Source: http://slidegur.com/doc/86256/laissez-le-bon-temps-roulez-in-fee-simple-absolute%3F%3F
Timestamp: 2017-03-30 09:18:38
Document Index: 355954578

Matched Legal Cases: ['Art. 2502', 'Art. 21', 'Art. 2989', 'Art. 16', 'art=18', 'art=274', 'art=0']

LAISSEZ LE BON TEMPS ROULEZ IN
FEE SIMPLE ABSOLUTE??
A Comparison of Texas and Louisiana
By: Sarah Chaudhry and Tiffany Melchers
Copyright &copy; by the Kilburn Law Firm, PLLC 2012. All rights reserved. No part of this presentation may be
used or reproduced in any manner whatsoever without written permission from the Kilburn Law Firm. For
information please address Kilburn Law Firm, PLLC, 1001 W. Loop South Freeway, Suite 400, Houston, Texas
Copyright &copy; by the Kilburn Law Firm, PLLC 2012. All rights reserved. *See copyright footnotes 1-2.
• Terminology – a crash course in speaking civil code
• A brief history – The Great Schism
• Conveyancing – Louisiana Style
• Severance v. Servitude – What is conveyed?
• Mineral Leases – Louisiana
• Authority to Convey – Who can convey what?
• Notice v. Race – What you know v. how fast you can get to the
• Probate – What comes after the Jazz Funeral?
Copyright &copy; by the Kilburn Law Firm, PLLC 2012. All rights reserved.
* See copyright footnotes 4-7.
The History of the Two States
* See copyright footnote 3.
1691-1822: Spanish Rule
1823-1835: Mexican Rule over Texas and Coahuila
1836-1845: Republic of Texas
1845 – present: The Lone Star State
Influence of Spanish/Mexican law: Spanish system of measurement (varas,
caballerias, labors and leagues), minerals belonging to the crown (until a series
of Relinquishment Acts), community property regime, pleading by petition and
Borrowing from a neighbor: In the 19th century, Texas held several conventions
to establish the rule of law. The Convention of 1835 recognized a state of war
between Texas and Mexico and established trial by jury in a departure from the
Spanish system. The Louisiana Civil Code was used to settle cases of civil
attachment and the Louisiana Criminal Code of Procedure governed arrests
1840: A critical year; independence had been declared; Texas officially adopts
Louisiana &amp; the Civil Code
- 17th &amp; 18th century: French &amp; Spanish Rule
- 1804: The French National Assembly enacted the French
Civil Code (the Code Napoleon) – this would influence the
- Louisiana develops its own Code system:
Commercial Code, Code of Civil Procedure, Code of Criminal
- 1825: Louisiana adopts the Code, written entirely in French
(revised in 1870) – local inhabitants insist on the civil law
- Borrowing from a neighbor:
The Spindletop Field was
discovered in Beaumont in 1901 – oil was discovered in
Louisiana the same year. Louisiana courts soon discovered
that a Mineral Code was needed. The Mineral Code was
proposed in 1938, completed in 1963 and enacted in 1974.
The Code and the cases that preceded it relied on Texas case
How does the history of these two
states effect Real Estate
The Louisiana Perspective
Conveyances = Acts of Sale
When conveying immovable property, the Civil Code provides that an
Act of Sale can be in the form of either an:
1) Authentic Act  where the signatories, or grantors, execute the
document in front of 2 witnesses and a notary.
2) Act under private signature  where the document is simply
executed by the parties, with no witnesses or a notary.
Most Commonly used = Authentic Acts because they are self
authenticating and can be recorded. Acts under private signature
cannot be admitted as prima facie evidence of a transfer until the
act is acknowledged (i.e., the signatories testifying in court to their
signatures on the document).
Types of Acts of Sale:
Louisiana recognizes three types of Acts of Sale:
1) Act of Sale with Warranties – which includes
all stated and implied warranties
2) Act of Sale without Warranties – which
excludes all warranties, including implied
warranties, except for the warranty against
3) Act of Sale at buyer’s peril and risk – which
excludes all warranties
Implied Warranties for Acts of Sale:
• Seller warrants that a 3rd party cannot evict the Buyer
• If breached, Buyer is entitled to purchase price, fruits,
revenues and legal fees.
• Courts apply this warranty to Acts of Sale and Acts of Sale
• Seller warrants that the property is reasonably fit for
• If breached, Buyer receives contract damages
• Courts only apply this warranty to Acts of Sale with
• Seller warrants that property does not have a latent defect
• If breached, Seller has opportunity to repair/correct (if
acted in good faith) and if he cannot do so, Buyer is entitled
to purchase price and expenses
Acceptance of Quitclaim Deeds:
In 1995, Louisiana adopted a Civil Code article
codifying the use of quitclaim deeds in LA.
Civ. Code Art. 2502:
“A person may transfer to another whatever
rights to a thing he may then have, without
warranting the existence of any such rights…
such transfer does not give rise to a
presumption of bad faith…”
Act of Sale at Buyer’s Risk and Peril
vs. Quitclaim Deed
• Although these instruments seem to be identical,
a grantor tendering an Act of Sale at the buyer’s
risk and peril is intending to convey the property.
• In a quitclaim deed, the grantor is intending to
merely convey his interest in the property, if any,
and not the property itself.
Note: For these acts of sale, there are no implied
warranties and after-acquired title doctrine does
Louisiana Rights in Property
•The Owner of property in Louisiana has what the common law calls fee simple
•If a usufruct is granted over the land, the owner becomes the “naked owner”
•Only the owner may grant a servitude
•There are two types of servitudes: predial and personal
•A “Personal Servitude” is “a charge on a thing for the benefit of a person. There
are three sorts of personal servitudes: usufruct, right of habitation, and rights of
•A predial servitude is a charge on a servient estate for the benefit of a dominant
estate; The two estates must belong to different owners.
•Defined as “a real right in and to the property of another for the life of the
usufructuary”
•This enables the usufructuary to use the property and enjoy its fruits.
•A usufructuary (over the land) may not sell, lease or encumber the property
unless given the power to dispose of “nonconsummables” ; otherwise, the naked
owner (only) must execute any such conveyance including oil and gas leases
•One who has the usufruct of a mineral right, as distinguished from the
usufruct land, is entitled to all of the benefits of use and enjoyment…” Thus,
the mineral usufructuary may lease and develop the land himself(Sec. 192 &amp;
193 of the Mineral Code
The Louisiana Mineral Code: The
• Section 4: Substances to which the Code is
applicable – “The provisions of this Code are
applicable to all forms of minerals, including oil
and gas. They are also applicable to rights to
explore for or mine or remove from land the soil
itself, gravel, shells, subterranean water, or other
substances occurring naturally in or as a part of
the soil or geological formations on or underlying
 Compared to Texas: Sec. 75.001 of the Property Code,
defines “minerals” as “oil, gas, uranium, sulphur,
lignite, coal and any other substance that is ordinarily
and naturally considered a mineral in this state,
regardless of the depth at which the oil, gas, uranium,
sulpher, lignite, coal or other substance is found
Severance vs. Servitude
Texas - Severences
Louisiana - Servitudes
• Adheres to the common law
principle of ownership as a
• The mineral estate may be
severed from the surface estate
• Owner of the mineral estate
may make reasonable use of
the surface to remove the
• Oil &amp; Gas Leases are not
merely contracts but vest the
lessee with a determinable fee
• Adverse possession may be
applied to either estate
• Louisiana does not recognize a
separate mineral estate in oil and
gas (Frost-Johnson Lumber Co. v.
Salling’s Heirs – 1922); minerals
are not susceptible to absolute
• Only two estates in land: corporeal
ownership of the soil and an
incorporeal servitude for the use of
• One may acquire only the right to
go upon the land of another to
explore for and produce the
minerals; the party purchasing
this right is granted a mineral
servitude, which reduces them to
possession and ownership (Art. 21
of the Mineral Code)
• Only the landowner may create a
Copyright &copy; by the Kilburn Law Firm, PLLC 2012. All rights
• The Mineral Code concerns the minerals themselves, Civil Code
articles on Property apply to more general principles, such as
• Actual possession is necessary for the accrual of acquisitive
prescription and is a prerequisite for the assertion of certain real
actions in Louisiana (determines the appropriate procedure and
• Period can be interrupted by acknowledgement of the owner’s
title or suit by the owner to oust the adverse possessor
• Different requirements for 10-year and 30-year acquisitive
• Does not apply against the federal government or the State of
• Cannot be used to create a separate “right” to the minerals
because a servitude must be granted by the owner
Acquisitive Prescription Periods
• Alleged “Owner” must show that he
acquired the property: (i) in good
faith (ii) without knowledge of title
defects (iii) under a deed translative
of title (iv) had an actual taking of
continuance possession for 10 years
free from interference by the true
• Advantageous because of the shorter
period and the adverse possesser
need only possess a portion of the
property covered by the deed, once
10 years has accrued, he is
considered to be in possession of the
remainder of the tract
• Must be the result of one deed and
the tract must be contiguous
• Does not require any color of
• Requires actual possession of
the entire are claimed
• Title examiners must ensure
that the property was
severed from the public
Copyright &copy; by the Kilburn Law Firm, PLLC
Acquisitive Prescription &amp; Mineral Rights
• The adverse possessor that gains land by prescriptive title
owns the minerals as well; possession of the surface is deemed
to be possession of the mineral right inherent in a fee title
• The “adverse possessor” must prove that the outstanding
mineral right had not been possessed by use during the
prescriptive period (LA. REV. STAT. ANN. 31:154-155,160)
• If use of the mineral rights has occurred, even with respect to
a part of the rights outside the limits of the tract being
adversely possessed, such use is deemed to be an ouster of the
possession of the adverse possessor to such right
• If the Adverse possessor prevents a mineral owner from using
his right by creating an obstacle to such use, the accrual of
the acquisitive prescription period is interrupted for as long
as the obstacle remains
• The most common method of acquiring rights to the minerals
is the granting of a mineral servitude
5 Methods of Extinguishing a Mineral Servitude:
• Confusion – When a usufruct (limited personal
servitude) is extinguished because the usufruct and
the naked owner are united (analogous to the
extinguishment of an easement)
• Renunciation or Remission – the servitude owner
renounces the servitude by expressly remitting his
• Specific Term or Resolutory Condition – The mineral
servitude is originally created for a specific term
• Dissolution of the landowner’s title – the creator’s
right is extinguished (i.e. fraud, forgery, failure to pay
the purchase price)
• Prescription of Non-Use (the 10-year Rule) – 10 year
limit on the “use of the minerals”, conveyance “starts
the clock”, prescription can be interrupted
Interrupting the Prescription of Non-Use: Good
Faith Drilling Operations
• To determine when prescription is interrupted one must
determine when the servitude was created and what
events are sufficient to extend the date of use; the owner of
the mineral servitude has the burden of proving these facts
• The Code provides two methods to interrupt prescription:
(i) actual production of the minerals covered by the
servitude or (ii) good-faith operations for the discovery and
production of such minerals
• Actual production is a straight-forward inquiry; most
litigation hinges on what constitutes “good faith
• The term of the servitude may be extended once actual
drilling is commenced, even if such operations are not
completed until after the prescriptive period has accrued
“Good Faith” Drilling Operations:
• Section 31:29 of the Louisiana Mineral Code
states that “good faith drilling operations” are
(1) are commenced with reasonable expectation of
discovering and producing minerals in paying
quantities at a particular point or depth
(2) Continued at the site chosen to that point or
(3) Conducted in such a manner that they
constitute a single operation although actual
drilling or mining is not conducted at all times
Good Faith Requirement Cont’d:
For “commencement” to begin, mere preparation
is not enough (Sec. 31:30 – Preparations for the
commencement of actual drilling or mining
operations, such as geological exploration,
surveying, clearing of a site, and the hauling and
erection of materials and structure necessary to
conduct operations do not interrupt prescription”
This is a case-by-case factual determination to be
made by the courts
Requires a single operation (McMurrey v. Gray)
but the courts have been flexible in deciding what
constitutes a “single operation”
Conducting operations that do not have the
requisite expectation of success will not suffice to
interrupt the prescriptive period
Servitudes vs. Leases (the hybrid institution)
• Sec. 16: The basic mineral rights that may be created by a landowner
are the mineral servitude, the mineral royalty, and the mineral
lease…Mineral rights are real rights and are subject either to the
prescription of nonuse for ten years or to special rules of law governing
the term of their existence.
• Sec. 18: A mineral right is an incorporeal immovable. It is alienable and
• Section 114: (Nature of a Mineral Lease): “A mineral lease is a contract
by which the lessee is granted the right to explore for and produce
minerals.”  can be created for non-contiguous tracts of land and can be
subject to unitization. (therefore, it is a right and a contract).
• Section 115 (Requirement of a Term): “The interests of a mineral lessee
is not subject to the prescription of nonuse but the lease must have a
term, except as provided by this article, a lease shall not be continued
for a period of 10 years without drilling or mining operations or
production, in paying quantities.
• Section 116: A mineral lease may be granted by a person having an
executive interest in the mineral rights on the property leased.
Implied Covenants in Louisiana
• Covenant of Protection Against Drainage:
▫ If the amount of drainage is such that a prudent operator would offset
drainage and that such offset would be profitable, then the lessee must do so.
 Note: If there is a substantial amount of drainage, but drilling an offset
well would not be profitable to the lessee, the lessee may have a duty to
seek the creation of a unit.
• Covenant of Reasonable Development (and Further Exploration):
▫ Article 122 of the Mineral Code states that “a mineral lessee is not under a
fiduciary obligation to his lessor, but he is bound to perform the contract in
good faith and to develop and operate the property leased as a reasonably
prudent operator for the mutual benefit of himself and his lessor.
 Note: Pre-Article 122, Louisiana jurisprudence sometimes implied a
covenant of further exploration, referring to case law that required a lessee
to “test every part” of the leased premises. However, the comments to
Article 122 imply that any perceived obligation of further exploration is a
part of the reasonable development standard
• Covenant to Market:
▫ Lessee must use reasonable diligence when marketing the minerals
Who has authority to hold and convey title: A
look at Louisiana entities
• Louisiana recognizes the following entities as juridical persons:
 Corporations – must file Articles of Incorporation and annual
reports with the Secretary of State
 Limited liability companies – LLCs must file Articles of
Organization and annual reports with the Secretary of State
 General Partnerships – do not have to file with Secretary of
 Partnerships in commendam – also do not have to file. The
common law equivalent for these are limited partnerships.
 Registered limited liability partnerships – these must file a
special form with the Secretary of State, which transforms a
general partnership to having limited liability for all partners
What to do when dealing with
• Standard practice: obtain certificates of good standing from
the Secretary of State, along with all of the entities’
governing documents and corresponding company
resolutions when dealing with companies in a particular
• For transactions that have already taken place:
instruments filed of record should have the company
resolution approving the transaction attached to all such
recorded documents, upon which 3rd parties may rely. If no
such resolutions are attached, LA does not provide for
presumptions of authority, and the buyer/lessee assumes
the risk of presuming such authority. See Tedesco et ux v.
Gentry Development Inc. wherein the court held that the
doctrine of apparent authority is not applicable to
Trusts in Louisiana –
• Trusts are not considered juridical entities in LA.
• Instead trusts are defined as “the relationship resulting
from the transfer of title to property to a person to be
administered by him as a fiduciary for the benefit of
another.” – La. Rev. Stat. 9:1731
• Therefore, title to immovable property must be held in
the trustee’s name, and not the trust itself.
• Unless the trust documents provide otherwise, Trustees
have the full right to alienate, convey and lease the trust
property (thus, you must review the trust documents).
Mandates and Mandataries
A mandate is “a contract by which a person, the
principal, confers authority on another person, the
mandatary, to transact one or more affairs for the
principal.” – Civ. Code Art. 2989
To alienate, acquire, encumber, or lease property, the
mandate must expressly grant such authority.
Any mandates for transactions involving immovable
property should be recorded with the transaction
Once recorded, the mandate may be relied upon by 3rd
parties until a subsequent modification or revocation
What about spousal rights in
Louisiana has a community property regime, wherein any
property acquired during the marriage is presumed to be
When conveying, encumbering or leasing community
property, both spouses must sign. Separate property, even if
the homestead, does not require both spouse’s signature.
Examples of separate property are gifts, inheritance, and
property acquired with the separate funds of a spouse.
Note: Declarations in conveyances stating that the property is
the separate property of a spouse, can be relied upon if the
other spouse intervenes in the instrument (meaning, the
other spouse executes the document, with language
acknowledging that the property is separate property).
LA’s homestead statute defines homestead as:
“A residence occupied by the owner and the land
own which the residence is located, including any
building, appurtenances located thereon, and any
contiguous tracts.”
Homestead (con’t)
• The homestead exemption provides that any
homestead is exempt (for up to $35,000 of
value in the homestead) from any seizure and
sale by a creditor.
▫ This exemption does not apply in certain
circumstances (ie: purchase money creditors).
• Homestead exemptions may be effectively
waived if such waiver is executed by the
owner and recorded.
Once conveyed, must a grantee do
anything else to protect their
Recording in Louisiana: A Race to the
• Article 517 of the Civil Code: “The ownership of an immovable is
voluntarily transferred by a contract between the owner and the
transferee that purports to transfer the ownership of the immovable. The
transfer of ownership takes place between the parties by the effect of the
agreement and is not effective against third persons until the
contract is filed for registry in the conveyance records of the
parish in which the immovable is located”
• This language makes Louisiana one of the few pure race jurisdictions
• Actual or constructive knowledge of an unrecorded instrument is
• NOTE: Recall that a mineral lease, as well as other mineral rights, are
real rights in Louisiana; therefore, the recording rules applicable to
mineral rights are the same as for land (Mineral Code Art. 16 and 18)
What must be recorded to protect a grantee’s
• Article 3338 of the Code: The rights and obligations established
or created by the following written instruments are without
effect as to a third party unless the instrument is registered by
recording it in the appropriate mortgage or conveyance records
pursuant to the provisions of the Title:
(1) An instrument that transfers an immovable or
establishes a real right in or over an immovable
(2) The lease of an immovable
(3) An option or right of first refusal, or a contract to buy,
sell, or lease an immovable or to establish a real right in
or over an immovable
(4) An instrument that modifies, terminates, or transfers
the rights created or evidenced by the instruments
described in subparagraphs (1) through (3) of this Article
Louisiana Public Records Doctrine:
• Article 3342 of the Civil Code makes a recorded instrument binding in its
recorded form on the parties to the instrument with regard to any subsequent
third party who may acquire an interest in that immovable; this is the public
records doctrine which is essentially a negative doctrine – it does not create
positive rights but has the negative effect of denying effectiveness of certain
rights unless they are recorded.
• If another law or the instrument itself makes the recording of an instrument a
condition to the creation, extinction, or modifications of rights or obligations,
then the act or instrument is not effective against third parties until it is
• Recordation only provides notice to third parties as to what the instrument
contains, it does not create a presumption that the instrument is valid or genuine
▫ I.E. Louisiana courts have held that where the exercise of a renewal
option in an oil and gas lease was unrecorded, the lease was treated
beyond its primary term and a third party was not bound by it.
• NOTE: Recordation has no effect unless the law expressly provides for
recordation and is only effective with respect to immovables in the parish where
the property is located. Therefore, with respect to third parties and the
effectiveness of an instrument, a title examiner must know the proper parish of
A Mortgage or a Conveyance?
• Unless there is a law to the
contrary, if the instrument
creates or relates to a
mortgage or privilege over an
immovable, it is recorded in
the mortgage records of the
immovable is located
• Includes: Mortgages, lien
• Credit sales and sales with
an assumption of mortgage
(recorded in both)
relating to immovables
• Includes: Cash sales, acts of
exchange, acts of partition
• Mineral leases and mineral
Clerk of Court/Recorder:
• The effect of recordation arises when an instrument is filed with the Clerk of
Court/Recorder of the appropriate parish
• Upon filing of the instrument, the Clerk of Court will assign a filing number
to the instrument and attach his certificate to the instrument with the filing
information along with the date and time that the instrument was deposited
• The Clerk then records the act by photocopying the original instrument and
filing it for preservation
• Finally, the Clerk indexes the instrument by the names of the parties
• NOTE: Title examiners should be aware of Civil Code Article 3351 which
states “An instrument that has been recorded for at least ten years is
presumed to have been signed by all persons whose purported signatures
are affixed thereto, and, if a judgment, that it was rendered by a court of
competent jurisdiction” (Louisiana version of the ancient document rule)
The Aftermath of a Jazz Funeral
* See copyright footnote 8.
Title immediately vests in a decedent’s heirs or
legatees upon the death of the decedent.
However, until probate is opened, the estate is
held in limbo.
Louisiana has no alternative methods of
transferring immovable property from a decedent
to his or her heirs/legatees  must go through
probate process if immovable property is involved.
o A title examiner cannot rely on any filed affidavits
of heirship, a will probated as muniment of title, or
a filed will. This does not put heirs in possession!
o The requirement to probate includes anything
related to immovable property, called incorporeal
immovable property (ie: mineral rights).
• Decedent’s Separate Property is
inherited in the following order of
Parents and siblings (if there
are surviving parents and
siblings, the siblings inherit
with a usufruct in favor of
(nieces, nephews, etc.)
Copyright &copy; by the Kilburn Law Firm, PLLC 2012. All
• Decedent’s interest in Community
Property is inherited as follows:
To his or her descendants,
with a usufruct in favor of the
surviving spouse (known as
the “890 usufruct”)
If no descendants, then to the
surviving spouse entirely.
The “890 usufruct” exists until the
surviving spouse remarries or dies;
If a usufruct is for the surviving
spouse, the usufructuary gets use
of the landowner’s mineral rights,
whether or not there were open
mines at the time the usufruct was
created (La. Rev. Stat. 31:190b)
• Prior to August 1, 1956, when evaluating instruments of title, Louisiana
courts referred to the roadways as either mere servitudes or vested full
ownership of the road in the transferee (NOTE: If the roadway was
considered a servitude, then the roadbed would still be owned by the
• When determining whether the instrument conveyed a servitude or full
ownership the court applied a 7 part test which included factors such as
(i) the consideration recited in the deed (ii) the metes and bounds
description of the right-of-way and (iii) payment of taxes
• After 1956, the legislature passed LA. REV. STAT. ANN. &sect;9:2971 which
states that conveyances of land bounded by a road includes ownership to
the middle of the roadbed if the grantor had full fee title of the land
Duhig:
• Louisiana follows the same principles of the Duhig Rule in Texas. This
was established by a Louisiana case in 1978 known as Dillon v. Morgan.
“I have said that Texas is a state of mind, but I think it is
more than that. It is a mystique closely approximating a
religion. Rich, Poor, Panhandle, Gulf, City, Country, Texas is
an obsession, the proper study, and the passionate possession
of all Texans.”
“It has been said that a Scotchman has not seen the world
until he has seen Edinburgh; and I think that I may say that
an American has not seen the United States until he has
seen Mardi Gras in New Orleans.”
– Mark Twain, 1859
Copyright &copy; by the Kilburn Law Firm, PLLC 2012. All rights reserved. No part of this presentation may be used or reproduced in
any manner whatsoever without written permission from the Kilburn Law Firm. For information please address Kilburn Law
Firm, PLLC, 1001 W. Loop South Freeway, Suite 400, Houston, Texas 77027.
* See copyright footnote 9.
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