Case Title: Charter One Bank v. Estate of Spillane

Citation: 174 Vt. 490, 807 A.2d 452

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2002-08-14T00:00:00Z

Document:
Charter One Bank v. Estate of Spillane (2001-228); 174 Vt. 490; 807 A.2d 452

[File 14-Aug-2002]

                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2001-228

                               MAY TERM, 2002


  Charter One Bank	               }	APPEALED FROM:
                                       }
                                       }
       v.	                       }	Windsor Superior Court
                                       }	
  Estate of Philip H. Spillane,        }
  Department of Taxes and Mary K.      }
  Spillane	                       }	DOCKET NO. 169-4-00WrCv

                                                Trial Judge: Alan W. Cheever 

             In the above-entitled cause, the Clerk will enter:


       This is an interlocutory appeal from an order granting summary
  judgment to plaintiff Charter One Bank against intervener Mary K. Spillane. 
  Mary Spillane is the widow and second wife of Phillip Spillane.  She
  intervened in this foreclosure action to assert her homestead rights in the
  real estate being foreclosed by Charter One Bank.  The foreclosure was
  brought because of a default in payments on a home equity line of credit
  taken out by Phillip Spillane and his first wife, Janice, now deceased. 
  Mary's claim is that her homestead interest should take priority over
  Charter One's interest because the advances under the home equity line of
  credit, whether taken during Phillip's first or second marriage, were not
  perfected because the spouses failed to consent to the advances.  We
  affirm.

       The stipulated facts show that Phillip and Janice borrowed $38,500
  from the Marble Bank (Charter One has succeeded to its interest) in 1987
  secured by a non-purchase money mortgage on their home and also securing
  any future advances made under the line of credit.  Janice died in 1988,
  and in 1990, Phillip married Mary.  Although the entire history of the loan
  advances is not clear, advances were made, and the last advance was made on
  October 3, 1994.  Phillip and Mary were divorced in February, 1995 and the
  property was awarded to Phillip.  Phillip and Mary then remarried in April,
  1998, and Phillip died on March 5, 1999.  Mary occupied the real estate
  during her first and second marriages to Phillip.  Mary has not signed any
  written consents to advances under the loan agreement.  The interest
  asserted here by Mary is to protect her homestead rights.  She has no title
  interest in the property.  The principal amount in default is $26,040.49
  exclusive of attorney's fees.

       The trial court held that Charter One was entitled to summary judgment
  because Mary's inchoate homestead rights were extinguished at the time of
  her divorce from Phillip in 1995, after the last advance had been made on
  the loan.  The trial court reasoned that, if there were defects in
  advances, those defects were cured by the divorce, and Mary's subsequent
  remarriage to Phillip entitled her only to the interest Phillip had when he
  died.  That interest, the trial court held, was properly subject to the
  interest of the bank, which was fully secured by the mortgage prior to the
  date of the second marriage in 1998.

 
        
       On appeal, Mary assigns numerous claims of error, but the centerpiece
  of her argument is that none of the advances made to Phillip during his
  first or his second marriage was perfected because of lack of consent by
  the spouses; therefore, she argues, the liens are void pursuant to 27
  V.S.A.   § 141(b).  Section 141(b) is a part of the homestead statutes and
  provides as follows:

    When a mortgagee takes an accruing mortgage, the only debt which
    shall be secured thereby or become a lien upon the property
    described therein shall be the debt described in the mortgage and
    existing at the the time of its execution, and subsequent direct
    indebtedness of the  mortgagor to such mortgagee; provided, that
    when the mortgage includes a homestead, the written consent of the
    wife or husband of the mortgagor to the creation of such
    subsequent direct indebtedness shall be required.

  Another statute, 8 V.S.A. § 1207, repealed effective January 2001, but in
  effect at the time of the events herein, also required that if the property
  included a homestead of a spouse, the mortgage and any future advances must
  have the written consent of the spouse.  

       We agree with the trial court that the liens created by the advances
  are not void, regardless of a lack of consent by Janice or Mary, because
  the liens created without their consent are voidable, and not void ab
  initio.  As such, the liens could be affected by subsequent events that
  extinguished the inchoate homestead rights of Janice, by death before
  Phillip, and of Mary, by divorce.  See Estate of Girard v. Laird, 159 Vt.
  508, 517, 621 A.2d 1265, 1270 (1993) (homestead interest voluntarily
  relinquished in divorce cannot be enforced thereafter and overruling
  contrary rule of Martin v. Harrington, 73 Vt. 193, 50 A. 1074 (1901));
  Condosta v. Condosta, 142 Vt. 117, 122,