No. 12,376 | La. | Mar 29, 1897
Lead Opinion
The opinion of the court was delivered by
This appeal is by defendants sued and condemned to pay on the promissory note of the New Orleans Brewing Association,, on the back of which the appellants placed their names before the note was delivered by the association to the plaintiff.
The note dated 4th of August, 1895, payable ninety days after date, was given by the association for a loan of money, and it was understood that the appellants’ names were to be placed on the note to-secure the loan, the agreement being fulfilled by the delivery to the plaintiff of the note thus secured. This suit was brought before the-maturity of the note, the petition alleging the loan to the Brewing Association, the giving by the association of the note, that the-appellants were guarantors and bound in solido for its payment, and
The association, placed in the hands of liquidators after the suit was brought, excepted on the ground of prematurity. The three defend-ants against whom the writs were issued moved to dissolve, on the .grounds of prematurity; that the petition disclosed no cause of action, and that the affidavits were untrue. The defendants excepted to the suit for prematurity, that of one of the defendants being filed after his answer, but his motion to dissolve the attachment assigned prematurity as one of the grounds; all filed the exception, claiming that the defendants being sureties were entitled to the benefit of •division, and with these exceptions some of the defendants repeated the exception of no cause of action made on the motion to dissolve the writs. The exception overruled, the defendants, reserving the benefit of the exceptions, answered, pleading the general issue, and again insisting on the division allowed sureties and claimed in the exceptions. There was judgment against the defendants in accordance with the prayer of the petition and all the defendants appeal, except the association.
It is contended by plaintiff that the exceptions were waived by the answers of defendants and their insistence on the benefit of division. But the surety sued before the time of payment stipulated in his contract, may well plead prematurity, and that defence failing, claim the division of the debt accorded sureties. Civil Code, Arts. 3045, 3049. The answers filed after the exceptions were overruled left the defendants the full benefit of their exceptions, if sustained on appeal, and for greater caution the defendants, in answering, repeated and reserved the advantage of the preliminary defences. We think there was no waiver of the exceptions.
Again, it is insisted by the plaintiff that from One of the defendants there was no exception of prematurity until after his answer. He is one of the three against whom the attachments issued. One of his grounds to dissolve the writ was prematurity. In this suit, the
There has been an elaborate discussion in this court in reference to the character of the obligation arising from defendants not payees, placing then' names on the note sued upon before its delivery to the plaintiff. This 'question of the original liability and the modification produced by the plea of division ought to be deemed fully answered by our jurisprudence. Civil Code, Arts. 3045, 3049. Smith vs. Gorton, 10 La. 376; McGuire vs. Bosworth, 1 An. 248; McCausland vs. Lyons, 4 An. 273; 4 Boilleux, p. 659. If the appellants could be viewed as endorsers in the commercial sense, the suit would fail because the default of the maker at maturity and notice of that default is essential to hold the endorser. It is, however, as sureties the petition charges that the appellants are liable, and the question is whether the surety can be sued and his property attached before the period for payment stipulated by his contract, and, of course, without any default of the principal debtor to pay at the appointed time. This is the dominating question in the case, and in its solution whether defendants are sureties, endorsers, whether bound jointly or in solido, and all other questions introduced into this discussion can, in our opinion, exert no influence.
On the part of the defendants it has been urged that no attachment, whether on the ground of fraudulent assignment, actual or contemplated, or on any other ground specified by the Oode of Practice, can issue against a surety before, under his contract, he can be called on to pay. On the same line of argument, the right to sue the surety before the time appointed to fulfil his engagement is denied. His engagement is to pay, if the principal defaults, at the maturity of the obligation. C. C., Arts. 3035, 3045. Hence, the defendants have invoked the line of authority that under our law, whatever the cause to attach, no attachment can issue unless the debt is absolute, and a conditional liability will not sustain the writ. In the language of the authorities defining the character of the debt there must be debitum inprsssenti solvendum in futuro — that is, an existing debt, although the term of payment has not arrived. Hence, our courts have uniformly held there could be no attachments against endorsers or drawers of bills of exchange, whether viewed as accommodation drawers or
The contention of the plaintiff that actual insolvency of the com - pany matured the debt, and hence authorized the suit and attachment against the sureties, is based on the provision of the Code that the cession of the debtor matures the debt. C. C., Art. 2054. It is claimed that as under our law the corporation can make no cession of property, hence the actual insolvency of th8 corporation is to be deemed the equivalent, in respect to maturing debts, of the judicially declared insolvency of the natural person.
In one aspect the argument of the plaintiff is contrasted with the familiar principle that the contract of the surety is to be strictly construed in his favor. No act of the creditor or debtor can change the obligation the surety has incurred and on which he is entitled to stand. The surety’s contract in this case is to pay on a fixed date, if his principal defaults. The argumenkof the plaintiff is, in effect, that the surety’s obligation is changed by the fact that the debtor afterward becomes insolvent. If that insol
If the plaintiff’s argument is accepted, the term of payment of" the obligation of sureties is made utterly uncertain. With a well' defined obligation to pay in ninety days, the argument is, the surety may be called on to pay and his property attached, at any moment, after he signs, if the debtor conceives the principal debtor is insolvent and is enabled subsequently' to prove it. The argument destroys all certainty as to the most important feature of the contracts, the time of payment. A man’s pecuniary condition when his insolvency is not judicially declared must necessarily be a matter of opinion for-others. He is apt to deem himself solvent. His creditors may have a different opinion. Is it to be said the time for payment fixed by the contract is to be displaced, and the test or rather no test, supplied by the opinion well or ill founded of the debtor’s insolvency? Above all is this rule applicable to a surety. He binds himself to pay on a fixed day. Is he to be made to respond earlier, or at any time, the creditor conceives the principal is insolvent. It is the policy of the law in maturing debts of the insolvent debtor, for purposes of securing the equal distribution of his property, to establish a fixed point of time. It is essential this point of time should be certain. All transfers of property by the insolvent debtor three months before his failure are annulled, and failure is used in the same sense as insolvency. In other respects it is important that the insolvency that is to mature debts, or for other purpose, should be determined, and not depend on the supposed insolvency of the debtor. Hence the Oode itself declares it
It is therefore ordered, adjudged and decreed that the judgment of the lower court be avoided and reversed, and the attachments issued be set aside, and plaintiff’s suit dismissed with costs.
Concurrence Opinion
Concurring Opinion.
This is a suit upon an unconditional obligation for the payment of money by the brewing association, coupled with an attachment.
It is of the following form, viz.:
“ |20,000. New Orleans, August 14, 1895.
“Ninety days after date we promise to pay to the order of ourselves twenty thousand dollars at the for value
received, with interest at the rate of eight per cent, per annum after maturity until paid.
“ No. . Due November 15.
“ New Orleans Brewing Association,
“ Ernest Fragst.
“ New Orleans Brewing Association,
“ Peter Blaise, President.”
“ New ORLEANS Brewing Association,
“ Peter Blaise, President.
“ New Orleans Brewing Association,
“ Ernest Pragst, Secretary.
“ E. F. Hoppe.
“ E. Muller.
“ J. D. Taylor.
“ Theo. Brummer.
“ Ohas. J. Babst.
“ Peter Blaise.”
The suit was filed on the 3d of November, 1895, more than ten days prior to the date at which the note went to maturity, and in the petition there is a full and complete description of the note and the date of its maturity, as it appears from the recitals thereof.
Alleging that the persons whose names are above enumerated became “ guarantors ” to the bank for the full payment of said note “as surety endorsers” thereon, and “bound in solido with, and as sureties to said association,” the petition alleges that it is advised and believes that said association is insolvent and unable to pay its. debts.
That Theodore Brummer, Charles J. Babst and Peter Blaise, “ sureties upon said note as aforesaid, have each of them mortgaged, assigned, and disposed of, or are about to mortgage, assign or dispose of their property rights and credits, or some part thereof, with intent to defraud their creditors,” etc. — in the language of the Code of Practice. C..P. 240.
The petitioner then prays for citation to the brewing association and each one of the parties enumerated, and for writs of attachment against the three defendants enumerated, viz.: Theodore Brummer, Charles J. Babst and Peter Blaise; and that, after due proceedings had, petitioner have judgment in its favor and against “ all the parties enumerated supra, naming them, for the full amount of the debt, with eight per cent, per annum interest from judicial demand until paid;” that the writs of attachment be maintained on all the property-attached, with the recognition of the privilege of the bank upon same.
On the 11th November, 1895, the defendant, Peter Blaise, filed a
Upon the 14th of November, 1895, Theodore Brummer filed a similar motion to dissolve the attachment as to him, prefacing same with a reservation of right under-an exception, that had been filed previously.
Subsequently some of the remaining parties filed similar exceptions; and one or two of them pleaded a division of their liability.
On the trial of the exceptions, the same were submitted on the face of the papers; and two days subsequently the court rendered its opinion.
In his' opinion the judge a quo substantially assigned that taking the allegations of the petition as true, the parties placing their names on the back of the note sued on must be held and treated as sureties or guarantors as it is so alleged, snd such being the legal situation “the debt existed, the obligation was incurred, and the defendants bound themselves to the plaintiffs for the moment for which they placed their signatures upon the back of the note, and not upon the maturity of the note as contended,” though the judge expressly stated that he did not thus hold or decide, but from the standpoint of the defendants pleading no cause of action the case must be viewed in that light for the purpose of the exception.
In this I think he-was right.
■Proceeding, the judge said further:
“ The court takes the allegation of the petition in this respect, as well as the allegation that by reason of the insolvency of the maker, the New Orleans Brewing Association,- the note, is due as true, and decides on the face of the papers the plaintiff has shown legal grounds for an attachment, and therefore the exceptions of no cause of action are overruled, and the motions to dissolve, on the face of the papers, are denied,” not disposing of the pleas of prematurity.
In this I think he was wrong.
Subsequently the case went to trial, and judgment was rendered in favor of the plaintiff for the full amount of the debt, against all the defendants in solido, sustaining and enforcing the attachments.
An application for a new trial having been applied for and overruled the three attached defendants prosecute this appeal.
Having placed their names upon the back or reverse of the note at the time of its execution, or while it was yet in the possession of the payee or first taker, the several defendants other than the maker will be deemed sureties, and as such bound as their principal is.
Rogers & Woodall vs. Gibbs, 24 An. 467, and the authorities therein collated. If the defendants were only bound as endorsers pure and simple, their obligation would be merely conditional, only becoming absolute at maturity. Claflin & Co. vs. Feibelman, 44 An. 519; National Bank vs. Moss, 41 An. 227.
But, notwithstanding the debt existed, it was not due on the face of the note, at the date it was filed, or when judgment was randéred.
“Every obligation,” says the Code, “gives impliedly a right of action to enforce its execution, but the obligation and the right of action do not always arise at the same time. Thus, in contracts to be performed at a future period, the obligation which gjrows out of the contract arises at the very moment of making it, but the right of action growing out of it arises only when the stipulated term has arrived.” C. P. 14.
“ What is due only at a certain time can not be demanded before the expiration of the intermediate time,” etc. R. C. 0. 2052.
“ When the demand is premature, that is to say when the action has been brought before the debt had become due, the suit must be dismissed, leaving to the party his right tcf bring the suit anew.” C. P. 158.
The prayer of the petition in this case is for an absolute judgment against the defendants in solido, and that is the kind of judgment which was pronounced against them; and claim is made that the note had, as a matter of law, become due by reason of the fact that the brewing association had become insolvent and unable to pay its debts.
But conceding the fact, arguendo, that the brewing association had become insolvent since the execution of the note, did that have the legal effect of maturing the debt and rendering it exigible as to the principal and securities?
The only cases that are cited by the plaintiff are Jeffries vs. Belle
There are two kinds of insolvency known to and recognized in our law, viz.: (1) actual insolvency; (2) declared insolvency. An illustration of the former is found in the precept of the Code, which declares, that “ by being in insolvent circumstances is meant that the whole property and credits are not equal in amount, at a fair-appraisement, to the debts due by the party.” R. C. C. 1985.
And again: “Solvency is the ability to pay one’s debts. He who ean not pay all that he owes is not solvent.” R. C. C. 8556, No. 26.
An illustration of'the latter is the “ failure,” or insolvency defined in the Revised Statutes, Sec. 1898, and which means “ a condition of insolvency,” which has been judicially and “ authoritatively fixed; an event certain and determined.” Seixas vs. Citizens Bank, 38 An. 424.
We are not informed' that it has ever been held that the actual insolvency of a natural person has the effect of making all of his indebtness mature; and we are not aware of any precept of law or adjudication which declares that any such an effect is to be attributed to the indebtedness of an insolvent corporation, or as to those who have become its securities.
In the recent case of Poitevent & Favre vs. Standard Manufacturing Company, ante p. 72, we drew the distinction between the two kinds of insolvency, and held that actual insolvency was no ground for an attachment.
There is no doubt of the fact that an attachment will lie before the debts fall'due; but an absolute-judgment can neither.be prayed for nor taken before the maturity of the debt.
The proper course is to ash for a writ of attachment to issue for a debt not due, unaccompanied by a prayer for absolute judgment; and when the debt becomes due, the petition should be amended, setting forth the fact of the debt having gone to maturity since the original petition was filed, and that he is entitled to judgment for the debt— sustaining the attachment with privilege. Williams vs. Duer, 14 La. 531" court="La." date_filed="1840-03-15" href="https://app.midpage.ai/document/williams-v-duer-7160108?utm_source=webapp" opinion_id="7160108">14 La. 531: Nelson vs. Pool, 17 La. 209" court="La." date_filed="1841-01-15" href="https://app.midpage.ai/document/neilson-v-pool-7160550?utm_source=webapp" opinion_id="7160550">17 La. 209; Catlett vs; Heffner, 23 An. 577; Warfield vs. Oliver, 23 An. 612; Gardner vs. Shipley, 4 An. 184;
In State ex rel. Merz vs. Judge, 31 An. 120, it was said:
“So, we hold that the question of prematurity must be tested by the facts existing at the date the suit is brought, and that the penalty is dismissal of the suit, if found premature.
“ Under this view it is manifest that the expiration, pending the suit, of the time of the alleged extension, does not relieve the-plaintiff from the consequences of his wrongful act; that the rela-tors have the right to have the court review the judgment of the District Court on the question of prematurity, and if the exception is found to be well taken, they have the right to demand the maintenance of their injunction and the setting aside of plaintiff’s order of seizure.”
In Adams vs. Day, 14 La. 503" court="La." date_filed="1840-03-15" href="https://app.midpage.ai/document/adams-v-day-7160102?utm_source=webapp" opinion_id="7160102">14 La. 503, it was held that the attachment allowed by act of 7th of April, 1826, in case of debts not due, was not intended as a means of bringing the debtor into court, but only as a conservatory measure. Irish vs. Wright, 8 R. 428; Read vs. Ware, 2 An. 498; Denègre vs. Milne, 10 An. 324.
I think it evident that the plaintiff’s suit was brought and absolute judgment demanded on a debt not due at the time, and that the plea of prematurity was well grounded, and should have been maintained and the suit dismissed, reserving the right of the plaintiff to ■bring his suit anew.
Entertaining this view, I think this is quite enough to decide.
Supplemental Decebe.
In view of the consent herein filed for the modification of the judgment on this appeal: It Is now ordered, adjudged and decreed that our previous judgment be set aside, and in lieu thereof, ■it is now ordered, adjudged and decreed that the judgment of the lower court be avoided and annulled, in so far as it condemns the appellants Theodore Brumer, Peter Blaise, Charles J. Babst and E. F. Hoppe to pay plaintiff’s demand, and as to those defendants, it is ordered and decreed that plaintiff’s suit be dismissed at plaintiff’s •costs, and it is further adjudged and decreed that the writ of attach
Rehearing
On Application por Rehearing.
The application for the rehearing brings to our notice that some of the defendants against whom judgment was rendered by the court below did not appeal, and our judgment reversed that of the lower court as to all the defendants. We had, prior to the application, corrected the error in part, and we now make a further correction. It is therefore ordered that our previous decree, as well as the amendmentthereof, be set aside, and now proceeding to render such judgment as should have been given on this appeal. It is ordered, adjudged and decreed that the judgment of the lower court be avoided and reversed, in so far as it condemns Charles J. Babst, Theodore Brumer, Peter Blaise, E. F. Hoppe and Joseph D. Taylor, defendants, to pay plaintiff’s debt, and in so far as said judgment maintains the attachments against said C. J. Babst, Peter Blaise and Theodore Brumer; that as to said defendants the plaintiff’s suit be dismissed and said attachments be dissolved; that the costs of this appeal and those of the lower court incurred in prosecuting the suit against all said defendants be paid by plaintiffs, and in so far as the judgment of the lower court condemns the New Orleans Brewing Association and Emile Muller to pay plaintiff’s debt, interest and costs, said judgment is affirmed, and it is further ordered that the application for the rehearing, with this modification, be refused.