Case Name: Portela v. The Porto Rican-American Tobacco Co.
Court: Supreme Court of Puerto Rico
Jurisdiction: Puerto Rico
Decision Date: 1903-06-18
Citations: 4 P.R. 55
Docket Number: No. 58
Parties: Portela v. The Porto Rican-American Tobacco Co.
Judges: Chief Justice Quiñones, and Justices Figueras and Mac-Leary concurred.
Reporter: Puerto Rico Reports
Volume: 4
Pages: 55–71

Head Matter:
Portela v. The Porto Rican-American Tobacco Co.
Appeal from the District Court of San Juan.
No. 58.
Decided June 18, 1903.
Contracts por Services — Compensation.—In a contract for services it is necessary that such services be rendered in order that a right to receive compensation therefor may exist; and in case of the dismissal of the servant before the expiration of such contract he has a right to indemnification only when he is dismissed without just cause.
Id. — Breach op Contract. — Breach of contract by one of the parties thereto relieves the other from all responsibility 'for the obligations contained therein, the latter not being required to ask for a rescission or nullity thereof, nor would such an action lie if based upon this ground.
STATEMENT OE THE CASE.
In the action instituted in the District Court of San Juan by José Pórtela Silva, a manufacturer, residing in this city, against the “Porto Rican-American Tobacco Company”, domiciled in the same city, for the recovery of a sum of money, said action pending before us on appeal in cassation, now appeal, taken by the plaintiff from the judgment rendered by said court; Pórtela Silva being represented in this Supreme Court by his counsel, Jacinto Texidor, and'the “Porto Rican-American Tobacco Company” by Hilario Cuevillas Hernández.
The judgment appealed from literally reads as follows:
“In tlie city of San Juan, Porto Rico, August 28, 1902. In view of these proceedings had in a declaratory action instituted by José Pórtela Silva, plaintiff, of legal age, a manufacturer, residing in this city, represented by Herminio Díaz Navarro, Esq., and the “Porto Rican-American Tobacco Company”, defendant, doing business in this city, and represented by Hilario Cuevillas Hernández, Esq., for the recovery of a debt.
José Pórtela Silva files with his complaint: First. — A simple copy of the declaration and acknowledgment made before Santiago R. Palmer, Notary of this city, by said Pórtela, Fausto Rucabado and O. P. Villere, on November 17, 1899, which, with reference to the question in issue, is to the following effect: That on November 9 of aforesaid year, the firm of Rucabado & Pórtela, the above mentioned Pórtela and Rucabado being managing-partners thereof, transferred to the “Porto Rican-American Tobacco Company”, a corporation,'organized and existing under the laws of the state of New Jersey, United States of America, for the consideration mentioned in the deed, all their rights, titles and interests, as vendor and partners, in their mercantile and industrial business, so far as the same had reference to the manufacture of cigars and cigarettes, explaining that the sale or transfer was to take effect from August 16, 1899, and that the vendor and partners, either through agents or personally, at any time within three years from the date of said deed, engaged to communicate all the formulas, processes, secrets of the manufacture, etc., in consideration of. which and of the employment of the partners Rucabado and Pórtela, in general and each by himself it was agreed that they should be retained in the service of the vendee for one year, from August 16, 1899, and devote three-fourths of their time, and all their ability and experience to' matters connected with the preparation, manufacture and sale of the vendee’s products, at an annual salary of four thousand dollars, each, payable monthly, they to remain in said service for one year, beginning from August 16, 1899; that if required by the vendee to reside in Santo Domingo for the benefit of the business, the annual salary would be five thousand dollars instead of four thousand, said vendee to pay tbe traveling expenses. ■ Second. — A copy of the instrument executed before said Notary Palmer by José Pórtela Silva calling upon the “Porto Rican-American Tobacco Company”, to identify the letter dated October 8, 1900, which literally reads: Mr. José Pórtela, San Juan. In reply to your favor of even date we have to state that this company owes you no compensation whatever for services from June 1, 1900, to August 15 of the same year, and refuses to pay what it does not owe. Yours respectfully, “Porto Rican-American Company”, W. T. Tawnes, President, which letter was identified, the company refusing to reply to the interrogatory propounded by Pórtela.
Based upon these documents and accompanying a certificate of the proceedings to secure a conciliation which had resulted in no agreement, José Pórtela Silva filed a complaint against the “Porto Rican-American Tobacco Company”, alleging as facts: The aforesaid sale of all his rights and actions and property; the clause mentioned above contained in said deed, referring to the employment of the partners from August 16, 1899, who were to devote three-fourths of their time, ability and knowledge to the business for the salary mentioned in the above finding of fact; that Pórtela had complied with this clause, while the “Porto Rican-American Tobacco Company” had failed to do so as to payment of salary, said company having failed to pay him eight hundred and thirty-three dollars and thirty-two cents for the months of June, July, and fifteen days of August, 1900, at the rate of four thousand dollars per annum; that Pórtela had written a letter to the manager of the company claiming his salary, the latter replying on October 8, 1900, that it did not owe him anything, and stating that' the company refused to pay what it did not owe, which statement was ratified in the notarial act mentioned in the foregoing finding. As legal authority he cited, articles 1089, 1091, 1101, 1108, 1542 and 1544 of .the Civil Code, and articles 50 and 63 of the Code of Commerce and section 63 of General Order No. 118, series of 1899, and prayed that judgment be entered against defendant for eight hundred and thirty-three dollars and thirty-two cents with legal interest from the date said sum should have been paid, and costs.
In answering the complaint the defendant prayed that plaintiff be declared to have no cause of action, and that the complaint be dismissed, with costs against Pórtela. The facts alleged by the defendant were: That the contract giving rise to these proceedings was executed in New York on October 9, 1899; that the sale included the use of machinery for the ' manufacture of cigars, processes, secrets and other particulars, the Company deeming it advisable that Rucabado and Pórtela should render their services for one year from August 16, 1899; that this is the reason why the clause mentioned in the above findings of fact figured as an-important factor with reference to this service and to salary, duration and proportion of time to be devoted to said service; that by another clause the vendors were, to communicate all tlie formulas, processes, recipes, etc., as stated in the first finding of fact; that privately it was agreed that Rucabado and Pórtela should transfer to the Company their right to purchase the machines from the Bensach Machine Company, at the price of five thousand dollars each, according to a verbal agreement with the latter’s agent, Noell, said Rucabado and Pórtela being at any time ready to take the necessary steps for the purpose of attaining this object; that Pórtela, in the requisition, had attempted to propound questions, as if he were a judge; that José Pórtela had remained in the service of the Company until May 18, 1900, when, having been instructed to repair to Ponce for the purpose of collecting a debt, he did go, but failed to report his arrival and the result of the commission entrusted to him; returning to this city, he did not make his appearance at the office of the Company, and departed for the United States where he remained until September, 1900, without permission of the Company; that through Portela’s negligence the Company had suffered a loss of eight hundred dollars; that Townes, on or about May 20, 1900, had tried to see Pórtela for the purpose of obtaining particulars with reference to the Ponce matter, but all his efforts proved unavailing; that in New York he met him by chance and reminded him of the agreement about the purchase of the machines, which he promised to carry out, and went with him to see Noell about the transfer of said machines, employing in this trip two nights and one day, that the Company had requested Pórtela to present his bill for this service, although it owed him nothing, but he omitted to do so; that the plaintiff had abandoned his employment and without the knowledge and consent of the Company had gone to New York to attend to private matters of his own; that Rucabado had through illness been prevented from performing his duties and the Company, as a favor, had allowed him all his salary. As legal authority the defendant cited articles 1091, 1100, 1101, 1157, 1254, 1256, 1261, 1278, 1281, 1544 and 1583 of the Civil Code and section 63 of General Order No. 118, series of 1899. '
At the proceedings for the taking of evidence, that submitted by the plaintiff was: First. — The admission of the president of the defendant Company to the efiect that he knew Fausto Rucabado and José Pórtela Silva, who had in this City a cigarette and cigar, factory which they had sold to the “Porto Rican-American Tobacco Company”, on October 9, 1899, the sale to date back from the 16th of August last; that the sale was effected by means of shares issued and delivered to Pórtela and Rucabado, it being true that there was a clause in the contract referring to the employment of these gentlemen by the “Porto Rican-American Tobacco Company” for one year from August 16, 1899, at four thousand dollars per annum, each, payable by the month; that the Company had paid Pórtela up to the month of May 1900, which covered the period of his services, he at that date having absented himself from the Island, without leave, and the Company had refused to pay him for June, July and fifteen days of August, because during that time Pórtela was not in their service; that the Company nad not called upon him judicially or before a notary to acknowledge the rescission of the contract, nor had it privately done so; that Rucabado had been paid for the whole year, during which time he had been ill for two months, but was employed in signing the checks as vice-president of the Company; that the president having casually met Pórtela in New York he had invited him to carry out one of the clauses of the contract of sale wherein it was stated that they had the option of buying the machines rented by them, to which Pórtela had acceded, the traveling expenses being for account of the Company, said expenses not having been paid because Pórtela had refused to render his bill. Second. — The Clerk of the Municipal Court having repaired to the establishment of the “Porto Rican-American Tobacco Company”, he requested the president, Luis Toro, to present the ledger and journal, which was done omitting the aceounts-current book, because, as was stated, it had reference to accounts and not to personnel, the aforesaid clerk certifying that said book is bound, ruled and paged, and that the journal bears the note of the Municipal Judge of San Francisco, dated November 15, 1899, the leaves being stamped, and that from said book it appears that the salaries of employees were paid each month. Third. — The witness Fausto Rucabado Vazquez testifies as to the matters declared pertinent, which the defendant had deemed proper. Fourth. — Letters rogatory were addressed through the Attorney General to the judicial authorities of New York, United States, asking that Junius Park, attorney for the “Porto Rican-American Tobacco Company” be examined as to the matters proposed by the plaintiff that were declared pertinent; Junius Park’s answer being, that he is one of the lawyers of the Company, having an office in the same building, No. 3 Fifth Avenue; that in August 1900, Pórtela and the witness went to Lynchburg, Virginia, and although W. T. Townes did not accompany them, the latter had met them there; that the object of their trip was to secure the acknowledgment of a contract providing for the lease of Bonsack’s machines to Rucabado & Pórtela, a contract which had been accepted by the “Porto Rican-American Tobacco Company”, with the right, as verbally agreed, to 'purchase said machines at a stipulated price; that he did not know whether or not at the time of making the trip, Pórtela was in the employ of the “Porto Rican-American Tobacco Company”, but he understood that he was then engaged in establishing or founding a factory for the manufacture of cigars in Providence, Rhode Island. Fifth. — De Ford & Co. replied that they were not in a position to furnish any information with respect to the matter upon which they were questioned because the books had been balanced and returned.
From the evidence introduced by the defendant it appears that José Por- tela Silva admitted that he had left Porto Rico on or about the 27th of May, 1900, and was absent until late in September, being in the United States where he had remained continuously; that during the whole of that time he had not been at the store but was present at the meeting of the share-holders, in New York, and by order of the president had gone to the State of Virginia for the purpose of purchasing some machinery; that no power of attorney had been given him, as the president had accompanied him on the trip; that there had been no verbal contract about the purchase of machines between the Company and Pórtela & Rucabado, but only a promise that if at any time they needed the machines, these would be sold to them for the same-price, and while in the United States he had conferred with Junius Park and others; that prior to that they had met to fix a day for the trip; that there > had been no private interview between him and Park; that they went to see-Noell who told them it was not a question of only one machine but of several,- and he had a contract with a strong company which he would not cancel; that they had employed in the trip two nights and one day; that he was engaged in installing a factory when summoned; that the witness had defrayed the expenses of the return trip and all.
In the Supreme Court of the County of New York John B. Cobb testified that he had knowledge of the negotiations of Rucabado & Pórtela in regard to the sale of their establishment, which had resulted in the establishing of the “Porto Rican American Tobacco Company;” that at that time he was vice-president of the latter; that when Mr. Townes, the president, arrived in New York in the summer of 1900, he was anxious to buy eight machines that the Company had on lease, they having been acquired under said lease from Rucabado & Pórtela; that at an interview in which Townes and Junius Park were present, in the summer of 1900, the latter had told Townes that Noell, who represented the Bonsack Machine Company, had denied that he had made any personal arrangement «with Rucabado & Pórtela which per- • mitted the latter to purchase the rented machines, and Townes had expressed surprise in hearing of Noell’s denial as he was sure that he had been informed of this arrangement by the' former and he knew that Rucabado or Pór-tela had previously declared that such a verbal agreement existed: that at a meeting in New York, Pórtela and Park being present, the latter told the former about Noell’s denial, at which Pórtela showed considerable surprise and said that Noell would not make such a denial personally to him if he could see him and remind him of the verbal' agreement; thereupon Pórtela was told that he should endeavor to have a personal interview with Noell, which he expressed a desire to do, and it was agreed that a day would be chosen when Pórtela might go to Lynchburg without any inconvenience; that he was under the impression that Pórtela was to go not as an employee of the Company, but as a person who had sold a contract as a thing certain, and desired to make good the property sold; that he could understand that it would be a satisfaction for Pórtela to corroborate the verbal contract and that he, Pórtela, felt he was under an obligation to the Company; that the declaration of May 10, 1900, expressed the truth in the matter. Junius Park testified that in appraising the property, account was had of the contract whereby Rucabado & Pórtela had the exclusive right to use the Bonsack machines in Porto Rico, said machines being considered the best, for which reason great value was attached to them, they being considered quite- an inducement by the Company; by said contract it was provided that one hundred dollars per month would be paid for each machine rented, and as they said they had a verbal contract to secure the ownership for five thousand dollars, this made the contract very valuable; that he had received instructions to buy the eight machines, and to hold an interview with Noell for the purpose of effecting an arrangement; the interview was held when Noell denied that there was any verbal agreement. Thus matters stood until August 1900, when Townes came to New York and upon meeting Pórtela he told him about Noell’s denial, Pórtela remarking that he did not believe Noell would mantain the denial in his presence. Pórtela was told, moreover, that Townes and the other members of the Company considered the purchase of the machines of great importance and as he had sold with this verbal contract, he should go to Lynchburg and prevail upon Noell to make it good; this Pórtela agreed to do fixing a day for the trip which took place on August 7; he saw Noell who maintained his denial, Pórtela declaring that the verbal agreement existed while Noell maintained that it did not and refused to admit it; that he (the witness) did not act as an employee or representative of the Company; that he knew nothing as to Pórtela’s leaving the service of the “Porto Rican-American Tobacco Company”, and it had never occurred to him that Pórtela was doing anything but what he considered to be his duty; that he acknowledged the signature affixed to the affidavit taken before a notary, copy whereof is exhibited and declared by him to be true, adding that Pórtela and the witness had left on the 7th in the evening, and had arrived at 7 o’clock a. m., August 9, 1900. The affidavit of this witness and that of Cobb taken before a notary contain the facts set forth in their testimony with certain details. Judge Juan J. Perea prepared the opinion of the court,
“ It is a natural condition of a contract for services that the same must be rendered in order to have a right to compensation therefor, and the party who fails to render them may be dismissed before the fulfillment of the contract, the party who rendered the services being entitled to indemnification only in case he should be dismissed without just-cause.
From the evidence introduced it appears that Pórtela failed to render the services due by him, during the months of June, July and fifteen days of August, payment for which he claims, having absented himself without the consent or authorization of the Company, and had departed for the United States where he remained during that time, returning in September, which failure on his part to comply with the contract relieves, defendant from asking for the rescission and nullity thereof, as requested at the hearing by the plaintiff.
Pórtela demanded the fulfillment of the contract, but as he had himself failed to comply with it, by reason of this failure on his part, defendant cannot be compelled to comply with it, and much less can he be required to ask for the rescission or nullity thereof, because the former would imply a defect of nullity in the contract, and the latter such defects as would invalidate the same, which is not the case in the present instance, as is seen from a reading of the provisions contained in articles 1583 to 1587 and 1595 of the Civil Code.
In view of the facts set forth in the first and second conclusions of law it not appearing that the Company’s consent and authorization were given to Pórtela, for his absence in the United States; and who therefore did not render during that period of time the services .which he was bound by the contract to render, nothing appearing in the record from which such consent and authorization can be implied, inasmuch as if the Company had given its consent and authorization, he would have claimed, not only the salary agreed upon, but also all his traveling expenses for the round trip, and the larger salary assigned by contract in the event of either Pórtela or Rucabado being required to reside in Santo Domingo in the interests of the Company.
These considerations are not destroyed by the fact that Pórtela went to Virginia to negotiate about the purchase of machinery for the Company, because, aside from his doing so for the reasons set forth at the hearing, it cannot be admitted that he had been sent to the United States by the Company for this sole purpose, remaining there two and a half months, when in the trip to Virginia only one day and two nights were employed, especially when he himself admits that he was in Providence, Rhode Island, engaged in installing a tobacco factory, a statement which goes to show that he had not undertaken the trip for account óf the Company but for the purpose of attending to private affairs of his own.
Inasmuch as compliance with the clause referring to residence abroad had not been called for by the Company, nor has a demand for travelling expenses been made by Pórtela, nor has it been shown that the services were rendered and payment therefor had been refused without just cause, as provided by the Civil Code, the complaint should be dismissed with costs against plaintiff.
We adjudge that we should declare, and do declare, that the aforesaid complaint cannot be sustained, and enter judgment in favor of the “Porto Rican American Tobacco Company”, costs being taxed against José Pórtela Silva. Thus by this our judgment we finally adjudge, command and sign. — Juan Morera Martinez. — Henry F. Hord. — Juan J. Perea ”.
From this decision counsel for José Pórtela Silva took an appeal in cassation for error of law, which was allowed. The record being forwarded to this Supreme Court, after citation of the parties the appeal was taken under consideration as an appeal in cassation, jmt afterwards made to conform to the procedure provided by “An Act of the Legislative Assembly, establishing the Supreme Court of Porto Rico as a court of appeals”, approved March 12, 1903. The papers were submitted to both parties for their information and a day set for the hearing. The hearing was held on the fourth of the present month when counsel for appellant and respondent made such arguments as were by them deemed advisable in support of their respective claims.
Mr. Texidor, for appellant.
Mr. Guerillas, for respondent.

Opinion:
Mr. Justice HerítÁNdez,
after making the above statement of facts, delivered the following opinion of the court:
All the findings of fact and conclusions of law hereinbefore set forth are substantially accepted.
Costs should be taxed against the party who loses his case on all points, according to section 63 of General Order No. 118, of August 15, 1899.
We adjudge that we should affirm, and do affirm, the judgment appealed from, rendered by the District Court of San Juan on August 28, 1902, with costs of the proceedings on appeal taxed against the appellant, José Pórtela Silva.
Chief Justice Quiñones, and Justices Figueras and Mac-Leary concurred.
Mr. Justice Sulzbacher did not sit at the hearing of this case.