Security and Pledge – The nature of the contract of pledge
Art. 3144. Accessory nature of pledge. Pledge is accessory to the obligation that it secures and may be enforced by the pledgee only to the extent that he.may enforce the secured obligation.
Civil Law Basics
Security and Pledge – Property that may be the object of pledge
Security and Pledge – Property that may be the object of pledge
Art.3142. Property susceptible of pledge. The only things that may be pledged are the following:
(1) A movable that is not susceptible of encumbrance by security interest
(2) The lessor’s rights in the lease of an immovable and its rents
(3) Things made susceptible to pledge by law.
Security and Pledge – General Principles
Security and Pledge- General Principles
Revision Comments: Art. 3431, comment D. Parties might nonetheless, through the exercise of the freedom of contract recognized by Article 1971 (Rev. 1984), enter into an innominate contract providing for an arrangement similar to what was previously known as an antichresis, but the contract would create neither a pledge under this Title nor a real right in the immovable enforceable against third persons who acquire rights in it.
Security and Pledge – Pledge
Security and Pledge – Pledge
Art. 3141. Pledge defined. Pledge is a real right established by contract over property of the kind described in Article 3142 to secure performance of an obligation.
Security and Pledge – Security
Security and Pledge – Security
Art, 3136. Security defined. Security is an accessory right established by legislation or contract over property, or an obligation undertaken by a person other than the principal obligor, to secure performance of an obligation. It is accessory to the obligation it secures and is transferred with the obligation without a special provision to that effect.
Revision Comments: Art, 3136, Comment (b). The concept of security arises in numerous other Articles found throughout the Civil Code. See, e.g., C.C. arts. 474 (Rev. 1978); 571 (Rev. 1976; Amended 2004); 573 and 624 (Rev. 1976; Amended 2010); 1499 (Rev. 1996; Amended
2003); 1514 (Rev. 1996; Amended 2003); 1783, 1884, 1887, 1891, 1913, and 2023 (Rev. 1984); 2557 and 2569 (Rev. 1993); 3047, 3053, 3054, 3062, 3068, and 3070 (Rev. 1987).
Art. 3133. Liability of an obligor for his obligations. Whoever is personally bound for an obligation is obligated to fulfill it out of all of his property, movable and immovable, present and future.
Art. 3134. Ratable treatment of creditors. In the absence of a preference authorized or established by legislation, an obligor’s property is available to all his creditors for the satisfaction of his obligations, and the proceeds of its sale are distributed ratably among them.
Art. 3138. Kinds of security. Kinds of security include suretyship, privilege, mortgage, and pledge. A security interest established to secure performance of an obligation is also a kind of security.
Art. 3185. Privileges established only by law, stricti juris. Privilege can be claimed only for those debts to which it is expressly granted in this Code.
Art. 3186. Privilege, definition. Privilege is a right, which the nature of a debt gives to a creditor, and which entitles him to be preferred before other creditors, even those who have mortgages.
Suretyship – Termination of suretyship
Suretyship – Termination of suretyship
Art. 3058. Extinction of the suretyship. The obligations of a surety are extinguished by the different manners in which conventional obligations are extinguished, subject to the following modifications.
Art. 3059. Extinction of principal obligation. The extinction of the principal obligation extinguishes the suretyship.
Art. 3060. Prescription of the surety’s obligation, right of reimbursement, and contribution. Prescription of the principal obligation extinguishes the obligation of the surety. A surety’s action for contribution from his co-sureties and his action for reimbursement from the principal obligor prescribe in ten years. The interruption of prescription against a surety is effective against the principal obligor and other sureties only when such parties have mutually agreed to be bound together with the surety against whom prescription was interrupted.
Art. 3061. Termination of suretyship. A surety may terminate the suretyship by notice to the creditor. The termination does not affect the surety’s liability for obligations incurred by the principal obligor, or obligations the creditor is bound to permit the principal obligor to incur at the time the notice is received, nor may it prejudice the creditor or principal obligor who has changed his position in reliance on the suretyship. Knowledge of the death of a surety has the same effect on a creditor as would a notice of termination received from the surety. A termination resulting from notice of the surety’s death does not affect a universal successor of the surety who thereafter unequivocally confirms his willingness to continue to be bound thereby. The confirmation need not be in writing to be enforceable.
Art. 3062. Effect of modifications of principal obligation. The modification or amendment of the principal obligation, or the impairment of real security held for it, by the creditor, in any material manner and without the consent of the surety, has the following effects.
Revision Comments-1987. Louisiana jurisprudence has created a special rule, applicable to compensated sureties who guarantee construction or other contracts, that changes or alterations that do not materially affect the surety’s liability and that bear a reasonable relationship to the extent of the original project will .not release the surety. See State v. Preferred Acc. Ins. Co. of N.Y., 149 So.2d 632 (La.App. 1st Cir.1963). This jurisprudential rule was made statutory in R.S. 9:4812(E)(2). This Article extends that rule to commercial suretyships generally and amplifies its provisions.
Suretyship – Effects among several sureties
Suretyship – Effects among several sureties
Art. 3055. Liability among co-sureties.Co-sureties are those who are sureties for the same obligation of the same obligor. They are presumed to share the burden of the principal obligation in proportion to their number unless the parties agreed otherwise or contemplated that he who bound himself first would bear the entire burden of the obligation regardless of others who thereafter bind themselves independently of and in reliance upon the obligation of the former.
Art. 3056. Right of contribution among co-sureties. A surety who pays the creditor may proceed directly or by way of subrogation to recover from his co-sureties the share of the principal obligation each is to bear. If a co-surety becomes insolvent, his share is to be borne by those who would have borne it in his absence.
Art. 3057. Limitation upon right of contribution. A surety who pays the creditor more than his share may recover the excess from his co-sureties in proportion to the amount of the obligation each is to bear as to him. If a surety obtains the conventional discharge of other co-sureties by paying the creditor, any reduction in the amount owed by those released benefits them proportionately.
Suretyship – Effects between surety and principal debtor
Suretyship – Effects between surety and principal debtor
Art. 3047. Rights of the surety. A surety has the right of subrogation, the right of reimbursement, and the right to require security from the principal obligor.
Art. 3048. Surety’s right of subrogation. The surety who pays the principal obligation is subrogated by operation of law to the rights of the creditor.
Art. 3049. Surety’s right of reimbursement for payment of obligation. A surety who pays the creditor is entitled to reimbursement from the principal obligor. He may not recover reimbursement until the principal obligation is due and eligible. A surety for multiple solidary obligors may recover from any of them reimbursement of the whole amount he has paid the creditor.
Art. 3050. Surety’s right of reimbursement for payment of obligation not owed A surety who in good faith pays the creditor when the principal obligation is extinguished, or when the principal obligor had the means of defeating it, is nevertheless entitled to reimbursement from the principal obligor if the surety made a reasonable effort to notify the principal obligor that the creditor was insisting on payment or if the principal obligor was apprised that the creditor was insisting on payment.The surety’s rights against the creditor are not thereby excluded.
Art. 3051. Payment by debtor without notice of payment by surety. A surety may not recover from the principal obligor, by way of subrogation or reimbursement, the amount paid the creditor if the principal obligor also pays the creditor for want of being warned by the surety of the previous payment. In these circumstances, the surety may recover from the creditor.
Art. 3052. Limitation on right of surery to recover what he paid creditor A surety may not recover from the principal obligor more than he paid to secure a discharge, but he may recover by subrogation such attorney’s fees and interest as are owed with respect to the principal obligation.
Art. 3053. Surety’s right to require security. A surety, before making payment, may demand security from the principal obliÂgor to guarantee his reimbursement when:
(1) The surety is sued by the creditor;
(2) The principal obligor is insolvent, unless the principal obligation is such that its performance does not require his solvency;
(3) The principal obligor fails to perform an act promised in return for the suretyÂship; or
(4) The principal obligation is due or would be due but for an extension of its term not consented to by the surety.
The principal obligor may refuse to give security if the principal obligation is extinguished or if he has a defense against it.
Art. 3054. Failure to provide security. If, within ten days after the delivery of a written demand for the security; the principal obligor fails to provide the required security or fails to secure the discharge of the surety; the surety has an action to require the principal obligor to deposit into the registry of the court funds sufficient to satisfy the surety’s obligation to the creditor as a pledge for the principal obligor’s duty to reimburse the surety.
Suretyship – Defenses of surety
Suretyship – Defenses of surety
Art. 3046. Defenses available to surety. The surety may assert against the creditor any defense to the principal obligation that the principal obligor could assert except lack of capacity or discharge in bankruptcy of the principal obligor.
Suretyship – Liability of surety
Suretyship – Liability of surety
Art. 3045. Liability of sureties to creditor; division and discussion abolished. A surety, or each surety when there is more than one, is liable to the creditor in accordance with the provisions of this Chapter, for the full performance of the obligation of the principal obligor, without benefit of division or discussion, even in the absence of an express agreement of solidarity.
