Louisiana Industries, Inc. v. Gibbens Bros. Construction Co.

Summary

The Louisiana appellate court affirmed a judgment against a contractor and its surety for unpaid construction materials. It held that the surety’s letter and the supplier’s executed release formed a binding agreement to pay the amount claimed, rather than an inadmissible compromise discussion. The agreement novated the prior obligation and was subject to a ten-year prescription period, making the one-year prescription applicable to materialmen’s privileges inapplicable.

Holdings

1. The letter and release were admissible because they did not evidence a compromise of a disputed amount; they constituted an unconditional offer by Phoenix to pay $733.75 in exchange for a complete release.
2. Even assuming Phoenix's obligation to pay was suspended until Gibbens approved the correctness of the account, the agreement was a valid contract whose condition was satisfied when Gibbens' counsel admitted that the materials had been received and unpaid.
3. The June 30 agreement novated the prior obligation owed by Phoenix under the bond and was subject to the ten-year prescription period under LSA-Civil Code article 3544; the one-year prescription period under LSA-R.S. 9:4814 did not apply.

Questions Presented

1. Whether the June 30, 1960 letter and release constituted inadmissible compromise discussions or an enforceable agreement.
2. Whether the agreement between Louisiana Industries and Phoenix was conditional and, if so, whether the condition was satisfied by the contractor's admission at trial.
3. Whether the agreement novated the prior obligation and was governed by the ten-year prescription period under LSA-Civil Code article 3544 rather than the one-year period under LSA-R.S. 9:4814.

Disposition

affirmed