text:
    No. 13,406
    Orleans
    KLEMA REALTY CO., INC., v. FAURIA ET AL.
    (November 3, 1930. Opinion and Decree.)
    (November 17, 1930. Rehearing Refused.)

      Henry J. Rhodes, of New Orleans, attorney for plaintiff, appellant.
    L. R. Hoover, of New Orleans, attorney for Sidney Fauria, defendant, appellee.
   JANVIER, J.

The facts of this case are much involved, but out of a mass of testimony we have reached the conclusion that they are, substantially, as follows:

The Zion Travelers Baptist Church, No. 3, a congregation apparently of very limited means, being in need of a place of worship, contracted to buy from Sidney Fauria two lots of ground and a small, more or less dilapidated frame cottage situated thereon. The sale was to have been made for cash, and it was expected that the transaction would be financed through one Morales, who, however, after negotiating with several realty or finance companies with which he was more or less connected, found difficulties in making the necessary arrangements.

After some delay a new contract was executed under which it was agreed that the sale should be made partially on deferred payments.

Again great difficulty was experienced in making the necessary financial arrangements for such cash as was required under the new contract, and apparently in order that the property might appear to better advantage to any possible prospective mortgagee or lender of money, and also for the purpose of providing the congregation with a place of worship, the remodeling and reconstruction of the building was commenced.

Defendant Fauria, owner of the property, had no knowledge of this reconstruction of his building until the work was well under way, and all the arrangements seem to have been made between the representatives of the church congregation and Morales, who, as we have already said, seems to have been connected with the various finance companies whose names appear in the record.

Thereafter it developed that the necessary arrangements for the taking over of the property would be much delayed, and thereupon a third contract was entered into under which it was agreed that, pending the taking of title by the church, rent at the rate of $8 per month should be paid by the church to Fauria.

Some of the materials used in the reconstruction work have not been paid for, the property has never been transferred to the prospective purchasers, and this suit has for its object the recovery of judgment against the church congregation and also against Fauria, and a recognition of the lien claimed to exist against Fauria’s property.

The trial court held that -plaintiff was not entitled to judgment against Pauria and that the recorded pretended lien in its favor and against Pauria’s property-should be canceled. Our brother below found difficulty in arriving at the amount due plaintiff by the other defendant, to-wit, the church corporation, but stated that he believed that the said amount was somewhere in the neighborhood of $375, and therefore rendered judgment for that amount.

We experience no difficulty in reaching the conclusion that plaintiff has no just claim against Pauria and that the recorded lien was properly ordered canceled.

Pauria at first had no knowledge whatever of the reconstruction work; he did not acquiesce therein, and he should not be made to suffer as the result of the unauthorized acts of his tenants. Under section 11 of Act No. 298 of 1926 the rights of the materialman in a situation such as existed here are limited to such rights as the lessee may have. He cannot obtain a lien against the realty itself.

As to the claim against the church corporation, we are of the opinion that the district judge was correct in finding in favor of plaintiff. Such arrangements as were made were made for the benefit of the church congregation and by its various proper representatives.

We find the record as to the amount due as confusing as it appeared to the trial judge, but we are convinced that an indebtedness of at least $375 has been proven. Since we find no answer to the appeal, the amount allowed could not be increased even if we felt that the record justified it.

The judgment appealed from is affirmed.


source: Caselaw Access Project

author: JANVIER, J.

license: Public Domain

text:
    No. 13,446
    Orleans
    SCHATZ v. KEHOE
    (December 1, 1930. Opinion and Decree.)

      Lazarus, Weil &. Lazarus, of New Orleans, attorneys for plaintiff, appellee.
    Harry E. McEnerny, Jr., and John D. Miller, of New Orleans, attorneys for defendant, appellant.
   JANVIER, J.

Plaintiff received injuries as the result of being struck at the corner of St. Charles avenue and Broadway, by an automobile driven by defendant, on a very dark, rainy night in January, 1929, when, accompanied by a brother and preceded by a sister, she attempted to cross St. Charles avenue from the lower river corner to the lower lake corner. She was struck while in the riverside driveway of St. Charles avenue before she reached the neutral ground.

There was the usual traffic signal on that corner. The traffic ordinance controlling vehicular and pedestrian traffic, and regulating the operation of such traffic signals, and requiring traffic to be governed thereby, does not seem to have been properly introduced in evidence, and the question of how far we could go in taking into consideration such ordinance would present a serious problem, were it not for the fact that counsel concede that, where there is such a traffic signal, it is negligence for a pedestrian or for an automobile to proceed in the face of a red light.

It is charged that defendant was negligent in three particulars.

One, that he either started his car across Broadway while the red light was shining, or that he failed to allow time, for the pedestrians already crossing the street ahead of him, to complete the crossing.

Two, that he did not have his car under such control as was necessary in view of the condition of the weather and of the street.

Three, that he was not keeping a proper lookout for pedestrians crossing the street in front of him.

These charges of negligence are denied by defendant, who avers that the cause of the accident was the negligence of plaintiff herself, in starting into the street without looking to see if anything was approaching, and particularly in doing so when the traffic signal, as viewed from her direction, shone red.

Plaintiff maintains that when she stepped into the street the light facing her was green, and that she was thus justified in proceeding, and that, if it changed to red immediately thereafter, it was the duty of defendant to allow her sufficient time to complete the crossing.

The judge a quo found for plaintiff, and it is contended that the usual rule that the trial judge should not be reversed on a question of fact unless clearly erroneous is applicable.

We are, however, confronted with a most unusual situation, in that in another suit against the same defendant and in which the plaintiff’s brother, the principal witness for plaintiff here, was himself plaintiff, a district judge, of another division of the civil district court, rendered a judgment exonerating defendant.

It is true that that other case is not now before us, but it is conceded that the evidence in the two cases is substantially the same, and we cannot but feel that in such a situation the finding of the other district judge on this disputed question of fact should be taken into consideration.

Furthermore, the written opinions rendered by the two district judges, one in the other case and one in this case, show that on one most important question of fact they seem to agree. As we read the reasons for judgment in both cases, both judges apparently found that, when the defendant’s automobile started to cross Broadway, the traffic light shone green in the direction from which the defendant was coming. It is true that in the written opinion in this case the district judge does not state that he so found, but he does say: "In my opinion, if the defendant had exercised due caution despite the lights, there would have been no accident.” We cannot interpret .this statement in any other way than as a finding that the light permitted defendant to proceed, but that there was, nevertheless, an opportunity for him to avoid striking the plaintiff had he exercised proper care.

The record convinces us that the finding of fact to the effect that the light shone green towards defendant’s automobile was correct. Unless, then, it appears that in spite of this he could have avoided striking plaintiff, there can be no recovery.

Plaintiff and her brother both admitted that they did not see the automobile approaching. Since it had its lights burning, and since, therefore, they must have seen it had they looked, it necessarily follows that they did not look. Not to look is negligence unless the pedestrian is relieved of the obligation to look by the fact that a traffic light gives him the right to cross without fear.

In considering whether it is probable that plaintiff and her brother looked at the traffic signal before starting to cross the street, it is important to remember that there was a heavy rain falling, and that the purpose of the pedestrians in crossing the street was to seek shelter from that downpour. It is reasonable to suppose that pedestrians in such a situation were hurrying as much as was reasonably possible, and that, thus, they may have failed to look at the traffic light.

Shortly after the accident, when plaintiff’s brother, who is now her principal witness, was being interviewed by a police officer, he made certain statements which showed that at that time, when the matter was fresh in his mind, he realized that he had not looked at the light at all, though, on the witness stand, he denied that he failed to look, claiming that he looked carefully and saw, not only the green light facing him, but also the red light facing in the other direction. He also claimed that his statement made shortly after the accident, and to which we have referred, resulted from his pain and excitement and was not correct. It appears to us that statements made under the circumstances surrounding that which he admits are more apt to represent the truth than are those contrary self-serving statements made months afterwards.

It is not probable that, if the pedestrians had entered the street when the light was green, they could have been struck by the automobile which we and the two district judges are convinced did not start until after the light had changed, because they had only a few feet to traverse, and surely they were hurrying all they could, whereas the automobile had to entirely cross Broadway, one of the widest double streets in New Orleans.

Of course, even though the green light gave to defendant the right to enter the intersection, it did not give him the right to cross without permitting pedestrians already on the roadway ahead of him time to complete their crossing. Crews v. Coogan, 7 La. App. 692; Harrison v. Loyocano, 12 La. App. 228, 125 So. 140. However, since defendant was justified in commencing to traverse the street, he cannot be charged with negligence unless it appears that a reasonable prudent driver could have seen and avoided the pedestrians and we are convinced that, because of the darkness of the night and because of the rain and the dark clothing and the black umbrella over their heads, this was impossible.

The judgment appealed from is annulled, avoided, and reversed, and there is now judgment dismissing plaintiff’s suit at her cost.


author: DREW, J.

text:
    No. 2982
    Second Circuit
    LUCEY MANUFACTURING CORP. v. OIL CITY IRON WORKS
    (November 7, 1930. Opinion and Decree.)
    D. C. Scarborough, Jr., of Shreveport, attorney for plaintiff, appellee.
    Yandell Boatner and Pugh, Grimmet & Boatner, of Shreveport, attorneys for defendant, appellant.
   DREW, J.

Plaintiff sued the defendant on open account for the sum of $856.71. Defendant admits the correctness of the account sued on, and alleges that the said account was extinguished by compensation for the reason that, at the time said indebtedness was incurred, plaintiff was indebted to defendant in an amount greater than the amount set forth in plaintiff’s petition, and that said debts were therefore mutually extinguished to the amount claimed by plaintiff, leaving a balance due defendant of $155.29, for which amount defendant reconvenes and asks for judgment. It is admitted that the accounts sued on by both plaintiff and defendant are correct, and there is no dispute as to the correctness of either account. The only question in the case is whether or not the account of defendant, being an amount owed by the Lucey Manufacturing Corporation at New York, can be pleaded in compensation of an account due to the Lucey Manufacturing Corporation at Houston, Texas.

Defendant contends that they are one and the same company, and that the Texas company was a mere instrumentality or adjunct of the New York company.

There is a Lucey Manufacturing Corporation at New York, Houston, Tex., Chattanooga, Tenn., Los Angeles, Cal., and numerous other places, as shown by the letterhead used by the New York corporation, the Texas corporation, and the Tennessee corporation, all of which use the same identical heading on the stationery. The stationery used by the plaintiff herein is headed as follows:

“Lucey Manufacturing Corporation
“General Office
“Woolworth Building, New York.
“Branches: El Dorado, Ark.
“Los Angeles, Cal. Haynesville, La.
“San Francisco, Cal. Beaumont, Texas
“London, E. C. Orange, Texas
“Pittsburg, Penn. Mexia, Texas
“Tampico, Mex. Houston, Texas
“Shreveport, La.
.“Works:
“Chattanooga, Tenn. Houston, Texas.”

The same letterhead is used by the New York company and the Chattanooga company.

The president of the defendánt company testified that defendant had been dealing with the Lucey Manufacturing Corporation for about -eight years and had always treated the different Lucey companies as one and did not know that plaintiff contended that it was a separate and distinct concern until the filing of this suit.

The record shows that the Lucey Manufacturing Corporation is incorporated in New York; the Lucey Manufacturing Corporation a-t Houston is incorporated in Texas; and the Lucey Manufacturing Corporation at Chattanooga is incorporated in Tennessee. It also shows that all of the stock of the Tennessee corporation is owned by the Lucey Manufacturing Corporation of New York, and all of the stock of the Texas corporation is owned by the Lucey Manufacturing Corporation of Tennessee. Therefore, according to our way of reasoning, all of the stock of the Tennessee corporation and the Texas corporation is owned by the New York corporation, as is indicated by the letterhead used by all concerns.

At the time of the filing of this suit, the New York corporation was in the hands of receivers, and the Texas corporation had a short while before been in the hands of receivers. There is filed in evidence the report of the receivers, of date November 1, 1924, filed in the United States District Court for the Southern District of New York. The receivers sign the report as receivers of the Lucey Manufacturing Corporation. The first paragraph of said report, which is admitted by plaintiff to be correct, reads as follows-:

“The undersigned Receivers of the above named defendant respectfully submit the following report:
“The Lucey Manufacturing Corporation of New York, the defendant herein (hereinafter called the New York Company), is a New York corporation owning all the capital stock of the Lucey Manufacturing Corporation of Tennessee (hereinafter referred to as the Tennessee Company), the Lucey Manufacturing Corporation of Mexico (hereinafter referred to as the Mexican Company), the General Supply Company and the Grant Tool Company. The Tennessee owns all of the capital stock of the Lucey Manufacturing Corporation of Texas (hereinafter referred to as the Texas Company).”

On page 2 of said receivers’ report, we find the following:

“We were appointed receivers of the New York Company on August 17, 1923. A few days before that date receivers had been appointed for the Tennessee company in proceedings in a State Court of Tennessee. Shortly after our appointment receivers were appointed in Texas for the Texas Company and for the North Texas Supply Company. The General Supply Company has continued operations in regular course but on a limited scale. The Grant Tool Company, which operates in California, was, a few months after our appointment as receivers, taken in charge by a local committee of creditors which has been liquidating its assets.”

Quoting further from said report, on page 3, we find the following:

“With the ■ approval and active cooperation of the Creditors’ Committee and with the approval of this Court, a dismissal of the receivership of the Tennessee Company was arranged on the basis of giving to creditors of that company a two-year mortgage on its fixed assets for $505,-851.66, the amount of their claims, junior to a purchase money mortgage previously existing thereon of $35,000.00, the New York company agreeing to subordinate its claim of approximately $375,000.00 to the payment in full of the mortgage debt and to the payment of current indebtedness thereafter created. For a more complete statement of the transactions relating to the Tennessee company, we respectfully refer to the proceedings before this court and the papers relating thereto filed in the office of the Clerk of this Court. A similar arrangement was consummated for dismissing the receivership of the Texas Company pursuant to which the creditors of that company received a nine months’ mortgage maturing in January, 1925, for $262,000.00, the amount of their claims, and the New York and Tennessee companies agreed to subordinate their claims against the company to the payment in full of the mortgage debt and current indebtedness thereafter created. The claim of the Tennessee company amounted to approximately $290,000.00 and the New York company to approximately $475,000.00.
“At the conclusion of the proceedings to consider the plan of reorganization the joint Committee requested the Court to authorize the further continuance of tñe business in the hope that there might be an improvement in conditions that would make a reorganization possible. At that time there was a substantial indication that such improvement was at hand. Unfortunately the improvement has failed to materialize and the operations of the company -and its subsidiaries have been continued at substantial loss, as follows:
“Losses from Feb. 29, 1924, the Date of Our Last Report, to August 31, 1924.
New York Branch $63,804.11
California Branch 10,168.26
Tennessee Company 20,833.81
Texas Company 30,053.52
Mexican Company 24,184.06
General Supply Company 2,611.80.”

The evidence in the case further shows that a letter written to one branch of the Lucey Manufacturing Corporation would be answered by another branch.

A careful reading of the report of the receivers for the Lucey Manufacturing Corporation, together with the other evidence in the case, convinces us that the plaintiff was a branch of the Lucey Manufacturing Corporation with its headquarters in New York, and that the affairs of the plaintiff were so organized and controlled and its affairs were so conducted as to make it a mere instrumentality or adjunct of the parent corporation in New York. The New York corporation owned all of the stock of the Tennessee corporation, therefore had complete control of the affairs of the Tennessee company, and the Tennessee company owned all the stock of the Texas company and had complete control of the Texas company, which in turn gives to the New York corporation complete control of both the Texas and Tennessee corporations.

In the case of Hunter v. Baker Motor Vehicle Company (D. C.) 225 F. 1006, 1015, the court said:

“The legal fiction of distinct corporate entity is disregarded, when necessary to do so in order to circumvent fraud, and also when a corporation is so organized and controlled and its affairs are so conducted as merely to make it an instrumentality or adjunct of another corporation. And it matters not how deftly the transaction is concealed by a succession of adjuncts and instrumentalities with corporate names all under one control, nor how many bankruptcies these adjuncts are put through for the benefit and emolument of the real company or corporation, which in fact owns and controls the business. When, as here, these adjuncts are used as mere agents for all purposes, except the payment of their just debts, the liability of the real managing and controlling corporation is neither released nor shifted, unless by some arrangement or agreement made by the creditor with knowledge of the facts, so as to create either an estoppel or ratification. Any other rule, adopted or sanctioned by the courts, not only defeats justice, but opens the door for the perpetration of the grossest frauds.”

And in Corpus Juris, volume 14, page 62, we find the following rule laid down:

“The legal fiction of distinct corporate existence may be disregarded in a case where a corporation is so organized and controlled and its affairs are • so conducted as to make it merely an instrumentality or adjunct of another corporation.”

In Spokane Merchants’ Association v. Clere Clothing Company, 84 Wash. 616, 147 P. 414, 416, the court said:

“Courts no longer hesitate to look through forms to substance, and ignore a mere colorable corporate entity, to the end that rights of third parties shall be protected.”

In the case of Lea v. Kentwood & E. Ry. Co., 131 La. 861, 60 So. 370, 373, the Supreme Court of this state quoted with approval Morawetz, Private Corporation, pp. 1 and 2:

“ ‘The word “corporation,” ’ says a well-known author, ‘is a collective name for the corporators or members who compose an incorporated association; and when it is said that a corporation is itself a person, or being, or creature, this must be understood in a figurative sense only. * * * Although a corporation is frequently spoken of as a person or unit, it is essential to a clear understanding of many important branches of the law of corporations to bear in mind distinctly that the existence of a corporation, independently of its shareholders, is a fiction; and that the rights and duties of an incorporated association are, in reality, the rights and duties of the persons who compose it, and not of imaginary beings.’ ”

The Supreme Court of this state, in discussing this question in the case of Brooks-Scanlon Company v. Railroad Commission, reported in 144 La., page 1091, 81 So. 727, 729, said:

“The Kentwood & Eastern Railroad Company, a Louisiana corporation, was organized December 5, 1905, with a capital stock of $100,000, and the incorporators were Dwight F. Brooks, Anson S. Brooks, Philip R. Brooks, and M. J. Scanlon, all of Minnesota, who were the holders of $99,400 of the stock. There were six shares of stock of $100 each, distributed among six Louisianians. The four persons just named were four of the five individual incorporators of the Brooks-Scanlon Company. The two companies '* * * were, to all intents and purposes, the same corporation.
“ ‘Corporations are intellectual beings, different and distinct from all the persons who compose them.’ C. C. art. 435.
“The law here announces a principle which until translated into practice is rather abstract. When five persons organize themselves into a corporation, or intellectual being, and cause that organization to be acknowledged before two law officers, and call the organization by two or three different names, the intellectual beings are really one and the same. A corporation is technically the owner of the corporate property. But the shareholders are the owners of the corporation. Stockholders, acting unanimously, do what they please with what belongs to them” — citing Cox v. Von Ahlefeldt, 105 La. 543, 588, 30 So. 175; Dilzell v. Lehmann, 120 La. 273, 283, 45 So. 138.

In this same decision, the court quotes with approval from 7 R. C. L. p. 27:

“The doctrine, however, that a corporation is a legal entity existing separate and apart from the persons composing it is a mere fiction, introduced for purposes of convenience and to subserve the ends of justice. This fiction cannot be urged to an extent and purpose not within its reason and policy, and it has been held that in an appropriate case, and in furtherance of the ends of justice, a corporation and the individual or individuals owning all its stock and assets will be treated as identical. * * * Where it (the corporation) is proceeding in equity to assert rights of an equitable nature or is seeking relief on rules or principles of equity, a court of equity will not forget that the stockholders are the real and" substantial beneficiaries of a recovery, and if the stockholders have no standing in equity, and are not equitably entitled to the remedy sought to be enforced by the corporation in their behalf, the corporation will not be permitted to recover. Again, corporate existence as an entity distinct from its members may be ignored in order to circumvent the fraudulent purpose of the shareholders in its organization.”

Counsel for defendant, in a well-prepared brief, has stated the law of other states of the Union on this subject, as well as the jurisprudence of the United States Supreme Court. We therefore quote from his brief:

“The principle relied upon by the Oil City Iron Works has received frequent treatment from the courts of other states in recent years, and the statement is made in some of the opinions that courts no longer hesitate to look through the mere form and entity of corporations when it is necessary to do so, in order to promote justice.
“We quote from the case of Advance-Rumely Thresher Company v. Geyer, 40 N. D. 18, 168 N. W. 731:
“ ‘The time has passed, or at least is swiftly passing, when courts are confined in their analyses to the mere form and entity of the corporation. Courts will look upon the corporation as a legal entity until sufficient reason arises to look beyond the mere form and entity of the corporation. If the corporation is so organized that it can be used to defeat the rights of innocent parties, defeat public convenience or cut off the right of redress or of action against it, or against other corporations of which it is, in effect, an agent, a court of equity will look through the form qf the corporation and examine the substance of it, and if several corporations are organized for a common purpose, it will look through the forms of all such corporations to the substance thereof, and the fact that several corporations are organized to carry out a common purpose will not prevent redress to an injured party, though the corporation which causes the injury or loss claims to have no connection with the general purpose for which the principal corporation is organized. Its legal entity will not alone protect it.’
“In Ross v. Pennsylvania Railroad Company (N. J. Err. & App. 1930) 148 A. 741, the plaintiff’s intestate was killed in a grade crossing accident by a train of the West Jersey and Seashore Railroad. The defendant owned the majority of the capital stock of this company. The locomotive and coaches were marked ‘Pennsylvania.’ ‘P. R. R.’ appeared on the uniforms of some of the train crew, and the train was listed in the time table of the ‘Pennsylvania Railroad System.’ Letters were introduced to show that the defendant’s claim agent had handled plaintiff’s claim. From a judgment for the plaintiff the defendant appealed, and it was held by the appellate court that the question whether the defendant controlled the train was properly left to the jury, and that its finding would not be disturbed where the facts indicated that the subsidiary was a mere agency of the parent.
“And the following is from Auglaize Box Board Company v. Hinton, 100 Ohio St. 505, 126 N. E. 881:
“ ‘In determining whether one corporation was the agent, tool, or instrumentality of another, the court may look through forms to substance, and ignore a mere colorable corporate entity. This disposition is shown with increasing firmness as the interests of justice require.’
“Other cases illustrating the point are:
“Erickson v. Minnesota & Ontario Power Co., 134 Minn. 209, 158 N. W. 979; Dillard & Coffin Company v. Richmond Cotton Oil Company, 140 Tenn. 290, 204 S. W. 758; S. G. V. Company of Delaware v. S. G. V. Company of Pennsylvania, 264 Pa. 265, 107 A. 721; Oriental Investment Company v. Barclay, 25 Tex. Civ. App. 543, 64 S. W. 80.
“In the Federal courts the rule is also well established. We quote from the opinion of Judge Trieber, in the case of United States v. United Shoe Machinery Company (D. C.) 234 F. 127:
“ ‘Whatever may have been the views of the courts in the early days of corporate existence when there were but few corporations and they mostly confined to the business of a quasi-public nature, at this time courts, and especially courts of equity, will look behind the corporate fiction and if it clearly appears that one corporation is merely the creature of another, the latter holding all of the stock of the former, thereby controlling it as effectively as it does itself, it will be treated as the practical owner of the corporation when necessary for the purpose of doing justice.’
“The following is from the opinion in Re Marcella Cotton Mills (D. C.) 8 F. (2d) 522:
“ ‘If one corporation is wholly under the control of another, the fact that it is a separate entity does not relieve the latter from liability for its acts, and even when one corporation is the owner and proprietor of another, the latter will be regarded as a mere trade name and the real beneficiary cannot resort to the fiction of claiming in the name of the latter to defeat bona fide creditors. * * * As between creditors of an insolvent corporation and stockholders, the policy of the law is always to favor the creditors.’
Other Federal cases to the same general effect are:
“Bishop v. United States (C. C. A.) 16 F. (2d) page 410; Joseph R. Foard Company v. State of Maryland (C. C. A.) 219 F. 827; Lehigh Valley Railroad v. Dupont (C. C. A.) 128 F. 840; Westinghouse Electric Mfg. Co. v. Radio Craft Co. (D. C.) 291 F. 169; Portsmouth Cotton Oil Refining Corp. v. Fourth National Bank (D. C.) 280 F. 879; Luckenbach Steamship Co. v. Grace & Co. (C. C. A.) 267 F. 676; Gulf, C. & S. F. Co. v. Cities Service Co. (D. C.) 281 F. 214; Clere Clothing Co. v. Union Trust & Savings Bank (C. C. A.) 224 F. 363.
“The rule is also well recognized by the Supreme Court of the United States. In Chicago, Milwaukee & St. Paul R. R. Co. v. Minneapolis C. & C. Association, 247 U. S. 490, 38 S. Ct. 653, 62 L. Ed. 1229, the Court, at page 1237 of the Law Edition, after referring to the emphasis laid upon some of its former decisions to the general effect that an identity of stock ownership alone does not create an identity of corporate interest between two companies, goes on to say:
“ ‘While the statements of the law thus relied upon are satisfactory in the connection in which they are used, they have been plainly and repeatedly held not applicable where stock ownership has been resorted to not for the purpose of ¡participating in the affairs of the corporation in the normal and usual manner but for the purpose, as in this case, of controlling a subsidiary company so that it may be used as a mere agency or instrumentality of the owning company or companies. Citing cases. In such a case the courts will not permit themselves to be blinded or deceived by mere forms of law, but regardless of fictions will deal with the substance' of the transaction involved as if the corporate agency did not exist, and as the justice of the case may require.’
“In Hart Steel Company v. Railroad Supply Company, 244 U. S. 294, 37 S. Ct. 506, 61 L. Ed. 1149, there was involved, the | question of whether a judgment against a subsidiary corporation in a patent infringement suit was res adjudicata against the parent corporation. The doctrine of res adjudicata was held to be applicable, the court using the following language during the course of its opinion:
“ ‘There can be no doubt from the record before us that the Elyria Company owned all of the capital stock of the Hart Company; that the latter company was a mere sales agent of the former; that Wood was the salaried manager of the latter; that both the Hart Company and Wood were agents, subject to the control of the Elyria Company, and that in selling the tie plates and as defendants in the litigation they acted wholly under the authority and in the interest of their principal. Identity of interest could not be greater or closer than it was between the defendants in the two cases' — they represented precisely the same single interest, and the Hart Company and Wood, as agent of the Elyria Company, were obviously and necessarily privies to the judgment rendered in its favor in the Circuit Court of Appeals for the Sixth Circuit.’ (Citing cases.)
“A late case is that of Davis, Agent, v. Alexander, 269 U. S. 115, 46 S. Ct. 34, 70 L. Ed. 17, where Mr. Justice Brandéis, in writing the opinion of the court, states the rule to be that where one railroad company actually controls another and operates both as a single system, the dominant company will be liable for injuries due to the negligence of the subsidiary company.”

Under the facts of this case and the law applicable thereto, we necessarily will have to reverse the finding of the lower court.

It is therefore ordered, adjudged, and decreed that the judgment of the lower court be reversed and the demands of plaintiff be rejected as having been extinguished by compensation; and it is further ordered, adjudged, and decreed that the defendant in reconvention do have judgment against the plaintiff in the sum of $155.29; and for all costs.


author: PER CURIAM.

text:
    No. 13,492
    Orleans
    BOWIE v. MENARD’S ESTATE ET AL.
    (December 1, 1930. Opinion and Decree.)
    R. A. Dowling, of New Orleans, attorney for plaintiff, appellant.
    Chas. J. Rivet, of New Orleans, attorney for defendants, appellees.
   ON MOTION TO DISMISS

PER CURIAM.

The grounds upon which appellees move the dismissal of this appeal are as follows:

First, that the appeal was taken during a term of court subsequent to that in which the judgment was rendered, and, therefore, required citation, and that no proper citation had been made.

Second, that the transcript was not filed in this court until more than three days after the return day, as fixed in the order granting the appeal.

As to the first ground we observe that this is a suit brought by Mrs. Georgiana Bowie against the estate of Chas. C. Menard and heirs of Chas. C. Menard, which resulted in a judgment in favor of the following named individuals and against the plaintiff, dismissing her suit: Charles Menard, Margaret Menard, Catherine Menard, wife of James F. Crawford.

At a subsequent term of court a devolutive appeal was taken and citation prayed for and ordered against “the defendant.” The return of the sheriff shows that citation was issued to “Estate of Chas. C. Menard, et als.” without naming any of the persons in whose favor the judgment had been rendered. It is apparent that citation was necessary. C. P. articles 573 and 574. Citation being required, it was the duty of the appellant to pray for it and to “designate the parties to be cited.” See Comire v. Schiro Amusement Co., 6 La. App. 441. No proper citation of appeal having been issued, the appeal must be dismissed.

It is unnecessary to notice the second point upon which the motion is based.

For the reasons assigned, the motion to dismiss the appeal is maintained, and the appeal is dismissed.


author: WESTERFIELD, J.

text:
    No. 13,592
    Orleans
    SCHENCK v. N. O. PUB. SERVICE, INC.
    (November 17, 1930. Opinion and Decree.)
    Henry J. Rhodes and J. A. Morales, of New Orleans, attorneys for plaintiff, appellant.
    Rosen, Rammer & Wolff and Farrar, of New Orleans, attorneys for defendant, appellee.
   ON MOTION TO DISMISS

WESTERFIELD, J.

The dismissal of this appeal is asked upon, the ground that the transcript was filed too late. The original return day was August 12, 1930. An extension was granted to September 12, 1930, and the transcript was filed in this court on September 16, 1930, or four days after the expiration of the extended return day.

Appellant objects to a consideration of the motion to dismiss upon the ground that it was filed” too late; that is, not within three days after the transcript was filed. This contention is unsound. In the case of Le Blanc v. Lemaire et al., 52 La. Ann. 1635, 28 So. 105, 106, the Supreme Court said:

“The transcript was not filed here until March 26, 1900, long after this extension of time had expired. No further extension was sought or obtained. On April 27, 1900, the appellees moved to dismiss on the grounds stated. Appellants resist this, claiming that the motion to dismiss, to be effective, must have been filed within three days following the filing of the transcript here.
“The point here raised is no longer an open question. Repeated decisions of this court have affirmed that, where an appellant fails to file his transcript within three judicial days following the return day or extended return day thereof, he is to be considered as having abandoned his appeal, and a motion to dismiss on this ground is not limited to three days following the filing of the transcript. Coudroy v. Pecot, 51 La. Ann. 495, 25 So. 270; Mutual Loan Association v. Church, 48 La. Ann. 1458 [21 So. 24]; Dwight v. McMillen, 4 La. Ann. 350; McDonogh v. De Gruys, 10 La. Ann. 75; French v. Harrod, 9 La. Ann. 21.”

See, also, O’Reilly Engineering Co. v. Buckner, 5 La. App. 662.

It is also argued that the payment of the filing fees to the clerk of this court indicated an intention to take an appeal, and the fact that the transcript was not filed until later and after the extended return- day is unimportant. The Code of Practice requires the transcript to be -lodged in this court within the time fixed, and consequently the payment of filing fees will not suffice. See article 587, Code Prac.

There are no days of grace allowable on an extended return day. New Iberia National Bank v. Lyons, 164 La. 1017, 115 So. 130.

The transcript in this case not having been filed in this court within time, the appeal must be dismissed.

The motion to dismiss the appeal will therefore be sustained, and the appeal dismissed, at the cost of appellant.

HIGGINS, J., takes no part.


text:
    No. 13,597
    Orleans
    SUCCESSION OF L’ENGLE
    (November 17, 1930. Opinion and Decree.)
    Paul W. Maloney, of New Orleans, attorney for movers in rule and appellee.
    N. E. Simoneaux, of New Orleans, attorney for respondent in rule and appellant.
   WESTERFIELD, J.

The . judgment appealed from is affirmed on the authority of the Succession of Jacob Koppel, No. 13,569, decided by this court October 20, 1930.

HIGGINS, J., takes no part.


text:
    No. 13,608
    Orleans
    CHRISTOFFERSON v. BOARD OF COMMISSIONERS OF THE PORT OF NEW ORLEANS
    (November 17, 1930. Opinion and Decree.)
    Swords & Jung, of New Orleans, attorneys for plaintiff, appellee.
    Harold A. Moise, of New Orleans, attorney for defendant, appellant.
   JANVIER, J.

This is a suit for compensation brought by the widow of a former dock patrolman, employed by the board of commissioners of the port of New Orleans, one Charles Christofferson, who, while patrolling his beat in the line of his duty, was shot and killed by one Stuart, an employee of a private detective agency.

The said Stuart was insane at the time of the killing and has since been committed to an insane asylum.

The facts are admitted, and the sole question presented depends upon an interpretation of the Workmen’s Compensation Law of this state.

The district court, having come to the conclusion that the statute affords protection under such circumstances, rendered judgment as prayed for. That judgment is now assailed.

Defendant contends: That the Compensation Statute, being Act No. 20 of 1914, as amended, contemplates two classes of employees, those of the state, parish, municipality, and the various public boards and bodies, and those of the private employer; that an employee of the state, parish, etc.— a public employee — is automatically placed under the protection of the act, whether he wishes it or not, while the employee of the private master has the option, as has his employer, to declare that the act shall not apply; that in the case of the private employee recovery can be had if the injury occurs while the employee is performing services incidental to his employer’s trade, business, or occupation, regardless of any lack of causal connection between the accident and the employment, while in the case of the public employee there can be no recovery even if the employee is injured while at work, unless the accident which caused the injury had causal connection with the employment.

It is thus argued that, if Christofferson had been in the employ of a private person, firm, or corporation, his death, while at work, would have entitled his widow to compensation, even though the cause — his being shot by an insane person — according to counsel for defendant, had no causal connection with the employment, but that, since he was in the employ of a public board, his death, under such circumstances, does not give rise to liability under the statute.

This distinction between the two classes of employees is said to result from certain language contained in the statute in question.

Section 1 of Act 20 of 1914 clearly has application only to employees of the state, parish, township, public board, or commission, etc.

Section 1, paragraph 2, of that act clearly includes only employees of private firms, persons, and corporations.

Section 2 provides that, in the case of the employees listed under section 1, paragraph 1 (public employees), recovery can be had only for injuries sustained as the result of “accident arising out of and in the course of such employment.”

If, however, section 2 is to be limited in its meaning to public employees only, then the entire act appears to be meaningless so far as private employees are concerned, because it does not appear that in any other part of the act is there any statement making the private employer liable to the private employee, though such was the very purpose for which the statutes were enacted. In other words, paragraph 1 of section 1 defines “public employees”; paragraph 2 of section 1 defines “private employees”; and section 2, which contains only one paragraph, states that under certain circumstances. the public employer shall be liable to the public employee, but there is no section similar to section 2 which applies to private employees.

The argument of counsel for the defendant is most ingenious and does not seem to be without considerable foundation. There is unquestionably, in the original statute and in the amendments, language which, if limited to the private employee, would mean that recovery in his case depends entirely on the employment, and there is other language which, if limited to the case of the public employee, would prevent recovery in his case unless the accident causing the injury has causal connection with the employment. But a reading of the whole statute and of the decisions of the Supreme Court interpretative thereof leads to the inevitable conclusion that no such distinction was intended to be made by the legislators who enacted the statute in question, and it is very evident that our Supreme Court is of this opinion, because, in Ferguson v. Cady-McFarland Gravel Co., 156 La. 871, 101 So. 248, that court applied to the case of a private employee the standard which, if counsel here is correct, should be applied only to the public employee. In that case it was found necessary to determine whether intentional assault by one employee on another was “an accident arising out of the employment.”

If the distinction which counsel contend for really exists, the court need not have come to any other conclusion than that a private employee may recover if an injury arises “in the course of the employment,” causal connection between the accident and the work being unimportant. The court, however, was not content with finding that such injury was sustained in the course of the employment, but, having so determined, found it necessary to investigate whether such an attack was an accident, and whether, if such an accident, it “arose out of the employment.”

But even if the distinction for which counsel for the defendant contend really exists, still we are of the opinion that, under the facts presented here, in view of the opinion of the Supreme Court in the Ferguson ease, the situation would not be saved for the defendant by that distinction, because in that case it was held, as we have stated, that an attack by a personal enemy while at work constitutes an accident arising out of the employment, and that conclusion is based on the reasoning that such employment was made more hazardous by enforced collaboration with a possible personal enemy. We see no reason to distinguish between the danger of being forced to work alongside of a possible personal enemy and the risk of being forced to work near a possible insane person. In neither case was the mental condition which caused the injury known to either the employer or the employee.

The judgment appealed from is affirmed at the cost of appellant.

HIGGINS, X, takes no part.


text:
    No. 3585
    Second Circuit
    U. S. SECURITIES CORP., INC., v. EXCHANGE NATIONAL BANK OF SHREVEPORT
    (November 7, 1930. Opinion and Decree.)

      Phelan W. Eatmon and Dickson & Denny, of Shreveport, attorneys for plaintiff, appellant.
    Lyons & Prentiss, of Shreveport, attorneys for defendant, appellee.
   DREW, J.

This suit was brought by the plaintiff, United States Securities Corporation, Inc., against the defendant, the Exchange National Bank, to recover the sum of $400, with legal interest thereon from July 1, 1928, which sum the defendant had charged the plaintiff for the release of certain money held by the defendant as collateral security for plaintiff’s indebtedness to the defendant.

Plaintiff alleged that ' the charge was wrongful, illegal, unwarranted, and ultra vires, and that other sums in the collateral security account had been released by the bank without charge.

Defendant admitted that the charge had been made, and set up that the release of other sums had been merely transactions on its books by which sums had been transferred from the collateral security account to the indebtedness owed by plaintiff to reduce the obligation in the sums so transferred. It also alleged that the transaction for which the $400 was paid was one in which the president of the plaintiff corporation had requested the defendant bank to release outright the sum of $8,300 in order that he might buy all of the outstanding stock of the plaintiff corporation not owned by him, and that at the time the transaction was entered into the plaintiff was indebted to the defendant in a sum of approximately $28,000, the greater portion of which was past due; that it held as collateral security for this debt a sum of approximately $18,000 in cash which, under the banking laws, the defendant had the right to apply against this indebtedness; and that as a favor to the plaintiff the defendant allowed the plaintiff to withdraw $8,300 of this collateral security, which was cash money, and did it knowing that plaintiff intended to use said sum to retire the outstanding stock, thereby reducing the bank’s security by that sum and weakening by just that amount the indorsement of the plaintiff on its indebtedness to defendant. The bank allowed $8,300 in cash, which it could have applied on plaintiff’s indebtedness, to be withdrawn for the sum of $400.

After the answer was filed, plaintiff filed a rule to take judgment against defendant on the face of the petition and answer. After trial of the rule it was rejected by the court. The case was then tried on the merits and the demands of the plaintiff were rejected. Prom this judgment the plaintiff has appealed.

The plaintiff was engaged in buying from automobile dealers the chattel mortgage notes taken by them in selling automobiles on credit, and plaintiff in turn rediscounted such notes to the defendant and deposited the notes with defendant as collateral security for the money advanced.

It seems that one of the stockholders of plaintiff, who owned and controlled a majority of its stock, demanded that the affairs of the corporation be liquidated, and, not being satisfied with the manner in which it was being liquidated, threatened to take over the affairs of the corporation and wind it up, provided the stock he controlled was not taken up by the corporation. He agreed to take 50 cents on the dollar for the stock, which in dollars and cents amounted to $8,300 after a deduction of $300 owed to the corporation by another stockholder whose interest this stockholder represented.

At this time plaintiff was indebted to defendant in the sum of nearly $28,000 and had on deposit in the collateral security account at defendant bank the sum of approximately $18,000 in cash.

During the time of the liquidation of plaintiff the funds collected on the collateral notes were deposited in the collateral account, and, with consent of defendant, sufficient of it was withdrawn to pay the salaries of the employees of plaintiff and the necessary expenses of carrying on plaintiff’s business as a going concern for the purpose of liquidation, and the balance of such funds was from time to time transferred from the collateral account to reduce the indebtedness of plaintiff to defendant. No money was allowed to be withdrawn from this collateral account for any other purpose.

Mr. ~W. M. Thomas, who became the sole owner of all stock in the plaintiff after purchasing the other outstanding stock witfi the $8,300, applied to defendant, stating the requirements of the then other stockholder, and requested the right to withdraw from the collateral account the sum of $8,300 to retire the outstanding stock, which request was at first refused. He then made attempts and efforts to obtain the amount from other persons and to transfer plaintiff’s account to other banks, without success. After which he returned to defendant with the same request, and was told that for defendant to allow the withdrawal of this fund would greatly weaken the security it then held against the indebtedness of plaintiff to it. Finally Mr. Thomas offered to pay defendant the sum of $400 in consideration of the withdrawal of the $8,300 from the collateral securities fund, and this was finally agreed to by the defendant. The $8,300 was withdrawn and the outstanding stock retired, and defendant was paid the sum of $400.

The testimony shows that on final liquidation of the affairs of plaintiff, defendant was paid in full the indebtedness of plaintiff to -it, and soon thereafter plaintiff filed this suit seeking to recover the $400 for the alleged reason that it was a wrongful charge, unwarranted, and an act ultra vires of the defendant.

The entire stock of the plaintiff was owned by Thomas, and he testified that he was forced to obtain the $8,300 in order to prevent himself from losing the money he had invested in the plaintiff’s stock, .and that it was for this reason he had paid the $400, but that it was paid under protest. He obtained the money needed' and avoided the loss that he claimed would have been incurred by plaintiff.

The defendant released $8,300 of the cash security, and thereby greatly reduced its chances of collecting the debt plaintiff owed it. The defendant was under no obligation to allow plaintiff to withdraw the collateral, and we might say that permitting the withdrawal was unwarranted on defendant’s part, in so far as its stockholders and depositors were concerned, and a dangerous practice for any bank to engage in.

However, the plaintiff got value received for its $400, and, according to the testimony of Mr. Thomas, should be the last to complain.

Article 5136 of the Revised Statutes of the United States (12 U.S.C.A., sec. 24) designates, among other powers possessed by national banks, the following:

“Third. To make contracts. * * *
“Seventh. To exercise by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking,” etc.

This section also provides how these powers may be exercised, by negotiating promissory notes, drafts, bills of exchange, etc., but it has been repeatedly held not to read as limiting the mode of exercising “such incidental powers as shall be necessary to carry on the business of banking,” but as descriptive of the kind of banking which is authorized.

The power of the defendant to make the charge complained of we think is given in the above section under powers incidental to and necessary to carry on the business of banking.

However, if we should hold that the act in question of the defendant was ultra vires its power, we think the plaintiff is without right to complain. Plaintiff suggested the transaction and received the benefit of it, saving itself thereby, according to Thomas’- testimony, many thousands of dollars. And it has been universally held that under such circumstances one who has received the benefit of an act that is ultra vires the corporation will not be permitted to plead that the act was ultra vires.

As a general rule an act that is ultra vires of a national bank cannot be pleaded by a party to the transaction, but only by the government against the bank. It cannot be pleaded by one benefited by the ultra vires act complained of.

In the case of Dupree v. First National Bank (Tex. Civ. App.) 146 S. W. 608, 611, the court said:

“That * * * national banking corporations are vested with ample power to make such contracts relating to property lawfully held by them as security as may be necessary to enable the corporation to reduce the security to money, and, in furtherance of this purpose, they necessarily have the authority to deal freely with the security and make such contracts with reference to its disposal as in the judgment of its officers may be deemed necessary or expedient and which will enable the corporation to dispose of the security to the best possible advantage.”

The majority stockholder of plaintiff had threatened to take over the affairs of the corporation, junk its repossessed cars, wind up its affairs, and take whatever loss he was occasioned thereby, and was not willing that the liquidation of the affairs of the corporation should be prolonged. It therefore became necessary for the stock owned by him to be bought by the corporation, and no doubt in the judgment of the officers of defendant it was deemed better for it for the liquidation to be worked out on orderly lines; and, while they were reducing the security held by the defendant some $8,300, and only receiving $400 in return for it, their judgment proved correct, for in the final liquidation of the affairs of the plaintiff the defendant was paid in full. We think the defendant acted under the implied powers it had.

It is therefore ordered, adjudged, and decreed that the judgment of the lower court be affirmed, with costs.


author: WEBB, J.

text:
    No. 3958
    Second Circuit
    THOMPSON-RITCHIE GROCER CO. v. BEDSOLE ET AL.
    (January 27, 1931. Opinion and Decree.)
    B. F. Thompson, Jr., of Alexandria, attorney for plaintiff, appellee.
    Modisette, Irion, Comegys & Switzer, of Shreveport, attorneys for defendants, appellants.
   WEBB, J.

This action was instituted by plaintiff, Thompson-Ritchie Grocer Company, against the widow and heir of Thomas L. Bedsole, to revive a judgment in favor of plaintiff, against Thomas L. Bed-sole, and the judgment being rendered in favor of plaintiff as demanded, defendants appeal.

The judgment was rendered on default, and there is not any suggestion that the proceedings had were in any respect illegal, and the evidence introduced on confirmation of the default is not in the record; but counsel representing the parties have filed a motion reading as follows:

“This motion made by attorneys for Lottie Mayo Bedsole and Jessie V. Bedsole, defendants and appellants, and attorneys for Thompson-Ritchie Grocer Company, plaintiff and appellee.
“It is agreed by said both parties that this Honorable Court amends said judgment appealed from so as to relieve the said Lottie Mayo Bedsole and Jessie V. Bedsole of any personal liability thereunder, but said judgment to remain in full force and effect against any property belonging to the said Thomas L. Bedsole or his succession or estate.”

The judgment revived was a personal judgment against Thomas L. Bedsole, and while there could not be any reason why the parties could not agree that the judgment should bear only against the property left by Thomas L. Bedsole, there is no authority cited showing that we have the authority to so amend the judgment, or to render a judgment in rem under proceedings in personam on motion of counsel for the parties.

Finding no error in the judgment appealed from, it is affirmed at appellants’ cost.


author: ELLIOTT, J. ELLIOTT, J.

text:
    No. 523, and on Rehearing No. 626
    First Circuit
    RAPIDES GROCERY CO. v. CLOPTON
    (December 30, 1929. Opinion and Decree.)
    (March 5, 1930. Rehearing Granted.)
    (June 30, 1930. Opinion and Decree on Rehearing.)
    (October 7, 1930. Writs Granted by Supreme Court.)
    (December 1, 1930. Judgment of Court of Appeal Reversed by Supreme Court.)

      Hawthorne & Stafford & Pitts, of Alexandria, and George K. Perrault, of Opelousas, attorneys for plaintiff, appellee.
    John W. Lewis, of Opelousas, attorney for defendant, appellant.
   ELLIOTT, J.

Rapides Grocery Company, Inc., claims of B. W. Clopton $208 as the balance due on a goods and merchandise account sold and delivered to him between March 13th and the 1st day of April, 1926. The sworn account sued on annexed to the petition shows that the sales consisted of cotton seed; 20 sacks of which were sold on March 13, 1926, in amount $150, and 40 sacks on April 1, 1926, in amount $300. Interest charged on account to November 1st, $8. Total $458. Credit for $250 cash was given May 5, 1926, leaving a balance of $208. Defendant admitted buying the cotton seed from plaintiff at the time and prices alleged, but denies any present indebtedness.

He alleges by way of reconvention that during the early part of 1926 he ordered from plaintiff 40 bushels of soy beans at $4.50 per bushel, under warranty expressed and implied that they would be of good sound quality and would germinate and fructify under proper planting and cultivation.

That during the month of March he planted about 100 acres of the beans in ground suitably prepared for tbe purpose. That he observed during the month of April that the beans were not coming up and had not come up at all. That he promptly notified plaintiff of such fact and kept him informed thereof. That he then experimented with the seed and ascertained that they were rotten when received and would not germinate. That plaintiff was • notified of that fact and knew that said seed were fundamentally worthless at the time they were sold to him, and that they would not germinate or fructify. That defendant refused to pay for same on said account. That due to the bad quality of the seed, he lost the fertilization of his land and the fruit which the plants would have borne, and a further loss of 100 acres of beans which he estimated would have yielded 20 bushels to the acre, at $1 per bushel, $2,000, and 100 acres of hay which would have yielded six tons per acre, at $10 per ton, $6,000. Making an allowance for the expense of planting, cultivating, and harvesting, he estimated a net loss of $4,000 as a result of the inherently bad and rotten seed furnished him by the plaintiff. That he made payments on open account to the plaintiff before he discovered the unsound and rotten condition of said bean seed, because of his indebtedness for cotton seed, treating the account as a whole, but did not knowingly or advisedly make any payments whatever, specially on account of the said soy beans, after he discovered their worthless character.

He claims of the plaintiff in reconvention the sum of $4,000.

The plaintiff filed against defendant’s demand in reconvention a plea of prescription of one year, and urges that it is good, whether the cause of action set up against it be regarded as an act, coming under the provisions of the Civil Code, art. 2315, or as a redhibitory action under the Civil Code, art. 2546, because more than two years had elapsed since defendant’s discovery of the alleged vice. That moreover, the avoidance provided for by the Civil Code, arts. 1882, 2047, and Code of Practice,, art. 20, is restricted to suits that have been brought to enforce that particular contract. That the object of the present suit is to recover the balance due for the cotton seed only. That there is no demand before the court for the price of the soy beans.

There is no demand on the part of the plaintiff for the price of the soy beans, yet it is established, as well by its witnesses as it is by the testimony of the defendant, that it sold and delivered to defendant 40 bushels of soy beans for seed purposes at the same time it sold him the cotton seed. The plaintiff however says, through Mr. Stafford, its manager, that its account sued on is the only one it had against defendant on March 13, 1926, at which P'me defendant remitted $250 on account. His testimony is as follows:

“Q. I notice here you have given credit to Mr. Clopton on May 5th, 1926 for $250.0.0. How much was due at the time, according to your books, by Mr. Clopton to your firm, at the time you received the remittance?
“A. $450.00.
“Q. Then, when you received this remittance from Mr. Clopton was there anything in the check or in the letter covering the remittance indicating to what particular purchase of Mr. Clopton this remittance should be credited?”

The witness, after referring to the letter from Mr. Clopton to the plaintiff, which accompanied the check, answered:

“A. I presume so; yes sir.”

The evidence shows that two agents of plaintiff called together on defendant at his plantation, and he bought cotton seed from one of them and bean seed from the other; Mr. Bogaerts being the one from whom he bought the bean seed. The order for both kinds of seed were given ac the same time, but there were two shipments of cotton seed. The evidence indicates that the sale of the bean seed took place at the first sale of cotton seed. Mr. Bogaerts, speaking of a conversation with Mr. Clopton in regard to the beans, says:

“Q. Did you make any inquiry of Mr. Clopton as to when and in what manner he had planted the beans?
“A. I asked him and he told me, in March.”

As the second shipment of cotton seed took place on April 1st, it is thus established with reasonable certainty that defendant bought the beans on March 13, 1926, that being the date of the first shipment of cotton seed. Mr. Bogaerts further said:

“Q. I wish you would give, in as near detail as possible, the conversation you had with Mr. Clopton at the time you sold him the seed.
“A. When I called on Mr. Clopton the primary object was to sell him cotton seed, and I found out that he had recently bought this plantation and that he was in the market for seed for practically the entire place; cotton seed, corn, peas, etc. And after selling him the cotton seed I naturally went over the lines that the house carried, in my department, mentioning all the seed that were listed and he bought cotton seed, corn and beans.”

This statement also indicates that the sale of the bean seed took place on his first visit to defendant for the purpose of selling him seed.

Mr. Clopton, speaking of his purchase of seed from plaintiff. and of his remittance of $250, says:

“Q. When you were placed upon the stand for the purpose of cross-examination you started to make a statement of the account you were questioned about and counsel stopped you, will you make that statement with regard to the soy beans?
“A. The soy beans did not show on his statement and I did not know why they should be left off. I bought all the seed at one time from the agent they had through here.
“Q. It was one account?
“A. Yes.
“Q. When you made the remittance of $250.00 did you send that as payment on the soy bean order, or did you send it intended as credit on the general account?
“A. Just as a credit on the general account. It would not offset any one item.”

The letter which defendant wrote accompanying the check for $250 shows that he did not specify how it was to be applied. But as 40 bushels of beans at $4.50 per bushel amounts to $180, the remittance was more than the beans amounted to. Besides, the language of the letter was such that defendant cannot be considered as intending to pay anything on the beans. The plaintiff and defendant live in different parishes, and under the law, Code Practice, art. 375, the defendant may in such instances institute a demand against the plaintiff in reconvention for any cause although such demand be not necessarily connected with or incidental to the main cause of action. Defendant therefore had a right to bring a demand in reconvention against the plaintiff, as he has done, based on a sale of soy beans sold him for seed: the beans being worthless for such a purpose at the time of the sale, causing him damages as alleged in his demand in re-convention.

The fact that plaintiff did not see proper to charge defendant for the beans cannot deprive defendant of his right to recover the damages caused him as a result of the sale.

Defendant’s demand in reconvention was not allowed in the lower court. It constitutes the ground for controversy in this court.

The worthlessness of the beans for the purpose for which they were bought and sold is established. There is no foundation for plaintiff’s veiled contention that defendant may not have properly prepared his ground, may have planted them too deep, or his soil may have been too wet, etc. The evidence shows that their failure to germinate and come up was due entirely to the badness of their quality at the time of the sale.

Plaintiff argues that it did not warrant that the bean seed would germinate, and that the demand in reconvention being due to such a failure, it is not liable on said account.

Mr. Clopton, testifying on this subject, says:

“Q. There was no sort of certificate of guarantee that came with the seed?
“A. No, except when I bought them I told them I wanted good seed. There was no certificate with the seed that I know of.”

The Act No. 119 of 1914, sec. 1, and section 3 (amended by Act No. 180 of 1916) governed this sale. The beans were agricultural seeds within the meaning of the act. The title of the act says that it is “To regulate and control the sale of agricultural seeds; to provide for the test and examination of same; and to provide for the punishment for the violation thereof.”

Soy bean seed are not expressly mentioned in the act, but they come within the scope of “forage plants” referred to in section 1 of the act, and also within the contemplation of section 3, which provides that a seller of seed must deliver a statement to the buyer showing approximately the percentage of germination, together with the date of the test. This requirement was not complied with by the plaintiff.

The Act No. 308 of. 1926 did not go into effect until January 1, 1927.

Mr. Bogaerts, plaintiff’s witness, testified that he did not warrant that these soy bean seeds would germinate; that seed houses do not warrant that the seed they sell will come up. It may be that such is the custom when selling garden seed in small packages and quantities, but when it comes to plantation owners like the ' defendant, buying large quantities of seed for the purpose of planting their plantations in fertilizer and forage crops, it is reasonable to expect the parties to make stipulations on the subject. The result of selling seed, worthless as such, when a hundred acres are to be planted, is no small matter. Such crops are highly valuable, and serious consequences follow a failure to make one. Such a farmer expects good seed and ordinarily Will not be satisfied to take and pay for seed which requires work and expense to prepare the ground for and plant, when no assurance exists that the seed will germinate.

Supposing in this case that there was no express agreement on the subject of warranty; there was implied warranty, under the Civil Code, art. 2520, that the thing sold would be useful for the purpose for which it was bought.

Seed bought for the purpose of being planted, that will not come up, are of no value. No real consent to buy takes place because the seed, in such a case, are not an equivalent for the price. Civil Code, arts. 1824, 1896, 2439, 2464. A vice of that kind in soy beans is not discoverable by simple inspection, but it is the same in effect as if the beans had, unknown to the parties, perished. In such case the plaintiff must hear the loss which resulted from the vice. Civil Code, art. 2532.

Plaintiff, arguing against recovery by defendant, claims that it called on him to return the unplanted seed for credit, and that it would have given him credit for their value had he done so. The record contains a letter from plaintiff to defendant dated October 18, 1926, in which it says:

“We would thank you to return us, the balance of the soy beans that you have on hand. Please see that the sacks have no holes in them, so that we will not have a claim with the railroad company. Upon the receipt of these soy beans we will issue credit memorandum for the value of the same.”

In October, 1926, plaintiff wrote:

“We again request your attention in the matter of the returning of the unused portion of soy beans, as we are anxious to close out the balance of $208.00 which we note is outstanding on your account.”

This was followed on November 1st by another letter in which plaintiff acknowledged receipt of a letter from defendant, in which he had informed them that hogs had gotten into the toolhouse and destroyed the seed. He suggested to defendant that the only way out of it then was for him to send his check for $208.

This $208 which the plaintiff refers to in its letter of October 26th and November 1st is the balance claimed in this case on account of the cotton seed. These letters indicate that plaintiff was permitting this balance to await an adjustment of defendant’s expenses and losses resulting from the fact that the soy beans that had been planted had not come up.

Defendant testifies, and we think it true, that the portion of the bean seed that had not been planted would have been returned to plaintiff soon after it was found that the portion planted would not germinate, had it not been that plaintiff was unwilling to receive them back. Defendant offered to return them, but plaintiff wanted to wait, so it claimed to him, until it could hear from the Snelson Seed Company of Athens, Ga., from which it had bought the seed.

Mr. Bogaerts says in his testimony that he learned from the Snelson Seed Company in May or June, 1926, that no adjustment from them could be expected, but no demand was made on defendant to return the unplanted seed until the 18th of October, and his offer then was to take back good beans. That those he saw in defendant’s outhouse were not good beans, and his offer did not apply to them. Note Testy. p. 12; Transcript 59.

His position on this subject, as it appears from the note of testimony, is such that we are unable to form any conclusion as to whether he means that he offered to take back the unplanted bean seed or not. He estimated as a witness that bean seed would remain in a good state of germination for six months. He was not sure that they would not keep this long in a tight place in summer, but thought they would for that length of time in March and February.

Bogaerts also testified that he visited Mr. Clopton’s plantation in May and looked at the bean seed. Mr. Clopton was absent at the time. That the seed was then stored in an outhouse, in bad condition, in a damp place, the door of the house open, and it looked' like hogs had been in there. That the effect of leaving seed in such a place is that they will rot.

The defendant was examined on this subject, and we are satisfied that the facts are as stated by him. When the seed in question arrived at his plantation, he stored them in a seedhouse or gear room, a tight room about 12x14 used to keep seed in. He planted about half of the bean seed, and when they did not come up he left the remainder, for the time being, in the seedhouse. At the time Mr. Bogaerts was asked by defendant to go and look' at the unplanted seed, and on which occasion he did not go, they were in this house awaiting some action on the part of the plaintiff as to their disposition. Later, it appearing that plaintiff was not intending to do anything, and the beans beginning to give out a bad odor, he moved them into another house called the toolhouse, in which they were at the time plaintiff’s witness went to look at them. Defendant testifies that the beans were rotten and of no value at the time he moved them out of the seed-house. It was after they had been moved into the toolhouse that the hogs found them.

According to defendant, the unplanted beans were rotten and had no value at the time they were moved out of the seedhouse in which they had been stored when first received. Defendant did not buy them for feed. It is not shown that they had any food value of importance at the time the hogs found them. If they had any, plaintiff lost it as a result of its delay and neglect in disposing of them, after having been informed that they had no value as seed.

Plaintiff contends that it did not know of the vice of the bean seed at the time of the sale. We are satisfied that such was the case.

Defendant’s recovery is therefore limited by the law, Civil Code, art. 2531, to the return of the price and the reimbursement of the expenses occasioned by the sale. Defendant prepared his ground for the soy beans as is ordinarily d-me, and planted them. The sum thus expended for labor, seed, 'and time of teams and tools does not appear as precisely as it could have been shown, but enough appears to indicate that the expense of preparing the ground for and planting 100 acres is equal to $208.

For these reasons the judgment appealed from will be amended in regard to defendant’s demand in reconvention.

There will be a judgment in favor of the plaintiff, Rapides Grocery Company, Inc., and against B. W. Clopton, defendant, for $208, as allowed in the lower court. And there will be at the same time judgment in favor of B. W. Clopton and against Rapides Grocery Company, Inc., on his demand in reconvention against the said plaintiff, for $208. And it is ordered that the said judgment in reconvention extinguish the judgment on the main demand.

As thus amended, the judgment appealed from is affirmed. The Rapides Grocery Company, Inc., appellee herein, to pay all costs in both courts.

ON REHEARING

ELLIOTT, J.

Rapides Grocery Company, Inc., plaintiff appellee, alleges in its petition for rehearing that our opinion and decree herein is contrary to the law and evidence and therefore erroneous in holding that the bean- seed sold defendant was worthless as seed, and that the court did not pass on the question of prescription of one year which it had interposed against defendant’s demand in reconvention, and that the placing of the cost in both courts on the plaintiff was not equitable.

The hearing was granted, and we have gone over the grounds of complaint.

As for the complaint that the- bean seed was not worthless, we remain satisfied with our opinion and decree on that subject.

We are satisfied that the defendant was damaged as held as a result of having been sold bean seed that would not germinate. The evidence is not as precise as might have been as to the amount of defendant’s loss on that account, but the amount fixed as due defendant on that account is not too much.

On the question of prescription, we are satisfied with our opinion and decree on that subject. The sale of the cotton seed was negotiated by one agent representing plaintiff, and that of the soy bean seed by another agent representing the plaintiff. The two came to defendant’s residence together and worked together in selling plaintiff seed. One sold him the cotton seed; the other one immediately sold him the bean seed. The cotton seed and bean seed were sold to the defendant at the same time; the two objects constituting one obligation.

Defendant testifies that it was one account, and it seems to us that the two items should have appeared as such on plaintiff’s account against the defendant. But plaintiff saw proper, after waiting more than a year, to bring suit for the cotton seed, and made no mention of the bean seed; yet plaintiff had received from the defendant a check for $250, which was more than the price that had been agreed on for the bean seed.

It seems to us to be a proper inference from plaintiff’s action in the matter that it endeavors to leave the bean seed out of view, knowing that they were worthless as seed and that defendant was damaged as a result of the sale.

If plaintiff’s procedure accomplishes the. end which seems to be its object, then it will recover on account of the cotton seed and escape the consequences resulting from its sale of worthless bean seed.

In our law, an obligation is, in its general and most extensive sense, synonymous with duty, so we feel justified by the facts and circumstances in trying to enforce on the plaintiff what seems to us to be plaintiff’s duty. The plaintiff cannot justly recover of defendant on account of the cotton seed without at the same time accounting to him for the consequences of having sold him worthless bean seed. It appears to us that defendant’s demand in reconvention herein is necessarily connected with and incidental to the demand which the plaintiff has brought against the defendant. But, as plaintiff and defendant live in different parishes, such a connection and incident is not necessary; consequently, even if we were to take the position that the sale of the cotton seed and bean seed were not the same transaction, still the present suit is a proper time for defendant to claim an accounting from plaintiff as to the loss sustained because of the bean seed.

The provision made in the Code Practice, art. 20, is authority for holding that defendant’s loss sustained on account of the bean seed may be brought forward to offset and extinguish plaintiff’s demand on account of the cotton seed, although more than one year has passed since the sale in question.

In Thompson v. Milburn et al., 1 Mart. (N. S.) 468 (volumes 1 and 2 bound and paged together), the court said;

“The article of our code, which directs that the action of redhibition must be brought in one year at farthest from the date of the sale, can only receive an application in cases where the vendee is plaintiff, and brings an action. It leaves untouched the right to offer the want of consideration as a defence against paying the price agreed on.”

The facts in that case were different from that before the court, but the principle on which the case is based is that a party may urge defensively a right based on a cause of action, even though the action would be prescribed if the party urging it defensively had brought it forward as a ground of action in a suit brought by him on the same. Davenport’s Heirs v. Fortier et al., 3 Mart. (N. S.) 695; Bushnell v. Brown’s Heirs, 4 Mart. (N. S.) 499; Paxton v. Cobb, 2 La. 137; Nichols v. Hanse & Hepp, 2 La. 385; Girod v. His Creditors, 2 La. Ann. 546; Gillespie v. Cammack, 3 La. Ann. 248; Lafiton v. Doiron, 12 La. Ann. 165; Riddle v. Kreinbiehl, 12 La. Ann. 297; Davis v. Millaudon, 14 La. Ann. 868; Edwards & Kurz v. Cold Storage Co., 46 La. Ann. 360, 15 So. 61; Framton v. Nelson, 142 La. 850, 77 So. 767 — are to the same effect.

In the case Girod v. His Creditors, 2 La. Ann. 546, the recovery was by way of a demand in reconvention, as in the present case. In the case Lafiton v. Doiron, 12 La. Ann. 297, the. seller was not aware at the time of the sale of the bad quality of the thing sold.

In the present case' we assume that the plaintiff was not aware at the time of the sale that the bean seed would not germinate.

The prescription of one year pleaded by the plaintiff against the defendant’s demand in reconvention was in effect, al-' though not expressly so stated, overruled in our first opinion and decree. We now expressly state that it was and is overruled.-

As for the cost, we placed the payment on the plaintiff. It seemed to us that it was equitably done, due to the plaintiff’s action as indicated by the record. We are satisfied that it should remain as previously ordered.

Our previous opinion and decree herein being correct in every respect, is now reinstated as the opinion and decree of this court and made final.