Woodward, Wight & Co. v. Dillworth

PARDEE, Circuit Judge, after having stated the foregoing facts, delivered the opinion of the court. In the case of John F. Aiken et; al. v. Woodward, Wight & Co., recently decided by this court on a similar claim made against the steamer Belle of the Coast for life preservers furnished under the same contract (19 C. C. A. 345, 72 Fed. 1019), it was held that the life preservers were a necessary equipment of the boat, and that for furnishing the same a domestic lien resulted, under article 3237, Rev. [418] Civ. Code La. In that case, as here, there was some conflict in the testimony as to the number of life preservers actually furnished; but as we held in that case we hold in this, — that the clear preponderance of the proof supports the libel, and that a lien resulted against the steamboat Stella Wilds for the full amount claimed. The important question presented on this appeal is whether the lien which resulted under the local law, in favor of the libelants, for the supplies furnished, was subsequently divested by reason of the proceedings in liquidation of the Comeaux-Aiken Packet Company, and the sále made therein, as set out in the statement of facts. We think there can be no doubt that the lien granted by the local law must be taken with all the limitations and conditions attached by the lawmakers. This has been specifically held in numerous cases in the United States courts, and from an early day. See The Chusan, 2 Story, 455, Fed. Cas. No. 2,717; The Red Wing, 14 Fed. 869; The City of Salem, 31 Fed. 616; The Edith, 94 U. S. 518; The Harrisburg, 119 U. S. 199, 7 Sup. Ct. 140. Article 3237 of the Revised Civil Code of Louisiana, which gives the lien or privilege which libelants claim, is followed by other sections dealing with the matter. Article 3239 is as follows: “Creditors Raving privileges on ships or otlier vessels may pursue the vessel in possession of any person who has obtained it by virtue of a sale; in this case, however, a distinction must be made between a forced and a voluntary sale.” And article 3240 reads': “When the sale was a forced one the right of the purchaser to the property becomes -irrevocable; he owes only the price of adjudication and over it the creditors exercise their privilege in the order above described.” The. question then is whether the sale under which claimant asserts title was a forced sale, within the meaning of the articles above quoted. There are plausible grounds for holding, as claimed by appellant’s proctor, that, in view of the fact that the Code of Practice of the state of Louisiana provides for the provisional seizure and sale of ships and vessels to enforce the liens granted by the local law, the forced sale, within the true intent and meaning of the articles above quoted, refers only to a sale made under such quasi admiralty proceedings. See Code Prac. arts. 284 et seq. But we are not required, in this case, to determine this point. For the purposes of this case, it may be taken, as claimed, that “forced sale” and “judicial sale” are identical in Louisiana, and that either term means a sale made under authority and process of law' in any legal proceeding had contradictorily with the owner before any court of competent jurisdiction. Article 2616 of the Revised Civil Code of Louisiana says that sales made by authority of law7 are of two kinds: (1) Those which take place when the property of a debtor has been seized, by order of a court, to be sold for the purpose of paying the creditor; (2) those which are ordered in matters of succession or partition. The facts, as found in this case, show that although there was a sa,Ie made by the sheriff, and under an order of court, it was in a proceeding wholly voluntary. Neither the resolution of the stockholders directing the [419] liquidation of the company, the petition of creditors to the court, nor any finding made by the court, shows a suggestion of insolvency, or of any contradictory proceeding. The proceedings had in the case are unknown to the lex scrip ta of Louisiana. They are barely permitted in the courts of the state, under a decision of the supreme court of the state in Re Louisiana. Savings Bank & Safe-Deposit Co., 35 La. Ann. 196, and solely on the ground that the corporation to be so liquidated consents to the proceeding. In this case liquidators chosen by the corporation took the Stella Wilds, and in a consent proceeding in court, binding only on consenting parties, caused the same to be sold. Although the forms of sale provided by the law of Louisiana in cases of sale on execution were followed, it was wholly voluntary on the part of the parties who effected the sale. There is not a suggestion in the record that the libelants were parties to the proceeding, or had any legal notice of the same. It is clear that they had no notice by reason of any seizure or change of possession of the vessel upon which the law gave them a lien. It cannot be admitted that the sale was either one of the two kinds mentioned in article 2616, supra. It is futile to contend that the insolvent laws of Louisiana give any color of right to the proceedings in question, because not only was there no suggestion of insolvency, but, as decided by the supreme court of the state, corporations cannot avail themselves of the provisions of the act relative to the voluntary surrender of property. Jeffries v. Iron-Works Co., 15 La. Ann. 19. The learned proctors for appellee claim that the practice finds support in section 688 of the Revised Statutes of Louisiana, providing the manner in which the affairs of a corporation shall be wound up in certain cases. The section is as follows: “Sec. 688. They shall forfeit their charter l'or insolvency evidenced by the return of no property found on execution. In such cases it shall bo the duty of the district court to convert all the assets, including- any unpaid balances due by the stockholders on their shares, into cash and to distribute the same under the direction of the court amongst the parties entitled thereto in the ,s¡t me manner as near as may be, as is done in cases of insolvency of individuals.” The forfeiture of a charter for insolvency evidenced by a return of “iso property found,” on execution, is an entirely different case from the one at bar, where there was neither judgment, execution, nor finding of insolvency. In our opinion, the sale made by the sheriff of the steamboat Stella Wilds was of no more force than if it had been made by the liquidators without the intervention of the sheriff, and that, treating it as a sale made by tlie liquidators, it is of no more force than if it had been made directly by the owner. To hold that such a sale should be given the force and effect of a forced sale, within the true intent and meaning of articles 3239 and 3240 of the Civil Code of Louisiana, would be unwarranted and unsupported by either principle or authority. The decree appealed from is reversed, and the cause is remanded to the district court, with instructions to enter a decree in favor of libelants for the amount claimed in the libel, with recognition of lien upon the steamboat Stella Wilds, and for costs.