Case Name: FIRST GUARANTY BANK, HAMMOND, LOUISIANA v. BATON ROUGE PETROLEUM CENTER, INC.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1987-11-30
Citations: 529 So. 2d 834
Docket Number: No. 87-C-1122
Parties: FIRST GUARANTY BANK, HAMMOND, LOUISIANA v. BATON ROUGE PETROLEUM CENTER, INC.
Judges: DIXON, C.J., dissents.
Reporter: Southern Reporter, Second Series
Volume: 529
Pages: 834–845

Head Matter:
FIRST GUARANTY BANK, HAMMOND, LOUISIANA v. BATON ROUGE PETROLEUM CENTER, INC.
No. 87-C-1122.
Supreme Court of Louisiana.
Nov. 30, 1987.
On Rehearing May 23, 1988.
On Limited Rehearing Sept. 8, 1988.
Alton B. Lewis, Jr., Hammond, for plaintiff-applicant.
Mary C. Cali, E. Wade Shows, William Morvant, Shows, Clegg & Cohn, Baton Rouge, for defendant-respondent.

Opinion:
COLE, Justice.
This is a suit for deficiency judgment. The question presented is whether a creditor is precluded from obtaining a deficiency judgment when the creditor forecloses by executory process against a corporate debt- or without submitting authentic evidence of a resolution authorizing execution of the mortgage.
The trial court held the corporate resolution is a required link in the chain of evidence which must be presented in a petition seeking executory process and failure to do so constitutes a valid defense to a subsequent suit for deficiency judgment. The court of appeal affirmed, adopting the trial court's reasons for judgment, 507 So.2d 22. We affirm.
FACTS
First Guaranty Bank, Hammond, Louisiana, filed a petition for executory process and obtained a writ of seizure and sale on March 28, 1985. The property was then sold at a sheriffs sale to First Guaranty for the required minimum of two-thirds the appraised property value on July 3, 1985. The debtor did not oppose the sale by seeking an injunction or filing a suspensive appeal. On September 17, 1985, First Guaranty filed a petition for deficiency judgment to obtain the remaining balance plus interest and attorney's fees.
In its answer Baton Rouge Petroleum Center, Inc. alleged the executory process, basis for the deficiency judgment, was defective because First Guaranty had failed to attach to its petition therefor a certified copy of a resolution of the board of directors authorizing the execution of the mortgage. The parties have stipulated the resolution was filed in the public records of Livingston Parish at the time the property was mortgaged and there is no question the agent of the corporation had actual authority to execute the mortgage.
DISCUSSION
We have previously stated the general rule that if improper authentic evidence is filed which would render the executory proceedings null, then any action based upon the executory proceedings, such as a suit for deficiency judgment, is likewise null. League Central Credit Union v. Montgomery, 251 La. 971, 979-80, 207 So.2d 762, 765 (1968). First Guaranty has two basic arguments against applying the rule in this case. First, there is no longer a statutory requirement for filing a corporate resolution as part of the petition for executory process. Second, failure of the debtor to raise this defect prior to the seizure and sale constitutes a waiver of the defense.
The practice of submitting authentic evidence of the corporate resolution authorizing the mortgage of the debtor's property is merely a specific application of the well-established rule that when a mortgagor acts through an agent in executing a mortgage and note, authentic evidence of the agent's authority to act must be presented in order to take advantage of executory process. Bank of Leesville v. Wingate, 123 La. 386, 48 So. 1005 (1909); Crescent-City Bank v. Blanque, 32 La.Ann. 264 (1880), Chambliss v. Atchison, 2 La.Ann. 488 (1847); Dosson v. Sanders, 12 Rob. 238 (La.1845). For example, in Bank of Leesville v. Wingate, supra, this court dismissed the executory proceedings when the receiver of the corporate debtor appealed from the order of seizure and sale on this basis.
In 1910 the legislature passed Act 148, which specifically required a properly certified corporate resolution to be attached to the original act of mortgage in all applications for executory process against property mortgaged by a corporation. 1910 La. Acts 148, § 1. This act was eventually codified as La.R.S. 13:4103. Under this provision, failure to attach a properly certified resolution constituted sufficient grounds for dismissing an order for exec-utory process when objected to by the debt- or before the sale. Snell v. Amite Oil Co., 178 La. 176, 151 So. 70 (1933); American Trust Co. v. Crescent Ice Co., 133 La. 247, 62 So. 664 (1913).
In 1960, Code of Civil Procedure article 2635, which specified the authentic evidence necessary to use executory process, and article 2636, which specified which documents were deemed authentic for purposes of executory process, were enacted. Article 2636(4) incorporated by reference R.S. 13:4103 in specifying the manner in which a copy of a resolution was to be certified in order to constitute authentic evidence. At that time, R.S. 13:4103 was revised and the word "attached" was deleted. However, this deletion appears not to have reflected any intent to change the law since the contemporaneous official revision comments to article 2635 state the purpose of that article was not to change the law, but simply to recognize "well-settled jurisprudential rules." La.Code Civ.P.Ann. art. 2635, comment (a) (West 1961). The comments further indicate one of the rules to be preserved was the requirement that where a mortgagor acts through an agent, a certified copy of the authentic act authorizing the agent to execute the mortgage must be attached to the petition for exec-utory process. La.Code Civ.P.Ann. art. 2635, comment (d) (West 1961). Without noting the change in R.S. 13:4103, courts continued to recognize the corporate resolution as a required link in the chain of authentic evidence necessary for executory process. Bank of St. Charles and Trust Co. v. Great Southern Coach Corp., 424 So.2d 462, 463 (La.App. 5th Cir.1982); Fabacher v. Hammond Dairy Co., Inc., 389 So.2d 87 (La.App. 4th Cir.1980); Progressive Bank & Trust Co., v. Dieco Specialty, Inc., 378 So.2d 139, 141 (La.App. 1st Cir.1979); White Motor Co. v. Piggy Bak Cartage Corp., 202 So.2d 294, 296 (La.App. 4th Cir.1967).
Article 2635 was amended in a manner which, it is argued, affects the resolution of this issue. When enacted, the last sentence of article 2635 originally read: "This requirement of authentic evidence is relaxed only in those cases, and to the extent, provided by law." (emphasis added). In 1982, Act 259 amended this sentence to read: "This requirement of authentic evidence is necessary only in those cases, and to the extent, provided by law." (emphasis added). 1982 La.Acts 259, § 1. First Guaranty asserts the 1982 amendment to article 2635 changing "relaxed" to "necessary" evidences legislative intent to reduce the number of "hypertechnical loopholes" available to debtors. The contention is that it was not required to submit the corporate resolution since article 2635 does not specifically require it, and article 2636 is merely definitional.
In light of the above discussion, we cannot agree. After considering the long line of jurisprudence requiring the submission of the corporate resolution and the legislative intent as evidenced by the comments to article 2635, we conclude the corporate resolution is an integral part of a mortgage executed by a corporate debtor. See also, La.Civ.Code arts. 2996, 2997.
First Guaranty also contends that in the event it was required to submit the resolution with its petition for executory process, the debtor waived the right to raise this defect as a defense by failing to object prior to the sale. The defendant, it is argued, should have sought an injunction or should have taken a suspensive appeal in accordance with article 2642 of the Code of Civil Procedure. Cited as authority for this proposition is First Guaranty Bank v. Wells, 509 So.2d 122, 124 (La.App. 1st Cir.1987); Gibsland Bank & Trust Co. v. Boddie, 480 So.2d 906, 909 (La.App. 2d Cir.1985); and, Plumbing Supply House, Inc. v. Century National Bank, 440 So.2d 173, 177 (La.App. 4th Cir.1983), cert. denied, 444 So.2d 1226 (La.1984). We find these cases to be distinguishable from the case at bar since none of these cases involved an attempt by the debtor to avoid a deficiency judgment by raising a defect in the original executory proceedings.
This court has held the debtor may be estopped from complaining of certain defects in the original executory proceedings but this theory is only applied when the debtor seeks to annul the sale of the property, not when he asserts the defect as a defense to a subsequent action for a defi ciency judgment. League Central Credit Union v. Montgomery, 251 La. 971, 979-80, 207 So.2d 762, 765 (1968). See also, Reed v. Meaux, 292 So.2d 557, 574 (La.1974) (Tate, J., concurring); and, Ford Motor Credit Company v. Herron, 234 So.2d 517, 522 (La.App. 3d Cir.1970) (Tate, J., concurring). Since Baton Rouge Petroleum Center does not seek to annul the sale we find First Guaranty's contention merit-less.
There are two cases from the courts of appeal, which reach opposite results, squarely addressing this issue. They are Bank of St. Charles and Trust Co. v. Great Southern Coach Corp., 424 So.2d 462 (La.App. 5th Cir.1982), relied upon by the courts below in this case, and White Motor Co. v. Piggy Bak Cartage Corp., 202 So.2d 294 (La.App. 4th Cir.1967).
In White Motor the creditor failed to produce authentic evidence of the debtor corporation's authorization to its agent to execute the chattel mortgage foreclosed upon. The debtor failed to seek an injunction or suspensively appeal, allowing the property to be sold. In that case the court of appeal allowed the creditor's deficiency judgment to stand, noting it was not unreasonable to require the debtor to assert the defect before the sale. Id. at 296. White Motor has been criticized by this court in League Central, supra, 251 La. at 978, 207 So.2d at 764, wherein we noted the White Motor court "apparently lost sight of the fact that the seizure and sale were not under attack."
The court of appeal in Bank of St. Charles, supra, held the creditor was precluded from obtaining a deficiency judgment under like circumstances, reading article 2635 in pari materia with article 2636 and R.S. 13:4103 to require submission of the resolution. That court, we find, properly followed the rule of League Central in holding the failure to attach a properly certified copy of the corporate resolution authorizing the mortgage a fundamental defect precluding a subsequent suit for a deficiency judgment. As we have previously stated in this opinion, the resolution is an integral part of a mortgage of corporate property as far as executory proceedings are concerned. As such, it is a link in the chain of evidence required by article 2635 of the Code of Civil Procedure. If the debtor in this case had raised this defect prior to sale, the executory proceedings would have been declared null. Therefore, the subsequent suit for a deficiency judgment based on the executory proceedings is also null.
We have noted the corporate resolution in question was on file in the public records of Livingston Parish. This fact is of no consequence. The authentic evidence supporting a petition for executory process is incomplete without the resolution. Exec-utory process is a unique and harsh remedy. Accordingly, the rules which allow a creditor to proceed must be strictly construed in the debtor's favor. Bank of Leesville v. Wingate, 123 La. 386, 48 So. 1005 (1909); Crescent-City Bank v. Blanque, 32 La.Ann. 264 (1880).
Finally, we reject the applicability of La. R.S. 13:4108.1 to this case. This provision was enacted by Act 489 of 1986, effective August 30, 1986, and makes drastic changes in our deficiency judgment law in those instances where a mortgage secures an obligation "in a commercial transaction." Plaintiff cannot rely on this recent legislation because it does not have retrospective operation. Clearly, this law is substantive in nature and retrospective application would operate to disturb the vested rights of the defendant. See, Graham v. Sequoya Corporation, 478 So.2d 1223, 1225-26 (La.1985).
For the reasons stated above, we affirm the judgment of the court of appeal.
AFFIRMED.
DIXON, C.J., dissents.
DENNIS, J., concurs with reasons.
LEMMON and MARCUS, JJ., dissents and assigns reasons.