Cintrón & Aboy v. Solá

22 P.R. 245

Opinion

Mr. Chief Justice Hernández

delivered the opinion of the court.

This is an action brought by the commercial partnership of Cintrón & Aboy ag’ainst Celestino Sola in the District Court of' Hnmacao to recover the amount due on a promissory note.

The promissory note in question, which both parties admit to be g’enuine and which is transcribed in the complaint filed on August 17, 1912, reads as follows:

“$6,000 U. S. Cy. Due March 30, 1911. We promise to pay, jointly and severally, to Antonio María Sorba, or to his order, on March 30, 1911, the sum of sis thousand dollars ($6,000) American gold, for value received to our entire satisfaction, and will deliver to him the said amount upon maturity on the said date. In case of default the said sum shall bear interest at the rate of 12 per cent per annum. We expressly submit ourselves to the insular courts of competent jurisdiction and bind ourselves to pay such costs and disbursements as may arise from proceedings to recover the said amount, including the fees of the attorney employed by the creditor to'bring the action.

“Caguas, May 31, 1910. (Signed) Sola & Son. (Signed) Celes-tino Sola. Pay to the order of Mateo Encabado for value received. San Juan, Porto Rico, June 4, 1912. (Signed) Antonio M. Sorba. Pay to the order of Cintrón & Aboy for value received. (Signed) Mateo Encabado.”

As fundamental facts of the complaint the plaintiff's allege that on May 31, 1910, Sola & Son and defendant Celes-tino Sola ma.de an agreement with Antonio María Sorba by which they jointly and severally bound themselves, conformable to the conditions detailed in the above note, to pay to Sorba the sum of $6,000, with interest; that as shown by the said note, it was indorsed by Sorba to Mateo Encabado and by Encabado to Cintron & Aboy, tbe plaintiffs; that tbe principal and interest of tbe debt bave not been paid by either of tbe two solidary debtors notwithstanding tbe demands made upon them therefor; that at tbe stipulated rate of 12- per cent per annum tbe interest due from March 30, 1911, when tbe obligation matured, to July 31, 1912, amounted to $960, and a' further sum of $60 becomes due for interest each month from August 30, 1912, to tbe date of payment.

Tbe complaint concludes with tbe prayer that tbe defendant be adjudged to pay to tbe plaintiff firm tbe sum of $6,000 as principal and $960 as interest due to July 31, 1912,. and further interest accruing at tbe rate of $60 per month from August 31, 1912, to tbe date of payment, together with tbe costs and disbursements, and $500 for fees'of plaintiffs’ attorney.

In answering tbe complaint tbe defendant alleges that altbou.gb.be signed tbe note be took no part in the negotiations which originated it, they having been agreed upon by Sola & Son and Antonio María Sorba alone for tbe exclusive benefit of Sold & Son, at whose request, through their manager, Marcelino Sold Eodriguez, be signed tbe note; that the firm of Sold & Son was dissolved on July 8, 1911, and Antonio María Sorba, after that date aixd without tbe participation or knowledge of tbe defendant, entered into an agreement with manager Marcelino Sold Eodriguez by which tbe interest agreed upon between them was paid and tbe note was renewed for a fixed time; that there existed in tbe town of Caguas a commercial partnership known as Sold & Son, Limited, which bad no leg’al connection with tbe dissolved firm of Sold & Son, and Sorba entered into a new agreement with Marcelino Sold, manager of Sold & Son, Limited, renewing tbe note in tbe absence and without tbe knowledge of defendant Celestino Sold, it being thus admitted that tbe firm of Sold & Son, Limited, was liable for the payment of the $.6,000, tbe amount of tbe promissory note; that by reason of a petition filed by their manager, Marcelino Solá Rodríguez, Solá & Son, Limited, were declared bankrupt on May 17,'1912, by the District Conrt of tlie United States for Porto Bico and in the schedules filed Sorba appears as creditor for the $6,000 which is now sued for; that Sorba had admitted that the firm of Solá & Son was substituted by that, of Solá & Son, Limited, for -on June 3, 1912, or the day before the indorsement of the promissory note, he made an affidavit before Notary Carlos B. Buitrago in order to file and prove his. claim in the bankruptcy proceedings of Solá & Son, Limited, averring that the said bankrupt firm owed him $8,000 on two promissory notes, one of which was for $6,000 and is the one now sued upon, and that the said note is commercial paper and was indorsed after maturity.

After a trial the lower court found that the sum of $6,000 secured by the note was lent by Sorba to the commercial partnership of Solá & Son for the benefit of that firm; that Marcelino Solá signed the note as solidary surety; that.when the note fell due Marcelino Solá, as a member of the firm of Solá & Son, applied for and obtained from the creditor a renewal of the same without the knowledge or consent of the defendant, but giving the creditor to understand that the same surety would continue; that when payment was demanded of Marcelino Solá he answered that he was under no obligation to pay it, and that the firm of Solá & Son was adjudged bankrupt and neither the defendant nor any other person had paid the amount of the note, but Sola & Son had paid the sum of $600 as interest due thereon.

Based- on said findings of fact and holding that sections 1111 and 1723 of the Civil Code were applicable to the case, the-court renderéd judgment on July 31, 1913, m favor of the firm of Cintron & Ahoy for the recovery from the defendant of the sum of $6,000, the amount of the note, together with interest at 12 per cent per annum from the date of the filing of the complaint, without special imposition of costs.

Both parties appealed from the said judgment; the defendant from the whole of 'it and the plaintiffs from its failure to order the defendant to pay interest on the note from March 30, 1911, when it became due, and the costs and attorney’s fees.

The defendant alleges the following grounds of appeal:

‘ ‘ 1. That the court committed error in not holding that the renewals granted by creditor Sorba, first to Sola & Son and then to Sola & Son, Limited, extinguished the subsidiary liability of surety Celes-tino Solá, it being a solidary surety.

“2. That the court committed error in not holding that the note on which the action was brought had been novated by the acts of .creditor Sorba.

“3. That the court committed error in finding that in granting the renewal without the participation of the defendant the creditor understood that the same surety would continue.”

. He also alleged that the complaint does not state facts sufficient to constitute a cause of action, inasmuch as the indorsement, without date, can be regarded only as a mere commission to collect, and such being the case, .Cintron & Aboy are not the owners of the note; but even if so, they would be only simple assignees subrogated to the assignor, who in turn was subrogated to the creditor, the acts of creditor Sorba thus prejudicing the rights of the plaintiffs.

Before considering the grounds of the appeal it is necessary to ascertain whether Celestino Solá 'is a solidary debtor with Solá & Son or a surety of Solá & Son.

In the note sued upon both Solá & Son and Celestino Solá, the defendant, are direct and principal debtors who say, “We promise to pay, jointly and severally, to Antonio Maria Sorba, or to his order,” etc. In fixing the scope of the stipulations agreed upon we must be guided by the intention of the contracting parties and that intention is plainly shown in the note beyond the least shadow of doubt, for a mere perusal thereof establishes the fact that both Solá & Son and Celestino Solá acknowledged themselves to be principal debtors of Antonio María Sorba and bound themselves in solidum. The genuineness of the note has not been impeached and must be admitted, pursuant to section 119 of the Code of Civil Procedure; and being genuine, according to section 1193 of the Civil Code, it has the same force as a public instrument between those who may have signed it or their successors in interest.

And it cannot be contended that the evidence introduced at the trial shows that the debt was contracted for the sole benefit of Solá & Son and that the defendant was only surety for the fulfilment of the obligation, for even if true, the fact would remain that Celestino Solá, without profiting by the money received on the note and without actually being a debtor, was willing to assume that character when he signed the note as solidary debtor in order that Solá & Son might secure the money from Sorba, who would not have lent it except under that condition. That Celestino Solá did not profit by the loan is immaterial; he agreed to be a solidary debtor in order to accommodate Solá & Son and that agreement was expressed in the promissory note when the defendant signed it as solidary debtor. The law of the contract was established in the note as the last expression of the intention of the parties and Celestino Solá must submit to it.

Under the theory which we have set forth the conclusion is reached that defendant Celestino Solá is not the surety of Solá & Son, but a solidary debtor of Antonio María Sorba jointly with Solá & Son. This being the case, the first ground of the appeal, based oii section 1752 of the Civil Code which provides that the extension granted to the debtor by the creditor without the consent of the surety extinguishes the security, is without merit, therefore it is unnecessary to discuss the question argued at length by both parties as to whether the said section is applicable as well to simple or common surety as to solidary surety.

As regards the second ground of appeal, .it must be stated that, according to counsel for Celestino Solá, the acts performed by creditor Sorba which determine the novation of tile obligation consisted in the signing by Sorba, the first payee of the note, of an affidavit in English under the title of the ease of Sola & Son, Limited, in bankruptcy, pending in the Federal Court, before Notary Bnitrago on June 3, 1912, and in that affidavit Sorba avers that the said bankrupt firm owed him $8,000 on two notes, one for $6,000 and another for $2,000, due respectively in March, 1911, and April of the same year; and he stated further that he had not told any one that he had received security for the debt.

As to the affidavit, Sorba states under oath that he made it on the advice of Marcelino Sola; that Marcelino Sola employed Attorney Buitrago; that he signed the affidavit without reading it, as he does not understand English, and that he did not us'e the same in the Federal Court but filed another affidavit which he made before Notary Soto G-ras.

In view of the affidavit of Sorba and of his explanations, Celestino Sola’s contention that debtor Sold & Son was substituted by another debtor, namely, Sola & Son, Limited, cannot be sustained.

The third assignment of error need not be considered as it is based on the supposition that the obligation is a„guaranty or surety given by the defendant and not a solidary debt. But the fact is that the said error does not exist, for appellant Celestino Sola himself admits that Antonio Maria Sorba stated that he granted Sola & Son the extension of time in the belief that Celestino Sold would continue as surety.

This being a case of a solidary obligation, sections 1110, 1111 and 1112 of the Civil Code are applicable and their pertinent parts read as follows:

“Section 1110. — Novation, compensation, confusion, or remission, of the debt, made by any of the joint creditors, or with any of the debtors of the same class, extinguishes the obligation. * * *

“Section 1111. — A creditor may sue any of the joint debtors or all of them simultaneously. * * *

“Section 1112. — The payment made by any of tbe joint debtors .extinguishes the-obligation.”

Plaintiffs Cintrón & Aboy, tbe indorsees of the promissory note nnder consideration, bave exercised tbe right given them by section 1111 in bringing tbeir action against one of tbe solidary debtors, Celestino Solá. Tbe obligation bad not been extinguished in any of tbe ways prescribed by said sections 1110 and 1112. As to tbe extension of time granted by Sorba to Sola' & Son, it cannot be regarded as a novation extinguishing tbe obligation, for there was no change of subject-matter or principal conditions; and as to novation consisting in tbe substitution of one debtor for another, there is no evidence of such substitution.

Tbe plea made before this court that tbe facts alleged in tbe complaint do not constitute a cause of action falls of its own weight, for whether tbe indorsement to Cintrón & Aboy be considered as a commission to collect or whether they be regarded as Sorba’s assignees, they may exercise tbe same rights as be bad, including tbe right to sue on tbe note, as they are doing. A cause of action exists.

Having considered the grounds of tbe appeal taken by defendant Celestino Sola, wo will now consider the- appeal taken by tbe plaintiffs.

Tbe object of tbe said appeal is to obtain a modification of tbe judgment to tbe effect that tbe defendant be adjudged to pay to tbe plaintiffs tbe $6,000 as principal due on tbe promissory note, together with interest thereon at 12 per cent per ánnum from January 1, 1912, to tbe date of payment, and tbe costs, disbursements and attorney’s fees.

Let us examine tbe provisions of tbe Civil Code pertinent to tbe case as embodied in sections 1067, 1068 and 1075, as follows:

“Section 1067. — Persons obliged to deliver or to do something are in default from the moment when the creditor. demands the ful-filment of their obligation, judicially or extrajudieially. "

“However, the demand of the creditor, in order that default may exist, shall not be necessary—

“1. If the obligation or law declares it expressly.

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“Section 1068. — Those who in fulfilling their obligations are guilty of fraud, negligence, or delay, and those who in any manner whatsoever act in contravention of the stipulations of the same, shall be subject to indemnify for the losses and damages caused thereby.

“Section 1075. — Should the obligation consist in the payment of a sum of money, and the debtor should be in default, the indemnity for losses and damages, should there not be a stipulation to the contrary, shall consist in the payment of the interest agreed upon, and should there be no agreement, in that of the legal interest.”

As is shown by the note under consideration, on May 31, 1910, Solá & Son and Celestino Sold bound themselves in solidum to pay to Antonio María Sorba, or to his order, on March *30, 1911, the sum of $6,000, which sum, in case of default, was to bear interest at the rate of 12 per cent per an-num, and further agreed to pay such costs and disbursements as might arise from proceedings to recover the said amount, including the fees of the attorney employed by the holder to bring the action.

As will be seen, the law of the contract was 'that in case of default in payment the solidary debtors were to pay interest at 12 per cent per annum and the costs, disbursements and attorney’s fees in case of legal proceedings.

From the evidence introduced at the trial — that is, the testimony of Antonio María Sorba and Marcelino Sold, manager of the firm of Sola & Son — it appears that both agreed to renew the note for a year and that the interest due was paid up to December, 1911, thus leaving owing the interest accruing from January 1, 1912.

The lower court erred by improperly applying section 1067 of the Civil Code and decreeing in its judgment that the interest should be paid from the date of the filing of the complaint, holding that since then only was the defendant in default, — that is, from the time he was sired on the note,— for that same section provides that demand need not he made by the creditor in order to establish'default when the obligation fixes it expressly, as it does in the present case where it is expressly stipulated that the amount due shall bear interest at 12 per cent in case of default in its payment.

Moreover, this being a case of a commercial loan, as the defendant himself admits, article 316 of the Code of Commerce is applicable and provides that debtors who delay the payment of their debts after the same have fallen due must pay, from the day following that on which it became due, the interest agreed upon in such case, or, in the absence of such agreement, the‘legal interest.

Therefore the solidary debtor, Marcelino Solá, is under obligation to pay the interest due and unpaid since January 1, 1912, according to the provisions of both the Civil Code and the Code of Commerce.

Respecting the imposition of costs, disbursements and attorney’s fees, this is not a matter which can be governed in the present case by the provisions of the Code of Civil Procedure as amended by the Acts of March 1, 1905, and March 12, 1908, for it should be governed by the law of the contract as set out in the promissory note, whereby the soli: dary debtor, Marcelino Solá, bound himself to pay such costs and disbursements as might arise from proceedings to collect the debt, including the fees of the attorney employed by the creditor to bring the action.

Section 1058 of the Civil Code provides that obligations arising from contracts have legal force between the contracting parties and must be fulfilled in- accordance with their stipulations.

For the foregoing reasons' we are of the opinion that the judgment appealed from shpuld be affirmed in so far as it decrees that the plaintiff firm, Cintrón & Aboy, shall recover tbe sum of $6,000 from defendant Celestino Solá and be modified in so far as it decrees tbe payment of interest on tbe said sum at tbe rate of 12 .per cent per annum from tbe date of tbe filing of tbe complaint, without special imposition of costs; onr judgment in lien thereof being that plaintiffs Cintron & Aboy have and recover of Celestino Solá interest at 12 per cent per annum from January 1, 1912, together with tbe costs, disbursements and fees of tbe attorney for tbe plaintiffs in tbe lower court.

Judgment affirmed but modified as to interest, costs, disbursements and attorney fees.

Justices Wolf, del Toro and Aldrey concurred. Mr. Justice Hutchison took no part in tbe decision of this case.