Premier West Bank v. GSA WHOLESALE, LLC

103 P.3d 1169, 196 Or. App. 640, 2004 Ore. App. LEXIS 1684
Court of Appeals of Oregon·Decided December 29, 2004·No. 02-1038-E3; A122917·Published·Cited by 10 cases

Opinion

*642 BREWER, C. J.

In this appeal from an order for sheriffs sale of a residence, we are called on to determine whether ORS 18.536 authorizes a judgment creditor to execute against residential property that the judgment debtor conveyed to a third party after the judgment was entered in the judgment register. 1 Defendant, the grantee of the judgment debtor’s residence, assigns error to the trial court’s order for the sale of the property. Alternatively, he assigns error to the court’s failure to include in the order findings as to whether the property is subject to the homestead exemption provided in ORS 18.395. 2 We review for errors of law, Lincoln Loan Co. v. City of Portland, 317 Or 192, 199, 855 P2d 151 (1993), and conclude that the trial court had authority to order the sale. However, because the order did not include the required findings regarding the homestead exemption, we vacate the order and remand for farther proceedings.

In the underlying proceeding, plaintiff obtained a judgment against defendant’s father for almost $500,000 in December 2002. 3 By operation of former ORS 18.350 (2001), repealed by Oregon Laws 2003, chapter 576, section 580, 4 that judgment became a lien in plaintiffs favor against all real property that defendant’s father owned in Jackson *643 County, where the judgment was entered in the court register. In February 2003, defendant’s father conveyed his residence to defendant. Defendant paid his father no consideration for the conveyance, but he assumed the mortgage on the property. In May 2003, plaintiff filed a petition under ORS 18.536 5 for an order authorizing the Jackson County sheriff to sell the residence to satisfy the judgment. Pursuant to ORS 18.536(3), the petition included the following allegations:

*644 “D. It is believed that the property is not the homestead of the debtor as it was conveyed to [defendant] post-judgment for no consideration. A title report showing priority of [the] judgment over [defendant’s] interest is attached hereto;
“E. Even though the property is a homestead, the property may nevertheless be sold on execution since the judgment sought to be satisfied is in excess of $3,000. It is contended that [defendant] has no homestead exemption since the judgment lien attached to the realty prior to his receipt of any interest in the property and because the judgment debtor is not the purported record owner of the realty.”

The trial court notified defendant that it would hold a hearing before deciding whether to issue an order authorizing the sale. The notice stated, in part:

“This is to notify you that [plaintiffs attorney] has asked the court to order the Sheriff to sell your property * * * to satisfy a court judgment that attached as a lien against your property prior to you obtaining any interest therein.
a* * ^ * *
“The law provides that your property is your homestead if you, or your spouse, dependent parent or dependent child, actually live in it as your home. If you are temporarily absent from the property but intend to move back in, it is still your homestead.
“The law provides that if the property is your homestead, then $33,000 of its value may not be taken to satisfy a judgment against you. In addition, a homestead usually may not be sold to satisfy a judgment for $3,000 or less. However, since you are not the judgment debtor, the moving party, [plaintiffl, contends that you have no homestead rights in the realty.”

At the hearing, defendant argued that, because his father, the judgment debtor, no longer owned the property, the court could not order the sale under ORS 18.536. He contended that a judgment creditor must file a separate fraudulent transfer action or initiate a creditor’s bill proceeding to reach real property that the judgment debtor has sold to a third party after a judgment lien has attached to the property. The *645 court rejected defendant’s argument and granted plaintiffs petition. 6 The order that the court entered does not state whether the homestead exemption applies or whether the court made any findings with respect to the exemption.

On appeal, defendant asserts that, when the lien created by the judgment against his father became effective, the property was subject to the homestead exemption and that the lien attached only to the portion of the property not subject to the exemption. Therefore, in defendant’s view, he took the exempt portion of the property free of the lien. He contends, thus, that the court could not order a sale on execution of the judgment lien without determining whether the exemption applied and, ultimately, whether there is any “leviable interest” in the property that plaintiff can reach by execution. 7 The crux of defendant’s argument is that there is no statutory procedure by which a court can make that determination in the action in which the judgment was entered if a third party owns the property at the time of execution.

In support of that argument, defendant relies on Clawson v. Anderson, 248 Or 347, 434 P2d 462 (1967). In that case, a judgment was entered against Hendricks, a property owner, in 1956. Hendricks filed notice that he claimed a homestead exemption in his residence. 8 The following year, he conveyed the residence to a third party, who in turn sold it to the defendants. Id. at 349. In 1964, the judgment creditor *646 obtained a writ of execution, 9 and the sheriff sold the property to the plaintiff. The defendants claimed that they retained ownership of the property to the extent of the amount of the homestead exemption. The plaintiff claimed ownership of the entire property, arguing that, before conveying it in 1957, Hendricks had abandoned the homestead, thereby waiving the exemption. Id. at 349-50.

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Premier West Bank v. GSA WHOLESALE, LLC, 103 P.3d 1169, 196 Or. App. 640, 2004 Ore. App. LEXIS 1684 (Or. Ct. App. 2004).

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