Opinion
NO. 2017CA0875
01-04-2018
DANIEL L. "DANNY" PICOU v. RANDY ANNY
James L. Maughan Zachary, Louisiana Counsel for Defendant/Appellant Randy Anny Stephen C. Carleton Carmen T. Hebert Baton Rouge, Louisiana Counsel for Plaintiff/Appellee Daniel L. "Danny" Picou
NOT DESIGNATED FOR PUBLICATION Appealed from the 23rd Judicial District Court In and for the Parish of Ascension State of Louisiana
Case No. 113,836 The Honorable Thomas Kliebert, Jr., Judge Presiding James L. Maughan
Zachary, Louisiana Counsel for Defendant/Appellant
Randy Anny Stephen C. Carleton
Carmen T. Hebert
Baton Rouge, Louisiana Counsel for Plaintiff/Appellee
Daniel L. "Danny" Picou BEFORE: McCLENDON, WELCH, AND THERIOT, JJ. THERIOT, J.
The appellant, Randy Anny, appeals the judgment of the Twenty-Third Judicial District Court in favor of the appellee, Daniel L. "Danny" Picou. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
In 2010, Mr. Picou and Mr. Anny had become business partners in enterprises involving barge fleeting, stone offloading, bore pits, sand dredging, and trucking operations along the Mississippi River. To secure a line of credit for the venture, on June 1, 2011, Mr. Anny addressed a letter to his banker, Chris Geraci, in which he described the business venture and stated that Mr. Picou had "invested a considerable amount of time and money," and that Mr. Picou would be employed by Mr. Anny and earn a six-figure income. Mr. Picou paid for expenses personally and through his company Dland, LLC ("Dland"), of which he was the sole member.
Mr. Picou secured leases along the river through Dland. Although Mr. Anny was actually leasing the property, the name of Dland was used to avoid competitors discovering the exclusive business relationship between Mr. Picou and Mr. Anny.
In March 2012, one piece of property owned by Mr. Anny's wife, Barbara Falgoust, that was being leased by Mr. Anny was seized under a money judgment of $275,000.00 rendered against Mr. Anny. To prevent the property from being sold at sheriff's sale, Mr. Anny solicited funds from several persons to pay off the judgment. One such person from whom Mr. Anny borrowed money was Mr. Picou. Due to the location of the property being critical to the fleet operations, Mr. Picou deposited $95,000.00 into Dland, and other individuals deposited various sums into Dland to satisfy the judgment. Mr. Picou then pooled the money into a cashier's check and paid the judgment to prevent the sheriff's sale.
On June 13, 2012, Mr. Anny executed a promissory note to one of the contributors, Tammy Schexnayder, for $90,000.00, which was the amount that she had contributed. On June 19, 2012, Mr. Anny executed another promissory note to Mr. Picou in the amount of $200,000.00, naming Mr. Picou as the lender.
The pertinent terms of the note to Mr. Picou were: the note would be due in full on January 1, 2016; if not paid in full when due, the balance would become due immediately, with accrued interest; the note would become due immediately upon the filing of bankruptcy or insolvency of the borrower, Mr. Anny. The note also referenced an "exhibit - A," which was purported to be security for the note. The note also stated "[t]the Lender is not required to rely on the ... security instrument and the assets secured therein for the payment of this Note in case of default, but may proceed directly against the Borrower." No exhibits were attached to the note, and the note delivered to Mr. Picou by Mr. Anny was a photocopy of the original. Mr. Picou inquired as to the missing "exhibit - A," to which Mr. Anny replied it was "the property on the river," which Mr. Picou assumed to be the property he had just helped save from sheriff's sale.
Mr. Picou filed a petition for damages on September 4, 2015, in which he alleged that in August of 2015, Mr. Anny had become insolvent, thereby authorizing Mr. Picou to sue for full payment as per the terms of the note. Mr. Picou also alleged in the petition that he was owed by Mr. Anny $11,010.00 for unpaid work he did for Mr. Anny, in addition to the $200,000.00 owed on the note.
In his answer, Mr. Anny pled the affirmative defenses of failure of consideration, want of consideration, and discharge. The bases of these affirmative defenses were that Mr. Anny alleged that one piece of property he had considered leasing was part of the estate of Augustine "Justin" Picou. However, due to the objection of one heir, the property could not be leased, and through the course of litigation, Mr. Anny was ordered to submit a sealed bid to lease the property. As a result, Mr. Anny was unable to obtain the lease. After this occurred, the plans for a stone yard and stockpiling operations on that property were abandoned. Mr. Anny also alleged that Mr. Picou was using the note to obtain a line of credit from Mr. Geraci, evidenced by Mr. Anny's letter to Mr. Geraci, to obtain financing for the acquisition of the property. Mr. Anny argues, therefore, that when the plans to obtain the property fell through, the consideration for the note ceased to exist.
See The Matter of the Succession of Victoria France Law (Francis) Picou, No. 8,467, Div. "C," c/w The Matter of the Succession of Augustine "Justin" Picou, No. 8,437, Div. "B," 23rd JDC.
See La. C.C.P. arts. 3226, 3229.
Trial was held on December 6, 2016. The trial court found in favor of Mr. Picou, awarding him $200,000.00, plus interest and attorney fees. In its written reasons for judgment, the trial court found that the promissory note admitted into evidence, while a photocopy, was admissible since Mr. Anny never submitted the original note into evidence, and that the consideration for the note was funds that had been loaned by Mr. Picou to Mr. Anny over the course of the business relationship, which Mr. Picou had established were in excess of $200,000.00. Mr. Anny timely filed a suspensive appeal.
Attorney fees were awarded by a subsequent judgment signed on September 7, 2017.
ASSIGNMENTS OF ERROR
Mr. Anny cites three assignments of error:
1. The trial court's application of the laws governing negotiable instruments to the document introduced at trial gave rise to an error of law.
2. The trial court's finding that expenditures by Mr. Picou's limited liability companies were consideration for a negotiable instrument was an error of law.
3. The judgment is manifestly erroneous and contrary to and without evidentiary support.
STANDARD OF REVIEW
Mr. Anny argues in his brief that the trial court made an error of law by misapplying the law of negotiable instruments, and therefore this Court should review the instant case de novo. Specifically, Mr. Anny argues the promissory note introduced by Mr. Picou at trial is not a negotiable instrument and therefore not actionable. We disagree.
Louisiana Revised Statutes 10:3-104 defines and governs the requirements for a document to be deemed a negotiable instrument. A "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money if it:
1. Is payable to the bearer or to order at the time it is issued or first comes into possession of a holder;
2. Is payable on demand or at a definite time;
3. Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.
In order for a document to be a negotiable promissory note, it must meet the requirements of La. R.S. 10:3-104. These requirements are: (1) be signed by the maker or drawer; (2) contain an unconditional promise or order to pay a sum certain in money; (3) be payable on demand or at a definite time; and (4) be payable to order of bearer. If the document is not payable to order of bearer, yet meets the other requirements of 10:3-104, it is a non-negotiable note. Dixie Web Graphic Corp. v. Sharp, 619 So.2d 1173, 1175 (La. App. 1 Cir. 1993).
The promissory note introduced at trial states Mr. Anny promised to pay a fixed sum of money, $200,000.00, "[f]or value received," to Mr. Picou. The sum was payable in full on January 1, 2016. Mr. Anny was designated as "Borrower," or payor, and Mr. Picou is designated as "Lender," or payee. It also gave conditions upon which Mr. Picou may immediately demand payment. While not attached, the referenced "exhibit - A" was security which could have been relied upon for payment of the note. The note was signed by Mr. Anny.
Mr. Anny further argues in his brief that the document Mr. Picou introduced into evidence was not a promissory note at all; therefore, no negotiable instrument was ever delivered or issued to Mr. Picou, which is required under LA. R.S. 10:3-105 for a negotiable instrument to be enforceable. Only a photocopy of the promissory note was introduced into evidence. If Mr. Anny was in possession of the original, he either did not or chose not to introduce it.
The trial court correctly applied the Louisiana Code of Evidence to find that a duplicate document is admissible to the same extent as an original when the original would otherwise be central to the case, but is absent, and in possession of the opponent. La. C.E. arts. 1003, 1004. Mr. Anny cannot hide behind La. R.S. 10:3-105 and say the original note was never delivered when he has not for whatever reason produced the original himself. The only promissory note known to exist is the one produced by Mr. Picou. The trial court correctly accepted the note in the place of the absent original.
While Mr. Anny argues the trial court did not apply or misapplied the law of negotiable instruments, we nevertheless find the note contains all the required characteristics of a negotiable instrument under La. R.S. 10:3-104, and was properly issued under La. R.S. 10:3-105. Therefore, the trial court made no error of law in its findings, and de novo review is not warranted in the instant case. We will therefore review the factual findings of the trial court under the manifest error standard. See Hall v. Folger Coffee Co., 2003-1734 (La. 4/14/04), 874 So.2d 90, 98.
DISCUSSION
At trial, Mr. Anny raised the defenses of failure of consideration, want of consideration, and discharge, and raises those issues again on appeal. Failure of consideration is defined as consideration which originally existed that was not performed or which failed thereafter—as opposed to want or lack of consideration which is no consideration at the time the instrument was given. Graves v. Porterfield, 555 So.2d 595, 598 (La. App. 1 Cir. 1989). Mr. Anny's allegations are that the promissory note was drafted to give Mr. Picou a line of credit in order to acquire the property from the Picou estate. Once acquisition was no longer possible, the consideration for the note ceased to exist and Mr. Anny was discharged of his obligation on the note.
The allegations Mr. Anny have made resemble failure of consideration more closely than want of consideration, and the distinction is important. The defense of failure of consideration may not be asserted against a holder in due course. Graves, at 598. A "holder in due course" is the holder of an instrument that does not have a question as to its authenticity, and the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any property or possessory claim to the instrument, and (vi) without notice that any party has a defense or claim in recoupment. La. R.S. 10:3-302(a).
The evidence presented at trial proves Mr. Picou is a holder in due course of the note. The issue of authenticity of the note has already been addressed; since Mr. Anny did not produce the original note, the photocopy produced by Mr. Picou is deemed as the original for evidentiary purposes. La. C.E. art. 1004; Cf. Rayne v. Barrington, 575 So.2d 831, 833 (La. App. 1 Cir. 1990). Mr. Anny admitted to signing the note. The note was delivered to Mr. Picou for value received, as indicated. No evidence was adduced at trial that the note was not delivered in good faith, and there was no evidence of conditions (iii) through (vi) of La. R.S. 10:3-302(a).
In a suit on a promissory note by a payee against the maker, the plaintiff will be given the presumption that the instrument was given for value received unless the maker casts doubt upon the consideration. Once the maker has cast doubt upon the issue of consideration, the burden shifts to the payee to prove consideration by a preponderance of the evidence. Courtesy Financial Services, Inc. v. Hughes, 424 So.2d 1172, 1174 (La. App. 1 Cir. 1982). Parol evidence is admissible to prove the defense of failure of consideration. Graves, 555 So.2d at 598.
Mr. Anny testified at trial. He did not produce the original note, any witnesses, or any proof of his payment of debts he had to Mr. Picou. In contrast, Mr. Picou produced a copy of the promissory note in his possession. He produced Mr. Anny's letter to Mr. Geraci that describes the "considerable" amount of time and money Mr. Picou had contributed to the fleeting operations. He produced an itemized income and expense sheet for Dland from September 15, 2010 to January 1 2016, that showed total outflow for the company and himself to be $450,091.03. A large portion of those expenses was the paying of the $275,000.00 judgment against Mr. Anny, $90,000 of which Mr. Picou paid personally. Mr. Picou offered testimony and evidence of Dland's inflow of $232,742.34, leaving $217,348.69 in expenses related to Mr. Anny's fleeting operations.
A large portion of the inflow includes the contributions from other sources for the payment of the $275,000.00 judgment against Mr. Anny. --------
We find the trial court did not err in concluding Mr. Anny did not cast doubt as to what was the consideration for the promissory note. The trial court correctly found by a preponderance of the evidence that Mr. Anny was the maker of the note and delivered the note to Mr. Picou, who was a holder in due course. Consideration for the note was previous expenses Mr. Picou and Dland paid for Mr. Anny's benefit in excess of $200,000.00. Consideration was not to obtain credit for the prospect of acquiring the property in the Picou estate. Furthermore, Mr. Anny's affirmative defenses of lack of consideration, failure of consideration, and discharge fail, because Mr. Picou was a holder in due course, consideration for the note existed, and Mr. Anny was never discharged of his obligation under the note.
DECREE
The judgment of the Twenty-Third Judicial District Court in favor of plaintiff-appellee, Daniel L. "Danny" Picou, and against the defendant-appellant, Randy Anny, is affirmed. All costs in this appeal are assessed to the appellant, Randy Anny.
AFFIRMED.