Court Opinion

ID: 8014201
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:02:02.975274+00
Date Added: 2024-06-11T16:36:14.193628
License: Public Domain

MARSHALL, L
In 1892, E. 0. Smith and wife owned four-sevenths interest in two hundred and five acres of land in Pike county. The wife owned one-seventh by inheritance, and the husband three-sevenths by purchase. The value of their interest was $1,500. It was the homestead of the family. Smith and wife mortgaged the homestead to the plaintiff for $1,500. Then Smith purchased a livery stable and a house in the town of Center, Ralls county. The house was worth $600 to $1,000, and .stood upon a lot 252 feet by 90 feet. The contract for the livery stable and the house was an entirety, and five dollars earnest money was paid to bind it. The livery stable was priced at $1,375, and the house at $1,100. Smith stated to Rose that he was borrowing the $1,500 to buy the livery stable. The loan was made on April 2, 1892. On April 5, Smith paid $1,370 for the livery stable and received a deed for it. The five dollars earnest money was applied to make up the difference between the $1,370 paid, and the $1,375, the agreed price. This $1,370 was paid out of the $1,500 borrowed. This left $130 of the $1,500 so borrowed. To this $130 Smith added the money he received from the sale of some stock and farm implements, and on May 9, 1892, he paid for and received a deed to the house. Smith thereupon abandoned his homestead on the farm and moved into the town house and established his homestead thereon, and has continued to use and occupy it ever since. In 1894, Smith conveyed the new homestead to his wife. In 1896, the $1,500 loan on the farm having matured and Smith being unable to pay it, the plaintiff foreclosed the deed of trust and became the purchaser for $1,250. After crediting that sum on the debt of $1,500 and the interest due, he brought suit for the deficit and obtained a judgment for $700. Under this judgment, he levied upon the new homestead,- had it sold *86raider execution and became the purchaser for $5. The day before the judgment for the deficit was rendered, Smith and wife sold the new property to Mrs. Smith’s brother, the defendant Ogle. The consideration was two hundred dollars that Ogle had loaned his sister, Mrs. Smith, and four hundred and fifty dollars in cash. The plaintiff then brought this proceeding in equity and ashed that the deeds from Smith to his wife and from Mrs. Smith to Ogle be declared fraudulent, and be set aside, and for possession of the property, etc. The circuit court rendered judgment as prayed, and the defendants appealed.
I.
The head of a family'may sell or mortgage his homestead, whether he be solvent or insolvent, and his creditors can not impeach the sale, for having no claim upon the homestead their rights are not impaired. [Bank v. Guthrey, 127 Mo. l. c. 193; Creech v. Childers, 156 Mo. 338; Brewing Association v. Howard, 150 Mo. l. c. 150.]
So a homesteader can dispose of one homestead and, with the proceeds, acquire another, and the new homestead will be exempt from execution as fully as the old one was. [Section 3623, R. S. 1899; Smith v. Enos, 91 Mo. 579; Goode v. Lewis, 118 Mo. 357; Macke v. Byrd, 131 Mo. 682; New Madrid Banking Co. v. Brown, 165 Mo. 32.]
But while the plaintiff admits that such is the law, he denies that it covers this case, for two reasons: first, because the. identical proceeds of the sale of the old homestead were not used to buy the new homestead, but $1,370 of such $1,500 was invested in the livery stable; and, second, because Smith never sold the old homestead; he only mortgaged it, and a mortgage is only a lien and not a sale, and therefore Smith had a homestead in the equity of redemption.
It is true that the evidence shows that $1,370 of the *87$1,500 was invested in the livery stable. But the evidence shows that the $130 balance of the $1,500 was invested in the new homestead. Therefore, pro tanto. Smith had that much of a homestead in the town house, and this action must fail because it seeks to set aside the whole conveyances and. to put the plaintiff into possession of the whole premises. So that the judgment of the circuit court can not stand.
But complete justice would not be done by stopping here.
The evidence shows that the contract for the purchase of the livery stable and the town residence was an entirety. This being true, if Smith had added to the fifteen hundred dollars borrowed on the old homestead, the amount he realized from the sale of the stock and farm implements, and had deposited both amounts in the bank together, and if the livéry stable and town house had been conveyed to him by the same deed, and he had given one check for $2,175, the agreed price for the two, there would be no doubt that any court would have treated the new homestead as purchased with the proceeds of the sale of the old. The only difference between this and the ease at bar is that the proceeds of the sale of the old homestead and of the farm implements were only mixed pro tanto and not entirely, and that the payments for the stable and the house were not made at the same time, by the same check. The contract for the purchase of the two was, however, an entirety. No just or logical distinction between the ease assumed and the ease at bar can be drawn so far ^s the rights of the plaintiff are concerned. He can not be heard, in equity, to say, “If the one course of procedure had been adopted, I would have had no right to subject the new homestead to the payment of my debt, but because of the difference in the form of procedure in the other case a right has accrued to me to so subject the new homestead.” It is a rule of equity as old as its establishment that courts of equity look to the substance and’ not to the shadow, look to the right and not to the form any transaction may have taken. So regarded, *88there is no equity in the plaintiff’s contention and the new homestead must be treated as acquired with the proceeds of the sale of the old.
The fact that, even under the plaintiff’s contention, at least, a part of the stock and farm implements were exempt from execution, and hence, likewise, were the proceeds of their sale, and that such proceeds, added to the balance of $130 remaining of the $1,500, were used to buy the town house, and hence that house was for this reason exem.pt> has not been overlooked.
The second contention of the plaintiff is true in the abstract, but has no application to this case. A mortgage creates a lien, and the mortgagor may have a homestead in the equity of redemption. But in this ease the mortgagor abandoned his occupancy of the land mortgaged and therefore lost his right to claim a homestead in the equity of redemption. Not only this but he actually established a new homestead in the town house, and as he could not have two homesteads at the same time, this was an abandonment, in law, of the prior homestead. Again, while primarily a mortgage, or a deed of trust, creates only a lien, it may effectually transfer the title also, if the lien is not discharged by the payment of the debt. At common law, a mortgage was a pledge to be defeated upon the happening of a subsequent condition, and if the condition was not fulfilled, the pledge became absolute, the pledgee was entitled to possession, as he already had title by the terms of the mortgage. A deed of trust places the title in the trustee instead of in the beneficiary as a mortgage does. But the title in the trustee may be divested out of him by a sale under the deed of trust and the title in this way be transferred from the original debtor or grantor in the deed of trust to the creditor, as was done in this case, or some third person. So that a homestead may be sold as effectually by means of a mortgage or deed of trust as by a direct conveyance. And the proceeds of a sale of a homestead by mortgage *89or deed of trust, that are invested in a new homestead are just as much within the spirit and reason of the statute and just as fully protected by the statute, as if the old-homestead had been sold outright and the proceeds re-invested in the new homestead. There is therefore no merit- or equity in the defendant’s second contention.
II.
The town house being a homestead, the conveyance by Smith to his wife in 1894 and by Mrs. Smith to Ogle in 1898, carried a good title, no matter what motive actuated the transfer. [Bank v. Guthrey, 127 Mo. 189.]
The judgment of the circuit court is reversed, and as the plaintiff can never recover in this action, the cause is not remanded.
All concur.