Case ID: la_155/html/0916-01.html
Source: Caselaw Access Project
Author: {"author": "DAWKINS, J. DAWKINS, J. 8T. PAUL, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(99 South. 696)
    Nos. 25371, 25700.
    In re MORGAN & CO., Inc. LUMBERMAN’S BANK & TRUST CO. v. DE RIDDER LIGHT & POWER CO. SAME v. MORGAN & CO. et al.
    (On Motion to Dismiss, Oct. 30, 1922.
    On the Merits, Oct. 29, 1923. On Rehearing, March 8, 1924.)
    
      (Syllabus by Editorial Staff.)
    
    On Motion to Dismiss.
    1. Appeal and error &wkey;>365(I) — Court’s minutes held to show that order of appeal had been granted appellant.
    Where a judgment creditor seized a light and power plant, and a third opponent intervened and sought to enjoin the sale claiming ownership, and defendant in execution made no appearance and judgment was rendered for plaintiff, an appeal of the intervener held not to be dismissed, as the minutes of the court showed that an appeal 'had been granted to such intervener, notwithstanding judgment was for “plaintiff” and appeal was granted “defendant.” .
    On the Merits.
    2. Injunction <&wkey;l69 — Motion to dissolve for falsity of allegations supporting writ should be treated as answer, or defendant should be directed to answer petition.
    A motion to dissolve an injunction, on the ground of the falsity of the allegations to support the writ, should be referred to the merits and treated as an answer, or defendant should be directed to answer tlie petition as directed by the pleading statute.
    On Rehearing.
    3. Fraudulent conveyances &wkey;3299(10) — Sale of property of light and power company held a simulation as to judgment creditor. 1
    Where a judgment creditor levied on the property of a light and power company as the judgment debtor, and a third party as alleged owner by conveyance sued out an injunction to restrain the seizure, and it appeared that such sale was put on record only 14 months after the execution thereof, and on the eve of suit against said light and power company, which still continued in possession, evidence held to show that the sale was a simulation and the injunction sued out by such third party could not be sustained. ' ' >
    
    4. Injunction &wkey;>.l88 — Attorney’s fees cannot be allowed on dissolution of writ after passing on merits of suit.
    Where, on rule to dissolve an injunction, the merits of the case have been submitted and the injunction dissolved only after passing on the merits, defendant in injunction cannot be allowed attorney’s fees--for the dissolution of the writ, since to do so would be to allow fees virtually for defending the suit on the merits, which is not permissible.
    5. Fraudulent conveyances &wkey;»297 — Insolvency of debtor held sufficiently shown.
    Where one who had purchased property of a light and power company under a simulated sale sought tó restrain a creditor of the power company from seizing its property, held, .that the insolvency of the power company had been sufficiently shown by showing an indebtedness, in view of Civ. Code, art. 1985, imposing burden on party denying insolvency to show property exceeding the indebtedness.
    Appeal from Fifteenth Judicial District Court, Parish of Beauregard; Thos. F. Porter, Jr., and Jerry Cline, Judges.
    Action by the Lumberman’s Bank & Trust Company against the De Ridder Light & Power Company, wherein Morgan & Co. intervened, consolidated with an action by Lumberman’s Bank & Trust Company against Morgan & Co. and others. Judgment for plaintiff in the case first mentioned, and intervener appeals, and for plaintiff in ¿he case last mentioned, and defendants appeal.
    Affirmed in part and reversed in part ■in the case first mentioned,' and affirmed in the last mentioned case.
    John W. Lewis, of Opelousas, and G. E. Gardiner, for appellant Morgan & Co.
    
      Cline & Planche, of Lake Charles, and Ped C. Kay and Frank E. Powell, both of De Ridder (S.' W. Plauche, of Lake Charles, of counsel), for appellee.
    By the WHOLE COURT.
   On Motion to Dismiss.

DAWKINS, J.

Lumberman’s Bank & Trust Company obtained a moneyed judgment of several thousands of dollars against De Ridder Light & Power Company, and issued execution thereon seizing the light and power plant of said defendant. Morgan & Co. intervened and enjoined the .sale, claiming ownership of the property. De Ridder Light & Power Company (hereinafter called the Power Company) made no appearance. Lumberman’s Bank & Trust Company (hereinafter called the Bank) filed a motion to dissolve the injunction upon the ground of the falsity of the allegations of the petition of intervention, pleaded the exception of no cause pf action, alleged the nullity of the transfer of the property by the Power Company to Morgan & Co., and reconvened for damages in the sum of $1,500. Morgan & Co., moved that this pleading be made to stand as an answer, which was denied; the ea^e was tried on its merits, and there was judgment in favor of the Bank, plaintiff in execution, and against Morgan & Co., intervener, dissolving the injunction, and for $750 damages as attorney’s fees against it and the surety on the injunction bond.

The defendant in execution, the Power Company, made no appearance whatever.

A bond for appeal, suspensive and devolutive, was filed by ‘ Morgan & Co., and the transcript timely filed by it in this court.

Counsel for the appellee Bank has moved to dismiss the appeal on the ground that there was no order of appeal in favor of Morgan & Co.

We quote the relevant minutes of the court, as disclosed by the record, as follows:

“April 17, 1922.
“Lumberman’s Bank & Trust Co. v. De Ridder Light & Power Company. No. 1347.
“From Beauregard parish.
“The court, nhaving previously taken this case under advisement, now rendered judgment in favor of plaintiff. See decree. Judgment read and signed.”
“April 18, 1922.
“Lumberman’s Bank & Trust Company v. De Ridder Light & Power Company. No. 1347.
“From Beauregard parish. Counsel for defendant moves for both suspensive and devolutive appeals to the Supreme Court. The court grants the appeals, returnable to the Supreme Court of Louisiana on or before May 30, 1922, upon appellant furnishing bond, if devolutive, in the sum ,of $250, and, if suspensive, in the sum of $14,000.”
“April 25, 1922.
“Lumberman’s Bank & Trust Company v. De Ridder Light & Power Company. No. 1347.
“From Beauregard parish.
“Counsel for Morgan & Company moves the Court to set aside the order of appeal previously granted herein on the ground that the suspensive appeal bond was excessive and not sanctioned by law. Owing to the fact that the suspensive appeal bond in this matter was improvidently fixed at $14,000, the previous order of appeal granted herein is amended by fixing the bond for suspensive appeal at $1,200. To which proceeding Counsel for the Lumberman’s Bank ■& Trust Company objects.”
(Underscoring of words by the court.)

The prayer of tbe petition of intervention and injunction was. for service upon the “plaintiff” and tbe sheriff, and not upon defendant in execution, and it was so served. There were, in reality, therefore, only two parties to the litigation, the Bank, plaintiff in litigation, and Morgan & Co., plaintiff iñ intervention, and each was defendant as to the other as to the demands made against it. As is seen from, the minute entry first above quoted of date April 17, 1922, judgment was rendered “in favor of plaintiff,” the Bank, and the judgment itself reads:

“ * * * That there be judgment in favor of the plaintiff, the Lumberman’s Bank & Trust' Company, and against the intervener, Morgan & Co., Inc., dissolving the injunction issued herein.”

It, the judgment, was also for the sum of $750 against Morgan & Co., and the surety on the injunction bond, for costs, etc., “with reservation of plaintiff’s right to sue for additional damages for additional attorney's fees if this judgment be appealed from.”

There can be no doubt, therefore, that the “plaintiff” referred to in the minutes of April 17th, in whose favor the judgment ran, was the bank, and that the defendant who was condemned was Morgan & Co., reading the minutes and judgment together as they must be. Nor can there be any doubt that the only party cast with tight of appeal was Morgan & Co. Hence when the minute entry of April 18th was made by the clerk showing that “defendant moves for both suspensive and devolutive appeals,” etc., it is perfectly, clear that it was on behalf of the only other party to the suit, Morgan & Co. All question on that point is removed by the minute entry of April 25th, in which “counsel for Morgan & Company moves the court to set aside” the order for 'the suspensive appeal as excessive, and the court reduced the amount of the bond for that appeal to $1,200.

We are clear that the party appealing, as disclosed by the whole record, was Morgan & Co., and that the order was asked for and granted in its behalf. Appellee had -already answered the appeal, and any doubt must be resolved in favor of the appeal.

The motion to dismiss is denied.

On the Merits.

-By Division B, composed of DAWKINS, LAND, and LECHE, JJ.

DAWKINS, J.

The Lumberman’s JBank & Trust Company, hereafter called defendant, obtained against the De Ridder Light & Power Company, a judgment upon two notes -for $5,000- each, .with interest, and seized the electric power plant and accessories in the town of De Ridder. Thereupon, Morgan & Co., Inc., herein called plaintiff, enjoined the sale, claiming ownership of the property, including the plant and land upon which it was situated, together with all appurtenances.

Defendant then appeared and filed what it termed a motion to dissolve the injunction, in which it alleged the following:

“I.
“That the allegations 'of fact/ contained in said petition and the affidavit thereto attached, which constitute the basis for the issuance of the said writ of injunction, are false and untrue.
“II.
“That intervener and third opponent’s petition discloses no cause or right of action against your appearer which entitles it to the writ of injunction herein sued out, and especially for the reasons following (among others), to wit:
“III.
- “That, as the basis of its right to the said writ of injunction, intervener and third opponent claims the ownership of the property seized under the writ of fi. fa. issued in this cause, by virtue of a certain ‘purported’ deed, claimed to have been executed in its favor by the said De Ridder Light & Power Company, Inc., purporting to convey to intervener and third opponent all of the property — real and personal, corporeal and incorporeal — owned by the said De Ridder Light & Power Company,Inc.; said instrument purporting to have been executed by the president and secretary of the said De Ridder Light & Power Compariy, Inc., by virtue of a resolution of its board of directors.
“IV.
“That said instrument is null and void, and conveyed no right or title in and to said property from the said De Ridder Light & Power-Company, Inc., to the said Morgan & Co., Inc., and is of no effect whatsoever as against your appearer, a seizing creditor thereof, for the reasons:
“A. That such a transfer, even if otherwise real (which is denied), is ultra vires of the alleged vendor corporation, and against public policy, and, therefore, null and void.
“B. That the'said De Ridder Light & Power Company, Inc., being a quasi public corporation, enjoying privileges and franchises from the city of De Ridder and the state of Louisiana, the said ‘purported’ transfer from itself to 'the said Morgan & Co., Inc., is a violation of its contract with the state and the said municipality, ultra vires and contrary to public policy; and hence, for this further reason, is null and void.
“C. That, in the event said instrument be not held void on the grounds above mentioned, then and in that event the said president and secretary, who purported to act for the said De Ridder Light & Power Company, Inc., in the said ‘purported’ transfer, were without any authority whatsoever so to do; and that, in so far as said officers sought to bind the said De Ridder/Light & Power Company, Inc., inlaid ‘purported’ transfer and to affect the rights of your appearer as a creditor of the said De Ridder Light & Power Company, Inc., on the said assets of the said De Ridder Light & Power Company, Inc., .their said act has no more force and effect than the act of mere-strangers; and that, therefore, for this further reason, said instrument is null and voicl, and of no effect as against your appearer.”

In response to this motion,- plaintiff filed a pleading asking that the said motion of defendant he ordered to stand as an answer, and in the alternative that it be compelled to elect as to whether it would stand upon its denial of the allegations of the petition, or upon the exception of no cause of action; that in paragraphs 3 and 4 of the motion defendant sought to attack plaintiff’s title to the property, which' was likewise inconsistent with the plea of no cause of action. The prayer of this last pleading was conformable to its allegations.

The lower court .overruled'the plea, and the case went to trial in this shape. At the opening of the trial the following appears in the minutes:

“Friday, March 24, 1922.
“Called on motion to dissolve writ of injunction. Motion argued and case is submitted as of date the transcript of evidence is filed with the clerk of court.”

And at the beginning of the note of evidence, we find the following:

“Defendants object to the filing of the motion in injunction; for the reason that same comes too' late, it cannot be considered by the court at this stage of the proceedings.
“The Court: The objection is overruled, and the pleading is permitted to be filed. After hearing argument from counsel on both sides as to the subject-matter of the motion, the motion is refused.
“Counsel for plaintiff in injunction and third opponent, in view of the court’s ruling on the application to cause counsel to elect or to cause his pleading' to stand as an answer to the injunction suit, counsel for the plaintiff in injunction and third opponent, moves to strike from the record the alleged pleading or motion of'the defendant in injunction, on the ground that it is a collateral attack on- the recorded title and deed, and seeks on a collateral matter to test the legality of the instrument declared upon, which is not permissible under the law.
“The Court: The motion of counsel for defendant is refused.”

In the ruling last quoted, the court evidently meant plaintiff where it said “defendant.”

Defendant then launched into an effort to prove by the city attorney and clerk the nature of the franchise granted the De Ridder Light & Power Company, which was prompt.ly met with the objection “that it is a col-' lateral attack upon the authentic recorded instrument executed in favor of third opponent and plaintiff in injunction attached to the petition in injunction and especially made the subject-matter of allegations in the petition for injunction,” which was overruled. Whereupon, defendant offered in evidence the copy of franchise, and plaintiff again objected upon the further ground that such evidence was “irrelevant and inadmissible under the pleadings.”

Defendant next sought to prove by j;he same witness that no authoz-ity had been obtained from the town of De Ridder for the transfer of the property by the Power Company, to plaintiff. This was objected to upon the same grounds “stated above,” and by agreement of counsel was made general. It then offered in evidence the “entire record” in the former suit betweem the Bank and' Power Company, which was also objected to as irrelevant and inadmissible under the pleadings, and the objection was overruled. It was next proven that the minute book of the De Ridder Light & Power Company, on the occasion of the trial of the case between the defendant Bank and the said Power Oomphny, had been examined by certain witnesses and found to contain no minute authorizing the sale,of the property to plaintiff. This was also done over the objection that it was. irrelevant and immaterial, and upon the further ground that the minute book was the best evidence, after it had been shown that a subpoena duces tecum upon the Power Company had failed to produce said book. The object of introducing the evidence was, of course, to show that, long after the date plaintiff claimed to have purchased the property, no such resolution or authority appeared in the corporate records of the De Ridder Light & Power Company. The evidence of these witnesses was further corroborated by the identification and introduction in evidence of a copy of the minutes contained in said book, made by a stenographer about the date of said first trial. Similar objections were made and overruled.

During the taking of the testimony of the young lady stenographer, counsel for plaintiff, after making the objection that the minute book itself was the best evidence, reminded the court that the officer of the Power Company upon whom service of the subpoena duces tecum had been made was present in open court, and asked that he be called for making return thereto; it appearing that up to that time none had been made, counsel stating that he would testify that the book was not in his possession or under his control, and for that reason could not be produced in court.

The response of the court was:

“If you want to make a return to the writ, make it in the proper form,”

—and the trial proceeded, the court permitting the introduction of this secondary evidence.

The note of evidence does not show it, but we presume that defendant rested after completing this line of evidence, for we find in the middle of the page with a slight indentation:

“Plaintiff in injunction and third opponent offers in evidence the petition and the documents thereto attached.”

The documents attached were the deed from De Ridder Light & Power Company to plaintiff covering the property seized, showing its recordation in the conveyance office of the parish on August 20, 1920, and the advertisement of the property for sale by the sheriff.

One C. Rhodes was then called to the stand, and, after being sworn, counsel for plaintiff, it would seem from the note of evidence, commenced to dictate the following futo the record:

“Mr. Rhodes, upon whom the subpmna duces tecum was served in this case for the production of the minute book of the De Ridder Light and Power Company, begs leave to make the following return to the court under oath:
“I have been assistant manager of the De Ridder Light & Power Company, or rather the plant belonging to Mr. Morgan & Co., since February 15th, when I received the duces tecum, sued out in this case, for the production of the books of the De Ridder Light & Power Company, I mean the minute book. I made diligent search for the same among the files and at the office of the De Ridder Light & Power Company, or rather the Morgan & Co., at De Ridder, and could not find it. I was only served with this subpoena on' yesterday,”

—when objection was made that the record was the best evidence, and Rhodes was then examined and cross-examined as to the whereabouts of the minute book; the net result being that the witness had not been able to locate it.

Then appears the notation, “Both sides close.”

There was judgment for defendant dissolving the injunction, and awarding it damages for attorney’s fees in the sum of $750. Plaintiff appeals.

Opinion.

It is thus seen that the whole ease has been disposed of on the merits, for there is nothing left to plaintiff if all of the property which it alleges belongs to it is permitted to be sold. The first paragraph quoted above clearly denied the facts upon which the injunction was obtained, and should have been considered as an answer. Unlike attachment, sequestration, etc., which are always ancillary remedies to some principal demand, the writ of injunction, often, as in the present ease, constitutes the sole relief sought, and to dissolve it disposes of the case. Of course, where the ground for dissolution consists of some alleged irregularity in the proceedings, like the insufficiency of the bond, improper affidavit, etc., or other informality, it may be dissolved without a trial on the merits, for such causes. But a motion to dissolve on the ground of the falsity of the allegations to support the writ should be referred to the merits and treated as an answer, or defendant should be directed to answer the petition as required by the pleading statute.

In a similar situation in the case of N. O. Waterworks Co. v. Joseph Oser & Co., 36 La. Ann. 919, we said:

“And there is as little doubt that the allegations made in the motion or rule to dissolve make a direct issue with the averments of the petition. It is denied therein that there is any injury whatever, and the acts against which the injunction is directed are admitted and justified as being done under competent authority. In other words, the motion is in all essential respects an answer to the merits. To admit evidence on the issues thus raised and to try the same would be virtually a trial of the case on the merits.
“We cannot conceive that there is any law to authorize this summary and perhaps final disposition of the cause in this preliminary stage of it. The articles of the Code of Practice evidently do not justify it. * * *
“This conclusion we think is supported by ample authority. State v. New Orleans, 26 A. 304; Levine v. Michell, 34 A. 1181. See, also, Williams v. Douglass, 21 A. 468; Heyniger v. Hoffnung, 29 A. 58.”

See, also, Xavier Realty Co. v. Louisiana R., etc., Co., 114 La. 437, 38 South. 427.

Defendant nowhere alleges in the motion that the transfer from De Ridder Light & Power Company was a simulation, but pitches its contention that the act was without effect, to such extent that it might be ignored and real property seized, upon certain alleged nullities resulting from the nature of the business for which the property was used, and upon certain alleged irregularities with respect to the authority of those purporting to represent the vendor to make thq sale.

Inasmuch as we have decided to remand the case to permit further answer by defendant and a regular trial on the merits, We will defer passing upon these issues at this time. We do not think defendant should be deprived of this right by the erroneous ruling of the lower court in its favor. It may be that nothing further can or will develop upon another trial, and that the litigants would be willing to submit the case to us upon the record as it now stands. If so, this can be disclosed on the application for rehearing.

For the reasons assigned, the judgment of the lower court is" annulled and set aside, and this case is remanded to be proceeded with according to law and the views herein expressed, with the right to defendant to answer, and in default thereof within a delay to be fixed by the judge the motion to dissolve, heretofore filed, to stand as such. Appellee to pay costs of this appeal, all other costs to await final judgment.

On Rehearing.

By the WHOLE COURT.

8T. PAUL, J.

S. R. Morgan &' Co., of Little Rock, Ark., is a partnership, composed of S. R. Morgan and M. B. Morgan, his brother. Tr. No. 1, pp. 86, 199, 148.

The De Ridder Light & Power Company is a corporation existing under the laws of this state, and doing business in Beauregard parish. Tr. No. 2, p. 10. ,

In June, 1919, S. R. Morgan & Co., acquired or “bought the property,” meaning the De Ridder Light & Power (i. e., the whole or a controlling interest in the stock of said conlpany), from T. S. Reed, and gave in (part?) payment therefor their promissory notes for $30,000; which said notes were “handled for collection” by the First National Bank of De Ridder, the county seat of Beauregard, parish (where plaintiff also had its domicile); but same were still due. and unpaid in January, 1920. Tr. No. 1, p. 189.

On June 6, 1919, the directors of the De Ridder Light & Power Oompány met at' De Ridder; T. 8. Reed, aforesaid, being the president, and W. F. McCannon the secretary-treasurer. Directors C. A. Collins, Frank Miller, and C. H. Hendershot resigned, and the following were elected in their stead, to wit: M, B. Morgan, A. (?. Miller, and J. TV. Sanders. Mr. W. F. McCannon resigned as Secretary-treasurer, and M. B. Morgan was elected in his stead. Tr. No. 1, p. 113.

On September 6, 1919, the directors met again. T. ■ S. Reed resigned both as president and as director. Frank Miller, who had previously resigned as director, now resigned as vice president,, and the following were elected: A. G. Miller, president; J. W. Sanders, vice president; 8. R. Morgan, director; W. F. McCannon, who^had previously resigned as secretary-treasurer and had bee'll succeeded by M. B. Morgan, appears at this meeting as a director (but in January was succeeded by A. B. Melchoir). See Tr. No. 1, pp. 113, 114, 81.

On January 18, 1920, the stockholders of the De Ridder Light & Power Company met at De Ridder and elected the following directors, to wit: A. C. Miller, J. W. Sanders, 8. R. Morgan, A. B. Melchoir, and M. B. Morgan. The reports of the manager, A. E. Melchoir, and of the auditor, were received, and “the action of the directors in purchasing a new engine and generator, and making other improvements was approved.” ' M. B. Morgan acted as secretary. Tr. No. 1, p. 81.

I.

On September 2, 1921, plaintiff, the Lumberman’s Bank & Trust Company, of De Ridder, brought suit against the De Ridder Light & Power Company for $10,000 upon two certain promissory notes for $5,000 each, dated respectively March 18, 1921, and June 3, 1921, both maturing 90 days after date, and both indorsed by 8. R. Morgan & Company, aforesaid, through M. B. Morgan; the notes being executed, on behalf of the De Ridder Light & Power Company, by the same M. B. Morgan as “secretary-treasurer” thereof. Tr. No. 1, pp. 62, 75, 77.

To this suit the De Ridder Light & Power Company set tup the following defenses (Tr. No. 1, p. 71):

(a) Because to the knowledge of the said bank any consideration that passed for the execution of the said notes went to S. R. Morgan & Co., one of the said notes having originally been executed in the name of the De Ridder Light & Power Company, the other in the name of S. R. Morgan & Co., and indorsed by M. B. Morgan, but subsequently at the time of renewal of the said notes they were both illegally executed with the De Ridder Light & Power Company as the payer-thereof, whereas in truth and in fact, and to the knowledge of the said bank, the notes were the obligation of $. R. Morgan & Co., and the name of the De Ridder Light & Power Company was illegally' used on the said instruments as an accommodation to S. R. Morgan & Co., your respondent, as before stated, having received no consideration whatever Nfor such illegal transaction.
“(b) Because M. B. Morgan, the alleged secretary and treasurer of respondent corporation had no authority or power to execute,' indorse or in any manner use the name of your respondent on said notes, either as principal, surety or indorser, and his action in so doing was illegal and ultra vires.
“(c) Because respondent specially denies that any provision of its charter, any resolution of the stockholders or board of directors thereof gave the said secretary-treasurer the right to sign or issue for its account bills or notes, but on the contrary the' rules and by-laws of the corporation specially prohibit such secretary-treasurer or any official of the company from so doing.”

The case came to trial on November 4 and 5, 1921 (Tr. No. 1, pp. 124, 125), and the chief witness relied upon by the defendant (De Ridder Light & Power Company) was M. B. Morgan, aforesaid.

The testimony adduced' is not material here. It was all reviewed by the trial judge (Porter) in an opinion of several pages. Tr. No. 1, pp. 127-134; Tr. No. 2, pp. 13-20. The fact that M. B. Morgan was the chief witness for defendant is here referred to for the sole purpose of showing that he testified, in order to support thé defense above set forth, that the notes sued upon (and for which plaintiff afterwards obtained judgment against the De Ridder Light & Power Company) were primarily the debt of S. R. Morgan & Co., tbe indorsers on said notes. The following extract from the opinion of the trial judge will suffice for that purpose:

“Being of opinion that Mr. Morgan failed to show, as he stated, payment of the Reed notes from money loaned defendant company by tie Bank; finding that extensive improvements were in fact made by the defendant company at the time of the two loans; and believing that the deposits were checked out by defendant in the usual course of business — the court finds that the notes sued on were not accommodation notes, but were' given for the consideration therein stated.” Tr. No. 1, p. 132; Tr. No. 2, p. 19.

Judgment was thereupon rendered against the De Ridder Light & Power Company on December 29, 1921, for $.10,000 with attorney’s .fees and interest on each note from its maturity, respectively, June 18,1921, and September 1,' 1921.

II.

From this judgment the De Ridder Light 1 & Power Company did not appeal; and on January 7,1922, a writ of fi. fa. issued, under which the sheriff seized all the property of the De Ridder Light & Power Company.

III.

Meanwhile, to wit, on June 30, 1920, A. G. Miller, president, and M. B. Morgan, secretary-treasurer, executed a deed by which for the sum of $1 and “other .good and valuable consideration,” the De Ridder Light & Power Company sold and conveyed to “Morgan & Co., a corporation organized and existing under and by virtue of the laws of the state of Delaware,” all the property real and personal, claims, franchises, etc., of the De Ridder Light & Power Company;

“it being intended that all property, real, personal and mixed of every kind and character which the party of the first part [De Ridder Light & Power Company] now owns and hold's in the parish of Beauregard, state of Louisi-ana, or elsetohere, shall be included in this conveyance with like effect as though covered and conveyed by specific and apt description.” (Italics ours.)

See Tr. No. 1, pp. 7, 8; Tr. No. 2, pp. 10,11.

This deed was acknowledged on the same day before a notary public of Pulaski county, Ark.

IV.

On September 3, 1920, two months after the De Ridder Light & Power Company had sold out “lock, stock and barrel,” as it were, to Morgan & Co., Inc., S. R. Morgan & Co. wrote to plaintiff as follows:

“Upon instructions of Mr. M. B. Morgah, while passing through here, we are inclosing you herewith note of De Ridder Light & Power Company, dated this -date, in amount of $5,000, for ninety days, in renewal of a note for like amount which you hold maturing this date; we are also inclosing check to your .order for $101, covering discount and revenue stamp on the new note, all of which we trust you will find satisfactory.” Tr. No. 1, p. 92.

As wé have already said, S. R. Morgan & Co., through M. B. Morgan, indorsed the two, notes of the De Ridder Company, dated March 18, 1921, and June 3, 1921.

On June 20, 1921, nearly 12 months after tl;e De Ridder Light & Power Company had divested itself of everything but its name, said company wrote plaintiff from Oakdale, La., as follows:

“As per instructions from our Mr. M. B. Morgan, I am inclosing herewith renewal note in the amount of $5,000 in, payment of note of like amount maturing this date and check in amount of $101 to cover interest and revenue stamps on same.
“We are in receipt of your favor of recent date requesting a reduction on this paper, but due to the present financial conditions it is utterly impossible for us to do so at this time. However if you will accept the inclosed renewal we will endeavor to make á reduction on same at the maturity date.” Tr. No. 1, p. 25.

On June 23, 1921, plaintiff wrote the De Ridder Light & Power Company as follows:

“We have yours of '20th, inclosing note as renewal of your note for $5,000, which was due on the 18th.
“We regret very much that we were forced to return this note to your representative at this place, but owing to instructions from our discounting committee we were unable to renew same. We will, however, renew $2,500 of this provided you put up additional collateral.”

On July 8, 1921, M. B. Morgan wrote plaintiff from Oakdale, La., as follows:

“I just have your letter of June 23d, which was forwarded to me from Oakdale for attention, and although I would be very happy to meet your wishes in regard to reducing this note to $2,500, it is utterly impossible for us to raise the money at this time. I am sure you are aware of the fact that money conditions are even tighter in this part of the country than in your section, and we have been unable for the past several months to raise any money on any kind of collateral.
“I shall be very glad indeed, after reconsidering the matter, if you will find it agreeable to accept this renewal for us, and at its maturity we will make every effort to reduce the note to at least $2,500.”

The record does not contain the answer, if any, of the plaintiff to this letter of July 8th; but the upshot of it was that the note was not renewed, for the note which matured on June 18th was one of the notes sued upon, being the one dated March 18th and payable in 90 days (actually due June 16th).

V.

On August 20, 1920, 12 days before the maturity of the other note (dated June 3d, and payable in 90 days) and nearly 14 months after the execution thereof in Pulaski county, Ark., the deed by which the De Ridder Light & Power Company sold and conveyed all its assets to Morgan & Co., Inc., was recorded in the parish of Beauregard, of which De Ridder is the county seat. Tr. No. 1, p. 9. Tr. No. 2, p. 12, says August 29th.

On September 1st, the note of June 3d matured. On September 2d, the plaintiff brought suit upon both notes.

yi.

During all the 14 months from June 30, 1920, when the De Ridder Light & Power Company conveyed all its property to Morgan & Co., Inc., until August 20, 1921, when the conveyance was put of record in Beauregard parish, and, whilst all these renewals of notes and efforts to renew were going on, the De Ridder Light & Power Company was carrying on business in its own name the same as if it had never parted with its franchise and property, and even offering (in writing) to the town of De Ridder to sell it the plant as a whole; the only change being that Mr. A. E. Melchoir, the manager, removed from De Ridder to Oakdale, and carried on the business there in close communication with M. B. Morgan and J. C. McCarthy the auditor for S. R. Morgan & Co., and the De Ridder Light & Power Company. Tr. No. 1, pp. 93, 184; Tr. No. 2, pp. 36, 37. And M. B. Morgan was the vice president of Morgan & Co., Inc. Tr. No. 1, p. 5.

VJI.

On Jan. 9, 1922, the sheriff seized the property real and personal which had once been the property of the De Ridder Light & Power Company and advertised it for sale on February 18, 1922. Tr. No. 1, p. 3. But on February 17th, Morgan & Co., Inc., claiming to be the owners thereof by virtue of the deed of June 30, 1920, sued out an injunction, thereby stopping the sale. Tr. No. 1, pp. 1, 136. The petition for injunction was sworn to by M. B. Morgan, as vice president of Morgan & Co., Inc. Tr. No. 1, p. 5.

Thereupon plaintiff filed a rule to dissolve said injunction, and the case ultimately reached this court under the No. 25371 of our docket.

That was the appeal. dealt with by Mr. Justice DAWKINS in the opinion handed down on October 29, 1923.

The opinion speaks for itself, but we direct attention to the last two paragraphs thereof, just preceding the decree, and particularly to the following:

“Defendant nowhere alleges in the motion that the transfer from De Ridder Light & Power Company was a simulation. * * *
“ * * * It may be that nothing further can or will develop, and that the litigants would be willing to submit the case to us upon the record as it now stands. If so, this can be disclosed upon the application for rehearing.”

VIII.

The appeal in No. 25371 had been lodged in this court on May 30, 1922.

On June 16, 1922, plaintiff brought a direct action against Morgan & Co., Inc. (now Republic Power & Service Company, Inc.), and the De Ridder Light & Power Company, to annul, avoid and set aside, and to cancel and erase from the records the “pretended” act of sale of june 30, 1920, by the De Ridder Light & Power Company to Morgan & Co., Inc., upon the following grounds, to wit:

“That, in truth and in fact, no consideration was paid by the said Morgan & Company, Inc. (now Republic Power & Service Company, Inc.), for said property, and no part of said ‘pretended’ sale carried or attempted to be carried into effect; it being a mere sham designed' by both parties thereto for the purpose of enabling the said De Ridder Light & Power Company, Inc., to perpetrate frauds upon its creditors and particularly your petitioner.”
“That no delivery was made or attempted to be made in pursuance of said ‘pretended’ sale; but, on the contrary, all of said property remained, and is now in the possession of the said De Ridder Light & Power Company, Inc., and is being operated, and all business transactions carried on, in the name of the ‘De Ridder Light & Power Company, Inc.’ ”

Both defendants were duly cited, but neither appeared; and on October 4, 1922, a preliminary default was entered, which was duly confirmed and judgment rendered for plaintiff as prayed for on October 28th.

On November 8, 1922, both defendants appealed suspensively and furnished bond therefor in the sum of $5,000, with the United States Fidelity & Guaranty Company as surety thereon; said appeal being lodged in this court on November 30, 1922, under the No. 25700 of its docket.

IX.

So that said appeal No. 25700 was pending before this court when‘the court made its suggestion in the opinion handed down in appeal No. 25371 on October 29, 1923.

Acting upon that suggestion the First National Bank of i)e Ridder (subrogee to plaintiff’s claims) filed its application for a rehearing and prayer for consolidation of the two appeals.

A rule also issued to Morgan & Co. and the De Ridder Light & Power Co. to show cause on Wednesday, January 2, 1924, “why a rehearing should not be granted in case No. 25371, in order that the case may be consolidated with the aforesaid case No. 25700 and have the issues in both cases decided at one and the same time,” which rule was submitted and made absolute, and the two cases were thereupon set down for a rehearing as consolidated cases.

When the cases were called, counsel waived argument, and submitted them on briefs filed and to be filed. Counsel-for the two banks filed their brief in the “consolidated” cases, on February 11, 1924; counsel for Morgan & Co., Inc., filed his brief, also in the “consolidated” cases, on February 29, 1924.

X.

The .two cases having been so “consolidated,” and thus made one, the two transcripts now make -up together one single transcript in the consolidated case, and hence we have not hesitated to gather the facts disclosed by both transcripts and then place them in chronological order as nearly as possible; to the end that they might “speak for themselves” upon the one real issue involved in this case, to wit, whether the deed of June 30, 1920, by which the De Ridder Light & Power Company pretended to convey, for a nominal consideration, all its property, without exception or reservation, to Morgan & Co., and the recordation of that instrument only 14 months afterwards, and on the eve of being sued, the vendor remaining in possession in the meanwhile, does or does not evidence a pure and simple simulation executed for the sole purpose of attempting to put the debtor’s property beyond the reach of its creditors.

And, having thus set out the facts, we conclude that the judgment of the trial judge (Cline) confirming the default as aforesaid was correct, See R. C. C. art. 2480; Cole v. Cole, 39 La. Ann. 878, 2 South. 794; Wolff v. Shreveport Gas, etc., Co., 138 La. 743, 70 South. 789, L. R. A. 1916D, 1138; King v. Atkins, 33 La. Ann. 1057.

But it may not be amiss (having already drawn attention to the close connection between S: R. Morgan & Co., De Ridder Light & Power Co., and Morgan & Co., Inc., and to the activity of M. B. Morgan in obtaining credit for the De Ridder Company, in defending the suit against it and in suing out the injunction on behalf of Morgan & Co., Inc.) to observe in passing that, according to the testimony given by M. B. Morgan, heretofore referred to, the very debt which plaintiff is seeking to collect is his oion debt, whilst as far as we can see from this record he himself is the only visible person having any interest whatever in Morgan & Co., Inc.

XI.

Since the sale by the De Ridder Light & Power Company to Morgan & Co. is a simulation, it follows that the injunction sued out by the latter must be dissolved.

But since the merits of the case have been submitted along with the rule to dissolve, and the injunction dissolved only aftter passing, on the merits, it follows that plaintiff cannot be allowed attorney’s fees for the dissolution of the writ, “for to do so would be to allow the fees virtually for defending the suit on the merits, which is not permissible.” Three Rivers Oil Co. v. Laurence, 153 La. 224, 231, 95 South. 652, 654.

XII;

Counsel for Morgan & Co. makes the point in his brief that “failure to allege and prove vendor’s insolvency, and plaintiff’s inability to otherwise collect the debt, is fatal” to a revocatory action or one en declaration de simulation, citing Hart & Co. v. Bowie, 34 La. Ann. 323.

We think plaintiff has fully proved the insolvency of the De Ridder Company by showing an indebtedness of over $10,000; for, notwithstanding some loose expressions to be found here and there in the jurisprudence, the general rule is that no one is required to prove a negative, and hence no one should be required to prove that another has no property. But, be that as it may, the rule in this state is statutory. R. C. C. art. 1985, reads as follows:

“Art. 1985. By being in insolvent circumstances is meant, that the whole property and credits are not equal in amount, at a fair appraisement, to the debts due by the party. And if he, who alleges the insolvency shows the amount of debts, it is incumbent on the other party to show property to an equal or greater amount. * * * ” (Italics ours.)

Decree.

The judgment herein appealed from under the No. 25700 of this court (No. 1512 of the court below) in the matter entitled Lumberman’s Bank & Trust Co. v. Morgan & Co., Inc., et al., is therefore affirmed.

And the judgment herein appealed from under the No. 25371 of this court (No. 1347 of the court below) entitled Lumberman’s Bank & Trust Co. v. De Ridder Light & Power Co. (In re Morgan & Co., Inc., Intervener and Third Opponent) is affirmed in so far as it dissolves the injunction therein sued out by Morgan & Co., Inc., and reversed in so far as it allows attorney’s fees for the dissolution of said injunction, the demand therefor being now rejected:

It is further ordered that Lumberman’s Bank & Trust Company pay the costs of appeal in No. 25371, and that Morgan & Co., Inc., pay the costs of appeal in No. 25700 and all costs of the lower court in both cases. And the right of all parties to apply for a further rehearing is reserved.