Court Opinion

ID: 7168288
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:23:36.049855+00
Date Added: 2024-06-11T16:15:38.173436
License: Public Domain

*341On Rehearing.
BREAUX, O. J.
This is the third time that this cause is before us. On the first appeal, the court discussed the different points presented on exceptions, and unanimously overruled the decision of the lower court and remanded the case. Same title as above, 122 La. 156, 47 South. 449.
On the second appeal, this court unanimously decided the main issues presented, and remanded the case for trial on different questions stated in the decree.
Both plaintiff and defendant complained ■of the judgment.
The court arrived at the conclusion that the whole case should be reopened and a full rehearing granted.
On this rehearing, defendant presented in argument a new point, not heretofore argued, and not even passed upon, and this new ground was never pleaded, except on the rehearing. This new ground is stated infra.
This court has repeatedly decided that issues must be timely filed, and that questions ■settled will not be reopened, and they are •considered settled, unless the issue is timely urged.
There are a number of decisions upon the subject.
Quite recently this court held substantially that questions decided between the same parties regarding the same thing, after full consideration in all the aspects presented and embracing all the issues raised, are conclusive; that cases will not be reopened to consider issues not previously pleaded and argued. Succession of Turgeau, 58 South. 497,1 handed down April 8, 1912. See, also, Boisse v. Dickson, 32 La. Ann. 1150; Paland v. Railroad, 44 La. Ann. 1006, 11 South. 707.
The Supreme Court of the United States expresses similar views upon the subject. See Clark v. Keith, 106 U. S. 464, 1 Sup. Ct. 568, 27 L. Ed. 302; Illinois v. Illinois Central, 184 U. S. 77, 22 Sup. Ct. 300, 46 L. Ed. 440.
[16] When the case was argued orally the last time, we were requested to go over the issues argued; otherwise an error would remain not reversed. We finally concluded to reconsider the issues, both those decided and the new point argued for the first time on the rehearing. The new point urged for the first time on rehearing was that the amount with which the $8,750 note was taken up was furnished by the bank, and that in consequence the bank was subrogated to the rights of the holders, Milliken & Ear-well; in other words, that it was a payment by the bank with legal subrogation. At the beginning of the discussion, we state that which will not be denied: That it was certainly not a conventional subrogation, entered into between the bank and Milliken & Earwell; for the bank had nothing to do with that firm. There was no payment made by the bank to that firm. The bank negotiated exclusively with George Louque, who was not the agent of Milliken & Farwell, who had naught to do with nor for them; he was only the debtor of this firm of Milliken & Farwell, and was, doubtless, anxious to pay the amount due them and save his place from seizure and sale. There was no way of obtaining subrogation, except by a transfer by Milliken & Farwell to the bank. Louque was a third person; he had no interest to transfer. At this point this question occurs to us, Who transferred the note to the bank? Not Milliken & Earwell; for they knew nothing of the bank’s interest in the matter. The certified check held by Louque was handed to Milliken & Farwell, and they handed him the note. The negotiation was entirely between Louque and the bank. Louque personally bore no business relations *343to the bank, except, as a member of the firm of George A. and W. N. Louque, was its debtor. It remains that one cannot pay his own note and immediately thereafter subrogate his creditor to the note. There is no authority for 'holding that if a party to an instrument “pays it he can show that he was the secret agent.” Louque was not even the secret agent of the bank, or of any one else. Secret agencies are not favored in commercial law; Louque was not even a secret agent. Daniel on Commercial Instruments, pp. 245, 246, 222, citing many decisions in support of the text.
The one who furnishes the money to take up the note must show that, directly or through an agent, it was taken up by him; that he paid it and became subrogated to the creditor.
Under our Code, a creditor who pays another, whose claim is preferred to his by reason of his privilege of mortgage, is subrogated. Civil Code, art. 2161.
The difficulty which confronts the defendant at this point is that the bank, creditor of George Louque and brother, did not pay Milliken & Parwell, creditors; but in reality it handed the amount to Louque.
At this point, in view of the importance of the issue, we determined to take up the particulars and details of the case.
Chas. A. Parwell, a well-known business man, who certainly knew the difference between the payment and the transfer of a note with subrogation, swore “that note [referring to the $8,750 note in question] was paid on the 24th day of February, 1896.”
The note and interest at the date it was paid amounted to $10,889.88.
Louque took up this note with his certified check; i. e., certified by the Bank of Commerce. He delivered the check to Par-well. Had the bank intended to take up the note, it would have used its own assets to effect the payment, and would have paid with its own check in favor of the creditors of Milliken & Parwell.
Philip Schumaker testified that he said to George A. Louque at the time he found it strange that the bank certified a check for his personal account; he having no funds in bank. 1-Ie said “he would have made arrangements on the check,” referring, as we take it, to the mortgage for $15,000.
George A. Louque’s account was closed entirely with the bank. He did not owe it anything. It was different with the firm of Louque & Louque. He met Louque afterward, who said to him that he had “paid his last mortgage note.”
Now, as to the' indebtedness of the firm of George A. Louque and W. N. Louque to the Bank of Commerce, it was, this witness testified, $4,000 or $5,000; i. e., an overdraft in that amount.
De Blanc, cashier, testified emphatically that the note was paid, and that it never was considered part of the assets of the bank, as the overdraft of George A. and W. N. Louque was covered by the mortgage note of $15,000, and not by the $8,750 note. De Blanc swore:
“But I remember when Mr. Nicholls handed me the note he said: ‘There, take that note; that note is paid.’ And I took it and put it on the file on my desk.”
The following question was propounded to him:
“Q. Why did the bank lend George Louque the money that you speak of and receive the $15,000 mortgage notes?
“A. To pay the mortgage on the plantation, the balance due on the plantation on the first mortgage; to wipe it out [that was the $8,750 vendor’s mortgage] ; and to secure the bank, also, for the overdraft of George A. and W. N. Louque, referred to above. These notes were sufficient to cover these two.”
Furthermore, he was asked:
“Did you have any security for the Louque overdraft in addition to the $15,000 mortgage notes?
*345“A. There were some rent notes of a man named Margot.
“Q. Do you remember the amount of those rent notes?
“A. In the line of a thousand dollars; I don’t remember the figures.
“Q. Then, with the $15,000 mortgage ■ notes, as a good mortgage, and a thousand dollars of Margot’s notes, the bank was absolutely secured?
“A. Absolutely secured for every cent.”
He adds that he and President Nicholls often spoke of the matter. Furthermore, he testified that the $10,889.88 cheek, before referred to, was his personal check on the Bank of Commerce, certified to by the bank, made payable to Milliken & Farwell. It was to clear that plantation. The check was charged to the individual account of George A. Louque.
Cashier De Blanc further testified that he gave directions to Bourgois, the bookkeeper, to note on the ledger:
“Secured by mortgage notes of $15,000.”
As cashier, he kept the $15,000 mortgage notes in the portfolio of the bank, and he put the $8,750 note—
“on a clip that I had on my desk to have that mortgage [that is, the mortgage for $8,750] canceled at some future day; to send it up to Jefferson parish and have it canceled.”
Asked why it was not canceled, his answer was:
“It did not bother us any. We had the note; knew it was paid; knew there was nothing on that plantation except the $15,000 mortgage notes, which we held; and we did not worry about it.”
Further questioned:
“The security to secure these accounts of the Louques that you have testified to of George A. Louque and George A. and W. N. Louque, you held the $15,000 mortgage notes and the Mar-got notes for approximately $1,000?
“A. Yes, sir.
“Q. And you say that was abundant to protect the bank against the Louque indebtedness?
“A. Yes, sir.
“Q. Mr. De Blanc, did this note of $8,750, which George A. Louque paid to Milliken & Farwell, figure upon the books of the Bank of Commerce at all?
“A. Not at all.
“Q. Did it figure upon any of the books of the Bank of Commerce?
“A. Not a 'book in the Bank of Commerce.
“Q. Was it regarded by the bank officers as an asset?
“A. No, sir. We did not consider it anything. We just had it as a memorandum. We thought we would use it later, or just to cancel the mortgage. That was all we wanted it for.
“Q. Who kept the credit discount ledger or the note book?
“A. I did.
“Q'. Who made the entries showing the notes tha.t were discounted?
“A. I made them.
“Q. Who made the entries in the book showing what collaterals the bank held as security for debts due it?
“A. I did.
“Q. Are you positive that this $8,750 note never figured upon the books of the bank?
“A. Yes, sir; I am positive.
“Q. Did the $15,000 mortgage notes figure upon the 'books of the bank?
“A. Yes, sir.
“Q". As what?
“A. As collaterals to notes.
“Q. Now, to what notes were they collateral, and what were the circumstances under which the notes were given, if they were given?
“A. They were collateral to two notes, one of George A. and W. N. Louque for the firm’s overdraft of $4,000 or $5,000, and the other for George A. Louque’s individual overdraft, as it reads altogether of $8,750, plus interest, $10,-889.38.”
This is corroborated by the figures in the quarterly statement of the bank, published by the Picayune at the time, to which the witness referred while testifying.
This witness also explains why it was that the note of George A. Louque for $10,889.38 was pledged to the Clearing House:
“There was a financial panic; it was in 1896, the year the Bank of Commerce failed. We pledged the note of George A. Louque, and with it we pledged the $15,000 of mortgage notes. I refer to the note [pledged] of George A. Louque.”
Witness further states that the bank held a note of George A. Louque for $10,889.38. On the reverse of the note was the indorsement:
“This note was secured by fifteen-thousand dollars of mortgage.”
In 1897 George A. Louque made a dation en paieinent to his wife of Lafreniere plan*347tation. At the date of the dation en paiement, the note was secured as to its payment by mortgage and vendor’s privilege on the plantation.
Mr. Charles A. Louque, a well-known- attorney, testified as follows about the $8,750 note:
“In order to facilitate his raising the money for the purpose of taking up the vendor’s lien note, which was then due, he [George A. Louque] executed a $15,000 mortgage note. Now, there was reported this affidavit that he made in favor of his wife; and, in order to make this mortgage a good mortgage, it was necessary for Mrs. Carmelite Louque to come and renounce all her paraphernal rights in the mortgage, which she did, although she was not exactly willing to do it. I had to explain to her that this mortgage was then a second mortgage; but I understood that it was made for the purpose of taking up and paying this Milliken note, and if she did not renounce her rights that they could not raise the money, and that this vendor’s lien note was ahead of her anyhow, and they would seize and sell the plantation, and she would lose her claims and rights, and thereupon she signed this mortgage. ‘She intervened in the act and signed the mortgage.’ She renounced her paraphernal rights in order to enable George A. Louque to raise the money to pay the Milliken note. She knew the amount of the note at the time.”
Thus it appears that from the first the understanding was that payment of the note was the purpose, and that understanding was consummated.
Questioned, he answers:
“Q. Do you remember anything about Mr. Nicholls stating to you that he would give them any additional amount for the purpose?
“A. No, sir; no additional money [he could not increase the overdraft before mentioned]. He never said anything like that. He said he would help them to take up the note if George A. Louque gave him that mortgage.
“The idea under which Mrs. Carmelite Louque signed this mortgage, which was a second mortgage (it was subsequent to the vendor’s lien note) was that this second mortgage was to be used for the purpose of taking up the other note [the $8,750 note], secured by vendor’s privilege.”
We will here state that Mr. Henry Daspit, an expert accountant, swore that the $15,000 notes, as found in the portfolio, were held by the bank as collateral, and that the note for $8,750 was not a part of the overdraft; nor was it held as a collateral against the overdraft. Again, some time in the early part of the year 1896 (President Nicholls of the bank testified)—
“Messrs. Louque, doing business with our bank,, were being pressed for payment by Mr. Richard Milliken, the holder of the vendor’s note on the Lafreniere plantation, and came to me for advice. I advised them to place an additional mortgage on the plantation for a sum sufficient to paj' the vendor’s lien and other indebtedness of theirs. They did put a mortgage of $15,000.”'
The Messrs. Louque, above referred to, were partners of the firm of W. N. and George A. Louque, the debtor to the bando at that particular time — a debt on an overdraft of some $4,000, which the bank wished to-secure, and which was afterward secured by the bank holding the $15,000 notes, which had been obtained as above stated. (Italics ours.)
[17] The partnership of Louque & Louque was a separate entity — distinct from George A. Louque, one of the partners. The creditor of Louque & Louque could not become subrogated to a claim due by George A. Louque personally.
If the bank had been a creditor of George A. Louque, it might have paid his debt and become subrogated to the right of the creditor, Milliken & Farwell;' but the bank as a creditor of Louque & Louque could not acquire a personal debt of George A. Louque with subrogation. The parties are different.
The following is, as we think, unanswerable:
George Louque was not the debtor to the bank, but the firm of W. N. and G. A. Louque.
The president of the Bank of Commerce, defendants’ witness, testified that—
“the batch of notes was placed in the hands of the cashier of the bank to secure the indebtedness of the Messrs. Louque.”
The “Messrs. Louque” were the two partners before named. George Louque’s ac*349count with the bank had been closed for some time. He was not personally responsible for the overdraft held by the bank.
Schumaker, the paying teller, testified, and his evidence is:
“His account was closed in 1895; and after his account was closed there never was an account opened for him.”
Legal subrogation takes place for the benefit of the creditor. As the bank was not the creditor of G. A. Louque, it did not become legally subrogated.
The partnership (the bank’s debtor) was a separate entity from that of the partner personally.
The members of the firm and the firm are not the same. This court said, in Pike Bros. & Co. v. Hart & Hebert, 30 La. Ann. 868:
“The ideal thing, the partnership, is perfectly distinct from the individuals who compose it, and may have — indeed, always have — properties, rights, and obligations equally distinct that the law recognizes.” O. O. arts. 2856, 2858, 2859.
In the Succession of Pilcher, 39 La. Ann. 364, 1 South. 929, the court said:
“The partnership is a moral being, distinct from the persons who compose it, not alone as regards the ownership of the partnership property, but as regards the creation of and liability for the partnership debts.”
The court cited various cases in reaching this conclusion, and said, in the case of Smith v. McMicken, 3 La. Ann. 322:
“The partnership once formed and put into action becomes, in contemplation of law, a moral being, distinct from the persons who compose it. It is a civil person, which has its peculiar rights and attributes. Hence the partners are not the owners of the partnership property. The ideal being thus recognized by a fiction of the law is the owner; it has the right to control and administer the property, to make it fulfill its legal duties and obligations, and the respective persons are but owners.”
It being very evident that it was the indebtedness of the partnership, a different person from the partner, the bank did not become the transferee of the note with subrogation. There was no agreement about taking up the note. The weight of the testimony is: It was paid (subrogation is a fiction, and, as it is a fiction, there must be an article which authorizes it, and it arises only under the condition determined by law). See text, Laurent, p. 450, vol. 23.
The condition determined by law is that the one by whom the debt is paid is a creditor of the debtor whose debt he paid. O. O. art. 2159.
There is other evidence; but we will stop here.
Against all this testimony, the contention of defendant is that George A. Louque wrote a letter to Stuyvesant Fish, president, in which he acknowledged his indebtedness on the $8,750 vendor’s privilege note.
At this point we will mention that in the year 1897 George A. Louque had made a dation en paiement to his wife. Lafreniere plantation, for valid consideration, had become her property. Subsequently, when George A. Louque wrote the letter, he had parted with all interest in the property. He, although not the agent of his wife, wrote to President Fish, soliciting time and asking that the property be not sacrificed by a sheriff’s sale in foreclosure proceedings. He chose to refer to the $8,750 note as secured by vendor’s privilege on Lafreniere, as well as the $15,000. The note was due, he in substance said.
At the time that the letter was offered in evidence, written by one who had lost all interest in the property, written by plaintiff’s husband, objection was urged to the admissibility of the testimony, on the ground that it was the letter of the husband. The objection was overruled in error, and the testimony admitted. To this letter, if it amounts to anything, no effect can be given.
Conceding for a moment that the letter was admissible in evidence: Between this letter of the nervous debtor, Louque, at that *351time doubtless anxious to protect bis wife’s place, wbicb had become hers under the circumstances before stated, with the understanding that the renunciation of her paraphernal rights in the mortgage in question was given as before stated, and the unbroken line of testimony, which we have in part reproduced, we must adhere to the view unanimously reached.
Lastly upon the subject, as absolutely confirming our view, at the time that the check was certified by the bank, who handed it to Louque, the amount was assigned to the credit of Louque to pay the check.
Louque, in handing his check to Milliken & Farwell, gave them the right to collect this amount placed to his credit.
The payment as made precludes the idea of subrogation.
The next point we have considered relates to the occupancy of part of the land for railroad purposes. One of the purposes, we take it, in first buying the notes and afterward in becoming adjudicatees at sheriff’s sale was to extend the railroad across Lafreniere plantation. In other words, for railroad purposes.
Plaintiff’s very earnest contention is that defendant had acquired no right to this land, and must now deliver the place as a trespasser, without right, because a trespasser.
In addition to the views heretofore expressed upon the subject, we reiterate that defendant should not be treated as a trespasser. It must be remembered that the issue is exceptional. Let us consider for a moment one of the views that may be considered in deciding the case. A in good faith sells a tract of'land to B, a vendee in good faith. After a time A discovers that there was no legal sale. He institutes suit for the property. B is condemned to return the property and A the price. B, being a vendee in good faith, claims the improvements. It happens that, owing to B’s occupancy, the improvements are worth hundreds of thousands of dollars, but worth the amount to him personally. If B’s claim for the value of the improvements were allowed, B would be at the mercy of A. A would be entirely unable to pay so large an amount for the improvements on the strip of land. In this instance, the length of the strip of land occupied by the railroad measures about 17 acres. Who, save the railroad, would wish to own 17 acres of railroad improvements? It would be of no value to him, although very valuable while forming part of a system.
The owner must look to the value of the property, and not to the property itself.
From Elliott we glean: Where it has constructed its road in good faith, without opposition by the owner, under color of title, it (the railroad) remains in possession. Elliott on Railroads (2d Ed.) 1058.
Plaintiff seeks to be relieved by contending that she did not know that the property was in the possession of the railroad. Her position in this respect is not sustained by the facts. She knew of the sale, and only realized some time after its date that she had a title. The case, instead of being different from those to which the statutes are intended to apply, falls within their provisions.
In regard to her knowledge of defendant’s possession, we will state, in passing, that her brother-in-law, W. N. Louque, said to her in 1899 that the place had been sold. Hr. Pomes, an attorney at law, says, in substance, that she became aware of the sale some time after it had been made. With that knowledge, she cannot be entitled to the property and improvements without paying anything for the improvements. They were made without the least objection. It would be receiving property without the least consideration.
At this point we will notice, as relates to defendant, that it pleads the prescrintion *353of one and two years. The question is one of title as relates to all property save that which has been taken possession of by the railroad for railroad purposes. The whole plantation cannot be subject to that prescription. As to the right of way and the prescription pleaded by defendant, the prescription cannot be of any avail; for there were no expropriation proceedings. This court has decided that prescription applies only in executory proceedings. Amet v Railroad, 117 La. 455, 41 South. 721.
As relates to good and bad faith, another issue; Learned counsel for defendant argue that good and bad faith are not issues in this case; that good faith arises in case of revindication against a claim for the property.
If it had been taken in bad faith, it might not be subject to the protection of the different statutes referred to above. But one is in bad faith who assumes to be the owner when he well knows that he has no title to the thing, or that the title is defective. Civil Code, art. 2432.
That knowledge has not been traced to the defendant that we have been able to find. There is no bad faith in fact, and no application for technical bad faith, as it is not shown that defendant was aware of any defect in its title. Good faith is always presumed. The error was one of fact, and not of law. Defendant’s agent evidently thought that they owned a good and valid note, although past due.
As relates to the time at which the value of the property should be fixed:
We have not found it possible to fix any other time than the date hereafter stated in the decree.
The defendant and appellee, on the other hand, asks that the decree be enlarged as relates to drainage. We leave that question to bo determined with other questions hereafter. We will state, none the less, that we adhere to the view that the railroad’s possession includes the ditches on each side necessary to drainage, as decided in Moore v. Railroad Co., 126 La. 840, 53 South. 22, cited by defendant.
We would be pleased to terminate all the issues at this time; but the facts before us, taken as a whole, do not justify our extending our decision further.
As the majority of the court are divided in opinion as to the reconventional demand of the defendant based on the mortgage, of date January 2, 1896, for $15,000, executed by George A. Louque on the Lafreniere plantation, whatever rights the defendant may have in the premises will be reserved.
It is therefore ordered, adjudged, and decreed that the judgment below be reversed; and it is now ordered, adjudged, and decreed that the judicial sale of the Lafreniere plantation, made in August, 1898, in the executory proceedings entitled “Hunter C. Leake v. George A. Louque,” No. 530 of the docket of the district court for the parish of Jefferson, state of Louisiana, be annulled and canceled on the records; and it is further ordered and decreed that the plaintiff, Mrs. Carmelite Pons, is the lawful owner of said Lafreniere plantation, as described and sold in said executory proceedings, subject to the reservations hereinafter set forth in this decree.
It is further ordered and decreed that defendant’s right to retain possession of that portion of said plantation actually used and occupied by defendant, at the date of the institution of this suit, for necessary railroad purposes be recognized and enforced, on the condition, however, of paying to the plaintiff the market value of said portion, as of date August, 1898, with legal interest thereon from said date until paid.
It is further ordered that the right of defendant be reserved to recover the enhanced value of the remainder of said plantation *355that may have resulted from any improvements and betterments thereon made by said defendant.
It is further ordered that the defendant’s reeonventional demand for $15,000 be reserved for future adjudication.
It is further' ordered that whatever rights the plaintiff may have to recover rents and revenues be also reserved.
It is further ordered that our former decree, as thus amended, be made the final judgment of the court, and that this cause be remanded for further proceedings according to law and the foregoing provisions, and that the defendant pay costs in both courts.
SOMMERVILLE, J., takes no part.
See dissenting opinion of PRO VO STY, J., 59 South. 735.

 130 La. 650.