Title: Dow Family, LLC v. PHH Mortgage Corp.

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2014 WI 56 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2013AP221   
COMPLETE TITLE: 
Dow Family, LLC, 
          Plaintiff-Appellant-Petitioner, 
     v. 
PHH Mortgage Corporation, 
          Defendant-Respondent, 
U.S. Bank, N.A., 
          Defendant. 
 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at 350 Wis. 2d 411, 838 N.W.2d 119 
(Ct. App. 2013 – Published) 
PDC No: 2013 WI App 114 
 
 
OPINION FILED: 
July 10, 2014 
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
March 19, 2014 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit    
 
COUNTY: 
Barron  
 
JUDGE: 
James D. Babbitt 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
ABRAHAMSON, C.J., concurs. (Opinion filed.)   
 
DISSENTED: 
        
 
NOT PARTICIPATING: BRADLEY, J., did not participate.    
 
 
 
ATTORNEYS: 
 
For the plaintiff-appellant-petitioner, there were briefs 
by Joe Thrasher and Thrasher, Pelish, Franti & Heaney, Ltd., 
Rice Lake, and oral argument by Joe Thrasher. 
 
For the defendant-respondent, there was a brief by Mary Sue 
Anderson and Mallery & Zimmerman, S.C., Wausau, and oral 
argument by Mary Sue Anderson. 
 
An amicus curiae brief was filed by John E. Knight, Kirsten 
E. Spira, and Boardman & Clark LLP, Madison, on behalf of 
 
 
2 
Wisconsin Bankers Association, and oral argument by John E. 
Knight. 
 
An amicus curiae brief was filed by Michael B. Apfeld and 
Godfrey & Kahn, S.C., Milwaukee; and Robert J. Pratte and 
Fulbright & Jaworski LLP, Minneapolis, on behalf of Mortgage 
Electronic Registration Systems, Inc.  
 
 
 
2014 WI 56
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2013AP221 
(L.C. No. 
2010CV355) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Dow Family, LLC, 
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
PHH Mortgage Corporation, 
 
          Defendant-Respondent, 
 
U.S. Bank, N.A., 
 
          Defendant. 
 
 
 
FILED 
 
JUL 10, 2014 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed and 
cause remanded to the circuit court.   
 
¶1 
N. PATRICK CROOKS, J.  In 2009, Dow Family, LLC, (Dow) 
purchased a condominium located at unit four in the Island of 
Happy Days Condominiums.  Unfortunately, the purchase did not 
result in happy days for Dow because PHH Mortgage Corporation 
(PHH) asserted that the condominium remained burdened by a 
mortgage after closing.  Dow asks this court to find that the 
outstanding mortgage is unenforceable.  Specifically, Dow argues 
No. 
2013AP221   
 
2 
 
that even if PHH can prove it holds the underlying note in 
question, it does not follow that PHH also holds the mortgage, 
which would give PHH the right to bring a foreclosure action in 
regard to the property to satisfy any outstanding debts. 
¶2 
At the time of purchase, Dow satisfied a mortgage from 
2003.  Before closing, Dow also inquired about another mortgage 
from 2001 that was listed on the title commitment.  The sellers' 
attorney informed Dow that the 2001 mortgage was mistakenly 
listed on the title commitment.  This information, however, was 
incorrect because the 2001 mortgage, purportedly owed to PHH, 
did exist and went unsatisfied at the time of closing.   
¶3 
Dow sought declaratory judgment that the 2001 mortgage 
did not constitute a lien on the property at the time of the 
2009 sale.  Dow's position is that the statute of frauds 
requires 
written 
documentation 
of 
mortgage 
assignments.  
Specifically, Dow asserts that PHH is unable to produce 
documentation indicating that the mortgage was assigned to PHH 
at the time of closing.  Therefore, Dow argues the 2001 mortgage 
was not an enforceable lien at the time it purchased the 
condominium in 2009.  After PHH initiated a foreclosure action 
against Dow, the circuit court consolidated the two cases.   
¶4 
We are asked to determine whether PHH could properly 
enforce the 2001 mortgage at the time Dow purchased the property 
in 2009.  PHH argues 1) that it received the applicable note by 
assignment in 2001, and 2) that it also held the mortgage at the 
time of the 2009 sale because, under the doctrine of equitable 
assignment, the mortgage follows the note.  To evaluate PHH's 
No. 
2013AP221   
 
3 
 
argument we must determine whether the doctrine of equitable 
assignment exists in Wisconsin.  We must then determine whether 
that doctrine exempts mortgage assignments from the statute of 
frauds.   
¶5 
We agree with the circuit court and the court of 
appeals that the doctrine of equitable assignment is alive and 
well in Wisconsin.  The doctrine's existence is evidenced in our 
case law, and we are convinced that the case law we rely upon 
should not be distinguished or discredited due to its age or 
changes in banking practices.  We further conclude that the 
language of Wis. Stat. § 409.203(7) (2011-12),1 which governs 
liens 
securing 
the 
right 
to 
payment, 
codifies 
equitable 
assignment.  Finally, the application of equitable assignment in 
this case results in no unfairness to Dow. 
¶6 
We further hold that the doctrine of equitable 
assignment does not conflict with the statute of frauds outlined 
in Wis. Stat. § 706.02.  Equitable assignment occurs by 
operation of law, which satisfies Wis. Stat. § 706.001(2)(a),2 a 
statutory exception to the statute of frauds. 
                                                 
1 All references to the Wisconsin statutes are to the 2011-
12 
version 
unless 
otherwise 
indicated. 
 
Wisconsin 
Stat. 
§ 409.203(7) governs "Lien securing right to payment."  It 
provides, "The attachment of a security interest in a right to 
payment or performance secured by a security interest or other 
lien on personal or real property is also attachment of a 
security interest, mortgage, or other lien."  Wis. Stat. 
§ 409.203(7). 
2 Wisconsin Stat. § 706.001(2)(a) excludes transfers of land 
from the statute of frauds when the land transaction occurs 
"[b]y act or operation of law." 
No. 
2013AP221   
 
4 
 
¶7 
Therefore, under the doctrine of equitable assignment, 
we hold that a mortgage automatically passes by operation of law 
upon the assignment of a mortgage note, which, as we noted 
above, satisfies a statutory exception to the statute of frauds.  
Accordingly, we affirm the court of appeals decision, which 
affirmed the circuit court, in part, reversed in part, and 
remanded the cause.  Like both the circuit court and court of 
appeals, we conclude that the doctrine of equitable assignment 
applies and does not violate the statute of frauds; however, the 
issue of whether PHH has the necessary documents to enforce the 
note in question must be determined by the circuit court. 
I. 
PROCEDURAL BACKGROUND 
¶8 
The circuit court ruled in favor of PHH and held that 
"there is no material issue of fact as to PHH holding the note 
and thereby getting the mortgage equitably assigned to them."  
This ruling from the bench by the Barron County Circuit Court, 
Honorable James D. Babbitt presiding, followed arguments on 
PHH's summary judgment motion.  The circuit court held that the 
doctrine of equitable assignment is alive and well in Wisconsin 
and that PHH possessed the underlying note.  Therefore, it 
concluded that under the doctrine of equitable assignment, the 
2001 mortgage was equitably assigned to PHH when it received the 
note in 2001.  Because the 2001 mortgage remained unsatisfied at 
the time of the 2009 sale, foreclosure in favor of PHH was 
appropriate.  Accordingly, the circuit court granted PHH's 
motion for summary judgment.  The circuit court later issued its 
No. 
2013AP221   
 
5 
 
written findings of fact, conclusions of law, and judgment of 
foreclosure.   
¶9 
We now review a published court of appeals decision 
that affirmed the circuit court in part, reversed in part, and 
remanded for further proceedings.  Dow Family, LLC v. PHH Mortg. 
Corp., 2013 WI App 114, ¶2, 350 Wis. 2d 411, 838 N.W.2d 119.  
The court of appeals, relying on Tidioute Sav. Bank v. Libbey, 
101 Wis. 193, 77 N.W. 182 (1898), Tobin v. Tobin, 139 Wis. 494, 
121 N.W. 144 (1909), Muldowney v. McCoy Hotel Co., 223 Wis. 62, 
269 N.W. 655 (1936), and Wis. Stat. § 409.203(7), agreed with 
the circuit court that the doctrine of equitable assignment 
applies in Wisconsin.  Dow Family, LLC, 350 Wis. 2d 411, ¶¶26-
37.  It further held that application of equitable assignment 
did not conflict with the statute of frauds outlined in Wis. 
Stat. § 706.02.  Id., ¶38.  It held that because the mortgage 
was equitably assigned to PHH by virtue of PHH holding the note,  
the transfer of the mortgage occurred by operation of law, which 
is an exception to the statute of frauds.  Id.; see also Wis. 
Stat. § 706.02(2)(a). 
¶10 The court of appeals, however, found that the circuit 
court erred in granting summary judgment to PHH because PHH 
failed to show that it could enforce the note.  Dow Family, LLC, 
350 Wis. 2d 411, ¶24.  Specifically, the court of appeals 
concluded that PHH's documentation at summary judgment did not 
show that it held an authenticated copy of the note in question.  
Id.  Furthermore, the court of appeals held that PHH's arguments 
as to whether the note could be considered self-authenticating 
No. 
2013AP221   
 
6 
 
were undeveloped, and it declined to address those arguments.  
Id., ¶22.  Therefore, the court of appeals reversed and remanded 
for trial on the issue of PHH's ability to enforce the note in 
question.3  Id., ¶24.  
¶11 Dow appeals, arguing that even if the doctrine of 
equitable assignment exists in Wisconsin, a point that it does 
not concede, the doctrine cannot serve as an exception to the 
statute of frauds, which it argues requires that mortgage 
assignments be done in writing. Dow further contends that 
because the statute of frauds cannot be overcome by the doctrine 
of equitable assignment, no enforceable lien existed when Dow 
purchased the condominium in question; therefore, Dow asserts 
that PHH cannot foreclose on the property.4 
II. 
FACTUAL BACKGROUND 
¶12 In 2001, U.S. Bank loaned William E. Sullivan and Jo 
Y. Sullivan $146,250.  A note dated May 17, 2001, which lists 
                                                 
3 PHH did not appeal the portion of the court of appeals' 
decision that reversed the circuit court and remanded the cause.  
Therefore, the issue of whether PHH can produce and enforce an 
authenticated copy of the note in question is not before this 
court. 
4 If this court were to decide that the doctrine of 
equitable assignment does not apply, Dow asks this court to 
decide two additional issues.  First, Dow asks the court to hold 
that it took the property in question free and clear of the 2001 
mortgage.  Second, Dow asks whether its good faith in purchasing 
the property is relevant to PHH's ability to foreclose on the 
property.  Because we conclude that equitable assignment applies 
and is not in conflict with the statute of frauds, we do not 
address Dow's additional arguments. 
No. 
2013AP221   
 
7 
 
U.S. Bank as the lender and the Sullivans as the borrowers 
evidences this transaction.   
¶13 The 2001 note is secured by a mortgage on a 
condominium located at unit four, Island of Happy Days, Mikana, 
Wisconsin, in Barron County.  The mortgage documentation is 
dated May 17, 2001, and explicitly references the above-
described 2001 note.  The mortgage lists the Sullivans as the 
borrower/mortgagor and U.S. Bank as the lender.  The mortgage 
also lists the Mortgage Electronic Registration System (MERS)5 as 
both the nominee for U.S. Bank and the mortgagee.6  The mortgage 
was recorded with the Barron County Register of Deeds on June 
                                                 
5 Generally speaking, 
Mortgage 
Electronic 
Registration 
Systems, 
Inc., 
commonly known as MERS, is a corporation registered in 
Delaware and headquartered in the Virginia suburbs of 
Washington, D.C.  MERS operates a computer database 
designed to track servicing and ownership rights of 
mortgage 
loans 
anywhere 
in 
the 
United 
States. 
Originators 
and 
secondary 
market 
players 
pay 
membership dues and per-transaction fees to MERS in 
exchange for the right to use and access MERS records. 
Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, 
and the Mortgage Electronic Registration System, 78 U. Cin. L. 
Rev. 1359, 1361 (2010).  
  
6 It is unclear to us how MERS can act as both a nominee of 
U.S. Bank and as the mortgagee.  See Peterson, supra note 5, at 
1374-75 (explaining that MERS cannot act as "both an agent and a 
principal with respect to the same property right").  To resolve 
the narrow questions before us, we need not determine whether 
the dual role of MERS is proper. 
No. 
2013AP221   
 
8 
 
22, 2001.  PHH asserts that it received an assignment of the 
2001 note shortly after it came into existence.7 
¶14  In 2009, Dow purchased the condominium at issue8 from 
the Sullivans.  Prior to the purchase, Dow obtained a title 
commitment that indicated that the property in question was 
subject to the above-described 2001 mortgage as well as a 2003 
mortgage in the amount of $140,000.9  The title commitment 
                                                 
7 This court takes no position on whether PHH received an 
assignment of the note or whether PHH holds an authenticated 
copy of the note.  However, the record contains a "notice of 
assignment, sale, or transfer of servicing rights" signed by the 
Sullivans.  The notice states, "You are hearby notified that the 
servicing of your mortgage loan . . . is being assigned, sold or 
transferred from U.S. Bank, N.A. to PHH Mortgage Services, 
effective immediately following the closing of your loan."  This 
notice is undated except for an electronic date stamp that 
appears to read May 11, 2001; therefore, the document may refer 
to the 2001 note.   
The record also contains a copy of the 2001 note that 
includes an undated endorsement in blank to Cendant Mortgage 
Corporation, d/b/a PHH Mortgage Services Corporation.  Finally, 
the record contains a copy of a letter dated November 24, 2009, 
which PHH's counsel sent to Dow's attorney.  In regard to the 
2001 note, the letter states, 
A copy of the assignment of the Note and Mortgage from 
USBank to MERS has not yet been located.  However, our 
records clearly evidence that the Note and Mortgage 
were assigned into MERS and are now owned by Fannie 
Mae.  PHH has serviced the loan since 2001 in the name 
PHH Mortgage Corporation.    
8 Dow's purchase of the condominium was one part of a larger 
transaction; however, only the sale of unit four is at issue 
here. 
9 The title commitment also evidenced a third mortgage, 
which is not at issue.   
No. 
2013AP221   
 
9 
 
documentation listed U.S. Bank as the lender for both the 2001 
and 2003 mortgages.10   
¶15 Prior 
to 
closing, 
Dow's 
attorney 
contacted 
the 
Sullivans' attorney to inquire about the 2001 mortgage.  Email 
correspondence between the attorneys indicates that William 
Sullivan represented that the 2001 mortgage should no longer be 
on the title and that the 2001 mortgage was the same as the 2003 
mortgage.  Dow apparently relied on this information to conclude 
that the 2003 mortgage evidenced a refinancing of the note that 
underlay the 2001 mortgage.  Closing documents reflect that Dow 
satisfied a single mortgage to U.S. Bank in the amount of 
$143,140.89.         
¶16  On November 24, 2009, PHH's counsel informed Dow's 
attorney 
that 
the 
2001 
note, 
serviced 
by 
PHH, 
remained 
outstanding and delinquent and that PHH would commence a 
foreclosure action if necessary.  On June 23, 2010, Dow filed 
suit against PHH and U.S. Bank seeking a declaratory judgment 
that it purchased the condominium free and clear of the 2001 
mortgage.  On August 9, 2010, PHH initiated a foreclosure action 
against Dow.  On February 1, 2011, Dow and PHH stipulated to the 
consolidation of the two cases. 
¶17 Questions about the assignment, location of, and 
authenticity of the 2001 note are not before this court.  
Instead, we are asked to determine whether the doctrine of 
                                                 
10 Dow asserts that the title commitment should have 
indicated that MERS was the mortgagee under the 2001 mortgage 
rather than U.S. Bank. 
No. 
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10 
 
equitable assignment applies in Wisconsin.  We first consider 
this 
question 
before 
discussing 
whether 
the 
doctrine 
of 
equitable assignment constitutes an exception to the statute of 
frauds. 
III. STANDARD OF REVIEW AND PRINCIPLES OF INTERPRETATION 
¶18 Whether or not the doctrine of equitable assignment 
exists in Wisconsin is a question of law.  This court reviews 
questions of law de novo.  D.S.P. v. State, 166 Wis. 2d 464, 
471, 480 N.W.2d 234 (1992). 
¶19 The question of whether the doctrine of equitable 
assignment violates the statute of frauds requires statutory 
interpretation.  "Statutory interpretation is a question of law 
for our independent review; however, we benefit from the 
discussions of the court of appeals and the circuit court."  
Kroner v. Oneida Seven Generations Corp, 2012 WI 88, ¶78, 342 
Wis. 2d 626, 819 N.W.2d 264. 
¶20 When conducting statutory interpretation we first look 
to the plain language of the statute.  State ex rel. Kalal v. 
Circuit Court for Dane Cnty., 2004 WI 58, ¶45, 271 Wis. 2d 633, 
681 N.W.2d 110.  We consider extrinsic sources to determine 
statutory meaning only when the plain language of the statute 
could reasonably be interpreted in more than one way.  Id., 
¶¶46-47.           
IV. 
ANALYSIS 
A. EQUITABLE ASSIGNMENT 
¶21 Under the doctrine of equitable assignment, the 
assignment of a mortgage note is automatically followed by the 
No. 
2013AP221   
 
11 
 
mortgage.  Dow's arguments regarding equitable assignment are 
intertwined with its arguments regarding the statute of frauds, 
which we address in turn.  However, Dow specifically questions 
references to equitable assignment in Wisconsin's common law, 
which it asserts are outdated and distinguishable. 
¶22 PHH counters that equitable assignment is alive in 
Wisconsin as evidenced by established case law.  PHH also 
asserts that Wis. Stat. § 409.203(7) codifies the doctrine of 
equitable 
assignment. 
 
Finally, 
PHH 
contends 
that 
the 
application of equitable assignment results in no unfairness to 
mortgagors.  
¶23  We agree with both the circuit court and the court of 
appeals that the doctrine of equitable assignment is alive and 
well in Wisconsin.  We also agree with the court of appeals' 
reliance on both case law and Wis. Stat. § 409.203(7) as 
evidence 
of 
the 
doctrine's 
existence 
and 
application 
in 
Wisconsin.   
¶24 Evidence of the doctrine of equitable assignment 
exists in Wisconsin case law dating back to at least 1859.  In 
Croft v. Bunster, 9 Wis. 503 (1859),11 a case involving real 
estate transfers that were encumbered by mortgages, this court 
stated, 
The debt is the principal thing, the mortgage the 
incident; the transfer of the debt carries with it the 
mortgage. It is the debt which gives character to the 
                                                 
11 Both WestLaw and Lexis use 9 Wis. 503 as the citation for 
Croft v. Bunster; however, the case appears at 9 Wis. 457 in the 
Wisconsin Reports, published by Callaghan & Company.  
No. 
2013AP221   
 
12 
 
mortgage, and fixes the rights and remedies of the 
parties 
under 
it, 
and 
not 
the 
mortgage 
which 
determines the nature of the debt. It cannot be 
contended that the securing of a negotiable instrument 
by a mortgage, destroys its negotiable character. We 
are of opinion, therefore, that both principle and 
sound policy require that the rights and remedies of 
an assignee, under the mortgage, should be co-
extensive with those which he has under the instrument 
securing the debt. 
Croft, 9 Wis. at 511.12  While the same party in Croft appears to 
have held both the mortgage and the note, see id. at 506, this 
fact does not discredit the court's early recognition of the 
idea of equitable assignment. 
¶25 In addition to Croft, Tidioute, 101 Wis. 193, Tobin, 
139 Wis. 494, and Muldowney, 223 Wis. 62, support the existence 
and application of equitable assignment in Wisconsin, as the 
court of appeals recognized.  See Dow Family, LLC, 350 Wis. 2d 
411, ¶¶26-37.  In Tidioute, Libbey, the defendant, secured two 
notes held by W.T. Richards & Co., who later sold each note to a 
different bank.  Tidioute, 101 Wis. at 193-95.  "[N]o formal 
assignment of the defendants' guaranty was made in either case."  
Id. at 195.  While the issue in this case specifically addressed 
the distinction between a general guaranty and a special 
guaranty to determine whether the defendant could be held 
accountable to the current holders of the notes in question, the 
                                                 
12 Croft utilizes a lengthy quotation from Mathews v. 
Wallwyn, 4 Vesey 118 (1798), an English case. It appears to rely 
on Mathews as the origin of equitable assignment. However, the 
conclusion of this quotation is unclear as the Croft opinion 
fails to include closing quotation marks.  Reference to the text 
of Mathews v. Wallwyn itself confirms that the quotation we cite 
is from Croft and not from Mathews. 
No. 
2013AP221   
 
13 
 
case 
gives 
ample 
support 
for 
the 
doctrine 
of 
equitable 
assignment.  The court stated, 
A guaranty is defined to be "a separate, independent 
contract, by which the guarantor undertakes, for a 
valuable consideration, to be answerable for the 
payment of some particular debt, or future debts, or 
the performance of some duty, in case of the failure 
of another person primarily liable to pay or perform;" 
and it is said that such guaranty is assignable, with 
the obligation secured thereby, and that it goes with 
the principal obligation, and is enforceable by the 
same persons who can enforce that. The rule is that 
the transfer of a note carries with it all security 
without any formal assignment or delivery, or even 
mention of the latter. 
Id. at 196 (citations omitted).  The court further explained, 
The transfer of these notes to the plaintiffs carried 
with it, by operation of law, all securities for their 
payment. The debt is the principal thing, and the 
securities are only an incident. The transfer of the 
former, therefore, carries with it the right to the 
securities, and amounts to an equitable assignment of 
them. No matter what the form of the security is, 
whether a real-estate or chattel mortgage, or a pledge 
of 
collateral 
notes, 
bonds, 
or 
other 
personal 
property, the purchaser of the principal takes with it 
the right to resort to these securities; and this is 
so, although the assignment or transfer does not 
mention them. 
Id. at 197 (emphasis added). 
 
¶26 In Tobin, a father, Joseph Tobin, loaned money to a 
third party.  Tobin, 139 Wis. at 494.  Joseph named his son, 
John Tobin, in the note and mortgage related to this loan 
without informing John; Joseph continued to hold the note and 
recorded the mortgage.  Id. at 494-95.  Following John's death, 
Joseph petitioned the court to declare that John never had any 
interest in the note and mortgage.  Id. at 495.  John's widow 
No. 
2013AP221   
 
14 
 
later opposed the petition.  Id. at 495-96.  While no transfer 
of the note from Joseph to John occurred in this case, the court 
still stated the rule of equitable assignment in its discussion.  
Id. at 499.  It stated, "A mortgage securing a promissory note 
passes as an incident upon transfer of the note."  Id. 
 
¶27 Finally, in Muldowney, Esther Muldowney loaned money 
to the McCoy Hotel Company (McCoy).  Muldowney, 223 Wis. at 64.  
Muldowney held on to three of the notes that resulted from this 
loan and endorsed the remaining 12 notes.  Id.  Later, the 
Niagara Building Corporation (Niagara) purchased the remaining 
12 notes from a third party.  Id.  McCoy defaulted on its loan 
and Niagara initiated a replevin action.  Id.  McCoy argued 
"that the Niagara Building Corporation cannot maintain this 
action because no formal assignment of the mortgage or any 
interest therein was executed and delivered to it in connection 
with the transfer of the notes."  Id. at 65.  Although this case 
addressed a chattel mortgage, the court cited the general 
principle of equitable assignment in holding in favor of 
Niagara,  
It is well established that, in the absence of an 
agreement to the contrary, the purchase of a note or 
debt secured by a mortgage carries with it the lien of 
the mortgage, because of which, in the absence of any 
formal assignment of the latter to the purchaser, he 
is considered the equitable owner thereof and of the 
security afforded thereby. 
Id. at 65-66. 
¶28 Dow argues that these cases, which each support the 
existence and application of equitable assignment of mortgages, 
No. 
2013AP221   
 
15 
 
are outdated and distinguishable.  We recognize that the cases 
relied upon by PHH, the court of appeals, and now this court 
each deal with different issues and factual scenarios.  However, 
we agree with the court of appeals that each case stands for 
"the general proposition that the security for a note is 
equitably assigned upon transfer of the note, without the need 
for a written assignment."  Dow Family, LLC, 350 Wis. 2d 411, 
¶34.  Furthermore, references to equitable assignment principles 
in Croft are especially noteworthy as that case concerned 
mortgages on real estate.  Likewise, in Tidioute, the court 
explicitly stated that equitable assignment applies to real 
estate mortgages. 
¶29 We also note that the doctrine of equitable assignment 
is not unique to Wisconsin case law.  In Carpenter v. Longan, 83 
U.S. 271, 275 (1872), the United States Supreme Court stated: 
"The transfer of the note carries with it the security, without 
any formal assignment or delivery, or even mention of the 
latter."  In the Restatement (Third) of Property (Mortgages) 
§ 5.4(a) (1997) we find additional support for the doctrine of 
equitable assignment: "A transfer of an obligation secured by a 
mortgage also transfers the mortgage unless the parties to the 
transfer agree otherwise." 
¶30 Further, we agree with the court of appeals' reliance 
on Wis. Stat. § 409.203(7) and hold that § 409.203(7) codifies 
the doctrine of equitable assignment. Chapter 409 sets forth 
Wisconsin's adoption of the Uniform Commercial Code (UCC) 
governing secured transactions.  Wisconsin Stat. § 409.203(7) is 
No. 
2013AP221   
 
16 
 
titled, "Lien securing right to payment," and it provides: "The 
attachment of a security interest in a right to payment or 
performance secured by a security interest or other lien on 
personal or real property is also attachment of a security 
interest in the security interest, mortgage, or other lien."   
¶31 The parties disagree over the plain meaning of Wis. 
Stat. § 409.203(7).  Dow argues that the statute "merely means 
that when a secured debt is itself assigned as a security to 
another, the original security interest accompanies the debt."  
In contrast, PHH argues that the language of § 409.203(7) 
codifies equitable assignment.   
¶32 Like the court of appeals, we conclude that each party 
provides a reasonable interpretation of the plain language of 
§ 409.203(7).  Therefore, we must look outside of the plain 
language of the statute for additional clarification.  See 
Kalal, 271 Wis. 2d 633, ¶50.   
¶33 Wisconsin 
Stat. 
§ 
409.203(7) 
adopted 
the 
exact 
language from Section 9-203(g) of the UCC.  Compare U.C.C. § 9-
203 (2000), with Wis. Stat. § 409.203(7).  The UCC comment to 
§ 9-203(g) provides: "Subsection (g) codifies the common-law 
rule that a transfer of an obligation secured by a security 
interest or other lien on personal or real property also 
transfers the security interest or lien."  U.C.C. § 9-203 cmt. 9 
(2000).  The language of the comment directly supports PHH's 
argument that § 409.203(7) codified equitable assignment.   
¶34 Finally, the application of equitable assignment to 
this case results in no unfairness to Dow.  Dow spends a 
No. 
2013AP221   
 
17 
 
considerable amount of time in its brief discussing MERS.  In 
doing so, Dow cites to numerous authorities that have been 
highly critical of MERS practices.  We recognize that MERS has 
been criticized; however, this case is not about MERS' practices 
and MERS is not a party to this case.   
¶35 Instead, our decision today clarifies the existence 
and application of equitable assignment in Wisconsin.  This 
clarification results in no unfairness to Dow.  First, in 
general, equitable assignment does not require mortgagors to 
satisfy anything beyond their debt(s) and accompanying liens.  
In addition, specific to this case, Dow had notice of the 2001 
mortgage prior to the 2009 sale.  Here, the title commitment 
informed Dow of the outstanding 2001 mortgage.  Dow apparently 
relied on information from the Sullivans and their attorney to 
conclude that the 2001 mortgage was listed on the title 
commitment in error.  However, Dow had full opportunity to 
investigate the existence of the 2001 mortgage prior to the 
purchase.  
¶36 Our determination that the doctrine of equitable 
assignment has long existed in Wisconsin, however, does not end 
our discussion.  We next consider the heart of Dow's argument: 
whether the statute of frauds prevents the application of 
equitable assignment under these circumstances.    
 
              
B. EQUITABLE ASSIGNMENT AND THE STATUTE OF FRAUDS 
¶37 Generally speaking, the statute of frauds applies to 
real estate conveyances.  It requires that "every transaction by 
which any interest in land is created, aliened, mortgaged, 
No. 
2013AP221   
 
18 
 
assigned or may be otherwise affected in law or equity" must be 
in writing.  Wis. Stat. §§ 706.001, 706.02.  Wisconsin Stat.  
§ 706.001(2), however, provides several exceptions 
to the 
statute of frauds requirements outlined in Wis. Stat. § 706.02.  
One such exception includes "transactions which an interest in 
land is affected by act or operation of law."  Wis. Stat.  
§ 706.001(2)(a). 
¶38 Dow argues that this exception does not exempt a 
mortgage assignment from the statute of frauds, which thus 
invalidates the doctrine of equitable assignment.  Specifically, 
Dow argues that this court should adopt a definition of "by 
operation of law" that is similar to the definition relied upon 
by the Michigan Supreme Court in Kim v. JPMorgan Chase, N.A., 
493 Mich. 98, 825 N.W.2d 329 (2012).  The Michigan Supreme Court 
explained that "a transfer that takes place by operation of law 
is one that occurs unintentionally, involuntarily, or through no 
affirmative act of the transferee."  Id. at 117.  Under this 
definition, Dow argues that PHH's acquisition of the mortgage 
could not have been by operation of law because it occurred 
intentionally through the assignment of the note. 
¶39 PHH asks this court to hold that equitable assignment 
falls within the "by operation of law" exception found in Wis. 
Stat. § 706.001(2)(a). 
¶40 We agree with PHH and hold that under the doctrine of 
equitable assignment a mortgage is automatically transferred by 
operation of law when the note is transferred.  Therefore, we 
hold that the "by operation of law exception" found in Wis. 
No. 
2013AP221   
 
19 
 
Stat. § 706.001(2)(a) exempts the mortgage assignment at issue 
from the statute of frauds. 
¶41 In reaching our conclusion, we first draw support from 
Tidioute.  There this court stated, "The transfer of these notes 
to the plaintiffs carried with it, by operation of law, all 
securities for their payment."  Tidioute, 101 Wis. at 197 
(emphasis added).  Although Tidioute does not explicitly address 
the statute of frauds, the statute of frauds existed at the time 
the case was decided. 
¶42 Wisconsin 
Stat. 
ch. 
104, 
§ 2302 
(1898) 
was 
in 
operation when this court decided Tidioute in 1898.  Section 
2302, titled "Conveyance of land, etc. to be in writing" 
provided:  
No estate or interest in lands, other than leases for 
a term not exceeding one year, nor any trust or power 
over or concerning lands, or in any manner relating 
thereto, 
shall 
be 
created, 
granted, 
assigned, 
surrendered or declared, unless by act or operation of 
law, or by deed or conveyance in writing, subscribed 
by 
the 
party 
creating, 
granting, 
assigning, 
surrendering or declaring the same, or by his lawful 
agent, thereunto authorized by writing. 
The statute of frauds operating in 1898 contains substantially 
similar language to our current statute.  Compare Wis. Stat. ch. 
104, § 2302 (1898), with Wis. Stat. § 706.001(1)-(2). 
¶43 Even earlier evidence exists that the statute of 
frauds 
was 
operating 
in 
the 
background 
of 
this 
court's 
statements 
in 
Tidioute 
and 
other 
early 
cases 
discussing 
equitable assignment.  In Yates v. Martin, Justice Hubbell, 
writing in dissent, stated, "The statute of frauds of this state 
No. 
2013AP221   
 
20 
 
declares every contract for the sale of any interest in lands 
void, unless it is in writing . . . ."  Yates v. Martin, 2 Pin. 
171, 178 (Wis. Jan. 1849). 
¶44 Furthermore, 
we 
are 
convinced 
that 
equitable 
assignment can be considered "under operation of law" under 
Dow's proposed definition of the phrase.  Here, PHH allegedly 
obtained the note through assignment.  PHH, however, took no 
action with regard to the mortgage itself because the mortgage 
automatically transferred upon the alleged assignment of the 
note.  We consider the automatic nature of the mortgage 
following the note under equitable assignment to be "by 
operation of law." 
V. 
CONCLUSION 
¶45 We agree with the circuit court and the court of 
appeals that the doctrine of equitable assignment is alive and 
well in Wisconsin.  The doctrine's existence is evidenced in our 
case law, and we are convinced that the case law we rely upon 
should not be distinguished or discredited due to its age or 
changes in banking practices.  We further conclude that the 
language of Wis. Stat. § 409.203(7), which governs liens 
securing the right to payment, codifies equitable assignment.  
Finally, the application of equitable assignment in this case 
results in no unfairness to Dow. 
¶46 We further hold that the doctrine of equitable 
assignment does not conflict with the statute of frauds outlined 
in Wis. Stat. § 706.02.  Equitable assignment occurs by 
No. 
2013AP221   
 
21 
 
operation of law, which satisfies Wis. Stat. § 706.001(2)(a), a 
statutory exception to the statute of frauds. 
¶47 Therefore, under the doctrine of equitable assignment, 
we hold that a mortgage automatically passes by operation of law 
upon the assignment of a mortgage note, which, as we noted 
above, satisfies a statutory exception to the statute of frauds.  
Accordingly, we affirm the court of appeals decision, which 
affirmed the circuit court, in part, reversed in part, and 
remanded the cause.  Like both the circuit court and court of 
appeals, we conclude that the doctrine of equitable assignment 
applies and does not violate the statute of frauds; however, the 
issue of whether PHH has the necessary documents to enforce the 
note in question was not appealed and must be determined by the 
circuit court.  
By the Court.—The decision of the court of appeals is 
affirmed and cause remanded to the circuit court.  
¶48 ANN WALSH BRADLEY, J., did not participate. 
 
 
 
No.  2013AP221.ssa 
 
1 
 
¶49 SHIRLEY S. ABRAHAMSON, C.J.   (concurring).  This is a 
mortgage foreclosure case, one of many in Wisconsin and across 
the country.1  PHH Mortgage Corporation, which claims to be 
assignee of the note and the mortgage in the instant case, has 
been a party in over 2,300 cases filed in the Wisconsin circuit 
courts, with many cases still open.  PHH, and by extension the 
Mortgage Electronic Recording System (MERS), upon which it 
relies, represent the modern mortgage system, which has become 
the subject of frequent litigation in the Great Recession, 
during which many homeowners have lost the American dream——
private home ownership.   
¶50 Some fear the economic damage from foreclosures; 
others fear the economic damage from encumbering the mortgage 
financing industry.  MERS benefits its members, but the question 
remains whether the MERS system provides benefits to home buyers 
and borrowers and whether MERS has a deleterious effect on real 
property and mortgage law.  
¶51 I do not join the majority opinion or support its 
blanket application of the nineteenth-century doctrine of 
equitable assignment to the modern mortgage system.  
¶52 The 
doctrine 
of 
equitable 
assignment 
and 
the 
longstanding state policy favoring recording of documents 
                                                 
1 After the housing bubble burst, foreclosure filings in 
Wisconsin "more than doubled from 2005 to 2008."  James 
McNeilly, An Introduction to Mortgage Foreclosure in Wisconsin, 
Inside Track (State Bar of Wisconsin, Madison, Wis.), Mar. 18, 
2009, 
available 
at 
http://www.wisbar.org/newspublications/insidetrack/pages/article
.aspx?volume=1&issue=4&articleid=5513 (last visited June 30, 
2014).  
No.  2013AP221.ssa 
 
2 
 
affecting real estate are being applied to twenty-first-century 
transactions 
that 
were 
not 
imagined 
when 
the 
equitable 
assignment 
doctrine 
and 
the 
Wisconsin 
recording 
statutes 
developed.  The majority opinion does not attempt to address the 
practical concerns of the current mortgage foreclosure crisis, 
the realities of the modern mortgage market, the values of the 
recording system, or the current and future problems associated 
with the modern mortgage system presented in the instant case.   
¶53 My 
concurrence 
describes 
the 
characteristics 
of 
traditional and modern real estate mortgages, the doctrine of 
equitable assignment, the purpose and value of the recording 
statutes, and unresolved issues raised by the majority opinion's 
blanket acceptance of the doctrine of equitable assignment and 
MERS. 
I 
¶54 PHH is just one of a long list of MERS's members.2  
Developed in 1993, MERS is a major player in the modern real 
estate mortgage system and the secondary mortgage market.  MERS 
is a private, "member-based organization" whose members include 
"lenders, servicers, sub-servicers, investors, and government 
institutions."3  Members pay fees to subscribe to MERS's system 
                                                 
2 See MERS Member Search, www.mersinc.org/about-us/member-
search (last visited June 30, 2014). 
3 Shelby D. Green & JoAnn T. Sandifer, MERS Remains Afloat 
in a Sea of Foreclosures, Prob. & Prop., July/Aug. 2013, at 18, 
19. 
No.  2013AP221.ssa 
 
3 
 
of 
"electronic 
processing 
and 
tracking 
of 
ownership 
and 
transfers of mortgages."4 
¶55 MERS is the mortgagee of record and, as the majority 
opinion points out, is strangely also the agent for the entity 
that ultimately holds the note and mortgage.5  MERS is presumably 
both principal and agent, and the entity on whose behalf MERS 
holds legal title to the mortgage changes every time the 
promissory note is assigned.6 
¶56 MERS does not have an interest in the promissory 
notes; it has never had such an interest.7  Yet sometimes the 
debtor is advised that MERS does have an interest in the note.8  
Further, MERS does not lend money or collect on the notes 
secured by mortgages for which it is named as mortgagee.9    
¶57 MERS facilitates transfers of mortgage notes without 
the necessity of recording an assignment of the mortgage.10  
Members of MERS avoid recording fees because "MERS remains the 
                                                 
4 MERSCORP, Inc. v. Romaine, 861 N.E.2d 81, 83 (N.Y. 2006). 
5 Majority op., ¶13, n.6. 
6 Jackson v. Mortgage Elec. Registration Sys., Inc., 770 
N.W.2d 487, 503 (Minn. 2009) (Page, J., dissenting). 
7 Green & Sandifer, supra note 3, at 18, 19. 
8 See majority op., ¶13, n.7.  
9 Christopher L. Peterson, Foreclosure, Subprime Mortgage 
Lending, and the Mortgage Electronic Registration System, 78 U. 
Cin. L. Rev. 1359, 1377-78 (2010). 
10 Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 278 (N.Y. App. 
Div. 2011). 
No.  2013AP221.ssa 
 
4 
 
mortgagee of record" in county recording offices regardless of 
how many times the note is transferred.11       
II 
¶58 The doctrine of equitable assignment is a common-law 
principle that "a transfer of an obligation secured by a 
mortgage on property also constitutes a transfer of the 
mortgage."12  The idea of equitable assignment is that a mortgage 
has no significance without reference to the note it secures.    
¶59 Although the majority opinion concludes "that the 
doctrine 
of 
equitable 
assignment 
is 
alive 
and 
well 
in 
Wisconsin"13 "as evidenced by established case law,"14 its 
proffered case law does not support its conclusion. 
¶60 The majority opinion cites no Wisconsin precedent 
explaining or applying the doctrine of equitable assignment in a 
case involving real estate in which the note and mortgage were 
held by two different persons.  See majority op., ¶¶24-28.  The 
                                                 
11 Id. 
12 James M. Davis, 
The Mortgage-Follows-the-Note Rule, 
Norton Bankr. L. Adviser, Sept. 2013.  See also Carpenter v. 
Longan, 83 U.S. (16 Wall.) 271 (1872); 5 Herbert Thorndike 
Tiffany, The Law of Real Property § 1449 (3d ed. 1939).  
Article 9 of the Uniform Commercial Code, Wis. Stat. 
§ 409.203(7), declares that it codifies the common-law rule of 
equitable assignment.  However, this provision may apply only to 
personal property.  See Uniform Commercial Code Comment 1, Wis. 
Stat. Ann. § 409.101 (West 2003). 
13 Majority op., ¶23. 
14 Majority op., ¶22. 
No.  2013AP221.ssa 
 
5 
 
Wisconsin cases upon which the majority relies are not analogous 
to the instant case.   
¶61 The Wisconsin cases cited by the majority opinion do 
not all involve real estate and do not involve instances in 
which the note and the mortgage are held by different persons.  
For example, Tidioute Savings Bank v. Libbey addresses the 
validity of a guaranty to repay a sum of money after the 
corresponding notes were sold,15 and Muldowney v. McCoy Hotel Co. 
concerns the equitable assignment of a chattel mortgage.16  The 
majority opinion glosses over the policy concerns unique to real 
estate transactions, particularly notice, in its use of these 
cases.  
¶62 More importantly, the Wisconsin cases the majority 
opinion highlights that do address real estate mortgages concern 
situations in a traditional setting in which the note and the 
mortgage are held by the same party, as in Tobin v. Tobin,17 
Croft v. Bunster,18 and Carpenter v. Longan.19 In the instant 
case, however, the foreclosure proceedings were initiated when 
the note and the mortgage were separated.   
                                                 
15 Tidioute Sav. Bank v. Libbey, 101 Wis. 193, 197, 77 
N.W. 182 (1898) (cited by majority op., ¶25). 
16 Muldowney v. McCoy Hotel Co., 223 Wis. 62, 269 N.W. 655 
(1936) (cited by majority op., ¶27). 
17 Tobin v. Tobin, 139 Wis. 494, 498, 121 N.W. 144 (1909) 
(cited by majority op., ¶26). 
18 Croft v. Bunster, 9 Wis. 503, 506 (1859) (cited by 
majority op., ¶24). 
19 Carpenter v. Longan, 83 U.S. 271, 272 (1872) (cited by 
majority op., ¶29). 
No.  2013AP221.ssa 
 
6 
 
¶63 The majority opinion relies on "dicta" in nineteenth- 
and early-twentieth-century cases (when "dicta" really meant 
dicta) and applies the dicta to a new set of twenty-first-
century facts.    
¶64 Modern mortgage transactions differ from traditional 
mortgage transactions.  In the traditional, non-MERS mortgage, 
the homeowner borrows money from a lender-mortgagee.  The 
lender-mortgagee keeps the note and records the mortgage.  The 
lender-mortgagee may transfer both the note and mortgage but 
generally keeps them together, and the assignment of the 
mortgage is ordinarily recorded.20   
¶65 In a MERS transaction, MERS is neither the lender nor 
is it the payee on the promissory note.  The borrower executes a 
note to the lender.  The borrower executes the mortgage, 
however, to MERS.  MERS is the holder of the mortgage but not of 
the promissory note.  The mortgage is recorded, with MERS as the 
mortgagee.21  Under the traditional view of equitable assignment, 
naming MERS as the mortgagee separates the mortgage from the 
promissory note and may cause the note to become unsecured.22  
                                                 
20 Adam Leitman Bailey & Dov Treiman, Moving Beyond the 
Mistakes of MERS to A Secure and Profitable National Title 
System, Prob. & Prop., July/Aug. 2012, at 40, 41. 
21 Silverberg, 86 A.D.3d at 278 ("MERS remains the mortgagee 
of record in local county recording offices regardless of how 
many times the mortgage is transferred . . . ."). 
22 Restatement (Third) of Property (Mortgages) § 5.4 cmt. a 
(1997); Christian J. Hansen, Note, Property:  Innovations to 
Historic 
Legal 
Traditions——Jackson 
v. 
Mortgage 
Electronic 
Registration Systems, Inc., 37 Wm. Mitchell L. Rev. 355, 368 
(2010). 
No.  2013AP221.ssa 
 
7 
 
¶66 The MERS system assists the secondary mortgage market 
in which mortgages are bought and sold.  Many entities may hold 
a partial interest in the note.  Indeed, it is sometimes 
difficult to track all the assignments of the note.23  Lenders 
have been sloppy about keeping track of the promissory notes.  
In the present case, PHH asserts that it has the note, yet the 
case is remanded to the circuit court to determine whether PHH 
actually has the note (and thus the mortgage interest by 
equitable assignment) entitling it to foreclosure.    
¶67 The majority opinion ignores the characteristics of 
the modern real estate mortgage to find a simple solution to the 
instant case——a solution that creates its own set of problems. 
III 
¶68 I turn to the Wisconsin statutes regarding recording 
of real estate transactions.  Wisconsin statutes governing 
recording of real estate transactions date back to 1849.24  The 
recording statutes serve the important purpose of compiling a 
reliable and public history of title for real estate25 in order 
to provide protection, in the form of notice, to all parties 
                                                 
23 See majority op., ¶13 n.7. 
24 Wis. Stat. ch. 59, § 24 (1849) ("Every conveyance of real 
estate within this state hereafter made, which shall not be 
recorded as provided by law, shall be void as against any 
subsequent 
purchaser 
in 
good 
faith, 
and 
for 
a 
valuable 
consideration of the same real estate, or any portion thereof, 
whose conveyance shall first be duly recorded."). 
25 Kordecki v. Rizzo, 106 Wis. 2d 713, 718 & n.4, 317 
N.W.2d 479 (1982) (citing Thauer v. Smith, 213 Wis. 91, 96, 250 
N.W. 842 (1933)). 
No.  2013AP221.ssa 
 
8 
 
involved in the transfer of real estate, that is, the 
purchasers, sellers, creditors, and debtors.   
¶69 In the nineteenth century, transfers of real estate 
rights were expected to be documented at the county recording 
office,26 and mortgages were rarely separated from the promissory 
note.27 
¶70 Today under MERS, MERS remains the mortgagee of 
record.  When MERS members transfer the notes, non-MERS members 
cannot access the identity of the true owner of a note and 
mortgage through the public recording system.28  As Chief Judge 
Judith Kaye of the New York Court of Appeals has written: 
[T]he MERS system, developed as a tool for banks and 
title companies, does not entirely fit within the 
purpose of the Recording Act, which was enacted to 
"protect 
the 
rights 
of 
innocent 
purchasers . . . without 
knowledge 
of 
prior 
encumbrances" 
and 
to 
"establish 
a 
public 
record . . . ."  It is the incongruity between the 
needs of the modern electronic secondary mortgage 
market and our venerable real property laws regulating 
the market that frames the issue before us.29 
                                                 
26 W. Scott Van Alstyne, Jr., Land Transfer and Recording in 
Wisconsin: A Partial History—Part I, 1955 Wis. L. Rev. 44, 44-45 
(describing the recording process as expressing "a basic social 
value" underlying the recording system). 
27 See, e.g., Carpenter v. Longan, 83 U.S. 271, 272 (1872) 
("[T]he note and mortgage" were assigned to the appellant); In 
re Tobin's Estate, 139 Wis. 494, 498, 121 N.W. 144 (1909) 
("[T]he note and the mortgage" were in the name of the same 
person). 
28 MERS tracks member-to-member mortgage assignments within 
its private system, leaving non-MERS members unaware of these 
assignments.  Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 278 
(N.Y. App. Div. 2011). 
29 Romaine, 861 N.E.2d at 86 (Kaye, C.J., dissenting in 
part) (citations omitted). 
No.  2013AP221.ssa 
 
9 
 
¶71 The modern mortgage system represented in the instant 
case by MERS and PHH has increasingly challenged Wisconsin's 
recording statutes and the state's strong policy in favor of 
recording all real estate transactions.  The recording system 
fosters disclosure of real estate transactions; MERS fosters 
secrecy.  Under the MERS system, a borrower may access only his 
or her loan servicer, not the underlying lender.30  As Chief 
Judge Kaye has written, this secrecy and avoidance of public 
recording have undesirable consequences: 
The 
lack 
of 
disclosure 
may 
create 
substantial 
difficulty when a homeowner wishes to negotiate the 
terms of his or her mortgage or enforce a legal right 
against the mortgagee and is unable to learn the 
mortgagee's identity.  Public records will no longer 
contain this information as . . . the MERS system will 
render the public record useless by masking beneficial 
ownership of mortgages and eliminating records of 
assignments 
altogether. 
 
Not 
only 
will 
this 
information deficit detract from the amount of public 
data 
accessible 
for 
research 
and 
monitoring 
of 
industry trends, but it may also function, perhaps 
unintentionally, 
to 
insulate 
a 
noteholder 
from 
liability, mask lender error and hide predatory 
lending practices.31 
IV 
¶72 Mortgage foreclosure actions are frequently before the 
Wisconsin circuit courts.  Numerous issues may arise from the 
application of the equitable assignment doctrine to the MERS 
system.  Indeed, we do not know the extent of the concerns that 
                                                 
30 Bailey & Treiman, supra note 20, at 40, 42. ("MERS does 
not allow nonmembers access to any of its records."). 
31 Romaine, 861 N.E.2d at 88 (Kaye, C.J., dissenting in 
part). 
No.  2013AP221.ssa 
 
10 
 
will be realized.  They are left for another day.  Here are a 
few raised in the case law and the literature: 
• Does MERS have standing to bring a foreclosure action? 
• Must MERS assign the mortgage to the note owner before 
a foreclosure action can be initiated? 
• What difference does it make that an assignment of the 
promissory note operates as an equitable rather than 
legal assignment of the security instrument? 
• Can legal and equitable title be separated? 
• Must the entity seeking to foreclose have both 
equitable and legal title? 
• What information must be disclosed to the borrower 
when the mortgage transaction is negotiated? 
• What protocols are warranted for dealing with a 
borrower in financial distress? 
• Does the lack of disclosure create difficulty when the 
homeowner wants to renegotiate the terms of the 
mortgage 
or 
enforce 
a 
legal 
right 
against 
the 
mortgagee and is unable to learn the mortgagee's 
identity? 
• Does the majority opinion preclude federal remedies 
that are otherwise available to homeowners? 
• Are existing rules on negotiable instruments suitable 
for transfers of mortgages? 
• What is the distinction between note ownership and 
entitlement to enforce a note? 
No.  2013AP221.ssa 
 
11 
 
• What is the impact of the comment to Restatement 
(Third) of Property (Mortgages) § 5.4 cmt a. (1997), 
which states, "When the right of enforcement of the 
note and the mortgage are split, the note becomes, as 
a practical matter, unsecured"?32   
¶73 It seems wise, at a minimum, to call the legislature's 
attention to the disparity that exists between the recording 
statute and the modern-day electronic mortgage industry. 
¶74 Although the outcome in the instant case seems 
reasonable enough, I cannot join the majority opinion, whose 
ramifications stretch far beyond this case.  
¶75 For the foregoing reasons, I write separately. 
                                                 
32 These questions and more are discussed in U.S. Bank 
National 
Ass'n 
v. 
Ibanez, 
941 
N.E.2d 
40 
(Mass. 
2011); 
Silverberg, 86 A.D.3d at 278; Jackson, 770 N.W.2d at 490, 500-
02; Shelby D. Green & JoAnn T. Sandifer, MERS Remains Afloat in 
A Sea of Foreclosures, Prob. & Prop., July/Aug. 2013; Zachary A. 
Kisber, Reevaluating MERS in the Wake of the Foreclosure Crisis, 
42 Real Est. L.J. 183 (2013); Bailey & Treiman, supra note 20, 
at 40; Christopher L. Peterson, Two Faces: Demystifying the 
Mortgage Electronic Registration System's Land Title Theory, 53 
Wm & Mary L. Rev. 111 (2011).  
No.  2013AP221.ssa 
 
 
 
1