1Appellant presently argues that the Cedar Hill home, which included 6.248 acres of land, may

have been a rural homestead, not an urban homestead. However, his counsel was quite clear

before the bankruptcy court, conceding that "the urban homestead, admittedly urban, was in

excess of an acre.... [s]o only one acre of that would be exempt, obviously ..." (Rec.Vol. 3 at

11–12). England's counsel also stated that he did not believe that there was "any dispute that the

... Cedar Hill property was served by all [municipal] utilities." (Rec.Vol. 3 at 30). Further, the

Appellant himself testified that his former homestead was located within the city limits of Cedar

Hill. (Rec.Vol. 3 at 31). Based upon these statements, there can be no question but that the

Cedar Hill property constituted urban, not rural, homestead. 

United States Court of Appeals,

Fifth Circuit.

No. 91–7381.

In the Matter of Wesley R. ENGLAND, Debtor.

Wesley R. ENGLAND, Appellant,

v.

FEDERAL DEPOSIT INSURANCE CORPORATION, Abrams Centre National Bank, and J.

Gregg Pritchard, Chapter 7 Trustee in Bankruptcy, etc., Appellees.

Oct. 26, 1992.

Appeal from the United States District Court for the Northern District of Texas.

Before POLITZ, Chief Judge, JOHNSON and JOLLY, Circuit Judges.

JOHNSON, Circuit Judge:

This case calls on the Court to determine whether both a homestead and proceeds from the

sale of a former homestead are exempt under section 41.001 of the Texas Property Code. Wesley

R. England appeals, urging the Court to reverse the Northern District Court's holding that both are

not exempt. Concluding that the language in section 41.001 clearly and unambiguously forbids the

simultaneous exemption of both, we affirm.

I. Facts and Procedural History

For the twenty-seven years prior to October 16, 1990, Wesley R. England ("England" or

"Appellant") and his wife, Virginia, lived in a home in Cedar Hill, Texas, which constituted their

urban homestead.1 On October 16, 1990, England sold this property for $10,000 in cash and a
 

2Mr. England testified that he used the funds to improve the ranch in several ways, including

remodeling his house, building two barns, building roads on the ranch, drilling a water well,

digging water tanks, and fencing the entire 869 acre ranch. He stated that the only improvement

which was not fully completed was the completion of a third barn. 

 

3England claimed the entire 869 acres as his rural homestead. However, the law is indisputably

clear that a rural homestead consists of a maximum of two hundred acres. See TEX.PROP.CODE

ANN. § 41.002 (Vernon Supp.1992). 

 

4

J. Gregg Pritchard is the Chapter 7 Trustee of the bankruptcy estate of the Appellant. He

intervened in this appeal solely to monitor the appeal and to participate as required to protect the

rights and interests of the creditors of the estate. 

 

5

In the interest of clarity, this Court chooses not to characterize the proceeds as homestead. 

See infra note 7. 

$210,000 Note Receivable (Note). This Note required the buyers to pay Appellant $1843 per month

for thirty-five months, with the balance due on October 16, 1993. England used the proceeds which

he received to pay for improvements on his ranch2 and for living expenses.

Approximately two weeks after closing on the house, England and his wife moved onto their

869 acre ranch near Hico, Texas. Two days after this move, on November 1, 1990, England filed a

petition for relief under Chapter 11 of the Bankruptcy Code. This was later converted to a Chapter

7 proceeding. Based upon 11 U.S.C. § 522(b)(2)(A), England elected to exempt property based

upon Texas law. Among other things, he claimed his ranch as a rural homestead3and the Note as

proceedsfrom the sale of homestead, both purportedly exempt property undersection 41.001(a) and

(c) of the Texas Property Code. The Federal Deposit Insurance Company and Abrams Centre

National Bank ("creditors"4) timely objected, arguing that to allow both exemptions would be

tantamount to allowing the appellant two homestead exemptions. The bankruptcy court and, upon

England's appeal, the district court agreed 141 B.R. 495. Both courts disallowed the exemption of

the proceeds, holding that as presented by England, the proceeds constituted a second homestead,5

something not countenanced by Texas law. England appealed to this Court, urging that we reverse

the holdings of the courts below and hold that both are exempt.

II. Discussion
A. Jurisdiction

Each court must be satisfied that it has jurisdiction of each case it considers. Even if the

parties fail to raise the question of subject matter or appellate jurisdiction, the court must do so sua

sponte, if necessary. In re Moody, 849 F.2d 902 (5th Cir.), cert. denied, 488 U.S. 967, 109 S.Ct.

493, 102 L.Ed.2d 530 (1988). The bankruptcy judge's order disallowing exemption of the proceeds

clearly did not dispose of England's entire bankruptcy case. We must therefore determine whether

this Court has appellate jurisdiction over that order.

Jurisdiction over bankruptcy cases arises from 28 U.S.C. § 158(d), which grants courts of

appeals appellate jurisdiction over "allfinal decisions, judgments, orders, and decrees" of bankruptcy

judges. District courts also have appellate jurisdiction over bankruptcy cases; however, their

jurisdiction includesinterlocutory orders and decrees on which the court has granted leave to appeal.

28 U.S.C. § 158(a). Although the district court did not grant England leave to appeal this case, that

court did not discuss the finality of the bankruptcy court's order.

The Supreme Court has defined final judgment, as used in 28 U.S.C. § 1291, as a decision

which "ends the litigation on the merits and leaves nothing for the court to do but execute the

judgment." Firestone Tire and Rubber Co. v. Risjord, 449 U.S. 368, 373–74, 101 S.Ct. 669,

672–73, 66 L.Ed.2d 571 (1981) (quoting Coopers and Lybrand v. Livesay, 437 U.S. 463, 467, 98

S.Ct. 2454, 2456, 57 L.Ed.2d 351 (1978)). The Supreme Court has not defined final judgment with

respect to section 158.

However, a determination that appellate jurisdiction arises only when the bankruptcy judge

enters an order which endsthe entire bankruptcy case, leaving nothing for the court to do but execute

the judgment, would substantially frustrate the bankruptcy system. This is so particularly when, as

here, one independent decision materially affects the rest of the bankruptcy proceedings. Separate

and discrete orders in many bankruptcy proceedings determine the extent of the bankruptcy estate
 

6Although In re White and Mather Memorial Hospital were decided prior to the enactment of

§ 158, we find the analysis in those cases persuasive. 

and influence creditors to expend or not to expend effort to recover monies due them. The reversal

ofsuch an order would waste exorbitant amounts of time, money, and labor and would likely require

parties to start the entire bankruptcy process anew. This potential waste of judicial and other

resources has influenced this Court and other courts of appeals to view finality in bankruptcy

proceedings in a more practical and less technical light. See In re Moody, 849 F.2d 902, 904 (5th

Cir.), cert. denied, 488 U.S. 967, 109 S.Ct. 493, 102 L.Ed.2d 530 (1988); In re Brayshaw, 912 F.2d

1255, 1256 (10th Cir.1990); In re Apex Oil Co., 884 F.2d 343, 347 (8th Cir.1989); In re Cottrell,

876 F.2d 540, 541 (6th Cir.1989); F/S Airlease II, Inc. v. Simon, 844 F.2d 99, 103–04 (3d Cir.),

cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 110 (1988); In re Charter Co., 778 F.2d

617, 621 (11th Cir.1985); Sumy v. Schlossberg, 777 F.2d 921, 923 (4th Cir.1985). But see In re

Wisz, 778 F.2d 762, 763–64 (11th Cir.1985). The Court has determined that an order which ends

a discrete judicial unit in the larger case concludes a bankruptcy proceeding and is a final judgment

for the purposes of section 158(d). In re Moody, 849 F.2d 902, 904 (5th Cir.1988); In re Moody,

817 F.2d 365, 368 (5th Cir.1987). Finality in bankruptcy cases is contingent upon the conclusion of

an adversarial proceeding within the bankruptcy case, rather than the conclusion of the entire

litigation. In re Louisiana World Exposition, Inc., 832 F.2d 1391 (5th Cir.1987).

Other courts have explicitly held that the grant or denial of an exemption in a bankruptcy

proceeding is a final order under section 158(d). In re Brayshaw, 912 F.2d 1255, 1256 (10th

Cir.1990); Sumy, 777 F.2d at 923; In re Jones, 768 F.2d 923, 925–26 n. 3 (7th Cir.1985); In re

White, 727 F.2d 884, 886 (9th Cir.1984); John T. Mather Memorial Hospital, Inc. v. Pearl, 723

F.2d 193, 194 n. 1 (2d Cir.1983).6 Although this Court has reviewed a district court's determination

that certain property was exempt in a bankruptcy proceeding, it has not expressly held that such an

order is final. There was an implicit finding that the bankruptcy court's order was final. In re Dyke,

943 F.2d 1435 (5thCir.1991). That which In re Dyke implied, the Court now holds: An order which
 

7Homestead interests exist in real property. Cocke v. Conquest, 120 Tex. 43, 52, 35 S.W.2d

673, 678 (1931). See also TEX.PROP.CODE ANN. § 41.002 (Vernon Supp.1992) (urban

homestead consists of one acre of land; rural homestead consists of not more than two hundred

acres). Proceeds are personal property, and cannot be homestead. We therefore disapprove of

the district court's determination and the creditors' argument that the exemption of proceeds and

homestead is tantamount to the exemption of two homesteads. 

 

8The legislature has re-enacted or amended the statute several times since its initial enactment

in 1897. 

grants or denies an exemption will be deemed a final order for the purposes of 28 U.S.C. § 158(d).

B. Homestead and Proceeds Exemption

1. Standard of Review

The determination of whether both homestead and proceeds offormer homestead are exempt

is a question of law, which this Court reviews de novo. Frame v. S–H, Inc., 967 F.2d 194, 202 (5th

Cir.1992).

2. Proceeds of Former Homestead

From the beginning of Texas' statehood in 1845, its constitutions have provided homestead

protection to its residents. See TEX. CONST. of 1845, art. VII, § 22. The first constitution, as well

as those which followed it, protected homestead from forced sale for the payment of debts, except

in specific circumstances which are not relevant in this case. In 1897, the legislature passed article

2396, a predecessor to section 41.001, which also protected proceeds from the sale of a homestead7

from creditors ("proceeds exemption statute"). The Texas Legislature amended the proceeds

exemption statute in 1985.8 That statute, section 41.001 of the Texas Property Code, presently reads:

(a) A homestead and one or more lots used for a place of burial of the dead are exempt from

seizure for the claims of creditors except for encumbrances properly fixed on homestead

property.

(b) Encumbrances may be properly fixed on homestead property for:

(1) purchase money;

(2) taxes on the property; or
 

9While the sale of homestead is abandonment which technically renders the property former

homestead, it is clear that the legislature intended that that type of abandonment trigger the

protection afforded in § 41.001. See Ingram v. Summers, 29 S.W.2d 447 (Tex.Civ.App.—El

(3) work andmaterialused inconstructing improvements onthe propertyif contracted

for in writing before the material is furnished or the labor is performed and in a manner

required for the conveyance of a homestead, with joinder of both spouses if the homestead

claimant is married.

(c) The homestead claimant's proceeds of a sale of a homestead are not subject to seizure for

a creditor's claim for six months after the date of sale.

TEX.PROP.CODE ANN. § 41.001 (Vernon Supp.1992).

The creditors argue that sections (a), (b), and (c) of the statute are disjunctive, allowing the

exemption of homestead or proceeds, but not both. England argues that the sections are conjunctive

such that the statute clearly and unambiguously exempts homestead in section (a) and proceeds in

section (c). He asseverates that construing the statute to exempt both the homestead and the

proceedsis consistent with the legislature'sintent that courtsliberallyconstrue homestead laws, "even

if the results are personally distasteful." No Texas court has answered this question, so this Court

ventures out into uncharted territory in determining whether section 41.001 may be construed to

exempt both a homestead and proceeds of a former homestead simultaneously.

a. Interpretation of Section 41.001

The first step in interpreting the meaning of a statute is to review its language. Courts must

adhere to the plain language of the law unless doing so demonstrably conflicts with the intentions of

the drafters. In re Meyerland Co., 960 F.2d 512, 516 (5th Cir.1992) (quoting Griffin v. Oceanic

Contractors, Inc., 458 U.S. 564, 571, 102 S.Ct. 3245, 3250, 73 L.Ed.2d 973 (1982)).

The language in section 41.001(c) is clear regarding proceeds of homestead: When one sells

his homestead, the proceeds from that sale are exempt. However, when one acquires a new

homestead after the sale of his previous homestead, he abandons the previous homestead, changing

its character to former homestead.9 Weaver v. Nugent, 72 Tex. 272, 277, 10 S.W. 458, 460 (1888).
Paso 1930). This Court's use of the terms "abandonment" and "former homestead" does not

encompass homestead abandoned merely by sale. As used in this opinion, the terms mean

abandonment by the acquisition of another homestead. See infra slip op. p. 607 (discussion of

Ingram v. Summers ). 

 

10During oral arguments, counsel for Mr. England asserted that the legislature may have

intended that both homestead and the proceeds be simultaneously exempt so that the claimant

could have a source of income. However, the Supreme Court addressed such an issue in 1875. 

The court determined that

[t]o exempt property, not in fact a part of the homestead, because it will be a

source of income from which a support for the family may be drawn ... may be also

an income much beyond that of even a majority of the most affluent class of our

city population. A construction of the constitutional exemption ... which would

lead to such results, or afford the means of such fraudulent practices against honest

creditors cannot be sanctioned, unless imperatively demanded by the plain and

unmistakable language in which it is expressed.

Herman Iken and Co. v. Olenick, 42 Tex. 195, 200 (1875). In 1897, the legislature

answered by enacting a plain, unmistakable statute which exempted the proceeds of the

sale of homestead, not former homestead. To follow the Texas Supreme Court's decision,

Therefore, the pertinent question this Court must answer is whether the proceeds of the sale of

former homestead are exempt under section 41.001. We find that they are not.

 Just as the former homestead loses its homestead character when its owner abandons it, so

the proceeds of the sale of that former homestead lose their homestead character and become

proceeds of former homestead. Texas law has consistently distinguished homestead from former

homestead and has done so for well over a century. Texas does not and has never afforded owners

of former homestead the rights of homestead claimants. Marler v. Handy, 88 Tex. 421, 427–28, 31

S.W. 636, 639 (1895); Weaver, 72 Tex. at 277, 10 S.W. at 460; Reece v. Renfro, 68 Tex. 192, 194,

4 S.W. 545, 546–47 (1887); Allison v. Shilling, 27 Tex. 450, 455–56 (1864). Owners of abandoned

homestead have no rights in their former homest ead, and there are no hindrances to the seizure

thereof. Allison, 27 Tex. at 455–56.

Because the distinction between homestead and former homestead isso clear, we believe the

drafters of the exemption statute would have unambiguously mandated that proceeds of both be

exempt, if that indeed is what they intended.10 See Herman Iken and Co. v. Olenick, 42 Tex. 195,
a court cannot sanction a construction of § 41.001 which exempts proceeds of former

homestead absent clear and unambiguous language which so requires. 

200 (1875). However, they did not do so, and we find that the plain language of section 41.001(c)

clearly and unambiguously exempts only the proceeds of the sale of homestead. Only during the six

months following the sale of a homestead when a claimant has not acquired another homestead do

claimants have any protected rightsin homestead sale proceeds. See Ingram v. Summers, 29 S.W.2d

447 (Tex.Civ.App.—El Paso 1930). The sale of the homestead instantly activates the protection of

the proceeds exemption statute and shelters the proceeds for up to six months. However, the

acquisition of another homestead during that six month period instantly changesthe prior homestead

to former homestead and deactivates the proceeds exemption statute such that the proceeds of the

former homestead are no longer exempt. Here, England's Hico ranch designation automatically

terminated his right to exempt the proceeds and triggered his right to exempt the new homestead.

b. Texas Case Law and Legislative History

The Court's construction ofsection 41.001 is entirelyconsistent with the legislative intent and

Texas case law. In enacting the present version of the proceeds exemption statute and other

homestead laws, the Texaslegislature asserted that their intent wasto codify case law on homestead.

SENATECOMM. ON STATEAFFAIRS,BILLANALYSIS, Tex.S.B. 1232, 69th Leg., R.S. (1985); Debate

on Tex.S.B. 1232 on the Floor of the House of Representatives, 69th Leg., R.S. (May 17, 1985)

(tape available from the Office of the House Committee Coordinator).

Texas cases have consistentlyheld that the fundamentalpurpose ofthe Texas homestead laws

is to secure a place of residence against financial disaster. Cocke v. Conquest, 120 Tex. 43, 53, 35

S.W.2d 673, 678 (1931); Herman Iken and Co., 42 Tex. at 198 ("The leading and fundamental idea

connected with a homestead is unquestionably associated with that of a place of residence for the

family, where the independence and security of a home may be enjoyed, without danger of its loss,

or harassment and disturbance by reason of the improvidence or misfortune of the head or any other
 

11England urges the Court to find that "investment in homestead" equates to improvement of

homestead. However, a review of Texas cases which used the terms invest or reinvest in

homestead reveals that the courts used those terms to mean "purchase" or "acquire." See e.g.

Kirby v. Giddings, 75 Tex. 679, 13 S.W. 27 (1890); Blum v. Light, 81 Tex. 414, 16 S.W. 1090

(1891); Freiberg, Klein and Co. v. Walzem, 85 Tex. 264, 20 S.W. 60 (1892); Cameron v.

Gebhard, 85 Tex. 610, 22 S.W. 1033 (1893); Stallings v. Hullum, 89 Tex. 431, 35 S.W. 2

(1896). 

member of the family. It is a secure asylum of which the family cannot be deprived by creditors.");

Allison v. Shilling, 27 Tex. 450, 455 (1864). See also Woodward v. Sanger Bros., 246 F. 777, 780

(5th Cir.1917), cert. denied, 246 U.S. 674, 38 S.Ct. 425, 62 L.Ed. 932 (1918) (This Court asserted

that "[a] fundamental ideal involved [in the homestead laws] is a place of residence."). The

homestead laws not only have beneficent purposes, but they also are designed to support the public

policy of preventing homelessness among Texasresidents. Cocke, 120 Tex. at 52, 35 S.W.2d at 678;

Woods v. Alvarado State Bank, 118 Tex. 586, 595, 19 S.W.2d 35, 38 (1929).

However, prior to the 1897 proceeds exemption statute, those who voluntarily sold their

homestead with the intention ofinvesting the sale proceedsin another homestead were faced with the

possibility of losing all of the proceeds to creditors. For when exempt property was voluntarily sold

or exchanged, the proceeds were not exempt. Kirby v. Giddings, 75 Tex. 679, 13 S.W. 27 (1890).

Thisrule was harsh and inconsistent with the purposes of the homestead laws, and many people were

rendered homeless because of it. See Kirby v. Giddings, 75 Tex. 679, 13 S.W. 27 (1890); Mann v.

Kelsey, 71 Tex. 609, 12 S.W. 43 (1888); Whittenberg v. Lloyd, 49 Tex. 633 (1878).

The Texaslegislature responded, recognizing that there would be times when people would

need to sell their homestead. It therefore passed the proceeds exemption statute "to preserve the

homestead protection afforded by the Texas Constitution in such cases by exempting sale proceeds

from creditors' claims for six months." Taylor v. Mosty Bros. Nursery, Inc., 777 S.W.2d 568, 570

(Tex.App.—San Antonio 1989). The object of the proceeds exemption statute was solely to allow

the claimant to invest the proceeds in another homestead, not to protect the proceeds, in and of

themselves.11 Gaddy v. First National Bank, 283 S.W. 277, 280 (Tex.Civ.App.–Beaumont 1926).
See also Taylor, 777 S.W.2d at 570 ("The six-month provision was enacted in order that the

proceeds might be reinvested in another homestead").

The court in Ingram v. Summers delineated the extent ofthe proceeds exemption. 29 S.W.2d

447 (Tex.Civ.App.—El Paso 1930). In dicta, the court stated that certain actions of a claimant could

waive the right to exempt homestead proceeds. The court stated that if the claimant abandoned the

homestead, the exemption statute would not applyand the proceeds would be subject to garnishment.

Id. at 449. While the court held that abandonment of the homestead by sale did not waive the

proceeds exemption, it intimated that abandonment in any other manner isincompatible with and not

covered by the exemption statute. Id. at 449–50. Indubitably, abandonment by the acquisition of

another homestead is one way a claimant forfeits his or her rights to exempt sale proceeds of the

former homestead.

In light ofthe plain language ofsection 41.001, the legislative intent, and Texas case law, this

Court holds that when one abandons a homestead by acquiring another homestead, the proceeds of

the former homestead are not covered by section 41.001 and are therefore not exempt.

III. Conclusion

Had Mr. England not claimed his ranch as homestead, the proceeds from the Cedar Hill

property would be exempt under section 41.001(c) of the Texas Property Code. However, both

cannot be exempt at the same time. Although homestead laws were designed to secure to residents

homes which creditors cannot seize, the legislature did not intend that the laws be extended to

jeopardize the rights of others. Herman Iken and Co. v. Olenick, 42 Tex. 195, 201 (1875); Allison

v. Shilling, 27 Tex. 450, 455 (1864). The judgment of the court below is therefore AFFIRMED.