Neis, Matter of

• Decision Date: 21 December 1983
• Docket Number: No. 83-1470,83-1470
• Parties: , Bankr. L. Rep. P 69,532 In the Matter of Don Orriel NEIS, Debtor-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 584

723 F.2d 584

11 Bankr.Ct.Dec. 423, Bankr. L. Rep. P 69,532

In the Matter of Don Orriel NEIS, Debtor-Appellant.

No. 83-1470.

United States Court of Appeals Seventh Circuit.

Argued Sept. 28, 1983.

Decided Dec. 21, 1983.

Galen W. Pittman, Johns, Flaherty & Gillette, La Crosse, Wis., for debtor-appellant.

Daniel E. Dunn, Smyth, Sauer, Becker, Lynch & Smyth, La Crosse, Wis., for appellee.

Before CUDAHY and POSNER, Circuit Judges, and WILKINS, Senior District Judge. ^*

CUDAHY, Circuit Judge.

The debtor, Don Orriel Neis, appeals from a district court judgment, 27 B.R. 985 (W.D.Wis.1983) reversing a final judgment of the bankruptcy court, 17 B.R. 656 (Bkrtcy.Wis.1982). The bankruptcy court determined that certain property of the debtor qualified for the homestead exemption available under Wisconsin law. The district court reversed, holding that this property did not qualify. We have jurisdiction pursuant to Pub.L. No. 95-598, Title IV, Sec. 405(c)(2), 92 Stat. 2668 (1978). ¹ We reverse and remand to the bankruptcy court for additional findings of fact.

I

Don and Andrea Neis purchased a house, as joint tenants, at 4062 Glenhaven Drive, La Crosse, Wisconsin, in 1972. They lived in this house together until February 1979 when marital difficulties caused Don Neis to spend part of his time at an apartment in a building which he owned and usually rented out to tenants. In late March, he entered into a year's lease for an apartment at 1638 Bainbridge Street, also in La Crosse. On April 2, Andrea filed for a divorce. She and their son continued to reside in the Glenhaven house, and in July a temporary order was issued requiring Don to vacate the Glenhaven property.

In September 1979, Don left the Bainbridge apartment and began to live at 1104 Wells Street, Onalaska, Wisconsin. This was another property which he owned and usually rented to tenants. Because there had been flooding and he was having difficulty finding a tenant, Don decided that it was economically more reasonable for him to occupy the Wells Street property than to pay rent elsewhere. During the summer of 1980, three judgments were docketed against him in favor of Cameron, Nix, Collins and Quillin on June 11, Anna and Raymond Mook on June 17 and Trane Employee's Credit Union on July 16.

On November 10, 1980, Don and Andrea Neis agreed on a stipulation which was incorporated in a judgment of divorce entered on November 26, 1980. According to the divorce decree, Andrea was to occupy the Glenhaven house until it could be sold, and the proceeds of the sale were to be divided between her and Don after payment of the mortgage and the crediting of certain expenses to Andrea. The closing of the sale of the house was set for December 31, 1980, and Andrea moved out in January. The buyers, however, would not accept title because of the judgment liens against the property. While the parties negotiated an agreement, Don moved back into the house in February 1981 in order to protect it from vandalism and to allow him to rent out the Wells Street property for which he had now found a tenant. On March 11, 1981, he filed a Chapter 7 bankruptcy petition, claiming the homestead exemption allowed by Wisconsin statute in the Glenhaven property. The Glenhaven house was sold on March 31, 1981, and the sale proceeds were placed in an escrow account pursuant to an agreement among Don, Andrea and the three judgment lienholders.

II

The sole issue on appeal both in the district court and here is whether under Wisconsin law a debtor has a right to the homestead exemption permitted by Wisconsin statute in a property which he left because of a pending divorce. Although in the course of these proceedings there has been considerable discussion of Don Neis' residency status at the various places where he has lived, the relevant moment for determining the availability of the homestead exemption is the time at which the judgments were docketed--that is, the summer of 1980. Northern State Bank v. Toal, 69 Wis.2d 50, 58, 230 N.W.2d 153, 157 (1975) (property owned but not occupied as a homestead when judgment liens are docketed can be attached even if the debtor later does occupy it as a homestead); Upman v. Second Ward Bank, 15 Wis. *449, 453 (1862) (when judgment is docketed, it becomes a lien upon the debtor's real estate, if not then occupied as a homestead; the debtor cannot defeat lien by later moving onto the property and occupying it as a homestead); Lueptow v. Guptill, 56 Wis.2d 396, 403-04, 202 N.W.2d 255, 259 (1972) (date upon which a household must be occupied to qualify as a homestead is the date upon which judgment is docketed; if the debtor subsequently leaves the house, this does not indicate abandonment of the homestead). Neis' return to the Glenhaven house in February and March 1981 is not relevant, other than as a possible indication of his intent when he left in February 1979 or at some intervening time, even if he were to attempt to show that he re-established his homestead there during the 1981 occupancy. ²

Wisconsin law protects a debtor's homestead property from judgments to the extent of $25,000 (1) An exempt homestead ... selected by a resident owner and occupied by him shall be exempt from execution, from the lien of every judgment and from liability for the debts of such owner to the amount of $25,000 ... except as otherwise provided. Such exemption shall not be impaired by temporary removal with the intention to reoccupy the premises as a homestead nor by the sale thereof, 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.

WIS.STAT. Sec. 815.20 (1981). The statute thus requires that an owner be a resident-occupant of the property claimed as a homestead subject to two exceptions: (1) when the owner is temporarily absent with an intent to return and (2) when the house is to be sold with the proceeds intended for the purchase of another homestead. Thus, with respect to these exceptions, the owner's intent is crucial to a determination of qualification for the homestead exemption.

The statute has been liberally construed in favor of debtors, as typified in Schwanz v. Teper, 66 Wis.2d 157, 223 N.W.2d 896 (1974), in which the Wisconsin Supreme Court stated:

[t]here is a strong public policy in this state to protect the homestead exemption. Because of this public policy, homestead statutes are liberally construed in favor of the debtor, and homestead rights are preferred over the rights of creditors.

Id. at 163, 223 N.W.2d at 899 (citations omitted). The bias of Wisconsin law toward the debtor is also illustrated in Eloff v. Riesch, 14 Wis.2d 519, 111 N.W.2d 578 (1961), where, although the debtor had left his home, the house was still held to qualify for the homestead exemption because his wife and family continued to live there.

In following this policy, the Wisconsin courts have considered whether the owner was required to leave the home involuntarily, as, for example, by a judicial divorce decree barring him from the home or by economic and personal necessities which operated to expel the owner from the residence. ³ In In re Bleiler, Nos. 73-BK-696, 73-BK-697 (W.D.Wis. March 11, 1974), the court found that financial and marital difficulties had rendered the debtor's departure from her home involuntary and so exempted the proceeds from the sale of the home. Finally, in In re Lumb, 12 B.R. 862 (E.D.Wis.1981), the court held that the debtor was involuntarily driven from his home by court order and did not forfeit the homestead exemption. ⁴

Following these precedents, the bankruptcy court in the present case determined that Don Neis was prevented during the summer of 1980, at the time the judgments against him were docketed, from occupying his Glenhaven home, first by marital difficulties and later by order of the Family Court Commissioner. The bankruptcy court went on to hold that the Glenhaven home was therefore protected from Don's creditors. Because the statutory language relies, in determining the availability of the homestead exemption, on the owner-occupant's intent, one may infer that the bankruptcy court made an implicit finding of fact consistent with its conclusion--that is, that Neis' departure was involuntary; that he intended, if he had been permitted, to return to the Glenhaven house up to the time of its sale and that he did not intend to abandon it as his homestead.

The district court on review reversed the decision of the bankruptcy court and held that the Glenhaven house was not exempt. The district court accepted the findings of fact of the bankruptcy judge as not clearly erroneous and therefore, following Rule 810 of the Rules of Bankruptcy, held that they could not be disturbed. The district court, however, stated that "in order properly to resolve the legal issues before me, I find it necessary to make the following additional findings, which are based on undisputed testimony and documentary evidence." 27 B.R. 985 at 986 (W.D.Wis.1983). While recognizing that, when a trial court has not made adequate findings of fact, the usual course for the appellate tribunal is to remand for additional proceedings, the district court relied on the principle that remand is not necessary when the evidence is documentary, the facts are undisputed or the record presents no genuine issue of material fact. Id. at 986 n. 2; see also Armstrong v. Collier, 536 F.2d 72, 77 (5th Cir.1976) ("Where the [district] court has failed [to make findings of fact], the normal procedure is to vacate the judgment and remand the case for appropriate findings ... [but] a remand is not required ... [when] a complete understanding of the issue may be had from the record on appeal ....); cf. Pullman-Standard v. Swint, 456 U.S. 273, 285-90, 102 S.Ct. 1781, 1788-91, 72 L.Ed.2d 66 (1982) (determination of intent to discriminate on basis of race...