Court Opinion

ID: 2682468
Source: CourtListenerOpinion
Date Created: 2014-07-10 14:03:17.604024+00
Date Added: 2024-06-11T13:12:46.189865
License: Public Domain

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
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.

                                       2
                                                                     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.
                                                                  FILED
PHH Mortgage Corporation,
                                                             JUL 10, 2014
            Defendant-Respondent,
                                                                Diane M. Fremgen
U.S. Bank, N.A.,                                             Clerk of Supreme Court

            Defendant.

      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

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
                                          2
                                                                    No.    2013AP221

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."

                                        3
                                                                           No.     2013AP221

       ¶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

                                               4
                                                                      No.    2013AP221

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
                                        5
                                                                        No.   2013AP221

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.

                                           6
                                                                                 No.    2013AP221

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.

                                                 7
                                                                      No.     2013AP221

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.

                                        8
                                                                             No.     2013AP221

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.

                                             9
                                                                        No.    2013AP221

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
                                            10
                                                                        No.     2013AP221

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.

                                         11
                                                             No.     2013AP221

      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.

                                    12
                                                                 No.     2013AP221

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

                                         13
                                                                           No.    2013AP221

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,

                                          14
                                                                           No.     2013AP221

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
                                            15
                                                                                      No.        2013AP221

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
                                                  16
                                                                               No.     2013AP221

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,
                                               17
                                                                      No.    2013AP221

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.
                                          18
                                                                              No.    2013AP221

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

                                             19
                                                                                   No.    2013AP221

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

                                                   20
                                                                              No.     2013AP221

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.

                                             21
                                                                    No.    2013AP221.ssa

      ¶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).

                                             1
                                                                No.   2013AP221.ssa

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.

                                         2
                                                                         No.   2013AP221.ssa

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).
                               3
                                                                            No.    2013AP221.ssa

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.

                                                  4
                                                                     No.    2013AP221.ssa

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).

                                           5
                                                                       No.     2013AP221.ssa

       ¶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).

                                             6
                                                               No.     2013AP221.ssa

       ¶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)).

                                          7
                                                                   No.   2013AP221.ssa

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).
                                        8
                                                                      No.   2013AP221.ssa

    ¶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).

                                            9
                                                                   No.    2013AP221.ssa

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?

                                        10
                                                            No.   2013AP221.ssa

         • 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).

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