Rose v. Smith

• Decision Date: 19 February 1902
• Citation: 66 S.W. 940,167 Mo. 81
• Parties: ROSE v. SMITH et al.
• Court: Missouri Supreme Court

66 S.W. 940

167 Mo. 81

ROSE v. SMITH et al.

Supreme Court of Missouri, Division No. 1.

February 19, 1902.

HOMESTEAD — SALE — MORTGAGE — REINVESTMENT OF PROCEEDS IN NEW HOMESTEAD — EFFECT.

1. A husband and wife owned a homestead in farm lands valued at $1,500, which they mortgaged to plaintiff for that amount. Thereupon the husband purchased a livery stable for $1,375, and a town home for $1,100. Out of the $1,500 realized from the mortgage he paid $1,370 on the livery stable. Later he added to the balance, of $130, money received from the sale of farm implements, and paid for the house. He thereupon abandoned his farm homestead and moved into the town house, and established his homestead there. Held, that though the new homestead was not paid for out of the identical $1,500, except as to the $130 balance, it must nevertheless be treated, in equity, as acquired with the proceeds of the old one, and therefore exempt from execution as fully as the old, under Rev. St. 1899, § 3623, providing that in such case the new homestead shall be exempt as fully as the old.

2. Though the mortgage of the old homestead merely created a lien, and the mortgagors might have had a homestead in the equity of redemption, their ceasing to occupy it and their acquirement of a new homestead in another place amounted, in law, to an abandonment of the old homestead.

3. Where the owner of a homestead mortgages it and invests the proceeds in a new homestead, the latter is as much exempt from execution, under Rev. St. 1899, § 3623, as though the proceeds of a direct sale had been so reinvested.

Appeal from circuit court, Ralls county; D. H. Eby, Judge.

Action by D. D. Rose against E. C. Smith and others to set aside an alleged fraudulent conveyance. Judgment for plaintiff, and defendants appeal. Reversed.

In 1892 E. C. Smith and wife owned four-sevenths interest in 205 acres of land in Pike county. The wife owned one-seventh by inheritance, and the husband three-sevenths by purchase. The value of their interest was $1,500. It was the homestead of the family. Smith and wife mortgaged the homestead to the plaintiff for $1,500. Then Smith purchased a livery stable and a house in the town of Center, Ralls county. The house was worth $600 to $1,000, and stood upon a lot 252 feet by 90 feet. The contract for the livery stable and the house was an entirety, and $5 earnest money was paid to bind it. The livery stable was priced at $1,375, and the house at $1,100. Smith stated to Rose that he was borrowing the $1,500 to buy the livery stable. The loan was made on the 2d of April, 1892. On the 5th of April, Smith paid $1,370 for the livery stable, and received a deed for it. The $5 earnest money was applied to make up the difference between the $1,370 paid and the $1,375, the agreed price. This $1,370 was paid out of the $1,500 borrowed. This left $130 of the $1,500 so borrowed. To this $130 Smith added the money he received from the sale of some stock and farm implements, and on May 9, 1892, he paid for, and received a deed to, the house. Smith thereupon abandoned his homestead on the farm and moved into the town house, and established his homestead thereon, and has continued to use and occupy it ever since. In 1894 Smith conveyed the new homestead to his wife. In 1896, the $1,500 loan on the farm having matured, and Smith being unable to pay it, the plaintiff foreclosed the deed of trust, and became the purchaser for $1,250. After crediting that sum on the debt of $1,500 and the interest due, he brought suit for the deficit, and obtained a judgment for $700. Under this judgment he levied upon the new homestead, had it sold under execution, and became the purchaser for $5. The day before the judgment for the deficit was rendered, Smith and wife sold the new property to Mrs. Smith's brother, the defendant Ogle. The consideration was $200 that Ogle had loaned his sister, Mrs. Smith, and $450 in cash. The plaintiff then brought this proceeding in equity, and asked that the deeds from Smith to his wife and from Mrs. Smith to Ogle be declared fraudulent and be set aside, and for possession of the property, etc. The circuit court rendered judgment as prayed, and the defendants appealed.

J. D. Hostetter, for appellants. Roy & Hays and Ed. L. Alford, for respondent.

MARSHALL, J. (after stating the facts).

1. The head of a family may sell or mortgage his homestead, whether he be solvent or insolvent, and his creditors cannot impeach the sale; for, having no claim upon the homestead, their rights are not impaired. Bank v. Guthrey, 127 Mo., loc. cit. 193, 29 S. W. 1004, 48 Am. St. Rep. 621; Creech v. Childers, 156 Mo. 338, 56 S. W. 1106; Association v. Howard, 150 Mo., loc. cit. 450, 51 S. W. 1046. So a homesteader can dispose of one homestead, and with the proceeds acquire another, and the new homestead will be exempt from execution as fully as the old one was....