Brodsky v. Maloney

• Decision Date: 15 November 1960
• Docket Number: No. 9811,E-M,9811
• Citation: 78 S.D. 605,105 N.W.2d 911
• Parties: Jerry G. BRODSKY, d/b/a Red-ix Cement Products Co., Plaintiff and Respondent, v. Herbert F. MALONEY, Maryan Maloney, First Federal Savings and Loan Association of Rapid City, Defendants and Respondents, Walton Sheet Metal, a partnership, Lampert Lumber Company, d/b/a Canyon Lumber Company, Defendants and Appellants, Robert V. Marcoe, d/b/a Marcoe Construction Company, Defendant.
• Court: South Dakota Supreme Court

Page 911

105 N.W.2d 911

78 S.D. 605

Jerry G. BRODSKY, d/b/a Red-E-Mix Cement Products Co. Plaintiff and Respondent, v. Herbert F. MALONEY, Maryan Maloney, First Federal Savings and Loan Association of Rapid City, Defendants and Respondents Walton Sheet Metal, a partnership, Lampert Lumber Company d/b/a Canyon Lumber Company, Defendants and Appellants Robert V. Marcoe, d/b/a Marcoe Construction Company, Defendant.

No. 9811.

Supreme Court of South Dakota.

Nov. 15, 1960.

Rehearing Denied Jan. 11, 1961.

Gunderson, Farrar, Carrell & Aldrich, Rapid City, for Lampert Lumber Company d/b/a Canyon Lumber Company, defendant and appellant.

Morrill & Morrill, Sturgis, for Walton Sheet Metal, a partnership, defendant and appellant.

Bangs, McCullen, Butler & Foye, Rapid City, for Herbert F. Maloney, Maryan Maloney and the First Federal Savings and Loan Association, defendants and respondents.

RENTTO, Judge.

This is another of those cases in which the rights of a mechanics' lien claimant collide with the assertion that the premises are exempt from such encumbrance under our homestead laws.

On or about September 16, 1956, the Maloneys, who were then living in rented premises and did not own a residence, made a written agreement to purchase from Marcoe a house to be built on the lots involved, then owned by him, subject only to their ability to obtain the necessary financing. Three days later Mr. Maloney and the First Federal Savings and Loan Association applied to the Veterans' Administration to guarantee a loan which the Association was proposing to make for that purpose. Applicable regulations of the V.A. required that the property on which it guarantees loans must be used as the veteran's home. On September 29, 1956, in connection with his application, Maloney certified that the proceeds of such loan would be used to construct a home for him and that he intended to occupy it as such, and that he would move into the property on its completion and use it as his home.

The application for the guarantee was approved on October 15, 1956 and the proposed loan made. During construction of the house the Maloneys on November 12, 1956 went to the building site and took possession of it by applying waterproofing material to the concrete basement. They moved into it on February 2, 1957 and apparently have lived in it from that date on. It was conveyed to them from the Marcoes by a deed executed on November 13, 1956 and recorded the following day. On this evidence the court found that on September 16, 1956 and at all times subsequent thereto, the Maloneys intended in good faith that the property in controversy should be their home and homestead. This finding, we think, has ample factual support.

Between November 16, 1956 and March 29, 1957 the Lampert Lumber Company sold and delivered to Marcoe certain building materials used in the construction of the house. It claims a lien for these items. Walton Sheet Metal, under an agreement with Marcoe, furnished certain material and labor for the construction of portions of the house between December 16, 1956 and March 12, 1957. Its claim of a lien in based on these items. The lien claimed by the plaintiff Brodsky was settled so the only liens here involved are those of Lampert Lumber Company, Walton Sheet Metal and the lien claimed by First Federal under the real estate mortgage given to it by the Maloneys on November 10, 1956 and recorded four days later.

In the trial court, and here, Lampert and Walton urged that even though the mortgage was on record before they furnished any material or labor, their liens were superior because the mortgage was made subsequent to October 25, 1956, the date of the actual and visible beginning of the improvement. This proposition the trial court did not reach since it agreed with the contention of First Federal that both liens were of no effect because the property was homestead in character. Based on this ground it entered judgment dismissing the counterclaims of Lampert Lumber and Walton seeking foreclosure of their liens. From this judgment both lien claimants appeal.

This court has consistently taken the view that a property may be impressed with the homestead character before the residence is completed and actually occupied by the family of the owner. Kingman v. O'Callaghan, 4 S.D. 628, 57 N.W. 912; Jensen v. Griffin, 32 S.D. 613, 144 N.W. 119, 50 L.R.A., N.S., 1128; Yellow-Hair v. Pratt, 41 S.D. 190, 169 N.W. 515; Harter v. Davison, 53 S.D. 399, 220 N.W. 862; Sidle v. Cheney, 74 S.D. 540, 56 N.W.2d 86. In the Kingman case it said [4 S.D. 628, 57 N.W. 915]:

'* * * when the head of a family, owning no other residence, purchases the site of an intended home, and begins the erection of a dwelling house thereon, with the intent by so doing to establish a place of abode for himself and family, which intention is followed by such occupancy as soon thereafter as the house, under the circumstances, can be completed, * * * the requirements of our statute have been answered, and the property is impressed with the homestead character before such house is completed and actually occupied by the family of the owner.'

Under these holdings it becomes a homestead at the time of the intention on the part of the owner to occupy it as his home. This is obviously the rule the trial judge had in mind when he concluded this property was the homestead of the Maloneys from and after September 16, 1956.

At this juncture the claimants direct our attention to SDC 51.1713. This is a new section concerning homesteads which came into our law on the adoption of our 1939 Code. It provides that:

'If the property is not marked off, platted, and recorded as hereinbefore provided it shall not have the character of exemption rights of a homestead unless it is actually occupied as such by the owner.'

In dealing with the statute in Knittel v. G. Sommers & Co., 72 S.D. 5, 28 N.W.2d 878, 879, it was said that this section 'has reference to the acquisition and establishment of a homestead'. The Maloneys did not mark off or plat the property in question as provided. Consequently the claimants argue that in view of this statute it could not be their homestead until they actually occupied it. On behalf of the Maloneys it is urged that this statute is unconstitutional because it goes beyond what the legislature may properly do in this field.

This statute was discussed in Ramsey v. Lake County, 70 S.D. 61, 14 N.W.2d 125 and Knittel v. G. Sommers & Co., supra, but its validity was not an issue in either case. While Sidle v. Cheney, supra, was decided subsequent to the adoption of SDC 51.1713 and concerned property being a homestead before its actual occupancy, this question was not before the court because of the record on which the appeal was predicated. This is our first occasion to consider its constitutionality. Since the Maloneys owned no other residence property, and there is no claim that this property exceeds one acre in extent, we are not here concerned with the right of the legislature to require the marking off, platting or recording of the property where the claimant owns several pieces of property which might be used a home or where the property claimed exceeds the area allowed by law for a homestead.

In the constitution of this state, Art. XXI, Section 4 it is provided that:

'The right of the debtor to enjoy the comforts and necessaries of life shall be recognized by wholesome laws exempting from forced sale a homestead, the value of which shall be limited and defined by law, to all heads of families, and a reasonable amount of personal property, the kind and value of which to be fixed by general laws.'

The power of the legislature to deal with homesteads does not flow from these provisions. Rather, they are limitations on what the legislature may do in this field. Acker v. Adamson, 68 S.D. 341, 293 N.W. 83. See also O'Leary v. Croghan, 42 S.D. 210, 173 N.W. 844, 6 A.L.R. 1134 and Home Lumber Co. v. Heckel, 67 S.D. 429, 293 N.W. 549. Significant in this section are the requirements that there must be a homestead exemption to all heads of families and that the right of every debtor to have his homestead exempt from forced sale must be recognized by laws that are wholesome.

In approaching this problem it is well to look again at some fundamental pronouncements of this court. In Ramsey v. Lake County, supra, [70 S.D. 61, 14 N.W.2d 126] this court said:

'It seems clear that the purpose of creating a homestead is to provide for the family a home in which it may have shelter from and a protection against the claims of creditors or its own improvidence and where it may live and be protected.'

In re Schneider's Estate, 72 S.D. 174, 31 N.W.2d 261, 264, it further said that:

'Throughout the entire history of this court no inroads upon the homestead exemption have been recognized except such as were clearly in accord with the constitutional mandate, * * *.'

It is against this background that we must examine the statute in controversy.

In SDC 51.1713 the legislature has said that if the property claimed as a homestead is not actually occupied by the owner as such it is not a homestead unless it is marked off, platted and recorded. In other words, the homestead character is established by (1) actual occupancy or (2) selection. For the purpose of this case we may assume, without deciding, that the legislature could require that actual occupancy was necessary to endow the property with the character of a homestead. Our concern here is limited to the other feature of the statute as to whether, under its limited power in this field, the legislature may say that without actual occupancy the property is not a homestead unless it is marked off, platted and recorded.

If effect is given to the challenged statute premises not actually occupied would be exempt to the families of those who select, mark off, plat and record a notice of homestead claim, but not to the families...