Horton v. Kelly

• Citation: 40 Minn. 193,41 N.W. 1031
• Parties: HORTON v KELLY ET AL.
• Decision Date: 05 March 1889
• Court: Supreme Court of Minnesota (US)

40 Minn. 193

41 N.W. 1031

HORTONvKELLY ET AL.

Supreme Court of Minnesota.

March 5, 1889.

(Syllabus by the Court.)

1. Where a mortgage covers an exempt homestead and additional lands, the mortgagor is entitled, upon the foreclosure, to have the non-exempt property first sold and applied to the satisfaction of the mortgage debt.

2. And where a conveyance by such mortgagor of that portion of the mortgaged premises not included in the homestead is found to be fraudulent and void, and is set aside at the suit of creditors, it cannot be continued in force as to any of the parties to the deed, and the homestead and dower interests of the grantors will be protected as if no such conveyance had been made.

3. In recognition of such homestead rights of the mortgagor the trial court was justified in refusing to set aside a fraudulent deed of lands mortgaged with the homestead, where the amount due on the mortgage largely exceeded the value of such non-exempt lands, on the ground that the equity of redemption of the mortgagor therein had no substantial value for creditors to reach. Following Baldwin v. Rogers, 28 Minn. 544, 11 N. W. Pep. 77.

Appeal from district court, Olmsted county; START, Judge.

Action by Hiram T. Horton against John B. Kelly and Joseph Kelly to set aside an alleged fraudulent conveyance in order that the premises might be sold to satisfy plaintiff's mortgage. Judgment for defendants, and plaintiff appeals.

Burt W. Eaton and Davis, Kellogg & Severance, for appellant.

C. C. Willson, for respondents.

VANDERBURGH, J.

The debtor John B. Kelly was, as between him and his mortgagee, entitled to have the non-exempt 80-acre tract first applied in satisfaction of the mortgage mentioned in the findings of the trial court. McArthur v. Martin, 23 Minn. 75. The mortgage, which covers an entire quarter section, including the homestead of the mortgagors and the 80 acres in question, is overdue, and the amount due thereon exceeds the value of the non-exempt 80-acre tract by more than $400. This tract, it appears, was transferred by deed by John B. Kelly and wife to their son, the defendant Joseph Kelly, subsequent to the execution of the mortgage, and while the defendant John B. Kelly was owing plaintiff the indebtedness sought to be enforced herein against the land so conveyed. This conveyance is found to have been made with the intent to defraud the creditors of John B. Kelly.

Estoppels by deed bind only parties and privies, and must be mutual. The plaintiff claims in hostility to the alleged fraudulent conveyance; and, if it be set aside in his favor as fraudulent and void, it cannot be considered still in force as to any of the parties to it, so as to prevent the defendant John B. Kelly and his wife from asserting the same rights for the protection of his homestead as if the alleged fraudulent deed had never been executed, and the dower interest of...