Matter of Erickson

Wisconsin Statute § 815.18(6) made certain property unavailable to satisfy a civil judgment and allowed a debtor to exempt farm equipment including “one mower” and “one hay loader,” both added to the list of exempt equipment in 1935. Under 11 U.S.C. § 522(b)(2)(A), debtors in federal bankruptcy cases could sometimes exempt the property that states protect from civil judgments. Under 11 U.S.C. § 522(f)(2)(B), the exemption could be used for implements or tools of the debtor’s trade, even if the debtor has given creditors a security interest in the items. In the federal bankruptcy proceeding of Marie Erickson (debtor), Dorchester State Bank (the bank) (creditor) agreed to allow Erickson to keep any implement or tool of the trade covered by Wisconsin Statute § 815.18(6). A dispute arose regarding whether under the state statute, a baler was a “hay loader” and a haybine was a “mower.” The bank argued that the baler and haybine had extra functions that disqualified them from exemption. Using the plain-meaning approach to interpretation, the statute’s application would be limited to only tools used when it was originally enacted. Using the same-value approach would exclude tools that had additional functions even if they still served the same primary purpose. Both approaches would undermine the statute’s purpose, which was to keep small farms in operation. The bankruptcy judge and district court judge determined that the haybine qualified as a mower because it was the mower’s technological successor, in that although the haybine had some advanced functionality, it still performed the basic role of a mower. The courts held that the extra functions therefore did not prevent exemption. The bank appealed to the Seventh Circuit.