Case Name: The State v. The Mexican Gulf Railway Company
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1843-01
Citations: 3 Rob. 513
Docket Number: 
Parties: The State v. The Mexican Gulf Railway Company.
Judges: 
Reporter: Robinson
Volume: 3
Pages: 513–607

Head Matter:
The State v. The Mexican Gulf Railway Company.
A railway is not an immoveable, either by nature or destination, when the soil on which it is laid belongs to another ; it is, consequently, not affected by judicial or legal mortgages, nor susceptible of being mortgaged unless authorized by a special act of the legislature.
Future property can never be the subject of conventional mortgage. C. C. 3276.
The act of 12th March, 1838, authorizing certain loans to be made to the Mexican Gulf Railway Company, and other Companies, does not, of itself, create a mortgage on the property of those Companies, nor could it without their consent. That Consent is expressed by the acts of mortgage, executed in pursuance of it. The act contains only a proposition to loan, upon the execution of a mortgage on the property of the Company ; when accepted, the mortgage exists, and is essentially conventional. The act did not contemplate taking a general mortgage on all the property of the Company, present and future.
Appeal, by the defendants and certain intervenors, from a judgment of the District Court of the First District, in favor of the State, Buchanan, J.
Bullard, J. The second section of the act of 12 March, 1838, entitled “ An act amendatory of an act to expedite the construction of the New Orleans and Nashville Rail Road,” declares, that the State engages to make a loan, among others, to the Gulf of Mexico Rail Road Company of $100,000, provided that before receiving the bonds of the State, &c., the Company shall execute their obligation to the State for the payment of the principal and interest of said bonds, the faithful pajunent thereof to be secured by mortgage and privilege'on all the property, slaves, machinery, &c., of said Company, to be executed as required by an act of 13th March, 1837 ; and provided, that before executing the notarial act of mortgage, the Governor shall name three disinterested persons, who shall, under oath, appraise the property of the Company, and show satisfactorily to the Governor and the Treasurer of the State, that the mortgage, bonds, or obligations are sufficient to secure the State against all losses. The act contains certain other conditions and restrictions, not now important to mention.
In pursuance of tbis act, the Company executed to the Governor, at different times, three acts of mortgage, and received the bonds of the State, which were negotiated through the City Bank. These acts declare that the Company grants a first lien, privilege and mortgage to the State, upon all the property of the said Corn pany, slaves, machinery, railways, buildings, and more especially upon a car house then being constructed, a saw mill and appurtenances on the bayou Loutre, and a certain number of slaves who are mentioned by name.
The interest on the bonds not having been regularly paid, the Attorney General sued out an order of seizure and sale, according to the condition of the contract. Various creditors of the Company intervened, and opposed this proceeding on the part of the State, alleging superior privileges to that of the State, upon certain property of'the Company not enumerated in the acts of mortgage.
First. F. De Lizardi & Co. claim the vendor’s privilege for $6099 upon iron rails, laid down on a portion of the road not included in the mortgage given to the State, as well as the privilege of seizing creditors on the same, it having been seized previously to the issuing of the order of seizure in this-case. They also claim as pledgees certain judgments, notes, and claims belonging to the Company, to secure the same debt.
Second. Albert, as agent of Norris, claims the vendor’s privilege on a locomotive. He has also seized certain claims.
Third. Millaudon, and the Orleans Insurance Company, claim a judicial mortgage on a lot of ground, and on a slave acquired by the Company since the mortgage to the State.
Fourth. Lallande, and J. and L. Gamier claim as judgment creditors, having seized claims and suits of the Company.
Fifth. Smith, and others, in the employment of the Company, claim privileges as such.
Roselius, Attorney General, for the State.
The act of 1838, under which the bonds of the State in favor of the Company were issued, refers in express terms to that of the 13th March, 1837, and makes the provisions of the second, third, fourth and fifth sections of the latter applicable to the transaction between the State and the defendants. The act of 1837 gives the State not merely a mortgage, but “ the first lien, privilege, and mortgage on all the property of the Company, within the limits of the State, at the time the Company shall fail to pay either the principal or interest of the bonds.” Persons contracting with the Company were bound to know that the State had the first lien and mortgage on all its property.
S. L. Johnson and L. Janin, contra.
By the second section of the act of 1838, the Company is required to execute its obligation for the loan made by the State, and to secure its payment by a mortgage. An act, on the part of the Company, was necessary to secure the payment; and this act was required to be executed in the same manner as the acts prescribed by the second section of the act of 13th March, 1837. It was not to be accepted, until the property should have been appraised by three persons appointed by the Governor. The property to be thus appraised, must have been in existence, and this excludes the idea that the future property of the Company was to be affected. This is made still clearer by that part of the section which directs that the loan shall be made only in case the appraisers, the Governor, and the Treasurer shall all be satisfied, that the property so appraised is sufficient to protect the State against loss.
But it has been contended by the Attorney General that the second, third, fourth, and fifth sections of the act of t13th March, 1837, apply to the Mexican Gulf Railway Company, and warrant the construction he has put upon the rights of the State, and the obligations of the Company. The fourth and fifth sections of that act have no bearing upon the present controversy. By the second section it is provided: “ That so soon as the President of said Company shall have executed a notarial act, &c., in favor of the Governor of this State and his successors in office, giving a first lien, privilege, and mortgage to the State, upon all property of the Company, immoveables, slaves, rights, machines, lots, railways, and generally upon all property which may appertain to said Company within the limits of the State of Louisiana, which first privilege, lien, and mortgage are hereby declared legal and obligatory, all laws to the contrary notwithstanding, &c., it shall be the duty of the Treasurer to issue the bonds,” &c. It thus appears that the notarial act gives the lien, privilege, or mortgage, and that it extends only to the property specially affected by the act, which says nothing of future, property.
The third section of the act of 1837, provides, that in the event of the failure of the Company to pay either the principal or iq terest of the bonds, the whole shall be considered as due, and that the State “ shall enjoy all the rights resulting from the privilege, lien, and mortgage aforesaid, and may cause all the property, immoveables, slaves, rights, machinery, lots, railways, and generally all the property belonging to said Company, to be seized and sold, as required by the laws of the State in cases of mortgage with judgment confessed — that is, that the State shall enjoy all the rights resulting from the act aforesaid, which gave no rights upon future, or any other property than that specially described therein. The rights of the State are those of a mortgagee under an act importing a confession of judgment, and apply only to the property specially mortgaged. An order of seizure and sale is to be taken out, without citing the defendant; and the evidence of debt, as well as the property bound, must, therefore, appear from the notarial act. The judge can order the seizure of no other property than that specified in the act. 'In the absence of clear and precise provisions, the court will not presume that the legislature intended to alter the general laws of the State, and dispense with a description, in the act, 'of the property mortgaged, (Civil Code, arts. 3273, 3274,) or to authorize the mortgaging of future property. Civil Code, art. 3276.
The act of 12th March, 1838, provides :
Sect. 2. That for the purpose of facilitating the immediate construction of the Red River Rail Road, of the Baton Rouge and Clinton Rail Road, and of the Gulf of Mexico Rail Road, the State hereby engages to make a loan to said companies of the following amounts, viz : of one hundred thousand dollars to the Red River Rail Road Company ; of seventy-five thousand dollars to the Baton Rouge and Clinton Rail Road Company ; and of one hundred thousand dollars to tho'Gulf of Mexico Rail Road Company ; provided, however, that before receiving the bonds of tho State, the proceeds, or any part thereof, which proceeds are to be deposited in the Treasury of the State, the said companies shall be and they are hereby required to execute their respective obligations to the State for the payment of the principal and interest of said bonds, the raithful payment whereof to be secured by mortgage and privilege on all the property, slaves, machinery; &c. of said companies, to be executed in the same manner and effect, in every particular, as is required by the State of the New Orleans and Nashville Rail Road Company, by the second section of an act entitled “ An act to expedite the construction of the New Orleans and Nashville Rail Road,” approved 13th March, 1837; and provided also, that before executing the notarial act of mortgage, the Governor shall name three disinterested persons, who shall, under oath, appraise the respective property of each of said companies, and whose farther duty it shall be to satisfy the Governor and Treasurer of the State, that the respective property of each of said companies, and their mortgages, bonds, or obligations aforesaid, are sufficient to secure the State against all losses ; and provided, moreover, that only ten thousand dollars of the proceeds of said bonds shall be paid over by the Treasurer of the State, for each mile of said Rail Road as soon as completed, not including that part of the Rail Road which may now be completed ; provided, also, that the second, third, fourth, and fifth sections of the above recited act do apply to the aforesaid companies, &c. ; and provided, that none of the provisions of the said second section [of the act of 13th March, 1837] shall affect the other Rail Road Companies mentioned in this act, except those by which the New Orleans and Nashville Rail Road Company shall be bound under this act, &c.
The act of 13th March, 1837, to'expedite the construction of the New Orleans and Nashville Railroad, declares :
Sect. 2. That so soon as this act shall be accepted by said Company, evidenced by the consent of a majority in value of the stockholders thereof, and the same shall be made known to the satisfaction of the Governor and Treasurer of this State, and the President of said Company shall have executed a notarial act in pursuance of the consent of the stockholders aforesaid, in conformity with the provisions of this act, in favor of the Governor of this State and his successors in office, giving a first privilege, lien, and mortgage to the State of Louisiana upon all property of the Company, immoveables, slaves, rights, machinery, lots, railways, and generally upon all property. which may appertain to said Company within the limits of the State of Louisiana, which first privilege, lien, and mortgage are hereby declared legal and obligatory, all laws to the contrary notwithstanding, for tho faithful payment of the principal and interest of said loan as the same shall become due, it shall be the duty of the Treasurer of this State, and he is hereby authorized and required to issue the bonds of said State, and deliver the same to the President of said Company, &e.
Sect. 3. That in case the said Company shall fail to pay the said interest when the same shall become payable, then the principal of said bonds shall be considered as due, and the State of Louisiana shall enjoy all the rights resulting from the privilege, lien, and mortgage aforesaid, and may, on the petition of the Attorney General, filed in either of the District Courts of the First and Second Judicial districts of this State, or other competent tribunals, cause all the property, immoveables, slaves, rights, machinery, lots, railways, and generally all the property belonging to said Company, to be seized and sold, as -required by the laws of the State in cases of mortgages with judgment confessed, for the purpose of enforcing the payment of the principal and interest of the bonds aforesaid ; &e.
The parts of the second and third sections omitted in the above extracts, and the whole of the fourth and fifth sections of the act, are irrelevant to the questions involved in this action.

Opinion:
Bullard, J.
Among the admissions of the parties in the record, is the following: " The land on which the Rail Road has been made does not belong to the Company, none of the owners having been expropriated." It is not, therefore, independently of the act of the legislature, susceptible of being mortgaged, and is not affected by judicial or legal mortgages. That act, we doubt not, rendered it susceptible of being mortgaged, and subjected it to a special conventional privilege, so far as the State is concerned, and for the purpose of securing the reimbursement of the loan ; but the Railway is not an immoveable, either by nature or destination, if the soil over which it is laid belongs to another. The rails, therefore, did not become immoveable by being laid down.
It is also clear that future property can never be the subject of conventional mortgage. Civ. Code, art. 3276. To this it is replied by the Attorney General, that the mortgage results from the special law passed in this case. We do not so understand it. The act does not create the mortgage, nor could it without the consent of the corporation. That consent is expressed in the acts of mortgage. The statute contains only the proposition to loan upon the execution of a lien, privilege, and mortgage upon all the property of the Company. As soon as that proposition is accepted the mortgage exists, and is essentially conventional. That the legislature did not intend to take a general mortgage upon all the property of the Company, present and future, real or moveable, appears also from the clause in the act which requires the appointment of appraisers of its property, who were to satisfy the Governor and the State Treasurer that the property and the bond of the Company are sufficient to secure the State. It was evidently not contemplated that the mortgage should embrace property to be acquired afterwards, because it could neither be appraised nor described, much less that it should defeat the vendor's privilege on property afterwards acquired on credit, or judicial mortgages on lands or slaves which did not belong to the Company at the date of the act of mortgage.
The application of these principles to the cases of,the different creditors who have made opposition, is not difficult.
The slave Peter acquired from Phelps, and the lot of ground in the faubourg Franklin, are not mortgaged to the State, and are subject to the judgment of Millaudon, Albert, and the Orleans Insurance Company.
De Lizardi & Co. claim the privilege of vendors on the iron rails laid down on the road, except for the first six miles ; and their right had been recognized, and they had actually seized under execution, when the State interfered by injunction, alleging a superior right under the statute, and the acts of mortgage and privilege. The rails not having been attached to an immoveable, were still, in our opinion, subject to the vendor's lien, and the injunction obtained by the State ought not to be sustained.
The same principles apply to the other privileged creditors; and we are of opinion, that the opposing creditors have a right to be paid in preference to the State.
It is, therefore, ordered, that the judgment of the District Court be reversed ; that the opposing creditors be first paid out of the the property subject to their privileges; and that, to this extent, the injunctions of the opposing creditors be perpetuated.
Ip the cases of Claude Tournier v. Chauchon and another, William Prehn v. Etienne Rivolet and another, and Alphonse Regnier v. R. H. Hawthorn and, another, from the City Court of New Orleans ; of William F. Thompson, Syndic, v. Elizabeth Morris and Husband, Joseph Albert v. Artemon Hill and another, Thomas C. Magoffin v. Oliver Dubois and another, Laurent Millaudon v. Artemon Hill and another, William Frost and another y. Jacques Léon and others, Michael Maher v. Patrick Summers, John D. James v. How Hinds, Benjamin Florance v. Joseph A. Beard, and Benjamin Florance v. John Mitchell, from the Commercial Court of New Orleans ; of Neally and another, y. Wellington and another, Paul Liautaud v. Jean Jonau, and Thomas H. Gorman y. Seth W. Nye, from the District Court of the First District, the judgments of the lower courts were affirmed on appeal, in New Orleans, with damages, during the period embraced by this volume.