwestern Securities Co. v. Nelson, 191 Wis. 580, 586, 211 N.W. 798, 800 (1927). Standing is a question of law which this court reviews independently. State v. Wisumierski, 106 Wis.2d 722, 733, 317 N.W.2d 484, 489 (1982). Under Wisconsin's law of standing, we must determine whether the petitioner was injured in fact, and whether the interest allegedly injured is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question. Moedern v. McGinnis, 70 Wis.2d 1056, 1067, 236 N.W.2d 240, 245 (1975) (citation omitted).
Doubtless, denying Ruth a homestead interest in the surplus funds resulting from the sheriff's sale caused her injury in fact. As to whether her homestead claim is within a protected zone of interest, we first look to the relevant statutes. Section 815.20(1), Stats. (1981), 2 provides in part:
An exempt homestead ... shall be exempt from execution, from the lien of every judgment and from liability for the debts of [its] owner to the amount of $25,000, except mortgages, laborers', mechanics' and purchase money liens and taxes and except as otherwise provided. Such exemption shall not be impaired by ... the sale [of the homestead] but shall extend to the proceeds derived from such sale to an amount not exceeding $25,000, while held, with the intention to procure another homestead therewith, for 2 years. Such exemption extends to land owned by husband and wife jointly or in common, and when they reside in the same household may be claimed by either or may be divided in any proportion between them, but in no event shall the exemption exceed $25,000 for such household. [Emphasis added.]
As for the disbursement of surplus monies derived from a foreclosure sale, sec. 846.162, Stats., states in part:
Disposition of surplus. If there shall be any surplus ... any party to the action or any person not a party who had a lien on the mortgaged premises at the time of sale, may file with the clerk of court into which the surplus was paid, a notice stating that he is entitled to such surplus money or some part thereof, together with the nature and extent of his claim. [Emphasis added.]
It is well-settled that the public policy of this state strongly favors the liberal construction of the homestead statutes in favor of the debtor, and that homestead rights are preferred over the rights of creditors. Schwanz v. Teper, 66 Wis.2d 157, 163, 223 N.W.2d 896, 899 (1974). The homestead exemption prevents a person Because it cannot be gainsaid that Ruth's interest was within the zone protected by the homestead statutes, she undeniably had standing to assert her homestead rights, and the trial court erred in arbitrarily rejecting her claim. 3 The real issue is whether Ruth waived her homestead exemption. See Reckner, 105 Wis.2d at 435, 314 N.W.2d at 164-65. We therefore must determine whether Ruth brought her homestead claim in a timely manner. In Northwestern Securities Co., 191 Wis. at 584, 211 N.W. at 799-800, our supreme court upheld the claim of joint mortgage debtors who did not assert their homestead rights until after the confirmation of the sheriff's sale:
from being deprived of the means to enjoy the necessary comforts of life. Reckner v. Reckner, 105 Wis.2d 425, 429 n. 7, 314 N.W.2d 159, 162 n. 7 (Ct.App.1981); see Wis. Const. art. I, sec. 17.
An adjudication in the judgment that the mortgaged property constituted the homestead of the mortgagors would...
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