Peacock v. Peacock
1996 WL 229426, 674 So. 2d 1030, 1996 La. App. LEXIS 849 (1996)
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Rule of Law:
A transfer of property is an absolute simulation, and therefore void, when it is intended to have no effect between the parties and is made to fraudulently defeat a third party's contractual right of redemption. Exercising a right of redemption does not require a formal tender of the full price before filing suit; a verbal offer or partial tender demonstrating intent is sufficient.
Facts:
- In 1990, James Roger Peacock sold his one-half interest in a 40-acre tract of land, which he co-owned with his half-brother Jon Franklin Peacock, to Jon for $8,000.
- The deed, drafted by Roger, included a right of redemption allowing Roger to repurchase his interest within five years for $8,000 plus 5% annual interest, provided Jon still owned the property.
- Over the next several years, Jon unsuccessfully attempted to persuade Roger to sign a new deed without the redemption clause.
- In early April 1994, Roger verbally informed Jon of his intent to exercise his right of redemption.
- On April 18, 1994, Roger sent Jon a registered letter containing a check for $8,000 to initiate the redemption.
- On April 20, 1994, Jon recorded the original 1990 deed for the first time.
- On April 25, 1994, Jon executed a deed purporting to transfer the entire property to his wife, Sharon Peacock, for "one dollar and other valuable consideration."
- On April 28, 1994, Jon accepted delivery of Roger's letter and subsequently returned the check, informing Roger the property had been sold.
Procedural Posture:
- James Roger Peacock filed suit against Jon and Sharon Peacock in a Louisiana trial court.
- Peacock sought to enjoin the defendants from alienating the property and to recognize his right of redemption.
- The defendants filed a reconventional demand (counterclaim) seeking to reform the original deed to remove the redemption clause.
- The trial court ruled in favor of James Roger Peacock, finding the sale between Jon and Sharon to be an absolute simulation and upholding Roger's right of redemption.
- The defendants, Jon and Sharon Peacock, as appellants, appealed the trial court's judgment to the Louisiana Court of Appeal, Second Circuit.
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Issue:
Does an intra-family property transfer, made for nominal consideration immediately after the original seller attempts to exercise a contractual right of redemption, constitute a void absolute simulation intended to defeat that right?
Opinions:
Majority - Gaskins, Judge
Yes, the intra-family property transfer was a void absolute simulation intended to defeat the right of redemption. The court found that Roger validly sought to exercise his right of redemption, as a full tender of the price including interest is not a prerequisite to initiating a suit; a verbal offer and partial tender is sufficient. The purported sale from Jon to his wife Sharon was a sham, or an absolute simulation, which produces no legal effect. A jurisprudential presumption of simulation arose because the facts and circumstances created a 'highly reasonable doubt as to the reality of the putative sale.' These circumstances included the suspicious timing of the transfer immediately after Roger announced his intent to redeem, the nominal consideration of one dollar, and the lack of credible evidence for any 'other valuable consideration,' as Sharon's intent to transfer stock in the future was insufficient. Because Jon and Sharon failed to rebut this presumption by proving a good-faith transaction, the transfer is void, meaning Jon still owned the property when Roger sought to redeem it.
Analysis:
This decision reinforces the equitable power of courts under Louisiana's civil law to invalidate transactions that are simulations, or shams, designed to defraud a third party of their contractual rights. It establishes that a combination of suspicious timing, intra-family dealing, and nominal or unproven consideration can create a strong presumption of simulation, shifting the burden of proof to the parties of the sale. The ruling also clarifies that the threshold for exercising a right of redemption is low, prioritizing the seller's demonstrated intent over a procedurally perfect tender of payment. This precedent makes it more difficult for parties to use sham transactions to escape contractual obligations.
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