Cahill v. People's Slaughter House And Refrigerating Company, Limited

• Decision Date: 22 April 1895
• Docket Number: 11,753
• Citation: 47 La.Ann. 1483,17 So. 784
• Parties: A. J. CAHILL v. PEOPLE'S SLAUGHTER HOUSE AND REFRIGERATING COMPANY, LIMITED
• Court: Louisiana Supreme Court

17 So. 784

47 La.Ann. 1483

A. J. CAHILL v. PEOPLE'S SLAUGHTER HOUSE AND REFRIGERATING COMPANY, LIMITED

No. 11,753

Supreme Court of Louisiana

April 22, 1895

Argued April 11, 1895

Rehearing Refused June 29, 1895.

APPEAL from the Civil District Court for the Parish of Orleans. Monroe, J.

Rouse &amp Grant and Bernard McCloskey, for A. J. Cahill and Leon and Charles Godchaux, Plaintiffs and Appellants.

E Howard McCaleb, Jr., Purchaser, and Attorney, for Charles A Thiel, Appellants.

John Dymond, Jr., Geo. W. Flynn, Dinkelspiel & Hart, E. N. Whittemore and John B. Fisher, for Intervenors and Appellees.

OPINION

BREAUX, J.

The plaintiff applied for and obtained an order of seizure and sale upon a mortgage recorded in the mortgage office May 15, 1893, commanding the sheriff to seize and sell the property described in the deed.

The amount of the sale, fifty-six thousand five hundred and fifty dollars, was not sufficient to pay the amount due on the mortgage upon which the process to foreclose issued, much less the debts claimed as privileged.

The contest is between the holders of bonds secured by the mortgage and creditors who claim a superior right under alleged privileges.

The appellants admit that the amounts claimed by these creditors are due and deny that they are entitled to a privilege. The denial is qualified by excepting the Delavergne Refrigerating Machine Company, entitled, it is admitted, to the privilege it claims. The company's property was encumbered with a mortgage of thirty-five thousand dollars. The following are the facts with reference to that mortgage:

The stock of the company was fixed at three hundred thousand dollars. The stockholders were slow in paying their subscriptions. The board, in consequence, determined to borrow the amount of thirty-five thousand dollars on mortgage. It was taken by three of the directors. In other words, these directors received thirty-five bonds for the debt of thirty-five thousand dollars, not matured at the time of the transaction, which the company owed them.

Subsequently the board of directors resolved to finish the plant by borrowing money on bonds secured by mortgage on the company's property, and to exchange a portion of the bonds thus secured for the prior mortgage of thirty-five thousand. The total of the bonds thus secured by mortgage was one hundred and twenty-five thousand dollars, that is, one hundred and twenty-five bonds of one thousand dollars each.

Thirty-five of these bonds were exchanged for the prior mortgage, which these directors holding the prior mortgage accepted and consented to a cancellation of their prior mortgage.

It is proved that more than eighty of these one hundred and twenty-five bonds issued are held by the directors, and as to the 80-125 of the proceeds of the sale the contest is between the members of the board of directors who are creditors (that is, owners of nearly all the bonds secured by mortgages as mentioned supra) and the creditors of the company claiming as privilege, who are:

Manion & Co

$ 4,350 06

Edward Thompson

1,603 51

The Southern Electrical Manufacturing Supply Company

531 00

The Delavergne Refrigerating Company

1,600 00

Frank Schiele

690 23

and the civil sheriff for costs.

These privileges of the first five named creditors were recorded, but not strictly within the time required by law to give them preference over a previously existing duly recorded mortgage securing the claim of a third person.

Manion & Co. and Edward Thompson are for labor and material in the construction of the slaughter house, under Art. 3249, C. C.

The Southern Electrical Manufacturing and Supply Company and the Delavergne Refrigerating Machine Company are for the balance price, admitted, of movables.

The last, Frank Schiele, for salary and labor.

Prior to the sale creditors of the defendant claiming privileges obtained orders for the separate appraisement and sale of particular property.

All the parties were finally brought before the court quasi in concurso.

The plaintiff in the proceedings prayed to have the mortgage securing the bonds held by him decreed prior in rank to any other claim against the proceeds of the sale.

The creditors who claim a privilege urge that the directors of a company by whom a contract is made for labor and materials furnished to the company are not third persons, and can not take advantage of a delay in inscribing the contract or the evidence of the debt. It was proved during the trial that plaintiff is not the owner of the bonds upon which he brought suit to foreclose the mortgage. That they were owned by one of the directors who chose to foreclose in the name of a third person.

The property was adjudicated to a trustee for six of the directors of the company, together with others, not directors. One of these directors is really the owner of the bonds sued on, for whom the nominal plaintiff brought the suit.

The adjudicatees of the property and the nominal plaintiff, appellants, do not oppose the judgment in favor of the Delavergne Refrigerating Ice Machine Company and the civil sheriff for costs; but they pray that the judgments in favor of Manion & Co., Edward Thompson, Frank Schiele, agent, and the Southern Electrical Manufacturing and Supply Company be reserved as far as it gives a privilege upon the property superior to the mortgage of the bondholders.

The controversy on appeal is between the creditors who claim privileges and the creditors who claim on...