103 So. 723 | La. | 1925
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *156
The motion to dismiss the appeal is founded upon article 567 of the Code of Practice, declaring that a person against whom a judgment has been rendered cannot appeal if he has acquiesced in the judgment by executing it voluntarily. The language of the Code merely deprives of the right to appeal a person who has voluntarily executed, or complied with, a judgment that has been rendered against him. In other words, it means — in fact it says — that a person cannot appeal from a judgment that has been rendered against him if he has voluntarily executed it, or complied with it. The plaintiffs in this case appealed from the judgment only in so far as it had rejected their demand. The judgment in their favor, for $2,860.50, or the judgment to that extent, is the judgment that they partially executed by having it recorded in the mortgage office. Their appeal from the judgment that rejected their demand in part was not a suspensive appeal, whatever they may have called it. An appeal taken by a plaintiff, from a judgment rejecting his demand, does not stay execution of the judgment, because such a judgment is not executory, except perhaps for the costs incurred.
The only method by which the defendants in this case might have stayed execution of the judgment for $2,860.50 was by taking a suspensive appeal. Their answer to the appeal did not give them a stay of execution.
The rule stated in article 567 of the Code of Practice is founded, expressly, upon *158 the theory of acquiescence, or voluntary compliance with the judgment. The recording of the judgment in plaintiffs' favor was not an acquiescence in the judgment that rejected a part of their demand.
The motion to dismiss the appeal is overruled.
Addendum
The three plaintiffs, Mrs. Lilly Julia Kittredge Grant, Mrs. Sinagh Gage Kittredge Fournier, and Mrs. Annie Kittredge Dell, are the sisters of George W. Kittredge, who died in this city on September 26, 1915, intestate, and without ascendants or descendants.
He left a surviving widow, Mrs. Augusta Grau Kittredge, who was by judgment of the court ordered sent into possession as owner of all the property belonging to the community existing between her and her said husband. The widow died in the latter part of 1918, leaving a last will and testament by which she instituted the defendants Mrs. Agnes Grant Robinson, Mrs. Juanita Robinson Wade, and Edward G. Grau as her universal legatees.
These parties were by judgment of court sent into possession of all of the property bequeathed to them by the will. Included in the property taken possession of by the legatees was 15 shares of the par value of $100 each of the capital stock of the Kittredge-Waters Supply Company, a corporation organized under the laws of this state and domiciled in this city.
The object of the present suit is to compel the legatees to surrender to the plaintiffs the shares of stock referred to, and in default that the plaintiffs have judgment against them for the value of the stock, which is alleged to be $25,000. In the alternative it is prayed that, should the court hold that the said corporate stock was not the separate *159 property of Kittredge, but belonged to the community between Kittredge and his wife, then that plaintiffs have judgment for $5,000, being the value of the separate property of Kittredge which went to pay for said stock.
The district judge rejected the primary demand of the plaintiffs, but awarded them judgment for $2,860.50 on the alternative demand, being the value of the separate property of George W. Kittredge which was used in purchasing or paying for the stock. The plaintiffs appeal from this judgment.
It is obvious from what has already been said that the question to be determined first of all is whether the corporate stock was the separate property of Kittredge, or whether it was an asset of the community between Kittredge and his wife.
There is no dispute as to the facts. In the early part of 1903 Kittredge, Borelli, Grau, and Bergen entered into a copartnership which was styled Borelli Kittredge, to engage in the ship chandlery and machine shop business in this city. Each of the partners contributed to the partnership $2,500. At the time of the formation of this partnership Kittredge was a single man, but in July of the following year he was married to Miss Augusta Grau. In August following, by mutual consent of all four members, the interest of Borelli was bought by the other members of the firm for $2,500 in cash and some other minor considerations, all paid out of the partnership funds, and the said Borelli was let out.
Thereafter H.H. Waters was admitted into the firm as an equal partner. On August 22, 1904, the members agreed to organize a corporation under the name of Kittredge-Waters Supply Company with an authorized capital stock of $20,000. The four members of the partnership were to be the incorporators, and were to have $2,500 each of the capital stock; that is to say each member was to receive 25 shares of the par value of $100 each, and the said stock was *160 to be paid for by the assets of the partnership valued at $10,000. In accordance with this agreement among the partners a regular charter was prepared and signed in due form by the four members, each following his signature to the charter with the words: "25 shares stock."
The charter contained the provision that the capital stock could be paid for in cash or its equivalent. The name on the books was changed from that of the partnership to that of the corporation, and a like change was made in the account with the bank. Otherwise the business was carried on the same as had been the partnership. There were no purchasers of stock outside of the four original incorporators, and no certificates of stock were ever issued to any of them until some time after the death of both Kittredge and his wife. It was the common understanding, however, and never questioned by any one, that each of the four members of the partnership owned an equal interest in the capital stock of the corporation which had taken over the assets of the firm, and as a matter of fact succeeded to the firm.
From time to time the four stockholders were paid dividends from the earnings of the corporation on the amount of stock owned by them respectively. Some years after the organization of the corporation, Waters being unable to pay for his stock in full, by common consent the other three drew out of the capital of the corporation $1,000 each, thereby reducing the capital stock to $1,500 each, or $6,000 for the four. It may be stated that the charter authorized the corporation to operate on a paid-up capital stock of not less than $5,000.
The theory on which the case was decided in the court below is that, when the corporation was formed, and Kittredge signed the charter, he thereby became a subscriber to the capital stock and a debtor to the corporation payable in money or in property at the option of the corporation; that a debt was *161 thus created on behalf of the community, and, when Kittredge turned over his interest in the firm in settlement of that debt, the stockreceived became an asset of the community. In other words, that the transaction evidenced a dation en paiement.
If the premises on which the conclusion was based were as a matter of fact true, then undoubtedly the conclusion is correct, and this would be so by whatever name the transaction may be called, whether a giving in payment or a sale or an exchange.
It is codal law (C.C. art. 2404) that all property purchased during the existence of the marriage, whether taken in the name of the husband or the wife, is presumed to be community property. The presumption may be rebutted by the wife, even though the act of purchase fails to recite that the purchase was made with her separate funds. But with respect to the husband the presumption that he purchased for the community is absolute and conclusive against him and his heirs, unless the act recites that the purchase was made with his separate funds. Sharp v. Zeller,
The rule stated finds no application, however, where the transaction on its face shows that the purchase was not in fact a community acquisition, but was a purchase or acquisition by the separate spouse.
It is well settled that, where separate property of the husband or wife is given in exchange for other property, the property so received in the exchange partakes of the same character — that of separate property. And this is true whether the property the subject of the exchange was immovable, movable, or incorporeal.
In Newsom v. Adams,
*162"Where paraphernal property of the wife is given in exchange, that received in place of it partakes of the same character." Syllabus.
Mr. Justice Matthews saying in the opinion:
"Pothier, Contracts of Sale, part 7, No. 629, states it to be one of the principal effects of an exchange, that the thing is subrogated in full right to that which was alienated; subrogatum capit naturam subrogati."
See to the same effect Lawson v. Ripley,
If the rule was given the rigid construction as contended for, and as appears to have been the opinion of the learned trial judge, then property received in exchange for the separate property of the husband during marriage could never be impressed with the character of separate property of the husband, unless there was a written instrument effecting such exchange and a declaration therein that the property given in exchange was the separate property of the husband. To adopt such a construction would require every exchange made by the husband of his separate movable property or his separate incorporeal rights to be reduced to writing. And the property acquired by the husband during marriage at a partition sale paid for by means of his heritable share would lose its character as separate property and fall into the community. And a heritable right falling to the husband would fall into the community, for such rights pass by an unwritten and unregistered title with no opportunity to make the declaration contended for.
The legal conclusion is inevitable that, if the transaction involved in this case was an exchange of the separate property of the husband for the stock in the corporation and not the payment of an obligation in money created by the husband as a subscriber for the stock, then the stock became the separate property of the husband, regardless of the name by which the transaction may be called, and regardless of the fact that no declaration was made by the husband at the time *163 that he was trading for the stock as his separate property.
The evidence in our opinion is conclusive, and not open even to controversy in point of fact or in law, that Kittredge never at any time became obligated to pay any sum of money to the corporation for the stock. The relation of creditor and debtor in the sense of a money obligation never at any time existed between the corporation and the incorporators. Kittredge and his partners were the incorporators and stockholders simultaneously, but were never subscribers for any stock to be paid for in money. The four agreed to take 25 shares each of the capital stock and to pay for the same by turning over to the corporation the business and assets of the partnership in its entirety and in globo. This agreement in effect was embodied in the charter. The alternative of giving the property of the firm for the stock was reserved to the incorporators, and the right to require payment for the stock in cash was not given to the corporation. Neither of the corporators ever bound himself unconditionally or otherwise to pay the price of the stock in money, and the corporation was without right or authority under the express terms of the charter to have compelled the four incorporators to pay for the stock in money.
The business and assets of the old firm passed under the control and in full ownership of the corporation at the very moment the act of incorporation was completed and signed, and the four stockholders were entitled at that moment to their stock certificates. There was no interval between the signing of the charter and the translation of the property of the firm to the corporation. The thing, the price, and consent all existed before the act of incorporation, and that act, when signed, put the contract into execution, and became the evidence thereof, and was binding on all parties. Indeed, this is admitted in paragraph 14 of defendants' answer, wherein it is stated: *164
"* * * That each of said incorporators, including the said George W. Kittredge, subscribed on said charter to 25 shares of the capital stock of the par value of $100 each; that, contemporaneously with said subscription, the said George W. Kittredge, W.P. Bergen, and Edward G. Grau each paid for 15 shares of their said subscription in property, which property was valued by the board of directors at the sum of $1,500 each."
Under this admission and the facts as we have stated them, which are shown by the testimony of some of the original incorporators who had personal knowledge of the entire transaction and by the books of the firm and of the corporation as shown by the testimony of the expert accountant, we are unable to arrive at any other conclusion than that Kittredge never at any time became obligated to pay for his stock in money, but that at the very moment he signed the charter he and his copartners paid for the stock with their respective interest in the firm. None of the parties ever consented to or contemplated anything else. The transaction amounted in law to an exchange and nothing more. It was not a dation en paiement, for there never was a debt payable in money due by Kittredge to the corporation.
It is conceded that the property given in exchange for the stock was the separate property of Kittredge. It follows from the authorities already cited supra that the corporate stock received in exchange was impressed with the same character, or, as said in Newsom v. Adams, supra, the stock was "subrogated in full right to that which was alienated."
The evidence shows that the stock had been reduced from 25 to 15 shares before the death of Kittredge. It follows that only the latter amount was received by the widow and transmitted in the will to her legatees. This fact is shown by the judgment sending the legatees into possession under the will. Whether the plaintiffs are entitled to the $1,000 withdrawn from the capital of the corporation during the community depends *165 on a settlement of the community which is not involved in this litigation.
For the reasons assigned it is ordered and decreed that the judgment appealed from be and the same is annulled and set aside, and it is now adjudged and decreed that the plaintiffs have judgment against the defendants, decreeing them to be the owners of 15 shares of the capital stock of the Kittredge-Waters Supply Company, Ltd., and that the same be turned over to plaintiffs by the defendants. All other rights which the plaintiffs may have against the community between Kittredge and his wife are reserved. It is further ordered that defendant pay all costs of this suit.
Addendum
In the statement of this case, in the opinion rendered by Division B (when this court was divided into divisions or sections), it was said that H.H. Waters was admitted into the firm as an equal partner with Kittredge, Grau and Bergen, after they had bought out Borelli with the partnership funds. That was a mistake. Waters was never a member of the commercial partnership, styled Borelli Kittredge. It was when Borelli was "let out" of the partnership that the corporation was organized, and Waters came in as one of the four incorporators, paying cash to the corporation for his fourth of the capital stock. But that is not important in deciding whether the ownership of Kittredge's fourth interest in the business was transferred from him to the marital community by effect of the converting of the partnership into a corporation.
Kittredge owned his fourth interest in the partnership before he married Miss Augusta Grau. His interest in the partnership was therefore a part of his separate estate, not community property. The three other members of the firm were Borelli, Grau and Bergen, each having a fourth interest. Each *166 partner had contributed a fourth of the original capital of $10,000 invested in the firm. It was a month after Kittredge had married Miss Grau that the firm of Borelli Kittredge was reorganized. The fourth interest of Borelli was taken over by the remaining three partners for $2,500, paid with funds of the firm. At the same time Waters came in, and the concern was then incorporated under the style of Kittredge-Waters Supply Company, with an authorized capital of $20,000, and a stipulation in the charter that the corporation might commence business on a paid-in capital of $5,000.
According to the agreement of the four incorporators, Kittredge, Grau, Bergen and Waters, each subscribed for $2,500 of the capital stock; and it was understood thereafter that each member owned a fourth of the capital stock of $10,000, although in fact no stock certificate was issued before the death of Kittredge and his wife. He died 12 years after the corporation was organized. She died 3 years later.
According to the plan of organization, Waters was to pay $2,500 cash for his fourth of the capital stock, but it seems that he paid only $1,500 in cash and owed $1,000 on his subscription. Several years later — perhaps because it was not convenient for Waters to pay the $1,000 balance due on his stock subscription — the three other stockholders, Kittredge, Grau and Bergen, each withdrew $1,000 from the corporation, thus reducing the capital stock to $6,000, of which each shareholder had 15 shares, of the par value of $100 each. The reduction of the capital made no difference, of course, in the value of the total shares of stock held by each shareholder, because each owned always a fourth of the total outstanding capital stock. No stock was ever issued except to the four incorporators. At the time or immediately after the charter was signed the property and affairs of the partnership of *167 Borelli Kittredge were transferred to the Kittredge-Waters Supply Company; the name was changed on the books of the concern and in the bank account; and the business was continued in the name of the corporation as it had been carried on in the name of the partnership.
Kittredge's 15 shares of capital stock was worth more at the time of his death than his fourth interest in the partnership was worth at the time of the organization of the corporation.
The plaintiffs in this suit are the heirs at law of the deceased, Kittredge. The defendants are the universal legatees of his deceased wife. The only question is whether the 15 shares of capital stock in the Kittredge-Waters Supply Company, which Kittredge acquired for his fourth interest in the firm of Borelli Kittredge, was a part of his separate estate or community property. It is not disputed that, as long as the partnership of Borelli Kittredge lasted, Kittredge's fourth interest in the firm continued to belong to his separate estate. Plaintiffs contend that the converting of the partnership into a corporation did not affect the title or ownership of Kittredge's fourth interest in the concern; and that, even though he did exchange his interest in the partnership for a like interest in the corporation during his marriage, the transaction did not make the interest in the corporation community property, but merely substituted the fourth interest in the corporation for the fourth interest in the partnership, leaving the title or ownership of the fourth interest in the business where it was — in Kittredge's separate estate.
The defendants, on the other hand, contend that, inasmuch as Kittredge's stock in the corporation was acquired during his marriage, it became community property, and at Kittredge's death his widow inherited it, *168 under Act 57 of 1910 (amended and re-enacted as Act 80 of 1916). On that theory the widow was given possession of the 15 shares of stock, by an order of court, soon after Kittredge's death.
The plaintiffs in this suit claimed that, even if the court should hold that the 15 shares of stock was community property, they should have judgment for the value of the fourth interest in the partnership, which went to pay for the 15 shares of stock. The district court rejected plaintiffs' principal demand for the 15 shares of stock, but gave them judgment for $2,860.50 on their alternative demand for the value of Kittredge's fourth interest in the partnership, which went to pay for the stock in the corporation. On appeal, this court (or division B), gave plaintiffs judgment for the 15 shares of stock.
The theory on which the district court held that the stock was community property was that, when Kittredge subscribed for the stock, he thereby became indebted to the corporation for the amount of his subscription, which debt was community debt, and that, when he transferred his fourth interest in the partnership to the corporation, in satisfaction of the debt, the capital stock which he got became community property, and the community became indebted to Kittredge's separate estate for the value of his fourth interest in the partnership, because it went to pay the community debt. This court rejected that theory, because, as a matter of fact, Kittredge's subscribing for stock in the corporation did not obligate him unconditionally to pay for the stock. His subscribing for the stock was only a part of the whole transaction by which he surrendered his interest in the partnership for the shares of stock in the corporation. It is true, according to the charter, each subscriber had the right to pay cash for his stock, but, by the terms of the plan of reorganization — by agreement among the incorporators — the *169 corporation was obliged to take over the business and affairs, the assets and liabilities, of the partnership, in payment for the stock subscription of Kittredge and his copartners. Their subscribing for the shares of stock did not make of them, in the ordinary sense, debtors to the corporation. It will not do, therefore, to say that Kittredge gave to the corporation his fourth interest in the partnership in payment of a community debt, and that the corporation gave to the community a fourth of the corporation's capital stock in payment of a debt due to Kittredge.
The theory on which this court reversed the judgment of the district court, and declared the plaintiffs to be the owners of the 15 shares of stock, was that the transaction by which Kittredge acquired the stock in return for his interest in the partnership was an act of exchange, and was governed by the decisions relating to exchanges of real estate. The court cited Newsom v. Adams,
If the transaction by which Kittredge acquired the 15 shares of stock should be regarded as a sale, the stock would be community property, because it was acquired while Kittredge was married. Rev. Civ. Code, art. 2402. With regard to real estate, it is well settled that, when a married man, under the régime of the community, buys property with his separate funds, and takes the title in his name, unless the deed contains a statement to the effect that the purchase is made with his separate funds, the property will belong to the community, and the community, at its dissolution, will owe his separate estate for the price which he paid. It is not so with regard to a married woman. The law has zealously guarded her interest against that of her husband or his creditors. When she buys property in her *170
own name, it is not necessary to declare in the deed that it is bought with her separate funds. She may assert and prove the fact whenever it is questioned. But, when a married man buys property in his name, without a stipulation in the deed that it is bought with his separate funds, the presumption in favor of the community is juris et de jure. Joffrion v. Bordelon, 14 La. Ann. 618; Durham v. Williams, 32 La. Ann. 162; Succession of Merrick, 35 La. Ann. 296; Moore v. Stancel, 36 La. Ann. 819; Heirs of Murphy v. Jurey, 39 La. Ann. 785, 2 So. 575; Hero v. Bloch, 44 La. Ann. 1032, 11 So. 821; O'Neil v. Walker, 45 La. Ann. 615, 12 So. 872; Hall v. Toussaint, 52 La. Ann. 1763, 28 So. 304; Succession of Muller,
Whether that rule applies only to purchases of real estate, or also to purchases of other property — specifically capital stock in a corporation — is a matter which we need not decide here, because the transaction by which Kittredge acquired his stock was not a contract of sale, or at all similar to a sale.
One reason — if not the only reason — why we granted a rehearing in this case was that some of us thought that some expressions in the opinion which was handed down were not consistent with our ruling in the Succession of Watkins,
It is true the five decisions cited in the original opinion handed down in this case — and there are others to the same effect — maintain that article 2402 of the Civil Code does not apply to contracts of exchange of real estate. Property so acquired during marriage, in the name of either spouse, is substituted for the property given in exchange for it, and has the same status or ownership. If the property given was community property, so is the property received in exchange for it community property; and, if the property given belonged to the separate estate of the party in whose name it is given, so is the property received in the exchange his or her separate property.
But the decisions cited in support of that rule are hardly pertinent to this case. In Newsom v. Adams,
The learned counsel for plaintiffs, appellants, contends that the ruling which we *173
made in the Succession of Watkins,
"In the act, the husband acknowledged that he received the lot as part of the plaintiff's paraphernal estate."
The court held, of course, that the lot which the married woman acquired in that way, in part satisfaction of her paraphernal claim, was her paraphernal property, not community property. The case was governed, however, as the opinion shows, not by the Civil Code, but by the Spanish law relating to the rights of married persons with regard to property acquired during their marriage. In the other case cited (Hurst et al. v. W.B. Thompson Co.) the latter, having a judgment against Hurst, seized a lot of ground which his mother had donated to his wife and children. The wife and children intervened, claiming the property, and the court ruled:
"A donation made especially and separately to the wife does not fall into the community."
The provisions of article 2402 of the Civil Code do not apply to such a case.
There is nothing in the decision in the Succession of Watkins that is not consistent with the decision heretofore handed down in this *174 case. The difference between the two cases is that Watkins, during his marriage, bought the lands. Kittredge, during his marriage, did not buy the corporation stock, or acquire it in any similar way.
We have concluded that the decree heretofore handed down in this case, declaring that the 15 shares of stock belonged to the separate estate of Kittredge, is correct; but we do not rest our decision upon the idea that the transaction by which Kittredge acquired the stock was an act of exchange, or was governed by the rules applying to acts of exchange of real estate. There is good reason why article 2402 of the Civil Code, and the decisions relating to a married man's buying real estate without stipulating in the deed that it is bought with his separate funds, do not apply to a married man's acquiring real estate in exchange for real estate belonging to him separately. In such case the title to the real estate which he has given in exchange for that which he has received is a matter of record, and the fact as to whether it belonged to his separate estate or to the community is more certain — better fixed — than would be a declaration in an act of sale that the land was bought with the purchaser's separate funds.
But the transaction by which Kittredge acquired his stock in the Kittredge-Waters Supply Company for his interest in the firm of Borelli Kittredge was not an act of exchange. There was no mutual exchanging of one thing for another, corporeally or incorporeally, physically or metaphysically. The corporation did not receive an interest in the partnership, because the partnership went out of existence by the transaction. Neither did the corporation transfer to the incorporators anything which it had owned previous to the transaction.
We prefer, therefore, to rest our decision upon the common sense view that Kittredge acquired his capital stock, not by an actual *175 transfer to him of something which he did not already own, but by the transformation of his interest in the partnership into an interest in the corporation. Every element that made up the value of Kittredge's 15 shares of stock in the corporation had likewise fixed the value of his fourth interest in the partnership. There was no more similarity to a contract of exchange, in this conversion of a partnership into a corporation, in the conversion of Kittredge's interest in the partnership into a like interest in the corporation, than there was in the miraculous change that took place in the water pots of stone at the marriage in Cana of Galilee.
The decree heretofore handed down by this court is now reinstated and made final.
LAND and THOMPSON, JJ., concur in the decree.
