Ivory v. Kennedy

PARDEE, Circuit Judge, (after stating-the case,) delivered the opinion of the court. The first error assigned is well taken. Complainant’s mortgage for the entire amount includes the 1,203 acres known as the “Waverly Place” (except the Kennedy homestead) as well as the balance of (he tract, and the complainant is clearly entitled to a decree of foreclosure and sale of the tract as a whole, the only exemptions therefrom allowable being the two tracts of 200 acres each claimed respectively by Walter Kennedy and Serena K. Walker as homesteads; the one because excepted in the deeds of trust, the other because exempted under the constitution and laws of Texas. The second assignment of error presents more difficulty. The case is shortly this: Complainant has a mortgage on the whole tract, less the Kennedy homestead. He has a vendor’s lien on the 1,203 acres known as the "Waverly Place” (except the Kennedy homestead) for a part of his entire claim. Mrs. Walker is entitled to claim and have exempted out of the 1,203 acres her designated homestead of 200 acres as against the complainant’s general mortgage, but not as against complainant’s vendor’s lien. The instructions as given in the decree are evidently inequitable, for under them the mortgagee is not only compelled to resort to the several parts of the undivided whole, hut to do it in such a manner as to compel him to pay for what he has already paid for, or lose his debt.; for, under the said instructions, any amount complainant should hid for the Waverly place over and above the $6,558.70 must he paid to some one else, for complainant is allowed to have it sold for tliat sum only; and in the event that sum is bid the homestead goes to Mrs. Walker without being paid for. The constitution of the state of Texas (article 16, § 50) is as follows: “The homestead of a family shall he, and is hereby protected from forced sale, for the payment of all debts except for the purchase money thereof, or a part of such purchase money, the taxes due thereon, or for work and material used in constructing improvements thereon, and in this last case only when the work and material are contracted for in writing, with the consent of the wife given in the same manner as is required in making a sale and conveyance of the homestead; nor shall the owner, If a married man, sell the homestead without the consent of the wife, given in such manner as may be prescribed by law. No mortgage, trust deed, or other lien on the homestead shall ever be lalid, except for the purchase money therefor, or improvements made thereon, as hereinbefore provided, whether such mortgage or trust deed, or other lien shall have been created by the husband alone, oi together with his wife; and all pretended sales of the homestead involving any condition of defeasance shall be void.” The power of a court of equity to compel the mortgagee to resort in the first instance to one of the several estates nior' gaged is generally exercised only for the protection of the equities of different creditors or incumbrancers, or of sureties, and not for the benefit of the mortgagor. Story, Eq. Jur. § 640; Pom. Eq. Jur. § [344] 1414. In the case of Searle v. Chapman, 121 Mass. 19, Mr. Chief Justice Gray (now Mr. Justice Gray of the supreme court of the United States) delivering the opinion of the court, the above rule was laid down, and the court held that the owner of the homestead could not compel the marshaling of securities so as to favor his homestead right, and the court said: “The right of homestead created by our statutes is certainly entitled to no higher degree of favor than the courts have always accorded the common-law right of dower. The case cannot be distinguished in principle from the ordinary one in which a wife, who has joined by way .of releasing dower in the mortgage of her husband, is held to pay the whole mortgage debt as a condition of asserting her right of dower against the mortgagee. Gibson v. Crehore, 5 Pick. 146-152; McCabe v. Bellows, 7 Gray, 148, 1 Allen, 269; Davis v. Wetherell, 13 Allen, 60. The judgment in Pittman’s Appeal, 48 Pa. St. 315, is in accordance with our conclusion. The cases in some of the western states, cited by the learned counsel for the tenants, so far as they countenance any equity in the owner of the right of homestead as against the party in whose favor he has waived or released it, are supported by no reasons, and do not disclose how far they may have been influenced by local statutes.” Tbe appellant contends that the decree in question “should have instructed Dickerson to sell the land, less the homesteads, to satisfy the plaintiff’s debt, and in the event the debt should remain unsatisfied after the sale, that the additional homestead of 200 acres set apart to Serena K. Walker, subject to the lien of $6,558.70, should be sold to satisfy what remained unrealized, provided it should not be sold in any event to satisfy an amount more than $6,558.70, which was the amount of the unpaid purchase-money notes, — the amount the decree found it subject to;” and he relies upon the case of Pridgen v. Warn, 79 Tex. 588, 15 S. W. Rep. 559, which is a case almost identical with the present one. In that case Warn claimed a lien upon 408 acres of land bought by Pridgen of Thomas. The tract included 100 acres claimed by Pridgen as a homestead. Pridgen bought the land on credit, and executed purchase notes for it. Some of the notes came due, and Pridgen borrowed a sum of money from Warn to pay them, and for other purposes. This sum was in excess of the purchase notes, and Warn took a deed of trust on all the land to secure the total sum advanced. The supreme" court of Texas held on appeal that Warn was subrogated to the rights of the vendor to the extent of the second note which he had taken up against the 100 acres in the homestead, and the court decreed as follows: “The land found subject to Wam’s mortgage will first be sold for the payment of his debt, and, should any balance of his debt remain, then the 100 acres found subject to the vendor’s lien shall be sold for the payment of such balance; but the amount to be applied from the proceeds of such sale shall in no case exceed the amount of the second note paid of£ by him as determined in the judgment.” We find no other Texas adjudication on this question. The cases in point from other states are conflicting, and those found holding that á creditor with security is compelled to divide his security in favor of a homestead — the homestead being under the law liable to be sold for the payment of the debt — are, as intimated by Mr. [345] Justice Gray, either based on insufficient reasons or upon statutes of loeal application. Under the eircuinstances of this case, we are of the opinion that we should follow the precedent set by the supreme court of Texas in a like case. We are the more inclined to this because it is all that complainant asks, and because, under the facts, the demand of (he defendants for an additional homestead, in view of their representation and affidavit to induce the complainant to part with his money, is inequitable, and tends to operate a fraud upon the complainant; and while we recognize the public policy of the state of Texas as declared in its constitution in favor of the exemption of homesteads from forced sales generally, we do not think that the present is a case calling upon us to invent new precedents, or stretch, the general rules of equity, in order to give the said defendants a homestead, for which, by the record, they have not paid, and which, under the law, may he, and ought to he, sold to satisfy a just debt. For these reasons, it is now ordered, adjudged, and decreed that the last paragraph of the decree appealed from be, and the same is hereby, reformed and amended so as to read as follows: Said sale shall he made in the following manner: The said J. J. Dickerson shall first sell all the property covered by complainant’s mortgage, as described in the twelfth paragraph of this decree, except, the two homesteads of 200 acres each, hereby set apart to Walter Kennedy and Serena K. Walker, to satisfy the sum of $36,504.24, and interest thereon until paid at the rate of 12 per cent, per annum, and all costs as found due to the complainant in the first paragraph of' this decree; and, in the event said amount remains unsatisfied, after being credited with the proceeds of said sale, then the said J. J. Dickerson shall sell the homestead of 200 acres herein set apart io Serena K. Walker,, to satisfy so much of the balance <lue on the decree aforesaid as shall not exceed the sum of $6,558.70 and interest; and, should said 200 acres bring an amount more than $6,558.70 and interest, then that such excess be paid to the defendant Serena K. Walker; and, in the event the decree in favor of plaintiff, as found in the first paragraph hereof, shall not he satisfied by such sale or sales, then that the complainant, Holmes Ivory, do have execution for the balance unpaid against the defendants Waller Kennedy, for himself, and as independent executor of the last will and testament of John F. Walker, deceased, and against Serena K. Walker, independent executrix of John F. Walker, deceased, and for his costs. It is further ordered, adjudged, and decreed that the decree appealed from as herein amended he, and the same is hereby, affirmed at the cost of the appellees.