Sabatier v. Their Creditors

6 Mart. (N.S.) 585

• Court: Supreme Court of Louisiana
• Decided: March 15, 1828
• Status: Published

Opinion

Porter. J.

delivered the opinion of court. Brunetti the appellant, complains the judgment rendered in the court below, which placed him on the tableau of distribution as a simple creditor—he contends that he . . . ' is a privileged one.

, The case presents two questions;

be a r'ort'íon was placed out of the reach of execution, provided the portion left was notsuffi■ cient to satis- The privilege on contracts of de- " LtoVefore^ Ration™/"⅛ co'd&T^'not affected by itsprovisions.

1st» Whether he is a creditor to the amount claimed by him.

authorises him to be paid in preference to chi-rographary creditors. And 2d. Whether he has a privity which'

I. As the judgment of the court below recognized the debt, and the other creditors who ~ °PPose die appellant have not prayed for any amendment to it, that question would seem set-tied. But in this court it has been argued, that, though they have no objection to recognise him as a simple creditor, because they have no in- . . ..... - terest in contesting his claim on that ground, they are deeply concerned in disputing his J r J 1 ° claim to be paid in preference to others; and 11 diat in exercising the right to contest his privilege, they can put him on the proof of every necessary to establish it, among which the first and most important is, that he should shew the existence of the debt claimed by him.

Perhaps they have: at all events, as our o-pipion accords with that of the lower court as to the justice and reality of the claim, we find it necessary to examine whether, tinder the state of the case, the question is open for examination. It is true, as contended for by the appellees, that on a contest between creditors in juicio de concurso, the notes or obligations of the insolvent do not make, in themselves, proof of the debt apparently due to them.— They must-be supported by other What that other evidence must be, as was said by this court in the case of Menendos vs. Lorionda's Syndics, no author that we have been able to consult distinctly and positively states. But as the books declare they do make evidence, when supported by other circumstances, (otros adminículos) the conclusion come to in the case just stated, appears to us still to be the correct one, namely; any legal evidence which will convince the minds of a court and jury of the fairness and justness of the claim. The evidence furnished in the case before us leaves not a doubt on our minds that the money was deposited as the appellant alleges, and we shall, therefore, proceed to examine whether he has a privilege for its. payment: 3 Martin, 705; 12 ibid, 157; Febrero, p. 2, lib. 3, cap. 3, no. 34.

II. This question is much more difficult than that just disposed of. At the time the money was placed in deposit, the provision of our old code regulated contracts of this description, and as, by them, no. change was made in the ancient jurisprudence of the country, a J r privilege or right of preference existed on the irregular deposit. Since the contract was en-into, and before the failure of the insol: • vents, a change has been made in our law by which the privilege of the depositor is restrained to eases where the thing reclaimed is identically the same with that deposited: conse-vuently, that arising from the irregular deposit, whén the demand is not for the same thing, but for the same quantity of the thing placed in the hands of the depositary is established: Civil Code, 2934, 3189; 9 Martin's Rep. 470, Durnford vs. Seghevs' Syndics.

By which of these laws should the right of the appellant be decided is the point presented for decision. If the privilege accorded by the law at the time of the contract, make a part of the rights flowing from the agreement, then the claim of privilege must be allowed. If, on the contrary, it is nothing but one of the remedies given 'to enforce the agreement, the control of them was within the legislative power, and the preference being abolished, the claimant must be put on the tableau as a simple creditor.

The distinction between rights and remedies is a subject of frequent discussion in courts, and the repeated contests they give rise to, is a sure proof how unsettled the doctrine is whiqh governs them. The constitution of the United States prohibits any of the particular states from passing laws which will impair the obligation of a contract As the obligation here spoken of is the legal, and not the moral, obligation, it would seem to follow, that the obligation of a contract is that which the law in force at the time the contract is made, obliges the parties to do or not to do. If this be tr ue, the right of each is, to obtain a performance of every obligation arising out of the agreement at the period it was entered into. The remedy is the means given by law to carry this right into effect.. The question, then, in every case of this kind, is, what are the obligations of one of the parties, because the rights of the other are ever correspondent to, and coextensive with, the duty imposed on the person with whom he stipulated.

No’w, in the ordinary case of a promise to pay a certain sum of money on a particular day, the obligation of tlfe contract is, that the debtor shall discharge the debt at the period fixed, or, that in dfefault thereof, his property shall be responsiblejo satisfy his engagement. We are aware that a few have contended, that there is no implied obligation to make the pro* perty liable in a contract of the kind just men* tioned; but we apprehend such a ground is quite untenable. Indeed, wre do not see how it can be maintained without reducing the obligation from a legal to a moral one, since a right without a legal remedy ceases to be a legal right If, by the contract, the property of the debtor did not become responsible, and was not, as between creditor and debtor, to be pía; ced out of legislative controul, there would be scarcely any thing left for the prohibition in the constitution of the United States to act on. It cannot be believed the framers of it intended to guard against the states passing laws, which might add to, or take from, die amount to be paid, and change the time of performance, find leave them a power which would enable them to say, the debtor should be en-irely released, both in person and property, from his engagement.

In the case of Sturges vs. Crowninshteld in die supreme court of the United States, it was admitted in argument, diat all the present property of die debtor ivas responsible to the creditor; but it was urged that the obligation did not go so far as to make future acquisitions subject to it. The court, however, said, that both present and future were, and to release the latter from liability impaired the obligation. In the case of Green vs. Biddle, they declared that any law introducing a deviation from the terms of the contract, by postponing or accelerating the period of performance, imposing conditions not expressed in the contract, or dispensing with those that were, violated its obligation: 4, Wheaton 122; 8, Wheaton 1.

We take it, therefore, as clear, that in the case put of an ordinary obligation to pay money, a law passed subsequent to the contract which would exempt all a man’s property from the payment of the debt wonld be unconstitutional ; and that it would be equally so if a par-of it was placed out of the reach of execution, provided, the portion left liable was not sufficient to satisfy tfre debt.

If it be true, then, that on the implied oblit gation of the property being liable for'-fheen-gagements of the debtor, the legislature caií not deprive the creditor of recourse on it: it would seem still clearer., they cannot interfere with a special contract by which the debtor makes a part of his property liable in the first instance for it. Because, if the law sanction! all such an agreement, the creditor acquires ky the stipulation, a right to the thing, which subsequent legislative act can take from him, without changing, or in case of insolvency, weakening, and, perhaps, entirely destroying, his claim. Such would be the consequence in the common case of a conventional mortgage. The mortgagee lends his money because the law allows him to take security for his debt by obtaining a special lien on some part of the borrower’s property. The security makes as much a part of the mortgagor’s obligation and the mortgagee’s right, as the promise to pay the money does, and future laws can no more deprive him of the one than the other. If, instead of taking real recurity, he obtained personal, by getting another to join his debtor in the bond, it would not be pretended that a subsequent act of the legislature, by declaring that there should be no such contract, as that of security enforced in our law ^3uld ‘discharge the co-obligor. And iflhe per] sonal security could hot be taken away, how can the real: they have both the same object; they are both permitted by the law; and they are both of equal importance to the creditor, who has trusted to them as a means of assuring the re-payment of the money he lent „i n -.1 o i tu6 iaith ox them.

In what respect the contact of deposit now befbre the court can be distinguished from that of mortgage in relation to the present questions we are unable to perceive; except, that in the former, the law gave a privilege to the depositor on all the property of the depositary, the moment the contract was made:in the latter, thawc required an express stipulation. But every principle that prevents legislative inter; ference with the one forbids it with the other.

As to the argument, that creditors, subsequent to the repeal of the law,, are not bound by the contracts made previously by their debt- or, we understand it to be perfectly well established that they are bound by them. In many cases, the legislature have required, tha* acts which give a preference should be registered to make them have effect against third parties, but when this formality is not required, and the law declares the creditor shall have a privilege, it is as binding on others as on the debtor himself

There some cases brought before the tribunals of France, which bear a close, if not a perfect analogy to that before r the court, and they are more worthy of atten* tion, because they were decided on general principles of law, without any special clause in the constitution of. that country such as ours contains.

They arose on the 2161st article of the Na-poleón code, which declares, that when the debtor has given a general mortgage, on his present and future property, and the objects hy-pothecated amount to more than was necessary to secure the debt, the debtor has an action to reduce the mortgage to such portion of the property as will be sufficient to secure and satisfy the sum due.

By the laws of France previous to the adoption of the Napoleon Code, no such power was vested in the mortgagor, and soon after its passage, a question was presented to their tribunals, whether a mortgage given under the ancient law could be reduced under the new.— Two of the appellate tribunals to \Vhom such a case was precented, decided in the negative: they held,.that the right to make the whole of the property responsible ^existed by the original contract, and that therfcw law could not change it without giving to that law a retroactive effect.

Two other courts of equal dignity held they ° J J might, but their decisions have not severe animadversion. However, the princi-pies on which they decided, strongly support the conclusion we have come to in thjtfcase.— They considered, that so long as the law left enough of property hypothecated to secure the payment of the debt, it could, for public convenience, unlock the surplus from the lien imposed on it, and that, by such regulation, the right of the creditor was not touched; it was only a change made in the property on which it might be enforced: Pothier's traite des lly-poth. rol. 2, ed. 1800, p. 171 Sf 198; Questions transitoires sur le Code Napoleon, rol’ %p. 47 to 59.

The legislation of the 2118th article of the Code Napoleon, declares, that mortgages can be only given on immoveable property and their accessories. By another article of the same work, (529) rents of land were declared to be moveable. The effect of these provisions was to abolish the right which had existed under their former law, of taking mortgages sur des rentes foncieres.

At the time this change was made ⅛ their law, there existed a great number of mortgages, which, previously to the adoption of the Napoleon Code, had been given on debts of Questions, we perceive, have been whether it was not necessary these , mortgages should be registered pursuant to the new law, but not a doubt is expressed as to their validity: Questions transitoires sur le Code Nap. 68 S? 73,

The question presented in this case renders it unnecessary to examine to what extent the legislative power to ceattaet remedies may be carried. In many instances that power may impair the creditor’s right The terms of the courts may be placed at such a great interval of time, that before the creditor can obtain judgment, the debtor has wasted all his property, Execution may be required to be levied on some description of goods before others can be seized, and the collection of the debt in this way delayed. The power of arrest on mesne process may be abolished, as may be that of imprisonment after judgment. But these are inconveniences incidental to the authority necessarily vested in the legislature to regulate . the proceedings of command its constitutionality is undoubted. It is sufficient,in the present ease, to say, that in the exercise of this power» they cannot turn a legal obligation into a-moral one, nor change a privileged into a chirogra-v , .. phary creditor.

Workman for the plaintiff, Mazureau for the defendant.

It is therefore ordered, adjudged and dt-creed, that the judgpient of the parish court be annulled, avoided and reversed,—that the appellant be placed on the tableau of distril ution as a privileged creditor, according to the rank he is entitled to, in reference to others holding privilege on the estate: and it is further ordered, that the appellee pay the costs of this appeal.