Case Name: GENERAL CONTRACT PURCHASE CORP. v. DOYLE et al.
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1952-02-04
Citations: 56 So. 2d 432
Docket Number: No. 19794
Parties: GENERAL CONTRACT PURCHASE CORP. v. DOYLE et al.
Judges: 
Reporter: Southern Reporter, Second Series
Volume: 56
Pages: 432–436

Head Matter:
GENERAL CONTRACT PURCHASE CORP. v. DOYLE et al.
No. 19794.
Court of Appeal of Louisiana. Orleans.
Feb. 4, 1952.
Rehearing Denied March 3, 1952.
Gatlin & Hill, New Orleans, for William W. Wilson, Jr., appellant.
John F. Connolly, New Orleans, for plaintiff and appellee.

Opinion:
McBRIDE, Judge.
Defendant, William W. Wilson, Jr., has taken this suspensive appeal from an order of seizure and sale under which a certain Chevrolet tudor sedan was seized from him by the Civil Sheriff for the Parish of Orleans. The writ was issued at the instance of plaintiff, the holder and owner for valuable consideration of a certain promissory note made and subscribed by one Walter Doyle, upon which there is a matured balance of $772.20, with interest and attorney's fees, and which is secured by a chattel mortgage on the automobile in question. The note declared upon, which is paraphed "Ne Varietur" for identity with the chattel mortgage, together with a certified copy of the mortgage, is annexed to and made part of the petition. Walter Doyle purchased the automobile on December 15, 1949, and gave the note, which represents the deferred portion of the purchase price, to Dutch O'Neal Motors, his vendor, and granted a chattel mortgage on the vehicle in favor of the holder of the note to secure payment thereof.
There is a discrepancy between-the allegations of the petition and the recitals of the note, as to whom the note is payable. The petition alleges that the note is payable to the order of Dutch O'Neal Motors, but the note itself and the act of mortgage stipulate that it is payable to the order of Dutch O'Neal Motors "or bearer." On the reverse, the note is endorsed: "Without recourse, Dutch O'Neal Motors by L. P. Roberts."
The recitals of the note must govern, for under the familiar rule of law, where there is a variance between the recitals of the petition and a document made part thereof, the latter controls.
Appellant devotes his entire brief to the complaint that the order of seizure and sale was issued without sufficient evidence to justify a resort to executory process, in that there was no authentic evidence furnished as to the endorsement of Dutch O'Neal Motors by which the note was transferred to plaintiff. Our attention is directed to two cases wherein the order of seizure and sale was annulled and set aside on appeal because there was a lack of authentic evidence showing the transfer of the note by the payee or endorser, viz., Miller, Lyon & Co. v. Cappel and Curry, 36 La.Ann. 264; Brock, State Bank Commissioner, v. Messina, La.App., 200 So. 511. However, unlike the note in the instant case, which is payable to a particular payee "or bearer," the notes with which the courts were concerned in the cited cases were payable to the order of a particular payee only, and by him endorsed in blank.
The jurisprudence of Louisiana is well settled that a creditor proceeding by executory process must bring himself and his action squarely within the strict requirements of the law. Fortier v. Burthe, 19 La.Ann. 510; Bank of Leesville v. Wingate, 123 La. 386, 48 So. 1005; Nolen v. Davidson's Succession, La.App., 190 So. 826.
Executory process is authorized under article 732 of the Code of Practice when the rights of a creditor arise from an act importing a confession of judgment, and which contains a privilege or mortgage in his favor. Article 733 of the Code of Practice recites: "An act is said to im port a confession of judgment in matters of privilege and mortgage, when it is passed before a notary public, or other officer fulfilling the same functions, in the presence of two witnesses, and the obligor declares and acknowledges therein the obligation (whether then existing or thereafter to arise) to which the privilege or mortgage relates."
Every muniment of title to the note and mortgage, and every link of evidence, must be in the authentic form when executory process is sought. In such procedure, the court can entertain no matter in pais. Miller, Lyon & Co. v. Cappel and Curry, supra.
The act of chattel mortgage is by authentic act, and recites that the note is drawn to the order of Dutch O'Neal Motors or bearer, and in order to secure the full and punctual payment thereof at maturity, together with interest and attorney's fees, Doyle specially mortgaged and hypothecated the automobile to and in favor of any future holder of the note, and confessed judgment for the full amount of the note.
Appellee's counsel contends that notwithstanding that the note in question is payable to Dutch O'Neal Motors or bearer, it is, under the provisions of the law, payable to bearer and transferable by delivery, and that the endorsement is surplus-age and should be ignored by the court, and no authentic evidence as to the verity of the endorsement of Dutch O'Neal Motors was necessary. In support of his position that plaintiff, irrespective of the endorsement, is entitled to proceed by way of executory process against the mortgaged automobile, counsel points to the case of Nolen v. Davidson's Succession, supra [La.App., 190 So. 827]. In that case 'the notes, which were payable to C. V. Palmer or bearer, and paraphed "Ne Varietur" to identify them with the acts of mortgage, contained no endorsement, and the defense was that the issuance of the order of seizure and sale under executory process was not supported by authentic evidence exclusively. It was specifically urged that the district court did not have before it, when the writ issued, authentic evidence of a transfer of the notes. In maintaining the writ of seizure and sale, the court said: " As the notes in question were payable to bearer, they were negotiable by mere delivery. No endorsement thereof was needed. Furthermore, they were accurately and fully described in the acts of security, which acts were executed in favor of any future holder of the notes, imported confessions of judgment, and were authentic in form. When the notes, or the principal obligations, were transferred by the delivery, the securities, which were accessories thereto, followed them. The required authentic evidence was present and, in our opinion, plaintiff was entitled to resort to executory process."
Realizing the effect of Nolen v. Davidson's Succession, appellant's counsel verbally argue that whereas the note is endorsed by Dutch O'Neal Motors the plaintiff acquired title to the note only by virtue of that endorsement, which made it en-cumbent upon plaintiff to produce authentic proof showing the transfer of the note. Counsel attempt to distinguish the present case from the Nolen case, wherein the notes bore no endorsement.
We believe that the holding in Nolen v. Davidson's Succession is sound, and that the doctrine enunciated therein has full applicability to the instant case, irrespective of the endorsement.
An instrument is payable to bearer when it is payable to a person named thereon or bearer, LSA-R.S. 7:9; an instrument if payable to bearer is negotiated by delivery, LSA-R.S. 7:30; an instrument negotiable in its origin continues to be negotiable until it has been restrictively endorsed or discharged by payment or otherwise, LSA-R.S. 7:47.
No restrictive endorsement appears on the note, and in our opinion the note is still payable to bearer as it was in its origin. The Negotiable Instruments Law, Act No. 64 of 1904, § 36, LSA-R.S. 7:36, recites:
"An indorsement is restrictive, which either:
"(1) Prohibits the further negotiation of the instrument; or
"(2) Constitutes the indorsee the agent of the indorser; or
"(3) Vests the title in the indorsee in trust for or to the use of some other person. But the mere absence of words implying power to negotiate does not make an indorsement restrictive."
We are in full accord with appel-lee's contention that under the circumstances of the case plaintiff is not limited to a reliance upon the endorsement to make out his title and ownership of the note. The note being payable to bearer, ownership passed upon mere delivery, and no authentic evidence of the transfer was necessary in this executory proceeding.
Under LSA-R.S. 7:48, the holder may at any time strike out any endorsement which is not necessary to his title; then, may he not ignore the endorsement entirely, and predicate his title to the note on its delivery to him and his possession thereof?
We have made a careful research of the jurisprudence of other jurisdictions touching upon an issue comparable to that raised in this case, and have been able to find the case of Lane v. Krekle, 22 Iowa 399, which is analogous in some respects to the present controversy. There, suit was brought upon a note payable to a named person or bearer, which came into the possession of the plaintiff through mesne endorsements, the first of which was purportedly that of the named payee acting through an agent. In resisting the suit, defendant urged the defense that the endorsement or transfer of the note in the name of the fictitious payee by an agent did not have the effect of transferring title. The court answered the contention as follows: "The argument is in part inapplicable to the present case, and in part unsound. It is inapplicable because the note is payable to bearer, and hence the title thereto will pass by delivery. The plaintiff is not bound to deduce or claim title to the note through the indorsement appearing thereon. This indorsement has full effect by treating it as intended to secure the liability of the payee as an indorser. It is not to be treated as the mode or medium through which the plaintiff acquired title. Plaintiff may rely for title upon his possession and the delivery to him (of which possession is evidence), and is not bound to be considered as having acquired the property in the note by or through the indorsement thereon. "
For the reasons assigned, the order of seizure and sale issued herein is approved and affirmed. Appellant is cast to pay the costs of this appeal.
Affirmed.