Court Opinion

ID: 8629730
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:35:46.611993+00
Date Added: 2024-06-11T16:55:43.685837
License: Public Domain

HUGHES, District Judge.
The first question here is, whether or not the homestead right may be set up against the judgment, and, in defeating that, defeat also the deed of trust which is subordinate to it. The proposition can not be entertained for reasons stated in the sequel.
The second proposition is, that the deed of trust, by defeating the homestead, lets in the judgment which is prior to the deed, which I concede. The third proposition is, that the deed of trust creditor is entitled to have his debt made good out of the proceeds of the land which was not covered by the deed, by virtue of the principle governing courts of equity in marshalling assets; that is to say, the principle of subrogation. This last proposition I must reject. If the bond, for securing which the deed of trust was given, contained on its face a waiver of the home'stead in writing, I would then think the proposition worthy of some consideration; for then there would be a waiver as to the debt as well as a waiver as to the land; but as there was no such express waiver on the bond, and the waiver in the form of the deed of trust applied only to the land, for reasons stated in the sequel I must reject this proposition. The deed of trust operated to exempt the land which it conveyed, from liability to the grantor’s (the bankrupt’s) right of homestead. It cleared the land of the homestead claim. The homestead right is not an estate in the land, but a mere right of using it for a specific purpose, during a period of time defined by the law, but of uncertain duration. The deed of trust removed from the land its liability to such use for as long a period as its provisions should remain unsatisfied. If the judgment creditor has a first lien or claim against land thus exempted from liability to the homestead it must be satisfied. If a deed of trust stands second to the judgment, that must then be satisfied. It is only after both are satisfied that the homestead liability returns agaiD to the land. But these principles are confined in application exclusively to land as to which the homestead right has been waived. They apply to that particular land only, because of the reasons just stated. They do not apply to other lands, because those reasons do not apply. “Cessante ratione cessat et ipsa lex.”
*3The doctrine of subrogation does not apply to this case on general principles. That doctrine is, that where a creditor has two funds out of which to satisfy his demand, he shall not disappoint a creditor who can obtain payment of his claim only out of one of the funds. The doctrine does not apply except in cases where there are two funds already in existence and available to the first-named creditor. In this case the judgment creditor has but one fund, and the deed •of trust creditor had only that same fund, and it is simply a question which of the two •creditors shall have payment out of that one fund. It is not a question of marshalling assets, but of mere right of priority. Besides, even if this were not so, we can not extend the principle of marshalling assets, or of subrogation, to lands subject by law to the homestead right. That right is given irrespective of the rights of creditors to be paid their debts, whether by subrogation, or in any other way. It is given as to all lands from which the right of homestead has not "been removed by specific waiver. If a debtor owned but one piece of land, and that not greater in value than the amount limited by law for the homestead, and there were debts due to an amount exceeding the amount allowed as to the value of the homestead, still the law disregards the rights of creditors •and gives the homestead if it has not been waived either as to the debt or the land. It is, therefore, a right superior to the rights ■of creditors of every sort and origin. The law intends to make the homestead right superior to all the rights of creditors, except as to any specific debt or land as to which the householder voluntarily and expressly in writing waives it. It is partly because the right of homestead is not an estate in land, but is a mere privilege of using it for a certain purpose, which privilege is not capable •of estimation in dollars and cents, that the principle of subrogation does not apply as against it. If it were an estimate capable of appraised valuation, then there would be more ground for considering whether or not It could be subjected to the principle of sub-"rogation. It seems to me that it would be a subversion of the objects of the law of homestead, a perversion of its aim, and a violation of its spirit, to apply the doctrines governing in the marshalling of assets in equity to the destruction of the homestead right in favor of other debts and against other property than those in regard to which the right of homestead has been expressly waived. The courts have already gone very far in judicially legislating the homestead right out of existence. But I know of no case in which they have carried the power ■of judicial legislation so far as to resort to the expedient of constructive waiver in attacking the homestead rights. At all events, I will wait to be overruled before employing the expedient myself.
I will give a decree declaring that the right of homestead does not exist as to the $840 produced by the land covered by the bankrupt’s deed of trust, and, therefore, that that debt, being relieved from the homestead, is liable first to the judgment, but recognizing the superiority of the homestead to the claim of the judgment creditor, in respect to the proceeds of the land not so covered, leaving the deed of trust wholly defeated. I infer from the absence of any evidence or proceeding to show that the prices bought at the sale of the bankrupt’s land were inadequate, that there is no objection to the sale on that score.
The decree of the district court was affirmed by the chief justice on petition for revision.