Smith v. Ratcliff

Campbell, J"., delivered the opinion of the court. The single question presented by this record is this: Is the money due from an insurance company on the loss of the house, which was a part of the homestead of the insured, exempt from liability to legal process against the homestead exemptionist ? If <?alled on to declare what should be the law, our answer would be that inasmuch as the house was exempt, the money due because of its destruction should be, to enable the owner to rebuild. This would accord with the policy which secures the homestead against the demands of creditors, for it is undoubtedly true that a contract made to secure its owner against the consequences of loss from the destruction of what the law has endeavored to secure to him, by denying to his creditors the right to take it for debts, ought to secure its avails to the exemptionist, for the purpose of replacing his loss ; and thus he would be encouraged to secure indemnity for such a loss by effecting insurance. We perceive how completely it is in the power of the insured to defeat the pursuit of creditors, by inducing the insurer to rebuild where the contract provides for this; and therefore of how little value an announcement of the liability to his creditors of money due for such a loss as we have supposed, to an exemptionist, will ordinarily be. But, regarding it as our duty to declare the law, as we understand it to be, and not to make it (when we find it already made) we are constrained to announce that the question stated in the beginning of this opinion must be answered in the negative. ■ This results, necessarily, from the established doctrine, which is that only those things are exempt which the statutes declare to be, and everything not embraced is liable to creditors. . A homestead is exempt, and the house is part of it, but the .money due on a policy of insurance on the' house is neither the house nor the representative of it. It is the result of a personal contract of indemnity against the loss of the house, which contract was founded on an independent consideration, in the premium paid by the insured. The house was the subject of the contract, it is true, but the indemnity was purchased by its price, the premium paid. What the law exempts is the homestead, and not what may [687] grow out of it or arise from it as the result of some contract made by the exemptionist — the homestead, and not the proceeds of it in another form which is not exempt. If the exemptionist had sold his house, the debt due for it would not be exempt, because the statute does not declare that money shall be exempt which arises by contract from what is exempt. . The money made by the use of the homestead is not exempt, and when exempt property is by act of the exemptionist converted into what is not exempt, the protection of the exemption laws cannot be claimed. But even if the proceeds of the homestead were exempt, the money due by the policy of insurance would not be, for it is not the proceeds of the house, but of the policy — an independent personal contract. The house was not insured. The owner was insured by the contract to pay him a sum of money as indemnity against loss. These principles are universally recognized, so as to deny to a mortgagee, who has no special contract right as to insurance,' the right to claim the proceeds of a policy of insurance as appropriable to his mortgage on the insured property; and we have held that a fraudulent grantee of land may hold the money due by a policy of insurance on a building on it against the claim of creditors entitled to subject the land and buildings to follow the insurance money. Bernheim v. Beer, 56 Miss. 149. It follows logically, from these settled principles, that the insurance money does not occupy the place of the destroyed building, and, if not, there is no legal ground on which to affirm that it is exempt because the building was. This view is fully sustained by the supreme court of New Hampshire, Wooster v. Page, 54 New Hamp. 125. Thompson on Homesteads and Exemptions § 750, says, “ the insurance money is not liable to garnishment,” and cites Houghton v. Lee, 50 Cal. 101, and Cooney v. Cooney, 65 Barb. 524, to support this view, and after stating the denial of this rule by the supreme court of New Hampshire, adds, “ but the rule is founded on reasons too cogent to be shaken by the dissent even of that able court.” What are the reasons? They are not given by Thompson, and [688] the California court in the case cited did not state any reason, but simply affirmed the judgment of the lower court. The New York case is the decision of an inferior court, and, while the opinion in the case is longer than in the California case, it is as destitute of any satisfactory reason to sustain its conclusion as is the other which does not attempt to furnish any. Smyth on Homestead, § 102, follows Thompson citing the California case, above. The question was before the supreme court of Texas in Cameron v. Fay, 55 Texas 58, and it was held that the insurance money was not liable, citing Houghton v. Lee, 50 Cal. 101; Thompson on Homesteads 750 ; citing also Cooney v. Cooney, 55 Barb. 524. The Texas case so strikingly illustrates the illogical conclusion of the court, in deciding it, as to forbid our adoption of it as a precedent. In that case the mechanics, who erected the building insured, and had a lien on it, were denied the right to follow through the ashes the money arising from the insurance, on the universally accepted doctrine that this money resulted not from the building but from a personal contract of indemnity founded on an independent consideration, but when the mechanics sought to apply the money to their judgment as lien creditors, the court, which had said that the money did not represent the house but was the avails of contract, on this contention, held, that the money did occupy the place of the house! thus presenting a conspicuous example of reasoning to a just result on one question in the case, and leaping to a desired conclusion on another question in the same case, an example we shrink from imitating. In that case the court says : “We are of opinion that the proceeds of the policy of insurance upon the homestead, effected for its protection and preservation as such, should for a reasonable time at least, be exempt, etc.” What is a reasonable time, and how is this to be determined ? That view is not only unsupported by principle, but is full of practical difficulty. We too think, with the Texas court, that the proceeds of the policy should be exempt as the house was, but the statute has not made it so, and it is impossible to reason correctly from established [689] rules to the conclusion in favor of exemption, and we do not tnink it allowable to jump to a desired result. We might have done so, aud cited Thompson and Smyth as authority for the announcement, but it is not always safe to accept without question what is laid down in text-books or the opinions of the courts. Judgment reversed and the money directed to be applied to the judgment.