IH KENT COMPANY v. MillerIH KENT COMPANY v. Miller
OPINION
By the Court,
This is an appeal from the judgment of the court below, dismissing under NRCP Rule 12(b) (5) the complaint of appellants wherein appellants sought a judgment compelling respondent to file in the bankruptcy court a claim for homestead exemption of property conveyed to appellant First National Bank, as trustee, for appellant I. H. Kent Company, as beneficiary, to secure a debt to said beneficiary.
*473 On January 30,1956 Boyce and Helen Miller, his wife, executed a trust deed on certain of their community property in Churchill County, Nevada, in favor of First National Bank of Nevada, as trustee, and I. H. Kent Company, as beneficiary. The property involved was occupied by them as their home. The trust deed, after describing the property, included in the conveyance “all of the estate, right, title and interest, homestead or other claim or demand, as well in law as in equity, which the Trustor now has or may hereafter acquire, of, in or to the said premises * * *.” Said trust deed was given to secure a preexisting debt to I. H. Kent Company. Thereafter, on May 8, 1956, and within four months of the execution of the trust deed Boyce Miller filed a petition in bankruptcy and was thereafter adjudged a bankrupt. On February 5, 1957 Boyce and Helen Miller filed a declaration of homestead on the property and Boyce Miller thereafter petitioned the bankruptcy court for leave to amend his schedules by claiming his homestead exemption on the property. Helen Miller did not join in such petition and has not sought to claim the homestead exemption. 1
The United States District Court, pursuant to petition of the trustee to set aside the trust deed as a preferential transfer under the provisions of the bankruptcy act, held that the conveyance was void. The court of appeals ordered the judgment redrawn as not to indicate on its face that the trust deed was void as between the parties to it. In otherwise affirming the judgment, the court of appeals held: “* * * the effect of the homestead provision [in the trust deed], whether it be referred to as an assignment, abandonment or a waiver, simply acts to protect Kent against the contingency of having his security reduced materially by a homestead exemption on the property.” It said further: “We agree with the *474 trial court that the right of homestead is a personal one created to protect the home and is completely inactive until activated by a husband and wife or by either or by the head of a family. It is nothing but an inchoate right that springs into effectiveness only by the application or declaration of those named and in no other manner. Therefore, the action of the bank-trustee and Kent in their attempt to establish a homestead for the Millers, and through this method remove the Miller property from the bankruptcy estate as exempt property, must fail. The property therefore remains in the estate, and since the conveyance was made less than four months before bankruptcy adjudication for an existing antecedent debt the conveyance cannot be effective to constitute a secured debt with preference over other debts.” I. H. Kent Company v. Busscher, supra.
It rejected the claim of appellants here that they were properly acting as agents of the Millers in attempting to declare and fix upon the property a homestead exemption.
Appellants attack the holding of the circuit court as not sound in law, and assert in any event that it is not binding upon this court. However that may be, appellants commenced this action to obtain a judgment compelling Helen Miller to join with her husband in filing a claim for the homestead exemption. This they seek by reason of the language contained in the trust deed, which they assert places upon Helen Miller an equitable duty to claim the exemption, and because her refusal so to do jeopardizes the security interest in the property of Kent because the property will otherwise remain in the bankrupt’s estate and be disposed of in the bankruptcy proceedings. The present appeal is from the lower court’s order dismissing the complaint for failure to state a claim upon which relief could be granted.
The nature of appellants’ contention is expressed by them as follows: “By the deed of trust, Helen K. Miller and her husband conveyed the property and their right of homestead therein to the trustee and beneficiary and, in equity, each of them should be compelled to do everything necessary to make that conveyance, effective.” In
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support, they cite Gylling v. Kjergaard, 8 Cir.,
We are compelled to reject this contention. It is uniformly held that constitutional and statutory provisions exempting the homestead from execution are intended to secure for the householder a home for himself and his family regardless of his financial condition; that laws exempting the homestead are not based upon principles of equity, nor do they in any way yield thereto, their purpose being to secure the home of the family even at the sacrifice of just demands, the preservation of the home being deemed of paramount importance as a matter of public policy. Clark v. Davis,
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It must be conceded that the determination of the issue is not without difficulty, and that the decisions are not harmonious. Appellants place their reliance on Gylling v. Kjergaard, 8 Cir.,
“The petitioners contend that the Trustee is required by Sections 6 and 7 of the Bankruptcy Act, §§ 24 and 25, Title 11 U.S.C.A., to set aside for the bankrupt the property which is exempt under the state law which would include the refrigerator in question. They admit the generally accepted rule that a bankrupt may waive his exemptions in favor of general creditors. See In re Roark, D.C.E.D. Ky.,
It is interesting to note the language of the District Court N.D. Ga., In re Martin Bros.,
Conceding that the language used is to a large extent dictum, that no case is cited in support, and apparently the opinion has not been cited in later cases, we think that it is good law in view of the principles recited in the cases herein referred to.
The judgment of dismissal is affirmed with costs.
Notes
Pursuant to judgment of the United States Circuit Court of Appeals (I. H. Kent Company et al. v. Busscher, Trustee in Bankruptcy, Etc.,
But see Kronstadt v. Citizens & Southern Nat. Bank of Savannah, 5 Cir.,