Court Opinion

ID: 9632620
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:20:24.178769+00
Date Added: 2024-06-11T13:07:37.538253
License: Public Domain

Dore, J.
(dissenting) — I agree with the Court of Appeals that the issue posed here is not the attachment of the 1973 judgment lien, but the relative priority of interest acquired by execution sale as against the interest reflected by the trust deed. Priority between creditors is determined in order of time, first in time being the first in right. Homann v. Huber, 38 Wn.2d 190, 228 P.2d 466 (1951); Hollenbeck v. Seattle, 136 Wash. 508, 240 P. 916 (1925). The majority would apply the rule of "first in time, second in right" in the present case, through the use of dicta from an 1898 case. Therefore, I must dissent.
*40Ordinarily, under RCW 4.56.1901-.210, a money judgment becomes a lien upon real property of the judgment debtor from the date judgment is entered. When a homestead exemption is established prior to judgment, the judgment does not become a general "lien" upon that part of the value of the homestead property which is exempted under the homestead act. Lien v. Hoffman, 49 Wn.2d 642, 306 P.2d 240 (1957); Survey of Washington Law, Equity Exceeding Homestead Exemption Value Subject to Execution, 41 Wash. L. Rev. 559 (1966). To conclude otherwise would limit marketability and restrict the ability of the homestead declarant to obtain a more desirable homestead by using funds from the sale of its earlier homestead. Aronson v. Murk, 67 Wn.2d 1, 7, 406 P.2d 607 (1965).
Even though no judgment lien has attached to that part of the property exempted under the homestead act, a creditor can reach the part of the homestead property in excess of the exempted portion through the process set forth in RCW 6.12.140-.280 while the property is in the judgment debtor's hands. These statutes require a complicated procedure whereby the creditor petitions a superior court to appoint appraisers to determine the value of the homestead and whether the residence can be separated from the remainder of the property. Mahalko followed this procedure, and the court determined from the appraisal report that the land claimed exempt exceeded in value the amount of the homestead exemption and directed sale under execution.
The majority relied upon dicta in the early case of Traders' Nat'l Bank v. Schorr, 20 Wash. 1, 54 P. 543 (1898) that a general judgment lien does not operate on the premises which constitute a homestead. This dicta was relied upon in *41Barouh v. Israel, 46 Wn.2d 327, 281 P.2d 238 (1955); Lien v. Hoffman, supra; and Webster v. Rodrick, 64 Wn.2d 814, 394 P.2d 689 (1964). None of these cases involved the rights of competing judgment creditors to the excess value, and two of these cases were decisions to protect the rights of bona fide purchasers. In contrast, Arctic obtained a title report which disclosed Julia Mahalko's judgment lien and execution sale before Arctic purchased the Westinghouse judgment and deed of trust.2 Arctic paid $7,500 to assume the portion of a deed of trust in excess of $39,000. Arctic is not a bona fide purchaser and the broad dicta of Traders is not relevant to the facts of this case.
Although conceding that none of the cases cited above specifically addresses the question of whether a judgment becomes a lien on the excess value of the homestead from the time the judgment is entered, the majority insists the policy reasons underlying the homestead act support the view that such a lien does not attach.
On the contrary, the policy reasons underlying the homestead act do not apply to protection of the excess value of the homestead. The act is designed to preserve from unsecured creditors a certain value for the judgment debtors, enabling them to convey the property. This prevents a restraint on alienation of that part of the homestead property on which the judgment debtor resides.
The procedures set forth in RCW 6.12.140-280 under which a creditor may reach the excess value of the homestead property provide the safeguards to avoid the evils the homestead act was designed to prevent. Under RCW 6.12-.170, a copy of the verified petition of the creditor, with a notice of the time and place of hearing, must be served upon the owner and the owner's attorney at least 10 days before the hearing. At the hearing the judge may, upon the proof of service of a copy of the petition and notice and of the facts stated in the petition, appoint three disinterested *42residents of the county to appraise the value of the homestead. RCW 6.12.180. The appraisers then have 15 days to view the premises and appraise the value thereof, under RCW 6.12.200-.210. If the appraised value exceeds the homestead exemption, they must determine whether the land claimed can be divided without material injury.
Under RCW 6.12.220, if it appears to the court that the homestead can be divided without material injury, the court must order the appraisers to set off to the owner so much of the land, including the residence, as will amount in value to the homestead exemption, and the execution will be enforced against the remainder of the land. If it appears to the court that the homestead exceeds in value the amount of the homestead exemption but it cannot be divided, the court must make an order directing its sale at execution, at which no bid can be received unless it exceeds the amount of the homestead exemption. RCW 6.12.230-.240. If the sale is made, the proceeds must be applied in the following order: first, the amount of the homestead exemption, to be paid to the judgment debtor; second, the amount expended in the execution sale; and third, the balance is paid to the judgment debtor. RCW 6.12.250. Under RCW 6.12.260, the money paid to the owner is entitled to the same protection against legal process and the voluntary disposition of the husband or wife which the law gives to the homestead.
Under this procedure, the judgment debtor can protect the amount of the homestead exemption from all creditors, enabling him to preserve a certain value for investment in a future homestead. At the same time, the creditor can reach that part of the property not qualified for homestead protection to satisfy the judgment debtor's obligations. The bona fide purchaser of homestead property has actual or constructive notice of the lien attached to the excess value of the homestead property. Additionally, there is no restraint on alienation, as the debtor is free to transfer the property prior to the execution sale without losing the benefit of the homestead exemption. Lien v. Hoffman, supra; *43Locke v. Collins, 42 Wn.2d 532, 256 P.2d 832 (1953).
I would recognize the reasoning of other courts holding that a creditor has a judgment lien on the excess value of the homestead. See Cochran v. Cutler, 39 Ill. App. 3d 602, 350 N.E.2d 59 (1976); Clawson v. Anderson, 248 Or. 347, 434 P.2d 462 (1967); Peter Mintener Lumber Co. v. Janisch, 44 S.D. 42, 181 N.W. 914 (1921); White v. Spencer, 217 Mo. 242, 117 S.W. 20 (1909); Gulley v. Thurston, 112 N.C. 192, 17 S.E. 13 (1893).
Other jurisdictions have also held that the title acquired by execution sale on a judgment lien excludes adverse interests acquired subsequent to those judgments. See Black v. Miller, 219 So. 2d 106 (Fla. Dist. Ct. App. 1969); Onyx Ref. Co. v. Evans Prod. Corp., 182 F. Supp. 253 (N.D. Tex. 1959); Conard v. Atlantic Ins. Co., 26 U.S. (1 Pet.) 386, 7 L. Ed. 189 (1828); 30 Am. Jur. 2d Executions § 446 (1967); 33 C.J.S. Executions § 124 (1942).
I conclude Mahalko's judgment lien on the excess value of the homestead property attached when the judgment was entered on May 30, 1973. As such, this judgment lien is superior to the junior 1976 trust deed acquired by Arctic. To decide otherwise allows judgment debtors to avoid creditors entirely or arbitrarily favor one creditor over another without furthering the purposes of the homestead act.
I would reverse the judgment of dismissal and remand to the trial court for entry of judgment in accordance with the provisions of this opinion.
Rosellini and Dimmick, JJ., concur with Dore, J.
Reconsideration denied April 11, 1983.

 RCW 4.56.190 provides:
"The real estate of any judgment debtor, and such as he may acquire, not exempt by law, shall be held and bound to satisfy any judgment of the . . . superior court of this state,. . . and every such judgment shall be a lien thereupon to commence as hereinafter provided and to run for a period of not to exceed ten years from the day on which such judgment was rendered."

 The title company in its report had no difficulty in characterizing the Mahalko judgment as a lien on the subject property.