TITLE INS. CO., ETC. v. Agora Leases, Inc.

• Citation: 320 NW 2d 884
• Decision Date: 25 June 1982
• Docket Number: No. 81-438.,81-438.
• Parties: TITLE INSURANCE COMPANY OF MINNESOTA, John R. Lugar, and Bonnie L. Lugar, Respondents, v. AGORA LEASES, INC., Appellant.
• Court: Minnesota Supreme Court

320 N.W.2d 884 (1982)

TITLE INSURANCE COMPANY OF MINNESOTA, John R. Lugar, and Bonnie L. Lugar, Respondents, v. AGORA LEASES, INC., Appellant.

No. 81-438.

Supreme Court of Minnesota.

June 25, 1982.

Maun, Green, Hayes, Simon, Johanneson & Brehl, Richard D. Donohoo and Larry B. Guthrie, St. Paul, for appellant.

Levin & Rohleder, St. Paul, James C. Yecker, Minneapolis, for respondents.

Considered and decided by the court en banc without oral argument.

AMDAHL, Chief Justice.

Defendant Agora Leases, Inc., appeals from a judgment declaring certain real estate and the proceeds from its sale free from a judgment lien under the homestead exemption statutes. Minn.Stat. §§ 510.01-.09 (1980). The crucial issue is whether the statutory exemption extends to lands in excess of the defined land area limits in a situation in which the excess has no direct value to the judgment creditor. We conclude that the statute must be given its unequivocal meaning that the exemption is measured by land area alone. Accordingly, we reverse and remand for further proceedings, if any.

The facts are not seriously disputed. On July 18, 1979, Agora obtained a judgment against one Angeline Mahmood on a business debt of $9,901. At that time Mahmood owned .77 of an acre of land located in the platted portion of the City of Maplewood. She occupied the property as her homestead until November 28, 1980, when she sold it to John R. and Bonnie L. Lugar.

One of the terms of the sale to the Lugers was that $14,000 of the purchase price be placed in escrow until Mahmood could obtain a judgment or release freeing the property from Agora's lien. Mahmood commenced this suit to remove the lien as a cloud on the title. The trial court found that if the parcel is divided into a statutorily exempt one-half acre portion containing the buildings and a .27-acre unimproved portion, the .27-acre portion would be neither saleable nor usable by Agora. There is no separate access to the .27-acre portion as set apart by Mahmood because of roadway and lakeshore easements. A lot of such small size cannot be built upon under applicable ordinances, and a deed conveying it would not be recordable. However, the land would be of value to a contiguous owner for whom none of these problems exists. The trial court removed the lien, reasoning that the lack of value of a .27-acre portion standing alone rendered the entire parcel exempt. Before the time to appeal expired, the escrowed funds were released to Mahmood and she filed bankruptcy. We granted a motion allowing the Title Insurance Company of Minnesota and the Lugars to be substituted in her place as real parties in interest.

Minn.Stat. §§ 510.01-.09 (1980) govern the exemption of homestead property from liability for debts. We have consistently construed these provisions liberally in favor of the debtor due to their constitutional roots¹ and the strong social policy of securing the home against the uncertainties and misfortunes of life. See Northwestern National Bank of South St. Paul v. Kroll, 306 N.W.2d 104, 105 (Minn.1981). From the beginning of statehood our legislature has defined the exemption in terms of land area. The present provision, Minn.Stat. § 510.02 (1980), provides that if a homestead is "within the laid out or platted portion of any city its area shall not exceed one half of an acre." In Cogel v. Mickow, 11 Minn. 475 (Gil. 354) (1866), we rejected the argument that, constitutionally, the homestead must be measured by value rather than area. More recently, in O'Brien v. Johnson, 275 Minn. 305, 148 N.W.2d 357 (1967), in which a large part of the real estate claimed by the debtor as his homestead consisted of valuable income-producing commercial property, we strictly applied the area limit, but recommended to the legislature that it impose a ceiling on the value of exempt property to prevent abuse and injustice. See Id. at 311, 148 N.W.2d at 361. The legislature has not seen fit to follow our recommendation.

In the present case, the question of value arises not because the debtor owned an extremely valuable parcel whose size is within the statutory area restrictions, but because she owned arguably valueless land in excess of the prescribed limits. We are not persuaded that value is any more relevant under our statute in this case than under the circumstances of O'Brien. The statute plainly adopts...