#### AMERICAN CREOSOTE COMPANY, Inc. v. George J. SPRINGER.

No. 3179.

Court of Appeal of Louisiana. Fourth Circuit.

May 5, 1969.

On Rehearing Jan. 12, 1970.

Writ Granted Feb. 27, 1970.

*534Montgomery, Barnett, Brown & Read, Richard B. Montgomery, Jr., Wood Brown, III, New Orleans, for plaintiff-appellant.

Baldwin, Haspel, Molony, Rainold & Meyer, Conrad Meyer, III, New Orleans, for defendant-appellee.

Before HALL, GARDINER and LeSUEUR, JJ.

GARDINER, Judge.

Plaintiff appeals from a judgment of the Civil District Court for the Parish of Orleans maintaining an exception of no cause of action and dismissing its suit.

American Creosote Works, Inc., which became the owner of all the property and assets of the American Creosote Works of Louisiana, Inc., in liquidation, sued defendant, George J. Springer, to recover the sum of $12,000.00 alleging plaintiff was obligated to pay this amount to the Illinois Central Railroad Company for railroad trackage, consisting of rails and angle irons constructed upon plaintiff’s property, when it failed to return the trackage to the Railroad Company at the termination of their written lease. Plaintiff sold its property to defendant by authentic act of sale, and defendant is resisting plaintiff’s claim on the assertion that he became the owner of the land and all improvements, including the railroad trackage, which was not expressly excepted. Defendant later sold the rails and angle irons as scrap metal.

In its petition plaintiff alleges that on March 31, 1949, the American Creosote Works of Louisiana, Inc., (hereinafter referred to as plaintiff’s predecessor) was the owner of certain property located at Southport, in the Parish of Jefferson, and on that date its predecessor entered into a written agreement with the Illinois Central Railroad Company to lease certain track-age “laid across petitioner’s property by the said railroad company, the said lease agreement being a lease of said trackage by the said railroad company * * A copy of the lease is attached to the petition.

Plaintiff further alleges that on October 8, 1962, it sold the aforementioned property to defendant by authentic act, but that it did not and could not include the trackage because of the said lease agreement; that “defendant was informed before the passage of the aforementioned act of sale that the trackage did not belong to petitioner, and consequently, that same would not, and could not be sold by petitioner to it. The act of sale was passed with the understanding between the parties that the trackage was not included.”

Plaintiff also avers that defendant disposed of the “switch trackage” in 1964 and used the proceeds thereof himself; that plaintiff, under the terms of the lease, was obligated to pay the Railroad Company $12,000.00 if it did not return the trackage at the termination of the lease. And lastly plaintiff asserts that being unable to comply with the demands of the railroad company to return the trackage or its value, plaintiff paid the $12,000.00 and obtained a subrogation from the Railroad Company of all of its rights against defendant.

We do not know upon what grounds the exception of no cause of action was maintained as the record does not contain reasons of the trial judge for dismissing the suit. However, defendant contends that he acquired title to the real estate and the trackage on the faith of the public records and that the authentic act of sale under which he purchased the property from plaintiff is full proof thereof.

It is the settled jurisprudence of this state that, in determining the issues raised by an exception of no cause of action, the well pleaded facts in the petition and the facts contained in any annexed documents must be accepted as true. Elliott v. Dupuy, 242 La. 173, 135 So.2d 54.

We shall first consider the exception on the allegation that defendant had knowledge of the fact that plaintiff *535did not own the trackage and that when the sale was executed it was with the understanding between the parties that the trackage was not included. Under such an allegation, if true, plaintiff seeks to prove by inadmissible evidence that the property was conveyed without a reservation by which trackage was excluded. The petition contains no allegation of fraud or error. Without such an allegation parol evidence may not be introduced for the purpose of contradicting, varying, or adding to a written agreement. Without alleging fraud or error, plaintiff may not introduce parol evidence to show that its intentions were other than those stated in the authentic act of sale. Neck v. Neck, La.App., 169 So.2d 401; LSA-C.C. art 2276. Our Supreme Court in Franton v. Rusca, 187 La. 578, 175 So. 66, stated the well settled and unbroken rule of law in this State, citing many cases, as follows:

> “ * * * in the absence of any allegation of fraud or error, conditions, and stipulations beyond those expressed in an authentic act, and what may have been said before, or at the time of, or since the execution thereof, can be proven only by means of a counter-letter or by the use of interrogatories on facts and articles.”

In giving consideration to the exception of no cause of action, the court also must weigh all the facts contained in the documents annexed to and incorporated in the petition by reference. O’Reilly v. Poche, La.App., 162 So.2d 787. Moreover, the entire record must be considered in making this determination. Succession of Pickett, La.App., 189 So.2d 670.

The act of sale referred to in plaintiff’s petition contains the description of the property sold to defendant, but it does not refer to the trackage as such. However, the description contains the following language :

> *“A*certain portion of ground, together with all the buildings and improvements thereon, all appurtenances and dependencies and all rights, ways, privileges, ser-vitudes, advantages and prescriptions thereunto belonging or in anywise appertaining to the property situated in Jefferson Parish and composed of part No. 2 of the Ludger Fortier Plantation, sfc ***jj< *a*

Defendant claims that the trackage, which had been constructed on the property long before his purchase of the realty, became immovable property either by nature or by destination, and that he took title thereto by virtue of his purchase of the realty on the faith of the public records, having no notice of plaintiff’s claim. He relies upon the provisions of articles 464 and 468 of the Civil Code.

As stated above, plaintiff’s predecessor corporation, on March 31, 1949, entered into a written lease with the Illinois Central Railroad Company whereby the Railroad furnished and leased to the corporation sufficient rails and angle bars, specified therein, for lessee’s use. Pertinent portions of the lease are as follows:

> “Whereas, the Lessee has constructed certain tracks aggregating about 16,491 feet at Southport, Louisiana, the approximate location of said tracks being shown in red on the plat * * * and desires to lease from the Railroad Company sufficient rails * * * and angle bars * * * to construct said tracks, it is now mutually agreed as follows:

> “1. The Railroad Company has previously delivered to Lessee at Southport, Louisiana, a sufficient amount of second-hand rail, together with angle bars, to construct the said tracks.

> *“2.*The rails and angle bars herein agreed to be furnished shall be measured and counted before delivery and a memorandum made, to be signed by the parties hereto, of the number and length of rails of each nominal or pattern weight, and of the number of angle bars actually delivered to the Lessee.

> *536“3. For the use of the rails and angle bars furnished and leased to the Lessee by the Railroad Company the Lessee hereby agrees to pay the Railroad Company rent in accordance with the following rental schedule * *

> 

> Lessee in performing the agreements in this paragraph contained, said rails and angle bars shall, at the option of the Railroad Company, be deemed to be converted to the use and benefit of said Lessee, and the Lessee shall, at the option of the Railroad Company, be liable to it for the full value thereof, as such value is herein specified and fixed.

> “5. The Lessee shall pay all taxes that may be levied or assessed upon the rails and angle bars furnished under this agreement, while the same remain in its possession.

> “6. It is understood and agreed that the title to the said rails and angle bars shall remain in the Railroad Company, that they shall remain personalty and shall not become part of the realty, and that upon the termination of this agreement the Lessee will take up said rails and angle bars • and deliver them loaded upon cars of the’ Railroad Company on its Railroad, the angle bars to be detached from the rails and loaded separately. * * * ”

The lessee also agreed to and did deliver to the Railroad Company a $12,000.00 indemnity bond for the faithful performance of the lease. It is this amount it forfeited and paid the railroad which it is seeking to recover from its vendee who had purchased the realty.

The lease was not recorded. The defendant’s act of sale shows that, from the attached mortgage and conveyance certificates, there were no alienations nor encumbrances bearing against the property.

Our laws of registry apply to defendant in this case as applied by this court to the defendants in a very similar situation in Industrial Outdoor Displays v. Reuter, La.App., 162 So.2d 160, cited by counsel for defendant. There the court said:

> “It is clear that under our laws of registry defendants are entitled to rely on the public records and are not bound or barred by unrecorded claims against the property, even though they may have had actual notice thereof gained dehors the public records. See LSA-C.C. Art. 2266; LSA-R.S. 9:2721; McDuffie v. Walker, 125 La. 152, 51 So. 100; Blevins v. Manufacturers Record Publishing Co., 235 La. 708, 105 So.2d 392; Vaughn v. Kemp, 4 La.App. 682.

> “It is also clear that defendants by virtue of their purchase acquired clear title to the real estate together with all the buildings and all other immovables situated on the land free and clear of all unrecorded claims and equities. See Prevot v. Courtney, 241 La. 313, 129 So.2d 1.”

In the above cited case the plaintiff had leased the roof of a building from defendants’ vendor for the purpose of erecting and maintaining thereon display signs. The lease, which was not recorded, contained similar provisions, i. e., the signs, etc., should remain the personal property of plaintiff with the privilege of removing them at any time. Two signs were constructed by plaintiff above the building and were attached to the ground in cement making them as permanent as possible in order to last for years. Plaintiff claimed the signs were movables, and was attempting to remove the structures or recover from the present owners the value thereof. This court held that the signs were constructions and became immovables by nature under the provisions of LSA-C.C. art. 464.

The rails and angle irons leased by plaintiff in this case were attached to cross ties, embedded in the realty belonging to plaintiff’s predecessor, which plaintiff used as a “switch track” in its business to remove its materials from its land to the main line of the Railroad Company. They *537were not emplaced upon any right of way of the railroad company but instead upon the realty owned by plaintiff, the lessee of the rails and angle irons. This trackage was on the property when defendant purchased it and remained there until April, 1964, when defendant tore it up and sold it for scrap iron.

LSA-C.C. art. 464 provides that: “Lands and buildings or other constructions, whether they have their foundations in the soil or not, are immovable by their nature.”

In a very early case, Morgan’s Louisiana A. & T. R. & S. S. Co. v. Himalaya Planting & Mfg. Co., 143 La. 460, 78 So. 735, the Supreme Court considered the question of whether a railroad, consisting of railroad iron such as rails and angle irons, was a construction. Plaintiff had entered into a contract with defendant to furnish it “with railroad iron to build certain railroad tracks on its plantation.” The railroad was built, but defendant failed to pay for some of the material used in the construction and suit was brought to collect the indebtedness. Defendant admitted an indebtedness for part of the amount and judgment in the district court was rendered therefor but recognition of a vendor’s privilege on the iron and material was refused. On appeal the Supreme Court held that the road, when constructed, became a part and parcel of the plantation, not as an immovable by destination, but as an immovable by nature, based on article 464 of the Civil Code, stating that: “* * * it will hardly be denied that a railroad is a ‘construction’ * * It also held that the ties, rails, spikes, irons, plates and ballast lost their character as movables, for all purposes of the vendor’s privileges, which plaintiff was seeking to enforce.

We are aware of the later case, Caldwell v. Laurel Grove Co., 175 La. 928, 144 So. 718. There the seizing creditor was seeking to maintain his vendor’s privilege under articles 3227 and 3231 of the Civil Code on movable property consisting of rails and other material, sold to the plantation owner. The court said that the privilege could not be defeated by the use the vendee made of the equipment, since they were not appreciably affected by such use, and overruled the case of Morgan’s Louisiana & Texas R. R. & S. S. Co. v. Himalaya P. & Mfg. Co., supra, insofar as it was inconsistent with the established jurisprudence. The Supreme Court did not consider whether the railroad was a construction under Article 464, and what was said in the former case as to the railroad being a construction and becoming an immovable by nature is applicable in the present matter.

“Other constructions,” whether they have their foundations in the soil or not, are immovable by their nature. Prevot v. Courtney, 241 La. 313, 129 So.2d 1. The Court of Appeal, Second Circuit, in Vaughn v. Kemp, 4 La.App. 682, said that there is no qualification to the rule set out in LSA-C.C. art. 464. A construction, within the textual provisions of that article, is an immovable by nature when erected on the land.

From the facts and jurisprudence relating to the situation here, we have reached the conclusion that the switch track or trackage, consisting of rails and angle irons, erected on plaintiff’s land was an immovable by nature.

Plaintiff, however, asserts that the rails and angle irons remained movables, and therefore it was not necessary to record the lease.

Counsel for plaintiff rely entirely upon the case of Louisiana Ry. & Nav. Co. v. Cash Grocery & Sales Co., 150 So. 57, in which the Court of Appeal, First Circuit, held that a spur track, consisting of rails, switch fixtures, etc., constructed by the railroad on another’s land, remained movable, and that since contracts affecting movable property do not have to be recorded, the plaintiff’s right and title to the tracks remained unimpaired. There plaintiff sought to remove the rails from the land *538which had been purchased by the defendant from the mortgage creditor who had foreclosed. on its mortgage and purchased at the foreclosure sale. Defendant resisted plaintiff’s claim on the ground that the spur track became immovable by destination. In the cited case no contention was made that the trackage was immovable by nature. Under these circumstances we cannot hold that the case is controlling here where defendant’s argument is that the railroad trackage is a construction, and we find that article 464 is applicable.

Plaintiff had ample means of protecting itself by recording the lease; otherwise the purchaser (defendant) has no means at all of protecting himself against claims of this type if he is not entitled to rely upon the law of registry.

For the reasons assigned, the judgment appealed from maintaining the exception of no cause of action is correct and is hereby affirmed. Costs are to be paid by plaintiff.

Affirmed.

ON REHEARING

LeSUEUR, Judge.

On rehearing, plaintiff has reargued that the case relied upon in our original opinion, Morgan’s Louisiana & T. R. & S. S. Co. v. Himalaya P. & Mfg. Co., 143 La 460, 78 So. 735 (1918), was overruled by Caldwell v. Laurel Grove Co., 175 La. 928, 144 So. 718 (1932). This same argument was urged by plaintiff on appeal and we considered that argument in our original opinion.

In Caldwell the court stated:

> *“So far as the four cases*cited by the seizing creditor, and hereinabove mentioned and discussed, particularly the case of Morgan’s Louisiana & Texas R. R. & S. S. Co. v. Himalaya Planting & Mfg. Co., *are inconsistent with the jurisprudence established*by the cases relied on by relator, *they must be considered overruled.”*(Emphasis added.)

Although this holding apparently overrules the case relied upon in our original opinion and cited above, this is true only insofar as it is inconsistent with the cases cited as jurisprudence in the Caldwell case. A close examination of the Caldwell case reveals that every case relied upon by the court involved a movable that became an immovable by destination after being attached to immovable real property by the owner thereof. In each case the movable turned immovable was a self-contained self-entity and, although it could become part of a larger entity, it was still a complete object or identity at the same time. This is not the circumstance in the cases cited in opposition to this decision and supposedly overruled. In Swoop v. St. Martin, 110 La. 237, 34 So. 426, movable parts became part of the machinery of a sugar mill, losing their separate identity as an entity and no longer being capable of being separated from the whole without destroying the essence of the whole. In Hibernia Bank & Trust Co. v. C. F. Knoll Planting & M. Co., 133 La. 697, 63 So. 288, individual parts were assembled into an entirely different whole and were incapable of being separated without destroying the resulting whole. In Milliken & Farwell v. Roger, 138 La. 823, 70 So. 848, involved machinery parts and the Swoop case was applied. The court in Caldwell dispensed with the Morgan case and the jurisprudence contained therein in the following manner:

> “When the rails and other materials were sold to the owner of the plantation, they were impressed with the vendor’s privilege, and it is difficult for us to see how the privilege can be defeated by the use the vendee made of them, since they are not appreciably affected by such use. The rails and their accessories have not been converted into a new species of thing. They remain rails and railroad iron even though attached to the ties. They can be removed without *539affecting any independent rights of ownership in the soil or structure, for when they are removed the soil and the roadbed will remain in the same form and condition they were before the materials were attached thereto.

> “We adhere to the jurisprudence established in the long line of cases which we have mentioned and discussed, to the effect that the unpaid vendor enjoys a real right in the thing sold to which the right of the purchaser is subordinated, so that, if the thing can be identified and reclaimed in substantially the same condition as when sold and without material injury to the structure to which it is attached, the vendor’s lien is enforceable, even though the use of the structure may be temporarily impaired.”

We think the court in Caldwell erroneously attempted to apply jurisprudence concerning immovables by destination to cases involving immovables by nature. Although the component parts of the railroad are still readily identifiable, they exist there as parts of a complete separate new entity and the separation of the parts destroys the whole. The railroad trackage can be disassembled without damage to the ground or bed, but this does not alter the fact that there is no longer a railroad track but merely a group of parts, much the same as when a house is built from bricks, lumber, etc. and can be returned to that state. The fact that each brick and each piece of lumber can be identified in the whole does not affect the concept that the house is a “construction” within the meaning of LSA-C.C. Art. 464. In the same manner the railroad trackage is a construction under Art. 464 and the Caldwell case did not concern itself with this finding in the Morgan case.

The court in Morgan discussed the concept of a railroad track being a construction under Art. 464 as follows:

> “It will hardly be denied that a railroad is a 'construction,’ or that, when constructed, it has its foundations in the soil, as much as, or more than, many plantation buildings, bridges, and fences; nor as we think, can it be successfully denied that, when the bed of such a road has been graded and surfaced, the cross-ties placed in position, the rails laid upon and spiked to the ties, secured or connected, with angle irons and fish plates, and the spaces between the ties filled with ballast, a new and distinct thing is created in which ties, rails, spikes, irons, plates, and ballast lose their character as movables, and their identities, for all the purposes of the vendor’s privileges, since such privileges can no more be enforced with respect to its several constituents without destroying the thing into which they have thus been merged than it can be enforced with respect to the canvas upon which a picture has been painted without destroying the picture. The case is, moreover, within the doctrine (as stated in the Matter of Receivership of Augusta Sugar Co., 134 La. 974, 64 So. 870) that, where the things sold are mere materials for the construction or repair of a building, or of machinery, and are so used, they lose their identity, and become merely a part of such building or machinery, and that, in such case, the vendor’s privilege is lost, though there arises a privilege, as of a furnisher of material, upon the structure, as a whole, and upon one acre of ground upon which it stands. Hi ‡ ** ***

Caldwell v. Laurel Grove Co., supra, reaffirmed the jurisprudence established in a long line of cases to the effect that a vendor’s lien and privilege on the thing sold is not lost by the attachment of the thing sold to a structure from which it can be removed without material damage, but this must be restricted to the type of case cited as jurisprudence in Caldwell, i. e., movables that become immovable by destination but remain a separate entity apart from the immovable to which they are attached.

*540If this principle of law is extended to its ultimate it may then be applied to a prefabricated house or even a house as normally constructed. The component parts are susceptible of identification and can be removed without affecting the ownership of the lot or causing material damage thereto, for when removed the lot will return to its appearance as it was before the house was placed on it. The extension of this concept would embrace innumerable constructions which have long been regarded as immovable by nature, although no such application of the principal enunciated in the Caldwell case could be seriously argued. A railroad is a construction and the rails, plates and other irons when attached to the cross ties with spikes are no less a component part of the construction than the gutters, down spouts, windows or doors that are a part of the building to which they are attached.

We interpreted the Caldwell case as a qualified or limited overruling of the Morgan case and pointed out that the Supreme Court in Caldwell did not consider whether the railroad in question was a “construction” such as to bring it under the provisions of LSA-C.C. Art. 464. On this point it was our opinion that Caldwell did not overrule Morgan. We fail to find the Caldwell opinion a reversal of the Supreme Court’s former opinion in Morgan that a railroad is a construction and immovable by nature, and we, therefore, hold that a railroad is a construction and immovable by nature.

For the foregoing reasons, we affirm our judgment maintaining defendant’s exception of no cause of action and assessing costs against plaintiff.

Affirmed.

BARNETTE, Judge

(dissenting).

I find it extremely difficult to disagree with the conclusion that a railroad is a construction of which the rails, bars and plates are a part and hence immovable by nature under LSA-C.C. art. 464. I think, however, that the Supreme Court did abandon this conclusion which it expressly found in Morgan’s Louisiana & T. R. & S. S. Co. v. Himalaya P. & Mfg. Co., 143 La. 460, 78 So. 735 (1918), by its opinion in Caldwell v. Laurel Grove Co., 175 La. 928, 144 So. 718 (1932). No other interpretation of the latter opinion will support the conclusion reached in Caldwell.

The majority has interpreted Caldwell as being a limited or qualified overruling of the Morgan case and that it did not go so far as to overrule the former opinion that a railroad is a “construction” and immovable by nature. I am much inclined to agree that a *railroad*is an immovable by nature, as held in the Morgan case; but it is inconceivable to me that the Court could have reached its conclusion in Caldwell without holding the rails and railroad irons, which are a part of the construction, were not themselves immovable by nature, that they had not lost their identity as rails, etc., and hence were subject to the vendor’s lien which attached to them as movables. The decision of the First Circuit Court of Appeal in Louisiana Ry. *&*Nav. Co. v. Cash Grocery *&*Sales Co., 150 So. 57 (1933), could not otherwise be valid.

If Caldwell does not entirely overrule the Morgan case, it as least stands for the principle that an adverse claim may be asserted if the rails can be identified and separated from the “construction” without material damage to the property or affecting the independent rights of ownership in the soil or structure. The burden of proof of the separate ownership or the encumbrance by vendor’s lien, chattel mortgage or other prior right or claim is upon the adverse claimant. This would require the hearing of evidence and the adverse claimant, would be entitled to his day in court. The exception of no cause of action could not then be maintained.

For these reasons, I must respectfully dissent.