Buchler v. Fourroux

• Decision Date: 06 March 1939
• Docket Number: 34951.
• Citation: 190 So. 640,193 La. 445
• Court: Louisiana Supreme Court
• Parties: BUCHLER v. FOURROUX (HOWARD, Intervenor).

190 So. 640

193 La. 445

BUCHLER v. FOURROUX (HOWARD, Intervenor).

No. 34951.

Supreme Court of Louisiana.

March 6, 1939

On Rehearing June 26, 1939.

Appeal from Twenty-Fourth Judicial District Court, Parish of Jefferson; L. Robert Rivarde, Judge.

Suit by Mrs. C. A. Buchler against Charles Fourroux to foreclose a chattel mortgage on a building, wherein Sam Howard intervened to enjoin sale of the building. From a judgment dismissing the suit in intervention, intervener appeals.

Reversed and judgment rendered decreeing chattel mortgage to be void.

Theodore Cotonio, of New Orleans, for Sam Howard appellant.

L. H Gosserand, of New Orleans, for appellee.

Scott E. Beer, Dart & Dart, through Louis Guidry, J. D. Dresner Raymond Gauche, Eldon S. Lazarus, Charles J. McCabe, Fontaine Martin, Jr., Roger Meunier, George Montgomery, John J. McCloskey, Hyman Mithoff, Charles J. Rivet, William J. Waguespack, Jr., Fred S. Weis, Yarrut & Stich, Fred Zengel, and Fred Zengel, Jr., all of New Orleans, amici curiae.

LAND Justice.

Plaintiff obtained an order of executory process on March 16, 1938, against defendant, Charles Fourroux, on a note secured by chattel mortgage executed under Act No. 198 of 1918 by defendant on a certain building located on a lot in the Town of Kenner, which had been leased by defendant from A. J. Cristina, the record owner of the lot.

Section 1 of Act No. 198 of 1918 specifically provides that it shall be lawful to mortgage, among the movables therein enumerated, ‘ buildings on leased ground.’

The chattel mortgage was executed on November 16, 1934, and recorded in Chattel Mortgage Book 7, Folio 178 as Entry 1072 in the Mortgage Office of the Parish of Jefferson.

Thereafter, defendant, Charles Fourroux, purchased the lot on which the mortgaged building was located and executed a conventional mortgage on the building and lot in favor of J. P. Morgan. The intervenor, and plaintiff in injunction, Sam Howard, later acquired this note, which was secured by the conventional mortgage, which was executed on June 30, 1936.

In the case of Sam Howard v. Charles Fourroux, No. 12322 on the docket of the District Court for the Parish of Jefferson, Howard brought suit via ordinaria to enforce the mortgage on the property, both as to the lot and the building thereon, and obtained judgment against Charles Fourroux for the amount of the mortgage note, with interest, attorney's fees, and costs, with recognition of the mortgage. This judgment was recorded in the Mortgage Records of the Parish of Jefferson.

Howard intervened in the foreclosure proceedings brought by Mrs. C. A. Buchler in her suit against Charles Fourroux, No. 12880 on the docket of the District Court, and sought to enjoin her and the sheriff from proceeding further in the executory proceedings and from attempting to sell the building on the mortgaged property.

The main grounds for the injunction are alleged as follows:

‘ That the so-called chattel mortgage under which said order for executory process was granted is null and void for the reason, if it is claimed that said mortgage was granted under the provisions of Act No. 198 of 1918 at page 372, that said act violates Article 3, Section 16 of the Constitution of 1921 (and Article 31 of the Constitution of 1898) in this, that the body of the act is broader than its title and therefore unconstitutional.’

‘ That the only law under which a mortgage can be granted on buildings erected by a lessee on leased ground is Act No. 186 of 1926, approved July 10, 1926, and said act specially provides that no mortgage granted under said act shall affect third persons unless and until recorded in the manner provided by law for the recordation of conventional mortgages upon real estate; and petitioner avers that no such recordation was made or is now of record in the office of the Clerk of Court and ex-officio Recorder for this Parish.’

‘ Petitioner further avers that at the time of the granting of the mortgage by said Fourroux under which your petitioner filed suit and secured judgment; said mortgage having been originally granted in favor of J. P. Morgan by act before Thomas J. Fitzgerald, Notary Public, June 30, 1936; the said J. P. Morgan, mortgagee, secured a certificate of mortgages from the Clerk of this Court and said certificate was clear and showed no mortgages whatever against the said Charles Fourroux except a small claim of about Thirty Dollars ($30.00) which was subsequently satisfied.’

After hearing had, the trial Judge set aside the preliminary injunction issued in the case, and rendered judgment in favor of Mrs. C. A. Buchler, defendant in injunction, against Sam Howard, plaintiff in injunction, rejecting his demand and dismissing his suit at his costs.

From this judgment, Sam Howard, plaintiff in injunction and intervenor, has appealed.

(1) The title of Act No. 198 of 1918 is ‘ An Act To grant the right to mortgage movable property; to provide the method of executing, recording, foreclosure and enforcement of such right of mortgage,’ etc.

Section 1 of the Act enumerates the various movables it shall be lawful to mortgage, and includes among them ‘ buildings on leased ground .’

‘ Section 2. Be it further enacted, etc., That every such mortgage of property mentioned in Section 1 shall be in writing, setting out a full description of said property to be mortgaged, so that same may be identified, and also stating definitely the time when the obligation shall mature.’ It is specifically declared in this section that ‘ In order to affect third persons without notice, said instrument must be passed by notarial act and the original or a certified copy thereof shall be recorded in the office of the Recorder of Mortgages in the parish where the property shall then be situated, and also in the parish in which the mortgagor is a resident.’

‘ Section 4. Be it further enacted, etc., that every mortgage shall be a lien on the property mortgaged from the time same is filed for recordation, which filing shall be notice to all parties of the existence of such mortgage, and said lien shall be superior in rank to any privilege or lien arising subsequently thereto .’

Section 6 provides ‘ that for the purpose of this Act, it shall be sufficient for the Recorder of each Parish to keep a book to be known as the Chattle Mortgage Book, which shall be ruled off in columns, with headings as follows:

‘ An index to the Chattel Mortgage Book shall be kept in the same manner as required for other records.’

The act of chattel mortgage held by Mrs. C. A. Buchler was passed by notarial act, and duly recorded in the ‘ Chattel Mortgage Book’ for the Parish of Jefferson.

Under the above quoted sections of Act No. 198 of 1918, it is clear that J. P. Morgan, mortgagee, of the conventional mortgage, upon which Sam Howard relies, and that Sam Howard himself, as the holder of the mortgage note, are affected by notice in this case, as third persons, as to the existence of the prior chattel mortgage in favor of Mrs. C. A. Buchler, although such mortgage was omitted from the certificate furnished by the Clerk and Ex-officio Recorder of the Parish of Jefferson.

To hold otherwise, would be for this court to ignore arbitrarily the plain and unambiguous provisions of Act No. 198 of 1918.

There are indices of both the Chattel Mortgage Book and of the Conventional Mortgage Book in the office of the Clerk and ex-officio Recorder for the Parish of Jefferson, and these indices are equally available to all interested third persons.

So, there is not room, under the provisions of Act No. 198 of 1918, even for a plausible argument of ab inconvenienti . Besides, such argument is of no avail when urged against the positive provisions of the statute, declaring that the recordation of the original, or of a certified copy of the notarial act of chattel mortgage, in the office of the Recorder of Mortgages, shall affect third persons without notice ; and that even the filing of such act of mortgage shall be notice to all parties of the existence of such mortgage .

(2) In the case of Bank of White Castle v. Clark, 181 La. 303, 159 So. 409, 410, the owner of a plantation executed a chattel mortgage under Act No. 198 of 1918 to secure an indebtedness of $6,500 on certain mules, agricultural implements, vehicles, pumps, engines, and syphons, immovables by destination. Thereafter, the owner of the plantation executed a mortgage on the plantation to secure an indebtedness due the Bank of White Castle in the sum of $37,800.

The chattel mortgage was attacked by the Bank on the ground that the movables described therein constituted a part of the plantation and could not be mortgaged or sold separately from the realty.

On the other hand, the holder of the chattel mortgage contended that the effect of the execution and recordation of the chattel mortgage was to deimmobilize the movables and that the recorded instrument was binding upon a subsequent purchaser or mortgagee.

So, in the case at bar, the building on the leased lot became deimmobilized and a movable, if it is contended that it formed a part of the realty, and the recorded act of chattel mortgage was binding upon the subsequent mortgagee, Sam Howard.

As stated in the Bank of White Castle v. Clark, cited supra: ‘ If the movables have been immobilized by the owner of the land, he may subsequently mobilize them by granting a mortgage thereon ‘ for debts or for money loaned or to secure future advances, or to guarantee the performance of any contractual obligations' by complying with the terms of the chattel mortgage statute.’ Act No. 198 of 1918, § 1.

The statute permits the mortgage of ‘ buildings on leased ground’, and such buildings are properly classified...