
    NO. 7971.
    COMMERCIAL-GERMANIA TRUST & SAVINGS BANK. VS ALBERT SIDNEY WHITE.
    STATE OF LOUISIANA COURT OF APPEAL PARISH OF ORLEANS.
   opinion.

St. Paul, Judge.

Plaintiff suod out executory process on a note purporting to represent the unpaid purchase prioe of the property seized and to he secured hy vendor's -lien and special mortgage thereon; all os per deed of purchase annexed.

Thereupon certain creditors of the defendant enjoined the seizure, alleging (in substanoe) that plaintiff had acquire-' the note from defendant himself, who in turn had come into possession thereof hy paying to the venidr the purchase price for which the note stood; that the mortgage, having thus been extinguished, did not revive when defendant reissued the note.

Por answer plaintiff alleged, and on the trial pffered to prove and did prove (over objections), that the purchase price had boon paid to the vendor at the very moment of the sale; that accordingly the note then executed never did represent such purchase prioe and had never passed into the possession of the vendor, hut on the contrary had been retained by the defendant; that the sole, purpose for which said note (and the mortgage to secure the sane) had heen confected, was that it night serve defendant as a basis of credit; and that defendant lad thus used it with plaintiff, who now hold the same as collator .1 security for an unpaid debt exceeding the amount thereof,

I.

Our jurisprudence is well settled that when a mortgage is executed to secure a special (then existing) debt represented ny note, payment of the debt thus represented extinguishes the mortgage, and the subsequent roiS3Ue of the note will not revive the mortgage (Bank vs Gragard, 109 La 677)

It is also equally well settled that when a mortgage note does not represent a special debt but is intended only for future use as collateral security (the mortgagee being only the nominal creditor), such note may be issued and reissued in that way; and the return thereof to the maker will not impair the mortgage, which revives with each reissue of the note. (Herber vs Thompson, 47 An 800; also 41 An 873; 39 An 712; 25 An 364; 22 An 285; 21 An 5; Bander vs Bowmar, 16 La 371)

Hence "Mortgages nay be given for debts having no legal existence at the tino of the mortgage (0. 0. 2292); and it is not essential in such a mortgage, even with respect to third persons, that it should express on its face that it was executed to secure future debts. It r.ay even be described as a security for existing debts, and yet used to protect those which 111 the contemplation of the parties were to be created at a future time." Pickeragill vs Brown, 7 An 297 (308-310)

IX.

That the oirouniBtanoea of this case come within the proposition above last stated, has particularly been deoided by the Supreme Court in a ease by this sane plaintiff against the same defendant, in which all but one of th present plaintiffs-in-injunotion were parties; towit, Bank vs White, 145 La 54.

The faots of that case wore identical with those here shown; and thereupon the court held; That a note and mortgage given .under such circumstances did not represent a special debt, since no debt then existed; 2' That the vendor under such circumstances was only a nominal mortgagee, since ho was not a real creditor; z‘ That between the holder of suoh a note (privy to the mortgage) and other creditors (not privy thereto), parol evidence was admissible to show the true nature of the mortgage, sinoe the rule that parpl evidence'shall not be admitted to contradict or vary the terms of a • written instrument, applies only in controversies between parties to the instrument and not in controversies between a party thereto and a third person.

Ill

Of th- propositions thus laid down, the first and second are not disputed, or oven disputable. It is said however that the third proposition is not sound in law, and is in conflict with the old case of Hill vs Hall, 4 Robinson 410, where such testimony was held not admissible

Of the legal soundness of the proposition we entertain no doubt whatever, having heretofore held the same doctrine in Covington Lumber Co vs August Stef, 12 Orleans Appeals, 237 (citing 19 Cyc 749; 105 Federal 559; 88 Federal 207). In this jurisdiction its soundness is the necessary consequence of a statutory provision that even though the consideration stated in the contract does not exist, the contract is none the less valid if a true and sufficient consideration be shown. C. C. 1900.

And since the is inapplicable in such a controversy, it follows that .neither side nay invoice it.

IT.

Undeniably however Hill vs Hall is in conflict witl this dootrine. But as to this it suffices to say, that apart from the fact that this earlier case seems in direct conflict with statutory law, it must also be considered as overruled by the latter case.

April 4th, 1921.

.a.ti earlier case inconsistent with a later ono, rrast he considered as overruled*

7.

It is also said t3i.it l'ID Ra 54 is itself in conflict with a lator case, tov.it, ilo Ronald vs Hawkins, 146 to 920. But v/e do not find it so. In the later case the note purported on its face to represent a special debt, to wit, tlie unpaid portion of the purchase price, and no proof whatever was adduced or even attempted to the contrary.

Me tliinjc the injunction was properly dismissed, and accordingly;

The judgment licrain appealed from is therefore affirmed..

Rev/ Orleans to,  