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New Orleans National Bank v. Raymond.

The whole controversy in this case is a conflict of privileges. The property was situated in Lafourche; it had been seized and sold under process of the District Court of that parish, and no other court in the State had power or jurisdiction to settle the controversy, and to distribute the proceeds of the sale among the several creditors asserting mortgages and privileges against the property. [The remainder of the opinion considers other questions.]

NEW ORLEANS NATIONAL BANK V. RAYMOND.

(29 Louisiana Annual, 355.)

National bank may sell real estate and take mortgage.

A National bank may sell real estate owned by it and take back a mortgage thereon to secure the payment of the purchase-money.

A

PPEAL from the Fifth District Court, parish of Orleans. CULLOM J.

Charles Louque and Carleton Hunt, for Joseph Billgery, plaintiff in rule, and appellee.

McGloin & Nixon, and Magruder & Richardson, for Mrs. A. B. Baranco, appellant.

SPENCER, J. The Union National Bank of New Orleans sold to Joseph Raymond, by authentic act of date the 27th of February, 1873, a certain parcel of ground in the square bounded by First, Second, Dryades, and Baronne streets, for the price of $14,666.66, one-fifth of which was paid in cash, and for the balance Raymond executed notes at one, two, three and four years, secured by special mortgage and pact of non alienando on the property.

On the 10th of April, 1873, Raymond entered into a contract with the city of New Orleans, acting through its mayor under ordinance No. 2041 administration series. By that contract Raymond bound and obligated himself in substance to erect on said grounds a market-house according to certain specifications; to free the property of all mortgages and incumbrances on or before the completion of said building, and to keep the market as required by

New Orleans National Bank v. Raymond.

the city ordinances, etc. Raymond during the first ten years was to receive all the rents and revenues. At the expiration of the first ten years the city was for the next ten years to farm out the market and take all the rents and revenues in excess of five hundred dollars per month, or six thousand dollars per year; the rents up to said amounts to be paid to Raymond, his heirs or assigns. At the end of this second term of ten years, Raymond was to transfer the grounds and market in full ownership to the city, binding himself not to alienate or incumber the same to the prejudice of this agreement.

On the 10th of March, 1874, the New Orleans National Bank obtained judgment on a bill of exchange for seven hundred dollars against Joseph Raymond, issued execution thereon, seized, and, on the 24th of July, 1876, sold and purchased for one hundred and fifty dollars "all the right, title, and interest of Joseph Raymond in, to, and under the contract made with the city of New Orleans of date April 10, 1873." "The said act of April 10, 1873, conferring upon him the right to the revenues of a market constructed by him at the corner of Second and Dryades streets, in the square bounded by Second, First, Dryades and Baronne streets, for the term of twenty years," etc.

*

On the 5th of September, 1876, said New Orleans National Bank sold and transferred, in consideration of the amount due it, with subrogation, to Mrs. Baranco, all its rights in, to and under said judgment and purchase.

On the 25th of May, 1876, the Union National Bank, under executory process against Raymond upon said vendor's mortgage, seized the above described lots of ground, "together with all the buildings and improvements thereon," and advertised the same for sale on the 1st of July, 1876.

On June 29, 1876, Joseph Billgery purchased and was subrogated to the judgment in the case of "Andrew G. Downey v. Joseph Raymond," for some twelve hundred and fifty dollars, being for work done on said market buildings.

On the 1st of July, 1876, the day of sale, Joseph Billgery paid to the Union National Bank the mortgage note due, and the sale was not made. Subsequently he took up and paid the remaining outstanding vendor's note held by the Union Bank. Billgery did not take a formal act of subrogation at the time of his payment on the 1st of July, but on the 2d of August, 1876, the bank gave him a receipt and subrogation to its rights.

New Orleans National Bank v. Raymond.

Billgery, as subrogee of Union National Bank, caused said property to be re-advertised for sale on February 10, 1877, and re-advertised again for sale on March 3, 1877.

On the 24th of February, 1877, he commenced the proceeding now before us, being a rule taken on Mrs. Baranco to show cause why the act of adjudication by the sheriff to the New Orleans National Bank above described (to which she had been subrogated) should not be erased and canceled from the books of the office of conveyances, for the reason that the same is null and void and operates injuriously to him (Billgery) as a cloud upon the title of said property.

Mrs. Baranco pleads by way of exception and answer in substance as follows:

First. That plaintiff in rule, not being a party to the suit of The New Orleans National Bank v. Joseph Raymond, cannot proceed in this summary manner to set aside the adjudication, and should proceed by direct action.

Second. That the pretended mortgage to the Union National Bank is void, as taken in contravention of the laws of the United States, creating National banks; that said bank under said laws is prohibited from owning real estate and from taking or holding mortgages thereon under the circumstances of this case.

Third. That the mortgage to the Union National Bank has been extinguished by payment, and that said Billgery was not subrogated thereto.

Fourth. She alleges her ownership of the rights of Raymond under the said contract with the city, and that she is entitled thereby to the rents and revenues of said market in the hands of the sheriff.

Fifth. By way of reconvention she prays and demands the nullity of Billgery's pretended mortgage rights and for their cancellation, and that she be declared entitled to the revenues of said market.

Upon these issues the case was tried. There was judgment for plaintiff ordering the erasure and cancellation of Mrs. Baranco's title, and decreeing its nullity. She prosecutes this appeal.

[The court here decided a question of practice.]

It therefore only remains for us to inquire whether Joseph Billgery shows an interest in having this done.

He claims to be subrogee of the vendor's mortgage held by the

New Orleans National Bank v. Raymond.

Union National Bank. If that be a valid mortgage and he be the holder of it, his demand is well founded.

Counsel for defendant in the rule urges strenuously that the mortgage in favor of the bank was in its inception null and void, as violative of the National Bank Act. He admits that the bank was the owner of the lots in question, but contends that it could not sell them on a credit, reserving a mortgage and privilege for the price, and that such mortgage and privilege were absolutely void. The 28th section provides as follows:

"And be it further enacted, That it shall be lawful for any such association to purchase, hold, and convey real estate as follows:

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First. Such as shall be necessary for its immediate accommodation in the transaction of its business.

"Second. Such as shall be mortgaged to it in good faith for debts previously contracted.

"Third. Such as shall purchase at sales under judgments or decrees or mortgages held by such association, or shall purchase to secure debts due to said association.

"Such association shall not purchase or hold real estate in any other case or for any other purpose than as specified in this section,” etc.

As stated, there is no dispute as to the bank having been owner of the lots, and therefore it must have acquired in some one of the modes specified in the act. The act gives authority to purchase under certain restrictions, but there is no restriction upon the power" to convey." The intent and policy of the law is manifest. It was to discourage, to prevent, the accumulation of real estate in the hands of these banks. But if such was the intent, it would be strange if the power and right "to convey," to sell, were restricted. We would expect the largest liberty in this direction, as being in furtherance of purposes of the lawgiver. It is unreasonable to conclude that because the law gives the power to do business "by loaning money on personal security," and restricts the right to purchase real estate, that therefore it forbids the sale of such real estate as may have been lawfully acquired upon the usual customary terms of the commercial world, and strikes with nullity such vendors' liens and mortgages as may be retained to secure deferred parts of the price. If defendant's theory be right, then a National bank in Louisiana cannot sell real estate on a credit at all, even without mortgage, for under our law the vendor has for his security, by mere operation of law, both his lien and the right of resolution of the sale, which would constitute real securities for debt in vio

Stetson v. City of Bangor.

lation of the Banking Act. We conclude therefore that there is nothing in the law preventing a National bank from selling its real estate on terms of credit and reserving a mortgage to secure the price.

The remaining question is, was Billgery subrogated to the bank's mortgage? It is unnecessary to discuss the effect of the receipt and conventional subrogation given to him by the bank on the 2d of August, 1876. He was a creditor of Raymond on the 29th of June, 1876, by subrogation to the judgment of Andrew G. Downey. He paid the mortgage note to the bank on the 1st of July, 1876. Subrogation took place by effect of law. C. C. (old) 2157.

There is no proof that Billgery acted as Raymond's agent; that is satisfactory. It is conceded on all sides that it was Billgery's money that was paid, and the weight of evidence is largely in favor of his having done so in his own interest and behalf.

It is therefore ordered, adjudged, and decreed by the court that the judgment appealed from be affirmed with costs of both courts.

STETSON V. CITY OF BANGOR.

(56 Maine, 274.)

Taxation of National banks

·State statute prohibiting banking companies.

Municipal officers cannot assess a tax on shares of stock of a National bank unless authorized by a law of the State.

A statute authorizing "the taxation of all shares in moneyed corporations," held sufficient authority to tax shares in National banks.

A State statute prohibiting the establishment of banking companies in the State, without authority of the Legislature, does not apply to National

banks.

A

SSUMPSIT to recover back taxes assessed April 1, 1864, on plaintiff's shares in a National bank organized under the National Currency Act of 1863.

Rome & J. A. Peters, for plaintiff.

A. W. Paine, for defendants.

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