Bigelow v. Porto Rico Planters Co.

7 P.R. Fed. 463

• Court: District Court, D. Puerto Rico
• Decided: January 30, 1915
• Docket: No. 1050
• Status: Published

Opinion

HahiltoN, Judge,

delivered tbe following opinion:

Demurrers bave been filed to the amended complaint in this case.

1. The first two grounds of demurrer are to the first cause of action set up in the amended complaint, and set out that under the complaint the issue of the promissory notes was subject to further agreement, and that the complaint is ambiguous in not showing how the defendant failed to issue them. The complaint is not subject to demurrer in this respect. It' does not show that there was to be any further agreement as to a material fact. If the maturity of the notes is to be considered as material, the law will presume that they were to be payable in a reasonable time. Minneapolis Gaslight Co. v. Kerr Murray Mfg. Co. 122 U. S. 300, 30 L. ed. 1190, 7 Sup. Ct. Rep. 1187. This time must have expired since June 29, 1903.

The demurrer is overruled so far as relates to these grounds.

2. One ground.of demurrer to the second cause of action is that it is uncertain as to when and where the contract was entered into. Any human transaction must occur at some time and place, but the Porto Rican Code does not require that the place be set out in an oral contract itself, or in a complaint seeking to enforce the contract. A contract for the payment of money is transitory in its nature, and no matter where entered into is enforceable in a forum having jurisdiction of the parties. Bouvier’s Law Diet. s. v. Transitory; Stephen, PI. 288, 290. There is no difference between the civil and the common law in this respect. If there is no jurisdiction, that would be a matter of defense.

3. Under the Porto Eican Code of Civil Procedure there are no niceties of pleading. If a contract, for instance, be enforceable, the only allegations necessary in the pleadings are those which set out the essential terms of the contract. What must be in the complaint is shown by § 103 of the Code of Civil Procedure, to wit:

“The complaint must contain:

“1. The title of the action, the name of the court, and district in which the action is brought, and the names of the parties to the action.

“2.n A statement of the facts constituting the cause of action, in ordinary and concise language.

“3. A demand of the relief which the plaintiff claims. If the recovery of money or damages be demanded, the amount thereof must be stated.”

At common law every complaint had to set out the time of a material occurrence, but the time alleged need not be the true time, and could be pleaded with a videlicet The only requirement was that the actual date proved must not be later than the time set out in the pleading. Stephen, PI. 292.

In the common-law states “the general principle is that in declaring on a parol or simple contract the day when the cor-' tract is alleged to be made is not material” (9 Cyc. 116), unless it is, or is made, of the essence of the contract, which does not appear in the case at bar. Brown v. Guarantee Trust & S. D. Co. 128 U. S. 403, 32 L. ed. 468, 9 Sup. Ct. Rep. 127. Time would be important only if the contract were barred by the statute of limitation, or prescription, as it is here called. Tbe complaint alleges that tbe contract in question was subsequent to January 1, 1903, and if it is barred by any provision of tbe statute tbis should be pleaded.

Tbe demurrer, so far as relates to lack of allegation as to time and place, is therefore overruled.

4. A further ground of demurrer is that tbe contract set out in tbe complaint is in violation of tbe second subdivision of paragraph 6 of § 1247 of tbe Civil Code. Tbe whole of tbis section is as follows:—

“Tbe following must appear in a public instrument:

“1. Acts and contracts tbe object of which is tbe creation, transmission, modification, or extinction of property rights on real property.

“2. leases of tbe same property for six or more years, provided they are to prejudice third parties.

“3. Marriage contracts, and tbe creation and increase of dowries whenever it is intended to enforce them against third parties.

“4. Tbe assignment, repudiation, and renunciation of hereditary rights or of those of tbe conjugal partnership.

“5. Tbe general power for lawsuits, and tbe special ones to be presented in suits; tbe power to administer property and any other, tbe object of which is an act drafted or which is to be drafted in a public instrument, or which may prejudice a third person.

“6. The assignment of actions or rights arising .from an act contained in a public instrument.

“All other contracts, in which the amount of the presta-tions of one of the two contracting parties exceeds $300, must be reduced to writing, even though it be private.”

The point here alleged is that, as the contract exceeds $300, it must and ought to be in writing, while the complaint alleges that it was parol.

■ This involves a discussion of the form of contracts at civil law. The Civil Code of Porto Pico relating to the subject is contained in §§ 1228, 1245, 1246, and 1247, corresponding, identical in form, to articles 1261, 1278, 1279, and 1280 of the Civil Code of Spain. The first of these sections is as follows:

“There is no contract unless the following requisites exist:

“1. The consent of the contracting parties.

“2. The definite object which may be the subject of the contract.

“3. The cause for the obligation which may be established.”

The word “cause” -in this section is more properly translated “consideration.” This, then, sets up the essentials of a contract, and is different from the original project of 1851, which referred also to forms of execution. The capacity of parties added in the Code Napoleon is implied in the Spanish Code.

5. The Civil Code is divided into four books, the first relating to Persons, the second to Property, the third to Convéy-ances, and the fourth to Obligations. Under the latter head come contracts, and this subject makes up title II. of the book. Section 1228, above quoted, is in chapter II. of the title, and the different sections go on to discuss the elements of consent, object, and consideration, called for in § 1228. Chapter III. of this title relates to the effectiveness of contracts, and under this head are §§ 1245, 1246, and 1247, as follows:

“Section 1245. Contracts shall be binding, whatever may be the form in which they may have been executed, provided the essential conditions required for their validity exist.”

“Section 1246. Should the law,require the execution of an instrument or other special formality in order to make the obligations of a contract binding, the contracting parties may compel each other to comply with said formalities from the moment in which consent and the other requirements necessary for their vadidity have taken place.”

Other chapters under this title relate to the interpretation, rescission, and annulling of contracts, but throw no further light upon the subject of requisites and carrying out of contracts.

It will be observed § 1245 provides that contracts shall be binding, whatever may be the form in which they have been executed, provided the essential conditions required for their validity exist, while the last clause of § 1247 says that a Contract of the character of the one in suit must be reduced to writing, even though it be private. The demurrer raises the point that the contract in question must therefore be in writing to have any effect, while the plaintiff maintains that, under § 1228, there are present all the requisites of a contract, and that, whatever may be the rule as to third parties, the contract in question is binding between the plaintiff’s predecessor and the defendant.

The question goes much further back than this suit The" Spanish law is, to a large extent, based upon the Roman. The Roman or Civil law was originally very formal, and some con7 tracts always required great formality. There was a distinction drawn between contractus on the one side and pactum .on the other. The pactum was the consent and agreement of two (1. 3 pr. D. 50, 12), and;was contrasted with the formal'contract, such as stipulatio. The law declared that ex pacto actia non nascitur (1. 10 C. 2, 3). Much, of the development of the civil law was due to the praetors, and one of the lines they pursued was equalizing contractus and 'pactum. Thus, the praetor said that he would carry out pacta which are entered into which are not against law and not fraudulent (1. 7 D. 72, 14).

In later days the canon law, with its appeal to conscience, had the same effect, and declared in almost the same words pacta sunt servenda. Perhaps the freer Teutonic spirit of the Goths tended in the same direction of preferring substance to form, and “when the renaissance of Roman law took place and Spain molded its precepts into the Code of the Partidas, the formalistic system struggled with the simplicity of the national, and was conquered by it,” as expressed by Manresa in his Commentary on article 1278 of the Spanish Code (§ 1245 of the Porto Rican Civil Code). What Manresa calls the “spiritualistic” as distinguished from the “formalistic” system triumphed in' title XVI. of the ordinance of alcala (a. d. 1386, Délas Obligaciones), which became Law 1, title 1, Book 10 of the Novísima Recopilación. While this was and is right in principle, there is always the question of proof, and the Code of Commerce of 1829 showed a complete reaction therein by requiring great formality for many contracts, nullifying others by article 236, and providing in article 238 that contracts for a sum exceeding 5,000 reals should be reduced to a public or private document in order to have legal effect. The present Code of Commerce, dating from 1885, took telegraph and other improvements into account in the evidence of contracts. Similar formality as to civil contracts, other than commercial, was provided for by the proposed Code of 1851, but this did not go into effect, and tbe Civil Code actually adopted went back to tbe ordinance of Alcala, and proceeded npon wbat Man-resa calls tbe spiritualistic bases. Tbe first instance in tbe Code in wbicb a public document was required was article 1321 (Porto Rico § 1288) in regard to contracts relating to matrimonial agreements, and tbe same became true in regard to real estate and mortgages. Article 633 (Porto Rico § 641) and article 1875 (Porto Rico § 1776).

Manresa discusses tbe subject at length and comes to tbe conclusion that consent without tbe concurrence of tbe formalities does not merely give a right to an action for tbe fulfilment of these formalities, that is to say, a specific performance of tbe legal requirements; but that such consent makes an enforceable contract itself as between tbe parties, except, for instance, where tbe contract relates to objects wbicb require authentic documents to secure inscription in tbe registry. Manresa, commenting on article 1279 (Porto Rico § 1246), says that these provisions “in no way destroy tbe binding force of contracts entered into by tbe parties, whatever may be tbe form in wbicb they are executed, nor does this article in tbe least destroy their full effectiveness when tbe parties perform them, even before reducing to a public document those contracts for wbicb tbe law exacts this requirement, there being created in this way legal rights wbicb cannot fail to prejudice third persons not parties to tbe contract, unless these third persons derive their right from some title wbicb by its nature is of a higher character, or because this title, being recorded in tbe registry, may impede the object of tbe contract with regard to third persons ; apart from this tbe law gives no right to á third person to demand compliance with wbat is provided in article 1280 (Porto Eico Code 1247). (Decision of 1st of July, 1901.)” The decision of the lltb of May, 1903, established, in effect, that contracts are binding, whatsoever may be the form in which they are executed, provided always there are present the essential requisites for their validity, from which it follows that their effectiveness between the parties depends exclusively on their validity, and not on the extrinsic forms required by the law for certain distinct consequences, and that, therefore, the parties can mutually demand the performance of the obligations entered into. Verbal contracts for rent, for an amount greater than 1,500 pesetas, are therefore binding in spite of what is provided in article 1280 (Porto Eico Code 1247).

6. The propriety of form in regard to the more important kinds of contract has been recognized in many systems of jurisprudence. It is based upon the double feeling that such an important transaction as the transfer of land requires solemnity, and also that it should be evidenced in such a way as to make it publicly known or provable. This seems to lie at the basis of much of primitive thought and law, and survived in the Eoman contractus as distinguished from the pactum, whose enforcement the praetors undertook at first among the non-Eomans (peregrini) of the capital. In England the livery of seisin and other ancient forms gave way, upon the diffusion of writing, to written contracts. The statute of 29 Charles II., chapter 3, called “An Act for the Prevention of Frauds and Perjuries,” was the crowning legislation on the subject. Its provisions as to the transfer of land and certain contracts which at common law could be made orally have become the basis of all English and American jurisprudence on the subject. Nevertheless, 'the chancellors followed the path of the Eoman prae+ors in finding a method for tbe performance, of informal' contracts. This is tbe equitable procedure known as specific performance. It may be conceded, however, that this remedy would not be applicable in such a ease as tbe one at bar. A failure to give notes for a certain amount of money would ordinarily merely result in damages to tbe equivalent amount,, thus presenting a case where tbe common-law procedure would be adequate, and a court of equity would not interfere. While' tbe form of pleading is different, the same would be true in. Porto Pico. This court would act in this matter, if at all, as. at law, and not as in equity.

7. Tbe formal provisions which we have been discussing, whatever the meaning of the legislators, have given way to-what Manresa calls “the Castilian or spiritualistic view,” that, whatever the defects of form in the contract, it shall nevertheless be enforced if the minds of the parties.met in agreement. The supreme court of Porto Pico has followed this construction, and in Maisonave v. Maisonave, 13 P. R. R. 254, 261, declares that § 1245 has always been understood to be effective-as between the contracting parties.

“The legal provisions which refer to the execution of public instruments for the transfer of the ownership of real property do not vary the nature of such contract, nor do they establish-an essential condition thereof, but merely a form in the interest of the public, independent of the will of the contracting-parties.” Velez v. Camacho, 8 P. R. R. 35, 40; Ascencio v.. Alvarez, 10 P. R. R. 102; Abella v. Antunano, 14 P. R. R. 486, 495.

Quoting the supreme court of Spain, that of Porto Pico-says: “The effectiveness of contracts does not depend on their external form, but on tbe concurrence of sucb circumstances as are necessary to their validity, the parties thereto being bound by them, whatever be the form in which they may have been perfected, and their record in a public or private document, in some cases required by law, is not an essential condition to their existence, but a coercive means allowed the contracting parties to compel each other to the fulfilment thereof.” Váz-quez v. Medina, 17 P. R. R. 96, 100.

The result, therefore, is that, while a formal contract may be necessary for purposes of binding third parties, as to which the mortgage law plays a large part, it is not always important as between the parties themselves, except that the lack of the prescribed form renders more difficult the proof of the transaction. In the case at bar, therefore, the fact that the notes agreed upon were not executed, and the fact that the agreement for their execution was not in writing, do not destroy in any way the claim of the plaintiff, provided he can prove the agreement which he sets out.

It follows that a demurrer on this ground cannot be sustained, and therefore the demurrer to the second cause of action of the amended complaint is overruled.

It is so ordered.