Board of Liquidators of Hart & Hérert v. Bates

The opinion of the Court was delivered by Bermudez, C. J. On the 7tb of November, 1875, the members who composed the firm of Hart & Hebert, made an extrajudicial voluntary surrender of their property to their numerous creditors, which twenty odd of them refused to accept. StyliDg themselves “ the Board of Liquidators of Hart & Hebert,” the petitioners took possession of such property. Certain mortgage creditors, nevertheless, thereafter proceeded via ordinaria to the recognition of their claims, and obtained judgment to that end, contradictorily with Hart & Hebert, which on 'appeal was affirmed. 30 An. 868. They afterwards assigned that judgment to another person, who issued a writ to have it satisfied, levying on the mortgaged property. At the offering for sale by the sheriff, T. W. Bothick, the real defendant herein, became the adjudicatee, and subsequently had himself put in possession of the property by that officer. Thereupon, alleging themselves owners of that property, in their fiduciary capacity, the plaintiffs charged by this suit apparently grave irregularities against the proceedings conducive to the sale, and prayed for the nullity of the sale and for possession of the property. Several defenses were set up by Bothick, res judicata, estoppel, general denial, title in himself, and eventually a money demand for taxes paid for, and repairs put on the property. There was judgment rejecting the plaintiffs’ demand and they have appealed. When the case of the mortgage creditors above mentioned was decided on appeal in 1878, the court speaking of the intervenors, who were the liquidators of Hart & Hebert, the present plaintiffs, said : “ The intervenors claim to be’third possessors, but are not, under the evidence, entitled to occupy even that position, as they are shown to be and allege themselves simply the liquidators of Hart & Hebert, and, in that [475] capacity, to have received, from the partners a transfer of the land, mortgaged for the benefit of creditors. This is, at best, but a security and means for the payment of the debts coupled with the power to sell the property for that purpose, the real title being in the hands of the debtors.” In that expression of opinion, touching the legal status of the plaintiffe, we concur. The surrender made extrajudieially by Hart & Hebert was not accepted by all their creditors. It does not purport to be a dation en paiement. It can have no greater force than a voluntary surrender, taking place through the intervention of the court, under the State laws. The Code, article 2175 et seq., says that the surrender does not give the property to the creditors. It only gives the right of selling it for their benefit, and receiving the income of it till sold. The debtor preserves the ownership and may divest the creditors of the possession, at any time before they have sold it, by paying the amount due them. Even after a liquidation, the debtor having ceased to be such, is entitled to be paid the surplus, if any remains, after payment of the creditors. Even if he were to die before the sale, the property surrendered would form a part of his succession. R. S. 1791. The jurisprudence on those provisions of law is, that the acceptance of the cession vests the property in the creditors, so that it be no longer liable to seizure or execution; but they acquire no real ownership in it. It is vested in them only to a certain extent and for certain purposes. They cannot hold it in common nor partition it in kind. It is in their hands only as a pledge, which they must have sold, according to law, in order to have the proceeds distributed among themselves according to their respective rights. 2 R. 187; 9 R. 219; 3 An. 387; 4 M. 562; 4 An. ■ 490; 5 An. 274; 11 An. 1,148. Those authorities are referred to merely to show that, as in a voluntary surrender accepted by the court, the title remains in the insolvent; title cannot surely be considered as divested in the case of a voluntary surrender made extrajudieially; more specially when it is not accepted by all the creditors. As the plaintiffs have averred ownership, they cannot be viewed as creditors seeking to annul the sale of their debtor’s property. As Hart & Hebert are not parties plaintiff to this action, and do not complain of the sale attacked, we are at a loss to perceive what standing the plaintiffs can have in Court to champion rights in their name by claiming a title of ownership to the property, the nullity of the sheriff’s sale and a return of possession to them. 6 An. 361; 7 An. 143. [476] This view of the case renders it unnecessary to consider the irregularities charged as valid causes of the nullity of the sale, under which the defendant appears satisfied to hold. The judgment of the lower court, as we construe it, is one of dismissal. It is therefore affirmed with costs.