Case ID: la-ann_27/html/0607-01.html
Source: Caselaw Access Project
Author: {"author": "Morgan, J. Wyly, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 486.
    John Chaffe & Brother v. John T. Ludeling et als. W. J. Q. Baker, intervenor.
    This court is satisfied that the document sued on is the property of plaintiffs and not of the intervenors, by whom it was transferred, and not merely pledged to plaintiffs, as he alleges, to guarantee the payment of the indebtedness of a third party.
    The position taken by the intervenor that the obligation sued on was not stamped when it was delivered to plaintiffs, and that it is therefore a nudum pactum, is entirely untenable. If he gave them the obligation without being stamped when stamps should by law have been placed upon it, it was a wrong doing of his own from which he can draw no protection. Besides, the plaintiffs had the right to cause the required stamps to be put upon it. The requirements of the law are complied with, if the stamps are on the obligation, when sought to be enforced.
    Allegations that intervenor, when he parted with the obligation, which was negotiable, and of which he claims the ownership, did so despite the agreement he was under with his associates to keep it out of commerce, can do him no good, and he can not be listened to on this point.
    It is conceded that the defendants, with others, at sheriff’s sale, purchased all the rights, privileges, franchises and other property belonging to the Yicksburg, Shreveport and Texas Eailroad Company. This company was a corporation established by law. As a corporation thus established, its members were not personally responsible for the debts of the company beyond the amount of stock which they individually held.
    As to the defendants, they did not acquire by their purchase the immunity of the stockholders of that company from liability beyond the amount of their stock. This purchase conveyed to them all the rights, privileges, franchises and other property of said company ; but it did not and could not make them a corporation, for corporations are created only by special act of the Legislature, or in the manner provided for by law. As regards the rights, privileges, franchises and other property of the company aforesaid, the purchase made defendants joint owners thereof and nothing else. It did not make them that company.
    If, as alleged, the ratification of the sale by the State constituted them a corporation, their corporate rights would take effect only from the passage of the act. But the act was passed subsequently to the publishing of the instrument sued upon. The rights of the holders of the obligation lmd vested, and the Legislature could not shake them.
    Defendants’ plea that the obligation sued on purports tp have been issued by the Yicksburg, Shreveport and Texas Eailroad Company, and therefore that they, the defendants, can not be liable individually, does not protect them. Obligors are hound not by the style which they give to themselves, but by the consequences which they incur by reason of their acts.
    It was sufficient that the instrument sued upon was stamped when offered in evidence.
    This court can neither add to the law nor take from it, and as the law limits the solidarity of obligors ongaged iu carrying personal property for hire to that property which is earned on ships, or other vessels, it can not be extended to those who carry it on a railroad. Hence the defendants are liable jointly, and not in solido.
    
    It appears that others besides the present defendants are the owners of this road. Their names were given to the plaintiffs by the defendants. Tbey should have been made parties to the suit. The owners are nine in number. Judgment is therefore rendered in favor of the plaintiffs and againat the defendants for the proportion due by each.
    APPEAL from the ■ Fourteenth Judicial District Court, parish of Ouachita.
    
      Robert J. Oaldivell, attorney at-law, selected to try this case. Morrison & Farmer, for plaintiffs and appellees. W. J. Q. Balter, in propria persona, intervenor and appellant. Franlc B. Stubbs, for defendants and appellants.
   Morgan, J.

John T. Ludeling, John Ray, Francis P. Stubbs and William R. Gordon, are sought to be made responsible in solido upon the following instrument:

Office of the Vicksburg, Shreveport and Texas Railroad Company, $5168 08. Monroe, La., November 6, 1866.

On or before the third February, 1869, the Vicksburg, Shreveport and Texas Railroad Company will pay to the order of Wesley J. Q. Baker five thousand one hundred and sixty-eight dollars and eight cents, value received, with eight per cent, interest per annum from the third day of February, 1866, till paid, payable annually.

Signed, JOHN T. LUDELING, President.
Attest:
Jos* P. McGuire, Secretary.

Defendants’ responsibility is claimed upon the allegations that on the third February, 1866, they purchased the Vicksburg, Shreveport and Texas Railroad at sheriff’s sale, and that previous to the purchase they formed themselves into an association for the purpose of buying the railroad in question and operating it in carrying freight and passengers for hire. This, plaintiffs say, constituted them common carriers and commercial partners. Upon this ground judgment is asked against them in solido.

Defendants excepted, first, that the maker of the instrument, the Vicksburg, Shreveport and Texas Railroad Company, a corporation created by and according to law, is alone liable thereon, and not the individual stockholders, of whom defendants are only a portion; second, that defendants, if liable at all, are only jointly so with all the other stockholders of the company, who have not been sued ; third, they plead the prescription of three and five years. The exceptions were overruled, and, without waiving them, but on the contrary reiterating them, they answered, admitting that the obligation sued on was signed by Ludeling as President of the Vicksburg, Shreveport and Texas Railroad Company, “a company chartered by the acts of the Legislature of the State of Louisiana, and that it was countersigned by the Secretary of said company, who affixed the seal of the company thereto, but they deny that they are or ever were individually liable in any manner under said obligation.”

■ As between the plaintiffs and the defendants the serious questions presented for our solution are—

Mrst — Are the defendants, individually, liable on the obligation sued upon Í

Second — If liable at all, is their liability solidary or joint ?

Before entering upon the consideration of these questions, we must investigate the pretensions of the intervenor W. J. Q. Baker. He alleges that he, and not the plaintiff, is the owner of the obligation sued on. If he is, of course the suit is at an end. He alleges that the obligation was made in his favor and intended to be between them and the defendants and others a statement of accounts among themselves; that when he gave it to plaintiffs it was not stamped, and that they were never authorized to put stamps upon it. He shows that it was given to plaintiffs by him as security for a debt due by Mrs. Wilson ; that this debt of Mrs. Wilson was never ascertained; that if it ever existed it is extinguished by payment and prescription; that they took no steps to secure the debt or keep it alive, and made no effort to protect the surety, and abandoned the whole claim; that they have no right to bring this suit until they have shown contradictorily with Mrs. Wilson the amount of her indebtedness. He prays that the suit be dismissed; that the indebtedness of Mrs. Wilson be declared prescribed and discharged by her bankruptcy, and, if the suit is not dismissed, that the obligation sued on be declared to be his property, and that it be delivered to him.

Baker was the holder of the document sued upon. It was made payable to his order. It was in negotiable form. He does not deny having pledged it to the plaintiff. It was pledged to secure the debt of a third party. But the act of pledge was a voluntary one on his part, and it was competent for him to make it. The indebtedness for which it was pledged was acknowledged by him, aud it had been contracted by him. He can not be listened to now when he denies it.

The evidence satisfies us also that he subsequently transferred the obligation which had before been pledged to the plaintiffs in full property and in satisfaction of this indebtedness. He swears he did not. But his testimony is contradicted by several witnesses. Shortly after the transfer he went into bankruptcy. To enable him to receive the benefit of the bankrupt law, it was necessary that he should file a schedule of all his property, and to swear to the fidelity of his return. If the obligation sued on was only in pledge with the plaintiffs, it was still owned by him. He had a residuary interest in it, and upon his, or his assignee, paying the amount for which it stood pledged, it would have been returned to him or to his assignee. He did not place it upon his schedule. As he swore to the truth of his return, if he did not place it on that return, the only charitable conclusion that we can come to is that it was not his property.

His position that, because the Obligation sued on was not stamped when it was delivered to the plaintiffs, it is therefore a nudum pactum, is entirely untenable. If he gave them the obligation without being stamped when stamps should by law have been placed upon it, it was a wrong doing of his own from which he can draw no protection. Besides, the plaintiffs had the right to cause the required stamps to be placed upon it. The ^requirements of the law are complied with if the stamps are upon it when it is sought to be enforced. It is sufficient for us to know that they are upon it when the case comes before us for investigation. The statement that, when the obligation was given to him it was not stamped because it was only intended as a memoranda of settlement between himself and those interested with him in the railroad, and that they were purposely left off it, that it should not be negotiated or transferred, does him no good. It only shows that he parted with the obligation despite the agreement he was under with his associates to keep it out of commerce. Under no hypothesis can he be listened to when he claims ownership of the obligation. His intervention, therefore, must be dismissed.

This brings us to the case between the plaintiffs and the defendants.

It is conceded that the defendants, with others, bought at sheriff’s sale the property of the Vicksburg, Shreveport and Texas Railroad. To state the case more broadly, it is conceded that the defendants, with others, at sheriff’s sale purchased all the rights, privileges, franchises and property belonging to the Vickburg, Shreveport and Texas Railroad Company. This company was a corporation established by law. As a corporation thus established its members were not personally responsible for the debts of the company beyond the amount of stock which they individually held.

Now the question propounded to us is: When Ludeling and others purchased the rights, privileges, franchises and property belonging to the Vicksburg, Shreveport and Texas Railroad, did the immunity of the stockholders of that company from liability beyond the amount of their stock attach to them ?

The question, we think, must be answered in the negative. The purchase of Ludeling and his associates conveyed to them all the property of the corporation which was sold by the sheriff. It conveyed to them the privileges and the franchise of the corporation, its powers to operate the railroad, etc.' The sheriff’s sale made them the owners of the road, its right of way, its property, its franchise, but it did not, and could not, make of them a corporation, for corporations are created only by special act of the Legislature or by associations under the general law regulating the mode in winch corporations are formed. This sale conveyed to them the title to the rights and property of the company, but, as regards those rights and that property, it made them joint owners thereof, and nothing else. In other words, the sheriff’s sale to Ludeling and his associates of the property, rights, privileges and franchise of the Vicksburg, Shreveport and Texas Railroad Company did not make of them that company. It only conveyed to them, in joint ownership, the property which they bought.

It is contended that the Legislature of the State, by subsequent act, ratified this sale. This is true. But no one here disputes the verity or validity of the sale. If this act of ratification, besides the ratification, constituted them a corporation, their corporate rights would take effect only from the passage of the act. The act was passed subsequent to the publishing of the instrument sued upon. Its effect was not and could not be retroactive. The rights of the holders of the obligation had vested, and the Legislature could not shake them.

The defendants have referred us to many decisions of the courts of England and of our sister States, collected in Redfield on Railways, in support of their defense. So far as we have been enabled to examine them, they do not apply. They relate to the power to sell railroads under mortgages, their franchises, and the right to operate them, none of which are questioned in this controversy.

They also contend that the obligation sued on purports to have been issued by the Vicksburg, Shreveport and Texas Railroad Company^ and therefore payment can not be exacted of them individually. This does not, in our opinion, protect them. Obligors are bound not by the style which they give to themselves, but by the consequences which they incur by reason of their acts. It matters not what they chose to call themselves. The question is, how do their acts bind them ?

They next contend that the document sued on should not have been received in evidence, because it was not property stamped when issued. It was stamped when it was offered in evidence, and this we think is sufficient. The last defense set up is prescription. But it was not urged in argument, and it can not avail them. The note was due in February, 1869; this suit was instituted in'I878. The only remaining question is the extent of the defendants’ liability. Are they bound solidarity or jointly 9

Plaintiffs contend that they are each bound for the entire debt, they being engaged in carrying personal property for hire. The code declares that commercial partners are those who are engaged in “ carrying personal property for hire in ships or other vessels.”

In this sense we understand vessel to mean any structure which is made to float upon the water, for purposes of commerce or war, whether impelled by wind, steam or oars. Vide Webster’s dictionary, verbo: vessel.

Now it seems absurd that, if two or more persons should associate themselves together for the purpose of conveying personal property for hire between two points on some of the streams in Louisiana too shallow for navigation except in small boats prbpelled by oars, they would be bound, with regard to everything connected with such employment, in solido, while the operators of a railroad are only bound jointly. But we can neither add to the law nor take from it, and as the law limits the solidarity of obligors engaged in carrying personal property for hire to that property which is carried on ships or other vessels, we can not extend it to those who carry it on a railroad. We therefore conclude that the defendants are liable jointly and not in solido.

Now it appears that others besides the present defendants, are owners of this road. Their names were given to the plaintiffs by the defendants. They should have been made parties to the suit. The owners are nine in number. Judgment must therefore be rendered in favor of the plaintiffs and against these defendants for the proportion due by each.

It is therefore ordered that the judgment of the district court be amended, and that each of the defendants herein pay one-ninth part of the judgment herein, and as amended the judgment be affirmed, appellees to pay costs of appeal.

Wyly, J.,

concurring. The plaintiffs sue the defendants, John T. Ludeling, John Eay, Francis P. Stubbs and William E. Gordon, on the following instrument:

“ Office of the Vicksburg, Shreveport and Texas Eailroad Company, $5168 08. Monroe, La., November 6,1866.
“ On or before the third day of February, 1869, the Vicksburg, Shreveport and Texas Eailroad Company will pay to the order of Wesley J. Q. Baker five thousand one hundred and sixty-eight dollars and eight cents, value received, with eight per cent interest per annum from the third day of February, 1866, till paid, payable annually.
“ JOHN T. LUDELING, President.
“Attest: Jos. F. McGuire, Secretary.”

They allege that said defendants and their associates on the third day of February, 1866, “ purchased the Vicksburg, Shreveport and Texas Eailroad at sheriff’s sale, with all its rights, privileges, franchises, locomotives, cars,” etc.; that previous to said purchase they formed themselves into an association for the purpose of buying said railroad and operating it in carrying freight and passengers for hire as common carriers and commercial partners; that, immediately after said purchase, they took possession of and operated the railroad in said capacity, sometimes under the name of John T. Ludeling and associates, at other times under the name of the Vicksburg, Shreveport and Texas Eailroad Company. They further allege that, by their repeated acknowledgments and deelarations, the defendants induced others, as well as your petitioners, to deal with them and accept their paper under the assurance that they were bound in solido, thereby assuming this responsibility toward third’ persons; that while the defendants were so associated together for the purpose aforesaid, they issued the promissory note sued on. They further allege that said John T. Ludeling was by the consent and authorization of the defendants authorized and empowered to execute said note,'for which they are bound in solido to petitioners, who acquired it for value before due. The prayer of the petition is for judgment in solido against the defendants for the amount of said note.

Defendants, in a peremptory exception, urged—

First — That the maker of the instrument, the Yicksburg, Shreveport and Texas Eailroad Company, a corporation created by, and according to law, is alone liable thereon, and not the individual stockholders, of whom defendants are only a portion.

Second — That defendants, if liable at all, are only jointly so with all the other stockholders of the company, who have not been sued, and whose names are disclosed in the exception.

The exception being overruled, defendants, reiterating the same defenses in their answer, further deny that the plaintiffs arc the legal owners or holders of the paper, and in good faith. They aver that Baker made a surrender in bankruptcy, and though this was not placed upon his schedule of assets, nor taken possession of by the assignee, E. E. Norton — yet, that it was legally the property of said assignee; that defendants had equities against said Baker, and plaintiffs held other collaterals for the debt of Mrs. Wilson, for whose debt to them the note sued on was delivered to them to secure. They set up the circumstance under which this paper was executed — as being when the purchasers of the railroad agreed among themselves to bid for the property, each of them paid into a common fund the sums they had agreed to furnish, respectively, with the agreement that whatever balances might remain after the purchase was complete the same should be loaned to the company for repair and construction purposes; that among the various balances was the sum of the paper sued on in favor of Baker, and all the other purchasers had similar papers executed for the balances respectively due them, which it was agreed among all should be held as simple memoranda of the agreement, and that purposely, and to prevent their use, none of these several instruments were stamped with the United States revenue stamps, necessary for the validity of a promissory note; and that the said note sued on is extinguished by compensation between the purchasers, who- hold similar obligations, in the event they, and not the Yicksburg, Shreveport and Texas Eailroad Company, are held liable, which however they deny.

W. J. Q. Baker intervened and claimed the ownership of the note in suit. The court gave judgment dismissing the intervention and condemning the defendants as- prayed for. The defendants and the intervention have appealed.

The defendants contend that, by their judicial admission in this case, the plaintiffs are estopped from denying their authorities to act under the charter of the Vicksburg, Shreveport and Texas Railroad Company and to execute the note sued on in the name of said corporation •, and therefore the defendants’ exception that the suit should have been brought against said corporation and not against them, the individual stockholders, should have been maintained and the suit dismissed.

The judicial admission relied on is the averment in plaintiffs’ petition that the “ said defendants and their associates on third February, 1866, purchased the Vicksburg, Shreveport and Texas Railroad at sheriff’s sale, with all its rights, privileges, franchises, locomotives, cars,” etc.

This is an admission that the defendants bought all the property of the corporation; but it is not a judicial admission that they became thereby the corporation itself, acquiring power to bind it by issuing obligations or notes of the kind in suif.

On the contrary, in other allegations of their petition, the plaintiffs aver that the defendants were operating said railroad merely as common carriers and commercial partners at the time they executed said notes; and it was for this reason that suit was brought against the defendants individually. The plaintiffs have not judicially admitted that the defendants, when they executed the note in the name of the Vicksburg, Shreveport and Texas Railroad, represented that corporation and had authority to execute the note in behalf thereof. The court did not err in overruling the exception to the form of the action. The note was executed by the defendants; it matters not what name they assumed for their firm or association. It was not the obligation of the insolvent corporation, the Vicksburg, Shreveport and Texas Railroad, whose property the defendants acquired at sheriffs sale on third February, 1866. They purchased the property of the juridical person, but not the being itself. The defendants contend that the plaintiffs are without interest and can not raise the question whether they represented the Vicksburg, Shreveport and Texas Railroad when they executed the note in suit. In pursuing the makers of the obligation the plaintiffs have an interest (when met by the objection that the note is not theirs but that of a certain railroad corporation), to deny that it was issued by such corporation, to deny that the defendants had authority to represent said corporation in issuing said note, and to show that they issued it merely as a firm or commercial partnership.

In order to make out their ease the plaintiffs clearly had the right to show that the defendants contracted the obligation as a firm or partnership and not as a railroad corporation, because they never had authority as such. In order to determine whether the equities set up by the defendants can be considered, it becomes important to ascertain whether the plaintiffs acquired it as owners or as pledgees before due and for value in due course of trade. They acquired it as pledgees before due, as will appear by the following document:

“ New Orleans, January 27, 1868.
“Received from W. J. Q. Baker a note of hand made by Eliza W. Warfield, dated May 3, 1867, for five thousand dollars, due and payable five years after date, bearing eight per cent, per annum interest, and said interest payable annually, paraphed ne varietur, June 3, 1867. Also a note signed by John T. Ludeling as President of the Vicksburg, and Texas Railroad Company, for five thousand and one hundred and sixty-eight dollars and eight cents, dated November 6, 1866, and payable on the third of February, 1869, to the order of Wesley J. Q. Baker and by him indorsed, said note drawing interest at eight per cent, per annum from the third day of February, 1866, until paid, interest payable annually; which notes are held as collateral security for the indebtedness of Mrs. N. J. Wilson, which indebtedness was contracted by the said W. J. Q. Baker. JOHN CHAFFE & BRO.”

The defendants contend that the debt for which the tote was given in pledge was suffered to prescribe; and with the prescription of the principal debt, the right of the plaintiffs as pledgees ceased, and the note belongs to the pledger Baker, or his assignee in bankruptcy, against whom the equities they set up can be established.

To this the reply is that the indebtedness of Mrs. Wilson is not prescribed, because before prescription had acquired she made a voluntary surrender of her property in bankruptcy, placing, plaintiffs on the schedule of her creditors for $10,000, and this was a most solemn acknowledgment and judicial admission of the debt; and since then prescription has not acquired.

The defendants contend that plaintiffs’ claim is described on the schedule of Mrs. Wilson as being evidenced by two promissory notes for $5000 each, dated twenty-seventh February, 1867, whereas their claim is an account; therefore the acknowledgment referred to did not arrest the current of prescription.

The plaintiffs were the factors of Mrs. Wilson and kept an account against her. The two notes referred to in the schedule are items in that account. Instead of acknowledging the "whole account, the'bankrupt chose to acknowledge two items thereof.

If all the other items of the account were incorrect, certainly in the most solemn manner she has judicially admitted the correctness of those items, the two notes of $5000 each ; and undoubtedly the current of prescription was arrested in regard to that part of the indebtedness of Mrs. Wilson to plaintiffs. And as long as there was an indebtedness or any part thereof, the pledge given by Baker remained in force.

The pledge was given to secure the indebtedness of Mrs. Wilson to plaintiffs, it matters not how evidenced ; and my conclusion is that it remains unimpaired and in full force. Besides, I am satisfied from the evidence that Baker transferred the note to plaintiffs in settlement of the debt for which it was pledged. The want of stamps on the note, if it be true it was not stamped, did not affect its negotiability or impair the pledge.

The time to raise that objection was when it was offered in evidence in this case, at which time it was properly stamped. The note having passed into plaintiffs’ hands before due, the equities set up by defendafits can not be considered.

The unincorporated association of which defendants were members, although engaged in carrying persons and freight tor hire on their railroad, was not a commercial partnership. It is only the carrying of personal property for hire in ships or other vessels by a partnership that makes it a commercial one. Revised Code, 2825. The defendants are therefore not bound in solido.

The judgment appealed from should therefore be amended so as to make the defendants jointly liable instead of solidarity.

For the foregoing reasons I concur in the decree rendered in this case.