Denny v. Jefferson Const. Co.

The First National Bank of Miami obtained a judgment in this state making executory a judgment rendered in the state of Florida against the defendant company for $2,730.45.

The judgment in this state was signed December 11, 1919. An execution was issued, or was about to be issued, when the defendant obtained an injunction on an allegation that the judgment had been paid.

The injunction in due course was dissolved with attorney's fees and interest taxed against the defendant and the surety on the injunction bond.

This judgment, together with the original judgment, was placed of record in the mortgage office on April 2, 1923, and on the same day a suspensive appeal was obtained and perfected from the judgment dissolving the injunction. There was no appeal from the original judgment. The judgment dissolving the injunction was affirmed by this court on October 5, 1926. 162 La. 47,110 So. 84.

On April 15, 1924, the Jefferson Construction Company purchased certain real estate in this city in part payment of which the purchaser gave its several notes aggregating the sum of $12,000. The act of purchase and mortgage were recorded on the day of execution. On the same day the construction company executed a second mortgage in favor of Arthur Dumaine to secure a note for $1,500, payable six years after date.

On February 10, 1926, there was recorded against the property referred to a material and builders' lien in favor of the Hibernia Sheet Metal Works for $498.45.

Thereafter, on April 13, 1926, the construction company executed a third mortgage on the property in favor of Walter F. Marcus to secure a demand note payable to his own order for $8,500.

In June, 1926, the mortgaged property was sold in foreclosure of the mortgage and vendor's privilege securing the notes given as part of the purchase price. The balance due on said purchase price was $9,116.48.

The property was sold for $13,500.

Thereupon the sheriff took a rule on the creditors herein named, and certain other creditors who held mortgages on the property recorded subsequent to those mentioned, to show cause why all of such mortgages and liens should not be canceled and the several creditors referred to the proceeds of the sale and that the proceeds be distributed among the creditors according to the rank of their respective claims.

On a trial of that rule, the balance due on the purchase price of the property represented by notes held by the plaintiff, the lien in favor of the Hibernia Sheet Metal Works, the mortgage in favor of Dumaine for $1,500, and the one in favor of Walter F. Marcus for $8,500, were recognized as superior in rank to the judgment in favor of the Miami bank.

As the proceeds of the sale were insufficient to pay all of the claims mentioned, the bank obtained nothing on its judgment, and hence this appeal.

It is conceded that the amount due on the material lien and the balance due on the purchase price of the property were properly ranked as superior to the judicial mortgage of the Miami bank.

The contest is over the balance of the proceeds of sale, and is between the said bank and the holders of the mortgage notes for $1,500 and $8,500.

It is to be observed that the purchase of the property by the construction company, the recordation of the material lien, the execution and recordation of the two last-mentioned conventional mortgages, were all subsequent in date to the recordation of the judgment in favor of the bank against the construction company in the mortgage book.

It is likewise to be observed that the sale of the property under foreclosure proceedings and the judgment ranking the various claims and ordering a distribution of the proceeds of the sale, took place during the pendency in this court of the suspensive appeal from the judgment dissolving the injunction and before that judgment was affirmed by this court.

It will be seen from the foregoing statement of facts that the question presented is, not whether a judicial mortgage takes precedence over an ordinary conventional mortgage recorded subsequent to the recordation of the judicial mortgage, for that goes without saying, but whether any judicial mortgage results at all to the prejudice of third parties, from a judgment recorded in the mortgage office during the pendency of a suspensive appeal.

It is contended on the part of the appellees that the record of the judgment of the bank was in violation of the injunction which had been maintained in force by the suspensive appeal, and that such recordation did not and could not have the effect of creating a judicial mortgage on the property against the parties acquiring the rights on the property during the suspensive appeal.

The precise question here presented has never been directly passed upon by this court so far as we are advised.

In the case of Dannenmann Charlton v. Charlton, 113 La. 283, 36 So. 968, the judgment appealed from was recorded after a suspensive appeal had been perfected, and on rule the recordation was ordered canceled.

In that case the court said:

"While judicial mortgages may be inscribed, as heretofore, in the office of the recorder of mortgages, prior to the suspensive appeal, the effect of such inscription prior to such an appeal is left open for future consideration, should the question come before us.

"An inscription of a judgment after a suspensive appeal has been taken and perfected trenches upon the suspensive appeal and the jurisdiction of this court, which requires that everything in the case should remain in abeyance from the time the suspensive appeal has been taken."

The question came before the court again in Cluseau v. Wagner,126 La. 375, 52 So. 547, in which the inscription of the judgment had been made before the suspensive appeal was perfected, the appeal being so perfected within ten days from date of judgment, and the court ordered the cancellation:

"If it [judgment] be inscribed, and thereafter a suspensive appeal is taken, and a valid and solvent bond is furnished, and all that is necessary has been done to secure a suspensive appeal, persons in interest can then have the inscription canceled and erased, at the cost of the judgment creditor at whose instance the judgment was recorded."

And again in Daly v. Brock, 133 La. 752, 63 So. 318, it was said, quoting from syllabus:

"Where, pending the delay for a suspensive appeal, a judgment, appealable to this court, is inscribed in the mortgage office, and the party cast thereafter appeals, the questions of his right to have the inscription canceled and of the jurisdiction of this court to order the cancellation are no longer open."

In State ex rel. Macheca v. Dunn, 148 La. 460, 87 So. 236, this court said:

"The recording of a judgment on the mortgage record, so as to create a judicial mortgage, is to that extent an execution of the judgment.

"A judgment cannot be effectively executed, even to the extent of recording it on the mortgage record, pending a suspensive appeal, or until the judgment has become final and executory.

"A suit to cancel and erase from the mortgage records the inscription or record of a judgment, on the ground that the judgment is not executory, is merely a suit to prevent, to that extent, the execution of the judgment."

In all of the cases cited and quoted from it appears that the application to have the judgment canceled was made during the pendency of the appeal, either by rule or by mandamus, and it is argued on behalf of the appellant that such a proceeding should have been taken in this case, and as it was not taken, the registry of the judgment, though prematurely made, became effective as creating a judicial mortgage.

We are of the opinion, however, that the registry of the judgment was, as stated in the cases cited, an execution of the judgment, was in violation of the original injunction and the suspensive appeal, and was null and void, and had not the effect of creating a judicial mortgage during the pendency of that appeal.

The defendant construction company was not called upon to take any proceeding to cancel the registry of the judgment during the existence of the injunction against the execution of the judgment and during the suspensive appeal.

Nor were the mortgage creditors whose rights on the property came into existence during the pendency of the appeal affected by such illegal registry. The creditors were not required to contest the validity of the registry of the judgment until said judgment as a judicial mortgage was sought to be enforced against them.

The case would have been different if the appellees had only acquired their mortgages on the property after the judgment on appeal had become final.

The judicial mortgage resulting from the premature and illegal registry, while remaining dormant and ineffectual during the pendency of the suspensive appeal, sprang into existence or revivified with all of its legal effect when and after the judgment on appeal became final and any parties acquiring rights on the property subsequent to the finality of the judgment on appeal would do so subject to the recorded judgment.

In this case, however, the property had been sold and the proceeds ordered distributed according to the rank of the mortgages before the judgment on appeal had been rendered.

Our conclusion is that a judgment recorded in the mortgage book, whether before or after a suspensive appeal has been perfected from such judgment, can have no effect as creating a judicial mortgage during the pendency of the suspensive appeal as against third parties who may have acquired rights on the property of the judgment debtor during the pendency of the appeal and before final judgment thereon.

The case of Toledano v. Relf, 7 La. Ann. 60, is not in conflict with the ruling herein made. In that case a judgment had been rendered on a confession with stay of execution corresponding with the terms of payment stipulated in the authentic act on which the judgment was based. There was no appeal and could have been none. The execution therefore was not suspended by the effect of law but by the consent of the parties. The court under the circumstances very properly held that, notwithstanding the consent stay of execution, the registry of such a judgment operated a judicial mortgage from the date the judgment was recorded.

That was quite a different situation from the one presented here, in which the execution was suspended by law and not by consent of parties, and where the recording was made in defiance of the law and the jurisdiction and authority of the appellate court.

This view renders it unnecessary to consider other questions discussed in briefs of counsel.

Judgment affirmed.