First Guaranty Bank v. Durham

• Decision Date: 12 January 1982
• Docket Number: No. 12266,12266
• Citation: 409 So.2d 380
• Parties: FIRST GUARANTY BANK v. Max H. DURHAM, Jr., et al.
• Court: Court of Appeal of Louisiana — District of US

Page 380

409 So.2d 380

FIRST GUARANTY BANK v. Max H. DURHAM, Jr., et al.

No. 12266.

Court of Appeal of Louisiana, Fourth Circuit.

Jan. 12, 1982.

Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Herschel L. Abbott, Jr., New Orleans, for defendants-appellees.

Pittman & Matheny, Tom H. Matheny, Christoper Moody, Alton B. Lewis, Hammond, for plaintiff-appellant.

Before REDMANN, GULOTTA and BARRY, JJ.

GULOTTA, Judge.

First Guaranty Bank (the Bank) appeals from the dismissal of its suit against Max H. Durham, Jr. (Durham) and Durham & Lazard (Partnership) for the balance due on a promissory note. In the judgment of dismissal, the trial court maintained Durham's exception of res judicata and further granted defendants' motion for summary judgment. We affirm.

Loans had been made by the Partnership from the Bank before 1970. On November 3, 1971, a promissory note was executed in favor of the Bank in the amount of $17,000.00 and signed "Sidney H. Lazard by Guy W. Smith under P/A". ¹ According to the Bank, the note was signed as a partnership obligation given in payment for a previously existing partnership debt. Durham and the Partnership, on the other hand, considered the note as Lazard's personal obligation given in payment for a previously existing partnership debt that he had assumed.

In May, 1972, Durham executed in favor of the Bank a $20,000.00 collateral mortgage note and mortgage on real property owned by him. Again, the parties differed as to the purpose of this device. Durham contended that the collateral mortgage was issued to secure future advances on his personal line of credit with the Bank, whereas the Bank viewed the mortgage as security for payment of the $17,000.00 note.

In November, 1972, Durham executed a note in favor of the Bank for $3,500.00 secured by the collateral mortgage. He subsequently repaid this loan, and thereafter filed suit in Tangipahoa Parish to erase the $20,000.00 collateral mortgage. The Bank reconvened praying for recognition of the mortgage and for judgment in the amount of $12,103.00, the balance owed on the $17,000.00 note. The trial court awarded the Bank a judgment against Durham for the balance due on the note; however, the First Circuit Court of Appeal reversed. The Bank's reconventional demand seeking recognition of the mortgage and the balance due on the note was dismissed. ²

On July 12, 1976, the Bank filed the instant suit against Durham individually and against the Partnership for the $12,103.00 balance remaining on the $17,000.00 note. In maintaining the exception of res judicata, the trial judge determined that the Bank's reconventional demand in the first-filed suit in Tangipahoa Parish was the same as its demand in the instant suit. In granting the motion for summary judgment filed by the Partnership, the judge further observed that there was no indication in the note that it was executed on behalf of the Partnership, or that Guy Smith, who signed for Lazard, had acted as a mandatary for the Partnership. The trial judge also noted that the Bank had failed to file any affidavits suggesting suretyship or a promise to pay Lazard's debt.

Appealing, the Bank claims initially the trial judge erred in applying res judicata. The Bank points out that in the first-filed suit recognition of the collateral mortgage and connection between the mortgage and the $17,000.00 note were sought; while in the instant suit, the balance on the unsecured $17,000.00 debt is sought. The Bank claims also that, unlike the first-filed suit, the instant case involves a question of guaranty. The Bank further argues that the trial judge erred in granting summary judgment.

RES JUDICATA

The Louisiana Supreme Court has recognized that res judicata under Louisiana law is much narrower in scope than its common law counterpart and is applicable only when the parties, the "cause" and the things demanded are identical. ³ The absence of any of these requirements is fatal to an exception of res judicata. See Welch v. Crown Zellerbach Corp., 359 So.2d 154 (La.1978); Mitchell v. Bertolla, 340 So.2d 287 (La.1976). Further, res judicata is stricti juris and a second suit is not barred where there is any doubt about the applicability of Article 2286. Lambert v. Maryland Cas. Co., 403 So.2d 739 (La.App. 4th Cir. 1981).

The term "cause of action" used in LSA-C.C. Art. 2286, has been defined by the Supreme Court as "cause" or "the juridical or material fact which is the basis of the right claimed, or the defense pleaded". Thus, it has been held that a plaintiff's earlier suit to nullify a contract for non-payment of rent and for lesion beyond moiety did not bar a second suit for nullity based on the grounds of fraud and lack of consideration, since there was no identity of "cause" to support the...