Rose v. Smith

• Decision Date: 19 February 1902
• Parties: ROSE v. SMITH et al., Appellants
• Court: Missouri Supreme Court

66 S.W. 940

167 Mo. 81

ROSE v. SMITH et al., Appellants

Supreme Court of Missouri, First Division

February 19, 1902

Appeal from Ralls Circuit Court. -- Hon. D. H. Eby, Judge.

Reversed.

J. D Hostetter for appellants.

(1) No disposition a debtor may make of a homestead or other exempt property can be fraudulent as to creditors. It is no concern of creditors what he does with the exempt property. The creditor has no claim thereon and a general judgment constitutes no lien thereon, and a sale of the same conveys a good title free from the claims of the grantor's creditors whether reduced to judgment or not. Vogler v Montgomery, 54 Mo. 577; State v. Diveling, 66 Mo. 375; Davis v. Land, 88 Mo. 436; Holland v Kreider, 86 Mo. 59; Kendall v. Powers, 96 Mo. 142; Bank v. Guthrey, 127 Mo. 193; Creech v. Childers, 156 Mo. 338; Brewing Ass'n v. Howard, 150 Mo. 450; Buck v. Ashbrook, 59 Mo. 200; Bartels v. Kinnenger, 144 Mo. 370. (2) Proceeds of one homestead put into another, and followed by an abandonment of the first one, and an occupancy of the second one, makes the second homestead exempt against all debts not older than the date of the record of the deed to the first one or the acquisition of title by inheritance thereto. Sec. 3623, R. S. 1899; Bechman v. Meyers, 75 Mo. 333; Farra v. Quigly, 57 Mo. 284; Burnes v. Bangert, 92 Mo. 167; Smith v. Enos, 91 Mo. 579; Creath v. Dale, 84 Mo. 349; Goode v. Lewis, 118 Mo. 357; Macke v. Byrd, 131 Mo. 682. (3) The homestead rights of Smith and his wife are in no manner affected by his conveyance of the Center residence to her. Such a conveyance being of the homestead could not be fraudulent, neither would it in the least alter their homestead rights as against the plaintiff's debt. A husband may have a homestead in real estate, the title to which is vested in the wife. Casler v. Gray, 159 Mo. 588; Kendall v. Powers, 96 Mo. 142; Richter v. Bohnsack, 144 Mo. 516; Bartels v. Kinnenger, supra. (4) It may be argued, on behalf of respondent, that because the identical dollars which were realized out of the $ 1,500 incumbrance placed on their first homestead were not used in paying for the second one, therefore it was not procured with the proceeds of the first. Still, in conformity with the general tendency of the courts, the same liberal construction in favor of the homesteader should be given in this case. Without the $ 1,500 derived from the deed of trust conveyance of the first homestead the second one could not have been paid for. The fact that the homesteader may have used other money with which to pay for his new homestead instead of the identical money borrowed from the incumbrance placed on the first one, was simply a matter of convenience, and does not alter the fact that he abandoned the first for the second. There is no question but that a deed of trust is such a disposition of the homestead as is contemplated by the statute, section 3623, Revised Statutes 1899. The giving of a deed of trust on the homestead cuts off all rights of the grantors in such conveyance against a purchaser under a trustee's sale thereunder. Markwell v. Markwell, 157 Mo. 326; Kopp v. Blessing, 121 Mo. 391.

Roy & Hays and Ed. L. Alford for respondent.

(1) The execution by Smith and wife of the deed of trust on their interest in the Pike county farm was not a "sale or other disposition of such prior homestead" as provided by section 3623, Revised Statutes 1899. Said deed of trust was to secure a note for $ 1,500 due one year after the date thereof. The condition thereof was not broken until one year after the execution thereof. Regardless of whether the $ 1,500 debt was the full value of said homestead, the defendants, after the execution of the deed of trust, were still owners of a homestead in said farm as before. Dickerson v. Bridges, 147 Mo. 235; Masterson v. Railroad, 72 Mo. 342; Woods v. Hildebrand, 46 Mo. 284; Logan v. Railroad, 43 Mo.App. 75; Fisher v. Johnson, 51 Mo.App. 162. It has been repeatedly held in this State that after the execution of a mortgage on the homestead, the mortgagee is entitled to a homestead in the equity of redemption, and it is not lost until a foreclosure of the mortgage. State ex rel. v. Neason, 88 Mo. 222; Elstroth v. Young, 83 Mo.App. 253; Pearman v. McKee, 79 Mo.App. 210; Meyer v. Nickerson, 101 Mo. 184; Casebolt v. Donaldson, 67 Mo. 308. As the defendants, after the execution of the deed of trust, still had a homestead in the farm, they could not have a homestead in the money borrowed from Rose or in any property purchased with it. (2) The $ 1,500 borrowed from Rose, for which the deed of trust was given, was not used by the defendants to pay for the property in controversy. The defendants say that $ 1,100 of it was used for that purpose, but they are thoroughly contradicted by other evidence, as follows. The books of the bank at Curryville show deposit of $ 1,500 to credit of Smith on the day of execution of deed of trust. Briggs says that Smith paid him for a livery stable with a check on Bank of Curryville for $ 1,370 in addition to $ 5 cash previously paid. This payment was made three or four weeks before the deed for the house in controversy was made to the Smiths. The statement of defendant Smith's account with the Bank of Curryville shows that he had no other money in that bank at the time of the purchase of the livery stable except the $ 1,500 borrowed from Rose. The house and lot in controversy were purchased on May 9, 1892, several days after all the money in Bank of Curryville had been paid out by Smith, so that not a dollar of the $ 1,500 went into the house and lot. This fact is virtually conceded by appellant, and the contention is made that a liberal construction of the statute will support the claim of homestead, in this case. Such would not be a liberal construction but a repudiation of the statute. Casebolt v. Donaldson, supra.

OPINION

MARSHALL, J.

In 1892, E. C. Smith and wife owned four-sevenths interest in two hundred and five acres of land in Pike county. The wife owned one-seventh by inheritance, and the husband three-sevenths by purchase. The value of their interest was $ 1,500. It was the homestead of the family. Smith and wife mortgaged the homestead to the plaintiff for $ 1,500. Then Smith purchased a livery stable and a house in the town of Center, Ralls county. The house was worth $ 600 to $ 1,000, and stood upon a lot 252 feet by 90 feet. The contract for the livery stable and the house was an entirety, and five dollars earnest money was paid to bind it. The livery stable was priced at $ 1,375, and the house at $ 1,100. Smith stated to Rose that he was borrowing the $ 1,500 to buy the livery stable. The loan was made on April 2, 1892. On April 5, Smith paid $ 1,370 for the livery stable and received a deed for it. The five dollars earnest money was applied to make up the difference between the $ 1,370 paid, and the $ 1,375, the agreed price. This $ 1,370 was paid out of the $ 1,500 borrowed. This left $ 130 of the $ 1,500 so borrowed. To this $ 130 Smith added the money he received from the sale of some stock and farm implements, and on May 9, 1892, he paid for and received a deed to the house. Smith thereupon abandoned his homestead on the farm and moved into the town house and established his homestead thereon, and has continued to use and occupy it ever since. In 1894, Smith conveyed the new homestead to his wife. In 1896, the $ 1,500 loan on the farm having matured and Smith being unable to pay it, the plaintiff foreclosed the deed of trust and became the purchaser for $ 1,250. After crediting that sum on the debt of $ 1,500 and the interest due, he brought suit for the deficit and obtained a judgment for $ 700. Under this judgment, he levied upon the new homestead, had it sold under execution and became the purchaser for $ 5. The day before the judgment for the deficit was rendered, Smith and wife sold the new property to Mrs. Smith's brother, the defendant Ogle. The consideration was two hundred dollars that Ogle had loaned his sister, Mrs. Smith, and four hundred and fifty dollars in cash. The plaintiff then brought this proceeding in equity and asked that the deeds from Smith to his wife and from Mrs. Smith to Ogle be declared fraudulent, and be set aside, and for possession of the property, etc. The circuit court rendered judgment as prayed, and the defendants appealed.

I.

The head of a family may sell or mortgage his homestead, whether he be solvent or insolvent, and his creditors can not impeach the sale, for having no claim upon the homestead their rights are not impaired. [Bank v. Guthrey, 127 Mo. l. c 189, 29 S.W. 1004; Creech v. Childers, 156 Mo. 338, 56 S.W. 1106; Brewing...