Delcambre v. Dubois

Louisiana Court of Appeal
263 So. 2d 96 (1972)

ELI5:

Rule of Law:

A sale of property accompanied by a counter letter that grants the seller a right to repurchase without a specified time limit will be construed as a sale with a right of redemption (vente à réméré), which under Louisiana law is subject to a statutory maximum term of ten years.

Facts:

In 1963, Howard Delcambre was heavily in debt, and his creditors threatened to seize his undivided interest in approximately 4,300 acres of family land.
To prevent creditors from forcing a partition sale of the entire property, Delcambre's siblings, including Verna Delcambre Dubois, agreed to help him.
Delcambre executed a cash sale, conveying his interest in the land to his siblings.
In consideration, the siblings assumed Delcambre's mortgages and judgments, which totaled over $60,000.
Contemporaneously, the parties signed a separate, unrecorded instrument, or 'counter letter,' which granted Delcambre the 'right and option to repurchase' the property.
The repurchase price was defined as all sums the siblings expended to pay off Delcambre's debts.
The counter letter did not specify a time limit within which Delcambre had to exercise his right to repurchase.
In 1968, after oil was discovered on the property, Delcambre attempted to exercise his right to repurchase, but his siblings refused.

Procedural Posture:

Howard Delcambre sued Verna Delcambre Dubois and other siblings in the district court (trial court) seeking specific performance of the repurchase agreement.
The district court granted specific performance in favor of Delcambre.
Defendants appealed to the Court of Appeal of Louisiana, Third Circuit.
The Court of Appeal found the agreement ambiguous and remanded the case to the trial court for the introduction of parol evidence regarding the parties' intent.
On remand, the district court again ruled in favor of Delcambre, ordering specific performance.
Defendants again appealed to the Court of Appeal, Third Circuit.
Initially, the Court of Appeal reversed the trial court, holding that the agreement was an invalid option contract because it lacked a stipulated time for performance.
The Court of Appeal then granted Delcambre's application for a rehearing.

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Issue:

Does a sale of real property, accompanied by an unrecorded counter letter that grants the seller the 'right and option to repurchase' without a stipulated time limit, constitute an unenforceable option or a valid sale with a right of redemption subject to a ten-year statutory limit?

Opinions:

Majority - Miller, J. (on rehearing)

Yes, the transaction constitutes a valid sale with a right of redemption. Although the counter letter uses the term 'option' and does not specify a time limit, the court will look to the substance and intent of the agreement rather than its form. The transaction fits the classic purpose of a 'vente à réméré' (sale with right of redemption), which is to allow a person in need of money to sell property with the hope of repurchasing it later. Under Louisiana Civil Code Art. 2568, the right of redemption cannot exceed ten years. Citing the legal scholar Planiol, the court reasoned that when parties fail to stipulate a time limit for redemption, the law automatically imposes the ten-year maximum. Because Delcambre sought to repurchase the property in 1968, five years after the 1963 sale, his action was timely and enforceable.

Dissenting - Culpepper, J. (on rehearing)

No, the transaction is an invalid option, not a sale with a right of redemption. An essential element of a sale with a right of redemption is that the seller must 'reserve' the right to repurchase, whereas an option is 'granted' by the buyer. The clear language of the counter letter shows the right was 'granted' by the defendants, and the attorney who drafted it testified that he intended to create an option. Furthermore, a valid sale with a right of redemption requires the buyer to take actual corporeal possession, which did not occur here as Delcambre remained in possession of his home and business. The court should not rewrite the parties' intended agreement into a different legal device to make it valid.

Concurring - Domengeaux, J. (on rehearing)

Yes, the trial court's judgment should be affirmed, but for the reasons expressed in his original dissent. The instrument is a valid counter letter that clearly reflects the parties' intent to allow the plaintiff to repurchase the property. This intent should be given effect without reclassifying the agreement as a sale with a right of redemption. The technical requirements of Civil Code Article 2462 regarding options should not be used to defeat the clear purpose and motive of the parties.

Analysis:

This decision demonstrates the willingness of Louisiana courts to look beyond the labels used by parties in a contract to the underlying substance and intent of the transaction. By re-characterizing what appeared to be a perpetually open (and thus invalid) option as a valid sale with a right of redemption, the court employed an equitable solution rooted in the Civil Code to prevent an unjust result. The ruling establishes a significant precedent: repurchase agreements lacking a time limit can be saved from invalidity by being classified as a 'vente à réméré,' which automatically subjects them to the statutory ten-year redemption period. This provides a safety net for informal security devices intended to help debtors, while also providing a degree of certainty by imposing a definite time limit.

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