Stuart v. Kennedy Co.

^* Corpus Juris-Cyc. References: Homesteads, 29CJ, p. 843, n. 16; p. 894, n. 92; Judgments, 34CJ, p. 941, n. 69. Adjudication of homestead claim as res judicata, see 13 R.C.L. 695. Simon D. Stuart and Mary C. Stuart exhibited their bill in the chancery court of Tallahatchie county, Second district, against Kennedy Co., the Mississippi Fire Insurance Company, and L. Barrett Jones, trustee, seeking to cancel a certain trust deed and quiet and vest title in complainants to certain lands as their homestead. To this bill the defendants interposed a demurrer, which demurrer was by the court sustained, and complainants, appellants here, were granted an appeal to settle the principles of the case.

The bill, as amended, sets out the pleadings and orders in three separate lawsuits, and, necessarily, the writer of this opinion is forced to digest and set forth, in a brief form, what is conceived to be the salient features of the bill and exhibits.

So stated, the case made by complainants' bill as amended is as follows: That complainant S.D. Stuart and one J.H. Little were associated together in business in the town of Wiggins, Stone county, Miss., in several enterprises, in which they became financially embarrassed; defendant Kennedy Co. being one of their largest creditors. That one John B. Dorsett was the president and the largest stockholder of Kennedy Co., and, as such, absolutely and exclusively controlled and dominated its business; he being, for all practical purposes, Kennedy Co. That among other assets of said Stuart Little was certain capital stock in the Hamilton Land Improvement Company, a corporation engaged in buying and selling real estate in the state of Mississippi, said capital stock belonging to them amounting, in round figures, to about fifteen thousand dollars par value, in about equal amounts to each of them, Stuart Little. That said Hamilton Land Improvement Company was seeking to liquidate its affairs by transferring its lands to its stockholders in lieu of, and in exchange for, their holdings of stock. That Stuart Little being, as above stated, largely indebted to Kennedy Co., turned over their stock (with other of their assets) to said Dorsett, to effect the exchange of said stock for its pro rata of the land holdings of the Hamilton Land Improvement Company so that said lands could be converted into money, or other "quick assets," and, after thus discharging Kennedy Company's debt against Stuart and Little, that the residue should be accounted for to Stuart Little, or to their other creditors; that Dorsett did exchange this stock for said lands (including the land involved in this cause), but, in so doing, took title to the lands in himself, and afterwards transferred same to Kennedy Co., which transactions, as complainants insisted, constituted Kennedy Co. a trustee in a resulting or constructive trust, of which Stuart Little were the cestui que trustent; that Stuart Little were also indebted to one A.W. Bond, and that Bond filed a bill in the chancery court of Harrison county, Miss., against Dorsett and Kennedy Co., and Stuart Little, said cause being styled: "A.W. Bond v. J.B. Dorsett et al.," No. 4816 of said chancery court, hereinafter referred to as "the Bond case." That in this case, in his bill, Bond averred that he was a creditor of Stuart Little, and set out the turning over by Stuart Little of certain of their assets to Dorsett and the converting of same into land, as above set forth, and the taking of the title thereto in the name of Dorsett, and his subsequent transfer of said land to Kennedy Co., and charged that this transaction between Stuart Little on the one hand, and Dorsett and Kennedy Co. on the other, was covinous and fraudulent as to creditors of Stuart Little, and prayed that said transaction be so decreed and be set aside, or for a judgment in his favor against Stuart Little and Dorsett and Kennedy Co., for the amount due him (Bond) from Stuart Little. That Dorsett and Kennedy Co. answered the Bond bill, denying, with most elaborate detail and all possible emphasis, that there was any fraud in the turning over by Stuart Little of their assets to Dorsett, and explaining, with great particularity, the circumstances of said transaction, and showing in said explanation that said transaction was not only not convinous and fraudulent in any respect, but was altogether honest and legitimate; that, upon the hearing of said case "Bond v. Dorsett," the chancellor held and decreed, in effect, that defendant Kennedy Co. and Dorsett "had obtained from" said Stuart Little certain assets of Stuart Little (including the land involved in this cause), and had appropriated same to the use and benefit of Kennedy Co., to an amount far in excess of Kennedy Co., claim against Stuart Little, and hence gave judgment for Bond against Stuart Little, and against Kennedy Co. for the amount of Bond's claim against Stuart Little. That the legal effect of this decree was to render the proposition that Kennedy Co. held the lands in trust for Stuart Little res adjudicata, and that, while Bond, in his bill, charged actual fraud against Dorsett and Kennedy Co. and Stuart Little, that such averments were wholly unnecessary to maintain Bond's right to subject the equitable title of Stuart Little in said land to Bond's debt against them; and, furthermore, that, while in the bill in the instant case Stuart avers that the facts of the transaction above referred to were "as averred by said A.W. Bond," said bill in the instant case specifically repudiates the averments of the Bond bill to the effect that the "agreement between Dorsett and Stuart Little was covinous and fraudulent," which averment is in strict accord with the decree of the chancellor in the Bond case, in which decree he held and decreed, not that Stuart Little had been guilty of any fraud in said transaction with Dorsett and Kennedy Co., but, on the contrary, that Kennedy Co. and Dorsett had obtained from Stuart Little, by a fraudulent arrangement, certain property belonging to said Stuart Little (including the land involved in this cause), and had appropriated same to the use and benefit of Kennedy Co. That, by the transfer of said land by the Hamilton Land Improvement Company to Dorsett in exchange for stock belonging to Stuart Little, and turned over by them to Dorsett (and his subsequent transfer of said land to Kennedy Co.), Stuart Little became, at that time, by said transfers, the equitable owners of said land; the legal title being in Kennedy Co., but its holding of said legal title being solely as trustee in a constructive or resulting trust. That thereafter Stuart Little divided said land by a mutual exchange of deeds, conveying each to the other his portion of the land.

Thereafter, being thus the equitable owner of the land in which homestead is claimed, Stuart executed and recorded a declaration of homestead in said land upon which he was living, in strict conformity with the statute providing for such declaration of homestead; that Stuart Little filed their bill in the chancery court of Tallahatchie county, Miss. (same being styled "J.H.Little et al. v. Kennedy Co. et al.," No. 874, chancery court of Tallahatchie county, and hereinafter referred to as the "Little bill"), in which they averred that, while the legal title to said land was vested in Kennedy Co., they (Stuart Little) were the equitable owners of said land, and that Kennedy Co. held said legal title only as a constructive or resulting trust for said Stuart Little, who were the equitable owners of said land by reason of the fact that said land represented and constituted the proceeds of said stock in the Hamilton Land Improvement Company, which had been turned over by Stuart Little to Dorsett, and which Dorsett had converted into said land. In their bill, Stuart Little prayed for a decree divesting the legal title to said lands out of Kennedy Co. and vesting it in them. Dorsett and Kennedy Co. answered said "Little bill;" the defense set up in said bill being (in addition to elaborate and manifestly insincere denials of indisputable facts) a claim that, upon a settlement of all accounts between Stuart Little and Kennedy Co. said Stuart Little would be indebted to Kennedy Co. in a sum in excess of the value of said land, and an inspection of said answer would show the most remarkable fact that there was no claim therein made that there was anything fraudulent in the transaction between Stuart Little on the one hand and Dorsett and Kennedy Co. on the other, in which transaction Stuart Little turned over their stock in the Hamilton Land Improvement Company.

A compromise of the conflicting claims of the parties was agreed upon, the method of effecting said compromise being: (a) The entry of a consent decree divesting out of Stuart Little all their title, claim, and interest in said land, and vesting it in Kennedy Co.; (b) a conveyance by Kennedy Co. of said land to Stuart Little; (c) the execution by Stuart Little of their notes to Kennedy Co. for a certain sum of money agreed upon as an adjustment of the financial differences between the parties; and (d) the securing of said notes by trust deed executed by Stuart Little, upon the lands thus conveyed to them — that this method of compromising this suit was one, single, and indivisible transaction, to which compromise, however, complainant Mary C. Stuart was not a party in any way whatever, she not being a party to said suit, nor to the signing of said notes or trust deed, and having no knowledge of said transaction.

This is a fair digest of the allegations of complainant's bill, but an examination of the exhibits which control deductions and implications of the pleader in his averments lead us to say that, in the Harrison county litigation, the bill charged there was a fraudulent arrangement by which either Stuart Little would be fraudulently protected. As stated, Dorsett and Kennedy Co. filed answer denying fraud, and we note that Stuart Little made no defense to the charges of fraud, and the chancellor found there was such a fraudulent arrangement, and, necessarily, Stuart Little were bound to have been parties, because it was originally their property being dealt with. The exhibits further disclosed that Stuart was a mere intruder upon this particular quarter section of land at the time of the rendition of the judgment in ejectment in the circuit court made an exhibit to the answer of Kennedy Co. to the "Little bill," and pleaded in bar of the "Little bill" and the affirmance of that judgment by this court on the 16th day of December, 1918 (118 Miss. 766, 80 So. 105), subsequent to the homestead declaration set out in the record.

We have stated the facts of the bill with implications and conclusions of the pleader as to exhibits. Of course, these do not control as against the actual contents of the exhibits attached to the bill.

The precise question presented here is, does an intruder acquire homestead rights, where the courts have adjudicated in proceedings initiated against him at law, and other proceedings initiated by him in equity without the joinder of his wife in either proceeding, in which it was adjudicated that he had neither legal nor equitable title to the land claimed as a homestead, nor right of possession?

There are other questions presented in this case, but, pretermitting them, we decide only this question.

The lamented chancellor in the court below held that the bill clearly shows, taking into consideration the exhibits, that Stuart never had any title of any kind or description to the land, and, therefore, had no right to file a homestead declaration, having no title to base this homestead exemption upon. The right to homestead exemption is based upon statute, and is controlled by the construction of section 1821, Hemingway's Code, reading:

"Every citizen of this state, male or female, being a householder, and having a family, shall be entitled to hold exempt from seizure or sale, under execution or attachment, theland and buildings owned and occupied as a residence by him orher, but the quantity of land shall not exceed one hundred sixty acres, nor the value thereof, inclusive of improvements, save as hereinafter provided, the sum of three thousand dollars. But husband or wife, widower or widow, over sixty years of age, who have been exemptionists under this section, shall not be deprived of such exemption because of not having family or not occupying the homestead." (Italics ours.)

The material part of this section is the phrase "owned and occupied as a residence by him or her."

Counsel for appellant seems to rest his case upon the idea that any kind of occupancy is sufficient to clothe the wife with the veto power to prevent any kind of adjudication of the title.

It certainly was adjudicated in the chancery court proceedings that Stuart, the husband, had no equitable title. It certainly was adjudicated by the circuit court and by this court in the ejectment proceedings that Stuart had no legal occupancy of the land, because he was termed a mere intruder by Chief Justice SMITH in the opinion of this court in Stewart v. Kennedy,118 Miss. 766, 80 So. 105.

Counsel for appellant insist that, because the wife was not a party to the ejectment suit or the chancery court proceedings, she was therefore not bound by the final judgment in either case as to her homestead rights, and this is true in a modified sense, if there had ever been any homestead right, but the word "ownership" means in this statute that one spouse or the other must have some kind of right, recognized by law, of occupancy and possession of the land sought to be impressed with the character of a homestead, and, in the cases decided by our court, cited by counsel, the homestead was conceded to exist at the time of the litigation or other proceeding which sought to deprive the wife thereof, and in each case the court held that wherever the homestead was involved the husband and wife were necessary parties to conclude an adjudication of a claim of homestead exemption. The strongest case for appellant's position is the case of McDonald v.Sanford, 88 Miss. 633, 41 So. 369, 117 Am. St. Rep. 758, 9 Ann. Cas. 1, wherein Chief Justice WHITFIELD, as the organ of the court, held that there was no res adjudicata as to the rights of the wife in a homestead growing out of a decree against the husband alone. In this case Pounds v. Clark, 70 Miss. 263, 14 So. 22, was cited, which Judge WHITFIELD condemned and overruled, and upheld the wife's veto power, as being such an interest or right as must be conveyed by a deed, signed and acknowledged by the wife under the statute, citing the case of G. S.I.R. Co. v. Singleterry, 78 Miss. 772, 29 So. 754, wherein it was held that the wife's failure to join in a conveyance of the homestead rendered the deed of the husband a nullity, and that the husband might join the wife in a suit to protect the homestead rights and repel an intruder. The Chief Justice also cited Revalk v.Kraemer, 8 Cal. 66, 68 Am. Dec. 306, a California case, saying that Revalk had given a mortgage upon the homestead which was not signed by the wife, and a bill to foreclose was filed against Revalk without making the wife a party, and a decree was rendered against him subjecting the property to sale, and the California court held that, where the husband appears alone and defends the suit, his right to the homestead is no more concluded by the decision than by his separate execution of the deed or mortgage. The legal proceedings, to be conclusive, must embrace both husband and wife. That conclusion reached by the court in the case, supra, was that a homestead could not be lost to the wife or husband, unless both were parties to the suit.

The case of G. S.I.R. Co. v. Singleterry, 78 Miss. 772, 29 So. 755, deals with a homestead, as does each and every one of the adjudicated cases which have been cited by appellant, and not with a case where the husband asserted some kind of equitable title to the land which was determined by the court in a decree reciting that he had no legal or equitable title to the land, and he afterwards executed a mortgage thereon for the purchase money thereof. It makes no difference, in our judgment, whether the decree was one rendered at the end of a hard fought battle, or by consent of the parties. So far as made known to us, the decree is final, binding, and conclusive, adjudicating that Stuart, the husband, had no sort of title to the land here sought to be claimed as a homestead. He had a right to file a bill seeking to establish his title legal and equitable to the land in question, without joinder of the wife therein. He lost his lawsuit, whether voluntarily or involuntarily. Whether he lost by good judgment or bad judgment, there must be an end to litigation.

A slight valid claim of interest in the land would be sufficient to establish ownership, but a mere "squatter" or intruder, without any other claim than unlawful occupancy, may not use his wife to secure another trial of the same facts.

A decree of the chancery court on the bill filed by him for the purpose of asserting his title to these lands, adjudicating that he had no title, and a subsequent purchase of the lands from the successful defendant in that suit, constitutes a complete bar to a suit by him and his wife to establish homestead rights therein. It is quite a different thing to litigate a title, as distinguished from litigation of the homestead right. The decree which was rendered by the chancery court is res adjudicata that Stuart had no title to the land in controversy.

The judgment of the circuit court is likewise conclusive that he had no legal title or right of occupancy, and, before a homestead claim can arise, there must be some kind of ownership of the land in either the husband or the wife, in order that the claim of occupancy thereof may impress it with the character of a homestead.

This case is very similar to the case of Billingsley v.Niblett, 56 Miss. 537, in which each of the defendants in error (appellees), the Nibletts, and their wives filed a bill to enjoin the sale of a quarter section of land under a trust deed in favor of Billingsley on the ground that the land had, for a long time, been occupied by them as their homestead, and the wives had not joined in the trust deed. "The Nibletts had been in possession of the land, under a bond for title, for many years, and the land during that time was sold at a tax sale, and bought by the plaintiff in error, who brought ejectment against the Nibletts, and they compromised the suit by purchasing the plaintiff's title, he making to them a quitclaim deed, and they making to him the trust deed. The Nibletts charge in their bill that they are ignorant men, and were deceived by Billingsley, who represented that he had a perfect title to the land, whereas in fact his tax title is utterly void. They recognize Billingsley's right to sell the title conveyed by the quitclaim deed, and also propose to do equity by repaying the taxes paid by Billingsley, but they contend that the title under the bond for title cannot be sold under the trust deed, because of the nonjoinder of their wives. Billingsley's answer denies all misrepresentations and fraud, and states that he dismissed his suit in consideration of the compromise The proof sustained the answer. On final hearing, the chancellor made the injunction perpetual, and ordered the Nibletts to pay Billingsley the sum paid out by him for the tax title."

Justice CAMPBELL said, in part, that the deed of trust was not invalid because the wives did not join in its execution. It was made to secure the purchase money of the land agreed to be paid by grantors. "The claim of plaintiff in error is paramount to the claim of a `homestead.' The land was a subject of legal controversy. Plaintiff in error sued to recover its possession. The grantors in the deed of trust surrendered to the claim asserted by plaintiff in error in court, and purchased his title by promising to pay him a sum of money, and securing its payment by a deed of trust on the land which was the subject of the suit. An attack was made on their title, which so threatened as to induce them to obtain security from harm by purchasing the hostile claim. . . . The defendants in that suit preferred a purchase of his title to a trial of it. They had the right to negotiate and settle, rather than to contest. They recognized the validity of the title of the plaintiff so far as to agree to pay for it, and to accept his deed, and to pledge the land to pay the price of extinguishing his title. He was a vendor, and they were vendees. That he made a quitclaim instead of a warranty deed makes no difference." Judge CAMPBELL then discusses the rights of a wife in the homestead exemption, and concludes his opinion with this statement: "There can be no homestead rights, as against the claim for the purchase money of the land on which the home is, because ownership is a condition precedent to the existence of a homestead." In the case at bar we have a very much stronger case for Judge CAMPBELL'S position.

After Stuart had filed his declaration of homestead, he defended an ejectment suit, and prosecuted the litigation to the point of securing judgment of the highest court in the state that he was a mere intruder, and was not, in fact, in legal possession of the lands here in controversy, and, having lost his case, he filed a bill setting up the constructive trust described in the statement of facts, and, when the day of trial came, permitted a final decree to be entered in solemn form against him in favor of his adversary, and then fortified the strength of that decree, received from his adversary a deed, and for that deed executed a trust deed and notes for the purchase money and interest, reciting in the trust deed that the notes represented the purchase money. He then fails to pay, same is foreclosed, and title acquired by the mortgagee, and money was loaned by other people. After all this he and his wife seek to relitigate the same questions as to a constructive trust in Dorsett by his original acquisition of the land.

We say that the decree of the chancery court of Tallahatchie county is res adjudicata that he had no title, or, to put it in the language of the statute, "ownership," and that ownership is as necessary as occupancy.

In the case of Jarvis v. Armstrong, 94 Miss. 145, 48 So. 1, this court said: "It has been repeatedly held by this court that a deed of trust given to secure the purchase money of a homestead is valid without the signature of the wife."

Many other authorities might be cited, but we deem it unnecessary to so do.

The decree of the court below sustaining the demurrer to the bill and dismissing the bill is affirmed.

Affirmed.