In Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, the Louisiana Supreme Court found the voluntary pay doctrine to be in direct conflict with the Civil Code. In this action, the borrower was to make payments with interest accruing at 6.5% for years one through five of the loan, 7.5% in years six through ten, and then at Citibank prime rate. Although the rate declined in years eleven through thirty, the borrower continued to pay interest at 7.5%, which exceeded the prime rate during the applicable period. In response to borrower’s claim, the bank asserted that borrower was estopped from recovering the payments or arguing that the payments were improperly made pursuant to the voluntary payment doctrine. In a 1902 decision, the Louisiana Supreme Court addressed the voluntary pay doctrine calling it “an established rule of law that if a party with full knowledge of facts, voluntarily pays a demand unjustly made on him and attempted to be enforced by legal proceedings, he cannot recover the money back”.
However, this time the Louisiana Supreme Court concluded that Civil Code article 2299 says nothing about the voluntary pay doctrine. This article states “a person who has received a payment or a thing not owed to him is bound to restore it to the person from whom he received it.” The Court found the express and plain language of article 2299 rejects the application of this doctrine and it reversed the Court of Appeal ruling insofar as it held plaintiff is precluded from recovering payments voluntarily made, whether made knowingly or by mistake. It stated that the knowledge exception applied in the voluntary pay doctrine is contrary to the express mandate of Civil Code article 2299, which the legislature adopted. Simply put, the article states that a person receiving payment of a thing not owed must return it. The Court stated, “There is no place in Louisiana law for a common law estoppel doctrine that addresses a subject already encompassed with positive law of the Civil Code.”