Lanahan v. Sears

APPEAL from the Circuit Court of the United States for the Western District of Texas.

This was a suit in equity by James E. Sears and Clara Sears, against Samuel J. Lanahan.

The case made by the bill is, in substance: The complainants were married in November, 1869, and thereafter lived, and still live, in Texas, said James since his marriage having been, under the Constitution and laws of that State, the head a family. In May, 1870, they purchased certain improved lots in Waco, Texas, and he thereupon took possession of them, and has, as the head of a family, and with his wife, ever since occupied them as their homestead. He was engaged in business, and became indebted to the firm of Lanahan & Son, of Baltimore, to whom he gave his promissory notes, aggregating $7,858.19. They were not paid, and the firm pressing for payment, or security, he and wife, to obtain time and to prevent legal proceedings, made, May 2, 1873, an absolute deed-which was duly acknowledged and recorded-of the lots to one Robertson, agent of the firm. Though made to him, it was really for the benefit of the firm, and there was executed and delivered, contemporaneously therewith, a writing by him, which sets forth that the deed was made for the purpose of securing the notes.

Notwithstanding the deed, the complainants continued to occupy the homestead. It was subsequently conveyed, without consideration, by Robertson to one Fort, who conveyed it in the same way to Samuel J. Lanahan, a member of the firm. He holds the same for its benefit, and, the notes being due and unpaid, brought ejectment, Dec. 20, 1875, in the court below, to try the title to, and recover the possession of, the lots, making only said James a party defendant.

The bill avers that the deed of May 2, 1873, and accompanying agreement, constitute a mortgage upon the homestead which cannot be judicially enforced, and that, if the judgment be recovered, the complainant Clara will be wrongly deprived of her homestead. An injunction is prayed for, restraining Lanahan from the further prosecution of his suit.

The defendant's demurrer to the bill having been overruled, and he declining to answer, the court decreed in favor of the complainants.

The defendant then appealed here.

Art. 12, sect. 15, of the Constitution of Texas of 1868 is as follows:--

'The legislature shall have power, and it shall be their duty, to protect by law from forced sale a certain portion of the property of all heads of families. The homestead of a family not to exceed two hundred acres of land (not included in a city, town, or village), or any city, town, or village lot or lots not to exceed five thousand dollars in value at the time of their destination as a homestead, and without reference to the value of any improvements thereon, shall not be subject to forced sale for debts, except they be for the purchase thereof, for the taxes assessed thereon, or for labor and materials expended thereon; nor shall the owner, if a married man, be at liberty to alienate the same, unless by the consent of the wife, and in such manner as may be prescribed by law.'

Mr. Bernard Carter for the appellant.

A mortgage of a homestead, executed by the husband and wife to secure his indebtedness, if it be in the form required by the law of Texas, is valid and binding on them. Sampson & Keene v. Williamson, 6 Tex. 118; Jordan v. Peak, 38 id. 429. The mortgagee under such a mortgage can, after default and condition broken, maintain in the Circuit Court of the United States an action for the possession of the land.

It is an elementary principle that a mortgagee who is not, as in this case, a citizen of the State where the suit is brought may, after default and breach of the conditions of the mortgage, maintain in the Circuit Court of the United States ejectment, writ of entry, or whatever may be the appropriate action in the particular jurisdiction to recover possession of the demanded premises. Brobst v. Brock, 10 Wall. 539; Hutchins v. King, 1 id. 58; Hughes v. Edwards, 9 Wheat. 494. The Constitution of Texas, which exempts from a 'forced sale' the homestead, does not inhibit such an action therefor by the mortgagee on the common-law side of the Circuit Court of the United States, although his only remedy in the courts of that State is by a proceeding to foreclose his mortgage.

The action sought to be enjoined seeks no sale of the property, forced or otherwise. It is simply one of the long-established alternative remedies of the mortgagee; viz., that on taking the property into possession, and applying the rents and profits to the liquidation of the debt. 2 Story, Eq., sect. 1016; Hanway v. Thompson, 14 Tex. 142.

The decisions in Texas establish,--

1. That if there is a mortgage of the homestead, with no power of sale inserted therein, then the court will not decree a sale, because it is in that State a forced sale.

2. That if there is a power of sale inserted in the mortgage or deed of trust, authorizing the trustee or mortgagee to sell on default, he may sell, and this is not a 'forced sale.' Sampson & Keene v. Williamson, supra; Jordan v. Peak, supra.

The provision in the Constitution adopted by Texas in 1875, that 'No mortgage, trust-deed, or other lien on the homestead shall ever be valid, except for the purchase-money therefor, or improvements made thereon, as hereinbefore provided, whether such mortgage or trust-deed or other lien shall have been created by the husband alone, or together with his wife; and all pretended sales of the homestead, involving any condition of defeasance, shall be void,' can have no application to the rights secured to the appellant by the mortgage of May 2, 1873.

A subsequent statute substantially altering the security cannot affect the rights of the mortgagee. Bronson v. Kinzie, 1 How. 318.

It makes no difference whether this attempted inpairment of them be by a constitutional or a statutory provision. Rail- road Company v. McClure, 10 Wall. 511; Gunn. Barry, 15 id. 610.

A brief prepared by the late Mr. Bailie Peyton was filed for the appellees.

Mr. justice field delivered the opinion of the court.