Flowers, Inc. v. Rausch

• Decision Date: 13 November 1978
• Docket Number: No. 61833,61833
• Citation: 364 So.2d 928
• Parties: FLOWERS, INC. v. Mrs. Lucy Reid RAUSCH, Clerk of Court, Parish of St. Tammany and Collector of Revenue, State of Louisiana.
• Court: Louisiana Supreme Court

Page 928

364 So.2d 928

FLOWERS, INC. v. Mrs. Lucy Reid RAUSCH, Clerk of Court, Parish of St. Tammany and Collector of Revenue, State of Louisiana.

No. 61833.

Supreme Court of Louisiana.

Nov. 13, 1978.

Attorneys for the Secretary of the Dept. of Revenue and Taxation, State of Louisiana Edwin M. Callaway and W. Steven Mannear, Baton Rouge, for defendant-applicant.

Barranger, Barranger, Jones & Fussell, William J. Jones, Jr., Covington, Anderson, Leithead, Scott, Boudreau & Savoy, Randall E. Roach, Lake Charles, for plaintiff-respondent.

CALOGERO, Justice.

In this litigation plaintiff, Flowers, Inc., succeeded in the district court and Court of Appeal in having tax assessments, filed in the mortgage records of St. Tammany Parish, ordered cancelled and erased insofar as they affected certain immovable property which plaintiff had purchased from the state's tax debtor, Tan Ho Land and Cattle Company, Inc. The facts are more fully set forth in the opinion of the Court of Appeal. Flowers, Inc. v. Rausch, 354 So.2d 641 (La.App. 1st Cir. 1977). Plaintiff acquired the property from the Tan Ho Corporation less than ten years after the state had recorded its tax assessments (for corporate income and franchise taxes). After ten years from recordation, during which the assessments had not been reinscribed by the state, plaintiff filed this suit to mandamus cancellation and erasure.

The Court of Appeal affirmed a trial court judgment favorable to the plaintiff in an opinion which relied in part upon its interpretation of identical provisions in the 1921 and 1974 Louisiana constitutions which bar the running of prescription against the state in civil matters. The Court of Appeal determined that "prescription" did not encompass peremption. It was this constitutional interpretation which prompted our granting this writ. Flowers, Inc. v. Rausch, 356 So.2d 1006 (La.1978).

Plaintiff had contended, and the Court of Appeal agreed, that a tax assessment is the equivalent of a money judgment, the recordation of which is subject to the peremption period of ten years provided in C.C. art. 3369, and that such peremption runs against the state notwithstanding that both Article XII, § 13, Louisiana Constitution of 1974, and Article XIX, § 16, Louisiana Constitution of 1921, provide:

"Prescription shall not run against the state in any civil matter, unless otherwise provided in this constitution or expressly by law."

In this litigation we must decide whether and to what extent the effect upon third parties of recordation of the tax assessment continues after ten years have elapsed without timely reinscription.

We proceed here to discuss pertinent provisions of the civil code and revised statutes which bear upon our resolution of the issues in this case.

R.S. 47:1581 provides:

"Any Tax, penalty, interest, or other charges duly Assessed under this Sub-title, Being the equivalent of a judgment, shall not be subject to the running of any prescription other than such prescription as would run against a judgment in favor of the State of Louisiana in accordance with the Constitution and laws of this state; And the recordation of such assessment shall have the same effect as the recordation of a judgment." (Emphasis supplied)

Thus, under the law tax assessments are equivalent to judgments. Judgments, including money judgments, give rise to judicial mortgages in favor of the person obtaining them, La.Civ.Code art. 3321; the judicial mortgage takes effect when recorded as the law requires. La.Civ.Code art. 3322.

Judicial mortgages are allowed to prejudice third parties only when they are recorded. La.Civ.Code art. 3342. No mortgage, judicial or otherwise, shall affect third parties unless recorded in the parish where the property to be affected is situated. La.Civ.Code art. 3347. Article 3369 says that the effect of the registry of mortgages ceases in all cases ". . . if the inscriptions have not been renewed within . . . (ten years)."

Furthermore, Article XIX, § 19, Louisiana Constitution of 1921, which is now a statute under the 1974 constitution, provides that "(n)o mortgage . . . on immovable property . . . shall affect third persons unless recorded or registered in the parish where the property is situated, in the manner and within the time prescribed by law, . . . ." Excepted from the rule stated are tax mortgages, which affect third parties even absent proper recordation and registry, ". . . provided such (unrecorded) tax . . . mortgages . . . shall lapse in three years from the 31st day of December in the year in which the taxes are due . . . ."

A fair reading of the foregoing provisions establishes that tax assessments are judgments, recordation of which has the same effect as recordation of other judgments insofar as third parties are concerned. Thus, the encumbrances which result from the recordation cease to have effect if there is no timely reinscription within ten years in accordance with La.Civ.Code art. 3369.

These legal principles find ample support in the jurisprudence. In Pichot v. Recorder of Mortgages, 2 McGloin 68 (La.App.1884), the owner of land encumbered as a result of an inscription for taxes for the year 1871 sought a writ of mandamus to compel erasure of the inscription. The tax had been recorded in January, 1873 and the erasure was sought by suit filed in March, 1883. Resisting the plaintiff's claim of ten years' prescription, the state argued that prescription does not run against the sovereign. The code provisions relating to the necessity for recordation of mortgages intended to affect third parties are set forth in the Pichot opinion, and the pertinent portions of C.C. art. 3369, providing that the effect of registry ceases upon failure to timely reinscribe, are quoted. The Pichot court, in determining the applicability of art. 3369, stated:

"We have not in any manner touched upon the question of prescription as against the State. The lapsing of a mortgage for failure to reinscribe, is not, strictly speaking, a matter or question of prescription. The mortgage is not necessarily a part of the debt; it is only an accessory right. The personal obligation may stand, though the mortgage perish. The plaintiff in this case is a third person, and it does not result at all from our decision that the State has no further recourse against the original debtor. In other words, we are not called upon to decree prescription against this debt or forced contribution, whatever it may be. We simply hold, that to maintain the necessary right of mortgage, certain formalities were necessary, and that these not having been complied with, the accessory right is perempted."

So the result reached by the Court of Appeal in the case before us was in keeping with legal principles set forth in the Code and the statutes which dictate that insofar as encumbrances against real property owned by third parties are concerned, tax assessments lose their effect if not reinscribed within ten years.

The more significant question is whether the constitutional provision barring prescription against the State in civil matters precludes the granting of the relief sought here by plaintiff. The Court of Appeal found that Flowers is entitled to cancellation and erasure since only prescription, not peremption, is barred by the constitution. The Court of Appeal detailed the differences between peremption and prescription, in one instance quoting the following from Succession of Pizzillo, 223 La. 328, 65 So.2d 783 (1953):

"The difference between prescription and peremption is that the former simply bars the remedy whereas, in the latter, time is made of essence of the right granted and a lapse of the statutory period operates as a complete extinguishment of the right. (Citations omitted.) Peremption admits of no interruption or suspension; performance of the required act must be accomplished within the specified time or else the right of action no longer exists."

However, in Gilmore v. State, 79 So.2d 192 (La.App. 3rd Cir. 1955) the court, in discussing prescription in connection with a workmen's compensation claim, inferred that there was little significant distinction. That court stated "We feel that the constitutional permission to waive 'any prescription' provided by Article 3, Section 35, authorizes waiver by the Legislature of any time limitation within which suit may be filed against the State, whether referred to as peremption or as prescription or (as with compensation suits) indiscriminately as either. The limitation of one year for tort and wrongful death actions under Article 2315, LSA-Civil Code, is also technically for some purposes termed one of 'peremption', and such tort suits can never be instituted against the State without special legislative authorization; if the legislature could not waive 'peremption', those injured at certain periods between the biennial sessions of the legislature could receive subsequent authorization to sue only for a perempted right. The constitutional intent is plan to authorize the legislature to waive all limitations (prescriptions) of time barring suit."

There is indeed a difference between prescription and peremption as noted by the Court of Appeal and as pointed out in the Succession of Pizzillo, supra. Nevertheless we conclude that peremption is but a form of prescription, a species thereof, but with the characteristic that it does not admit of interruption or suspension, ¹ and we determine that the constitutional provision barring prescription bars prescription in all its forms, including peremption.

There is of course the argument that the drafters of our 1921 and 1974 Constitutions were aware of the repeated jurisprudential treatment of prescription and peremption as different and distinct theories of waiver, and that had they intended to bar the running of peremption against the state they would have distinctly said so. We reject that argument. Our conclusion is that peremption,...