Case ID: la-ann_18/html/0732-01.html
Source: Caselaw Access Project
Author: {"author": "Howell, J. Hyman, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bailey & McKie v. Chase.
    — On Rehearing.
    A., by authentic act, convoyed to 15. certain immovable proporty; 15. gave to A.6 a countor-lotter, in wliich it was agroed that tho proporty was transferred to B., as security for tho payment of two specific debts; A. having tho right to pay tho dobts within a fixed delay, and have tho property recoil’ vcyod to him, othorwiso ho lost all right therein :
    
      Held: — 'That, although this may not have been a real salo, yob it had a real cause, and cannot bo invalidated as a simulated salo.
    APPEAL from the Fifth District Court of Now Orleans,
    
      Eggleston, J. J. Ad. Bozier, for appellants. Kennedy <& Miles, for appellees.
   Howell, J.

This is an hypothecary, action, in which plaintiffs, in February, 1858, obtained an order of seizuré and sale upon a judicial mortgage against certain vacant immovable property, situated in the Parish of Jefferson, and in tho possession of defendant, to satisfy a judgment recorded on 1st February, 1856, and held by them against ono Warrick Martin. The defendant enjoined the sale, on the ground that, by a notarial act of sale, dated 18th, and recorded on the 19th January, 1854, ho purchased for $37,360 cash, and has ever since owned and possessed, in good faith, the property seized.

In answer to the petition of injunction, plaintiffs aver that, by a counter-letter, dated 24th January, 1854, i? is expressly doclarod that said property is transferred to the defendant Chase, as a security for tho payment of a debt of $38,000, and interest, duo by Martin to-E. W. Clark & Bros., of St. Louis, and one of $53,000 and interest, duo by said Martin to E. W. Clark, Dodge & Co., of Now York, and not in payment of said dobts; that no possession passed to defendant, but all the burdens and advantages of ownership remained in Martin; that, on 5th May, 1856, Martin executed another notarial act of sale, of same property, to Chase, tho alleged consideration being the failure of Martin to pay tho said dobts; that, at tho date of the first act, Martin was notoriously, and to tho knowledgo of defendant, insolvent. That said act of 18th January, 1854, was a mero cover to shield tho property of Martin from his creditors, and was not intended to convoy title or possession; that tho judgment on such executory process, herein issued, having been duly recorded prior to the date of tho act of 5th May, 1856, could not -be affected by tho letter, which, not containing a description of the property, is -without effect as to third persons, and they prayed that tho injunction be dissolved, with damages.

In a former decree of the Court, the act of salo of 18th Jan. 1854, was declared simulated, null and void, but the injunction was perpetuated OH the ground that the ten days’ notice, to defendant, as the third possessor, was not given before the order of seizure and sale was obtained.

On application by defendant, a rehearing was granted, and his counsel presses upon our consideration the principle as recognized in our law and jurisprudence, and applicable to this case, that, although the contract road by the light of the counter-letter, may not be an absolute sale; yet, as it has a real cause, it cannot be invalidated, and cites Art. 1894, C. C.; 12 A. 529; 1 A. 432; 6 N. S. 583, and other authorities.

The Act of 18th January, 1854, is an authentic act of sale in due form, and by its terms conveyed the property and. possession absolutely to Ohase; but by the counter-letter executed several days thereafter, the parties agreed and stipulated, that the property in question was transferred to Chase, as security for the payment of two specific debts, and not in j>aymcnt thereof, giving Martin, the vendor, an opportunity to pay said-debts within a fixed delay, and have the property reoonveyed to him, and on his failure to pay any part of said debts, he was to forfeit all right in law or equity to any portion of said property, and Chase, the vendee, reserved the right to sell the same to pay said debts pro tanto.

It is evident that it was the intention of the parties to enter a serious contract, although not such a one as its language purports.

The debtor, by passing the title of his property to another, intended to make secure to two of his creditors, two debts, amounting to over §90,000, and actually due and owing, and put it beyond his own power to impair that security. Whatever may bo its effect as to conferring an unjust preference or advantage, we cannot properly stamp it as an absolute simulation- — a mere shield to cover a debtor’s property from the pursuit of his creditors. It seems clear that Martin Could make no disposition of the property to the prejudice of these claims. He could not, under any interpretation of the terms and stipulations of the counter-letter, treat the sale of 18th January as a simulation, and require the property to bo reconveyed to him, without first paying the two debts, and plaintiffs possessing no greater rights than Martin, their debtors could do no more. They base their right to proceed against this property upon the tenor and effect of this counter-letter, and can derive from it no greater right or remedy than it resei’ves to their debtor.

As is said, in the case of Wolf v. Wolf, 12 An. 531, it does not follow, because parties have clothed their contract in one form instead of another, that it will avail in either. There is no such penalty declared by the lawgiver, and the Courts cannot supply it. There is nothing immoral in using the contract of sale as the security of a bona fide debt. As he may make an absolute donation of his property, saving the rights of the parties injured, we see no reason to declare an act void because the vendor has contented himself with a falso course, a fictitious price, instead of inserting the true cause of the contract. C. C. 1894.

Viewing, then, the act of 18th January, 1854, on which Chase relies, as having substance and reality, and not prohibited as to form and purpose, by law or good morals, we must apply tho principio invoked by him, and not disregard it until duly sot aside for legal causo.

It is therefore ordered, that the decree heretofore rendered by us be sot aside, and it is now ordorod that the judgment of the lower Court be avoided and reversed; and it is further ordered, that the injunction heroin bo perpetuated, with costs in both Courts.

Hyman, C. J.

adheres to tho opinion formerly prepared and read by him.