Court Opinion

ID: 7181886
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:48:57.699568+00
Date Added: 2024-06-11T16:15:56.510768
License: Public Domain

The judgment of the court was pronounced by
Rost, J.
The plaintiffs sue for the amount of a stock loan made under the provisions of their charter, and pray that the property mortgaged to secure the stock, which is also mortgaged for the loan, be seized in the hands of a third possessor, and sold to satisfy the judgment.* The defendants have not made a serious defence,'but the third possessor has intervened, and opposes the claim: *114of the plaintiffs'on-the following grounds: 1st, That the" parties who mortgaged the property to the bank were not the true owners thereof, and held it under a simulated sale from-one Joseph Nicolas, who had made the transfer in fraud of the intervenor, to the knowledge of the plaintiffs. 2nd, That the bank could not legally take a mortgage to secure a stock loan, there being no power to that effect conferred by its charter. 3rd, That the mortgage is a nullity, because the amount1 of'the loan intended to be secured by it is nowhere mentioned in the act. There was judgment in favor of the plaintiffs against the defendants- and the intervenor, and in favor of one of the defendants against the intervenor, under warrnty of the latter. Erom these judgments the intervenor appealed. It is proved that the-sale made by Joseph Nicolas was originally intended as a power to the purchasers to subscribe for stock in the Union Bank, the vendor being at the time the cashier of one of its branches, and incapable as such to become a stockholder. The-power was used to subscribe for stock in the Citizens’ Bank, and the property was subsequently re-transferred to Joseph Nicolas, in whose possession it was seized and sold under a judgment of the intervenor, who acquired it subject to the mortgages of the bank. In the sale made to him by the sheriff, he binds himself to pay and satisfy “ all privileges and mortgages prior to his own, the said privileges and mortgages to be unaffected by the adjudication.” It is in evidence that the proceeds of the stock loan were either received by Joseph Nicolas, or applied to the payment of his liabilities. The intervenor has failed to show that he was a creditor of Joseph Nicholas at the time of the sale, and that the plaintiffs were apprised of the-r.eal character of the transaction. Had these allegations been proved, it is not perceived how they could avail him in this suit. The plaintiffs were not creditors of Joseph Nicolas. They gave in money the full consideration of the mortgages they took, and. we should judge from the results that they had a hard- bargain. The situation of the intervenor was certainly not made worse by the operation-; he continued to deal with Joseph Nicolas as before, and in such. a. manner as satisfies us that he was aware of what had taken place, and approved of it. He purchased the property with the full knowledge of the claims of the bank, and expressly assumed to satisfy them, and retained for that purpose the whole amount of the adjudication. A question so free from difficulty is seldom presented to a court of justice.
The other two grounds taken by the intervenor, were passed upon by this court in the cate of the Union Bank v. Grice, 2 Ann. Rep. 249, and determined in favor of the bank. No argument has been urged at all affecting the reasons upon which that decision rests.
Under the stipulation of the intervenor to pay and satisfy all mortgages prior to his own, Jean Omer Nicolas, one of the' parties who subscribed for the stock, and1 against whom a personal judgment has been rendered in this suit for three fourths of the claim, has obtained a judgment against the said intervenor for the whole amount thereof. This is an error. The same judgment should have been rendered in his favor under that stipulation, as was rendered against him in favor of the bank. In that respect the judgment must be changed.
It istherefore ordered that the judgment rendered in favor of the plaintiffs be affirmed. It is further ordered, that the judgment rendered in favor of the defendant, Jean Omer Nicolas, against the intervenor, be reversed, and that the said Jean Omer Nicolas have judgment against the said intervenor for three fourths of the amount of the judgment rendered in favor of the plaintiffs, with a stay *115of execution for ninety days; this judgment to stand as an indemnity for the judgment obtained by the plaintiffs against Jean Omer Nicolas, and to be of no effect so far as that judgment is satisfied by the sale of the property mortgaged, or by the intervener himself; the -intervenor to pay the costs of the court below, and those of the appeal to be paid in equal shares by him and Jean Omer Nicolas.

The 11th sec. of the stat. of 1 April, 1833, incorporating the Citizens’ Bank, provides: “ That every stockholder in the said corporation, on depositing and pledging his certificate of stock, shall be entitled to a credit equal to one half of the total amount of his stock.”
The act of mortgage recites that the mortgagees “ ayant souscrit pour deux cent soixantequatre actions do cent piastres chacune, formant ensemble la somme de vingt six millo quatre cents piastres au fonds capital de la Banque des Citoyens de la Louisiane, incorporée par un acte de la legislature, approuvé le promier avril mil huit-cent trente trois ; Eux les dites comparants so reconnaissent, par cos présentes, débiteurs conjoints et solidaires envers la dito banque de la somme de vingt six millo quatre-cents piastres, montant des dites actions; et en garantie de leurs actions au fonds capital de la dito banquo, ainsi qu’en garantie du paiement du capital et des intéréts de I’emprunt qui doit étro levé pour former le capital do la dite banque, pour l’émission d’obligations ou bons qui doivont étre signes par le président et eontre-signés par le caissier de la dite banque, lis affeetent et hypothéquent conjointement et solidairement par ces présentes, en favour de la dite Banque des Citoyens de la Louisiane Ies propriétés suivantos: &c. Lesquelles propriétés resteront ainsi hypotbéquées jusqu’au paiement final, et jusqu’au rachat de tous les dits bons en capital et intéréts, ou jusqu’á co que les dits comparants aient payé le montant de leurs actions et qu’ils aient remboursé l’omprunt qu’ils pourront avoir obtenu, a moins qu’ils n’aient auparavant transferé leurs actions, et qu’ils n’aient été entiéreinent déchargés par la dite banque. Les dits comparants consentent á ce que la presento obligation hypothécaire, donnée par eux en garantió des dites actions et de tons prets qu’ils pourront avoir obtenus de la dite banque, portent intéréts a raison do dix pour cent par an apvés l’échéance, s’ils n’étaient point ponctuellement acquittés, et a ce que les propriétés ci-dessus décrites demeurent également hvpotliéquécs en garantie du paiement des dits intéréts éventuols,” &c.