Case Name: Debra HEWITT, Ind. and on Behalf of her Minor Daughter, Teasha Wilkerson v. SAFEWAY INSURANCE COMPANY OF LOUISIANA, et al.
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 2001-06-06
Citations: 787 So. 2d 1182
Docket Number: No. 01-0115
Parties: Debra HEWITT, Ind. and on Behalf of her Minor Daughter, Teasha Wilkerson v. SAFEWAY INSURANCE COMPANY OF LOUISIANA, et al.
Judges: Court composed of HENRY L. YELVERTON, JOHN D. SAUNDERS, and JIMMIE C. PETERS, Judges.
Reporter: Southern Reporter, Second Series
Volume: 787
Pages: 1182–1196

Head Matter:
Debra HEWITT, Ind. and on Behalf of her Minor Daughter, Teasha Wilkerson v. SAFEWAY INSURANCE COMPANY OF LOUISIANA, et al.
No. 01-0115.
Court of Appeal of Louisiana, Third Circuit.
June 6, 2001.
Donald R. Brown, Attorney at Law, Alexandria, LA, Counsel for Debra Hewitt, Teasha Wilkerson.
DeWitt T. Methvin, Jr., Attorney at Law, Alexandria, LA, Counsel for State Farm Insurance Company, Catherine Lemoine.
Lauren Gay Coleman, Attorney at Law, Alexandria, LA, Counsel for Debra Hewitt.
Melissa Broussard, Attorney at Law, Lafayette, LA, Counsel for Safeway Insurance Company of Louisiana, Brent Bre-velle.
Court composed of HENRY L. YELVERTON, JOHN D. SAUNDERS, and JIMMIE C. PETERS, Judges.

Opinion:
hPETERS, Judge.
State Farm Mutual Automobile Insurance Company (State Farm) appeals a $9,130.90 judgment rendered against it in favor of Debra Hewitt on behalf of her minor daughter, Teasha Wilkerson. For the following reasons, we reverse the judgment and render judgment dismissing State Farm as a party defendant in the litigation.
The accident giving rise to this litigation occurred on October 7, 1998, when Brent J. Brevelle's vehicle struck a vehicle driven by Melissa Dauzat as she exited the Winn-Dixie grocery store parking lot in Marks-ville, Louisiana. Teasha, who was thirteen years old at the time, was a guest passenger in the Dauzat vehicle, a 1997 Isuzu pickup truck. Ms. Hewitt had driven the truck to the Winn-Dixie store and had allowed Ms. Dauzat to use it to run an errand. In her suit, Ms. Hewitt initially named Mr. Brevelle and his liability insurer, Safeway Insurance Company of Louisiana (Safeway), as defendants. She later amended the suit to name State Farm as an additional defendant, asserting that State Farm provided liability insurance coverage for the 1997 Isuzu pickup truck.
After trial, the trial court awarded Tea-sha general and special damages, found Ms. Dauzat totally at fault in causing the accident, and held that State Farm provided liability insurance coverage for the accident. In its sole assignment of error on appeal, State Farm asserts that the trial court erred in concluding its liability policy provided coverage for the 1997 Isuzu pickup truck.
OPINION
State Farm does not dispute that it issued a liability insurance policy to [¡.Catherine M. Bordelon wherein the 1997 Isuzu pickup truck was listed as the covered automobile. It is also undisputed that Ms. Bordelon was the owner of the truck when the State Farm policy was first issued and that she still held record title to the truck at the time of the accident. However, prior to the October 7, 1998 accident, Ms. Bordelon entered into the following handwritten agreement with Ms. Hewitt:
Lease Purchase
I Catherine M. Bordelone [sic] do hereby Lease purchase one 1997 Green Isuzu Hombre pickup-VIN # 1GGCS1448V8659834, odo. 00009 to Debra S. Hewitt for the amount of 272-80¡xx per month plus 80.00 insurance payment for a period of 60 months For a total of 852.80 per mo.
All insurance proceeds will go to Catherine M. Bordelon + Debra S. Hewitt to repair or replace said vehicle.
In the event this agreement falls 45 days delequient [sic] Purchaser Debra S. Hewitt will return said vehicle to Seller Catherine M. Bordelone [sic] and forfiet [sic] all previous payments.
Payment [sic] are to begin July 1, 1997. Ending July 1, 2002 This agreement entered into jointly by:
/s/ Debra S. Hewitt +
/s/ Catherine M. Bordelon
on this day June 26 year 1997
Debra S. Hewitt DR. Lie # 4238788 Catherine M. Bordelone [sic] DR. Lie
# 5233248
/s/Mancil Galland Notary Public
State Farm asserts that the effect of this agreement and the terms of its policy operated to terminate liability coverage for the 1997 Isuzu. We agree.
According to State Farm, this agreement is a conditional sale of the Isuzu, and Ms. Bordelon's action in entering into the agreement terminated its coverage obligations because the policy provided no coverage for a non-owned vehicle Loperated by someone other than an insured under the policy. The trial court determined that the agreement was not a conditional sale but a contract to sell. In doing so, the trial court concluded that title had not passed to Ms. Hewitt and State Farm's policy remained in full force and effect. Thus, the task before us is to determine the nature of the June 1997 agreement and its legal effect on the relationship between the parties.
As we recently stated in Armand v. Belt, 01-0051, p. — (La.App. 3 Cir. 05/16/01); — So.2d —, —, 2001 WL 515330, in attempting to interpret the terms of a contract:
[t]he interpretative purpose is to determine the common intent of the parties. La.Civ.Code art. 2045. In attempting to determine that common intent, we may not seek a different interpretation "[w]hen the words of a contract are clear and explicit and lead to no absurd consequences." La.Civ.Code art. 2046. Words within a contract "must be given their generally prevailing meaning." La.Civ.Code art. 2047. However, if words of a contract are susceptible of different meanings, we must interpret them in the manner that "best conforms to the object of the contract." La.Civ. Code art. 2048.... We are required to interpret a doubtful provision "in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties." La.Civ.Code art. 2053. Additionally, where the doubt created by a contract provision cannot be removed, we must interpret that provision against the party who furnished it. La.Civ.Code art. 2056.
At trial, the litigants stipulated that, if called as a witness, Ms. Bordelon would testify that the agreement was exactly as set forth in the handwritten document. Ms. Hewitt testified that she "lease-purchased" the vehicle from Ms. Bordelon and considered the vehicle as her own. In fact, in her initial suit against Mr. Brevelle and Safeway, Ms. Hewitt sought to collect for the cost of repair of "her vehicle" in the accident. However, she presented no evidence concerning the amount of damage to the vehicle. This testimony, the stipulation, and the agreement itself constituted all the evidence presented on the interpretation issue.
14Contract to Sell
Louisiana Civil Code art. 2623 defines a contract to sell as follows:
An agreement whereby one party promises to sell and the other promises to buy a thing at a later time, or upon the happening of a condition, or upon performance of some obligation by either party, is a bilateral promise of sale or contract to sell. Such an agreement gives either party the right to demand specific performance.
A contract to sell must set forth the thing and the price, and meet the formal requirements of the sale it contemplates.
Such a contract does not transfer ownership of the property involved. Rourke v. Cloud, 398 So.2d 57 (La.App. 3 Cir.1981). Additionally, a contract to sell does not give the party seeking to purchase the property the right of possession of the property unless specifically provided for in the contract. Id.
In reaching the decision that the June 1997 agreement was a contract to sell, the trial court emphasized the forty-five-day forfeiture provision of the agreement. However, it is clear from a review of the entire agreement, the actions of the parties immediately after the agreement execution, and the evidence presented at trial that the parties contemplated something more than an agreement to sell the vehicle in the future. Ms. Hewitt took possession immediately after execution of the agreement and treated the vehicle as her own from that point forward. Thus, we find that the trial court erred in its conclusion that the agreement was a contract to sell.
Conditional Sale Agreement
State Farm argues that the June 1997 agreement is a conditional sale agreement, and as such, ownership of the Isuzu transferred immediately to Ms. Hewitt. According to State Farm, once Ms. Hewitt became the owner of the vehicle, its obligations under the policy issued to Ms. Bordelon ceased to exist. State Farm bases this assertion on the provision of its policy which provides that "[n]o change [ Bof interest in [the] policy is effective unless [State Farm] consent[s] in writing." In this instance, State Farm did not consent to any transfer of ownership to Ms. Hewitt in writing, and did not consent to insuring Ms. Hewitt rather than Ms. Bordelon under the policy.
The transfer of ownership of property in Louisiana takes place "as soon as there is agreement on the thing and the price is fixed, even though the thing sold is not yet delivered nor the price paid." La. Civ.Code art. 2456. Louisiana has declined to recognize the common law concept of conditional sale of movables where the vendor attempts to retain ownership until the purchase price is paid in full. Security Ctr. Protection Servs., Inc. v. All-Pro Sec., Inc., 97-1070 (La.App. 4 Cir. 11/26/97); 703 So.2d 806. We addressed the treatment of such contracts in Haymon v. Holliday, 405 So.2d 1304, 1307 (La.App. 3 Cir.1981) as follows:
Accordingly, if the parties have agreed on the thing and the price, the sale is complete. The parties cannot validly agree that the seller will retain title to the object until payment of the purchase price, as Louisiana does not recognize the common law conditional sales contract for movable property. Roy O. Martin Lumber Co. v. Sinclair, 220 La. 226, 56 So.2d 240 (1951). The effect of this law is that the seller is divested of ownership as soon as the buyer is unconditionally bound to pay the purchase price, and such contractual attempts to retain title until payment are of no effect.
In other words, an attempted conditional sale agreement is simply "treated as a credit sale in which ownership of the object of the sale passes at the time the contract is entered into." Succession of Dunham, 408 So.2d 888, 896 (La.1981).
Additionally, Louisiana has recognized the difference between a lease with an option to purchase and a conditional sale disguised as a lease.
The distinction between a valid "lease with option to purchase" and a disguised "conditional sale" is that in the former, there is an option to give additional consideration in order to purchase the leased item at the end of the contract term, while in the latter, there is an obligation to [fipay the full price regardless of whether the option is exercised or not. Pastorek v. Lanier Systems Co., 249 So.2d 224 (La.App. 4th Cir.1971).
A contract by which a party binds himself to pay in installments a certain sum for the use of a thing, with the privilege of becoming owner thereof upon paying a further sum, for which he has not bound himself absolutely, is simply a lease with an option to purchase, and is not a sale. An alleged lease, in which at the end of the term the lessee is to become owner of the thing leased, in consideration of the rent to be paid, is in fact a sale translative of the property from its very inception. Byrd v. Cooper, 166 La. 402, 117 So. 441 (1928).
Bamma Leasing Co., Inc. v. Secretary, Dept. of Rev. and Taxation, 93-881, pp.4-5 (La.App. 5 Cir. 9/14/94); 646 So.2d 917, 920, writ denied, 94-2505 (La.12/9/94); 648 So.2d 380.
A lease contract is "a synallagmatic contract, to which consent alone is sufficient, and by which one party gives to the other the enjoyment of a thing, or his labor, at a fixed price." La.Civ.Code art. 2669. However, it is clear that the June 1997 agreement contemplated that Ms. Borde-lon would eventually transfer title to the 1997 Isuzu to Ms. Hewitt upon compliance of the payment schedule contained in the agreement without any further consideration.
Despite its use of "lease purchase" language, we find that the June 1997 agreement did immediately transfer ownership of the 1997 Isuzu to Ms. Hewitt. Although the price was not paid in full at that time, the agreement established a fixed price [$352.80 per month for sixty months] for the thing purchased [the 1997 Isuzu pickup truck] as required by La.Civ. Code art. 2456. Once ownership of the vehicle was transferred to Ms. Hewitt, State Farm's obligations to its insured, Ms. Bordelon, ceased to exist. Therefore, we conclude that the trial court erred in finding that the State Farm policy provided liability coverage for the accident sued upon.
We recognize that the Louisiana Lease of Movables Act, La.R.S. 9:3301 et seq., "recognize[s] as valid and enforceable in this state" those "financed leases, which [had] previously been construed as conditional sales transactions." La.R.S. |79:3302. However, this recognition does not affect the result of this opinion as the provisions of the Act merely provide that the lessor under a properly perfected financed lease retains full legal and equitable title and ownership to the leased equipment until the lessee exercises his option or complies with his obligation to purchase the leased equipment from the lessor as provided for under the lease agreement. La.R.S. 9:3310(B). The Act has no application to any question of underlying insurance coverage. Assuming, for purposes of this opinion, that Ms. Bordelon retained title and ownership to the Isuzu, State Farm's policy would still afford no liability coverage for the accident because it specifically states that it provides no coverage for an insured vehicle rented or leased to another.
DISPOSITION
For the foregoing reasons, we reverse the trial court judgment rendered in favor of Debra Hewitt on behalf of her daughter, Teasha Wilkerson, and against State Farm Mutual Automobile Insurance Company. We render judgment in favor of State Farm Mutual Automobile Insurance Company and against Debra Hewitt on behalf of her daughter, Teasha Wilkerson, dismissing her demands against State Farm Mutual Automobile Insurance Company with prejudice, and at her cost.
REVERSED AND RENDERED.
SAUNDERS, J., dissents and assigns written reasons.
. The trial court's oral reasons for judgment established the total award as $9,132.90. However, the written judgment executed by the trial court sets the award at $9,130.90. Because we reverse the judgment, the discrepancy does not affect this opinion.