282 S.W. 9 | Ark. | 1926
On January 4, 1918, A.M. Ledbetter sold the southeast quarter of section 27, in township 5 north, range 13 west, to J. E. Tillman, taking notes for $600 secured by mortgage on the land. Within a short time thereafter Tillman learned that the title to the southwest quarter of the southeast quarter was in the United States, and on January 25, 1918, he entered the above land under the homestead law and procured a patent in February, 1924. Mrs. A.E. Moore acquired the purchase money notes before maturity and without notice of any defects. On January 4, 1921, Tillman, being unable to pay the notes, executed four notes payable to Mrs. Moore for the sum of $165 each, secured by mortgage on the southwest quarter above mentioned, signed by his wife, Ida H. Tillman, and by A.W. Winston, due in one, two, three and four years. The notes being unpaid, Mrs. Moore brought suit on November 21, 1923, asking judgment upon the notes and foreclosure of the mortgage. Defendants answered, alleging that the mortgage was void as to the southwest quarter of the southeast quarter, for the reason that Tillman had not received a patent therefor or made final proof at the time he executed the mortgage. The chancellor gave judgment upon the notes, but sustained the defense as to the mortgage being invalid as to the southwest quarter of the southeast quarter. The plaintiff has appealed. *897 The question presented by this appeal is whether or not one who has entered lands under the United States Homestead Act may execute a valid mortgage thereon prior to the issuance of a patent, or prior to making final proof entitling the entryman to a patent therefor. The applicable provisions of the homestead laws are contained in the Revised Statutes of the United States, as amended by acts March 3, 1891, c. 561, 5, and June 6, 1912, c. 153, and are as follows:
"Section 2289. Every person who is the head of a family, or who has arrived at the age of twenty-one years. and is a citizen of the United States, or who has filed his declaration of intention to become such, as required by the naturalization laws, shall be entitled to enter one-quarter section, or less quantity, of unappropriated public lands, to be located in a body in conformity to the legal subdivisions of the public lands; but no person who is the proprietor of more than one hundred and sixty acres of land in any State or Territory shall acquire any right under the homestead law. And every person owning and residing on land may, under the provisions of this section, enter other land lying contiguous to his land, which shall not, with the land so already owned and occupied, exceed in the aggregate one hundred and sixty acres.
"Section 2290. Any person applying to enter land under the preceding section shall first make and subscribe before the proper officer and file in the proper land office an affidavit that he or she is the head of a family, or is over twenty-one years of age, and that such application is honestly and in good faith made for the purpose of actual settlement and cultivation and not for the benefit of any other person, persons or corporation, and that he or she will faithfully and honestly endeavor to comply with all the requirements of law as to settlement, residence and cultivation necessary to acquire title to the land applied for; that he or she is not acting as agent of any person, corporation, or syndicate in making much entry, nor in collusion with any person, corporation *898 or syndicate to give them the benefit of the land entered, or any part thereof, or the timber thereon; that he or she does not apply to enter the same for the purpose of speculation, but in good faith to obtain a home for himself, or herself, and that he or she has not directly or indirectly made, and will not make, any agreement or contract, in any way or manner, with any person or persons, corporation or syndicate whatsoever, by which the title which he or she might acquire from the Government of the United States should inure, in whole or in part, to the benefit of any person, except himself, or herself * * *.
"Section 2291. No certificate, however, shall be given, or patent issued therefor, until the expiration of five years from the date of such entry; and if, at the expiration of such time, or at any time within two years thereafter, the person making such entry; or, if he be dead, his widow; or, in case of her death, his heirs or devisee; or, in case of a widow in making such entry, her heirs or devisee, in case of her death, proves by two credible witnesses that he, she, or they have resided upon or cultivated the same for the term of five years immediately succeeding the time of filing the affidavit, and makes affidavit that no part of such land has been alienated, except as provided in section twenty-two hundred and eighty-eight, and that he, she, or they will bear true allegiance to the Government of the United States; then, in such case, he, she or they, if at that time citizens of the United States, shall be entitled to a patent, as in other cases provided by law.
"Section 2296. No lands acquired under the provisions of this chapter shall in any event become liable to the satisfaction of any debt contracted prior to the issuing of the patent therefor."
Learned counsel for the appellees contend that a mortgage of the lands, entered for homestead purposes, by the entryman prior to obtaining his patent, or making final proof entitling him to a patent, is an alienation of the lands in the sense of the provisions of the homestead laws above, and is therefore forbidden by those laws. *899
The word "alienated" in 2291, supra, is used in the narrow and restricted sense that the entryman has not executed a deed or absolute conveyance to the land or any part thereof upon which he made his homestead entry. A mortgage, or incumbrance, in itself does not operate in equity to convey an absolute title, and therefore by such instrument the entryman has not "alienated" his property in the sense of the above Federal statute. This is the interpretation put upon the word "alienated" by the Land Department of the United States, and by the Supreme Court of the United States, and is practically the consensus of modern opinion in State jurisdictions where the above provisions of the statute have been under consideration. While the exact question here before the court was not decided by the Supreme Court of the United States in the case of Hafemann v. Gross,
Mr. Finney, First Assistant Secretary of the Interior, in 48 Land Decisions, at page 583, says: "All the decisions of the department since the incumbency of Secretary Teller have been to the effect that such mortgage or deed of trust is not an alienation within the scope of the homestead statute, or forbidden by the spirit of the law. * * * The spirit and intent of the preemption and homestead laws in this respect are the same." This interpretation is in precise conformity with what is said by the Supreme Court of the United States, through Mr. Justice Brewer, in Hafemann v. Gross, supra.
Learned counsel for the appellees, to sustain their contention that the mortgage of the lands entered for a homestead is an alienation thereof, and therefore prohibited by the Revised Statutes of the United States cite the line of our cases holding that a mortgage carries the legal title. Whittington v. Flint,
But an analysis of these very cases will discover that a mortgage of lands is not a conveyance thereof carrying the absolute and unrestricted title thereto. On the contrary, while a mortgage at law does carry the legal title, it is not, either at law or in equity, an absolute, unconditional and indefensible title. It becomes such only after the mortgagor has breached the condition of the mortgage and his equity of redemption has been foreclosed. In other words, while the legal title under the law does vest in the mortgagee, still this is only for the purpose of enabling him to obtain security for the satisfaction of the debt or obligation due him by the mortgagor; and, when that satisfaction is obtained, the legal title vests and remains in the mortgagor without the necessity of a reconveyance from the mortgagee. Thus, after all is said and done, a mortgage, in common parlance as well as legal acceptation, is an instrument *901
Evidencing a security for debt — the conveyance or instrument to be void upon the discharge of the debt or obligation. As is well said in 19 R.C.L., page 242, 2, "harmony and consistency have been achieved only by the complete adoption, by judicial decision or statute, of the original equitable conception that a mortgage is in fact a security — nothing more, nothing less." See also Hillard on Mortgages, 2, p. 1; 4 Kent's Commentaries, *pgs. 154 to 162, inclusive. Our own court, through Chief Justice COCKRILL, in Stewart v. Scott,
In Cox v. Donnelly,
It is clear that it was unnecessary to the conclusion reached by the court in the decision of the above case to hold that "no lien on the land entered under the homestead to secure a debt contracted before the patent therefor is issued, can in manner be acquired." True, the language was germane to the discussion, but was not necessary to the decision, and the facts are entirely different from the case at bar, and therefore we do not feel bound by the decision to hold, in the instant case, that a mortgage executed by the homestead claimant prior to the time of receiving his patent or making his final proof is null and void. In the case of Shorman v. Eakin, supra, Burke, although in possession of the land at the time he sold to Eakin, was not claiming the land under a homestead entry but under a swamp land grant. Furthermore, Burke, even if he could be considered as the homestead claimant, was not proposing to mortgage the land but to make a straightout unconditional sale of the same. There was no mortgage executed by Eakin, the homestead claimant, to Burke. So, from any viewpoint, there was a total failure of consideration for the note on which Shorman predicated his action. The case, for all purposes of the decision, could and should have ended there.
In the case of Gilkerson-Sloss Co. v. Forbes,
Nevertheless, our court has never decided the precise question here involved, and therefore no rule of property has been established by this court by any decision upon the subject. We are called upon now to decide it, and must decide it, in the light of the weight of authority that now obtains throughout the American Union, and what we believe to be the better reason.
One of the best cases we have found upon the subject is that of Stark v. Morgan, supra, 85 Pac. (Kan.) 567, 6 L.R.A. (N.S.) 934. After an exhaustive review of the authorities, the Supreme Court of Kansas says: "However, the courts as well as the Interior Department have recognized no distinction between mortgages executed upon land held under the preemption law, when that law was in force, and those held under the homestead law. The purpose of the requirements in both is held to be to prevent speculative entries, and the right of the claimant to execute a valid mortgage upon the land for any legitimate purpose is no longer doubted. There is much force in the suggestion that, in cases of this kind, the court should hold in harmony with the policy and will of the government as announced in the rulings of the Land Department." See also case note.
Another illuminating case is that of Lohman State Bank v. Grim, 222 P. 1052, where the Supreme Court of Montana says: "The act of the entryman in giving a mortgage in good faith to secure a legitimate debt is not deemed an alienation within the meaning of, and is not forbidden by, the spirit of the Federal statute which provides that land acquired under the homestead laws shall not, in any event, become liable to the satisfaction of any debt contracted prior to the issuing of patent therefor. This view is sustained by the nearly unanimous voice of the courts." After citing numerous cases, the court continues: "Yet, while the entryman may *906 incumber the land voluntarily to the extent of his rights therein, within the limitations above mentioned, the statute prevents a creditor from in any manner acquiring an involuntary lien upon the land to secure satisfaction of a debt contracted by the homesteader before patent issues."
Counsel for the respective parties, in their most excellent briefs, have greatly lightened our task by an exhaustive survey of all the authorities of importance to be found on the subject. After a critical analysis of these, we are convinced that a homestead entryman may mortgage the land entered either before or after making final proof entitling him to a patent therefor. The rationale of the doctrine of the cases is: First, that these homestead provisions of the Revised Statutes were intended by Congress for the benefit of actual bona fide citizens of the United States who wish to acquire homesteads. Alienation is prohibited because it would mean abandonment and would lead to speculation and fraud upon the government and be destructive of the very purpose which Congress had in mind in enacting the homestead laws. Therefore, the homesteader is forbidden to alienate the entered land, and the same can not be taken from him by process created, not by contract, but by operation of law. See Ruddy v. Rosser,
Second: Since the homestead entrant, by mortgaging the land entered as security for his debts or obligations, does not contravene the policy of the government, as between him and the mortgagee, he would be estopped from disputing the validity of a lien created by him. *907
Kirkaldie v. Larrabee,
Third: In controversies between individuals involving the construction of the homestead laws to determine their rights, for the sake of uniformity and harmony in the practical administration and execution of the government's home-building program, State courts, unless some insuperable obstacle of reason or policy intervenes, should endeavor to harmonize their decisions with the interpretation of the homestead laws by the Land Department, which is intrusted with the enforcement of these laws. Most assuredly should this be the case so long as the interpretation by the Land Department is not contrary to the decisions of the Supreme Court of the United States. This rule is observed with practical unanimity as shown by numerous decisions of State courts cited in appellant's brief.
Fourth: The Land Department, in an exhaustive opinion by First Assistant Secretary Finney, 48 Land Dec. 582, to which we have already referred, distinctly holds that "a homestead entryman is not precluded from mortgaging his entry prior to the perfection of his equitable title; and the provision contained in the Revised Statutes to the effect that no homestead shall in any event become liable to the satisfaction of any debt contracted prior to the issuance of patent, does not invalidate a mortgage voluntarily given on an unperfected entry."
It follows that the trial court erred in refusing to foreclose appellant's mortgage on the southwest quarter of the southeast quarter of section 27, township 5 north, range 13 west, Faulkner County, Arkansas, said lands being embraced in a mortgage executed by appellee, J. E. Tillman, to the appellant to secure the debt of appellee to appellant. The decree is therefore reversed, and the cause will be remanded for further proceedings according to law and not inconsistent with this opinion. *908