# Petition for Writ of Certiorari — Mercado E Hijos v. Commins > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386404_0028%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1944 - **Citation:** 322 U.S. 465 ## Text “IN THE : Suprene Court of the aa: States | OCTOBER TERM, 1943, | No. 497, Se \ ai | "Manto Meds E Hisos, ~ yk 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 iv \. 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 o Covert or Appga.s, First Circuit oe a 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 — > 4 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 ll 6 - 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. . : - ’ : ; . . . 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.) 14 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 16 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 24 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. ; . 22 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 F ““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. a 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. | ; a ‘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 ia 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: e. 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 a P 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- year leases to this petitioner partnership, Mario Mercado © 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). (c) The petitioner sacisineale Mario Mercado e Hijoe, 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, also, against any diminution through taxes, federal or in- © 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 s 4 @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- fied on behalf.of one of them, a minor, and another one, of © 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 “