Collins v. His Creditors

Labatjve, J. On the 6th March, 1858, Bartholomew Collins, the insolvent, covenanted a mortgage in favor of Collens & Wooldridge, for $9,000,. divided in nine notes, each for $1,000. On the same day Collens, of the firm of Collens & Wooldridge, executed a counter-letter of the following tenor: * ‘Be it remembered that Bartholomew Collins, having executed the mortgage before Robert T. Kerr, Esq., notary public, and delivered the notes described in the said act of mortgage, dated March 6th, 1858,1 hereby declare that said notes (with the exception of so much thereof as will [239] meet the amount fairly due the firm of C. & W. for professional services) are held by me to be negotiated, or otherwise disposed of, for the use of said B. Oollins, and are to be so negotiated or disposed of agreeably to his orders, or to be restored to him at will, after deducting the sum due us on a fair settlement of account as aforesaid. New Orleans, 6th March, 1858. (Signed) T. Wharton Collens, for Collens & Wooldridge. ” On the 22d April, 1858, Samuel L. Wooldridge, of the firm of Collens & Wooldridge, and acting for his firm, went before the said notary, Kerr, and producing four of the notes in question, had them cancelled, as well as the said mortgage, to the amount thereof, viz: $4,000. On the 3d July, 1858, Bartholomew Collins made a cessio bonorum, which was accepted by the Judge. A direct action was brought by the syndic to have the said mortgage annulled, on the ground of fraud and simulation and an attempt to cover the property; a provisional account having been rendered on the 4th March, 1859, it was opposed by R. Gardere, as holder of two of said mortgage notes, and by said Samuel L. Wooldridge, as also holder of two of sajd mortgage notes, both oppositions being in amount $4,000. The direct action to annul the mortgage was consolidated with the opposition to the provisional account. The District Court, after having heard the testimony, sustained the said oppositions of Samuel L. Wooldridge and R. Gardere, so far as that they be placed on the tableau as mortgage creditors in their rank, and paid as. such out of the proceeds of the property mortgaged. From this judgment the creditors, A. Egan & Co. and John Corlis, appealed. « This ease is on a rehearing granted upon a decision rendered by our immediate predecessors, declaring the mortgage in question to be null and void, and reversing the judgment appealed from. There are several bills of exception to be disposed of. On the trial of the case interrogatories-were propounded to B. Collins, the insolvent, who was made a party in the suit to annul the mortgage. The opponent excepted, so far as other parties were concerned, other than B. Collins himself, on the ground that the answers of one defendant could not be taken as against other co-defendants; the Court sustained the objections as to other parties. The Court decided correctly. The opponents offered J. B. Poindexter to show that the insolvent, in conversation with him, had said that he had fixed upon a certain amount as coming to Collens & Wooldridge, and his counsel, Field and Hunt. The syndic objected; but the Court admitted the testimony. We believe the Court erred, and we will disregard that testimony. The syndic offered A. Bonneval to prove that said Wooldridge had in his hands money collected for said Collins, more than sufficient to meet any advances he may have made to said Collins, and particularly a sum of $3,099, in the suit of B. Collins v. De Moujan, etc. The opponents objected to said testimony, on the ground that the amount of the judgment of [240] Collins v. De Moujan, as received by said Wooldridge, was in controversy in another suit between Levy, syndic, and B. Oollins, et ais., etc. The Court properly sustained the objections. The said syndic also offered B. Collins, the insolvent, and one of the defendants in the suit, to annul the mortgage, as a general witness, to prove that no such contract was entered into by him with Collens & Wooldridge, as is set forth in their answer to the suit of Levy, syndic, v. B. Collins et als., etc. The opponents objected to said witness, on the grounds that he was accused of fraud with them ; that he had an interest in defeating the debt, etc. The Court sustained the objections and rejected the testimony. We believe the Court did not err. The said syndic also offered in evidence,an act of sale by Wooldridge to Kenny Mitchell, as showing with greater certainty, a matter testified to by Mitchell, as to the purchase of said property, etc. The opponents objected to the document, on the grounds that those matters were in controversy between the same parties, as evidenced by the petition filed herein, etc. The Court sustained the objections. We think the Court did not err. This case involves but one main question on the merits, and that is .purely of law. The Court which tried the case below was satisfied that the mortgage was real, and valid in law, and proved, to the amount of $4,000, represented by four notes held by the opponents. We are of opinion that our learned brother did not err. It is contended in this Court (and so our predecessors had decided in this case) that the mortgage and the counter-letter, taken together, disclose a case of prohibited and illegal simulation, in this, that the contract was different from what the act of the mortgage alone imparted; that even a partial simulation involves the absolute nullity of an entire transaction, although portions of it are real. This counter-letter was deposited in the hands of the notary, and it was produced and brought into Court by him on a subpena duces tecum, issued at the instance of the creditors opposing this mortgage. This counter-letter shows what was the intention of the parties, and it was carried out. On the 22d April, 1858, four of the notes were returned and cancelled, as well as the mortgage to that amount. It is fair to presume that the parties had had ■some settlement and understanding about that business; and, that the notes now brought against the insolvency, are held for value received. This was two months and a half before the failure of Collins. A mortgage may be given for a debt not yet in existence, or for a debt which might not be realized but in part, or even a sale might be made as security for money advanced or to be advanced. C. C. Articles 3259, 3260, 1894. Wolf v. Wolf, 12 An. 529. We see nothing immoral or illegal in this transaction. It is therefore ordered, adjudged and decreed, that the judgment of the District Court be affirmed; and that the appellants pay the costs of this appeal, each for one-half. ' Howell, J., recused.