Academic journal article South Dakota Law Review

A "Rogues' Paradise"? A Review of South Dakota's Property Exemptions and a Call for Change

Academic journal article South Dakota Law Review

A "Rogues' Paradise"? A Review of South Dakota's Property Exemptions and a Call for Change

Article excerpt

This article explores South Dakota's property-exemption statutes, their history, and recent case treatment. The philosophy of a person's relation to the state, as well as the competition between the interests of capital and those of debtors will be discussed briefly. Next, I will discuss the historical context and competing interests in this area of the law. Finally, I will argue that changes need to be made to comply with the South Dakota Constitution's requirement that the comforts and necessaries of life shall be recognized by wholesome laws exempting from forced sale a homestead and a reasonable amount of personal property.

I. HOW DID WE GET HERE?

The story of South Dakota's property-exemption statutes is necessarily historical, as the statutes have changed little since territorial days. It was not until 1859 that a permanent settlement took root in Yankton, "The Mother City" of the Dakotas. (2) Dakota Territory was created in 1861 (the year the Civil War began). (3) It was split into the states of North Dakota and South Dakota in 1889, and our state undertook the process of creating the Constitution and statutes by which it would govern. (4)

A. A NATION IN CRISIS: THE PANIC OF 1873 AND THE POLITICAL CLIMATE THAT FOLLOWED

As the infant State of South Dakota began setting out its constitution and laws, it was, of course, impacted by events of the times. Primary among these was the so-called economic panic of 1873. In 1873, a major economic downturn spread from Europe to the United States. It was precipitated on this side of the pond by unregulated industrial growth and the fall of Jay Cooke and Company, the country's preeminent investment banking firm and principal backer of the Northern Pacific Railroad. Jay Cooke, acting in an era of wide-spread American political corruption, obtained numerous government subsidies for the railroad by

Eventually Mr. More's position prevailed, leading Mr. Jones of Miner to exclaim excitedly, "[t]his is the rogues' paradise!" (26)

Second, the convention members debated whether exemption amounts should be firmly set in the Constitution or whether they should be left to the legislature to set. Delegate distrust of future legislatures is a recurring theme in the debates. No doubt this was a reflection of general distrust in government, given the national abuse reflected in the scandals of the age by moneyed interests. Some delegates favored enacting a strict constitutional limit on future legislatures to protect the credit of South Dakota. Others insisted the Constitution should be a broad expression of policy, with the legislature determining the specifics, as required at any given time. In the end, the delegates adopted the recommendation of the Committee on Exemptions Real and Personal, leaving the amount to be set by the legislature. Mr. Allen of Turner County (member of the Committee on Exemptions Real and Personal appointed in 1883) explained:

   The majority of the Committee who framed this article for the
   Constitution had in view the article from Wisconsin, thinking it
   would answer the purpose for Dakota just as it would for Wisconsin.

   It exempts simply the homestead, and leaves the legislature to
   determine its value; whatever they may determine is the reasonable
   value to place upon the homestead, it will so remain. We thought it
   was going too much into legislation for this Convention to fix that
   amount.

   It also exempts a reasonable amount of personal property, it does
   not state the amount; we think the necessity for exemptions is
   liable to change at any time; what may be a reasonable exemption of
   personal property today in ten or twenty years from now may be very
   unreasonable. So it was thought to leave this matter entirely to
   the legislature and let them fix the amount of the exemptions, real
   and personal, as they think the people demand.

   The Legislature comes directly from the people and they will know
   just exactly what they want. … 
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