American Freehold Land Mortgage Co. of London, Ltd. v. Peirce

49 La. Ann. 390

• Court: Supreme Court of Louisiana
• Decided: February 1, 1897
• Docket: No. 12,361
• Status: Published

Opinion

The opinion of the court was delivered by

Nicholls, C. J.

The attack upon the mortgages executed by J. Caldwell Peirce to the plaintiff company, in so far as it is based upon the claim that plainiiff was doing business in Louisiana in violation of Art. 236 of the Constitution, must fail. The facts of this case bring it under the principles laid down in Reeves vs. Harper, 43 An. 516, and Scottish American Mortgage Co., Limited, vs. W. F Ogden, ante, p. 8.

Intervenors claim that the loan to Mrs. Peirce, though apparently made by Richardson, was in point of fact made to her by Shattuck & Hoffman, and that in the taking of the notes and mortgage and in the proceedings which resulted in the sale of the Delhi plantation, Richardson’s name was simply used in order to interpose a third person between Shattuck & Hoffman and Mrs. Peirce and her heirs. We find under the evidence no foundation for that charge. There is no reason assigned why at the time of the loan to Mrs. Peirce there should have been any concealment of the actual facts of the case. The property belonged to her; she had a legal right to contract the debt she incurred and to grant the mortgage she did, and even up to the present time there has been no contention as to her not having been legally bound both as to the debt and as to the mortgage. The loan in question made to Mrs. Peirce was really made to her by the British and American Mortgage Company, through Richardson, and the notes and mortgage given were held by that corporation and not by Shattuck & Hoffman. It is charged that the sale made under the Richardson mortgage was the result of an agreement or combination between Shattuck & Hoffman and J. Caldwell Peirce, the father of the intervenors, to bring about for the benefit of the latter, and to the injury of the children, the shifting of the title of the plantation to the husband from the succession of the wife. We do not find this to have been the fact. The correspondence between the firm and Peirce discloses that the British and American Mortgage Oompany, holders of Mrs. Peirce’s notes and mortgage, had become alarmed at her death lest by some judicial proceedings a sale should be made in the settlement of her succession which would raise the mortgage and transfer their rights to the proceeds of sale. They were unwilling that this should happen, or that matters should remain any longer as they were; they therefore insisted upon immediate payment, or that a sale should be made and that their rights should be secured to their satisfaction. Peirce, so far from, at that time, seeking to transfer the title to himself, wrote a letter to Shat-tuck & Hoffman, complaining that immediate payment was being insisted upon, and the latter replied, explaining the exact situation and from what quarter came the demand. They informed Peirce that they had no control over the matter; that they had to follow the instructions of the company, between whom and Shattuck & Hoffman there seems to have existed business relations of some kind. It is not pretended that either Peirce himself, or the succession of his wife, was in a condition to make the payments which were exacted. The British and American Mortgage Company had the legal right to enforce payment, and neither Peirce nor the succession of the wife could control the corporation in the exercise of that right. They were without power to stay the executory proceedings which followed. The sale which resulted from these proceedings was a public one, at which any person was at liberty to buy. Had the seizing creditor bought precisely for the same price at which the property was adjudicated, there could certainly have been no legal obstacle in the way of its doing so, if the proceedings themselves were proper and legal. Nothing was done or alleged to have been done which was either intended to deter bidders or to have resulted in doing so. It is argued that the price bid was much below the actual value of the property, but the mortgagor, the mother of the intervenors, had herself waived the benefit of appraisement, and she was bound by her agreement. There was no legal reason why Hoffman, of the firm of Shattuck & Hoffman, should not buy the property at the offering. When the adjudication was made to him and the price (under the orders of the attorney of the seizing creditor) was credited on the writ, the debt of Mrs. Peirce was instantly as between her and the British and American Mortgage Company paid and extinguished and the ownership of the property passed at once to Hoffman. The seizing creditor could have donated the price to the purchaser or they might have consented to payment of the price by means of novation. In either event the seized debtor could not object. (Baudin vs. Roliff, 1 N. S. 165; Id., 8 N. S. 100.) Whether Hoffman ever paid the English and American Mortgage Company, or when or how they paid the amount of the bid was a matter between those parties which did not concern the seized debtor. All that the debtor could require was that the debt should be declared discharged. If either the seizing creditor or Hoffman, looking forward to the possibility of becoming a purchaser at the sale, had in view of that contingency made promises or arrangements (based upon that fact) with Peirce, this would have been doing with their own what they had the right to do. If the title passed to Hoffman by the sale (as it did) the seized debtors had no ground of complaint; certainly none so far as Hoffman was concerned that he should make use of his own ownership so as to benefit their father. They might be able to find fault morally with their father that he should not subsequently have given them the benefit of any arrangement which he had been able to make, but they could not make their father’s preferring to follow his own interests than theirs (if such was indeed his course) turn to the disadvantage of Hoffman, who owed them no duty. In Amato vs. Erman & Cahn, 47 An. 976, referring to a complaint of a similar kind sought to be urged against mortgage creditors, we said: “ If those parties had a legal mortgage on the property they were free to enforce it, and if they enforced it and cut off by becoming purchasers at the sale all rights of the creditors of Sorrel upon the property itself, transferring whatever claims creditors might have to the proceeds of sale, they were at liberty to do with their own what they pleased, and if they thought proper to transfer the property to a third person in order that Erman & Cahn might derive a benefit from it, that fact could not result in divesting them of rights which had legally vested in them under their execution. (Gilkerson, Sloss & Co. vs. Bond & Williams, 44 An. 844.) “ The creditors might perhaps (if the special agreement was one which would enable their debtor to evade their pursuit in the future) attack the agreement itself or make it turn to their own advantage, but they could not oust the purchaser from the property.”

It can not be pretended here that the English and American Mortgage Company were not legally authorized, holding a valid mortgage to force the property to sale as they did, nor that Hoffman was not at full liberty to buy as he did. It would be a strange result if, notwithstanding the concurrence of those two facts, the exercise of both rights should be followed by the consequence that the property should remain the property of the heirs, of the debtor, not only without having themselves paid the debt for which it stood mortgaged, but freed from that debt directly and indirectly. It is not asserted that the English and American Mortgage Company in foreclosing had any other object in view than to safeguard and protect their own interests. When Hoffman bought at the sale he became bound for the price; when he paid this price he became entitled to protection defensively, and, within certain limits, as against the seized debtor and her heirs through the rights of the seizing creditor. There existed at once such a privity between the seizing creditor and the purchaser as to authorize him to call on the latter and appear and defend the title, or directly avail himself of any legal or equitable defence by which the creditor might oppose the action. Judice vs. Kerr, 8 An. 462; Upsher vs. Briscoe, 37 An. 154; Seawell vs. Payne & Harrison, 5 An. 255; Scott vs. Featherston, 5 An. 314; Wolf vs. Lowry, 10 An. 274; Coiron vs. Millaudon, 3 An. 664.

Whether this right of protection springs from defensive equitable subrogation or the application of the principle that the debtor should not be permitted to enrich himself at the expense of another (Childress vs. Allen, 3 La. 480), we need not here consider.

The intervenors have succeeded in this suit, as between themselves and their father, in reinstating in themselves the title of which they were divested by the suit of the English and American Mortgage Company. Their father acquiesces in that judgment. The plaintiffs in this suit have no further interest in the question of title than to see that their mortgage rights, which they acquired on the strength of the title of J. Caldwell Peirce, as it appeared of record under judicial proceedings, should be fully recognized and enforced.

It would not follow, as the necessary consequence of the intervenors being decreed to be the owners of the property, that plaintiff’s mortgage rights should fall. Chaffe vs. Farmer, 34 An. 1021.

Francis B. Hoffman, however, as appellant, is interested in seeing, that the purchase of the property as made by him be sustained, inasmuch as he subsequently transferred the title so acquired by him ta J. Caldwell Peirce under warranty.

We will have, therefore, to examine into and decide whether the adjudication made to Hoffman divested the heirs of Mrs. Peirce of their interest in the property.

We have already said that Hoffman’s title was beyond attack on the ground of any bargain or arrangement between himself or Shat-tuck & Hoffman and J..Caldwell Peirce; that a judicial sale should be resorted to for the purpose of transferring the property over from the succession of the wife to the husband. The proceedings which resulted in the sale, therefore, have alone to be considered.

The only attack made upon the judicial proceedings is, that in foreclosing their mortgrge the English and American Mortgage Company did so contradictorily with J. Caldwell Peirce as being tutor of his children when, as they contend, he was not such under the law.

If, at that time, Peirce was not their tutor, the company would have been entitled to call for the appointment of a tutor ad hoe to represent their interests under the proceedings then about to be taken. Art. 313 of the Civil Code declares that, “ when the minor is without a tutor, any person who has a claim against him may apply to the competent judge to request that a tutor ad hoe be appointed to him, which tutor shall not be bound to give any security, but shall take an oath before the court who has appointed him to defend the interests of the minor according to the best of his knowledge.” It will be seen from this article that in cases where parties have claims adverse to minors, their enforcement is not subordinated to the fact that at that time the general interests of the minors in the administration of their affairs should be protected by a tutor who had given bond, and otherwise complied with the law as to tutorship generally. The rights of creditors, as well as those of minors, was matter for consideration. The lawmaker, in dealing with that subject, deemed it perfectly consistent with proper protection of the minors that they should be represented defensively in litigation by parties whose fidelity was guaranteed simply by an oath to perform their duty. J. Caldwell Peirce would unquestionably have been the proper person to have been appointed tutor ad hoc to represent Ms children had they been at that time without a regular tutor. He would presumptively be much more concerned in and for the welfare of his children than would a stranger. When the English and American Mortgage Company, in an examination of the proceedings in the matter of the succession of the wife, found that the father had been tutor of the children under a recital that he had complied with the provisions of the law, and that he had taken an oath as tutor, they were justified in believing, particularly under the decision in Stackhouse vs. Zuntz (36 An. 583), that J. Caldwell Peirce was legally authorized to represent Ms children as tutor — if not generally as tutor, at least defensively, and for the purpose of that particular suit.

We think it would be subordinating substance to mere form to have required that the father should have been appointed as a tutor ad hoc in that particular case, and to take therein a second oath. We are of the opinion that the proceedings carried on contradictorily with him as tutor were legal, and carried with them the legality of the sale to Hoffman.

Even had there been a secret understanding between Hoffman and J. Caldwell Peirce, the intent and object of which was to transfer the ownership of property from the heirs of Mrs. Peirce to the father, we do not think that fact could be made by the children to turn fo the injury of the plaintiffs. The record disclosed that their mother had executed a valid mortgage to the English and American Mortgage Company — that that company had validly enforced their mortgage rights on the property; that it had been purchased by Hoffman, against whose legal right to purchase nothing appeared; that it had been sold by Hoffman to Peirce, as between whom there was no reason to suppose that a legal disability existed either to sell or to buy. On the hypothesis that there was in fact some defect or vice in the title as between Hoffman, Peirce and Peirce’s children, plaintiffs were no party to the proceedings or facts from which such defect arose. They knew nothing of such defect or vice. There was nothing to indicate such vice in the records. We can apply to them the language used in Chaffe vs. Farmer, 34 An. 1021, in respect to the intervenors in that case: “ They acted in taking the mortgage upon the faith of a judicial sale translative of the property.: They were therefore in good faith and entitled to protection.”

For the reasons herein assigned, it is hereby ordered, adjudged and decreed that the judgment herein appealed from be and the same is hereby annulled, avoided and reversed, and it is now ordered, adjudged and decreed that the demands contained in the petition of intervention of Philip B. Peirce, Geraldine B. Peirce; wife of Samuel H. Coulsom; J. Caldwell Peirce, Jr., and Mary B. Pierce and contained in their petition in the suit of Philip B. Peirce et al. vs. J. Caldwell Peirce et al., No. 1892 of the docket of the Eighth Judicial District Court for the parish of Concordia, to be recognized as the owners of the Delhi plantation in Concordia parish, and that the sales of said plantation made by the sheriff of said parish to Francis B. Hoffman on the 7th of May, 1887, and by Francis B. Hoffman to J. Caldwell Peirce on June 14, 1887, and the mortgages granted hy said J. Caldwell Peirce to the American Freehold Land Mortgage Company .of London, Limited, recorded in the mortgage books of the parish of Concordia be declared null and void and set aside, be and they are hereby rejected at their costs in both courts.

It is further ordered, adjudged and decreed that the injunction which issued herein on the petition of J. Caldwell Peirce be and the same is hereby set aside and the plaintiff, the American Freehold Land Mortgage Company of London, Limited, be and they are hereby authorized to proceed to seize and sell the property covered by their mortgage and referred to in their petition in accordance with the order of sale granted to them on their prayer. It is further ordered and decreed that J. Caldwell Peirce pay costs in both courts.