Case Name: Montes de Oca, Plaintiff and Appellant, v. Báez et al., Defendants (Succession of Gómez, Contestant and Appellee)
Court: Supreme Court of Puerto Rico
Jurisdiction: Puerto Rico
Decision Date: 1916-04-14
Citations: 23 P.R. 656
Docket Number: No. 1398
Parties: Montes de Oca, Plaintiff and Appellant, v. Báez et al., Defendants (Succession of Gómez, Contestant and Appellee).
Judges: Justices Wolf, del Toro and Aldrey concurred.
Reporter: Puerto Rico Reports
Volume: 23
Pages: 656–662

Head Matter:
Montes de Oca, Plaintiff and Appellant, v. Báez et al., Defendants (Succession of Gómez, Contestant and Appellee).
Appeal from'the District Court of Mayagüez in an Action for Cancellation of Mortgage.
No. 1398.
Decided April 14, 1916.
Mortgage — Summary Proceedings — Foreclosure—Sale oe Property. — According to the law and jurisprudence now in force, the recovery of a mortgage credit may be proseeuted by the summary proceeding of- the Mortgage Law and its Regulations, or in accordance with the provisions of the Code of: Civil Procedure, and in either case should be governed by the act approved March 9, 1905, by the foreclosure or sale of the mortgaged property.
Execution — Repeal.—The Law of Civil Procedure which went into effect in this Island on January 18, 1886, was not repealed as to the part relating to the execution of judgments by General' Order No. 118 of August 15, 1899, but remained in force until replaced by the present code of July 1, 1904.
Td. — Mortgage—Junior Mortgagees — Foreclosure—Public Sale. — According to the old Law of Civil Procedure and the Mortgage Law, junior mortgagees were notified of the foreclosure proceeding prosecuted' for the recovery of the credit of a senior mortgagee, and such notice should be given in the summary proceeding at present in force, as provided by articles 171 and 172 of the Regulations for the execution of the Mortgage Law, so that they may take part in the sale. If they do not attend, they cannot be heard to complain that they have been injured by the application of article 125 of the Mortgage Law.
Id. — Junior Mortgagees — Notice oe Sale — Cancellation oe Mortgage — Due Process oe Law. — Although the Act of March 9, 1905, relating to judgments and the manner of satisfying them is silent as to junior mortgagees, if the ordinary procedure for the recovery of a mortgage credit is followed, its silence cannot be construed as authorizing compliance with article 125 of the Mortgage Law in regard to them if they have received no notice of the sale. They have a real right in the property to be sold and it is to their interest that the highest price be obtained. Previous notice is indispensable in order that the cancellation be made under due process of law.
Id.— Previous Notice oe Sale — Junior Creditors — Cancellation oe Mortgage. — When the complaint is directed against the debtor only, previous notice of the sale to the junior mortgagees is sufficient for the cancellation of the subsequent mortgages. Article 125 of the Mortgage Law is construed in harmony with articles 152 and 171 of the' Regulations, and section 36 of the Code of Civil Procedure is applied.
The facts are stated in the opinion.
Mr. Pascasio Fajardo Martines for the appellant.
Mr. José 8abater for the appellee.

Opinion:
Mr. Chief Justice Hernández
delivered the opinion of the court.
By a public instrument of February 15, 1892, Ramón and Osvaldo Báez mortgaged a rural property belonging to them to secure the payment of a debt to. Emilio G-ómez Martínez, which mortgage was duly record M in the Registry of Property of Mayagüez.
By a subsequent instrument of September 1, 1893, which is also recorded in the said registry, the said Ramón and Osvaldo Báez created another mortgage on the same property in favor of Rosa Báez Méndez to secure another debt of $8,000 and Emilio Gómez y Martinez joined in the said instrument and waived his rights of priority as first mortgage creditor in favor of Rosa Báez.
Rosa Báez, by a deed of June 19, 1893, assigned her credit to Teresa Oamoin Báez, who by a deed of July 20, 1909, assigned it in turn to Enrique Montes de Oca, both these instruments being also recorded in the registry.
On August 9, 1909, following the ordinary procedure established by the Code of Civil Procedure, Enrique Montes de Oca filed suit in the District Court of Mayagfiez against Ramón and Osvaldo Báez for the recovery of the mortgage credit assigned to him by Rosa Báez and on October 30 of the same year judgment was rendered against the defendants for the amount claimed, together with interest and the costs of the action.
A writ having been issued to the marshal for the execution of the judgment, the mortgaged property was sold at public auction on December 24, 1909, after due notice by publication. The only bidders who appeared at the auction sale were Emilio Montes de Oca and Miguel Salgado. The former offered $1,000 for two-thirds of the property and the latter $500 for the other third and the property was sold to the said bidders, Montes and Salgado, in the said proportions.
The foregoing facts were alleged by counsel for Montes de Oca in a motion filed in the Mayagfiez court on August 14, 1915, praying that an order issue to the registrar of property to cancel the record of the mortgage created by the deed of February 15, 1892, in compliance with Act No. 31 of 1912 amending article 125 of the Mortgage Law.
The Succession of Emilio Gómez opposed the cancellation 'prayed for and on October 1, 1915, the court overruled the motion on the ground that article 125 of the Mortgage Law was not applicable to tbe case, from wbicb ruling Montes de Oca appealed to tbis conrt..
We agree with tbe lower court that article 125 of the Mortgage Law, tbe violation of wbicb tbe appellant relies on as a ground for bis appeal, is not applicable to tbe case. Tbe second paragraph of article 125 of tbe Mortgage Law, as re-enacted later in Act No. 31 of 1912, reads as follows:
"In the case of one or several estates being encumbered by mortgage debts of various creditors, and they are sold or awarded for the payment of the first creditor in such manner that the value of what is sold or awarded does not equal or exceed the mortgage debt which is liquidated, the remaining debts shall be, by act and right, considered canceled, and upon presentation of the proper judicial order showing the sale or award and the reasons for same, there shall be canceled in the registry, including in the entry of cancellation the act constituting the liquidation of the preferred credit, all subsequent records of annuities (censos) or mortgages and records of attachment also made subsequently, thus leaving the estate or estates which have been conveyed or .awarded free from all incum-brance. ' '
According to tbe law and jurisprudence now in force, tbe recovery of a mortgage credit may be prosecuted by tbe summary proceeding of tbe Mortgage Law and its Regulations, or in accordance witb tbe provisions of tbe Code of Civil Procedure, and in either case should be governed by tbe Act approved March 9, 1905, by tbe foreclosure or sale of tbe mortgaged property. Giménez et al. v. Brenes, 10 P. R. R. 124; Banco Territorial y Agrícola v. Erwin, District Judge, 10 P. R. R. 388; The People v. Port of America Co., 13 P. R. R. 124; Cintrón et al. v. Banco Territorial y Agrícola, 15 P. R. R. 495.
As regards tbe summary proceeding for tbe recovery of mortgage-credits established by articles 128 et seep of tbe Mortgage Law and completed by articles 168'.et seq. of tbe Regulations for tbe execution of tbe said law, tbe last paragraph of article 171 of tbe Regulations provides that when the certificates of tbe registrar of property show tbe ad dresses of tlie persons interested in the liabilities which liave been recorded subsequently to the right of the petitioner, the judge shall order, at the time demand for payment is issued, that notice thereof be served on said interested persons at the addresses mentioned, if found there,- and-in case the said notice cannot be so served, the second paragraph of article 172 prescribes that the published notices shall state the day, hour and' place of the sale and shall also serve to notify the creditors whose interests in the property were recorded or cautionary notices thereof entered subsequently to the claim of the execution creditor, to which end it shall be necessary that the names of such interested persons be stated as they appear in the certificate of the registrar in order that they may attend the sale if they so desire.
The Law of Civil Procedure, which went into effect in this Island on January 1, 1886, and which was not repealed by General Order No. 118 of August 15, 1899, in so far as it related to the execution of judgments, but remained in force until replaced by the present code of July 1, 1904, prescribed in its article 1488 that if it should appear from the certificate of the registrar that the property is encumbered by second or subsequent uncanceled mortgages, the mortgagees shall be informed of the execution in order that they may intervene in the appraisement and sale of the property should they desire to do so; and its articles 1516 and 1517 make similar provisions to those of article 125 of the Mortgage Law transcribed above.
Consequently, according to the old Law of Civil Procedure and the Mortgage Law, the junior mortgagees were notified of the foreclosure proceeding prosecuted for the recovery of the credit of a preferred mortgagee and that notice should be given in the summary proceeding at present in force, as provided by articles 171 and 172 of the Regulations for the execution of the Mortgage Law. By virtue of said notice the junior mortgagees have knowledge of the foreclosure proceeding and may take part in the sale. If they do not attend, they cannot be heard to complain that .they had been injured by the application of article 125 of the Mortgage Law.
If the ordinary or common proceeding for the recovery of a mortgage credit is followed, the Act of March 9, 1905, relating to judgments and the manner of satisfying them is silent as to junior mortgagees, bnt its silence cannot be construed as authorizing compliance with article 125 of the Mortgage Law in regard to.them.if they have received no notice of the sale. They are interested in the sale because they have a real right in the property to be sold and it is to their interest that the highest price be obtained. Previous notice is indispensable in order that the cancellation be made after due process of law.
In support of the foregoing doctrine we cite our decision in the case of Canals Hermanos & Co., Ltd., v. Ortiz et al., 22 P. R. R. 70. In the said casé the plaintiff prayed for the sale of a mortgaged property and the cancellation in the registry of a second mortgage, and as the complaint was demurred to on the ground of misjoinder of parties because the second mortgage creditor was not a party to the action, the court held that as one of the prayers of the complaint was for the sale of the mortgaged property and as the cancellation of both mortgages in the registry was sought, it was clear that the second mortgage creditor was a proper party. If the second mortgage could have been ordered canceled after the first had been satisfied and no surplus remained and it was not necessary to this end to give any notice of the sale to the second mortgage creditor, there is no doubt that the demurrer would have been sustained on the ground of misjoinder of parties.
The second mortgage creditor was a proper party in view of the manner in which that action was brought; but when the complaint is directed against the debtor only, as in the present case, previous notice of the sale to the junior mortgagees is sufficient for the cancellation of the subsequent mortgages. This is the manner in which we construe article 125 of the Mortgage Law, in harmony with articles 152 and 171 of the Eegnlations, and apply section 36 of the Code of Civil Procedure.
The judgment appealed from should he
Affirmed.
Justices Wolf, del Toro and Aldrey concurred.
Mr. Justice Hutchison concurred in the judgment.