author: Blanchard, J. Watkins, J.

text:
    No. 12,575.
    Mrs. Emma Clara Lambert, Widow, vs. The Penn Mutual Life Insurance Company of Philadelphia, and L’Hote & Co.; L'Hote & Co. vs. Penn Mutual Life Insurance Company—Consolidated.
    1. A policy of life insurance, taken out by a husband in favor of his wife, can not subsequently be assigned by him to her prejudice. The doctrine announced ini the Pilcher case, 33 An., and the Putnam case, 42 An., sustained as the jurisprudence of the State. .
    2. And it makes no difference that he secured from her what purports to be an assignment, without consideration, of the policy to him before he assigned it to his creditor.
    3. A donation made in the form, of an onerous contract (without^consideration and really intended as a donation in disguise) to have effect as such must be passed before a notary public and two witnesses.
    4. An ipnocent stakeholder, without interest in a pending litigation, depositing in court, by consent of the judge thereof, the full amount he owes, or in his hands, and which is the object of dispute between contesting claimants, the rightfulness of whose claims is the subject of the litigation, should be relieved from further liability, and not held for interest and costs subsequently accruing.
    APPEAL from the Civil District Court for the Parish of Orleans. Théard, J.

      Thomas J. Semmes and J. J. O’Connor for Mrs. Lambert, Plaintiff and Appellant.
    Fenner, Henderson & Fenner for L’Hote &Co., Plaintiffs, Appellees.

      Dinkelspiel & Hart for Defendant, Appellant.

      B. B. Howard and II. 0. Hollander as anvieus curies on Application for Rehearing.
    Argued and submitted.March 22, 1898.
    Opinion handed down May 2, 1898.
    Rehearing refused June 29, 1898.
   The opinion of the court was delivered by

Blanchard, J.

In January, 1891, the insurance company, defendant herein, issued a policy of insurance upon the life of Louis H. Lambert for the sum of ten. thousand dollars.

By its terms this amount was made payable to said Lambert, his executors, administrators, or assigns, on the twentieth of January, 1911. But should he die before that time, then the amount was made payable to his wife, plaintiff herein, at his death.

In other words, it was a twenty-year endowment policy, of which his wife was the beneficiary in the event of his death before the lapse of the twenty years, and of which he himself was to be the beneficiary should he be alive at the maturity of the endowment.

Something over three years after the issuance of the policy an assignment thereof was made as follows: “ For value received we hereby sell, assign, transfer and set over all our right, title and interest whatsoever, of, in and to twenty-payment life policy No. 69,732 on the life of Louis EL Lambert in the Penn Mutual Life Insurance Company of Philadelphia unto Louis H. Lambert.”

This was signed first by the husband and then by the wife, in the presence of witnesses. As a matter of fact, Mrs. Lambert received nó consideration from her husband on account of this assignment.

Three days later the husband, in similar terms, transferred all his right, title and interest in the policy to L’Hote & Co. in trust, first, to pay thcmsels’ss any indebtedness he might be due them when the policy became a claim, and, second, to pay the remainder, if any, to him (the husband) or his executors, administrators, or assigns.

These assignments were, respectively, notified to the insurance company.

The policy passed into the possession of L’Hote & Co., who advanced Lambert, on the day of the assignment, six hundred dollars. Besides this he owed them a large amount.

In June, 1896, Lambert, the assured, died.

From the time they became pledgees of the p'olicy to the death of Lambert, L’Hote & Co. paid one thousand and fifteen dollars and seventy-eight cents as premiums thereon. Including this amount, Lambert was, at his death, indebted to them in the sum of twelve thousand nine hundred and sixty-four dollars and seventeen cents.

L’Hote & Co. furnished proofs of death to the company and demanded payment of the policy. But immediately following the death of the assured, the attorneys of Mrs. Lambert had served written notice on the company that she claimed to be legal owner of the policy and demanded payment of its proceeds to her.

Under the circumstances the company declined payment to either, though admitting its liability on the policy.

Whereupon Mrs. Lambert instituted suit against the company and L’Hote & Go. She recites she was induced by her husband to assign her interest in the policy to him in order that he might transfer the same to L’Hote & Co. to secure an indebtedness he owed them; that this assignment by her was without consideration, prohibited by law, null and void; that her husband’s transfer of the policy to L’Hote & Co. could and did convey no interest which she possessed in it; and that L’Hote & Co. were without legal right to claim the policy or collect its proceeds. She prayed judgment accordingly and for the amount of the policy against the company.

This was followed later by an action by L’Hote & Co. against the company. They recited the fact of the transfer of the policy to them by the assured and their possession of it, the prior renunciation or assignment of her interest in it by Mrs. Lambert to her husband, the indebtedness of the husband to them at his death, and the assurance given them, both by Lambert and the agent of the company, that the policy was the absolute property of the husband. They prayed judgment against the company for the amount of the policy.

The two suits, pending at the same time, were, by order of court, consolidated.

L’Hote & Co., for answer to the suit of Mrs. Lambert, pleaded the same state of facts set up in their own action on the policy against the company.

The latter, answering both suits, avers that it had nothing to do with the assignments which had been made of the policy beyond receiving notices thereof; that none of its agents had any authority to give the assurance, claimed by L’Hote & Co.; that the policy was the absolute property of the assured; that said assurance, if given, was without the company’s knowledge or consent, and is not binding upon it, referring to a clause in the policy stipulating that: “ In no case does the company guarantee the validity of an assignment.”

It then, in effect, states its position to be that of stakeholder merely; admits that it owes the amount due under the policy; is ready, willing and anxious to pay the same to the party legally entitled thereto; and that it has not been able safely to discharge the obligation because of the rival claims of contending parties.

It then, as plaintiff in reconvention by way of interpleader, recites it has been compelled to employ counsel to defend two suits in order to be protected from double liability in a matter in which it is without interest, tenders and deposits in court nine thousand seven hundred and sixty-nine dollars and eighty-six cents, the exact amount due under the policy, prays that both claimants be ordered to accept the tender, and to be discharged from the suits, leaving the matter to be settled between them, the amount thereof, deposited, to be awarded as the court may determine after due and proper hearing.

The judgment below rejected the demand of Mrs. Lambert and decreed L’Hote & Co. entitled to recover from the insurance company nine thousand seven hundred and sixty-nine dollars and eighty-six cents, with legal interest from judicial demand, and that the costs of suit be paid jointly by the company and Mrs. Lambert.

The company appeals, suggesting error to its prejudice in so far as it is condemned to pay interest and costs.

Mrs. Lambert appeals and asks reversal of the judgment rejecting her demand to be decreed entitled to the amount due on the policy.

The policy, which is the basis of both suits (consolidated), was a contract between the insurance company and the assured, out of which grew two distinct and independent obligations and two distinct and independent rights. Thus, the husband (the assured), if he lived until the year 1911, was to have the benefit of the contract;.if he died before 1911, the wife was to have it. Hence, during the first twenty years of the life of the policy, the obligation of the company was to the wife and to her alone, and upon the happening of the •event, which matured the policy, within that period, she being alive, no one was to be considered, or dealt with, in connection With its settlement except herself.

After the lapse of the twenty years, the husband being still alive, the wife, if living, or, if dead, her heir, ceased instantly to be the obligee and the husband became such alone and the settlement of the policy was to be made solely with him. While, therefore; both •the spouses were, in a sense, during the first twenty years of the life of the contract of insurance, its beneficiaries, the degree in which they respectively held this status was different and their rights therein were separate and independent, the wife during that period being the- active beneficiary, the husband the passive, his rights being dependent upon’his existence continuing to the end of the endowment period. So, the happening or fulfilment of the condition which developed the passive character of his relation to the policy into the active beneficiary thereof, ended the wife’s connection with it as such altogether. It follows that the rights of both were conditional. Hers did not attach except upon the condition of his death before the lapse of the twenty years; his did not attach except upon the condition that he lived through the twenty years.

This would seem to demonstrate that the husband had an assignable interest in the policy independent of the wife. But he could ■convey or assign no greater right or interest in it than he himself possessed.

The insurer and the assured agreed that the place of contract should be the city of Philadelphia. It is so stipulated in the application for insurance annexed to the policy, which application is declared to be the basis of the contract.

They could legally so stipulate. Norton vs. Pritchard, 106 U. S. 124; Dicey Conflict of Laws, p. 567.

The court will take judicial cognizance of the fact that the common law is the basis of the jurisprudence of the State of Pennsylvania, as well as judicial notice of what the common law is. Copley vs. Sanford, Executor, 2 La. An. 335. At common law a stipulation in favor of a third person, if for his benefit, is presumed to be accepted by him. Oliver vs. Lake, 3 La. An. 78. It is familiar doctrine that in the absence of proof of the existence of a statute varying or changing a rule of the common law in eomman law States, the courts will presume the rule obtains. There was no proof adduced of a contrary statute.

The-wife’s acceptance, therefore, of the stipulation in her favor in this policy of insurance, viz.: that it was to be paid to her in the event of the husband’s death ¡before the lapse of the endowment period, is presumed.

So, the question, that the stipulation in the contract in favor of a third person (the wife) 'was revoked before acceptance, can not arise. This might be different did the contention between the parties, that a State other than Louisiana should be the place of contract, derogate from the force and effect of' any law prevailing here founded upon considerations of public order or policy. But the acceptance of such a stipulation, presumed by the common law, may be made, under.our law, either by express declaration to that effect, or impliedly by the doing of some act evidencing the intention to accept. C. C. 1890, 1902, 1810, 1811. This being so, it is difficult to see what public policy here established is sought to be avoided by giving effect to the common Jaw doctrine of the presumption of acceptance of a benefit by a third person in whose favor made. We do not wish to be understood as deciding that under our law it is necessary for a wife to indicate her acceptance of a stipulation of insurance in her favor in order to give it validity or effect.

It is to be observed that this is not a controversy with the insurance company as to the right of the parties to recover from it. The company does not seek by the application of some law in Pennsylnia (the place of contract) to avoid a liability unquestioned under the Louisiana law. On the contrary, it admits its liability, and.its only concern in the case is to protect itself from double liability. The controversy is between two parties of the same domicile (Louisiana) who claim the money which the company is willing to pay to the proper person; and as both base their claim on the policy, and this policy makes Pennsylvania the place of contract, it would seem that neither is in a position to dispute the applicability of the law prevailing there so far as the same may properly be recognized as affecting the matters at issue in these suits.

The contention of Mrs. Lambert is that being the beneficiary of the policy in the event of the death of her husband within the endowment period, and that event having happened, she alone is entitled to the money. Confronted by her act assigning all her right, title and interest in the policy to her husband, who, in turn, assigned it to another, sae replies (1) that the assignment of the policy was in inself a contract, separate and distinct from the policy of’insurance, was made in Louisiana, by parties in Louisiana, and is to be governed by the law of Louisiana; (2) that such a contract, being not one of those which the law of this State permits husbands and wives to make between themselves (C. C. 1790, 2446), or permits the wife to make with another so as to bind herself for her husband’s debts or those of the community (C. C. 2398), is without effect and void; (3) that if the assignment by her, being without consideration, is classed in the category of donations, it is void because not evidenced by an authentic act.

The contention of L’Hote & Oo. is that, for a good and valid con - sideration, the policy was duly and regularly assigned and delivered by the husband to them; that the wife at that time had no interest, in the policy,having legally parted with all' her right, title and interest therein previously to her husband.

Confronted with the plea that the wife could not by contract or convention with her husband part with her right and'interest in the policy, they reply that the stipulation in a contract of life insurance between the assured and the insurer in favor of a third person, not a party to the contract, as beneficiary, is a stipulation pour autrui, and as between the assured and the beneficiary is a pure gratuity, a donation, governed by all the laws regulating donations, except-those relating to form; that when such beneficiary is the wife of the assured, the stipulation in her favor falls within the letter and spirit of the rule announced in C. C. 1749 and is revocable by the husband at will; that this revocation may be either express or tacit, and is effectively accomplished by any conduct of the husband which implies an intention to revoke, and the conduct of the husband in this case clearly evidences such an intention; and that the rule of law embodied in O. 0. 1749 is one founded upon considerations of public policy and for the preservation of public order, from the force of which parties can not by their conventions derogate.

With great research and ability counsel for L’Hote & Oo. support these propositions, citing the decisions of the French courts and quoting the opinions of the learned jurists of France whose commentaries upon the Code Napoleon have assisted so greatly in moulding our own jurisprudence. It must be conceded that the French authorities are full and clear on the point that all donations between the spouses are revocable at the will of the donor, that this rule of law is founded upon considerations of public order and policy, and that a life policy of insurance in favor of a wife as the beneficiary thereof is a gift, a donation,- in this sense, revocable at will by the husband, applying to the same the provisions of Art. 1096 of the Code Napoleon, from which the corresponding article of our Civil Code, 1749, is taken — being a literal reproduction of the former.

If the question were a new one before our courts there would seem to be no great difficulty in following this enlightened lead.

But in two cases, in comparatively recent years, where the wife’s rights in an insurance policy as against the husband’s attempted assignment of the same to his creditors, underwent a careful consideration, a different rule was established which we feel called upon to sustain.

We refer to Pilcher vs. Ins. Co., 33 La. An. 322, decided in 1881, •and Putnam vs. Ins. Co., 42 La. An. 740, decided in 1890.

In both those cases, while it was not disputed that the taking out of the insurance by the husband on his life in favor of the wife was a gift, a gratuity, a donation to her, his power, right or authority afterward to assign or dispose of the policy for his own benefit is ‘denied, and her right and interest in the policy is referred to as her ¡separate property not disposable by the husband.

Indeed, strong and emphatic language is used, the court, in the first named case at page 331, saying: “ We hold that the right of the beneficiary wife in the policy could only be terminated by its lapse;” and in the latter case using this language, quoted from the syllabus: “ A life insurance policy in which a married woman is named as beneficiary vests a complete title in her as separate, paraphernal property, which can not be pledged as security for the debts of her husband or of the community.”

When these decisions were rendered, C. C. 1749, relied on now by the opposition as defeating the rights of this wife, stood as it stands now. There has been no change of the law in this respect. Counsel for L’Hote & Co. say in their brief, in respect to the two cases referred to: “ The court in those cases * * '* simply overlooked a plain and unambiguous provision of the Code,” meaning Art. 1749. It is then said that those decisions make no reference to the said articles, or to the authorities thereunder. Continuing they say: “ This defence was not made,” and assert that if it had been there can be little doubt it would have been sustained. Again: “ The defendants in those cases had a right to waive these defences, and if they chose to do so, the court was not bound to apply them. The only point presented for determination in those cases was whether such contract of insurance gave the wife a vested interest before the death of her husband. The court decided * * * that it did; that the contract constituted a valid gift to the wife. If anybody had then called attention to the fact that under our law every gift from husband to wife during marriage is revocable at will by the husband, we submit there would have been a different solution of the cases.”

These observations of counsel caused a reference to the briefs ■filed on behalf of the insurance company in the two cases cited.

We fortunately found the brief in the Pilcher case, and its perusal shows counsel to be in error. The point was there distinctly and broadly made that constituting the wife the beneficiary of the policy was a stipulation pour autrui, which may be revoked at any time before acceptance, and various authorities were cited in support ■thereof, including 0. 0. 1749; Merlin, Questions de Droit, Vol. 6, p. •30, verbo Stipulation pour autrui; Code Napoleon Annoté Sirey et •Gilbert, and others.

So this defence was urged in the two cases, but unsuccessfully.

We have already shown that by the common law of Pennsylvania, made the place of contract by the contracting parties, the acceptance by the wife of the benefit stipulated in her favor is presumed.

But if act of hers signifying acceptance were needed, it can be found in the attempted assignment of the policy to her .husband. How could she assign if there were no acceptance, no right vested in her which had become assignable? That act of assignment can well •be given effect to as evidencing an acceptance of the stipulation made in her behalf in the policy, while, at the same time, it is without effect and void as a transfer or conveyance of her rights.

It was not one of the contracts which our law permits husbands and wives to covenant between themselves, nor allows the wife to make so as to bind herself or her property for her husband’s debts or those of the community. 0. 0. 1790, 2398, 2446. It was the case ■ of a husband prevailing upon his wife to transfer her property to him without consideration, in order that he might pledge it to his creditor as security for debt. This is in the teeth of a prohibitory law and is null. Nor could the consent of the wife to the arrangement infuse validity or legality into it.

The creditor or pledgee, in this instance, is charged with direct notice of the wife’s rights, for the policy shows on its face that she was its beneficiary if the husband died before the endowment period had matured.

Nor can we assent to the proposition that the assignment of the policy by Mrs. Lambert to her husband is valid as a donation, as contended for it on the authority of 0. 0. 1746. It is quite true that under that article one of the spouses may during marriage give to the other whatever he or she might give to a stranger. But this must be done pursuant to the directions of the law relative to donations. C. 0. 1536. The donation of incorporeal things, such as credits, rights or actions, must be by public authentic act. This assignment was not such act. It is sought to overcome- this difficulty, however, by the contention that the assignment is made in the form of a sale by private ¡act, and though not a sale because without consideration, it is yet good, in this form of an onerous contract, as a donation, although not clothed with the formalities requisite for.the validity of a donation. Several old decisions (5 M. 693; 2 La. 215) are cited as sustaining this view. These cases were decided under the Code of 1808, whose Art. 53 provided that, “ all acts containing donations must be passed before a notary and two witnesses,” etc. An essential difference, both in language and effect, will be noted between that article of the Code of 1808 and Art. 1523 of the Code of 1825, now Art. 1536 of the- Revised Code, in respect to the form of donations.

The donation in the 2 La. case, p. 215 (Trahan vs. McManus) , was upheld because it did not profess on its face to be a donation, though it was in reality one in the guise of an onerous contract under private signature.

As it was not an act by its terms containing a donation, it was held not to .contravene the provisions of Art. 53 of the then Code. But this article was changed in the Code of 1825 so as to make the law declare that “an act shall be passed before a notary and two witnesses of every donation,” etc.

The 2 La. case, therefore, is not an authority under the altered conditions. This was pointed out in Brittain vs. Richardson, 3 R. 81, where it was declared that all donations inter vivos must be passed before a notary and two witnesses. See also 10 La. 90; 7 N. S. 424; 1 La. An. 237; 2 La. An. 766; 15 La. An. 491; Farrar vs. Michaud, 22 La. An. 358.

The conclusion we announce on this subject is that a donation made in the form of an onerous contract — that is to say, an onerous contract which is not such because without consideration and really intended as a donation in disguise — to have effect as a donation must be passed before a notary public and two witnesses.

The judgment below which awards the proceeds of this life pol - icy to L’Hote & Oo. must be reversed.

But since they paid as premiums on the policy the sum of one thousand and fifteen dollars and seventy-eight cents, they should recover that amount out of its proceeds, with legal interest from July 6, 1896, the date of filing of first suit on the policy. While the sum so paid may rightly be considered as advances made to the husband and charged on his account current, it enured directly to the benefit of the policy and the rightful beneficiary thereof, and it would be inequitable not to permit them to recover it from the proceeds of the policy.

With regard to the appeal by the insurance company we do not think it should be required to pay interest after the date of its second deposit of funds in court, June 18, 1897. The deposit first made, February 2, 1897, was insufficient, in that it did not include interest and costs to that date. This was later corrected, but not until after judgment had been rendered by the court a qua and this appeal taken. We believe it a just principle to announce that an innocent stakeholder, without interest in a pending litigation, depositing in court the full amount he owes, or in his hands, and which is the object of dispute between contesting claimants, the rightfulness of whose claims is the subject of the litigation, should be relieved of further liability, and not held for interest and costs subsequently accruing.

It is, therefore, ordered, adjudged and decreed that the judgment appealed from, rejecting the demand of Mrs. Emma Clara Lambert, widow, and decreeing L’Hote & Co. entitled to recover from the Penn Mutual Insurance Company of Pennsylvania the sum of nine thousand seven hundred and sixty-nine dollars and eighty-six cents, with legal interest from November 27, 1896, until paid, be annulled, avoided and reversed, and proceeding to render such judgment as should have been rendered in the first instance, it is ordered and decreed that the said- insurance company owed on the policy of insurance declared on in these consolidated suits the sum of nine thousand seven hundred and sixty-nine dollars and eighty-six cents, withJegal interest thereon from July 6, 1896, until June 18, 1897, and, in addition, a sum sufficient to pay the costs incurred in the suit entitled Mrs. Emma Clara Lamb’ert vs. The Penn Mutual Life Insurance Company and L’Hote & Co., up to and inclusive of June 18, 1897.

It is further ordered, etc., that the sum of nine thousand seven hundred and sixty-nine dollars and eighty-six cents deposited in court by said insurance company on February, 2, 1897, and the further sum of three hundred and twelve dollars and sixty cents, deposited June 18, 1897, be accepted as an acquittance of said obligation on the part of said insurance company.

It is further ordered, etc., that Mrs. EmmaOlara Lambert, widow, do have and recover from said sums so, deposited as aforesaid, the-sum of eight thousand seven hundred and fifty-four dollars and eight cents, with legal interest thereon from July 6, 1896, until June 18, 1897.

It is further ordered, etc., that L’Hote & Co. do have and recover from said amounts so deposited as aforesaid, the sum of one thousand and fifteen dollars and seventy-eight cents, with legal interest thereon from July 6, 1896, until June 18, 1897.

It is further ordered, etc., that all costs in suit numbered 50,270 on the docket of the lower court up to and inclusive of June 18, 1897, be paid out of the funds deposited in court by the said insurance company, any shortage thereof, on interest and costs, to be made up by said company; and that all costs incurred in suit numbered 51,597 on the docket of the lower court, as well as the costs of this appeal, be taxed against L’Hote & Oo.

[The Chief Justice concurs in the order refusing the rehearing. Breaux, J., and Blanchard, J., dissent, and think a rehearing should be granted.]

Concurring Opinion.

Watkins, J.

In my opinion the judgment appealed from should be reversed, because it has been settled by repeated decisions of this court that a policy of life insurance which is taken on the life of a hus - band, payable to his wife as the beneficiary, becomes eo instanti the separate paraphernal property of the wife under her administration and control and which can not be surrendered or assigned by the husband.

But in the course of none of its decisions has this court held that such a policy passed a title to the wife by donation inter vivos, notwithstanding that it has held that it was in a certain sense a gratuity. The court has had no occasion to decide the character of her title; and, indeed, it is necessarily innominate.

The policy is only payable upon the happening of the death of the insured, and is specially conditioned upon the premiums being regularly paid. It must be couceded that the wife has .an insurable interest in the life of her husband, and it has been held to be immaterial by whom premiums are paid.

Thus circumstanced, the policy of insurance possesses no element-of a donation inter vivos, neither in form nor essence.

A life insurance policy made payable to wife, or wife and children-as beneficiary, or beneficiaries, is separate property of the beneficiary and beyond the control of the husband. Pilcher vs. New York Life Ins. Co., 38 An. at p 324 (at bottom); citing Succession of Kugler, 23 An. 455; Succession of Hearing, 26 An. 326; Succession of Clark, 27 An. 269; Succession of Bofenschen, 29 An. 714, p. 325 (at top and in centre of the page) .

In opinion on rehearing by Judge Fenner (pp. 330, 331) is found the following expression, viz.:

“ The gift to her had been fully executed and the resultant interest-was her separate and indefeasible property.” (My italics.)

Again:

“ If such an assignment had been made it wonld have been illegal, null and void, and would not have divested Mrs. Pilcher’s interest in the policy, which would have continued unimpaired as long as thy; policy,” etc,

(P. 331) “ If, as held in Louisiana, in repeated decisions, the' insurance by the husband for the benefit of his wife, is such .a valid-gratuity in her favor as to make her right under the policy at his-death her absolute and separate estate, the like effect logically attaches pro tanto to the valuable interest under the policy,” etc.

In Putnam vs. Insurance Company, 42 An. 739, under circumstances quite similiar to those stated in the Pilcher case, we said:

“In law this policy” — the one in which Mary S. Putnam was: .named as the beneficiary — “inured to her separate, paraphernal benefit; though not separate in property from husband, the insured,, and its character of paraphernal property could not be changed to that of separate property of the husband, nor that of the community without her consent, lawfully obtained. As such it could not be-placed as security for the husband’s debts. To this effect are many authorities” — citing the Pilcher case and the decisions therein cited.

In addition thereto, the opinion cites the following cases, viz.:

Lemon vs. Life Insurance Co., 38 Conn. 294; Barey vs. Bruno, 71 N. Y. 62; Barey vs. Life Insurance Company, 59 N. Y. 587; Dalton vs. Willner, 52 N. Y. 312; Burroughs vs. Life Insurance Co., 97 Mass. 359; Knickerbocker Life Insurance Co. vs. Wiltz, 99 Mass. 159; Life Insurance Co. vs. Burroughs, 34 Conn. 305; Chopin vs. Fellows, 36 Conn. 132; Bliss on Life Insurance, Sec. 348.

In Stuart vs. Sutcliffe, 46 An. 240, the life insurance policy was made payable to the assured, his executors, administrators or assigns, and same was during the life of Wm. Stuart, who bought the policy, assigned to John Klien as collateral security for debt; but while recognizing the validity of that assignment, we drew a distinction between that character of policy and one made payable to the wife, or wife and children of the assured. We quoted with approval the following extract from the> Hearing case, viz.:

If the policy issues to the wife the amount stipulated belongs to her when the event insured against happens, and she can not be forced to inventory it as a part of her husband’s estate. The object he had in view would be defeated if a contrary doctrine prevailed.”

Succession of Hearing, 26 An. 326. The opinion then quotes and affirms the Putnam and Pilcher cases in terms.

In Tutorship of Crane, 47 An. 896, we said:

"It has been settled by repeated decisions of this court that money which is collected after death of the husband or the father, upon a policy of life insurance made payable to his wife and children, is not an asset of the matrimonial community, butof their separate estate,” citing with approval all of the foregoing authorities.

In each of the four cases cited the same principles of law were announced, and have been steadily maintained, and of their absolute correctness, in my opinion, there can be no doubt.

But if their correctness be doubtful, the rule of stare decisis should be maintained, and the rights of the wife and children protected against the creditors of impecunious fathers and hnsbands.

For these additional reasons I concur in the opinion of the majority.


source: Caselaw Access Project

author: Watkins, J.

license: Public Domain

text:
    No. 12,835.
    Mrs. Geo. C. Terry and Husband vs. Mrs. Lizzie S. Gilkeson, Executrix, et als.
    In case the form of a sale is resorted to for the purpose of obtaining the apparent security of a special mortgage and vendor’s lien, it will be treated as a mortgage pure and simple in an action by the wife who enjoins its execution in executory proceedings on the charge of simulation and illegality as an effort to bind her paraphernal property for the individual indebtedness of her husband. And, that, being so considered, same draws to it all the legal consequences which attend a mortgage in fact which has been executed for like purposes.

      APPEAL from the Fifth Judicial District Oourt for the Parish of Ouachita. Potts, J.

      .A. A. Gunby for Plaintiff, Appellant.

      Munholland & Munholland for Defendant and Appellant.
    Argued and submitted May 81, 1898.
    Opinion handed down June 24, 1898.
   The opinion of the court was delivered by

Watkins, J.

In December of 1897 defendant obtained an order of seizure and sale in the foreclosure of a special mortgage of three thousand dollars and interest on the plaintiff’s Lyndhurst ’ plantation in the parish of Ouachita, and the latter enjoined said executory proceedings on the ground, principally, that the note and mortgage were executed exclusively for the purpose of securing a debt her husband that was due to John M. Gilkeson, of whom the defendant is executrix.

On the trial the plaintiff’s injunction was perpetuated and the mortgage was annulled and its registry ordered canceled and erased from the record, on the ground that same was given as security for the debt of her husband, in violation of a prohibitory law of Louisiana, and therefore void.

It further ordered and decreed that there be judgment in favor of the defendant in reconvention for the amount of certain taxes which J. M. Gilkeson had paid upon the property mortgaged.

Each of the parties prosecuted an appeal from so much of the judgment as was considered prejudicial to them, respectively.

The theory of the plaintiff is that she is owner of the property in question as her own separate paraphernal property, under her administration and control, as an inheritance from her deceased father, who was a citizen and resident of the State of Louisiana, where he died possessed of said property; and that she being a citizen of this State inherited same at her father’s death, and was there married to her husband, Col. Ira C. Terry, of St. Louis, Mo.r at which place their matrimonial domicile was thereafter established.

That “ on the 15th of December, 1894, in order to secure a debt of her husband to John M. Gilkeson, of St. Louis, (she) made a pretended sale of said property to J. M. Gilkeson for the pretended price of ten thousand dollars in cash in hand paid, when in fact no price was paid whatever, and no sale was made except on paper. That bn the same day said J. M. Gilkeson pretended to sell and convey said property back to (her) for the price of ten thousand dollars, acknowledging the receipt of seven thousand dollars in cash, when in fact no cash was paid, and for the balance of said pretended price (she) executed a note for three thousand dollars due January 1, 1898, and three notes of two hundred and forty dollars, each, for the /interest on said three thousand dollar note;” and that to secure the payment of those several notes, the aforesaid mortgage was given.

She further represents that these transfers were simply intended to operate a mortgage on her separate property to secure a debt of her husband; and that she'received no part of the consideration for said mortgage note and interest notes; and that same did not in any manner inure to the benefit of her separate property or estate.

That said act of mortgage, disguised as a sale, is and was in plain and direct contravention of a prohibitory law of the State of Louisiana, and, therefore, null and void absolutely.

' That she was not examined by a judge and none of the forms' of law for binding the real property of a married woman were observed; and that the pretended sale of her property was a simulation and disguise for the mortgage aforesaid.

Apprehending that the defendant intended and would attempt to seize her property in the attempted enforcement of said mortgage, plaintiff prayed for and obtained an injunction — she having at that time already obtained the order of seizure and sale.

Her prayer conforms to her allegations.

The defendant tendered an exception of no cause of action, and on the same filed an extended answer, the principal points of which are the following, viz.:

■ That the defendant admits that the act of sale from plaintiff to Gilkeson was executed before a notary and Louisiana commissioner of deeds in St. Louis, Missouri, and that the property thereby conveyed and mortgaged “ was inherited by the plaintiff from her parents as alleged, and as such was her paraphernal property.”

But the averment is made that no law of the State “px’ohibits a married woman from alienating her paraphernal immovables, nor from giving a vendor’s priviege on same to a person acting in good faith, for .a valuable consideration accruing to her separate benefit.”

That said deed, mortgage and note evidenced real, serious and bona fide transactions, and the note and mortgage are binding on the property of the plaintiff.

That a part of the three thousand dollar note had for its consideration an individual note of the plaintiff for fifteen hundred dollars, which she executed in favor of Gilkesou- Sloss Commission Company on the first of February, 1895, which was secured by a special mortgage contemporaneous therewith.

That the plaintiff “ was duly authorized to'make the mortgage (enjoined) by examination before a competent judge, and that a •certificate was duly issued from Hon. R. W. Richardson, then judge ■of the Fifth District Court of the parish of Ouachita, and that said mortgage was duly executed and signed by Lewis D. Allen, Jr., who bore an authenticated special power of attorney from the plaintiff to execute the same,” etc.

The further averment is made that one hundred and sixty-nine •dollars and eighty-nine cents of the three thousand dollars was paid to James G. Trimble, in the redemption of the property mortgaged, -from the tax sale, and which she had permitted to go to sale for the non-payment of delinquent taxes, on July 28, 1894 — -it having been redeemed on January 10, 1896.

That the remainder of the three thousand dollars was paid “ to the plaintiff or her authorized agent and husband, I. C. Terry, who was jading as such from 1880 to 1897, on drafts and acceptances from time to time; and that said sums were expended in payment for improvements on the said plantation of the plaintiff, and in the •expense of making crops there’on.

“That at the time of these transactions, as at the present time, ■the plaintiff was leasing and conducting her said Lyndhurst plantation for her.own separate account and benefit.”

Then follows the allegation of the wrongful issuance of the writ ■of injunction and the consequent damages — aggregating eight hun--fired dollars. ' ' ‘ ’ • •

Assuming the character of plaintiff in reconvention, the defendant •claims that the plaintiff is indebted to her in the further sum of .one hundred and forty-four dollars and ten cents, with interest from the 6th of June, 1896, for taxes paid by J. M. Gilkeson. on the property of the plaintiff for the year 1896, “as more fully appears by a draft, drawn by her husband as agent, and tax receipt from L>. A. Johnson, sheriff and tax collector of the parish of Ouachita,” etc.

Then follow the general averments, viz.:

“ That the mortgage and vendor’s lien be declared valid and enforced and that same be declared of full force and effect and binding and executory on plaintiff’s property.”

Her prayer is in conformity with the foregoing allegations, and in addition thereto she makes the following special prayer, viz.:

“ Respondent prays in the alternative, that if for any cause the-special mortgage should be annulled and the injunction sustained, that respondent may have personal judgment against the plaintiff in reconvention for and in the full sum of three thousand eight hundred and sixty-four dollars and ten cents, with eight per cent, per annum interest,” etc., * * * or such portion of such aggregate

amount as is proved to have inured to plaintiff’s separate and exclusive benefit and to the improvement of her paraphernal property.”

The effect of the averments of the defendants taken as judicial admissions of the facts involved and necessary to a proper decision of this case are the following, viz.:

1. The act of sale from the plaintiff to J. M. Gilkeson was executed before a notary and Louisiana commissioner of deeds in St. Louis, Missouri.

2. That the property thereby conveyed was separate paraphernal property of the wife which came to her as an inheritance from her parents as alleged in the plaintiff’s petition.

3. That a part of the consideration of the three thousand dollar note, which is the subject of the executory proceedings which are enjoined, was a note for one thousand five hundred dollars which plaintiff had executed on the 1st of February, 1895, in favor of Gilkeson-Sloss Commission Company; that one hundred and sixty-nine dollars and eighty-nine cents was the amount J. M. Gilkeson had expended in the redemption of her property from tax sale, and that the remainder of that sum was paid to the plaintiff through her husband, who was acting as her general agent “ on drafts and acceptances from time to.time,” and which sums “ were expended in payment for improvements on the plaintiff’s plantation and in the expense of making crops on the same.”

4. Tbat plaintiff was duly authorized to make the mortgage enjoined by examination before Judge R. W. Richardson of the Fifth Judicial District, who gave a proper certificate of authorization therefor.

5. That “ said mortgage was duly executed ” and signed by an agent who had been specially authorized for that purpose.

8. “ That at the time of these transactions, as at the present time, the plaintiff was leasing and conducting her said Lyndhurst plantation for her own separate account and benefit.”

These admissions, taken collectively, plainly imply and import that the plaintiff was the owner of this Louisiana plantation in her •own separate paraphernal right; that the proceedings evidenced or were intended to evidence a mortgage upon this separate property ostensibly for three thousand dollars, which she owned, but which amount was chiefly made up of drafts and acceptances for her husband and amounts alleged to have been expended in improvements of plaintiff’s plantation and expenses in making crops on her plantation.

In other words, the answer, in effect, admits that there was no consideration for the sale from plaintiff to Gilkeson which was executed in St. Louis, but that it was only a means resorted to of placing the property in his hands so that he could subsequently reconvey it to her and thus obtain a conventional mortgage and vendor’s lien that could be enforced by executory proceedings and sale. This idea is further reinforced by the fact that an application was made to a Louisiana judge to grant a certificate of authorization for that purpose, and the judge signed a certificate, notwithstanding it possessed the form of a sale with mortgage retained therein. But that •certificate was unavailing for any necessary purpose for the reason that it is made a condition precedent that the judge must examine the wife at chambers, separate and apart from the husband, “ touching the objects for which the money is to be borrowed, or the debt to be eontraeted.” R. O. O. 127.

And that article further distinctly, provides that “if he shall ascertain either one or the other are for her husband’s debts, or for his separate benefit or advantage,” he shall not grant his certificate. Ibid. Berwick, Wife, vs. Sheriff, 49 An. 201.

The admissions in the answer clearly show that the wife was never examined by the judge who granted the certificate; and further, that had she been examined by the judge it would inevitably have been made to appear that the three thousand dollars was principally made up of drafbs and acceptances of the husband while acting-as general agent of his wife.

Not only so, but that notwithstanding the plaintiff is admitted to have been at the time in possession of her property, leasing same to tenants, and conducting her own business for herself, that a large part of the three thousand dollars was “expended in payment for improvements on the plantation of the plaintiff and in the expense of making crops on the same."

This statement is very confusing, to say the least of it.

If the plaintiff was operating the plantation for herself, on her own account, and leasing it, it ought reasonably to have been sufficiently remunerative to have kept improvements paid for, without incurring an additional debt therefor; and that will be taken for granted in the absence of countervailing evidence.

If the plaintiff was administering her own plantation, leasing it, then she had no occasion for the services of an agent in the premises, general or special.

If the plaintiff was leasing her plantation she evidently had no occasion for the expenditure of these large sums of money “ in the expense of making crops thereon.”

Erom the quotation we have made from the defendant’s prayer, demanding personal judgment against the plaintiff, this proceeding has been converted from one via exeeutiva to one via ordinaria, and one of the consequences of this change is that the defendant becomes-a plaintiff pro hac vice.

Under these circumstances, if she was nob otherwise — which we are not prepared to concede — the executrix carries the burden of establishing the fact, that the debt demanded inured to-the plaintiff’s separate and paraphernal benefit, or that of her paraphernal property; because the requirements of the Code, with reference to their private examination by the judge, were not attempted to have been complied with.

The proof clearly shows that plaintiff’s husband paid the taxes claimed in the answer, as well as the redemption price of the land. The receipts were taken in his name; and the plaintiff swears they were so paid.' If Gilkeson let Colonel Terry have the money, that circumstance does not constitute the plaintiff his debtor. The proof shows that he owned a plantation in the parish of Ouachita in the immediate vicinity of that of his wife. He therefore had means of his own at his command. And the proof further shows that he was. the owner of an interest in the tract of land that was redeemed from the tax sale.

With regard to the note and mortgage of one thousand five hundred dollars which figures in these proceedings, the emphatic statement of the plaintiff as a witness, frequently repeated, is that that mortgage was given to secure an obligation of her husband to Gilkeson-Sloss Commission Company, “ for moneys advanced to him to buy cotton with;’ ’ and that her husband subsequently paid the debt, but, for some reason, did not get possession of the note. In confirmation of that statement she annexed the contract between them to her testimony. Her husband was not permitted to testify.

W e are of opinion that the whole case is with the plaintiff.

Defendant’s counsel have made “ the best out of a bad bargain.”

Entertaining these views, the judgment appealed from must be amended in favor of the plaintiff.

It is therefore ordered and decreed that the judgment appealed from be so amended as to perpetuate plaintiff’s injunction in its entirety and to reject the defendant’s demands for taxes paid, and reimbursement for moneys expended in redemption of land sold for taxes.

•And that as thus amended the judgment be affirmed; and that the defendant be adjudged to pay all costs of both courts.


author: Watkins, J. Miller, J.

text:
    No. 12,568.
    Metropolitan Bank vs. Aarons-Mendelsohn Company, Ltd.
    On Motion to Dismiss.
    The extended return day for the filing of the transcript of appeal occurring on a dies non, the appellant is entitled to the whole of the next day to file same, or to apply for an additional extension — the extended return day not having occurred in term time.
    On the Merits.
    In a suit to make the defendant the purchaser of property from insolvent debtors, liable on the ground, the defendant aided the debtors in defrauding their creditors, the price paid by him must have the weight given to it in the revocatory action

      If the price is adequate the sale will not be set aside because the debtors applied the price to pay one of the creditors, though the purchaser may havebeen informed of that intended application of the price.
    The revocatory action is the remedy under our law for creditors seeking relief against sales or other dispositions of the debtor’s property in fraud of creditors. Civil Code, Arts. 1970, 197S, 1982, 1989, et seg.

    APPEAL from the Civil District Court for the Parish of Orleans^ Monroe, J.

      Lazarus, Moore & Luce and Dinkelspiel & Hart for E. Blanc, Receiver, Plaintiff, Appellant.

      Farrar & Lemle for Elias Aarons, Defendant, Appellee.
    Submitted on motion to dismiss, December 13, 1897.
    Motion overruled and opinion handed down December 28, 1897.
    Argued and submitted May 5, 1898.
    Opinion handed down June 13, 1898.
    Application for rehearing withdrawn by consent November 10, 1898.
   On Motion to Dismiss Appeal.

Watkins, J.

The ground upon which the appellee seeks to dismiss this appeal is that the appellant’s second extension of the return day thereof had neither been requested of this court or granted by it until after the date when the first extension had expired — the order of the court granting the first extension having extended the time for the return of the appeal to the first Monday and first day of November, 1897, and that granting the second extension having been made on the second day of November, 1897.

The application for the second extension of the return day of "the appeal was filed on the second day of November, 1897, and the order of this court granted an extension on and allowed three judicial days thereafter within which to file the transcript of appeal — that is, until the 4th of November, 1897, the court being in session. And in conformity with that order the transcript of appeal was filed in this court on the 4th of November, 1897. The first Monday was the first day of November, 1897.

True it is that in the first application which was made by the appellant for the extension of the return day for the pnrpose of affording the clerk time to prepare the transcript, the first Monday of November, 1897, was mentioned as the date to which the time was extended, and that the order of the court conformed to said suggestion.

But it is equally true that said averment and order were in exact conformity with the language of the Constitution, viz.:

“The Supreme Court shall hold its sessions in the city of New Orleans from the first Monday in the month of November,” etc. Art. 84.

That it so happened this year, 1897, that the first Monday of November occurred upon the first day of that month, relieves the appellant from the necessity of strict compliance with the order of court extending the return day — the first day of November being under the law a day of public rest, and a legal “ holiday,” or dies non. Act 98 of 1892.

That statute declares that all commercial paper which shall by law or commercial usage be required to be protested for non-payment “ shall be deemed to be due, and shall be due and payable on the first day not a Sunday or legal holiday succeeding the third, or last day of grace, if the third or last day of grace be a Sunday or legal holiday,” etc.

It seems but reasonable and just that a like interpretation should be by this court placed upon this statute with regard to the return day for appeals, in that it equally affects all judicial proceedings, .and stays and restrains judicial action thereon upon dies non.

The decision of the court in Bienvenu vs. Factors and Traders Insurance Company, 28 An. 901, is not in point, for the court say :

“ The question presented is, has the appellant a delay of grace for filing the transcript after the day to which the return is extended if such extended return day is not a judicial though a legal day9
• “The question must be answered in the negative.
“ It is well settled that no days of grace are allowed after the day to which the extension is granted.
“ The further time granted for bringing, up the appeal, under Art. 888, C. P., is simply an extension of the days of grace, a postponing of the return day by order of the court, which becomes fixed, if not moved or postponed, by antecedent order of the court." ■

Counsel for the appellee cites and much relies iipon the decision of our immediate predecessors in Sun Mutual Insurance Company vs. Bynum, 32 An. 28, and ib is true that their citation therefrom does support their proposition, but the quotation made is from the syllabus and not from the opinion.

The court in that opinion refers to the ease of Surrat vs. L’Hote, then recently decided, and said:

“ We held that when an extension is granted to a day not inierm time, the transcript may be filed on the first day of the ensuing term, and, as here, the term of this court commences on the first Monday in November and lasts until the end of May, and as it was duriny term time that the delay was extended and expired, the appellants could have preserved their right by simply applying for a, further extension.”

It is plain that the syllabus of that ease disagrees with the text.

In that case the return day was extended during term time, and that day arrived and the delay expired in term time; but in the instant ease the delay expired on a day when the court was not in session and had not convened because the day fixed for the extension and for the convocation of the court was not a legal day but a dies non.

Under this state of facts it was utterly beyond the power of the appellant to have obtained a further extension, because the court had not convened for the term, and could not convene on the date-fixed in the Constitution because it was not a legal day.

In State ex rel. Luling vs. Judge, 24 An. 333, it was said by the court:

“ It appears that the return day as extended was the 28th of February, which was Sunday. * * *
“ The return day occurring on Sunday, we think the appellant was entitled to the whole of the next day to file his appeal.”

Applying the principle announced in that opinion to this case, the appellantwas legally entitled to apply on the day he did for an additional extension of the return day.

In our examination of the case cited, and others, we have found no countervailing authority.

The motion to dismiss is not well grounded.

It is therefore denied.

On the Merits.

Miller, J.

This is an appeal by the receiver of the Aarons-Mendelsohn Company, Limited, from the judgment dismissing his demand against Elias Aarons for five thousand dollars.

The corporation was organized in 1892, Augustus Aarons and Charles Mendelsohn being the principal shareholders; Elias Aarons, against whom this suit is directed, and another party holding one share each, and at a later period two others became subscribers to the stock. In 1895 the corporation became embarrassed; sundry suits were begun, and attachments against the corporate property were issued, the effect of which was to close the business of the corporation, its charter having been decreed forfeited on the return nulla bona on one of the exécutions. The debts of the company were between forty and fifty thousand dollars; its assets were the stock of merchandise sold at the sheriff’s sale for thirty-three hundred dollars leaving, after satisfying the lessor’s claim, eighteen hundred dollars; the bills receivable and book accounts were purchased by Elias Aarons for one thousand five hundred dollars, and the tobacco pledged to various creditors were sold by them to him for the amount of the debts for which the tobacco was pledged. After all these transactions the receiver was appointed, brought this suit against Elias Aarons, and from the judgment against the receiver he appeals.

The petition of the receiver alleges that the officers of the corporation, its shareholders and the defendant, related or connected by marriage, combined and colluded to place the property of the corporation beyond the reach of its creditors; the corporation being insolvent, to the knowledge of defendant, an employee, and cognizant of the financial condition of the corporation; that in furtherance of this combination the defendant, under color of a collusive and fraudulent sale about the time the receiver was appointed, took possession of the bills receivable and accounts of the corporation and is receiving and illegally appropriating the collections; that there are no other assets except of inconsiderable, if of any value,, to pay the creditors, and the petition prays for judgment against-defendant for five thousand dollars. The answer is, substantially, the general issue, with the averments of the purchase of the stock of merchandise of the corporation at sheriff’s sale under the executions of their creditors; that he then purchased the book accounts and bills receivable for .a fair price paid by him; and the validity of the sale is insisted upon, but the answer avers that save the amount-collected, twenty-four- hundred dollars, the assets are worthless, and that defendant is willing to return all he purchased, including all collections, for an amount equal to the price paid, and for his-services and time in making the collections.

In argument the suit is presented to us as one in the nature of the revocatory action combined with that for damages for the alleged wrongful acts of the defendant in aiding the debtors to place their property beyond the 'reach of their creditors. The aspects of this litigation naturally suggest the revocatory action, or that en declaration de simulation, deemed by our law and jurisprudence ample to secure creditors against all acts of their debtors calculated to deprive creditors of recourse on the debtor’s propertjL Civil Code, Arts. 1970, 1978, 1982, 1989, et seq. We perceive in the briefs the suggestion that the usual actions to' avoid the prohibited acts of insolvent debtors was not deemed applicable. We have not without some doubt as to the plaintiff’s right to the remedy plaintiff selects, taken the suit as he has presented it. To enforce the demand the orgnnization and course of business of this corporation has been exhibited in testimony and argument; thus we are apprised the corporation was organized in 1892; that it was preceded by a firm composed of defendant and his brother, who, with others, afterward formed the Aarons-Mendelsohn Company, Limited; that defendant’s brothers, Augustus and Charles Mendelsohn, became the principal shareholders, Augustus Aarons eoniributing as his part of the capital the interest of defendant in the previous firm, purchased by Augustus Aarons; that Elias Aarons, the defendant, owning at one time one share of the stock, claims to have disposed of it, but was in the employ of the corporation to its close. It is also brought to our notice that the principal attaching creditor was a relative of the members of the corporation; that another creditor was paid to the exclusion of others the entire one thousand five hundred dollars, derived from the defendant’s purchase of the assets of the corporation, and there is testimony to the effect that the defendant, owing to his relationship and intimacy with the shareholders, enjoyed advantages in respect to the purchases of the merchandise and assets of the corporation not possessed by others, and the testimony is that in these purchases he had the advice and encouragement of the shareholders. In an action based on an alleged combination and conspiracy it was, doubtless, deemed proper to introduce the mass of testimony we find on this subject in the record, but, in our view, the investigation we are to make must mainly depend in their result on the purchases by defendant of the property of the firm.

In the petition it is the sale of the accounts and bills receivable that is specially assailed, and it is mainly in relation to that sale, as we read the petition, that the judgment is claimed against' the defendant for five thousand dollars. Whether in the revocatory action, or in any form of controversy involving defendant’s liability to creditors arising out of-that sale, the question of the value of the assets would be the prominent inquiry, ff not the test. According to-the testimony the assets had accumulated since 1892, though a considerable amount was the result of more recent sales. It readily occurs that the assets of a commercial firm, in great part in their origin, dating three years back, are not apt to have anything like the value conforming to their face. The testimony is to the effect the great mass of these assets were worthless; that with two years efforts at collection there had been realized of all the assets but twenty-four hundred dollars, and defendant claims and testifies the time and expense of collecting debts due by country, as well as city debtors, equaled the excess of collections over the price paid, and we have in the record the defendant’s offer to return all the assets, including collections for reimbursement of the price and the amount claimed for the expense of collection. The testimony, it is true, comes from the shareholders and the defendant, but it is upon this testimony the case has been presented and must be determined. It is claimed in argument that defendant having, aided the debtors in putting their property beyond the reach of their creditors, should be condemned to pay the amount of the collections and be denied any restitution of the price he has paid; and it is insisted we can grant this relief under the prayer for judgment against defendant for five thousand dollars and for general relief. The relief we are asked to afford is the incident of the revocatory action when the defendant participates in the fraud of the debtor, or as the Code puts it, is in fraud as well as the debtor. C. C. Art. 1982. Under the testimony we must conclude the motive and object of the defendant in his purchase was to obtain the accounts, having bought the merchandise and with the view of continuing for himself the. business of the debtors. The corporation had the right to sell; he had the right to buy. The law protected him in his contract and his right to reimbursement of the price if the sale should be set aside for inadequacy of the price. Civil Code, 1981, 1982. Even under the revocatory action when the sale is set aside, we do not understand the purchaser is to be denied restitution of the price because tbe debtor applies the purchase price to pay one of his creditors, and although the purchaser may know the debtor intends that application of the price. This sale as presented to us in the testimony was for a fair price paid by the purchaser,- prompted by the purpose to secure the accounts to aid him in the business of the late corporation he proposed to continue. With the best attention we have been unable to perceive the basis for avoiding the sale for inadequacy of price or other cause.

When the corporation failed it had pledged tobacco to the banks and others creditors. Tbe defendant acquired the tobacco from the creditors holding it in pledge for the amount of the pledge debts. We find in the petition no allusion to these acquisitions of the firm’s tobacco, but a large part of the testimony is devoted to these transactions, and it is contended in argument that defendant thereby acquired an advantage to the detriment of creditors. It was some months after the failure before the pledged creditor obtained payment. In that period it is claimed, and there is testimony in the record to the effect, that efforts were made to sell the tobacco, and pay the pledge debts, and it was after these efforts failed that the defendant having succeeded to the business of the. corporation in part, we infer, the manufacture of cigars, obtained the tobacco on payment of the pledge debts. If in these transactions the creditors of the corporation sustained injury, the revocatory action is adopted to give full relief. But there are before us neither allegations or proof on which we can base any relief in respect to the tobacco pledges.

As to the sheriff’s sale of the • merchandise, it was open to all bidders. The defendant stood on an equal, but no better footing than all others. The fact he had better means of knowledge of the stock and- its value derived from his connection with the late firm and his intimacy with its members give us no basis to hold tha sale void, or as furnishing plaintiff any cause for complaint.

It is therefore ordered, adjudged and decreed that the judgment of the lower court be affirmed with costs.


text:
    No. 12,823.
    Kansas City, Shreveport & Gulf Railway Company vs. Thomas J. Davis, Sheriff and Tax Collector, et als.
    Once an assessment has been completed and the roll has been deposited in the clerk’s olRee and a copy thereof delivered to the tax collector for the col" lection of taxes, neither the correctness of the levy nor the assessment can he tested in a proceeding contradictorily with the tax collector alone.
    A PPEAL from the' Twelfth Judicial District Court for the Parish of Vernon. Read, J.

      J. MeD. Trimble, General Solicitor, J. G. Parle, Assistant Attorney (Pujo & Moss, of Counsel), for Plaintiff, Appellant.

      J. Henry Shepherd for Defendants, Appellees.
    Argued and submitted June 4, 1898.
    Opinion handed down June 13, 1898.
   The opinion of the court was delivered by

Watkins, J.

This is an injunction suit which seeks to restrain and prohibit the defendant from seizing and selling certain described property of the plaintiff on the ground thatt he tax sought to be collected is illegal and void and not enforceable.

The judgment of the District Court sustained the defendant’s exception of no cause of action, and decreed the defendant “ ten per cent, on the amount enjoined by the suit as attorney’s fees,” and from that judgment the plaintiff has appealed.

The plaintiff avers that it is the owner of a certain railroad track in the parish of Vernon, and on the 17th of August, 1897, the parish assessor delivered to the tax collector thereof “ a certain alleged assessment roll ” whereon was charged a tax of two thousand seven hundred and forty-flve dollars and twenty-eight cents . on 35.64 miles of tiack and roadbed, upon a valuation of five thousand five hundred dollars per mile, against the Kansas City, Pitts-burg & Gulf Railway Company.

That said tax is illegal, false and untrue in the following particulars, viz.: '

That neither the said Kansas City, Pittsburg & Gulf Railway Company nor petitioner owned any completed railroad in said parish on the 31st of May, 1897, and that said Kansas City, Pittsburg' & Gulf Railway Company does not now and never has owned any railroad track of any character.in said parish-; that said assessment is irregular and illegal’in the following respects, viz.:

1. That no railroad track of petitioners was in existence on January 1, 1897 in said parish, and that said assessor “made no examination of the mortgage and conveyance records thereof, as to the title to, or quantity, or value of petitioner’s track therein.”

2. “ That said assessor did not in person or by deputy visit the domicile or any office of petitioner for the purpose of filling out any tax list of the property of petitioner;” and that it never had any notice, or opportunity to fill out a tax list showing the quantity and value thereof.

8. “ That said assessment list and estimate of the valuation of said property was not completed by said assessor until long after January 1, 1897, to-wit: August 17, 1897.”

4. “ That no assessment of petitioner’s railroad in said parish, pursuant to Act 92, approved July 12, 1888, had ever been reported to said assessor.”

The averment is then made that the tax collector and the parish of Vernon are threatening to seize and sell petitioner’s property for the purpose of enforcing the payment of said tax; and that unless restrained by injunction they will seize and sell the same.

On the foregoing allegations, the plaintiff prays that the tax collector and the parish of Vernon be cited and enjoined, that its injunction be maintained and perpetuated; and that it have judgment in its favor “ decreeing said tax to be illegal and void and of no effect.”

This suit was filed and the injunction granted on the 5th of March, 1898 — more than six months after the assessment roll had been completed, filed in the mortgage office, and a copy thereof had been delivered to the tax collector.

To this suit the parish assessor was not, at first, made a party defendant; but the president of the police jury was duly cited, and the tax collector accepted service and waived citation. The assessor was cited subsequently. The defendant, tax collector, by counsel, excepted to the jurisdiction of the District Court of the parish of Vernon to try and decide this suit; and he averred that the only court which can exercise jurisdiction over, or fender judgment in this cause, is that in which the parish of Sabine is situated, for the reason that the president of the Board of Commissioners, who is charged with the assessment of plaintiff’s property, resides therein.

He avers that the injunction herein is illegal and vexatious, and that defendants are “entitled to damages as attorney’s fees of ten per cent, on the amount of tax enjoined,” and he prays for judgment in the sum of two hundred and seventy-four dollars and twenty-eight cents against the plaintiff.

It seems that this plea was tried and overruled, and that fact is conceded in the argument, and it also appears from an admission in the record. For the defendant tax collector tendered a plea of no cause of action, and prefaced that plea by a reservation of all of his rights under his previous plea to the jurisdiction of the court,; and on that plea he renews his demand for attorney’s fees of ten per cent, on the amount of the tax enjoined.

But the defendant tax collector reserved no objection to the ruling of the court, and tendered no bill of exceptions thereto, and no issue was joined with either the assessor or the president of the police jury.

Reduced to a last analysis, the question for decision is no cause of action vel non, and it is to be determined alone and exclusively between the railway company and the tax collector.

.On the foregoing pleadings the contention of the defendant is that this is an attempt to have an assessment corrected for alleged formal defects which the plaintiff asserts to have existed in the preparation and confection of the assessment rolls, more than sfx months subsequent to their completion, and a certified copy thereof had been delivered to the tax collector preparatory to the collection of the taxes which had been extended thereon.

This theory of the defendant-is emphasized by the plaintiffs’ averment that the tax assessor had delivered the assessment roll to the! tax collector on the 17th of August, 1897, prior to the filing of this suit in March, 1898, and that because of his attempted collection of said tax by a threatened seizure and sale of its property, an injunction was necessary.

His contention is, that even considering this suit to be one for the correction of an assessment (but we are of opinion it is not), it came too late, and was not instituted against the proper parties; or in other words, that a suit haviug that object in view can not be properly and legally conducted against the tax collector.

The provisions of the revenue law applicable to this relief are as follows, viz,:

“That all taxpayers shall have the right to appear before the borad of assessors of the parish of Orleans between the first and twentieth of March of the year in which the assessment is made, and in other parishes before the board of reviewers on or before the -first'day of Nóvember of the year in which the assessment is made, as provided for in this act, during the session of said board, and be heard concerning the descriptipn of the property listed and the valuation of same as assessed, and they shall have the right of testing the correctness of their assessments before the courts of justice in any procedure which the Constitution and the laws may permit; but the action to test such correctness shall be instituted on or before the first day of November in the year in which the-assessment is made.” Section 27 of Act 98 of 1898.

And the contention of the defendant is that any proceeding intended to correct the assessment should have been filed prior to the first day of November in the year in which same was made, and that as the plaintiff has failed to observe that requirement of the law his suit is out of time.

Questions of this kind have been frequently before this court and similar revenue statutes have been repeatedly interpreted. The following decisions are pertinent and instructive, viz.: City of New Orleans vs. Canal Bank, 32 An. 157; Gay vs. Board of Assessors, 34 An. 370; Adler, Goldman & Co. vs. Board of Assessors, 37 An. 507; Shattuck & Hoffman vs. City, 39 An. 206; Oteri vs. Parker, Tax Collector, 42 An. 374; Factors and Traders Insurance Company vs. Levi, 42 An. 432.

Not only so, but the contention of the defendant is further to the effect that once the tax has been levied by the proper authority and by the parish assessor extended upon the assessment roll and the tax roll has been placed in the hands of the tax collector for the purpose of collecting the tax, the regularity and validity of the assessment can not be tested in a suit against the tax collector.

The case of Gaither vs. Green, Tax Collector, 40 An. 362, presents and decides that qu'estion squarely — the question being the constitutionality and legality of the five-mill district levee tax.

In the course of our opinion we said :

“It is equally clear to our minds that this is a collateral proceeding — a third opposition, coupled with an injunction against the enforcement of the tax, and wherein the tax collector is the sole defendant.
“ The law has confined the levy, assessment and collection of the special tax in question to three sets of officials:
“ 1. Its levy to the Board of Levee Commissioners.
“ 2. Its extension on the assessment roll to the parish assessor.
“3. Its collection to the State tax collector.
“ There is between their respective duties a line of demarcation that is well defined and clear.
“It is essential to the validity of the tax that proper and legal proceedings should be taken in its levy and ‘extension upon the assessment roll, because it is through the correct performance of the duties assigned that the tax is brought into existence. .But once in esse and the tax roll placed in the possession of the collector the levying and assessing officers cease to have any relation to the tax, .and are funeUts officio.
“ At this stage the legality of neither the levy nor assessment can be tested by either injunction or mandamus, directed against the collector alone.”

That decision is altogether appropriate to the present controversy and supports the contention of defendants as it appears in counsel’s brief:

‘ ‘ From the face of the petition it is clear that the tax roll is no ■longer in the hands of the assessor. He is without power to change it. From the moment of filing it in the clerk’s office his control is gone, and he has no more power over it than the coroner, of the parish. He has become functus officio.”

The argument of plaintiff’s counsel is to the effect that its petition disavows the ownership of the property taxed, and it can not, therefore, be taxed for its value. But the averment is that “it never owned any completed railroad ” — quite a different thing. Substantially plaintiff’s complaint is that when the assessment was made its road was in an incomplete condition, and consequently an assessment of it as a completed road was an erroneous assessment.

We are of the opinion that the judgment is correct in so far as it sustains the defendant’s plea of no cause of action; but we think it erroneous and illegal in at the same time awarding the defendant damages at ten per cent, on the amount of the tax enjoined.

The maintenance of the plea of no cause of action necessarily puts the case out of court in its entirety. It is true that the dissolution of plaintiiff’s injunction results; but the situation is different from that of an injunction having been dissolved on rule.

In so far as the judgment awards the defendant damages is con-cerned, we are of opinion that it must be amended and the damages' disallowed, with full reservation of the defendant’s right in that respect.

It is therefore ordered and decreed that the judgment appealed-from be amended by rejecting the defendant’s demand for damages;- and that, as thus amended, same be affirmed, the defendant’s right toclaim damages in some other proceedings be reserved, and that-he be taxed with coasts-of appeal.

Mr. Justice Blanchard takes no part in this decision.


author: Miller, J.

text:
    No. 12,627.
    Patrick W. Mulqueeney et als. vs. James Shaw et als.
    A stock subscription by which the corporation in the full exercise of its functions-was organized can not be repudiated by some of the shareholders, and the corporation thrown into the hands of a receiver, merely and only on the ground-taken by the dissatisfied shareholders that the subscription was illegal, the subscription having been approved by all 6f them, and the full amount of which the corporation retains.
    The appointment oí a receiver for a corporation will not be made with no allegations of mismanagement, improper application of funds or other acts of • corporate maladministration, and only on the general allegation of the shareholders seeking the appointment, that they apprehend exposure in the future, if the corporation is not wound up, to liabilities not contemplated when they became shareholders. High on Receivers, Secs. 17,11, 24, 2SS, 29S.
    APPEAL from the Civil District Court for the Parish of Orleans, King, J.

      Carroll & Carroll and A. E. Blaokmar for Plaintiffs, Appellants.

      Chrétien & Suthon for the Excelsior Co-operative Association, Limited, and James Shaw and others, Defendants and Appellees,

      Frank Zengel for Screwmen’s Benevolent Association, Intervenor,. Appellee.

      Joel E. Prowell for Mrs. Margaret Dieck, widow of James Palmer,- and Mrs. Elizabeth Regan, widow of James Duffy, Intervenors,Appellants.

      Argued and submitted March 9, 1898.
    Opinion handed down April 18, 1898.
    .Rehearing refused June 28, 1898.
   The opinion of the court was delivered by

Miller, J.

The plaintiffs appeal from the judgment against them •on their rule to appoint a receiver for the Excelsior Co-operative Association, and for an injunction to restrain any- further action of the officers of the association.

For many years the Serewmen’s Benevolent Association has existed in this city, incorporated in 1871, under the general law for the organization of charitable corporations. Revised Statutes, Sec. 677 et seq. In 1895 the Screwmen’s Association conceived it to be their interest to promote the formation of a body corporate and twenty-one parties, all members of the Screwmen’s Association, signed the act, incorporating them as the Excelsior Co-operative Association, with an authorized capital of ten thousand dollars, divided into shares of ten dollars each, the corporation to commence business when five thousand dollars of the capital was subscribed: the object of the new corporation was the execution of contracts for the loading and unloading of ships in this port, and we gather from the testimony, it was contemplated the work secured by the contracts of the Excelsior was to be performed by the members of the Screwmen’s Association. We find in the record a paper signed by the president of the Screwmen’s Benevolent Association, expressing its subscription to five hundred and fifty shares of the stock of the Excelsior; there are also entries in the books of that association stating its ownership of ten thousand dollars of the Excelsior, and it is put beyond all controversy that the ten thousand dollars was furnished with which the Excelsior has conducted its business, and it is in evidence that the dividends on the subscription have been paid and employment afforded by Means of the Excelsior to the screw-men as contemplated when the subscription was made; it further appears that when this suit was brought the Excelsior had on hand eleven thousand or twelve thousand dollars, owed no debts, save its stock liability to the Screwmen’s Aasociation and contemplated the continuance of its business.

In this condition the present suit was brought by some of the twenty- one parties who became subscribers to that number of shares of the Excelsior, praying that its affairs be put into the hands of a receiver, that the association be decreed not a corporation, and that its assets' be divided. The grounds of the petition are, that the subscriptions to-the capital stock were not obtained required as a condition precedent for going into th'e business of the corporation; that hence the association has no corporate capacity; that the petitioners only became aware recently of the illegality of the subscriptions, and of the fact the association had no corporate existence. The petition-further avers tha't the president named in the charter is unfit, the-grave misapprehension of law and fact under which, it is alleged,, the association commenced business, and the responsibilities of the petitioners, different, it is charged, from those claimed and intended, lead to the fears of petitioners of embarrassment and trouble in the future, and they assert their right to a division of the assets of the asspciation, and to the injunction and appointment of the receiver. The exception and answer negative the allegations in the petition ;• aver that the business of the association is prosperous, and, after-paying dividends, has on hand a cash surplus, besides implements; the suit is charged to have been brought in bad faith, from selfish-motives, arising from the failure of one of the plaintiffs to secure his re-election as secretary, and the respondents deny there is any occasion for the injunction, receiver or other relief sought by the petition. There is an intervention by the Screwmen’s Benevolent Association, averring its ownership of five hundred and fifty shares of the stock of the Excelsior Company, and the solvency and prosperous business of that company; that the plaintiffs participated in the organization and all other acts of the Excelsior Company, are estopped from seeking and have no interest to demand the relief claimed in the petition, and defendants deny there is any cause for the injunction or appointment of the receiver. On the rule to appoint the receiver and for the injunction the organization of the Excelsior Association, the subscriptions to its stock, the modes and results of its business, and its financial condition, owing no debts, with no creditor, and with cash on hand in excess of that debt, were developed iu the copious testimony we find in. the record, and resulted in the judgment from which plaintiffs appeal denying the relief prayed by them and affirming the legality of the defendant’s charter.

During the trial the plaintiffs excepted to the ruling of the court against questions propounded by plaintiffs to show that the president of the Excelsior Association was of drinking habits. It is claimed the testimony should have been received under the allegation in the petition that the president was unfit by reason of his health and habits. We do not think that on this general allegation the court could make any decree, and if there were acts of misconduct or mismanagement on his part there should have been the specification of the acts. On these applications for receivers the facts relied on for the relief should be distinctly and specifically set forth; ” and ¡ again, “ while fraudulent conduct or danger to the property is frequently the foundation for a receivership, it will not do to allege such fraud or information generally, and a bill containing only vague and general allegations presents no case for the appointment of a receiver.” High on Receivers, Sec. 17. The discussion of the other bills to the exclusion of questions touching the authority of the president of the Screwmen’s Benevolent Association to make the subscription is, in our view, useless. The books of that association, the testimony that the subscription was discussed at the corporate meetings, and the ineontestible fact the amount subscribed was furnished, used and recognized by the Excelsior, by entries on their books and dividends received by the Screwmen’s Association, remove the fact of the subscription and the authority by which it was made, whatever its effect, beyond the domain of controversy.

On the theory that the Excelsior Association is not a corporation, plaintiffs would be deemed simply owners in common of assets. On this view the usual remedies afforded by our Code for the division of property thus held must be deemed ample, without resort to the receivership, not granted even in chancery as between tenants in ¡ommon of personal property, except, at least, in special cases. Sigh on Receivers, Sec. 20.

The main ground of plaintiff’s suit is that the Excelsior has 10 corporate existence, because of the alleged invalidity of the ubscription to its stock by the Screwmen’s Association, and in his connection we are referred to the general rule, that one corpor.tion can not subscribe to the stock of another. The Serewmen’s Lssociation organized to assist its members, to that end was accusomed to rely on the investment of its surplus funds. The real purpose of the subscription was by means of the capital thereby Burnished the Excelsior, to secure dividend and the no less importnnt object, obtain employment for the Screwmen in executing the contracts of the Excelsior Association. Our attention has been called to the decision of our predecessors, that a number of corporations can not unite to form another. Factors and Traders Insurance Company vs. New Harbor Protection Company et als., 37 An. 233. There is no uniting in this case of two corporations. It admits of serious question whether a subscription by an organization of laborers to the stock of another corporation, created to secure contracts affording employment to laborers, and when the object of the subscription is to secure that employment for the laborers, members of the subscription corporation can be deemed ultra vires on its part. There are cases in which the subscription by one to the stock of another corporation is upheld, when the subscription contributes to the object for which the subscribing corporation is organized. Cook on Shareholders, Sec. 64, announces the general rule with its qualification. But irrespective of the question of the principle supposed to forbid this subscription, have these plaintiffs any basis to force a receivership and the winding up of the Excelsior, upon the other shareholders and on the Screwmen’s Association, with its large interest in the controversy before us resisting the plaintiffs’ demands? We find the subscription has resulted advantageously in dividends for the Serewmen’s Association and employment for its members. We perceive no mismanagement or losse of its funds proved, or even charged. The Excelsior Associatio has in its treasury, after paying the dividends to the Screwmen, funds more than adequate to pay the entire amount the Screwmen’ Association furnished. No complaint in respect to the subscriptio and the corporate capacity, of the Excelsior is made by any one save plaintiff, and the election for its officers resulting in the dis placement of one of the plaintiffs, quickly followed by the presen suit, is not without influence in appreciating the basis on which th plaintiffs call for the winding up of the corporation. Two of th plaintiffs have been officers of the corporation, all of them parbiei pated in its formation; all knew and approved of the subscriptio and according to the testimony have shared in the benefits derive from the Excelsior as a source of the dividend and of employme for the screwmen. While defects of a radical character in organi zing corporations may be deemed incapable of ratification, we d not think a subscription like that under consideration, and t corporate capacity resting in part on that subscription, can be repudiated by parties concurring in obtaining the subscription, and who, for a length of time, have recognized and affirmed the corporation they now attack, and attack with a view to a receivership sought by one of the plaintiffs of funds applicable to satisfy the claim if urged, of the Screwmen’s Association desiring no receivership and resisting plaintiffs’ demand. The intervention of that association we think increases the force of the estoppel urged against plaintiffs by the other shareholders. The ten thousand dol - lars was obtained on the pledge of the corporate capacity of the Excelsior Company and plaintiffs concurred in that pledge. We do not think plaintiffs are entitled to reverse their position to the prej - ■ udice of the Screwmeri’s Association by subjecting funds applicable to their claim to the expense of a receiver, with no function, if appointed, but to turn over to the receiver funds they are content and desirous shall remain in the present custody. In our opinion, both with respect to the other shareholders and the Screwmen’s Association, the plaintiffs are estopped from asserting the pretensions advanced in this suit.

In another aspect the plaintiffs’ suit for a receivership and injunction can not be maintained. They exhibit no wrong. In this connection it is impressive that they have not paid any part of their stock subscription. They allege they apprehend trouble in the future from engagements that may be formed in the future by the Excelsior Company for which the plaintiffs may .be held. The mere possibility of future injuries to the plaintiff seeking a receiver is not deemed sufficient to appoint receivers. With no allegations of mismanagement, misapplication or waste of the- funds in respect to which the receivership is claimed, we understand no appointment of receiver in this class of cases is made by the equity courts. High on Receivers, Secs. 17, 11, 14, 288, 293.

The whole case made, by the petition was developed on the trial of the rule to appoint the receiver. That and the injunction constituted the relief sought. The issue presented on the rule and the petition was the alleged right to have the corporation or association wound up because of the invalidity of the subscription and the resulting alleged want of corporate capacity. We find no reason for requiring another trial when the judgment on the rule disposes of the controversy and leaves no issue to be determined.

It is therefore ordered, adjudged and decreed that the judgment .of the lower court be affirmed with costs.