Court Opinion

ID: 7172338
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:27:44.382673+00
Date Added: 2024-06-11T16:15:46.571336
License: Public Domain

On Rehearing.
LAND, J.
The order granting the rehearing in this case reads as follows:
“International Harvester Company of America v. Union Irrigation Company. The receiver’s application for a rehearing is granted only upon the following questions, viz.: (1) Whether the claim of the Planters’ National Bank, as subrogee of J. Franklin Schell, for $1,200 for wages or salary alleged to have been due to Schell is secured by a lien or privilege, and, if so, what is its relative position or rank with reference to other claims upon the funds to be distributed. (2) Whether there was error in" the ruling that the receivers should have charged themselves with $8(57.67 more as the amount turned over by the auctioneer as proceeds of the first and second sales. (3) Whether there was error in the ruling that the receivers should not have deducted from the amount received from the auctioneer $4,044.90 for commissions and expenses. (4) Whether Act 199 of 1914 affected the receiver’s certificate No. 6.
‘‘The International Harvester Company’s application for a rehearing is granted only upon the question whether the judgment dated May 22, 1915, shall have the effect of exempting the proceeds of the sale of the machinery sold by the company from the payment of any other costs or charges other than the costs of the public sale of that property. The application for rehearing filed jointly by the Marion Steam Shovel Company, Fairbanks Steam Shovel Company, and Rumley Products Company is granted only upon the question whether the amount of the costs or charges to be contributed by each opponent shall, if possible, be fixed by the decree of this court. In all other respects, all of the applications for rehearing are refused.”
1. Whether the claim of the Planters’ National Bank as subrogee of J. Franklin Schell for $1,200 for wages or salary alleged to have been due to Schell, is secured by a lien or privilege, and, if so, what is its relative position or rank with reference to the other claims upgn the fund to be distributed.
The instrument by which the claim of J. Franklin Schell was transferred to the Planters’ National Bank, reads as follows:
“The claims being transferred are the amount due me as general manager of the said Union Irrigation Company to November 1, 1913, amounting to th.e sum of three thousand fifty and 30/100 dollars, and the further sum of twelve hundred dollars due me as general manager and overseer from November 1, 1913, up to May 1, 1914, and which last amount is privileged on the crop of 1914.”
On May 27, 1915, the receivers filed their first provisional account, and the Planters’ National Bank of Opelousas, appearing as the transferee of Schell’s claim, filed an opposition thereto, claiming the entire amount with privilege; but, by judgment of July 9, 1915, all oppositions “were referred to future adjudication, upon the filing of final account.” On April 1, 1918, the receivers filed their second provisional account, and the bank filed an opposition claiming only $1,203 with privilege, and the judge ad hoc (the presiding judge having recused himself) gavo judgment for that amount, “to be paid out of the proceeds of the crops of 1914 in preference to all other creditors,” and in our former decree we affirmed this judgment.
[5J The judgment appointing the receivers was rendered April 30, 1914, and, as the $1,-200 claim of Schell for wages as genei’al manager and overseer was for services rendered from November 1, 1913, up to May 1, 1914, it is clear that Schell’s claim is based upon services rendered prior to the receivership, and could not outrank the costs of the receivership, nor could it be a privilege superior to the vendor’s privilege upon the movables.
Section 5 of Act 159 of 1898, as amended and re-enacted by Act 212 of 1910, as amended and re-enacted by Act 199 of 1914, answers that question in favor of the debts represented by the receivers’ certificates, which, by. the Act of 1910, “bear a privilege on all of the property real or personal and the income of the corporation to be paid by *429preference and priority over all other creditors,” save the vendor’s lien and privilege which' may be .outstanding, due and owing at the time the certificates are issued. It therefore follows that the privilege of an overseer upon the year’s crop for balance of salary is primed by the vendor’s privilege and by that of the holder of a receivers’ certificate.
2. Whether there was error in the ruling that the • receivers should not have deducted from the amount received from the auctioneer $4,044.90 for commissions and expenses.
The portion of the first provisional account of the receivers which it is necessary for us to consider is as follows:
Moneys received from sales, including 20 per cent, of the purchase price of personal property on which vendors’ liens are claimed .. $22,333 66
Law charges:
Balance due on advertising.$ 372 00
Costs of court. 567 38
Attorney’s fees .— 5,000 00
Receivers’ foes . 5,000 00
Revenue stamps to he placed process verbal.-. 40 00
Auctioneer’s fees and other expenses deducted by him. 4,044 90 15,024 28
Balance from sales. $ 7,309 28
The auctioneer’s cash statement, including both sales, shows:
Total cash received...'. $28,892 60
Less items not collected.$1,686 35
Less commissions and costs paid and reserved by auctioneer. 4,044 90 6,731 26
Balance cash turned over to receivers by auctioneer. $23,161 25
It will he observed from the above that there is a discrepancy between the amount of cash received by the receivers, as stated in their provisional account, and the amount paid them, as shown by the auctioneer’s cash statement, of $827.59, or the difference between $23,161.25 and $22,333.66.
It will also be observed that the amount of $23,161.25 was the net cash balance paid over to the receivers, after deducting the commissions and costs reserved by the auctioneer, amounting to $4,044.90, yet in the provisional account of the receivers we find this sum of $4,044.90 again deducted from the $22,-333.66, which is already short the sum of $827.59, making a total of $4,872.49 apparently not accounted for in the provisional account, and which, added to the balance shown by said account of $7,309.28, would make the balance of these sales $12,181.77. Wo therefore, in affirming the judgment appealed from, amended the same, so as to charge the receivers with the sum of $12,-181.77, as remaining from the first provisional accóunt, instead of $7,309.28, as appears on the second provisional account. In this we erred, for the reason that, however misleading the account of the receivers may appear on its face, yet, if we take the gross amount of the sales made by the auctioneer amounting to $28,892.50, and then deduct from this sum the admitted credits, the. balance on hand necessarily proves that the balance as stated in the receivers’ account is correct as it gives the same result, $7,309.28.
To illustrate:
The auctioneer’s cash statement, including both sales, shows:
Total cash received. $28,892 50
Less items not collected.$1,686 35
Less commissions and costs paid and reserved by auctioneer. 4,044 90
Tbe receivers held in separate accounts as 80 per cent, oí tbe proceeds o£ vendor’s lien movables sold to third parties. 4,837 04
Proceeds of supplies not used by receivers . 35 55
Law charges:
Balance due on advertising. 372 00
Costs of court. 567 38
Attorneys’ fees . 5,000 00
Receivers’ fees . 5,000 00
Revenue stamps to be placed on procés verbal . 40 00 21,583 22
Balance from sales..... $ 7,309 28
This demonstrates the correctness of the balance stated in the receivers’ first provisional account.
[6] 4. Whether Act 199 of 1914 affected the receivers’ certificate No. 6.
*431Section 5 of Act 159 of the Acts of the, General Assembly of 1898, as amended by Act 212 of 1912, and as amended by Act 199 of 1914, reads in part as follows:
“In the order appointing such receivers, the court may * * * authorize any receiver of any corporation, in order to carry on the business of the corporation, to borrow or obtain money on certificates of indebtedness to be taxed as costs of court. The sum so obtained shall bear a privilege on all of the property real or personal and the income of the corporation to be paid by preference and priority over all other creditors of the corporation, save the vendor’s lien and privilege which may be outstanding due and owing at the time the certificates are issued, which vendor’s lien and privilege shall remain unimpaired and retain its present status as provided for by existing laws.”
This act was approved July 9, 1914.
When judgment was rendered placing the corporation in the hands of a receiver, it appointed J. Franklin Schell and William Edenborn as receivers, and it required them¡ to proceed at once with the farming operations, and authorized the issuing of $50,000 of certificates. The court immediately issued certificate No. 1 for $5,000, dated April 30, 1914.
On May 30, 1914, the court modified this order issuing $50,000 of certificates, and on June 5, 1914, there was issued $16,000 additional certificates of this authorized issue of $50,000, which were numbered 2 to 6, respectively, and were in denominations as follows: No. 2, $2,000; No. 3, $2,000; No. 4, $2,000; No. 5, $5,000; and No. 6, $5,000. An ineffectual effort was made to negotiate these certificates to banks in Opelousas and New Orleans, and. afterwards Mrs. Mann agreed to take them,, on the condition 'of being secured by the personal guaranty of the receivers. She took these certificates on June 11, 1914, six days after they had been issued, and on that day the receivership was credited with the $16,000, being the full face value of said certificates, as shown by the receivers’ statement of receipts and disbursements from May 1, 1914, to May 1, 1915; the credit being entered of date June 11,1914, for “Receivers Certificates Nos. 2-6, $16,000.”
In other words, the money was loaned on these certificates by Mrs. Mann, the transaction was consummated, and the credit finally obtained on June 11, 1914, or nearly 30 days prior to the. passage of Act 159 of 1914, which was approved July 9, 1914. The mere fact that the receivers did not require her to advance all of the money at one time, but waited until it was needed, September 11, 1914, when $3,000 was advanced, and until October 23, 1914, when $1,000 was advanced, is immaterial, as only a credit would have been obtained if the whole $16,000 had been paid by Mrs. Mann, and the receivers had deposited the money in the bank. If a commission merchant should allow a planter a credit of $16,000 on. the first of. January, 1914, to make a crop for the current year, it could not be seriously argued that the contract of loan in such a case was not consummated until the last advance of this sum was actually made.
So, in the present. ease, the loan having been finally made, and the credit actually given, before the passage of Act 159 of 1914, the contract between the receivers and Mrs. Mann became definitive and irrevocable, and its obligation could not be impaired by any subsequent legislation on the subject. We therefore conclude that the receivers’ certificates held by Mrs. Mann represent a debt which did not fall under the dominion of said act, but enjoys a privilege which primes that of the vendors, whether of immovables or movable property.
5. Shall the judgment dated May 22, 1915, have the effect of exempting the proceeds of the sale of the- machinery sold by the company from the payment of any other costs or charges other than the costs of the public sale of that property?
The judgment is as follows:,
“It is further ordered, adjudged, and decreed *433that plaintiff’s vendor’s .lien and privilege on the articles described in the exhibits filed with his petitions be recognized and enforced, and that the petitioner be paid from the proceeds of the sales of said articles made by the receivers, in preference and priority over all other claims or demands in reference thereto, saving the rights of any third parties to assert such claims or demands as they may present to the court prior to the payment by the receivers, in or to such proceeds.”
More than a year elapsed from the issuing of the first receivers’ certificate to the time of rendering the judgment recognizing the privilege of the International Harvester Company as vendor of the movables sold. The receivers were appointed April 30, 1914; certificate No. 1 for $5,000 was issued April SO, 1914; certificates Nos. 2-6 for $16,0G0i were issued June 11, 1914; application and order to sell property October 14, 1914; property sold January 9, 1915; judgment of International Harvester Company recognizing its privilege was rendered May 22, 1915.
[7] The vendor of movables is entitled to have the property upon which his privilege rests, seized and sold forthwith, and the proceeds distributed immediately by the receiver in a provisional account filed by said receiver, in which the proceeds of the sale only will be distributed. Hudson & Sons v. Uncle Sam Planting & Mfg. Co. et al., 136 La. 1071, 68 South. 139.
Instead of exercising this summary remedy, in which case it would have incurred the costs only of this particular sale and proceeding, the International Harvester Company permitted its property upon which it had a privilege to remain under the dominion, control, and operation of the receivership, taking the risk of such experiment, and therefore it subjected its property to the costs and charges of the receivership, the same as other creditors pursuing the same course. Teutonia Bank & Trust Co. v. Security Brewing Co., 137 La. 1046, 69 South. 833; Borne v. Alexander Hardwood Co., 140 La. 323, 72 South. 976.
[8] The judgment of May 22, 1915, does not purport to confer the advantage claimed by the International Harvester Company over other creditors, as to the payment of costs of the receivership, since it contains the saving clause, ‘‘the fights of any third parties to assert such claims as they may present to the court, prior to the payment by the receivers, in or to such proceeds.”
6. As to whether the amount of the costs or charges to be contributed by the Marion Steam Shovel Company, Fairbanks Steam Shovel Company, and Rumley Products Company shall be fixed by the decree of this court.
Three years have elapsed since the judgment appealed was rendered, and it is to be hoped that the various matters which were unsettled at that time have now been disposed of and definite results so far attained as that it will be possible to ascertain in the district court, the exact amount of the deficit, if deficit there should be, to be made good by the levy of a pro rata assessment upon the proceeds of all movables sold in the receivership, which are subject to vendors’ liens; but, as the case is now presented, the fixing and pro rating of such Assessment cannot be accomplished in this court.
Our former decree is amended, by placing upon the second provisional account of the receivers, certificate No.' 6 for $5,000, held by Mrs. Mann, as a claim priming, that of the holders of vendors’ liens on movables, and by placing upon said provisional account the privilege of the Planters’ National Bank for $1,200 subordinate in rank to that of the holders of receivers’ certificates, and of vendors’ liens on movables, and so as to charge the receivers with the sum of $7,309.28 instead of $12,181.77 as remaining from the first provisional account, and as appears on the second provisional account, and our for*435mer decree as amended is reinstated and made the final judgment of the court.
DAWKINS, J., dissents from the allowance of certificate No. 6 as a preference.