Sanson Four Rentals, LLC v. Faulk

803 So. 2d 1048, 2001 La. App. LEXIS 3273, 2001 WL 1614558
CourtLouisiana Court of Appeal
DecidedDecember 19, 2001
Docket35,417-CA
StatusPublished
Cited by3 cases

This text of 803 So. 2d 1048 (Sanson Four Rentals, LLC v. Faulk) 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
Sanson Four Rentals, LLC v. Faulk, 803 So. 2d 1048, 2001 La. App. LEXIS 3273, 2001 WL 1614558 (La. Ct. App. 2001).

Opinion

803 So.2d 1048 (2001)

SANSON FOUR RENTALS, L.L.C., Plaintiff,
v.
Lon B. FAULK, Defendant.

No. 35,417-CA.

Court of Appeal of Louisiana, Second Circuit.

December 19, 2001.

*1050 Sam O. Henry, III, Monroe, Counsel for Defendant-Appellant, Kilpatrick Funeral Homes, Inc.

Malcolm Earl Decelle, Jr., Monroe, Counsel for Plaintiff-Appellee, Sanson Four Rentals, L.L.C.

Marshall Leon Sanson, Monroe, Counsel for Third Party Appellee, Marshall Leon Sanson.

Before CARAWAY, PEATROSS and KOSTELKA, JJ.

CARAWAY, J.

This suit involves a $5,000 assignment of a judgment acquired by the plaintiff. The defendant/assignor has now been sued for breach of warranty due to its release of the judicial mortgage from the mortgage records. The release occurred in error after defendant/assignor had made the assignment, and as a result, the judgment debtor was able to sell valuable property unencumbered by the judicial mortgage. The trial court awarded plaintiff the return of the $5,000 price for the assignment, plus damages, and ordered the judgment returned to the defendant/assignor. Finding an eviction and breach of warranty caused by the defendant/assignor's own act, we affirm.

Facts

The disputed judgment arose from Kilpatrick Funeral Homes, Inc.'s ("Kilpatrick") suit on a promissory note against Lon B. Faulk, Sr. ("Faulk") in 1992. The note for $5,309.36 was dated October 27, 1991, and provided for 1½% interest per month and 33 1/3% attorneys fees in the event of collection. A default judgment, dated June 11, 1992 (hereinafter the "Faulk Judgment"), was rendered against Faulk and recorded in the Ouachita Parish mortgage records. The judgment debt remained uncollected by Kilpatrick.

*1051 Faulk owned 2½ acres of land in West Monroe to which the judicial mortgage attached. Marshall Sanson ("Sanson"), an attorney who lives in West Monroe, became interested in the land for investment purposes because of its proximity to the interstate. Sanson and his wife are the members of Sanson Four Rentals, L.L.C. ("Sanson Four"), a company that makes money engaging in real estate transactions. Sanson checked the title to Faulk's land, waited for another mortgage which primed the Faulk Judgment to prescribe, and then contacted Kilpatrick about buying the Faulk Judgment. Kilpatrick's controller, Beth Bostwick ("Bostwick"), agreed to sell the Faulk Judgment for $5,000 cash. On January 23, 1998, Kilpatrick assigned the Faulk Judgment to First Thrift and Loans, L.L.C. ("First Thrift"), another entity controlled by Sanson. On February 10, 1998, First Thrift assigned the Faulk Judgment to Sanson Four. Both assignments described the Faulk Judgment, recited that it was assigned for value received, and each assignment recited that the assignor had not executed any prior assignment, release, discharge or cancellation thereof. Neither assignment contained any specific limitation or disclaimer as to warranty.

On March 2, 1998, Sanson Four instituted suit against Faulk to make the Faulk Judgment executory. On March 11, 1998, the sheriff's office issued a writ of fieri facias for $23,193.04 for the seizure of the 2-½ acre tract in anticipation of the customary sheriff's sale. Notice of the writ of fieri facias was recorded in the mortgage records on March 11, 1998. While the mortgage certificate was being prepared, Sanson learned for the first time that the property had been sold by Faulk to a third party and that the inscription of the Faulk Judgment had been cancelled from the mortgage records of Ouachita Parish.

By Cash Deed dated February 16, 1998, Lon Faulk, a resident of Texas, sold the 2½ acre tract to a third party for $25,000. The deed was recorded on March 2, 1998 while the judicial mortgage of the Faulk Judgment remained an encumbrance upon the property. The cancellation of the Faulk Judgment occurred on March 6, 1998 after Kilpatrick authorized cancellation in a letter signed by Bostwick directed to the Clerk of Court. North Delta Title, the closing agent for Faulk's sale, had prepared the letter for Kilpatrick's signature which stated that the Faulk Judgment "has been paid in full by defendant, Lon B. Faulk." Bostwick presumed that North Delta Title's request for the cancellation letter was made on behalf of First Thrift. Upon receipt of the cancellation letter on March 6, 1998, the Clerk of Court entered a notation on the face of the Faulk Judgment stating that it was paid in full and recorded the cancellation letter.

On November 5, 1998, Sanson amended his petition to add Kilpatrick as a defendant and alleged that Kilpatrick's agent intentionally released a letter authorizing cancellation of the judgment. Sanson prayed for the amount of the Faulk Judgment ($5,309.36) plus accrued interest and attorneys fees provided in the judgment, and for costs. Kilpatrick answered and alleged that Sanson Four was negligent for failing to record its assignment so as to give notice to third parties that Kilpatrick no longer owned the judgment.

Following a bench trial, the trial court rendered judgment in favor of Sanson Four for $15,650.02. This amount represents the face value of the Faulk Judgment, including the 1-½% interest which had accrued in accordance with the underlying promissory note, attorney fees set forth in the note and costs of this action. The $15,650.02 judgment was nevertheless subject to a 20% reduction because of Sanson *1052 Four's contributing fault. Thereafter, the judgment was amended to provide that upon satisfaction of Sanson Four's judgment against Kilpatrick, the Faulk Judgment was to be returned to Kilpatrick.

Discussion

I.

Through two assignments of error, Kilpatrick argues that Sanson's negligence in failing to record the assignments to the two companies, First Thrift and Sanson Four, should be considered the sole cause of the loss, or alternatively, that the trial court's 20% fault assessment against Sanson Four should be increased. Kilpatrick presented testimony by an employee of the Clerk of Court that notations revealing the recorded assignments would have been made on the face of the Faulk Judgment and that Kilpatrick's letter authorizing cancellation would have not been honored by the Clerk of Court. Kilpatrick asserts the application of the second paragraph of Civil Code Article 2500 in support of its argument.

Chapter 15 of the Civil Code provisions on Sale (Title VII) addresses the assignment of incorporeal rights and applies to Kilpatrick's assignment of the Faulk Judgment. The assignor of a right warrants its existence at the time of the assignment. La. C.C. art. 2646. The assignment of a right includes its accessories such as security rights. La. C.C. art. 2645. The assignor warrants the existence not only of the right, but of the accessory securities attached to and transferred with it. Revision Comment (b) to C.C. art. 2646. Citizens' Bank & Trust Co. v. Walker, 9 La. App. 143, 119 So. 487 (1926).

An assignment of right is a species of sale and is treated as such in our Civil Code. Scott v. Corkern, 231 La. 368, 91 So.2d 569 (1956); Alco Collections, Inc. v. Poirier, 95-2582 (La.App. 1st Cir.9/27/96), 680 So.2d 735; writ denied, 96-2628 (La.12/13/96), 692 So.2d 1067. The warranty against eviction is implied in every sale. La. C.C. art. 2505. The seller of an incorporeal right does not merely warrant its existence at the time of sale, but warrants also against eviction. Tomlinson v. Thurmon, 189 La. 959, 181 So. 458 (1938). Eviction is the loss suffered by the buyer occasioned by the right or claims of a third person. La. C.C. art.

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Bluebook (online)
803 So. 2d 1048, 2001 La. App. LEXIS 3273, 2001 WL 1614558, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sanson-four-rentals-llc-v-faulk-lactapp-2001.