# Livingston's Executrix v. Story

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## Dissenting Opinion

    Baldwin
United States Supreme Court
36 U.S. 351
Livingston's Executrix v. Story
[Syllabus from pages 351-353 intentionally omitted]
APPEAL from the District Court for the Eastern District of Louisiana. The case, as stated in the opinion of the court, was as follows:
The complainant, the appellant's testator, on the first day of February 1834, filed a bill in equity in the district court of Louisiana, in which he stated himself to be a citizen of the state of New York, against Benjamin Story, a citizen of the state of Louisiana.
The bill charged, that some time previous to the 22d of July 1822, the complainant, being in want of money, applied to the defendant and John A. Fort for a loan, offering as a security a lot in the city of New Orleans, on which a building, intended for stores, had been begun; that the defendant and Fort agreed to loan him $22,936; of which a part only was paid in cash, part in a note of John A. Fort, and $8000 of which was afterwards agreed, between himself, the defendant and Fort, to be paid by Story & Fort, to one John Rust, a mechanic, who had contracted with the complainant, to complete the stores. That to secure the money borrowed, complainant conveyed to Fort & Story the lot of ground mentioned, and that, contemporaneously with the deed of sale, they executed, on their part, an instrument in writing, called a counter-letter, by which they promised, on the payment of $25,000, on or before the 1st day of February 1823, to reconvey to the complainant the property which he had conveyed to them. The complainant further charged, that of the sum of $25,000 to be paid by him on the 1st of February, a part of it was made up by a charge of interest at eighteen per cent. per annum, upon the amount of $22,936, actually advanced to him, and to be paid on his account to Rust, by Fort & Story.
The complainant also transferred his written contract with Rust to the defendant and Fort, rendering himself responsible for the proper employment of the $8000; and which was to be paid Rust in weekly payments, by the defendant and Fort. Rust, on his part, consented to the transfer of his contract, and accepted Fort & Story in the place of the complainant. The stores were to be completed by Rust, by the 1st of November 1822, in a workmanlike manner; and all the materials, except those already provided, were to be found by Rust; and in his contract, he renounced all claim or privilege upon the building beyond $8000, which was to be paid him by Fort & Story, for the complainant. The deed and counter-letter, and agreement with Rust, are in notes,A,B andC.
A
Deed. In the city of New Orleans, state of Louisiana, on the 25th day of July 1822, and in the forty-seventh year of the Independence of the United States of America, before me, Hughes Lavergne, a notary-public, duly commissioned and qualified, in and for the city and parish of New Orleans, residing therein, and in the presence of the subscribing witnesses hereinafter named, personally appeared Edward Livingston, of this city, counsellor-at-law, who declared to have granted, bargained and sold, and doth by these presents grant, bargain and sell, with all lawful warranty, unto John A. Fort and Benjamin Story of this city, merchants, here present and accepting, all that parcel of ground situated on the batture of the suburb St. Mary, between Common and Gravier streets, measuring eighty-two feet, fronting Common street, one hundred and twenty-six feet or thereabouts, fronting Tchoupitoulas street, one hundred and forty-six feet or thereabouts, fronting New Levee street; and bounded on the other side by the lot of ground belonging to Messrs. Livermore, Morse, and Miller and Pierce, containing one hundred and twenty feet or thereabouts, the said parcel of ground sold, together with the buildings, improvements, and all other appurtenances to the same in any wise appertaining or belonging, without any exception or reserve; the said purchasers declaring that they are perfectly acquainted with the premises, and do not wish for any further description of the same. The above-described property belongs to the said vendor, by virtue of the compromise entered into between him and the heirs of Gravier, by act before Carlisle Pollock, notary-public of this city, under date of the 3d of May 1818, and is free of mortgage, as appears by the recorder's certificate, delivered this day, and hereunto annexed. This sale is made for and in consideration of the sum of 25,000 dollars, which price the said vendor acknowledges to have received from the said purchasers, out of the presence of the undersigned notary and witnesses, renouncing the exception non numerata pecunia, and giving by these presents to the said purchasers a full and entire acquittance and discharge of the said sum of 25,000 dollars. In consequence of which payment, the said vendor doth hereby transfer and set over unto the said purchasers, all his rights of property on the above parcel of ground and buildings thereon; consenting that they should take immediate possession of the said premises now sold, to have, hold, use and dispose of the same, as fully belonging to them by virtue thereof. This done and passed, in my office, in the presence of John Baptiste Desdunes, junior, and Charles Janin, witnesses, residing in this city, who, together with me, the said notary, have signed this act, after the same had been fully read and understood. The contracting parties having previously signed.
B
Counter-Letter.7 Whereas, the said Edward Livingston, by act before H. Lavergne, notary-public, hath this day sold and conveyed to said Fort & Story, a certain lot of ground, situated on the batture, in front of the Faubourg St. Mary, and designated as lot No. 1, on the plat thereof deposited in the office of the said notary, together with all the buildings and improvements thereon, for the sum of twenty-five thousand dollars in cash: Now, be it known, and it is the true intent and meaning of the parties to said deed of sale, that if the said Edward Livingston shall pay and reimburse to said John A. Fort and Benjamin Story, the aforesaid sum of twenty-five thousand dollars, on or before the 1st day of February 1823, then and in that case, the said Fort & Story stipulate and bind themselves to reconvey the said property above described, to said Edward Livingston. And in case of non-payment of the said sum of twenty-five thousand dollars, on or before the day as above stipulated, then the said Fort and Story covenant and agree to cause the said property to be sold at public auction, by one of the licensed auctioneers of this city, after twenty days' public notice, on the following terms, to wit, twenty-five thousand dollars in cash, and the residue in equal payments one and two years: the purchaser given satisfactory indorsed notes and special mortgage on the property, until final payment. (continued on p. 355) The complainant charged, that soon after the transaction, he left New Orleans; and that when he returned to it, he found that Fort & Story had paid to Rust $8000, on his account, but that little or nothing had been done toward the completion of the stores; so that if the property had been sold on the first of February, according to the terms of the counter-letter, it would not have
The said residue, after deducting the costs attending the sale, to be delivered over to the said Edward Livingston. And the said Edward Livingston, on his part, having taken cognisance of this agreement, declares himself to be perfectly satisfied and contented therewith, and gives his full and free assent to the terms of sale and all the conditions as above stipulated.
C
Agreement with John Rust. It is hereby agreed, between Edward Livingston and John Rust, as follows: First, That the said John Rust engages, for the price hereinafter mentioned, to finish the sixteen stores now commenced and brought up to the ground floor, situated at the corners of Tchoupitoulas, Levee and Common streets according to the plan and elevation signed by them and delivered to the said Edward Livingston; except that the said stores, instead of three, are to be only two stories high, to be covered in terrass. The whole to be finished by the 1st day of November next, in a workmanlike manner; and all the materials, except those already provided, to be found by the said John Rust. And the said Edward Livingston agrees to pay to the said John Rust eight thousand dollars, in weekly payments of six hundred and sixty-six dollars each, during the progress of the work. And the said John Rust declares that he renounces any kind of claim or privilege upon the said building beyond the said eight thousand dollars to be paid as aforesaid.
Know all men, by these presents, that I, Edward Livingston, for myself and my representatives, do hereby transfer and assign the within contract to John A. Fort and Benjamin Story, they complying with the stipulations on my part therein contained; and John Rust being here present, consents to the said transfer, and accepts the said John A. Fort and B. Story, in the place of Edward Livingston. Dated 25th of July 1822. I do further agree to allow the said weekly payment of six hundred and sixty-six dollars to be charged to me, rendering myself responsible for the proper employment thereof, by the said John Rust. produced any thing like its full value. That under these circumstances, he applied to Fort & Story for further time, which they would not consent to, but on certain conditions; which were, that the property should be advertised for sale, on the 22d of June 1823; that the sum due them should be increased from $25,000 to $27,500; which was so increased by the addition of $1500 as interest, at eighteen per cent. for five months, $800, for auctioneer's commissions, $50, for advertising, and $150, arbitrarily added by the said Fort & Story. The complainant stated, that being entirely at the mercy of Fort & Story, he consented to those terms, and executed a paper accordingly.(a)
The bill further stated, that the complainant, on the 2d of June, in order to obtain a delay of sixty days, was forced to consent to sign a paper, by which it was agreed, that the debt should be augmented to the sum of $27,830.76; and that if the same was not paid on the 5th of August, then the property should belong to the said Fort & Story without any sale.(b)
But there was no clause by which
(a)
'Agreement between Edward Livingston, and John A. Fort and Benjamin Story of the other part, as follows: 1st. The sale of lot No. 1, on the batture, with the buildings thereon, to be postponed until the 2d of June next. 2d. On that day it shall be sold by McCoy & Company, unless sooner redeemed, after being advertised in the Courier de 1a Louisiane, in French; and the Orleans Gazette, in English, from the 1st day of May previous to the sale. 3d. The conditions for the sale shall be $27,350 cash, and the residue at one and two years with special mortgage; but in this sum is included $850, at which the auctioneers' commission, and charges of advertisement are calculated, which shall be deducted or redueed to what they shall really amount to, if payment be made before the 1st of June. 4th. The overplus, after deducting the cash payment, is to be delivered to Edward Livingston. 5th. The counter-letter, executed by Messrs. Fort & Story, shall be delivered up, and the registry thereof annulled, immediately after the signature of this agreement, made by duplicates, this 4th day of March 1823.
(b)
In the city of New Orleans, state of Louisiana, on the 2d day of June 1823, the forty-seventh year of the independence of the United States of America, before Mr. Hughes Lavergne, notary-public, duly commissioned and qualified, in and for the city and parish of New Orleans, residing therein, and in the presence of the undersigned witnesses hereinafter named, personally appeared, Edward Livingston, counsellor-at-law, of this city, on the one part, and John A. Fort and Benjamin Story, of this city, merchants, of the other part, which said appearance declared, that this being the day agreed on by contract, between Edward Livingston and the said Fort and Story, for the sale, at auction, of lot No. 1, situated on the batture, in the front of Fauxbourg St. Mary; and the said Edward Livingston having requested that said sale might not take place, for his own accommodation, the said Fort and Story, have agreed to the said Livingston's request, on the following conditions, to wit: that on or before the 5th day of August, he, the said Livingston, shall pay to the said Fort and Story, the whole amount of the consideration-money paid by them for the said lot, that is to say, the sum of $27,830.76, and also any other sum they may be under the necessity of paying for the preservation of the said property; then the lot and buildings to revert to the said Livingston, and to become his property; and in case the said Livingston should fail, on the day above mentioned, to wit, the 5th day of August next, to pay to the said Fort and Story the sums above specified, then and in that case, the said lot with all the buildings thereon, are to become the full and he should be discharged from the payment of the sum so borrowed as aforesaid, whereby he would have been liable to the payment of the sum so advanced, in case the property had fallen in value; and the bill stated, that on the 5th day of August, above mentioned, the said Fort & Story demanded, by a notary, the full sum of $27,830.76, which included the charge of $800 for auctioner's commissions for selling, although no sale had taken place, and all the other illegal charges above stated; and on non-payment, protested for damages and interest on the said sum, thereby showing their intention to hold him responsible for the sum demanded, if the premises should, by any accident, become insufficient in value to pay the same. Fort & Story remained in possession of the said premises, until the death of the said John A. Fort, which took place some time in the year 1828; after his death, the said Benjamin Story took the whole of the said property, by some arrangement with the heirs of the said John A. Fort, and was and ever since had been, in the sole possession thereof; and the bill charged, that the said John and Benjamin, in the life-time of the said John, and the said Benjamin, after the death of the said John, had received the rents and profits of the said property, to the amount of at least $60,000; and that the complainant was advised, and believed, that he had a right to ask and recover from the said Benjamin Story, the possession of the said property, and an account of the rents and profits thereof, the said conveyance of the same from the complainant having been made on a contract for the loan of money, and although in the form of a sale, in reality, only a pledge for the repayment of the same; the act by which he agreed to dispense with the sale being void and of no effect in law.
The bill also prayed, that an account might be taken, under the direction of the court, between the complainant and the defendants to the bill, in which the complainant agreed he should be charged: 1st. With such sum as should be shown to have been advanced to him or paid on his account under the loan made to him on the 25th day of July 1822, with the interest which he agreed to pay, of eighteen per cent. per annum, to be calculated upon each advance from the time it was made, until the 5th of August 1823, and after that time at legal interest. 2d. With all reasonable expenditures judiciously made and incurred by the said John and Benjamin, in building, repairing and safe-keeping of the said property, and that the complainant be credited in such account with all such sums as the said John and Benjamin, or either of them, had received, or might, if they had used due diligence and care, have received, from the said property; and that, in such account, the rents and profits be applied as the law requires: first, to the payment of the sums necessarily incurred in building and repairing; secondly, to the payment of interest on the sums which should appear to have been advanced on the said loan; and thirdly, to the discharge of the principal of the said loan. And that if, on said account, it should appear that there was a balance due him, as he hoped to be able to show will be the case, that the said Benjamin Story be decreed to pay the same to him, and to surrender the said property to him; and that if any balance should be found due from the complainant, that the said B. Story might be decreed to deliver the said property to him, on his paying or tendering to him the said balance; and that he might have such other relief as the nature of his case might require. That he, the said Benjamin Story, in his own right, and also as executor of the last will and testament of the said John A. Fort, or in any other manner representing the estate of the said John A. Fort, might be summoned to answer this bill; the complainant averring that he was a citizen of the state of New York, and that the said Benjamin Story was a citizen of the state of Louisiana, and then resided in New Orleans.
The protests, made at the request of John A. Fort and Benjamin Story, on the non-payment of the money stipulated to be paid by Edward Livingston, on the 1st of February 1823, stated, that on that day the notary had requested from Edward Livingston, payment of the sum of $25,000, and was answered, that 'he could not immediately pay the sum due to Fort & Story, but that he hoped soon to be able to do it.' The answer to the demand made, stated in the protest of the 5th of August 1823, to have been given by Edward Livingston was, 'that owing to the very extraordinary scarcity of money, he was prevented repaying the money he had borrowed from Messrs. Fort & Story at this time, but was willing to allow them the same interest, at eighteen per cent., with good personal security, in addition to the real property they now have, for the renewal of the obligation for six months.'
On the 17th of February 1834, Benjamin Story appeared to the bill, and demurred to the same; alleging for cause of the demurrer, that the case made in the bill was not such a one as entitled the claimant in a court of equity of the state of Louisiana, to any discovery touching the matters contained in the bill, or any other matters, or any relief; and that by complainant's own showing in the said bill, the heirs of John A. Fort, who was therein named, were necessary parties to the said bill; as much as it was therein stated, that all the matters of which he complain, were transacted with the defendant and John A. Fort, whose widow, the present Mrs. Luzenburg, was the sole heir and residuary legatee.
The district court sustained the demurrer, and dismissed the bill, on two grounds: 1st. That this is not a suit that can be maintained in its present form, in a court of the United States, sitting in Louisiana. 2d. That a material party is omitted in the bill. The complainant appealed to the supreme court, and at Jannary term 1835, the decree of the district court was reversed, and the case remanded for further proceedings. (9 Pet. 632.)
On the 15th of December 1835, Benjamin Story filed in the district court of Louisiana, an answer, on oath, to the original bill, in which he said, that he did not admit, but if it were the fact, required proof, that the complainant was a citizen of the state New York; that at the time of the transaction mentioned in the bill, and for a long time thereafter, he was a citizen of the state of Louisiana, and one of her senators in the senate of the United States; and if he had ceased to be a citizen of that state, the defendant knew not when or how, and called for the proof.
And the defendant, further answering, said, that he expressly denied, that on or about the 25th July 1822, he and John A. Fort agreed to lend to the complainant the sum of $22,936, or any other sum. That he expressly denied, that at any time, he either jointly with the said Fort, or separately, ever agreed to lend to the said complainant any sum of money whatever, as alleged in the bill of complainant. That so far from there having been any loan intended by the parties, the defendant stated, that the negotiation for the sale of the said lot, commenced between John A. Fort and Nathan Morse, Esq., since deceased, the latter acting for the said complainant; and that one of them informed the defendant that the complainant wished to raise money on mortgage; but the defendant peremptorily and expressly refused to advance any money whatever to the complainant on mortgage. That during the progress of the negotiation, the complainant having learned that the defendant was to be interested in the purchase, and was to make the principal payments, mentioned to the defendant, that he would prefer obtaining money by mortgage on the property, rather than make a sale of it; and the defendant again repeated to him his refusal, and insisted upon a sale being made to him.
As evidence of the understanding of the parties, and of the real nature of the transaction, certain communications which had been addressed by the alleged agent of Mr. Livingston to John A. Fort and Story, were annexed to the answer.(a)
(a)
to JOHN A. FORT, Esq., Present.-Messrs. John A. Fort and Story will oblige Mr. Livingston by sending in writing, their definitive terms, that is-What sum will they give in cash; what sum they retain in their own hands to appropriate towards the building; what sums, and at what periods, they give their notes; that they must have an absolute sale of the lot and buildings free from all incumbrances, and a transfer of the contract, and are to put in immediate possession; the property to be returned in case the money is refunded punctually, at the expiration of _____ months.
To Mr. JOHN A. FORT, Present.-Messrs. Fort and Story are requested to meet at Lavergne's office, corner of Royal and St. Louis street, this day, at 12 o'clock, for the purpose of completing the arrangements for the batture.
Friday, 26th July.
(Signed) The sale was agreed to, and an act was passed on the 25th of July 1822, containing the clause of non enumerata pecunia. The answer referred to the different documents which were stated and referred to in the complainant's case. The money not being repaid, as was provided in the counter-letter on the 2d of February 1823, no sale of the property was made by auction, because of the request of the complainant; and on the 4th of March, they made another agreement (note ante, p. 356), by which they agreed to postpone the sale of the property, until the 2d of June 1823; and the said Edward Livingston, in consideration of allowing him such additional chance to repurchase the said lot and buildings, or obtain some person to purchase it, agreed to pay to them a compensation therefor, as is in said agreement stipulated; and in this agreement, it was covenanted between the parties, that the counter-letter should be annulled and given up, so that there then existed between the parties the absolute bill of sale, and this stipulation of 4th of March 1823. And finally, the 2d day of June 1823, having arrived, and Edward Livingston would not pay the price of said property, nor was there any offer therefor, at his request, an agreement was entered into before H. Lavergne, a notary-public, whereby the said Edward Livingston requested that the sale might not take place, for his accommodation, and the said Fort & Story agreed thereto, on the following conditions: that on or before the 1st day of August 1823, the said Edward Livingston should pay the said sum of $27,830.76, and any further sum by them expended for the care and preservation of said property, and that then the said lot and buildings were to become the property of said Livingston; and in case the said Livingston should fail, on the 5th August 1823, to pay to the said Fort & Story the sums above specified, then the said lot, with the buildings thereon, were to become the full and absolute property of Fort & Story, and the said Livingston engaged thereupon to surrender and cancel all and every writing or other document in relation to said property, that might give to him any equity of redemption or other right to the said promises; it being in said act expressly stated, that it was the true intent and meaning of the parties, that in the case of failure of payment as aforesaid, said lots, with all the buildings and appurtenances to the same belonging, were to vest in said Fort & Story a full, free, and absolute title in fee-simple for ever.
The answer denied, that at the time of the purchase, the property was worth more than the money Fort & Story paid for it, and that any loan of money was made; but it was an absolute sale, with power to redeem, which was twice extended to the complainant, and was finally closed by the last agreement; and on the 5th of August 1823, a demand was made, and payment refused; whereby all clauses of redemption were annulled, by articles 93 and 94 of the act then in force in Louisiana, and the property became absolutely and irrevocably the property of Fort & Story. The answer also denied, that the property had become as valuable as was represented by the complainant; and it stated, that on the 10th of March 1832, he, the respondent, by a purchase from the widow of John A. Fort, now Mrs. Luzenburg, became to owner of the moiety of the property which had belonged to John A. Fort, for which the sum of $50,000 was to be paid. A liability by Mrs. Luzenburg and her husband to repay this money, in case of eviction, was alleged to exist under the laws of Louisiana, and that the purchaser had a right, under those laws, to call on the vendor, to assist in his defence; 'and the respondent submits to the court, whether by the proceedings having been instituted in the district court of the United States, Mrs. Luzenburg is to be precluded from claiming and defending the ownership, when, being vendor, she is interested in the case.' The answer prayed a citation to the widow of John A. Fort, who intermarried with Dr. Luzenburg; that they might appear and defend the sale, and abide by any decree of the court.
To the answer, was annexed a statement of the moneys paid and received, on account of the estate, by the respondent and John A. Fort. The sums paid for the estate from July 26th, 1822, to May 27th, 1817, amounted to $51,537.20, the interest at ten per cent., which is $26,261.12; total $77,796.32; the sums received, up to January 26th, 1829, amounted to $29,705.69-interest $7073.18-total $36,778.87. The answer claimed the benefit of the proscription of five or ten years, under the laws of Louisiana, as constituting a bar to the suit.
Afterwards, on the 14th of March 1836, the defendant filed an amended answer, stating, that Mary C. Luzenburg, the widow of John A. Fort, deceased, had, since the filing of the original answer, set up a claim to the moiety of the estate in controversy, and had instituted a suit in the judicial district court of the state of Louisiana, against the respondent, for the purpose of vacating the contract by which he became invested with a title to the interest of which Fort died possessed, and to recover the same from him; and as the claim was not admitted, but in the event of the success of the appellant, she and her husband would be liable to the respondent, and consequently, the rights of the respective parties could not be fully, fairly and finally decided, unless Luzenburg and wife be made parties to this suit; the amended answer prayed they might, by the complainant, be made parties to the bill. A copy of the bill of Mrs. Luzenburg to the judge of the district court of the first judicial district of the state of Louisiana, was annexed to the amended answer. It alleged a sale of the moiety of the property which belonged to John A. Fort, to have been made to Benjamin Story, on the 10th of March 1832, for $50,000; when in truth and in fact, the said moiety was worth $100,000.
The testimony of two witnesses was taken in open court. Hughes Lavergne, the notary before whom many of the documents in the case had been executed, deposed, 'Mr. Nathan Morse came to his office, accompanied by Mr. Story, at the period named, for the purpose of making the sale above referred to. Mr. Morse appeared in this transaction to be the legal adviser of Messrs. Story & Fort; at this time, Mr. Livingston was, and had been for some time, a member of the New Orleans bar, of great practice and celebrity, and it was not probable, that Livingston would employ a lawyer to advise him. Cross-examined by the defendant's counsel to the question, if deponent did not know that Mr. Morse was the financial agent of Mr. Livingston? He answered, that he did not know that he was. Money was very scarce in New Orleans, in 1822.
H. Lockett, Esq., the agent of Mr. Livingston, deposed, that the complainant had not been in Louisiana since 1829; that he had written to deponent often, that he had changed his domicil to New York; he had property there and voted there. Cross-examined deponent stated, that Mr. Livingston was the senator from Louisiana, until the year 1831, when he was appointed secretary of state at Washington; it was then that Mr. Livingston changed his domicil to the state of New York; deponent never saw Mr. Livingston in New York, as he had never been there; but he had received letters, and still received letters from E. Livingston, dated and post-marked New York.
On the 3d of June 1836, the district court made a decree, that the bill of the complainant should be dismissed. The complainant, Edward Livingston having died, his executrix was made a party to the proceedings, and she prosecuted this appeal.
The case was argued by White, for the appellant; and by Crittenden and Clay, for the appellee.
White, for the appellant.-An attempt is made by the appellee to raise up a question of jurisdiction in this case. If the right of Mr. Livingston to sue in the court of the United States in Louisiana, resting upon his having been a citizen of that state, when the suit was commenced, is contested; the exception should have been presented to the district court of the United States in Louisiana, by a plea to the jurisdiction. Proof could then have been regularly given, that he became a citizen of New York in 1831, and continued such until his death, in 1836. Proof of this is in the record.
The whole of this attempt is made to cover the real character of this transaction; and it is sought to make it a sale of the property, and not a loan, as the penalties of usury are heavy, under the laws of Louisiana. The facts of the case show, that it was a loan by John A. Fort and Benjamin Story, to Mr. Livingston; of this the court will be fully satisfied. Nothing is so common under the civil law, as to make a deed of absolute transfer of real estate, and to take an agreement from the lender of the money, to secure whom the deed is made, which is called 'a counter-letter.' This is an advantage to the borrower; it puts him in possession of the evidence of the real nature of the transaction, and gives him full power over the deed of conveyance. The counter-letter is the contract between the parties. In this case, it contradicts the answer of the defendant to the plaintiff's bill. He says, it was an absolute sale of the land; that is entirely disproved by the counter-letter. The counter-letter shows it was not a sale, but a loan on the security of the real estate; and the law of Louisiana takes charge of the borrower, and will not allow him, under the pressure of his difficulties, to surrender the protection the law gave him. A sale by an auctioneer, or a judicial sale, is required; and this the borrower cannot relinquish.
The purpose of the lenders was to embarrass the borrower, and thus prevent the redemption of the property. The stores were not completed, as they ought to have been; and as the contractor, Rust, should have been obliged, by Fort & Story, to complete them; they having an assignment of the contract for their completion; nothing was done by them. Had the contract with Rust been insisted upon, and the stores completed, ample means to pay the whole sum borrowed, would have been in possession of Mr. Livingston. The extravagant interest which was made a part of the consideration for the loan, would have been fully paid; and this most willingly. The appellant has no wish to escape from the payment of that interest; and he has instructed his counsel not to ask anything which will prevent its allowance, according to the agreement. The property, at the time of action, was far greater in value than the amount loaned by Fort & Story. In 1832, it was worth $100,000. It is now of much greater value; and all the appellant asks, is, that she may be allowed to repay to the lenders, all they advanced, all they expended, and the legal interest on the amount, since the debt became payable; taking back the estate, and having the advantage of the proceeds of it, since that time. No injustice will be done by this settlement; and all parties should be satisfied with it.
This was not a conditional sale of property by Mr. Livingston. It was a pledge of real estate, which cannot be enforced by a sale of the pledge, without a judicial proceeding. This is what, in the civil law of Spain, is called antichresis.
The code of law prevailing in Louisiana, is difficult to be understood. It has grown up since the first establishment of the province. Originally, it was adopted by a proclamation of Governor O'Riley, in 1768; and was afterwards confirmed by the king of Spain. This was the Corpus juris Civilis, and the Partidas, and the Recopilacion de Leyes de las Indias. The French inhabitants of the province became dissatisfied, and Les Coutumes de Paris were declared to furnish the rules of practice-the principles of the established laws to remain in full force. This was the state of things, when the United States acquired the territory; and great embarrassments arose, on the introduction of the provisions of the laws of the United States, and the forms of proceedings under the same. A code was prepared by authority of the legislature of the state, which is called the civil code, and is, in most of its provisions, the Code Napoleon; and allows the Spanish laws to prevail, in all cases to which they will apply.
By the civil laws of Spain, the transaction was an antichresis; and by these laws, Mr. Livingston was to be treated as a minor, and could, by no act of his, change the contract, far less, dissolve or annul it. (Civil Laws of Spain, translated by Johnson, 149, 156.) 'A pledge must be sold by some judicial process. The right of property in a pledge cannot be transferred, except by some judicial proceeding, whatever may be the stipulations between the parties.' (Ibid. 159.) The counter-letter stipulates that the surplus shall go to Mr. Livingston. (Civil Code of La. art. Pledge, tit. 22, art. 3100.) In article 3143, Civil Code of Louisiana, will be found the regulations relative to unremovables pledged, called antichresis; and article 3146 declares, that any clause which passes the property of a debtor, on a failure to pay, is inoperative and void. At common law, the mortgagee may become the owner of the property by a release of the equity of redemption; but the civil law does not allow this.
Mr. White then read to the court, an argument prepared by Mr. Hunt, of New Orleans, who was the counsel for Mr. Livingston, in the district court of Louisiana; to show the character of the loan, by the laws of the state of Louisiana, derived as they are from the laws of Spain and of France; and contended, that by the provisions of the law, the property was pledged, not sold. Cited, 4 Kent's Com. 135-6; Civil Code, 362, ch. 5, art. 91; Ibid. 344; 2 Ves. 405; Poth. Sale, art. 362; 5 Mass. 109; 9 Wheat. 489; Civil Code, 446, tit. Pledge, art. 25; 12 Seirry 20; 13 Ibid. 223; 7 Ibid. 872; 1 Mart. (N. S.) 417; Civil Code, 408, art. 12-13; 2 Mart. (N. S.) 21-4. The authorities referred to in this argument, show that the whole transaction was one protected by the law.
The Protests which Fort & Story made on the non-payment of the sum borrowed, were intended to destroy the credit of the borrower; and thus prevent his obtaining from other sources the funds required for the redemption of the property. In the case cited from 2 Mart. (N. S.) 21-4, the court will find the opinion of Judge PORTER, showing that a right to land pledged, cannot be acquired, without some judicial proceeding; and so all measures to destroy the rights of the original owner of the property, will be of no avail. Once a mortgage, always a mortgage; cited, 4 Mart. 3, as to the nature and effect of a counter-letter.
Crittenden, for the defendant.-This is a suit in chancery which has heretofore been before this court. After it was remanded, the Louisiana court proceeded to enforce the decision of this court. The defendant filed his answer to the complainant's bill, to which the complainant replied, and the cause was tried on its merits, and the court dismissed the bill, with costs, from which this appeal is prosecuted.
The case attempted to be made out by the complainant, in his bill, is, that he made a loan of the defendant and a certain Fort, was to give them an exorbitant interest; and as a security for the repayment of the money advanced to him, that he conveyed the lot, which is the subject of controversy, in New Orleans, in mortgage. On the contrary, the defendant denies, peremptorily and positively, that the transaction was a loan; and avers, that he and his associate, Mr. Fort, absolutely refused to make any loan to the complainant. He denies, that the conveyance of the lot in dispute is a mortgage. He alleges, that the lot was purchased by him and his associate, of the complainant; with a privilege secured to him of re-purchasing it by a given day. That this privilege, although extended from time to time, was never exercised by him; and that the lot, therefore, became the absolute property of the defendant and his associate. The whole controversy, so far as the merits are concerned, turns upon the fact, whether the parties to the transaction intended a sale of the property, or a loan; and the conveyance of the lot as a security for the reimbursement of that loan.
The complainant sues as a citizen of the state of New York, and the defendant denies that he was a citizen of that state at the time of the commencement of the suit. The proof attempted on this point by the complainant is irregular, and not to be regarded.
With the exception of that testimony, all the evidence is documentary. The transaction originated in an absolute conveyance of the property, with a separate instrument, called a counter-letter, both under date of the 25th July 1812; and by their terms, it was to have been consummated on the 1st of February 1823; but at the instance of Livingston, and in virtue of new agreements, materially variant from the first, this consummation was deferred to the 2d of June, and then to the 5th of August 1823. By these new agreements, the counter-letter of the 25th of July 1822, was annulled; and it was finally settled between the parties, that if Livingston paid the sum specified, on or before the said 5th of August 1823, the property should 'revert to said Livingston, and become his property;' and that if he should fail to pay by that day, then that said lot and appurtenances to be the 'absolute property of the said Fort & Story;' the said Livingston to surrender and cancel every 'writing or document that might give him any equity of redemption, or other right to the said premises: it being the true intent and meaning of the parties' that, in case of the failure of payment, &c., the said lot and appurtenances 'are to vest in the said Fort & Story a full title in fee-simple for ever.'
The main question in the cause turns upon the law of Louisiana, where the civil law prevails, and where they have no code of equity, nor of common law, except as it has been introduced, in a very limited extent, since the annexation of Louisiana to the United States. 1st. The first question will be as to Mr. Livingston's right to maintain a suit in the district court of the United States for Louisiana. Should that be decided affirmatively, the second, and most important, question is, was the original transaction between the parties, the case of a loan, or of a bon a fide sale? 3d. A minor question may arise, as to the parol testimony admitted, contrary to the usages of courts of equity, at the trial of the suit.
It is denied, that the court had jurisdiction of the case; as Mr. Livingston was, at the time the suit was brought, a citizen of Louisiana. The answer denies his citizenship, and the proof which was given on the part of Mr. Livingston, by no means shows he had ceased to belong to Louisiana. The appellees have full right to raise the question of jurisdiction here. Jurisdiction was denied in the district court, and evidence given upon the question. The court will look at that evidence. If there is no jurisdiction, the court will dismiss the cause. Having been brought into question, and the whole of the testimony appearing which was given to establish it, this court will consider the point as regularly before them. Brown v. Keene, 8 Pet. 115. It is known, that when Mr. Livingston became the secretary of state, he was a citizen of Louisiana. While at the city of Washington, he could not acquire the right of a citizen in any other state; although it is admitted, that a residence at Washington, in the public service, could not affect his citizenship in the state from which he came. He could only become a citizen of New York, by actual residence there; and this did not take place, until after he filed the bill in this case, in the district court of the United States for the eastern district of Louisiana. As to jurisdiction, cited, Brown v. Keene, 8 Pet. 115.
The appellee, in this case, is protected by time. This suit was not brought until ten years after the transaction between the parties was closed. Civil Code of Louisiana, 302. The allegation of the operation of the act of limitation is in the case, and the court will regard it.
Upon the mertis of the case, the question will be, whether the arrangement between Mr. Livingston, and Fort & Story, was a sale of the property or a pledge. The appellee asserts it to have been originally a conditional sale; which afterwards was made absolute by Mr. Livingston, who had a perfect right to make it such. The provisions of the civil law, and of the Louisiana code, which have been referred to by the counsel for the appellant, apply to mortgages. If this was a case of mortgage, then the ability of the mortgagor to change it, and relinquish his right to have a judicial sale of the property, may exist. It is difficult, under the common law, to distinguish between a conditional sale and a mortgage. What this is, must be decided by the code, and by the decisions of Louisiana. The counter-letter speaks of the deed from Mr. Livingston, as a conveyance; and the recital admits the transaction to be a sale. The purpose of the counter-letter was to secure a re-conveyance. If the civil law allowed Mr. Livingston the ability to cancel the counter-letter, the evidence to show that he did so, and waived his right of redemption, is conclusive. The authorities cited by the counsel for the appellant, apply to admitted mortgages; and they have no application to this transaction, which never was a mortgage. But if it had been such, still the right to release the equity of redemption existed; and under the civil law, that right may, by agreement, be extinguished. Civil Code of Louisiana, 472.
The civil code of Louisiana of 1808, was in force when this transaction took place. The provisions which apply to it, will be found in pages 344, and in 272, 274. The contract comes within the definitions of a conditional sale, in the articles referred to. A sale is, where one agrees to give a thing or property for a particular sum of money. This was a sale; but subject to an expressed condition, which suspended its operation for a certain time, within which the vendor had a right, expressly reserved, to cancel it. The papers all show it was such a sale. It is nowhere called a mortgage, or a security for money loaned. The counter-letter does not contain an engagement to repay the money received from the purchaser of the property. The deed is absolute. The only stipulation is that of Fort & Story, to re-convey the property; but there is no obligation on the part of Mr. Livingston, to repay the money he had received. It is essential, that there should have been such an agreement, to constitute a loan. Both parties, in the case of a loan, are bound; one to receive the money, when offered, the other to repay it, according to the agreement. It would be vain to search for such provisions in the instruments executed by the parties. They import anything but such an arrangement.
But if, originally, it was not a sale, it afterwards became such. The surrender of the counter-letter, and the subsequent agreement of the parties converted it into an absolute transfer of the estate; and this, after all the indulgence which Mr. Livingston had asked, had been fully conceded to him. The postponement from the 4th of March 1823, was made at the instance of Mr. Livingston, and on entering into the agreement; which, after a further postponement from June to August, in the same year, he terminated, with his free and full consent-gave up all his right or claim on the property. The rights of Fort & Story thereby became absolute and irrevocable.
It is contended, that although this agreement was made, yet by the civil law, it was of no avail, and was void. If this is not the law, then the agreement must have full effect. The court must be satisfied, that this is the law of Louisiana; and unless they are so satisfied, the decree of the district court will be affirmed. The authorities referred to by the counsel for the appellant, if they have any application, apply to loans on mortgage, and they may show that, in case of a mortgage, such agreements are void. They can have no other application. It is true, that once a mortgage always a mortgage; but certainly, a party may give up his right of redemption. Code of Louisiana, 472. Mortgages may be extinguished by paction or agreement. This is a paction or agreement. By the original agreement between the parties, the property was to be put up to sale; but Mr. Livingston afterwards give this up, considering that this would be more advantageous than to offer the property for sale. Mr. Livingston was fully competent to do this; and yet it is contended by the appellant, that by some law of Louisiana, the power to do so is taken away.
If the transaction was a sale on condition, then it is not asserted, that Mr. Livingston had no power to make it absolute. The civil code of Louisiana is explicit to this effect. The very form of a sale, on condition, has been adopted in this case. The deed is an absolute and complete transfer; the counter-letter declares the conditions of the sale. This, by the civil code, is a paction, by which the vendor reserves the right to take back the property; and in the instrument, the very terms of the law are adopted. May I not sell my property, on a condition that if I do not repay the money named, the estate shall be sold by auction; the proceeds of the sale to repay the same, and I to receive the residue? This may be done by our laws. Courts of chancery have sought to make such a transaction between parties, more than they intended it to be; but the law of Louisiana will not allow this: tit. Mortgage, art. 1,452; art. 6, 452. Under the law of Louisiana, no conditional mortgage can exist between parties, except that which is expressly stipulated. None can be inferred from anything but the express agreement of the parties. Authorities will sustain these positions: 1 Mart. (N. S.) 522, 528.
Strong apprehensions have prevailed in Louisiana, that in consequence of the decisions of this court, in cases from the district of Louisiana, the laws of Louisiana are not to govern the cases which may be brought here; but that they are to be decided by the chancery law of other states, and by the chancery laws of England. This is an error in those who entertain such apprehensions. The courts of the United States adopt the forms of proceeding in chancery cases, where they are brought into those courts, but they will apply the laws of the place to contracts made under them.
It has been said, that the Civil Code of Louisiana is but a part of the law of that state, and that they have there, in full application, the Corpus Juris Civilis, and the Partidas of Spain. Whatever system of laws prevailed before 1808, after that time, the laws then established alone prevailed. After that time, we are not to look to the laws of Spain, or of any part of the continent of Europe. In the formation of the code then adopted, such of the provisions of those laws as were approved, were taken from them; and Louisiana having a right to make her laws, did thus make them. No other code now exists.
By the law then established, the transaction in this case was a contract of sale on condition; and the time for the performance of the condition is not, by the law, permitted to be extended. After the time fixed, no redemption can take place. Possession of the property was given, when the sale was made, and has continued from that time. This is stated in the bill. The possession shows the character of the arrangement, and proves that no mortgage, but a sale only, was intended. The fact that it was a loan of money, and not a sale, is asserted in the bill; and in the answer, this is denied, and it is asserted by the respondent to have been a sale. No proof to support the allegations in the bill is given, and the facts in the answer are to stand, until disproved. This is the rule in chancery.
But if evidence were required to show that the negotiation was as represented by the respondent, it will be found in the notes which were written, before it was concluded. Mr. Moss asks what sum Fort & Story will give for the property, to be redeemed by Mr. Livingston.
The allegation of the increased value of property is not supported by evidence. The bill filed by the widow of Fort is no part of the case. But whatever may be the present value of the property, it can have no influence in the cause. Suppose, the property was now worth one-half of what it was in 1823, could the respondent apply to the district court of Louisiana, and after making a sale at auction, claim from the legal representatives of Mr. Livingston, the deficiency? This right should be found in the proceedings in favor of the defendant; or it cannot exist in favor of the representatives of Mr. Livingston.
Clay, also of counsel for the appellee.-This case stands before the court under no favorable appearances. A transaction, closed in 1823; finally closed; without an expression of dissatisfaction; and in harmony with the written agreements between the parties; is brought up, ten years afterwards, and a claim is made to put aside all that was then considered completed. Mr. Livingston was in Louisiana for many years after 1823, in New Orleans; and no suit was instituted by him to avoid that he had done, and no complaint made by him. The situation of Mr. Livingston, his profound legal knowledge, and his professional experience, gave him every opportunity of knowing the import and effect of the instrument executed by the parties. On the other hand, the purchasers of the property were ignorant of the law, were merchants, not knowing the effect of these instruments. They took them to be what they imported; and trusted to them upon a plain construction of their terms.
The first question in the case is, by what law is it to be tried? The case shows the high and august character of this court. Accustomed to the rules of the common law, and to the principles and practice adopted in courts of equity, they are called upon, from a distant state, to expound laws different from those which their deep studies have made familiar to them; and a knowledge of which, and their eminence as jurists, learned in the common law, and the law of equity, have given them the high positions they hold.
The effect of the decree in this case, when it was formerly before the court, was no more than to give to the district court of the eastern district of Louisiana chancery jurisdiction over the cause. The plan of the constitution of the United States, was not to create or apply any laws, in the states of the Union, in the courts of the United States, in cases brought before those courts, other than the established laws of the state; but to give a right to administer those laws in the cases legally brought before those courts. In cases brought from any state to this court, the only power the court has, is to apply the laws of the state; and in this case, the law of Louisiana will be applied. It is essential to secure confidence in the court, that this shall always be done.
In looking at this case, under the laws of Louisiana, the court will find, that there are no laws which impose penalties on usury; and although the civil code declares the rate of interest in certain cases, and in particular contracts; it does no more. These provisions will not be filled up by penalties.
It was, in the district court of Louisiana, presented on new pleadings, and the facts as exhibited in the defendant's answers, in the contracts between the parties, and on the oral evidence, are now, for the first time, to be considered by this court.
The question of jurisdiction, from the citizenship of the parties, was brought before that court, and the evidence does not show that the complainant, when the bill was filed, was a citizen of any other state than Louisiana. This court will now consider this question. If, according to the strict rules of pleading, under the common law, and the practice of courts of chancery, a plea in abatement should have been filed, this is not required by the civil law, and it will not be now insisted upon. A suggestion of a want of jurisdiction is always in time; and even the principles applied in chancery cases, shall govern in the final decision of this cause, the practice of the courts of the United States, in Louisiana, are, by the acts of congress, to be conformable to the rules of practice in the state courts.
As to the merits of the case: all the allegations of the great value of the property, are without any evidence to support them. If, at the time of the transaction, the property was of greater value than the sum the defendant and Fort agreed to pay for it, this could have been, and should have been, proved. No testimony was offered on this subject; and the conclusion is, that such was not the fact. If afterwards it became of greater value, it did so, in consequence of the improvements made upon it by the purchasers, by the expenditure of their capital upon it; and by the rise of property in value from the great prosperity of the city of New Orleans. But if the value of the estate is to be determined by this court, and is essential to the disposition of the case; the court have evidence before them, which entirely contradicts all the assertions of the appellant. The accounts rendered by the appellee, show that no proceeds of the property, which will justify or sustain the allegations of such value, have come into his hands. This is the best testimony which the case admits of; and the appellant has not attempted to contradict the statements in these accounts.
The liberty of purchasing property, and the privilege of disposing of it, are among the highest we enjoy. May they not be exercised in the manner which those who acquire, or will dispose of, property, think proper, and on such terms as may be agreed upon? May not a loan of money on property to-day, be converted into a sale to-morrow, for the money borrowed? Nothing in the laws of Louisiana to prevent this has been shown, and no such provisions exist. While courts may have looked into transactions of this kind with a jealous scrutiny, to prevent usury; they have not claimed the powers to make void an absolute sale, made by a person fully competent to act, and who deliberately acted in making the sale; and this, where no evidence has been offered to show that the full value of the property sold was not paid. The whole argument of the appellant assumes that the transaction was that of a loan; and this in direct opposition to the other evidence in the case. It assumes, that it was a loan on the property by Fort & Story; and being such, the law of Louisiana deprived the borrower of the right to change the transaction, and make it a sale. To support this position, the law prevailing in Louisiana has been referred to, without success.
White, in reply, insisted, that there was evidence in the case which fully proved that Mr. Livingston was, when the bill was filed, a citizen of the state of New York. He became a citizen of that state, when he ceased to be a senator from the state of Louisiana; and his residence in the district of Columbia, while acting as secretary of state, did not affect or impair his New York citizenship. He asked, if an exception to the jurisdiction of this court, on the allegation that the appellant could not sue in the district court of the United States of Louisiana, could be admitted; when it did not appear, that the question of citizenship had been made before the judge of that court?
As to the operation of the act of limitation, no such point was made in the court below. If it had been presented, the law of Louisiana would not have sustained it. Cited, Civil Code, art. 1082, 1084, art. 67, page 486, tit. Prescription. In 3 Mart. 458, the law on this subject is found. Prescription does not apply to pledges, and is always interrupted by judicial proceedings; and it does not run until twenty years. Cited, as to Prescription, or Action of Nullity, Civil Code, 722, 1084.
The argument for the appellant has been mistaken by the counsel for the defendant. It has not been said, that this is the case of a mortgage. Possession of the property mortgaged, does not, expressly, nor does it ever, in Louisiana, pass with the execution of the instrument; this was not then a mortgage. Was it an absolute sale? The demand of the money, at the several succeeding periods when it became payable, and the protests at each period, even at the last, when by the surrender of the counter-letter, and the new agreement, the transaction had assumed a new aspect, show, that it was always considered and treated as a loan. The only right Fort & Story acquired by the last agreement, was the right to procure from a competent court a decree of sale; this decree they could not legally obtain, until the complainant was legally put in default, by the sentence of a court. The complainant was never put in legal default; no legal demand was made; no sale ordered. The property remains the property of Livingston, in pledge.
The contract was usurious, by the law of Louisiana. Interest on a judicial proceeding is five per cent.; bank interest is six per cent.; and conventional interest may be ten per cent. No one can recover on a contract, where the interest exceeds ten per cent. In this case, the contract, being usurious, was tainted and corrupted throughout. The transaction not being one of mortgage, not being a conditional sale, or an absolute sale, after the surrender of the counter-letter, what is it? This is shown in the laws of Louisiana. Under that law, as under the civil law, the security is one of the highest order, and one under the peculiar guardianship of the law. The contract being made, is to be carried out according to its original terms, and no other. If the amount loaned is not repaid, the lender must adopt the course which was originally agreed upon; and which he stipulated to pursue. He can only sell the property by a judicial sale; and from the sale receive the sum due to him. This is called an antichresis, by the civil code; and all its characteristics and its incidents are well defined, established and declared. Cited, Civil Code, art. 974, 984.
The nature of the antichresis is, that the lender has the property in his possession, and receives the profits. These go towards paying all expenses to which he may be subjected, and discharging the interest on the loan. The rule of the civil law, both in Louisiana, and wherever it prevails, is, once a pledge, always a pledge. Cases have existed, and the rules of the law have been applied to them, in which as many as one hundred years have elapsed since the transaction was commenced. 13 Seirey 223. The stipulation which was afterwards entered into, that the title to the pledge should become absolute, and become a title in fee-simple, was void and null by the civil code; and by the decisions of the courts of Louisiana. Civil Code of 1808, art. 25, tit. Pledge; Code Napoleon, art. 20, 88. It is here said, the creditor cannot sell the immovable property pledged, in default of payment, or by the consent of the contracting party. The code of Louisiana is borrowed from this article. Under this article, the French courts have proceeded, and have held that a creditor cannot sell the pledged article, with the consent of the debtor. 12 Seirey 20; 13 Ibid. 233; 7 Ibid. 872. Cited 1 Mart. (N. S.) 417; 2 Ibid. 22, 24, 17; 3 Ibid. 17, 168; Pothier on Pledges; Pothier on Mortgages, ch. 4, tit. Security.
The court will apply the law, which is thus established, to the case before them. The appellant asks a restoration of the property, on the restoration of the sum loaned, and the interest, including all costs and expenses. This is reasonable. It has been shown, that this may be, and has been done, after one hundred years; and in the case before the court, little beyond ten years had passed, before the claim, which is now before the court, was made. By the decree which the court are asked to give, the defendant will sustain no injustice. The appellant, as was said in the argument in chief, does not place the claim on the law of usury. He asks, that all the interest he agreed to pay, shall be allowed to the defendant; and this being allowed, and all the capital advanced repaid, the property is asked for; or that a sale of the same shall be made, and the residue of the proceeds paid over, after all that the defendant is entitled to shall have been fully reimbursed to him.
WAYNE, Justice, delivered the opinion of the court.

## Notes

1  For further proceedings in this cause, see 12 Pet. 339, and 13 Id. 359. The plaintiffs eventually recovered the property in dispute, and the sum of $32,958.18, found due to them, by the report of a master, on a settlement of the accounts between the parties.
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