Nutt v. Citizens' Bank

22 La. Ann. 346

• Court: Supreme Court of Louisiana
• Decided: May 15, 1870
• Docket: No. 2645
• Status: Published

Opinions

Howell, J.

Tlie question presented in this suit is, whether or not two acts of mortgage executed respectively on twentieth. February, 1838, and fifteenth January, 1839, by Austin Williams and wife in favor ■of tlie Citizens’ Bank; to secure five hundred shares of the capital stock of said hank, embrace within their security such loans as might bo made under tho provisions of tlie charter of the bank to said A. Williams as a stockholder, on his said stock.

Tho language of the said acts on this point is as follows: “ And in order to secure his subsciiption in the capital stock of said bank, and -also to secure the payment of the principal and interest of the loan raised or to be raised to form the capital of said bank by tho issue of ■bonds signed by the Governor, etc., * * they do, by these presents, jointly and severally mortgage in favor of the Citizens’ Bank of Louisiana, tlie following described property, * * All of which property is to remain thus mortgaged until all of said bonds shall have been paid and redeemed in capital and interest, or until said Austin Williams shall have paid the amount of his shares, and have reimbursed the loan which ho may have obtained as stockholder, unless he should have previously transferred his shares and have been entirely discharged by the said bank. The said Austin Williams and Mrs. Caroline M. Williams, his wife, agree that tho present hypothecary obligation granted by them to secure said stock and the reimbursement of any loan which he, the said Austin Williams, may or shall have obtained of said bank, shall bear interest at the rate of ten per cent, per annum, if not punctually paid when due, and that all the above «described property shall likewise remain specially mortgaged to secure the payment of such eventual interest. The said Mrs. Caroline M. Williams does hereby renounce in favor of said bank all rights and privileges, whether dotal or of any other kind or nature whatever, which they may have upon the above described property, ceding and transferring her said rights to the said bank.”

The existence and validity of the obligations resulting from the subscription of Williams to five hundred shares of the capital stock of.the bank, and of the mortgages securing them, granted by the said acts of 1833 and 1839, are not. questioned; but, it is contended by plaintiffs, whose rights are derived through Mrs. C. M. Williams, the mother of the plaintiff, Mrs. Nutt, that the said acts did not grant or create a mortgage to secure any loan or loans made to Williams or his wife or any subsequent owner of the mortgaged property, and that if they expressly embraced the loans upon the stock, the mortgages are void, because the exact sum or sums secured are not declared in them as required by article 3277 Civil Code.

In the case of the Citizens’ Bank v. Nicolas, 3 An. 112, the stipulations and recitals in the act of mortgage were similar to those in this case, and virtually the same grounds of defense were made, and were decided in favor of the bank upon the authority of the decision in the case of the Union Bank v. Guice, 2 An. 249, in which it is said: “It was provided by the charter of the bank that, after the sale ol the State bonds, each stockholder should be entitled to a loan, equal in amount, to one-half of his stock. The acts of mortgage stipulated that the property affected for the security of the stock, was also to stand hypothecated for the stock loans,” and it was held that the mortgage, the stipulations of which, the record shows, are similar to those in this case, was valid, the sum being stated with sufficient definiteness.

In the case at bar, the charter, which is quoted by both parties, provides that each stockholder shall be entitled to a loan equal to one-half of his stock as in the above mentioned charter, and the two acts •of mortgage under review state the amouut of the stock secured blithe mortgage and also that it (the mortgage) is granted to secure the ■stock and the reimbursement of any loan obtained by said stockholder. This, according to the interpretation in the above cited cases, is a stipulation in the acts of the maximum to be advanced, to wit, one-half of the amount of the stock subscribed. All persons arc informed by said acts that the property described in them is encumbered with a mortgage for loans to bo made to the extent of one-half of the stock mentioned in addition to the amount of the stock itself. The case iu 3 Annual, p. 112, is quite jdaiu and direct on this point, as shown by the briefs and the opinion, and we must infer that the .question has been considered settled since that date, as we do not find that it has since been agitated.

The parties m the case now before us, are in legal contemplation, the parties to tlie original acts of mortgage, and if there be any doubt,, the interpretation of those acts must be against the plaintiffs, who hold through the parties that contracted the original obligation, to wit: Mr. and Mrs. Williams, the parents of Mrs. Nutt, one of the plaintiffs, from her the other plaintiffs acquire — the origin of her right being the donation of a part of the price of the mortgaged property-in the sale of it by her mother, Mrs. Williams, to Haller Nutt, the husband of plaintiff, who assumed the mortgage in favor of the bank.

The other points, as to the existence of a loan to Austin Williams-prior to the sale to Haller Nutt and the novation of the mortgage by the latter, present no difficulty. The record shows that such a loan existed and that the mortgage was not novated, bub expressly assumed by Haller Nutt for the balance of the said loan existing at the date of his purchase from his mother in law. The laofc that the transfer of the stock was made at a subsequent date to that of the real estate subject to it, did not affect the mortgage rights of the bank. No act of the mortgagors could impair the rights of the bank.

We think the judge a aao decided correctly.

Judgment affirmed.