United States v. Velez-Velez

772 F. Supp. 56, 1991 U.S. Dist. LEXIS 12951, 1991 WL 176098
CourtDistrict Court, D. Puerto Rico
DecidedSeptember 10, 1991
DocketCiv. No. 80-0135CCC
StatusPublished

This text of 772 F. Supp. 56 (United States v. Velez-Velez) is published on Counsel Stack Legal Research, covering District Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Velez-Velez, 772 F. Supp. 56, 1991 U.S. Dist. LEXIS 12951, 1991 WL 176098 (prd 1991).

Opinion

OPINION AND ORDER

CEREZO, District Judge.

This case, originally an action for the foreclosure of a mortgage, is now before the Court on a post-judgment motion filed by plaintiff United States of America (Small Business Administration) (docket entry 37). In its motion, the government has requested the issuance of an order to the Registrar of the Property of Puerto Rico, San Juan section IV, to cancel what it considers is an improperly registered mortgage which still encumbers one of the real estate properties foreclosed. The holders of the contested lien, the heirs of Mr. Eulo[57]*57gio Colón-Díaz,1 have opposed this motion (docket entry 39), claiming that the foreclosure procedure was never notified to them and was, therefore, defective.

The facts relevant to this dispute are, for the most part, not controverted by the parties. As revealed by the motion and supporting documents on file, they are as follows: on February 25, 1975, Mr. Carmelo Vélez-Vélez and his wife Mrs. Nereida Huertas-Fress executed Deed of Purchase and Sale Number 5 before Notary Public Américo Torres-Gónzalez, in which they acquired from Mr. and Mrs. Eulogio Colón-Díaz the property whose description is as follows:

“RUSTICA. Predio de terreno radicado en el Barrio Quebrada Clara de Trujillo Alto, compuesto de dos hectáreas, veinte áreas, cero uno punto setenta y tres centáreas equivalentes a cinco punto cinco noventa y siete cuerdas, en colindancias por el NORTE, con la finca principal de la cual se segregó, por el SUR, con terrenos de Don Mariano y Doña Aida Flores, por el ESTE, con terrenos de Don Felipe Morales y por el OESTE, con la carretera estatal número ciento ochenta y uno.”

This property appears registered in the Registry of Property of San Juan, Section IV, at page 210, volume 103 of Trujillo Alto, property number 4,579.

The property was bought for the total price of $51,000.00, of which amount- Mr. and Mrs. Vélez made a down payment of $10,000.00 to the sellers. A bearer note was signed for the balance of $41,000.00, as payment of this amount was agreed to be postponed. This bearer note was guaranteed with a mortgage, which was also constituted in Deed Number 5. However, when the deed was filed for recording at the Registry of Property, the Registrar recorded only the sale of the property and not the mortgage. Nonetheless, a mention {mención)2 of the latter was made in the Registry when the sale inscription was entered.

On August 3, 1976, Mr. Vélez-Vélez and Mrs. Huertas-Fress received from the Small Business Administration a secured loan, which was evidenced by a note executed by both of them in the principal sum of thirty five thousand dollars ($35,000.00) and made payable to the order of the Small Business Administration. For the purpose of securing the payment of the principal and interests of said note, the debtors mortgaged two of their properties, including the one previously acquired from the Colón-Díaz. Both these mortgages were registered in the Registry of Property on 1976.

The Veléz having failed to pay their loan installments as agreed with plaintiff, this action for the foreclosure of its mortgages was brought before the court in 1980. A judgment by default was entered in 1981, followed by an order of execution (1981), the judicial sale of the properties (1983) and confirmation of the sales by the court (1983). On June 19, 1984, a deed of sale was finally executed conveying title of the property here in question to the person who acquired it in the judicial sale, Mr. Neftalí Rosa-Rodríguez. The deed of judicial sale was then filed for its inscription at the Property Registry on March 20, 1985. Meanwhile, on May 4, 1984, precisely within the period after confirmation of the judicial sale by the Court and before execution of the deed of judicial sale, deed number five was again filed at the Registry, but this time just for the inscription of the mortgage which had appeared only as a mention since 1975. The Registrar then proceeded to register the said mortgage as requested, and it has remained so inscribed up to this date.

In its motion requesting cancellation of the mortgage, the government has argued that inasmuch as the mentioned mortgage was filed for recording after the expiration [58]*58of the time period provided by the Mortgage Act of 1979 to request the inscription of mentioned rights, it was improperly registered and should be cancelled. The heirs of Mr. Eulogio Colón-Díaz, in their response to plaintiff's motion, have emphasized instead the fact that plaintiff already knew of the existence of the mortgage constituted in their favor in Deed number five when it agreed with the Veléz that a new mortgage be established over the property. They contend that plaintiff’s previous knowledge and recognition of the existence of this mortgage expressly required it to notify the Colón-Díaz family of the initiation of the foreclosure proceeding and that its failure to do so has flawed the whole process.

We begin our discussion of the relevant legal issues by briefly pausing to examine the juridical figure of the mención registral, or mention, as an understanding of its nature is of extreme importance for the final disposition of the matter now before us. As defined by the Supreme Court of Puerto Rico, a mention “is a mere notice entered by the registrar of the existence of an unrecorded interest. It is a warning with respect to an interest but not the creation of an interest which already exists, although unrecorded____” Miranda v. Registrar, 45 P.R.R. 385, 387 (1933). In similar terms, the well known Spanish commentator Ramón Roca-Sastre has described it as “a mere indication of the existence of a lien or encumbrance on a property, made in an entry concerning the same.” R. Roca-Sastre, III — 3 Derecho Hipotecario 346, n. 1 (1948) (as quoted in Postigo v. Registrar, 96 P.R.R. 535, 538 (1968)). Although the mention of a property right in the registry was not equivalent to its inscription, it did have several practical effects, among them to warn third parties of the existence of the still unrecorded right. Also, it served to secure a preferred ranking to the mentioned right, as once its inscription was requested the same would be made retroactive to the date it was first mentioned in the Registry. See Article 29 of the Mortgage Act of 1893, R. Roca-Sastre, supra, Brau del Toro, Apuntes para un curso sobre el estado del Derecho Inmobiliario Registral Puertorriqueño bajo la Ley Hipotecaria de 1893, 48 Rev. Jur. U.P.R. 113 (1979), see also, with regard to the mention of a mortgage, Hess Klinger v. Sues. Mestres, 55 P.R.R. 792, 794 (1940).

However, the mention has not been a favored concept since it was first introduced in Puerto Rico in the Mortgage Act of 1893, as attested by the several legislative attempts to gradually eliminate it.3 Its demise finally came with the Mortgage Act of 1979 (30 L.P.R.A. § 2001 et seq.), whose Article 255 provides in pertinent part that:

Any mention of a right subject to special and separate registration existing in Registry entries shall have no effect whatsoever, even though it may relate or refer to titles or registrations entered later, when the interested party has not requested that the right be recorded, or no legal action has been initiated to claim his right by noting the suit in the Registry, within six months after the date this act is in force.

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Related

Juarbe Alicea v. Juarbe Auto Sales, Inc.
640 F. Supp. 110 (D. Puerto Rico, 1986)
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110 P.R. Dec. 603 (Supreme Court of Puerto Rico, 1981)

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Bluebook (online)
772 F. Supp. 56, 1991 U.S. Dist. LEXIS 12951, 1991 WL 176098, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-velez-velez-prd-1991.