Case ID: la-ann_35/html/1129-01.html
Source: Caselaw Access Project
Author: {"author": "Bermudez; C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 8865.
    The Mutual National Bank vs. Keenan & Slawson.
    Compensation cannot bo validly set up in extinguishment of a claim for the price of commod* ities sold for cash, where possession of the same was obtained by an artifice or breach of trust.
    The purchase price, payable ccss7i, must bejpttid under the agreement.
    Compensation rests essentially on good faith, and cannot take place against a claim for the ‘ restitution of a thing of which the owner has 'been unjustly deprived.
    Article 1392, C. N., is identical with Article 2210 of our Code, and the authorities agree in that sense. Rulings in 6 An. 46, 207, 356 5 7 An. 53 5 28 An. 629, and other cases, affirmed.
    APPEAL from the Civil District Court for the Parish of Orleans. J.
    
      T. H. Kennedy for Plaintiff and Appellee:
    Compensation is not allowable against tbe vendor in a casli sale. 28 An. 627 ¡ Marcadé, Vol. 4, ■ pp. 626, 627 j No. 1, p. 629; No. 5 on Art. 1293, Code Napoleon $ 18 Laurent, p. 468, and 2d note.
    ■ Blanc <& Butler for Defendants and Appellants. ,
   The opinion of the Court was delivered by

Bermudez; C. J.

This is an action to recover the price of cotton sold for cash. The defence is compensation. From a judgment adverse to them the defendants appeal.

The following are the facts proved. On December 12th, 1881, Ben Gerson & Son drew a sixty days’ note for $3,000 to the order of defendants, who endorsed it for .accommodation. The note was used by the drawers. A few days previous to its maturity, learning that Gersoa & Son were in failing circumstances and would not take up the note, the defendants, through a broker who did not disclose them as his principals, bought from Gerson & Son 51 bales of cotton for $2,410.70, which they had under their owu control.

The sale was made for cash, with special provision that $2,000 would be paid before 3 i>. m. the same day, February 8th, 1882. When that hour came, the broker informed Gerson & Son that the amount would not be forthcoming, and that the cotton had been bought for Slawson. Gerson & Son then replied that the sale was cancelled. Later in the •day Gerson & Son ascertained that the purchaser was one of the defendants. An attempt by Gerson & Son to sell the same proved unsuccessful, the defendants refusing to deliver it.

On February 14th, 1882, the $3,000 note maturing, the defendants took it up.

It appears that on the 4th of February Gerson & Son, who were indebted to the plaintiff Bank for advances, gave them an order for the cotton, but this order was not used.

. Subsequently, no material circumstance having intervened between Gerson & Son and the defendants affecting the cotton transaction, the former, on March 31st, 1832, transferred to the plaintiff Bauk their rights under it against the defendants.

The plaintiff Bank now sues, under that transfer, to recover the price of the cotton, $2,410.70.

The defendants,- after pleading the general issue, and admitting the cotton transaction, allege the note of Gerson & Son endorsed and paid by them, and plead the amount thereof, $3,000, in compensation of the demand. They finally charge the-simulation of the transfer, and conclude, praying for judgment under the issues.

It appears that on the trial of the case, the defendants, treating their answer and its averments as being a revocatory action, offered evidence, to show knowledge in plaintiff of Gerson & Son’s insolvency, unjust preference, and consequent injury to them, but the Court refused to admit the proof offered as irrelevant under the pleadings, and bills were reserved.

The answer contains no charge to justify the evidence, and no prayer to warrant a judgment upon it.

The court ruled correctly.

Under the facts as found, the only question presented is one of law: whether the compensation set up can avail 1

The defendants urge, with great force, that the plaintiff Bank stands, under the transfer, in the shoes of Gerson & Son; that the transfer cannot prejudice them, and that, as before it took place, the claim of Gerson & Son against them for the. price of the cotton had been extinguished by compensation, the plaintiff Bank acquired nothing under the transfer.

The argument is solid in appearance only. It is significant that on the 8th of February, when the cotton was sold, the $3,000 note was not due; that it matured on the 14th, subsequently, when it was taken tip; that previous to the purchase, of the cotton, the defendants were, well aware of the insolvent circumstances of Gerson & Son.

It was for the purpose, therefore, of covering themselves against the payment of a claim not in existence, conditionally so, and which, under any aspect, was not exigible, that the defendants purchased the cotton. .

The law requires the co-existence of three conditions in order that compensation maybe setup: 1st, Both debts must have the same object. 2d, They must be liquidated. 3d, They must be exigible.

If. they were not exigible, that one of the debtors, who would not be bound to pay actually, would find himself, by the fact of compensation, deprived of the benefit of the term of credit. Mourlon 2, p. 756, No. 1443; Pardessus Dr. Com., Yol. 1, No. 250.

Speaking on the subject of compensation, Pardessus Dr. Com. says, Vol. 1, p. 282, No. 235, §2, “Cette compensation doit étre offerte de bonne foi. Ainsi Pon ne pourrait trouver ce caractére dans la conduite d’un crdancier qui achéterait diez son debiteur des marchandises qu’il feindrait de vouloir payer comptant et qui apres en avoir fait l’enlevement, n’effectuerait pas le paiement, mais exciperait d’une compensation. II en serait de méme de celui qui, empruntant, comme pour un besoin extrémement, pressé, une somme qu’il promettrait de rendre incessamment, refuserait ensuite d’exécuter cet engagement, sous le pretexte que le préteur est son redevable. Ces sortes de ruses sont indignes de la bonne foi du commerce. Le créancier doit agir directement et. les tribunaux n’accorderaient point, dans ce cas, un succés préparé par un' véritable abus de confiance.”

In support he refers to a decision of .the Court of Cassation. See also Merlin Yo. Compensation, §2.

This Court has emphatically recognized and applied those principles in the following cases which it is unnecessary to analyze. Haydel vs. Roussel, 1 An. 35; Yale vs. Nolan, 3 An. 449; Nolan vs. Shaw, 6 An. 46; McKee vs. Amonett, Ib. 207; Rhodes vs. Hooper, Ib. 356; Breed vs. Purvis, 7 An. 53; Bogert vs. Egerton, 11 An. 73; Vincent vs Gandolfo, 12 An. 526; Guillebeau vs. Melançon, 28 An. 629.

The doctrine rests upon the principle clearly announced in Article 2210, R. C. C., which is to the effect that compensation' shall not take place against a claim for the restitution of a thing of which the owner, has been unjustly deprived. This Article is found in the N. C. as Article 1292.

The notes upon it treat the party who has obtained the unjust possession of the thing of which restitution is asked, as a spoliator.

Bigot Preameneu says: “La compensation ne peut ófcre opposée par celui qui est spoliateur d’une chose, í\ la demande qui lui en est faite. Le spoliateur ne peut sous quelque pretexte que ce soit, étre autorisó il reteñir ce qu’il a volé; l’ordre public l’exige.”

Del vi n court says: “ Quoique la compensation s’opére de pleine droit, le spoliateur n’y est pas recevable, Spoliatus ante omnia reatituend%is.')

There can surely be no escape from the operation of such principles, in a case like the present one, in which the creditor, setting ■ up compensation, had undoubted knowledge of the insolvenoy of his debtor,, and by a preconcerted artifice, unjustly deprives his debtor of property of which he otherwise would not have obtained possession, and this with the view of paying himself and securing au undue preference.

If it be true that the defendants could not have set up compensation, against Gerson & Son, had they been the actual plaintiffs herein, how. can the defendants pretend that they can do so against a third innocent party?

There being no error in the judgment appealed from, it is affirmed with costs.