Canal Bank & Trust Co., In re
Decision Date | 24 March 1952 |
Docket Number | No. 40236,40236 |
Citation | 59 So.2d 115,221 La. 184 |
Parties | In re CANAL BANK & TRUST CO. |
Court | Louisiana Supreme Court |
Jas. G. Schillin, Fishman, Reuter, Rosenson & D'Aquin and Warren M. Simon, all of New Orleans, Montgomery, Barnett, Brown & Sessions and Wood Brown, all of New Orleans, for defendants in intervention and appellants.
Walter Lemann, Donaldsonville, Ellis, Ellis & Lancaster and Archie M. Suthon, all of New Orleans, for intervenor and appellee.
This is an appeal from a judgment annulling a contract and ordering the return of the purchase price.
Walter Lemann, as agent of Harold S. Mayer, his undisclosed principal, entered into four simultaneous agreements with the Canal Bank & Trust Company in Liquidation, through the State Banking Commissioner, the special agent and the liquidator in charge of its liquidation, on May 19, 1938 for the purchase of notes of Picard & Geismar, Ltd., having a face value of approximately $40,000 for the sum of $6,228.12. These simultaneous agreements were treated by the parties at interest as one contract. They were also treated by the lower court as one contract and are not treated otherwise by counsel on this appeal. Under the contract, the notes were sold to Lemann 'without any warranty whatever, not even for the return of any part of the purchase price, except as to the genuineness of the signatures and endorsements and the genuineness of the signatures on the guarantees.' It is stated in the contract that there had been partial payments made on the notes which were not endorsed thereon and the purchaser was familiar with these payments and bought only the portion which remained unpaid. It is stated therein that Lemann would return the notes and re-transfer them together with all endorsements, guarantees, etc., after the termination of the receivership and after he receives from the receivership everything that will be payable out of the receivership on the notes, to the Canal Bank & Trust Company in Liquidation for the sum of $434.52. It is provided therein that the object of the sale, assignment, transfer, and the delivery of the notes, endorsements, and continuing guarantees by the bank in liquidation to Lemann, and this agreement of sale and re-purchase, is that Lemann, regardless of the amount, is to receive for his own account any and all sums that may be payable on the notes from the receivership of Picard & Geismar, Ltd., after which the notes, endorsements and continuing guarantees are to be re-transferred to the bank in liquidation. It is provided that the transfer of the notes would not subordinate or effect the right of the bank in liquidation from proceeding against Geismar & Heymann, Inc., guarantors of the notes. It is further agreed therein that as a part of the consideration of the sale that Lemann would transfer to the bank in liquidation 36.21% of any mineral interest or mineral royalties which he might acquire in lands now belonging to Picard & Geismar, Ltd., or which might be acquired by reason of the acquisition of the notes of Picard & Geismar, Ltd., or from any other source. Thereafter, during the month of June 1938 the lands of Picard & Geismar, Ltd., containing approximately 6,300 acres, were sold at receivership sale and acquired by Harold S. Mayer, through an undisclosed agent, Robert E. Lee Mayer, for the sum of $108,000. Sometime prior to January 1939, Lemann contacted the attorneys for the receiver and informed them that he was of the opinion that the claims of all the creditors, some 300, with the exception of two claims held by him and one claim held by another, had prescribed. The attorneys informed Lemann that if he insisted on his position they would contest his right to claim on the notes against the receivership because some of the security attached to the notes had been subordinated some years ago without the consent of Picard & Geismar, Ltd., which in their opinion rendered the notes of Picard & Geismar, Ltd., valueless. One of the attorneys for the receivership told Lemann that if he would not insist that the notes of the other creditors had prescribed the receivership would forget about its defense, that they had been rendered valueless because of an unauthorized subordination. Lemann refused this offer and asserted his plea of prescription against the other creditors and counsel for the receiver asserted their claim that the notes of Picard & Geismar, Ltd., were valueless because of the unauthorized subordination. These issues were decided adversely to Lemann and the notes were held to be valueless against the receivership because of the unauthorized subordination. See International Shoe Company v. Picard & Geismar, Ltd., D.C., 30 F.Supp. 570, which was upheld on appeal by the United States Circuit Court of Appeals for the Fifth Circuit in Mayer v. Gros., 116 F.2d 733. Some years thereafter, Harold S. Mayer instituted the present intervention in the liquidation proceedings of the Canal Bank & Trust Company seeking to have the agreements of Lemann, executed on his behalf for the purchase of the notes, decreed null and void and to recover the purchase price paid for the notes. The liquidators of the Canal Bank & Trust Company reconvened and asked that the validity of the contract be recognized; that the bank in liquidation be decreed the owner of 36.21% of an undivided one-fourth interest in all the minerals and mineral rights in or under the 6,300 acres of land purchased at the receivership sale for Mayer, described in exhibit 'A', and directing and requiring the intervenor to execute the necessary instruments to complete the transfer; and that the intervenor be directed to return the notes to the bank in liquidation upon payment of the sum of $434.52 in conformity with the contract.
The lower court, on trial of the case, gave judgment in favor of the plaintiff decreeing the contract null and void and judgment against the defendant for the purchase price of the notes. The liquidations of the bank have appealed.
The appellants contend that the contract involved herein is a sale without warranty or recourse, not even the return of the consideration. The appellants take the position that the thing sold was a litigious claim or a right to make a claim against the receivership.
From the evidence it appears that the firm of Picard & Geismar, Ltd., had been in receivership in the Federal Court for the Eastern District of Louisiana for some years prior to 1937. Sometime in the latter part of 1937 or the early part of 1938, Lemann began negotiations with the view of purchasing the Picard & Geismar, Ltd., notes involved herein. He interested his brother-in-law, Harold S. Mayer, the intervenor herein, in the proposition and throughout the remainder of the transactions in respect thereto he acted as the undisclosed agent of Mayer, who furnished the money to consummate the transaction. His negotiations finally culminated into the purchase of the notes and the execution of the four instruments constituting the contract.
The notes involved in this suit were previously owned by the Marine Bank & Trust Company, whose president agreed to subordinate certain mortgage notes given as security to receivership certificates. The mortgage notes given as security were on the Clover Ridge Planting & Manufacturing Company, Inc., which was at that time in receivership. Subsequent to and after the Marine Bank & Trust Company was merged with the Canal Bank & Trust Company, the mortgage notes were further subordinated to receivership certificates during the year 1928. In the year 1930 a controversy arose in the receivership proceedings of the Clover Ridge Planting & Manufacturing Company, Inc., between the Canal Bank & Trust Company, which was not in liquidation at that time, and the holders of receivership certificates regarding the mortgage notes and the certificates. The controversy was finally terminated by this court on appeal in 1933. In re Clover Ridge Planting & Mfg. Co., 178 La. 302, 151 So. 212. It appears that Lemann was a counsel of record in the case and his name appears on the brief filed in this court wherein the subordination of the mortgage notes are discussed. The opinion handed down by this court refers to the subordination of the mortgage notes. At the time Lemann purchased the notes he was in a position to know of the subordination for the reason...
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