Court Opinion

ID: 7164921
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:20:03.23162+00
Date Added: 2024-06-11T16:15:30.556111
License: Public Domain

On the Merits.
BREAUX, O. J.
The purpose of the rule on the part of the receivers of the firm of Noullet & Co., taken contradictorily with a number of creditors of the firm, was to obtain a decree to compel the recorder of mortgages for the parish of Orleans to cancel the liens and privileges recorded against said firm from the books of his office, and to refer the creditors whose claims are thus recorded to the proceeds for payment.
The refusal of the lower court to grant this rule, and order the liens and privileges of different creditors who opposed the rule to be canceled, brings up the question at issue for our decision.
The firm of Noullet & Co. became the creditors of the city of New Orleans under a building contract under which the building known as the “Home of Detention” was constructed by it as contractor with the said city. The different creditors have not been paid. Differences have arisen between the partners. The partnership of Noullet & Co. has, since the said building was completed, been dissolved by a judgment of the court.
*171The balance of the contract price of the building owned by the city is represented by her certificates, aggregating the sum total of $29,349.43, which the city is quite willing to hand over and pay to whomsoever is entitled to it.
Part of the history of the case is given in the decision of this court heretofore rendered refusing to dismiss the appeal on appellants’ motion.
The court, in the case just cited, decided that the receivers had a standing in court to present any right which their principals. Noullet & Co., and now the members of said firm, might have had. (Italics ours.) The foregoing is a sufficient state of fads for the decision.
Taking up the issues from the point of view heretofore decided, we are constrained to hold that, if the parties (that is, the receivers) are held to whatever rights Noullet & Co. had, then that plaintiffs in rule have very thin and attenuated grounds upon which to stand. We have not been successful at finding that the receivers have any greater rights than their principals; ' that is, of Noullet and Eitzner.
The creditors are subcontractors and men who furnished materials, who have the privilege accorded by statute. They are creditors of the firm. By observing the requirement of law and recording their claims, they have become the creditors of the city of New Orleans as well. They are "the statutory creditors of the city, against which their claims are to stand until they are paid. The members of the firm are without authority, in the absence of insolvency or other good legal cause, to have these claims canceled, and force the creditors to look to the proceeds of uncollected certificates, which we presume are good for the amount. If they have been converted to cash, there is no necessity of the court’s action to cancel liens and privileges, for, upon presentation of claims recognized as legal by the parties concerned, through the action of the court, if needful, all that the debtors have to do is to comply with the obligation stipulated: pay up, get receipt, and cancel lien and privileges after payment. We can think of no good ground upon which a solvent firm can compel creditors to look to the proceeds in a case similar to the one before us for decision. Prom the necessity of the case, creditors in insolvency proceedings or in proceedings in concurso are bound to follow proceeds, to collect their mortgages, liens, and privileges. This situation does not here arise, the firm in question not being insolvent.
Going a step further, and considering the issues as presented by the receivers, who, unquestionably, in certain respects, do represent the said firm, we are constrained, from our point of view, to decline to recognize a right in them, in the present state of affairs, to have the liens and privileges canceled and erased. We view the issues strictly as a question of law. We are well aware that these receivers will properly and satisfactorily administer anything which falls to them to administer. That is not the question.
We do not conceive it possible for debtors, not insolvent, because of any acts or differences of their own, to bring on a situation which would enable them, through receivers, to free property from a creditor’s lien and privilege, and refer these creditors to the proceeds represented by certificates of the city.
The amount to pay the claims may be in the possession of the owner, the city. Whether it is or not, we cannot imagine that the contractor can say to the subcontractor under his contract, and to the man who furnished material: “Cancel your lien and
privilege, and take your chances of collecting from the owner of the property upon which these liens and privileges rest.”
These claims (when reduced, if need be, *174to the amount due) are indebtedness of the city as.well as of the contractor. The creditors, under the statute, bold the city; and, while the contractor may insist that no amount over the sum actually due be paid, he is powerless, in law, to require any release of any kind from the creditor prior to payment. These creditors are not in a position to require a concurso, or compel creditors to look to the proceeds after having canceled their claims. They (Noullet & Co.) are not holding a sum, and calling upon the creditors to establish among themselves the proportion to which they are entitled. They cannot touch the funds in the hands of the city, to the prejudice of the creditors in question, who hold a prior right, which cannot be affected by any action of the contractor.
We take it that a concurso is not thought of. It is only referred to as an illustration of the limit beyond which the debtor cannot go. The situation here presents no such condition as requires the debtor, “prior to payment, to cancel his lien or privilege. On the contrary, under special statute, these creditors are subrogated to the rights of their debtor, the contractor, and stand in the way of his recovering anything from the owner of the building before they are paid. The contractor is absolutely without right of action to obtain the cancellation for which he asks.
The articles of the Code single out these liens and privileges for payment by the owner. It imposes upon him the burden of seeing that they axe paid.
The owner may, under given circumstances, have a concurso convened to distribute funds in his hands; the contractor to distribute the funds in the hands of the owner. His part in the proceeds is to let these creditors be paid, and then he may become master of the situation.
What right has the contractor to have liens canceled on the property of another as long as this other owes the amount of the lien to his subcontractor or materialman? This view is particularly binding upon the court in presence of the various statutes relating to “contracts for buildings and the security of workmen and furnishers of materials.” Wolf’s Rev. St. “Privileges,” p. 1336.
They have the first privilege on the building, which cannot be charged on rule of solvent contractors who move to have it canceled.
The exception was well taken. It only remains for us to affirm the judgment.
It is affirmed.