Reckner v. Reckner, 80-2348

• Decision Date: 17 November 1981
• Docket Number: No. 80-2348,80-2348
• Citation: 314 N.W.2d 159,105 Wis.2d 425
• Parties: Helen Wurl RECKNER, Plaintiff-Respondent, v. Leroy RECKNER, a/k/a Hardy Reckner, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 159

314 N.W.2d 159

105 Wis.2d 425

Helen Wurl RECKNER, Plaintiff-Respondent, v. Leroy RECKNER, a/k/a Hardy Reckner, Defendant-Appellant.

No. 80-2348.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 17, 1981.

Opinion Released Nov. 17, 1981.

Opinion Filed Nov. 17, 1981.

William E. Kaplan, Wausau, for defendant-appellant.

Trembath, Hess, Miller & Seidl, S. C., Wausau, for plaintiff-respondent.

Before DEAN, CANE and DYKMAN, JJ.

DEAN, Judge.

In an action for partition, LeRoy Reckner appeals from an order directing judicial sale of property. ¹ The appeal raises two issues:

1. Is LeRoy Reckner entitled to a homestead exemption in a partition action under ch. 842, Stats., involving real estate titled to non-spousal joint tenants?

2. Did LeRoy Reckner waive his right to any exemption by failing to assert it before the judgment of partition, before attempts to sell the property privately and before the proceedings conducted under an order of judicial sale?

Because we conclude that Reckner is entitled to a homestead exemption against creditors, that he did not waive his exemption right to $25,000 proceeds from the sale, but that collateral estoppel bars him from upsetting the sale, we reverse. Because we are unable to determine whether any creditors are subject to the exemption, we remand the case to the trial court.

LeRoy Reckner and Helen Wurl Reckner lived together for a period of approximately ten years. ² Pursuant to a stipulation that was instrumental to the settlement of prior litigation, Helen and LeRoy were deeded a farm and held title to it in joint tenancy. In 1978, Helen abandoned the farm as her residence leaving LeRoy in possession of it.

Helen brought this action for partition against the property. The property was listed with a broker who was unable to sell it. The trial court entered judgment of partition, found that the parties agreed to the sale of the property, and ordered judicial sale of the property. At the judicial sale, LeRoy was the high bidder, but the sale became invalid because he was unable to complete the purchase. Prior to a second sale ordered by the court, LeRoy asserted an exemption for the dwelling and forty acres as his homestead. The trial court determined that LeRoy was not entitled to a homestead exemption and directed LeRoy not to interfere with the second sale. LeRoy sought to enjoin the sale pursuant to appeal of his right to a homestead exemption. This court denied LeRoy injunctive relief. ³ The farm sold for $147,100. ⁴ Helen received nearly $74,000, and LeRoy received $18,714.16. LeRoy's $18,700 represents his share of the $147,100 sale price, less claims of creditors for which he was responsible. LeRoy contends that his homestead exemption affects the distribution of sale proceeds so that he receives the first $25,000. He calculates that Helen is entitled to only $67,700. He asks the court to order Helen to refund to him $6,300. ⁵

For clarity and understanding, we emphasize three points. First, although partition actions are usually conceived as actions between co-owners, the statutory procedure provides for the concurrent settlement of claims between owners and third-party creditors. ⁶ Second, the sec 815.20, Stats., homestead exemption is a statutory right that a debtor may assert against some creditors. ⁷ Third, the term "homestead" is ambiguous; it is used to refer to a surviving spouse's interest in a home that is part of the deceased spouse's estate as well as the sec. 815.20 debtor's right. ⁸

LeRoy asserted a homestead exemption right under sec. 815.20. Chapter 815, of which sec. 815.20 is a part, governs executions on judgments. Helen's partition action is governed by ch. 842. The trial court ruled that since ch. 842 did not provide for a homestead exemption, LeRoy was not entitled to a homestead exemption. Whether LeRoy may claim a sec. 815.20 homestead exemption in a partition proceeding is a question of law, and this court will review the trial court's decision without deference to its reasoning. ⁹

We conclude that the homestead exemption may arise in partition actions for four reasons. ¹⁰ First, sec. 815.20 is a statutory expression of a public policy embodied in Wis.Const. art. I, § 17, that creditors should not be permitted to deprive a debtor of the necessary comforts of life. The Wisconsin Supreme Court has held that the homestead exemption is to be interpreted broadly to protect the homeowner. ¹¹ A partition action may serve to adjudicate the claims of creditors against the homeowner. If we held that no homestead exemption exists in a partition action, then creditors could satisfy debts out of the proceeds of the partitions of a home even though the creditors could not otherwise execute a judgment against the home. This result would only serve to give a homeowner's creditors a windfall because of formalistic differences in the nature of the action as a partition action rather than the execution of a levy. The policy interest is more important than the formal difference in the type of action, and a broad interpretation of the homestead exemption supports the conclusion that a homeowner may claim the exemptions in a partition action.

Second, a homeowner may assert a homestead exemption against creditors to preserve the proceeds of a sale in a foreclosure action. Section 846.11, Stats. Although sec. 846.11 expressly refers to the homestead exemption, the absence of any reference to the homestead exemption in ch. 842 does not demonstrate a legislative intent to deny the right to a party to a partition action. Section 846.11 does not provide a right that is separate and distinct from the sec. 815.20 exemption. Section 846.11 merely expresses a legislative direction on the mechanics of incorporating the sec. 815.20 exemption into a foreclosure action. Because foreclosure is one type of real property action and the sec. 815.20 exemption right extends to this type of real property action, we conclude that the legislature intended the exemption to apply, where appropriate, in all real property actions. The legislative failure to provide for the mechanics incorporating homestead exemptions in partition proceedings does not extinguish the right.

Third, sec. 815.20 extends the exemption to $25,000 in proceeds from the sale of a homestead when the proceeds are held with the intent to use the money to purchase another homestead. The Wisconsin Supreme Court has held that proceeds from a homestead may be exempt from creditors in cases of involuntary dispossession, such as bankruptcy ¹² or fire. ¹³ Partition is no more than another form of involuntary dispossession, and LeRoy then should be entitled to an exemption for his proceeds so long as he meets the statutory requirements relating to procuring another homestead.

Fourth, sec. 840.02 provides that the general rules of procedure, chs. 801 to 847, apply to proceedings under chs. 840 to 846, unless otherwise provided. ¹⁴ No provision of ch. 842 bars the homestead exemption and, thus, the sec. 815.20 homestead exemption is incorporated by reference into real property actions. The provisions for sale of the property in ch. 842 modify the provisions for sale under sec. 815.21. We conclude that a party to a partition action may assert a homestead exemption as provided in sec. 815.20.

The trial court also determined that sec. 815.20 precluded LeRoy from claiming an exemption without Helen's consent. Section 815.20 provides, in part: "(S) uch exemption extends to the interest therein of tenants in common, having a homestead thereon with the consent of the cotenants ...." The trial court erred in relating the requirement of consent to the assertion of the exemption. In the statutory phrase, consent relates to permission to have a homestead on the property. The phrase uses the term "homestead" rather than the term "homestead exemption." We determine, as a matter of ordinary language, that it is not necessary to have the consent of tenants in common to claim a homestead exemption, although it is necessary for a tenant in common to consent for another tenant to establish a homestead.

In this case, LeRoy and Helen resided on the property together for several years. Their cohabitation represented mutual consent to establish a homestead on the property. A home is a relatively fixed establishment. Once consent is given among tenants in common and a tenant establishes a homestead, the existence of the homestead should not depend upon the whim of other tenants to withdraw consent. ¹⁵ We conclude that Helen and LeRoy consented to their establishment of their homestead for purposes of sec. 815.20, and it continued as LeRoy's homestead while he resided in the farm's dwelling.

In addition, the trial court ruled that even if LeRoy was entitled to a homestead exemption, he did not timely assert his right. The court found that LeRoy's homestead exemption claim was untimely because it was not made prior to the stipulation for the sale of the property in the judgment of partition, prior to efforts to sell the property privately, or prior to the first judicial sale. The parties argue the question as one of whether LeRoy waived his homestead exemption. We conclude that LeRoy did not waive his exemption insofar as he may protect the $25,000 proceeds from the sale, but that collateral estoppel bars LeRoy from upsetting the sale of the property.

Waiver is the voluntary and intentional relinquishment of a known right. ¹⁶ A question of waiver is a mixed question of fact and law. ¹⁷ In this case, sec. 815.21 provides that a person may assert the exemption anytime prior to the sale of the property. LeRoy asserted his homestead exemption in October, 1980. Helen contends that the sale occurred under the first judicial order of sale, which occurred on September 3, 1980, although that sale was invalid. The issue, then, is whether the first judicial sale, although invalid, terminated LeRoy's right to a...