Août - Septembre 2015/ August - September 2015

Action of the creditor against the offending third party seized, in the absence of a declaration of debt at the collective proceeding of the debtor

Collective proceedings

Source: Supreme Court, Commercial Ch., 8 Sept 2015, n°14-15.831

In application of the articles L211-3, R211-4 and 5 related to the Code of the execution of the Civil Proceedings, the third party seized must declare to the creditor the extent of his obligations towards the debtor and provide to the bailiff the information provided in the article L211-3 related to the Code of the execution of the Civil Proceedings.

Failing to do so, he can be condemned, from the creditor's request, to pay the sums due to the latter, and even to pay damages and interests in case of a gross negligence or a false declaration.

In the present case, the debtor was put into receivership on 10th March 2009 and a recovery plan was decided on 9th March 2010.

In execution of an order dated 17th September 2009, which condemned the debtor to pay him a retainer, the creditor had a procedure of attachment made on 21st April 2011, by Mr Y..., notary (the third party seized).

On 12th July 2011, the court pronounced the resolution of a recovery plan of the debtor and opened a bankruptcy procedure.

On 18th January 2012, the creditor issued a writ to the third party seized for the payment of damages and interest for a false declaration on the basis of the article R211-5, paragraph 2 of the Code of the execution of the Civil Proceedings. On these grounds, he was condemned to pay the sum of €9000 for damages and interests.

The latter made an appeal against the decision rendered by the Court of Appeal, on the grounds that only the debts that aroused after the opening of a collective procedure for the progress of the proceedings, or the period of observation, or in return of a service provided to the debtor during this period, are not subject to the obligation of a declaration to the judicial representative and to the interdiction of payment and enforcement procedures.

In only noticing that the debt, which the creditor blamed the third party seized for its loss, had aroused after the opening of the collective procedure, to then deduct that it did not have to be declared to the judicial representative and was not subject to the interdiction of payment and enforcement procedures, without checking if this debt had aroused for the progress of the procedure or the period of observation or in return of a service provided to the debtor during this said period, the Court of Appeal would have deprived its decision of a legal base in regards with the articles 31 of the Civil Procedure Code and L622-17, L622-21 and L622-24 of the Commercial Code.

For the Supreme Court, the decision must be confirmed. It considers that a debt, which was not declared to the debtor's liability, is not extinguished but cannot be opposed to the collective procedure, therefore the absence of declaration of debt, in the recovery of which the creditor had a procedure of attachment made before the opening judgement of his debtor, does not deprive this creditorfrom his interest to act against the third party seized, on the basis of the article R211-5, paragraph 2 of the Code of the execution of the Civil Proceedings.

However, the Supreme Court dismissed the decision of the Court of Appeal on the grounds of the articles 1382 of the Civil Code and R211-5 of the Code of the execution of the Civil Proceedings.

The court, which had granted damages and interests to the creditor, as compensation for the loss of the possibility to have further enforcement measures, did not outline, as she was invited to, which other enforcement measures could have been done by the creditor and which chances he would have got to succeed.

A cheque not dated given as a guarantee of a loan of money is valid

Civil Law

Source: Supreme Court, Commercial Ch., 22nd Sept 2015, n°14-17.901 JurisData n° 2015-021015

As a guarantee of a loan of €500,000.00, the debtor gave the creditor a cheque for the same amount, not dated, from an account open in his own name.

The creditor dated the cheque and gave it for encashment.

The debtor having stopped payment on this cheque because of fraudulent use, the creditor issued a writ against both the bank and the debtor for the release of the cancellation.

The Court of Appeal of Versailles complied with this request.

The debtor complained that the judgement ordered the release of the cancellation of the cheque, mentioning in particular the fact that is considered null, as against public policy and therefore must have no effect, the agreement between the parties on the presentation of a cheque not dated, and the affixation of a false date, later on, in order to avoid the prescription, and allow its presentation for payment in spite of its expiration.

The Supreme Court dismissed the appeal.

The absence of date of the cheque at the time of its establishment results from an unambiguous agreement and presenting the cheque for encashment after filling in a date, the creditor only gave it the purpose of a guarantee cheque that both parties had conventionally used it for. From those findings and assessments, the Court of Appeal legally justified its decision.

Law applicable to a surety-bond loan: the provisions of the Civil Code and the Consumption Code do not constitute mandatory rules

Civil Law / Commercial Law

Source: Supreme Court, 1st Civil Ch. 16th Sept 2015, n°14-10.373 JurisData n° 2015-020553

On April 19th 2006, an Italian bank granted a loan to a private individual, who usually lives in Italy. Another private individual, who usually lives in France, acted as a guarantor for this loan, by separate document dated April 21st 2006, also concluded in Italy. After having pronounced the acceleration, the bank issued a writ against the borrower and the guarantor for the payment of all due sums.

The Court of Appeal of Besançon declared the French Law applicable to the contract of guarantee, in accordance with the provisions of the article 4 of the Rome Convention dated June 19th 1980 related to the Law applicable to contractual obligations, under which the contract is governed by the law of the country with which it has the closest links. In order to declare the French Law applicable to the guarantee contract, the judgement notes that the guarantee is a separate contract and that it was with France that the disputed contract had the closest links.

The Supreme Court partially reversed the appeal decision in accordance with this text.

In absence of a choice by the parties, the contract is governed by the law of the country with which it has the closest links. Is assumed to have such links, the one where the party who must provide the characteristic performance has, at the time of the contract conclusion, his usual residence.

This presumption is left aside when it results from all the circumstances that the contract presents closer links with another country.

In this particular case, the Supreme Court notes that the disputed guarantee contract, written in Italian, had been concluded in Italy, that the lender had its head office in that country, that the borrower had there his usual residence and that the surety-bond contract, whose surety-bond act constituted the guarantee, was governed by the Italian Law, from which it resulted that the disputed surety-bond contract had closer links with Italy than France.

Then, in order to declare the French Law applicable to the surety-bond contract, the appeal decision notes as well that the texts of the French Law related to the protection of the guarantor and to the formalism of his commitment have a mandatory nature.

The Supreme Court also partially reversed the appeal decision in application of the article 3 of the Civil Code, together with the article 1326 of the same code, the articles L341-2 and L341-3 of the Consumption Code and the article 7, paragraph 2 of the Rome Convention dated June 19th 1980:

«[…]neither the article 1326 of the Civil Code, which gives obligation to the party that commits on its own towards another one, to pay him a sum of money, to add on the act that ascertains this commitment, his signature as well as a mention, written by himself, of the sum in both letters and figures, nor the articles L341-2 and L341-3 of the Consumption Code, which enforce the private individual who acts as guarantor towards a professional debtor, to have his signature preceded by a written mention, the mentions provided by these texts being intended to unsure a better protection of the guarantor, are laws, which have to be observed for the protection of the political, social and economical organisation of the country to the extent of imperatively govern the situation, whatever the law applicable is, and to constitute a mandatory rule.»