Source: https://www.legalcrystal.com/case/97361/puerto-rico-vs-rubert-hermanos-inc
Timestamp: 2018-05-20 12:30:55
Document Index: 544775844

Matched Legal Cases: ['§ 182', '§ 27', '§ 182', '§ 182', '§ 182', '§ 2', '§ 27', '§ 182', '§ 182']

Puerto Rico Vs Rubert Hermanos Inc - Citation 97361 - Court Judgment | LegalCrystal
Puerto Rico Vs. Rubert Hermanos, Inc. - Court Judgment
LegalCrystal Citation legalcrystal.com/97361
Case Number 315 U.S. 637
Respondent Rubert Hermanos, Inc.
puerto rico v. rubert hermanos, inc. - 315 u.s. 637 (1942) u.s. supreme court puerto rico v. rubert hermanos, inc., 315 u.s. 637 (1942) puerto rico v. rubert hermanos, inc. no. 96 argued february 6, 9, 1942 decided march 16, 1942 315 u.s. 637 certiorari to the circuit court of appeals for the first circuit syllabus 1. the principle which accords great weight to the decisions of the supreme court of puerto rico in matters of local law applies where the question respects the power of that court to appoint a receiver and is dependent upon a construction of local statutes, and a fortiori where the question concerns merely the propriety of an exercise of that power. p. 315 u. s. 646 . 2. a decision of.....
Puerto Rico v. Rubert Hermanos, Inc. - 315 U.S. 637 (1942)
U.S. Supreme Court Puerto Rico v. Rubert Hermanos, Inc., 315 U.S. 637 (1942)
1. The principle which accords great weight to the decisions of the Supreme Court of Puerto Rico in matters of local law applies where the question respects the power of that court to appoint a receiver and is dependent upon a construction of local statutes, and a fortiori where the question concerns merely the propriety of an exercise of that power. P. 315 U. S. 646 .
2. A decision of the Supreme Court of Puerto Rico affirming its power to place a receiver in control of the property of a corporation the dissolution of which it had decreed for violations of a law forbidding corporations to hold more than 500 acres of land is entitled to great weight as an exposition of the local law, and, not being plainly incorrect, should not have been reversed by the Circuit Court of Appeals, although § 182 of the local Code of Civil Procedure, upon which the insular court relied, appears to conflict with §§ 27-30 of the Private Corporation Law. P. 315 U. S. 646 .
(1) That the appointment was discretionary, for the purpose of preventing confusion and needless litigation which might result if the directors of the corporation should attempt to convey interests in the property pending the exercise of the option. P. 315 U. S. 646 .
(2) That, as the receivership was to be terminated upon the exercise of the option, it was sufficiently definite in time; nor was it too broad in not being restricted to the land in excess of the 500 acre maximum, since to separate the land from the machinery and other personalty pending the exercise of the option would have resulted in economic waste. P. 315 U. S. 647 .
118 F.2d 752 reversed.
"every corporation hereafter authorized to engage in agriculture [in Puerto Rico] shall by its charter be restricted to the ownership and control of not to exceed five hundred acres of land. [ Footnote 1 ]"
This limitation was carried over into the present Organic Act of Puerto Rico enacted on March 2, 1917. [ Footnote 2 ] In 1935, the Legislative Assembly of Puerto Rico enacted two laws to provide the means of enforcing the Congressional prohibition. Act No. 33 conferred upon the Supreme Court of Puerto Rico exclusive original jurisdiction over quo warranto proceedings instituted for violations of the 500-acre law. [ Footnote 3 ] Act No. 47 authorized the Attorney General of Puerto Rico or any district attorney to bring such quo warranto proceedings in the Supreme Court of Puerto Rico against any corporation violating the Organic Act, and provided further that, when any corporation is
or the alienation thereof at public auction, within a term of not more than six months counting from the date on which final sentence is rendered. [ Footnote 4 ]"
This is a quo warranto proceeding brought in 1937 against respondent corporation by the Attorney General of Puerto Rico under these statutes. The complaint alleged that respondent corporation was organized in 1927 under the laws of Puerto Rico for the purpose of acquiring and working sugar cane farms and plantations, that its articles of incorporation restricted it to the acquisition of 500 acres, that it nevertheless had acquired, and that it owned and was working at the time of the filing of the complaint, some 12,188 acres of land. The answer conceded that the 500-acre restriction was contained in the articles and that the respondent had nevertheless acquired the 12,188 acres, but interposed several defenses. On July 30, 1938 the Supreme Court of Puerto Rico entered judgment for the petitioner. It ordered "the forfeiture and cancellation" of the license and articles of incorporation of respondent, "the immediate dissolution and winding up of the affairs" of the corporation, and the payment of a $3,000 fine and costs. On the same day, petitioner moved that a receiver be appointed to handle the dissolution and disposition of the respondent's property, pursuant to subsections 4 and 5 of § 182 of the People of Puerto Rico Code of Civil Procedure. [ Footnote 5 ]
The motion for the appointment of a receiver was held in abeyance pending an appeal to the Circuit Court of Appeals for the First Circuit. That Court reversed the judgment of the Supreme Court of Puerto Rico on the ground that Acts Nos. 33 and 47 exceeded the authority of the Legislative Assembly under the Organic Act. 106 F.2d 754. We granted certiorari, 309 U.S. 642, and on March 25, 1940 reversed the judgment of the Circuit Court of Appeals and reinstated that of the Supreme Court of the Island. 309 U. S. 543 .
The mandate of this Court reached the clerk of the Supreme Court of Puerto Rico on May 13. On the same day, the Attorney General entered a request for a hearing on petitioner's pending motion for the appointment of a receiver. The respondent then filed its answer and briefs were submitted by both parties. In its answer and brief, respondent raised numerous objections to the appointment of a receiver. Chief among these objections were: (a) that, on March 28, 1940, respondent corporation had been dissolved by vote of its stockholders and its property conveyed to a partnership consisting of all the stockholders, so that nothing remained to be done, and (b)
that the statutes applicable to this case are certain sections of the Private Corporations Law, [ Footnote 6 ] rather than § 182
of the Code of Civil Procedure, [ Footnote 7 ] that, under the terms of the former, "the directors shall be the trustees . . . pending the liquidation" of any dissolved corporation, and that the court was consequently without jurisdiction to appoint a receiver under § 182. The insular court resolved all the issues in petitioner's favor, appointed a receiver of all the property of the respondent, and directed the receiver to handle the property as a going concern until the People of Puerto Rico should exercise the option granted to them by § 2 of Act No. 47 of August 7, 1935, either to confiscate the real estate unlawfully held by respondent or to have it sold at public auction. [ Footnote 8 ]
From this order, respondent took a second appeal to the Circuit Court of Appeals, making the two contentions which have been noted, as well as many others which require no discussion here. The Circuit Court of Appeals disposed of several of these contentions unfavorably to the respondent. However, it reversed the judgment of the Supreme Court of Puerto Rico on the ground that the order appointing the receiver was "improvidently issued." In the opinion of the Circuit Court, §§ 27, 28, and 30 of the Private Corporation Law are unquestionably applicable to the dissolution of a corporation by court order as a result of a violation of its charter and the laws, although the insular court had declared them "applicable only to a voluntary dissolution agreed upon by the shareholders of a corporation or by expiration of the term fixed for its duration." With respect to § 182 of the Code of Civil Procedure, upon which the lower court relied, the Circuit Court of Appeals determined that it permitted the appointment of a receiver only "upon proper showing by an interested party, agreeably to the usages of courts of equity." It concluded that the option granted by Act No. 47 of 1935 did not afford the People of Puerto Rico an interest sufficient for this purpose. It observed that the option relates only to the excess acreage, whereas the order had sought to place the receiver in charge of all the property of the respondent, both real and personal. If the People of Puerto Rico should elect to have the land sold at public auction, [ Footnote 9 ] the Circuit Court asserted, a master can be appointed for that purpose, and, in the meantime, a
Again, if nothing more than these sections were before us, we think it clear enough that, upon the dissolution of a corporation "in any manner," the directors would remain in charge of the assets as trustees until some "creditor or stockholder" moved a district court -- not the Supreme Court of the Island -- to remove them.
A frank recognition that the statutes appear on their face to conflict and to overlap permits us to avoid the lengthy and technical arguments which have been advanced by both parties in this Court and in the courts below. The Supreme Court of Puerto Rico resolved this conflict in favor of its power to appoint a receiver by holding that the pertinent sections of the Private Corporations Law do not apply to judicially ordered dissolutions, but that § 182 of the Code of Civil Procedure does apply. In recent years, we have had occasion to announce that the decisions of the courts of Puerto Rico with respect to the interpretation of the Island's statutes and to matters of local law are to be accorded the greatest weight. Sancho Bonet v. Yabucoa Sugar Co., 306 U. S. 505 ; Sancho Bonet v. Texas Co., 308 U. S. 463 . We cannot say that an interpretation placed by the Supreme Court of Puerto Rico upon statutes whose meaning is so open to doubt is plainly incorrect. Accordingly, though the interpretation suggested by the Circuit Court of Appeals may be equally plausible, it erred in reversing the judgment of the insular court.
Third: respondent insists and the Circuit Court held, finally, that the order was too broad to be sustained. It is
"4. In the case when a corporation has been dissolved, or is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights. "
"5. In all other cases where receivers have heretofore been appointed by the usages of courts of equity. "