Case Name: E. L. BURNS CO., INC. v. Anthony CASHIO d/b/a Cashio Construction Co.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1974-10-28
Citations: 302 So. 2d 297
Docket Number: No. 54539
Parties: E. L. BURNS CO., INC. v. Anthony CASHIO d/b/a Cashio Construction Co.
Judges: DIXON, J., dissents.
Reporter: Southern Reporter, Second Series
Volume: 302
Pages: 297–303

Head Matter:
E. L. BURNS CO., INC. v. Anthony CASHIO d/b/a Cashio Construction Co.
No. 54539.
Supreme Court of Louisiana.
Oct. 28, 1974.
Stanford O. Bardwell, Jr., Baton Rouge, for plaintiff-applicant.
Randall J. Cashio, Cashio & Cashio, Baton Rouge, for defendants-respondents.

Opinion:
MARCUS, Justice.
On April 17, 1970, Anthony Cashio, a general contractor, entered into a written contract with the East Baton Rouge Parish School Board, whereby he was to furnish all materials and perform all labor according to specifications in the construction of additions to the Merrydale and Cedar-crest-Southmoore Elementary Schools. The St. Paul Fire & Marine Insurance Company executed a bond guaranteeing faithful performance of the contract and payment of all laborers and materialmen, as required by the public contracts law. La.R.S. 38:2241 (1950). The contract and bond were timely recorded in the office of the clerk and recorder of mortgages for East Baton Rouge Parish.
On January 21, 1971, the school board recorded its acceptance of the work done under the contract in the parish mortgage records. Since no claims were filed within forty-five days of the recordation of acceptance, the contractor obtained a clear lien certificate and presented it to the school board on March 10, 1971. In due course, he was paid the balance due him under the contract.
During the course of the construction, E. L. Burns Company orally subcontracted with Cashio to furnish labor and materials to erect covered walkways at the schools. The subcontractor's labor and materials were used on the project during the month of December, 1970 and were invoiced to Cashio, the contractor, at the agreed price of $4,767.00. Cashio paid only $2,000.00 on the invoice, and, after formal demands on the contractor and his surety, E. L. Burns Company filed suit on December 4, 1972 against both to collect the balance due of $2,767.00.
After a general denial, the defendants filed a peremptory exception of prescription, alleging that more than one year had elapsed between the recordation of acceptance by the school board and the filing of the suit. See La.R.S. 38:2247 (1950). Plaintiff argued that the bond allowed suit within two years from the time the final payment was due by the school board to the contractor. Thus, although the suit was filed more than one year from recor-dation of the school board's acceptance, plaintiff contended that it was nonetheless timely because two years had not elapsed since the final payment date.
From a ruling sustaining the exception of prescription insofar as it applied to the surety, plaintiff filed a devolutive appeal with the First Circuit Court of Appeal, which affirmed the trial court. E. L. Burns Co. v. Cashio, 289 So.2d 226 (La.App. 1st Cir. 1973). We granted certiorari to consider whether the one-year prescription of actions on the contractor's bond under the public contracts law may be extended by contract. 293 So.2d 166 (La.1974).
The public contracts law permits any person to whom money is due for perform ing labor or furnishing materials for the construction of any public works to file a sworn statement of the amount due him with the governing authority having the work done and record it in the parish mortgage records within forty-five days after recordation of the acceptance of the work. La.R.S. 38:2242 (1950). However, a claimant having a direct contractual relationship with the contractor may sue on the surety bond without filing and recording a lien affidavit. Id. 38:2247. Although the action against the contractor is then subject to the ten-year prescription ordinarily applied to actions in contract, La.Civil Code art. 3544 (1870), the action against the surety on the bond must, like all lien claims on the project, be brought within one year from the date of recordation of acceptance of the work by the governing authority. La.R.S. 38:2247 (1950); Marquette Cement Manufacturing Co. v. Normand, 249 La. 1027, 192 So.2d 552 (1966).
The surety bond at issue provides in pertinent part:
Any suit under this bond must be instituted before the expiration of two (2) years from the date on which final payment falls due.
This provision extends the prescriptive period of one year set forth in La.R.S. 38:2247 by one year and forty-five days, since the contract specifies that the final payment to the contractor was due forty-five days after recordation of acceptance of the work. Plaintiff's suit in this case was filed more than one year after the rec-ordation of acceptance by the school board, but within two years from the date final payment was due. Thus, if the language of the bond extending the one-year prescription is allowed to prevail over the statute, the action was timely, and the judgment below sustaining the exception of prescription must be reversed. However, if we find that the contractual extension of prescription here is impermissible, the judgment below will be affirmed.
Plaintiff urges that we uphold the stipulation in the bond on the ground that, according to article 11 of the Civil Code, individuals may renounce what the law has established in their favor. Thus, he argues, the surety may renounce the one-year prescriptive period established in its favor and allow claimants to sue on the bond within two years from the due date of final payment.
Article 11 of the Civil Code does state that individuals may renounce whatever advantages the law may have established in their favor; however, this is an exception to the general rule contained therein that, where a law is directed to the preservation of public order or good morals, the rule thus established may not be derogated from by private agreement. Reading further, article 12 more specifically states an example of rules founded on public order in its terse decree that "[wjhatever is done in contravention of a prohibitory law, is void, although the nullity be not formally directed." La.Civil Code art. 12 (1970).
Statutory rules may be either imperative or suppletive. Rooted in public policy considerations, an imperative rule is applied without regard to the intention of the individuals concerned. A prohibitory law, as mentioned in article 12, is one that is cast in the imperative form, but exhibits a negative, rather than positive, command. Examples of imperative rules include article 2589 (rescission of sales of immovables for lesion beyond moiety), 3305 (requiring a conventional mortgage to be in writing), and articles 2326 and 2329 (matrimonial agreements). A suppletive rule, on the other hand, applies only if those affected by it have not excluded its application. Examples of suppletive rules include articles 2157 (debt is to be paid at the debtor's domicile) and 1228 (collation of inter vi-vos gifts by descendants). Thus, distinction between imperative and suppletive rules determines whether private individuals can set aside rules established by the legislature and regulate their legal relations by private agreement. If an agreement contravenes an imperative rule, it is absolutely null; thus, it is not subject to ratification and may be annulled in judicial proceedings instituted by any interested party.
Here, in determining whether the provision in the surety bond allowing two years for an action on the bond may supersede the one-year prescriptive period of La.R.S. 38:2247, we are confronted with the declaration of article 3460 of the Civil Code, that "[o]ne can not renounce a prescription not yet acquired, but it is lawful to renounce prescription when once acquired." La.Civil Code art. 3460 (1870). Thus, we must determine whether that text evidences an imperative rule, or, more specifically, whether the rule against anticipatory renunciation of prescription contained in article 3460 is a prohibitory law within the meaning of article 12, which cannot be derogated from by private agreement.
Two methods have been suggested to determine whether a statutory text dis plays an imperative or suppletive rule. The first is by an examination of the wording of the text. Simply stated, this view holds that, if the statute in question states its command in unequivocal terms and without exception, the rule there expressed is imperative. However, if the statute is merely directory or contains a proviso such as "unless otherwise stipulated" or "except as otherwise provided," it states a suppletive rule of law that may be superseded by conventional agreement. The second method of interpretation, suggested by those with reservations about the consistency of legislative drafting, evaluates the content of the statute to determine whether the rule is directed to the protection of an interest vital to the public order. It has been suggested that proper technique requires consideration of both factors: the literal wording of the rule and the interest the rule was designed to protect.
Applying these two methods of interpretation, we find it clearly evident that article 3460 expresses a prohibitory rule of public order as contemplated by articles 11 and 12. The literal wording of article 3460 is clear and permits no exception to the rule against anticipatory renunciation. The interests protected, i. e., the extinction of the charge against the debtor as a result of the creditor's inactivity and the prevention of litigation brought long after memories have dimmed and evidence has been lost, have long been considered vital to the public order, both in Louisiana and France.
As a prohibitory law founded on the public order, article 3460 cannot be supplanted by private agreement. The stipulation that suit may be brought on the bond within two years, in contravention of the one-year prescription set forth in La. R.S. 38:2247, constitutes an anticipatory renunciation of prescription as proscribed by article 3460 and cannot be given effect. Hence, as the suit was brought more than one year from the date of recordation of acceptance of the contractor's work by the school board, it is barred by prescription.
Plaintiff also urges that the dissimilar, more favorable, treatment accorded creditors suing on contractors' bonds under the private works act, where extension of the prescriptive period to two years has been upheld, deprives him of the equal protection of the law in violation of the fourteenth amendment. U.S.Const, amend. XIV. However, under the rationale of our decision here, dissimilar treatment no longer exists. The prohibitory nature of article 3460 applies to proscribe all anticipatory renunciations of prescription, regardless of whether the contractor's bond guaran tees payment and performance on a public or a private construction project. Thus, plaintiff may no longer complain of discrimination against him.
For the reasons assigned, the judgment of the court of appeal is affirmed.
DIXON, J., dissents.
TATE, J., dissents and assigns reasons.
CALOGERO, J., dissents for the reasons assigned by TATE, J.
. We originally granted the plaintiff's application for certiorari to assess the correctness of the distinction drawn by the court of appeal between the DeFrances and Patent cases. In DeFrances Marble & Tile Co. v. Coxe, 148 So.2d 83 (La.App.1st Cir. 1962), cert. denied, 224 La. 114, 150 So.2d 583 (1963), suit was filed by a materialman against the contractor and his surety under the private works statutes. See La.R.S. 9:4801-42 (Supp.1974). The bond contained a provision similar to that in controversy here, allowing two years for a suit on a claim, despite the one-year prescription in the statutes. Id. 9:4814. Although the suit was filed after the one-year prescription period had run, the court of appeal regarded the provision in the bond as controlling and allowed recovery against the surety.
In Patent Scaffolding Co. v. Ross Corp., 172 So.2d 364 (La.App.4th Cir.), cert. denied, 247 La. 870, 175 So.2d 108 (1965), suit was brought against the surety under the public contracts law to recover for rental and equipment not returned by the contractor to a ma-terialman. The court of appeal denied recovery and invoked the established rule that, because a surety bond is mandatory in public contracts, the terms of the bond (which covered rental equipment) may neither enlarge nor diminish the conditions required by the statute (which excluded coverage of rental equipment). Thus, whatever was written into the bond not required by statute was given no effect.
The court of appeal below relied on the Patent rationale and distinguished DeFrances on the ground that the rule of strict construction applied to all bonds given pursuant to public contracts, as was the case here. E. L. Burns Co. v. Cashio, 289 So.2d 226 (La.App. 1st Cir. 1973). As will be seen, under the facts of this case, it is unnecessary for us to determine whether the distinction drawn by the court of appeal was correct.
. Individuals can not by their conventions, derogate from the force of laws made for the preservation of public order or good morals.
But in all cases in which it is not expressly or impliedly prohibited, they can renounce what the law has established in their favor, when the renunciation does not affect the rights of others, and is not contrary to the public good.
La.Civil Code art. 11 (1870).
.For a thorough discussion see R. David, French Law: Its Structure, Sources, and Methodology 83-92 (1960 ed. M. Kindred transí. 1972) [hereinafter cited as David] ; Morrison, Legislative Technique and the Problem of Suppletive and Constructive Laws, 9 Tul.L.Rev. 544 (1935) [hereinafter cited as Morrison] ; Symposium, Contractual Incapacity in the Louisiana Civil Code, 47 Tul.L. Rev. 1093, 1128-31 (1973) [hereinafter cited as Contractual Incapacity]. Morrison characterizes laws as constructive or suppletive, and subdivides the constructive classification into imperative and prohibitory. David employs the term imperative to encompass prohibitory as well, and thus does not use the constructive classifieátion.
. David, supra note 3, citing French Civil Code art. 1674, equivalent to La.Civil Code art. 2589.
. Id., citing French Civil Code art. 2127, equivalent in part to La.Civil Code art. 3305.
. Contractual Incapacity, supra note 3, at 1128.
. David, supra note 3, citing French Civil Code art. 1247, equivalent to La.Civil Code art. 2157.
. Id., citing French Civil Code art. 843, equivalent to La.Civil Code art. 1228.
. See Contractual Incapacity, supra note 3, at 1128 & n. 280 and authorities cited therein. This concept has it origin in Roman law. See 12 S. Scott, The Civil Law 87 (1932).
. David, supra, note 3, at 85; Morrison, supra note 3, at 550-53; Contractual Incapacity, supra note 3, at 1127-28.
. See note 10 supra.
. Morrison, supra note 3, at 553-56.
. Contractual Incapacity, supra note 3, at 1130-31.
. See, e. g., Bodcaw Lumber Co. v. Magnolia Petroleum Co., 167 La. 847, 120 So. 389 (1929) ; Nabors Oil & Gas Co. v. Louisiana Oil Refining Co., 151 La. 361, 91 So. 765 (1921) ; LeBleu v. LeBleu, 206 So.2d 551 (La.App. 3d Cir. 1967) ; Dainow, The Work of the Louisiana Appellate Courts for the 1971-1972 Term, Prescription, 33 La.L.Rev. 235, 238-40 (1973). Article 3460 of the Louisiana Civil Code is a verbatim translation of French Civil Code article 2220. The French commentators, particularly Baudry-Lacantinerie and Tissier, declare the rule to be a fundamental protection for debtors, as it was feared that creditors might extract renunciations of prescription before extending credit. 28 G. Baudry-Laeantinerie & A. Tis-sier, Traité théorique et pratique de droit civil nos. 53, 59, 62 (4e ed. 1924 La.St.L.Inst. transí. 1972) ; see also 31 A. Carpentier & G. Frérejouan du Saint, Repertoire general alphabetique du droit francois nos. 284-97 at 228-29 (1903) ; 7 E. Fuzier-Herman, Code Civil annote 928-29 (1949) ; 4 J. Maleville, Analyse raisonée de la discussion du Code Civil 309-09 (3e ed. 1822) ; 1 M. Planiol, Traité élémentaire de droit civil no. 2712 (12e ed. 1939 La.St.L.Inst. transí. 1959) ; 2 id. nos. 630, 649 (lie ed. 1939).
.For a discussion of prior jurisprudence on this point see note 1 supra.