Case Name: Sharon W. LAMBERT and Donald Lambert v. MARYLAND CASUALTY COMPANY
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1981-06-15
Citations: 403 So. 2d 739
Docket Number: No. 10252
Parties: Sharon W. LAMBERT and Donald Lambert v. MARYLAND CASUALTY COMPANY.
Judges: Before SAMUEL, REDMANN, BOU-TALL, SCHOTT and KLIEBERT, JJ.
Reporter: Southern Reporter, Second Series
Volume: 403
Pages: 739–773

Head Matter:
Sharon W. LAMBERT and Donald Lambert v. MARYLAND CASUALTY COMPANY.
No. 10252.
Court of Appeal of Louisiana, Fourth Circuit.
June 15, 1981.
Rehearings Denied Sept. 17, 1981.
Klein & Rouse, Henry L. Klein, and Cecil M. Burglass, New Orleans, Arthur J. Lenti-ni, Metairie, for plaintiffs-appellees.
Deutsch, Kerrigan & Stiles, Marian Mayer Berkett and Matt J. Farley, New Orleans, for defendant-appellant.
Fred Clegg Strong and Guy B. Scoggin, New Orleans, for intervenor-appellant.
Before SAMUEL, REDMANN, BOU-TALL, SCHOTT and KLIEBERT, JJ.

Opinion:
SAMUEL, Judge.
Plaintiffs, Sharon W. Lambert and Donald G. Lambert, filed this suit against Maryland Casualty Company seeking $33,-000,000 in damages caused by defendant's alleged wrongful attempt to take over and destroy their wholly owned corporation, Donald G. Lambert Contractor, Inc. Plaintiffs had personally guaranteed the indebtedness of the corporation to Maryland. The original petition alleged a conspiracy on the part of Maryland, The Bank of New Orleans & Trust Company (BNO), and Hibernia National Bank in New Orleans. The banks were not named as defendants in the original petition, but were added when Maryland's exception of nonjoinder of necessary parties was maintained by the trial judge. Defendants answered, denying any liability to plaintiffs.
Shortly before trial, judgment was rendered giving effect to a stipulation between plaintiffs and the defendant banks, dismissing the banks on all charges except the premature call of the notes owned by the corporation to them. Separate trials were ordered for the claims against Maryland and the banks.
After the trials were concluded, one judgment was rendered awarding plaintiffs $9,866,739.50 against defendant Maryland. The suit against BNO and Hibernia was dismissed.
Maryland appealed from that judgment. Plaintiffs also appealed insofar as the judgment dismissed the banks and allegedly failed to adequately compensate plaintiffs. However, plaintiffs subsequently dismissed their appeal. In addition, after rendition of judgment, the trustee in bankruptcy of plaintiffs' corporation sought to intervene in the trial court. The trustee's motion was denied by the trial judge, and the trustee appealed both as to the denial of the intervention and as to the judgment. Shortly before the date scheduled for argument in this court, plaintiffs filed a motion to dismiss the trustee's appeal. The motion was referred to the merits.
Plaintiffs' corporation was one of the largest highway construction companies in this state. Plaintiff, Donald Lambert, through his corporation, developed a close working relationship with Maryland, which eventually wrote all the corporation's public works bonds pursuant to R.S. 38:2241. In 1974 the corporation had approximately $30,000,000 in outstanding construction contracts bonded by Maryland.
During 1974 the corporation began to have financial problems, which plaintiffs' counsel attribute to slow cash flow resulting from high interest rates, excessive rain-caused work stoppages, increased oil prices, and a $13,000,000 retainage of progress payments by the State of Louisiana involving disputed contract payments.
The corporation reduced its outstanding indebtedness from $25,000,000 in late 1974 to approximately $9.5 million in October, 1975. In May, 1974 it was unable to continue to operate without additional cash. The two banks with which it had done business in the past, BNO and Hibernia, terminated the corporation's credit line and refused to lend more funds. At this time the corporation owed BNO $2,200,000 and Hibernia $547,000.
Also at this time, the corporation had in excess of $22,000,000 in uncompleted public works contracts. In order to allow it to stay in business, Maryland agreed to guarantee new BNO loans up to $2,000,000 upon condition that the corporation and plaintiffs individually (1) recognize that the assignment of contract balances executed in individual indemnity agreements to hold Maryland harmless against bond losses were "ex-ecutory" and (2) the corporation and plaintiffs individually furnish other collateral to secure the new loan and the loans already made by BNO. This agreement was executed May 31, 1974.
The company continued to be unprofitable, and Maryland guaranteed a $250,000 promissory note held by Hibernia to prevent it from calling the company's entire indebtedness.
During this period the corporation's other creditors began to demand payment, and in due course they made demands on Maryland under the payment portion of its public works bonds. The evidence is somewhat contradictory in this respect, but the record indicates demand letters in excess of $1,000,000 were received by Maryland, suits in excess of $300,000 were filed against the corporation and Maryland, and liens in excess of $500,000 were filed against the corporation's jobs. At the corporation's and plaintiffs' request, Maryland executed "release of lien bonds" to have these liens erased from the public records. As a result, the Louisiana Department of Highways released sums of money in its 125% lien reserve to the corporation, and Maryland's exposure accordingly was increased by the amount of the lien release bonds so furnished.
By August, 1975 the corporation again was in need of cash, and on August 20,1975 the corporation and the individual plaintiffs executed an agreement with Maryland by which Maryland undertook to consider requests for cash advances up to $2,000,000 to be secured in part by the proceeds of a possible settlement of claims by the corporation against the Department of Highways. Maryland advanced $1.1 million under this agreement prior to October 1, 1975. However, prior to the execution of this contract, the corporation had "rejected" a $2,000,000 settlement offer from the Department of Highways, with the result that the Department's attorney concluded all claims should be litigated.
In late September, 1975 the corporation had $10,000,000 in public works jobs unfinished, the bulk of which were represented by two jobs which the corporation had difficulty in completing. Maryland's outstanding liability continued to grow, and all signs indicated to Maryland's management that the corporation was beyond financial rehabilitation. Maryland consequently decided to discontinue increasing its liability and to claim from parties to contracts it had bonded for the corporation the outstanding progress payments and other balances owed on completed work.
On October 1, 1975 Maryland informed the corporation it had decided to write no additional public works bonds for it, to execute no further releases of lien bonds, to make no further cash advances, and to file with the Department of Highways and other public agencies letters notifying them of Maryland's claim to the contract balances by way of assignment, subrogation, or otherwise. On the same day Maryland delivered such a letter to the Department of Highways.
As a result of the October 1, 1975 letter, the corporation's creditors withheld payments owed it and the corporation was unable to function. Maryland offered to finance certain jobs on a limited basis, but the offer was refused.
On October 14, 1975 the corporation filed a petition under Chapter XI of the Federal Bankruptcy Act. It was allowed to continue to operate its business as a Debtor in Possession without supervision of a trustee. Nevertheless, it was unsuccessful in perfecting the Chapter XI arrangement with its creditors, and made an unsuccessful attempt to convert to a corporate reorganization under Chapter X of the Bankruptcy Act. On its own petition, the corporation then converted the proceeding to a straight bankruptcy.
Numerous suits, counter suits, and other proceedings in state and federal courts have resulted, two of which have been determined by this court. One such proceeding has given rise to an exception of res judica-ta by Maryland.
Maryland contends the present suit states the same cause of action against it as that asserted by plaintiffs in their reconventional demand in the prior suit entitled "Bank of New Orleans & Trust Co., et al. v. Donald G. Lambert, et al." The reconventional demand was dismissed primarily because defendants' attorney did not appear for the trial. This court held the trial judge did not commit error by dismissing the suit although a letter had been written to the trial judge advising that counsel was unable to attend the trial, since a number of previous delays had been given counsel for various reasons.
In Louisiana res judicata (the plea is available under the provisions of Civil Code Article 2286) is stricti juris and a second suit is not barred when there is any doubt about the applicability of Article 2286. It has been held that:
"A final judgment has the authority of res judicata only to those issues presented in the pleadings and conclusively adjudicated by the court, and where any doubt exists the second suit will be maintained."
In Mitchell v. Bertolla, the Supreme Court summarized the law relating to the issue of "identity of cause" and noted that under civilian law a judgment of dismissal only bars relitigation of matters actually pleaded and adjudicated and, unlike the common law doctrine of collateral estoppel or estoppel by judgment, does not bar matters which might have been pleaded. The court (at page 292) made the following statement:
"We hold that the words 'cause of action' in C.C. 2286 are to be interpreted to mean 'cause', and we will look to civilian doctrine, if need be, to explain the meaning of 'cause.'
O'Quin described the prevailing view of cause in actions to nullify an instrument:
'. . . each of the vices is a separate cause, and therefore failure of the plaintiff in an attack on the ground of fraud will not bar a subsequent attack on the grounds of error or duress, or any other vice. This view has been adopted by practically all the modern commentators.' "
Finally, in Scurlock Oil Company v. Getty Oil Company, the Supreme Court explained the underlying principal against applying an overly liberal doctrine of res judi-cata as follows:
". . The doctrine is moreover compatible with the principle that freedom of access to the court is guaranteed by Louisiana's Constitution. 'All courts shall be open, and every person for the injury done to him in his rights, lands, goods, person or reputation shall have adequate remedy by due process of law and justice administered without denial. . . . ' La. Const. Art. I, ¶ 6. This interest outweighs the argument that litigation should have an end."
The "cause" asserted in the recon-ventional demand was conspiracy between the various defendants in reconvention and an anti-trust violation. That cause was dismissed, and evidence of this kind was excluded by the trial court in this proceeding. This suit contains additional claims for wrongful seizure, negligence, breach of contract, and breach of suretyship duties. Moreover, the assertion of the direct damage to plaintiffs was made distinctly here and was not an essential element of the reconventional demand. Consequently, we conclude the cause of action asserted in this suit is not barred by the dismissal of plaintiffs' reconventional demand in the previous suit.
Maryland further argues that plaintiffs have no right to proceed directly as stockholders of the bankrupt corporation against a party which allegedly caused damage to the corporation. The clearest Louisiana case on this point is Afeman v. Insurance Company of North America, in which a 90% stockholder of a corporation, who performed almost all of its services, fell through a false ceiling as a result of the defendant's negligence and sued for loss of income to his corporation resulting from the disability he incurred in the accident. This court rejected his claim and stated that if ". . . a corporation sustains a loss then [other than a secondary action] only the corporation can sue to recover it." The basis for this court's decision was the distinction made in C.C.Arts. 435 and 436 between a corporate entity and the persons who comprise the corporation. This court refused to disregard the corporation's existence and award its lost profits as damages to its shareholder.
In Orlando v. Nix, the Supreme Court previously had held that when a corporate loss results from fraud or mismanagement by a corporate official, the right of recovery is an asset of the corporation and not of its shareholders. The court further stated that only "in extreme cases" is a shareholder permitted to sue for damages owed to a corporation, and then not until the shareholder has made ineffectual demand on the corporation to institute suit. Such a suit must then be brought on behalf of the corporation which alone is entitled to the amount recovered.
Plaintiffs cite Green v. Victor Talking Mach. Co., the basis of which is that a shareholder may obtain a personal right of action against a wrongdoer whose actions damage both the shareholder and his corporation provided there are "relations between him and the tort-feasor independent of those which the shareholder derives through his interest in the corporate assets and business." (quotation from page 381).
The special relationship upon which plaintiffs rely is their status as guarantors of corporate debts. By supplemental brief, plaintiffs attempt to establish a broader "special relationship" by what they characterize as Maryland's insistence on dealing with the Lamberts in "an individual and personal capacity." We see no difference between this phase and the Lamberts' status as guarantors. In Mullins v. First National Exchange Bank of Virginia, the district court for the western district of Virginia expressly held that the status of guarantor of a corporate debt does not support individual action for damages allegedly done the corporation. The court stated (at page 722):
"The fact that plaintiffs were guarantors on the note executed by the corporation will not suffice to create a personal right of action independent of the harm suffered by the corporation."
Our reading of the jurisprudence leads us to the conclusion that plaintiffs should not be allowed to proceed individually as shareholders to recover for damages allegedly caused by defendant to the corporation. However, the Afeman case, which is the clearest pronouncement by Louisiana courts on the subject, does not involve a "special relationship" as that relied upon by plaintiffs. Because our jurisprudence is incomplete on this point, because of the result we reach on the merits, and because of its size and complexity, we prefer to decide this case on its merits. Accordingly, we proceed with a discussion of the substance of plaintiffs' claims.
Prior to a discussion of the merits of Maryland's appeal, we must dispose of the plaintiffs' motion to dismiss the appeal of the trustee in bankruptcy, and that appeal itself, since the questions thereby raised are entwined with plaintiffs' right to maintain this action as individuals.
The judgment here appealed from is dated September 20, 1978. On October 6, 1978 Maryland appealed suspensively and filed the appropriate security. On November 10, 1978 the trustee in bankruptcy filed a motion for permission to intervene and assert a petition for damages against Maryland. After a hearing, that motion was denied for the reason that Maryland's appeal divested the trial court of jurisdiction. The trustee then appealed devolutively from the order denying the intervention and from the judgment in favor of plaintiffs against Maryland.
In our view, the trial judge was correct in refusing to permit the trustee to intervene subsequent to this appeal by Maryland. At that time the trial had been completed, the intervention could serve no useful purpose, and the trustee's remedy, if any he had, was by appeal.
Subparagraph (6) of Code of Civil Procedure Article 2088 specifically retains jurisdiction in the trial court to grant an appeal to a party other than the first appellant and Article 2086, providing for third-party appeals, reads as follows:
"A person who could have intervened in the trial court may appeal, whether or not any other appeal has been taken." LSA-C.C.P. Art. 2086.
Consequently, we overrule plaintiffs' motion to dismiss the trustee's third-party appeal and proceed to the merits of that appeal.
The main thrust of the trustee's appeal is that the judgment of the district court should have been rendered in his favor and not in favor of the individual plaintiff stockholders because they have no right to sue for an alleged injury to the corporation in which they own stock. Referring to matters outside the record, he argues the bankruptcy court did not abandon the suit asserted by the plaintiffs in this case, and that plaintiffs should have prosecuted the suit as a shareholders' secondary action under Article 596 of the Code of Civil Procedure, which reads as follows:
"The petition in a class action brought by a shareholder or member of a corporation or unincorporated association because it refuses to enforce a right which it may enforce shall:
(1) Allege that the plaintiff was a shareholder or member at the time of the occurrence or transaction of which he complains, or that his share or membership thereafter devolved on him by operation of law;
(2) Allege with particularity the efforts of the plaintiff to secure from the managing directors, governors, or trustees and, if necessary, from the shareholders or members, the enforcement of the right; and the reasons for his failure to secure such enforcement; or the reason for not making such an effort to secure enforcement of the right;
(3) Join as defendants the corporation or unincorporated association and the ob-ligor against whom the obligation is sought to be enforced;
(4) Include a prayer for judgment in favor of the corporation or unincorporated association and against the obligor on the obligation sought to be enforced; and
(5)Be verified by the affidavit of the plaintiff or his counsel." LSA-C.C.P. Art. 596.
The trustee also relies on the Afeman and Orlando cases as authority for the contention that a shareholder may not sue for damages done the corporation unless such a suit is in the form of a secondary action on behalf of the corporation, and unless the corporation and the obligor against whom the obligation is sought to be enforced are joined as parties defendant. The trustee thus concludes the decision of the district court should be recast to substitute him, as trustee, for the individual plaintiffs, Mr. and Mrs. Lambert.
For whatever evidentiary value it may have in this regard, the record shows on June 14, 1976 plaintiffs' attorney wrote the trustee, supplied him with a copy of the suit against Maryland, and specifically requested that the trustee file a similar law suit on behalf of the bankrupt corporation against Maryland. The trustee took no action until judgment was rendered in favor of plaintiffs, at which time he attempted to intervene as stated above.
Our settled law is that in a third party appeal the third party appellant takes the record and the court proceedings as he finds them. The record before us does not indicate precisely what rights were abandoned by the bankruptcy court. Moreover, there may be special defenses available to Maryland against the trustee which were not available to it against the individual shareholders. Considering that the record does not contain evidence sufficient to justify a substitution of the trustee for the individual plaintiffs in this proceeding, the relief sought by the trustee must be denied.
On the merits of Maryland's appeal, the parties urge numerous relevant and nonre-levant charges and counter-charges against each other. However, it is clear from our analysis of the record, the briefs and the oral arguments that defendant's liability to plaintiffs hinges upon a determination of the following questions:
1) Did the corporation assign to Maryland progress payments and other funds owed under the various jobs for which Maryland furnished public works bonds?
2) Did Maryland have the legal right to take the actions outlined above on October 1, 1975, and particularly the letter to the corporation's creditors, without the consent of either the corporation or the individual plaintiffs?
3) If Maryland had the legal right to take such actions, is it nevertheless liable to plaintiffs for a bad faith breach of a fiduciary relationship on an "abuse of rights" theory?
As these are basically questions of law and contract interpretation, the manifest error doctrine is inappropriate.
The first question already has been answered and decided by this court in another context. In Lambert v. Cronvich, we concluded the documents executed by the parties did result in an assignment to Maryland of the contract proceeds. Lambert v. Cron-vich includes a detailed discussion and analysis of those documents (at pages 557, et seq.) which need not be repeated here.
A detailed reference to the particular documents in the context of the issues presented establishes the existence of a valid and enforceable assignment and affirmatively answers the second question for our consideration, namely, whether Maryland had the right to take its actions of October 1, 1975, including issuance of the letter to the corporation's creditors.
In each bond application executed in connection with every bond written for the corporation by Maryland, the following language appears:
"And for the better protection of the said Company the undersigned do, as of the date hereof, hereby assign, transfer and convey to the said Company all our right, title and interest in and to all the tools, plant and equipment and materials of every nature and description that we may now or hereafter have upon said work, or in, on or about the site thereof, including as well materials purchased for or chargeable to said contract which may be in process of construction, on storage elsewhere, or in transportation to said site; hereby assigning and conveying also our rights in and to all sub-contracts, which have been or may hereafter be entered into, and the materials embraced therein, and authorizing and empowering said Company, its authorized agents or attorneys, to enter upon and take possession of said tools, plant, equipment, materials and subcontracts, and enforce, use and enjoy such possession upon the following conditions: This assignment shall be in full force and effect as of the date hereof should the undersigned fail to discharge any obligations of any description incurred in the performance of said contract, or be unable to complete the said work in accordance with the terms of the contract covered by said bond(s), or in the event of any default on the part of the undersigned under the said contract, or in the event of claim or default in connection with any other former or subsequent bonds executed for us or at our instance and request." (Emphasis ours).
Plaintiffs contend the above language cannot be read to mean that Maryland thereby was furnished with a perfected assignment. They argue a further condition must be met, namely default of the principal on the various contracts, and insist the corporation was not in default on the contracts involving Maryland.
However, in its letter of May 31,1974 the corporation and the present plaintiffs agreed to the following:
"LAMBERT recognizes that the assignment of contract funds, materials, equip ment and rights in subcontracts made by LAMBERT to Maryland in the various indemnity agreements, heretofore executed by LAMBERT, are now executory. LAMBERT confirms the aforesaid indemnity agreements and the effectiveness of those assignments as of this date and agrees to execute, when called upon by Maryland, whatever documents may be required to evidence to third-parties the effectiveness of the assignment."
Counsel for plaintiffs argue this is not an assignment, and the trial court concluded that if this language is an assignment, it merely assigns the rights of the corporation to contract proceeds earned prior to the date of its execution on May 31, 1974. We disagree.
First, we conclude the language in the letter agreement of May 31, 1974, making "now executory" the assignments of balances due had the effect of waiving the condition in the various indemnity agreements which, according to plaintiffs, required a default on their part before the assignments could be executed. The contract of May 31, 1974 makes the assignment capable of enforcement unilaterally by Maryland without concurrence by the corporation or plaintiffs. The language by which the corporation and plaintiffs agree to execute "whatever documents may be required to evidence to third-parties the effectiveness of the assignment" was merely precautionary in nature and failure to obtain such documentation is not fatal or prejudicial to Maryland. Should Maryland have requested any of the Lambert interests to execute such documents, it undoubtedly would have been met with a resounding refusal. The law does not require the performance of a vain and useless act. Consequently, the agreement of May 31, 1974 makes the assignment provisions of previous indemnity agreements enforceable by Maryland.
In connection with this argument, plaintiffs contend the word "executory" does not mean capable of being executed, but on the contrary means incomplete, contingent, and unperfected. They cite as authority Black's Law Dictionary as follows:
"EXECUTORY. That which is yet to be executed or performed; that which remains to be carried into operation or effect; incomplete; depending upon a future performance or event. The opposite of executed.
"Right which is not vested but lies in action and which requires resort to court of equity to invest plaintiff with right claimed is 'executory'. Parks v. Classen Co., 156 Okl. 43, 9 P.2d 432, 435."
The word "executory" is capable of two meanings in other states and of two meanings in Louisiana legal terminology. The American Heritage Dictionary of the English Language gives the following definition of the word "executory":
"1. Administrative. 2. Operative; in effect. 3. Law. Intended to go into effect, or having the potential of becoming effective at some future time; contingent."
This language seems to be based, as is the definition of "executory" in Black's Law Dictionary, on common law usage. At least one Louisiana case tends to give the word a similar meaning. In Whaley v. White, the court held that a note and mortgage given to secure an oral promise of remarriage "ceased to be executory" upon remarriage and was then "an executed agreement."
However, other dictionaries and legal usage in Louisiana have long referred to an "executory judgment" as one which is capable of immediate enforcement. Article 2781, et seq., of the Code of Civil Procedure provide a method for making a final judgment capable of execution in another parish, and the code clearly means that making a judgment executory has the effect of rendering it immediately enforceable. (See also Article 2167, Code of Civil Procedure.) A similar meaning was given to the word "executory" in Eiermann v. Modenbach, in which the court stated a suspensive appeal prevents a judgment from becoming "exec-utory" until the decision of the appellate court has become final.
While plaintiffs argue this ambiguity should be construed against Maryland because Maryland drafted the document, we are aware that the contract of May 31, 1974 was drawn in Louisiana by Louisiana lawyers for use and enforcement in Louisiana. The authority cited by plaintiffs is derived from a common law source. Moreover, the contract of May 31, 1974 obviously was intended to change the contractual status quo since rights were being granted and concessions made in that document. To construe the words "now executory" to mean "remain contingent" would be to defy common sense and reason, particularly in the context of the document's purpose of giving extra privileges to the corporation in return for the giving by the corporation and plaintiffs of extra security and other concessions to further guarantee Maryland from loss under its bonded indebtedness. We thus construe the words "now executory" to mean "now capable of execution" similar to the usage of the articles of the Code of Civil Procedure which provide for making judgments of another jurisdiction executory.
Second, we do not agree that the contract of May 31, 1974 had retrospective effect only. First, the indemnity agreement, quoted and emphasized above, applied to contracts then or thereafter con-fected. This language strongly denotes prospective effect. Second, the language quoted above from the May 31, 1974 letter including the phrase "heretoafter executed by Lambert" must be read in context with the language of the indemnity agreements and the third to last paragraph of the May 31 letter which reads:
"The undersigned recognize that the indemnity agreements heretofore or hereafter given by LAMBERT to Maryland are not modified or altered by any of the transactions contemplated by this letter, except to the extent that the indemnities are made executory as set forth in paragraph numbered 1 above." (Emphasis ours).
Third, the parties executed a letter agreement on August 20, 1975, some forty days before Maryland's letter of October 1, 1975. That August 20 document is on the letterhead of Donald G. Lambert Contractor, Inc., and is reproduced here:
DONALD G. LAMBERT CONTRACTOR, INC.
1800 Duncan St. • Kenner, Louisiana
70062 • 504-729-4581
August 20th, 1975
Maryland Casualty Company
Post Office Box 51178
New Orleans, Louisiana 70151
Gentlemen:
Donald G. Lambert Contractor, Inc., and its affiliated firms and controlling stockholders, Lambert Industries, Inc., Lambert Construction Company, Inc., Lambert Aviation, Inc., Donald G. Lambert and Sharon W. Lambert (Collectively referred to in this letter as "LAMBERT") your indemnitors and assignors, hereby request that you, Maryland Casualty Company, assist LAMBERT, who is in immediate need of cash, by advancing from time to time, as needed by LAMBERT, cash funds not to exceed in aggregate $2,000,000.00. Donald G. Lambert is authorized to act for LAMBERT in requesting the individual advances. Maryland Casualty Company will not be obligated to grant the requests of LAMBERT to advance funds but may in its sole discretion grant or refuse each or all of LAMBERT'S requests to advance as Maryland may elect. However, should Maryland elect to advance any sums to LAMBERT, LAMBERT agrees as follows:
(1) The funds made available by Maryland will be used only for the purposes designated or indicated in LAMBERT'S request for them. It is contemplated that Maryland will only entertain requests for advances to meet LAMBERT'S payrolls, for payment of subcontractors, suppliers and rents arising out of and in connection with any LAMBERT construction contract, and for overhead items such as taxes, salaries, general office expense, interest on loans incurred by LAMBERT, installments due on notes secured by real estate or chattel mortgages on equipment purchases made heretofore.
(2) The advance made by MARYLAND under this letter agreement shall be repaid on or before January 30th, 1976. The maturity date may be extended by MARYLAND without consent of, consultation with, or notice to the indemnitors herein.
(3) LAMBERT recognizes that MARYLAND is not bound to execute and/or to issue any additional bonds for LAMBERT, or for any of the persons included in that collective reference, but will consider requests for the execution and issuance of additional bonds as applications are made and MARYLAND reserves the right to refuse, in whole or in part, such applications.
(4) Under the existing executory assignment heretofore made by LAMBERT on March 31, 1973 to MARYLAND, which the parties reconfirm, MARYLAND has an assignment of all funds recovered by or to be recovered by LAMBERT in connection with any construction contracts of LAMBERT, or any of the persons included in that collective reference. LAMBERT anticipates that within a short period of time, it may recover substantial sums on claims and suits for extras and damages now pending against the State of Louisiana and other governmental bodies, which claims do in fact arise out of said construction contracts. If recovery is effected, LAMBERT will pay the sums recovered directly to MARYLAND first to the repayment of any advances MARYLAND may make under this letter agreement.
(5) The undersigned recognize that the indemnity agreements heretofore or hereafter given by LAMBERT to MARYLAND are not modified or altered or extinguished by any of the transactions contemplated by this letter.
(6) The undersigned warrant that the signatories to this letter are fully authorized to act in the capacity or capacities in which they appear and for the purposes set out herein and attach evidence of their corporate authority.
(Emphasis added by the Court).
These documents and our decision in Lambert v. Cronvich amply demonstrate the assignment by the corporation was to be prospective in effect and was not limited to funds earned as of May 31, 1974.
From all of the above, we conclude the assignment given to Maryland by the corporation had legal effect as of October 1, 1975, and Maryland had the legal right to take the action outlined above on that date, including the letter notification, to persons owing money to the corporation, of its demand for payment.
Additionally, even if Maryland did not have the benefit of a contractual assignment, it had the right to claim funds due the corporation on the various outstanding contracts which it had bonded by legal subrogation. This point was decided long ago in Prairie State Bank v. United States, in an opinion written by Chief Justice White. In that case the Supreme Court of the United States held a surety on a public works bond is entitled to the contract balance by legal subrogation through the owner's rights, whether or not an express assignment had been executed by the contractor, and even though the money may be attributable to work done by the contractor prior to default. The court explained that the contract balances were the security which the owner held to secure faithful performance by the contractor of the work to be done. If the work was not faithfully completed, the owner had a right to withhold payment of the funds. When the surety, in conformity with its bond obligations, provided the owner with full performance of the contract after the contractor's default, then the surety became subro-gated to all the rights of the owner, including the right to hold the contract funds as security for its own losses. The Supreme Court reiterated its decision in Prairie State Bank in the later case of Pearlman v. Reliance Insurance Company.
At least two federal cases originating in Louisiana recognize the position of the sure ty with respect to contract funds. In Claiborne Parish Sch. Bd. v. Fidelity & Deposit Company of Maryland, the court recognized that a surety needs no assignment to the contract funds, holding the surety is entitled to the funds by the right of subro-gation if called upon to pay any claims. This decision was maintained in U. S. Fid. & Guar. v. Housing A. of Town of Berwick.
Plaintiffs argue subrogation is not appropriate in the present case because the corporation, although bankrupt, was not in default on October 1, 1975. While there was no formal recordation of default of the various construction contracts, there was clearly default on the bonds and actual default on the construction contracts themselves. Subrogation takes effect under the provisions of the indemnity agreement when there has been a claim or a default of the contract. Louisiana public works bonds are statutory in nature and not only guarantee performance of the construction work but also payment of laborers and materialmen. Between March and October 1, 1975 claims in excess of $1,000,-000 were asserted against defendant by letter, lien, or suit, and these claims represented unpaid laborers, materialmen, and subcontractors on the various bonded jobs undertaken by plaintiffs' corporation. This demonstrates the corporation, as principal on the bond, was in default on the payment portion of that obligation. The corporation admitted the validity of over $380,000 of the claims, and requested Maryland to pay claims of $302,434 and $79,902 asserted under R.S. 38:2241. One claim of $6,471 against the corporation and Maryland was reduced to final judgment which Maryland had to pay. The corporation admitted in its petition under Chapter XI of the Bankruptcy Act that it had unsecured creditors in an aggregate amount of $2,324,447.38, and that $1,100,000 of this amount possessed lien rights under various contracts.
Defendant remains exposed to the claims of the lien holders and is entitled under its right of legal subrogation to protect itself against potential liability by asserting an interest in the funds given to indemnify it against loss.
It has been held that exposure to claims under payment obligation of a public works bond is sufficient in itself to justify a surety's notification to the owner under a public works contract of its interest in the contract balances. In United States Fidelity & Guaranty Co. v. Triborough Bridge Authority the court said:
"A failure by the contractor to pay for labor and material was just as much a failure to perform and carry out the terms of the contract as an abandonment of the work would have been."
A similar decision was rendered in Gerstner Electric Company, Inc. v. American Insurance Co., in which a surety, after becoming aware of a single claim for labor and materials by a subcontractor, directed the owner to withhold further payments from the contractor even though the contractor had not been declared in default by the owner, had not admitted default, and disputed the validity of the subcontractor's claim. The court upheld the trial court, concluding the surety had acted reasonably under the circumstances. In Fireman's Fund Insurance Company v. United States, a surety demanded the contract balances because one supplier had filed suit against it and the contractor. The contractor contested the supplier's suit, but the court nevertheless held the owner liable to the surety for a payment made to the contractor after the owner received the surety's notification of its claim to the contract balances. Other eases also have upheld the right of a surety to protect its interest in the contract balance prior to formal recor-dation of default.
Having concluded the existence of the assignment, its effectiveness on October 1, 1975, and Maryland's subrogation rights, we must now decide whether Maryland, while having the legal right to do so, nevertheless committed a breach of faith and broke a fiduciary relationship by sending the letter of October 1, 1975 to the corporation's debtors, thereby effectively freezing the funds of the corporation and forcing it into bankruptcy.
When in May, 1974 Maryland became a guarantor of the $2,000,000 owed to BNO and subsequently for the $250,000 owed to Hibernia, it took on an obligation over and above those owed as surety. Furthermore, in August, 1975 Maryland agreed to advance Lambert up to $2,000,000 and did in fact advance 1.8 million dollars under this agreement, so that by October, Maryland occupied the positions not only of surety, but also of guarantor and direct creditor of Lambert.
The conclusion of the trial judge that Maryland was a fiduciary with regard to the corporation and owed it a duty of acting in good faith is an over simplification. That corporation, as principal on the public works bonds, made certain indemnity agreements which were unilaterally enforceable both prospectively and retrospectively by written agreement. We also note Maryland has a duty to its shareholders, and perhaps to its creditors, to manage its business in a prudent manner in order to avoid jeopardizing the corporate entity, the equity interest of its shareholders, and the right of its creditors to be paid amounts owed by it.
We cannot construe the action of Maryland as being in bad faith or in violation of any fiduciary relationship to the corporation. Maryland was under no legal obligation to furnish additional public works bonds; it was under no legal obligation to furnish additional releases of lien bonds; and it had no obligation to make further direct cash advances to or for the benefit of the corporation. Maryland did not lull the corporation into a "false sense of security" by the agreement of August 20, 1975, quoted above in its entirety, since the opening paragraph of the agreement clearly establishes that "Maryland Casualty Corn- pany will not be obligated to grant the request of LAMBERT to advance funds but may in its sole discretion grant or refuse each of all of LAMBERT'S requests to advance as Maryland may elect." (Emphasis added). Consequently, the corporation and the plaintiffs were put on notice by this language that Maryland did not guarantee it would advance all or any part of the $2,000,000 cash advance requested by the corporation and plaintiffs.
Plaintiffs argue that had they known Maryland would cease to advance funds and otherwise take action to protect its interests as of October 1, 1975, they could have obtained another bonding source to allow the corporation to remain in operation without the benefit of Maryland's bonding capacity. The testimony offered in this regard is not disputed. However, we cannot ignore the fact that less than two weeks after Maryland's actions the corporation applied to the bankruptcy court for relief under Chapter XI of the Bankruptcy Act, and it was allowed to continue operation as Debtor in Possession without the burden of a trustee to second-guess or otherwise interfere with its operations. If the corporation or plaintiffs actually had access to other bonding capacity they certainly would have used the same while entrenched as Debtor in Possession in order to rescue the corporation from its financial difficulties. Furthermore, they would not have accepted the onerous obligation imposed on them in the agreements of May 31 and August 20, in order to get additional cash. These circumstances establish that even had Maryland not taken its action on October 1, the corporation still would not have survived financially.
We agree with the trial court's conclusion that Maryland intended to cut off its financial support to the corporation with the full knowledge that such action would effectively place the corporation in bankruptcy. However, we do not see in this a breach of good faith or of a fiduciary violation since we know of no law requiring even a surety company much less a guarantor and creditor to continue to put additional money into a corporation which it reasonably believes is in a financially hopeless condition, once it has legally obtained the right to take whatever actions are necessary to cease operations in connection with such a corporation.
Having concluded there was no violation of a fiduciary duty and no lack of good faith, we must determine whether Maryland actionably abused the rights we have decided it possessed on October 1, 1975.
The doctrine of abuse of rights is essentially that "fault" in the delictual sense can be imposed upon a party who attempts to exercise a right legally given it with the intention of harming or imposing a detriment upon another. Commentators have explained the doctrine as follows:
"Briefly summarized — if a person exercises his rights with a predominant intent to harm, as evidenced by the fact that he obtains little or no benefit from the exercise of his rights while, at the same time the other party or parties suffer damages thereby, most courts in civil law jurisdictions will find the act abusive, an abuse of rights. They will not enforce it, or will award damages to the injured party, or will order that what was done be demolished, modified, or if possible, undone."
The doctrine of abuse of rights also has been stated as follows:
". . . Louisiana, like France, in difficult cases where the exercise of a right is challenged, appeafg"to seek the -raison d'etre of the right — what is it for? — Why has the law provided it? If the exerciser of the right has acted within the ambit of purpose, he is protected even though the exercise entails inconvenience to others. But if the exercise of the right is abnor mal, not benefitting its purpose — -then the good jurist, recognizing with Celsus that law is the art of good and of equity will strive to make his decision just and good insofar as he can."
There is a paucity of jurisprudence in Louisiana dealing with the abuse of rights doctrine. The primary case is Higgins Oil & Fuel Co. v. Guaranty Oil Co., a suit by one land owner against another land owner seeking to have the defendant cap a dry oil well drilled on its property. The defendant's oil well, while uncapped, was letting air into an underground cavity, preventing plaintiff from obtaining enough suction to pump oil from the plaintiff's well. The court reviewed numerous French commentators and concluded that cases of this nature involving conflicting rights must be predicated on their own facts and circumstances, and no broad or inflexible rule can be set forth. However, the court formulated, in somewhat unsatisfactory fashion, the rule that one neighbor in an "unneighborly spirit" must not do something which creates no benefit to himself but which causes damage to his neighbor. The court stated that while the defendant had the right to drill on his land and to allow the well to remain uncapped, nevertheless when the uncapped well accomplished no benefit to the defendant and simultaneously caused damage to the plaintiff, the plaintiff was entitled to injunctive relief requiring defendant to cap the well. In short, the court seemed to be saying that an abuse of right exists where one exercises a right to which he is otherwise entitled when the exercise of that right causes him no benefit while at the same time causes detriment to another. This rationale is somewhat similar to the doctrinal material quoted above.
Another case based on the abuse of rights doctrine is Onorato v. Maestri. In that case plaintiff, a real estate broker, negotiated a lease and agreed to accept his commission in installments. Prior to the payment of all installments of his commission, the lessors went into receivership in violation of the lease and the lessee used this receivership to rescind the lease contract. The defendant lessors contended because the lease was rescinded it never existed and therefore the plaintiff real estate broker was never entitled to a real estate commission. However, immediately after rescinding the lease the lessors entered into another lease with the receiver under the same terms and conditions contained in the original lease prior to its dissolution. The court said that unquestionably defendants had the right to rescind the lease upon the appointment of a receiver as provided in the lease contract. Had they done this and nothing more, or had the rescinded the lease and subsequently leased the property to a third person the court indicated it would be inclined to hold the agent not entitled to recover, at least to the extent of commission payments due after the rescission, because his right to a commission depended upon the collection of rental from the leased property until his commission was satisfied. However, by executing the identical lease with the receiver, the lessors in effect reinstated the original lease to the extent of the time period named in the lease with the receiver which covered all or most of the time in which the plaintiff was interested. To allow the defendant lessors to so avoid their obligation would be a subjugation of substantive rights to matters of mere form. The reasoning of the court was that, by exercising their right to rescind and re-leasing the property on the same terms and conditions to the legal representative of the original lessee, the defendants obtained no benefit for themselves and at the same time caused detriment or harm to the plaintiff agent.
An analysis of these Louisiana cases which touch upon the abuse of rights doctrine shows that, depending on the facts and circumstances of each case, for one to be held in damages for exercising a right legally conferred upon him there must exist (1) no benefit to the person exercising the legal right, and (2) damage or injury to the person against whom the legal right is asserted.
This analysis was confirmed by the Louisiana Supreme Court in the recent case of Morse v. J. Ray McDermott & Co., Inc., in which the court established the test for the existence of an abuse of rights is whether the party exercising the right had "legitimate and serious interest" in its exercise. Thus, merely possessing a right does not justify its exercise if that exercise injures another. The party exercising the right must have an interest in doing so and that interest must be legitimate and not feigned.
In the present case, unquestionably plaintiffs, as guarantors of their corporation, sustained damage by the exercise of Maryland's right on October 1, 1975. However, by exercising its rights, Maryland gained a distinct and obvious advantage in protecting its legitimate and serious interests. It limited its liability under its sure-tyship arrangements and as a guarantor and creditor and prevented its corporate assets from being further depleted by investing money in a corporation which reasonably was beyond financial resuscitation. A distinct benefit having been gained by Maryland from the exercise of its rights on October 1,1975, the abuse of rights doctrine is not applicable, and Maryland is not liable in tort to plaintiffs.
It should be noted that in brief even plaintiffs agree Maryland did not act with the intention of destroying plaintiff's corporation. On the contrary, plaintiffs concede Maryland's actions were more motivated by a desire to control and dominate the operations of the company than by an intent to destroy. Considering the indebtedness undertaken by Maryland, we do not see that a motivation to control and dominate for the purpose of financial rehabilitation is unreasonable under all the circumstances here. This is amply demonstrated by the fact that even after Maryland issued its letter of October 1, 1975, it still offered to plaintiff the right to continue his business under certain circumstances, primarily involving supervision and control of his actions by Maryland or its representatives. Plaintiff rejected this offer and eventually the corporation went into bankruptcy.
Given all the facts, the legal rights exercised by Maryland, and the protection of its serious and legitimate interests Maryland received by exercising its legal rights, we conclude the abuse of rights doctrine, as applicable in Louisiana, does not justify an award of damages against Maryland for protecting itself by exercising the legal rights acquired by it by contract and by operation of law.
For the reasons assigned: Plaintiffs-ap-pellees' motion to dismiss the appeal taken by the trustee in bankruptcy is overruled. On the merits of the trustee's appeal, there is judgment in favor of the appellees and against the appellant. On the merits of the appeal taken by Maryland Casualty Company, the judgment appealed from by Maryland Casualty Company is reversed and there is judgment in favor of defendant-appellant, Maryland Casualty Company, and against plaintiffs-appellees, Sharon W. Lambert and Donald Lambert, dismissing their suit against Maryland Casualty Company; costs in the trial court are to be paid by defendant-appellant; costs in this court are to be paid by the plaintiffs-appellees.
MOTION OVERRULED; REVERSED.
. Whenever the word "plaintiff" is used in this opinion in the singular, it refers to Donald G. Lambert.
. The record indicates the corporation's financial condition had grown worse following the BNO loan and it had lost $1,097,000 in the first five months of 1975.
. See footnote 2.
. Hibernia also was given certain rights to share in the additional collateral given to BNO and Maryland in May, 1974.
. Approximately $685,000 was advanced under this agreement after October 1, 1975.
. 11 U.S.C. § 701-799.
. 11 U.S.C. § 501-676.
. Bank of New Orleans & Tr. Co. v. Lambert, La.App., 373 So.2d 550, and Lambert v. Cronvich, La.App., 373 So.2d 554, both handed down April 10, 1979.
. See Bank of New Orleans & Tr. Co. v. Lambert, La.App., 373 So.2d 550.
. Scurlock Oil Company v. Getty Oil Company, La., 294 So.2d 810; McKean v. Campbell, La.App., 372 So.2d 652; New Orleans Mortg. Co., Inc. v. City of Kenner, La.App., 362 So.2d 1217.
. McKean v. Campbell, La.App., 372 So.2d 652, 654; see also McNeal v. State Farm Mutual Automobile Ins. Co., La., 278 So.2d 108; Olsen Engineering Corp. v. Hudson Engineering Corp., La.App., 289 So.2d 346.
. La., 340 So.2d 287.
. Supra, note 10, at page 819.
. Maryland also contends that in several instances in brief plaintiffs argue the reconven-tional demand and the present suit assert the same cause of action. However, our reading of plaintiffs' various briefs reveals the term was used in a loose sense in connection with other matters.
.La.App., 307 So.2d 399.
. The basis for this court's reasoning was the case of Texas Industries, Inc. v. Dupuy & Dupuy & Dupuy Develop., Inc., La.App., 227 So.2d 265, which recognized the distinction between a corporation and its shareholders and stated that a corporation's shareholders cannot be sued for a corporate debt unless there is mistreatment of corporate affairs sufficient to justify piercing the corporate veil.
. 171 La. 176, 129 So. 810.
. See Weber v. Bon Marche Pharmacy, Inc., La.App., 378 So.2d 520.
. 24 F.2d 378 (2 Cir.).
. 275 F.Supp. 712 (D.C.).
. See footnotes 15 and 17, supra.
. See, e.g., Balis v. Mitchell, La.App., 48 So.2d 691.
.Maryland so argues in brief.
. See footnote 8, supra.
. This position is questioned as overly narrow since the indemnity agreements state that the assignments will become effective "in the event of claim or default."
. La.App., 7 So.2d 751.
. See also R.S. 10:3-304(4)(b) which refers to executory promises in the context of defenses or lack of defenses to negotiable instruments.
. Bouvier's Law Dictionary (3rd rev.—8th ed.) defines "executory" as "whatever may be executed, — as, an executory sentence or judgment." Webster's International Dictionary gives as its main entry ". . . operative, being in effect, putting into effect."
. 198 La. 1062, 5 So.2d 335.
. Supra, note 8.
. 164 U.S. 227, 17 S.Ct. 142, 41 L.Ed. 412.
. This opinion was expanded in Henningsen v. U. S. Fidelity & Guaranty Company, 208 U.S. 404, 28 S.Ct. 389, 52 L.Ed. 547, in which the Supreme Court held a surety is not only subro-gated to the contract balances necessary to complete construction, but also to the balances if the surety was required to pay laborers and materialmen whose claims were guaranteed by the payment portion of the bond.
. 371 U.S. 132, 83 S.Ct. 232, 9 L.Ed.2d 190.
. 40 F.2d 577 (5 Cir.).
. 557 F.2d 482 (5 Cir.). See also Natchitoches Sweet Potato Co. v. Perfection Curing Co., 153 La. 916, 96 So. 808; Times Picayune Pub. Co. v. Russell Construction Co., La.App., 139 So.2d 573; Lennox Industries, Inc. v. Pitcher Company, La.App., 209 So.2d 507. Other state court decisions are Hartford Accident & Indemnity Co. v. Long, 245 A.2d 800 (Del.Ch.); Argonaut Insurance Co. v. C & S Bank of Tifton, 140 Ga.App. 807, 232 S.E.2d 135; First Vermont Bank & Trust Co. v. Village of Pultney, 134 Vt. 28, 349 A.2d 722; Canter v. Schlager, 358 Mass. 789, 267 N.E.2d 492; Trinity Universal Insurance Co. v. Bellmead State Bank, Tex.Civ.App., 396 S.W.2d 163; Jacobs v. Northeastern Corporation, 416 Pa. 417, 206 A.2d 49; Levinson v. Linderman, 51 Wash.2d 855, 322 P.2d 863; Scarsdale Nat'l. Bank & Trust Co. v. U. S. Fidelity & Guaranty Co., 264 N.Y. 159, 190 N.E. 330; and State v. Schlesinger, 114 Ohio St. 323, 151 N.E. 177, 179. Other federal court decisions are Martin v. Nat'l. Surety Co., 300 U.S. 588, 57 S.Ct. 531, 81 L.Ed. 822; Great American Ins. Co. v. U. S., 203 Ct.Cl. 592, 492 F.2d 821; Home Indemnity Co. v. U. S., 193 Ct.Cl. 266, 433 F.2d 764; Fireman's Fund Ins. Co. v. U. S., 190 Ct.Cl. 804, 421 F.2d 706; Nat'l. Shawmut Bank of Boston v. New Amsterdam Cas. Co., 1st Cir., 411 F.2d 843; In Re Dutcher Const. Corp., 2nd Cir., 378 F.2d 866; Home Indemnity Co. v. U. S., 180 Ct.Cl. 173, 376 F.2d 890; Standard Accident Ins. Co. v. Federal Nat'l. Bank, C.C.A., 112 F.2d 692; Farmers' Bank v. Hayes, C.C.A., 58 F.2d 34; Lacy v. Maryland Cas. Co., C.C.A., 32 F.2d 48; Travelers Indemnity Co. v. West Georgia Nat'l. Bank, 387 F.Supp. 1090; American Fidelity Fire Insurance Co. v. Construcciones Werl, 407 F.Supp. 164.
. First Ala. Bank, etc. v. Hartford Acc. & 1. Co., 430 F.Supp. 907.
. Id.
. E. L. Burns Co., Inc. v. Cashio, La., 302 So.2d 297.
. R.S. 38:2241. Failure of either is a default on the bond.
. This evidence was in the record by way of an offer of proof. It should have been admitted into evidence.
. 297 N.Y. 694, 74 N.E.2d 226.
. 8th Cir., 520 F.2d 790.
. 190 Ct.Cl. 804, 421 F.2d 706.
. American Fidelity Fire Insurance Co. v. United States, 206 Ct.Cl. 570, 513 F.2d 1375; Great American Insurance Company v. United States, 203 Ct.Cl. 592, 492 F.2d 821; Home Indemnity Company v. United States, 180 Ct.Cl. 173, 376 F.2d 890; National Surety Corporation v. United States, 319 F.Supp. 45.
. The record contains some evidence indicating the Lambert interests were notified only July 31, 1975 that Maryland would not continue to write public works bonds for the corporation.
. Cueto-Rua, "Abuse of Rights", 35 La.L.Rev. 965 (1965).
. Stone, Tort Doctrine, 12 La.Civil Law Treaties, § 261 (1977).
. 145 La. 233, 82 So. 206.
. 173 La. 375, 137 So. 67.
. Plaintiffs also cite three other cases in support of Louisiana adoption of the abuse of rights theory. In Fassett v. United T.V. Rental, Inc., La.App., 297 So.2d 283, the court refused to recognize a provision in a television rental contract irrevocably authorizing the lessor to enter into the debtor's residence without judicial authority or without the owner's consent to repossess a rented television set. The court rendered judgment in tort, holding in effect that the contract clause was against public policy. The case does not tend to stand for the abuse of rights doctrine since the court held the defendant did not have a right which it could abuse. Plaintiffs also cite Hero Lands Company v. Texaco, Inc., La., 310 So.2d 93, which involved a question of strict liability under C.C. Art. 667. The issue was the statutory duty owed by neighbors and the creation of a nuisance involving an inherently dangerous instrumentality in the form of a gas pipeline. The court stated the extent of inconvenience which one neighbor must endure to benefit another depends on the facts and circumstances of each case. This decision does not involve the abuse of rights doctrine since the defendant obviously obtained some benefit from the installation of the gas pipeline, and the question involved was the extent of one neighbor's rights to inconvenience another under C.C. Art. 667. Finally, plaintiffs cite Steadman v. Action Finance Company, La.App., 197 So.2d 424, in which the court held a document purporting to be a pledge did not justify the taking of an automobile without court order or the owner's consent. This case is merely a variation of the Fassett case above, where a legal right did not exist and consequently a legal right could not have been abused.
. La., 344 So.2d 1353. See also Illinois Cent. R. Co. v. International Harvester, La., 368 So.2d 1009.