Steib v. Joseph Rathborne Land Co.
163 So. 2d 429, 1964 La. App. LEXIS 1587 (1964)
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Rule of Law:
A contract cannot be classified as a sale with a right of redemption (vente à réméré) if the vendor reserves the right to repurchase a substantially altered asset (e.g., land stripped of timber) for a nominal sum, as this fails to meet the essential elements of restoring the original thing sold and returning the original purchase price.
Facts:
- On June 9, 1909, The Joseph Webre Co., Limited (Vendor) executed an authentic act purporting to sell described lands in St. James and St. John the Baptist Parishes to The Louisiana Cypress Lumber Company, Limited (Purchaser) for $114,600.00 cash.
- The Act of Sale included a provision reserving to The Joseph Webre Co., Limited the right to redeem the said lands after the removal of cypress timber by the purchaser, with the redemption price not to exceed $100.00 for all the lands.
- The vendor also reserved other rights, including pasturing cattle, cultivating ridges, draining waters, and removing cord wood.
- From 1909 onward, The Louisiana Cypress Lumber Company, Limited and its successor assessed and paid taxes on the property, surveyed it, marked boundaries, cleared and maintained paths, patrolled the land, and conducted trapping operations.
- Between 1918 and 1921, The Louisiana Cypress Lumber Company, Limited cut and removed 33,500,000 feet of saw timber, clearing all merchantable cypress timber from the property by the end of 1921.
- On December 31, 1927, The Louisiana Cypress Lumber Company, Limited transferred the property to The Joseph Rathborne Land Company, Inc. (now Joseph Rathborne Land & Lumber Co., Inc.) for $100,000.00 cash, with the purchaser acknowledging prior titles.
- From 1930 through 1953, the Rathborne Corporation cut and logged second-growth timber, and since 1937, granted mineral leases and drilled for oil.
- The Joseph Webre Co., Limited has exercised no possession of any nature upon the land since the 1909 sale.
Procedural Posture:
- The Receiver for The Joseph Webre Co., Limited filed suit against The Joseph Rathborne Land and Lumber Company, Inc., certain mineral royalty assignees, and mineral lessees in a state trial court (District Judge).
- The Receiver prayed for the June 9, 1909 sale to be decreed a timber deed only, for the plaintiff to be recognized as the full owner of the fee simple title, for defendants to be allowed a reasonable term to terminate timber operations, and for defendants to account for revenues from non-timber acts of ownership.
- The Joseph Rathborne Land and Lumber Company, Inc. and its royalty assignees filed answers denying the instrument was a timber deed, alleging ownership and possession, and pleaded the prescription (peremption) of 10 years (LSA-C.C. Article 2568) against the right of redemption and the acquisitive prescription of 30 years (LSA-C.C. Articles 3499-3501).
- The mineral lessees joined as defendants pleaded the protection of the law of registry (LSA-R.S. 9:1105 and LSA-C.C. Articles 2251-2266).
- Both plaintiff and defendants filed motions for summary judgment.
- The District Judge granted summary judgment dismissing plaintiff’s suit, holding the 1909 conveyance was a valid sale of land with the right of redemption and maintaining defendants’ plea of prescription (peremption) of 10 years under LSA-C.C. Article 2568.
- Plaintiff (Receiver of The Joseph Webre Co., Limited) appealed from the summary judgment.
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Issue:
Does a conveyance of land that reserves to the vendor the right to repurchase the land after the removal of all cypress timber for a nominal sum, constitute a timber deed, a sale with a right of redemption (vente à réméré), or another type of contract under Louisiana law?
Opinions:
Majority - Hall, Judge
No, the conveyance of June 9, 1909 was neither a timber deed nor a sale with a right of redemption (vente à réméré); instead, it constituted a sale of land with a reservation to the vendor of a right to repurchase the denuded land. The court first rejected the contention that the instrument was merely a timber deed, noting that its plain language used terms of fee transfer for real estate, describing a sale of 'the said lands' and including reservations (such as pasturage and drainage) that would be unnecessary in a timber deed. The court found no basis for speculating that the parties intended only a timber transfer when the deed itself clearly manifested an intent to transfer ownership of the land. Next, the court determined that the instrument was not a valid sale with a right of redemption (vente à réméré) as defined by LSA-C.C. Article 2567. A true vente à réméré requires two elements: 1) the vendor reserves the power of taking back the thing sold in its original state (with adjustments for deterioration or augmentation), and 2) the vendor returns the price paid for it. In this case, the vendor reserved the right to redeem the land after the removal of cypress timber, meaning the thing to be redeemed would be depleted from its original state, not the original 'thing sold.' Additionally, the stipulated redemption price of 'not to exceed $100' was not a return of the original $114,600 purchase price. While a redemption price can sometimes differ from the original, the court noted no precedent for it being substantially less in this manner. Since the critical element of taking back the original 'thing sold' was absent, the court held the special 10-year prescription (peremption) applicable to rights of redemption (LSA-C.C. Article 2568) was inapplicable. Finally, the court concluded that the instrument evidenced a sale of realty and its timber, with a reservation to the vendor of a right to repurchase the bare land. The court considered that this right of repurchase might be invalid if the price was uncertain (LSA-C.C. Article 2464). Even if valid, the plaintiff failed to tender the repurchase price before filing suit, which would be a prerequisite to seeking ownership. The court noted that relevant pleas of liberative prescription (10 or 30 years) were not raised by the defendants, and the court could not supply such pleas.
Analysis:
This case provides crucial clarification on the strict interpretation of 'sale with right of redemption' (vente à réméré) under Louisiana Civil Law, emphasizing that such agreements require both the restoration of the original asset and the original purchase price. It reinforces the principle that courts will primarily rely on the plain language of a contract to discern intent, rather than extrinsic speculation. The ruling also underscores the critical importance of proper pleading in litigation, as the court acknowledged the potential applicability of alternative prescriptive periods but could not consider them due to the defendants' failure to raise them, thereby affecting the final outcome of the case.
