The 25th section of the law of Louisiana incorporating the Union
Bank of- Louisiana declares that in all hypothecary contracts and
obligations entered into by any married individual with the bank,
it shall be lawful for the wife to unite with him, and
Page 53 U. S. 328
in such case the property of the wife, whether dotal or of any
other description, shall be affected by the contract.
Where a wife united with her husband in mortgaging property to
the bank, the mortgage was good under this clause.
A sale of the mortgaged property for a twelve months' bond under
an order of seizure and sale was not a novation or extinguishment
of the original mortgage.
Where the mortgage is payable by installments, some of which
were not due at the filing of the bill, the statute of limitations
will not apply. The possession of the mortgagor was not adverse to
the mortgagee.
Where other parties had a nominal interest as defendants and
resided beyond the jurisdiction of the court, it was error in the
circuit court to dismiss the bill because they were not made
parties. Under the Act of Congress of 1839, the court should have
gone on to decree against the actual defendants, and in this case
all who have a beneficial interest are in court.
The facts are set forth in the opinion of the Court, to which
the reader is referred.
Page 53 U. S. 336
MR. JUSTICE GRIER delivered the opinion of the Court.
The Union Bank of Louisiana filed a bill in the District Court
of the United States for Texas, claiming the seizure and sale of
certain negro slaves which had been mortgaged to them by the
defendants in Louisiana and afterwards removed to Texas. The bill
was dismissed by the court below for want of proper parties, and
the complainants have appealed to this Court. It will be necessary
to select from the voluminous record of the case only so much of
the allegations in the pleadings and of the evidence connected
therewith as will exhibit the several points of law which have been
argued and relied upon in this Court.
The bill sets forth a mortgage made by the respondents through
their attorney to the complainants dated 6 June, 1837, to secure
the payment of a loan of $45,000, payable in one year from its
date. Among other things, this mortgage included 102 slaves, with
their increase. When this mortgage became due, the defendants
refused to pay, and opposed the sale of the slaves on the ground
that at the time of its execution, Mrs. Stafford was a minor. After
some time, a compromise was effected between the parties by the
intervention of friends. The bank accepted the notes of J. S.
Stafford for about twenty thousand dollars of their debt, and Mrs.
Stafford joined her husband in a mortgage on the same property for
the sum of $30,000 payable, the interest annually, and the
principal in annual installments,
Page 53 U. S. 337
commencing on the first of March, 1844, and ending in 1851. This
mortgage is dated 22 May, 1841. It recites the original mortgage of
1837, acknowledges the loan of $45,000 by the bank to respondents
"for the purpose of assisting them in their pecuniary matters and
for the particular purpose of paying debts due by the wife." It
recites that the wife being now of full age, "is anxious to do away
with any vice, defect, or informality which might vitiate or impair
the previous mortgage," and thereby "approves, ratifies, and
confirms it to the amount and extent of $30,000, so that the two
instruments shall be considered as one mortgage." Isaac Thomas also
intervened and became a party to this mortgage in his own right and
as administrator of Michah P. Flint, stating that Stafford had
given a mortgage to Flint in his lifetime on a part of these
negroes dated 9 June, 1836, to secure him for endorsements, and
likewise a mortgage to said Thomas and Flint, dated 22 April, 1837,
for $100,000 for the same purpose, and agreeing to release and
discharge both these mortgages so far as to give priority to the
mortgage to the Union Bank.
"This waiver and postponement by said Thomas, however, being
made without prejudice to the rights acquired by him in a portion
about 48 in number of the above-named slaves, at a sheriff's sale
of the property at the suit of the New Orleans Canal & Banking
Company on 8 August, 1840."
The bill further alleges, and this allegation is fully proved by
the evidence in the cause, that these slaves remained in the
possession of the respondents from the date of the mortgage till
February, 1845, when they were fraudulently removed by them to the
State of Texas for the purpose of evading the payment of this and
other debts secured upon them, and that Stafford has threatened to
remove them out of that state to Mexico if such a step should be
necessary to prevent them from being seized to satisfy his
debts.
To prevent this, a receiver was appointed by the court, and by
means of a writ of assistance, a part of the slaves have been taken
into his possession with much difficulty and at great expense.
The answer of Mrs. Stafford admits the mortgages, and that the
slaves have been brought to Texas, and that she holds them in her
possession subject to the order of the court. Without attempting to
give an abridgment of the various matters alleged in this answer,
we shall proceed to notice the several points of defense made by
counsel in the argument, stating the allegations and facts which
tend to elucidate them, without regarding the order or peculiar
statement of them in the answer.
I. Was this mortgage valid and effectual to pass or bind the
Page 53 U. S. 338
interest, "property, and right of the wife, whether dotal or of
any other description?"
In the decision of this question it is not necessary to take
into consideration the doctrines of the civil law or of the
Louisiana Code, art. 2412, concerning the power of the wife to bind
herself as surety for the debts of her husband, as we are of
opinion that the 25th section of the Act of April 2, 1832,
incorporating the Union Bank of Louisiana, is conclusive upon this
point. It is as follows:
"SEC. 25. Be it further enacted &c. that in all hypothecary
contracts and obligations entered into by any married individual
with or in favor of said Union Bank of Louisiana or with any of its
offices of discount and deposit according to the true intent and
meaning of this act, it shall be lawful for the wife of the said
individual to bind and oblige herself jointly and
in
solido with him, and in such case the property and right of
the wife, whether dotal or of any other description, shall be
affected by the said contracts or obligations, provided that the
said wife be of the age of majority at the time of entering into
such obligations or contracts."
Now it is admitted that when the latter instrument of mortgage
was executed, the wife was of full age.
That it is a hypothecary contract for the loan of money by the
bank is evident from the face of the deed. And if the recital in
the mortgage that it was given for a loan of money be not
conclusive evidence of that fact, the testimony in the case fully
shows that the consideration of it was the loan of $45,000, which
was set to the credit of Stafford on the books of the bank and
drawn out by his checks. The purpose to which this money was
applied was a matter with which the bank had no concern, and which
cannot affect the validity of its security.
This instrument was a public act, duly acknowledged, and was
therefore a binding contract or obligation to affect the "property
and right of the wife, whether dotal or of any other description,"
and by the laws of Louisiana operated as a judgment, with lien on
the property specially described in it.
See Bank of Louisiana
v. Farrar, 1 La.Ann. 49.
II. It is alleged in the answer that this contract of mortgage
has been novated and extinguished.
The facts on which this objection rests are as follows:
The instrument of mortgage contains a covenant that
"In case of failure on the part of the mortgagors to pay any or
either of said installments, or any or either of the amounts of
interest, it shall be sufficient cause to foreclose the same and
enforce the payment by such legal process as the nature of the case
shall
Page 53 U. S. 339
or may require."
The mortgagors having failed to make any payment of the annual
installments of interest in April, 1843, the bank obtained an order
of seizure and sale of the mortgaged property. According to the
usual course of proceeding in such cases, when the sheriff cannot
obtain a bid for cash to the amount of two-thirds of the appraised
value of the property, it is again offered for sale on a credit of
one year, the purchaser giving what is called a twelve months'
bond, and if the purchase money be not paid in that time, the
mortgagee may have an order of seizure and sale on this bond. On
this last sale, the property is sold for cash subject to all
previous liens to the higher bidder. In this case the mortgaged
property was bid off by William M. Stafford, a brother of
respondents; he gave his twelve months' bond; the property
remained, as usual, in the possession of the respondents; and no
part of the purchase money was paid at the end of the year. The
bank then issued process for a final sale of the property to the
highest bidder for cash. The lands included in the mortgage were
sold, but the negroes were fraudulently carried off by the
defendants to Texas. The amount for which the lands sold did not
satisfy the first installment of the principal of the mortgage, due
in March, 1844.
The question which arises on these facts is whether this sale to
William M. Stafford, and his twelve months' bond is a novation or
extinguishment of the original mortgage. If it was, the
complainants should have filed their bill on the twelve months'
bond, which operated as a judgment and mortgage on the property,
and not on the original mortgage, as has been done in this
case.
"A novation takes place in three ways." Louis.Code, art.
2185
"1st. When a debtor contracts a new debt to his creditor, which
new debt is substituted to the old one, which is extinguished. 2d.
When a new debtor is substituted to the old one, who is discharged
by the creditor. 3d. When, by the effect of a new engagement, a new
creditor is substituted to the old, with regard to whom the debtor
is discharged."
Whether this twelve months' bond operates as a novation and
discharges the mortgage or judgment without actual payment or
satisfaction is a question depending so entirely on the peculiar
laws of Louisiana that we must look alone to the decisions of the
tribunals of that state for its solution. The cases of
Offut v.
Hundsley, 9 La. 1;
Reboul v. Behren, id.,
90; and
Dunlap v. Sims, 2 La.Ann. 239, are directly in
point on this question. In the latter case, the court said
"No principle is better settled in our law than that a sale of
property under execution on a credit of twelve months neither
satisfies the judgment nor novates the debt. "
Page 53 U. S. 340
On this point of defense, therefore, we must decide that the
sale to William M. Stafford and his twelve-months' bond, which it
is admitted has never been paid, did not novate or extinguish the
lien or debt secured by the original mortgage to the bank. This
result is consonant with the true equity and justice of the case,
as it is transparently clear from the whole transaction that
William M. Stafford's interposition in this matter was merely to
gain further time for the respondents, he being wholly unable to
satisfy the debt of the bank according to the tenor of his bond.
His transfer of the negroes to Mrs. Stafford or to M'Waters as her
trustee left the case, as between these parties, in precisely the
same position as it stood at first. The negroes always remained in
possession of respondents, subject to the lien of the mortgage,
notwithstanding this complication of sales and nominal
transferees.
III. The respondent, both by her pleas and in her answer, sets
up the statute of limitations of Texas as a bar to the proceedings
in this case; she relies first on the section which limits all
actions of debt, upon any contract in writing to four years, and
secondly
"that all actions for detaining personal property, or for
converting such property to one's own use shall be commenced and
sued within two years next after the cause of such action or suit,
and not after,"
and alleges that
"she has converted the slaves to her own use and held them
adversely to the complainant from 9 April, 1845, until after the
commencement of this suit -- that is to say for more than two years
before the filing of this bill."
However much it may be the policy of Texas as it is alleged in
the cases of
Love v. Dock and
Snodely v. Cage,
lately decided in the supreme court of that state, to give a
liberal construction to their statutes of limitation in favor of
debtors for the purpose of encouraging immigration, it is
abundantly apparent that these sections can have no application to
a bill in equity to enforce the sale of mortgaged property, whether
the slaves in question be considered either as personalty or
realty.
The first of the eight installments of the principal debt became
due on 1 March, 1844, and the last in 1851, and the bill was filed
in February, 1848, less than four years after the first installment
became due, so that if this were an action of debt, the plea could
apply only to the installments of interest payable before 1844. And
in such an action it would be no answer to this objection to the
plea of the statute that the creditor had a right to sell the
mortgaged property on the failure or neglect of the mortgagor to
pay the first installment. In cases of concurrent jurisdiction,
courts of equity are said to act in obedience to the statutes of
limitation, and in other cases they act
Page 53 U. S. 341
upon the analogy of the limitations of law. A bill to foreclose
a mortgage and enforce the sale of the mortgaged property has no
analogy to an action of
trover, detinue, or trespass. The
claim of the mortgagee is a
"jus ad rem," not a
"jus
in re." He does not claim as owner of the property. The
possession of the mortgagor is not adverse, but under the
mortgagee. And although this species of realty is movable and may
be carried away or fraudulently concealed from the pursuit of the
mortgagee, such acts cannot be alleged in a court of equity as an
adverse possession which will defeat the lien of the creditor after
two years, in analogy to the limitation of actions at law for
taking and carrying away or converting to one's own use the
property of another. A chancellor will not permit a party to plead
his own fraud to defeat the equity of the complainant. This plea
must therefore be overruled.
IV. The court below decided the three points of defense which we
have just considered against the respondents, but dismissed the
bill of complainants for want of proper parties.
This constitutes the fourth and last ground of defense which has
been urged in the argument of the case in this Court.
It is contended that William M. Stafford, James A. M'Waters, and
Isaac Thomas should have been made parties to this bill, and that
without such parties the court cannot proceed to a decree in favor
of complainants.
It is admitted that William M. Stafford, James A. M'Waters, and
Isaac Thomas reside in the State of Louisiana and out of the
jurisdiction of the court. And it is contended that as the
complainant cannot therefore compel them to become parties, he is
utterly remediless notwithstanding the original mortgagors are in
court and have in their possession the property subject to the lien
of his mortgage.
It is true that if these persons had been within the
jurisdiction of the court, they might properly have been made
parties, but there is no decree sought against either of them, nor
will a decree in favor of the complainants affect any rights which
they may have.
It is unnecessary in the consideration of this point to bring
under review the doctrines advanced on this subject in treatises on
equity practice and pleadings or cases decided in England or
elsewhere. The act of Congress of 28 February, 1839, is conclusive
of this point. It enacts
"That where, in any suit at law or in equity commenced in any
court in the United States, there shall be several defendants, any
one or more of whom shall not be inhabitants of or found within the
district where the suit is brought or shall not voluntarily appear
thereto, it shall be lawful for the court to entertain jurisdiction
and proceed
Page 53 U. S. 342
to trial and adjudication of such suit between the parties who
may be properly before it. But the judgment or decree rendered
therein shall not conclude or prejudice other parties not regularly
served with process or not voluntarily appearing to answer, and the
nonjoinder of the parties who are not so inhabitants or found
within the district shall constitute no matter of abatement or
other objection to said suit."
Notwithstanding the complication of mortgages, sales, and
transfers of the slaves now in question, it must be observed that
they have never been out of the possession of the respondents till
seized with a strong hand by the marshal on a writ of assistance
and delivered to the receiver appointed in this case. And as we
have seen, the transfer to William M. Stafford by the sheriff, on
his giving a twelve months' bond, left them still subject to the
lien of the mortgagees, as the bond was never paid. The transfer
from Stafford to M'Waters for the separate use of Mrs. Stafford,
one of the original mortgagors, did not affect the rights of the
mortgagees; neither Stafford nor M'Waters have or claim any
beneficial interest in the property. M'Waters was examined as a
witness, and might have been made a party if he chose. It would be
a strange perversion of justice if the remedy on a mortgage could
be defeated by transfers of this description to persons living out
of the jurisdiction of the court. If this act of Congress had never
been passed, a court of equity would not suffer the remedy of a
mortgagee to be defeated by such a scheme.
If it were true that Isaac Thomas still retained his claim to
forty-eight of the slaves included in the mortgage, it would be no
reason why the complainant should not be entitled to his decree as
against the respondents, leaving Thomas to prosecute his claims, if
he had any, at such time and in such manner as he might elect. But
the plea set up in the answer on this point must be taken with the
facts connected with it, as alleged by the respondent, in
connection with the testimony of Thomas himself, who was examined
as a witness in the case. By these it appears that the New Orleans
Canal & Banking Company had a previous mortgage for $10,000 on
these forty-eight slaves, executed by Stafford and wife; that a
writ of seizure and sale issued thereon, and these slaves were sold
to Isaac Thomas, who left them in possession of the respondents,
but never paid for them; that the slaves were then sold as the
property of Thomas and purchased by one Flint, who afterwards
released his right to the Canal Bank, who sold to William M.
Stafford, who transferred his right to M'Waters in trust for Mrs.
Stafford. It appears also by the record that the Canal Bank has
filed its bill claiming its lien on these slaves, who are in the
hands of the receiver appointed in this case and who, by
arrangement between
Page 53 U. S. 343
the parties, holds them subject to their respective rights. The
Canal Bank, though not formally made a party to this bill, is in
court claiming its rights through Thomas. The court has therefore
before them all the parties claiming any beneficial interest in
these slaves, and before it distributes the proceeds of the
mortgaged property, can compel the parties interested either to
settle their respective claims amicably or by action or
interpleader, and thus make a final decision binding on all the
parties who have any claim to the property.
The decision of the district court dismissing the bill for want
of proper parties must therefore be
Reversed and the record remitted to the court below with
directions to enter a decree in favor of the complainants and have
such further proceeding as to justice and equity may
appertain.
Order
This cause came on to be heard on the transcript of the record
from the District Court of the United States for the District of
Texas, and was argued by counsel. On consideration whereof it is
now here ordered, adjudged, and decreed by this Court that the
decree of the said district court in this cause be and the same is
hereby reversed with costs, and that this cause be and the same is
hereby remanded to the said district court with directions to that
court to enter a decree in favor of the complainant and for such
further proceedings to be had therein as to law and justice may
appertain.