Opinion ID: 2124077
Heading Depth: 1
Heading Rank: 5

Heading: Homestead Proceeds

Text: In 1992, Michael sold one of two pieces of real estate that he owned for $32,000.00. The court held the proceeds from the sale in escrow pending resolution of the modification and alimony dispute. After the trial court entered its judgment against Michael for arrearages, Michael was required to deposit the judgment amount with the trial court before he could obtain the balance of the real estate proceeds. Michael asserts that the proceeds from the sale were homestead proceeds and thus exempt from judgment. South Dakota law provides protection from attachment, liens, and other final process ordered by the court for homesteads and the proceeds from the sale of the homesteads. A homestead: (1) As defined and limited in chapter 43-31, is absolutely exempt; or (2) In the event such homestead is sold under the provisions of chapter 21-19, or is sold by the owner voluntarily, the proceeds of such sale, not exceeding the sum of thirty thousand dollars, is absolutely exempt for a period of one year after the receipt of such proceeds by the owner. . . . SDCL 43-45-3. Judgment creditors are similarly prevented from obtaining liens on the homestead. SDCL 15-16-7. The purpose of the homestead exemption is to provide the security of a home to a family against the claims of creditors. Speck v. Anderson, 318 N.W.2d 339, 343 (S.D.1982). The spouse and any children are not outside creditors, but are the family. The exemption cannot be used to harm the ones it is designed to protect. In re Application of Jensen, 414 N.W.2d 742, 745-46 (Minn.Ct. App.1987). A divorce court, being a court of equity, possesses the power to impose a lien upon a homestead for purposes of spousal or child support. Kerr v. Kerr, 74 S.D. 454, 459, 54 N.W.2d 357, 360 (1952) (quoting Harding v. Harding, 16 S.D. 406, 412-13, 92 N.W. 1080, 1082 (1902)). In neither Harding nor Kerr, did the original divorce decree provide a lien upon the husband's property for alimony or support. Rather, the court found that both under the liberal provisions of our statute and the general powers invested in courts of equity, it was perfectly competent for the circuit court to so far modify the original judgment as to make the alimony a lien upon the homestead in the possession of the defendant. Harding, 16 S.D. at 412-13, 92 N.W. at 1082; Kerr, 74 S.D. at 459, 54 N.W.2d at 360 (quoting Harding ). The Minnesota Court of Appeals has similarly stated: The court's equitable powers override the application of the homestead exemption. Jensen, 414 N.W.2d at 746. [2] We do not find that the trial court abused its discretion in escrowing the proceeds from the sale of Michael's real estate for a judgment of alimony arrearages. Michael owned two pieces of real estate: one in which he lived and one which he rented to his son. Michael planned to use the proceeds from the sale of the property on which he was living to pay off the remaining mortgage on his second property to which he was moving. Escrowing the sale proceeds did not deprive Michael of a home; permitting Michael the use of the homestead exemption deprives Lore of five years of alimony to which she was entitled. Michael made an independent, inappropriate decision to terminate his alimony payments in 1987 notwithstanding his knowledge of the divorce decree in this matter. Equity will not afford Michael the luxury of paying off the mortgage on a second property he owns with proceeds from the sale of the first when he has an outstanding judgment for alimony arrearages. The trial court did not abuse its discretion in placing in escrow the amount of money from the proceeds of his real estate sale necessary to cover alimony arrearages. The order of the trial court is accordingly affirmed. MILLER, C.J., and WUEST, J., concur. SABERS, J., concurs in part and dissents in part. HENDERSON, J., dissents.