People v. Fajardo Sugar Co.

50 P.R. 156
CourtSupreme Court of Puerto Rico
DecidedJune 4, 1936
DocketNo. 1
StatusPublished

This text of 50 P.R. 156 (People v. Fajardo Sugar Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People v. Fajardo Sugar Co., 50 P.R. 156 (prsupreme 1936).

Opinion

Me. Chief Justice Del Tobo

delivered tlie opinion oí the Court.

Upon the petition of the Attorney G-eneral of Puerto Bico, this Court, on January 28 last, authorized the filing of an information in the nature of quo warranto in this case, and the defendants were granted until the 28th of the following’ February to demur, answer, or enter any other proper plea.

On the 5th of February, the plaintiff filed a motion for an inspection and copy of certain books, papers, and documents in the possession or under the control of the defendants, and on the 15th of the same month the latter presented their written opposition thereto, based, among other grounds, [158]*158upon the claim that this Court, for various reasons which they stated, had no jurisdiction to act in the matter.

The plaintiff moved to strike out from the oppositions certain questions of law raised therein, among them, those relating to the jurisdiction. Both parties were heard on this point and the court ruled that it was not possible to decide the question of inspection while disregarding that of jurisdiction and set March 16, 1936, for further hearing' the parties. They were so heard, fully, and in addition they filed briefs in support of their respective contentions, the last of such briefs being filed on May 16, 1936.

What is the question involved? The holding of real estate by agricultural corporations. What does The People of Puerto Rico demand through the Attorney General? That this Court give judgment of ouster from the franchise as against the Fajardo Sugar Company of Porto Rico and the Loiza Sugar Company, decreeing their immediate dissolution, prohibiting them from continuing to do business in Puerto Rico, and imposing on them the proper fines, and as regards The Fajardo Sugar Growers Association, that the same be ordered to cease doing business in this Island; together with any other relief which in equity and justice may be proper as against them all.

It is substantially alleged in the information that The Fajardo Sugar Company of Porto Rico is a corporation organized under the laws of this Island, on February 28, 1919, its object being to engage in agriculture and the manufacture of sugar and it being stipulated in its articles of incorporation that its right to own or control land in Puerto Rico would be limited to five hundred acres, as provided by Section 3 of the Joint Resolution of the Congress of the United States, approved May 1, 1900; and that, notwithstanding this, it acquired all the properties of The Fajardo Sugar Company, a corporation oi'ganized under the laws of the State of New York in 1905, engaged in agriculture and the manufacture of sugar in this Island, which, by itself, as well [159]*159as through the defendant, The Fajardo Sugar Growers Asso - ciation, had acquired from time to time the ownership or control of land in Puerto Rico in the aggregate amount of about thirty thousand seven hundred acres.

As regards The Fajardo Sugar Growers Association, it is substantially alleged in the information that it is an entity describing itself as a joint-stock association which was organized under the laws of the State of New York to engage in the growing of sugar cane, and to acquire by purchase, lease, or otherwise, such land as may be necessary to carry out its purposes, and that it having complied with the requirements prescribed by the Private Corporation Act of Puerto Rico, approved March 9, 1911, it was authorized to do business in the Island. Then follow several averments tending to show that it is in fact a corporation.

With respect to the other defendant, Loiza Sugar Company, the information substantially alleges that it is a corporation organized under the laws of Puerto Rico for the purpose of purchasing and leasing land and planting or harvesting sugar cane. As in the case of the defendant first above mentioned, its articles of incorporation specifically provide that its right to own or control real estate, shall be limited to five hundred acres, in accordance with the Joint Resolution of Congress already cited, in spite of which it owned or controlled, on October 6, 1925, about eleven thousand thirty-eight acres of land in the Island.

It is further substantially alleged in the information that on October 6, 1925, defendant The Fajardo Sugar Company of Puerto Rico acquired by purchase the entire capital stock of the Loiza Sugar Company, and still controls 99 per cent thereof and thereby manages and controls its business; that by a public deed executed on January 10, 1935, the Loiza Sugar Company conveyed to The Fajardo' Sugar Growers Association, for the purpose of concealing the identity of the true owner thereof, all the agricultural lands which it held or controlled in Puerto Rico, except some five hundred [160]*160and ninety-eight acres which it still holds and controls in its own name.

Reference is made in the information to certain instruments executed which, as petitioner claims, show the interdependence of the three defendants; and it is textually alleged: “The total amount of agricultural land which is held or controlled at the present time by said defendant, The Fajardo Sugar Company of Porto Rico, either by itself or through its subsidiaries, or agencies above mentioned, and upon which it is engaged at present in agriculture, as already stated, amounts to some 23,800 acres.”

The information concludes by alleging that the ownership or control by the defendants of lands concentrated into large estates is contrary to the public policy of Puerto Rico and is in conflict with the economic welfare of the people of the Island; and it sets forth the facts and circumstances upon which such allegation is based.

The Joint Resolution of which mention has already been made, was approved eighteen days after the territory of Puerto Rico was organized by the Congress of the United States. By its third Section, as the same appears on page XSXY of the Revised Statutes and Codes of Puerto Rico, 1902, it is provided as follows:

“Section 3. — That all franchises, privileges or concessions granted, under Section thirty-two of said Act shall provide that the same shall be subject to amendment, alteration, or repeal; shall forbid the issue of stock or bonds, except in exchange for actual cash, or property at a fair valuation, equal in amount to the par value of the stock or bonds issued; shall forbid the declaring of stock or bond dividends; and, in the case of public-service corporations, shall provide for the effective regulation of the charges thereof and for the purchase or taking by the public authorities of their property at a fair and reasonable valuation. No corporation shall be authorized to conduct the business of buying and selling real estate or be permitted to hold or own real estate except such as may be reasonably necessary to enable it to carry out the purposes for which it was created, and every corporation hereafter authorized to engage in agriculture shall by its charter be restricted to the ownership and control of not to [161]*161exceed five hundred acres of land; and this provision shall be held to prevent any member of a corporation engaged in agriculture from being in any wise interested in any other corporation engaged in agriculture. Corporations, however, may loan funds upon real estate security, and purchase real estate when necessary for the collection of loans, but they shall dispose of real estate so obtained within five years after receiving the title.

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50 P.R. 156, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-v-fajardo-sugar-co-prsupreme-1936.