Jackson v. Halls

2013 UT App 254
_________________________________________________________

THE UTAH COURT OF APPEALS

LEE JACKSON; ACTION INVESTMENT SERVICES, LLC; AND
INTERNATIONAL PETROLEUM, LLC,
Plaintiffs and Appellees,
v.
WILLIAM C. HALLS,
Defendant and Appellant.

Memorandum Decision
No. 20120913‐CA
Filed October 24, 2013

Second District Court, Farmington Department
The Honorable Thomas L. Kay
No. 080700504

William C. Halls, Appellant Pro Se
James H. Deans, Attorney for Appellees

JUDGE MICHELE M. CHRISTIANSEN authored this Memorandum
Decision, in which JUDGES J. FREDERIC VOROS JR. and
STEPHEN L. ROTH concurred.

CHRISTIANSEN, Judge:

¶1 William C. Halls appeals from the district court’s denial of
his motion to compel delivery of the cash value of his homestead
exemption in certain property executed upon by Lee Jackson;
Action Investment Services, LLC; and International Petroleum,
LLC (collectively, Plaintiffs). We reverse and remand.

¶2 This case arises from Plaintiffs’ attempts to collect on a
judgment obtained against Halls in a prior proceeding (the
Judgment). In August 2008, Plaintiffs filed a complaint seeking to
renew the unpaid portion of the Judgment and the district court
entered default judgment against Halls. Plaintiffs obtained a writ
Jackson v. Halls

of execution against Halls’ primary residence, and the sheriff set
the sale for March 1, 2011. On January 28, 2011, Halls filed a
declaration of homestead with the county recorder claiming a
homestead exemption in that residence. See Utah Code Ann.
§ 78B‐5‐503(2) (LexisNexis Supp. 2010) (providing for a portion of
an individual’s residence to remain exempt from execution or
levy). In response to Halls’ exemption, Plaintiffs applied a $40,000
credit to the Judgment,1 and the sheriff proceeded with the sale on
March 1.

¶3 At the sale, Halls requested that Plaintiffs tender a cash
payment to him in the amount of his homestead exemption.
Plaintiffs refused to pay cash based upon their position that
crediting $40,000 toward the Judgment gave Halls “value” that
satisfied the requirements of the homestead exemption. Plaintiffs
were ultimately the successful bidders on Halls’ residence with a
credit bid of $425,000 against the Judgment.

¶4 Thereafter, Halls filed a motion to compel Plaintiffs to
deliver payment of his homestead exemption in cash rather than a
credit against the Judgment. The district court denied Halls’
motion, agreeing with Plaintiffs that the $40,000 credit against the
Judgment had satisfied Halls’ homestead exemption. Halls appeals.

¶5 Halls challenges the district court’s interpretation of the
exemption statute. We review a district court’s statutory
interpretation for correctness. Turner v. Staker & Parson Cos., 2012
UT 30, ¶ 7, 284 P.3d 600. Halls argues that because he filed a

1
Halls’ homestead declaration identified his claimed
homestead exemption in the residence as $40,000, presumably
because that figure included a homestead exemption for his wife
with whom he owned the residence jointly. However, Plaintiffs
executed only against Halls’ interest in the residence, and Halls
has asserted on appeal an entitlement only to his own homestead
exemption of $20,000.

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Jackson v. Halls

declaration of homestead on his residence prior to the execution
sale, he was entitled to receive the amount of his exemption in cash
from the proceeds of the sale and Plaintiffs were entitled only to
the excess of the proceeds above the value of his exemption. We
agree.

¶6 The Utah Exemptions Act (the Act) creates a homestead
exemption “consisting of property in this state in an amount not
exceeding . . . $20,000 in value if the property claimed is the
primary personal residence of the individual.” Utah Code Ann.
§ 78B‐5‐503(2)(a) (LexisNexis Supp. 2010). The Act further
provides, “Property that includes a homestead may not be sold at
execution if there is no bid that exceeds the amount of the declared
homestead exemption.” Id. § 78B‐5‐504(5) (2008). Thus, a judgment
creditor executing against a residence “is only entitled to receive
those proceeds that do not impair the [debtor’s] homestead
exemption.” Homeside Lending, Inc. v. Miller, 2001 UT App 247, ¶ 19,
31 P.3d 607. Accordingly, Halls was entitled to receive $20,000 from
the proceeds of the sale on Plaintiffs’ bid of $425,000 before the
remaining proceeds could be returned to Plaintiffs as the executing
judgment creditor.

¶7 Plaintiffs assert that because they satisfied their bid with a
“credit” or “judgment” bid—a bid satisfied with a credit against
the judgment owed rather than a cash payment—there were no
cash proceeds from the sale and Halls is therefore not entitled to
delivery of his exemption as a cash payment. As a general rule, the
sheriff may not accept payment at an execution sale on credit but
must take payment from the successful bidder in cash. See 30 Am.
Jur. 2d Executions & Enforcement of Judgments § 425 (2005); 33 C.J.S.
Executions § 380 (2009). However, where the executing creditor is
also the successful bidder, many courts have held that the creditor
may satisfy the bid with a credit against the judgment owed, rather
than undertaking the “useless ceremony of handing money to the
sheriff and then receiving it back from him.” See Title & Trust Co.
v. Security Bldgs. Corp., 284 P. 177, 178 (Or. 1930) (citation and
internal quotation marks omitted); see also Holden v. Cribb, 561

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S.E.2d 634, 638 (S.C. Ct. App. 2002) (“[I]f the successful bidder is
the judgment holder and is solely entitled to whatever sums may
have been bid for the property, it would be senseless to require the
bidder to pay cash.”). See generally Citibank Fed. Sav. Bank v. New
Plan Realty Trust, 748 A.2d 24, 29 (Md. 2000) (reviewing
jurisdictions adopting the judgment bid exception). And it is “well
established” in Utah that “if the trustee forecloses he . . . may bid
and take credit for his judgment.” Chapman v. Schiller, 83 P.2d 249,
255 (Utah 1938).

¶8 However, we do not agree with Plaintiffs’ argument that
because they satisfied their bid at the execution sale with a credit
against the Judgment there were no proceeds of the sale from
which Halls’ homestead exemption must be paid. Allowing the
executing creditor to pay its winning bid by credit is merely a
convenience to avoid the “useless ceremony” of payment to the
sheriff by the very party which is entitled to receive the proceeds
of the sale. See Title & Trust Co., 284 P. at 178. “The fact that the
judgment creditor does not tender the cash to the sheriff . . . is
irrelevant and in no way alters the character of the transaction as
a sale of property purchased with cash.” Petrie v. General
Contracting Co., 413 P.2d 600, 602 (Utah 1966) (Callister, J.,
dissenting from the majority’s conclusion that an attorney entitled
to one‐third of a judgment as a contingency fee was entitled to a
one‐third ownership interest in property purchased with credit
against that judgment). Moreover, payment of the full bid amount
by such a credit is predicated on the successful bidder being “solely
entitled to whatever sums may have been bid for the property.”
Holden, 561 S.E.2d at 638 (emphasis added).

¶9 Here, the sheriff’s notice of sale provided that payment was
to be made in cash. See 33 C.J.S. Executions § 380 (2009) (“Cash
within the meaning of this rule generally means current legal
tender or money . . . .”). Plaintiffs submitted a successful bid of
$425,000 for Halls’ residence and were entitled to the proceeds
from that bid in excess of Halls’ homestead exemption of $20,000
and any other superior claims or fees associated with the sale. See

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Jackson v. Halls

Homeside, 2001 UT App 247, ¶ 19. While Plaintiffs may have
properly satisfied some part of their bid with a credit against the
Judgment, they were required to pay cash for any part of the bid
that they were not entitled to receive, which in this case includes
the full amount necessary to satisfy Halls’ exemption. See 33 C.J.S.
Executions § 380 (2009); cf. Holden, 561 S.E.2d at 638 (“Were it not for
the requirement that the portion of the bid attributable to the
homestead exemption be paid in cash, the sheriff could have
accepted [the creditor’s] bid without requiring a cash deposit
because it would have been immediately repaid to her in her
capacity as judgment creditor.”).

¶10 Plaintiffs also argue that the Act does not require the
payment of cash to the property owner because the homestead
exemption is defined in terms of “value” and Plaintiffs gave value
to Halls by crediting the Judgment in the amount of the exemption.
“When interpreting a statute, . . . [w]e employ plain language
analysis to carry out the legislative purpose of the statute as
expressed through the enacted text.” Richards v. Brown, 2012 UT 14,
¶ 23, 274 P.3d 911 (footnote citation omitted). “Where a statute’s
language is unambiguous and provides a workable result, we need
not resort to other interpretive tools, and our analysis ends.” Id.
However, we read the statute as a whole to “give effect to every
provision of a statute and avoid an interpretation that will render
portions of a statute inoperative.” Warne v. Warne, 2012 UT 13, ¶ 36,
275 P.3d 238.

¶11 The relevant provision of the Act states, “An individual is
entitled to a homestead exemption consisting of property in this
state in an amount not exceeding . . . $20,000 in value if the
property claimed is the primary personal residence of the
individual.” Utah Code Ann. § 78B‐5‐503(2)(a) (LexisNexis Supp.
2010). Plaintiffs assert that the legislature’s use of the term “value”
in the definition of the exemption indicates that anything of value
may be used to satisfy the exemption, such as a credit against the
judgment executed upon. However, this provision of the Act
speaks only to the scope of an individual’s homestead exemption

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and does not address how that exemption may be satisfied. Rather,
the Act clearly contemplates that the exemption will be satisfied
from the proceeds of the execution sale by protecting these very
proceeds from further execution. See id. § 78B‐5‐503(5)(b) (“The
proceeds of any sale, to the amount of the exemption existing at the
time of sale, is exempt from levy, execution, or other process for
one year after the receipt of the proceeds by the person entitled to
the exemption.”). Plaintiffs’ reading of the statute would render the
protections afforded by this provision meaningless here, as a credit
to a judgment owed to one creditor provides nothing for another
creditor to execute or levy upon.

¶12 Moreover, Plaintiffs’ interpretation of the Act directly
contravenes the purpose of the homestead exemption, which is to
“protect citizens and their families from the miseries of
destitution.” P.I.E. Emps. Fed. Credit Union v. Bass, 759 P.2d 1144,
1145 (Utah 1988). Allowing Plaintiffs to satisfy Halls’ exemption
with a credit toward a judgment he is demonstrably unable to pay
would provide him no such protection. Indeed, Plaintiffs’
interpretation in effect forces Halls to exchange his exemption for
a credit against the Judgment. This result would render the
homestead exemption a nullity and the legislature could not have
intended such a result. Accordingly, we hold that the Act does not
permit a creditor to satisfy a homestead exemption by giving the
debtor “value” in the form of a credit to the judgment against the
debtor.

¶13 Halls is entitled to a homestead exemption of $20,000 from
the proceeds of the execution sale. Plaintiffs must pay the portion
of their bid comprising Halls’ homestead exemption in cash.
Plaintiffs may not satisfy the homestead exemption by giving
“value” in the form of a credit to the Judgment. We reverse the
order of the district court and remand to the district court with
instructions to grant Halls’ motion for payment of the homestead
exemption by Plaintiffs.

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