Shepard & Morse Lumber Co. v. Clawson

• Jurisdiction: Oregon
• Court: Oregon Supreme Court
• Citation: Shepard & Morse Lumber Co. v. Clawson, 486 P.2d 542, 259 Or. 154 (Or. 1971)
• Parties: SHEPARD & MORSE LUMBER CO., a corporation, Respondent, v. J. H. CLAWSON and Credit Bureau of Columbia County, Inc., a corporation, Appellants, and Donald Anderson and Elsie Anderson, Defendants.
• Decision Date: 16 June 1971

Page 542

486 P.2d 542

259 Or. 154

SHEPARD & MORSE LUMBER CO., a corporation, Respondent, v. J. H. CLAWSON and Credit Bureau of Columbia County, Inc., a corporation, Appellants and Donald Anderson and Elsie Anderson, Defendants.

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 11, 1970.

Decided June 16, 1971.

George C. Van Natta, St. Helens, argued the cause and filed a brief for appellants.

David O. Bennett, St. Helens, argued the cause for respondent Shepard & Morse Lumber Co. With him on the brief were Bennett, Vagt & Olsen, St. Helens.

Before O'CONNELL, C.J., and McALLISTER, DENECKE, TONGUE, ^* HOWELL, SCHWAB and MENGLER, JJ.

O'CONNELL, Chief Justice.

This is an appeal by two judgment creditors from a decree quieting title to certain real property owned by plaintiff.

The property was originally owned by Guy and Jessie Hendricks, who recorded a notice of homestead exemption on April 4, 1956. On April 12, 1957, three judgments were obtained and docketed against the Hendrickses. These judgments are now held by defendants Clawson and Credit Bureau of Columbia County, Inc.

After the judgments were docketed the Hendrickses conveyed the property to plaintiff. Plaintiff entered into a land sale contract with Donald and Elsie Anderson as purchasers. Subsequently, in 1964 Clawson levied execution on the property and purchased it at sheriff's sale for the amount of the judgments.

In Clawson v. Anderson, 248 Or. 347, 434 P.2d 462 (1967), we set aside the sheriff's sale, holding that the title which plaintiff took as purchaser from the Hendrickses 'carried with it the benefit of the homestead exemption' and that there could not be a legally effective judicial sale of the property unless and until there was a prior determination that the property was worth more than the amount of the homestead exemption ($5,000 at that time). We said:

'In the present case there was no judicial determination that an excess existed at the time of the levy and execution sale. We must hold, therefore, that the execution sale was void and that title did not pass to (Clawson). However, the abortive execution sale would not have the effect of vitiating (Clawson's) judgment and consequently, if the judgment is not invalid upon other grounds, (Clawson) may proceed by way of a creditor's bill to establish his interest, if any, in the propety.' 248 Or. at 352--353, 434 P.2d at 465 (1967).

The judgments were renewed in ex parte proceedings in 1965 and 1966. As a result of the decision in Clawson v. Anderson, Supra, plaintiff's title to the property was affirmed subject, of course, to the contract interest of the Andersons and the judgment liens which had been renewed; but these judgments were, in turn, subject to the $5,000 homestead exemption which followed the property when it was conveyed to plaintiff.

Although it was held in Clawson v. Anderson that Clawson had the right to proceed by way of a creditor's bill to assert whatever rights he had as the holder of the judgments, Clawson never asserted that right. To resolve the question of the judgment creditor's interest in the property, plaintiff brought the present suit to quiet title.

The trial court entered the following decree:

'DECREED that any rights the defendants may have in the hereinafter described property is in excess of the value of the homestead in said property based upon the value of the property at the time of the conveyance thereto to plaintiff by Guy H. Hendricks and Jessie M. Hendricks on April 12, 1957; and it is further

'DECREED that the value of the property at the time of the conveyance to plaintiff on April 12, 1957, was the sum of $7,800; and it is further

'DECREED that the defendants J. H. Clawson and Credit Bureau of Columbia County, Inc. are entitled to the excess of the value of the property over the homestead in the amount of $2,800; * * *'

Clawson and the credit bureau appeal, contending that they are entitled to a recovery based on the value of the property at the time of the present suit rather than the value on April 12, 1957, the date of the conveyance by the Hendrickses to plaintiff (less the $5,000 homestead exemption).

If the property purchased by plaintiff had not been claimed as a homestead, it would be clear that the judgment creditors could postpone the levy of execution on their judgments and be entitled to have the amount realized at the execution sale applied toward the satisfaction of their judgments; the judgment creditors would not be limited to the value of the property at the time it was transferred by the debtor to his grantee.

The same principle should be applied when the property transferred is homestead property. The judgment lien should attach to the extent that the value of the land exceeds the statutory amount of the homestead exemption whether that surplus amount existed at the time of the sale by the homestead owner or arose later as a result of an increase in the value of the land.

If the land had remained in the ownership of the homestead claimant, any increase in the value of the land above the amount of the homestead exemption would be subject to sale on execution to apply on the judgment. There is no reason for any different rule merely because at the time the judgment creditor decides to enforce his judgment lien the land is held by a transferee of the homestead claimant. There is nothing in the language of our homestead exemption statutes which calls for a different result and we have been unable to think of any policy underlying the homestead exemption which would warrant a statutory interpretation limiting the judgment creditor's lien to the value of the land at the time of the sale by the homestead claimant.

Plaintiff contends that it is immaterial whether the value of the property is fixed at the time of transfer or at the date of the execution sale because in any event the judgments are void. This contention rests upon the ground that because the...