Court Opinion

ID: 3470793
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:39:38.156229+00
Date Added: 2024-06-11T14:08:26.218762
License: Public Domain

This is a suit upon a promissory note, dated May 29, 1917, payable on or before October 1, 1917, with interest at 8 per cent. per annum from date, and secured by mortgage on certain real property. The note and mortgage were made and executed by the defendant. The defenses to the suit were fraud, want of consideration, and the plea of prescription. The judgment of the trial court was in favor of plaintiff. In our original opinion the judgment appealed from was amended with respect to the date from which interest on the note should be computed, and, as thus amended, it was affirmed. On the application of defendant a rehearing was granted for the limited purpose of again considering defendant's plea of prescription. The money, which is represented by the note sued upon, was borrowed by defendant for the use and benefit of the Boyce Lumber  Realty Company, a corporation of which defendant was a stockholder, director, and officer, and the note was to be paid by the corporation. The entire agreement and understanding of the interested parties is minutely detailed in our original opinion, and need not be repeated here, for we are now concerned only with defendant's plea of prescription. The record does not disclose that any authority was conferred upon the corporation by *Page 966 
the defendant, with reference to the note, except such as was given at the time of its execution and coincident with its issuance, and the only authority then conferred upon the corporation was to pay the note. When the note fell due, October 1, 1917, it was not paid, and no demand for its payment was made upon defendant until 1924, or about seven years thereafter. The plaintiff held the note, and during the years from its date to January 29, 1921, the Boyce Lumber  Realty Company paid the accrued interest thereon. Subsequent to that time the corporation went into the hands of a receiver, and following this incident, the plaintiff made a demand upon the defendant for the payment of the note. The demand was resisted and this suit followed. In our original opinion we said:
  "The next question to be considered is the plea of prescription. A promissory note prescribes in five years from the date of its maturity. C.C. art. 3540. The note, in this instance, matured on October 1, 1917, and suit was not filed until August 7, 1924. Hence more than five years elapsed between the maturity of the note and the filing of suit, and therefore between the former date and the service of citation. However, prescription on a promissory note may be interrupted by a payment made on the note. The payment must be made, however, by the debtor or by another with his authority. No interruption will result from a payment made by a third person without the authority of the debtor. Smith, Administrator, v. Coon, 22 La. Ann. 445. In the case at bar, as we have seen, payments were made on the note. None, however, were made by defendant, but only by the Boyce Lumber  Realty Company. We have found, however, that it was understood and agreed by defendant and the company that the latter should pay the note. Hence, when the company made payments thereon, it made them with defendant's express authority."
The foregoing excerpt from our original opinion contains an accurate statement of law and fact, but the conclusion we express therein, that because "it was understood and agreed by defendant and the company that the latter should pay the note. Hence, when *Page 967 
the company made payments thereon, it made them with defendant's express authority" — is erroneous. There is no substantial foundation upon which to rest that conclusion. Authority to a third person, given before maturity, merely to pay a note at maturity (that is what defendant in this case did), is not authority to pay the accrued interest, thereon, or to partially pay the note after its maturity. In such a case as is presented here, to interrupt the prescription which began to run at the maturity of the note, it must appear that the maker, after its maturity, authorized a payment thereon. A payment without such authority is not an acknowledgment of the debt, and such an acknowledgment is necessary to interrupt prescription. Article 2997, R.C.C., provides that the power to "contract a loan or acknowledge a debt must be express and special."
Counsel for appellant cites Webster v. Harman, 148 La. 1080,88 So. 462. This case has application, for it holds that the power to acknowledge a debt must be express and special. The court said:
  "A power of attorney, authorizing an agent to sell stock, did not authorize him to give it in payment of his principal's debt; for, however much a dation en paiement may be likened to a sale by Civ. Code, art.2446 and 2659, there is a difference between them, in that, before a dation en paiement can be made, the existence of a debt must be acknowledged, and the power to do this must be express and special under Civ. Code, art. 2997."
From other authorities cited we quote the following:
  "Payment by an agent is effectual to suspend the statute of limitations only when the agent is specially authorized to make it." 37 Corpus Juris, 1162, and authorities therein cited.
"In the case of a part payment by a stranger, or by a person not authorized to represent the debtor, it is obvious that there is no ground for assuming that it is an admission of an existing liability on his part, or for inferring a new promise by him to pay the balance of the debt. Therefore, inasmuch as such payments, to remove the bar of the statute, must *Page 968 
have the effect of an acknowledgment of the debt, or new promise, they should be made by some person who had the right to acknowledge it, or to make the new promise, which principle requires that the payment must either be made by the debtor himself or by an authorized agent. A creditor, therefore, cannot be made the agent of the debtor to such an extent as to make the act done by him operate as a new promise to himself. So neither an amount collected by a creditor and credited on the debtor's account without authority from the debtor can be considered as creating a mutual contract, so as to put the statute of limitations in motion from the last item." 17 Ruling Case Law, p. 935.
"Defendant made a note payable to his wife, which she indorsed, and defendant's son, who is a director in the bank of which plaintiff was receiver, procured it to discount the note, the money being paid to defendant. Thereafter payments of interest within the period of limitations were made by the son directing the cashier of the bank to apply the dividends due to defendant's wife on certain shares of the bank's stock standing in her name; but there was no evidence tending to connect defendant with such payments, except the declaration of the bank's cashier, as a witness, that the son was acting as his father's agent throughout the transaction. Held, that the evidence was insufficient to show that the payments of interest were made with defendant's authority and consent, and were therefore insufficient to stop the running of limitations as against him." Schofield v. Twining (C.C.) 127 F. 488.
  "A part payment, to toll the statute of limitations, must have been made as part payment of the obligor, or some one at his direction, and under such circumstances as to amount to an acknowledgment of an existing liability." Good v. Ehrlich, 67 Kan. 94, 72 P. 545.
See, also, Patterson et al. v. Collier, 113 Mich. 12,71 N.W. 327, 67 Am. St. Rep. 440.
For these reasons, the judgment appealed from and the decree of this court heretofore rendered herein are avoided and set aside, and it is now ordered and decreed that plaintiff's demands be rejected, and this suit dismissed, at its cost.
It is further ordered and decreed that the note sued upon and the mortgage given to secure the payment of said note be and they are hereby declared null and void, and the clerk and recorder of Rapides parish, Louisiana, *Page 969 
is ordered to cancel and erase said mortgage from the records of his office. The right is reserved to appellee to apply for a rehearing.
OVERTON, J., dissents, adhering to original opinion handed down herein.