Goffinet v. Polanco

287 F. 29, 1923 U.S. App. LEXIS 2288
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 13, 1923
DocketNo. 1545
StatusPublished
Cited by2 cases

This text of 287 F. 29 (Goffinet v. Polanco) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Goffinet v. Polanco, 287 F. 29, 1923 U.S. App. LEXIS 2288 (5th Cir. 1923).

Opinion

JOHNSON, Circuit Judge.

The appellee recovered a judgment in a District Court of Porto Rico setting aside a former judgment of the same court as a nullity. From that judgment the appellant here took an appeal to the Supreme Court of Porto Rico, which court affirmed the judgment of the District Court, and the case is before this court on appeal from the judgment of that court.

The appellee and appellants were respectively plaintiff and defendants in the Porto Rican courts and they will be so designated herein.

The following recital of facts will show the issues involved in the complaint on which the judgment was rendered:

On March 27, 1914, the plaintiff gave a mortgage of certain real estate in Porto Rico to the defendants to secure the payment' of the sum of $30,000, with interest thereon at 10 per cent., and an additional amount of $500 to cover costs, expenses, and attorney’s fees. .Of this sum of $30,000, the sum of $15,725.55 had been previously advanced, leaving the sum of $14,274.45 to be advanced as needed by the plaintiff in cultivation of a sugar cane plantation covered by the mortgage.

On August 24, 1917, summary proceedings for the foreclosure of this.mortgage were instituted by the mortgagees under the Porto Rican Code, and as required by the Porto Rican law the pétition in these proceedings set out that, prior to the filing of the petition, there had been an accounting between the mortgagor and the mortgagee, which showed a balance of $18,086.46 due to the mortgagees under the mortgage.

Under article 169 of the Regulations applicable to the mortgage law in forcé in Porto Rico (Rev. St. 1913, §• 7266), it is provided that the petition for a summary foreclosure of a mortgage shall among other things state:

“The net amount of the claim which, by the mere act of instituting the proceedings the creditor will contract, assuming liability for any loss or damage the debtor or interested third persons may suffer through malice or negligence in not making a true statement of facts and of the circumstances which the Judge must, take into consideration in authorizing the institution of the proceedings and continuing them.”

The court found the sum of $18,086.46 to be due the mortgagees, and in the event of the failure to pay said sum ordered the sale at public auction of the mortgaged premises.

On August 27, 1917, the mortgagor, the plaintiff here, moved to set aside this order of the court on the following grounds:

“First. Because the instrument evidencing the debt sued for is not attached to the complaint.
[31]*31“Second. Because the plaintiff does not show categorically the exact amounts collected as interest or as a part of the principal of the debt.
“Third. There is no authentic document showing the exact amount of the balance of the debt due.”

The mortgagor further alleged:

“That the plaintiffs have falsely and maliciously set out in the third count of the said complaint that on the first instant the plaintiffs liquidated with the agreement of the mortgagor the financing' account secured by the mortgage.”

The mortgagees resisted this motion, assigning among other reasons that the summary foreclosure proceedings could only be stayed for reasons specifically set out in article 175 oí the regulations for the execution of the mortgage law (Rev. St. 1913, § 7272).

The motion was denied, and the property was sold at public auction on October 25, 1917, under an order of sale, for $19,202. Meantime, on October 9, 1917, the mortgagor filed a complaint in the District Court to vacate the summary proceedings which had been instituted, and whatever entries might have been made in the registry of property in connection therewith, and also asking for damages, with costs, disbursements, and attorney’s fees.

In this complaint it is alleged:

“That in the aforesaid summary foreclosure proceedings the defendants, foreclosing mortgagees, failed expressly to state in their initial petition the exact amounts recovered from the debtor, plaintiff herein, by way of interest or on account of the principal indebtedness. They did not attach to the said petition, as they should have done, the instrument evidencing the credit claimed. Neither did they annex to the said petition an authentic and authoritative document showing the exact, liquidated, demandable amount of the debt. Further, they falsely set out in the said petition that on August 1,1917, the defendants, in concurrence with the mortgage debtor, liquidated the account of advances secured by the mortgage. The plaintiff contends that said account has not been liquidated by mutual accord of the interested parties, but that, on the contrary, the defendants herein, foreclosing mortgagees, arbitrarily and in violation of the said contracts, fixed the balance in their favor at 818,286.46.”

The District Court found that there had been no liquidation as set forth in the summary petition for foreclosure and that this was an indispensable condition required by article 169 of the mortgage law regulations of Porto Rico, and sustains this finding in this statement:

“And the fact that there was no such liquidation and no such admission is shown not only by the testimony of plaintiff Polanco but also by that of the defendants’. attorney in fact, who said that an agreement had not been reached because of differences in the computation of the interest and in the application of the percentage on liquidating the cane ground in the factory from the proceeds of which the defendants were to be reimbursed, according to the financing contract. * * *
“The omissions mentioned are sufficient to void the mortgage foreclosure proceeding, according to the letter and spirit of article 128 of the Mortgage Law [Rev. St. 1913, § 6812] and article 169 of its Regulations.”

The court further found that there was malice on the part of the mortgagees in falsely stating the facts and circumstances to be con[32]*32sidered by the court which ordered the institution of the foreclosure proceedings; also in the attitude assumed by them when the mortgagor, confronted by the danger of losing the possession of his property in a summary proceeding, asked the court to protect him against the threatened loss, and awarded damages to the plaintiff in the sum of $9,923, together with costs, expenses and attorney’s fees.

The Supreme Court of Porto Rico, in its opinion affirming the judgment below, said:

“After a careful review of this testimony, we cannot say that the court below manifestly erred in finding that the foreclosure proceedings were instituted ‘without previous liquidation with plaintiff of the account for advances,’ or that the question as to the amount of interest admitted by the witness of defendants to he in dispute is so insignificant as to fall within the principle of ‘de minimis non curat lex.’
“Aside from the bald statement that the mortgage ‘was executed to secure an agricultural loan of $30,000 made by mortgagees to mortgagor,’ and the reference to a liquidated balance, the petition for foreclosure contained nothing whatever to show either the amount advanced, if any, any credit on such account, any balance due thereon, or even the existence of the account itself.”

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53 P.R. 539 (Supreme Court of Puerto Rico, 1938)

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Bluebook (online)
287 F. 29, 1923 U.S. App. LEXIS 2288, Counsel Stack Legal Research, https://law.counselstack.com/opinion/goffinet-v-polanco-ca5-1923.