Case ID: la_138/html/0701-01.html
Source: Caselaw Access Project
Author: {"author": "PROVOSTY, J. PER CURIAM. PER CURIAM. PROVOSTY, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(70 South. 617)
    No. 21282.
    In re J. D. CONNELL IRON WORKS CO.
    (June 29, 1915.
    On Application for Rehearing, Nov. 2, 1915.
    On Rehearing, Jan. 10, 1916.)
    
      (Syllabus by Editorial Staff.)
    
    1. Receivers <&wkey;148 — Claims—Mortgages'— Attorney’s Fees.
    .Where a mortgage on land required the mortgagor, in the event of nonpayment, to pay all fees and costs including attorney’s fees at 5 per cent, of the amount for which judgment was obtained, such attorney’s fees are properly allowable as a debt in a receivership proceeding on the mortgagor’s business, in which the mortgaged land was sold, though a foreclosure suit on the mortgage was not brought, and the fees were for services in securing a judgment for the amount of the mortgage in the receivership proceeding.
    [Ed. Note.- — For other cases, see Receivers, Cent. Dig. § 260; Dee. Dig. <@^14S.]
    2. Receivers &wkey;>152 — Mortgages—Priority oe Claims — Attorney’s Fees.
    In such case, where the mortgaged lands were sold confusedly in bulk with other property, without appraisement, the lien of such fees could not attach prior to the other debts, the amount on which the lien could attach being impossible of ascertainment.
    [Ed. Note. — For other cases, see Receivers, Cent. Dig. §§ 272-275, 278; Dec. Dig. &wkey;152.]
    3. Appeal and Error &wkey;>190 — Objections in Lower Court — Accounting by Receiver.
    Where a claimant in receivership proceedings fails to object to the account of the receiver in the court below, he cannot, for the first time on appeal, urge specific objections to the account, the judgment appealed from being a general approval of the account as a Mióle.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 1216-1220; Dec. Dig. &wkey;> 190.]
    4. Appeal and Error <&wkey;920 — Review—Interest — Presumption.
    Where the date of a payment by the debtor on a judgment for claimant against the debtor is not proved in receivership proceedings, it will bo presumed on appeal to have been made at the date of the judgment, and no interest thereon can be allowed.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 3714-3721; Dec. Dig. <i&wkey; 920.]
    5. Appeal and Error <&wkey;177 — Presentation op Matters Below — Costs.
    Where costs in obtaining a judgment against a debtor are not proved in receivership proceedings against him, none can be allowed on appeal.
    [Ed. Note. — For othei cases, see Appeal and Error, Dec. Dig. <&wkey;>177.]
    6. Receivers ¡&wkey;145 — Proceeds op Sale — Priority op Liens.
    A judgment for the amount of a mortgage on land, recorded prior to the sale of the property of the mortgagor in receivership proceedings is a prior lien upon the proceeds of the immovables so sold, except as against a prior recorded mortgage.
    [Ed. Note. — For other cases, see Receivers, Dec. Dig. c&wkey;>145.]
    O’Niell, J., dissenting.
    On Rehearing.
    7. Receivers &wkey;>196 — Appointment—Fees.
    Where stockholders of a corporation select liquidation commissioners to proceed either under court orders or independently, and they elect to be governed by the court, which formally appoints them as receivers, they are, in law receivers and entitled to fees as such.
    LEd. Note. — For other cases, see Receivers, Cent. Dig. §§ 387, 389-391; Dec. Dig. &wkey;196.
    For other definitions, see Words and Phrases, First and Second Series, Receiver.]
    O’Niell, J., dissenting in part.
    Appeal from Civil District Court, Parish of Orleans; E. K. Skinner, Judge.
    Proceedings in the matter of the liquidation of the J. D. Connell Iron Works Company, in which Otto J. Mayer and another claimed a lien for attorney's fees. From an order allowing the fees and preferring them to other debts, the claimant Robert P. I-Iyams Coal Company, Limited, appeals, and the Metropolitan Bank also appeals from the account of the receivers.
    Judgment set aside in part and affirmed in part.
    Carroll, Henderson & Carroll, of New Orleans, for appellants liquidating commissioners and receivers. James E. Zunts, of New Orleans, for appellant Robert P. Hyams Coal Company, Limited. Dart, Kernan & Dart, of New Orleans, for appellees Mayer and Dart, Kernan & Dart. William Waller Young, of New Orleans, for appellee Karst.
   PROVOSTY, J.

We shall deal with this case only in so far as presented in the briefs.

The case involves oppositions to the account of receivers.

The Metropolitan Bank filed an opposition and took an appeal, but no brief has been filed in its behalf: we assume, therefore, that the opposition has been abandoned.

Otto J. Mayer and Charles Karst, mortgage creditors, were not allowed in the account the attorney’s fees stipulated in their favor in their mortgage acts. They opposed on that ground, and were allowed the fees in the judgment appealed from, with rank equal to that of the mortgage.

Robert P. Hyams Coal Company, one of the ordinary creditors, has appealed, and urges that the fees should not have been allowed at all, or at any rate, should not have been accorded a preference over the unsecured debts.

We think the fees were properly allowed as a debt. The two acts of m'ortgage are alike in that each contains the following clause:

“And the said president declared that he does by these presents bind and obligate said company and heirs and assigns to pay and reimburse unto said mortgagee and such person or persons who may be the holder or holders of said promissory note, all such costs, charges, and expenses as said mortgagee or any such holder oi holders shall or may incur or pay, in the event of nonpayment of said promissory note at maturity; said attorney’s fees, however, to be fixed at 5 per cent, on the amount for which judgment may be obtained.”

The notes were not paid at maturity, and, as a consequence, the mortgagees had to employ counsel; and the fees of such counsel are hy this clause of the act of mortgage fixed at 5 per cent., which is the amount allowed by the judgment. It is said that no judgment has been rendered for the mortgage debt in this case, and that therefore the case is not covered by this clause. But a judgment was rendered for the mortgage debt. It is also said that this clause evidently contemplates that the fees should only be earned in the event of there being a foreclosure proceeding to enforce payment of the mortgage debt, and that there was nothing of the kind. We think the contemplation of the parties was that the mortgagee should be at no expense for lawyers’ fees in connection with his mortgage; that the mortgagor should pay any expense of that kind it might become necessary to incur; and that these fees should be fixed at 5 per cent.

But the lots of ground upon which the mortgages in favor of Otto J. Mayer and the $6,000 mortgage in favor of Charles Karst bore, were sold confusedly, in globo, with the other immovable property of the receivership, without previous appraisement, and it is now impossible to identify the proceeds of the sale of the particular lots upon which the mortgages bore, or in other words, to be certain what amount was realized from the sale of the mortgaged property; and the consequence of this confusion is that no particular part of the proceeds can be attributed to the mortgages; or, in other words, that the mortgages are lost. This principle has so often operated to extinguish privileges that citation of cases on that point can hardly be necessary. It applies equally in the ease of mortgages. Reusch v. Keenan, 42 La. Ann. 419, 7 South. 589.

The judgment will have to be amended so as to place these attorney’s fees with the ordinary debts.

In the brief in behalf of Robert P. Hyams Coal Company, the following contentions are made:

“There was error in allowing the payment of any amount to the various mortgage creditors by preference because their claims had been relegated to the proceeds of the sale of the several lots on which their mortgages bore, and, as all the lots were sold in lump, there was no way of ascertaining the amount of the proceeds upon which the several mortgages bore.
“There was error in not ordering the payment of the legal mortgage of the Hyams Company for $309.83 by priority before the several mortgages including the principal, the interest, and the attorney’s fees allowed on those mortgages.
“There was error in referring the several mortgage claims generally to the entire fund, as those mortgage claims, if allowed at all, as preferred claims, should have been referred only to the proceeds realized from the sale of the real estate and should not cover the proceeds realized from the movable property.”

In the several respects here complained of the judgment simply approved the account; and in these same respects the account was not opposed by Robert P. Hyams Coal Company; therefore these complaints come too late. They are being urged by Robert P. Hyams Coal Company for the first time in the brief in this court. The opposition of said company to the account was restricted to specific items of the account; it did not contain any general clause of opposition.

The evidence shows the amount due on the judgment obtained 'by the Robert P. Hyams Coal Company on February 12, 1912, to be $538.62, with 8 per cent, per annum interest thereon from July 27, 1911, and 10 per cent, on the full amount of the judgment, less a payment of $350. The date of this payment not having been proved, it will have to be held to be the same as that of the judgment. Costs are claimed, and, no doubt, some were incurred in obtaining the judgment; 'but their amount is not proved, and hence none can be allowed.

As this judgment was duly recorded prior to the sale of the property, it bore legal mortgage .upon the immovables, and hence must be given this rank upon the proceeds of the immovables.

The prayer of the opposition is that this judgment be paid by preference over all other claims against the fund to 'be distributed. Inasmuch as it bears mortgage upon this fund, whereas the claim of Otto J. Mayer and the $6,000 claim of Charles Karst are not thus secured, it is entitled to rank these claims here named; but not that of Charles Karst for $1,100 secured by mortgage on the entire immovable property, which ranks it, as being prior in registry. ■ .

The judgment appealed from is therefore set aside in so far as it accords to the attorney’s fees on the Otto J. Mayer claim and the Charles Karst $6,000 claim, a rank equal to these claims, and in so far as it accords to the claims here named, a rank superior or even equal to that of the judicial mortgage in favor of Robert P. Hyams Coal Company, and that in all other respects it be affirmed; and the case i‘s remanded, with instructions to the trial court to recast the account in accordance with the views expressed in this opinion. The costs of this appeal to be paid in equal proportions 'by the receivership and the Metropolitan Bank.

O’NIELL, J., dissents from the decree affirming the judgment ordering the payment by preference out of the entire funds of debts secured by mortgage on only a part of the property sold.

On Application of Otto J. Mayer for a Rehearing.

PER CURIAM.

The distinction between the instant case and that of Barry Bros. v. American White Lead & Color Works, 107 La. 236, 31 South. 733, is that the sale was preceded by separate appraisement in that case and not in the instant case.

The rehearing is refused.

On Application of Liquidating Commissioners and Receivers for a Rehearing.

PER CURIAM.

The court failed through inadvertence to pass upon the claim of these liquidating commissioners and receivers for fees. On this point a rehearing is granted. And a rehearing is also granted from that part of the judgment apportioning the costs of the appeal.

On Rehearing.

PROVOSTY, J.

The rehearing was restricted to the questions of the costs of the appeal, and the fees of the receivers. It is now practically agreed’ that the costs should bé paid in their entirety by the mass, and we shall so decree. The question of the fees of the receivers was not overlooked by the court in considering the case, but in some way was overlooked in drafting the opinion. These fees amounting to $529.07, being 2% per cent, on the amount to be distributed, were held by the trial court not to be a proper charge against the receivership for the reason that the receivers “were simply liquidators appointed by the stockholders and confirmed by the court; they were not receivers in the sense of the law.”

The facts are that the stockholders adopted a resolution dissolving the corporation, and appointing three ' commissioners to have charge of, and liquidate, its affairs with authority to act as receivers, and to do so “with or without court proceedings, as they shall deem best”; that they deemed best to act with court proceedings, and accordingly at once presented a petition to the court alleging the said resolution, and that they desired to-be “recognized, sworn, and confirmed as liquidating commissioners and receivers,” and praying accordingly; and the court made an order so recognizing and confirming them “as liquidating commissioners and receivers with the powers of receivers.” They were duly sworn and a commission was issued to them ■ as “liquidating commissioners and receivers,” and from that time on the affairs of the corporation were administered by them as in any ordinary case of receivership; that is to say, an inventory was made, and all that was done was done by order of court; and their account was rendered to the court.

Under these circumstances, we think that these officers were receivers, appointees of the court, acting under and by virtue of the appointment of the court; and that they are therefore entitled to the fees allowed by law to receivers. The fact of their having been selected by the stockholders, and of the stockholders, through them, having procured their appointment, does not detract from the force or effect .of the order of court appointing them receivers. In the case of Leidigh-Dalton Lumber Co. v. Houck, 138 La. 159, 70 South. 72, the commissioners had not been confirmed by the court, and did not act by authority derived from the court, or as appointees of the court.

The judgment appealed from is therefore amended in the further particular that the fees of the receivers as fixed in the provisional account are ordered to be paid by preference as set down in said account; and it is further ordered that the costs of this appeal be paid by the receivership.