Associated Bank N.A. v. Jack W. Collier , 355 Wis. 2d 343 ( 2014 )

2014 WI 62
SUPREME COURT OF WISCONSIN
CASE NO.: 2011AP2597
COMPLETE TITLE: Associated Bank N.A.,
Plaintiff,
SB1 Waukesha County, LLC,
Co-Plaintiff-Respondent,
v.
Jack W. Collier, Deborah L. Collier, Greenbrier
Developers, LLC, Executive Realty Partnership
LP, Gerald
Franklin, Kenneth Whaley, ISB Community Bank and
United
States of America,
Defendants,
Decade Properties, Inc.,
Intervening
Defendant-Appellant-Petitioner.
REVIEW OF A DECISION OF THE COURT OF APPEALS
Reported at 345 Wis. 2d 397, 824 N.W.2d 928
(Ct. App. 2012 – Unpublished)
OPINION FILED: July 15, 2014
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: September 11, 2013
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Waukesha
JUDGE: Donald J. Hassin Jr.
JUSTICES:
CONCURRED:
DISSENTED: ABRAHAMSON, C.J., BRADLEY, J., dissent. (Opinion
filed.)
NOT PARTICIPATING: PROSSER, J., did not participate.
ATTORNEYS:
For the intervening defendant-appellant-petitioner, there
were briefs by Roy L. Prange, Valerie L. Bailey-Rihn, and
Quarles & Brady LLP, Madison, and oral argument by Valerie L.
Baily Rihn.
For the co-plaintiff-respondent, there was a brief by John
M. Van Lieshout, Joseph W. Voiland, and Reinhart Boerner Van
Deuren S.C., Milwaukee; and Neal H. Levin and Freeborn & Peters
LLP, Chicago, and oral argument by Neal H. Levin.
2
2014 WI 62
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2011AP2597
(L.C. No. 2009CV4938)
STATE OF WISCONSIN : IN SUPREME COURT
Associated Bank N.A.,
Plaintiff,
SB1 Waukesha County, LLC,
Co-Plaintiff-Respondent,
v.
FILED
Jack W. Collier, Deborah L. Collier, Greenbrier JUL 15, 2014
Developers, LLC, Executive Realty Partnership
LP, Gerald Franklin, Kenneth Whaley, ISB Diane M. Fremgen
Clerk of Supreme Court
Community Bank and United States of America,
Defendants,
Decade Properties, Inc.,
Intervening Defendant-Appellant-
Petitioner.
REVIEW of a decision of the Court of Appeals. Modified in
part and as modified, affirmed.
¶1 PATIENCE DRAKE ROGGENSACK, J. This is a review of an
unpublished decision of the court of appeals1 affirming the
1
Associated Bank N.A. v. Collier, No. 2011AP2597,
unpublished slip op. (Wis. Ct. App. Nov. 28, 2012).
No. 2011AP2597
circuit court's2 denial of summary judgment, grant of a motion to
turn over property to the receiver, and denial of a motion for
reconsideration. The review concerns the collection efforts of
two judgment creditors of defendant Jack Collier, SB1 Waukesha
County, LLC and Decade Properties, Inc., the latter being owned
by Collier's business associate, Jeffrey Keierleber.
¶2 Decade argues that when it served Collier with an
order to appear at supplemental proceedings, it perfected a
"common law creditor's lien" on all of Collier's personal
property. According to Decade, its lien preserves the property
for Decade's benefit, thereby precluding SB1 from pursuing
collection from it. SB1 argues that even though Decade served
Collier with an order to appear at supplemental proceedings
before SB1 did so, Decade has no lien on Collier's personal
property because Decade's judgment was not docketed before its
service of the order to appear. SB1 reasons that a judgment
must be capable of execution before there is the potential for a
common law lien on personal property and undocketed judgments
cannot obtain an execution.
¶3 We conclude that supplemental proceedings under ch.
816 are a discovery tool in aid of judgment collection.
Decade's serving Collier with an order to appear for
supplemental proceedings did not give rise to a blanket lien on
all of Collier's personal property that prevented SB1 from
2
The Honorable Donald J. Hassin, Jr. of Waukesha County
presided.
2
No. 2011AP2597
pursuing collection. A judgment creditor obtains an interest in
a judgment debtor's identified, non-exempt personal property
superior to other unsecured creditors when it dockets its money
judgment, identifies specific personal property and levies that
property. Levying may be accomplished by at least three
different means: (1) by executing against specific personal
property with the assistance of a sheriff; (2) by serving the
garnishee defendant in a garnishment action to seize specific
property in the hands of the garnishee defendant; or (3) by
obtaining an order to apply specific personal property to the
satisfaction of the judgment, which a creditor may do with the
assistance of a supplemental receiver. Wis. Stat. § 815.05(6)
(2011-12);3 Wis. Stat. § 812.01; Wis. Stat. § 816.08.
¶4 Here, SB1 was the first judgment creditor with a
docketed money judgment to levy specific, non-exempt personal
property of Collier. It did so by obtaining a court order to
turn over specifically identified property to its receiver.
Accordingly, we affirm the decision of the court of appeals that
concluded that SB1 has priority over Decade in regard to the
specific personal property SB1 identified and levied. However,
insofar as the decision of the court of appeals can be read to
recognize a blanket lien in favor of SB1 that prevents other
creditors from pursuing collection from Collier's personal
3
All subsequent references to the Wisconsin Statutes are to
the 2011-12 version unless otherwise indicated.
3
No. 2011AP2597
property, we modify that decision because no blanket lien
exists.
I. BACKGROUND
¶5 This case concerns SB1's attempt to satisfy the
portion of a default judgment against Collier that it purchased
from Associated Bank, N.A. The relevant portion of the judgment4
relates to Collier's default on a $7.2 million promissory note
in favor of Associated, which Collier secured with a personal
guarantee and a mortgage on a Brookfield property.
¶6 After purchasing a portion of Associated's docketed
money judgment against Collier, SB1 obtained an order for
Collier to appear at supplemental proceedings. Despite repeated
attempts to serve Collier in Wisconsin and Florida, where
Collier had a second home, SB1 was unsuccessful and the order
expired.
¶7 Shortly after SB1 obtained an order for Collier to
appear, Keierleber, the owner of Decade, sued Collier. The
court of appeals succinctly summarized the litigation as
follows:
In short order, Keierleber commenced six lawsuits
on behalf of Keierleber, Keierleber-owned, and
Keierleber- and Collier-owned Wisconsin and Florida
entities, Decade among them. Each complaint sought
enforcement of a claimed loan right and money judgment
against Collier or against two business entities of
which Keierleber and Collier each owned a fifty-
4
The judgment also related to Collier's default on a $1.8
million promissory note, which he secured with his interest in
Clearwater Bay Investors, LLC. This debt is not part of the
proceedings before us.
4
No. 2011AP2597
percent interest. While still unserved with SB1's
order to appear, Collier accepted service of these six
complaints. The parties involved in the six new
actions executed stipulations agreeing to judgment
amounts in each of them.
Associated Bank N.A. v. Collier, No. 2011AP2597, unpublished
slip op., at ¶4 (Wis. Ct. App. Nov. 28, 2012).
¶8 Of these six lawsuits, the present case concerns only
the $654,646.83 judgment Decade obtained against Collier
personally. Decade tried to docket this judgment with the
Waukesha County Clerk of Court by sending the judgment, a $5.00
docketing fee and a receipt for docketing to the circuit court,
where the judgment was to be signed and forwarded to the clerk
with the docketing fee and receipt. However, even though
Decade's attorneys received the receipt dated October 26, 2010,
the clerk did not enter the judgment in the judgment and lien
docket. Instead, on June 29, 2011, after the error was
discovered, the clerk docketed Decade's judgment.
¶9 On November 16, 2010, Decade served Collier with an
order to appear for supplemental proceedings, which Decade's
attorney conducted on November 22, 2010. In its brief, Decade
explained that it took these actions after learning about SB1's
collection efforts in order to "protect its interest by first
obtaining a judgment and then a superior Creditor's/Receivers
Lien against Collier's personal property." It does not appear
from the record that Decade took any additional steps to seize
any of Collier's personal property to satisfy its judgment.
¶10 Having been unsuccessful in serving Collier before the
initial order expired, SB1 subsequently obtained a second order
5
No. 2011AP2597
for Collier to appear for supplemental proceedings. SB1 also
moved the circuit court to appoint a supplemental receiver.
¶11 On April 2, 2011, at Collier's Florida residence, SB1
finally obtained service of the order to appear for supplemental
proceedings and its motion to appoint a receiver. On April 18,
2011, Collier failed to appear at the scheduled supplemental
proceedings and the supplemental commissioner issued an order to
show cause why Collier should not be held in contempt of court.
The commissioner also appointed Douglas Mann as supplemental
receiver.
¶12 On June 9, 2011, the day before the return date of the
order to show cause, Collier initiated a state insolvency
proceeding in Florida. SB1 moved to enjoin the insolvency
proceeding on the grounds that SB1 had a receiver's lien on
Collier's personal property, which was perfected. Decade
intervened and objected to imposition of an injunction. The
Florida insolvency proceeding was enjoined and Collier was found
in contempt of court for failing to appear at SB1's supplemental
proceedings.
¶13 On July 29, 2011, SB1 moved for court approval of the
sale of Collier's personal property located in Brookfield,
Wisconsin, which had a fair market value of $63,925. SB1 also
moved to order Collier to turn over certain shares of stock,
rights to unasserted counterclaims and affirmative defenses in
Waukesha County cases, and all partnership interests in and
profits from an entity called AWI Limited Partnership.
6
No. 2011AP2597
¶14 Decade intervened and opposed SB1's motions. Decade
moved for summary judgment on the grounds that it had a superior
lien on all of Collier's personal property. It argued that
according to our decision in Mann v. Bankruptcy Estate of Badger
Lines, Inc., 224 Wis. 2d 646, 590 N.W.2d 270 (1999), all that is
necessary to perfect a common law lien that prevents SB1 from
pursuing collection is service on Collier of an order to appear
at a supplemental proceeding.
¶15 SB1 responded that Decade could not have had a lien on
Collier's personal property when it served Collier with a notice
to appear at supplemental proceedings because Decade's judgment
had not been entered in the judgment and lien docket.
¶16 Decade contended that the failure to enter the
judgment in the judgment and lien docket did not affect the
validity of its lien.5 At a hearing before the circuit court,
Decade's attorney argued that "the key issue is that execution
and the ability to execute [are] separate from the ability to
institute supplementary proceedings because you don't need to
have [an un]satisfied execution in order to proceed with a
compelling order to appear before a court commissioner." In
other words, Decade's position was that a judgment creditor can
obtain a common law lien even if its judgment is not docketed or
executable because the ability to execute and a judgment
creditor's lien are not tethered.
5
The parties seem to agree that the failure to enter
Decade's judgment in the judgment and lien docket was due to a
clerk's error.
7
No. 2011AP2597
¶17 The circuit court rejected Decade's argument,
reasoning that "if the underpinning for the proceeding fails[,]
the proceeding itself necessarily fails." In denying Decade's
motion for reconsideration, the court reiterated that its
position was that "you can't pursue collection unless you have
an executable judgment. . . . [H]ow can you go forward and
compel somebody to appear at a supplementary where you don't
have a judgment that you can collect on[?]"
¶18 Accordingly, the circuit court concluded that SB1's
interest in Collier's personal property was superior to that of
Decade's, holding that "[a]ll actions, proceedings, liens or
other orders relative to Decade's un-docketed judgment prior to
June 29, 2011 that would otherwise [a]ffect or limit SB1's
supplemental proceedings or attempt to execute upon the judgment
are held for naught." The circuit court then granted SB1's
motions and approved the sale of Collier's personal property.
The court also vested the supplemental receiver with Collier's
rights in the property identified in SB1's motion for turnover.
¶19 Decade appealed and the court of appeals affirmed the
orders of the circuit court. The court of appeals concluded
that service of an order to appear at supplemental proceedings
"does not . . . present an alternative to a properly docketed
judgment." The court also concluded that the circuit court's
refusal to exercise the court's equitable power in favor of
Decade was within its discretion, noting that "the record
suggests that Collier evaded service from SB1 for months and
that Decade's six lawsuits were filed as a dilatory tactic."
8
No. 2011AP2597
¶20 Decade seeks review before us, making the same
arguments it made to the circuit court and the court of appeals.
We affirm the decision of the court of appeals to the extent
that it recognized SB1's priority to the property SB1 levied.
We also affirm its conclusion that an undocketed judgment cannot
obtain an execution. We modify the decision of the court of
appeals insofar as it could be read to recognize a blanket lien
giving any one unsecured judgment creditor the exclusive right
to pursue collection from all of a debtor's personal property,
simply due to service of an order to appear for supplemental
proceedings.6
II. DISCUSSION
A. Standard of Review
¶21 Decade asks us to uphold what it asserts is a judgment
creditor's lien on all of Collier's personal property. Whether
a lien exists and the effect of an alleged lien against third
parties are questions of law that we review independently of the
court of appeals. See McIntyre v. Cox, 68 Wis. 2d 597, 602, 229
6
In explaining its refusal to separate execution and
supplemental proceedings, the court of appeals held that
"[w]ithout a creditor's lien, there is no right to pursue
collection under § 816.03." Associated Bank, No. 2011AP2597,
unpublished slip op., ¶16. This statement may simply express
the same uneasiness we have with allowing a creditor to
circumvent statutory execution processes. Lest our affirmation
of the decision of the court of appeals be construed to
recognize a blanket lien that gives an unsecured judgment
creditor the exclusive right to pursue collection from all of
the judgment debtor's personal property, we clarify that no such
blanket lien exists or is necessary to pursue collection from a
judgment debtor.
9
No. 2011AP2597
N.W.2d 613 (1975); Yorgan v. Durkin, 2006 WI 60, ¶55, 290
Wis. 2d 671, 715 N.W.2d 160 (Roggensack, J., dissenting).
¶22 Decade also asks us to review the circuit court's
refusal to exercise its equitable powers, for which we employ an
erroneous exercise of discretion standard. J.L. Phillips &
Assocs. v. E & H Plastic Corp., 217 Wis. 2d 348, 365, 577 N.W.2d
13 (1998). An erroneous exercise of discretion occurs when the
circuit court fails to exercise discretion, the facts fail to
support the court's decision or the circuit court applies the
wrong legal standard. Id. at 364-65.
B. General Debtor/Creditor Principles
¶23 By entering a judgment in the judgment and lien
docket, a judgment creditor obtains a ten-year statutory lien on
real property of the debtor located in the county in which the
judgment was docketed. Wis. Stat. § 806.15(1). However,
entering a judgment in the judgment and lien docket does not
create a statutory lien on the debtor's personal property.
Instead, a judgment creditor obtains an unsecured, inchoate
interest with regard to the debtor's personal property, tangible
and intangible, against which to levy. As such, a judgment
creditor will typically "have to take further steps to enforce
the judgment." Robert A. Pasch, 12 Wisconsin Practice Series:
Wisconsin Collection Law § 14:1, at 286 (2d ed. 2006).
Execution, garnishment and turnover orders applying property in
satisfaction of a judgment are all methods of levying the
judgment debtor's personal property.
10
No. 2011AP2597
1. Levy
¶24 Wisconsin statutes provide several different methods
by which to levy, but each "require[s] reachable, non-exempt,
assets of the debtor." Pasch, supra, § 14:1, at 287. One
method used to judicially enforce money judgments is execution.
Black's Law Dictionary 650 (9th ed. 2009); see Wis. Stat.
§ 815.02 ("A judgment which requires the payment of money or the
delivery of property may be enforced in those respects by
execution."). For instance, a judgment creditor can execute on
specific, non-exempt personal property of the debtor by
obtaining an order to have the sheriff seize the property. Wis.
Stat. § 815.05(6).
¶25 If a judgment creditor locates specific, non-exempt
personal property belonging to the debtor or owed to the debtor
in the control of a third party, the judgment creditor may be
able to levy that property through garnishment. Wis. Stat.
§ 812.01. Garnishment is entirely statutory.7 Therefore, "[i]n
the absence of specific statutory authorization, garnishment
does not lie." Moskowitz v. Mark, 41 Wis. 2d 87, 91, 163 N.W.2d
175 (1968).
7
Garnishment actions vary in type and requirements. For
example, under certain circumstances, a garnishment action may
be commenced prior to judgment. See Wis. Stat. § 812.02; Wis.
Stat. § 812.05. In addition, the filing of a garnishment action
does not assure that other creditors do not have a superior
claim to the property the garnishee holds. See Wis. Stat.
§ 812.11(5).
11
No. 2011AP2597
¶26 Finally, a creditor may levy specific, non-exempt
personal property by obtaining a court order to apply that
property in satisfaction of the judgment. Wis. Stat. § 816.08.
A supplemental receiver may obtain such a turnover order on a
creditor's behalf. Id.; Candee v. Egan, 84 Wis. 2d 348, 361,
267 N.W.2d 890 (1978) ("A receiver in aid of execution is
authorized to collect those assets revealed by the examination
of the debtor, take possession of them, apply them to the
satisfaction of the judgment, and return the excess to the
judgment debtor.").
¶27 Because each of these statutory collection procedures
requires a creditor to identify specific, non-exempt property of
the debtor to levy, judgment collection can be cumbersome and
expensive if the details of a debtor's property are not known to
the judgment creditor. Supplemental proceedings provide a
mechanism by which to obtain information in aid of judgment
collection.
2. Supplemental proceedings
¶28 Wisconsin Stat. ch. 816 is entitled "Remedies
Supplementary to Execution." Supplementary proceedings are a
"form of discovery . . . used where the judgment creditor is
uncertain of the nature, location, extent, and amount of the
debtor's property." Pasch, supra, § 16:1, at 318. Wisconsin
Stat. ch. 816 vests a supplemental court commissioner with
certain powers to aid in enforcement of the judgment against the
judgment debtor's property. For instance, a supplemental court
commissioner can compel a judgment debtor who has been served
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No. 2011AP2597
with an order in compliance with Wis. Stat. § 816.035 to appear
to answer questions concerning his or her property. Wis. Stat.
§ 816.03. If it appears that there is danger of a judgment
debtor leaving the state or if the judgment debtor has property
he or she unjustly refuses to apply to the judgment, the
commissioner may require the debtor to give a bond and refrain
from disposing of property not exempt from execution. Wis.
Stat. § 816.07. If supplemental proceedings reveal non-exempt
personal property, a court commissioner or judge may order that
the property be applied toward the judgment, sometimes through
the use of a supplemental receiver, rather than having a sheriff
seize the property. Wis. Stat. § 816.04; Wis. Stat. § 816.08.
3. Liens
¶29 No statute grants a judgment creditor a lien on the
judgment debtor's personal property simply by docketing the
judgment. However, in Badger Lines, we mentioned a lien that
had as one of its underpinnings a docketed money judgment.
There, the United States Court of Appeals for the Seventh
Circuit certified the following question that arose in a dispute
in federal bankruptcy court: "Does Wisconsin law require that a
lien obtained by a judgment creditor who institutes
supplementary proceedings under Wis. Stat. § 816.04 be
perfected, and if so, how is the lien to be perfected?" Badger
Lines, 224 Wis. 2d at 649 n.2. When we decided Badger Lines, we
assumed, as did the certified question, that the judgment
creditor had a lien, and we answered that "a creditor's lien is
valid and superior against other creditors at the time the
13
No. 2011AP2597
creditor serves the debtor with a summons to appear at the
supplementary proceeding under Wis. Stat. § 816.03(1)(b)." Id.
at 649. We now take a closer look at when a lien may arise and
to which personal property such a lien may attach.
¶30 Kellogg v. Coller, 47 Wis. 649, 3 N.W. 433 (1879),
involved two judgment creditors who sought to employ Wis. Stat.
§ 3030 and Wis. Stat. § 3031 (1878) when the executions of their
individual judgments were returned unsatisfied. Id. at 657. To
some extent, Kellogg's discussion is helpful to determining when
a judgment creditor may obtain a lien. There, we explained:
In several summary proceedings supplementary to
executions against the same debtor, returned
unsatisfied (R. S., secs. 3028-3038),——such a
proceeding being a substitute for a creditor's bill,——
the creditor who first commences his proceeding and
obtains service of process upon the debtor, and
prosecutes the proceeding with proper diligence to the
appointment of a receiver, obtains a prior lien upon
the assets of the debtor.
Id. at 649 (emphasis added). This passage appears to be the
source of the common law receiver's lien discussed in Candee,
which we cited in Badger Lines, and Badger Lines itself. Badger
Lines, 224 Wis. 2d at 654.
¶31 However, Kellogg says nothing about a blanket judgment
creditor's lien on all of the judgment debtor's personal
property. In addition, it is somewhat problematic to argue too
strongly from cases as old as Kellogg because the statutes they
employ differ from current legislative enactments, and the ever
developing body of case law and code can shade what at the
moment of decision once seemed so clear.
14
No. 2011AP2597
¶32 Furthermore, there is a "diversity of opinion as to
[the] real character" of judgment creditor's liens relating to
execution that dates back much farther than Candee. For
instance, in Bank of Commerce v. Elliott, 109 Wis. 648, 660-61,
85 N.W. 417 (1901), we examined the rights of a judgment
creditor who had initiated a garnishment action. In attempting
to ascertain the creditor's rights in relation to a bankruptcy
trustee, we noted:
The courts have uniformly said . . . that the
service of a garnishee process is an equitable levy
upon the property of the debtor in the hands of the
garnishee, and that the interest thereby obtained in
such property is at least in the nature of an
equitable lien, and has been commonly called a lien.
In many cases it has been called a lien without
qualification, in others an equitable lien, and in
some a mere inchoate or incipient lien,——the mere
commencement of proceedings to obtain a lien in
fact. . . . Some . . . authorities are to the effect
that a garnishee levy creates a specific lien. Others
are directly to the contrary.
Id. at 660-61 (emphasis added). As we have explained,
garnishment creates a lien due to the seizure of the debtor's
property that is in the hands of the garnishee defendant.
Morawetz v. Sun Ins. Office, 96 Wis. 175, 178, 71 N.W. 109
(1897) ("[G]arnishment is a seizure in the hands of the
garnishee by notice to him, creating an effectual lien upon the
garnished property to satisfy whatever judgment").
¶33 The judgment creditors in both Kellogg and Bank of
Commerce levied the debtor's property in order to affix common
law liens——Kellogg by attempted execution that was returned
15
No. 2011AP2597
unsatisfied and then securing the appointment of a receiver, who
applied the debtor's personal property to the judgment debt, and
Bank of Commerce by prosecuting a garnishment action, wherein
the specific personal property in the hands of a third party was
levied. Kellogg, 47 Wis. at 656; Bank of Commerce, 109 Wis. at
661. The conclusion that a judgment creditor who first
identifies and levies specific, non-exempt personal property of
a judgment debtor has a superior interest in regard to other
judgment creditors who have taken no such actions in regard to
the identified property is consistent with our earlier
decisions.8
¶34 For example, in Alexander v. Wald, 231 Wis. 550, 286
N.W. 6 (1939), we examined the rights of a supplemental receiver
vis-a-vie a bankruptcy trustee. Id. at 551. We held that the
receiver, who had discovered and executed on intangible personal
property consisting of a real estate mortgage, a chattel
mortgage, and certain personal property that the debtor had
fraudulently conveyed, had an interest superior to that of the
bankruptcy trustee with respect to that property because the
receiver had been appointed and levied more than four months
before commencement of the bankruptcy. Id.
8
It should be noted that when two judgment creditors with
docketed money judgments each attempt to levy identified, non-
exempt personal property, or when a perfected secured party's
rights are at issue, further analysis may be necessary to
determine relative priorities.
16
No. 2011AP2597
¶35 In Holton v. Burton, 78 Wis. 321, 47 N.W. 624 (1890),9
we reached a consistent result. Holton concerned a judgment
creditor who had initiated supplemental proceedings, but had not
levied any specific property. An assignment for the benefit of
creditors was made after supplemental proceedings were begun,
but before a supplemental receiver was appointed. Id. at 322.
We reasoned that the judgment creditor did not have a superior
interest, but instead had to take a pro rata share of the
debtor's personal property in the insolvency proceeding because
the judgment creditor had not timely levied specific personal
property to avoid the effect of the insolvency proceedings. Id.
at 327-28.
¶36 It is reasonable to conclude that the results in
Alexander and Holton, where judgment creditors were in disputes
with insolvency trustees, were at least partially due to the
different steps the judgment creditors took and the timing of
those steps. When the judgment creditor exercised rights to the
debtor's property by timely levying specific property well in
advance of the insolvency proceedings, the creditor prevailed.
When the creditor did nothing more than initiate supplemental
proceedings prior to an insolvency proceeding, the creditor did
not prevail. Stated otherwise, a judgment creditor obtained a
superior interest in identified personal property of a judgment
debtor that could defeat the claim of a trustee in insolvency or
9
While the reasoning in Holton v. Burton, 78 Wis. 321, 47
N.W. 624 (1890), is interesting, I note that the statutes then
employed have been changed significantly.
17
No. 2011AP2597
bankruptcy proceedings when the judgment creditor or a receiver
acting on the judgment creditor's behalf levied that property
before the trustee obtained an interest in the property.10
¶37 At first glance, Kellogg may appear to cast doubt on
this interpretation. In Kellogg, two judgment creditors, who
had executions returned unsatisfied, initiated supplemental
proceedings and obtained appointments of two supplemental
receivers.11 The first judgment creditor to initiate
supplemental proceedings was second to properly serve the debtor
with an order to appear for supplemental proceedings because of
a technical problem with its first service. Kellogg, 47 Wis. at
651-52. By the time the first judgment creditor properly served
the debtor, the second judgment creditor had served the debtor
and the debtor had assigned his property to the second judgment
creditor's receiver in aid of execution of the second creditor's
10
Early New York cases are particularly persuasive because
Wisconsin adopted its supplemental proceeding statutes from New
York. Robert S. Moss, Supplementary Proceedings in Wisconsin,
23 Marq. L. Rev. 49, 51 (1939). These cases also support our
interpretation. While the New York and Wisconsin supplemental
proceeding statutes were still comparable, the New York rule was
"to give the creditor a lien on the debtor's equitable assets
which was [an] 'inchoate' [lien] at the time the examination
order was served." See Isadore H. Cohen, Collection of Money
Judgments in New York: Supplementary Proceedings, 35 Colum. L.
Rev. 1007, 1015-17 (1935) (citing Edmonstone v. McLoud, 16 N.Y.
543 (N.Y. 1858); Lynch v. Johnson, 48 N.Y. 27 (N.Y. 1871)).
11
We ultimately held that "where different judgment
creditors are prosecuting supplementary proceedings against the
same debtor at the same time," only one receiver should be
appointed. Kellogg v. Coller, 47 Wis. 649, 657, 3 N.W. 433
(1879).
18
No. 2011AP2597
judgment. Id. Despite the assignment, we concluded that "under
all of the circumstances of the case, [the second creditor's]
proceeding [wa]s inoperative to give [the second creditor] a
prior lien." Id. at 657.
¶38 Read in light of its facts, Kellogg established the
judgment creditor for whose benefit a supplemental receiver must
act, i.e., which judgment creditor had priority to money that
the supplemental receiver recovered, regardless of which
creditor had the receiver appointed. Under Kellogg, the first
judgment creditor who made a "bona fide attempt to serve" an
order to appear for supplemental proceedings and also prosecuted
"with proper diligence" to the appointment of a supplemental
receiver had priority to assets the supplemental receiver
recovered, even if the receiver was appointed in the
supplemental proceedings of a different judgment creditor. Id.
at 656-57.12 The equities of the underlying facts also may have
impacted our decision in Kellogg because the second judgment
creditor and her attorney "had actual notice that [Kellogg] had
previously commenced [supplemental proceedings]" when she
instituted her proceeding. Id. at 652.
¶39 However, it is significant that two judgment creditors
remained free to pursue collection on their docketed judgments
12
See also Alexander v. Wald, 231 Wis. 550, 552, 286 N.W. 6
(1939) ("bankruptcy proceedings had not displaced the lien
acquired by the receiver upon his appointment"); Cohen, supra
note 10, at 1016 (in New York, it was only upon appointment of a
receiver that a creditor's interest "ripen[ed] into a full
lien").
19
No. 2011AP2597
at the same time. Id. at 658 ("different [supplemental]
proceedings may be pending at the same time, the only
restriction upon a junior proceeding being that creditors
prosecuting prior proceedings shall be notified of the pendency
thereof, and that but one receiver shall be appointed. . . . the
plaintiff in the junior proceeding should be allowed to proceed
. . . without regard to priorities").
¶40 Furthermore, our conclusion that a superior judgment
creditor's interest in specific personal property may arise when
that property is seized has been the statutory directive of the
legislature since at least 1864. As we explained so long ago in
Knox v. Webster, 18 Wis. 426 (*406) (1864), when interpreting a
prior statute, "'[p]ersonal property shall be bound from the
time of its seizure on execution.' Before seizure there is no
lien[;] . . . [t]he lien takes effect from the date of the levy
and by virtue thereof." Id. at 429-30 (*409) (internal citation
omitted). In this regard, the current statute states the same
legal principle: "Personal property shall be bound from the
time it is seized." Wis. Stat. § 815.19(1). Accordingly,
seizure, often referred to as levying, of personal property is
necessary to create a lien in favor of an unsecured judgment
creditor.
¶41 Having explained the common law foundation and the
statutory foundation for when a judgment creditor's lien may
20
No. 2011AP2597
arise in identified personal property,13 we briefly return to
Badger Lines. Badger Lines arose in a priority contest between
a judgment creditor, Emerald Industrial Leasing Corporation, and
a trustee in bankruptcy. Badger Lines, 224 Wis. 2d at 649-50.
A trustee in bankruptcy has, by federal statute, all the rights
of a judgment creditor. 11 U.S.C. § 544(a). A supplemental
receiver had been appointed to administer Badger Lines' property
for the benefit of Emerald before the case made its way to us.
Prior to the appointment of the receiver, Emerald also had
docketed its judgment. Badger Lines, 224 Wis. 2d at 649-50.
And subsequent to said docketing, Emerald served an order
directing Badger to appear for a ch. 816 supplemental
proceeding. Id. at 650.
¶42 Docketing a creditor's judgment is a condition
precedent to establishing the priority of a judgment creditor's
interest because a judgment must be docketed before an execution
against the property of a judgment debtor can issue. Wis. Stat.
§ 815.05(1g)(a)6. (requiring that an execution shall state,
"[t]he time of entry in the judgment and lien docket in the
county to which the execution is issued"). Furthermore, a
judgment creditor must levy specifically identified personal
13
See In re Badger Lines, Inc., 140 F.3d 691, 694-95 (7th
Cir. 1998) (finding that Kellogg's omission of a perfection
requirement is "too thin a reed on which to rest [an] important
[priority] determination, especially in light of the significant
changes which have occurred in debtor/creditor law in the 120
years since" that decision).
21
No. 2011AP2597
property of the debtor before a lien can arise in that property.
Knox, 18 Wis. 2d at 429-30; Wis. Stat. § 815.19(1).
¶43 In Badger Lines, the trustee in bankruptcy attempted
to declare Emerald's interest a preference, whereby he could
place Emerald's money judgment among all of the other unsecured
creditors' claims. Badger Lines, 224 Wis. 2d at 650-51. Of
course, Emerald had no interest in sharing the assets it had
uncovered with other creditors. However, if Emerald's lien was
created within 90 days of filing the bankruptcy, it would be
held to be an avoidable preference and Emerald would lose to the
trustee. Id. at 651. Therefore, instead of focusing on the
creation of its lien, Emerald shifted the court's focus to
"perfection" of its lien. Emerald did so because if perfection
occurred more than 90 days before the filing of the bankruptcy,
Emerald could possibly prevail.
¶44 In Badger Lines, we did not have a full record that
displayed all the issues that we might have considered;
therefore, it differed significantly from the case now before
us.14 Badger Lines' statement that the date of service on Badger
14
At least one commentator seemed to view the Badger Lines
as a departure from older case law, noting that:
The Wisconsin Supreme Court, In re Badger Lines, Inc.,
224 Wis. 2d 646, 590 N.W.2d 270 (1999), held that
service upon the debtor of an order to appear at a
supplemental examination under Chapter 816 establishes
at the time of service a lien in favor of the creditor
without requiring the creditor to take additional
steps to perfect the lien . . . The court rejected
arguments that, to avoid a secret lien, some
additional action should be required of a judgment
creditor. The court also rejected arguments that the
22
No. 2011AP2597
Lines of the order to appear for supplemental proceedings was
the date of "perfection" must be limited to the context in which
it arose. That context did not include an assertion that common
law liens do not require "perfection," but rather, liens arise
in specifically identified, non-exempt personal property when
that property is levied.
¶45 Accordingly, it must be recognized that service of an
order to appear for supplemental proceedings will not create an
interest that is superior to the interest of a docketed judgment
creditor who has levied specific personal property of the
debtor. Merely serving an order to appear for supplemental
proceedings also will not create a common law lien on the
debtor's personal property nor will it give a judgment creditor
an interest superior to that of a secured creditor who has
lien should not arise until a supplemental receiver is
appointed or the court issues a turnover order as to
the debtor's assets; the court held that the lien
arises at an earlier stage, when the judgment debtor
is served with the order to appear at the supplemental
examination. See Holton v. Burton, 78 Wis. 321, 47
N.W. 624 (1890).
Robert A. Pasch, 12 Wisconsin Practice Series: Wisconsin
Collection Law § 16:13, at 330-31 (2d ed. 2006). Pasch also
noted the breadth of the decision, explaining that the case
"references the lien as a 'receiver's lien,' [but] . . . appears
to have broader application to the lien of a judgment creditor
pursuing supplemental proceedings." Id. at 331.
23
No. 2011AP2597
timely proceeded according to the directives of Wis. Stat. ch.
409.15
4. Statutory collection procedures
¶46 To conclude, as Decade asserts, that simply serving a
judgment debtor with an order to appear at supplemental
proceedings gives a judgment creditor the exclusive right to
pursue collection from all of the debtor's personal property
would improperly "impinge on the purview of the legislature" by
eviscerating its statutory scheme for judgment collection. See
Crown Castle USA, Inc. v. Orion Constr. Group, LLC, 2012 WI 29,
¶17, 339 Wis. 2d 252, 811 N.W.2d 332 (refusing to find an
implied right to compel a third party to appear at supplemental
proceedings because Wis. Stat. ch. 816 did not provide for one).
¶47 For example, if a judgment creditor were able to
encumber all of a judgment debtor's personal property simply by
15
Wisconsin Stat. ch. 409 governs voluntarily given
security interests, rather than creditors' rights represented by
a judgment. Wis. Stat. § 409.109(4)(i) (chapter does not apply
to "assignment of a right represented by a judgment, other than
a judgment taken on a right to payment that was collateral").
Under this system of secured transactions, a creditor obtains a
security interest in property the debtor has assigned as
collateral that is enforceable against the debtor when
"attachment" occurs pursuant to Wis. Stat. § 409.203. The
creditor's security interest is valid against the claims of
other creditors when it perfects that interest by meeting "all
of the applicable requirements for perfection in ss. 409.310 to
409.316." Wis. Stat. § 409.308. These "applicable
requirements" vary depending on the type of collateral, but the
general rule is that "a financing statement must be filed to
perfect all security interests." § 409.310(1). See Attorney's
Title Guaranty Fund, Inc. v. Town Bank, 2014 WI 63, __ Wis. 2d
__, __ N.W.2d __.
24
No. 2011AP2597
serving an order to appear for supplemental proceedings,
alternate statutory processes such as execution, ch. 815, and
garnishment, ch. 812, and turnover orders would be nearly
useless for collection of money judgments. A judgment creditor
who does nothing more than initiate supplemental proceedings
could stop another judgment creditor who has located specific,
non-exempt personal property from having the sheriff seize the
asset under a valid execution order. Similarly, a judgment
creditor who discovered a judgment debtor's bank account could
be prevented from garnishing that account once an order to
appear for supplemental proceedings was served. And since state
law determines priority in bankruptcy, a judgment creditor who
does nothing more than serve a debtor with an order to appear at
supplemental proceedings outside of the bankruptcy preference
period could thereby defeat the claim of a bankruptcy trustee
(and the unsecured creditors he or she represents) to all of the
debtor's personal property. If those results were to occur,
they would directly contradict the legislature's directive that
"[p]ersonal property shall be bound from the time it is seized."
Wis. Stat. § 815.19(1).
¶48 Moreover, by granting the judgment creditor with a
docketed judgment who first levies on non-exempt personal
property a superior interest in that property, "[t]he law justly
rewards the diligent creditor who by his timely efforts succeeds
in discovering assets of the debtor which are inequitably
withheld from his creditors." John W. Smith, The Equitable
Remedies of Creditors § 235, at 243 (Chicago, Callaghan & Co.
25
No. 2011AP2597
1899). Rather than encouraging diligence, the kind of blanket
lien Decade asks us to recognize would remove incentives for a
judgment creditor to locate and levy a debtor's personal
property. The facts of this case aptly demonstrate some of the
problems this would present.
5. Article 9 secured transactions
¶49 A blanket lien on a judgment debtor's personal
property also would frustrate the legislature's goal of a
uniform system of secured transactions. The Wisconsin
Legislature adopted the Uniform Commercial Code in 1965 in order
to "simplify, clarify, and modernize the law governing
commercial transactions." Wis. Stat. § 401.103(1)(a).
¶50 Chapter 409 governs secured transactions and works
toward these stated goals by prescribing the steps a party must
take to obtain and perfect a security interest in personal
property.16 Wis. Stat. § 409.203; Wis. Stat. § 409.301 et. seq.;
see generally Smith & Spidahl Enters., Inc. v. Lee, 206 Wis. 2d
663, 673, 557 N.W.2d 865 (Ct. App. 1996) ("Fashioning equitable
solutions to mitigate the hardship of [statutory] requirements
on particular creditors undermines [the system's] purpose. . . .
[R]elaxing [statutory] requirements does not . . . justify the
16
Article 9 of the Uniform Commercial Code is contained in
Wis. Stat. ch. 409. Nat'l Operating, L.P. v. Mut. Life Ins. Co.
of N.Y., 2001 WI 87, ¶31, 244 Wis. 2d 839, 630 N.W.2d 116
("Wisconsin has adopted each section of the U.C.C. relevant to
this case. This includes all of Article 9, which is embodied in
Chapter 409 of the Wisconsin Statutes. Chapter 409 does not
vary in any material respect from the uniform law.").
26
No. 2011AP2597
uncertainty and inconsistency that would result from such an
approach.").
¶51 Article 9 does not apply to the present case. Wis.
Stat. § 409.109(4)(i). Judgment creditors are unsecured
creditors with regard to a debtor's personal property. Still,
the impact of a blanket lien on the statutory scheme for secured
transactions provides additional understanding of the conflicts
that such a lien would create. We explain in more detail the
implications a blanket lien would have on lending, paying
particular attention to Wis. Stat. ch. 409 in Attorney's Title
Guaranty Fund v. Town Bank, 2014 WI 63, ¶¶30-36, __ Wis. 2d __,
__ N.W.2d __, released today.
¶52 And finally, we conclude that if a judgment creditor
were to have a blanket lien on all the personal property of a
judgment debtor that precludes other creditors from pursuing
collection, that is a policy choice better left to the
legislature than to the courts. Compare Cal. Civ. Proc. Code
§ 708.110(d) (providing for a lien on non-exempt personal
property for one year from service of notice to appear at
supplemental proceedings); 735 ILCS 5/2-1402(m) (judgment
27
No. 2011AP2597
"becomes a lien" on non-exempt personal property when citation
from the clerk is served).17
C. Application
¶53 Decade contends that because it served an order to
appear for supplemental proceedings, it has a blanket lien on
all of Collier's non-exempt personal property. However, Decade
does not explain how it acquired this lien. Instead, it skips
that step in the analysis and discusses perfection of its lien.
¶54 SB1 asserts that "neither Decade nor Keierleber had
any interest in actually recovering money from Collier." This
view is supported by "the record[, which] suggests that Collier
17
Wisconsin is not the first state to face problems
regarding the idea of a common law lien arising out of
supplemental proceedings. Illinois courts were split on whether
the issuance of a "citation to discover assets," a procedure
akin to supplemental examination, created a lien, until the
legislature expressly provided for the creation of a lien.
Prior v. Farm Bureau Oil Co., 176 B.R. 485, 492 (Bankr. S.D.
Ill. 1995); see Francis Edward Stepnowski, Less Than Perfected:
Uncertainty in Illinois Judgment Lien Law, 13 N. Ill. U. L. Rev.
33, 41 (1992) (before the legislature provided for the lien,
Illinois case law created uncertainty, "whereas today's business
climate requires bright-line rules to determine priority among
creditors"). The New York legislature similarly provided for a
lien upon "secur[ing of] an order for delivery of, payment of,
or appointment of a receiver of, a debt owed to the judgment
debtor or an interest of the judgment debtor in personal
property" in order "to avoid the confusion of . . . former law."
N.Y. C.P.L.R. § 5202 (Consol. 2013) and Advisory Committee Notes
subd. (b); see Cohen, supra note 10, at 1015-17. Finally, the
California legislature has provided for a lien on personal
property that is compatible with Article 9. See Cal. Civ. Proc.
Code § 697.510(a) (providing judgment creditors with the
equivalent of a security interest in a debtor's personal
property when the creditor files notice of a judgment in the
state's central filing system).
28
No. 2011AP2597
evaded service from SB1 for months and that Decade's six
lawsuits were filed as a dilatory tactic." Associated Bank, No.
2011AP2597, unpublished slip op., at ¶18. Should we adopt
Decade's position, we would be affirming Decade's ability to
shelter Collier's assets from SB1 and other creditors. SB1
asserts that if Decade's contention were correct, by serving
Collier with an order to appear, Decade could prevent other
creditors from executing on Collier's personal property while
Decade itself took no steps to apply Collier's property in
satisfaction of Decade's judgment. Therefore, as long as Decade
continued to take no action to collect, Collier would remain in
possession of his personal property, flouting the "noble
proposition that debtors ought to pay." David Gray Carlson,
Critique of Money Judgment (Part Two: Liens on New York
Personal Property), 83 St. John's L. Rev. 43, 44 (2009).
¶55 SB1's argument has a lot of merit. SB1 has not only
docketed its money judgment and served Collier with an order to
appear for supplemental proceedings, SB1 also obtained a
turnover order through a receiver for Collier's identified
personal property thereby levying that property. Accordingly,
SB1 has a lien on that levied property that is superior to other
unsecured judgment creditors.
¶56 In addition, we conclude that Decade does not have the
exclusive right to pursue collection from Collier's personal
property simply by serving him with a notice to appear at
supplemental proceedings because Decade had not docketed its
29
No. 2011AP2597
judgment and proceeded in its collection efforts sufficient to
acquire a lien on any of Collier's personal property.
¶57 Before concluding, we briefly address Decade's
contention that the circuit court erroneously exercised its
discretion when it refused to give Decade priority over SB1 in
regard to Collier's personal property. Decade contends that the
circuit court should have employed its equitable powers and held
its judgment was docketed because the failure in docketing was
due to the error of the clerk. Again, we disagree.
¶58 First, if Decade suffered any damages due to the
clerk's error, the legislature has provided a statutory remedy
for that error in Wis. Stat. § 806.10(3). Second, the circuit
court balanced Decade's lawsuits and supplemental proceeding
with Collier's apparent evasion of service of SB1's order to
appear and concluded that Decade's failure to docket should not
be accorded an equitable remedy. Third, we agree with the court
of appeals that serving an order to appear for supplemental
proceedings is not the equivalent of docketing a money judgment.
"In a race-notice jurisdiction such as Wisconsin, prompt
docketing of judgments is needed to establish the proper
priority of claims." S. Milwaukee Sav. Bank v. Barrett, 2000 WI
48, ¶40, 234 Wis. 2d 733, 611 N.W.2d 448. Fourth, a properly
docketed judgment is required to obtain a statutory lien on real
property. Wis. Stat. § 806.15; Builder's Lumber Co. v. Stuart,
6 Wis. 2d 356, 364, 94 N.W.2d 630 (1959). No less should be
required for personal property. Accordingly, we conclude that
30
No. 2011AP2597
the circuit court did not erroneously exercise its discretion
when it refused to grant Decade equitable relief.
III. CONCLUSION
¶59 We conclude that supplemental proceedings under ch.
816 are a discovery tool in aid of judgment collection.
Decade's serving Collier with an order to appear for
supplemental proceedings did not give rise to a blanket lien on
all of Collier's personal property that prevented SB1 from
pursuing collection. A judgment creditor obtains an interest in
a judgment debtor's identified, non-exempt personal property
superior to other unsecured creditors when it dockets its money
judgment, identifies specific personal property and levies that
property. Levying may be accomplished by at least three
different means: (1) by executing against specific personal
property with the assistance of a sheriff; (2) by serving the
garnishee defendant in a garnishment action to seize specific
property in the hands of the garnishee defendant; or (3) by
obtaining an order to apply specific personal property to the
satisfaction of the judgment, which a creditor may do with the
assistance of a supplemental receiver. Wis. Stat. § 815.05(6);
Wis. Stat. § 812.01; Wis. Stat. § 816.08.
¶60 Here, SB1 was the first judgment creditor with a
docketed money judgment to levy specific, non-exempt personal
property of Collier. It did so by obtaining a court order to
turn over specifically identified property to its receiver.
Accordingly, we affirm the decision of the court of appeals that
concluded that SB1 has priority over Decade in regard to the
31
No. 2011AP2597
specific personal property SB1 identified and levied. However,
insofar as the decision of the court of appeals can be read to
recognize a blanket lien in favor of SB1 that prevents other
creditors from pursuing collection from Collier's personal
property, we modify that decision because no blanket lien
exists.
By the Court.—The decision of the court of appeals is
modified and as modified, affirmed.
¶61 DAVID T. PROSSER, J., did not participate.
32
No. 2011AP2597.ssa
¶62 SHIRLEY S. ABRAHAMSON, C.J. (dissenting). The
majority opinion reaches its erroneous conclusion today by
operating in its own imaginary world, divorced from reality.
¶63 In the real world, our courts have recognized for the
last 150 years a judgment creditor's common-law equitable lien,
superior to other creditors, created by service of notice of a
supplementary proceeding upon a judgment debtor on the debtor's
non-exempt personal property. In the real world, creditors and
debtors have relied upon this judgment creditor's common-law
equitable lien. In the real world, the parties in the instant
case dispute the applicability of this common-law equitable lien
to the undisputed facts.
¶64 In the world of the majority opinion, a judgment
creditor's common-law equitable lien and the issues raised by
the parties simply have not existed and will not exist in the
future.1
1
According to the majority opinion, a lien on a judgment
debtor's non-exempt personal property turns on the judgment
creditor's "levying" on non-exempt personal property after
identifying the property and docketing the judgment. Majority
op., ¶3.
Docketing the judgment is mentioned in only one place in
chapter 815, entitled "Execution": Section 815.05(1g)(a)6.
provides that the execution "shall intelligibly refer to the
judgment stating," inter alia, "the time of entry in the
judgment and lien docket in the county to which the execution is
issued."
With regard to execution, Wis. Stat. § 806.06(4) provides
that "[n]o execution shall issue until the judgment is perfected
or until the expiration of the time for perfection." (emphasis
added). A judgment is perfected "by the taxation of costs and
the insertion of the amount thereof in the judgment." Wis.
Stat. § 806.06(1)(c). Perfection does not relate to docketing.
1
No. 2011AP2597.ssa
¶65 The issue in this case as presented by the parties is
whether Decade Property obtained a common-law equitable lien on
Jack Collier's personal property superior to SB1's interest when
Decade Property, the judgment creditor, served Collier, the
judgment debtor, with an order to appear at a supplemental
examination but the clerk of circuit court failed to docket the
judgment.2
¶66 SB1 asserts a superior common-law equitable lien on
Jack Collier's non-exempt personal property even though SB1
served Collier notice of the supplementary proceeding after
Decade Property served Collier, but SB1's judgment was docketed
before Decade Property's judgment was docketed. The circuit
court and court of appeals agreed with SB1.
¶67 Rather than address the issue of how a judgment
creditor obtains a common-law equitable lien, the majority
opinion broadly and surprisingly holds that supplemental
Furthermore, Wis. Stat. § 815.04(1)(a) permits execution to
issue "within 5 years of the rendition of the judgment.
Section 806.06(1)(a) provides that "[a] judgment is rendered by
the court when it is signed by the judge or by the clerk at the
judge's written direction" (emphasis added).
The circuit court and court of appeals do not always use
the words "perfecting" a judgment, "entering" a judgment, and
"docketing" a judgment as these words are used in the statutes.
2
The Petition for Review states the issue as follows: "Is
a creditor's right to obtain a common law Creditor's/Receiver's
Lien against a judgment debtor's personal property conditioned
upon docketing the judgment in the Judgment and Lien Docket
under Wis. Stat. § 806.10(1)?"
The circuit court concluded, and the court of appeals
affirmed, that docketing the judgment was a prerequisite for a
common-law creditor's lien. See majority op., ¶19.
2
No. 2011AP2597.ssa
proceedings do not give rise to any lien whatsoever on any of
the debtor's personal property. "[S]upplemental proceedings
under ch. 816 are a discovery tool in aid of judgment
collection." Majority op., ¶3. "Supplementary proceedings
provide a mechanism by which to obtain information in aid of
judgment collection." Majority op., ¶27.
¶68 According to the majority opinion, a judgment creditor
obtains an interest in a judgment debtor's identified non-exempt
personal property superior to other unsecured creditors when the
judgment creditor (1) dockets its money judgment, (2) identifies
specific, non-exempt personal property, and (3) "levies" (by at
least one of three enumerated means) the specific non-exempt
personal property it has identified. Majority op. ¶¶3, 23, 33.
¶69 The long-recognized judgment creditor's equitable
common-law lien arising from supplementary proceedings simply
does not exist in the world created by the majority opinion.
Yet in the real world, creditors and debtors have long relied on
the court's recognition of the common-law equitable lien.3 In
writing the common-law creditor's lien out of Wisconsin legal
history, the majority opinion mischaracterizes or ignores
existing case law.
¶70 To put the majority opinion's rewriting of history and
case law in proper perspective, I first review the law regarding
the judgment creditor's common-law equitable lien arising on a
3
See Attorney's Title Guaranty Fund v. Town Bank, 2014 WI
63, ___ Wis. 2d ___, ___N.W.2d ___ (a judgment creditor acted
under the assumption that a common-law equitable lien existed on
the judgment debtor's property).
3
No. 2011AP2597.ssa
debtor's personal non-exempt property in supplementary
proceedings. I then discuss our most recent case, In re Badger
Lines, Inc., 224 Wis. 2d 646, 590 N.W.2d 270 (1999), a case that
the majority opinion in effect overrules without confronting the
doctrine of stare decisis.
¶71 Before I tackle these two issues, I enumerate a few
other flaws in the majority opinion (not necessarily in order of
significance), but I do not address each in great detail.
¶72 First, the majority opinion is confused and confusing
as it describes its holding in different ways in different parts
of the opinion. Compare majority op., ¶¶3, 20, 33, 42, 45, 47,
48, 52, 60.
¶73 Second, the majority opinion entangles the law on
liens on real property and personal property. See majority op.,
¶58; Associated Bank N.A. v. Collier, No. 2011AP2597,
unpublished slip op., ¶14 (Wis. Ct. App. Nov. 28, 2012).
¶74 Third, "levying" is the important concept in the
majority opinion, yet it is undefined. According to the
majority opinion, a lien on a judgment debtor's non-exempt
personal property turns on the judgment creditor's "levying" on
the non-exempt personal property. Majority op., ¶3.
¶75 Yet service of notice of a supplementary proceeding
has been characterized by the court as an "equitable levy."
Supplementary proceeding on the debtor "operates as an equitable
levy, and creates a lien in equity upon the effects of the
judgment debtor, and every species of property belonging to [the
debtor] may be reached and applied to the satisfaction of his
4
No. 2011AP2597.ssa
debts." Bragg v. Gaynor, 85 Wis. 468, 486, 55 N.W. 919 (1893)
(emphasis added).4 See also In re Milburn, 59 Wis. 24, 34, 17
N.W. 965 (1883) (service of the notice of the supplementary
proceeding "operates as an equitable levy and creates a lien in
equity . . . ").
¶76 Without discussion or explanation, the majority
opinion ignores case law describing service of notice of a
supplementary proceeding as an "equitable levy."
¶77 Fourth, the majority opinion appears to conflict with
various statutes. Contrary to the majority opinion, a judgment
creditor need not always docket the judgment to obtain a lien
and priority on non-exempt personal property of the debtor.5
¶78 For example, a judgment creditor may, without
docketing the judgment, obtain a lien on a debtor's property by
use of garnishment. On service of the garnishment complaint,
the garnishment lien has priority. Wis. Stat. § 812.18.6 A
garnishee is liable as to debts due "or to become due" at the
time of service of the garnishment summons and complaint.7
4
See also Candee v. Egan, 84 Wis. 2d 348, 360, 267
N.W.2d 890 (1978) (service of notice of the supplementary
proceeding serves as an equitable levy on the unknown property
of the debtor "to preserve the debtor's nonexempt property for
the benefit of the specific judgment creditors . . . .").
5
Liens may be perfected in many different ways. The manner
in which a lien is perfected depends on both the type of lien
asserted, e.g., a judgment lien, a statutory lien, an equitable
lien, and the type of property against which the lien is
asserted, e.g., real or personal.
6
See also Robert A. Pasch, 12 Wisconsin Practice Series:
Wisconsin Collection Law § 17:15, at 349 (2d ed. 2006).
7
Wis. Stat. § 812.18.
5
No. 2011AP2597.ssa
¶79 The court has spoken of garnishment as an equitable
levy upon the property of the debtor in the hands of the
garnishee, just as it has spoken of service of notice of a
supplementary proceeding as operating as an equitable levy.
Bragg, 85 Wis. at 486.
¶80 Fifth, the majority opinion voices concern about
"blanket liens" over a debtor's non-exempt personal property.8 I
agree that issues exist regarding the scope of a judgment
creditor's common-law equitable lien on a debtor's non-exempt
personal property, including a lien on after-acquired property.
By eliminating the lien entirely, the majority opinion does not
tackle the more nuanced issues involving the scope of the
common-law equitable lien created by notice of supplementary
proceedings, an issue raised by the parties in the instant case.
¶81 Sixth, by subverting the longstanding rule on a
judgment creditor's common-law equitable lien, the majority
opinion ignores the policy of this court to promote
predictability, efficiency, and uniformity in commercial
transactions. The majority opinion does not consider whether it
should "sunburst" its opinion to maintain the predictability and
efficiency of the law governing economic transactions.9
8
See majority op., ¶¶3, 20, 51, 52-55.
9
The decision to apply a new rule of law only
prospectively, or to "sunburst" the new rule of law,
is driven by our attempt to alleviate the unsettling
effects of a party justifiably relying on a contrary
view of the law. [State ex rel. Buswell v. Tomah Area
Sch. Dist., 2007 WI 71, ¶ 46, 301 Wis. 2d 178, 732
N.W.2d 804]. Accordingly, in determining whether to
apply a new rule of law prospectively instead of
retrospectively, we consider three factors: (1)
6
No. 2011AP2597.ssa
¶82 Accordingly, I dissent.
I
¶83 I begin by discussing the case law on a judgment
creditor's common-law equitable lien in supplementary
proceedings.
¶84 Since the early days of statehood, our statutes and
case law have recognized that when a judgment creditor properly
serves notice upon a debtor of a supplementary proceeding to
identify property to satisfy its judgment, the judgment creditor
obtains a common-law equitable lien on the debtor's property.10
¶85 The judgment creditor's common-law equitable lien has
a long robust history in our state. It can be traced to the
whether our holding establishes a new rule of law,
either by overruling clear past precedent on which
litigants may have relied, or by deciding an issue of
first impression, the resolution of which was not
clearly foreshadowed; (2) whether retroactive
application would further or impede the operation of
the new rule; and (3) whether retroactive application
could produce substantial inequitable results. Id.,
¶47; see also [Kurtz v. City of Waukesha, 91
Wis. 2d 103, 109, 280 N.W.2d 757 (1979)].
Heritage Farms, Inc. v. Markel Ins. Co., 2012 WI 26, ¶45, 339
Wis. 2d 125, 810 N.W.2d 465 (footnote omitted).
10
See, e.g., Kellogg v. Coller, 47 Wis. 649, 656 (1879); In
re Milburn, 49 Wis. 24, 17 N.W. 965 (1883); Bragg v. Gaynor, 85
Wis. 468, 486, 55 N.W. 919 (1893); In re Badger Lines, Inc., 224
Wis. 2d 646, 654 (citing Candee, 84 Wis. 2d at 360).
Wisconsin creditors and debtors, including both parties in
the instant case, point to the judgment creditor's common-law
equitable lien on a debtor's property created by a subpoena or
notice to appear at a supplementary hearing. See Brief of
Intervening Defendant-Appellant at 31-39; Brief of the Co-
Plaintiff-Respondent at 16.
7
No. 2011AP2597.ssa
creditor's bill in equity. In 1856 the Wisconsin legislature
adopted the precursor to chapter 816 of the Wisconsin Statute
governing supplementary proceedings11 "with the intent to
substitute supplementary proceedings for the relief formerly
obtainable in equity by a creditor's bill."12 The supplementary
proceedings are the "statutory equivalent of a creditor's bill
in equity at common law and follow essentially the same rules of
law."13
¶86 The court has routinely used the common-law principles
of the creditor's bill in equity to interpret the supplementary
proceedings statutes. A supplementary proceeding, the court
declared, "is a substitute for a creditor's bill in equity, and
is governed by the same rules of law in respect to the rights
and priorities of parties affected by the proceeding which
control the equitable action. . . . [T]he creditor who, after
filing his bill, obtained the first service of the subpoena upon
the judgment debtor, thereby obtained a prior lien upon the
equitable assets of such debtor."14
11
Ch. 120, §§ 200-213, Laws of 1856.
12
Robert S. Moss, Supplementary Proceedings in Wisconsin,
23 Marq. L. Rev. 49, 49 (1939). Moss urged clarification of the
principles and practices governing supplementary proceedings.
23 Marq. L. Rev. at 58.
13
In re Badger Lines, Inc., 224 Wis. 2d 646, 654, 590
N.W.2d 270 (1999).
If a lien existed at common law, the mere existence of
other lien statutes does not abrogate the common-law lien.
Moynihan Associates, Inc. v. Hanisch, 56 Wis. 2d 185, 190, 201
N.W.2d 534 (1972).
14
Kellogg v. Coller, 47 Wis. 649, 655-56 (1879).
8
No. 2011AP2597.ssa
¶87 The creditor's bill in equity existed as a remedy at
equity for creditors when no remedy at law existed.15 The
creditor's bill in equity arose to address the problem of
judgment creditors of debtors who had died. At common law, the
debtor's property at death no longer belonged to the debtor for
purposes of execution; the property instead belonged to the
debtor's heirs and assigns.16 The creditor's bill in equity
allowed the creditor to reach the assets of the deceased debtor
by providing a separate action for the creditor against the
estate, heirs, or assigns of the deceased debtor.
¶88 Additionally, the creditor's bill in equity provided
an equitable remedy if a judgment debtor concealed assets from
the debtor and the sheriff was forced to return with an
execution unsatisfied, leaving the creditor with no remedy at
law to satisfy his or her judgment.17
15
Robert S. Moss, Supplementary Proceedings in Wisconsin,
23 Marq. L. Rev. 49, 50 (1939).
For an extensive discussion of the creditor's bill in
equity, see C.C. Langdell, A Brief Survey of Equity
Jurisdiction, Part VI, 4 Harv. L. Rev. 99 (1890).
16
At common law, when the debtor died, the creditor was
unable to execute on the debtor's property. Langdell, supra
note 15, at 119.
17
As in the creditor's bill, an appeal was made to the
conscience of the defendant to discover upon oath
whether he had property covered up or concealed beyond
the reach of an execution, so in this proceeding, the
judgment debtor is required to state, under oath,
whether he has not property somewhere concealed, which
should be applied in payment of his debts.
In re Remington, 7 Wis. 541, 548 (1858).
9
No. 2011AP2597.ssa
¶89 The common-law lien functioned as an "equitable levy"
precisely because the property could not be levied on at law.18
The majority opinion gets it backwards when it rules that
service of notice of a supplementary proceeding cannot
constitute a lien and that a judgment creditor must levy on the
property in order to establish a lien and priority.19 Rather,
the purpose of the supplementary proceeding was to allow a
judgment creditor to obtain a superior lien, without meeting the
statutory requirements of execution or other levy at law.
¶90 Our longstanding case law teaches that a judgment
creditor's service of notice upon the debtor of the
supplementary proceeding creates a judgment creditor's lien
against the non-exempt personal property of the debtor. "[T]he
filing of the bill and a bona fide attempt to serve the subpoena
give the complainant priority of right to the equitable assets
of the judgment debtor . . . ."20
¶91 The rule that a lien superior to other creditors is
created from the time of the judgment creditor's service of
18
Langdell, supra note 15, at 109-118).
19
Majority op., ¶3.
20
Kellogg v. Coller, 47 Wis. 649, 655, 3 N.W. 433 (1879).
10
No. 2011AP2597.ssa
notice of the supplementary proceeding upon the debtor has been
continuously reiterated and reinforced by this court.21
¶92 In In re Milburn, 59 Wis. 24, 34, 17 N.W. 965 (1883),
the court stated that the service of the notice of the
supplementary proceeding "operates as an equitable levy, and
creates a lien in equity upon the effects of the judgment
debtor":
As in a creditor's bill, so in supplementary
proceedings: the commencement of them by the service
of process or notice operates as an equitable levy,
and creates a lien in equity upon the effects of the
judgment debtor, and every piece of property belonging
to him may be reached and applied to the satisfaction
of his debts.
¶93 The Milburn holding is echoed in later cases. In
Bragg, 85 Wis. at 486, the court cited Milburn and reiterated
that service of process or notice of the supplementary
proceeding serves as an equitable levy on all a judgment
debtor's property and creates a lien in equity on the judgment
debtor's property:
When commenced by service of process or notice, [the
supplementary proceeding] operates as an equitable
levy, and creates a lien in equity upon the effects of
the judgment debtor, and every species of property
belonging to him may be reached and applied to the
satisfaction of his debts.
21
The majority opinion at ¶40 relies on Knox v. Webster, 18
Wis. 426 (1864), for the rule that "[p]ersonal property shall be
bound from the time of its seizure on execution." This
declarative statement is true, but it does not mean that seizure
is always necessary to create a lien. The Knox case dealt with
two creditors who attempted to seize the same property. The
court held that executions should be levied according to the
order in which the sheriff received the executions.
11
No. 2011AP2597.ssa
¶94 Kellogg v. Coller, 47 Wis. 649, 3 N.W. 433 (1879), is
also instructive. The majority opinion cites Kellogg
approvingly but views the case as establishing the rule that a
lien's perfection requires "the appointment of a receiver, who
then applied the debtor's specified personal property to the
judgment debt." Majority op., ¶33.22
¶95 The majority opinion's commentary on Kellogg is
contrary to the facts and reasoning of Kellogg.
¶96 In Kellogg, two judgment creditors attempted to
satisfy their judgments against a debtor. The first creditor,
Kellogg, obtained an order of a supplementary proceeding and
served the order upon the debtor. Due to a scrivener's error,
the affidavit of the sheriff was defective and service of notice
of the supplementary proceeding was not completed. Thus,
Kellogg did not appoint a receiver, secure a turnover order, or
identify specific property of the debtor.
¶97 The second creditor, Coller, instituted supplementary
proceedings against the debtor and served the debtor with notice
of the proceeding. The debtor appeared and disclosed a life
insurance policy. Subsequently, the court commissioner
appointed a receiver for the assets of the debtor identified at
the hearing. The debtor then assigned all his non-exempt
personal property to the receiver.
22
The summary set forth in the majority opinion at ¶33 does
not appear in the text of Kellogg v. Coller, 47 Wis. 649, 656, 3
N.W. 433 (1879).
12
No. 2011AP2597.ssa
¶98 The first creditor had a receiver appointed after the
second creditor's receiver took possession of the property of
the debtor.
¶99 The first creditor completed none of the majority
opinion's requirements for obtaining priority on the debtor's
property: no statutory levy, no execution, no receiver, no
specification or identification of property before the second
creditor acted. The second creditor in Kellogg completed all of
the majority opinion's requirements for obtaining priority on
the debtor's property prior to the first creditor: she had
identified specific property; a receiver had been appointed and
turnover required; and the debtor's property was properly
executed against.
¶100 If the majority opinion's interpretation of Kellogg
were correct, that a creditor cannot obtain a lien on the
debtor's personal property by mere service of notice of a
supplementary proceeding, the first creditor should have lost.
¶101 Yet in Kellogg, the first creditor won. The Kellogg
court explicitly rejected the reasoning the majority opinion
adopts in the present case. The Kellogg court stated:
As in a creditor's suit the filing of the bill and a
bona fide attempt to serve the subpoena give [the
first creditor] priority of right to the equitable
assets of the judgment debtor, so, under the
circumstances of this case, the bona fide attempt to
serve the order issued by the commissioner at the
instance of [the first creditor] must be held to
confer upon them like priority of right over [the
second creditor], although the order obtained by her
was served before service of [the first creditor's]
order was perfected.
Kellogg, 47 Wis. at 656 (emphasis added).
13
No. 2011AP2597.ssa
¶102 In other words, the Kellogg court gave priority over
the debtor's personal property to the first creditor, based on
the first creditor's bona fide attempt to serve the debtor in
the supplementary proceeding. It determined that the second
creditor's "proceeding is inoperative to give her a prior lien
on the equitable assets of the judgment debtor." Kellogg, 47
Wis. at 657.
¶103 The longstanding rule that the perfection of the
creditor's lien depends on "first service of the subpoena upon
the judgment debtor" was applied in Kellogg to "give the
complainant priority of right to the equitable assets of the
judgment debtor." Kellogg, 47 Wis. at 656.
¶104 Kellogg stands in direct contradiction of the majority
opinion's assertion that "service of an order to appear for
supplemental proceedings will not create an interest that is
superior to the interest of a docketed judgment creditor who has
levied specific personal property of the debtor." Majority op.,
¶48. Under Kellogg, service of notice of supplementary
proceedings creates a superior interest in a judgment debtor's
property.
¶105 The court has interpreted Kellogg as I do. In Candee
v. Egan, 84 Wis. 2d 348, 360, 267 N.W.2d 890 (1978), the court,
citing Kellogg, reiterated that "[a] judgment creditor who first
begins supplementary proceedings against a particular judgment
debtor obtains an equitable lien upon the debtor's nonexempt
14
No. 2011AP2597.ssa
property that is prior to the equitable lien of a judgment
creditor who commences a supplementary proceeding thereafter."23
¶106 The same rule of law was confirmed in In re Badger
Lines, Inc., 224 Wis. 2d 646, 590 N.W.2d 270 (1999). The court
stated that it is service of notice of the supplementary
proceeding upon the debtor by which a judgment creditor perfects
a common-law equitable lien on the non-exempt personal property
of the debtor. Badger Lines, 224 Wis. 2d at 658.
¶107 I now examine Badger Lines.
II
¶108 The majority opinion contorts and distorts Badger
Lines to reach its result, changing the baseline rule that
Badger Lines reiterated and upon which debtors and creditors
have relied.
¶109 The question in Badger Lines was presented to this
court by the federal Seventh Circuit Court of Appeals as a
question of state law necessary to resolve a federal bankruptcy
case.24 The following is a rough timeline of the events in
Badger Lines:
23
Citing Candee, 84 Wis. 2d at 360, and Alexander v. Wald,
231 Wis. 550, 286 N.W. 6 (1939), Robert Pasch writes: "[A]
judgment creditor who first begins a supplementary proceeding
against a debtor obtains an equitable lien on the debtor's non-
exempt property that is senior to any judgment creditor who
subsequently commences a supplementary proceeding." Pasch,
supra note 6, § 16:13, at 329. See also Pasch, supra note 6,
§ 17:15, at 349.
24
See Matter of Badger Lines, Inc., 140 F.3d 691 (7th Cir.
1998) (certifying a question of Wisconsin state law for
resolution by the Wisconsin Supreme Court).
15
No. 2011AP2597.ssa
• October 18, 1991: A judgment of $82,120.26 was entered
in favor of Emerald Industrial Leasing Corporation
against Badger Lines, Inc. for services rendered and
unpaid.
• October 21, 1991: Emerald Industrial's judgment was
docketed.
• October 30, 1991: Emerald Industrial served Badger
Lines with an order directing it to appear at a
supplementary hearing pursuant to Wis. Stat. § 816.03
and enjoining Badger Lines from transferring its
assets.
• December 17, 1991: The court commissioner appointed a
supplementary receiver on behalf of Emerald
Industrial; issued a "turnover" order that instructed
Badger Lines to turn over its assets; and enjoined
Badger Lines from transferring its assets.
• February 11, 1992: Badger Lines filed for Chapter 7
bankruptcy in the Bankruptcy Court for the Eastern
District of Wisconsin.
• March 1992: The receiver filed a proof of claim in
bankruptcy asserting a receiver's lien on behalf of
the Emerald Industrial.
• April 1995: The Chapter 7 trustee issued a final
report distributing the remaining assets of Badger
Lines; the receiver and Emerald Industrial were
treated as unsecured creditors.
16
No. 2011AP2597.ssa
¶110 The federal bankruptcy and district courts had
determined that Emerald Industrial had a common-law equitable
lien on the debtor's property.25 Thus, the federal court asked:
"Does Wisconsin law require that a lien obtained by a judgment
creditor who institutes supplementary proceedings under Wis.
Stat. § 816.04 be perfected, and if so, how is the lien to be
perfected?"26
¶111 The key dispute in the case was whether any additional
action besides notice to the debtor was required to perfect
Emerald Industrial's common-law equitable lien on Badger Lines'
assets. Emerald Industrial argued that perfection of its lien
on Badger Lines' assets occurred upon service of notice to
Badger Lines of the supplementary proceeding. The bankruptcy
trustee argued, however, that perfection of the lien was
accomplished either by the appointment of a receiver or the
issuance of a turnover order.27
¶112 If Emerald Industrial were correct and service of
notice of the supplementary proceeding provided perfection of
the lien, then it would have priority over other creditors. If
the bankruptcy trustee were correct and Emerald Industrial
25
See In re Badger Lines, Inc., 199 B.R. 934, 937-38
(Bankr. E.D. Wis. 1996) (recognizing the existence of the lien
created by supplementary proceedings); In re Badger Lines, Inc.,
1996 WL 33364962 (E.D. Wis. Mar. 14, 1996) (treating the common-
law lien as already in existence and ruling only on the question
of perfection of the lien).
26
Matter of Badger Lines, Inc., 140 F.3d 691, 699 (7th Cir.
1998).
27
In re Badger Lines, 224 Wis. 2d 646, 652, 590 N.W.2d 270
(1999).
17
No. 2011AP2597.ssa
needed to take steps in addition to service of notice, then
Emerald Industrial's lien would have been perfected within the
90-day preference period in bankruptcy and could be avoided.
¶113 When Badger Lines was served with notice of the
supplementary proceeding, the judgment creditor did not know
what property Badger Lines held. The "specific personal
property" of Badger Lines was not identified until December 17,
1991, when the turnover order was issued.
¶114 Nevertheless, the Badger Lines court held that Emerald
Industrial obtained and perfected an equitable lien on October
30, 1991, the date of its service of notice of the supplementary
proceedings.
¶115 The Badger Lines court explicitly rejected the
bankruptcy trustee's argument that appointment of a receiver or
a turnover order were necessary to perfect a judgment creditor's
common-law equitable lien on the defendant's property:
[R]equiring an additional step beyond service in order
to obtain a superior lien removes any incentive for
negotiation and settlement between the creditor and
the debtor. . . . . Such imposed protraction benefits
no one, wastes the parties' time and money, and
burdens the courts with potentially unnecessary
hearings and proceedings.
Badger Lines, 224 Wis. 2d at 660.28
¶116 Badger Lines concluded that nothing in addition to
service of notice to the debtor of a supplementary hearing was
required to perfect Emerald Industrial's common-law equitable
lien over Badger Lines' personal property: "Wisconsin law does
28
Id. at 660.
18
No. 2011AP2597.ssa
not require a creditor to take additional steps to perfect a
receiver's lien beyond service on the debtor."29
¶117 Although the majority opinion frequently cites to
Attorney Pasch's treatise on collection law in Wisconsin,30 the
majority opinion conveniently fails to reveal that Attorney
Pasch disagrees with the majority opinion's characterization of
Badger Lines. Pasch explains Badger Lines as I do:
The Wisconsin Supreme Court, In re Badger Lines, Inc.,
224 Wis. 2d 646, 590 N.W.2d 270 (1999), held that
service upon the debtor of an order to appear at a
supplemental examination under Chapter 816 establishes
at the time of service a lien in favor of the creditor
without requiring the creditor to take additional
steps to perfect the lien. The court determined that a
creditor who initiates a supplemental proceeding in
Chapter 816 must not do anything more than serve the
debtor with notice to appear at the supplemental
examination so as to obtain a superior lien that
cannot be overcome by another creditor. The court
rejected arguments that, to avoid a secret lien, some
additional action should be required of a judgment
creditor. The court also rejected arguments that the
lien should not arise until a supplemental receiver is
appointed or the court issues a turnover order as to
the debtor's assets; the court held that the lien
arises at an earlier stage, when the judgment debtor
is served with the order to appear at the supplemental
examination. See Holton v. Burton, 78 Wis. 321, 47
N.W. 624 (1890). Although the Badger Lines case
references the lien as a "receiver's lien," the
decision appears to have broader application to the
lien of a judgment creditor pursuing supplemental
proceedings.
Pasch, supra note 6, § 16:13 at 330-31 (emphasis added).
29
Id. at 661 (emphasis added).
30
See, e.g., majority op., ¶¶24, 28.
19
No. 2011AP2597.ssa
¶118 Unlike Pasch, the majority opinion resurrects and
adopts the losing party's argument in Badger Lines, while
professing to follow the holding of Badger Lines.31
¶119 Thus, the majority opinion blithely overturns Badger
Lines and 150 years of Wisconsin jurisprudence, leaving
creditors and debtors unsure of their rights. I cannot join
such an undertaking.
¶120 For the foregoing reasons, I dissent.
¶121 I am authorized to state that Justice ANN WALSH
BRADLEY joins this dissent.
31
The majority opinion asserts that in Badger Lines, the
court held that "liens arise in specifically identified, non-
exempt personal property when that property is levied."
Majority op., ¶44. This is flatly wrong. In Badger Lines, the
creditor Emerald Industrial had no knowledge of Badger's assets
at the time it served notice upon Badger of the supplementary
proceeding, but it nonetheless perfected its lien.
Additionally, the Badger Lines court specifically refused to
comment on the issue of levy (to the extent that "levy" means
possession of the property). Badger Lines, 224 Wis. 2d at 658
n.5.
20
No. 2011AP2597.ssa
1