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Opinion of the Court.

Assuming for present purposes, that the facts relative to the purchase by complainant of the two notes which form the basis of his claim, and also to the subrogation, are as found by the court below, we pass to the assignment of errors. It is clear that if this were an original suit directly on the notes, to foreclose the mortgage, it could not be maintained, because, under the provisions of the Louisiana law the notes would be prescribed, and the mortgage would be perempted. These notes were both dated January 31, 1870, and matured February 3, 1872, and February 3, 1873, respectively. They were, therefore, prescribed February 3, 1877, and February 3, 1878, respectively, by virtue of art. 3540 of the Civil Code, which is as follows: "Actions on bills of exchange, notes payable to order or bearer, except bank notes, those on all effects negotiable or transferable by endorsement or delivery, and those on all promissory notes, whether negotiable or otherwise, are prescribed by five years, reckoning from the day when the engagements were payable." The mortgage given to secure these notes was recorded February 12, 1870, and, never having been reinscribed, became perempted in ten years from that date, by virtue of art. 3369 of the Civil Code, which is as follows: "The registry preserves the evidence of mortgages and privileges during ten years, reckoning from the day of its date; its effect ceases, even against the contracting parties, if the inscriptions have not been renewed before the expiration of this time, in the manner in which they were first made."

It is also true that a mortgage, under the law of Louisiana, is indivisible, (art. 3282, Civil Code;) and that the foreclosure of it has the effect to extinguish it, even if all the parties to the mortgage have not been made parties to the foreclosure proceedings. Parkins v. Campbell, 5 Martin, La. (N. S.) 149; Pepper v. Dunlap, 16 La. 163.

It is insisted, however, by the complainant that this action is brought not on the aforesaid notes and mortgage directly, but to enforce an obligation growing out of the foreclosure and sale of the mortgaged property- an obligation on the part of the purchaser at that sale to pay to the complainant,

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Opinion of the Court.

out of the net proceeds of the sale, his pro rata share thereof. In other words, the contention is, that the net proceeds of the sale should have been divided ratably among the holders of all the unpaid notes secured by the mortgage; and that, as that was not done by the Quitmans, who purchased the property, an obligation arose on their part to pay the different instalments of the debt, which obligation followed the land, and was not prescribable until at least ten years from the date of the sale. Certain provisions of the Civil Code and the Code of Practice, as well as a number of decisions of the Supreme Court of the State, are relied upon to support this view, all which we shall now consider.

The following articles of the Code of Practice relate to the general question involved:

"ART. 679. When there exists a mortgage or privilege on the property put up for sale, the sheriff shall give notice, before he commences the crying, that the property is sold subject to all privilege and hypothecations, of whatsoever kind they may be, with which the same is burthened, and with the condition that the purchaser shall pay in his hands whatever portion of the price for which the property shall be adjudicated may exceed the amount of the privileges and special mortgages to which such property is subject."

"ART. 686. When a seizing creditor has a privilege or a special mortgage on the property seized, for a debt of which all the instalments are not yet due, he may demand that the property be sold for the whole of the debt, provided it be on such terms of credit as are granted to the debtor by the original contract for the payment of such instalments as are not due."

"ART. 706. But when the property sold is subject to privileges or special mortgages in favor of other persons besides. the suing creditor, the sheriff shall require from the purchaser, and he shall be compelled to deliver to the creditor, whether the sale be made for ready money or on credit, only the surplus of price beyond the amount of the privileges or special mortgages, if there be any surplus."

"ART. 709. The hypothecary action lies against the pur

Opinion of the Court.

chaser of a property seized, which is subject to privileges or mortgages in favor of such creditors as have said privileges and mortgages, in the same manner and under the same rule and restrictions as are applicable to a third possessor of a mortgaged property."

One of the leading cases relied on is Pepper v. Dunlap, 16 La. 163, 169, 170, 171. In that case the holders of the second and third notes of a series of seven, (the first having been paid at maturity,) concurrently secured by a mortgage on certain real and personal property, obtained an order of seizure and sale, on their mortgage against the mortgaged property, praying in their petition that it be sold to satisfy all the notes, but on a credit to meet those not due. The order was issued by the lower court, and the defendant appealed directly to the Supreme Court. After discussing some incidental questions, the court said: "The mortgage is in its nature indivisible, and prevails over each and every portion of all the immovables subjected to it. Louisiana Code, art. 3249 (now 3282). If so, how can property subject to a special mortgage be sold to satisfy a part of the debt, the whole of which the mortgage secures; would the purchaser acquire such title as he is legally entitled to, and would he not, on the contrary, have to run the danger of being disturbed for the payment of the balance of the debt, although the price of his purchase would be the full value of the property? Such proceedings would, in our opinion, be met with such difficulties and inconveniences that an injury must necessarily result to either of the parties, and we cannot sanction the doctrine that the creditor of part of a debt secured by a special mortgage, for which notes have been given, may be allowed or must be restrained to seeking and obtaining the satisfaction of his claim out of the sale of the property mortgaged for the whole, without any regard to the right of those who may be the holders of the other notes, and with an entire disregard of the consequences as to the purchaser of the property. Our laws being silent on this subject, we must reason by analogy." And after discussing the various articles of the Code of Prac tice relating to this subject, the court went on to say: "It is

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Opinion of the Court.

clear, then, from these articles, that the purchaser of the property is personally bound for the surplus of the adjudication, still secured by special mortgage on the property sold, and that he holds said surplus in his hands, subject to the claim or call of the creditors who had the inferior mortgages, and who had nothing to do with the sale from which said surplus proceeded, and that when it is demanded of him, if he does not pay it, he is subject to being proceeded against in the same manner as if he were a third possessor. This, it seems to us, would be a safe and proper rule to adopt in a case like the present, where the different instalments are secured by the same mortgage, and where the rights of the creditors are of equal dignity, and we cannot see any good reason why, in the absence of any law, it should not be adopted. We think, therefore, that we may safely establish, as a rule of practice, that when a seizing creditor only sues for such instalments of a debt secured by privilege or special mortgage as are due, the property so mortgaged is to be sold for the whole of the debt, on such terms of credit as are granted by the original contract, although such creditor does not show that the subsequent instalments belong to him, or that he is the holder of all the notes mentioned in the contract of mortgage, and that it suffices that the several instalments, as are not due, be mentioned in the petition."

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Johnson v. Duncan, 24 La. Ann. 381, resembles the case at bar in some respects. In that case the plaintiff was the owner and holder of one of a concurrent series of notes secured by mortgage on a plantation. The holder of the other notes of the series foreclosed the mortgage, and the property was sold to the defendant for an amount not quite sufficient to satisfy the whole indebtedness. The court said: "The defendant was bound to retain in his hands for the benefit of the plaintiff's note the pro rata of the price coming thereto by law, and to pay the same with interest when demanded. We do not think he was bound for any more than this, but judgment to this extent may be properly given under the pleadings and evidence; and this view renders it unnecessary to pass upon many technical points presented in the argument. The

Opinion of the Court.

principal defence urged is that of peremption. The defendant contends that the mortgage was first recorded in 1859, and was not reinscribed, and that the plaintiff, whose suit was not instituted till 1871, lost his rights against defendant by peremption. This, we think, an error. The obligation of defendant springs from his purchase, and the duty of retaining in his hands the proportion of price coming to a concurrent mortgage note not embraced in the judgment under which the sale was made, and to deliver such proportion to the holder of such note. An hypothecary action is provided against him. As to him, the mortgage of the concurrent creditor requires no reinscription, for he has assumed the debt to the extent of its proportion of the purchase money, which he must retain."

In Soniat v. Miles, 32 La. Ann. 164, 166, the court, quoting from the syllabus in Parkins v. Campbell, 5 Martin, N. S. 149, said: "When a debt, secured by mortgage, is due in several instalments, and the assignee of the second causes the property to be seized and sold, the sale gives a complete title to the purchaser, and the creditor of the first instalment cannot seize the property in his hands, unless he alleges and proves that the sale is an absolute nullity, or unless he proceeds against that purchaser, by the hypothecary action, for any proportion of the price to which he may be entitled, under a prior or concurrent mortgage."

These authorities establish the principle that the holder of one or more of a series of notes secured by a concurrent mortgage is entitled to a pro rata share in the net proceeds arising from the sale of the mortgaged property at the suit of a holder of any of the other notes, and that an hypothecary action lies to enforce such claim. And one of them, Johnson v. Duncan, lays down the principle that, as regards the purchaser at the foreclosure sale, no reinscription of the mortgage is necessary, because he has assumed, by his purchase, the payment of the proportionate share of the debt. And the reasoning of the court in that case inevitably leads to the conclusion, that the basis of the hypothecary action provided by the Code in such cases is the obligation which the law casts upon the pur

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