Greater Baton Rouge Port Commission v. Cargill, Inc.

205 So. 2d 151, 1967 La. App. LEXIS 4691
CourtLouisiana Court of Appeal
DecidedNovember 13, 1967
DocketNo. 7132
StatusPublished
Cited by1 cases

This text of 205 So. 2d 151 (Greater Baton Rouge Port Commission v. Cargill, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Greater Baton Rouge Port Commission v. Cargill, Inc., 205 So. 2d 151, 1967 La. App. LEXIS 4691 (La. Ct. App. 1967).

Opinion

LOTTINGER, Judge.

The petitioner, Greater Baton Rouge Port Commission, filed this suit against defendant, Cargill, Incorporated, asking for a declaratory judgment interpreting certain provisions of an Act of Lease between petitioner, and defendant. The Lower Court rendered a judgment in favor of the petitioner, and the defendant has appealed.

Plaintiff, the Greater Baton Rouge Port Commission (hereinafter called the “Commission”) is an executive department of the State of Louisiana, created pursuant to, and operating subject to, the provisions of Article 6, Section 29 of the Louisiana Constitution. It generally has the power to administer the affairs of the port area, as defined by the Constitution, and to enter into agreements and contracts with third persons in furtherance of the purpose of its creation, subject, of course, to such legal restrictions as might be otherwise applicable under the Constitution and laws of this State.

On September 7, 1955, the Commission entered into a written lease with defendant, Cargill, Incorporated (hereinafter called “Cargill”), under which the Commission leased to Cargill certain public property, including land, a grain elevator and wharf-age for a period of twenty years. In order to construct the grain facility which was the subject of the lease, the Commission issued general obligation bonds of the [153]*153State of Louisiana. Although the bonds were secured in part by rentals to be paid by Cargill over the term of the lease agreement, they nonetheless constituted an obligation for which the State was primarily responsible. Through this method of public financing, Cargill obtained certain advantages ; it was able to open a grain facility in the lower Mississippi River area without extensive capital outlay, under a plan which resulted in lower interest costs to Cargill on the money borrowed to construct that facility.

In order to insure that Cargill would have first refusal on any additional grain elevator similarly financed and constructed, Paragraph 17 of the lease agreement provided in pertinent part, as follows:

“During the term of this lease Cargill shall have the exclusive right to operate hereunder a public grain elevator within the Port Area as such area is defined by law. In the event said grain elevator is inadequate to properly handle the then existing grain movement through the Port Area and the Port decides to construct additional grain storage and handling facilities, Port must first offer such facilities to Cargill for operation on such terms and for such payments as the Port is prepared to make to responsible third persons in good faith. Cargill must accept or reject such an offer within thirty (30) days; failure by Cargill to notify Port in writing of its election within said thirty (30) days period shall be deemed to be a rejection of said offer. Any modified offer by Port must similarly be first submitted to Cargill and rejected by Cargill before being submitted to third persons.” (Emphasis ours.)

Prior to the institution of this suit, other persons engaged in the transportation, storage and handling of grain had made inquiries of the Commission concerning the possibility of locating a grain elevator in the port area. As a consequence of these inquiries, a dispute arose between the Commission and Cargill as to the interpretation and meaning of Paragraph 17 of the lease agreement, Cargill contending in substance, that the lease vested in Cargill the exclusive right to operate a public grain elevator within the port area and consequently prohibited the Commission from: (a) leasing or otherwise making available to any third party land owned or otherwise controlled by the Commission within the port area for the establishment and operation by any third person of another public grain elevator; and (b) acquiescing in the establishment and operation of another public grain elevator by any third party even on property not owned or otherwise controlled by the Commission, but located within the described port area.

In addition, Cargill contended that even in the event of the attempted establishment and operation of another public grain elevator by any third person on property not owned or otherwise controlled by the Commission, but located within the port area, the lease agreement required the Commission to take such legal steps as might be required to enjoin any such endeavor.

The Commission, in order to resolve the dispute, filed this suit for declaratory relief, contending that Paragraph 17 of the lease agreement did not vest any such exclusive rights in Cargill, but, to the contrary, extended to that lessee merely a right of first option and refusal to lease from the Commission any additional grain storage and handling facilities constructed and financed by the Commission. The Commission further contended that if the lease agreement be construed to grant the exclusive rights urged by Cargill, then the provisions of Paragraph 17 of the agreement must be declared null and void and without force or effect, as amounting to an attempt to take private property without due process and to create an exclusive franchise or privilege contrary to the Constitution and laws of the State of Louisiana.

[154]*154There is no serious dispute concerning the facts of this case; it was submitted to the Lower Court largely on the basis of depositions previously taken and supporting documentary evidence. The principal issue is a legal one involving the interpretation and meaning of that portion of Paragraph 17 of the lease agreement quoted above.

The Lower Court rendered a declarative decision in favor of the Commission and against Cargill providing as follows:

“(1) That the said Lease executed by and between plaintiff and defendant under date of September 7, 1955, as amended, does not vest in defendant, Cargill, Incorporated, the exclusive right to operate a public grain elevator within the Port Area, as such Port Area is defined by Article VI, Section 29, of the Louisiana Constitution (i. e. the Parishes of East Baton Rouge, West Baton Rouge, Iberville and Ascension, Louisiana).
■“(2) That plaintiff does not have and has never had the legal or constitutional authority to grant any exclusive franchise, privilege or monopoly to operate a public grain elevator.
■“(3) That Plaintiff is not prohibited by the said Lease of September 7, 1955, from leasing or otherwise making available to any third party or parties land owned or otherwise controlled by plaintiff within the Port Area for the establishment and operation thereon by any such third party or parties of a public grain elevator or elevators.
“(4) That the said Lease of September 7, 1955, does not require plaintiff to take any legal or steps to enjoin or prohibit the establishment and operation of public grain-elevators by any third party or parties on property not owned or otherwise controlled by plaintiff, but located within said Port Area.”

With regard to the holding of the Lower Court, Cargill now contends that the Court erred in holding that Cargill does not have the exclusive right to operate a public grain elevator within the port area.

While we do not agree wholeheartedly with the wording of the Lower Court in this regard, we feel that the effect of an interpretation of Paragraph 17 of the lease agreement is, as was decided by the Lower Court, not an exclusive arrangement.

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Related

Greater Baton Rouge Port Commission v. Cargill, Inc.
214 So. 2d 119 (Supreme Court of Louisiana, 1968)

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Bluebook (online)
205 So. 2d 151, 1967 La. App. LEXIS 4691, Counsel Stack Legal Research, https://law.counselstack.com/opinion/greater-baton-rouge-port-commission-v-cargill-inc-lactapp-1967.