Court Opinion

ID: 3982552
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:39:11.082175+00
Date Added: 2024-06-11T14:18:12.534432
License: Public Domain

The trend of appellate courts of our state, as well as those of other jurisdictions, to abrogate constitutional provisions to meet exigencies by strained construction and by frivolous, technical, and speculative circumvention, has grown to such an alarming extent that it should be checked. The Constitution means today the same as it did when adopted by the people in conventions, or amended by suffrage. *Page 639 
The homestead provisions of our Constitution, Vernon's Ann.St., were adopted to insure a home for a family — wife and children — safe from debts and speculative loans. If property be homestead in fact and law, the Constitution, in effect, says, without equivocation, that lenders must understand that liens cannot be advanced upon it, and that declarations of the husband and wife to the contrary, however made, must not be relied upon. Article 16, Section 50, provides: "The homestead of a family shall be, and is hereby protected from forced sale, for the payment of all debts except for the purchase money thereof, or a part of such purchase money, the taxes due thereon, or for work and material used in constructing improvements thereon, and in this last case only when the work and material are contracted for in writing, with the consent of the wife given in the same manner as is required in making a sale and conveyance of the homestead; nor shall the owner, if a married man, sell the homestead without the consent of the wife, given in such manner as may be prescribed by law. No mortgage, trust deed, or other lien on thehomestead shall ever be valid, except for the purchase money therefor, orimprovements made thereon, as hereinbefore provided, whether suchmortgage, or trust deed, or other lien, shall have been created by thehusband alone, or together with his wife; and all pretended sales of thehomestead involving any condition of defeasance shall be void."
(Italicized for emphasis.)
It is not contended here that the debt and deed of trust sought to be enforced against appellants' homestead were creatures of any provision of the Constitution. They were not for purchase money, or any part thereof; they were not for taxes due thereon, or for work and material used in constructing improvements thereon. It is, in effect, conceded, so held by the majority opinion, that the debt and lien sought to be enforced herein were given in renewal and extension of a void lien. Notwithstanding the emphatic language of the Constitution that such lien is void and not susceptible to foreclosure on the homestead, it seems, from the majority opinion, that the homestead of appellants may be lost; not on the ground that the conveyance, mortgage, or lien covering the same is valid, but on the ground that the husband misrepresented the facts; and the wife, in the presence of and under the dominion of the husband, silently stood by and failed to speak when it was her duty to have spoken; thereby the homesteaders are estopped to claim the benefits of the constitutional provision.
It is settled in this state by many decisions, that mere record representations contained in an instrument filed by a wife and her husband, designating certain property as a homestead, without more ado, would not estop the wife and her husband from asserting homestead rights in other property which had, in fact, been used and acquired as a homestead when the instrument was filed; nor, indeed, is the wife, by her silence, mum in the presence of her husband, estopped to claim her constitutional rights, to avoid the loss of her home through foreclosure of a void deed of trust.
The only ground presented in this appeal for the enforcement of appellee's deed of trust is one not found in the Constitution or the statute, but in decisions of courts of equity — denominated "estoppel". An examination of all such decisions discloses that enforcement by estoppel of a lien against a homestead, not coming within the purview of the constitutional exemptions, is in cases which may be grouped into three general classes (First Texas Joint Stock Land Bank v. Chapman, Tex.Civ.App. 48 S.W.2d 651, 655): "(1) When the owners, not actually occupying the property, or so using it that its status is dubious at the time the mortgage is executed, represent that it is not their homestead; (2) when the owners create a lien by entering into a simulated transaction which has all the outward appearance of a valid, unconditional sale, but which is in fact a mortgage; (3) when the owners represent that existing notes are valid mechanic's lien notes for improvements, secured by a mechanic's lien contract properly executed." The reasoning of the courts is founded on facts showing: either a simulated transaction with all the outward appearance of a valid, unconditional sale, but which is in fact a mortgage; or, out of which simulated purchase money (vendor's lien) notes result; or simulated mechanic's lien notes, secured by a mechanic's lien contract, properly executed; or, a set of facts representing two places, where the homestead character may well be attached to either, according as husband and wife intend. In the latter case, however, the two places are so *Page 640 
occupied as to render either capable of being the homestead, and the actual homestead can only be determined by the expressed intention of the parties; and, in the other cases of simulated transactions, the result is to create an exemption allowed by the Constitution. It may well be advanced that, unless the facts show either: (1) That two places are being so used or occupied as a homestead that it is ambiguous as to which one constitutes the true homestead; or (2) a simulated transaction which has all the outward appearances of a valid, unconditional sale, resulting in a purported purchase money note; or (3) simulated mechanic's lien notes, secured by mechanic's lien contract properly executed, that any other form of deed of trust, mortgage, or other lien on the homestead is invalid and incapable of enforcement, being inhibited by the Constitution, whether created by estoppel or otherwise.
In the instant case, the facts do not give rise to an apparent lien consistent with the form of those classes of liens which, by the exceptions in the Constitutional provision, are valid against the homestead. Appellee extended the loan solely on the representations of the husband, that the lien in favor of Schoellkopf (appellee's assignor) was valid and the record representations contained in a filed instrument of homestead designation at another place, contrary to the true facts.
The uncontradicted evidence shows that appellants, together with their daughter, moved into the Harwood Street property (the property in suit) in 1907, used and occupied the same as their homestead continuously, unambiguously and uninterruptedly from that date down to the date of trial. The jury also found that the Harwood Street property had been, since said date, the uninterrupted homestead of appellants. In 1922, appellants applied to Mr. Schoellkopf for a loan of $7,000, expressed a desire to secure the loan by an unsecured personal note, which was refused; and, subsequently devised a scheme, suggested by the lender, to give a deed of trust on their homestead as security for the loan and designate, by written instrument, the property on Lindsley Avenue as their homestead, contrary to the facts. In 1926, Mr. Lincoln secured another loan from appellee Bennett in the sum of $8,000, evidenced by note and deed of trust on property at San Jacinto-Hawkins Streets, in the City of Dallas. The note and deed of trust were prepared by Judge Lively, the trustee named in the deed. That deed of trust, among other provisions usual in such instruments, recites: "Said property is not the homestead of the grantor herein, but our homestead is located at Dallas, Texas, on South Harwood Street and this representation is made as a part of the consideration for the loan herein secured." Thereafter, when the $7,000 Schoellkopf loan became due, Mr. Lincoln approached Judge Lively and requested the loan involved in this controversy, for the sole purpose of taking up the Schoellkopf loan, and, to that end, represented to the Judge that the loan was secured by a valid lien on the property; indeed, a layman's conclusion of law, which, by all rules of reason, the Judge, an able and experienced lawyer, was not justified in accepting as true, especially in the face of the above declaration to the contrary in the $8,000 transaction, of which he and appellee were fully cognizant. It is not disclosed that Judge Lively made any inquiry whatsoever as to the basis for the conclusion that the lien was valid, and none was given. The jury found that Lincoln did not represent to Lively that the South Harwood Street property was not his homestead. In the face of all this, the loan involved in this suit was eventually consummated, appellee paid the money to Schoellkopf for his note and deed of trust, which were duly transferred; and, in turn, the note and deed of trust involved here were executed and delivered in lieu of and in renewal and extension of the original Schoellkopf loan. Thus it will be seen that appellee acquired by the transaction, no better security than his predecessor had.
It is settled law that persons dealing with land must take notice of an actual, open, and exclusive possession concurrent with interest in the possessor, which makes the land a homestead; a lender loaning money to persons in possession stands charged with notice of the homestead rights, irrespective of declarations to the contrary made by persons in possession. Nixon et al. v. Hirschi, Tex.Com.App., 132 S.W.2d 89.
In the case of Texas Land  Loan Company v. Jas. A. Blalock et al.,76 Tex. 85, 13 S.W. 12, 13, Chief Justice Stayton, after observing that the declaration in an application for the loan recited that the property was not the homestead of the applicant, said: "* * * Here nothing was *Page 641 
hidden. Possession was open, certain, and in character in no respect ambiguous. It was such as gave homestead right, and the lender cannot be heard to say that it did not know it. The constitution forbidding the fixing on the homestead of liens other than such as are thereby expressly permitted, no estoppel can arise in favor of a lender, who has attempted to secure a lien on homestead in actual use and possession of the family, based on declarations of the husband and wife, made orally or in writing, contrary to the fact. To hold otherwise would practically abrogate the constitution."
It will serve no useful purpose to cite numerous authorities condemning loans of this nature. Indeed, the pronouncement of Judge Stayton in the above case has become a rule of property in this state. In the very recent case of the Commission of Appeals' opinion, written by Judge Taylor, approved by the Supreme Court, Nixon et al. v. Hirschi, 132 S.W.2d 89, 92, the contention of appellee is put to rest. The disposition of this appeal may well stand on the reasoning and conclusions stated in that opinion. After quoting from many decisions on cognate questions, the Commission of Appeals, in that case, said: "The fact that the holding of this Court reflected in the above excerpt from the Blalock case has for many years been a rule of property in this State, is sufficient reason for declining to overrule it. Furthermore the Court shares the view expressed by Chief Justice Stayton that holding otherwise would abrogate that provision of the Constitution, Vernon's Ann.St. Const. art. 16, § 50, declaring that no mortgage, trust-deed, or other lien on the homestead shall ever be valid except for the purposes therein stated, by ultimately rendering such provision ineffective."
To hold, as in the majority opinion, that today a lien on a homestead is void and unenforceable, but may become valid and enforceable tomorrow, is a dangerous precedent, leaving wide open the door to abrogate the Constitution. Analysis of the holding shows that a lender may knowingly loan money on a homestead inhibited by the Constitution, hold its enforcement for a term, then assign the void and unenforceable lien to another, and, on representations of the homesteaders in the first instance that the lien is valid, such representations give to the subsequent assignee an enforceable contract, on the theory of equitable estoppel. In other words, equity breathes life into a transaction which otherwise lacks vitality — void under the law. It is a rule well recognized in this state that, the principles of equity will not invade any constitutional guaranty, or abrogate, or modify any positive law. It is elementary and fundamental that no equitable relief may be granted, where a legal or statutory right is positively declared. As in the Blalock case, supra, expressly approved in Nixon v. Hirschi, supra, "* * * nothing was hidden. Possession was open, certain, and in character in no respect ambiguous. It was such as gave homestead right, and the lender cannot be heard to say that it did not know it". No estoppel arises in favor of the lender under the facts of this case. While reluctant to differ with my associates, yet sincerity dominates my action. The judgment of the court below should be reversed and rendered, granting the injunction.
Dissent.