Montgomery v. Foreman

• Decision Date: 03 February 1982
• Docket Number: No. 8608,8608
• Citation: 410 So.2d 1160
• Parties: J. Boring MONTGOMERY, M.D., Plaintiff-Appellant, v. Ronald J. FOREMAN, Executor of the Succession of J. Y. Foreman, Defendant-Appellee.
• Court: Court of Appeal of Louisiana — District of US

Page 1160

410 So.2d 1160

J. Boring MONTGOMERY, M.D., Plaintiff-Appellant, v. Ronald J. FOREMAN, Executor of the Succession of J. Y.

Foreman, Defendant-Appellee.

No. 8608.

Court of Appeal of Louisiana, Third Circuit.

Feb. 3, 1982.

Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Daniel G. Fournerat and Gordon T. Whitman, Lafayette, for plaintiff-appellant.

Hayes, Fazzio & Durio, Steven G. Durio, Lafayette, for defendant-appellee.

Before GUIDRY, SWIFT and STOKER, JJ.

STOKER, Judge.

This case presents two basic issues on appeal: (1) Whether the contract in question creates a mandate or agency "coupled with an interest" of the agent; and (2) if so, whether the contract remains valid after the death of the agent.

The facts in this case are easily stated. J. Boring Montgomery, M.D. (Montgomery), is one of several co-owners of certain tracts of land in Lafayette, Louisiana, who entered into an agreement with J. Y. Foreman (Foreman), realtor, for the commercial or residential development of the property. The agreement was entered into on March 27, 1973, and on March 1, 1979, Foreman died. Montgomery subsequently sought a declaratory judgment from the Fifteenth Judicial District Court in Lafayette to the effect that the contract became null and void with the death of Foreman. Ronald J. Foreman, executor of J. Y. Foreman's succession, filed a peremptory exception of no cause of action to Montgomery's petition for declaratory judgment. The district court sustained the exception of no cause of action and Montgomery has appealed the decision.

A copy of the contract between the owners of the property to be developed and Foreman (designated in the contract as "Agent") is appended to this opinion for ease of reference. The contract gave Foreman the power to develop the property as he saw fit (Paragraphs III, IV, and IX) and authorized him to sell the property for the owners (Paragraph VI). Foreman was obligated to pay the owners $40 per running foot for all lots sold. The balance Foreman received from the sale of any lot was his property. (Paragraph VI). The owners are responsible for any taxes owing on the properties (Paragraph VIII), but the agent bears the entire cost of developing the properties. (Paragraph IV, V, and IX).

Paragraph X of the contract provides that the property shall be listed exclusively with Foreman for 15 years from the date of the contract (March 27, 1973) with Foreman having an option to renew for an additional 10 years. The last sentence of Paragraph X states:

"The Owners hereby acknowledge that the consideration for this listing shall be payment of the improvements as well as the development cost of said property by the said Agent, in addition to other consideration hereinabove mentioned."

However, it is stated in Paragraph VI that any amount that Foreman receives above $40 per running foot is "the profit of the said Agent as his consideration hereunder." Thus, it is understood that Foreman is to recoup his expenditures for developing the property from the amount for which he sells the improved property.

Finally, the agreement is made "binding upon the successors and assigns of all parties," in Paragraph XIII.

Plaintiff Montgomery argues that the contract is one of mandate or agency and as such it expired with the death of the mandatary or agent. He cites LSA-C.C. art. 3027 for the general rule that a mandate is revoked by the death of the principal or agent. Plaintiff cites the cases of Marchand v. Gulf Refining Co. of Louisiana, 187 La. 1002, 175 So. 647 (La.1937); and Bryson v. United Gas Public Service Co., 169 So. 350 (La.App. 2nd Cir. 1936) for the proposition that a statement in a mandate that it is irrevocable has no effect unless the mandate is a power of attorney coupled with an interest. Plaintiff contends that the contract does not create a power coupled with an interest. Therefore, according to plaintiff, the contract expired with Foreman's death despite the language in Paragraph 10 making the agreement heritable.

The trial court found the agreement to be not one of mandate, but a bilateral contract instead. The court's reasons for judgment, found in a minute entry of March 9, 1981, are as follows:

"After reviewing the evidence contained in the record, the Court sustains defendant's exception of no cause of action as to plaintiff's petition for declaratory judgment. Plaintiff states in his petition that the contract between himself and J. Y. Foreman, which was made a part of the petition, is a contract of agency and, therefore, terminated upon the death of J. Y. Foreman. The Court finds no merit in the argument.

"The contract of mandate is an instrument which unilaterally delegates authority from the principal to the mandatary. The mandatary may act only within the restricted limits of the powers which are delegated to him. (LSA-C.C. art. 3027) provides that this type of contract terminates upon the death of the principal. The contract attached to the petition in no manner contains merely a unilateral delegation of authority. The contract is a contract of development of certain tracts of land and requires reciprocal duties on the part of the parties involved. It is apparent from Paragraph V of the agreement that Mr. Foreman was to bear all expenses of developing the property involved, including the costs of engineering, street improvements and ground levelling. The duties, which are clearly delineated in the contract, are bilateral duties, not merely a unilateral delegation of authority.

"The petition for declaratory judgment states no alternative basis on which judgment could be rendered. It merely asks that the contract be terminated as of March 1, 1979, the date of the "agent's" death. As previously stated, the Court finds no merit in plaintiff's averment that this is a contract of mandate and therefore, sustains defendant's exception."

Despite the last sentence of the trial court's reasons which clearly states that the court finds no merit in plaintiff's averment that the contract is one of mandate, the defendant argues in his brief that the trial court found that the agreement was not "merely" an agency or mandate. Defendant contends that the contract creates an agency relationship, but it is not only a contract of agency. The defendant urges that the contract creates a mandate "for the joint interest of both parties" under LSA-C.C. art. 2986.

We agree with defendant that the contract in this case is one of mandate. The mandatary, Foreman, had practical or effective authority to sell the property owned by the principals, Montgomery, et al, in a representative capacity. ¹ Under the contract between Foreman and the plaintiffs, Foreman was given complete authority to deal with the property. For example, Paragraph VI of the contract provides:

"The Agent is expressly empowered to buy or sell any lot involved herein for such price and under such terms and conditions as the Agent may deem fit and proper; provided the said Owners are to be paid the price per running foot hereinabove established at the time of the sale of any lot involved herein."

"The Owners expressly agree to sign and execute any act of sale or conveyance necessary to transfer any portion of the above-described property to the said Agent, or to such purchaser as the said Agent shall produce for the prices mentioned above."

While the plaintiffs were required to sign all contracts for development and sales of lots, the plaintiffs bound themselves to sign whatever contracts were negotiated by Foreman. See particularly Paragraphs IV and VI. Since the making of the contracts was entirely at Foreman's discretion and reflected his will only, the signing and execution of documents by plaintiffs was the performance of ministerial acts only. This provision not only applied to third parties but to instances in which Foreman decided to purchase any portion of the property. This provision granted Foreman a virtual option to purchase.

The agreement is probably also a mandate for the joint interest of both parties since both the mandatary and his principals contemplated a profit from the arrangement. However, this classification of the mandate under LSA-C.C. art. 2986 is not determinative of the issue of whether the mandate is heritable or whether it expires with the death of the mandatary.

The answer to this issue has been supplied jurisprudentially rather than in the Civil Code. The jurisprudence of Louisiana has adopted the common law principle that for a power of attorney to survive the death of the principal, it must be "coupled with an interest." Therefore, we must determine whether the contract before us creates a power of attorney coupled with an interest and, if so, whether such a contract can survive the death of the agent.

POWER COUPLED WITH AN INTEREST

A short history of the concept of "power coupled with an interest" may help in this determination. The principle that a contract of agency is irrevocable if the power of attorney created thereby is coupled with an interest of the agent entered American jurisprudence in the 1823 U. S. Supreme Court decision of Hunt v. Rousmanier's Administrators, 21 U.S. (8 Wheat.) 174, 5 L.Ed. 589 (U.S.1823). In that case, Chief Justice Marshall stated:

"We hold it to be clear that the interest which can protect a power after the death of the person who creates it, must be an interest in the thing itself. In other words, the power must be engrafted on the thing." 8 Wheat. 174, 204; 5 L.Ed. 589, 597.

The Louisiana Supreme Court in the 1888 case of Renshaw v. His Creditors, 40 La.Ann. 37, 3 So. 403 (1888), citing French authorities, specifically rejected the common law "powers coupled with an interest" as found in the Hunt case. The court in Renshaw did hold the mandate in question was irrevocable and stated:

"Thus, the French court of cassation held that a mandate conferred in the interest of the agent as well as of the principal, and as a...