Bank of Louisiana v. Farrar

The judgment of the court was pronounced by Eustis, C. J.

On the 19th of April, 1838, at Woodville, Wilkinson county, State of Mississippi, Preston W. Farrar and his wifo acknowledged themselves to be jointly and severally indebted to the plaintiffs in the sum of $29,000, for a loan ofmoney stated to have beenon that day mado to them by the plaintiffs, which they acknowledged to have received, and which they bound themselves to pay on the 19th of April, 1839, fixed. To secure tho payment of this debt, on the same day and at the same place, the parties mortgaged to the plaintiffs a certain plantation and slaves in the parish of Rapides.

The plaintiffs contend that, under the 32d section of the charter of the Bank of Louisiana, Mrs. Farrar bound herself jointly and severally with her husband, amd that her rights and interest in the property mortgaged are affected by this obligation. The section reads as follows: “In all hypothecary contracts or obligations entered into by any individual with, or in favor of tho president, directors and company of tho Bank of Louisiana, according to the true intent and meaning of this act, it shall be lawful for the wifo of such individual to bind herself jointly and in solido with him, and, in such case, the property and rights of said wife, either dotal or of any other description, shall be affected by said contracts or obligations, provided said wife be of age of majority at the time of entering into such contracts or obligations.”

The charter of tho bank was passed on the 7th of April, 1824, and it is contended on the part of Mrs. Farrar, who is the sole appellant, that this section is repealed by article 2412 of the Civil Code, which provides that, “ Tho wifo, whether separated in property by contract or by judgment, or not separated, -cannot bind herself for her husband, nor conjointly with him, for debts contracted .by him before or during the marriage.”

*54 The Code was promulgated and went into effect in May, 1825. The article 2412 was not contained in the old Code of 1808, but was one of the amendments proposed by the commissioners in their projit to the legislature. Vide projét, page 70.

The question of the repeal of this section by the Code is not one of the construction of conflicting statutes, but rather of the interpretation of a system of laws. The body of law, promulgated under the title of the Civil Code of the State of Louisiana, is not to be considered technically as a statute, but as a Code, and effect must bo given to its provisions as such. It becomes necessary to state what the law was, on this subject of the incapacity of married women to bind themselves for the debts of their husbands, previously to the Code of 1825.

The 61st law of Toro was then in force, and it provided as follows: “From henceforth it shall not be lawful for the wife to bind herself as surety for her husband, although it should be alleged that the debt was converted to her benefit; and we do also order that when the husband and wife shall bind themselves jointly in one contract, or severally, the wife shall not be bound in any thing, unless it shall be proved that the debt was converted to her benefit, and she shall then be bound in proportion to what shall have been so applied. But if the debt so applied to her use served only to procure that which her husband was obliged to supply her with, such as food, clothing and other necessaries, then we say she shall not be bound in any thing.” Novissima Recopilación, XO, 11, 3.

It was contended that this law of Toro was repealed by the Code of 1808; but the Supreme Court held otherwise, and the provisions of the Code and of the Spanish law remained equally in force. Durnford v. Gross, 7 Martin, 489 .

By the Code of 1825 the Spanish laws on that subject were repealed, and this article, and others of the Code in pari materia, became the law on the subj ect of the disabilities of married women to contract.

The article 2412, under consideration, we consider as making no change in tho law as it then stood, but as an embodiment of its different provisions and of the jurisprudence at the time it was enacted.

The exception in section 32 of the charter existed before the Code, and as no change was made in the law we see no reason why it should be held to be repealed by the enactment of article 2412. It was an exception to the former law; it remains an exception to this. There may be some difference between article 2412 and the law of Toro concerning the proof; but as to the power, or faculty of the wife to bind herself, there is no difference. ,

Wo do not understand that, by a revision of the laws, and the enactment of a law in which no change purports tobe made of tho legislation on that subject, where there is no clause of repeal, nor any intimation of the legislative will to that effect, that a special privilege in favor of a public institution can be held to be repealed. We do not understand such to be the legal intendment of the article under consideration. All laws must be taken and considered as forming a part of one system, and be construed with reference to each other.

In Louisiana special laws form a large portion of our legislation. It is one of the evils of the times. An effort was made in the late convention to place some restraint on what was felt to be an abuse in legislation. It failed, and special legislation is apart of our system. We cannot hold this section to be repealed by what we consider an implication; for the exception of the 32d article is no more in contradiction with article 2412, than it was to the laws in reference *55 to which it was passed; the relation it bears to each is to all intents and purposes identical.

But if we had any difficulty in ascertaining the intendment of this article, it vanishes when we take into consideration the facts attendant on its enactment, and the subsequent legislation on this subject. The charter of the bank was passed, in April, 1824. At that time the projét, in which this article figures, was before the legislature, and had received a most elaborate discussion. The i-emoval of the disability and its establishment were made at the same session. This charter was a matter of most serions interest to the agricultural interests of the State. It was for the relief of that interest, and on its credit that the bank was established. The State owned one-half its stock, and, by its bonds, provided one-half of its capital. The agricultural interest could not be reached without a removal of this disability on the part of married women, who owned a large portion of the best estates, and who had rights on the lands and slaves of the planters to a still greater extent. To suppose that the legislature, at the time of making this provision for the security of the loans in which one-half the capital of the bank was to be invested, would render it inoperative by means of a general law, is inconsistent with all ideas not only of probability but of legislative propriety. The hypothesis brings us to a conclusion from which a court of justice must recoil.

But the subsequent legislation is still more conclusive on this point. All the banks chartered by the legislature since 1824 have the same provision in their favor, as to the power of married women to bind themselves, as that contained in the charter of the Bank of Louisiana.

The establishment of banks necessarily threw upon them the business of lending money, and we can say, without danger of exaggeration, that nine-tenths of the whole debt due by the landed interest in this State, was due to the banks ; so that, as far as the general policy of the State can be inferred from legislation and its necessary result, it was in favor of removing the disabilities of married women to bind themselvesfor the debts of their husbands, rather than of restraining them from making such contracts. The cases under the exception far exceed those under the operation of the rule. We believe such to be universally the case wherever the prohibition existed.

In Rome, a woman could not become a surety for another. The Senatus- consultum Velldanum destroyed the obligation. Justinian afterwards permitted yvomen to renounce the exception which the Senatusconsultum gave them. This law was in force in the parts of France under the jiu'isdiction of the parliament of Paris, and the prohibition of the Senatusconsultum became useless, in consequence of its renunciation being made a matter of course by notaries. Pothier on Obligations, No. 388.

By the laws of Spain the wife could bind herself for her husband’s debts, provided she renounced the law of Toro. Beauregard v. Piernas, 1 Martin, 294 . Banks v. Trudeau, 2 Martin N. S. 39. Perry v. Grebeau, 5 lb. 19. 7 Martin, 489 .

In France, under the Napoleon Code, the wife labors under no disability to bind herself for the debts of her husband, since the repeal of the Senatuscon-sultum Velldanum.

The authorities on this subject are collected and well stated, in the learned argument by the counsel for the plaintiff in the case already cited of Darnford v. Gross .

*56 In England, and in most of our sister States, where, by marriage, the legal existence of the wife is incorporated in tho person of tho husband, the right of the wife to bind her separate estate by contract, can no longer be questioned. 1 Blackstone, 442. Story’s Equity, § 1400, 1401, and notes.

Being, therefore, of opinion that the section under consideration is not repealed, it is unnecessary to examine the questions concerning the power of the legislature over personal rights and disabilities, or the nature and character of tho privilege given to the bank by this section.

It is next urged, on behalf of the defendant and appellant, that, at the time she signed the bond and mortgage sued on, she was not indebted to tho bank, that she never received any sum of money loaned by the bank, nor was ever, directly or indirectly, benefitted by the money alleged to have been loaned to her husband; that, in point of fact, the bond and mortgage were not given to secure any loan or discount made by said bank to the defendant, or to her husband, but to securo a debt duo by the husband to third persons, and that, for that reason, the bond and mortgage did not create such an hypothecary contract as a married woman is authorized to mako under the charter.

The facts of the case, wo infer from the evidence and written argument of tho counsel, to bo, that previous to tho execution of tho bond and mortgage, the bank held notes of Hermann, Briggs & Co., to an amount exceeding that mentioned in the bond ; that that house had stopped payment, and the husband of the defendant was its debtor; that on this bond and mortgago a loan was eifect-ed from the bank, tho whole proceeds of which were not actually paid in hand to tho husband and wife, but of which a large portion was transferred to the credit of Hermann, Briggs & Co., on the joint check of the parties to the bond, the bank delivering up to Hermann, Briggs & Co. their notes for nearly the amount, excepting a sum of $818 83, which was passed to the general account of Hermann, Briggs & Co.

The portion of the loan passed to the credit of Hermann, Briggs & Co., was $24,443 25, and tho entry is made in their books on tho 26th May, 1838. This sum exceeded the debt due by Mr. Farrar to Hermann, Briggs & Co., who refunded him the difference, $3,520 18. Of the disposition of the difference between the proceeds of the loan, $29,000, less the discount, and the amount transferred by the check of Mr. Farrar to Hermann, Briggs & Co., wo have no evidence before us.

It is very far from being clear to us that this transaction, so far as the bank is concerned, is not a loan. No privity on the part of the bank is proved to have existed as to the future disposition of the proceeds of the bond, still less any condition imposed to appropriate them to the payments of the debts due the bank by Her-mann, Briggs & Co. Wo should hesitate beforo we could infer such an agree-vment from the fact that a portion, even a large one, had been so appropriated, on the joint check of the parties. The amount thus passed to the credit of Her-inann, Briggs & Co., was not the whole proceeds of the loan, and exceeded tho debt due them by Mr. Farrar by some $3,500.

The argument is that, if tho proceeds of this obligation were thus applied to the payment of the debt of a third person, there was, in fact, no loan, and that wo must not look to the form, but to the substance of the contract; that by the 32d section of the charter, tho hypothecary contracts to which the wifo can become a party, nro by tho terms “ according to the true intent and moaning of this act,” limited to the caso provided for in tho thirteenth *57 paragraph oftho fifteenth section, which contains certain provisions — fourteen in number — which are declared to b& fundamental articles of the constitution of the corporation. This paragraph provides that “two millions of the capital stock of said bank shall be appropriated to the sole purpose of being loaned upon notes or bonds, secured by mortgages on immoveable properly, to the satisfaction of the board,” &c.

There having been no loan made within the intendment of this paragraph, it is contended that the obligation of the wife is not within the authorization provided for by the 32d section. But the section does not even mention loans. It provides for all hypothecary contracts or obligations, entered into by any individual with, or in favor of the bank, according to the true intent and meaning of the charter. Any contract that any individual may lawfully make with the bank, according to the terms of the charter, is certainly comprehended within this section. Can the bank make or receive any other hypothecary contracts, except for loans, under the thirteenth paragraph? The charter certainly provides for other cases. In section 9th, with the general powers, is given the power to take mortgages and pledges; to discount, upon banking principles, on such credit and on such security, as they (the directors) may think adviseable.

In section 28 it is provided, that “ all hypothecary bonds loaned upon, and all mortgages given to secure the payments of notes discounted by any of said offices of discount and deposit, shall be made,” &c.

In other sections the general terms, all mortgages, are used, and this 32d section has the equally, if not more comprehensive terms of all hypothecary contracts or obligations entered into by any individual. The terms ‘■'■according to the true intent and meaning of this act,'" we understand to refer to all mortgages which the bank, under its charter, may lawfully receive in the proper and just exercise of its powers, and not merely to loans made under the provision for the appropriation of the fund to be loaned to the landed interest. We do not understand that there is any ground for such a limitation. There is none expressed, nor can any such inference be drawn from the words used.

If the contract made by Mr. Farrar is binding upon him, under the charter of the bank, it was one to which the defendant and appellant could become a parly, and bind her property for the performance of it under the 32d section.

The bond and mortgage, having been passed out of the State, was duly recorded in the parish where the property was situated, and our attention has not been directed to any matter of form which affects their validity.

Judgment affirmed.