*Pursuant to Local Rule 47.5, the court has determined that this

opinion should not be published and is not precedent except under

the limited circumstances set forth in Local Rule 47.5.4.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________

No. 96-30083

Summary Calendar

__________________

FARM CREDIT BANK OF TEXAS,

Plaintiff-Counter DefendantAppellee

versus

ASHLAND PLANTATION INCORPORATED; 

KENNETH H. KAHOA,

Defendants-Counter ClaimantsAppellants.

______________________________________________

Appeal from the United States District Court for the

Middle District of Louisiana

(92-CV-313-M2)

______________________________________________

October 1, 1996

Before SMITH, BENAVIDES, and DENNIS, Circuit Judges.

PER CURIAM:*

This appeal stems from a suit to enforce the provisions of a

promissory note and mortgage. On November 10, 1976, the

appellants, Ashland Plantation, Inc. and Kenneth A. Kahao

(hereinafter Borrowers), executed a promissory note payable to the
1 Land Bank, Farm Credit Bank's predecessor in interest, actually

filed the suit. However, there is no dispute that Land Bank was

the predecessor in interest; thus, only Farm Credit Bank will be

referred to in this opinion. 

2

Federal Land Bank of New Orleans. The Federal Land Bank of New

Orleans subsequently changed its name to the Federal Land Bank of

Jackson. The Federal Land Bank of Jackson was placed in

receivership, and the receiver assigned the promissory note to Farm

Credit Bank, the appellee in the case at bar.

The Borrowers made payments on the note until July 15, 1985.

Less than a year later, on April 18, 1986, Farm Credit Bank1 filed

suit against the Borrowers in Louisiana state court to enforce the

note. Borrowers appeared in the state court action and claimed

prematurity of suit and requested dismissal without prejudice.

Farm Credit Bank later filed its ex parte dismissal of the state

court suit on October 27, 1988. The dismissal occurred before any

hearing was conducted on Borrower's dismissal request. 

Farm Credit Bank thereafter filed a complaint in the district

court to obtain a money judgment on the note and proceed to enforce

the mortgage securing the note. The district court granted summary

judgment in favor of Farm Credit Bank.

It is undisputed that the note is in default. The Borrowers

argue that the enforcement of the note is barred by prescription,

that the note does not provide for compound interest, and that Farm

Credit Bank had failed to comply with the Agricultural Credit Act

of 1987 and its corresponding regulations. Finding that the
3

district court properly granted summary judgment, we affirm.

I. WHETHER ENFORCEMENT OF NOTE IS BARRED BY PRESCRIPTION

It is undisputed that the note in question was subject to a

prescriptive period of five years. La.Civ.Code art. 3498 (1992).

The prescriptive period may be interrupted by, among other things,

the obligee filing suit against the obligor in a court of competent

jurisdiction and venue. La.Civ.Code art. 3462. Although such an

interruption continues as long as the suit is pending, the

interruption is considered never to have occurred if the plaintiff

abandons, voluntarily dismisses, or fails to prosecute the suit at

trial. La.Civ.Code art. 3463. 

The parties agree that prescriptive period began to run on

July 16, 1985. As previously set forth, less than one year later,

on April 18, 1986, Farm Credit Bank filed suit against the

Borrowers in Louisiana state court, and that suit was dismissed

without prejudice. Subsequently, on April 14, 1992, Farm Credit

Bank filed suit in federal district court to enforce the note.

Accordingly, because the instant suit was filed more than five

years after the start of the prescriptive period, the issue is

whether the state court suit interrupted prescription.

Relying on Hebert v. Cournoyer Oldsmobile-Cadillac GMC, 419

So.2d 878 (La. 1982), the district court concluded that the prior

state court suit had interrupted prescription. In Hebert, the

Louisiana Supreme Court explained that "[b]ecause the voluntary

dismissal in this case occurred after defendants' general
2 Article 3519 is the predecessor to article 3463, and is

identical to the provision at issue in this case.

4

appearance, at which time defendants could have objected to, and

the trial court could have denied, a dismissal without prejudice,

we hold that C.C.Art. 35192 does not apply." Id. at 881 (footnote

added). Applying the holding in Hebert, the court below concluded

that because the Borrowers had made a general appearance in the

state court suit, the filing of that suit interrupted prescription.

The Borrowers do not dispute that they made a general

appearance in state court. Nonetheless, the Borrowers contend that

the district court's broad reading of Hebert is incorrect. They

argue that Hebert is distinguishable from the facts of their case

because unlike Hebert, there was no joint motion of dismissal filed

in the previous state suit. In support of this argument, the

Borrowers cite Plaisance v. Loop, Inc., 499 So.2d 736 (La.App. 4

Cir. 1986). In Plaisance, the Court of Appeal of Louisiana

distinguished Hebert because there was no joint motion of dismissal

filed in Plaisance. The court explained that in Hebert the

opposing parties could have objected to the dismissal but in

Plaisance the defendants were not aware of the motion for dismissal

until after it had been granted. 

Because Plaisance was a decision by the Court of Appeal of

Louisiana, to the extent that there is any inconsistency or

conflict we must follow the decision of the Louisiana Supreme Court

in Hebert. See Lamarque v. Massachusetts Indem. & Life Ins. Co.,
5

794 F.2d 194, 196 (5th Cir. 1986) (explaining that federal courts

presiding over diversity cases must "apply the latest and most

authoritative expression of state law applicable to the facts of a

case"). Moreover, assuming Plaisance correctly interpreted Hebert,

it affords the Borrowers no relief. The Plaisance court

distinguished Hebert on the basis that the defendants were not

aware of the motion to dismiss and thus had no opportunity to

object if they had so desired. However, the Borrowers do not

dispute that, in the previous state proceeding, they themselves had

claimed prematurity of suit and had moved that the petition be

dismissed without prejudice. Therefore, the basis upon which the

Louisiana Court of Appeal distinguished Plaisance from Hebert,

i.e., the defendants in Plaisance were unable to object to the

dismissal, is not present here.

The Borrowers also argue that the language in Hebert "is mere

dicta which must be limited to its particular facts." They further

argue that "[a] joint dismissal, which means the defendant joins in

the dismissal, takes the dismissal out of the mandatory language of

the second sentence of Article 3463 which speaks of a dismissal

only by plaintiff." We are unpersuaded by the Borrowers' attempt

to distinguish the Hebert decision. 

In Hebert, the Supreme Court did not rely on the fact that the

dismissal had been pursuant to a joint motion of all the parties.

The Court expressly based its holding on the fact that because the

voluntary dismissal occurred after the defendants' general
3 Citing Adams v. Aetna Casualty & Surety Company, 214 So.2d 148

(La. 1968), the Borrowers argue that the filing of the state court

action on the same note and mortgage did not interrupt the fiveyear prescription period because the state court action was

dismissed ex parte on motion of Farm Credit Bank. The Borrowers

contend that in Adams, the Supreme Court of Louisiana "affirmed a

dismissal of a second suit because of prescription, holding that

the first suit, which was voluntarily dismissed by plaintiff on ex

parte motion without prejudice, after defendants had filed various

exceptions and thereby entered a general appearance in the first

suit, did not interrupt prescription because of the voluntary

dismissal and the clear language of Civil Code Article 3519." 

Assuming for purposes of this appeal that the Borrowers'

contention that the defendants in Adams entered a general

appearance is correct, we conclude that the district court properly

denied relief based on the subsequent authority of Hebert. See

Lamarque v. Massachusetts Indem. & Life Ins. Co., supra. Moreover,

Borrowers' own request for dismissal without prejudice

distinguishes Adams from the instant case. 

6

appearance, the defendants could have objected to a dismissal

without prejudice. Further, in Roger v. Estate of Moulton, 513

So.2d 1126, 1133 (La. 1987), the Louisiana Supreme Court explained

that Hebert "held La.Civ.Code art. 3519 (now art. 3463) does not

apply after the defendant has made a general appearance, because

after the defendant answers the trial court is vested with the

discretion to dismiss the suit with prejudice." (emphasis added).

Accordingly, applying Hebert to the facts of the instant case,

because the Borrowers made a general appearance in the state court

suit and had themselves requested dismissal without prejudice,

article 3463 does not apply. The prescriptive period therefore was

interrupted by the suit filed by Farm Credit Bank in state court.3

II. WHETHER THE NOTE PROVIDED FOR COMPOUND INTEREST.

The Borrowers argue that the district court erred in
7

concluding that the terms of the promissory note allowed Farm

Credit Bank to compound interest. Contrary to the Borrowers'

contention, the note provides for interest upon interest: 

[i]n the event of default of any payment of principal or

interest, such payments as are not paid when due shall

bear interest from the date of default until paid at the

rate of ten (10%) per cent.

Additionally, the second loan treatment application provides that:

A default in the payment(s) of any principal, interest,

or advances made by the Bank on this loan shall cause

such defaulted payment(s) to bear interest at the rate in

effect during the period of default plus two (2%) percent

per annum.

Because the note and second loan application expressly authorize

compounding interest, we find this contention without merit.

III. WHETHER THE AGRICULTURAL CREDIT ACT WAS VIOLATED.

The Borrowers argue that the Bank's failure to follow certain

procedural requirement of the Agricultural Credit Act constituted

an affirmative defense to the Bank's action on the promissory note.

We agree with the district court's conclusion that the Borrowers

have failed to show that the Farm Credit Bank violated the

provisions of the Act. Moreover, assuming the Act was violated,

the Borrowers have cited no controlling authority for the

proposition that the failure to comply with the procedural

provisions of the Agricultural Credit Act constitutes an

affirmative defense to the Bank's suit to enforce the promissory

note. This claim affords the Borrowers no relief.

For the foregoing reasons, the judgment is AFFIRMED.