Manuel v. Shaheen
316 So.2d 878 (1975)
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Rule of Law:
Under Louisiana law, a sale is considered perfected and ownership is transferred as soon as the parties reach an agreement on the object to be sold and its price, even if the object has not yet been delivered or the price has not yet been paid.
Facts:
- On or before June 5, 1973, Joseph Shaheen authorized his son, Jake Shaheen, to purchase a new boat from Clay's Marine, Inc., and to trade in their old boat.
- On June 5, 1973, Jake Shaheen selected a new 16.7-foot Boston Whaler boat and an 85-horsepower motor from Clay's Marine, and the parties agreed on the purchase price and the trade-in allowance for the old boat.
- The agreement included a provision that Jake Shaheen could later trade the 85-horsepower motor for a larger one by paying the difference in price.
- Clay's Marine took possession of the Shaheens' old boat on or about June 5, and delivered the new Boston Whaler boat and motor to Jake Shaheen on June 6 or 7, 1973.
- On June 19, 1973, Joseph Shaheen paid Clay's Marine the full purchase price for the new boat and motor.
- On June 29, 1973, Julius R. Manuel sustained personal injuries while water skiing behind the new Boston Whaler boat while it was being operated by Jake Shaheen.
Procedural Posture:
- Julius R. Manuel sued Joseph Shaheen, Jake Shaheen, and Home Insurance Company in a Louisiana trial court to recover for personal injuries.
- The trial court granted summary judgment for Home Insurance Company, dismissing it from the suit.
- Manuel amended his petition to implead Zurich Insurance Company, alleging it was the insurer for the boat's true owner, Clay's Marine, Inc.
- Zurich Insurance Company filed a motion for summary judgment, arguing its insured, Clay's Marine, did not own the boat at the time of the accident.
- The trial court granted summary judgment in favor of Zurich, dismissing it from the lawsuit.
- Manuel, as plaintiff-appellant, appealed the summary judgment to the Court of Appeal of Louisiana, Third Circuit.
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Issue:
Is a sale of a boat and motor considered perfected, transferring ownership to the buyer, as soon as the parties agree on the object and the price, even though the buyer has a conditional option to trade in the motor for a larger one at a later date?
Opinions:
Majority - Judge Hood
Yes. A sale of a boat and motor is perfected, and ownership transfers, as soon as the parties agree on the object and the price. The court reasoned that under Louisiana Civil Code article 2456, a sale is considered perfect between the parties once there is an agreement on the object and the price, regardless of delivery or payment. In this case, the parties agreed on the specific boat, motor, and price on June 5, 1973, which perfected the sale on that date. The plaintiff's argument that the sale was subject to a 'suspensive condition' (a try-out period) was rejected because the obligation was executed immediately, with delivery and payment occurring before the accident. The option to trade in the motor was, at most, a 'resolutory condition,' which under LSA-C.C. art. 2045 does not suspend the sale but merely provides a basis for undoing it later if the condition occurs. Since the sale was effective on June 5 and the resolutory condition never took place, Joseph Shaheen was the owner of the boat at the time of the accident.
Analysis:
This case provides a clear application of a fundamental principle of Louisiana sales law, emphasizing that the moment of agreement on price and object is the moment ownership transfers. It clarifies the distinction between suspensive conditions, which delay the effect of a sale, and resolutory conditions, which do not. The decision solidifies that a collateral agreement, such as an option to upgrade a component, does not prevent a sale from being perfected, providing legal certainty for determining ownership for purposes of liability and insurance coverage.
