Case Name: SYNDICS OF BERMUDEZ vs. IBANEZ & MILNE
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1813-05
Citations: 3 Mart. (o.s.) 17
Docket Number: 
Parties: SYNDICS OF BERMUDEZ vs. IBANEZ & MILNE.
Judges: 
Reporter: Martin (Louisiana Term Reports)
Volume: 3
Pages: 17–40

Head Matter:
SYNDICS OF BERMUDEZ vs. IBANEZ & MILNE.
Stay of proceedings suspends process before and after judgment.
Trustee privileged on trust estate.
Bermudez, in January 1812, brought his action, in the Superior Court of the late Territory of Orleans, to compel Ibanez to convey to him, a lot of ground sold to him by Bermudez’s agent.: The following interlocutory decree was made : the Court is of opinion that the land mentioned in the petition was directed to be sold, by the plain- without any fraudulent intention—that from the relation in which the defendant stood to the plaintiff and his wife- (being her brother) by whose agency the sale was effected—from his avowed object in pressing the plaintiff to authorise his wife to sell—from the price given, and the subsequent declarations of the defendant, since the plaintiff’s return, it appears that the purchase was made with a view to secure the defendant’s claim, and it was the intention of the’ defendant, in the knowledge of the plaintiff’s agent, at the time the sale was made, that on the defendant’s being fully paid all his advances, he should sell the land for the benefit of the plaintiff or his family or reconvey it.—It is therefore ordered See; that the defendant do file with the clerk a statement of his claim for all monies by him' paid or advanced for the plaintiff, or his family—that the same be referred to three persons to be agreed upon by the parties, or named by the Court, and that on the’ plaintiff paying the sum reported to be due by him to the defendant, within sixty days, the defendant do reconvey the premises to him, and On failure of payment within sixty days, that the premises be sold to satisfy the defendant’s claim and the balance be paid to the plaintiff.
East. District.
May 1813.
Sale made by sheriff, after a stay, set aside.
The referees, reported a balante in favor of Ibanez of six thousand and odd dollars, and Ber-mudez neglecting to pay, an execution was levied on the lot and it was for the third and last time advertised for sale, on the 3d of February 1813, at one year’s credit, '
Before this day, Bermudez presented his petition to the Superior Court, stating his insolvency and annexed to it a schedule of his property, in which the lot was set down, as part of it. The Court declined granting any stay of proceedings, as the shedule presented no property on which the stay could operate, except the lot, which had been ordered to be sold. On this, Bermudez presented a similar petition to the City Court, from which he obtained a stay of proceedings and an order for the meeting of his creditors.
At a meeting of the creditors, syndics were appointed and Bermudez made to them a cessio bonorum. The proceedings were homologated and an order of the City Court obtained enjoining the sheriff from proceeding to the sale of the lot.
The syndics on the same day, January 30th 1813, brought suit against the sheriff and Ibanez, to recover possession of the lot. Process was served on the first of February, and the sheriff proceeded to the sale, on the day appointed, and Bermudez’s brother, being the highest bidder, haying bid É 7000, the sheriff required of him to enter into bond with surety, according to law. He named a solvent person then absent, and the sheriff insisting on the surety being produced, the purchaser went in quest of one, but returned without any, and on the following day the lot was put up and struck to Milne, for 8 7000» but. no bill ot sale was made out, m consequence of an opposition made by the syndics, who ob-jajneej an injunction from the City Court on the 9th of February.
On the 5th of April the syndics filed' a supplementary petition in the District Court, to which the record of the original suit was (after the Change of government) removed, making Milne a party thereto, stating the sale and praying a rescission of it.
At the trial it was proved that Bermudez’s brother, the first purchaser of the lot, was worth upwards of seven thousand dollars and that the person he had offered as his surety was worth much more and would have been ready to sign the bond, had he béen found. The District Court gave judgment for Ibanez and Milne, the defendants, and the syndics, the plaintiffs appealed.
Smith and Ellery for the appellees.
This case presents itself under two, principal points of view.
1. What was the situation of the original parties, prior to the insolvency ?
2. Whether any, and what change of relation was produced between the parties, by the subsequent act of Bermudez, convoking his creditors and the proceedings that then ensued so as to affect the rights of Ibanez, as settled by the judgment? i
I. It appears by the judgment in the original suit, that, prior to its institution, Ibanez had an absolute conveyance of the property in question— that the purchase was made to secure the repayment of his advances—that he , relied on it as his security and that he intended to reconVey, only on being fully paid—that he was in possession and had every apparent feature and quality of owner. Could Bermudez have then obtained possession without first refunding what was due? If he had then proclaimed himself insolvent, what could his syndics have done, more than to call upon the equitable jurisdiction of the JHourt below and address themselves to the conscience of the defendant, in order to establish the true state of the property ; and thus arrive in time, just at the point at which Bermudez himself had arrived in obtaining judgment against Ibanez ? They are not now at liberty to say they would have Obtained a better judgment, it is the very foundation of their title,' and is not to be, gainsayed by them.
But the eflort has been already made by Ber-mudez before insolvency, and he has succeeded against the pretentions of Ibanez to the utmost that cart be done by him, or by any who represent him. He has obtained a final decree of account, in the last resort, making a specific disposition of that property which was before under the absolute control of Ibanez, And what is that specific disposition ? Why, that Bermudez shall by entitled to have a reconveyance of the property provided he refunds within sixty days to the defendant the amount of his advances: otherwise that the property shall be sold by the sheriff and Bermudez receive the proceeds, after a deduction of the advances.
This is a judgment recovered by the insolvent, before insolvency, and against the defendant, Ibanez, limiting his former control over the property. Were not Bermudez and Ibanez, the original parties, indissolubly bound by it ?
II. It is an established principle of law that the creditors of an insolvent take his estate, subject to all the equities, which governed it in his hands, and also that all acts fairly made by the insolvent stand as well against his creditors as against himself. 1 Cook's B. L. 325. 1 Vesey 331. Rowe vs. Dawson, 2 Vernon 286 Pope vs. Onslow, 2 Vesey, 633, Hinton vs. Hinton. By the judgment in the suit between the original parties it appears that the plaintiff had conveyed the title and delivered the possession of the estate to. the defendant, as a security for advances made and to be made by him. It appears also that the act had been fairly done and further that it was clearly the intention of the parties that the title should not be reconveyed and that possession, should not be redelivered until Bermudez the vendor should refund the amount of these advances, whatever they, might be. Would not such an act then, upon the authorities that have been cited, stand against the creditors independently of the judgment : being an act fairly done, and on the faith of which the defendant advanced his money, and more especially as sustaining it could not operate any fraud or inconvenience to the creditors in general ? For the title and the possession having been both long in the defendant, it could have obtained for the plaintiff no delusive credit. His others creditors could not have trusted to property that seemed to belong to another. The real question then, in the present case seems to be whether Bermudez, the plaintiff, in the original suit, can by declaring himself insolvent defeat a judgment from which therewas no appeal. This is the naked meaning of the case.
The judgment is that the estate be reconyeyed to the plaintiff, provided he first refund to the defendant the amount Of his advances. Otherwise that the estate be sold by the sheriff, and the balance only of the proceeds be delivered to him, after payment of the defendant’s advances. The object of the present suit is to obtain a recon-veyance,without first refunding the advances in question—to annul the sale of the sheriff without being obliged to receive the mere balance of the proceeds of the sale, equally in contravention of clear understanding of the original parties and of a final, irreversible judgment, enforcing the specific performance of the contract.
The decree in question is not like ah ordinary judgment, establishing a debt, a mere judicial mortgage against the insolvent’s estate : such a judgment would be unaffected by a delivery of all the property, possessed or claimed by the insolvent, into the hands of the syndics, and might be equally well satisfied at the hands of the syn-dics and at the hands of the sheriff. But this decree, which is admitted to be a final judgment, of no less authority, than a judgment homologating the proceedings of creditors, cannot be complied with consistently with the success of the plaintiffs’ demand, but must, in such event, be infringed. If this decree had been simply that the defendant reconvey to the plaintiff, provided he first refund to the defendant the sums he had advanced on the faith of that security, it would seem to be undeniable that the subsequent insolvency of the plaintiff could entitle his syndics to a reconveyance on no better terms—but the latter part of the. judgment was intended to enforce a compliance with the first. Shall then the judgment be said to be unshaken, when the means which it prescribes for its own enforcement can be legally resisted ?
Turner, for the appellants.
In examining die plaintiffs’ claim three questions necessarily arise.
1. Had Bermudez any right or interest in the lands, at the time of his insolvency and surrender Of goods ?
2. Do the proceedings on his petition in the City Court suspend the proceedings on the order of sale of the District Court ?
3. Independently of those proceedings, is the sale to Milne a valid one, under the act of assembly ?
I. It is contended by the defendant, that Ber-mudez had no right to the lands, and could acquire none, but by payment of the money decreed to. the defendant, within the time limited by the decree, and that not having done so, the estate became absolute in the defendant, before the insol - vent exhibited his petition and schedule; and that therefore he ought not to have inserted die land in the schedule, and that the plaintiffs therefore can have no right to it.
These positions are not warranted either by the law, nor the decree, of the late Superior Court.
We do not pretend to claim title under the decree; we contend that by the decree, it is established that Ibanez never had any other than a trust estate in the premises ; he is a mere trustee for our use. But having made advances to Ber-mudez, he has a lien on the lands for the amount of his debt.
By the Roman civil law, the cestuique trust is considered as the real owner of the lands. And the Courts of equity have ever gone upon the same principle ; and have always compelled the trustee to perform the trust, whether the trust was declared in the deed or not. 2 Fonblanque, 1, 8, 121 Sanders’ essay 1, 6, 11.
It is even a maxim of the civil law “that he who has the right of action for a thing, is considered the owner of the thing.”
This is also the rule of common sense and of common practice. It never was heard of that a man might come into Court, with a suit, to acquire a right, to a thing which he was not before the owner of.
If indeed a suit should be so commenced, and it should turn out, on the trial that the plaintiff had' no right, he must be cast as a matter of course. And yet the defendant contends we had no right to the land, but such as was acquired by the decree, that our right then for the first time had its origin—a doctrine strange in jurisprudence, and contradicted by the decree itself.
It is too manifest to admit of argument to the contrary that the land belonged to Bermudez, but was subject to the incumbrance of Ibanez’s debt, as a mere mortgage or pledge.
Had it been otherwise, the Court could never consistently with either the rules of law or equity have decreed the defendant to reconvey the title to Bermudez, on the payment of his debt.
If we consider.the land in the possession the defendant as under mortgage for Bermudez’s debt, the rights of Bermudez are just the same, as in the case of a trust estate.
The mortgagor is considered as the real owner, and the, mortgaged thing as a mere security for the debt, and the mortgagee as a trustee for the mortgagor. 2 Fonblanque 261. Powell on mortg., 15 76.
It is clear therefore that Bermudez had a pro-pert}' in the lands; but it is not material to the present inquiry, wliat that interest is worth, nor in what manner, it existed it is sufficient that he had an interest: that interest whatever it was, vested in the plaintiffs as syndics.
II. The 2d. question is very easily disposed of.
Having, as I believe, shewn beyond the possibility of a legal doubt, that the property in the lands in controversy was vested in Bermudez, not by any appointment of the decree, but by his old and original title, acquired long before Ibanez had any claim upon it:
I will now attempt to shew that the order of sale of the late Superior Court was suspended by the surrender of the insolvent’s property.
It is declared in 4 Febrero, book 25—a consequence of such proceedings by an insolvent, that all judicial process against the insolvent, or against his property, are suspended.
This was the existing law of the land before the compiling- of our Civil Code—It was so acted on; it Was the uniform practice of the country i and it has been recognized and solemnly decided, to be the law of the land in the case of Elmes vs. Estevan in the Superior Court. 1 Martin, 193.
By the Civil Code 294 art. 172, it is provided that the surrender of property, “ suspends all kinds of judicial process against the debtor. ”
These words are very general, and comprehend every thing denominated process.
Process, by the strict and technical rules of the common law is divided in to original process, mesne process, and final or judicial process.—» Thus we find that the words of this law emphatically apply to executions, as judicial process ;— But the words need no aid of illustration, they are plain and comprehensive, and take in all kinds of process, issuing from a Court, whether original, mesne, or final process, and whether against the person of the debtor or against his property, generally or specially.
It is also provided in the Civil Code 440, art. 6, that mortgage creditors are affected by the respite, in the like manner as the other creditors»
But the defendant again contends, that the order of sale, and proceedings of the sheriff to advertise and sell the land, are not judicial proceedings against the insolvent, Because, say the counsel, it is a proceeding to enforce a decree made in a suit of Bermudez vs. Ibanez, by which he, as plaintiff, was to be benefited : that it is not a proceeding against the insolvent nor against his estate, but on his behalf and against the lands of Ibanez.
This objection is not even plausible-—the proceedings in the suit shew that it was instituted to obtain a conveyance of the trust estate; to the plaintiff-—and that the suit was opposed by defendant upon the ground of his being a purchaser for a valuable consideration, and holding the land by complete title, made several years before. But the .Court decreed in favour of, the plaintiff— that it was only, a trust estate, and must be re-conveyed by the defendant. But as it appeared the defendant had; made advances, which were to be considered as an incumbrance on the land, the Court treated the subject as a mortgage and ordered the plaintiff to pay the defendant’s debt before the reconveyance of the lands, and in default of such payment by a given day, the land should be sold by the sheriff’.—‘How sold ? Why as the property of the delator, most undoubtedly, and to satisfy his debt.—Moreover the excess of proceeds, after paying the defendant his debt, are ordered to be paid to the plaintiff. Why sell the land to satisfy the defendant’s debt, and why pay the excess of proceeds to the plaintiff’, if it was not his land? The decree is double—it look? two ways—it requires duties to be performed by both plaintiff and defendant—it calls on the defendant to reconvey to the plaintiff—it also calls on the plaintiff to discharge the defendant’s claim on it. As it regards the debt, it is a judgment against the debtor and the process is against him as in other cases of judgment on mortgage. It is there fore quoad the order of sale a judicial proceeding against the insolvent. It can be no other in law or reason.
III. The surrender of the insolvent’s property (and this very land amongst the rest) being made before the sheriff had carried into effect the order of sale, all further proceedings thereon were suspended by the rule of the City Court—nay the convocation of creditors was had, their proceedings before the notary homologated and notified to the sheriff' before the sale. The sale therefore to Milne was contrary' to law and ought to have been set aside by the District Court.
The sale to Milne is irregular on another account. But as the plaintiffs’ right appears so manifestly against the decree on the first point, it seems almost unnecessary to notice any other objections, in the cause. But as the property is of great value, if the sale to Milne, be confirmed, it will greatly injure the creditors, the Court will please to pardon me if I should trespass a little further on their time and patience.
By the execution law the sheriff is required to sell at twelve months credit on “ mortgage and security.”
Acts of 1808 page 48.
This law has two objects in view, viz, 1st to obtain the greatest price possible, and 21y the security of the purchase money. The first and greatest, is the price—it is therefore important to extend the sphere of bidders to the greatest limit— the sale is to be by public auction—to be in the day time—and upon twelve months credit—this object so desirable for the benefit of both debtor and creditor, would in a great measure be defeated, by requiring the kind of security demanded by the sheriff in this instance. He requires art endorsed note—a thing unknown to the law, and justified only by the usage of merchants— an endorsed note is consequently a negociable note—it may be paid away in a course of trade and dealings—it may be deposited in the bank for collection—it may be discounted at bank—it then will be subject to all the rules and burthens of mercantile usage—it may be protested for non payment—the endorser will be immediately responsible—not as security, but as principal—he cannot claim the sale of the thing mortgaged—he cannot claim a discussion of the principal’s effects. Many men therefore -would not endorse who would join in a bond or note as security—many bidders might be able to give security, who could not get all endorser—But this mortgage and security is ex natura an authentic act—made before a notary, or at least acknowledged before one—it is not to be given nor required by the sheriff, until he is ready to make a deed for the land sold ; as he is required by the law to do— lie could not require, the security at the instant of the sale—he ought to appoint a time and place where the mortgage and security is to lie given, and notify the purchaser of it—he has no right to require the mortgage and security until he is ready to make the conveyance—the law gives him one week to do this—Laws 1805, 180 246. If this course is observed by the sheriff, and I contend it is the only legal one—the bidder will have time to get his security—he will have, time to go among his friends and find out such as are able and willing—if he should be disappointed in one, he may find another—but very few indeed, could do this on the ground, the instant the property is struck off to him, or even in the short space of half an hour.—The bidders therefore would be very limited, and none but rich speculators could come into the market—thus the wholesome provisions of the law would be defeated—the security, when given in the manner I contend for, could not be called on for payment until after the mortgaged thing was sold, and if it fell short of the debt; nor until the principal’s effects are discussed and found also deficient.—By the statement of the sheriff contained in the record, J. B. Bermudez was adjudged the highest bidder—and as he required of him terms, which by the law he could not do ; and as he again sold the property on the same day and upon terms unjustifiable, the sale is irregular and the District Court ought to have quashed it.
I trust therefore that, upon both these grounds, or one of them, the Court will think with me, that the decree, appealed form, ought to be reversed.
Ellery and Smith, in reply.
The sale of the sheriff, under the judgment, is not a proceeding against the person or property of the insolvent. It is a sale under a judgment, in which the insolvent Was plaintiff, and notwithstanding the condition, incorporated in it in favor of the defendant, it is no less a judgment in favor of the plaintiff—a judgment by which the previous absolute title of the defendant was converted into a privileged security only : and by which the plaintiff acquired a right to a reconveyapce of the title on the fulfilment of a certain and definite condition, or, at all events, to the balance of the proceeds of the sale.
Without the benefit of that judgment, where would be the pretentions, of the insolvent or his syndics, against the apparent, absolute title and the possession of the -defendant, Ibanez ? It is then a judgment m favor of the plaintiff, Bermu-dez, awarding him what he could not obtain with- . . . r ' i out it. and therefore the execution or it is a proceeding against neither his person nor his pro-pert}-. The security of the defendant has been likened, in the course of the argument, by the counsel of the appellants, to a mortgage ; but of a mortgaged property, both the title and possession remain, in the mortgagor, and, of course, on his insolvency pass to his creditors at large. The syndics would not be obliged to recur to a suit, in order to realize the estate, to convert it into money for the discharge of the debts. On the Other hand, the mortgage creditor, having contented himself with a security, by which the title and possession of the property on which it was imposed, remained in.-the debtor, prior to his insolvency, could insist on nothing better, against the syndics, after that event. The security, in the present case, has no more resemblance to a mortgage, than the general one of being a security for a debt, and raised on real property.
It has been likened in the next place to a trust. But, a trust estate, according to the English law; is created for the sole benefit of the cestay que trust. The feoffee in trust, or trustee, holds it subject to the controul of the cestuy que trust, and is bound to reconvey at his pleasure. But, even in the case of a trust estate, the trustee, if he have made advances, on the credit of the estate, or have since, in any other way become a creditor of the cestuy que trust shall hold possession of the premisses ; not only against him, but also against his creditors, in case of his insolvency, until the full payment of whatever may be so due. Lessee of Trazes & al. vs. Hallowell, 1 Binney 126.
It will not be. contended that a pawnee can be compelled by the creditors of a bankrupt to surrender the pawn, without being first paid the money he has advanced upon it. But, in the present case, the defendant has, equally with the pawnee, possession of his security ; and further that security is a realty, and is assured to him, by the solemnity of an absolute title.
It is, however, not true, that the possession of all property whatsoever to which a party may have title, or in which he may have an interest, passes, on his insolvency to his creditors at large : and it may be laid down as a general rule that the possession of property, in which an insolvent, at the time of his insolvency, had not the right of possession, shall be recovered by his creditors, in no better terms that these which would have availed the insolvent himself.
With regard to the second ground, assumed by the counsel of the appellants, viz, that the sale of the sheriff is irregular, in as much as the property was struck off to one bidder, when another was the real- purchaser, it seems to. be some what foreign to the cause. .
To the parties in this suit, it would seem to be a question wholly immaterial whether the sheriff give a deed to one or the other of the bidders, provided he take care, in due time to produce the best price offered for the property, at the sale. If, however the sheriff had committed some irregularity, clearly vitiating the sale, the consequence that would follow must be, that he should sell again. If he had committed some error of form that might bring in question the title of the purchaser that could lie between that purchaser and the sheriff or some rival bidder. The sheriff’s bill of sale must bind the property against all the world, except a rival bidder or a party claiming under another title.

Opinion:
By the Court.
In this case, the respective, rights of the original parties (Bermudez and Iba-nez) to the lot of ground in dispute, have been settled by the decree of a Court from whose decisions there is no appeal.
The determination of the present suit depends, therefore, on ascertaining which of the said parties was recognized by that decree, as the owner of the contested land.
It appears that while F. X. Bermudez, once the undisputed proprietor of the lot in question, was absent from this country, F. Ibanes, the brother of his wife urged him to authorize her to sell that property; that Bermudez having sent the necessary authorization, Ibanez became the purchaser of the.lot, apparently for a fixed price, but in reality for the purpose of securing an unliqui-dated claim of money which he had against Ber-mudez ; that at the time of sale; it was understood between the contracting parties, that, when Ibanez should be reimbursed his advances, he would either re-convey the land to Bermudez, or sell for the benefit of Bermudez and his family. does further appear from the said decree, that claim of money of Ibanez had remained unsettled, and was to be subsequently ascertained ; finally, that on Bermudez paying, within a certain delay, the sum thus to be liquidated, the land was be re-convéyed to him ; otherwise to be sold the payment of that sum, and the balance to to Bermudez.
Posterior to that decree, the claim of Ibanez was settled by the referees to the sum of six thousand, six hundred and six dollars and seventy five cents; and on Bermudez' having failed to pay it within the fixed time, the sale of the land was decreed to be made by the sheriff. Previous, however; to the sale, Bermudez called a meeting of his creditors^ and an order issued from a competent Court, staying all proceedings against' him; notwithstanding which order, the sale was executed. The present plaintiffs have prayed for a rescission of that sale, and from a decree of the Court of the first district, refusing to rescind it, they have claimed the appeal on which this Court have now to pronounce.
The situation of the parties in this case is, indeed, a novel one. But however ambiguous their rights may appear at first, one point, at least, is very clear—and that is the non-existence of any real title in Ibanez. His right to the land was not even that which is acquired by purchase subject to redemption ; for, in such case, the purchaser may become the absolute owner, in the event of the vendor's suffering the stipulated delay to elapse without redeeming, while here in defect of payment the property was to be sold. A property, which was to be sold to pay Ibanez' claim, surely could not be considered as his property : the idea is repugnant to common sense. A right to be paid out of the proceeds of a sale, far from bearing any resemblance to a right of property in the creditor, implies the very reverse; for it is a right to be exercised against the property of another.
It being ascertained that Ibanez was not the owner of the land in dispute, it remains to enquire what kind of right he had on that land. His right was not that of a mortgagee, nor that of a purchase! under a claim, of redemption ; nor can it strictly be called an antichresis. The object the contract was to vest him with as ample a security as could be given. The nature, also, of the debt, part of which must have been created by advances made for the support of Bermudez' family, during his absence, entitles his claim still more to be recognized as a privileged one. And when the Court fbrther consider that in cases of antichresis, to which this may in some degree be assimilated, the debtor cannot before full payment of the debt, claim the enjoyment of the immovable estate which he has given in pledge (Civil Code book 3d, tit. 18, art. 24) they feel disposed to secure to the defendant, Ibanez, the immediate payment of his debt, independent of any agreement of the other creditors of Bermudez.
Upon the whole, the Court are of opinion that Bermudez was, at the time of his failure, the true owner of the lot of land in contest; that the decree ordering a stay of proceedings against him, ought to have stopped the judicial sale of that land, and that the sale made in contravention to it was illegal and void. It is therefore ordered, that the said lot be surrendered to the syndics of the creditors of Bermudez, for the purpose of selling it within the usual delay of judicial sales, payable, to wit, the sum of six thousand, six hundred and six dollars and seventy five cents in cash, to satisfy die claim of Ibanez, and the remainder at such credit as they may think proper to fix agreeably to directions by them received from their constituents; unless the said syndics choose to satisfy the said sum to Ibanez. And it is further ordered that the parties shall pay their respective costs.