Laster v. First Huntsville Properties Co.

• Decision Date: 11 December 1991
• Docket Number: No. D-0537,D-0537
• Citation: 826 S.W.2d 125
• Parties: Melissa L. LASTER, Petitioner, v. FIRST HUNTSVILLE PROPERTIES COMPANY, Respondent.
• Court: Texas Supreme Court

Page 125

826 S.W.2d 125

Melissa L. LASTER, Petitioner, v. FIRST HUNTSVILLE PROPERTIES COMPANY, Respondent.

No. D-0537.

Supreme Court of Texas.

Dec. 11, 1991.

Rehearing Overruled April 22, 1992.

John E. Wright, Huntsville, for petitioner.

E.M. Schulze, Jr., Huntsville, for respondent.

OPINION

COOK, Justice.

This case presents the question whether one ex-spouse who, pursuant to a consent decree of divorce, holds a future interest in property subject to the homestead right of the other ex-spouse, can mortgage that interest. We hold that such an interest can be validly mortgaged. For the following reasons, the judgment of the court of appeals is affirmed and this cause is remanded to the trial court for a determination of the rights of the parties.

I

When Melissa and Richard Laster divorced in 1976, they entered into an agreed judgment which, among other things, divided the couple's property. Under the decree, Melissa was given a 73.83 percent interest in the community property residence and Richard was given the remaining undivided 26.17 percent interest. Melissa and the children were also given the right to the use and occupancy of the residence until the younger of the two children reached eighteen years of age or was no longer in school.

This right in the residence was further made subject to Melissa making the monthly payments on the residence, maintaining the premises, and ensuring that any absence from the residence did not exceed three years. The judgment provided that at the occurrence of one or more of these conditions, Melissa's right of use and occupancy of the residence would terminate and the rights of the parties in the property would be determined in accordance with their interests as set out in the judgment. Melissa currently remains in sole possession of the residence.

In 1979, Richard executed a deed of trust conveying his interest in the residence to secure payment on a promissory note, upon which he later defaulted. Richard's interest was sold by substitute trustee's deed in 1981 to the First National Bank of Huntsville, which later sold the property to First Huntsville Realty Corporation in 1983. First Huntsville Properties purchased the property from First Huntsville Realty in 1985. The couple's youngest child turned eighteen in 1988, and First Huntsville Properties filed suit seeking to partition the residence in 1989. In Melissa's answer, she alleges the entire property was, both at the time the deed of trust was executed and at the time suit was filed, subject to her homestead interest in the entire residence. Thus, she claims, the residence is protected from forced sale.

A bench trial was had and the trial court rendered judgment holding that: the residence was protected from forced sale by Melissa's continuing homestead right in the entire residence; the continuing homestead right was paramount to First Huntsville's interest in the property; and the writ of partition was thereby denied as "premature." The court further stated that in light of its holding, it was unnecessary to determine the question of the parties' respective interests in the residence. In the findings of fact and conclusions of law filed later, however, the court stated that First Huntsville Properties had acquired title to Richard's 26.17 percent interest in the residence "subject to the right of occupancy of Melissa L. Laster."

First Huntsville Properties appealed, claiming that Melissa no longer had a homestead right which extended to its undivided interest in the property at the time the partition action was filed and, therefore, partition should be granted. The court of appeals reversed the trial court's judgment, holding that the trial court erred in not partitioning the residence because First Huntsville's interest in the property which was held in cotenancy with Melissa, was paramount to her homestead right. 797 S.W.2d 151 (Tex.App.1990). Melissa appeals from that judgment.

II

Melissa argues the court of appeals erred both when it held that a cotenant's right to seek partition was paramount to another cotenant's homestead rights, and when it did not find that the mortgage executed by Richard was void because it was levied against homestead property to secure general indebtedness. We turn first to the issue of what relation the parties bear to one another in regards to the residence.

A

The court of appeals found that Melissa and Richard held their respective interests in the residence as "joint owners," with Melissa retaining a homestead interest in the whole until the younger of the two children reached eighteen. The court also determined that, by way of Richard's mortgage, Melissa and First Huntsville now hold the residence as tenants in common. The court of appeals did not discuss whether the mortgage was void under Texas homestead laws. Although we agree that First Huntsville and Melissa are now cotenants in the residence, we disagree with the court's reasoning in reaching this result.

The term "joint owner" is utilized in the statute which authorizes partition of jointly held property. See Tex.Prop.Code § 23.001. This term, however, is imprecise because its use does not signify any one type of ownership. The term has, in the past, been used to refer both to property held in joint tenancy, see Stauffer v. Henderson, 801 S.W.2d 858 (Tex.1990), and property held in cotenancy. See Harrell v. Harrell, 692 S.W.2d 876 (Tex.1985) (per curiam). In the context that the term is used by the court of appeals in the instant case, it appears the court considered Melissa and Richard to be tenants in common in the residence. This classification is incorrect.

A cotenancy is formed when two or more persons share the unity of exclusive use and possession in property held in common. 4A R. Powell & P. Rohan, Real Property, p 601 (1991); 2 H. Tiffany, Real Property, § 319 (3rd ed. 1939). The present right to possession of the property is essential because one who is never entitled to possession of property held in common is not a cotenant. Reed v. Turner, 489 S.W.2d 373, 381 (Tex.Civ.App.--Tyler 1972, writ ref'd n.r.e.); LeBus v. LeBus, 269 S.W.2d 506, 510 (Tex.Civ.App.--Fort Worth 1954, writ ref'd n.r.e.). Therefore, Melissa and Richard did not hold the residence as tenants in common because the divorce decree gave Melissa the right to the use and possession of the residence to the exclusion of Richard.

In Texas, the homestead right constitutes an estate in land. Woods v. Alvarado State Bank, 118 Tex. 586, 593-94, 19 S.W.2d 35, 37-38 (1929). This estate is analogous to a life tenancy, with the holder of the homestead right possessing the rights similar to those of a life tenant for so long as the property retains its homestead character. Fiew v. Qualtrough, 624 S.W.2d 335, 337 (Tex.App.--Corpus Christi 1981, writ ref'd n.r.e.); Sparks v. Robertson, 203 S.W.2d 622, 623 (Tex.Civ.App.--Austin 1947, writ ref'd). Although the homestead estate is not identical to a life estate because one's homestead rights can be lost through abandonment, "it may be said that the homestead laws have the effect of reducing the underlying ownership rights in a homestead property to something akin to remainder interests and vesting in each spouse an interest akin to an undivided life estate in the property." United States v. Rodgers, 461 U.S. 677, 686, 103 S.Ct. 2132, 2138, 76 L.Ed.2d 236 (1983).

Therefore, the divorce decree created in Melissa rights in the residence analogous to those of a life tenant, and created in Richard a future interest in the residence similar to that held by a vested remainderman. ¹ See generally Guilliams v. Koonsman, 154 Tex. 401, 406, 279 S.W.2d 579, 582 (1955) (setting out the rule used to determine whether a remainder interest has vested); Medlin v. Medlin, 203 S.W.2d 635, 641 (Tex.Civ.App.--Amarillo 1947, writ ref'd) (a remainderman's interest in property is usually vested). It is undisputed that at the time Richard mortgaged his interest in the residence, the property as a whole was designated as Melissa's homestead. The question arises, then, whether the mortgage executed by Richard against his interest in the residence is void under the Texas homestead laws.

B

The homestead of a single adult or family is protected from forced sale for the payment of a debt unless the debt is for purchase money on the homestead, for work and materials used to construct improvements on the homestead property, or for unpaid taxes. Tex. Const. art. XVI, § 50; Tex.Prop.Code § 41.002. Any attempt to mortgage homestead property, except as approved by the Texas Constitution, is void. Burkhardt v. Lieberman, 138 Tex. 409, 159 S.W.2d 847, 850 (Tex.Comm'n App.1942, opinion adopted); Anglin v. Cisco Mortgage Loan Co., 135 Tex. 188, 193, 141 S.W.2d 935, 937 (Tex.1940); Toler v. Fertitta, 67 S.W.2d 229, 230-31 (Tex.Comm'n App.1934, judgm't adopted). A mortgage or lien that is void because it was illegally levied against homestead property can never have any effect, even after the property is no longer impressed with the homestead character. Toler, 67 S.W.2d at 230-31.

This homestead protection, however, can arise only in the person or family who has a present possessory interest in the subject property. See Inwood North Homeowners' Assoc., Inc. v. Harris, 736 S.W.2d 632, 636 (Tex.1987); Greene v. White, 137 Tex. 361, 380, 153 S.W.2d 575, 586 (1941); Gann v. Montgomery, 210 S.W.2d 255, 258 (Tex.Civ.App.--Fort Worth 1948, writ ref'd n.r.e.). Accordingly, one who holds only a future interest in property with no present right to possession is not entitled to homestead protection in that property. ² See Rettig v. Houston West End Realty Co., 254 S.W. 765, 768 (Tex.Comm'n App.1923, judgm't adopted); Massillon Engine & Thresher Co. v. Barrow, 231 S.W. 368, 369-70 (Tex.Comm'n App.1921, judgm't adopted).

Applying this rule to the present situation, no homestead right arose in Richard's interest in the residence because he held...