Case Name: Francois Rouge vs. The Larfargue Bros. Co., Limited
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1895-11-18
Citations: 47 La. Ann. 1646
Docket Number: No. 11,593
Parties: Francois Rouge vs. The Larfargue Bros. Co., Limited.
Judges: 
Reporter: Louisiana Annual Reports
Volume: 47
Pages: 1646–1651

Head Matter:
No. 11,593.
Francois Rouge vs. The Larfargue Bros. Co., Limited.
A creditor of the Lafargue Bros. Co., Limited, recognized as such by judgment of the Circuit Court of the United States, having caused a writ of ft. fa. to issue, under which a seizure was made, certain parties alleging that they were qualified liquidators of the corporation under an appointment from the Civil District Court for the parish of Orleans, in the suit of liougc vs, The Lafargue Bros., that they were in possession of the property, rights and credits of the corporation, and that the seizure made was an illegal interference with their administration in the State court, ruled in the Circuit Court, the seizing creditor to show cause why an injunction should not issue restraining him from further proceeding. On the trial of this rule the Circuit Court ordered the seizure to he quashed unless within a time fixed the seizing creditor should file a suit in the Civil District Court, attacking the validity of the order appointing the liquidators, hut holding matters in the meantime in abeyance. The seizing creditor, within the time fixed, obtained a rule in the suit in which the liquidators were appointed on the plaintiff, the defendant corporation and the liquidators to show cause why the order appointing liquidators should not be annulled, urging among grounds that the court was without power or authority to make the appointment. Defendants excepted to the rule on the ground that the plaintiff in his rule disclosedno cause of action; that the proceeding by rule was unauthorized and not in conformity to the orders of the Circuit Court, and that the plaintiff should have resorted to a direct action. The District Court maintained the exception reserving to plaintiff in rule the right to bring a direct action to annul. Held:
The Circuit Court was obviously not concerned as to the manner in which the seizing creditor should proceed in the State court; that it was the attack itself, not its mode, which the court had in view.
The liquidators having themselves, in the rule in the Circuit Court, ruled the seizing creditors to show cause why an injunction should not issue against them, could not object to their doing so by way of answer, and the United States Court having, instead of passing upon the issue, relegated the parties to a trial of the same by the court which granted the order, the rule taken in the Civil District Court was substantially nothing more than cause assigned by the seizing creditors in answer to the rule of the liquidators, though it might not be so in appearance. All parties in interest were before the court which made the order of appointment on equally advantageous ground, and it would be subordinating substance to form to require new proceedings by direct action.
APPEAL from the Civil District Court for the Parish of Orleans. Bightor, J.
Frank N. Butler for Russmann & Galland, Plaintiffs in Rule, Ap - pellants.
J. Numa Augustin and W. J..Waguespaek for Liquidators, Defendants, Appellees.
Argued and submitted November 5, 1895.
Opinion handed down November 18, 1895.
Rehearing refused December 16, 1895.
Russmann & Galland, creditors of the Lafargue Bros. Co., Limited, obtained a judgment against that corporation in the Circuit Court of the United States, upon which they caused execution to issue, and under this execution seizures by garnishment were made. When matters were in that situation a rule was served upon them in the Circuit Court, calling on them to summarily show cause why an injunction should not issue prohibiting them from proceeding further in the matter of the seizures. The rule was issued at the instance of Ludovic Lafargue, Adolphe Schreiber and Paul Capdeville, who, in their application therefor, alleged that they had been appointed liquidators of the defendant corporation in the suit of Francois Rouge vs. the Lafargue Bros. Co., Limited, in the Civil District Court for the parish of Orleans, and had qualified as such; that they had been in the full possession of all the assets of the corporation under the orders of the said court, and had been actively engaged in the liquidation of the corporation, and had presented a provisional account of administration, on which Russmann & Galland had been placed as judgment creditors when that firm took out the garnishment proceedings referred to; that all the rights, property and credits of the corporation were at that time legally in the possession and under the control of the liquidators, as officers actiug under the authority and orders of the Civil District Court, a court of competent jurisdiction, under a judgment of that court which had never been attacked directly or appealed from, but was in full force and effect, and that the rights and credits which the plaintiffs, Russman & Galland, were seeking to realize and control were in the hands of the liquidators for distribution according to law, and that the seizure of Russman & Galland was an attempt to illegally wrest the control of those assets and credits from their hands, which would work irreparable injury to the proper and legal adminstration of the corporation.
Upon the trial of this rule the court ordered that the garnishment be quashed, unless the judgment creditors, within five days, filed a suit in the Civil District Court attacking the validity of the appointment of the liquidators, and directing that in the meantime matters in the Circuit Court stand in abeyance.
Acting upon the directions of the Circuit Court Russmann & Gal-land caused a rule to issue in the suit of Francois Rouge vs. The Lafargue Bros. Co., Limited, to show cause why the appointment of the liquidators should not be set aside as having been illegally and improvidently issued. The three liquidators, the Lafargue Bros. Co., Limited, and Francois Rouge (the plaintiff in the suit) were made defendant in the rule.
Defendants in rule excepted that the nullity of the judgment appointing the commissioners could be sued for only by direct action; that the proceeding taken did not conform to the orders of the Circuit Court, which required that a suit not a rule be taken, and that the allegations of the rule did not disclose a cause of action in Russman & Galland to ask for the nullity of the judgment. The District Court sustained the exception and dismissed the suit, reserving to plaintiff the right to bring a direct action.
Plaintiffs in rule appealed.

Opinion:
The opinion of the court was delivered by
Nicholls, C. J.
In the rule taken by Russmann & Galland, they maintained that the liquidators had never been legally appointed, confirmed or qualified as such, for various assigned reasons, one of the reasons assigned being, that the court was without jurisdiction in the premises, and could not legally take action in the matter of the appointment.
On the argument of this case, counsel of appellants declared that the action taken by the District Court was nothing more than substantially the approval and homologation of proceedings of a meeting of stockholders of the defendant corporation, at which the stockholders selected the three persons named as liquidators of the corporation, the order of homologation being followed by an order converting these liquidators so extra-judicially selected into jucicial liquidators, with all the rights and powers of judicial receivers authorized to stop judicial proceedings and otherwise interfere with creditors in the enforcement of their legal rights; that the order complained of was a mere confirmation, at the instance of Rouge, of those proceedings. The record in the case of Rouge is not in the transcript. Counsel should remember that while the judge of the lower court may take judicial notice of his own proceedings, this court has no knowledge of what occurred below, except through the record as brought up. Steps should have been taken in the lower court to have the proceedings in the suit of Rouge brought before us. We see enough of the situation, however, to warrant us in our opinion, in coming to a legal conclusion. The situation of these parties is a peculiar one. The plaintiffs in rule were proceeding regularly in the execution of the judgment obtained by them, when they were met by a rule to show cause why further proceedings should not be stayed by injunction, by reason of plaintiffs in rule having been appointed liquidators of the defendant corporation in an order of the Civil District Court, the effect of which, it was claimed, was legally to tie the hands of creditors, and prevent their proceeding against the property of the corporation.by way of execution. The liquidators made the order of court the sole basis of their demand. If the defendants in that rule were of the opinion that the court which issued the order was without jurisdiction or power to grant the order which was made the basis of the demand, the defendant, we think, had the legal right, by way of defence and cause shown, to set up that contention. Whether or not they would succeed in that contention is a different matter. We do not think that the plaintiffs in that particular rule, having themselves invoked Russmann & Gailand to show cause, could object as to the mere form of their doing so by way of answer. Paxton vs. Cobb, 2 La. 139; Quine vs. Mayes, 2 Rob. 510; Surgi vs. Colmer, 22 An. 22; Stevenson & Co. vs. Riser, 23 An. 421; Succession of Coco, 32 An. 329; Borde vs. Erskine, 33 An. 879; Beltran vs. Gauthreaux, 38 An. 106; Succession of Mercier, 42 An. 1138; Baker vs. Michinard, 17 An. 251; Pasteur vs. Lewis, 39 An. 5; Windom vs. McVeigh, 93 U. S. 283.
The Circuit Court, instead of attempting to pass finally upon the issues, conservatively relegated the parties to the Civil District Court for a decision upon them. The present proceeding, though not so in appearance, is substantially nothing more than cause assigned by Russmann & Galland (responsively to the rule of the liquidators upon them to show cause) why an injunction should not issue in the Circuit Court restraining them from further proceeding with their seizure in the Circuit Court. In dealing with the question whether a rule was the proper remedy or not to be resorted to by Russmann & Galland, we think the peculiar circumstances under which it was resorted to can fairly be considered, and added as a feature in the determination of the general question of remedy.
We do not conceive that the Circuit Court in directing that in the absence of the filing within five days by Russman & Galland of a suit attacking the validity of the appointment of the liquidators the garnishments should be quashed, attached any particular significance to the manner in which the plaintiffs should proceed in the District Court by way of attack. It was the attack itself, not its mode, which the court had in view. It was (as we have said) substantially a transfer of the rule to the District Court. Plaintiffs' right of attack was, however, independent of any order of the Circuit Court.
We are of the opinion that plaintiffs in rule were authorized to proceed as they did. If the District Court was without power, authority and jurisdiction to grant the order it did, and it was an absolute nullity, the sooner that fact be ascertained and announced the better for all parties.
It is to the interest of all that litigation by which the common property of the debtor is being eaten up by costs should terminate, and that the rights of parties should be determined as speedily as possible, consistently with justice. We see no good reason for forcing plaintiffs to a direct action; all persons in interest are now confronting each other on equally advantageous ground, and it wonld be subordinating substance to form, to require new proceedings; we see nothing to be gained by it. Jeffries vs. Bellville Iron Works, 15 An. 20; Letchford vs. Dannequin, 16 An. 150; Hackett vs. His Creditors, 43 An. 124; State ex rel. Brittin et al. vs. City, 43 An. 833; State ex rel. Brewing Co. vs. Judge, 46 An. 100; State ex rel. Gaiser vs. Judge, 46 An. 110; State ex rel. Fox & Searles vs. Judge, 46 An. 114; State ex rel. Feldner vs. Judge, 46 An. 116.
The judgment appealed from is hereby annulled, avoided and reversed, and the case is remanded for further proceedings according to law.