Jackson Title Corp. v. Swayne, 411 So. 2d 690

Lead Opinion

LOBRANO, Judge.

On April 16, 1970, Allen Swayne purchased two lots of ground from the heirs of Buford Stokes, namely Richard Stokes, Buford Stokes, Doris Stokes Brown, Melvin Stokes and Lillie Mae Stokes McGee, by act before Myrtis C. Broussard, Notary Public. The notary did not obtain the required tax research certificates and there was no waiver of same by Swayne. The City of New Orleans taxes for the year 1970 were not paid, and Jackson Title Corporation purchased the subject property at tax sale on November 19,1971. On May 22,1978 Jackson Title Corporation filed this lawsuit to confirm and quiet its tax title. Swayne filed a third party demand against Brous-sard, the Notary, and Paula Feeney, the Surety on the notarial bond. Broussard and Feeney then third partied the assessor, James W. Smith alleging failure to properly assess the property, and Charles A. Kron-lago, Jr., the city notary for failing to provide the assessor with a copy of the tax deed to Jackson Title Corporation. The trial court entered judgment in favor of Jackson Title confirming their title to the property, and in favor of Allen Swayne on the third party demand against Broussard and Feeney, in the amount of $5,500.00, the original purchase price. The demands against Smith and Kronlage were dismissed.

The notary and surety filed this appeal alleging that the tax sale to Jackson Title was an absolute nullity, and therefore the Court erred in confirming the title. Alternatively, they claim that should the tax title be valid, then the loss of the property was not caused by the Notary’s negligence but by the negligence of the assessor in failing to properly assess same and the city notary in failing to provide the assessor with a copy of the tax title. Swayne appealed on the basis that he should have been reimbursed for the value of the property as of May 22,1978, the date he learned of the tax sale to Jackson Title, rather than the original purchase price.

It is clear that by virtue of Article X, Section 11 of the Constitution of 1921, and Article VII, Section 25 of the Constitution of 1974, the only defense to a tax sale after the deed has been of record for a period of more than five years is proof of prior payment of the taxes for the year in which the property was adjudicated. La. Const, of 1921, Art. X, Sec. 11; La.Const. of 1974, Art. VII, Sec. 25; Cortinas v. Murray, 224 La. 686, 70 So.2d 589, (1954); Laventhal v. Lake Investment Corp., 252 So.2d 521 (La.App. 4th Cir.) In their brief, appellants (Notary and surety) claim that the property was assessed to Buford Stokes in 1970, but since Buford Stokes had died in 1964, and his heirs placed in possession, the property should have been assessed in the heirs’ names. Since this was not done by the assessor, they argue, the tax sale was void because the assessment was not in the name of the record owner. In support thereof they cite Hubbs v. Canova, 401 So.2d 962 (La.1981). First, we point out that Buford Stokes, Jr. is one of the heirs of Buford Stokes, and as such is a legal owner of the property, therefore the assessment did name a record owner. More important, however, is the constitutional five year preemptive period. The tax sale was recorded on February 18, 1972, and the confirmation suit was filed on May 22,1978. The Hubbs case, supra, does not support appellant’s contention with respect to the five year preemption period. That case dealt with a poor description in the assessment which made the property unidentifiable. The Court concluded that “an assessment which purports to assess unidentified land is not valid”. Hubbs v. Canova, 401 So.2d 962, 964 (La.1981). That situation does not exist in the present case, and therefore we agree with the trial court in confirming the tax title of Jackson Title Corporation.

We are compelled to affirm the trial judge’s decision finding the notary negligent. It is a requirement that a notary, in passing an act of sale, obtain clear tax research certificates and annex same to his act. In Orleans Parish, he is prohibited from passing said acts unless the taxes due thereon are paid. La.R.S. 9:2921, et seq. Appellant Swayne employed the notary, Broussard, to pass the act of sale by which he acquired the subject property. The notary failed to obtain the necessary tax certificate, thus breaching the duty she owed Swayne. As a result, Swayne was not put on notice of the delinquent 1970 taxes and consequently the property was lost at tax sale.

The more important issue is the question of quantum. Appellant Swayne argues that the trial court erred in awarding him only the return of his purchase price, rather than the value of the lost property as of May 22,1978, the date which he learned of the loss. In support of this contention, Swayne relies on Langendorf v. Administrators of Tulane Educational Fund, 361 So.2d 905 (La.App. 4th Cir. 1978). In Langendorf, the succession representative failed to pay the taxes on certain lands owned by the decedent in the State of Florida. As a result, the property was sold for unpaid taxes in 1965, and subsequently purchased by an attorney for the succession representative. The heirs brought suit for breach of fiduciary duty, and this Court held the succession representative responsible. The heirs were awarded the value of the property as of the time of tax sale in 1965. In so doing, we stated:

“Generally, the amount of recovery for property lost or destroyed is the value at the time of the loss, which is the earliest time the damaged party can file suit for recovery of a monetary award.” Langendorf v. Administrators of the Tulane Education Fund, 361 So.2d 905 (La.App. 4th Cir. 1978), at p. 910

We then stated that the plaintiff heirs could not have filed suit for recovery prior to 1965 because they had not yet been aware of their claim to ownership of the Florida property.

We are compelled to hold differently in the case at bar, and will distinguish the reasoning of Langendorf in that regard. This case must be analogized to an action of a buyer against a seller in case of eviction. Civil Code Article 2506 provides:

“When there is a promise of warranty, or when no stipulation was made on that subject, if the buyer be evicted, he has a right to claim against the seller:

1. The restitution of the price.

2. That of the fruits or revenues, when he is obliged to return them to the owner who evicts him.

3. All the costs occasioned, either by the suit in warranty on the part of the buyer, or by that brought by the original plaintiff.

4. The damages, when he has suffered any, besides the price that he has paid.”

The Second Circuit, in RalsCo. v. Cone, 344 So.2d 95 (La.App. 2nd Cir. 1977), analogized Article 2506 with an action brought against a Clerk of Court for failing to show an encumbrance on his mortgage certificate. In that case, a purchaser of property subject to a mortgage in favor of Ralston Purina, relied on the mortgage certificate which failed to show that encumbrance. As a result, the purchaser subsequently lost the property through foreclosure proceedings brought by the mortgagee. In those proceedings, the purchaser third partied the clerk of court for failing to list the Ralston Purina encumbrance on his certificate. The clerk was held responsible, and in so deciding, the Court stated:

“By analogy, the measure of damages provided by Article 2506 should control the damages recoverable by third party plaintiff from the Clerk in this case. Principally, the measure of damages is return of the purchase price paid by Frazier to Cone for the property from which he is being evicted.” id. at 98.

This reasoning is applicable to the present case. Appellant-third party plaintiff, Swayne, seeks recovery from the negligent notary for his eviction from the subject property. His action is very similar to those of a buyer against a seller in an action of warranty. The remedies provided a buyer in Article 2506 should be applicable in the present case. We are not constrained to give the appellant the benefit of inflationary economic cycles, just as we would not be constrained to penalize him for deflationary cycles should the Code have provided a remedy different than return of the purchase price. In this regard, it is noteworthy to point out that the redactors of our Civil Code failed to include Article 1633 of the French Code, which provides:

“If the thing sold has increased in price at the time of eviction, even independently of any act of the acquirer, the vendor is bound to pay him what it is worth above the price of the sale.”

As explained by the writer in 17 La.L.R. 253 at p. 260:

“In omitting this Article (French Code Art. 1633) from our Code, the redactors said in explanation that it was ‘evidently dangerous and might cause ruin of a vendor selling in good faith, in a country where fluctuations in value are so great.’ ” Parenthesis added.

We agree that this is the better view, and affirm the trial court’s award of the return of the purchase price. We distinguish the reasoning of Langendorf because in that case the plaintiff heirs did not purchase the subject property, and then subsequently lose same by the negligence of the tort-feasor. They had a claim to the property by virtue of the inheritance laws of Florida and lost that claim by virtue of the deliberate actions of the succession representative in attempting to secure the property for himself. These facts can not be analogized to the buyer-seller case of eviction. The tortfeasor in Langendorf was in bad faith and the plaintiff heirs did not purchase the property in reliance on his (the succession representative) actions.

Appellants, Broussard and Feeney, argue that the assessor should be held responsible for failing to properly assess the subject property, and that the City Notary should also share the responsibility for failing to provide the assessor with a copy of the tax sale to Jackson Title. The proximate cause of the loss of the property was the failure to pay the 1970 city taxes. This would have been cured had the Notary fulfilled her obligation to provide tax certificates, which she did not. The loss was caused by that negligence, and that negligence alone. Hence, it is unnecessary to decide the issues raised against the Assessor and City Notary.

For the foregoing reasons, the judgment of the trial court is affirmed.

AFFIRMED.

SCHOTT, J., dissenting in part with reasons.

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Dissenting Opinion

SCHOTT, Judge,

dissenting in part:

I concur with the majority in affirming the judgment of the trial court on the main demand of Jackson Title Corporation and the judgment on the incidental demands to the extent of holding the notary and surety liable to appellant Swayne and exonerating from liability the assessor and the city notary. However, I dissent from the limitation of Swayne’s recovery to the amount of his purchase price.

Swayne’s cause of action against the notary is based simply on C.C.Art. 2315 which obliges the notary to repair the damage she caused Swayne by her fault in failing to order the proper research certificates when she passed the act of sale. Her negligence caused Swayne to lose the property. However, his loss occurred not in 1970 when the sale was passed, and not in November, 1971, when the property was sold for taxes to Jackson but three years after the recordation on February 18,1972, of the formal tax sale of the property to Jackson. Until the passage of that three years Swayne had an absolute right to redeem the property under Art. X, § 11, of the Louisiana Constitution of 1921, Art. VII, § 25, of the Louisiana Constitution of 1974; and R.S. 47:2221. Under basic tort recovery theory Swayne should be entitled at least to the value of the property as of the time he lost it on February 18, 1975, with the passage of the three year redemptive period.

However, Swayne’s loss was aggravated by the fact that the property continued to be assessed in his name and he continued to pay the tax bills which contained no reference to the tax sale, with the result that he continued to believe he was owner of the property until the present suit to confirm the tax title was filed in May, 1978. Only by then did Swayne learn that the property, in reality his investment, was lost because of the notary’s negligence.

I do not agree with the majority point of view that Swayne’s recovery should be limited to the purchase price of $5,000 rather than the $16,000 which the property was worth in May, 1978. While Swayne’s situation seems analogous to that of an evicted purchaser under C.C.Art. 2506 as discussed in Ralston Purina Co. v. Cone, 344 So.2d 95 (La.App. 2nd Cir. 1977) there is no basis for limiting the recovery of Swayne, the tort victim, as there may be for limiting the recovery of the evicted purchaser against the good faith seller.

Professor J. Denson Smith’s discussion in 17 La.L.R. 258 et seq. recognizes the difference between the recovery allowed buyer against a good faith seller as compared to a bad faith seller, comparing C.C.Arts. 2452 and 2510; and his concern seems to be for the good faith seller when he states at page 266:

“.Yet it hardly seems reasonable to say that the parties contemplate, at the time of the sale, that the seller will stand good for any subsequent increase in value, no matter how great and no matter what period of time may elapse between the transfer of the property, and the day the seller is called upon to make good his warranty against eviction..."

However, our case is not concerned with a good faith seller’s liability, but that of a tort feasor who is obliged by C.C.Art. 2315 to repair the damage she caused. That damage was not simply Swayne’s loss of his purchase price (the quid pro quo for the property) but the loss of the property itself including its enhanced value at the time Swayne learned of the loss.

I would amend the judgment to award Swayne $16,000 with legal interest from date of judicial demand.

Case Details

Case Name: Jackson Title Corp. v. Swayne

Court Name: Louisiana Court of Appeal

Date Published: Mar 9, 1982

Citations: 411 So. 2d 690; 1982 La. App. LEXIS 7050; No. 12757

Docket Number: No. 12757

Court Abbreviation: La. Ct. App.