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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats.
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports.
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No. 96-1663
STATE
OF WISCONSIN IN
COURT OF APPEALS
GMAC MORTGAGE
CORPORATION OF
PENNSYLVANIA, F/K/A
GMAC
MORTGAGE CORPORATION
OF IOWA,
Plaintiff,
RANDALL CUDD and JIM CLAYCOMB,
†Intervenors-Respondents,
v.
MICHAEL GISVOLD and
DRUE GISVOLD,
Defendants-Appellants,
UNITED STATES OF AMERICA,
U.S. ATTORNEY GENERAL,
CHICAGO TITLE INSURANCE COMPANY,
A/K/A OLD REPUBLIC NATIONAL
INSURANCE COMPANY, TITLE
INSURANCE COMPANY OF MINNESOTA,
Defendants.
APPEAL from an order of
the circuit court for St. Croix County:
ERIC J. LUNDELL, Judge. Reversed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
MYSE, J. In this mortgage foreclosure action, Michael
and Drue Gisvold appeal an order denying their attempted redemption and
allowing the successful bidders at the sheriff's sale to complete the purchase. The Gisvolds argue that the trial court
lacked the authority to allow the purchase to be completed after the bidders
failed to deposit the remainder of the purchase price within the required
period under § 846.17, Stats. Because we conclude the trial court has no
discretion to waive the requirements of § 846.17, the attempted purchase was
forfeited and the Gisvolds' redemption was valid.
The facts are
undisputed. In 1992, the Gisvolds
defaulted on a home mortgage held by GMAC and GMAC began foreclosure
proceedings. A foreclosure judgment was
entered on April 26, 1993. Numerous
foreclosure sales were scheduled and subsequently cancelled when the Gisvolds
filed for bankruptcy but then voluntarily dismissed these filings after the
sales had been cancelled.
The set of facts
pertinent to this appeal stem from the foreclosure sale of June 13, 1995. Intervenors, Randall Cudd and Jim Claycomb,
were the highest bidders at this sale and made the requisite ten percent
deposit. The sale was set for
confirmation on June 27, 1995. Drue
Gisvold filed for bankruptcy protection prior to the confirmation hearing and
it was cancelled. Drue Gisvold
voluntarily dismissed the bankruptcy filing on July 25, 1995, and the
confirmation hearing was rescheduled for October 3, 1995. On October 3, 1995, Michael Gisvold filed
for bankruptcy relief, which he voluntarily dismissed on October 19, 1995. This filing delayed the confirmation hearing
until December 27, 1995.
The court confirmed the
sale at the December hearing but stayed entry of the order until January 15,
1996. The Gisvolds and GMAC, by
agreement, stayed this deadline until January 17, 1996. On January 17, 1996, approximately three
hours before the deadline, Michael Gisvold filed for ch. 13 bankruptcy relief
again. This action was involuntarily
dismissed on March 12, 1996. No notice
was given to the intervenors of the dismissal.
On March 19, 1996, the Gisvolds paid the balance due on the mortgage to
the circuit court. GMAC moved for
determination whether the Gisvolds had redeemed the property or whether the intervenors
had forfeited their right to the property.
The circuit court held
that the § 846.17, Stats., could
not be applied literally to this case and excused the intervenors for failing
to pay the remainder of the purchase price within the ten days after the sale
was confirmed. The court denied the
Gisvolds' claim that they had redeemed the property and allowed the intervenors
to purchase the property.
The Gisvolds contend
that they validly redeemed the property because after the intervenors missed
the statutory deadline to deposit the remainder of the purchase price, a new
sale needed to be ordered and, until that sale was held and confirmed, they
could redeem the property. We
agree. The determinative issue in this
case is whether the trial court had the authority to waive the requirement that
the balance of the purchase price be paid within ten days after confirmation of
the sale pursuant to § 846.17, Stats. We conclude there is no discretion to waive
this requirement and therefore the order is reversed.
Initially, the parties
argue whether the bankruptcy filing stayed the Gisvolds' redemption rights and
where the authority came from in the bankruptcy code, 11 U.S.C. § 108 or §
362. We do not resolve this issue
because it is irrelevant to the analysis here.
The intervenors failed to deposit the remainder of the purchase price
within ten days of the confirmation of the sale even if the bankruptcy filing stayed
the redemption period.
This case presents a
question of statutory construction.
Questions of statutory construction are questions of law this court
reviews without deference to the trial court.
State ex rel. Frederick v. McCaughtry, 173 Wis.2d 222,
225, 496 N.W.2d 177, 179 (Ct. App. 1992).
In determining the legislature's intent, we first look to the language
of the statute itself. State v.
Wicks, 168 Wis.2d 703, 706, 484 N.W.2d 378, 379 (Ct. App. 1992). The word "shall" is presumed
mandatory when used in a statute. WHEDA
v. Bay Shore Apts., 200 Wis.2d 129, 141, 546 N.W.2d 480, 485 (Ct. App.
1996). While "shall" may,
under certain circumstances, be construed as directory to carry out the
legislature's intent, Karow v. Milwaukee County Civil Serv. Comm'n,
82 Wis.2d 565, 571, 263 N.W.2d 214, 217 (1978), those circumstances are not
present here. Because the statute
contains the penalty for failing to pay the remainder of the purchase price, we
conclude that "shall" is mandatory in this context. See id.
Section 846.17, Stats., requires the purchaser to pay
the remaining part of the price within ten days of the confirmation of the
sale. If payment is not made within ten
days, the purchaser forfeits the deposit and a new sale is mandated. Id. "In the event of the failure of such purchaser to pay [the
remaining amount] the amount so
deposited shall be forfeited ... and a resale shall be [held of the] premises
...." Id. It is undisputed that the intervenors failed
to pay the balance within the required ten days. The intervenors, however, argue that this statute should
"not be applied literally to this case." We see no alternative.
Section 846.17, Stats., requires payment in ten days or
the deposit is forfeited and a new sale is required. The statute lists no exceptions, nor have any been created in the
case law. The term "shall"
was used in the statute requiring the forfeiture of the deposit and a new sale
once the ten-day limit is exceeded. It
is true that foreclosure proceedings are equitable in nature, Frick v.
Howard, 23 Wis.2d 86, 96, 126 N.W.2d 619, 625 (1964), and that the
trial court has discretion in confirming the foreclosure sale. Gumz v. Chickering, 19 Wis.2d
625, 633-34, 121 N.W.2d 279, 283-84 (1963).
This discretion does not apply, however, to the application of § 846.17.
Equity does not allow a
court to ignore a statutory mandate. First Federated Sav. Bank v. McDonah,
143 Wis.2d 429, 434, 422 N.W.2d 113, 115 (Ct. App. 1988). Rather, equity gives the court power to
achieve a fair result in the absence of or in conjunction with a statute. See id. As a result, the trial court had no
authority to waive the requirement of this statute because the intervenors were
not given notice of the dismissal of the Gisvolds' bankruptcy claim. The Gisvolds had no obligation to provide
notice of the bankruptcy proceedings to the intervenors. The intervenors were not a party to the
Gisvolds' bankruptcy action, although they could have intervened had they
desired. Bankruptcy Rule 2018(a). The burden fell on the intervenors to keep
apprised of the matters concerning their intended purchase.
The intervenors failed
to purchase the property by paying the remainder of the purchase price. The trial court had no authority to waive
this failure. Therefore, pursuant to §
846.17, Stats., a new sale was
required. Parties can redeem property
until the foreclosure sale is confirmed.
Gerhardt v. Ellis, 134 Wis. 191, 114 N.W. 495 (1908), §
846.13, Stats. The intervenors' forfeiture placed the
Gisvolds in the position they were in before any sale had occurred. The Gisvolds paid the remaining amount of
the mortgage before another sale was held, much less confirmed. This is a valid redemption.
The Gisvolds were
attempting to manipulate the system by abusing the automatic stay provision of
the bankruptcy code. It is disturbing
that this decision appears to reward their efforts. The only answer to this abuse of the system is that they may be
accountable to the Federal Bankruptcy Court.
We should note that the Gisvolds' filings did not prevent the buyers
from complying with the statutory requirement that the balance of the purchase
price be paid within ten days of the confirmation sale. We also do not decide whether the court
could have granted a motion to extend the time of deposit until the bankruptcy
stay was lifted. We are required to
conclude that a statute requiring the balance of the purchase price to be paid
within ten days means precisely what it says.
By failing to comply with the statute, the intervenors forfeited their
deposit.
By the Court.—Order
reversed.
