Jacoby v. Parkland Distilling Co.

41 Minn. 227 | Minn. | 1889

Mitchell, J.

The evidence offered by the defendants, the exclusion of which is here assigned as error, may all be classified under two heads: First, evidence tending to prove that George G. Jacoby, an insolvent debtor, in contemplation of insolvency, moved into and made his dwelling in the property in controversy, which constituted & large part of his assets, for the express purpose of holding it as a homestead and thereby withdrawing it from the reach of his creditors; and, second, that in a financial statement made to defendants, and upon the faith of which they gave him credit for the claims upon which their judgments against him were recovered, he had included as part of bis assets the property in question. It is claimed that the first would render the claim of homestead exemption fraudulent as to creditors, and that the second would estop Jacoby from claiming the exemption as against the defendants. There is nothing in either point. A debtor in securing a homestead for himself and family, by purchasing a house with non-exempt assets, or by moving into a house which he already owns, takes nothing from his creditors which the law secures to them, or in which they have any vested right. He merely puts his property into a shape in which it will be the subject of a beneficial provision for himself, which the law recognizes and allows. Even if he disposes of his property subject to execution, for the very purpose of converting the proceeds into exempt property, this will not constitute legal fraud. This he may do at any time before the creditors acquire a lien upon the property. It is a right which the law gives him, subject to which every one gives him credit, and fraud can never be predicated on an act which the law permits. Tucker v. Drake, 11 Allen, 145; O’Donnell v. Segar, 25 Mich. 367; North v. Shearn, 15 Tex. 174; Cipperly v. Rhodes, 53 Ill. 346; Culver v. Rogers, 28 Cal. 520; Randall v. Buffington, 10 Cal. 491.

This also disposes of the question of estoppel. The fact offered to be proved did not contain the first element of estoppel, for, as the law permits a debtor at any time to select or appropriate out of his property, as exempt, the amount allowed by statute, or to convert non-exempt property into that which is exempt, every one must be presumed to deal with him with reference to the law. Any other view would imply a prohibition of a selection and occupancy of a homestead by any debtor, when doing so would make him insolvent, or where it is the only property upon the possession of which credit was obtained. The effect of this would be to render the selection and occupancy of a homestead invalid in all cases where the debtor did not own enough other property to pay all his debts in full. Such a construction would often render the homestead law nugatory and valueless in the very cases where its protection is most needed. In re Henkel, 2 Sawy. 305.

The fact that the building on the lot in question was in part suited to and used for business purposes was wholly immaterial. The law exempts as a homestead a quantity of land not exceeding one lot, and no restriction is placed upon the uses of any part of it, provided it is the dwelling of the debtor. This has been the settled construction of the statute for many years. Kelly v. Baker, 10 Minn. 124, (154;) Umland v. Holcombe, 26 Minn. 286, (3 N. W. Rep. 341.)

Neither can the questions of the value of the premises, or what proportion that value bears to the remaining property of the debtor, be at all important, so long as the premises are in area within the limit of exemption fixed by law. Unfortunately our statute fixes no limit as to value upon a homestead exemption. It must be confessed that such a law may be greatly abused, and permit great moral frauds; but this is a question for the legislature, and not for the courts. There was no error in excluding the evidence offered, and the agreed facts fully justified the findings of the trial court.

Judgment affirmed.