Opinion ID: 5221
Heading Depth: 5
Heading Rank: 2

Heading: Texas Case Law and Legislative History

Text: The Court's construction of section 41.001 is entirely consistent with the legislative intent and Texas case law. In enacting the present version of the proceeds exemption statute and other homestead laws, the Texas legislature asserted that their intent was to codify case law on homestead. SENATE COMM. ON STATE AFFAIRS, BILL ANALYSIS, 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 consistently held that the fundamental purpose of the 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 a court cannot sanction a construction of § 41.001 which exempts proceeds of former homestead absent clear and unambiguous language which so requires. 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 Texas residents. 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 of investing the sale proceeds in 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). This rule 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 Texas legislature 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). 11 England 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). 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 of the 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 apply and 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 is incompatible 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 of the plain language of section 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.