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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Reynolds v. The Sisco Group, Inc. (5/9/2003) sp-5688

Reynolds v. The Sisco Group, Inc. (5/9/2003) sp-5688

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

DONNALD R. REYNOLDS and  )
PARRIS A. REYNOLDS,      )    Supreme Court No. S-10266
                              )
               Appellants,         )    Superior Court No.
                              )    3AN-99-8596 CI
          v.                  )
                              )
THE SISCO GROUP, INC., ESTATE )    O P I N I O N
OF ELDRIDGE C. SISSON, and    )
VIRGINIA ERICKSON,            )    [No. 5688 - May 9, 2003]
                              )
               Appellees.          )
                                                                )


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Brian C. Shortell and Stephanie E.
          Joannides, Judges.

          Appearances:  Barton M.  Tiernan,  Esq.,  Law
          Offices of Barton M. Tiernan, Anchorage,  for
          Appellants.   Allan E. Curlee, Allan  Curlee,
          P.C.,  Fairbanks,  for  Appellee  Estate   of
          Eldridge C. Sisson.

          Before:   Fabe,   Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          BRYNER, Justice.

I.   INTRODUCTION

           Reynolds tried to execute on a money judgment  against

Sisson  by  seizing  one  of three vans Sisson  had  fraudulently

transferred to a friend, Erickson, and by attaching funds owed by

a  third  person, Frye, to whom Erickson had sold the  other  two

vans  after receiving them from Sisson.  As Reynolds prepared  to

sell  the  seized  van  and either shortly  before  or  after  he

attached  the  funds  from  the other vans'  sale,  Sisson  died.

Alaska's probate code bans judgment creditors from attempting new

executions or levies against any property of a deceased  judgment

debtor's estate.  Relying on this prohibition, the superior court

ordered  the  seized van and attached funds  to  be  restored  to

Sisson's  estate.  We reverse as to the seized van,  finding  the

probate  code's  ban inapplicable, since Reynolds  perfected  his

security  interest in the van by seizing it before  Sisson  died.

As  to  the  estate's right to the sale funds, we hold  that  the

issue  turns on whether Reynolds perfected his security  interest

by  serving  the writ of attachment on Frye before  Sisson  died.

Because  the record does not disclose the writ's date of service,

we  vacate  the summary judgment as to the funds and  remand  for

further proceedings.

II.  FACTS AND PROCEEDINGS

           In  April  1999 the superior court entered  a  default

judgment  against Eldridge Sisson and his company,  Sisco  Group,

Inc.  (Sisson),  awarding Donnald and Parris Reynolds  (Reynolds)

over $400,000 in tort damages.  Reynolds recorded the judgment  a

week  later and began collecting the judgment by obtaining  writs

of  execution and attempting to seize various items  of  Sisson's

property, including three Ford vans.  In July Reynolds managed to

seize one of the vans.

           Meanwhile,  however, attempting  to  avoid  execution,

Sisson had transferred title to all three vans to a friend  named

Virginia  Erickson; in early June Sisson had  also  arranged  for

Erickson to sell two of the vans to a third party, Cameron  Frye,

for  $47,500.  The sale contract between Erickson  and  Frye,  an

arm's-length  transaction, required Frye to pay Erickson  a  down

payment of $5,000, forty-eight monthly installments of $1,027.50,

and four $5,000 balloon payments.

          Upon learning of this sale, Reynolds asked the court to

issue  an  order  enjoining  any  further  transfer  of  Sisson's

property and directing any persons owing money to Sisson  to  pay

directly  to  the court.  The superior court granted the  request

and  issued the writ of attachment so ordering on July  7,  1999.

On  July  23 Reynolds filed a supplemental action against  Sisson

and  Erickson,  seeking an order nullifying  Sisson's  fraudulent

transfers  to  Erickson and requiring Frye  to  pay  his  monthly

installments  directly  to the court.   After  consolidating  the

supplemental  action with the original case, the  superior  court

issued  a  prejudgment  writ  of attachment  on  July  29,  1999,

ordering  Frye  to make all further payments to the  court.   The

record  does not disclose the exact date that Frye received  this

order,  but he evidently started sending his monthly payments  to

the court in August or September.

          On August 8, 1999, Sisson died in an accident.

           Several  months  later,  Reynolds  moved  for  summary

judgment on his fraudulent conveyance complaint, asking the court

for  title to the van he had seized in July so that he could sell

it  in  partial satisfaction of his judgment; he also  asked  the

court  to  award him the right to collect Frye's installments  on

the  other  two vans.  The personal representative  for  Sisson's

estate  intervened  and  responded.   While  acknowledging   that

Sisson's  conveyances  had been fraudulent,  the  estate  opposed

Reynolds's  request  for  the property,  arguing  that  the  sale

proceeds from Frye and the title to the unsold van should instead

be  restored  to the personal representative for distribution  as

part of Sisson's estate.

           Superior Court Judge Brian C. Shortell agreed with the

estate  and issued a summary judgment ordering that the  van  and

the  funds be held in the court registry for distribution as part

of  Sisson's  estate.   After the parties stipulated  that  Judge

Shortell's  order disposed of all triable issues, Superior  Court

Judge Stephanie E. Joannides, who had replaced Judge Shortell  on

the case, entered a final judgment incorporating the substance of

the summary judgment order.

          Reynolds appeals, arguing that the superior court erred

in awarding the disputed property to the estate.

III. DISCUSSION

          The controversy in this appeal centers on AS 13.16.505,

which  prohibits judgment creditors from executing or levying  on

property  of  a deceased debtor's estate but nonetheless  permits

the continued enforcement of liens:

                No execution may issue upon nor may any

          levy  be  made  against any property  of  the

          estate  under any judgment against a decedent

          or   a   personal  representative,  but  this

          section shall not be construed to prevent the

          enforcement of mortgages, pledges,  or  liens

          upon   real  or  personal  property   in   an

          appropriate proceeding.

Alaska  drew  this  statute from  3-812 of  the  Uniform  Probate

Code,  a law we described in Lundgren v. Gaudiane as establishing

that the "death of the judgment debtor terminates the possibility

of  issuing  a  valid writ of execution upon a money  judgment."1

In Sheehan v. Estate of Gamberg, we declared that "the purpose of

AS  13.16.505 is to freeze the status of all claims at the  death

of  the debtor in order to provide for the orderly administration

of  the estate."2  We observed that this purpose harmonizes  with

the  purpose  of  Alaska's devolution statute,3  which  passes  a

decedent's property "to his heirs or devisees immediately upon []

death,  subject  to  the  rights  of  creditors."4   Given   this

immediate transfer of property rights, we explained, "a  judgment

creditor  of  a  decedent cannot create a new property  interest,

such as a judgment lien, in the decedent's estate since title  is

in the heirs or devisees."5

            In  the  present  case,  Reynolds  insists  that   AS

13.16.505's  prohibition against new executions and  levies  does

not  prevent  him  from  using Sisson's  vans  as  a  source  for

satisfying  his  judgment.  Before Sisson died,  Reynolds  points

out,  one  of the vans had already been seized under  a  writ  of

execution;  and  a  prejudgment writ of  attachment  had  already

issued directing Frye to pay to the court all future installments

falling due on the other two vans.  Because seizing the first van

completed  its  execution and the prejudgment writ of  attachment

acted  as  a  lien on the remaining funds owed by Frye,  Reynolds

maintains,  his  interest in using this property  to  secure  his

judgment  was  already perfected by the time  Sisson  died.   And

because AS 13.16.505 only prohibits new executions or levies  and

expressly allows continued enforcement of existing liens after  a

judgment debtor dies, Reynolds reasons, nothing in the statute or

in  our  cases interpreting it precludes him from satisfying  his

judgment  by enforcing his established interests in the  van  and

Frye's installments.

           In response, the estate cites Sheehan and Lundgren and

insists  that,  as  interpreted  by  these  cases,  AS  13.16.505

effectively froze the status of all claims pending against Sisson

at  the time of his death, thereby requiring his interest in  the

vans to be treated as the estate's property:

                What  is  in dispute is the appropriate

          disposition  of  the  van  still  titled   to

          Erickson and the proceeds of the sale [of the

          other  two vans].  Based on AS 13.16.505  and

          [Lundgren],   the   Personal   Representative

          asserts  that  the property and  proceeds  of

          sale  should be returned to her to allow  her

          to properly carry out her duties[.]

            But  the  estate's  argument  is  unpersuasive.6   In

providing that "no execution may issue upon nor may any  levy  be

made  against  any property of the estate," AS 13.16.505's  plain

language   makes   two  conditions  necessary  to   trigger   its

prohibitions  after  a judgment debtor dies:  (1)  some  form  of

execution  or levy must be issued or made; and (2) the  execution

or  levy  must be directed against property of the  estate.   Our

cases interpreting this statute reinforce its plain meaning.   In

Sheehan,  for example, we noted the statute's purpose of ensuring

that  "a  judgment  creditor of a decedent cannot  create  a  new

property  interest" after title passes to heirs or devisees;  yet

at  the same time we recognized that the heirs and devisees  take

the  decedent's  property "subject to the  rights  of  creditors"

existing  at  the  time of death.7  Similarly,  in  Lundgren,  we

described  AS  13.16.505  as  a provision  that  "terminates  the

possibility  of issuing a valid writ of execution  upon  a  money

judgment."8

           Here,  then, the estate's claim that it should receive

the  disputed  property so that the personal  representative  can

ensure an orderly administration of the estate's assets begs  the

two critical questions posed by the statutes' requirements: would

allowing  Reynolds to recover his judgment by selling the  seized

van  and collecting Frye's installments entail the creation of  a

new property interest (that is, an interest that did not exist at

the  time  of Sisson's death)?  And if so, does the new  interest

that  Reynolds seeks to assert involve property that  belongs  to

the  estate  (that is, property devolving to Sisson's  heirs  and

devisees upon Sisson's death)?

          As to the seized van, at least, the answer to the first

question  is  decidedly,  "No."  Under  Alaska  law,  a  writ  of

execution directs a judgment creditor to levy on - or seize - the

property  that is subject to the writ.9  Until the  levy  occurs,

"the property is not affected by the execution."10  But once  the

property  is  levied  upon, it serves as a  specific  source  for

satisfaction  of the judgment,11 and the judgment  creditor  thus

enjoys  a lien-like interest in collecting against the particular

property seized.12  By seizing the van under a writ of execution,

then,  Reynolds  secured a cognizable interest in satisfying  his

judgment against that particular item of property.13  And because

the  van's  levy undisputedly occurred before Sisson  died,  this

interest cannot properly be regarded as the kind of newly created

interest forbidden under AS 13.16.505.  To the contrary, whatever

residual  right Sisson retained in the seized van  when  he  died

devolved   to  his  heirs  and  devisees  subject  to  Reynolds's

established interest in collecting against that property.

           Whether  Reynolds  has  the right  to  collect  Frye's

installment  payments presents a cloudier picture.   Because  the

record  fails  to  disclose  exactly  when  Reynolds  served  the

prejudgment  writ  of  attachment on Frye,  we  cannot  determine

whether  the  installment payments were  attached  before  Sisson

died.   Reynolds  argues that this is irrelevant.   He  maintains

that the prejudgment writ of attachment itself amounted to a lien

upon  issuance, regardless of whether or when it was served.   In

support  of this argument, Reynolds cites Civil Rule 89's opening

language,  which  authorizes claimants to apply  for  prejudgment

writs  of  attachment "as security for satisfaction of a judgment

that  may  be  recovered."14   But  the  rule's  broad  statement

describing  a  writ  of attachment's purpose  begs  the  narrower

question  of  precisely  when a writ of attachment  achieves  its

purpose  of  providing "security for satisfaction of a judgment."

Nothing  in  the  statement of purpose suggests that  a  writ  of

attachment creates a security interest before being perfected  by

service.   And  as  we  explain  below,  Alaska's  probate   code

definitively hinges the estate's right to Frye's payments on when

Reynolds perfected his security interest.

           As  already  mentioned, AS 13.16.505 prohibits  a  new

execution  or  levy  after a judgment debtor  dies  only  if  the

execution  or  levy  is directed "against  any  property  of  the

estate."15  A writ of attachment is a type of levy.  The  pivotal

questions presented, then, are whether Frye's future payments for

the  two  vans can be considered "property" and, if  so,  whether

these   payments   became  "property   of   the   estate"   under

AS   13.16.505.             Alaska's  probate  code   adopts   an

expansive  view  of   "property,"  defining  the  word  to   mean

"anything that may be the subject of ownership, and includes both

real  and  personal property and an interest in real or  personal

property."16   The  contractual  right  to  payments  from   Frye

certainly is something that "may be the subject of ownership"  so

it  is  unquestionably property.  We must  thus  proceed  to  ask

whether  this  contractual right became property of  the  estate.

Another  probate code provision, AS 13.16.385, squarely  controls

this   issue,  unequivocally  granting  personal  representatives

exclusive  power  to  prosecute claims  on  behalf  of  unsecured

creditors for any unencumbered property transferred by a decedent

through "void or voidable" means:

                The property liable for the payment  of
          unsecured  debts of a decedent  includes  all
          property transferred by the decedent  by  any
          means  which  is in law void or  voidable  as
          against  creditors,  and  subject  to   prior
          liens, the right to recover this property, so
          far as necessary for the payment of unsecured
          debts of the decedent, is exclusively in  the
          personal representative.[17]
          
           By  giving Sisson's personal representative  exclusive

authority  to  maintain  an action to  set  aside  the  allegedly

fraudulent  chain  of  conveyances unless  Frye's  payments  were

"subject  to prior liens," this provision effectively  recognizes

that  the  right to the outstanding payments would  pass  to  the

estate if Reynolds's claim against the funds remained unperfected

-  that  is, if the writ of attachment remained unserved  -  when

Sisson died.18

           Here,  before Sisson died he transferred all three  of

his  vans to Erickson, who titled them in her name.  By the  time

of his death, two of the three - the two that remained unseized -

had  been further transferred from Erickson to Frye in return for

his  promise  to make forty-eight monthly payments of  $1,027.50.

Reynolds  had filed a complaint asserting that these transactions

were  fraudulent and were therefore voidable; and he had obtained

a  prejudgment  writ  of attachment.  But whether  the  writ  was

served  on  Frye  before Sisson died is unclear  on  the  current

record  and was not decided below.  Because the record  fails  to

disclose  when the writ was served, entry of summary judgment  on

this point was inappropriate.  Accordingly, we must set aside the

summary judgment with respect to Frye's payments and remand  this

case  for  further  proceedings  to  determine  if  the  writ  of

attachment was served before Sisson's death.

IV.  CONCLUSION

           We  REVERSE the superior court's judgment with respect

to  the  seized  van and direct entry of judgment  in  Reynolds's

favor; we VACATE the judgment with respect to Frye's payments and

REMAND for further proceedings.

_______________________________
1See  Lundgren  v.  Gaudiane, 782 P.2d  285,  288  (Alaska  1989)
(quoting   S.   Riesenfeld,  Creditors'  Remedies  and   Debtors'
Protection, 84-85 (3d ed. 1979) (citations omitted)).
2Sheehan v. Estate of Gamberg, 677 P.2d 254, 256-57 (Alaska 1984)
(citing  In  re  Hogan's Estate, 229 Wis.  600,  282  N.W.  5,  9
(1938)).
3See  AS 13.16.005 (devolution statute); see also Wright, Uniform
Probate  Code  Practice Manual  12.1 (1972) (stating  that  under
the  UPC's  definition  of devolution,  "Title  to  a  decedent's
property, both real and personal, passes to his heirs . . . or to
the devisees . . . , immediately upon death").
4Sheehan, 677 P.2d at 257-58.
5Id.  at  257.   More  recently,  in  Lundgren  v.  Gaudiane,  we
confirmed Sheehan's reading of AS 13.16.505, emphasizing that  AS
13.16.505  prevails insofar as it conflicts with language  in  AS
09.35.060  that  would seemingly allow execution  on  a  judgment
after  the  judgment  debtor dies.  Lundgren,  782  P.2d  at  288
(confirming Sheehan's holding and resolving conflict  between  AS
13.16.505  and  AS  09.35.060, which provides: "If  the  judgment
debtor  dies  after  judgment, execution may  be  issued  on  the
judgment in the manner and with the effect as if the debtor  were
still living, except as provided in AS 13.16.505.").
6Because  this appeal arises on undisputed facts from  a  summary
judgment  order  and because Reynolds's argument  raises  a  pure
question  of  law,  we decide the case de novo  by  applying  our
independent  judgment. Guin v. Ha, 591 P.2d  1281,  1284  (Alaska
1979).
7Sheehan, 677 P.2d at 257 (emphasis added).
8See Lundgren, 782 P.2d at 288 (quoting S. Riesenfeld, Creditors'
Remedies  and Debtors' Protection, 84-85 (3d ed.1979)  (citations
omitted) (emphasis added)).
9AS 09.35.100; AS 09.35.110; Alaska R. Civ. P. 69(f).
10AS 09.35.110.
11See  AS 09.35.030; cf. AS 09.40.010(a) (allowing attachment  of
property "as security for the satisfaction of a judgment").
12See AS 09.35.030; cf. Alaska Nat'l Ins. Co. v. Jones, 993  P.2d
424,  427-28 (Alaska 1999) (construing a statute to give rise  to
an  equitable lien because it established "an interest in  and  a
right to seek reimbursement from" a particular source).
13Cf.  AS  09.35.160 (giving a judgment creditor and the  process
server  who  levies  on property under a writ of  execution  full
control  over  the  timing  of  a sale  in  satisfaction  of  the
judgment).
14See Alaska R. Civ. P. 89(a).
15AS 13.16.505.
16AS 13.06.050(39).  This definition comports with the definition
set out in Uniform  Probate Code section 1-201(33), which states:
"  `Property'  includes both real and personal  property  or  any
interest  therein and means anything that may be the  subject  of
ownership."
17Cf.  Goldstein  v. Prien, 299 P.2d 344, 346  (Cal.  App.  1956)
(recognizing under analogous section of California Code "that the
right  to  recover property conveyed by a decedent  in  fraud  of
creditors  is  an  asset of his insolvent  estate  and  that  the
executor or administrator is a trustee thereof for the benefit of
creditors.").
18Since  AS 13.16.505 prohibits liens from being perfected  after
the  date  of death, the term "prior liens" in AS 13.16.385  must
refer  to  liens  on  voidably transferred property  or  proceeds
thereof perfected before the date of death.