Hawkins v. McVae , 14 La. Ann. 339 ( 1859 )

Buchanan, J.

The plaintiff, bearer of a second mortgage, sues the defendant to have a prior mortgage erased and cancelled, on the ground that it has been extinguished by the act of the mortgagee. The property is in the hands of the mortgagor.

The first mortgage is one which was granted by John W. Hays and his wife Catharine Hays, on the 15th June, 1838, to the Clinton and Port Hudson Railroad Company, to secure a subscription by the mortgagors to the capital stock of the said corporation.

In 1852, John W. Hays was sued by the State of Louisiana, as a defaulting Tax Collector, and this property was seized in execution of that judgment. It was sold on twelve months credit, nominally to B. M. G. Brown ; but the real purchaser was Mrs. Catharine Hays, as we learn from the recitals of a subsequent conveyance of the property from Brown to Mrs. Hays.

It was admitted on trial, that the Clinton and Port Hudson Railroad Company “ mortgaged, and pledged, and subrogated the State of Louisiana, on the 19 th day of June, 1839, among others, to the mortgage of Hays and wife,” and it was agreed, “ that any copy of said act, embraced in appeals from this court, may bo used and referred to, if desired, by either party.”

Upon this admission, it is contended by plaintiff, that the State is the party who held the stock mortgage of Hays and wife, at the time of the sale under execution ; and that the State, having exercised the right, given it by Article G85 of the Code of Practice, of having the property sold to satisfy a debt of inferior rank to the said mortgage, has thereby released the mortgage. The legislative and judicial history of the Clinton and Port Hudson Railroad Company, is officially known to us; and the agreement above copied, made by the parties on trial, specially authorizes us to look into the records of other appeals, having reference to the subrogation of the State to the stock mortgages of this corporation.

In the case of tlie Gas Light Company v. Bennett, 6 An. 457, Judge Bost reviewed the legislation on the subject of the stock mortgages of the Clinton and Port Hudson Railroad Company. Those mortgages are shown by him, to be of two classes — the first, given for the stock subscribed under the amended charter enacted in 1834, — the second, for that subscribed under the Act of 1831. The first class of mortgages, is for the benefit'of the holders of bonds of the Company. The second, is the security of the State for reimbursement of a loan of $500,000, made by the State to the Company. ,

The mortgage of Hays and wife, belongs to the second of these two classes ; and the State, in virtue of its subrogation, had the right to pursue the foreclosure of this mortgage, for contribution to the objects of the contract; but this could only be done through the liquidator appointed in pursuance of law, to settle the affairs of the Company. See the case of Bennett in 6 An. already quoted; and that of the Gas Light Company v. Haynes, 7 An. 114. For the mortgage of Hays and wife was connected with, and contingent upon, the general administrar tion of the affairs of this insolvent corporation, and cannot be confounded with the other personal obligation of one of the mortgagors, John W. Hays, as Collector of Taxes; with which obligation the liquidator had nothing to do, its enforcement being the duty of a distinct officer. Neither the process verbal of adjudication, nor the Sheriff’s deed to Brown are before us ; being omitted from the record by the agreement of counsel. But it is alleged in argument by appellant, that the sale was made subject to the stock mortgage on the property sold. This is a matter which might be of importance, had the property been adjudicated in reality, to a third person ; and were it now in the hands of a third possessor. But Mrs. Hays, the real adjudicatee, and actual possessor, is herself a mortgagor, and bound, in solido, for the debt secured by the mortgage. And as to the plaintiff, we are bound to presume notice, at the date of Mill’s mortgage, of the existence of the stock mortgage. For in the mortgage from Mrs. Hays to Mills, the production of a certificate of mortgages by the notary, is especially waived. This waiver we hold to be equivalent to an acknowledgment of notice of the stock mortgage then extant upon the records of the parish.

Judgment of the District Court reversed ; and judgment for defendant, with costs in both courts.

Voorhies, J., absent. Merrick, C. J., took no part in this decision, having been of counsel on the the first series of bonds.