Wallowa Nat. Bank v. Riley

• Decision Date: 18 July 1896
• Citation: 29 Or. 289,45 P. 766
• Parties: WALLOWA NAT. BANK v. RILEY. [1]
• Court: Oregon Supreme Court

45 P. 766

29 Or. 289

WALLOWA NAT. BANK v. RILEY. ^[1]

Supreme Court of Oregon

July 18, 1896

Appeal from circuit court, Wallowa county; Robert Eakin, Judge.

Creditor's bill by the Wallowa National Bank against Levi W. Riley Josie E. Riley, his wife, and C.B. Riley, to subject certain land to the payment of a judgment obtained by plaintiff against defendant Levi W. Riley. From a judgment for defendant, plaintiff appeals. Affirmed.

F.S. Ivanhoe and D.W. Sheahan, for appellant.

A.C Smith, for respondent.

BEAN C.J.

This is a suit, in the nature of a creditor's bill to subject certain real estate formerly owned by the defendant Levi W. Riley to the payment of plaintiff's judgment. The facts are that on August 8, 1892, plaintiff commenced an action at law against the defendant to recover money, and caused the land in question to be attached; that a judgment was subsequently rendered therein, and the land ordered sold; that prior to the levy of the writ of attachment Riley conveyed the land to his wife, and she to the defendant C.B. Riley, for the purpose of hindering, delaying, and defrauding creditors; that the land in question was entered by Levi as a homestead, under the laws of the United States, and final proof made on the 8th day of October, 1889, and patent issued to him on November 23, 1891; that after final proof, and before patent, he became indebted to the plaintiff bank on several promissory notes, as surety for other parties; that such notes were renewed from time to time, the last renewals thereof, and the notes upon which the action at law was based, being made after he had received the patent for his land. Upon these facts the court below held that the land was not liable to seizure and sale for the satisfaction of said judgment, and plaintiff appeals.

Substantially the only question for our determination is whether a homestead under the laws of the United States is liable to seizure and sale for the satisfaction of a debt contracted after final proof and before patent issues. It is true, the contention was made at the argument that this case does not come within the provisions of the homestead law, because the notes upon which the action was based were given after the issuance of the patent. But in this view we are unable to concur. The notes in question were simply renewals of other notes, and evidence of an indebtedness contracted long before the date of their execution. The debt for which it is sought to subject the land in question to compulsatory sale was contracted by Levi at the time the money was borrowed from the bank, and the notes then executed, and all subsequent notes made in renewal thereof, were but evidence of the same debt. This brings us, then, to the important question in the case. Section 4 of the act of congress of May 20, 1862, granting homesteads on the public lands (section 2296, Rev.St.U.S.), provides that "no lands acquired under the provisions of this act shall in any event become liable to the satisfaction of any debt contracted prior to the issuing of the patent therefor." The literal terms of this section clearly exempt the lands of the homesteader from liability for debts which antedate the issuing of the patent. But the contention for the plaintiff is that, in contemplation of law, the patent issues when the final proof is made, and accepted by the land department, and hence the land is liable for debts contracted thereafter; and this is the view of the supreme court of Colorado. Mercantile Co v. Davis, 31 P. 495. So far as the question of title is concerned, this question may be conceded; but the vice of the position, as applied to the case before us, lies in the fact that we are not dealing with title, but with the question of exemption under a valid statute which declares, in plain and direct terms, that the land granted thereby shall not be liable for debts contracted prior to the happening of a specific event. It has been frequently held that, as between a settler and the government, a vested right to a patent is equivalent to a patent issued, and thereafter the government holds the legal title in trust for the settler, and, when issued, the patent will relate back to the inception of the right of the patentee, when necessary to cut off the rights of intervening claims. Witherspoon v. Duncan, 4 Wall. 210; Stark v. Starrs, 6 Wall. 402; Cornelius v. Kessel, 128 U.S. 456, 9 Sup.Ct. 122; Deffeback v. Hawke, 115 U.S. 392, 6 Sup.Ct. 95. But this rule is one of title, and has no bearing upon the question of exemption. By the federal constitution, congress is expressly vested with the power of making all needful rules and regulations respecting the public domain, and under this power it may dispose of public lands on...