Court Opinion

ID: 6319632
Source: CourtListenerOpinion
Date Created: 2022-03-03 15:06:24.479674+00
Date Added: 2024-06-11T09:01:39.319370
License: Public Domain

FILED
                                                                      IN THE OFFICE OF THE
                                                                   CLERK OF SUPREME COURT
                                                                          MARCH 3, 2022
                                                                    STATE OF NORTH DAKOTA

                   IN THE SUPREME COURT
                   STATE OF NORTH DAKOTA

                                 2022 ND 43

Howard Malloy and Great Plains Potato
Production, LLP,                                      Plaintiffs and Appellees
      v.
James Behrens,                                       Defendant and Appellant

                                No. 20210155

Appeal from the District Court of Morton County, South Central Judicial
District, the Honorable David E. Reich, Judge.

REVERSED AND REMANDED.

Opinion of the Court by VandeWalle, Justice.

James A. Teigland, Fargo, ND, for plaintiffs and appellees.

William L. Caldwell (argued) and Timothy D. Lervick (appeared), Bismarck,
ND, for defendant and appellant.
                             Malloy v. Behrens
                               No. 20210155

VandeWalle, Justice.

[¶1] James Behrens appealed from orders granting a petition for appraisal of
a homestead, directing the sale of the homestead, and confirming the sale. We
conclude the district court misapplied the law in granting the petition for an
appraisal. We reverse the orders and remand.

                                       I

[¶2] Howard Malloy and Behrens were partners in Great Plains Potato
Production, LLP. In 2009, Malloy and Great Plains sued Behrens, alleging
various claims and requesting the district court order the partnership be
dissolved. In 2010, a judgment was entered ordering Behrens’ interest in the
partnership be transferred to Malloy and Behrens pay the plaintiffs
$341,890.26 plus interest.

[¶3] In February 2020, an execution of judgment was issued directing the
sheriff to satisfy the judgment out of Behrens’ personal and real property. On
April 2, 2020, the sheriff recorded a levy with the county recorder’s office,
which listed real property Behrens owned among the property upon which
Malloy was levying. Behrens objected to the execution and declared various
property was exempt from all execution and levy, including that certain real
property was his homestead. On May 7, 2020, the sheriff released its levy and
recorded the release. In May 2020, the writ of execution was returned partially
satisfied.

[¶4] In June 2020, Malloy petitioned for an appraisal of Behrens’ homestead.
Behrens objected to the petition for appraisal, arguing there was no levy upon
the homestead and statutory requirements for an appraisal were not met. The
district court granted Malloy’s petition for an appraisal. Behrens appealed, and
we dismissed the appeal because the order was not appealable.

[¶5] In September 2020, the appraisals were filed. All three appraisers
concluded the fair market value of the property was $600,000.

                                       1
[¶6] In October 2020, Malloy moved for an order directing the sale of the
homestead. Behrens opposed the motion, arguing Malloy did not receive the
consent of Behrens’ wife, Julie Behrens, to the sale of the homestead and
therefore any sale would be void under N.D.C.C. § 47-18-05. Behrens also
argued Malloy did not properly account for all of the liens and encumbrances
against the homestead and the district court must set the correct minimum bid
for the property including the amount of Malloy’s judgment and all other liens
and encumbrances.

[¶7] On March 29, 2021, the district court rejected Behrens’ arguments and
granted Malloy’s motion and ordered the sale of the homestead property. The
court concluded Julie Behrens’ consent was not required. The court also
concluded the minimum bid received must exceed the balance of the mortgage
on the property plus one hundred thousand dollars and Malloy’s recovery was
limited to any proceeds received over and above that amount. A special
execution was issued, directing the sheriff to sell the property. Behrens filed a
notice of appeal, appealing the order granting the petition for appraisal and
the order granting the petition for sale.

[¶8] Behrens’ homestead property was sold at a public auction to Malloy. On
June 3, 2021, the sheriff ’s report of sale was filed. Malloy filed a proposed order
confirming the sale, and Behrens objected. On June 7, 2021, the district court
confirmed the sale. On August 3, 2021, Behrens filed a notice of appeal from
the order confirming sale.

                                        II

[¶9] Malloy argues the appeal is moot and should be dismissed because
Behrens did not seek a stay under N.D.R.Civ.P. 62(h) before the property was
sold.

[¶10] Rule 62, N.D.R.Civ.P., provides rules for the stay of a proceeding to
enforce a judgment, and states:

      Undertaking to Stay Execution for the Sale or Delivery of Real
      Property on Appeal. If the judgment directs the sale or delivery of
      possession of real property, its execution is not stayed on appeal

                                         2
      unless an undertaking is executed on behalf of the appellant by at
      least two sureties, for a sum as directed by the court.

N.D.R.Civ.P. 62(h).

[¶11] The failure to obtain a stay may moot issues raised on appeal. In re
Estate of Shubert, 2013 ND 215, ¶ 17, 839 N.W.2d 811. We have generally
recognized the failure to obtain a stay of a court ordered conveyance of real
property to a third party uninterested in the action moots issues raised on
appeal about the conveyance. Id. at ¶ 18. We explained we lack jurisdiction
over the property and are unable to provide relief from the order approving the
sale of land when the conveyance was completed and the appealing party failed
to obtain a stay of the order. Id. at ¶ 19.

[¶12] However, this was not a sale to an uninterested third party. The property
was sold to Malloy. Moreover, the sale is not yet final because a redemption
period applies and has not yet expired. A judgment debtor has a statutory right
to redeem the property from the purchaser during the redemption period. See
N.D.C.C. § 28-24-02. The judgment debtor retains the legal title to the property
after execution, levy, and sale until the redemption period has expired. CIT
Group/Equip. Fin., Inc. v. Travelers Ins. Co., 504 N.W.2d 565, 568 (N.D. 1993).
In this case, the sale of the real property was subject to a one-year redemption
period, which expires on June 1, 2022, one year from the date of the sheriff ’s
sale. See N.D.C.C. § 28-24-02. The sale is not final. We conclude the appeal is
not moot. See In re Estate of Johnson, 2015 ND 110, ¶ 10, 863 N.W.2d 215
(holding appeal was not moot and the court was not deprived of jurisdiction
over the property when the sale of property was to an “interested person”
involved in the proceedings).

                                     III

[¶13] Behrens argues the district court erred by granting Malloy’s petition for
appraisal. He claims a court can only grant a petition to appoint an appraiser
under N.D.C.C. § 47-18-06 if an execution and levy is pending at the time the
application for appraisal is made, and there was no execution or levy pending
in this case when Malloy’s petition for appraisal was filed.

                                       3
[¶14] Statutory interpretation is a question of law, which is fully reviewable
on appeal. Mattern v. Frank J. Mattern Estate ex rel. Erickson, 2015 ND 155,
¶ 10, 864 N.W.2d 458. Homestead statutes are to be liberally construed with a
view of protecting the homestead. Id. at ¶ 14.

[¶15] The homestead, as created, defined, and limited by law, is exempt from
all process, levy, or sale. N.D.C.C. § 28-22-02(7); see also N.D.C.C. § 47-18-01
(stating the homestead is exempt from judgment lien and execution or forced
sale except as provided in chapter 47-18). “The homestead of any individual,
whether married or unmarried, residing in this state consists of the land upon
which the claimant resides, and the dwelling house on that land in which the
homestead claimant resides, . . . the total not to exceed one hundred thousand
dollars in value, over and above liens or encumbrances or both.” N.D.C.C. § 47-
18-01. A homestead is subject to execution or forced sale to satisfy a judgment
when, “upon an appraisal as provided by section 47-18-06, it appears that the
value of the homestead is more than one hundred thousand dollars over and
above liens or encumbrances on the homestead, and then only to the extent of
any value in excess of the sum total of the liens and encumbrances plus said
one hundred thousand dollars.” N.D.C.C. § 47-18-04(4).

[¶16] Section 47-18-06, N.D.C.C., states, “When an execution for the
enforcement of a judgment obtained in a case . . . is levied upon the homestead,
the judgment creditor may apply to the district court in the county in which
such homestead is situated for the appointment of persons to appraise the
value thereof.” Section 47-18-07, N.D.C.C., states an application for an
appraisal must be made upon a verified petition showing:

      1. The fact that an execution has been levied upon the homestead;
      2. The name of the claimant; and
      3. That the value of the homestead exceeds the amount of the
      homestead exemption.

The district court may appoint the appraisers “upon proof of the service of the
notice and petition provided for in section 47-18-08 and of the facts stated in
the petition.” N.D.C.C. § 47-18-09.

                                       4
[¶17] In this case, an execution was issued, the sheriff recorded the levy, but
the sheriff released the levy and returned the execution before Malloy filed the
petition for appraisal. The district court granted Malloy’s petition for an
appraisal of the homestead and rejected Behrens’ arguments that there was no
levy upon the homestead, concluding N.D.C.C. § 47-18-06 only requires that
the homestead be levied upon and it does not require that the levy not be
released.

[¶18] The plain language of N.D.C.C. § 47-18-06 states when an execution is
obtained and levied upon the homestead, the judgment creditor may apply for
the appointment of appraisers. Section 47-18-07, N.D.C.C., states the petition
for appraisal must show the fact that an execution has been levied upon the
homestead. Words and phrases in a statute are construed according to the
context and rules of grammar. N.D.C.C. § 1-02-03. The statutes use the words
“is” and “has been levied,” which indicate the act occurred and continues in the
present. The use of this verb tense indicates a temporal connection between
the existence of the levy and the petition for appraisal. See State v. Azure, 2017
ND 195, ¶ 17, 899 N.W.2d 294. We conclude the plain language of the statutes
requires there be an execution and levy on the property at the time of the
petition for an appraisal.

[¶19] Furthermore, there is a purpose to the process required by the statutory
law. “The purpose of an execution is to provide a means for a party to recover
under a judgment for money damages, the liability for, and amount of which,
has been specifically determined by a court.” Poppe v. Stockert, 2015 ND 252,
¶ 8, 870 N.W.2d 187 (quoting Suffield Dev. Assocs. Ltd. P’ship v. Nat’l Loan
Inv’rs, L.P., 802 A.2d 44 (Conn. 2002)). The execution authorizes the officer to
carry a judgment into effect and to levy on the property. 33 C.J.S. Executions §
1 (2021); see also N.D.C.C. § 28-21-05 (authorizing the clerk of court to issue
an execution to the sheriff); N.D.C.C. § 28-21-06 (required contents of
execution). “The object of a levy is to bring property within the custody of the
law.” In re Peterson, 80 B.R. 167, 169 (D. N.D. 1987). Generally, a levy is an
indispensable step toward the consummation of an execution sale. 33 C.J.S.
Executions § 134 (2021); see also N.D.C.C. § 28-21-11 (levy and sale); N.D.C.C.
§ 28-21-12 (notice of levy). The mere issuance of an execution does not give the

                                        5
officer the right of possession of any property until he has levied the writ, and
a levy on the property may be required to enable the sheriff to sell the property
and vest in the purchaser a valid title. 33 C.J.S. Executions § 134 (2021).

[¶20] Here, the levy was released and the writ of execution had been returned
before the petition for appraisal was filed. The release states, “I hereby release
and discharge each and every part of the said property herein described from
the said levy, and from the notice and effect of said levy, and I hereby abandon,
waive, discharge & cancel the said levy.” The writ of execution was returned,
stating it was partially satisfied. There was no current execution or levy when
Malloy petitioned for appraisal. The statutory requirements were not complied
with. We conclude the district court misapplied the law and erred in granting
Malloy’s petition for appraisal.

                                       IV

[¶21] Behrens also argues the district court erred when it granted Malloy’s
motion for an order directing the sale of the homestead. Behrens claims Malloy
was required to receive consent for the sale from Behrens’ wife, Julie Behrens.
He also claims the appraised value of the homestead did not exceed the
homestead exemption amount. Although we have already determined the
district court erred by granting the petition for appraisal, we will address
Behrens’ arguments because these issues are likely to arise again. See
Quamme v. Quamme, 2021 ND 208, ¶ 12, 967 N.W.2d 452.

                                        A

[¶22] Behrens claims Malloy was required to receive Julie Behrens’ consent to
the sale of the homestead before the homestead could be sold. He contends
N.D.C.C. § 47-18-05 requires an instrument conveying or encumbering a
homestead to be executed and acknowledged by both spouses, the buyer of the
homestead in a sale under execution receives a sheriff ’s certificate and deed,
and therefore the sheriff ’s deed in this case will be void unless signed by Julie
Behrens.

                                        6
[¶23] The district court rejected Behrens’ argument that Julie Behrens’
consent to the sale was required. The court explained Behrens’ interpretation
of N.D.C.C. § 47-18-05 would frustrate the purpose of N.D.C.C. ch. 47-18.

[¶24] Section 47-18-05, N.D.C.C., states, “The homestead of a married person
. . . cannot be conveyed or encumbered unless the instrument by which it is
conveyed or encumbered is executed and acknowledged by both the husband
and wife.” We presume the legislature did not intend a statute to be interpreted
in a manner that would lead to an absurd, ludicrous, or illogical result.
Brossart v. Janke, 2020 ND 98, ¶ 12, 942 N.W.2d 856. We construe statutes in
a practical manner and give consideration to the context of the statute and the
purpose for which it was enacted. Id.

[¶25] This Court has previously held statutory law requiring the instrument
by which homestead property is conveyed or encumbered to be executed and
acknowledged by both spouses was designed to merely protect the homestead
as limited in both area and value under other sections of the chapter. Severtson
v. Peoples, 148 N.W. 1054, 1059 (N.D. 1914). Section 47-18-01, N.D.C.C., states
the homestead of any individual shall not exceed one hundred thousand dollars
in value, over and above liens and encumbrances. Interpreting N.D.C.C. § 47-
18-05 to require a spouse’s signature under the circumstances of this case
would give the spouse power in excess of the homestead exemption and we have
previously determined that was not the legislature’s intent. See Severtson, at
1059.

[¶26] Behrens claims this case is similar to Kipp v. Sweno, 683 N.W.2d 259
(Minn. 2004), and any conveyance of the property requires Julie Behrens’
consent even though she is not on the title. In Kipp, 683 N.W.2d at 266, the
Minnesota Supreme Court held a debtor’s homestead property, held in joint
tenancy with his non-debtor wife, could not be unilaterally severed through an
execution sale to satisfy a judgment against the debtor because it would
dispose of or eliminate the wife’s possessory or occupancy interest, right of
survivorship, and remainder interest in the homestead property. The court
further held that a judgment creditor cannot acquire more property rights than

                                       7
those held by the debtor and that a judgment debtor may not increase the reach
of the judgment lien beyond property owned by the judgment debtor. Id.

[¶27] This case is different from Kipp. Behrens admits Julie Behrens is not on
the title to the property. The homestead property in this case is not held in joint
tenancy and Julie Behrens only has a homestead interest in the property. Her
interest will be protected through the homestead exemption. N.D.C.C. §§ 47-
18-13, 47-18-14. See Kipp, 683 N.W.2d at 267 (vacating the lower court’s
decision “relating to a credit bid at an execution sale where the homestead
exemption was not paid out of the proceeds of the execution sale in cash to
appellant and/or his spouse.”). We conclude Julie Behrens’ signature is not
required for a forced sale of the property under N.D.C.C. ch. 47-18.

                                        B

[¶28] Behrens claims the amount of the homestead exemption must include
the balance still owing on the current judgment and the minimum bid must
exceed that total amount.

[¶29] Section 47-18-04(4), N.D.C.C., provides that a homestead may be subject
to execution or forced sale to satisfy a judgment when it appears from the
appraisal that the value of the homestead is more than one hundred thousand
dollars over and above liens or encumbrances on the homestead, and only to
the extent the value exceeds the total of the liens and encumbrances plus one
hundred thousand dollars. Section 47-18-13, N.D.C.C., states the court must
order a sale of the property under the execution if the appraised value of the
homestead property exceeds the amount of the homestead exemption and
further states, “At such sale no bid must be received unless it exceeds the
amount of the homestead exemption.” Section 47-18-14, N.D.C.C., further
states, “If the sale of a homestead is made as provided in section 47-18-13, the
proceeds thereof to the amount of the homestead exemption must be paid to
the claimant and the residue applied to the satisfaction of the execution.”
Under the plain language of these statutes, the minimum bid must be more
than the homestead exemption, which is the sum total of the liens and
encumbrances plus one hundred thousand dollars, and only the amounts above
the homestead exemption may be used to satisfy the judgment.

                                        8
[¶30] Behrens contends the judgment in the current case is a lien for purposes
of Chapter 47-18 and must be included in calculating the total of the liens and
encumbrances on the homestead to determine the amount of the minimum bid
on the property. Behrens argues the district court incorrectly calculated the
amount of the homestead exemption because it did not include the balance of
the judgment in that amount.

[¶31] Behrens’ argument is without merit. A judgment does not become a lien
against homestead property at the time of judgment docketing. See N.D.C.C. §
28-20-13 (stating a judgment is a lien on all real property, except the
homestead, of a person against whom the judgment is rendered); see also
Peterson, 80 B.R. at 169. A judgment can be effective against the excess value
of the property constituting a homestead if the statutory process in Chapter
47-18 is complied with, but the judgment does not become a lien against the
property until the statutory process is complied with. Peterson, at 170.

[¶32] We conclude the judgment in the current case is not included in the liens
and encumbrances on the homestead for the purpose of calculating the
exemption amount.

                                      V

[¶33] We have considered all remaining issues or arguments raised by the
parties and have determined they are either unnecessary to our decision or are
without merit. We reverse the orders granting the petition for appraisal of the
homestead, directing the sale of the homestead, and confirming the sale. We
remand for further proceedings consistent with this opinion.

[¶34] Jon J. Jensen, C.J.
      Gerald W. VandeWalle
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte

                                      9