text:
    Bernard E. REGAN, Plaintiff-Appellee, v. Bernard E. CARR, Defendant-Appellant.
    No. 5770.
    Court of Appeal of Louisiana, Third Circuit.
    March 4, 1977.
    Rehearing Denied April 5, 1977.
    Writ Refused June 1, 1977.

      Pugh, Buatt, Landry & Pugh by Lawrence G. Pugh, Jr., Crowley, for defendant-appellant.
    Thomas K. Regan, Crowley, for plaintiff-appellee.
    Edwards, Stefanski & Barousse by Nolan J. Edwards, Crowley, for defendant-appel-lee.
    Before HOOD, DOMENGEAUX and WATSON, JJ.
   HOOD, Judge.

Plaintiff, Bernard E. Regan, seeks damages for the alleged breach of a lease contract and for wrongful eviction from the leased property. The defendant, Bernard E. Carr, reconvened for damages, alleging breach of contract by Regan. Judgment was rendered by the trial court in favor of plaintiff Regan, awarding him damages for breach of contract and dismissing defendant’s reconventional demand. Defendant Carr appealed. Plaintiff answered the appeal seeking an increase in the amount of the award.

The issues presented are whether a tacit reconduction of the lease occurred, and, if so, whether Regan is entitled to recover damages for wrongful eviction.

Prior to April 15, 1974, defendant Carr owned three tracts of farm land in Acadia Parish, comprising a total of 112.17 acres. He acquired ownership of that property by inheritance from his father in 1964. The property was leased to plaintiff Regan each year from 1950 through 1973, and Regan farmed rice and soybeans on it every crop season during that time. Originally, Regan entered into a verbal agreement with Carr’s father to lease the property for one year, and the lease was tacitly reconducted or orally renewed annually for a number of years thereafter. Both parties agree that the terms of the leases were from January 1 to December 31 of each year. The last year Regan actually farmed the property was during the year 1973.

Defendant Carr lives in Illinois. While he owned the above property, however, he visited the area where it was located regularly in the fall or winter of each year, and usually he saw Regan on each of those trips.

Carr decided to sell his farm property during the latter part of 1973, and he thereupon listed it for sale with Bill Hoffpauir, a local real estate broker. At about 10:00 A.M., on December 3,1973, Carr met Regan at the latter’s rice dryer in Louisiana and informed him that he was going to sell the property and that he had listed it with Hoffpauir. At about 2:00 P.M. that same day, December 3, a written agreement was entered into between Carr, Hoffpauir and Thomas B. Freeland, under the terms of which Freeland agreed to purchase the property from Carr for a stipulated price. The agreement provided, however, that the sale was conditioned on the ability of the purchaser to secure adequate financing, and that the contract would be null and void on December 31, 1973, if the purchaser failed to obtain a loan by that date. The sale was not completed by December 31, 1973.

On January 15, 1974, another buy-sell agreement was entered into by Carr and Freeland, under the terms of which Free-land agreed to buy for about the same price what we assume to be the same property, although it is described somewhat differently and is shown to contain a greater number of acres than is shown in the original agreement. That contract also was com ditioned on the purchaser’s ability to borrow a substantial sum of money on or before January 31, 1974. The property was sold about three months later pursuant to that agreement. Carr executed a deed conveying the property to Freeland on April 15, 1974. Freeland took possession of the property on or shortly after that date, and he farmed it during the 1974 crop season.

This suit was instituted on March 26, 1975. The trial judge found that there had been a tacit reconduction of the lease for the year 1974, and that Regan was evicted from the leased premises “in April of 1974, much more than one month after the expiration of the previous lease.” He thus rendered judgment in favor of plaintiff awarding him damages for breach of the lease contract.

The principal issue to be determined is whether a tacit reconduction of the 1973 predial lease occurred.

The applicable law is set out in Article 2688 of the Louisiana Civil Code, which provides:

“If, after the lease of a predial estate has expired, the farmer should still continue to possess the same during one month without any step having been taken, either by the lessor or by a new lessee, to cause him to deliver up the possession of the estate, the former lease shall continue subject to the same clauses and conditions which it contained; but it shall continue only for the year next following the expiration of the lease.”

With reference to LSA-C.C. art. 2688, our Supreme Court said in Ashton Realty Company v. Prowell, 165 La. 328, 115 So. 579 (1928):

“The meaning of that article is simply this: That, if both parties to the lease remain silent and inactive for the space of one month after the expiration of the lease, they shall both be presumed to have acquiesced in, and tacitly consented to, a renewal of the lease for another year. It has no application whatever when either party has clearly announced his intention not to renew the lease on the same terms or for a full year, for the purpose of the law is not to force a contract upon parties unwilling to contract, but merely to establish a rule of evidence, or presumption, as to their intention in the premises.”

The above rule has been applied repeatedly by courts in this state. See Eames v. Goodwin, 337 So.2d 909 (La.App. 3 Cir. 1976); Scanlan v. Haristy, 316 So.2d 841 (La.App. 3 Cir. 1975); Prisock v. Boyd, 199 So.2d 373 (La.App. 2 Cir. 1967); Dinkins v. Broussard, 190 So.2d 496 (La.App. 1 Cir. 1966); Cramer v. Habetz, 189 So.2d 278 (La.App. 3 Cir. 1966).

We have examined the facts in the instant suit with the above rules in mind.

Carr testified that he tried to contact Regan on December 4, 1973, to inform him that on the preceding day he had entered into an agreement to sell the property to Freeland, but he stated that he was unable to get in touch with Regan. He concedes that he did not inform Regan personally at any time that he had agreed to sell the property to Freeland. He did not tell him after the sale was completed that the property had been sold, and he did not tell Regan at any time that he could not farm that land during the year 1974. He testified that he never notified Regan to vacate the property, and that no one else in his presence ever ordered Regan to vacate the leased premises.

Hoffpauir testified initially that he talked to Regan about a week after December 3, 1973, and told him at that time that Freeland “was going to buy the property and was going to farm it.” Later in his testimony, however, he stated that “the only thing” he told Regan on that occasion was that he “thought Mr. Carr was going to sell the property to Mr. Freeland and that they had an agreement to sell the property.” Hoffpauir further testified that he “never, at any time on behalf of Mr. Carr, notified Mr. Regan to vacate the property.”

Thomas B. Freeland testified that “later on in the winter,” after he had agreed to purchase the property, he talked to Regan “about whether he was going to be able to plant the crop in ’74,” and he told Regan at that time that he (Freeland) intended to plant it. He did not remember the date on which that conversation took place, but he concedes that it could have been in the latter part of February, 1974. Freeland testified that he did not notify Regan to vacate the premises at any time, because he felt that he had no authority to do so “until after the sale was actually passed.” We have already noted that the sale was completed on April 15, 1974.

Regan testified that after he harvested his 1973 crop, he began preparing the above property for his 1974 crop by constructing levees and drains on at least a part of it. He completed that work by the end of December, 1973. He stated that he intended to farm the property during the year 1974, but that he did not actually do any work on the property during that year.

Regan’s testimony is that no one ever told him to vacate the premises before the property was actually sold to Freeland on April 15,1974. He said that Hoffpauir told him a few days after December 3, 1973, that Carr had given Freeland an “option” to buy the property, and he admits that Freeland told him in 1974, before the crop season began that year, that he (Freeland) planned to buy the property and was going to farm it. Regan stated, however, that immediately after he received that information from Freeland he contacted his own attorney, and that his attorney promptly wrote to Carr’s attorney advising that Re-gan had started preparing the land for farming during the 1974 crop season, and that Regan was entitled to be maintained in peaceable possession of the property that year. Regan’s attorney suggested in that letter that an effort be made to work out an agreement whereby Freeland would allow Regan to continue farming that year. The above letter was written by Regan’s attorney on February 25, 1974.

The evidence convinces us that- Regan contacted his attorney immediately after Freeland informed him that the latter intended to buy and to farm the property in 1974, and that the above letter was written on the day Regan saw his attorney. We find that it was on or about February 25, 1974, that Freeland first informed plaintiff that Freeland intended to farm the property during the 1974 crop season.

We have determined that the lease held by Regan in 1973 extended over that full calendar year, beginning on January 1 and ending on December 31 of that year. The one month period provided in LSA-C.C. art. 2688 expired on January 31, 1974.

We find, as did the trial judge, that plaintiff Regan continued to possess the leased property from December 31, 1973, until about April 15, 1974, a period of considerably more than the one month provided in Article 2688 of the Civil Code. We think plaintiff was effectively evicted from that property on or about the last mentioned date, however, by the act of the new owner, Freeland, in taking possession of the land and beginning farming operations on it.

Defendant’s primary argument, as we understand it, is that before the term of the 1973 lease expired the owner, Carr, clearly announced his intention not to renew that lease, and that under those circumstances a reconduction of the lease could not and did not take place. To support that argument, he points out (1) that Carr told Regan on December 3,1973, that he was going to sell the property, (2) that a buy-sell agreement was entered into with Freeland on that date, (3) that Regan learned of the proposed sale a few days after the agreement was signed, (4) that Freeland confirmed the fact that such an agreement had been signed when he talked to Regan on February 25, 1974, and (5) that Regan did not conduct any farming operations on the property in 1974.

We have decided that the information which Carr gave to Regan on the morning of December 3, 1973, did not constitute a clear announcement by Carr of his intention not to renew the lease for another year. Carr told Regan at that time simply that he was going to sell the property and that he had listed it with Hoffpauir. The evidence shows that Carr had talked about selling the property for years. Regan, in fact, had made offers to Carr for the purchase of at least parts of it. Hoffpauir testified that Carr had asked him for several years to try to sell the property, and that on this occasion “it finally came to a point where we did sell it.” Carr, himself, after conceding that he had talked to Regan on prior occasions about selling the property, explained that when he saw plaintiff on December 3, 1973, he told him that he “had really decided to sell it” at that time. That indicates to us that Carr had not really tried to sell it on prior occasions, and that there was no reason to think that he was any more sincere on the last mentioned date. The fact that Carr told Regan one more time, on December 3, 1973, that he was going to sell it, certainly did not constitute a clear announcement that the lease would not be renewed for 1974.

Our conclusion is that when Carr talked to Regan on December 3, 1973, he did not tell plaintiff, or even imply, that the latter’s farming lease would not be reconducted or renewed for the year 1974. Prior to the expiration of the terms of the 1973 lease, therefore, Carr did not clearly announce his intention not to renew the lease. And, neither did he take a step to cause Regan to deliver up possession of the estate at any time prior to January 31,1974, that is, prior to the expiration of the one month period provided in LSA-C.C. art. 2688.

The execution of a buy-sell agreement by Carr and Freeland on December 3,1973, the signing of another such agreement on January 15, 1974, and the information which Hoffpauir gave to Regan about the first such agreement in December, also did not constitute a notice of Carr’s intention not to renew the lease for the year 1974. In the first place, there is no showing that Hoff-pauir had authority to give such a notice in behalf of Carr. But even if he did have that authority, Hoffpauir did not say, or even intimate, that plaintiff’s farming lease would not be renewed for another year, as had been done routinely every crop season for 23 years.

Hoffpauir, in fact, made it clear that he did not tell Regan that he would have to vacate the premises. Regan unquestionably understood from his conversation with Hoffpauir that Carr still owned the land as of that time and that the property had not been sold. His understanding of the transaction was that Carr had granted an “option” to Freeland. Neither Carr nor Hoff-pauir indicated to Regan when the sale might be completed, and neither of them suggested that such a sale would prevent Regan from farming the property in 1974. If any such suggestion had been made, we think there likely would have been some further discussion as to whether the purchaser would benefit from the work and expense which Regan had devoted to the 1974 crop.

Our conclusion is that the facts which Hoffpauir gave to Regan in December, 1973, considered alone or with all .of the other information which Regan had obtained from other sources, was not sufficient to constitute an announcement by Carr that the latter did not intend to renew Regan’s farming lease for the year 1974.

It is immaterial that Regan was informed by Freeland on February 25, 1974, that the latter planned to farm the property in 1974. The conversation between Re-gan and Freeland took place after a recon-duction of the lease had occurred, so any information which Freeland gave plaintiff at that time came too late to constitute a clear announcement by or on behalf of Carr that the latter did not intend to renew the 1973 lease for another year.

We agree with the apparent conclusion reached by the trial court that Regan continued to possess the property for one month after the term of the 1973 lease expired, without any step having been taken by the owner-lessor to cause him to deliver up possession of the property, and that prior to the expiration of the 1973 lease neither party clearly announced his intention not to renew the lease for the year 1974. A tacit reconduction of the lease thus occurred on January 31, 1974. Regan had the right to conduct farming operations on the premises during the year 1974, and he was wrongfully evicted from that property in April of that year.

LSA-R.S. 9:3203 provides that the lessor of property to be cultivated who fails to permit the lessee to occupy or cultivate the leased property, is liable to the lessee in an amount “equal to the market value of the average crop that could have been grown on the land or on like land located in the immediate vicinity.”

In this suit, the evidence shows that in 1974 plaintiff intended to plant 38.4 acres in rice and 35 acres in soybeans. A farmer’s average profit from farming operations that year would have been $125.00 per acre for rice, and $75.00 per acre for soybeans. The trial judge computed plaintiff’s loss for both crops to be $7,485.00, and he rendered judgment in favor of plaintiff for that amount. We think the evidence supports the award made by the trial court as damages for the breach of contract.

Plaintiff also seeks damages for embarrassment and mental distress resulting from his eviction from the leased premises. He argues that the trial court erred in rejecting his claim for damages for wrongful eviction, and he demands in his answer to the appeal that the judgment be amended by increasing the award to include such damages.

The evidence fails to show that plaintiff sustained any damages at all, other than the loss of his crop, as a result of his eviction from the leased premises. We thus find no error in the conclusion reached by the trial court that plaintiff is not entitled to the additional damages claimed for the wrongful eviction.

Having concluded that the evidence fails to establish that plaintiff sustained any damages resulting from the wrongful eviction, it is unnecessary for us to consider defendant’s argument that Regan’s claim for that item of damages has prescribed.

For the reasons assigned, the judgment appealed from is affirmed. The costs of this appeal are assessed to defendant-appellant.

AFFIRMED.


source: Caselaw Access Project

author: CULPEPPER, Judge.

license: Public Domain

text:
    DIESI-PONTIAC-CADILLAC-BUICK, INC., Plaintiff and Appellee, v. Sam FADAOL d/b/a Sam Fadaol Diesel Service, Defendant and Appellant.
    No. 5797.
    Court of Appeal of Louisiana, Third Circuit.
    March 4, 1977.
    Rehearing Denied April 5, 1977.
    Writ Refused June 1, 1977.
    Robert F. Fadaol, Gretna, for defendant-appellant.
    Morrow & Morrow, by J. Michael Morrow, Opelousas, for plaintiff-appellee.
    Before HOOD, CULPEPPER and DO-MENGEAUX, JJ.
   CULPEPPER, Judge.

Plaintiff sued defendant for the balance of $529.71 due on an open account for services and repairs to various personal and business vehicles. The district court rendered judgment in favor of plaintiff for $368.42. Defendant appealed.

Defendant’s first argument on appeal is that this suit was filed against Sam Fadaol Diesel Service, Inc., a corporation, but that judgment was rendered against Sam Fadaol individually. This argument has no merit. The defendant named in plaintiff’s petition is Sam Fadaol, d/b/a Sam Fadaol Diesel Service. The judgment appealed is against this same defendant. There is no judgment against the corporation.

During the trial, the defendant objected to several of the invoices composing the open account on the grounds that some of the repair services were rendered to Sam Fadaol Diesel Service, Inc., rather than to Sam Fadaol individually. However, plaintiff testified that the account was carried in the name of Sam Fadaol individually and that he was billed over a considerable period of time in his name individually, and Fadaol never objected. The trial judge accepted plaintiff’s testimony that it was the understanding of the parties that this was an account in the name of Fadaol individually.

Although many invoices were questioned by defendant during the trial, a stipulation was entered into by counsel for both parties at the end of the trial narrowing the issues to four invoices. In his written reasons, the trial judge held:

“According to my notes it was stipulated at trial that except for four invoices all the claim was agreed as either due or not due. The disputed invoices are No. 2020 involving work on the transmission, No. 2336 involving work on the front end, No. 11299 involving trailer hitch on the Buick and No. 11474 involving trailer hitch and undercoating on the Pontiac. I will allow the latter two (No. 11299 and No. 11474) as these are not shown on the bill of sale and I have no alternative but to go by that in view of the contradiction in the testimony of the witnesses. I will allow one-half of the other two claims because there was work done on both of these and apparently a failure of communication between the parties as to the completion of these jobs.”

Substantial evidence supports the finding of fact by the trial judge.

For the reasons assigned, the judgment appealed is affirmed. All costs of this appeal are assessed against the defendant-appellant.

AFFIRMED.


author: GUIDRY, Judge.

text:
    Mrs. Charles Kinchen LUSHUTE, Plaintiff-Appellee, v. Frank J. DIESI, and Little Capitol of Louisiana, Inc., Defendant-Appellant.
    No. 5798.
    Court of Appeal of Louisiana, Third Circuit.
    March 4, 1977.
    Rehearing Denied April 5, 1977.
    Writ Granted June 1, 1977.

      Lewis & Lewis by John M. Shaw, Opelou-sas, for defendant-appellant.
    Vance R. Andrus, Lafayette, for plaintiff-appellee.
    Before WATSON, GUIDRY and FORET, JJ.
   GUIDRY, Judge.

This is a suit for workmen’s compensation death benefits. Mrs. Charles Kinchen Lu-shute, widow of Charles Vincent Lushute and his sole dependent, brought this action on May 21, 1975 against Frank J. Diesi, as operator of the Little Capitol Restaurant. Plaintiff avers that on May 23, 1974, her husband, Charles Vincent Lushute, while performing maintenance service on the air conditioning system at said restaurant, fell through the ceiling, and as a result of injuries sustained in the fall he died on May 24, 1975. On July 8, 1975 defendant answered plaintiff’s petition, generally denying the allegations therein. Subsequently plaintiff, on September 16, 1975 filed an amending and supplemental petition, naming Little Capitol of Louisiana, Inc., as co-defendant. The defendant corporation answered the amended petition and later filed an exception of prescription. The defendant Diesi filed an exception of no cause of action. Both exceptions were referred to the merits and after trial the trial court rendered judgment against both defendants, in soli-do. The trial court awarded plaintiff benefits in the amount of $65.00 per week for 500 weeks, plus the additional amount of $1,849.13 representing medical and funeral expenses. Both defendants appeal.

The following issues are presented by this appeal:

(1) Was the defendant, Frank J. Diesi the operator of the Little Capitol Restaurant on May 23, 1974?

(2) If Frank J. Diesi and Little Capitol of Louisiana, Inc. were not joint operators of such restaurant, was there an interruption of prescription against the defendant, Little Capitol of Louisiana, Inc., when suit was timely filed against Diesi?

(3) Was Charles Lushute, at the time of his death, performing work which was an integral part of the business of Frank J. Diesi and/or Little Capitol of Louisiana, Inc.?

In discussing the first two issues we observe that the record shows that Charles Lushute, on May 23,1974, while performing maintenance services on an air conditioning system fell through the ceiling of the Little Capitol Restaurant in Krotz Springs. He died on the following day from injuries he sustained in that fall.

It was stipulated at the time of trial that some six months following the accident plaintiff contacted Robert Szabo, an attorney in Baton Rouge, to represent her in prosecuting any claim she might have as a result of her husband’s death. After several inquiries about the accident, Szabo, by letter dated January 21,1975 contacted Salvador Diesi, Frank Diesi’s son, who was an attorney in Opelousas, Louisiana. Szabo’s letter informed Salvador Diesi of the death of Lushute at the restaurant, and advised Diesi that he had been retained to further Mrs. Lushute’s claim for workmen’s compensation death benefits. Szabo by this letter requested information regarding the individual, corporation, or any other entity which owned and operated the Little Capitol Restaurant, as well as information regarding the workmen’s compensation insurer. Salvador Diesi testified that he had received Szabo’s letter of January 21, 1975, but never responded in writing to the request. The stipulation establishes that Sza-bo never received any answers to his inquiries, and as a consequence traveled to Opel-ousas to check the public records. Szabo’s examination of the records revealed that Frank J. Diesi was the owner of the premises. Szabo found no recorded lease of the premises in the public records.

On May 21, 1975 Szabo filed the original petition in the instant matter naming Frank J. Diesi, operator of the Little Capitol Restaurant, defendant. Frank Diesi was served with the petition, but immediately thereafter turned the same over to his son Salvador Diesi, who by letter to Szabo dated May 27, 1975 indicated he had forwarded the petition to their workmen’s compensation insurer. Subsequently, another attorney, John Shaw, filed an answer on behalf of the defendant Diesi. Following defendant’s answer Szabo withdrew as plaintiff’s counsel of record and plaintiff’s present counsel took over. On September 16, 1975 plaintiff filed an amending and supplemental petition naming Little Capitol of Louisiana, Inc., as co-defendant. The defendant corporation filed an exception of prescription setting forth that the death of Charles Lushute occurred on May 24-, 1974 and suit was not instituted against it until September 16, 1975. The defendant Diesi filed an exception of no cause of action alleging that at the time of the accident he did not operate a restaurant known as the Little Capitol Restaurant, but had previously leased the same to Little Capitol of Louisiana, Inc.

The record shows that Frank J. Diesi is the owner of the premises known as the Little Capitol of Louisiana Restaurant. Frank Diesi testified that he operated the restaurant prior to October, 1965 however, about that time the operation of the restaurant was turned over to a newly formed corporation, Little Capitol of Louisiana, Inc. Although the title to the land and buildings remained in Diesi’s name all existing restaurant equipment on the premises was transferred to the corporation. Carl Bel-lard, a certified public accountant, testified that the corporation was the owner of the restaurant equipment located on the premises and that the equipment was being depreciated on the corporation’s federal income tax statements. The evidence also shows that in October of 1971 an oral agreement between the corporation and Frank J. Diesi provided for the lease of the premises by Diesi to Little Capitol of Louisiana, Inc., for $1,000.00 per month. Frank Diesi stated that he received these payments until March of 1973, at which time the corporation discontinued the rental payments because of a sharp decline in its income. Diesi’s testimony was corroborated by the defendant’s introduction of checks issued from Little Capitol of Louisiana, Inc., to Frank Diesi. Also introduced were checks issued from Little Capitol of Louisiana, Inc. to Charles Lushute. These latter checks which covered a period of about two years were issued to Charles Lushute in payment for electrical and plumbing services. All of the checks introduced by the defendant were signed by the restaurant manager, “Johnny Gerace c/o Frank J. Diesi”. Johnny Gerace is the person who called Charles Lushute on May 23, 1974 to come to the restaurant to fix the air conditioning unit.

We finally note that the articles of incorporation of Little Capitol of Louisiana, Inc., dated October 1,1965, provide that Prank J. Diesi and Salvador Diesi serve the corporation as its President and Secretary-Treasurer, respectively. Both Diesis were, listed as registered agents of the corporation.

The trial court concluded that Prank J. Diesi and Little Capitol of Louisiana, Inc., were both the employers of Charles Lu-shute; that as such both were liable to plaintiff in solido; and, therefore the supplemental and amending petition naming as defendant, Little Capitol of Louisiana, Inc. was timely filed. We conclude that the trial court erred in finding that Frank J. Diesi was the employer of Lushute. Further, although we determined that Diesi and Little Capitol of Louisiana, Inc. are not solidary obligors, we find that the trial court’s overruling of the latter’s exception of prescription was correct.

We are unable to find any evidence in the record which would support a conclusion that following October 1965 Prank J. Diesi continued as operator of the Little Capitol of Louisiana Restaurant or that Diesi was the employer of Charles Lushute. To the contrary the evidence reflects that the corporation, Little Capitol of Louisiana, Inc., was formed on October 1, 1965 for among other purposes “to construct, own, buy, sell, lease, equip and operate restaurants, bars of all kinds; . . . ”. Shortly following the filing of the corporate charter the physical properties owned by Diesi were leased to the corporation and all restaurant and bar equipment was conveyed to the latter. Thereafter all business was conducted in the name of the corporation and all payments for rentals, services, etc. were paid by check drawn on the corporation’s bank account. The record clearly establishes that the services performed by Lushute on all occasions and specifically on May 23, 1974 were performed not for Prank Diesi but rather for Little Capitol of Louisiana, Inc. and that the latter paid for these services by cheek drawn on the corporation’s bank account.

It is well established that a corporation has a separate and distinct existence apart from its stockholders and officers, and in the absence of fraud, the liability of a corporation is not the liability of the shareholders or the officers thereof. McMillan Welding and Machine Works v. General Towing Company, D.C., 247 P.Supp. 402; Cefalu v. Cefalu Co., 253 So.2d 547 (La.App. 1st Cir. 1971); Nichols Construction Corporation v. Spell, 315 So.2d 801 (La.App. 1st Cir. 1975). It is conceded that under certain circumstances, i.e., fraud etc., the corporate entity is disregarded when it is found necessary to promote justice or avoid inequities, however, such circumstances are clearly not present in the instant case.

We determine that Frank J. Diesi was not the operator of the Little Capitol Restaurant on May 23, 1974 nor did he on said date contract for the services of Charles Lushute. The operator and owner of such business being Little Capitol of Louisiana, Inc. Accordingly, the trial court judgment against Prank J. Diesi is reversed and plaintiff’s suit as against him will be ordered dismissed with prejudice.

We next consider whether the plaintiff’s action against the defendant, Little Capitol of Louisiana, Inc. has prescribed.

Admittedly, although the instant suit was timely filed, the proper defendant was not made a party thereto until several months following the tolling of the one year prescription. The question is thus presented as to whether the filing of the suit timely against Prank J. Diesi, individually had the effect of interrupting prescription as to the Little Capitol of Louisiana, Inc.

The statutory provision concerning the running of prescription in workmen’s compensation claims is found in LSA-R.S. 23:1209. This provision reads in pertinent part as follows:

“. . . all claims for payments shall be forever barred unless within one year after the accident or death the parties have agreed upon the payments to be made under this Chapter or unless within one year after the accident proceedings have been begun as provided in Parts III and IV of this Chapter.”

In considering the quoted provision the Supreme Court in Nini v. Sanford Brothers, Inc., 276 So.2d 262, 264 (La.1973) stated that “the essence of interruption of prescription by suit has been notice to the defendant of the legal proceedings based on the claim involved. If suit is filed in a court of competent jurisdiction, prescription is interrupted.” The law with respect to prescription in workmen’s compensation cases was succinctly summarized by Professor Malone, Malone La. Workmen’s Compensation Law & Practice Section 384 (pp. 497-98) (1961), as follows:

“A petition and citation filed within a year from the time of accident, but which names the wrong defendant will not interrupt the running of prescription where the proper defendant was not aware that an action had been instituted against him. (Bowerman v. Pacific Mut. Ins. Co. (1948) 212 La. 999, 34 So.2d 53; Ruffin v. Blue Plate Foods, Inc. (La.App.Orl.1947) 29 So.2d 722). A suit, however, which advises the proper employer of the claim will serve to interrupt prescription even though the defendant is improperly named, as where suit is filed against a non-existent corporation but process is served against the defendant who is doing business under a similar name, (Mitchell v. Sklar (La.App.2d Cir. 1940) 196 So. 392). Similarly, where two corporations which are engaged in closely coordinated activities have a common manager, service of process upon such manager will interrupt the running of prescription, even though the wrong corporation is named as employer. (Lunkin v. Triangle Farms, Inc. (1945) 208 La. 538, 23 So.2d 209).”

See also: Stewart v. Maloney Trucking and Storage, Inc., 147 So.2d 62 (La.App. 4th Cir. 1962); Banks v. K & H Stock Farm, 97 So.2d 444 (La.App. 1st Cir. 1957).

Our consideration of the facts of this case in light of the cited authorities prompts us to conclude that the suit timely instituted by plaintiff against Frank J. Diesi served to interrupt the one year prescription provided for in LSA-R.S. 23:1209 and that plaintiff’s petition as amended presents a viable claim against Little Capitol of Louisiana, Inc.

There can be no doubt but that the defendant, Little Capitol of Louisiana, Inc., had notice of the filing of this suit prior to the running of prescription. Frank J. Diesi who was served as a defendant was the registered agent for service of process of the corporation. After being served he immediately delivered the plaintiff’s petition to his son, Salvador Diesi, the other registered agent. Both were keenly aware from the allegations set forth in this petition and facts peculiarly within their own knowledge that the claim was against Little Capitol of Louisiana, Inc. and not Frank Diesi. This case clearly presents a situation where the proper party had notice of the claim and that suit on such claim had been instituted. For these reasons we conclude that the trial court properly overruled the exception of prescription filed by Little Capitol of Louisiana, Inc.

We turn finally to a consideration of the principal issue, i.e., was Charles Lushute, at the time of his death, performing work which was a part of the principal’s trade, business, or occupation.

No contest is made of the fact that Charles Lushute was an independent contractor who, by virtue of LSA-R.S. 23:1021(6), was covered under the provisions of the workmen’s compensation act. LSA-R.S. 23:1021(6) provides in pertinent part:

“ ‘Independent Contractor’ means any person who renders service, other than manual labor, for a specified recompense for a specified result either as a unit or as a whole, under the control of his principal as to results of his work only, and not ás to the means by which such result is accomplished, and are expressly excluded from the provisions of this Chapter unless a substantial part of the work time of an independent contractor is spent in manual labor by him in carrying out the terms of the contract, in which case the independent contractor is expressly covered by the provisions of this Chapter.”

It is admitted that Charles Lushute, just prior to the accident, had spent a substantial part of his time performing manual labor in carrying out his contract to repair the air conditioning system at the defendant’s restaurant. However, defendants contend that the workmen’s compensation act is not applicable since the work being performed by the independent contractor, Lushute, was not a service which was an integral part of his principal’s trade, business, or occupation.

The evidence in this regard shows that the decedent, Charles Lushute was a self-employed plumber and electrician who performed most of his own work. Mrs. Lushute testified that her husband owned the equipment which he used in his trade, including a truck. Lushute serviced about 270 clients. Concerning Lushute’s association with Little Capitol Restaurant, Frank Diesi testified that Lushute had been called upon to repair the plumbing and electrical appliances in the establishment for well over 30 years. It was stipulated that defendant usually paid Lushute $6.00-$7.00 an hour for the work performed. Mrs. Lu-shute further testified that in the year prior to her husband’s death he was called to Little Capitol Restaurant on an average of once or twice a month. It is undisputed that Lushute had previously serviced defendant’s refrigeration equipment, stoves, toaster, and plumbing. • At the time of Charles Lushute’s death he was working on one of the four air conditioning units at the restaurant.

The evidence also showed that the defendant corporation operated a restaurant and at no time engaged in the plumbing, electrical, or air conditioning business. The defendant did not employ a full-time electrician or plumber.

The law is clear that the test to be applied in determining whether the repair and maintenance services performed by Lu-shute were a part of his employer’s trade, business, or occupation is whether such services constituted an integral part of defendant’s regular business. In other words, were the services substantial, essential and recurring. Doss v. American Ventures, Inc., 261 La. 920, 261 So.2d 615 (1972); Broussard v. Adams, 270 So.2d 913 (La.App. 3rd Cir. 1972). As stated in Evan v. Naihaus, 326 So.2d 601, 604 (La.App. 4th Cir. 1976):

“A major purpose of the Workmen’s Compensation Act was to remove the burden of industrial and commercial accidents from the victim and to allocate the cost of these accidents over the consumers of the product or the customers of the business. The act was thus intended to apply to workers whose services form a regular and continuing part of the business or cost of the product.”

Likewise, it is well established that this determination is a question of fact which must be adduced by the evidence in each case. Broussard v. Adams, supra; Doss v. American Ventures, Inc., supra. See also Vizena v. Travelers Insurance Company, 238 So.2d 238 (La.App. 3rd Cir. 1970) writ refused, 256 La. 885, 239 So.2d 542, 1970 and cases therein cited.

The trial court concluded from the evidence that the repair of the air conditioning system was essential to and an integral part of the operation of defendant’s restaurant business. Our review of the evidence convinces us that the trial court had a reasonable basis upon which to found this factual conclusion. The restaurant building is a modern day brick and glass structure. The temperature control in this building was solely dependent upon the air conditioning and heating system. As testified to the building on the afternoon of May 23, 1974 was hot, and certainly this uncomfortable situation affected not only the restaurant’s employees but the patrons. Obviously the restaurant’s normal operation could not have continued without a functioning air conditioning system.

The record also establishes that the defendant’s business required him to employ Lushute to perform substantial maintenance and repair of essential items such as plumbing and electrical appliances as well as the air conditioning; and, that Lushute was so employed by defendant on a frequent and recurring basis over many years. After considering all the evidence, we find, as did the trial court, that the repair work being performed by Lushute at the time of his death was an integral part of the trade, business or occupation of the defendant, Little Capitol of Louisiana, Inc.

For the above and foregoing reasons the judgment appealed from is reversed insofar as it casts Frank J. Diesi in judgment to plaintiff and it is accordingly ordered, adjudged and decreed that plaintiff’s suit against Frank J. Diesi be dismissed with prejudice. In all other respects the judgment of the trial court is affirmed, appellant, Little Capitol of Louisiana, Inc., to be cast for all costs of these proceedings in the trial court and on appeal.

REVERSED IN PART, AFFIRMED IN PART AND RENDERED.

      . Neither party questions the .quantum of this award.

      . Robert Szabo did not testify at the trial of this matter.

      . Salvador Diesi was at the time of Szabo’s letter serving as the secretary-treasurer of the defendant corporation, Little Capitol of Louisiana, Inc.

      . It was stipulated to by defendant that its restaurant operation was a hazardous business.


author: FORET, Judge. WATSON, Judge,

text:
    ACADIANA BANK, Plaintiff-Appellant, v. Kimball Aubrey FOREMAN et al., Defendants-Appellees.
    No. 5800.
    Court of Appeal of Louisiana, Third Circuit.
    March 4, 1977.
    Rehearing Denied April 5, 1977.
    Writ Granted. June 3, 1977.

      Pucheu & Pucheu by Jacque B. Pucheu, Jr., Eunice, for defendant-intervenor-appel-lant.
    Devillier & Ardoin by Anthony J. Pazzio, Eunice, for plaintiff-appellee.
    Before WATSON, GUIDRY and FORET, JJ.
   FORET, Judge.

On January 8, 1976, Acadiana Bank (hereinafter referred to as Acadiana) filed a petition for executory process against Kim-ball Aubrey Foreman and his wife (hereinafter referred to as the Foremans), under which a writ of seizure and sale was issued foreclosing on certain chattels of the Fore-mans. On April 7,1976, the property seized was sold, and the proceeds of the sale were put into possession of the Sheriff of St. Landry Parish. On March 18, 1976, a petition of intervention was filed by Wilson J. Moosa (hereinafter referred to as Moosa), wherein intervenor claimed that his lessor’s lien was superior to that of the chattel mortgagee, Acadiana, as his lessor’s lien was recognized in a judgment rendered on February 17, 1976. Judgment herein was rendered on August 3, 1976, in which the trial court held that:

“. . . after January 1, 1975, the chattel mortgage held by Acadiana Bank primed the lessor’s lien of Wilson J. Moo-sa, thereby entitling Acadiana Bank to receive the proceeds of the Sheriff’s Sale ...” (Tr. pg. 83)

From such judgment intervenor Moosa has filed this appeal.

Prior to September, 1974, Moosa leased certain premises located in Eunice, Louisiana, to a Mrs. Doty. The term of the lease, which was unrecorded, terminated on December 31, 1974. Prior to the expiration of such lease, defendants herein, the Fore-mans, purchased from Mrs. Doty the right of occupancy to the leased premises and all of her movables located therein. On or before September 18, 1974, the Foremans occupied the leased premises. On that date the Foremans executed a written lease with Moosa, which lease was recorded on September 20, 1974, the term of which commenced on January 1, 1975. (Court # 2; Tr. pg. 63-66) On that same date, September 18, 1974, the Foremans executed:

(1) a collateral chattel mortgage on the movables located in the leased premises, which chattel mortgage was recorded October 3, 1974 (Court # 1, Tr. pg. 61-61A) and
(2) a collateral mortgage note in the amount of $17,000.00, which note was paraphed and identified with a chattel mortgage, and which was delivered to Acadiana and,
(3) a $12,000.00 hand note, a provision of which stated that the note
“and any extension or renewal thereof and any and every debt, liability or other obligation, direct or contingent, due or to become due, whether now existing or hereafter arising, by the undersigned, or any of them, to the said ACADIANA BANK, up to the sum of FOUR HUNDRED AND FIFTY THOUSAND DOLLARS ($450,000.00), are and the same shall be secured by the pledge of the securities or property listed and described as follows, vis: collateral chattel mortgage in the amount of $17,-000.00.” (Bank-1; Tr. pg. 68)

On August 14, 1975, the unpaid balance of the $12,000 note having been reduced to $5,000 and the Foremans wishing to pay smaller monthly installments, Mrs. Foreman re-negotiated and executed a $5,000 hand note. (This note was not filed in the record.) By October 6,1975, the $5,000 note had been fully paid, and it was returned to the Foremans. On October 7, 1975, Mr. Foreman executed a $6,234.20 hand note, which note contained the same provision of pledge as does the $12,000 note. (Interve-nor-3; Tr. pg. 43) (This is the note upon which the petition for executory process was filed.) At all times herein, the collateral mortgage note remained within the possession of Acadiana.

Intervenor-appellant Moosa alleges the following as errors of the trial court:

1. The ruling of the trial court as to the ranking of the lessor’s lien and chattel mortgage;
2. The ruling of the trial court as to the efficacy of the pledge of the $17,000 negotiable promissory note, as to the date of its effectiveness, and, in particular, as to its securing the $6,234.20 hand note.
3. In applying the New Orleans Silversmith’s decision rather than Odom v. Cherokee Homes, Inc., 165 So.2d 855 (La.App. 4 Cir. 1964); writs refused 167 So.2d 677.

I

RANKING OF LESSOR’S LIEN AND CHATTEL MORTGAGE

For the payment of rent, the lessor has a right of pledge, a privilege, and a lien upon the movables of the lessee located within the leased premises. Such right exists as of the first date of the term of the lease and terminates as of the last date of the term of the lease. C.C. Art. 2705; In Re Ruston Creamery, Inc., 190 La. 681, 182 So. 715 (La.1938); Comegys v. Shreveport Kandy Kitchen, 162 La. 103, 110 So. 104 (1926); Morrison v. Faulk, 158 So.2d 837 (La.App. 4 Cir., 1963); writ refused, 245 La. 643, 160 So.2d 229; Thigpen v. Wall Printing Corp., 145 So. 714 (La.App. 2 Cir., 1933); Hardie v. Wright, 12 La.App. 52, 125 So. 312; (La.App., Orl.1929).

A chattel mortgage takes effect as against the world as of the date of its filing or recordation. Prior thereto, such legal instrument has effect only as between the parties thereto. LSA-R.S. 9:5354.

The issue of the ranking of the lessor’s lien and the chattel mortgage in cases practically identical to the one at bar has been firmly and definitively decided by the Louisiana Supreme Court in the case of In Re Ruston Creamery, Inc., supra, and by the Louisiana Supreme Court’s refusal to grant writs in the Orleans Appeals case of Hardie v. Wright, supra. In Ruston, one R. B. Knott had leased a building to C. A. Tooke and J. E. Reynolds. (Tooke and Reynolds subsequently formed a corporation known as Ruston Creamery, Inc.) The initial lease was for a period of five years beginning August 1, 1927. Ruston Creamery, Inc. took over the creamery on February 8, 1932, approximately six months before the expiration of the term of the prior lease given by Knott to Tooke and Reynolds. Ruston Creamery subsequently leased the building from R. B. Knott for a period of five years to begin at the expiration of the prior lease i. e. August 1, 1932. At the time of the execution of the second lease the machinery and fixtures were in the building where they remained until they were sold by receivers (Ruston Creamery, Inc. having been placed in receivership). The lease from R. B. Knott to Ruston Creamery was filed and recorded on April 1, 1932. On April 27, 1932, Ruston Creamery, Inc. executed chattel mortgage notes to its own order for $10,000 secured by a chattel mortgage on all the machinery and equipment in the building, which mortgage was filed and recorded on that same date. Also on that date, that is, April 27, 1932, the notes and chattel mortgage were transferred to T. L. James & Company, Inc. The question presented during the receivership was which of these privileged claims, R. B. Knott’s landlord’s lien and privilege or T. L. James & Co.’s chattel mortgage privilege would be given preference or priority over the other. The Court noted, in giving priority to the chattel mortgage, that while the lease to Ruston Creamery was executed on April 1, 1932, it did not take effect, nor did the term begin until August 1, 1932. Therefore at the time the chattel mortgage was given, the term of the lease had not begun, and the tenant had not taken possession under the new lease. The Court then cited Hardie v. Wright, supra, wherein the Supreme Court had refused to grant writs, and quoted the following from Hardie’s page 314:

“The existence of a landlord’s lien presupposes a landlord and a tenant. To construe that this relation existed between the owner of the property and Mrs. Hickox when the mortgage was granted is to argue that the owner sustained this relation to two individuals at the same time with reference to the same property, for Mrs. Mallon’s lease had not expired. Mrs. Hickox was certainly not a tenant of the owner. She was in the house by sufferance and could have been ejected at any time. The fact that she subsequently became a tenant could not have retroactive effect. It is true that when she granted the chattel mortgage she had contracted to occupy the place as a tenant, thus indicating her intention to create the relation of landlord and tenant. But the landlord’s lien is not created by intention, nor by contract, in the sense that the obligation and privilege of landlord and tenant cannot be created by convention in advance of the actual establishment of the relation. In other words, it is not competent for individuals to stipulate that a lease shall begin at some time in the future and the landlord’s lien shall have effect immediately.”

II

EFFICACY AND EFFECTIVE DATE OF THE PLEDGE OF THE $17,000.00 NEGOTIABLE PROMISSORY NOTE

Although “all pledges may be made by private writing of any kind if only the intention to pledge be shown in writing .”, the transfer of possession of a negotiable note to a pledgee in good faith is the only formality required to pledge such an instrument. C.C. Art. 3158; Wallace v. Fidelity National Bank, 219 So.2d 342 (La. App. 1 Cir., 1969), writ refused 253 La. 1083, 221 So.2d 517; Baker Bank and Trust Co. v. Behrnes, 217 So.2d 461 (La.App. 1 Cir., 1968). By “good faith” is meant that the pledgee did not know, and should not have known, of a defective title in the pledgor. Rex Finance Co. v. Cary; 145 So.2d 672 (La.App. 4 Cir., 1962), affirmed 244 La. 675; 154 So.2d 360 (La.1963).

In this case a valid pledge of a negotiable promissory note was made. Defendants delivered possession to the plaintiff. The plaintiff was in good faith. Its officer witnessed execution of the promissory note which was delivered (pledged) to plaintiff, and further the promissory note contained language to the effect that it was to “be used for collateral purposes”.

By the execution of the $5,000 hand note, the pledgee lost none of its rights as a mortgagee. Such was not a novation, for a novation requires specific intent, and cannot be presumed. Novation must result from the terms of an agreement or from the full and final discharge of a debt. The execution of the $5,000 hand note and the surrender of the $12,000 hand note was but a refinancing of the latter note. Rex Finance Co. v. Cary, supra.

Although the original $12,000 obligation had been fully paid, the execution of the $6,234.20 was but a new loan, secured by the pledge of the $17,000 collateral mortgage note and the chattel mortgage. As the collateral mortgage note had always remained within the possession of plaintiff-pledgee and as such instrument provided for the securing of additional loans, the privilege of the plaintiff-pledgee was effective as of the date of the original pledge. C.C. Art. 3158; New Orleans Silversmiths, Inc. v. Toups, 261 So.2d 252 (La.App. 4 Cir., 1972); writ refused 262 La. 309; 263 So.2d 47.

Ill

SILVERSMITHS CASE AS THE CONTROLLING CASE

The facts of this case are almost identical to those of New Orleans Silversmiths v. Toups, supra. In both cases a negotiable promissory note was executed and delivered (pledged) but once; loans were renewed by execution of new notes; a privilege was created between the date of pledge and of execution of renewals or new loans. Citing Civil Code Article 3158 the court correctly held that the mortgagee’s privilege, for the total amount of loans secured by the pledge, outranked that of the intervening creditor.

This case is readily distinguishable from that of Odom v. Cherokee Homes, Inc., supra. In the latter case, after the initial pledge of the negotiable promissory note, a transaction was consummated by which the loan was fully paid and the pledged instrument was delivered to another party. Citing Civil Code Article 3158, the court ruled that the original debt was fully extinguished and that the promissory note was reissued or repledged, such that the collateral mortgage primed only those obligations arising subsequent to the date of reis-suance.

For the foregoing reasons the judgment of the trial court is affirmed. All costs of this appeal are assessed against intervenor-appellant.

AFFIRMED.

WATSON, J., dissents and assigns written reasons.

WATSON, Judge,

dissenting:

This dispute over the proceeds of the sale of certain chattels is between the Acadiana Bank, which holds a recorded chattel mortgage, and Moosa, who claims a lessor’s privilege.

Certain facts are clear and undisputed. On September 18, 1974, or a few days earlier, the Foremans occupied and leased the premises from Moosa under a verbal lease, the rent being $160 per month. (TR. 39-40) The chattels were in the leased premises on that date and had been for some time. This fact was well known to the bank when it took the chattel mortgage, which recites “Property located at 600 W. Laurel Ave. known publicly as ‘Frostop’, Eunice, St. Landry, Louisiana.” (TR. 61) On September 18, 1974, the Foremans and Moosa executed a written lease, recorded September 20, the term of which began on January 1, 1975. On September 18, the Foremans also executed a collateral chattel mortgage in favor of the bank, recorded October 3,1974. The lessor’s privilege attached as of September 18 and primed the chattel mortgage recorded October 3. Morrison v. Faulk, 158 So.2d 837 (La.App. 4 Cir. 1964) writ refused 245 La. 643, 160 So.2d 229.

Aside from certain questions concerning the collateral mortgage note and the subsequent hand notes, the basis for the trial court’s decision in favor of the bank is that Moosa lost his lessor’s privilege because the term of the written lease did not begin until January 1,1975. I do not agree. The chattels were on the leased premises prior to recordation of the chattel mortgage. Although the lease between the Foremans and Moosa changed from oral to written form and the rental changed, the parties remained the same, the lessor-lessee relationship continued, and the chattels were never removed from the premises. Both the oral and written leases were entered into at the same time by Moosa and the Foremans and constituted parts of a single agreement, the entire substance of which was formulated and agreed between the parties at the inception. LSA-C.C. arts. 2670, 2684. It is inequitable to hold that the chattel mortgage primes the lessor’s privilege. See the concurring opinion of Justice Rogers in Youree v. Limerick, 157 La. 39, 101 So. 864 (1924).

The majority feels bound by In re Ruston Creamery, 190 La. 681, 182 So. 715 (1938). In the present case, the relationship of lessor-lessee came into existence between Moosa and Foreman prior to the granting of the chattel mortgage; in the Ruston Creamery case it is not clear that this relationship ever existed between Knott, the lessor., and the creamery corporation, the lessee, until after the corporation gave a chattel mortgage on the machinery and equipment in the building. The building had been under lease previously to Tooke and Reynolds, who formed the creamery corporation, but it is not certain that the lease was transferred to the creamery corporation or that the corporation ever occupied the status of lessee of the building prior to the existence of the chattel mortgage. This precise distinction is pointed up by the case of Hardie v. Wright, 12 La.App. 52, 125 So. 312, writ den., on which the Supreme Court based its opinion in Ruston creamery. See 182 So. 716.

Therefore, Moosa’s privilege primes the chattel mortgage, and he should be paid by preference and priority over the bank. To hold otherwise is to defeat the fundamental civil law institution of lessor’s privilege in favor of the chattel mortgage, a ubiquitous and sometimes iniquitous off-spring of the common law.

I respectfully dissent.

      . The note contained language to the effect that it was “to be used for collateral purposes and may be negotiated and re-negotiated without further authentic act”. (Intervenor-2; Tr. Pg- 42)


text:
    Marybelle DEMAIO and Joseph Demaio, Plaintiffs and Appellees, v. Robert THERIOT, Defendant and Appellant.
    No. 5801.
    Court of Appeal of Louisiana, Third Circuit.
    March 4, 1977.
    Rehearing Denied April 5, 1977.
    Writ Granted June 3, 1977.

      Koury & Ashy by D. Warren Ashy, Lafayette, for defendant and appellant.
    Michael H. Colvin, Lafayette, for plaintiffs and appellees.
    Before HOOD, CULPEPPER and DO-MENGEAUX, JJ.
   CULPEPPER, Judge.

This is a suit on a promissory note. Plaintiffs are the original holders and owners of the note in the principal sum of $7,500. The defendant, Robert Theriot, is the maker of the note. The note represents part of the $12,000 purchase price of a ladies dress shop, which plaintiffs sold to defendant. Defendant contends that payment of the note was conditioned on his being able to obtain a loan from the Small Business Administration (SBA). Since he was unable to obtain the loan, defendant contends he is not obligated to pay the note. The district judge rejected this defense and awarded judgment to plaintiffs for the full amount of the note. Defendant appealed.

The substantial issue is whether payment of the note was conditioned on defendant obtaining the SBA loan.

The general facts are that plaintiffs owned a ladies dress shop named “Mary-belle’s- Fashion Chateau”, which Mrs. • De-maio operated on leased premises. On March 12, 1975, Mrs. Demaio entered into an agency agreement with Financial Management Control, Inc., represented by one J. Daigle, to sell the business for $7,500, Daigle’s fee to be all sums received over this amount.

On March 25, 1975, Daigle, as agent for Mrs. Demaio, entered into a “Buy-Sell Agreement” whereby defendant agreed to purchase the business for $12,000. This agreement provided for a down payment of $500 and stated “Balance to be financed through a SBA participation loan applied for this date.” On the same date, defendant entered into an agreement with Gilbert Associates, also represented by Daigle, to secure an SBA loan not to exceed $18,000. Defendant paid Daigle $650 for his services in attempting to secure the loan.

On March 31, 1975, Mrs. Demaio and defendant and Mr. Daigle met in the office of an attorney to close the sale. The SBA loan had not come through. Plaintiff testified she had no prior knowledge that defendant had engaged Mr. Daigle to obtain the loan. She said that when she went to the closing she expected to be paid in cash the full amount of $7500. On being advised that defendant did not have the cash, but that he had applied for the loan, plaintiff agreed to take the note herein sued on in lieu of cash. Mrs. Demaio testified positively that she understood the sale was completed on March 31, 1975 and that neither the sale nor payment of the note were conditioned .on defendant’s being able to. obtain the SBA loan. She said she assumed that if the SBA loan did not come through, defendant would borrow the money through another source.

The defendant testified that Mr. Daigle assured him the SBA loan would come through in a few days and that, relying on this, he signed the note for $7,500, dated March 81, 1975 and payable in 60 days. At the same time, defendant signed a note payable to Daigle in the sum of $4,500, representing Daigle’s fee for selling the property.

Immediately after the written act of sale on March 31, 1975, defendant took possession of the business which included a stock of clothing and various items of equipment for the store. Also, defendant assumed payment of the monthly rentals of $350.

In about July of 1975, Daigle advised defendant that the Small Business Administration had refused to approve the loan. In October of 1975, defendant sold most of the stock of clothing for about $1,500 in order to pay the last three months rent and utilities. Despite repeated demands by plaintiffs for payment of the note, defendant has never either paid the note or offered to return what was left of the business assets.

Although, at defendant’s request, a subpoena was issued, for the appearance of Mr. Daigle as a witness, the sheriff was unable to locate him. Therefore, we do not have the benefit of Mr. Daigle’s testimony as to his understanding of the intent of the parties.

As stated above, the question is whether payment of the note was conditioned on defendant being able to obtain the SBA loan. The note itself is on a printed form and contains the usual “promise to pay to the order of” without any provision making payment contingent on defendant obtaining a loan. The note does not mention the loan.

Nevertheless, defendant argues that since the written act of sale states the sale was made “pursuant to the agreement of sale and purchase executed previously by vendors and vendee”, the “Buy-Sell Agreement” was made a part of the act of sales; and, since the “Buy-Sell Agreement” provides for payment of the balance of the purchase price through a SBA loan, the payment of the note was conditioned on defendant obtaining the loan. Defendant says he relied on Daigle’s statement that the loan was forthcoming and that since Daigle was plaintiff’s agent, plaintiff is bound by Daigle’s actions; and, furthermore, that plaintiff ratified Daigle’s actions and assurances by executing the act of sale.

LSA-R.S. 10:3-105(l)(c) provides in pertinent part that a promise to pay is not made conditional by the fact that the instrument “refers to or states that it arises out of a separate agreement.” And LSA-R.S. 10:3-105(2)(a) provides that a promise to pay is conditional if the instrument “states that it is subject to or governed by any other agreement.” In the present case, the note sued on does not even refer to the act of sale and, of course, the note does not state that it is subject to or governed by the sale. Thus, the note itself contains an unconditional promise to pay.

LSA-R.S. 10:3-119(1) provides in pertinent part:

“As between the obligor and his immediate obligee or any transferee the terms of an instrument may be modified or affected by any other written agreement executed as a part of the same transaction

This provision of our new Commercial Law Act of 1974 is copied verbatim from the Uniform Commercial Code, Section 3-119(1). The Official Comment under this Section of the Uniform Commercial Code, 2 Uniform Law Annotated, (Master Edition 1968) 56, explains:

“3. The section applies to negotiable instruments the ordinary rule that writings executed as a part of the same transaction are to be read together as a single agreement. As between the immediate parties a negotiable instrument is merely a contract, and is no exception to the principle that the courts will look to the entire contract in writing. Accordingly a note may be affected by an acceleration clause, a clause, providing for discharge under certain conditions, or any other relevant term in the separate writing. ‘May be modified or affected’ does not mean that the separate agreement must necessarily be given effect. There is still room for construction of the writing as not intended to affect the instrument at all, or as intended to affect it only for a limited purpose such as foreclosure or other realization of collateral.”

The present case is between the immediate parties, and there is no question that the note was executed at the same time and as a part of the same transaction as the act of sale of the dress shop. Clearly, the act of sale may be considered in determining the intention of the parties as to whether payment of the note was conditioned on defendant obtaining an SBA loan. The act of sale itself does not mention an SBA loan, but it does state that the sale “is executed pursuant to the agreement of sale and purchase executed previously by vendor and vendee.” Under this provision of the act of sale, the “Buy-Sell Agreement” of March 25, 1975 may also be considered in determining the intention of the parties.

The “Buy-Sell Agreement” states the total price of $12,000, and that a down payment of $500 was made. Paragraph 3 states: “Balance to be financed through a SBA participation loan applied for this date.” Paragraph 6 states: “Seller to be paid immediately upon funding of the SBA loan applied for.” The Buy-Sell Agreement does not mention the possibility that a promissory note be given in case defendant did not obtain the SBA loan, nor does the agreement expressly condition the completion of the sale on defendant obtaining an SBA loan. In view of the ambiguities in the act of sale and the Buy-Sell Agreement, and in view of the fact that the sale was completed without defendant obtaining an SBA loan, we think that parol testimony was admissible, under the general rules of contracts, to show the intention of the parties.

After considering the entire transaction, including the Buy-Sell Agreement, the act of sale and the note, as well as the parol testimony of the parties concerning the transaction, we conclude defendant has failed in his burden of proving that payment of the note was conditioned on his obtaining an SBA loan. Since Daigle did not testify, it is largely a question of Mrs. Demaio’s testimony against that of defendant. The trial judge apparently found the testimony of Mrs. Demaio, to be more logical and more credible than that of defendant. The evidence amply supports this finding.

For the reasons assigned, the judgment appealed is affirmed. All costs of this appeal are assessed against the defendant-appellant.

AFFIRMED.


text:
    Frank ARENDER, d/b/a Farm Realty Company, Plaintiff and Appellant, v. Jess Carr GILBERT, Defendant and Appellee.
    No. 5815.
    Court of Appeal of Louisiana, Third Circuit.
    March 4, 1977.
    Rehearing Denied April 5, 1977.

      Adcock & Dupree by E. Wade Shows and Herschel C. Adcock, Baton Rouge, for plaintiff and appellant.
    Falkenheiner & Calhoun by W. C. Falken-heiner, Vidalia, for defendant and appellee.
    Before CULPEPPER, DOMENGEAUX and WATSON, JJ.
   CULPEPPER, Judge.

This is a suit filed by Frank Arender, a real estate broker, to enforce the bonus clause of a 30-day “exclusive listing agreement” between him and defendant, Jess Carr Gilbert. The exclusive listing agreement provided that plaintiff would receive a commission of $35,000 plus a bonus of one-half of any amounts received in excess of the price set by Gilbert for the sale of certain woodland and timber on the “Black Hawk Plantation”. Defendant reconvened against plaintiff seeking return of a $35,000 payment which he made to plaintiff for his services. The basis of the reconventional demand is that plaintiff allegedly breached his fiduciary duty to defendant by representing and having an ownership interest in Three Rivers Farm, Inc., the corporation which purchased the subject property. The trial judge rendered a judgment rejecting the claims of both parties, and both parties appealed.

The litigation arises from a very complex land sale transaction. The trial record and briefs of counsel suggest several issues. The decisive issue, however, is whether the following letter from Arender to Gilbert dated 8/18/1973 constitutes and “accord and satisfaction” which estops Arender from claiming any further compensation under the terms of the July 11, 1973 exclusive listing agreement:

“RE: Agreement between you and myself dated 7/11/73 relative to sale of Black Hawk Plantation — land and timber
“Dear Sir:
“I acknowledge my fee to be in the sum of $35,000.00 as a result of the sale to Three Rivers Farm, Inc. dated 8/17/73.
“I hereby accept a note from you in the amount of $35,000.00 to be paid 1/10/1974 (one line of type is marked out at this point) and is full compensation for my services.
/s/ Frank L. Arender”

This letter was introduced into evidence without objection.

The record shows that Gilbert purchased Black Hawk Plantation for approximately $1,200,000 in February of 1973. It consisted of 9,615 acres of woodland and cleared land situated in the southern part of Concordia Parish along the Mississippi River.

On July 11, 1973, Gilbert entered into an “exclusive listing agreement” with Arender to secure a purchaser for the woodland and timber on Black Hawk Plantation. The agreement specified that 7,532 acres of woodland were to be sold at $140 per acre. The standing timber on Black Hawk Plantation was to be sold for an additional $650,000. The total proposed selling price, therefore, was $1,704,480.

The listing agreement set the credit terms of the sale at “29% down and the balance in January, 1974.” The agreement provided further that Arender was to receive a commission of $35,000, to be paid in January, 1974. Also, the following bonus clause was contained in the listing agreement: “In the event the selling price is more than the above figure, Frank (Aren-der) is to receive one-half of all over this figure.” The agreement was to run 30 days from July 11, 1973.

After securing the exclusive listing, Ar-ender immediately began contacting potential purchasers. One of these, Dale Rogers, was interested in purchasing only a portion of the plantation for use in his farming operation. He was not interested in purchasing the entire tract offered.

Arender also contacted a Lake Providence attorney, Captan Jack Wyly. Wyly, as Rogers, was interested in purchasing only portions of the land offered. Through the efforts of Arender, Wyly and Rogers met and formed a corporation to purchase the subject property. The corporation was formed on July 19, 1973 under the name Three Rivers Farm, Inc. Its president was Dale Rogers. A total of 300 shares of stock were issued on three certificates. 100 shares were issued to Rogers, 100 shares to his wife, and 100 shares to Wyly’s secretary, who held the shares for him. Arender owned no stock in the corporation.

A round of negotiations between Wyly, Gilbert, Rogers and Arender followed. Gilbert’s attorney, George Griffing, was also involved in these negotiations. Wyly and Rogers trusted Arender, and often Arender acted as “middle man” between representatives of Three Rivers and Gilbert. Offers and counteroffers were communicated to both parties through Arender. Finally, on July 26,1973, Three Rivers and Gilbert executed a contract whereby Three Rivers acquired an option to purchase a certain portion of Black Hawk Plantation (about 7,100 acres) for the total sum of $1,798,560. The option price, $50,000, was paid by Three Rivers on July 26, and applied toward the purchase price.

The option agreement stated that the act of sale was to be passed on August 17,1973, at which time an additional $450,000 was to be paid in cash to Gilbert. The remainder of the purchase price, $1,298,560, was to be represented by a promissory note due on January 5, 1974.

The property described in the option to purchase was not the same property described in the exclusive listing agreement between Gilbert and Arender. During the course of negotiations, Rogers stated that in order to secure financing for the purchase, some cleared land would have to be included in the property sold. In response to Rogers’ financing difficulties, Gilbert added about 550 acres of cleared land, but in return, Gilbert retained several hundred additional acres of woodland which he originally intended to sell.

The act of sale was passed on August 17, 1973 substantially in accordance with the terms of the “Option To Purchase.” The $450,000 cash payment was in the form of a check drawn on the account of J. E. Jones Lumber Company payable to Three Rivers, which was endorsed to Gilbert by Three Rivers. J. E. Jones Lumber Company stopped payment on its check, however, when its attorney discovered a notice of lis pendens affecting the subject property had been filed by Ricks Lumber Company on August 17. In its petition, Ricks alleged that Arender, acting as Gilbert’s agent, had promised to sell certain timber located on Black Hawk Plantation to Ricks for a specified price. The Ricks’ suit was eventually dismissed on an exception of no cause of action, but the stop payment order on the check brought the subject sale transaction to a halt.

All of the parties were concerned about the future course of the transaction. On the day after the act of sale was passed, August 18, 1973, Arender, Rogers, Gilbert and his attorney, George Griffing, met at Gilbert’s house to determine what course of action they should follow. The initial purpose of the meeting was to determine how the Ricks suit could be dismissed and the notice of lis pendens removed from the record. Other types of negotiations also took place at the meeting, including some negotiations concerning Arender’s fee. It is the negotiations regarding Arender’s fee that we are concerned with.

Prior to the meeting, Gilbert had become dissatisfied with Arender. Apparently, he thought that Arender was not entitled to his fee. For example, Gilbert testified he considered the listing agreement to be terminated because the land actually sold was not the land described in the listing agreement. The credit terms of the final sale were also different from those specified in the listing agreement. Additionally, Gilbert testified that shortly after the option to purchase was executed, Arender told him that he had an ownership interest in Three Rivers. (The evidence shows, however, that Arender had no such interest in Three Rivers.) Gilbert testified, and the trial judge concluded, that shortly after the option agreement was executed, Gilbert began neT gotiating for himself and no longer considered Arender his agent. In summary, Gilbert entered the August 18 negotiations with Arender and others believing that Ar-ender had not fulfilled the terms of the listing agreement, had represented Three Rivers to Gilbert’s detriment, and was not entitled to his fee.

The atmosphere at the August 18 meeting was tense. Gilbert testified, and the trial judge concluded, that Arender demanded payment of his $35,000 commission at this meeting. The listing agreement of July 11, 1973 provided that the commission was not due until January, 1974. Gilbert and his attorney, George Griffing, drafted the letter quoted at the outset of this opinion in response to Arender’s demand. By way of review, Arender acknowledged in the letter that his fee for the sale of Three Rivers was $35,000. Arender further stated in the letter that he accepted a note from Gilbert in the amount of $35,000 to be paid 1/10/74, the note being “full compensation for my services." The letter made specific reference to the exclusive listing agreement of 7/11/73, but did not mention the “one/half over” bonus provision. The question before us is whether this letter constitutes an “accord and satisfaction”, which would bar Arender’s claim to any further compensation under the terms of the July 11 exclusive listing agreement.

Our courts have adopted the common law doctrine of accord and satisfaction. Each of these three conditions must be present for its application: (1) An unliqui-dated or disputed claim. (2) A tender by the debtor. (3) An acceptance of the tender by the creditor. Young v. White Stores, Inc., 269 So.2d 266 (La.App.3rd Cir. 1972) and cases cited therein. An additional prerequisite to settlement by accord and satisfaction is that the creditor must understand that if the reduced payment is accepted his claim will have been paid in full. Antoine v. Elder Realty Company, 255 So.2d 625 (La.App.3rd Cir. 1971). If the tender itself clearly sets forth that the lesser sum is offered in full payment of the disputed or unliquidated debt, however, acceptance of the tender constitutes acceptance of the debtor’s offer. Charles X. Miller, Inc. v. Oak Builders, Inc., 306 So.2d 449 (La.App.4th Cir. 1975).

The August 18 letter executed by Arender, accompanied by Arender’s acceptance of the tendered note for $35,000, constitutes an accord and satisfaction. The requirements of tender of payment by the debtor and acceptance by the creditor are obviously satisfied. The further requirement that the debt be unliquidated or disputed is also satisfied.

The debt was, in fact, unliquidated and disputed. Though there is some question as to whether Gilbert informed Arender of all of the reasons that he felt would prevent Arender from receiving the full amount of the fee contemplated by the listing agreement, there is no doubt that the fee was disputed.

The fee was the subject of negotiations between Gilbert and Arender at the August 18 meeting. It was Arender who first brought up the subject by demanding payment of the $35,000 commission at the meeting. By the terms of the exclusive listing agreement, the commission payment was not due until January, 1974. Apparently, Arender opted to take a $35,000 note as full compensation for his services rather than risking both his commission and his “one-half over” on successful resolution of the transaction in accordance with the terms of the original listing agreement. In other words, Arender bargained away his chances to collect a commission plus a bonus by accepting a $35,000 note tendered as full compensation before any compensation was due under the terms of the listing agreement. The note was paid at maturity.

The present case is not one of those where the debtor scrawls “in full settlement” or other similar words on his check and sends it off to the distant creditor, hoping that the creditor will unwittingly cash it and effect an accord and satisfaction. Arender and Gilbert were literally negotiating at arms’ length when the tender was made. The tender was apparently the subject of some discussion between the two. The bargaining process was operative. Its end product was the accord and satisfaction agreement.

Arender argues that no dispute as to the amount of money owed to him existed when Gilbert tendered the $35,000 note as full compensation for his services. The record supports this argument to the extent that there was no discussion as to the “one-half over” provision of the contract at the August 18 meeting. There was, however, a dispute as to whether any portion of Aren-der’s fee, either the commission or the one-half over bonus, was due.

Even if we assume that Arender was not aware of any dispute concerning the amount of his fee before August 18, he would have been put on notice that such a dispute existed by the very terms of the letter which he signed on that day. The letter made specific reference to the exclusive listing agreement of July 11, 1973. In unambiguous terms, Arender acknowledged in the letter that his fee as a result of the sale to Three Rivers Farm, Inc. was $35,-000.^ It is significant that he acknowledged his fee to be in the amount of $35,000 rather than acknowledging his commission to be in that amount. The term “fee” is much broader than the term “commission”. “Fee” can reasonably be deemed to include all of the compensation to be earned by Arender as a result of the sale, including the “one-half over” bonus stipulated in the listing agreement. The broad scope of the letter and its intended effect become even clearer when the second paragraph of the letter is considered along with the first paragraph. In the second paragraph, Aren-der acknowledges acceptance of the note as “full compensation” for his services.

Though the letter does not mention the “one-half over” provision, its intent could hardly be more clearly expressed. The letter was intended as an “accord and satisfaction” to bar any future claim for compensation based upon the terms of the July 11 exclusive listing agreement.

In the Charles X. Miller case, supra, the court quoted from 1 C.J.S. Accord and Satisfaction § 6, P. 479, to explain that an accord and satisfaction could be effected even though the creditor may have acted under a misapprehension as to the legal effect of his acceptance or may not have understood or believed that it would have the effect of accord and satisfaction, provided that the creditor acted knowingly or with knowledge of all the pertinent facts. Arender was intimately involved in all aspects of the transaction and had knowledge of all of the pertinent facts. Furthermore, any fact or opinion unknown to him could have been easily ascertained by simply asking one of the parties present at the August 18 meeting.

The question of whether a debt is “disputed” is a factual one which must be decided on a case by case basis by reference to the record as a whole. In the present case, we determine a dispute existed. Under a similar factual situation in Hancock v. Lincoln American Life Insurance Company, 278 So.2d 561 (La.App.1st Cir. 1973), the court determined that no dispute existed and held the doctrine of accord and satisfaction was inapplicable. In Hancock, the court quoted at length from the decision of our Supreme Court in Pontchartrain Park Homes v. Sewerage & Water Board, 246 La. 893, 168 So.2d 595. A portion of the quotation from Pontcharirain Park dealing with the requirement of a “dispute” for accord and satisfaction follows:

“Unquestionably the creditor must have knowledge, actual or imputed, of the existence of a dispute regarding the amount due. It is not necessary, however, that there be haggling over a fixed contract price to either constitute a dispute or impute knowledge thereof to the creditor. It suffices that actual knowledge be shown or circumstances demonstrated from which knowledge may reasonably be inferred.’’ (Emphasis added) 278 So.2d 561 at 564

In the present case, it was Arender who provoked the dispute concerning his fee by demanding its payment four months before it would have been due. There was no haggling over the exact amount due, but Arender had knowledge of the facts upon which Gilbert based his contention that Ar-ender was not entitled to a fee. Furthermore, the contents of the letter signed by Arender on August 18 charged him with imputed knowledge that some dispute concerning the amount of his fee existed. The answers to any questions he may have had were within his grasp. He failed, either intentionally or unintentionally, to avail himself of these answers.

“Accord and satisfaction” is an affirmative defense which must be pleaded in the answer. LSA-C.C.P. Art. 1005 and Official Comment E to that article. Defendant pleaded facts constituting the basis for the defense of accord and satisfaction in paragraphs 4 and 15 of his answer, though he did not label the defense “accord and satisfaction.” Furthermore, the letter which affected the accord and satisfaction was introduced into evidence without objection, thereby enlarging the pleadings to include the defense. LSA-C.C.P. Art. 1154; Conques v. Hardy, 337 So.2d 627 (La. App.3rd Cir. 1976); Edwards v. Edwards, 282 So.2d 858 (La.App.1st Cir. 1973), writ refused, 284 So.2d 777 (La.1973). Therefore, Arender’s assertion that Gilbert cannot urge the affirmative defense of accord and satisfaction because he failed to plead it in his answer is without merit.

The same result could be reached through application of the provisions of our Civil Code dealing with voluntary remission of debt. LSA-C.C. Art.. 2199, et seq. The application of the principle of remission in cases such as the present one is explained in Obligations, J. Denson Smith, 26 La.L.Rev. 497 and 498. There, Professor Smith explains that under the common law theory, the significance of the “dispute” requirement for accord and satisfaction lies in the' fact that in the absence of a dispute, the receipt by the creditor of less than the amount due will not serve as consideration to discharge the remainder. In our civilian system, however, although a disputed claim may be compromised by way of settlement, an undisputed claim may also be discharged in whole or in part by voluntary remission. No consideration is required and the absence of a dispute is wholly unimportant. All that is required under the remission articles is a finding that the creditor intended to remit his claim or that he estopped himself to claim the contrary.

In the present case, the letter of August 18 shows a clear and convincing intent to effect a voluntary intentional remission of any part of the debt (broker’s fee) beyond the acknowledged total fee of $35,000.

Having disposed of Arender’s claim, we move now to Gilbert’s reconventional demand for return of the $35,000 fee paid to Arender pursuant to the terms of the August 18 accord and satisfaction agreement. The alleged grounds for the recon-ventional demand are that (1) Arender breached his fiduciary duty, to Gilbert by representing Three Rivers in negotiation preceding the July 26 “Option To Purchase”, and (2) Arender allegedly acquired an ownership interest in Three Rivers prior to execution of the option to purchase. The evidence in the record supports neither of these assertions. To the contrary, the* evidence shows that Arender had no ownership interest in Three Rivers and received no compensation from them.

The most conclusive answer to Gilbert’s reconventional demand is that he is also barred by the accord and satisfaction between the parties stated in the August 18, 1973 letter quoted above.

We conclude there is no merit to Gilbert’s reconventional demand for return of the $35,000 fee which he paid to Arender.

For the reasons assigned, the judgment of the district court is affirmed. The costs of this appeal are to be shared equally by Arender and Gilbert.

AFFIRMED.