Opinion ID: 5221
Heading Depth: 4
Heading Rank: 2

Heading: taxes on the property; or

Text: 7 Homestead 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. 8 The legislature has re-enacted or amended the statute several times since its initial enactment in 1897. (3) work and material used in constructing improvements on the property if 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 proceeds is consistent with the legislature's intent that courts liberally construe 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.
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). 9 While 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 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 is so clear, we believe the drafters of the exempt ion 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, 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 ). 10 During 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, 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 rights in 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 changes the 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.
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.