Judges: JAMES D. \"BUDDY\" CALDWELL, Attorney General
Filed Date: 5/1/2009
Status: Precedential
Modified Date: 7/5/2016
Dear Mr. Haney:
You have requested an opinion from this Office regarding the ownership status of certain school board property in Iberia Parish. Specifically, you provide the following facts:
The Iberia Parish School Board ("the Board") acquired two parcels of property, upon which is located one school, one by sale in 1906 and one by fifty-year lease in 1960. The 1906 sale documents, which you have provided for our review, contain reversionary language that states that:
It is agreed and understood that this lot, presently sold, is specially for the purposes of a White Public School for no other purposes, that should said Public School be discontinued there in that case the said lot shall return to present Vendor free from encumbrances.1
The Peebles Elementary School was erected on the property. The subject school was integrated in 1969.2 In addition, the school was vacated in 2005 due to damage caused by Hurricane Rita. The Board now desires to sell the property upon which this school sits. However, in light of the above-quoted reversionary clause, you have the following questions regarding the Board's rights and duties with respect to the land:
*Page 21. Does the Board have an enforceable obligation to return the properties?
2. If the answer to question 1 is "yes", has prescription tolled on any reversionary language in the respective deeds?
3. If the answer to question 2 is "yes", can the Board legally demand the appraised value with all improvements (are improvements considered encumbrances)?
Each of these questions, to the extent that they are necessary, are addressed, in turn, below.
A. Does the Board have an enforceable obligation to return theproperties?
The implications and effects of reversionary clauses in property transfers was recently succinctly addressed by the Louisiana Fifth Circuit in the matter of City of Harahan v. State of Louisiana, 08-106 (La.App. 5 Cir. 5/27/08),
As an initial matter, we find La.C.C. Art.
The right of ownership may be subject to a resolutory condition, and it may be burdened with a real right in favor of another person as allowed by law.
Because we are of the opinion that the reversionary clause in the 1906 deed is properly classified as a resolutory condition, 3 we believe that La.C.C. Art.
The courts of this State have looked disfavorably upon conditions in the acquisition of property by one elected body that will bind subsequent bodies as to the use of the property. See e.g., Anderson v. Thomas,
The next obvious question in this matter is: Can the above-quoted clause be stricken from the deed? In a recent opinion, Judge Lemelle of the Eastern District of Louisiana wrote the following concerning whether particular provision of a contract could be stricken due to their violations of public policy:
The Louisiana Supreme Court has held that the dissolution of a contractual provision because it goes against public policy does not necessarily dissolve the entire contract. The court stated, "It is not necessary that the entire agreement containing the stipulation against public order or policy be declared null." Morse v. J. Ray McDermott Co., Inc.,
344 So.2d 1353 ,1358 (La. 1976). See also Henderson Implement Co., Inc. v. Langley,707 So.2d 482 (La.App. 3rd Cir. 1998) (It is not necessary that the entire agreement containing a provision against public policy be declared null and void; courts are free to recognize, by interpretation of will of the parties, that a provision inserted the in the agreement is only an accessory clause to which the agreement was not subject for its *Page 4 existence, and delete the offending provision while enforcing the remainder of the agreement); Wilson Warehouse Company of Texas Inc. ., v. Maryland Casualty Co.,269 So.2d 562 (La.App. 1st Cir. 1972) (In order to avoid inequities, courts will sever the illegal and unenforceable provisions of the contract from the remainder of the contract rather than declare the entire contract void.); Starke Taylor Sons, Inc., v. Riverside Plantation,301 So.2d 676 ,680 (La.App. 3rd Cir. 1974) (If the enforceable provision of a contract can be severed from the unenforceable provisions, courts should, in order to avoid inequities, sever the enforceable from the unenforceable portion rather than declare the entire contract void).
Rathborne Land Co., LLC v. Ascent Energy, Inc.,
Because the questions that you ask relate to the cause of the contract (the 1906 deed), a consideration of the enforceability of an illegal cause is warranted. In this regard, La.C.C. Art.
[t]he cause of an obligation is unlawful when the enforcement of the obligation would produce a result prohibited by law or against public policy.
Because the subject cause in this matter is both illegal and in violation of public policy, we have no qualms about labeling it unenforceable. In addition, unlike the "as allowed by law" provision of La.C.C. Art.
Nonetheless, if the "obligation" is the entire sale (the 1906 deed), we believe that this option would obtain the same result as in the Evans cases: the failure of the cause would result in the failure of the contract. On the other hand, if, as we here opine, the "obligation" is merely the obligation to give effect to the resolutory condition, then the failure of the cause would not result in the failure of the contract, but rather just severing of the offending clause. Nonetheless, although we are unable to definitively opine that the Peebles Elementary School property can remain the property of the Board because of the unenforceability of the segregation clause, for the reasons discussed below, we are of the opinion that such a determination is unnecessary, as the property appears to have vested in the Board's ownership for other reasons that rest on a clearer legal basis.
It is the opinion of this Office that the basis for the Board's full ownership of the Peebles Elementary School property, with no obligation to return the property for *Page 6 the failure to keep the school segregated, lies in the Louisiana law of prescription. When Peebles Elementary School was integrated in 1969, this action was, while required by law, a clear and open breach of the 1906 sale contract.
The prescriptive period for bringing a breach of contract claim in Louisiana is ten years. La.C.C. Art.
Accordingly, in answer to your first question, it is the opinion of this Office that, although the Board breached the segregation terms of the deed, that clause is now inoperable as a means to rescind the sale, as all actions that might be brought for said breach have prescribed.9 Therefore, the Board does not have an enforceable duty to return the Peebles Elementary School property for its failure to adhere to the segregation requirement. The Board now owns that property without any strings attached.
B. If the answer to question 1 is "yes", has prescription tolled onany reversionary language in the respective deeds?
Your second question, as to the deeded property, is answered by the answer to the first question and is thus considered no further.
C. If the answer to question 2 is "yes", can the Board legally demandthe appraised value with all improvements (are improvements consideredencumbrances)?
The answer to your third question, as to the deeded property, is moot based upon the answer to your first question.
D. Is there an "offer back" provision that the Board can use to sellthe property back to the original owners?
During telephone conversations subsequent to your opinion request, you inquired whether the Board could offer the subject property back to the original owners in the event that the Board was the owner of the property. Because we have determined that the Board is the owner of the subject property, we address your question regarding whether, under the Public Bid Law, the Board can offer the property back to the original owners before putting it up for bid (assuming that the Board wants to divest itself of the property). *Page 7
To answer this question, we refer you to La.R.S.
A. Does the Board have an enforceable obligation to return theproperties?
The operative language in the 1960 lease reads as follows:
It is agreed and understood that the property herein leased shall be used only for school purposes and the failure to put said property to such use for a period of one (1) year shall, ipso facto, terminate this lease.10
It is the opinion of this Office that there is no facial deficiency or unenforceable portion of this lease. The lease term is for 50 years, which would mean that the lease would run its course on December 14, 2010. In direct answer to your questions, it is the opinion of this Office that on December 14, 2010, the Board has an obligation to return the leased property unless the lease has been extended or the property has been purchased by the Board before that time.
B. If the answer to question 1 is "yes", has prescription tolled onany reversionary language in the respective deeds?
Because there is no reversionary language in this lease, this question is inapplicable to the leased property. *Page 8 C. If the answer to question 2 is "yes", can the Board legally demandthe appraised value with all improvements (are improvements consideredencumbrances)?
Although it is clear that this question is more related to the sale document discussed in Part I of this opinion, there is some relevance of this question to the leased property. The relevant language in the leases states that:
At the termination of this lease for any cause, the lessee, Iberia Parish School Board, is specifically granted the right to remove from said property any buildings or improvements placed thereon by it.11
It is apparent from your request letter that this language could pose a problem for the Board, as the structures currently in place on the purchased and leased property span both tracts. Thus, the removal of improvements from the leased property could well mean the destruction of the improvements on the property that the Board owns on the 1906 deeded property. Again, this reality strongly suggests that the Board should make all efforts to either purchase the leased property outright or to at least seek a lease extension from the land owner if it wishes to retain an interest in the currently-leased land.
We should note that the above-quoted language is essentially a contractual recapitulation of the provisions of the Civil Code relating to lessees rights and improvements. Specifically, La.C.C. Art.
In the absence of contrary agreement, upon termination of the lease, the rights and obligations of the parties with regard to attachments, additions, or other improvements made to the leased thing by the lessee are as follows:
(1) The lessee may remove all improvements that he made to the leased thing, provided that he restore the thing to its former condition.(2) If the lessee does not remove the improvements, the lessor may:
(a) Appropriate ownership of the improvements by reimbursing the lessee for their costs or for the enhanced value of the leased thing whichever is less; or
(b) Demand that the lessee remove the improvements within a reasonable time and restore the leased thing to its former *Page 9 condition. If the lessee fails to do so, the lessor may remove the improvements and restore the leased thing to its former condition at the expense of the lessee or appropriate ownership of the improvements without any obligation of reimbursement to the lessee. Appropriation of the improvement by the lessor may only be accomplished by providing additional notice by certified mail to the lessee after expiration of the time given the lessee to remove the improvements.
(c) Until such time as the lessor appropriates the improvement, the improvements shall remain the property of the lessee and the lessee shall be solely responsible for any harm caused by the improvements.
We do not believe that the lease provision modifies this law in any way, but rather simply memorializes it as part of the lease. Thus, should the lease terminate without an extension, the lessor would have the option of keeping the improvements if the Board does not elect to remove them.12
The exercise of this option would require some reimbursement to the Board as provided by La.C.C. Art.
Finally, concerning your question of whether an improvement constitutes an encumbrance on a piece of property, it is the opinion of this Office that it does not. An encumbrance is defined by Black's Law Dictionary (8th ed.) as:
A claim or liability that is attached to property or some other right and that may lessen its value, such as a lien or mortgage; any property right that is not an ownership interest.
Thus, it is clear that an encumbrance is an inchoate right that attaches to a piece of property and not a tangible thing such as a property improvement. Accordingly, it is our opinion that an improvement is not the same as an encumbrance.
We hope this sufficiently answers your inquiry; however, if we may be of further assistance please do not hesitate to contact our office.
Sincerely yours,JAMES D. "BUDDY" CALDWELL ATTORNEY GENERAL
By:__________________________ RYAN M. SEIDEMANN Assistant Attorney General
JDC/RMS/tp
A conditional obligation is one dependent on an uncertain event.If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive.
If the obligation may be immediately enforced but will come to an end when the uncertain event occurs, the condition is resolutory.
In this situation, because the obligation was immediately enforceable (i.e., the sale) and the failure of the sale is conditioned on the integration of the school, we are of the opinion that the segregation language in the deed is clearly a resolutory condition.
Anderson v. Thomas , 166 La. 512 ( 1928 )
WILSON WRHSE. CO. OF TEXAS, INC. v. Maryland Cas. Co. , 269 So. 2d 562 ( 1972 )
Henderson Implement Co., Inc. v. Langley , 707 So. 2d 482 ( 1998 )
City of Harahan v. State Ex Rel. Doa , 986 So. 2d 755 ( 2008 )
Starke Taylor & Sons, Inc. v. Riverside Plantation , 301 So. 2d 676 ( 1974 )
Plessy v. Ferguson , 16 S. Ct. 1138 ( 1896 )
Brown v. Board of Education , 74 S. Ct. 686 ( 1954 )