Youngblood v. Burke

43 So. 2d 695, 1950 La. App. LEXIS 440
CourtLouisiana Court of Appeal
DecidedJanuary 4, 1950
DocketNo. 7399
StatusPublished
Cited by4 cases

This text of 43 So. 2d 695 (Youngblood v. Burke) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Youngblood v. Burke, 43 So. 2d 695, 1950 La. App. LEXIS 440 (La. Ct. App. 1950).

Opinion

KENNON, Judge.

This is a concursus proceeding filed by Kermit Youngblood and the Commercial Standard Insurance Company, who deposited a certified check for $2964.91 with the Clerk of Court of Caldwell Parish along with a petition stating that this amount was the entire balance still due by them as unsuccessful defenders in a tort action filed by Jesse E. Burke. The petition set forth that E. J. Davidson and A. H. Gerson had each caused a seizure to be made of the rights of Jesse E. Burke in this tort suit. The petition further related that on September 26, 1947, Jesse E. Burke had assigned to Nolan Justice and Hollis Cruse his interest and equity in all sums realized from his claim up to the amount of $3200.-00. The petition concluded with the prayer that Jesse Burke, his two judgment creditors, and his two assignees be required to answer and that the petitioners be relieved from further liability.

The judgment in favor of Davidson amounted to something over $200.00; that in favor of Gerson to something over $500.-00 and, upon petition of Justice and Cruse, the District Court permitted the withdrawal of $2000.00 by these assignees, leaving sufficient money in the registry of the Court to cover the claims of Davidson and Ger-[697]*697son, should these parties prevail in the present concursus proceeding'.

The answers of Davidson and Gerson asserted that the act of assignment from Burke to Justice and Cruse was without consideration; executed by the parties for the purpose of placing the proceeds of Burke’s tort action beyond the reach of his judgment creditors, and set forth in the alternative, in the event the Court should find the assignment was real and not a simulation, that Burke was insolvent at the time and the assignment gave an unfair preference to Justice and Cruse.

Burke disavowed any interest in the deposit, asserting that it was owned by Justice and Cruse by virtue of his assignment to them.

The District Court overruled an exception of no cause or right of action filed by Justice and Cruse in which it was urged that the judgment creditors had no right to attempt to set aside an assignment in a con-cursus proceeding, but rather should have filed a separate action, and gave judgment sustaining the validity of the assignment and further maintaining the plea of one year prescription as to the attack upon same as granting an unfair preference to Justice and Cruse over Burke’s other creditors.

The case is before us on appeal from that judgment.

Since Burke conceded that the assignment was valid and disclaimed any interest in the deposit, the case resolved itself into a contest over the funds between Davidson and Gerson, judgment creditors on the one side, and Justice and Cruse, assignees of Burke, on the other. Although these parties were all technically listed as defendants, they became, in fact, adversaries in the action and each is entitled, and required, to set forth his own claims and rights against all parties cited with him in the concursus proceedings. Each claimant may assert — against any other claimant— his claim in the same manner as he would be entitled to do had he been party plaintiff and the other claimants been party defendants. The District Judge therefore correct-ly overruled the exception of no cause or right of action.

Our finding of fact is that an assignment by Jesse E. Burke' to Justice and Cruse was made at a time when Jesse E. Burke was insolvent. Previous to giving the assignment herein sought to be set aside, Jesse E. Burke had deeded his house, furniture and automobile to his nephew, Nolan Justice, but retained possession and use' of house, furniture and automobile under contract of rental, he testified. Both Justice and Cruse testified that they had advanced money at different times to Burke. Each testified that at the, time the assignment was made, he paid to Burke in cash the difference between the amounts due him by Burke because of previous advances, inr eluding rent due by Burke to Justice on the house previously owned by Burke and sold to Justice, and the $1500.00 cash consideration recitedly paid by each to Burke at the time of the transfer. The portion of this total recited consideration of $3000.00, which was represented by the preexisting debt due by Burke, was more than the amount claimed by the appellees herein. Article 2658 of the Civil Code, which is under Chapter 13, entitled “Of the Giving in Payment”, provides that a debtor may, “although insolvent, lawfully sell for the price which is paid to him; but the law forbids to give in payment to one creditor, to the prejudice of the others, any other thing than the sum of money due.”

In view of the above article, the portion of the assignment representing the preexisting debt from Burke to Cruse and Justice would have been ineffective as against Burke’s judgment creditors even if the assignment had been made in absolute good faith and without any plan, thought or intention of giving the assignees a preference over Burke’s other creditors.

The testimony as to the dates and sums of the particular loans, advances and rentals due by Burke to'Cruse and Justice was indefinite and inconclusive. The whole transaction was under such circumstances that we conclude that it would not amount to merely the giving of a preference of one creditor over another for securing a just [698]*698debt, to which Articles 1983 and 1987 of the Civil Code are appropriate, but that the assignment was given for an inadequate consideration and with the specific intention of defrauding Davidson and Gerson of their rights as creditors.

Our conclusion on this point is in accordance with the holding of the Supreme Court in the case of Gast v. Gast, 206 La. 285, 19 So.2d 138, 141:

“Article 1987, above quoted and which provides for the bringing of the action within one year from the date of the injurious transaction, speaks of a contract made for the purpose of securing a just debt and which contains no other cause of nullity than the preference given to one creditor over another. Because of the restrictive language thus used, the prescription of that article, obviously, is applicable only and limited to the situation contemplated by the aforeanalyzed Article 1983, i. e., where payment of a debt, justly due and owing, is secured with property approximately equal in value to the indebtedness and where there exists . constructive fraud because of the obligor’s insolvency of which the obligee had knowledge. It does not pertain to those contracts that are permeated with active, deliberate or malicious fraud, confect-ed by the parties with the intention of defrauding creditors; nor does it apply to those other acts specifically covered by Article 1989.”

In view of our finding of fact and the above quoted holding of the Supreme Court in the Gast casé, it is obvious that appellants’ attack on the assignment is not barred by the prescription of one year set forth in Article 1987, Revised Civil Code.

We next consider whether the rights of Davidson and Gerson have been prescribed under the general rule of prescription in revocatory actions.

Article 1994’ of the Revised Civil Code provides that the action brought by the creditor is limited to one year “to be counted from the time he has obtained judgment against the debtor.” The record is conclusive that neither Davidson nor Gerson had actual notice of the existence of the assignment until after the filing of the con-cursus proceedings. However, the Gerson judgment was rendered on July 16, 1946 and the Davidson judgment on February 18, 1947.

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Bluebook (online)
43 So. 2d 695, 1950 La. App. LEXIS 440, Counsel Stack Legal Research, https://law.counselstack.com/opinion/youngblood-v-burke-lactapp-1950.