Court Opinion

ID: 5004721
Source: CourtListenerOpinion
Date Created: 2021-10-01 01:50:21.209851+00
Date Added: 2024-06-11T08:17:13.753826
License: Public Domain

On Rehearing.
 In its motion for rehearing the defendant in error presents that it has the equitable right to have the homestead of plaintiffs in error sold first, and that its equitable right is not affected by the contractual provisions of the deed of trust quoted in the original opinion. On the question of equities arising in a situation where homestead claimants have executed a second lien upon the excess land owned by them above that included in the homestead exemption, our Supreme Court, through Chief Justice Cure-ton, has rendered a rather exhaustive opinion in the case of Kerens National Bank v. Stockton, 120 Tex. 546, 40 S.W.(2d) 7, 11, 77 A. L. R. 362. The opinion states that it was the first time the question had been directly presented to that court. If quotes with approval the following: “This right of the homestead claimants, as we have seen, is one which they may exercise even to the detriment of junior incumbrances of the other lands. This is so, upon the principle that they have taken their junior incumbrances with knowledge of the existing equities which the homestead carries, amongst which is the important one to direct the senior mortgagee to have recourse first to lands other than the homestead.”
And the following: “The claimants, in the absence of any expression of a contrary intent, should be presumed to intend no further peril to their homestead than necessity demands, while he who receives a mortgage from them should be regarded as obtaining a mere security for his debt, and not the right to employ that security in such a mode as to needlessly imperil the homestead.”
This decision unquestionably establishes the law in this state to be that homestead claimants have a right to compel the prior mortgagee having a valid lien upon the homestead and excess land to have recourse first to the excess, even though such claimants have executed a valid second mortgage against such excess, and even though, by such sale thereof, the second lienholder loses his lien. The State Bank in this case was ai junior mortgagee, and took its mortgage with knowledge of the valuable right possessed by its mortgagors to have the excess land first sold to apply upon the indebtedness secured by the first mortgage. Its equitable position was not altered by the fact that the trustee under its deed of trust sold the property and it became the purchaser thereof, for it had “not the right to employ that security in such a mode as to needlessly imperil the homestead.” On equitable grounds we think the judgment heretofore rendered by this court should stand. We are more convinced of its correctness when we take into consideration the fact that the State Bank is here suing upon a contract which expressly granted; that right to the Boykins.
In the case of Christoff v. Chesley, 11 Tex. Civ. App. 122, 32 S. W. 355, the court denied the right to have land sold in parcels when all the lienholders were not before the court. We are impressed by the soundness of that decision as applied to the facts of *130that case, but in the instant case the contract upon which the State Bank bases its suit would prevent the application of that rule. That contract gave the right of successive foreclosures, and, in the same manner, gave the Boykins the right to have the excess land sold first. This latter right applied to all or any portion of the indebtedness owing to the Federal Bank. That right could not be defeated by assignments of portions of such indebtedness and the lien securing same and successive foreclosures of such portions. The State Bank took such second lien with knowledge of the fact that the Boykins had the right here asserted and, is declaring upon the very contract giving that right. If the value of the excess is no greater than the first lien against same, it never had any valuable lien. If that value is in excess of the first lien, it can still protect all the rights it ever had by discharging the first lien against same.
The motion for rehearing will be overruled.