Tolbird v. Cooper, 46020

• Court: Louisiana Supreme Court
• Writing for the Court: HAWTHORNE; HAMITER
• Citation: Tolbird v. Cooper, 243 La. 306, 143 So.2d 80 (La. 1962)
• Decision Date: 29 June 1962
• Docket Number: No. 46020,46020
• Parties: James L. TOLBIRD v. Howard C. COOPER.

Page 80

143 So.2d 80

243 La. 306

James L. TOLBIRD v. Howard C. COOPER.

No. 46020.

Supreme Court of Louisiana.

June 29, 1962.

John Makar, Natchitoches, for applicant.

Gerard F. Thomas, Jr., Natchitoches, for respondent.

HAWTHORNE, Justice.

James L. Tolbird, a resident of the State of Florida, instituted this suit in the Tenth Judicial District Court for the Parish of Natchitoches, Louisiana, against Howard C. Cooper, a resident of Natchitoches, Louisiana, to recover damages for the wrongful taking by the defendant of a truck owned by the plaintiff. Defendant filed an answer and a reconventional demand denying in general the allegations of plaintiff's petition, praying that plaintiff's suit be dismissed, and seeking judgment in reconvention for a large sum. In the district court upon objection by counsel for plaintiff evidence offered by defendant on his reconventional demand was excluded, and judgment was rendered for the plaintiff for $1459.00. The defendant appealed to the Court of Appeal, Third Circuit, and the plaintiff answered the appeal seeking an increase in the award. The Court of Appeal sustained the ruling of the trial judge refusing to permit defendant to introduce evidence on his reconventional demand, and increased the award to plaintiff to $1609.00. 136 So.2d 83. On defendant's application we granted certiorari but limited our review to the question of whether defendant should be allowed to introduce evidence in support of his reconventional demand.

Relator's only contention here is that it was error ¹ not to permit him to offer evidence in support of a claim in his reconventional demand for $670.00, which he alleges was misappropriated by plaintiff before the taking of the truck. His allegation in his reconventional demand in regard to this claim is that 'During the time defendant (in reconvention) worked with reconvenor he appropriated $670.00 of the Partnership and/or the Corporate funds to his own use for which he did not account'.

The Court of Appeal set out in detail all the facts of the case. For an understanding of this $670.00 claim it is necessary for us to state, as found by the Court of Appeal, only that plaintiff and defendant were the principal stockholders and employees of a refrigeration and appliance service business in Natchitoches, Louisiana, and that the plaintiff conveyed to the defendant all of his stock in this corporation, the consideration for the transfer being among other things the Chevrolet truck. This is the truck which defendant wrongfully took from the plaintiff and which he is now using. The alleged misappropriation of the partnership or corporation funds must have taken place while these two men were still in business together.

The Court of Appeal was of the view that, inasmuch as the defendant had wrongfully taken plaintiff's truck, the district judge was correct in excluding the evidence which defendant sought to introduce in support of his reconventional demand under the provisions of Article 2210 of the Civil Code as interpreted by this court in Hitt v. Herndon, 166 La. 497, 117 So. 568, to the effect that set-off and compensation are equitable remedies, not extended to wrongdoers or those guilty of bad faith.

Defendant-relator, on the other hand, contends that he has the right, without qualification, to proceed by reconvention for any cause when the plaintiff resides out of the state, relying on Code of Practice Article 375 (Code of Civil Procedure Article 1061) and cases interpreting its provisions, to the effect that a defendant has a right to reconvene against a non-resident plaintiff for any cause although such demand be not necessarily connected with or incidental to the main cause of action.

Article 2210 of the Civil Code provides:

'Compensation takes place, whatever be the causes of either of the debts, except in case:

'1. Of a demand for restitution of a thing of which the owner has been unjustly deprived. * * *'

The resolving of the problem presented by this case requires an understanding of compensation and the reason for the exception in Article 2210. The articles on compensation in the Civil Code appear in Book III, Title IV, Chapter 5, 'Of the Manner in Which Obligations May Be Extinguished', and compensation is recognized by our Code as one of the methods by which obligations may be extinguished along with payment, novation, voluntary remission, confusion, etc.

Article 2207 defines compensation as:

'When two persons are indebted to each other, there takes place between them a compensation that extinguishes both the debts * * *.'

The practicality and common sense of this method of extinguishing obligations and the necessity for it, Domat sets out with clarity in his treatise on the civil law:

'It often happens that the same person is at the same time both creditor and debtor to another * * *. * * * it is natural not to make so many payments as there are debts, so as for one of the two to pay to the other what he owes him, and to receive back again that which is due to him; but such debts are compensated, that is, every one retains in payment of what is due to him that which he owes to the other, whether it be for the whole debt, if the sums are equal, or by deducting a lesser debt out of a greater. So that compensations are nothing else but two reciprocal payments, which are made at the same time, the debtors giving to one another no other thing but their bare acquittances, the debts being annulled for so much as shall be found to be acquitted by the compensation.

'The use of compensation is necessary to avoid the circuit of two payments, which would happen if each of the two persons who compensate should be obliged first to pay what he owes, and then to receive back again what is due to himself. And it is natural, without fetching this compass, for every one to retain in payment of what is due to him that which he owes on his part. Thus, every compensation implies two payments.' 1 Strahan, Domat's Civil Law (Cushing's ed. 1861), p. 908 et seq.

Pothier agrees that 'The equity of compensation is evident; it is established upon the common interest of the parties between whom it is made; it is clear that each of them has an interest to compensate rather than pay what they owe, * * * compensation avoids a useless circuity * * *.' 1 Pothier, A Treatise on the Law of Obligations (Evans' tr. 1853), p. 458. See also Planiol, Traite e le mentaire de droit civil (La.State Law Inst. tr. 1959), nO 562, p. 314.

The common interest in this short-cut or avoidance of circuity, as it is referred to, ceases or does not exist, however, in the exception set out in Article 2210, and compensation is not permitted in that case. In the case of a demand of restitution of a thing of which the owner has been unjustly deprived, no compensation can take place, and the effect of this is that the less convenient method of two payments must obtain, that is, A must pay B, and B must pay A, in spite of the fact that they mutually owe each other. The source and reason for this exception are explained by the French commentators.

'There are, however, some debts, against which the debtor cannot propose a compensation.

'1st. In the case of spoliation, no compensation can be opposed against the demand for the restitution of the thing of which any person has been plundered, according to the well known maxim, Spoliatus ante omnia restituendus * * *.' 1 Pothier, op. cit. supra, p. 460. This Latin maxim means that 'A party despoiled (forcibly deprived of possession) ought first of all to be restored'. See 58 C.J. 1305; (81 C.J.S. Spoliator p. 836). Planiol agrees that the maxim is the basis for the exception. "The demand for restitution of a thing of which the proprietor has been unjustly deprived,' says Art. 1293(1). ² This is the application of the maxim established by the canon law: 'spoliatus ante omnia restituatur' * * *.' 2 Planiol, op. cit. supra, nO 581, p. 320.

The motive of equity is evident, say Planiol and Ripert; nothing ought to hinder the restitution of a thing taken away by an illegal act; it primes all other consideration. 7 Planiol et Ripert, Traite pratique de droit civil francais (2E e d. 1954), nO 1289, p. 699.

To demonstrate how the equitable principle which is the basis of this exception applies to reconvention under Article 375 of the Code of Practice it is necessary to point out that there are three kinds of compensation, legal which is effected by the mere operation of law, contractual which is effected by the will of the parties, judicial which is effected by the courts, and to discuss when and how legal compensation and judicial compensation take place.

The compensation with which the Civil Code is concerned is legal compensation which operates by effect of the law and under conditions fixed by it.

'Compensation takes place of course by the mere operation of law, even unknown to the debtors; the two debts are reciprocally extinguished, as soon as they exist simultaneously, to the amount of their respective sums.' La.Civ.Code Art. 2208.

'Compensation is legal when it operates by effect of the law and under conditions fixed by it. It is the only one with which the Code is concerned.' Planiol, op. cit. supra, nO 566, p. 315.

Pothier describes its operation thus:

'When it is said that compensation is made Ipso jure, it means that it is made by the mere operation of law, without being pronounced by the judge, or opposed by the parties.

'As soon as a person who was creditor of another has become his debtor of a sum of money, or other matter susceptible of compensation with that of which he was a creditor; and Vice versa , as soon as a person who was debtor of another, becomes his creditor of a sum susceptible of compensation with that of which he was debtor, a compensation is made, and the respective debts are from thenceforth extinguished, to the extent of their concurrence, by virtue of the law of compensation.' Pothier...