#### SEALY REALTY COMPANY, Inc., Plaintiff-Appellee, v. Joe BRANGATO, Defendant-Appellant.

No. 11200.

Court of Appeal of Louisiana. Second Circuit.

April 29, 1969.

Rehearing Denied May 27, 1969.

C. P. Brocato, Shreveport, for appellant.

Wiener, Weiss & Wiener, Shreveport, for appellee.

Before GLADNEY, AYRES and PRICE, JJ.

GLADNEY, Judge.

This appeal is from a judgment rendered in favor of plaintiff for a real estate commission. The defendant-appellant assigns error to the holding by the trial court that a conveyance made by defendant to Lemuel Sliman was an act of sale rather than a pignorative contract.

Joe Brangato, the owner of a lot on Line Avenue in Shreveport, listed Sealy Realty as exclusive agent to find a buyer for his property. The agreement executed January 11, 1967 recited in part:

> “* * * I hereby employ said AGENT as my sole and EXCLUSIVE AGENT to sell for me the following described property: * * * for a price of $25,-000.00 * * * ”

The commission was to be due “in the event of a sale or exchange of said real property by said AGENT or any other agent or person including OWNER, while this contract is in force. * * * The contract was for six months with provisions for extensions. Sealy made contacts with prospective buyers without results.

*621On April 7, 1967 Brangato executed a cash sale deed in favor of one Lemuel Sli-man for a recited consideration of $21,500. Sealy made demand on Brangato for $1,-290. Brangato refused to pay because he claimed the sale did not actually transfer ownership to Sliman but was a security transaction for the security of Sliman for a loan.

Sealy filed suit May 9, 1967 and judgment was rendered in its favor for the commission claimed. The court determined that the listing agreement provided for a commission to Sealy irrespective of whether Sealy or Brangato sold the property; it further rejected Brangato’s contention that the sale was only a pignorative contract or a sale reserving the right of redemption. The main issue raised on this appeal is whether the agreement entered into between Sliman and Brangato was a pignora-tive contract, a sale subject to redemption.

A real estate broker is not entitled to a commission on a sale made by the owner if he is an agent of the seller except when the owner sells to a prospect obtained by the agent. But if the agent is given the exclusive right to sell, the agent is entitled to a commission on a sale made by the owner. George Lawrence & Sons, Inc. v. Lucas, La.App., 198 So.2d 427 (4th Cir.1967). In this case as Sealy was an exclusive agent, however, the agreement provided that the commission would be due although the owner sold the property. The parties specifically provided for a determination in the event that the owner did find a buyer during the existence of the contract.

The only written evidence of the agreement between Brangato and Sliman is a cash sale deed. The deed itself does not contain any reservation of redemption in Brangato’s favor. No counter-letters or other written agreements have been presented which bear on the issue. The only evidence of the nature of the contract between Brangato and Sliman consists of oral testimony. Jack Rogers of Sealy testified that about March 30, 1967 Brangato told him during a telephone conversation that he was in need of money and had made an agreement with Sliman to make a loan on the property in which transaction Sliman was to have the deed and Brangato was to have six months in which to redeem the property. Rogers further testified that Brangato told him the property was still for sale and that in the event Rogers could find a buyer he could still convey the property. Rogers admitted that Brangato told him the transaction was merely a security device but Rogers informed Brangato that Sealy would consider the transaction a transfer and consider itself entitled to its commission. Rogers also said he offered to escrow the commission for Brangato to be returned to him when and if the property was redeemed.

Lemuel Sliman testified that Brangato needed some additional money in connection with the purchase of an additional tract of land and that it was agreed between themselves that Brangato would deem the property to Sliman. Proceeds of the loan, $21,500, was to be given Brangato who was to have one year in which to redeem. Sliman testified that for the period of one year, Brangato had the control of the property and was obligated for taxes and expenses, but he had the right to sell the property when he wished for an amount in excess of the $21,500. After the one year however, the property, if unredeemed, belonged to Sliman. Sliman testified that Brangato paid the taxes for 1967 and although he had the grass on the lot cut Brangato reimbursed him for these costs. Brangato’s testimony corroborated that of Rogers and Sliman.

Sales subject to redemption (vente á réméré) have been consistently treated by the courts of this state as pignorative contracts or security devices if the vendor has remained in possession. This type of arrangement is considered in the same light as a mortgage. Even where the vendor retains possession other evidence may show that the sale with the option to redeem is a real sale. See Coddou v. Gros, *622235 La. 25, 102 So.2d 480 (1958); Latiolais v. Breaux, 154 La. 1006, 98 So. 620 (1924) and Marbury v. Colbert, 105 La. 467, 29 So. 871 (1901). In the Marbury case is the following':

> “ * * * redeemable sales of immovable property, unaccompanied by delivery of the thing sold, will be considered, as between the parties, in the absence of evidence to the contrary, as mere contracts of security, and either party to the contract is at liberty to maintain this position.” [29 So. 871, 872]

In the case of Marbury v. Colbert, supra, Justice Provosty contended that prior to that decision parol evidence had never been admitted, over objection urged, to vary, as between the parties, the expressed terms of the written agreement, or to affect the title of the real estate. In noting this in Latiolais v. Breaux, supra, . the court said: “* * * But the rule was none the less laid down as above, and has been adhered to ever since.” [98 So. 620, 621].

The decision of the court quoted Bagley v. Bourque, 107 La. 395, 31 So. 860 (1902) to the effect that in order to state a cause of action to have a redemption sale declared a mere contract of security plaintiff must allege that the purchaser had never taken actual possession.

The court pointed out in Jackson v. Golson, La.App., 91 So.2d 394 (2nd Cir. 1956, cert. den.) that in pignorative contracts the purported vendor continues to be the owner and the purported owner has only a pledge or mortgage for his debt which he must enforce in the usual way.

In brief counsel for appellee assert that: (a) the cash sale deed is silent with respect to any right of redemption, repurchase option or the like; (b) that no counter letter or other agreement whatsoever was introduced in evidence to support such position; (c) that Mr. Sliman encumbered the subject property with a mortgage immediately after he acquired title on April 7, 1967; and (d) Mr. Sliman placed a “For Sale” sign on the property, instructing prospective buyers to inquire at his place of business, not at Mr. Brangato’s place of business. These contentions are without merit. In order for a cash deed to accompany a pignorative contract it is unnecessary to specifically provide in said deed for redemption. See Jackson v. Gol-son, supra. No counter letter was in evidence. This, however, is of no import for the reason that both parties to the property transfer, Brangato and Sliman, fully confessed under oath in court the facts which establishes the existence of the pignorative contract. With reference to encumbering the property with a mortgage, it may be observed that this may be the purpose of a pignorative contract for Sliman possibly could have borrowed in his name when Brangato was unable to do so. In the instant case it was simply the responsibility of Brangato to redeem the property and make it available for transfer to Sealy’s customer in the event of a sale. He had so advised Mr. Rogers of Sealy that he would do this. There appears to be no reason why a sale with adequate consideration could not release the property from the mortgage by Sliman or Brangato. With reference to the “For Sale” sign it should be noted that the evidence is conclusive that Brangato retained possession and the sign which remained for only a short period of time was removed, therefore inured to the benefit of Sealy in the case of a sale.

The contract between Brangato and Sli-man not being one of sale but a security device does not entitle plaintiff to a commission.

The judgment is reversed and it is now ordered, adjudged and decreed that plaintiff’s demands be rejected at it cost.

PRICE, Judge

(dissenting) :

I must respectfully dissent from the view of the majority in this case. The plaintiff’s right to a commission is recognized by the opinion if the transaction between Brangato and Sliman on April 7, 1967 was a contract of sale. The majority have re*623lied solely on oral testimony given by parties having a pecuniary interest in the outcome of this suit, to vary the content of the written instrument which affects the right of a third party, in holding that the agreement constituted merely a pignorative contract.

Although plaintiff has acquired no real or personal right to the immovable property involved in this case, he has a contractual right resulting from his dealing with the property and should be regarded as a third party as defined in LSA-R.S. 9:2722 and thus protected by the law of registry contained in LSA-R.S. 9:2721.

The portion of LSA-R.S. 9:2722 applicable to plaintiff reads as follows:

> “Third persons or third parties so protected by and entitled to rely upon the registry laws of Louisiana now in force and effect and as set forth in this Chapter are hereby redefined to be and to include *any third person or third party dealing with any such immovable or immovable property** * (Emphasis supplied)

LSA-R.S. 9:2721 reads as follows:

> “No sale, contract, counter letter, lien, mortgage, judgment, surface lease, oil, gas or mineral lease or other instrument of writing relating to or affecting immovable property shall be binding on or affect third persons or third parties unless and until filed for registry in the office of the parish recorder of the parish where the land or immovable is situated; and neither secret claims or equities nor other matters outside the public records shall be binding on or affect such third parties. Acts 1950, 2nd Ex.Sess., No. 7, § 1.”

Even though the parol testimony is considered (although I do not concede it proper), I do not agree with the finding of fact made by the majority relative to the continued possession of the property by the vendor, Brangato. The opinion states that “the evidence is conclusive that Brangato retained possession * * *”

The property which is the subject of this controversy is a vacant lot situated on Line Avenue in the City of Shreveport. The only evidence in the record concerning the possession of the vacant lot after the act of sale on April 7, 1967, is the testimony of the two parties, Brangato and Sliman, that Brangato paid the taxes for that year (1967). They further testified that although Sliman kept the grass cut on the lot, Brangato reimbursed him for the costs. No documentary evidence showing payment was introduced to corroborate this testimony. In opposition the plaintiff introduced evidence showing the immediate placement of a sign on the property advertising it for sale and referring prospects to the business address of Sliman, which was adjacent to the lot in question. The defendant’s evidence is not sufficient to overcome the recital in the cash deed that delivery has been made by vendor and this fact acknowledged by both parties to the instrument. ■

The Supreme Court case of Coddou v. Gros, 235 La. 25, 102 So.2d 480 (1958) is more comparable to this case than the cases relied on by the majority. In the Cod-dou case a deed was executed containing a right of redemption for a specified period of time. The court even found that the vendor had remained in physical possession, but with the consent and acquiescence of the vendee. In spite of the continued possession of the *vendor*the court held that the evidence showed that the parties had intended it to be a bona fide sale with a right of redemption, using the following language:

> “Considering all of the surrounding facts and circumstances, we conclude that the 1934 instrument was a valid sale with the right of redemption. The effect of the said redemptive clause constituted a personal advantage in favor of Gros to be exercised or waived at his option. Having allowed the period of redemption to expire he must be held to have waived such right, rendering said stipulation as between the parties as *624though not written. Consequently upon his failure to exercise his right to redeem the property Coddou’s title thereto became absolute and unassailable.

> “We consider the evidence conclusive that the parties did not intend the act of sale of 1934 to be a mere security but rather a bona fide sale with a right of redemption. The defendant herein executed a valid sale to his creditor in payment of his debt, stipulating his right of redemption. His failure to pay the price within the time agreed on in the contract forfeited his right of redemption and the title to the property was vested absolutely in the purchaser, Coddou. Furthermore, this act of sale concludes the defendant in the absence of error or fraud and establishes the nature of his possession as the possession of his vendee. Here there is no error or fraud alleged, much less proved.” Page 485.

Even by the testimony of the witnesses relied on by the majority, the transaction was intended to be a sale with the right of redemption. I quote from the testimony of the witness, Sliman, as follows:

> “Q. You further testified that if the property weren’t sold in a year the deal would be all off. What did you mean by that ?

> “A. Well, then, I would sell the property or keep the property, one of the two. In other words, if I sell the property for more than twenty-one five I get the profit.

> “Q. In other words, if the property sold on April the 8th, say, 1968, for any price, the full price is yours ?

> “A. Yes, sir.”

The evidence further reflects that Mr. Slim,an did not mortgage just this one piece of property for the exact amount of $21,500.00 to procure funds from the Commercial National Bank, but apparently mortgaged this property, along with other property already owned by him, as security for a loan totaling $71,000.00. The testimony of Mr. Sliman in this regard reads as follows:

> “Q. And this mortgage is for how much, sir?

> “A. Twenty-one five.

> “Q. In order to get the Twenty-one £jyg ^ ‡ ‡

> “A. No, the mortgage was for $71,000.-00.

> “Q. Seventy-one Thousand?

> “A. Yes, sir.”

Although Sliman testified he made oral arrangements with an official of the bank to release this property in1 payment of $21,500.00 on the indebtedness he owed to the bank, the official was not called as a witness to corroborate his testimony.

The evidence reflects that no note or other evidence of indebtedness was ever executed, nor was there any agreement for the payment of interest by the borrower. What was the motive or consideration for the alleged lender, Sliman, to advance this sum of money to the supposed borrower, Brangato ? There is no evidence of any family or personal relationship between these invididuals.

In the cases relied on by the majority the parties to the action were the vendor and vendee, of the sale under consideration, or their ancestors in title. The right of third parties was not being considered. In each of the cases where the court has found a “pignorative contract” rather than a contract of sale, no adequate amount was paid to the vendor for it to be considered a serious consideration to support a true sale. Jackson v. Golson, La.App., 91 So.2d 394 (2d Cir., 1957), and cases cited therein. In the case under consideration the sum of $21,500.00 is approximately the amount that the seller, Brangato, hoped to realize from this property. The testimony of Mr. Brangato is quoted as follows:

> “Q. Did you tell him how much money you were trying to raise ?

> *625“A. Yes, sir, just the amount of what I had in the lot, Twenty-one five.”

For the foregoing reasons I am of the opinion that the transfer from Brangato to Sliman on April 7, 1967 could have been no more than a sale with a right of redemption as controlled by Article 2567 of the Louisiana Civil Code, and other articles under Chapter 8. To hold to the contrary on the basis of the oral testimony of the vendor and vendee alone would open the door to a means to evade the payment of a real estate commission lawfully contracted for by a vendor.