author: THOMAS, Justice. PRUNTY, Associate Justice

text:
    Robert H. STEPHENS and wife, Jane M. Stephens and Walter Cowan, Sr., as natural guardian for Walter Cowan, Jr., Appellants, v. Lizzie STEPHENS, a widow, et al., Appellees.
    Supreme Court of Florida, En Banc.
    March 6, 1957.
    Rehearing Denied April 29, 1957.

      Liddon, Isler, Welch & Harris, Panama City, for appellants.
    Cornett, Duncan & Leath, Panama City, for appellees.
   THOMAS, Justice.

The appellants started a suit to quiet the title to four lots in Block 21 of Bayview Addition to St. Andrews, in Bay County, two of which, numbered 6 and 7, were alleged to be owned by Robert H. Stephens and his wife, Jane, and two, numbered 8 and 9, by Walter Cowan, Sr., as natural guardian, for Walter Cowan, Jr. After extensive pleadings and considerable testimony, the master recommended that a decree be entered declaring the persons we have named to be the owners in fee simple of the respective lots.

The chancellor confirmed the report in respect of Lot 6 and decreed Robert H. Stephens and his wife owned it by virtue of adverse possession, but he rejected the recommendations with reference to the other three lots because of failure to establish adverse possession, and he dismissed the bill of complaint so far as it involved that property.

Under the appeals that were taken, we will proceed to adjudicate the title of the four lots in question without disturbing the findings of fact made by the master in chancery.

The salient facts appearing in the report seem acceptable to all parties here complaining.

The common source of title was a tax deed from the State of Florida to one John W. O’Neal by which the four lots were conveyed to him 27 April 1931. Sometime afterward, the time is no more definitely set than by the statement of his wife that she last saw him in 1935, the grantee left for parts unknown. Before leaving he put his sister-in-law, Annie E. Stephens, in charge of the property telling her to “look after” it. The sister-in-law lived on an adjoining lot, No. 5, and stayed there until 1953. According to the report the sister-in-law exercised dominion over the property for nearly twenty years. She kept chickens on the land, planted grapes on one lot and leased the lots for use as sites for outdoor advertisements. “By and through her lessees” underbrush' and trees were cleared from the northern part, or front, of all the lots. She paid all taxes on the property until she “sold” it in 1952.

At this point in his report the master stated that it could be “assumed” that Annie E. Stephens held the lands as agent or trustee from the time they were placed in her charge until 27 May 1943. We inject this opinion of the master, relative to a point of law, into the narrative of the facts because it is a fitting introduction to the next item in the history of the title.

On 27 May 1943 Bertha Belle Stephens O’Neal, wife of John W. O’Neal, having concluded that her husband had died, a decision based on nothing so far as the record shows but his prolonged absence, conveyed the property to the sister-in-law, who up to that time had acted as agent of John W. O’Neal. Ever since, found the master, she had claimed all the lands. Later Annie E. Stephens conveyed Lots 6 and 7 to Robert H. Stephens and his wife, and Lots 8 and 9 to Walter Cowan, Sr., as guardian of Walter Cowan, Jr.

Then John W. O’Neal came back and he, joined by one Sarah Geneva O’Neal, described in the instrument as his wife, though there is a lack of evidence that the marriage to Bertha Belle Stephens had ever been dissolved, proceeded to convey all four lots to M. H. Stephens and Victoria Stephens after the bill was filed. His return was prompted by notice of this very suit. The deed he subsequently executed was introduced by the answer of M. H. Stephens and Victoria Stephens in which a decree was sought quieting their title to the property.

Accepting the facts reported by the master to the chancellor but rejecting the decisions of points of law, we conclude that the decree must be reversed. And we think that in disposing of the controversy we need not make any excursion into the law of adverse possession.

Possession of the property was gained by Annie E. Stephens when John W. O’Neal put the property in her charge before he went away. For ten years she seems faithfully to have discharged her obligation to him. But certainly that relationship could not be effectively and validly ended because his wife arbitrarily decided that he had departed this life and that inasmuch as they had no children she could deed property that was his. She could not, by indulging an unfounded presumption, declare him dead and herself his heir, and at the same time translate Annie E. Stephens from an agent of John W. O’Neal into an adverse holder by virtue of a deed which Bertha Belle Stephens O’Neal had no right to execute.

The stipulation with reference to the de-raignment of title and the facts developed by the testimony impel us to the conclusion that title to the four lots is vested in the grantees of John W. O’Neal subject to any outstanding dower rights, a matter which should be determined by the chancellor after taking such further testimony as he finds necessary to decide the point.

We reverse the decree with directions to proceed according to the views we have expressed.

Reversed.

TERRELL, C. J., and HOBSON, ROBERTS and THORNAL, JJ., concur.

DREW, J., and PRUNTY, Associate Justice, dissent.

PRUNTY, Associate Justice

(dissenting).

The appellants, plaintiffs in the court below, sought by their complaint to quiet title to certain lands in Bay County, Florida.

The complaint as amended listed numerous defendants; however, the defendant-appellees, M. H. Stephens and Victoria Stephens and the defendant Bertha Belle Stephens O’Neal filed Answers and asked for the affirmative relief of having the title to the property in question quieted in them.

The Chancellor appointed a special master to hear the testimony and make recommendations. The special master found that the evidence was sufficient to support the plaintiff’s allegations and recommended that the plaintiffs be granted the relief sought in their complaint. The defendants, appellees, excepted to the special master’s report and the chancellor entered a final decree sustaining the exceptions in part and denying them in part. It is this decree that is appealed from and the appellees join in the appeal.

All of the parties deraign title from one common source, a tax deed from the State to John W. O’Neal dated April 27, 1931, conveying

Lots 6, 7, 8 and 9, Block 21, Bay-view Addition to St. Andrews, Florida, in the Spi of Section 35, Township 3 South, Range 15 West, as per plat on file in the office'of the Clerk of Circuit Court of Bay County, Florida.

After acquiring the Tax Deed, O’Neal left Bay County and was last heard from by his wife Bertha Belle Stephens O’Neal in 1935.

Before O’Neal left he placed his sister-in-law, Annie E. Stephens, who lived on the adjacent lot, in charge of the lands with instructions to look after them. Annie E. Stephens exercised full authority over the property for over 20 years.

This property was employed for raising grapes, vegetables and chickens. The lands were cleared by Annie E. Stephens and her lessees, and portions were leased for outdoor advertising signs. Annie E. Stephens also paid all state, county, municipal and other taxes upon the lands until the same were sold to the plaintiffs.

On May 27, 1943, the defendant Bertha Belle Stephens O’Neal, wife of John W. O’Neal, believing her husband to be dead and knowing that they had no children, executed a quit-claim deed to Annie E. Stephens, which was placed of record. She thereupon proceeded to claim title to all of the lands so conveyed in her own right.

There is some dispute in the testimony as to the use of the south end of the property, there having been apparently less use made of this portion, and this area was shown to be covered with large trees. However, it appears that the property was used consistently for sign locations and generally cultivated for over 10 years since 1943.

In 1953 John W. O’Neal, apparently in response to notice of plaintiff’s suit, returned to Bay County and sought legal advice. He executed a quit-claim deed to M. H. Stephens and wife Victoria Stephens. This instrument was dated December 21, 1953, and was signed by John W. O’Neal and Sarah Geneva O’Neal. The status of the last-named individual is not revealed. The deed forms the basis of appellees’ claim to the lands in dispute.

Upon stipulation of the parties the special master viewed the property and included in his report a statement of his findings as a result of this viewing.

The special master, after hearing all the evidence, set forth his conclusions as follows :

“From an examination of the amended bill of complaint and the testimony adduced I conclude that the Quit-claim deed from Bertha Belle Stephens O’Neal to Annie E. Stephens, dated May 27, 1943, conveying to the said grantee
Lots 6, 7, 8 and 9, Block 21, Bayview Addition to St. Andrews, in the South Half (Si4>) of Section 35, Township 3 South, Range 15 West, as per plat on file in the office of the Clerk of the Circuit Court of Bay County, Florida,
is a written instrument, valid and sufficient to authorme and warrant possession and occupation under color of title by the grantee. The grantor actually believed and intended to convey the full legal title to the lands so conveyed, but as a matter of fact she did convey all of her right, title and interest in the lands, including whatever right, title and interest she now claims.
“The quantity and quality of adverse possession under color of title is defined in section 95.17, F.S.A. The evidence is sufficient to show that the plaintiffs and their predecessor in title usually cultivated and otherwise improved the lands over a period of ten years or more. They also leased the front end of the lots to advertisers who erected and maintained large signs thereon and kept that portion of the lots free of undergrowth that would quickly spring up to hide the signs. In view of the fact that myriads of advertising signs literally infest the lands adjoining highways all over the nation it may safely be assumed the leaseholds herein shown was ‘the ordinary use of the occupant’. Such occupancy has been continuous for the past ten years or more.
“The Quit-claim deed from John W. O’Neal and Sarah Geneva O’Neal to M. H. Stephens and wife Victoria Stephens, dated December 21, 1953 and recorded in Deed Book 189 at page 597 of the public records of Bay County, Florida, is not a valid conveyance and is not sufficient to convey the title to the lands therein described to the grantees. It only serves to cast an after-cloud upon the title of the plaintiffs herein.
“Before executing this deed John W. O’Neal had notice of the suit and came here to ascertain his rights in and to the lands, consulting an attorney, (tr. pages 101 to 104) He told the attorney that he and the defendant Bertha Belle Stephens O’Neal had been married and he did not aver that they were divorced, yet, when he attempted to convey the lands to the defendants, M. H. and Victoria Stephens he was joined by a bogus wife in the execution of the conveyance — well knowing that she was not his wife. By the same token the grantees accepted the deed with full knowledge of its infirmity. They well knew that their sister, Bertha Belle, was the wife of John W. O’Neal and not Sarah Geneva who acknowledged in the conveyance as his wife, and they knew or should have known that the deed was not sufficient to convey title to them.”

The deed from Bertha Belle Stephens O’Neal to Annie E. Stephens was sufficient to qualify as a written instrument as contemplated by F.S. § 95.16, F.S.A. The nature of the instrument required under this section of the statutes is discussed in Morrison v. Byrd, Fla.1954, 72 So.2d 657. See also McRae v. Ketchum, 138 Fla. 610, 189 So. 853.

Annie E. Stephens went into possession of the property in question as an agent of John W. O’Neal. However, her actions with reference to the property were not those of an agent. The cultivating, leasing, clearing and other usages of the premises by Annie E. Stephens and her lessees, which are for the most part undisputed, are actions adverse to the interests and claims of John W. O’Neal.

When Annie E. Stephens acquired the quit-claim deed from her sister Bertha Belle Stephens O’Neal she was able to couple her acts of adverse holding with a proper written instrument constituting color of title.

Appellees contend that the appellants’ predecessor in title performed no acts subsequent to receipt of the quit-claim deed which were not performed prior to its delivery, and that therefore the tenancy of Annie E. Stephens continued uninterrupted.

We cannot follow this contention. In the first place, the relationship of Annie E. Stephens follows more logically within the theory of agency than tenancy. If tenancy existed it could have no greater dignity than that of a tenant at sufferance. In the second place, the actions of Annie E. Stephens were inconsistent with the position of an agent or a tenant and were certainly adverse to the claims of the former owner. She rented the property to others, cultivated it, raised chickens, executed outdoor advertising leases and treated the property in every respect as her own until she sold the same to plaintiffs-appellants. She retained the proceeds of any rental and enjoyed the reputation of being the owner of the property.

The appellees were charged with notice of the claim under color of title by appellants from the date of the recording of the deed from Bertha Belle Stephens O’Neal to Annie E. Stephens. They were also charged with knowledge and in fact had actual knowledge of all the adverse actions and claims which the appellants now rightfully rely upon.

This case is distinguishable from the holding in Ballard v. Gilbert, Fla.1951, 55 So.2d 723, in that the latter case turned solely on the question of the existence of the landlord and tenant relationship and the acquisition of a tax deed by the tenant.

We feel the lower court was correct in sustaining the conclusions and recommendations of the Special Master with reference to Lot 6 of Block 21, Bayview Addition to St. Andrews, but we fail to see how the Chancellor, having arrived at his decision on this parcel, could reach a different conclusion as to the remainder of the property. True it is that there is some disagreement and conflict of the evidence with reference to such matters as the size, area and location of the gardens, chicken runs and grape arbors, and also as to the difference in appearance between the north and south ends of the property.

However, the Special Master heard all the testimony, observed the witnesses, and even viewed the property. He was in better position to weigh, sift and determine the evidence than this Court or even the Chancellor below. This Court has repeatedly taken the position that the Special Master’s decisions, especially when they concern the facts or mixed questions of law and facts, should be accepted by the Chancellor unless such findings are shown to be clearly erroneous. See Harmon v. Harmon, Fla.1949, 40 So.2d 209; City of Miami Beach v. First Trust Co., Fla.1949, 45 So.2d 681; Florida National Bank & Trust Co. of Miami v. Brown, Fla.1950, 47 So.2d 748; Aldred v. Romano, Fla.1952, 58 So.2d 436.

There is no showing that the Special Master’s findings were erroneous. In fact, there is ample support for his conclusions. We therefore determine that the first paragraph of the final decree of the Chancellor with reference to Lot 6, Block 21, of Bay-view Addition to St. Andrews should be affirmed. The second paragraph of the final decree with reference to Lots 7, 8 and 9, Block 21, of Bayview Addition to St. Andrews should be reversed and this cause remanded for the entry of an appropriate decree consistent with the views herein expressed, quieting title to Lots 6 and 7, Block 21, of Bayview Addition to St. Andrews in Robert H. Stephens and wife Jane M. Stephens as the- owners in fee simple of said property, and quieting title to Lots 8 and 9, Block 21, of Bayview Addition to St. Andrews in Walter Cowan, Sr. as natural guardian for Walter Cowan, Jr. as the owner in fee simple of said property as such guardian.

It is my view that the decree should be affirmed in part, reversed in part.

DREW, J., concurs.


source: Caselaw Access Project

author: DREW, Justice.

license: Public Domain

text:
    Ann SMALL, Appellant, v. Rose SHURE by her Conservator City National Bank and Trust Company of Chicago, Appellee.
    Supreme Court of Florida, Division B.
    April 10, 1957.

      Joseph A. Hackney, Miami, for appellant.
    Dunn & Hickey and Hoffman, Kemper & Johnson, Miami, for appellee.
   DREW, Justice.

This is an appeal from a final judgment on written obligations to pay money. The judgment was in the sum of $26,000 and represented the amount of principal due from the appellant Small to the appellee Sam Shure, as executor of the estate of Rose Shure, deceased, on three written obligations to pay money in the sum of $10,000, $5,000 and $11,000 respectively. These obligations read as follows:

“Miami Beach, Florida Apr. 27th, 1951
“I owe Rose Shure ten thousand dollars.
“s/ Ann Small”
“September 27, 1951
“I owe Rose Shure eleven thousand dollars
“s/ Ann Small”
“September 6th 51
“I owe Rose Shure 5 thousand dollars.
“s/ Ann Small”

The payee of these obligations was deceased at the time of the trial.

Prior to the trial the plaintiff took the deposition of Ann Small, the maker of these obligations, but this deposition was never introduced in evidence although it appears in the original record which is before us.

At the trial before the court without a jury, Ann Small the maker of the three written instruments was called by the plaintiff as a witness on behalf of the plaintiff and she testified concerning these instruments as follows:

“Q. Now, Mrs. Small, I show you an instrument purporting to be an I.O.U., and I ask you whether or not you have ever seen the instrument before? A. Yes, that is my writing.
“Q. Is that your writing on the instrument? A. Yes.
“Q. Did you write everything on the instrument, ‘I owe Rose Shure ten thousand dollars’? A. Yes.
“Q. This note is dated April 27, 1951. Did you ever repay any part of this money? A. She didn’t want me to.
“Q. Did you ever repay it? A. No.
“Mr. Dunn: I would like to introduce this in evidence as Plaintiff’s Exhibit A, if the Court please.
“Mr. Hackney: No objection.
“Q. (By Mr. Dunn) Now, Mrs. Small, I hand you an instrument dated September 6, 1951, and ask you whether or not you have seen this instrument before. A. Yes; that is my writing.
“Q. Is that your handwriting on there? A. Yes.
"Q. Did you write, 'I owe Rose Shure five thousand dollars?’ A. I did.
“Q. That is your signature? A. Yes.
“Q. Did you ever repay any part of this? A. No.
“Mr. Dunn: I would like to introduce this into evidence as the next Plaintiff’s Exhibit.
“The Court: Let’s get these exhibits marked properly. We are going to mark this form, letters testamentary, as Exhibit No. 1.
“Plaintiff’s Exhibit 2 will be this document which we have here, the I.O.U. for $10,000.
“This third exhibit will be the one just offered, and will be marked Plaintiff’s Exhibit No. 3, which is the I.O.U. for $5,000.
“Mr. Hackney: No objection.
“(The documents referred to were thereupon marked “Plaintiff’s Exhibits Nos. 1, 2 and 3.’’)
“Q. (By Mr. Dunn) Mrs. Small, I show you an instrument dated September 27, 1951, and ask you whether or not you have ever seen this instrument? A. Yes, it is my writing.
“Q. Is that your writing and signature? A. Yes; it is.
“Q. That is the instrument containing the words: ‘I owe Rose Shure eleven thousand dollars’? A. Yes.
“Q. Has any part of this been repaid? A. No.
“Mr. Dunn: I offer this in evidence as Plaintiff’s Exhibit No. 4.
“Mr. Hackney: No objection.
“The Court: All right. It will be marked.
“(The document referred to was thereupon marked “Plaintiff’s Exhibit No. 4.”)
“Q. (By Mr. Dunn) Mrs. Small, did you receive the money represented by each of these I.O.U.s, which you signed? A. Yes — not in a lump sum —$200.
“Q. Did you receive it? A. Yes, I did.
“Mr. Hackney: I would like to request counsel to aim his questions this way a little because I am afraid she doesn’t hear.
“The Witness: I can hear.
“The Court: The answer was yes, wasn’t it?
“Mr. Hackney: It was a qualified answer, that’s why I didn’t think she heard the question.
“The Court: All right. Do you want to answer it more fully? Go ahead.
“Mr. Dunn: You may inquire.”

Following the above direct examination, the attorney for Mrs. Small proceeded to cross-examine her with reference to the question propounded on direct by the plaintiff’s attorney, viz. “Mrs. Small, did you receive the money represented by each of these I.O.U.s, which you signed?” From such examination Mrs. Small attempted to testify that there had been no consideration received by her for the note for $11,000. She attempted to testify that Mrs. Shure had told her she would loan her $1,000 if she wanted it, whereupon she sent Mrs. Shure the $11,000 note which was for the purpose of replacing the $10,000 note and evidenced the additional $1,000 loan. She testified at length concerning the circumstances under which she executed the note, referring at various times to the fact that all of the transactions arose out of some betting venture on the horse races but the hearing concluded with the following:

“Mr. Hackney: It is my understanding then, that the Court rules we are not entitled to present that testimony?
“The Court: No; the Court says that the statute forbids you to do it.
“Mr. Hackney: Then the defendant rests.
“The Court: Enter up a judgment. It certainly doesn’t pay to gamble.”

The question, therefore, which we must decide is whether the witness was, under the circumstances related above, disqualified to testify under Section 90.05, Florida Statutes 1955, F.S.A. (commonly called the “Dead Man’s Statute”). Relevant parts of the statute above referred to provide that “no party to such action or proceeding [“in any court, or before any officer acting judicially”] * * * shall be examined as a witness in regard to any transaction or communication between such witness and a person at the time of such examination deceased * * * against the executor * * * of such deceased person * * *.” It is well settled that the protection of the statute can be waived by parties therein protected. E. g. McMullen v. St. Lucie County Bank, 1937, 128 Fla. 745, 175 So. 721; Rich v. Hunter, 1938, 135 Fla. 309, 185 So. 141.

Plaintiff’s act of deposing defendant did not waive the protection of the statute where no part of the deposition was offered in evidence. See Herring v. Eiland, Fla.1955, 81 So.2d 645; Embry v. Southern Gas & Electric Corp., Fla.1953, 63 So.2d 258; Catlett v. Chestnut, 1935, 117 Fla. 538, 158 So. 418. A review of the record shows that plaintiff did not consciously give up-protection offered by the statute, but intended to claim all of his rights throughout the trial.

The inquiry then focuses upon whether or not plaintiff “waived” protection under the statute in spite of his intention by placing defendant on the stand and asking her questions to the following effect: (1) did defendant sign the several notes? (2) did defendant repay any of the sums identified by the notes? (3) did defendant receive the sums identified by the notes ?

The answer to this question turns in part upon the concept of waiver. Here, we speak of “deemed” or constructive” waiver. A party should not be allowed to make use of part of the possible testimony of a witness which is favorable to him, and to exclude the remainder which may be prejudicial. This is particularly applicable to situations such as this. See Home Insurance Co. of New York v. Handley, 1935, 120 Fla. 226, 162 So. 516, 64 A.L.R. 1168. For instance, in Zackheim v. Zackheim, 1924, 75 Colo. 161, 225 P. 268, 269, the court said: “He for whose protection the statute was enacted may not juggle with it. He may not claim it in part and waive it in part, as suits his convenience. Otherwise this act, passed for the purpose of preventing fraud, might become the instrument of fraud.” In Miller v. Consolidated Royalty Oil Co., 8 Cir., 1927, 23 F.2d 317, 320, the court very aptly observed that “a litigant cannot be permitted to open the mouth of his adversary so long as he speaks favorably, and then ■close it to an adverse statement”.

The signature of defendant is an ■external matter which has existence unrelated to any transaction or communication between defendant and deceased. The defendant properly testified that a writing exhibited to her was her own signature. This matter was not within the statute. Cf. Seeba v. Bowden, Fla.1956, 86 So.2d 432; see Hoes v. Negele, 1898, 28 App.Div. 374, 51 N.Y.S. 233.

When plaintiff called and examined ■defendant as a witness [a step obviously not necessary to prove a prima facie case] the incompetence of defendant under the statute as to matters which plaintiff inquired into were clearly waived by him. See Herring v. Eiland, supra. The answer that defendant had made no repayments concluded that matter and the verified notes established the debt.

The last question which plaintiff posed did open up a matter which defendant then had a right to answer. The inquiry of whether the defendant received the sums identified by the notes, called for an answer by defendant, which she had the right to fully explain by further testimony on direct or cross-examination. It is true as we have observed that plaintiff did not have to ask the question to prove his prima facie case; but once the question was asked, which favored plaintiff’s case and was germane to the defense of failure of consideration, the defendant could answer fully in the matter.

Reversed and remanded.

•TERRELL, C. J., and HOBSON and O’CONNELL, JJ., concur.


author: PER CURIAM.

text:
    Louis BERKES, Appellant, v. C I T CORPORATION, Rivers Body Factory, Thomas G. Lovingood, and Felton Metts, Appellees.
    Supreme Court of Florida, Division A.
    March 27, 1957.
   PER CURIAM.

Affirmed.


text:
    James FRANCIS, Appellant, v. Vallie FRANCIS, Appellee.
    Supreme Court of Florida, Division A.
    April 3, 1957.
    Rehearing Denied April 24, 1957.
   PER CURIAM.

Affirmed.


author: McCALEB, Justice.

text:
    232 La. 405
    Pearl Thomson BOUDREAUX et al. v. OLIN INDUSTRIES, Inc., et al.
    No. 42196.
    Supreme Court of Louisiana.
    April 1, 1957.
    Armand F. Rabun, Farmerville, for petitioners and appellants.
    Shotwell & Brown, Monroe, for defendants-appellees.
   McCALEB, Justice.

Defendant, Olin Industries, Inc., is owner of a large acreage of timber lands much of which is situated in the North or hill country of Louisiana and extends into Arkansas. Among the lands in North Louisiana is a 160-acre tract in Union Parish, being the SW}4 of the NEJ4, NWJ4 of the SE[4, NE}4 of the SWj4 and SEJ4 of the NW}4 of Section 24, Township 20 North, Range 3 East. This property was acquired by defendant under warranty deed from Frost Lumber Industries on January 23, 1952. Frost Lumber Industries was the predecessor of Frost-Johnson Lumber Company, which acquired the tract by general warranty deed from Union Saw Mill Company on November 27, 1917. Union Saw Mill Company acquired an undivided %ths interest in the property during 1910 by separate conveyances from the heirs of John Reeves Parks and Mary Elizabeth Parks, who held under patent from the United States Government. The remaining 14th interest was acquired by Union Saw Mill Company in 1916 by purchase at sheriff’s sale held pursuant to a partition by licitation invoked by Union.

Plaintiffs, Pearl Thomson Boudreaux, John Llewellyn Thomson and Mabel Thomson Smith, are the sole and only heirs of their mother, Linda Parks Thomson, one of the six children of John R. Parks and Mary Elizabeth Parks and formerly an owner of a %th interest in the property. By act under private signature dated July 3, 1910, Mrs. Linda Parks Thomson, under authorization by her husband, J. L. Thomson (father of plaintiffs herein), conveyed to Union Saw Mill Company her undivided %th interest in the tract for the sum of $53.33, which was paid by draft drawn to her order, said draft being purportedly endorsed by the payee and her husband and accepted for payment at the Central Savings Bank & Trust Company in Monroe, Louisiana.

This suit, which was filed on June 18, 1952, assails the validity of the conveyance by plaintiff’s mother in 1910 on the ground that the signatures of both their mother and father were forged and plaintiffs pray that the deed be declared null and void and they be recognized as the owners of an undivided %th interest in the land.

Joined with Olin Industries, as defendant in the suit, was Union Saw Mill Company, allegedly a foreign corporation, which was cited through a curator ad hoc. In due course, these parties appeared and, after filing various exceptions including pleas of prescription of five, ten and thirty years, a plea of estoppel and special pleas of the ten and thirty year prescription acquirendi causa, which were referred to the merits, filed answer denying the charges of forgery. However, prior to the filing of the answer, considerable evidence was adduced by the litigants relative to the genuineness of the signatures of Mrs. Thomson and her husband on the questioned deed. Upon completion of this evidence but before judgment, defendant again filed in open court special pleas of ten and thirty year acquisitive prescription and, after hearing evidence on the pleas over the .objection of plaintiffs’ counsel, the judge sustained the plea of ten year prescription and dismissed the suit. Plaintiffs have appealed.

Although a scrutiny of the evidence touching upon plaintiffs’ claim that their mother’s signature to the 1910 deed is a forgery has left us with the distinct impression that they have fallen short of establishing a convincing case, it is unnecessary that we rest our decision on this issue of fact forasmuch as we, like the district judge, think it plain that defendant has acquired a valid title by the prescription of ten years provided for by Article 3478 of the Civil Code. Under Article 3479 of the Code, four conditions must concur in order to acquire the ownership of immovables by this species of prescription. Those conditions are (1) good faith on the part of the possessor; (2) a title translative .of property; (3) possession during the time required by law and (4) an object which may be acquired by prescription.

In the case at bar, all of these requisites are present and, in our consideration of the plea, it is .only essential that we examine the ownership of Frost Lumber Industries, defendant’s immediate predecessor in title. Frost-Johnson Lumber Company, which later became Frost Lumber Industries, acquired the tract on November 27, 1917 from Union Saw Mill Company under a general warranty deed. This acquisition was by title translative of the property and presumptively in good faith. Thereafter, in 1919, Frost-Johnson took corporeal possession of the land, which is high upland covered with merchantable timber, by general and complete cutting of timber thereon in connection with extensive cutting operations upon contiguous property owned by it. Approximately 24 to 28 sawyers were on the - land as well as a number of teams and drivers; logs were hauled out of the woods to a railroad which was built on the timber land and traverses the tract in question. In addition to this extensive cutting occurring in 1919, there were other cuttings; a general selective pole cutting of all timber suitable for communication poles in 193S and again in 1947, when Frost Lumber Industries undertook another general timber cutting operation.

Moreover, the corporeal possession of Frost Lumber Industries was made in conjunction with acts of civil possession which have continued since 1917. The boundaries of the property were marked, blazed and patrolled throughout the years. In 1926 certain mineral rights were sold and rights-of-way were granted to Interstate Natural Gas Company, Inc. for the building of a pipeline through the property. Other rights-of-way were also given during Frost Industries’ ownership. In 1917 pipeline rights-of-way were granted and two pipelines were actually laid; in 1931 the State acquired a right-of-way for the construction of a public road and in 1939 a power line right-of-way was given to Louisiana Power and Light Company. Defendants and their authors in title were the only ones assessed with and the only ones to pay all taxes on the property for thirty years.

Notwithstanding these numerous manifestations of actual possession and ownership, counsel for plaintiff argues that no one act or the sum total of them justifies a holding that a valid prescriptive title has been acquired.

Counsel initially contends that the judge should not have received evidence on the plea of prescription after a trial on the merits of the case had been completed as this was contrary to established rules of pleading and procedure.

The point is without merit. Article 3464 of the Civil Code declares that prescription may be pleaded in every stage of a cause “even on appeal, but it ought to be pleaded expressly and specially before the final judgment”. The judge’s action was compatible with the codal article.

Counsel next contends that, since plaintiffs charged forgery of their mother’s signature, the property could not be acquired by prescription as a forged deed cannot form the basis of a just title. The cases of Whitney Nat. Bank of New Orleans v. Schwob, 203 La. 175, 13 So.2d 782 and Pitre v. Peltier, 227 La. 478, 79 So.2d 746 are cited in support of this proposition.

This argument is, of course, predicated on the assumption that the 1910 deed to Union Saw Mill Company is a forgery, a matter about which we entertain serious doubt. But conceding, for purposes of discussion, that such is the case and that the title acquired by Union Saw Mill Company is absolutely null, this circumstance does not affect the validity of defendant’s prescriptive title. The Schwob and Peltier cases cited by counsel are not authority for the proposition invoked by him as those cases dealt only with the liberative prescription. And, while our recent decision in Hicks v. Hughes, 223 La. 290, 65 So.2d 603, supports the view that an absolutely null deed cannot form the basis for the acquisitive prescription of ten years by the vendee, that authority is not apposite here for the reason that defendant is not depending upon the deed from Mrs. Thomson to Union Saw Mill Company for its prescriptive title but, rather, upon the 1917 deed from Union Saw Mill Company to Frost-Johnson Lumber Company. The fact that we are assuming that the title of Union Saw Mill Company was absolutely null, and that that company could never use its title as a basis for prescription, does not affect the prescribable right of the transferees of Union Saw Mill Company. Indeed, it was expressly .held in Clayton v. Rickerson, 160 La. 771, 107 So. 569, that a person holding under a deed, although absolutely null when the property was transferred to its vendor, could nevertheless acquire a valid prescriptive title if the title under which he possesses is one that is genuine on its face and translative of the property. See also Zahn v. Arensberg, 154 La. 70, 97 So. 301 and Nethery v. Louisiana Central Lumber Co., 175 La. 753, 144 So. 486.

Finally, counsel for plaintiffs asserts that defendant and its authors in title did not preface their civil possession by corporeal possession requisite for a valid ten-year prescriptive title under Article 3487 of the Civil Code, see Haynes v. Hood, 173 La. 712, 138 So. 517 and Martel v. Hunt, 195 La. 701, 197 So. 402, as the timber cutting operations of Frost Lumber Industries did not constitute actual or physical possession of the land.

This contention is also without merit. It is well settled that the corporeal possession necessary to support the ten-year prescription is governed by the use for which the land is destined. Chamberlain v. Abadie, 48 La.Ann. 587, 19 So. 574; Snelling v. Adair, 196 La. 624, 199 So. 782 and Veltin v. Haas, 207 La. 650, 21 So.2d 862 and the many authorities reviewed . therein. The land involved in this suit, as we have above stated, is high upland timber land. The tract is now and has been used primarily for the purpose of growing timber and no other cultivation or habitation has ever been attempted. Under such circumstances, it is clear that use of the land by a general cutting of the timber followed by acts of civil possession are to be regarded as sufficient in law to supply a proper foundation for the prescription acquirendi causa. See Zylks v. Kaempfler, 189 La. 609, 180 So. 425.

The judgment appealed from is amended so as to run in favor of Olin Mathieson Chemical Corporation and, as thus amended, it is affirmed at plaintiffs’ costs.

      . After the instant appeal was lodged in this Court, Olin Mathieson Chemical Corporation succeeded to all the rights of Olin Industries, Inc. and it has been substituted as party defendant in place and stead of Olin Industries.

      . Since Frost Lumber Industries were owners of adjacent lands in some instances no attempt was made by it to enclose the tract in suit by boundary markings. However, the external boundaries of its land in which this tract was situated were fully marked and patrolled where its property fronted on lands owned by others.

      . See also McCluskey v. Webb, 4 Rob. 201 and Buillard v. Davis, 185 La. 255, 169 So. 78, wherein a similar view is expressed.

      . In that case the court specifically overruled its prior decision in Lewis v. King, 157 La. 718, 103 So. 19, wherein it had been held that a person holding a deed, which is a nullity, cannot convey to a purchaser in good faith a title which can form the basis for a plea of ten years acquisitive prescription.


text:
    232 La. 416
    Succession of Mary MORALES, Wife of Louis MUTIN.
    No. 43028.
    Supreme Court of Louisiana.
    April 1, 1957.

      Elmer D. Flanders, New Orleans, for appellant.
    Siegfried B. Christensen, III, New Orleans, for appellees.
   McCALEB, Justice.

Mary Morales Mutin, a Negro woman about 60 years old, died at her residence in the city of New Orleans on August 7, 1955. She had neither descendants nor ascendants, her nearest legal survivors being her husband, Louis Mutin, and her two sisters, Emily Cambre and Rose Williams.

On August 15, 1955, Mutin, alleging that his wife died intestate, caused her succession to be opened in the Civil District Court where an inventory of the succession property, which consisted entirely of community assets, was taken and homolgated. The inventory- disclosed that decedent’s one-half share of the community amounted to $26,600.86, which her husband would have inherited under the provisions of Article 915 of the Civil Code in case she died intestate. However, before a judgment of possession was rendered in the succession proceedings, Richard J. Garvey, a practicing attorney in New Orleans, filed a petition therein, as executor of a purported olographic will of the decedent, and prayed that said will be admitted to probate. Mutin opposed the probate of this will, asserting that it was null for three reasons: (1) the uncertainty of its date; (2) the lack of testamentary capacity of decedent and (3) that it was a fraudulent instrument in that it was not entirely written, dated and signed by decedent. Following the filing of his opposition, Garvey was joined in his efforts to have the will admitted to probate by Rose Williams and Emily Cambre, the sisters of the decedent, who are named as universal legatees in the testament.

After a trial on the issues raised by the pleadings, the judge found for the proponents and admitted the will to probate. Mutin has appealed and he reurges in this Court the contentions for invalidity of the testament made below.

We first address our attention to the claim that the date on the will is uncertain. The testament was written on a plain piece of white paper and backed with heavy blue paper. It reads as follows:

Feb 2/9/S4
Mary Mutin My Last Will I geave every thing I own to my tou-sisters Enily Cambra and Rose Williams I make Richard Garvey My Executor and my attorney Mary Morales Mutin.”

In arguing that the date “Feb 2/9/54” is uncertain, counsel for opponent complains of the judge’s action in permitting the proponents to adduce testimony (over his objection) in support of their position that the will was made on February 9, 1954 and that the abbreviation “Feb” was written on the date line after the will had been completed to signify that the numeral “2”, contained in the date, represented the month in which the will was written.

We agree with counsel that it was error for the judge to allow the introduction of evidence to exhibit the intent of the testatrix as to the date of the will. Article 1588 of the Civil Code provides:

“The olographic testament is that which is written by the testator himself.
“In order to be valid, it must be entirely written, dated and signed by the hand of the testator. It is subject to no other form, and may be made anywhere, even out of the State.”

If an olographic will is undated or contains an uncertain date, its nullity results from a vice of form. Hence, it matters not whether the testator intended a particular date or not as extrinsic evidence cannot cure the defect. An uncertain date is the equivalent of no date at all and the sufficiency and certainty of the date must be determined from the face of the will. Heffner v. Heffner, 48 La. Ann. 1088, 20 So. 281; Succession of Robertson, 49 La.Ann. 868, 21 So. 586; Succession of Beird, 145 La. 756, 82 So. 881, 6 A.L.R. 1452; Succession of Curtis, 149 La. 487, 89 So. 629; Succession of Dyer, 155 La. 265, 99 So. 214; Succession of McCay, 166 La. 681, 117 So. 772; Succession of Kron, 172 La. 666, 135 So. 19; Succession of Wenling, 172 La. 673, 135 So. 21; Succession of Lasseigne, La.App., 181 So. 879 and Succession of Buck, 208 La. 556, 23 So.2d 215.

A different rule; however, applies when there has been an overcharge or surcharge' of figures in the date of an olographic will. In such instances, evidence of handwriting experts may be received for the purpose of showing that the surcharged figures are visible and, if they permit the exact date to be seen and recognized with certainty, the will will be upheld. See Succession of Lefort, 139 La. 51, 71 So. 215 and Succession of McCay, supra. On the other hand, if, after a consideration of the evidence and an inspection of the surcharged figures, the Court finds that the exact date is not clearly visible, the testament must be rejected. Succession of Wenling, supra and Succession of Buck, supra and compare Succession of Reynolds, 224 La. 975, 71 So.2d 537.

Counsel for proponents, pointing to certain pronouncements contained in a per curiam refusing an application for a rehearing in Succession of Lefort, supra, which are to the effect that extrinsic evidence may be received in any case to throw light upon an obscure date in an olographic will and thus remove all doubt, uncertainty or ambiguity concerning it, insist that the testimony was properly admitted in the instant matter.

Counsel are mistaken. The cited observations from the Lefort case, which were pure obiter dicta as that case involved a surcharge, or superimposition of figures in the year date of the will, have been criticized and found to be incorrect in the later decisions of the Court, although the ruling as to surcharges has been many times approved.

Since we hold that evidence was inadmissible to establish the date of the will intended by the testatrix, we proceed to a determination of whether the date, as written, is so uncertain that the testament must be held invalid for failure to comply with the form prescribed by law.

The will is dated “Feb 2/9/54”. Obviously, the century and decade (1954) and the month of the year (February) are explicit. See Succession of Kron, supra and compare Succession of Beird, supra. Hence, if any ambiguity exists, it would appear to be in the day of the month and, as to this, the only question is whether the will is dated “Feb 2/1954” or “Feb 9/1954”. We think it manifest that the date, as written, “Feb 2/9/54” cannot logically be resolved to be “Feb 2/54” as this would require that the figure “9” be disregarded. But this cannot be done as the figure “9”, punctuated by virgules, is clearly intended to be part of the date. Thus, it is reasonably certain that “9” represents the day of the month on which the will was written, whereas the figure “2”, which follows the abbreviation “Feb”, was merely a repetition by figure of the month, February, designated in the dateline and was undoubtedly intended to signify that month. In other words, the figure “2”, following the abbreviation “Feb”, and not separated therefrom by a punctuation mark, may be considered as though the testatrix had written “Feb” twice and then followed it with the punctuation marks “9/54”.

Counsel for the opponent makes numerous contentions in his efforts to have us declare the date of the will as uncertain. Initially, he asserts that the figure “9”, as written, could be a “4” because it is not closed at the top and that the “5” in “54” could be construed to be a “6”.

We find no merit in these points for we think the figures “9” and “5”, as written are legible and reasonably clear.

Counsel further contends that the virgule separating the figure “2” from “9” may be construed to be the figure “1” and, therefore, the date might be read “Feb 2, 1954” or “Feb 2 19/54”, or that it could be read “Feb 29/54”.

We find no substance in these postulations as the virgules used in the date are pronounced, thus making it patent that the date is not subject to such interpretation. On the contrary, we consider the date, as written, to be reasonably certain and, therefore, the will is not amenable to the claim that it is invalid in form.

The second ground of attack is that decedent did not have the testamentary capacity to make a will. This, of course, presents purely a question of fact.

The record shows that decedent was about 58 years of age at the time of the writing of the purported will. She could read and write, that is to say, she was literate, though having only a second grade education. However, she had been suffering for many years from an acute diabetic condition and this, as the medical testimony shows, subsequently affected her vision. In 1952 the ravages of the disease resulted in her right leg becoming gangerous, necessitating its amputation below the knee. In addition, she suffered from cataracts on both eyes and an operation for the removal of the cataracts from one eye left her with limited vision out of her right eye. Extreme obesity and tremors of her hand also contributed to her generally infirm condition. But, despite her poor health and physical condition, decedent was able to accumulate over the years various pieces of real property and the rentals from this property, which she managed up until the time of her death, provided a comfortable livelihood for both herself and her husband.

The testimony relative to decedent’s vision is highly contradictory, as is much of the evidence in this case. Two eye specialists, Dr. Jonas W. Rosenthal and Dr. Horace Dozier, testified that decedent could- see at most one letter in a word at a time with a magnifying glass and that the operation for removal of the cataract from her right eye did little more than improve her sight from light perception to hand movement.

Dr. Dozier examined decedent two months after the purported will was written and his testimony was that she could do little more than read the headlines of a newspaper without glasses. And when she wore her glasses she could not see to read appreciably more. He stated that only with a magnifying glass was decedent able to read letters the size of one inch or less.

The testimony of the medical specialists is corroborated by the testimony of two lay witnesses who were in constant contact with decedent at the time the will was purportedly written. Her husband (opponent) testified she could not see sufficiently to prepare her insulin injection and either he or the maid prepared it for her. He said the magnifying glass which was bought for his wife did no good at all and she refused to bother with it, after the first futile attempt to see with it. He also said she never wrote anything except her signature to endorse the rent checks and that she could not dial a telephone, look at television, tell the denominations of paper money, or read anything smaller than headlines on a newspaper.

When showed the purported will, opponent emphatically denied that it was in her handwriting, other than the signature. Yet he could produce no specimens of his wife’s handwriting other than her signature. He did remember that, on March 11, 1943, both he and his wife had executed olographic wills in a lawyer’s office, leaving the bulk of their estates to each other, but he could not find her will and he presumed she must have destroyed it.

Florence Richardson, who knew decedent for many years and who began working for her as a maid in 1952 and was employed until the latter part of 1954, corroborated much of opponent’s testimony. Although Florence admitted she was illiterate, she said she knew decedent’s signature and she never saw decedent write anything other than her signature.

On proponent’s side of the' case, ample evidence was adduced tending to prove that decedent could see well enough to write this will and that she did, on occasion, both read and write. Dr. Harry B. Caplan, the eye surgeon who removed the cataract from decedent’s eye, testified the “operation was technically a success”; that with a lens she could read letters the size of 2 or 3 millimeters and that, after the operation, her vision was such that she could watch television, dial a telephone and distinguish money.

Rose Morales Williams, legatee under the will, testified she saw and took care of her sister every day from 11:00 a. m. to 11:00 p. m., for many years and up until the time of her death. Her testimony flatly contradicts that of opponent and Florence Richardson, she stating that she saw decedent write on different occasions, such things as grocery slips and lottery slips.’ She further identified her sister’s handwriting and declared that the will was wholly written, dated and signed by her.' She also related that decedent watched television, filled her own syringe with insulin, dialed the telephone and managed her own-money matters.

A nephew of decedent, Henry Cambre, testified that his aunt watched television with her glasses on and that, on one occa-. sion, he saw her tell time on a clock approximately four inches in diameter from a four or five foot distance. He also saw her squeeze an air bubble out of her syringe in December of 1954.

The most important evidence on the subject of decedent’s testamentary capacity was that given by Mr. Richard Garvey, who stated he actually saw her entirely write, date and sign the will on February 9th 1954. In the years just prior to her death, decedent employed Mr. Garvey as her lawyer for the purposes of passing acts of sale and apparently for advice on, various matters.

Leona Meteye, legal secretary in the office of Mr. Garvey, testified that decedent-called by telephone on February 9, 1954 and asked to speak to Mr. Garvey, stating to the witness that she wanted to make a will. Mr. Garvey declared that, after he received the message from Miss Meteye, he picked up a plain piece of white paper on the back of which was attached a blue cover, a common method for keeping important papers in the legal profession, and went to decedent’s home. He arrived there about 1 o’clock in the afternoon and, after they talked in the living room for about twenty minutes, he and decedent went into the kitchen where the latter proceeded to write the will.

Mr. Garvey testified no one else was in the kitchen other than himself and the testatrix; that he helped to steady her hand several times during the writing of the will and that he placed his hand on her hand to guide the pen to the correct place on the page in order to begin a new line. He emphatically denied dictating the will or that he actually wrote it. He does not remember, but he said it may be possible that he helped her to spell the words “attorney”1 and “executor” in the will.

Florence, the maid, stated that she was in the living room of decedent’s home when Mr. Garvey came there and could see directly into the kitchen at the time decedent and Mr. Garvey were at the kitchen table; that Mr. Garvey placed a white piece of paper on the table on which there already was writing and stated to decedent “I want you to sign your name right there” and that all that decedent did waste write her name, as directed.

It is seen from -the foregoing that the evidence submitted anent decedent’s testamentary capacity is in direct conflict. However, there is substantial testimony to the effect that not only was decedent capable of writing a will but that she actually did so. In ruling the will valid, the district judge evidently was of the' opinion that the affirmative evidence prevailed over the negative. After a.careful examination of the record, we cannot say that the judge erred in his finding of fact.

Finally, counsel for opponent maintains that the will is void as it was not entirely written, dated and signed by decedent. This, like the attack on decedent’s testamentary capacity, presents a question of fact. Since the will was challenged before its probate, Article 2245 of the Civil Code and Article 325 of the Code of Practice apply (see Succession of Lefort, supra and Succession of White, 132 La. 890, 61 So. 860) and, therefore, the burden of proof was on proponents to establish the validity of the instrument by a preponderance of evidence.

The trial judge was of the opinion that proponents had carried this burden and we think his ruling correct. Mr. Garvey, Miss Meteye and Rose Williams positively swore that the will was entirely written, dated and signed by the testatrix. The only contrary evidence is that of Florence Richardson and the opponent, who admits that his wife signed the will but denies that the body of the will is in her handwriting.

The judgment appealed from is affirmed.

      . In Succession of McCay, 166 La. 681, 117 So. 772, 773, the Court said: “While not agreeing with that part of the decision in Succession of Lefort that holds that extrinsic evidence may be resorted to in order to ascertain the intention of the testator as to the date, we accept as correctly stated, and approve the French jurisprudence therein reviewed, in so far as the general law relative to surcharges is concerned.” The quoted language from Succession of McCay was cited approvingly in Succession of Reynolds, 224 La. 975, 71 So.2d 537. The observations in the Lefort case were also criticized in a per curiam refusing an application for a rehearing in Succession of Butterworth, 195 La. 115, 196 So. 39.


author: HAMITER, Justice. PER CURIAM.

text:
    232 La. 431
    Sam MACALUSO v. Harris I. THIBODEAUX and London Guarantee and Accident Company, Limited, and Abry Bros.
    No. 42865.
    Supreme Court of Louisiana.
    Feb. 25, 1957.
    Rehearing Denied April 1, 1957.

      Montgomery, Barnett, Brown, Sessions & Read, Cicero C. Sessions, for appellant.
    Baldwin, Haspel & Molony, Robert R. Rainold, Richard C. Baldwin, New Orleans, for defendant-appellant.
    Piazza & Gulotta, George Piazza, JNIew Orleans, for plaintiff-appellee.
   HAMITER, Justice.

Damages in the sum of $31,420, plus attorneys’ fees and penalties, were demanded in this action for the alleged breach of a building contract to make changes and improvements to a dwelling owned by plaintiff. Named as defendants were the contractor, Harris I. Thibodeaux, the surety, London Guarantee and Accident Company, Ltd., and a subcontractor, Abry Bros., a partnership which had -5ub-contracted a portion of the work (these are sometimes referred to hereinafter as contractor, surety, and subcontractor, respectively).

In a written contract of date September IS, 1950, Thibodeaux agreed, for a consideration of $15,375 payable in five installments of $3,075 each, to raise and remodel plaintiff’s six room dwelling and to .construct beneath it a structure suitable ■for store purposes. He furnished a' bond, with the London Guarantee and Accident ■Company, Ltd. as his surety; and he subcontracted the raising job to Abry Bros.

After the subcontractor had raised the house, and had placed it on jacks, Thibo-deaux proceeded to build (during a period of several weeks) the concrete lower wall structure on which it would rest. On the completion thereof the contractor received from plaintiff the first installment ($3,075) in accordance with the terms of the contract, and he notified Abry Bros, to lower the house onto the newly constructed walls.

On November 22, 1950, while the subcontractor was engaged in performing the lowering operation, the house moved forward and the front portion thereof fell, apparently because of the failure of some of the supporting jacks. Looking toward a rectifying of the condition conferences were held by the interested persons until December 14, 1950, when Thibodeaux caused the dwelling to be demolished and sold the salvaged materials for $50. Further attempts for an amicable settlement followed; but these proved futile and plaintiff instituted this suit on May 25, 1951.

Thibodeaux and his surety filed answers in which they denied liability to plaintiff. Additionally, they called Abry Bros, in warranty, alleging that the damage sustained by plaintiff resulted solely from a breach of the subcontract for raising.

Abry Bros, answered plaintiff’s petition in like manner. Also, it filed exceptions of no right and no cause of action to the ■call in warranty. These exceptions were sustained by the district court.

Trial of the controversy commenced on July 13, 1953, and thereafter evidence was adduced intermittently until November 15, 1954 when the case was' continued indefinitely. Meanwhile, Act. 433 of 1954 (Third Party Practice Act — LRS 13:3381 et seq.) was e.nácted and, purportedly on the authority o'f that statute, Thibodeaux and his surety filed third party petitions against Abry Bros, (for the purpose of bringing that partnership into the suit), they alleging therein a breach of the subcontract with Thibodeaux. Exceptions of no right ■and no cause of action levelled at the third party petitions (or, in the alternative, at the constitutionality of the statute pursuant to which the petitions were filed) were tendered by the subcontractor and were overruled.

In April, 1955, when further trial of the case was had, plaintiff was subjected to cross examination. Also, at that time, -the other litigants introduced evidence in defense of plaintiff’s demands and in connection with the third party petitions.

Judgment was rendered on December 30, 1955, in favor of plaintiff against Thibodeaux and his surety, in solido, for the 'sum of $6,075.24; in favor of Abry Bros, rejecting plaintiff’s demands as against it; and in favor of Thibodeaux and his surety against Abry Bros, for the sum of $6,057.25, subject to a credit of the $50 received by Thibodeaux for the salvaged materials.

The contractor, surety and subcontractor appealed from the judgment. Plaintiff neither appealed nor answered the appeals.

Thibodeaux and his surety complain here that the trial court was in error in failing to hold Abry Bros, responsible directly to plaintiff and in condemning them for the breach of a contract rendered impossible of performance by the subcontractor. They further urge that such court erred in not permitting their call in warranty. Additionally, the surety maintains that it cannot be cast with Thibodeaux inasmuch as the damages sought by plaintiff were not contemplated by its bond.

Abry Bros, bases its appeal principally on the alleged error of the district court in permitting the filing of the third party petitions by virtue of which judgment was rendered against it in favor of the contractor and the surety. However, it also urges alternative defenses as hereafter shown.

The complaint of Thibodeaux and his surety that the trial court erred in rejecting plaintiff’s demand against Abry Bros, cannot be considered. Plaintiff has neither appealed nor answered the appeals of the other litigants and, hence, under no circumstances could we amend the judgment so as to grant that demand.

Without merit is the contention that they are not liable to the plaintiff, they maintaining that the contract became impossible of performance due to a breach of the subcontract by Abry Bros. If the contract became impossible of performance it was due solely to the act of Thibodeaux himself in demolishing the dwelling and selling the salvaged materials for $50, a sum which he retained. The great weight of the evidence, as we appreciate it, is to the effect that the house (after it fell) could have been raised again and restored to its former condition at not too great an expense — that is at a cost not out of proportion to the amount involved in the entire contract. The assertion that Thibo-deaux was required by the City of New Orleans to demolish the building is not correct. The notice relied on to sustain it simply directed that the then existing condition be remedied, not that the building be demolished.

After considering all of the evidence we have concluded that the contractor unnecessarily, and at his own risk, arranged for and caused the demolishing of the building (even over the protests of the subcontractor). Consequently, Thibodeaux must respond in damages to plaintiff for the failure to perform his contract.

The surety’s defense that damages of that nature were not contemplated by its bond cannot be sustained. The bond provides that it shall run “in favor of said owner * * * for the true and faithful performance of said contract * * The loss suffered by plaintiff here is directly attributable to a failure by the contractor to faithfully perform his contract. The surety, therefore, is solidarily liable with the contractor to the plaintiff.

As to the extent of the damages sustained by plaintiff the trial judge found that his building, which was totally demolished by the contractor, had a value of $6,300. Although there is some testimony showing a lesser value, our review of all of the evidence on this point convinces us that the judge was correct in his finding.

Of course, before the house fell Thibo-deaux had constructed three concrete walls to support it (for which construction he and his surety claim credit). Assuming that credit for such construction is due as claimed we are satisfied from the record that the value of the walls does not exceed the $3,075 which plaintiff has already paid to Thibodeaux — an amount that would offset such credit claim. In fact, we are inclined to the belief that their worth is less than that amount.

The district court awarded damages to plaintiff in.the total sum of $6,-075.25. Since he failed to appeal from the judgment or to answer the appeals of the contractor and surety we are unable to increase the award to the full value ($6,300) of the destroyed dwelling. Moreover, such failure makes unnecessary a consideration of his demands for attorneys’ fees and liquidated damages.

With respect to the demand of Thibodeaux and his surety against Abry Bros, we are of the opinion that the district court incorrectly refused them the right to call the subcontractor in warranty. Clearly the demand was based on an implied warranty in the agreement between Abry Bros, and Thibodeaux.

The position of Abry Bros, is that the call in warranty was improper for the reason that there was no privity between it and the plaintiff. However, this court has expressly repudiated the once prevailing doctrine that the right of a defendant to call in warranty is dependent on privity of contract as between the plaintiff and the party called, the present jurisprudence being that such a right depends only on privity existing between the party making the call and the warrantor. See Muntz v. Algiers & Gretna Railway Company, 114 La. 437, 38 So. 410 and Bennett v. Weinberger, 160 La. 1001, 107 So. 780. Hence, we must conclude that the contractor and surety, having alleged the subcontract and the breach thereof, were entitled to call Abry Bros, in warranty.

9] Ordinarily, in such a situation as this (here a call in warranty has been improperly stricken), the judgment in its entirety would be reversed and the case remanded for a retrial on both the principal demand and the call in warranty, the reason being to afford protection to the rights of the warrantee (the defendant). See Blanchard v. Norman-Breaux Lumber Company, Inc., 216 La. 551, 44 So.2d 112. In the instant cause, however, whatever harm may have been done to Thibo-deaux and his surety by the improper striking of the call in warranty was remedied by the court’s allowing them later to bring Abry Bros, into the suit on the same demand under the provisions of the Third Party Practice Act (LRS 13:3381 et seq.). This is conceded by their counsel.

It is true that Abry Bros, is now resisting the judgment rendered against it on the ground that the mentioned statute does not permit a third party to be brought into the case after actual trial thereof has begun (as was the situation here), or, in the alternative (if it does), the law is unconstitutional inasmuch as he would be denied the right to cross examine plaintiff’s witnesses. But conceding arguendo that Abry Bros, is correct in its interpretation of the statute the judgment rendered against it herein was only that which might have resulted on the call in warranty if it had not been improperly stricken.

In this connection we do not find that Abry Bros, was prejudiced by its not having been brought into the suit through the third party petitions until after the introduction of evidence had begun. Initially it was made a defendant by plaintiff and, as such, it participated in the entire trial of the case. Throughout the proceedings the partnership was represented by counsel who fully cross examined all of the opposing witnesses — those presented before the filing of the third party petitions and those offered afterward — just as if it had been in the case by reason of a call in warranty. And after the filing of the third party petitions Abry Bros, completely presented its defense to the demands therein contained which were essentially the same as those made in the attempted call in warranty.

We think, therefore, that it would serve no useful purpose to reverse the judgment and remand the case merely in order that under the call in warranty the same issues could be retried and the same evidence adduced. This litigation has endured for some six years; and since all interested parties were before the court throughout the entire proceedings (and were fully heard) there should be no further delay in finally determining the controversy.

Having arrived at this conclusion we have left for consideration only the question of whether there is any liability on the part of Abry Bros, (the subcontractor) and, if so, in what amount. At the time of the accident the dwelling was under the sole control of that partnership; therefore, the latter carried the burden of showing that it was not responsible for the failure to perform in a workmanlike manner the subcontract for raising. This it has failed to do, each of the partners testifying that actually he did not know what caused the front portion of the house to fall.

But the trial court erred, we think, in condemning Abry Bros, for the full amount of the judgment rendered in favor of plaintiff against Thibodeaux and his surety. As we have already indicated it was not necessary that the dwelling be demolished, the evidence clearly sustaining the defense of the subcontractor that it could have reraised and repaired the house and finished its work in accordance with the agreement. Moreover, it offered to thus perform but was prevented from doing so by Thibodeaux’s demolishing of the building over its protests.

Consequently, Abry Bros, is liable only for what it would have cost to carry out and complete the subcontract, plus the damages sustained by the concrete walls erected by Thibodeaux. And after considering all of the evidence on this point we think that $1,500 would be a fair and proper award. Of this amount $1,200 would be for reraising and repairing the dwelling and the remainder ($300) for the damage caused to the walls.

For the reasons assigned the judgment appealed from is amended by reducing the award in favor of Harris I. Thibodeaux and the London Guarantee and Accident Company, Ltd. against Abry Bros, (and the individual partners thereof) from $6,-057.25 to $1,500; and, as amended, the judgment is affirmed. Thibodeaux and the London Guarantee and Accident Company, Ltd. are to pay the costs of this appeal.

FOURNET, J., absent.

SIMON, J., recused.

On Rehearing

PER CURIAM.

The defendants Harris I. Thibodeaux and his surety, the London Guarantee & Accident Company, Ltd., correctly point out in their application for rehearing that we erred in stating in the body of our opinion that the plaintiff had been awarded a judgment against them in the amount of $6,075.24 when, in truth, the damage award was $6,057.25. This was obviously a typographical error.

Our decree, which is correct, remains in effect and the rehearing is refused.


author: •HAMLIN, J ustice ad hoc.

text:
    232 La. 446
    SOUTHERN BELL TELEPHONE & TELEGRAPH CO. v. LOUISIANA PUBLIC SERVICE COMMISSION (City of New Orleans, Intervenor).
    No. 43251.
    Supreme Court of Louisiana.
    Feb. 25, 1957.
    Rehearing Denied April 1, 1957.

      Charles Cecil Bird, Jr., Breazeale, Sachse & Wilson, Baton Rouge, Henriques & Mayo, New Orleans, Tucker, Bronson & Martin, Shreveport, Gravel, Humphries, Sheffield & Mansour, Alexandria, Plauche & Plauche, Lake Charles, for plaintiff-appellant.
    Jack P. F. Gremillion, Atty. Gen., Theo. F. Cangelosi, Baton Rouge, Raoul Sere, Louis F. Claiborne, New Orleans, Melvin G. Dakin, Baton Rouge, for appellants.
    Adair & Goldthwaite, Atlanta, Ga., Donald Martin, New Orleans, Cashio, Cashio & Molloy, Maringouin, amicus curiae.
   •HAMLIN, J ustice ad hoc.

Southern Bell Telephone & Telegraph Company instituted this suit, praying that Order No. 6993 of the Louisiana Public Service Commission, issued June 30, 1956, which reduced its rates, be decreed null, void, and of no effect; and, that it be permitted and empowered to immediately increase its Louisiana intrastate tolls, rates and charges. In the alternative, plaintiff asked that the Order be declared null, and that it be empowered to immediately increase its November, 1952 rates prescribed by the Commission in Order No. 6131— 2.7%, the increase required to provide the Telephone Company with 6% on gross plant less 5%% of depreciation.

Plaintiff prayed that a rule issue to the Louisiana Public Service Commission to show cause why an interlocutory injunction should not issue, enjoining the Commission from enforcing its Order No. 6993 of June 30, 1956; from bringing suit to prohibit the Telephone Company from charging the .rates fixed by Order No. 6131 of November 1, 1952; from fixing, levying, or imposing any fine or penalty for not obeying the Order of June 30, 1956; and, from authorizing any person to bring suit for the recovery of penalties for failure of the Telephone Company to comply with Order No. 6993 of June 30, 1956.

The Louisiana Public Service Commission filed an exception of no cause or right of action.

The City of New Orleans intervened, alleging that it had an interest in maintaining Order No. 6993 of June 30, 1956.

The trial judge granted the interlocutory injunction, predicated upon the Telephone Company’s furnishing adequate bond. His opinion .stated, in substance, that he seriously doubted the validity of the Order.

The exceptions were referred to the merits, and upon trial, Order No. 6993 of the Louisiana Public Service Commission, ordering a reduction in intrastate toll and coin rates, was declared null. The Telephone Company was refused an increase in rates. The judgment also prohibited the Commission from bringing suit to prevent the Telephone Company from collecting, for its Louisiana intrastate services, the rates and charges fixed by Order No. 6131 of November 1, 1952; from fixing, levying or imposing any fine or penalty for disobedience to Order No. 6993 of June 30, 1956; and from instituting or authorizing or directing any persons to prosecute any action against Southern Bell Telephone & Telegraph Co. for recovery of any penalties for failure to comply with Order No. 6993 of June 30, 1956.

The defendant and intervenor appealed to this Court, praying that the judgment of the District Court be reversed, insofar as it annulled and set aside the Commission’s Order; and that it be affirmed, insofar as it denied the Telephone Company’s application for an increase in rates.

Answering the appeal plaintiff prayed that the judgment be affirmed, insofar as it nullified the Commission’s Order; but, that judgment be rendered authorizing and empowering the Telephone Company to increase its Louisiana intrastate tolls, rates and charges 8.4% — that is, sufficiently to produce an annual increase in gross revenue of at least $6,581,000. Alternatively, plaintiff prayed that it be authorized and empowered to increase its November, 1952 intrastate toll rates and charges 2.7%— the increase required to provide the Telephone Company with 6% on gross plant less 5%% of depreciation reserve.

Order No. 6993 resulted from preceedings instituted by the Louisiana Public Service Commission requiring Southern Bell Telephone & Telegraph Co. to show cause why its rates and charges for Louisiana intrastate telephone service should not be reduced. Public hearings were commenced on December 13, 1955 and concluded on May 11, 1956. The Telephone Company’s motion to reopen was refused.

Order No. 6993 reads:

“1. That Southern Bell Telephone and Telegraph Company shall reduce its annual gross intrastate operating revenues in the amount of $3,940,000.00.
“2. This reduction shall be accomplished in the following manner:
“Effective September 1, 1956, all public telephone pay station rates shall be reduced from ten cents (10^) to five cents (5‡) per local call.
“Effective August 1, 1956, all intrastate toll rates and charges shall be subject to a discount of 20% per call.
“3. This Commission retains jurisdiction in these proceedings to consider and act upon any revision of the amount of the reduction in intrastate toll rates and charges herein ordered, which Southern Bell Telephone and Telegraph Company can prove by competent evidence, based on adequate actual experience, would result in a total reduction in its annual intrastate gross operating revenues (the public telephone pay station reduction being also considered) of more than $3,940,000.00.
“4. The discount method of effecting the reduction in intrastate toll rates and charges shall be utilized until such time as Southern Bell Telephone and Telegraph Company submits revised rate schedules otherwise accomplishing the reduction in such toll rates and charges and such revised rate schedules are approved by this Commission.
“5. Any petition, motion, or objection made in these proceedings which has not otherwise been resolved by this opinion and Order is hereby dismissed.”

Plaintiff alleges in its petition that the Order contains twenty-five errors on the part of the Commission, among which are the following:

1. The ordering of a schedule of rates which are so low that the return therefrom to the company is unreasonable, arbitrary, discriminatory and confiscatory, thereby depriving the company of its property without due process ;
2. The refusing to fix reasonable and just rates for the company which would produce earnings commensurate with earnings of other utilities in Louisiana, taking into consideration the risks involved; and in holding that the telephone industry enjoys greater stability than other companies.
3. The basing of its determination of a fair rate of return on an assumed and fictitious capital structure of 45% debt ratio and 55% common stock equity, notwithstanding the company’s historical average capital structure of Ys debt ratio and 2/¡ common stock equity.

The Commission steadfastly contends that the Telephone Company has failed to overcome the presumption in favor of the validity of the order under attack, and that, therefore, it must be maintained.

Article VI, Section 4, óf the Louisiana Constitution of 1921, LSA, reads as follows :

“The Commission shall have and exercise all necessary power and authority to supervise, govern, regulate and control all common carrier railroads, * * * telephone, telegraph, * * * and other public utilities in the State of Louisiana, and to fix reasonable and just single and joint line rates, fares, tolls or charges for the commodities furnished, or services rendered by such common carriers or public utilities, except as herein otherwise provided.”

In the case of Southern Bell Telephone & Telegraph Co., Inc., v. Louisiana Public Service Commission, 183 La. 741, 164 So. 786, 788, this Court stated:

“The law is clear that the burden is upon the plaintiff to show that the commission reduced the rates to such an extent that it is patent and obvious that the company will be unable to realize a fair and just return upon its investment. The plaintiff must also demonstrate that the trial judge abused his discretion in refusing the interlocutory injunction. Section 5, article 6, Constitution of Louisiana of 1921.
* * * * * *
“In the case of Vicksburg, S. & P. R. Co. v. Railroad Commission of La., 153 La. 983, 96 So. 832, 833, it is stated:
“ ‘But inasmuch as such functions are by their nature legislative in character, and courts, owing to their methods of procedure, often cannot intelligently pass upon the advisability or propriety of regulations affecting the future as well as the present, it follows that courts should act slowly in substituting their own views and discretion for those of a body peculiarly constituted to act intelligently in such cases, and primarily charged with doing so, and that they ought never to interfere with such bodies except when their action is clearly arbitrary, or unreasonable to an extent which in effect makes them so.’ ”

In the case of Gulf States Utilities Co. v. Louisiana Public Service Commission, 222 La. 132, 62 So.2d 250, 252, this Court stated:

“ * * * And, to hold that a rate is unjust or unreasonable, it must be found that the action of the Commission was arbitrary or capricious — that is, that the decision was either plainly contrary to the facts or unsupported by evidence, bearing in mind, of course, that the rulings of the Commission, like those of other administrative bodies acting under a delegation of discretionary authority, are entitled to great weight and will not be disturbed in the absence of a clear showing of abuse of power. Burke v. Louisiana Public Service Commission, 215 La. 451, 40 So.2d 916 and cases there cited.”

On Page 7 of its Order, the Commission sets out that although it is authorized to fix “reasonable and just” rates, there is no prescribed formula for the precise implementation of such authorization, and that it is obliged to explore the authorities for proper guidance; and that the method or technique which may be employed to accomplish this purpose is of less importance than the end result reached. It cites the following authority:

Federal Power Commission v. Hope Natural Gas Company, 320 U.S. 591, 64 S.Ct. 281, 288, 88 L.Ed. 333, 345, 346:

“The rate-making process under the Act, i. e., the fixing of ‘just and reasonable’ rates, involves a balancing of the investor and the consumer interests.
“ * * * Under the statutory standard of ‘just and reasonable,’ it is the result reached, not the method employed, which is controlling. Cf. Los Angeles Gas & E. Corp. v. Railroad Commission, 289 U.S. 287, 304, 305, 314, 53 S.Ct. 637, 643, 644, 647, 77 L. Ed. 1180 [1191, 1192, 1197]; West Ohio Gas Co. v. Public Utilities Commission, 294 U.S. 63, 70, 55 S.Ct. 316, 320, 79 L.Ed. 761 [768]; West v. Chesapeake & P. Teleph. Co., 295 U.S. 662, 692, 693, 55 S.Ct. 894, 906, 907, 79 L. Ed. 1640 [1657, 1658] (dissenting opinion). It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end. The fact that the method employed to reach that result may contain infirmities is not then important. * * * And he who would upset the rate order under the Act carries the heavy burden, of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences. Cf. Railroad Commission [of Louisiana] v. Cumberland Teleph. & Teleg. Co., 212 U.S. 414, 29 S.Ct. 357, 53 L.Ed. 577; Lindheimer v. Illinois Bell Tel. Co., supra, 292 U.S. [151] at pages 164, 169, 54 S.Ct. [658] at pages 663, 665, 78 L.Ed. 1182 [1191, 1193]; Railroad Commission [of California] v. Pacific Gas & E. Co., 302 U.S. 388, 401, 58 S.Ct. 334, 341, 82 L.Ed. 319 [326].
******
«* * * Rates which enable the company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed certainly cannot be condemned as invalid, even though they might produce only a meager return on the so-called ‘fair value’ rate base. * * * ”

The Commission found that plaintiff is a corporation organized under the laws of the State of New York, duly authorized to do business in the State of Louisiana; that American Telephone & Telegraph Co. owns all of plaintiff’s outstanding common stock, all or a majority of the voting stock in eighteen other telephone operating companies, and a minority stock interest in two operating companies — all of which comprise the Bell System in the United States.

American Telephone & Telegraph Co. also owns a minority interest in The Bell Telephone Co. of Canada, a 50% interest in the Cuban American Telephone & Telegraph Co., 99.82% of the outstanding common stock of Western Electric Company, Inc., and 50% of the stock of Bell Telephone Laboratories, Inc. Western Electric Co. owns the other 50% of the stock of Bell Telephone Laboratories, Inc., and it manufactures, purchases, and distributes most of the apparatus, equipment and supplies required by all of the companies in the Bell System, while Bell Telephone Laboratories, Inc., performs research, development, and design work for the entire system.

The evidence shows that under its integrated set up, plaintiff borrows constantly from American Telephone & Telegraph Co., using a system of short term loans.

We quote the following from Page 203 of plaintiff’s brief:

“ * * * While the amount of the reduction was not serious to the system as a whole—amounting to only a few cents per share on AT&T stock after tax savings—nevertheless it was a blow to the system because of the possibility that some of the fallacious reasoning of the commission and its experts might influence other regulatory bodies to take similar viewpoints, without checking the accuracy of the arguments advanced.”

The contention that the action of the Commission is fallacious is fully answered by the holding in the Hope Natural Gas Company case, supra, wherein it was held that, under the statutory standard of “just and reasonable” it is the result reached, not the method employed, which is controlling.

With regard to the application of the “Cost of Capital” method, the Supreme Court of the United States has recognized that the peculiar situation of each utility, which is largely reflected in its cost of capital, dictates the level of its earnings. There is no constitutional requirement that every regulated company be allowed the same rate of return.

“The company contends that the rate of return is too low and confiscatory. What annual rate will constitute just compensation depends upon many circumstances, and must be determined by the exercise of a fair and enlightened judgment, having regard to all relevant facts. * * * ” Bluefield Water Works and Improvement Company v. Public Service Commission of State of West Virginia, 262 U.S. 679, 43 S.Ct. 675, 679, 67 L.Ed. 1176, 1182.

Each company is allowed to meet its own legitimate cost of doing business, although the rate of return may vary. The relevant facts and circumstances are to be considered in order that each is given an equal footing in the competition for new capital. The voluminous record in this case shows that the Commission considered the relevant facts and circumstances.

At the time of the hearing, the Commission found that the Telephone Company had a capital structure of 22.3% debt ratio and 74.6% common stock equity. The Commission based its determination of a fair rate of return on a capital structure of a 45% debt ratio and 55% common stock equity. Plaintiff -contends that its historical average capital structure has been debt ratio and % common stock equity. The testimony of Mr. W. H. Bailey, a witness for the Telephone Company, as to the meaning of debt ratio, is as follows:

“Debt ratio means the per cent of total capital represented by debt. Thus, a 30% debt ratio would signify that for every $100 of total capital $30 would represent debt and the remaining $70 would represent equity or stockholders’ capital in the business. In other words, out of each $100 of total capital the owners not only have an investment of $70, but also use in the business and guarantee repayment of $30, of debt, including interest.”
“The matter of determining how much debt a company may reasonably carry, i. e., the debt ratio appropriate, is not determinable by any mathematical formula or from any statistical or financial handbook. * * * ”

In its determination of a fair rate of return on a 45% debt ratio and 55% common stock equity, the Commission states (p. 10 of its Order):

“The composition of a utility’s capital structure affects its operating costs and earnings requirement. Debt capital is much cheaper than equity capital, particularly with the prevailing level of Federal income taxes. A prudent capital structure is one conducive to the lowest cost of service that is consistent with a sound financial posture.
“The record shows that Southern Bell’s debt ratio, or the percentage of long-term debt in its total capitalization, had declined from 45.8% at the end of 1947 to 22.3% at December 31, 1954. It was still 22.3'% at December 31, 1955. During the test period, the debt ratio averaged 21.3%. While the company’s debt ratio was thus declining, the debt ratios of the privately-owned electric utilities in the United States rose from 46.8% at the end of 1947 to 50.4% at December 31, 1954, and that of the natural gas companies advanced from 50.8% to 61.8% during the period * * *. Moreover, at December 31, 1954, the privately-owned electric utilities had a composite of 12.4% of preferred stock in their capital structures and the natural gas companies 7.8%; but Southern Bell’s capitalization is completely devoid of preferred stock, an admittedly lower cost security than common ■ stock. And during 1955, of all the new money securities issued by the electric and gas utilities, long-term debt consituted 59.5% and 71.6%, respectively, and preferred stock represented 15.5% and 9.4% respectively. It is apparent that while the managements of the electric and gas utilities have been seeking to reduce their overall cost of capital, the management of Southern Bell has been steadily increasing the overall cost of capital to the prejudice of the telephone subscribers.”

Plaintiff contends that in computing its earnings requirement, the Commission increased actual earnings by $596,000 — a theoretical amount by which income taxes would be reduced — -with a 45% hypothetical debt ratio; that this fictitious increase in income 'and downward adjustment in income taxes is based upon the claim that the Telephone Company should be considered as having long term debt in its capital structure (which it does not have), and as having paid interest upon that long term debt (which it has not paid).

Plaintiff further argues that the Commission invaded the reasonable range of discretion of its Board of Directors. Its officials testified, in substance, that the present debt ratio of approximately 22% is the result of prudent and sound policies.

On Page 26 of the Commission’s Order, it is stated:

“If at any time in the future, the company’s investors are prejudiced in their enjoyment of a fair and equitable return, this Commission will be available for appropriate rate adjustments.”

As appears from its Order, the Commission has retained jurisdiction to act upon any revision of the amount of the reduction which can be based upon competent evidence. Thus, the door is not closed to the Telephone Company in the proceedings in which the order herein involved was rendered.

A test period, the four months ending October 31, 1955, was chosen by the Telephone Company as being representative and adequate for determining the going level of its Louisiana intrastate operations. The record shows, and it is not seriously disputed by either party, that the following- composition of Southern Bell’s net average investment in its intrastate property in Louisiana during the test period is as follows:

Telephone Plant in Service.. $178,796,713.
Telephone Plant under Construction . 5,611,424.
Property Held for Future Telephone Use . 36,804.
Materials and Supplies. 2,539,005.
Cash Requirements. 346,055.
Total Gross Investment.$187,330,001.
Depreciation Reserve. 32,699,246.
Net Investment. $154,630,755.

The Commission adopted a net investment rate base by eliminating certain items above enumerated, as follows:

Net Investment (supra).$154,630,755,
Eliminations:
Telephone Plant under Construction. 5,611,424.
Materials and Supplies.. 2,539,005.
Cash Requirements. 346,055.
$ 8,496,484.
Net Investment Rate Base . $146,134,271.

Mr. A. L. Groce, a witness for the Telephone Company, submitted the following income data, based on the Company’s books and records covering the 4-month test period:

Annualized
Operating Revenue.$63,469,992.
Operating Expenses (Including Taxes) . 55,266,228.
Net Operating Income. $ 8,203,764.

By dividing the Telephone Company’s annualized net operating income of $8,203,-764., by the net investment rate base of $146,134,271. found by the Commission, we obtain a 5.61% rate of return. By dividing $8,203,764. by the Telephone Company’s net investment figure of $154,630,755., we obtain a 5.31% rate of return.

In the case of Gulf States Utilities Co. v. Louisiana Public Service Commission, supra [222 La. 132, 62 So. 253], this Court said:

“ * * * Hence, if 6% is and has been considered by the Commission to-be a just and equitable rate of return,, it would seem that refusal to grant an applicant a rate increase which would enable it to earn 6% would be inequitable and unjust in the absence of exceptional circumstances.”

The parties to these proceedings admit that this rate of 6% is not res adjudicata. The Telephone Company refers to it as “The criterion established by this Court.”

In view of the fact that there seems to be no prescribed formula for the fixing of “reasonable and just” rates; that it is the result reached, not the method employed, which is controlling; that the Commission does support by authority its determination of a fair rate of return on a capital structure based on a 45% debt ratio- and 55% common stock equity; that it is not presently patent and obvious that the-Telephone Company will be unable to realize a fair and just return on its investment on a capital structure of 45% debt ratio- and 55% common stock equity; that the Commission has kept the door open for a. revision of its order, after a trial and the-hearing of evidence in the same proceeding in which the order herein involved was; rendered; and in view of the status of the American Telephone & Telegraph Company and Southern Bell Telephone & Telegraph Co.; we are of the opinion that there are presently no exceptional circumstances in this case authorizing a finding-that the action of the Louisiana Public-Service Commission is arbitrary, capricious,, and confiscatory.

For the reasons assigned, the judgment of' the trial court, setting aside Order 6993 of the Louisiana Public Service Commission,, issued June 30, 1956, reducing the rates of' plaintiff, is reversed and set aside; the interlocutory and permanent injunctions heretofore issued are recalled and set aside;. Order No. 6993 is decreed to be in fulli force and effect; and the judgment of the lower court, rejecting the demand of plaintiff for an increase in rates, is affirmed. All ■costs to be paid by plaintiff.

FOURNET, C. J., is of the opinion that inasmuch as this case is so tremendous in scope, of such far reaching effect and importance, it should in the interest of justice, be fully reargued and that to this end a rehearing should be granted.

SIMON, J., being in full accord with the views expressed by FOURNET, C. J., and because of the magnitude and far reaching effects of the issues herein presented, feels that a rehearing should be granted in this case for further argument and reconsideration.

McCALEB, J., recused.


text:
    232 La. 467
    James Edward WYATT v. Bettie Jo WYATT.
    No. 42343.
    Supreme Court of Louisiana.
    April 1, 1957.
    See also 228 La. 77, 81 So.2d 775.
    Joseph S. Guerriero, Monroe, for appellant.
    Jones & Blackwell, West Monroe, for plaintiff-appellee.
   McCALEB, Justice.

When this case was called for argument appellant, Bettie Jo Wyatt, neither appeared nor did she file a brief in support of her appeal. Consequently, she is presumed to have abandoned it. See Grand Lodge of State of Louisiana, Knights of Pythias v. Natchitoches Lodge, 215 La. 300, 40 So.2d 472; Core Bros. v. F. J. J. Sloat Dredging Co., 220 La. 169, 55 So.2d 904 and cases there cited.

The appeal is dismissed.