Case Name: Succession of Pierre Lanaux
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1894-05
Citations: 46 La. Ann. 1036
Docket Number: No. 11,356
Parties: Succession of Pierre Lanaux.
Judges: Mr. Justice McEnbrv concurs in this opinion with respect to the claim of Mrs. Tassin, but dissents from the views expressed as to other parties — maintaining the correctness of the original opinion of the court in its entirety.
Reporter: Louisiana Annual Reports
Volume: 46
Pages: 1036–1074

Head Matter:
No. 11,356.
Succession of Pierre Lanaux.
A debtor who deposits with a third party pledges for his creditor, presumably purchased with trust funds, and who informs the creditor of the deposit, who accepts the third party as the depositary, loses control and possession of said pledge. The depositary holds the pledge for the benefit of the pledgee. That the third party is the clerk of the pledgor does not destroy the effect of the pledge.
A.depositor of money lost or misappropriated by an insolvent depositary does not give the depositor a genera] privilege on the estate of the depositary for the return of the money.
On Application eok Reheakinu.
Delivery of the property pledged to the creditor, or to the third person to hold possession for the creditor^ is indispensable to perfect the contract of pledge, and when delivered to the third person he must, of course, know of the trust and accept the obligation it imposes. Civil Code, Arts. 8133,3152, 3162; Code Napoleon, Art. 2076; Laurent Droit Civil, 28th Vol., p. 162, pars. 464, 470, 471, 484, 3d Mourlin Examen du Code Napoleon, p. 482, par. 1218, Sec. 3; 7th Boilleux Commentaire du Gage, p. 129; Jones on Pledges, Secs. 23, 27, 28, et seq.
Hence, no pledge is accomplished by the debtor executing his note in favor of his creditor, attaching bonds and certificates of stock to secure its payment, placing note and securities in a package marked with the creditor’s name in the box of the debtor in bank, the debtor at the same time instructing his clerk having the key of the bank box to deliver the package on the reguest of the creditor; and although the instructions are communicated to the creditor, and all is done in pursuance of a pledge promised the creditor, but no delivery ever having been made, and when the debtor dies the securities .remaining in his bank box deposited and held as his property. Ibid.
In such ease, the clerk of the debtor, because he receives the instructions of his employer to deliver the securities, and communicates such instructions to the creditor, does not become “ the third person agreed upon” to take possession of the securities for the creditor, required by the Code when the pledge is proposed to be perfected by that method of delivery; least of all can we hold that by such instructions and theiy communication is any shadow of possession passed to the clerk of securities in his employer’s bank box, never taken from it until his death, when his executor takes charge of box and contents. Hid.
Instructions of an employer to his clerk, with reference to the delivery of the employer’s securities to one of his creditors, and communicated to the creditor, whatever their force in the life of the employer, certainly cease to have any effect when the death of the employer occurs, no delivery having ever been made.
Death of the debtor fixes the rights of his debtors as they exist at that moment, and a proposed pledge, not perfected by delivery when the debtor’s death occurs, confers no rights. 1H. D., p. 686, Insolvency IV, No. 7; 2 H. D., p. 1601, i. e., Delivery; O. C. 3133, 3152, 3162,'3182, 3183, 3185; 12 Rob., p. 213, and authorities cited on page 1053.
APPEAL from the Oivil District Oourt, Parish of Orleans. King, J.
Chas. F. Claiborne Attorney for the Testamentary Executor, Appellant:
This is a contest over an account of distribution presented by the executor of this succession.
Among the princ pal creditors of this succession are Widow F. E. Tassin, Denis Lanaux, Joseph R. Hymel, and the heirs of Seraphin Hymel and of Octave Hymel. They had been placed upon said account as privileged creditors whose claims were secured by pledge of stocks and notes. Their right to a pledge and preference was opposed by several creditors. The court below denied their privilege. From this judgment they have appealed.
Authority to sign a promissory note may be by parol. O. O. 2997 (2966) ; 21 An. 477; 8 R. 242; 23 An. 310; 6 La. 587; 1 Daniel Neg. Inst., Sec. 274; 1 Parsons on Bills, p. 100; 34 An. 224.
A pledge of notes, stocks and bonds may be by parol; and the power to execute the same may also be by parol. O. O. 3158, Sec. 2; 35 An. 1173; 43 An. 1051.
Because parties have committed to writing an act which would have been valid by parol, it does not follow that authority to do the act must be in writing.
A principal who has a balance in the hands of his agent has neither preference nor privilege upon the money in the hands of his agent, unless he can identify it as his own. 9 La. 50; 17 La. 162; 25 An. 478; 31 An. 314.
T. J. Semmes & Legendre Attorneys for Estate of Seraphin Hymel, Appellant:
Art. 3152, O. C., is modified by Art. 3162. The pledgee need not always have corporeal manual possession of the thing pledged; a third person may be detainer of it by agreement between the parties, and even the pledgor may have possession of the thing pledged for account of the pledgee. 38 An. 863; 33 An. 973; 32 An. 1250; 42 An. 694.
The tradition or delivery of movable effects takes place either by real tradition or by the delivery of the keys oLthe buildings in which they are kept. O. C. 2478. This rule of delivery has likewise been recognized by the courts in France: “La deliverance des effets s’opere par la remise des chefs des batiments qui les contiennent.” Duranton, T. XVIII, p. 607, No. 521; Dalloz Nantissement, No. 211, Art. 21, February, 1840; Dalloz, 1876, 2-23; Bordeaux, 26 May, 1873.
The rule exists at common law as well as under the civil law. 1 Atk. 165, 171; Ryal vs. Rolle, 2 T. R. 462; Atkinson vs. Maling— Held, the delivery of the keys of a warehouse is a delivery of the goods that are in it.
The common law also recognizes the principle that possession may be held by a third person for the pledgee. 43 N. H. 430, Bruns vs. Warren; 18 N. H. 285, Tibbetts vs. Flanders; 3 Tenn. Oh. 13, McOready vs. Haslock; Jones on Pledges, Secs. 34, 35.
In Courts vs. Tuchett, 24 Minn. 423, it was held that a delivery of goods to a workman or clerk employed by the pledgor and possession by such workman on behalf of the pledgee are sufficient to create and continue the lien.
Under the jurisprudence of this State it is well settled that a factor stands in a fiduciary relation to his principal in respect to the proceeds of goods sold; a fortiori, does he stand in that position in respect to a special deposit, such as was made in this case. The legislation of this State has attached the quality of a trust to that relation, and has conferred upon it the responsibilities ensuing therefrom, and has affixed criminal penalties for its violation in Sec. 905 of the Revised Statutes. 25 An. 187, Tate vs. Laforest et als.; 28 An. 870, Brown vs. Garrard; 31 An. 809, Desobry vs. Tete.
The law does not require impossibilities. To require identification of the very bank notes deposited by Hymel with Lanaux, and by him deposited in bank, is to require an impossibility. Such extreme nicety of proof of identity is not required, and is in fact repudiated. The doctrine was fully considered in the following case: 104 U. S. 55, National Bank vs. Insurance Oompany. Same doctrine recognized in McLeod vs. Evins, 66 Wis. 401; 28 N. W. 173; Bank vs. Weems; 6 S. W. 802, and in the English courts — 4 De Gex M. and G. Eng. Chan. Rep.; 13 Chancery Div. (Law Reports), Knatchbull vs. Hallett.
F. P. Poehé and Albert VoorIvies for Mrs. Tassin, Appellant.
Albert Voorhies for Jos. R. Hymel, individually, and as executor of succession of Octave Hymel, filed separate briefs.
The form and execution of the contract of pledge are distinct matters.
Delivery, which is of its essence, constitutes the execution.
The form is the language, written or spoken, evidencing the agreement or contract.
The vested right of the creditor-pledgee results from an adherence to the form, accompanied by the execution.
The law of delivery by pledgor, and of possession by pledgee, is identical in the Roman, French and Louisiana jurisprudence.
But the form, or formalities of the contract of pledge show chronological variances in the three systems respectively, and in each of these systems within itself.
Originally the general rule in each system was that pledge required in all eases a written (and in some instances an authentic) instrument, besides registry in some cases.
In Louisiana, originally, all pledges required a written instrument— some few an authentic act. But by various statutory amendments incorporated in Revised Cfivil Code of 1870, all pledges of incorporeal things can be made by verbal as well as written contract; while a private writing is all that is required for movables corporeal.
B. Howard McCaleb and Beattie & Beattie Attorneys for the People’s Bank of New Orleans, the New Orleans National Bank and George Dionni, Opponents and Appellees, filed a brief.
J. McConnell Attorney for State National Bank, Opponent and Appellee:
In this case no actual delivery was ever made by the pledgor to the pledgees. The pledgees were never put in possession, and no third person was agreed on by the parties who, as trustee ad hoc, or otherwise, received actual possession, and remained in possession, for the alleged pledgees as required by law. O. C., Art. 3162 (3129); O. N. 2076; Code of 1808, p. 446, Art. 7; Jacquet vs. His Oreditors, 88 An. 866; Conger, Exr., vs. Oity of New Orleans, 32 An. 1252; Weems vs. Delta Moss Co., 33 An. 973; Succession of D’Meza, 26 An. 35; Oasey vs. Oavaroc, 96 U. S. 475.
Where the pledgee’s possession is not in himself, but in a third person, such third person (a) must have been “agreed on by the parties” — i. e., by both pledgor and pledgee, and (5) such third person must have been “ actually put and remained in possession” of the pledged property, otherwise no privilege thereon can exist as against third persons. O. C., Art. 3162, and authorities above quoted.
No promise to transfer or deliver collaterals as security for a debt can create a privilege upon the collaterals not actually transferred. Succession of D’Meza, 26 An. 35, quoted and approved in Oasey vs. Oavaroc, 96 U. S., 485, 486.
If the dispossession of the pledgor is not sufficiently complete to prevent substitution the'pledge is not valid. Dalloz Nantissement, 119; Oasey vs. Oavaroc, 96 U. S., 476.
If the pledged property remains in the possession or under the control of the pledgor (as in this case), the pledge is void as against third persons, unless such possession or control of the pledgor is proved to be precarious, or clearly for account of the pledgees. Jacquet vs. His Oreditors, 38 An. at p. 866; Conger, Exr., vs. Oity of New Orleans, 32 An. 1252.
“The property of the debtor (especially insolvent debtors) is the common pledge of his creditors, and the proceeds of its sale must be distributed among them ratably, unless there exist among the creditors some lawful cause of preference.” O. O. 8183 (3150). “ Privilegia sunt strictissimm interpretationis.’ ’ Privileges, especially when asserted against third persons, must be 1 ‘ conclusively established.” 10 An. 429. “Privileges are never allowed except when expressly granted by law; and then only by virtue of an exact compliance with the legal requisites essential to their creation and existence.” Hennen’s Dig., p. 1238, No. 3, and authorities there cited.
When pledged securities are “ actually put ” in the possession of a custodian selected by the pledgor alone, and are held by such custodian, subject to the orders and control of the pledgor, and the property so remains subject to the control of the pledgor until his death, such pledge is without effect and void as against third persons.
Farrar, Jonas & Kruttschnitt, W. 8. Benedict, R. G. Dugué and John B. Fisher Attorneys for other Appellees.

Opinion:
The opinion of the court was delivered by
McEnery, J.
Pierre Lanaux, commission merchant and factor, died in the city of New Orleans, September 6, 1892. He was the agent for Mrs. E. Tassin, Octave Hymel, deceased, and J. R. and Seraphin Hymel. These parties entrusted their funds to Lanaux for investment without specifying and directing the mode of'investment. These funds were never, except in case of Mrs. Tassin, loaned to Lanaux, and he was never authorized to use them for his own purposes or in his business. The mandate, as shown by the witnesses and the correspondence between the parties, was to invest their funds. They were deposited by them with Lanaux for this purpose and none other. On the accounts current furnished these several parties, it was noted that the funds had been invested without saying in what particular manner.
A short time before his death, Lanaux, for the amounts which he had for investment for these parties, made up separate packages in separate envelopes in which were placed his individual notes for the amount due each, with bonds and certificates of stock, with the usual blank power of attorney to transfer, attached to them.
On each envelope or package was endorsed the name of the party to whom it belonged. They were placed in a bank box, and this box with the key was placed in the actual, corporeal possession of DeJahan, his clerk.
This box was, according to Lanaux' instructions, placed in the branch depository of the State National Bank for security and safe keeping, through the intervention of G. A. Lanaux, who received the box from DeJahan. DeJahan was instructed and directed by Lanaux, to deliver on demand these packages to the persons to whom they were addressed.
He had exclusive control of the box containing these pledges and says he would have delivered them to the parties on demand. It is evident, from the testimony of DeJahan and G. A Lanaux, that DeJahan's possession of the box was full and complete, and adverse to that of Lanaux.
Mrs. Tassin, who had instructed Lanaux in the same manner as the Hymels, as to the investment of her money, subsequently met Lanaux, to whom she loaned her money on the faith of the securities set apart for her, with the understanding that DeJahan was to be the depositary of the pledge. DeJahan after receiving these packages, informed Mrs. Tassin of his possession of the same for her benefit, and she accepted DeJahan as the depositary then, as she had previously signified her assent to do so, when she had the conversation with Lanaux, which resulted in the loaning of the money. This statement of the facts in relation to Mrs. Tassin brings her case directly under the textual provisions of Art. 3162 of the Civil Code and the interpretation placed upon the same by this Court. 42 An. 694; 38 An. 863; 33 An. 973; 32 An. 1250.
The fact that DeJahan was the clerk of Lanaux could not affect his capacity to act as a third party, chosen by the parties, to be the detainer of the thing pledged. There was no inconsistency in the two relations. Having accepted the trust, so far as it was concerned, he was a stranger to Lanaux, and in no way bound by his private relation to him to violate his obligation as a fiduciary and to surrender the pledge to him. And he so regarded it, as he says he would have delivered the packages on demand to the parties for whom they were intended.
Seraphin Hymel, J. R. Hymel and Octave Hymel were informed of the investment of their funds, either by Lanaux or DeJahan, although the testimony does not show that they were informed par ticularly as to the mode of investment. It is a fair inference, however, that they were so informed by Lanaux and DeJahan when they spoke to those parties, whom they had visited for the purpose of informing them as to the fulfilment of the trust imposed by them upon Lanaux. This is corroborated by the blank power of attorney which Seraphin Hymel refused to sign, the object of which was to remove and to deposit bonds, bills, stocks, notes, etc.
Taking all the evidence together, the impression made upon the mind is that the Hymels had knowledge of the pledging of these bonds, stocks, etc., for them, and that they accepted DeJahan as the custodian.
Seraphin Hymel's reason for refusing to sign the power of attorney was that he thought his funds safely invested.
The power of attorney was admitted in evidence over the objection of opponents, but it was admissible to show in part that Seraphin Hymel knew that his funds had been investod in the manner shown by the inventory and the account and the disposition of his funds, and that he accepted DeJahan as the third party agreed on between'the parties to detain the pledge.
We see no good reason why the debtor can not place the thing pledged in the hands of a third party and inform the creditor of the fact, when, if he accepts the third party, the pledge becomes perfected. Such seems to be the doctrine indicated in Peters vs. Pacific Guano Co., 42 An. 694.
The succession of Lanaux could have no greater rights than the decedent. If he had lived would not the pledgees have had the right to claim the things pledged to them in the hands of DeJahan? If a demand had been made upon DeJahan for the pledges he could not have set up title in Lanaux, and Lanaux certainly was estopped from claiming the pledges.
In fact he had completely divested himself of possession of the notes, bonds and certificates of stock after DeJahan had accepted the pledges from him and had been accepted as the detainer of the pledges by the pledgees.
Any attempt of Lanaux to dispose of the things pledged in the hands of DeJahan could have been successfully resisted by the pledgees. Another view of the case is also fatal to the demand of opponents.
Conceding that there was no valid pledge of the property, the relations between Lanaux and the Hymels were not those of debtor and creditor. They never authorized Lanaux to use for his own purpose or in his business these funds. Their instructions to him, who was their servant and agent, were to invest their funds. They were informed that they had been invested, and it was so noted in the account current furnished the Hymels. Lanaux invested these funds in property, of which he was the owner, and placed the same in the hands of his clerk to be delivered on demand. The Hymels, on his death, found in his succession this property detained by Lanaux for them. This property was presumably purchased with their funds and separated from Lanaux' property, and became their property. Beaty vs. McLeod, 11 An. 76.
It is the law that the Hymels, in order to secure the identical fund in the insolvent succession, must separate the fund from the mass of the succession and distinguish it. But it is also the law when trust funds have been specifically invested in property which can be identified the property must respond to the trust fund and stand in its stead. The Hymels therefore have the right to claim the specific property purchased with their funds by their servant and agent. Id.
It is contended by opponents that the notes were null and void because signed and endorsed by DeJahan, and that he had no written authority to sign and endorse them. The mandate to sign and endorse a promissory note must be express and special, but it need not be in writing. 21 An. 476.
DeJahan's authority to sign and endorse the notes was express and special, although not in writing.
To perfect the pledge the delivery of the bonds, notes, etc., was sufficient. 35 An. 1171; C. C. 2158.
On October 8, 1891, S. Hymel deposited with Lanaux twenty-three thousand dollars. This deposit was for the purpose of meeting current expenses of his plantation. This sum is placed on the account as an ordinary debt. It is claimed by Hymel that this was a trust fund, and that the executor must turn it over to Hymel's representatives before making a distribution of Lanaux' assets among his creditors.
The fund has not been identified, nor has it been traced in its conversion into other property.
The depositor has no general privilege on the property of the agent. 25 An. 478; 31 An. 314.
It must therefore be rated as an ordinary debt against the succession fund.
The opposition to the claim of the Planters' Fertilizing Company is not well founded. The proof is sufficient to sustain the claim. The District Judge was of this opinion and we see no reason to disturb his ruling.
Walton & Co. and Moran & Wood's claim for a privilege for coal furnished the plantation was properly allowed, restricted as it was to coal furnished for making the crop of sugar on the several plantations.
It is therefore ordered, adjudged and decreed that the judgment appealed from be amended so as to reverse that part of the decree sustaining the oppositions to the claims of Seraphin Hymel, Octave Hymel, Joseph R. Hymel, Mrs. F. E. Tassin, to be paid by preference and privilege out of certain notes and bonds, shares of stock, etc., pledged to them and mentioned in the inventory and on the account of the executor, and it is now ordered that the opposition to the same be dismissed and said claims be recognized as placed in the account. In all other respects the judgment is affirmed, the succession to pay all costs.