American Colonial Bank & Trust Co. v. District Court of San Juan

57 P.R. 557

• Court: Supreme Court of Puerto Rico
• Decided: October 29, 1940
• Docket: No. 1170
• Status: Published

Opinions

Opinion of

Mu. Chief Justice Del Toko

in which Mb. Justice Hutchison concurs.

The discussion of this case has been a long and laborious one. The moment has arrived when it can not be further prolonged. I appreciate the force of the arguments set forth in the memorandum of Mr. Justice Travieso and of the statements made by Mr. Justice De Jesús, analyzing the law and all the cases cited by Mr. Justice Wolf'and Mr. Justice Tra-vieso during the discussion in conference, and the fact that an extreme case is involved.

Technically, the views upheld by Mr. Justice Travieso and Mr. Justice De Jesús may be correct; but taking into account the actual situation presented by the record, I think that the order sought to be annulled within the certiorari proceeding is inspired in justice and can be supported upon á liberal interpretation of the law and the decisions.

In my judgment, the presumption of correctness which attaches to the decision of the district court has not been overcome. Therefore, the writ issued must be discharged and the petition denied.

I am authorized to state that Mr. Justice Hutchison concurs in this opinion.

Opinion of

Mr. Justice Wole.

A petition for certiorari was originally filed before me, then acting as judge in vacation. The following opinion was issued:

“This is a petition for certiorari wherein the writer would, have been inclined to deny the issuance of the writ or the entertainment of a hearing if he had not had some doubt as to whether'the District Court of San Juan could appoint, as ancillary administrator, a nonresident of Puerto Eico. The petitioner at the hearing, however, placed no reliance on said nonresidence.

“Charles Borda Klugkist owed money to Theodore Baettenhaus-sen. The latter was domiciled in the State of New York and died there testate. Lina E. Grey, Julius A. Both, Kirt W. Baettenhaus-sen as beneficiaries, and the Guaranty Trust Company of New York as executor under the will of the deceased Baettenhaussen, brought a suit ex parte, in the District Court of San Juan, for the purpose of having one George IT. Emerson named ancillary administrator (ad-ministrador auxiliar) of the property of Theodore Baettenhaussen in Puerto Eico. The District Court of San Juan thereafter appointed George H. Emerson ancillary administrator.

“It was alleged in the lower court that Charles Borda could not be found; that he is not a resident and never was a resident of Puerto Eico; that he owned certain real property on this island which he transferred or attempted to transfer to his wife and that the latter conveyed said realty in trust to the American Colonial Bank and Trust Company of Porto Eico, who is the petitioner herein. The purpose of Lina E. Grey et al. was apparently to file suit somewhat in the nature of a creditor’s bill to set aside the conveyance made, through an intermediary, to the American Colonial Bank and Trust Company.

“Perhaps the principal question in this case is whether Mr. Theodore Baettenhaussen left any property in Puerto Eico for the recovery of which an administrator could be named. In other words, the petitioner maintains that the right of a simple contract creditor to bring an action for the annulment of a conveyance of property by his debtor does not in itself constitute a lien or interest upon such property so that a court might proceed to appoint an administrator for its foreclosure or recovery. The petitioner does not question the doctrine of Sánchez v. Soto Nussa, 14 P.R.R. 430. That was a case where the plaintiffs were seeking to recover the possession of what they alleged to be the property of the decedent.

“Let us suppose that Mr. Baettenhaussen were alive today and authorized a suit in his name to set aside the ultimate conveyance to the American Colonial Bank and Trust Company. Such a suit is distinctly authorized by section 1064 of the Civil Code (1930 ed.). It makes no difference that the claim of Mr. Baettenhanssen was founded upon a simple contract debt.

“What Baettenhaussen had was a right to bring his suit to annul, if annulable, the conveyances which led up to the title or supposed title in the American Colonial Bank and Trust Company. On his death this right devolved upon his legal representative. In this case, the legal representative is admittedly the Guaranty Trust Company of New York, testamentary executor. It is my opinion that the right to bring an action either in Baettenhaussen or his representative was a property right. The word “Property” is nomen generalissimum and some of the considerations of it may be seen in Gleason v. Thaw, 236 U. S. 558; People v. Alcaide, 29 P.R.R. 171; 50 C. J. 740 and 763, the last named under the title “choses in action.” For the purpose of ancillary administration the petitioner does not convince me that the most general concept of property is not applicable.

“Concluding, as I do, that this chose in action was, in the hands of Baettenhaussen or his representative, a property right in Puerto Rico, it would follow that a district court would have a right to name an ancillary administrator to follow up the supposed right.

“I may likewise draw attention to the fact that the petitioner, as the supposed ultimate grantee, is the real defendant. Neither Charles Borda nor his wife, after making their conveyances, need be considered. All the transfers under the averments are seemingly voluntary and the said defendant could acquire nothing that could not be made the subject of a suit by a creditor.

“It is suggested that there is nothing in the laws of Puerto Rico authorizing the appointment of an ancillary administrator. Where a man dies leaving property in Puerto Rico, the practice of the courts, in the absence of a will, is to appoint a judicial administrator. If I am right in the rest of my reasoning, a judicial administrator could have been appointed for any property that Baettenhaussen had left in Puerto Rico. The parties and the court called the person named an ancillary administrator which to my mind is tantamount to a judicial administrator. To the credit of the petitioner it is that the writer has felt to enter into these considerations and he regrets not to have better developed the opinion.

“The writ prayed for should be denied.”

The case of Wyman v. Halstead, 109 U. S. 654, 656, has held that “simple debts are assets at the domicile of the debtor.” But that an auxiliary administration can be taken out elsewhere is decided by Wilkins v. Ellett, 108 U. S. 256, where the court said:

“There is no doubt that the succession.to the personal estate of a deceased person is governed by the law of his domicil at the time of his death; that the proper place for the principal administrator of his estate is that domicil; that administration'may also be taken out in any place in which 'he leaves personal property; and that no suit for the recovery of a debt due to him at the time of his death can be brought by an administrator as such in any State in which he has not taken out administration.

“But the reason for this last rule is the protection of the rights ■of citizens of the State in which the suit is brought; and the objection does not rest upon any defect of the administrator’s title in the property, but upon his personal incapacity to sue as administrator beyond the jurisdiction which appointed him.

“The administrator, by virtue of his appointment and authority as such, obtains the title in promissory notes or other written evidences of debt, held by the intestate at the time of his death, and coming to the possession of the administrator; and may sell, transfer and indorse the same; and the purchasers or indorsees may maintain actions in their own names against the debtors in another State, if the debts are negotiable promissory notes, or if the law of the State in which the action is brought permits the assignee of a chose in action to sue in his own name. Harper v. Butler, 2 Pet. 239; Shaw, C. J., in Rand v. Hubbard, 4 Met. 252, 258-260; Petersen v. Chemical Bank, 32 N. Y. 21. And on a note made to the intestate, payable to bearer, an administrator appointed in one State may sue in his own name in another State. Barrett v. Barrett, 8 Greenl. 353; Robinson v. Crandall, 9 Wend. 425.”

That a claim to the right to set aside deeds constitutes property of an estate upon which administration may be had has been held in In Re Rees' Estate, 212 Pac. 234. Copying’ from the syllabus:

A claim of a right to set aside deeds made by decedent constitutes property of the estate in the nature of real property upon which administration may be had.

“It is discretionary with, a probate court to appoint an administrator where the only property of a decedent is an equitable claim of a right to set aside deeds made by decedent.”

In New York it lias been held that a debt due by a New! York business house to a resident of Germany who died and left property in Germany, where administration was taken, was enough to support an ancillary administration in New York. Matter of Warburg, 129 Misc. (N. Y.) 832.

The Supreme Court of California upheld the jurisdiction of the state court to hear a case between nonresidents to rescind a deed of sale of land located outside California. "Ws copy from the syllabus:

“1. The courts of this state have jurisdiction over an action between nonresidents to rescind, on the ground of the vendor s fraud, ;a sale of mining property situated in a foreign country, where the nontract of sale was entered into in this state, and where the consideration, consisting partly of money, and partly of notes executed by a citizen of this state secured by mortgages on land within the state, is in the hands of the vendor’s agent, a resident of this state.

“2. The real object of the action being to compel the restoration to the vendees of the money which they were fraudulently induced to give for the mining property, and the cancellation of the securities likewise procured by fraud, all of which are within the court s jurisdiction, the fact that they have offered, as they were equitably bound to do, to restore to the vendors the title to the mining property, will not deprive the court of jurisdiction on the ground that the action involves the title to land in a foreign country.

“3. As the action is virtually in rem to compel the restoration of the consideration fraudulently obtained from the vendees, which is still within the state, the superior court has jurisdiction of the action, though the vendors were never personally served with-process, and have not submitted themselves to the court’s jurisdiction.” Loaiza v. Levy, 24 Pac. 707.

The differences between actions in rem, in personam,,and Quasi in rem, are clearly set up in Gassert v. Strong, 98 Pac. 497. Again from the syllabus:

“5. JUDGMENT — JURISDICTION—SERVICE OE PROCESS BY PUBLICATION._Service of process by publication on a nonresident does not warrant a judgment m personam against him, but in a suit against property within the jurisdiction of the court it may render a judgment in rem.

6. ActioN — FORMS—'Aotion in Personam.’ — A proceeding in personam is one, in form as well as in substance, between the parties claiming a right, and the judgment binds the defeated party to some sort of personal liability.

“1. Judgment — 'Action in Rem.’ — An action in rem is a proceeding to determine the state or condition of the thing itself, and a judgment in rem is but an adjudication pronounced on the status of some particular subject-matter.

“8. Action — ‘Action Quasi in Rem.’- — An action quasi in rem is an action in which property of a nonresident is attached and is held for the discharge of debts due by him to citizens of the state and for the enforcement of liens; and an action quasi in rem differs from an action strictly in rem in that the interest of defendant is alone sought to be affected, that citation to him is required, and that judgment therein is only conclusive between the parties.

“9. Jugdment — JURISDICTION.—Jurisdiction over the person of defendant is acquired first by service of process, or, secondly, by a proceeding against his property within the jurisdiction of the court; but in the latter case defendant is not personally bound by the judgment beyond the property in question.

“11. Judgment — Establishment—Enforcement—Jurisdiction. An action to establish and enforce a trust in corporate stock in the possession of a person in the state brought against a nonresident holding the legal title is quasi in rem, and substituted service on the nonresident, as authorized by Code Civ. Proc. see. 637 (Rev. Codes, see. 6520), is sufficient to give the court jurisdiction.”

It is true that the case of Wilkins v. Ellett, supra and Wyman v. Halstead, supra, seem to hold contrary to the trend of this opinion. These cases were followed by a latter case, Blodgett v. Silberman, 277 U. S. 1, where the Supreme Court of the United States said:

At common law the maxim ‘mobilia sequuntur personam’ applied. There has been discussion and criticism of the application and enforcement of that maxim, but it is so fixed in the common law of this country and of England, in so far as it relates to intangible property, including choses in action, without regard to whether they are evidenced in writing or otherwise and whether the papers evidencing the same are found in the State of the domicil or elsewhere, and is so fully sustained by cases in this and other courts, that it must be treated as settled in this jurisdiction whether it approve itself to legal philosophic test or not.”

However, there is a difference between the Silbermcm case and the one at bar. In the case of Duehay v. Acacia Mutual Life Insurance Co., 124 A. L. R. 1280, the U. S. Court of Appeals for the District of Columbia said:

“Appellant relies strongly upon the case of Blodgett v. Silberman, 277 U. S. 1, 9, 10, 48 S. St. 410, 72 L. ed. 749. That case, however, pertains to- the power of the state of a decedent’s domicil to impose a tax upon his intangible property. The Court there did not consider the question here involved, i. e., whether an intangible may have a situs, separate and apart from the domicil of its owner, for the purposes of administration. The rule as laid down in the Sil-berman case is not free from exceptions, even in the field of taxation. See Wheeling Steel Corp. v. Fox, 298 U. S. 193, 210, 56 S. Ct. 773, 80 L. ed. 1143. We think it is not applicable here.”

In that case an ancillary administration was granted in Washington. The deceased was a resident of and died in Virginia. His only property in Washington was a claim owing to deceased. The opinion from which the citation is taken turned on whether creditors in Washington had preference in collecting or shared with Virginian creditors. The Court granted preference to creditors within the District. That would not be a question here because Baettenhaussen, so far as appears from the record, had no obligations in Puerto Rico. We believe that, under the circumstances of the case, the estate of Baettenhaussen had the right to an ancillary administration.

If the contrary conclusion is sound, then Mr. Baettenhaus-sen alive or his personal representatives if Mr. Baettenhaus-sen is dead, as is the fact, cannot sue on the claim in New York, because so far as the proceedings disclose Mr. Borda is not a resident of New York and has no property there. From the standpoint of the law of vendor and véndee, and «'editor’s bills, the property of a fraudulent creditor may be reached wherever the property is located, and an ancillary administrator can be appointed in most jurisdictions in the United States. If this claim cannot be collected in Puerto Eico, then the estate of Mr. Baettenhaussen is without a remedy. Ubi jus, ibi remeclium.