84 So. 205 | La. | 1919
Lead Opinion
At a time when the commercial firm of W. A. Tompkins & Sons and its members were insolvent, and were being sued by several creditors, W. A. Tompkins, a member of the firm, sold to A. Tompkins, his son, another member, a tract of land which appears to have been the only property possessed by him liable to seizure' by his creditors. The judgments obtained in the said suits are to this day unsatisfied because of no property liable to seizure. The said sale was for $18,000, whereof $13,500 cash, and $4,500 represented by a note, to the order of the purchaser and by him indorsed in blank, secured by vendor’s privilege and special mortgage on the property sold. The date of the sale was May 13, 1914; and the note was made payable in one year from date. The act of sale was duly recorded in the conveyance and mortgage books:
Seven days before he had thus- acquired this property, to wit, on May 6, 1914, A. Tompkins gave it in exchange to R. W. Harkness and S. P. Harrell for other property. The exchange was evidenced by mutual cash deeds, the price in the deed by A. Tompkins being $20,000. This deed, while thus bearing date 7 days before the acquisition of the property by A. Tompkins, was, however, not put of record until May 23, 1914, 10 days after said acquisition.
A few days thereafter, on June 14, 1914, A. Tompkins, finding himself in imperative need of $250 to pay the taxes on some property which he had sold without having paid the past-due taxes thereon, borrowed this amount from D. F. Batchelor, and, as security for the loan, pledged the said $4,500 note; at the same time giving instruction that after the $250 should have been repaid the note should be delivered to R. W. Harkness and S. P. Harrell for cancellation of the inscription .of the mortgage and vendor’s privilege securing it.
This instruction was carried out, and Harknéss and Harrell, having received the note from Batchelor, presented it to the clerk of court, requesting that the inscription of the mortgage and vendor’s privilege securing it be canceled; and this was done, the date of the cancellation being August 31, 1914.
In the meantime, A. Tompkins had absconded to parts unknown.
The note was attached by the clerk of court to the leaf of the mortgage record book on which the canceled inscription appeared; and the plaintiff in the present case caused it to be there seized, as being the property of W. A. Tompkins, and liable for his debts to satisfy a judgment obtained against W.
Plaintiff then brought the present suit to cause the said cancellation to be annulled, and the canceled inscription to be reinstated, because had in fraud of his rights. The defendants are W. A. Tompkins, A. Tompkins, R. W. Harkness, S. P. Harrell, D. P. Batch-elor, and the clerk of court.
There was no reason why Batchelor should have been made a party to the suit, as his acceptance of the note in pledge was perfectly legitimate, and his connection with the note ceased entirely when he received the reimbursement of his $250, and delivered the note to Harkness and Harrell. The judgment dismissing the suit as to him must therefore be affirmed.
The case has not been argued for the defense either orally or by brief. And as well is it so, for we do not see in what way the cancellation in question could be sought to be justified as against the rights of the creditors of W. A. Tompkins. An insolvent debtor cannot dispose of his property gratuitously to the prejudice of his creditors. O. G. 1980. And there is no pretense that one cent was ever paid on this $4,500 note, or that the cancellation of the mortgage and vendor’s privilege was not purely gratuitous.
The judgment appealed from, which dismissed plaintiff’s suit, is therefore set aside, except in so far as in favor of D. A. Batch-elor; and it is now ordered, adjudged, and decreed that there be judgment decreeing the note of $4,500, executed by A. Tompkins to his own order and by himself indorsed, of date May 13, 1914, due one year after date, and secured by vendor’s privilege and special mortgage, to be unpaid and unsatisfied and in full force and effect, and annulling the cancellation made by the clerk of court on August 31,1914, of the inscription of the mortgage and vendor’s privilege securing the payment of said note recorded in Book of Mortgages, vol. M, pp. 572, 573, of the clerk’s office of the parish of Webster, and reinstating the said inscription as in full force and effect, and that the defendants-W. A. Tompkins, R. W. Harkness,. and S. P. Harrell, in solido, pay the costs of this suit.
Rehearing
On Rehearing.
Plaintiff, a judgment creditor of the firm of W. A. Tompkins & Sons, and the individual members of that firm, -alleges that he became the purchaser and owner of a certain vendor’s lien note issued' by Albin Tompkins to his father, W. A. Tompkins, in part payment for certain land in Webster parish then owned by W. A. Tompkins; that the note was for $4,500, dated May 13, 1914, payable one year after date; and was made and issued by Albin Tompkins payable to his own orderthat the note was delivered to W. A. Tompkins, and subsequently was delivered by W. A. to Albin Tompkins, the maker, for some undisclosed purpose, but without consideration, at a time and place unknown to petitioner; that Albin Tompkins pretended to return the note to his father, but, instead thereof, he gave to him a forged note similar in all respects to the original, which said forged note is now in the possession of W. A. Tompkins ; that Albin delivered the genuine note to D. P. Batchelor, without consideration, and that Batchelor delivered it to R. W. Harkness, the owner of the Tompkins property at the time this suit was filed, and that Harkness delivered it to the clerk of court, and caused said note to be canceled and the mortgage securing it erased from the records of the parish; that such cancellation and erasure were illegal, null, and void; that he caused the note to be seized under a fieri facias and sold in satisfaction of the judgment held by him against W. A. Tomp
The suit is a most unusual one; and it is stated on plaintiff’s brief that—
“The object and purpose of this suit is to have the court give judgment, decreeing that the note was the property of W. A. Tompkins, and not legally canceled by the clerk of the court when R, W. Harkness presented it for cancellation, because it had not been paid, was not paid, and not due at that date; that R. W. Harkness obtained it without consideration from D. P. Batchelor, who was not the legal owner of same; and that Albin Tompkins obtained it from his father, W. A. Tompkins, fraudulently, and pretended to return it to him by leaving a bogus or forged note in place of the one his father let him have.”
There are many other matters mentioned in the petition than those just referred to as "the object and purpose of this suit.” They will be noted in due time.
The sale by W. A. Tompkins of his home place to his son Albin is alleged by plaintiff, and that sale is not attacked by him. On the contrary, he is claiming a part of the proceeds of that sale, represented by the note involved in this case. It would appear that there were two acts of sale made by W. A. Tompkins to his son Albin. One was for $18,000 cash, and the other was for $13,500 cash, and the balance was represented by a note for $4,500, payable one year after date. The first act of sale was presented to R. W. Harkness and his attorney for examination at the time that Albin Tompkins sold the property to R. W. Harkness. That act was not recorded at the time; but the notary and Albin agreed to have it recorded on the following morning. This was not done. But on the second day thereafter the act which referred to the $4,500 note was registered, and that is the act upon which this suit is based. The other act, for $18,000 cash, has entirely disappeared.
“The party [I-Iarkness] who takes it before due for a valuable consideration, without knowledge of any defect of title, and in good faith, holds it by a title valid against all the world.”
“Suspicion of defect of title or the knowledge of circumstances which would excite such suspicion in the mind of a prudent man, or gross negligence on the part of the taker, at the time of the transfer, will not defeat his title. That result can be produced only by bad faith on his part.”
“The burden of proof lies on the person who assails the right by the party in possession.” Doll v. Rizotti, 20 La. Ann. 263, 96 Am. Dec. 399; Murray v. Lardner, 2 Wall. 110, 17 L. Ed. 857.
“When the qualities of debtor and creditor are united in the same person, there arises a confusion of right, which extinguishes the obligation.” C. C. 2217.
“Consequently, it is essentially necessary to the existence of a mortgage, that there shall be a principal debt to servo as a foundation for it.
“Hence it happens, that in the cases where the principal debt is extinguished, the mortgage disappears with it,” etc. C. C. 3285.
When the note, if ever issued by Albin Tompkins to his father, was returned into the possession of Albin Tompkins, the maker, the note and mortgage were extinguished by confusion, and this suit should end here.
The existence of a bogus or forged note was not proved. No such note was offered in evidence. And the only testimony concerning- same is merely hearsay, to the effect that W. A. Tompkins said that he had such a note. But it was not sufficient to show that there was a note in existence, or that W. A. Tompkins was really in possession of such a note.
The testimony of two witnesses that they had seen a note in the possession of W. A. Tompkins, and that he questioned the genuineness of that note, is not -sufficient to prove that it was at all similar to the note in suit.
In addition to “the object and purpose of this suit,” as stated on counsel’s brief, it is alleged in the petition of plaintiff that W. A. and Albin Tompkins were insolvent at the time that the note was delivered by W. A. to Albin Tompkins, and that such delivery was made in fraud of their creditors, particularly plaintiff.
There was offered in evidence the records of four suits brought against W. A. Tompkins & Sons, two of which were filed in January, 1914; and the .other two some time after the alleged transfer of the note. These suits were on contracts made in 1913. The two suits filed in January, 1914, went to judgment in October, 1914; and this present suit was filed on January 6, 1915.
Writs of fieri facias were issued on two of these judgments, and the sheriff returned, in one instance, that no property was to be found. This single return of nulla bona, coupled with the fact that W. A. Tompkins & Sons had sold out their mercantile business, that W. A. Tompkins had gone to Shreveport, where he engaged in business, and that Albin Tompkins had disappeared entirely, was the only evidence to support the allegation of insolvency of W. A. Tompkins.
“The evidence of the insolvency of Tompkins is not well established by the record and by the return of nulla bona on the writ of execution, but by the testimony of the witnesses in the case.”
He then quotes from the testimony of C. M. Roberts and Dr. R. C. Tompkins, brother of W. A. Tompkins. But the evidence of these two witnesses is not conclusive of the insolvency of W. A. Tompkins. When O. M. Roberts was under cross-examination he was asked whether Tompkins had real assets after he had sold the New York Bargain Store, and he answered:
“I presume that he had the proceeds of the sale of the property.”
Again he was asked:
“That put it where the creditors could not get it?”
He answered:
“That may be true; probably is.”
And Dr. R. 0. Tompkins testified:
“That after they had sold the New York Bargain Store they had no merchandise or any other kind of business, and they owed him a debt that he could not collect.”
But this witness did not testify as to his own knowledge. He simply said that he was testifying from hearsay.
While such evidence does not sustain the allegation of insolvency of W. A. Tompkins, other evidence in the record shows conclusively that Harkness and Batchelor, two of the defendants in this cause, were not aware of such alleged insolvency, and it further shows that they acted in absolute good faith in taking the note from Albin Tompkins. The Code provides in article 1969:
“From the principle established by the last preceding article, it results that every act done by a debtor with the intent of depriving his creditor of the eventual right he has upon the property of such debtor, is illegal, and ought, as respects such creditor, to be avoided. This can be done in the mode and under the circumstances set forth in the following rules.”
Article 1978 provides that:
“No contract shall be avoided by this action but such as are made in fraud of creditors, and such as, if carried into execution, would have the effect of defrauding them. If made in good faith, it cannot be annulled, 'although-it prove injurious to the creditors; and although made in bad faith, it cannot be rescinded, unless it operate to their injury.”
And, in article 1979:
“If the contract be onerous, and the original debtor made it with intent to defraud his creditors, but the person with whom he contracted was in good faith, the contract cannot he annulled, except under the circumstances and in the manner hereinafter provided.”
In the case of Seixas v. Citizens’ Bank of Louisiana, 38 La. Ann. 424, it is said:
“It is requisite to maintain this action that three things be shown: Fraud on the part of vendor; knowledge on the part of the vendee; and actual injury to the other creditors. C. C. 1984; [Brown v. Kenner] 3 Mart. [O. S.] 270; [Barrett v. Creditors] 4 R. 406.”
Our reasons for judgment, briefly stated, are that the evidence does not satisfy us that W. A. Tompkins was insolvent at the date of the transfer of the note by him to Albin Tompkins, to the knowledge of D. P. Batch-elor and R. W. Harkness, and that such transfer was made with the intent, on the part of W. A. Tompkins, Albin Tompkins, and R. W. Harkness, to disturb the creditors of W. A. Tompkins; that the transfer of the note to Harkness was to discharge an obligation which was due by Albin Tompkins to Harkness; that Harkness paid full value for the note; that he weiit into actual possession of the property; and that he acted1 in perfect good faith.
Batchelor and Harkness both testified on the trial to the effect that they had no in
Harkness, on the evidence, must be held to have been a holder in good faith, for a valid consideration, before maturity, and that it is plaintiff’s misfortune not to have bought a valid and existing note.
The judgment appealed' from is affirmed.
