Case Name: Santini Fertilizer Co., Inc., Plaintiff and Appellee, v. Francisca Burgos and Eleuterio and Octavio Hernández-Burgos, Defendants and Appellants
Court: Supreme Court of Puerto Rico
Jurisdiction: Puerto Rico
Decision Date: 1926-01-22
Citations: 34 P.R. 830
Docket Number: No. 3706
Parties: Santini Fertilizer Co., Inc., Plaintiff and Appellee, v. Francisca Burgos and Eleuterio and Octavio Hernández-Burgos, Defendants and Appellants.
Judges: 
Reporter: Puerto Rico Reports
Volume: 34
Pages: 830–836

Head Matter:
Santini Fertilizer Co., Inc., Plaintiff and Appellee, v. Francisca Burgos and Eleuterio and Octavio Hernández-Burgos, Defendants and Appellants.
No. 3706.
Argued December 3, 1925.
Decided January 22, 1926.
Luis Pereyó Quinones and González Fagundo & Gonzalez, Jr., for the appellants. Enrique Hincón Plumey for the appellee.

Opinion:
Mr. Justice Audrey
delivered the opinion of the court.
Santini Fertilizer Co., Inc., sued Francisca Burgos and her sons Eleuterio and Octavio Hernández Burgos for the rescission of a contract whereby Francisca Burgos sold to her said sons various real properties, alleging that in 1921 there existed the agricultural partnership of Burgos & Ortiz engaged in planting sugar cane on- lands belonging to Francisca Burgos and the succession of José Hernández, of which defendants were members, the other partner of Francisca Burgos being her son-in-law Juan Ortiz, who died before the complaint was filed; that in that year the firm of Burgos & Ortiz, through its partner Juan Ortiz, bought fertilizer from the plaintiff and in payment thereof signed two soli-dary promissory notes payable to the corporation in June and August of 1922; that Juan Ortiz died without leaving property of any kind and the partnership owns none; that Francisca Burgos, solidary debtor in the said obligations, and her two defendant sons, who had knowledge of their mother's debt, executed a public deed on November 6, 1922, whereby the mother conveyed to her said two sons, without consideration and in fraud of creditors, all of her properties, she thus appearing to be insolvent because after the execution of that deed she had no property of any kind, and the plaintiff has no other remedy than the present for collecting its claim against her. In a supplementary complaint filed later the plaintiff alleged that it had recovered a final judgment against Francisca Burgos as solidary debtor for the amount of the obligation mentioned, but the judgment had not been satisfied.
The defendants answered and after the plaintiff had examined its evidence at the trial they alleged that it was not sufficient to support a judgment against them and moved for a nonsuit, but their motion was overruled and as no evidence had been introduced by the defendants, judgment was entered rescinding the said contract of purchase and sale, whereupon this appeal was taken.
In support of their appeal the defendants allege that the court erred in overruling their motion for a nonsuit and in rendering judgment for the plaintiff.
One of the grounds stated by the appellants for the first assignment of error is that it was not proved that the contract was made without consideration, because there was a price fixed in the deed and the notary certified to that fact.
In one of the clauses of that deed it is said "that of the $13,528.62 fixed as the purchase price the grantees reserved $6,600 to satisfy mortgage liens on one of the properties and that receipt of the remaining $6,928.62 is acknowledged by the grantor from the grantees in equal parts. ' ' And at the foot of the deed the notary says: "I read this deed to the parties and witnesses, who waived their right to read it themselves, of which I informed them, to which and to all that has been stated, I, the notary, certify."
Our Civil Code provides in section 1264 that "Contracts by virtue of which the debtor alienates property, for a good consideration, are presumed to be executed in fraud of creditors," and that is the same as section 1297 of the Spanish Civil Code from which it proceeds. And article 40 of the Mortgage Law, referred to by the Supreme Court of Spain in connection with the cited section of the Civil Code in its judgment of February 20, 1899, 86 J. G. 328, provides that it shall be understood that no price or its equivalent figures in. such contracts, when the notary does not certify to its payment, or if the contracting parties acknowledge that such payment was made prior to the execution of the contract and this fact is not established. From these statutes it is deduced that in alienations it is of great importance that if the vendors receive the price at the time of executing the deed the notary certify that the price was paid in his presence, for if he does not, the contract would be presumed to have been entered into without consideration in case any creditor of the vendor should sue for its. rescission, unless it be proved that the price was paid. For this reason the notary should expressly and clearly certify that the price was paid in his presence.
In this case it is said in the deed that acknowledgment is made of the receipt of the money by the vendor at the time of executing the deed, but the notary does not certify that it was paid to her in his presence, and although it is true that at the foot of the deed the notary states that he certifies to all that is therein contained, this, at most, is equivalent to certifying that the vendor acknowledged that - she received the price at that time, but not that it was paid in the notary's presence, for which reason we must conclude that said sale is presumed to have been made by the mother to her sons without consideration. Consequently, the deed exhibited by the plaintiff corroborates the presumption that the contract was made without consideration, and the defendants have introduced no evidence to destroy that presumption.
Tbe appellants also state tbat as tbe rescissory action is a subsidiary one and can be maintained only when tbe injured person bas no other legal remedy for securing reparation, as provided for in section 1261 of tbe Civil Code, tbe plaintiff should have proved tbe insolvency of tbe defendants, but did not, for although tbe exhibited certificates issued by tbe Treasurer of Porto Rico and by tbe registrar of property show tbat Francisca Burgos bad no real property, it bas not been proved tbat she bad no personal property or money in banks.
It was proved at tbe trial by tbe testimony of Andrés Quintana Reyes tbat tbe partnership of Burgos & Ortiz bad no property and tbat the partner Juan Ortiz left no property at bis death; and as regards Francisca Burgos, since tbe fact tbat she conveyed all of her real property to her two sons without consideration while she was in debt raises tbe presumption of fraud against her creditors, any other evidence, however slight, is sufficient to lead to tbe conclusion tbat she was insolvent, and for this reason tbe testimony of Quintana to tbe effect tbat tbe judgment recovered by dbe plaintiff against Francisca Burgos could not be satisfied because there was no property, can be deemed sufficient with the other evidence of tbe deed for tbe conclusion tbat tbe insolvency of tbe vendor was proved.
Another reason stated by the appellants is tbat Francisca Burgos, as a member of tbe civil partnership of Bur-gos & Ortiz, is not bound individually for tbe debts of tbe partnership according to section 1600 of tbe Civil Code, but as there exists a final judgment against Francisca Burgos individually in favor of tbe Santini Fertilizer Co., Inc., on tbe obligations which tbe firm of Burgos & Ortiz signed, whatever may be tbe error in tbat judgment tbe question is now res judicata and she can not plead tbat she is not a solidary debtor. In respect to tbat judgment tbe appellants also say tbat it is not important because tbe action for reeission is based on tbe two obligations referred to in tbe com plaint and not on the judgment, wherefore it should have been shown that Francisca Burgos was obliged to pay them and that said judgment has no value or effect in this action because the supplementary complaint wherein it is pleaded was filed without leave of the court.
If the supplementary complaint was filed without the lower court's permission, the appellants should have moved that for that reason it be stricken out, but as they did not do so, they can not plead now that it has no value. As regards the other part of appellant's argument, inasmuch as the judgment orders Francisca Burgos individually to pay to Santini Fertilizer Co., Inc., the amount of the two obligations sued on, the said obligations disappeared in the judgment and the plaintiff did not have to prove independently of said judgment that they were individual debts.
With respect to the failure to produce evidence to show that the purchasers had knowledge of the debts of their grantor when the deed of sale was executed, it will suffice to say that as it was alleged in the sworn complaint that the purchasers had knowledge of the debt of their mother, Francisca Burgos, when on November 6, 1922, they executed the deed whereby the mother conveyed to her two sons without consideration all of her properties for the purpose of appearing insolvent, the sworn answer only denies from that allegation that the sale was made without consideration, in fraud of creditors and for the purpose of making it appear that the grantor was insolvent, without denying that the sons had knowledge of the debts of their mother, for which reason the plaintiff did not have to prove that fact.
In support of the second ground of appeal that the court erred in sustaining the complaint, it is alleged that when Santini Fertilizer Co., Inc., brought its action for rescission it was not a creditor of Francisca Burgos because she had not signed any obligation in its favor, for which reason the grantees could not have knowledge of any debt that would prevent them from making the purchase, and that as the plaintiff was not a creditor, it had no right of action for the rescission of said sale. Replying to that it is sufficient to say that the judgment consented tb by Francisca Burgos is evidence that she was solidary debtor in the obligations which Burgos & Ortiz signed in favor of the plaintiff and had become due when she made the sale.
It is further said that the debt sought to be collected amounts to some $1,000 and that the rescission involved is of a sale for $13,000, which is anomalous because the plaintiff's right can not go beyond the former amount. It is true that the plaintiff can only collect what is owed to it, but it is also true that as the sale was made in fraud of its claim, the law gives it the right to sue for the rescission of the sale made in its prejudice without regard' to the amount of the conveyance rescinded.
The appellants allege finally that as it appears from the registry of property that one of the properties has passed to a third person who is not a party to this action by virtue of a sale made by the defendant brothers, a rescission of the whole contract can not be adjudged. Whether or not the rescission prejudices that person is a question which concerns him and it is no defense for the defendants in this action.
For the foregoing reasons the judgment appealed from should be affirmed.