author: "Watkins, J.

text:
    No. 13,119.
    Mrs. Harriet A. Hornor vs. R. T. McDonald et als.
    Syllabus.
    1. An averment in a petition oí the solidarity of an obligation which is joint in fact, and a prayer for a judgment in solido against several defendants, does not constitute an estoppel against the plaintiff’s recovery against some of the defendants because she made a compromise with another defendant after issue joined.

      2. The obligation of two or more persons who intervene in an act of sale to a corporation, and give their personal guarantee that for a period of years its shares of preferred stock shall annually earn and pay a dividend of ten per cent., is joint as to the obligors and not in solido.

    3. Such a covenant evidences an independent stipulation pour autrwi and not a contract of suretyship ; and the obligation of the intervenor is different and distinct from that of the corporation. Consequently, the insolvency of the corporation judicially declared, did not have the effect of precipitating the maturity of the instalments of the intervenors indebtedness not yet run to maturity on the face of the contract, notwithstanding it had that effect-as to its own debts not yet due. The principles announced in Ilawkes vs. Bright, 31st Ann., 70, are affirmed.
    APPEAL from the Civil District Court, Parish of ' Orleans. Bight or, J.

      Guy ill. Ilornor and Bernard McGlosloey (Omer Villero and Dinlc-cl piel & Hart, of Counsel) for Plaintiff, Appellee.

      Harry H. Hall for R. T. McDonald, Defendant, Appellee.

      Clegg é Quintero for Helen IT. Hart and Samuel J. Hart, Defendants, Appellants.
   The opinion of the court was delivered by

"Watkins, J.

This suit was brought March 2, 1898, by the plaintiff, as the holder of certain shares of the preferred stock of the New Consumers’ Ice Company, Limited, against the defendant McDonald and the heirs of Judah Hart, and they-seek to recover a judgment against them in solido for the sum of $1,162.50 as set forth in their original petition.

In a supplemental petition, plaintiff prays for judgment against the same defendants in solido, for an additional sum of $8,137.50.

Petitioner alleges, in her original petition, that she is the holder of 116 % shares of the stock of said corporation, of the par value of one hundred dollars, upon which is due and payable a dividend of ten per cent, per annum, payable semi-annually, and that the dividends due on the first days of May and November, 1897, are unpaid, due and owing.

That demand has been made upon the corporation for payment, but that said company is in the hands of a receiver in the United States Court, and hopelessly insolvent.

In her supplemental petition she alleges, that -under the terms of the contract sued upon, all the dividends on her shares of stock, for a period of ten years from the twenty-first day of June, 1893, less, those admitted to have been paid,, are now due and exigible. That by error in, her original petition, only two dividends are claimed as due and exigible, whilst in truth and in fact fourteen, are due and. exigible, amounting to the sum aforesaid.

Petitioner avers, that by notarial act, of date May 2nd, 1894, the defendants McDonald and Judah Ilart, for a valuable consideration,, did guarantee and bind themselves in solida that the New Consumers’ Ice Company, Limited, should earn and pay to the holders of the preferred stock of the corporation, a dividend of ten per cent, per annum,' on the par value of the, same, to each and every holder thereof,, payable semi-annually.

That the said consideration for said guarantee is truly set forth in said notarial act, and that they are bound and responsible to her for its fulfillment. That Samuel J. Ilart and Helen H. Ilart, wife of Maurice J, Ilart, are the heirs and legal representatives of Judah Ilart, whose succession has been opened in the .Civil District Court, and same has been accepted purely and simply by said heirs, who have, thereby, become responsible for the payment of the debts of the deceased. That McDonald is a non-resident of the State and has money and property within the jurisdiction of the court, and she prayed for the issuance of a writ of attachment against the same.

For answer, the defendant, McDonald, pleads a general denial-and admits that he signed the stipulations contained in the notarial act evidencing the sale by liquidators of the Consumers’ Ice Company, Limited, to the New Consumers’. Ice Company, Limited, of date May 2, 1894; but he denies that he is liable thereunder as alleged, or in any manner whatsoever. He avers that he signed the stipulation in the said act in consideration, solely, of the issuance to him by said New Consumers’ Ice Company, Limited, on the 31st day of May, 1893, of 1242 shares of the common stock of said company, of the par value of $124,200.

He avers, further, that subsequently, to-wit; on or about the 25th day of August, 1896, he was called upon by the New Consumers’ Ice Company, Limited, to surrender said 1242 shares of stock by reason of the fact, that, under the charter of the company and under the provisions of the Constitution of the State of Louisiana, said stock was illegally issued to him, He avers that upon said demand to return and cancel said stock he did return it, and the same was can-celled and that the entire consideration received for his aforesaid .guarantee of ten per cent, dividend upon the preferred stock, was thus taken from him and said guarantee was and has since remained •entirely without consideration.

Further, that all and singular, the-.entire property, movable and immovable, of the New Consumers’ Ice Company, Limited, was, in 1897, placed in the hands of a receiver in the United States Circuit ■Court; and same was, by order of that court sold on the 28th of February, 1S98, to pay 'a mortgaged indebtedness of $50,000, and more. He further avers that said corporation is no longer a going •concern and has passed permanently out of existence, and its stock was destroyed and rendered worthless by the sale of all the property which it represented; and that, thereby, the principal obligation of «defendant corporation to the plaintiff was extinguished, and with it fell and lapsed any and all obligations accessory thereto’ which may, at the time of said sale, have existed; and respondent avers that if said obligation was not void for want of consideration, and he reiterates it was, it was extinguished with said principle obligation.

For these reasons, he prays that the plaintiff’s demands bo 'rejected.

The defendants S. J. Hart and Helen H, Hart for answer to the original and supplemental petitions, plead a general denial and admit that they are the heirs of Judah Hart, and have been, by a judgment of court, sent into possession of his estate. They aver that Judah Hart signed the notarial act of sale mentioned in plaintiff’s petition, on the 2nd day of May, 1894; but deny that he bound himself in manner and form set forth in plaintiff’s petition.

They further allege, that the terms of the notarial act did not and were not intended to bind Judah Hart ,to guarantee the payment of dividends to plaintiff as set out in the petition; and that there was not, and Judah Ilart did not receive any consideration for any such contract or guarantee.

That if such contract be'expressed, or he intended to be set forth in the notarial act, by which it is stipulated that the said Judah Hart and R. T. McDonald, who guaranteed and bound themselves in solido, to pay to the holders of .the preferred stock of the New Consumers’ Ice Company a dividend of ten per cení., per anmim on the .par value of said stock', then the said stipulation and contract is a nudum pacium and not binding on Judah ITart, or on respondents, the same having been made without consideration.

They further show, that Judah Hart has never received any benefits from said contract, but that, on the contrary, the same has been expensive to him, and that he has paid out and expended large sums of money in the interest and in behalf of the said plaintiff and the parties to said contract, largely in excess of the amount herein claimed of respondents.

They represent that the business venture, known as the New Consumers’ Ice Company, has been and has proven a losing venture to Judah Hart, and that he never derived any profits or benefits therefrom, but, on the contrary, lost large sums of money; that the company is now insolvent and its assets have passed into other hands, and that it would be unjust and inequitable to make respondents bear the entire loss and to permit the plaintiff to profit at respondent’s expense.

For those reasons they pray that the plaintiff’s demands be rejected.

On these issues the parties' went to trial, and judgment was rendered in favor of the plaintiff and against the defendants, Samuel J. Hart and Helen IT. Hart, for the several dividends claimed; that is to say, fourteen dividends of $290.62 — one-half each or for one-half of the total amount of the dividends claimed against McDonald and Judah Hart with 5 per cent, interest on each respective dividend from the date of its maturity, on the four instalments which were due, and giving to the defendants a discount of eight per cent, per annum on the dividends not due from the date judgment was rendered.

No judgment was rendered against McDonald, for the reason that it appears from the record that a compromise had been entered into between him and the plaintiff during the pendency of the suit, by reason of which he was discharged. That discharge was made the subject of a special plea on the part of the defendants, Samuel J. Hart and Helen H. Hart, which is of the following tenor:

That since the institution of this suit and since the answers of defendants were filed and issue joined thereby, and since the overruling of the exception of no cause of action, plaintiff has, by transaction or settlement, received of McDonald their co-defendant, a consideration, and has released said McDonald from any and all liability, and from any claim by reason of the matters and things set up in the petition, and has granted him an acquittance and discharge.

They represent, further, that plaintiff has prayed for a judgment in solido against them and McDonald, and since issue joined on their prayer, has discharged McDonald as above set forth.

They further represent that plaintiff has relieved and discharged lier attachment against the property of the co-defendant, McDonald, to the.prejudice of their rights, “and that thereby, and by reason of the matters and things hereinbefore set forth, your respondents are discharged from any and all liability to the plaintiff, if any such had existed, or had arisen, and that the plaintiff is estopped by plea and by conduct .from further claiming anything of them, by reason of the matters and things set up in her petition.”

Thereupon, they prayed, in the event that their pleas and defenses made in their answer are not maintained, and only in that event, that this, their present plea, be allowed and maintained.

From the foregoing it appears that the plaintiff as one of the preferred stockholders in the New Consumers’ Ice Company, Limited, seeks to enforce against the defendants, Samuel J. Hart and Helen IT. Hart, alone, a liability as unconditional heirs of Judah Hart on an obligation which is contained in a notarial act of sale, of the 2nd of May, 1894, from the liquidators of the Consumers’ Ice Company, Limited, to the New Consumers’ Ice Company, Limited; and that said defendants seek to exonerate themselves therefrom upon the different grounds which have been recapitulated.

The act of sale in question shows that said liquidators bargained, sold and conveyed to the New Consumers’ Ice Company, Limited, in pursuance of a resolution of the board of directors of date 24th'day of June, 1898, all the property of the Consumers’ Ice Company, Limited, for and in consideration (1) of the issuance to said liquidators of the whole of the preferred capital stock of the New Concumérs’ Ice Company,- amounting to'the sum of $130,000, to be issued as full paid stock and not liable to assessment; (2) in consideration of the first mortgage, six per cent, twenty-year bonds of the new company to the amount of $50,000; (3) in consideration of the assumption, by the New Consumers’ Ice Company, of the whole of the outstanding indebtedness of the company.

In said act occurs, the following recital, to-wit:

“And now to these presents came, appeared and intervened, Judah Hart * * * and Ronald T. McDonald, who declared that they have taken cognizance of the above and foregoing act of sale, and that, for a valuable consideration, to them paid, they do hereby give their personal guarantee that for ten years hereafter, the said preferred stock hereinabove described, shall annually earn and pay a dividend of ten per cent from January 1, 1894, payable selni-annually on May 1st and November 1st of each year.”

Said act was signed by the liquidators and by Hart and McDonald on the date specified.

This is the obligation upon which this suit is based. It appears that said contract of sale was made in pursuance of a previous agreement between the Consumers’ Ice Company and McDonald and Hart, of date February 16th, 1893, wherein it is stipulated that all the property of the Consumers’ Ice Company, of every kind and character, should be sold to McDonald and Hart upon the approval of the stockholders of said-company; and the said Hart and McDonald obligated themselves to purchase the same for the price and sum named therein and in the manner following, to-wit:

“The said Hart and McDonald will cause to be organized in the city of New Orleans,' a corporation with a preferred capital stock of one hundred and fifty thousand dollars, which preferred capital stock shall be entitled to an annual cumulative dividend of ten per cent., to be paid cumulatively, out of the profits of the company, before any of the dividends are paid to any other stockholders. Said dividends to be paid semi-annually on the 1st of May and the 1st of November. The said Judah Hart and R. T. McDonald are to guarantee, personally, that this preferred stock shall, for ten years after the organization of the said company and the delivery of the said stock as part of the purchase price aforesaid, earn ten per cent, per annum dividends and shall guarantee that in any year in which the earnings of the said company are not sufficient to pay ten per cent, per annum semiannually, as aforesaid, they will pay the said dividends, or make up any deficiencies between the dividends earned and the said ten per cent, per annum dividends, and for other considerations not necessary to mention.”

It further appears that in pursuance of said agreement, a charter for the New Consumers’ Ice Company, Limited, was adopted, on the 21st day of June, 1893, in which it is specified “that the capital stock of said corporation, is hereby fixed at the sum of four hundred thousand dollars, divided into and represented by four thousand shares of one hundred dollars each; and shall he further subdivided into two distinct species or classes of stock known as preferred stock and common stock. (1) The said preferred stock shall consist of 1500 shares .of $100 each, amounting to the sum of one hundred and fifty thousand dollars; and the corporation shall not have power to increase the amount of said preferred stock without the consent of three-fourths of all said stock, at a special meeting held for the purpose. Said preferred stock shall be entitled to an annual cumulative dividend of ten per cent, to be paid cumulatively out of the profits of the company before any dividends are paid to the common stockholders. Said dividends shall be paid semi-annually on the 1st day of May and the 1st day of November in each year. In case of the dissolution of the corporation and the distribution of its assets, the said preferred stock shall be paid in full out of the assets of the corporation, before any payment is made upon the common stock.

“(2) That said common stock shall consist of 2500 shares of one hundred dollars each, amounting in the aggregate to two hundred and fifty thousand dollars, and shall be subject to the preferred stock as above set forth.

“(3) Separate and distinct certificates shall be issued for the said preferred stock and the said common stock, showing.briefly their relation to each other, and the said certificates of stock shall never fin any manner be mingled.

“(4) All of said stock, both common and preferred, shall be paid for at such times and in such installments as the Board of Directors may fix, and said board shall have power to issue full paid stock, common and preferred, in exchange for labor done or property actually transferred to the corporation.”

In the foregoing agreement, charter and contract of sale, are to be found the obligation upon which plaintiff’s claim is founded; and in construing the character and intent of said obligation, these contemporaneous writings should-be considered.

The certificate of preferred stock which was issued to the plaintiff, is of the following tenor, viz:

“This certifies that Harriet A. Hornor is entitled to 116% shares of the preferred stock of the New Consumers’ Ice Company, Limited.

******

This certificate is part of an issue of the preferred shares amounting in the aggregate to one hundred and fifty thousand dollars, which are entitled to dividends at the rate of ten per cent, per annum only cumulative from the first day of January, 1894, out of the earnings of the company applicable to the purposes before any dividend is declared on the common stock.”

This certificate bears date 21st day of November, 1894, and is signed by the president of the corporation.

The recitals of this certificate are in exact keeping with the stipulations of the charter; that is to say, that its holders are entitled “to dividends at the rate of ten per cent, per annum, only cumulative from the 1st day of January, 1894, out of the earnings of the company applicable to the purpose, before any dividend is declared upon the comjnon stock.”

In other words the obligation of the corporation to the holders of its preferred stock, was to pay cum ulative dividends at the rate of ten per cent, out of the earnings of the company applicable to the purpose before any dividend is declared on the common stock; and the obligation of McDonald and Hart, as specified in the act of sale to the corporation, was, that they personally guaranteed that the preferred stock should annually earn and pay a dividend of ten per cent, semiannually for a period of ten years.

The obligation of the corporation was to pay ten per cent, dividends to the holders of the preferred stock from its resources and eáírnings; and the obligation of Hart and McDonald was to guarantee that the stock would earn and pay a dividend, irrespective of the resources of the corporation.

I.

The first question to consider is the defendants’ plea of estoppel, the effect of which is alleged to be a discharge resulting from a compromise which the plaintiff made with McDonald during the pendency of the suit.

The terms of the compromise were reduced to writing, the substance of which is as follows:

That in compromise and full settlement of plaintiff’s demands against McDonald, she agreed to receive on or about the 1st of August, 1898, in cash, one-half of the dividends for the year 1897 as claimed, and that McDonald should organize a corporation and sell to same the entire plant of the New Consumers’ lee Company which was recently purchased ty Mm, and as a part of the price of such salé will give its mortgage notes -to the various preferred stockholders who áre plaintiffs in this suit and other suits of like character.

This document is signed by the-plaintiff and McDonald and other parties, but it bears no date; yet, it is evident from its terms that it was executed and accepted during the pendency of this suit and after issue had been joined by the filing of the answers of all the defendants.

The point made and relied upon by the defendants Samuel J. Hart imd Helen I-I. ITart, is, that the plaintiff alleges that the obligation sued on was solidary in character and that she prayed for judgment against all the defendants in solido; and that this averment was a judicial admission to the effect that the defendants were bound in, solido, and that the same had the effect of an estoppel by plea and by conduct debarring plaintiff from claiming anything of them, by reason of the discharge of McDonald' as a solidary debtor during the pendency of the suit. - > .

In other words, the plaintiff- having judicially averred that the obligation sued upon was one in solido, and binding each of the defendants, for the whole amount of the debt claimed, -and having asked judgment in solido ágainsf all the defendants, therefor, she is es-topped from pressing her claim against them, because the compromise with McDonald operated a discharge in their favor from all further liability.

The concluding part of the act of compromise is in these words:

“All of these to be received by the plaintiffs in the above entitled and numbered causes in full satisfaction and settlement of all their claims against the said R. T. McDonald arising from the1 guarantee made by him and Judah Hart that the said New Consumers’ Ice Company, Limited, would earn and pay a dividend of ten per cení, annually for a period of ten years; but it is specifically agreed that nothing in this agreement shall be construed to be a waiver- of any kind, or any right of the plaintiffs in the above entitled and numbered causes against the succession or heirs of the late Judah Hart as claimed in the above entitled and numbered causes.”

The plaintiff’s insistense is, that giving to the allegations of her petition the fullest possible effect,-in respect to the averment of the solidarity of the obligation, it is only an averment of a conclusion of law and not of a matter of fact; and that the court, in rendering judgment, must necessarily look into the obligation sued on for the purpose of determining its character and to decide accordingly; and, therefore, no estoppel is raised thereon as said defendants contend.

Rut if the court should construe said averment as the defendants insist it should, the plaintiff contends that the reservation in the agreement that same should not be considered a waiver of any of their rights against the other defendants is a saving clause by which her rights are protected.

And this contention is supported by reference to the provision of law “that the remission or conventional discharge in favor one of the co-defendants in solido, discharges all the others, unless the creditor has expressly reserved his right against the latter.” Rev. O. C., 2203.

In our view1 the plea'of estoppel can not prevail, as we deem it our duty to examine and consider the terms in which the obligation sued upon is couched, in order to decide what the nature and legal effect of same are.

As, notwithstanding the plaintiff’s averment of the solidarity of the defendants’ obligation should Re conceded to be one of fact and not of law, she would not be entitled, on that account, to take a judgment in solido against the defendants, Hart, on a joint obligation; hence, said averment can not, as a judicial admission, so operate in their favor as to render her aforesaid compromise with their co-defendant, McDonald, a bar against recovery, because she had averred that the defendants’ obligation was in solido.

In so far as the defendants’ plea of estoppel, based upon the aver-tíient is concerned, they do not appear to have acted thereon; nor do they seem to have been, thereby, induced to alter their previous position in this controversy.

It is a familiar principle in jurisprudence that estoppel is not favored in law, and should not be permitted, except in clear cases, to defeat the object of the administration of justice which is “to discover and apply the truth”; and that, in order to justify the application of this plea, “it must be certain to every intent, and is not to be sustained on argument or by inference.” Bigelow on Estoppel, pp. 302, 311; Best Princ. Ev., p. 527; 1st Green. Ev., Sec. 22.

But the law provides that “there is an obligation in solido on the part of the debtors, when they are all obliged to the same thing, so that each may be compelled for the whole, etc.” R. C. C., 2091.

Again: “An obligation in solido is not presumed; it must be expressly stipulated.” R. O. C., 2093.

In our opinion the obligation of Hart and McDonald does not meet these requirements, as it only provides, that, “for a valuable consideration, to them paid, they do hereby give their personal guarantee, etc.”; and the law declares, that “when several persons join in the same contract to do the same thing, it produces a joint obligation on the part of the obligors.” R. C. 0., 2080.

These principles of the Code confirm the statement that the obligation sued on is joint and not in solido on the part of the defendants, and defendants’ plea of estoppel can not be sustained.

II.

In the contract of February 16th, 1893, Hart and McDonald stipulated and agreed with the liquidators of the Consumers’ Ice Company, that they would cause to be organized a new corporation, with a preferred capital stock of one hundred and fifty thousand dollars, which would be entitled to ah annual cumulative dividend of ten per cent., to be paid to the holders thereof out of the profits of the company, cumulatively and semi-annually, “before any dividends are paid to any other stockholders.”

That stipulation constituted part of the consideration of the sale therein proposed by Hart and McDonald to be made of the entire assets of the old corporation.

That proposition was carried into effect by the organization of the new corporation known as the New Consumers’ Ice Company, Limited, on the twenty-first of June following, by the adoption of a charter in which the capital stock was fixed “at $400,000, which was to be represented by four thousand shares of one hundred dollars each, and which was to be sub-divided into preferred and common stock — the former aggregating fifteen hundred shares, and the latter twenty-five hundred shares — it being therein provided that said preferred stock shall be entitled to an annual cumulative dividend of ten per cent., to be paid out of the profits of the company, before any dividends are paid to the holders of the common stock of the company..

It contained the further express stipulation that “separate and distinct certificates shall be issued for the said preferred stock and the said common stock”; and the further express stipulation that “all of said stock, both common and preferred, shall be paid for at such times and in such instalments as the board of directors may fix.”

A formal transfer and delivery of the property and assets of the Consumers’ Ice Company was made, on the 2nd of May, 1894, directly to the New Consumers’ lee Company, Limited, instead of being made to Hart and McDonald, as it was originally proposed; and certificates of preferred stock were formally issued to the plaintiff and others pn the twenty-first day of the following November.

In the act of sale there are no recitals relative to the original agreement, or to the charter of the new company, except that the preferred stock formed a part of the consideration thereof; but the obligation which the plaintiff seeks to enforce is'therein contained.

It states that Judah ITart and R. T. McDonald intervened in the act, and declared that they have taken cognizance of the act of sale and “for a valuable’consideration, to them paid, they do hereby give their personal guarantee' that, fox ten years hereafter the said preferred stock, hereinbefore described, shall annually earn and pay a dividend of ten per cent, etc.” (Our italics.)

The intervenors gave their personal guarantee that the preferred stock should, for the period of ten consecutive years after the organization 'of the new company, “annually earn and pay a dividend of ten per cent.” That personal' guarantee was distinctly and expressly given in favor of the preferred stockholders of the corporation and was evidently intended to enure to their benefit, alone.

Having been made subsequent to the adoption of the charter of the corporation, and prior to the issuance of the preferred stock, same was doubtless intended as the consideration of the original agreement with the old company, and as an inducement to the stockholders thereof to surrender their certificates and take preferred shares in the new organization. This is evidenced by their personal guarantee that the preferred stock of the new company shpuld annually earn and pay a dividend of ten per cent, and the reasonable reliance of those stockholders was, that the company would earn and pay them ten per cent, dividends annually; and if it did not, then the intervenors would be personally bound on their guarantees.

The stipulation of the charter on the subject of dividends is essentially distinct and different from that of the personal guarantee of the intervenors, as it only provides that the preferred stock shall be entitled to receive an annual dividend of ten per cent, to be paid cumulatively out of the profits of 'the company, before any dividends are paid to the common stockholders.

We are of opinion that the personal guarantee of the intervenors fulfills all the requirements of a stipulation pour arbrui, as same is recognized in our Code as follows, to-wit:

“A person may, also, in his own name, make some advantage for a third person the condition or consideration of the commutative contract, or onerous donation; and if such third person consents to avail himself of the advantage stipulated in his favor, the contract can not be revoked.” R. O. 0., 1890.

There is no doubt of the fact that Hart and McDonald proposed this adventure to the Consumers’ lee Company which was, at that time, confessedly in financially straightened circumstances, with the view of obtaining control of the ice manufacturing business in the city of New Orleans; and that the shareholders fully realizing that their stock was in great peril, were willing to accept the personal guarantee of Hart and McDonald of a ten per cent, annual dividend for a period of ten years, taking the chances of saving their investments, if the venture should prove successful.

The subsequent acquisition of fifteen hundred shares of the preferred stock of the new company was 'an acceptance of the stipulation pour autrui on the part of the shareholders of the old company; and the issuance to Hart and McDonald of 1242 shares, each, of the common stock of the new company — 2484 in all — gave them the entire control of the conduct and management of its affairs through the selection of a board of directors. '

Therefore, it is apparent, that in this manner the original scheme was consummated, and the new corporation put into operation; and that same was, thereafter, operated profitably, for á period of more than two years, is shown by the fact that the preferred stockholders were regularly paid ten per cent, semi-annual dividends from the earnings and profits of the business.

In this manner both parties to the contract became absolutely bound by the conditions of said stipulation pour avbrui; and the law declares that “if the third person consents to avail himself of the advantage stipulated in his favor, the contract can not be revoked.”

The plaintiff sues for its enforcement, and the defendants, Hart, allege their discharge therefrom.

Such a stipulation is an independent obligation, and not a contract of suretyship, as it is “an accessory promise by which a person binds himself for another already bound and agrees with the creditor to satisfy the obligation if the debtor does not.”

R. 0. 0., 3035.

The preferred stockholders do not stand in the relation of creditors of the corporation; and it is in no sense their debtor. It might have been so if dividends had been earned and not paid over. Hart and McDonald bound themselves, personally, that the corporation would earn and pay ten per cent, dividends to the preferred stockholders; and the contract in their favor became exigible because the corporation did not earn and pay over the same.

The law provides that “suretyship can not exceed what may be due by. the debtor, nor be contracted under more onerous conditions.” R..C. 0., 3031.

“That suretyship can not be presumed; it ought to be expressed and is to be restrained within the limits indicated by the contract.” R. 0. 0., 3039.

If the surety is bound as his principal is, and his obligation can not exceed what is due by him, then it might be reasonably contended, that the liability of Hart and McDonald became extinguished when the corporation became insolvent and made a judicial surrender of its assets — on the theory that the corporation was principle and they its sureties.

But this, in our opinion, would be, to read out of the act of sale their promise to personally guarantee the payment of ten per cent. dividends to the preferred stockholders, for a period of ten 'years.

This, of course, is not admissible, and is not contended for; and giving to it the effect its terms clearly import, our conclusion, as before stated, is, that it is a stipulation pour autrui and an independent obligation, binding the defendants jointly, and not in solido. Hawkes vs. Bright, 51st Ann., J9.

III.

We are, next, to consider the answer of the defendants, Hart,— that of McDonald being omitted — to the effect that Judah Hart did not bind himself in the manner and form set forth in plaintiff’s petition ; that the terms of said act did not and were not intended to bind Judah Hart to guarantee the payment of dividends to the plaintiff as set out in their petition, and that Judah Hart did not receive any consideration -for any such contract or guarantee.

That it in such contract it be expressed, or he pretended to he set forth in said act, that Hart and McDonald guaranteed and bound themselves in solido to pay to the holders of the preferred stock of the New Consumers’ Ice Company a dividend of ten per cent, “then the said stipulation is a nudum pactum and not binding on Judah Hart or your respondents, the same having been made without consideration.”

That Judah Hart has never received any benefits from said contract, but, on the contrary, it has been expensive to him; and that he has expended on that account, large sums of money in the interest and in behalf of the plaintiff and other stockholders, largely in excess of tbe amount herein claimed of respondents.

That same has been a losing venture to Judah Hart and your respondents, and that neither have derived any profits or benefits therefrom, but, on the contrary, lost large sums of money, and that the company is now insolvent and its assets have passed'into other hands and it would be unjust and inequitable to make respondents bear the entire loss, and permit the plaintiffs to profit at their expense.

The argument of the counsel of defendants, Hart, on this part of the case is, that soon after the organization of the new company, McDonald, in connection with one Louis P. Hart — who is no way related to Judah Hart or his heirs — united, combined and formed what is called The City Delivery Company, which controlled all the ice companies in the city of New Orleans; and that they made a contract with the directors of the New Consumers’ Ice Company to deliver its output of ice to the said City Delivery Company, at two dollars per ton; and that they, in turn, sold ice to consumers at prices ranging from three to seven dollars per ton.

That through the interposition of the City Delivery Company, McDonald and L. P. Hart collected the profits of this contract and deprived the New Consumers’ Ice Company of all its resources.

That by this means, it became insolvent after the lapse of two years, being unable to pay dividends; and in consequence of which there was nothing to pay to the holders of the common stock of the corporation.

An examination of the record has satisfied us, that this argument is substantially correct, notwithstanding there is some evidence in the record to the effect that Judah Hart had participated, to a limited degree, in the profits of the City Delivery Company, at one time.

But, in our opinion, this state of facts does not constitute a defense to the present suit; and, indeed, it is-not referred to in the answer of the defendants, Hart.

The want of consideration pointed out by the counsel of defendants, ITart, and upon which their defense is predicated, seems to be, that the issuance of the common stock to Hart and McDonald was the sole consideration for their personal guarantee of -the ten per cent, dividends; and that, as a resolution of the board of directors, in 1896, had declared the issuance of the same illegal and called for its restitution, the same constitutes proof of the want of consideration, and that the contract was a nudum pactum.

But the charter of the new company absolutely required that all stock, both common and preferred, should be paid for; and the proof in the record clearly discloses that no such payment was made by either Hart or McDonald, and that they were holders of same without consideration.

Indeed, the answer of McDonald admits that such was the true state of facts, and that he had surrendered his common stock in pursuance of the resolution of the board-of directors; and the same is not denied on the part of the defendants, Hart. And the proof shows that after the adoption of-said resolution, suit was brought against Judah Hart for the recovery and possession of said shares of stock, but it does not appear that same were obtained, notwithstanding that suit was subsequently discontinued.

Under this state of facts, it does not seem reasonable that the defense set up should be sustained; but if the proof had shown that Judah Hart had paid for his common stock as the terms of the charter require, it- would have been a better foundation for' the defense. As the matter stands, the common stock not having been paid for, it can not be considered as a consideration for the personal guarantee of Hart and McDonald.

There is nothing in the written acts; or in the parol evidence to sustain the proposition; and the act of sale admits there was a valuT able consideration.

It is not alleged in defendants’ answer, or shown by the proof in the record, that the preferred stockholders took any part in the wrecking of the now corporation, nor that they were benefited by it; but the proof does show that they were aware of the fact that the shares of common stock had not been paid for, and that they made efforts looking1 to its surrender.

It further shows that they were interested in measures being set on foot intended for their protection, but same were not consummated; and they subsequently consented to proceedings being taken in the United States Court, by Judah Hart, for the purpose of putting the affairs of the corporation into liquidation, as the only means left whereby their rights could be protected.

In this situation of affairs, we are of opinion that there is no merit in the plea of defendants, Hart, that plaintiff was without legal or equitable right in the prosecution of this suit.

IV.

The only remaining question for consideration is, whether the judgment appealed from can be sustained as to the amounts of dividend claimed, which were not due at the date of the institution of this suit.

Plaintiff demands payment of the entire amount of the unpaid portion of the dividends, for a period of Seven years, which are covered by the guarantee of Hart and McDonald, twelve semi-annual instalments of which had not run to maturity according to the tenor of the contract; and judgment was rendered accordingly. On this question, the argument of counsel for the defendants, Hart, is, that “the failure of the New Consumers’ Ice Company, Limited, to earn and pay a ten per cent, annual dividend to its preferred stockholders, did not precipitate the performance of payment of ‘the obligation, if any, entered into by Hart and McDonald in the act of sale from the liquidators of the old Consumers’ Ice Company to the new.” If the plaintiffs are entitled to recover at all, “the insolvency of the corporation, even if judicially declared, would not, as against the defendants, Hart, cause the obligation to mature.”

As authority for that proposition, counsel cite and rely upon Hawkes vs. Bright, 51st Ann., 19.

In that case the court had under consideration the question whether the immediate payment of the ten instalments of dividends became mature, because of defendant’s acts; and in deciding same, we said:

“We have found no difficulty in arriving at the conclusion, in' view of the terms and conditions of the defendant’s obligation of guarantee, that the amount of one thousand dollars allowed in the judgment appealed from, was due.

“With reference to the remaining- nine-tenths of plaintiff’s claim, the question arises: Did the failure of the Knight Lumber Company, Limited, have the effect of precipitating the maturity of the defendant’s obligation as guarantor under the contract before stated ?

“It is contended in behalf of the plaintiff that the company is utterly unable to earn anything to pay any dividends; that it is without stockholders, officers or propeprty and exists only in name.

-x- •>:- -s * -x- *

“Conceding all that is claimed relative to the insolvency and ruin of the Knight Lumber Company, in view of the conditions of the contract, the plaintiff is not entitled to the cash payment of the whole amount due.”

-x- -x- -x * * ■»

“The defendant’s obligation being personal and absolute, the insolvency of the corporation even if judicially declared would not, as a--ainst the defendant, cause his obligation to mature.

“The defendant was a vendor. ITe assumed to make good that which the vendee considered, or must have considered, at least, partial consideration. This is not the case of a security, but an independent obligation of one who is called upon to respond, because the property he transferred has not yielded the revenue he bound himself it would yield. .The corporation, for reasons alleged, is no longer a going corporation. It appears that the corporation never can pay plaintiff the dividends defendant guaranteed it should receive. It remains that the defendant was considered and treated as an independent obligor.”

In that case the District Court rendered judgment in favor of the plaintiff, for the first year’s dividend guaranteed in the contract, and non-suited plaintiff’s demands- for the remainder of- dividends, as being premature; and this court affirmed that judgment.

Therefore, counsel say, if any decree must be entered against the defendants, Hart, it must be for only the amount of tbfe dividends due and unpaid, “and can not and ought • not condemn them for dividends, the time for the payment of which, has nas not yet arrived.”

Counsel for the plaintiff rely upon the following articles of the Code as supporting the judgment complained of, to-wit:

“Wherever there is a cessiqn of property either voluntáxy or forced, all debts (owing) by the insolvent shall be deemed to be due, although contracted to be’ paid at a term not yet arrived; but in such case a' discount must be made of the interest at the highest conventional rate, if none has been agreed upon by the contract.” R. C. C., 2054.

But the law declares that the time given or limited for the performance of an obligation is called its term. R. C. C., 2048.

“What is due only at a certain time, can not be demanded before the expiration of the intermediate time, etc.” R. C. C., 2052.

“The term is always presumed to be stipulated in favor of the debtor.” R. C. O., 2053.

In the following article, 2054, is found the provision above referred to, that “all debts (owing) by the insolvent shall be deemed to be due, although contracted to be paid at a term not yet arrived;” and by comparison made between it and the articles previously cited, it is plain to be discerned that a solvent debtor is entitled to await the expiration of the full term of his contract before he can be called upon to pay.

Indeed, a subsequent article, 2057, provides, that “where a term is given or limited for the performance of an obligation, the obligor has until sun set of the last day limited for its performance, to comply with his obligation, etc.”

Also, “where the term, referred to in the contract, consists of one or more years, the calendar year shall be presumed to have been intended.” R. C. C., 2061.

But conceding the application of that article to corporations, and that its insolvency precipitates the maturity of all of its indebtedness notwithstanding same is made payable in installments at future dates, can it have any reference to unearned premiums which do not constitute a debt of the corporation?

The proof in this case shows, that the corporation earned no money from which the dividends embraced in this suit could be paid, and that its declared insolvency and liquidation rendered the payment of dividends by the corporation, impossible in the future.

Consequently, the personal obligation of the guarantors became exigible in favor of the preferred stockholders, but it was to pay annually in lieu of the corporation, from year to year in semi-annual instalments.

It was the inability of the corporation to pay at all that rendered the guarantors, liable; but the insolvency of the corporation did not have the effect of precipitating the maturity of the indebtedness of the guarantors — they being perfectly solvent.

And the insolvency of the New Consumers’ Ice Company, Limited, can not have the effect of precipitating the maturity of the obligation of Ilart and McDonald, the term for the payment of which has not expired, for the reason that same is not the obligation of the corporation or of any of its stockholders, but the personal obligation of Hart and McDonald as individuals in favor of the preferred stockholders.

In our view the case of Ilawkes vs. Bright is exactly ajiplicable to this case, and strictly in keeping with the provisions of the Code already cited; and for the reasons stated therein, our conclusion is, that we should not recognize the insolvency of the New Consumers’ Ice Conxpany, Limited, as precipitating the future instalments of the obligation of the guarantors, Hart and McDonald.

We are, therefore, of opinion, that the judgment apx>ealed from is correct only with regard to the dividends which fell due on the first days of May and November, 189 Y — this suit having been filed on the 2nd of March, 1898 — and that a judgment of non-suit should be entered with respect to the remaining dividends claimed for the year 1898 and subsequent years.

It is, therefore, ordered and decreed that the judgment in favor of the plaintiff, Mrs. Harriet.A. Horner, and against the defendants, Samuel J. Hart and Mrs. Helen H. Hart, be affirmed in respect to the two dividends of two hundred and ninety dollars and sixty-two and one-half cents ($290.62%) each, which matured on the first day of May and first of November, 189Y, with five per cent, per annum interest from judicial demand; and that in all other respects same be reversed — the demands in respect to other dividends enumerated being dismissed as of non-suit. And that costs of appeal be taxed against the plaintiff and appellees.

Rehearing refused.


source: Caselaw Access Project

author: Breaux, J. Watkins, J.

license: Public Domain

text:
    No. 13,144.
    Edgard D. Farrar vs. New Orleans and Carrollton Railroad Company.
    Syllabus.
    Where the plaintiff heedlessly steps in front of a coming car without at all “looking” and “listening,” and then stopping in case of danger, he omits observing one of the rules laid down in a number of decisions, which should be complied with by a pedestrian when he is about to cross a track, i. e., to “look” and “listen.”
    While the failure to observe the rule does not relieve those in charge of the car from the necessity of.being careful at all times, none the less, in order that a plaintiff may recover damages it must appear that the danger was not seen by the motorneer at a time when he should have seen it, and that he did not make every exertion fo avoid the accident.
    The plaintiff enjoyed the faculties of sight and hearing unimpaired at an. advanced age. His steps were slow but the evidence does not show that his steps were so slow and1 feeble that he could not cross before the coming car, or that plaintiff would fail properly to use his senses of “hearing” and, “seeing” and undertake to make the crossing despite the danger to which it was attempted to call his attention by ringing the gong and loudly hallooing to him.
    The motorneer, while manning his car, had a right, to some extent, at least, to be governed by the belief that plaintiff would not seek to cross unless his strength was sufficient to enable him to cross before the arrival of the car.
    APPEAL from the Civil District Court, Parish of Orleans— King, /.

      Boalner, Dodds & Boatner for Plaintiff, Appellant,

      Dari & Kernan for Defendant, Appellee.
   The opinion of the court was delivered by

Breaux, J.

Plaintiff brought this action to recover the sum of ten thousand dollars damage for injuries sustained, he alleges, through the negligence of the employees of the defendant company, in June, 1898, at about 9 o’clock in the morning. The defendant is the owner of a line of ears operating on St. Charles avenue, and has two tracks. The distance between the two rails, or the guage, is five feet, and the distance between the two tracks is eight feet. The car by which plaintiff was struck was coming down the street on the river side track. Plaintiff charges that he could be seen approaching the track for a distance of about two blocks just prior to the accident, and that he was seen by the motorneer at a distance sufficient to avoid the accident by moderating the speed of the car had he been careful in manning the car. Plaintiff alleges that he is seventy years old and extremely feeble; that, on account of his age, -his steps are slow; that his sight and hearing are considerably' impaired; that he did not see any approaching' car, 'nor hear any sound of the gong; that the motor-neer was aware, from his slow progress when .walking, and from his apparent weakness, that he would be unable to make any sudden movement or exertion for his protection; that it was the duty of the motorneer when he saw the petitioner near the track, and that petitioner was not aware of the car’s approach, to check its speed and to protect petitioner from the danger of which he was unconscious; that, instead of doing this, he recklessly permitted the car to run at a dangerous speed, up to the moment it struck petitioner, who- had nearly crossed the track, when he was thrown down and dragged about a car’s.length and greatly bruised .and’injured, from the effects of which he had not recovered at the'time this case was tried, and from the effects of which he will never recover.

There were a number of passengers in the car at the.time, among them a young boy, who testified that he was seated near the front of the car on the wood side, and heard, a moment before the accident, an alarm or commotion; a lady screamed; the motormon cried out and rang his bell; and the car was brought to a stop, jarring- the witness and throwing- him forward.

' Another witness who was also a passenger, said that, as well as he could remember, the gong- was sounded rapidly when they had made about a quarter of the block between Second and First street, at the corner of which the accident happened, and it attracted his and the attention of the other passengers, as did the cry “look out!” “look out!” uttered a few seconds before the car was brought to a stop. It was a very small fractional part of a minute from this call, i. e., ringing the gong, and cries “look out!” to the stopping. He and the other passengers jumped out of the car and he saw Judge Farrar, the plaintiff, who was in the act of rising from the ground with the assistance of some one near. He, plaintiff, was on the river side about the centre of the street, and about opposite the second window from the front of the car.

The next witness, in the order in which they were .xamined on the trial, testifies that the car’s length is about thirty feet, and that a car can be stopped within a car’s length or less. Tie made a test of time required to cross defendant’s track by one walking, ? slowly as plaintiff was walking when he attempted to cross the track just prior to the accident, and said it would take him from fifteen to twenty seconds to cross the defendant company’s tracks.

The first witness, a member of the bar, sworn for the defendant, was also a passenger in the car which collided with the plaintiff. He testified that he heard a clanging of the car bell and some one screamed in front, who he afterwards discovered was the motorneer. This was within one-third or one-quarter of the square just above First street. Just then he saw plaintiff, apparently not noticing the car and walking'over, not making much progress; an instant after plaintiff was thrown to one side. He was walking in about the middle of the track immediately in front of the car.

The second witness for defendant, a passenger, saw the accident- and saw the plaintiff approaching the track and by the time the car was near him the motorneer began to ring his bell. The ringing began when the car was about midway between First and Second streets, but plaintiff did not seem to hear and walked on. After the loud exclamations the car slackened its speed. The alarm was sudden, also the stop.

The motorneer continued ringing his bell. Plaintiff did not stop, and. when he was about the middle of the track,he was struck and the car stopped. The motorneer was making every effort to stop his car. lie stopped it just after plaintiff was struck, i. e., within about a car’s length. There was nothing between the plaintiff and the car to prevent him from seeing the car. He, plaintiff, was about five car lengths off when he put his foot on the wood side of the track, not the one on which the car was coming down.

The third witness, another member ,of the bar, says the alleged offending car is an open one and that he was sitting on the woods side of the car about the third or fourth seat from the front. He noticed plaintiff, when the car wras at Second street, crossing the gutter and moving on to the track. The car was coming down at the usual rate of speed. Plaintiff was walking rather slowly, and when the car was about the middle of .the block, the motorneer rang his gong. Plaintiff walked on and crossed the first up-town track and walked on to the second track to the place where he was struck, about half over the track. ‘Everybody was screaming, the motorneer was yelling at the plaintiff and the gong was ringing.

The motorneer at the same time put on the brakes. When the plaintiff passed the first track and was coming across the second track, the motorneer put on the brakes violently. The car was two lengths away when several of the passengers became greatly alarmed and screamed. There were a number of passengers in the car. Plaintiff was walking slowly, but not particularly slowly.

The motorneer testified, contradicting the lad who was the fifth witness, that he had received a signal from a dispatcher or any one else to go on and not to stop; that he stopped at several points before coming to First street, and says that his car was on time, and that he was within twenty feet from he crossing when plaintiff stepped from the up-town track, between the two tracks, and crossed over when he applied the brakes, threw the power off, and hallooed. Plaintiff walked on until he was nearly across the down-town track when he was struck. lie had checked the speed to one of five miles an -hour, and a little activity on the part of the plaintiff would have enabled him to pass the second track entirely. The testimony of the motorneer is, in the main, similar to the testimony of the passengers. The case was tried before the judge without a jury. The demand of plaintiff was rejected, and he appeals.

We have analyzed the evidence, and have not found that the defendant was guilty of the recklessness and negligence charged. To arrive at a different conclusion, one would have to assume that the car was running at a dangerous rate of speed up to the very' moment it struck petitioner; that the motorneer had time and cause to stop the car before the accident; that it had become apparent to him just prior to this accident that plaintiff was not conscious that a car was advancing upon him; that plaintiff’s slow and labored way of walking rendered it impossible to hasten and get out of the car’s way.

With reference to the rate of speed, it does not appear to have been unusual. It was at a rate less than the number of miles per hour sanctioned by the ordinance of the City Council regarding railroad speed, and there was no occasion to lessen the speed prior to leaving Second street, the first street before the one where the accident occurred. A very short distance after having left the intersection of this street with 'St. Charles avenue, the motorneer and oth'ers Saw Judge Farrar, who, the evidence shows, had frequently crossed the streets while on his usual walks. The alarm was given sufficiently loud to attract the attention of any save one absorbed in study Or thought and entirely unconscious of an approaching ear. The Speed was, from that time, until the collision, slackened. As relates to the speed there .was nothing unusual or wrong. As long as municipal ordinances sanction the speed at the present rate, and passengers expect and insist upon fast transit going to and returning from home and othéí places, no more, ordinarily, can be required than the sounding of the gong and the slackening of the speed. This was done in this case, as was shown by the testimony of all the witnesses, and a stop was made as sudden as possible.

With reference to the time and opportunity the motorneer had within which to sfop the car, as alleged by plaintiff, it does not appear that the motorneer had cause enough to make it imperative to stop the car at the moment that plaintiff was stepping on the track on which defendant’s car was running.

Plaintiff, it is true, is old and physically feeble, but the evidence of the passengers who saw the accident does not disclose that he was apparently so feeble as to mak« it dangerous for hinuto attempt to cross in front of an advancing car, nor does it appear that the motorneer had noticed in time to prevent the accident that the old gentleman would not recover from his unconsciousness of an approaching car sufficiently to make him stop and not place himself in peril. We must say here that we are not inclined to give much importance to the rule that requires of the pedestrian that he should “stop, look and listen.” It is to be expected, only exceptionally, that a pedestrian should stop, and then look and listen. It would be, ordinarily, requiring too much of the pedestrian, i. e., to “stop, look and listen.” But here.the plaintiff did not “look and listen,” and did not hear the ringing and loud screaming.

With reference to the plaintiffs unconsciousness of an approaching car being apparent to the motorneer, it was to awaken the attention of the plaintiff that he was called on by loud shouts and gong ringing. When these had failed in accomplishing the purpose intended, we infer from the testimony that it was entirely too late to do more than .was done to stop the car. We have not discovered that there was any-tiling- to leád tlie motorneer to think that plaintiff would not hear the alarm given. Regarding- plaintiff's slow and feeble steps, urged as sufficient to have given warning to the motorneer to stop his car, in order''to give this fact "the importance for which plaintiff contends, we would havq to, assume that the motorneer knew, or should have known, that plaintiff would''attempt to make the crossing before the car. ‘ The evidence' shows that, although plaintiff is quite aged, his sight, hearing and mind are quite acute. lie would have heard, we infer, had it not been for the fact that he was meditating on some subject which rendered him entirely unconscious of any noise at all. This was the cause of the unfortunate accident. True, if the motor-neer had stopped the car when he wa.s' near, he would have avoided the accident; but was he bound to assume that the plaintiff would not hear, and that, therefore, the stopping of the car was necessary? Aiid again, was he bound to assume that plaintiff would fail to make the crossing, if he chose to take the chances ?

We have given careful attention to the principles laid down in the cited decisions. Counsel refer, with confidence, to the case of McGuire vs. R. R. Co., 46 Ann., 1543. The facts, briefly stated, were "that the victim of the accident in this cited case was intoxicated, and lying prone upon the ground within the range of the railroad light. The engineer would have seen him £it is reasonably certain) had his view not been obscured by the escape óf steam, owing to a defect in the engine, which the defendant company had failed to' repair. The court held that the engineer’saw, or should have seen, the man thus exposed, and should have stopped the train. In the case before us, plaintiff was not on' the track, nor was he apparently lifeless and greatly exposed (unless unconscious of approaching danger owing to his absent mindedness at the time). The motorneer had tlie right to assume that he would heed the warning of approaching danger. This court said, in Snider vs. Railroad, 48th Ann., 11, that'plaintiff had placed himself directly in front of an approaching car and that escape from collision was impossible, as there was nothing to place the motorneer on his guard, 'or make him suppose that plaintiff would seek to cross.

The situation was véry much the saíne in the case now before us for decision: In another case the court said that the evidence showed that plaintiff’s wife was har'd of hearing and wore a large sun bonnet which, in part, concealed her face. She neither saw nor heard the approaching car while attempting to cross the street, for had she seen or heard it, she would either have stopped, or, at her peril, hurried oyer safely. It is not to he supposed that the driver for an instant imagined that she would not stop. He was not wrong in believing that she would exercise her senses and stop.

Did not the motorneer,’in the case here, have the right to assume as in the case cited, that the plaintiff would realize the danger and not expose himself? Plaintiff was not physically helpless, and there was no reason to suppose, when he first Qame into view of the motor-neer, that he would incur the risk of crossing, or would not cross in time. When it was discovered by the motorneer that plaintiff was attempting to cross and would not make the crossing, as testified to by the passengers; it was too late to stop in time to avoid the blow.

A pedestrian must use his faculties for his own protection. When he is unconscious of the danger, the unconsciousness must be apparent’ in sufficient time to enable the car to stop’.

The District Judge, who heard arid saw the witnesses, decided that defendant was not at fault. We have weighed the evidence as carefully as we could, and have arrived at the same conclusion. We have not found it possible, under the law, to reverse the decision and pronounce judgment for plaintiff.

The judgment of the District Court must be affirmed. It is affirmed.

ON,APPLICATION FOR REHEARING.

Watkins, J.

This is an action in damages for personal injuries inflicted on the plaintiff, through the alleged negligence of defendant’s employees — plaintiff having been struck by one of its cars as he was approaching the track and was plainly visible, and was evidently seen by the motorneer in ample time to have stopped the ear and thus avoided the accident.

But it is quite significant that-petitioner, at the same time, declares that he did not see, or hear the car approaching.

His averment is that the car was running at a dangerous rate of speed at the moment of contact.

There were a number of passengers on the car at the time, who gave their testimony as to the occurrence; and the case was tried by the judge, who, after having seen and heard the witnesses, gave judgment in favor of the defendant, and our opinion affirmed his decree by a concurrence of all the justices.

The application is based, exclusively upon the' ground that our opinion did not give sufficient weight to the facts tending to prove negligence.

A re-examination of the case has confirmed us in our original conclusion.

Rehearing refused.


author: BlaNohard, J.

text:
    No. 13,065.
    H. Laroussini vs. Philip Werlein.
    Syllabus.
    1. A verbal contract of lease, complete in itself independent of any writing; and unaccompanied by an intention to bave the same reduced to writing as perfecting it, is an enforceable contract.
    2. And if such a verbal contract be made and subsequently the parties agree that the same shall be reduced to writing and be signed, and afterwards there is a failure to so reduce it to writing and to signature — one of the parties refusing — it is still enforceable as a binding contract.
    3. But if when a verbal contract of lease is agreed on, it is understood, contemplated and intended, that it should be reduced to writing; that there should.be a written lease; that the written lease should take the place of, and stand for what had been agreed on verbally in respect to the leasing of the property, then until the writing is drawn up and signed, the contract is Inchoate, and either party -may, before signing, recede.
    APPEAL from the Civil District Court, Parish of Orleans — • King, J.

      Henry Denis and Branch K. Miller for Plaintiff, Appellant.

      Lazarus & Luce and Edwin T. Merrick for Defendant, Appellee.
   The opinion,of the court was delivered by

BlaNohard, J.

Plaintiff sues to enforce a verbal contract of lease on valuable property in New Orleans, for the term of five years at ■750 per month, or $9000 per annum.

His contention is that there was entered into between himself and defendant a complete and final verbal contract of lease, for the more secure proof of which an act in writing was to have been executed; but that the binding obligation of the agreement was in no manner to depend upon the said-writing, or to be suspended, or revocable, in. the meantime.

The contention of the defendant is that while the lease of the property was negotiated at personal interviews between himself and plaintiff, the verbal agreement was only preliminary to a written contract intended to be passed, and until the latter was consummated, neither party was bound by the verbal agreement.

The .parties sustained at the time the relation of lessor and lessee towards each other. The defendant was occupying the identical premises under a previous five years’ lease, which was drawing towards its close, and the contract now declared on was in renewal of the lease for another five years, at a rate of rental $50 per month greater than the then existing -lease called for.

The latter was in writing — an authentic act — and rent notes for the monthly payments of $700 had been given.

It was in contemplation that rent notes for the renewed lease were, to be given.

About a week after the verbal agreement of renewal had taken place, • the plaintiff called at the office of a notary public and informing the latter he had leased his store to the defendant, mentioning the terms of the new lease and the monthly rental, requested him to draw up ah act of lease substantially similar to the one then existing between the parties for the same premises.

The notary did so and also prepared sixty rent notes, at $750 each, to cover the five years lease. He then notified defendant the lease and notes were ready for signature. Some-delay ensued, but in the course of a week or ten days later the plaintiff, with the notary, repaired to the office of the defendant. The lease as prepared by the notary had been handed to the defendant at his request for inspection some days before, and he had it in his possession when the notary and the plaintiff called. The notary informed him the object of the call was to formally execute the lease and obtain his signature to the rent notes.

Whereupon defendant replied that he had changed his mind and would not execute the lease, and handed the written instrument and the unsigned notes back to the notary.

Following this, the plaintiff brought an action to enforce the specific performance of defendant’s promise to sign the act of lease in execution of the verbal agreement.

That suit was dismissed on exception, and the -judgment of dismissal, on the ground of no cause of action, was affirmed here. See 4-8 La. Ann. 13.

The present suit was then instituted, basing- recovery'on the verbal lease.

It was met by the plea of res judicata, filed by way of exception, predicated upon the judgment in the first case.

The plea was sustained by the trial court and the suit dismissed; but on appeal here that judgment was reversed, the case ordered reinstated on the docket and a trial upon its merits directed to be proceeded with.

See 50 La. Ann. 637.'

Trial followed with the result that plaintiff’s demand was rejected. He appealed and this appeal is now before us.

The question presen ted is whether there was a valid, binding agreement, amounting to a completed contract, verbally made between the parties, which is enforceable irrespective of the fact that -the same was not followed by the execution, of a written contract of lease; or whether there was only a bargain between the parties to lease, or a completed negotiation to that end, or an understanding and agreement as to terms, conditions, duration, etc., which was to attain to the dignity and importance of a contract of lease, and obligatory, only after the same had been reduced to writing and signed by the parties.

If the first, the case is with the plaintiff; if the latter, with the defendant.

A verbal contract of lease, complete in itself independent of any writing, and unaccompanied by an intention to have the same reduced to writing as perfecting it, is an enforceable contract. And if such a verbal contract be made and subsequently the parties agree that the same shall be reduced to writing and be signed, and afterwards there is a failure to' so reduce it to writing and to signature — one of the parties refusing — it is still enforceable as a binding contract. Carlin vs. Harding, 10 La. 225; Avendano vs. Arthur & Oo., 30 La. Ann. 321.

But if when a verbal contract of lease is agreed on, it is understood, contemplated and intended that it should be reduced to writing, that there should be a written lease, that the written lease should take the place of, and stand for what has been agreed on verbally in respect to the leasing of the property, then until the writing is drawn np and signed the contract is inchoate, incomplete, and either party, before signing, may recant, retract, recede, withdraw, decline to go further, refuse to consummate. Fredericks vs. Fasnacht, 30 La. Ann. 117; Villere vs. Brognier, 3 M. 349-527; Blocker vs. Tillman, 4 La. 80; Wolf vs. Mitchell, Craig & Co., 24 La. Ann. 434; Fernandez vs. Soulie, 28 La. Ann. 31; Des Boulet vs. Gravier, 1 N. S. 421-492; Meyer vs. Labau, 51 La. Ann. 1729.

Judged by the rule thus laid down the case at bar is with the defendant.

Undoubtedly these parties litigant did agree verbally upon a contract of lease in renewal of the then existing lease; but that this was to be followed by a writing setting forth the same, and to be signed by the contracting parties, which writing should take the place of and stand for what had been agreed on verbally, is established beyond per adventure.

This was, we think, the understanding and intention of the parties, and this understanding and intention was contemporaneous with the verbal agreement made. After agreeing verbally with the defendant about the lease, plaintiff left the store, where the interview had been held, to have, later, the contract drawn by his notary. Defendant had suggested that it be merely endorsed upon the then existing written contract of lease, but plaintiff had not consented to this. He desired a formal contract drawn in renewal of the lease, with accompanying-notes, and such contract was drawn and the notes prepared.

Whether the renewal contract was to be endorsed upon the old contract of lease and signed by the parties, or whether a fresh contract was to be drawn and signed, equally evidences the intention that a written contract was to be made.

The agreement reached, as to the renewal of the lease, was to be reduced to writing in some form or another. The law is not particular as to this form, nor as to the verbiage used, nor as to the length of the contract, and however brief the writing, if it were part of the understanding there should be a writing, as we hold was the case, such writing suffices, provided it sets forth the intention of the parties, and until it is drawn up and signed no contract of lease was perfected.

Plaintiff does not deny that a writing setting forth the lease was contemplated and intended at the time the verbal agreement was made, but contends that this was to serve only as proof of the agreement. and that the contract being complete without it, the parties remained bound even though the written act was not executed.

Considering the many circumstances disclosed by the record inili-tating against it, we can not accept this view of the case. For do we think it can be pressed with consistency in face of the fact that having failed to obtain the signature of defendant to the new contract and notes, plaintiff first brought suit to compel the signing of the same.

The contract was to be reduced to writing; the lease had yet to be executed. There is no .contradiction as to that. This understanding, contemplation and intention as to .the writing, as to the execution of a written lease, was part of the transaction that went to make up the verbal agreement, and the same ‘can not be held to have been completed until the written lease was prepared and signed.

The plaintiff had had a long experience in leasing real estate and is a conservative business man. A five years verbal lease of high-priced property was not a’reasonable business transaction. He had never finally closed a contract of lease except in writing, and had never put a tenant in possession of premises except under a written contract of ■lease.

These are strong circumstances militating against the probability of a completed .verbal contract having been made.

In Wolf vs. Mitchell, Craig & Co., 24 La. Ann. 434, where a verbal lease of. property for five years at the price of $9000 for the first year, $10,000 for the second year, and $12,000 for the three following years, was sought to be enforced, it was held “it being shown that it was the obvious intention of the parties to reduce the terms of the lease to writing before it was considered -as complete, the defendants, as lessees, could not be held on the plaintiff’s showing a verbal lease merely.”

And in this connection it was said: “In making a contract to the extent, amount and importance of the one under consideration, it is reasonable that the parties should have reduced it to writing so as to make it binding in all its stipulations before considering it fully closed. * * *”

In the lease under consideration, as shown by the copy plaintiff had drawn up by the notary, there were many and drastic stipulations, such as, that the non-payment of any one of the rent notes at maturity should cause all the remaining notes to become due and demandable, payment of attorney’s fees (5 per cent.) in case of suit to collect the rent, keeping of the premises in good order at the expense of the lessee, the non-dissolution of the lease in the event the building should be destroyed by fire, the reservation of the right by the lessor to cancel the lease in the event of the violation of any of the conditions by the lessee, etc.

It surely was not intended that a contract of lease embracing concessions, rights and obligations of this character was to be left to the doubts and uncertainties of a mere verbal agreement.

And that the written instrument which was to follow was only to furnish proof of a completed, anterior, verbal contract of lease, is not, we think, sustained by the evidence. Nor does it comport with what is usual among business men in transactions of that character.

We incline to the conviction that the written act which the parties intended to execute between themselves was to be the contract itself. This being so the law fixed their rights and responsibilities, and neither party was bound until the written instrument was passed, and either had the right, before consummation, of receding.

Judgment affirmed.

Mr. Justice BReaux, dissents.

Rehearing refused.