Denzer v. Prendergast, 38696

• Citation: 267 Minn. 212,126 N.W.2d 440
• Decision Date: 17 January 1964
• Docket Number: No. 38696,38696
• Parties: Floyd DENZER, Respondent, v. Michael E. PRENDERGAST, Raymond Lucy, Admr. of Estate of Michael E. Prendergast, deceased, substituted as appellant, and Loretts Prendergast, Appellants, Patrick W. Smith as Sheriff of Le Sueur County, Defendant.
• Court: Supreme Court of Minnesota (US)

Page 440

126 N.W.2d 440

267 Minn. 212

Floyd DENZER, Respondent, v. Michael E. PRENDERGAST, Raymond Lucy, Admr. of Estate of

Michael E. Prendergast, deceased, substituted as

appellant, and Loretts Prendergast,

Appellants,

Patrick W. Smith as Sheriff of Le Sueur County, Defendant.

No. 38696.

Supreme Court of Minnesota.

Jan. 17, 1964.

Syllabus by the Court

1. The owner of the remainder in fee to an 80-acre tract of real estate in a rural area is entitled to the homestead exemption with respect to such tract where he lives in the house situated on it with his wife and children under an arrangement with the life tenant, his mother, whereby in exchange for her paying a specified amount monthly he supports and maintains her in the family home.

2. The legislature has made no distinction between judgments based upon tort and judgments based upon contract in granting exemption from sale and seizure of the homestead.

Arthur E. Anderson, Le Sueur, George T. Havel, Le Center, for appellants.

Michael E. McGuire, Montgomery, Joe A. Walters and Thomas A. Keller, III, O'Conner, Green, Thomas & Walters, Minneapolis, of counsel, for respondent.

SHERAN, Justice.

Appeal from an order of the district court denying a blended motion for amended findings or for a new trial.

Action was instituted by Floyd Denzer for the purpose of obtaining a judicial determination that a described 80-acre tract of real estate located in rural Le Sueur County, Minnesota, is exempt from seizure or sale under legal process on account of judgments in favor of defendants Michael E. Prendergast and Loretta Prendergast entered January 12, 1961, and based on verdicts for damages caused by an automobile accident found to have resulted proximately from the negligence of plaintiff.

The essential facts are stipulated. At the time of the entry of the judgment plaintiff was the owner of the remainder in fee subject to his mother's life estate. The interests of both were acquired from plaintiff's father, August E. Denzer, who died in 1951 when plaintiff was 29 years of age and his widowed mother was 73.

Plaintiff, with his family, has lived in the house on the 80-acre tract and cared for his mother under an agreement with the guardian of her estate whereby he worked the 80 and an additional 40 acres owned by her; paid the real estate taxes, insurance, and repairs; and received $100 per month for her case, of which $500 annually was withheld in lieu of cash rent. In 1959 plaintiff discontinued working the land, and it was then leased, except for the buildings, to a third person. At the time of the trial on September 12, 1961, according to the stipulation, plaintiff had a wife and six children and was living with and providing for his mother in the buildings on the farm. Except as stated, he was without a lease and paid no fixed rent.

The trial court found the facts to be as stated and concluded that the realty was not subject to the lien of the judgments since it was plaintiff's homestead.

The question for decision is whether the owner of a remainder in fee subject to a life estate is entitled to the exemption provided by Minn.St. 510.01 where he is in possession of the house on the tract involved under an oral agreement whereby, in exchange for the support and maintenance of the life tenant, he and his family share the occupancy of the home with her and where the land other than the building site has been leased to another by the life tenant.

There is no Minnesota decision directly in point. Whether the exemption was properly claimed depends on the construction to be given the constitutional and statutory provisions exempting the homestead from seizure or sale. Minn.Const. art. 1, § 12, provides:

'No person shall be imprisoned for debt in this state, but this shall not prevent the legislature from providing for imprisonment, or holding to bail, persons charged with fraud in contracting said debt. A reasonable amount of property shall be exempt from seizure or sale for the payment of any debt or liability. The amount of such exemption shall be determined by law. (Provided, however, that all property so exempted shall be liable to seizure and sale for any debts incurred to any person for work done or materials furnished in the construction, repair or improvement of the same, and provided further, that such liability to seizure and sale shall also extend to all real property for any debt incurred to any laborer or servant for labor or service performed.)'

The sentence in brackets was added to the constitution of 1857 by amendment adopted November 6, 1888. In rural areas the homestead includes any quantity of land not exceeding 80 acres. Minn.St. 510.02.

Minn.St. 510.01 provides:

'The house owned and occupied by a debtor as his dwelling place, together with the land upon which it is situated to the amount hereinafter limited and defined, shall constitute the homestead of such debtor and his family, and be exempt from seizure or sale under legal process on account of any debt now lawfully charged thereon in writing, except such as are incurred for work or materials furnished in the construction, repair, or improvement of such homestead, or for services performed by laborers or servants.'

Appellants contend that plaintiff's interest in the farm is subject to seizure or sale under legal process issued pursuant to the judgment because the realty is not 'owned and occupied' by him as his dwelling place, and further that a judgment for damages caused by a tort is not a 'debt' within the meaning of the quoted statute.

1. It is clear, of course, that plaintiff as owner of the remainder in fee of the 80-acre tract of land upon which the house is situated, subject only to the life estate of his mother, has a present interest in this realty. ¹ This interest, however, does not entitle him to possession or occupancy while the life tenant lives. ² Apart from the support agreement, she, as life tenant, is entitled to exclusive possession of the premises until her death. ³ Appellants reason:

'An examination of the statute clearly indicates that the proper construction of the words 'owned and occupied' requires that there be not only ownership but that such ownership give rise to occupancy, concurrent therewith and * * * dependent thereon.'

While plaintiff has no right to present occupancy based on his ownership of the remainder in fee subject to the life estate, the house is in fact occupied by him and his family. With respect to the house and the land upon which it is situated, he has ownership and occupancy. The ownership of the fee subject to the life estate and the occupancy concur in time but the occupancy does not spring from the ownership. It is argued, therefore, that plaintiff should not be accorded the statutory exemption in light of early cases containing this language:

'* * * the character of the ownership, or of the estate or interest owned, is not material, so that it gives the right of occupancy so that there is a concurrence of ownership and occupancy The former sustaining the latter.' (Italics supplied.) Kaser v. Haas, 27 Minn. 406, 408, 7 N.W. 824, 825.

The decisions in which the quoted expression appears do not control this case. The holding of In re Emerson's Homestead, 58 Minn. 450, 60 N.W. 23, is that a tenant for years is entitled to the exemption when in possession during his tenancy. Kaser v. Haas, 27 Minn. 406, 7 N.W. 824, holds that a tenant in common is entitled to the homestead exemption. Wilder v. Haughey,21 Minn. 101, cited in the Kaser case, declares only that one occupying under a contract for deed is entitled to the exemption. We do not find in these decisions, which extend the exemption, authority for resolving the doubt in this case in appellants' favor. McCarthy v. Van Der Mey, 42 Minn. 189, 44 N.W. 53, also cited by appellants, holds merely that under the law of Minnesota as it existed prior to the enactment of L.1889, c. 46, § 63, et seq., the fee of the homestead of a deceased person, subject to the life estate of the surviving widow, was subject to administration and sale in the probate court.

There is authority from other jurisdictions which supports appellants' claim that the homestead exemption does not operate in favor of the owner of the remainder in fee subject to a life estate even though he be in possession. ⁴ The constitutional and statutory provisions among the states differ in some respects. In addition, considerations of local public policy are so much involved that these decisions do not have the persuasive effect they might in a different situation.

The decisions of this court reflect a disposition to protect the person claiming homestead exemption as against those asserting the right to reach his assets in satisfaction of claims. A creditor is entitled in justice to be paid, and this is true whether his judgment be based on contract or on tort. The homestead exemption law does not relieve one from his moral and legal obligation to pay what he owes. But experience has taught that in the long run obligations are more likely to be fulfilled by those whose connections with the community are stabilized by a protected interest in a relatively permanent place of abode than by those not so anchored. The result is that just claims of a particular claimant may be deferred or defeated. Nevertheless, review of our decisions, with special attention directed to the more recent ones, shows that the policy of giving the debtor 'sanctuary' from just claims in his 'homestead' has prevailed with significant uniformity. By way of illustration: In Wilson v. First Nat. Bank, 239 Minn. 550, 60 N.W.2d 69, 40 A.L.R.2d 894, this court held for the first time that rentals derived from homestead property wholly unoccupied by the owner were exempt by virtue of Minn.St. 510.01 and 510.07. In Holden v. Farwell, Ozmun, Kirk & Co., 223 Minn. 550, 27 N.W.2d 641, it was held that where one of several matured debts was secured by...