Chaffraix & Agar v. Packard

Howexj., J. On the twenty-fourth September, 1872, the plaintiffs, Chaffraix & Agar, caused executory process to issue against the three defendants and an undivided half of the Sarah plantation, sold by the former to the latter jointly, to be seized and advertised for sale, to pay a note due at two years from the date of sale, being the second of a series of three given by the purchasers and secured by mortgage on the property sold, and plaintiffs ask that the. sale be made for cash and on credit, in accordance with their act of sale and mortgage. These notes were made jointly by the' three purchasers, and indorsed by them. On the sixteenth of the next month, C. C. Packard, one of said purchasers and defendants, arrested the sale under article 739 C. P., alleging that “the said property was sold and adjudicated on the fifth August, 1871, in the undivided half of fifteen lots of ground,” by an order in the case of Chaffraix & Agar against these defendants, to satisfy the mortgagees’ rights upon said land in toto; that a sufficient amount of cash was required for the matured note and costs, “ the balance of the lots (in the language of his petition) were sold upon terms of payments of the unmatured notes;” that the land of said plantation is now owned in separate lots by the persons to whom they were adjudicated at said sale; that by said sale all the mortgages and privileges followed the proceeds, and the whole of said undivided half so sold was relieved therefrom; that said plantation is no longer the joint property of these defendants; that plaintiffs’ rights, sought to be enforced,.are extinguished: First — By the extinction of the thing, the plantation having been mortgaged in block, and sold in lots or parts under the constitution. Second — By the extinction of the mortgagees’ rights. Third — By the extinction of the debt for which the mortgage was given. Fourth — By mortgagees’ relinquishment of mortgage which attached to proceeds of above mentioned sale, and the executory title against the joint defendants having also ceased with said sale, the plaintiffs are without right to proceed as they are attempting; that this defendant, having purchased and paid for certain distinct lots, is now sole owner of the same unencumbered, and the seizure and sale of the alleged half of said tract is an unwarranted usurpation of his rights and will work him an irreparable injury. In our opinion these allegations do not warrant an injunction. They are inconsistent, and his legal deductions are incorrect. He first states that the sale on fifth August, 1871, was made for cash, to pay the ma [174] tured note, and the balance of the lot on credit to meet those not then due, and yet he alleges that this sale extinguished this debt and mortgage upon the whole tract; and (though rather vaguely) that he bought certain of the lots and paid for them in full, and he is therefore the sole owner thereof, with an unencumbered title, and has a right to arrest the sale of the undivided half, although the other purchasers do not complain. The order of sale, described by him and annexed to his petition, did not authorize the sale of certain of the lots for all cash, and the balance of the lots all on credit, and any such sale by the sheriff would be simply null. In our opinion, his allegations, taken all together and as true, do not show a sale that in the least affects plaintiffs’ right to enforce the mortgage by which their notes are secured. But on the trial, he introduced evidence, by which, he contends, he has shown a sale by the sheriff and a purchase by himself of two of the lots, the price of which he paid in cash, and therefore the said lots are released from the mortgage, and it is suggested that the case be remanded for the sheriff to amend his return and for further proof. No amount of evidence, in our opinion, could establish such a sale, under or by virtue of the order of court — the executory process — which was to sell for cash sufficient to pay the note due, and on such terms of credit as were granted to the debtors by the original contract, for the payment of the installments not then due, as prescribed by article 686 C. P. By article 690, the adjudication thus made has, of itself alone, the effect of transferring to the purchaser all the rights and claims which the party in whose hands it was seized might have had to the thing adjudged. If Mr. Packard bought two lots, or the whole of the undivided half under the above order, he only acquired thereby the rights of himself and his co-debtors, and they had no rights, under the law or their contract, which could impair the plaintiffs’ right to have their unmatured notes paid according to the original contract for their payment. See 11 La. 70, Rice v. Schmidt. In 9 La. 11, ib. 99, and 12 R. 206, the doctrine was announced that where the debtor and owner becomes the purchaser, the sale does not extinguish the debt and mortgage, not actually paid by the proceeds of the sale, the debtor being bound by his contract and not being able-to extinguish his debt except by payment according to his stipulations. In Pepper v. Dunlap, 16 La. 170, a leading case, it was held that property could be sold for cash to pay the note due and on credit to meet the unmatured notes according to the contract of mortgage; and in Gallier v. Garcia, 2 R. 319, commenting on this right the court refer [175] to the above case in 16 La., and say that in such a sale the sheriff could claim only the sum actually intended to be made, and state the assumpsit of the purchaser to pay the outstanding notes. And this seems but justice; for any other course would place the holders of the notes for the unmatured installments, secured by the same mortgage, in a worse position than that given by articles 707, 708, and 709 C. P., to the holders of second or inferior mortgages. Now, if Mr. Packard, being an owner and debtor, had bought the whole plantation and paid the debt then due, he and the land would have remained bound for the portion not due, and the holders of the notes representing such portion could, under articles 709 and 732 C. P., proceed to enforce the payment thereof. The Sheriff according to the authorities already referred to, could have canceled the mortgage only to the extent of the debt actually paid. And we can not see how he is placed in any better condition by being the purchaser of only a portion of the mortgaged property, and paying, as he contends, the whole of his bid, which, at most, only amounted to the sum actually due at the time, unless he alleges and shows that the plaintiffs agreed to release him and the portion of the land purchased by him, which he has not done. The principle upon which the right of a mortgage creditor to sell for cash and on credit rests, is that every part of the property is mortgaged for the whole of the principal debt, and in the distribution of the proceeds of the pledge, the holders of the different installments of the same mortgage are entitled to participate. 1 R. 225. In this case the whole of the undivided half sold by the plaintiffs to defendants was affected by the mortgage, retained to secure each and all the notes given by the purchasers and co-proprietors. See 23 An. 411. The payment of one of the said notes did not release the mortgage as to the others. It follows then that Mr. Packard could not acquire a. part of the property free from the mortgage securing the unpaid debt except upon a new and special agreement to that effect with the holders of such debt, which was not made; and as he does not pretend that the property did not sell for enough to meet the debt due and not due, thereby necessitating a pro rata reduction thereon, he can not, upon any hypothesis, claim that any portion of the mortgaged land is exempt from any part of the unpaid debt. If, under the circumstances, he has to pay more than his virile share, as he seems to fear, he may have recourse upon his co-obligors. The error, as to him, is in supposing that a sale of mortgaged property for cash, to pay the installment due and on credit to meet those not due, extinguishes the mortgage as to the latter. We think the law and the jurisprudence of the State clearly maintain the contrary [176] /doctrine, and that the injunction was properly dissolved, and the plain-stiffs allowed to proceed. Judgment affirmed.