Case Name: IN THE MATTER OF THE JUANITA SUGAR & COFFEE PLANTING COMPANY, BANKRUPT
Court: United States District Court for the District of Puerto Rico
Jurisdiction: United States
Decision Date: 1913-06-06
Citations: 6 P.R. Fed. 192
Docket Number: No. 15
Parties: IN THE MATTER OF THE JUANITA SUGAR & COFFEE PLANTING COMPANY, BANKRUPT.
Judges: 
Reporter: Porto Rico Federal Reports
Volume: 6
Pages: 192–195

Head Matter:
IN THE MATTER OF THE JUANITA SUGAR & COFFEE PLANTING COMPANY, BANKRUPT.
Mayaguez,
Bankruptcy,
No. 15.
On Certificate of Eeferee as to Allowance of Claim of the People of Porto Eico.
Bankruptcy — Proof of Claim.
1. Where a claim is set up against an assignee, the creditor must prove not only the correctness of the claim, but the validity of the assignment. Nonuser of the right in question tends to show its nonacceptance.
Bankruptcy — Termination of Franchise.
2. Where a franchise to use water provides that the permit shall ipso faeto become null and void unless there is an annual payment by a certain date, there is a revocation on that date per se, unless the amount is so paid.
Bankruptcy — Tax or Contract.
3. It need not be determined whether a claim is for a tax or for a contract price, if it has come to an end.
Note. — On the question of forfeiture of franchise of water company, for failure to comply with contract, see note in 61 L.E.A. 93.
Opinion filed June 6, 1913.
Mr. Salvador Mestre for the People of Porto Rico.
Mr. José JE. Benet for the Creditors.

Opinion:
HamiltoN, Judge,
delivered tbe following opinion:
Tbe referee in bankruptcy at Mayaguez certifies up to this court that on February 19, 1913, a meeting of creditors of tbe Juanita Sugar & Coffee Planting Company was beld, at wbicb claims were presented and allowed. Among those.presented was one on behalf of tbe People of Porto Pico for tbe sum of $55 as compensation for a revocable permit granted Julio F. Anduze, March 30, 1911, approved April 5, 1911, for talcing and using for industrial purposes nine litres of water per second from tbe Arenas river, in the municipal district of Las Marias. Tbe claim was opposed by creditors, and thereupon evidence was offered, consisting of a certified copy of tbe said ordinance, tbe auditor's collectible account for tbe said $55 from January to December, 1912, and a certificate from tbe secretary of tbe executive council of Porto Pico, dated April 27, 1911, that Julio F. Anduze, on April 15, 1911, notified the executive council that be bad assigned tbe said water franchise to tbe Juanita Sugar & Coffee Planting Company, wbicb assignment was approved by tbe council on April 27, 1911. Oral evidence was also offered by Julio F. Anduze, who testified that after acquiring tbe said permit be transferred it to the corporation, but that tbe corporation was a failure, and tbe water was never taken or used, nor did tbe tbe corporation intend to take any water from that or any other river, and its land was never irrigated, and that "said corporation never considered nor made use of said water right."
Thereupon "tbe referee took a vote of tbe creditors present, and they unanimously voted against tbe allowance of said claim; and for the said reason the referee refused to allow said claim on the following grounds:
"1. Because said water right was never used nor considered by the Juanita Sugar & Coffee Planting Company; nor the water taken by the grantee or the assignee, the bankrupt.
"2. Because said franchise became null and void on January 15, 1912, according to § 6 of the ordinance herein referred to.
v3. Because said claim cannot be considered as a tax or as a compulsory obligation."
It was stated upon the argument that, while the papers filed are in the form of a certificate by the referee, it was intended and acted upon by all parties as an appeal by the People of Porto Pico from the decision of the referee in the matter. For this reason the proceeding will be considered both as an appeal by the creditor and a request for instructions by the referee; but the practice in the case is disapproved for the future. A creditor desiring to appeal should do so in regular form, having his transcript certified by the referee as an appeal.
This is a bankrupt estate, and the claim of the People of Porto Eico was disallowed at a meeting of creditors to prove claims. It, of course, devolved upon the creditor to prove his claim in some adequate way. No objection for lack of affidavit, or for other informality, seems to have been made, and none will be considered now, but there are several objections to the claim.
In the first place, the franchise was granted to Julio F. Anduze, and, although he was manager of the bankrupt corporation, there is nothing whatever to show that there was any valid transfer from him to the corporation. There is evidence that he notified the executive council of such a transfer, but none whatever to show that the transfer was accepted. On the other hand, there is evidence tending to show that it was not accepted, for he himself testified that the franchise "was never considered" by the bankrupt. It is not quite clear what this language means, but, if it means anything, it means at least that the minds of the parties did not meet in regard to the franchise. The action of the bankrupt also in never using the water under the franchise would tend to show nonacceptance. The burden was on the creditor to show that the transfer was accepted, for otherwise the bankrupt company was not a debtor of the People of Porto Rico.
The original compensation required for the franchise was' duly paid when it was granted, but nothing further was ever paid. Unless the annual payment for 1912 was paid by January 15th of that year, the terms of the franchise itself (§6) declared that the "permit shall ipso facto become null and void." This is not an option on the part of the People of Porto Rico to consider the franchise in force and to sue for the compensation, but an absolute revocation of this revocable permit by its own terms. It is difficult to see upon what principle the People of Porto Rico can now claim the compensation in question. If they get the money, it amounts to a waiver of the forfeiture, and there never would be any revocation of the revocable permit.
As to whether this charge is a tax or a contract price need not be determined. Whatever it was, it did not become binding or come to an end, so far as this bankrupt estate is concerned, and cannot now be collected.
As a result, an order will be entered sustaining the action of the referee in disallowing the claim.