Court Opinion

ID: 9792658
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:33:23.743799+00
Date Added: 2024-06-11T07:37:44.428099
License: Public Domain

HODGES, Chief Justice,
with whom SUMMERS, Justice, joins, dissenting:
The majority holds that public policy and equity create an exception to doctrine of marshaling of assets when homestead property, which was knowingly mortgaged, is involved. I cannot agree.
Section 4, title 24 of the Oklahoma Statutes provides:
Where a creditor is entitled to restore [sic] to each of several funds for satisfaction of his claim, and another person has an interest in or is entitled as a creditor to resort to some but not all of them, the latter may require the former to seek satisfaction from those funds to which the latter has no such claim, so far as it can be done without impairing the right of the former to complete satisfaction and without doing injustice to third persons.
Title 42, section 17 of the Oklahoma Statutes states:
*423Where one has a lien upon several things, and other persons have subordinate liens upon or interests in, some but not all of the same things, the person having the prior lien, if he can do so without the risk of loss to himself, or injustice to other person, must resort to the property in the following order, on the demand of any party interested:
1. To the things upon which he has an exclusive lien;
2. To the things which are subject to the fewest subordinate liens;
3. In like manner inversely to the number of subordinate liens upon the same thing; and,
4. When several things are within one of the foregoing classes, and subject to the same number of liens, resort must be had,
(a) To the things which have not been transferred since the prior lien was created;
(b) To the things which have been so transferred without a valuable consideration; and,
(c) To the things which have been so transferred for a valuable consideration.
As the majority recognizes, the purpose of these' statutory provisions is to allow marshaling under the facts of this case. However, the majority suggests that these statutory provisions do not apply in this case because to do so would cause injustice to third persons, namely the debtor, which is prohibited by the provisions. This position is insupportable, especially where the debtor has voluntarily mortgaged the property and received purchase money. Any time that these statutory provisions are utilized, the debtor will forfeit some of his assets. If this forfeiture is an injustice, then, under the majority’s implication, these provisions would never apply and the statutes would be a nullity. In fact, to be effective these statutes could only be construed to disallow marshaling when an injustice to the creditors would result.
The majority also would find an exception implied in section 2 of article 12 of the Oklahoma Constitution and title 31 section 1 of the Oklahoma Statutes and an exception based on equity. I cannot agree that these two provisions on which the majority relies imply an exception and, even if an exception is implied, that such an implication should override explicit statutory mandates. Neither should equitable principles be applied to negate express legislative language.
There is nothing in article 12, section 2 of the Oklahoma Constitution which prohibits marshaling toward the homestead when the homestead has been deliberately mortgaged. Article 12, section 2 declares:
The homestead of the family shall be, and is hereby protected from forced sale for the payment of debts, except for the purchase money; [njothing in this article shall prohibit any person from mortgaging his homestead ... nor prevent the sale thereof on foreclosure to satisfy any such mortgage.
(Emphasis added.) There is nothing in this provision that protects a homestead from sale to satisfy a mortgage on the homestead property.
Section 1, title 31 of the Oklahoma Statutes provides an exemption for homestead property “from attachment or execution and every other species of forced sale for the payment of debts.” Section 5 of title 31 exempts homestead property from the protection of section 1 where the debt is incurred in exchange “[f]or the purchase money of such homestead or a part of such purchase money. ...”
Even though article 12 of the Oklahoma Constitution and title 31 of the Oklahoma Statutes reflect a public policy protecting homestead property from unsecured creditors, they are not public policy statements protecting the property from mortgage holders. In fact, the Oklahoma Constitution and the Oklahoma Statutes explicitly recognize the public policy and the practical necessity of allowing mortgage foreclosure on homestead property. Further, any public policy protecting the homestead property is offset by the public policy favoring mortgage holders as recognized by title 42, section 17 and title. 24, section 4.
A cardinal rule when applying a statute is that the legislative intent be followed. State ex rel. Cartwright v. Georgia-Pacific Corp., *424663 P.2d 718 (Okla.1982). “When the intent of the legislature is plainly expressed in a statute, it must be followed without further inquiry.” In re Hamm Prod. Co., 671 P.2d 50, 52 (Okla.1983). The legislature clearly expressed its intent in title 42, section 17 and title 24, section 4 that assets be marshaled and that creditors be allowed to require marshaling. There is no exception to this clear expression of intent either in the Oklahoma Constitution or the Oklahoma Statutes for homestead property which has been knowingly mortgaged.
I would hold that the Oklahoma Constitution and the Oklahoma Statutes do not create or authorize an exception to the marshaling of assets when the debtor has voluntarily mortgaged the homestead property to secure payment of a debt and the Oklahoma marshaling statutes, Okla.Stat. tit. 42, § 17 and tit. 24, § 4 (1991), permit secured creditors to compel the marshaling of assets against homestead property which has been intentionally mortgaged.