Elliott v. Mackorell

• Decision Date: 19 April 1883
• Citation: 19 S.C. 238
• Parties: ELLIOTT v. MACKORELL.
• Court: South Carolina Supreme Court

19 S.C. 238

ELLIOTT

v.MACKORELL.

Supreme Court of South Carolina.

Apr. 19th, 1883.

1. For a trustee to apply money then impressed with a trust in part payment for land, and to give mortgage for balance due, would be a breach of trust. Mathews v. Heyward, 2 S. C. 239. Not so, however, when the trust is created by the deed executed contemporaneously with the mortgage. Barrett v. Cochran, 8 S. C. 49 and 11 S. C. 35.

2. The purpose of the homestead provisions in the constitution was not to create any new estate, or to invest estates already existing with any new qualities, or to subject them to any restrictions, but to secure a right of exemption by forbidding the use of the process of the court to sell certain property for the payment of debts.

3. A homestead is not an estate but a mere right of exemption from seizure and sale for the payment of debt.

4. The constitution does not authorize the legislature to take property away from one man and vest it in another-not even in his wife and children.

5. A debtor has the right to sell or mortgage his homestead after it has been assigned to him, and the legislature has no power to deprive him of such right.

6. A debtor's land was sold under execution, and $1,000 of the purchase-money was reserved as a homestead exemption under an order of court requiring the sheriff to apply such money to the “purchase of a homestead for defendant, under his direction, and that he have leave to take title for the same in the name of his wife and in trust for his children.” Subsequently the sheriff, by defendant's direction, paid the money to the purchaser of this land (who was the execution plaintiff), who made deed to such defendant as trustee for his wife and children, and at the same time took mortgage for a credit portion of the purchase-money. Held, that there was no trust created prior to the execution of this deed and contemporary mortgage; that the transaction was unobjectionable, and that the mortgage was entitled to payment before any application of the proceeds of sale to the purposes of the trust.

MR. JUSTICE MCGOWAN dissenting.

Before WITHERSPOON, J., Fairfield, September, 1882.

The opinion states the case.

Mr. A. S. Douglass, for appellants, cited the several homestead acts and also the following authorities:

Thomp. Homest., §§ 43, 465, 453, 502; Cooley Const. Lim. 442-449, 352; 3 Blacks. Com. 418; Pott. Dwar. 185, 203, 209, 213; 7 S. C. 19; 1 Jones Mort., §§ 731, 466; 2 Id. 1632; 8 S. C. 49;11 Id. 30.

Mr. A. M. Mackey, contra, also cited the homestead statutes and Tiff. & B. Trusts 354; Smythe Homest., §§ 254, 262; Thomp. Homest., §§ 470-473; 1 Perry Trusts 452, 460; Lew. Trusts 138, 802; 2 S. C. 227, 244;7 Id. 1, 149;Herm. Exec. 120; 36 Am. Rep. 730,note; Freem. Exec. 239; Freem. Co-ten. & P., §§ 50, 51.

The opinion of the court was delivered by

MR. JUSTICE MCIVER.

On May 9th, 1877, R. J. McCarley obtained judgment against the defendant, John C. Mackorell, for the sum of $1,136.26, and, under the execution issued to enforce this judgment, the tract of land which is the subject-matter of the present action was levied on by the sheriff. Appraisers were appointed to set off the homestead of the judgment debtor, who certified that they valued the premises levied upon at the sum of $2,275, and that, in their judgment, the premises could not be divided so as to set off the homestead without injury to the remainder. The judgment debtor, John C. Mackorell, waived the sixty days' time allowed him by the act to pay the difference between the appraised value and the amount of the homestead exemption, and, accordingly, the premises were sold by the sheriff on September 3d, 1877, for the sum of $2,232.04 to R. J. McCarley, who complied with his bid by paying to the sheriff $1,000 and the costs, in cash, and receipting on his execution for the balance of his bid, whereupon the sheriff made titles to him in the usual form.

On October 25th, 1877, upon the application of John C. Mackorell, the court ordered “that the said sum of one thousand dollars be applied by the said sheriff to the purchase of a homestead for the said defendant, under the direction of the defendant, and that the defendant have leave to take title for the same in the name of his wife and in trust for the children of the said defendant.” On December 17th, 1877, R. J. McCarley sold and conveyed to John C. Mackorell the premises in question for $2,200, receiving from the sheriff $1,000 in cash, and receipting to him for said sum, as the “amount of defendant's homestead invested by order of the court”; and, to secure the balance of the purchase-money, Mackorell gave to McCarley his bond as trustee for his wife and children, secured by a mortgage of the premises-the title having been made to Mackorell as trustee for his wife and children-the deed, bond and mortgage having been executed simultaneously.

This action is now brought by the plaintiff, who had been appointed receiver of the estate of R. J. McCarley, to foreclose said mortgage, and John C. Mackorell and his wife and children are made parties defendant to the action. The Circuit judge held that the sum of $1,000, held by the sheriff, was a trust fund, and that it was a breach of trust to invest such fund in land which was to be encumbered by a mortgage to secure the credit portion of the purchase-money; that McCarley had notice of such breach of trust, and that the plaintiff, as receiver, was bound to the same extent that McCarley would be; and therefore, that the plaintiff is not entitled to receive any portion of the proceeds of the sale of the mortgaged premises until the said trust fund is replaced. He, therefore, rendered judgment for foreclosure, but provided in the order that the mortgaged premises should be withdrawn from sale unless they brought more than $1,000 and costs; and, if they brought more than that amount, then that the sum of $1,000 should be retained by the clerk, subject to the further order of the court, and that the plaintiff should only be entitled to so much of the excess over said sum of $1,000 and costs as might be necessary to pay the amount due him.

From this judgment the plaintiff appeals upon various grounds which, under the view we take of the case, need not be set out here. The substantial question made by the appeal, and the one upon which the case must turn, is as to the character of the fund of $1,000 in the hands of the sheriff, representing the homestead of the judgment debtor, John C. Mackorell. If that fund had been impressed with a trust before the purchase of the land from McCarley by Mackorell on December 17th, 1877, when the deed and bond and mortgage were contemporaneously executed, then upon the authority of Mathews v. Heyward, 2 S. C. 239, it was a breach of trust to invest the same in land to be encumbered with a mortgage to secure the payment of a portion of the purchase-money, and the mortgagee, McCarley, who must be regarded as having notice, took his mortgage subject to such trust, and cannot enforce it until provision is made for replacing such fund, and the plaintiff who stands in his shoes has no higher right than he has.

But if, on the other hand, such fund was not impressed with any trust until it was created by the deed contemporaneous with the mortgage, then the lien of the mortgage is not impaired by the trust, and the plaintiff is entitled to his judgment of foreclosure in the usual form. Barrett v. Cochran, 8 S. C. 49; same case in 11 S. C. 35. For in that event, as is said in Barrett v. Cochran, where first reported, “The trust must be considered as created by the deed to Barrett [Mackorell], which must be construed together with the mortgage as contemporary acts. The burden on the trust estate was, under this view, created by the very act calling the trust into existence, and its imposition must be deemed consistent with the purposes of the trust.”

The practical question, therefore, in this case is, whether the fund of $1,000 had been impressed with any trust before the execution of the deed from McCarley to Mackorell. To determine this question it is necessary to ascertain what is the nature of the homestead right as created by the constitution and the laws passed in pursuance thereof. It is derived from section 20, article I., and section 32, article II. of the constitution, and is regulated by such acts of the general assembly as have been passed in conformity to these constitutional provisions. Looking to these sections we find nothing indicating a purpose to create or provide for any new kind of estate, as an estate of homestead?? but the manifest purpose and declared object is simply to protect a certain amount of property from levy and sale, under mesne or final process; the language of the one section being: “A?? reasonable amount of property as a homestead, shall be exempted from seizure or sale for the payment of any debts o?? liabilities except for the payment of such obligations as are provided for in the constitution,” while that of the other section, which goes more...