Gray v. Bank of Hartford

208 S.W. 302, 137 Ark. 232, 1918 Ark. LEXIS 501

• Court: Supreme Court of Arkansas
• Decided: December 23, 1918
• Status: Published

Opinion

HUMPHREYS, J.

This suit was instituted in the Greenwood District of the Sebastian Chancery Court by appellant against appellees, to enjoin them from ousting him under writ of possession from 160 acres of land near Bonanza, Arkansas, claimed by him as a homestead, and, for that alleged reason, not subject to process.

Appellees answered denying that the land was appellant’s homestead and exempt to him under the laws of the State.

The cause was heard upon the pleadings and evidence, from which the court found that the land was not the homestead of appellant, and decreed a dismissal of his bill for the want of equity. From the decree of dismissal an appeal has been prosecuted to this court, and the cause is before us for trial de novo.

Appellant was the owner of a 209-acre tract of land near Bonanza, Arkansas, of which the 160-acre tract in question was a part, as well as some lots in Bonanza on which he resided. On the 11th day of September, 1914, he conveyed the Bonanza property to W. B. Martindale who conveyed it to him in December of the same year; and, on the 15th day of October, 1914, conveyed the 209-acre tract to his brother, G. W. Gray, in payment of an indebtedness to him, and put him in possession of same. On October 16,1914, appellee, Bank of Hartford, brought suit in attachment oii two notes against J. B. Gray and B. Troutt in the Greenwood District of the Sebastian Circuit Court and levied the attachment upon the 209-acre tract of land of which the 160-acre tract in question was a part. J. B. Gray, at that time,' was in Texas with his family and was served by warning order. G. W. Gray intervened in the suit, setting up title to the 209-acre tract of land under the deed aforesaid from his brother. Appellee, Bank of Hartford, filed an answer denying the allegations of the intervention, and a cross-bill against G. W. Gray and J. B. Gray, alleging that the conveyance was fraudulent as against creditors and sought the cancellation thereof. The cause was then transferred to the chancery court. J. B. Gray entered his appearance to the cross-hill but filed no pleading. While no answer was filed to the cross-bill by G. W. Gray, the cause was submitted to the court upon the issue, among others, as to whether the conveyance of the 209-acre tract was a fraud upon the creditors of appellant, J. B. Gray. J. B. Gray made no contention in that case that the 160-acre tract of land included in the 209-acre tract was his homestead. The cause was heard on June 7, 1915, and the court rendered judgment on that date against J. B. Gray and B. Troutt for $3,739.05, sustained the attachment, dismissed the intervention of G. W. Gray for want of equity and ordered a sale of the land to satisfy the judgment. On August 30, 1915, G. W. Gray reconveyed the 209-acre tract to his brother, J. B. Gray. On the 22nd day of September, 1915, appellant filed a petition in bankruptcy in the Federal Court for the Western District of Arkansas at Fort Smith and was adjudged a bankrupt on September 25, 1915. In that proceeding he filed a schedule of all his property, both real and personal, including the tract in question, and all of his indebtedness, including the judgment obtained against him on June 7, 1915, by the Bank of Hartford. On October 29, 1915, in the course of the bankruptcy proceedings, the appellant was awarded the 160-acre tract in question as a homestead. Shortly after that time, he received his discharge in bankruptcy. Thereafter, the 209-acre tract of land was advertised for sale under the decree rendered on June 7, 1915, and appellant filed a petition in the chancery court seeking to restrain the sale of the 160-acre tract of land, alleging that it was his homestead at and after the time the attachment was levied upon it. That issue was tried out, but, prior to the rendition of any judgment thereon, appellant was permitted to take a nonsuit. On May 22, 1916, the trustee in bankruptcy sold the equity in the Bonanza property to Cary Holbrook who was connected with the Hartford Bank, for the sum of $35. On May 24th thereafter the sale was approved by the referee in bankruptcy. It seems that Cary Holbrook gave the bank the benefit of his purchase and that the bank.thereafter realized $400 out of said property. On March 23, 1917, the sheriff proceeded to sell the 209-acre tract of land under order of court, at which sale the Bank of Hartford purchased it for $1,500 and applied the purchase price on its judgment against J. B. Gray and B. Troutt. Appellant gave notice at the sale that the 160-acre tract had been set off to him as a homestead- in the bankruptcy proceedings. The sale was reported to the court, and, on April 25, 1917, was approved, and deed ordered and writ of possession directed. The deed was executed by the sheriff to appellee, Hartford Bank, on the 27th day of June, 1917. Immediately thereafter a writ of possession for the property was ordered and placed in the hands of the sheriff. The purpose of this suit was to enjoin the execution of that writ.

We have read the facts responsive to the issue of whether appellant had abandoned the 160-acre tract as a homestead at the time the attachment was issued and placed in the hands of the sheriff under the attachment proceeding by appellee, Hartford Bank, against J. B. Gray and B. Troutt. We deem it unnecessary to extend the opinion by incorporating a written analysis of the evidence. Appellant had not resided on the tract of land in question for eight or ten years at the time the attachment was levied. He engaged in the mercantile business in Bonanza during this extended absence from the farm and resided in that town in a substantial dwelling house of his own, worth about $1,000, which was perhaps the best dwelling in the town. On October 14, 1914, he sold the 209-acre tract of land to his brother, placed him in possession thereof and removed to Texas. Prior to going to Texas he had conveyed all of his other real estate to W. B. Martindale. The attachment was levied on the tract in question after he removed to Texas. Upon his return the Bonanza property was conveyed back to him by W. B. Martindale. Appellant then entered his appearance to the suit, in which his brother, G. W. Gray, had intervened, laid no claim whatever to the land as a homestead but testified that he had sold to, conveyed and placed his brother in possession of it in good faith. It is true that he visited the farm frequently while he resided in Bonanza, and, when he burned out there, told his brother-in-law that he intended to return to the farm. There is also some evidence tending to show that he moved to Texas temporarily for the benefit of his health. The great weight of the evidence, however, shows that he abandoned the farm as a homestead before he went to Texas. Touching the abandonment of a homestead, this court has laid down the following rule: ‘ ‘ The abandonment of a homestead is almost, if not entirely, a question of intent. This intent must be determined from the facts and circumstances attending each case. * * * If, at the time of the removal, there is no present or constant and abiding intention to return to it and preserve same as a homestead, then such removal from the land will constitute an abandonment of it as a homestead.” Stewart v. Pritchard, 101 Ark. 101; Whipple v. Keith, 134 Ark. 202, 203 S. W. 841. Our conclusion- is that appellant moved from the tract in question to his Bonanza home without any present intention, which constantly abided with him, to return to his former homestead.

But appellant contends that the issue of homestead involved in this case was concluded by the award of the tract of land to him as a homestead in the bankruptcy proceedings. The designation and setting aside of property as exempt to a bankrupt in a proceeding in bankruptcy does not, and can not, affect valid and subsisting liens on the property claimed as exempt and exempted to the bankrupt, which liens had been acquired or given more than four months before the petition in bankruptcy was filed. 1 Loveland on Bankruptcy, sec. 477; Lockwood v. Exchange Bank, 190 U. S. 294; Lucius v. CawthonColeman Company, 196 U. S. 149; Morris v. Covey, 104 Ark. 226. In the instant case, an attachment was issued and placed in the hands of the sheriff on the 16th day of October, 1914, and levied on the property in question on the 22nd day of October, .1914, and was sustained on June 7, 1915. When sustained it related back to the date of issuance, and was a valid and subsisting lien on the property in question at the time of the award of it to appellant as exempt in the bankruptcy proceedings, so the setting apart of it to him as a homestead could not, and did not, in any way affect the attachment lien.

Appellant also insists that his discharge in bankruptcy extinguished appellee’s Bank of Hartford’s judgment ; that all proceedings and sale thereunder were void and passed no title to appellee bank. We do not so understand the law. A discharge protects a bankrupt from further personal liability but does not affect valid and subsisting liens. An attachment, garnishment, or judgment lien obtained more than four months before a petition in bankruptcy is filed, is unaffected by the discharge of the bankrupt. 7 C. J., secs. 728 and 731, p. 411.

Appellant insists that because appellee, Bank of Hartford, was the purchaser through J. C. Holbrook of the Bonanza property, from the trustee in bankruptcy, and received the benefit therefrom, that it is estopped from enforcing its lien on the 209-acre tract. The trustee had a right to sell the Bonanza property and the bank had a right to purchase it. The lien on the 209-acre tract was not affected by the proceeding in bankruptcy. The lien on the 209-acre tract was not connected with the Bonanza property but was independent of it, so we are unable to see that the sale of it by the trustee and the purchase of it by the bank could estop the bank from enforcing the lien'on the 209-acre tract.

Appellant also insists that the sheriff’s deed was premature and could not have been made until the expiration for redemption under section 3279 of Kirby’s Digest. It is also insisted that appellant had a right to redeem the land under section 3279 of Kirby’s Digest within twelve months after sale. It is true the original suit was a suit in attachment brought on the law side of the docket but it developed into a bill to set aside a fraudulent conveyance and subject the property to the payment of a creditor’s claim. While the attachment served the purpose of fixing the lien and impounding the property, it did not follow that the subsequent sale was a sale under execution or attachment. It was a sale under an order of court which had jurisdiction to carry out its decrees effectively by orders, so the sections of the statute referred to have no reference to the case of sales ordered by chancery courts. Neither do we think sections 3304 and 3631 of Kirby’s Digest are in any way binding as to procedure upon a court of equity. "When a court of equity has acquired jurisdiction for one purpose, it takes the case for all purposes, and it was not error to fail to remand the case to the circuit court after it had canceled the conveyance as fraudulent.

These rulings are conclusive of this case, but the contention made by appellee that appellant was precluded from claiming the homestead -in this' action on the ground that it was necessarily included within the issues made on the bill to set aside the conveyance for fraud, and therefore res adjudicaba; and the contrary contention of appellant that he was not precluded by that adjudication, but had a right to claim his homestead exemptions until ousted by writ of possession; together with the suggestion that there is a conflict in this particular between the case of Baker v. Hudson, 117 Ark. 492, and Bunch v. Keith, 64 Ark. 654, moves us to announce that we adhere to the doctrine in Bunch v. Keith, supra, as a rule of property. It does not follow that the case of Baker v. Hudson, supra, is overruled. In the latter case, the widow and children, in whose names the cause was revived, had been ousted from possession of the property claimed as a homestead by legal proceedings; and, after remaining out of possession for several years, brought suit for the possession thereof. The case of Baker v. Hudson, supra, was decided right, but it should have been put on the ground that the homestead claimant had been ousted from the homestead by legal proceedings before instituting suit to recover same, and not upon the ground that the homestead right was necessarily involved within the .issue presented by the pleadings and evidence in the original suit. Had the ruling announced in Bunch v. Keith, 64 Ark., supra, been called to the attention of the court at the time it decided the case of Baker v. Hudson, a different reason would have been assigned for the decision in the latter case, which reason would have clearly distinguished the cases. A decree of foreclosure in a suit wherein the widow of the mortgagor was made a party will not bar her from afterwards claiming dower unless her right .of dower was actually put in issue. McWhirter et al. v. Roberts, 40 Ark. 283; Fourche River Lumber Co. v. Walker, 96 Ark. 540. If this be. true as to the dower right, we can see no good reason why the same rule should not apply to the homestead right. Under section 3902 of Kirby’s Digest, the debtor residing upon the homestead, or one not residing thereon, but owning no other lands, may set up his right of homestead when suit is brought against him for possession of the land. The right of homestead not having been put in issue in the suit of appellee against appellant and G. W. Gray to cancel the deed from appellant to G. W. Gray for fraud, appellant was not precluded by the judgment in that case from setting up his claim of homestead in the instant case in opposition to the writ of possession issued to oust him.

No error appearing, the decree is affirmed.

McCULLOCH, C. J., and SMITH, J., concur.