Vendor's Privilege: Adheret Visceribus Rei

• Author: L. David Cromwell
• Position: Member, Louisiana Bar, and Vice President and Member of the Council of the Louisiana State Law Institute, as well as Reporter of its Security Devices Committee. J.D., 1983, Tulane University of Louisiana.
• Pages: 1165-1250

Vendor’s Privilege: Adheret Visceribus Rei L. David Cromwell  As the price for an immovable, a purchaser assumed payment of the seller’s debt that was secured by an existing mortgage that the seller had granted a year earlier. More than ten years after recordation of the mortgage, but less than ten years after the act of sale was recorded in the mortgage records, a judgment creditor of the purchaser seized the immovable, arguing that the mortgage had lost its effectiveness for failure of timely reinscription. Unfortunately for the judgment creditor, however, she had overlooked a powerful security device that resulted by operation of law from the purchaser’s assumption of the mortgage debt: the vendor’s privilege. Affirming a ruling that the immovable remained subject to this vendor’s privilege, the Louisiana Supreme Court held it to be wholly immaterial whether the mortgage was reinscribed in a timely manner or whether the mortgage was recorded at all, for the failure of timely reinscription of the mortgage did not affect the vendor’s privilege that arose from the assumption in the act of sale “as a legal concomitant . . . without the requirement of any stipulation at all.” 1 As authority for this proposition, the Court cited, without translation, an obscure Latin maxim: Adheret visceribus rei . The Court’s use of this Latin expression certainly suggests that the security device known as the vendor’s privilege, like many other creatures of the civil law, originated in Roman law. Indeed, support for that proposition can be inferred from Baker v. Frellsen , 2 in which the Louisiana Supreme Court a year earlier invoked the same Latin phrase, in the process providing both a translation and an apparent indication that the vendor’s privilege finds its source in Roman law: [The vendor’s privilege] is a guarantee which attaches so tenaciously to the nature of the contract of sale on term, Copyright 2015, by L. DAVID CROMWELL.  Member, Louisiana Bar, and Vice President and Member of the Council of the Louisiana State Law Institute, as well as Reporter of its Security Devices Committee. J.D., 1983, Tulane University of Louisiana. This Article is derived from, and expands upon, a paper presented by the author to the Society of Bartolus in New Orleans, Louisiana, on October 12, 2012. The author expresses appreciation to Professors A.N. Yiannopoulos and Dian Tooley-Knoblett, both of whom were in attendance when the paper was presented, for their thoughtful comments and suggestions, and to Claire Popovich for her able research assistance. 1. Conté v. Cain, 33 La. Ann. 965, 968 (1881). 2. 32 La. Ann. 822 (1880). 1166 LOUISIANA LAW REVIEW [Vol. 75 that the Roman law says that it adheres to the very entrails of the thing, adheret visceribus rei . 3 Objection might be made to this statement on the ground that it, unfortunately, is without basis in historical fact and appears to have arisen from a mistaken belief that Latin words necessarily imply roots in Roman law. Indeed, the Supreme Court recanted just two years later in De L’Isle v. Succession of Moss , 4 explaining, in a footnote, that the use of the word “Roman” in the Baker case was in error; instead of Roman law, the reference was intended to be “ modern civil ” law. The Court acknowledged that the vendor’s privilege was unknown to Roman law but rather is of Gallic creation. Whatever its origin, the vendor’s privilege has been a coveted and powerful form of security throughout Louisiana’s history. This Article begins with a short excursus recalling some central notions about the definition and nature of privileges and posits that there actually exist two different vendor’s privileges: the vendor’s privilege on movables and that bearing on immovables. After tracing the origin of both of these vendor’s privileges, this Article explores the policies underlying the privileges, requirements of registry, status of the privileges as real rights, events causing a loss of the privileges, and problems involving ranking. By focusing on the vendor’s privilege as an example, this Article seeks to illustrate, from a broader perspective, the reasons for the existence of privileges, the manner in which they relate to each other and to other forms of security, and the extent to which privileges can remain relevant in a modern civil law system. I. GENERAL NOTIONS OF PRIVILEGE Article 3186 of the Louisiana Civil Code, which was borrowed verbatim from the Code Napoléon , 5 provides that “[ p ] rivilege 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.” 6 A privilege is thus a preference established by legislation and is an exception to the general rule of the Civil Code that the proceeds of the sale of an obligor’s property are distributed ratably among his creditors. 7 A privilege is a form of real security. 8 3. Id. at 828. 4. 34 La. Ann. 164, 166 (1882). 5. See CODE CIVIL [C. CIV.] art. 2095 (Fr.) (1804). 6. See LA. CIV. CODE art. 3186 (2015). 7. LA. CIV. CODE art. 3134 (2015). As comment (a) to that article explains, this rule continues the familiar principle of article 3183 of the Louisiana Civil 2015] VENDOR’S PRIVILEGE 1167 Privileges cannot be granted contractually; they can arise only by operation of law based upon the nature of the debt. 9 Planiol defines a privilège as “a disposition of the law which favors a creditor.” 10 This definition not only underscores the rule that privileges arise only by operation of law but is true to the term’s Latin etymology—law made for private or particular interests: privilegium , from privus - legis . 11 Some privileges are general and operate on all property of the debtor, such as those securing funeral charges, law charges, and expenses of the last illness. 12 Other privileges are special; that is, they operate only on specific property. One of the most important special privileges is that in favor of the vendor as security for the unpaid purchase price. The law itself grants the unpaid vendor this privilege; it is unnecessary for the vendor to obtain a mortgage, or even to obtain written recognition of the existence of the vendor’s privilege, for it to arise. 13 The definition of “privilege” contained in article 3186 has been criticized on the ground that it envisions merely rights of preference that exist upon property while in the debtor’s patrimony and that the general privileges comprise the only category of Code of 1870 that “the property of the debtor is the ‘common pledge of his creditors.’” Id. cmt. a. The reference in the source article to the concept of “pledge” was deleted, because the term was used in that article in a “non-technical sense.” Id. 8. LA. CIV. CODE art. 3137 cmt. c (2015). The fact that a privilege is a form of real security does not necessarily mean that it is a real right. Id. 9. See LA. CIV. CODE art. 3185 (2015); see, e.g. , Southport Petroleum Co. of Del. v. Fithian, 13 So. 2d 382, 383 (La. 1943); In re Liquidation of Hibernia Bank & Trust Co., 162 So. 644, 645 (La. 1935); State v. Miller, 126 So. 422, 428 (La. 1930); Succession of Rousseau, 23 La. Ann. 1, 3 (1871). 10. 2 MARCEL PLANIOL & GEORGES RIPERT, TREATISE ON THE CIVIL LAW, pt. 2, No. 2544 (La. State Law Inst. trans., 11th ed. 1959) (1939). 11. LE PETIT LAROUSSE ILLUSTRE 822 (Larousse 2010). 12. LA. CIV. CODE arts. 3191, 3252 (2015). The need for explanation of the reasons for the existence of privileges has often afforded courts the opportunity to demonstrate their prowess in the use of poetic and figurative language, as evidenced by an early case providing this moving explanation for the privilege for funeral charges: [W]ere it not for the privilege which the law allows to those who dig the grave, furnish the coffin and drive the hearse, many a lifeless frame, deprived of sepulture, would rot in unnoted or forsaken homes. Were it not for that privilege, when Death enters a city and knocks at every door-watchful and indefatigable as it is, Charity would inevitably be unequal to the increased task which-otherwise-would be imposed upon it. Alter v. O’Brien, 31 La. Ann. 452, 454 (1879). 13 . Conté v. Cain, 33 La. Ann. 965, 968 (1881). 1168 LOUISIANA LAW REVIEW [Vol. 75 privileges that truly fits within this definition, even though the Code establishes other privileges, such as the special privileges on immovables, that include a right of pursuit in addition to a mere right of preference. 14 It is asserted that those privileges constitute real rights that are inconsistent with the definition given in article 3186. 15 The degree to which vendor’s privileges can be viewed as real rights will be explored in substantial detail below. Among two or more competing privileges, the general rule is that they rank according to their nature rather than the date on which they arise. 16 Privileges that are of the same rank are paid concurrently from the proceeds of the thing that they burden. 17 These general rules are applied consistently only to privileges burdening movables, 18 though there are instances under Louisiana law in which they continue to apply to immovables. 19 The last phrase of article 3186 is critical, for it contains the general rule of ranking of privileges upon immovables against mortgages. By their nature, privileges are preferred to mortgages, regardless of whether the mortgage may have previously arisen or become effective against third persons, unless some other provision of law provides to the contrary. 20 It is for this reason that the general privileges that arise under the Civil Code outrank mortgages. 21 Nevertheless, in order for 14. 2 BERNARD KEITH VETTER & THOMAS A. HARRELL, LOUISIANA CREDITORS’ SECURITY RIGHTS 154, 241–43 (1988). See also PLANIOL & RIPERT, supra note 10, No. 2547 (observing that there are no general characteristics of privileges, except in the case of general privileges). 15. VETTER & HARRELL, supra note 14, at...