Malloy v. Behrens

1

2024 ND 199

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

No. 20240071

Supreme Court of North Dakota

October 24, 2024

Appeal from the District Court of Morton County, South Central Judicial District, the Honorable James S. Hill, Judge.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Benjamin J. Sand (argued) and W. Logan Caldwell (on brief) Bismarck, ND, for plaintiffs and appellees.

James A. Teigland, Fargo, ND, for defendant and appellant.

OPINION

Crothers, Justice.

[¶1] James Behrens appeals from orders granting a petition for an appraisal of his homestead, directing the sale of the homestead, and confirming the sale. We hold the district court correctly decided the sheriff complied with a law requiring personal property be used to satisfy a judgment before real property, but the court erred when it applied a homestead exemption amount not in effect when the sale occurred and when it allocated sale proceeds to satisfy a superior mortgage rather than the judgment. We affirm in part, reverse in part, and remand for proceedings consistent with this decision.

I

[¶2] In 2010, Howard Malloy obtained a judgment against Behrens in a lawsuit concerning their partnership. The judgment ordered that Behrens's interest in the partnership be transferred to Malloy and that Behrens pay $341,890.26 plus interest. Behrens's homestead property, which was subject to a mortgage issued in 2006, was sold at an execution sale. Behrens appealed from an order confirming the sale. In Malloy v. Behrens, 2022 ND 43, 971 N.W.2d 392 ("Malloy I"), we reversed and remanded holding the district court erred when it granted a petition for an appraisal when there was no execution or levy pending.

[¶3] After remand, the district court issued a new execution to the Morton County Sheriff, and the sheriff returned it unsatisfied on September 13, 2022. The court issued another execution on September 14, 2022, which resulted in the Morton County Sheriff placing a levy on Behrens's homestead. On May 24, 2023, the court entered an order directing an appraisal of the property. In June 2023, the appraisers returned values for the property between $715,000 and $721,000. On August 1, 2023, amendments increasing the homestead exemption from $100,000 to $150,000 went into effect. See 2023 N.D. Sess. Laws ch. 299 §§ 2-4; see also N.D. Const. art IV, § 13 (providing the effective date for legislation).

[¶4] On August 23, 2023, the district court ordered the Morton County Sheriff to sell Behrens's homestead at an execution sale. On November 7, 2023, Malloy purchased the property at a public auction for $759,004.65. The district court entered an order confirming the sale on January 8, 2024. The court applied a homestead exemption based on the pre-amendment $100,000 value, deducted costs of the sale, set aside $118,866.27 as "owed to lender" for Behrens's existing mortgage, and applied $526,827.86 of the sale proceeds towards satisfaction of the judgment. The court explained Behrens "will be paid the $100,000.00 required by statute via cash or its equivalent, and will also be paid the balance of the liens or encumbrances via [Malloy] taking the property subject to the mortgage-accounting for the entirety of the Homestead Exemption." Behrens appeals.

II

[¶5] Behrens argues the district court erred when it decided the sheriff complied with a law requiring personal property be used to satisfy the judgment before real property; erred when it did not apply the increased homestead exemption amount in effect when the execution sale occurred; and erred when it allowed Malloy a "credit" for the amount of the mortgage encumbering the property.

[¶6] Judgment creditors have the right to enforce a judgment by execution as provided in N.D.C.C. ch. 28-21. "'The purpose of an execution is to provide a means for a party to recover under a judgment for money damages, the liability for, and amount of which, has been specifically determined by a court.'" Malloy I, 2022 ND 43, ¶ 19 (quoting Poppe v. Stockert, 2015 ND 252, ¶ 8 870 N.W.2d 187). The execution provides a means for recovery by authorizing an officer to "carry a judgment into effect and to levy on the property." Malloy I, at ¶ 19 (quoting 33 C.J.S. Executions § 1 (2021)); see also N.D.C.C. § 28-21-10 (stating officer "shall proceed to execute the execution with diligence").

[¶7] Our constitution protects a debtor's right "to enjoy the comforts and necessaries of life" by exempting from forced sale "a homestead, the value of which shall be limited and defined by law." N.D. Const. art. XI, § 22; see also First Nat'l Bank v. Hallquist, 184 N.W. 269, 271 (N.D. 1921) (stating "this constitutional provision requires the Legislature to pass laws exempting the homestead from forced sale"). Homestead protections are codified in N.D.C.C. ch. 47-18. "[T]he precise intent of the homestead provisions is to place designated homestead property out of the reach of creditors while it is occupied as a home, or as otherwise stated, to secure a debtor and his family essential shelter from creditors." Farstveet v. Rudolph, 2000 ND 189, ¶ 11, 630 N.W.2d 24; see also Swingle v. Swingle, 162 N.W. 912, 915 (N.D. 1917) ("The homestead law of the state is founded upon sound reasons of public policy .... The object of the homestead law is the protection of the family.").

[¶8] When interpreting homestead statutes, we apply liberal construction "with a view of protecting the homestead." Mattern v. Frank J. Mattern Estate, 2015 ND 155, ¶ 14, 864 N.W.2d 458. Our policy of liberally construing homestead laws "has been consistently pursued ever since statehood and during territorial days." O'Hare v. Bismarck Bank, 178 N.W. 1017, 1019 (N.D. 1920). Our general rules of statutory construction apply:

"Our primary goal in construing a statute is to discover the intent of the legislature. We look first to the language of the statute in seeking to find legislative intent. If a statute's language is clear and unambiguous, the legislative intent is presumed clear on the face of the statute. If a statute's language is ambiguous, however, we may look to extrinsic aids in interpreting the statute."

Poppe, 2015 ND 252, ¶ 7 (cleaned up) (quoting Northern X-Ray Co., Inc. v. State, 542 N.W.2d 733, 735 (N.D. 1996)). Statutory interpretation presents a question of law fully reviewable on appeal. Malloy I, 2022 ND 43, ¶ 14.

A

[¶9] Behrens argues N.D.C.C. § 28-21-06 requires that sheriffs conduct independent searches for personal property for each execution a district court issues.

[¶10] Under N.D.C.C. § 28-21-04, when "the judgment requires the sale of property, the judgment may be enforced by a special execution directing the sale and application of the proceeds in conformity with the judgment." The clerk of court issues the execution to the sheriff of the county where the judgment is docketed. N.D.C.C. § 28-21-05. "The execution authorizes the officer to carry a judgment into effect and to levy on the property." Malloy I, 2022 ND 43, ¶ 19. The levy brings the property into the custody of the law. Id.

"Upon receipt of an execution, the sheriff shall:

1. Satisfy the judgment . . . out of the personal property of the judgment debtor, and if sufficient personal property cannot be found, out of the real property belonging to the debtor on the date when the judgment was docketed in the county or at any time after that date."

N.D.C.C. § 28-21-06(1).

[¶11] Behrens claims the Morton County Sheriff violated the law because the sheriff's office did not conduct a renewed search for personal property when it received the last execution issued in this case. However, no language in N.D.C.C. § 28-21-06(1) specifies where, how, or when the sheriff must attempt to locate personal property. The operative question when deciding if a violation of N.D.C.C. § 28-21-06 occurred is whether the sheriff used real property when sufficient personal property could be found. A Morton County Sheriff's sergeant testified the sheriff's office searched for personal property and was unable to locate any prior to levying on Behrens's real estate. Behrens does not dispute the sergeant's testimony. Nor does he claim personal property existed that the sheriff could have found. Under these circumstances, the district court did not err when it decided the Morton County Sheriff complied with N.D.C.C. § 28-21-06.

B

[¶12] Behrens asserts the district court erred by applying the homestead exemption of $100,000 that existed when this collection action began. He asserts he is entitled to the increased $150,000 homestead exemption in effect when his real estate was sold at the execution sale.

[¶13] Determining which version of a statute applies is a question of law. State v. Larsen, 2023 ND 144, ¶ 9, 994 N.W.2d 194. "In order for a court to retroactively apply a statute, the statute itself must generally contain language expressly declaring the statute to be retroactively applied." Senger v. Senger, 2022 ND 229, ¶ 11, 983 N.W.2d 160. This general rule is based on a cannon of construction stating "[n]o part of this code is retroactive unless it is expressly declared to be so." N.D.C.C. § 1-02-10. This canon of construction is "'subservient to the main rule that the intent and purpose of the legislature must be given effect.'" Smith v. Baumgartner, 2003 ND 120, ¶ 14, 665 N.W.2d 12 (quoting State v. Davenport, 536 N.W.2d 686, 688 (N.D. 1995)).

[¶14] Applying a statute retroactively results in the attachment of new legal consequences to past matters. Klein v Klein, 2016 ND 153, ¶ 7, 882 N.W.2d 296. Applying a statute prospectively results in the attachment of legal consequences to matters occurring after...