Bank of America NA v. The Estate of Richard P. Nelson

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
September 17, 2025
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2023AP1549 Cir. Ct. No. 2022CV296

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II

BANK OF AMERICA NA,

PLAINTIFF,

V.

THE ESTATE OF RICHARD P. NELSON,

DEFENDANT,

UNITED STATES OF AMERICA,

DEFENDANT-RESPONDENT,

STATE OF WISCONSIN DEPARTMENT OF REVENUE,

DEFENDANT-APPELLANT.

APPEAL from orders of the circuit court for Waukesha County:
MICHAEL P. MAXWELL, Judge. Affirmed.
No. 2023AP1549

Before Neubauer, P.J., Gundrum, and Lazar, JJ.

¶1 NEUBAUER, P.J. The Wisconsin Department of Revenue (DOR)
appeals from an order directing the Waukesha County clerk of court to disburse
$54,421.96 that the clerk was holding as surplus proceeds from the foreclosure
sale of real property formerly owned by Richard Nelson to the United States of
America. The DOR and the United States each had liens on the property for
unpaid taxes, but the circuit court determined that the United States had the
superior claim to the surplus under the federal priority statute, 31 U.S.C. § 3713.
As relevant here, the statute gives the federal government’s claim priority if “the
estate of a deceased debtor, in the custody of the executor or administrator, is not
enough to pay all debts of the debtor.” Sec. 3713(a)(1)(B). The court concluded
that the statute applies to the surplus because the clerk of court qualifies as an
“administrator.” The DOR disagrees with the court’s reading of the statute, but
for the reasons explained below, we conclude that the court correctly determined
that the statute applies and that the United States is entitled to the surplus. We
therefore affirm.

BACKGROUND

¶2 The relevant facts are brief and undisputed. Richard Nelson died
owing substantial sums to the United States ($175,431.51) and the DOR
($115,975.33) for unpaid taxes. Bank of America, NA, which held a mortgage on
real property Nelson owned at the time of his death, commenced this action
seeking to foreclose on its mortgage and sell the property to pay off its loan. In
addition to Nelson’s estate, Bank of America named the United States and the
DOR as defendants because both had liens against the property to secure unpaid
tax debts. The circuit court entered a judgment of foreclosure allowing Bank of

2
No. 2023AP1549

America to sell the property. The property was later sold at a sheriff’s sale. The
purchaser paid the sale price to the clerk of court. After the bank’s claim and
certain fees were paid, a surplus of $54,421.96 remained. The order confirming
the sale instructed the clerk to hold the surplus “pending further order of the
court.”

¶3 The DOR filed an application asking the circuit court to direct the
clerk to pay the surplus to it pursuant to its tax lien. The United States also filed a
motion to claim the surplus, arguing that its claim was “entitled to priority …
pursuant to 31 U.S.C. § 3713.” The DOR opposed the United States’ claim,
arguing that § 3713 “does not apply in this foreclosure action.” After the parties
submitted briefs on the applicability of § 3713, the court issued a written decision
concluding that the statute applied to the surplus, the clerk of court was an
“administrator” under § 3713(a)(1)(B), and thus the United States’ claim to the
surplus had priority. The DOR moved for reconsideration, arguing that the court’s
conclusion was a manifest error of law. The court disagreed and denied the
motion.

DISCUSSION

¶4 The parties take different positions regarding the appropriate
standard of review. The DOR argues that we are to review the circuit court’s
interpretation and application of the priority statute de novo. The United States,
citing a circuit court’s “equitable discretion” in foreclosure proceedings, contends
that the court’s decision should only be reviewed for an erroneous exercise of
discretion. However, the parties agree that resolution of this appeal turns on the
proper interpretation and application of 31 U.S.C. § 3713. We thus agree with the
DOR that de novo review is appropriate. See Alberte v. Anew Health Care Servs.,

3
No. 2023AP1549

Inc., 2000 WI 7, ¶7, 232 Wis. 2d 587, 605 N.W.2d 515 (“Interpretation of a
federal statute is a question of law that is subject to de novo review by this
court.”).

¶5 The priority statute “is almost as old as the Constitution, and its roots
reach back even further into the English common law.” United States v. Moore,
423 U.S. 77, 80 (1975). The first priority statute was enacted in 1789, and
subsequent enactments in the 1790s broadened its scope and “gave the priority
teeth by making the administrator of any insolvent or decedent’s estate personally
liable for any amount not paid the United States because he gave another creditor
preference.” Id. at 81. These enactments were later codified as 31 U.S.C. §§ 191
and 192 (1976). Section 191 stated as follows:

Whenever any person indebted to the United States is
insolvent, or whenever the estate of any deceased debtor, in
the hands of the executors or administrators, is insufficient
to pay all the debts due from the deceased, the debts due to
the United States shall be first satisfied; and the priority
established shall extend as well to cases in which a debtor,
not having sufficient property to pay all his debts, makes a
voluntary assignment thereof, or in which the estate and
effects of an absconding, concealed, or absent debtor are
attached by process of law, as to cases in which an act of
bankruptcy is committed.

See Moore, 423 U.S. at 79. Section 192, which codified the personal liability
aspect of the priority, stated as follows:

Every executor, administrator, or assignee, or other person,
who pays, in whole or in part, any debt due by the person
or estate for whom or for which he acts before he satisfies
and pays the debts due to the United States from such
person or estate, shall become answerable in his own
person and estate to the extent of such payments for the
debts so due to the United States, or for so much thereof as
may remain due and unpaid.

4
No. 2023AP1549

See United States v. King, 322 F.2d 317, 320 (3d Cir. 1963). Congress later
revised and re-enacted Sections 191 and 192 as 31 U.S.C. § 3713(a) and (b),
respectively, but “no substantive changes” to the priority statute were intended by
that revision. See United States v. Coppola, 85 F.3d 1015, 1019 n.3 (2d Cir.
1996); United States v. Cole, 733 F.2d 651, 654 n.2 (9th Cir. 1984).

¶6 In its current form, the priority statute states as follows:

(a)(1) A claim of the United States Government shall be
paid first when--

(A) a person indebted to the Government is insolvent
and--

(i) the debtor without enough property to pay all
debts makes a voluntary assignment of property;

(ii) property of the debtor, if absent, is attached;
or

(iii) an act of bankruptcy is committed; or

(B) the estate of a deceased debtor, in the custody of
the executor or administrator, is not enough to pay all
debts of the debtor.

(2) This subsection does not apply to a case under title
11.

(b) A representative of a person or an estate (except a
trustee acting under title 11) paying any part of a debt of
the person or estate before paying a claim of the
Government is liable to the extent of the payment for
unpaid claims of the Government.

31 U.S.C. § 3713(a)-(b).

¶7 The parties focus their arguments on subsection (a)(1)(B) because
Nelson is deceased. We begin our analysis of that subsection with two points that
appear to be undisputed. First, the DOR and the United States agree that the
surplus is not an asset that legally belongs to Nelson’s estate and instead is, at

5
No. 2023AP1549

present, in the “custody” of the clerk of court. In addition, neither party disagrees
with the circuit court’s determination that the clerk is not an “executor” under the
statute.

¶8 The parties do disagree, however, about whether the clerk is an
“administrator.” The DOR contends that although we are concerned with a federal
statute, we must analyze it using the interpretive principles that guide our analysis
of Wisconsin statutes. See State ex rel. Kalal v. Circuit Ct. for Dane Cnty., 2004
WI 58, ¶¶44-52, 271 Wis. 2d 633, 681 N.W.2d 110; Voces De La Frontera, Inc.
v. Clarke, 2017 WI 16, ¶13, 373 Wis. 2d 348, 891 N.W.2d 803 (“We apply
general principles of statutory interpretation when construing federal
regulations.”). Under the Kalal framework, it argues, we are to focus on the
language of the statute, give its terms their ordinary meaning unless they are
technical or specially-defined, and construe the statute as a whole, not in isolated
parts. See Kalal, 271 Wis. 2d 633, ¶¶45-46.

¶9 Applying that framework to the statutory language at issue here, the
DOR contends that the term “executor” in 31 U.S.C. § 3713(a)(1)(B) refers to
“someone appointed by a will to settle the affairs of a decedent’s estate,” and that
the term “administrator” must have a similar meaning because those terms are
linked in the statute in a context that suggests they have similar meanings. In the
DOR’s view, an “administrator” must also be “someone who is appointed to settle
an estate.” It contends that this meaning of “administrator” existed around the
time of the founding when the first priority statute was enacted, as evidenced in
contemporary dictionaries and statutes. It also finds support for its interpretation
in subsection (b) of the statute, which subjects “[a] representative of a person or an
estate” to liability if he or she “pay[s] any part of a debt of the person or estate
before paying a claim of the [United States].” The DOR contends that a clerk of

6
No. 2023AP1549

court does not become a representative of an estate by holding a surplus, and in
any event could not be held liable under § 3713(b) because our supreme court
held, in Ford v. Kenosha County, 160 Wis. 2d 485, 499, 466 N.W.2d 646 (1991),
that “when a non-judicial officer performs a ministerial function, but at the
direction of a judge who is acting in a judicial capacity, that officer is cloaked with
absolute immunity from civil liability.”

¶10 The DOR also cites several nineteenth century decisions of the
United States Supreme Court and Wisconsin courts that refer to executors and
administrators as persons charged with settling estates. See, e.g., Ogden v.
Blackledge, 6 U.S. 272, 275 (1804) (stating that executors and administrators
differ only in “that one is created by the act of law, and the other by the act of the
party”); Bank of Hamilton v. Dudley’s Lessee, 27 U.S. 492, 504 (1829) (reference
to “all probate and testamentary matters” in state constitution “meant all the duties
of executors and administrators, and all matters arising out of the settlement of the
estates of decedents”); Johnson v. Wilson, 1 Pin. 65, 67 (Wis. 1839) (explaining
that an administrator appointed in another state could not “come into our courts
and, with their aid, collect the assets of the estate, carry them into another
jurisdiction, and thereby require the creditors of the deceased in this Territory to
receive payment or distribution of the same according to the laws of a foreign and
distant government”); Robbins v. Gillett, 2 Pin. 439, 440 (Wis. 1850) (discussing
state statute “provid[ing] that the executor or administrator, shall have a right to
the possession of all the real, as well as the personal estate of the deceased”).
These authorities, the DOR posits, show that Congress intended the word
“administrator” in the priority statute to mean “someone appointed by a judge to
settle an intestate decedent’s estate.”

7
No. 2023AP1549

¶11 The DOR concludes by explaining that a circuit court clerk is not an
“administrator” under 31 U.S.C. § 3713 because clerks hold constitutionally
created offices and perform a variety of duties unconnected to settling the estates
of intestate decedents. It notes that in foreclosure cases like the present case, a
clerk’s role is limited to accepting notices from persons who claim an entitlement
to some or all of a surplus and paying the surplus as directed by the circuit court.
See WIS. STAT. § 846.162 (2023-24).1 The DOR contrasts this limited role with
the broad powers accorded to personal representatives appointed under Wisconsin
probate law to settle the estates of intestate decedents. See WIS. STAT. § 851.23.
Personal representatives are empowered with authority to “pay and discharge out
of the estate all expenses of administration, taxes, charges, claims allowed by the
court, or such payment on claims as directed by the court; render accurate
accounts; make distribution and do any other things directed by the court or
required by law.” WIS. STAT. § 857.03(1). The DOR notes that clerks of court
lack such powers and instead fill an “entirely separate” role “circumscribed by
different laws.”

¶12 The United States takes a fundamentally different approach to
interpreting the priority statute. It contends that we must follow federal law in
construing the statute and directs us to several United States Supreme Court
decisions in which the Court recognized that its terms are to be liberally construed
in view of its underlying aim of securing sufficient revenue for public needs. See
Moore, 423 U.S. at 81-82 (“the priority proceeds from ‘motives of public policy,
in order to secure an adequate revenue to sustain the public bur[d]ens and

1
All references to the Wisconsin Statutes are to the 2023-24 version.

8
No. 2023AP1549

discharge the public debts …. (A)s that policy has mainly a reference to the public
good, there is no reason for giving to (the statute) a strict and narrow
interpretation.’” (quoting United States v. State Bank of N. Carolina, 31 U.S. 29,
35 (1832))); Bramwell v. U.S. Fid. & Guar. Co., 269 U.S. 483, 487 (1926) (“As
this statute has reference to the public good, it ought to be liberally construed.”).

¶13 With regard to the specific issue before us, the United States
contends that the priority statute’s “application is not to be narrowly restricted to
the cases within the literal and technical meaning of the words used.” See
Bramwell, 269 U.S. at 492. Rather, it should be applied broadly to “all debts due
from deceased debtors whenever their estates are insufficient to pay all creditors.”
See id. at 487. The United States says we should construe the statute
“functionally” and apply it to any person who exercises control over the assets of a
debtor, regardless of that person’s title.

¶14 In support, the United States cites King v. United States, 379 U.S.
329 (1964), in which the Supreme Court held that King, who had been appointed
by a bankruptcy court as an agent for distribution of an insolvent corporation’s
assets, could be held liable under 31 U.S.C. §§ 191-192 (1958) for paying the
claims of other creditors before the United States’ claim. King argued that he
could not be held liable because “distributing agents as a class … are agents of the
court rather than personal representatives of the debtor.” King, 379 U.S. at 336.
The Court disagreed:

The purpose of s 192, as recognized in Bramwell, is to
make those into whose hands control and possession of the
debtor’s assets are placed, responsible for seeing that the
Government’s priority is paid. Whether or not King falls
within the category of fiduciaries on whom such
responsibility should be placed depends, not on the title of
his position or the mode of his appointment, but, in
practical terms, upon the degree of control he is in a

9
No. 2023AP1549

position to assert over the allocation among creditors of the
debtor’s assets in his possession.

King, 379 U.S. at 337. The Court further described Bramwell as establishing

that others besides personal representatives of the debtor
may be included in s 192, for in that case this Court
indicated that s 192 would apply to a state official charged
with the function of liquidating a bank’s assets, although
the official was clearly not acting as the personal
representative of the bank.

King, 379 U.S. at 337. Thus, the fact that King worked “primarily for the court
rather than for the debtor” did not place him beyond the statute’s reach. Id. at 338.

¶15 In its reply brief, the DOR contends that Bramwell, Moore, and
King are not controlling here because none of those cases specifically addressed
the meaning of “administrator” in the priority statute, and each arose out of facts
that are materially different from those in the present case. The DOR also cites
several other United States Supreme Court decisions which, in its view, show that
the priority statute should be “interpreted … according to its terms, even when
doing so limit[s] the rule’s reach.” See, e.g., Prince v. Bartlett, 12 U.S. 431, 434
(1814) (explaining that “[i]t appears to be the true construction of the [priority
statute] to confine it to the cases of insolvency specified by the legislature”); State
Bank of N. Carolina, 31 U.S. at 34 (“The priority of the United States has been
held to exist in the cases only which come within the statutes, on their strictest
construction.”);2 United States v. Oklahoma, 261 U.S. 253, 259 (1923)

2
This statement from United States v. State Bank of North Carolina, 31 U.S. 29 (1832),
is taken from the Court’s summary of the argument presented by the bank’s counsel, not from the
Court’s opinion. The Court disagreed with the bank’s argument, concluding that “there is no
reason for giving [the priority statutes] a strict and narrow interpretation.” Id. at 35. Instead, the
statutes were “to receive a fair and reasonable interpretation, according to the just import of their
terms.” Id.

10
No. 2023AP1549

(explaining that earlier priority statute “established priority which is limited to the
particular state of things specified”).

¶16 After careful review of these authorities, we conclude that the United
States has the better reading of the priority statute. The interpretation and
application of the statute is governed by federal law. See Stipetich v. Grosshans,
2000 WI App 100, ¶11, 235 Wis. 2d 69, 612 N.W.2d 346. “[W]e are bound by the
United States Supreme Court’s interpretation” of the statute, see Doubek v. Kaul,
2022 WI 31, ¶3, 401 Wis. 2d 575, 973 N.W.2d 756, and because its text “is
virtually unchanged since its enactment” in the late 1700s, United States v. Estate
of Romani, 523 U.S. 517, 524 (1998), it is appropriate to look to cases applying
prior versions for guidance, Coppola, 85 F.3d at 1019 n.3.

¶17 Although the DOR is correct that the United States Supreme Court
has not addressed the precise issue presented here, its decisions instruct that we
must construe the statute broadly and not in a manner that limits its reach to “the
literal and technical meaning” of its terms. See Bramwell, 269 U.S. at 492. And
our analysis must focus not on the clerk’s “title … or … mode of … appointment”
but rather on the “degree of control” the clerk may assert over the disposition of
the surplus. See King, 379 U.S. at 337.

¶18 Under this interpretive framework, we agree with the United States
that the priority statute applies to the foreclosure surplus. Though the clerk of
court may not, as the current custodian of the surplus, exercise all of the powers
granted to an administrator or personal representative appointed by a court to settle
a decedent’s estate, the clerk nonetheless exercises significant control over the
disposition of the surplus. The clerk has exclusive custody of the surplus and no
claimant may receive any portion of it unless and until the clerk disburses it as

11
No. 2023AP1549

directed by the circuit court. We agree with the circuit court that, in these
circumstances, the clerk functions as the equivalent of an “administrator” for the
purpose of 31 U.S.C. § 3713(a)(1)(B). The control exercised by the clerk over the
surplus suffices to bring the clerk within the scope of the statute.

¶19 The DOR’s focus on determining the meaning of “administrator”
from interpretive canons, syntax, and uses of that term in ancient sources is
misplaced. In effect, that effort favors a “technical meaning” of the statute over
the broader reading that Bramwell, Moore, and King instruct us to give it. Like
the distribution agent in King, the fact that the clerk functions as an arm of the
circuit court with respect to the foreclosure surplus, and not as a representative of
Nelson’s estate, is not enough to render the priority statute inapplicable.

¶20 The DOR makes a second argument as to why the priority statute
does not apply to the surplus, but it fares no better than its first. The DOR notes
that 31 U.S.C. § 3713(a)(1)(B) applies only if a deceased debtor’s estate “is not
enough to pay all debts of the debtor.” The DOR characterizes this language as
imposing “the functional equivalent to the insolvency requirement for living
debtors in subsection (a)(1)(A)” and argues that the United States did not prove
that all of the assets in Nelson’s estate—not just the surplus—were insufficient to
pay the estate’s debts. In response, the United States contends that it did not have
the burden of proving that Nelson’s estate was insolvent. Instead, it argues, the
burden falls on the DOR, as the party “who claim[s] exemption from the operation
of the statute,” to show that it does not apply. See Bramwell, 269 U.S. at 487; see
also United States v. Cole, 733 F.2d 651, 654 (9th Cir. 1984) (“The burden lies
with those who argue that the government’s priority does not apply to show that
they are not within the provisions of section 3713.”). The DOR disagrees, arguing
that the United States has the burden to establish insolvency, and only when the

12
No. 2023AP1549

priority statute appears to apply does the burden shift to the opposing party to
prove an exception. See United States v. Hooe, 7 U.S. 73, 90 (1805) (explaining
“that the insolvency, which is the foundation of the claim, must certainly be
proved by the United States”).

¶21 Ultimately, we need not resolve this issue because the Wisconsin
Consolidated Court Automation Programs (CCAP) record of the probate
proceeding involving Nelson’s estate indicates that the estate was insolvent. See
Waukesha County Circuit Court Case No. 2020PR579. We may take judicial
notice of the CCAP records in that action. See OLR v. Hudec, 2019 WI 39, ¶32,
386 Wis. 2d 371, 925 N.W.2d 540 (per curiam); Kirk v. Credit Acceptance Corp.,
2013 WI App 32, ¶5 n.1, 346 Wis. 2d 635, 829 N.W.2d 522. Here, the CCAP
record indicates that an attorney for Nelson, who also served as the personal
representative of his estate, filed a petition to close the estate pursuant to a
summary settlement and, at a hearing on the petition held on July 18, 2024,
represented to the circuit court that Nelson’s estate was insolvent. The record
further indicates that the court granted the petition and that the proceeding was
closed shortly thereafter. The DOR has not alerted us to anything which calls the
accuracy of this information into question. We deem it sufficient to establish that
Nelson’s estate did not contain assets sufficient to pay all of Nelson’s debts.

¶22 Finally, the DOR argues that the circuit court erred in denying its
motion for reconsideration. In that motion, the DOR challenged the court’s
conclusion that the United States was entitled to priority because the clerk of court
was an “administrator” for the purpose of 31 U.S.C. § 3713(a)(1)(B). Rulings on
motions to reconsider are reviewed for an erroneous exercise of discretion. Bauer
v. Wisconsin Energy Corp., 2022 WI 11, ¶11, 400 Wis. 2d 592, 970 N.W.2d 243.
In light of our determination that the priority statute applies to this case and

13
No. 2023AP1549

entitles the United States to the surplus, we conclude that the court did not
erroneously exercise its discretion in denying the DOR’s motion for
reconsideration.

CONCLUSION

¶23 The priority statute entitles a claim of the United States to priority
over other claims if “the estate of a deceased debtor, in the custody of the executor
or administrator, is not enough to pay all debts of the debtor.” 31 U.S.C.
§ 3713(a)(1)(B). The statute applies here: the Waukesha clerk of court functions
as an “administrator” with respect to the foreclosure surplus because the clerk
exercises control over the surplus and its disposition, and the estate of Richard
Nelson is unable to pay all of Nelson’s debts. Thus, the circuit court did not err in
ordering the clerk to pay the surplus to the United States, or in denying the DOR’s
motion to reconsider that order.

By the Court.—Orders affirmed.

Recommended for publication in the official reports.

14