First National Bank v. Browne

SHARPE, J. This suit is brought under the statute (Code, section 809 at seq.), to have determined as between complainant and defendant their respective rights in a lot in Talladega. The complainant claims as a purchaser from J. J. Hendricks, and the respondent asserts an interest in the lot. as a creditor of Hendricks. The following facts appear of record and are undisputed. During the year 1898 and at the time of the occurrences which gave rise to the claims of both parties, the lot in controversy was Hendricks’ homestead, and urns of the value of $1,800 and not more. It was subject to a mortgage held by J. M. Lewis for a balance due him from Hendricks as purchase money for the lot, amounting to $1,740. Defendant held a note against Hendricks given in Janunary, 1898, payable in March of that year. Shortly áfter the note became due, Hendricks made an assignment of property for the benefit of creditors, reserving ¡therefrom the homestead lot. In June, .1898, defendant obtained and registered a judgment on the note ■against Hendricks in which there was a recital of his [560] waiver of exemptions as to personal property only. Defendant'and Lewis both participated as creditors in the 'distribution of funds by the 'assignee; Lewis receiving on his mortgage debt $533.80. In December, 1898, complainant with notice of the facts 'stated, bought the lot of Hendricks and received his conveyance, for the price of $1,550, which was settled by her paying $150 in cash and assuming to pay the amount remaining unpaid on Lewis’ mortgage, amounting to $1,100. By the common law, lands were not subject to the payment of debts. The creditor’s remedy to so subject them exists by statute only; and by the constitution, supplemented by the statute, the remedy is withheld from that portion of the lands which within the legally prescribed area and the value of $2,000, constitute the debtor’s homestead. The exemption extends to the debtor’s entire interest in the land and does not operate a mere postponement of any acquired or prospective lien or right of the creditor, but it prevents his acquisition of such rights. The sale, by the debtor of his entile estate in the homestead, though that, interest extend to the fee is not prejudicial to the creditor, for. the reason that the creditor has no interest in such property, and the sale withdraws nothing which had been within his reach. Upon this ground numerous decisions of this court have settled the doctrine that where the conveyance is of the homestead alone, no fraud as to creditors, can be predicated upon it. — Kennedy v. Bank, 107 Ala. 170; Fuller v. Whitlock, 99 Ala. 411; Pollak v. McNeil, 100 Ala. 203, and cases there cited. The waiver of exemptions embodied in defendant’s judgment did not extend to real estate,. consequently no lien was acquired under that judgment; neither do the facts exist from which the. defendant can acquire a lien by attacking the conveyance for fraud. Defendant can have no interest in ¡the property by subrogation to the rights of Lewis, under his mortgage even to the (extent he was paid from the general property assigned. The law exempting the homestead from debt is to be liberally construed. It is not its policy [561] to apply the doctrine of marshalling assets, or the fiction of subrogation, in order that the. property may be subjected to incumbrances not created by the debtor himself. — Ray v. Adams, 45 Ala. 168; Mitchelson v. Smith, 28 Neb. 583; 26 Am. St. Rep. 357; Armitage v. Toll, 64 Mich. 412; 15 Am. & Eng. Ency. Law, 691. If Lewis’ debt had been unsecured he would still have been entitled to share in the general assets, and since the mortgage covered nothing which the complainant could have taken if there had been no mortgage, the equitable consideration upon which the doctrine of marshal-ling assets is based does not exist. Let the decree be affirmed.