Branner v. Hardy

18 La. Ann. 537

• Court: Supreme Court of Louisiana
• Decided: July 15, 1866
• Status: Published

Opinion

TaiíIAeerbo, J.

By an act of the Legislature of the State of Louisiana, approved on the 11th day of March, A. D. 1852, the Vicksburg, Shreveport and Texas Bailroad Company was incorporated, and by the act of incorporation invested with the power “to borrow from time to time such sums of money as may be required for the construction of the road, over and above the amount received from subscriptions to its capital stock ; provided, that the amounts borrowed do not exceed four millions of dollars; and said president and directors be, and are hereby authorized to secure said loans by mortgaging the property of the company, in whole or in part, as they shall deem expedient,” etc.

Under the authority conferred upon him by a resolution of the board of directors of the company, passed on the 31st of August, 1857, Charles G. Young, then president of the board, was authorized and instructed to issue two thousand bonds of the company, redeemable in twenty years from the 1st day of September, A. D. 1857, for one thousand dollars, or two hundred and twenty-five pounds sterling, each bearing interest at eight per cent, per annum, payable semi-annually in coupons of forty dollars, or nine pounds sterling each; the principal and interest of said bonds made payable in New Orleans, New York or London, as the president by his endorsement may determine. And he was further authorized, by the resolutions aforesaid, “to secure the payment of said bonds and of the interest thereon, by a first mortgage on the railroad of the company, its lands, property, franchises,” etc.

By a notarial act before the Recorder of the Parish of Ouachita, on the 1st of September, A. D. 1857, the president aforesaid declared that he had that day issued two thousand bonds of the said company, in conformity with the power and instructions granted to him, under and by virtue of the resolutions above stated. And he further declared in said act, that “ in consideration of the premises, and in order to secure the full, faithful, and punctual payment and redemption of each and all of the said bonds issued as aforesaid, to any and all future holder or holders thereof, and to each and every one of them, when the same shall become due and payable, together with the interest accruing thereon, in the manner and at the periods of time herein above stipulated, and as evidenced by the coupons attached to the said bonds respectively, the said Vicksburg, Shreveport and Texas Railroad Company does, by its president, the said Charles G. Young, grant in favor of John Ray, ,of the town of Monroe, Parish of Ouachita and State of Louisiana, as well as in favor of all and every other person or persons whosoever, who may become the holders of said bonds or coupons, or any of them, a first mortgage, lien and privilege upon its entire railroad,” etc.

In the month of December, A. D. 1865, William R. Gordon, alleging himself to be the owner and holder of four of the bonds of said company, with the interest coupons or warrants attached to the said bonds, and that eighteen of the coupons held by him were due and unpaid, applied for and obtained, on the 23d day of December, 1865, an order of seizure and sale against the entire railroad and all its appurtenances; and, in pursuance of the order, the entire property of the company mortgaged to secure the payment of the bonds and coupons, or interest warrants, was seized, and after the legal preliminary proceedings, sold by the sheriff of the Parish of Ouachita, at public auction, in the town of Monroe, on the 3d day of February, A.- D. 1866.

The plaintiffs in the case now before us, George M. Branner & Co., aver that, at the judicial sale of the Yicksburg, Shreveport and Texas Railroad, with its appendages, etc., made at Monroe, Parish of Ouachita, Louisiana, on the 3d of February, 1866, under an order of seizure and sale rendered in favor ofVm. R. Gordon,'the entire property was adjudicated to them, as the last and highest bidders, at the price and sum of $550,000. They further aver that they were ready, at the time of the adjudication, to comply with the terms of sale; that they tendered the cash part of the price to the sheriff, in law'ful money of the United States; but that M. O. Hardy, the sheriff, at the instance and request of John T. Ludling and his associates, parties defendants in this case, refused to receive the amount so tendered ; and that said Hardy, sheriff, against the plaintiff’s public protest, proceeded again' to offer the said property at public sale, and at this second offering adjudicated the property to the said Ludling and his associates, the sole bidders at the second exposure. The plaintiffs bring this action against M. O. Hardy, sheriff, making Ludling & Oo. parties, and pray that the adjudication made to Ludling and others, on the 3d of February, 1866, and the proceedings connected with the same, and the deed of sale subsequently made to Ludling and others by the sheriff, be declared null aud void; that they be decreed the legal owners of the property; that the sheriff be directed to make a deed of sale of the property to plaintiffs, upon their complying with the terms of the adjudication made to them at the first offering of the property. They claimed damages against the defendants in solido, in the sum of one hundred thousand dollars.

The claim for damages, as well as the reconventional demand of damages set up against the plaintiffs by the defendants in their amended answer, was, subsequently, discontinued.

The defendants severed in their defence. Their answers contain general denials. Ludling & Co. admitted that they became purchasers of the property, and aver that they acquired a legal, title to it by virtue of the adjudication and deed to them by the sheriff. Both branches of the ease were argued together, and by consent of parties, all the evidence taken on the trial of the case, as to Ludling and his^associates, except such portions as were specified, was taken and received on the trial of the case, as to Hardy, sheriff, the other defendant.

It will be proper here to consider an exception, presented at an early stage of the proceedings, in the Court below, by the defendants, Ludling & Co., and by the Court referred to the merits. This exception, in its nature peremptory, embraces four points. We shall notice, however, the pnly one of. these upon which, in argument before this Court, the defendants’ counsel seemed to place much stress. It is, that this suit is a petitory action, and the plaintiffs, being without title, can not maintain it. The plaintiffs complain of an alleged injury done them by the sheriff and the other defendants, in preventing them from obtaining a complete title to the property in dispute. The gravamen of their case is that a, title was illegally withheld from them. The gist of their action is to obtain that which the defendants contend they are incapable of suing for, because they have no title. The defendant Hardy, sheriff, also excepts to the right of plaintiffs to sue him, on the ground that, having returned the writ under which he sold the property, he is, as to these proceedings, functus officio, and has no further interest in the matter.

We regard the action as one brought against the sheriff, to compel him to make a title to plaintiffs, and to have the adjudication and deed by the sheriff, to Ludling & Co., annulled. We see nothing irregular in the plaintiffs making Ludling & Co. parties, as their rights, under the deed soiight to' be annulled, are necessarily brought in question, The exception, we think, was not well taken. 12 Rob. 79.

The prominent inquiry in this case is, did Branner & Co., the plaintiffs, comply with the terms of the sale, or did they offer to comply ? In order to a proper solution of this inquiry, it is necessary to ascertain clearly what were the terms on which the property was sold. For it appears that, from a disagreement upon this fundamental point, a large amount of the litigation in this case has arisen.

Going back to the commencement of the proceedings, we find that, in his petition for an order of seizure and sale against the railroad company, Gordon, the suing creditor, prays that the entire railroad, etc. “be seized and sold according to law, and in order to pay the interest coupons or warrants now due and unpaid, and the accruing interests and bonds, at their maturity respectively, and that the proceeds of the sale be distributed according to law.”

The order of seizure and sale is responsive to the prayer of the petition, but more explicit, It is in these words :

“It is further ordered, adjudged and decreed, that the property mortgaged, and described above and in the mortgage, be seized, and advertised and sold, according to law, to wit: for cash, to pay the interest coupons now due, and on terms of credit to meet the falling due or maturity of the interest coupons and the bonds to mature.”

The writ of seizure and sale, and the advertisement, repeat the terms, as expressed in the order of seizure and sale; the advertisement adding that the property would be sold under benefit of appraisement. The sheriff’s return upon the writ, made 10th February, 1866, recites the terms as expressed in the various acts, and adds to them the words: “purchaser to give bond and good personal security for the credit portions of the price bid, conditioned according to law.”

Afterwards, hoWY6?? 031 motion before the Ristrict pourt, on the 9th of April following, and on leave obtained of tbe Court, tbe sheriff amended bis return by striking out tbe -words above, under quotation marks, so that,' as tbe return now stands, tbe conditions upon wbicb tbe sale was made are, in every essential particular, expressed in identical language in tbe original petition of Gordon, tbe seizing creditor, the order of seizure and sale, tbe writ, tbe advertisement, and tbe sheriff’s return. But none of these acts are explicit as to ulterior and important questions that arise after tbe adjudication to tbe plaintiffs, on tbe first offering of tbe property, and these are : Was tbe purchaser to retain in bis own bands any surplus of tbe cash portion of tbe price that might remain, over and above tbe arnount be bad to pay to tbe sheriff for tbe seizing creditor and for costs ; and also to retain tbe credit portion to apply to tbe various coupons and bonds as they severally fall due ; tbe mortgage subsisting as security for all tbe unpaid parts of tbe debt, whether due or running to maturity? Or did tbe mortgage become extinct by tbe act of sale, and tbe purchaser to be required to pay over to tbe sheriff tbe whole amount required in cash, and to give bonds with personal security and special mortgage on tbe property purchased, to secure tbe payment of tbe bonds and coupons yet to mature ?

Tbe character of tbe mortgage given to secure tbe bonds and coupons, or interest warrants, became tbe subjeot of a long and elaborate argument by tbe able counsel on each side of this case, both orally and by brief. They agree that all tbe proceedings in tbe case of Gordon v. The Railroad Company, up to tbe time of the adjudication of tbe property, on tbe first offering to Branner & Co.,, tbe plaintiffs, are regular. They agree that tbe property seized should be disposed of according to tbe provisions of tbe Article 686 of tbe Code of Practice, but they draw widely different conclusions as to tbe requirements of that article, when applied to tbe mortgage given to tbe bond-holders by the railroad company, to secure tbe payment of tbe bonds and tbe interest warrants attached to them.

After a careful examination of the subject, we arrive at tbe conclusion, that tbe mortgage in question assimilates itself to an act of hypothecation made to secure a debt payable in installments; and that proceedings to enforce it should be conducted according to tbe rules laid down in tbe case of Pepper v. Dunlap, 16 L. R. 163. We see no other course, wbicb, in. our view, carries out more fully tbe intentions of tbe contracting parties, wbicb better secures their rights, and wbicb deals more equitably with all tbe parties in interest. We are aware that this course, wbicb accords an hypothecary action to enforce tbe payment of any portion of tbe debt, however minute, is not free from objections. But arguments ab inconvenienti are not always tbe most forcible; and we apprehend that, practically, tbe apparent difficulties in tbe way are not at all likely, to be of frequent occurrence.

This being tbe course, in our judgment, implied by tbe general expression “ agcording to law,” we find the conditions of. the gale to.-bq,;. to cover all those portions of the entire debt already due, to include as well the interest coupons due and held by parties other than the seizing-creditor, as the coupons held by him, and on which he obtained his order of seizure and sale. The purchaser to pay in cash, to the sheriff, the amonnt due the seizing creditor and costs of proceedings. To retain in his own hands any surplus amount of cash that might remain over and above his payment to the sheriff for the seizing creditor and for costs. And to retain also those portions of the price to be applied to the several parts of the debt not yet due, as they respectively mature. The mortgage subsisting to secure each and every unpaid part of the debt.

We recur now to the inquiry, did Branner & Co. comply with the terms of the sale, or offer to comply with them ?

After the property was “knocked off” to Branner & Co. at the sale, it is in evidence that J. T. Ludling presented to the sheriff one hundred and fifty-four of the railroad company’s bonds, upon which the interest coupons due amounted to thirty-six thousand three hundred and sixty dollars; and that F. B. Stubbs presented to the sheriff, at the same time, seventy-two interest coupons of the bonds of the company, amounting to twenty-eight hundred and eighty dollars. That the sheriff, at the instance of Ludling and Stubbs, presented the bonds and coupons to Branner & Co., and demanded payment of the coupons then due, amounting, in the whole, to the sum of thirty-nine thousand one hundred and forty dollars. This demand made, as it appears, in the presence and at the instance of the holders of the bonds and coupons, was objected to by Branner & Co., who refused to pay the amounts so demanded, on the ground that they had to pay only the coupons which had been protested for non-payment.

Although the president of the company was authorized to issue two thousand bonds, it appears that, in fact, only seven hundred and sixty-one were issued. At the day of sale, the amount of interest coupons due was one hundred and sixty-eight thousand one hundred and sixty dollars., As the entire debt, then, on the day of sale, largely exceeded the amount bid for the property, the creditors could only receive their pro rata shares. The amount due Gordon, the seizing creditor, and which was exigible in cash on the day of sale, reduced to its pro rata share, exceeded four hundred dollars; the costs of proceedings amounting to $3,469 75, making, together, a sum larger by two hundred dollars than the amount it is in proof, Swan, the agent of Branner & Co., tendered in cash, as all the money he had to pay, to wit: thirty-six hundred dollars. The amount of costs is run up by the sheriff’s commissions being cast upon the amount of the bid, which we think he would have been entitled to had Branner & Co. complied with their bid.

The 'grounds' upon which the plaintiffs declined paying the interest coupons due and presented’by Ludling and Stubbs, we think, is not tenable. It was not necessary that they should have been protested before payment was demanded. 5 An. 724. 13 An. 136. 5 An. 61. The purchaser was clearly bound to pay any bona Me holder the portion of the .debt due him, upon the proper evidence of the claim beig presented.

It is in proof that Swan, the agent of Branner & Co., and one of the parties purchasing, admitted the bonds presented were genuine; that he made no question of the ownership or agency o.f those who presented them and demanded payment of the coupons due and held by them. It admits of no doubt, we conclude, that the plaintiffs faded to comply with the conditions of the sale, and that it was the duty of the sheriff to proceed as he did, to re-offer the property for sale on the same day.

We find several bills of exception in the record, which we do not deem it important, in the decision of this case, to revert to.

It is therefore ordered, adjudged and decreed, that the judgment.of the District Court be affirmed, the plaintiffs and appellants to pay costs in both Courts.