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2 Shan. Cas. 431

Himes v. Smith

Tennessee Supreme Court

Decided September 15, 1877

Tennessee Supreme Court · decided 1877-09-15

<p>1. VENDOR’S IMPLIED LIEN. Ear profit in selling land back to bis conveyor.</p> <p>Where the conveyor of lands repurchases the same and procures a reconveyance thereof by canceling the debt for its sale, and g-iving- his note for an additional sum as a bonus or profit, whatever be the form in which witnesses express it, the same is, in legal effect, part of the price of the repurchase of the land, and stands on the footing of purchase money, and it is an equitable or implied lien on the land where no express lien is retained.</p> <p>2. SAME. Does not pass by mere assignment of note for purchase money.</p> <p>The vendor’s equitable or implied lien on land for the purchase money does not pass to the assignee by mere assignment of the note evidencing debt, in the absence of any special assignment of S3i.ch equity. [See Cate v. Cate, 3 Pickle, 43, and citations; Graham v. MeCampbell, Meigs, 55; Gann v. Chester, 5 Yer., 205; Ross v. Young-, 5 Sneed, 628; Eeatherston v. Boaz, ante, p. -.]</p> <p>3. SAME. Same. Surety paying- same to assignee, not substituted to vendor’s lien.</p> <p>Where the vendor assigns the note that is an equitable or implied lien on land for the purchase price thereof, without any special assignment of the lien, and the surety on said nota pays the same to the assignee or any subsequent as-signee or holder, he cannot be substituted to the lien, because the creditor to whom he malees payment has no such lien.</p> <p>4. SAME. Same. Same. Homestead not exempt from debt for purchase money though not a lien.</p> <p>While the surety in the case stated in the last syllabus has not the vendor’s equitable or implied lien on the land, still in a suit to subject the land to the payment of the debt contracted for its purchase, the debtor cannot claim the homestead exemption, for the homestead is not exempt from sale for the payment of debts contracted for the purchase money of the land. It is immaterial in what form the debt is presented, or how its enforcement is sought, so it is contracted for the purchase money. [See notes 39-44 under sec. 3803 of the Code.]</p> <p>Cited and construed: Con., art. 11, sec. 11; act of 1870, ch. SO, sec. 1; T. & S. Statutes, sec. 2314a; Shannon’s Code, sec. 379S.</p> <p>5. HOMESTEAD. Husband not estopped to claim ag-ainst his deed of trust, unless to secure purchase money.</p> <p>Where a husband conveys his land by a deed of trust to secure debts, without his wife joining in the same with him, it is good to convey the remainder or reversion after the termination of the homestead, for the land may be sold under judicial process subject to the homestead exemption; but as against his such deed of trust the husband may claim the homestead, unless the debt so secured was contracted ior the purchase money of the land. [See notes 7, 14-16, 39-44 under sec. 3803 of the Code; note 18 under sec. 3808; note 2 under sec. 11 of art. 11 of the Con.]</p> <p>6. DOWER. In land mortgaged to secure repayment of purchase money to surety, when.</p> <p>Where the surety on the notes given by the purchaser at a judicial sale of land on which an express lien was retained to secure the purchase money, pays the same, and takes from the purchaser a deed of trust to secure the repayment of the amount, and the purchaser dies before foreclosure of the deed of trust, his widow, having- not joined in the same, will be entitled to dower in the land. [See Code, sec. 4140, and notes 29, 34-40(a).]</p> <p>7. PRINCIPAL AND SURETY. Surety paying after released by extension of time, entitled to rights of a surety.</p> <p>Where the surety on a note has paid it, the maker cannot, in the surety’s suit against him for reimbursement, even though it be a suit in rem, make the question that the surety paid it in his own wrong, because he had been released from the payment of the note by the payee’s accepting- other security and g-iving further time. A surety paying- a debt under such circumstances is entitled to all the rig-hts of a surety.</p>

Decided 1877-09-15

HcFabland, J.,

¶1delivered the opinion of the court:

¶2J. M. Smith sold and conveyed his land, by deed, to "Win. < bumley, receiving in hand part of the price. Soon after, Crumley sold the land back to Smith, executing a- deed therefor. Smith was to give Crumley for the land, $550, more than Crumley had agreed to pay him. The balance that Crumley owed Smith was canceled, and the amount that Crumley had paid Smith was also arranged, and a note was executed by Smith to Crumley, for the $550, the additional price, and upon this note John Himes became the security of Smith. Soon after the date of this last transaction, Smitii conveyed the land to A. J. Cox, in trust, to secure the $550 note, and also to secure James B. Worley the payment of a note for $156.71, of date 25th of February, 1871.

¶3This deed of trust does not clearly show whether it was made for the benefit of Crumley, the payee of the $550 note, or for the benefit of Himes, the security thereon. It purports to he simply for the purpose of securing the *433note. It does not appear, however, that Crumley ever accepted or relied upon the benefits of this deed. He transferred tlie $550 note to Jacob Crumley, by whom it. was again transferred, to whom, does not clearly appear. There was judgment against the makers in favor of N. M. Taylor, trustee of D. JVI. Hughes, and the judgment was paid by Himes, or his personal representative.

¶4Upon these facts, the personal representative of Himes and 'Worley join in this bill. It is claimed for Himes’ representative that there was a vendor’s lien on the land in favor of 1m. Crumley, for the $550 note, and that Himes, as surety, having paid this note, should be substituted to this vendor’s lien, and is entitled on this ground to satisfaction out of the land, independent of the deed of trust, and in preference to the right of homestead set up by Smith.

¶5It is first insisted by Smith that the $550 note was not purchase money for the land; that this was only a bonus given by him to procure a rescission of the contract, or, as the witness esxpresses it, for a “rue bargain.” But whatever be the form in which witness expresses it, it was, in legal effect, part of the price of the re-purchase of the land, and stands upon the footing of purchase money. It is next argued for Smith that Himes was released from the payment of the $550 note, because Crumley accepted ether security (that is, the deed of trust), and gave further time, and Himes therefore paid the note in his own wrong.

¶6It does not lie in Smith’s mouth to make this question. Ilimes, as his security, has paid his debt without objection, and must be held entitled to the rights of a surety; and, besides, there is nothing to show that Crumley accepted the deed of trust, or did anything to release Himes.

¶7But a more serious question is this: Conceding that Win. Crumley might have asserted a vendor’s lien, it was a lien or equity .which did not pass to his assignee of the note, in the absence of any special assignment of such *434equity, there being no express lien retained in the deed. This is well settled.

¶8This being so, Taylor, to whom Himes paid the judgment, had no vendor’s lien, and the question is: Can Himes be substituted to any higher rights than Taylor, the creditor, had?

¶9The argument on the other side is, that Crumley had or might have asserted a lien for the note, and the right of Himes, the surety, to be substituted to this lien upon the payment of the note, attached when he became surety, and that the said Crumley could not assign away the rights or make any assignment to defeat the surety’s right or equity of substitution.

¶10But we think this argument is not sound. Where the note is secured by mortgage, express lien retained in the deed, or by title retained in the vendor — in all which cases the security or lien passes to an assignee of the note, the original holder of the note could not, after the transfer, release the lien or mortgage or convey the property, so as to defeat the rights of the holder or a surety thereon. Nor do we make any question but what, if ITimes had paid the note to Crumley, Crumley thenjiaving the vendor’s equity, or implied lien, that Himes might be substituted thereto. But Crumley had an undoubted right to transfer the note. The legal consequence was to extinguish, for the time at least, his own right, and to transfer tO' his assignee the note simply, without any lien for its security, and when Himes paid the note to' the assignee, he wras not paying off an incumbrance upon the land, but simply a debt. Taylor had no lien on the land to which Himes could be substituted. It is the right of the creditor to whom the debt is paid to Which the surety is substituted.

¶11We hold, therefore, that there was no lieox on this land to which ITimes could be substituted.

¶12But both Himes and Worley are entitled to the benefit of the deed of trust. But as it was Smith’s homestead— *435bo having a wife and family, and residing upon tbe land, end tbe wife not joining in the alienation — tbe right of homestead, it is assumed, was not lost by tbe deed of trust. Tbe eleventh section of art. 11 of tbe constitution, that “A homestead in tbe possession of each bead of a family, and the improvements thereon, to tbe value, in all, of one thousand dollars, shall be exempt from sale, under legal process, during the life of such bead of a family, to inure to tbe benefit of the widow, and shall be exempt during tbe minority of their children occupying the same. Nor shall »aid property be alienated without the joint consent of husband and wife, where that relation exists. This exemption shall not operate against public taxes nor debts contracted for the purchase money of such homestead, or improvements thereon.’’

¶13After the adoption of this constitution in 1870, the legislature passed an act, approved the 29th of June, 1870 [Acts of 1870, ch. 80], the first section of which, in substance, reiterates the above clause of tbe constitution, with some slight verbal additions, providing, also, that the joint consent of the husband and wife to the alienation shall be evidenced by deed duly executed as required by law for married women. The concluding paragraph of the section is as follows: ‘And provided further, that such real estate shall not be exempt from sale for the payment of public taxes, legally assessed upon it, or from sale.for the satisfaction of- any debt or liability contracted for its purchase, or legally incurred for improvements made thereon.” T. & S. Statutes, 2114a [see now Shannon’s Code, sec. 3798], The alienation by the deed of the husband alone will not defeat the homestead exemption, by tbe express provision of the constitution, but his conveyance of land not covered by the exemption (that is, land other than, what may be included in tbe homestead), will be good, and so probably it would be good to convey the remainder or reversion after the termination of the exemption. As we have held that the land may be sold under judicial process, subject *436io tbe exemption, it would probably follow t-liat tbe. bus-band may convey bis land, subject only to tbe exemption. So, that tbe creditors under this deed of trust have acquired a valid lien upon tbe property, but tbe question is, whether or not it is subject to the homestead exemption. Was it intended by tbe clause of tbe constituion we have quoted, that tbe debt for purchase money, in order to prevail over tbe exemption, should be a debt for which a vendor’s lien could be enforced? Tbe language is: “This exemption ¡•ball not operate against . . . debts' contracted for tbe purchase money.” Tbe language of tbe act of tbe legislature is: "Such real estate shall not be exempt . . from sale for tbe satisfaction of any debt or liability contracted for its purchase.” There is nothing in this or in tbe constitution indicating that tbe payment of tbe purchase money must be enforced in any particular mode in order to prevail over tbe exemption. Giving this language its plain and ordinary meaning, it would seem to be immaterial in what form tbe debt is presented, or bow its enforcement is sought. It is enough, if it is a debt contracted for purchase money.

¶14There is the same reason in justice for allowing tbe superiority of tbe claim for purchase money over tbe homestead exemption, whether it be in the form of a vendor’s lien, or otherwise. That is, tbe debtor has no moral right to a homestead for which be has not paid. As to tbe rights of third parties, and for some purposes, it would still be important to know if a vendor’s lien attached to the land, but as between tbe vendor, or one standing in bis place, and tbe debtor, it will be enough to know that tbe debt was contracted for tbe purchase of tbe land. We held in an unreported case at Nashville, that where tbe surety bad paid tbe debt for which an express lien was retained— a fc a judicial sale — and bad taken from tbe purchaser of tbe 'and a deed of trust to secure tbe repayment of tbe amount, and tbe purchased' died before foreclosure of tbe deed of trust, bis widow was entitled to dower. Although under our *437decisions, the vendor’s lien is superior to dower, yet by the express provisions of the statute [Shannon’s Code, sec. ■ 4140], the claim for dower shall prevail over the creditor whose debt is'secured by mortgage or deed" of trust, where the debtor dies before foreclosure, and as the surety in that case had paid off the lien and accepted a deed of trust, his claim should abide the rule declared by the statute.

¶15But the question here is between the creditor and the right of a homestead exemption, and we hold that the exemption shall not be allowed, because the debt is for purchase money, and the constitution declaring the exemption shall not operate against such debt. We hold that Hime’s representative stands in the place of the vendor or creditor to whom the purchase money was paid, and, although he is not entitled to a vendor’s lien, the exemption cannot be allowed against him. It not being alleged that Worley’s debt was purchase .money, the exemption will be allowed against this debt. Special Chancellor W. Y. Deaderick, though proceeding upon somewhat different grounds, arrived at the same conclusion, and his decree will be affirmed with costs.

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