Court Opinion

ID: 7108868
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:24:02.660761+00
Date Added: 2024-06-11T16:13:40.128200
License: Public Domain

On Rehearing. Original opinion adhered to.
Thursday, October 26, 1899.
Waterman, J.
A rehearing was granted in this case because of plaintiff’s contention that nothing is said in the original opinion as to the claim made that Carroll borrowed the money to pay a part of the purchase price of the prop*573erty, and so used it, and therefore plaintiff is entitled to a lien upon the land. The writer thinks this question was disposed of by the finding of fact that the homestead right was acquired before the indebtedness to plaintiff was incurred. No particular complaint is made of this finding in the petition for rehearing. It is not insisted that ww 5 review it. But it is thought best, in view of the stress laid by plaintiff upon the proposition that it is entitled to a lien because its money went into the homestead, that we set out with more particularity the reasons upon which our conclusion is based. While it is true that Carroll used the borrowed money to pay for the property in question, it does not appear that it was any part of the contract between him and the .bank that he should do so. On the contrary, the evidence, without dispute, discloses that the loan was made on the security of the Cotter notes and mortgage alone. TJnder these circumstances, the plaintiff is entitled to no lien on the homestead. It is not enough to show that the borrowed money was used to pay for the homestead, but, in order to confer a right to a lien, it must also appear that it was a part of the contract that this should be done. Eyster v. Hathewaty, 50 Ill, 521; Mitchell v. McCormick, 22 Mont. 249 (56 Pac. Rep. 216). We do not overlook the fact hat the president of the bank testified that Carroll told him the money was wanted for the purchase of u home. But this was in the preliminary talk as to the loan, and does not seem to have entered into the terms of the contract. It was no part of the inducement to the loan, so far as disclosed by the evidence. When the money was placed to ’Carroll’s credit, he was free, so far as his agreement with plaintiff was concerned, to do with it as he pleased. It is immaterial whether Carroll had a right to pledge the Cotter papers. We are not concerned with the value to the bank of those securities. The bank, at the time, supposed Carroll had such right, and we have only to do with the question as to what inducement operated to persuade it to part with *574its money. There is no equity in tbe bank’s claim that, because it bad lost tbe security which it took and solely relied upon, it should be given a lien upon the homestead. Akers v. Luse, 56 Iowa, 346.
II. There is another and a broader ground upon which we might rest the conclusion on this issue. This indebtedness, having been incurred after the homestead right attached, although it was for money paid on the purchase price, would confer on the creditor no' right to a lien. The statute (Code., section 2972), provides that the homestead is exempt from 6 judicial sale, “where there is no special declaration of statute to the contrary.” Section 2976 provides that it may be sold for debts created by written contract executed by those persons invested with power to convey, when the contract expressly stipulates that it is liable, and also for debts antedating its purchase. There is also a provision in section 2975 making it liable to mechanics’ liens. These are the only statutory provisions on the subject. If we are to enforce liability in this case, it must be upon general equitable principles, and in the face of the prohibition of section 2972. We can discover no warrant for so doing. See Lee v. Murphy, 119 Cal. 364 (51 Pac. Rep. 549). We have held that the homestead may be sold for purchase money indebtedness 'incurred at the time of the acquisition of the homestead right. But this was upon the express ground that such indebtedness did not accrue after the homestead was acquired; that, in effect, it was an antecedent obligation. Christy v. Dyer, 14 Iowa, 438. In that case if is said: “The legislature, with a view of avoiding all constitutional questions, has made ithe exemption prospective, and not retrospective. When the homestead has been purchased, then, as to all subsequent debts, it is 'exempt; for all prior ones, it is liable.” The cases relied upon by appellee are all distinguishable in their facts from the one we have here. In each of them the indebtedness was incurred at the time the homestead right attached, while *575in the case at bar, as w© bay© found, the Homestead was 'acquired before the loan by plaintiff was made. That this is a material distinction is sufficiently shown, perhaps, by the language of our own statute; but it is not out of place to say that it is elsewhere recognized. Ruhl v. Kauffman, 65 Tex 728; Loftis v. Loftis, 94 Tenn. Sup. 232 (28 S. W. Rep. 1091); McCarty v. Brackenridge, 1 Tex. Civ. App. 170 (20 S. W. Rep. 997); Dresse v. Myers, 52 Kan Sup. 126 (34 Pac. Rep. 349); Eyster v. Hatheway, supra. The constitution of Tennessee (Article 11, section 11) provides, with relation to the homestead exemption: “The exemption shall not operate against public taxes nor debts contracted for .the purchase money of such homestead or improvements thereon.” In the Loftis Case, to which attention has just been called, the court said, in construing this provision: '“The difficult and important question is presented in this case whether money borrowed from a third peleón to pay off the purchasemoney due the original vendor or his assignee is a- debt or liability contracted for the purchase, in the sense of the statute and constitutional provision. * * * We think there is a. marked difference between purchase money and money borrowed to pay ^off purchase money, and that a debt or liability contracted for the purchase of land means a debt which has for its immediate and original consideration such purchase. So long as the original consideration of the debt remains,- — the purchase of the land,-— the homestead cannot prevail against it, even though the debt be assigned, renewed, or -extended. * * * But, when the -original purchase money is paid by the use of other money borrowed from a third person for' that purpose, the consideration of the debt incurred for borrowed money is not superior to the homestead. If we hold that money borrowed to- pay off the purchase money mlnst be held superior ito the homestead, then it logically follows that money borrowed to pa,y off such borrowed money must also be -held superior, and this rule -must continue through as many *576removes and borrowing transactions as the needy debtor may be forced to make through a series of years. * * * This would not be a sound rule. ** * * The priority extended to debts contracted for the purchase money of a homestead is not the same as a vendor’s lien for purchase money, and in nowise dependent upon the question whether the vendor has retained such lien. * * * The party who pays off such purchase money is not thereby substituted to the priority in favor of the original debt.” Another distinction between the case at bar and those cited' by plaintiff is that in each of the latter the money was paid by the creditor directly to the vendor or lienholder. That this is regarded as material is. shown by the cases we have cited above from the courts of Illinois, Nansas, and Texas, when compared with the authorities cited from those states by plaintiff, viz: Loan Co. v. Everheart, 18 Tex. Civ. App. 192 (44 S. W. Rep. 885); Austin v. Underwood, 37 Ill. 438; Nichols v. Overacker, 16 Kan. 54. In this case, the borrowed money was placed to Carroll’s general account in the bank, and, while a part of it was doubtless paid out on the check given Beermaker, the vendor, yet it was so paid as Carroll’s money and not as the money of the bank. The original opinion is adhered to, and the judgment REVERSED.
Ladd, J., concurs in the result, for the reasons stated in the first paragraph of this opinion. Granger, J., takes no part.