2014 VT 26


Brattleboro Savings and Loan
Association v. Hardie, et al. (2012-332)
 
2014 VT 26
 
[Filed 21-Mar-2014]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2014 VT 26

 

No. 2012-332

 

Brattleboro Savings and Loan
  Association


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Windsor Unit,


 


Civil Division


 


 


Richard E. Hardie, et al.


April Term, 2013


 


 


 


 


Theresa
  S. DiMauro, J.


 

James B. Anderson of Ryan Smith & Carbine, Ltd.,
Rutland, for Plaintiff-Appellant.
 
Richard E. Hardie, Pro Se, Avon, New Jersey,
Defendant-Appellee.
 
Robert S. DiPalma of Paul Frank + Collins P.C., Burlington,
for Appellee.
 
 
PRESENT:   Reiber, C.J., Dooley, Skoglund and
Burgess, JJ., and Bent, Supr. J.,
                    
Specially Assigned
 
 
¶ 1.        DOOLEY,
J.   Plaintiff Brattleboro Savings and Loan Association appeals a
superior court decision denying plaintiff’s motions for summary judgment and
granting intervenor/appellee Lisa Mangini’s cross-motion for summary judgment,
ruling that Mangini holds title to a Weathersfield, Vermont property, free and
clear of a mortgage to plaintiff.  The superior court ruled that the
mortgage was inoperative because Mangini’s husband, defendant Richard Hardie,
mortgaged the property without the participation of Mangini in violation of 27
V.S.A. § 141(a).  We reverse the grant of Mangini’s motion for summary
judgment and the denial of Brattleboro Saving’s motions for summary judgment,
and remand.
¶ 2.        The
essential facts are undisputed.  In 2002, defendant Richard Hardie
borrowed $209,000 from Brattleboro Savings in order to purchase a vacation home
and surrounding land in Weathersfield, Vermont.  The loan was secured by a
mortgage on the property and included a “second home rider” clause, asserting
that the property was not a primary residence.  Hardie was married to
Mangini at the time, but was the sole owner of the property, and Mangini did
not sign either the promissory note or the mortgage.  Hardie refinanced
the property in 2004 and 2005, both times without Mangini’s
participation.  These mortgages each contained a second home rider
clause.  
¶ 3.        By 2007,
Hardie and Mangini’s marriage was deteriorating.  In April 2007, Mangini
left the couple’s New Jersey home and moved into the Weathersfield
property.  In February 2008, Mangini filed for divorce in the Windsor
Superior Court, Family Division.[1]
 In her divorce filing, Mangini claimed that the property had become her
primary residence as of May 2007.  Also in the divorce filing, Mangini
requested “an award of the Weathersfield home and the adjoining land either
without any encumbrances, or, in the alternative, that [Hardie] be responsible
for paying off and releasing the mortgage[] to [Brattleboro Savings].”[2] 
¶ 4.        In April
2008, while Mangini was occupying the property and the divorce was pending,
Hardie refinanced the mortgage on the Weathersfield property.  The
2008 refinancing was completed without Mangini’s participation, and Hardie
again claimed that the property was a second home only.  In January 2011,
Brattleboro Savings commenced a foreclosure action on the property, naming only
Hardie as a defendant.
¶ 5.        Despite not
being named in the foreclosure case, Mangini filed an answer asserting an
affirmative defense that she had established a homestead interest in the
property prior to the 2008 mortgage, and that therefore the 2008 mortgage was
“inoperative to convey” her homestead interest.  Due to the unusual
posture of this case, Brattleboro Savings filed two motions for summary
judgment, one requesting a foreclosure judgment against Hardie and the second
seeking judgment against Mangini on her homestead claim.  The motion
directed at Mangini specifically alleged that Mangini did not have a homestead
interest because she possessed neither a legal nor an equitable interest in the
property.  Brattleboro Savings made two alternative arguments in the event
that the court found a valid homestead exemption.  First, Brattleboro
Savings argued that the 2008 refinancing fell under the exception in 27 V.S.A.
§ 141(a) for purchase money mortgages and therefore did not require
participation by “execution and acknowledgement” of Mangini to give the
mortgage priority over her homestead exemption.  Second, Brattleboro Savings
argued that if Mangini were to have a homestead interest, it would be subject
to all preexisting causes of action against the homestead as provided in 27
V.S.A. § 107, which states that homestead interests “shall be subject to
attachment and levy of execution upon causes of action existing at the time of
acquiring the homestead.”  Mangini filed a cross-motion for summary
judgment, detailing for the first time her claim that she had acquired an
equitable interest in the property by her divorce filing.  
¶ 6.        The court
denied Brattleboro Savings’s motions for summary judgment and granted summary
judgment in favor of Mangini, declaring the entire 2008 mortgage on the
property unenforceable against Mangini.  The court reasoned that Mangini
acquired an equitable interest in the property when she filed for divorce, thus
fulfilling the dual requirement for establishing a homestead interest—occupancy
and equitable title—as set out in In re Soter, 26 B.R. 838
(Bankr. D. Vt. 1983).[3] 
The court held that Mangini was entitled to full immunity from the note and
mortgage, not merely protection for the $125,000 value of the homestead
exemption as provided in 27 V.S.A. § 101.  Following the denial
of Brattleboro Savings’s motion to reconsider, the superior court granted
permission to appeal its summary judgment decisions.  Brattleboro Savings
subsequently appealed.
¶ 7.        We review
summary judgment decisions de novo.  Doe v. Forrest, 2004 VT 37,
¶ 9, 176 Vt. 476, 853 A.2d 48.  As provided in Vermont Rule of Civil
Procedure 56(a), summary judgment will be granted only when “the movant shows
that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”  V.R.C.P. 56(a).  The
nonmoving party, in this case Brattleboro Savings, is given “the benefit of all
reasonable doubts and inferences.”  Forrest, 2004 VT 37, ¶ 9.
 In this case, the parties on appeal agree that there is no material issue
of fact and the questions presented to us involve only issues of law.
¶ 8.        Brattleboro
Savings has appealed on a variety of issues, asserting that the court erred in
holding that Mangini had acquired an equitable interest upon filing for
divorce; that the court had unjustly enriched Mangini; that the court erred by
not considering the 2008 mortgage to be a purchase money mortgage; that the
court abused its discretion by refusing to apply the doctrine of equitable
subrogation; that the court erred by not limiting Mangini’s homestead interest
to $125,000; and that the court lacked subject matter jurisdiction to declare
the 2008 mortgage entirely void.  We address only the first issue and
resolve the appeal by deciding that Mangini did not acquire equitable title to
the property by filing for divorce.  Because Mangini did not acquire
equitable title, she is not entitled to a homestead exemption from the 2008
mortgage, and the security created by the 2008 mortgage is valid against her.
 See Soter, 26 B.R. at 841 (holding that equitable or legal title
is required to establish homestead exemption). 
¶
9.       
In Vermont, the homestead exemption is a statutory creation.[4]  The homestead exemption at issue in
this case was originally enacted in 1849.  1849, No. 20, § 1; 27
V.S.A. § 101.  The current version of the statute states:  “The
homestead of a natural person . . . not exceeding
$125,000.00 in value, and owned and used or kept by such person as a
homestead . . . shall be exempt from attachment and
execution except as hereinafter provided.”  27 V.S.A. § 101. 
The term “homestead” “signifies the dwelling house in which the family resides,
with the usual and customary appurtenances.”  In re Avery, 41 B.R.
224, 225 (Bankr. D. Vt. 1984).  The purpose of the homestead exemption in
Vermont, as elsewhere, is to conserve family homes.  Girard v. Laird,
159 Vt. 508, 510, 621 A.2d 1265, 1266 (1993); see In re Roberge, 307
B.R. 442, 446 (Bankr. D. Vt. 2004) (“[T]he intention of Vermont’s homestead
exemption is to preserve a home for the family.”); see generally R. Waples,
Homestead and Exemption, ch. 1, § 2, at 3 (1893) (“The conservation of
family homes is the purpose of homestead legislation.  The policy of the
state is to foster families as the factors of society, and thus promote the
general welfare.  To save them from disintegration and secure their
permanency, the legislator seeks to protect their homes from forced sales so
far as it can be done without injustice to others.”).
¶ 10.     The statute requires that a
homestead be both owned and occupied as a homestead by the person claiming it.[5]  Regarding the ownership
requirement, we have explained that “the statute applies to an equitable as
well as legal ownership; an incumbered as well as an unincumbered estate.”
 Morgan v. Stearns, 41 Vt. 398, 407 (1868); see also Doane’s
Ex’r v. Doane, 46 Vt. 485, 493 (1874) (“It is well settled that a homestead
right exempt from attachment, may exist in a mere equitable interest in
premises occupied or used or kept as a homestead.”).
¶ 11.     Also enacted in 1849, and
essentially unchanged since that time, is § 107, which states: “Such
homestead shall be subject to attachment and levy of execution upon causes of
action existing at the time of acquiring the homestead.”  27 V.S.A.
§ 107; see 1849, No. 20, § 6.  We have clarified that § 107
is intended to prevent parties from hiding assets from creditors by purchasing
property.  W. River Bank v. Gale, 42 Vt. 27, 31-32 (1869). 
The Legislature has further provided:
A
homestead or an interest therein shall not be conveyed by the owner thereof, if
married, except by way of mortgage for the purchase money thereof given at the
time of such purchase, unless the wife or husband joins in the
execution . . . .  A conveyance
thereof . . . shall be inoperative so far only as relates
to the homestead provided for in this chapter.
 
27 V.S.A.
§ 141(a).  Thus, when two spouses have established a homestead together,
one spouse cannot convey the other’s interest “without the express, written
consent and participation of the other co-owner.”  In re Jakab,
293 B.R. 621, 626 (Bankr. D. Vt. 2003).  
¶ 12.     No person may have more than
one homestead at a time.  See 27 V.S.A. § 109; In re Wolff’s
Estate, 108 Vt. 54, 56, 182 A. 187, 188 (1936); Goodall v. Boardman,
53 Vt. 92, 101 (1880).  Likewise, cohabitating family members may normally
claim only one homestead exemption per household.  D’Avignon v.
Palmisano, 34 B.R. 796, 800 (D. Vt. 1982).  Where spouses have
separated and are living apart, however, they may each claim a separate
homestead if the court finds that “each homestead is necessary to preserve a
family unit” and that “there is no evidence of fraud.”  Roberge,
307 B.R. at 448.  A prerequisite to each spouse’s homestead claim is that
each spouse separately meets the requirements of establishing a homestead
interest.
¶ 13.     The parties agree that
§ 141(a) would apply only if Mangini had a homestead exemption at the time
that the new mortgage was created.  The trial court found that Mangini
occupied the property as her principal residence beginning in April 2007.
 The court also found that Mangini had an “equitable interest” because,
upon her divorce filing in February 2008, the family court “exercised
jurisdiction over all of the marital property, and Ms. Mangini stood to be
awarded any or all of it, regardless of which of the spouses held legal
title.”  The court found additional evidence of Mangini’s interest in the
property in the form of the family court’s interim domestic order, which was
issued before the 2008 mortgage was created and forbade either spouse to
“remove, sell, assign, transfer, dispose of, lend, dissipate, mortgage or
encumber any marital property.”  Because the occupancy, divorce filing and
interim domestic order preceded the new mortgage, the court found that
§ 107 did not apply, but that § 141(a) did apply to make the mortgage
inoperative relative to the homestead exemption. 
¶ 14.     Mangini’s argument here is
that the “equitable interest” found by the trial court is sufficient to give
her a homestead exemption.  In response, we stress that the governing
statute, 27 V.S.A. § 101, requires that the property claimed as a homestead
must be “owned” by the person claiming the exemption, and our precedents
recognizing equitable-title interests must be viewed in that context.
¶ 15.     Equitable title is defined as
“title that indicates a beneficial interest in property and that gives the holder
the right to acquire formal legal title.”  Black’s Law Dictionary 1523
(8th ed. 2004).  This is a rigorous definition—one that requires not just
a possibility of acquiring title, but a concrete right.  Although
“homestead statutes are remedial . . . [and] are to be
interpreted liberally to accomplish their remedial purpose,” Mercier v.
Partlow, 149 Vt. 523, 524, 546 A.2d 787, 789 (1988), we must apply this
definition here.  All of our cases are consistent with the requirement for
equitable title and its definition.  See Canfield v. Hard,
58 Vt. 217, 225-26, 2 A. 136, 151-52 (1886) (holding that
an enforceable oral contract for a conveyance of land vested equitable title in
the grantee and created a homestead exemption, especially where the grantee
took possession, built a house, and made other improvements to that land in
expectation of becoming the future owner); Doane, 46 Vt. at 493
(recognizing a homestead exemption where the defendant held a right of
redemption in property he occupied as a home even though legal title to that
right was held by a trustee for his benefit); Stearns, 41 Vt. at 406-07
(applying a homestead exemption where the defendant had equitable ownership of
a farm on which he had lived with his family for twelve years, although legal title
to the farm was held by the defendant’s brother and another man, “for purposes
of security”); see also Soter, 26 B.R. at 841 (holding that a purchaser
gained equitable title and a homestead exemption after she executed a valid
agreement for the purchase and sale of property and occupied that property as a
home).  In each of these cases, the party holding equitable title had a
definitive right to acquire formal legal title.
¶ 16.     Cases in which we have found
equitable title—or even equitable interest—in other contexts also support this
mainly enforceable-contract-driven derivation of equitable title.  The
less certain the right to the property, the less likely we are to find
equitable title.  See, e.g., Field v. Costa, 2008 VT 75, ¶ 31,
184 Vt. 230, 958 A.2d 1164 (holding that, where potential purchaser’s alleged
contractual right to purchase property was barred by third party’s right of
first refusal, potential purchaser never acquired equitable title to property);
Mad River Valley Enters., Inc. v. Warren Bd. of Adjustment, 146 Vt. 126,
128-29, 499 A.2d 759, 760-61 (1985) (holding that, where assignment
transferring property interests never occurred, alleged assignee held no title
to property despite parties’ apparent intent to eventually transfer rights to
assignee); see also Avery, 41 B.R. at 226 (holding that wife’s occupancy
of property with husband, the legal owner of the property, was insufficient to
establish homestead exemption for wife); Prue v. Royer, 2013 VT 12,
¶¶ 29, 41, 193 Vt. 267, 67 A.3d 895 (finding that an enforceable contract
for deed creates an equitable interest in vendees); Gregoire v. Gregoire,
2009 VT 87, ¶¶ 23-24, 186 Vt. 322, 987 A.2d 909 (holding that, where
family had agreed to list son on parents’ property deed as joint tenant with
right of survivorship solely for estate-planning purposes, and parents managed
and benefitted from property for twenty years without son’s participation,
resulting trust existed under which parents had equitable title—and therefore a
right to the use and benefit of the property during their lifetimes—and son did
not); Tromblay v. Dacres, 135 Vt. 335, 339-40, 376 A.2d 753, 756 (1977)
(stating that lease with purchase option, unlike contract for deed, does not
create equitable mortgage interest in lessor).
¶ 17.     The trial court found a
sufficient equitable interest to support a homestead exemption in the family
court’s jurisdiction over the marital property and the interim domestic
order.  The jurisdictional statute on which the court relied is 15 V.S.A.
§ 751, which provides: “All property owned by either or both of the
parties, however and whenever acquired, shall be subject to the jurisdiction of
the court.  Title to the property . . . shall be
immaterial.”  The statute does not establish title or ownership in either
party to a divorce; indeed it explicitly operates irrespective of title. 
Its purpose is to give the court jurisdiction over all the property of the
parties.  See Lynch v. Lynch, 147 Vt. 574, 576, 522 A.2d 234, 235
(1987).  Whether or not a party’s interest in the marital property could
be classified as “equitable,” it is no better than an expectancy that
particular property will be distributed as that party seeks.  In this
case, the family court divorce record, which is also before this Court on
appeal, shows that both parties sought the Weathersfield property.  The
family court has broad discretion in distributing marital property and could
have awarded the Weathersfield property to either party.  Section 751 did
not give Mangini equitable title to the Weathersfield property. 
¶ 18.     Nor do we find that the
family court’s injunction against alienation of marital property affects our
result.  The intent of the order is to maintain the marital property for
whatever distribution the court will make in its final order.  It did not
give either party a right to any item of property.  The value of the
Weathersfield property did not materially decrease as a result of Hardie’s
actions and thus the purpose of the injunction was not violated.  
¶ 19.     The trial court should have
granted Brattleboro Savings’s motion for summary judgment with respect to
Mangini’s claim of a homestead exemption, and denied Mangini’s motion.
Reversed and
remanded. 
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


Associate
  Justice

 
 
¶ 20.     BURGESS, J., concurring.  
I concur with the majority’s mandate as well as its underlying reasoning, but I
also concur with Judge Bent’s opinion as an alternative basis for reversing the
superior court summary judgment decisions.

 


 


 


 


 


Associate Justice

 
 
¶ 21.     BENT, Supr., J., Specially
Assigned, concurring.   I concur with the majority’s mandate
because Mangini cannot rely upon 27 V.S.A. § 141(a) to avoid an existing
mortgage that merely refinanced a debt on the homestead that existed before she
established the homestead.  Under the circumstances of this case, I agree
with the majority that neither her pending divorce action, nor the family
division’s interim domestic order prohibiting either spouse from encumbering
any marital property, created an equitable interest to support Mangini’s
homestead exemption claim with respect to the Vermont property.  I am
concerned, however, with the implication in the majority’s opinion that spouses
generally may not rely upon § 141(a) to avoid the consequences of a
unilateral spousal conveyance unless they can prove an equitable interest equivalent
to a contractual right to marital property owned solely by the conveying
spouse.  As I indicate below, this implied holding could be applied in
future cases under circumstances where § 141(a) would appear to provide
protection to nonsigning spouses.  I believe that a more fundamental basis
for rejecting Mangini’s reliance upon § 141(a) in the present
circumstances is simply that the 2008 mortgage did not increase the debt
existing at the time Mangini established a homestead in the Vermont property and
thus may not be deemed inoperative under § 141(a).  See
27 V.S.A. § 107 (“Such homestead shall be subject to attachment
and levy of execution upon causes of action existing at the time of acquiring
the homestead, except as otherwise provided in this chapter.”).
¶ 22.     Like §§ 101 and 107 of
Title 27, the prohibition against unilateral spousal alienation of the marital
homestead in § 141(a) has been the law in Vermont since 1849.  1849, No.
20, § 5.[6]
The purpose of “joinder” statutes such as this, which are part of virtually
every state’s homestead laws, is not only to protect the financial interests of
the family, but in particular to protect the nonsigning spouse from unilateral
alienation of the homestead by the conveying spouse.  See, e.g., In re
Clark, 384 B.R. 563, 566 (Bankr. W.D. Mo. 2008) (stating that purpose of
Missouri’s statute prohibiting unilateral conveyance of homestead “is to
protect the non-conveying spouse”); HSBC Mortgage Servs., Inc. v. Graikowski,
812 N.W.2d 845, 848 (Minn. Ct. App. 2012) (noting that Minnesota courts have
applied joinder statute “in numerous cases to protect a nonsigning spouse to a
conveyance”).
¶ 23.     This statutory right against
unilateral spousal alienation or encumbering of homesteads is provided to
spouses notwithstanding—in fact because of—the nonsigning spouse’s lack of
title in the homestead property.  See Taylor v. Maness, 941 So. 2d
559, 564 (Fla. Dist. Ct. App. 2006) (holding that homestead status may not be
destroyed unless both spouses join in conveyance of homestead to third party,
even where homestead is owned by only one spouse); Rendleman v. Rendleman,
8 N.E. 773, 776 (Ill. 1886) (“[I]t is unimportant whether the title to the
homestead premises is in the husband or in the wife.  Whether in the one
or the other, the holder of the title cannot wrongfully deprive the other of
the enjoyment of the homestead premises.”); R. Waples, Homestead and Exemption,
ch. 3, § 5, at 68 (1893) (“The homestead is that of both husband and wife,
though he owns it . . . .  Neither had the sole right of [e]ncumbering,
alienating or enjoying it, before they were legally parted from each other;
their homestead rights were equal.”).  In other words, the homestead right
in joinder statutes is typically derivative in nature.
¶ 24.     Indeed, the right obtained
through joinder statutes is merely one against unilateral spousal alienation
and vests no title in the non-owner spouse.  See Cole v. Cole, 117
Vt. 354, 364, 91 A.2d 819, 825 (1952) (“The homestead law does not vest any
title to the homestead in the wife of the general and legal owner, during his
lifetime, but only a contingent and inchoate right, which, if she do[es] not
release, by joining in a conveyance or otherwise become barred by operation of
law, she may enforce, after his death, even though he may have conveyed it away
absolutely in his lifetime.”); Winkles v. Powell, 55 So. 536, 538 (Ala.
1911) (“The wife has no estate in the homestead when the legal title is in the
husband, and the only rights she has with respect thereto are the common-law
right of occupancy jointly with the husband, and the statutory right of veto
against its alienation, so long as it remains the family homestead.”); Speck
v. Anderson, 318 N.W.2d 339, 343 (S.D. 1982) (“The [statutory] requirement
. . . that a spouse must join in the conveyance of a homestead does not create
in the non-owner spouse any estate in the land represented by the homestead.”);
R. Waples, supra, ch. 4, § 7, at 121 (“The joint-title, created by the
husband’s declaration of homestead upon his separate property, is merely a
title to estate of homestead—not to the realty itself, as a general rule. 
The husband conveys no land to his wife by declaring homestead; he lets her in
to equal control as to alienation, and equal right to enjoyment, and to that
protection which the law gives to all homestead holders.”).[7]
¶ 25.     The majority’s point that a
homestead claim must be founded on either legal title or equitable title
equivalent to a contractual right to the property is supported by cases
construing 27 V.S.A § 101, which generally defines homesteads, rather
than the statute that is the subject of this appeal, § 141(a), which concerns a
spouse’s derivative homestead rights.  I realize that in this case Mangini
is claiming a homestead in her own right, following her separation from her
husband, in a different property than the homestead established during the
marriage before the parties separated.  But the majority’s broad holding
regarding the requirement of equitable title in the strictest sense would
appear to carry over into situations where the nonsigning, non-owner spouse
remained in the original marital homestead after the owner spouse left the
marital home and established a separate homestead.  For example, would the
majority’s strict equitable title requirement apply if the non-owner spouse
obtained a relief-from-abuse order, and, as a result, the owner spouse left the
marital homestead, established a new homestead, and afterwards burdened the
marital homestead with a new mortgage not signed by the non-owner spouse? 
Under the same scenario, would the marital homestead be subject to liabilities
incurred by husband, say in an automobile accident, after he left the home?
Apparently so in both cases, given the majority’s broad holding, yet the law in
this area is convoluted and uncertain.  Compare Merchant’s Nat’l Bank
v. Se. Fire Ins. Co., 751 F.2d 771, 777 (5th Cir. 1985) (concluding under
Mississippi homestead law that “[w]hen a husband removes himself from homestead
property without any intent to return and his wife consents, the homestead is
abandoned notwithstanding wife’s continued residence on the land”), with Larson
v. Wells Fargo Bank, 799 F. Supp. 2d 961, 963 (D. Minn. 2011) (finding
mortgage signed by husband void based on wife not having signed it, even though
she had separated from husband twenty years earlier and lived in separate
home), and Coy v. Mango Bay Prop. & Inv., Inc., 963 So. 2d 873,
877-79 (Fla. Dist. Ct. App. 2007) (concluding that husband who had left marital
home owned by wife pursuant to injunction was entitled to hearing on issue of
whether he had constitutionally protected right in marital home so as to preclude
wife under joinder law from unilaterally mortgaging property).  See
generally R. Waples, supra, ch. 9, § 2, at 258-60 (describing joinder
statutes as giving non-owner wife an estate to possess and enjoy homestead
during life of householder unless certain exceptions applied).
¶ 26.     Rather than rely upon a
potentially overbroad holding that could ensnare spouses entitled to § 141(a)’s
protection under different circumstances, I would reject Mangini’s claim under
§ 141(a) based on the uncontested fact that the 2008 mortgage signed solely by
her husband did not increase the debt on the subject property that existed
prior to Mangini’s homestead claim.  The superior court found that the
debt associated with the property was originally a purchase money mortgage that
was refinanced in 2004, 2005 and 2008.  The court also found that Mangini
began living in the subject property in April 2007.  At that time, the
property was encumbered by the debt from the 2005 refinancing of the
mortgage.  The court found that the 2008 refinancing was with no cash
out.  Hardie asserted that the 2008 mortgage refinance was intended simply
to obtain a lower interest rate and did not increase the preexisting debt on
the property.  Mangini produced no evidence to contradict this assertion,
which is consistent with the court’s findings.
¶ 27.     Under these circumstances, I
believe that 27 V.S.A. § 107 applies, as Brattleboro Savings argued both
below and on appeal, to preclude Mangini from relying upon § 141(a) to make the
2008 mortgage inoperative.  Section 107, which was also part of the
original Homestead Act in 1849, 1849, No. 20, § 6, provides that homesteads
“shall be subject to attachment and levy of execution upon causes of action existing
at the time of acquiring the homestead, except as otherwise provided in
this chapter.” (Emphasis added.)  Recently, this Court noted that, early
on, we “squarely rejected the contention that ‘causes of action’ in the statute
were limited to a creditor’s suit on the [preexisting] debt.”  Weale v.
Lund, 2006 VT 66, ¶ 11, 180 Vt. 551, 904 A.2d 1191 (mem.) (citing Robinson
v. Leach, 67 Vt. 128, 129, 31 A. 32, 33 (1895), which stated that statute
was “the same . . . as though it read, ‘debts existing’ ”).  We reaffirmed
the view that § 107 applies to “debts existing when the homestead was
acquired.”  Id. ¶ 5.
¶ 28.     As stated above, it is
undisputed that the debt from the 2005 refinanced mortgage existed at the time
Mangini “acquired” the homestead.  I do not believe that Mangini can
escape the consequences of that preexisting debt under § 141(a) based
simply on the fact that it was refinanced with no cash out solely by the
owner-husband a month or so after she claimed to have established a homestead
on the property.  In Robinson, the issue was “whether a homestead
is exempt from a note given by the homesteader after its acquisition, in
renewal of his notes given before its acquisition, the parties to the notes
being the same.”  67 Vt. at 129, 31 A. at 33.  We stated that,
particularly with respect to the renewal of mortgage notes, “[a]s long as the
original debt can be traced, the security remains, no matter how many renewals
there have been.”  Id.  In allowing the claim against the
homestead, we reasoned as follows:
The new note was
but a new evidence of the old debt.  True, the old notes were extinguished
as affording a ground or cause of action, but the debt evidenced thereby
continued to exist for the purpose of preserving the right against the
homestead that was originally connected with it.
 
Id.
 
¶ 29.     Commentators and courts agree
with this principle.  See, e.g., R. Waples, supra, ch. 10, § 2, at
284 (stating that wife need not sign mortgage on homestead given to secure debt
created prior to establishment of homestead when “it creates no additional
burden relative to her rights and interests”), ch. 12, § 4, at 377 (stating
that some courts do not require joinder of spousal signatures on mortgage that
merely secures debt antecedent to establishment of homestead); Harris v.
Mosley, 111 S.W.2d 563, 564-65 (Ark. 1937) (stating that “any increase
in the indebtedness secured by the mortgage made” without wife’s signature
would not be binding on her (emphasis added)).  Some courts have arrived
at the same principle on equitable grounds.[8]  Cf. Swift v. Kraemer, 13
Cal. 526, 530 (Cal. 1859) (refusing on equitable grounds to apply joinder rule
to prevent creditor from collecting on husband’s unilateral loan that paid off
preexisting homestead lien); Katsivalis v. Serrano Reconveyance Co., 70
Cal. App. 3d 200, 213 (Cal. Ct. App. 1977) (concluding that policy of joinder
law is not subverted by allowing lender, who had loaned money to one spouse to
pay off preexisting encumbrances on homestead, to be subrogated to rights of
prior lender to avoid unjust enrichment).
¶ 30.     Interpreting § 107 in
this manner does not undermine either the underlying policy or the plain
language of § 141(a).  Section 141(a) is intended to preclude one
spouse from burdening another by unilaterally alienating or encumbering a
homestead without the agreement of both spouses.  That statute is not
intended to allow spouses to avoid debts existing at the time of the
establishment of the homestead based on one spouse’s unilateral signing of a
mortgage that does not increase that preexisting debt.  Cf. Wells Fargo
Home Mortg., Inc. v. Newton, 646 N.W.2d 888, 895 (Minn. Ct. App. 2002)
(concluding that “harsh result” of trial court’s interpretation of joinder
statute to invalidate mortgage signed by one spouse was inconsistent with
policy underlying statute, given that nearly half of unilaterally signed
mortgage was used to refinance original contract for deed on homestead and thus
could be considered, to that extent, purchase money mortgage).  Whether we
consider the 2008 mortgage to be subject to the express purchase money mortgage
exception contained in § 141(a) or the preexisting debt rule set forth in
§ 107, wife cannot avoid the consequences of that mortgage under
§ 141(a).  See Fraser v. Sleeper, 2007 VT 78, ¶ 12, 182 Vt.
206, 933 A.2d 246 (“We interpret statutes to avoid absurd and illogical results
. . . in favor of reasonable construction when a plain reading of the statute
would produce a result demonstrably at odds with any conceivable legislative
purpose.”  (quotation omitted)).  For the above reasons, I concur in
the majority’s mandate but not the reasoning underlying that mandate.

 


 


 


 


 


Superior Judge, Specially
  Assigned

 
 





[1] 
The divorce action has concluded in family court, and an appeal of the final
judgment is pending in this Court as Lisa Mangini v. Richard Hardie,
Supreme Court Docket No. 2012-362.  We have referenced events in that action
only when they were in the civil division record when this case was decided.
 


[2] 
This request apparently referred to the 2005 mortgage in effect at the time the
divorce action was filed.


[3] 
Because homestead law is invoked so frequently in the context of bankruptcy, we
note that the federal bankruptcy court in this state has significant experience
interpreting Vermont homestead statutes.  Many significant precedents
underlying our decision in this case come from that court.  We find them
to be well-reasoned and have generally chosen to follow them in this decision.


[4] 
This is true of homestead interests in most jurisdictions.  “The estate of
homestead is purely the creature of statute, and can be created only in the
mode prescribed by the statute.”  C. Boone, Real Property, ch. 8,
§ 80(a), at 200 (1901) (citing Abbott v. Cromartie, 72 N.C. 292,
294 (1875)).  
 


[5] 
This is consistent with the majority of homestead statutes.  Occupancy of
the property is typically required, but “ownership by some title is an
essential everywhere, required by every statute.”  R. Waples, supra,
ch. 4, § 2, at 103-04 (1893).


[6] 
This earliest version of the statute provided as follows:
 
  Such
homestead shall not be alienated or mortgaged by the owner thereof, if a
married man, except by the joint deed of such husband and wife, executed and
acknowledged in the manner provided for the conveyance of the lands of married
women: Provided, however, that such husband may, without the consent of
his wife, mortgage such homestead, at the time of the purchase thereof, for the
payment of the purchase money.


[7] 
By citing to early cases that refer to archaic legal relationships and
presumptions concerning men and women, I do not mean to suggest that such
relationships and presumptions have any validity today, but rather only to
emphasize that joinder laws were meant to establish derivative homestead rights
in spouses notwithstanding a spouse’s lack of any claim to title in the marital
homestead. 


[8] 
Equitable subrogation may also serve as an available alternative remedy in
situations such as this.  In this case, however, the appellant did not
raise that remedy until its sur-reply in connection with a post-judgment
motion.



