THORSBY v. BABCOCK

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District Court of Appeal, First District, Division 2, California.

THORSBY et al. v. BABCOCK.

Civ. No. 14237.

Decided: April 27, 1950

Phillips, Munck & Niemand, Oakland, for appellant. St. Sure & Moore, Oakland, for respondents.

This appeal was taken from an order denying appellant's claim of exemption from execution.

Respondents sued appellant in the Justices' Court and recovered a judgment for $938.25 on March 27, 1947. An appeal was taken and when the case came on for hearing in the Superior Court on November 21, 1947, appellant failed to appear. Judgment for respondents for $1,003 was then ordered.

On the same day appellant and his wife filed a declaration of homestead on the property on which they lived in Lafayette Oaks, Countra Costa County.

The judgment for $1,003 was entered on January 8, 1948, and thereafter an abstract thereof was filed for record.

On April 17, 1948, appellant and his wife sold the Lafayette Oaks property, and the purchase price, found to be $4,351.62, was paid in to a title company.

At that time there stood of record against the property not only the respondents' abstract of judgment but an attachment which had been levied by another creditor a few days before the sale. The title company refused to turn over the $4,351.62 to appellant because of these liens, and appellant and his wife on May 6, 1948 filed a suit to quiet title to the fund.

On December 7, 1948, after that suit had been tried, respondents levied an execution in enforcement of their $1,003 judgment, on the fund held by the title company and then awaiting decision. On January 20, 1949 the findings and decree were filed and on the next day appellant filed with the Sheriff a written claim and demand, supported by his affidavit, asserting that the fund was ‘exempt from execution as being proceeds from the sale of affiant's homestead.’ Respondents promptly moved for a determination of the validity of the claim of exemption and on March 15, 1949 the court ruled that the fund was not exempt.

Appellant claims that the ruling was erroneous because the money was ‘exempt on the ground that the same constitutes proceeds from the sale of his homestead which, as against respondents, was determined to be such in a proceeding to quiet title.’

Section 1265, Civ.Code provides that ‘* * * should the homestead be sold by the owner, the proceeds arising from such sale to the extent of the value allowed for a homestead exemption as provided in this title shall be exempt to the owner of the homestead for a period of six months next following such sale.’

In support of his contention appellant argues that ‘A creditor should not be permitted, by delaying payment of proceeds to a homestead claimant through litigation for more than six months, to destroy the exemption of such proceeds.’

The first answer to this is that respondents did nothing to delay the payment or destroy the exemption. It was the refusal of the title company to pay over the money, which led to the litigation, resulting in a nine months delay, and that delay used up the statutory exemption period. Respondents, however, were not responsible for any part of the delay. The purchase money was paid into the title company at appellant's own instance, and was held by it as his agent. Respondents were joined in the quiet title suit by appellant and did no more therein than assert their judgment lien, as the complaint invited them to do. If they had attempted by litigation during the six months period to circumvent the provisions of § 1265 or § 1265a and thus deprive the judgment debtor of his exemption, a different problem would be presented. But no affirmative action was taken by them until after the six months period had expired.

The second answer is that respondents' execution was levied on December 7, 1948, which was almost eight months after the sale and about seven weeks after the six months expired. Their right to the writ was wholly independent of any lien they claimed against the Lafayette Oaks property or on the fund which grew out of its sale. The writ was based on the judgment for $1,003 alone. As soon as the six months expired—on October 17, 1948—the fund in the title company lost its statutory exemption and became exposed to this or any other levy. It was virtually the same as a deposit in bank and the fact that litigation was pending to settle priorities as between appellant's homestead claim and respondents' claimed judgment lien against the land could not destroy or affect their right to an execution.

The court in the quiet title suit found that the filing for record of respondents' abstract of judgment was subsequent to the declaration of homestead and concluded that respondents' claim based thereon was ‘subject to the prior claim of homestead of the plaintiffs herein.’ See Thatcher v. Van Bever, 139 Cal.App. 658, 660, 34 P.2d 740. It then decreed that the funds in the title company of $4,351.62 ‘are the proceeds from the sale of plaintiff's homestead and plaintiff's title to the same is hereby quieted;’ that the title company should pay them to the appellant and that respondents (and the other lienor) had no claim to them.

Appellant, to quote from his brief, ‘claims the property exempt on the ground that the same constitutes proceeds from the sale of his homestead which, as against respondents, was determined to be such in a proceeding to quiet title.’ (Emphasis added.)

There is no connection or dependency between whatever lien respondents might have claimed against the land or its proceeds, on the one hand, and the lien created by the execution, on the other. The adjudication in the quiet title suit could not have embraced respondents' rights under the execution, because it was not levied until some seven months after issue was tendered in that suit and several days after the case was tried and submitted. The suit was filed on May 6, 1948, which was but a few days after the six months period had commenced to run following the sale on April 17. The issue tendered by the complaint was as to the ownership of the fund and the validity and priorities of the liens standing against the homestead premises, or the fund derived therefrom, as of the commencement of the action. Accordingly the findings and decree spoke only respecting the fund and its status at that time. Metropolis Trust & Savings Bank v. Barnet, 165 Cal. 449, 452–454, 132 P. 833; Willett v. Schmeiser Mfg. Co., 82 Cal.App. 249, 254, 255 P. 529. The exempt status of the fund continued only from April 17 until October 17, 1948, hence the decree which dealt with that status could not have adjudicated with respect to respondents' rights under the fresh lien of the execution levied on December 7, 1948, based, as it was, on the personal judgment for $1,003, and not at all on the judgment lien.

It is settled law, as appellant contends, ‘that the homestead statute should be given a liberal construction in favor of the exemption, because it is a remedial, and beneficent law, and has an object of humane character.’ (13 Cal.Jur. pp. 426–7). The fact remains that the liberal provisions which the legislature saw fit to write into § 1265, prolonging the exemption for six months beyond the sale, say nothing respecting any further extension or respecting the tolling of the statute in any way. If appellant's contentions were adopted the result would be that the exemption which by the clear and unambiguous language of § 1265 has been fixed at six months, could be further extended by what would amount to judicial legislation to fit the circumstances of a particular case.

Appellant cites no cases supporting his contention that the time consumed in litigation (which he started) should be excluded from the six months period, and frankly admits that there are no authorities in point. He points, however, to the reasoning of several cases as supporting his position. These cases, Beckman v. Manlove, 18 Cal. 388; California Cotton Credit Corp. v. Superior Court, 127 Cal.App. 472, 15 P.2d 1108; a Kansas case and two Texas cases, simply hold that where exempt property of one kind is converted into property of another kind, the exemption survives the conversion and protects the new property as it had protected the old. Appellant has no need to invoke such authorities since § 1265 itself clothes the proceeds of the sale with the same exemption as that which had protected the land. This it does for the six months period but not beyond it.

The order denying the exemption claim is affirmed.

I dissent. The hand may be quicker than the eye but it is not too difficult in this case to locate the shell under which the pea is hidden.

It is conceded that the proceeds of the sale of the homesteaded property were exempt for six months. § 1265, Civ.Code. Relying on this exemption appellant brought an action to quiet title to these proceeds against respondents' claim based on the recording of their superior court judgment. Respondents by cross-complaint asserted a lien against the exempt fund based on their judgment. They thus tied up the fund for more than six months by the assertion of an untenable claim, and after the six months had expired and while the issue which they had voluntarily tendered was still undecided they attempted to levy execution on the fund which they had thus tied up to satisfy the identical judgment put in issue by them in the quiet title suit. ‘No one can take advantage of his own wrong.’ § 3517 Civ.Code. It seems clear to me that this case presents only two alternatives. We must either hold that respondents may be permitted to trifle with the courts by waging a sham battle therein or we must hold that by voluntarily submitting their claim against the fund to a court of justice they made an election to be bound by the outcome of that litigation and when the judgment went against them wiping out their claim based on the lien of their judgment the intervening writ of execution by which they were trying to enforce the same judgment against the same fund was wiped out also. To affirm this order is to ignore substance and exalt form.

GOODELL, Justice.

NOURSE, P. J., concurs.