Livingston v. Story - 36 U.S. 351 (1837)
U.S. Supreme Court
Livingston v. Story, 36 U.S. 11 Pet. 351 351 (1837)
Livingston v. Story
36 U.S. (11 Pet.) 351
Louisiana. On 25 July, 1822, Livingston applied to and obtained from Fort and Story a loan of $22,936 on a security of a lot of ground in New Orleans on which stores were then being built. This sum was received, part in cash, part in a promissory note, and $8,000 were to be paid to the contractor for finishing the stores on the lot. The property was conveyed by Livingston, to Fort and Story by a deed of absolute conveyance, and he received from F. & S. a counter-letter by which they promised to reconvey the property to him if, on or before 1 February, 1823, he paid them $25,000. By the counter-letter, on payment of the loan the property was to revert to L.; if not, it was to be sold by an auctioneer of the City of New Orleans, and the residue of the proceeds of the same paid to L.; the money advanced by F. & S., with the interest and the expenses, being first deducted. The agreement for building the stores was transferred by L. to F. & S., and they agreed to pay the $8,000 as the work proceeded, in installments.
On 1 February, 1823, the buildings bad not been completed, and F. & S. agreed that the payment of the sum due on that day should be postponed until 2 June, 1823; the sum of $25,000, to be increased to $27,500, being at the rate of eighteen percent per annum for four months, and the residue for expenses of selling the property at auction, &c. An agreement was made that if the amount named should not be paid on 1 June, 1823, the property should be sold at auction, and after the repayment of the sum of $27,500, the expenses of sale &c., the residue should be paid to L. By the same agreement, the counter-letter was to be delivered up and the record of it cancelled.
On 2 June, the money not being paid by L. to F. & S., it was agreed, that if on or before 5 August, 1823, the sum due, with interest, at eighteen percent per annum, to amount to $27,860.76, should not be paid by L. to F. & S., the lot, and all the buildings, should become the full and absolute property of F. & S. The money was not paid, and F. & S. protested, as they had done on 4 February for noncompliance with the agreement to pay the money agreed to be paid. From this time, F. & S. continued in possession of the lot and the buildings until the death of Fort in 1828, when S. purchased the share which had belonged to F., and he holds the property to this time. The evidence in the case showed that after July, 1822, the contractor did not apply the $8,000 to the completion of the stores on the property, and although F. & S. knew that he was so neglecting to apply the funds, they continued to pay over the same to him in weekly payments according to the contract.
In 1832, L., having become a citizen of New York, filed a bill in the District Court of the United States for the Eastern District of Louisiana claiming to have the property held by S. reconveyed to him on the payment to S. of the sum due to him and interest on the same, deducting the rents and profits of the estate, or that the same should be sold according to the terms of the counter-letter, and after the payment to S. of the amount due to him, with interest, the same deductions having been made that the balance remaining from the sale should be so paid to him. By the court;
"After much inquiry and
deliberation and a comparison of the Civil Code of Louisiana with the civil law from which it derives its origin and with which it is still in close connection, we have come to the conclusion that the original contract and counter-letter constituted a pledge of real property, a kind of contract especially provided for by the laws of Louisiana, denominated, 'an antichresis.' By this kind of contract, the possession of the property is transferred to the person advancing the money. That was done in this case. In case of failure to pay, the property is to be sold by judicial process, and the sum which it may bring, over the amount for what it was pledged, is to be paid to the person making the pledge. In this case, a provision was made for a sale by the parties upon the failure of payment, but this feature of the contract is rather confirmatory of the contract and counter-letter being an antichresis than otherwise, for it is, at most, only a substitution by the parties of what the laws of Louisiana require. The decree of the court was in conformity to those principles."
Under the law of Louisiana, there are two kinds of pledges -- the pawn and the antichresis. A thing is said to be pawned when a movable is given as a security; the antichresis is when the security given consists in immovables.
The antichresis must be reduced to writing. The creditor acquires by this contract the right of reaping the fruits or other rewards of the immovables given to trim in pledge on condition of deducting annually their proceeds from the interest, if any be due to him, and afterwards from the principal of his debt. The creditor is bound, unless the contrary is agreed on, to pay the taxes, as well as the annual charges of the property given to him in pledge. He is likewise bound, under the penalty of damages, to provide for the keeping and necessary repairs of the pledged estate, and may lay out from the revenues of. the estate sufficient for such expenses.
The creditor does not become proprietor of the pledged immovables by the failure of payment at the stated time; any clause to the contrary is null, and in that case it is only lawful for him to sue his debtor before the court in order to obtain a sentence against him and to cause the objects which have been put into his hands to be seized and sold.
The debtor cannot before the full payment of his debt claim the enjoyment of the immovables which he has given in pledge, but the creditor who wishes to free himself from the obligations under the antichresis may always, unless he has renounced this right, compel the debtor to retake the enjoyment of his immovables.
The doctrine of prescription, under the civil law, does not apply to this case, which is one of pledge, and if it does, the time before the institution of this suit had not elapsed in which, by the law of Louisiana, a person may sue for immovable property.
The 23d rule of this Court for the regulation of equity practice in the circuit courts is understood by this Court to apply to matters applicable to the merits, and not to mere pleas to the jurisdiction, and especially to those founded on any personal disability or personal character of the party suing, or to any pleas merely in abatement. The rule does not allow a defendant, instead of filing a formal demurrer or a plea, to insist on any special matter in his answer and have also the benefit thereof, as if he had pleaded the same matter or had demurred to the bill. In this respect, the rule is merely affirmative of the general rule of the court of chancery, in which matters in abatement and to the jurisdiction, being preliminary in their nature, must be taken advantage of by plea and cannot be taken advantage of in a general answer, which necessarily admits the right and capacity of the party to sue.
The case, as stated in the opinion of the Court, was as follows:
The complainant, the appellant's testator, on 1 February 1834, filed a bill in equity in the District Court of Louisiana, in which he stated himself to be a citizen of the State of New York, against Benjamin Story a citizen of the State of Louisiana.
The bill charged that sometime previous to 22 July 1822, the complainant, being in want of money, applied to the defendant and John A. Fort for a loan, offering as a security a lot in the City of New Orleans on which a building, intended for stores had been begun; that the defendant and Fort agreed to loan him $22,936, of which a part only was paid in cash, part in a note of John A. Fort, and $8,000 of which was afterwards agreed between himself, the defendant, and Fort to be paid by Story & Fort, to one John Rust, a mechanic, who had contracted with the complainant to complete the stores. That to secure the money borrowed, complainant conveyed to Fort and Story the lot of ground mentioned, and that, contemporaneously with the deed of sale, they executed on their part an instrument in writing, called a counter-letter, by which they promised, on the payment of $25,000, on or before 1 February 1823, to reconvey to the complainant the property which he had conveyed to them. The complainant further charged that of the sum of $25,000 to be paid by him on 1 February, a part of it was made up by a charge of interest at eighteen percent per annum, upon the amount of $22,936, actually advanced to him, and to be paid on his account to Rust by Fort and Story.
The complainant also transferred his written contract with Rust to the defendant and Fort rendering himself responsible for the proper employment of the $8,000, and which was to be paid Rust in weekly payments by the defendant and Fort. Rust, on his part, consented to the transfer of his contract, and accepted Fort and Story in the place of the complainant. The stores were to be completed by Rust by 1 November, 1822, in a workmanlike manner, and all the materials except those already provided were to be found by Rust, and in his contract he renounced all claim or
privilege upon the building beyond $8,000, which was to be paid him by Fort and Story for the complainant. The deed and counter-letter and agreement with Rust are in notes [Footnote 1]1, [Footnote 2]2, and [Footnote 3]3.
The complainant charged that soon after the transaction, he left New Orleans, and that when he returned to it, he found that Fort and Story had paid to Rust $8,000 on his account, but that little or nothing had been done toward the completion of the stores, so that if the property had been sold on the first of February according to the terms of the counter-letter, it would not have
produced anything like its full value. That under these circumstances he applied to Fort and Story for further time, which they would not consent to but on certain conditions, which were that the property should be advertised for sale on 22 June 1823; that the sum due them should be increased from $25,000 to $27,500, which was so increased by the addition of $1,500 as interest, at eighteen percent for five months, $800, for auctioneer's commissions, $50, for advertising, and $150 arbitrarily added by the said Fort and Story. The complainant stated that being entirely at the mercy of Fort and Story, he consented to those terms, and executed a paper accordingly. [Footnote 4]
The bill further stated that the complainant, on 2 June, in order to obtain a delay of sixty days, was forced to consent to sign a paper by which it was agreed that the debt should be augmented to the sum of $27,830.76, and that if the same was not paid on 5 August, then the property should belong to the said Fort and Story without any sale. [Footnote 5]
But there was no clause by which
he should be discharged from the payment of the sum so borrowed as aforesaid, whereby he would have been liable to the payment of the sum so advanced, in case the property had fallen in value, and the bill stated that on 5 August, above mentioned, the said Fort and Story demanded, by a notary, the full sum of $27,830.76, which included the charge of $800 for auctioneer's commissions for selling, although no sale had taken place, and all the other illegal charges above stated; and on nonpayment, protested for damages and interest on the said sum, thereby showing their intention to hold him responsible for the sum demanded if the premises should by any accident become insufficient in value to pay the same. Fort and Story remained in possession of the said premises until the death of the said John A. Fort, which took place sometime in the year 1828; after his death, the said Benjamin Story took the whole of the said property by some arrangement with the heirs of the said John A. Fort, and was and ever since had been in the sole possession thereof, and the bill charged that the said John and Benjamin, in the lifetime of the said John and the said Benjamin, after the death of the said John, had received the rents and profits of the said property to the amount of at least $60,000, and that the complainant was advised and believed that he had a right to ask and recover from the said Benjamin Story the possession of the said property and an account of the rents and
profits thereof, the said conveyance of the same from the complainant having been made on a contract for the loan of money, and although in the form of a sale, in reality only a pledge for the repayment of the same, the act by which he agreed to dispense with the sale being void and of no effect in law.
The bill also prayed, that an account might be taken, under the direction of the court, between the complainant and the defendants to the bill, in which the complainant agreed he should be charged:
1st. With such sum as should be shown to have been advanced to him or paid on his account under the loan made to him on 25 July, 1822, with the interest which he agreed to pay of eighteen percent per annum to be calculated upon each advance from the time it was made until 5 August, 1823, and after that time at legal interest.
2d. With all reasonable expenditures judiciously made and incurred by the said John and Benjamin in building, repairing, and safekeeping of the said property, and that the complainant be credited in such account with all such sums as the said John and Benjamin or either of them had received or might, if they had used due diligence and care, have received from the said property,
and that in such account the rents and profits be applied as the law requires, first to the payment of the sums necessarily incurred in building and repairing, secondly to the payment of interest on the sums which should appear to have been advanced on the said loan, and thirdly to the discharge of the principal of the said loan. And that if on said account it should appear that there was a balance due him, as he hoped to be able to show will be the case, that the said Benjamin Story be decreed to pay the same to him and to surrender the said property to him, and that if any balance should be found due from the complainant, that the said B. Story might be decreed to deliver the said property to him on his paying or tendering to him the said balance, and that he might have such other relief as the nature of his case might require. That he, the said Benjamin Story, in his own right and also as executor of the last will and testament of the said John A. Fort or in any other manner representing the estate of the said John A. Fort, might be summoned to answer this bill, the complainant averring that he was a citizen of the State of New York and that the said Benjamin Story was a citizen of the State of Louisiana, and then resided in New Orleans.
The protests, made at the request of John A. Fort and Benjamin Story on the nonpayment of the money stipulated to be paid by Edward Livingston on 1 February, 1823, stated that on that day the notary had requested from Edward Livingston payment of the sum of $25,000, and was answered that "he could not immediately pay the sum due to Fort and Story, but that he hoped soon to be able to do it." The answer to the demand made stated in the protest of 5 August, 1823, to have been given by Edward Livingston was
"that owing to the very extraordinary scarcity of money, he was prevented repaying the money he had borrowed from Messrs. Fort and Story at this time, but was willing to allow them the same interest at eighteen percent, with good personal security in addition to the real property they now have, for the renewal of the obligation for six months."
On 17 February, 1834, Benjamin Story appeared to the bill and demurred to the same, alleging for cause of the demurrer that the case made in the bill was not such a one as entitled the claimant in a court of equity of the State of Louisiana to any discovery touching the matters contained in the bill or any other matters, or any relief, and that by complainant's own showing in the said bill, the heirs of John A. Fort, who was therein named, were necessary parties to the said bill, as much as it was therein stated that all the matters of which he complain were transacted with the defendant and John A. Fort, whose widow, the present Mrs. Luzenburg, was the sole heir and residuary legatee.
The district court sustained the demurrer and dismissed the bill on two grounds -- 1st, that this is not a suit that can be maintained in its present form in a court of the United States sitting in Louisiana; 2d, that a material party is omitted in the bill. The complainant appealed to the Supreme Court, and at January term, 1835, the decree of the district court was reversed and the case remanded for further proceedings. 34 U. S. 9 Pet. 632.
On 15f December 1835, Benjamin Story filed in the District Court of Louisiana an answer on oath to the original bill in which he said that he did not admit, but if it were the fact, required proof that the complainant was a citizen of the state New York; that at the time of the transaction mentioned in the bill and for a long time thereafter, he was a citizen of the State of Louisiana and one of her Senators in the Senate of the United States, and if he had ceased to be a citizen
of that state, the defendant knew not when or how, and called for the proof.
And the defendant, further answering, said that he expressly denied, that on or about 25 July 1822, he and John A. Fort agreed to lend to the complainant the sum of $22,936 or any other sum. That he expressly denied that at any time he either jointly with the said Fort or separately ever agreed to lend to the said complainant any sum of money whatever, as alleged in the bill of complainant. That so far from there having been any loan intended by the parties, the defendant stated that the negotiation for the sale of the said lot, commenced between John A. Fort and Nathan Morse, Esq., since deceased, the latter acting for the said complainant, and that one of them informed the defendant that the complainant wished to raise money on mortgage, but the defendant peremptorily and expressly refused to advance any money whatever to the complainant on mortgage. That during the progress of the negotiation, the complainant having learned that the defendant was to be interested in the purchase and was to make the principal payments, mentioned to the defendant that he would prefer obtaining money by mortgage on the property rather than make a sale of it, and the defendant again repeated to him his refusal and insisted upon a sale's being made to him.
As evidence of the understanding of the parties and of the real nature of the transaction, certain communications which had been addressed by the alleged agent of Mr. Livingston to John A. Fort and Story were annexed to the answer.
The sale was agreed to, and an act was passed on 25 July 1822, containing the clause of non enumerata pecunia. The answer referred to the different documents which were stated and referred to in the complainant's case. The money not being repaid, as was provided in the counter-letter on 2 February 1823, no sale of the property was made by auction, because of the request of the complainant, and on 4 March they made another agreement [Footnote 6] by which they agreed to postpone the sale of the property, until 2 June 1823, and the said Edward Livingston, in consideration of allowing him such additional chance to repurchase the said lot and buildings or obtain some person to purchase it, agreed to pay to them a compensation therefor, as is in said agreement stipulated, and in this agreement it was covenanted between the parties that the counter-letter should be annulled and given up so that there then existed between the parties the absolute bill of sale, and this stipulation of 4 March, 1823.
And finally, 2 June, 1823, having arrived, and Edward Livingston would not pay the price of said property, nor was there any offer therefor, at his request, an agreement was entered into before H. Lavergne, a notary public, whereby the said Edward Livingston requested that the sale might not take place, for his accommodation, and the said Fort and Story agreed thereto on the following conditions:
That on or before 1 August, 1823, the said Edward Livingston should pay the said sum of $27,830.76 and any further sum by them expended for the care and preservation of said property, and that then the said lot and buildings were to become the property of said Livingston, and in case the said Livingston should fail, on 5 August, 1823, to pay to the said Fort and Story the sums above specified, then the said lot, with the buildings thereon, were to become the full and absolute property of Fort and Story, and the said Livingston engaged thereupon to surrender and cancel all and every writing or other document in relation to said property that might give to him any equity of redemption or other right to the said promises, it being in said act expressly stated that it was the true intent and meaning of the parties that in the case of failure of payment as aforesaid, said lots, with all the buildings and appurtenances to the same belonging, were to vest in said Fort and Story a full, free, and absolute title in fee simple forever.
The answer denied that at the time of the purchase, the property was worth more than the money Fort and Story paid for it and that any loan of money was made, but it was an absolute sale, with power to redeem, which was twice extended to the complainant and was finally closed by the last agreement, and on 5 August, 1823, a demand was made and payment refused, whereby all clauses of redemption were annulled by articles 93 and 94 of the act then in force in Louisiana, and the property became absolutely and irrevocably the property of Fort and Story. The answer also denied that the property had become as valuable as was represented by the complainant, and it stated that on 10 March, 1832, he, the respondent, by a purchase from the widow of John A. Fort, now Mrs. Luzenburg, became to owner of the moiety of the property which had belonged to John A. Fort, for which the sum of $50,000 was to be paid. A liability by Mrs. Luzenburg and her husband to repay this money in case of eviction was alleged to exist under the laws of Louisiana, and that the purchaser had a right under those laws to call on the vendor to assist in his defense,
"and the respondent submits to the court, whether by the proceedings having been instituted in the district court of the United States, Mrs. Luzenburg is to be precluded from claiming and defending the ownership when, being vendor, she is interested in the case."
The answer prayed a citation to the widow of John A. Fort, who intermarried with Dr. Luzenburg, that they might appear and defend the sale and abide by any decree of the court.
To the answer was annexed a statement of the moneys paid and received on account of the estate by the respondent and John A. Fort. The sums paid for the estate from July 26, 1822, to May 27, 1817, amounted to $51,537.20, the interest at ten percent, which is $26,261.12; total $77,796.32; the sums received, up to January 26, 1829, amounted to $29,705.69 -- interest $7,073.18 -- total $36,778.87. The answer claimed the benefit of the proscription of five or ten years under the laws of Louisiana as constituting a bar to the suit.
Afterwards, on 14 March 1836, the defendant filed an amended answer stating that Mary C. Luzenburg, the widow of John A. Fort, deceased, had, since the filing of the original answer, set up a claim to the moiety of the estate in controversy and had instituted a suit in the Judicial district Court of the State of Louisiana against the respondent for the purpose of vacating the contract by which he became invested with a title to the interest of which Fort died possessed, and to recover the same from him, and as the claim was not admitted, but in the event of the success of the appellant, she and her husband would be liable to the respondent, and consequently, the rights of the respective parties could not be fully, fairly, and finally decided unless Luzenburg and wife be made parties to this suit.
The amended answer prayed they might by the complainant be made parties to the bill. A copy of the bill of Mrs. Luzenburg to the judge of the District Court of the first Judicial District of the State of Louisiana was annexed to the amended answer. It alleged a sale of the moiety of the property which belonged to John A. Fort, to have been made to Benjamin Story on 10 March, 1832, for $50,000, when in truth and in fact the said moiety was worth $100,000.
The testimony of two witnesses was taken in open court. Hughes Lavergne, the notary before whom many of the documents in the case had been executed, deposed,
"Mr. Nathan Morse came to his office, accompanied by Mr. Story at the period named, for the purpose of making the sale above referred to. Mr. Morse appeared in this transaction to be the legal adviser of Messrs. Story & Fort; at this time, Mr. Livingston was and had been for some time a member of the New Orleans bar of great practice and celebrity, and it was not probable that Livingston would employ a lawyer to advise him. Cross-examined by the defendant's counsel to the question if deponent did not know that Mr. Morse was the financial agent of Mr. Livingston, he answered that he did not know that he was."
Money was very scarce in New Orleans in 1822.
"H. Lockett, Esq., the agent of Mr. Livingston, deposed that the complainant had not been in Louisiana since 1829; that he had written to deponent often, that he had changed his domicile to New York; he had property there and voted there. Cross-examined, deponent stated that Mr. Livingston was the
Senator from Louisiana until the year 1831, when he was appointed Secretary of State at Washington; it was then that Mr. Livingston changed his domicile to the State of New York; deponent never saw Mr. Livingston in New York, as he had never been there, but he had received letters, and still received letters from E. Livingston, dated and postmarked New York."
On 3 June 1836, the district court made a decree that the bill of the complainant should be dismissed. The complainant, Edward Livingston having died, his executrix was made a party to the proceedings, and she prosecuted this appeal.