Forrey v. Strange

105 So. 25, 105 So. 21, 158 La. 941, 1925 La. LEXIS 2159
CourtSupreme Court of Louisiana
DecidedMay 25, 1925
DocketNo. 25568.
StatusPublished
Cited by13 cases

This text of 105 So. 25 (Forrey v. Strange) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Forrey v. Strange, 105 So. 25, 105 So. 21, 158 La. 941, 1925 La. LEXIS 2159 (La. 1925).

Opinion

ST. PAUL, J.

On January 19, 1919, defendant and three associates sold to the Globe Oil Company a certain oil lease for $300,000; of which $60,000 was paid cash, and the balance secured by mortgage on said lease. On the same day the Peerless Oil Company sold to said Globe Oil Company another oil lease for $450,000; of which $90,-000 was paid cash, and the balance secured by mortgage on said lease.

It appears also that defendant and his associates were the principal stockholders of the Peerless Oil Company; that the sale of both leases was negotiated as a single transaction for $750,000, of which $150,000 was to be paid cash, and the balance on terms, the stockholders of the Peerless Company approving the division by which the company received 60 per cent., and defendant and his associates 40 per cent, thereof. But mention is made of all this simply to show that defendant and his associates had an interest in both mortgages when defendant purchased at the foreclosure sale hereinafter mentioned.

I.

The Globe Oil Company thereupon went into possession of and operated said leases, purchasing for that purpose, on open account, from the Continental Supply Company, some $40,4S1.34 of “machinery, oil well supplies, tools, wares, and merchandise” ; upon which ■ certain partial payments were made, reducing the amount due on February 1, 1920, to a balance of $21,339.71.

Meanwhile, on February 15,1919, the Globe Oil Company had granted a second mortgage on these (and other) leases to secure certain bonds aggregating $2,000,000; in which mortgage (and deed of trust) plaintiffs Frank M. Forrey and the Fort Dearborn Trust & Savings Bank of 'Chicago have been constituted trustees for the bondholders.

II.

In May, 1920, there was still owing to defendant and associates a balance on their mortgage of $80,000, with interest at 6 per cent, from January 19, 1919, and attorneys’ fees at 2% per cent.; and to the Peerless Oil Company a balance of $120,000, with like interest and attorneys’ fees. And said amounts being then past due, both creditors took out executory process (foreclosure proceedings), each against the lease on which it held a mortgage.

Both leases were advertised for sale (and were sold) on the same day, to wit, July 3, 1920. On which day, with interest, attorneys’ fees and costs, the claim of defendant and associates amounted to $90,313.03, and that of the Peerless Oil Company to $136,690.30. And on that day the claim of the Continental Supply Company amounted, with legal interest from February 1,1920, to $21,824.71; for which amount said company claimed a vendor’s lien and privilege upon such machinery, supplies, and tools furnished by it *945 to the Globe Oil Company, as might be found upon the seized premises and capable of identification.

III.

Both leases had been ordered sold without appraisement, the benefit thereof having been specially waived in both mortgages. But defendant was desirous of protecting both mortgages, in both of which he had an 'interest as aforesaid. It was his intention, therefore, to bid at the sale up to the full amount of said mortgages, with interest, etc., but to bid no more; and he made that intention known to whoever appeared to take sufficient interest in the affairs of the Globe Oil Company (then in bankruptcy), and of its bondholders, to make any inquiries on the subject. The evidence does not show that plaintiffs made any such inquiries, either in their capacity of trustees for the bondholders or otherwise..

IY.

But the Continental Supply Company, in order to protect its vendor’s privilege-, was about to demand an appraisement and separate sale of the property on which it claimed such privilege.

Whereupon counsel representing plaintiffs in the foreclosure proceedings (who also represented this defendant in the purchase he made at the foreclosure sale) investigated the claim of the Continental Supply Company, and having been satisfied that the claim was due, and that the property sold by the Supply Company to the Globe Company could be identified, entered.into a written engagement with the attorney for the Supply Company, whereby it was agreed:'

“ * * * That, in order to save costs and expenses the aforesaid property sold by the Continental Supply Company (to the Globe Oil Company) be. this day sold under the foreclosure proceedings without being separately appraised and separately sold; but that $21,-339.71 of the sales price of said property in the foreclosure proceedings be set aside as the proportionate part paid for the property shown in the list hereto annexed and made part hereof, and on which the Continental Supply Corn-pay has its vendor’s lien and privilege; and it is agreed that its vendor’s lien may be recognized and enforced against the said sum of $21,339.71, plus interest 'from February 1, 1920, the same as if the said property had been separately appraised and sold for the said sum of $21,339.71, plus interest from February 1, 1920 (i. e., $21,824.71). The admissions herein are made upon the assumption that no third party has any adverse interest.”

V.

Accordingly, when the leases were cried out for sale, counsel who bid for this defendant increased his intended bids by the full amount of the Supply Company’s claim; adding 40 per cent, thereof, or $8,731.90, to his bid on the Strange lease, and 60 per cent, thereof, or $13,092.81, to his bid on the Peerless lease. Hence the Strange lease was adjudicated to defendant for $99,044.90; which bid, according to the procSs verbal and return of the sheriff, “included $8,731.90 bid for the property sold by the Continental Supply Company, located on the said lease, and on which said company claims a vendor’s lien and privilege”; and the Peerless lease was adjudicated to defendant for $149,783.11; which bid, according to the procSs verbal and return of the sheriff, included $18,092.-81 bid for the property sold by the Continental Supply Company, and located on said lease, and on whieh said company claims a vendor’s lien and privilege.”

The full amount of the Supply Company’s claim, $21,824.71, was thereupon paid by the sheriff to its attorney ($8,731.90 plus $13,092.81), and the balance of said purchase price, less the costs, was paid to the attorney for the plaintiffs in the foreclosure, being the amount of their claim with interest and attorneys’ fees according to the bid originally intended by defendant (to wit, $89,-380 on the Strange mortgage, and $134,170 on the Peerless mortgage).

*947 VI.

Plaintiffs, as trustee for the bondholders, whose bonds (as we have said) were secured by the second mortgage on the two oil leases aforesaid, bring this strictly “hypothecary action, properly speaking,” by which, “If the hypothecated property be neither in the possession of the debtor nor of his heirs, but in that of a third person, the creditor has his action against that person, in order to compel him either to give up the property or pay the amount for which it stands hypothecated.” Code of Practice, art. 68.

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Bluebook (online)
105 So. 25, 105 So. 21, 158 La. 941, 1925 La. LEXIS 2159, Counsel Stack Legal Research, https://law.counselstack.com/opinion/forrey-v-strange-la-1925.