Laster v. First Huntsville Properties Co.

GAMMAGE, Justice,

dissenting.

While the majority’s logic and reason— though not their accuracy — might indicate their approach is rational, here we deal with law, and the law, as indicated by both Holmes1 and Bumble2, respectively, is and should be based on experience.

Our founders’ experience with financial institutions divesting them and their neighbors of their property prompted them to include stringent constraints on a family’s ability to encumber their homesteads. The majority today blow a large hole in that shelter.

The majority opinion inaccurately states the nature of the 1976 divorce decree and then misapplies Texas homestead law to reach a result contrary to the very purpose of the homestead protection — preventing creditors from defeating the homestead right. With due respect, I must dissent.

The divorce decree did not give the former husband, Richard K. Laster, any control over the homestead rights. His undivided “ownership” of 26.17% of the homestead property was subject to the family homestead rights expressly granted to his former wife Melissa Laster, at least until the homestead right granted to her terminated. He could not mortgage his interest, because the family homestead right granted to Melissa Laster attached to the whole property, including his 26.17%. Any attempt to mortgage the homestead — except for the three constitutionally sanctioned purposes of purchase money lien, construction lien for valuable improvements to the property contracted for in writing, or taxes on the property — is not just voidable but void. Sanger Bros. v. Brooks, 101 Tex. 115, 118, 105 S.W. 37, 38 (1907); Inge v. Cain, 65 Tex. 75, 79-80 (1885) (“void," “absolutely void,” emphasis in original); *133Tex. Const, art. XVI, § 50 (“No mortgage, trust deed, or other lien on the homestead shall ever be valid, except for” purchase money, improvements thereon, and taxes due thereon). Richard Laster could not mortgage “his” share of the property, because the property as a whole, including his undivided interest, was impressed with the family homestead character.

Had Richard Laster purported to mortgage the homestead during the marriage, then divorced Melissa and been awarded an undivided share, there could be no doubt under this court’s decisions that the mortgage was void and did not “spring back to life” after the divorce decree. O’Brien v. Woeltz, 94 Tex. 148, 154, 58 S.W. 943, 945 (1900) (deed of trust was void as to property that was business homestead at time instrument was executed, and subsequent divorce and abandonment did not make deed of trust become effective); Hays v. Hays, 66 Tex. 606, 608, 1 S.W. 895, 896 (1886) (wife’s subsequent abandonment of family homestead did not make prior mortgage on property valid because it was “null and void” when made, i.e., when property still impressed with homestead character). We should not reach a contrary result in this case.

The divorce decree recites that “the use and occupancy of the homestead of said parties located on [legal description of the property] is set aside and awarded to Petitioner [Melissa L. Laster] and the children until the youngest child reaches the age of eighteen or [other conditions occur].” (Emphasis added.) The majority apparently concede that this language expressly granted the family homestead right to Melissa and the children, but nevertheless provide confusing separate discussions about Richard’s homestead rights in his share of the property and Melissa’s homestead rights in her share. The divorce decree clearly awards the family homestead rights. So long as there is a person who is a constituent element of the family entitled to claim it, the family homestead rights are “to occupy the entire homestead.” Reconstruction Finance Corp. v. Burgess, 155 S.W.2d 977, 980 (Tex.Civ.App.—Waco 1941, writ ref’d).

This principle that the family homestead rights in a joint ownership situation extend to the whole property, when the whole property was owned by the community at the time the family homestead was created, is clearly explained in Sparks v. Robertson, 203 S.W.2d 622 (Tex.Civ.App.—Austin 1947, writ ref’d). In Sparks, the family homestead right originally arose during the marriage of Isaac and Elizabeth Sparks, who owned the property in community. Isaac died, and Elizabeth as the surviving widow “had a homestead estate in the entire property and a one-half interest therein in fee,” but the other one-half interest “was inherited by Turner [Sparks], Isaac’s son by a former marriage.” 203 S.W.2d at 623. Turner was not a cotenant because Elizabeth’s homestead rights prevented him from occupying the property, but he was a joint owner. Elizabeth subsequently married Chester Robertson. They lived on the property. Upon Elizabeth’s death, Chester had the homestead right established by his marriage to Elizabeth, but not the homestead right in the whole property. As the opinion explained:

Appellees’ contention ... appears to be predicated upon the proposition that Chester had a homestead interest in the entire property after the death of Elizabeth. This is not correct. One can not have a homestead interest in property the title to which is in neither spouse nor in the community. As the survivor of the community of herself and Isaac, Elizabeth, of course, had a homestead interest in the entire property while used as such during her life. Upon her death the homestead interest of Chester extended only to Elizabeth’s half interest in the property. Upon her death, Chester and Turner became cotenants of the property, and their rights are governed accordingly.
Sparks v. Robertson, 203 S.W.2d at 626.

The homestead rights addressed in the divorce decree are those established while Richard and Melissa were married and owned the property in community. The same principle applies. The homestead rights granted Melissa in the divorce de*134cree extended to the whole property, including Richard’s undivided share. As the majority correctly point out, Richard was a joint owner but not a cotenant. The family homestead rights given Melissa and the children included Richard’s homestead rights. He could not “abandon” them or mortgage the property to which they attached. See Burkhardt v. Lieberman, 138 Tex. 409, 413-14, 159 S.W.2d 847, 851 (1942) (conduct by one spouse may not es-top other spouse to claim homestead right). His attempt to mortgage part of the property impressed with the homestead character was void.

The former husband’s ability was to establish his own separate homestead after the divorce, not to destroy the family homestead. Nor should it have been to destroy the separate individual homestead of his former wife. The husband was a joint owner, not a cotenant. He was not entitled to occupy or partition the property so long as it was impressed with the homestead interest. His rights should extend only to establish his individual homestead, not to destroying that of his former spouse and children.

The only authority cited by the majority for trouncing the family homestead rights awarded to Melissa is inapposite. The majority assert correctly that a divorce court has power “to order the sale of the homestead and the partition of the proceeds.” Opinion at 131. The majority then assert the effect of the divorce decree was that “Melissa and Richard agreed, with the trial court’s approval, to simply postpone the partition of the homestead” and that “the division of the homestead can now take place just as if the court had ordered the division at the time of divorce.” Opinion at 131. The majority thus retroactively validate a mortgage and foreclosure of the mortgage on property protected by the family homestead rights at the time the purported mortgage was executed, even though established law is that a mortgage on property protected by the homestead right is void.

The issue is not whether the divorce judge could have ordered the sale of the homestead and the partition of the proceeds, with the property and the proceeds from its sale remaining exempt. The issue is whether, during the time the homestead rights were expressly granted to the former wife, the husband could mortgage his interest in the family homestead property. The cases cited and discussed by the majority simply do not support their conclusion.

The majority cite a number of lower court opinions over which this court exercised no review. Since this court has not heretofore approved the cases, there is no need to explain them. Nevertheless, those cases do not support the theory that a mortgage may be imposed on the non-pos-sessory owner’s undivided interest while the property is impressed with the family homestead character. In fact, if anything they support the conclusion that no mortgage, charge or lien for debt other than that expressly authorized by the constitution may be placed on property impressed with homestead character, or on the proceeds if the divorce court orders a sale of the family homestead.3

*135The majority also cite two decisions from this court. The first is Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21 (1923), in which this court held that the husband’s separate real property, if used as the family homestead, could on divorce be awarded to the former wife for the duration of her natural life, without divesting the husband of his ownership. This court wrote, “Real estate impressed with the homestead character was as much subject to division as was nonexempt property.” Id. at 409, 248 S.W. at 22. The opinion further explained:

In disposing of the property of the parties it is competent for the court to consider the homestead character of any of the property, separate or community, and the homestead needs of either the husband or the wife or the children; and, the right of use and occupancy of homestead property, as of any other, may be adjudged to the husband, the wife, or the children. Kirkwood v. Domnau, 80 Tex. 647, 16 S.W. 428, 26 Am.St.Rep. 770; Speer v. Sykes, 102 Tex. 451, 119 S.W. 86, 132 Am.St.Rep. 896.
Id. at 411, 248 S.W. at 23.

The issue of whether the husband, who owned 100% of the homestead property, could validly mortgage it for debt not sanctioned by the constitution while the former wife occupied it as homestead, was not expressly presented, but the fair implication from the opinion is that he could not. The family homestead character remained although he was dispossessed of the property by the divorce decree. Further, the quoted language from the opinion makes it clear that the divorce decree in the present case did expressly award the family home*136stead right to the former wife. Hedtke does not support the majority’s conclusion.

The other case the majority cites, Kirkwood v. Domnau, 80 Tex. 647, 16 S.W. 428 (1891), did at least deal with a former husband’s right to convey his undivided interest in homestead property. Even if we equate the right to convey with the power to mortgage, because the case lacked the element of a specific award of the homestead right to the wife in the divorce decree, by its very own language it also does not apply.

Kirkwood v. Domnau was decided when the only constitutional homestead right was that of a family homestead. This court wrote that the divorce court had the right to grant the family homestead rights to the wife had it desired to do so, but that “it not having been then done,” the legal effect is as though the former husband and wife were tenants in common and “as if they had never borne that [marital] relation to each other.” Kirkwood v. Domnau, 80 Tex. at 647, 16 S.W. at 429 (emphasis added). We held that the former husband could convey his undivided portion of the property, and that the former wife could not prevent a forced sale through partition by sale of her new tenant in common, to whom the former husband sold his interest.

We have just the opposite facts here. The family homestead rights were expressly granted to Melissa. The family homestead rights attached to the whole family homestead property. Richard could not convey or mortgagfe the property in violation of the family homestead rights awarded Melissa. Giving Kirkwood v. Domnau as justification for the retroactive effect of validating a void lien is just what the opinion states it does not authorize.

I am further concerned by what the majority opinion does by implication. Since the voters adopted the constitutional amendment November 6, 1973, single adults, including divorced persons, have had constitutional homestead rights. Tex. Const, art. XVI, § 50 (“The homestead of a family, or of a single adult person, shall be, and is hereby, protected from forced sale ...,” emphasis added). For the strong policy reasons protecting the homestead, when two persons divorce, the individual homestead rights of the one continuing to occupy the family homestead should relate back to the original establishment of the homestead as family homestead, and “should be presumed to continue upon divorce.” Note, Effects of Extending the Homestead Exemption to Single Adults, 26 BayloR L.Rev. 658, 664-65 (1974). Unless the circumstances of the divorce require an immediate sale, the individual homestead right, by relating back to establishment of the family homestead, should protect and attach to all of the property affected with the family homestead character. The trial court here evidently reached just such a conclusion by stating the former wife’s homestead rights were “paramount” to whatever rights the finance company acquired as the former husband’s ownership rights. That construction, supported by sound policy, would avoid the anomaly we have in this case of a creditor’s dispossessing the former spouse of the homestead under the guise of a “partition.” What the majority really do is condone foreclosure on and dispossession of what should be protected homestead property.

We have no business disturbing settled Texas law to aid the creditor and its successors in this case where the creditor had ample public record notice the property was family homestead. Nor should we trounce on the relatively new individual homestead rights of divorced persons without even acknowledging the harm we do. I would reverse the judgment of the court of appeals and affirm the trial court’s judgment.

MAUZY, J., joins in this dissent.

. O. Holmes, The Common Law 1 (1881):

The life of the law has not been logic; it has been experience. The felt necessities of the time, the prevalent moral and political theories, institutions of public policy, avowed or unconscious, even the prejudices which judges share with their fellow men, have a good deal more to do than the syllogism in determining the rules by which men should be governed. The law embodies the story of a nation's development through many centuries, and it cannot be dealt with as if it contained only the axioms and corollaries of a book of mathematics.

. C. Dickens, Oliver Twist, in Three Novels (Ham-lyn 1977) at 356:

[Quoting Bumble:] “If the law supposes that, ... the law is a ass — a idiot_ [A]nd the worst I wish the law is, that his eye may be opened by experience — by experience."

. McIntyre v. McIntyre, 722 S.W.2d 533, 537 (Tex.App. — San Antonio 1986, no writ), states:

Where a homestead cannot be partitioned, it is subject to sale and a division of the proceeds. Brock v. Brock, 586 S.W.2d 927 (Tex.Civ.App. — El Paso 1979, no writ). However, the proceeds from the sale of a homestead cannot be used to extinguish the liabilities due unsecured creditors. Delaney v. Delaney, 562 S.W.2d 494 (Tex.Civ.App. — Houston [14th Dist.] 1978, writ dism’d).

The actual holding of the case was that the husband had not proved the property was homestead, and therefore could not complain about the order to pay fees out of the proceeds.

Based upon the record before us we cannot conclude that the family residence was the parties' homestead. As no complaint was raised at trial or in a motion for new trial, appellant has no basis for now complaining that the proceeds from the sale of the property are exempt.
McIntyre, 722 S.W.2d at 538.

In Brock v. Brock, 586 S.W.2d 927, 930 (Tex. Civ.App. — El Paso 1979, no writ), the court first held that all points had been waived but then addressed the points, stating:

With regard to the first point, we initially note there is no question but that in a divorce proceeding where a homestead cannot be partitioned it is subject to sale and a division of *135the proceeds. Speer, Texas Family Law, Sec. 5:64 (5th ed. 1975). It is equally clear that the proceeds of the homestead may not be used for the purpose of paying unsecured creditors. Delaney v. Delaney, 562 S.W.2d 494 (Tex.Civ. App. — Houston [14th Dist.] 1978, writ dism’d); Klein v. Klein, 370 S.W.2d 769 (Tex.Civ.App.— Eastland 1963, no writ).

The opinion then goes on to say that enough non-exempt property was ordered sold to pay the unsecured creditors, so there was no error in any event.

In Delaney v. Delaney, 562 S.W.2d 494, 495-96 (Tex.Civ.App. — Houston [14th Dist.] 1978, writ dism’d w.o.j.), the court explained the difference between the right to order the sale and partition of proceeds and the lack of power to order the proceeds dedicated to pay unsecured debts:

As part of the property division, the trial court ordered the Delaneys’ community property homestead sold and the proceeds from the sale applied to the extinguishment of a variety of community debts, including a number of general unsecured debts. We sustain Mrs. Delaney’s attack on the decree to the extent that the proceeds from the sale of the homestead are ordered to be applied to discharge the general unsecured debts of the marriage, as such order violates the exempt status afforded homesteads and the proceeds from their sale. Franks v. Franks, 138 S.W. 1110 (Tex.Civ.App. — Austin 1911, writ refd).
A divorce court may order partition of a community homestead, including partition by sale. Trigg v. Trigg, 18 S.W. 313, 317 (Tex. Sup.1891). It may not, however, order the proceeds of such a sale applied toward general debts. Klein v. Klein, 370 S.W.2d 769 (Tex. Civ.App. — Eastland 1963, no writ). Such an order permits general creditors to look to property previously beyond their reach, and violates the statutory protection afforded the proceeds from the sale of a homestead. Tex. Rev.Civ.Stat.Ann. art. 3834 (1966).

The final case cited in the majority opinion likewise holds that a judicial lien may not be imposed on proceeds from the sale of the homestead to pay types of debt not authorized by the constitution. Brunell v. Brunei!, 494 S.W.2d 621, 623 (Tex.Civ.App. — Dallas 1973, no writ), states:

It is settled law in this state that real estate which is a homestead of the parties is subject to division on divorce. Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21 (1923); 20 TexJur.2d, "Divorce and Separation,” § 217. There is no legal prohibition in awarding to the wife a judgment for a sum of money found by the court to represent a fair value of the wife's interest in the homestead awarded to the husband and also to grant to the wife a lien upon the husband’s property to secure the payment of the amount found by the trial court to be fair and just and to be awarded to the wife for her portion of the homestead. Ex parte Scott, 133 Tex. 1, 123 S.W.2d 306, 126 S.W.2d 626 (1939); Mozisek v. Mozisek, 365 S.W.2d 669 (Tex.Civ.App., Fort Worth 1963), and Mea v. Mea, 464 S.W.2d 201 (Tex.Civ.App., Tyler 1971). * * * However, we hold that the trial court exceeded its authority in extending the lien to the payment of attorneys’ fees and past due alimony payments. This court in Jeter v. Jeter, 281 S.W. 598 (Tex.Civ.App., Dallas 1926), expressly held that an attempt to subject to payment of court costs and attorneys’ fees the interest of the divorced spouse in his homestead was altogether unauthorized. As the court there stated the homestead character of the property was not destroyed by the decree of divorce.