author: JONES, Judge.

text:
    OLINKRAFT, INC., Plaintiff-Appellee, v. Charles H. Coster GERARD, Defendant-Appellant.
    No. 13658.
    Court of Appeal of Louisiana, Second Circuit.
    Oct. 30, 1978.

      Shotwell, Brown & Sperry by Burt W. Sperry and George Wear, Jr., Monroe, for plaintiff-appellee.
    Bodenheimer, Jones, Klotz & Simmons by David B. Klotz, Shreveport, for defendant-appellant.
    Before BOLIN, HALL and JONES, JJ.
   JONES, Judge.

Defendant, Charles H. Gerard, appeals a judgment rendered in this declaratory judgment proceedings which (1) denied the cancellation, insofar as it was applicable to gas produced from Section 35, of a Gas Sale and Purchase Contract between Franks Petroleum, Inc. and Olinkraft, Inc. (2) denied him an increase in the price of the gas above that provided for in the Franks-Olin contract and (3) denied payment for all gas not taken, based upon deliverability of 2000 MCF per day between the period of August 20, 1975 and January 29, 1976. We affirm.

Defendant acquired by assignment from Franks leases in Section 35 subject to the Gas Sale and Purchase Contract between Franks and Olin. The contract provided Olin was entitled to receive 33.3975% of all gas produced in Section 35.

Defendant also owned approximately 21% of the leases on adjacent Section 36, however, none of any production which he might receive from these leases was dedicated to the Franks-Olin contract. Approximately 50% of the leases in Section 36, owned by others, was subject to the Franks-Olin contract and from which Olin was entitled to the gas production.

In the fall of 1974, Olin was interested in securing at the earliest possible date, gas production in Sections 35 and 36 in order to provide gas for the operation of its paper-mill in Ouachita Parish, Louisiana. As an incentive to encourage the defendant to diligently seek production in Sections 35 and 36 Olin, on October 21, 1974 offered defendant an increase in the price from $.435 MCF provided for in the Franks-Olin contract to $.57 MCF for all gas it purchased produced from Section 35. The price increase was conditioned upon defendant advising Olin before November 11, that he was committed to the drilling and participation in a well in Section 35 (Sanford well) and a well in Section 36 (Browder well) and upon both wells being commenced (spudded) before December 31, 1974.

The defendant by letter to Olin on November 5, 1974 accepted the terms and conditions of Olin’s letter of October 21, 1974. Defendant spudded the Sanford well in Section 35 on November 22,1974 and had prior to that date entered into an agreement with all other lease owners in Section 36 designating Tensas Delta Land Company as an operator to secure the drilling of the Brow-der well. On November 12, 1974, Tensas Delta contracted with Garrett and Starkey to drill the Browder well with a contemplated spudding date of on or before December 31, 1974.

On December 19, 1974, Tensas Delta requested permission of all working interest owners to change the starting date of the Browder well to January 31, 1975 and the defendant agreed to this change on December 20, 1974. All other working interest owners agreed to the change in the drilling contract and it was changed. The change in the starting date of the Browder well was requested because Sawyer Drilling and Service, Inc., who had subcontracted the drilling of the well from Garrett and Starkey, did not have a rig available to commence the well until the latter part of January 1975.

Because defendant would not be entitled to the increase in the gas price for his production in Section 35 if the Browder well in Section 36 was not spudded by December 31, 1974, he sought an extension of the required spudding date from Olin. Olin denied the extension. Defendant then, with the permission of Tensas Delta, Garrett and Starkey, and Sawyer, had an 18 inch diameter, 22 foot hole drilled by a water well drilling rig at the Browder well site and inserted in the hole a conductor pipe on December 31,1974 in an attempt to comply with the spudding requirements of his Olin agreement. The pipe was not cemented into place in accord with the practice usually followed in connection with the installation of conductor pipes. The actual arrangements for the drilling of the 22 foot hole and the installation of the conductor pipe were made with the water well drilling company by Sawyer at the request of the defendant. The specifications of the drilling contract for the Browder well did not provide for the installation of a conductor pipe. The installation of the conductor pipe, which cost approximately $1,000, was billed to and paid for by the defendant.

In the latter part of December 1974, there was some preliminary dirt work on the Browder location, however, Sawyer did not bring the deep well drilling rig to the Browder location until January 22, 1975, and the actual drilling of the well was not commenced until January 24, 1975.

The Sanford well was completed as a producer and Olin received its first delivery from it September 27, 1975. Olin considered the Browder well to have been spudded on January 24, 1975 and rejected defendant’s contention that the well was spudded by the drilling of the 22 foot hole and installation of the conductor pipe on December 31, 1974. Olin paid for the Sanford gas at the rate of $.435 MCF as provided for in the Franks-Olin contract, rather than at the rate of $.57 MCF which it had offered in its letter of October 21, 1974.

In addition to the price issue, the parties have an unrelated dispute with regard to Olin’s obligation to pay under the “take or pay” provision of the Franks-Olin contract on the gas produced from the Sanford well. Defendant contends that deliverability of the Sanford well was established by the Louisiana Department of Conservation test at 2000 MCF per day and that under the terms of the contract, Olin was required to take 33.3975% of a minimum of 2000 MCF per day whether or not this volume of gas was actually produced. Defendant contends Olin was required to pay for all gas not taken by it up to the minimum amount calculated upon 2000 MCF per day for each day commencing the day of the first production, August 20, 1975, until January 29, 1976 (excluding the last 17 days of October when the well was admitted to be out of production) after which date Olin was taking more than it was required to take based upon this formula. The applicable provisions of the contract are:

“The term ‘Minimum Quantity’ shall mean an average daily quantity of gas in each Contract year, determined as provided in Article IV of this contract, which Buyer is obligated to take or pay for if available to Buyer and not taken. (Article I)
2. Subject to the other provisions hereof, Buyer agrees to purchase and receive from Seller, on as nearly a uniform daily basis as the operation of Buyer’s pipeline and manufacturing plants will permit, a quantity of gas each day during the term hereof which will average in each calendar month not less than the greater of (i) the sum of: (a) Seller’s interest in two and one-half million (2,500,000) cubic feet of gas for each well completion capable of delivering two and one-half million (2,500,000) cubic feet of gas per day or more (b) Seller’s interest in the total de-liverability of each well completion capable of delivering less than two and one-half million (2,500,000) cubic feet of gas per day . . . . (Article IV(2).
The quantity of gas which the wells heretofore accepted by Buyer as being subject hereto are capable of producing may be redetermined upon the request of either Buyer or Seller not more than once during any Contract Year and the resulting revision of Minimum Quantity, if any, shall become and remain effective until superseded by a subsequent redetermination. (Article IV, Paragraph 2, pages 8 and 9).
7. All determinations or redetermina-tions of the deliverability of Seller’s wells for the purpose of this agreement shall be made by the agreement of Buyer and Seller, or, in the absence of such agreement, the parties shall select a recognized and reputable firm or individual experienced in testing for deliverability who shall make such determination. In the event the parties are unable to agree upon a mutually acceptable firm or individual to make such determination, the matter shall be submitted to arbitration as provided in Exhibit ‘C’. (Article IV, Paragraph 7)
3. During the term hereof should Buyer fail in any calendar month (prorate for any portion of a calendar month) to take the sum of the daily Minimum Quantities in effect during such calendar month, Buyer shall pay to Seller the aggregate amount which Seller would have received had such deficiency been purchased at the price in effect for such calendar month. If, on one or more days during any calendar month, Seller fails, whether or not by reason of force majeure, to deliver to Buyer the full quantity of gas requested by Buyer up to the Contract Quantity, then the total of the Minimum Quantities which Buyer is obligated to take or pay for during such month shall be reduced by the aggregate amount of such deficiencies in Seller’s deliveries which were requested by Buyer . . . (Article IV(3).
Billing and Payment
1. On or before the twenty-fifth (25th) day of each calendar month after deliveries of gas are commenced hereunder, Buyer shall render a statement to Seller, showing the amount of gas delivered during the preceding month, together with-check in the amount due therefor and with sufficient information to explain and support any adjustments made by Buyer with respect to the value of gas delivered in determining the amounts stated to be due. Within twenty-five (25) days after the end of each calendar month Buyer shall render Seller a statement to cover payments due for gas available and required to be paid for when not taken, together with check in the amount due therefor. For the purpose of price the gas required to be paid for when not taken shall be considered to have the BTU content of the gas last actually delivered prior to the maturation of the obligation to pay for gas not taken. (Pages 15 and 16)
2. Should Buyer fail to pay the full amount due Seller when the same is due, as herein provided, interest thereon shall accrue at the rate of eight percent (8%) per annum from the date when such payment is due until the same is paid. If such failure to pay continues sixty (60) days, seller may suspend deliveries of gas hereunder but the exercise of such right shall be in addition to any and all other remedies available to Seller.”

Olin argues that until minimum delivera-bility is established in accordance with Article IV, Section VII of the contract, it is only required to pay for gas actually received.

The defendant seeks cancellation of the contract based upon Olin’s failure to pay the increased price for gas provided for in its letter of October 21, 1974, and upon Olin’s failure to pay for gas not taken based upon a minimum daily deliverability of 2000 MCF.

ISSUES

The issues are contained in the defendant’s assignment of errors. The defendant contends that the trial judge was in error in finding: (1) that he was not entitled to an increase in the price of gas above that provided for in the Franks-Olin contract because there was no good faith spudding of the Browder well prior to December 31, 1974 (2) that Olin was not required to take or pay for its dedicated percentage of 2000 MCF per day commencing August 20, 1975 and (3) there was no default justifying a cancellation of the contract.

DID DEFENDANT TIMELY SPUD THE BROWDER WELL?

In order for the defendant to be entitled to the increase in the price of gas he was required to have spudded the Brow-der well not later than December 31, 1974. The term “spudded” was defined in the decision of Hilliard v. Franzheim, 180 So.2d 746 (La.App. 3d Cir. 1965) as follows:

“In the first place, the term “spud in” has a well defined-meaning in the oil and gas industry as the first boring of the hole in the ground, that is, the first actual penetration of the earth with a drilling bit.” Id. page 747.

Hilliard made a clear distinction between what was necessary to spud a well and what was necessary to commence a well. The court defined “commence a well” as follows:

". . . the general rule to be drawn from these decisions is that actual drilling is unnecessary to ‘commence’ a well within the meaning of the lease provisions; and that substantial surface preparations to drill are sufficient to be considered ‘commencement’ of drilling operations for a lease-clause purposes, such as making and clearing a location, delivering equipment to the well site, and the like, provided that such preliminary operations are continued in good faith and with due diligence until the well is actually spud-ded in.” (emphasis added) Id. page 748.

While there is no decision directly in point on what constitutes good faith spudding, the law is well established that when the requirement is the commencement of a well on a critical date for the purpose of maintaining viability of a lease beyond the primary term or interruption of prescription of a mineral servitude, that the activity involved must be such that it can be construed to be performed in a good faith attempt to drill the well. The essence of the good faith requirement is that the activities performed must be necessary for the drilling of the well and they must be pursued with diligent continuity.

The court, in the decision of Keebler v. Seubert, 167 La. 901, 120 So. 591, 592 (1929) in holding that the running of prescription of a mineral servitude had been interrupted, made the following statement:

“. . . the actual drilling was begun on April 1, 1927, four [4] days before the expiration of the ten years from the making of the reservation, and notwithstanding the institution of this suit five [5] days later, operations were conducted continuously to a depth of 2,003 feet, when they were suspended on May 5, 1927 on account of the flood of that year.”

In the decision of Matlock Oil v. Gerard, 263 So.2d 413 (La.App. 2d Cir. 1972) the court rejected a mineral servitude owner’s contention that prescription had been interrupted by drilling a well to a depth of 8,800 feet to the Sexton Formation on a tract that was not subject to the mineral servitude, but was within a Conservation Commission unit with the tract subject to the servitude. The unit was created by an order of the Conservation Commission for the purpose of producing the lower Hosston Formation which was located at a depth of not more than 7,200 feet. As the well was drilled to the Sexton Formation it passed through the Hosston Formation. The court found the acquisition of the drilling permit at a location in the section different from that required by the Conservation Commission order for a well far deeper than the lower Hosston Formation, along with drilling activity which made no attempt to test the Hosston Formation established an absence of any good faith attempt to produce the lower Hosston Formation. For this reason there had been no good faith drilling on any part of the unit created by the Conservation Commission for the production of the Hosston Formation. The court concluded the existing rule of Mire v. Hawkins, 249 La. 278, 186 So.2d 591 (1966) which permitted any good faith drilling within a unit created by the Conservation Commission to constitute use of the servitude on any property located within the unit, was inapplicable.

In the decision of Allen v. Continental Oil Company, 255 So.2d 842 (La.App. 2d Cir. 1971), wherein the court was concerned with whether a well had been commenced within the primary term of a lease, the court found substantial surface preparations to drill the well prior to the expiration date on the lease included: (1) the staking of the drilling location (2) clearing operations for the road by the use of a bulldozer (3) construction of slush pits (4) grading of the well site (5) partial construction of the access road (6) laying of necessary gas and water lines to the well site and (7) attempts to move a deep well drilling rig on the property which was aborted only by heavy rain.

The court concluded all of this activity prior to the date of the expiration of the primary term of the lease, followed by the installation of a 34 foot conductor pipe by the use of a spudding rig, on the day following the expiration of the primary term, and the actual drilling by the big rig nine (9) days following the expiration date of the primary term, and the drilling of a well continuously to its conclusion, satisfied the requirement of the lease even though the actual drilling of the well was not commenced until after the expiration of the primary term.

The good faith preparations necessary for the drilling of the well prior to the lease expiration date, followed by continuous, diligent effort to drill the well, was the reason for the court’s conclusion.

Defendant contends that the use of the spudder rig to install the conductor pipe, prior to the. use of the large rig to drill the hole, results in the Allen case being authority for holding in the instant ease that the well was spudded December 31, 1974.

There is no indication in the Allen case that the installation of the conductor pipe was not required and necessary to the drilling of the well. It was installed along with other extensive necessary preparations of the drilling site and there was diligent continuing activity culminating in the actual commencement of the drilling activities by the deep well rig within nine (9) days of the critical date.

The circumstances in the Allen case are totally different from those involved here and while it supports the defendant’s expert testimony that a small rig may be utilized for the purpose of spudding a deep well, it does not hold such activities performed in bad faith can create the spudding of a well. The Allen case involved the question of commencement of a well and not spudding.

We find that the good faith test applicable to the determination of “commencement of a well” before a given date, is also applicable to a determination of a contractual requirement that the well be “spudded” before a designated date.

As a prerequisite to applying the good faith test to defendant’s activities, the trial court made the following findings of fact:

“The drilling contract with Garrett and Starkey which was subbed out to Sawyer, was a turnkey contract which did not specifically call for the setting of a conductor pipe.
A conductor pipe, while convenient, is not essential to the drilling of a well such as this one, and the tool pusher at the well testified that this one was not necessary and served no useful purpose — was not used.
Gerard had agreed the actual drilling would not commence until the latter part of January. In order to protect its opportunity to receive an increased price for the gas to be produced, Gerard first asked for an extension beyond December 31st to spud the well and then he employed another party (not the driller) to drill the 20 foot hole and place a 16 inch conductor pipe in it. This action had no bearing on the lease (sic) well itself.
Most of the time, conductor pipe is cemented in place. This was not done in this instance, but for some reason, a person — not positively identified — put on the report that the pipe was cemented in place.”

These findings of fact are supported by the record. The activity of the defendant on December 31, 1974 in having the shallow hole drilled and the conductor pipe placed in it, was not necessary to the drilling of the Browder well. It was performed by defendant solely for the purpose of attempting to comply with his Olin agreement. He knew there would be no continuous diligent drilling activity following the drilling of the conductor hole. He had agreed with other working interest owners that the drilling of the well would be delayed until January 31, 1975. There was a lapse of three weeks before the drilling rig that was used to drill the well was brought on the site. There was no continuity of activity directed toward the creation of a hole in the ground from which minerals could be produced.

Under these circumstances, there was no good faith spudding of the Browder well until the deep well drilling rig commenced to drill into the earth on January 24, 1975. The defendant failed to meet the requirement of spudding the Browder well before December 31, 1974, which was necessary for it to become entitled to a rate for its gas above that provided for in the Franks-Olin contract.

MINIMUM DELIVERABILITY OF THE SANFORD WELL

The gas production from the Sanford well not dedicated to Olin under the Franks-Olin contract was dedicated to Arkansas Louisiana Gas Company. The defendant operated the well and delivered the gas to the Olin pipeline and the Arkla pipeline. The defendant initially planned to divide the gas between the two purchasers by delivering all of the gas for approximately % of each month to Arkla and all of the gas for approximately % of the month to Olin. Defendant commenced gas delivery to Arkla on August 20, and following demand for gas by Olin, commenced delivery to it on September 27th. When Olin was advised of the manner in which the defendant contemplated the division of the gas for the purpose of delivery to it, Olin made demand for its gas to be delivered on a daily basis as required by the contract. In order for the gas to be delivered in this manner, the defendant was required to install a SPLIT STREAM MECHANISM which divided the gas approximately Vs to Olin and /s to Arkla for simultaneous delivery to each purchaser.

Though Olin had accepted gas the last four days in September, it first became obligated to accept its dedicated percentage of the gas on November 1, on which date the defendant completed the installation of the equipment necessary to provide simultaneous SPLIT STREAM delivery to Olin and Arkla.

The contract contemplated the daily de-liverability of the well would be determined and that Olin would be required to purchase its dedicated percentage of the determined daily deliverability of the well, or in the event it did not take the required amount of gas, it would be obligated to pay for same on the billing date just as if it had in fact received the gas. The contract contained a MAKE UP provision entitling Olin to later receive the gas paid for but not taken “free of cost”, subject to certain price adjustments. The defendant contends that the daily minimum deliverability of his well was established at 2000 MCF per day by the Louisiana Conservation Commission test of September 20, 1975. Defendant argues that Olin was required to take daily 33.3975 times 2000 MCF or 667.95 MCF per day, and in the event it failed to take this minimum amount, that it was required to pay for that not taken.

An official of the Conservation Commission testified that the fact their test indicated on a given day that the well was capable of producing 2000 MCF did not establish it would continuously deliver daily this amount of gas. The validity of this conclusion is substantiated by the McGuire Report of the production of this well, which was introduced into evidence as a joint plaintiff and defendant exhibit, which reflects that the well produced 2000 MCF or more only 2 days in September, no days in October, November and December, and 11 days in January, 1976.

The contract provides the minimum deliv-erability of the well is to be established by agreement between the parties or in absence of their agreement, by an expert selected by the parties or in default of agreement in the selection of an expert, by the arbitration provisions in the contract.

Because the 2000 MCF deliverability of the well asserted by the defendant was not established as required by the contract, Olin was not required to pay for gas not taken based upon the Conservation Commission’s deliverability test.

The trial court found Olin had admitted that where deliverability is not established in the manner provided for in the contract, that deliverability of the well was the actual amount of gas produced and that Olin was required to pay for its percentage of gas produced which it did not take. This finding is supported by the record. Olin was required to take none of the production from the well until November 1, when defendant first became capable of split stream delivery from the well in the manner required by the contract. Olin commenced to take gas from the well on a daily basis on November 1, 1975. Though Olin requested that its delivery be reduced by 20% below its required take commencing November 17, the McGuire Report reflects that Olin actually received 159.7 MCF in excess of its required take in the month of November, and therefore was not required to pay for any gas not taken during this month. The McGuire Report reflects that Olin failed to take 5082 MCF of its required take in December and therefore, it was required by the contract to pay for the gas not taken, along with the gas taken, as of the contract billing date of January 25, and this it failed to do.

On January 28, 1976, Olin increased its take substantially above its required percentage and the McGuire Report reflects that it actually received 404 MCF above its required take in January, which excess take reduced its deficit take of December to 4678 MCF. Olin continued taking in excess of the required take during the month of February and by the elapse of the first ten days of February had made up its deficit take for which it did not pay for in the month of December. The January take (which included the 404 MCF excess) was paid for on February 25, thus only leaving the 4678 MCF of the gas which Olin had failed to take and pay for in December unpaid for. On March 13, by a special billing, the defendant received payment for 3903 MCF of the gas not taken and not paid for in December, and on the 23rd of March, following the standard billing practices as required by the contract, defendant received payment for February gas which included the remaining 615 MCF of gas which Olin had failed to take in December and which had not theretofore been paid for.

Under these circumstances, Olin had received all required gas not taken by February 10 and paid for all gas not taken which it was required to take by March 13, with the exception of 615 MCF. The defendant gave Olin notice of default by letter dated January 29, 1976 and gave it 30 days (as required by the contract) to cure the default, which delay for compliance was thereafter voluntarily extended by the defendant to March 15, 1976. Thus before the expiration of the extended compliance date of March 15, Olin’s only contractual failure was being indebted for gas not taken in December in the amount of $267 and this was paid for on March 23, within 8 days following the default compliance date. The only other sum owed by Olin under the contract, subsequent to March 23, was 8% per annum interest owed, on the purchase price of the 5082 MCF not taken in December and only fully paid for by March 23. This interest was awarded against Olin in the trial court’s judgment in the amount of $32.08.

Olin’s failure to pay the small balance on the gas not taken and not paid for in December for 8 days following default compliance date and its failure to pay the small amount of interest due on the unpaid for not taken gas results in a very minor breach of contract when considered in light of the large overall sums involved. Olin’s good faith is established by its having prior to the extended default compliance date, instituted this declaratory judgment action on March 9,1976, for the purpose of having its rights and obligations under the gas purchase contract judicially determined.

Olin substantially complied with all of its contractual obligations and the trial court did not abuse its discretion in refusing to cancel the contract.

For the reasons assigned the judgment is AFFIRMED at appellant’s cost.

      . “C. H. C. Gerard
      104 Lane Building
      Shreveport, Louisiana 71101
      Attention: Mr. Joe A. Wojtkiewicz
      Subject: South Drew Field
      Proposed Wells in Sections 35 and 36,
      Township 18 North Range 2 East,
      Ouachita Parish. Louisiana
      Gentlemen:
      In order to eliminate the possibility of any misunderstanding, this letter is written to set forth Olinkraft’s proposal regarding the timely commencement of the captioned wells.
      Olinkraft is willing to amend their gas purchase contract with Franks Petroleum Inc., insofar and only insofar as the acreage in Section 35, Township 18 North, Range 2 East is concerned, to provide that the price and annual escalations to be paid for gas produced from said well be changed to conform with the price and annual escalations provided for in the gas purchase contract and drilling agreement between C. H. C. Gerard and Arkla Gas Company covering said Section 35, provided: (1) the gross price does not exceed $.57/MCF and an annual escalation of $.01 per MCF plus BTU adjustment, and (2) Olinkraft has received written notification by November 11, 1974, that C. H. C. Gerard has committed to the drilling and participation in the subject wells to be commenced on or before December 31, 1974. This proposal will be considered null and void if said notice is not received by November 11, 1974, or either of said wells is not commenced (spudded) on or before December 31, 1974.
      Please advise if the above is not as you understood our proposal.
      Very truly yours,
      OLINKRAFT, INC.
      Donald R. Worden
      Exploration and Minerals Manager” DRW:bs

      . The McGuire Report references to Olin’s take contained in this opinion for the months of November, December and January, have been recalculated to correctly reflect the amount of Olin’s surplus or deficit take based upon the correct percentage of 33.3975 rather than the incorrect percentage of 32.17, which was used in the report.


source: Caselaw Access Project

author: HALL, Judge.

license: Public Domain

text:
    Raymond C. ELLERD, Plaintiff-Appellant, v. John Henry WILLIAMS, Sr. and Victoria Holloway Williams, Defendants-Appellees.
    No. 13666.
    Court of Appeal of Louisiana, Second Circuit.
    Oct. 30, 1978.
    Donald R. Miller, Shreveport, for plaintiff-appellant.
    James E. Bookter, Bossier City, for defendants-appellees.
    Before BOLIN, PRICE and HALL, JJ.
   HALL, Judge.

Raymond C. Ellerd, plaintiff, appeals from a judgment sustaining an exception of no cause of action filed by John Williams, defendant, and dismissing his suit to set aside a sheriff’s sale or for damages. We find the petition states a cause of action and reverse the judgment of the trial court.

The allegations of Ellerd’s petition must be taken as true to determine whether it states a cause of action. The petition alleges that on February 4, 1976 Ellerd, a nonresident domiciled in New Mexico, bought a subdivision lot located in Shreveport from Williams. Ellerd issued a $6,000 note secured by a special mortgage on the property in favor of Williams. On June 16, 1977 Williams initiated foreclosure proceedings against the property because Ellerd was behind in his payments. A writ of seizure and sale was issued on that day and a curator, Mr. McMichael, was appointed for Ellerd. Ellerd, upon learning of the foreclosure proceedings, expressed his desire to avoid the sale of the property. McMichael communicated this desire to Mr. Bookter, Williams’ attorney. Bookter, after discussion with Williams, informed McMichael that to avoid the sale of the property Ellerd would have to pay the entire principal balance due on the note plus interest, together with attorney’s fees and all costs of the proceedings. McMichael communicated this offer to Ellerd who began to make the necessary financial arrangements. A notice of seizure and sale was issued and the sheriff’s sale of the property was scheduled for September 21, 1977.

The crucial allegations of the petition then state:

“11.
“That on September 20, 1977, Mr. Ellerd informed Mr. McMichael that he could fly to Shreveport on the day of the sale with the money necessary to avoid the sale or to purchase the property.
12.
“That on the morning of September 20, 1977, at 9:00 AM Mr. McMichael told Mr. Bookter that Mr. Ellerd had the money as discussed previously, and could come to Shreveport that day to complete the agreement.
13.
“That Mr. Bookter told Mr. McMichael that Mr. Ellerd did not need to come to Shreveport, that he, Mr. Bookter, would buy the property at the sheriff’s sale for his clients, Mr. and Mrs. Williams, and that Mr. Ellerd could send the money to Shreveport, and upon its arrival Mr. McMichael could deliver it to the Williams’ who would then execute a deed to the property in favor of Mr. Ellerd.
14.
“That Mr. McMichael relied on the statements of Mr. Bookter and advised Mr. El-lerd by telephone that he need not make the trip to Shreveport.
15.
“That Mr. Ellerd sent the money to Shreveport, and upon its arrival, Mr. McMi-chael contacted Mr. Bookter, who advised that the Williams’ were no longer willing to deed the Property back to Mr. Ellerd at the price agreed upon, and would only do so at a price much higher than the agreed price.
16.
“That the property has a value of approximately $15,000.00 due to Mr. Ellerd’s improvements on it while he was the owner, and that the only consideration given for the property by the Williams’ was the ex-tinguishment of a debt of approximately $6,500.00 owed by Mr. Ellerd.
17.
“That the representations of the Williams’ acting through their authorized agent, Mr. Bookter, were relied upon by Mr. Ellerd, acting through his authorized agent, Mr. McMichael, in that Mr. Ellerd made no effort to come to Shreveport on the day of the sale, and therefore, were such that free competition among bidders was hindered at the sale.”

Williams contends that by this petition Ellerd is trying to enforce an oral contract to sell immovable property of which parol evidence is not admissible. Actually, the essence of Ellerd’s cause of action is to annul a judicial proceeding because of fraud or ill practices of which there is no prohibition against parol evidence. Ellerd has alleged he was ready, willing and able to effect payment of the debt, which would have terminated the litigation and would have prevented the sheriff’s sale. According to the petition, Ellerd was led to believe by the Williams’ duly authorized attorney that it was not necessary for him to travel to Shreveport to make payment prior to the sale but that the same result would ensue if he merely sent the money even though payment would be made after the sale.

Assuming the truthfulness of the allegations, Ellerd was misled into a false sense of security by the defendants through their agent. The actions of Williams’ agent prevented Ellerd from satisfying the Williams’ demand by paying the debt. Had Williams refused to accept payment, Ellerd could have prevented the public sale of the lot and retained ownership by “payment to the sheriff of the judgment, with interest and costs.” LSA-C.C.P. Art. 2340. Thus, according to the allegations, the sheriff’s sale was pursued and accomplished through conduct tantamount to fraud or ill practices.

A final judgment can be annulled under LSA-C.C.P. Art. 2004 if it was obtained by fraud or ill practices. TAPP v. Guaranty Finance Company, 158 So.2d 228 (La.App. 1st Cir. 1963), writ refused 245 La. 640, 641, 160 So.2d 228 (1964) states:

“. . . The article is not limited to cases of actual fraud or intentional wrongdoing, but is sufficiently broad to encompass all situations wherein a judgment is rendered through some improper practice or procedure which operates, even innocently, to deprive the party cast in judgment, of some legal right, and where the enforcement of the judgment would be unconscientious and inequitable. . . ."

In Collins v. Collins, 325 So.2d 773 (La.App. 2d Cir. 1976) defendant’s attorney assured plaintiff’s attorney that he would take no action until plaintiff filed an amended answer. A subsequent judgment of separation obtained before the amended answer was filed, was set aside on the grounds it had been obtained.by ill practices.

By analogy, since a judgment can be annulled because of fraud or ill practices, a sheriff’s sale pursuant to a judgment ordering executory process should be subject to annulment for the same reasons where the fraud or ill practices were done by the creditor and adjudicatee and no third party rights have intervened. Several cases have stated the general rule on attacking judicial sales is “in the absence of fraud or ill practices or lack of notification, a judicial sale under executory process cannot be attacked once the sale has been consummated.” Jambois O. & M. Machine Shop, Inc. v. Dixie Mill Sup. Co., 218 So.2d 672 (La.App. 4th Cir. 1969). Also see White Motor Co. v. Piggy Bak Cartage Corp., 202 So.2d 294 (La.App. 4th Cir. 1967). The implication of that rule is that a sale under executory process can be attacked for fraud or ill practices.

Judicial sales have been set aside when the competitive bidding has been stifled by the adjudicatee. Konen v. Konen, 165 La. 288, 115 So. 490 (1928); First Nat. Bank of Abbeville v. Hebert, 162 La. 703, 111 So. 66 (1926); Swain v. Kirkpatrick Lumber Co., 143 La. 30, 78 So. 140 (1918). While the facts of this case do not precisely amount to a stifling of the competition, the effect is the same. The actions of the adjudicatee Williams prevented Ellerd from protecting his rights as owner.

Ellerd’s petition alleges Williams’ action deprived him of his opportunity to end the litigation and retain ownership of the property by paying the debt, costs and interest prior to the judicial sale. We find the petition states a cause of action against Williams, adjudicatee in the sheriff’s sale, for annulment of the sheriff’s sale, or for damages. Accordingly, the judgment sustaining the exception of no cause of action is reversed, the exception overruled, and the case is remanded to the district court for further proceedings, costs to be assessed upon final disposition of this matter.


text:
    Terry Lynn FLOWERS, Plaintiff-Appellant, v. LLOYD’S LONDON INSURANCE COMPANY, Defendant-Appellee.
    No. 13670.
    Court of Appeal of Louisiana, Second Circuit.
    Oct. 30, 1978.

      Theus, Grisham, Davis & Leigh by J. Michael Hart, Monroe, for plaintiff-appellant.
    Davenport, Files, Kelly & Marsh by Mack J. Marsh, Monroe, for defendant-appellee.
    Before BOLIN, PRICE and HALL, JJ.
   HALL, Judge.

Plaintiff, Terry Lynn Flowers, was injured while riding as a passenger on a borrowed motorcycle driven by her husband who negligently drove the motorcycle off the road. She sued defendant, Interstate Surplus Underwriters, Inc., for damages under both the liability and uninsured motorist provisions of an automobile insurance policy issued by defendant to her husband, also seeking recovery of penalties and attorney’s fees for arbitrary failure to pay the uninsured motorist benefits. After suit was filed the insurance company paid its uninsured motorist policy limits of $5,000. It defended the liability claim on the grounds that the policy does not provide coverage for injury arising out of the use of a nonowned motorcycle.

The trial court held that the policy does not provide liability coverage for damages arising out of the use of motorcycles, and that the insurance company was justified in delaying payment of the uninsured motorist benefits. Judgment was rendered rejecting plaintiff’s demands and she appealed. We affirm.

The issues are:

(1) Does the insurance policy provide liability coverage for injury arising out of the use of a nonowned motorcycle?

(2) Is the plaintiff entitled to penalties and attorney’s fees for arbitrary failure of the insurance company to pay benefits under the uninsured motorist coverage within 60 days after demand?

Liability Coverage

The parties correctly agree that under the jurisprudence motorcycles are included within the term “motor vehicles” but not within the term “automobiles”. Allstate Insurance Company v. Montalbano, 335 So.2d 793 (La.App. 1st Cir. 1976); Posey v. Commercial Union Insurance Company, 332 So.2d 909 (La.App. 2d Cir. 1976); Thibodeaux v. St. Paul Mercury Insurance Company, 242 So.2d 112 (La.App. 3d Cir. 1970), writ denied 257 La. 622, 243 So.2d 533 (1971); Lavove v. Traders & General Insurance Company, 219 So.2d 614 (La.App. 3d Cir. 1969). Appellant contends, however, that the term “automobile” as used in the policy in question includes motorcycles because of the use of the broader term “motor vehicles” in the definition section of the policy.

The basic insuring clause of the policy provides:

“I Coverage A — Bodily Injury Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.”

The specific insuring clause dealing with the use of nonowned automobiles under which plaintiff claims coverage provides:

“V Use of Other Automobiles. If the named insured is an individual or husband and wife and if during the certificate period such named insured, or the spouse of such individual if a resident of the same household, owns a private passenger automobile covered by this policy, such insurance as is afforded by this certificate under coverages A, B, division 1 of coverage C and E with respect to said automobile applies with respect to any other automobile, subject to the following provisions: . .

The definition section of the policy, which appellant emphasizes, provides:

“IV Automobile Defined, Trailers, Private Passenger Automobile, Two or More Automobiles, Including Automatic Insurance.
“(a) Automobile. Except with respect to division 2 of coverage C and except where stated to the contrary, the word “automobile” means:
“(1) Described Automobile — the motor vehicle or trailer described in this certificate or, if none is so described, with respect to coverages A, B and division 1 of coverage C, any private passenger automobile owned on the effective date of this certificate by the named insured or by his spouse if a resident of the same household;
"* * *
“(d) Two or More Automobiles. When two or more automobiles are insured hereunder, the terms of this certificate shall apply separately to each, but a motor vehicle and a trailer or trailers attached thereto shall be held to be one automobile as respects limits of liability under coverages A and B and separate automobiles as respects limits of liability, including any deductible provisions, under coverages D, E, F, G, H, I and J.”

The motor vehicle described in the policy is a 1972 Buick Riviera automobile.

The policy is designated as a “Combination Automobile Certificate”. It provides coverage with respect to a Buick automobile and other automobiles operated by the insured. The term “motor vehicle” is used in the liability section of the policy in only two instances; once in defining the “described automobile” as the motor vehicle or trailer described in the policy and again in providing that where two or more automobiles are insured, a “motor vehicle and a trailer or trailers attached thereto” shall be held to be one automobile as far as limits of liability are concerned.

The limited use of the term motor vehicle in the policy does not indicate that the terms automobile and motor vehicle are used interchangeably or synonymously throughout the policy, or that the term automobile is expanded beyond its common, popular meaning. The limited use of the term motor vehicle in clauses unrelated to use of other automobiles clause under which plaintiff claims recovery does not create an ambiguity in the meaning or intent of the policy with respect to that clause. Nothing in the contract indicates any intent on the part of the contracting parties to provide coverage arising out of the use of a borrowed motorcycle.

Appellant points to possible ambiguities and inconsistencies that might exist if a motorcycle had been listed as the described vehicle in the policy. Whether or not the hypothetical situations posed by appellant might present problems of interpretation, the policy under consideration does not describe a motorcycle; it describes an automobile and is not ambiguous.

Appellant relies on the Kansas case of Western Casualty & Surety Company v. Budig, 213 Kan. 517, 516 P.2d 939 (1973), which is directly in point and held there was coverage under identical facts and policy provisions. Our view is that the majority opinion in that case represents a strained interpretation of the policy in the absence of any ambiguity. Our view is in accord with the dissenting opinion in the Kansas case.

Although there is no Louisiana case directly in point, the cases generally have refused to expand the definition of automobile in the liability portion of an insurance policy to include motorcycles. In Guillory v. Deshotel, 251 So.2d 91 (La.App. 3d Cir. 1971), one part of the policy defined automobile as “land motor vehicle.” The court held that the term automobile in the liability coverage clause was not expanded to include motorcycles. In Allstate Insurance Company v. Montalbano, supra, the policy in question described trailers and types of vehicles other than cars. Notwithstanding use of the term “land vehicle” in LSA-R.S. 22:6(3) defining vehicle insurance and the inclusion of the various types of vehicles in the policy coverage, the court held the term automobile did not include motorcycles.

We hold that the liability coverage of the policy in question does not extend to injury arising out of the insured’s use of a non-owned motorcycle. Appellant’s claim was correctly denied.

Uninsured Motorists Coverage — Penalties and Attorney’s Fees

Appellant seeks recovery of penalties and attorney’s fees under LSA-R.S. 22:658 for the insurance company’s arbitrary refusal to pay the uninsured motorists benefits within 60 days after demand. The record reflects that payment was made shortly after suit was filed, a little more than four months after demand. It was stipulated by the parties that on and after the date of demand “there remained serious questions as to contributory negligence' of Terry Lynn Flowers and as to the extent of her injuries.” When there are serious questions as to the plaintiff’s contributory negligence, the insurance company’s refusal to pay uninsured motorists benefits is not arbitrary or capricious. Rogers v. State Farm Mutual Automobile Ins. Co., 217 So.2d 690 (La.App. 3d Cir. 1969); Stewart v. Wood, 153 So.2d 497 (La.App. 1st Cir. 1963). Under the stipulated facts, appellant was correctly denied recovery of penalties.

The judgment of the district court is affirmed at appellant’s costs.

Affirmed.


text:
    D. L. (Denny) BERTOLLA, Plaintiff-Appellee, v. Ruth W. MITCHELL et al., Defendant-Appellant.
    No. 13672.
    Court of Appeal of Louisiana, Second Circuit.
    Oct. 30, 1978.

      Baker, Culpepper & Brunson by Bobby L. Culpepper, Jonesboro, for defendant-appellant.
    Stewart & Stewart, Minden by John M. Stewart, Arcadia, for plaintiff-appellee.
    Goff, Caskey, Butler & Davis by H. Russell Davis, Arcadia, for defendant-appellee Bank of Ringgold.
    Before HALL, MARVIN and JONES, JJ.
   HALL, Judge.

Judgment in the first suit between these parties granted specific performance of an option to purchase and ordered Mitchell to convey the property involved to Bertolla. After that judgment became definitive, and while a second suit between the parties was pending, the buyer Bertolla filed this third suit seeking to be vested with title to the property upon deposit, of the purchase price in the registry of the court, alleging the seller Mitchell had refused to convey title as ordered by the previous judgment.

In this third suit, Mitchell filed an exception of lis pendens based on the pendency of the second suit, which had been filed by Mitchell against Bertolla seeking cancellation of the option on the grounds of fraud, lack of consideration, and other grounds, and which second suit had been dismissed on an exception of lis pendens and was pending on appeal. The exception of lis pendens in this third suit was overruled.

Mitchell answered this third suit and also asserted a reconventional demand attacking the validity of the option on substantially the same grounds of fraud, lack of consideration, and other grounds asserted in the second suit mentioned above and in footnote 2. Mitchell prayed for judgment declaring the option null and rejecting plaintiff’s demands.

Bertolla filed an exception of res judicata to the reconventional demand in this third action based on the judgment rendered in the first suit ordering specific performance of the option. The exception of res judicata to the reconventional demand was sustained, but no judgment dismissing the re-conventional demand was signed at that time.

After trial on the principal demand, judgment was rendered in favor of Bertolla decreeing that title to the property be vested in him upon his depositing the $80,000 sales price in the registry of the court within 60 days after finality of the judgment, and containing provisions relative to the payment of mortgages and judgments affecting the property out of the money so deposited. No mention was made of the reconventional demand or the exception of res judicata in the signed final judgment. Defendant Mitchell perfected suspensive and devolutive appeals.

The record on appeal was not lodged in this court for more than two years after judgment was signed, apparently because the tapes of the evidence were misplaced for a period of time. In the meantime, the second suit filed by Mitchell against Bertol-la seeking cancellation of the option for fraud and other grounds wound its way through the Court of Appeal and the Supreme Court. As mentioned in footnote 2, the Supreme Court reversed the decision of the trial court which sustained an exception of lis pendens and the decision of the Court of Appeal which sustained an exception of no cause of action, holding that the judgment in the first suit was not res judicata and remanding the case for further proceedings. That second suit is currently pending in the district court.

On the appeal before this court, both parties agree that the decision of the Supreme Court on the res judicata issue is controlling, and that the trial court erred in sustaining the exception of res judicata to the reconventional demand in this case. Appellant Mitchell prays that the judgment rendered in favor of appellee Bertolla be reversed and that the case be remanded for further proceedings on the principal and reconventional demands. Bertolla concedes the judgment sustaining the exception to the reconventional demand should be reversed, but contends only that part of the judgment should be reversed and the case remanded for consideration of the recon-ventional demand alone, in consolidation with the second suit pending in the district court.

The precise issue before us, in view of the trial court’s erroneous dismissal of the re-conventional demand on an exception, is whether only that part of the judgment should be reversed and the case remanded for further proceedings on the reconven-tional demand alone, or whether the judgment on the principal demand should also be reversed and the case remanded for further proceedings on both the principal and reconventional demands.

The reconventional demand attacks the option to purchase on the grounds of fraud, lack of consideration, and other grounds. It does not seek to annul the judgment which the principal demand seeks to enforce. The principal demand is not to enforce the option but is to enforce the previous definitive judgment. The reconventional demand does not allege any of the grounds for annulment of judgments provided by LSA-C. C.P. Art. 2001, et seq. The allegations of the reconventional demand relate entirely to matters surrounding the original execution of the lease option agreement, known to Mitchell at the time the first suit was filed and tried, and do not relate to any matter involved in the procurement of the judgment in the first suit. For example, the reconventional demand alleges Mitchell did not own part of the property described in the agreement; that she never intended to grant an option to purchase; that there was no consideration for the option; that her signature was procured by fraud; that the provision of the agreement providing for an option was added by Bertolla without her knowledge, consent or approval; that the $80,000 price was never discussed; and that the instrument was not signed in the presence of the witnesses whose names appear thereon.

No reason has been advanced by appellant, and we perceive of none, why a judgment favorable to appellant on the re-conventional demand would in any way defeat or otherwise affect the enforceability of the definitive judgment which is enforced and given effect in the judgment on the principal demand appealed from. The brief per curiam of the Supreme Court in the second case indicates there would be some effect, but we are unable to determine what it would be. Appellant specifies no error in the judgment on the principal demand. The Code of Civil Procedure specifically allows separate trial of principal and incidental demands and separate judgments thereon. LSA-C.C.P. Art. 1038.

Because there is no error in the judgment on the principal demand and because a judgment favorable to plaintiff on the incidental demand would not, as far as we can see, defeat or otherwise affect the judgment on the principal demand, there is no reason to set aside that judgment or to remand the case for further proceedings on the principal demand. Our decree will reverse the judgment sustaining the exception of res judicata to the reconventional demand, will remand the case for further proceedings on the reconventional demand, and will affirm the judgment on the principal demand, with a modification as hereinafter discussed.

The unusual and confusing posture in which this litigation will remain after our decision is a consequence, we believe, of the result reached by the Supreme Court in its decision in the second case as pointed out in footnote 2. An outright affirmance of the judgment on the principal demand would place Bertolla in a difficult position because he must pay the $80,000 purchase price within 60 days after the judgment on the principal demand becomes final, and yet he is still faced with trial of the second suit and the reconventional demand in this suit, without being sure of what effect, if any, a judgment favorable to Mitchell in those proceedings will have. Therefore, we will modify the judgment on the principal demand to allow Bertolla to pay the purchase price at any time up until 60 days after the last judgment in the pending proceedings (second and third suits) becomes final and definitive.

The judgment of the district court is reversed insofar as it sustains the exception of res judicata to the reconventional demand; the exception is overruled; and this action is remanded to the district court for further proceedings on the reconventional demand. The judgment of the district court on the principal demand is modified to provide that D. L. Bertolla is vested with title to and is decreed to be the owner of the property described therein subject to his depositing in the registry of the Second Judicial District Court the sum of $80,000 at any time, up until 60 days after the last judgment disposing of all demands in both suits numbered 21,835 and 22,176 on the docket of said court becomes final and definitive. Costs of this appeal are assessed to the appellant and the appellee equally.

Reversed in part, modified in part, affirmed in part, and remanded.

      . In the first suit, Mitchell v. Bertolla, 300 So.2d 209 (La.App. 2d Cir. 1974), writ refused 303 So.2d 179 (La.1974), Mitchell sought cancellation of the lease option for failure to pay rental, failure to exercise the option during the lease period, and lesion beyond moiety. Bertol-la sought specific performance of the option. Judgment was rendered upholding the validity of the option and ordering Mitchell to convey the property to Bertolla upon payment of the purchase price. The judgment was affirmed by the Court of Appeal and writs were denied by the Supreme Court.

      . In the second suit, Mitchell v. Bertolla, 340 So.2d 287 (La.1976), reversing 328 So.2d 380 (La.App. 2d Cir. 1976), Mitchell sued to cancel the option to purchase. The trial court sustained Bertolla’s exception of lis pendens based on the pendency of the previous suit. The Court of Appeal affirmed the dismissal of the suit, sustaining an exception of no cause of action filed in the appellate court on the basis that the present suit did not seek to annul the judgment in the prior suit, but sought a remedy which was not available because of the prior judgment and raised an issue which was moot under the posture of the case. The Supreme Court reversed, holding principally that because there was no identity of “cause” between the suits (the first seeking cancellation because of nonpayment of rent and lesion and the second seeking cancellation because of fraud, lack of consideration, and other grounds), the plea of res judicata filed in the appellate court should be overruled. The exception of lis pen-dens was also overruled because the judgment in the previous suit became final before the judgment was signed in this case. The opinion did not deal with the exception of no cause of action on which the Court of Appeal decision was grounded. In a per curiam rendered on application for rehearing, the Supreme Court dealt only briefly with the Court of Appeal’s decision which sustained the exception of no cause of action, holding the case was not moot because “the option is presently enforceable, absent the termination of the litigation in plaintiffs favor.” It would seem that the Supreme Court, anxious to write on res judicata which was not considered by either the trial court or the Court of Appeal, failed to grasp the fact that the option was not “enforceable” as stated in the per curiam, but had already been enforced by judgment in the first proceeding. The judicial enforcement of the option was an accomplished fact. The only thing remaining “enforceable” was the judgment itself, which was not attacked in the second case or by the reconventional demand in the third case now before this court. We have no quarrel with the Supreme Court’s decision on res judicata. We do question the decision on cause of action. Does a party have a cause of action to annul a contract on grounds related to the execution of the contract where there is a previous definitive judgment ordering specific performance of the contract? Can relief be afforded to the party without setting aside the previous judgment?

      . Although the signed judgment does not mention the reconventional demand, it is to be considered as rejecting that demand. The minutes clearly reflect that intention, as they show judgment was rendered (although not signed at that time) sustaining the exception of res judi-cata to the reconventional demand.


text:
    TRI-STATE INSURANCE COMPANY OF TULSA, OKLAHOMA v. FIDELITY & CASUALTY INSURANCE CO. OF N. Y. et al. W. F. WATLEY v. FIDELITY & CASUALTY INSURANCE CO. OF N. Y. et al.
    Nos. 13675, 13676.
    Court of Appeal of Louisiana, Second Circuit.
    Oct. 30, 1978.
    Writ Refused Dec. 8, 1978.

      Baker, Culpepper & Brunson, Jonesboro by J. Michael McDonald, Farmerville, for plaintiff-intervenor-appellant, Tri-State Ins. Co. of Tulsa, Okl.
    Davenport, Files, Kelly & Marsh by Thomas W. Davenport, Jr., Monroe, for defendants-appellees, Fidelity & Cas. Ins. Co. of N. Y. and Bill Sneed d/b/a Sneed’s Service Station.
    Theus, Grisham, Davis & Leigh by Edwin K. Theus, Jr., for defendant-third party defendant-appellee, Budd Automotives, Inc.
    Before HALL, MARVIN and JONES, JJ.
   HALL, Judge.

W. F. Watley, a truck driver employed by W. D. Jones, was injured when the split-rim wheel of a truck exploded while he was inflating the tire mounted on the wheel. The wheel and tire had been mounted on the truck shortly before the accident by employees of Sneed’s Service Station.

Appellant, Tri-State Insurance Company of Tulsa, Oklahoma, workmen’s compensation insurer of Jones, filed suit against Bill Sneed, the service station owner, and his liability insurer to recover workmen’s compensation benefits paid to Watley. Appellant also intervened in a suit brought by Watley against Sneed and his insurer, Budd Automotives, Inc., alleged manufacturer of the wheel, and Frost Trailer Parts, Inc., alleged vendor of the wheel purchased by Jones. Third party demands were filed.

After trial of the consolidated suits the trial court found: (1) no negligence was established on the part of Frost; (2) no negligence was established on the part of Sneed or his employees; (3) the wheel was manufactured by Budd; (4) the wheel was a dangerous instrumentality; (5) no warning was given by Budd to the general public or to people handling this equipment; and (6) Watley well knew the danger involved, knew a cage or chains were required for safety when inflating a tire on such a wheel, failed to use such safety devices, and, therefore, was contributorily negligent barring recovery by him or the workmen’s compensation insurer. Judgment was rendered accordingly. Watley did not appeal. The workmen’s compensation insurer appealed asserting on appeal only its claim against Budd.

Appellant contends the trial court was correct in finding that Budd manufactured the wheel and that it was unreasonably dangerous for normal use, but that the trial court erred as a matter of law in holding that Watley’s contributory negligence barred recovery by him or the workmen’s compensation insurer. Appellant contends contributory negligence is not a defense in a products liability or strict liability case.

Appellee Budd contends the trial court erred in finding that the wheel was manufactured by Budd and in finding that the wheel was a dangerous instrumentality. Alternatively, appellee contends that the trial court was correct in finding that recovery by appellant is barred by Watley’s contributory negligence or assumption of risk.

We conclude the wheel was manufactured by Budd but that no manufacturing or design defect was proved; nor was it established that the wheel was unreasonably dangerous for normal use. We further conclude that Watley’s own fault bars recovery by the appellant workmen’s compensation insurer.

The logging truck Watley was driving had a flat tire. He drove the truck into Sneed’s Service Station to have the tire changed. The employer Jones, a logging contractor, was a regular customer of Sneed who kept on hand several wheels and tires belonging to Jones in order to promptly service his trucks. Sneed’s employees took off the flat tire and mounted another wheel and tire on the truck. Watley kicked the tire and thought it needed more air. He picked up the air hose and measured the air in the tire with a gauge attached to the hose. Finding it only had about 60 pounds and intending to inflate the tire to about 100 pounds, Watley started inflating the tire. The split-rim wheel came apart violently, sending a piece of metal from the rim into Watley’s arm.

Some two or three days prior to the accident a flat tire on the wheel was repaired, the tire was remounted and inflated to approximately 80-85 pounds of pressure by Sneed’s employees.

The wheel was observed after the accident by Sneed and Jones. It had “BW” stamped on it. The side rim edge appeared thin and a part of it had given way. The wheel was thrown away and was not available at trial.

The testimony of Budd’s Wheel and Brake Engineering Manager established that Budd had not stamped any of its wheels with “BW” since at least 1956 when the manager went to work for Budd. Nevertheless, the Budd employee conceded a similar wheel produced at the trial was probably a Budd wheel. It was not established exactly when or where Jones acquired the wheel. He bought a truck that had Budd wheels in 1966 and bought wheels that were represented to him as Budd wheels from various distributors between 1966 and 1971, the year of the accident. The wheel was probably several years old and had been used on logging trucks for some time. There is sufficient evidence, including particularly the Budd employee’s admission, to support the trial court’s conclusion that the wheel was originally manufactured by defendant Budd.

It was well established that all persons concerned, the employer Sneed and his employees, and Watley, were well aware that there is a danger of split-rim wheels, particularly used ones, exploding while tires are being inflated. The normal practice of all concerned, including Watley, is to use a cage or chains when inflating a tire on a split rim. While the wheel itself contained no instructions or warning label, it is clearly established that it is common knowledge among those concerned with truck tires that the usual and normal procedure is to use chains or other safeguards while inflating tires on split rims and that it is dangerous to do otherwise.

Weber v. Fidelity & Casualty Insurance Co. of N. Y., 259 La. 599, 250 So.2d 754 (1971) holds that a manufacturer is liable for injury caused by a defect in the design, composition or manufacture of a product.

The evidence does not establish that there was a manufacturing or composition defect in the wheel. The wheel was old and had been subjected to hard use. It was not recently manufactured or rebuilt as was the wheel in Spillers v. Montgomery Ward & Company, Inc., 294 So.2d 803 (La.1974). The side rim edge probably gave way because of rust, erosion, misuse, or lack of proper maintenance. There is no evidence that the wheel came off the assembly line with a flaw or defect. There is no duty on the part of a manufacturer to make a product that will last forever or will withstand abuse or lack of maintenance. Foster v. Marshall, 341 So.2d 1354 (La.App. 2d Cir. 1977), writ refused 343 So.2d 1067, 1077 (La.1977).

The evidence does not establish that there was a defect in manufacturing design. The wheel was of a design which is standard in the industry and has been used by Budd and other wheel manufacturers for many years. There is no duty on the part of a manufacturer to make a product that is foolproof. Foster v. Marshall, supra.

Chappuis v. Sears Roebuck & Co., 358 So.2d 926 (La.1978) holds that in order to recover, a plaintiff need not prove defective design or manufacture if he proves he was injured by a product unreasonably dangerous for normal use.

The evidence does establish that a split-rim wheel is dangerous unless properly handled. The manufacturer’s own literature so states. There was no breach of the manufacturer’s duty to warn in this case, as there was in Chappuis, because here the danger and the manner of avoiding the danger were common knowledge, and were known by the injured party. The manner of avoiding the danger was not complicated or difficult and was readily available to the injured party. Normal use of this product required the use of chains or other safety devices while inflating a tire. Under the circumstances, it cannot be said that the product was unreasonably dangerous or that it was being used in a normal manner at the time of the accident. Consequently, there is no liability on the part of the manufacturer.

The foregoing discussion overlaps a discussion of the injured party’s own fault. Being well aware of the danger, and of the importance of using a safety device as a normal procedure while inflating a tire on a split-rim wheel, Watley was himself at fault in failing to do so.

The key products liability cases decided by the Supreme Court, beginning with Weber, supra, and continuing most recently with Chappuis, supra, seem to make it clear that fault on the part of the victim can preclude recovery in a products liability case even though a manufacturer’s liability is considered as strict liability.

Weber held:

“A manufacturer of a product which involves a risk of injury to the user is liable to any person, whether the purchaser or a third person, who without fault on his part, sustains an injury caused by a defect in the design, composition, or manufacture of the article, if the injury might reasonably have been anticipated. . ” (Emphasis added)

Chappuis held:

“. . .If Chappuis knew, or should have known of the danger, and chose, nevertheless, to use the dangerous instrument, he would have shared the fault of the manufacturer, and could not recover. . . ."

Fault of the victim has been recognized as a defense in strict liability cases under LSA-C.C. Art. 2316, et seq. Holland v. Buckley, 305 So.2d 113 (La.1974); Turner v. Bucher, 308 So.2d 270 (La.1975); Loescher v. Parr, 324 So.2d 441 (La.1976) and their progeny. It may not be necessary to characterize the victim’s fault as either contributory negligence or assumption of risk. Compare, Langlois v. Allied Chemical Corporation, 258 La. 1067, 249 So.2d 133 (1971); Richard v. Singer Lumber Co., Inc., 361 So.2d 955 (La.App. 4th Cir. 1978); Wilson v. Voss, 361 So.2d 312 (La.App. 1st Cir. 1978); Dixon v. Gutnecht, 339 So.2d 1285 (La.App. 1st Cir. 1976); Khoder v. AMF, Inc., 539 F.2d 1078 (5th Cir. 1976). The standard of conduct which amounts to victim-fault barring recovery in a products liability case should depend on the circumstances of the particular case, but ordinarily will be measured by application of the elements of assumption of risk, that is, full knowledge and appreciation of the danger or defect and a voluntary and unreasonable use of the product in the face of such knowledge.

We hold the split-rim wheel, as manufactured, was not defective in manufacture, composition or design, and was not unreasonably dangerous for normal use. We further hold that Watley’s fault, in any event, bars his recovery and, consequently, that of the workmen’s compensation insurer who paid him benefits. The defendant manufacturer is not liable and the judgment rejecting the workmen’s compensation insurer’s demands against the manufacturer is affirmed at appellant’s costs.

Affirmed.


author: PRICE, Judge.

text:
    Maggie Ebarb BROWN et al., Plaintiffs-Appellants, v. ALLEN SANITARIUM, INC., et al., Defendants-Appellees.
    No. 13668.
    Court of Appeal of Louisiana, Second Circuit.
    Oct. 31, 1978.
    En Banc. Rehearing Refused Dec. 13, 1978.

      Donald R. Miller, Shreveport, Denver L. Thornton, El Dorado, Ark., for plaintiffs-appellants.
    Mayer, Smith & Roberts by Charles L. Mayer, Shreveport, for defendants-appel-lees, Dr. J. H. Chidlow, et al.
    Mayer, Smith & Roberts by Paul R. Mayer, Shreveport, for defendant-appellee, Dr. Jacqueline G. Morgan.
    Simon, Fitzgerald, Fraser & Cook by Chatham H. Reed, Shreveport, for defendant-appellee, Allen Sanitarium, Inc.
    Before BOLIN, PRICE and HALL, JJ.
   PRICE, Judge.

Appellants are the wife and six children of a fifty-five-year-old man who died following a cystoscopic examination performed under a general anesthetic on June 29, 1972, at the Allen Sanitarium in Converse. They have appealed the judgment based on an adverse jury verdict rejecting their demands for damages in this medical malpractice action against Allen Sanitarium, Dr. John H. Chidlow, Dr. Jacqueline Morgan, and the malpractice liability insurers of these parties. We affirm the judgment for the reasons assigned.

The cystoscopic examination performed by Dr. Chidlow, an urologist of Shreveport, was recommended by Dr. W. J. Mitchell of Allen Sanitarium, who had been treating decedent for a severe urinary infection and gross hematuria for several weeks without a successful diagnosis. Decedent elected to have the procedure done under a general rather than local anesthetic to avoid as much pain as possible. Mrs. Doris Meredith, a registered nurse-anesthetist, administered the various drugs and gases to place decedent under the general anesthetic at about 2:10 p. m. on this afternoon of the examination. Decedent was given Sueci-nylcholine di-Chloride, commonly called Anectine, which is used to relax or paralyze the skeletal muscles of the body to facilitate such an examination. Decedent was artificially respirated by Mrs. Meredith while under the influence of the Anectine as it also blocks the nerves controlling the diaphragm. The cystoscopic examination was completed and the Anectine discontinued at about 2:25 p. m. Because of the short time Anectine was administered it was expected that its effect would wear off within ten or fifteen minutes. As decedent had not resumed normal nerve function or breathing on his own by 3:00 p. m., the anesthetist concluded he had experienced an adverse reaction to the Anectine. She continued to provide positive pressure ventilation and to monitor decedent’s vital signs.

At about 5:30 p. m. Dr. Chidlow requested Dr. Morgan, a general practitioner on the staff at the sanitarium, take over the supervision of decedent’s recovery so that Dr. Chidlow could return to Shreveport. After arriving in Shreveport, Dr. Chidlow consulted by telephone with Dr. Robert Haley, the director of anesthesiology at Schumpert Medical Center. Dr. Haley concurred in the diagnosis of an adverse Anec-tine reaction. Dr. Haley consulted by telephone with Dr. Morgan and Mrs. Meredith around 9:00 p. m. and suggested that in addition to the artificial respiration being continued, that precautionary X-rays be made of decedent’s chest. At about 10:00 p. m., after being moved to the X-ray room, decedent suffered a cardiac arrest. His heart action was restored by external heart massage and an injection of adrenalin. Following this incident Dr. Morgan consulted with Dr. Chidlow and a decision was made to transfer decedent to Shreveport. He arrived by ambulance at Highland Hospital at about 1:20 a. m. and died approximately ten minutes later at 1:30 a. m. after suffering another cardiac arrest.

An autopsy was performed by Dr. A. M. Hand, pathologist at Schumpert Medical Center, which disclosed that decedent had a cardiac condition known as myocarditis (an inflammation of the heart muscle) which was subacute and diffuse. Dr. Hand concluded in the report that decedent would have survived had it not been for the myo-carditis.

The allegations of negligence against Dr. Chidlow are generally his failure to perceive from decedent’s medical history that a problem could occur if an Anectine reaction was experienced because of a known prior reaction of decedent to sulfa drugs, his failure to properly direct the nurse-anesthetist in deciding what drugs to use, his failure to timely diagnose that decedent was in a critical condition by midafternoon and to promptly transfer him to better medical facilities in Shreveport, his abandonment of the patient at 5:00 p. m. to return to Shreveport, and his failure to properly advise decedent’s family of his condition. The allegations against Dr. Morgan are substantially the same as the allegations against Dr. Chidlow concerning the failure to diagnose decedent’s condition and to transfer him to better facilities. The allegations against Allen Sanitarium are directed at its failure to comply with various state and federal laws and regulations.

Appellants’ counsel has made specific assignments of error. The first two relate to the refusal of the trial judge to permit the introduction into evidence, either on direct or in rebuttal of defendant’s evidence, the deposition of an expert witness, Dr. Charles W. Quimby, Jr., of Nashville, Tennessee, because of the locality rule. The third assignment relates to the failure of the trial judge to give numerous instructions requested by appellants in the court’s charge to the jury. Although counsel for appellants designated that the instructions to the jury be included in the transcript of appeal, the record as filed does not contain the court’s instructions to the jury. As this was noted in opposing counsel’s brief, and no effort was made to supplement the record, we must presume appellant is content for this court to exercise its constitutional authority to review facts as well as law and decide the matter on the record before us. We therefore shall not discuss the failure of the trial court to give requested instructions.

We further find it unnecessary to rule on the admissibility of the deposition of appellants’ expert, Dr. Quimby, as we have examined his deposition placed in the record under an offer of proof and do not find that his testimony when given full consideration would sustain the burden of proving negligence on the part of any defendant.

The burden of proof required of a plaintiff in a malpractice action is now set forth in La.R.S. 9:2794. This statute has been held to be procedural and to have retroactive effect in the recent case of Ardoin v. Hartford Acc. & Indem. Co., 360 So.2d 1331 (La.1978). The statute provides a plaintiff must prove:

(1) The degree of knowledge or skill possessed or the degree of care ordinarily exercised by physicians or dentists practicing in the same community or locality to that in which the defendant practices; and where the defendant practices in a particular specialty and where the alleged acts of medical negligence raise issues peculiar to the particular medical specialty involved, then the plaintiff has the burden of proving the degree of care ordinarily practiced by physicians or dentists within the involved medical specialty-
(2) That the defendant either lacked this degree of knowledge or skill or failed to use reasonable care and diligence, along with his best judgment in the application of that skill, and
(3) That as a proximate result of this lack of knowledge or skill or the failure to exercise this degree of care the plaintiff suffered injuries that would not otherwise have been incurred.

The primary allegation of negligence against Dr. Chidlow is that an examination of decedent’s prior medical records would show that he had a reaction from a sulfa drug a few weeks prior to this time, and as this can be one of the several causes of myocarditis, he should have realized decedent would have difficulty in the event of an adverse reaction to Anectine. There is no medical testimony to support this allegation. Dr. Quimby, appellants’ expert, was not questioned in this regard. The evidence shows that Dr. Mitchell, who was decedent’s regular physician, had given decedent a series of medical examinations including electrocardiograms during the several days prior to the cystoscopic examination, and that there was no indication of any abnormality in his heart or cardiovascular system. The preponderance of the medical testimony shows there was no lack of good medical judgment in concluding decedent was capable of undergoing a general anesthesia.

Appellants contend Dr. Chidlow was negligent in failing to properly supervise the anesthesia administered to decedent by the nurse-anesthetist, Mrs. Meredith, and in permitting the anesthetist to select the drug to be used. The testimony of Dr. Haley shows that after the supervising physician decides the patient is suited for a general anesthetic, it is customary to rely on the anesthetist to decide which drugs are most suited for the particular situation. There is no evidence of any improper selection or administration of drugs to the decedent by Mrs. Meredith. Appellants’ expert, Dr. Quimby, admitted the drugs and gases used were proper.

The remaining allegations of negligence against Dr. Chidlow and Morgan relate to the standard of care and treatment afforded decedent after he did not regain normal breathing within the usual time the effect of Anectine was expected to wear off.

We find the evidence to show that Dr. Chidlow was advised by Mrs. Meredith at about 3:00 p. m. that she was concerned decedent had an Anectine reaction as he had not regained nerve function or voluntary breathing as would have been expected. Appellants contend Dr. Chidlow should have made a decision at that point to move decedent to Shreveport where more adequate medical facilities were available. The course of treatment that was being followed was the accepted method in this area according to the testimony of Dr. Haley. His testimony also indicated it would have been the best medical judgment not to move decedent so long as it was believed he was merely experiencing an Anectine reaction.

The evidence shows that Dr. Chidlow did consult with a specialist, Dr. Haley, after it appeared the reaction would be protracted. Decedent was being prepared for X-rays to determine the condition of his chest when he suffered the cardiac arrest, which was the earliest time it could be determined that there was anything critical in his condition. He was then transferred to Shreveport as soon as his cardiac condition became sufficiently stabilized to permit the trip.

Appellants’ expert, Dr. Quimby, testified in deposition that in his opinion a decision should have been made at 3:00 p. m. to move decedent to Shreveport to a medical facility that could have furnished a blood gas test at frequent intervals during the time artificial respiration was being utilized. Dr. Quimby was of the opinion this is the only certain method of determining that the blood is being properly oxygenated to guard against pulmonary edema.

Dr. Haley testified that at the time of this incident in 1972, although Schumpert had the facility to give the blood gas test, it was a very sophisticated, expensive, procedure and was not generally used for patients requiring short periods of artificial respiration as is expected following an Anectine reaction.

Dr. Haley testified that the primary cause of decedent’s death was the myocardi-tis which caused decedent to go into congestive heart failure. This opinion is corroborated by the autopsy report of Dr. Hand in which Dr. Hand concluded decedent would not have died except for the myocarditis.

We find appellants’ evidence has failed to show that there was any lack of knowledge or skill on the part of Drs. Chidlow and Morgan or that their failure to exercise their best medical judgment was the cause of decedent’s death.

Appellants contend Allen Sanitarium was at fault because it was in violation of La.R.S. 37:930 in permitting a registered nurse-anesthetist to administer a general anesthesia without being under the supervision of a licensed physician. Mrs. Meredith was under the control of Dr. Chidlow, and although he did not specifically direct her in the selection and the method of application of the drugs used in anesthetizing decedent, we do not interpret the statute to require the degree of supervision over a person possessing the skill and training of a registered nurse-anesthetist as that contended by appellants.

We further find that appellants’ evidence fails to show that Allen Sanitarium was not in compliance with the various sections of the Code of Federal Regulations cited by appellants, or that any specific noncompliance was a proximate cause of decedent’s death. The sanitarium was properly licensed by the appropriate state and federal regulatory agencies and was approved for medicare patients. Therefore, there is a presumption it was in compliance with the appropriate regulations.

There has been no proof of negligence on the part of Dr. Morgan or Mrs. Meredith for which the sanitarium could be liable under the doctrine of respondent superior as contended by appellants.

For the foregoing reasons, the judgment is affirmed at appellants’ cost.


author: BOUTALL, Judge.

text:
    Sylvia S. SMITH v. DELTA FOOD MART and Matthew M. Sumich.
    No. 10095.
    Court of Appeal of Louisiana, Fourth Circuit.
    Nov. 27, 1978.

      Randy O. Lewis, Hackman & Lewis, Boutte, for Sylvia S. Smith, plaintiff-appellant.
    Phillip D. Lorio, III, Deutsch, Kerrigan & Stiles, New Orleans, for Delta Food Mart, defendant-appellee.
    Before SAMUEL, GULOTTA and BOU-TALL, JJ.
   ON MOTION TO DISMISS APPEAL

BOUTALL, Judge.

Appellee, Delta Food Mart, has filed a motion to dismiss the appeal of appellant Sylvia S. Smith on the basis that the appellant has failed to pay the estimate appellate costs to the Clerk of the trial court after demand. By affidavit of the Clerk, we are informed that appellant had not applied for an extension of the return date, September 11, 1978, and has never paid the appellate costs or filing fees and as a result the record has not been prepared by the Clerk nor lodged with the Court of Appeal.

In support of its motion, appellee has referred us to prior jurisprudence in which we dismissed the appeal because the costs were not paid. Amongst the cases are Succession of Cavallino, 336 So.2d 909 (La.App. 4th Cir. 1976) and Succession of Silas v. Marciante, 301 So.2d 367 (La.App. 4th Cir. 1974). We agree with the principles announced in those decisions, but point out that the Statutory law has changed since then. We refer especially to Code of Civil Procedure, Article 2126 and Article 2088(9), as amended by Act 175 of 1977 and applicable to appeals taken since January 1, 1978.

C.C.P. Article 2126 provides for the method by which the Clerk demands the appellate costs, and provides that the trial judge, upon motion by the Clerk or by any party, and after hearing, may:

“(1) Extend the time within which the costs may be paid, not to exceed thirty days with or without penalty upon appellant or his attorney; or
“(2) Impose a fine, not to exceed one hundred dollars, upon the appellant, or his attorney, or both; or
“(3) Dismiss the appeal.”

Consistent with these provisions, Article 2088 provides that the trial court retains jurisdiction in the case to:

“(9) Impose the penalties provided by Article 2126, or dismiss the appeal, when the appellant fails to timely pay the estimated costs or the difference between the estimated costs and the actual costs of the appeal.”

Accordingly, appellee’s motion to dismiss should be properly directed to the trial court and not to this court. The motion before us is dismissed.

MOTION DISMISSED.


author: BROOM, Justice,

text:
    The TRAVELERS INDEMNITY COMPANY v. MUNRO OIL & PAINT COMPANY.
    No. 50745.
    Supreme Court of Mississippi.
    Nov. 22, 1978.
    Daniel, Coker, Horton, Bell & Dukes, Pete H. Carrubba, Gulfport, for appellant.
    Rushing & Guice, William Lee Guice, III, Biloxi, for appellee.
    Before SMITH, WALKER and BROOM, JJ.
   BROOM, Justice,

for the Court:

Performance and payment bond of a surety (Travelers Indemnity Company: appellant), executed on its co-defendant, Howard L. Byrd, Contractor, Building Services, Inc. (Byrd herein), is the subject matter of this appeal. Munro Oil & Paint Company (plaintiff) sued the contractor alleging that Byrd owed plaintiff for merchandise (petroleum products) furnished the contractor which Byrd used on the Hancock County Port and Harbor Authority construction job. Travelers, as surety, was also made defendant to the plaintiff’s amended declaration in the County Court of the Second Judicial District of Harrison County. Byrd made no answer or appearance and suffered a default judgment for $579.71. After taking the default judgment against Byrd, the plaintiff introduced documentary evidence as to the amount owed and rested, whereupon Travelers moved for a directed verdict, which motion was overruled. Travelers declined to put on any proof, and judgment was entered against it. An appeal was taken by Travelers to the Circuit Court of the Second Judicial District of Harrison County, which affirmed the county court judgment. We reverse.

The record clearly shows that the suit is one concerning materials furnished by Munro to Byrd under a public works contract and bond. There is a condition precedent to any liability of Travelers (surety) to the plaintiff, which condition is that Byrd wrongfully failed to pay for materials furnished by plaintiff in the performance of the public works contract. Public works contracts and surety bonds are within the purview of Miss.Code Ann. § 31-5-1 (1972) et seq. In this case the contract and bond of Travelers specifically state that their purpose is to guarantee payment on a specific public works project, and in this case the obligee of the bond is Hancock County.

Pertinent here and dispositive of this suit is Miss.Code Ann. § 31-5-13 (1972), which provides as follows:

In all suits instituted under the provisions of this chapter, notice of the pend-ency of such suits shall be made by publication in some newspaper of general circulation published in the county or town where the contract is being performed, and if there be no such paper, then in a paper having a general circulation therein, for at least three weeks, the last publication to be at least one week before the trial of said cause. In all such suits the parties interested shall be summoned as provided by section 85-7-145.

This statute has been in force and effect for many years and was construed in U. S. F. & G. v. Mobley, 143 Miss. 512, 108 So. 501 (1926), which held that “the essentials of the statute (now § 31-5-13) must be pleaded and proven by the plaintiff.” One of the essentials of the statute obviously is that “notice of the pendency of such suits shall be made by publication in some newspaper . . . .” In U. S. F. & G. v. Mobley, supra, there was a lack of such publication and the court said that such failure “was fatal error.” Our opinion in that case further said:

This notice seems to be in the nature of due process, and whether the failure to publish the notice in Jefferson county was pleaded in abatement, or called to the attention of the court in any other way, cannot be deemed a waiver, for the reason that the statute requires that there be but one suit, and that the necessary parties are to be brought in by such publication, and therefore no valid decree could be rendered under the statute unless its essential requirements are complied with by the court.

See also, Standard Acc. Ins. Co. v. Standard Oil Co., Inc., in Kentucky, 242 Miss. 11, 133 So.2d 539 (1961), wherein Justice Lee, writing for the court, pointed out the necessity for publication “either following a completion, or an abandonment, of a contract, and said: ‘The time set is not alone a statute of limitation; it confers a cause of action against the surety where none existed before.’ (Emphasis supplied.)”

In this case the plaintiff failed to either plead or prove the publication required by § 31-5-13, supra. At the trial level Travelers made no challenge of the lack of publication under § 31-5-13, but, as held in U. S. F. & G. v. Mobley, supra, such deficiency cannot be waived by failure of the surety to plead such a failure, or argue it in the lower court. The statutory requirement of publication is jurisdictional in nature and therefore may be raised here even though not raised in the assignment of error to the circuit court. Williams v. Michael, 319 So.2d 226 (Miss.1975). It follows, therefore, that the case must be reversed and remanded to the county court, and at retrial compliance (in pleading and proof) will be required of the plaintiff with our statutes dealing with public works contracts. Argument is also made that substitute process served upon the Secretary of State is not valid, but the record is not clear in this regard. The case is being reversed for reasons stated and at retrial care will be taken to insure that process upon all necessary parties is in proper order.

REVERSED AND REMANDED.

PATTERSON, C. J., SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, LEE, BOWLING and COFER, JJ., concur.


author: DARWIN M. MAPLES, Commissioner

text:
    Colie ELLETT v. STATE of Mississippi.
    No. 50837.
    Supreme Court of Mississippi.
    Nov. 22, 1978.
    J. W. Kellum, Sumner, for appellant.
    A. F. Summer, Atty. Gen. by Carolyn B. Mills, Sp. Asst. Atty. Gen., Jackson, for appellee.
    Before PATTERSON, C. J., SUGG and BOWLING, JJ., and MAPLES, Commissioner.
   DARWIN M. MAPLES, Commissioner

for the Court:

Appellant was convicted on March 14, 1977 by a jury in the Circuit Court of the Second Judicial District of Tallahatchie County, Mississippi, of receiving stolen property. She was sentenced to five years in the State Penitentiary with three years suspended pending good behavior. Appellant has assigned as error the trial court’s refusal to grant peremptory instructions at the close of the State’s evidence and at the close of all the evidence. We reverse.

On March 13, 1976, Sunflower County authorities had traced a stolen cotton trailer to an auction being held in Inverness, Mississippi. Upon inquiry of the auction promoters, it was found that the trailer had been delivered by a group of people who also delivered several other items to be sold at the auction. This group, consisting of the defendant, her daughter and several of her grandchildren, were placed under surveillance and were arrested when they attempted to leave the auction site after appearing to have grown “nervous”. It was subsequently discovered that the items — a grease gun, a grader blade and a hydraulic cylinder — belonged to residents of Tallahat-chie County, and defendant was indicted, tried and convicted in that county for the receipt of this stolen property. The cotton trailer was not included.

Other evidence for the State consisted of the identification of the items by their owners, none of whom could pinpoint the date when the items were stolen. The Sheriff of Tallahatchie County testified that defendant stated to him, after being advised of her rights, that the items came from a building owned by her which she was dismantling in Webb, Mississippi. This statement was also given to the arresting officer, Sheriff Jack Sessums of Sunflower County. Sheriff Sessums was used for the introduction of a piece of paper purportedly written by the appellant directing the auction authorities to send the proceeds from the sales to an address in Webb, Mississippi. Although the sheriff was not the proper party to introduce this evidence, no objection was made at the trial and no assignment was made to this Court, and the matter is therefore not before us. This, in essence, was the entire case presented by the State during trial.

Guilty knowledge is the gist of the offense of receiving stolen property, made a crime by Mississippi Code Annotated, Section 97-17-69 (1972). By this it is not meant that the defendant should have personally witnessed the theft, but that she received the property under circumstances that would lead a reasonable man to believe it to be stolen. Brown v. State, 281 So.2d 924 (Miss.1973); Pettus v. State, 200 Miss. 397, 27 So.2d 536 (1946). Such guilty knowledge must be both alleged and proved by the State before a conviction will be allowed to stand. Johnson v. State, 247 So.2d 697 (Miss.1971).

It is apparent from the record in this case that there is not a scintilla of evidence of the circumstance whereby the appellant Colie Ellett received the property “knowing” the same to have been stolen. The evidence offered by the State showed that appellant acquired possession of the property from a building owned by her, which she was dismantling. No evidence was offered to rebut this, or prove its inconsistency, and the State therefore wholly failed to prove either defendant’s knowledge, or such circumstances that would constitute defendant’s knowledge, that the items were stolen when she received them. As was said in Johnson, supra, the most that can be said of the State’s evidence was that defendant had in her possession stolen property. There is no evidence that she received it knowing that it had been stolen.

We are of the opinion that appellant was erroneously convicted of receiving stolen property, and the judgment is reversed and it is ordered that she be discharged.

REVERSED AND APPELLANT DISCHARGED.

PATTERSON, C. J., SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, LEE, BOWLING and COPER, JJ., concur.

      . Sitting pursuant to Chapter 430, Laws of 1976. The above opinion is adopted as the opinion of the Court.


text:
    LEWIS MILLER CONSTRUCTION COMPANY, INC., etc. v. STRIBLING-PUCKETT, INC.
    No. 50767.
    Supreme Court of Mississippi.
    Nov. 29, 1978.
    Watkins & Eager, Hassell H. Whitworth, John L. Low, IV, Jackson, Prewitt & Braddock, John W. Prewitt, Vicksburg, for appellant.
    Daniel, Coker, Horton, Bell & Dukes, Joel W. Howell, III, Agnew, Agnew & Crawford, Lee B. Agnew, Jr., Jackson, for appel-lee.
   Appeal from Circuit Court, Warren County; Ben Guider, Judge.

Before ROBERTSON, P. J., and LEE and COFER, JJ.

Affirmed.