First Alabama Bank of Dothan v. Renfro

• Decision Date: 11 May 1984
• Citation: First Alabama Bank of Dothan v. Renfro, 452 So.2d 464 (Ala. 1984)
• Parties: FIRST ALABAMA BANK OF DOTHAN v. Robert RENFRO, as Trustee of Donald Earl Crawford. 82-612-CER.
• Court: Alabama Supreme Court

Page 464

452 So.2d 464

FIRST ALABAMA BANK OF DOTHAN v.Robert RENFRO, as Trustee of Donald Earl Crawford.

82-612-CER.

Supreme Court of Alabama.

May 11, 1984.

Barry Bledsoe of Byrd & Carter, Dothan, for appellant.

C.H. Espy, Jr. of Farmer, Price, Espy & Smith, Dothan, for appellee.

Certified Question from the United States District Court for the Middle District of Alabama

ADAMS, Justice.

Pursuant to Rule 18, A.R.A.P., the United States District Court for the Middle District of Alabama requests this court to answer questions of law which are deemed determinative of an action before that court and as to which there is no clear controlling precedent in the decisions of this court.

In support of the certificate, the federal district court submits the following:

"1.STYLE OF THE CASE: The style of the case in which this certificate is made is First Alabama Bank of Dothan vs. Robert Renfro, as Trustee of Donald Earl Crawford, being Civil ActionNo. 82-220-S, United States District Court for the Middle District of Alabama.

"2.STATEMENT OF THE FACTS: Prior to February 20, 1981, Donald Earl Crawford owned a Flamingo mobile home, SerialNo. 9053.This mobile home was not attached to real property and is not claimed by Crawford to be real property.Instead, the parties agree the mobile home is personal property.

"On February 20, 1981, and before that date, Crawford's Flamingo mobile home was the principal residence of Crawford and his wife.On February 20, 1981, Crawford, along with his brother, mother and father, signed a promissory note in the amount of $115,325.07 with the Plaintiff-Appellant, First Alabama Bank of Dothan.As security for this note, Crawford signed a security agreement offering, among other things, his Flamingo mobile home as collateral for said loan.The $115,325.07 note contains the standard waiver of homestead exemption language.The Bank properly recorded a UCC-1 financing statement in February, 1981, showing the Flamingo mobile home as collateral.The Bank had a perfected security interest in the Flamingo mobile home on the date Crawford filed his Petition in Bankruptcy.The Bank's security interest in Crawford's Flamingo mobile home is not a purchase money security interest.

"The Bank does not have a waiver of homestead by separate instrument executed by Crawford, and the Bank does not have a separate acknowledgment or execution of any waiver of homestead exemption by Crawford's wife.The only waiver of homestead exemption is contained in the commercial note executed by Crawford.Crawford's Flamingo mobile home has been, and is through the date of these proceedings, the principal residence of Crawford and his wife.The fair market value of the Flamingo mobile home is less than $3,000.00, and the debt owed to the Bank exceeds the value of the mobile home.Except for the right to assert his homestead exemption, Crawford has no equity in the mobile home.

"On or about March 2, 1982, Crawford filed a Chapter 7 Petition in the United States Bankruptcy Court for the Middle District of Alabama.In May, 1982, the Bank filed a Petition for Reclamation of Crawford's Flamingo mobile home.The Bank's petition was heard on July 14, 1982.At the hearing held on July 14, 1982, after consulting with the Bank's attorney concerning the Bank's having obtained the proper waiver of exemption, Crawford's attorney withdrew Crawford's claim that the Flamingo mobile home was exempt, that the Bank had no purchase money security interest and that it was a homestead.

"By Order dated July 16, 1982, the Bankruptcy Court granted the Bank's Petition for Reclamation and ordered Crawford to turn over the property to the Bank within 14 days from the July 16, 1982, Order.On or about July 21, 1982, Crawford filed a motion to reconsider the Bankruptcy Court's Order of July 16, 1982.The motion to reconsider was set down for hearing before Judge Rodney R. Steele on September 8, 1982.On September 8, 1982, a hearing was duly held on Crawford's motion to reconsider.Prior to this hearing, the parties entered into a written stipulation of facts that was presented to Judge Steele for his consideration.In addition to the written stipulation of facts, there were certain other facts orally stipulated that have been incorporated in this Statement of the Facts.

"On October 8, 1982, Judge Steele entered an Order in which he ruled that the Bank's security interest is totally void as against the Flamingo mobile home claimed exempt by Crawford and that Crawford have this mobile home in the bankruptcy proceedings free and clear of the lien of the Bank.

"The Bank timely filed its Notice of Appeal to the United States District Court for the Middle District of Alabama on October 18, 1982.The Bank contends that, since the mobile home was admittedly personal property owned solely by the Bankrupt at the time the security instrument was executed but in which the Bankrupt had no current equity or interest, either the Bankrupt (Crawford) has no homestead exemption or the waiver of exemption stated in the note pursuant to CODE OF ALABAMA, § 6-10-121, validly waived the exemption as to the Bank's claim.CODE OF ALABAMA, § 6-10-6, provides that the personal property of a resident of Alabama to the extent of $3,000.00 in value, and otherwise as to matters not here pertinent, is exempt.CODE OF ALABAMA, § 6-10-121, provides that a waiver of a personal property exemption may be made by separate instrument or it may be included in a promissory note, as was done in this case, or otherwise in ways not here pertinent.CODE OF ALABAMA, § 6-10-2, limits the homestead exemption to "the extent of any interest" of the homesteader.

The defendantTrustee contends that, since the mobile home was Crawford's homestead (even though Crawford had no equity in it), the mobile home was exempted to Crawford pursuant to CODE OF ALABAMA, § 6-10-2 and that waiver of that exemption was void because it was not executed pursuant to CODE OF ALABAMA, §§ 6-10-3and6-10-122.Section 6-10-2 provides in pertinent part:

" 'The homestead ... with the improvements and appurtenances, not exceeding in value $5,000.00 and in area 160 acres, shall be, to the extent of any interest he or she may have therein, whether a fee or less estate or whether held in common or in severalty, [is] exempt....For purposes of this section and sections 6-10-38and6-10-40, a mobile home ... if the principal place of residence of the individual claiming the exemption, shall be deemed a homestead.'

"Section 6-10-3 provides, in part:

" 'No mortgage, deed or other conveyance of the homestead by a married person shall be valid without the voluntary signature and assent of the husband or wife, ...' duly acknowledged.

"Section 6-10-122 provides, in part:

" 'As to the homestead, the waiver must be by a separate instrument in writing, subscribed by the party ... and attested by one witness.If such party is a married man, such waiver shall not be valid without the voluntary signature and assent of the wife and acknowledgment by her before an officer authorized to take acknowledgments, ....'

"It is conceded that the conveyance and the waiver of the claimed exemption were not executed in accordance with the law pertinent to homestead exemptions but that they were executed in accordance with the law pertinent to personal property exemptions.It is also conceded that Crawford has no remaining equity in the mobile home, but the DefendantTrustee contends that Crawford, nonetheless, has an 'interest therein within the meaning of the phrase in § 6-10-2 limiting the homestead exemption to the extent [of any interest]he or she may have therein.'

"3.THIS COURT, THEREFORE, CERTIFIES THE FOLLOWING QUESTIONS TO THE SUPREME COURT OF ALABAMA: A.Does the maker of a security instrument on personalty in which he has no equity have an interest in the personalty within the meaning of the word "interest" as used in the clause of the homestead exemption law, CODE OF ALABAMA, § 6-10-2, whereby the homestead exemption is limited 'to the extent of any interest' the maker may have therein?

"B.Is a mobile home, which is personal property but is occupied as the principal place of residence of the individual claiming the exemption and, therefore, under the provisions of CODE OF ALABAMA, § 6-10-2, a 'homestead' for the purposes of §§ 6-10-2,6-10-38and6-10-40, also to be considered a 'homestead' for purposes of §§ 6-10-121,6-10-3and6-10-122, that is, for purposes of determining whether it may be alienated pursuant to the provisions of law pertinent to alienating personal property [ § 6-10-121] or to those laws pertinent to alienating the homestead [ §§ 6-10-3and6-10-122]?"

The answer to the first question must be "no."For purposes of this question, we look to the first part of § 6-10-2:

The homestead of every resident ... with the improvements and appurtenances, not exceeding in value $5,000.00 and in area 160 acres, shall be, to the extent of any interest he or she may have therein, whether a fee or less estate or whether held in common or in severalty, exempt ....

The facts of this case indicate that the fair market value of the mobile home offered by Crawford as security for the loan in question is less than $3,000.00, while the debt owed to the bank exceeds that amount.Thus, if the bank's security interest in the mobile home is valid, Crawford has no equity in the mobile home to provide him with an interest to which the homestead exemption could attach.This conclusion is consistent with this court's holding in Franklin v. Comer, 170 Ala. 229, 54 So. 430(1911).In that casethis court held:

There being a valid and subsisting incumbrance on the homestead, the defendant had only an interest therein subject to said incumbrance, the amount of which was properly deducted from the value of said homestead; and if his interest, after deducting the amount of the mortgage, did not exceed $2,000 in value, it was...