First Nat. Bank of Van Hook v. Zook

• Decision Date: 08 December 1923
• Parties: FIRST NAT. BANK OF VAN HOOK v. ZOOK et al.
• Court: North Dakota Supreme Court

50 N.D. 423

196 N.W. 507

FIRST NAT. BANK OF VAN HOOK

v.ZOOK et al.

Supreme Court of North Dakota.

Dec. 8, 1923.

Syllabus by the Court.

An entryman, who lives with his family under a certificate of entry upon government land, for the purpose of ultimately obtaining from the federal government a patent thereto, under the United States homestead statutes, may acquire a homestead right in the premises, under chapter 51 of the Civil Code, C. L. 1913, relating to homestead exemptions, before proof is made or a patent is issued.

A loan by a third party to the purchaser of a relinquishment from an entryman, made for the purpose of purchasing the relinquishment and with the intent and understanding that the purchaser will establish a home upon the premises, is a debt “created for the purchase price” of a homestead, within the provisions of section 5607, C. L. 1913, and a mortgage to such third party to secure the loan, executed simultaneously and as a part of the same transaction, is valid and enforceable, although the wife of the mortgagor does not join in the execution thereof.

The holder of a preliminary mortgage, under the facts stated in the opinion, may advance to the mortgagor the amount of money necessary to make complete proof to the federal government and procure a patent to the land, and may add such advance to the amount of his lien.

Appeal from District Court, Mountrail County; Jno. C. Lowe, Judge.

Action by the First National Bank of Van Hook, N. D., a corporation, against D. Homer Zook and the Citizens' Bank of Minot, N. D., a corporation. Judgment for defendant last named, and plaintiff appeals. Modified.C. N. Cottingham, of Van Hook, for appellant.

B. H. Bradford, of Minot, for respondent.

JOHNSON, J.

This is an appeal from the district court of Mountrail county. The plaintiff brought an action against the defendant, Zook, joining other persons and corporations as defendants, to foreclose a mortgage upon real property. The defendants, other than the Zooks, are lienholders or holders of mortgages which are claimed by the plaintiff to be liens inferior to that of its mortgage. The court found generally against the plaintiff and in favor of the defendant, the Citizens' Bank of Minot, holding that the mortgage of the last-named bank was superior to that of the plaintiff and appellant.

The facts are as follows: On December 5, 1916, the defendant Zook purchased a relinquishment from an entryman on the land described in the mortgage involved in this controversy; on the same day, he borrowed $1,290 from the assignor of the appellant and executed the mortgage in suit to secure the loan. The money was paid to the vendor of the relinquishment on the same day, and it seems from the evidence that the relinquishment was executed and delivered at the same time. The transaction took place in the offices of the assignor of the plaintiff, and the loan was made and the money borrowed for the purpose of purchasing the relinquishment with the intention on the part of the Zooks to establish their home upon and acquire a homestead right in the premises described in the mortgage. This was known and understood at the time by the mortgagor and the mortgagee. The mortgagor was married, but his wife did not join in the execution of the mortgage. At the time of the execution of the mortgage and the procuring of the loan and the purchase of the relinquishment, the mortgagor had not moved upon the land and it appears that he and his wife subsequently established their home upon the premises. The mortgage was recorded in the office of the register of deeds on December 20, 1916. On the 28th day of January, 1921, the wife of the mortgagor signed the mortgage and the note.

On the 24th day of September, 1917, the Zooks executed a promissory note in the sum of $2,117.65 to the defendant, the Citizens' Bank of Minot, and at the same time executed a mortgage upon the premises occupied by them, securing the same. This mortgage was, on the 3d day of October, 1917, filed for record in the office of the register of deeds. The contest for priority is between these mortgagees.

It appears that some time during the month of April, 1919, the appellant furnished the money necessary to complete the proof and make the payment required therefor, with the result that the Zooks became entitled to a patent from the government to the premises. The appellant claims a lien upon the premises to secure this advance.

The respondent, the Citizens' Bank of Minot, contended in the trial court that the mortgage sought to be foreclosed by the appellant was inferior to the mortgage executed by the Zooks on the 24th of September, 1917, because the wife of the mortgagor did not join in the execution of the first mortgage; it also contended that the advance to the federal government to make the payment necessary in order to obtain the patent was a voluntary payment, was made without the request or consent of the Zooks, that they received no benefit therefrom, and that the appellant was not entitled to a lien upon the premises as security therefor. The trial court sustained both of these contentions, and held that the lien of the respondent bank was superior to that of the appellant.

In the trial court, the appellant invoked the statute of limitations against the respondent bank (sections 5609, 5610, C. L. 1913), contending that the Zooks had abandoned the homestead premises more than two years prior to the commencement of the action, and that the respondent bank was precluded from attacking the validity of the appellant's mortgage, on the ground that it covered homestead property and was of no effect, inasmuch as it was not executed by both husband and wife. The trial court held against the appellant, and found that there was no abandonment of the premises by the mortgagors.

Appellant contends, among other things, that the statutory homestead right could not attach, under the circumstances, because the Zooks had not complied with the conditions entitling them to a patent from the federal government, and had, at most, an inchoate right to such a patent, provided they made proof in due form and complied with all the requirements of the federal government. He then says that, inasmuch as the homestead right did not attach, it was not necessary that the wife join in the mortgage.

There are some legal questions raised on this appeal that have not been heretofore decided by this court. The primary questions seem to be:

(1) May an entryman, who lives with his family under a certificate of entry upon government land, for the purpose of ultimately obtaining from the federal government a patent thereto, acquire a homestead right in the premises under chapter 51 of the Civil Code, C. L. 1913, before such proof is made or the patent is issued?

(2) Is a loan by a third party to the purchaser of the relinquishment from an entryman, such loan being made for the purpose of purchasing such relinquishment and with the intention and understanding that the borrower will establish a home upon the premises, a debt “created for the purchase price” of a homestead, within the provisions of section 5607, C. L. 1913? To state the matter differently: Is a third person, who furnishes the purchase money with which the relinquishment is purchased from an entryman, and for the purpose of establishing a home on the premises, entitled to the same rights as the vendor, under section 5607, subd. 3, supra?

(3) May the appellant, holder of a preliminary mortgage, under the facts in the record, advance to the mortgagor the amount of money necessary to make complete proof to the federal government, and procure a patent to the land, and add such advance to the amount of his lien?

[1] It is urged by the appellant that the Zooks cannot claim a homestead under the circumstances. We are unable to see any merit in this contention. The entryman who holds a homestead certificate from the United States government has a possessory right to the premises, which he can successfully maintain against all the world, except against the United States government and “persons claiming by legal and equitable title under it,” 32 Cyc. 821, 822. The primary purpose of the government in opening its vast public domain under the homestead laws was to enable individuals to acquire and own homes; the purpose of the state homestead laws was to preserve the home, howsoever acquired, to the family, regardless of prodigality or misfortune. The wisdom which dictated the policy of the homestead exemption laws did not measure the right to claim a homestead by the quality of the title to the premises which the claimant might have. The beneficent purpose of these and cognate statutory enactments is to build a protective barrier around the home, calculated to save it for the family, alike against the improvidence of the head of the household and the sweeping tide of calamity or financial disaster. Whether the right of the claimant to the premises be in fee, or possessory merely under the United States homestead laws, is wholly immaterial; it is equally the purpose of the homestead exemption laws to preserve the premises as the family home. The homestead right “is impressed on the land to the extent of the interest of the claimant in it,” who has the “actual and rightful possession of the premises. * * *” Gaylord v. Place, 98 Cal. 472, 32 Pac. 484;Watterson v. Bonner Co., 19 Mont. 554, 48 Pac. 1108, 61 Am. St. Rep. 527;State v. Diveling, 66 Mo. 375;Griffin v. Chattanooga S. R. Co., 127 Ala. 570, 30 South....