People's Bank v. Cage

The opinion of tbe Court was delivered by Fenner, J. On January 7, 1876, t>be People’s Bank sold to Harry Cage certain immovable property for a price of $8000, of which $1000 was paid in cash and the rest was represented by six equal promissory notes, secured by mortgage aud vendor’s privilege, and falling due respectively in the years 1877 to 1882, both inclusive. All but the last two nqtes were paid. In 1884, after their maturity, the bank transferred these two notes (which were payable to Cage’s own order and by him endorsed) to [140] Gidiére, Day & Co., executing at the same time a notarial act reciting that it had received in cash the full amount of the notes, that the transfer was made ‘‘withoutrecourse on said bank or warranty of any kind,” and also containing the clause that the bank does, “ moreover, cede, transfer and assign to said Gidiére, Day & Co. all of said bank’s rights and interest in and to said notes, and to the mortgage securing the same, hereby subrogating the said Gidiére, Day & Co. in and to all of said bank’s rights, mortgages, actions, liens, privileges and remedies, to which it is entitled, under and by virtue of the provisions, clauses and conditions in said act of mortgage contained, to be by the said Gidiére, Day & Co. enjoyed and exercised in the same manner and to the same extent as they could have been by the said People’s Bank itself.” « A few days thereafter, Cage executed in favor of Gidiére, Day & Co. a mortgage to secure two notes of $8500 each, which are now held respectively by the Hibernia National Bank and the New Orleans National Bank. Subsequently, Gidiére, Day & Co. discounted their own note in the People’s Bank, as security for which they pledged the two original mortgage notes of Cage, which they had bought from the bank; and, later, by the foreclosure of this pledge, the bank again became the owner of said notes. Haiving suffered its mortgage to lapse by failure to reinscribe, it brings the present suit to resolve the sale for non-payment of the price represented by said notes, to which it makes Cage and the Hibernia and New Orleans banks parties. Various interesting questions are presented in argument, but it is apparent from the face of the foregoing statement that plaintiff has no case. Under our law the resolutory condition implied in all commutative contracts gives to the seller of property the right to dissolve the sale in case the buyer fails to pay the price. C. C. 2046, 2561. Undoubtedly in every contract of sale there is tacitly embodied an obligation on the part of the buyer to restore the thing sold to the seller, on the latter’s demand, in case he fails to pay the price. It is now well settled that this obligation is, in some sort, personal to the seller and does not pass with the transfer of the notes representing the price to a third person, at least without a special transfer of this particular obligation with subrogation. Hamilton vs. State National Bank, 39 Ann.; Castle vs. Floyd, 38 Ann. 583; Swan vs. Gayle, 24 Ann. 503. [141] We need not now definitely decide whether this peculiar obligation is transferable at all, or whether, if transferable, the language of the notarial subrogation quoted in this case was sufficient to embrace it. If it was transferred to Gidiére, Day & Co., it is clear that it was never retroceded by them to plaintiff, and hence he has no standing to enforce it. But if it did not pass to Gidiére, Day & Co. it is equally clear that the obligation was extinguished by the transfer of the notes by the seller, for a valuable consideration, without recourse or warranty. Had the plaintiff remained bound as endorser on the notes, the case might have been different. But the transfer without recourse completely severed his connection with the contract of sale otherwise than as warrantor of the title to the buyer; and, leaving him without right or interest to demand payment of the price, equally destroyed his right to demand resolution of the sale on the ground of non-payment. Every obligation is the correlative of a corresponding right; and -when the right is destroyed, the obligation necessarily falls with it. Tins seems plain enough in reason and common sense, and is only confused by the groundless assumption on the part of plaintiff’s counsel, that obligations can only be extinguished by one of the nine modes mentioned in article 2130 of the Civil Code, and by his claim that, as not one of those modes has operated to extinguish this obligation, it must, ex necessitate rei, continue to exist. The fallacy of this argument will be exposed by a brief quotation from Marcadé’s commentary on the corresponding article of the Napoleon Code: “ Besides these general modes, there is a multitude of other causes of extinguishment peculiar to each special kind of obligation. Thus the obligation of a tutor to take charge of the person and property of his waid ceases, not only by the death of either, but also by majority or emancipation of the minor, or by the destitution or excuse of the tutor; my obligation to discharge the mandate which I have accepted ends not only by death, but also by my renunciation or by your revocation of the mandate, etc. These are methods of extinguishment peculiar to particular obligations,which the law does not concern itself with in a title consecrated .to the general principles common to all obligations.” 4 Marcadé, p. 508. In the instant case, at the moment when the vendor parted with the right or power to demand or receive the payment of the price, he lost the right to enforce the penalty of resolving the sale because of nonpayment, and the correlative obligation was necessarily destroyed. [142] This would hardly be questioned had Oíd i ere, Day & Co. remained owner of the notes. But the.vendor’s reacquisition of the notes could not revive an extinguished obligation. For extinct obligations there is no resurrection. New ones may bo created, but the dead rise not again. Judgment affirmed.