Moseley v. Bevins

| Ky. Ct. App. | Feb 19, 1891

JUDGE LEWIS

delivered the opinion of the court.

The question, in this case is whether land occupied and claimed as a homestead, but bought on credit, can be made subject to payment of a debt not existing at the time to the extent of purchase money paid after it was created.

Section 16, article 13, chapter 38, General Statutes, provides that the homestead exemption shall not apply to sales under execution, attachment or judgment, at the suit of creditors, if the debt or liability existed prior to the purchase of the land, or erection of improvements thereon.

It is manifest that determination of the question depends upon the meaning given to the word purchase as used in that section.

It seems to us, considering the rights of creditors, the moral obligation of debtors, and the reason for adoption of the section, the word was intended to be understood and applied in the sense of acquisition of a homestead by fully paying for it. For ownership of land can' not be absolute, but, as said in Farmers and Drovers’ Insurance Company v. Curry, 13 Bush, 312" court="Ky. Ct. App." date_filed="1877-09-19" href="https://app.midpage.ai/document/farmers--drovers-ins-v-curry-7379490?utm_source=webapp" opinion_id="7379490">13 Bush, 312, is conditional, and held in trust for the vendor until the purchase price is paid. Hence, the original homestead act of 1866 provided in the language of section 9, as it now stands in the General. Statutes, that a homestead should not be exempt from enforced sale for payment of purchase money due thereon. But it was thereby, in express terms, made exempt from sale under execution, attachment or judgment, to pay any debt created subsequent to June 1, 1866. So that a homestead, whether paid for in full or bought on credit, would, in course of time, under operation of the statute of 1866, have come to be exempt from all debts and liabilities whatever, without regard to date of their creation, except those for purchase money, and such as were secured by mortgage; and to remedy that defect an amendment was adopted March 1, 1876, which is embodied in section 16, mentioned. The underlying principle of that amendment is, that the homestead of a debtor shall not be exempt from payment of any just debt or liability, except when he has paid, or to the extent he has paid therefor, prior to creation of such debt or liability. For there is no difference in principle or effect between purchasing and paying for a homestead with means that ought to have been applied to payment of a pre-existing debt, and paying wholly or partially after creation of a debt the pur chase price of a homestead, even if it was bargained for prior to existence of the debt. In one case, as well as in the other, the means used by the debtor to pay for the homestead may have either been obtained directly from, or else looked to and relied on by, the creditor when the debt was created; and in both alike it would be unjust to the creditor to give legal immunity for such unfair or treacherous conduct of the debtor; nor is there any reason for subjecting a homestead to the extent of improvements erected thereon after creation of a debt to its payment, as is expressly provided by section 16, that does not equally apply for making it liable to extent of purchase money paid after a debt is created ; for, if in the latter case the debtor might be hindered or delayed in acquiring absolute ownership, he would, in the other, be prevented having full enjoyment of the land as a homestead. In our opinion, according to proper construction of the statute as amended, he is entitled to neither, unless procured honestly and without prejudice to the rights of existing creditors.

The conclusion reached in Griffin v. Procter, 14 Bush, 571" court="Ky. Ct. App." date_filed="1879-02-21" href="https://app.midpage.ai/document/griffin-v-proctors-admr-7379670?utm_source=webapp" opinion_id="7379670">14 Bush, 571, seems to be adverse to the view now taken. There the debtor, being in possession, though having only a title bond for the land claimed as a homestead, borrowed money, part of which was used in payment of the purchase money; and it was held that occupation of the improved premises under the contract of purchase was the acquisition of a homestead right as against subsequent creditors, and the fact a portion of the money borrowed was applied in payment for the land did not make any difference. The error of that position, as it now seems to us, is in assuming that, under the statute, possession and claim of land as a homestead by a debtor, without having paid all, or it may be any part of the purchase price, exempts it from sale to pay subsequent debts, though they may be for money or property borrowed or purchased and then used to pay for the identical land. We think the statute ought not to be so used or construed, and consequently the doctrine of the case referred to is overruled.

Though the judgment appealed from was on demurrer to the petition, appellee filed an answer alleging the payments made of the purchase money were proceeds of exempted personal property. But though, if true, that allegation would be a defense, no issue was made in regard thereto ; and consequently, for the error of the lower court in sustaining the demurrer, the judgment must be reversed, and cause remanded for proceedings consistent with this opinion.