Adams v. Bank of Woodland

This appeal is from an order of the superior court made in the above-entitled estate, setting apart a homestead to the respondent, who is the widow of the deceased. Her original petition for the homestead was filed September 13, 1895, and an amended petition, upon which the hearing was had, was filed January 17, 1896. The appellant is a creditor of the estate, and filed objections to the granting of the widow's petition, and upon the issues thereby presented the court filed its findings of fact and made the order appealed from. The court finds that the decedent died January 20, 1890, leaving a widow — the respondent herein — and four children, who are still minors and under the care and maintenance of their mother; that no homestead was selected by him or by the petitioner in his lifetime; that he left a last will and testament, in which the respondent was named as one of his executors, and that the same was admitted to probate and letters testamentary thereon issued March 17, 1890; that the whole of the real property belonging to the estate was the separate property of the deceased; that the property prayed for as a homestead was the family residence of the deceased and his family; that said tract will not more than support and maintain the petitioner and her children, and is more suitable for a homestead than any other property of the estate. An inventory of the estate of the deceased was filed April 15, 1890, and the same was then appraised at the sum of two hundred and thirty-two thousand seven hundred and thirty-two dollars. The record does not show the amount of the indebtedness at that time, but it appears that a portion *Page 382 of the estate was mortgaged to the appellant, and that under a foreclosure of this mortgage about two thousand acres of the land were sold, leaving a deficiency judgment of nearly twenty-seven thousand dollars, which has not been paid. The court finds that the estate is still indebted to the appellant in the sum of about eighty thousand dollars, for which the appellant holds no security, and is indebted to another creditor in the sum of eight thousand dollars. The court does not find the value of the estate still remaining in the hands of the executrix, or whether there are any other outstanding claims against the estate, but it does find that the property of the estate, "if sold at public auction under order of this court, would not pay in full the outstanding indebtedness of said estate and the charges and expenses of administration already accrued and to accrue in the final settlement of said estate"; and at the hearing upon the petition one of the witnesses testified: "The whole estate is not worth seventy thousand dollars. If this property is set apart as a homestead to Mrs. Adams, the creditors will lose at least fifty per cent of their debts." The property set apart as a homestead consists of two hundred and fifteen acres of cultivated land and about eighty five acres of land not cultivated in the creek bottom, and the court finds that at the time the order was made setting it apart it was of the value of eleven thousand one hundred and thirty-nine dollars and seventy cents. It was held in Estate of Walkerly, 81 Cal. 579, that the provisions of the code for setting apart a homestead for the family of the deceased,when none had been selected before his death, do not contain any limitation to the value of such homestead; that the value of the homestead thus to be set apart is within the discretion of the court, and that in the exercise of this discretion it is to take into consideration the amount and condition of the estate; and that its action will not be interfered with by this court unless it appears that such discretion was abused. The rule thus declared was repeated inEstate of Smith, 99 Cal. 449. The question presented upon the present appeal has not, however, been heretofore considered by the court. In the Walkerly case the value of the estate above its indebtedness exceeded five hundred thousand dollars, and the estate of Smith was of the *Page 383 value of seventy-five thousand dollars above all debts and expenses of administration, and in each of those cases the property set apart as a homestead was an entirety and incapable of division; whereas in the present case the estate is insolvent, and it does not appear that the property of the estate was so situated that it could not have been otherwise divided. In each of the above cases it was declared that the discretion of the court was to be exercised upon a consideration of the amount and condition of the estate. In the exercise of its discretion as controlled by these considerations the court must also take into account the rights of creditors, and, although their rights are subordinate to the right of the family to a home, they are not to be entirely disregarded. For the purpose of adjusting these conflicting rights the provision which the law has made to afford a home for the family, and the object underlying all of the legislative provisions for a homestead, are also subjects proper to be considered by the court. The main object of the law in directing that a homestead be set apart for the surviving family out of the estate of a decedent is the same as in the provision for the selection of a homestead in his lifetime, viz., to provide it with a home in which it may have shelter from want, and protection against the greed of creditors or its own improvidence. (Estate of Schmidt, 94 Cal. 337; Keyes v. Cyrus,100 Cal. 322; 38 Am. St. Rep. 296.) While the home thus given to the family may be available as a source of support, the code does not direct, nor is it within the purpose of the legislation thereon, that the homestead to be set apart shall be sufficient for the permanent support of the family in case the estate is insolvent. The authority to set apart a homestead is found in section 1465 of the Code of Civil Procedure, and under that section it is to be set apart for the "use" of the family; and the provision in section 1466, limiting any additional allowance for the maintenance of the family to one year in the case of an insolvent estate, implies that, aside from the place of residence for a home which may have been set apart, the family is not entitled to "support" from an insolvent estate for more than one year from the granting of letters of administration. The family will be entitled to whatever support it may get from the homestead which the court is authorized to set apart, but *Page 384 the capacity of the homestead to support the family is not the measure of the court's authority to set it apart, or a test for the proper exercise of its discretion. The legislature has fixed the sum of five thousand dollars as the limit in value which the debtor may claim for his homestead against the demands of his creditors, and, while it has not fixed this limitation upon the value of a probate homestead to be set apart by the court where none was selected in the lifetime of the decedent, a wise exercise of judicial discretion would limit the homestead to be so set apart to this amount in value in the case of an insolvent estate, where a homestead of this value can be divided from the remainder of the estate, or where the property sought to be set apart is capable of such admeasurement. As it clearly appears from the record herein that the estate was insolvent, and that the property is so situated that a portion thereof not exceeding five thousand dollars in value could be selected and set apart as a homestead, it must be held that the court abused its discretion in making the order appealed from. The correctness of the order is to be determined upon a consideration of the character of the estate at the time of making the application or of the hearing thereon. While the present order might have been upheld if it had been made at the outset of the administration, and it had then appeared that the estate was solvent, the reason therefor fails when the settlement of the estate and the payment of the claims against it has been delayed until the property has so far depreciated in value that it is insufficient to meet these claims. Neither is any benefit that the estate may have derived from the care and provision of the executrix, or any extravagance in the management of the estate, or the amount previously allowed for the support of the family, an element to be considered in determining the right to have a homestead set apart. No exception seems to have been made to the granting of the order for family allowance, and whether the estate has been properly managed or not is a matter to be considered by the court in passing upon the annual accounts of the executrix. The order is reversed. *Page 385 Temple, J., Van Dyke, J., Henshaw, J., Garoutte, J., and Beatty, C.J., concurred.