When a corporation of Louisiana which had leased premises on
which it had goods liable to the landlord's lien was owing rent
(for the payment of which by the law of the state the landlord had
a right by a judicial proceeding to seize the goods, and for the
space of fifteen days, if they were removed, to follow and seize
them) undertook, in supposed pursuance of the laws of Louisiana
which authorize
"any person" to make a
cessio
bonorum, to make such cession, and the judge having
jurisdiction of the matter of cessions generally accepted the
cession for the benefit of creditors, and directed that all
judicial proceedings against the property be stayed, after which --
things proceeding in regular course -- the syndic took possession
of and sold the goods,
held, on a contest between the
landlord and judgment creditors for the proceeds of them in the
syndic's hands, that although it was finally decided in the supreme
court of the state that a corporation was not entitled by the laws
of Louisiana to make a
cessio bonorum, and although,
accordingly, the order staying all judicial proceedings was vacated
and annulled, yet that the landlord had not lost his lien by
omitting to follow and seize the goods in the syndic's hands within
the fifteen days after the syndic removed them, and that although
the decision in the first instance of the judge staying all
judicial proceedings against the property of the corporation might
have been void, as it was finally adjudged to be, yet as the
subject generally belonged to him, as the parties were before him,
and as he had to decide in the first instance the question of his
own jurisdiction, his acts were binding till reversed or set aside,
and that, as he was acting judicially in what he did, the landlord
was not bound, in the face of an express inhibition of judicial
proceeding against the goods, to attempt to seize them and thus
meet the court with the issue of the strong hand.
This was a bill in equity filed by Sumner and others, as
Page 82 U. S. 601
lessors, against Holdane & Co., one Jeffries, and the Bank
of America, to enforce a lien for rent upon certain moneys
deposited in the bank, the proceeds of goods which were formerly on
the leased premises, and thereby subject to the lessors' privilege.
The bank was but a stakeholder. The real defendants were the other
parties named, judgment creditors who had garnisheed the moneys for
the payment of their judgments. The controversy arose as far back
as 1859. The leased premises were known as the Belleville Iron
Works, situated near the Mississippi River opposite New Orleans.
The tenants were an incorporated company known as the Belleville
Iron Works Company. The term of the lease was ten years, commencing
the 1st of January, 1856, the rent being a percentage on the amount
of work done by the lessees, not to be less than $7,500 per
annum.
At the close of the year 1858, the company was insolvent, and
sought to obtain the benefit of the insolvent laws of Louisiana by
making a
cessio bonorum. The existing law on this subject,
which was passed in 1855, declared that any person may make a
cession of his property to his creditors, provided the surrender be
made
bona fide, without fraud, and agreeably to the
formalities prescribed therefor. It then directed that any debtor
wishing to make a surrender of his estate to his creditors must
present his petition for that purpose to any judge having
jurisdiction. This petition is to contain a statement of the
debtor's affairs, with a schedule of his property, debits, and
credits, and be sworn to. The sixth section of the action directs
as follows:
"That whenever the judge shall be convinced that the debtor who
wants to surrender his property has complied with all the
formalities prescribed, he shall endorse on the schedule that the
cession of all the property of the insolvent is accepted for the
benefit of his creditors, and shall order a meeting of the
creditors, to be called in the manner and within the time
prescribed for respites; he shall also appoint an attorney to
represent the creditors absent or residing out of the state, if
there be any mentioned in the schedule."
The seventh section enacts:
Page 82 U. S. 602
"That when issuing the order for the meeting of the creditors,
the judge shall order that
all the proceedings, as well against
the person as the property of the debtor, be stayed."
The act then provides for the appointment of a syndic to take
possession of the property and to administer and sell the same, and
contains other provisions regulating the entire proceedings.
In pursuance of this law, the Belleville Iron Works Company, on
the 29th of December, 1858, presented their petition in due form to
the judge of the Fourth District Court of New Orleans (the proper
judge for the purpose), who took cognizance of the case, and by an
order of the same date accepted the cession for the benefit of the
creditors, appointed a time and place for their meeting, and
further directed that in the meantime
"all judicial proceedings
against the property of said company be stayed." After this,
the cause proceeded in the regular course. A syndic was duly
appointed and qualified, and took charge of the property of the
company, and having obtained an order of sale, the whole property
was sold under his direction by the sheriff, and netted over
$50,000. Out of this money he paid the rent of the works up to
April 1, 1859, the arrears and interest then amounting to over
$14,000. He then made and filed in the court a tableau of
distribution by which he arranged the claims against the estate in
the order of priority and privilege, and placed the entire rent to
accrue on the lease after the 1st of April, 1859, being for six
years and nine months, amongst the privileged claims, which, with a
few other privileged claims, largely exceeded the proceeds of the
property remaining in his hands. This tableau was filed May 23,
1859. It met with strenuous opposition from the ordinary creditors,
and a long litigation ensued. Suits were commenced by the
defendants and others, and Holdane & Co. recovered judgments in
the circuit court of the United States on May 11, 1859, amounting
in the aggregate to over $4,000. The other defendant, Jeffries,
sued in the Fourth District Court of New Orleans, and the suit was
cumulated with the insolvency proceedings. These proceedings being
finally carried by
Page 82 U. S. 603
appeal to the Supreme Court of Louisiana, were wholly set aside
on the ground that the insolvency law was intended for natural
persons only, and that a corporation, like the Belleville Iron
Works Company could not make a
cessio bonorum under it.
After this decision of the supreme court, the cause was remanded to
the Fourth District Court of New Orleans, and that court, on the
23d of March, 1860, made the following decree:
"It is ordered, adjudged, and decreed, that the order of the
court, entered on the 29th December, 1858, in the case of
The
Belleville Iron Works Company v. Its Creditors, staying all
judicial proceedings against the property of said company, be
vacated and annulled, and it is further ordered, that the plaintiff
do have and recover of the defendant, The Belleville Iron Works
Company, the sum of $,262.86,"
&c.
The supreme court subsequently held, when the case came up on
another appeal, [
Footnote 1]
that the effect of this judgment was to annul the order of 29th
December, 1858, in all its parts, and to allow the creditors to
proceed as if there had been no surrender, and that the money in
the hands of the syndic remained the property of the company and
could be seized on execution, and did not become the property of
its creditors, by virtue of the
cessio bonorum.
The defendants having been thus left at liberty to prosecute
their judgments to effect, issued executions, and as before said,
garnisheed the balance of money in the hands of the syndic,
amounting at this time to about $11,000, which he had deposited in
bank.
The complainants then, February 23, 1867, filed this bill to
have the said moneys applied to the payment of their rent.
The defendants insisted that the complainants had lost their
privilege by not proceeding against the goods themselves, before
they were removed from the leased premises, or within fifteen days
afterwards, within which time, under the provision of the code, the
lessor might seize them if
Page 82 U. S. 604
there had been no change of property, and the chattels were
still capable of being identified.
The plea of prescription of three years.
The court below, it which the bill was filed, decided that the
money belonged to the complainants, lessors of the iron works, and
from that decree Holdane & Co., with Jeffries, the opposing
creditors, appealed to this Court.
Page 82 U. S. 605
MR. JUSTICE BRADLEY delivered the opinion of the Court.
By the Civil Code of Louisiana, the lessor has for the payment
of his rent, and other obligations of the lease, a right of pledge
on the movable effects of the lessee which are found on the
property leased, and in the exercise of this right, the lessor may
seize the objects which are subject to it, before the lessee takes
them away or within fifteen days after they are taken away if they
continue to be the property of the lessee and can be identified.
[
Footnote 2] This seizure is
effected by means of a writ of provisional seizure, which is issued
to the sheriff upon the lessor's filing a petition in the local
court showing the amount of rent due or the amount accruing on the
lease, whether due or not, and swearing that he has good reason to
believe that the property will be removed. [
Footnote 3]
But when the goods are
in custodia legis, as where they
are seized by a sheriff under an execution or are placed in the
hands of a syndic under a
cessio bonorum, the lessor
cannot exercise this power of seizure, and does not lose his
privilege by not exercising it, but said privilege attaches to the
proceeds of the property in the officer's hands. This is the
immediate result of the laws directing the proceedings in such
cases, and has been expressly decided by the Supreme Court of
Louisiana. Sheriffs, on execution, are directed to sell subject to
the privileges or special mortgages on the property sold. [
Footnote 4] The syndic, under the
insolvent law of 1855, is directed to sell the property absolutely
and to distribute it according to the priorities. [
Footnote 5] The curator of a decedent's
estate is required to sell the property and distribute it in the
same manner. In
Robinson v. McCay, Curator, [
Footnote 6] the curator removed the goods
from the leased premises, and then, in opposition to the lessor's
privilege, set up that he had not asserted his claim by seizure of
the goods. The court said:
"The representatives of an estate can do nothing which will
destroy or impair a claim existing on the deceased's person or
property at the moment of his decease.
Page 82 U. S. 606
In this instance, the removal by the curator cannot have the
effect of destroying the privilege, because the lessor could not
exercise his privilege on the thing subject to it. The law makes it
the duty of the former to take the property into his possession,
sell it, and after the sale to settle the order of privileges
contradictorily with the other creditors. The proceeds in the hand
of the curator represented the thing. The want of power in the
lessor to seize prevented the prescription from running against
him."
It seems that the sheriff may also sell the goods absolutely
upon condition of paying the lessor his rent. If the latter
apprehends any danger of the goods' being sold and removed without
his rent's being paid, he may get a rule on the sheriff to pay the
rent, or get out an injunction. In
Robinson v. Staples,
[
Footnote 7] the court directed
the sheriff not only to pay the lessor the rent that was then due
but to reserve sufficient to pay that which was yet to accrue. The
exception was taken in that case that the lessor had not exercised
his right of provisional seizure. But the court said:
"It is not well argued by the plaintiff's counsel that the
lessors cannot have their privilege in this case because they did
not make a provisional seizure under the statute. The proceeding
was unnecessary, the property being already
in custodia
legis under the
fieri facias. Another creditor
threatened to absorb by his proceedings the lessor's security, and
if they were not permitted to protect their privilege
prospectively, the security would have been lost."
It appears from this case, as indeed the words of the Code
import, that the lessor's privilege extends to his unaccrued rent
as well as to that which is due; but the purpose of quoting it here
is to show that when goods are
in custodia legis, the
lessor's privilege attaches to the proceeds without any act of
seizure on his part.
But it has been held that if the goods are not
in custodia
legis or in course of legal administration, the lessor will
lose his privilege unless he enforces his remedy. Thus, in
Farnet v. Their Creditors and Del Campo, Opponent,
[
Footnote 8] the
Page 82 U. S. 607
lessees becoming insolvent, an amicable meeting of their
creditors was had at which liquidators were appointed who were to
take charge of the property and act as trustees of all the
creditors until the will of the foreign creditors could be
ascertained. The property was thereupon removed from the leased
premises and put on storage in another building. About a month
afterwards, one of the lessees made a regular
cessio
bonorum, and the lessor insisted on being placed on the
tableau as a privileged creditor. The court held that as no formal
assignment was made at the first meeting, it was impossible to give
to an amicable arrangement of that sort the effect of a
cessio
bonorum, "by which," said the court,
"the rights of creditors are fixed at the date of the surrender.
If formal assignment had been made and possession had been given,
it might have created an equity in favor of Del Campo [the lessor]
against the creditors who took part in the assignment, but
certainly against none others,"
and the lessor's claim was overruled because he had suffered the
fifteen days to go by with out exercising his right of seizure.
Both parties cited this case, the complainants to show that if
there be a regular assignment or
cessio bonorum in form,
the lessor's privilege is preserved without his making a seizure,
the defendants, to show that if the assignment is not regularly
made, the lessor must avail himself of the remedy which the law
gives him. In this case, a regular
cessio bonorum in form
was made, but the supreme court set it aside as unauthorized by the
law. The question is whether this unauthorized
cessio
excused the lessors from following up their remedy or not. From the
authorities which have been cited from the Louisiana reports, it
would seem to result that the lessor is only excused from making a
seizure in order to preserve his privilege when he cannot lawfully
make it in consequence of the goods being
in custodia
legis -- in other words, when he is prevented from making it
by the act of the law. If, in the present case, the proceedings
taken by the Belleville Iron Works Company were absolutely void,
the lessors were not precluded from seizing the property; if only
voidable, they were precluded.
Page 82 U. S. 608
After the decision of the Supreme Court of Louisiana in the
case, the cause was remanded to the Fourth District Court of New
Orleans, and that court, on the 23d of March, 1860, ordered,
adjudged, and decreed, that the order of the court entered on the
29th December, 1858, staying all judicial proceedings against the
property of the company, be "vacated and annulled," and that the
plaintiff (Jeffries) recover of the company the sum of $3,262
&c. The supreme court subsequently held, when the case came up
on another appeal, that the effect of this judgment was to annul
the order of 29th December, 1858, in all its parts, and to allow
the creditors to proceed as if there had been no surrender, and
that the money in the hands of the syndic remained the property of
the company and could be seized on execution, and did not become
the property of its creditors, by virtue of the
cessio
bonorum.
This vacation of the original order and setting aside the
proceedings had under it does not, of itself, afford an answer to
the question whether the proceedings were absolutely void or only
voidable. Proceedings are often set aside for mere irregularities.
The judge who accepted the cession had jurisdiction of the subject
matter and the parties were before him. The order accepting the
cession contained an inhibition that all judicial proceedings
against the property of the company should be stayed. The defect in
the proceedings was that the corporation was not such a person as
was entitled to the benefit of the law. Could such an order be
disregarded so long as it was not vacated or reversed? Was it not
the duty of the lessors to respect it? How could they safely issue
a writ of provisional seizure when there was an express inhibition
of all judicial proceedings against the property in a proceeding to
which they were parties? The order of the judge accepting the
cession and inhibiting judicial proceedings was a judicial act. In
making it, he had to decide on the question of his own jurisdiction
over the subject matter and the parties, and although his decision
may have been wrong, acts done in pursuance of it were binding
until they were reversed or set aside. All
Page 82 U. S. 609
parties acted on this principle. The defendants complied with
all orders directed to them in the case. When their actions were
cumulated with the insolvent proceedings, they acquiesced in the
order of the court and followed up their rights in regular
procedure by contestation and appeal, and only proceeded to enforce
their judgments when they had obtained a decision of the supreme
court in their favor, and a decree of the District Court of New
Orleans in pursuance thereof, vacating the original order. Under
these circumstances, it hardly lies in the mouths of the defendant
to say that the lessors ought to have disobeyed the order of the
judge and disregarded all the subsequent proceedings before they
were reversed, and that they should have met the court with the
issue of the strong hand.
But without relying on this equitable aspect of the case arising
from the respect due to the solemn acts of a judicial tribunal and
the conduct of all the parties concerned, there seems to be no
sound technical reason for regarding the act of the judge in making
the order of December 29, 1858, as absolutely void. He had
jurisdiction, both of the subject matter and of the parties, but
the principal party, the applying debtor, was incapacitated to sue
for the relief afforded by the law. Being a corporation, though a
"person" in the legal sense of the term, it was not embraced within
the intent and meaning of the insolvent law. Is this anything more
than the common case of a party instituting a suit in court who
turns out to have no legal standing in the court? And yet no one
would assert that this predicament renders the entire proceedings
absolutely void and the court and all its officers trespassers. If
a married woman brings an action in her own name without joining
her husband, the proceeding is not void, although the defect may be
pleaded in bar or set up as a defense on the trial.
Without pursuing the subject further, it suffices to say that in
our judgment, the lessors, under the circumstances of this case,
were properly excused from making a seizure of the property of the
Belleville Iron Works Company as a means of retaining their
privilege for the rent accruing on
Page 82 U. S. 610
the lease, and that said privilege attached to the proceeds of
said property in the hands of the syndic.
The plea of prescription cannot be sustained in this case,
inasmuch as the bill was filed in February, 1867, and we have
lately held, in the case of
Adger v. Alston, [
Footnote 9] that all statutes of
prescription and limitation were suspended, at least in the federal
courts, during the period of the late civil war, which was not
solemnly determined in Louisiana until the President's proclamation
of April 2, 1866.
Decree affirmed.
[
Footnote 1]
Jeffries v. Belleville Iron Works Co., 18 La.Ann.
688.
[
Footnote 2]
Civil Code, Articles 2675, 2679.
[
Footnote 3]
Code of Practice, Article 287.
[
Footnote 4]
Code of Practice, Articles 679, 683, 706 &c.
[
Footnote 5]
Note to Civil Code, Article 2169.
[
Footnote 6]
8 Martin, N.S., 106.
[
Footnote 7]
5 La.Ann. 712.
[
Footnote 8]
8
id. 372.
[
Footnote 9]
Supra, p.
82 U. S. 555.
