Douglas v. Registrar of Property of Mayagüez

55 P.R. 644

• Court: Supreme Court of Puerto Rico
• Decided: November 24, 1939
• Docket: No. 1055
• Status: Published

Opinion

Mr. Justice Hutchison

delivered the opinion of the Court.

By Joint Resolution No. 28, approved April 26, 1927, the Commissioner of the Interior was authorized to convey to Francisco Pagán 390 square meters of land, the property of the People of Puerto Rico, in Mayagüez for such assessed valuation as might he made by the Treasurer of Puerto Rico and the Commissioner of the Interior at the time of the sale. In May 1939, the Commissioner of the Interior conveyed the property to Cuthbert Charlton Douglas as trustee for the heirs of Francisco Pagán for $975, paid in cash by Douglas. A registrar of property refused to record the deed: because a declaration of trust of even date did not contain any mandate whereby the settlor had conveyed any property to the trustee to be disposed of as directed by the settlor, as required by Section 834 of the Civil Code (1930 ed.); and because the conveyance to a trustee deprived the Pagán heirs of their right to acquire title to the property and to dispose of the same at will.

By the terms of Section 834 supra:

“A trust (fideicommissum) is an irrevocable mandate whereby certain property is transferred to a person, named the trustee (fidu-ciario), in order that he may dispose of it as directed by the pariy who transfers the property, named constituent (fideicomitente), for his own benefit or for the benefit of a third party, named the beneficiary (cestui que trust) or (fideicomisario)

Douglas in Ms declaration of trust stated that he had received from the National City Bant of New York $975 and in consideration thereof constituted himself a trustee for the persons named in the deed as the heirs of Francisco Pagan, with power to invest the said money in real or personal property, to sell the property so acquired at such price and upon such conditions as he might deem proper, to terminate the trust by delivery of the trust fund to the cestuis que trustent, or by a transfer of the trust property to them, or by the payment of their debts to the amount of the trust fund or to the value of the property. The trust was to terminate whenever the trustee should deliver to the cestuis que trustent the amount of the trust fund or the property or properties acquired therewith by him in trust, or whenever he should discharge any obligation of the cestuis que trustent to the amount of the trust fund.

The declaration did not come within the letter of the statutory definition. That definition, however, does not necessarily exclude a declaration of trust wherein the settlor and trustee are one and the same. Such declarations are quite common elsewhere and are generally regarded as permissible and proper. 1 Bogert 4; 26 R. C. L. 1182, Section 19; American Law Institute, 1 Bestatement of the Law of Trusts 64, Section 17; Morsman v. Commission of Internal Revenue, 90 Fed. (2d) 18.

We cannot bring ourselves to believe that Section 834 of the Civil Code, reasonably construed in the light of other. provisions in pari materia, requires the establishment" of a different rule in this jurisdiction.

Section 871 of tibie Civil Code reads as follows:

“Real property transferred by trust shall be recorded in the registry in the name of the trustee, as in the case of any other conveyance of ownership, and there shall be recorded as encumbrances on the property the provisions of the trust whereby the authority of the trustee to alienate or encumber the property be limited.”

Given the terms and conditions contained in the declaration of trust and without any other data upon which to base an opinion, we cannot agree with the registrar that a record entry in the nanie of the trustee would deprive the Pagan heirs of any right which they may have to acquire an absolute title to, the lot in question and thereafter freely to dispose of the same.

The ruling appealed from will be reversed with instructions to record the deed of conveyance.