Smith, Wade V.

English

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Louisiana Law ReviewVolume 11 | Number 3March 1951Sales - Effect of Recordation on Community RightsWade V. SmithThis Note is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted for inclusionin Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact kreed25@lsu.edu.Repository CitationWade V. Smith, Sales - Effect of Recordation on Community Rights, 11 La. L. Rev. (1951)Available at: https://digitalcommons.law.lsu.edu/lalrev/vol11/iss3/7NOTESreached since the determination of the lawfulness of the restraintis much the same in civil, as in common law.THEODORE C. STRICKLANDSALES-EFFECT OF RECORDATION ON COMMUNITY RIGHTSLeaving his wife at the marital domicile in Mississippi, IsiahPayne came to Louisiana. He purchased immovable property inBossier Parish, reciting his marital status as single in the recordedact of sale. A divorce was subsequently obtained by the husbandin Bossier Parish by substituted service without his wife's knowl-edge; the judgment was not recorded in the conveyance recordsof the parish. Defendant then bought the property from the hus-band and again the recorded sale stated that the husband was asingle man. Plaintiff, aware of the husband's true marital status,went to Mississippi and bought the wife's undivided one-halfinterest in the property. He then immediately brought a petitoryaction, seeking to be adjudicated owner of a one-half interest inthe property. Held, under Article 2266 of the Civil Code1 the-unrecorded divorce judgment affecting the immovable propertyin controversy was utterly null and void as to the defendant, athird party relying on the public records. Humphreys v. Royal,215 La. 567, 41 So. 2d 220 (1949).Article 2266 is the codal basis for what has come to be knownas the doctrine of McDuffie v. Walker: third parties who engagein transactions that involve immovable property are entitled torely upon the public records, even if they have actual notice ofunrecorded claims against the property.2 Behind this establisheddoctrine stands the public policy of protecting the security of realestate transactions.The doctrine of McDuffie v. Walker has at various times comeinto conflict with other settled rules of law. Among these are the1. "All sales, contracts and judgments affecting immovable property,which shall not be so recorded, shall be utterly null and void, except betweenthe parties thereto. The recording may be made at any time, but shall onlyaffect third persons from the time of the recording."The recording shall have effect from the time when the act is depositedin the proper office, and indorsed by the proper officer." Art 2266, La. CivilCode of 1870. See also Arts. 2262, 2264, 2265, La. Civil Code of 1870.2. McDuffie v. Walker, 125 La. 152, 51 So. 100 (1909), doctrine discussed in:Coyle v. Allen, 168 La. 504, 509, 122 So. 596, 598 (1929); Westwego Canal andTerminal Co., Inc. v. Pizanie, 174 La. 1068, 1071, 142 So. 691, 692 (1932); Stateex rel. Hebert v. Recorder of Mortgages, 175 La. 94, 143 So. 15 (1932); Mastersv. Cleveland, 158 So. 382, 385 (La. App. 1935); Gulf Refining Co. v. Evans,181 So. 666, 670 (La. App. 1938). See also Notes, 14 Tulane L. Rev. 16 (1939),22 Tulane L. Rev. 208 (1947), 23 Tulane L. Rev. 259 (1949).19511LOUISIANA LAW REVIEWrules of forced heirship and community property. In the first ofthree cases involving the rights of forced heirs, Long v. Chailan,3it was held that this doctrine did not defeat the right of forcedheirs who inherited their mother's half of community property,even though there was no positive information of record as totheir inheritance rights. Further, there was no information ofrecord, reliance upon which might negate such a claim. In a casearising two years later, Chachere v. Superior Oil Company,4 thecourt applied the doctrine of McDuffie v. Walker. The decision issometimes considered contrary to Long v. Chailan, but in factin the later case there was positive information of record on whichthird persons had relied. In the latest case, Thompson v. Thomp-son,5 the court allowed forced heirs to set aside their ancestor'ssimulated sale to the detriment of a third party, who had pur-chased an option in reliance on the public records. The courtindicated, however, that its decision would not be applicable toa case where the rights of the third party arose from a completedsale instead of an option to purchase. Thus, the court has notestablished and maintained a consistent policy which would beapplicable to all cases involving a, conflict between the rules offorced heirship and those of recordation.In Succession of James,6 the court faced the issue of whetherthe doctrine of McDuffie v. Walker should be given priority overthe rules relating to community property. There the wife boughtand later mortgaged certain real estate by recorded acts in whichher marital status was described as single. After the wife's death,the mortgagee had the property sold to satisfy the mortgage. Thehusband, a sailor, returned in time to contest the mortgagee'sright to the entire proceeds on the ground that the property wasacquired during the marriage and hence that he was entitled tothe surviving spouse's one-half interest.7 The court held for thehusband, considering settled8 that the protection of the right of3. 187 La. 507, 175 So. 42 (1937).4. 192 La. 193, 187 So. 321 (1939), noted in 2 LOUISIANA LAw REVIEW 387(1940). See also Note, 23 Tulane L. Rev. 259 (1949).5. 211 La. 468, 30 So. 2d 321 (1947), noted in 8 LOUISIANA LAW REVIEW 429(1948), 22 Tulane L. Rev. 208 (1947).6. 147 La. 944, 86 So. 403 (1920).7. Arts. 2402, 2405, 2406, La. Civil Code of 1870; Giglio v. Giglio, 159 La.46, 105 So. 95 (1925); Washington v. Palmer, 28 So. 2d 509 (La. App. 1946).Daggett, The Community Property System in Louisiana, 8-17 (1945).8. 147 La. 945, 950, 86 So. 403, 405 (1920). In Phillips v. Phillips, 160 La.813, 826, 107 So. 584, 586 (1926), it was said: "It had been decided, in Dixon v.Dixon's Executors, 4 La. 188, 23 Am. Dec. 478, in 1832, and was repeated inTheall v. Theall, 7 La. 226, 26 Am. Dec. 501, in 1834, that the wife had not amere expectancy but the absolute ownership of half of the community prop-[VOL. XINOTESa surviving spouse to an undivided one-half interest in the com-munity property operates as an exception to the rule that thirdparties may safely rely on the public records.In the present case the court was careful to distinguish Suc-cession of James. It pointed out that there was no contract orjudgment affecting the immovable that could be recorded in thatcase, while here there was a divorce obtained by the husbandwhich could have been but was not recorded. From this thecourt concluded that Article 2266 was applicable in the instant,case although not in Succession of James. This distinction is opento question. In general, property acquired by either spouse duringmarriage belongs to the community of acquets and gains.9 Todetermine whether the parties were married at a given time, themarriage certificate is as important as the divorce judgment. Arecorded marriage certificate is notice that property thereafteracquired may be community property, 10 but a recorded divorcejudgment is not necessarily notice to third parties that previouslyacquired property belongs to the community, for the marriagemay have occurred subsequent to the acquisition. Therefore, ifthe vendee in the present case was not affected by the unrecordeddivorce, then it would seem that the mortgagee in the James caseshould not have been affected by the unrecorded marriage cer-tificate.If the doctrine of McDuffle v. Walker has priority over com-munity rights, the court could have simply said as much, withoutreference to thd divorce judgment. By basing its decision on theground that the defendant was not affected by the unrecordeddivorce judgment, and by thus distinguishing the instant casefrom Succession of James, the court apparently was unwilling tohold that the doctrine of McDuffie v. Walker has priority everytime it conflicts with community rights. The equities in the casemay have influenced the court to find for the defendant, and indoing so, to base its decision on the narrow ground just referredto. It is apparent from the opinion that the court viewed theerty during the existence of the community, subject, of course, to the hus-band's power of administration." This was affirmed in Succession of Weiner,20:3 La. 649, 14 So. 2d 475 (1943). Cf. Gulf Refining Co. v. Evans, 181 So. 666(La. App. 1938).9. Art. 2402, La. Civil Code of 1870. See also note 8, supra.10. While marriage is not recognized as a contract, Rhodes v. Miller, 189La. 288, 179 So. 430 (1938), it partakes to some extent of that status. Arts. 86,90, La. Civil Code of 1870. If the property is community, divorce calls fordissolution, but it is marital status that establishes the nature of the propertyacquired as community or separate.1951]LOUISIANA LAW REVIEWplaintiff as an opportunist who, knowing the true circumstances,bought the wife's interest in the property solely as a speculation."As between plaintiff and the innocent vendee, who had boughtthe property in reliance on the records, the equities obviouslyfavor the vendee. But a contrary result might obtain under adifferent factual situation. If the wife had been plaintiff thecourt might have been impressed with the fact that she couldhardly have recorded a divorce judgment when she had no knowl-edge of the divorce suit.The court's narrow holding may be founded on the desirenot to commit itself to a definite policy at this time. Litigationinvolving this issue has arisen only infrequently, 12 and the courtmay be as yet undecided on the preference to be establishedbetween the doctrine of McDuffie v. Walker and the right of aspouse in the community at termination of the marriage.As a result of the narrow basis on which the present decisionrests, it is impossible to say definitely that the case represents apolicy determination. If the decision was based primarily uponthe facts of the case and was not dictated by policy consideration,it would appear that protection of the divorced spouse's rights inthe community property will require the divorce to be recordedin the parish conveyance records.' 8 Unless the spouse knows inwhich parish or parishes the immovables are located, adequateprotection will require recordation of the divorce judgment inall sixty-four parishes of the state. The question arises whethermarriage certificates also should be recorded in the conveyancerecords of all sixty-four parishes to protect the rights of the spousein the community property.If the decision is based strictly on the failure to record thedivorce judgment, to what extent may a title examiner relyon a statement of marital status appearing in the public records?For example, suppose the title examiner finds in the recordedsale by which the vendor acquired the property a recitation thatthe vendor was divorced, whereas in fact the vendor was then11. "Soon after the development of the Benton Oil Field, in which areathis property lies, the plaintiff, obviously with a knowledge of all of the facts,sought out Gertrude Fields Payne at her residence in Mississippi, and, onApril 26, 1946, purchased from her an undivided half interest . . . in and tothe property." 215 La. 567, 576, 41 So. 2d 220, 221 (1949).12. Until the present case, the issue had arisen but once, in Johnson v.Johnson, 213 La. 1092, 1102, 36 So. 2d 396, 399 (1948), in the thirty years sinceSuccession of James, and then only indirectly.13. On the death of a parent, will forced heirs now be required to recordthe death notice, or a judgment of heirship, to protect their inherited com-munity rights?[VOL. XINOTESmarried but has subsequently been divorced? Could the exam-iner advise the prospective vendee to rely on the recorded state-ment of divorce? Assuming that policy does not underlie the pres-ent decision, these and similar questions will arise to plague titleexaminers in the future. In addition, if the equities of this caseinfluenced the court's decision, the outcome of similar futurecases may depend on their individual equities.On the other hand, the decision in the instant case may infact be one of policy. Failure to record the divorce judgmentmight well have been merely a convenient peg on which to hanga policy favoring the doctrine of McDuffie v. Walker over theprotection of community property rights. This view of the major-ity opinion was taken by Justice Hawthorne in his dissentingopinion, 14 which was based on the policy announced in Successionof James, that the community interest is paramount to, and shouldprevail against, the rules of recordation. If the present decisionis considered to enunciate a policy favoring the doctrine of Mc-Duffie v. Walker over community property rights, third partiesmay now safely rely on a statement of marital status appearingon the public records. At least one highly beneficial result be-comes apparent immediately. Title examination is made morecertain, and considerably easier, if the examiner does not haveto inquire into the truth of the statement of marital status appear-ing in the records. While on the surface this might appear toopen the door for fraud, 5 or to be inequitable toward the affectedspouse, these results do not necessarily follow. The issue is notone between supporting a fraud and diminishing its occurrence,but rather one drawn solely between the injured spouse and theinnocent third party. It presupposes misrepresentations of mari-tal status on the public records and presents for decision the ques-tion of whose rights in the contested property shall be protectedand who shall be relegated to a personal action against the offend-ing spouse.'6 It cannot be said that the preference accorded thethird party by this policy is an inducement to fraud, for in eithercase an innocent party stands to be shorn of his rights in theproperty by an antecedent fraud. Nor is it inequitable that thewife should be the one who must resort to a personal actionagainst the errant husband. As between an innocent vendee, who14. 215 La. 567, 574-577, 41 So. 2d 220, 222-223 (1949).15. See Note, 24 Tulane L. Rev. 375, 378 (1950), where this view is treated.16. The wife derives her personal action from Art. 2404, La. Civil Code of1870. The vendee derives his action from the articles on warranty, Arts. 2475,2476, 2500, 2501, 2505, 2506, La. Civil Code of 1870.1951]LOUISIANA LAW REVIEWpresumably is a stranger with no knowledge of the vendor's char-acter, and the wife, a policy protecting the third party appearsequitably justified. But if the vendee has knowledge of the mari-tal status of the husband and chooses to rely solely on statementsrecorded in the sale, the equities might favor the wife, for insuch a case the vendee is not, in fact, "innocent."It is impossible to say definitely that the Royal decisionfavors the rules of recordation over those protecting communityrights, or that the decision is based solely on its peculiar factsand equities. For this reason, the case creates uncertainty in anarea of law which had heretofore appeared certain, 7 and whichshould be certain. A definite statement of policy is clearly neededconcerning the extent to which the doctrine of McDuffie v. Walkerhas priority over the rights of the community of acquets andgains. This uncertainty in the law is a proper subject for theforthcoming revision of the Civil Code. It might have been desir-able for the court to announce a clearer interim policy.WADE V. SMITHSUBSTANTIVE DUE PROCESS-STATUTE SETTING MINIMUM MARK UPHELD UNCONSTITUTIONAL BECAUSE OF FAILURE TOCARRY OUT LEGISLATIVE POLICYLouisiana Act 360 of 19481 provided for wholesale minimummark ups above cost of 15 per cent on liquor, 20 per cent oncordial liqueurs and specialties, and 25 per cent on sparklingand still wines; and for retail mark ups of 33% per cent on liquor,45 per cent on cordials, liqueurs and specialties, and 50 per centon sparkling and still wines. Schwegmann Brothers failed tocomply with these requirements, and on revocation of their licenseinstituted suit to enjoin enforcement of the act, alleging denialof due process. The Louisiana Supreme Court affirmed an ordergranting the injunction: ". . . the provisions of Act 360 of 1948which relate to the mandatory minimum mark ups (Sections1 [s], 24 and 26) do not tend in a degree that is perceptible andclear, toward the accomplishment of the announced purpose ofthe statute, namely, the regulation and control of the liquortraffic so that it 'may not cause injury to the economic, social17. The policy stated in Succession of James had been applied as earlyas Dixon v. Dixon's Executors, 4 La. 188, 23 Am. Dec. 478 (1832), nearly a hun-dred years before. Since the James case, its decision was cited with approvalin Johnson v. Johnson, 213 La. 1092, 1101, 36 So. 2d 396, 399 (1948).1. La. R.S. (1950) 26:1 et seq.[VOL. XI

Sales - Effect of Recordation on Community Rights

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Sales - Effect of Recordation on Community Rights

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