Lee v. His Creditors

2 La. Ann. 599

• Court: Supreme Court of Louisiana
• Decided: June 15, 1847
• Status: Published

Opinion

The judgment of the court was pronounced by

Edstis,- C. J.

This case was-determined in the District Court, after a very elaborate examination- of the subject involved in it on the part of the district judge, who has given us the benefit of his views in an able and well prepared written opinion. The'decision of the district judge was given in favor of certain claims for work done and materials furnished in- building the steamer Old Hickory, in Kentucky, in preference and adversely to an asserted privilege of the vendor.- The party representing this privilege has appealed, and the case has been argued at bar principally with-respect to-the relative rank of the privileges claimed' by each.

By a law of the State of Kentucky, workmen and material-men have a lien or privilege on the boat, which may be enforced at any time within twelve months, even against a purchaser without notice; and steamers, indebted to that class of creditors.-coming within that commonwealth, are subject to the lien or privilege. The district judge considered all the parties before him as non-residents, and the' enquiry was not embarrassed with the distinction between the rights of domestic and foreign creditors.

It is contended-by the counsel who argued the case' for Handy, representing the vendor’s privilege, who is the appellant, that in a concurso or litigation of all the creditors of an insolvent, opened in this State, a privilege existing under the Jaw of another State, cannot be recognised or enforced by our courts. It is ratlier singular that this question lias never been determined by the Supreme Court of this State, and we are not aware of its ever having been presented to the consideration of the court of the last resort, although in the courts of the first instante scarcely a month passes in the business season without the seizure or sale of a vessel or steamer, and the judicial- distribution- of the proceeds among the conflicting claims of creditors.

We deem it first necessary to ascertain What privileges tho appellee's, Gloéer and others/ would have under oilr laws) supposing, their contracts to have boen made,-their work done, and materials furnished'the Coat, in the State'of Louisiana. The steam'er made her first trip from ¿omsville,- in'December, 1845. Front her arrival in New Orleans, until'she was attached' and surrendered, in May,- J'846, she was engaged in the Nashville trade. She had been making, voyages during five months, before the appelleós attempted to enforce their' privilege.

We consider that the ektréme'fefin for thb durdfion of privileges oh steam5-ers,- when engaged in making voyages between this port and those of other' States, is sixty days. The subject was first brought to the consideration of the Supreme Court, in 1836. Vide Terry v. Terry, 10 La. 79. In the case of The Fulton Company v. Wright & Harris, decided in the yeárj 1837, the' judge of the late first judicial District Court, thus expressed- himself on this'subject:

“1 haveon various occasions expressed my difficulties ori' the subject of administering the law relative to'privileges* on vessels. The articles of our Code on this matter' are taken from the French Code of Commerce, and some' of them cannot be applied, for they contain expressions which refer to' a' system1 not' known with us. The article 192, nos. 6 and 7, refers to a system of registering claims against vessels with the clerk of the tribunal of commerce, within' ten days after the departure of the vessel; and other articles of that Code are framed with a- view to that registry, viz those describing the voyage, &c. The' very language of these last articles we ha-ve adopted, -while the system of the registry of claims, which makes them reasonable and practicable, is rinlfrio-ivn' to-us.- I consider that the term- voyage does not' apply to boats ori rivets/ lakes,-&c'. Either ¿he» there" is no'privilege, or it must receive á reasonable limitation'. I have adopted the'period of sixty days, by analogy to art. 321:2, as thb' period within which these'elaims must be asserted,- whbre theré áre' éonllicts of- rights.”

A-motion was made for a new trial* on which'this questiori vías'agáih cotí-sidefe'd, and we believe since that case it has been held to be'settled, with the general-concurrence of the bar. This interpretation received the sanction' of the Supreme Court in Shirley v. Fabrique, 15 La. 140. We therefore 'conclude that,- under our law the appellees had no privilege on the'pfocbbds of the steamer at the time'of the attachment.

Being- aware that our.courts had frequently had this subject before them, we directed an examination to be made of the cases decided by the late Commercial Court of New Orleans,- distributing the proceeds of steamers among the different privileged creditors.

In the case of Berthoud v. Wm. T. Gray and Sleamer Caledonia, no. 6807 of the suits of that court, Judge Watts, who decided the case of The Fulton Company v. Wright & Harris, alteran elaborate review of his whole course of decisions on the subject of privileges during a period of twelve years from the time he had presided in the- District and Commercial Courts, touching on the question of privileges given by the laws of other States, says:

“ Another principle which I have found it neccessary to adopt is, that privilege is governed by the law of the fórum, and not- of the place where the debt was contracted. In the distribution of- the proceeds-of a steamboat which came from Pittsburg, claims for privilege, the duration of which was one year under the laws of Pennsylvania, Ohio, Kentucky, Tennessee, Mississippi, and Louisiana, were presented. Such a system was manifestly impracticable, and the rule was adopted of regulating privileges by the law of the forum. It has, however, produced inconveniences, for a steamboat, sold to pay her debts under a decree of the courts of Louisiana, has been taken from the purchaser at St. Louis under the claim of privileges-given by the laws ofMissouri, and-re-sold to enforce the privileges.-

“ It is presumed, however, that more mature reflection will demonstrate the impractibility of permitting the laws of lien or privilege to follow moveables into a new jurisdiction.- That lien or privilege is part of the remedy seems clear, when we consider the purpose for which they- are given. They are the means of enforcing a right, which right is always the payment- of a sum of money ; and a privilege or lien is the-means of compelling the payment, and is analogous to a seizure or execution. We do not respect mortgages-given in other. States, when they are claimed on negroes brought into Louisiana. A- party who- claims a privilege on a moveable, must not permit that moveable to leave the jurisdiction of the State or country which confers the privilege. The utter impractibility of paying any attention to the laws of lien or privilege of other States on vessels or other moveables, is a complete answer to any claim- of right founded on the laws conferring such privileges or liens.

“ I consider that my opinion on this subject is entitled to some authority, as a long administration of justice in the courts of the fii*st instance enables me to-comprehend the bearing of these kinds of rules in practical affairs of this nature.”

Judge Buchanan, who succeeded Judge Watts on the bench-of the late First District Court, states the practice to have been uniformly to the same effect.

Without being required to assent to the principle adopted by Judge Wattsr as to liens and privileges in all cases appertaining, exclusively to the remedy and-as such regulated-by the law- of the forum,'alone, it must be admitted that the-views given-by him as to the impractibility of the opposite system are sound,, and that his exposition of the law and the practice of our courts under it in relation to privileges on ships and vessels, is in- accordance with the textual provisions of our Code.

Privilege can be claimed only for those debts to which it is expressly granted, in this Code. C. C. art.- 3152. This article has always-received the construction from our courts which its terms import, and no privilege by implication, or other than that created by positive enactment, has been recognised. Grant v. Fial, 17 La. 158. Hoffman v. Laurans, 18 La. 72. First Municipality v. Hall, ante p. 549.

Art. 3202 pi-ovides that the following debts are privileged on the price of ships or other vessels, in the order in which they are placed: they are eleven in number, and the material-men, seamen, and others are provided for in their order, and provision is made in subsequent articles for the loss and extinguishment of privileges. We are not aware of a single case in which any privilege has been recognised in the distribution of the proceeds of a vessel, other than those mentioned in the Code.

The policy of our system, which-confines privileges to those expressly created byjlaw, is very obvious .to those who have had the means of observing the abuses to which its extension would necessarily lead. It would be impossible to prevent collusion between the owner of a vessel and creditors whom he might wish to prefer, or who would hold up and keep unsatisfied their secret privileges, to be enforced as his interests required, to the detriment of bond fide creditors. Even under our system, .restricted as it .is, this abuse prevails to a certain extent, and-imposes on our courts the duty of rigid scrutiny of all claims which carry with .them privileges on the proceeds of a vessel .under judicial authority.

We think that the framers of our Code, ¡in .establishing privileges on ships and vsssels, did not intend to confine the .operation of their legislation to those belonging to this port, or owned in this State; but laid down general rules in .relation to the distribution of .their proceeds, without regard to their origin or the place of their owner’s residence. The existence .of privileges on vessels under the.law.of other States was a fact,befbre.them,,and none.of.any kind .are allowed except those expressly recognised and enumerated in the .Code.

That a failure to acknowledge, or enforce, liens or privileges on moveables created by foreign laws, cannot be .considered as derogating .from the comity which prevails among States in relation to the effect to be given to.foreign .laws, is obvious. A nation within whose territory personal property is found, has .as entire jurisdiction over it while there as it has over immovable property. Its exercise for all purposes .is a question of policy, and may be co-extensive with its authority over the-latter. Civil Code, art. 9. Story Conflict of Laws, § 550. Penny v. Christmas, 7 Rob. 499. Harper v. Stanbrough, ante p. 377. We therefore conclude, that the claims of Clover and .others .are not privileged.

The judge of the District Court from whose judgment this appeal is taken, •decided in favor of the privileges claimed by Clover and others, on the ground ¡that the privilege, attaching by the law of the place of the contract, became a ■part of the contract, which ought to be maintained and carried out in its inte.grity, and that to deprive the party of the privilege was virtually .to impair the obligation of the contract. The right of a.creditor to enforce a privilege created by a foreign law on a moveable within this State as .part of the original contract, is the antagonist theory to that which considers the privilege as exclusively appertaining to the remedy. We do notfeel ourselves .called upon to adopt either in the present case, as our own legislation has placed the moveable exclusively under the operation of our own laws, which the sovereign power has the same right to do as it has to determine what property shall, and -what shall not, be subject to the payment of debts .under execution.

Whoever has taken the trouble to examine .the opinions of writers of acknowledged authority on this vexed question of conflicting laws, will be struck with .the difficulties which every phase of it presents, and the almost necessity of •remedying the evil by positive legislation.

The learned judge has referred to several authorities in support of his opinion, which he considers as recognising the doctrine that the privilege, forming part of the contract itself by the law of the country where it is made, followed the property into one where by law no such privilege existed. The case of Whiston et al. v. Stodden Hewit's Syndics, 8 Mart. 134, was determined in 1820, and consequently without reference to the eliqct of our Code of 1825.

The opinion in the case of Sabatier et al. v. Their Creditors, 6 Mart. N. S. 589, we do nqt understand as relating to a right created under a foreign law ; and as we have s.een in the practice of our courts since, the case pf the Ohio Insurance Company v. Edmonson, 5 La. 296, decided in 1832, has never been considered as determining the question under consideration. Indeed, so far as authority is considered in relation to t\ie conflict of laws in similar cases, and (he comity which is to he observed in relation to the right of priority of payment created by the law of the place where the contract is made, the decisions of the highest tribunal in the Union are directly and positively against its recognition. Harrison v. Sterry, 5 Cranch, 298. Smith, Administrator, v. The Union Bank, &c., 5 Peters, 523.

In the distribution of insolvent estates under pur laws, we are not aware of any distinction that is recognised among creditors, dependent on the place of the origin of the debts. The distribution is made according tp the order of privileges and mortgages .established jin .the Code, its of tlio proceeds of a common pledge.

It has been urged in argument that the sale yvas made for the purpose of defeating the rights of Glover et al., the .appellees, bn the steamer, and (hat it was in that respect fraudulent, and that the appellants pan have no claim under file sale. That objection is obviated by our decision as to the existence of the privilege asserted by Glover et al. Ip regard to the bond fides of the sale itself, for the price of which Handy .claims 9 privilege, we find nothing in the evidence yyhich would authorise us in disallowing it.

The judgment appealed froin must therefore be reversed, and a privilege alIowred to Handy of the vendor on the proceeds of the one-half of the steamer .Old Hickory, for the sum of $7,750; the costs of the appeal to be paid by th§ appellees.