Petition for Writ of Certiorari — Mercado E Hijos v. Commins

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“IN THE

: Suprene Court of the aa: States |

OCTOBER TERM, 1943, |

No. 497, Se \

ai | "Manto Meds E Hisos, ~

yk <a . : 3 Petitioner,

VS.

Euvima Ouiviert Commins Er AL.,

Respranete

Prnrion FOR Writ or Certiorani, on, IN THE p ALTERNATIVE,

For’ a Warr OF MANDAMUS, to THE CrrcurT Court oF ~~

APPEALS; First Circuit, aNp Supportive Brier

- WiELIAM Catrrox Riosy, -

4 Pepro M. Porrata,

bi Attorneys for Petitioner

Ricsy, Leon axp WEILL, .

Prep W. Lizwettys, _

* Of Counsel

. ee

tr \

ya SUBJECT.INDEX

- ; . .

Page

ON. ..... eee as See eee Ree kt 1-20

Introductory PRS eee dD

The Rule in Sisition: Rule — Circuit Court of

_ Appeals, First Circuit. Pear iee 3

Questions Presented ..... eas ae rree .. 28

‘ District Court’s Opinion’ POM a elm re 10-14

_ Judgment of the Circuit Court of Aypenis oe wee 14,15

eo Ms... Lae 15, and Appendix 4 33-36

Petitioner’s Position ................4..... .....15-19

Reasons for Granting the Writ... ......... as ee

Barrer 1x Support oF Peririon . EET

.. Opinions Below..................... ee ae

- Jurisdiction ......... Poa ee eo

. Questions Presented . 22

Sree 22, and ‘Appendix L 33-36

Specification of Errors To Be Urged see eeh pet ee

Summary of I ot Pe Ce ees : 22

' Opinions of the District Céurt of Ponce and of the

Supreme Court of Puerto Rico. e 22

Argument gem Ta Fst eee eee are 7 Ss aS 23-31

First. The judgment of the Supreme Court of ©

Puerto Rico was clearly — even

“‘patently’’ and ‘‘inescapably’’ so..... .23-29

Point I. Both insular courts :ignored their

rs own ‘‘Findings of. Facts’’.......: . 23-25

Point II. Misapplied Section 1759 and other

Sections of the Civil Code and Art.

152 of the Mortgage Law. 25-27

Point III. Ignored the effect. of the 1933 assign-

ment, even on their own ne of

_ its meaning __. 27-28

Point IV. The insular Supreme ‘ ‘ourt, iicih

cally, ignored the “Finding of —

Fact’’ that all the respondents.

‘actually knew petitioner’ 8 owner-

ship of the option Poi. bs oes ae

Second. Point V. Invalidity of Rule 39(b), of the

First Circuit exes al 29-30 ; and rue, 15-19

A eee eee sit oak aned ennee CEw EI 30-31-—

ix I. ‘Constitution’ and Statutes............. 33-36

Appendix II. Chronological —- of the Facts. ..37-48

TABLE oF CASES Pee

‘Albright v. Sandoval, 216 U.8.981......... Me APs : 36

Bradley, Ex parte, 7 Wall. 364...................... 19

Clason v. Matko, 223 U. 8. 646...................... 16

Copper Queen Consolidated Mining Co. v. Board of ——4

Equalization, 206 U. S. 474....... Wiese as ey 16

‘+ Cordovav. Folgueras, 227 U.8.375......-..... 00-0. 16

De Castro v. Board of Commissioners of.San J ‘uan, -

: oe isa ae cai ess 18.

-. De La Torre v. National City Bank, 110 F. (2a) 381... |

Same Case, 110 F. (2d) 976..°........ aE Pee B

English v. Arizona, 214 U. 8: 359. ............ Petey bm) 16 -

. Fernandez v. Ayllon, 266 U. 8. 144............. ck GR

_ Fox v. Haarstick, 156 U. S. 674........ eee 60

Gilson v. United States, 234 U.S. 380............. i

Grow ©; Taster, Ber OU. 0 GE... cee eae - 16

Hawaii Consol. Co. v. Borthwick, 105 F. (2d) 286...... 17

Hudson v. Parker, 256 U. 8. 277.............6..... oe

. Inter-Island Co. v. Hawaii, 305 U. S. 306............. 16

Kawato, Ex parte, 317 U.S. 69............... eee ae ee

Ker & Co. v. Couden, 223 U. S. 268......<........... 16

Knickerbocker Ins. Co. v. Comstock, 16 Wall. 258... .. 19

Lewers & Cooke v. Atcherly, 222 U. 8. 285. peeeauces iA

Lewis v. Harrea, 208 U. S. _ Serr rr rer 16

Llinas v. Mariani, 47 P. R. Rep. 543... .. TE Pee 26

Lluberas Passarell v. Mario Mercado e Hijos, 55 P. R..

Dec. 41 (ejectment case)..........6... 6 2 Xe: 21

| Loiza Baad Co. v. People of. Puerto Rico, 57 F. (24) ‘o

Mario Mercado ¢ Hijos v. Olivieri (Commins) ‘60 P. R.

Matos v. Alonso Hermanos, 300 U. ia 16.

Metropolitan Water Co. Ex parte, 220 U. S. 539... 19

Montilla v. Van Syekel, 8 P. R. Rep. 153.............. 26.

‘McClellan v. Carland, 217 U.S. 268. ee igen aye 19

- Nadal v. May, 233 U. 8. 447. 2 enn

Northern Pacific R, Co. v. Hantbly, 154U.8.359 16

Phoenix R. R. Co. v. Landis, 231 U_S. 578 -.—.— 16 ©

Porto Rico Coal Co. v. Domenech, 41 F. (2d) .183:..... os

Puente v. Perez, 7 P. R. Rep. 181. Ceti,

Richardson v. Fajardo copa Co., 237 Fed.195 -. 17

_- Roche v. Evaporated Milk Association, 319 U.S.21.... 19 |

~ Russell, Ex parte, 13 Wall. 664................... 19

‘- Russell & Co. v. ‘Sancho Bonet, Treasurer, 92 F. (2d)

Te ree Se eo as cs sick bk GL aE kt 17

Sancho Bonet, Treasurer, v: 1; Texas Co., 308 U. S&S

— A veneers oe

— Bonet... Treasurer, vi ageing Co., 306

me » — SO oye Rods ae eee ese 15, 16

Santa Fe Co. v. New Mexico, 215 U. S:296......... 16

Santa Fe C. R. Co. v. Friday, 232 U. S 694. ‘ ae

Simons, Ex parte, 247 U.S. 231........ PS Aare fee 19

_ Sweeney v. Lomme, 22 Wall. 208... 16°

__ Texas Pac. R. R. Co. v. Railroad Commissioner, 232

RE a ere et or ae wee 16

Texas Co. ats. Sancho Bonet, Treasurer, 308 U. S.

~)2 es -.. 2 18, 16

‘Treat v. Grand re R. Co., 222 U.S. 448. ark 16

Villanueva v. Villanueva, 239 U.S. 93. rss.

Wailua Co. v. Christian, 305 U.S.91.. .............. 16

__ Walker v. O’Brien, 115 F. (2d) 956... ....... 17

‘-Yabucoa Sugar Co. ats. Sancho Bonet, Treasurer, 306

ieee HA ee eee ee

STATUTES

. Constitution : er 7 eal

OS ae ee , 33

Art. IV., Sec. 3; clause 2. ae ited ES

Fifth Amendment _ oe F oes isan ae

Federal :: i ; |

Organic Act; ‘flee. 2... ae Ana aan Ses 33 .

Judicial Code: wane

Sec. 128(a), Fourth . ..

Sec. 240(a), as amended oe 13, 1925 21

Puerto Rico: |. |

Civil Code (Edition of 1930) —. ues

Secs. 1233 and 1235 _. ms ...... 18, 33-34

Sec. IMB . 18, 23-24, 33-34

iii

; Law of Evidence aa

“Secs. 1234-1241 - ee ~. 24, 25, 27,

Sec. 1418 .... : ve EE 13, 23, 34

* Bee. 1780... | ) a... UB, 25-26, 35

ortgage Law .. . :

- eee >

og Pas onc vac asd xeon ee ae

Sec. 26 and Secs. 27,28 oe tae oe 13, 36

Secs: 26, 27, and 28 . euwatadsesd Appendix I, 36

OTHER AUTHORITIES °

Rule 39(b), Cireuit Court: of Appeals, First: Cireuit

Oi a ee ita Sta dw eceta eds

\. IN THE.

+ Sagrane Couto he United States

| ‘ ooronmn Thitts, 1963

No: 497 .~

Mario: Mercapo E Hisos,

Petitioner, .

| VB. .

"Eva Ouivieri Commins Er AL.

Respondents —

Petition ror Writ oF CERTIORARI, OR, IN THE ALTERNATIVE, -

> For 4 Writ or ManpaMvus, To THE Circurr

Covert or Appga.s, First Circuit oe

To the Honorable, The Chief Justice, and the dssclahe

Justices of the Supreme Court: of the United. States: .

“Lwrropuctory

Petitioner, Mario ‘Meseade e Hijos; an agricultural

civil partnership’ domiciled in Ponce, Puerto Rico, prays

‘a writ of certiorari to the Cireuit Court of Appeals for the ~

First Circuit, to review its order or judgment entered

_ August 23, 1943, affirming, under its Rule 39(b), without .

a hearing or opportunity for argument on the merits,

the judgment of the Supreme Court of Puerto Rico in this

case ;—or, in the alternative, a writ of mandamus to such ~

Circuit Court of “Appeals, directing it to set aside such

order or judgment of August 23, 1943, and to hear and’

consider and decide on the merits.the appeal to it hereto-

fore taken by this petitioner from the — Court of

Puerto Rico i in this case. -

*@.

Tue Rue IN —

Rule 39(b) of the First Circuit Court of Appeals, adopted

in the Revision of that Court’s Rules effective September

20, 1940,—nine months after this Court’s decision, Janu-

ary 2, 1940, in Sancho Bonet, Treasurer, vs. Tezas Com |

pany, 308 U. S. 463, 470-472,—reads as follows:

‘*(b) In appeals from the Supreme Court. of Puerto

Rico involving only questions of local law the appel-

lant shall be required to show in his statement on ap-

peal that the judgment appealed | from is ‘inescapably

wrong’ or ‘ tently erroneous’. (Sancho Bonet v.

' Texas Co., 308 U. S. 463 (1940).). The court will enter-

tain a motion by the appellee to affirm on the ground —

_ that it is manifest from the record and the statement

on appeal that the judgment below was, neither ‘ ines-

capably wrong’ nor-‘patently erroneous’, and conse-

quently should not be disturbed by this court. Such

motion, which may be united in the alternative with

a motion to dismiss the appeal, may be filed within

twenty days after the filing and serving of the state-

ment on appeal. A brief in support thereof may be

filed-‘and furnished in the manner specified by Rule

-25. The court may, however, upon its own motion, dis-

. miss the appeal or affirm the judgment appealed from’

where the law and justice of the case so require; or,

if the case is of such character as not. ta justify ex-

.tended argument, the court may, order the cause set —

down for immediate hearing.’’

Questions PRESENTED

1. Is the foregoing rule valid?” May the Circuit Court

of Appeals thus abdicate the jurisdiction over appeals

from the Supreme Court of Puerto Rico, vested in it by

the a by Section 128 (a) “Fourth” of the- Judicial

Code, as amended by the Act of February 13, 1925, c. 229,

- 43 Stat. 936; or the duty to hear and to consider and de-

cide such appeals on the merits, upon briefs — arguments,

‘in the same way as in other cases? |

2.. Was the decision of the insular Supreme Court of

Puerto Rico so manifestly correct as to make any appeal

from it necessarily ‘‘frivolous’’ and thus. to warrant dis-

missal of the appeal without a hearing, on mere. inspection

of the face of the record, as was done by the Circuit Court

of Appeals in this case? - |

3.--Or, on the contrary, is net the decision of the insu: -

lar Supreme Court in this case so ‘‘patently erroneous’’,—

and, indeed, go ‘‘inescapably wrong’’,—as to. require re-—

versal at the. hands of the Circuit Court of Appeals, or

of this Court? Or, in any event, is there not presented by

‘this record a.substantial question of whether or not the -

' insular Supreme Court’s decision was not in reality ‘‘clear-

ly wrong’’, or ‘‘patently erroneous”, or, indeed, ‘‘ines- .

-eapably wrong”’, within the meaning of this Court’s: deci-

sioris,—a question of sufficient substance, at least, to entitle

the appellant [petitioner] to have it argued and considered’

and decided on the merits ‘by the’ Cireuit Court of Appeals,

- or by this-Court? ;

7 Statement

This case originated in a petition ie thé Inoular District

Court of Ponce, Puerto Rico {‘‘Civil Case’? No. 311; RB.

_ - 1-12), filed April 7, 1937, seeking the rescission of a sale

_the month before, March 9, 1937, from the respondent,

Elvira Olivieri. Commins, to the other respondents, of the _

plantation or estate known as -‘‘Indios,’’ as having been .

fraudulently made, in. direct violation of an option to °

purchase the property at the same. price offered by any

other purchaser [and requiring 30.days’ notice of any

offer, and an peaqeoaay during that time to purchase ¢ at

— >

the same price offered}, held by the petitioner plaintiff, of

which ‘all the respondents were aware.

- There is also a companion case filed the same day (‘Civil

Case’’ No. 312; R. 35) for the rescission of a lease likewise

made by Mrs. Commins, the same day as the sale, March 9,

1937, to her nephew, Dr. Emilio Blasini Totti, and his wife, -.

Mrs. Celia Liuberas Passarell, two of the respondents in

the present case. Dr. Blasini’s wife, Celia Liuberas Pas-

sarell, is a sister of the respondent, Manuel Francisco

Lluberas Passarell, and of- the other respondents, An-

tonia, Rosa Elena, Graciela, and Raquel Liuberas Passarell.

A chronological analysis of the facts is in Appendix I,

following our Supporting Brief (infra, pp. 37-48).

Phe gist of the story is that in March, 1932, Mrs. Com-

mins applied to: the -petitioner, Mario Mercado e Hijos, an

‘agricultural partnership,’’ for a loan 6f something over

$40,000.00 on her undivided half interest in two plantations

- or estates in Puerto Rico, ‘‘Indios’’ and ‘‘Juanita,’’ then

owned jointly. by herself and her sister Santia. The Mer-

cado partnership was the tenant of both estates, and

had been for-several years, under ten-year. leases, ‘made

back in 1927 and in 1928. Half of the term of the

**Indios’’ lease had thus already run. It would expire

in June, 1937; that of ‘‘Juanita’’ had.one year more

to run, uritil 1938. The Mercado partnership was, of

course, looking forward to the permanency of its enter-

price, and thus interested in the future of these lands; par-

ticularly since they adjoined other lands owned by itself,

as appears from their legal descriptions (R. 322-323), so that

these lands that it held under lease were so situated as to

‘be cultivated in connection with its own lands, in a single

agricultural enterprise. Under these circumstances, when

Mrs. Commins asked the loan [quite probably really a re--

newal of a former loan], the. partnership wanted to be as-

sured. that in case she, or the sisters, should’ wish to sell

the lands at any time, the partnership could have the right

to buy them—or, if they were not sold, then to renew its

leases, at the same price that anyone else might offer. So the

loan was made for seven years, upon promissory notes pay-

able to ‘‘the bearer by endorsement’’ secured by a mortgage

not specifically naming any particular mortgagee, but

with a right to ‘Mrs. Commins to pay it off at any time

before maturity, upon three months’ notice. And the option

to the Mercado partnership to purchase or to renew. its

’ leases upon the same terms that anybody else might offer

was agreed upon; and also that iQ partition of the lands .

should be made between the sisters,. the mortgage re-

mained in force, without the consent the Mercado part-

nership. .

But instead of drawing two or three separate instruments

embodying those different agreements, they were all put

into one instrument of ‘‘voluntary mortgage’’ or deed for

the public records (R. 322; Exhibit ‘‘J’’) ;—[although the

option for the benefit of the Mercado partnership to secure

the future of its agricultural enterprise was plainly no part

of the security to the ‘‘bearer’’ notes secured by the mort-

- gage; but was an independent major consideration to the

- partnership, inducing it to make the Idan).

| The next year, in May, 1933, the Mercado partnership

_sold the ‘‘bearer’’ promissory notes to the heirs of Jose

Tous Soto, deceased, but with some reservations. It ap-

pears that the guardian’s purpose in purchasing was to

provide a regular monthly income for the heirs, some of

_ Whom were minors at that time. Mrs. Commins’ ‘‘bearer’’

_ promissory notes bore interest at 9% per annum, pay-

able semi-annually, as above noted. But in order to get a .

secure income for the heirs, in such form that they could,

receive it regularly every month, the guardian,—with the

approval of the District Court in guardianship proceed-

ings,— was to accept a slightly lesser rate of income

than the 9% ; provided it could be made payable monthly,

and Maiti Geapenteel Aish a Ge conmemnenedh ‘wan

made, and embodied in a formal’ deed approved by the

court and recorded, dated May 9, ae eee ie Be

- cado sanlninieil assigned to the bile the ‘mortgage cred-

' ie ’ by delivering to them the ‘‘bearer’’ promissory notes,

_ and “absolutely guaranteeing, itself,,to pay to them in

monthly installments an amount equal to 814% per annum

on the notes; and, in consideration of such. guarantee, was

itself ‘‘entitled to retain’’.3%4 of 1% out of the 9% semi-

annual interest on the si (Deft.’s “Exhibit — “Third”; ie 3

R. 397, 406). |

This, of course; left in the Mercado seattaiahies a sub-

_ stantial, active, interest in the Commins indebtedness; and

. apparently contemplated that the partnership would con-

tinue to collect the semi-annual interest itself, and would

itself pay over the monthly installments to the heirs at

the stipulated lesser rate of 844%. No formal assignment .

of the mortgage deed was made; and nothing was put on the

public records at that. time specifically mentioning the Mer-

cado partnership’s option or its right. to be consulted and

to be asked for its ‘‘consent’? to any. partition of the lands’

_ between Mrs. Commins and her sister,—-the provisions of

‘Paragraphs ‘‘Seventh’’ [the option] and ‘‘Eleventh”

[consent to partition] in the original March, 1932, deed.

And it was clearly understood between the parties thaf,

in fact, the option was not intended to be assigned, but was

reserved to the Mercado partnership, as was also the right

to be consulted and to give its ‘‘consent,’’ upon any parti-

tion of the lands. The heirs themselves expressly affirmed

that this was the understanding, by formal deed approved

‘by the District Court in the guardianship proceedings, four

years afterward; apparently as soon as the question was

called to their attention [deed of March 31, 1937; Exhibits

‘“E*’ and ‘‘F’’; R. 281, 284; 286, 291-301).] And that such . —

was actually the understanding ‘at the time, was shown

on the public records. later on, by ‘the fact that upon

_ the partition of ‘the lands -between Mrs. Commins and

her sister three years afterwards, on August 20, 1936,—

before any of the questions here involved had arisen,—itt

was the Mercado partnership,—and not the Jose Tous Soto

heirs,—who appeared with the parties in the formal partt-

“tion deed for the purpose of giving its “consent”? to the par-

tition under Paragraph ‘“Eleventh’’ of the original 1982

deed. (District Court’s Findings of Fact; R. 38.) ;

And the District Court itself expressly found in its ‘‘ Find-

ings of Fact’? (R. 39), copied also ‘with approval by the

insular Supreme Court in its opinion (R. 481-482), that all

the respondents were in fact aware that such was really the

understanding, and that the option was still the property

of the ‘Mercado partnership. [A copy of the 1933 assign-

ment to the heirs had been given. to Mrs. Commins at the

time; R. 37].

*. It appears that shortly after nee the partition of

-the lands with her sister in August, 1936, Mrs. Commins

began to think about selling: the part that had thus come

to her. <

Although the mortgage still had considerably more than

_ two years yet. to-run until its maturity on- March 23, 1939,

yet, as early as December, 1936, only a few months after

_ the partition, Mrs. Commins was writing to Mario Mercado

about it; and, as the District Court finds; from then on she’

was negotiating about it with the Mercado partnership

_ through her son-in-law, Rafael Barletta; and she kept up

thesé: negotiations until the very day that she closed the

‘sale and lease here assailed, to other parties, the re-

' . spondents here; wifhout giving any notice to the Mercado

partnership: that she had even had any other offer, or

that she was dealing with anyone else at all,—despite

the- option held by the partnership, of which, as the Dis-

trict Court found, as above noted, not only she herself,

but also all the other respondents, were aware, and

despite the fact that the partnership stood ready to pay

the same amount. as any other purchaser or to renew its

leases for a future term on.as favorable a rent and condi- - ~

tions as anyone else might offer. (Findings; R. 38-39; 481.)

The explanation is that some time along in January or

early February, 1937, Mrs. Commins happened to have a

talk with an old friend, Mrs. Elena Passarell-de-Delgado,

the mother of the respondents Manuel Francisco, Antonia

‘Rosa Elena, Graciela, Celia, and Raquel Lluberas Passarell,

—whose daughter Celia is married to Mrs. Commins’ neph-

ew, Dr. Emilio Blasini Totti, likewise one of the respondents

_ here. It is-an old family friendship and connection. Mrs.

Elena Passarell de Delgado’s [‘‘Dona Elena’s’’] husband, ©

then recently deceased, had been candidate for Mayor of

‘ Ponce, and apparently an influential man. Mrs. Commins

had known the younger members of the family practically

ever since their birth. ~

This talk was had while Mrs. Commins’ negotiations with

the Mercado partnership were under way for a sale or @

new lease of the properties to it. [It will be remembered that

its ten-year lease of ‘‘Indios’’ was to expire in the following

June, 1937; and that of the other estate, ‘‘Juanita’’, the:

next year. But that Mrg. Commins’ mortgage loan still had

more than two years to run, until March 23, 1939.]

‘‘Dona Elena”’ offered her friend Mrs. Commins [‘‘ Dona

Elvira’’] $40,000.00 for ‘‘Indios’’, for the benefit of Dona _

Elena’s children, respondents here, provided that Mrs.

Commins would also lease to the Jatter’s own nephew, Dr.

Emilio Blasini Totti (husband of Dona Elena’s daughter

Celia), the other estate, ‘‘Juanita’’, for ten years after the

- expiration of the Mercado partuership’ 8 lease.

Mrs. Commins wanted to accommodate her friend, and

to benefit her nephew and the family connections. She pre-

ferred them to have the property, rather than to have it go

to the partnership on the same terms,—(although her rela-

tions with the partnership were also friendly, up to that

time). °

' To accomplish this purpose, and to evade the partner- -

ship’s option, they resorted to the trick of having Mrs.

Commins give a $45,000.00 mortgage to Manuel Francisco

Lluberas Passarell on February 25, to run for only six

months, and allowing him, as special attorney in fact for

“Mrs. Commins, to retain the whole $45,000.00 in his hands;

and then he: turned around, and,—[apparently with money

‘furnished by his mother, Dona Elena, as a gift for the bene-

fit of her children],—paid the amount of the old 1932 mort-

gage indebtetiness to the Jose Tous Soto heirs, together

with three months’ interest in advance because of the loan’s

being paid two years before maturity,—[and apparently not

calling their attention to the facts that they were entitled

to three months’ notice before such a payment in:advance,

and that the Mercado partnership as holder of a part of the

mortgage indebtedness (its 3/4 of 1% per annum share of

the interest under the 1933 assignment),—as well as be-

cause of its rights.under the option,—-was likewise entitled

to the: notice,—but, instead, threatening the heirs with a suit

' if they did not immediately cancel the mortgage] ’,—and

thus secured a deed of: cancellation of the mortgage (Ex-

hibit I, recorded March 8, 1937; R. 312-321). aa,

_ With that cancellation in hand,? the trap was sprung.

The deed of sale to Manuel Francisco Lluberas Passarell

and his sisters, of ‘‘Indios’’,—and the lease to Mrs. Com-

mins’ nephew, Dr. Blasini (whose wife, Celia, is one of the

sisters),—of the other estate, ‘‘Juanita’’,—were executed

and put on record the very next day, March 9, 1937.

_ The Mercado partnership, this petitioner, promptly made

a formal demand for the rescission of the deed and the

lease, and to be subrogated to the respondents as purchasers

and lessee, respectively, under its option; and offered pay-

ment of the same purchase price received from the others;

and upon refusal — the money in court, and began —

these suits. _

‘A threat for which there was no possible basis what-

ever, particularly ingview of the mortgagees’ right to three

months? notice before accepting an i ance payment.

(Clause ‘‘Ninth’’; R. 327). °

? Thus procured behind the backs of the Mercado part-

_ hership, without any notice to them whatever, and at the

very time when Mrs. Commins, through/her son-in-law, Bar-

letta, ‘was actually carrying on negotiations with the part-

nership for a sale or for a renewal of the leases to them.

[Finding of the District Court R. 38-39; see also R. 130-135;

~ 142-147; 179-181 and i and also Appendix II, infra .

pp. 44-46).

- (Bindings of Fact,” R 36-39) with substantial accuracy,

. that, as above indicated, before the sale and.the lease in

District Court's Opinion

The District Court sums up the pleadings in its opinion |

(*‘Statement of the Case,’* R. 31-35) ;“and finds the facts

so far as its, findings go; but it omits to mention or make

any findings upon several of the essential facts. It is note-

worthy that it does find, however, among its other findings,

question executed March 9, 1937, all the ern

actually

‘“were advised”, ‘‘of the right a option to sirelinie,

and lease held by Mario Mercado e Hijos concerning

the estates ‘Juanita’ and ‘Indios’ (B. 39) 5 |

and that: neither Mrs. Commins nor any of the other re-

_ spondents ever notified the petitioner~that they contem-

plated any sale or. lease of the properties (R. 38) ; and also

that the ‘petitioner partnership ‘‘always was and .is now

ready: to subrogate itself to the place cf the purchasers

and lessees of said estates for the same price and rental —

and on the. same terms as those of the contract of. sale and

lease whose rescission is hereby sought”’ (R. 38-39).

-. And also further that _ 39), from Mrs. ‘Commins’ own

testimony,

‘‘it appears as a fact that she ‘authorized her son-in-

law, Rafael Barletta, to enter into negotiations with

Mario Mereado e Hijos for the lease or sale of the

estates Juanita and Indios”’ ;.

and that from other testimony and from telegrams and ©

letters in evidence, it likewise appears ‘‘as a fact’’ (R. 39,

supra), that from the preceding December, 1936,-althreugh——.

the winter, and up to March * 8, 1937 y—the day before the

* The Opinion reads “‘May’’ 8; but this is natty a clerical

error. It should read ‘‘ March 8. ‘99 (Confer, Footnote, p. 42,

infra, Appendix IT, p. 43).

-pemenmgeiat a "eth A NAICRROINE AOR De ne NG a Oe

. A . .

actual execution of the sale and lease to the other respond-

ents,—this son-in-law, Rafael Barletta, had been actually

holding conversations and meetings with the manager aimi— —

other-officials of this partnership petitioner, ‘‘in regard

to the possible purchase and lease of said immovables from

Elvira Olivieri Commins to the plaintiff partnership.’’

Nevertheless, the District Court found against the peti-.

tioner, and refused to set aside the March 9, 1937, sale and

lease; simply on the legal ground that the option, although

running specifically to this petitioner partnership, by name,

had originally been included as clause ‘‘Seventh’’ in the

’ same deed by which a ‘‘voluntary mortgage’’ was consti- |

tuted by Mrs. Commins on March 23, 1932, to secure her

four seven-year mortgage notes -payable to bearer, aggre-

gating $41,256.89, originally held by the petitioner partner-_

ship but afterwards assigned by it, the next year, May 9, —

1933- [although with some restrictions of record in the .

assignment deed ]* to the heirs of, Jose Tous Soto, deceased,

and that in thus assigning the notes (‘‘mortgage credits’’)

the petitioner had neglected to. recite of record, in the

formal deed of assignment filed for record in the Public

‘Including the right to ‘‘retain’”’ % of 1% per annum of

the interest on the notes, which were payable semi-annually;

this retaining being expressed to be in consideration for the

partnership’s undertaking to pay the amount of the balance

- , of the interest. over to'the assignees in monthly install-

ments, instead of only semi-annually as it was collected

from Mrs. Commins, and also absolutely to guarantée tlre

Heirs both the principal and interest and the payments in ~

such monthly installments, and also to protect them against

any taxes, federal, insular or municipal, that‘might be lev- —

ied upon it at any time,—so as certainly. to secure to the

heirs a steady monthly income in any event. This, which

appeared of record in the Public Registry, manifestly con-

templated that the assignor partnership, the petitioner

here, should retain an active interest in the mortgage deed,

and was not assigning the whole instrument outright.

(Confer. Appendix II, infra, pp. 40-42].

12. i = — —

Registry, in so ) many aa the in that it was ” as

signing, but on the contrary was reserving to itself, the .

option running specifically in its own favor in the inde-

pendent clause ‘‘Seventh’’ in the original deed of 1932.

(R. 40-42) ;—[although: (1) The Court itself expressly _

- " found, in its ‘‘Findings of. Facts’’ as above stated, that _

_ all of the respondents did actually know, before the making

of this March 9, 1937, sale and lease, that the petitioner-.

_ partnership really still owned the option itself, and had

not transferred it; and despite (2) ‘The fact that the Jose

Tous Soto heirs thennscives, the assignees of the mortgage

notes, had. acknowledged in a solemin deed of record made

on March 31, 1937 (Exhibits “Ey” and “‘F’, supra; ante,

- -p. 6), as soon-as their attention was called to this ques- .

- tion,—[and with the formal. approval of the District’

Court in guardianship proceedings on behalf. of one of

‘the heirs who was a minor and another who: was ‘‘inca-

pacitated’’],—the fact that this option had actually been so

reserved by ‘the partnership in making the original assign-

ment in 1933 (R. 281, 284; confer Appendix II, isifra, pp.

41-42); and although (3) Insofar as the public notice in

the Registry might have any bearing at all in a case like

- this, where there was actual notice by all of the parties con-

cerned,—the requisite notice of record of the fact of the

.. partnership’ s still: continuing ownership of the option and —

its active rights and interest in the original deed of 1932,

was shown of record in the partition deed made August 20,

1936, between ‘Mrs. Commins and her sister, Santia,—three

years after the assignment of the mortgage notes, as above,

to the Jose Tous Soto heirs—in which the ‘plaintiff part-

nership, Mario Mercado e Hijos, and not the heirs of Jose

Tous Soto,-appeared and took part as being the party

consenting to the partition, under clause ‘*Eleventh’’ (8 5)

of the original 1932 deed.°®

5 Respondent-defendants’ own answers in the District

Court: each specifically .admit plaintiff’s allegation that it

"was the petitioner partnership who thus ‘‘gave its consent

to the said partition.’’ (Complaint, Par. 10, R. 8; Answers;

Par. ‘‘Tenth,’’ R. 22; Par. ‘‘Sixth,’’ R. 27).

o: ee wee Se a tars

vf wes Scat aa VY

ee CPS

: 13

P " > . : - ’ : ; . . . Pd

The District Court none-the-less concludes that.(R. 42): .

| ‘when Mario Mercado e Hijos coriveyed to the heirs.

‘of Tous Soto the mortgage credit, it also conveyed the

rights embodied in clause 7 of the option to sell and

lease. 996

In. support of this conclusion, the District Court wien

upon Article 152 of the Mortgage Law and Section 1418

. of the’Civil Code of Puerto Rico, and referred also to See-

tions 1233, 1235, and 1759 of the Civil Code, and Section 26

of the ‘‘Law of Evidence”’; and also to five decisions of:

- the Supreme Court of Puerto Rico, none of which réally

appears to support it at-all, as is pointed out in our Sup-

porting Brief (infra, pp. 23-27).

'. “The insular Supreme Court, after noting that it had

denied the respondents’ (Appellees’ in that Court) motion

to dismiss petitioner’s appeal to it, because the appéal pre- ©

sented substantial questions that ‘‘were not plainly frivo- .

lous’’ (R. 475), copied (R. 478-486) the District Court’s

“Findings of Fact’’, and determination of the ‘‘Ques-

tions of Law,’’: supra, and held (BR. 487): rar

‘If the plaintiff | ‘when assigning its promissory notes

to the Heirs of Tous Scto had expressly reserved to

itself the right of — and if when ‘Tecording. the

* But in saying this the Court also manifesily overlooked.

the fact that there. is no pretense that any notice of the

contemplated sale and lease of March 9, 1937, was. ever

given to the Jose Tous Soto heirs, any more than to the

' partnership itself, by any of the respondents. It is_per-

fectly manifest that if any. such notice had been given to

_. .those heirs they would have transmitted it to the: plaintiff

partnership which they themselves clearly recognized as —

still retaining the option, and. therefore as entitled to the

notice. Nobody has ever even: suggested that the assign--

ment to the heirs ever cancelled the option. It was still in

existence, and was certainly owned either by the’ partner-

ship or else by the heirs; and hence, either one or the other

‘was. entitled to the notice. But no notice was ever given

to anybody. (Confer ee Brief, — Point: anes

pp. 27-28.)

assignment it had’ récorded such reservation in the

registry, then it would have been entitled to’claim

knowl of such reservation on the part of defend-

ants with all the consequences that might arise as

against them’’

thus in its turn completely tgnoring,—as had likewise the -

District Court,—the express finding of the District Court,—

[which the Supreme Court itself had copied with apparent

approval, i in its own opinion (R. 481-482], —that both Mrs.

Commins and also. all of ‘the other respondents had actu-

ally had full notice —

‘‘were advised, prior ‘to the execution of the contract

of sale and lease, of the right of option to purchase

and lease held by Mario Mercado e Hijos concerning

‘the estates Juanita and. Indios.’’

"Judgment of the Circuit Court of Appeals

The plaintiff, this petitioner, appealed from the insular

Supreme Court to the Circuit Court of Appeals, First Cir- .

cuit (R. 490-491), and filed its ‘‘Statement of Points’’ (BR.

495-498) and its “Statement on Appeal” (R. 498-513) in

that Court, both on March 26, 1943.

Respondents, appellees there, appeared and filed on

April 12, 1943, their ‘“motion to docket and dismiss’’ (R. «

514-517) on the ground that the appeal involved only ques-

._. tions of local law, and that (R. 517) a ‘‘simple reading of

‘ the Opinion of the Supreme Court of Puerto Rico’’ should

be enough to convince the Circuit Court of Appeals that

’ the judgment ‘‘is not in any respect wrong’’, and ‘‘that the

appeal has been taken to hinder and delay and is against

the’ administration of justice.’’ -

Upon that basis, ‘the Circuit Court of Appeals, without

affording appellant [petitioner] any opportunity for full .

hearing or argument, entered its order or judgment on

August 23, 1943, granting appellees ‘qeapennete’ motion, -

and ne (R. — that:

“Upon consideration of the.. statement on appeal -

filed i appellant on March 26, 1943, the motion to dis- ©

miss filed by appellees on April 12, 1943, the memo-

randa filed by the parties thereon; and the ‘typewritten _

- transcript of record in this case, it ‘is now, to wit,

. August 23, 1943, here ordered, adjudged and decreed —

as follows: The judgment of the Supreme Court of

ieee Rico is affirmed, under nie 39{b).”’ hs

Pertinent constitutional and statutory provisions, fed-

eral and insular, are in Appendix I (infra, pp. -33-36).

: Petitioner's Position

Petitioner believes, and. submits ;

‘First. This case presents a substantial question, worthy

of consideration on.its merits, upon full briefs and argu- .

ment in the usual way, by the Circuit Court of Appeals, as

to the correctness of the decision of the insular Supreme,

Court. It is believed that that decision was clearly wrong,

“‘patently erroneous,”’ and even ‘‘inescapably’’ so; and

that petitioner was entitled to have the question of whether

or not it really was so, considered by the Cirentt Court of

Appeals, upon full argument. .

. Second. Rule 39(b) of the Circuit Court of Appeals for

the First Circuit, adopted September 20, 1940, shortly after

the decision of this Court on January 3, 1940, of the case

of Sancho Bonet, Treasurer, vs. Texas Co., 308 U. S. 463,

470-472, reflects a misunderstanding by that Circuit Court

-of the decisions of this Court in the Sancho Bonet, Treas-

urer, vs. Texas Co. case and in the earlier case of Sancho |

Bonet, Treasurer, vs. Yabucoa SugarCo., 306.U. S. 505,

509-511. -

This Court did not in those cases indicate. any intention

to change in any way the rule as to the respect to be ac-

. ‘corded to the decisions of a Territorial court of last resort

_ concerning questions of fact or of local law, that had been

unvaryingly recognized and enforced by this Court for

‘more than sixty years previously, alike in cases coming

from the old Territories within the continental United .

States, and, since 1898, from Hawaii, the Philippines, and

Puerto Rico. = a

So far from expressing any intention to vary that. rule, .

this Court expressly said in the.Sancho Bonet vs. Texas Co.

case, supra, (at-p. 470) ;

“For over sixty years this Court has consistently -

recognized the deference due intérpretations of local

law by such local courts unless they appeared:to be

clearly wrong. From Sweeney v. Lomme, 22 Wall. 208,.

decided in 1874, to Bonet v. Yabucoa Sugar Co., supra,

. ‘decided in 1939, .repeated admonitions to that effect

\.. have been given. That rule is founded on sound

\ \ policy. 997 ‘

™ Confer: Sweeney v. Lomme, supra, . 20 Wall. 208, 213;

Northern Pacific R. R. Co. v. Hambly, 154 U. S. 349, 361;.

Foz v. Haarstick, 156 U. S. 674, 679; Copper Queen Consol.

Min. Co. v. Territorial Board of Equalization, 206 U. S..

474, 479; Lewis v. Harrea, 208 U. S. 309, 314; English v.

Arizona, 214 U.S. 359, 361; Santa Fe County v. New Mexico, |

215 U. S. 296, 305; Albright v. Sandoval, 216 U. S. 331, °

339 ; Lewers & Cooke v. Atcherly,; 222 U. S. 285, 294; Treat

v. Grand Canyon R. R. Co., 222.U. S. 448, 452; Ker & Co..

v. Couden, 223 U. S. 268, 279; Clason v. Matko, 223 U.S.

646, 653; Gray v. Taylor, 227 U. S. 51, 57; Cordova v. Fol-

gueras, 227 U.S. 375, 378-379 ; Phoenix R. R. Co. v. Landis,

231 U. S. 578, 579-580; Texas & Pacific R. R. Co. v. Railroad °

Commissioner, 232 U. Ss. 338; Santa Fe C. R. Co. v. Friday.

232 U. S. 694, 700; Nadal v. May, 233 U.S. 447, 454; Gilson

v. United States, 934 U. S. 380, 383, 384; Villanueva v. Vil-

lanueva, 239 U. S. 293, 298-299 ; Diag v. Gonealez, 261 US.

102, 105-106 ;,Fernandez vs. Aylion, 266 U.S. 144, 146; Matas |

vs. Alonso Hermanos, 300 U. S. 429, 432; Wailau. Co. v.

Christian, 305 U.S. 91, 109; Inter-Island Co. v. Hawaii, 305

U. 8. 306, 311; all leading up to the emphatic statement of

+» the same. rule i in Sancho Bonet, Treasurer v. Yabucoa Sugar

Co., supra, 306 U. S. 505, 509-511 ; ‘and in Sancho Bonet,

Treasurer v. Texas Co., supra, 308 U. S. 463, 470-472.

Third. Throughout all ‘those years, and in all those

cases where under the old statutes a direct appeal from

_ the Territorial supreme courts lay to this Court [and in

later cases fromthe Philippines in~cases where a direct

appeal lay to this Court], this Court, while always con-

sistently recognizing and applying this rule of the respect

_ to be accorded to decisions of thé Territorial courts of last

resort upon questions of fact and. of local law, yet appears

never to have failed to examine carefully- and at length,

and upon full briefs and argument, as in any other case,

any appeal coming to it as of right, under the Act of Con-

- gress, from any Territorial court of last resort; and so

likewise the Circuit Courts of Appeal for the Ninth Circuit,

and for the First Circuit, since having had vested in them.

respectively, by the Congress, jurisdiction over appeals

from the Supreme Courts of Hawaii and of Puerto Rico,

have steadily and consistently in applying such rule, and in

’ citing and following the decisions of this Court recognizing

and enforcing ‘it, patiently examined and heard on briefs

and full argument, as in any other case, all appeals coming

_ to them as of right under the Acts of Congress from those

courts respectively,’—with: the sole exception of the. new

practice now adopted in the First Circuit under this new °

Rule 39(b) of that Circuit, here involved.

_ Fourth. ‘The. Circuit Court of Appeals for the First

Circuit has itself, even since the adoption in 1940 of this

Rule. 39(b), recognized. and acted upon its statutory duty

under the Act of fe cee cana to entertain appeals from the.

—_—_—— |

*Confer: Richardson v. Fajardo Sugar Co., 237 Fed. 195,

. 196; Loiza Sugar. Co. v. People of Puerto Rico, 57 F. (2d)

. 105,706; Porto Rico Coal Co. v. Domenech, 41 F. (2d) 183,

185-186; Russell & Co. v. Sancho Bonet. Treasurer, 92 F.

(2d) 821, 822; Hawaii Consol. Co. vs. Borthwick, 105 F. (2d)

a 288; Walker vs. carey 115 F. (2d) 956, 957.

6 =a

_ Supreme Court of Puerto Rico; even although saying that

under this established rule of this Court as to the respect

to be accorded to the decisions of Territorial supreme

courts in local questions: ‘‘Appeals in such-cases are

therefore likely to be futile and merely to cause needless

delay and expense”’. De La Torre v. National City Bank.

110 F. (2d) 381, 383; and see also, Same Case, 110 F. (2d)

976, 983; and likewise the recent case, decided June 14,

1943, of DeCastro v. Board of Commissioners of San Juan,

136 F. (2d) 419, 425.426.

In the De La Torre case, supra, that Gourt in dénying 2

motion theve made to dimnies the egbedl on file very

ground that the case involved ‘‘purély a question of local

_ law,’’ said (110 F, (2d) 381, supra, at p. 383); |

‘under Section 128 of the Judicial Code, 28 U. 8.C.,

Section 225, appeal to this Court is conferred as a

“matter of right, provided the jurisdictional requisites

ms t. We cannot therefore dismiss the appeal

first ground urged by appellee.”

And in the recent De Castro case against the Board of

Commissioners of San Juan, supra, that court again, while

very strongly expressing its feeling that under the rule of

this Court its functions, in passing upon appéals from the

Supreme Court of Puerto Rico, may be reduced to requir-

ing it ‘‘to act practically as a rubber stamp, or else to

be reversed by the Supreme Court of the United States,”

nevertheless recognized and acted upon its statutory duty

to entertain the appeal, saying (136 F. (2d) 419, supra,

at p. 425); -

“But as the law now stands litigants bring these

cases to us as a matter of right, and we have to pass on

them.’’ (Italics supplied.)

Those recent decisions of that Circuit Court itself appear

to recognize the impropriety and the invalidity of its Rule

39(b) here in question ; as well as the jurisdiction, and con-

‘sequently the duty, of that court to hear cases coming from

‘the insular Supreme Court of- Puerto Rico, in just the same

manner as it hears cases costing to it on appeal from other

-- courts.

’ Fifth. When 2 court possesses jusiodiction, it is its duty

to exercise its jurisdiction, and to proceed to hear the case.

_ It may not abdicate its jurisdiction ; nor deny to an appellant

bringing an appeal within its jurisdiction from one court,

the same kind of full hearing that it grants to appellants

bringing to it appeals within its jurisdiction from other

courts: To do so is to deny to such appellants from the one

court the equal protection of the laws, and due ‘presses of

law.

And the duty of a court to exercise its jurisdiction may

+. be enforced by mandamus. Ez parte Kawato, 317 U. S. 69,

71; Roche v. Evaporated Milk Association, 319 U. 8. 21,

~ 32; Ex parte Metropolitan Water Co., 220 U. 8. 589,

; McClelland v, Carland, 217 U. S. 268, 279-282; Ex —

poh Bradley, 7 Wall. 364, 376; Knickerbocker Ins. Co. v.

Comstock, 16 Wall. 258, 270-271; Ex parte Russell, 13 Wall. -

664, 669-671 ; Ex Parte Simons, 247 U. &. 201; Hedeen ¢.' .

Parker, 256 U. S. 277, 288-289.

Sizth. It follows that it was the duty of the Circuit Conrt

of Appeals in the present case, despite its ‘‘Rule 39(b)’’, to

hear on full briefs and argument this appeal coming to it

front the Suprema Court of Puerto Rico, in the same way

that it hears appeals within its jurisdiction coming to it

from other courts; and that it was grave error to sustain .

appellees’ (respondents’) motion to dismiss the appeal, and

to affirm, pro forma, the. judgment of the insular Supreme

. Court, without giving to this petitioner-appellant the oppor- -

tunity for a full hearing. “

Seventh. The decision of the insular Supreme Court of =

Puerto Rico was clearly wrong, and should. be reversed, for

_ the réasons hereinbefore indicated,.and stated: more at

length in the Supporting Brief (infra, pp. 23-29), and in

petitioner’s (appellant’s) ‘‘Statement of Poitits”’ in the

Cireuit Court of Appeals (R. 495-498).

¢ Ae , - '

Sic ei da dl sanled Alla alec Naini: dainin hb AA wich Sa LMR I OR NO a PR NEE 2 ce | a :

, Ocoee

{

. 20

Reasons for Granting the Writ

This case presents an important question of federal law,.

. of the validity and application of this Rule 39(b) of one

of the Circuit Courts of Appeal [the First Circuit], which

has not been, but it is believed should be settled by this

Court. The practice followed by that Court in this case

under that Rule, of denying to the appellant in an appeal

coming to it under its statutory jurisdiction from the in-

sular Supreme Court of Puerto Rico, the same opportunity

for a full hearing upon briefs and oral argument which is

accorded by it to appellants in other cases within its juris-

diction coming to it from other courts, is believed to be a:

denial of due process of law and of the equal protection

of the laws, and to be.such a departure from the accepted

and usual course of judicial proceedings, and to be so in

conflict with the applicable ‘decisions of this Court, ag to

call for the ‘exercise of this Court’s power of supervision,

and the issuance of a writ of certiorari, or in the alterna-

tive of a writ of mandamus, to that end.

The decision of the insular Supreme Court of Puerto

Rico was clearly wrong, and should be reversed.

It is. therefore respectfully requested that this petition

be granted, and that a writ of certiorari issue,—or in the

alternative a writ of mandamus,—to the Circuit Court of

-- Appeals for the First Circuit, and that upon a hearing the

judgment of the Supreme Court of Puerto Rico affirming

that of the District Court of Ponce, Puerto Rico, be rée-

versed, and that petitioner-plaintiff be granted the relief

prayed in its two original petitions Nos. 311 and 312, in.

the District Court of Ponce. ae

Respectfully submitted

WiiuM Cartrron Ricsy

Pepro M. Porrata —

| ' Attorneys for Petitioner

Ricsy, Leon anp WEILL, .

Frepv W. LLEweLttyn

Of Counsel

BRIEF IN SUPPORT OF. PETITION

- Opinions Below

- The opinion of the insular District Court of Ponce |

(‘Statement of the Case and Opinion of District Court’’,

R. 31-44) is not officially reported. The Opinion of the Su-

preme Court of Puerto Rico, July. 31, 1942 (R. 474-487)

. is reported in 60 P. R. Dec. 877 (Spanish edition). It has

not yet appeared i in the English edition of the Puerto Rico

Reports.

There is no written opinion by the Circuit Court of Ap-

peals. Its ‘‘judgment’’ of August 23, 1945 (R. 518) upon the’

‘‘motion to dismiss’’ filed by 5s tecaad _— :. the respond-

ents here), by which it is ;

‘there ordered, adjudged and: decreed as follows: The

judgment: of the Supreme Court of Puerto Rico is

affirmed, under Rule 39(b),’’

has not yet appeared in the Federal Reporter.

The former opinion of the insular. Supreme Court of —

Puerto Rico, which was adverse to the respondents here

and favorable to ‘this petitioner, denyi ing ejectment to the

respondents, to which reference is several times’ made in

the transcript of the record here /(R. 475, 496, 498), is re-

ported in 55 P. R. Dee. 41 (Spanish edition), but has not

yet appeared i in English edition of the Puerto Rico Reports.

J urisdiction

The jurisdiction of this Court to issue the writ of cer-

tiorari is invoked under Section 240(a) of the Judicial

Code of the United States as amended by the Act of Feb- -

ruary.13, 1925, c. 229, 43 Stat. 938.

Its jurisdiction to issue the writ of mandamus is invoked

under this Court’s inherent constitutional power to issue

the recognized common law writs in aid of its appellate

jurisdiction. ; .

More than’ $5,000.00 is involved, as is expressly admitted

also by. the ecard themselves (R. 498-499, 513, 515).

Questions Presented

The questions here presented are stated in the petition

(‘tQuestions Presented’’, ante, pp. 2-3).

a ’

As is indicated in the Petition (ante, p . 15), pertinent

_ -ecnstitutional and statutory provisions, federal and insular,

are in Appendix I (infra, pp. 33-36).

_ Specification of Errors To Be Urged

“These are indicated under the headings ‘‘Questions Pre-

. ‘sented?’ ‘*Petitioner’s Position’’, and ‘‘ Reasons for Grant-

ing the Writ’’ in the Petifion (ante, pp. 2-3, 15-19, 20).

Summary of Argument

The argument is summarized under the headings ‘‘Peti-

tioner’s Position’’ and ‘‘Reasons for Granting the Writ”’

in the Petition (ante, pp. 15-19, 20); and in the *‘Subject-

_ Index’’ preceding it (ante, pp. I-II).

STATEMENT OF THE CasE)

The case is stated in the Petition (‘‘Statement,”’ i,

. pp. 3-9). A chronvlogical analysis of the facts is in n Appen-

dix II (infra, pp. 37-48)...

. Opinions, of the District eet of Ponce ay of the

Supreme Court of Puerto Rico

The gist of the opinions of these Courts is summarized

in | he Petition (ante, pp. 10-14).

—

ee oe

ARGUMENT

The judgment of the Supreme Court of Puerto Rico was

clearly wrong; even “patently erroneous”, or “inescapably

wrong.’’ | ,

. Point I

' A. The District Court ignored its own finding that all of

the respondents had express actual knowledge of this peti-

. tioner’s ownership of the option, and wrongfully applied

the rules of the -mortgage.law concerning recording in the

registry which could only have been applicable in the ab-

sence of such actual_notice; and it misapplied the rule of

Section’ 1418 of the Civil Code relating to the interpretation

of contracts when the parties to a contract differ among

themselves as to its meaning; so as improperly to hold in

this case, where is no. misunderstanding or difference be-

tween the parties themselves as to the meaning.of this

1933 assignment, that it meant something wholly different

from what either he parties themselves understood it

- to mean—[and of which all the respondents here also actu-:

ally. had notice, as the Court itself had just found in its

“Findings of Fact”; viz., that the option was not intended to

be assigned but was reserved and still owned by this peti-

tioner],—the Court nevertheless holding that it was con-

‘strained by Section 1418 of the Civil Code to construe the

assignment of the mortgage notes as necessarily carrying

the option with it, despite the contrary intention of both

parties to the contract.

.B. In so holding the District Court relied upon the pro-

visions of the first clause of Section 1233 of the Civil Code

directing that: “If the terms of a contract are clear and

leave no doubt as to the intentions-of the contracting

parties, the literal sense of its stipulations shall be ob-

served’’ (Appendix, infra, pp. 33-34). But-in so holding the

Court ignored both the provision of the second clause of

‘the same Section 1233 that:

. r

. ~

pa 2 Ci ia Gales Sat at eS na a man! ate : ell

““If the words should appear contrary to the evident

intention of the contracting parties, the intention shall

prevail’’ (Italics supplied) ; ;

and also the similar provisions of the next-succeeding sec-

tions of the Code, Sections 1234, 1235, 1236, 1237, 1238, and

1239 (Appendix, infra, p: 34) emphatically directing that

it is the actual intention of the parties at ‘which the Court .

should endeavor to arrive.

C. And in this holding the Court also, without any dis-

cussion or analysis of the 1933 assignment deed, in assum-

ing that its words ‘‘are very explicit and do not leave any

room for doubt as:to the intention of the contracting par-

ties’? (R. 40). not only completely ignores the fact which

_ it had ‘itself found that the mutual intention of both the

contracting parties was that its meaning was directly to

the contrary of what the Court is here assuming concern-

ing it; but also completely ignores the terms of the instru-

ment itself, insofar as, on its face, it did not purport to

be a complete outright assignment of the mortgage, but,

on the contrary, an assignment only of the mortgage ‘‘in

_part’’*, expressly reserving to the assignor, the Mercado.

partnership, the right to ‘‘retain’’ a portion of the interest

‘on the notes in consideration of its undertaking a new

obligation to. pay (and absolutely to guarantee the pay-

‘ ment of): monthly installments of the interest to the heirs,

which interest it could itself collect: only semi annually from

Mrs. Commins, the mortgagor. This significant provision,

in addition to the fact of nothing whatever being said ir

that instrument regarding either the option under clause

‘‘Seventh’’-of the 1932 mortgage, running directly to the

Mercado partnership, and not to‘the holders of. the mort-

gage notes,—or as to the right to be consulted and asked

to “consent’’ in. case of ‘any proposed partition of the

a ‘‘in part’’: The wording of Article 152 of the Mortgage.

bands between Mrs. Commins and her sister Santia, which

the Court also completely i ignores.

D. The Court also in that connection likewise completely

_ ignores the practical construction of that assignment in-.. —

strument which was put of record, and became notice to | —

the world on the public Registry, when, three years later, -

on August 20, 1936, upon the partition of the-lands be-

‘ ‘tweenthe two sisters, it was the Mercado partnership, and

not the Jose Tous Soto heirs, which took part, ‘‘inter-

vened”, in the partition deed for the purpose of giving its

‘‘consent’’ to the partition, as even the respondents them- ~

selves all expressly admit in their several Answers in the

District Court (R. 22, Par. ‘‘Tenth’’; R. 27, Par. ‘‘Sixth’’).

‘E: The Court very clearly erred in this holding that the

recording laws, the Mortgage Law,—or the Civil Code of

Puerto Rico,—were intended by the Legislature to, or do

actually, override the mutual intentions of the parties to.

a contract, where there is no misunderstanding or -differ-

~ ence of opinion between the parties themselves about it,

and where all the other parties to the ‘case actually had

notice of that mutual understanding of the terms of .the

contract.

To the exact contrary, the provisions of Sections 1233

to 1239 of the Civil Code (Appendix I, infra, taken together,

strongly emphasize that it is the intention of the parties

which is-to govern. | ;

‘Point II rn

And the Court also clearly misapplied Section 1759 of

the Civil Code (Appendix I, infra, p. 35) in saying that (R.

41), ‘‘according to Section 1759 of the Civil Code the mort-

gage-is eSsentially indivisible’’, and théreupon-concluding, |

without further discussion, that (R. 41, supra): ‘The op-

tion to sell and leasc was substantially part “of said con-

tract, and, therefore, it. was inseparable from the mort-

gage’’.

A. In support of this proposition the Court quotes

= t

~ . LS PRN ei gE a asi eats te SE Sanne. :

Llinas v. Mariani, 47 P. R. BR. 543; Montilla v. Van Syckel

et al.,. 8 Puerto Rico Rep. 153; and Puente v. Perez et:al.,

7 Puerto Rico Rep. 181; none of which remotely supports

the Court in this proposition.” Nor does a full reading of

Section 1759 itself. [It is copied at length in Appendix I,

infra, p. 35]. It deals with the division of a mortgage debt

_ into aliquot parts, among several holders (creditofsy, or

among several debtors; and directs that even though the.

mortgage indebtedness be thus distributed, yet the mort-

e securing it remains one and — for the

gag 4

benefit of all of them. ‘

B. So far as that section is applicable to this case at all,

it would seem to mean that upon the partial assignment of

the mortgage indebtedness, in 1933, to the Jose Tous Soto .

Heirs, the Mercado partnership expressly retaining a part

of it—[the 34 of 1% per annum out of the annual interest,

with the obligation. on its part. ‘to continue to collect the

- whole 9% semi-annual interest payments from the mort- .

gagor, and to pay over the reduced amount of 814% to the

heirs, but in absolutely guaranteed monthly payments, so

as to produce a regular, and certair, monthly income for

the heirs],—the mortgage securing the notes. was not

thereby divided up into aliquot parts, but still remained

‘indivisible’? in the hands of the Mercado partnership~

for the benefit of all of the holders of the indebtedness.

And that, of course, a fortiori, the wholly independent agree-

ments embodied in the deed of March 23, 1932, in its clauses

‘‘Seventh’’ and ‘‘Eléventh’’, embodying respectively the

‘ option and the right to be asked to ‘‘consent’’ to any parti-

y tion of the lands between the two sisters,—both these cove-

_ nants running specifically, by name, to the Mercado part-

nership, and not, generally in favor of the holders of the

indebtedness. (the mortgage notes), as did clause ‘‘Second’’

of that deed (R. 325-326) which constituted the mortgage in

favor of the holders of those ‘‘bearer’’ notes, whomsoever

they might be,—remained undisturbed, and unaffected in

_ any way, by the delivery of the ‘‘bearer’’ notes to the heirs.

AS SPR RSD DB: RSET ee HN oe) 2 TSR a bi Eo OR Rk 2s TS

oN pany! O25 wae we aye ne Sr eee igs a ces SE aes oe oye a:

C. Bearing this in mind it appears wholly consistent with

the actyal intention of the parties that there was no as-

signment of the mortgage itself outright, and no assign-

ment of these clauses or covenants of the 1932 deed, to the

heirs,—the purpose being, of course, to reserve the rights

under those clauses, undisturbed, in the ownership of the:

Mercado partnership. And the assignment deed, assigning

as it did only a portion,—{although, of course, by far the —

major portion],—of the mortgage credits to the heirs,

“and-not specifically assigning the mortgage itself, nor any

of the separate covenants in it, accurately expresses that

limited purpose. It was accurately done; it was by no means

slipshod work; it was good conveyancing. It is not to be .

read as carrying more than it actually said, and certainly

not to the extent of interpreting it to transfer this inde- —

pendent property right in the option, which, most clearly;

neither of the parties intended it should catry,—and thus

_to override, merely by implication, the actual intent-of all

' the parties to it.

D. It should be borne in mind that the Jose Tous Soto

_ heirs do not appear to have been in the farming business; .

so that the option right was of no value to them. It added |

nothing to the security of the mortgage. On the other hand,

it was of great value to the permanency of the enterprise of:

the Mercado agricultural partnership to.have the right to

renew its leases on the lands it was cultivating,—or to buy

‘them if they should be offered for sale,—on the same terms

- that anyone else might offer.

"These circumstances are to be taken into consideration in

- interpreting the 1933 assignment, in arriving at the inten-

tion of the parties in executing it; as is directed by Section

1233 to 1241, inclusive, of the Civil Code of Puerto Rico

(Appendix I, sire, Pp. 34,- supra).

Point III

And the Court erred again, equally, in ignoring the plain

fact that, necessarily, if the 1933 assignment were actually

- to be regarded as transferring this option right to the Jose

Tous Soto Heirs, then it. became and remained their prop.

erty, and was such in 1937; and they were entitled to the

notice under it, .

A. The: option was certainly not extinguished by the

transfer. If it were to be considered as the property of the

heirs, then they stood in the partnership’s shoes in respect

to it. Then they held the same right, and were entitled to

the same thirty days notice of any proposed sale or lease,

to which the Mercado partnership would have been, if the as-

signment had never been made. And moreover, since the

partnership, on the face of the record, still retained, in any

event, an aliquot part of the mortgage indebtedness [its —

% of 1% per annum interest], it follows that -it likewise

‘still retained, even on that theory, the right to the thirty -.

days* notice of any proposed sale or lease, and to receive -

that notice éither directly or else through the heirs. as the

owners of the major portion of the indebtedness.

B. And those facts, at least, and in any event, all of the ~

parties to these proceedings,—and the whole world,—were

bound to know, from the face of the record in the.Public

Registry,—even if they should choose to close their ears

and eyes to their actual knowledge which the Court finds

they all really had, of the true intention of both parties to

the assignment, to the contrary.

C. But no notice whatever of the proposed sale and lease

of March 9, 1937, was given to the Jose Tous Soto Heirs,

any more than to the Mercado partnership. Of course, if it

had been, it promptly would have been transmitted by the

heirs to the evant this petitioner ; and the jig would

have been up. --

The heirs were just as carefully kept in the dark as was

‘the partnership.

Point IV

And the Supreme Court of Puerto Rico similarly acre

in approving and affirming the judgment and the opinion

. ‘ P

e > —— tie ere Oy rea eee BF ee ee ~ ae qo a .

+ —=—— SPOS PRS sit ace ar I es

29 . P

of the District Court; and in holding that the [supposed]

lack of notice of record of the fact of the reservation of

the option, and of its continued ownership by the Mercado

partnership,

‘‘entitled dctendente to proceed as: regards the plain-

tiff in accordance with their construction of the statute’’

(R. 487, supra),

despite | the express finding of the District Court, quoted

with approval by the insular Supreme Court itself (R. 481-

482), that all of the defendants-respondents actually did have

full notice of that fact.

B. Under those circumstances, what possible additional

bencfit could the defendants have received from having that

same fact spread of record in the Public Registry,—the same

thing which they already actually really knew themselves,

as the court itself had just found in approving the ‘‘Find-

’ ings of Fact’’ of the District Court. And yet, the insular

Supreme Court holds (R. 487 supra) : —

‘*Tf the plaintiff when ; assigning its promissory notes

to the Heirs of Tous Soto had expressly reserved to

itself the right of option and if when recording the as-

signment it had recorded such reservation in the reg-

istry, then it would have been entitled to claim knowl-

edge of such reservation on the part of defendants with —

' all the consequences that might arise as against them.

The record of the original contract in the registry and

that of the second contract without any reservation in

regard to option, entitled the defendants to proceed

as regards the plaintiff in accordance with their con-

struction of the statute.’’ (/talics supplied. z

C. It is respectfully submitted that that; holding is sim-. |

pid and plainly, ‘‘inescapably wrong’’; ‘‘patently errone-

s’’. It is gravely unjust; and should be reversed. —

SECOND

; Point V |

Rule 39(b) of the Circuit Court of Fs sare for the Fire

\ Circuit, quoted in the Petition ate, p. 2), is invalid;

‘and its application by that Court in this case, by dismissing

the appeal from the Supreme Court of Puerto Rico, without

giving appellant, this petitioner, an opportunity for a full

_ hearing and argument, in the same way in which that court

_ hears appeals within its jurisdiction coming from other

courts, was a denial of due process of law and of the equal

protection of the laws. This point has already been dis-

cussed in the Petition ee s Position’’, ante, Peti-

tion, pp. 15-19).

CONCLUSION

The decision of the Supreme Court of Puerto Rico, af-

firming the judgment of the District Court of Ponce, was

clearly wrong, and should be reversed; and the\action or

judgment or order of the Circuit Court of Appeals for the

First Circuit, dismissing, under its Rule 39(b) the appeal

to it, and affirming the judgment of the insular Supreme

Court pro forma, without full hearing and argument,

.likewise erroneous. and a deprivation of petitioner-appel- \

' lant’s constitutional rights to due process of law and to the

equal protection of the _— and should. likewise be’ re-

- versed. -

The writ of certiorari should be granted, oy upon argu-

ment the judgments, as well-of the Circuit Court of Appeals

-as also of the Supreme Court of Puerto Rico, and of the

District Court of Ponce, should be reversed; and this case

remanded with directions to grant the prayers of petitioner’s

original complaints in the District Court. Or else, in the

alternative, the writ of mandamus should issue to the Cir-

‘cuit Court cf Appeals [or that Court should be directed

in these certiorari proceedings] to-set aside its order or

judgment of Aagust 23, 1943, which affirmed pro\forma |

. Without full hearing the judgment of the insular Sapreme

Conrt, and ‘to proceed to hear upon full briefs and argu-

Ned ce tata Se Se oat Sig We ETS ol Pol TET Se RR sO

! ‘4.

;. Sn

ment, and in the sams Way in which it hears appeals coming

_ from other courtswithin its jurisdiction, and to consider

and decide this case upon the merits. °

Respectfully submitted,

- Wim Carrron Ricsy » -

Pepro M. Porrata —

Attorneys for Petitioner

Riesy, Leon anv WEILL,

Frep W. LLEWELLYN

Of Counsel

ae a

: °

z 4

\, ;

\ re

‘.

APPENDICES

| 33

“APPENDIX I .

es and Statutes

ConstITUTION -

Article III. flection 1. The jndicial Power of the United

States, shall. be vested in one supreme Court, and in*such

inferior Courts as the Congress may from time to time

ordain and establish. - 2

Article IV., Section 3; Clause 2. The Congress shall have

Power to dispose of and make all needful Rules and Regu-

lations respecting the Territory or other. Eroper ty belong-

ing to the United States;

Fifth Amendment. No person * * * * * * nor be deprived

of life, liberty, or property, without due process of law.

FEDERAL

Organic Act for Puerto nae Act of March 2, 2, 1917, ¢. ms

39 Stat., 951.

Sec. 2. That no law shall be. enacted in Porto Rico ‘whlch

shall deprive any person of life, liberty, or property, with-

out due process of law, or deny to » any’ person therein, the

equal protection of the laws.

Judicial Code, Sec. 128(a). | circuit courts of appeal

shall have appellate jurisdiction to review by appeal or =;

writ of error final decisions— oe

First. In the district courts***** -

Fourth. In the Supreme Courts of the Territory of

Hawaii and of. Porto Rico, in all cases, civil or criminal,

wherein the Constitution or a statute or treaty of the United

States or any authority exercised thereunder. is involved;

in all other civil cases wherein the. value in controversy,

exclusive of interest and costs, exceeds $5,000.00, and in

all habeas corpus proceedings. (As amended by Act # Feb-

ruary 13; 1925, c. 229, 43 Stat. 936.)

Puerto Rico

Civil Code. (Edition of 1930.)

‘See. 1233. a the terms of a contract are clear and leave

34°

-no doubt as to the intentions of the contracting parties the

literal sense of its stipulations shall be observed.

If the words should appear contrary to the evident in-

tention of the contracting partics, ‘the intention shall

prevail.

Sec. 1234. In order to judge as to the intention of the -

contracting parties, attention must principally be paid to

their acts,.contemporaneous and subsequent to the contract.

- Sec. 1235. However general the terms of the ‘contract

may be, there should not be understood as admitted therein

things’ and cases.different from those with regard to which

the persons interested intended to contract. ;

Sec. 1236. If any. stipulation of a contract should admit

of different meanings, it should be understood in the sense

most suitable to give it effect.

_ Sec. 1237. The stipulations of a contract should be inter

preted in relation to one another, giving. to those that are .

doubtful the meaning which may appear from the consider-

ation of all of them together.

Sec. 1238. Words which may have different meanings shall

ve understood in that which may be most in accordance .

with the nature and objects of the contract.

Sec.:1239. The uses or customs of the country shall be

taken into consideration in interpreting ambiguity in con--

tracts, supplying in the same the omission of stipulations

~ which are usually included..

See. 1240. The interpretation of obuctre stipulations of a.

contract must not favor the party o¢casioning the obscurity.

Sec. 1241. When it should be absolutely impossible to de-

cide the doubts by the rules establishéd in the preceding sec-

tions, if they deal with incidental circumstances of the con-

tract, and said contract involves a good consideration, they

shall be decided in favor of the smallest transmission of |

rights and interest. Should the contract involve e valuable.

pn consideration, the doubt shall be decided in favor of the

greatest reciprocity of ‘interests. .

Should the doubts, the decision of which is referred to in

this section, inv olve. the principal object of the contract so

‘ ¢ «@ - .

BPP ae OS Laie ON, er Me PAA, oF ee gas US

5 ‘ - .

7 ° P ue

that the intention or will of the contracting parties can not

.be ascertained, the contract shall be void.

Sec. 1418. The sale or assignment of a credit includes

that of all the accessory rights, such as the security, mort-

gage, pledge, or privilege. ;

Sec. 1759. The pledge and the mortgage ‘are indivisible,

even if the debt should be divided among the legal repre-

sentatives of the debtor or of the creditor. ae

Therefore, an heir of the debtor who may have paid a

part of the debt can not request. that the pledge or mort-

gage be proportionally extinguished as long as the debt has

not been paid in full.

Neither can the heir of the creditor, who received his

part of the debt, return the pledge nor cancel-the mortgage |

to the prejudice of the other heirs who have not been paid.

From these provisions is excepted the case in which there

are several things given in mortgage or pledge and each

of them secures only a specified part of the credit.

The debtor in such case shall be entitled to. have the

pledge or mortgage extinguished in proportion as he-pays

the part of the debt for which each. me is naan) liable.

MORTGAGE LAW

Section 152. A mortgage credit may be conveyed or as-

signed to a third person in whole or-in part, provided it -

be effected by means of a public instrument, notice of which

is given to the debtor, and that it be recorded in the registry.

_ The debtor shall not be bound by said contracts to any fur-

ther extent than he was by his own.

The agsigtiee shall be subrogated to all the rights of the

assignor.

Sec. 153. Ina mortgage constituted to secure iiaatiaas

transferrable by endorsement or documents payable to .

bearer, when the mortgage interest is conveyed or assigned,

it shall be understood that the latter is conveyed, together

with the obligation or document, without the necessity of

the debtor being advised thereof, or the transfer oats re-

corded in the registry.

° .

NT SERENE TS Eee e lis

Law of Evidence (Rev. Stats. and Codes of 1911; Pars.

1394-1396).

Sec. 26 (Par. 1394). In the acnatinelan of a statute or

instrument, the office of the judge is simply td ascertain |

and declare what-is in terms or in substance contained

therein, not. to insert.what has been ommitted, or to omit

what has been inserted; and where there are several _pro-

' visions or particulars, such a construction is, if ais to

be adopted as will give effect to all:

- See. 27 (Par. 1395). In the construction of a iain the

intention of the Legislature, and in the construction of an

instrument, the intention of the parties, is to be pursued,

if possible; and when the intention of a general provision

and that of a particular one are inconsistent, the latter is

paramount to the former.

Sec. 28 (Par. 1396)..For the proper construction of an

instrument, the circumstances under which it was. made,

‘including the situation of the subject of the instrument and’ _

- of the parties to it may also be shown, -so that the judge

be placed in the position of those whose language he is

to interpret.

APPENDIX I |

Chronological Analysis of the Facts

‘The underlying facts are substantially as. follows:

1. On March 23, 1932, respondent, Mrs. Elvira Olivieri

Commins, a divorcee, borrowed $41,256.89 from this peti-

.tioner, Mario Mercado e Hijos, ‘‘an agricultural civil

partnership’’ of Ponce, for which she executed four prom-

issory notes, each dated that day, and payable March 23,

1939, seven years after their date, ‘‘to the holder by en- .

dorsement of this promissory note’’ (Complaint, R. 2-3; —

“Exhibit J’’, R. 322,-324-325.) As security for the loan she

executed ‘‘a voluntary mortgage’’, ‘‘to secure all and each

of the promissory notes’’ (R. 2-4; 325-326), upon her un-

-divided one-half interest-in two estates then owned - jointly z

by. herself and her sistér Santia, and known as’ “Los |

‘Indios’’ and ‘‘Juanita’’.

2. At-that time, both of thsoe estates were under ten-

e Hijos, made back in 1927 and in 1928, respectively ; and

this petitioner also owned other lands of its own adjoin-

ing them,—its ‘‘Rufina’’ plantation (‘‘Central Rufina’’),

~—and others, as is ‘indicated by the recorded descriptions of

the boundaries of the estates, ‘‘Los Indios’’ and ‘‘Juanita”’

(‘Exhibit J’’, supra; R. 322-323).

3. Under those circumstances, there were haieieils in

-the'same public deed by which the mortgage was constitut- .

ed, two independent clauses running specifically,’ person-

1 UNLIKE THE GENERAL CLAUSE ‘‘second’’, constituting the

mortgage, and which made to run, not to this petitioner

by name, nor to anyone else in. particular; but, generally,

“to secure all and each of the promissory notes referred to.

‘in the foregoing clause’’ [notes payable to the ‘‘holder by

indorsement’’, whoever he might be, without naming any

specific payee]—in whomsoever’s hands they might be,—

without specifically naming sid —

ally, to this petitioner-plaintiff partnership, Mario Mercado

e Hijos, by name, and reading, respectively, as follows:

“Seventh

‘‘Option to Purchase and Sell and to Lease :—Not-

withstanding the foregoing clause, the debtor, as part -

of the consideration of this contract, agrees with the ~

partnership Mario Mercado e Hijos, so long as the -

mortgage credit herein constituted is not paid, to grant

it priority to purchase and éell or lease her undivided

joint interests in the estates ‘Indios’ and ‘Juanita’

_upon the same price and terms. To this effect, the

debtor shall advise, unless such ‘mortgage credit is

paid, by registered-letter to Mario Mercado e Hijos,

of any offer of sale or lease made to her and said part-

nership shall be granted thirty days for accepting or -

refusing such offer and during said period the debtor

_ cannot sell or lease to anybody else. Should there be.

a sale or lease in violation of this agreement, Mario

Cittade e Hijos shall be entitled, to repurchase from

the purchaser or lessee, which right it can exercise

for thirty days from the record of such ‘sale or lease -

_ for subrogating itself to the place, degree or priority

of the purchaser ‘or lessee.’’ (R. 4-5, 327)

‘« Eleventh

‘‘The parties likewise agree that the actual partition

of said estates cannot be carried out without the con-

sent of Mario Mercado e Hijos so “y as the mortgage

herein constituted i is in foree.”’ (R. 5, 328)

‘4. The next year, on May 9, 1933 [while its ten-year

leases of the lands were still in effect], by public deed, the

petitioner partnership assigned the mortgage credits of

_ $41,256.89 to the heirs of Jose. Tous .Soto, deceased,

_ “through. the proper endorsement and delivery. by the

plaintiff to the aforesaid heirs of the four mortgage cred-

its’? (Complaint, R. 5). But the deed of ‘‘ Assignment of

Mortgage Credit’’, put in evidence by the respondents

themselves,? recorded in’ the Public Registry on May 26,

2 Defendants’ “Exhibit: 2’? (R. 397-412).

———E————E

1933 (R. 411-412), shows on its face that this assignment

of the mortgage credits was not an outright assignment of

the whole deed, by which the mortgage securing the notes, in

whosoever’s hands they might be, was constituted ; but was

an assignment only of a partial interest in the promissory

notes, for which purpose, only, the notes, were delivered to

the purchasers, the heirs of Jose Tous Soto. Pertinent pro-

visions in the deed of assignment are: ” |

(a) This petitioner- -plaintiff partnership, the assignor,

is, expressly,

‘*to retain *%4 of 1% annually of the aforesaid interest

during the life of this mortgage, as a consideration,

as above stated, of the obligation to be assumed in the

next clause of this deed.” (Clause “THIRD”, R. 406-

407 ; italics supplied. ) ;

(b) Clause “youRTH”” provides (R. 407 ) i

‘‘The partnership Mario. Mercado e Hijos.binds it-

_ self to pay to the assignees in monthly installments

at the end of each month the interest on the mortgage

hereby assigned at the rate of 814% annually.’’

(Italics supplied. That is to say, monthly payments

- at the rate of 844% per annum; instead of the semi-

annual payments at the rate of 9% per annum stipu-

lated in the promissory — themselves. asa R. -

325, 401).

also absolutely guarantees (Clauses ‘‘Fifth’’, ‘‘Sixth’’ and

‘*Kighth’’; R. 407-408), not only the payment of the month-

ly installments, but also of the principal and interest of

the mortgage debt in full, and also of all‘taxes, excises or

imposts that might be levied on the principal or the interest

by either the Federal or the Insular Government or any

Municipality.

(d) There is no express assignment ‘of the rights given:

dirgetly to the partnership Mario Mercado e Hijos by

PRIS |S a

. 40

_ clauses ‘‘Seventh’’ and ‘‘Eleventh’’, above quoted, of the

original mortgage deed of Mrs. Commins of ‘March 23, —

1943, supra,—the clauses securing the partnership’s right

or option to purchase or lease the lands at the same figure ~

that might be offered by anybody else, and forbidding their

partition bétween the two sisters without its- consent.

_ (e) Nor was there, on the face of the document, any ex- -

press outright assignment ofthe deed of mortgage itself,.

but only (Clause ‘‘First’’, R. 406) of ‘‘the mortgage credit ~

constituted by the deed’’;—‘‘the assignor subrogating the °

assignees to its rights in the same degree and priorities by

. delivering to them in this act and in my presence and that _

-of the witnesses the four mortgage promissory notes above

mentioned duly endorsed.’’ (Jtalics supplied). -

5. In other words; upon the face of. that deed of a as- -

signment,’ May 9, 1933, as it appears recorded on the Pub-

- lic Registry a few. days latur, May 26, 1933, supra, it ap-

parently contemplated that this partnership, the assignor, —

holding the leases on these lands, as it then did, should

continue to collect the interest from the mortgagor, at the -

stipylated rate of 9%, in her semi-annual payments as they

fell due; but that, without regard to the dates of those semi-

annual payments, the partnership should, in monthly pay-

ments, which it absolutely guaranteed—[and guaranteed,

sular],—provide a monthly income for the heirs of Jose

- Tous Soto, at the rate of 814% per annum on the amounts

of the original mortgage notes; and that it should itself

‘‘retain % of 1%’’ per annum, ‘‘as a consideration, as above

stated, of the obligation’’ (R. 407 supra) thus assumed by

the partnership.

This apparently means that the partnership still retained’

a live, active interest in the whole deed securing the notes.

It retained the right and the duty to collect the interest,

semi-annually, from the mortgagor, and to pay it over to

- the assignees in the monthly installments at a lesser rate,

which it absolutely guaranteed; and the express right, ‘‘as

@e.

= - ye. a Certo.

MELDED EIDE ON EMOTE ES OLE IE i I

a ;

- a consideration’’ for a]l these obligations it was thus as- —

suming, ‘‘to retain’’ for itself the difference of % of 1%

in.the annual interest. ak :

- And thus retaining this active interest, no outright as-

signment was made of. the whole original mortgage deed;

' . —gand no assignment of the partnership’s rights in the

lands under clauses ‘‘Seventh’’ and ‘‘Eleventh’’ of that

original deed. ams

6. That such was the understanding in fact,—and spe-

cifically that the option rights under clause ‘‘Seventh’’ of.

the March 23, 1932; mortgage, remained in the hands of

the partnership and were not assigned,—was directly and

positively stated by the Heirs of Jose Tous Soto them-

selves, in a formal deed of ‘‘ratification’’, March 31, 1937

(petitioner, plaintiff’s ‘‘Exhibit. E’’, R. 281-286; and

“Exhibit F’’, R. 286-302), as soon as the question was

brought to their attention, in which the heirs formally

stated with reference to that’ assignment of May 9,

1933 (R. 288-289) that it did not carry with it the

partnership rights under clause ‘‘Seventh’’ of the 1932

mortgage, but that, directly to the contrary (R. 284):

‘*Fourth,—It is set down by the parties hereto * * °

that the conveyance of the Mortgage Credit constituted

' by Mrs, Elvira Olivieri Commins by means of deed

No. 13, of March 23, 1932, * * * had for its exclusive

aim the reception by the Heirs of Jose Tous Soto,

parties hereto, of-a fixed and certain rent, it being

agreed that the said partnership Mario Mercado e

Hijos would retain three-fourths of 1% of the inter- °

est agreed upon in the said deed of constitution of

mortgage. ? . .

“It was likewise agreed between the parties, in con-

sideration of the solidary obligation assumed by the

partnership Mario Mercado e Hijos; that such convey-

ance would not carry with it, and did not so carry, the

right or rights constituted in favor of the said partner-

ship Mario Mercado e Hijos in clause ‘‘Seventh’’

above transcribed of said deed of constitution of mort-

gage, said partnership reserving to itself, as it did re-

serve, the rights and obligation arising from said

clause ini all the time that the said mortgage might

be in force.’’ '

This «zatification” deed of the Heirs was formally rati-

age but ‘‘incapacitated’’, by the District Court of Ponce, |

. in guardianship. proceedings, by an order April-7, 1937, .

_ after hearing evidence and a report of the District Attor-

ney (Plaintiff’s “<Exhibit F”, supra; R. 286-302). - o

6. Three years after such assignment of the ‘mortgage

credits’’ to the Jose ‘Tous Soto heirs, Mrs. Commins and |

her sister partitioned the estates ‘‘Los Indios’’ and _

‘‘Juanita’’ between: themselves by a formal deed of parti-’

tion dated August 20, 1936 ( Complaint R. 5-8; plaintiff's |

«Exhibit A’’ R. 225-259), recorded in the public Registry

on March 1, 1937 (R. 257-259); and in that partition deed

it was the partnership Mario Mercado e Hijos,—[and not

the Heirs of Jose Tous. Soto, nor anyone on their behalf],—

‘who appeared. and gave their consent to the partition un-

der paragraph ‘‘Eleventh’’ of the 19382 mortgage. (Com-

plaint, Par. 10, R. 8; and express admissions in the ‘‘An-

swers’’ of defendants-respondents ; Answer, Par. ‘‘Tenth,”’

R. 22; Answer, Par. ‘‘Sixth,’’ R. 27). See also the District

Court’s finding to that effect (‘‘Opinion’’, R. 38).:

4. The .District Court expressly finds — '

‘Findings of Fact", at p. 39). that:

“Tt also appears to have been shown that both El-

vira Olivieri Commins and all the other defendants in

cases Nos. 311 and 312 were advised, prior to the execu-

tion of thé contract of sale and lease, of the right of

option to purchase and lease held by Mario Mercado e

Hijos concerning the omenay Juanita -_ Indigs’’.

8. “Under. these stnenenataitiiiin. on Seidias 15, 1936, ;

some two-years and three months prior to the maturity of

the seven-year mortgage notes given by her on March 23,

1932‘, Mrs. Ccsiaian, ma, letter to Mr: Mario Mercado, the

managing director® of the ee —

said (R. 373-374) ;

“My dear friend: In ‘accordance with the conversa-

tion had by my son-in-law, Mr. Rafael Barletta, with .

the manager, Mr. Peralta, regarding”? {other matters

not pertinent in this case] * * *. ‘‘As soon as these

holidays are over Don Rafael. i is going to talk business

with you. ;

at that time-the iin was still the tenant of both

estates as lessee under the old ten-year leases of 1927 and

1928 respectively ; and, as above- noted, the mortgage notes :

of 1932 still had considerably:more than two years yet to.

run before their maturity on March. 22, 1939. |.

8. The District Court’ further finds, in its ‘*Findings

of Fact”, supra (at p. 39), that:

“From the testimony of Elvira Olivieri Commins—~; ;

(page 81 of the transcript of record) it appears as a

fact that she authorized her son-in-law Rafael Barletta ~—

for the lease or sale of the estates Juanita and Indios.

‘*From the testimony of Jose R. Peralta, manager

of the plaintiff partnership (page 126 et seq. of the °

transgript of record) and from certain telegrams and

letters mentioned in such testimony and which were

admitted in evidence, it appears as a fact that from

December, 1926, until May® 8, 1937, Rafael Barletta |

and the partnership Mario Mercado e Hijos held con-.

versations and meetings in regard to the possible pur-

' chase and lease of the said immovables from Elvira

Olivieri Commins to the plaintiff partnership’’.

9. In the meantime, apparently along sometime in Jan-

‘Maturing March 23, 1939 (R. 324).

a? © |

5 May”? j is a clerical error. It should read ‘March 8”.

er testimony: Peralta, R. 145-146; Zapater, R. 181-

“4

‘ wary or early in February, 1937, Mrs. Commins had a talk

of Lluberas’’ (BR. 166), whose husband, who had been a

candidate for the Mayoralty of. Ponce, had died. She is

- cisco Liuberas Passarell and his sisters, including Mrs.

Celia Lluberas Passarell, the wife of the respondent, Emilio

Blasini Totti; and is, therefore, the mother-in-law of that

respondent,.who, in turn, is a nephew of Mrs. Commins.

Dona Elena appears to have offered her friend, Mrs.

Commins, ‘‘Dona Elvira’’, $40,000.00 for the part of the

“*Indios’’ estate that had come to the latter in fhe parti-

- tion with her sister, Santia,—to buy it for the of

Dona Elena’s son, Manuel Francisco Lluberas, and his sis-

tefs, Dona Elena’s other children; on condition, however,

that Mrs. Commins, ‘‘Dona Elvira’’, would also lease the

other estate, ‘‘Juanita’’; to her own nephew, the respond-

ent, Dr. Blasini, son-in-law o na Elena, whose wife,

Celia, is one of Dona Ek children.

_ As to this; Mrs. ide herself said, when ssked about

' it in the presence of a stenographer during the notarial act

of making formal demand upon her for rescission of the

sale and the lease, on April 6, 1937 (R. 164-167), shortly be-

fore this litigation was } begun (Stenographer’s notes; R.

381-383) :

‘‘A. When Dona Elena offered me $40,000.00" for

the ‘Indios’, she asked me to lease her the ‘Juanita’

estate, for the benefit of her daughters, all this as a

concession in the event that she should buy

property. I accepted because in my opinion it was

a good business, ° * °. I also had attorney * * °

“Q Who is your attorney? A. Sabater. Always

when necessary he advises us.

**Q. Cannot. you remember whether this contract of

a oe executed a month prior to March 9, 1937!

.I don't remember whether it was a month or twenty

days .. + Well, I had already given my word. You

know I am very honest and my word is always made : o

good. Ip this I take after my father.

3 pad £22 8:38 ge uenemea 8

i } uy ai faba fuses

ae slab fake gi Galea

be ce cacette :faskbes oe Uitte

i yhery pits F2y; gMis ia tudyceciis: 2!

ye yey § Hat LE ATE

es =pitt Haty leit: priests vei? <2

5 = g<0 2% EEES we Be eek e go ucasests £%

Ped ara Gee et

F EB Sg *423 5: eee cfu pees met 1x f &

ip lat git aeseddigtiitiit Pa

aa ie tipeclit Pa Ee

° fv” % TEES Ae —o ;

Peale: aa PEs all tiers) uti

wane e Hijos i in that eae A. Well, as. he did

not want it, I could not tell him anything ° * ° * °,

- £8 7 ee H » °

“Q. Can you not pe We more or less when it

_ was agreed to sell the property? A. I cannot tell you «

.- . exactly; it seems to me that: it was at the time of Del-

_ gado’s death, Oh, yes, I remember! It was about that —

time.’’

11. Thevenpinn Mrs. Commins and the other respondents

proceeded to carry out the sale and lease in accordance with -_

Dona Elena's offer. On February 25, 1937, a formal mort-

gage (R. 303-310; “Exhibit G@”) was put of record by which.

Mrs. Commins mortgaged to the respondent Manuel Fran-

- eisco Lluberas Passarell, both of fhe estates, ‘‘Indios’* and

-**Juanita’’ for an expressed $45,000.00 indebtedness and

$900.00 attorneys’ fees and costs. and disbursements, . but

ee provided (‘distribution of liens’’; R. 308) that all. except

-$5500.00 of the indebtedness should be charged against the

various parcéls of ‘‘Indios’’, leaving only $5500.00 against

‘‘Juanita’’; and constituted the - mortgagee,.. Francisco _

_.Lluberas Passarell, as her-“special attorney-in-fact” (R. .-

amount of the $45,000.00 in. his hands for that purpose, and

_afterwards to account to her for the balance left after .

clearing off such encumbrance. The loan recited in. this -

mortgage (R. 307) was to run for only six months, with

interest at 8. per cent per annum.

12. That new mor tgage having thus been made, Fran-

cisco Lluberas Passarell paid the José Tous Soto heirs the

_ $41,256.89, the principal amount of the 1932 mortgage [two

years before its maturity], together. with interest for three

months in advance, and: received from them a deed ‘‘of

cancellation of mortgage’’, on March 8, 1937 (“Exhibit ae

‘R. 312-321).

2 appears. from the iaaieesis Notes”? (R. 444

447) in the guardianship proceedings, March 2 to March 5,

1937 (R. 425. 451, pene ‘‘Exhibit. 4’’), had wale the

ape Ny

petition of the guardian of two of the Jose Tous Soto heirs

for permission to cancel the 1932 mortgage, that:

(1) Neither the guardian nor the Court. was advised

‘of the right, to three months’ notice before payment of the

principal before maturity, under paragraph ‘‘Ninth’’ of -

the 1932 mortgage (R. 327) [On the contrary, the guardian .

and the Court were specifically advised that the payment

. cculd be made by the mortgagor at any.time’by simply pay-

ing three months’ interest in advance (R. 446); and also

-. that (R. 446), ‘

_ “Sf such cancellation is not made a suit would ensue

which would cause inconvenience and expenses to the

_ incapacitated ones” (Italics supplied) ; ;

(2) Nor reminded that’ wnder- the assignment to the heirs

‘from this petitioner Mario Mercado e Hijos of May 9, 1933,

supra, a proportionate amount of the three months’ advance

interest being paid clearly belonged to this petitioner [its

3/4 of 1%, out of the 9% interest rate which the mortgage

bore, expressly reserved to this petitioner by the assign-

ment deed (Clause “Phird”’, supra, R. 406-407) ], and ‘that,

therefore, this petitioner was entitled—[for that reason

alone, if for no other]—to notice of the proposed payment

- and cancellation of the mortgage;

(3) Nor reminded in any way of the option then in exist-

ence, and surely then being held, either by the heirs or else

by this petitioner, under Clause ‘‘Seventh”’ of the ne

mortgage deed.

The heirs’ consent thus to accept the money and to cancel

the mortgage, without any notice to this petitioner, appears,

_ indeed, particularly from the ‘‘Stenographic Notes’’, to.

have been pushed through somewhat under pressure of the

threat that, as above quoted, ‘‘if such cancellation is not

_ made a suit.would ensue’’,—a threat for which there was

‘most plainly né@ possible basis whatever. “

13. That cancellation of the mortgage having “a been

secured on March 8, 1937, without any notice to the plain-

Se et Nr Oy cee reer aes ; aan fe.

tiff partnership, and purposely, as it may fairly be said,

‘‘behind its back’’,” the respondents proceeded to execute

and to put on record the new sale and lease from Mrs.

Commins. , pe |

14 Promptly on learning of it, this petitioner made a

formal demand for rescission and to be subrogated under

its option to the rights of the new purchasers of ‘‘ Indios”

and of the new lessee of ‘‘Juanita’’; and the demand being

refused, deposited the purchase money in the District

Court, in the same amount that had been paid by the new

purchasers and lessee, * and began the present suits.

Confer the District Court’s finding (R. 39) that during

all that time, from the p sceding December, 1936, onwards,

Mrs. Commins, through her son-in-law Barletta, had been’

actively in communication with the petitioner partnership,

‘theld conversations and meetings in regard to the possible

purchase and lease of the said immovables’’; and Bar-

letta’ssnumerous letters and telegrams to petitioner during

all that time, making appointments and then making ex-

cuses to break them.(‘‘Exhibits’’ N, 0-1, 0-2, 0-3, 0-4, 0-5,

and P, Q, R, and S; R. 371-373), and also the uncontradicted

testimony ofthe petitioner’s manager, Mr. Peralta (R. 145),

that-as late as March 8, 1937, the very day that the can

cellation of the mortgage was dated and was being put of

record, he had a talk with Barletta in the very office of the

attorney, Zapater; ‘‘and he told me that he had in mind to

see me on that day or the next day. * ** * * That the busi-

ness was good and that he thought-he could close it that

afternoon or ‘on the next day in the morning. He told me

this in the presence of attorriéy Zapater.’’ (R. 145, supra.)

And this was, in effect, corroborated by attorney Zapater

himself, in his testimony (R. 179-181).

. *Notarial Act, formal demand, testimony of attorney

Porrata as to serving it (R. 164-168, with “stenographic

notes’’ of statements made by Mrs. Commins on that occa-

sion (‘*Exhibit U’’, R. 381-384). It was on that occasion

that Mrs. Commins made the admissions hereinbefore

quoted. (R. 381-383; ante, pp. 44-46).

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.