Court Opinion

ID: 7183230
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:50:11.534832+00
Date Added: 2024-06-11T16:15:59.175631
License: Public Domain

On an Application for a Re-hearing.
By the court:
Rost, J.
The petition for a re-hearing in this case appeared to me deliberately offensive, but as my brethren were willing to act upon it, I have perused it with great care.
The perusal has not been unattended with advantage, as it has fully satisfied me of the correctness of the judgment.
The counsel regrets to be compelled to raise a direct issue of fact with the court. Any body may raise issues of fact with us, but the question on every particular case is, whether it can be fairly done; the issue of fact raised in this case, does not rest on truth, but on mere verbal criticism, to which all judicial opinions ai’e more or less obnoxious. The opinion assumes, that the plaintiff knew his rights, because it was no where alleged or shown that he had not. But suppose that all the parties to the agreement contracted in ignorance of their legal rights ■ as to priority. Still, under the view which the counsel takes, it was intended to benefit .some of them; and after it was ascertained by the judgment of classification of the mortgages, that the plaintiff was the party protected by it, and he claimed that protection, it was true to say, that he claimed a waiver of the right of priority, made by the other parties, for his benefit; if not nominally, at least, substantially under the decree of the court; and whether he knew his rights originally or not, the rule of law invoked against him is equally applicable.
It may be true that the agreement was the work of the other parties as well as his own; but the difference between them is, that they claim nothing under it, and he does. They say that the leading object of it was the purchase of the cotton press; that this object has been attained, and they are satisfied with the position given them by the judgment of classification. If they sought to disturb that judgment, under the agreement, they would fail, for the reasons which have caused the failure of the plaintiff.
The court had not the most remote intention in applying article 1953 of the code to the case, to charge the plaintiff with concealment or bad faith. First: because we know him to be incapable of either; and, next, because we considered that if the common intent of the parties was as now represented, his adviser alone was to blame for not having placed the matter beyond doubt in the agreement, and for having caused the rank of the mortgages to be finally determined between all the creditors, without reference to it. It was reserved for the plaintiff’s counsel himself, to subject his client to imputations which never entered our thoughts. We assumed, in the opinion, that the plaintiff knew that the claims of the defendants were entitled to the preference over so much of his own, as rest upon bonds of the second series.
“ So far from this being the case,” says the learned counsel, “ at the period the agreement was entered into, it was the firm conviction, of all the parties to it, that the bonds of the second series had primed and obtained preference over *463those of the first. It was not until the decree of this court, on the subject, that the parties were apprised of their legal rights.” Be it so; and how does the matter stand upon this and another statement of the learned counsel. “ He informs us, that the individual interest of the nominal plaintiff, himself a holder of a very large amount of bonds of the first series, is identical with that of the defendants themselves, over fifty thousand dollars of the bonds of the second series having been sent to him, and put in judgment, for account of Messrs. Morrison 8f Son, of London, who are still sole owners of the same, and the only real plaintiffs in this controversy.”
The bonds which have given rise to this litigation, belong to Morrison Sf Son, and the plaintiff merely acted as their agent in making the agreement. He had the firm conviction, at the time, that those bonds are entitled to priority over his own, and yet his counsel contends that he entered into an agreement by which he betrayed the confidence placed in him, and enriched himself by renouncing, without necessity, vested rights which he was firmly convinced his principals had. I say, without necessity, because it is not only conceded, but strenuously insisted upon, that the defendants were in his power, and could impose no conditions upon him.
It does not matter what the decree of the court in those rights subsequently was, the morality of the act must be tested by the belief of the plaintiff, at the time, and his counsel cannot maintain his argument without convicting him of a flagrant breach of good faith and common honesty.
If the intention of the parties appeared doubtful, under the agreement, the high character of the plaintiff would justify the conclusion, that he never renounced rights which he could not have renounced without disgrace. But his action in the matter does not rest upon mere conjecture, as I will presently show. Reference has been made by the counsel, on both sides, to the agency of the counsel of Lizardi &f Co., in the making of the agreement now at issue; and, as that counsel has no interest in the cause, I have not hesitated to avail myself of his statement in relation to all the occurrences of that transaction. That statement, connected with other facts of indisputable truth, has satisfied me that no trace of this business has remained on the mind of the plaintiff’s counsel, and that the common intent of the parties is totally misapprehended by him.
The lands and buildings of the cotton press had cost between seven and eight hundred thousand dollars. Besides the double square actually built upon, there was a batture nearly seven hundred feet front, extending over a hundred feet towards the river, and increasing rapidly. Unimproved property had formerly been selling in that neighborhood at near $1,000 a foot front, and at the time the sale of the press took place, it was still selling for nearly double what it sells for now. It did not, at first, enter the minds of the parties to the agreement, that the' property about to be taken, under execution, would not sell for more than enough to pay the debts of the company ; and all the clauses in the agreement but the last, were evidently prepared, under the influence of that belief.
The defendants authorized the plaintiff to purchase the property, and to use their judgments and mortgage claims in any way he might see fit, to meet the cash payment which they anticipated he would have to make over and above the mortgages. Believing further, that by forcing a sale for cash, they would be enabled to purchase the property below its real value, they provided for the case of a resale at an advance, in which the profits would, of course, have been *464ratably divided, if the price given for the property had exceeded the amount of the debts, as they supposed it would.
They considered the necessity of determining the rank of the mortgages as a remote contingency, not likely to happen, but still they made provision for it, and expressly reserved the right. Such a reservation was in all respects consistent with the preceding parts of the agreement; and the argument, that it was intended to refer to new difficulties which might arise from the agreement itself, requires no answer.
The project of agreement had progressed thus far, when it was shown to Lizardi’s counsel, who thought it ambiguous, and asked the plaintiff and some of the defendants, “ if priority was to be waived by them, why the fact was not clearly stated in the agreement?” The answer was, “that some were acting as agents, and were unwilling expressly to bind their principals in that manner.” And here I find Mr. Shepherd where I was sure to find him ; he was agent of Morrison and Son, and firmly believed that they were entitled to priority over himself. When asked why he did not waive the right of priority in their behalf, he peremptorily refused to do so, as in honor and good faith he was bound to do, under the belief he entertained.
Lizardi’s counsel being then informed, and believing that the parties to the agreement were the only parties interested in the proceeds of the sale, suggested that he would draw up a clause which would, as he thought, prevent the question of priority from arising; and he drew up the last clause, providing, that if the property was bought for less than the whole amount of the claims of the parties to the agreement, yet, as between them, it was to be considered as having been purchased at the amount of the entire claims, so as to leave each one interested in proportion to his claim, and to avoid, as far as possible, between themselves, any question as to priority of rank.
Mr. Shepherd and the defendants acceded to the proposal, under the belief that the property could not sell below that limit, and that, at that price, it would be an advantageous investment.
This clause was inserted, with the implied understanding that the question of priority was not finally waived. If, as represented to Lizardi’s counsel, the entire proceeds of the sale had gone to the parties to the agreement, it would have been avoided; but, as under a decree of this court, nearly forty thousand dollars of the price had to be applied to the payment of other debts, it is clear that it remained open, until it was finally closed by the judgment of classification.
The plaintiff was either influenced by the advice of his counsel, or by motives of delicacy, when he proposed to distribute the funds in his.hands, in the manner most advantageous to himself. But I am convinced that this mode of distribution would neither be just towards him, nor in conformity with his intention in making the agreement for the purchase of the cotton press.
In conclusion, I will say that I was not at first entirely satisfied with the decision; but, with the statement of the counsel of Lizardi, and the new facts disclosed in the petition for a re-hearing, the case appears to me as free from difficulty as any I have ever decided ; and I feel no uneasiness as to the authority which the decision is to have hereafter. Re-hearing refused.
Eustis, C. J.
I regret to be obliged to withhold my concurrence in the elaborate opinion prepared by Judge Rost. My brethren being against granting a re-hearing, after a very elaborate review of the subject, I waive my own convictions, and concur in the refusal.