Blaize, Samuel A.

English

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Louisiana Law ReviewVolume 29 | Number 2The Work of the Louisiana Appellate Courts for the1967-1968 Term: A SymposiumFebruary 1969Civil Procedure - Deficiency Judgment AfterInvalid Executory ProcessSamuel A. BlaizeThis Note is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted for inclusionin Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact kreed25@lsu.edu.Repository CitationSamuel A. Blaize, Civil Procedure - Deficiency Judgment After Invalid Executory Process, 29 La. L. Rev. (1969)Available at: https://digitalcommons.law.lsu.edu/lalrev/vol29/iss2/24NOTES"We favor the abolition of the death penalty. Modernpenology with its correctional and rehabilitative skills affordsgreater protection to society than the death penalty whichis inconsistent with its goals. This Nation is too great in itsresources and too good in its purposes to engage in the lightof present understanding in the deliberate taking of humanlife as either a punishment or a deterrent to domesticcrime." 57However, in default of legislative action in this area, the UnitedStates Supreme Court seems to be moving toward such a result.This is evidenced by the attitude taken by the Court in the twocases noted in this series,5s and the fact that the Court hasgranted certiorari in a case which clearly presents the issue.5 9It is submitted that society's "evolving standard of decency"requires the court to declare capital punishment unconstitutional.Edward A. KaplanCIVIL PROCEDURE-DEFICIENCY JUDGMENTAFTER INVALID EXECUTORY PROCESSAfter default in payments plaintiff successfully foreclosedvia executiva on a chattel mortgage securing the purchase priceof defendant's automobile, without authentic evidence of thechattel mortgage. Since defendant, although having notice ofthe proceedings, did not seek to enjoin or appeal the seizure andsale, the car was sold to a third party.1 Soon thereafter, plain-tiff sought a deficiency judgment for the balance of the debt.Defendant's administratrix argued that the acknowledgment ofthe chattel mortgage under private signature, by an agent of themortgagee, was improper; the evidence given in order to useexecutory process was illegal; and therefore everything done sub-sequently was null and void.2 Held, where executory process isinvalid because a chattel mortgage under private signature hasnot been duly acknowledged, a deficiency judgment is not al-57. Letter of then Deputy Attorney General Ramsey Clark to the HonorableJohn L. McMillan, Chairman, House Committee on the District of Columbia, July23, 1965, reported in the N.Y. Times, July 24, 1965, at 1, col. 5.58. Notes, 29 LA. L. REV. 381 (1969) 29 LA. L. REV. 389 (1969).59. Boykin v. Alabama, 37 U.S.L.W. 3133 (Oct. 15, 1968).1. Although the facts of the case are unclear, it will be assumed for the purposeof this Note that no appeal or injunction was sought, and that the automobile wassold to a third party purchaser in good faith.2. Since the agent of the chattel mortgagee was neither the grantor of nor awitness to the act as required by LA. R.S. 13:3720 (1950), the act was not dulyacknowledged.1969]LOUISIANA LAW REVIEWlowed. League Central Credit Union v. Montgomery, 251 La. 971,207 So.2d 762 (1968).Under the Deficiency Judgment Act, a creditor can recoverthe balance due on a debt following executory process with ap-praisement.3 The proceeds of a judicial sale often do not fullyextinguish the debtor's obligation to his creditor; thus thecreditor is able to invoke the remedy of the deficiency judgment.The defendant must be cited, and is afforded all the delays andformalities of ordinary proceedings. 4The creditor is required to comply strictly with the DeficiencyJudgment Act as regards appraisement of the property.5 Thestrict compliance requirement is a result of the legislative andjudicial policy of protecting the debtor's rights in the expedi-tious executory proceedings.6 If there is no appraisement, thedebt is discharged and the creditor may not seek a deficiencyjudgment. 7When the debtor fails to assert his defense of irregularityin the executory process at the time of seizure and sale, therehas been confusion as to whether he can assert it in the subse-quent suit for a deficiency judgment. The ambiguity seems toarise because of the conflicting policies of protecting the debtoron the one hand and the innocent purchaser at judicial sale onthe other." Those cases allowing the debtor to assert the defenseof irregularity in the executory process reason that since it issuch a harsh remedy, the debtor will not be estopped fromasserting his defense and the deficiency judgment suit willfall.9 The opposing line of cases reasons that if the deficiencyjudgment were upset by this defense, then the judicial sale toan innocent third party could also be upset.10 The latter view3. LA. R.S. 13:4106, 13:4107 (Supp. 1966) ; LA. CODE Civ. P. arts. 2771, 2772.4. LA. CODE CIv. P. art. 2771.5. Buchanan v. Williams, 104 F. Supp. 243 (W.D. La. 1952) ; Carr v. Lattier,188 So.2d 645 (La. App. 2d Cir. 1966) ; Universal C.I.T. Credit Corp. v. Hulett, 151So. 705 (La. App. 3d Cir. 1963) ; Associates Discounts Corp. v. Johnson, 149 So.2d14 (La. App. 1st Cir. 1963) ; Mack Trucks, Inc. v. Dixon, 142 So.2d 605 (La. App.4th Cir. 1962) Shreveport Auto Fin. Corp. v. Harrington, 113 So.2d 476 (La. App.2d Cir. 1959) David Inv. Co. v. Wright, 89 So.2d 442 (La. App. 1st Cir. 1956)Southland Inv. Co. v. Lofton, 194 So. 125 (La. App. 2d Cir. 1940).6. Emmco Ins. Co. v. Nola Cabs, Inc., 125 So.2d 207 (La. App. 4th Cir. 1960).7. See note 5 supra.8. White Motor Co. v. Piggy Bak Cartage Corp., 202 So.2d 294, 296 (La. App.4th Cir. 1967) ; Note, 24 LA. L. REv. 894, 901 (1964).9. League Central Credit Union v. Montgomery, 251 La. 971, 207 So.2d 762(1968) ; Tapp v. Guaranty Fin. Co., 158 So.2d 228 (La. App. 1st Cir. 1963).10. White Motor Co. v. Piggy Bak Cartage Corp., 202 So.2d 294 (La. App. 4thCir. 1967) ; League Central Credit Union v. Montgomery, 198 So.2d 914 (La. App.4th Cir. 1967).[Vol. XXIXNOTESthus disallows the defenses and permits the creditor to recoverthe balance of the debt. This problem is not present where thepurchaser at the judicial sale is the creditor. Since there are nothird party rights to protect, the judicial sale can be avoided.1"Protection was afforded the debtor in Tapp v. Guaranty Fin.Co.12 In that case, the First Circuit announced that executoryprocess, which was invalid on its face, could not be the basis fora valid appraisal. Coupling this decision with the requirementthat no appraisal means no deficiency judgment, the court con-cluded that the debtor could successfully defend a deficiencyjudgment action by showing that there was an irregularity inthe executory process. However, this reasoning seems to be moremakeweight than the actual basis for the decision. The realbasis seems to be that only the executory process was invalid."13However, by this artificial invalidation of the appraisement, thecourt bolstered its decision because the legislation explicitly pro-vides that a failure to appraise the property precludes recoveryof a deficiency judgment. Thus, the court in effect held that alldefenses to an invalid executory process are available in a suitfor a deficiency judgment.White Motor Co. v. Piggy Bak Cartage Corp..14 a Fourth Cir-cuit case, decided after Tapp, held that the creditor can recoverthe deficiency judgment despite the irregularity in the executoryprocess, and adopted the reasoning of the jurisprudence applyingthe bona fide purchaser doctrine. 15 The court stated that if acreditor were refused recovery on the deficiency judgment be-cause of a defect in the executory process, the rights of a thirdparty who had purchased in good faith at the judicial salewould be jeopardized. The court thus held that the debtor mustbe estopped from asserting his defense of an irregularity in theexecutory process.The court in White, however, seemed to overlook the factthat only the deficiency judgment was under attack, not therights of the bona fide purchaser.16 The mortgagor has the re-11. League Central Credit Union v. Montgomery, 251 La. 971, 207 So.2d 762(1968).12. Tapp v. Guaranty Fin. Co., 158 So.2d 228 (La. App. 1st Cir. 1963).13. Note, 24 LA. L. REv. 894, n.4 (1964).14. White Motor Co. v. Piggy Bak Cartage Corp., 202 So.2d 294 (La. App.4th Cir. 1967).15. Cullotta v. Grosz, 173 La. 83, 136 So. 95 (1931); Huber v. Jennings-Heywood Oil Syndicate, 111 La. 747, 35 So. 889 (1904) ; Miller v. People's Home-stead & Savings Ass'n, 161 So. 656 (La. App. 2d Cir. 1935).16. League Central Credit Union v. Montgomery, 251 La. 971, 987, 207 So.2d762, 764 (1968).1969]LOUISIANA LAW REVIEWmedies of appeal or injunction whenever property is seized. 7 Thejurisprudence indicates that when the debtor does not use theseremedies to attack the seizure and sale, he is estopped fromcomplaining of defects in the proceeding thereafter, in the ab-sence of fraud or ill practice. However, these decisions dealtwith the rights of the mortgagor as against the rights of a thirdparty purchaser, not the mortgagee.'- When a third party entersthe picture, the courts will not prejudice his rights because ofneglect on the part of the debtor.In the instant case, which followed the reasoning of theearlier Tapp decision, an officer of the creditor was the witnessto the acknowledgment of the chattel mortgage before a notarypublic.' 9 The Supreme Court stated that because the officer wasneither the grantor of the mortgage nor a witness to the privatesignature as required by R.S. 13:3720, there was no authenticevidence to support the executory process. Therefore, since theexecutory process was invalid, the creditor could not recoverthe deficiency judgment.League clearly points out that because the rights of an in-nocent third party will not be prejudiced after the property hasbeen seized and sold to him, the courts should not be concernedwith his rights at all in considering a defense of invalid executoryprocess to a deficiency judgment action.2 0 This action is simplya contest between the creditor and the debtor. If the executoryprocess is found to be invalid, then it and everything based uponit is null and void; unless the rights of an innocent third partypurchaser are infringed.It is suggested that League conforms to the general publicpolicy of protecting the debtor from abuse in the expeditiousexecutory proceedings, where, without prior citation or formaljudgment, the creditor may seize and sell the property.2 Thelegislation affords a creditor an easy, quick, and relatively in-expensive method to enforce his rights. In return, he is requiredto follow the law to the letter.League may be logically inconsistent in allowing the debtorto attack the validity of the executory process in the suit forthe deficiency judgment, while barring him from so doing wherethe rights of third parties are concerned because he failed to17. LA. CODE CIV. P. art. 2642.18. See note 15 supra.19. 251 La. 971, 974, 207 So.2d 762, 763 (1968).20. Id. at 978, 207 So.2d at 765.21. LA. CODE Civ. P. art. 2631.[Vol. XXIXNOTESuse his remedies of appeal or injunction to prevent the unau-thorized seizure and sale. However, the creditor's suit for a de-ficiency judgment does not involve the policy considerations ofprotecting third persons who purchase at judicial sales. There-fore, since the bona fide purchaser doctrine is not applicable, thecourt in League approves the general principle that a debtorbeset by executory proceedings is not required to attack theseizure and sale of the property in order to assert defenses tothe deficiency judgment. He may wait to do so until a deficiencyjudgment is actually sought against him.2Samuel A. BlaizeCOMMUNITY OF ACQUETS AND GAINS-ANTENUPTIALOBLIGATIONS OF THE HUSBAND-ARTICLE 2403Proceedings were instituted to enforce a judgment renderedagainst a husband prior to his marriage by garnishment of hiswife's salary, and community funds in a joint bank account.Judgment debtor and his wife intervened, praying that thegarnishment be dissolved and that the judgment creditor beenjoined from obtaining execution against these assets. Held,the wife's salary and community funds in a joint bank accountare not subject to garnishment to pay an antenuptial obliga-tion of the husband. United States Fidelity & Guar. Co. v. Green,252 La. 227, 210 So.2d 328 (1968).The Civil Code does not mention the right of creditors ofeither the husband or wife to have execution against the com-munity assets. This is understandable. As Article 2807 states,"the community of property ... is the effect of a contract" andcontracts create rights only between the contracting parties.3Furthermore, the articles on the community are found in thetitle captioned "Of The Marriage Contract, And Of the Respec-tive Rights Of The Parties In Relation To Their Property. ' ' 422. LeBlanc v. Rock, 84 So.2d 629 (La. App. 1st Cir. 1955).1. It was assumed without question that the wife's salary was a communityasset. The classification of a wife's salary was made uncertain by La. Acts1912, No. 170. However, Houghton v. Hall, 177 La. 237, 148 So. 37 (1933) heldthat the earnings of the wife living with her husband were not affected by thisamendment to LA. CIV. CODE art. 2334.2. LA. CIV. CODE art. 2807: "The community of property, created by marriageis not a partnership; it is the effect of contract governed by rules prescribed forthat purpose in this Code."3. Id. art. 1901: "Agreements legally entered into have the effect of lawson those who have formed them."4. Id. bk. III, tit. VI.19691

Civil Procedure - Deficiency Judgment After Invalid Executory Process

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Civil Procedure - Deficiency Judgment After Invalid Executory Process

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