Case Name: HOLAHAN v. NUGENT
Court: United States Court of Appeals for the Fifth Circuit
Jurisdiction: United States
Decision Date: 1952-07-18
Citations: 198 F.2d 653
Docket Number: No. 13707
Parties: HOLAHAN v. NUGENT
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 198
Pages: 653–660

Head Matter:
HOLAHAN v. NUGENT
No. 13707.
United States Court of Appeals Fifth Circuit.
July 18, 1952.
Rives, Circuit Judge, dissented.
Bernhardt, C. Heebe, New Orleans, La., for appellant.
James I. McCain, New Orleans, La., for appellee.
Before HOLMES, RUSSELL, and RIVES, Circuit Judges.

Opinion:
RUSSELL, Circuit Judge.
The sole question in this case is whether ordinary debts of creditors with no lien, pledge, or title, which are incurred during the period of occupancy of a family home in a Louisiana city of more than 100,000 population and before the filing of the declaration of homestead exemption, are enforceable against, or from the proceeds of, property subsequently claimed and perfected as a homestead by the recording of a homestead declaration. The question arises in this way. Appellee Nugent and his wife, in 1941, purchased as community property a residence located in New Orleans, Lpuisi-ana, moved into the residence, and continually resided there until the home was sold in 1950 by the trustee in bankruptcy. In 1948, Nugent contracted a number of ordinary, unsecured debts. On January 4th, 1949, he and his wife properly filed and had recorded a joint declaration of homestead as authorized by Article XI of the Constitution of Louisiana, as amended in 1932 and 1938, and likewise claimed it as a family home under the provisions of Act 35 of the Legislature of the State of Louisiana for the year 1921, LSA-R.S. 9:2801 et seq. On December 17th, 1949, Nugent filed a petition in bankruptcy in which he asserted his homestead exemption. The property was subject to a mortgage passed on November 15th, 1943, in which the husband and wife waived their homestead exemption, but only in favor of the mortgage creditor. The property was sold by the trustee, the mortgage paid, and a balance of approximately $11,000 remained. The ordinary creditors, two of whom had reduced their claims to judgment after the filing of the homestead declaration, claimed the proceeds, including the homestead exemption. The Referee held the claims of such creditors superior to the claim of homestead, but, upon review,' the District Judge reversed this order and adjudged that the homestead exemption was superior to, and should be prior to the payment of, the claims of the unsecured creditors.
We think the Court properly held that the homestead exemption was superior to such claims of the creditors. Article XI of the Constitution of Louisiana, as amended in 1932 and 1938, provides a homestead exemption. So far as material here, Section 1 declares exempt "from seizure and sale by any process whatever, except as herein provided, the homestead, bona fide, owned by the debtor and occupied by him" consisting of specified lands and other property to the total value of not more than $4,-000.00. Section 2 declares that the exemption shall not apply to specified debts. Its concluding paragraph is explicit. The proviso last quoted accords with a provision in Section 1 which contemplates a possible sale to determine the value of the homestead and which declares that if the sale does not realize more than $4,000.00 over and above all costs and expenses, the sale shall be null and void. Section 3 provides for a waiver of exemption in whole or in part, either general or special, by waiver in writing, which, to be effective, must be made by both the husband and wife if living together. Such waiver shall have effect from the "time of recording." Section 4, upon the language of which the appellant bases his argument, is as follows: "The homestead exemptions herein provided shall exist without registration, except where the property is situated in a city having a population of more than one hundred thousand (100,000), in which latter event said exemptions shall not be valid unless recorded in the manner provided by Act 114 of 1880, or as may be otherwise provided by law." It will be observed that generally the homestead exemption exists without registration. In such instances it has been held "that the existence of an ordinary debt, even though it be reduced to judgment, will not, unless the judgment be recorded, operate to prevent the acquisition of a right of homestead which will protect the property, occupied and claimed as a homestead, from seizure in satisfaction of such judgment."' Pouncy v. Gunby's Estate, 138 . La. 10, 69 So. 856. In that case the debt arose when the debtor was unmarried and did not occupy the land and therefore was not entitled to acquire a homestead, but it was held that after marriage and occupancy such right and claim was effective as against the enforcement of the debt. The decision thus clearly recognizes that when the right to exemption arises it defeats the enforcement of prior ordinary debts. It is true that the provisions of Section 4, of Article XI, of the Constitution of Louisiana, supra, are susceptible to the construction that in a case of property situated in a city of more than 100,000 population the exemption provided does not become finally effective until recordation is made in the manner required. We do not attempt to determine whether the provision might be given the broader interpretation relied upon by appellee, as one part of his argument, for we are clear that even under the more restricted view the act of recordation is suf ficient to render the homestead exemption prior in right and claim to the ordinary debts here sought to be enforced against it. We do not attribute to the language of the Constitution, by its provision for registration, an intention to provide one ultimate measure of exemption for citizens in a city of more than 100,000 population and another in other localities of the State. It would seem that the requirement for registration in such cities, at most, only postpones the effective establishment of the right of exemption, which, when finally perfected and established by recordation, is as effective from that time on as would be true in a locality where the right existed without registration. The exemption from seizure and sale applies to property whether "rural or urban". It could well be that the proviso requiring registration in cities of more than 100,000 population contemplated that in cities of this size there did not exist the opportunity for knowledge and notice of occupancy of the residence as a family home which obtained in small communities and that the requirement of recordation was imposed to supply the notice which in other cases is usually and generally known in the neighborhood. However this may be, it is entirely clear that following the recordation the homestead exemption is as effective in the city as in the country. In neither location do we find any basis for a determination that an ordinary debt, even though contracted prior to the perfection of the exemption right, is superior to, and may be enforced against, the exemption provided by the Constitution. Such ordinary debts, without privilege, pledge, lien or title can not invade the security provided by the Consfitutional claim of exemption. Of course, it would seem that in the city, prior to recordation, and in the country, prior to the arising of circumstances which give rise to the right to claim the exemption, claims or encumbrances which affect the title, which the debtor must have in order to enjoy any homestead exemption at all, would prime the exemption, but debts without such rights and privileges aie those against which the Constitution raises a barrier to enforcement in order to carry out the declared public policy implicit in its provisions. The language of the Constitution contemplates that the homestead exemption shall have the purpose of availing the head of the family of its protection against outstanding debts for it designates the person entitled to protection as "debtor."
Counsel for appellant relies largely upon the decision in Succession of Furniss, 34 La.Ann. 1013, a decision in 1882 deal.-ing with the provisions of the Louisiana Constitution of 1879. We do not find this authority applicable in determining the legal effect of the language of the present Constitution of Louisiana. The basis of that decision is expressly the fact that the Constitution of 1879 contained no provision for waiver of exemption. Such is not true at the present. The present Constitution expressly permits waiver and the reason that im~elled the decision in the early case does not now obtain. The decision in Clarke v. Natal, 138 La. 1038, 71 So. 149, referred t~ in Watson v. Bethany, 209 La. 989, 26 So.2d 12, dealt with the priority of a mortgage perfected before the registry of the homestead declaration.
At the time the declaration of homestead in the present case was recorded the existence of the antecedent debts in no way affected the title of the head of the family and his wife. Upon recordation the homestead exemption provided by the Constitution became finally effective. The debts now sought to be enforced are not among those specified as excepted by the provision of Section 2 of Article XI of the Constitu tion of Louisiana, supra. The trial judge did not err in adjudging the bankrupt entitled to receive the homestead exemption in the amount of $4,000.00.
Judgment affirmed.
. "This exemption shall not apply to the following debts, to wit:
"1. For the purchase price of property or any part of such purchase price.
"2. For labor, money, and material, furnished for building, repairing or improving homesteads.
"3. For liabilities incurred by any pub-lie officer, or fiduciary, or any attorney at law, for money collected or received on deposits.
"4. For taxes or assessments.
"5. For rent which bears a privilege upon said property.
"6. For the amount which may be due a homestead or building and loan association for a loan made by it on the security of the property; provided, that if at the time of making such loan the borrower be married, and not separated from bed and board from the other spouse, the latter shall have consented thereto.
"7. For the amount which may be due for money advanced on the security of a mortgage on said property; provided, that if at the time of granting such mortgage the mortgagor be married, and not separated from bed and board from the other spouse, the latter shall have eon-sented thereto.
"No court or ministerial officer of this State shall ever have jurisdiction, or authority, to enforce any judgment, execution, or decree, against the property exempted, as a homestead, except for the debts above mentioned in numbers one, two, three, four, five, six and seven of this Section; provided the property herein declared exempt shall not exceed in value Four Thousand Dollars ($4,-000.00)."
. Lee v. Cooper, 155 La. 143; 98 So. 869; State ex rel. Code v. Code, 215 La. 485, 41 So.2d 62; Young v. Geter, 185 La. 709, 170 So. 240, 242, 107 A.L.R. 608.
The decision in Young v. Geter, supra, recognizes the abandonment in Louisiana of the former rule of strict construction of exemption laws. Supported by th~ citation of two authorities, the Supreme Court of Louisiana declares: "this Court has adopted the rule that whenever the claim to the exemption can be brought within the purpose and intent of the statute by a fair and reasonable interpretation, the exemption wifi be allowed.'~