Petition for rehearing denied March 24, 1936 ON PETITION FOR REHEARING (55 P.2d 794) In a petition for rehearing, the respondent, G.E. Smith, asserts that the effect of that part of our former opinion wherein we ordered a sale of the real and personal property in the event that it could be sold for enough in excess of the mortgage against the property to insure to E.G. Kay $3,000, the maximum allowed under the homestead law, and $399.12, the amount of the lien impressed upon the property for money advanced by E.G. Kay's son, is to permit E.G. Kay to look to property other than that in which he is entitled to a homestead, to make up the difference between the value of the homestead property and the statutory maximum of $3,000.
All the evidence in the case is to the effect that the property in which the court allowed E.G. Kay a homestead is of greater value than the non-exempt property. The amount of the mortgage to the veterans' state aid commission is $3,000, on the principal of which a small amount has been paid. It covers both the exempt and the non-exempt property. The amount of the son's lien, as above stated, is $399.12, and he is granted a lien on both the personal property and all the real property as security for the payment of that sum.
In the event that the mortgage should be foreclosed at this time and the non-exempt property be first sold to pay the amount of the mortgage and the son's lien, any excess, over and above such encumbrances, realized from the sale of the non-exempt property, would not inure to the benefit of E.G. Kay. Nor, in all probability, would it be necessary, even if it were permitted, for *Page 98 him to look to such excess of proceeds of sale of the non-exempt property to make up the maximum of $3,000; for, as above stated, the property in which he is entitled to a homestead is of a greater value than the non-exempt, and the maximum to which he is entitled is less than the amount of the two liens.
It is stated in the petition for rehearing that to require the respondent to find a purchaser willing to pay $3,399.12 the aggregate of the homestead exemption and the son's lien, over and above the amount of the mortgage, would in effect preclude a sale of the property and deprive the respondent from satisfying the amount of his judgment of some $1,600 against E.G. Kay. The amount of the mortgage together with the other two items is some $6,300. The court found that the value of the property at the time it was transferred from the father to the son was $9,500. The evidence of respondent's witnesses showed the value to be in excess of that amount. At the time of the transfer there were many vacant houses and apartments at Klamath Falls. But at the time of the trial all the houses were filled and there was a strong demand for dwellings. Also, the value of the property in question had increased over its value at the time of the transfer. In view of these facts there should be little difficulty in finding a purchaser who would buy the property for enough, over and above the mortgage, so that respondent could recover the amount of his judgment after making allowance for the son's lien and the amount of E.G. Kay's exemption.
The decree of the circuit court, in conformity to the prayer of the complaint, set aside the transfers of the real and personal property and ordered all the property sold to satisfy the plaintiff's demands. The court in Bowman v. Sherrill,59 Or. 603 (117 P. 1122), in *Page 99 a proceeding similar to this, said: "A decree, such as is sought in this case, would operate practically as an execution, and we see no reason why this [homestead] exemption should not be claimed and urged in this proceeding." We likewise see no reason why, in this proceeding, in view of the peculiar situation here presented, this court should not prescribe the procedure to be followed upon the remanding of the cause to the circuit court. By so doing it is possible to obviate further litigation of the matter and to preserve not only the right which E.G. Kay has to a homestead but in addition the rights of the creditors. It is altogether probable that the respondent would, under the procedure outlined, recover more on his judgment than he would obtain in the event that the mortgage were foreclosed. And any other procedure which we can conceive would in all probability bring about a foreclosure of the mortgage in the very near future.
Reference is made in the petition to the deed from Chester Kay to his sister, Erma K. Austin, and it is suggested that because this deed has not been canceled it will tend to defeat a sale of the property on execution. Nothing said here or in our former opinion should be so construed as to prevent the circuit court from following such procedure as may be necessary to determine what right, if any, the said Erma K. Austin has in and to the property here involved.
The petition for a rehearing is denied.
CAMPBELL, C.J., and BEAN and RAND, JJ., concur. *Page 100