Union Homestead Ass'n v. Finck

156 So. 458, 180 La. 437
CourtSupreme Court of Louisiana
DecidedJuly 2, 1934
DocketNo. 32789.
StatusPublished
Cited by3 cases

This text of 156 So. 458 (Union Homestead Ass'n v. Finck) 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
Union Homestead Ass'n v. Finck, 156 So. 458, 180 La. 437 (La. 1934).

Opinions

BRUNOT, Justice.

This case presents only questions of law. On March 18, 1925, the Union Homestead Association purchased, for cash, from Mr. and Mrs. Otto Finck, and sold to them on terms of credit, the property described in the plaintiff’s petition, on which the Homestead Association retained the usual building and loan mortgage and vendor’s lien. On the same day Mr. and Mrs. Otto Finck granted a mortgage upon the same property to R. Marks. This act was passed before E. A. Parsons, notary public, and it is recited in the act that:

“The'parties hereto are aware of the exist: ence of a mortgage granted this day by the *440 said Mr. and Mrs. Otto Einck, in favor of the Union Homestead Association of this Oity, for the sum of $11000.00, by act passed before W. Morgan Gurley, Notary, on March 18, 1925, and the mortgage herein presently granted is a second mortgage, subordinated to the said mortgage in favor of the Union Homestead Association, no matter in what order the said mortgages are recorded, and priority of payment is granted to said Union Homestead Association of their mortgage over the presently granted mortgage.”

The sale by the Union Homestead Association to Mr. and Mrs. Einck was registered in the conveyance office on March 19, 1925. The second mortgage, but with the clause subordinating that mortgage to the homestead mortgage omitted therefrom, was recorded on March 20, 1925, and the Homestead Association’s vendor’s lien and special mortgage was recorded on March 21, 1925.

It appears that the note held by R. Marks and secured by the second mortgage was, before its maturity, acquired, in due course, by Louis Spiro, the third opponent in the suit. The defendants having defaulted in their payments to the Union Homestead Association, foreclosure proceedings were had by the Homestead Association, and the mortgaged property was seized and advertised for sale. Two days preceding the date of the sale, Louis Spiro, the holder and owner of the note secured by the second mortgage, filed his opposition herein and had a rule served upon the plaintiff to show cause why the claim of opponent, with interest thereon, attorney’s fees, and costs should not be paid to him by • preference and priority over all other persons, out of the proceeds of the sale of said property. The Union Homestead Association prayed for oyer of the act of mortgage under which the third opponent asserted his claim. In his return to the prayer for oyer the opponent attached thereto a certified copy of the- extract of the second mortgage as it appears in the mortgage records, and prayed that it be deemed a sufficient return to the prayer. The plaintiff moved to have the return stricken from the record as being insufficient. This motion, however, was denied. Plaintiff then filed the exception of no cause of action and, reserving the benefit of this exception, filed its return to the rule to show cause. In its return the plaintiff pleaded in bar of opponent’s claim that opponent acquired the note held by him about two and one-half years after the plaintiff’s mortgage and vendor’s lien had been recorded; that opponent was charged with notice of what appeared upon the public records, and pleaded this notice as a bar to the relief prayed for by opponent This plea was argued, submitted, and maintained, and the rule taken herein by the opponent was dismissed at his cost. From this judgment the opponent appealed.

Under the title “How Privileges are Preserved and Recorded,” article 3274, Rev. Civ. Code, provides:

“No privilege shall have effect against third persons, unless recorded in the manner required by law in the parish where the property to be affected is situated. It shall confer no. preference on the creditor who holds it, over creditors who have acquired a mortgage, unless the act or other evidence of the debt is recorded within seven days from the date of the act or obligation of indebtedness, *442 when the registry is required to be made in the parish where the act was passed or the indebtedness originated and within fifteen days if the registry is required to be made in any other parish of this State. It shall, however, have effect against all parties from date of registry.”

In the case of Allen-Wadley Lumber Co. v. Huddleston, 123 La. 522, 49 So. 160, 161, this court said:

“For a privilege to have effect over an existing mortgage, it must be recorded within the delay prescribed by article 3274 of the Civil Code. Bank v. Fortier, 27 La. Ann. 243; Citizens’ Bank v. Hotel Association, 27 La. Ann. 460; State ex rel. Prager v. Recorder of Mortgages, 28 La. Ann. 534; Gallaugher v. Congregation, 35 La. Ann. 829; Givanovitch v. Congregation, 36 La. Ann. 274.”

Counsel for opponent contends that article 3274, Rev. Civ. Code, has been repealed by subsequent legislation. He says:

“Art. 3274, Rev. Civ. Code, is utterly inconsistent with Act No. 120 of 1902, Act No. 215 of 1910, Act No. 292 of 1910, Act No. 28 [2291 of 1916, Act No. 126 of 1926 and Act No. 140 of 1932, and the article has no further force or effect, so far as a vendor’s lien is concerned.”

The acts mentioned by counsel are those referring to and regulating building and loan and. homestead associations. They prohibit building and loan and homestead associations from acquiring incumbered property except where the association itself is the creditor, and they provide that all Mens recorded subsequent to the recordation of the building and loan or homestead vendors’ liens shall be subordinate to the building and loan and homestead vendors’ liens, etc. These acts make no reference to, and we fail to see where they are in conflict with, article 3274, Rev. Civ. Code. That article merely provides a time limit within which registry of a privilege must be made, as a condition precedent to the preservation of its priority over creditors who have acquired a mortgage on the property pending the recordation of the privilege. Counsel for opponent on page 5 of his brief says:

“If a man puts a conventional mortgage on his property, he can sell it only subject to and encumbered by that mortgage. Hence the purchaser when he sells it, can give nothing but an encumbered title, it matters not whether that purchaser be or not a homestead association.”

That would be true if the property was incumbered when the homestead association purchased it. That is • not the case here. When plaintiff purchased the property from the Fincks it was unincumbered, and when the second mortgage, upon which opponent relies, was executed it was incumbered with the mortgage and vendor’s lien upon which the foreclosure proceedings issued, and as the plaintiff’s mortgage was recorded timely, it preserved the priority of the plaintiff’s vendor’s lien over the conventional mortgage to Marks, although the conventional mortgage was recorded first.

It would serve no useful purpose to review the codal provisions and jurisprudence of. the state prior to the passage of Act No. 45 of 1877 (amending Rev. Civ. Code, art. 3274). There has been no change since the passage *444

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156 So. 458, 180 La. 437, Counsel Stack Legal Research, https://law.counselstack.com/opinion/union-homestead-assn-v-finck-la-1934.