SHWARTZ et al. v. H. B. CLAFLIN CO.; KERN et al. v. SAME, 60 F. 676

PARDEE, Circuit Judge (after stating the facts). Although the record is so, voluminous and, according to the brief and arguments submitted, it ⅛ bristling with points of law, novel and otherwise, we find it necessary to consider two questions only. 1. Henry Kern and Mrs. Henry Kern complain of a judgment against them as the legal heirs and representatives of Emile Kern, condemning them in solido to pay the claim of Claflin & Co. against Henry Kern & Son, when, as the record shows, they have had no day in court, no default entered against them, nor the verdict of any jury holding them liable.

It appears they were brought into the case after hearing and submission upon an assertion that they were the sole heirs of Emile Kern, deceased, and by notice only that they were made parties to the cause, and that any judgment rendered in the case should be rendered for or against them as heirs representing Emile Kern.

Article 120 of the Code of Practice of Louisiana contains provisions as follows: “If one against whom there was a cause of action die leaving one heir only, the suit shall be carried on against such heir as it would have been against the deceased. If the suit had already been brought against the deceased and he had not answered, it shall not be interrupted, but it shall bo continued against the heir by a mere citation or notice served on him to that effect within the delay for original citations according as the distance may be front his domicile to the court where the action has been brought.

If, on the contrary, the deceased have two or more heirs the plaintiff may proceed personally against each of them for the share which he inherits, if that share be sufficiently known and ascertained by an inventory or partition, otherwise they can only be sued each for a virile portion, that is to say for an equal part of the debt dividing.it in as many parts as there are heirs.

If the suit had already been commenced against the deceased it shall be continued against his several heirs by citing each of them separately as if there were only one; but judgment can only be given personally against each for his hereditary share or virile portion, as above provided.” In the case in hand, the last provision quoted applies.

Under that provision it was necessary to have cited each of the heirs of Emile Kern to answer the demand against them as heirs and legal representatives of Emile Kern, giving them, and each of them, an opportunity to admit or deny heirship, or to make any other defense personal to Emile Kern, deceased, or to themselves, which the case might warrant. This appears perfectly clear, as the law of Louisiana is well settled that the heirs are not liable for the debts of their ancestor unless they shall accept his succession. It is also clear, from the provisions referred to, and other articles of the Louisiana.

Code of Practice, as well as the Civil Code of Louisiana, that judgment can only he given against heirs when found liable for the debts of their ancestors for their virile portions. See Code Pr. La. art. 113; Civ. Code, arts. 1426, 1427. The judgment complained of is erroneous, both because the parties condemned did not have their day in court, and because they were condemned beyond the limits allowed by law, if liable at all. 2.

The case shows that after the attachment sued out in this case against Henry Kern & Son, and before final trial and judgment, the said Henry Kern & Son made a voluntary cession of their property to their creditors under the insolvency laws of Louisiana, that this voluntary cession prior to final trial and judgment was brought to the attention of the court by suitable pleadings both by A. Shwartz & Sons, interveners, and by Henry Kern & Son, defendants, and thus the question is fairly presented on the record as to the proper disposition of the attachment issued in the case.

Authority to issue attachments in common-law causes in the circuit courts of the United States is found in

section 915 of the Revised Statutes, which reads as follows: “In common law causes in tlie circuit and district courts the plaintiff shall he entitled to similar remedies, by attachment or other process, against the property of the defendant, which are now provided hy the laws of the state in which such court.is held for the courts thereof; and such circuit or district courts may, from time to time, hy general rules, adopt such state laws as may he in force in the states where they are held in relation to atachments and other process; provided, that similar preliminary affidavits or proofs, and similar security, as required by such state laws, shall be first furnished hy the party seeking such attachment or other remedy.” Were this

section standing alone on the subject, a very strong argument could be made that, wherever attachments in the state courts of Louisiana are affected after issuance by matters arising under other laws of the state, the circuit courts would be bound to give the same effect to such matters as would be given them in the courts of the state in similar cases, and therefore that, where an attachment would be stayed or dissolved by a subsequent cession under the' insolvent laws prior to final judgment in the state courts, the same effect would necessarily follow in the circuit courts of the United States.

To make the matter clear, however, that such effect is to be given, the act entitled “An act to make attachments which are made under process issuing from the courts of the United States conform to the laws regulating such attachments in the courts of the states,” approved March 14, 1848- (9 Stat. 214, and now substantially embodied in

section 938 of the Revised Statutes), was enacted.

That statute is as follows: “That whenever, upon process instituted in any of the courts of the United States, property shall hereafter he attached to satisfy such judgment as may he recovered by the plaintiff in such process, and any contingency occurs by which, according to the laws of a state, such attachment would he dissolved upon like process pending in, or returnable to, the state courts, then such attachment or attachments made upon process issuing from, or pending in, the courts of the United States within such state shall he dissolved, the intent and meaning of this act; being to place such attachments in the courts of the states and the United States upon the same footing: provided, that nothing herein contained shall interfere with any existing or future law giving priority in payments of debts to the United States.” From this it is perfectly clear tbat attachments sued out of the circuit courts of the United States ar.e placed upon the same footing with regard to all incidents thereto as like cases in the courts of the state.

It is well settled in Louisiana that, attachments issued in civil cases give rise to no lien prior to final judgment, and the law of Louisiana is that, when there is a cession to creditors under the insolvency laws of the state, the court accepting the ces> sion shall order all proceedings, as well against the person as against the property of the debtor, to be stayed, and that, after such cession and acceptance; all of the property of the insolvent debtor mentioned in the

schedule shall be fully rested in the creditors (see sections 1790, 1791, Rer. St. La.); and, further, that all suits which may hare been brought anterior to the failure shall be transferred to the court in which the insolrent debtor shall hare presented Ms schedule, and shall be continued against his syndic. See Id. § 1816. The uniform construction of these laws in the courts of the state of Louisiana is to the effect that all attachments issued against the property of a debtor who thereafter makes a cession of his property under the insolrent laws are by operation of law perpetually stayed. See 1 Hen. La.

Dig. “Insolvency,” pt. 4, pp. 686-688, and cases there cited. The question involved here was presented to the circuit court of the United States for the eastern district of Louisiana in the case of Lafollye r. Garriere, 24 Fed. 346.

It was there held — the circuit and district judges concurring — that the effect of the cession and proceedings thereon under the insolrent laws of Louisiana was to stay and practically dissolre all attachments then issued against the surrendering debtor, and against all property surrendered in the state court by the direct operation of the state laws, and in the national courts by the force of

section 933, Rer. St. The same question was presented to the supreme court in the case of Tua v. Garriere, 117 U. S. 201, 6 Sup. Ct. 565, and that court said, through Mr. Justice Woods: “It is not disputed that if the insolvent law of Louisiana was a valid law, and the surrender made by the surviving partners of the dissolved firm of A. Carriere & Sons was a valid surrender of the effects of the firm, the attachment of the plaintiff was rightfully dissolved.

For, under the law of Louisiana, the effect of a cession of property by an insolvent person is to dissolve all attachments which have not matured into judgments. Code Pr. art. 724; Hanna v. His Creditors, 12 Mart. (La.) 32; Fisher v. Vose, 3 Rob. (La.) 457; Collins v. Duffy, 7 La. Ann. 39. And, by

section 933 of the Revised Statutes of the United States, an attachment of property upon process instituted in any court of the United States is dissolved when any contingency occurs by which, according to the law of the state where the court is held, such attachment would be dissolved upon the process instituted in the courts of said state.” The opinions in these well considered and adjudicated cases in the circuit and supreme courts of the United States, which would ordinarily settle the matter, are attacked with much plausibility by the defendants in error (Tna v.

Garriere, as obiter) urging that, as a matter of fact and law, attachments sued out of the courts of Louisiana, and not merged in final judgments, are not dissolved by operation of law, but merely stayed in the courts of the state when the debtor makes a voluntary cession under the insolvent laws of Louisiana, and the proper proceedings are had and the proper orders are made in the court accepting the cession.

This contention was presented to the learned judge of the circuit court, who disposed of it, in Ms opinion on the motions for a new trial and for dissolving the attachment- (which opinion was made by reference to part of the “Opinion, Findings of Fact, and Conclusions of Law” found in the transcript), as follows: “But it is urged on the part of the' plaintiff, there is no provision of the Louisiana law which dissolves the attachment and destroys the lien; that the obstacle to the attachment in the state court is that the suit of the attaching creditor is stayed, and he has an attachment, but he is simply prevented from enforcing it, and that there is no such obstacle in the United States courts, by reason of them being established under a distinct sovereignty, and that here the creditor, having no such impediment, can proceed and make his inchoate or conditional lien or privilege absolute.

The answer to this is the statute. By its declared intent, the creditor with an attachment in the United States court must be put on the same footing with the creditor with an attachment in the courts of the state. In these last the creditor’s attachment is perpetually stayed. It follows that somehow in the courts of the United States it must be also rendered inoperative, and, since the creditor here may proceed to judgment in order to prevent the inequality which the object of the statute was to prevent, he must proceed here with the attachment dissolved.

In other words, it is only by dissolving the attachment in this court that the equality of rights of the creditors can be preserved.” With these views we entirely concur. Defendants in error further contend that neither the interveners,' Shwartz & Sons, nor the defendants, Henry Kern & Son, have any interest or right to suggest or plead the insolvency proceedings, and that no syndic representing the creditors of Henry Kern & Son (which syndic, it is said, is the real party in interest) has appeared in the case. This contention was sustained in the lower courts so far as the defendants, H.

Kern & Son, were concerned, hut rejected as to the interveners, “because the said interveners were parties to the cause, and have an interest in the dissolution of the attachment sufficient to make them parties to the litigation of this question.” It seems clear that if the rights of the inter-veners are favorably affected or determined by any fact outside of the record, they must have a clear right to plead such fact. As to H.

Kern & Son, defendants in the court below, the reason given why they should not be allowed to plead a fact which would defeat an attachment run against them is that, by reason of théir insolvency in the state court, they are civilly dead. As the plaintiffs 'in the court below are demanding a judgment against H. Kern & Son, and this notwithstanding the well-known insolvency proceedings of the state court, we think they are not in a position to maintain, nor can we agree, that Henry Kern & Son are civiliter mortuis.

Aside from all this, it is to be noticed that the insolvency proceedings in the state court were called to the attention of the court by the intervention of the provisional syndic, and that, although the said provisional syndic has since disappeared from the case, he has left of record in the cause, beyond dispute, the fact that, prior to the final trial and judgment in the court below, Henry Kern & Son did make a cession under the insolvency laws of Louisiana which was accepted in the proper court of the state.

The-first conclusion of law found by the circuit court is that the attachment was dissolved by the insolvency proceedings in which the defendants made, and the proper court accepted, a surrender of all their property. It is apparent that the omission to carry this conclusion into the judgment so as to make it effective was inadvertent, and should be corrected in the judgment given in this court. The attachment dissolved, the court has neither interest nor jurisdiction to inquire into the ownership of the property attached, and the intervention of Shwartz & Sons naturally falls.

The judgment of the circuit court should he reversed, with costs to he adjudged against the II. B. Olaflin Company, and the cause remanded, with instructions to dissolve the attachment against IT. Kern & Son at their costs, and as of date December 6, 1892, and to dismiss the intervention of A. Shwartz & Sons at their costs, hut without prejudice to any right the defendants, H. Kern & Son, or the syndic of the creditors of H.

Kern & Son, insolvents, _ may have in or to or arising out of the forthcoming bond given by inter-veners in the case; and to otherwise proceed in the cause as law and justice may seem to require, hut not inconsistent with the views • expressed in this opinion, and it is so ordered.