Crescent Cigarette Vending Corporation v. Toca
271 So. 2d 53, 1972 La. App. LEXIS 5862 (1972)
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Rule of Law:
A debtor claiming extinguishment of an obligation by novation, through the substitution of a new debtor, bears the burden of proving by a preponderance of the evidence that the creditor expressly declared its intent to discharge the original debtor.
Facts:
- Alvin Toca, operator of a lounge called 'Laura's Playroom,' borrowed $1,000 from Crescent Cigarette Vending Corporation (Crescent) and executed a promissory note.
- The loan was to be repaid from commissions Toca earned from a Crescent cigarette machine in his lounge, supplemented by $10 weekly payments.
- On or about October 17, 1969, Toca sold his business to Sam Jones.
- Toca alleged that at the time of the sale, an agreement was made among himself, Jones, and Crescent for Jones to assume the outstanding debt and for Toca to be released from the obligation.
- A representative for Crescent denied that Jones assumed Toca's debt, testifying instead that Jones borrowed money in a separate and independent transaction.
- The original promissory note signed by Toca was never cancelled or modified.
Procedural Posture:
- Crescent Cigarette Vending Corporation sued Alvin J. Toca in a trial court to recover the balance on a promissory note.
- Toca filed an answer raising the affirmative defense of extinguishment by novation.
- The trial court rendered judgment in favor of the defendant, Toca, dismissing the plaintiff's suit.
- Plaintiff, Crescent Cigarette Vending Corporation, appealed the trial court's judgment to the Court of Appeal of Louisiana, Fourth Circuit.
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Issue:
Does a debtor meet the burden of proof for the affirmative defense of novation by testifying that a new debtor assumed the obligation, without presenting evidence that the creditor expressly declared its intent to discharge the original debtor?
Opinions:
Majority - Boutall, Judge
No. A debtor does not establish the affirmative defense of novation without positive proof that the creditor expressly consented to discharge the original debtor. Novation is an affirmative defense that is never presumed, and the party asserting it bears the burden of proof. Under Louisiana Civil Code article 2192, the substitution of a new debtor does not release the original debtor unless the creditor has 'expressly declared' their intent to grant a discharge. Here, Toca failed to carry his burden. His testimony was devoid of any specific conversation or agreement with an authorized representative of Crescent confirming his release. He did not call the new debtor, Jones, to testify, and the original promissory note remained in Crescent's possession without any indication of cancellation. The trial court's finding in favor of the defendant based on his perceived character was insufficient to overcome the lack of evidence required to prove the special defense of novation.
Analysis:
This case reinforces the stringent requirements for proving the affirmative defense of novation in contract law, particularly the element of express intent. It clarifies that a trial court's assessment of a witness's credibility cannot substitute for the substantive evidence required to meet a party's burden of proof. The decision serves as a caution that a mere delegation of debt to a third party is legally insufficient to discharge the original obligor's liability. For future cases, this holding solidifies the principle that a creditor's release of an original debtor in a novation must be proven with positive, unambiguous evidence, not just the debtor's uncorroborated testimony.
