John Calder & Co. v. Creditors , 44 La. Ann. 454 ( 1892 )

The opinion of the court was delivered by

Fenner, J.

The Whitney National Bank is a creditor of D. R. •Oalder for $20,000, secured by first mortgage on the Orange Grove plantation. After fruitless efforts by the insolvent and the bank to effect a private sale of the plantation, the bank sued out executory process in the Civil District Court of this parish, under which the plantation was duly seized and advertised for sale to take place on March 19, 1892.

On the 15th of February, 1892, Oalder made, in the proceeding now before us, a cession of his property under the State insolvent law. Provisional syndics were duly appointed and qualified.

Thereupon the bank intervened in the insolvent proceedings, and, representing the necessities and circumstances of the case as indicated in the agreed statement of facts, which we reproduce further on, they took a rale upon the provisional syndics to show cause why the court should not make its order allowing the sale of the plantation to proceed UDder the order of seizure and sale as advertised, under the condition that the proceeds should be paid over to the syndics, and held by them as funds of the insolvency subject to the same mortgages resting on the plantation, and to be distributed by them according to law. The syndics appeared and showed cause against the rule ón two grounds, viz.:

1. That, under the law, the court is without authority or power to grant the relief demanded.

2. That no legal order for the sale of the property referred to in said rule can be granted until a definitive syndic is elected herein, and the cession made by the insolvents accepted by their creditors.

The case was submitted to the court under the following statement of facts:

“ 1. The Whitney National Bank of New Orleans held and owned, and still holds and owns, the note of D. R. Oalder, one of the above named insolvents, for $20,000, dated March 80, 1889, payable one year from date, and payment extended to January 1, 1891.

“ 2. The said above described note was secured by first mortgage on the Orange Grove plantation, in Lafourche parish, Louisiana, owned by said D. R. Oalder, before H. N. Ooulon, notary public in said parish of Lafourche, and duly recorded; said mortgage contains the pací de non alienando.

“8. On December 26, 1891, the said Whitney National Bank sued' out executory process on above mentioned note and act of mortgage, in the suit entitled ‘ Whitney National Bank vs. D. R. Oalder,’’ No. 84,586 of the docket of the Civil District Court for the. parish of Orleans, in which said parish said D. R. Oalder was resident and' domiciled at the time.

“4. In said proceedings, after due notices and delays, the writ of' seizure and sale issued and was placed in the hands of the sheriff of Lafourche parish for execution, and thereunder, after due notices and delays, the said sheriff seized, and then advertised for sale, according to law, the said Orange Grove plantation.

“5. After the issuance of said writ and the seizure of said plantation, as above recited, the said John Calder & Co. and the said D. R. Oalder filed their petition making a cession of their property to their creditors, under the insolvent laws of Louisiana, in the proceedings hereinabove entitled.

“ 6. The insolvents surrendered as part of their assets seven sugar plantations under cultivation, one of which was the said Orange Grove plantation.

“ 7. The only funds surrendered by the insolvents, or since received by the provisional syndics, are $7000, part of the proceeds of the crop of 1891, made on said sugar plantations, or on some of them, and now applicable to the privileged or ordinary creditors of the insolvents.

“ 8. It will cost about $1500 a month to cultivate and keep up the Orange Grove plantation from now until July, 1892.

“9. If said Orange Grove plantation is not so cultivated and kept up, it will rapidly and largely deteriorate in value; the drainage will become obstructed with vegetation and earth; the labor will leave the place; the crop will be lost, and a heavy expenditure of money will be necessitated to restore the plantation to its present, earning capacity and value, and in consequence of such deterioration the plantation will sell for much less than could be obtained for it now.

“ 10. The opinion of persons who own or deal with sugar plantations is that they will not sell as advantageously later in the season as they would now; that while the plantation might sell for a little more later on, it would not, in all probability, sell for as much more as would have been expended in cultivating and keeping it up. And if, in consequence of an unfavorable season, too much rain or too little, a crevasse or visitation of worms, the crop did not look well, the plantation would probably sell for much less than it would bring now.

“ 11. The syndics have not sufficient funds in the insolvency to cultivate and keep up all the plantations surrendered, even if they are permitted to use all the funds in the insolvency for that purpose. If they undertake to cultivate the places, they will be compelled to borrow money for that purpose; and if the plantations should not find a purchaser When offered for sale, then the syndics will be compelled to borrow largely in order to complete the crop and get back the sums so borrowed.

“ 12. The said Orange Grove plantation was offered for sale nearly six weeks preceding the cession of property herein, and the highest price offered in that time did not equal the amount of the mortgage resting on said plantation.

“13. The meeting of creditors for the election of a syndic will open in this case on March 21, 1892.

“14. If the Whitney National Bank is permitted to spll under its writ, as demanded in its rule, it is willing to advance the funds necessary to run the plantation until the date of the sale; and the provisional syndics are of the opinion that if such sale can be legally allowed by the court, it will be greatly to the interest of all concerned.

“Horace E. Upton and H. L. Lazarus,

“ Attorneys for Prov. Syndics.

“ White, Parlangb & Saunders,

“ Attorneys for Whitney National Bank.”

After hearing, judgment was rendered making the rule absolute and granting the order as prayed for, from which the provisional syndics prosecute the present appeal.

The ease really presents no issue, except the issues of law raised on the pleadings, viz.: to-wit: (1) whether, in any case, the court has power to order the sale of property surrendered before the election of a definitive syndic, and (2) whether it had authority to make the particular order here granted.

If the court had the authority to order the sale, the statement of facts exhibits conclusively a proper case for it's exercise. We deal with the substance, not the form of things. It is not of the slightest consequence whether the order is applied for by the bank or by the provisional syndics. Both were before the court; both submitted the question to the court; both agreed upon the facts which rendered the sale necessary; and the syndics expressly told the court that they were “ of the opinion that if such sale can be legally allowed by the court, it will be greatly to the interest of all concerned.”

Their counsel now say in their brief: “ The provisional syndics are not before the court urging that the sale of the mortgaged plantation was a conservatory act necessary for its preservation and safe keeping.” We can give no heed to such a statement. They were before the court upon an agreed statement of facts, showing that the sale of property was a conservatory act necessary to preserve the property from great deterioration in value, and advising the court that, if it could be legally done, the sale should be ordered in the interest of all concerned.

We can not permit them, in this court, to impugn the judgment of the court below on any other question than the one submitted, of judicial authority vel non.

It is equally insubstantial to say that this sale was made in a proceeding conducted against the debtor, and under order granted in a proceeding different from the cession, and which had been stayed by the latter.

The sale was really made under and by authority of the order here complained of, issued by the court in the insolvent proceedings. The bank asserted no pretension of right to proceed with the sale under the original order. It acknowledged the paramount authority of the insolvent court, and applied for its order as the warrant under which the sale should be made and according to which the funds realized were to be held, controlled and distributed by that tribunal. The case differs, in no respect, from what it would have been had the court rendered an independent order of sale without reference to the pending foreclosure proceeding. It prejudiced no right and was a wise exercise of discretion in the interest of economy, to allow the sale to proceed under the pending advertisement, if it was legal to make the sale at all.

It was, moreover, a substantial compliance with the provisions of the law under which suits against the insolvent do not abate, but are only stayed by the' cession, and which require further proceedings therein to be' conducted before and under the authority of the insolvent court. O. P., Art. 165, No. 3; Rev. St., Sec. 1816; State ex rel. Cohen vs. Judge, 41 An. 41.

These formal objections being thus eliminated, the sole question remaining is whether or not the law vests the insolvent court with authority, in any case, to ordei the sale of assets surrendered prior to the meeting of creditors and the choice of a definitive syndic.

It can not be denied that the general rule prescribed by our insolvent laws requires that the property surrendered shall be held intact during the pendency of the proceedings for the election of a syndic, and that provisional syndics, when appointed, exercise, ordinarily, only powers of administration and must hold and deliver to the definitive syndic, when elected, all the assets which have been received by them. Such are the provisions of the law enforced by uniform jurisprudence. Rev. Stat., Secs. 1793, 1794, 1812; Pitcher vs. Creditors, 40 An. 784; Spears vs. Creditors, Id. 650; Barkley vs. Creditors, 11 Rob. 30.

But the law-maker could not close his eyes to the fact that during the considerable delays that might intervene before the appointment of a definitive syndic, sometimes extending over many months, an inflexible adherence to this rule might impair and even utterly destroy the value of some of the surrendered assets. Hence he wisely invested provisional syndics with the power of “ performing all the conservatory acts which may be necessary, as well for the interest of the insolvent debtor as for that of the mass of creditors.” Rev. St. 1793.

It is, to our minds, self-evident that these powers embrace the power of sale when that is necessary for the conservation of the property or its value. Even in cases of attachment the law wisely provides that property attached, if “ of a perishable nature, and subject to be lost or deteriorated during the pendency of the suit,” may be sold pendente lite.

The judge, before whom the cession is pending, is vested with the discretion to determine what are such conservatory acts as are necessary to preserve the property or its value for the interest of all concerned.

It certainly requires a clear case of necessity to justify the sale of immovable property as a conservatory act.

But no one can read the statement of agreed facts without perceiving that it presents the strongest possible case. The syndics themselves, who are the only appellants, unreservedly conceded the necessity of the sale in order to prevent serious deterioration in value, and that it would be ‘ ‘ greatly to the interest of ail concerned. ’ ’ What was the judge todo? Was he to sit idly and permit the plantation to go to waste and ruin, sacrificing the whole benefit of the plante.d crops? Or was he to embark the provisional syndics in the hazardous enterprise of borrowing large sums of money to run seven sugar plantations? If not, there was no other alternative but to order the sale to proceed, and, in so doing, we think he wisely exercised a legal discretion.

Judgment affirmed.