Court Opinion

ID: 7165070
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:20:11.62408+00
Date Added: 2024-06-11T16:15:30.860552
License: Public Domain

On the Merits.
PROVOSTY, J.
The matter before the court is a third opposition filed in this suit, the suit itself being an executory process. The question is whether the petition of third opposition shows a cause of action. The third opponents are the widow and the daughter of Edw. B. Benton. They allege that their said husband and father put the property against which the executory process has issued — then his, now theirs — in the. name of Jos. D. Taylor, and that the latter, while the property stood of record in his *891name, made two notes, of $5,000, each, to his own order, and by him indorsed, and, to secure, the same, executed on said property the mortgage that is now being foreclosed; that the mortgage notes “were discounted by the said Taylor, or delivered by him to some one to whom he was indebted, and that said notes came into the hands of the Ger-mania Savings Bank or of a Mrs. Alexander, or were under the control of said bank, by which holder or holders the said notes were held until long after they were due”; that the Germania Savings Bank sued out ex-ecutory process on the first maturing of said notes; that the defendant, Taylor, “representing that he was acting as agent and attorney in fact of the plaintiff, Hillard, purchased the two notes from the holder or holders thereof, and caused said notes to be transferred and delivered to the said Hillard through him, and that all of this was done long after said notes were due; that the said Hillard is bound by the knowledge of his agent; that said notes were purchased for a sum far below the amount ostensibly due thereon, and for far less than they would have been worth if they had been good and genuine notes and really secured by the above alleged mortgage, all of which was known to the said Hillard and the said Taylor; that the said Hillard now pretends, by virtue of the above transaction, to be the owner of the said two notes and alleged mortgage, and to be the real plaintiff in the above-described suit, entitled, ‘Germania Savings Bank v. Jos. D. Taylor;’ that said Hillard and said Taylor had complete knowledge that the said alleged mortgage was a fraud and a simulation, and that the said Taylor had had no right to execute the same”; that, notwithstanding the facts above set forth, the said Taylor and Hillard have conspired together to attempt to seize and sell said property in execution of the writ of executory process issued in this case, and have caused the sheriff to seize same under said writ and to advertise, etc.; and that, unless restrained, etc.
The petition contains the further allegation that the property was sold at tax sale-in 1896, and bought in by Benton; that the property was delivered by the tax collector to Benton, who took and had actual possession thereof and lived thereon until his death, in 1897, and that since that time it has been in the possession either of the sheriff or of the executrix of Benton; and that said tax sale has had the effect of doing" away with the said mortgage.
It is further alleged that Taylor has judicially admitted the simulated character of his title.
The date of the execution of the notes and mortgage is alleged to have been Junfe 18, 1902, and the notes are alleged to have been payable in one and two years from their date. The date of the filing of the ex-ecutory process by the Germania Bank on the first maturing note is alleged to have been November 14, 1898. In argument, attention is called to the fact that on the note sued on in the present case there appears an indorsement to the effect that the payment of the note is extended to June 17, 1899; said indorsement being signed by Jos. D. Taylor, and dated just one day before the accomplishment of the five-years prescription of the note.
It will be noted that there is no specific allegation of the circumstances under which the bank or Mrs. Alexander acquired the notes, nor of whether Taylor’s purchase wasi or not in part for himself, or of whether he owns any interest in them. On these essential points the allegations leave the court in doubt. But the court has concluded that, in view of the charges of fraud and conspiracy, the allegations are sufficient to open the door to evidence, and that inasmuch as, under certain phases of the evidence, the third opponents would have a cause of action, the case had better be sent to trial.
*893If the bank acquired the notes before maturity, in good faith, and for a valuable consideration, it held them free from equities; and, in the absence of contrary proof, .the presumption would be that it. so held them. Cochrane v. Dickenson, 40 La. Ann. 127, 3 South. 841; Collins v. Gilbert, 94 U. S. 754, 24 L. Ed. 170; Fairex v. Bier, 37 La. Ann. 824; Saloy v. Hibernia Nat. Bank, 39 La. Ann. 90, 1 South. 657.
Subsequent information of the infirm origin of the notes would not have vitiated the notes in the hands of' the bank, and the bank could convey as good a title as it had itself, and, in order to do so, would not have had to practice concealment, but could do so openly and above board, with full revelation of the facts. The transferee, although fully advised of the original infirmity of the notes, would acquire as good a title as the transferror had. Therefore, unless Hillard was connected with the fraudulent negotiation of the notes, he would acquire from the bank as good a title as it had, even though fully advised either actually by the bank, or presumptively through the knowledge possessed by his agent, Taylor, of the fraudulent origin of the notes. Levy v. Ford, 41 La. Ann. 873, 6 South. 671, and authorities cited at page 879 of 41 La. Ann., page 674 of 6 South.; Howell v. Crane, 12 La. Ann. 126, 68 Am. Dec. 765, and, authorities cited. As a matter of course, the notes would become extinguished by confusion to the extent of whatever interest Taylor might acquire in them, he being the debtor on them.
If Hillard could thus purchase the notes directly himself and get a good title, he could equally well purchase them through an agent, and could employ Taylor as such agent. So long as Taylor acted purely as the agent of Hillard, his acts, legally speaking, would be those of Hillard himself. Such intervention of Taylor might give rise to the inference, as a matter of fact, of his having an interest in the transaction, but could not give rise to a presumption, as a matter of law, of his not being simply an agent whose acts would be simply those of the principal himself.
While the mortgage is negotiable, and follows the note it secures, yet it is not governed by the commercial law, like the note, and does not enjoy the same perfect negotiability. Hence, where the ostensible owner of property has fraudulently mortgaged it, and negotiated the mortgage paper, the right of the real owner to contest-the validity of the mortgage is not to be determined exclusively from the consideration .of whether the mortgage paper was negotiable, and was acquired for value, in good faith, and before maturity, but rather from the consideration of whether, under all the circumstances of the case, he is estopped from so doing. Pertuit v. Damare, 50 La. Ann. 893, 24 South. 681.
The allegations concerning the tax sale show a cause of action of themselves. True, the tax collector’s deed is authentic in the sense that it proves itself, and therefore, under article 174, Oode Prae., requiring a copy of the authentic act on which the action is brought to be filed with the petition, the third opponents should have filed with their petition the copy of the tax deed which they allege is annexed to it and made part of it; but the facts in connection with the tax sale are fully set forth in the petition, and, since these facts are, for the purposes ■ of the present trial, to be taken for true, the court fails to see what useful purpose in connection with the present trial the production of said copy could have subserved. The object of requiring the copy to be filed is to enable the • defendant to know whether the allegations are true (Smith’s Heirs v. Blunt, 2 La. 133); but in the instant case, for the. purpose of the trial of the. exception of no cause of action, the facts are admitted to be true,' hence on the present trial the said copy could subserve no useful purpose. As *895was held in the case of Smith’s Heirs v. Blunt, just cited, the only consequence of not filing the authentic act is that the defendant may refuse to answer until it has been filed. The trouble in the cases cited by the learned counsel for Hillard was not so much that the copies had not been filed, as that the allegations of the petition were insufficient. The court was asked to read the act into the petition notwithstanding that it had not been filed, and naturally refused to do so.
If Benton acquired the property at all at tax sale, he acquired it free of the mortgage, for the tax privilege primed the mortgage,-, and at a judicial sale the property passes free of subsequent incumbrances. The only theory upon which the plaintiff can claim mortgage rights is that the property belonged to Taylor. The moment plaintiff repudiates that theory he goes out of court. Now, on that theory, Benton had as good a right as any one to buy the property at the tax sale. He owed no duty to the holders of the mortgage notes. The debt on them was not his, and the mortgage securing them had been executed as a fraud upon him.
Judgment set aside, exception of no cause of action overruled, and case remanded to be proceeded with according to law.
BREAUX, O. J., concurs in the decree.