Latiolais v. Citizens' Bank

The opinion of the Court was delivered by Bermudez, C. J. This is an injunction suit, arresting an executory process issued by the Citizens’ Bank for the balance of two reduced — 1447 — stock mortgage notes, with interest, and of certain contributions, or calls, on reduced stock. The plaintiff, in her capacity of administratrix of the succession of O. S. Duclozel, the original mortgageor and subscriber of the notes, has set up numerous defences in support of a prayer for complete exoneration from all liability, many of which were urged in the lower, and others in this court. We understand that the object of the suit is to have it declared: that the Citizens’ Bank is a defunct corporation, having no status in Court; that the debt sued for has been novated, — a new debtor having-been accepted in the place of the original one, who was discharged ; that the notes sued upon are prescribed ; that the mortgage claimed has-no existence, for want of a reinscription ; that similar proceedings have been instituted against the delegated debtor, and are pending and undecided ; that the asserted pact de non alienando has been abandoned ; that the contributions demanded are not due and could not be recovered in the executory proceedings against the estate ; that the debt claimed, if it existed at the date of the proceedings against the delegated debtor, has become extinguished by a much larger debt due by the bank, which has since arisen, and which is pressed in reconvention. The injunction was asked and granted, apparently under the sanctioning provisions of article 739 C. P. The bank answered by a general denial on the trial. Bills of exceptions were taken, which will be hereafter noticed. Prom a judgment dissolving the injunction, with a reserve in favor of plaintiff to claim the debt set up against the bank, in a different action, this appeal is taken. The bank has asked no amendment of the judgment. The salient facts of the case are the following : In 1887, O. S. Duclozel gave a mortgage, for $15,000, directly to the Citizens’ Bank, under the terms of its charter, for the triple purpose of securing : 1st. One hundred and fifty shares of its capital stock, subscribed for by him ; 2d. The bonds which the bank was authorized to issue to raise money to form its capital and to carry on its financial operations ; 3d. Loans made to him as a stockholder. The act was seasonably and duly recorded. In 1869, Duclozel sold the property mortgaged and the stock secured by it to W. P. Sproule, who, as one of the terms of the sale, assumed the liabilities of his vendor to the bank. Sproule sold part of the property and stock to A. C. Graff and J". S. Chalfant, who assumed proportionally his liabilities to the bank. In 1875, in consequence of non-payment of its debt, under the terms of agreement, and under charges of indebtedness against Duclozel, styl — 1448 — ing Sproule, Graff and Ohalfant “ owners and third possessors,” the bank issued executory process against the mortgaged property, which at once passed into the sheriff’s possession and custody. Duclozel was not made a party. Sproule was served with the process of the court, while the other two, who were absent, were represented by a curator ad, hoc. . Subsequently, the property, on bond, was released from seizure and an application was made for the removal of the case to the United States Circuit Court. The bank discontinued the proceeding. It appears from the evidence received, subject to exceptions, that, while the property was under seizure, and after it was bonded, it sustained material injury in different ways, which the plaintiff values at $20,000, for which indemnity is asked. After the discontinuance mentioned, the bank instituted these proceedings, — Duclozel having departed this life, — against his succession, represented by the plaintiff as administratrix. She sued out the pres■ent injunction. From the view which-we have taken of the case, we deem it unnecessary to pass either upon the consequences of the joining of issue by a general denial by the bank, or upon the bills of exception taken during the trial. We propose to deal with the case as though it had been brought via ordinaria and tried accordingly. Had the bank prayed for amendment the contention would now be set at rest. Wo will now proceed to examine seriatim the different grounds of objection or opposition, upon which the plaintiff relies for relief. The plaintiff is estopped iron) denying that: I. The bank had and has a legal status. O. S. Duclozel was the original stockholder, the original mortgageor, the original borrower. By becoming a contracting party in the Act of 1837, he acknowledged the existence of the bank. By that act lie subscribed for its stock, gave security for borrowing its money. He secured the stock and the loan, as well ms the bonds issuable by the bank, by mortgage on his property. In 18C9, more than thirty years afterwards, he sold the stock which he had acquired in that bank, together with the property which he had incumbered, as is above said, and had the purchaser, as one of the conditions sine qua non of the sale, to assume all his liabilities, actual and eventual, to the bank. By those acts he not only acknowledged the existence of the corporation with which he had contracted, but he warranted that very existence. In the petition which the plaintiff, as administratrix of his succession, has filed for an injunction, the bank is declared to be a corporation, located in New Orleans, and prayer is made that it be enjoined, cited and condemned to pay damages fixed at $20,000. All- the reasons set forth in the petition, in the oral and written ar — 1449 — .guments, to show that the bank is a myth and has no status, existed, to the knowledge oí Duclozel, prior to and in 1869, when he acknowledged •and,warranted the existence of that institution, in the sale which he made to Sproule of his stock therein and of his property mortgaged to it, and when he imposed upon his vendee the assumption of all his ■confessed debts and liabilities, present and contingent, to the corporation. It is settled, by an overwhelming array of indisputable precedents, that, as a rule, one who contracts with what he acknowledges to be and treats as a corporation, incurring obligations in its favor, is estopped from denying its corporate existence, particularly when the obligations are sought to be enforced. It is right that it should be so. If a party have no other objection to oppose to the enforcement of the contract than that the obligee is incompetent to sue, for reasons anterior to his contract, or last acknowledgment, he should not be permitted to escape liability. The case would be different where the incompetency is the result of something happening subsequent to the contract, or last acknowledgment of existence and capacity. It is a familiar principle that one cannot be permitted to play fast and loose, so as to take advantage of his own unfair vacillations. We think it useless trouble to refer to the authorities, which, however, we have taken the pain of reviewing. How can the plaintiff consistently ask this Court to pronounce that the bank has no status, is incompetent to sue for the enforcement of contracts in its favor, for want of a charter, when during the thirty odd years which elapsed since Duclozel first contracted with it he has uninterruptedly recognized it as a going corporation ; and when, during the thirty-nine years which have elapsed since tne great law of relief was passed in its favor in order to assist it and its stockholders and others concerned in its welfare and prosperity, the State of Louisiana, whose creature it is, from whom it emanates, — and which perhaps alone, could have taken advantage of any irregularity destructive of its being, — has, by at least thirteen statutes, adopted from time to time, up to 1880, continually recognized, proclaimed and acted upon the fact of its existence. If the doctrino of estoppel can be opposed to a party blowing hot and cold, it is assuredly in the present instance. II. There has been no novation of the debt or mortgage. The act of morlgage executed in 1837 is emphatic that Duclozel shall continue to be liable and the mortgage shall remain in its Integrity, until the debt shall have been paid or until he shall have been discharged. The clauses and stipulations of that act were tacitly reiterated and recognized as in existence and obligatory in the act of sale, in 1869, by Du — 1450 — clozel to Sproule, which contained stipulations pour autrui, of which it was legitimate for the bank to avail itself, not only on general principle, but also by the tenor of the act of 1837, which is admitted by the petition for an injunction and by counsel, in their brief, to contain the pact de non alienando, and by the express terms of its charter, which authorize it to ignore subsequent transfers. There is nothing in the record to prove that the bank has done any act showing that it considered and treated Sproule, Graff and Chalfant as its sole debtors, in consequence of its having discharged Duclozel, or otherwise: the notices issued by a clerk of the bank are in no way indicative of such acknowledgment. But the plaintiff insists that in its petition in the proceedings first brought the bank ratified the sale made by Duclozel to Sproule, and by the latter to the other parties, in treating them as owners. Be that so, but it does not follow, in the absence of either a formal and express or of an implied consent to novate, which should be irresistibly inferred from surrounding circumstances, that it has discharged Duclozel unconditionally, and has accepted those parties as new delegated debtors-in his place. Nemo presumitur donare. 29 An. 958; 19 An. 212. Novation is a contract, the object of which is : either to extinguish, an existing obligation and to substitute a new one'in its place; or to discharge an old debtor and substitute a new one to him ; or to substitute a new creditor to an old creditor with regard to whom the debtor is discharged. It is never presumed. The intention must clearly result from the terms of the agreement or by a full discharge of the original debt. Novation by the substitution of a new debtor can take place without the consent of the debtor, but the delegation does not operate a novation, unless the creditor has expressly declared that he intends to discharge the delegating debtor, and the delegating debtor was not in open failure or insolvency at the time. The mere indication by a debtor of a person who is to pay in his place does not operate a novation. Delegatus debitor est odiosus in lege. R. C. C. 2188, 2189, 2190, 2192. The most that could be inferred would be that the bank in the exercise of a sound discretion, proposed to better its condition by accepting an additional debtor to be and remain bound with the original one. The bank had something to lose by discharging Duclozel, but had something to make by accepting Sproule and the others. The testimony shows that the account of'the bank with Duclozel was not closed, and that what amounts were paid in after 1869, were placed to the credit of his account. Commenting upon article 1273 of the N. C., Marcadé says, vol. 4, III, § 769: — 1451 — “ On congoit en effet, que quand une nouvelle personne, soit de son propre mouvement, soit sur la presentation de mon débiteur, s’oblige envers moi, au paiement de ma cróance, il est sans doute possible que ce débiteur soit pris par moi, a la place de l’apcien qui sera ainsi liberé par la novation, mais il est bien possible aussi que mon intention soit de l’avoir pour obligó en méme temps quel’ancien débiteur. Ici encore, d’aprés notre article, les doutes qui existeraient sur le point de savoir si on a entendu faire une novatien, entravrie negation de novation, puisqu’il faut que cette novation soit clairement établie.” Larombiére, V. 3, on Art. 1275, says : “ Lorsque le débiteur dólógant n’a pas été expressóment déchargó par le cróancier délégataire contre qui, dans ce cas, il n’y a pas novation, ce dernier s’il n’est pas payé par le déléguó, aura un recours a exercer contre le délógant. Celui-ci continue, en effet, d’étre l’obligó nonobstant l’accession du nouveau débiteur qui a accepté la délégation. Il doit en consequence payer la dette si le delegué pour lequel il est censé répondre ne la paye pas luiméme. Le cróancier qui n’a point déchargó le débiteur retire ainsi de la délégation faite a son profit l’avantage de conserver ses droits co.ntre le délégant en méme temps qu’il en acquiert d’autres contre le déléguó. Et ces nouveaux droits il les fera valoir avec toutes les garanties qui peuvent y étre spécialement attachées, soit que deja elles .aient existé A. l’égard du délógant, soit qu’elles aient été stipulées du déléguó au moment do la délégation.” V. also Laurent v. 18, p. 339, n. 315. See, also, Pothier, Obl. 3 part, ch. 2, No 559, 560; Merlin, v. ind. de paiement; Toullier 7, No. 278, 283; Gilbert, C. A. on same article and article 275; Duranton, 12, n. 309, Zachariœ, t. 2, 323. The authorities in 19 L. 207 and 1 R. 30, do not bear out plaintiff’s theory. In the first case there was a special condition that the notes were discharged and were to be delivered and destroyed before the first payment under the act should be due. A suit, on the assumpsit, by the creditor against the new delegated debtor gave effect to the act in all its parts. In 11 A. 93, the ruling in the second case was declared, and we think properly, to be of doubtful authority. In Jacobs vs. Calderwood, 4 An. 509, which was a suit against an original debtor for the difference between the proceeds of his mortgaged property and the amount of the debt, he .pleaded novation, resulting from a suit on the assumpsit of a substituted debtor and recovery against him in a personal action of a judgment for the deficiency. The Court held that the delegation and the acceptance by the creditor of the stipulation pour auirui, did not operate a novation and did not discharge the original debtor. The ruling in 1 R. 301, was found not applicable in — 1452 — that case; neither is it in the present instance. See, also, 9 M. 270; 16 L. 474; 13 A. 238. We cannot declare, in the face of the charter of the bank, of the original act of 1837, of the formal text of the law and of the judicial exposition made of its object and purport, that the bank has accepted Sproule and the others in the place of Duclozel, and has discharged him. III. The notes sued on are not prescribed. The eleventh section of the charter of the bank entitles a stockholder, on depositing and pledging his certificate of stock, to a credit of one-half of the total amount of that stock; such stockholder, on using ■such credit, to give his notes for the sum thus lent him. It is manifest that the notes sued on in this ease evidence the use •which, under the charter, Duclozel made of his credit. He impliedly contracted with the bank, on obtaining the money which forms the consideration of those notes, to give his stock in pledge, the certificates wherefor the bank retained. The stock pledged as a security, constitutes a standing acknowledgment, during the existence of which prescription did not run. The debtor consenting to the possession of his property by his creditor, tacitly acknowledges the existence of the debt. This defense is not a ■new one. Whenever set ,up in similar cases it has invariably been properly overruled. 21 An. 128; 1 R. 556; 8 R. 146; 22 An. 108, 117; 28 An. 125; O. B. 44, fol. 376 ; O. B. 45, fol. 138 ; O. B. 46, fol. 337, 372. It must have the same fate in the present instance. IV. The act of mortgage required no reinscription to keep the mortgage alive. Under the special and exceptional laws which have been enacted for the benefit of this bank, and from the beginning have always received a liberal construction, although in derogation of common right, — it does not lie in the mouth of an original stockholder and raortgageor, to plead against the bank a.want of reinscription. Whatever can be said under article 3369 R. O. C. (3333) touching the cessation of the effect of an ordinary mortgage between the parties, can have no bearing in this case, which is entirely dehors the purview of that general provision. The Citizens’ Bank, being a property bank, is entitled to all the immunities which the law allows to such institutions, under which mortgages consented in their favor are dispensed from reinscription. Such mortgages, when once inscribed, remain in force, as long as the principal (the debt) which they are designed to secure, continue in existence, ■unsatisfied, unextinguished, or until a discharge has been actually — 1453 — granted. It is not until after extinction of the debt, or after a discharge that the mortgage dies away. Under the very terms of the Act of 1837, reiterated in that of 1863, such was, besides, the express understanding of the parties, and that understanding being the law regulating their respective rights and obligations, concludes them! O. O. 3284, 3285, 3411. In Union Bank vs. Dawson, 7 An. 548, it was expressly held, that a mortgage given directly to a property bank need not be reinscribed in order to continue in force, after an original inscription. The interest of the State in the property banks induced Acts of March 11th, 1842, No. 96, and 27th March, 1843, No. 87, which, without referring to article 3333 of the Code of 1825, have amended it, the former exempting from reinscription stock mortgages in favor of those banks, and the latter forbidding the cancellation, after ten years, of any . mortgage of that description. This double legisla tion, it has been 'held, although exceptional, is not to be construed strictly, and is to be taken together, the latter enlarging the former. The courts have gone to the extent of saying that all mortgages, not merely stock mortgages, but others, owned by a property bank, are within the statute, whether such mortgages be granted directly or acquired by subrogation. 4 An. 471; 10 An. 591; 15 An. 630. The rulings dispensing with a reinscription in cases like that now be- ■ fore the Court, have become a rule of property which cannot be questioned or disturbed. V. The proceedings instituted by the bank to seize the mortgage property in the hands of Sproule and the others, cannot be pleaded, as lis pendens. Duclozel had not been made a party to them. They were discontinued previous to the institution of the present ones. The objection that the order of discontinuance on the minutes is unsigned is untenable. 14 L. 277; 12 An. 642; 28 An. 186. VI. The pact de non alienando was not abandoned. On the contrary, it was carried out by the proceedings against Sproule and the others. Admitting that it was, however, what is it to the plaintiff, who is the administratrix of the succession of the original mortgageor, whether it ever existed at all ? It can, under no circumstance, be insisted upon as a ground to arrest the writ of seizure and sale, or seek exoneration from the debt, or mortgage. VII. The bank had a right to claim the contributions, under the act on the subject. The question whether there was sufficient authentic evidence to justify the fiat of the District Judge, should have been presented on appeal and not on a petition for an injunction. H. D. 665 No. 2; 667 No. 31; 746 No. 45; L. D. 312 No. 10; 26 A. 709. Be that — 1454 — as it may, however, we think under the authority in the case of the Citizens’ Bank vs. Deynoodt, 25 A 628, the decree of seizure and sale was properly made. V. Act 141 of 1852, Sec. 4; Act 246 of 1853, Sec. 1; Act 45 of 1873; also 28 An. 125; 7 An. 289. VIII. The damages claimed should not be recovered. The plaintiff •shows herself that ever since 1869 Duclozel has ceased to own the property ordered to be seized and sold. If it sustained injury for which the bank might be made responsible, the question would arise whether it ■could be so held, otherwise than in an action by the owners of it. They are not before us. If it be true, however, that the plaintiff can officially, as a creditor of theirs, with vendor’s privilege and special mortgage, be permitted to champion for the benefit of the estate which she administers, assert and vindicate the right of such owners, — no recovery should be had. The right of action if it exist, could be exercised, not against the bank which is not charged with privity, but against the sheriff, if the damages were occasioned while the property was in his keeping and custody, and by his negligence and fault. This right of action would not exist for injury or damage sustained subsequent to the bonding of the property and its consequent release from seizure. 14 An. 26 ; 11 An. 476 ; 12 An. 616 ; 32 An. 1181 ; 33 An. 338. The District Court erred in reserving to plaintiff the right of claiming damages in a different action. The bank pleaded the general issue. If it did not intend to try the ■suit as to the item of damages, it should have excepted to the proceeding in that respect. The plea would have been sustained, as such a claim cannot be validly incorporated in an opposition for an injunction, without bond, under article 739 C. P. See, also, 738. The appellant has prayed for the reversal of the judgment of the lower court and for the damages claimed. We have found against her in the positions which she has taken. In the absence of a prayer for an amendment of the judgment on the part of appellee, we are bound to let it remain undisturbed, although we find it incorrect in one particular. It is, therefore, ordered and decreed that the judgment appealed from be affirmed with costs.