Case ID: la-ann_34/html/0907-01.html
Source: Caselaw Access Project
Author: {"author": "Poché, J. Pochií, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 8501.
    Thomas W. Bothick vs. Samuel P. Greves et als.
    An extrajudicial surrender of his property made by a debtor to, and accepted on his conditions by, a portion of his creditors, does not transfer the owneiship of his property to such creditors, nor does it divest his other creditors of th e i ight to participate pro rata in the proeeds of the sale of such property, made by judicial process at the instance of the creditors who had formally accepted the surrender and conditions of the debtor.
    The title of any creditor to a judgment against the debtor, and who claims his share of the assets, cannot be inquired into collaterally, without making the alleged owner a party to the suit.
    APPEAL from the Seventeenth Judicial District Court, Parish of East Baton Rouge. Sherburne, J.
    
      Herron & Beale and G-. W. Buckner, for Plaintiff and Appellee :
    The Code of Practice, Arts. 306, 400, 401, authorize proceedings such as these, where plaintiff claims to be entitled to a privilege on the proceeds of sale, up to his pro rata share thereof.
    The purchaser of a judgment takes with the judgment all its accessories and securities. Hennen’s Digest, Sale III, b. 2, B.; Louque, same reference, Execution, Y, d. 12, Louque, p.640.
    Prescription of one, two and three years not applicable to claim against agent.
    No prescription runs in favor of agent as to things that he holds for another. B. G. C. 5510. Where the claim is for the debt of a sura of money, ten years prescribes.
    The Board of Liquidators can stand in judgment in this suit, as they were clothed with power to sue and be sued, and have exercised that authority continuously ever since their appointment. »
    The creditors under the transfer of property made by agent, stand alike as to whether they' were creditors of the new or old firm or individual creditors. The evidence in this case shows that nearly all of the property belongs either to the old firm or its individual members. Insolvency has nothiiig to do with their case.
    
      Sam’l P. G-reves and G. B. Bavrot, for Defendants and Appellants :
    There is no law nor precedent for the form of action adopted by the plaintiff in this case. The Code of Practice clearly announces that this form of action can be resorted to only in two cases: where the opponent claims the ownership of the property seized, and where he claims a supeiior privilege on the proceeds of the sale. See C. P. under the head of third opposition, 30 An. 146.
    In case of allegation of supeiior privilege, Art. 401, C. P. requires the further allegation that the debtor has not sufficient ofother property to satisfy the demand of opponent. See also G. P. 301.
    The allegation of superior privileges ratifies the sale, the judgment and all the proceedings prior to judgment, and opponents are estopped from contesting any and all the proceedings, and of the acts and allegations of the parties to the suit and judgment.
    The Board of Liquidators were not parties to suit 2,710, and could not stand in judgment in this suit; consequently their exception should have been sustained, and their suit dismissed.
    The cieditors of the new firm have a supeiior privilege upon its assets over the creditors of the old firm.
    Insolvency is never presumed. It must be alleged and proven, otherwise the action will not lie, the plaintiffs showing no interest.
   The opinion of the Court was delivered by

Poché, J.

The present controversy is one of the many cases winch have arisen from the failure in business of Hart & Hébert, formerly bankers in Baton Rouge, and turns substantially on the following facts:

At the time of their failure, in October, 1875, Hart & Hébert made a voluntary surrender of their property to their creditors, under certain conditions, which were accepted by all their creditors, except twenty-two.

The accepting creditors appointed a committee of seven, with full power to accept said surrender, and to dispose of the property for the benefit of creditors.

Subsequently, these creditors who liad formally accepted the debtors’ surrender and their conditions, instituted among themselves an action in partition for the sale of the property of Hart & Hébert, with a view to a distribution of the proceeds among themselves, and a judgment was rendered ordering- the sale and the distribution prayed for, to be made under the supervision and control of the committee which is styled the “ Board of Liquidators of Hart & Hébert.”

Plaintiff in this case, who owns a judgment obtained against Hart & Hébert by Pike, Brother & Co., based on a note secured by mortgage on certain property of Hart & Hébert, granted before their failure, and who is a creditor for a residue on said note, after foreclosure on the property mortgaged, has filed a third opposition in the partition of the accepting creditors inter sese, for the purpose of being paid his pro rata in the proposed distribution of the proceeds of the property of Hart & Hebert, and he has prayed for citation on the Board of Liquidators through their president. The latter excepted, on the ground of his want of authority to stand in judgment for his former constituents, the accepting creditors, who had resumed for themselves the administration of Hart & Ilóbert’s property, and were the only parties in the suit for partition.

•The defects pointed out by this exception and by all the objections urged to the form of plaintiff’s present proceedings, have been cured by the intervention of H. Badley and all the other creditors who were parties to the partition suit, and who have thus formally joined issue with plaintiff on the relief which he seeks through this proceeding.

These intervenors, joined by the Board of Liquidators in the answer of the president, resist plaintiff’s demand on several grounds, which we shall consider seriatim.

Many of their grounds resolve themselves into an argument that plaintiff, as subrogee of Pike, Brother & Co., has no right to participate in the proceeds of the property surrendered by Hart & Hebert, by reason of the refusal of Pike, Brother & Co. to accept said surrender, which was therefore made for the exclusive benefit of those creditors who accepted under the conditions prescribed by the debtor, and on the additional ground that their claim is prescribed. We do not construe the transfer of Hart & Hébert as importing such an exclusion, and. we hold that such an intention on their part, even if manifested in the act of transfer, could not be sustained in law. No debtor in failing circumstances could, by means of a voluntary surrender of his property to certain creditors, on condition of a discharge from their claim, defeat the legal recourse of his other creditors on his property thus surrendered, which yet, remains the common pledge of his creditors.

This transfer of Hart & Hébert, has twice received judicial interpretation in this Court, where it. has been defined to be but a security for the payment of debts, coui>led with the power to sell the property, for the purpose of securing the creditors. 30 An. 868 ; 33 An. 474.

The plea of prescription cannot prevail against the creditor owning a judgment rendered in 1877, less than ten years preceding- this suit.. Intervenors’ denial of the ownership-of plaintiff of the Pike judgment, on the ground that it had been transferred to A. Baldwin by the original owner, is met by the fact, that Baldwin does not complain and is not a party to this suit; hence, he cannot be bound by the judgment herein, and his rights, if any he has, will be considered whenever he urges them and, therefore, these intervenors cannot- be heard to champion them.

' The same answer applies to the objection that the rights of G-. A. Pike, as a member of Pike, Brother & Co., to the judgment have never been acquired by plaintiff, whose title is not opposed by G-. A. Pike.

To the objection, that since the date of the mortgage of Hart & Hebert to Pike, Brother & Co., the former firm had been changed by the admission of a new member, Hugnot, we answer that the property surrendered was owned almost exclusively by the first firm, and urge the fact that such a defense should have been made and could have been heard only in the suit’of Pike, Brother & Co. vs. Hart & Hebert.

We have carefully considered and maturely weighed the numerous objections urged against the right of this creditor to claim hisjwo rata share in the distribution of the, assets of his insolvent debtors,.which was recognized by the judgment in the lower court, and we find none sufficient to justify a reversal of that judgment.

It is, therefore, ordered, adjudged and decreed, that the judgment appealed from be affirmed at appellants’ costs.

On Application for Rehearing.

Pochií, J.

In our decree affirming the judgment of the Court a qua, we recognized the right of plaintiff to participate with Hart & Hébert’s other creditors in the distribution of their assets, and by an oversight, we omitted to correct errors of calculation made by the District Judge, in fixing the share of such assets accruing to plaintiff, and partially admitted by the latter’s counsel, to which our attention has been called by defendants’ counsel in an application for rehearing.

The practical effect.of our judgment is intended to place plaintiff, Bothick, on the same footing with all the creditors of Hart & Hebert, in the proceeds realized or to be realized from the sale of the property surrendered by them for the benefit of their creditors.

Justice, therefore, requires an amendment of our decree, and as comidicated calculations are necessary for the purpose of determining the precise amount to which plaintiff is entitled as his share in said fund, we conclude that this branch of the case should be referred to the District Court, and our former decree is therefore set aside.

And it is now ordered that so much of the judgment appealed from as adjudicates the special amounts to be received by plaintiff from the-defendants be annulled, avoided andreversed; and it is further ordered that-in so far as said judgment recognizes and enforces the right of plaintiff to- participate pro rata with other creditors of Hart & Hebert, in the proceeds of the sale of the property of said I-Iart & Hebert, as well of the funds already distributed as those to be distributed by defendants among creditors, it be affirmed; and it is ordered that the case be remanded to the lower court for the purpose of making such distribution in accordance with the views expressed in this opinion. Opsts of appeal to be paid by plaintiff.

Eehearing refused.

Levy, J., absent.