New Orleans Banking Ass'n v. Le Breton - 120 U.S. 765 (1887)
U.S. Supreme Court
New Orleans Banking Ass'n v. Le Breton, 120 U.S. 765 (1887)
New Orleans Banking Association v. Le Breton
Argued October 21-22, 1886
Decided March 21, 1887
120 U.S. 765
In Louisiana, a holder of a first mortgage on real estate, duly executed before a notary with pact de non alienando, is not bound to give notice to subsequent mortgagees, or to any person but the debtor in possession, when he proceeds by executory process to obtain seizure and sale of the mortgaged property to satisfy the mortgage debt.
In Louisiana, a mortgage given to secure a future balance on an open unliquidated account is valid, and the acknowledgment of the amount of the balance by the debtor before a notary is all that is necessary to be done under the code in order to ascertain it for the purposes of executory process.
In Louisiana, informalities connected with or growing out of any public sale made by any person authorized to sell by public auction are prescribed against by those claiming under the sale after the lapse of five years from the time of making it, whether against minors, married women, or interdicted persons.
W, owning a plantation in Louisiana and being embarrassed, agreed with several of his creditors and with K that W should remain in possession and work the plantation, that K should make annual advances to a stipulated amount to enable him to work it, and should receive and dispose of the crops and apply their products first to the payment of his own account and next to the payment of the debts of the creditors, and that for these advances and the balance on his account he should have a first mortgage on the plantation with pact de non alienando, and that the debts of said creditors should be secured by a mortgage subsequent to the lien to secure K's account. A second mortgage was afterwards made to K with a like pact, and with an agreement, in which all joined, that it should have priority over the first mortgage. The plantation was worked at a loss, and K having made large advances, W acknowledged the amount of them before a notary, and K proceeded by executory process
to obtain a sale of the plantation, and it was sold under judicial process. In a suit brought after the lapse of eight years by one of said creditors to foreclose the creditors' mortgage and to set aside the sale under the mortgage to K,
(1) That no notice to the creditors of the proceedings to foreclose K's mortgage was necessary.
(2) That W's acknowledgment of the balance due on K's account was all the ascertainment that was required.
(3) That the relation of trustee and cestuis que trust did not arise between K and the creditors.
(4) That the creditors were guilty of laches in allowing so long a time to elapse after knowledge of the sale before commencing proceedings to disturb it.
Bill in equity to foreclose a mortgage and to set aside a sale under a prior mortgage. The case is stated in the opinion of the Court.