Jackson v. Halls
2013 UT App 254
| Utah Ct. App. | 2013Background
- Plaintiffs held a preexisting money judgment against Halls and obtained a writ of execution against his primary residence.
- Sheriff scheduled a foreclosure sale; before the sale Halls recorded a homestead declaration (claiming $40,000, though Halls now asserts a $20,000 individual exemption).
- Plaintiffs applied a $40,000 credit to the Judgment in response to the declaration and were the successful bidders at the sale with a $425,000 credit bid.
- At the sale Halls demanded cash payment equal to his homestead exemption; Plaintiffs refused, treating the credit against the judgment as satisfying the exemption.
- The district court denied Halls’ motion to compel cash payment of the exemption; Halls appealed.
- The Court of Appeals reversed, holding Halls was entitled to receive his $20,000 homestead exemption in cash from the sale proceeds and that a creditor cannot satisfy that exemption by crediting the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a judgment creditor who wins at an execution sale may satisfy the debtor’s homestead exemption by crediting the judgment rather than paying cash | Credit to the judgment gave the debtor "value" equal to the exemption, so no cash payment was required | Halls argued he was entitled to receive the exemption amount in cash from sale proceeds when he had recorded a homestead before the sale | The court held the creditor must pay the exemption amount in cash; a credit against the judgment cannot satisfy the homestead exemption |
| Whether the statute’s use of the term “value” permits satisfaction of the exemption by non-cash credit | “Value” is broad and includes a credit against the judgment | The exemption protects proceeds of sale and must be delivered as exempt cash to the debtor | The court read the statute as protecting sale proceeds and rejected the creditor’s “value”/credit argument |
| Whether a judgment-credit bid converts the sale into a non-cash transaction that eliminates proceeds for exemption payment | Plaintiffs relied on the judgment-bid exception (credit bids when creditor is successful bidder) | Halls argued the exception does not defeat the requirement to pay the homestead portion in cash to the owner | The court allowed judgment-credit bids generally but required cash payment for the portion of the bid attributable to the homestead exemption |
| Public policy question: Does allowing credit satisfaction undermine the exemption’s protective purpose? | Plaintiffs argued convenience and longstanding practice support credit bids | Halls argued credit satisfaction would leave him without protected funds and defeat the homestead’s protective purpose | The court held that permitting credit satisfaction would nullify the exemption’s protective function and was contrary to legislative intent |
Key Cases Cited
- Title & Trust Co. v. Security Bldgs. Corp., 284 P. 177 (Or. 1930) (recognizes judgment-credit bids to avoid pointless cash exchange when creditor is sole beneficiary of proceeds)
- Holden v. Cribb, 561 S.E.2d 634 (S.C. Ct. App. 2002) (credit bid permissible when creditor is solely entitled to bid proceeds)
- Citibank Fed. Sav. Bank v. New Plan Realty Trust, 748 A.2d 24 (Md. 2000) (survey of jurisdictions adopting the judgment-bid exception)
- Chapman v. Schiller, 83 P.2d 249 (Utah 1938) (Utah precedent that a foreclosing trustee may bid and take credit for his judgment)
- Petrie v. General Contracting Co., 413 P.2d 600 (Utah 1966) (discussing character of credit bids as sales for cash in substance)
- P.I.E. Emps. Fed. Credit Union v. Bass, 759 P.2d 1144 (Utah 1988) (states the homestead exemption’s remedial purpose: protect families from destitution)