Bishop v. Hubbard

Crocker, J. delivered the opinion of the Court—Norton, J. concurring.

Bishop & Long were partners engaged in an extensive business, and as such owned the tract of land in controversy, on which is a dwelling-house, the house and land having been occupied by Bishop, with his family, as them homestead for several years. Becoming embarrassed, they made a division of their real estate, and executed mutual deeds to each other under it, by which the title to this property became vested in Bishop, who duly filed and had recorded his declaration of homestead. The defendants are creditors of Bishop & Long, and as such obtained judgments on their debts and levied upon the property. Bishop then brought this action, claiming the property as a homestead, and therefore not liable to sale on execution, and prayed for an injunction to restrain the defendants from selling it under their executions. The defendants contend that the division of the property between the partners was a fraud upon them as creditors, and therefore void as to them ; that the property is still partnership property, and as such liable to the judgment of their debts, which cannot be defeated by the claim of homestead. The case was tried by a jury, who found a verdict for the defendants, upon which a judgment was duly rendered against the plaintiff, from which he appeals.

It has been repeatedly decided by this Court, that a homestead could not be established upon property held in joint tenancy, or tenancy in common. ( Wolf v. Fleishacker, 5 Cal. 245; Reynolds v. Pixley, 6 Id. 236 ; Gibbin v. Jourdon, Id. 147 ; Kellersberger v. Copp, Id. 565.) It follows that while the debtors owned the prop[518]erty as tenants in common, it was liable for their partnership debts; and the fact that it had been and was occupied by one of them as a homestead, would not have affected that liability.

In the case of Riddell v. Shirley (5 Cal. 488), a debtor in embarrassed circumstances made a sale of certain personal property for the purpose of raising funds with which to discharge certain debts, which were a lien upon his homestead, for the purpose of saving it to himself—of all which the purchaser had full knowledge at the time of his purchase. It was held that it was a transaction calculated to hinder, delay, or defraud creditors, and therefore the property was liable, in the hands of the purchaser, for the debts of his vendor. The Court say: “ Although the law secures the homestead from execution arising from ordinary indebtedness, it is yet made chargeable for debts by the acts of the parties interested in its preservation, and in some cases by operation of law. Where such cases exist, it would seem to be only fair that the homestead should remain answerable for the debts charged upon it, and not, after becoming a source of credit, be relieved, intentionally, by the disposition, of all the other property of the debtor, leaving nothing for the satisfaction of the other creditors.” So in the present case, the land in question, before the division, was chargeable with the debts of the partnership by operation of law, and it was a source of credit to the parties while it remained in that Condition; and it would not seem just and right that the debtors)'after having thus obtained credit thereon, should, by their own a|t, without the consent of their creditors, place it beyond the reach of such creditors, who may have dealt with them on the faith of^tjie liability of this property to be applied in payment of their just debt's. The conveyance from Long to Bishop was a means of placing the property in a situation by which it might be put beyond the reach of the creditors ; and if done for that purpose the jury were justified in finding that it was made for the purpose of hindering, delaying, or defrauding creditors, and therefore void.