Case Name: WHITEHALL OIL COMPANY, Inc., Plaintiff and Appellant, v. Mrs. Marie Celeste Delaureal BOAGNI et al., Defendants and Appellees
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1968-12-05
Citations: 217 So. 2d 707
Docket Number: No. 2454
Parties: WHITEHALL OIL COMPANY, Inc., Plaintiff and Appellant, v. Mrs. Marie Celeste Delaureal BOAGNI et al., Defendants and Appellees.
Judges: Before TATE, HOOD and CULPEP-PER, JJ.
Reporter: Southern Reporter, Second Series
Volume: 217
Pages: 707–716

Head Matter:
WHITEHALL OIL COMPANY, Inc., Plaintiff and Appellant, v. Mrs. Marie Celeste Delaureal BOAGNI et al., Defendants and Appellees.
No. 2454.
Court of Appeal of Louisiana, Third Circuit.
Dec. 5, 1968.
Rehearing Denied Jan. 10, 1969.
Writ Granted March 13, 1969.
For amendment to judgment as to substituted party defendant see 217 So.2d 716.
Chaffe, McCall, Phillips, Burke, Toler & Hopkins, by C. Manly Horton, Jr. and Charles Richard, Jr., New Orleans, for plaintiff-appellant.
Kantrow, Spaht, Weaver & Walter, by Carlos G. Spaht, Baton Rouge, Voorhies, Labbé, Fontenot, Leonard & McGlasson, by David S. Foster, Lafayette, Charles F. Boagni, III, Morgan J. Goudeau, III, Andrus & Pavy, by Alex L. Andrus, Jr., Opelousas, for defendants-appellees.
Before TATE, HOOD and CULPEP-PER, JJ.

Opinion:
CULPEPPER, Judge.
This case is consolidated for trial and appeal with Whitehall Oil Company, Inc. v. Heard et al., 217 So.2d 717, in which a separate decision is being rendered by us this date. The plaintiff seeks to recover from the defendants certain overpayments of gas royalties not due under the respective leases. From an adverse judgment in both cases, the plaintiff has appealed.
There.is no dispute as to the facts. They are set forth in a joint stipulation by the parties. The defendants are lessors in two oil, gas and mineral leases covering certain lands in St. Landry Parish, Louisiana. The lease in the present case is dated December 13, 1959 and the one in the companion case December 7, 1959. There is also an assignment of overriding royalty, pertaining to the lease of December 1, 1959, to certain of the defendants. These leases were acquired by plaintiff by assignment on April 4, 1960.
On September 13, 1961, the Federal Power Commission granted plaintiff temporary authority to sell the gas produced from the two leases at a price of 23.25‡ per m. c. f. However, this temporary authority was conditioned on plaintiff's agreement to restore to the pipeline purchasers any difference between the price temporarily authorized and the price finally approved by the Federal Power Commission.
On July 23, 1964, the Federal Power Commission established the final authorized price at 20‡ per m. c. f. pursuant to the terms of the temporary authority, plaintiff then refunded to the pipeline purchasers the difference between the price temporarily authorized and the final price established.
Plaintiff actually paid royalties to the defendants, based on the temporary price of 23.25f! per m. c. f., until the final price of 20‡ was established on July 23, 1964. However, the joint stipulation of the parties states: "The defendants were not notified in any way prior to July 23, 1964, that they could be subjected to a retroactive demand for excess royalty payments in the event the gas sales price was reduced." Early in 1965 plaintiff demanded reimbursement from the royalty owners for their respective portions of the overpay-ments which plaintiff had refunded to the pipeline purchasers. Defendants refused and this suit followed.
Plaintiff argues first that under the very language of the two leases, and the overriding royalty assignment, the defendants are entitled only to their proportionate parts of the amount "realized" by the plaintiff from the sale of the gas. And, since it finally realized only 20fS per m. c. f., there was an overpayment of royalty not due which must be refunded. Plaintiff relies on the general equitable principles of unjust enrichment, LSA-C.C. Articles 21 and 1965, and particularly the articles of our Civil Code dealing with "Payment Of A Thing Not Due".
These latter articles are found in Title V, Chapter I of our Civil Code entitled "Of Quasi Contracts". The rationale of the articles is that, even without an express agreement to that effect, every payment presupposes a debt. Consequently, if a thing has been paid without it being due, it can be recovered.
In construing these articles, the first question is the requirement of error. Article 2301 provides that, as to the person who receives the payment, it is immaterial whether he had knowledge the payment was made through error. In the present case, the defendants had no knowledge whatever that the alleged overpayments were made subject to a condition that they might have to refund them. In any event, this is immaterial, for even if they had known the payments were not due, this would not affect their obligation to refund them.
Article 2302 states that "he who has paid through mistake, believing himself a debtor, may reclaim what he has paid." Thus, our Civil Code allows recovery of payment through error of a thing not due. In the present case, the alleged overpayments were not made through error on the part of the plaintiff. It knew that under the terms of the leases it was obligated to pay royalty on the basis of the price for which it sold the gas to the pipeline purchasers. The lease provisions to this effect are clear and were so understood by the plaintiff. At the time these payments were made, they were actually due. Hence, there can be no contention that they were paid through error.
Since the payer was not in error, defendants make a strong argument that the above quoted codal articles, regarding payment of a thing not due, can have no application. However, this is not the end of our inquiry of the statutory materials. In discussing "repetition", the French action to recover payment of a thing not due, Planiol, Civil Law Treatise, an English Translation by the Louisiana State Law Institute, Vol. 2, Part I, pg. 449, Sec. 837 states:
"Repetition always presupposes that what was paid was not due, but in order to determine precisely the conditions under which repetition can be exercised, it is necessary to distinguish between three different situations: (1) where there was no obligation whatever between the payer and the payee; (2) where the payment was made in view of an actual obligation which has since ceased to exist; and (3) where the obligation paid had an illicit or an immoral cause."
Planiol takes the position that error by the payer is required in situation (1) listed above, but not in situations (2) and (3). The present case falls within situation (2), of which Planiol says in Vol. 2, Part I, pg. 452, Sec. 843:
"It is required that there be something not due: the plaintiff in repetition must prove that his debt was resolved or annulled, or that the future debt did not arise; but the condition of error is not required, and it cannot be exacted. There is an act other than payment, and that is the annulment, the resolution or failure of a condition, which renders necessary the re-establishment of things in' the State'they would have been in if the agreement had not been made." (Emphasis added)
We note that Planiol's discussion concerns Code Napoleon Article 1376, which is almost identical to our own LSA-C.C. Article 2301. These two articles do not attempt a further definition of "a thing not due", nor do they expressly provide for recovery of a payment made through error. Our own Louisiana Civil Code has added Articles 2302 through 2309, which have no corresponding source articles in the Code Napoleon. The purpose of these additional articles is to expressly allow recovery where there is error on the part of the person making the payment and to further define "a thing not due".
LSA-C.C. Article 2304 is particularly applicable to the present situation. It provides that "a thing not due is that which is paid on the supposition of an obligation which did not exist, or from which a person has been released." The first part of the article pertains to the situation where a person pays through error a debt which actually does not exist at the time of the payment. (This is in effect the same as Article 2302.) However, the latter part of the article applies to the situation where an actual obligation exists at the time of the payment, but the debt is later released. Although Article 2304 does not expressly state that in this latter situation error on the part of the payer is not required, we think this is necessarily implied. For, if there is an actual legal obligation at the time of the payment, it cannot be made through mistake. As Planiol says, in Vol. 2, Part I, Sec. 843, quoted above, there is an act which takes the place of the payment through error, and that is the subsequent resolution or failure of the contract. Under our Code, this would be a resolutory condition.
From the statutory materials, it is our conclusion that in the present case, error on the part of the plaintiff at the time of the payment is not required. Plaintiff need only show that subsequent to the payment the debt was released by the occurrence of a resolutory condition. The Code, Article 2304, provides no further limitation or condition. However, our courts have applied equitable considerations in many cases for recovery of payment of a debt not due.
For instance, the courts have considered the following equity factors in suits to recover payment of a thing not due: (1) Was the payer guilty of fault such as fraud or duress, or of negligence in failing to protect his own interests or in failing to treat fairly the interests of the payee, Pennsylvania Casualty Co. v. Brooks, La.App., 24 So.2d 262; Metropolitan Life Ins. Co. v. Mundy, La.App., 167 So. 894; New Orleans & N. E. R. R. Co. v. La. Construction & Improvement Co., 109 La. 13, 33 So. 51; Rivers v. New Orleans Waterworks Co., 35 La.Ann. 822; Ducros v. Missouri State Life Ins. Co., Orl.App. No. 7996. (2) Would recovery result in injury to the party to whom the payment was made, Continental Oil Co. v. Jones, La.App., 191 So.2d 895; Central Surety & Ins. Corp. v. Corbello, La.App., 74 So.2d 341. (3) Would the party who made the payment receive some benefit from the payment by error, Morse v. Oates, 11 La.App. 462, 123 So. 439.
Jurisprudence in common law jurisdictions has developed many other equitable factors to be considered in a suit for recovery of payment of a debt not due. Some of these mentioned in 40 Am.Jur. 820-872, Verbo Payments, Secs. 155 through 235 are: (1) was the payment made under business duress (Sec. 171), i. e., was it necessary to make the payment to preserve the payer's property or protect his business interests; (2) was the payment made under protest (Sec. 180, et seq.); (3) did the payer have another remedy in lieu of payment (Sec. 183); (4) was the payment induced by fraud (Sec. 185); (5) was there mutuality of mistake (Sec. 191); (6) has the payment caused such a change in the position of the payee that it would be unjust to require him to refund (Sec. 201). We see no reason why equity factors, such as the ones developed in common law jurisdictions, should not be applied where appropriate by the courts of Louisiana. Actually many have been discussed and some applied. For instance, the concept of büsiness duress was discussed in New Orleans & N. E. R. R. Co. v. La. Construction & Improvement Co., 209 La. 13, 33 So. 51, but the court found under the facts of that case that it should not apply. However, the decision of the court shows the extent to which equitable considerations are taken into account. The court said:
"The question narrows to what is in law a voluntary payment. The distinction to be made between payments voluntary and payments under duress has been a fruitful theme of discussion in the courts. Where the parties were not on equal terms; where the payer had no choice; where the only alternative was to submit to an illegal exaction or discontinue business — these and other like circumstances evidencing pressure or duress under which money or other value is parted with have never been regarded as embraced within the rule of voluntary acts within the meaning of the maxim 'Volenti non fit injuria.' Swift Co. v. U. S., 111 U.S. [22] 28, 4 Sup. Ct. 244, 28 L.Ed. 341. But where dispute arises and the debtor, who pays under protest, has at hand other means of immediate relief than by making the payment, his act is not one done under coercion and his protest does not take the case out of the category of voluntary payment."
Now let us examine the facts of the present case to determine where the equity lies. Plaintiff contends the payments were made under "business duress". The argument here is that, in order to protect its leases, plaintiff had to make the overpayment of royalty based on the price fixed by the Federal Power Commission. Hence, that the payments were made under business duress and the defendants should not be allowed by equity or good conscience to retain them. This is a persuasive argument. Plaintiff could charge no more than the price authorized by the Federal Power Commission and, in order to protect its leases, it had to pay royalty on the basis of this price. In seeking the highest possible price plaintiff was attempting to protect not only its own but the payee's interests. There was no way for plaintiff to determine in advance whether the final price authorized would be lower. In the interim, it paid the full royalty to defendants who had the use of the money. Hence, up to this point, the equity seems to favor the plaintiff.
Defendants' principal argument is that plaintiff should have notified them that the overpayment of royalties might have to he refunded. Defendants say that the plaintiff could have sought an agreement, whereby the excess royalty could have been placed in escrow until the final authorized price was determined by the Federal Power Commission; or that plaintiff could have sought to obtain from defendants an amendment of the lease; or at least that plaintiffs could have filed a suit for declaratory judgment to determine their rights under the leases. Defendants contend that by not pursuing one of these alternatives, the plaintiff has been guilty of negligence in the protection of its own interest and has failed to mitigate its losses. Of course, defendants also argue that they were misled into using the funds for a period of three years and now it would cause them injury if they had to make restitution.
It is our conclusion, after considering all of the facts, that the equities favor the plaintiff. The only substantial equitable argument against its position is that it failed to notify the defendants in some way, either through an attempted escrow agreement, a suit for declaratory judgment, payment under protest or by some other means that part of the royalty payments might have to be refunded. However, this lack of notice to the defendants is offset to some extent by the fact that the overpayments received are not large sums and the defendants have failed to show their circumstances are such that they will be injured by the return of these overpay-ments which were not due.
The plaintiffs pray for refund of both the principal and interest which it had to pay to the pipeline purchasers under its agreement. We find no case which considers the question of interest on recovery of a payment not due. However, under the facts of this case, we think interest should be denied.
The defendants also argue that under LSA-C.C. Art. 2671 the rent due under a lease must be "certain and determinative". They argue that if a refund of the rent (in this case the royalties) is required, the price would then be uncertain and the lease violated. The answer to this argument is that the present action is based on a quasi contractual obligation authorized by our Civil Code as discussed hereinabove.
The arguments made by defendants under the heading of "estoppel" in their brief, are substantially the same as those discussed above in considering the equities of the case.
For the reasons assigned, the judgment appealed is reversed and set aside. It is now ordered, adjudged and decreed that there be judgment herein in favor of Whitehall Oil Company, Inc. against Mrs. Marie Celeste Delaureal Boagni in the amount of $1752.91; against Mrs. Gladys Mae Pitre Boagni in the amount of $536.44; against Mrs. Gladys Boagni Waterbury in the amount of $152.27; against Christopher Dietlein Boagni in the amount of $274.72; against Vincent Boagni, Jr. in the amount of $1727.28; against Edward M. Boagni, III in the amount of $1752.88, and against the following, in the proportions stated for each, out of the sum of $1883.67 formerly held in the registry of the court in proceedings numbered 44352 on the docket of the Twenty-seventh Judicial District Court for the Parish of St. Landry:
Marie Celeste D. Boagni 33.333%
Edward M. Boagni, III 33.333%
Gladys M. Pitre Boagni 22.200%
Vincent D. Boagni, Jr. 7.423%
Christopher D. Boagni 3.711%
It is further ordered that the defendants pay legal interest from the date of judicial demand until paid, together with all costs in the district court and in this court of appeal.
Reversed and rendered.
. Two royalty owners, Sirs. Susan B. Gardiner and Bicliard O. Eekhart, voluntarily remitted the alleged overpayments made to them, hut the defendants in the present suit refused.
. The lease dated December 13, 1959 provides that on gas the royalty is "the market value free of cost of production and delivery of one-eighth of the gas so sold or used. " This lease further states: "In any case where lessee sells gas or plant products of his and lessor's, lessor shall receive the same price and terms as lessee and in such cases the gas of both parties shall be measured in the same manner." The assignment of overriding royalty dated December 13, 1959 pertains to this lease and states that the overriding royalty shall be calculated and paid in the same manner that is provided in the lease.
The royalty clause in the lease dated December 7, 1959 is somewhat different, as it provides: "The royalty on gas sold by lessee to be one-fourth of the amount realized at the well from such sales."
. Art. 2301. He who receives what is not due to him, whether he receives it through error or knowingly, obliges himself to restore it to him from whom he has unduly received it.
Art. 2302. He who has paid through mistake, believing himself a debtor, may reclaim what he has paid.
Art. 2303. To acquire this right, it is necessary that the thing paid he not due in any manner, either civilly or naturally. A natural obligation to pay will be sufficient to prevent the recovery.
Art. 2304. A thing not due is that which is paid on the supposition of an obligation which did not exist, or from which a person has been released.
Art. 2305. That which has been paid in virtue of a void title is also considered as not due.
Art. 2306. The payment from which we might have been relieved by an exception that would extinguish the debt, affords ground for claiming restitution.
Art. 2307. But this exception must be such that it shall extinguish even all natural obligation. Thus he who, having the power to plead prescription, shall have made payment, can not claim restitution.
Art. 2308. It is considered that a thing has been paid, when not due, if the payment was made by virtue of an agreement, the effect of which is suspended by a condition, the event of which is uncertain.
Art. 2309. This principle must not be extended to things due on a day certain, nor to conditions which must certainly happen.
.Planiol, Vol. 2, Part I, pgs. 448-454, Secs. 835-846; Great American Indemnity Co. v. Dauzat, 157 So.2d 308 (La.App., 3d Cir. 1963); Ark. Fuel Oil Co. v. Williams, 183 So. 128 (La.App.2d Cir.1938); LSA-C.C. Art. 2133.
. See the Case Note in 20 Tul.Law Rev. 618 for a review of the history of Article 2302 and its interpretation.
. LSA-C.C. Article 2308 affords similar relief where the condition is suspensive. See also Articles 2021, 2023, 2042 and 2045 on suspensive and resolutory conditions.
. 40 Am.Jur. 831, Verbo Payments, Sec. 171 defines this exception to the general rule of voluntary payment as a situation "whore by reason of the peculiar facts a reasonably prudent man finds that in order to preserve his property or protect his business interest it is necessary to make a payment of money which he does not owe and which in equity and good conscience the receiver should not retain. "
. The amounts of principal to be refunded by the respective royalty owners vary from about $2380.80 down to $152 and aggregate about $9,458.37 in the two cases.