Case ID: la-ann_34/html/0998-01.html
Source: Caselaw Access Project
Author: {"author": "Pocino, J. Told, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 1054.
    J. H. Mitchell, Tutor, et al. vs. W. S. Logan, Sheriff, et al.
    Hotes executed by a stockholder of the Citizens’ Bank to represent a stock loan, identified by authentic act with the original stock mortgage, are fully secured by the stock mortgage, which is binding as a loan mortgage, even on third parties, without an inscription of tlie new act in the proper office.
    The failure, neglect or refusal of a stockholder of that Bank to pay the stipulated instalment and interest on his loan when due, operates of itself a forfeiture of his right to renew his stock loan note, which thence becomes due and exigible, according to law, in capital and interest of ten per cent.
    An order of seizure and sale is not a judgment in tho legal sense of the term.
    Its only element, in common with a judgment, is the fact of its being liable to be reviewed on appeal.
    APPEAL from the Fifth District Court, Parish of Ouachita. Bichardson, J.
    
      B. G. Cobb and B. Bichardson, for Plaintiffs and Appellants :
    1. Tlie clerk has no power to vary or change the terms of an order of the Judge, in an order of seizure and sale, in the writ issued by him to the sheriff, under such order, directing the sale of the mortgaged property. He can neither increase or diminish the quantity of land or other property ordered to he sold, nor amount of money decreed to he due hy the Judge. The clerk is merely a ministerial officer.
    2. An order of seizure and sale granted hy the Judge, directing the sale of property, described as 1340 and 46-100 acres, on 0. river, mortgaged hy D., and other land situated at junction of bayous B. and DeS., 15 miles distant, mortgaged by D. & B., a planting partnership owning and working landand slaves, for a different and unconnected matters and purposes, in globo, to pay different debts, is illegal.
    3. That where there are two mortgages executed, one hy an individual and tho other hy a partnership, of whom said individual is a member, to the Citizens’ Bank, to secure stock subscriptions, said mortgage, being entirely independent of and unconnected with each other, the Bank cannot consolidate the indebtedness resulting from loans made under separate pledges of stock issued to the individual and partnership, in a proceeding against the individual. Different orders of sale must issue on the different mortgages. C. P. 732, et seq.
    
    
      4. Prescription of.10 years runs against a judgment in favor of the Citizens’ Bank, resulting from an order of seizure and sale duly signed and notice served, granted on petition with notes attached, and if said period elapse without executing or reviving the judgment, no new order or judgment can be rendered on same notes for same debt. C. C. 3347 ; 12 M. 696; 6 An. 447.
    5. There is nothing in the charter of the Citizens’Bank, or acts amendatory thereof, that exempts them from pursuing tho same formalities in obtaining and executing orders of sale on the mortgaged property of tlieir subscribers, that others are compelled to follow.
    6. When notes are given to the Bank for loans undecamortgage given for stock subscription, but at subsequent dates, and said notes or obligations are not recorded in tlie parish where the property is situated, nor any authentic act showing the amount of loans, third possessors and owners of the mortgaged property will only be affected by the stock mortgage for contributions on stock.
    7. Where the stock subscriber and loan debtor was a resident within the Confederate lines from 1861 till cessation of hostilities, the Bank could not capitalize the whole debt and charge interest at 10 per cent, from last payment, under lltli Section of Charter. Such cax)italization can only take place after judicial demand hy the Bank for payment.
    
      
      F. F. Stubbs, for Defendants and Appellees :
    1. Under the charter of the Citizens’ Bank-antl the mortgage contracts, the failure to meet the instalments of stock notes as they matured, places the debtor in default, and the whole loan, becomes exigible, with 10 per cent, interest from that date. -See. 24, 11.
    2. Any payments thereafter made are imputable to the interest, and nothing to the principal, until the entire interest is discharged.
    3. Two distinct tracts being mortgaged to secuio the stock notes, one for all of them and the other for only a portion, that hound for the whole may be first seized and sold for the debt and without seizing the other. The mortgagor cannot complain that only a part of the mortgaged property was seized. 3 La. 234.
    4. Executory process is not properly a suit, but merely the aid of judicial power to give force aud effect to what is equivalent to a judgment confessed, aud an order of seizure and sale is not a judgment in the true and legal sense of the term. 16 La. 254; 13 An. 256; 18 An. 186.
   The opinion of the Court was delivered by

Pocino, J.

Plaintiffs, as third possessor's of several tracts of land, formerly part of a larger tract owned by S. W. Downs, are seeking, by injunction, to arrest the sale of their property, seized under executory process at the instance of the Citizens’ Bank, under a stock loan mortgage, granted by said Downs, when he was the owner of said large tract of land.

In the case of the Citizens’ Bank vs. S. W. Downs et al., in which the order of seizure and sale complained of issued in March, 1879, the plaintiffs in this suit, defendants in the other, had taken an appeal to this Court, which maintained the executory process, in an elaborate opinion, in which is found a full and complete statement of facts, and a history of the claim urged by the Citizens’ Bank, under the law which incorporated that institution, and endowed it with unusual powers and prerogatives.

That opinion, rendered in 1879, by our immediate predecessors, to be found in the Opinion Book of the Court at this place, p. 536, has been of great assistance to us in the consideration and determination of the numerous points raised in the present case, which are ten in number, and are substantially as follows :

1. That there were two tracts mortgaged, viz: that owned by them, the original Downs’ Home Place and the Island Placo; that both were described in the Bank’s petition for the order of seizure and sale, and 227 shares of stock, alleged to be pledged, and that the clerk, in the writ, had only directed the seizure aud sale of the Downs’ Home Place, and 170 shares of the stock.

2. They deny that there is or over has been any mortgage to secure the six notes, bonds or obligations, or that said mortgage has ever been registered in Ouachita; and that if any such mortgage exists, they are third possessors without notice, and not hound.

3. That the notes are only an ordinary debt of Gen. Downs.

4. No writ of seizure and sale can issue on a stock mortgage.

5. By permitting the sale of the Arpen Tract, a part of the Island, property originally mortgaged, they released all the other property from liability for their claims.

6. That one-half the loan was secured by the mortgages on the Downs’ Home property, and that has been long since extinguished by Downs’ payments.

7. ■ That the Bank had no right to declare Downs in default, and charge him with ten per cent., etc. j that Downs was in the Confederate lines, etc.

8. That it was merged into judgment in 1868, and prescribed by ten years.

9. That the clerk had no right to change the terms of the writ from the order of seizure and sale, and direct less to be seized than the Judge had ordered.

10. Prescription against the calls duein 1873,1876 and 1878, of three, five and ten years.

First and Ninth. The first and ninth grounds, presenting one and the same point, will be considered together.

The record shows, that by means of two different contracts, Downs acquired two hundred and twenty-five shares of the Citizens’ Bank stock, and that in another act, by himself and his planting partner, he acquired seventy-five more shares; that the stock purchased by him individually, was secured by mortgage on the property now owned by plaintiffs in this suit, and the other stock was secured on other lands owned by the partnership. After the dissolution of the partnership, Downs remained the owner of 300 shares, of which 225 were secured on his Home Place, and the balance, (75) on the former partnership property, known as the Island property.

Under the charter of the Bank, and as amended by subsequent legislation, his shares were reduced to 227, affecting his property in the proportion of one-fourth on the Island Place, and three-fourths on the Home Place.

During the years 1837, 1833 and 1839, while Downs owned 243 shares of stock, he exercised his right, under the charter, of obtaining loans from the Bank, which loans aggregated the sum of $11,190, represented by six notes of various amounts, and which were, by payments, conformably to the charter, reduced to $5,818.60, to enforce the payment of which balance the executory process herein enjoined was resorted to by the Bank.

Under the law, the contract and the charter, the Bank was entitled to the seizure of all the tracts of land subject to its mortgage, as ordered in the order of seizure and sale, and as decided by our immediate predecessors, in the decision on the appeal above referred to. Holding- such an order, a seizing creditor lias the undoubted legal right to direct and control its execution, and to restrict the first levy to a portion only of the lands ordered to be seized by the order of the Judge.

If Downs were living, and yet the owner of these several tracts of land, he certainly could not complain that all of the mortgaged prop; erty had not been seized. Gaiennie vs. Questi, 3 La. 434.

It is difficult to conceive what greater rights have been acquired by the present owners, holding under his titles, subject to the mortgages existing previous to their purchase.

The objection that the seized debtors are not given all the credits to which they claim to be entitled, cannot justify an injunction of the entire seizure, especially as the evidence fails to show, to our satisfaction, that the seizing creditor had failed to allow them credit for all sums paid by their veudor and his author.

The act of the clerk, in compliance with the seizing creditor’s request, in directing the sheriff to seize less property than the order of seizure and sale called for, cannot be considered as an attempt to alter or change the order of the Judge, and is far from presenting an instance of “ a monstrous usurpation of authority,” as charged by plaintiffs’ counsel. In so doing, the clerk merely carried out the legal intention of the seizing creditor.

Second. Under the charter of the Rank, it is specially stipulated that the stock nnjj.'tgage required of all the shareholders, shall stand as full security for the loan or loans, and the interest thereon, which stockholders may obtain from the institution; and hence, it required no special act of mortgage to create the contemplated security for stock loan notes, which were, by notarial act, identified with the original act of stock mortgage.

It is now judicially settled, that the inscription of the act or acts of mortgage, in which it was stipulated that the stockholder shall be entitled to a credit equal to one-half of the total amount of his stock, is sufficient to create the loan mortgage, even as to third parties. Charter, Sec. 11; 2 An. 249 ; 3 An. 112, 063.

Third. The notes executed by Downs, under those circumstances, became, for those reasons, stock loan notes, and are secured by the mortgage stipulated in the charter; and it is, therefore, erroneous to charge that they were ordinary debts of Downs.

Fourth. We know of no law which deprives the corporation holding stock, or stock loan mortgages, represented by notes, identified by authentic acts, with a previous authentic act of mortgage, of the benefit of the law authorizing executory process, in the enforcement of ■a claim secured by an act importing a confession of judgment. Hence, we see no merit in this objection.

Fifth It appears from the record, that the Arpen Tract ” was formerly owned by the planting partnership of Downs & Brigham, and that it was included iu the mortgage to secure the stock purchased by ■'said partnership.

In the cases of Rind vs. Fluker, 22 An. 482, and of the Citizens’ Bank vs. Fluker, 23 An. 567, we are informed that the stock loan mortgage of 1839, affecting this tract of laud, was extinguished quoad this tract, by a judicial sale made a,t the instance of the Bank, at which sale the property brought a price exceeding the amount of tlie loan as it then stood. We are at a loss, therefore, to conceive how the Bank, in renouncing a claim extinguished under the law, could be construed as thus releasing all the other property mortgaged in its favor for the security of its claims. This 2>oint is reviewed and fully dist>osed of in the case quoted from Opinion Book, p. 536.

Sixth. A mere ins2Jection of the notes in suit, discloses the fact that the .payment of all six was secured by mortgage on Downs’ Home Place, and that three of them were additionally secured by mortgage on the Island Place. Hence, plaintiffs are manifestly in error in asserting that only half of the loan was secured on the lands which they now hold.

Seventh. Under the charter of the Bank, Sec. 11, it was expressly provided, that if any debtor, under a stock loan, should fml, or neglect, or refuse to pay the proportion of the capital and interest, as the same should become due and payable, then and in that case, the whole debt, capital and interest, inay be considered as due, and payment thereof demanded and enforced according to lawand by Section 24, ten per cent, on the loan was the rate of interest fixed; and it is elementary that this law was a part of Downs’ contract with the corporation. Hence, on the first of January, 1862, at the maturity of his •loan notes, his failure to ]>ay the stipulated instillment and interest, ■operated, of itself, a forfeiture of his right to renew under the charter.

Tlie argument that, by reason of the possession of New Orleans by the United States military authorities, which, as history informs us, occurred only at the end of April, 1862, cutoff communication between that city and the Parish of Ouachita, then under Confederate occupation, is evidently not serious, and is refuted by a mere statement of the ■proposition.

Fighth. The objection, that by executory 2U’ocess issued on this claim -in September, 1868, not followed by execution until the present order was granted in March, 1879, the stock loan was merged into a judgment, by reason of which it was extinguished by the prescription of ten 3rears, involves the proposition that an order of seizure and sale is a judgment in the full and legal sense of the term. It would be difficult to conceive of a more absolute legal fallacy, and an examination of the authorities cited in its support by plaintiffs’ counsel, satisfies us that this legal heresy finds no foundation in our jurisprudence. 12 M. 695 ; 2N. S. 32; 6 An. 446.

To the assertion that “ every element of a judgment enters into the executory process," the legal mind suggests a ready and easy answer : that the executory process lacks the following elements of a judgment:

1. It is not preceded by citation, the foundation of a judgment.

2. It creates no issue.

3. It decides no issue, and requires no answer or no default.

4. It adjudicates to the plaintiff no right which is not secured by* his notarial act, nor deprives him of any thus secured.

5. Its inscription in the mortgage office will, therefore, operate no judicial mortgage.

6. If the property mortgaged, and seized and sold under it, does not bring a price sufficient to satisfy the amount of the claim, the creditor cannot issue execution on such balance without first obtaining judgment thereon, contradictorily with his debtor.

7. It cannot support the plea of res judicata or Us pendens.

Other differences could be enumerated, but it would be an idle task, as we consider the point well settled in our jurisprudence, which recognizes in such orders but one element of a judgment, namely, the right of appeal, which can be taken either from the order of the Judge or from his refusal to grant the process. 16 La. 254, Harvard vs. Voorhies; 13 An. 256, Riley vs. Christie; 28 An. 186, Rousseau vs. Bourgeois ; 32 An. 977, State ex rel. Wise vs. Taylor, Judge.

■ We, therefore, conclude that the ten year prescription on judgments cannot avail plaintiffs in this case.

The plea of prescription of three and five .years to the contributions called for under acts of the legislature, seems to be abandoned on appeal, and is absolutely untenable, under the amendments to the charter.

After an exhaustive investigation of the evidence, and a mature consideration 'of the numerous obstacles interposed b3r plaintiffs to the collection by the Bank of a just and valid claim, protected by equity as well as law, we reach the conclusion that the judgment of the District Court, dissolving the injunction sued out by plaintiffs in this case, is righteous, legal and correct.

Judgment affirmed.

On Application for Rehearing.

Told, J.

The objection to the alteration by the clerk of tlie order of seizure and sale, in the particular of allowing the taxes in diminution of tlie credits admitted in the order, cannot bo considered under the pleading's, which do not set up this objection as a ground of injunction.

The complaint in the petition to the action of tlie clerk, under the instruction of the Bank’s attorney, was in reducing the amount of property to be seized. This point, too, was barely and obscurely referred to, even in tfie original brief of plaintiffs, and not at all in the brief of defendants, which indicates that it had not been asserted or relied on in the lower court.

All other points, referred to in this application, were disposed of in our original opinion, which we see no reason to change.

Rehearing refused.