author: Nicholls, C. J.

text:
    No. 11,490.
    New Orleans Gaslight Company vs. City of New Orleans et al.
    1. Act No. 106of 1890, Sec. 26, requires in matters both of reduction and increase of assessments by the Committee of Revision of Assessments that the “ Board of Assessors” should be heard before that committee reaches any determination in the premises. A formal notice such as is given to the individual tax-payer should in each case of proposed alteration be served upon that board, calling upon it to show cause why the alteration should not be made. It is the duty of the board to present a written answer in each case, giving its views in respect to the same explicitly and in detail. It is the duty of the committee to receive and file these answers, and after taking each into consideration, in connection with such other facts relative to the subject matter as may be before it, to reach a separate conclusion in each case and annex these answers to its report and forward them as part of the same to the Common Council.
    2. The Committee on Revision should keep a record of all its proceedings, and of the evidence upon which it acted. The work of the committee is only by way, of inquiry and investigation — its action is not final — its recommendations are submitted for approval or rejection by the council. It is the action of the council, not the committee, which determines what should be done with the special assessments designated. The council is expected to bring to bear both knowledge and judgment in its conclusions, and not merely register those of the committee, and this can not be done unless the latter communicates to it its reasons and the evidence upon which it acted. The report of the committee, both as to increase and reduction of assessments should have attached to it the affidavits of a majority of the committee “ that the valuations fixed by it are the valuations provided by law.”
    3. In reporting back, at a date not later than the 18th of April as required by law to the assessors the report of-the Committee on Revision, the action of the council on that report must be simultaneously reported.
    APPEAL from the Civil District Oourt, Parish of Orleans. Monroe, J.

      Chas. F. Buck Attorney for Plaintiff and Appellant:
    Revenue laws having for their object forced levies upon the property of the citizens are subject to strict construction.

      Every provision of such laws which is intended for the protection of the tax-payer to insure justice and equality of taxation, is mandatory, and failure to comply with them imposes the penalty of nullity.
    Such are the provisions of Sec. 26 of the Revenue Act No. 106, creating the “Committee on Assessment” of the City Council and defining its powers. The provision in said section that a majority of the committee shall attach their affidavit to the report which they are required to make to the City Council, applies to all their official acts in that regard, and is mandatory.
    The law will presume that all the formalities prescribed for the assessment of property, have been complied with, but noncompliance, informalities or irregularities may be shown by evidence, and when so shown the assessments affected by them are null and void.
    The Board of Assessors for the parish of Orleans, in all matters pertaining to assessments, can only act as a Board, and can not delegate any of its official duties to an employé whom it chooses to style “ secretary. ” The act creating the Board makes no provision for a secretary.
    The delivery of the report of the Committee on Assessment of the City Council to a person called the Secretary of the Board of Assessors, at 7:80 p. m. of the 18th of April of a given year, is not a delivery to the Board of Assessors at the time and in the manner prescribed by law.
    A report presented to the City Council by a committee and recommitted to the committee is not before the Council for final action, and when it is submitted to the Council at a subsequent meeting it is new matter, and must lie over for one week before final and legal action can be taken. See. 9, City Charter, Act 20, 1882.
    The notice required by Sec. 26, to the tax-payer, of an intention to increase an assessment, must be of full three days, and it must state the property upon which the increase is to be made and the amount to which the assessment is to be increased; or, if not, when the tax-payer appears to show cause, as requested, he must be advised of the increase which is intended to be placed upon the property, in order that he may have a hearing thereon.

      Where the contemplated increase is on the value of a franchise, which valuation is ascertained by rules obviously different from those applicable to the assessment 'of tangible property, the presumption existing in favor of the correctness of the assessment made by the Board of Assessors is entitled to special weight, and this assessment should not be disturbed unless, on investigation, it appears affirmatively that the Board of Assessors have neglected or failed to make a correct assessment and that their assessment has been “imperfectly or improperly” made in the words of the stature.
    The provision of the statute that, before such increase can be placed upon an assessment already made, “ the Board of Assessors should be heard,” means the Board of Assessors as a body, and the failure of the Committee and the Board of Assessors, as such, to co-operate in this respect, as required and intended by the statute, entails the nullity of the attempted change of the assessment.
    Mere casual conversations had between members of the Board of Assessors and the Committee, especially where no member of the Board Of Assessors was present when the final action upon the part of the Committee was had, is not the hearing and conference intended by law.
    Evidence received without rejection, but otherwise bearing upon the controversy, will be given the same effect as if it were responsive to the direct affirmations or averments contained in pleadings. 16 An. 273.
    A “franchise” is not personal property; it is an immovable, subject to mortgage, etc., and a notice, therefore, to show cause why the assessment on “personal” property should not be increased is not a notice embracing a franchise.

      E. A. O’Sullivan, City Attorney, and Geo. W. Elynn, Assistant City Attorney, for Defendant and Appellee:
    Act 106 of 1890, Sec. 26, does not require the affidavit of the Committee on Assessments of the City Council to their report' in eases of increased assessments. The affidavit referred to in that section applies to cases of reduction of assessments solely, and not to the increase of assessments.

      An affidavit to a report of a committee of the City Council is superfluous, inasmuch as the members of that body'subscribed their oaths of office before entering upon their duties, as required under See. 4 of Act 20 of 1882, known as the city charter.
    It is the action of the council that makes the committee report final, and it is the latter body, alone, who can object to omissions or informalities of the committee.
    A party who appears before a committee, in answer to a summons, and makes no protest as to time, is subsequently estopped by his own action from setting up a plea that sufficient time was not given him.
    There is no injunction on public officers to cease all official labor after office hours. An act performed by a public officer after office hours will not be stricken with nullity.
    The law presumeé that, in cases of taxation and assessment, all the legal formalities have been complied with. The evidence in this ease shows that all the legal requirements were carefully adhered to.
    The increased assessment placed upon “ franchise ” of the New Orleans Gaslight Company is fully justified by the evidence contained in the record. “Franchises” must be treated as personal property. All property not “ real” comes under the head of “ personal.”
    A resolution of the Oity Council, approving or rejecting the report of the Committee on Assessments, requires no ordinance or resolution having the form of law, within the meaning of Sec. 9 of Act No. 20 of 1882.
   The opinion of the court was delivered by

Nicholls, C. J.

Plaintiff alleges that in due time it made return for purposes of State and municipal taxation of its property, and that the assessment of all of its property, real and personal, and franchises was made and completed in regular and due course of law, as provided by the statutes, by the Board of Assessors, at a total valuation of two million two hundred and forty-four thousand four hundred and forty dollars; that while it considered this very high it did not protest, but accepted and acquiesced therein; that on the 6th of April, 1893, the corporation was notified through its president to appear before a committee of the City Council styling itself the Committee on Budget and Revision of Assessments, on the 8th of April, 1893, at 11 o’clock A. M., pretending to act under the provisions of See. 26 of the revenue act of 1890, being Act No. 106 of that year, then and there to show cause why an increase should not be placed upon the assessment of its personal property over and above that made by the Board of Assessors; that it had no notice or information of any specific character as to the particular property upon which that committee proposed or intended to make an increase of assessment, but through the president it answered said notice in person, appearing before the committee on the date and at the time mentioned, when he was informed that it was intended to increase the assessment placed upon the franchise so called of the corporation by the sum of one hundred thousand dollars; that its president protested in the meeting of the committee against any increase, and after discussion he retired, but the action of the committee was not announced, nor was the corporation informed or notified what, if any, action the committee would finally take; that for the reasons above stated and the informal manner in which the committee proceeded, the Company had no opportunity to file any formal or written protest before it, but in view of the provisions of said Sec. 26, which require that the revision committee shall report its action to the City Council for appróval or rejection, it addressed a formal written protest to the Mayor and Common Council in anticipation of a report that said committee might make against any contemplated increase; that they had no other means or opportunity than this to protest; that at a meeting of the City Council held on the 17th of April, being the same meeting at which the corporation’s protest was presented, the Committee on Revision made a report containing simply the result of its conclusions on a large number of assessments under consideration, and stating the amounts to which they had increased or reduced various assessments without any other reason or explanation for its action, among which was an increase of one hundred thousand dollars on the franchise of the plaintiff corporation; that the City Council did not heed the protest, but approved the increase, and the same stands now assessed against it as a basis for State and municipal taxes for the year 1893; that the increase upon the valuation of the franchise in excess of its just and true value, which had been previously fixed by the Board of Assessors is absolutely wanton and arbitrary, aseertained and adopted upon no rule or principle of computation, unjust and oppressive, for the reason that in making said increase on said franchise, the committee followed no fixed or general rule, but acted arbitrarily in reference to each and every corporation enjoying franchises of money value, reducing same and only increasing the present plaintiff corporation without basis or other rule of action than the arbitrary will of the committee; that as a matter of fact said increase is excessive in value and should be reduced to the amount originally fixed by the Board of Assessors upon the movable property and franchise, to the sum of one million seven hundred and ninety-six thousand six hundred and fifty dollars.

That the attempted increase is illegal, null and void, because the conditions provided by the law under which the power of the Committee on Revision or of the Oity Council arises did not exist; that under Sec. 26 of the Revenue Act, under which the committee acted, it had power to increase only assessments imperfectly or improperly made; that there was no notice, allegation or pretence that the said assessment was imperfectly or improperly made; that in fact the valuation of the Board of Assessors was fixed after full hearing, in regular form, in compliance with all the requisites of the law. That the said attempted increase was null and void for the reason that the committee did not comply with the requirements of Sec. 26, of Act No. 106 of 1890, particularly in this:

1. There was no hearing or conference between the committee and the Board of Assessors in reference to any contemplated increase by the committee, whereas the law expressly provides that the Board of Assessors shall be heard before any increase in valuation can be made and reported by the committee.

2. The action of the Committee of Revision, as well as that of the Common Council at its meeting on the 17th April, 1893, at which the report of the committee was received and approved, was absolutely null and void, because the said committee, or the members constituting the same, had not qualified as required by law for the purposes of acting as a Committee of Revision of Assessments, and particularly because the report of the committee did not contain the affidavit of the committee, or any members of the committee, or of a majority of the committee. That the failure on the part of the committee to attach their special affidavit to the report made to the council, as required by the twenty-sixth section of Act No. 106, and upon which report the council was required to act, either by way of approval or rejection, rendered the action taken absolutely null and void, and the increase referred to invalid and of no effect.

Plaintiff therefore alleges that the increased assessment of one hundred thousand dollars on the franchise or franchises should be canceled for the reason that the same is excessive, inequitable and unjust on its merits, and, secondly, that in any event the proceedings on the part of the Committee of Revision and of the City Council purporting to effect said increase, is null andivoid'for the reasons above set forth and should be so decreed.

Plaintiff declares that it has paid the taxes of 1893 upon the assessment originally made by the Board of Assessors, reserving the right to make the present contest over the increase made. The prayer of the petition is that the Board of Assessors, the State Tax Collector of the First District and the city of New Orleans be cited, and that there be judgment ordering the cancellation of the increase upon the assessment of the franchise attempted to be made through the Committee of Revision and the City Council and decreeing the same in any event to be absolutely null and void for failure of compliance with the requirements of the law in the premises.

The city of New Orleans, after pleading the general issue, further answering, said that it acted under the provisions of law in increasing the plaintiff’s assessment, because the assessment made by the Board of Assessors was insufficient in amount, which fact was within the knowledge of the committee on budget and assessment, and in making the supplemental assessment all the forms of law were complied with. It prayed for judgment declaring the supplemental assessment to be valid and dismissing plaintiff’s demand.

The other defendants for answer filed a general denial.

Judgment was rendered in the District Court rejecting plaintiff’s demand and the plaintiff has appealed.

The twenty-sixth section of Act No. 106 of 1890, referred to in the pleadings, is as follows:

“All tax-payers in^the parish of Orleans shall have the right to appear before a standing committee on assessments of the City Council of New Orleans between the 21st of March and the 10th day of April, inclusive, of the year in which the assessments are made, and in the parishes before the Board of Reviewers, as provided for in this act, during the sessions of said board, and be heard concerning the descriptions oí the property listed and the valuation of the same as assessed, and they shall have the right of testing the correctness of their assessments before courts of justice in any procedure which the Constitution and laws may permit, but the action to test such correctness shall be instituted on or before the 1st day of November of the year in which the assessment is made. In all suits for the reduction of assessments the State Tax Collectors of the respective parishes shall be made parties.
“The said Committee on Assessments shall meet on the 21st day of March, or if a holiday, then on the next succeeding day not a legal holiday, of each year, in the city of New Orleans, to consider and examine into the applications of those owners of assessed property who believe the assessor’s valuation to be in excess of and beyond the actual cash value of the property assessed. Said committee shall determine upon said applications, but their duties are confined entirely to the question of valuation and description, and report their action at once to the City Council for approval or rejection; said report to contain the affidavit of a majority of the committee that the valuations so fixed are the valuations provided by law, and decisions by the. council shall be final unless set aside in accordance with Art. 203 of the Constitution. The said Committee on Assessments shall be, and are hereby empowered, to increase any assessment imperfectly dr improperly made; provided, that before said increase is made the tax-payer be served with notice to appear before said committee within three days and show why such increased assessment should not be made. In passing upon any application for reduction in valuation, and before determining upon any increase in valuation, tbe Board of Assessors must be heard in reference thereto, and they are expected to be present at all sessions of the committee. No application to be considered by the said committee unless said application has been first made to the board and refused. In all cases the action of said committee to be finally reported back from the council to the assessors, not later than the 18th of April, or the revision to be null and void.”

On the 6th of April, 1893, the Committee on Assessments served on the plaintiff a notice to the following effect:

“You are hereby notified, pursuant to the provisions of Act No. 106 of the General Assembly of 1890, Sec. 26, that this committee proposes to increase the assessment now placed by the Board of Assessors on your personal property situate in the Fifth Assessment District, and to show cause on the 8th day of April, 1893, at 11 A. m., why the said increase should not be made.”

No notice of this proposed action appears to have been given to the Board of Assessors.

On the 11th of the same month the plaintiff addressed the following communication to the Mayor and Common Council of the city :•

“Gentlemen — About ten days ago the president of the New Orleans Gaslight Company was served with a notice purporting to come from the Committee on Revision of Assessments to appear before it and show cause why the assessment upon the property of the New Orleans Gaslight Company should not be increased. I appeared before the committee protesting against any increase, and expressing my willingness to accept as final the assessment made by the Board of Assessors, although even that was higher than it should be.
“I have not been officially advised of any action on the part of the committee, but learn that the committee has undertaken to increase the assessment on franchise one hundred thousand dollars, and that its report is before your honorable body for approval or rejection, as per Sec. 26 of Act No. 106 of 1890. I deem it my duty, both, by reason of my conviction of the wrong contemplated by this increase of assessment, and for the purpose of reserving the legal rights of the New Orleans Gaslight Company, to contest the same before the courts, to solemnly and earnestly protest against this assessment, and ask its rejection by your honorable body. The Sec. 26 above referred to gives your committee and yourself the power to increase an assessment ‘imperfectly or improperly made.’ It was not contended that there was an imperfect or improper assessment, and no investigation was had developing any facts justifying the increase attempted by your committee. The same is purely arbitrary and without foundation of fact to stand upon. And your petitioner further represents that it is utterly null and void and illegal, as not coming within the power of your honorable body through your committee, under the text of the law, and for other reasons which will be duly urged if this protest is unheeded and petitioner compelled to resort to the courts of law.”

This communication was submitted to the City Council by the Mayor at its session of April the 18th, and immediately referred to the Committee on Revision of Assessments. No further notice or action upon it seems to have been taken by the council.

The council had in the meantime held a session on the 11th of April, at which the “Committee on Revision of Assessments” made a report containing changes made by it in the matter of ninety-five assessments.

The report having been received, was recommitted to the committee under the rules.

On the 18th of April the council, at its session of that date, took up the report of the committee, and the same was as a whole adopted without discussion, a motion to take up and consider the various items of the report separately having been lost.

The chair then instructed the clerk of the council to deliver the report of the Committee on Revision of Assessments, taking therefor the receipt of the secretary of the Board of Assessors, which was done, as the minutes of the proceedings of that day contain a copy of the receipt for the same by Eendel Horn, signing as secretary of the Board of Assessors.

The Board of Assessors had held a session itself on the 18th, but had adjourned after having authorized and directed Mr. Fendel Horn to receive the report from the council.

Our knowledge of what took place at the various sessions of the “Committee on Revision of Assessments” is of the most meagre kind, and derived entirely from the testimony taken on the trial of this case, the committee evidently not considering itself called upon to keep any record of its proceedings, or to assign any reasons in making its report to the Common Council as to the evidence upon which it acted or the grounds upon which it proceeded.

We think it very clear that the Board of Assessors was never officially notified that the committee proposed to increase or alter its assessment of the plaintiff’s property, and called upon to show cause, if any, it had why this should not be done, and that the only action taken in the matter, so far as the State assessors were concerned, was through informal desultory conversations with the president of that board, or some of its members. The statute of 1890 requires, both on matters of reduction and of increase of assessment, that the Board of Assessors should be “ heard in reference thereto” before the revision committee reaches any determination in the premises. We are of the opinion that a formal notice, such as is given to the individual tax-payer, should in each case of proposed alteration be given to the Board of Assessors, and that it is the duty of that board, in each case, to make a reply in writing, giving explicitly and in detail its views in regard to the alteration and the reasons and grounds upon which these views are based; that it is the duty of the revision committee to receive and file this answer, and after taking it in consideration, in connection with such other facts relative to the subject matter as may be brought before it, to annex it to its report, and forward it to the Common Council as part of the same.

Knowledge of the Board of Assessors brought to it through the mere presence of either all or some of its members at sessions of the committee is something other and different from the knowledge of the board conveyed to it through formal notice. The presence of the board at the meeting is suggested by the law as a thing proper to be done, but it is not exacted, while notice is a matter of obligation, as is the duty of the board to reply to the notice.

We think the revision committee greatly erred in supposing it was under no obligation to keep a record of its proceedings and of the evidence upon which it acted. It is very true the statute does not in terms, order it so .to do, but the obligation to do this results from the nature of the duty it was performing.

Any action which the committee might take would not be final. Its work was purely by way of investigation and inquiry. Its recommendations had to be submitted for rejection or approval to the council, and it was the conclusions reached by the council, not those of the committee, which determined whether particular assessments should be changed or not. The Common Council was not to be amere automaton in this matter and called upon only to authenticate what the committee had done, but it was expected itself to bring to bear both knowledge and judgment in the premises.

It is impossible for it to do so when the committee fails to communicate to it any of the reasons and any of the evidence upon which its recommendations rest, and only forwards to the main body conclusions of its own and not facts. We think the report which the committee filed should have been accompanied by the affidavits of a majority of the committee to the fact “ that the valuations fixed by it are the valuations provided by law.” We see no reason why a distinction should be made in this respect between a report calling for reductions of assessment and those calling for an increase. If the oath taken by the members of the committee as members of the council was deemed a sufficient guarantee for the fidelity of their official action as committeemen in the case of increase, as suggested by defendants, it certainly should neither be less nor more so in the matter of reductions. The General Assembly has thought proper to require an additional oath, probably so as to thoroughly and forcibly impress them with. their special and direct responsibility for the matters placed in their charge. We think it intended this affidavit should be made by the committeemen whether their report was to reduce or to increase assessments.

Though the General Assembly did not find occasion to repeat or reiterate these requirements it is clearly and easily inferrible from the text and context, when construed together, that such was the legislative purpose and intent. Only one single report is spoken of by the statute and to this single report the affidavit is ordered to be attached.

We took this same view in State vs. Lochte, 45 An. 1045, where an argument very similar to that which is now urged by defendants was pressed upon us. In the absence of the affidavit and of the declaration certified to by-’a majority “that the values as fixed by the committee were those provided by law,” and in the absence of any evidence or reasons, the committee was free to change arbitrarily of its own will, or through favoritism, dislike or prejudice such assessments as it might select for that purpose. In the case at bar the Common Council without any basis whatsoever, except the bare report itself of the committee, fortified neither by affidavit, certificate, declaration, reasons or testimony, took up and adopted as a whole, without investigation or examination, so far as their proceedings show, ninety-five alterations of assessment made by the committee, most of them reductions. Such a condition of things was not contemplated by the General Assembly. In examining the proceedings of the council of the 18th of April we notice that the paper delivered to the secretary of the Board of Assessors by the clerk of the council was simply the report of the Committee on Revision of Assessments. When the statute required the action of that committee to be reported back from the council to the assessors not later than the 18th of April, it contemplated that the action of the council on that report should be reported back as well as the report itself. The report per se, as we have said, has no official force. The Committee on Revision of Assessments of the Common Council and the Common Council itself, have in their course and action departed so widely from that pointed out by law as that under which they were to act that that action can not be sustained or maintained. We do not mean to intimate that an increase of plaintiff’s assessment could not properly and justly have been made and to the extent which it was made by the committee and the council, or that either acted oppressively or arbitrarily, but both were called to act under limited powers and under express limitations and restrictions. Where powers conferred by statute have not been exercised under the circumstances and requirements of the statute, the acts done fail for want of authority, even though they would have been sustained as right had legal conditions as to action been complied with.

For the reasons herein assigned, it is hereby ordered, adjudged and decreed that the judgment appealed from be and the same is hereby annulled, avoided and reversed, and it is now ordered, adjudged and decreed that the action of the Committee on Budget and Revision of Assessments increasing the assessment for the year, 1893, upon the franchise of the plaintiff corporation, and the action of the Common Council of the city of New Orleans in adopting the said action •of the said committee, contained in its report to said council, be and the same are declared null and void, for failure by both the said committee and the said Common Council to comply with the requirements of the law in respect to the revision of assessments, and it is further ordered that the Board of Assessors cancel on their books or records the said attempted increase of assessments upon the plaintiff’s franchise.


source: Caselaw Access Project

license: Public Domain

text:
    No. 11,461.
    Citizens Bank vs. John F. Irvine.
    Where the owner of property seized and sold by the Citizens Bank in enforcement of calls for contribution on stock indebtedness, secured by a stock mortgage on the same, is not the owner of the shares of stock, but a third possessor not personally bound, his consenting to have executory proceedings directed against himself as actual possessor of the land, instead of against the original subscriber and his heirs, and his becoming the adjudicatee of the property, which was entirely for cash, did not make him a stockholder in the bank, and liable for future contributions. The sale of the stock under proceedings, directed against himself, was that of the property of a third person, without process of law, and an absolute nullity. The ownership of the stock remained after the adjudication where it was before — in the heirs of the original sub scriber, Bepper vs. Dunlap, 9 Bob. 288; Hare vs. Nevill, 3 An. 326.

      In selling the land entirely lor cash on the defaulted calls lor contribution, the bank exhausted its mortgage claims on the property (there being no loan mortgage), and the purchaser on paying the purchase price held the property free from mortgage.
    APPEAL from the Thirteenth Judicial District Court, Parish of West Feliciana. Brame, J.

      8. MeC. Lawrason Attorney for Plaintiff and Appellant:

      ‘ ‘ Shares or interests in banks and other companies of commerce or industry are considered as movables.” O. O. 466.
    Title is acquired by prescription in three years when possession has been in good faith, except where the thing be lost or stolen; in ten years without title or good faith. O. O. 3472, 3475; 31 An. 228; 35 An. 779, 781; 42 An. 729.
    In executory process “ improper service or lack of service ” is prescribed by five years. O. O. 3542, 3543; 24 An. 24; 33 An. 1043; 28 A'-. 569; 34 An. 209; 39 An. 67; 4 Otto, 6.
    “The property banks in Louisiana furnish an exception to the rule that the creditor who holds under two mortgages of unequal rank on the same property, and who has caused the property to be sold to satisfy his junior mortgage, can not be allowed to sell it a second time to satisfy his senior mortgage.” 14 An. 237: 15 An. 630.
    The Citizens Bank issued no certificates of stock to mortgage stockholders whose shares were not paid up, and probably never will be.
    Want of actual seizure by the sheriff is cured by prescription of five years. Evans vs. Pike, 4 Otto, 6.
    It is unnecessary to hold a stockholder that he should have been given possession of stock, or notified of transfer to him; the registry of his name on the stock book is sufficient. 10 Ind. 499; 3 Woods, 55; 16 Mass. 94; 22 N. Y. 551; 47 Iowa, 575; 24 Me. 273; 64 Oal. 117; 105 U. S. 217; Keyser vs. Hitz, 133 ü. S. 138.
    Acts of ownership through a long period of years, in which that ownership has not been disturbed, will estop the purchaser at a judicial sale from questioning it.
    One who knowingly purchases property from which there was danger of eviction can not, under the law, and until evicted, refuse to pay price. 7 An. 94; Voorhies O. 0., Art. 2557.

      A purchaser whose fears of being disquieted arise from a naked point of law will not have relief under Art. 2557 O. O. Hodge vs. Moore, 3 Rob. 400.
    The Citizens Bank of Louisiana could sell stock of its mortgage stockholders who no longer met the conditions required by law of stockholders, in such manner as it deemed best. Charter of Bank and Act Amendatory. Acts of 1835, approved March 19; Acts of 1873, No. 45.
    One can not, in attacking the validity of a judicial sale, elect to consider it valid for that which he considers advantageous, and invalid as to the rest.

      W. W. Leake Attorney for Defendant and Appellee:
    A sale of property under an order of seizure, after the mortgage debtor has died without making the heirs or -legal representatives parties, is an absolute nullity. 22 An. 20; 30 An. 84; 31 An. 372; 28 An. 348; 29 An. 262; 37 An. 866; 41 An. 420.
    The stock mortgage in favor of the Citizens Bank of Louisiana does not give a pledge. 42 An. 730.
    Prescription, in cases of nullity or rescission of an agreement, commences, in case of error or deception, from the day on which either was discovered. R. O. C. 2221; 34 An. 917;_ 38 An. 772.
    Parol evidence is admissible to show inducement to contract. Kelly vs. Carter, 55 Ark. 119; 17 S. W. R. 706.

      Thos. J. Semmes and Henry Denis submitted a brief on the Application for a Rehearing.
   The opinion of the court was delivered by

Nicholls, C. J.

On the 27th of February, 1838, Robert McCausland mortgaged certain property in the parish of West Feliciana to secure two hundred shares of the capital stock of the Citizens Bank of Louisiana, to which he had subscribed.

He died in 1851, and his wife in 1853.

McCausland had living in 1879 two children and several grandchildren, minors.

At a probate sale made in the succession of McCausland in_1852, O. B. Chinn purchased the plantation.

The other property (excepting the Citizens Bank stock) was partitioned in kind.

The defendant, Irvine, bought the plantation at a sale made in the matter of the succession of Chinn, on the 19th September, 1872.

Neither McCausland nor his heirs were called upon to pay contributions upon the stock until 1878, when the bank proceeded, by seizure aod sale, to sell the shares of stock (then reduced to one hundred and eighty-six shares, under the operation of the statute of April, 1853) belonging to McCausland, and the land mortgaged to secure the same. McCausland’s heirs were not cited or notified in said proceedings, which were directed against John F. Irvine, the present defendant, as being at that time the actual possessor of the property. At the sale, Irvine became, on the 15th of November, 1879, the purchaser, for the price of eight hundred and thirty-five dollars.

In the present suit, the bank alleging that Irvine became on the date mentioned the owner by purchase at the sheriff’s sale made in the matter of the Citizens Bank of Louisiana vs. Robert McCausland and John F. Irvine, of one hundred and eighty-six shares of mortgage stock of said bank, the property of Robert McCausland (defendant in said suit), seized and sold therein; that the Citizens Bank had called for the following contributions, to-wit: two dollars per share, payable on the 1st day of December of each of the years 1881 to 1891 inclusive — has sued defendant as the owner of said stock for the sum of four thousand four hundred dollars and interest, as an amount due by Irvine for such contributions. Plaintiff also prays for the recognition of the special mortgage securing the said shares of stock, and for the seizure and sale thereof to pay said contributions, reserving all its rights against defendant for the balance and sums which will hereafter fall due on said shares of stock.

Defendant pleaded the general issue and specially denied that he was a stockholder, or that he ever assumed the liabilities of a stockholder of the Citizens Bank. He averred that the pretended seizure and sale of one hundred and eighty-six shares of mortgage stock of the bank belonging to McCausland, and the adjudication to him of said stock was an absolute nullity, and said pretended sale should be annulled, for the reason that Robert McCausland and wife died many years prior to said pretended seizure and sale in 1879, leaving children and grandchildren in Louisiana and Texas, and these heirs were never made' parties, nor was any notice served on them; that the sheriff never saw and never had actual possession of the certificates of stock belonging to McCausland; that possession of said stock was never given to defendant, nor was he ever notified of any transfer on the books of plaintiff. He avers that on the day of sale, November 15, 1879, and prior thereto, it was distinctly agreed and understood between defendant and the attorneys of the bank in the suit of the Citizens Bank of Lonisiana vs. Robert McCausland and John E. Irvine, actual possessor of the land, that defendant was not to assume any of the responsibilities of a stockholder of said bank, and in bidding in said stock he was in error, and deceived by the representations and assurances of the attorneys representing the bank in. said case.

Defendant also pleaded the prescription of three, five and ten years.

Judgment was rendered in the District Court in favor of the defendant. Plaintiff appealed, and specially pleads in this court the prescription of three, five and ten years to defendant’s demand to set aside the sale.

At the time of the sale in November, 1879, in the proceedings of the Citizens Bank vs. Robert McCausland and John P. Irvine, the latter was the owner of and in possession of the property which had been mortgaged by McCausland to the bank under and through the probate sales which had been made, as has been stated, first in the successions of McCausland and later in the succession of Chinn.

The stock had not been sold at either of these sales and quoad that stock Irvine stood only as the owner of and in the possession of the property which had been mortgaged to secure it. He had assumed and was under no personal liability in regard to that stock when he bought the property from the succession of Chinn.

On the 15th of November, 1879, the date of the sale made by the bank under the executory proceedings referred to, the ownership of the shares of stock and that of the real estate was in different hands; the heirs of McCausland still remained the owners of the stock, but the real estate had by the probate sales mentioned become the property of and was in the possession of Irvine. Under the special legislation relative to the Citizens Bank the property, though sold, was, for the purpose of the enforcement of the rights of the bank, to be dealt with as if still held by McCausland, and proceedings under executory process were to be carried on on that theory, regardless of the intermediate sales. This method of proceeding had been granted by way of benefit or privilege to the bank, but in the particular case the privilege would have been an actual burden, as McOausland had died, and to have made his heirs parties would have entailed both expense and delay. In view of. the fact that the land had been sold in the M Oausland succession and the heirs had ceased actually to have any interest in the property or to be concerned in after proceedings respecting it, the bank, with the consent of Irvine, the then owner and possessor, directed the executory proceedings which it instituted against Irvine, and contradictorily with him as the only defendant a sale took place at which Irvine became, as we have seen, the purchaser, for the price of eight hundred and fifty dollars cash.

Irvine gave a qualified consent to this proceeding, evidenced by the following endorsement upon the petition in the case:

“ Service of the within petition and order accepted, notice and citation waived, and I agree and consent that executory process issue without further forms, processes or delays, and that the property mortgaged may be seized and sold on November 20, 1879.
(Signed) “ J. E. Irvine.”

At this sale, not only was the real estate mortgaged sold, but with it was also sold one hundred and eighty-six shares of the capital stock of the bank.

The terms of sale were cash, and the value of the entire property offej ed for sale was fixed by the appraisers at one thousand two hundred and fifty dollars.

The amount of the stock subscription of the McOauslands, as reduced, was eighteen thousand six hundred dollars. The particular proceeding directed against Irvine was in enforcement of pas^ due calls on that subscription amounting to five hundred and fifty-eight dollars, with interest.

We are of the opinion that Irvine’s obligation, as resulting from his purchase of the land, was limited to the purchase price.

There was, as against the land, only one single claim — that securing by mortgage the stock subscription. It is true that simultaneously with the granting of the stock mortgage, there was granted a loan mortgage of even date, to secure amounts which it was assumed might possibly be borrowed by McOausland, but this mortgage was one of the class permitted to be given by Art. 3292 of the Oivil Oode to secure an obligation not yet risen into existence, but which, as declared by Art. 3293, is realized only in so far as the obligation for which it prospectively provides shall afterward actually arise. It was a mere contingent mortgage, which never came actually into life, for the reason that McOausland never obtained any money on the strength of his stock, and the land was sold without the privilege of borrowing having ever been utilized.

There is no question in this case of a sale by the bank under a senior mortgage and its effect upon a junior mortgage in its own favor, therefore the decisions quoted from 14 An. 237, Haynes vs. Harbour, have no bearing.

The case at bar is simply that of a mortgage creditor proceeding upon his claim by executory proceedings against the mortgaged property, asking that it be sold entirely for cash, and so selling it. There can be no question in law as to the effect of such a sale upon the property and upon the purchaser. The creditor, by his course, exhausted his rights against the property, • and the purchaser, by paying the purchase price, complied fully with all the legal obligations flowing from his purchase. If the creditor was entitled to demand that the property should be sold for cash to meet the past due calls, and on credit to meet such additional future calls as might be due to the bank on the stock indebtedness and mortgage, and subject to the original stock mortgage to secure such calls, he should have claimed and obtained a recognition of that right, and the property should have been advertised to be sold and sold on those terms, but it did nothing of the kind. The reason why this was not done is very clear, for with such a heavy liability resting on the property and the purchaser, no purchaser other than the bank itself could have been found. The only alternative left to the bank was either to purchase itself and then sell on private terms, free from all claims, or to find in advance a purchaser at a suitable price, and then sell the property at judicial sale, in manner and terms as was actually done in this case.

We have so far been, intentionally, separating Irvine’s rights and obligations, as a purchaser of the land, entirely from those which resulted or could result from the sale of the stock.

We now pass to that matter.

It will be seen at once that Irvine occupied a very different position toward the stock at the time the executory proceedings were taken out from what he did toward the land; and the position of the MeOauslands was also entirely different as to the two. The McCauslands had the ownership of the stock and a legal interest in judicial proceedings in regard thereto and no ownership and no legal interest in the land and the judicial proceedings in respect to it. Irvine, on the contrary, had the ownership of the land and an interest in the proceedings relative thereto and none whatever in regard to the stocfc. The bank was authorized to deal and was safe in dealing in regard to the land with Irvine, who was its actual owner and possessor; but the bank and Irvine had no right whatever to deal with each other in respect to the sale of the stock. Irvine as to that stock was completely a third party and a stranger.

Proceedings carried on contradictorily with Irvine leading up to a sale were absolute nullities — the adjudication conferred no title — the sale was that of a third person without due process of law, and the stock remains to-day as it was before, the property of the McCausland heirs. It will not do to say that the MeOauslands will never claim the stock — that it is worthlesss — that it no longer represents a right, but exclusively evidences a liability. We have legally to deal with the stock as that of third persons, which has been attempted to be sold in judicial proceedings to which they were not parties.

Plaintiff claims that Irvine adheres to the sale of the land as made under the executory proceedings and repudiates the sale of the stock. It must be borne in mind that at the time of these proceedings Irvine was actually the owner of the land and he is its owner now. The effect of the sale under the executory proceeding as to Irvine was not as between the bank and himself to give him a new title — it simply operated to clear off an existing encumbrance upon the property; the proceeding as to its effect was rather an extinction of a mortgage by payment than a purchase.

The sale of the land was legal — the sale of the stock illegal— Irvine had the right to claim the benefits of the one and to reject the liabilities of the other. We do not think the pleas of prescription filed by the plaintiff well founded. For the reasons herein assigned it is hereby ordered, adjudged and decreed that the judgment appealed from be and the same is hereby affirmed.

Miller, J. recused.

On Application for Rehearing.

In the brief of counsel on application for rehearing it is said: Counsel for the Citizens Bank do not question the conclusion of the court that the sale of the stock of the bank attached to the McCausland plantation is void, but they respectfully suggest that the sale of the plantation under the proceedings taken by the bank in 1879 is also void. The court rests the validity of the sale on the consent of the bank. * * *

“We respectfully suggest that the Board of Directors of the Citizens-Bank never expressly or impliedly consented to a sale of the plantation separate from the stock, and therefore both the sale of the stock and the sale of the plantation are void.
“ A decree that Irvine is not liable for contributions on the stock because the sale of the stock was a nullity would meet the case presented by the pleadings. Whether Irvine acquired a title to the plantation free from the stock mortgage is a question not raised by the pleadings. *
“ The court has, however, passed upon that question in its opinion. We respectfully suggest that the exigencies of the case are met by deciding that Irvine is not personally liable for stock subscriptions, and when the bank shall hereafter proceed to enforce the stock mortgage against the plantation the effect of the judicial sale made in 1879 can be more satisfactorily determined, and hence the court should reserve so important a question for final determination when that question becomes the vital point in the case and is thoroughly discussed by counsel.”

The prayer of plaintiff’s petition in the case is as follows:

“ Petitioner prays that John F. Irvine may be cited to answer hereto; that after due proceedings judgment may be rendered in its favor against said defendant for the amount of said contributions, to-wit: Four thousand f ur hundred dollars, with interest as aforesaid, with a recognition of petitioner's mortgage on the property herein described to secure said stock and the contributions aforesaid, and that said tracts of land may be sold to satisfy as far as they will the judgment herein by preference. Petitioner reserving all its rights against defendant for the balance and sums which will hereafter become due on said shares of stock.”

It will be seen that the plaintiff claimed not only a personal judgment against Irvine as being personally liable for the contributions on the stock, but a judgment recognizing, contradictorily with him as a stockholder and as a purchaser of the land under and through its proceedings against him in 1879, a stock mortgage on that property.

The court below and this court had to pass upon and dispose of the whole of the prayer, not only as to Irvine’s personal liability, but also as to this claimed stock mortgage on the land. In disposing of each of the two claims reasons had to be assigned. When the court rejected plaintiff’s prayer for a recognition of the stock mortgage on the land owned by the defendant, it did not, as counsel say, pass upon a question not raised by the pleadings. In dealing with that question we had to consider the claim in the light in which and under the circumstances in which it was presented to the court. Under what circumstances was this mortgage claimed ? Was it under and through proceedings against the McOausland heirs or against Irvine as strictly a third possessor of. the land holding no privity with the asserted mortgage ? By no means. The claim was advanced directly against Irvine himself as a stockholder and as having as such personally assumed the reversion of the stock mortgage. The whole theory of plaintiff’s case is that Irvine is the owner of the land not under the two succession sales, but under the sale made in the executory pro - ceedings of the plaintiff in 1879.

We reasoned as to the existence of a stock mortgage from that standpoin presented by the plaintiff itself, and from it held it to be impossible for plaintiff to have sold the land in the manner and on the terms it did and to still retain a mortgage on the land. Plaintiff in its pleadings and its prayer maintained that it could do so. It did not ask the nullity of the sale.

So far from asking the nullity of the sale of the plantation by it to Irvine, its whole demand and prayer was based upon the existence and the legality of that sale. We could not have decreed the nullity under any prayer of the plaintiff, nor could we do so under defendant's pleadings and prayer. Defendant was already the owner of the property, though under a different title derived through the succession sales mentioned. There was no necessity for him to ask for a decree setting aside the sale by the bank to him. It would not have been to his interest to do so, and should the plaintiff bring the action against him which the brief hints at, he will, no doubt, vigorously oppose the action. The decree of nullity of the sale - of the plantation which counsel suggest as that which should have been rendered would have been not .a decree under the pleading, but entirely out-' side of them and directly against those of the plaintiff itself.

We did not intend to express an opinion and we expressed no opinion as to what the rights of parties would have been had an action of a different character from that actually brought been instituted, nor what would be those rights in’ case of a future action of a different character. Those matters are for future adjustment. We intended to deal and dealt only with the issues presented in this particular case, under its pleadings and prayer. Those we had to dispose of, as we have said, in their entirety. What we decide in this case are those issues — none other. Nothing that we have said could or should be construed to go beyond this.

Rehearing refused.


text:
    No. 11,395.
    Dean & Cazenavette vs. Theodore A. Beck.
    Where, pending a lease, work has to be done which should have been done prior to the lease in order to place the building leased in the condition in which it should have been to fulfil the lessor’s warranty, that it was fit and appropriate for the known use to which it was to be applied, the lessee has a legal right to a dissolution of the lease.
    The extent of the work to be done and the extent of the inconvenience to be suffered by the lessee do not control the rights of the lessee as to a dissolution. The warranty is indivisible.
    APPEAL from the Civil District Court, Parish of Orleans. King, J.

      H. E. Upton and Lloyd Posey Attorneys for Plaintiffs and Defendants in Reconvention, Appellees,
    cite C. C., Arts. 2692, 2695, 2698, 1934; 43 An. 817; 6 An. 487; 14 An. 564.

      Denegre & Denegre Attorneys for Defendant and Appellant,
    cite C. C. 2700, 2697; 9 An. 527; 33 An. 1343; 12 An. 823; 6 An. 279; 17 An. 321; 11 An. 695; 37 An. 532.
   The opinion of the court was delivered by

Nicholls, C. J.

On the 3d of November, 1890, the defendant leased to the plaintiffs for a period of eleven months, commencing on the 1st of November, 1890, certain property in the city of New Orleans for the sum of twenty-two hundred dollars^ payable in monthly instalments of two hundred dollars each, represented by promissory notes of the lessees, endorsed by Paul Oonrad.

The lessees took possession of the building, but after occupying it for a short time left the same and instituted the present suit for a dissolution of the lease, and claiming eight hundred dollars as actual and ten thousand dollars as exemplary and punitive damages against the defendant.

Defendant resists the demand, and admitting that plaintiffs have paid the first month’s rent reconvenes, praying for a judgment for two thousand dollars as still due under said lease and on said notes against the plaintiff and Paul Oonrad, who on their prayer was made a party to the suit. The case was tried by a jury, which returned a verdict in favor of the plaintiffs for the sum of one hundred dollars, and also in their favor on defendant’s reconventional demand. Defendant appealed.

Plaintiffs allege that about the 1st of November, 1890, they formed a copartnership with the object and purpose of carrying on the business of warehousemen; that they required for said business a suitable building; that they found what they considered a suitable location for conducting it, not having before engaged in that business, at Nos. 59 and 61 Decatur street, the property of the defendant; that they called on him and were by him informed that the house and premises were particularly fitted, eminently proper and thoroughly safe for said business; that the building was so strongly constructed that it could bear all the weight of all the goods of any character whatever that could be stored there; that under such a statement and owing to the safe appearance of the house, it being lately built, they rented the same and commenced business, after fitting up the establishment with furniture and tools and elevator at considerable cost.

They aver that the building and premises were wholly unfit and dangerous for the purpose and business for which they were rented to them by the defendant, and that he well knew that it was unsafe, unsound and unfit both in foundation and superstructure for the business, and he falsely and purposely misrepresented the facts, misleading them into the belief that the premises were in every respect adapted and perfect for the said business of a warehouse for sugar and molasses, and thus by fraud and bad faith on the part of defendant they were prevailed upon to enter into said contract of lease.

That they began business under the most favorable auspices and with the brightest prospect of success.

That after they had received nine hundred sacks of rice, one hundred and nineteen hogsheads of sugar, one thousand four hundred and fifty barrels of sugar- and one thousand one hundred and fifty barrels of molasses, weighing altogether about one million five hundred and fifteen thousand two hundred and fifty pounds, over one-half of which was stored on the basement floor, they were suddenly forced to stop receiving and storing goods because the building proved unable to support the said weight and began to sink aDd give way, and it became at once apparent that it was unfit and useless for a warehouse; that in the meantime they were obliged to refuse offers from various parties to store sugar and molasses, more than sufficient to fill the premises, because of the defective and dangerous condition of the building.

That it got out of level, and its foundations gave way owing to the defective condition and construction of the same, and they were obliged to discontinue their business altogether; that notwithstanding efforts on their part they were unable to find a ay other building convenient and suitable for their business, and through the malicious and false representations of the defendant they were deprived of the means of conducting a business which would have been very lucrative and would have yielded them during the term of the lease, including the term for which renewal had been stipulated therein, at least ten thousand dollars net.

That they notified defendant without delay that they considered the lease null and void by reason of said defects and unfitness, and that they would vacate the premises and hold him for damages; that they had complied with all their obligations under the lease, having paid the first month’s rent, which they were entitled to recover; that by reason of the sinking of the building they were compelled to notify all the owners or their agents of the goods stored with them to remove the same, and they had refused to pay the storage due at the time on the same, which amount, as well as the labor therein, they were entitled also to recover.

Answering the charges made in the petition, defendant, after denying generally all plaintiff’s allegations, says that the premises rented were not improper, unfit, unsafe or unsound; that they were examined by the plaintiffs before the lease was entered into, and if any damage or inconvenience was caused plaintiffs it was because of their own reckless, negligent and improper use of the premises.

That through some unforeseen event some of the posts holding up a part of the building sank a few inches, but the flooring did not fall in or give way; that immediately upon being notified of the fact they had the proper repairs made with as little inconvenience as possible to the plantiffs and all were done and completed inside of eight days. That he offered to allow a rebate in the rent for the time and space occupied while the repairs were going on, but plaintiffs refused to consider the question and claimed excessive damages.

The questions we have to decide are, first, whether the plaintiffs having leased the premises described in the petition and taken possession of the same were justified in subsequently vacating the building under the circumstances disclosed in the record, repudiating the contract and claiming damages from defendant, or whether the latter be entitled to rent, and if so, to how much rent.

The plaintiffs maintain (and the testimony of Dean and Ker sustain the contention) that prior to leasing the property several interviews took place between the parties at which the lessor was advised of the business upon which plaintiffs were about to enter, the uses of the building which they sought to lease and the character of the building needed for that purpose; that the defendant represented to them that his building would meet the necessities of the case and was what they needed; that they entered into the contract of lease relying upon the correctness of these representations, which subsequent events showed to be untrue. The defendant denies that any such representations were made, but his own testimony is not as positive or emphatic and direct as it should have been. The reference made by him prior to the lease of the storing capacity of the Kelly building, which he evidently admitted very reluctantly on cross - examination, indicates that the subject matter of the capacity and strength of his own building was under discussion and this reference was made clearly in incidental support of the merits of his own building. Defendant’s answer contains a declaration that he rented the “ warehouse ” to the plaintiffs, and this allegation sustains plaintiffs in their position as to the knowledge of the defendant of the contemplated use of the building and its lease as a warehouse. Plaintiffs took possession of the premises about the 10th of November and immediately commenced business as warehousemen for sugar, molasses and rice. The building was at no time completely filled. The precise distribution of what they did have on hand on the 10th of December is shown neither by plaintiffs nor defendant; sugar and molasses are said to have been stored in some places two tiers high, and in others three, but the exact place where this was is not disclosed. The building is a long one with nine supporting posts distributed lengthwise through the centre and resting on brick foundations of uniform size and character.

On the morning of the 10th of December the three back posts were observed to have settled considerably, bringing down correspondingly, the flooring with them and the portion of the roof over them. Plaintiffs at once notified the defendant of the situation. Workmen were immediately sent to the. buildi ig, under direction of an architect, who “ prized up ” and took out the flooring near these posts, as well as the posts themselves. The foundations on which these three posts rested were taken out and made deeper and broader. A portion of the wall, which had “bulged” somewhat, from the sinking of the posts, was straightened; the posts were replaced and the roof raised to its original position. Only eight or nine days were consumed in this work, but plaintiffs had made up their mind to throw up the lease and vacate the premises. Owners of the property on storage were called on to withdraw the same, and as soon as this was done plaintiffs left the premises, after notifying the defendant and tendering him the keys of the establishment. Defendant refusing to receive the keys, they were left at a corner store subject to his orders. We may here say that after some delay defendant took the keys, and in July occupied a portion of the building for his own purposes. We may also say here that in the meantime the defendant unsuccessfully attempted to lease the building for account of the plaintiffs.

Considerable testimony was taken in the lower court as to the weight a building should be able to bear per square foot in order to be held and considered a building proper and suitable for warehouse purposes, and as to whether the particular house leased to plaintiffs came up to the required standard. As might be expected there was a difference of opinion on that subject. The jury adopted the views of the plaintiffs’ witnesses on both points, and we can not say they erred.

It is very certain that defendant, when he sent his workmen to the building after the sinking spoken of, caused the foundations on which the posts rested to be made very considerably deeper and broader, thereby recognizing the necessity for a change. This change was not confined to the particular post under which it is claimed a soft spot, up to that time unknown (occasioned by the existence there at a former time of a well), was discovered, but extended to all three of the posts at the back end of the building. There was some claim that plaintiffs hacl overloaded the building, but the answer ascribes the sinking, not to this, but to an ‘‘unforeseen event,” which defendant’s testimony points out as the “soft spot” just mentioned. Even if the building was overloaded beyond its actual bearing capacity, there is nothing to show that it would have been overloaded had that capacity been up to standard requirements.

Defendant' claims that the work called for by the sinking of the posts was in the nature of repairs and not reconstruction; that plaintiffs were put to no serious inconvenience, as they were not forced to leave the house; that the repairs worked an interruption (such as it was) of plaintiffs’ business for only eight or nine days; that the building, except at the particular place where the sinking took place, was stanch and strong, and that the partial trouble gave no right to a dissolution of the lease, but at best to a reduction of rent. He relies particularly upon Art. 2700 of the Civil Code. The work done in this case was work which was necessary to have been done prior to the lease in order to have placed the building in the condition in which it should have been, to fulfil defendant’s warranty that it was fit and appropriate for the known use to which it was to be applied. This warranty is indivisible. Caffin vs. Redon, 6 An. 488. The work itself was a betterment, not mere repairs, and could only be done during the lease, subject to plaintiffs’ legal rights in the premises. The rules referred to by the defendant are not applicable under the conditions of this case. Defendant contends that plaintiffs inspected the building themselves prior to contracting and recognized in the act of lease it was in good condition.

The building was a new one — the condition referred to was the outward apparent condition. ' The foundation under the posts which gave way or sunk were hidden from view. It is claimed that the real motive of the plaintiffs in asking a dissolution of the lease is to be found in the failure of their business venture independently of the building. That may well be, but if the circumstances of the case justified an abandonment of the premises, their motives in exercising the legal right do not affect the situation.

We think the jury erred in condemning the defendant to pay plaintiffs one hundred dollars. If plaintiffs have suffered any damage in this matter the proximate cause thereof is not due to the defendant. For the reasons herein assigned, it is ordered, adjudged and decreed that so much of the verdict of the jury as condemns the defendant to pay the plaintiffs one hundred dollars, and the judgment of the court below based on said portion of the verdict, be and the same is hereby annulled, avoided and reversed; the verdict and judgment otherwise are hereby affirmed. Defendant to pay the costs of the lower court, plaintiffs and appellees to pay costs of appeal.


author: McEnery, J.

text:
    No. 11,397.
    A. Meyer & Bro. vs. M. H. Rothschild & Co.
    No valid sublease of premises can be made without the consent of the lessor, when the lease prohibits the subleasing of the premises without the lessor’s consent.

      Bightor, J. PPEAL from the Civil District Court, Parish of Orleans.
    Lazarus, Moore & Luce Attorneys for Plaintiffs and Appellants. Henry G. Miller submitted a brief on same side.

      Farrar, Jonas & Kruttsehnitt Attorneys for Defendants and Appellees.
   The opinion of the court was delivered by

McEnery, J.

The plaintiffs leased the building No. 100 Canal street in the city of New Orleans from the agents of the owner, a non-resident. The agents were Robinson & Underwood of the city of New Orleans.

The lease contained the stipulation that the property could not be subleased without the owner’s consent.

Plaintiffs sue the defendants for the price, upon an alleged verbal lease made on 10th of August, 1892, for the unexpired term of their lease for the price of five thousand two hundred and fifty dollars.

The defendant, M. H. Rothschild, had negotiated with the attorney of A. Meyer & Bro. for the unexpired term of the lease.

Security was demanded from Rothschild, who was either unable or unwilling to give it.

On the 10th of August an agreement was reached by which the defendant consented to take the unexpired term by paying in advance, with a discount of eight per cent. He declined to take the premises after the agreement, hence this suit. The defendant denies that there was any valid contract of lease.

It is evident that no valid lease could be made without the consent of the original lessor.

This was never given. Underwood, of the firm of Robinson & Underwood, emphatically states that he had declined to accept the defendants as lessees without security, and they were never tendered as lessees with the required security.

The attorney for A. Meyer & Bro. proposed the names of several responsible parties to Underwood and asked him if he would accept them as security. He assented, but says the security was never tendered.

In reference to the agreement made by the attorney with Rothschild about paying in advance, with eight per cent, interest discount, he says that he has no recollection of any such proposition having been made to him. He is a disinterested witness and was sworn in plaintiff’s behalf. He being a real estate agent, it is reasonable to suppose he would have positive knowledge of a fact^which it was essential for him to know, in order to give his assent to the subleasing of the premises. He says the manner in which it was brought to his knowl- . edge before the 10th of August agreement was when he was asked by plaintiff’s attorney if he would nob at any time accept the cash, if it could be discounted, but he never mentioned Rothschild’s name. The question seems to have been hypothetical. It is not shown that Underwood was made acquainted with the note of discount, or that any definite understanding was ever made with him to accept defendants as lessees on any particular condition.

As the consent of Robinson & Underwood, the owner’s agents, was essentia] to a sublease of the premises, it is certain that the agreement between the attorney and defendants was without effect, as this consent was wanting.

In a brief opinion the District Judge says that the verbal agreement between plaintiff and defendant is clearly proved, but the concurrence of the two wills was not sufficient to impart vitality to it without the consent of Underwood & Robinson, the agents of the original lessor. Their consent was essential to the perfection of the contract of lease, and that neither plaintiff nor defendant could supply the missing link.

It does not appear that Robinson & Underwood were even made acquainted with the 10th of August agreement. Underwood says positively it was never submitted to him for his ratification or re - jection, and that he has never consented to the subleasing of the premises to the defendants.

Judgment affirmed.

Miller, J., having filed brief before his appointment takes- no part in the decision.

Rehearing refused.


text:
    No. 11,451.
    Romano & Guerriero vs. Their Creditors.
    The“placing by the insolvent, without intent to defraud, on his schedule claims ■which do not exist, and amounts which are to some extent exaggerated, does not amount to a fraud against other creditors within the meaning of the insolvent laws. The claims of these creditors are mere matters of legal right, subject to be disputed or controverted in the concw'so.
    In an accusation of fraud made against the insolvent, he has the right to trial by jury.

      No opposition to a voluntary surrender, charging fraud, can be filed after the lapse of ten days next following the meeting of creditors.
    The maxim Contra non valeniem agere non cwrrit preseriptio does not apply to the prescription of ten days for filing oppositions to a voluntary surrender. 11 An. 36.
    PPEAL from the Civil District Court, Parish of Orleans. . Monroe, J.

      E. H. MeCaleb, Jr., Attorney for Insolvents and Appellants:
    Fraud must be specially alleged and proved beyond doubt. The . onus is upon the opponent who alleges that certain claims are fictitious.
    On opposition to insolvent’s discharge; when evidence is admitted, under objections, for the purpose of showing fraud, a judge is incompetent, ratione materise, to consider such evidence. Upon overruling the objection a jury must be impaneled to try the opposition. 3 La. 217; 16 La. 348; 18 La. 383, 496; 7 An. 258; 14 An. 516; 17 An. 85; 9 La. 387.

      Dinkelspiel & Hart Attorneys for and Opponents and Appellees:
   The opinion of the court was delivered by

McEnery, J.

On the 26th December, 1892, the plaintiffs filed a petition, annexing thereto a schedule of their affairs, and prayed for a meeting of creditors and a discharge from their liabilities. The usual orders were granted, the meeting of creditors held, a syndic appointed, the insolvents’ estate was administered, and they were ■discharged by a vote in number and amount from their liabilities. The syndic presented his account for the final distribution of the assets in the insolvents’ estate.

On the 20th February, 1893, certain creditors opposed the syndic’s account and the discharge prayed for the plaintiffs on the following grounds:

1. That the plaintiffs did not ree ive the affirmative votes cast at the meeting of creditors, for their discharge, of a majority in number and amount.

2. That the schedules herein filed by the plaintiffs do not correctly represent their assets and liabilities; that many of the names placed therein as creditors are not creditors, or if creditors at all, for amounts less than given and voted for; that the plaintiffs have not accounted for all their assets, but on the contrary have omitted a large quantity thereof from their schedules; that a few days before their surrender the plaintiffs purchased from the N. O. Auction and Oommission Go., Limited, one of the opponents, lemons to the amount of four hundred and fifty-six dollars, and nqver accounted for the lemons or the proceeds of their sale; that also, within a short time before their failure the plaintiffs purchased a large quantity of peanuts of the value of one thousand five hundred dollars, and never accounted for them or the proceeds of their sale; that they also purchased from Seinsheimer Paper Company, of Cincinnati, under same circumstances, a large quantity of paper, for which they never accounted.

3. That the plaintiffs did not keep proper books and did not turn over their books to the notary appointed by the court to conduct the insolvent proceedings.

4. Opponents oppose the vote of A. Xiques for the discharge of the plaintiffs on the ground that as voting as agent of a creditor he had no personal knowledge of the indebtedness.

5. The opponents oppose the votes cast by certain named creditors because they were not creditors of the plaintiffs for the amounts stated.

There was judgment in favor of opponents, Hills Bros. & Co., placing them on the account as ordinary creditors against the city of New Orleans, dismissing its opposition, and as thus amended the account was approved and homologated, and the funds ordered distributed accordingly.

It was “further ordered, adjudged and decreed that the opposition of the New Orleans Auction and Commission Company, Limited, and others be maintained, and the application for the discharge of the insolvents, Roman and Guerriero, is refused at their cost.”

The controversy is in relation to that part of the judgment refusing to discharge the insolvents.

It was based on the alleged frauds of the insolvents prior to the filing of their petition and the surrender of their property, in order to obtain the benefit of the insolvent laws.

The judgment does not deny the claims of the creditors alleged by opponents not to be creditors of the insolvents, and who voted for their discharge.

The claims of these creditors are mere matters of legal right, subject to be disputed or controverted in the concurso. Their mere appearance on the schedule does not amount to a fraud against creditors within the meaning of the insolvent laws. Monthly vs. Creditors, 18 La. 383.

The evidence does not show that these creditors were placed on the schedule with the intention of defrauding other creditors, nor is there any reason to believe that the creditors were injured by the mere statement on the schedule of the amount due these creditors. If the amounts were not due at all, or some of them exaggerated, both of which are alleged, the errors could have been easily and promptly corrected in the concurso.

The proces verbal of the notary shows that a majority in number and amount voted for the discharge of the insolvents.

The proces verbal makes a prima facie ease for them, and we do not think the evidence in the record is sufficiently convincing to destroy the effect of the votes east by the five creditors who it is alleged were not creditors for the amounts stated, and the votes of the twenty-six creditors who are alleged to be the creditors of the individual members of the insolvent firm.

The specifications contained in numbers two and three are embraced within the definition of fraud in Sees. 1802, 1803 of the Revised Statutes. The fraud specified in these sections must be distinctly and positively particularized in the opposition, and if it be sustained by proof, the insolvent is punished by being debarred forever from the benefits of the insolvent laws, and incurs the penalty of imprisonment for a term not exceeding three.years.

Section 1802 of the Revised Statutes says: “ Should any creditor of an insolvent debtor deem it necessary to oppose the appointment of a syndic, or to charge fraud against the debtor, he shall, within the ten days next following the meeting of creditors, lay before the court his written opposition, stating specifically the several facts of nullity of the appointment or fraud alleged against the insolvent debtor. Whereupon the judge shall decide said opposition, and in case of accusation of fraud, after having received the insolvent debt- or’s answer, the court shall order a jury to be summoned for the purpose of deciding on the accusations.”

The plaintiffs were entitled to have the aceus'ation of fraud made against them referred to a jury. McCloskey & Co. vs. Ingram, 17 An. 85; Besle vs. Creditors, 14 An. 522; Thompson vs. Chapman, 7 An. 258.

The opponents failed to charge fraud against the insolvent within ten days after the meeting of creditors, as required by Sec. 1802, R. S.

No opposition charging fraud to a voluntary surrender can be filed after the lapse of ten days next following the meeting of creditors, although the creditors did not know of the fraud complained of within that time. Mathews & Finley vs. Creditors, 11 An. 36.

In the case cited the reasons for excluding the maxim Contra non valentón agere non eurrit prescriptio from the application to the ten days’ prescription for filing oppositions in insolvent proceedings are fully and sufficiently stated.

It is therefore ordered, adjudged and decreed that the judgment appealed from be amended so as to reverse that part of it which refuses to discharge the insolvent plaintiffs, and it is now ordered that they be discharged. In all other respects the judgment is affirmed, the insolvent’s estate to pay costs.