Subject: IN THE SUPREME COURT OF TEXAS
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Date: Mon, 12 Mar 2007 20:24:56 -0500

IN THE SUPREME COURT OF TEXAS

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No. 05-0476

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Thomas Eugene Norris, Sr. and
Karen Lynn Norris, Appellants,

v.

Johnny W. Thomas, Trustee,
Appellee

════════════════════════════════════════════════════

On Certified Question from the United
States

Court of Appeals for the Fifth
circuit

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Argued November
15, 2005

Justice Willett delivered the opinion
of the Court, joined by Chief Justice
Jefferson, Justice Hecht, Justice Green, and Justice Johnson.

Justice O’Neill delivered a dissenting
opinion, joined by Justice Wainwright,
Justice Brister, and Justice
Medina.

We confront
today a question of first impression: whether a boat qualifies as a homestead
under article XVI, sections 50 and 51 of the Texas Constitution. Since
1845, our state constitution has protected a homestead from forced sale to
satisfy the claims of creditors.[1] Thomas Norris claimed his
68-foot yacht as a homestead to shield it from bankruptcy creditors, prompting
the United States Court of Appeals for the Fifth Circuit to certify this
question to us: “Does a motorized waterborne vessel, used as a primary residence
and otherwise fulfilling all of the requirements of a homestead except
attachment to land, qualify for the homestead exemption under Article 16,
§§ 50 and 51 of the Texas Constitution?”[2] Under the facts presented
in this case, and given the Constitution’s explicit realty-based language, we
answer the question, “No.”

I. Background

In September
2003, Norris filed a voluntary bankruptcy petition under Chapter 7 of the United
States Bankruptcy Code.[3] Under the Code a debtor may
claim a homestead exemption as allowed by state law.[4] Norris claimed his 68-foot
yacht as exempt property under the Texas homestead exemption. The boat, which
Norris valued at $399,000 in his bankruptcy schedules, has four bedrooms, three
bathrooms, a galley, and an upper and lower salon. Although his petition
indicated that his street address was 13909 Nacogdoches Road, San Antonio,
Texas, Norris testified at a January 2004 bankruptcy court hearing that the
address is a business postal center where the Norrises receive mail. Norris
further stated that he took up permanent residence on the boat after the
Norrises sold their previous home in Lake McQueeny, Texas, in 2000, and that the
boat is his only home. Norris’s attorney stated at the hearing that “primarily,
[Norris] lives on that boat while it’s dry-docked” at Corpus Christi, and that
the boat received water, phone service, and electricity through connections to a
dock. Norris also testified at the hearing that since purchasing the boat in
1997 he had cruised extensively to places such as New Orleans, Florida, and
Alabama. At the time the bankruptcy petition was filed in September 2003, the
boat was docked in Port Aransas, Texas. Norris testified at the January 2004
hearing that he had moved the boat to a marina in Corpus Christi, Texas, where
he had a month-to-month lease. Although the boat is described in the record as
“dry-docked,” there is no indication that Norris ever permanently affixed the
boat to real estate or intended to do so.

The
bankruptcy court held that the Texas homestead exemption, even broadly
construed, does not include boats. The federal district court agreed, concluding
that the boat was a movable chattel “by virtue of its self-powered mobility” and
not entitled to homestead protection.[5] Norris appealed to the
Fifth Circuit, which certified the question to this Court.

II. Discussion

We construe
homestead laws generously;[6] however, courts cannot
unduly stretch the homestead laws beyond their constitutional and statutory
moorings and protect that which is not a homestead.[7]

A. Texas Constitutional and Statutory Provisions

Neither the
Texas Constitution nor the Property Code defines “homestead” with specificity.
Section 50 of article XVI shields homesteads from forced sale, providing
generally that “[t]he homestead of a family, or of a single adult person, shall
be, and is hereby protected from forced sale, for the payment of all debts . . .
.”[8] Section 51, in turn,
restricts the maximum size of a protected homestead, limiting rural and urban
homesteads by acres of land and including any land-based improvements.[9] The Texas Property Code
resembles section 51 and likewise describes a homestead as a home or a home and
business with certain acreage limitations with any “improvements thereon.”[10] Though neither of these
provisions expressly exclude boats from homestead protection, they both discuss
homesteads in terms of land and any improvements that sit atop the land.[11] More specifically, when
describing the scope of the protection, section 51 and the Property Code state
the acreage limitation and then variably say, when describing any attached
structures, “with the improvements thereon” or “with any improvements on the
land” or “with any improvements thereon.”

B. Precedent

Texas’s
strong pro-homestead tradition pre-dates statehood, and the Republic of Texas
was determined to protect homesteads from creditors.[12] In 1886, roughly a
half-century after Texas homestead laws originated,[13] we opined on their reach
and limits. In Cullers v. James, we held that a house may be a homestead
even if the owner has no proprietary interest in the land on which the house
stands.[14] The James family leased a
three- or four-acre tract of land from Robert Walker (though the property was
actually Walker’s wife’s separate property).[15] The land contained
improvements such as a house, a gin-house, gin machinery, and a mill that were
“so fixed as to make [them] part of the land.”[16] But since James had no
interest in the land,[17] the Court viewed the
improvements as personal property instead of realty.[18] Nonetheless, the Court
held that the house and gin-house qualified as a homestead.[19]

Cullers
established that a house can be a homestead even if the owner has no ownership
interest in the land. It also made clear that the term “improvements” as
protected by article XVI, section 51 includes the residence itself. In the 121
years since Cullers, we have defined improvements to real property with
greater precision, distinguishing them from mere personalty, and holding that
“personalty does not constitute an improvement until it is annexed to realty.”[20] This Court put it plainly
in Sonnier v. Chisholm-Ryder Co.: “There can be no improvement without
annexation to realty, and until personalty is annexed to realty, it by
definition cannot be an improvement.”[21] Not only that, but the
annexed object cannot be deemed an improvement to land unless it is intended to
be “a permanent addition to the realty.”[22]

Since
Cullers, the courts of appeals have issued several homestead-related
opinions that bear more directly on today’s issue, and they share a common
thread: homestead protection turns not on who owns the underlying land, but on
the degree to which the residence “thereon” or “on the land” is attached to it.
This Court reviewed four of these pertinent cases, refusing the writ in the
first and finding no reversible error in the others. We continue to believe that
their attachment-based analysis is correct.

In Clark
v. Vitz, Vitz built a “house-trailer” that his family used as its primary
residence for two years.[23] He later purchased a lot
with a brick house, placed the house trailer twenty-five feet from the house,
and set the trailer on four wooden blocks.[24] Vitz ran electrical
service to the house trailer from the residence and planned to connect the
trailer to the residence’s plumbing.[25] The court held that Vitz’s
attachment of the house-trailer to his residence made the trailer part of the
homestead.[26]

In Gann v.
Montgomery, the Ganns owned a “house trailer, mounted on wheels, of the type
usually pulled behind an automobile.”[27] After a few years, the
Ganns moved the trailer to Mr. Gann’s parents’ backyard.[28] Gann executed a promissory
note secured by a chattel mortgage on the trailer.[29] Gann then entered the
United States Army and was stationed at the Fort Worth Army Airfield.[30] His family still lived in
the trailer, now parked at the airfield and still on wheels.[31] The mortgage holder
brought suit to foreclose on the chattel mortgage lien.[32] The court, citing
Cullers, noted the distinction between a chattel that is attached to
realty and a chattel that is not.[33] After quoting from
Cullers, the court said:

Taken
alone, this language might indicate a belief by the Supreme Court that the
homestead exemption could attach to any chattel, such as a covered wagon, or a
houseboat, or any other type of movable vehicle or conveyance, which for the
time being might be occupied by the claimant and his family as living quarters.
But when we examine the opinion in the light of the facts of the case, and
consider the disposition made of the entire case, we come to a different
conclusion.[34]

The court then
noted the distinction between personal property—such as the gin machinery in
Cullers—and a permanent fixture attached to realty that is personal
property only because the owner of the fixture does not own the land.[35] The court cited
Clark as consistent with this dichotomy in that the house trailer was
only a homestead because it had been attached to the realty and set alongside
the house, essentially becoming an extra room.[36] The court held that house
trailers without the characteristics of permanent fixtures attached to realty
are not protected homesteads.[37]

In Capitol
Aggregates, Inc. v. Walker, the Walkers owned a “mobile trailer home”
connected to the gas, water, and sewage systems of a trailer park.[38] They removed the wheels
and set the house on cement blocks.[39] The court found it
persuasive that the house was “as physically attached to the land as frame
houses” and held that the trailer house was a homestead.[40]

Finally, in
Minnehoma Financial Co. v. Ditto, Ditto purchased a “mobile home.”[41] He attached the mobile
home to his property by removing the wheels, placing it on concrete blocks
secured by eight-foot buried anchors, and connecting it to electricity and
water.[42] The court held that the
mobile home was a homestead:

We agree
with Ditto that a mobile home may be deemed an improvement to the realty when
attached to the realty in a manner indicating an intention that it be a
permanent part of the real estate. The nature of a mobile home does not preclude
its being given homestead protection. If a mobile home is attached in such a
manner to a homestead, it is entitled to homestead protection.[43]

Nonetheless,
the court held that the trailer home was not protected because a lien attached
before the mobile home became part of Ditto’s homestead.[44]

C. Application

Applying
these precedents to the instant facts, we agree that the proper test for whether
a residence attains homestead status is whether the attachment to land is
sufficient to make the personal property a permanent part of the realty.
Significantly, both the Constitution and the Property Code use the word
“thereon” when describing any protected homestead improvements;[45] the Constitution also
stipulates “on the land,” which is plainly not the same as “in the water.”

As we said in
Cullers, “The greater part of [the personal property] was . . .
so fixed as to make it part of the land . . . .”[46] Ninety-two years later,
the Ditto court held “a mobile home may be deemed an improvement to the
realty when attached to the realty in a manner indicating an intention that it
be a permanent part of the real estate.”[47] The Gann court
similarly reasoned “the homestead right may attach to a chattel if it has been
annexed to the freehold so as to have become a fixture and to have acquired the
character of realty.”[48] Movable chattels do not
possess the characteristics of a fixture attached to real property and do not
acquire the character of realty. As the Walker court put it, “[i]t
is their attachment to realty which gives them homestead character.”[49]

In
Clark, setting a trailer home on four wooden blocks and connecting it to
electrical service was sufficient to attach the trailer to real property.[50] In Gann, where the
house trailer remained on wheels, merely parking the movable trailer on real
property was insufficient to attach the trailer to the property.[51] In Walker, removing
the wheels of a mobile trailer home, setting it on cement blocks, and connecting
it to water, sewer, and gas service was sufficient to attach the mobile trailer
to real property.[52] And in Ditto,
removing the wheels of a mobile home, setting it on concrete blocks with
eight-foot buried anchors, and connecting it to electrical and plumbing service
was sufficient to give it homestead protection.[53]

In the
pending case, although Norris’s dock-based connections to utilities and plumbing
are like the land-based utility connections in Clark, Walker, and
Ditto, a boat is sufficiently distinct from a mobile home or house
trailer to justify a different outcome, particularly given the Constitution’s
unequivocal requirement that protected improvements be on the land. Norris’s
boat, unlike a dwelling that is permanently affixed to land, retains its
independent, mobile character even when attached to dock-based amenities because
it has self-contained utility and plumbing systems and also boasts its own
propulsion.[54] Norris, in fact, admits to
traveling in the boat extensively throughout the Gulf of Mexico prior to filing
for bankruptcy, and he moved the boat from Port Aransas to Corpus Christi after
the bankruptcy filing. Gann was the only case where parties moved their
home and still sought homestead protection, which the court denied.[55] Though Norris took steps
to tether the boat to realty, these steps do not sufficiently alter the boat’s
mobile character or, apparently, prevent Norris from cruising. We hold that
Norris’s boat remains a movable chattel; it does not rest “thereon” or “on the
land” as Texas homestead law clearly requires; it has not become a permanent
part of the real estate; and it has not sufficiently attached to real property
to merit homestead protection.[56] In our view, the homestead
exemption from creditors found in the Constitution and the Property Code
contemplates a requisite degree of physical permanency and attachment to fixed
realty—“thereon” and “on the land” constitute the operative language—that is not
present in the pending case.

The dissent
bemoans the Court’s “cramped interpretation” and urges a more “family-supportive
‘homestead’ concept” that the Legislature and at least one executive agency have
embraced in other areas of Texas law.[57] The Tax Code, for example,
specifically includes mobile homes in its definition of “residence homestead”
and more generally employs a looser definition that essentially focuses on
whether the structure is owned and occupied as a principal residence.[58] In addition, state
regulations that determine eligibility for certain welfare-related programs
define “homestead” expansively to include “[a]ny structure, including a
houseboat or motor home, that the household uses as its residence . . . .”[59] The dissent, while
conceding that these context-specific provisions do not govern the instant
dispute, argues these more protective provisions counsel a more “functional
approach.”[60]

We believe
these provisions cut the other way, demonstrating if anything that policymakers
are adept at adopting different definitions for different purposes. The
Legislature is certainly free to put a proposed amendment before Texas voters to
delete “thereon” and “on the land” and expand our Constitution’s current
land-based homestead exemption to cover boats explicitly.[61] Indeed, amending the Texas
Constitution is no Sisyphean task, having been done 439 times since its adoption
in 1876, making our Constitution one of the nation’s longest.[62] But the authority to
overhaul Texas homestead law and shield boats from bankruptcy creditors is not
ours.[63] This is a quintessential
policy judgment, and our confined role is determining what Texas law is, not
what it should be. If houseboat-homesteads are in Texas’s future, it should be
because Texas voters have amended our laws to say so, not this Court.[64]

III. Conclusion

Unless and
until Texas law changes, a boat can be a home, but it cannot be a homestead. Our
realty-focused constitution and laws frame a homestead in terms of tracts,
parcels, acres, and lots together with any land-based improvements.

In order to
qualify as a homestead, a residence must rest on the land and have a requisite
degree of physical permanency, immobility, and attachment to fixed realty. A
dock-based umbilical cord providing water, electricity, and phone service may
help make a boat habitable, but the attachment to land is too slight to warrant
homestead protection.

Accordingly,
Norris’s yacht does not qualify as an exempt homestead under article XVI,
sections 50 and 51 of the Texas Constitution, and we answer the certified
question, “No.”

________________________________________

Don R. Willett

Justice

Opinion delivered: February 9, 2007

[1] Tex. Const.
of 1845, art. VII, § 22.

[2] 413 F.3d 526, 530.

[3] See 11 U.S.C. §§ 301, 701–84.

[4] See id. at § 522.

[5] 316 B.R. 246, 251 (W.D. Tex. 2004).

[6] Inwood N. Homeowners’ Ass’n, Inc. v. Harris, 736
S.W.2d 632, 635 (Tex. 1987).

[7] Whiteman v. Burkey, 282 S.W. 788, 789 (Tex.
1926).

[8] Tex.
Const. art. XVI, § 50.

[9] Tex.
Const. art. XVI, § 51. Section 51 states in pertinent
part:

The homestead, not in a town or city, shall consist of
not more than two hundred acres of land, which may be in one or more parcels,
with the improvements thereon; the homestead in a city, town or village,
shall consist of lot or contiguous lots amounting to not more than 10 acres of
land, together with any improvements on the land; provided, that the
homestead in a city, town or village shall be used for the purposes of a home,
or as both an urban home and a place to exercise a calling or business, of the
homestead claimant . . . .

(Emphasis added).

[10] The Property Code recognizes a general homestead
exemption from creditors, Tex. Prop.
Code § 41.001(a), and defines homestead as follows:

(a) If used for the purposes of an urban home or as both
an urban home and a place to exercise a calling or business, the homestead of a
family or a single, adult person, not otherwise entitled to a homestead, shall
consist of not more than 10 acres of land which may be in one or more contiguous
lots, together with any improvements thereon.(b) If used for the purposes
of a rural home, the homestead shall consist of:

(1) for a family, not more than 200 acres, which may be
in one or more parcels, with the improvements thereon; or(2) for a
single, adult person, not otherwise entitled to a homestead, not more than 100
acres, which may be in one or more parcels, with the improvements
thereon.

(c) A homestead is considered to be urban if, at the
time the designation is made, the property is:

(1) located within the limits of a municipality or its
extraterritorial jurisdiction or a platted subdivision; and(2) served by police
protection, paid or volunteer fire protection, and at least three of the
following services provided by a municipality or under contract to a
municipality:

(A) electric;(B) natural gas;(C) sewer;(D) storm sewer;
and(E) water.

(d) The definition of a homestead as provided in this
section applies to all homesteads in this state whenever
created.

Tex. Prop. Code § 41.002 (emphasis added).

[11] Two other constitutional provisions create limited
exemptions from State taxes for “residential homesteads” and “residence
homesteads,” see Tex.
Const. art. VIII, §§ 1-a, 1-b, but neither provision defines the
term.

[12] See Woods v. Alvarado State Bank, 19 S.W.2d 35,
36–37 (Tex. 1929) (discussing history of the Texas homestead
exemption).

[13] Texas’ first homestead law was an 1839 act of the
Congress of the Republic of Texas. Id. at 36.

[14] 1 S.W. 314, 315 (Tex. 1886).

[15] Id. at 314–15.

[16] Id. at 315.

[17] The Court was unsure if James had a valid lease because
the owner of the land, Mrs. Walker, never expressly agreed to the lease.
Id. at 314–15.

[18] Id. at 315.

[19] Id.

[20] Sonnier v. Chisholm-Ryder Co., 909 S.W.2d 475,
479 (Tex. 1995).

[21] Id.

[22] Id. at 481 (emphasis
added).

[23] 190 S.W.2d 736, 737 (Tex. Civ. App.—Dallas 1945, writ
ref’d).

[24] Id.

[25] Id.

[26] Id. at 738.

[27] 210 S.W.2d 255, 256 (Tex. Civ. App.—Fort Worth 1948,
writ ref’d n.r.e.).

[28] Id. at 257.

[29] Id.

[30] Id.

[31] Id.

[32] Id.

[33] Id. at 259.

[34] Id.

[35] Id. at 259–60.

[36] Id. at 260.

[37] Id.

[38] 448 S.W.2d 830, 831–32 (Tex. Civ. App.—Austin 1969,
writ ref’d n.r.e.).

[39] Id. at 832.

[40] Id. at 833, 837.

[41] 566 S.W.2d 354, 355 (Tex. Civ. App.—Ft. Worth 1978,
writ ref’d n.r.e.).

[42] Id. at 356.

[43] Id. at 357 (citations omitted).

[44] Id.

[45] Black’s Law Dictionary defines “thereon” as “On that or
them.” Black’s Law Dictionary
1517 (8th ed. 2004).

[46] 1 S.W. at 315.

[47] 566 S.W.2d at 357.

[48] 210 S.W.2d at 258.

[49] 448 S.W.2d at 835.

[50] 190 S.W.2d at 737–38.

[51] 210 S.W.2d at 257, 260.

[52] 448 S.W.2d at 832, 837.

[53] 566 S.W.2d at 356–57.

[54] See Gann, 210 S.W.2d at 259 (indicating that
homestead protection should not attach to “a covered wagon, or a houseboat, or
any other type of movable vehicle or conveyance”).

[55] Id.

[56] See Ditto, 566 S.W.2d at 357; Gann, 210
S.W.2d at 260 (noting that a house is a homestead only if it is “a permanent
fixture attached to the realty”).

[57] __ S.W.3d __, __.

[58] Tex. Tax
Code § 11.13(j)(1).

[59] 1 Tex. Admin.
Code § 372.356(5).

[60] __ S.W.3d at __.

[61] See, e.g., Miller v. Keyser, 90 S.W.3d
712, 719 (Tex. 2002).

[62] Legislative Reference Library of Texas, Constitutional
Amendments (Feb. 2006),
http://www.lrl.state.tx.us/legis/constAmends/lrlhome.cfm.

[63] See Whiteman v. Burkey, 282 S.W. 788, 788 (Tex.
1926) (“There are no exemptions except those provided by law.”); Gann,
210 S.W.2d at 260 (“[T]he courts cannot protect that which is not a
homestead.”).

[64] Texas law dictates today’s result, but
given the dearth of boat-as-homestead cases in Texas, it is illustrative to
study court decisions applying other states’ homestead laws. Federal bankruptcy courts applying the laws of other
states have extended homestead protection to houseboats, but these decisions all
turn on distinct constitutional and statutory language that expressly grants
homestead protection for “personal property” or “mobile homes” or similar
dwellings. In In re Mead, a Florida bankruptcy court held that a
houseboat was a homestead under a Florida statute that defined a homestead as
“any dwelling house, including a mobile home used as a residence.” 255 B.R. 80,
83, 85 (Bankr. S.D. Fla. 2000). Not surprisingly, this issue has arisen
frequently under Florida law, and we refer the reader to Mead and the
following cases but do not attempt to reconcile them with each other or our own
case law, other than to note that Florida statutory law is different from our
own. See In re Walter, 230 B.R. 200, 203 (Bankr. S.D. Fla. 1999) (holding
that a houseboat was not a homestead under Florida law because it was “a
navigable vehicle” and was “designed to serve as a recreational vehicle rather
than a permanent dwelling”); In re Major, 166 B.R. 457, 459 (Bankr. M.D.
Fla. 1994) (holding that a houseboat was not a homestead under Florida law
because the boat was not designed to serve as a permanent dwelling and was
immobile only because owners lacked funds to repair the engine); Miami
Country Day Sch. v. Bakst, 641 So.2d 467, 469 (Fla. Dist. Ct. App. 1994)
(holding that a houseboat was a homestead under Florida law because it “cannot
be used as a vehicle: it has never been equipped with a motor and was towed to
its present location”). In In re Ross, an Illinois bankruptcy court held
that a houseboat was a homestead under an Illinois statute that expressly
includes personal property. 210 B.R. 320, 322, 325 (Bankr. N.D. Ill. 1997). In
In re Scudder, an Alabama bankruptcy court held that a houseboat was a
homestead under an Alabama statute that defines a homestead to include a “mobile
home or similar dwelling” because a boat used as a primary residence is similar
to a mobile home. 97 B.R. 617, 618–19 (Bankr. S.D. Ala. 1989). And in In re
McMahon, a Kentucky bankruptcy court held that a houseboat was a homestead
under a Kentucky statute that expressly includes personal property. 60 B.R. 632,
633–34 (Bankr. W.D. Ky. 1986). In contrast, as discussed above, Texas
constitutional and statutory language contemplates a land-based inquiry, which
explains the seamless case law holding that attachment to realty governs whether
a dwelling is a homestead.