Court Opinion

ID: 7186032
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:52:30.751503+00
Date Added: 2024-06-11T16:16:04.395958
License: Public Domain

Meebick, O. J.,
dissenting. I cannot think that the mention of the amount of the debt in the act, is of the essence of the contract of pledge. It appears to me to be nothing more than a formality.
Under the general provisions of the Code in regard to contracts, it is not necessary to specify the consideration or cause of an agreement. In the language of the Code, “ an agreement is not the less valid, though the cause be not expressed.” O. C. 1888,1894.
This being the general law, any provision in regard to certain special contracts, which required the consideration to be specified or expressed in them, prescribed nothing more nor less than an additional formality or form. Such was the special law of the Code, requiring the amount of the debt to be expressed in the contracts of pledge and mortgage, which they secured.
The formalities required by the Code for the act of pledge, had come to be considered a burden and impediment to commercial transactions, when the Statute of 1852 was passed.
The Article 3125 required the pledge to be executed in notarial form, or by act under private signature, registered with a notary, in order to protect the pledgee against third persons, and whatever the form of the act, these further formalities, viz, that it should mention the amount of the debt, the species and nature of the thing given in pledge, or have annexed thereto a statement of its number, weight and measure.
And the preceding formalities were required in pledges of obligations, negotiable or not negotiable, as well as of movables.
In addition, if an obligation not negotiable were pledged, the Code required that a copy of the act at large should be duly served on the debtor of the credit pledged. If the obligation were negotiable, the law required it to be endorsed *379by the party pledging’ it. Commercial men are proverbially careless of forms, and these provisions of the Code became a snare to business men and were a fruitful source of litigation. Hence the Act of 1852, reenacted in 1855, ought to be construed so as to advance the remedy.
It provided for two classes of objects susceptible of being pledged, viz, movables and incorporeal rights.
The latter were the subject of the first section, which discards every formality presented by the Code, except delivery. It declares : “ That when a debtor wishes to pawn promissory notes, bills of exchange, stocks, obligations, or claims upon other persons, he shall deliver to the creditors, the notes, bills of exchange, certificates of stock, or other evidences of the claims or rights so pawned; and such pawn so made without further formalities, shall be valid as well against third parties as against the pledgors thereof, if made in good faith.”
Here then no private act is recorded, or notarial act required — no description of the property pledged ; no statement of the amount of the debt, and no in-dorsement of the negotiable paper, and no notice except a simple notice in the case of paper not negotiable.
Now, if it were important that the amount of the debt secured by the pledge, should be specified in writing, the lawgiver would certainly have prescribed the formality in this class of pledges which are the most easily concealed from other creditors and third parties, and are the most common mode of securing loans of money.
It cannot be denied, that this section has repealed the formalities of Article 3125 of the Code, as it respects all the objects of pledge mentioned in the first section of the Acts of 1852 and 1855.
If so, can any good reason be given why the same Article is not also repealed by the second section of the Act as to movables ? Is not the reason of the law the same ? Its language is just as forcible. It is as follows :
“ Be it enacted, &c., That all pledges of movable property may be made by private writing, accompanied by actual delivery; and the delivery of property on deposit in a warehouse, shall pass by the private assignment of the warehouse receipt, so as to authorize the owner to pledge such property; and such pledge so made without further formalities, shall be valid as well against third persons as the pledgor thereof, if made in good faith.”
Here again the Act makes no mention of the recording of the private act of pledge; no mention of a particular and detailed description of the property pledged, or amount of the debt to be secured, but it expressly declares, that all pledges of movable property may be made by private writing, accompanied by delivery, and the same shall be valid without further formality.
It has been suggested, that if the amount of the debt is not specified in the private writing, it may give rise to great frauds. But this could not have been the motive of the lawgiver in requiring a private writing. Had it been, he would have required a private writing, specifying the debt in cases of pledges of bills of exchange, promissory notes, obligations and stocks, the most frequent objects of pledges. Moreover, he would have required the private act to be recorded, to prevent its subsequent change or modification, and to give third persons a clew to its contents, instead of trusting it entirely to the secret keeping of the pledgee.
But it is supposed, that it cannot be a private writing in the sense of the Act, unless it specifies the amount of the debt to secure which it is given. The de*380scription of the debt is but an expression of the cause of the contract. The old law expressly made such statement in the act of pledge, an essential formality. The new law appears to me to repeal the formality, and place the contract of pledge on the footing of ordinary contracts in this particular.
I do not think it essential now to describe with absolute precision, tho debt or things pledged. It may bo done in general terms, or oven omitted as to the debt, the cause of the contract. In my opinion, a private writing in these words, “ I hereby pledge to A B, all the gunny bags I have this day delivered him, to secure to him the amount I owe him by promissory notes,” would be valid under the Act. So too I think the private writing in question sufficient. The Civil Code has (as already observed) declared that an agreement is not the less valid, though tho cause be not expressed. O. 0.1888. When, therefore, Merrell declares that he pledges to Eager the 629 bales of gunny bags, for value received, the Civil Code permits the latter to offer testimonial proof of the cause of the pledge, proof explanatory of “ the value received,” viz, the nature and amount of the debt secured. C. C. 1894; 3 An. 235 and 281.
But suppose it be held that the formality required by Article 3125 of the Code, to mention the amount of the debt duo, has not been repealed by the Act of 1852. Will an erroneous description of the debt vitiate the Act ? If the creditor mistakes the amount of his debt, is he, as in case of the registry of the mortgage, to lose the surplus ?
Under the old law, there was some reason why the amount of the debt should be specified in act of pledge. It was because, by the registry of the private act, and by the notarial act itself, publicity was given to the act of pledge, and third parties, by diligence, were enabled to know the terms thereof. This reason has ceased, by permitting verbal pledges of obligations, and the delivery of the private writing to the custody of the pledgee or the parties, in case of other movables.
In this instance, the amount of the debt and the contents of the private writing are disclosed by the answers of. the garnishee to the interrogatories propounded by the plaintiff. I can see no good reason why the garnishee should be deprived of his pledge.
It will also be observed, that the act of pledge in this instance, (under the fourth section of the Act,) authorizes Eager to dispose of the gunny bags without the intervention of justice. This fourth section of the Act also corroborates the views I have taken, inasmuch as it permits the parties to agree to the sale or other disposition of the thing sold by the pledgee, without tho formalities of a suit or any intervention of justice. This liberal provision oí law is certainly in contrast with the formalities required by the Code, and gives us a further insight into the intention and scope of the Act.
The Act of 1852 was, at the time of its passage, looked upon as removing the vexatious restrictions imposed by the Code, upon this mode of raising money and securing debts, and, as such, was received with great satisfaction by the commercial community, and I am unwilling, by any construction of the Act, to revive any of the formalities prescribed by tho Code, and (as I think) repealed by the sweeping provisions of the Acts of 1852 and 1855.
I think the judgment ought to be affirmed.