Case ID: la-ann_31/html/0679-01.html
Source: Caselaw Access Project
Author: {"author": "Manning, C. J. Mare, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 813.
    R. T. Jennings et al. vs. H. F. Vickers et al.
    An exception, which if maintained, will terminate the suit, ought to be tried and decided in limine.
    
    A mortgage is not negotiable, in the sense of the commercial law, although it be given to secure a negotiable instrument, and if it has been extinguished, or for any cause has ceased to be a subsisting obligation, so that it could not be enforced by the mortgagee, then it cannot be enforced by any transferee of his, especially to the prejudice of a third possessor of the property on which the mortgage rests, who has paid the price of the property to the mortgagee, extinguished pro tanto the mortgage debt, and obtained from the mortgagee an order on the Recorder of Mortgages to cancel the mortgage.
    ■Whore the transferee of a mortgage, which covers three different parcels of ground in the possession of three different persons, forecloses on two of the parcels, which sell for enough to pay his whole debt, and fails to enforce the sales, but by agreement with the possessors of the two parcels allows second sales to bo made which do not realize the amount of his debt, he cannot afterwards proceed for the residue of his debt against the possessor of the third parcel of ground covered by the mortgage, who has bought the land in good faith, paid its purchase price, and to that extent, by special agreement with the mortgagee, extinguished the mortgage.
    APPEAL from the Fourteenth Judicial District Court, parish of Rich-land. Bay, J.
    
      W. W. Farmer and Biehardson & JBoatner for plaintiffs and appellees.
    
      P. H. Toler and M. J. Liddell for defendants and appellants.
    The opinion of the court on the original hearing was delivered by Manning, C. J., and on the rehearing by Mark, J.
   Manning, C. J.

The transcript in this case is so voluminous, the pleadings so prolix, and the issues sought to be presented so numerous and contradictory, that the patience and industry of the' Court has been severely taxed in its examination. The issues necessary to be decided are few and simple, and can be embraced in a narrow compass.

The plaintiffs — R. T. Jennings, John Chaffe, Brother & Son, and Chaffe & Bell, assignees of Winston Morrison & Co., bankrupts — join in an hypothecary action against several defendants for the enforcement of a conventional mortgage executed by H. E. Yickers in favor of Winston Morrison & Co., of date 1st October, 1872.

No defence was opposed to the action by any of the defendants except Mrs. Mulhern.

• The following is an accurate and brief statement of the facts disclosed by the record:

EL E. Yickers, being indebted to Winston Morrison & Co., executed in their favor on 1st October, 1872, a conventional mortgage on his property situated in Richland parish, the debt thus secured being evidenced by three promissory notes for $12,650 each, due respectively 1st of January, 1873,1871 and 1875, with 8 per cent per annum interest from date, which mortgage was duly registered in the Recorder’s office of Richland on the 1st day of October, 1872, the day of its execution, the property now in possession of Mrs. Mulhern and sought to be subjected to this mortgage being fully described therein. It appears that there was a verbal agreement between Yickers and Winston Morrison & Co. that in case the former could sell any of the mortgaged property the latter were to receive the purchase price and cancel the mortgage upon the property sold.

On the 5th of July, 1873. W. Morrison & Co., the successors and liquidators of Winston Morrison & Co., pledged to R. T. Jennings, as collateral security, one of the Yickers notes — that due 1st January, 1871. On the 25th of August following they sold to John Chaffe, Brother & Son another of the notes. The third note was surrendered as part of their assets in bankruptcy and was sued on herein by their assignees.

On the 12th of August, 1873, H. E. Yickers sold to P. S. Mulhern the lands upon which this mortgage is now sought to be enforced. Hiram Morrison, of the firm of W. Morrison & Co., was present,received the purchase price, which is credited to Yickers on the note sold to Chaffe, and signed an order directing the Recorder to cancel the mortgage upon the lands sold.

This order, with the deed from Yickers to Mulhern, was presented to the Recorder by Morrison and Mulhern for record. That officer refused to cancel the mortgage as requested, assigning as a reason that he had no authority to do so, unless Mr. Morrison could produce the notes. Since he could not do this, both documents were left with the Recorder by Mulhern and Morrison, the latter promising to send up the notes as soon as he reached New Orleans, on receipt of which the mortgage was to be cancelled and the deed recorded, Mulhern stating he would not pay for the deed unless the mortgage was cancelled.

Morrison, on reaching New Orleans, instead of sending up the notes as promised, gave credit upon one of them for the notes received from Mulhern and negotiated it to John Chaffe, Brother & Son, without notice of the transaction above related. The note due 1st January, 1874, having been previously pledged to B. T. Jennings.

Yery soon afterwards Mr. Mulhern died, and his wife having qualified as administratrix of his estate, this suit was brought against her. The original mortgage from Yiekers affected three several pieces of property; one of which at the institution of the suit was in possession of H. E. Yiekers; one of W. W. Farmer; and one of Mrs. Mulhern, who are the three defendants. The suit was filed 11th October, 1875. On 26th of March following, Jennings, with consent of Morrison, sold his note to John Chaffe, who also subsequently purchased that sued upon by Chaffe & Bell, assignees. *

The defendant in her answer filed October 26th, 1875, urges as her defence that the mortgage herein sought to be enforced, was in effect cancelled and extinguished by the order of 12th August. That Morrison & Co. were the owners of the notes at that time, and the present holders having acquired subsequent, by and with knowledge of this transaction, are bound thereby. She propounds interrogatories to Chaffe and Jennings to prove this defence. Jennings answers that he held the note prior to the sale to Mulhern (acquired it 5th July), and knew nothing of any agreement with Yiekers or Mulhern. Chaffe answers that he acquired the note held by him on 25th August, but without any knowledge of Morrison’s promise to have the mortgage cancelled. The defendant thereupon filed an amended answer, and called in warranty H. F. Yiekers. On the 17th of September, 1877, she filed an exception, in which she urged the dismissal of the action upon three several grounds, Viz: That Farmer, being one of the defendants, could not represent the plaintiff; that the plaintiffs are all really acting in the interest of the defendant Yiekers, who is charged with being the owner of the notes, and the sole person interested in prosecuting this suit; and that there is a misjoinder of parties.

The court tried the exception, but did not decide it. It is not easy to see why, since time had been consumed in trying it. The exception was tumbled into the omnium gatherum, yclept the merits — a practice which not infrequently wastes time and labour. An exception, which if maintained, will terminate the suit, ought to be tried and decided in limine.

Jennings held his note as collateral, and subsequently sold his interest in it, and the suit upon it, to Chaffe, who at length became ,the owner of the interests of the assignees in bankruptcy of W. Morrison & Co., and of the other members of the Chaffe firm. When interrogated specially upon the nature of his purchase of these three several interests, he answers that it was an absolute purchase,-and that he was subrogated to all their rights.

There were judgments against H. E. Vickers upon which executions issued, and at the sale one of the plantations was bought by Mr. Farmer, as attorney of the plaintiffs in execution, for $3,7U0, and another was bought by Vickers’ wife for $33,711, and these two bids were sufficient to pay the special mortgage which is now sought to be enforced. The bids were not complied with. The property was not offered a second time at their risk. If these bids had been complied with, the Mulhern property would have been free from mortgage, and Mrs, Mulhern could never have been pursued for any part of the demand now made upon her. The whole debt would have been extinguished.

While matters were in this condition John Chaffe went from New Orleans to the plantation where Vickers and his wife lived, taking his attorney with him. It is insisted by Mrs. Mulhern that the result of that conference was an agreement that Mrs. Vickers should be released from liability for her bid of over $33,000, and that-the property should be again exposed for sale, should be bought by Chaffe, and then should be resold to Mrs. Vickers (who is separate in property) for a price agreed on. A resale was had in the same year, when the plantation which had been adjudicated at $3,700 on the previous sale, was now bought by John Chaffe for $4,400, and that which had been adjudicated at $33,700 was now bought by the same purchaser for $4,000. The place bought by Mr. Chaffe’s lawyer at the first sale brought an advance of seven hundred dollars, and the place bought by Mrs. Vickers at the first public auction suffered a diminution of $29,700, and this in a few months. In the next month after this purchase by Chaffe, he sold to Mrs. Vickers the place she had bought at the first sale, for $14,572.28.

Chaffe could have held Mrs. Vickers to her bid of thirty three thvusand dollars, and that, with the bid for the other place, paid the mortgage debt. Both his and Mrs. Vickers’ conduct afterwards shew there was an agreement by which she was released by Chaffe from paying her bid, and the arrangement was then entered into, under which the second sheriff’s sale was had, the purchase was made by Chaffe at a price so low as to leave a large margin to cover the Mulhern plantation, and immediately afterwards, before the new year’s planting operations began, he sold to Mrs. Vickers for an advance over his own bid of ten thousand five hundred and seventy two dollars. He was entirely at liberty to remit to Mrs. Vickers any debt she owed him. If he thought it more prudent as a business man not to pursue Mrs. Vickers for the sum she had become apparently liable for, and instead, to agree privately with her on a solution of the complication, such as that subsequently carried out, he had the unquestionable right to do with his own as he willed.

But he cannot do this to Mrs. Mulhern’s injury. He cannot at his. own option change the victim to be sacrificed, and loosing the bands which bound the one, avert the knife from a prostrate Isaac, and plunge it instead into the heart of the lamb which 'he has dragged from the thicket of mortgages in which‘it was entangled. Mrs. Mulhern has been released by his release of Mrs. Yickers.

The lower court held otherwise.

It is ordered, adjudged, and decreed that the judgment of the lower court is avoided and reversed, and that the defendant Mrs. Mulhern have judgment against the plaintiffs on their demand and. for the costs of appeal, and her costs in the lower court.

On Application fob Reheabins-..

Mare, J.

The mortgagor, Yickers, with the consent of the mortgagees, Winston Morrison & Co., sold to Mulhern part of the land mortgaged. The mortgagees received the entire price; and they gave-an order, in writing, to the recorder, to cancel the mortgage so far as it bore upon this part of the land. This was not done because the mortgage notes were not presented to the recorder. The mortgagees promised to send the notes to the recorder, but failed to do so. They credited the price paid by Mulhern on one of the Yickers’ mortgage notes, which they afterwards endorsed specially and delivered to Chaffe, Brother & Son in part payment of a debt.

The recorder retained the order to cancel from the day of its date, 12lh August, 1873; and he finally recorded it, in the book of mortgages, under date 4th September, 1875, and made a pencil memorandum in-the margin of the record of the Yickers mortgage, referring to the book and page of the record of the order to cancel.

There were three mortgage notes given by Yickers, to the order off Winston Morrison & Co., each for §12,650; payable, respectively, May 1, 1873,1874,1875. In July, 1873, the note maturing 1st May, 1874, was delivered to R. T. Jennings, endorsed by the payees and by W. Morrison & Co., their successors, with other notes, as collateral for a debt of §8400, which they owed him. The note payable ^st May, 1875, was. the one endorsed to Chaffe, Brother & Son, with the credits on it, and the one payable 1st May, 1873, W. Morrison & Co. retained until it passed to their assignees in bankruptcy, 16th June, 1874.

A mortgage is not negotiable, in the sense of the commercial law? and whether it be transferred by separate assignment, or merely as accessory to .the negotiable note secured by it, the transferee has no greater rights than his transferror had at the date of the transfer. If the mortgage has been extinguished, or for any cause has ceased to be a subsisting obligation, so that it could no longer be enforced by the mortgagee, it cannot be enforced by the transferee. See Schmidt vs. Frey, 8 Rob. 435; Bowman vs. McElroy, 14 An. 587; Doll vs. Rizotti, 20 An. 264.

If this be true with respect to the mortgagor, with how much greater force must the rule apply to the third possessor, who has > paid the price of his purchase to the mortgagee, extinguished, pro tanto, the mortgage debt, and obtained from the mortgagee an order to cancel the mortgage.

The two notes payable 1st May, 1873, and 1st May, 1875, passed from the possession, and ownership of the mortgagees after the order to cancel had been delivered by the mortgagees to the recorder; and the mortgage, with respect to them, was extinguished on the 12th August, 1873, so far as it bore upon the land sold to Mulhern.

The note held by J ennings was specially endorsed to him. or his order. Jennings delivered it without endorsement to Ohaffe, long after its maturity, and during the pendency of this suit. Ohaffe did not acquire it, therefore, in the usual course of business, before maturity, without notice. When J ennings, with the consent of Morrison, sold the note to Ohaffe, or rather, his interest in the suit then pending on the note, the extent of his right and interest”was fixed at 54200, the price paid him by Ohaffe; and Ohaffe had no right to enforce the mortgage as against the land sold to Mulhern, except to the extent of the 51200; and interest from the 23d March, 1876, the date of the payment by him to Jennings, upon the hypothesis that he succeeded to all the rights of Jennings.

But the property mortgaged to secure all the notes, which was not sold to Mulhern, had been sold, at the second sale by the sheriff, part to Farmer for 51000, and the remainder, nominally to Ohaffe, but in reality to Mrs. Tickers, for 511=572, making in all 518,572, to be applied to each of the three notes owned by Ohaffe. There were large credits on the notes which matured in May, 1873, and May, 1875. But applying the total proceeds to the three notes equally, the portion to each would be 56190, which extinguished the amount due Ohaffe on the note which he acquired from Jennings, the only one of the three which could have been enforced against the property sold to Mulhern, under the most favoraole hypothesis for Ohaffe.

The rehearing is therefore refused.