Opinion ID: 436121
Heading Depth: 1
Heading Rank: 3

Heading: louisiana contracts

Text: 15 The bankruptcy court found that two of the five sales agreements at issue were confected in Louisiana and one was confected in Georgia. It could not determine where the other two agreements were confected because of conflicting evidence. Nevertheless, the bankruptcy court held that the agreements reached by the parties were executory agreements of sale, that title to the property remained in Mitsubishi until the pipe reached New Orleans, and that contracts of sale were not perfected under Louisiana law until title passed to Clark in Louisiana. The court therefore held that the contracts were Louisiana contracts, and recognized a vendor's privilege in favor of Mitsubishi. The district judge affirmed the bankruptcy court's findings of fact and conclusions of law. 16 After reviewing the record, we affirm the bankruptcy and district courts' findings and conclusions. First, as to findings of fact: specifically, we uphold the findings that Mitsubishi owned the pipe and was at risk for its loss until the pipe was delivered to Clark in Louisiana; that after the pipe left Japan the bill of lading was held by Mitsubishi or its agent until the pipe was unloaded on the New Orleans dock and had cleared customs; and that after delivery Clark had the right to inspect the pipe and return it for defects or deficiencies. Based on those facts we join the bankruptcy and district courts in concluding that the parties intended the sale to be perfected by delivery of the pipe in Louisiana. 17 We now apply those findings to Louisiana contract law. Because the Louisiana vendor's privilege applies only to sales completed within Louisiana, In re Leggett, 505 F.2d 120, 121 (5th Cir.1974), appellant contests the conclusions of both the bankruptcy and district courts. Appellant argues that the contracts were Georgia contracts, since Mitsubishi's agent allegedly accepted the orders over the telephone while in Georgia. In the alternative, Associates argues that since the steel pipe had identifying marks placed on it after manufacture, while still in Japan, the pipe was identified to the contract at that time. Therefore, the contract was perfected before the pipe was delivered to New Orleans. Finally, Associates contends that on two of the contracts the pipe was shipped CIF New Orleans, and that since a CIF contract is a shipment contract where title is transferred from the seller to the purchaser upon delivery to the carrier, those contracts were perfected outside of Louisiana. 18 As we start our inquiry into the Louisiana law we note two aged cases which are significant. In De La Vergne Refrigerating Machine Co. v. New Orleans & W.R. Co., 51 La.Ann. 1733, 26 So. 455 (1899), a contract for the construction of two cotton presses was at issue. The contract was made in New York, but the presses were to be built in Louisiana on the site where they would be used. The court wrote: 19 The contract for the presses, while made in New York, was to be executed and consummated in Louisiana. The presses were to be erected and completed here, and there was a suspensive condition in the contract, viz. that after completion a test stipulated for in the contract was to be applied here, and the acceptance of the presses by defendant was dependant on their performance measuring up to the requirements of the test. The presses and their appurtenances remained the property of the plaintiff and at their risk until thus tested and accepted. Hence the delivery of the presses was to be accomplished here. The contract must be held to be a Louisiana contract, and the presses subject to the lien accorded by our law to the vendor. 20 Id. 26 So. at 459. 21 Similarly, in McIlvaine & Spiegel v. Legare, 36 La.Ann. 359 (1884), three boilers were to be brought from outside Louisiana for use on a Louisiana plantation. They could be rejected upon delivery if they did not meet the requirements of the contract. The court concluded that the contract was 22 only executory and subject[ed] to the laws of Louisiana, governing such contracts. The new stipulations ... engrafted a suspensive condition in the contract, under which it could not be executed before delivery of the things sold, in this State. Hence the conclusion that it thus became a Louisiana contract, and that its enforcement must be tested under the laws of this State. 23 Id. at 362. The court granted the out-of-state seller a vendor's privilege on all three boilers. 24 More recent Louisiana law does not establish a clear test for determining when a sale is a Louisiana sale. In Modern Farm Service, Inc. v. Ben Pearson, Inc., 308 F.2d 18, 22 (5th Cir.1962), we wrote: 25 A contract is made where an offer is accepted or where the bargain becomes mutually binding on both parties. The contract for the manufacture and sale of the eight cotton pickers became a completed transaction and mutually binding on both parties when J.B. Lancaster accepted the pickers in Pine Bluff, Arkansas, to be transported by Modern Farm at its sole expense to New Roads, Louisiana. As was stated in State v. Shields, (1903) 110 La. 547, 34 So. 673, and George D. Witt Shoe Co. v. J.A. Seegars & Co., (1908) 122 La. 145, 47 So. 444, when goods to be delivered by the seller to the buyer become segregated from other goods or appropriated to the contract so that the objects to be sold are readily identifiable, the same becomes executed, and at that time title to the goods passes to the buyer. See also Succession of Welsh, (1904) 111 La. 801, 35 So. 913, 64 L.R.A. 823, and H.B. Claflin & Co. v. Mayer (1889) 41 La.Ann. 1048, 7 So. 139. 26 (Emphasis added.) 27 The cotton pickers were identified to the contract in Arkansas when the buyer accepted them. Title passed to the buyer, and the buyer undertook the transportation to Louisiana. The Court held that the contract was completed and became mutually binding in Arkansas, and so the Court applied Arkansas law in interpreting the contracts. 28 In Williams v. Travelers Insurance Co., 19 So.2d 586, 588 (La.App.1944), the court had to decide whether an employment contract was a Louisiana or a South Carolina contract. The employee had been in South Carolina when he accepted the offer of employment over the telephone. The court concluded that it should be guided by the intent of the parties. It had to consider, therefore, the place of the contract's making, the place of the contract's performance, and all the facts and circumstances of the case. The court concluded that the parties' intent was that the contract be considered a Louisiana contract, and held accordingly. 29 In Caldwell Company v. Deschanel International Corp., 6 La.App. 802 (1927), a Minnesota corporation sent a telegram to a Louisiana buyer offering to sell a certain amount of flour. The buyer accepted the offer in a letter confirming the contract and setting forth the terms of the sale. Acceptance, therefore, occurred in Louisiana. The contract called for the goods to be shipped FAS New Orleans. The seller, as in the present case, was to pay the freight to New Orleans, remain responsible for the goods, and retain control and dominion over the goods until they arrived and were delivered in New Orleans at shipside. When a New York shipping company sued the Louisiana purchaser for the balance remaining due on a shipment of flour, and the Minnesota seller intervened asserting a vendor's privilege, the court held that the contracts were Louisiana sales because the last steps in the completion of the sale were to be performed in Louisiana. The court recognized a Louisiana vendor's privilege in favor of the Minnesota corporation. See also American Slicing Machine Co. v. Rothschild & Lyons, 12 La.App. 287, 125 So. 499 (1929) (Machine was shipped by Illinois company from Indiana to Louisiana for use in that state by a Louisiana resident. Since the principal acts necessary to effect the objects of the contract must have been done in Louisiana, the court applied Louisiana law.) 30 Thus, the various factors considered by these courts in determining the site of a contract have included the place of acceptance of the offer, the place where the contract became mutually binding on both parties, the place where the parties intended the contract to be made, and the place where the last acts necessary to complete the sale were accomplished. 31 In this case the bankruptcy court found that of the five contracts, two were accepted in Louisiana, and one was accepted in Georgia. It could not determine where the remaining two contracts were accepted. Those findings are not clearly erroneous. Neither is the finding that Clark had the right to inspect the pipe upon delivery in New Orleans, and to reject it if not satisfied. Because Clark had the right to reject the pipe, the contracts contained a suspensive condition under Louisiana law and were not mutually binding until Clark accepted the goods in New Orleans. That fact supports the bankruptcy court's conclusion that Mitsubishi and Clark intended the contracts to be perfected in Louisiana, where the last acts necessary to complete the sale, delivery, inspection, and acceptance of goods, occurred. Although Louisiana law does not provide a clear cut test for determining when a contract or sale is a Louisiana contract or sale, we find that the factors considered in prior case law support the holding that the contracts in this case are Louisiana contracts. Even though one of the contracts was accepted in Georgia and it was not determined where two of the other contracts were accepted, we find the other factors together are more important than the place of acceptance by itself. 32 Associates argues that the sales were not executory sales since Mitsubishi identified the goods to the contracts when identification numbers were placed on the pipes at the steel mills in Japan. We are not persuaded by Associates' argument since the identification numbers were placed on the pipes for Mitsubishi's convenience and before Mitsubishi actually received title to the pipes. Mitsubishi received title to the pipes once they were placed on board ship. Apparently, Mitsubishi did not itself identify or segregate the goods until they were cleared through customs in New Orleans. It was at that time that the goods were separated into various groups for removal by customers of Mitsubishi. Only thereafter, when Clark accepted delivery of the pipes, were the contracts executed. 33 Associates also relies on the CIF notation on two of the invoices from Mitsubishi to Clark as evidence that those contracts, at least, were perfected outside of Louisiana, either when the goods were identified by numbers placed on them at the steel mill, or when they were placed on board ship in Japan. Appellant argues that CIF indicates that title to the goods passed from Mitsubishi to Clark when the goods were delivered to the carrier for shipment. Appellant ignores the fact that the insurance on those shipments was taken out by Mitsubishi Corporation Tokyo and was assigned by Mitsubishi Corporation Tokyo to Mitsubishi, indicating that Mitsubishi was the owner and the party at risk during shipment. Further, we emphasize that Mitsubishi paid for customs, insurance, and freight charges, and that Mitsubishi was at risk for loss until the goods arrived in Louisiana. 34 These facts lead to the conclusion that Mitsubishi had title to the goods until they were delivered to Clark, not that title passed immediately from Mitsubishi Corporation Tokyo, through Mitsubishi, to Clark. The notation CIF on the invoices may be readily explained as an indication that the price charged Clark would reflect the fact that Mitsubishi paid Mitsubishi Corporation Tokyo for customs, insurance, and freight charges, or even as an observation of the fact that the goods were shipped CIF from Mitsubishi Corporation Tokyo to Mitsubishi. Because the CIF notation appears on the first invoice in the context Unit prices are CIF, and on the second invoice under the price column, the former possibility appears likely, and renders Associates' argument regarding the passing of title less than persuasive.