Case Name: PONS v. YAZOO & M. V. R. CO. et al.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1911-06-15
Citations: 131 La. 313
Docket Number: No. 18,748
Parties: PONS v. YAZOO & M. V. R. CO. et al.
Judges: PROYOSTY, X, takes no part for reasons stated in separate document.
Reporter: Louisiana Reports
Volume: 131
Pages: 313–355

Head Matter:
(59 South. 721.)
No. 18,748.
PONS v. YAZOO & M. V. R. CO. et al.
(June 15, 1911.
On Rehearing, June 29, 1912.)
(Syllabus by the Court.)
1. Foreclosure of Mortgage — Payment of Notes.
The promissory note secured by mortgage, on which plaintiff in foreclosure proceeded, had been paid.
2. Mortgages (§ 534*) — Foreclosure—Right to Foreclose — Payment of Debt.
No title could be conveyed to an adjudieatee on a mortgage note that had been paid.
[Ed. Note. — For other cases, see Mortgages, Cent. Dig. § 1555; Dec. Dig. § 534.*]
3. Foreclosure of Mortgage — Notes Omitted.
Plaintiff in foreclosure held two other aotes, upon which he did not choose to declare in the foreclosure proceedings.
4. Foreclosure of Mortgage — Theories of Parties.
The theory of the defense is that the Bank of Commerce, among whose papers the mortgage note of $8,750, was found, held it legally and other two notes, while the'theory of the plaintiff is that the Bank of Commerce only held the last two notes.
5. Mortgages (§ 587*) — Foreclosure—Sale-Rights of Purchasers.
This court has already decided that the title of a third possessor cannot be divested by sale under executory process, issued on a mortgage note which had previously been paid. Pons v. Yazoo & Mississippi Valley R. R., 122 La. 158, 47 South. 449.
[Ed. Note. — For other eases, see Mortgages, Cent. Dig. §§ 1685, 1685%, 1687, 1688; Dec. Dig. § 587.*]
6. Case Remanded.
The cabe was remanded for trial on the merits.
7. Mortgages (§ 319*) — Foreclosure—Proceedings to Set Aside — Sufficiency of Evidence.
The preponderance of testimony proved that the note had been paid.
[Ed. Note. — For other cases, see Mortga^'s Cent. Dig. §§ 855-893, 875, 913, 1356, 1366; Dec. Dig. § 319.*]
8. Mortgages (§ 534*) — Foreclosure—Right to Foreclose — Payment of Debt.
The adjudicatee acquired no title.
[Ed. Note. — For other cases, see Mortgages, Cent. Dig. § 1555; Dec. Dig. § 534.*]
9. Equity (§ 87*) — Estoppel (§ 98*) — Equitable Estoppel — Persons Affected — Husband and Wife — Laches.
The acts of omission or of commission which estopped the husband, who is not the agent, did not estop the wife; nor is she concluded by his laches. She was a third possess- or, and the property did not pass from her to the defendant by the illegal adjudication.
[Ed. Note. — For other eases, see Equity, Cent. Dig. §§ 242-244; Dec. Dig. § 87;* Estoppel, Cent. Dig. § 290; Dec. Dig. § 98.*]
10. Mortgages (§ 539*) — Foreclosure—Proceedings to Set Aside — Relief Granted.
The mortgage claim on the two notes of $15,000 revives and is reinstated. The value of the property at the time that the railroad went into possession of it for its use as a railroad to be deducted from the revived indebtedness as of the date that the sale of this property is proven.
[Ed. Note. — For other cases, see Mortgages, Cent. Dig. § 1560; Dec. Dig. § 539.*]
11. Mortgages (§ 587*) — Foreclosure—Proceedings to Set Aside — Relief Granted.
Plaintiff owned the property for which she brought suit, subject to the rights which inured to the railroad.
[Ed. Note. — For other cases, see Mortgages, Cent. Dig. §§ 1685, 1685y2, 1687, 1688; Dec. Dig. § 587.*]
12. Mortgages (§ 539*) — Foreclosure—Setting Aside Foreclosure — Improvements.
To the railroad was reserved the right of suing for improvements on the land in its possession not in use for railroad purposes.
[Ed. Note. — For other cases, see Mortgages, Cent. Dig. § 1560; Dec. Dig. § 539.*]
13. Mortgages (§ 548*) — Foreclosure—Setting Aside Foreclosure — Improvements.
To the plaintiff is reserved the right, if any she has, to sue for rental from the date that suit was filed.
[Ed. Note. — For other cases, see Mortgages, Cent. Dig. § 1566; Dec. Dig. § 548.*]
(Additional Syllabus by Editorial Staff.)
14. Mortgages (§ 440*) — Foreclosure—Notice to Owner.
Where the deed upon which a foreclosure was made contained the pact de non alienando, the proceedings are conducted contradictorily with the original debtor, and there is no necessity of notifying a subsequent purchaser from the mortgagor.
[Ed. Note. — For other cases, see Mortgages, Cent. Dig. §§ 1298, 1299, 1303-1307; Dec. Dig. § 440.*]
15. Bills and Notes (§ 440*) — Validity-Reissue.
Matured paper cannot be reissued by the maker after payment.
[Ed. Note. — For other cases, see Bills and Notes, Cent. Dig. §§ 1223-1232, 1260, 1261, 1304-1488, 1490, 1491; Dec. Dig. § 440.*]
On Rehearing.
16. Subrogation (§ 23*) — Grounds — Advances for Discharge of Incumbrance.
Where a debtor applies to a bank for a loan with which to take up a mortgage indebtedness, and the loan is made upon his executing a mortgage for the amount required and existing indebtedness to the bank, and he takes the proceeds and pays the mortgage, the bank is not subrogated to the rights of the mortgagee.
[Ed. Note. — For other eases, see Subrogation, Cent. Dig. §§ 60-66; Dec. Dig. § 23.*]
17. Subrogation (§ 23*) — Advances for Discharge of Incumbrance. '
A bank which was a creditor of a partnership could not, by payment of a debt of one of the partners, become subrogated to the claim of the creditor.
[Ed. Note. — For other cases, see Subrogation, Cent. Dig. §§ 60-66; Dec. Dig. § 23.*]
Provosty, J., dissenting.
Appeal from Twenty-Eighth Judicial District Court, Parish of Jefferson; Prentice E. Edrington, Judge.
Action by Mrs. Carmelite Pons, wife of George A. Louque, against the Yazoo & Mississippi Valley Railroad Company and others. From a judgment for defendants, plaintiff appeals.
Modified.
See, also, 122 La. 156, 47 South. 449.
Lazarus, Michel & Lazarus, Farrar, Jonas, Goldsborough & Goldberg, and David Sessler, for appellant. I-Iunter C. Leake, Gustave Lemle, L. H. Marrero, Jr., Eugene D. Saunders, Newton C. Blanchard, Blewett Lee, and O. L. Sivley [Chas. N. Burch, of counsel), for appellees.

Opinion:
BREAUX, C. J.
The action was petitory.
Plaintiff asked to be decreed the owner of lands situated in the parish of Jefferson.
It was formerly the Lafreniere plantation, owned by plaintiff's husband, George A. Louque.
Plaintiff is separate in property from her husband.
Plaintiff's husband was indebted to her in large amount, which amount was secured by mortgage.
He transferred this plantation to her on July 2, 1897, in part satisfaction of his indebtedness.
An exception was filed in the district court by defendant on a number of grounds. We will not state these grounds, as they are stated in the decision referred to infra.
The exception was sustained, and the cause dismissed.
On appeal, the exception was maintained, the cause was reinstated by this court, and remanded for trial on the merits. See same title, 122 La. 156, 47 South. 449.
After it had been remanded to the district court to be tried on the merits, it was tried and decided in favor of defendant.
Plaintiff appealed.
Some of the points presented here, if sustained by the facts of record (as we think they are), were decided in the first appeal.
Some time prior to the date that plaintiff became the owner of this property, there was a note due by the owner of the place, George A. Louque, the husband, secured by special mortgage and vendor's privilege on it, for $8,750.
It had been past due for some time.
The owners, Milliken & Harwell, were pressing George A. Louque, the maker of this note, for payment.
He made several unsuccessful attempts to borrow the amount wherewith to pay this sum. He called on several banks and money brokers, all in vain.
Finally, he called on the president of the Bank of Commerce of this city, with whom he had had financial dealings, and to whom he was indebted for about $4,000 at the time, for which there was an overdraft in the bank just named.
The president heard his statement about his inability to borrow a much needed sum at that particular time.
The president suggested to him to make two notes, one for $5,000 and the other for $10,000, secured by mortgage on the Lafreniere plantation, which was Louque's property at the time, and that by depositing these two notes as security it would be possible for him to raise the money with his bank.
This suggestion was followed.
There was a mortgage given for the amount, and the wife of George A. Louque renounced her paraphernal rights in favor of the mortgagee.
He thereby obtained the amount to satisfy the note, $8,750, and to cover the overdraft of $4,000 at the bank.
The position of plaintiff at this point is that the note was absolutely paid by her husband, and that she therefore cannot be held responsible.
This is one of the important points which has given rise to extended argument at bar.
Regarding the payment vel non of this note, witnesses were examined at some length.
It may as well be said here that both plaintiff and defendant derive title from a common author.
Plaintiff by a dation en paiement made by her husband to her on July 2, 1897, and the defendant by being adjudicatee of the property in foreclosure proceedings of the $8,750 note in August, 1898.
Defendant held two notes, amounting to $15,000, and the $8,750 note, secured by vendor's mortgage.
Defendant did not use the first two, but chose to foreclose on the $8,750 note, which plaintiff avers has been paid.
One of the grounds of pláintiff in regard to this foreclosure sale is that she was never notified at all and had no knowledge of the proceedings.
The Bank of Commerce, holder of these three notes, failed, and was placed in the hands of liquidators, and after its failure the notes were transferred to Hr. H. C. Leake.
We will here state that this note for $8,750 remained with the bank until it was pledged to the New Orleans Clearing House Association.
When the Clearing House Association was settled with by the liquidators of the bank, it was returned to the bank, where it remained until about a year after the liquidators had been in charge.
The amount borrowed from the Clearing House Association (that was before the bank's failure), for which this note was security in part, amounted to $60,000, secured by collaterals.
The bank, in a moment of great financial emergency, in order to pass the financial storm, gathered a number of its notes, among them the note for $8,750, and deposited them as security for the $60,000 loaned by the Clearing House Association.
After payment of the $60,000 indebtedness of the bank, as before stated, made to the Clearing House Association, and the values had been returned to the liquidators, the liquidators, in time, in accordance with an order of court, sold this note as one of the assets of the bank to Mr. Leake.
They also sold to Mr. Leake the two notes, one for $5,000 and the other for $10,000, before mentioned, all for $15,000.
Plaintiff's contention is that the defendant acquired no title, because the note of $8,750, before referred to, had been paid, and therefore the foreclosure proceedings were null and void; that her own title remains in full force and effect; that she is entitled to possession, and that defendant is in bad faith; and she asks for reservation of certain rights to be claimed in a separate suit.
The defense is that the note in question was not paid; that it was taken up by the Bank of Commerce, some time before its failure, for its own account, and became one of its assets; that after the failure of the bank it was validly sold in accordance with an order of court; and that after it had been bought by .Leake the proceedings he instituted on this note in foreclosure were regular.
The defense further is that plaintiff's laches estops her from claiming the property; that, even if originally Leake did not have an absolute right to this particular note, the property in this foreclosure passed, free of all claims, from her to the defendant railroad, and that it is now part of its great railroad system, and, as such, indispensable; that, the lands having been in use for nearly nine years, the properties cannot now be taken from defendant; and that at most, if plaintiff can recover anything, she can recover only the value of the land when taken subject to the first mortgage.
In the alternative, defendant pleads its good faith, and urges that it is entitled to recover, before it can be evicted, the value of its improvements on the land, amounting to a very large sum.
In the foreclosure proceedings before mentioned, defendant bought the property (Lafreniere plantation), for $15,000.
We will return, for a moment at this point, to give further consideration to certain facts preceding the failure of the bank, and to say that some one, when the emergency referred to above arose, must have considered the note used in foreclosure as an asset of the bank.
Whatever was done in that emergency cannot bind the plaintiff, if, as we think, the note had been paid.
It is quite certain, that after the failure the liquidators of the bank and their attorneys, in good faith, considered it as an asset of the bank.
As such, it was sold.
In justification of the sale of the note, the principal attorney for the liquidators, in a letter addressed to Mr. Leake, says that the Bank of Commerce bought the $8,-750 note in due course of business from Mil-liken & Harwell, at the same time that the two notes, one for $5,000 and the other for $10,000, were placed in the hands of the bank as collateral security.
While entertaining the highest respect for the opinion of that attorney, we must say that his opinion is not sustained by the weight of the testimony of the officers of the bank.
The distinguished attorney by whom this letter was written, whose sincerity and good faith are not for a moment questioned, did not have all the details before him, as he himself admits; but he insists that he must have had reason for making the statement.
Of this we have not the least doubt.
A short time prior to the adjudication to defendant in July, 1908, George A. Louque, maker of the $8,750 note, wrote to the presi. dent of the Illinois Central Railroad, saying that the liquidators of the Bank of Commerce held three notes against Lafreniere plantation, one note secured by vendor's lien and the other notes by a mortgage.
It must be borne in mind that this is the statement of the husband, with which the plaintiff had naught to do.
Plaintiff testified that she knew nothing of this sale of the plantation under executory process until January, 1899.
It must be said that George A. Louque never claimed this $8,750 note at any time; and that, in so far as he is concerned, he is absolutely concluded and estopped.
The evidence shows that it was different as relates to plaintiff. She is not bound by acts and utterances of her husband.
But to take up the question of fact relating to the payment of this note.
We have grouped certain facts as follows:
The first evidence that attracted our attention was that of Mr. Farwell, representing the firm of Farwell & Milliken, holders of the note, amounting at the date that Far-well & Milliken received payment to the sum of $10,899.58.
Farwell in testifying always refers to this last note — i. e., the note of $8,750 — as one which was paid to his firm by the maker of the note, George A. Louque.
He seems to have known no one else as liable in the matter, either directly or indirectly.
He states particularly that the note was taken out of his possession by a personal check of George A. Louque, certified to by the Bank of Commerce. But, when asked if the note was transferred to the bank by the firm, or if it was a payment, his answer was that he did not know. Despite this answer at the close of his testimony, the testimony taken as a whole creates a decided impression that the witness thought that the certified check was delivered to him in payment of the note.
His explanation at this point, with reference to his custom in matter of notes, was that whenever he held several notes for collection he invariably marked them "Paid," except if it was the last of several; then he did not care what became of it.
The object of marking all save the last note as paid is evident, and needs no comment, except to say that, all prior notes having been paid, it made no difference how often it might be issued.
The evidence informs us that the president of the Bank of Commerce called on Farwell with Louque to ascertain the amount of the principal and interest due on the note. And that on another day George A. Louque returned and delivered the personal check, before mentioned, and took the note.
The cashier of the Bank of Commerce testified that with the two notes, one for $5,000 and the other for $10,000, secured by mortgage on Lafreniere plantation, and another note of $1,000, which the bank held as security, the bank was absolutely secured for all indebtedness' of George A. Louque and W. N. Louque, to whose account the personal indebtedness of George A. Louque had been transferred some time prior on the books of the bank; that these notes were amply sufficient to cover both the amount of the overdraft, due by George A. Louque to the bank, and the $8,750 note; that George A. Louque took up the vendor's privilege note; that the certified check, above mentioned, was charged to George A. Louque's individual account; that he placed the two mortgage notes, one for $5,000 and the other for $10,-000, in the bank's portfolio; that as to the note of $8,750, he placed it on a clip that he had for that purpose; that he (the cashier) kept it in order to have the mortgage canceled, but, as this claim did not bother the bank's officers further, they simply held the note, knowing that it was paid; that they were quite well aware that there was nothing due on the plantation, except the $15,-000 mortgage notes held by the bank; that the bank had no title whatever to this note.
We will take up for a moment the testimony of the president of the Bank of Commerce.
As relates to the note in question, he, as a witness, said that it was left with the bank to secure the indebtedness of George A. and W. N. Douque, and that J. B. De Blanc, cashier of the bank, negotiated the loan of September 9th and 10th, of $60,000, with the New Orleans Clearing House Association, and that the note in question, together with other notes, were pledged as collateral with the Clearing House Association.
That, prior to that time, while it was still held by Milliken & Farwell, it was taken up with Milliken & Farwell by George A. Louque with a personal certified check, and that the funds were the funds of the Bank of Commerce; that the check was charged by the bank to the account of George A. Louque, thereby making an overdraft.
The president testified that he presumed that the liquidators furnished the notary and .appraisers information, in order to enable them to appraise the funds of the bank.
To this mere presumption, no great weight can be given, because it is devoid of certainty in statement, which amounts only to an impression.
He presumed this because he had very little to do with that himself, he added.
In the inventory, made about the time the liquidators were appointed, the following appears :
George A. Louque and W. N. Louque, secured by note of mortgage on property in the parish of Jefferson, dated Jan. 2, 1890, amounting to fifteen-thousand dollars.............$11,279.49
And again, under the same • heading, on page 55 of the inventory:
George A. Louque and W. N. Louque, secured by same collateral as set forth above. .$5,095.91
This is all there is upon the subject; it is not conclusive either way, for or against any of the parties.
The president said that he had no recollection of the exact figures of these overdrafts, but considered the vendor's lien and mortgage note of $8,750 and the note for $15,-000 were left as security to cover the entire indebtedness of Mrs. Louque, and that the mortgage notes and vendor's notes should have been kept together as one transaction.
But, on cross-examination, the president explains in the following words:
"As I said before, the note was taken, up 'by Mr. Louque with his personal check, or the check of George A. Louque and W. N. Louque; and the note was held in the portfolio- of the bank to secure the indebtedness incurred by the payment of the check, and pending the sale of the $15,000 mortgage notes, which were to reimburse the bank for this payment and other indebtedness."
That the mortgage notes for $15,000 (that is, one for $5,000 and the other for $10,000) he was under the impression were left with the cashier after the taking of the vendor's lien note, and, as he considered the $15,000 notes had not been negotiated yet, the whole was held as collateral against the indebtedness.
Again, he states the loan from the Clearing House was made by the cashier of the bank.
"I know nothing of the details, but knew of the loan and approved it. I have no recollection of any item that entered into the loan. I have no recollection at all of the note of George _A. Couque for $8,750, pledged to the Clearing House. In fact, I do not recollect any of the collateral pledged."
The manager of the Clearing House Association, Mr. Herndon, testified that in September, 1896, during the financial panic that year, the Bank of Commerce applied to the Clearing House Association for assistance, pledging various collaterals; that he found from the records the total of the securities tendered and accepted; that he found a notation showing a note, alleged to be signed by George A. Couque, for $10,899.58.
If this be correct, it follows that George A. Couque must have deposited a personal note with the bank for the amount, before mentioned, which the bank afterwards deposited with the Clearing House Association.
Mr. Harwell stated as a witness the total due him, which George A. Couque took up, was $10,899.58, the same amount to a cent as the amount of the personal check of George A. Couque.
This note, we have said, was deposited with the Clearing House Association by the bank, and the only inference is that it was his personal note.
If this be in accordance with the facts, George A. Couque furnished a demand note to the bank for the amount. It may be that the bank in turn deposited it, together with the note of $8,750, with the Clearing House Association.
It would then show that he (Couque) was treating personally with the bank in regard to an amount loaned by the bank on the $15,000 mortgage notes as security.
It does not appear that this demand note was ever returned by the Clearing House Association.
Among the great number of papers, this worthless paper disappeared.
Be that as it may, we take up the testimony of the bookkeeper of the Bank of Commerce at the time, who is now the assistant cashier of the Bank of Hranklinton, in the parish of Washington.
He testified that the president remarked to him, about the date the loan was made, that he intended to pay a mortgage which was held on Cafreniere plantation, and to let George A. and W. N. Couque have as a loan the sum -of $15,000. Hirst, that he would pay the note due Milliken & Harwell, secured by vendor's lien; that in taking up this note and the overdraft of George A. Couque and W. N. Couque he would obtain a first mortgage on Cafreniere plantation for $15,000, which would cover the overdraft, including a sum previously due by the Couques to the bank, for at that time the account of George A. and W. N. Couque was overdrawn for four or five thousand dollars.
According to this witness in the transaction, the personal check of George A. Couque was made payable to Milliken & Farwell for the vendor's lien and mortgage note of $8,750, plus interest, and this check was charged to George A. Couque's individual account; and that the $8,750 note never figured on the books of the 'Bank of Commerce as an asset of the bank, neither in the ledgers nor in any of the books.
That the Couques owed the Bank of Commerce between $15,000 and $16,000.
This witness swore that the bank had, in addition to the $15,000 mortgage notes, other securities, amounting to $1,000, making a total of $16,000 to secure $15,000.
This witness insists that he was told by the president that he wanted the security for the overdraft of a date anterior.
With reference to the purpose for which the $15,000 notes (one for $5,000 and the other for $10,000) were executed, we will here state: That, in order to complete the transaction, it became necessary for the wife of George A. Couque (who is plaintiff here) to renounce her right as mortgagee on the place; for at that time she was not the owner. She became the owner afterward.
The wife testified, and in this there is some corroboration, that she only consented to renounce her mortgage on Lafreniere plantation when it became well understood that part of the $15,000 which her husband was borrowing would be used in paying the $8,-750 vendor's mortgage, which primed her mortgage.
We will have occasion to refer to her testimony later again.
Henry Daspit, ¿n expert accountant of long experience, who served in that capacity under the liquidators of the bank, testified that he assisted in making the inventory before mentioned. He went into details in regard to it, and referred to the $60,000 mentioned above, due by the Bank of Commerce to the Clearing House Association, and to the fact that the $8,750 note was held in pledge, and that it was handed to the liquidators by the Clearing House Association after they had taken charge, and after the Clearing House Association had collected its claim due by the bank in liquidation.
He goes over the ground again, and states that George A. Louque and W. N. Louque, secured by mortgage notes on property in the parish of Jefferson one amount for $11,-279.40, and another amount of $5,095.71; that those two amounts appeared on the books of the bank, as against which there was found in the portfolio of the bank two notes, one for $5,000 and the other for $10,-000, held by it as collateral security, and which were so entered upon the books of the liquidators and used by them in the settlement of overdrafts.
That the note for $8,750 was not held as collateral by the bank; -it was not in the portfolio. No entry showed that it was ever considered as an asset of the bank.
The witness Daspit adds that his knowledge did not come from any of the officers of the bank nor from Mr. Leake, but entirely from the entries which he found in the books of the bank.
The paying teller of the bank, Schumaker, testified that he delivered the certified check, before mentioned, to George A. Louque.
In the afternoon of the day it was delivered to him, he returned to the bank, showed the $8,750 note to the paying teller, and said to him that he had paid his last mortgage note.
That George A. Louque, the debtor, received a certified cheek from the bank, made in his favor, to the order of Harwell, or Harwell & Milliken, took it to the former, and the former handed him the note when he received the debtor's check, in payment of the note, evidently, this creditor understood.
This witness also testified that the books of the bank were destroyed, by order of the court, after the liquidation had been closed, all except the dividend book.
He sought to verify certain facts by ref-, erenee to entries in the books some time previous, but had not succeeded.
He knew, however, of the indebtedness at the time of George A. Louque to the bank, and that, prior to the large transaction herein involved, the husband of plaintiff had no credit in the bank. He at the time expressed some surprise that one whose credit had been so limited had obtained a check for so large an amount, as before stated.
We can only here add that evidently the bank must have furnished him (Louque) with a check to pay this note. Had the bank intended to take up the note, it would have issued its own check, and would have taken it for its own account. It would not have permitted the maker of the note to pay it, as he did, with his own certified check.
The silence of the officers of the bank,who testified as to the payment of the note, is alluded to as inconsistent. This may be explained by the fact it does not appear that their attention was called during the liquidation to the status of this note. There is evidence proving that the books were in a chaotic condition, and thé values that the bank had in a complete state of confusion.
It is made evident by the record that there was confusion in the business of the bank during the financial panic which swept it out of existence, as well as destroyed other financial institutions. In the financial troubles, it may well be that papers were mingled which should have been kept separate and distinct.
This is not said with a view of finding fault with any one. The bank affairs are of the past. Our only purpose is to give an idea of the condition.
It does not appear to us that any one was prompted by a desire of representing the facts otherwise than as they were.
The settlement of the business of the bank, which followed its failure, has, to a certain extent, been brought under the limelight.
As to the liquidators and their assistants, we have found that upon inquiry they were informed that the parties, George A. and W. N. Louque, had been customers of the bank. They arrived at the conclusion that the note of $8,750 was an asset of the bank.
In this they acted with the utmost good faith. They were actuated by the best motives, also, in the sale of the notes of $15,-000, including the $8,750 note, which was made under an order of court about one year after the opening of the bank's liquidation.
It did not devolve upon them to institute judicial inquiry in this respect.
There was no negligence on their part. Doubtless there were a good many papers of different kinds — good, bad, and indifferent. I
What was done might have been done by the 'most vigilant and judicious.
The note was transferred in regular course (but after maturity), under circumstances which leaves no room for blame.
Foreclosure Proceedings.
They were regular and in due form.
In the proceedings themselves, or in the act of those who subsequently became interested, nothing suggests that there was- an attempt at circumventing any one.
It was an open, public sale, made at the instance of the holder of the note.
The adjudicatees desired to become the owners of the'property; their bid was accepted, and they were declared the owners.
As relates to the foreclosure proceedings, there is no necessity of referring further than -heretofore to the facts than to state that the deed upon which the foreclosure was made contained the pact de non alienando. This being the ease, the proceedings were conducted contradictorily with the original debtor, and there was no necessity in law of notifying the plaintiff, although at the date of the sale the property was in her name.
A concession, as we understand, was made with the debtor, George A. Louque, by the owner of the note, under which the sale was made, whereby the rental for the plantation for the year was allowed to the former.
This did not affect the plaintiff's interest, as she was not a party.
Legally, in so far as relates to the holder of the-note, there is nothing to criticise or to object to in this.
Mrs. Louque, as a witness, from the first denied that her husband was her agent, and she denied that she knew of the different transactions regarding the plantation and the disposition attempted to be made of her interest.
We refer to the facts in groups, as they present themselves in considering the issues.
Having considered nearly all of the facts to which it is necessary to refer in matter of the bank and its failure, we come to the acts of administration of the liquidators, of which, it is charged by plaintiff, the holder (Mr. Leake) of the $8,750 note had special knowledge.
We must say, with reference to this holder, that we have not found that he committed any act which goes toward impugning his or the good faith of those who acquired from or through him.
But returning to the liquidators.
They found the note among the papers of the bank. It had, as before stated, been deposited with the Clearing House Association.
Upon inquiry, they were informed that the parties, George A. and W. N. Louque, had business with the bank.
The notary made a note of it on the sheet of the inventory and carried it among the assets.
Inquiry was made in regard to this note.
We will have occasion, in more detail, to refer to this subject later in considering the issues.
Despite all that is said to the contrary, we are decidedly of the opinion that there was a missing link between the bank and Milliken & Earwell, to whom the note was paid. We will remain with the subject one moment longer to say that the note passed from Milliken & Earwell to George A. Louque, the maker — from Louque, who had paid it to the bank, as said by the cashier, to have the mortgage canceled; from the bank to Leake, who brought the action of foreclosure. It was, in any event, reissued paper. It went into the hands of the bank as such. It was past due when the defendant became the adjudicatee. It knew, or it must be held to have known, that the note was dishonored paper.
The bank began by securing itself to cover an overdraft, and, in securing the overdraft, found it xjossible to make a loan and to secure itself against danger of loss.
It then gave a cheek, secured as to its payment by the mortgage notes of $15,000.
The debtor called upon his creditor and paid the amount.
The notes taken as security were transferred to the portfolio of the bank, and the usual entry was made.
While regarding the other note, the entries did not show that it was taken up by the bank.
Upon reading the testimony of the officers of the bank, it clearly appears that this note never was surrendered as an account of the bank, or as one of its securities to secure the payment of a loan. It was handed to the cashier, he testified, in order to have the mortgage canceled. He placed it aside for the purpose. It was never canceled — an oversight, doubtless.
By the certification of a check, as before stated, the bank acquired no interest in it, as it was payable in the name of the debtor, Louque, to his creditor, Earwell.
It was returned to him (the debtor, Louque). It had matured, as to its payment, months before.
1-Ie had no authority to reissue it and make it binding as against third persons with an adverse interest.
The rule is that matured paper cannot be reissued after payment.
It will be observed that this note, extinguished by payment, was in the hands of the debtor, who had no authority to give it new life. It was not acquired by third innocent persons.
With the evidence before us, we are unable to hold that it was ever acquired by the bank.
The testimony of the cashier of the bank in regard to the payment is clear and un equivocal. It leaves no room for doubt. He is plainly corroborated by the other officers, except the president, who, to some extent, differs in his statements from the other officers.
And, further, the president and W. N. Louque, brother of plaintiff's husband, do not agree in regard to a salient fact in matter of the payment of the note.
This is only mentioned to state that, considering the testimony of the officers of the bank, and to the extent that the testimony of the brother of plaintiff's husband is considered, the weight of the testimony is with plaintiff on this point.
Learned counsel comments upon the fact that the cashier testified that he is of a nervous temperament, and that the pass into which the bank had fallen financially was a shock from which he had scarcely recovered.
We do not infer that the cashier's mind was in the least affected.
He was, at the date he testified, a bookkeeper for one of the commercial firms of this city.
The note having been paid, as relates to reissuing this note, the following decisions are pertinent: Hill v. Hall, 4 Rob. 416. See, also, Walmsley v. Theus, 107 La. 424, 31 South. 869; Upton v. Adeline Sugar Factory Co., 109 La. 678, 33 South. 725; Pertuit v. Demare, 50 La. Ann. 906, 24 South. 681; Sentell v. Hewitt, 49 La. Ann. 1021, 22 South. 242; Gridley v. Conner, 4 Rob. 445; Succession of Norton, 18 La. Ann. 39; Schinkel v. Hanewinkel, 19 La. Ann. 260; Doll v. Rizotti, 20 La. Ann. 265, 96 Am. Dec. 399; Walker & Vaught v. Kimbrough, 23 La. Ann. 639; Hall, Rodd & Putnam v. Cachere, 25 La. Ann. 494; Schepp v. Smith, 35 La. Ann. 5, 8.
Beyond question, there was error committed in matter of the reissued note.
Its effect has received our careful attention; also the curative possibilities of the plea of estoppel Interposed, and the defense of laches urged by defendant, have been considered.
Whether they have the effect claimed presents the important issue at this point.
Defendant has to meet the important principles: First. The precision and certainty required in commerce in matters relating to paper values. Second. The right under the statute safeguarding the property of married women.
With regard to the first, it is only necessary to say that the promise to pay money retains its full value as negotiable instrument by observing certain well-defined rules.
We have not found that there was strict business care shown — only as a matter of business, that which may happen to any one in taking up the matured note.
The defendant knew, or must be held to have known, that the property was owned by plaintiff, a married woman, and that to bind her it is necessary to show that she, or some one authorized by her, was a party in interest, contradictorily with whom the negotiable or value of the note was maintained.
Second. Paraphernal rights are not always subject to the pleasure of the husband. He cannot dispose of them as his own.
A married woman may be estopped, but not by the conduct and utterances of her husband, who is not her agent and not authorized to represent her.
Unquestionably, the husband is estopped. He is thoroughly concluded, but not to the extent of affecting his wife's interest, who was not a party to his acts and utterances.
We have considered the, serious ground urged as an estoppel, which is, in substance, that she by her silence acquiesced in the sale.
She was not at the sale; nor does it appear that she was informed as to the sale, its terms and conditions.
The property was not situated in the parish within whose limits plaintiff had her residence.
A married woman has never been held bound by estoppel if the property sold is situated away from the vicinity in which she resides, and she knew nothing of the sale.
Plaintiff's Asserted Laches.
Learned counsel for defendant have cited and quoted from decisions in other jurisdictions regarding laches.
Under different laws and in accordance with other jurisprudence, these decisions are not pertinent. We will not review each of them that can be held as controlling or even persuasive.
As to our own decisions, laches, as considered in them, is of exceedingly limited scope.
As to delay which is not sufficient to be considered a prescription period, laches adds very little, particularly when a married woman pleads the statute for the protection of her paraphernal property.
We have found no decision directly pertinent.
This cause is not yet concluded, although it has received our best attention.
If any of our decisions should be hereafter found upon the subject, we will certainly pause and reconsider the point.
Just now, although thoroughly argued, we must say, that, with the light before us, neither the facts nor the law, in our opinion, can be so construed as to hold plaintiff's cause as concluded against her by her laches.
Further in regard to laches.
The defendant, through learned counsel, has argued, in substance, regarding the opportunity that plaintiff had to know and learn of the fact that the property had passed out of her possession and ownership, and that this knowledge was sufficient to charge her laches, as she did not act within reasonable time.
There was some delay — several years. She spoke to several attorneys. They did not at once take charge. Some declined to act.
As a witness, she mentions that she had no means to institute suit.
Regarding the owner's knowledge of disposition of his property illegally made, we have read the decisions cited by learned counsel for defendant. The strongest, doubtless, is the last cited, Shaffet v. Jackson, 14 La. Ann. 154.
The minor was represented by the curator ad hoc.
The court held that under article 116 of the Code Practice a minor could be thus represented. We gather from the whole case that over 10 years had elapsed since the sale. The plea of prescription had been interposed. In the preceding case, no such plea would have been sustained by the fact.
The laws of this state have never been prone to divest the married woman of her property because of some act of the husband, to which she was not a party.
Whether this sufficiently explains, it remains that her inactivity is not in itself laches.
One of the penalties for waiting before suing is that the claim of defendant revived (there is no question at this point of a prescriptive title acquired by the 10 years' prescription); that would present another issue, not before us.
She cannot claim a benefit as growing out of her delay in suing. She could not wait just long enough to let the note prescribe and the mortgage perempt, and then, as it were, pounce upon the creditor and demand of him the property, adjudicated free of all claim.
The law, in effect, says to the creditor:
"You cannot wait just enough to avail yourself of prescription and then recover the property."
That would not be equitable, just, or right.
It is proper to state that it is not our intention to hold for an instant notice or fore closure should have been given to plaintiff. The pact de non alienando rendered notice to her unnecessary.
The matter of notice is referred to only to state that it is corroborative of her testimony that she knew nothing of the sale.
We will here state that there is an equitable principle that, where one of the persons must suffer a loss, the law throws the loss upon the one by whose negligence or fault the damage or loss is occasioned.
This principle would have application here, were it not that the negligence or fault of the husband cannot be imputed to the wife.
The mortgage notes, amounting to $15,000, must be reinstated, and the status quo prior to the foreclosure restored.
The mortgage revives under the authority of the decision in Factors' & Traders' Ins. Co. v. Murphy, 111 U. S. 743, 4 Sup. Ct. 679, 28 L. Ed. 582; New Orleans Insurance Association v. Labranche, 31 La. Ann. 839; St. Charles Street Co. v. Fairex, 46 La. Ann. 1030, 15 South. 421; Heirs of Wykoff v. Miller, 48 La. Ann. 483, 19 South. 478; Succession of Gohs, 37 La. Ann. 429; Dawson v. Thorpe, 39 La. Ann. 368, 1 South. 686.
The mortgage must be reinstated; but the defendant's insistence is that it is entitled to the whole place; that it has used the front of the plantation and covered the greater part of the place with permanent structures for railroad purposes.
With this view, we are unable to agree.
The defendant is entitled to continue in use, for railroad purposes, of all the property now in its possession and held by it for the purpose stated, upon paying for the value of the property.
This defendant's contention is that it includes the whole place. The evidence does not sustain defendant's point in regard to the use of the whole place for railroad purposes.
It is also contended that plaintiff's rights are not prejudiced for damages; that she is really not entitled to anything; and it would, serve no purpose to set aside the sale. Be that as it may, we will not go one step further than to recognize the mortgage claim; for as to it we do not think that plaintiff, even if there be peremption or prescription on the face of the papers, can stand silently by, and successfully sue for the property, and receive it immediately after peremption and prescription, when she has contributed by her delay.
The Extent of Plaintiff's Right.
She asks to be placed in possession of the whole plantation as owner.
Under well-settled jurisprudence, she is entitled to the whole place, subject, however, to the right of servitude acquired by defendant.
That is, she has a right of possession as owner of the land not occupied by the railroad.
The defendant went into possession in good faith, and remained in possession, without objection, until this suit was brought.
Under repeated decisions, plaintiff cannot recover over and above the value of the land (now in possession of defendant for railroad use) at the time it went into the possession and use of the defendant.
This position is amply sustained by the following decisions: St. Julien v. Morgan's Railroad, 35 La. Ann. 924; McCutchen v. T. & Pa. R. R. Co., 118 La. 436, 43 South. 42; Railroad Co. v. City, 31 La. Ann. 478; Bourdier & Belisser v. Railroad Co., 35 La. Ann. 947; Day v. Railroad Co., 36 La. Ann. 244; Lawrence v. Railroad Co., 39 La. Ann. 427, 2 South. 69, 4 Am. St. Rep. 265; St. Julien v. Railroad Co., 39 La. Ann. 1063, 3 South. 280; Mitchell v. Railroad Co., 41 La. Ann. 363, 6 South. 522.
It was from that time that the right of recovering its value arose.
Delimitation at this time is not possible with any degree of certainty.
The ease is remanded, in order that the question at this point may be decided.
Before concluding, we will refer to the point growing out of the fact before noted— that the defendant has parted with its possession by conveying the property to another railroad.
The plaintiff is not prejudiced by this conveyance. Her rights remain, and have been passed upon as if no transfer had been made, as, under the statute, it is as if there had been no transfer.
It is therefore ordered, adjudged, and decreed that plaintiff have judgment setting aside, avoiding, and reversing the judgment of the district court.
It is further ordered, adjudged, and decreed that plaintiff have judgment recognizing her as the owner of the Lafreniere plantation, less those tracts that have been disposed of and no longer form part of that plantation.
The proceedings in foreclosure are annulled.
That part of Lafreniere plantation in possession of defendant for the use of a railroad remains and continues in use of the defendant in the same way and to the same extent as it has been possessed, held, and used heretofore; i. e., since the railroad went into possession.
It is further ordered, adjudged, and decreed that the mortgage of defendant on Lafreniere plantation and its interest therein revive and become of full force and effect as an indebtedness secured by mortgage on Lafreniere plantation, and that it is not subject to the confusion heretofore existing; i. e., before the date of this judgment, and from the day that the property was adjudicated, as before stated.
It is decreed that the case be remanded, and that the question be decided in the district court; and the evidence to be heard is as to the extent, area, and number of acres in use by defendant for railroad purposes, and the value of the property thus used at the time that defendant went into possession.
It is further ordered, adjudged, and decreed that the value thus ascertained of all such property be deducted from the amount of the claim just mentioned as revived, keeping an account as to balances, and adjusting the claims and passing upon the issues thus presented.
It is further ordered, adjudged, and decreed that the right of defendant to recover the value of improvements placed by it on the land not used for railroad purposes is reserved.
It is further ordered, adjudged, and decreed that plaintiffs right, if any she has, for rental since the suit was filed is reserved.
It is further ordered, adjudged, and decreed that appellee pay the costs of appeal.
PROYOSTY, X, takes no part for reasons stated in separate document.
PROYOSTY, J.
Not having heard the argument, I take no part in the decision of this case, although the parties have filed an agreement that I should do so. My reason is that the record and briefs are very voluminous, and the decision of the case depends upon an aijpreciation of the evidence, and that in these closing days of the session I could not give the case any special attention, without neglecting other cases already demanding my attention and having first claim upon it. Should there be an application for a rehearing, and the application not be disposed of at the present session, I shall feel obliged, under the said agreement of counsel, to participate in the consideration of the case.