41 So. 2d 811 | La. | 1949
Lead Opinion
R. Lafayette Jones instituted this suit on September 16, 1939, to rescind that certain act of sale executed by him on February 13, 1937, whereby he conveyed to the First National Bank of Ruston, Louisiana, for the recited consideration of $3,000 in cash "and other good and valuable consideration" a tract of land consisting of approximately 440 acres and being the SE1/4 and SE1/4 of the SW1/4 of Section 7, and the NE1/4 and E1/2 of the NW1/4 of Section 18, T. 17 N., R. 4 W., Lincoln Parish, claiming that the real consideration for this purported sale was the cancellation of the judgment against him in favor of the bank in the amount of $1,854, which, together with interest, fees, costs and the redemption of the property from the state for failure to pay taxes amounted to $3,398.14 although the property was actually worth $13,200, more than twice the consideration actually paid; that at the time of the execution of the deed the defendant was negotiating to execute oil and gas mineral leases for an amount in excess of the price paid and that within *865 the month following the execution of the deed of sale it actually leased the property mineral rights for $10 an acre, or $4,400. In the alternative he alleged there was no meeting of the minds since he was to receive $3,000 in cash in addition to the cancellation of this judgment, which amount was never paid him.
After the defendant's exceptions of no cause and no right of action had been overruled, the defendant answered admitting the land was conveyed to the defendant in satisfaction of the judgment it held against the plaintiff but averring that the value of the land for oil, gas, and mineral purposes is irrelevant and immaterial to the issues in the case; further averring that the transaction, being the giving of a thing in payment of the judgment it held against the plaintiff, is not subject to the law of lesion beyond moiety. The allegations of the petition with respect to the alternative plea were denied.
Before the case was tried on the merits, the plaintiff died and his widow and heirs were substituted as parties plaintiff. They elected to stand on the main demand. From a judgment of the lower court dismissing their suit, they are appealing.
The record shows that the defendant bank, as a creditor of R. Lafayette Jones, being the holder of a $1,854 note, instituted suit against him on the note and to have set aside the deed he executed in 1933, at which time he was insolvent, purportedly transferring to his two married daughters *866
800 acres of land and other property in order to place it beyond the reach of his creditors. After judgment in favor of the bank became final on January 19, 1937, see First National Bank of Ruston v. Jones,
We think the instrument in controversy was, in fact, a giving of a thing in payment within the purview of Article 2655 of the Revised Civil Code, to be found in Title VII, treating of sale, as claimed by the defendant in its answer, but that it is, nevertheless, subject to attack on the ground of lesion beyond moiety since the giving in payment is subject to all of the rules governing ordinary contracts of sale (Article 2659) except that it is only perfected by the actual delivery of the thing. Article 2656.
"Lesion is the injury suffered by one who does not receive a full equivalent for what he gives in a commutative contract. The remedy given for this injury, is founded on its being the effect of implied error or imposition; for, in every commutative contract, equivalents are supposed to be given and received." Article 1860 of the Revised Civil Code. "The law, *867
however, will not release a person of full age, and who is under no incapacity, against the effect of his voluntary contracts, on account of such implied error or imposition, except * * * 2. In sales of immovable property * * * if the price is given is less than one-half of the value of the thing sold" (Article 1861), including such immovables as are made so by destination. Article 1862. No recovery can be had, however, unless suit is brought within four years from the date of the contract between the persons of full age, and from the age of majority in the contract of minors (1876), the value of the property to be ascertained as of the date of the contract (1871) in the state in which it was at that time. Article 1870. See also, Articles 2589, 2590, Linkswiler v. Hoffman,
This court, in the fairly recent case of Blaize v. Cazezu, supra, summarizes the principles underlying the doctrine of lesion beyond moiety in this manner:
"The law presumes juris et de jure that he who sells an immovable for less than half its value is acting under an error of fact sufficient to invalidate the sale. Civ. Code, Articles 1860, 1861. This presumption is so strong and conclusive that even if the vendor should know and expressly declare that he knows the value of the property exceeds twice the price *868
received, and should even declare that it is his purpose to give the purchaser the surplus of the thing's value over the price received, and that he expressly abandons the right to rescind the sale, nevertheless the law still gives him that right. Civ. Code, Art.
In discharging the burden that was theirs of establishing that the property at the time of the sale was worth more than twice the amount received for it — $7.72 an acre — the plaintiffs offered the testimony of four residents and property owners in the vicinity who valued the property in controversy, at the time the deed was executed, including the improvements and the mineral rights, at from $20 to $25 an acre. In addition, they offered in evidence two documents one showing that the bank, ten days after this sale, gave the Gulf Refining Company a mineral lease on 240 acres of the tract for a consideration of $2,400 (or $10 an acre), exclusive of lease provisions covering delay rentals, and the other showing that less than a month after the execution of the deed it leased the remaining 200 acres to the United Carbon Company for mineral purposes for a consideration of $2,000, also exclusive of delay rental payments and other provisions from which source, as to the entire tract, the bank realized the amount *869
of $880 during the following two years. They also introduced in evidence another document for the purpose of showing that the Federal Land Bank of New Orleans in December of 1935, after the discovery of the gas well in the vicinity, sold a tract of land, reserving to itself a 1/4 mineral interest, for $19.75 an acre, and two other documents showing that in 1938, approximately a year after the execution of the deed, the loan value of the property in the vicinity (which is approximately half the value of the land) ranged from $7.50 to $8.33 an acre. Other evidence in the record shows the 440-acre tract was traversed by a gravel highway, was entirely fenced in with three-strand barbed wire with a smaller tract of some 40 acres inside this outer wire fenced about with hog wire; that some 60 acres of the property was open for cultivation, and the remainder, consisting mostly of meadows and pasture land that was highly suitable for cattle purposes, was also open; that there were three barns on the property, a large barn 60×100, a cow barn 40×40, and a log barn 12×20 (used as a corn crib) with sheds on each side; and that there was also a small tenant house on the property, all of which improvements were valued at $1,500. See, Hall v. Baker,
The defendant, relying primarily on the holding in the case of Silbernagel v. Harrell,
We cannot quite follow the logic of this argument and the conclusion reached by the Court of Appeal in the Silbernagel case for when the plaintiff executed the deed transferring the property in controversy to the bank unencumbered by any real right toward any other person, the bank acquired the same in perfect ownership (Article 490 of the Revised Civil Code) and this, of necessity, carried with it "the ownership of all that is directly above and under it," including the right to construct below the soil all manner of works and to dig as deep as necessary in order to draw from the soil all of the benefits it is felt might accrue. Article 505. Consequently, if that right has any value, this is an element that enters into the consideration of its value just as does the value of growing timber and other valuable attributes.
The Silbernagel case, upon which the lower court based its decision, is unsound and not in accordance with law, for it is based upon the expression to be found in the case of Wilkins v. Nelson,
In the Wilkins case the court very aptly pointed out that "There are three classes of immovables: Immovables by nature, immovables by destination, and immovables by the disposition of law. When Article 1862 of the Code restricted the action oflesion to immovables, it meant immovables which are such bytheir nature and not such as are made immovable by dispositionof the law. This is made manifest by the special inclusion with the immovable by nature all immovables by destination, and the implied exclusion of all immovables made such by the disposition of the law. We hardly think that the language of article 1862 can be so construed as to extend the action of lesion to every real or incorporeal right and to every character of intangible property made immovable by the disposition of the law. * * * It * * * appears that the servitude referred to in article 471 as being an immovable is one which is established on an estate. Its immovable character results from the nature of the object to which it is attached. It becomes a part of the estate and follows the estate. *873 It can hardly be contended that such a servitude, though declaredto be an immovable, would be subject to the action of lesion,independent of the estate to which it was attached or on whichit was established. Even so, with respect to an immovable by destination, as long as it is attached to an immovable by nature it is subject to the action of lesion as a part of the immovable to which it is attached, but the moment the immovable by destination is detached from the immovable, it becomes a movable, and is not subject to the action." (Italics ours.)
In our opinion this is a sound and logical exposition of the law on this subject that is in keeping with the obvious intention of the redactors of the code who, in using the term "immovable" in Articles 1861 and 1862 no doubt did so in the light of the definition they had given this term and its application as set out in Article 462, where we find that an immovable, in its strict sense, applies only to such things as are immovable by their nature and not to such as are so only by disposition of law.
That the land, unencumbered with any mineral leases or servitudes, was worth at least $20 an acre, as claimed by the plaintiffs and testified to by their witnesses, is unmistakably established by the testimony of the defendant's witnesses. For example, one of these witnesses, Mr. C. E. Barham, admitted under cross-examination that he had refused offers of *874 $25 and $50 an acre for a lease on property in that vicinity owned by him in indivision with Add Thompson (president of the defendant bank), Truett L. Scarborough (attorney who represented Jones along with Barham in the suit filed by the bank and also represented Jones in the transfer of this property to the bank in satisfaction of the judgment), and W. C. Simonton, who dealt in oil and gas property and leases. Mr. Simonton, another witness for the defendant, testified that mineral leases in the vicinity sold for as high as $100 an acre at the time of the execution of this deed. Although Scarborough in testifying for the defendant said he thought the $7.72 an acre Jones received for the property was fair and that he felt sure he had exhausted all avenues for selling or leasing the land at the time he suggested the transfer of the property to the bank in satisfaction of the judgment, volunteering the statement that he had also offered the land to Barham (his associate in representing Jones in the bank litigation), in view of the testimony of Barham and of Simonton this testimony is unimpressive. While Barham did state on direct examination that the property would not be worth over $10 an acre to him, it is to be noted that in answer to the question: "I asked you whether Mr. Scarborough made an effort to sell you the 440 acres of land before it was sold to the bank?" he answered: "I don't know whether you would call it that he made an effort to sell it to me, but while he was handling *875 the sale of the land, I talked with him concerning the deal he was going to make, and he asked me if I would be interested in paying the judgment owed and taking the deed, and I said that I believed I'd better not."
If we had any doubt that this property had a definte mineral value at the time of the execution of this deed, as established by the two mineral leases negotiated by the bank within the month following its acquisition of the property, this doubt is unquestionably dispelled by the testimony of the defendant's own witnesses, as above pointed out.
We therefore conclude that the plaintiff has established the value of the property in controversy in the state in which it was at the time of the sale, including the improvements and mineral value, to be at least $20 an acre, much more than twice the amount actually paid for it, $7.72 an acre. Consequently, it is clear that the land, having been sold for less than half its just value, the purchaser may either restore the property and account for the fruits derived therefrom or keep the property by making up the difference between the price paid and its just value, with legal interest from the date the rescission was demanded. Articles 2591 and 2592 of the Revised Civil Code.
For the reasons assigned, the judgment of the lower court is annulled and set aside and it is ordered that there be judgment in favor of the plaintiffs and against *876 the defendant decreeing that the property was transferred to the bank for $3,398.14, less than half the value of it, which value we fix at $8,800, and that it is, accordingly, subject to rescission because of lesion. The case is hereby ordered remanded to the lower court in order that the defendant may be afforded an opportunity to avail itself of the right to either return the property to the plaintiffs and account for the profits or keep it and make proper adjustment, i. e., pay the plaintiffs the difference between the price paid and its just value, with legal interest from the date the rescission was demanded, all in accordance with law and consistent with the views herein expressed. All costs are to be paid by the defendant.
HAMITER, J., concurs in the decree.
O'NIELL, C. J., takes no part.
Dissenting Opinion
I am in full accord with the holding by the majority that "* * * the instrument in controversy was * * * a giving of a thing in payment within the purview of Article 2655 of the Revised Civil Code", and in fact all parties concede this, as shown by the pleadings, but I do not agree that it is subject to attack for lesion beyond moiety.
Article
The following provision of Article 1863 emphasizes the intention of the redactors of the Code to limit the kinds of contracts which may be rescinded for lesion to the two enumerated in Article 1861: "Persons of full age are relieved for lesion in no other contracts than those above expressed, except as hereinafter provided regarding the contract of exchange." (As amended by Act 280 of 1940.) (All italics mine.)
Article 1863 prior to its amendment read as follows:
"Persons of full age are relieved for lesion in no other contracts than those above expressed, not even in exchange, which bears some resemblance to the contract of sale."
The language of this article prior to its amendment shows that the drafters of the Code were so intent upon emphasizing the limitations placed on rescission of contracts for lesion, and were so concerned with making the cases provided for in Article 1861 exclusive, that they made a statement apparently contradictory to other provisions of the Code. In Title VIII, which is *878 styled "Of Exchange", we find Article 2664, which provides that the rescission of the contract of exchange on account of lesion is not allowed in such contracts except in the following two cases — a contract in which one party gives immovable property to another in exchange for movable property, and a contract of exchange where the balance has been paid in money or in movable property. In these instances, the person having given the immovable estate may demand a rescission of the contract, and the party who has paid such balance may also demand a rescission. To correct the apparent inconsistency between these provisions and Article 1863, the Legislature by Act 280 of 1940 amended Article 1863 as set out hereinabove. See, The Louisiana Legislation of 1940, 3 La.L.Rev. 98, 105.
In spite of the lucid, positive language of Articles 1861 and 1863, the majority of the court has extended their meaning by interpreting them in connection with another article of the Code. The type of law exemplified in these articles is not susceptible of extension by interpretation, and an extension to other contracts of the rule which limits rescission on the ground of lesion to certain contracts, in my opinion, is not a proper interpretation of the rule. Domat says in his excellent treatises on interpretation of the civil law:
"The rules of law, whether natural or arbitrary, are of three kinds. Some of them are general, which agree to all matters; others are common to several matters, *879 but not to all; and many are peculiar only to one matter, andhave no relation to others. For example, these rules of natural equity, that we must do wrong to no man, that we ought to render to every one what is his due, are general, and belong to all sorts of matters. This rule, that agreements made between parties are to them in the place of laws, is common to several matters; for it agrees to all kinds of contracts, covenants, or pacts; but it has no relation to testaments, nor to several other matters. And the rule for making void a sale, in which anyone of the parties is damaged more than half of the just price,is a rule peculiar only to the contract of sale. So that, in the use and application of the rules of law, it is necessary todiscern in every one its limits and its extent.
"All these rules cease to have their effect, not only when theyare drawn beyond their limits, and applied to matters to whichthey have no manner of relation, but likewise when, in the application of them to the matters to which they belong, they are either falsely or wrongfully applied, contrary to the true intent of them. * * *" Domat, The Civil Law in Its Natural Order (Strahan's tr., 1861), Tit. I, Sec. I, nos. 12, 13, pp. 110, 111.
"* * * it is of importance, in the study and application of the laws, to observe and to distinguish the rules which are common to all matters without distinction; *880 those which extend to several matters, but not unto all; andthose which are peculiar only to one; that we may avoid falling into the error, to which many persons are liable, of extending a rule that is peculiar to one matter to another, where it has no use, and even where it would be false. * * *" Domat, A Treatise of Laws (Strahan's tr., 1861), Ch. XII, nos. 18, 19, pp. 88, 89.
It is the express opinion of one writer that the kind of law represented by Article 1861 cannot serve as a basis for prolongation. Franklin, Equity in Louisiana: The Role of Article 21, 9 Tulane L.Rev. 485, 501.
The courts of this state in at least two cases have shown by their language that they recognized the unusual character of the provisions of our law permitting lesion, and have shown that they will not allow an extension of the concept of lesion even by a liberal application of it in the cases in which it is permitted.
In Smith v. Huie-Hodge Lumber Co., Ltd.,
"A lesion suit, at best, when unaccompanied, as in the present case, by any suspicion of actual fraud, does not recommend itself to a court of justice. It calls upon the court to set aside a contract to which parties fully capable of contracting, and not alleging any actual error or fraud, have deliberately consented. * * *" *881
And the Court of Appeal, First Circuit, in Bourgeois v. Martin,
"The right to avoid a sale for lesion originated under the Roman law. It was at first recognized by the old French jurisprudence and then abandoned, but when the French Code was adopted it was reestablished, though in a much modified form. The compilers of our own Code, in Louisiana, with slight changes, made it a part of our own system; hence the articles in Paragraph 10, Section 2, Chapter 2 of the fourth title in our Civil Code. Baudry-Lacantinerie, one of the most renowned among the French civil law commentators, whose opinions have always been respected and often quoted by the courts of this state, says in his `Precis de Droit Civil' that the Civil Code perhaps made a backward step in borrowing this system from the Roman law, and adopting it as part of the law of France, though modified in some of its details. The reasons given to justify lesion as a cause for the rescission of sales of immovables are very weak. The lawmaker seems to have considered that the owner who sells his property for less than one-half its value accepts such an unacceptable price under the influence of some moral constraint to which it is impossible for him to resist. He needs money and must have it by selling at any price. His consent thus given is considered unreasonable and the law comes to his rescue by authorizing him to demand a rescission of the sale. *882
"On the other hand, it may be said that the purchaser has the right to assume that the owner is endowed with reason, has the liberty of contract and is free to do what he pleases with his property as long as he does not infringe upon the rights of others, but that such purchaser, under this paternalistic system, is never free of the danger of a demand on the part of the owner for rescission on account of lesion.
"It is, however, the law, and courts should construe and enforce it, regardless of its wisdom or of the motives which induced the lawmaker to adopt it. But in its enforcement proof of the value of the property must be strong and conclusive. In the case of Demaret v. Hawkins, 8 [La.App.] 483, the court says:
"`The right to rescind a sale for lesion beyond moiety is the only restraint on the liberty of the citizen to bind himself or his property according to the dictate of his own judgment, and the evidence relied on to establish that right should be peculiarly strong and conclusive.'"
Aside from the matter of the proper method of interpretation of the Code, some doubt has been expressed as to the propriety of rescission of contracts of giving in payment for lesion. The French commentator referred to in the foregoing case has argued that the considerations which prompted the authors of the French Code to allow rescission of sales of immovables for lesion do not exist as to a dation en paiement. He points out that, *883 in the eyes of the authors of the Code, the owner who consents to sell his immovable for a lower price than half of the true value of it is acting under the pressure of a great need of money, so that it is proper to protect him against the buyer who uses the circumstances to take advantage of him. On the other hand, such is not the situation of the debtor who relieves himself by giving an immovable in the place of a sum of money which he owes. To avoid all moral constraint and in order to be sure of obtaining the real value of his immovable, he has only to abstain from resorting to the dation en paiement and to let his property be seized. See Baudry-Lacantinerie et Barde, Traité théorique et pratique de droit civil XIII, Des Obligations II (3e éd. 1907), no 1688, pp. 795, 796.
A writer in this state discusses the problem which the court has before it in the instant case, and takes the same view as I do. He says:
"The principle of rescission of sales for lesion does not apply to a dation en paiement in France, since lesion is not a vice of consent nor a general contract rule, but an exception which mustbe restricted in its application. The question of whether or not rescission for lesion beyond moiety applies to giving in payment in Louisiana is somewhat in doubt. According to Pothier, the contract of dation en paiement should be subject to rescission for lesion beyond moiety. Thus, the question resolves itself into a determination of the *884 intention of the drafters of the Louisiana Civil Code either to adopt or reject the opinion of Pothier in this respect. It is quite possible that the question did not occur to the Louisiana drafters. Nevertheless, the provisions of the Louisiana CivilCode on lesion beyond moiety should put this question at rest.Article 1861 states that lesion beyond moiety is available inonly two cases, namely, sale and partition. In addition, by way of emphasis, Article 1863 provides that rescission for lesion may be had in no other contracts. Furthermore, the considerations upon which lesion is applied to sales have no justification in a giving in payment." Comment, 14 Tulane L.Rev. 263, 270.
In view of all these considerations, it is incomprehensible that the majority of this court could conclude that the general, broad language in Article 2659 shows an intention on the part of the redactors of the Code to extend the concept of lesion to another contract, giving in payment, in spite of the explicit, restrictive language used by them to limit the application of the concept to the contracts specifically enumerated in Articles 1861 and 1863. Great inadvertence or oversight may be attributed to the redactors by their drafting of Article 2659, but I can see by it no specific intention to extend the exclusive provisions of Articles 1861 and 1863.
It is significant to me that the articles of the Code dealing with lesion as to partitions and sales of immovable property set out in detail the respective rights of the *885 parties in the event lesion beyond moiety is found to exist; likewise in the two cases in which lesion is allowed in contracts of exchange the rights of the parties are expressly defined and are limited to a rescission of the contract. On the other hand, in the last chapter of Title VII, "Of the Giving in Payment", which just precedes Title VIII, "Of Exchange", no mention is made of lesion beyond moiety, and there is no provision dealing with the rights of the parties to the giving of a thing in payment although lesion may exist.
Assuming, however, that the rules governing the rights of parties in sales apply to the rights of the parties in a dation en paiement, let us now examine the rules and the rights of the parties where lesion beyond moiety is found to exist in a sale of immovable property, as set forth in Articles
Under the rule which the majority says is applicable, if the bank in the instant case elects to rescind the sale, is it entitled to have its obligation, secured by a judicial mortgage, reinstated? And, if so, should the judicial mortgage be reinstated as of the date of its cancellation, and, if so reinstated, should it cover and operate against *886 other property owned by Jones on the date the present contract was entered into, notwithstanding the fact that this other property has been acquired by third parties on the faith of the public records showing the cancellation of the mortgage? Further, how should the tax adjudications themselves be adjusted? Certainly the bank did not pay to Jones any sum of money which he, the seller, can return as the purchase price to comply with the provision of the Code that "the seller shall repay the purchase money which he has received" in the event the purchaser elects to rescind. It may be that it is the intention of the majority for Jones to repay the full amount of the judicial mortgage, including all interest, costs, and attorney's fees, as well as the amount paid by the bank for the purpose of redeeming the property, but, if so, I am unable to find any provision of the law that authorizes or permits such a disposition, either under the articles dealing with lesion or under those dealing with exchange or under those dealing with the giving of a thing in payment.
Since I consider that the contract here is not subject to attack for lesion beyond moiety, it is not necessary for me to express an opinion on the question of whether the value of the mineral rights should be considered in determining the value of an immovable as of the date of the sale when an act of sale is attacked for lesion beyond moiety.
I respectfully dissent. *887