Conrad v. Prieur
Conrad v. Prieur
Opinion of the Court
This was an application to the Parish Court of New Orleans by F. B. Conrad, assignee of Thomas Banks, for a mandamus commanding the Recorder of Mortgages of the parish of Orleans, to raise certain mortgages on property of the bankrupt sold by the assignee, in order to give an unincumbered title to the purchasers. The petitioner represents, that amongst the surrendered property there were sundry valuable tracts of land which had been mortgaged by the bankrupt; that at the request of the first mortgagees on said property, he applied to the United States District Court for the Eastern District, sitting in bankruptcy, for an order authorizing the sale of the mortgaged premises, and decreeing the erasure of the mortgages recorded against them; that all the mortgagees holding liens upon the property were thereupon duly cited to oppose this application, if they saw fit so to do; that no opposition having been filed, a judgment supervened, decreeing the erasure of the mortgages, the sale of the property by the Marshal of the United States for this District, and the reservation to all interested parties, of their respective rights to the proceeds of the sale, when effected; that a sale having taken place under this decree, the assignee presented to the Recorder of Mortgages a copy of the judgment of the United States Court, and required him to erase the mortgages according to its te,nor, and to deliver to him a certificate showing the property to be free from all incumbrances, but that officer refused so to do, alleging that the judgment was invalid and of no legal force, or effect. After hearing the parties, the inferior Judge
The only question which this case presents is one of jurisdiction ; for if the District Court sitting in bankruptcy was competent to cite in the mortgage creditors, and make an order for the erasure of their mortgages', we cannot review its decision, or inquire into its correctness. It had occurred to me, that as the District Court has assumed jurisdiction, and has full authority to compel obedience to its decrees, the Judge below should perhaps have refused to interfere ; but, upon further reflection, I believe that a State court should not withhold the expression of its opinion, when it is legally called for by a State officer, either on his own account, if he wishes to shelter himself from responsibility, or at the instance of purchasers entertaining, as in this case, fears as to the security of their titles, by reason of the supposed want of jurisdiction in the court which ordered the sale. Besides, the Judge below, being of opinion that the District Court of the United States had jurisdiction over the subject matter, may well have considered it incumbent on him to compel the Recorder of Mortgages to fulfil an official duty by means of a mandamus, although the same result could perhaps have been obtained, by application to that court to enforce its decree. As to' the parties holding these mortgages, they have already been cited in the United States Court, and have had an opportunity of urging their objections, if they had any, to the erasure of their mortgages, but they have made none. The question is not, whether this erasure has. been rightfully ordered, but whether the District Court was competent to order it, and whether it has consequently become an official duty, on the part of the Recorder of Mortgages, to do the act demanded of him by the appellee.
The jurisdiction of the District Court, sitting in bankruptcy, is defined in the sixth and eighth sections of the bankrupt law. In the sixth section, it is declared, “ that the District Court, in every district, shall have jurisdiction in all matters and proceedings arising under this act,” “ the said jurisdiction to be exercised summarily, in the nature of summary proceedings, &c.“ and the jurisdiction hereby conferred on the District Court, shall extend to all cases and controversies in bankruptcy, arising between
It seems to be conceded, that the District Court of the United States is not without jurisdiction ratione materias, when creditors holding mortgages, or other liens, pome in voluntarily, and make themselves parties to the proceedings ; but it is urged, that they are not bound by the bankruptcy ; that they can stand out of it if they choose, and pursue their remedy without reference to such proceedings. An essential difference is believed to exist between
According to our laws, both the possession and the title of property subject to mortgages, whether conventional, legal, or judicial, remain in the debtor, and the creditors holding these several mortgages, are to be paid according to the dates of the registry of their liens in the office of the Recorder of Mortgages, or according to the date of the acts which give rise to a legal mortgage. Of these three kinds of mortgages, two of them, the judicial and the legal, are general, and affect each and every piece of immoveable property owned by the debtor. If the latter sells any por tion of his property, it passes into the hands of the purchaser subject to the amount of the mortgages recorded against the former owner, and the mortgagee can, by a hypothecary action, have the property seized and sold in the hands of the purchaser, unless the latter chooses to free the property by paying the debt. A mortgage, moreover, is, under our law, only an accessary to the principal obligation, and the extinction of the debt carries with it that of the mortgage. Civil Code, Book III, Title 22. As relates to the privileges recognized by our laws, they are most of them allowed only in view of insolvency, and can be exercised
The act of Congress makes- it the duty of the bankrupt, under the penalty of not obtaining his discharge, to place upon his schedule or inventory, all his property without any exception ; and from the date of the decree of bankruptcy, all such property is divested out of the bankrupt, and by force of the same decree, is vested in the assignee appointed by the court. All the property then mortgaged, or subject to privileges, becomes a part of the bankrupt’s estate, to be disposed of at such times, and in such manner as may be ordered by the court sitting in bankruptcy, (sec. 9, of the Bankrupt Law); while in England and in the other States of the Union, the equity or right of redemption alone, passes to, and vests in, the assignee. It is true, that according to the equity doctrine, the common law mortgage is considered a mere security for the debt, and only a chattel interest; yet it is a transfer of the property itself, as security for the debt, and a bill in equity is the only remedy of the mortgagor, after payment of the debt, if the mortgagee, having entered, upon the condition being broken, refuses to relinquish the possession. 17 Mass. Rep. 419. 3 lb. 560. It has been remarked by the appellant’s counsel, that though, in form, this contract at common law is a sale, it is, in substance, nothing else than a mortgage ; but it is that very form which makes all the difference, by vesting the legal title in the mortgagee. This mortgage has some analogy to the contract of sale, with a right of redemption, which is sometimes made in this State, by way of security for the loan of money to be returned within a given lime. This contract is also in substance a mort
This right which the mortgagees have in the property vested in the assignee, is evidenced under our law by an inscription, or
In corroboration of this view of the subject, the counsel for the assignee has called our attention to the last proviso of the second section of the bankrupt act. It is in these words : “ that nothing in this act contained shall be construed to annul, destroy, or impair any lawful rights of married women, or minors, or any liens, mortgages, or other securities on property, real or personal, which may be valid by the laws of the States respectively, and which are inconsistent with the provisions of the 2d and 5th sections of this act.” It is said, that although this proviso is general in its terms, it was inserted at'the instance of the Louisiana delegation in Congress, in view of the difficulties which would inevitably have attended the operation of the bankrupt law in this State, in consequence of the peculiar character of our privileges and mortgages. Its express object, it is contended, was to secure to the persons therein mentioned, and others similarly situated in Louisiana, the right of being paid out of the proceeds of the property subject to their privileges and mortgages, as they were under the State law, and therefore, to authorize every thing which was necessary to attain that end. Such appears to have been the construction given to this proviso of the law, by the United States District Court in this District. Its rules and regulations have been made in accordance with this construction. Mortgaged property, to an immense amount, has been sold under it, and the rights of the privileged and mortgage creditors have been allowed and
Concurring Opinion
I concur in opinion with my colleague, Judge Morphy, and conclude that the judgment of the Parish Court ought to be affirmed, with costs,
Martin, J., did not sit on the tria! of this case,
Concurring Opinion
For the reasons stated in the opinion read by Judge Morphy, and for those stated in an opinion which I have' prepared in the case of Clarke, assignee of Zabriskie v. Rosenda and another, ante, p. 27, I concur in the opinion, that the judgment of the Parish Court should be affirmed.
Dissenting Opinion
dissenting. I must content myself with expressing. my dissent, not having strength to develope, at any length, the reasons on which it is founded. My views, generally, in re lation to the late bankrupt law, are expressed at length in the case of Clarke, assignee, v. Rosenda and another, ante, p. 27. This case, it appears to me, presents a dilemma. Either the United States Court, sitting in bankruptcy, has,*or it has not, plenary jurisdiction over the whole subject of mortgages, and has a right-to decide on the rights of mortgagees. If it has, then it follows, that that court may order evidences of mortgages to be erased and may direct the Recorder, as a ministerial officer, to perform
Again : if we are to pronounce ourselves upon the right of second mortgagees, and upon the authority of the Recorder to efface from the record the evidence of their rights, then it must be done with proper parties before us — auditis audiendis. Who are the parties before us ? None other, as I understand it, than the assignee and the Recorder of Mortgages. None of the parties, whose rights are to be affected by this proceeding, are before us ; nor have they had an opportunity to be heard, by forming a contestatio litis. In the case of Gasquet v. Dimitry, we refused to order the Sheriff to erase the mortgage, without hearing the mortgagee. Our venerable senior, who does not sit in this case, delivered the opinion of the court in that, 6 La. 453,
Does the Recorder of Mortgages wish to shelter himself behind the authority of this court, he must bring with him those whose rights are to be affected by the act required to be done by him. Otherwise, it is clear the mortgagees would not be precluded, either by his acts, or even by the judgment of this court. The Recorder of Mortgages does not represent those whose mortgages are inscribed upon his register. If the mortgagees had been made parties in the Parish Court, they might have denied the existence of any judgment in the District Court of the United States against them. They might have shown, that the proceedings on the part of the first mortgagees were illegal and void, and that, consequently, their rights are not to be impaired. In fine, they might have placed their case in such a form before the court, claiming under the act of Congress to have their rights as mortgagees secured and protected, as, in the event of a judgment here, in the highest State court, against them, they might have prosecuted a writ of error to the Supreme Court of the United States. ■ Instead of that, what have we ? An assignee of a bankrupt, who asserts in his favor a judgment of the Bankrupt Court, and a Re
My opinion, therefore, is, that the judgment of the Parish Court should be reversed.
Judgment affirmed.
Reference
- Full Case Name
- F. B. Conrad, Assignee of Thomas Banks, a Bankrupt v. Denis Prieur, Recorder of Mortgages for the Parish of Orleans
- Cited By
- 3 cases
- Status
- Published