R. M. Walmsley & Co. v. Resweber

On Rehearing.

Breaux, J.

An elaborately prepared brief is presented by the plaintiffs for our consideration, in support of our decree. Intervenors, on the other hand, in an earnest brief, argue that, in the main, our decree is erroneous and should be reversed and set aside in part, at least. We deem it necessary to reconsider the questions presented.

*531Before taking up these questions for decision, we will dispose of a matter we no longer consider a part of the controversy between plaintiffs and intervenors, for the reason that counsel for the intervenors, to some extent at least, recognize the legality of our decree. In the first brief filed by counsel for intervenors, after our decision had been handed down, said counsel concede that if plaintiffs held as transferees in good faith before maturity, the notes are not subject to the equities and claims set forth in their pleadings. They admit that two of the notes were transferred before maturity by Eournet and Delahoussaye, first holders, to Walmsley & Co., second holders.

In the second brief, counsel declare that if plaintiff held before maturity in good faith, no inquiry could be made with the view of defeating their rights, and they then aver emphatically that two of their notes of five hundred dollars each were transferred by Eournet and Delahoussaye, original transferrees, before maturity, and that this firm was the holder in good faith before maturity.

The position of intervenors regarding these two notes leaves very little to decide. As to these two notes, they are committed to the correctness of commercial law, under which it is held, “if the first endorsee has a right of action by being a bona fide transferee without notice before maturity, he could transfer a perfect title as well after as prior to the maturity of the note.” It follows that, as to these two notes, our decree must remain undisturbed.

We take up the remaining questions arising out of the transfer of four of these notes after maturity, also secured by mortgage. As to those four notes, the intervenors who hold the mortgages second in rank, who are third persons, have the right to avail themselves of any defense against the plaintiffs’ claim. They, as relates to their mortgage, stand in the shoes of their pommon mortgagor, Eesweber, and it follows that they have a right of action to compel plaintiffs to limit their claim to the amount properly due them. Plaintiffs, who hold from Eournet and Delahoussaye, cannot sustain their right to a claim of more than Eournet and Delahoussaye had at the time that they transferred or attempted to transfer their mortgage to plaintiffs. No one can transfer greater right than he himself has. Nemo plus juris ad alienum transferre potest, quam ipse habet. (Coke, Litt 309 b) Dig. 50, 17, 120. The transferee of a mortgage has no greater right than his transferrer had at the date of the transfer.. He only acquires the rights of the mortgagees. Schmidt vs. Frey, 8 Rob. 435. We repeat, plaintiffs can only acquire *532such rights as their transferrer had. The original mortgagees, Eournet and Delahoussaye, unquestionably were creditors of the mortgagor for a small amount at the date the mortgage was executed and at the time they transferred their claim to plaintiffs. To that extent they, Walmsley & Co., are subrogated to the rights of those mortgagees.

In order to make the position clear, we state here that on the 25th of March, 1892, Jules A. Resweber executed the act of mortgage on which Walmsley & Co. brought this suit. On the 29th of June of the same year, Jules A. Resweber executed an act of mortgage on which Sentell & Co. rest their claim.

In 1894, the first mortgage, that on which Walmsley & Co. brought their suit, was transferred to them, Walmsley & Co., by Fournet and Delahoussaye. It results that the Walmsley mortgage only had consideration (save as to the amounts admitted to be due by Resweber and Eournet & Co.) after the Sentell mortgage had been executed. Moreover, as to the consideration, the Walmsley mortgage contains the declaration that it was executed to secure the payment of the amount due at the time the mortgage was executed, that is the 25th of March, 1892. A mortgage containing such) a declaration, plaintiffs contend, secures as against a third person advances to Toe. made. We do not find it possible to sustain that view. A mortgage may be executed for any debt pour auiuri, conditional, and even for future debt, but it must be so stipulated. Instead of such stipulation, Resweber retained four of the notes in his possession, and while he had them in his possession, he executed a mortgage in favor of Sentell & Co., intervenors. After he had executed this mortgage in favor of Sentell & Co., it was no longer possible for him to give validity to a mortgage to the prejudice of third persons. To illustrate, A executes a mortgage in favor of B to secure the payment of six notes of five hundred dollars each. He delivers two of the notes to B and retains the four others in his own possession. Some time after, he executes a mortgage in favor of C. He cannot, after he has executed this mortgage in favor of 0, place the four notes in circulation to the prejudice of C’s mortgage. This'would be giving effect to a potestative condition in a manner the law never contemplated as possible. “Every obligation is null that has been contracted on a potestative condition on the part of him who binds himself.” O. O. 2034. We think that the following, which we translate •from Pothier, has direct bearing: “In that case, that is in case the mortgage creditor consents to a transfer of his mortgage as a security *533for another debt to another creditor, the first creditor becomes the last, but he becomes the last for the reason that the preference that he accords to the transference must not interfere with the rights of intermediate mortgagees.” (Dupin.) Oeuvres de Pothier, Vol. 10, p. 849. The following is the principle laid down in one of the articles of the Oivil Code (3293) : “But the right of mortgage, in this case, shall only be realized in so far as the promise shall be carried into effect by the person making it” — that is, so far as the transferring mortgagee has acquired a right.

Here let us concede for a moment that the original mortgagee had promised to make advances to the mortgagor, although the act of mortgage is absolutely silent on that point. That right was never transferred to the plaintiffs because "neither the agreement between the plaintiffs and their transferrers nor the act of mortgage contains any reference to any future obligation of the mortgagor growing out of the advances with which he was to be favored.

There may have been verbal stipulations in that connection between the original mortgagees and the mortgagor, but nothing is in writing on the subject. If there were verbal stipulations, they cannot be of any effect, for they were not made in compliance with the articles of the Code requiring written evidence of a mortgage. O. C. 3305. The stipulations of the act of mortgage in question do not refer to any advances to be made to any one. It is absolutely silent on that point. In Flower and King vs. O’Bannon, 43 Ann. 1047, this court said: “The mortgage was not given to secure advances generally or to secure any-resulting balance of account without- limitation as to time. Its terms explicitly declare that it is given to secure the sum of $2500 for money advanced and acceptances made and to be made during the.present year. Plaintiffs seem to consider that the present year means the year running from the date of the mortgage, but such is not a natural construction of the words in their ordinary use, which obviously suggest the year 1887; and this is confirmed by the fact that the notes given to represent the debt matured respectively on December 1st, 1887, aud January 1st, 1888.

“We cannot see our way clear to holding that this mortgage was intended to secure or did secure any advances or acceptances not made during the year 1887 or any balance of account beyond that existing on the last day of the year.”

We must look for the obligations of the mortgage in the act itself; *534to extend them beyond the plain terms of the act, on evidence such as that here suggested, would be to create a mortgage by parol or by implication, in violation of the articles of the Code which are cited supra.

True it is that between mortgagor and mortgagee, a mortgage may be executed for advances to be made and it may be that as between them, although the mortgage does not contain the stipulation that it should regarding future advances, it may yet be construed to embrace them as a consideration; but as between a transferee of a mortgage and a third person, the former cannot establish by parol a consideration not even hinted at in the act of mortgage or in any writing.

It is ordered, adjudged, and decreed that the judgment appealed from be affirmed to the extent that it decrees judgment in favor of plaintiffs for the sum of three thousand dollars.

It is further ordered, adjudged, and decreed that it be amended and that instead of interest as heretofore allowed, plaintiffs recover interest-thereon at the rate of eight per cení per annum from December 15th, 1894, subject to a credit- of nine hundred and seventy-three and 22-100 dollars.

It is further ordered, adjudged, and decreed that the mortgage executed by J. A. Résweber in favor of Fournet and Delahoussaye on the 21st day of February, 1892, and afterwards transferred in pledge by Fournet and Delahoussaye to R. M. Walmsley & Co., is a valid, mortgage to the extent that it secures the payment' of the two first notes and the costs of the District Court, and it is further ordered and decreed that the property described and mortgaged to secure the full and entire payment of the said two notes, interest, and costs be seized and sold, and that the proceeds thereof (to the extent necessary) be applied to the payment of the said two notes, interest, and costs.

It is further ordered, adjudged, and decreed that the judgment appealed from is annulled, avoided, and reversed in so far as it does not recognize plaintiffs’’ right to the said two notes and mortgage, and in all other respects that it does not conform with this judgment.

It is further ordered, adjudged, and decreed that the mortgage executed to secure the four other notes described in the act of mortgage 'is of no effect against the mortgage of intervenors which primes, under this decree, the mortgage of Walmsley & Co.j but between Walmsley & Co. and Resweber, the former’s claim and mortgage remain unchanged.

It is further ordered that the intervention of G. W. Sentell & Co. is sustained to the extent that they claim preference to the amount rep*535resented by the four last notes. Their rights under their mortgage are reserved to them, to-wit, the intervenors.

It is further ordered that defendant pay the costs of intervention in this case be reinstated only to the extent that it recognizes plaintiffs’ right to recover on the mortgage notes to the amount of one thousand dollars, interest and costs. In other respects, it is not reinstated, except as herein mentioned.

It is further ordered, adjudged, and decreed that our former decree in the lower court and that intervenors pay the costs of appeal.

Monroe, J., and Provosty, J., concur inthe decree; Provosty, J., handing down a separate opinion. Nioholls, O. J., and Blanchard, J., dissented in part; Blanchard, J., handing down a separate opinion, in which Nioholls, C. J., concurs.