Court Opinion

ID: 6637769
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:42:33.930474+00
Date Added: 2024-06-11T15:59:07.157043
License: Public Domain

McConnell, C. J.
This was an action of ejectment. Respondents, in their answer, disclaimed as to a part of the premises, and set up homestead exemption as to the remainder. Appellant, in his replication, denies the right of respondents to homestead. Trial by the court, sitting instead of a jury. Judgment for defendants, and appeal in error by plaintiff.
There seems to he no dispute about the facts. Those material to be noticed are as follows, to wit: William H. Babcock conveyed an undivided half-interest in fee-simple to the disputed premises — a house and lot — to respondent, Will F. Davis, June 3, 1881; said Babcock having the fee-simple title to the whole of it prior to that time. Respondents, Will F. Davis and Ollie I. Davis, were intermarried May 27, 1883, and began to occupy said house and lot as their home October 10, 1883, and made formal declaration of homestead November 17,1883, and had it duly recorded. Nelson Story commenced suit against W. H. Babcock and Will F. Davis, as partners, under the firm name and style of Babcock & Davis, and sued out an attachment, and had it levied on said house and lot November 28,1883. Said Nelson Story recovered judgment in said suit September 26, 1884. Appellant, Lindley, purchased of Story this judgment. Execution was issued October 1, 1884, and the lot sold and purchased by appellant, who took a sheriff’s deed. Babcock & Davis were partners in the business of loaning money and selling real estate. They executed partition deeds in severalty of their real estate June 3, 1884, by which respondent Will F. Davis became the sole owner in fee-simple of the house and lot in controversy, but after the levy of the attachment, November 28, 1883. While Babcock and Davis were partners they held the title to this house and lot, not in their firm name of Babcock & Davis, hut in their individual names, as tenants in commoh. After Davis became the sole owner *209of the house and lot, June 3,1884, he filed, and had duly recorded, another declaration claiming homestead therein. Appellant purchased the judgment of Story, and the house and lot, at sheriff's sale, with full notice of the homestead claim of respondent, who served notice of his • claim on the sheriff before the sale, which notice the sheriff read at the time of the sale. It is conceded that the lot does not contain over one quarter of an acre, and the value of both the house and lot is not over two thousand four hundred dollars. The respondent, as the head of a family, occupied and claimed the house and lot, which are situated in the town of Bozeman, as a homestead, from October 10, 1883, up to the present time.
The sole question, then, is, Did the court err in finding that the respondents were entitled to a homestead exemption under the foregoing state of facts? The rights of the appellant relate to the time of the inception of the lien of the attachment. The respondents, in their claim of a homestead, must stand or fall upon the title of the respondent Will F. Davis to an undivided half-interest in the premises in controversy at that time. We are met upon the threshold of this discussion with this question: What are the-interests of respondent Davis in the premises in controversy? Were they partnership property? If so, must they not be regarded as a part of the capital stock of the concern, and as personalty? We find the doctrine upon this subject very clearly stated in the case of Hewitt v. Rankin, 41 Iowa, 35, — Beal estate held by a partnership is to be. regarded as the property of the firm, as to the creditors and all persons dealing with it, when necessary to protect their rights. The partner is to be regarded in such cases as holding only an interest in the stock or capital of the partnership, which is personal property. If the business of the firm be in opergution, or there be outstanding liabilities against them, the partu ers have not an interest in its lands or other assets *210that may he regarded as property. Their interest is in the stock of the firm, — whatever, upon final settlement, may be due them”; citing Meily v. Wood, 71 Pa. St. 488; 1 Washburn on Real Property, 3d ed., 574; Lindley on Partnership, 463.
The conversion of real property into personalty is a device of equity, in order to effectuate the settlement of partnerships. The rule ceases when the partnership is settled and its debts are paid. The partners then hold their real estate as tenants in common, relieved of any trust in behalf of the partnership. The weight of American authorities sustains this doctrine. Freeman on Co-tenancy and Partition, sec. 118. If the decision of this case rested upon the doctrine above stated, then the respondents cannot be allowed a homestead, for this exemption cannot be carved out of personal property. The fact that tenants in common are also partners does not of itself invest the realty with any of the characteristics of personalty; nor is the fact that it was paid for out of partnership money decisive of the question. Copartners may withdraw realty from the partnership for the purpose of holding it severally; and in this event they become simply co-tenants iff such land. Freeman on Co-tenancy and Partition, sec. 114.
In this case, Babcock & Davis built the house with partnership money, in the years 1880 and 1881, and lived in it. In May, 1883, Davis married, and October 10, 1883, moved with his wife into this house, for the purpose of making it his home. On November 11th following, he filed- his declaration, claiming it as his homestead, and had it duly recorded. This, we take it, was a public withdrawal of this house and lot from the partnership assets, and a dedication of it as a homestead. Babcock, by his silence at least, consented to it, and in June, 1884, in confirmation of what had already been done, he executed a deed of his undivided half to Davis. We thinkj *211as a matter of fact, it is clear, from the proof in the case, that it was not the intention of the copartners to hold this house and lot as any part of their partnership assets or stock in trade, but to withdraw it, if it ever had been such, that Davis might have it as a home. This dedication of the place as a homestead was made before the levy of the attachment. Story had full knowledge of respondent’s claim when he sued out the attachment, and so had Lindley, the appellant, when he purchased the judgment, and had the house sold, and took his sheriff’s deed. There is no pretext that the firm was insolvent at the time this homestead was set apart and claimed as such, or that there existed any equitable grounds upon which it should be subjected to the payment of appellant’s judgment, notwithstanding its withdrawal from the partnership assets, and dedication to the purposes of a homestead. We hold that, under the proof in the record, Babcock & Davis were tenants in common of the house and lot in controversy, and the question is, whether a co-tenant is entitled to a homestead exemption under our law. We think he ,is, and that the judgment of the court .below should be affirmed.
This case was heard at the last term of this court, and reversed; the court holding that the respondents were not entitled to a homestead. 6 Mont. 458. The learned justice who wrote the opinion placed the decision upon the ground that our statute granting the homestead exemption was taken from the California act, and the courts of that state had held that a tenant in common in land was not entitled to the homestead exemption. They had so held before the passage of our act, and this was a sufficient evidence of what the legislative will was in the passage of our act. This court, however, before adjournment, granted a rehearing of the case, and vacated the order reversing it, and continued it until this *212term. The case is now before us for final determination. The decisions of the different courts of last resort in the several states and territories are in hopeless conflict, some of the judges giving to the language of the homestead-exemption statutes a liberal construction, and holding tenants in common in land entitled to the exemption; while others, giving a strict construction, hold that they are not entitled thereto. But we are told that we are bound by the California decisions already referred to. We do not think so. By a comparison of our statute with that of Minnesota, we find it almost a verbatim copy of the Minnesota law on the subject of homestead. There is no mistaking the fact that the draughtsman of our statute copied it from the Minnesota statute. Stats. Minn., Revision 1866, .p. 498.
There is much similarity between our statute and that of California. Our section 313 is common to both the California and Minnesota statutes; but there are material matters about which they widely differ. The only measure of the homestead is its value under the California act. The homesteader is entitled to five thousand dollars' worth of realty, no matter where situated, or for what purpose used. Under our act, if the homestead is land used for agricultural purposes, and not in any town plat, city, or village,-160 acres are allowed, provided its value' does not exceed two thousand five hundred dollars; or if it is a lot in a town plat, city, or village, then it must not exceed one fourth of an acre, and its value must not exceed two thousand five hundred dollars. The homesteader may take his choice of the farm in the country, or the lot in town, the value being the same. These are precisely the provisions of the Minnesota statute, except the former cannot exceed eighty acres, and instead of one fourth of an acre in town, it says one lot. The attention of the court was not called to *213the Minnesota statute last term, nor did it have the whole of the California act before it.
A late senator, in advocating in the United States Senate the adoption of a general homestead law, said: “ Tenantry is unfavorable to freedom. ’ It lays the foundation of separate orders in society, annihilates the love of country, and weakens the spirit of independence. The tenant has in fact no country, no hearth, no domestic altar, no household god. The freeholder is the natural supporter of a free government, and it should be the policy of republics to multiply their freeholders, as it is the policy of monarchies to multiply their tenants.”
The homestead exemptions are not in derogation of the common law; hence this is no reason why they should be strictly construed. By the common law, a man could only have satisfaction of goods, chattels, and the present profits of land, but not of the lands themselves. 3 Bla. Com. 418; Thompson on Homestead and Exemption Laws, secs. 2 et seq. We think our statute should be liberally construed. Our statute provides that “ a homestead consisting of any quantity of land, not exceeding 160 acres, used for agricultural purposes, and the dwelling-house thereon, and the appurtenances to be selected by the owner thereof, and not included in any town plat, city, or village; or, instead thereof, at the option of the owner, a quantity of land not exceeding in amount one fourth of an acre, being within a town plat, city, or village, and the dwelling-house and its appurtenances, owned and occupied by any resident of the territory,” etc.; “provided said homestead shall not exceed in value the sum of two thousand five hundred dollars.” Rev. Stats. 101, sec. 311. It will be seen that the homestead is dedicated to the owner; the language of the statute being “owned” and “occupied” by any resident. To aid us in arriving at its meaning, we *214quote section 315. It provides that “any person owning and-occupying any dwelling-house on land not his own, which land he shall be rightfully in possession of by lease or otherwise, and claiming such house as his homestead, shall be entitled to the exemption of such house.” The statute says the head of a family owning and occupying a house, on land not his own, but which he is lawfully in possession of, shall have the benefit of it. He need have no title to any part of the land. And the other section gives the homestead in land and houses to the owner and occupier of them without qualification. He need not be the sole owner, nor does it prescribe the character of the title, whether equitable or legal. The statute does not say to him who owns the entire estate in the lands, but to him who owns and occupies it, leaving it to the court to say when the head of a family is the owner. “ The word ‘ owner,’ within the meaning of the homestead and exemption law, and even in the case of certain criminal offenses, includes all who have a claim or interest in the property, even though it is an undivided interest, or falls short of absolute ownership in fee.” Lozo v. Sutherland, 38 Mich. 168; Thompson on Homestead and Exemption Laws, sec. 174.
As already stated, the courts of California have held that tenants in common are not embraced by this term “ owner.” The first case in which this doctrine was held is that of Wolf v. Fleischacker, 5 Cal. 244; and upon this, and this alone, all the others are founded. Kellersberger v. Kopp, 6 Cal. 564; Bishop v. Hubbard, 23 Cal. 514; Elias v. Verdugo, 27 Cal. 419; Seaton v. Son, 32 Cal. 481, and Carroll v. Ellis, 63 Cal. 441. The reason given for all these decisions is thus briefly laid down in the case of Wolf v. Fleischacker, supra, to wit: “The statute did not contemplate that homesteads should be carved out of land held in joint tenancy or tenancy in common, because it has not provided any mode for their separation *215and ascertainment. All of the questions of excess of value, appraisement, and division between debtor and creditor would arise only to give complexity to a state of facts for which no provision of the statute seems to be adequate, and would necessarily force into litigation, or at least into care and trouble, the innocent co-tenants, who would be thus subjected to annoyance without any fault of their own.”
There is no pretense that the word “ owner ” cannot be applied to a tenant in common. There is no pretense that he cannot lawfully occupy all and every part of the premises, to the exclusion of all the World except his co-tenants; but it is a plea of want of adequate means to set apart the homestead, and the inconvenience of it. We cannot see the force of these reasons. Why cannot 160 acres, or the fourth part of an acre, more or less, of the value of two thousand five hundred dollars, more or less, be as easily set apart to a co-tenant as well as to the owner of the entirety? To meet this very construction, the legislature of California, 1868, passed an act extending the homestead exemption to joint tenants or tenants in common; but made no provision whatever for carving the homestead out of such interests, leaving them to be set apart under the same provisions of law which the court said are not adequate. Stats. Cal. 1867-68. The California court, having announced, in the case of Wolf v. Fleischacker, the doctrine that a tenant in common could not take homestead exemption, applied it to a case in which the husband and father, his wife‘and child, were tenants in common, and living on the land so held as their homestead, and denied them this exemption. In another case a head of a family, supposing that he had a good title to all of his land, lost his homestead exemption because it turned out that his title was defective to one undivided eighteenth of it. And in still another case, the head of a family sold an undi*216vided interest in his homestead, and it was held that he thereby lost his exemption. And thus it worked, until the legislature passed the act above alluded to.
In commenting upon the above reasons, the supreme court of Minnesota said: “In setting off the homestead between the claimant and his creditor, the rights of third persons are not considered; nor does it matter that a portion selected by and set off to the claimant,, as between him and the creditor, may, in a subsequent controversy between the claimant and some third person, be lost forever. The object of the statute is not to vest in the claimant an assured title to the portion set off, but to protect that portion from levies and sales under judgments. When there is the requisite ownership and occupáncy in that portion set off, it cannot be material that such ownership and occupancy may be subsequently defeated, as by foreclosure of a lien already attached, or re-entry for condition broken, or the like.” Kaser v. Haas, 27 Minn. 409.
The setting apart of the homestead, as between the debtor and his creditor, does not affect the rights of the co-tenant. His title to his undivided interest, and his right of entry and joint occupancy with the homesteader, are not impaired; but because he may enter and occupy the homestead with him, seems to us a very unsatisfactory reason to be given for depriving the debtor of his home. Nor can we see that any change whatever is made in the relations of the co-tenants to the realty owned by them by setting apart to one of them a homestead therein. The homesteader gets only his interest in the land, subject to all the rights of the other tenant, and with all the risk of losing his improvements upon partition. But what concern is this .of the creditor? The law will not presume that the tenant, enjoying his homestead exemption, will usurp the rights of his co-tenant, and thus produce litigation and inconvenience.
*217We close this discussion with a pertinent criticism upon the doctrine that a tenant in common is not entitled to a homestead exemption, made by Mr. Freeman in his work on co-tenancy and partition, section 54: “ But we see -no sufficient reason, even in the absence of statutes directly bearing upon the subject, for holding that a general homestead act does not apply to lands held in co-tenancy.
“The fact that a homestead claim might savor of such an assumption of an exclusive right as is inconsistent with the rights of the'other co-tenant, and that the maintenance of such claim might interfere with proceedings for partition, form no very satisfactory reason for denying the exemption. If the rights of the other co-tenant are threatened or endangered, he alone bhould be permitted to call for protection and redress. The law will not sanction any use of the homestead in prejudice of his rights. But as long as his interests are respected, or so nearly respected that he feels no inclination to complain, why should some person having no interest in the co-tenancy be allowed to avail himself of the law of co-tenancy for his own, and not for a co-tenant’s, gain? The homestead laws have an object perfectly well understood, and in the promotion of which courts may well employ the most liberal and humane rules of interpretation. This object is to assure to the unfortunate debtor, and his equally unfortunate but more helpless family, the shelter and influence of home. A co-tenant may lawfully occupy every parcel of the lands of the co-tenancy. He may employ them, not merely for cultivation, or for other means of making profits, but may also build houses and barns, plant shrubs and flowers, and surround himself with all the comforts of home. His wife and children may, of right, occupy and enjoy the premises with him. Upon the land, of which he is but a part owner, he may, and in fact he frequently does, obtain all *218the advantages of a home. These advantages are none the less worthy of being secured to him and his family in adversity because the other co-tenants are entitled to equal advantages in the same home. That he has not the whole is a very unsatisfactory and a very inhumane reason for depriving him of that which he has.”
We are supported in these views by tho following authorities: Tarrant v. Swain, 15 Kan. 147; Kaser v. Haas, 27 Minn. 406; McClary v. Bixby, 36 Vt. 258; Thorn v. Thorn, 14 Iowa, 54; Lozo v. Sutherland, 38 Mich. 169; Horn v. Tufts, 39 N. H. 478; Greenwood v. Maddox, 27 Ark. 660.
Let the case be affirmed, with costs.
Galbraith, J., concurs.