Livingston's Executrix v. Story/Opinion of the Court

by James Moore Wayne

United States Supreme Court

36 U.S. 351

Livingston's Executrix  v.  Story

The legal question to be decided in this case, depends altogether upon the facts disclosed in the bill, answers and documentary evidence on the record. The complainant charges, that some time previous to the 25th July 1822, being in want of money, he applied to the defendant, and John A. Fort, for a loan, offering as security, a lot on the batture of the suburb St. Mary, between Common and Gravier streets, in New Orleans, on which a building intended for stores, had been begun; that the defendant and Fort had agreed to lend him $22,936, of which a part only was paid in cash, part in a note of John A. Fort, and $8000 of which was, afterwards, agreed between himself, the defendant, and Fort, to be paid by Story & Fort, to one John Rust, a mechanic; who had contracted with complainant, to complete the stores; that to secure the payment of the money borrowed, complainant conveyed to Fort & Story the lot of ground mentioned; and that contemporaneously with the deed of sale, they executed on their part, an instrument in writing, called a counter-letter, by which they promised, on the payment of $25,000, on or before the 1st day of February 1823, to reconvey to the complainant the property which he had conveyed to them. The complainant further charges, that of the sum of $25,000 to be paid by him on the 1st of February, a part of it was made up by a charge of interest, at 18 per cent. per annum, upon the amount of $22,936 actually advanced to him, and on his account to Rust, by Fort & Story. The complainant also transferred his written contract with Rust, to the defendant and Fort, rendering himself responsible for the proper employment of the $8000 by Rust, and which was to be paid Rust, in weekly payments, by the defendant and Fort. Rust, on his part, consented to the transfer of his contract, and accepted Fort & Story in the place of complainant. The stores were to be completed by Rust, by the first of November 1822, in a workmanlike manner, and all the materials, except those already provided, were to be found by Rust; and in his contract, he renounced all claim or privilege upon the building, beyond the $8000 which was to be paid him by Fort & Story, for the complainant. For the deed of sale from Livingston to Fort & Story-the counter-letter to Livingston-Rust's contract, and the transfer of it-all of the same date, see documents, A, B, C (ante, p. 354). The complainant further charges, that soon after the transaction, he left New Orleans, and that when he returned to it, he found that Fort & Story had paid to Rust $8000 on his account; but that little or nothing had been done towards the completion of the stores; so that if the property had been sold on the 1st of February, according to the terms of the counter-letter, it would not have produced anything like its full value. That under these circumstances, he applied to Fort & Story for further time to make the payment of the sum loaned, which they would not consent to, but on the following conditions: that the property should be advertised for sale on the 2d of June 1823; that the sum due them should be increased from $25,000 to $27,500; which was so increased, by the addition of $1500 as interest, at eighteen per cent. for four months, $800 for auctioneers' commissions, $50 for advertising, and $150 arbitrarily added by the said Fort & Story. The complainant states, that being entirely at the mercy of Fort & Story, he consented to those terms, and executed a paper accordingly (ante, p. 356). On the 2d June, the complainant being still unable to repay the actual sum advanced to him, and the additions made by the charge of interest at eighteen per cent., &c., he applied to Fort & Story for a further extension of the time of sale, which they consented to, for two months longer, to the 5th of August, by which his debt to them was augmented to $27,830.76; he agreeing, in writing, that if, on the last-mentioned day, he should fail to pay $27,830.76, then the lot and all the buildings thereon were to become the full and absolute property of Fort & Story (ante, p. 356). The day came, and the complainant did not pay. The defendant had him protested, as he had before done on the 4th of February, for his non-compliance with his agreement to pay the sum of $25,000: and on that of the 5th of August, for his non-compliance with his agreement to pay $27,830.76; and for all damages, costs and charges, and interest, suffered or to be suffered be the said Fort & Story. The defendant and Fort, after this, continued in possession of the lot and buildings, until the death of Fort, which took place in 1828; and after the death of Fort, the defendant Story retained or took possession of the property, by an arrangement with the heirs of Fort. It is to be remembered, that the possession of the property was given by Livingston to Fort & Story, on the 22d of July 1822, when the deed of sale and counter-letter were executed.

Here, it is proper, for a full understanding of the transaction between these parties, to set out, what were the rights of Livingston, and obligations of Fort & Story to Livingston, growing out of the counter-letter, and continued by them, on the subsequent agreement, until that of the 2d of June; when it was stipulated by Livingston, that if he failed to pay on the 5th of August, the property was to become absolute in them.

The counter-letter, after reciting that Livingston had sold and conveyed to them the lot, buildings and improvements, for the sum of $25,000 in cash, declares it to be the true intent and meaning of the parties to said deed of sale, that if Livingston shall pay and reimburse to Fort & Story, $25,000, on or before the 1st of February 1823, then Fort & Story stipulate and bind themselves to reconvey the property to Livington. And the case of non-payment, at the stipulated time, then Fort & Story 'covenant and agree to cause the said property to be sold at public auction, by one of the licensed auctioneers of this city, after twenty days' public notice, on the following terms, to wit, $25,000 in cash, and the residue in equal payments, at one and two years; the purchasers giving satisfactory indorsed notes, and special mortgage on the property, until final payment. The residue, after deducting the costs attending the sale, to be delivered over to the said Edward Livingston.' When the first extension of the time of payment was given, we find, substantially, the clause of the kind just recited. It will be well to give it in terms.

Agreement between Edward Livington and John A. Fort and Benjamin Story: 1st. The sale of lot No. 1, on the batture, with the buildings thereon, to be postponed until the 2d of June next. 2d. On that day, it shall be sold by McCoy & Co., unless sooner redeemed, after being advertised in the Courier de la Louisiane, in French, and the Orleans Gazette, in English, from the 1st day of May previous to sale. 3d. The conditions of the sale shall be $27,350 cash, and the residue at one and two years, with special mortgage; but in this sum is included $850, at which the auctioneers' commission and charges of advertisement are calculated, which are to be deducted or reduced to what they shall really amount to, if payment be made before the 1st of June. 4th. The overplus, after deducting the cash payment, is to be delivered to Edward Livingston. 5th. The counter-letter, executed by Messrs. Fort & Story, shall be delivered up, and the registry thereof annulled, immediately after the signature of this agreement, made by duplicate, &c.

The defendant begins his answer, by denying the right of the complainant to sue in the district court of the United States for the eastern district of Louisiana, on account of both being citizens of the same state; equivalent to a denial of the jurisdiction of the court over the case. He then denies, positively and repeatedly, that Fort and himself, either jointly or separately, ever agreed to lend the complainant $22,936. So far from any loan having been intended by the parties, he says, the negotiation for the sale of the lots began between Fort and Nathan Morse (the latter of whom he states as having acted for the complainant), and that one of them informed him that the complainant wished to raise money on mortgage; that he peremptorily refused to advance any money to the complainant on mortgage. That this refusal was afterwards made by him to the defendant himself; and for a confirmation of his refusal and understanding of the parties, he refers to two notes of Morse, as a part of his answer, both of them addressed to Fort; the first dated the 13th of July, and the other on the day the conveyance of the lot was made to himself and Fort, by Livingston. (ante, p. 360). He then states the sale of the lot to himself and Fort; refers to the deed of sale; and, generally, declares himself and Fort have paid more than the price agreed on for the property so purchased. He then admits the execution, by himself and Fort, on the day of the sale, of an instrument in writing, giving to Livingston the power to redeem; whereby, upon the payment of $25,000, on or before the 1st of February, they were to reconvey the property to Livingston; and if he failed to pay, that Fort & Story were to sell the property so acquired and purchased, and if it brought more than $25,000, that they would give the surplus to the complainant. The answer then contains the failure of Livingston to pay; the extension of time to him by another agreement, to the 2d of June, on which they agreed to postpone the sale; and that Livington was to give them a compensation for the additional chance which the time allowed gave him to repurchase the lot. Upon this agreement the defendant relies, to prove an absolute bill of sale of the property to himself and Fort, at the time of its execution; because the fifth and last clause of it annulled the counter-letter. The defendant recites the second failure of Livingston to pay; the further extension of time to him, to the 5th of August, and Livingston's stipulation (ante, p. 356), by which, on Livingston's failure to pay $27,830.76, and any further sum that Fort & Story may be under the necessity of paying for the care and preservation of the property; the lot and buildings were to become the full and absolute property of Fort & Story; and Livingston's obligation to surrender and cancel all and every writing or other document in relation to the property, that may give him any equity of redemption, or other right in the premises; it being the true intent and meaning of the parties, that in case of failure of payment, the lot and buildings, and appurtenances, are to vest in Fort & Story a full title in fee-simple, for ever. The defendant insists, that Livingston was the guarantor of Rust, for the application of the $8000 to the completion of the buildings. He then relies upon the 93d and 94th articles of the Civil Code of Louisiana, then in force in the state; to give himself and Fort an absolute and irrevocable title to the property, on Livingston's failure to pay on the 5th of August. The articles relied on are: 'The time fixed for redemption must be rigorously adhered to, it cannot be prolonged by the judge;' and 'if that right has not been exercised, within the time agreed on by the vendor, he cannot exercise it afterwards; and the purchaser becomes irrevocably possessor of the thing sold.' He reiterates his denial of any loan, or that time was given to Livingston to repay a loan; but that the extension of time was to enable Livingston to repurchase, or to effect the sale of the property; and that the increase of the sum from $25,000 to $27,830.76, was the sum demanded by them as the consideration of their waiver of their right to have the sale made at the time the money was payable. The defendant denies the deduction of interest at eighteen per cent. per annum, or any other.

To the second interrogatory in the bill, he answers, that, at the time of the purchase, he paid Livingston, in a check on the United States Bank, $12,006.57; in a note of John A. Fort, in favor of defendant, due and paid November 25th, 1822, $2764.83; and to Nathan Morse, Esquire, the attorney of Edward Livingston, $1000; which sum, Morse stated to Story, he considered ought to have been paid him by Livingston, for effecting a sale of the property. To the fourth interrogatory, which is, if Fort & Story did not consent to postpone the sale of the property to the second of June, and did not exact, as a condition of such postponement, that the counter-letter should be cancelled, and that the complainant should pay the sum of $2500, in addition to the $25,000; and whether the sum of $2500 was not made up of interest, charged for four months, at 18 per cent. per annum, of $800 auctioneers' commission, $50 for advertising, and an arbitrary sum of $150, the defendant answers, that Fort and himself did consent to postpone the sale; but that he does not know, except from the act, how the additional sum stipulated to be paid by them was composed; nor does he recollect any memorandum containing the items of the additional sum.

In an exhibit by the defendant, we, however, have a more precise stateof the sum paid to Livingston.

July 26th, 1822, Cash paid E. L. $12,006 57

27th, 1822, J. A. Fort's note, payable 25th

Nov. 2,764 83

Sept. 10th, 1822, Cash paid John Rust at sundry times 8,000 00

Interest 2,228 60-$25,000

Thus, substantially confirming the allegation of the complainant, that the sum of $25,000 expressed on the deed of sale, as the consideration for the purchase, was made up in part of an amount of interest upon that sum, deducted by Fort & Story, contemporaneously with the execution of the deed of sale and counter-letter. There is this difference, too, between the answer of the defendant and the exhibit, that it appears, from the latter, the sum of $1000 paid to Morse, which the defendant, in his answer, alleges to have been paid by him as a part of the consideration for the lot, or on account of Livingston, was not paid to Morse until the 12th of February 1824; more than six months after the time when the defendant considered himself and Fort to have acquired a full and absolute title to the property, from the failure of Livingston to pay on the 5th of August preceding. Upon this item of money paid to Morse, we remark, that the letters of Morse (ante, p. 360), do not prove Morse to have been the agent of Livingston in negotiating the transaction between the parties; but rather that he was, if not altogether the agent of Fort & Story, the agent of both the parties: and that the defendant, without consulting Livingston, graduated the compensation of Morse by his own ideas of the service rendered by him; and chose to pay Morse $1000, after he considered Livingston had forfeited his right to redeem the property. The answer and exhibit are contradictory upon this point; but the latter being more detailed and certain, it forces the conclusion to which we have come as regards that item. We must remark, too, that the answer and exhibit are also contradictory in a more essential particular, as regards the interest alleged to have been deducted from the $25,000, at the time the deed of sale was executed; the exhibit stating the fact of interest being then deducted, and the answer denying that 18 per cent. interest was deducted, or any other.

Soon after the transaction of the 25th of July 1822, the complainant left New Orleans, and did not return to it until after the time within which Rust was to have had the buildings completed. They were not finished, however; and this incident deserves a passing notice. The defendant and Fort had required an assignment of Rust's contract to them; indeed, it is of the same date with the deed of sale and counter-letter, and seems to have been made by Livingston and Rust for them. It was transferred, with Rust's consent, they undertaking to make weekly payments to him of $666, during the progress of the work, to the amount of $8000; and Livingston rendering himself responsible for the proper employment of the money by Rust. In a short time, however, the defendant admits, that he discovered Rust misapplying the money to some other contract; and that, upon remonstrating with him against such conduct, Rust persisted in a declaration of his intention to expend the money otherwise than in the execution of his contract. Under these circumstances, what should the defendant and Fort have done? We think, good faith with Livingston, as they had made themselves his agent to disburse $8000 for a particular object, to which they had become parties, by the transfer of the contract, required from them, in Livingston's absence, to have stopped further payments to Rust, notwithstanding Livingston's responsibility for the proper employment of the money; for Rust's obligation to them, under the transferred contract, was, to have the stores finished by the 1st of November; and as they held the funds to be applied to that object, they should have withheld them from Rust, when he declared his intention not to do so, and had ceased to work upon the buildings. Rust's conduct was as much a breach of his contract with them, as it was with Livingston; and they should have protected themselves and Livingston, which they could easily have done. Instead of this being done, the defendant admits, he continued the weekly payments to Rust, after he had discovered the misapplication of the money; and that but $1000 of the $8000 were applied to the buildings. They neither protected themselves nor Livingston: and it cannot be disguised, that the misapplication of the money was much more fatal to Livingston than themselves; for the buildings being unfinished in November, Livingston was deprived of any further resources from them, to aid him in redeeming the property on the 1st of February, by paying the money advanced by them. This incident gave Livingston a strong claim upon the defendant for an extension of time; and we cannot but remark, that it has a bearing in favor of the allegation of the complainant, that by the contract of July 1825, an absolute sale was not intended. Is it reasonable to suppose, that the defendant and Fort, if an absolute sale had been intended, would have calmly seen the misapplication of $8000 from what they deemed their property, and taken Livingston as a security, upon his general responsibility for Rust; when the defendant himself declares, he would not have loaned Livingston money on any account? The consequence of this misapplication of $7000 by Rust, was to take so much from Livington's ability to redeem the property. The complainant, however, does not pray to be discharged from this sum, on a settlement of the transaction with the defendant; and therefore, the payment to Rust, of $8000, must be allowed to be a charge against Livingston.

We do not deem it necessary to make a further synopsis of the bill and answer. They are contradictory in several points; but a careful examination of them, and of the documents and exhibits attached to the answer, has enabled us to fix the legal character of the transaction, throughout, under the laws of Louisiana; whatever may have been the designs of the parties upon each other, or their individual intentions, when the contract was made, on the 25th of July 1822. The law of Louisiana controls the controversy between these parties; and the first, indeed, only question, to be determined, is, what was the legal character of the contract between them, from the execution of the first papers to the last, on the 2d of June 1823? The defendant's counsel do not contend, that it was an absolute sale. The defendant's answer shows it was not. He admits Livingston's power to redeem, and their obligation to reconvey, as expressed in the counter-letter. For although the conveyance of the 25th of July 1822, is, in form, a positive sale, yet, the counter-letter explains its nature as fully as if it were inserted in that conveyance. Executed, as it was, at the same time, it is a part of the contract; a separate clause, modifying and explaining the other clause, states the deed of sale; the two must be construed together. The Civil Code of Louisiana says, 'all clauses of agreements are interpreted the one by the other, giving to each the sense which results from the entire act.' Civil Code, 1808, p. 270, § 5, art. 61. It can make no difference whether these clauses be on one piece of paper, or on two pieces; whether there be two separate instruments, or one instrument containing the substance of the two. The Civil Code of Louisiana does not require that the stipulation of parties, relative to a sale of property, should be in one instrument. They are to be reduced to writing, and the parts necessarily make up the entire contract; in this regard, corresponding with the rule in equity, which makes a defeasance attach itself to a conveyance, absolute in the first instance, converting the latter into a mortgage, as it is expressed by Chancellor KENT, in (4 Kent's Com. 135) treating of mortgages. 'The condition upon which the land is conveyed is usually inserted in the deed of conveyance, but the defeasance may be contained in a separate instrument; and if the deed be absolute in the first instance, and the defeasance be executed subsequently, it will relate back to the date of the principal deed, and connect itself with it, so as to render it a security, in the nature of a mortgage.' We do not mean to be understood, as applying this rule, to make, under the laws of Louisiana, a constructive mortgage out of an absolute conveyance or deed of sale, on account of some other paper explaining or controlling the first; but have used it only as an illustration, that by the law of Louisiana, a contract of sale, and a power to redeem, need not be in one instrument.

The contract of the 25th of July 1822, not being an absolute sale then, what is it? It is either a conditional sale, vente a r em er e (sale with the right of redemption), a mortgage, or a pledge. The defendant's counsel say it is the first, a conditional sale, vente a r em er e. We will use their language. They say, it is a contract of sale, not a pure and simple sale, but a sale with conditions, and a right or power of redemption annexed, vente a r em er e; that the right and power of redemption stipulated for in this case, is in exact conformity with the provisions of the same code of 1808, in form and substance, and identifies it still farther as a sale, vente a r em er e. That is defined to be 'an agreement or paction, by which the vendor reserves to himself the power of taking back the thing sold, by returning the price paid for it' (Civil Code 245); and the provision of the code regulating the right of redemption, or that 'the time fixed for redemption must be rigorously adhered to, it cannot be prolonged by the judge;' and, 'if that right has not been exercised within the time agreed on by the vendor, he cannot exercise it afterwards, and the purchaser becomes irrevocably possessed of the thing sold;' just as at common law and in equity, in the case of an absolute sale, with an agreement for a repurchase, the time limited for the repurchase must be precisely observed, or the vendor's right to reclaim his property will be lost. 1 Poth. on Sale 183; 1 Ves. 405.

But in this instance, there was no sale corresponding to the vente a r em er e, unless other provisions in the counter-letter than Livingston's right to redeem, shall be altogether disregarded. By the counter-letter, Fort & Story covenant with Livingston, upon his failure to pay, that the property shall be sold at auction, and that the residue of what it might bring, over the sum which they claimed, should be paid to Livingston. Upon failure to pay, the land and buildings did not become the property of Fort & Story. The failure to pay only gave to them the right to have it sold, according to the terms prescribed, for their own reimbursement. Had the contract been a vente a r em er e, the land would have become their absolute property; for the code is, 'if the right to redeem has not been exercised within the time agreed on by the vendor, he cannot exercise it afterwards, and the purchaser becomes irrevocably possessed of the thing sold.' The exclusion of that irrevocable possession by Fort & Story, in the counter-letter, upon Livingston's failure to pay, destroys so principal and effective a provision of the vente a r em er e, that the law will not permit us to consider the contract to have been one of that kind.

The question then recurs, what was the nature of the contract of the 25th July 1822? It is not a mortgage, because no property in the soil, nor right of possession, is given by the contract of mortgage, by the law of Louisiana. By that law, a mortgage is defined to be 'a contract, by which a person affects the whole of his property, or only some part of it, in favor of another, for security of an engagement; but without divesting himself of the possession thereof.' In this instance, possession accompanied the execution of the deed, and has continued in the defendant. It was a part of the contract, and a feature of it entirely inconsistent with a mortgage, under the laws of Louisiana. The contract then, being neither a sale upon condition, with a power to redeem annexed, a vente a r em er e; we must seek further in the laws of Louisiana, to establish its legal character. After much inquiry and deliberation, and a comparison of the Civil Code of Louisiana with the civil law from which the former derives its origin, and with which it is still in close connection, we have come to the conclusion, that the original contract and counter-letter constituted a pledge of real property; a kind of contract, especially provided for by the laws of Louisiana, denominated an antichresis. By this kind of contract, the possession of the property is transferred to the person advancing the money. That was done in this case. In case of failure to pay, the property is to be sold by judicial sentence; and the sum which it may bring over the amount for which it was pledged, is to be paid to the person making the pledge. In this case, a provision was made for a sale by the parties, upon the failure of payment; but this feature of the contract is rather confirmatory of the contract and counter-letter being an antichresis, than otherwise; for it is, at most, only a substitution by the parties of what the laws of Louisiana require; and what we think the law requires to be done by itself, through the functionaries who are appointed to administer the law. But upon this point, let the law speak for itself.

The Civil Code of Louisiana says, 'the pledge is a contract, by which the debtor gives something to his creditor as a security for his debt.' Tit. 20, art. 3100. 'There are two kinds of pledges; the pawn and antichresis.' 'A thing is said to be pawned, when a movable thing is given as security; the antichresis is, when the security given consists in immovables.' Tit. 20, art. 3102. 'The antichresis shall be reduced to writing. The creditor acquires by this contract, the right of reaping the fruits or other revenues of the immovables to him given in pledge, on condition of deducting annually their proceeds from the interest, if any be due to him, and afterwards from the principal of his debt.' Art. 3143. 'The creditor is bound, unless the contrary is agreed on, to pay the taxes as well as the annual charges of the property given to him in pledge. He is likewise bound, under the penalty of damages, to provide for the keeping, and useful, and necessary repairs of the pledged estate, and may levy out of the revenues of the estate sufficient for such expenses.' Art. 3144. 'The creditor does not become proprietor of the pledged immovables, by failure of the payment at the stated time; any clause to the contrary is null; and in this case, it is only lawful for him to sue his debtor before the court, in order to obtain a sentence against him, and to cause the objects which have been put in his hands to be seized and sold.' Art. 3146. 'The debtor cannot, before the full payment of the debt, claim the enjoyment of the immovables which he has given in pledge. But the creditor, who wishes to free himself from the obligations mentioned in the preceding articles, may always, unless he has renounced this right, compel the debtor to retake the enjoyment of his immovables.' Art. 3145.

These appear to us to be equitable provisions, affording ample security to the creditor, and fully protecting the rights of the debtor. Especially protecting the latter from a rapacious creditor, who might otherwise push his debtor's necessities into a relinquishment of all his rights in such a contract; to make himself the proprietor of the thing pledged, upon the failure of the debtor to pay. This is a high species of security, over which the law watches benignantly; because, though one of choice and convenience, very frequently, it is commonly the resort of distress in the last alternative, when all other means of raising money have failed. It was this high species of security, that Fort & Story received from Livingston; or their contract cannot be comprehended within any of the provisions of the Civil Code of Louisiana. If anything else, it is a contract unknown to the laws of that state. We class it with the antichresis; not because the instrument between the parties provides specifically in every particular for the rights and obligations of parties to the antichresis; but because it does so, in the main and substantial requisites of such a contract, and from those main and substantial particulars in this contract, being irreducible to any other kind of contract provided for by the laws of Louisiana. The property was put into the possession of Fort & Story; they looked to it to reimburse them, upon the failure of Livingston to pay; upon that failure, it did not, from the terms of the counter-letter, become theirs absolutely; as, we see, would have been the case, if it had been a vente a r em er e. It was to be sold at public auction; and if a sale should be made for more than they had advanced, the residue was to be paid to Livingston. But no such sale could be made, without a judicial sentence; such a decree was not obtained; no sale was made: so the parties stood under the contract on the 1st of February, when Livingston first failed to pay, as they did when it was first entered into. It is therefore plain, that Fort & Story acquired no absolute property in the lot and buildings, under the contract of the 25th of July 1822; and if they did not, it was only a pledge or antichresis for their ultimate reimbursement.

We now proceed to inquire, whether the antichresis was converted into a sale, by the annulment of the counter-letter, after the 1st of February 1823, under the agreement of the 4th of March. It appears by the document (ante, p. 356), that the complainant did, on the last-mentioned day, execute a paper annulling the counter-letter of the 25th July. But supposing the first to have been so annulled; was not the second, in effect and in terms, another instrument of the same kind, only extending the time for redemption, upon consideration of Livingston's paying a larger sum than the $25,000 originally expressed in the first deed of sale; and providing still for a sale, in the event of Livingston failing to pay a second time, and giving to him the residue, if any should remain, after they were reimbursed. Consequently, until the 2d of June, the pledge continued. Livingston, under the agreement of the 4th March, could, by paying the money at any time, on or before the 2d of June, have prevented the sale; and if a sale was made, he was entitled to the overplus.

The defendant, in his answer, says, that he and Fort agreed with Livingston to postpone the sale until the 2d of June, for which Livingston agreed to pay them a compensation, &c.; that he had until the 2d of June to redeem, but did not do so; and then the property was to have been sold, &c. Thus showing, that the property in his possession continued to be a pledge; and in case of Livingston's not paying, that a sale was to be made, notwithstanding the annulment of the counter-letter. But for what purpose was the counter-letter annulled? Clearly, because an increased sum was to be paid to Fort & Story by the second agreement; and not because it was the intention of the parties to alter, substantially, their respective rights in the property. The counter-letter, the agreement to sell at a fixed day, and after reimbursing the defendant and Fort, to deliver the surplus proceeds of the sale to Livingston; the prolonged agreement to sell, after annulling the first counter-letter, without any renunciation of Livingston's right to the overplus, as set forth in defendant's answer; prove conclusively, to us, that Story regarded the contract to be, what it is really made by the law of Louisiana, a contract of pledge; a security for money advanced upon property. We think it was, in its inception, an antichresis; and that it continued so, until the 2d day of June 1823. Did it, after that time, retain its original character?

The agreement of the 2d of June recites, 'that it being the day fixed upon by the contract between Livingston, and Fort & Story, for the sale at auction of the lot, &c.; and Livingston having requested that the sale might not take place, for his own accommodation; on condition that Fort & Story would assent to that request, Livingston agreed to increase the sum due to them to $27,830.76 (which they deem the whole of the consideration-money paid by them for said lot), and to pay the same on the 5th of August, then next, and any further sum that they may be under the necessity of paying for the care or preservation of the property; in which case, the property should revert to Livingston. But if he should fail to make such payment, on the 5th of August, the said lot should become the absolute property of Fort & Story; it being declared to be the true intent of the parties, in case of failure of payment, that the said lot, with all the buildings thereon, are to vest in Fort & Story, a full, free and absolute title, in fee-simple, for ever.'

Such an instrument as this would have the effect to vest in Fort & Story an absolute title in the property, if it were not positively controlled by the law of Louisiana. We must administer the law as it is; and having established that the original transaction was an antichresis, and continued so, up to the 2d of June, it was not in the power of the parties to give to it such a character, as to vest, by the act of Livingston, an absolute title in Fort & Story. 'In the language of the Code, 1808, tit. Pledge, art. 28, already cited, the creditor does not become proprietor of the pledged immovables, by failure of payment at the stated time; any clause to be contrary is null:' and in this case, it is only lawful for him to sue his debtor, before the court, in order to obtain a sentence against him, and to cause the objects which have been put into his hands in pledge, to be seized and sold.' If such a clause had been inserted in the original agreement, it would have been void. Can it be more valid, because subsequently introduced in a paper having a direct relation to the first contract; and which was intended to alter its character into something which the law prohibits, when it determines the original contract to be one of pledge? We think not. Such an allowance to a creditor would be a precedent, giving to all creditors, in cases of pledges, the power to defeat the benevolent vigilance of the law, preventing them from becoming proprietors of the debtor's property, unless by a decree of the court. We think it immaterial, whether such covenant be in the original agreement, or in a subsequent instrument. In either case, the law is express; the creditor does not become the proprietor, by the failure of the debtor to pay; any clause to the contrary is null.

It would be difficult to find a case more clearly illustrating the wisdom of this rule, than that under our consideration. Story & Fort advanced to Livingston $22,936, and took possession of the lot; looking to Livingston, in the first instance, for reimbursement, and on his failure to pay, to a sale of the lot. Livingston being unable to pay at the time fixed, applied for an extension of time; it is granted, but only upon condition of an addition of $2500 to his debt, for a delay of four months; thus creating a debt of $27,500, in ten months, upon an advance of $22,771.40. This increase, the exhibit attached to the defendant's answer proves was not on account of expenditures upon, or in the care of the property; for that account shows the disbursements of the defendant, in the care of the property, up to the 5th of August 1823, did not amount to $400. When the 2d of June came, Livingston was still unable to pay, and asked for a further extension of time; it was granted; but by another addition to the debt, or to the amount for which the property was already incumbered; and only upon condition that, upon a third failure, the property was to vest absolute in Fort & Story. This final result is what the law of Louisiana intended to prevent, in cases of pledge; and we know not a case to which it can be more fairly applied. In the enforcement of the law, in this case, we are pleased to find authorities for doing so in the courts of Louisiana. We refer to the cases of Williams v. The Schooner St. Stephens, 1 Mart. (N. S.) 417; and the Snydics of Bermudez v. Hanez & Milne, 3 Mart. 17, 168.

In regard to the plea of prescription, urged in the defendant's answer, we think it inapplicable to a case of pledge; and if it be so, then that plea cannot prevail in this case, because the time had not elapsed, which the law of Louisiana gives to a person to sue for immovable property.

It now only remains for us to dispose of the defendant's protest, in the beginning of his answer, against the jurisdiction of the court in this case. The 23d rule of this court, for the regulation of equity practice in the circuit courts, has been relied on, to show that it is competent for the defendant, instead of filing a formal demurrer or plea, to insist on any special matter in his answer; and have the same benefit thereof as if he had pleaded the same matter, or had demurred to the bill. This rule is understood by us to apply to matters applicable to the merits, and not to mere pleas to the jurisdiction, and especially to those founded on any personal disability, or personal character of the party suing, or to any pleas merely in abatement. In this respect, it is merely affirmative of the general rule of the court of chancery; in which matters in abatement and to the jurisdiction, being preliminary in their nature, must be taken advantage of by plea; and cannot be taken advantage of in a general answer, which necessarily admits the right and capacity of the party to sue. Wood v. Mann, 1 Summ. 506.

In this case, the judgment of the court below is reversed, and a decree will be entered accordingly.

THIS cause came on to be heard, on the transcript of the record from the district court of the United States for the eastern district of Louisiana, and was argued by counsel: On consideration whereof, it is ordered and adjudged, and decreed, that the decree of the said district court, dismissing the bill of the complainant, be and the same is hereby reversed and annulled; the court being of opinion, that the transaction of the 25th of July 1822, between John A. Fort, Benjamin Story and Edward Livingston, was a loan to the said Edward Livingston, secured by a pledge, denominated an antichresis, in the law of Louisiana. And it is hereby further ordered, adjudged and decreed, that the cause be sent back for further proceedings in the court below, with directions that the cause be referred to a master, to take an account between the parties. And it is hereby further ordered, adjudged and decreed, that in taking said account, there be allowed to the defendant all advances which shall be shown to have been made by him, or paid on account of the loan made to Edward Livingston, on the 25th day of July, in the year 1822, with the interest which the said Edward Livingston agreed to pay, of eighteen per cent. per annum, to be calculated upon cash advances, from the time it was made, until the 5th of August 1823, and after that time, at legal interest. And further, that in taking said account, the defendant be allowed all reasonable expenditures made by the defendant and John A. Fort, in building, repairing and safe-keeping of the property pledged by the said Edward Livingston, to secure the loan made to him on the 25th day of July 1822, and that the complainant be credited in such account with all such sums as the defendant, or John A. Fort, or either of them, have received from the said property; and that in taking such account, the rents and profits be applied, first, to the payment of the sums necessarily incurred in building and repairing; secondly, to the payment of the interest on the sums which shall appear to have been advanced on the said loan, or in the improvement of the lot; and thirdly, to the discharge of the principal of the said loan. And if, on taking said account, it shall appear that there is a balance due to the complainant, it is hereby further ordered, adjudged and decreed, that the defendant pay to the complainant such balance, within six months from the time of entering the final decree in the cause, and shall surrender and reconvey the said property to the complainant, or such person or persons as shall be shown to be entitled to the same. And if, upon the taking of said account, it shall be found that any balance is due from the estate of the said Edward Livingston, deceased, to the defendants, it is hereby further ordered, adjudged and decreed, that on paying or tendering to the defendant the said balance, he shall deliver up the possession, and reconvey to the person or persons who shall appear to be entitled to the same, the property so pledged, to secure the aforesaid loan. And it is further ordered, adjudged and decreed, that in case a balance shall be found due to the defendant, and shall not be paid within six months after a final decree of the district court, then the said property shall be sold, at such time and on such notice as the said court shall direct; and that the proceeds be first applied to the payment of the balance due the defendant, and the residue thereof be paid to the complainant. ^[1]

TANEY, Ch. J., having been of counsel in this cause, did not sit in the same.

absolute property of the said Fort and Story; and the said Livingston hereby engages thereupon to surrender and cancel all and every writing or other document, in relation to said property, that may give to him any equity of redemption or other right to the same premises, it being the true intent and meaning of the parties, that in case of failure of payment, as aforesaid, that said lot, with all the buildings and appurtenances to the same belonging, are to vest in said Fort and Story a full title in fee-simple for ever. Thus done and passed in my office, on the day, month and year above written, in the presence of J. B. Desdunes, junior, and Charles Janin, witnesses, residing in this city, and requested to be present, who, together with the parties, signed this act, as well as me the said notary, after the same had been fully read and understood.

^[1]

For further proceedings in this cause, see 12 Pet. 339, and 13 Id. 359. The plaintiffs eventually recovered the property in dispute, and the sum of $32,958.18, found due to them, by the report of a master, on a settlement of the accounts between the parties.

Notes