Case ID: ohio-st_31/html/0437-01.html
Source: Caselaw Access Project
Author: {"author": "McIlvaine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bridget and Patrick Kelly v. Peter Duffy et al.
    .An insolvent debtor conveyed all his property, including his family homestead, on which were certain liens which precluded its exemption, to an assignee for the benefit of creditors; afterward the assignee brought an action to marshal liens, and for the sale of the homestead, in which action a-sale was ordered for the payment of the preferred liens, reserving, however, to the debtor the right to demand such exemptions as the law might allow; before the sale, the family dwelling-house was entirely destroyed by fire, and the debtor and bis family removed from the premises without intending to rebuild the house; and thereafter the premises were sold under the decree 'for more than sufficient to pay the preferred liens—Held :
    
    1. That there was no abandonment of the right to homestead, which continued in the de.btor until the property was sold.
    2. That out of the surplus after payment of the preferred liens, upon the application of the debtor’s wife, an allowance should be made to her in lieu of the homestead, in analogy fo the provisions of the homestead act in favor of debtors who are not the owners of homesteads.
    .3. The 4th section of the act of April 9, 1869 (66 Ohio L. 50), does not apply as against debts contracted before its passage; but independent of this section, the debtor’s right to the exemption attaches to the surplus of the proceeds of such sale, as against creditors whose claims do not preclude the allowance of a homestead.
    Error to the District Court of Perry county.
    The original action, commenced January 10, 1874, was brought by Duffy as assignee for the benefit of creditors of Patrick Kelly, to marshal liens, and for the sale of certain real estate, which was tfie homestead of Patrick Kelly and family.
    At the date of the assignment, March 13, 1873, this homestead was subject to the liens of certain mortgages which had been executed by Kelly and bis wife, Bridget, ■and also of certain judgments before that time rendered against said Patrick Kelly. By the deed of assignment all the property of Kelly was transferred to the assignee, subject, however, to all his rights under the exemption laws-of the state.
    On the 14th of February, 1874, the court rendered a decree directing the sale of the property, but reserving “ to the Kellys the right to demand homestead in such cases as-they by law may have the right thereto.”
    Kelly and his family continued to occupy the property as a homestead until the 23d of February, 1874, on which-day the homestead building was destroyed by fire.
    Afterward an order of sale was issued, and on the 6th of April, 1874, the property was sold for $2,605. And afterward, May 23, 1874, the sale was confirmed and the-court ordered the proceeds to be disbursed as follows : To the payment of costs, taxes, and the liens, as against which the court found that neither Kelly nor his wife was entitled to demand a homestead. The aggregate of the sums thus disbursed was about $1,800. Next, the court awarded to-Bridget Kelly, the wife of the plaintiff’s assignor, upon her application therefor, the sum of $500 in lieu of. the homestead, and the balance was ordered to be paid to the assignee, to be by him administered for'the benefit of the-general creditors.
    In addition to the facts already stated, there was embodied in a bill of exceptions, an agreed statement asfollo ws :
    “ That there have been presented to and allowed by the assignee, as valid-claims, debts in the aggregate amounting to about $12,000; that the estate will not pay to exceed 75 per cent., if all the proceeds of the sale in this case be used and taken as assets. A large amount of the claims so presented to the assignee and allowed by him as valid claims-against the said P. J. Kelly, and to be paid, are debts contracted prior to the year 1869, and they amount in the aggregate to more than the surplus money in the hands of the sheriff, proceeds of the sale in this case, after the payment of the liens on the premises, which preclude the assignment of homestead.
    “ Kelly and wife continued to use and occupy the portion; of house designed as a dwelling-house from the time it was-built, as a dwelling-house, and their only homestead, up to-the 23d( day of February, 1874, when the entire building-was destroyed by fire, and after which the said Kelly and wife resided elsewhere in said town of Lexington.
    “After the said building was so burned, there were no-steps taken by said Kelly to rebuild on said lot, nor did he- or his said wife Bridget design or purpose to rebuild on said lot. No demand was ever made for homestead, or money in lieu of homestead, until after the sale had been made.”
    The assignee excepted to the award to Bridget in lieu of homestead, and, on his petition in error, the district court-reversed the portion of the judgment excepted to by theassignee.
    Bridget Kelly and her husband now prosecute this proceeding to obtain a reversal of the judgment of the district court.
    
      Harrison § Olds for plaintiff' in error:
    This ease comes clearly within the provisions of section 4 of the act of April 9, 1869. (66 Ohio L. 50).
    Quitting the occupancy of the dwelling-house, caused by the accidental necessity, was not-, in fact nor in law, an abandonment of the homestead right. Abandonment can result only from a voluntary act. The removal from the homestead, to constitute an abandonment, must be (1) voluntary, (2) actual, and (3) with no intention to return.
    That Kelly did not intend to rebuild makes no difference. He had no means to rebuild with. He could not have rebuilt if he would.
    The exemption is for the benefit of the family. Wetz v. Beard, 12 Ohio St. 431; Sears v. Hanks, 14 Ohio St. 300.
    On the question of what is an abandonment of a homestead see Locke v. Rowell, 47 N. H. 46; Mills v. Von Bos-Jdrk, 35 Texas, 360 ; Rix v. Bank, 2 Dillon, 369 ; Dunn v. Tozer, 10 Cal. 167; Moss v. Warner, 10 Cal. 296 ; Stewart 
      v. Brand, 23 Iowa, 477; Guiod v.- Guiod, 14 Cal. 506; Dorsey v. McFarland, 7 Cal. 342.
    As to the abandonment or waiver of the right to ahome■stead by the wife, see Ring v. Burt, 17 Mich. 465; Horn v. Tufts, 39 N. H. 478; Wood v. Lord, 51 N. H. 448; Nims v. Bigelow, 45 N. II. 347; Dunn v. Tozer, 10 Cal. 167; Con-■nor v. McMurray, 2 Allen, 202.
    There is no constitutional objection to those laws which •except certain portions of a debtor’s property from execution, being so modified as to increase the exemptions, and the modifications made applicable to contracts previously •entered into. Bronson v. Kinzie, 1 How. 311; Cooley’s •Con. Lim. 288, 289.
    If Kelly was not the owner of a homestead after the loss of the dwelling-house by fire, and $500 could not be .■awarded to him and his family under section 4 of the act of April, 1869, then he was entitled to $300, or $500 out of the proceeds of the sale of the assigned property, “ in lieu of a homestead,” and in addition to the amount of chattel prop•erty specifically exempted by law from levy and sale on •execution.
    If the original (assignment) act applies to this case, from the fact that some of the debts against Kelly were contracted prior to the passing of the amendatory act of April ‘9, 1869, $300 is the amount of the exemption, if the fire extinguished all rights under section 4 of said amendatory act. But if section 3 of said amendatory act be applicable, then ■the amount of the exemption is $500. It may be that the proviso in section 2 will be held to preclude the application •of section 3 to this case. That an exemption and allowance may be claimed under section 8 of the original act, or under section 4 of the amendatory act, we submit is clear. Corner v. Dodson, 22 Ohio St. 615.
    
      J. W. Okey and M. A. Daugherty, for Peter Duffy :
    After the destruction of the building by fire, and the removal of Kelly and wife from the lot, with the intention to Temain away permanently and never build or reside on the lot, it would be quite absurd to call the place their homestead, in any ordinary sense of the term, because a homestead includes a dwelling-house where the family reside. Smyth on Homesteads, sec. 68; Herman on Exemptions, sec. 105.
    The provisions of the original act of 1850, relating to ■the exemption of homesteads, sections 2, 3, 5, 6, 8, and 9, •show very clearly that the act was not to have a retroactive -operation, and they show with equal clearness that it was not in the mind of the legislature to allow the setting apart, in any event, of money in lieu of homestead, or money-out ■of a surplus, until the debts of the party were fully paid, •so far as-those in interest might be represented in the suit. 'The whole -structure of the act leaves no doubt that that was its meaning when it was passed. And it is well settled that “ whatever was the meaning of the statute when first enacted, should be its meaning through all future time.” Meed v. Evans, 17 Ohio, 128-134.
    There is some informality in the manner of repealing •original section 8, as amended in 1858. In form the repeal applies to the original act. 66 Ohio L. 50, sec. 2. But it amounts to a repeal of the amendment of 1858. 66 Ohio L. 50, sees. 2, 3 ; Forest City L. and B. Association v. Gallagher, 25 Ohio St. 208.
    Section 8 being thus repealed and supplied by the act of April 9, 1869 (66 Ohio L. 50), the latter amendment was repealed by the act of February‘27,1873, which is in force and stands in the place of section 8 of the original act. But neither the act of 1869 nor that of 1873 professes to exempt against debts created before its passage. Both are made to operate in the future. 66 Ohio L. 49, see. 1. Nor could they •constitutionally apply so as to exempt as against debts existing at the time of their passage, in view of the 10th section of article 1 of the constitution of the United States. Rorer on Jud. Sales, sec. 1100; Jones v. Brandon, 48 Geo. 593 ; Lasly v. Phipps, Supi’eme Court of Mississippi, 22 Am. Law Reg. (April, 1874) 236. And the provision in the constitution of this state prohibiting retroactive laws removes all difficulty on the subject. Art. 2, sec. 28. In harmony with that is the act of 1866 (S. •& S. 1). Here the agreed ease shows that the debts contracted previous to 1869 were-sufficient, in amount to absorb the entire surplus, after paying off the mortgages which had been executed by Mrs.Kelly ; and hence neither the act'of 1869 nor that of 1873 can have any effect upon the decision of this case.
    Section 4 of the act of 1869, relied on by counsel for Mrs. Kelly, stands on no different ground from the balance of the act.
    It applies to the future, and not the past. It gives a right which before did not exist. As we have seen, debts-existing at the time of its passage amount to a larger sum than came to the hands of the sheriff, after deducting the amount of the mortgages executed by Mrs. Kelly. No part of the act professes to apply to existing debts, and, foj* the reasons already given, no part of it could so apply. Besides, that section, by its very terms, only applies in cases where there is an actual homestead—a dwelling-house— and here, at the time of the sale and demand, there was-none.
    Was Mrs. Kelly entitled to three hundred dollars under the amendment of section 8 of the homestead law of 1850, passed in 1858 (2 S. & C. 1146), which was repealed in 1869-(66 Ohio L. 50) ?
    This section was not a provision by way of homestead or in lieu of one, but for the. allowance to the debtor of so-much personal property, to be selected by the debtor out of any personal property which he might own.
    But the section has no application here.
    No principle is better settled than that laud sold on or iu virtue of a mortgage, retains the same character while the-proceeds are in the hands of the court or its officer.
    Another and a stronger reason why that section can not apply : At that time a number of other statutes were in force, allowing exemption of specific property. 2 S. & C. 1143, et seq. That was the state of the law at the passage-of the act of 1861 (S. & S. 396), amending section 15 of the-assignment law of 1859.
    The language of the amended section 15 is explicit: “ Property exempt from levy or sale upon execution,” need not “ be delivered up for the payment of debts.” This plainly and naturally refers to specific personal property exempted under the act above referred to, and the provision for homestead explicitly refers to the homestead provided for in the act of 1850.
   McIlvaine, J.

By the homestead act of March 23,1850,. the family homestead of each head of a family was exempted from sale on execution; provided, the value of the-homestead did not exceed $500. And when the homestead exceeded $500 and was not divisible, its exemption from-sale was made dependent upon the payment to the creditor of the annual rental value of the property in excess of $40. The exemption Is allowed on the application of the debtor or his wife, his agent or attorney. There were some exceptions, however, to the right to. this exemption, as for instance, when the debt was contracted before the act took effect, and as against a mortgage executed by the debtor and his wife, etc. But the general creditors of ’Nelly, are not shown by this record to be within any of the exceptions.

It is contended, however, that at the time of the sale, the property sold was not the family homestead of the debtor,. Nelly, and his family. That the property was not occupied as such, at the time, is true; for the reason, however, that the house had recently beeu destroyed by-fire.

But the simple fact that the property was not in the actual occupancy of the family did not affect its character as-a homestead. Although, in a general sense, the homestead of a family is the place where they actually reside;’ yet it is settled by numerous decided cases, that the temporary absence of the family, though voluntary, does not affect the character of the property as a homestead;'and, for stronger reasons, an involuntary absence would not do so.

The chief contention, however, is that the removal of the ■family from the premises, after the fire, and the absence of any purpose on the part of the debtor to rebuild or construct a dwelling-house on the premises, shows an abandonment of the homestead.

It seems to be conceded, that, if the debtor had intended to rebuild within a reasonable time, the right to hold the property exempt from execution could not be denied, notwithstanding the destruction of the house by fire and the consequent enforced absence of the family. If this be so, and we think it is, the question arises, what effect should be given, under the circumstances of this case, to the intention of the debtor not to rebuild ? The property, while it remained in the actual possession of the family of the debtor .as a homestead, had been decreed to be sold for the payment of debts, as against which, the right of exemption ■could not be asserted; but as against the claims of the general creditors of the debtor, either he or his wife, had a clear right to demand the exemption. And it is quite certain, that as against the general creditors, the debtor did not intend to abandon his right to any exemption to which, under the law, he was entitled. 'This is shown by his reserving the right in the deed of assignment, and also, in the decree for the sale of the property. And when it is considered, that shortly before the fire, he had transferred all his property, personal and real, save only such exemptions as were allowed by law, which included the homestead, the ■sale of which under the decree was then inevitable, there can be no reasonable inference that he intended to abandon the homestead, from the mere fact, that under the circumstances, he did not design to rebuild the house. So that, as between Kelly and his wife on the one side, and the general creditors on the other, the right of the former to demand a homestead, or a portion of the proceeds in lieu thereof, was exactly the same that it would have been, if the house had not been destroyed, and the debtor and his family had not left the premises previous to the sale.

On this view of the case, it is further claimed in support of the judgment of the district court, that, the homestead, having been sold under the decree to satisfy claims against which its exemption could not be demanded, there is no-authority, under the statute, to award a portion of the proceeds to the debtor or his wife, in lieu of the homestead, a‘s-against the claim of any creditor.

■ On the other side it is claimed that under the 4th section of the act of April 9, 1869 (66 Ohio L. 50), such authority is expressly given. The section reads as follows :

“When a homestead shall be charged with liens, some-of which, as against them, precludes the allowance of a. homestead to either the head of the family or the wife, and others of such liens do not preclude the allowance of such homestead, and a sale of such homestead is had, then of the proceeds of such sale, after the payment of the liens so-precluding the allowance of such homestead, the balance,, not exceeding five hundred dollars, shall be awarded to the head of the family, or the wife, as the case may be, upon the application of either of them in person, or by agent or attorney, in lieu of such homestead.”

This section, we think, can not apply to this ease. It-was passed after the debts due to the general creditors had been contracted. Without inquiry as to the power of the-legislature to apply.such enactments to pre-existing debts,, we are satisfied that it was not the intention of the legislature to give this statute such operation. The first section, of the act, which enlarges the homestead from a valuation of $500 to $1,000, exempts it from sale, in express terms, as against subsequent debts only; and such has been the uniform policy of our legislation on this subject. And again, a lion upon homestead property is preserved to the creditor, until the property ceases to be a homestead, when it becomes subject to sale. Therefore, while section 4 compensates for the loss of a homestead of the value of $1,000; held under this act, by an allowance, out of its proceeds, of $500 only, it would seem to be unreasonable to hold that the intention was to allow absolutely the -full value of the-homestead exempted under the former act. And further,. the uniform policy of legislation on this subject has been to make the absolute exemption in lieu of a homestead of ■less value than the homestead itself where a temporary use ■only is preserved to the debtor and his family.

' This brings us back to the question, ‘What-, under the original act of 1850, was the right of a debtor, or his family, in the surplus of the proceeds of a homestead sold under a claim which precluded the exemption, as against creditors whose claims were inferior to the right of homestead?

The statute did not in terms provide for such a case; .and yet, it may be safely affirmed that it was the intention •of the statute to make provision for the families of such debtors beyond the exemptions otherwise allowed by law. If the debtor were the head of a family and not the owner ■of a homestead, an additional exemption to the value of .$300 was allowed; and, if the owner of a homestead, it was exempted from sale so long as it remained the family homestead; so that additional exemptions were allowed for -every debtor who was the head of a family. True, the homestead was not exempted as against certain classes of ■ creditors; but these exceptions were not intended for the benefit of creditors who did not belong to the preferred • classes. Hence, when a preferred creditor asserted his lien against the homestead in a court of equity, so much only ■ of the homestead, if capable of division, should be sold as would satisfy the preferred claim; and, if not capable of division without injury, a sale, subject to the right of homestead might be made, if the preferred claim would thereby be satisfied. That preferred claims could thus be satisfied from the homestead of the debtor without injury to the non-preferred creditors admits of no doubt; and therefore, we think it follows that if the whole of the homestead property be sold, any surplus remaining should be regarded, .as between the debtor and non-preferred creditors, as representing the homestead, and should be invested accordingly for the benefit of the parties, or divided between them .according to their respective rights.

And in case the latter method, which we think as a gen■eral rule should be preferred, is adopted, the rights of the. parties to the fund should be determined in analogy to other provisions of the statute. Section 8 of the act, as amended March 22,1858, and in force at the time the rights of these parties accrued, fixed the absolute allowance in lieu of a homestead to a debtor who was not the owner of a homestead at $300 in personal property, to be selected by him. A case quite analogous to the one at bar. We therefore think that, on the application of Mrs. Kelly, the court of common pleas, out of the surplus proceeds of the homestead, after payment of preferred debts, should have allowed to her the sum of $300, and adjudged the balance to the assignee, to be by him administered for the benefit of the general creditors.

When the case was brought into the district court, on error, the record contained an agreed statement of facts, from which it appeared that Mrs. Kelly was entitled to an allowance of $300, instead of $500, as allowed by the court of common pleas, thus presenting a proper case for a modification of the order below, instead of a general reversal. Therefore Ave think the judgment of the district court ■should be reversed, and the order entered here which should have been made below.

Okey, J., having been of counsel, did not sit in this case.