Case Name: Joaquín Cortada, Plaintiff and Appellee, v. Gloria de Jesús et al., Defendants and Appellants
Court: Supreme Court of Puerto Rico
Jurisdiction: Puerto Rico
Decision Date: 1937-07-12
Citations: 51 P.R. 841
Docket Number: No. 7318
Parties: Joaquín Cortada, Plaintiff and Appellee, v. Gloria de Jesús et al., Defendants and Appellants.
Judges: Mr. Justice Córdova Dávila took no part in the decision of this case.
Reporter: Puerto Rico Reports
Volume: 51
Pages: 841–851

Head Matter:
Joaquín Cortada, Plaintiff and Appellee, v. Gloria de Jesús et al., Defendants and Appellants.
No. 7318.
Argued June 18, 1937.
Decided July 12, 1937.
Rehearing denied July 30, 1937.
D. Pellón, Jr., for appellants. Bubón & Ochoteco for appellee.

Opinion:
Mr. Chief Justice Del Toro
delivered the opinion of the court.
Joaquín Cortada brought an action of debt against Gloria and José de Jesús in the Municipal Court of San Juan and obtained a favorable judgment. The defendants appealed to the district court and, after a trial de novo, judgment was also rendered sustaining the complaint. Thereupon the defendants appealed to this Supreme Court, and in their brief they have assigned only one error, thus:
" . . the District Court of San Juan erred in admitting in evidence the promissory notes which were alleged to have been indorsed to the plaintiff, notwithstanding the objection raised by the defendants on the ground that the indorsement had not been proved in any way, since the plaintiff had failed to prove that said indorsement was made by Machado & Co., or by any other person authorized to make it, or that the plaintiff was the owner of said promissory notes by virtue of the indorsement."
In the complaint it was alleged that the plaintiff was the owner and present holder of three promissory notes which the defendants signed and delivered in favor of Machado & Co. and which were indorsed by the latter in favor of the plaintiff for value received, and a true and exact copy of said promissory notes was annexed to, and made a part of, the complaint.
The wording of the promissory notes and of their in-dorsements is the same in each case. It will suffice to transcribe one of the instruments. It reads thus:
"Amount $125.00 — Maturity: January 10, 1935. — On January 10, 1935, we jointly and severally promise to pay Machado & Co., or order, in New York, the sum of one hundred and twenty-five dollars, value received as a loan, and we also jointly and severally bind ourselves to pay interest at tbe rate of six per cent per annum after maturity and the costs and expenses that may he caused by the collection of this debt and fees of the attorney employed by the holder of this note in case of judicial action. We expressly submit ourselves to the jurisdiction of the Insular Courts of the City of San Juan, Puerto Rico.
"We expressly consent to any renewal or extension granted at the request of any of the subscribers herein, and remain jointly and severally liable for any extended balance with the same force as in the original obligation; and we waive the right to notice, presentment, and protest.
"San Juan, Puerto Rico, June 7, 1934. — (Sgd.) José de Jesús (Sgd.) Gloria de Jesús.
"(On the back) Pay to the order of Mr. Joaquín Cortada, value received — New York, January 8, 1935. — (Sgd.) Machado & Co/ — • Joaquín Cortada."
The defendants in their answer, which was not verified, alleged:
"First: As to the first paragraph of the complaint the defendants admit having signed and delivered to Machado & Co., of the city of New York, the three promissory notes referred to in the complaint but deny that the same were indorsed in favor of the plaintiff for value. On the contrary, the defendants allege that if the indorsement claimed exists the same was made only for collection."
They further alleged, in substance, that they sent merchandise to Machado & Co. for the value of $163, which amount was credited to the thrqe promissory notes, for which reason they only owed the sum of $112 and not $375, as claimed.
Having noted the above facts, let us see now what occurred at the trial de novo in the district court. It was thus:
"Plaintiff: We offer in evidence the three original promissory notes, copies of which were made part of the complaint and whose genuineness and execution was not denied by the defendants.
"Dependants: Concerning the three promissory notes which are transcribed in the complaint, we admit that the defendants signed and delivered them to Machado & Co., originally.' However, we do not admit the indorsement, which is the basis of plaintiff's action, as tlie signature of Machado & Co. has not been duly authenticated, nor has it been shown who signed said promissory notes, indorsing them, or what powers he had as member of said firm to whom he indorsed them.
"Plaintiff : In the case against the Benitez Sugar Co., in which the defendant raised the objection that it had not been proved that the person who appeared as indorser of the promissory notes was an officer authorized by the owner of the notes and that, as such officer of the defendant, he could indorse the note, the Supreme Court held that where negotiable promissory notes were involved (as are those herein), the holdér of the note, by the mere fact of the possession of the note, established that he was the owner of the same, as only the defendant or the maker of the note could be prejudiced in case that the note were presented to him, and that no person other than the holder of the note could present it for payment.
"Defendant: "We maintain that as in this case a mercantile partnership is involved, and it is not known who made the indorsement, but that the signature 'Machado & Co.' appears, the latter must be identified as mercantile partnership, and there must be shown and proved to the court who was the person that made the indorsement, which are two distinct matters. In the case cited by my colleague there was a person making an indorsement in the name of a legal entity. The presumption was that he was authorized therefor. In this case the indorsement appears to have been made by Machado & Co., a mercantile partnership, and in accordance with the Code of Commerce, in order that a managing partner may bind the company he must have authority to use the firm's signature; that is, that any act performed by a partner who is not authorized to sign for the partnership does not bind the latter.
"Judge: The documents a.re admitted.
"Defendants: We respectfully take an exception for the reasons stated in the objection.
( C W -A* ír # -Si
"We wish to add another ground of objection. The presumption in favor of the indorsement exists in the sense that it is presumed that it is for value received, but when the presumption is rebutted, it is incumbent on the other party to prove that the transaction took place and that it was for value received. Otherwise it is considered as an act of collection. Until it is proved here that Machado & Co. received the amount of the notes in virtue of which it indorsed and delivered them to the plaintiff, unless he proves those particulars, really be can not allege or base its action on tbe status of owner, as alleged in tbe complaint. We also object to tbe admission of tbe documents, on tbe further ground that it bas not yet been proved that the amount of tbe promissory notes was delivered to tbe assignor.
"JuneE: Let tbe objection be entered."
In the only error assigned, as we have seen, the merits of the question or questions involved in the suit are not treated. The appellants base their contention solely on the inadmissibility of the promissory notes, as it had not been proved that the indorsement was in fact made by Machado & Co.
The Code of Civil Procedure provides that when an action is brought upon a written instrument, and the complaint contains a copy of such instrument, or a copy is annexed thereto, the genuineness and the execution of such instrument are deemed admitted, unless the answer denying the same be verified. Section 119 of the Code of Civil Procedure, 1933 ed. And as in this case the answer is not verified, the genuineness of the instrument in its entirety was admitted.
That consideration alone would be sufficient to overrule the error assigned. But there is still more.- Even though the answer had been verified, neither in the paragraph thereof which we have already transcribed, nor elsewhere in that pleading is it denied that the signature which is contained in the indorsement and which reads: Machado & Co., is not that of the firm Machado & Co., in whose favor the defendants signed the notes.
The appellants in their brief cite subdivision 5 of section 462 of the Code of Commerce, which provides that the indorsement must contain the signature of the indorser or of the person legally authorized to sign for him, which shall be stated in the subscribing clause.
At the time the instruments in question were executed the applicable law was not the Code of Commerce but Act No. 17 of 1930, that is, the Negotiable Instruments Law (Session Laws, p. 172).
Sections 31 and 32 of said act provide:
"Section 31. — An instrument is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery. I
"Section 32. — The indorsement must be written on the instru- | ment itself or upon a paper attached thereto. The signature of the | indorser, without additional words, is a sufficient indorsement." | Laws of 1930, p. 184. |
Moreover, the plaintiff, by presenting the promissory | notes in evidence, proved that he was the holder thereof, | and section 52 of said act provides that the holder of a ne- I gotiable instrument may sue thereon in his own name and payment to him in due course discharges the instrument, and, according to section 53, a holder in due course is a holder who has taken the instrument under the following conditions: that it is complete and regular upon its face; that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; that he took it in good faith and for value; and that at the time it was negotiated to him he had no notice of any in- I firmity in the instrument or defect in the title of the person negotiating it.
Those conditions were present, prima facie, in the case of the plaintiff. The defendants could have overcome the presumption, provided they had available sufficient evidence for this purpose, but until they did so — which in fact they failed to do — the court, under the attendant circumstances, could act as it did in this case admitting the promissory notes in evidence.
Therefore, as the only error assigned was not committed, thé appeal must be dismissed and the judgment appealed from affirmed.
Mr. Justice Córdova Dávila took no part in the decision of this case.