Case ID: la-ann_5/html/0222-01.html
Source: Caselaw Access Project
Author: {"author": "Slidell, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John Perkins v. Bank of Louisiana.
    Where the cashier of a bank grants an extension of time to the principal debtor, upon the payment of a portion of the debt, and thereby discharges a surety, the bank, having received the money and the benefits of the acts of the agent, will be considered as having ratified them.
    A debtor upon a twelve months’ bond, taken at a sheriff’s sale, is not a judgment debtor. Recording a twelve months’ bond in the mortgage office does not create a judicial mortgage.
    APPEAL from the District Court of West Feliciana, Stirling, J.
    
      C. Ratliff, for the plaintiff,
    contended : The twelve months’ bond contained a mortgage and confession of judgment. This bond was not recorded in the mortgage book until the 15th of March, 1844. Before the recording of this bond and mortgage, there were many judgments recorded against Leake. Now, we contend, that the bank had no greater rights in the bond than Dwell had; and, by failing to have the bond recorded, which contained a mortgage, before other judgments was recorded against the principal debtor, that they could not subrogate Perkins, the security of Leake, to the liens and privileges of the original creditor, as it existed at the time of his entering into the obligation. See payment with subrogation, C. C. 2155,2156, to 2158. Surety is discharged, when, by the act of the creditor, the subrogation to his rights, mortgages, and privileges can no longer be operated in favor of the surety. C. C. 3030, 3032. 3d Ann. 255. 2d Ann. 427. 2d Ann. 160. Pothier on Oblig., 744. 2d Ann. 254. 2d Ann. 192. How can the bank subrogate Perkins to the rights and privileges on the mortgage retained on the land sold and described in the twelve months’ bond, when it was not recorded until 1844, long after numerous judgments had been recorded against the principal debtor; and long after the land had gone out of the principal debtor’s hands, and into the possession of A. Ledoux Sf Co., by virtue of a seizure and sale.
    The second point we make is, that the Bank of Louisiana, having taken in advance nine per cent interest on the bond from the principal debtor, for one year at a time, had thereby agreed and bound themselves to wait the twelve months, before they could sue. This they done.repeatedly; and by the prolongation of the time of payment granted to the principal debtor, without the consent of the surety, operates a discharge of the’latter. C. C. 3032. 1st Ann. 428, 254, 162. Pothier on Obligations 744. See the credits endorsed on the bond, signed N. C. Hall, cashier, and J. N. Maynard, cashier. But, the counsel for the bank contends, that this prolongation of the term of payment by the bank, and the taking of usurious-interest for the same, was not authorized by the bank, and not binding on ber. We will reply to this by saying, that the transfer from Neville Dwell to the bank, was made, executed, and accepted by Mr. Hall, the bank cashier. The bank received the interest upon the bond in advance, at nine per cent.. She is presumed to know what her agents do, when their transactions are in writing. She pocketed the money, acquiesced in this act repeatedly, and then credits the bond with the money so paid at this usurious rate of interest, arid then sues out a fieri facias for the balance, and we think it is rather too late now for the bank to say the cashier was not authorised to extend the time of payment. She should have done so within a reasonable time. But, if the bank has not sanctioned the acts of Mr. Hall and Maynard, why did she sue for the balance of the bond according to their mode of receiving payment? Why did she not calculate .the interest according to the tenor of the bond, and give credit accordingly, and then issue a fi. fa. for the balance ? No one can doubt the sanction of the bank to this transaction. It is well known to your honors, that the rules of the banks are to have semi-annual statements from all their branches, which keeps them informed of the acts of their agents, and they also send a special agent, once or twice a year to inspect their accounts, &c., and this transaction could not have run on from .1836, to 1847, without the mother bank’s knowledge. It would be permitting the bank to practice a fraud upon the debtor, to take from him nine per cent interest on a bond calling for but five per cent. In consideration of the indulgence granted the debtor, deprive the surety of his legal remedy, and continue this process for more than ten years, and after the bank had pocketed nearly the whole amount of the original debt in this illegal interest, to come down upon the surety for the balance of the debt yet unpaid. This is precisely the case in this instance. Justice says, the bank must either sanction the whole of the acts of her cashiers, in this instance, or repudiate them. Surely the court will not permit her to adopt such as seems to her interest, and reject the balance. Either this money was paid by Leake on the bond, for the purpose and in the manner stated by Hall and Maynard, the cashiers, or it was not paid at all, for that was the condition on which it was paid. Leake surely cannot be presumed to have paid the money on any other conditions than those expressed in writing, in the receipts on the bond. Then, if these conditions are binding on the bank, Perkins is discharged by the granting of time to the principal debtor, without his consent. If they are not binding, then no money has been paid by Leake, legally speaking, for a fraud has been practised upon him ; and so, prescription runs against the bond, as more than ten years has elapsed since the maturity of the bond, before the issuing of the execution enjoined.
    The judgment of the lower court was in favor of Perkins perpetuating the injunction, and we think it is sustained by the law and the evidence, and should not be disturbed.
    
      J. A. Patterson and Brewer and Collins, for defendant,
    contended: We know of no law requiring a twelve months’ bond to be recorded, or giving to such bond, when recorded, the force and effect of a mortgage, though, in all other respects, the bond is as fully operative against the parties as a final judgment.
    This bond was given to secure the payment of the price of property sold at judicial sale. In all judicial sales, after the adjudication has been made, the sheriff is required by law, to pass an act of sale to the purchaser of the property. C. P. 691, 692, 693, 694. This act of sale, not the bond, must be recorded. C. P. 695, 696, and the sheriff is required by law, to cause such record to be made before returning the act to the clerk of the court. C. P. 696. After having been thus recorded, it is the duty of the sheriff to return the act of sale to the clerk, who is required to make a record of the same, C. P. 695, 697. The plaintiff in injunction has taxed himself with the labor of showing that the bond was not recorded, but has neither alleged nor proved that^the act of sale is in a like category. The allegations of the petitions for an injunction may be true ; and yet the act of transfer may be recorded in the proper office, arid proper book. Prom such a state of facts the presumption arises, that the sheriff performed his duty, and that all the requisitions of law have been complied with. Dunlap v. Sims, 2d Ann. 239.
    
      Further than this, the burden of proof is on the plaintiff in injunction. He is claiming his release from an obligation deliberately entered into, and it is incumbent on him to prove such release. In any event, the defendant is not required to prove that the act of transfer made by the sheriff'has been recorded; no issue having been made by the pleadings, rendering such proof necessary. The plaintiff has merely alleged, that the bond was not recorded ; he has made no such allegation, in relation to the act of transfer. If, however, the court should be of opinion, that a twelve months’ bond is operative as a mortgage, and that the recording of such a bond would give it force and effect against third persons, and should also be satisfied that the bond in this case has not been recorded, even then, we think that Perkins has not been released from liability. The holder of the bond might have been satisfied with the personal security; and if Perkins, as surety, wished for any further rights of recourse against his principal than those possessed by the creditor, he had it in his power to obtain them by recording the bond. Again, the holder of the bond had no right given him by the bond to follow the mortgaged property into the hands of third persons. He could only acquire such a right by causing the bond to be recorded. Now, we are not cognisant of any law that requires the creditor to acquire lights for the benefit of the surety. If the surety should desire them, he must acquire them for himself. •
    The powers of a cashier are purely administrative, and, without a special authorisation, he has no power to release a debtor from liability to the bank. Union Bank v. Bayley, 10 R. R. 43; Commissioners of the Clinton and Port Hudson Railroad Company v. Reman, 10 R. R., 174 ; re-hearing of same case, 10 R. R. 176. In the latter case the court held, “that the release of a debtor is an act of ownership, which a cashier is not authorised to perform under his general administrative powers.” The cashier being without power to grant such release directly, he cannot do it indirectly, by prolonging the term of payment. If he is without power to grant such a release, a change in the means used will not render the act legal. But, admitting that time was granted to the principal on the bond, and that the act of the cashier was within the scope of his powers, yet the surety has not been released thereby.
    In the case of Bynum v. Jackson, 10 M. R. 424, the court held that “ the appellee,” a surety on a twelve months’ bond, was “liable as upon a final judgment.” An agreement with the principal debtor to grant an extension of time, will not affect the liability of a surety, if such agreement is made after the liability of the parties has been fixed by a final judgment. Louisiana Stale Bank v. Haralson et al., 2d Ann. 456. In the case lust cited, the court considered that tlie endorser was bound, notwithstanding an extension of time had been granted to the principal debtor. The principles settled in that case are applicable to the one now before the court. In that case, the party was not discharged by the indulgence granted to the principal, because such indulgence was granted after the liability of the parties had been fixed by a final judgment. In this case, according to an authority already cited, (10 M. R. 424,) the obligors on the twelve months’ bond became liable, as on a final judgment. Their liability then being the same as that of the defendants in the suit of the Louisiana Stale Ban'/c v. Haralson et al., the defence, which could not avail the defondants in that suit, cannot avail the appellee in this.
    From the principles settled in the case of the Louisiana Slate Bank v. Haralson et al„ we think it fairly deducible, that if the judgment creditor had failed to acquire a right of following the property of his debtor into the hands of third persons, by neglecting to have his judgment recorded, and such failure had been set up by the defendants as a neglect that released them from liability on the judgment, the decision of the court would have overruled the defence. We recur, then, to the second point made in our brief, and applying these principles, contend, that the failure on the part of the creditor to record his bond, and thereby acquire the right of following the property of his debtor into the hands of third persons, is not such laches as will discharge the liability of the surety on the bond ; that liability being the same as if fixed by a final judgment.
   The judgment of the court was pronounced by

Slidell, J.

Perkins was the surety of Hurell, in a twelve months’ bond, executed by the latter, dated in 1835, and bearing five per cent interest, from date. This bond was soon afterwards transferred by the obligee to the Bank of Louisiana. When it matured, an extension of one year was given by the cashier of the branch of the bank, upon payment of a part of the capital, of the interest accrued, and one year’s interest in advance on the balance, at nine per cent. Similar extensions were granted from time to time on similar terms, during a period of several years; and, at length, in 1847, the bank issued execution for the balance of capital due on the bond, and interest from January, 1847, until paid. No assent of the surety to the extension is proved. The surety contends that he has been discharged by these acts of the creditor. There was judgment in his favor in the court below.

It is said, on the part of the bank* that the cashier had no authority to grant the indulgences, and thus impair the rights of the corporation. It is unnecessary to consider the question of original authority. The bank has received the amounts of principal, and nine per cent interest, paid from time to time, and given credit for them. It has taken the benefit of the acts of the agent; and, in so doing has ratified them.

It is said, that where there is a judgment against the surety, the giving time after such judgment to the principal does not discharge the surety. And, assuming this to be the rule, the bank next assumes that Perkins is a judgment debtor, beeause he is a debtor upon a twelve months’ bond. Whether the first proposition is correct, we need not enquire; for the second is not, in our opinion, tenable. A debtor upon a twelve months’ bond is not a judgment debtor. It is true, that upon a twelve months’ bond the creditor may have execution against the purchaser and his surety “in the same manner as on a final judgment.” C. P. 719. But the professions of a single quality of a judgment does not clothe the instrument with all the qualities of a judgment, and superinduce all the legal consequences which pertain to a judgment. For example, it could not be pretended that the recording of a twelve months’ bond in the mortgage office would create a judicial mortgage.

Judgment affirmed, with costs.