Opinion ID: 12207
Heading Depth: 3
Heading Rank: 6

Heading: By prescription.16

Text: 42 In this case, the parties have suggested--and we agree--that the first two methods listed in Article 3411 are the only ones among the six that could conceivably be applicable. We consider these two in inverse order. 43 1. Creditor's Acquiring Ownership of the Thing Mortgaged 44 The method outlined in Article 3411(2) provides that a mortgage is extinguished when the creditor, i.e., the mortgagee, acquires ownership of the thing mortgaged. As new Article 3319(2) makes clear, 17 this method of extinguishing a mortgage was designed to apply to situations in which the Civil Law doctrine of confusion would operate to extinguish a mortgage. Despite the seemingly curious English translation of its French label, this traditional Civilian doctrine of the law of obligations is actually quite straightforward. As expressed in Louisiana Civil Code Article 1903, it simply means that [when] the qualities of obligee and obligor are united in the same person, the obligation is extinguished. 18 In the specific context of mortgage--an accessory contract granted to provide security for the performance of the underlying or principal obligation--confusion will operate to extinguish the mortgage contract itself either (a) when confusion extinguishes the principal obligation, as when, for example, the promissory note that is secured by the mortgage is acquired by its maker, or (b) when confusion extinguishes the thing mortgaged, as when, for example, an encumbered building is acquired by the mortgagee. 19 45 As the Ross Group correctly observes, the particular manifestation of confusion contemplated by Article 3411(2) could not operate here to extinguish the Mortgage: First, no one acquired the principal obligation from the Ross Group; and second, if anyone acquired ownership of the thing mortgaged (the leasehold interest), it was the Debtor (the mortgagor /obligor/debtor), not the Ross Group (the mortgagee /obligee/creditor). Regardless of whether or not the provisions of Article 3411(2) might have extinguished the Mortgage if the Debtor had acquired the hand note or if the Ross Group had acquired the Debtor's leasehold interest, 20 neither of those transactions occurred here. Consequently, we agree with the Ross Group that Article 3411(2) cannot provide a basis for finding that the Mortgage was extinguished by confusion. 2. Extinction of the Thing Mortgaged 46 Former Article 3411(1) identifies the other potentially applicable method of extinguishing a mortgage: extinction of the thing mortgaged. 21 The most recognizable example of this method of extinguishing a mortgage occurs when the thing mortgaged is uninsured corporeal (tangible) property--such as a building--and that thing is physically destroyed. 22 Contrary to the Ross Group's protestations, this method of extinction is not limited in application to the physical destruction of corporeal things. Albeit relatively rare, an incorporeal--such as a leasehold interest--that (1) exists in the eyes of the law because it is comprehended by the understanding, 23 and (2) is the thing mortgaged, is susceptible not of destruction but of extinction, such as when it terminates by its express provisions, by the mutual consent of the parties, or by operation of law. 47 In this case, reacquisition of record title of the Foundry (the leased premises) by the Debtor (lessee) from the Parish (lessor), by virtue of their executing the Deed, had the potential of extinguishing the Lease by confusion and with it the Debtor's leasehold interest. Under the doctrine of confusion the qualities of obligee and obligor [were] united in the same person. 24 Indeed, Louisiana law has long recognized that when the lessor's interest and the lessee's interest are consolidated in the same person--in this instance, the Debtor--the lease is extinguished by confusion. 25 Regardless of the existence of any contractual agreements between the parties to the Deed or to the Mortgage that (1) would limit or vary the effects of confusion on the parties' interests under the Mortgage, and (2) would not contravene public policy, the Debtor/Lessee's September 5, 1989, redemption of record title to the Foundry from the Parish/Lessor did in fact terminate the Lease, i.e., extinguish it, under the doctrine of confusion. This does not end our inquiry though, for what remains to be seen is whether such extinction of the Debtor's leasehold interest, being the thing expressly encumbered in the Mortgage, must as a matter of public policy extinguish the Mortgage by confusion under former Article 3411(1) despite bona fide efforts of the parties to prevent that result. Before we parse the Mortgage to see whether under the instant facts any of its provisions are effective to vary or limit the effects of the doctrine of confusion without violating public policy, we take a short detour to analyze the effects of Louisiana's public records doctrine on this case.