Opinion
No. 32922.
December 6, 1937. Suggestion of Error Overruled January 3, 1938.
1. HOMESTEAD.
In statute permitting homestead in tract of land not to exceed in quantity 160 acres and in value $3,000, the $3,000 limitation is on value of land and not owner's interest therein (Code 1930, section 1765).
2. HOMESTEAD.
The homestead exemption granted by statute is not on any particular interest in land, and interest need not be ownership in fee simple, and all that is necessary is that the exemptionist have an assignable interest in the land (Code 1930, section 1765).
3. HOMESTEAD.
When homestead claimant has an assignable interest in land, the homestead exemption covers land to extent of $3,000 in value, although value of the exemptioner's interest therein may be less than that amount (Code 1930, section 1765).
4. EXECUTORS AND ADMINISTRATORS.
Where deceased had executed trust deed covering homestead to secure $3,564.74 indebtedness and land brought $5,500 at foreclosure sale after deceased's death, excess of proceeds of sale over money secured by trust deed was not exempt from payment of probated claims against deceased's estate, since in ascertaining value of premises claimed as homestead legal incumbrances were not to be deducted (Code 1930, sections 1765, 1771, 1772).
APPEAL from chancery court of Sunflower county. HON. J.L. WILLIAMS, Chancellor.
Neill Townsend, of Indianola, for appellants.
Appellee claims the exemption under the provisions of Section 1765 of the Mississippi Code of 1930. We submit that under the facts in this case, taking the agreed statement of facts, it is not shown that said decedent was an exemptionist and entitled to the exemption. The exemption is not claimed by reason of a sale under an execution or attachment, and that is the only thing exempted under the statute. Furthermore, the agreed statement of facts does not show that said decedent was an exemptionist, that is to say, does not disclose that said decedent, prior thereto and prior to the age sixty, was a householder, and having a family. Frankly, we state to the court, however, that we understand the facts to be that said decedent was something over seventy years of age at the time of his death, and his wife had died about the year 1931, since which time said decedent lived on said premises with an adult son, which son was the head of a family, and said decedent had no children dependent on him for support, and no family to support at any time after the date of the death of his wife.
We realize that the homestead laws are liberally construed in favor of the exemption, but they cannot be so construed as a pretext to claim that which does not really and substantially exist.
Some of the states do not permit one to encumber a homestead, other states do not permit it unless certain statutes are strictly complied with; our state permits it provided the wife joins in the execution of the encumbrance. In the case at bar the wife of the decedent was dead and said decedent elected to borrow money on his homestead and encumber same. That was a voluntary transaction on his part he elected to alienate his homestead right and did so.
Smith v. Ratcliff, 6 So. 460; Trenholm v. Klinker, 66 So. 738.
A mortgage on his homestead, diminishing the value of the mortgagor's interest in the property, does not enlarge the area or value of the land which he may claim as exempt.
Bennett v. Dempsey, 94 Miss. 406; Marx v. Haley, 45 So. 612.
If the decedent was entitled to a homestead exemption in the beginning he has already got it. Were not the proceeds he borrowed from the beneficiary in the deed of trust which was foreclosed exempt from seizure and attachment and garnishment. Section 1777, Mississippi Code 1930, provides that exempt property, real or personal, disposed of by the owner, shall not by disposal become liable to the debts of the owner; and any debtor leaving this state may take with him personal property which is exempt from execution.
Field v. Goat, 1 A.L.R. 482.
We submit, therefore, that if the decedent was entitled to a homestead exemption while he yet lived, he has already received the benefit of that exemption, and this statute cannot be construed now as to exempt these proceeds in the form of cash that have been paid into this estate without objection. These funds in the form of cash are the proceeds of monies which have come into existence by reason of a contract between the decedent, while he yet lived, and the trustee, that in the event of foreclosure said funds would be paid to whomsoever they may belong. To hold otherwise, in a case where one is entitled to the homestead exemption, would be the equivalent of holding that one is entitled to an exemption in the sum of $3000.00 plus whatever encumbrance the exemptionist may be able to put on the property, consequently where would there be any limitation on the amount of the exemption.
Cooper Thomas, of Indianola, and H. Lee Herring, of Ruleville, for appellee.
While Smith v. Ratcliff, 66 Miss. 683, 6 So. 460, is not in support of the position taken by appellants, yet, even if it were, subsequent legislation in Mississippi has rendered such decision of no effect for the last 47 years. But we need not rest our case here. Section 1777 of the Code of 1930, which has also been the law of Mississippi for a long time, is as follows: "Exempt Property May Be Disposed Of. — The exempt property, real or personal, disposed of by the owner, shall not by disposal become liable to the debts of the owner; and any debtor leaving this state may take with him his personal property which is exempt from execution."
It is generally recognized, even in the absence of statute, and based on the broad liberality with which the courts surround and protect the homestead and homestead rights, that the involuntary sale of the homestead does not lose or lessen the rights in the proceeds realized from such involuntary sale.
If we did not have such statutes expressly exempting the proceeds of the sale of exempt property, we submit that it is the great weight of authority that the proceeds of the involuntary sale or conversion of exempt property are exempt.
13 R.C.L., 585, sec. 50; White v. Horton Menner, 97 P. 70, 18 L.R.A. (N.S.) 490.
Where land embracing a homestead is sold upon foreclosure of a lien paramount to the homestead right, the homesteader is entitled to a homestead exemption in the surplus above the amount of the lien, arising from the sale; and this right is superior to that of his creditors who have no lien upon the homestead.
Hooper v. Castetter, 45 Neb. 67, 63 N.W. 135; Morrill v. Skinner, 57 Neb. 164, 77 N.W. 375; Hinson v. Adrian, 92 N.C. 121; Leak v. Gay, 107 N.C. 468, 12 S.E. 312; Vanstory v. Thornton, 112 N.C. 196, 34 Am. St. Rep. 183, 17 S.E. 566; Wilson v. Patton, 87 N.C. 318; Huntington Bank v. Bowers, 22 Ky. L. Rep. 497, 58 S.W. 418; Kelly v. Duffy, 31 Ohio St. 437; William H. Holmes Co. v. Book, 1 Ohio N.P. 58; White v. Fulghun, 87 Tenn. 281, 10 S.W. 501; Re Barrett, 140 Fed. 569; 29 C.J. page 1012, sec. 502, and page 838, sec. 130; Edmonson v. Meacham, 50 Miss. 34.
Generally, where a homestead is sold at a judicial or execution sale for a debt as against which it is not exempt, and a surplus remains, the debtor may claim the amount of his exemption in such surplus.
29 C.J., page 838, sec. 143.
The proceeds of the sale of exempt property are themselves exempt, even though the homesteader removes with his family out of the state.
Meacham v. Edmonson, 54 Miss. 746.
The exemption rights in a homestead are not lost upon the death testate of the exemptionist who devises the homestead specifically. And the devise of a homestead exemption does not render it liable to the testator's debts, even though in the will is an expressed direction that such debts be paid.
Norris v. Callahan, 59 Miss. 140.
While there is some authority to the contrary it is generally held that, in ascertaining the value of premises claimed as a homestead valid and subsisting, legal encumbrances are to be deducted.
29 C.J. 828, sec. 102; Franklin v. Comer, 170 Ala. 229, 54 So. 430; Kilmer v. Garlick, 185 Ill. 406, 56 N.E. 1103; Borkaw v. Ogle, 170 Ill. 115, 48 N.E. 394; Imhoff v. Lipe, 162 Ill. 282, 44 N.E. 493; Reames v. Morrow, 193 Ill. A. 155; Mills v. Hobbs, 76 Mich. 122, 42 N.W. 1084; Houf v. Brown, 171 Mo. 207, 71 S.W. 125; Meyer v. Nickerson, 101 Mo. 184, 14 S.W. 188; State v. Mason, 88 Mo. 222; Mundt v. Hagedorn, 49 Neb. 409, 68 N.W. 610; Hoy v. Anderson, 39 Neb. 386, 58 N.W. 125, 42 Am. St. Rep. 591; Crosby v. Anderson, 49 Utah 167, 162 P. 75.
Argued orally by S.D. Neill, for appellant, and by Forrest G. Cooper, for appellee.
W.M. Edwards, a widower, died owning 120 acres of land, which constituted his homestead under section 1765, Code of 1930, on which he had given a deed of trust to secure the payment of an indebtedness of $3,564.74. After his death this deed of trust was foreclosed by the trustee. It brought $5,500 at the foreclosure sale, and the excess thereof over the money secured by the deed of trust was paid by the trustee to Edwards' executor. Several creditors had probated claims against Edwards' estate, and the question for decision here is whether this money in the hands of his executor is exempt from the payment of these debts.
The homestead permitted by section 1765, Code of 1930, is a tract of land not to exceed in quantity 160 acres and in value $3,000. The appellee's contention is that this $3,000 is not the value of the land itself but of the owner's interest therein, which was here the value of the land less the mortgage thereon, citing in support thereof, among other authorities, 29 C.J. section 102, at page 828, wherein it is said: "While there is some authority to the contrary it is generally held that, in ascertaining the value of premises claimed as a homestead valid and subsisting, legal encumbrances are to be deducted." The holding in the court below was in accordance with this contention, and this money in the hands of the executor was held not to be subject to the decedent's debts.
This question must be decided in each jurisdiction on the statutes relating thereto, or deductions to be made therefrom. According to section 1765, Code of 1930, the limitation of $3,000 is on the value of the land and not of the owner's interest therein. The exemption granted is not on any particular interest in the land. This interest need not be ownership in fee simple. Tanner v. Tanner, 111 Miss. 460, at page 467, 71 So. 749; McGrath v. Sinclair, 55 Miss. 89; King v. Sturges, 56 Miss. 606. All that is necessary is that the exemptionist have an assignable interest in the land. Berry v. Dobson, 68 Miss. 483, 10 So. 45; Stuart v. Kennedy Co., 145 Miss. 728, 110 So. 847, and, when he has such an interest, the exemption covers the land to the extent of $3,000 in value, although the value of the exemptioner's interest therein may be less than that amount. This holding is in accord with, and probably necessitated by, Bennett v. Dempsey, 94 Miss. 406, 48 So. 901, 902, 136 Am. St. Rep. 584, wherein the court said: "Nor does the fact that there is a mortgage on the land, thus cutting down the net value of same, authorize the claiming of a greater quantity of land than could be claimed if there were no mortgage." Neither sections 1765, 1771, nor 1772, Code of 1930, which two latter provide for the sale of a homestead for debt where its value exceeds $3,000, provides that in ascertaining this value existing encumbrances on the land must be deducted from the land's actual value, nor has any other statute so providing been called to our attention.
To hold in accordance with the appellee's contention would be, in effect, to amend section 1765, Code of 1930, under the guise of interpretation. This we are not at liberty to do.
Reversed and remanded.