Investors' Mortgage Security Co. v. Newton

This suit was brought by plaintiff in error against defendants in error, who are the surviving widow and children, respectively, of E. E. Newton, deceased, to establish an indebtedness and lien on a tract of land owned by said E. E. Newton at his death, and which was at the time of his death the homestead of said Newton and family, consisting of the said widow and children. The answer, in effect, was that said land was the homestead, that the estate of said Newton was insolvent, that said homestead had been set apart to defendants in error as such, and that said lien was thereby discharged as to said land. The case was tried by the court without a jury, and judgment rendered in favor of plaintiff in error establishing said claim against the estate, but denied the lien on said land. From the judgment denying said land subject to said lien, this appeal was taken.

The facts are that plaintiff in error is a corporation by virtue of the laws of Great Britain, doing business in Texas by its permission. The defendants in error are the widow and children of E. E. Newton, deceased, and Mrs. Newton is the administratrix of his estate, which was insolvent at his death. On March 7, 1898, E. E. Newton, then unmarried, executed his note for $600, payable to himself, and to secure the payment of same executed a deed of trust to the land in controversy, being 92 acres, with Philip Lindsley as trustee. Said note was duly transferred to James R. Mitchell. Newton remained single until November 17, 1899, when he married defendant in error Lula L. Newton. In June, 1900, E. E. Newton, with his family, moved upon said land and lived thereon as his home until October, 1901, when said Newton and his wife moved to the Territory of Oklahoma, where they acquired a homestead. While living there, in April, 1902, said E. E. Newton made application to plaintiff in error for a loan of $700 to take up said $600 note which was held by plaintiff in error, it having been duly transferred by said Mitchell. Said loan was made, a note for $700 executed by said Newton in renewal and extension of said $600 note, interest and expenses, and for this purpose a new trust deed to said land was executed, with Robert Ralston named as trustee. Said Newton, without being joined by his wife, made the last transaction. Some time after the last transaction E. E. Newton and family, having sold the home in Oklahoma, moved back to Texas and reoccupied and lived on said land as their home until he died in February, 1910, leaving surviving him the defendants in error herein. Mrs. Newton was duly appointed administratrix of his estate, which was insolvent. By order of the probate court said land was duly set apart as the homestead of defendants in error. Said order of the probate court has never been set aside or appealed from. The claim of plaintiff in error was presented to the administratrix for allowance, but same was refused — hence this suit. The land was the separate property of E. E. Newton, it having been acquired by him before marriage, and the indebtedness was for borrowed money, none of which was expended for the purchase price of said land.

There is no controversy about the facts, upon which but one question of law arises for determination, and that is: Did the said land as a homestead descend and vest in defendants in error freed from the lien given by E. E. Newton, while single, the estate of said Newton being insolvent at his death? We are of the opinion that this should be answered in the affirmative. The lien on the land was executed by Newton, it being his separate property, he being at that time a single man. He subsequently extended and renewed the lien after he had married, and it was a valid and subsisting lien at the time of his death, but his estate was insolvent, which subordinated the lien on the land subjected to the widow's and children's claim to homestead exemption.

Our state under its Constitution and laws has made wise provision for the exemption of the homestead for the protection of the head of a family, his wife and children, and especially so for the wife and children *Page 292 when the husband dies and leaves an insolvent estate. R.S. 1911, art. 3422. This article provides for all exempt property to pass absolutely to the widow and children free from debts of the estate, except in certain cases, this not being within the exception. Therefore express liens on exempt property have to give way to the widow's and children's right to such property, unless the debt comes within the exception. This rule was first announced in Robertson v. Paul, 16 Tex. 472, which has been adhered to ever since. This case has been criticized by other jurisdictions, but our Supreme Court has not thought proper to overturn it, and it remains the law to-day. In support of this rule we cite Hoefling v. Hoefling,167 S.W. 210; Griffie v. Maxey, 58 Tex. 214; Blinn v. McDonald,92 Tex. 604, 46 S.W. 787, 48 S.W. 571, 50 S.W. 931; Krueger v. Wolf,12 Tex. Civ. App. 167, 33 S.W. 663; Reeves v. Petty, 44 Tex. 249; Bonding Co. v. Logan, 166 S.W. 1132, and numerous others.

While plaintiff in error virtually admits that the foregoing is the rule in this state, yet it contends that this case is different and is not governed by the ruling announced, because Newton was a single man when he created the lien on the land, and it could not be anticipated that he would marry and the widow's right would intervene to defeat the valid lien. We see no material difference in principle whether a man is single or married when a valid lien is fixed, if in the case of the married man the wife does not join in the lien. In the latter case the lienholder knows of the marriage, and takes cognizance of the then existing law; and in the former his marriage should be anticipated, and the same rule of law obtains. The law fixes the status of the property at the time of the death of the parties, and if the estate is insolvent, the lien on exempt property is subordinated to the rights of the widow and children.

In Krueger v. Wolf, supra, the facts are that Mrs. Stuessey, a widow, and her widowed daughter, Mrs. Krueger, were living together as one family upon lots 3 and 4, block 30, in the city of Austin, which was Mrs. Stuessey's separate property to the extent of a life estate, and her homestead. Mrs. Stuessey owned two other lots, Nos. 11 and 12, block 29, in said city, but no part of the homestead. She incumbered these two lots with a valid lien. Subsequently she died insolvent, leaving Mrs. Krueger as her only heir and only constituent of the family. Mrs. Krueger sought through the probate court an allowance in lieu of a homestead. Lots 11 and 12, block 29, were set apart to her as a homestead, subject to the payment of the lien. On appeal the court reversed the judgment and rendered it in favor of Mrs. Krueger, holding that she was entitled to said lots as a homestead freed from the lien, thereby vesting absolute title in her. This case illustrates the principle that should be applied to the facts of this case. Mrs. Stuessey, at the time she created the lien on the two lots, was authorized to do so, and the said lien was valid. But she died insolvent, and the lien she had theretofore fixed became subordinate to the homestead exemption. So in the instant case Newton had the right to establish a lien on the land, and, subsequently dying insolvent, the lien was subordinated to the homestead rights of his widow and children. Being a rural homestead, it is not subjected to valuation, for the law does not fix any valuation, but only requires that it shall not exceed 200 acres of land.

It did not require any action of the probate court to fix an allowance in lieu of the homestead in this instance, as it became established by reason of the estate being insolvent. Hoefling v. Hoefling, supra; Bonding Co. v. Logan, supra.

The principle herein seems a little hard on creditors who have trusted on the faith of creating liens to secure the payment of their debts, but believing such to be the law, as decided by the decisions, the judgment is affirmed.

Affirmed.