Hoffman v. Love

• Decision Date: 12 April 1973
• Docket Number: No. 18063,18063
• Citation: 494 S.W.2d 591
• Parties: Leonard E. HOFFMAN, Jr. and W. R. Sessions, Appellants, v. Frank LOVE, Appellee.
• Court: Texas Court of Appeals

Page 591

494 S.W.2d 591

Leonard E. HOFFMAN, Jr. and W. R. Sessions, Appellants, v. Frank LOVE, Appellee.

No. 18063.

Court of Civil Appeals of Texas Dallas.

April 12, 1973.

Rehearing Denied May 3, 1973.

W. R. Sessions, Sessions & Sessions, Dallas, for appellants.

Edward Drake, Brady, Drake & Wilson, Dallas, for appellee.

GUITTARD, Justice.

Our questions are (1) whether a purchaser of a residence from an owner who occupied it as a homestead has standing to claim the homestead exemption against a lien asserted by the former owner's judgment creditor and (2) the extent of the excess subject to the lien in an urban lot which was worth more than the $5,000 exemption at the time of its designation as homestead and has increased substantially in value at the time of foreclosure of the lien.

1. Purchaser's standing to claim homestead.

For simplicity we shall discuss the standing of the purchaser to claim the exemption as if no excess were involved and omit any reference to the excess until later in this opinion.

In 1955 Robert Karll and wife acquired a house and lot and began to occupy it as their homestead. In 1960 plaintiffs recovered a judgment against Karll in the amount of $33,976, with interest. Plaintiffs brought the present action against Karll and wife in 1964 to discover assets and to enforce their judgment lien against the property in question. The Karlls filed only a general denial. The action remained pending in this status until April 1969, when the Karlls sold the property to Frank Love, who subsequently filed a petition in intervention alleging that the property continued as the Karll's homestead until it was sold to him. The Karlls made no further appearance in the litigation. At the trial the jury found that Karll did not abandon the property as his homestead before April 1969, when he sold to Love. The trial judge rendered judgment on the verdict allowing the exemption, and plaintiffs appeal.

Plaintiffs contend that the homestead exemption is personal and cannot be asserted by a purchaser. We hold that the purchaser has standing to assert that the judgment lien never attached to the property before it was sold to him. The controlling constitutional provision is Vernon's Ann.St.Tex.Const. art. XVI, § 50, which provides in part, as follows:

'The homestead of a family shall be, and is hereby protected from forced sale, for the payment of all debts except for the purchase money thereof, or a part of such purchase money, the taxes due thereon, or for work and material used in constructing improvements thereon . . .. No mortgage, trust deed, or other lien on the homestead shall ever be valid, except for the purchase money therefor, or improvements made thereon . . ..'

This provision protects the family of a judgment debtor against forced sale of the homestead and renders invalid ony lien against it, with only the exceptions stated. Consequently a judgment, though duly abstracted never fixes a lien on the homestead so long as it remains homestead. The judgment debtor may sell it and pass title free of any judgment lien, and the purchaser may assert that title against the judgment creditor. Mayers v. Paxton, 78 Tex. 196, 14 S.W. 568 (1890); Black v. Epperson, 40 Tex. 162, 188 (1874); Johnson v. Echols, 21 S.W.2d 382 (Tex.Civ.App., Eastland 1929, writ ref'd). Moreover, the exemption has been interpreted as allowing a judgment debtor to sell and dispose of the homestead without restraint. Mauro v. Lavlies, 386 S .W.2d 825 (Tex.Civ.App., Beaumont 1964, no writ). In order to meet the needs of his family he may sell one homestead and invest the proceeds in another. Watkins v. Davis, 61 Tex. 414 (1884). This right is facilitated by Vernon's Tex.Rev.Civ.Stat.Ann. art. 3834, which extends the exemption to the proceeds of the sale of the homestead for a period of six months.

None of these rights would be adequately protected if a purchaser of the homestead were unable to assert the invalidity of the lien. A prudent purchaser would not be likely to pay full value if the lien could be attacked only by his vendor, who may have little interest in the matter after he receives the purchase money and moves away from the property.

Of course, a judgment lien attaches to the judgment debtor's interest if he abandons the property as his homestead before he sells it, but the jury here found no abandonment, and none of plaintiffs' points attack that finding as without support in the evidence.

Plaintiffs argue that the homestead exemption may be waived by failing to assert it in litigation in which it would have been material and that the Karlls waived the exemption here by failing to claim it in their answer or in any other pleading before they abandoned the property as homestead by conveying it to intervenor. Thus, plaintiffs insist that intervenor must take the litigation as he found it and cannot assert the exemption which the Karlls themselves failed to assert.

Although this argument has a ring of plausibility, we cannot accept it. No adjudication of the lien or of the homestead claim was made before intervenor bought the property, as in such cases as Nichols v. Dibrell, 61 Tex. 539 (1884) and Benson v. Mangum, 117 S.W .2d 169 (Tex.Civ.App., San Antonio 1938, writ ref'd). The Karlls' failure to plead the homestead exemption cannot be taken as a waiver of the exemption because they could have amended their answer and claimed the exemption at any time before the sale. After the sale intervenor was the party directly interested, and if the judgment lien had not attached before he bought it, no lien attached to the property in his hands under the authorities above cited.

The contention that the homestead exemption is personal to the judgment debtor was before this court in Englander Co. v. Kennedy, 424 S.W.2d 305 (Tex.Civ.App., Dallas 1968, writ ref'd n.r.e.), and was overruled with the observation that the judgment debtor did assert his personal right to the homestead by using and enjoying it as a home until he sold it. Accordingly, the court held that a subsequent purchaser of the homestead was entitled to have his title quieted as against the judgment creditor. We do not interpret this decision as limited to a situation in which the homestead claimants are in actual occupancy of the homestead. Tex.Const. art. XVI, § 51 expressly provides, '(a)ny temporary renting of the homestead shall not change the character of the same, when no other homestead has been acquired.' This language, together with article XVI, § 50 above quoted, establishes beyond doubt the rule that a judgment lien does not attach to a homestead merely on the judgment debtor's removal from the property. No lien attaches until he abandons it as his homestead, and if he does not abandon it before he sells it, his conveyance is free of the judgment lien. The failure of the Karlls to claim the homestead in their answer was not an abandonment as a matter of law. Consequently, we hold that intervenor has standing to assert that no judgment lien had attached.

2. Excess subject to lien.

We turn now to the problem of determining the excess subject to plaintiffs' judgment lien. The jury found that the value of the lot without improvements in 1955, when the Karlls began to occupy the property as their home, was $12,250, and that its value in 1969, when sold to intervenor Love, was $36,750. The record shows that intervenor paid $67,500 for the lot and existing improvements and added $40,000 in further improvements. Plaintiffs' judgment against Karll was for $33,976 and interest, which amounted to $17,915 at the time of the sale.

Plaintiffs contend that the excess should be determined by considering the value at the time of the sale to intervenor, and, therefore, it amounts to $31,750, the value of the lot at that time less the $5,000 exemption. Intervenor contends that the dollar amount of the excess should be determined at the time of the original designation of the homestead by the Karlls in 1955. Accordingly he argues that the excess amounts to $7,250, the value of the lot at that time above the exemption. The learned trial judge rejected both of these contentions. He found that when the Karlls acquired the property, the lot was exempt in the proportion which the $5,000 exemption bore to the $12,250 value at that time, so that 20/49 ($5,000 out of $12,250) was exempt and 29/49 ($7,250 out of 12,250) was subject to the lien. He apportioned the increase in value in the same ratio and held that $15,000 of the value (20/49 of $36,750) was exempt and $21,750 (29/49 of $36,750) subject to the lien. The judgment orders the property sold and allows plaintiffs satisfaction of their lien out of the proceeds to the extent of $21,750.

We conclude that the trial court adopted the correct rule for apportioning the increase in value between the exempt interest and the excess, although we do not approve all the terms of the judgment . The controlling constitutional provision is Tex.Const. art. XVI, § 51, as follows:

'The homestead, not in a town or city, shall consist of not more than two hundred acres of land, which may be in one or more parcels, with the improvements thereon; the homestead in a city, town or village, shall consist of lot, or lots, not to exceed in value five thousand dollars, ¹ at the time of their designation as the homestead, without reference to the value of any improvements thereon; provided that the same shall be used for the purposes of a home, or as a place to exercise the calling or business of the head of a family. . . .'

The history of this section and earlier constitutional and statutory provisions indicate that the purpose of the language, 'at the time of their designation as the homestead,' was to make sure that the protection afforded to the family by the homestead exemption should not be reduced by inflation of land values. Swayne v. Chase, 88 Tex. 218, 30 S.W. 1049 (1895); Tex.Const.Ann. art. XVI, § 51 (1955), comment....