Case Name: Ernestine Colligan FARTHING v. Burkett S. NEELY et al.
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1961-01-30
Citations: 129 So. 2d 224
Docket Number: No. 22
Parties: Ernestine Colligan FARTHING v. Burkett S. NEELY et al.
Judges: Before TATE, FRUGÉ and SAVOY, JJ.
Reporter: Southern Reporter, Second Series
Volume: 129
Pages: 224–240

Head Matter:
Ernestine Colligan FARTHING v. Burkett S. NEELY et al.
No. 22.
Court of Appeal of Louisiana. Third Circuit.
Jan. 30, 1961.
On Rehearing April 17, 1961.
Further Rehearing Denied May 9, 1961.
Certiorari Denied June 20, 1961.
Plauche & Stockwell, by Oliver P. Stock-well, Lake Charles, for defendants-appellants.
Stuart S. Kay, DeRidder, for plaintiff-appellee.
Before TATE, FRUGÉ and SAVOY, JJ.

Opinion:
SAVOY, Judge.
This suit was instituted by Mrs. Ernestine Colligan Farthing against defendants husband and wife, Burkett S. Neely and Frances E. Neely, seeking the rescission, termination and cancellation of a bond for deed contract entered into between the parties on January 14, 1955, executed under the provisions of LSA-R.S. 9:2941 to 9:-2947, and for a money judgment against defendants for the alleged difference paid by plaintiff on the contract and the fair rental of the property contracted to be sold.
To the suit defendants filed exception of no right of action, exception of no cause of action and non-joinder of proper parties plaintiff, the last plea being based on the fact that plaintiff's husband was not made a party plaintiff. The exception of non-joinder of proper parties plaintiff was maintained. Plaintiff amended her petition to make her husband, Woodrow N. Farthing, a party to the suit. Since he was an absentee, an attorney at law was appointed as curator ad hoc to represent him.
Defendants then filed an exception of improper articulation, which was overruled.
The trial judge referred all of the other exceptions to the merits.
Defendants filed an answer denying that plaintiff was entitled to a rescission of the contract, and then filed a reconventional demand praying for a specific performance of the contract and asked for a money judgment for the balance due on the contract, subject to a credit representing the proceeds of an insurance policy covering real estate destroyed by fire and located on the property described in the original contract.
During the course of the trial defendants filed two pleas of estoppel: (1) That plaintiffs moved on the property prior to the sale and were familiar with the property and the improvements thereon and due to the fact that they have made no effort to rescind the contract for any of the alleged causes set forth in their petition prior to demand for payment of past-due installments in January, 1957, they are estopped by their laches to urge any of these matters as grounds for rescinding said contract; and (2) that they are estopped to urge that the contract was cancelled by the actions of Mr. Neely due to the fact that Mrs. Farthing remained on the property, leased out portions thereof, and permitted others to use the property up to the time of the filing of this suit.
Plaintiffs likewise filed a plea of estoppel.
After a hearing on the merits, the trial judge overruled the exceptions of no right of action and no cause of action and the pleas of estoppel, and rendered judgment in favor of plaintiffs, holding that the contract was mutually terminated on January 24, 1957, ordered defendant to pay plaintiffs a certain specified sum, and rejected the re-conventional demand of defendants, plaintiff s-in-reconvention.
From this judgment defendants have appealed to this Court.
The bases for the individual contentions made by counsel for both plaintiffs and defendants are found in a series of letters written on behalf of their respective clients.
The evidence reveals that plaintiffs defaulted on the payment due on the contract on December 14, 1956. After Mrs. Farthing failed to make two monthly payments, Mr. Neely wrote plaintiffs a letter on January 18, 1957, advising that the back installments must be paid by January 21, 1957, or he would be forced to take some action to collect.
On January 19, 1957, Mr. Neely again wrote plaintiffs advising that they owed in excess of $200 for insurance and taxes and requesting that plaintiffs take care of this item in the near future. Mr. Neely wrote plaintiffs a third letter on January 24, 1957, stating that he was cancelling the contract and asked for possession of the premises at ten o'clock a. m., January 26, 1957.
On January 26, 1957, Mr. Neely arrived at the home of plaintiffs and had a conversation with Mrs. Farthing. He obtained permission from her to inspect the premises, stating that he wished to estimate the cost of repairing the buildings and improvements located thereon. He employed a person to work around the property for two or three days, but said employee left after Mrs. Farthing had asked Mr. Neely and his employee to leave.
On January 29, 1957, Mr. Neely's attorney wrote to plaintiffs advising that if the December, 1956, and January, 1957, installments, together with interest, insurance and taxes, were not paid that he would cancel the contract in accordance with Paragraph 7 thereof.
Paragraph 7 of the contract provided that if the purchaser failed to pay installments, plus interest, taxes and insurance for a sixty-day period, then the seller was granted the right to rescind the contract by giving notice either in person or by the U. S. mail.
On January 31, 1957, Mrs. Farthing's attorney wrote to Mr. Neely, stating that Mrs. Farthing demanded a nullification, rescission and dissolution of the contract entered into between the parties on January 14, 1955, because of certain false and misleading representations regarding the value of the property and the extent of the earnings of the store and filling station, and Mr. Neely's attempt to take possession of the property, having his employee make repairs and alterations upon the buildings, and stating further that Mr. Neely obligated himself to convey certain minerals whereas as a matter of record he did not own any minerals on a substantial portion of the land, and that the record title reflected other restrictions and conditions which made it impossible to deliver to the purchaser the unencumbered title stipulated in the contract.
On February 1, 1957, Mrs. Farthing's attorney wrote to the attorney for defendants another letter stating in part, "Although our clients each mutually charged the other with default, they seem to have the same objective in mind and this is rescission of the contract. Please inform us what your client's position is in regard to restitution of money paid by my client in event they mutually terminate the contract, and she gives him the property back."
On February 3, 1957, Mr. Neely caused an advertisement to be carried in the Lake Charles American Press, advising that the property in litigation was for rent.
Mrs. Farthing's attorney further wrote to counsel for defendants on February 12, 1957, stating in part, "On February 1st, we wrote you further regarding this matter, and we now repeat the position therein stated to the effect that although based upon different reasons, both parties have declared a cancellation and dissolution of the contract and therefore by their agreement, the contract is dissolved and at an end."
On February 27, 1957, Mr. Neely, through his attorney, wrote to counsel for plaintiff, Mrs. Farthing, to the effect that Mr. Neely had the right to terminate the contract for failure to pay the balance due, or had the right to sue for the full amount; that he elected to sue for the balance of the installments due.
There was no further correspondence between the parties and this suit was filed by Mrs. Farthing on June 11, 1957.
The trial judge held that there was a mutual cancellation of the contract between the parties, that this was permissible under the provisions of LSA-C.C. Articles 1901, 1945 and 2130, and the case of Noto v. Blasco, La.App., 198 So. 429.
LSA-C.C. 1901, 1945 and 2130 provide the following:
"Art. 1901. Agreements legally entered into have the effect of laws on those who have formed them.
"They can not be revoked, unless by mutual consent of the parties, or for causes acknowledged by law.
"They must be performed with good faith."
"Art. 1945. Legal agreements having the effects of law upon the parties, none but the parties can abrogate or modify them. Upon this principle are established the following rules:
"First — That no general or special legislative act can be so construed as to avoid or modify a legal contract previously made;
"Second — That courts are bound to give legal effect to all such contracts according to the true intent of all the parties;
"Third — That the intent is to be determined by the words of the contract, when these are clear and explicit and lead to no absurd consequences ;
"Fourth — That it is the common intent of the parties — that is, the intention of all — that is to be sought for; if there was a difference in this intent, there was no common consent and, consequently, no contract."
"Art. 2130. Obligations are extinguished :
% *
"By nullity or rescission
In the Noto case, supra, plaintiff entered into a contract with defendant, through defendant's agent, to purchase certain lots for a stated consideration. Plaintiff gave defendant's agent a check for $50 as a part payment on the property to be purchased. A short time after the above contract was entered into, defendant requested a release from the contract to sell the property, stating that he and his wife had decided they wanted to keep the lots and build a duplex on the lots for rent, and that they had no intention of selling these lots to anyone else. Plaintiff alleged that because of the earnest requests and solicitations on the part of the defendant, he agreed to and did release the defendant from his contract to sell the lots, whereupon the purchase price was returned to plaintiff. Shortly thereafter, defendant sold the lots which had been released to a third party. Plaintiff filed a suit for damages for the difference between the purchase price upon which plaintiff had agreed and the price for which they were sold by defendant to the third party.
The Court of Appeal held that while contracts legally entered into have the force and effect of law between the parties thereto, these contracts may be abrogated or re- voiced by the mutual consent of the parties, citing LSA-C.C. Articles 1901, 1945, and 2130.
This Court is of the opinion that the Noto case, supra, is distinguishable from the case at bar in that the contract was mutually dissolved - by the parties on the same subject matter, whereas in the case at bar, defendants are seeking to terminate said contract for non-payment of past-due installments, while plaintiffs are seeking to rescind said contract on other grounds, namely, misrepresentations as to the property in controversy, the inability of defendants to deliver minerals or royalties on a certain portion of the property, the placing of a mortgage by defendants on said property after the execution of the contract, and other related matters.
This Court is of the opinion that the case of Tharpe v. Tracy, La.App., 40 So.2d 509, 510, is more in point.
In the Tharpe case, supra, defendant entered into a contract with plaintiff, by reason of which plaintiff was accorded the exclusive right to list certain property owned by defendant for a stated consideration. The term of the listing was for a period of forty days. The contract contained the provision that should the property be sold to anyone to whom plaintiff had shown the property within six months after the expiration of the forty-day period, that plaintiff was to receive his commission. After the forty-day period had expired, plaintiff wrote defendant a letter stating that by mutual agreement the exclusive listing was terminated. A short time thereafter defendant sold the property to a third party. Plaintiff then filed the suit claiming a commission based on the original suit between the parties. Defendant filed an exception of no right of action. The district court maintained defendant's position and dismissed the suit. On appeal the Court of Appeal reversed the judgment of the lower court and said:
"There is no question as to the right of parties to an unexecuted commutative contract to abrogate or revoke such contract by mutual consent, and this proposition is well substantiated in this State. Article 1901 of the Civil Code declares that legal agreements can be revoked 'by mutual consent of the parties'; Article 1945, dealing with the interpretation of agreements, confirms the right of the parties to 'abrogate or modify' such agreements; and Article 2130, in enumerating the methods of extinguishing obligations, includes 'recission' [sic],
"We cannot subscribe to the interpretation sought to be enforced by defendant that 'termination' comprehends the same effect as would be implied by the terms 'revocation', 'abrogation', or 'rescission'. Black on Rescission and Cancellation, Second Edition, Volume 1, Section 1, Page 1, points the distinction as follows: 'To rescind a contract is not merely to terminate it, but to abrogate and undo it from the beginning ; that is, not merely to release the parties from further obligation to each other in respect to the subject of the contract, but to annul the contract and restore the parties to the relative positions which they would have occupied if no such contract had ever been made.'
"We find a similar definition by the Supreme Court of Oklahoma in F. & M. Drilling Company v. M. & T. Oil Company, 192 Okl. 372, 137 P.2d 575, 577, as follows: '"Termination" or "cancellation" of a conditional contract means to abrogate so much of it as remains unperformed, doing away with an existing agreement upon the terms and with the consequences mentioned in the writing, and different from "rescission," which means to restore the parties to their former posir tion.'
*
"Reverting to the provisions of Ar-tide 1945 of the Civil Code with re spect to interpretation, we find that the fourth paragraph of the Article provides: 'That it is the common intent of the parties — that is, the intention of all — that is to be sought for; if there was a difference in this intent, there was no common consent and, consequently, no contract.'
"While the above rule of interpretation deals with the construction of contracts, we are convinced that it is equally applicable to the construction of agreements abrogating or modifying contracts. Viewed in this light there is no question as to the conclusion that the parties to this litigation were actuated by obvious differences of intent. The plaintiff by this suit has evidenced his construction of the agreement of 'termination' in a manner entirely at variance with that of defendant, who proceeded to conclude this transaction within a period of little more than two weeks after the 'termination' with the very party on the very terms that had been procured by plaintiff.
"With further reference to a consideration of the intention of the parties the following principle is noted in 17 C.J.S., Contracts, § 412, page 899: 'Rights acquired under a contract may he abandoned or relinquished by agreement, conduct, or by a contract clearly indicating such purpose. To constitute an abandonment of rights, an actual intent to abandon must exist.'
"We can only conclude that in this instance there has been no rescission of the contract of August 20th by mutual consent, and consequently, the termination cannot be construed as having deprived plaintiff of those rights which had accrued to him prior to September 11th."
The next case cited by counsel for plaintiffs is that of Subdivision Realty Co. v. Woulfe, 17 La.App. 446, 135 So. 71. This case was decided in 1931 before the enactment of the bond for deed statute, namely, LSA-R.S. 9:2941 to 9:2947.
In the Subdivision Realty Company case, supra, plaintiff brought suit against defendant on a written contract or bond for deed for the sale of real estate and notes, maturing monthly, given as part of the purchase price for the property.
Defendant answered the suit admitting the execution of the contract but alleged that it had been cancelled by virtue of a letter written by plaintiff dated May 7, 1930, and a letter of defendant in reply thereto dated June 6, 1930, and that the notes sued on were without consideration and should be returned.
Defendant also filed a reconventional demand asking for the return of amount paid on the purchase price since plaintiff retained the land under contract because of the cancellation of same.
The contract sued on contained the provision that should the purchaser default in his payments on the notes, the seller could at his option declare the whole of said notes due upon giving the purchaser thirty days' notice by registered mail of his intention to exercise his option.
The letter of May 7, 1930, written by plaintiff to defendant referred to the paragraph of the contract as to default of payment on the notes and plaintiff stated that defendant was in default and the letter was written so as to give defendant thirty days under the contract to comply with the conditions thereof, and in default thereof plaintiff would retain the prior payments as liquidated damages.
Defendant, through counsel, wrote plaintiff on June 6, 1930, that the attempt by plaintiff to cancel the contract and retain the payments made was null and void in view of the decision in the case of Heeb et ux. v. Codifer and Vonnabel, Inc., 162 La. 139, 110 So. 178. Plaintiff wrote a letter to defendant on June 11, 1930, stating that the letter of May 7, 1930, inadvertently cancelled the contract, and that demand was being' made by him for collec-lection of the notes and execution of the contract. The district court held the contract void because of the liquidated damages clause. This was affirmed on appeal. The appellate court found plaintiff had invoked the thirty days cancellation clause in the contract and that the defendant acceded to the cancellation.
Following the decisions in the Heeb et ux. and Subdivision Realty Co., cases, supra, the Legislature adopted Act No. 169 of 1934 dealing with bond for deed contracts. This act is re-enacted as LSA-R.S. 9:2941 to 9:2947.
As stated previously in this opinion, under Paragraph 7 of the contract, defendants could not cancel the contract for a period of sixty days after default on any installment. Plaintiffs defaulted on the payment due December 14, 1956. Defendants could not cancel said contract until February 14, 1957.
In addition to the sixty days mentioned above, defendants had to send a registered letter to plaintiffs notifying plaintiffs of their intention to cancel said contract and said cancellation could not be effected by plaintiffs for 45 days from the date of mailing under LSA-R.S. 9:2945. The provisions of LSA-R.S. 9:2945 are mandatory. Williams v. Dixie Land Co., 231 La. 834, 93 So.2d 185. This provision of law would have extended the time in which defendants could have cancelled the contract to April 1, 1957. This case is distinguishable from the Subdivision Realty Company case, supra, in that the letter written by defendants on January 24, 1956, was premature, no mention was made of the cancellation clause of the contract in the letter, and it was not sent by registered mail, whereas in the Subdivision Realty Company case, supra, plaintiff invoked the cancellation clause in his letter of May 7, 1930, and the notice of cancellation was not premature because there was no waiting period provided in the contract before cancellation of the contract could be invoked, as is found in the case at bar, and LSA-R.S. 9:2945 was not in existence then. Defendants also agreed on a mutual cancellation on the same subject, which is not the case here.
Before the time in which defendants could have legally cancelled the contract, plaintiffs wrote defendants the letter of January 31, 1957, seeking nullification, rescission and dissolution of the contract on grounds of misleading representations, interfering with plaintiffs' possession of the property, and other matters than that stated in defendants' letter to plaintiffs of January 24, 1957.
The letter written by defendants to plaintiffs on January 24, 1957, was without legal effect to the reasons enumerated herein, and hence, did not terminate the contract between the parties.
Considering' all of the factors in this case, this Court is of the opinion that the lower court was in error in determining that the parties to the bond for deed contract had by mutual agreement cancelled said contract.
Having concluded that there was no mutual termination of the original bond for deed contract, this Court will next discuss the grounds set out by plaintiffs for rescinding said contract, to wit:
1. By forceful entry upon the property and disturbance of possession as set forth in Paragraph 13 of the petition.
2. The property is encumbered with a servitude or easement in favor of Long-Bell Farm Land Corporation for the establishment of such public roads thereon as it sees fit without compensation.
3. The property is encumbered with a restriction against sale or conveyance to any person not of the Caucasian race.
4. Subsequent to the execution of the contract aforesaid, the seller executed and recorded a conventional mortgage dated January 24, 1955, in favor of themselves or any future holder in the principal sum of $5,000, which is recorded in the Mort gage Records of Beauregard Parish, Louisiana, under instrument number 119017 and in Mortgage Book 59, Page 177, which operates as a lien, privilege and encumbrance against the property covered by the contract of January 14, 1955, and without compliance with R.S. 9:2941 et seq.
5. Seller did not at the time of the execution of the contract and does not now own any mineral rights under the property.
Forceful Entry upon the Property and Disturbance of Possession, as Set Forth in Paragraph 13 of the Petition.
The evidence discloses that Mr. Neely went on the Farthing property with the full consent of Mrs. Farthing to make certain repairs on the premises. He and an employee worked on the premises for several days and left the premises as soon as they were requested to do so by Mrs. Farthing. We find no merit for cancelling the contract on this ground.
The Property Is Encumbered with a Servitude or Easement in Favor of Long-Bell Farm Land Corporation for the Establishment of Such Public Roads Thereon as It Sees Fit without Compensation.
In support of his second ground for setting aside the contract, counsel for plaintiffs cites the cases of Couret v. Hopkins-Rhodes & Co., 13 Orleans App. 161; Hebert v. Vezoux's Succession, 12 La.App. 624, 126 So. 461, Bolian v. Porche, La.App., 149 So. 272, and Williams v. Meyer, La.App., 29 So.2d 599. An examination of these cases reflects that the Court found in each instance the purchaser was unaware of the restrictions in said deeds. In the case at bar, the bond for deed contract provides that certain roadways may be established by the Police Jury of the parish. Plaintiff having signed the contract is presumed to have read same and is bound by the terms thereof. This objection is equally without merit.
The Property Is Encumbered with a Restriction against Sale or Conveyance to Any Person Not of the Caucasian Race.
The restriction that the property could not be sold to any person not a member of the Caucasian race was nullified by the United States Supreme Court in the case of Barrows v. Jackson, 346 U.S. 249, 73 S.Ct. 1031, 97 L.Ed. 1586.
Subsequent to the Execution of the Contract aforesaid, the Seller Executed and Recorded a Conventional Mortgage Dated January 24, 1955, in Favor of Themselves or Any Future Holder in the Principal Sum of $5,000 Which Is Recorded in the Mortgage Records of Beauregard Parish, Louisiana, under Instrument Number 119017 and in Mortgage Book 59, Page 177, Which Operates as a Lien, Privilege and Encumbrance against the Property Covered by the Contract of January 14, 1955, and without Compliance with R.S. 9:2941, et Seq.
The bond for deed contract was dated January 14, 1955, and filed for record in Beauregard Parish on January 18, 1955. 'Subsequent to the contract between the parties, defendants granted a mortgage on the property in question and the note was made payable to themselves or any future holder. The note was transferred to the City Savings Bank and Trust Company, DeRidder, Louisiana. The mortgage was dated January 24, 1955, and was filed for record in the Mortgage Records on January 24, 1955. Plaintiffs were aware of the mortgage executed by defendants and did not complain of same. The mortgage in question could not affect the bond for deed contract for the contract was recorded prior to the mortgage. If the bank had been forced to foreclose on said mortgage and had acquired the property at sheriff's sale, it would have been obligated to carry out the provisions of the contract between the parties to this suit. We conclude that this is not a ground for rescinding the contract.
Seller Did Not at the Time of Execution of the Contract and Does Not Now Own Any Mineral Rights under the Property.
The bond for deed contract contained a stipulation that the conveyance of the property when executed would contain a mineral reservation in favor of the seller and that the seller would transfer to the purchaser a Veáth mineral royalty interest. The evidence shows that this was explained to the plaintiffs prior to their signing the bond for deed contract.
The evidence reflects that on an eighty-acre tract of the property described in the contract, defendants did not own any minerals at the time of the execution of said contract. This court does not feel that this would warrant the rescission of the contract.. The transfer of the royalty was conditional upon plaintiffs paying the full purchase price of the property and also upon their paying accrued interest on said indebtedness, together with insurance and taxes. Under the terms of the contract, if plaintiffs paid all of the installments as set forth therein, they would have acquired the property in twenty years, or in 1975. It is very probable that in that long period of time that the minerals on the eighty-acre tract would revert back to the Neelys. Until all of the installments were paid, defendants were under no obligation to transfer said royalty interest. The argument advanced by counsel for plaintiffs is premature at this time.
Having concluded as we have, there is no necessity to discuss the pleas of estop-pel filed by plaintiffs and defendants.
1 For the reasons assigned, the judgment of the trial court is reversed and judgment is now rendered in favor of Burkett S. Neely and Mrs. Frances E. Neely, and against Mrs. Ernestine Colligan Farthing and Woodrow N. Farthing, decreeing a specific performance of the bond for deed contract dated January 14, 1955, and granting defendants judgment against plaintiffs in solido, in the full and true sum of $22,-338.27, with six per cent per annum interest from December 14, 1956, until paid, together with fifteen per cent as attorney's fees on the principal and interest, subject to a credit made on November 25, 1957, of $9,500, and recognizing defendants' lien and privilege on said property described in the bond for deed contract, dated January 14, 1955, to secure the balance thereon, and that simultaneously upon the payment of the judgment herein in full, defendants shall convey to plaintiffs the following described property situate in the Parish of Beauregard, State of Louisiana, to wit:
North Half of Northwest Quarter (N of NW}4) of Section Twenty (20), Township Five (5) South, Range Eight (8) West; North Half of North Half (N}/£ of Nj/j) of Section Nineteen (19), Township Five (5) South, Range Eight (8) West, Louisiana Meridian.
Plaintiffs are to pay all costs of court in the district court and on appeal.
Reversed and rendered.