ARGUMENT: November 7, 2017
of a decision of the Court of Appeals. Reversed and cause
County Circuit Court L.C. No. 2015CV125 D. T. Ehlers Judge
the defendant-respondent-petitioner, there were briefs filed
by James E. Goldschmidt, Donald K. Schott, and Quarles &
Brady LLP, Madison and Milwaukee. There was an oral argument
by Donald K. Schott.
the plaintiff-appellant, there was a brief filed by Melinda
A. Bialzik, Samuel C. Wisotzkey, and Kohner, Mann &
Kailas, S.C., Milwaukee. There was an oral argument by
Melinda A. Bialzik.
amicus curiae brief was filed on behalf of Wisconsin Bankers
Association by Kirsten E. Spira, John E. Knight, and Boardman
& Clark LLP, Madison.
WALSH BRADLEY, J.
The petitioner, Allen S. Musikantow (Musikantow), seeks
review of an unpublished per curiam decision of the court of
appeals directing that the circuit court apply a credit of
$2, 250, 000 to a money judgment entered against Musikantow
as guarantor of a loan. Musikantow contends that the court of
appeals erred by limiting the credit to the amount of the
winning bid at the sheriff's sale thereby precluding the
circuit court from hearing evidence of the fair value of the
property after the confirmation of sale.
Specifically, Musikantow contends that Wis.Stat. §
846.165 (2015-16) does not require a circuit court to make a
determination of a guaranty credit at the time the
foreclosure sale is confirmed. He further argues that circuit
courts have the discretion to decouple guaranty-related
rulings from underlying foreclosure sales.
We conclude that Wis.Stat. § 846.165 does not apply to
credits toward a judgment on a guaranty. Rather, it applies
to the relationship between only the mortgagee and mortgagor
who signed the promissory note underlying the mortgage. It
therefore cannot serve as authority for the proposition that,
when confirming a foreclosure sale, a circuit court must
determine the amount of a credit to be applied to a judgment
on a guaranty.
Further, we conclude that when an action for foreclosure
against a mortgagor and an action for a money judgment on a
guaranty are brought in the same proceeding as in the instant
case, the circuit court may, in its discretion, decide the
amount of a credit to be applied to a judgment on a guaranty
either at the time the sale is confirmed or at another time.
The questions of fair value for purposes of Wis.Stat. §
846.165 and the amount of any credit toward the judgment on
the guaranty are separate questions. Thus, the circuit court
did not erroneously exercise its discretion when it decoupled
the confirmation of sale from the determination of the
Finally, we determine that the stipulation in this case does
not establish that the amount of the winning bid at the
sheriff's sale shall be the sole credit toward the money
judgment against Musikantow.
Accordingly, we reverse the decision of the court of appeals
and remand to the circuit court for further proceedings to
determine the amount of the credit to be applied toward the
judgment against Musikantow as guarantor. I
Horizon Bank, National Association (Horizon Bank) loaned $5
million to Marshalls Point Retreat LLC (Marshalls Point),
secured by a mortgage on property located in Sister
Bay.Musikantow, a member of Marshalls Point,
signed a continuing guaranty of payment for the loan.
Alleging that Marshalls Point had defaulted on the loan,
Horizon Bank brought a foreclosure action. In the same
action, Horizon Bank also brought a claim for a money
judgment against Musikantow pursuant to the terms of the
The parties stipulated to the entry of judgment on both of
Horizon Bank's claims. The stipulation contained an order
for judgment, which the circuit court signed. A judgment for
foreclosure was entered against Marshalls Point and a money
judgment was entered against Musikantow as guarantor for $4,
045, 555.55, the amount of principal and interest remaining
on the loan.
In addition, the stipulation provided that the Sister Bay
property may be sold at a sheriff's sale. It further
[t]he amount paid to [Horizon Bank] from the proceeds of said
sale of the Premises, remaining after deduction by [Horizon
Bank] of the amount of interest, fees, costs, expenses,
disbursements and other charges paid or incurred by [Horizon
Bank] not included in the monetary judgment against
[Musikantow] (set forth below) shall be credited by [Horizon
Bank] as payment on said monetary judgment.
At the sheriff's sale, Horizon Bank bought the Sister Bay
property for a credit bid of $2, 250, 000. The sole bid was
from Horizon Bank.
Horizon Bank moved the circuit court to confirm the sale
pursuant to Wis.Stat. § 846.165, arguing that the amount
of its bid at the sheriff's sale constituted "fair
value" of the Sister Bay property. In support of its
determination of fair value, Horizon Bank submitted two
expert witness affidavits.
Additionally, Horizon Bank indicated in its motion to confirm
the sale that it would not seek a deficiency judgment against
Marshalls Point. Finally, it requested that the circuit
court apply the amount of the winning bid at the
sheriff's sale as a credit toward the judgment against
Musikantow, thereby reducing the amount of the money judgment
by that amount.
In response to the motion to confirm the sale, Marshalls
Point and Musikantow "recognize[d] that the court must
find that the amount bid at sale represents fair value, even
though the mortgagee did not seek a deficiency judgment
against the mortgagor." They also conceded that
"[f]air value is not the same as fair market
Thus, Marshalls Point and Musikantow did not object to the
confirmation of sale at the price of Horizon Bank's
winning bid at the sheriff's sale on the condition that
certain language be added to the order confirming the sale.
They sought language to protect Musikantow from being bound
to the amount of the winning bid as the amount of the credit:
Notwithstanding anything in this order, the confirmation of
the sale of the collateral to Horizon Bank, following a
deficiency against the borrower, shall have no collateral
estoppel or res judicata effect should Horizon Bank seek to
recover against the guarantor, Allen S. Musikantow, on all or
any part of the judgment against Allen S. Musikantow as
guarantor of this obligation.
Marshalls Point and Musikantow further indicated that, if the
requested language was not inserted into the order, they
would object "not to the confirmation of the sale
itself, but to the amount to be credited upon the judgment
against [Musikantow]." They asserted that the Sister Bay
property had a fair market value far in excess of the $2,
250, 000 winning bid, arguing that the actual value of the
property exceeded $10 million.
The circuit court held a hearing on the motion to confirm the
sale. Marshalls Point and Musikantow reiterated their desire
for additional language in the order as reflected above.
See supra, ¶15. Their counsel stated, "We
don't oppose confirmation of sale in and of itself at
that price. What we oppose is a finding of the value which
would be binding on the guarantor."
Additionally, counsel for Marshalls Point and Musikantow
indicated that a witness was present in the courtroom who
would testify that the Sister Bay property had a market value
exceeding $10 million. The circuit court adjourned and
rescheduled the hearing and the witness never testified.
At the next scheduled hearing, counsel for Marshalls Point
and Musikantow asserted that there was "a great deal of
testimony" that could be presented about the
property's market value. However, counsel did not offer
this testimony based on the belief "that it's really
not necessary that we make an evidentiary finding with
respect to the value to be placed upon the residence [
Rather, counsel observed that the guaranty Musikantow signed
contained a governing law provision. This provision stated
that the guaranty "will be governed by federal law
applicable to lender and to the extent not preempted by
federal law, the laws of the State of Indiana without regard
to its conflicts of law provisions." Counsel expressed
his view that "it's clearly not a Wisconsin case in
terms of the substantive law. It is, however, in Wisconsin
for procedural issues dealing with the foreclosure."
Additionally, counsel indicated that Horizon Bank had already
filed a federal lawsuit in Florida, where Musikantow resided,
for the purpose of "authenticating" the judgment
against him. He argued that "what we're doing is
we're going above and beyond what's required in
Wisconsin procedural law to decide an issue that's . . .
more likely to be litigated in the State of Florida as to the
value to be credited for that property."
In response, Horizon Bank explained that "[t]he federal
action is a domestication of the money judgment that this
[c]ourt has already entered on the guarant[y] in these
proceedings." Horizon Bank further asserted, "The
judgment has been entered. He was personally served. He was
under the jurisdiction of the [c]ourt. The [c]ourt entered a
money judgment. Those issues are done." Thus, it
requested that the circuit court confirm the sheriff's
sale and apply the $2, 250, 000 proceeds from the
sheriff's sale as "the only number that can be
credited to the judgment."
The circuit court granted Horizon Bank's motion to
confirm the sale. It further found "that a bid price of
2.25 million dollars represents fair and reasonable value for
the property." However, the circuit court declined to
rule on the credit to be applied toward the judgment against
Musikantow as guarantor.
In declining to rule on the amount of the credit, the circuit
court expressed its belief that because of the governing law
provision, the Florida district court would determine the
amount of the credit. The circuit court stated:
I guess if the federal courts kick this back to me to make a
decision [about] what is to be the appropriate credit under
the commercial guarant[y], well, then we'll have a
hearing and I'll make that decision. But I'm not
going to preempt federal law at this point.
Maybe the federal courts are going to kick it back here.
Maybe they're going to kick it back to Indiana. I
don't know whether they're going to kick it back. If
it's kicked back here, then I'll deal with
[T]his is a federal issue and I'm not going to deal with
Accordingly, the circuit court entered an order confirming
the sale. Consistent with its determination to leave the
calculation of Musikantow's credit for another day, it
crossed out the final paragraph of the proposed order, which
After application to the Judgment indebtedness of the amount
bid at sheriff's sale of $2, 250, 000, there remains due
under the Judgment entered against Allen S. Musikantow the
sum of $1, 869, 460.70, as of November 4, 2015, together with
subsequently accruing interest, fees and costs.
A month later, the circuit court entered another order.
"[I]n light of the language in the Guaranty document
indicating that it is to be governed by Federal Law [, ]
" the circuit court stated that it would "decline
to make a finding of the amount to be credited against the
judgment of Horizon Bank  against  Musikantow as
guarantor." The court advised it would, "if
requested by a Federal Court, make a determination as to such
amount to be credited against the judgment of Horizon Bank 
against  Musikantow."
Horizon Bank appealed the second order. On appeal, Horizon
Bank argued that the stipulation between the parties
controlled the amount of the credit to be applied toward the
judgment. The court of appeals agreed, reversing the circuit
court and remanding with the direction to amend the money
judgment against Musikantow by applying a sole credit of $2,
250, 000. Horizon Bank, Nat'1 Ass'n v. Marshalls
Point Retreat LLC, No. 2016AP832, unpublished slip op.,
¶25 (Wis. Ct. App. Jan. 24, 2017) (per curiam).
This case requires us to interpret Wis.Stat. § 846.165.
Statutory interpretation is a question of law we review
independently of the determinations of the circuit court and
court of appeals. GMAC Mortg. Corp. v. Gisvold, 215
Wis.2d 459, ¶29, 572 N.W.2d 466 (1998).
We are also asked to address whether the circuit court
erroneously exercised its discretion when it decoupled the
guaranty-related credit determination from the underlying
foreclosure action. This court will uphold the discretionary
decision of a circuit court as long as the circuit
court's exercise of discretion was not erroneous.
Hull v. State Farm Mut. Auto. Ins. Co., 222 Wis.2d
627, ¶11, 586 N.W.2d 863 (1998) . An exercise of
discretion is erroneous if it is based on an error of fact or
law. Zarder v. Humana Ins. Co., 2010 WI 35,
¶21, 324 Wis.2d 325, 782 N.W.2d 682.
Finally, we construe the stipulation between the parties. The
interpretation of a stipulation is also a question of law we
review independently of the determinations of the circuit
court and court of appeals. Stone v. Acuity, 2008 WI
30, ¶21, 308 Wis.2d 558, 747 N.W.2d 149.
The court of appeals based its determination on the language
of the stipulation and its understanding that Musikantow had
conceded fair value. Nevertheless, to provide context we
begin our analysis by examining the statutory procedure for
confirmation of sale set forth in Wis.Stat. § 846.165.
Subsequently, we address the circuit court's discretion
to set forth the procedure when foreclosure and a money
judgment on a guaranty are brought in the same proceeding.
Finally, we consider the stipulation of the parties and its
effect on the amount to be credited.
Wisconsin Stat. § 846.165 governs the procedure for
confirming a sheriff's sale of a foreclosed property. At
issue here is sub. (2), which provides:
In case the mortgaged premises sell for less than the amount
due and to become due on the mortgage debt and costs of sale,
there shall be no presumption that such premises sold for
their fair value and no sale shall be confirmed and judgment
for deficiency rendered, until the court is satisfied that
the fair value of ...