Case Name: R. D. Shepherd v. Mark Phillips & Co.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1852-06
Citations: 7 La. Ann. 458
Docket Number: 
Parties: R. D. Shepherd v. Mark Phillips & Co.
Judges: Preston, J., concurred.
Reporter: Louisiana Annual Reports
Volume: 7
Pages: 458–464

Head Matter:
R. D. Shepherd v. Mark Phillips & Co.
It will be presumed, unless the contrary appear, tliat all the parties to an agreement had knowledge of their legal rights ; where, therefore, there are ambiguities and conflicting stipulations in the agreement, and one party claims the waiver of a legal right by the others, in his favor, the ambiguity will be construed against the party claiming the benefit; for it was incumbent on him to have given such explanations, at the time of entering into the agreement, as would have prevented the doubt.
APPEAL from the Fifth District Court of New Orleans, Buchanan, J.
A. K. Josephs, for plaintiff.
E. Briggs, for defendant.

Opinion:
By the court: (Slidell, J., absent.)
Rost, J.
On the 20th May, 1846, the following agreement was entered into by the parties to it:
" It is hereby agreed between the undersigned, mortgage creditors of the Orleans Cotton Press Company, for the following sums, viz: R. D. Shepherd, four judgments in FifthDistrict Court, for about $205,000; J. Y. de Egana, one judgment in Criminal Court, for about $36,000; John Slidell, one judgment in Commercial Court, for about $15,000 ; Mark Phillips, one judgment in Commercial Court, for about $20,000; Sam'l Nicholson, one judgment in Commercial Court, for about $6,000, and that execution shall be issued on said judgments, and said R. D. Shepherd is hereby authorized and empowered to purchase at the sheriff's sale, for the account of the undersigned, in his own name, all the mortgaged property described in the several acts, and which is bound for the payment of the above claims, to be held and disposed of by him for their account, and each of the undersigned is to be interested in said purchase in proportion to the amount of his claim; and, to the end aforesaid, the undersigned do further authorize and empower the said R. D. Shepherd to raise their several mortgages and judgment claims now due, so as to meet the cash payment required at the sale to be made as aforesaid; and in the event of a resale to a profit to said R. P. Shepherd, which resale, at profit, he is hereby authorized to make, such profit shall be ratably divided as aforesaid; and should any future difficulty arise between the parties as to the partition of said property or its proceeds, in relation to any priority of lien or mortgage, that may be claimed by one or more of them over the other, such difficulty shall be made the subject of an amicable suit, to be submitted, by consent, to the Supreme Court for decision. It is well understood, that the said R. P. Shepherd should not bid for the property, up to the whole amount of the claims of the undersigned; and if the property is bought in for less at the sale, yet, as between the undersigned, it is to be considered as having been purchased at the amount of the entire claims, so as to leave each one interested in proportion to his claim, and to avoid, as far as possible, between themselves, any question of priority of rank between them. In faith whereof, they have hereunto signed their names, this 20th day of May, 1846. This agreement, as soon as signed, to be deposited with H. £. Cenas, Esq., notary public, for safe keeping. Signed: R. D. Shepherd ; Mark Phillips by A. SfJ. Dennistoun Sp Co., agents; J. Y. de Egana; John Slidell, for H. C. Cammack; SamH Nicholson."
Under this agreement R. P. Shepherd purchased, in his own name, the property to which it refers, for the price of $270,000, which, after deducting costs and arrears of taxes, left the sum of $266,744 55, subject, according to the sheriff's return, to such distribution as the court might make between the creditors of the company. The plaintiff has since had the management of the property, and has purchased the claim of Phelps, Podge 8p Co., the party represented in the agreement by SamH Nicholson, for the common benefit of the other parties to that agreement. He has now in his hands, for distribution among the shareholders, a sum of $15,541 27, proceeding from the rents of the property.
He has made a distribution of it among the shareholders, on which the dividends are in proportion to the amount of their respective claims, without regard to the priority which some of those claims have over others, but as his construction of the agreement is at variance with that of the other parties, he has instituted this proceeding for the purpose of ascertaining the proper division of the property and its revenues among the shareholders.
The latter have appeared, and oppose the distribution made, on the following grounds: That the stipulation in the agreement, that the price should be considered as between themselves, the amount of their claims had necessarily reference to those claims as recognized and settled in the form provided in the agreement itself. That by a decree of the Supreme Court, rendered on a rule to which all the parties hereto were also parties, these several claims were finally liquidated, and it was decreed, that the holders of the bonds of the first series were entitled to be paid in preference to the holders of the second series, whose mortgage had never been reinscribed. That under the judgment in that case, the holders of the bonds of the second series were entitled to a dividend of 29| per cent on the sum of $23,902 24, the balance of the purchase money after paying the claims to be declared to be of higher privilege; that of the amount claimed by the plaintiff, $56,657 63 is claimed for bonds of the second series, and, for which, under the decree, he is only entitled to the sum of $16,855 44. That the decree df the Supreme Court finally settled the interest of the parties, and forms res judicata.
They pray that their shares in the property and its rents, be fixed according to the principles of that decree.
The case was submitted to the district judge, without .argument, and the judgment rendered was in conformity with the prayer of the petition. The defendants have appealed.
The different stipulations of the agreement, cited on both sides, seem to be in direct conflict with each other; and if, in endeavoring to construe it, we should fail to reach the common intent of the parties, they alone will be to blame for having created a state of things to which rules of law cannot be applied with any degree of certainty.
The stipulations upon which the plaintiff relies, seem to imply a waiver of any right of priority by the purchasers. But if a waiver was intended, why was it not expressed in the act. So far from this being the case, it is stipulated, that should any difficulty arise between the parties, in relation to any priority of lien or mortgage that may be claimed by one or more of them over the others, such difficulty shall be made the subject of an amicable suit, &c.; and, further, the purchase shall be considered as having been made for the whole amount of the claims of the purchasers, to avoid, as far as possible between themselves, any question as to priority of rank. This expressly reserves the question of priority, which the other stipulations seem to waive, and hence the difficulty which the case presents.
It is not pretended that the agreement was entered into under the influence of any error of law or fact, by any of the parties to it. I must, therefore, take it for granted, that they were all apprised of their legal rights, and that the plaintiff had knowledge that the claims of the defendants were entitled to the preference over so much of his own, as rested upon bonds of the second series. He now insists, that the agreement is a waiver of the right of priority, made by the other parties, for his benefit. Under those circumstances, I am of opinion that it was incumbent upon him to have given such explanations, at the time, as would have prevented doubt or ambiguity; and, as he failed to do so under the express provision of article 1953 of the Civil Code, the construction most favorable to the defendants should be adopted.
The purchase was made on the 29th June, 1846. On the 3d of July following, the counsel of plaintiff, on informing the court of that fact, and suggesting that the certificate of the recorder of mortgages shows a large number of bonds, secured by mortgage, on the property sold, besides those sued upon by the said Shepherd, the plaintiff in the suit, and, in order to determine among all the bondholders and mortgage creditors, their respective claims for priority fully and finally, as well as to obtain the erasure of said mortgages, took a rule on all the mortgage creditors of the company, except the defendants in this suit, to show cause why their mortgages and privileges should not be erased, on the ground of the priority of the mortgages of himself and the defendants. He did not ask that the defendants should be cited, buthe prayed for citation against Phelps, Dodge Sf Co., one of the parties to the agreement, and entitled under it to the same rights as the plaintiff, although not a judgment creditor.
The defendants, though not cited, appeared, as well as Phelps, Dodge 8f Co., by separate counsel, and each litigated his claim against all the other creditors, the plaintiff among the rest. Upon the separate issues thus formed, and having all the essential characteristics of a proceeding in concurso, a judgment was rendered by the district court, recognizing the right of the plaintiff to be paid by preference, the amount of his judgment on bonds of the second series, rejecting the claim of Phelps, Dodge &? Co., and ordering their mortgage to be erased upon the books of the recorder. Phelps, Podge Sf Co. and other creditors appealed, and an agreement in relation to the manner of bringing up the record, was signed by the counsel of each creditor.
On the appeal, the contestation was renewed in this court; the judgment giving a preference to the plaintiff, over Phelps, Podge &f Co. and other holders of bonds of the second series, was reversed. His reinscription was adjudged not to be valid, and his claim ordered to share pro rata with those of the other holders of the same series of bonds. 2 Ann. 100.
This judgment was in a suit instituted by the plaintiff himself. All the parties to the agreement were parties to it, and as it is res judicata as to Phelps, Podge Sf Co., who have the same rights as the plaintiff under the agreement, and it is conceded that they have only received for their claim the dividend which that judgment allows them, it is extremely difficult to avoid the conclusion, that the judgment has also finally determined the question of priority against the plaintiff, and in favor of the defendants.
The rule did not give the court to understand, that the question of priority was not open'between the purchasers of the property, or that it had been waived by them. It was expressly taken in order to determine, among all the mortgage creditors, their respective claims for priority fully and finally, and represented the question as open in relation to the claim of Phelps, Podge Sf Co. If open as to them, it must have been equally so as to all other parties to the agreement, and the judgment should have the same effect as to all.
If the plea of the thing adjudged could not, on 'technical grounds, be maintained, yet, as showing the interpretation put by the plaintiff, upon the agreement, the proceedings on the rule would be sufficient to bind him. He made no reservation of any rights he might have under that agreement, and, in my opinion, waived those rights by testing the claim of Phelps, Podge 8f Co., in all respects similar to his own, and suffering a judgment to be entered against him, in favor of his co-purchasers, on the question of priority.
I am of opinion, however, that, under the agreement, two hundred and eighty-two thousand dollars should be considered the price of the adjudication of the cotton press, and that the rights of the parties in this suit should be settled on that valuation.
It is therefore ordered, adjudged and decreed, that the judgment of the lower court be reversed, and that the rights of the parties to the agreement which forms the subject of this litigation, in the property of the press, be settled and established on the following basis: The press was purchased at$282,000. From this amount is to be deducted, 1st. The daifas preferred to those of the parties, consisting of charges and privileged claims, as per tableau of distribution, $25,387 43. 2d. Those of the holders of the first series, paid in accordance with tableau, $5,516 19=$30,903 62, leaving $251,096 38. 3d. Amount of the dividend paid to the holders of the third series, not parties to the agreement,$7,028 64. Balance to be distributed between parties to the agreement, $244,067 74. Of this two hundred and sixteen thousand two hundred and eighty-one dollars and forty-nine cents, was contributed by the holders of the bonds of the first series, to wit: R. P. Shepherd,- Lizardi Sf Co., John Slidell and Mark Phillips, under the decree as per tableau, leaving as a dividend due to Mr. Shepherd, as holder of bonds of the second series, twenty-seven thousand seven hundred and eighty-six dollars and twenty-five cents, instead of sixteen thousand eight hundred and fifty-five dollars and forty-five cents. And, it is farther ordeped, that the dividends due on the several interests, be distributed accordingly, in the account filed, so far amended; and that the appellees pay the costs of this appeal.
Preston, J., concurred.