Court Opinion

ID: 7192664
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:59:02.281247+00
Date Added: 2024-06-11T16:16:14.078573
License: Public Domain

On the Merits.
We think proper to premise that, although it is admitted .that the State has-filed an intervention, we have failed to discover it in the transcript. It was agreed, however, that the defenses raised against the plaintiffs would be deemed as urged against the State. , ,
From the lengthy and elaborate answer of the defendant and the-oral and printed arguments, all of which strenuously deny any liability either to the concern or to the State, the main defenses may be considered as being;
- That -the claim is prescribed; that the debt was novated and the mortgage-extinguished; that, by the payment of certain instalmentslevied under the Act of 1847, the stockholders were completely discharged; that each stockholder can be held only for his share of the debts of the Association and not for the delinquency of other stockholders or- deficiency of the.property mortgaged; that this proportion should be computed on the original 6,000 shares subscribed ;■ that not more than five per cent, can-be claimed on arreared contributions; that the stockholders have a,right .to pay such proportion in *429anjr bond issued by the State, under the Funding Act of 1874, or the Constitution of 1879, that is,.$60 for $100; and upon so doing, that, they are entitled to.a discharge from all indebtedness and to a cancellation of the mortgage.originally consented on their property, solely for the eventual payment of the shares subscribed for, and in no way. for that of the bonds issued by. the State. ...
The demand and the defenses being stated, the merits must now !>e inquired into. ......
The corporation having failed .to raise.the capital necessary for its ■ banking operations by the negotiation of its bonds, which were authorized to be issued by the act of incorporation of 1827, the State; became a stockholder, and under the Act of 1828, .uttered her own-bonds, acknowledging therein an indebtedness to the corporation, by. whose endorsement, they were to be transferrable. The officers of the corporation endorsed the bonds, with a stipulation of its liability, therefor, disposed of them, received the proceeds and applied the qame to its purposes. The.payment or reimbursement of those bonds, was secured by a pledge of all the assets of the corporation, including the mortgage consented,by the stockholders to make certain the pay-ment of the shares subscribed for by them. The payment of those bonds, was, from time to time, extended. .A largo number of the same-was funded under the Funding Act of 1874.by. the holders, who, upon, receiving from the State other.bonds of hers in discharge-of their claim against her, ceded and transferred unto her all their right,.title, and .interest in and to the same and to the securities guaranteeing the. payment or reimbursement thereof, fully subrogating the State thereto,.
■ The State then became a creditor of; the concern for the amount of the bonds funded, or, at least, for the amount of the bonds given inpjaee thereof, acquiring, both by conventional and legal subrogat-iou,' all.the rights which the. holders of the funded bonds could have exercised against the Association to coerce payment..
It is not correct to say that it was essential for the State to have-paid in money the bondholders, in order to be subrogated by them to their rights. It was optional with them to accept either money, or any other valuable consideration for the cession and subrogation. The transfer could have taken place even without any consideration. The. cession, transfer and subrogation could have been made as a benevo-: l.ence, or as a gratuity.
But it was not necessary that there, should be any conventional subrogation. As the concern was bound for the payment of the bonds with the State, or the State was liable with it and /or it,.the $tate had-an interest to acquit or.discharge the debt as far as she was concerned,- and she could do so on terms acceptably to the holders and most suit-, *430able to her interest. She obtained thereby her release from the hold" ers, with a curtailment of 40 per cent, on the dollar. Whether this partial release accrues to the benefit of the State alone or to that of the concern also, is a question which is not presented in this case, and which does not require a decision presently. It will be time to determine it when the issue will be properly submitted.
It is for the purpose of meeting the indebtedness in favor of the State, as also of paying what unfunded State bonds may exist, that the contributions, particularly that of $40 per share, have been raised.
The liability of the Association for the payment of the bonds of the State was constantly acknowledged by it. It was recognized in the Forstall case, lately decided, 34 An. p. 770, O. B. 56, fo. 1032. That acknowledgment concludes absolutely both itself and the stockholders. It cannot, therefore, plead an extinction of it, either by prescription, novation or otherwise. Its liability therefor is commensurate with that of the stockholders, which extends ratably to the amount of their subscription for stock, secured by mortgage on tlie property subjected, thereto, or so much of said subscription as may be necessary to satisfy the liability for the bonds. 18 An. 310; 24 An. 405.
The right of holders for payment was declared1 to be imprescriptible, the State not being suable. 30 An. 611. The obligation of the Association, whatever it was, to discharge the obligations which the State had incurred for its benefit, was co-extensive with the responsibility of the State. The securities guaranteeing the fulfilment of that obli - gation have continued unimpaired, unless prescribed, and will so remain until the liability secured shall have been satisfied.
The defense, as against both the plain tiffs and the State, that the latter is no creditor and that no call can be made to pay a debt which has no existence, would have been formidable, indeed, destructive of the action, if founded j but such is not the case.
It is undeniable that, in 1850, when lie purchased from the Mechanics’ & Traders’ Bank the property on which the mortgage is claimed, the defendant acquired, at the same time, the twenty-two shares which had been previously bought from Widow Duplessis, an origiual stockholder, and that he assumed, or took the reversion of the mortgage given by her to secure the payment of that stock, then valued at $500 per share, $11,000 in all. In 1850, the defendant then stood in the same condition as Mrs. Duplessis, vested with the same rights and subjected to the same obligations.
The history of the Association, the object, tenor and character of its charter, the vicissitudes through which its stockholders, its creditors, the State have passed, the tale of its protracted and onerous liquidation are familiar to the jurisprudence of this State. In some twelve *431cases has the highest Court had. occasion to consider the same. 2 An. 1012, 776; 3 An. 552; 7 An, 319; 10 An. 591; 24 An. 519; 27 An. 535; 30 An. 611, 980, 1151; 34 An. 770, O. B. 56, fo. 1032. The legislation concerning it covors no less than sixty-five pages of the statute books.
It is needless, therefore, to enlarge what has already been said on the subject. It suffices, for the purposes of this case, to know that the Association has long since ceased to be a going institution, and that the liquidation of its affairs was entered upon. The corporation ceased, business, but it never disbanded. It continually remained under the charge and administration of officials recognized by law.
In order to accomplish the liquidation it was necessary, on the one hand, to ascertain the debts and liabilities, the assets and resources, and on the other, in the event of deficiency or deficit, or, in other words, of inability to pay, or insolvency, the right accrued to collect, without obstruction from the stockholders, contributions wherewith to meet the indebtedness of the concern. 9 An. 265, 341.
It is important to note that the mortgage originally consented was furnished to secure the payment of the value of the stock subscribed for, and also to secure the payment of the bonds to be issued by the concern at 5,10 and 15 years, for the purpose of raising the capital necessary for banking operations. It was on the failure of the institution thus to raise the capital that the State, becoming a stockholder in 1828, issued her bonds, the payment of which, 'fixed to June, 1843, became secured in the manner indicated by Act No. 19 of that year.
In 1830, the legislature granted two years after the expiration of the charter in 1843 to close the affairs of the Association. In 1835, the payment of the bonds of the State was postponed to June, 1848. In 1843, the assets of the Association were taken possession of by the State, so to remain nnder her management until final payment of all the bonds issued by her in its favor. In 1847, the bonds were extended 6, 9,12, 15 and 18 years, and a contribution was authorized to be raised, sufficient to meet the obligations df the State, to be divided into instalments running from one to seventeen years.
In 1853, by Act 113, the president and directors, constituted in accordance therewith, became and remained the sole liquidators, representing both the corporation and the State, and as such were entitled to the possession and exclusive management of the assets and affairs thereof.
In 1866, the legislature authorized a further postponement of the payment of the bonds of the State for ten years and a prolongation of the liquidation of the concern until the maturity of the bonds thus extended.
A careful and attentive survey of the whole legislation, however *432obscure,- on the subject of this Association, satisfies the mind that the right-of action against the stockholders for tlie payment of their shares in whole or in part, was not an absolute, unconditional one, but an eventual one, not to arise unless in a contingency, a deficiency in the assets, an inability to pay, until a call for that purpose liad been actually made. Hence, that right accrued only the moment the assessed instalments matured, and becoming exigible-, were demanded.
The contribution called for in 1847 was of $6 per share, during 17' years. The defendant has paid all, up to 1860, but-since has failed to pay any. He pleads prescription iu- defense.
' The proposition is unwholesome that prescription does not ruu on money claims of the description of those sued on against corporations, whether going or not.' It is only where the claim has not ripened by the happening of a contingency, in contemplation for its maturity, that prescription does not run. ' J
The initial point in this case, when prescription began-to run, was not precisely the-happening of the contingency which-justified-tile call for a contribution, but was the-oall itself. - '
The payment of the obligation of the stockholders to the Association was secured by a mortgage and not by a pledge. It is the payment or reimbursement-of the bonds of the State that was secured by a pledge. Hence, the stockholders can plead prescription against the Association, while that defense cannot be set up against a claim of the bondholders, pr of the State, although the pledge may itself be destroyed by prescription.
: This suit is not by a bondholder, or by tlié State subrogated, but by the Association for a partial payment of the shares secured by the mortgage. A pledge, keeps a debt alive, a mortgage does not.
• It does not appear that the stockholders have ever assumed the liability of the -Association or have, at any time, consented that their obligation in its favor and the mortgage guaranteeing it, be pledged to secure it. Whatever the effect-of the pledge may be as to-the Association, it cannot prevent the stockholders fi-oni pleading prescription against'the-Association, when it seeks to enforce payment of the obligation pledged as a security for its-debt.
- Prescription proves destructive of money claims-owned by married women, minors and interdicted, persons, the responsibility for permitting their extinguishment resting on the person who could have interrupted and prevented it from accruing and who did' not do so. There is no reason why that mode of extinguishing' obligations owned by corporations should not also prevail, in the absence of any statute of immunity taking them out of the rule governing such cases.
The liquidators should -have brought suit, on the- failure of the *433defendant to respond, for the recovery of the contributions raised under the Act of 1847, or, at least, before prescription could have extinguished the right of action. This suit was instituted in 1881, far jnoi'e than ten years after the maturity of the last instalment in 1865. 3 An. 181; 9 An. 342; 13 An. 259. Whether the action was prescribed by five years it is not necessary to decide, as it was surely extinguished by the lapse of ten years.
The suit for the five instalments, ending in 1865, must then abate in favor of the defendant.
It now remains to be determined whether the plaintiffs can recover the contribution of $40 per share, assessed under the Act of 1878.
That contribution is nothing but a part of the original debt contracted for the purchase of the shares, the payment of which was secured by conventional mortgage. The debt contracted was the value of the shares, which was to be paid at no specified date, but eventually ouly.
In Clinton & Port Hudson R. R. Co. vs. Eason, 14 An. 876, although the plea of prescription was not sustained, the Court considering and discussing the very question and reviewing the previous ruling in 3 An. 181; 9 An. 342; 7 An. 116; 13 An. 259; 12 An. 528, announced the doctrine, that where the liability of a stockholder, in an incorporated company, on a mortgage given to secure the subscription to the capital stock depends on a future contingency, prescription does not begin to run unless that contingency has happened, which was to make the payment of the subscription demandable. We concur in that proposition, which we consider well founded in law.
In the present instance the contribution of $40 was called under the provisions'of the Act of 1878, and five years have not since elapsed.
We will now proceed to consider summarily the other defenses, some of which could be considered as inconsistent and self-destructive.
That of novation is not sustained by the evidence. The debt of the defendant to the Association is, in nature, what it was when Mrs. Duplessis incurred it. It has not, in the least, been since changed or modified. This defense was rather designed to defeat the indebtedness to the State, but it cannot avail. The giving of new bonds in place of the old ones, although it discharged the liability of the State to the bolder, was not destructive of the rights of such holder against the Association, rights which the State acquired, as was already said, both by a conventional and by a legal subrogation.
The defense, if of any force, that the payment of all the instalments under the call made in 1847, operates as a discharge for the surplus of. the subscription, cannot avail the defendant, as he has not paid them.
*434That lie is relieved by prescription from paying the contributions claimed is not an equivalent for payment. Prescription is not the coin recognized by creditors for the satisfaction of their claims. It is not money.
The defense touching the quantum of liability, on the assumption that it could relieve the defendant* cannot be inquired into, in the absence of evidence to substantiate it.
There may have been and, no doubt, thei’e has been for a series of years, a deplorable maladministration of the affairs of the concern, but, at this late hour, the tardy complaint of the defendant cannot relieve him. He was not without remedy. He does not appear to have exercised any right, or sought any relief. For having slept on his rights, he can blame no one but himself. 6 An. 457; 7 An. 114; 9 An. 341.
• The evidence does not show that the contribution of $40 is not what it should have been, or that it is excessive. 25 An. 136.
The defense touching the rate of interest is well founded. There is nothing in the record to show' that a higher rate than that allowed by law was ever agreed to by the stockholders. The charter and the acts subsequently passed are absolutely reticent on the subject. To such effect was a previous ruling. 10 An. 611.
The last defense, as to the mode in which the obligations of the concern, or of the stockholders to the State can be satisfied, cannot be passed upon in this case. The State is not now asking- payment of the bonds issued by her.
The judgment appealed from erroneously allowed-the five instalments, the last of which matured in 1865, and- also an interest higher than five per cent, on the contributions under the Act of 1878.
It is, therefore, ordered, adjudged and decreed that the judgment appealed from be reversed, in so far as it allows the five instalments, aggregating six hundred and sixty dollars and the interest thereon, and interest higher than five per cent, on the contributions under the Act of 1878, of forty dollars per share, aggregating eight hundred and eighty dollars ; that it be.amended by striking therefrom said allowances, and that thus amended, it be affirmed, plaintiffs and appellees to pay costs of appeal.
Fenner, J., recuses himself, on the ground of interest.
Manning, J., takes no .part, the case having- been argued and submitted before his appointment.