Banco Español de Puerto Rico v. Bolivar

7 P.R. 68

• Court: Supreme Court of Puerto Rico
• Decided: May 23, 1904
• Docket: No. 53
• Status: Published

Opinion

MR. Justice Figueras,

lifter making the above, statement' of facts delivered the opinion of the court.

The findings of fact contained in the judgment appealed from are accepted.

Pedro Bolívar, a brother of, and attorney-in-fact for, Gorgonio Bolivar, testified on March 13, 1903, that his sister Basilisa had rich relations in America, but he did not know whether they had made her important gifts in money; that Gorgonio came from Spain in 1900 and took up his residence at the house occupied by the deponent which is the property of the former; that he came to look after his interests and to renew the contract of the firm of Bolivar, Arruza & Co.; that he examined the situation of the latter, by taking inventories and going over them; that Bolivar, Arruza & Co. owed L. Mayol & Co., of Barcelona, a certain sum the payment of which Gorgonio had guaranteed with 2000 boxes of matches, delivered to a member of the firm of Gilet, of Ponce.

On folio 206 containing the loan account of the “Banco Español de Puerto Bico” with Bolivar, Arruza & Co., of which Gorgonio is a silent partner, appears the amount due by the latter to aforesaid institution on account - of the obligations dated December 10, and 31, 1900, which are also the object of the present demand.

The promissory note signed by Gorgonio Bolivar to the order of Bolivar, Arruza & Co. for the sum of $4192.49, which by endorsement came into the hands of the J. T. Silva Banking and Commercial Company, bears date of January 3, 1901, which is that of the sale by Gorgonio Bolivar to his sister Basilisa, of thirteen pieces of property and two mortgage credits, aggregating $63,000 (Folios 1 and'244 of the record).

At the trial, March 3, 1903, Gumersindo Suarez and Con-rado Palau testified that Gorgonio Bolivar had personally spoken to them as members of the board of directors of the 'Banco Español,’ about contracting a loan of 20,000 pesos, provincial money, with the latter for the purpose of building a house, and that in fact a house was built in Santurce, according to the testimony of Suárez, and several, according to Palau’s testimony. (Polio 397 et seq. of the record).

Carlos Conde also testified at the trial that Gorgonio Bolivar had urged him to procure for him an interview with Antonio Sarmiento (secretary of the bank) for the purpose of talking over the transaction he had pending with the bank, and that he knew that Bolivar had offered as security for the contemplated deal, a mortgage executed in his favor by one Vila.

Among the properties sold by Gorgonio to Ms sister Basi-lisa, .on January 3, 1901, there appears, under No. 15, a mortgage credit for 20,000 pesos, provincial money, due Mm by Jaime Vilá, which, credit, originally in favor of Bolivar, Arruza & Co., was transferred, for value on account, to Gor-genio Bolivar, subsequent to January 19, 1901.

Gorgonio Bolivar had failed to deposit in a bank or any other institution, the amount of Ms obligations, and the total of the properties stated to have been retained by Mm to cover the same, referred to in the first finding of the judgment appealed from, was reduced t.o the sum shown in the expert appraisal contained in the ninth finding of aforesaid judgment.

At the request of the plaintiff, cautionary notice was entered of an attachment levied on a piece of property consisting of 14 cuerdas, deducting therefrom 8,314 square meters, and another consisting, of. 4 cuerdas more or less of land, which might be the proportion alloted to Gorgonio Bolivar in the liquidation of the firm of G. Bolívar & Co.; and for the purposes of article 165 of the regulations for the execution of the Mortgage Law, it was decided that the former would be liable for $10,000 of the principal and $1,000 for costs, and the other for $500 of principal. (Polios 89 and 123).

The letter in which Basilisa Bolívar y Alvarez authorizes Attorney Herminio Diaz to represent her, literally reads: “ Spain, Bilboa, Munguia, December 9, 1900. Mr. Herminio Diaz, Attorney at Law, San Juan. Dear Sir: I have not the pleasure of your acquaintance, but by the report of persons who know you I am aware of the gentlemanly qualities which adorn you; that you are a practising lawyer in your city, and that for the purpose of authorizing you to represent me there .is no need of executing a power of attorney, according to the laws now in force in your island, wherefore I hereby take the liberty to appoint you as my representative with power to in-tervene in all judicial and extra-judicial matters which I have <or may have'in your island, -and to conduct the same with your accustomed discretion and solicitude. Not doubting that you will accept this appointment, I remain your obedient servant, Basilisa de Bolivar.”

The cédula (personal identification paper) produced by aforesaid lady upon executing the deed of acceptance and ratification of the purchase, mentioned in the closing portion of the sixth finding of fact contained in the judgment appealed from, is of the eleventh class. (Folio 125).

The first, second, third and fourth conclusions of law, contained in the judgment appealed from, are accepted.

The statement of a false consideration in contracts shall render them void, unless it be proved that they were based on another valid and lawful one, according to article 1276 of the old, and section 1243 of the revised Civil Code.

Although it cannot be denied that a consideration- appears in the contract of sale executed January 3,1901, between Gor-gonio Bolívar y Alvarez and his sister Basilisa, since the notary certifies that the latter paid $63,000 for the properties sold (article 1274 of the Civil Code), there has been no attempt as would have been proper after the denial, to show by what means Herminio Díaz Navarro had raised said sum here, inasmuch as in the letter of authorization no reference is made to the subject, nor is the purchase mentioned nor is there even any intimation as to the manner in which such an important sum had been remitted from Spain to this city, as belonging to the purchaser, to be used as a real consideration in an actual sale, and thus positively becoming the property of the vendor who, in that case, could have stated upon requisition, that he retained in his possesion a sum sufficient to cover his liabilities, since he also stated that he had nowhere deposited the amount thereof, thereby altering his subsequent financial position and, consequently, the judicial aspect now presented by the contract executed.

The foregoing facts taken together with the vague and improbable manner in which Basilisa explains how she came by such a fortune, when her cedióla is only of the eleventh class, and the surprise caused by her inexplicable determination to acquire now so many estates and credits in this country, of which she is an alien, lead to the' conviction that in this contract there prevailed only an intention to prevent the creditors of the vendor from collecting the money due them by levying upon the properties apparently sold, and this produces a simulated contract, according to Judicial Order of March 5,1899.

To understand better the spirit of saipl order, we must refer to its preamble wherein it is expressly stated that contracts executed with the said object in view are “highly injurious to the agricultural and commercial interests of the country, inasmuch as by undermining their very foundation, they absolutely destroy the credit of these two only resources of wealth, whose development and life are thus rendered impossible,” and it is further stated that such contracts are “immoral, and hence the necessity of making more effectual the prohibition already contained in our law; ’ ’ from which it follows that aforesaid provision must be strictly construed and applied so as to avoid the evils pointed out therein.

The same intention prevailed in the other contract of sale of .a building-lot, executed on January 19, 1901, between Her-minio Díaz Navarro, as purchaser and Gorgonio Bolivar, as vendor, inasmuch as these transactions resulted in the insolvency of the latter, and hence the prejudice to the interests of the creditors, wherefore both contracting parties must together abide by what the evidence and law may determine.

The simulation of said contract is indisputable, and to be convinced of this, we have but to remember that Gorgonio Bolivar had full knowledge of his indebtedness to the ‘Banco Es-pañol’ through the books of Bolivar, Arruza & Co. of which firm he was a silent partner; he was also aware of said debt because he himself had approached two of the directors of the bank for the purpose of obtaining a loan of 20,000 pesos, and, moreover he could not be ignorant of the existence of other debts against him, since the one now demanded by the firm of J. T. Silva Banking and Commercial Company was contracted by Bolivar himself on January 3, 1901, the very day on which he executed the deed of sale in favor of his sister Basilisa, and other debts had given rise to protests prior to that date, of which he was likewise informed, since they had been negotiated through his agents; and with this perfect knowledge of his true financial situation, Bolivar had conceived the plan which was afterwards executed.

The evidence has shown that after the sale made by Gor-gonio Bolivar to his sister, spontaneous acts occurred which corroborate' the simulation of the contract, namely,- the collection by his brother Pedro, acting as Bolivar’s agent, of the rents for January and February of -a house occupied by Jorge Saldana, which house had céased to be the property of said Bolivar, if the conveyance of January 3, ■ 1901, was a bona fide sale; the statement made at the hearing by aforesaid Pedro, on March 13, 1901, that- he lived in a house belonging to his brother, when, if there had been a real contract, said house at that date was already the property of Ba-silisa; the withdrawal on February 13, 1901, of an appeal on behalf of Gorgonio Bolivar by the same attorney who had been authorized by Basilisa to represent her in the execution of the contract and to deliver the purchase money, which appeal had been taken in an action for the recovery- of. a mortgage debt, when, if the sale in question had been a bona fide transaction, said mortgage debt already belonged to Ba-silisa, in which case the withdrawal of the appeal could be made only in her name; the transfer of aforesaid debt to the credit of Gorgonio, entered in the books of Bolivar, Arruza & Co. subsequently to the date of the sale; and, lastly, the offer of this same mortgage debt made by said Bolivar to Antonio Sarmiento, Secretary of the “Banco Español,” as a guarantee for the transaction he had in-mind, which guarantee could have no object other than the settlement of these actions that had already begun, because the obligations in favor of the bank were guaranteed.

Such is the conclusion to be drawn from the testimony given by Carlos Conde, on March 13, all of which details, by their very simplicity and naturalness are clear indications that Gorgonio, his brother and agent Pedro, and his attorney, knew that the estates and credits sold had not, as a matter of fact become the actual property of Basilisa, but, on the contrary, belonged to the apparent vendor' thereof, and here we have the reason for those declarations and acts that were in perfect keeping with the real situation.

No less light is thrown upon the contemplated simulation by the tenor of the letter of authorization dated in Munguia, Bilbao (Spain), December 9, 1900, as reproduced in one of the findings of fact, which letter is absolutely silent as to the means whereby the writer’s agent was to provide himself with the necessary funds to carry out the contract; by the few days elapsed between that date and January 3, 1901, when the deed of sale was executed upon receipt of the purchase money, amounting to $63,000, a sum almost equal to 100,000 Spanish pesos; by the silence of Gorgonio Bolivar in regard to this important sum, when summoned by the court on March 11, of aforesaid year, and which, had there been an actual sale, he would have retained, or, at least, invested in property on his private account; and by the certificate of the Treasurer of Porto Rico to the effect that from the record of assessment of property for the fiscal year 1901-2, no schedule appears to have been presented bearing the signature of Gorgonio Bolivar Alvarez; all of which circumstances tend to show the state of insolvency in which Bolivar knowingly endeavored to place himself in order to escajoe satisfaction of the obligations he had previously contracted.

The cautionary notices of attachment of two estates, taken from the registry of property, and appearing in the record, cannot be alleged in favor of the solvency of Gor-gonio Bolivar, because it should be remembered that said estates are recorded in the name of G. Bolivar & Co., and, therefore, involved in said copartnership, now in liquidation, of which Gorgonio is a silent partner, and the attachment, and subsequent collection, can cover only the amounts which may be due the debtor partner by reason of profits or liquidation, according to article 174 of the Code of Commerce.

The contract executed on January 3, 1901, being based on a consideration which the evidence has shown to be false and no attempt even having been made by the defendants to prove as it was their duty to do, that it was based on another real and lawful one, and inasmuch as in said contract and in the one executed on the 19th of the same year (sic) there was the same intention, the debtor having the same object in view in both cases, it must be concluded that they are void and have no effect whatsoever, as are likewise void the title recorded in the registry of property and, therefore, also the records to which said titles may 'have given rise, because according to article 33 of the Mortgage Law, the record of instruments which are null and void in accordance with the law, are not rendered valid thereby.

Creditors, upon proving the simulation, and for the purpose of collecting their claims, or demanding that the same be guaranteed, may bring actions against their debtor or the party who as owner, holds the latter’s property, said holder being responsible in such cases for the amount due by the direct debtor up to the full value of said property, according to the provisions of section 3 of the Judicial Order of March 5 and 20, 1899.

The judgment rendered by this court on March 2, 1900, which is cited as a legal ground in the brief, has no application to the case at bar.

The costs of the trial should be taxed against the defendants, and those of the appeal declared without special imposition.

In view of article 1259 of the old, or section 1226 of the revised, Civil Code, and others cited in this judgment, together with Judicial Orders of March 5, and 20, 1899, the Act of the Legislative Assembly of this; Island, approved March 12, 1903, General Order No. 118, series of 1899, and. articles 358, 364 and 371 of the Law of Civil Procedure, we adjudge that, affirming the judgment appealed from, as to the portion accepted, and reversing the same as to the other portions, we should condemn and do condemn Gorgonio Bolivar y Alvarez to pay the following debts: To Ihe “Banco Español de Puerto Rico” $20,400, beside the interest accrued or that may accrue, at the rate of 12 per cent, per annum; and to the firm of J. T. Silva Banking and Commercial Company, $4,192.49, besides the legal interest from the date of default in payment. As to the contracts of sale, the deeds of January 3 and 19, 1901, and the records to which said contracts may have given rise, the same are declared null and void and without any effect whatsoever. And we declare that for the purpose of collecting the sums due by Gorgonio Bolivar to the “Banco Español de Puerto Rico” and to J. T. Silva Banking and Commercial Company, as also the one having reference tO' Francisco de P. Acuña, the properties described in aforesaid deeds be forthwith levied upon as to the two first mentioned debts, and as soon as executory judgment shall have been rendered in the summary proceeding instituted for its recovery, as to the latter. The costs of the trial are imposed upon the defendants and no special imposition is made of the costs on appeal.

Chief Justice Quiñones and Justices Hernández, Sulz-bacher and MacLeary concurred.