Relators, as judgment creditors, instituted this suit against Llano del Rio Company *Page 625 of Nevada, a Nevada corporation, operating in the parish of Vernon, this state, for the purpose of having the corporation placed in the hands of a receiver, due to alleged mismanagement and fraudulent and dishonest operations which dissipated and jeopardized the assets and property of the company to the prejudice and detriment of the creditors and stockholders thereof.
The company pleaded in bar an order of the moratorium commissioner issued by virtue of the provisions of Act No. 2 of the Second Extra Session of the Legislature of Louisiana of 1934, suspending all laws or parts of laws relative to the enforcement of the debts due by the corporation.
The district judge held that Act No. 2 of the Second Extra Session of the Legislature of 1934, generally known as "The Moratorium Statute," was applicable for the protection of debtor corporation, and that an order of the moratorium commissioner suspending all laws or parts of laws of this state relative to the enforcement of the debts due by the corporation prevented further proceedings by the judgment creditors seeking to have the debtor corporation placed in the hands of a receiver, and refused to proceed further with the case. Relators then applied to this court for writs of certiorari and mandamus, which were granted, and the case is now before us for review.
The statute in question is emergency legislation for the purpose of protecting *Page 626 debtors from the enforcement of their debts through judicial proceedings, seizure, and sale, due to the fact that property sold at public auction would not bring a fair price on account of the general stagnation of business.
Section 1 of the statute reads, in part, as follows:
"This Act, however, shall extend to any laws of this Staterelative to the enforcement of any debt due any national banking corporation or any conservator, receiver or liquidator thereof, and to laws relating to the enforcement of paving liens issued by municipal corporations." (Italics ours.)
The language of the statute in other sections is general and broad enough to include debts due by corporations, for instance, sections 5 and 14 read:
"Section 5. That where proceedings have been commenced beforeany court of this State to enforce the payment or collection ofany debt (as herein defined), public or private, or forenforcement or foreclosure of any lien, privilege, or mortgagesecuring the same, the Debt Moratorium Commissioner shall have jurisdiction thereof under Section 4 of this Act; and the debtor shall have the right for relief in any and all cases, any provisions in the evidence of the indebtedness or the terms of the contract to the contrary notwithstanding, and upon the filingin said court of the order or judgment of the Debt Moratorium Commissioner, all orders, *Page 627 decrees or judgments of said court and all laws or parts of lawsauthorizing such proceeding in said court shall be suspendedduring the period stipulated by the Debt Moratorium Commissionerin said order." (Italics ours.)
"Section 14. The term `debt' as herein used shall be construed to include any evidence of indebtedness whatsoever, and any and all liens, privileges, or mortgages which might secure the payment of the same, including the vendor's lien, and conventional mortgages, judgments and legal or judicialmortgages, except bonds of the State or of any political subdivision or municipality."
See, also, section 4.
It is our opinion that a corporation whose creditor is seeking to enforce his claim may avail itself of the benefits of the moratorium statute, and the commissioner, after proper hearing, is authorized to issue an order or judgment in favor of the debtor corporation, suspending the laws of this state for the enforcement of the debt.
Relator contends, with reference to the second ground of the judgment, that the court erred in not appointing a receiver to take over all of the corporation's property and affairs, and administer the same during the period of moratorium, for the purpose of conserving them for the benefit of the creditors and stockholders, but not for the purpose of having the assets of the corporation sold at public sale and the corporation liquidated. *Page 628
The district judge, in his return, states: "That your respondent herein did not dismiss the suit, but did enter an order suspending the same * * * until the period of the moratorium had expired (March 14, 1936) * * *.
"Until the constitutionality of the Moratorium Law of Louisiana has been successfuly attacked, it is the duty of your respondent to recognize it.
"* * * If the relators in this matter felt aggrieved by the decree of the Moratorium Commissioner, they should have appealed to the courts for a review and modification of the order, as prescribed in the Moratorium Act."
The record shows that relators did not appeal from the commissioner's judgment granting the suspension in favor of the debtor.
The appointment of a receiver places the property of the debtor corporation in actual custodia legis during the period of the receivership. It is one of the processes of law designed for the purpose of enforcing, through judicial proceedings, the payment of debts due by a corporation.
The statute clearly shows that the law-makers wanted to give the debtor a respite from harassment by his creditors for a reasonable time and to maintain him in possession of his property. Under relators' theory, the debtor corporation would be deprived of its property, and this would be equivalent to denying it the benefits *Page 629 of the statute, for without its property and the administration of its affairs, the corporation would be without any means of earning money with which to pay the creditors. Furthermore, placing the corporation in the hands of a receiver means additional expense in the form of fees, costs of court, etc. There is no doubt that under the language of sections 4, 5, and 14 the rights of a judgment creditor are suspended by virtue of the decree of the moratorium commissioner. Therefore, our learned brother below properly held that he was without jurisdiction to seize the property or place it in custodia legis and thereby deprive the debtor of the use and enjoyment of the property during the moratorium period.
Counsel for relators complain that during that period of time the officers of the company will fraudulently dissipate and alienate the assets of the corporation so that the creditors will not receive anything. The answer to that argument is that relators' remedy was to appeal from the order granting the moratorium, if they were dissatisfied, as was their right under section 8 of the statute.
Relators had a further remedy, as provided in section 7, which reads as follows:
"Upon the application of either creditor or debtor prior to the expiration of any suspension granted under this act and upon presentation of evidence that the terms fixed by the Debt Moratorium Commissioner are no longer just and reasonable, *Page 630 the Commissioner may revise and alter said terms, in such manneras the changed circumstances and conditions may require." (Italics ours.)
We conclude that the trial court was correct in refusing to proceed further with the appointment of a receiver.
For the reasons assigned, the rule to show cause is vacated, the writs recalled, and the judgment of the district court affirmed, at relators' costs.
O'NIELL, C.J., dissents.