Court Opinion

ID: 7200797
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:07:50.176968+00
Date Added: 2024-06-11T16:16:31.197119
License: Public Domain

ON APPLICATION FOR REHEARING
MOUTON, J.
Defendant _ executed his note in favor of plaintiff for $600.00, dated April 15th, 1926, payable on or before August 1st, 1926. To secure the payment of that note he delivered to plaintiff his collateral mortgage note dated May 14, 1925, due May 14, 1926.
Plaintiff sued defendant on the collateral security prior to the maturity of the principal or original obligation. Defendant, in his answer, contends, that plaintiff could not sue on the collateral before the first note had matured. We held, in the original opinion, that this defense raised the issue as to the right of action of plaintiff to sue, and was not a plea of prematurity.
When defendant executed his original note, the right of action of the plaintiff sprung immediately into existence, but the right to sue thereon was suspended until August 1st, 1926, when that note matured. If the suit had been brought on that note, which was the principal obligation of the defendant, an exception that it was instituted before the debt became due, would have been one of prematurity, entailing its dismissal under the ¡provisions of Article 158 C. P. The suit was not brought on the principal obligation, but was instituted on the mortgage note for the payment of the collateral mortgage, but prior to the maturity of Jhe principal obligation. Obviously this collateral mortgage was given by defendant as an auxiliary obligation for the enforcement of the principal obligation. C. C. 3136. It could not have the effect of changing the conditions of the main obligation. On the contrary, it must be held that it followed or conformed to those conditions. C. C. 3137. Such being the legal situation, the right to sue on the collateral could spring into existence only when the original became due. As it could not arise until then, the suit on thé collateral having been instituted prior thereto, at that time plaintiff had no right of action at all on the collateral security. Evidently as the collateral was due when suit was instituted no exception of prematurity could be filed against it. It is, therefore, apparent tuat the exception of defendant urged in his answer, was to the effect that ¡plaintiff had no right of action whatsoever to en*245force collection on the collateral, independently of a demand on the original note. It seems to us that it is inconceivable that defendant in giving plaintiff the collateral mortgage in pledge intended to change the date of payment of the original note, thus to allow plaintiff to. sue on the collateral at its maturity, and if the proceeds realized were insufficient, to again permit plaintiff to sue on the original note for the payment of whatever balance might remain due thereunder.
In his brief accompanying his application for a rehearing, plaintiff says, and correctly, that: “A written contract is presumed to express the intention of the parties, and it is the law of the case between the parties;” “that the intention is to be , determined by the words of the contract when these are clear and explicit.” Further, counsel says: “When the intent of the parties is evident and lawful, neither equity nor usage can be resorted to, in order to enlarge or restrain that intent, nor can any law operate to that effect, unless it be some prohibition or other provision which the parties had no right to modify or renounce.” No one will dispute the correctness of the foregoing propositions of law stated by counsel for plaintiff. Let us apply those principles to the ease at bar. In the original note, which formed the contract between the parties defendant obligated himself to pay to plaintiff $600.00 on August 1st, 1926. This agreement embodied the obligation on the part of defendant, to pay said amount to plaintiff, but at the maturity of the note. The words of the contract are clear and explicit, and the agreement made the payment legally ex-igible at the time stipulated, and became the law between the parties.
C. C. Article 1901 says: “Agreements legally entered into have the effect of laws on those who have formed them. They can not be revoked unless by mutual consent of the parties, or for causes acknowledged by law. They must be performed, in good faith.” It is not disputed that the agreement which is evidenced by the note was lawfully entered into, and had the effect of a law between plaintiff and defendant. Under the provisions of that Article ef the Code, it is indisputable that ithe agreement as to the date or time stipulated on the note for its payment could not be changed or revoked, except by the “mutual consent” of the parties thereto. It was clearly the intention of the parties that the note was to be paid at the time fixed for its maturity, when it would become exigible. There is nothing in our original opinion to suggest in the least that we attempted to resort to usage or equity for the purr pose of restraining or enlarging the intent of the parties expressed in the note, as seems to be indicated by counsel in his brief for a rehearing. We grounded ourselves in that opinion on the provisions of Article 1901 of the Civil Code, which pointedly declares that agreements legally entered into, as this one was, constitute the law between the parties, cannot be revoked except by their “mutual consent” and must be performed in good faith. The collateral mortgage note was given in pledge to plaintiff. C. C. Article 3136 reads as follows: “Every lawful obligation may be em forced by the auxiliary obligation of pledge.” Article 3137 reads: “If the principal condition be conditional, that of the pledge is conformed or extinguished with it.” It seems clear that the pledge follows the conditions of the contract it is given to enforce, and as said in Article 3133, it is a contract by which a debtor gives something to his creditor as a security for his debt. It appears quite clear to us that defendant gave the collateral mortgage note as an auxiliary obligation, to secure the debt, and to enforce the original note or principal obligation, as provided for in *246Articles C. C. 3136, 3223. If it was delivered to plaintiff as an auxiliary to. enforce the main note, as it doubtless was, it is manifest that defendant had no intention when the collateral was so pledged, to Change or revoke the date, that is August 1st-, 1926, at which time the original note matured according to its clear ‘and explicit terms. It is not believable that when' he pledged this collateral he intended to confer on plaintiff the right to sue thereon for a collection of his original debt prior to its maturity. It may be that it was acceptable to plaintiff to advance the collection on the collateral security, but the transaction repels the idea that by “mutual consent” defendant had the least desire to give the authority to plaintiff to sue on the collateral for the collection of his debt, prior to the maturity of the original note. As it is evident that defendant never intended to change the date of the payment of his debt as originally fixed, plaintiff had no right to sue on the collateral security before the maturity of the note the auxiliary obligation was given to enforce. To hold that he could, would be in violation of the plain provision of Article C. C. 1901, which in its concluding part says, that agreements between parties which is a law unto them, “must be performed in good faith”.
Counsel refers us confidently to Hollingsworth vs. Ratcliff, 162 La. 281; 110 South. 422, in - contending that if defendant intended, when he delivered the collateral to make its terms of payment conform to the date of payment of the. original note, that in endorsing it, he • should have extended the -payment' thereof to August 1st, 1926, the term of maturity of the original note. In the casé cited, the Court said that the extended payment entered on -the note by the maker had the effect of preserving its negotiability, although: the date of its maturity; had passed. . When defendant. delivered the collateral, there is ■ no proof to show that it was past due, and had to be endorsed to preserve its negotiability, and which defendant was not called upon to do in order to preserve the negotiability of the note as against himself. The principle announced in the case above cited does not apply to this case.
The term of payment in the original note was fixed by virtue of a contract which is founded on a natural right, and which is recognized by positive law under the provisions of Article 1901 Civil Code. The right given the pledgee creditor to sue on a collateral security is the result of an arbitrary enactment. If there arises any conflict on the application of these two Articles of the Civil Code in determining the rights of the parties in a case of this character, it seems to us the provisions of Article 3170, giving to the creditor the right to sue on the pledged note should yield to Article 1901, which is founded on equity and justice. As we have, however, stated originally, we are of the opinion, that the right to proceed on a collateral by the pledgee applies to cases where third (parties are affected, but not to a case like the one at bar, where the debtor has given to his creditor a collateral in pledge to secure his debt, which is an auxiliary to enforce the main obligation.
For the foregoing reasons the rehearing is refused.