Bowman v. McKleroy & Bradford

Cole, J. In December, 1855, James R. Bisland, one of the defendants, resided on the Mississippi river, a few miles above Natchez, in the State of Mississippi. He was then the owner of fifty-eight slaves, who figure in this suit, and which appear to have then constituted the whole of his property. These slaves were heavily mortgaged in the State of Mississippi to various creditors. On. the night of the 17th of December, 1855, Bisland, without the knowledge or consent of his creditors, placed all these slaves on a passing steamer, landed them the next day more than a hundred miles below, on the Louisiana side, in the parish of Point Ooupée, at the plantation of his brother-in-law, R. W. Mc-Rae, and immediately made a pretended sale of them to James M. Motlow, the overseer of his brother-in-law, McRae. The notes given by Motlow to J. R. Bisland, for the pretended price, were transferred by said Bisland to McRae, and by him to McKleroy & Bradford. These slaves were sold in 1856, by Motlow to Elam Bowman. The first of the series of notes of Motlow to J. R. Bisland, having matured, McKleroy <fi Bradford obtained from the District Judge in Point Ooupée, an order of seizure and sale against these negroes, who were then in the parish of Tensas, in the possession of Bowman. The sale was enjoined by Bowman in the District Court of Tensas. The various creditors of J. R. Bisland intervened in that court, claiming to enforce their liens, and making J. R. Bisland and Motlow parties. The District Court decided the sale from Bisland to Motlow to be fraudulent, null and void, as to the creditors, and gave judgment to each for the amount of his claim against J. R. Bisland; ordered a sale of the slaves, and proceeded to fix the rank in which the creditors should be paid, giving to McKleroy & Bradford only such surplus as might remain after paying the creditors of J. R. Bis588 land, and placing George S. Sawyer last in the rank of the mortgage creditors aforesaid. McKleroy & Bradford and Sawyer, have appealed. We consider the plea to the jurisdiction to have been waived, and proceed to determine the rights of the different parties. We are of opinion that the sale of J. R. Bisland to Motlow, of the slaves in litigation, was fraudulent and simulated ; that no consideration passed for the same from Motlow; and that it was not really intended to be a sale so as to vest in Motlow a bona fide title to the negroes. An important question now arises as to the respective rank of the mortgage creditors of J. R. Bisland and of McKleroy & Bradford. The notes received by J. R. Bisland from Motlow, were transferred by Bisland to McRae, about the 2d of January, 1857, and by the latter to McKleroy & Bradford, about the 5th of January, 1857. The creditors of J. R. Bisland, who are parties to this suit, hold mortgage claims against him upon these slaves, which originated prior to his sale to Mot-low. It is contended that McKleroy & Bradford, being the holders of the notes of Motlow, before maturity, are entitled to be paid the amount of the mortgage upon those negroes, securing them, in preference to the creditors of Bisland, who held mortgages originating before the execution of the notes by Motlow. It appears that McKleroy é Bradford must have had notice before taking the notes of claims against these negropr — About-April, 1856, Motlow published a notice in the New Orleans Picayune'where McKleroy <fi Bradford carried on their business, and in the Point Ooupée Echo, stating that the consideration of the notes had failed, and warning all persons not to trade for them. Suits were also ponding, previous to their getting the notes, in the parish of Point Ooupée, and there were in the mortgage office of Point Ooupée mortgages recorded against these negroes, and it was in this parish whore the sale of the slaves to Motlow was passed. If they intended to depend upon the mortgage, and not upon the makers and endorsers, to guaranty the payment of the notes, ordinary prudence would have made them examine the mortgage office of Point Coupée to see whether Bisland, before selling to Motlow, had not covered the slaves with liens. C. C. 2428. But oven if McKleroy <& Bradford are holders of the notes for a valuable consideration before maturity, and without notice, they cannot avail themselves of the mortgage which is accessory to the notes, independently of the rights of creditors holding mortgages anterior to the execution of the mortgage securing (heir notes. Their action upon the mortgage is one in rem, and is distinct in its nature from their personal action against the maker and endorsers. The negotiability of notes has been created to facilitate commerce; the protection of the holder before maturity and without notice against the equities existing between the maker and payee, or other parties, is an exception to the gen - eral rule, that a person cannot transfer a greater right than he possesses, and the negotiability of notes, and the rules appertaining thereto, must not be extended so as to effect more injury than good. Mortgages are real rights, and are governed by certain rules as to rank from the time of their recording, and also from other causes. — 589 — The mere securing' of a negotiable note by mortgage, cannot give to the mortgage a rank superior to one recorded before it. If one mortgages property, not liis own, and without any authority, to guaranty a negotiable note, the mortgage is without effect. A party taking a negotiable note secured by mortgage, must incur the risk that there may be other parties who may successfully oppose his mortgage. The mortgage is a privilege upon real property. Before the property can be held liable to secure a note, it must appear that the mortgagor was the owner of the property, or had the legal right to give the mortgage ; and if he had the right, still the mortgage may be defeated as to its effect, by the existence of tacit or conventional mortgages, superior to it in rank. If the mortgagor were the pretended owner of the property by a simulated sale, the negotiability of the note cannot give force to the act of mortgage, and thus transform a simulated sale into a real one. The negotiability of notes cannot destroy the rights of third persons to real property, who are not parties to the note, and perhaps know nothing of its existence. It is true that the transfer of a note, carries with it its accessories, and the mortgage is an accessory, but the mortgage is conveyed only so far as the person giving it was entitled to create it. If the latter held the property subject to tacit or conventional mortgages, then in granting to a third person a mortgage to secure a note, and in transferring the mortgage note to him, ho transfers a right of mortgage inferior to mortgages held by other persons, and the holder of the mortgage note takes it thus, inferior to the rights of those persons. If a different doctrine should obtain, the proprietors of real estate, and those holding bona fide mortgages would be entirely in the power of the unscrupulous. The negotiability of notes introduced to facilitate commerce, would be the destruction of property holders, and their rights would be sacrificed without ever being parties to the mortgage and note that doomed them to ruin. It matters not in the present ease, if the mortgages of the creditors of J. R. Bkland, originated in the State of Mississippi. The rights of citizens of a sister State ought to be protected, as far as their protection does not conflict with our laws. If we expect the claims of our citizens to be equitably determined in foreign tribunals, the right of foreign citizens must also be respected. The-eye of justice must look impartially upon the demands of parties; its vision is not bounded by the limits of a State, but by those of the eternal principles of right and wrong. It is antagonistical to those principles to permit a citizen of another State to run from that State his slaves, heavily mortgaged, into this State, in order to elude his mortgage creditors, and then to pass a simulated sale of the slaves to the overseer of his brother-in-law, and then to allow the brother-in-law to transfer the mortgage notes executed as the price, so as to make the mortgage securing the notes, to be superior to those of the creditors of the absconding citizen, which existed before his simulated sale to the overseer. If this were sanctioned, instead of facilitating commerce, it would be highly detrimental to it. For it would afford the shield of courts to the machinations of the unjust, and destroy all confidence in the security arising from mortgages on slaves, and this — 590 — portion of the property of the State which constitutes so much of its wealth, would be almost useless as a security for debts. A principle so unjust and destructive to the business of the south, ought not to be upheld by the judiciary. We are, therefore, of opinion, that the creditors of J. R. Bisland, who held mortgages originating before the execution of the notes to Motlow, are entitled to be paid in preference to McKleroy & Bradford, the present holders of those notes. "We shall now proceed to fix the rank of the different parties to this suit, and the time from which their mortgages are to date, whether from being recorded in Mississippi or this State. 1. D. S. Bisland and B. P. January, paid a debt of J. R. Bisland, with whom they were bound on his appeal bond for the payment thereof. They had, therefore, an interest in discharging it, and their legal obligation was to pay it. A legal subrogation consequently took place of right, according to Article 2157, number three of the Civil Code, and B. S. Bisland and January became subro-gated to whatever right the judgment creditor had on the property of James R. Bisland. This right was a judicial mortgage which was recorded on the 22d of December, 1853, in the parish of Catahoula, where a part of the slaves then wore attached to and working upon a cotton plantation, thes undivided half of which then belonged to J. R. Bisland, who was domiciliated in the State of Mississippi. We are of opinion that the recording of a judicial mortgage against a debtor in the parish where he has negroes attached to a plantation of which he is part owner, creates a judicial mortgage upon the slaves, when the owner is not domi-ciliated in the State of Louisiana ; for in such case, it is impossible to record it in the parish where the judgment debtor resides. Mallard & Armistead v. Carpenter, 6 An. 397 ; Spencer v. Amis, 12 An. 127. The judicial mortgage of B. S. Bisland and B. P. January, must then take effect upon the slaves in controversy, which were in the parish of Catahoula at the time of the recording of the judgment. They will be designated in the decree. The amount of their mortgage is $3,294 64, with eight per centum interest thereon, from the 4th January, 1852. 2. Elam Bowman bought the slaves in dispute of Motlow, but he also subsequently bought an outstanding mortgage upon these slaves. This sale is null, because Bowman bought the slaves, subject to the decision of this suit as to the title of Motlow, and as Motlow is decreed to have no title, the sale to Bowman is without effect, and the right of mortgage of Bowman, which may be said to have been extinguished by confusion, revives. This mortgage has effect from the 24th of February, 1854, for $11,584 40, with eight per cent, interest per annum from the 27th of December, 1855, until paid. The negroes are in the possession of Bowman; the mortgage creditors cannot, however, claim from him the liii’e. This claim must be reserved to be urged by the owner or owners of the slaves. When slaves are seized, the Sheriff cannot hire them out, unless by consent of parties. O. P. Arts. 659, 662. It is only when lands or houses are seized, that the Sheriff seizes “ the rents, issues and revenues.” C. P. 656. — 591 — The mortgagee is not entitled to receive hire for slaves during the time they may be under seizure. 0. 0. Arts. 453, 457, 3371. 3. Hackaliah Leggett’s mortgage is recognised for $13,500, with six per cent, interest on $4,500 thereof, from 7th February, 1855, on $5,000 thereof, from the 7th of March, 1855, and five per cent, interest on $4,000 thereof, from the 23d December, 1854. The mortgage of Leggett is to date from the 17th of March, 1854. His claim is based upon three drafts secured by mortgage from J. R. Bisland, passed in the State of Mississippi, on the 7th of March, 1854. This mortgage is upon the slaves in controversy, and was recorded in Mississippi and Louisiana. 4. The mortgage of Cartwright <& Doniphan is based upon a deed of trust executed by /. R. Bisland in their favor, on the 30th of May, 1854, on the slaves in controversy, and other property, which latter was afterwards exhausted by a sale under a prior mortgage in favor of Miltenberger. The deed of trust expresses that it was made to secure five thousand dollars then due, to cover future advances to be made to Bisland, and to secure them for their liability on certain drafts of Bisland, on which they were accommodation endorsers. The advances were made to about $14,000. The accounts of them, showing the exact amount due, were shown to Bisland, who admitted them, in writing, to be correct, and they were duly recorded in the mortgage records of Point Coupée, as containing the amounts intended to be secured in the deed of trust to which they refer. We are of opinion, that the mortgage is void as to the creditors of J. R. Bis-land, No.’s 1, 2, 3, 5 and 6, except for the $5000, which were specified. C. C. Art. 3277. Frost v. Beekman, 18th John. Ch. R. p. 550; An. Ch. Dig. by Wheeler, vol. 2, p. 191; 4 Kent, p. 175 ; 2 An. 974, 917 ; 9 R. 482. This mortgage is to have effect from the 30th May, 1854, with interest at the rate of 6 per cent, from that date. The right of Cartwi'ight <& Doniphan is reserved to their personal action against J. R. Bisland for the excess of their claim over five thousand dollars. 5. George S. Sawyer is entitled to a mortgage upon certain of the slaves by virtue of a decree of the Yice Otiancery Oourt, Southern District of Mississippi, at Natchez. His mortgage is $8445, with ten per cent, interest thereon from 1st July, 1854, and bears date from 1st July, 1854. J. R. Bisland sold to Sawyer fifteen of the negroes seized in this suit in payment of this decree; but the slaves were to remain in the possession of Bisland, being hired by Mm. Bisland afterwards carried them off in order to deprive Sawyer of his rights. This illegal action of Bisland ought not to injure Sawyer. The latter sold these fifteen negroes to Bowman. But as Bowman in his injunction in this case did not claim them, and as Sawyer did, without any objection on the part of Bowman, this may be considered as a tacit dissolution of the sale from Sawyer to Bowman at the time the intervention was filed. After the intervention of Sawyer was filed, Bowman and Sawyer, by an act, mutually rescinded the sale. Besides, even if the negroes belonged to Bowman at the time of the intervention of Sawyer, the latter had the right to intervene to defend the title he had conveyed to Bowman, for he had sold with special warranty. — 592 — So far as Bisland is concerned, Sawyer is entitled to consider the sale to himself of the fifteen negroes null, because Bisland ran away with them and caused the consideration to fail, and he has the right as to Bisland to have his mortgagee enforced. If the sale were considered in force, then Sawyer would be entitled to a judgment for the fifteen negroes, but he has asked for judgment in the alternative either to have his title decreed to be valid for the negroes, or to have the mortgage enforced. As the fifteen negroes are reasonably worth more thau his debt, the other parties cannot complain at our recognition of his mortgage, instead of recognising him as owner of the fifteen negroes. The rescission of the sale by Bowman in favor of Sawyer was not the purchase by Sawyer of a litigious right in the sense of Art. 2422 of the Civil Code, which forbids attorneys from purchasing litigious rights, falling under the jurisdiction of the tribunal in which they exercise their functions, because that Article does not refer to arrangements that lawyers may make as to their own claims, but to the purchase of rights in which they have no property. 6. The sale from /. R. Bisland to Mollow being rescinded so far as it affects the mortgage creditors of the former, who are parties to this suit, McKleroy é Bradford are entitled to be paid their claims as owners of the mortgage notes out of the balance of the proceeds of the sale of all the slaves in contestation, which shall be left alter the satisfaction of the previous mentioned creditors in the manner specified as aforesaid. It is, therefore, ordered, adjudged aud decreed, that the judgment of the District Court be avoided and reversed ; that the injunction sued out against the order of seizure and sale be perpetuated ; that the sale of the slaves in contestation in this suit from J. R. Bisland to J. M. Motlow, is null, void and without effect as to the mortgage creditors of J. R. Bisland, whose claims are recognised in this judgment; that the sale of the said slaves from Mollow to Elam Bowman bo rescinded; that the slaves aforesaid be seized aud sold by the Sheriff of the Parish of Tensas, according to law, and that the various claimants be paid in the following rank out of the proceeds of all or apart of the slaves in contestation, as shall now be detailed. I. D. S. Bisland and J). P. January shall be paid $3294 64, with 8 per cent, interest from the 4th January, 1852 ; their mortgage is recognised as taking effect from the 22d December, 1853. The said amount is to be paid out of the proceeds of the sale of all the slaves mentioned in their intervention and their issue, except the following, Eliza Pierce, Yarrow, Sally, Victoria, Perry, Alsey Levi, Suclcy and Peggy. II. Elam Bowman shall be paid $11,584 40, with 8 per cent, interest per an-num from the 21th of December, 1855, until paid. His mortgage is to have effect from the 24th of February, 1854, and he is to be paid said amount out of the proceeds of the sale of all of the slaves. The claim against him for the hire, use and enjoyment of the slaves in contestation is reserved, if any such right exists, to be urged in another suit in an action by the owner or owners of the slaves. Hackaliah Leggett shall be paid $13,500, with, 6 per cent, interest on $4500 thereof from the 1th February, 1855, and on $5000 thereof, from the 1th March, 1855, and 5 per cent, interest on $4000 thereof from the 23d of December, 1854. His mortgage is to take effect from the 11th March, 1854, and he is to be paid his claim out of the proceeds of the salo of all the slaves. — 593 — IV. Cartwright & Doniphan shall be paid out of the proceeds of the sale of all the negroes in contestation, five thousand dollars, with 6 per cent., interest thereon from the 30th of May, 1854, from which date also their mortgage is to have effect for said amount. The balance of their claim shall be paid out of the residue, if any there be, of the proceeds of the sale of all the negroes in dispute, after paying all the preceding claims, and those that follow their claim in this judgment; or as much of their demand as can be so satisfied, reserving their rights against J. R. Bisland for any balance of their claim remaining unpaid. V. George 8. Sawyer shall be paid @8445, with ten per cent, interest thereon from the 1st July, 1854. Iiis mortgage is to have effect from the 1st July, 1854, and he is to be paid said amount out of the proceeds of the sale of the negroes (and their issue) in contestation, which are mentioned in the decree of the Vice Chancery Court, Southern District of Mississippi, at Natchez, rendered and signed the 1st July, 1854, in the case of George S. Sawyer v. James R. Bisland. VI. McKleroy <& Bradford shall be paid the amount of their notes sued upon and their demand out of the proceeds of the sale of all the slaves in contestation, after the preceding five mortgage claims are paid the amounts of their mortgages recognised by this judgment. Their right of action against the makers and endorsers of the notes aforesaid, held by them, if any such they have, is reserved. It is further ordered and decreed, that all costs of the lower court shall be paid out of the proceeds of the sale of the negroes, in preference to any of the preceding claims, and the costs of appeal shall be paid by Cartwright & Doniphan.