The opinion of the Court was delivered by
Bermtjdhz, C. J.
It is essential for a proper understanding of this-controversy that, at the threshold, a-very concise statement he made of the most glaring facts which the trial has indisputably developed, as also of the pleadings which present the issues submitted. Otherwise, the mind left guideless in the labyrinth before it, could never see its-way through.
Those facts are:
John Crossley & Sons had extensive financial relations with one E.. C. Palmer and the Louisiana Savings Bank and Safe Deposit Company.
They deposited with the institution $50,000, for which certificates were issued.
They made money advances to the hank for $100,000 and subsequently granted to it a letter of credit for as much (£20,000) to be used only under certain terms and restrictions, receiving as collateral security for advances made and to be made, certain drainage warrants, in tbe possession of the bank, and besides, generally all other warrants belonging to it, and which had been pledged to other parties, but which were to be redeemed and then handed over.
Under this letter the bank-drew some $22,000.
Palmer was the president of the concern and its creditor for advances and loans really made, figuring to his credit on the books, for-upwards of $400,000.
[83]*83New or additional stock, to the extent of 3500 shares, having been authorized to be issued, it was agreed (as there was no disposition for outsiders to take any of it) between the bank, Palmer and the Crossleys, who appear to have had some title to the credit in favor of Palmer, that this indebtedness would be converted into the stock, in Palmer’s-name, Subsequently, with plaintiffs’ assent, this stock was placed, part, in the name of a number of the directors, part otherwise; some remaining in Palmer’s name.
On the brink of the bank’s failure and destruction, but before it had been used the letter of credit, as far as not made available, was recalled by the Crossleys.
Palmer had liad extensive dealings with one VanNordan, who had: under his control the drainage of the city, who became largely indebted to Palmer and the bank, and who, in a transaction between him and the city, was required, in order to give a clear title to the corporation,, to turn over to Palmer a large amount of drainage warrants received from the city as the consideration of the contract between them ; those-■warrants being important factors in this litigation.
The bank went into bankruptcy. Its affairs and business are now in process of liquidation.
The plaintiffs bring this action to recover the balance due on the certificates of deposit, the advances made aggregating, they say,. $167,510 36. They further claim conventional and legal interest on different portions of this amount.
The plaintiffs aver rights of ownership to the drainage warrants in, their possession and to others, of the total face value of $516,208; insisting in the alternative that, at worst, they have a lien, as pledgees on $334,208 thereof.
In answer the defendants plead the general issue and assuming the1 character of plaintiffs in reconvention, claim :
That the concern in liquidation owns drainage warrants amounting; to $569,982, to which plaintiffs have set up a similar title, although eventually as pledgees, whereof $334,208 are presently in their possession.
That the plaintiffs are indebted unto the late corporation in the sum-of $350,000 with interest, being the price of the 3500 shares of its stock, subscribed for by them and still unpaid.
That the plaintiffs are further indebted unto the company in $78,-712 50, as the balance due under the letter of credit issued by them to-the bank.
[84]*84As defendants in reconvention, plaintiffs excepted and denying ■those claims, pleaded estoppel and prescription.
From a judgment allowing' them less than they claimed, and the «defendants more than they asked, the plaintiffs appeal.
The record in this case is unnecessarily voluminous, onerously encumbered with a mass of entirely irrelevant testimony and documentary •evidence. Its imposing- appearan ce and the representations of cd unsel as •to the gravity of the controversy, exacted the toleration of an oral argument, which consumed four days of public time. Twelve elaborate briefs covering hundreds of pages of printed matter have been besides submitted.
It cannot be expected that the Court will state at any great length, all the facts from which the parties claim that the differences arisen between them have grown out.
In order to be intelligible, the statement would have to be chronological and methodical, and this kis an impossibility. The facts advanced by each side are discordant, incongruous and irreconcilable. Such statements would necessarily embrace extraneous and cumbersome matters, the consideration of which would unavoidably confuse the mind and lead it astray.
It will suffice that the salient facts upon which the claims and counter claims are based be stated, as each matter in controversy is taken ¡up.
There are four questions to be considered :
First — The money claims of plaintiffs.
Second — Their title to the warrants, viz : whether they are owners or pledgees and to what extent.
Third — Their liability for the price or value of the 3500 shares.
Fourth — Their liability for the balance not drawn under the letter of ‘credit.
Those questions will be dealt with and decided in that order.
I.
The evidence, indisputably establishes that the plaintiffs have deposited with the bank $50,000, for which two certificates were delivered them and on which partial payments have been made.
It also shows that the plaintiffs advanced £20,000 to the bank and issued to it a letter of credit conferring authority to draw £20,000 on them, with certain qualifications.
There can be no real dispute as to the validity of the claim for the several items aggregating $167,510, save as to the balance due on the certificates of deposit, and as to'the rate of interest dire on it.
[85]*85After allowing credit for partial payment?, that balance appears to he $41,714 77.
Tn the absence of any written evidence, showing an agreement to pay conventional interest, the plaintiffs can recover legal interest only on that balance and this from judicial demand.
'I’lie rest of plaintiffs’ money claim is for a sum of $100,000. and a further sum of $220,250 advanced under the letter of credit.
The plaintiffs insist that the payment of these amounts is secured, at least, by a pledge of two sets of drainage warrants in their possession; the one of the face value of $214,208, the other of $120,000.
They go further, and claim to be the owners of those identical warrants and of another set of $182,000, which, they say, after being-pledged, were diverted and used for the purposes and benefit of the. bank.
The plaintiffs further set forth, that after $302,000 of those warrants had been thus pledged, they acquired them in full ownership for a valuable consideration.
They conclude by charging that, if they be not the owners
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The opinion of the Court was delivered by
Bermtjdhz, C. J.
It is essential for a proper understanding of this-controversy that, at the threshold, a-very concise statement he made of the most glaring facts which the trial has indisputably developed, as also of the pleadings which present the issues submitted. Otherwise, the mind left guideless in the labyrinth before it, could never see its-way through.
Those facts are:
John Crossley & Sons had extensive financial relations with one E.. C. Palmer and the Louisiana Savings Bank and Safe Deposit Company.
They deposited with the institution $50,000, for which certificates were issued.
They made money advances to the hank for $100,000 and subsequently granted to it a letter of credit for as much (£20,000) to be used only under certain terms and restrictions, receiving as collateral security for advances made and to be made, certain drainage warrants, in tbe possession of the bank, and besides, generally all other warrants belonging to it, and which had been pledged to other parties, but which were to be redeemed and then handed over.
Under this letter the bank-drew some $22,000.
Palmer was the president of the concern and its creditor for advances and loans really made, figuring to his credit on the books, for-upwards of $400,000.
[83]*83New or additional stock, to the extent of 3500 shares, having been authorized to be issued, it was agreed (as there was no disposition for outsiders to take any of it) between the bank, Palmer and the Crossleys, who appear to have had some title to the credit in favor of Palmer, that this indebtedness would be converted into the stock, in Palmer’s-name, Subsequently, with plaintiffs’ assent, this stock was placed, part, in the name of a number of the directors, part otherwise; some remaining in Palmer’s name.
On the brink of the bank’s failure and destruction, but before it had been used the letter of credit, as far as not made available, was recalled by the Crossleys.
Palmer had liad extensive dealings with one VanNordan, who had: under his control the drainage of the city, who became largely indebted to Palmer and the bank, and who, in a transaction between him and the city, was required, in order to give a clear title to the corporation,, to turn over to Palmer a large amount of drainage warrants received from the city as the consideration of the contract between them ; those-■warrants being important factors in this litigation.
The bank went into bankruptcy. Its affairs and business are now in process of liquidation.
The plaintiffs bring this action to recover the balance due on the certificates of deposit, the advances made aggregating, they say,. $167,510 36. They further claim conventional and legal interest on different portions of this amount.
The plaintiffs aver rights of ownership to the drainage warrants in, their possession and to others, of the total face value of $516,208; insisting in the alternative that, at worst, they have a lien, as pledgees on $334,208 thereof.
In answer the defendants plead the general issue and assuming the1 character of plaintiffs in reconvention, claim :
That the concern in liquidation owns drainage warrants amounting; to $569,982, to which plaintiffs have set up a similar title, although eventually as pledgees, whereof $334,208 are presently in their possession.
That the plaintiffs are indebted unto the late corporation in the sum-of $350,000 with interest, being the price of the 3500 shares of its stock, subscribed for by them and still unpaid.
That the plaintiffs are further indebted unto the company in $78,-712 50, as the balance due under the letter of credit issued by them to-the bank.
[84]*84As defendants in reconvention, plaintiffs excepted and denying ■those claims, pleaded estoppel and prescription.
From a judgment allowing' them less than they claimed, and the «defendants more than they asked, the plaintiffs appeal.
The record in this case is unnecessarily voluminous, onerously encumbered with a mass of entirely irrelevant testimony and documentary •evidence. Its imposing- appearan ce and the representations of cd unsel as •to the gravity of the controversy, exacted the toleration of an oral argument, which consumed four days of public time. Twelve elaborate briefs covering hundreds of pages of printed matter have been besides submitted.
It cannot be expected that the Court will state at any great length, all the facts from which the parties claim that the differences arisen between them have grown out.
In order to be intelligible, the statement would have to be chronological and methodical, and this kis an impossibility. The facts advanced by each side are discordant, incongruous and irreconcilable. Such statements would necessarily embrace extraneous and cumbersome matters, the consideration of which would unavoidably confuse the mind and lead it astray.
It will suffice that the salient facts upon which the claims and counter claims are based be stated, as each matter in controversy is taken ¡up.
There are four questions to be considered :
First — The money claims of plaintiffs.
Second — Their title to the warrants, viz : whether they are owners or pledgees and to what extent.
Third — Their liability for the price or value of the 3500 shares.
Fourth — Their liability for the balance not drawn under the letter of ‘credit.
Those questions will be dealt with and decided in that order.
I.
The evidence, indisputably establishes that the plaintiffs have deposited with the bank $50,000, for which two certificates were delivered them and on which partial payments have been made.
It also shows that the plaintiffs advanced £20,000 to the bank and issued to it a letter of credit conferring authority to draw £20,000 on them, with certain qualifications.
There can be no real dispute as to the validity of the claim for the several items aggregating $167,510, save as to the balance due on the certificates of deposit, and as to'the rate of interest dire on it.
[85]*85After allowing credit for partial payment?, that balance appears to he $41,714 77.
Tn the absence of any written evidence, showing an agreement to pay conventional interest, the plaintiffs can recover legal interest only on that balance and this from judicial demand.
'I’lie rest of plaintiffs’ money claim is for a sum of $100,000. and a further sum of $220,250 advanced under the letter of credit.
The plaintiffs insist that the payment of these amounts is secured, at least, by a pledge of two sets of drainage warrants in their possession; the one of the face value of $214,208, the other of $120,000.
They go further, and claim to be the owners of those identical warrants and of another set of $182,000, which, they say, after being-pledged, were diverted and used for the purposes and benefit of the. bank.
The plaintiffs further set forth, that after $302,000 of those warrants had been thus pledged, they acquired them in full ownership for a valuable consideration.
They conclude by charging that, if they be not the owners they are-at least the pledgees of all the warrants, which must be subjected by-sale to the payment of their entire money demand.
On the other hand, the defendants contend that the $302,000 of warrants in question never were the property of plaintiffs; that they always belonged to the bank, together with other warrants amounting to $18,000, swelling the amount to $320,000; that Palmer, from whom plaintiffs claim to have acquired title of ownership, never owned them.
They further charge that, if the plaintiffs ever had a right of pledge-on the two sets of $214,208 80 and $120,000, they have forfeited the same, and have therefore no shadow of any claim, either as owners oías pledgees, to any of the warrants mentioned in their petition; that the same are the exclusive property of the bank, and that plaintiffs-should be condemned to return those in their possession free from any encumbrance whatever.
This conflict of claims brings us to consider the validity of the respective pretensions of the litigants to the warrants in question.
n.
The evidence is clear that-, at the date of the letter of credit, the-plaintiffs had already advanced to the bank £20,000, or $100,000, and. that on their agreeing to make further advances, under certain stipulated terms and qualifications, the bank actually pledged to plaintiffs the set of $214,208, which was physically delivered. All the other wan ants owned by the bank, whether in its possession or not, were [86]*86likewise pledged, though not delivered, with the obligation on the part of the bank of redeeming them and turning them over as soon as disencumbered.
If it be true that the set of $120,000 was the property of the bank at the date of the letter of credit and of the resolution accepting the same, there is no room for doubt that, like the set of $214,208, they are affected with a lien in favor of the plaintiffs to secure the reimbursement, if not of the balance due on the certificates of deposit, at least •of the advances prior and subsequent to the letter, not exceeding twice £20,000, or $200,000.
The resolution of the board accepting the letter of credit, and the receipt given for the warrants pledged, are conclusive of the fact and •of the right of pledge.
The testimony and documentary proof offered by the plaintiffs do not establish that the warrants in their possession were pledged to secure the balance due on the certificates of deposit, and still less that they have become their property by any transfer from Palmer or the bank.
When they dealt with that person they knew they were treating with one occupying a double capacity and they should have required from him irrefragible title to the warrants,,whether they were held by him individually or officially as president of the bank.
But he does not appear ever to have owned them. They were delivered to him by Van Norden, his debtor, to raise the encumbrance which the latter had placed on his rights of property in and to the drainage contract, which he was to transfer to the city free from any and all claim. The transfer or delivery of those warrants by Van Norden appears to have been designed and effected merely to secure the payment •of the debt due Palmer.
When subsequently transferred to the bank, they passed in settlement of the indebtedness' of Van Norden earn onere, burdened with Palmer’s individual claim. So that Van Norden did not transfer, and Palmer did not acquire from him, the ownership. Hence, the latter ■could not and did not convey any such title to plaintiffs. Claiming to be the pledgees of the bank, plaintiffs cannot deny the latter’s title, for that would be repudiating their own.
Although plaintiffs have failed to prove ownership, they have clearly •established that their demand for the $122,025 is secured by privilege, unless it be true, as is urged by the defense, that by their failure to make further advances for $78,712 under the letter of credit, they have forfeited all their rights as pledgees over those warrants — a question [87]*87which is now pretermitted, but will be considered in its proper place in the latter part of this opinion.
III.
The defendants claim from plaintiffs $350,000, as the amount due by them for 3500 shares of the stock of the company, subscribed for by them by their authorized agent, E. C. Palmer.
They aver that the subscription price of those shares was not paid in ■cash or in its equivalent, but in the check of Palmer for the amount, against a credit of $405,000 figuring in his favor on the books of the bank as a real debt.
The evidence does not show that the plaintiffs ever intended to buy themselves any stock from the bank, or ever authorized Palmer or any one else to purchase any stock for their benefit and account, and to pay their par value in cash or to bind them to such payment.
Consent, express or implied, was an essential prerequisite for the recovery of the price of purchase. Failure to establish it is fatal.
It appears that there was an understanding between Palmer and the bank for the conversion of $350,000 of the amount to his credit into the ■3500 shares, and that this agreement was carried out by a funding of •debt into stock, with the sanction of plaintiffs, whom Palmer considered as having some title to the credit standing in his name, as his creditors for a large amount.
It is not at all probable that the plaintiffs ever gave such power to Palmer, for they well knew of the tottering condition of the bank, and that taking such stock, for which no offer had been made by outsiders and which was of very little value, was not only forfeiting the preference enjoyed by creditors over stockholders, but actually to throw away to no useful purpose the amount of subscription. Such a transaction would have implied insanity.
If it were true, however, that plaintiffs did give the authority to acquire, there is nothing to show that they agreed to buy or pay casli for the stock.
The understanding was, explicitly, that the credit of $405,000 would be debited with the $350,000, and that the stock would thus then rest.
It may well be, as claimed, that under the circumstances surrounding it sucli a transaction was ultra vires, one not susceptible of ratification, and one therefore which is an absolute nullity, not binding on the creditors.
If such were the case the entire transaction would be irrevocably void, and neither the bank nor the stockholders could enforce it.
How then can the representatives of the bank be heard to demand specific performance of a. contract which they have not proved?
[88]*88The conditions upon which the contract was founded would have to-be expunged and replaced by others essentially different, which never entered into the minds of the parties at the time.
The contract was to give stock for credit, or credit for stock, and the-Court is asked to say that the stock was given for money, or that money was to be given for the stock.
The Court cannot substitute to the contract made one which the parties never contemplated to enter into, and lend its aid to enforce it.
The plaintiffs, whom the defendants regard as the owners of the-credit in favor of Palmer, had no interest, no benefit to derive by a conversion. of the debt into stock, for by so doing the preference which a creditor has over a stockholder was to be irretrievably foregone.
Tt 'may, however, be surmised that the only good which plaintiffs expected to derive by the transaction was to put part of their claim against the bank, which the latter could not honor, in the shape of' stock, might have been more available and more easily disposed of in the market, the proceeds to extinguish partly Palmer's debt to them;: but if this were so, it would be a non segmtur to say that therefore plaintiffs are liable for the price which Palmer or they, had they j>«rehased, might have then had to pay for the stock bought.
The inference, under the circumstances, that the bank, or its liquidators, has any right of action against plaintiffs for the price of the shares, is utterly unjustified.
This view of the-case relieves us from the necessity of considering the plea of prescription which the plaintiffs have opposed to the claim, of defendants, which they treat as being substantially an action of nullity of the transaction.
This demand of the reeonvenors for the price of the stock must therefore be rejected.
IV.
The letter of credit to advance £20,000 more, which was accepted by the bank, was notan absolute obligation. On the contrary, it was a conditional one. The letter and the resolution of the board siiow that the advances would be made only to restore, and maintain the bank in an emergency or financial panic, and' this at the instance of a specially convened board. It rested on the contingent saving necessities of thé moment and the entire, good faith of the parties.
The evidence shows conclusively that at that time the tottering condition of the bank was such to the knowledge of her managers, that the balancé which otherwise might have been drawn could, under ho-plausible hypothesis, have restored and maintained the bank.
[89]*89There was then no special emergency or financial panic which could.' authorize the board to demand the balance.
It clearly appears from the showing of the defendants themselves,, that the bank was a still-born institution; that it continued to be thoroughly insolvent, and that at the date of the call it was so beyond the-possibility of redemption.
■ Had not the plaintiffs countermanded the letter of credit, and had-they paid what might have been drawn for under it, this payment would have benefited, as designed, neither the bank as an institution,, nor the mass of the depositors and creditors and the stockholders, for it is manifest that it could not have saved the bank from impending-collapse.
The plaintiffs were therefore right to have refused making further advance. To have acted differently would have been a piece of unqualified stultification.
Such refusal does not assuredly impair their rights as pledgees on •the two sets of warrants in their possession and already mentioned.. Such rights are therefore recognized, and remain in their integrity.
For these reasons’:
Itis ordered and decreed that the judgment appealed from be affirmed-so far as it allows plaintiffs $41,714 77, with legal interest from judicial demand; that the said judgment be so amended as to allow, instead of' $121,287 50, the sum of $122,205, with legal interest as claimed, and 'that in all other respects it be reversed;
And proceeding to render such judgment as ought to have been rendered,
It is now ordered, adjudged and decreed, that said sum of $122,205 and interest be declared to be secured by lien and privilege on the drainage warrants in the possession of plaintiffs, of the sum of $334,-208 80, which shall be sold to meet said claim, which shall be satisfied by privilege and preference over all others out of the proceeds; that the pretensions of plaintiffs to the ownership of said other warrants described in their petition be rejected, and that said warrants be declared to be the property of the defendants.
It is further ordered and adjudged, that the claims of the defendants as plaintiffs in reconvention for $350,000 and for $78,7.12 50, be rejected, with judgment in favor of plaintiffs as defendants in reconvention.
It is further ordered and decreed, that the defendants and recoil venéis pay the costs in both courts.