author: CUTRER, Judge. PER CURIAM.

text:
    Terry A. CROMWELL, M.D., Plaintiff-Appellee, v. COMMERCE & ENERGY BANK OF LAFAYETTE and Fidelity National Bank of Baton Rouge, Defendants-Appellants.
    No. 83-461.
    Court of Appeal of Louisiana, Third Circuit.
    April 11, 1984.
    On Rehearing May 9, 1984.

      Ernest L. Parker, Bean & Parker, Hayes & Durio, Stephen G. Durio, Mark C. An-drus, Broadhurst, Brook, Mangham, Hardy & Reed, Oscar Reed, Mouton, Roy, Car-mouche, Bivins, Judice & Henke, H. Purvis Carmouche, Laborde & Lafargue, Cliffe Laborde (Logan & Assoc., William Logan, Onebane, Donohae, Bernard, Torian, Diaz, McNamara & Abell, Dennis Doise, Gary J. Russo, Henry C. Perret, Lafayette of counsel), Guillory, McGee & Mayeux, Aaron F. McGee, J. Winston Ardoin, Ardoin & Dai-, gle, Eunice, Kantrow, Spaht, Weaver & Walter, Lee C. Kantrow, . Downing, Cazedessue & Powers, John D. Powers, Baton Rouge, Gist, Methvin, Hughes & Munsterman, John W. Munsterman, Alexandria, Henry H. Lemoine, Jr., Pineville, Bauer, Darnell & Boudreaux, Mary Coon Biggs, Franklin, Darrell D. Ryland, Mark-sville, for plaintiff-appellee.
    Steen, Rubin, Curry, Calvin & Joseph, Michael H. Rubin, John Dale Powers, Baton Rougq, Charles Kohlmeyer, Jr., William R. Forrester, Jr., Peter L. Koerber, Kohl-meyer & Matthews, Lemle, Keleher, New Orleans, for defendants-appellants.
    J. Michael Cutshaw, Baton Rouge, ami-cus curiae.
    Robert G. Jackson, Baton Rouge, for in-tervenors-appellants.
    Susan H. Rouprich, Baton Rouge, for defendant-appellee.
    Before CUTRER, YELVERTON and KNOLL, JJ.
   CUTRER, Judge.

This is an appeal from a trial court judgment which granted plaintiff’s request for a preliminary injunction to prevent payment of drafts under letters of credit.

This case and the four cases mentioned below involve essentially the same substantive questions. In each case the plaintiff or plaintiffs are limited partners of the same Louisiana limited partnership; the party who is being denied payment is the same; and, the party whose conduct we are asked to scrutinize in each, the general partner of the Louisiana limited partnership, is the same. While the defendants, the banks under injunction in these cases vary, they all stand, vis a vis the parties mentioned above, in near identical positions. Therefore, for ease of reading, this opinion will refer to plaintiffs and the defendants collectively with the intent that this opinion serve as a basis for decision in each case. Consolidated with this case are (1) Breaux, et al. v. First National Bank of Lafayette, 450 So.2d 13 (La.App. 3rd Cir.1984); (2) Anderson, et al. v. American Bank & Trust Company of Lafayette, et al., 450 So.2d 14 (La.App. 3rd Cir.1984); (3) Bauer, et al. v. First National Bank of Lafayette, et al., 450 So.2d 15 (La.App. 3rd Cir.1983); and (4) Long v. Security First National Bank, 450 So.2d 16 (La. App. 3rd Cir.1983). A separate decision will be rendered in each case.

FACTS

In 1981, Combined Equities, Inc. (C.E., Inc.) and its affiliated services companies of Baton Rouge, Louisiana, had been in operation for approximately five years. These companies were engaged in the syndication and management of limited partnerships. C.E., Inc.’s primary sources of revenue were fees derived from the organizational, syndication, management, financial advisory and other services rendered to limited partnerships which it had formed. During the year 1981, the officers of C.E., Inc. decided to syndicate a limited partnership to be known as Combined Investments, Ltd. (C.I., Ltd.).

Pursuant to this decision, the personnel of C.E., Inc. prepared the usual document known as the Private Placement Memorandum (PPM). This instrument, along with the closure instruments and the articles of partnership, set forth the details and established the whole of the relationship between the general partner (C.E., Inc.) and the limited partnership to be formed (C.I., Ltd.). The PPM was dated June 1, 1981.

C.E., Inc., through its sales staff, began the syndication sales of “units” in C.I., Ltd. C.E., Inc. proposed to sell as many as 100 units in C.I., Ltd., each valued at $250,000.00. (Though each unit had a value of $250,000.00, each investor/limited partner was required to put up only $20,-000.00 in cash; the remainder of the price of the unit was covered by a $30,000.00 note and a $200,000.00 note secured by a $200,000.00 letter of credit from one of the defendant banks. The tax benefits which flowed from such an arrangement will be discussed below.) The sales did not proceed as expected and the number of units originally sold was 39.

The prospective investors were each, provided a copy of the PPM upon the initial contact by the sales personnel. Investors were cautioned, by the PPM, that an investment in C.I., Ltd. represented a long-term investment which would involve significant risk factors and should be considered only by persons who had substantial net worth and a substantial anticipated income.

The proposed limited partnership (C.I., Ltd.) was formed according to the law of Louisiana, LSA-C.C. art. 2836 et seq. Pertinent articles in this regard are as follows:

LSA-C.C. article 2837:

“A partnership in commendam consists of one or more general partners who have the powers, rights, and obligations of partners, and one or more partners in commendam, or limited partners, whose powers, rights, and obligations are defined in this Chapter. ”

LSA-C.C. article 2840:

“A partner in commendam must agree to make a contribution to the partnership. The contribution may consist of money, things, or the performance of nonmanagerial services. The partnership agreement must describe the contribution and state either its agreed value or a method of determining it. The contract should also state the time or circumstances upon which the money or other things are to be delivered, or the services are to be performed, and if it fails to do so, payment is due on demand. ”
“A partner in commendam is liable for the obligations of the partnership only to the extent of the agreed contribution. If he does not make the contribution, or contributes only part of it, he is obligated to contribute money, or other things equal to the portion of the stated value that he has failed to satisfy. The court may award specific per- ■ formance if appropriate. ”

LSA-C.C. article 2843:

“A partner in commendam does not have the authority of a general partner to bind the partnership, to participate in the management or administration of the partnership, or to conduct any business with third parties on behalf of the partnership. ”

We particularly note the provision of art. 2843 which mandates that, to retain the status of a partner in commendam, a limited partner cannot have the authority to bind the partnership, nor can such limited partners participate in the management or administration of the partnership. The conducting of any business, management or administration of the affairs of a limited partnership must be relegated to the general partner. As we shall discuss later in this opinion, the PPM fully complies with the mandates of these provisions.

Looking at investments in limited partnerships from the standpoint of the investors, the primary purpose is to obtain income tax savings. The Federal Tax Law allows business partnerships to pass through to limited partners certain losses, beneficial for tax purposes, according to the amount of “at risk” money invested. This includes the cash, notes and letters of credit invested for each unit. The total amount of money “at risk” by the investor in each unit in this appeal is $250,000.00; thus, the limited partner can get a tax benefit based upon a $250,000.00 investment when he has only $20,000.00 cash invested. Investments by the limited partnership are highly leveraged; i.e., the notes and letters of credit of the limited partners are used to secure loans, the proceeds of which are used for the operation and investments of the partnership.

A distinguishing characteristic of this PPM is that it set up a “blind pool” arrangement. This means that the limited partnership, at the time the units were sold, stated it owned no property, had not identified any property it intended to purchase and was not engaged in negotiations to purchase any property. In essence, the cash invested by the plaintiffs and the proceeds of any loans secured by the plaintiffs’ notes and/or letters of credit went into a “pool,” the uses of which the investors were “blind” to determine. -This “blind pool” arrangement, when considered along with the plenary authority given to the general partner in the PPM and the partnership agreement, carries the non-activity of the limited partners to a near-maximum extreme.

To become an investor in C.I., Ltd., the plaintiff/investors had to execute several “closing documents.” The first instrument was entitled “Pre-offering Suitability Letter.” In this document the investor, among other things, recognized that he had been afforded an opportunity to employ an offeree representative to examine the PPM and advise him as to the merits and risks of the investment in the partnership. If the investors did not employ an offeree representative then he warranted that, by reason of his knowledge and experience in financial and business matters in general, and investments in particular, he was able to evaluate the merits and risks of the investment in this partnership.

We wish to particularly point out that each of the plaintiff/investors agreed to be bound by “all the terms and conditions set forth in the PPM dated June 1, 1981.”

In addition to a broad power of attorney executed by the plaintiffs in favor of the general partner (C.E., Inc.) personnel, the PPM contained the following provision as to the exclusive management of the limited partnership by the general partner, C.E., Inc.

“All decisions with respect to the management of the Partnership will be made exclusively by the General Partner under the Partnership Agreement and Limited Partners have no right or power to take part in management of the Partnership. Subject only to certain limitations described above, the General Partner has complete discretion in making investments of Partnership funds....”
(PPM 46, 47.)

We point out these provisions to show that the plaintiff/investors completely divested themselves of any authority in the management or decision-making process of the partnership. This divesture of authority is in compliance with the Louisiana law pertaining to partnerships in eommendam, as previously discussed.

After approximately 39 units had been sold, the articles of partnership were executed on September 23, 1981. Immediately thereafter, C.E., Inc., as general partner, negotiated to have two loans made to C.I., Ltd. The Mercantile National Bank of Dallas, Texas, loaned C.I., Ltd. $5,400,000.00. Also, the First National Bank of Lafayette, Louisiana, loaned C.I., Ltd. $2,420,000.00. As security for the loans C.I., Ltd. pledged and assigned to the banks letters of credit along with a security interest in the limited partners’ demand notes. These loans were consummated in late September 1981.

Using the funds generated by the loans and the cash contributions made by the limited partners, the general partner (C.E., Inc.), on behalf of C.I., Ltd., made investments. C.I., Ltd. acquired interests in partnerships which had been previously sponsored by the general partner or its affiliates. These interests were acquired by C.I., Ltd. making cash contributions and loans to C.E., Inc.’s affiliated partnership which owned investment properties such as hotels, motels and condominiums, etc. The investments were consummated before December 31, 1981, and produced deductible tax losses for C.I., Ltd. in an amount equal to $73,957.00 per unit in the tax year 1981. These losses were passed directly to the owners of the C.I., Ltd. units and reported to the Internal Revenue Service by them on their various personal tax returns. Each of the limited partners was given a full report of the investments in a document dated March 10,1982, entitled PPM Supplement.

In September 1981, the general partner (C.E., Inc.), had begun negotiations with the European American Bank and Trust Company of New York (E.A.B.) for a line of credit up to $10,000,000.00. After a thorough check on the financial stability and prior activities of the general partner and its officers, and negotiations as to the terms of the loan agreement, a line of credit to C.I., Ltd., in the amount of $10,-000,000.00, was approved by E.A.B. The loan agreement was executed March 15, 1982. This loan was to “take out” or consolidate the loans made by the Dallas and Lafayette banks and to obtain a lower rate of interest on C.I., Ltd.’s outstanding debt.

To secure the E.A.B. loan the limited partners were requested to cancel their original letters of credit and to have new letters of credit issued by their Louisiana banks naming E.A.B. beneficiary. Each limited partner, pursuant to the request, authorized the cancellation of the original letter of credit, in favor of C.I., Ltd., and had a new letter of credit issued to E.A.B. The loans by the Dallas and Lafayette banks were paid from the proceeds of the E.A.B. loan. C.I., Ltd. defaulted on its loan from E.A.B. In November 1982, E.A.B. presented drafts to the various Louisiana issuing banks to collect on its security, the various letters of credit.

Plaintiffs, the limited partners of C.I., Ltd., filed suit against the banks which had issued the letters of credit, seeking to enjoin payment under the letters of credit to E.A.B.; E.A.B. intervened. The trial court granted temporary restraining orders preventing the defendant banks from honoring E.A.B.’s requests for payment of drafts presented under the letters of credit. After a hearing, the trial court found that there was fraud in the transaction between the general partner and the investors and, under the provisions of LSA-R.S. 10:5-114, issued a preliminary injunction enjoining the defendant banks from honoring E.A. B.’s drafts for payment of the letters of credit. From the trial court judgment E.A.B. appeals. Also, defendants, American Bank and Trust Company, Baton Rouge, Louisiana, and American Bank and Trust Company, Lafayette, Louisiana, appeal.

We reverse and remand.

ISSUE

The issue in this appeal is whether the trial court erred in its application of LSA-R.S. 10:5-114, thereby enjoining the issuing banks from honoring E.A.B.’s drafts on letters of credit held as security for its loan to C.I., Ltd.

LSA-R.S. 10:5-114 is a part of the Commercial laws adopted by the Legislature of Louisiana in 1974, made effective January 1, 1975. The Commercial laws (LSA-R.S. ■ 10:1-101 et seq.) are modeled after the Uniform Commercial Code which has been adopted in every other state of this country.

We are particularly concerned with the underlined portion of LSA-R.S. 10:5-114 which reads as follows:

“(1) An issuer must honor a draft or demand for payment which complies with the terms of the relevant credit regardless of whether the goods or documents conform to the underlying contract between the customer and the beneficiary. The issuer is not excused from honor of such a draft or demand by reason of an additional general term that all documents must be satisfactory to the issuer, but an issuer may require that specified documents must be satisfactory to it.
(2) Unless otherwise agreed when documents appear on their face to comply with the terms of a credit but a required document does not in fact conform to the warranties made on negotiation or transfer of a document of title or of security or is forged or fraudulent or there is fraud in the transaction
(a) the issuer must honor the draft or demand for payment if honor is demanded by a negotiating bank or other holder of the draft or demand which has taken the draft or demand under the credit and under circumstances which would make it a holder in due course and in an appropriate case would make it a person to whom a document of title had been duly negotiated or a bona fide purchaser of a security; and
(b) in all other cases as against its customer, an issuer acting in good faith may honor the draft or demand for payment despite notification from the customer of fraud, forgery or other defect not apparent on the face of the document but a court of appropriate jurisdiction may enjoin such honor.
(3) Unless otherwise agreed an issuer which had duly honored a draft or demand for payment is entitled to immediate reimbursement of any payment made under the credit and to be put in effectively available funds not later than the day before maturity of any acceptance made under the credit. ” (Emphasis added.)

We have thoroughly examined the voluminous record accumulated at the trial court. (The record on appeal contains over 7,000 pages in some 36 volumes; various counsel have filed extensive briefs.) Due to the conclusions we have reached in this case, it is not necessary that we make a factual determination of whether the trial court was correct in finding that fraud had been committed in the underlying transaction. We have concluded that, assuming arguendo, such fraud did exist, the presence of such a fraud, in these cases, cannot serve as a basis for injunctive relief under the provisions of LSA-R.S. 10:5-114.

USES OF LETTERS OP CREDIT

The letter of credit is an extremely useful and necessary instrument for the facilitation of complex international and domestic business transactions. Before beginning a discussion of the issue we feel it is important to give some background on the many uses of letters of credit:

“More small manufacturers and businesses are engaging in international trade, necessitating their use of letters of credit. Letters of credit are also becoming more common in domestic trade. * * * Most important, however, is the dramatic development of ‘standby’ letters of credit, used in both domestic and international transactions to guarantee performance of such disparate contractual promises as construction of roads, sewers, or buildings, * * * payment of commercial paper, and maintenance of sophisticated communication, manufacturing, or other facilities in foreign countries. * * * The spread of letters of credit into non-sale areas, moreover, has just begun. The only limits on their use are the creative abilities of those who use them. * * * In short, letters of credit are being used in more ways, in more business transactions than ever before.
(Footnote references omitted.)

Symons, Letters of Credit: Fraud, Good Faith and the Basis for Injunctive Relief, 54 Tul.L.Rev. 338 (1980).

TYPES OF LETTERS OF CREDIT: CONVENTIONAL AND STANDBY

As the letters of credit initially developed, its primary use was to facilitate sales-of-goods transactions. Such transactions involve basically three parties: (1) the buyer (customer) who requests that a letter of credit be issued; (2) a bank (issuer) which, at the customer’s request, issues the letter of credit; and (3) the supplier (seller/beneficiary) to whom the letter of credit is issued and who is the person entitled to draft or demand payment on the letter of credit upon the presentment of the required documents to the issuing bank.

In this typical, or conventional, letter of credit transaction, three contractual ■relationships exist: (A) the underlying buy-sell agreement between the customer and the seller/beneficiary; (B) the contract between the issuer and the customer where the issuing bank agrees to issue the letter of credit to the seller/beneficiary and the customer (buyer) agrees to reimburse the bank for the sum paid plus the bank’s charges; and (C) the letter of credit contract between the issuing bank and the seller/beneficiary in which the bank promises to honor the seller/beneficiary’s draft, provided it is accompanied by documentation as may be required by the letter of credit.

In relatively recent years the “standby” letter has come into use. In the ease at hand we are dealing with standby letters of credit.

The important difference between the usual “standby” letter of credit and the “conventional” letter of credit is that another party is added to the cast of participants. In the conventional letter of credit, there are three parties as described above. In that situation the seller and the beneficiary are one and the same person. In a standby situation (as in this case) we have the usual three parties (buyer, seller and issuing bank) plus an additional party, the lending bank. The lending bank accepts the customer’s letter of credit as collateral and loans money to the seller to finance the underlying transaction between seller and customer. The lending bank is now the beneficiary; the dual role of the seller/beneficiary, as found in the conventional letter of credit, is split and the identity of seller, on the one hand, and beneficiary, on the other, rests in two separate and distinct entities. This difference is important as we shall discuss later in this opinion.

RULE OF “INDEPENDENT CONTRACTS” WITHIN LETTER OF CREDIT TRANSACTIONS

As the law of letters of credit developed, the courts recognized early that the letter of credit contract between the issuing bank and the seller/beneficiary must be viewed as separate and independent from the underlying business transaction between the customer (buyer) and the seller/beneficiary. This recognition by the courts led to the well-established rule of independent contracts in letter of credit transactions. This rule means the issuing bank is under a legal duty to honor any demand for payment by the seller/beneficiary who complies with the terms of the letter of credit, without reference to the performance of the underlying contract.

The early recognition of the independent contract rule is exemplified in the case of Maurice O’Meara Co. v. National Park Bank, 239 N.Y. 386, 146 N.E. 636 (1925). This case involved the shipment of newsprint paper that was to be of a specified tensile strength. Upon shipment, the documents required by the letter of credit issued by the National Park Bank were presented to the bank with a demand for payment. Even though the documents presented complied with the letter of credit, the bank refused to honor the demand for payment on the ground that there had “arisen a reasonable doubt regarding the quality of the newsprint paper.” The seller/beneficiary, O’Meara, sued the bank for payment of the letter of credit.

The Court of Appeal of New York affirmed a judgment on the pleadings for the seller/beneficiary, holding:

“This contract [between the issuing bank and the seller/beneficiary] was in no way involved in or connected with, other than the presentation of the documents, the contract for the purchase and sale of the paper mentioned. That was a contract between buyer and seller, which in no way concerned the bank. The bank’s obligation was to pay sight drafts when presented if accompanied by genuine documents specified in the letter of credit. If the paper when delivered did not correspond to what had been purchased, either in weight, kind or quality, then the purchaser had his remedy against the seller for damages. Whether the paper was what the purchaser contracted to purchase did not concern the bank and in no way affected its liability. It was under no obligation to ascertain, either by a personal examination or otherwise, whether the paper conformed to the contract between the buyer and seller. The bank was concerned only in the drafts and the documents accompanying them. This was the extent of its interest. If the drafts, when presented, were accompanied by the proper documents, then it was absolutely bound to make the payment under the letter of credit, irrespective of whether it knew, or had reason to believe, that the paper was not of the tensile strength contracted for. This view, I think, is the one generally entertained with reference to a bank’s liability under an irrevocable letter of credit of the character of the one here under consideration....”
“To hold otherwise is to read into the letter of credit something which is not there, and this the court ought not to do, since it would impose upon a bank a duty which in many cases would defeat the primary purpose of such letters of credit....”

This independent contract rule is found in Louisiana law at 10:5-114(1), which reads as follows:

“(1) An issuer must honor a draft or demand for payment which complies with the terms of the relevant credit regardless of whether the goods or documents conform to the underlying contract between the customer and the beneficiary. The issuer is not excused from honor of such a draft or demand by reason of an additional general term that all documents must be satisfactory to the issuer, but an issuer may require that specified documents must be satisfactory to it. ”

This rule applies to conventional as well as standby letters of credit.

“FRAUD IN THE TRANSACTION”

The issue presented in this case revolves around the application of the words “fraud in the transaction” as found in R.S. 10:5-114(2) and the effect thereof on the drafts and demands of E.A.B. for payment on the letters of credit issued by the defendant banks.

E.A.B. and the other appellants contend that LSA-R.S. 10:5 — 114(2) does not authorize injunctive relief to enjoin the payments by the defendant banks. E.A.B. contends that the term “fraud in the transaction” extends only to the loan transaction as that is the only transaction to which the lending bank, E.A.B. (beneficiary), was a party. E.A.B. contends that the independent contract rule applies and that the defendant banks cannot be enjoined from payment of the drafts submitted by E.A.B. since the documents presented to the defendant banks complied with the requirements of the letters of credit.

On the other hand, plaintiffs contend that the phrase “fraud in the transaction” refers to the underlying transaction between the plaintiffs and the general partner of C.I., Ltd. Plaintiffs contend that, if a fraud has been practiced in the underlying transaction, “that would ultimately cause a loss to the customer [plaintiffs] who would ultimately be obliged to reimburse the issuing bank, an injunction will lie against honor regardless of who perpetrated the fraud.”

The trial court apparently agreed with the plaintiffs’ position. The trial court found that C.I., Ltd., through the managing general partner, had perpetrated a fraud upon the plaintiffs, the limited partners of C.I., Ltd. The court based its legal finding of fraud primarily on its factual finding that C.I., Ltd., through C.E., Inc., had made investments beyond the express guidelines of the PPM. Also, the trial court felt that, since the PPM obligated C.E., Inc. to be responsible for capital contributions and negative cash flow up to $5,000,000.00, C.E., Inc. committed fraud by failing to reveal certain cash flow problems to the plaintiffs. (For the purpose of this opinion, we repeat, we are assuming, without deciding, that these findings of the trial court are correct.)

The court further held that E.A.B., in its credit check of C.E., Inc., had acquired information from which E.A.B. could have reasonably concluded that fraud had been committed by C.E., Inc. as the general partner of C.I., Ltd. On this basis the trial court concluded that the fraud in the underlying transaction (between the limited partners and the limited partnership, C.I., Ltd., through its general partner), permeated the entire letter of credit transaction. The trial court, necessarily, concluded that the underlying transaction was the “transaction” referred to in the 5-114(2) “fraud in the transaction” language and issued a preliminary injunction.

At this point we note that the precise question before this court (which “transaction” is meant by the phrase “fraud in the transaction” in R.S. 10:5-114(2) in a standby letter of credit situation), is res nova in Louisiana. Since this particular part of the Louisiana Commercial Law is taken from the U.C.C., we feel justified in considering cases from other jurisdictions in analyzing the questions raised in this case and in attempting to resolve this question in a way compatible with our sister states who have the same statutory language.

A broad and far-reaching examination of jurisprudence and commentary has been undertaken by this court. Pointed study and consideration has been given to judicial statements and scholarly assertions arising from other jurisdictions.

Our study has led to the conclusion, and we hold, that the “transaction” referred to in 5-114(2)’s “fraud in the transaction” phrase, is solely the letter of credit contract, or transaction, involving the issuing bank and the beneficiary of the letter of credit. Injunctions under 5-114(2) are a type of exception to the general rule of independent contract as set forth in 5-114(1).

While the precise rule before this court is res nova in Louisiana, there have been many cases which dealt with fraudulent conduct in situations involving conventional letters of credit and several involving injunctions being sought in standby letters of credit situations. These have been analyzed by counsel for the parties and this court.

We note that the cases which have allowed an injunction to issue, in letters of credit cases in general, can be divided into two main classes. Both of these classes, or groups of cases, recognize the independent contract rule and limit those cases in which a finding of fraud in the “transaction” (between the beneficiary of the letter of credit and the issuer of the letter of credit) is made.

We will refer to the two groups of cases as the O’Grady cases and the Sztejn cases. The O’Grady cases basically say that, when a. beneficiary presents fraudulent documents to an issuer there are sufficient grounds to enjoin payment under letters of credit held by the presenting beneficiary. The Sztejn cases hold that, when a seller/beneficiary practices fraud against a customer then that fraud will clothe, or infect, facially valid documents presented to an issuer, with fraud sufficient to support an injunction.

In O’Grady v. First Union Nat. Bank, 296 N.C. 212, 250 S.E.2d 587 (1978), the court discussed which “transaction” was intended to be considered when examining “fraud in the transaction.” The court stated:

“Given the independence of the issuer’s obligation to the beneficiary, and the commercial purposes which this independent obligation serves, it would appear that an injunction should issue to enjoin payment of a draft only in those instances where there is some action by the beneficiary which vitiates the transaction between the beneficiary and the issuer_ Since the transaction between the beneficiary and the issuer is one consisting of an exchange of documents, only some defect in these documents would justify an injunction against honor.
“The Official Comment to G.S. 25-5-11 j [the North Carolina equivalent of LSA-R.S. 10:5-114] gives little indication of the meaning of the term ‘fraudulent’ document. Presumably such a document would be one that is completely forged or drawn up without any underlying basis in fact, one that is but partly spurious or a document which has been materially altered. ...” (Citations omitted.)

O’Grady, its ancestors and descendants, recognize that, under the independent contract rule, it is the “transaction between the beneficiary and the issuer” we are concerned with and they hold that, if the beneficiary presents fraudulent documents, this “vitiates the transaction between the beneficiary and the issuer,” sufficient to support an injunction.

There has been no proof, or even allegation, in this case of any documentary fraud practiced by E.A.B. against any of the defendants. There can be no O’Grady-based injunction in this case.

The second class of cases springs from Sztejn v. J. Henry Schroder Banking Corp., 177 Misc. 719, 31 N.Y.S.2d 631 (Sup.Ct.1941), the case commonly accepted as the source of the “fraud in the transaction” language now found in 5-114(2). The plaintiffs rely heavily on Sztejn as support for their contention that fraud in the underlying transaction may serve as a basis for injunctive relief regardless of who perpetrated the fraud and regardless of who the beneficiary may be.

The plaintiffs further contend that, since R.S. 10:5-114(2) is a codification of Sztejn, the phrase “fraud in the transaction” refers to fraud in the underlying transaction as the basis for injunctive relief. We disagree.

In Sztejn, a customer in New York contracted to purchase bristles from a seller/beneficiary in India. At the request of the customer, the defendant bank issued a letter of credit to the Indian seller as beneficiary. The letter of credit required that drafts by the seller/beneficiary for the payment of the letter of credit be accompanied by an invoice and bill of lading showing that the merchandise ordered was shipped. Instead of shipping 50 crates of bristles as ordered, the Indian seller/beneficiary shipped 50 crates of worthless rubbish. The documents presented by the seller/beneficiary represented that the proper merchandise was shipped.

Before the draft of the seller/beneficiary could be paid, the customer sued seeking to enjoin the issuing bank from paying the draft on the letter of credit on the ground of fraud committed by the seller/beneficiary; i.e., shipping rubbish instead of the merchandise ordered.

The issuing bank filed a motion to dismiss on the ground that the petition failed to state a cause of action; since the bank was only concerned with the documents presented by the seller/beneficiary and on their face they complied with the letter of credit requirements, the bank’s position was that it could not legally concern itself with the underlying transaction under the established independent contract rule. The court recognized the independent contract rule but went on to say, “Of course, the application of this doctrine [the independent contract rule] presupposes that the documents accompanying the draft are genuine and conform to the requirements of the letter of credit.”

The court further observed that, when an issuer of a letter of credit knows that the documents, although correct in form, are, in point of fact, false, it cannot be called upon to recognize such a document as complying with the terms of the letter of credit.

The letter of credit transaction in Sztejn was conventional; the three parties involved were the customer, the seller/beneficiary, and the issuing bank. The seller/beneficiary was actively committing a fraud upon the customer by shipping rubbish rather than the ordered merchandise. This active fraud by the seller/beneficiary resulted in the submission of documents (bills of lading and invoices) which, although correct .in form, were in fact false and did not conform to the requirements of the letter of credit. .This activity by the seller/beneficiary amounted to a delivery of fraudulent documents to the issuing bank; i.e., “fraud in the transaction” between the beneficiary and the issuer. (Because of the procedural posture of Sztejn it was presumed there had been fraud in the underlying transaction.)

In Sztejn there was active fraud committed by the seller in its relationship with the customer. Since the seller and beneficiary are one and the same person, the fraud committed by the seller clothed all documents with fraud that was presented by the seller as beneficiary and rendered them fraudulent when presented to the issuer.

In the case at hand, we have a standby letter of credit situation. The seller and beneficiary' are two different parties involved in different capacities. In our case we have the seller (C.E., Inc.) as general partner of C.I., Ltd., the customer (plaintiffs), the issuing banks (defendants) and the beneficiary lending bank (E.A.B.). The trial court found fraud had been committed by the general partner in its activities with the investors in the underlying transaction. E.A.B. was not a party to activities between C.E., Inc. and the investors.

Plaintiffs argue that a finding of fraud in the underlying transaction is sufficient to support an injunction prohibiting a beneficiary from collecting under letters of credit issued pursuant to that underlying transaction and cite Sztejn to support their position. We have no quarrel with Sztejn as an appropriate rule where the beneficiary/seller committed active fraud rendering the documents fraudulent. However, the entry of a fourth party (beneficiary/lending bank) in this standby letter of credit situation, a party who gives value to obtain the letters of credit and who obtains them without fraudulent conduct on its part, justifies a different result.

The fact that E.A.B., in its credit check of C.E., Inc., acquired information on the activities of C.E., Inc. in the underlying transaction, which activities by C.E., Inc. could, at some later date, be declared fraudulent by a court, cannot serve as a basis' for injunctive relief. The lending bank would be placed in the nebulous position of not only evaluating the credit reliability of its borrower, but the bank, after considering its credit check information along with the very complex provisions of the PPM, would have to second-guess what a court ruling may be, at some later date, as to the classification of the conduct of the borrower (seller) in its dealing with the investor (customer). We can find no statutory law or jurisprudence that would place such an ambiguous burden upon the lending bank nor do we find any authority for issuing an injunction on this basis. It was error for the trial court to consider those circumstances as a basis for injunctive relief. A Sztejn -based injunction was improper.

As we apply the principles of Sztejn and O’Grady to the case at hand we conclude the trial court clearly erred in granting a preliminary injunction. The record does not support any active fraud having been committed by E.A.B. It is undisputed that the documents presented by E.A.B. to the issuing banks were in order and met the requirements of the letter of credit. There is no “fraud in the transaction” between E.A.B. and the issuing banks. Therefore, as we apply the independent contract rule, the judgment of the trial court must be reversed.

The narrow construction of 10:5-114, as we have expressed herein, represents the prevailing view of the courts of other jurisdictions. See Stringer Const. Co. v. American Ins. Co., 102 Ill.App.3d 919, 58 Ill.Dec. 59, 430 N.E.2d 1 (1st Dist.1981). We are aware that some courts have taken a broader view resulting from their attempts to apply an equitable approach to letters of credit situations. A broad view or an application of the law of equity will lead to only one result; the demise of the letter of credit as a universal commercial tool.

The independence of the letter of credit from other contracts, arrangements and relationships involved in the underlying transaction, out of which the letter of credit arises, is the cornerstone of its utility.

“Encroachment of concepts that appropriately govern those other contracts, arrangements, and relationships does more than curtail the use and development of letters of credit. The rigid rules that govern letters of credit are structural. If they are subordinated to more pliable precepts appropriate to equitable resolution of disputes, the very existence of the letter of credit as a useful business device can be destroyed as surely as a wisteria vine can strangle an oak.”

Under the circumstances presented we shall reverse and dismiss the trial court judgment granting the preliminary injunction. Having come to this conclusion it is not necessary to discuss the remaining issues presented.

The appellants, European American Bank and Trust Company of New York, American Bank and Trust Company of Lafayette, and American Bank and Trust Company of Baton Rouge, sought damages and attorney’s fees according to provisions of LSA-C.C.P. art. 3608. This issue was not reached by the trial court, thus, it is necessary that we remand the case to the trial court for the limited purpose of considering whether damages and attorney’s fees should be awarded, and if so, the amount.

For the reasons set forth, the judgment of the trial court, granting the preliminary injunction, is reversed and set aside. The suit is hereby remanded for the limited purpose of considering appellants’ request for damages and attorney’s fees according to the provisions of LSA-C.C.P. art. 3608.

Plaintiff-appellee is to pay all costs of the trial court and for this appeal.

REVERSED AND REMANDED IN PART.

PER CURIAM.

Combined Investments, Ltd., inter-venor, through its general partner, Combined Equities, Inc., filed an application for a rehearing requesting that we amend that portion of our judgment which remanded the suit for the limited purpose of considering appellants’ request for damages and attorney’s fees according to LSA-C.C.P. art. 3608. Combined Investments was not included in the remand. The record, as presented to us, reflected that Combined Investments’ appeal was not perfected due to the failure to pay appeal costs. After we received this application, we found that the record was in error.

This error occurred as follows: The district court clerk originally sent the notice of the estimated appeal costs to Combined Investments’ original attorney, failing to note that there had been a change of counsel. The appeal costs were not paid and, when the record was filed with this court, there was written on the face of Combined Investments’ motion for an appeal, the following: “Abandoned due to failure to pay costs.” The district court clerk later found that the notice of costs was sent to the wrong counsel. The estimated costs were then presented to the proper counsel; the same were paid to the district clerk. The appeal was thus perfected and corrections were made by the clerk. However, these corrections were either not forwarded to us or were lost in transit; in any event, they failed to get into the record. The check for costs, which the clerk sent to cover Combined Investments’ appeal, was improperly credited by our clerk’s office and thus no evidence existed on the face of the record before us to show that Combined Investments’ appeal had actually been perfected. Thus, the appeal was erroneously not considered by us. We now, however, consider the appeal perfected.

For the reasons above, the application of Combined Investments, Ltd. is granted and that portion of our judgment, remanding the suit for the limited purpose of considering appellants’ request for damages and attorney’s fees, according to LSA-C.C.P. art. 3608, is hereby amended to include a consideration of the request of Combined Investments, Ltd. for damages and attorney’s fees.

In all other respects, the judgment rendered by this court is to remain unchanged.

APPLICATION GRANTED AND JUDGMENT AMENDED.

      . These "units" were purchased by individuals, groups of individuals and partnerships formed for this purpose. The purchaser/investors, the limited partners of C.I., Ltd., are the plaintiffs herein.

      . American Bank-Baton Rouge had issued letters of credit for the account of some investors which letters of credit were secured by letters of credit issued by the American Bank-Lafayette. The effect of the preliminary injunction was to not only enjoin E.A.B. from drafting on letters of credit held by it, but also American Bank-Lafayette was enjoined from honoring the letters of credit which secured the letters of credit issued by American Bank-Baton Rouge.
      Defendant, Hub City Bank and Trust Company, of Lafayette, Louisiana, appealed but filed no brief.

      . Dynamics Corp. of Amer. v. Citizens & Southern Nat. Bank, 356 F.Supp. 991 (N.D.Ga.1973).

      . Harfield, Identity Crises in Letters of Credit Law, 24 Ariz.L.Rev. 239 (1982).

      . LSA-C.C.P. article 3608 provides:
      "The court may allow damages for the wrongful issuance of a temporary restraining order or preliminary injunction on a motion to dissolve or on a reconventional demand. Attorney's fees for the services rendered in connection with the dissolution of a restraining order or preliminary injunction may be included as an element of damages whether the restraining order or preliminary injunction is dissolved on motion or after trial on the merits.”


source: Caselaw Access Project

license: Public Domain

text:
    Floyd J. BREAUX and Daniel G. Dupree, Plaintiffs-Appellees, v. FIRST NATIONAL BANK OF LAFAYETTE, Defendant-Appellee.
    No. 83-462.
    Court of Appeal of Louisiana, Third Circuit.
    April 11, 1984.
    On Rehearing May 9, 1984.
    Ernest L. Parker, Bean & Parker, Hayes & Durio, Stephen G. Durio, Broadhurst, Brook, Mangham, Hardy & Reed, Oscar Reed, Mouton, Roy, Carmouche, Bivins, Ju-dice & Henke, H. Purvis Carmouche, La-borde & Lafargue, Cliffe Laborde, Logan & Viguerie, William Logan, Onebane, Don-ohae, Bernard, Torian, Diaz, McNamara & Abell, Dennis Doise, Gary J. Russo, Henry C. Perret, Cabes, Tracey & Perret, Lafayette, Guillory, McGee & Mayeux, Aaron F. McGee, J. Winston Ardoin, Ardoin & Dai-gle, Eunice, Kantrow, Spaht, Weaver & Walter, Lee C. Kantrow, Downing, Cazed-essue & Powers, John D. Powers, Baton Rouge, Gist, Methvin, Hughes & Munster-man, John W. Munsterman, Alexandria, Henry H. Lemoine, Jr., Pineville, Bauer, Darnell & Boudreaux, Mary Coon Biggs, Franklin, Darrell D. Ryland, Marksville, for plaintiff-appellee.
    Steen, Rubin, Curry, Colvin & Joseph, Michael H. Rubin, John Dale Powers, Baton Rouge, Charles Kohlmeyer, Jr., William R. Forrester, Jr., Peter L. Koerber, Kohl-meyer & Matthews, Lemle, Keleher, New Orleans, for defendants-appellants.
    J. Michael Cutshaw, Baton Rouge, ami-cus curiae.
    Robert G. Jackson, Baton Rouge, for in-tervenors-appellants.
    Susan H. Rouprich, Baton Rouge, for defendant-appellee.
    Before CUTRER, YELVERTON and KNOLL, JJ.
   CUTRER, Judge.

For the reasons assigned in the case of Cromwell v. Commerce & Energy Bank of Lafayette, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the judgment of the trial court, granting the preliminary injunction, is reversed and set aside. The suit is hereby remanded for the limited purpose of considering appellants’ request for damages and attorney’s fees according to the provisions of LSA-C.C.P. art. 3608.

Plaintiffs-appellees are to pay costs of the trial court and for this appeal.

REVERSED AND REMANDED IN PART.

PER CURIAM.

For the reasons set forth in the per cu-riam filed in the case of Cromwell v. Commerce & Energy Bank of Lafayette, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the appeal of Combined Investments, Ltd., inter-venor, is recognized. That portion of our judgment remanding the suit for the limited purpose of considering appellants request for damages and attorney’s fees, according to LSA-C.C.P. art. 3608, is hereby amended to include a consideration of the request of Combined Investments, Ltd., for damages and attorney’s fees.

In all other respects the judgment rendered by this court is to remain unchanged.

APPLICATION GRANTED AND JUDGMENT AMENDED.


text:
    Bennett Boyd ANDERSON, Jr., et al., Plaintiffs-Appellees, v. AMERICAN BANK & TRUST COMPANY OF LAFAYETTE, et al., Defendants-Appellants.
    No. 83-463.
    Court of Appeal of Louisiana, Third Circuit.
    April 11, 1984.
    On Rehearing May 9, 1984.
    Ernest L. Parker, Bean & Parker, Hayes & Durio, Stephen G. Durio, Broadhurst, Brook, Mangham, Hardy & Reed, Oscar Reed, Mouton, Roy, Carmouche, Bivins, Ju-dice & Henke, H. Purvis Carmouche, La-borde & Lafargue, Cliffe Laborde, Logan & Viguerie, William Logan, Onebane, Don-ohae, Bernard, Torian, Diaz, McNamara & Abell, Dennis Doise, Gary J. Russo, Henry C. Perret, Cabes, Tracey & Perret, Lafayette, Guillory, McGee & Mayeux, Aaron F. McGee, J. Winston Ardoin, Ardoin & Dai-gle, Eunice, Kantrow, Spaht, Weaver & Walter, Lee C. Kantrow, Downing, Cazed-essue & Powers, John D. Powers, Baton Rouge, Gist, Methvin, Hughes & Munster-man, John' W. Munsterman, Alexandria, Henry H. Lemoine, Jr., Pineville, Bauer, Darnell & Boudreaux, Mary Coon Biggs, Franklin, Darrell D. Ryland, Marksville, for plaintiff-appellee.
    Steen, Rubin, Curry, Colvin & Joseph, Michael H. Rubin, John Dale Powers, Baton Rouge, Charles Kohlmeyer, Jr., William R. Forrester, Jr., Peter L. Koerber, Kohl-meyer & Matthews, Lemle, Keleher, New Orleans, for defendants-appellants.
    J. Michael Cutshaw, Baton Rouge, ami-cus curiae.
    Robert G. Jackson, Baton Rouge, for in-tervenors-appellants.
    Susan H. Rouprich, Baton Rouge, for defendant-appellee.
    Before CUTRER, YELYERTON and KNOLL, JJ.
   CUTRER, Judge.

For the reasons assigned in the case of Cromwell v. Commerce & Energy Bank of Lafayette, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the judgment of the trial court, granting the preliminary injunction, is reversed and set aside. The suit is hereby remanded for the limited purpose of considering appellants’ request for damages and attorney's fees according to the provisions of LSA-C.C.P. 3608.

Plaintiffs-appellees are to pay costs of the trial court and for this appeal.

REVERSED AND REMANDED IN PART.

PER CURIAM.

For the reasons set forth in the per cu-riam filed in the case of Cromwell v. Commerce & Energy Bank of Lafayette, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the appeal of Combined Investments, Ltd., inter-venor, is recognized. That portion of our judgment remanding the suit for the limited purpose of considering appellants’ request for damages and attorney’s fees, according to LSA-C.C.P. art. 3608, is hereby amended to include a consideration of the request of Combined Investments, Ltd., for damages and attorney’s fees.

In all other respects the judgment rendered by this court is to remain unchanged.

APPLICATION GRANTED AND JUDGMENT AMENDED.

      . The plaintiffs in this case are as follow: Bennett Boyd Anderson, Jr.; Shirley S. Covington, M.D.; Richard E. D'Aquin; John M. Howard; Jewil Parkerson Lowe; Robert D. Lowe; William E. McCray, M.D.; James Parkerson Roy; Rodney L. Savoy; William F. Stevenson, Jr., and N.J. Yentzen, Jr.
      The defendants in this case are as follow: American Bank & Trust Company of Lafayette; Commercial Bank & Trust Company of Franklin; First National Bank of Lafayette; Hub City Bank & Trust Company and Southwest National Bank of Lafayette, La.


text:
    Carl BAUER, et al., Plaintiffs-Appellees, v. FIRST NATIONAL BANK OF LAFAYETTE, et al., Defendants-Appellants.
    No. 83-464.
    Court of Appeal of Louisiana, Third Circuit.
    April 11, 1984.
    On Rehearing May 9, 1984.
    Ernest L. Parker, Bean & Parker, Hayes & Durio, Stephen G. Durio, Broadhurst, Brook, Mangham, Hardy & Reed, Oscar Reed, Mouton, Roy, Carmouche, Bivins, Ju-dice & Henke, H. Purvis Carmouche, La-borde & Lafargue, Cliffe Laborde, Logan & Viguerie, William Logan, Onebane, Don-ohae, Bernard, Torian, Diaz, McNamara & Abell, Dennis Doise, Gary J. Russo, Henry C. Perret, Cabes, Tracey & Perret, Lafayette, Guillory, McGee & Mayeux, Aaron F. McGee, J. Winston Ardoin, Ardoin & Dai-gle, Eunice, Kantrow, Spaht, Weaver & Walter, Lee C. Kantrow, Downing, Cazed-essue & Powers, John D. Powers, Baton Rouge, Gist, Methvin, Hughes & Munster-man, John W. Munsterman, Alexandria, Henry H. Lemoine, Jr., Pineville, Bauer, Darnell & Boudreaux, Mary Coon Biggs, Franklin, Darrell D. Ryland, Marksville, for plaintiff-appellee.
    Steen, Rubin, Curry, Colvin & Joseph, Michael H. Rubin, John Dale Powers, Baton Rouge, Charles Kohlmeyer, Jr., William R. Forrester, Jr., Peter L. Koerber, Kohl-meyer & Matthews, Lemle, Keleher, New Orleans, for defendants-appellants.
    J. Michael Cutshaw, Baton Rouge, ami-cus curiae.
    Robert G. Jackson, Baton Rouge, for in-tervenors-appellants.
    Susan H. Rouprich, Baton Rouge, for defendant-appellee.
    Before CUTRER, YELVERTON and KNOLL, JJ.
   CUTRER, Judge.

For the reasons assigned in the case of Cromwell v. Commerce & Energy Bank of Lafayette, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the judgment of the trial court, granting the preliminary injunction, is reversed and set aside. The suit is hereby remanded for the limited purpose of considering appellants' request for damages and attorney’s fees according to the provisions of LSA-C.C.P. art. 3608.

Plaintiffs-Appellees are to pay costs of the trial court and for this appeal.

REVERSED AND REMANDED IN PART.

PER CURIAM.

For the reasons set forth in the per cu-riam filed in the case of Cromwell v. Commerce & Energy Bank of Lafayette, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the appeal of Combined Investments, Ltd., in-tervenor, is recognized. That portion of our judgment remanding the suit for the limited purpose of considering appellants’ request for damages and attorney’s fees, according to LSA-C.C.P. art. 3608, is hereby amended to include a consideration of the request of Combined Investments, Ltd., for damages and attorney’s fees.

In all other respects the judgment rendered by this court is to remain unchanged.

APPLICATION GRANTED AND JUDGMENT AMENDED.

      . The plaintiffs in this suit are as follow: Carl Bauer; Stephen Searcy; Patrick Ottinger; Mark Tompkins; George Latiolais, Marcel Bulliard; John Millette; Richard Melebeck; Richard W. Blackstone, Sr.; Roger Harris; Brian Heinen; Larry Sikes; Isaac Seale, and Cecil D. Trahan.
      The defendants in this suit are as follow: First National Bank of Lafayette; Patterson State Bank; Hub City Bank of Lafayette; Union Bank of Marksville; Capital Bank & Trust of Baton Rouge; Acadiana Bank of Eunice; First Bank of Eunice; and American Bank & Trust Company of Lafayette.


text:
    William D. LONG, Plaintiff-Appellee, v. SECURITY FIRST NATIONAL BANK, Defendant-Appellee.
    No. 83-465.
    Court of Appeal of Louisiana, Third Circuit.
    April 11, 1984.
    On Rehearing May 9, 1984.

      Ernest L. Parker, Bean & Parker, Hayes & Durio, Stephen G. Durio, Broadhurst, Brook, Mangham, Hardy & Reed, Oscar Reed, Mouton, Roy, Carmouche, Bivins, Ju-dice & Henke, H. Purvis Carmouche, La-borde & Lafargue, Cliffe Laborde, Logan & Viguerie, William Logan, Onebane, Don-ohae, Bernard, Torian, Diaz, McNamara & Abell, Dennis Doise, Gary J. Russo, Henry C. Perret, Cabes, Tracey & Perret, Lafayette, Guillory, McGee & Mayeux, Aaron F. McGee, J. Winston Ardoin, Ardoin & Dai-gle, Eunice, Kantrow, Spaht, Weaver & Walter, Lee C. Kantrow, Downing, Cazed-essue & Powers, John D. Powers, Baton Rouge, Gist, Methvin, Hughes & Munster-man, John W. Munsterman, Alexandria, Henry H. Lemoine, Jr., Pineville, Bauer, Darnell & Boudreaux, Mary Coon Biggs, Franklin, Darrell D. Ryland, Marksville, for plaintiff-appellee.
    Steen, Rubin, Curry, Calvin & Joseph, Michael H. Rubin, John Dale Powers, Baton Rouge, Charles Kohlmeyer, Jr., William R. Forrester, Jr., Peter L. Koerber, Kohl-meyer & Matthews, Lemle, Keleher, New Orleans, for defendants-appellants.
    J. Michael Cutshaw, Baton Rouge, ami-cus curiae.
    Robert G. Jackson, Baton Rouge, for in-tervenors-appellants.
    Susan H. Rouprich, Baton Rouge, for defendant-appellee.
    Before CUTRER, YELVERTON and KNOLL, JJ.
   CUTRER, Judge.

For the reasons assigned in the case of Cromwell v. Commerce & Energy Bank of Baton Rouge, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the judgment of the trial court, granting the preliminary injunction, is reversed and set aside. The suit is hereby remanded for the limited purpose of considering appellants’ request for damages and attorney’s fees according to the provisions of LSA-C.C.P. art. 3608.

Plaintiff-appellee is to pay costs of the trial court and for this appeal.

REVERSED AND REMANDED IN PART.

PER CURIAM.

For the reasons set forth in the per cu-riam filed in the case of Cromwell v. Commerce & Energy Bank of Lafayette, et al., 450 So.2d 1 (La.App. 3rd Cir.1984), the appeal of Combined Investments, Ltd., in-tervenor, is recognized. That portion of our judgment remanding the suit for the limited purpose of considering appellants’ request for damages and attorney’s fees, according to LSA-C.C.P. art. 3608, is hereby amended to include a consideration of the request of Combined Investments, Ltd., for damages and attorney’s fees.

In all other respects the judgment rendered by this court is to remain unchanged.

APPLICATION GRANTED AND JUDGMENT AMENDED.


author: FORET, Judge.

text:
    FAUSTINA PIPE LINE COMPANY, Plaintiff-Appellant, v. Minos J. BROUSSARD, et al, Defendants-Appellees.
    No. 83-597.
    Court of Appeal of Louisiana, Third Circuit.
    April 11, 1984.
    Writ Denied June 8, 1984.

      Sonnier & Hebert, Charles R. Sonnier, Abbeville, Broadhurst, Brook, Mangham, Hardy & Reed, Michael J. O’Shee and Mich-ard R. Mangham, Lafayette, for plaintiff-appellant.
    Thompson, Sellers & Bundick, Roger C. Sellers, Abbeville, for defendants-appellees.

      Before GUIDRY, FORET and CULPEP-PER , JJ.

       Judge William A. Culpepper, Retired, Judge Ad Hoc.

   FORET, Judge.

This is an appeal in an expropriation suit. Plaintiff-appellant, Faustina Pipe Line Company, brought suit to expropriate a pipeline servitude across the land of defendant-appellee, Minos J. Broussard. Also made defendant was Ricky Broussard, Minos J. Broussard’s tenant on the land sought by Faustina. As a result of defendants’ failure to timely answer plaintiff’s petition, the only issue at the first phase of the trial was the amount of compensation that plaintiff should pay. The trial court awarded defendants compensation in the amount of $5,806.65. Plaintiff appealed this judgment. Following the filing of this appeal, the trial court rendered a judgment ordering plaintiff to pay attorney’s fees and court costs. Plaintiff also appealed this decision. Both appeals have been consolidated for decision and all issues are dealt with in this opinion .

Several issues are presented by this consolidated appeal:

(1) Whether the trial court erred in accepting defendants’ witness as an expert.
(2) Alternatively, whether the lower court erred in giving greater weight to the testimony of defendants’ expert.
(3) Whether the trial court erred in its determination of the highest and best use of the property taken.
(4) Whether the court erred in its determination of the value of the land taken, and the compensation due defendant, Minos J. Broussard, for the permanent and temporary servitudes granted to plaintiff.
(5) Whether the lower court erred in awarding severance damages to defendant, Minos J. Broussard.
(6) Whether the trial court’s award of attorney’s fees was excessive.
(7) Finally, in the event that this Court reduces the trial court’s award to a sum less than that offered by plaintiff prior to trial, whether this Court should assess court costs against defendants and eliminate the award of attorney’s fees.

FACTS

Plaintiff, Faustina Pipe Line Company, is a foreign corporation doing business in the State of Louisiana. It is a corporation created for and engaged in the business of piping and marketing natural gas. Plain>tiff plans to construct a natural gas pipeline which will begin near the Bayou Henry Gas Plant in Vermilion Parish and run approximately fourteen miles to a point within Lafayette Parish, where it will branch into two segments.

One of the tracts of land across which plaintiff seeks a pipeline servitude is owned by defendant, Minos J. Broussard. This tract contains approximately twenty-one acres and is situated in Vermilion Parish, along the west side of Highway 339 (a hard-surfaced highway) one and one-half to two miles north of the town of Erath. A brick veneer home and other minor improvements are located on the front portion of the property near the highway. The back portion of the property where the pipeline will run is presently used for agricultural purposes. Minos J. Broussard’s tenant, Ricky Broussard, also a defendant in this suit, raises soybeans on this portion of the property. There are already four pipelines which run in a parallel fashion across this part of defendant’s land. Plaintiff proposes to construct its pipeline on the west side of and immediately adjacent to these other pipelines.

Plaintiff and defendant, Minos J. Brous-sard, were unable to agree on the amount of compensation for the servitude which plaintiff sought. Plaintiff brought expropriation proceedings. Since defendants did not answer plaintiffs petition timely, they were precluded from contesting plaintiffs right to expropriate the pipeline servitude. The only issue at trial was the amount of compensation that plaintiff should pay.

In a judgment signed April 11, 1983, the trial court ordered the expropriation of a permanent pipeline servitude and the temporary servitude for its construction. The court also ordered plaintiff to pay compensation in the following amounts:

To Ricky Broussard, $320 for crop damage;
To Minos J. Broussard, $80 for crop damages,
$2,476.09 for the permanent pipeline servitude
$2,215.47 as severance damages and
$720 for the temporary servitude.

Following the rendition of this judgment, defendants requested that the court order plaintiff to pay attorney’s fees and court costs. Prior to the trial, plaintiffs highest offer to defendants was $1,955 — $3,851.65 less than the amount eventually awarded by the trial court. In a judgment rendered June 2, 1983, the trial court ordered plaintiff to pay $4,410 in attorney’s fees and all court costs, including $1,000 in expert fees.

TRIAL COURT’S QUALIFICATION OF DEFENDANTS’ WITNESS AS AN EXPERT

Defendants’ expert witness, Kearney Dronet, is a licensed real estate broker. He has extensive experience dealing with real estate in the area where defendant’s property is located and is familiar with local conditions. See Maddox v. Percy, 351 So.2d 1249 (La.App. 1 Cir.1977), writ denied, 353 So.2d 1336 (La.1978). Mr. Dronet has developed property in the area since 1951 and has been a contractor since 1967. Since becoming a broker in 1979, he has done appraisals.

In its brief, plaintiff complains that Dronet had only completed two of a number of courses required to qualify him as a member of the American Society of Real Estate Appraisers. We find that Dronet’s lack of certain formal training did not disqualify him as an expert. His extensive experience in the local real estate market was sufficient reason for the court’s decision to accept him as an expert witness.

“Structured-learning in a school-setting has never been the sole manner in this country for the acquisition of expertise in a specific field.”

Maxwell v. State, Department of Transportation & Development, 391 So.2d 1230 (La.App. 1 Cir.1980), writ denied, 394 So.2d 281 (La.1980). The qualification of an expert witness rests within the sound discretion of the trial judge and his determination will not be disturbed absent a showing of manifest error. Matter of Aaron, 417 So.2d 105 (La.App. 3 Cir.1982); Roberts v. Tiny Tim Thrifty Check, 367 So.2d 64 (La.App. 4 Cir.1979); Maddox v. Percy, supra; Sledge v. Aluminum Specialties Manufacturing, Inc., 351 So.2d 835 (La.App. 1 Cir.1977). In the instant case, the trial judge acted properly in accepting defendants’ witness as an expert.

WEIGHT GIVEN TO THE TESTIMONY OF THE EXPERTS

Plaintiff claims that it was error for the trial court to give more weight to the opinions of defendants’ expert than it gave to the opinion of its experts.

We note, at the outset, that the trial judge did not give greater weight to the opinion of defendants’ expert in deciding many of the issues before it. For example, the trial judge rejected the opinion of defendants’ expert that there would be no residual value after the permanent servitude was taken. Rather, the court accepted the opinion of plaintiff’s experts that after the expropriation, defendant would still have some use of the property. Plaintiff’s experts testified that if the property’s highest and best use was for rural home-sites, the residual value would be 5% to 10%. In accordance with this opinion, the court set the residual value at 7½%. Additionally, when the trial court set the amount of compensation for the temporary servitude, it specifically said that it was accepting the figure offered by appellees’ expert only because it was lower than the amount which would be obtained by using the method suggested by plaintiffs experts, given the market price determined by the court.

In its brief, plaintiff quotes the Supreme Court in Middle Tennessee Council, Inc. v. Ford, 274 So.2d 173 (La.1973) when it says:

“The weight to be given to the testimony of experts is largely dependent upon their qualifications and the facts upon which their opinions are based.”

We think that the opinion of the Supreme Court, in regard to this matter, is clearer when this quotation is seen in its context. We think it is also particularly relevant to the present case. Following the portion quoted by plaintiff in its brief, the Supreme Court continues:

“However, the sincerity and honesty of the opinions expressed are matters which the trial judge is in a particularly advantageous position to determine. It is, in effect, in part, a question of credibility, and when the experts are widely disparate in their conclusions, the rule has special relevance.” (Emphasis added.)

In the present case, the opinions of defendants' and plaintiffs experts were widely disparate on many points. That the trial judge chose to accept the opinion of defendants’ expert, in some cases, was a matter within his discretion. In expropriation cases, much discretion is granted to the trial judge in weighing the testimony of experts. Southwest Louisiana Electric Membership Corp. v. Duhon, 313 So.2d 366 (La.App. 3 Cir.1975), writ refused, 318 So.2d 52 (La.1975).

The court based its valuation of the tract of land on what defendants’ expert considered to be his “best” comparable. This tract of land had been sold very recently and was located about three and one-half miles from defendant’s property. The trial judge’s use of this comparable to establish the per-acre value of defendant’s property was a reasonable exercise of his discretion. Similarly, the trial court’s decision to accept the opinion of defendants’ expert that the highest and best use of the entirety of defendant’s property was for rural homesites was supported by the facts as will be discussed presently.

We feel that the decision of the trial court to give more weight to the opinion of defendants’ expert, in some areas, is supported by the record.

HIGHEST AND BEST USE OF DEFENDANT’S PROPERTY

Plaintiff contends that the trial court erred in finding that the highest and best use for the entirety of defendant’s property was for rural homesites. Plaintiffs experts testified that the best and highest use of the front portion of the tract was for rural homesites. They considered, however, that the back portion’s best and highest use was agricultural. Plaintiff claims that the use of the back portion of the tract for rural homesites is too remote to be considered as an element in determining the market value of defendant’s land.

The highest and best use of property is the most favorable employment to which it is adaptable and may reasonably be put in the not-too-distant future. Louisiana Resources Co. v. Langlinais, 383 So.2d 1356 (La.App. 3 Cir.1980); State, Department of Highways v. Rapier, 246 La. 150, 164 So.2d 280 (1964). In the instant case, all experts agreed that defendant’s property was high and well drained. Defendants’ expert testified that he considered the highest and best use of the entire tract was for rural homesites. He based his opinion on the demand for mobile home sites in the area. He testified that of three hundred eighty-nine permits for homesites issued in Vermilion Parish during 1982, over fifty percent were for mobile homes. He further testified that his real estate office in Erath received several calls a day for mobile home sites, but none were available. It was his opinion that defendant’s property could be developed for rural homesites, specifically mobile home sites, and that such development would be immediately profitable given the local demand.

Defendants’ expert was thoroughly familiar with the local real estate market. His testimony regarding the demand for mobile home sites was uncontested by plaintiff. The trial court’s conclusion that it was reasonably possible for defendant’s property to be used for rural homesites in the near future was completely justified. Accordingly, we concur in the court’s determination that the best and highest use of the entire tract was for rural homesites.

THE COMPENSATION AWARDED FOR THE SERVITUDES

Plaintiff contends that the compensation awarded by the court for the permanent and temporary servitudes was excessive. We disagree.

The trial court fixed the per-acre value of defendant’s property based on the value of a tract of land which defendants’ expert considered as his best comparable. As mentioned above, this tract had been sold very recently and was about three and one-half miles from defendant’s property. Although this tract was improved, defendants’ expert adjusted the price to arrive at the per-acre value of the land alone. Using this comparable, the court found that the per-acre value of defendant’s property was $8,635.

Based on its decision that the highest and best use of defendant’s entire tract was for rural homesites, the trial court set the residual which would remain after the taking at 7¾⅛%. In so deciding, the court accepted the opinion of Gene Cope, one of plaintiff’s expert witnesses who testified, as noted above, that the residual value of the property would be 5% to 10% if the best and highest use of the entire tract was for rural homesites.

The court set the value of the temporary servitude at $720. This was the amount proposed by defendants’ expert. If the method of determining compensation for this servitude proposed by plaintiff’s experts had been used, along with the per-acre price found by the trial court, the amount would have been higher. As a result, we find plaintiff’s objection to this award to be without merit.

The trial court’s determination of the value of expropriated property is a question of fact and carries the same weight as any other finding of fact. Louisiana Resources Co. v. Greene, 406 So.2d 1360 (La.App. 3 Cir.1981), writ denied, 412 So.2d 84 (La.1982); State, Dept. of Highways v. LeBlanc, 388 So.2d 412 (La.App. 1 Cir.1980). The record amply supports the amounts awarded by the Court. We find no error.

SEVERANCE DAMAGES

The trial judge found severance damages in the amount of $2,215.47. It arrived at this figure by finding that there would be a 20% diminution in the value of the land within one hundred twenty-five feet of the west boundary of plaintiff’s permanent servitude, this area corresponding to a row of lots in a hypothetical development. He found no severance damages on the east side where there were already four pipelines. This determination of the trial judge was supported by the testimony of the experts and relevant jurisprudence. See Michigan Wisconsin Pipe Line Co. v. Miller, 229 So.2d 182 (La.App. 3 Cir.1969), writ denied, 255 La. 482, 231 So.2d 395 (1970). Plaintiff’s own expert, Gene Cope, testified that if the highest and best use of the entire tract was found to be for rural homesites, lots abutting the pipeline servitude would be less desirable.

ATTORNEY’S FEES

The trial court awarded $4,410 in attorney’s fees to defendants. Plaintiff contends that this award was excessive. In its brief, plaintiff argues that the amount of attorney’s fees should be limited to 25% of the amount which the court awards in excess of the highest amount offered by the expropriator prior to trial. In effect, plaintiff claims that the only factor which the court should consider in awarding attorney’s fees is the amount awarded by the court in excess of the expropriator’s highest pre-trial offer. This amount is, however, only one element that the court must consider in fixing attorney’s fees. Other factors which are equally important are: the responsibility incurred, the importance of the litigation, the amount involved, the extent and character of the work performed, the legal knowledge, attainment and skill of the attorney, the number of appearances made, the intricacies of the facts involved, the diligence and skill of counsel, and the court’s own knowledge. State v. Ransome, 392 So.2d 490 (La.App. 1 Cir.1980). Plaintiff’s contention that the court should only consider the amount awarded in excess of the expropriator’s highest offer is without merit.

In its brief, plaintiff directs this Court’s attention to LSA-R.S. 48:453 which limits attorney’s fees in highway expropriation cases to “25% of the difference between the award and the amount deposited in the registry of the court”. Although recognizing the inapplicability of this statute to the present case, plaintiff, nevertheless, contends that this Court should adopt this statutory limit in the present case. We decline to do so. In its brief, plaintiff cites a number of cases in which it claims the statutory limit of 25% was applied by appellate courts to expropriation cases falling outside of the ambit of LSA-R.S. 48:453. Although in some of these cases, the court did find that attorney’s fees amounting to 25% of the excess compensation judgment or less were reasonable, in none of them did the court sanction the idea that this amount should serve as a maximum. LSA-R.S. 19:8 imposes no set ceiling on attorney’s fees. Rather, it authorizes the trial court to award reasonable attorney’s fees. Clearly, the trial court is empowered to award reasonable attorney’s fees even if that means an award greater than 25% of the excess compensation judgment. If the legislature had wanted to limit attorney’s fees, in cases like the present one, to 25% of the excess compensation judgment, it could have done so. The fact is, it did not.

The record shows that one attorney for defendants spent a total of 34¼ hours on this suit. Defendants’ other attorney spent 11⅝ hours. The trial judge is vested with considerable discretion to award attorney’s fees. Prentice Oil and Gas Co. v. State, Department of Transportation and Development, 421 So.2d 937 (La.App. 1 Cir.1982), writ denied, 423 So.2d 1165 (La.1982). In the present case, the trial judge was in a most advantageous position to view the skill and effort of defendants’ attorneys. Under the circumstances, we feel that the trial judge’s award of attorney’s fees was within his discretion and we will affirm it.

Plaintiff has asked that we eliminate attorney’s fees and assess court costs against defendants in the event we reduce the trial court’s compensation judgment to an amount less than plaintiff’s highest pretrial offer. Given our decision set out above, we need not consider this request.

Defendants have answered the appeal and asked this Court to award them additional attorney’s fees for the time and effort expended by their attorneys on this appeal. We are of the opinion that the amount of attorney’s fees awarded by the trial court is sufficient to compensate the defendants and their attorneys; accordingly, we deny the request for additional attorney’s fees for appellate purposes.

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

AFFIRMED.

      . For a separate opinion rendered in 83-867, see Faustina Pipe Line Company v. Broussard, 450 So.2d 24 (La.App. 3 Cir.1984).

      . Faustina’s experts, although highly qualified, had less experience in the local real estate market than defendants’ expert.

      . In the present case, the difference between the court’s award and Faustina’s highest offer was 13,531.65.


text:
    FAUSTINA PIPE LINE COMPANY, Plaintiff-Appellant, v. Minos J. BROUSSARD, et al., Defendant-Appellee.
    No. 83-867.
    Court of Appeal of Louisiana, Third Circuit.
    April 11, 1984.
    Writ Denied June 8, 1984.
    Sonnier & Hebert, Charles R. Sonnier, Abbeville, Broadhurst, Brook, Mangham, Hardy & Reed, Michael J. O’Shee and Mich-ard R. Mangham, Lafayette, for plaintiff-appellant.
    Thompson, Sellers & Bundick, Roger C. Sellers, Abbeville, for defendants-appellees.
    Before GUIDRY, FORET and CULPEP-PER , JJ.

       Judge William A. Culpepper, Retired, Judge Ad Hoc.

   FORET, Judge.

For the reasons assigned this date in Faustina Pipe Line Company v. Broussard, 450 So.2d 17 (La.App. 3 Cir.1984) (our docket number 83-597, with which this instant case was consolidated on appeal), the decision of the trial court is affirmed.

All costs of this appeal are assessed against plaintiff-appellant.

AFFIRMED.


author: LABORDE, Judge.

text:
    Elton DEVILLE, Plaintiff-Appellant, v. Emile CARMOUCHE, Defendant-Appellee.
    No. 83-578.
    Court of Appeal of Louisiana, Third Circuit.
    May 16, 1984.

      Elton Deville, in pro. per.
    Emile Carmouche, in pro. per.
    Before FORET, LABORDE and YEL-VERTON, JJ.
   LABORDE, Judge.

Elton Deville, plaintiff, brought suit against defendant, Emile Carmouche, for damages arising out of an alleged failure to perform legal services pursuant to a contractual agreement. A final judgment has not been rendered by the trial court in this matter. Plaintiff appeals from the trial court’s refusal to confirm a default judgment. Since this ruling was of an interlocutory nature and since we find no irreparable harm resulting from such ruling, we dismiss plaintiff’s appeal ex proprio motu. The case is hereby remanded and ordered to proceed to trial on the merits.

FACTS

Plaintiff, Elton Deville, instituted this suit against Emile Carmouche, alleging that defendant failed to adequately represent plaintiff as an attorney at law in a former suit entitled Mathew L. Hanigrief v. Elton Deville. The object of this suit is to recover damages allegedly resulting from the inadequate and fraudulent legal representation performed by defendant in the Hanigrief suit on behalf of the instant plaintiff. Plaintiff’s theory of recovery sounds in both contract and tort.

' Defendant recanted with peremptory exceptions which were subsequently made moot by plaintiff’s supplemental and amending petition. Defendant answered both the original and supplemental petitions, however, beyond the legal delays allowed by law. Plaintiff filed a motion and obtained a preliminary default prior to defendant’s answers, but attempted to confirm the default judgment after plaintiff had answered. At a hearing to confirm the default judgment, with defendant present, the trial court held that plaintiff failed to confirm the default timely, and after a prima facie showing in accordance with LSA-C.C.P. art. 1702. Plaintiff now appeals from the trial court’s denial of his motion for confirmation of default.

INTERLOCUTORY JUDGMENT

At the outset, we note that the disposi-tive issue on appeal is whether the trial court’s refusal to confirm a default judgment constitutes a final and appealable judgment. We find that it does not.

An appeal may be taken only from a final judgment or from an interlocutory judgment which may cause irreparable injury. C.C.P. art. 2083. A final judgment is one that determines the merits in whole or in part. C.C.P. art. 1841. The judgment refusing to confirm a default judgment did not determine the merits of the case either for or against plaintiff, and therefore was not a final judgment. The judgment determined only preliminary matters and therefore was an interlocutory judgment. C.C.P. art. 1841; Jacobs v. Jacobs, 365 So.2d 25 (4th Cir.1978).

Appeals are normally limited to final judgments, the purpose being to prevent piecemeal appeals from interlocutory rulings. However, the Code of Civil Procedure article 2083 recognizes that a party may sustain irreparable injury if there was an absolute prohibition against review of certain interlocutory judgments prior to the determination of the merits of the case. Appeals are therefore allowed to be taken from interlocutory judgments under limited circumstances where such a judgment poses grave threats of irreparable harm to the appealing party. The standard for determining whether an interlocutory judgment may cause irreparable injury is whether any error in the judgment may be corrected as a practical matter in an appeal following the determination of the merits. Feitel v. Feitel, 169 La. 384, 125 So. 280 (1929); Sylvester v. St. Landry Parish Police Jury, 401 So.2d 688 (3rd Cir.1981).

In this instance, the trial court refused to confirm plaintiffs default and stated in the record that the matter would be set for trial pending an outcome of this appeal. There is no practical deterrent to plaintiff raising the issues concerning the attempted confirmation of default at the time of an appeal from a final judgment following a determination of the merits. This case presents no basis for variation from the well-settled policy in our law which prohibits piecemeal appeals.

Accordingly, we dismiss plaintiffs appeal ex proprio motu on the grounds that the judgment appealed from is a nonappealable interlocutory judgment.

The appeal is dismissed at plaintiffs costs and remanded for further proceedings in accordance with the law.

APPEAL DISMISSED; CASE REMANDED.


text:
    Drucie Ann WATTS, Plaintiff-Appellee, v. James L. WATTS, Defendant-Appellant.
    No. 83-586.
    Court of Appeal of Louisiana, Third Circuit.
    May 16, 1984.
    James D. Davis, Alexandria, for defendant-appellant.
    Allan R. Harris, Shreveport, for plaintiff-appellee.
    Before FORET, LABORDE and YEL-VERTON, JJ.
   FORET, Judge.

In this child support case, judgment was had on rules filed by both parties, denying plaintiff’s request for an increase in child support, sustaining her exception of no cause of action, dismissing defendant’s rule to terminate child support, and awarding back due child support to plaintiff in the amount of $1,800 and $200 in attorney’s fees. We affirm the decision of the trial judge and adopt his excellent reasons for judgment as our own:

“On March 14, 1983, the Court heard, pursuant to regular assignment, rules filed by both parties. The defendant father, James L. Watts, had filed on January 27, 1983, a rule to terminate child support for two minor children and to set his visitation rights. The plaintiff mother, Drucie Ann Watts, filed a rule on March 8, 1983, to make executory past due child support payments for the last three years in the total amount of $1,800.00 and also sought attorney’s fees in the sum of $400.00. Additionally, the mother sought an increase in the child support payments from the sum of $50.00 per month to the sum of $200.00 per month.

“The substantial issues presented for decision by the Court are: (1) Should the child support payments be terminated? (2) Should the mother have judgment for past due child support and attorney’s fees? (3) Should the child support payments be increased from $50.00 per month to the sum of $200.00?

“At the beginning of the hearing, the mother’s attorney argued exceptions of no cause of action, no right of action, non-join-der of an indispensable party, unauthorized use of summary proceedings, improper cumulation of actions and vagueness directed at the father’s rule to terminate child support. In the father’s rule he alleged the mother had improperly withdrawn approximately $7,000.00 from a $24,000.00 trust fund created by the father for the children, and that she had misused these funds. The father prayed that the mother account for her use of these funds, and that the child support payments be terminated until the mother makes the accounting and reimburses the trust for any funds improperly withdrawn or misused. In support of the mother’s exceptions, her counsel argued the issue of the misuse of the trust funds was the subject of another pending suit by the father against the mother and the trustee, Guaranty Bank and Trust Co. and that any such alleged misuse of trust funds by the mother would not be grounds to terminate the father’s child support payments, nor would it be a defense to the mother’s demand for past due child support. The Court agreed with the arguments by the mother’s attorney. The exception of no cause of action was sustained, thus dismissing the father’s rule to terminate child support payments.

“The evidence shows that during July of 1974, the father was ordered to pay to the mother the sum of $25.00 per month for each of two minor children, who were then respectively two and three years of age and are now eleven and twelve years old. The father has never made any of these child support payments to the mother. The father’s defense to the rule by the mother to make the last three years of payments executory is based on the argument that at about the same time the child support judgment was rendered in July of 1974, a trust fund was created by the father in the sum of $12,000.00 for each child, a total of $24,000.00, with the Guaranty Bank and Trust Company of Alexandria as the trustee, and that disbursements by the bank to the mother of both principal and interest from this trust have equalled or exceeded the $50.00 per month child support payments and should be held to have satisfied the child support obligation of the father.

“In a post-trial memorandum submitted by the father’s attorney, he frankly admits he has found no jurisprudence supporting his argument that interest from the trust satisfies the child support obligation under the judgment. The father admits that when the trust was created and the child support judgment was rendered in 1974, he intended to pay the child support of $50.00 in addition to the interest received from the trust for the children’s support. The evidence shows that -the trust was created from funds received by the father as the result of a personal injury claim, that is, the loss of his right hand. At the time the child support judgment was rendered, the father was drawing social security disability payments and his children also received social security benefits as his dependents. However, in April, 1982, the social security system determined that the father was no longer disabled and benefits were terminated both to him and to the children. The father testified that after his social security benefits were terminated, he worked for a short time as a surveyor’s assistant at minimum wages, but that his employment was terminated after a few months and he has not been able to find employment since. Mr. Watts argues that since he is no longer receiving social security and that due to his disability and his inability to secure employment, he has simply been unable to make the child support payments. He argues that the interest income from the trust, which the wife has been receiving for the benefit of the children, should be held to satisfy his child support obligation.

“The father also points to evidence that the mother has now remarried and her affidavit of income and expenses filed in the record shows she has a net monthly income of $640.00 and that her husband’s net income is $1,560.00, making a total net income of $2,200.00 per month.

“Although, there is much equity in the above discussed arguments by the father that he should not be cast in judgment for the sum of $1,800.00 in past due alimony, he has not cited, nor has the Court been able to find, any law to support his position.

“On the other hand, the mother relies on L.S.A. — Civil Code Article 232 and the jurisprudence thereunder for the rule that the only remedy available to a father to relieve himself of the obligation to pay child support decreed in a judgment is by a judicial proceeding to have the judgment amended, suspended, or terminated. Dauzat v. Dauzat, La.App.1980, 391 So.2d 60; McGovern v. Tatman, La.App.1982, 410 So.2d 779; Rivers v. Rivers, La.App.1981, 402 So.2d 733.

“The Court concludes that despite the equity of some of the father’s arguments, the law is against him[]. His failure to seek judicial modification of the child support judgment makes him liable for the past due child support for the last three years in the sum of $1,800.00, plus legal interest. The mother is also entitled to an award for attorney’s fees in the sum of $200.00. The Court also concludes that the father is not entitled to have the child support payments of $50.00 per month terminated as to those due in the future. With reference to visitation rights, the parties agreed during the trial that there was no dispute. The father is to have visitation rights every other weekend, on every other major holiday, and one month during the summer.

“For the reasons discussed above, (1) the father’s rule to terminate child support is denied; (2) the mother’s rule to make exec-utory past due child support payments in the sum of $1,800.00 plus legal interest and cost is granted, and the mother is also awarded the sum of $200.00 in attorney’s fees; (3) the mother’s demand that the child support payments be increased from $50.00 per month to $200.00 per month is denied.”

For the reasons so ably expressed by the trial judge, we will affirm the lower court’s decision.

DECREE

For the above and foregoing reasons, the judgment of the trial court is affirmed. Costs of this appeal are assessed against plaintiff and defendant, one-half to each.

AFFIRMED.

      . LSA-C.C. Art. 21; Chambers v. Parochial Employees Retirement System of Louisiana, 398 So.2d 102 (La.App. 3 Cir.1981), writ denied, 400 So.2d 1382 (La.1981).


author: DOMENGEAUX, Judge.

text:
    STATE of Louisiana v. Willie W. JONES, Defendant-Appellant.
    No. CR83-629.
    Court of Appeal of Louisiana, Third Circuit.
    May 16, 1984.
    Lyman S. Gore, Vidalia, for defendant-appellant.
    John Sturgeon, Dist. Atty., Ronald J. Kil-garlin, Asst. Dist. Atty., Vidalia, for plaintiff-appellee.
    Before DOMENGEAUX, GUIDRY and DOUCET, JJ.
   DOMENGEAUX, Judge.

On January 10, 1980, the defendant, Willie W. Jones, was charged by Grand Jury indictment with armed robbery, a violation of La.R.S. 14:64. On October 22, 1980, a twelve person jury found the defendant guilty as charged. On January 21, 1981, the defendant was sentenced to serve 12 years at hard labor.

The defendant was granted an out of time appeal on application for writ of habe-as corpus because an appeal of this conviction had not been perfected by defendant’s court-appointed trial counsel. Defendant’s newly-appointed appellate counsel filed an appellate brief containing three assignments of error. However, no formal assignments by defendant’s appellate counsel were ever made a part of the appellate record before the Court as required by La.C.Cr.P. Arts. 844 and 916. Although defendant was allowed to file an out of time appeal which necessarily included an out of time filing for assignments .of error, defendant did not file any assignments of error within the time permitted by law. State v. Lewis, 445 So.2d 195 (La.App. 3rd Cir.1984).

The statutory law and jurisprudence of this State require the filing of a formal assignment of error to preserve issues urged on appeal. State v. Cox, 369 So.2d 118 (La.1979). In State v. Mouton, 319 So.2d 331 (La.1975), the Louisiana Supreme Court ruled “that in the absence of objection at the time, La.C.Cr.P. Art. 841, and a formal assignment of error * * * La.C. Cr.P. Art. 920(1), this Court cannot review the record except for errors discoverable on the face of the pleadings and proceedings and without inspection of the evidence. La.C.Cr.P. Art. 920(2).” Argument concerning assignments of error in appellate brief alone is insufficient to satisfy the requirements of La.C.Cr.P. Art. 920(1). Consequently, this case will only be reviewed for errors patent on the face of the record. State v. Jimmerson, 432 So.2d 1093 (La.App. 3rd Cir.1983).

The defendant was indicted by a grand jury on March 18, 1982. The indictment was signed by the foreman of the grand jury and is proper in form.

On January 23, 1980, the defendant, accompanied by counsel, waived formal arraignment and entered a plea of not guilty. The court minutes reflect that the defendant was present during selection of the jury, at all times during the trial, and was present when judgment was rendered.

The defendant was tried before a twelve person jury on a charge of violating La. R.S. 14:64 which necessarily requires a twelve person jury. He was found guilty as charged.

On January 21, 1981, the defendant was sentenced. The minutes reflect the sentence imposed.

There is no question presented herein as to the constitutionality of La.R.S. 14:64. We find no errors committed by the trial court which are patent on the record.

DECREE

For the above and foregoing reasons the judgment of the trial court is affirmed.

AFFIRMED.

      . In State v. Jack, 285 So.2d 204 (La.1973), the Supreme Court stated that the endorsement "A True Bill" may be typed before it is signed by the foreman.