Caldwell v. Atchafalaya Bank

| La. | Jan 15, 1840

Bullard, J.,

delivered the opinion of the court.

This is a revocatory action, by which the plaintiff, one of the creditors of Chapman, an insolvent debtor, seeks to annul a transfer of stock made to the defendants, in fraud of his rights. The only ground of fraud alleged is, .that the insolvent thereby gave an unjust preference to the bank, also his creditor, and having a full -knowledge of his insolvency. After the surrender of Chapman, the syndic of his creditors intervened, and joining the plaintiff in his demand of nullity, claims that the stock should be restored to the mass' of the insolvent’s property.

This datien en paiement to the bank was made, we do not doubt, under circumstances which would render it null, as to other creditors, on the ground of an unjust preference, had it not been for a previous contract of pledgb between the parties, by which the stock in question was specially affected to secure the payment of a large debt due to the bank. If that contract was valid, then the preference complained of already existed, and the only remaining inquiry would be, whether the subsequent sale of the stock was for an inadequate price, and to the injury of'the complaining creditors'? The contract of pledge took place more than one year previously to the institution of this suit; and there is a plea of prescription.

Where bank stock is pledged to secure a debt to the bank, and is afterwards transferred, in payment, at its full value; although made on the eve of insolvency, it does not prejudice other creditors, and is not fraudulent as to their rights. The revoca-tory action, to set aside a contract by an insolvent debtor to a creditor, to secure a just debt, is only applicable to a particular class of cases, in -which the 'only ground of nullity, is an undue preference given to one of the creditors, and suit must be brought within a year from the date of such contract.

We are' quite satisfied that the sale of the stock to the bank was but a consummation of the contract of pledge; and that, if the sale itself were declared void, the pledge, together with the preference which it confers, would revive ; because the parties are to be placed in the same condition they were in before the transaction complained of; and we concur with the counsel for the appellant in the proposition, that, if the pledge was valid at the time of the transfer, and the stock was transferred at its full value, then the contract did not prejudice other creditors, and consequently cannot be set aside.

This brings us to the inquiry whether it be now too late to question the validity of the contract of pledge, which bad existed more than a year before the institution of this suit %

Article 1982 declares that no contract between a debtor and one of his creditors, for the purpose of securing a just debt, shall be set aside by this action, although the debtor was insolvent to the knowledge of the creditor, and although the other creditors be injured by such contract, if such contract was made more than one year before the suit brought to avoid it, and if it contain no other cause of nullity than the preference given to one creditor over another'.

To this it has been answered, that, by a subsequent article, to wit, 1989, the action, it is true, is limited to one year; but if brought by a single creditor, to run from the date of judgment, against the debtor ; and if, by a syndic, or other representative of the creditors collectively, from the day of their appointment. It has been argued (hat this latter article is inconsistent with the one first cited, and must control it.

But the revo-catory action may be brought within a year, by a single creditor, from the date of his judgment against his debt- or, or by a syn-dic.representing all the creditors, within a year from his appointment, to set aside all contracts of the insolvent debtor bywMch creditors are injured,

The court is bound, if .possible, to give some effect to both articles; and they are easily reconciled by consideringarticle 1982, as applicable to a particular class of cases, iu which the only alleged ground of nullity is an undue preference given to one of the creditors of an insolvent; and the other article, as applicable to all other contracts,'by which creditors are injured. Such is the view which this court took of these provisions of the Code in the case of Petit vs. His Creditors, 3 Louisiana Reports, 26.

With this view of the case, and under the agreement made by counsel in this court, we do not think it important to examine several questions which arose oh the trial below, but considering that the stock is shown to have been sold for its full value at the time, and. to satisfy a.debt privileged to be paid out of it by a contract no longer liable to be attacked by other creditors of the insolvent, either individually or collectively ; and, consequently, that the complaining creditors have not been injured by the sale of the stock to the bank, we think ourselves authorized to declare that the plaintiffs are not entitled to the remedy they seek.

The judgment of the District Court is, therefore, reversed; the verdict set aside, and judgment is here given for the defendants, with costs in both courts.