R. M. Walmsley & Co. v. Resweber

The opinion of the court was delivered by Nicholls, C. J. On the rehearing, by Breaux, J. Nicholls, O. J. The plaintiffs alleged that on the 21st of March, 1892, defendant, Jules A. Resweber, being indebted unto Beauregard L. Eournet and Cesaire B. Delahoussaye in the sum of three thousand dollars, subscribed six promissory notes, each for the sum of five hundred dollars, and bearing eight per cent, per annum interest from date, until paid, and made payable to his own order and by him endorsed and delivered to the said Fournet and Delahoussaye, the first of said notes maturing on the 15th of October, 1892, the second on the 1st of November, 1892, the third on the 15th of November, 1892, the fourth on the 1st of December, 1892, the fifth on the 15th of December, 1892, and the sixth on the 1st of January, 1893; and that to fully secure the payment of said six notes, in .capital and' interest, on the 21st day of March, 1892, by act passed before Alex. Y. Fournet, clerk, ex officio recorder of the parish of St. Martin, the defendant mortgaged and specially hypothecated in favor of said Beauregard L. Fournet and Cesaire B. Delahoussaye, and in favor of all future holders of said notes, certain described property in the parish of St. Martin. That defendant, Jules A. Resweber, being indebted unto the firm of R. M. Walmsley & Co. in the sum of sixteen hundred and thirty-four dollars and ninety-seven cents, as shown by the note marked No. 1, which they annexed, upon which the said Beauregard L. Fournet and Cesaire B. Delahoussaye were sureties, and being also indebted unto Sylvester P. Walmsley, for which he, the. said defendant, made, — 524 — subscribed and! delivered his promissory note for three thousand dollars (with, interest), which they annexed, on the third day of February, 1894, the said Beauregard L. Fournet and Desaire B. Delahoussaye, to be released as surety on the note of sixteen hundred and thirty-four dollars, aforementioned, with the written authorization and consent of the said Resweber and in accordance with a verbal agreement between him and PI. P. Fournet (who was then representing petitioners in this matter), transferred and delivered to petitioners in pledge the six mortgage notes as collateral security for the payment of the said note of sixteen hundred and thirty-fouk dollars and ninety-seven cents, and also to secure the payment of whatever indebtedness he, the said Resweber, owed or might owe to S. P. Walmsley, which indebtedness is evidenced by the aforesaid note of three thousand dollars, which they annexed. That being the joint holders of the six first described mortgage notes transferred, given and delivered in pledge as collateral security for the paymentl of their respective claim against the said Resweber as averred, they had the right to enforce payment of the said six mortgage notes and to have the property mortgaged to secure their payment, seized and sold, the proceeds thereof to be applied to the payment of the indebtedness of Resweber to petitioners as averred and shown. Petitioner S. P. Walmsley showed that the said J. A. Resweber was entitled to a credit of nine hundred and seventy-three dollars and twenty-two cents on his nóte of three thousand dollars annxed; said credit to be reckoned from the 7th of May, 1895, as shown by an account current statement and affidavit filed for reference. In view of the premises they prayed! that Resweber be cited; that judgment be rendered against Resweber in favor of petitioners jointly for the sum of three thousand dollars, represented by his mortgage notes, described and annexed, with interest, and that the property described and mortgaged, to secure the full and entire payment of the six notes, which petitioners hold and owned in pledge as collateral, as averred, be seized and sold, and that the proceeds thereof be-first applied to the payment of the indebtedness of A. Resweber to petitioners, as averred and shown. They annexed to their petition the act of mortgage referred to. The defendant answered. He averred that during a period of several years, at about the time mentioned by plaintiffs in their petition, he was and remained in business with them on open accounts, sometimes aggregating yearly amounts as much as forty thousand dollars. — 525 — That of these dealings and transactions, which continued subsequently to furnishing the notes sued on in this ease and which consisted mainly in their advancing to him money for the purchase of cotton by him and his consigning and shipping'that cotton to them, no liquidation or settlement had yet been made. That during said period he purchased and shipped to said plaintiffs a large quantity of produce and cotton, which, as brokers and commission merchants, they sold for his account; the proceeds whereof, as understood and agreed, were to be applied first to the payment of respondent’s open account, and, accordingly, if any balance remained, to the extinction of the notes sued upon and at that time regularly held and owned by plaintiffs. That the cotton and other produce so consigned by him to them, and by them sold as aforesaid, realized more than sufficient to satisfy his indebtedness on open account with them, and if not fully, at least, enough to meet perhaps three-fourths of the debt evidenced by said notes. Wherefore, he denied all and singular the allegations set forth in plaintiff’s petition and pleaded payment of the debt sued on in the premises. He prayed that their demand against him be rejected. George W. Sentell & Go. intervened in the suit. They alleged that they were mortgage creditors of Resweber in the sum of four thousand four- hundred and forty-five dollars and sixty-five cents ($4445.65), as per act of mortgage recorded in the recorder’s office. They especially denied that Resweber was indebted to any one upon the six notes of five hundred dollars each, sued upon. They averred that the said notes were given by him to Fournet and Delahoussaye merely to protect himself against the claims of petitioners and other creditors; that it was given without consideration and for a fraudulent purpose, and were, therefore, null and void. That after said notes were executed and their maturities arrived, they were turned over and delivered to Resweber. That long after their maturities and after Resweber became involved with R. M. Walmsley & Go. he returned the six notes of five hundred dollars each to B. L. Fournet and O. B. Delahoussaye, who were the representatives of R. M. Walmsley & Co., and they turned over those notes to the plaintiffs in this suit. Intervenors averred that the only object of Fournet and Delahoussaye was to assist Resweber in giving an unfair preference to plaintiffs — 526 — over the other mortgage creditors for payment of their ordinary claims. That) having once taken up those six notes from Eournet and Delahoussaye, Resweber could not again give them life and transfer them to plaintiffs. That Fournet and Delahoussaye were not the sureties of J. A. Resweber, but were simply endorsers, and could not be made to pay an obligation past due, without protest. That the whole transaction was fraudulent, and was a plan concocted to give a preference to plaintiffs for the payment of their ordinary claims, against the privileged claim of petitioners. They prayed that their intervention be maintained; that the transfer of said six notes be decreed null and vqid and of no effect; that the pretended mortgage securing them be cancelled and erased and that plaintiffs’ suit be dismissed. The widow in community and heirs of George W. Sentell intervened, adopting the allegations and prayer of George W. Sentell & Co. The plaintiffs answered the intervention, pleading the general issue, and specially denying the charge of fraud therein made. The District Court rendered judgment in favor of the plaintiffs againts the defendant for three thousand dollars, with interest from judicial demand, subject to a credit of nine hundred and seventy-three dollars and twenty-two cents, as shown by account current settlement and affidavit fil°d with plaintiffs’ petition for reference. It decreed further, that the six notes of five hundred dollars each, executed by Resweber, made payable to his own order and by him endorsed and delivered to Fournet and Delahoussaye and fully described in plaintiff’s petition, which notes were subsequently transferred, given and delivered in pledge as collaterals to plaintiffs by Fournet and Delahoussaye, be decreed to be extinguished for the reasons given by the court. .It further decreed that the mortgage given to secure said six notes be annulled and of no effect in so far as the junior mortgage of intervenors is concerned, which took precedence over it. It further ordered that the intervention of G. W. Sentell et als. be maintained to that extent, and that the right to enforce their mortgage claim against the said Jules A. Resweber be specially reserved to said intervenor. Plaintiffs appealed. Opinion. On the 21st of March, 1892, an act of mortgage was executed by the defendant before A. V. Fournet, notary public for the parish of St. — 527 — Martin, to secure the payment of six promissory notes of five hundred dollars each, with interest, maturing at intervals of fifteen days, commencing the 15th of October, 1892, and ending the 1st of January, 1893. The notes were drawn by Eesweber, the mortgagor, to his own order, and were by him endorsed, and the mortgage was granted to Fournet and Delahoussaye and in favor of all future holders of said notes. The recitals touching the note and mortgage as given in the act were, that Eesweber declared that he was indebted unto Beauregard L. Fournet and Oesaire B. Delahoussaye in the sum of three thousand dollars, for the reimbursement of which hel made and subscribed six promissory notes (describing them) and delivered the same to the said Fournet and Delahoussaye, and to secure the payment of said six notes at maturity, a mortgage in favor of said Fournet and Delahoussaye (present and accepting the same), and of all future holder or holders of said notes, consented a mortgage upon a certain property described in the act, the said premises to remain thus mortgaged until final payment of the six notes. The evidence shows that at the date of this mortgage, Eesweber was indebted in point of fact to the mortgagees only for the sum of nine hundred and seventy-five dollars; that the parties had held and intended to continue to hold business relations with each other; that the debt of nine hundred and seventy-five dollars, then existing, was for advances already made, and the notes and mortgages were given to secure those advances and others expected to be made. Although the act of mortgage declared that the six notes were delivered at the time of its execution to Fournet and'Delahoussaye, the truth was that they received at that time only two of the notes; the mortgagor retaining possession of the four others. It appears that Eesweber had for a number of years had business relations also with the firm of E. M. Walmsley & Co., and on the 18th of March, 1893, he made, subscribed, endorsed and delivered to S. P. Walmsley, the successor in business of Walmsley & Co., his promissory note for sixteen hundred and thirty-four dollars and ninety-seven cents, payable on the 1st of December, 1895, to the order of E. W. Walmsley & Co; Fournet and Delahoussaye signed this ’note as sureties, whereupon Eesweber delivered to the latter two more of the mortgage notes. This note of sixteen hundred and thirty-four dollars was intended to secure advances to be made to Eesweber by Walmsley during the season of 1893 and 1894. — 528 — On February 3rd, 1894, Fournet and Delahoussaye wrote to S. P. Walmsley the following letter: “In order to secure the claim of Messrs. R. M. Walmsley & Oc. against Mr. Resweber, represented by his note for about sixteen hundred and thirty dollars, endorsed by us, and also to secure your claim against him, we have, at his request and with his consent, forwarded to you by Mr. PI. P. Fournet, as collateral security, the-mortgage notes of the said J. A. Resweber, for the sum of three thousand dollars* in six instalments, each for. the sum of five hundred dollars, due Oct. 15, Nov. 1, Nov. 15, Dec. 1, Dec. 15, ’92, and Jan. 1, ’93, as per act in our favor, executed before A. Y. Fournet, clerk, ex officio recorder and notary public, in the year 1892, and duly recorded in the office of the recorder of mortgages for the parish of St. Martin, which said notes were held by us against the said Resweber to secure our claim against him. “We make this transfer as a matter of accommodation, to both you and him. In consideration! of this transfer, our endorsement on his note due R. M. Walmsley & Oo. is to be annulled and of no effect against us, and the understanding had between you and Mr. H. P. Fournet in regard thereto is hereby approved by us. You will therefore hold said note bearing our endorsement until you shall have effected a new settlement with Mr. Resweber, and when his entire indebtedness shall have been paid, you will please return to us his said mortgage notes to secure his indebtedness to us.” On February 3rd, 1894, Resweber wrote the following letter to S. P. Walmsley: “Dear Sir: — This is to say that I have consented to the transfer to you by Messrs. Fournet and Delahoussaye of the six several mortgage notes which were handed to you a few days ago, by Mr. H. P. Fournet, said notes being for the sum of five hundred dollars each and secured by mortgage on my property, as per act before A. Y. Fournet, clerk, and ex officio notary, in favor of B. L. Fournet and O. B. Delahoussaye, in 1892, which said notes you are to hold as collateral security to secure whatever indebtedness I may owe R. M. Walmsley & Go. and S. P. Walmsley, -and then transfer them back to the said Fournet and Delahoussaye, being pleased that Mr. PI. P. Fournet has explained the situation of my affairs to your satisfaction and with the assurance that I may be able to pay you within the next ninety days (90) about $1000 or $1700 to reduce my debt.” — 529 — The arrangement referred to in this correspondence having been agreed to by Resweber, Fournet and Delahoussaye and Walmsley, the six mortgage notes of the former were turned over by Fournet and Delahoussaye, in February, 1894, to H. P. Fournet, plaintiff’s agent in St. Martinsville, and at once transmitted by him to Walmsley. The exact situation of the accounts between Resweber, Fournet and Delahoussaye at that date is now shown, but they had not been closed. Resweber had retained possession of the last four notes to be delivered to Fournet and Delahoussaye as they should make advances to him. Two of them were delivered to them afterwards, when they signed the $1634 note as sureties, and the last two were delivered to them the day before they themselves delivered all of them to IT. P. Fournet for transmittal to Walmsley. B. L. Fournet testified that all the advances made by them to Resweber were paid to them after the transfer of the mortgage notes to the plaintiffs. The fact of Resweber’s indebtedness to the plaintiffs for the amount claimed in their petition is not contested, but it is claimed that the indebtedness is not secured by mortgage. We understand that intervenors have abandoned their charge of fraud and simulation, but If they have not there is nothing in the record which would in the least sustain it. Fournet and Delahoussaye were not endorsers, but surety, on the note for sixteen hundred and thirty-four dollars; it was made payable to the order of R. M. Walmsley & Go. and was delivered to them with Fournet’s and Delahoussaye’s signatures upon the back of the note. It is well settled that parties signing in that way do so as sureties. They were at no time agents of the plaintiffs. There can' be no question as to the fact that these mortgage notes went into the hands of the Walmsleys as collateral security for Resweber’s indebtedness to them, with the consent of all the parties concerned. When intervenors accepted their mortgare the records showed it was primed by the three thousand dollar mortgage granted to Fournet and Delahoussaye. There were no equities existing against the six notes when received by plaintiffs as collateral at that time. If such was the fact, it was immaterial that the notes should have been past their maturities when so accepted as collateral. It is not pretended that Resweber has ever paid the notes to the Walmsleys, and their payment to anybody else since their transfer would have been totally unauthorized and could not bind them. — 530 — Resweber was estopped from making such payment to Fournet and Delahoussaye after their transfer to plaintiffs. The right of Fournet and Delahoussaye and Resweber by joint consent to turn over these mortgage notes to. the plaintiffs under the circumstances as collateral security cannot be doubted. Levy vs. Ford, 41 Ann. 873; Mechanics’ and Traders’ Insurance Company vs. Powell, 27 Ann. 647, 648; D’Meza vs. Generis, 22 Ann. 286; Brewer vs. Gay, 24 Ann. 37; Gardner vs. Maxwell, 27 Ann. 561. We do not find in the record any evidence of any reissue of these notes by the maker. When Fournet and Delahoussaye transferred them to the plaintiffs they transferred to them whatever claim or right the security was understood by the parties to represent. 47 N. W. 271; 40 Pac. 1049. The judgment appealed from is, in our opinion, erroneous and it must be reversed. For the reasons assigned, it is ordered, adjudged and decreed that the judgment of the District Court be and the same is hereby annulled, avoided and reversed, and it is now ordered, adjudged and decreed that the plaintiffs, R. M. Walmsley, John J. Barr and Sylvester P. Walmsley, composing the commercial firm of R. M. Walmsley & Co., and Sylvester P. Walmsley, plaintiffs herein, do have judgment ágainst and recover from the defendant, Jules A. Resweber, the sum of three thousand dollars represented by the six mortgage notes described in and annexed to their petition herein, with eight per cent, per annum interest thereon, from the 21st of March, 1892, subject to a credit of nine hundred and seventy-three dollars and twenty-two cents, on the 7th of May, 1895, until paid, and that the property described in their petition and mortgaged to secure the full and entire payment of the six notes which plaintiffs hold and own in pledge as collateral, as alleged in their petition, be seized and sold, -and the proceeds thereof be first applied to the payment of the indebtedness of Jules A. Resweber to the plaintiffs, as alleged and shown in their petition. Costs of both courts on the intervention to be borne by the intervenors.