Fort Pitt National Bank v. Williams

The opinion of the court was delivered by Fenner, J.

The statement of this case, so far as essential for its decision, may be made in very brief and simple terms.

L. O. Desforges & Oo. was a commercial firm, engaged in the coal trade, and domiciled and doing business in the Oity of New Orleans, of which L. O. Desforges, of New Orleans, and Joseph B. Williams, of Pittsburg, Penn., were members.

In February, 1889, the plaintiff bank and.the Mechanics’ National Bank, of Pittsburg, held a large amount of the unmatured notes of L. O. Desforges & Oo., endorsed by the Grand Lake Goal Oo. Both the firm of Desforges & Co.', and the Grand Lake Coal Oo., had failed and gone to protest to the knowledge of the two banks just named.

In this state of facts, Williams executed his individual due-bills in favor of said banks, the sole consideration of which was his liability on the unmature firm notes held by them.

Upon these due-bills the banks immediately instituted attachment suits in the Civil District Court of New Orleans against Williams, under which they attached, as the property of Williams, the “ E. A. Burkes,” and the barges “Keystone” and'“Maud McLain.” Williams promptly entered a personal appearance and confessed judgment, upon which confession final judgment was entered with privilege on the property attached, execution was issued and the property was seized under writ of fieri facias on March 6, 1889.

On March 8, 1889, the firm of L. O. Desforges & Co., and L. O. Desforges individually, made a cession of property under the State insolvency laws, and filed its schedules, which embraced as assets of the firm the three vessels above mentioned. L. A. Jung was duly appointed provisional syndic in the insolvency, and immediately ap *421 plied for and obtained from the court an order of sale of the vessels, which was proceeding to execution when enjoined by the banks.

Agreements were reached by which the sheriff sold all the vessels, and the proceeds were deposited in the judicial depositary to represent the property sold without prejudice to the rights of parties, which are to be the same upon the proceeds as they would have been upon the property if it stood unsold.

The sole contest is between the syndic and the banks as to the disposition of these proceeds.

We accept the statement of the counsel for the banks that the case hinges upon the question of title to the vessels, and his concession that if the vessels belong to the firm of L. O. Desforges & Go., and not to Williams individually, his case is lost.

It is conceded that the proceeds of sale of the “ Keystone ” were absorbed by admitted liens; so that we have only to consider the titles to the “Burke ” and the “ McLain.”

The “Burke” was purchased from the estate of James B. Eads, and the title stands recorded in the Customhouse in the names of O. L. Desforges and Joseph B.' Williams.

The title to the “ McLain ” stands recorded in the name of Joseph B. Williams.

The syndic claims that although the titles were so made both boats were really bought and paid for by the firm of O. L. Desforges & Go., and, with the full understanding of all parties that they were really the property of said firm. •

The banks object to any proof of these allegations on the ground that such equitable title, even if established, can have no effect against them, who are third persons unaffected with notice, and are bound only by the recorded title.

They rely upon Section 4192 of the United States Revised Statutes which provides:

“ Sec. 4192. No bill of sale, mortgage, hypothecation or conveyance of any vessel, or part of any vessel of the United States, shall be valid against any person other than the grantor or mortgagor, his heirs and devisees, and persons having actual notice thereof", unless such bill of sale, mortgage, hypothecation or conveyance is recorded in the office of the collector of the customs where such vessel is registered or enrolled.”

It is' not denied that, as between Williams and the firm, the latter *422 could set and prove its equitable title although unrecorded, because Williams is necessarily affected with notice.

It is claimed, however, that, as attaching creditors, they have acquired rights superior to those of their debtor, and can maintain his title though he himself could not.

This is contrary to the general principles of attachment, which give to the attaching creditor no higher or better right than his debtor had to the .propex’ty attached. Oakey vs. R. R. Co., 13 La. 570 ; Hepp vs. Glover, 15 La. 461 ; Deloach vs. Jones, 18 La. 447 ; Frazier vs. Wilcox, 4 Rob. 517 .

“It takes effect only on such interest as the debtor has in the property at the time of the levy, and does not per se affect the title at all.” 1st Am. Encyc. of Law, p. 930.

It is true that under the registry laws of Louisiana, an attacking creditor of the recorded owner of real estate will hold it against any outstanding unrecorded title; but that results from peculiar provisions of our laws.

It may be that a similar interpretation will be given to the statute of the United States regarding the registry of title to vessels; but we are cited to no decision of the Federal Courts going to that extent. On the other hand, we are referred to sundry decisions, Federal and State, which strongly intimate that the object and effect of the statute are simply to protect persons who have dealt on the faith of the recorded title, and as to whom it would be a fraud to give effect to unrecorded titles to their detriment. Richardson vs. Montgomery, 49 Pa. St. 203; White Bank vs. Smith, 7 Wall. 655 ; Morgan vs. Shinn, 15 Wall. 109 ; Mott vs. Buckman, 3 Blatch. 75; Bradley vs. Johnston, 41 Maine, 582. The question is not free from doubt, but we are not disposed to give to the statute the sovereign effecf claimed- for it. It is, however, a satisfaction to know that, if we have erred in our construction of this Federal statute, the means of correction lie open.

We therefore conclude that the evidence was properly admitted. As to the effect of the evidence, it establishes to our entire satisfaction, as’it did to that of the District- Judge, that the equitable title to these boats rested in the firm of L. O. Desforges & Co.; that they were bought for the firm use and for the firm account, and paid for with the firm funds; and the attempt of Williams to divert them to the benefit of particular creditors of the firm, under the transparent *423 pretext of making them his individual creditors by giving his due bill for the unmatured debt due by his firm, and by such collusive attachment proceedings as followed, can not be countenanced.

Judgment affirmed.