Opinion ID: 2491629
Heading Depth: 1
Heading Rank: 11

Heading: Prados v. South Central Bell

Text: In Prados v. South Central Bell Tel. Co., 329 So.2d 744 (La.1975) (on rehearing), a property owner leased land to the South Central Bell Telephone Company (Bell). In a series of leases, Bell was granted the right to construct improvements on the property, namely buildings, sheds, fences, etc., as well as the privilege of removing them. In a lease terminating in April, 1973, the owner/lessor again granted Bell the right to construct buildings and also granted Bell the corresponding privilege of removing same at the conclusion of this lease or renewals thereof. Id., 329 So.2d at 745. At that time, the Civil Code required that a lessee restore the property to its owner in its original condition, unless the contrary had been established in the lease contract. [55] After the lease expired, Bell did not remove the improvements it had made to the property and the owner/lessor did not request that Bell remove them, either under the terms of the lease contract or the Civil Code. A few months thereafter, the owner sold the property to another. After acquiring title, the new owner demanded that Bell remove the concrete structures and other improvements it had built on the property. When Bell refused, the new owner had the improvements removed and restored the property to its condition at the commencement of the lease. The new owner filed suit against Bell, seeking to recover the amount which had been necessary to restore the property. Both the trial court and court of appeal held in favor of the new owner, finding he could recover the cost of removing the improvements from the property under the provisions of the lease between his ancestor in title and Bell. [56] On original hearing, this court affirmed, finding the lease provisions imposed real obligations on the property which were consistent with the provisions of the Civil Code regarding a lessee's obligation to restore property. Upon re-examination, the court found it had erroneously considered the matter in its original opinion as though the property had been sold during an existing lease. Under those circumstances, the new owner would have been bound to perform the obligations of the lessor stated in the lease in the absence of a contrary stipulation, and would have been entitled to receive the benefit of the obligations of the lessee (such as rent) from the time of his acquisition of the property. Id., 329 So.2d at 749. Here, however, the lease between the former owner and Bell expired before the property was sold to the new owner, and the seller conveyed the property free of any lease. Consequently, the court determined the question of liability must be resolved in the light of the rules governing the assignment and subrogation of rights. Id. In other words, in order for the new owner of the property to assert the former owner's right to insist on Bell's performance of its lease obligations, the new owner must have been assigned or subrogated to those rights. The court found the nature of the former owner/lessor's rights, which arose from the obligations found in the lease provisions, were personal rights, rather than real rights. Id. [57] The next step for the court was to determine whether the former lessor/owner expressly assigned or subrogated his personal right to the new owner. The court reviewed the act of sale and found the conveyance and subrogation clauses therein made no reference to the expired lease, nor to the right of the seller to a restoration of the property to its original state, nor to the right of damages. Id., 329 So.2d at 750. Instead, the subrogation clause in the act of sale was directed to the rights and actions of warranty against previous owners: ... [the seller] does by these presents, grant, bargain, sell, convey, transfer, assign and set over with full guarantee against all mortgages, liens, claims, evictions, or other encumbrances or alienations whatsoever, and with subrogations to all her rights and actions of warranty against all previous owners, and with full guarantee of title, unto [buyer].... Id., 329 So.2d at 749-750. Thus, there was no express assignment to the new owner of the right to sue the former lessee for damages based on violations of the expired lease. Since there was no express assignment or subrogation of the former owner's right to sue for damages, the court then questioned whether the personal right was impliedly or tacitly assigned to the new owner as an accessory of the land, as the sale of immovable property included its accessories and dependencies. Id., 329 So.2d at 750. [58] Moreover, former law recognized an implied assignment of heritable rights from the conveyance of the property to which the rights were attached. [59] The court held there had been no implied or tacit assignment of the personal right in the act of sale because the law was clear that accessories to a sale do not include personal rights belonging to the seller. Under the article [former La. C.C. art. 2490], however, Accesories [sic] do not include personal rights of the seller. Id., 329 So.2d at 750. The court cited as authority Gumbel, supra , Clark, supra , and Planiol to hold: Personal rights belonging to the seller can never be considered as accessories sories [sic] of the immovable sold. [60] The court could have ended its analysis at that point, having found no explicit or implicit assignment to the new owner of the personal rights of the former owner to sue for damages against the former lessee. Instead, the court embarked on a discussion of accessory rights, addressing other fact situations where no accessory rights passed in the sale of property without assignment. First, the court noted that rents which accrued before the sale of property under an existing lease cannot be recovered by the new owner, citing among other cases, the Matthews decision discussed earlier. The court then stated the general rule at issue here: Likewise, a purchaser cannot recover from a third party for damage to the property incurred prior to the sale. Prados, 329 So.2d at 750. Cited as authority for this rule were Gumbel, supra ; Taylor, supra ; McCutchen, supra ; Bradford, supra ; and Clark, supra . Next, the court stated the purchaser of immovable property sold during an existing lease acquired no right to sue the lessee for property damage which occurred before the sale. To illustrate this example, the court again referred to Matthews, supra , and included a passage from that opinion which emphasized that a buyer is presumed to buy the accessory rights to property, but does not obtain in the transfer the personal rights of the vendor, acquired by the vendor before the sale, without an express subrogation. See Prados, 329 So.2d at 750-751. Thereafter, the court stated: The general principle, we think, is that a buyer is presumed to know the overt condition of the property and to take that condition into account in agreeing to the sales price. See LSA-C.C. Art. 2521; Aubry & Rau, Droit Civil Francais, supra, p. 76 (f.n. 6). Id., 329 So.2d at 751. This statement has been widely misinterpreted. The plaintiff and the court of appeal have interpreted this statement as containing the general principle of the subsequent purchaser rule itself, i.e. that the rule applies only when damage is apparent and when a purchaser has been able to negotiate a lower sales price due to the obvious deterioration or damage to the property. Looking at the court's statement in context, however, the comment was merely a part of the court's discussion of accessory rights in a sale of property under an existing lease, the subject matter under discussion. [61] At the conclusion of the discussion of accessory rights, the court reaffirmed that the personal right of the former owner obtained under the now-expired lease had not passed to the new owner with the title: The rationale of the foregoing decisions applies more strongly to the present case. Here, as we have noted, the conveyance was made after the termination of the lease. The property passed to the buyer unencumbered. The right to damages accrued to the lessor prior to the sale. It was a personal right, as distinguished from a real right. Under no sound theory can it be considered as attached to or accessory to the immovable property. Hence, in the conveyance, the plaintiff received no assignment of the right. Id., 329 So.2d at 751 (emphasis added). A careful reading of the Prados opinion clearly distinguishes between the discussion of accessory rights and the court's holding. Only after finding that the new owner did not acquire the former owner's personal rights explicitly, in the act of sale; implicitly, by a transfer of accessory rights; or under any other theory, did the court state: We hold that the present owner has no right to recover damages against the former lessee. Id., 329 So.2d at 751.