Case Title: Megal Development Corporation v. Craig Shadof

Citation: 2005 WI 151

Docket Number: 2004AP001594-FT

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2005-11-08T00:00:00Z

Document:
2005 WI 151 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2004AP1594-FT 
COMPLETE TITLE: 
 
 
Megal Development Corporation,  
          Plaintiff-Respondent, 
     v. 
Craig Shadof, d/b/a Spectrum Investments,  
and Susan Shadof,  
          Defendants-Appellants. 
 
 
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
OPINION FILED: 
November 8, 2005   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
September 7, 2005   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Waukesha   
 
JUDGE: 
Mark Gempeler   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendants-appellants there were briefs by Todd C. 
Esser and Todd C. Esser & Associates, Milwaukee; and Henry E. 
Koltz and Schmidt, Darling & Erwin, Milwaukee, and oral argument 
by Todd C. Esser. 
 
For the plaintiff-respondent there was a brief by O. Thomas 
Armstrong, Roy L. Prange, Jr., Valerie L. Bailey-Rihn, Patrick 
J. Schoen and Quarles & Brady LLP, Milwaukee, and oral argument 
by Valerie L. Bailey-Rihn. 
 
An amicus curiae brief was filed by J. Bushnell Nielsen, 
Daniel Kelly, Krista J. Ebbens, and Reinhart Boerner Van Deuren 
S.C., 
Waukesha, 
on 
behalf 
of 
the 
Wisconsin 
Land 
Title 
Association. 
 
2005 WI 151
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2004AP1594-FT 
(L.C. No. 
94SC59E) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Megal Development Corporation, 
 
          Plaintiff-Respondent, 
     v. 
 
Craig Shadof d/b/a Spectrum Investments and 
Susan Shadof, 
 
          Defendants-Appellants. 
 
FILED 
 
NOV 8, 2005 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
APPEAL from an order of the Circuit Court for Waukesha 
County, Judge Mark S. Gempeler.  Reversed and cause remanded.   
 
¶1 
N. 
PATRICK CROOKS, J. This appeal is before the 
court on certification from the court of appeals, pursuant to 
Wis. Stat. § 809.61 (Rule) (2003-04).1  Defendants Craig and 
Susan Shadof (Shadofs) appeal an order of the circuit court 
denying their application for satisfaction of a judgment and a 
judgment lien under Wis. Stat. § 806.19(4), where the underlying 
judgment had been discharged in bankruptcy.  The Shadofs 
appealed, and the court of appeals certified the issue of 
                                                 
1 All subsequent references to the Wisconsin Statutes are to 
the 2003-04 version unless otherwise indicated. 
No. 
2004AP1594-FT   
 
2 
 
whether § 806.19(4) requires the satisfaction of a judgment debt 
against a homestead, where the underlying judgment has been 
discharged in bankruptcy, yet the debtor’s homestead equity 
exceeds the allowable homestead exemption, and where the debtor 
failed to seek avoidance of the judgment lien in the bankruptcy 
court.  The court of appeals further raised the issue of 
whether, if § 806.19(4) does require the satisfaction of a 
judgment debt when the underlying judgment has been discharged 
in bankruptcy, the statute is in conflict with, and therefore 
preempted by, federal bankruptcy law. 
¶2 
We conclude that the circuit court erred in refusing 
to satisfy the judgment debt pursuant to Wis. Stat. § 806.19(4).  
The plain language of the statute unambiguously provides that 
when a proper application is received by the clerk and submitted 
to the judge for signature, the only thing required for 
satisfaction of a judgment debt and cessation of an associated 
judgment 
lien 
is 
that 
the 
underlying 
judgment 
has 
been 
discharged in bankruptcy.  Further supporting our conclusion is 
the legislative history of the statute, as well as persuasive 
precedent discussed herein.  We also conclude that § 806.19(4) 
is not in conflict with, and therefore not preempted by, federal 
bankruptcy law. 
I 
¶3 
The relevant facts are not in dispute.  On May 18, 
1994, Megal Development Corporation (Megal) obtained a small 
claims judgment for eviction and money damages against the 
Shadofs 
in 
the 
amount 
of 
$52,713.78. 
Pursuant 
to 
No. 
2004AP1594-FT   
 
3 
 
Wis. Stat. §§ 806.10(1), 806.15(1) and 815.20(1), the judgment 
subsequently became a lien upon the Shadofs’ homestead property 
located in Waukesha County, Wisconsin.  
¶4 
In February 2003 the Shadofs filed for Chapter 7 
bankruptcy relief in the United States Bankruptcy Court for the 
Eastern District of Wisconsin.  They included the Megal judgment 
as a dischargeable debt on Schedule D of their bankruptcy forms.  
On June 
12, 
2003, at 
the 
conclusion 
of 
the 
bankruptcy 
proceedings, Judge James E. Shapiro granted the Shadofs a 
Discharge of Debtor, which included a discharge of the debt to 
Megal.  The Trustee in bankruptcy found that after subtracting 
the first and second mortgages, the homestead exemption, and the 
judgment lien from the value of the homestead, there was no 
money left in the estate to pay unsecured creditors.  Therefore, 
the Trustee abandoned the property at which point it reverted to 
the Shadofs.  Coming out of bankruptcy, the Shadofs' homestead 
equity exceeded the $40,000 homestead exemption.   
¶5 
During the bankruptcy proceeding, Megal filed an 
Objection to Debtor’s Claim for Exemption on May 22, 2003, 
arguing that the Shadofs had equity in their homestead in excess 
of the $40,000 exemption.  The bankruptcy court set aside 
Megal’s objection as premature, because the Shadofs had not 
sought to avoid any portion of Megal’s judgment lien.  However, 
the bankruptcy court order specified that Megal retained the 
right to challenge any subsequent lien avoidance motion brought 
under 11 U.S.C. § 522(f)(2004).   
No. 
2004AP1594-FT   
 
4 
 
¶6 
On June 16, 2003, the Shadofs filed an application 
with the Waukesha County Circuit Court seeking an order 
satisfying the Megal judgment and the judgment lien pursuant to 
Wis. Stat. § 806.19(4).  Circuit Court Judge Donald J. Hassin, 
Jr. signed an order satisfying Megal’s judgment and associated 
judgment lien on June 20, 2003.  That same day, Megal filed an 
objection to the Shadofs’ application based upon the position 
that § 806.19(4) only permits satisfaction of judgments, and 
judgment liens, which have been discharged in bankruptcy. As a 
result, the circuit court vacated its previous order and 
scheduled the matter for further proceedings.   
¶7 
At the hearing on application for satisfaction, Megal 
argued that under Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773 
(1992), a Chapter 7 bankruptcy proceeding discharges a person’s 
in personam debt, but not the in rem judgment lien, which 
survives bankruptcy.  Because the judgment lien had not been 
discharged, Megal maintained it was inappropriate to satisfy the 
lien under Wis. Stat. § 806.19(4).  Megal asserted that the 
Shadofs could not obtain satisfaction of a debt under the 
statute when they possessed equity in their homestead in excess 
of the statutory exemption.  The circuit court, Judge Mark S. 
Gempeler presiding, agreed with Megal.  Judge Gempeler’s order 
did three things.  First, it denied satisfaction of the judgment 
granted to the Shadofs in bankruptcy.  Second, it granted 
Megal’s motion to extend indefinitely the judgment lien to 
permit Megal to execute on its judgment.  Finally, it stayed 
Megal’s right to execute the judgment during the pendency of the 
No. 
2004AP1594-FT   
 
5 
 
appeal of its decision, or the expiration of the Shadofs’ appeal 
rights. The Shadofs appealed to the court of appeals, which 
certified the matter to this court.   
II 
 ¶8 Statutory interpretation is an issue of law which we 
review de novo.  While the review is de novo, this court 
benefits from the analyses of the circuit court and the court of 
appeals.  State v. Anderson, 2005 WI 54, ¶23, 280 Wis. 2d 104, 
695 
N.W.2d 731 
(citing 
State 
v. 
Waushara 
County 
Bd. 
of 
Adjustment, 2004 WI 56, ¶14, 271 Wis. 2d 547, 679 N.W.2d 514). 
¶9 
  We address two issues in this case.  First, whether 
under 
the 
circumstances 
presented, 
Wis. Stat. § 806.19(4) 
requires the satisfaction of Megal’s judgment debt, including 
the judgment lien against the Shadofs’ homestead.  Second, if 
this court determines that § 806.19(4) does require satisfaction 
of the judgment debt, is that statute preempted by federal 
bankruptcy law.  We will consider each in turn. 
¶10 The 
first 
issue 
before 
the 
court 
is 
whether 
Wis. Stat. § 806.19(4) requires satisfaction of a judgment debt, 
including a judgment lien, when the underlying judgment has been 
discharged in bankruptcy, but the equity in the homestead to 
which the lien attaches exceeds the homestead exemption.2   
                                                 
2 Wisconsin Stat. § 806.19(4) states in relevant part:  
No. 
2004AP1594-FT   
 
6 
 
                                                                                                                                                             
(a) Any person who has secured a discharge of a 
judgment debt in bankruptcy and any person interested 
in real property to which the judgment attaches may 
submit an application for an order of satisfaction of 
the judgment and an attached order of satisfaction to 
the clerk of the court in which the judgment was 
entered. 
(b) The application and attached order shall be in 
substantially the following form: 
APPLICATION FOR ORDER OF SATISFACTION OF JUDGMENTS DUE 
TO DISCHARGE IN BANKRUPTCY 
TO: Clerk of Circuit Court . . . . County 
1. 
. . . . (Name of judgment debtor) has received an 
order of discharge of debts under the bankruptcy laws 
of the United States, a copy of which is attached, and 
. . . . (Name of judgment debtor or person interested 
in real property) applies for satisfaction of the 
following judgments: . . . . (List of judgments . . . 
.) 
2. 
a. Copies of the schedules of debts as filed with 
the bankruptcy court showing each judgment creditor 
for 
each 
of 
the judgments 
described 
above are 
attached; or 
b. Each judgment creditor for each of the judgments 
described 
above has 
been duly 
notified 
of the 
bankruptcy case in the following manner: . . . . 
(statement of form of notice). 
3. 
The undersigned believes that each judgment listed 
above has been discharged in bankruptcy, and no 
inconsistent ruling has been made by, or is being 
requested by any party from, the bankruptcy court.   
Dated this . . . .  day of . . . . , . . . . (year) 
. . . . (Signature) 
Judgment Debtor, Person Interested in Real Property or 
Attorney for Debtor or Person 
ORDER OF SATISFACTION 
No. 
2004AP1594-FT   
 
7 
 
¶11 Megal argues that the plain language of the statute is 
unambiguous, and clearly requires that in order for a judgment 
debt, including a judgment lien, to be satisfied under the 
statute, the lien itself, not simply the underlying judgment, 
must have been avoided in bankruptcy.  Megal bases this 
interpretation on the distinction between in personam judgments, 
and in rem judgment liens (an in rem action based upon in 
personam liability).  Bankruptcy provides a discharge of in 
personam liability for debts.  See Dewsnup, 502 U.S. at 418.  
However, a bankruptcy discharge leaves a lien on real property 
                                                                                                                                                             
The clerk of circuit court is directed to 
indicate on the judgment and lien docket that each 
judgment described in the attached application has 
been satisfied. 
Dated . . . 
. . . . (Signature) 
Circuit Judge 
. . . . 
(c) Any person submitting an application and attached 
proposed order shall serve a copy of the completed 
application and attached proposed order on each 
judgment creditor for each of the judgments described 
in the application within 5 business days after the 
date of submission. 
(d) Upon receipt of a completed application, the 
clerk shall submit the attached proposed order for 
signature by a judge after which the clerk shall 
satisfy of record each judgment described in the 
application.  Upon satisfaction, a judgment shall 
cease to be a lien on any real property that the 
person 
discharged 
in 
bankruptcy 
owns 
or 
later 
acquires. 
No. 
2004AP1594-FT   
 
8 
 
intact.  Id. (citing Johnson v. Home State Bank, 501 U.S. 78, 
84, 111 S. Ct. 2150 (1991) ("Rather, a bankruptcy discharge 
extinguishes only one mode of enforcing a claim –- namely, an 
action against the debtor in personam –- while leaving intact 
another –- namely, an action against the debtor in rem.")). 
¶12 Because an in rem judgment lien survives bankruptcy, 
Megal urges, a debtor must pursue an 11 U.S.C. § 522(f)(2004) 
motion in federal court to avoid the lien.  Therefore, to make 
Megal’s in personam judgment debt and in rem judgment lien 
eligible for satisfaction under Wis. Stat. § 806.19(4), the 
Shadofs must have successfully avoided the lien under § 522(f).  
Having failed to avoid the lien, Megal reasons, its judgment 
lien was not "discharged" in bankruptcy, and is therefore 
ineligible for satisfaction under § 806.19(4). 
¶13 The 
Shadofs 
also 
believe 
the 
statute 
to 
be 
unambiguous, yet in support of the opposite result.  The Shadofs 
maintain that the plain language of Wis. Stat. § 806.19(4) 
clearly states that if a judgment debt is discharged in 
bankruptcy, the judgment shall be satisfied if a proper 
application is made to the court.  The court of appeals seems to 
agree, 
stating 
in 
its 
certification 
"On 
the 
surface, 
Wis. Stat. § 806.19(4) appears to clearly and unambiguously 
entitle a judgment debtor to a satisfaction of a judgment debt 
that has been discharged in bankruptcy."   
¶14 The Shadofs contend that the statute provides a 
checklist of conditions which, if met, shall lead to the 
satisfaction of a creditor’s judgment and associated judgment 
No. 
2004AP1594-FT   
 
9 
 
lien.  Wisconsin Stat. § 806.19(4) requires judgment debtors to 
(1) "secure[] a discharge of a judgment debt in bankruptcy"; (2) 
give notice to judgment creditors; and (3) make a proper 
application for an order of satisfaction, certifying that the 
judgment has been discharged in bankruptcy.  The Shadofs do not 
dispute 
Megal’s 
position 
that 
ordinarily 
liens 
survive 
bankruptcy. See Johnson, 501 U.S. at 84.  Nor do they question 
the contention that 11 U.S.C. § 522(f) (2004) provides a means 
in the federal bankruptcy code for a debtor to avoid such liens.   
¶15 The Shadofs’ position is that Wis. Stat. § 806.19(4) 
provides a mechanism through operation of state law for a debtor 
to obtain satisfaction of a judgment and a judgment lien when 
the underlying judgment has been discharged in bankruptcy, 
whether or not the debtor has first obtained a lien avoidance.  
Having satisfied what they interpret to be the exclusive 
requirements of § 806.19(4), the Shadofs believe the circuit 
court should have satisfied the judgment and judgment lien. 
III 
¶16 [W]e 
have 
repeatedly 
held 
that 
statutory 
interpretation 
"begins 
with the 
language 
of the 
statute.  If the meaning of the statute is plain, we 
ordinarily stop the inquiry."  Statutory language is 
given its common, ordinary, and accepted meaning, 
except that technical or specially-defined words or 
phrases 
are 
given 
their 
technical 
or 
special 
definitional meaning.   
State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 
58, ¶45, 271 Wis. 2d 633, 681 N.W.2d 110 (citations omitted).   
No. 
2004AP1594-FT   
 
10 
 
¶17 In this case, both parties urge the court to conclude 
that the statute is unambiguous, yet they disagree as to its 
meaning.  We find the language of the statute clearly and 
unambiguously 
supports 
the 
Shadofs' 
position.  
Wisconsin Stat. § 806.19(4)(a) provides in relevant part that 
"[a]ny person who has secured a discharge of a judgment debt in 
bankruptcy . . . may submit an application for an order of 
satisfaction of the judgment. . . ."  Subsection (4)(d) then 
states in relevant part that "[u]pon receipt of a completed 
application . . . the clerk shall satisfy of record each 
judgment described in the application.  Upon satisfaction, a 
judgment shall cease to be a lien on any real property that the 
person discharged in bankruptcy owns or later acquires."   
¶18 Megal 
urges 
the 
court 
to 
adopt 
an 
alternate 
understanding of the statute.  Megal would have us read the 
statutory phrase "judgment" as encompassing two elements——the in 
personam judgment debt, and the associated judgment lien.  After 
discussing 
the 
discharge 
of 
a 
"judgment 
debt," 
Wis. Stat. § 806.19(4) refers exclusively to the satisfaction of 
a "judgment."  Megal argues that since the rights of secured 
creditors to proceed against property in rem survive Chapter 7 
proceedings, only the in personam judgment debt, not the entire 
judgment, has been "discharged." 3  Because the Shadofs failed to 
                                                 
3 A contrary position was expressed in In re Spore: "A 
discharge does not fail to void any aspect of a judgment; a 
discharge in bankruptcy voids all aspects of all judgments to 
the extent of the debtor’s personal liability."  In re Spore, 
105 B.R. 476, 478 (Bankr. W.D. Wis., 1989) (citation omitted). 
No. 
2004AP1594-FT   
 
11 
 
seek an order under 11 U.S.C. § 522(f)(2004) to avoid the in rem 
judgment lien, the lien was not "discharged in bankruptcy."  
Therefore, neither the judgment nor the judgment lien is 
eligible to be satisfied under § 806.19(4).   
¶19 The weakness in Megal’s position is evident when the 
statute is reviewed in light of terms used in bankruptcy.  
First, applying the technical meaning particular to bankruptcy, 
a discharge "voids any judgment at any time obtained, to the 
extent that such judgment is a determination of the personal 
liability of the debtor. . . ."  11 U.S.C. § 524(a)(1) (2004).4  
Black's Law Dictionary defines "discharge" as "[t]he release of 
a 
debtor 
from 
monetary 
obligations 
upon 
adjudication 
in 
bankruptcy."  Black’s Law Dictionary 475 (7th ed. 1999).  In 
other 
words, 
in 
personam 
liability 
is 
"discharged" 
in 
bankruptcy.  However, liens, including judicial liens, are 
"avoided" in bankruptcy.  Black's Law Dictionary 936 (7th ed. 
1999).5  Wisconsin Stat. § 806.19(4) clearly provides that a 
person who has "secured a discharge of a judgment debt" may 
apply 
for 
"an 
order 
of 
satisfaction 
of 
the 
judgment." 
Wis. Stat. § 806.19(4)(a) (emphasis added).  Therefore, even if 
                                                 
4 Section 
1 
of 
the 
Bankruptcy 
Act 
of 
1898 
defines 
"discharge" as "the release of a bankrupt from all of his debts 
which are provable in bankruptcy, except such as are excepted 
under this act."  Pitcairn v. Scully, 97 A. 120, 121 (Pa. 1916). 
5 Black’s 
Law 
Dictionary 
defines 
"lien 
avoidance" 
as 
"Bankruptcy.  A debtor’s depriving a creditor of a security 
interest in an asset of the bankruptcy estate.  11 U.S.C.A. §§  
506(d), 522(f)."  Black's Law Dictionary 936 (7th ed. 1999). 
No. 
2004AP1594-FT   
 
12 
 
we accept Megal’s parsing of the statute, satisfaction of the in 
personam money judgment would lead to a satisfaction of the 
entire judgment. Once the judgment is satisfied, the judgment 
lien would be satisfied in accord with § 806.19(4)(d).  There is 
no statutory language requiring that an associated judgment lien 
first be avoided before it can be satisfied. 
¶20 The 
final 
sentence 
of 
Wis. Stat. § 806.19(4)(d) 
states: "Upon satisfaction, a judgment shall cease to be a lien 
on any real property that the person discharged in bankruptcy 
owns or later acquires."  Wis. Stat. § 806.19(4)(d) (emphasis 
added).  Although "judgment debt" could be understood to be 
comprised of only the in personam judgment, a judgment lien is 
not a judgment in rem.6     
¶21 In this case, we find the language clearly provides 
that a debtor may have a judgment and an associated judgment 
lien satisfied through operation of state law, when the 
underlying judgment has been discharged in bankruptcy.7  Megal 
urges this court to read into the statute requirements that are 
                                                 
6 The creation of a judgment lien against a property does 
not create a new in rem judgment.  Rather, it provides a means 
of pursuing satisfaction of an in personam judgment by going 
after the debtor’s real property.  The court in Spore clarified 
the distinction. "The terms in rem and in personam describe 
actions, not aspects.  When used to describe a judgment, in rem 
means a judgment against a thing, a right, or status while in 
personam means a judgment against a person.  The terms in rem 
and 
in 
personam 
are 
mutually 
exclusive 
when 
applied 
to 
judgments."  Spore, 105 B.R. at 478 (citation omitted).  
7 We acknowledge that this result may cause holders of 
judgment liens to act more quickly, in similar situations, to 
execute on their liens. 
No. 
2004AP1594-FT   
 
13 
 
simply not there.8  Had the Wisconsin Legislature intended to 
require avoidance under 11 U.S.C. § 522(f) (2004) before a 
judgment and judgment lien could be satisfied through state 
procedure, it could have done so.9  It did not.  Another 
                                                 
8 In oral argument, Megal concluded that there were two 
situations under which it would be appropriate for a judgment 
lien to be satisfied under Wis. Stat. § 806.19(4): when a 
judgment lien is avoided under 11 U.S.C. § 522(f) (2004) or some 
other federal bankruptcy motion, and when a judgment lien never 
properly attached due to insufficient equity in a property.  See 
Rumage v. Gullberg, 2000 WI 53, ¶28, 235 Wis. 2d 279, 611 N.W.2d 
458 (holding a creditor’s properly docketed judgment was not a 
valid lien against fully exempt homestead property at the time 
the debtor sold the property).   
9 Other state legislatures have chosen to do so.  For 
example, the New Jersey statutes, in a section entitled 
"Cancellations Following Discharges in Bankruptcy," provide the 
following limitation to discharges after bankruptcy:  
Where the judgment was a lien on real property owned 
by the bankrupt prior to the time he was adjudicated a 
bankrupt, and not subject to be discharged or released 
under the provisions of the Bankruptcy Act, the lien 
thereof upon said real estate shall not be affected by 
said order and may be enforced, but in all other 
respects the judgment shall be of no force or 
validity, nor shall the same be a lien on real 
property acquired by him subsequent to his discharge 
in bankruptcy.   
N.J. Stat. Ann. § 2A:16-49.1 (West 2003). 
The Illinois statutes go further and provide for the 
revival of a judgment.  
If a judgment debtor has filed for protection under 
the United States Bankruptcy Code and failed to 
successfully adjudicate and remove a lien filed by a 
judgment creditor, then the judgment may be revived 
only as to the property to which a lien attached 
before the filing of the bankruptcy action.   
735 Ill. Comp. Stat. 5/2-1602 (West 2003). 
No. 
2004AP1594-FT   
 
14 
 
interpretation would require us to read additional language into 
the statute.  We decline to do so. 
IV 
¶22 Further buttressing our plain language reading of 
Wis. Stat. § 806.19(4) 
is 
the 
legislative 
history 
of 
the 
statute.  While the traditional rule is that "'resort to 
legislative history is not appropriate in the absence of a 
finding of ambiguity'" this court has recognized that "[o]n 
occasion . . . we consult legislative history to show how that 
history supports our interpretation of a statute otherwise clear 
on its face."  Seider v. O’Connell, 2000 WI 76, ¶¶50, 52, 236 
Wis. 2d 211, 612 N.W.2d 659. 
¶23 The 
legislative 
history 
of 
Wis. Stat. § 806.19(4) 
strongly supports the position that the discharge of an in 
personam judgment in bankruptcy allows for a satisfaction of 
both the judgment itself and an associated judgment lien.  In 
the past 20 years, there have been two significant amendments to 
the statute.  Both amendments were in response to a Wisconsin 
court having narrowly construed the statute against the debtor. 
1985 Wis. Act 137, 1995 Wis. Act 393.  As we have repeatedly 
stated, when a statute is repealed and recreated following a 
judicial interpretation, it is "presumed to be the result of 
conscious 
deliberation 
on 
the 
part 
of 
the 
legislature."  
Verdoljak v. Mosinee Paper Corp., 200 Wis. 2d 624, 633, 547 
N.W.2d 602 (1996) (citation omitted).      
¶24 The first significant amendment of the statute came in 
1985, following the court of appeals' decision in State Central 
No. 
2004AP1594-FT   
 
15 
 
Credit Union v. Bigus, 101 Wis. 2d 237, 304 N.W.2d 148 (Ct. App. 
1981).  In Bigus, the question before the court was quite 
similar to the issue in this case: "whether a satisfaction order 
entered on behalf of a discharged bankrupt relieves the 
discharged bankrupt of the statutorily created in rem effects of 
a judgment. . . ."  Id. at 239-40. 
¶25 The court of appeals sought to reconcile what it felt 
to be "apparently conflicting remedial statutes."  Id. at 241.  
Wisconsin Stat. § 806.15(1) gave a judgment creditor a lien 
against real property owned by the judgment debtor.    Yet the 
last sentence of the statute provided "the limitation that, 
where a satisfaction order has been entered upon a claim 
discharged in bankruptcy, a judgment based upon that claim 
cannot 'thereafter become a lien on any real property of the 
discharged person then owned or thereafter acquired.'"  Bigus, 
101 
Wis. 
2d 
at 
241. 
 
In 
apparent 
conflict 
was 
Wis. Stat. § 806.19(4) that "provide[d] that a person discharged 
in bankruptcy can obtain a satisfaction of judgment order from 
the proper court upon application."  Id.  The Bigus court read 
the two statutes together "to mean that a judgment lien can be 
enforced against the bankrupt’s property if the judgment was 
obtained before a satisfaction order is entered pursuant to sec. 
806.19(4)."  Id. at 243.   
¶26  The Bigus court failed to consider the language 
immediately preceding the statutory language it relied upon, 
however.  The final sentence of Wis. Stat. § 806.15 actually 
stated "A judgment based upon a claim discharged in bankruptcy 
No. 
2004AP1594-FT   
 
16 
 
shall upon entry of the order of satisfaction or discharge cease 
to be and shall not thereafter become a lien on any real 
property of the discharged person then owned or acquired." 
Wis. Stat. § 806.15(1) (1981-82) (emphasis added).  By ignoring 
the statutory phrase "cease to be" the court was able to reason 
that the legislature only intended to prevent the attachment of 
liens on property after the conclusion of the bankruptcy 
proceeding.   
¶27 The legislature expressed its displeasure with the 
Bigus decision by amending the statute in 1985.  The 1985 
Wisconsin 
Act 
137 
removed 
the 
language 
from 
Wis. Stat. § 806.15(1) upon which the court of appeals had based 
its reasoning and repealed and recreated Wis. Stat. § 806.19(4).   
¶28 Several years later, in Overhead Door Co. v. Hazard, 
the Dane County Circuit Court interpreted the amended statute.10    
The issue in that case was "whether a surviving judicial lien 
against 
the 
bankrupt’s 
property 
precludes 
a 
motion 
for 
satisfaction of the judgment under sec. 806.19(4) Wis. Stats."  
In Overhead Door, the judgment debtor had obtained a discharge 
                                                 
10 The amended language provided that "Any person who has 
secured a discharge in bankruptcy that renders void one or more 
judgments . . . may submit an application for an order of 
satisfaction. . . ."  Wis. Stat. § 806.19(4) (1987-88).  The 
proposed form in subsection (4)(b) included a statement that 
"The undersigned believes that each judgment listed above has 
been completely voided by the discharge in bankruptcy . . . ."  
Wis. Stat. § 806.19(4)(b) (1987-88).  Subsection (4)(d) stated 
"Upon receipt of a completed application, the clerk shall submit 
the attached proposed order for signature by a judge after which 
the clerk shall satisfy of record each judgment described in the 
application."  Wis. Stat. § 806.19(4)(d) (1987-88). 
No. 
2004AP1594-FT   
 
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of the underlying judgment, but his motion for an order to avoid 
the judgment lien under 11 U.S.C. § 522(f)(2004) had been 
denied.  The circuit court denied satisfaction of the lien under 
the Wisconsin statute, stating that because the lien was not 
successfully avoided under § 522(f) "the judgment at issue was 
not 'completely voided by the discharge in bankruptcy' as 
required by sec. 806.19(4)."  
¶29 In 1995, the legislature acted again.  In a move 
similar to that ten years earlier, the legislature, in its 1995 
amendments, removed the language upon which the Overhead Door 
court had based its reasoning.  Rather than requiring the debtor 
to certify that each judgment had been "completely voided by the 
discharge," it was now sufficient that the listed judgments be 
"discharged in bankruptcy." 1995 Wis. Act 393.  In addition, the 
final 
sentence 
of 
the 
current 
statute 
was 
added 
to 
Wis. Stat. § 806.19(4)(d).  With both of these amendments, the 
legislature clearly was attempting to correct an interpretation 
of the statute that ran counter to its intent.   
¶30 Further supporting our plain language interpretation 
of the statute is In re Spore, 105 B.R. 476 (Bankr. W.D. Wis. 
1989), a 1989 case from the United States Bankruptcy Court for 
the 
Western 
District 
of 
Wisconsin 
which 
interpreted 
Wis. Stat. § 806.19(4).  Although the facts were different, and 
the court was examining the 1985 amendment of the statute, the 
argument employed by the debtors in that case was exactly the 
No. 
2004AP1594-FT   
 
18 
 
same as that put forward by Megal.11  The court in Spore reasoned 
that prior examinations of § 806.19(4) and its predecessors 
which had construed debtor’s rights narrowly, including Bigus, 
had failed to consider Wis. Stat. § 806.21 and the combined 
effect of the two statutes.  The court, by presenting a summary 
of cases that have examined § 806.19(4) and its predecessors, 
started from the position that "Wisconsin has provided debtors 
discharged in bankruptcy the legal basis and the legal means to 
avoid liens in state court since 1943."  Spore, 105 B.R. at 483.   
¶31 In 
analyzing 
the 
relationship 
between 
federal 
bankruptcy law and Wis. Stat. §§ 806.21 and 806.19(4), the court 
emphasized the unitary nature of judgments.  Spore, 105 B.R. at 
480.  Spore reiterated the fact that a lien survives discharge 
of the underlying judgment in bankruptcy, and emphasized that "a 
discharge in bankruptcy voids all aspects of all judgments to 
the extent of the debtor’s personal liability."  Id. at 478 
(citing 11 U.S.C. § 524(a)(2)(1989)).  
                                                 
11 The debtors reason as follows . . . the discharge 
alone voids the judicial lien only as to personal 
liability.  Since the Bankruptcy Code does not by 
itself render void the in rem aspects of a judgment . 
. . the only reasonable construction of order of 
satisfaction under Wis. Stat. § 806.19(4) is that such 
order only voids the in personam aspects of such 
judgment unless some action has been taken under other 
sections of the Bankruptcy Code to have the judgment 
lien voided.   
Spore, 105 B.R. at 478. 
 
No. 
2004AP1594-FT   
 
19 
 
¶32 At the time of the Spore decision, Wis. Stat. § 806.21 
provided "If a judgment is satisfied in whole or in part or as 
to any judgment debtor and such satisfaction docketed, such 
judgment shall, to the extent of such satisfaction, cease to be 
a lien. . . ." Wis. Stat. § 806.21 (1987-88).  Reading § 806.21 
in conjunction with Wis. Stat. § 806.19(4), and in light of 
Wisconsin’s 
long 
history 
of 
providing 
a 
mechanism 
for 
extinguishing judgment liens after bankruptcy, the Spore court 
concluded that Wisconsin law "provide[s] the legal basis and the 
legal means for debtors discharged in bankruptcy to void liens 
surviving bankruptcy."  Spore, 105 B.R. at 485.  The court 
explained:  
At the present time, Wis. Stat. § 806.15(1) provides 
for the creation of a lien upon the docketing of a 
judgment; 
Wis. Stat. § 806.19(4) 
provides 
for 
the 
satisfaction of a judgment by a debtor discharged in 
bankruptcy; and Wis. Stat. § 806.21 provides for the 
destruction of a lien upon satisfaction.  Clearly, no 
further ambiguity exists for Wis. Stat. § 806.19(4). 
Id. 
¶33 Megal contends that Spore is no longer good law after 
the United States Supreme Court decisions in Johnson and 
Dewsnup.  Both Johnson and Dewsnup stand for the proposition 
that liens pass through bankruptcy despite the discharge of an 
underlying judgment.  Neither holding altered the law with 
regard to this concept.  Megal misstates the reasoning in Spore 
by arguing that the court held, in error, that a bankruptcy 
discharge voided both the in personam and in rem aspects of a 
No. 
2004AP1594-FT   
 
20 
 
judgment.  Since that is an incorrect reading of the Spore 
decision, we conclude that Spore is still good law.   
¶34 The Wisconsin Legislature, on multiple occasions, has 
demonstrated its intent to allow debtors to obtain satisfaction 
of both a judgment and a judgment lien when the underlying 
judgment has been discharged in bankruptcy.  In this decision, 
we are recognizing and enforcing policy choices made by the 
Wisconsin Legislature.  If the legislature determines such 
policies are no longer consistent with the best interests of the 
citizens of this state, it is its exclusive prerogative to amend 
the statute.   
V 
¶35 We 
next 
turn 
to 
the 
issue 
of 
whether 
Wis. Stat. § 806.19(4) is preempted by the Supremacy Clause of 
the United States Constitution. U.S. Const. art. VI, cl. 2.  
Because we find that § 806.19(4) does not conflict with federal 
bankruptcy law, the statute is not preempted. 
¶36 The United States Constitution is "the supreme law of 
the land."  U.S. Const. art VI, cl. 2.  As the United States 
Supreme Court explained in Gibbons v. Ogden: 
[I]t has been contended, that if a law passed by a 
State, 
in 
the 
exercise 
of 
its 
acknowledged 
sovereignty, comes into conflict with a law passed by 
Congress in pursuance of the constitution, they affect 
the subject, and each other, like equal opposing 
powers. But the framers of our constitution foresaw 
this state of things, and provided for it, by 
declaring the supremacy not only of itself, but of the 
laws made in pursuance of it.  The nullity of any 
act, inconsistent with the constitution, is produced 
No. 
2004AP1594-FT   
 
21 
 
by the declaration, that the constitution is the 
supreme law.  
Gibbons v. Ogden, 22 U.S. 1, 210-11 (1824). 
¶37 "Federal 
preemption 
may 
occur 
through 
express 
preemption or implied preemption.  Congress may expressly 
preempt contradictory –- or even coterminous -– state laws in 
the text of the laws it passes."  Olstad v. Microsoft Corp., 
2005 WI 121, ¶38, ___ Wis. 2d ___, 700 N.W.2d 139 (citations 
omitted).  "Congress may also impliedly preempt state laws by 
completely occupying a given regulatory field."  Id.  In 
addition, "implied conflict preemption will be found 'where 
state law stands as an obstacle to the accomplishment and 
execution of the full purposes and objectives of Congress.'" 
Miezin v. Midwest Express Airlines, Inc., 2005 WI App 120, ¶10, 
___ Wis. 2d ___, 710 N.W.2d 626.  However, "if the preemption is 
only implied, courts typically require clear evidence of 
legislative intent to preempt."  Olstad, ___ Wis. 2d ___, ¶38.  
Further, the U.S. Supreme Court has articulated a "strong 
presumption" against preemption.12  Id.   
                                                 
12 Discussing the importance of limiting preemption to only 
those 
situations 
obviously 
intended 
by 
Congress, 
Justice 
Frankfurter noted in his concurrence in Bethlehem Steel Co. v. 
New York State Labor Relations Board. "To construe federal 
legislation so as not needlessly to forbid preexisting State 
authority is to respect our federal system. Any indulgence in 
construction should be in favor of the States, because Congress 
can speak with drastic clarity whenever it chooses to assure 
full federal authority, completely displacing the States."  
Bethlehem Steel Co. v. New York State Labor Relations Bd.,  330 
U.S. 
767, 
780, 67 S. Ct. 
1026 
(1947) (Frankfurter, J. 
concurring).  See also Younger v. Harris, in which Justice Black 
emphasized the importance of the nation's federal system: 
 
No. 
2004AP1594-FT   
 
22 
 
¶38 In this case, there is no express preemption. 13  In 
the absence of explicit language preempting state law, the 
                                                                                                                                                             
[T]he notion of "comity," that is, a proper respect for 
state functions, a recognition of the fact that the 
entire country is made up of a Union of separate state 
governments, and a continuance of the belief that the 
National Government will fare best if the States and 
their institutions are left free to perform their 
separate functions in their separate ways.  This, 
perhaps for lack of a better and clearer way to 
describe 
it, 
is 
referred 
to 
by 
many 
as 
"Our 
Federalism," and one 
familiar with the 
profound 
debates that ushered our Federal Constitution into 
existence is bound to respect those who remain loyal 
to the ideals and dreams of "Our Federalism."  The 
concept does not mean blind deference to "States' 
Rights" any more than it means centralization of 
control over every important issue in our National 
Government and its courts.  The Framers rejected both 
these courses.  What the concept does represent is a 
system in which there is sensitivity to the legitimate 
interests of both State and National Governments, and 
in which the National Government, anxious though it 
may be to vindicate and protect federal rights and 
federal interests, always endeavors to do so in ways 
that will not unduly interfere with the legitimate 
activities of the States.  It should never be 
forgotten that this slogan, "Our Federalism," born in 
the early struggling days of our Union of States, 
occupies a highly important place in our Nation's 
history and its future. 
 
Younger v. Harris, 401 U.S. 37, 44-45, 91 S. Ct. 746 (1971). 
 
 
13 Even 
though 
bankruptcy 
is 
one 
of 
only 
two 
legislative powers in Article I, Section 8 of the 
Constitution in which the power to make "uniform" laws 
is made explicit, the presumption against displacing 
state law by federal bankruptcy law is just as strong 
in bankruptcy as in other areas of federal legislative 
power.   
No. 
2004AP1594-FT   
 
23 
 
question of "whether a state statute is in conflict with a 
federal statute and hence invalid under the Supremacy Clause is 
essentially a two-step process. . . ."  Perez v. Campbell, 402 
U.S. 637, 644, 91 S. Ct. 1704 (1971).   First, the court must 
construe the state and federal statutes.  Id.  Second, we must 
ascertain whether they are in conflict.  Id. 
¶39 The 
Shadofs 
argue 
that 
an 
interpretation 
of 
Wis. Stat. § 806.19(4) that allows a debtor to extinguish a 
judgment and judgment lien upon the satisfaction of the 
underlying judgment in bankruptcy does not in any way conflict 
with federal bankruptcy law.  Instead, it reflects policy 
decisions of the legislature to provide additional protections 
to Wisconsin residents at the conclusion of a bankruptcy 
proceeding. 
¶40 Megal 
maintains 
that 
an 
interpretation 
of 
Wis. Stat. § 806.19(4) that would allow a judgment lien to be 
satisfied when an underlying in personam judgment was discharged 
in bankruptcy, even though equity remains after applying the 
homestead exemption, would impermissibly interfere with the 
Bankruptcy Code (Code), and therefore be preempted by the 
                                                                                                                                                             
Pacific Gas & Elec. Co. v. California ex rel. California 
Dept. of Toxic Substances Control, 350 F.3d 932, 943 (9th 
Cir. 2003).   
No. 
2004AP1594-FT   
 
24 
 
Supremacy Clause. 14  Megal’s position is that such a reading of 
the statute would afford substantive rights to the debtor 
expressly at odds with the Code’s provisions concerning the 
equitable distribution of assets among debtors and creditors.  
If the judgment lien is extinguished by operation of statute, 
Megal argues, the Shadofs would end up with a windfall, perhaps 
as much as $20,000, directly in conflict with the Code’s goal of 
providing debtors with a "fresh start" not a "head start."  
Taylor v. AGE Fed. Credit Union, 3 F.3d 1512, 1516 (11th Cir. 
1993).   
¶41 In support of its preemption argument, Megal cites to 
a long list of cases that stand for the proposition that state 
laws that interfere with the Bankruptcy Code, or provide 
additional regulations, are preempted.  Megal further argues 
that exemptions that operate only in the context of bankruptcy 
override Congress’s determination of how property should be 
administered, and are therefore preempted.   
¶42 One of the cases Megal relies on is Kanter v. 
Moneymaker, in which the United States Court of Appeals for the 
Ninth Circuit struck down a California statute that limited the 
                                                 
14 Article I, Section 8, clause 4 of the United States 
Constitution gives Congress the power "To establish . . . 
uniform Laws on the subject of Bankruptcies throughout the 
United States."  This provision is not at issue in this case.  
The "Uniformity Clause is not a restriction upon the states.  It 
. . . operates as a limitation on the type of bankruptcy laws 
Congress may enact.  It is difficult, if not impossible, to see 
how a state law can violate a restriction on the powers of the 
national legislature."  In re Cross, 255 B.R. 25, 31 (Bankr. 
N.D. Ind. 2000)(citations omitted).   
No. 
2004AP1594-FT   
 
25 
 
assignment of an interest in monies recovered from personal 
injury actions, which were otherwise available to satisfy 
creditors’ claims.  Kanter v. Moneymaker, 505 F.2d 228 (9th Cir. 
1974).  The court held that the statute "'stands as an obstacle 
to the accomplishment and execution of the full purposes and 
objectives of Congress,' since it would operate to deny to the 
trustee assets which could ordinarily be reached in satisfying 
the claims of general creditors."  Id. at 231 (citations 
omitted).  Megal, therefore, concludes that although California 
had the right to exempt property from the claims of creditors, 
it could not create exemptions which either interfered with 
bankruptcy proceedings, or operated only in the context of a 
bankruptcy.  
¶43 Megal further cites In re Cross, 255 B.R. 25 (Bankr. 
N.D. Ind. 2000), to support the proposition that exemptions that 
operate only in the context of a bankruptcy are preempted by 
federal law.  Cross relied on the Supremacy Clause to strike 
down an Indiana statute that prevented a trustee in bankruptcy 
from reaching property held by spouses as a tenancy by the 
entireties, to satisfy the claims of creditors when only one of 
the two spouses filed bankruptcy.  Id. at 32.  However, "outside 
of bankruptcy, Indiana law allows entireties property to be used 
to satisfy the claims of creditors, but only for the joint debts 
of both spouses. . . ."  Id.  The offending Code section at 
issue 
"completely 
exempt[ed] 
entireties 
property 
from 
administration by a bankruptcy trustee where only one of the two 
No. 
2004AP1594-FT   
 
26 
 
spouses files bankruptcy, without regard to the existence of 
joint creditors."  Id. (citation omitted).   
¶44 We 
conclude 
that 
both 
Kanter 
and 
Cross 
are 
distinguishable.  Both cases involved state exemption statutes 
that operated to limit the powers of the trustee during the 
bankruptcy proceeding from reaching assets that could ordinarily 
be reached by creditors.  The court, in each case, found that 
while the Bankruptcy Act recognizes state exemptions to assist 
the debtor to make a fresh start, the provisions at issue failed 
to 
meet 
the 
criteria 
of 
a 
general 
exemption. 
 
While 
Wis. Stat. § 806.19(4) 
is 
particular 
to 
the 
bankruptcy 
proceeding, in that it requires the discharge of judgments in 
bankruptcy before it can operate, it does not create an 
exemption.  Nor does it limit the powers of the trustee during 
bankruptcy or operate to interfere in any way with the 
bankruptcy proceeding itself——it simply does not operate during 
bankruptcy.  Section 806.19(4) is dormant until the conclusion 
of the federal bankruptcy proceeding, and, thus, it does not 
conflict with the Code.   Therefore, neither Kanter nor Cross 
requires us to conclude that § 806.19(4) is preempted by federal 
law. 
¶45 Further, federal bankruptcy law allows variations 
among states in judgment clearing statutes.  South Dakota, for 
example, provides that: 
[a]ny person discharged in bankruptcy may file in the 
office of each clerk of court in which a judgment has 
been rendered . . . a certified copy of any bankruptcy 
court order specifying any judgment discharged in 
No. 
2004AP1594-FT   
 
27 
 
bankruptcy.  The clerk shall enter the discharge order 
in the judgment docket and the entry shall discharge 
the judgment specified from and after that date.   
S.D. Codified Laws § 15-16-20 (West 2003).  New York requires 
the debtor wait a minimum of one year from the time of the 
discharge in bankruptcy before he may apply for an order 
"directing that a discharge or qualified discharge of record be 
marked upon the docket of the judgment."  N.Y. Debt. & Cred. Law 
§ 150 (McKinney 2003).  New York courts will direct a qualified 
discharge be placed on the judgment docket only if: 
(a) it does not appear whether the judgment was a lien 
on real property owned by the bankrupt or debtor prior 
to the commencement of the bankruptcy proceedings, or 
(b) if it appears that the judgment was a lien on such 
real property and it is not established to the 
satisfaction 
of 
the 
court 
that 
the 
lien 
was 
invalidated or surrendered. . . . 
Id.  Wisconsin Stat. § 806.19(4) provides a mechanism to allow a 
lien which has survived a bankruptcy to be satisfied through a 
state procedure.  For states that do not have a means of 
satisfying liens, 11 U.S.C. § 522(f)(2004) provides a mechanism 
to avoid liens through the federal bankruptcy code.  However, 
the Code itself takes no position on the enforcement or lack 
thereof of liens after there has been a discharge in bankruptcy, 
unless § 522(f) has been utilized.   
¶46 Megal additionally argues that an interpretation of 
Wis. Stat. § 806.19(4) allowing for a judgment and a judgment 
lien to be satisfied after the underlying judgment is discharged 
would operate contrary to Wisconsin’s homestead exemption, where 
equity remains after applying the exemption.  We disagree.  
No. 
2004AP1594-FT   
 
28 
 
Neither statute relies upon, or makes reference, to the 
operation of the other.  They are not contingent, nor in 
conflict. 
¶47 We 
agree 
with 
the 
Shadofs’ 
position 
that 
Wis. Stat. § 806.19(4) does not conflict with, and is therefore 
not preempted by, federal bankruptcy law.  In this case, the 
Shadofs’ property, including their homestead, was with the 
Trustee in bankruptcy for purposes of administration.  After 
determining that once secured creditors were accounted for, 
along with the homestead exemption, there would be no assets 
left in the estate to pay unsecured creditors, the Trustee 
abandoned the homestead property which then reverted back to the 
Shadofs.   
¶48 Finally, Megal urges that the Shadofs’ interpretation 
of the statute would violate the Due Process Clause of the XIV 
Amendment to the United States Constitution, by depriving them 
of a property right without due process of law.  The Shadofs 
maintain, and we agree, that a judgment lien is nothing more 
than a mechanism for the enforcement of an in personam money 
judgment.  The judgment and the associated judgment lien only 
exist 
through 
the 
operation 
of 
the 
Wisconsin 
statutes.  
Wis. Stat. §§ 806.10, 806.15. 
Such a lien, under a judgment "does not constitute or 
create an estate, interest, or right of property in 
the lands which may be bound for its satisfaction; it 
gives merely a right to levy on such lands to the 
exclusion of adverse interests subsequent to the 
judgment." . . . "the lien of a judgment on lands does 
not constitute, in law, per se, a property or right in 
No. 
2004AP1594-FT   
 
29 
 
the land itself, and a plaintiff who obtains a 
judgment does not thereby acquire any interest or 
estate in the property." 
Musa v. Segelke & Kohlhaus Co., 224 Wis. 432, 435, 272 N.W. 657 
(1937).  The issue of due process was first raised at the oral 
arguments on this case, but was not fully argued or briefed by 
counsel for the parties, and, therefore, we do not address it 
further.   
VI 
¶49 It is for these reasons we conclude that the circuit 
court erred in refusing to satisfy the judgment debt pursuant to 
Wis. Stat. § 806.19(4).  The plain language of the statute 
unambiguously provides that when a proper application is 
received by the clerk and submitted to the judge for signature, 
the only thing required for satisfaction of a judgment debt and 
cessation of an associated judgment lien is that the underlying 
judgment has been discharged in bankruptcy.  The legislative 
history of the statute, as well as persuasive precedent 
discussed herein, provide additional support for our conclusion.  
We also conclude that § 806.19(4) is not in conflict with, and 
therefore is not preempted by, federal bankruptcy law.   
By the Court. The 
decision 
of 
the 
circuit 
court 
is 
reversed, and this matter is remanded for further proceedings 
consistent with this decision.   
No. 
2004AP1594-FT   
 
 
 
1