Smith v. Hart

• Decision Date: 12 March 1926
• Docket Number: 6070.
• Citation: 207 N.W. 657,49 S.D. 582
• Parties: SMITH, State Superintendent of Banks, v. HART (HART et al., Garnishees).
• Court: South Dakota Supreme Court

207 N.W. 657

49 S.D. 582

SMITH, State Superintendent of Banks, v. HART (HART et al., Garnishees).

No. 6070.

Supreme Court of South Dakota

March 12, 1926

Appeal from Circuit Court, McCook County; L. L. Fleeger, Judge.

Action by F. R. Smith, as State Superintendent of Banks, acting in charge of and on behalf of the Dakota State Bank of Salem against W. H. Hart and M. A. Hart and another, garnishees. From an order releasing a certain sum from garnishment plaintiff appeals. Order reversed.

R. M Sheild, of Salem, for appellant.

H. Van Ruschen, of Salem, for respondent.

CAMPBELL J.

This action was brought to enforce defendant's liability under Const., art. 18, § 3, and section 8937, Code 1919, as stockholder in the failed Dakota State Bank of Salem. Garnishment process was served upon the garnishee Struck, who disclosed in response thereto that she had under her control the sum of $4,000 payable to defendant on a contract whereby she was purchasing from the defendant his homestead in Salem. It appears that the homestead property had a total value of $4,500; the sum of $500 having been previously paid by the garnishee to the defendant as part of the purchase price pursuant to the contract between them. Thereafter, upon application of the defendant, the court made and entered an order reciting that said sum of $4,000 so disclosed was the proceeds of sale of defendant's homestead, and, as such, absolutely exempt to the defendant, and releasing the same from any lien of the garnishment process, from which order plaintiff appeals.

The case presents but one question, and that is whether or not, under the circumstances of this case, the proceeds of a voluntary sale of homestead, being less than $5,000, are exempt from garnishment.

Under section 2658, Code 1919, in the event of a forced sale of the homestead under execution, the first $5,000 of the proceeds must be paid to the debtor, and it is provided that-

"*** In such case the said sum of $5,000 herein provided to be paid to such debtor shall be exempt from execution, or other process, for one year after the receipt thereof by the person entitled to the exemption; and if re-invested in a homestead the same shall be entitled to the same exemption as the original homestead."

Under this statute respondent contends that, in the event of forced sale, the proceeds of the homestead to the extent of $5,000 in the hands of the debtor are absolutely exempt for the full period of one year, regardless of what disposition may be intended thereof, and regardless of what disposition may actually be made thereof during the year, and respondent by analogy would have this court apply the same rule to the proceeds of voluntary sale of the homestead. The statutes in many states make specific provision with reference to exempting proceeds of voluntary sale of homestead, in varying amounts up to the entire equivalent of the homestead exemption, under varying circumstances, and for varying periods of time. We have no such statute in this state. The statute above recited by its terms applies only to proceeds in the case of execution sale, and to apply it to voluntary sale would be the most palpable sort of judicial legislation.

Section 463, Code 1919, however, provides as follows:

"Change of Homestead, Limitations. The owner may from time to time change the limits of the homestead by changing the metes and bounds, as well as the record of the description, or may change it entirely; but such changes shall not prejudice conveyances or liens made or created previously thereto; and no such change of the entire homestead made without the concurrence of the husband or wife shall affect his or her rights or those of the children."

And respondent contends that, in order to give full effect thereto, the homestead claimant must be able to make a voluntary sale of one homestead and purchase another, and further, to accomplish this end the proceeds of the sale must be treated as exempt for a reasonable time while they are "in transitu," so to speak, from the first homestead to the second. On this particular proposition there seems to be a...