Case Name: The Merchants Bank of Baltimore v. The Bank of the United States
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1847-06
Citations: 2 La. Ann. 659
Docket Number: 
Parties: The Merchants Bank of Baltimore v. The Bank of the United States.
Judges: 
Reporter: Louisiana Annual Reports
Volume: 2
Pages: 659–663

Head Matter:
The Merchants Bank of Baltimore v. The Bank of the United States.
Decision in Richardson v. Lcaviíl, 1 An. Rep. .430, affirmed.
The registry in the conveyance office of .a copy, of an act of sale of immovables situated hero, executed before a notary in another State, whose official capacity is attested by.the secretary of state under-the great seal of the State, .the copy being certified by a notary . in this State to be a true one from an original instrument deposited in his office, is sufficient, .without further proof of the execution of the act,-to make the registry notice to third persons. Stats. 20 March, 1827; 17 March, 1828.
A foreign creditor will not be aided by our courts in disturbing the possession of an assignee , under* voluntary assignment of real property in this State, made in ..another State, by • ■whose laws it was valid.
Actions by creditors to avoid contracts made by a debtor.by-,which an,illegal preference is given to certain creditors, are prescribed by one year.
PPEAL from the Fourth District Court of New Orleans, • Strawbri'dge, J. The facts of. this case are stated in the opinion of the court, infra. The conveyance under -which the appellants claim was admitted to record by the register of conveyances, on the production of-a copy certified by a notary of this State to have been correctly made from an original instrument deposited in his office. This .original was attested by a potary in Pennsylvania, and a certificate from the secretary of state of Pennsylvania, under the great seal of the State, attested that the person who professed to be a notary of the State of Pennsylvania, was duly commissioned as such, and that all his official acts are entitled to full faith-and credit. There .was.a judgment below against the opponents, from which they appealed.
Wharton and Bonford, for the appellants.
It is contended that no sufficient proof of a compliance with our registry laws had been presented by our opponents, to charge the Merchants-Bank with constructive notice of tho existence of their title. Art. 225,0 of the CivjlCode provides that“the reeord.of an act purporting to be a sale or exchange of real property shall not have effect against creditors or bond fide purchasers, unless, previous to its being recorded, it was acknowledged by the party, or proved by the oath of one of the subscribing witnesses, and the certificate of such acknowledgment be signed-b.y a judge or notary, and recorded with the instrument. This article would seem to make it incumbent on the bolder of a title under private signature, in order to give effect to its registry as against creditors or-purchasers,-to record at the same time authentic proof of the signature, of the parties. It is alleged thatthis is merely directory to the officer, and that if he chosos to record the act without requiring the proof of its execution, the registry is good t.o raise .constructive notice to third parties. This view is in direct opposition to the text and spirit of the article. The article is framed upon the assumption that the- officer has no right or authority to require proof of the execution of the act before recording it. It supposes the recording to have taken place without such proof. By the third section of the act of 1827, it is provided that whenever acts of transfer shall have been passed .under private signature, said register shall record them in tolo, with an act ascertaining the signatures if the,.contracting parties wish the registering of the act to be accompanied with an act ascertaining their signatures. And the act of 1828, containing a similar clause, uses the.expression “ if thereunto requested.” So that the officer is bound to register the act witbouttbe previous proof mentioned in art. 2250, if such .be the will of the party, who runs the risk of having it declared ineffective against.creditors and third parties. See Segrest v. Hood, 12 Rob. 210. We borrow the doctrine of notice, from the english and american law. Judge Story, in the case of Flagg v. Mann, 2 Sumner’s Rep., inclined against tho extension of the rule of constructive notice. All authorities agree that the mere registry is not sufficient to charge a party with notice, when the other requisites of the law of registry are not complied with. See Story’s Equity Jurisprudence, vol. 1, § 404. Kent’s Commentarles, vol. 4, p. 174. Latouche v. Rusenberry, 1 Sch. & Lef. 157. Frost ■v. Beckman, 1 John’s Ch. Rep. 300. The language of Chancellor Kent has .direct bearing upon the present case — “a deed unduly registered, either from .the want of a valid acknowledgment or otherwise, is not notice, according to ,the prevailing opinion in this country.”
Cases arising .under the laws regulating the inscription of mortgages are to be .distinguished from the present. Article 3331 of the Civil Code, which determines .the mode of .inscribing an act of mortgage under private signature, differs from art, 2250. It is expressly provided that the recording officer may inscribe ,tho original act on his own responsibility, without proof of its execution. The .inscription is not declared to be void as to .creditors and purchasers for the want ,of this proof, as in art. 2250. The cases therefore which affirm the validity of the .inscription.of an act of mortgage so,us seing prí¡oé without previous proof ,of its execution, have the warrant of the text of art. 3331 to sustain then?* ■The case .of FUs v. Sims, recently decided, ante p. 251, and which may be .relied on as opposed to the position.assumed here, goes no further than this.
The assignments by the Bank of the United States, of the 3d and 7th of ¡September, 184.1, so far .as they .effect the personal property therein transferred, ¡have been held by the late Supremo Court to be valid. 8 Ro.b. 262. The .question as to their effect upon the rqal estate situated in this State, .was .expressly reserved. The .court below decided that as to the real estate situated here, .those assignments'.were to be construed and governed by our law, the law rei .sitce. The clea.r dispositions of articles 10 and 483 of our Civil Code, render the examination of any authorities on this subject unnecessary. Assignments ,of property in trust for the benefit of .certain creditors of .an insolvent, are re-probated by the policy of our laws. Townsend v. Louisiana Ins. Company, 13 Lq. £51.
T. A. Clarke, for the appellants.
The conveyance was recorded in the proper planner to give it effect against third persons. C. C. 2415, 2417. Stat. ;20th March, 1837, ss. 3, 5. 2 Mart. N. S. 1.71-4. 4 Ib. N. S. 369. 6 lb. N. S. 431. Fils v. Sims, ante p. 251. If the action be regarded as a revo.catory one, the prescription of one year bars it. .C. C. 1982. ,6 Rob. 150. 4 Rob. 408.

Opinion:
The opinion of the court was prono.uncod by
Eustis, C. J.
This case arises out of the seizure o.f certain lots in this ,city, pnder .a judgment rendered in Pennsylvania ,in favor of the plaintiffs .against.the late Bank pf the United States, and made executory by the judge ,of the late Commercial Court of New Orleans, for the sum pf $159,620 29, The third opponents, James Robertson amd.others, alleged that .they were the .owners .and possessors .of .the property seized, under a .conveyance made to ¡them from the president, directors .and company of the Bank of the United .States, executed ,at Philadelphia o.n the 12th of February, 1842, and recorded ,hore op.the 16th April, 18£2. The opposition to the seizure and sale was dismissed after a hearing before the Fourth District Co.urt of New Orleans, and ,the opponents have appealed.
The .conveyance purports to be a sale for a fixed price, but in point of fact the ¡lots in question fornied part of the property o.f the late United States Bank, .assigned to .certain trustees for .the use of certain.creditors ;.and the .conveyance ,wns in furtherance of .the assignments, .and the .opponents were in possession (Under it. The assignments, ,so far .as relates to the personal property assigned, Raving been held to be valid by,a decision made by the lato .Supreme .Court, it .is said, the question as to thejr operation on the real estate situated within this State was reserved, and that, so far as concerns the r'eal estate, the force and effect of the assignments are to bo governed exclusively by our own laws.
The plaintiffs, for all the purposes of this enquiry, must be considered as having all the rights on the property of the bank, their debtor, which the laws of Pennsylvania confer, and no more. Tho remedies which the layvs of Louisiana give to creditors, the plaintiffs possess and have exercised. Tho opponents were in the possession of .the property seized .under ,a title, legal in point of form, and what are the grounds ,on which the plaintiffs can question its validity ? They are, that assignments of property in trust for the benefit of certain creditors of an insolventare reprobated by .our laws, and that no effect will be giv.eo to them by our courts.
We have lately given our ¡views in relation to this subject, after .a very thorough argument at bar, and an examination of all the authorities which tho assistance of counsel .and our own research could furnish. They are stated in the opinion of the court in the case of Richardson v. Leavitt, 1 Ann. Rep. 430. We do not know that .there is any part of that .opinion which requires, after a revision of the subject, any change. It -would result, from an application of tho principles .there laid down, to the present case, that, if these .assignments made by the Bank of the United ¿States in -Pennsylvania, -were valid by the laws of ¡that State, and are obligatory on the plaintiffs, that is, if the bank had a right to give a preference to particular creditors, the plaintiffs could not, by any process of law;, subject any property assigned for that purpose to the exclusive payment of their debt.
There are some preliminary matters, however, -to be first considered.
There is nothingin the for.m of the conveyance which affects its validity, and all the plaintiffs can ask is, that tho claims of the opponents be confined to rights created under the assignments, and conferred by the instrument itself in furtherance of their object. The mention of a sum of money as a consideration is a matter.of no moment, as the case is before us under the evidence.
It is said -that the conveyance was not recorded in the manner required by our 'laws, so as to charge the plaintiffs with notice; but we think that, .under the acts of the legislature of 1827 and 1828, relating to the register of conveyances for New Orleans, the record as made of the instrument did operate as notice.
The case of Townsend v. The Louisiana State Insurance Company, 13 La. 551, is considered by the counsel for the plaintiffs as conclusive in their favor. But the facts of that case, and the decisions .made on them, have no application to the questions which the case of Richardson v. Leavitt, and this case, present. In Townsend's case, the assignment was made by an insolvent debtor residing in Louisiana, to the detriment of his creditors, of property which was .their common pledge, in which an undue preference was sought to be given, in .palpable .violation of his obligations.and of -the penal, as well .as .civil, laws of the land. That decision we have had occasion to recognise as correct; but we have also held that, where there was no common pledge, where by the law of ¿the domicil of the parties where the contract was made, no right was created on ¿the property of the debtor, and he might lawfully prefer .one creditor to another ¿in payment, .a foreign creditor would not be aided by o.ur courts in disturbing the possession of an assignee under a voluntary assignment, lawfully made for the purpose of carrying into effect a distribution of moveable property, which the debtor had the undoubted right to make. If the property in dispute were personal, we would maintain tho possession of the opponents in the case made out by plaintiffs. Is there another rule applicable to real proporty ?
As to -thevalidify of-the assignments, and binding force of the contracts under tile opponents held the property in dispute, under the laws of Pennsylvania, and of Maryland,-the domicil of plaintiffs, the courts of those States jjave reraove(j a]j .doubt by repeated recognitions of the principles on which they rest. 13 Sargeant & Rawle, 132. 6 Gill & Johnson, 371, 363, 206. Dana v. The Bank of the United States, in the Supreme Court of Pennsylvania. United States Bank v. United States, 8 Rob. 262.
But the argument-is, that our own laws operate exclusively upon real property within our jurisdiction; and arts. 10 and 483 of our Code are considered tobe so-formal and positive on-that subject,,as-to supersede the necessity of any further enquiry. The clause of art. 10 referred to, provides that-the effect of acts passeddn-one.country to have effect in another, is regulated by-the laws of the country-where they -are to have effect. The second -paragraph, of article 483 provides that, persons residing out of the State cannot dispose -of the property they possess here in a manner different from that prescribed by its laws. JIt would not be-reasonable to isolate these provisions from the great'body of our laws, and give them an arbitrary and literal interpretation, 'They are the •exponents of-principles which are recognised.under every system of laws, and -their application is.well understood. "There are cases arising here relating to property in this State, and by no means a small number have been before us, -which are governed , and determined by laws other than those of Louisiana. There can be no question-of the.su-premecy of the.laws of every country over the property within its jurisdiction, real and personal; but their exclusive application -indiscriminately -to all eases-occurring, would be-contrary to those •rules of cqmity which every civilised nation acknowledges, .and those who ad•minister the laws are bound to respect.
Merlin, Repertoire, verbo Loi, § 6, nos.-B, 3, says,that,-though the french Saw governs-in all cases of immovables in France, evqn when the owners are foreigners,-yet that there are.exceptions to the rule. As, ibr-instance, if the Soreign Jaw in the country where a contract is made respecting them, has been adopted by the contracting parties, and .converted by .them into an express .contract; in such a case,-he 'holds,-thnt the contractus -binding, because the foreign law, as such,.does not act upon-the immovables in France, but solely by way of contract. And he applies the same principle to cases where there is no express.adoption of the-foreign law, but it arises by way of tacit contract from the place of the contract.
But this is not a case in which we are called upon to give effect to a foreign law, adversely to our own. The opponents are in possession under a title perfect as to form, and competent to transfer the property from the owner to them, with a consideration adequate -between the parties. The laws of Louisiana .protect those rights of possession and ownership. 'I he plaintiff's, third persons, Without any form of law,-seize the property, and'have it exposed for sale. Now •the first-preliminary enquiry is as to their rights. Did they ever own the property, or have any right in it, or upon it? Has their debtor any power or dominion over it, or any right in it, which will authorise the seizure ? This is answered by .the assertion of the exclusive operation of the laws of Louisiana over dll properly-within its jurisdiction, which "is assuming the very point in dispute. The plaintiffs only can avoid the effect of the title of the opponents by settingup a right in themselves, for it cannot be supposed that any person at -will can expel them from their possession; and when their pretensions are sub jected to the test of truth, it is found that they are seeking to invalidate a coutract perfectly valid and lawful by the laws of the country where it was made, and executed by the parties without any infringement on the laws of'Louisiana. As we said in Richardson's case: By our laws the property of the debtor is the' common pledge of his creditors. Every creditor has an action to- annul contracts made in fraud of his rights.- The violation of the common pledge is the1 basis of this action; and where there is no-pledge violated, there is no injury to' the creditor. The bank, in this case, has an undoubted right to makethe disposition of its property which the-assignments were intended to carry into effect ; and the plaintiffs have no-more right to interfere with-it, than with any other lawful payment made by the bank. Besides; under our laws, actions can be brought by a creditor to avoid contracts made by a debtor with- his creditor by which a preference is secured, only within one year from-the time the contract was made.
The plaintiffs can acquire no rights by this- summary and unlawful- mode of enforcingtheir claims,which can only be accounted for by the condition of wreck-in which the late Bank of the United- Statos closed-its existence;
It is therefore ordered that the judgment of the District Court be' reversed,- and that the said- opponents, James Robertson, Richard H. Bayard, James S. Newbold, Herman Cope, and Thomas S. Taylor, be decreed- to be the lawful-owners of the following described property, to wit: " The one undivided half-part of all and singular those three contiguous lots of ground, marked asnos. 10; 11 and 12, on a plan drawn by J. Pilié, city surveyor, on the 22d day of-' December, 1835, and deposited in the office of Adolphe Mazureau, one of the notaries public of New'Orleans,-the-same being situated in- New Orleans,, measuring each 24 feet 8 inches front on Tchoupitonlas street, between St.Joseph and Julia streets, by 86 feet in depth, between parallel lines, being the' same property described in the act of sale, before Jules Mossy, one of the notaries of New Orleans, on the 6th day of July, 1840, by James Hick to the-Bank of the United States.
And it is further ordered, in virtue of the agreement-of counsel touching-the' effect of the decree to be rendered in this case now on the files of this court,, of date the 25th May, 1845, that the opponents, James Robertson etal. take and. receive the proceeds of the sale of said property made by the sheriff of the'
Commercial Court of New Orleans, on the 30th May, 1845, and that the plain-tiffs pay costs in both courts.
Sí.ideií, J., did not sit i.n this caso, having boon of counsol.