Case Name: GREGG COMPANY, LTD., v. UTUADO SUGAR COMPANY
Court: United States District Court for the District of Puerto Rico
Jurisdiction: United States
Decision Date: 1915-01-30
Citations: 7 P.R. Fed. 459
Docket Number: No. 898
Parties: GREGG COMPANY, LTD., v. UTUADO SUGAR COMPANY.
Judges: 
Reporter: Porto Rico Federal Reports
Volume: 7
Pages: 459–463

Head Matter:
GREGG COMPANY, LTD., v. UTUADO SUGAR COMPANY.
San Juan,
Equity,
No. 898.
In the Matter oe the Report oe the Standing Master in Chancery on the Petition of Carlos Cabrera for the Cancelation of a Certain Lease Granted to Antonio Serbia by the Utuado Sugar Company.
Receivership — Lease of Property.
Where it seems best for the interest of all concerned to lease out receivership property which cannot otherwise be handled to advantage,, this will not be construed as affecting liens one way or the other Such procedure is in administration, and does not affect claims one-way or the other.
Opinion filed January 30, 1915.
Mr. 0. Coll y Cuchi for Carlos Cabrera.
Messrs. Alvarez Nava & Dominguez for Felipe Iglesias.

Opinion:
HamiltoN, Judge,
delivered tbe following opinion:
Tbis conies up upon a petition of Carlos Cabrera for tbe can-celation of a lease wbicb is set out in detail, alleging that tbe company or tbe receiver was to advance Serbia money and be was to raise sugar cane in tbe usual way, but that on account of tbe difficulties of tbe receivership, only $1,000 or $1,200 were advanced, and Serbia was unable to go on, and bas abandoned tbe contract and tbe property; that there is, however, cane on tbe ground wbicb ought to be talien care of in some way, and Cabrera, who bas leased tbe property generally, offers to repay tbe $1,200 advanced, and also to make a certain payment of $2,000 for tbe lease of tbe property up to tbe 1st day of July, 1916.
Tbis was referred to tbe master and tbe master reports favorably upon tbe petition by a report filed January 15, 1915. Felipe Iglesias, claiming to be a refacción creditor, excepts to tbe master's report on January 20th. Tbe ground of tbe exception is rather general in that tbe exception says merely that said report ought to be "reversed by tbis honorable court be cause tbe said master bas totally disregarded tbe petitioner's rights in tbe premises." Tbe rights referred to grow out of tbe fact that this court directed tbe receiver to borrow money to operate tbe plant up to $50,000. In point of fact, be got $30,000 from Iglesias on certain terms, and there bas been paid back about half that sum. Tbe contention of Mr. Iglesias is that tbe balance of $15,000 is a refacción debt, which covers everything, and, as a debt of tbe officer of tbe court and in some sense a debt of tbe court itself, should be protected in every way, and be objects now, as be did to tbe lease to Cabrera, to this cancelation on tbe ground that it infringes bis rights to recover tbe $15,000.
Tbe question is a delicate one, as tbe whole Utuado matter bas been a delicate one. It bas been totally outside tbe ordinary course with regard to receiverships. Ordinarily receivership is a comparatively simple matter. Tbe receiver takes charge, and under the instructions of tbe court borrows money and operates tbe property and finally turns it over to somebody interested. We have not reached tbe end of this litigation at all. Tbe receiver bas stopped work by direction of tbe court, and it is necessary to make some other arrangement to take tbe place of the receivership. It is a very unusual situation and it calls for unusual procedure.
Tbe court thinks that here, as in other cases, tbe primary duty of tbe court is tbe preservation of tbe property for whatever may be tbe final disposition, whether it all goes to Mr: Iglesias or to tbe creditors, or whatever becomes of 'it. As long as it is in court, it must be preserved in some way. Mr. Iglesias makes no offer in regard to this particular lease. It is proved before tbe master by tbe affidavit of Serbia himself that it is a fact be bas thrown up bis lease, and tbe property is practically abandoned. It might be that if Iglesias or anybody else would make a more favorable offer, it would be entertained. Still there is only this one proposition before tbe court, that is to> say, of Mr. Cabrera to pay back what bas already been advanced and pay a certain rental. Tbe master approves tbe proposition, and tbe court does not see at all from inspection of the papers that tbe master is wrong; so there is no option except to confirm tbe master's report. At tbe same time it may be that one or two things should be more fully guarded than as. provided in tbe report; so tbe order will be made in this shape.
1. In tbe first place, tbe master's report is confirmed and Cabrera's petition for lease of tbe property is accepted.
2. In tbe second place, however, tbe proceeds, both the' amount to be paid back and tbe rental, are to stand in place of tbe property and be held and treated as in tbe nature of a special fund. Whatever rights anyone bas upon tbe land itself, whether it be Mr. Iglesias or anyone else, will be recognized in regard to tbe proceeds of tbe property under this arrangement with Mr.- Cabrera. In other words, tbe proceeds take tbe place-entirely of tbe property itself, and there is no change intended by this arrangement in tbe rights of tbe parties one way or the-other, except tbe transfer from tbe land to tbe proceeds, and the-court will not be understood as interfering with tbe land itself, or any rights now existing by tbe lease now made to Cabrera,, that is say, for tbe length of time mentioned in bis petition.
3. And in tbe third place, ten days are allowed to Mr. Igles-ias to apply to tbe court, if be sees proper to do so, to have Mr. Cabrera furnish an inventory of tbe property, of tbe rattoon& there may be, tbe condition of tbe cane, and everything that may be proper, but no duty is laid upon Mr. Cabrera to make-suck a report unless it is so required. If suck an application is made, tke attorneys for Cabrera and for Iglesias are directed to confer upon tke form of making tkis inventory, and if tkey cannot agree it will be referred to tke master to make suck an inventory. But tkis is not intended in any way to impede Mr. Cabrera in bis use of tke property, and is not required unless requested by Mr. Iglesias witkin tke next ten days.
Tkis seems to be tke best way of salving tke property, and I kave tkus preserved as well as may be whatever may be tke rights of tke parties, without now passing upon those rights, which may come up at any future time when tke parties are in court and may be beard.
4. A formal renunciation by tke former lessee must be filed in court witkin tke next ten days by Mr. Cabrera or some other party to tke cause, and'tkis is a part and condition of tke arrangement.