Greenleaf Plantation, Inc. v. Kieffer

• Decision Date: 30 July 1981
• Docket Number: No. 8231,8231
• Citation: 403 So.2d 100
• Parties: GREENLEAF PLANTATION, INC., Plaintiff-Appellant, v. John P. KIEFFER and Arnold R. Kilpatrick, Defendants-Appellees.
• Court: Court of Appeal of Louisiana — District of US

Page 100

403 So.2d 100

GREENLEAF PLANTATION, INC., Plaintiff-Appellant, v. John P. KIEFFER and Arnold R. Kilpatrick, Defendants-Appellees.

No. 8231.

Court of Appeal of Louisiana, Third Circuit.

July 30, 1981.

Rehearing Denied Sept. 22, 1981.

Michael Henry, Natchitoches, for plaintiff-appellant.

Gahagan & Gahagan, Russell E. Gahagan, Natchitoches, for defendants-appellees.

Before CULPEPPER, DOMENGEAUX, STOKER, LABORDE and BIENVENU ¹, JJ.

LABORDE, Judge.

Plaintiff, Greenleaf Plantation, Inc. (Greenleaf), appeals the trial court's denial of its suit for specific performance of an option to purchase property from defendants, John Kieffer ² and Arnold R. Kilpatrick. The crucial issue on appeal involves whether the option was validly exercised by Greenleaf. We hold that it was and we reverse on that basis.

Albin Johnson and James Maxey are and have been the sole shareholders and officers of Greenleaf Plantation, Inc., a corporation formed by them to raise cattle and farm soybeans. Sometime prior to January of 1979, defendant landowners, Kieffer and Kilpatrick, contacted Johnson and Maxey to see if they were interested in leasing or purchasing from them a large ³ tract of farmland in Grant Parish. Negotiations followed and in January of 1979, Greenleaf, through its president Albin Johnson, entered into a one year lease with defendants. The lease began February 1, 1979, and expired January 31, 1980, and called for a rental payment of $10,000. Johnson signed the document on behalf of Greenleaf.

Contemporaneously with the signing of the lease the defendants executed an agreement granting Greenleaf an option to purchase the leased premises for an agreed upon amount per acre. This option agreement is what we are concerned with on appeal. Johnson also signed this document of behalf of Greenleaf. The option was to terminate on November 1, 1979, but could be exercised by Greenleaf by delivering to defendants, within thirty days prior to November 1, 1979, written notice of its (Greenleaf's) intent to exercise the option.

Pursuant to the lease agreement, Greenleaf paid defendants $10,000 in lease rentals and farmed the land for the one year lease term.

On August 10, 1979, (more than thirty days prior to November 1, 1979), Greenleaf, through Johnson, expressed in writing to defendants its intention to exercise the option to purchase the property. In ensuing correspondence, plaintiff's attorney, on October 11, 1979, (which was within thirty days prior to November 1, 1979), notified defendants of plaintiff's intention to exercise the option. Subsequently, some title questions regarding the tract were discovered, yet on January 22, 1980, plaintiff's attorney informed the defendants that plaintiff decided to complete the transaction despite these title objections. On January 28, 1980, defendant Kieffer issued notice to plaintiff to vacate the leased premises within thirty days. On February 8, 1980, plaintiff's attorney notified defendants of the closing date set for February 19, 1980. Finally, on February 22, 1980, defendants' attorney responded that his clients had no intention of conveying the property. Thereafter, on March 3, 1980, plaintiff sued to force the sale of the property.

Following a trial on the merits, the district court rendered judgment in defendants' favor for two reasons: (1) There was no meeting of the minds between plaintiff and defendants; and (2) Albin Johnson, Greenleaf's president, did not have necessary written authority to contract for the purchase of immovable property. Greenleaf appeals.

An option to purchase immovable property requires for its validity reciprocal consent of both parties as to the thing, the price, and the terms; evidenced by a written instrument. LSA-C.C. art. 2462. After a review of the record, we are satisfied that these requirements were met. We believe the crucial issue on appeal is whether the option to purchase was validly exercised, thus entitling plaintiff to specific performance of the agreement.

In determining whether the option to purchase was validly exercised, we begin by viewing the agreement itself.

The pertinent provision in the option reads:

"II. PERIOD OF OPTION

AND EXERCISE

"This option shall terminate on November 1, 1979, and shall be exercised by PURCHASER, if it so desires in the following manner: Within thirty (30) days prior to November 1, 1979, PURCHASER shall deliver to OWNERS, their heirs and assigns, or their administrators or agents, written notice of PURCHASERS intent to exercise the option. If PURCHASERS do exercise this option to purchase prior to November 1, 1979, OWNERS do hereby grant, a ninety (90) day period of time after November 1, 1979 for the closing of the transaction passing title."

As we interpret this agreement, defendants negotiated and bargained for only the requirement that "purchaser shall deliver to owners ... written notice of purchasers intent to exercise the option." (Emphasis added.)

Returning to the facts, we are satisfied that defendants, pursuant to the agreement, were indeed given timely notice in writing that plaintiff intended to exercise the option to purchase the tract of land. This written notice occurred in the form of a letter from plaintiff's attorney mailed on October 11, 1979, notifying defendants of plaintiff's intention to exercise the option. This letter followed an earlier letter of August 10, 1979, wherein Greenleaf, through Johnson, expressed the same intent. All that defendants bargained for in order to validly exercise the option was written notice of that intent. The record supports that this is precisely what they received.

Defendants argue that Greenleaf was never bound by the exercise of the option because the corporation, through its board, never authorized it through a corporate resolution.

While we agree that Greenleaf's board of directors did not pass a corporate resolution authorizing Johnson either to enter the option to purchase or to exercise the option, we disagree that this lack of a resolution is fatal. See Bonura v. Christiana Bros. Poultry Co. of Gretna, 336 So.2d 881 (La.App. 4th Cir. 1976) writ denied, 339 So.2d 11 (La.1976); Louisiana National Bank of Baton Rouge v. Heroman, 280 So.2d 362 (La.App. 1st Cir. 1973) writ refused, 281 So.2d 755 (La.1973); Richard Apartments, Inc. v. Shadix, 150 So.2d 602 (La.App. 4th Cir. 1963); Trichel Contracting Company v. Little Creek Oil Company of Louisiana, 84 So.2d 874 (La.App. 2nd Cir. 1956); and Ideal Savings & Homestead Association v. Kerner, 208 La. 978, 23 So.2d 200 (1945).

While none of these cases is precisely on point, a common thread in each is that a corporate officer acted on his corporation's behalf without a resolution from its board of directors, yet in spite of that the act was nevertheless upheld by the court. In the Trichel Contracting Co. case, supra, the court stated:

"It is not always necessary that the authority of an officer of a corporation be shown by resolution of its board of directors. The trial court correctly held that the defendant corporation could not accept and profit by the benefits arising from the cancellation of the original contract and its release from the obligation to pay $500 a day waiting time and then repudiate the acts of its officer and the obligations arising from his acts. Simmons' acts were in the interest of defendant and, as heretofore stated, were in keeping with sound business judgment. Under such circumstances, the formality of a resolution of defendant's board specifically conferring authority upon him was unnecessary. For instance, in Gueydan v. T. P. Ranch Company, 156 La. 397, 403, 100 So. 541, 543, it was stated:

"It is a familiar principle in law that it is not always necessary to show the authority of an officer of a corporation by a resolution of its board of directors. A corporation may not, any more than an individual, reap the benefits flowing from the acts of its officers and repudiate the obligations arising from the same acts. Berlin v. P. L. Cusachs, Ltd., 114 La. 744, 38 So. 539; Gair Co. v. Columbia Rice (Packing) Co., 124 La. (193) 194, 50 So. 8; Boudreaux v. Feibleman, 105 La. (401) 404, 29 So. 881."

Under the facts and circumstances of this case, as herein above detailed and in keeping with the legal principles just cited, the conclusion follows that a resolution of defendant's board was not necessary to confer authority upon C. E. Simmons, its vice president and field manager, to alter to its advantage the original contract executed by him on behalf of defendant by the subsequent agreement. The conclusion is likewise inescapable that not only did Simmons have actual authority to so contract with plaintiff but that he was held out by defendant as possessing such authority. The defendant is, therefore, bound by the aforesaid contract entered into for and on its behalf."

In the Heroman case, supra, the plaintiff Bank instituted a deficiency judgment proceeding against personal endorsers of the corporate defendant, Southern Real Estate Investment, Inc. The major defense urged by the individual defendants was that the executory process was improper because there was no resolution by the corporation authorizing its president to execute the note and mortgage at the time of the execution of the note and mortgage. There was a resolution that was passed by the corporation two days after the note and mortgage were signed. Thus, the First Circuit was faced with the same issue that is before this Court: the authority of the president to bind the corporation in the absence of a resolution. The Court stated and held:

"We cannot accept defendant's contention that the corporate resolution must be prospective in nature and terminology so that unless a corporate resolution exists prior to the time of the execution of a note and mortgage, the payee or bearer of the mortgage note will not be able to resort to executory process, notwithstanding the presentation to the...