Opinion
February Term, 1889.
Jus Disponendi — Homestead — Constitution, Art. X.
1. The jus disponendi is a vested right, protected by the Constitution of the United States, and by Article I, section 31, of the Constitution of this State; and is restricted only by provisions for dower and homestead, which restrictions must be so construed as to carry out the kindly purpose for which they were created, with no more restraint on the power of alienation than is necessary to make them effectual.
2. An unembarrassed owner of land, no matter when the land was acquired, can convey the same, absolutely, or by way of trust or mortgage, free of all homestead rights, without the assent of his wife, except in the following cases: (1) Where the land in question has been allotted to him as a homestead, either on his own petition or by an officer, in accordance with law; (2) where no homestead has been allotted, but there are judgments against him which constitute a lien on the land, and upon which execution might issue and make it necessary to have his homestead allotted; (3) where no homestead has been allotted, but he has made a mortgage, reserving an undefined homestead, which mortgage constitutes a lien on the land that could not be foreclosed without allotting a homestead; (4) where the conveyance is fraudulent as to creditors, and no homestead has been allotted in other lands.
3. If a husband make a fraudulent conveyance of his land (the wife not joining in the deed), the proceedings of creditors to have the deed vacated inure to the benefit of the fraudulent grantor's family, because the creditors ultimately subject the reversion to the payment of their demands, while the wife and children of their debtor get the homestead in the land.
4. The mere fact that a man owes debts does not disable him from conveying his lands (free of all homestead rights) without the joinder of his wife, unless the deed be executed with intent to defraud his creditors, and no homestead has been allotted to him.
THIS was a civil action, heard before Graves, J., at the spring Term, 1888, of the Superior Court of NORTHAMPTON County.
T. W. Mason for plaintiff.
R. B. Peebles for defendant.
BY MERRIMON, J., dissenting. The Constitution, Art. X, by its express terms, as well as the spirit which pervades it and the judicial interpretation of it for the last twenty years, not only secures a home to an insolvent debtor and his family beyond the reach of the final process of a court, but goes further, and protects and secures to the wife and children a homestead estate in the lands of the husband and father independent of any actual allotment or defined location of the homestead. This homestead estate is protected against the reckless alienation of an improvident or vicious husband and father, by section 8, Article X, of the Constitution, which makes the joinder of the wife essential to every conveyance by a married man in order to pass title to his lands free of the right of homestead. This is true whether such land has been actually set apart and allotted as a homestead or not.
(The above is applicable, of course, to lands acquired since the Constitution of 1868, and to such lands, acquired before 1868, in which the husband has had a homestead allotted.)
PLAINTIFF'S APPEAL.
The plaintiffs are the executor and heirs at law of Samuel Calvert.
On 8 January, 1876, defendant executed three notes of that date, but falling due in one, two and three years after date, (238) payable to said Samuel Calvert, and at the same time executed to said Calvert a mortgage deed, conveying thirty-five acres of land in Northampton county, to secure the payment of said notes. This action was brought to foreclose.
At the time when the defendant executed the mortgage deed (8 January, 1876), he owned no other land, except the tract conveyed in said deed, and another tract of two acres, both of which, together, are not worth one thousand dollars. The defendant acquired title to one undivided half interest in said land, in the year 1865, but did not become the owner of the other half until the _____ day of _______, 1876.
The defendant was first married in 1873, and his first wife was living on 8 January, 1876, but did not join in the execution of the deed. She died in the year 1881, and he married a second wife in the year 1882. This action was brought in June, 1879, after the last of said notes became due.
The defendant contended that the deed, or writing purporting to be a deed, executed by the defendant, on 8 January 1876, was void, as a conveyance, and that no interest in said land passed by said deed.
The plaintiffs insisted, on the other hand, that the deed was valid without the joinder of the wife in its execution, and vested the title to the whole of said land in fee simple in Samuel Calvert, subject to the trusts set forth therein.
The court adjudged that the defendant and all persons claiming under him be "foreclosed of all equity of redemption in and to the reversion in the land mentioned in the complaint," after the termination of the homestead estates, and ordered that a commissioner sell the (239) reversion, unless the debt adjudged to be due from defendant should meantime be discharged.
Both plaintiffs and defendant appealed, and both cases are considered together, the appeal of plaintiffs being the first in order.
When we approach the consideration of the question, whether the organic law or the statute law shall be so construed as either to preserve unimpaired or to greatly restrict the right of the citizen to alien his own land, it is wise to recur to the fundamental principles embodied in our State and National Constitutions, or the elements of the common law that have proven consistent with the genius of our institutions.
Every citizen has the right to enjoy the fruits of his own labor, and when his earnings are invested in land, the rule is that he acquires with the title the incidental right of absolute and unrestrained alienation. The few instances in which the law has trammeled the citizen in the exercise of this power, in order to reach some beneficial end, are the exceptions that establish instead of destroying the rule. The jus disponendi, subject only to the exceptions hereafter mentioned, is a vested right, protected even against hostile State legislation, by that clause of the Constitution of the United States which prohibits the enactment of any law impairing the obligations of a contract. Bruce v. Strickland, 81 N.C. 267.
In our Declaration of Rights (Cons., Art. I, sec. 31), more than a century since, perpetuities were coupled with monopolies, and denounced as "contrary to the genius of a free State."
(240) This was followed by the act, passed in the same spirit, which converted a fee-tail estate in its very inception into a fee-simple, with the incidental right to sell, and with the avowed object of attaching the absolute jus disponendi to the estate created.
It has been repeatedly declared to be sound public policy to remove every obstacle to the ready sale of real estate upon the market, in order to benefit commerce and thereby promote general prosperity. It was in furtherance of this object that our General Assembly, but a few years since, so altered our registration laws that persons proposing to purchase land could be well advised as to the title by a careful inspection of the public records.
This leading purpose is subordinated, however, to two wise provisions for women and children — dower, a creation of the common law, and the homestead, which is imbedded in the organic law; but, while the humane exemption clauses of the Constitution have found favor with the courts, they have been carefully so construed as to carry out the kindly purpose for which they were created, but to restrict alienation only so far as is necessary to effectuate that object.
If we will bear in mind, in the progress of this discussion, how essential to the protection of the rights of the citizen and how important to the promotion of commercial prosperity it is to guard well the right of alienation, and to restrict it only so far as is necessary in order to extend the blessings of a homestead to those for whose support it was intended, we will find it a beacon-light to guide us safely through the mazes of conflicting authorities, emanating from more than a score of appellate courts, when the true way to steer through the sea of doubt and perplexity might otherwise be obscured. What was the legislative intent in enacting laws providing for the exemption of homestead and fixed amounts in value of personal property from sale under execution? A few definitions of a homestead given by the different courts of the Union will show what they have declared was the object of (241) the law-making power in enacting them.
The homestead law was called by the Supreme Court of California "a beneficent provision for the protection and maintenance of the wife and children against the neglect and improvidence of the father and husband."
This Court has declared that the purpose was to provide every man a home for his wife and children. Jacobs v. Smallwood, 63 N.C. 112.
We must acknowledge that there is some conflict between Adrian v. Shaw, 82 N.C. 474, and the authorities there cited ( Gheen v. Summey, 80 N.C. 187, and Lambert v. Kinnery, 74 N.C. 348), on the one hand, and the cases of Hager v. Nixon, 69 N.C. 108, and Mayo Parker v. Cotten, 69 N.C. 289, on the other; and the inconsistency of the authorities as to the true interpretation to be given to section 8, Article X, must be removed, either by modifying the abstract rule laid down in Adrian v. Shaw, supra, or by directly overruling the plain principle announced in Mayo v. Cotten as the only safe solution of all the cases that might depend upon the true meaning of the restriction contained in said section.
In Gheen v. Summey, supra, the Court says: "It is the settled construction of this Court that the homestead right is a quality annexed to land whereby an estate is exempted from sale under execution for a debt, and it has its force and vigor in and by the Constitution, and is in nowise dependent on the assent or action of the creditor; and therefore it results, as has been expressly held, that the action of the sheriff, in assigning the same by metes and bounds, is not needed to any extent to vest the title, but merely as finding the quantum, so as to enable him to ascertain the excess, if any, and levy on and sell it."
The only question that arose out of the facts of that case was, whether a previous appeal by the judgment creditor to the township board of trustees (under Bat. Rev., ch. 55), to have a new allotment of (242) homestead afterwards, to satisfy a debt created before 1868, the creditor having sold the excess previously and soon after allotment. Only the constitutional construction established by Edwards v. Kearsey was involved in the case, and therefore the definition of the homestead given was obiter. So much of the definition as is taken from Littlejohn v. Egerton is not inconsistent with the principle laid down in Mayo v. Cotten; but in the later case of Adrian v. Shaw, the Court not only repeated the definition given in Gheen v. Summey (the latter part of which was taken from Lambert v. Kinnery), but added to the definition another quotation, in substance at least, from the latter case, as follows: "Title to the homestead can only be divested in the mode prescribed in section eight, Article X, of the Constitution."
As we shall see presently, the facts did not in either case warrant the giving of any general definition of a homestead, and that given was unnecessary.
In Adrian v. Shaw, the facts were, that one Jackson and wife joined (with privy examination of the wife in proper form) in conveying, on 22 April, 1872, the only tract of land that Jackson owned, and which was worth less than one thousand dollars, but no homestead had been laid off in the land. Jackson and wife left the State, and, after they had left, execution issued in 1874 on a judgment docketed 20 November, 1871, against Jackson, in the county where the land was located. The plaintiffs, Adrian and Vollers, purchased at the execution sale, and the question presented and decided was, whether the deed of Jackson and wife conveyed any estate in the land to the grantee, and whether Adrian and Vollers had a right to recover possession from the grantee of Jackson and wife.
The Court held that Shaw took, under the deed from Jackson and wife, an estate, at least for the life of Jackson, because the sale was made subject to the right of a judgment creditor, who already had a lien upon the land, with the incidental power to have the (243) homestead allotted in it, and sell the excess, if any.
In Lambert v. Kinnery, the facts were, that a sheriff sold all of the land of a debtor without having a homestead assigned him in it, and the plaintiff was the purchaser at execution sale. It was also in evidence that the defendant (the debtor) had declared at the courthouse door, while the sheriff was selling the land, that it did not belong to him, but to another. The case, therefore, involved both the question, whether the homestead right could be surrendered by the owner by estoppel in pais, and whether the sheriff could defeat the right by refusing to allot. The idea, therefore, that the homestead right so vested, by operation of law, in every owner of land, that it could not be divested except by a conveyance executed in accordance with the provisions of section 8, Article X, must have been advanced with a view to the facts of that case only, because, to accept and interpret the language literally, and apply it to all cases, would lead us into many contradictions, not to say absurdities.
Unless the language of the Court in Adrian v. Shaw, interpreted in its broadest sense, shall be held to bind this Court to a construction of the Constitution fraught with consequences so serious, we are still at liberty to consider and determine whether section eight, Article X, of the Constitution, deprives the husband of the power to convey an unascertained homestead, when not subject to any lien, as well as one already laid off, either on petition of his own, or by an officer who has an execution in his hands.
The case of Littlejohn v. Egerton was twice before this Court; so far from justifying the limitation which is contended for by the defendant, upon the power of sale on the part of the husband in a case like this, the facts and the reasoning of the Court in both cases tend rather to sustain the opposite view of the case. In the first (244) appeal ( 76 N.C. 468), it appeared that the homestead had been first allotted, so as to cover a portion of Littlejohn's land, and the excess was sold to satisfy executions in favor of his creditors, and subsequently that Littlejohn consented to the sale of the homestead, and that his conduct at the time of, and his language in reference to it, were such as to amount to an estoppel in pais.
The Court held that he could not waive his right of homestead in favor of his creditors, except by a deed in which the wife should join with privy examination.
In the second appeal ( 77 N.C. 379), a doubt was suggested whether Littlejohn's homestead had been laid off so as clearly to define it by metes and bounds.
The Court held that "the right of homestead was a quality annexed to land (like a condition) whereby an estate is exempted from sale under execution for debt, and cannot be defeated by failure of the sheriff to have the homestead laid off by metes and bounds."
The two cases presented singly the two points that had been decided in the case of Lambert v. Kinnery, supra, at one view.
All of these rulings looked to the beneficent end of protecting the home of the family, when the husband or father was embarrassed with debt and pursued by his creditors, either against his own improvidence or the misconduct of officers. The homestead right would be worse than a delusion if it could be defeated by language, used either by accident or design, by the drunken or reckless owner, or by the arbitrary refusal of an officer to have it ascertained by metes and bounds.
But the question fairly presented, by both appeals in this case, is not whether the owner of an unallotted homestead can always, by a conveyance executed without the joinder and privy examination of his (245) wife, defeat her right or that of his children to a homestead in the land, but whether he has the power to alien all of his land before a part or the whole is designated by law as an actual homestead, subject to the dower right of the wife, and, where the husband is free from debt, to no other incumbrance.
In Hager v. Nixon, Justice Rodman, for the Court, says: "It seems that the idea of a homestead which the framers of the Constitution had in mind, was ownership and occupancy of land extempted from execution obtained on any debt during the life of the owner. To this original conception was added a continuance of the exemption during the minority of any one of the owner's children; and if he died leaving no children, but a widow, the exemption continued during her life. The idea apparently was, that the exemption should attach to the property of the owner, or some part of it, during her lifetime."
We infer this from section 3, Article X, of the Constitution: "The homestead, after the death of the owner thereof, shall be exempt from the payment of any debt during the minority of the children, or any one of them." It is implied, that the ancestor had been owner of the homestead, by which, in this connection, must be meant a part of his property set apart and designated as exempt and not merely land occupied and owned by him. And so section 5, Article X, Constitution, is as follows: "If the owner of a homestead die, leaving a widow, but no children, the same shall be exempt from the debts of her husband, and the rents and profits thereof shall inure to her benefit during her widowhood, unless she be the owner of a homestead in her own right."
"The whole design of the Constitution, so far as can be gathered from Article X, was to exempt property of a debtor to a certain value from execution. . . . The purpose of a homestead law is to regulate between a debtor and his creditors, and to affect other interests, incidentally only, and to the least possible degree consistent with its main purpose."
No explanation is needed for quoting so extensively from that (246) opinion, as it has a broad foundation for the rule that is decisive of this case. A landowner who is not in debt may convey his land, that has never been allotted to him as a homestead, without the joinder of the wife in the deed, subject only to her right of dower, if she survive him, but free from any restriction growing out of the provisions of section eight, Article X, of the Constitution, whether his land was acquired or his marriage was celebrated before or after the Constitution of 1868.
The main purpose being to protect the family against the creditor, why should the law needlessly interpose, with mailed hand, when a thrifty man, who owes nothing and holds his land unincumbered, attempts, it may be, to realize a handsome profit by a sale to one who is willing to incur the risks of the survivorship and incident rights of the wife, or to allow a satisfactory discount for such risks?
While both live, a dutiful wife can compel her husband, if he have means, to support her according to her station in life; and if she survive him, any land of which he was seized during coverture is subject to her claim of dower.
If the husband make a fraudulent conveyance (the wife not joining in the deed), the proceeding of the creditor to have the deed vacated inures to the benefit of the family, because the creditor ultimately subjects the reversion to the payment of the debt, while the wife and children of the debtor get the homestead in the land. The validity of the husband's conveyance is, therefore, subject also to the restriction, as all deeds should be, that it shall be made in good faith. Crummen v. Bennett, 68 N.C. 494; Arnold v. Estis, 92 N.C. 162. But in Mayo v. Cotten the question presented was, whether the owner had the right to select his homestead in any land for which he had title. After declaring that the owner might, under the Constitution, locate his homestead, without any restriction, in any tract of land owned by him the Court says in that case, what seems to be decisive, in the very (247) plainest terms, of both appeals brought up in this action: "Neither is it material that the wife of the defendant did not by deed assent to his receiving a homestead in the Swamp place. Section 8, Article X, of the Constitution, applies only to a conveyance of the homestead after it is laid off."
After deciding that the husband might determine, as between the different tracts of land, the location of the homestead without the assent of the wife, the Court went further and construed section 8 to apply only to allotted homesteads, evidently having in view the possible difficulty that might grow out of conceding to the owner the power to select as between a number of tracts of land, and determine in which one his homestead should be marked out. Suppose the owner, being free from debt, should convey all of his land, including a dozen tracts, any one of which was worth more than a thousand dollars, and to a dozen different persons, but his wife should fail to join in the conveyances to any one of the grantees, and no homestead had been allotted. Suppose, then, that he should invest the proceeds of the sale in a dozen other tracts of land. If financial misfortune then overtake him, surely it would not be contended that all of the conveyances were void, or even that they were effectual to pass only the reversionary interest. He could not take a homestead in all of the tracts, and it would be absurd to allow him to incumber a particular one, at his option, and in the face of his own deed.
The only safe rules as to the meaning of section 8, Article X, Constitution, must be deduced chiefly from the two cases last cited. When there is no creditor there is no reason for restricting the owner in the sale of land, not allotted as a homestead, by any construction placed upon that section, because the whole plan of homestead exemptions was formed for the purpose of affording protection against debt. But it does not follow, from the mere fact that a man owes debts, that section 8, Article X, of the Constitution, is to be construed to disable him (248) from conveying his land without the joinder of his wife, unless the deed was executed with intent to defraud his creditors, and no homestead has been allotted to him, or unless the land conveyed by him is subject to a lien of a judgment or a mortgage reserving the homestead right, that cannot be enforced without allotting a homestead, in order to ascertain and subject to sale the excess.
The rule stated in Mayo v. Cotten is so far modified, therefore, as not to apply when the owner of land is embarrassed with debt and his land is subject to be sold to satisfy a lien. It was not the intention of the framers of the Constitution to restrict the rights of thrifty and successful men, who ask and need no such interference in their affairs. Hence, when the sheriff holds executions against a debtor, the latter will not be allowed, ignorantly or by collusion with the creditor, to conclude himself from the right to claim a home by the use of any mere words. It was never intended that an effectual estoppel should be so created, and allowed so easily to defeat the leading purpose apparent in Article X of the Constitution — the protection of the debtor's family.
The ideal homestead, created by the Constitution and located by proceedings under the statute, is born of financial embarrassment, and exists as to any given body of land only when the creditor can arm the sheriff with power to sell it to satisfy a judgment; or a mortgagee, holding subject to an express reservation of the right of homestead in the land mortgaged, has the right to foreclose, and what is exempt has not already been located as the law prescribes; or, where the debtor has executed a deed to land with intent to defraud creditors, and has no homestead allotted to him in other lands. The Constitution does not annex the quality to the land, of one who is free from financial embarrassment, for the right operating, as it does, to exempt an estate from sale for debt — must of necessity be the creation of debt.
In Markham v. Hicks, 90 N.C. 204, this Court held, that the (249) effect of the assignment of a homestead was simply to attach to an existing estate the quality of exemption from sale under execution, and the designation of the homestead right as "a quality annexed to the land, whereby the estate is exempted from sale under execution," was an inadvertent and inaccurate expression, in so far as it conveyed the idea of carving new estates out of the land of the debtor. But, in either view of the nature of the homestead right, there can be no doubt that it relates to and grows out of debt, and exempts land from sale under execution for debt. The definition given in Littlejohn v. Egerton has been repeated only because it still stands as a part of the later definition given in Adrian v. Shaw and Gheen v. Summey. We cannot reconcile the decisions in all the cases cited, upon any other principle than this. In corroboration of this view, we find that not only was it held by this Court that the Constitution allowed the owner to determine where the homestead should be laid off, but it has been expressly held, that where land was acquired by a husband, and the marriage was celebrated before the Constitution of 1868 was ratified, the husband had a vested right in the land and could convey it without the joinder of the wife, unless the husband has either had the homestead allotted, on his own petition, or it has been laid off by an officer according to law. Bruce v. Strickland, 81 N.C. 267; Sutton v. Askew, 66 N.C. 172; Castlebury v. Maynard, 95 N.C. 281; Gilmore v. Bright, 101 N.C. 382.
In the case of Lee v. Mosely, 101 N.C. 311, this Court held that a homestead in land in this State would be deemed abandoned by the owner if he should move his residence to another State, and the Court were united as to that view. The case is cited merely to call attention to the fact that a right of homestead can be abandoned without a deed, in which the wife joins with privy examination, and if the rule stated in Adrian v. Shaw, supra, is to be taken literally and construed to mean that all land vests in all cases, without exception, before (250) allotment as a homestead, and "can only be divested in the mode prescribed in section 8, Article X, of the Constitution," then a change of residence to another State, not being the mode prescribed in said section, would not have divested the right of homestead out of the claimant in that case.
Moreover, if we accept the theory, in its broadest sense, that the law so vests a right of homestead in every man who holds title to land, that it cannot be divested except in the manner prescribed in said section, it would follow that the owner would be compelled to marry and procure the joinder of his wife, with privy examination, in order to make a valid title to a purchaser of his land, because he could not otherwise comply with the rule literally construed and enforced.
It would astound the members of the legal profession, and the people of the State generally, to be informed that a phrase, apt to be repeated inadvertently, even by courts, because it is concise and euphonious, though uttered heretofore unnecessarily, will be adhered to, with the result of making utterly void every deed that has not the sanction of a wife. It would seem consonant with reason, as well as the express authority of Hager v. Nixon and Mayo v. Cotten, to construe the language quoted in Adrian v. Shaw, and Lambert v. Kinnery, in the qualified sense we have suggested as the true meaning. As between the creditor having a lien, on the one side, and the debtor and his family on the other, the Constitution does not create a right to a home for the benefit of the debtor's family in his lands — a home that may never be marked out by metes and bounds. The debts may be discharged before the homestead is allotted, and then the inchoate right, as applied to the debtor's land, no longer exists. But when the creditor reduces his claim to judgment, the law places him and the debtor at arm's length, and frustrates every effort of either to evade the section of the Constitution, that gives the (251) wife the veto power, by requiring an allotment of the homestead as antecedent to any sale, and her assent, with privy examination, before the improvident husband can dispose of it; so, if the debtor sells to defraud his creditor, when the latter moves in the court to set aside his deed, and subject the land to his claim, the Constitution gives first the right to an undefined homestead, and the law, made in pursuance of the Constitution, ascertains its bounds so soon as he seeks to sell.
Until the owner contracts debts, there can be no undefined homestead right, attaching to his land, and, unless his homestead has already been allotted, section 8, Article X, of the Constitution, does not restrict his power to convey. If, however, the homestead has once been laid off at the instance of creditors, though the debts may be discharged, the restriction remains, and renders the joinder of the wife essential to a valid conveyance of it. The definition given in Adrian v. Shaw must be considered as modified and restricted in its application, so as to conform to the views we have expressed in this opinion. The defendant conveyed his land by mortgage deed, to secure money (loaned to him on the land, as we infer). Until proof to the contrary is offered, the presumption is in favor of this power to convey, and the defendant offers no evidence of the existence of a debt in judgment against himself. For the purpose of this discussion there can be no difference between a mortgage and an absolute deed. His first wife, who was then living, did not join, and did not, therefore, convey her right to dower, had she survived her husband. But she died in 1881, and it is not necessary to discuss the rights of the defendant's second wife. It is sufficient to say, that neither she nor any other person can be allowed a homestead in the land. No homestead having been allotted before the deed was executed in 1876, or since, the deed of the defendant to the plaintiff's testator was valid, and passed the land to the grantee for the purposes mentioned therein, subject only to a contingent right no longer hanging (252) over it.
We therefore hold that the judge erred in ordering the sale of the reversionary interest, and should have adjudged that the entire interest, instead of the reversionary interest only, be sold, unless the debt should be paid by the time mentioned.
In the plaintiff's appeal there was error. Let this opinion be certified, to the end that the judgment may be modified.
Error. Modified.