Case ID: so2d_234/html/0770-01.html
Source: Caselaw Access Project
Author: {"author": "LOTTINGER, Judge. BLANCHE, Judge", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

FIRST NATIONAL STATE BANK OF NEW JERSEY v. Nancy Riggs BARKER, Wife of/and David H. Barker.
    No. 7959.
    Court of Appeal of Louisiana, First Circuit.
    April 13, 1970.
    Rehearing Denied May 25, 1970.
    'Henry L. Klein, New Orleans, for appellant.
    Bernard L. Knobloch, Thibodaux, for appellees.
    Before LOTTINGER, BLANCHE and PICKETT, JJ.
   LOTTINGER, Judge.

Petitioner, First National State Bank of New Jersey, filed a petition for executory process against defendants, Nancy Riggs Barker, wife of/and David H. Barker (deceased), in foreclosure of a certain mortgage on real property. The defendant, Mrs. Barker, filed petition to enjoin the seizure and sale, and a temporary restraining order issued below. Upon hearing on preliminary injunction, the court held in favor of defendant and granted the temporary injunction. Petitioner has taken this appeal.

The facts disclose that on June 13, 1963, the Barkers executed a mortgage on real estate in the sum of $25,000.00 in favor of the American Mortgage Corporation, hereafter referred to as American. Apparently the mortgagors were instructed to make payments on this obligation to Pringle-Associated Mortgage Corporation, hereafter referred to as Pringle, and Mr. Barker thereafter made monthly payments on the obligation to said corporation until his death on February 9, 1969. In addition to the monthly payments on the note, Mr. Barker paid a monthly premium of $7.92 which was listed on his monthly payment card as “mortgage insurance”.

Mrs. Barker contends that her husband died from accidental causes, and, following his death, forwarded affidavits from five doctors to Pringle, which she believed to be the mortgagee, requesting that the mortgage be canceled, as Mr. Barker’s death was accidental. Upon receipt of this request, Pringle wrote the attorney for Mrs. Barker stating:

“We are ordering pay-off figures on this account. Upon receipt of this (sic) figures, we will forward all correspondence to Mr. Max Landry in our New Orleans office. Mr. Landry should contact shortly and send you the necessary papers for the loan to be paid in full.”

The insurer, Old Republic Life Insurance Company, hereafter referred to as Republic, failed to pay-off on its policy, and Pringle attempted to repudiate its acknowledgment and demanded that the obligation be revived by a resumption of payments. Mrs. Barker refused to make these payments, contending that the obligation was extinguished under the terms of the insurance policy, and executory process was filed by petitioner which was then, for the first time revealed to Mrs. Barker as the real mortgagee.

Mrs. Barker petitioned for an injunction naming as defendants, therein, Republic, Pringle and petitioner. The Lower Court granted the temporary restraining order, and after hearing on the preliminary injunction, same was issued. Petitioner, First National, has taken this appeal.

The petitioner alleges error on the part of the Lower Court as follows:

1. Defendant failed to set forth any of the exclusive grounds listed in Article 2751 of the Louisiana Code of Civil Procedure for arresting the seizure and sale under executory process.
2. A cause of action against an insurer for failure to pay a life insurance policy payable to mortgagee does not effect the right of the mortgagee to proceed with foreclosure of the mortgage, and such failure to pay on the part of the life insurer does not constitute proper grounds for the issuance of an injunction in foreclosure proceedings.

Article 7 of the petition for injunction provides in part that:

“ * * * there is no obligation presently due and owing by the surviving spouse and heirs of the late David H. Barker to National State Bank of Newark or its assignor American Mortgage Corporation and/or Pringle-Associated Mortgage Corporation.”

This allegation on the part of defendant clearly sets forth the extinguishment of the obligation and, therefore, brings the proceeding within the provisions of Article 2751 of the Code of Civil Procedure.

With regard to the second contention on the part of petitioner, i. e., that a cause of action against an insurer for failure to pay a life insurance policy payable to mortgagee, does not affect the right of the mortgagee to proceed with foreclosure of the mortgage, petitioner cites Guaranty Bank and Trust Company v. Lebo, 143 So.2d 743, which was decided by this Court during the year 1962. Our appreciation of the holding in said case was to the effect that none of the defenses set forth in Article 2751 had been urged in the petition for injunction filed therein. This, of course, distinguishes the Lebo case from the one now before us. Another point upon which the two cases may be distinguished is that in the Lebo case the life insurance policy was apparently issued to Mr. Lebo with a loss payable clause in favor of the bank. The certificate of insurance which is filed in the record lists David H. Barker as the owner thereof and Pringle as the policy holder. The monthly insurance premium was a part of the mortgage payment. Pringle was apparently the agent for collection on the mortgage both for the original mortgagee, American, and its assignee, National. This agency relationship was further evidenced by the letter written April 2, 1969, in which Pringle indicated to Mrs. Barker that the loan would be paid by the insurance company. It appears that the first she knew that such would not occur was when the executory proceeding was filed.

Article 3601 of the Louisiana Code of Civil Procedure provides that an injunction shall issue in cases where irreparable injury, loss, or damage may otherwise result to the applicant, or in other cases specially provided by law. There is no question but that Mrs. Barker will suffer irreparable injury unless the sale is enjoined pending a full and final hearing between the parties involved. Article 3601 further provides that during the pendency of an action for an injunction the court may issue a temporary restraining order, a preliminary injunction or both. Article 3602 provides that the hearing on a preliminary injunction shall be held not less than two nor more than ten days after service of the notice. Both the temporary restraining order and the preliminary injunction are interlocutory in nature and serve to maintain the status quo until a final hearing might be had upon the trial for the permanent injunction.

In City of New Orleans v. Delta-ByProducts, Inc., La.App., 177 So.2d 395, the court said:

“The granting of a preliminary injunction is only an interlocutory judgment designed to maintain and preserve the existing status pending a trial of the issues on the merits; the question of whether the preliminary injunction should be granted or refused is one which addresses itself to the sound discretion of the trial court; and in order to obtain the issuance of such an injunction, the petitioner therefor need only make out a prima facie case.”

The Lower Court was correct in issuing the preliminary writ of injunction and, accordingly, its judgment will be affirmed.

For the reasons hereinabove assigned, the judgment of the Lower Court will be affirmed, all costs of this appeal to be paid by appellant.

Judgment affirmed.

BLANCHE, Judge

(dissenting).

By its decision the majority has held in effect that the mere existence of a creditor life insurance policy ipso facto gives rise to extinguishment of the debt secured by a mortgage upon the death of the mortgagor-insured. Such a decision is erroneous.

In opposition to this foreclosure proceeding under executory process brought by the mortgagee, the surviving widow successfully obtained a preliminary injunction of the seizure and sale, without furnishing bond and, therefore, pursuant to Code of Civil Procedure Article 2753, which enumerates five exclusive grounds for such injunctive relief. Counsel for appellee contends that the preliminary injunction was proper to avoid alleged irreparable injury, counsel contending that the grounds enumerated in Code of Civil Procedure Article 2751 are not exclusive, which contention has been sanctioned by the majority. It is clear, however, that the temporary restraining order and preliminary injunction in these proceedings were not issued pursuant to Article 2751, which would have required appellee to furnish security therefor, but rather were granted by the courts’ order expressly pursuant to Article 2753 so as to obviate the furnishing of security. Code of Civil Procedure Article 2754 makes it obvious that no temporary restraining order will be allowed to arrest seizure and sale in an executory proceeding except where the temporary restraining order is sought on the basis of one of the five specific and exclusive grounds enumerated in Article 2753.

An examination of the proceedings reflects that the grounds stated in paragraphs (3) through (5) of Article 2753 are inapplicable. Paragraph (2) of Article 2753 dealing with prematurity of enforcement of the debt either because the original term allowed for payment or an extension thereof granted by the creditor had not expired at the time the executory proceeding was instituted, is likewise inapplicable as evidenced by an examination of the record. This writer will concede that had these executory proceedings been instituted before the surviving widow was clearly apprised that the creditor life insurer had denied coverage, and had the surviving widow relied to her detriment on representations by the mortgagee or Pringle, its agent, for payment without giving the surviving widow an opportunity to bring the mortgage payments up to date, there could be ground for issuing the preliminary injunction on the basis of an implied extension of time. The brief of counsel for appellee reflects, however, that these ex-ecutory proceedings were not instituted until three months after Pringle advised the surviving widow and the attorney representing her late husband’s succession in writing that the insurer had denied coverage. Counsel contends that the widow could not alter her position by resuming monthly payments so as to disavow the medical testimony and to revive the extinguished obligation, but this contention is without merit inasmuch as such payments could have been made under protest and with an express reservation of rights. It is clear that in no way was the surviving widow lulled into a false sense of security with regard to the status of the indebtedness secured by the mortgage nor was there any implied extension of time for performance granted by the mortgagee. Accordingly, paragraph (2) of Article 2753 is inapplicable.

The sole remaining ground for this temporary restraining order and preliminary injunction, therefore, is contained in paragraph (1) of Article 2753, which provides that injunctive relief may be sought when “the debt secured by the mortgage or privilege is extinguished or prescribed.” No question of prescription exists, and, accordingly, the determinative question is whether the debt secured by this mortgage is extinguished. The only contention in support of such extinguishment is the argument that the existence of the creditor life insurance policy operates to extinguish the debt secured by the mortgage upon the death of the mortgagor-insured. This contention is without merit.

Civil Code Article 2130 enumerates nine specific ways that an obligation is extinguished in law, none of which is applicable. For example, the first enumerated method of extinguishment — payment—is inapplicable since Civil Code Article 2131 defines “payment” as the delivery of money or the performance of that which the parties undertook. In this case there has certainly been no payment by the insurance company since there has been no delivery of money or performance of the obligation undertaken by the creditor life insurer. This insurer may be in error in its contention that it is not liable under the terms of the policy so as to give rise to an obligation on the part of the insurer to pay, but such obligation to pay cannot be deemed payment. Similarly, the other remaining eight enumerated methods of extinguishment are inapplicable.

This Court held in Guaranty Bank and Trust Company v. Lebo, 143 So.2d 743 (La.App. 1st Cir. 1962), that the alleged obligation of a creditor life insurer to pay the balance owed on a debt secured by a mortgage did not operate to extinguish the debt or entitle the surviving widow and children to enjoin the seizure and sale in an executory proceeding. The same ruling should obtain in this case.

The majority purports to distinguish the Lebo case on the ground that the surviving widow and heirs therein alleged no specific ground for enjoining the seizure and sale, whereas in the instant case the surviving widow has alleged that the debt secured by the mortgage is extinguished by virtue of the alleged obligation of the creditor life insurer to pay the balance owed thereon. This writer is satisfied that the statement emphasized by the majority herein amounts only to a judicial determination that the contention of the surviving spouse and heirs relative to the obligation of the insurance company to pay did not amount in law to an extinguishment of the debt secured by the mortgage, and inasmuch as the other specific grounds for enjoining the seizure and sale were not invoked, the surviving widow and heirs were not entitled to a preliminary injunction.

It is obvious that the mere existence of a policy of creditor life insurance does not ipso facto give rise to an extinguishment of the debt secured by the mortgage upon the death of the mortgagor-insured. Instead, there are simply two different contracts and different resulting rights involved in such a situation, and the existence of the insurance policy does not operate to preclude the mortgagee from enforcing its rights. It would be obvious, for example, that the existence of a policy of creditor life insurance underwritten by an insolvent or bankrupt insurance company would not operate to extinguish a debt secured by the mortgage merely upon the death of the mortgagor-insured. Where heirs of a deceased mortgagor have been expressly advised by the creditor life insurer of its denial of liability, they cannot, nevertheless, set up their possible contract rights against this insurer as a justifiable ground for avoiding the consequences of nonpayment of the debt secured by the mortgage and enjoin an executory proceeding brought by the mortgagee which has not received payment in accordance with its contract rights. In such a case the heirs or surviving widow must continue to perform as required by the contract giving rise to the mortgage or suffer the consequences of foreclosure. The judgment of the trial court granting a preliminary injunction is erroneous and should be reversed.

I respectfully dissent.

Rehearing denied.

Blanche, J., dissents from the refusal to grant a rehearing. 
      
      . The pertinent part of the trial court’s order confirming this observation reads as follows:
      “IT IS FURTHER DECREED that in accordance with Article 2753 of the Code of Civil Procedure the petitioner [appellee] is not required to furnish security for the issuance of this temporary restraining order.” (Record, p. 24)