411 So. 2d 1180 | La. Ct. App. | 1982
This is an appeal from a judgment of the district court in favor of the plaintiff, Richard L. Fisher, holding James R. Childs and Childs Investment Company solidarily liable on a promissory note in the amount of $7,553.39, plus 8% interest from September 27, 1977, attorney’s fees of 25% and costs. From that judgment, which we reverse, defendant appeals.
The promissory note sued on by plaintiff was executed as part of a sale of a then ongoing business known as “Bridge Circle Inn.” Bridge Circle Inn was a restaurant and bar owned and operated by Mr. Fisher. The sale was made pursuant to the Louisiana Bulk Sales Act. Shortly after confection of the sale, the purchaser discovered several problems with the Bridge Circle Inn. Some of the equipment was defective, a number of Mr. Fisher’s creditors had not been named in the list of creditors and 90% of the parking area was discovered not to belong to Mr. Fisher and hence was not transferred to the purchaser.
Fisher received the note as consideration for the sale. Accordingly, he is not a holder in due course but rather a simple holder for value against whom defenses may be raised.
Defendant pleaded four items of failure of consideration. Turning to that question, we note the following:
1. Mr. Childs was purchasing an ongoing business.
2. An integral part of that business was the parking facility and equipment.
3. The loss of substantially all of the parking space resulted in the failure of the business, and the equipment proved to be defective.
4. Mr. Childs only assumed the debts connected with creditors listed on the creditor’s list and in all other respects was warranted free and unencumbered property.
5. Shortly after sale, Mr. Childs discovered that the property was encumbered with debts to Magnolia Liquor Company, the Jefferson Music Company, Guaranty Bank and Trust Company, and outstanding taxes.
Examining the above listed factors which touch on almost every aspect of the business, we conclude that a failure of consideration has in fact occurred. Having so concluded, we pretermit discussion of appellant’s other arguments. We further find that the promissory note is void ab inition due to failure of consideration.
For the reasons discussed, the judgment of the district court is reversed and we render judgment as follows:
IT IS ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of the defendants, James R. Childs and Childs Investment Company, dismissing plaintiff’s case. All costs are to be borne by plaintiff.
REVERSED AND RENDERED.