Cook v. Mixon
700 So. 2d 1264 (1997)
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Rule of Law:
To rescind a sale for lesion, the price must be less than half the fair market value of the immovable property. When the property's value is primarily derived from timber, the plaintiff must prove the timber's quantity and value with 'practical certainty,' and fair market value is determined by the collective market, not by a single, exceptionally high sale to a specially motivated buyer.
Facts:
- In late September 1994, Mary Alice Barber Cook entered a contract to sell a 160-acre tract of timberland in Winn Parish to James Mixon and Floyd Smith for $84,215.
- Stone Container, a national timber company that had been managing the property for Cook, declined to exercise its right of first refusal to purchase the tract for $84,000.
- After the sale was consummated, Mixon and Smith solicited bids to resell the property.
- Williamette Industries, an adjoining landowner, initially submitted a bid of $192,180 for the tract.
- After being contacted by Smith to assure the accuracy of the bid, Williamette increased its offer to $225,934.
- In January 1995, Mixon and Smith sold the property to Williamette Industries for the increased price.
- Following its purchase, Williamette Industries clear-cut the timber from the property.
Procedural Posture:
- Mary Alice Barber Cook sued James Mixon and Floyd Smith in a Louisiana trial court, claiming the sale of her property should be rescinded for lesion.
- The trial court found in favor of Cook, ruling that the sale was lesionary and that she was entitled to the profit the defendants realized.
- Mixon and Smith, as appellants, appealed the trial court's judgment to the Court of Appeal of Louisiana, Second Circuit.
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Issue:
Does the sale of a 160-acre tract of timberland for $84,215 constitute lesion when the buyers resold it six weeks later to an adjoining landowner for $225,934, where other market participants valued the property significantly lower?
Opinions:
Majority - Caraway, J.
No, the sale does not constitute lesion. Fair market value is determined by what a collective group of willing and informed buyers would pay, not by a single, exceptionally high price paid by a specially motivated buyer. The trial court legally erred by focusing solely on Williamette's purchase as the definitive measure of value, treating it as the entire market. This ignored substantial evidence from other timber cruises and market participants that placed the property's value far lower. For a lesion claim involving timber, which is a measurable commodity, the plaintiff has a heightened burden to prove value with 'practical certainty.' The plaintiff failed to meet this burden, particularly by not producing Williamette's actual harvest records, which would have provided the best evidence of timber quantity. Williamette's status as an adjoining landowner and its unexplained decision to dramatically increase its already high bid characterize the transaction as 'exceptional' and 'dictated more by the special need of the purchaser,' making it an unreliable indicator of fair market value.
Dissenting - Stewart, J.
Yes, the sale was lesionary. The majority improperly conducted a de novo review and substituted its own credibility determinations for those of the trial court, which was in the best position to weigh the conflicting expert testimony. The price actually paid by a willing buyer like Williamette is strong evidence of fair market value. The trial court did not commit manifest error in finding the testimony of Williamette's manager, Steve Barham, to be credible and the best evidence of the property's value. The majority improperly discounts this evidence by speculating about bias while ignoring potential biases of the defendants' own witnesses. The appellate court's role is not to reweigh the evidence but to determine if a reasonable factual basis exists for the trial court's finding, and in this case, one did.
Analysis:
This decision reinforces the high evidentiary standard required to rescind a sale for lesion in Louisiana, particularly when the asset's value, like timber, is quantifiable. The court clarifies that 'fair market value' is not synonymous with the highest price a single, specially motivated buyer is willing to pay. This precedent directs lower courts to consider the broader market and discount 'exceptional transactions,' such as a sale to an adjoining landowner with a unique interest, when determining value. It solidifies the 'practical certainty' test for valuing timber, placing a heavy burden on the plaintiff to produce the most accurate evidence available.
