A bill was brought in the name of A. B. "in his capacity as
President of the N. O. National Bank." Throughout the pleadings and
all proceedings below it was treated as the suit of the bank. After
appeal, it was assigned for error that it was the suit of A. B.,
and, as A. B. and the defendant were citizens of the same state,
that this Court was without jurisdiction.
Held that the
defendant was bound by the construction put upon the bill below,
and that the objection to jurisdiction was too late.
Page 112 U. S. 440
In Louisiana, the certificate of a judge under article 127 of
the Code, that he has examined a married woman apart from her
husband touching a proposed borrowing of money by her, and that he
is satisfied that the proposed debt is not to be contracted for her
husband's debt or for his separate advantage, or for the benefit of
his separate estate, or for the community, is not conclusive, but
casts on the wife the burden of proving that the money borrowed did
not inure to her benefit.
A national bank may loan on security of a mortgage if not
objected to by the United States.
National Bank v.
Matthews, 98 U. S. 621, and
National Bank v. Whitney, 103 U. S.
99, affirmed. .
These are cross-appeals from a decree in equity in a cause
brought by
"Albert Baldwin, in his capacity of president of the New Orleans
National Bank, a corporation organized under the National Banking
Law, against Celestine Louise Fortier,"
who was a married woman, the wife of Polycarpe Fortier. The
purpose of the suit was to enforce the collection of a note
"drawn," as the bill avers,
"by the said Celestine Louise Fortier to her own order, and by
her endorsed with the authorization of her said husband, dated at
New Orleans, March 16, 1877, payable one year after date, bearing
interest at eight percent per annum from maturity until paid, for
ten thousand dollars."
Leon Godchaux was the payee of the note, who, after its
maturity, and but a short time before the suit was brought,
transferred it to the New Orleans National Bank. The note was
secured by a mortgage, executed by Mrs. Fortier, on three squares
and six lots of ground in the City of New Orleans, which were her
separate property. The bill by which the suit was commenced prayed
for an order of seizure and sale of the mortgaged premises, as
provided by the Code of Practice of Louisiana.
The mortgage was in the ordinary form of mortgages in Louisiana,
and was executed in the usual manner before a notary public and
competent witnesses. Appended to it was the following
certificate:
"
THE STATE OF LOUISIANA, Parish of Orleans, City of New
Orleans"
"
Fourth District Court for the Parish of Orleans"
"I, W. T. Houston, Judge of the Fourth District Court for
Page 112 U. S. 441
the Parish of Orleans, do hereby certify that on this 14th day
of March, 1877, personally came and appeared before me at chambers,
in the City of New Orleans, Mrs. Celestine Louise Laboranche, of
lawful age, the wife of Polycarpe Fortier, of this city, and by
virtue of article 127 of the Revised Civil Code of Louisiana, I did
then and there examine the said Mrs. P. Fortier, separate and apart
from her said husband, and she stated that she appeared before me
for the purpose of obtaining the certificate specified in said
article to borrow the sum of ten thousand dollars for her separate
benefit and advantage by mortgaging her separate property."
"I do further certify that then and there I examined her
touching the object for which the said sum of money was to be
borrowed, and that I have by her declaration, made on oath,
ascertained to my satisfaction that the sum of ten thousand
dollars, which the said Mrs. P. Fortier desires to borrow, is not
for her husband's debts nor for his separate advantage or the
benefit of his separate estate or for the community, but that the
same is solely for her separate advantage, and I therefore give and
sign this certificate in pursuance of said article, giving my
sanction and authority to said Mrs. P. Fortier, with the
authorization of her husband, to hypothecate or mortgage her
separate property for the purpose of borrowing the said sum of ten
thousand dollars."
"Witness my hand and the seal of said court, this 14th day of
March, 1877."
"W. T. HOUSTON,
Judge"
A writ of seizure and sale having issued as prayed for in the
bill, Mrs. Fortier filed her plea and a cross-bill. In the latter,
she prayed for an injunction to restrain the seizure and sale of
the mortgaged premises. The grounds upon which she based her
defense to the original bill, and the relief prayed by her
cross-bill, were as follows:
Admitting that at and before the date of the note and mortgage,
she was separated in property from her husband, Polycarpe Fortier,
she averred that she was possessed in her own right, as of a
separate estate, of the property described in the mortgage; that
the consideration of the note
Page 112 U. S. 442
sued on and secured by the mortgage was in part money lent to
her husband by Godchaux, the payee, and in part the payment and
satisfaction of a debt due from her husband to Godchaux.
To show that Godchaux knew that the money was not borrowed for
the separate benefit of Mrs. Fortier, the cross-bill further
averred that before the execution of the mortgage by her, it was
agreed between her husband and Godchaux that the loan should be
secured by a mortgage on her husband's property, but the titles not
proving satisfactory to Godchaux, it was agreed between him and her
husband that the mortgage to secure the loan should be placed on
her separate property and that it should be transferred to the
property of her husband when his titles were perfected. For the
reasons stated, it was averred that the note and mortgage sued on
were not binding on her property
There was an answer and demurrer to the cross-bill. The answer
denied that the note sued on was given for any other purpose than
that expressed in the certificate of the judge appended to the
mortgage, and averred that the money raised on the note was all
paid to Mrs. Fortier, except the discount, amounting to $1,025, and
the sum of $1,200, which was, by her direction, handed to the
notary to pay taxes due on the mortgaged premises.
The demurrer applied to all those averments of the cross-bill
"tending to show that the said note, and mortgage granted by her,"
Mrs. Fortier,
"to secure the same were not executed for her own use and
benefit, in opposition to her sworn declarations made on her
examination by the judge of the Fourth district court, and the
certificate of the said judge to that effect, and to all those
averments in regard to the application made of the money lent by
said Godchaux on the faith of said mortgage."
It was shown by the evidence that the mortgage and note were
executed in the office of the notary; that Mr. and Mrs. Fortier and
Godchaux, the payee of the note and the mortgagee, were present;
that upon the execution and delivery of the papers, Godchaux
retained from the $10,000, for which the note was given, first, the
discount of ten percent on the face of
Page 112 U. S. 443
the note, amounting to $1,025, and second, the amount of a debt
due from Mr. Fortier to him, being the sum of $1,800; that he gave
his check to the notary for $1,200, to be applied to the discharge
of taxes, etc., which were a lien on the mortgaged premises, and
that he paid the residue of the $10,000 by handing to Mrs. Fortier
his check on the Union National Bank for $5,975, payable to her
order. It was further shown that after Mrs. Fortier received the
check, it was deposited by Mr. Fortier, with her endorsement, to
his own credit in the Louisiana National Bank, and the deposit was
drawn out from time to time thereafter on his checks. The proceeds
of the check for $1,200 handed to the notary were applied, after
deducting the fees of the notary, to the payment of the taxes,
interest, and costs, which were a lien on the mortgaged
premises.
Robert Duque, a witness for the defendant, who appeared to be
the friend and legal adviser of Mr. Fortier, the husband, testified
that the latter, before the execution of the note and mortgage in
suit, proposed to Godchaux to borrow of him $10,000 and to secure
the same by a mortgage on the Fort Leon Plantation, of which he was
the owner; that Godchaux declined to make the loan on the security
offered on account of some defect in the title, and that the loan
was afterwards made on the security of the mortgage in suit, with
the agreement between Mr. Fortier and Godchaux that when the former
perfected his title to the Fort Leon plantation, the mortgage
should be transferred to it, and the property of Mrs. Fortier
released therefrom.
The testimony of Duque on these points was directly and
unequivocally contradicted by the deposition of Godchaux.
Godchaux also testified that, before the loan was made to Mrs.
Fortier, he went to see the property which was afterwards
mortgaged; that he was shown over it by Mrs. Fortier, who told him
she wanted to borrow the money to improve the property and pay off
the taxes due upon it.
This testimony of Godchaux in reference to his inspection of the
property and the statements of Mrs. Fortier was not directly
contradicted by her, although she was examined as a
Page 112 U. S. 444
witness in the case, nor was she questioned by her counsel in
reference thereto. She testified that she received no money from
Godchaux on the loan made by him, and that she did not receive any
money on his check, which she admitted was endorsed by her, and
that none of the money loaned was used for her separate
benefit.
Upon final hearing, the circuit court rendered a decree for the
complainant in the original bill for $7,860, with interest thereon
from March 16, 1878, and five percent attorney's fees, having
deducted from the amount appearing to be due upon the note of Mrs.
Fortier the sum of $2,140, that sum being the amount retained by
Godchaux out of the proceeds of the note of Mrs. Fortier for the
debt due him by Mr. Fortier, with the interest, etc. The court
dismissed the cross-bill with costs. Both parties appealed.
MR. JUSTICE WOODS delivered the opinion of the Court. He stated
the facts in the foregoing language, and continued:
It is first assigned for error by Mrs. Fortier, the original
defendant, that, as the bill was filed in the name of "Albert
Baldwin, in his capacity of President of the New Orleans National
Bank," against the defendant, who is alleged to be a citizen of
Louisiana, it does not appear that the parties were citizens of
different states, and, as no other ground of jurisdiction is
averred, the circuit court does not appear to have had jurisdiction
of the case. If Baldwin was in fact the complainant, there was no
ground stated in the petition upon which the jurisdiction of the
circuit court could rest, and the objection to the jurisdiction
could be made at any time. But the counsel for the bank insists
that the bank, and not Baldwin, was the complainant. The question
is therefore how is the bill to be construed?
It is clear upon an inspection of the whole record that the
Page 112 U. S. 445
suit was treated by both parties and by the circuit court as the
suit of the New Orleans National Bank, and not of Albert Baldwin.
Every pleading in the case, including the answer and cross-bill
filed by the defendant, and every order and decree made by the
court was entitled "
The New Orleans National Bank v. C. L.
Fortier." In the appeal bond given by the defendant, the case
was described in the same manner. The cause of action set out in
the petition was the cause of action of the bank. The plea of the
defendant to the original bill treated the bank as the complainant
by averring that "the said bank is not the holder of the note for
value, and that the note was sued on in the name of the bank merely
to give the court jurisdiction." The answer to the cross-bill was
styled the answer of the New Orleans National Bank. It averred that
the bank was the holder of the note and mortgage sued on, and that
the bill was intended to be and was the bill of complaint of the
bank, and not of Baldwin. There was no replication to this answer.
It is plain, therefore, that the defendant carried on the
litigation on the theory that the bank was the complainant, and the
cause was entertained and decided by the circuit court on the same
assumption.
We must adhere to the construction of the bill asserted by the
bank and acquiesced in by the defendant. The defendant, having
herself so construed and treated the bill, will not be allowed on
final hearing, in order to defeat the jurisdiction, to assert for
the first time that Baldwin, and not the bank, was the complainant.
It follows that the objection to the jurisdiction is not well
taken.
We now come to the merits of the case. The contention of the
counsel for complainant is that Mrs. Fortier, having by the
authorization of her husband and of the judge of the Fourth
District Court, evidenced by his certificate, been empowered to
borrow the money sued for to be used for her separate benefit and
advantage, and to mortgage her separate property therefor, is
concluded by the certificate of the judge, and cannot be heard to
deny that the money was borrowed for her own use, or to assert that
it was borrowed to pay her husband's debts, or for his separate
advantage. On the other
Page 112 U. S. 446
hand, the counsel for the defendant insist that the money was in
fact borrowed by Mrs. Fortier for the use of and to pay the debts
of her husband, which Godchaux, the payee of the note, well knew,
and that the money borrowed was so applied by the husband, and that
she is not precluded by the certificate of the judge from showing
these facts, and that being shown, they are a defense to the
suit.
By article 2412, Civil Code La. 1825 it was provided as
follows:
"The wife, 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."
This article is now article 2398 of the Civil Code of 1870. The
Supreme Court of Louisiana, construing it, has repeatedly decided
that a debt contracted by a married woman, whether separated in
property from her husband or not, could not be enforced against her
unless the creditor established affirmatively that the debt inured
to her separate benefit.
Dranguet v. Prudhomme, 3 La. 74;
Pascal v. Sauvinet, 1 La.Ann. 428;
Erwin v.
McCalop, 5 La.Ann. 173;
Brandigee v. Kerr, 7 Martin
(N.S.) 64;
Beauregard v. Her Husband, 7 La.Ann. 294;
Moussier v. Zunts, 14 La.Ann. 15. In the case last cited,
the court said:
"It is a principle that has come down to us from the laws of
Spain that he who contracts with a married woman must show
affirmatively that the contract inured to her advantage. The
exception was when the wife renounced the 61st Law of Toro, but
this exception no longer exists."
This article, thus construed, still continues to be the law of
Louisiana except as modified by the act of 1855, which now
constitutes articles 126, 127, and 128 of the Revised Code of 1870.
They are as follows:
"Article 126. A married woman over the age of twenty-one years
may, by and with the authorization of her husband and with the
sanction of the judge, borrow money or contract debts for her
separate benefit and advantage, and to secure the same grant
mortgages or other securities affecting her separate estate,
paraphernal or dotal."
"Article 127. In carrying out the power to borrow money
Page 112 U. S. 447
or contract debts, the wife, in order to bind herself or her
paraphernal or dotal property, must, according to the amount
involved, be examined at chambers by the judge of the district or
parish in which she resides, separate and apart from her husband,
touching the objects for which the money is to be borrowed or debt
contracted, and if he shall ascertain either the one or the other
are for her husband's debts, or for his separate benefit or
advantage, or for the benefit of his separate estate or of the
community, the said judge shall not give his sanction authorizing
the wife to perform the acts or incur the liabilities set forth in
article 126."
"Article 128. If the wife shall satisfy the judge that the money
about to be borrowed or debt contracted is solely for her separate
advantage or for the benefit of her paraphernal or dotal property,
then the judge shall furnish her with a certificate setting forth
his having made such examination of the wife as is required by
article 127, which certificate, on presentation to a notary, shall
be his authority for drawing an act of mortgage or other act which
may be required for the security of the debt contracted, and shall
be annexed to the act, which act, when executed as herein
prescribed, shall furnish full proof against her and her heirs, and
be as binding in law and equity in all the courts of this state and
have the same effect as if made by a
feme sole."
The effect of these articles is simply to establish a new rule
of evidence in cases of loans of money made to married women.
The cases in which they have been construed by the Supreme Court
of Louisiana show clearly that the contention of the complainant,
that the certificate of the judge is conclusive evidence of the
fact that the money lent to a married woman was for her sole
benefit, and that she will not be allowed to contradict it, cannot
be sustained. The construction put upon these articles is that the
effect of the authorization and certificate of the judge was to
relieve the creditor from the burden of proving that the money lent
by him to the wife inured to her benefit, and to cast the burden on
the wife to prove that it did not.
Bank v. Barrow, 21
La.Ann. 396, 398.
Page 112 U. S. 448
In the case of
Barth v. Kasa, 30 La.Ann. 940, it was
held that prior to the act of 1855, the burden of proof to bind the
wife was on the creditor, but that under that act, when the judge's
authorization had been obtained, the burden of proof rested on the
wife to show that she was not bound.
In
Claverie v. Gerodias, 30 La.Ann. 291, the plaintiff
holding the note of Gerodias, a married woman, secured by mortgage
on her paraphernal property, executed by the authorization of the
judge, took out executory process thereon. Mrs. Gerodias filed an
opposition thereto on the ground, among others, that her note and
mortgage were given for the purpose of securing the debt of the
husband to Claverie. The latter admitted that the note was executed
by Mrs. Gerodias to enable her husband to obtain the means of
carrying on his trade, "and was given by him to the respondent
[Claverie] for that purpose, to the knowledge of his wife."
Upon these facts, the court said:
"The law forbids the wife to become security of her husband or
to bind herself or property for his debts. Her note for such a
purpose, in the hands of the husband's creditor who takes it
knowingly, is utterly void. The act of 1855 (now articles 126, 127,
128, C.C.) has no application to such a case as is here
presented."
And the court affirmed the judgment of the lower court, which
decreed the nullity of the mortgage, the erasure of its
inscription, and directed the surrender of her note to Mrs.
Gerodias notwithstanding the fact that the note and mortgage had
been executed by virtue of the authorization and certificate of the
judge, as provided in the act of 1855.
In
Barth v. Kasa, ubi supra, it was held that when a
married woman has, even under the authorization of the judge,
executed her note and mortgage on her separate property to secure
it, she may show, by way of defense thereto, that she gave the note
and mortgage for the debt of her husband, being induced thereto by
her husband and the creditor.
So in
Hall v. Wyche, 31 La.Ann. 734, it was held that
the authorization of a judge to a married woman to borrow money and
execute a mortgage to secure its repayment does not preclude her
from proving that, with the knowledge of the creditor
Page 112 U. S. 449
the mortgage was given to secure an antecedent debt of the
husband due to him.
These cases show conclusively that the contention of counsel for
the complainant cannot be maintained.
On the other hand, it does not follow that because the money
borrowed by the wife with the authorization of the judge was used
to pay her husband's debts, the note and mortgage given therefor
are void and cannot be enforced. To make such a defense good, it
must be shown that the creditor knew when he made the loan that the
money was not to be used for the separate benefit or advantage of
the wife, for the lender, having in good faith paid the money to
the wife, or to another by her direction, is not bound, since the
passage of the act of 1855, to see that it is used for her benefit.
It has been so held by the Supreme Court of Louisiana.
In
McClellan v. Dane, 32 La.Ann. 1197, the defendant
was a married woman who had executed by the authorization of the
judge the note and mortgage sued on. She alleged by way of defense
that the note and mortgage were obtained from her through the
influence of her husband, who received the money for which the note
and mortgage were given, and that therefore as to her they were
without consideration. In support of her defense, Mrs. Dane offered
evidence tending to show that the money borrowed was subsequently
received by her husband and by him used for his own purposes. This
evidence was admitted by the court below, and its admission was
declared by the supreme court to be error. In giving judgment, the
court said:
"The check representing the borrowed money was delivered to the
wife, who endorsed the same and received the money which it called
for, and to require more from the lender in such cases would be to
defeat the very object of the law. . . . Our jurisprudence is
firmly settled on this question, and it is unnecessary to quote
authorities in support of the proposition that, in the absence of
any allegation of fraud against the creditor himself, married women
are bound, as all other persons, by their contracts and mortgages,
executed under proper authorization, as required by the law of 1855
(Civil Code 127 and 128), and cannot be allowed by parol
testimony
Page 112 U. S. 450
to attempt to disprove the certificate of the judge and their
own authentic declarations in acts of mortgage. Nor will the law
authorize the inquiry into the subsequent disposition made of the
funds borrowed by married women when properly authorized thereto.
The law does not and cannot confer upon the lender in such
circumstances the power and authority to watch over and control the
acts of the married woman who has borrowed money from him, so as to
prevent the improper use of the same."
In the still later case of
Dougherty v. Hibernia Insurance
Co., 35 La.Ann. 629. the Supreme Court of Louisiana said:
"Objections founded on the irregularity of the proceedings
before the judge, and on the use made of the money and the like, in
the absence of fraud or complicity on the part of the lender, have
no force. The jurisprudence is now well settled that in such case
the lender is not bound to look behind the judge's certificate, and
is not concerned as to the actual use of the money after it is paid
to the wife or according to her direction."
See also Pilcher v. Pugh, 28 La.Ann. 494, and
Henry
v. Gauthreaux, 32 La.Ann. 1103.
The result of these authorities, succinctly stated, is that
since the act of 1855, when a married woman, with the authorization
of her husband, and the sanction and certificate of the judge,
borrows money, the creditor is not bound to show that the money was
used for her separate benefit and advantage, but the debt may be
enforced against her, and her separate property mortgaged to secure
it, unless she shows that, with the knowledge or connivance of the
lender, the money was borrowed and used not for her separate
benefit, but for that of her husband.
This conclusion supports the decree of the circuit court. When
Godchaux deducted and retained out of the money loaned on the note
and mortgage of Mrs. Fortier the sum of $1,800 to pay a debt due to
herself from her husband and paid over to her, or by her direction
only, the residue, he was acting, so far as the sum just mentioned
is concerned, in complicity with the husband and in fraud of the
law, and he cannot shield himself under the authorization of the
judge. This
Page 112 U. S. 451
sum, with the interest thereon, was properly deducted from the
amount due on the note and mortgage. The $1,200 paid by Godchaux to
the notary, by the direction of Mrs. Fortier, to clear off taxes,
with the interest and costs, which were a lien upon that property
mortgaged by her, was applied for her separate benefit and
advantage, and she cannot escape liability for it. As to the
$5,975, the residue of the loan, we are of the opinion that the
defendant has not made it appear affirmatively by preponderance of
proof, as she was bound to do, that the money was borrowed by her
with the knowledge or connivance of Godchaux to pay off the debts,
or for the use of her husband. Godchaux therefore having handed to
the defendant a check payable to her own order for the residue of
the loan, his duty ceased. Under the act of 1855, he was not, as we
have seen, bound at his peril to take care that she applied the
money to her own separate benefit and advantage. So far, therefore,
as the defense to the enforcement of the money paid by the check
rested in the averment that the money borrowed of Godchaux was with
his complicity borrowed for the use of the husband, and not for the
separate advantage of the wife, it must fail.
Complaint is made in behalf of Mr. Fortier that the court erred
in enforcing by its decree a loan of money made by a national bank
on the security of a mortgage, the contention being that the loan
on such a security was unauthorized by the National Banking Act,
and was therefore void. In the cases of
National Bank v.
Matthews, 98 U. S. 621, and
National Bank v. Whitney, 103 U. S.
99, this point is expressly decided against the
contention of the defendant, and in the latter case it was also
held that an objection to the taking by the bank of a mortgage lien
as security for future advances could only be made by the United
States.
It follows from the views we have expressed that
The decree of the circuit court was right, and should be
affirmed.
