Court Opinion

ID: 8532615
Source: CourtListenerOpinion
Date Created: 2022-11-23 11:03:02.745398+00
Date Added: 2024-06-11T16:51:51.895039
License: Public Domain

ON MOTION FOE. REHEARING
April 3, 1936
Mr. Justice Córdova Davila
delivered the opinion of the court.
The defendants Manuel González Martínez and Josefina Fabián de Lozana have moved for a reconsideration. of our judgment on the ground that the same is erroneous in so far as it regards the agreement entered into,, between the plaintiff ’s predecessor in interest and the defendants as a contract of agency. We have studied the questions raised by the assignment of the errors claimed to have been committed by the lower court in the opinion on which the judgment appealed from was based. We said that the relation established between Messrs. González, Fabián, and Riera, and the persons who delivered their money for the purchase of the properties of the railroad companies was a fiduciary one. Then we stated our views with respect to the relation of strict confidence which is established between mandator and mandatory and between principal and agent, and cited the opinion of Manresa as regards the civil law and that of the text writer Pomeroy as regards the American jurisprudence. There is no doubt that, upon accepting the trust (encomienda) to use the funds received in the purchase of the properties *480of the railroad companies, Messrs. González, Fabián, and Eiera became the agents of the persons who delivered those funds to them for that purpose. The question of whether or not this relation involves a contract of agency under the civil law is of no importance. We have already said in our former opinion that “regardless of the name that may be given to the relation contracted by González, Fabián, and Eiera, with the subscribers to the fund, it cannot be denied that, taking the averments of the complaint as true, such relation was a fiduciary one.”
“In the instant case,” we further said, “according to the averments of the complaint, the subscribers delivered their money to González, Fabián, and Eiera for a common purpose: the acquisition of the corporeal and incorporeal property of the railroad companies. That was the only purpose for which the money was delivered to the three gentlemen aforementioned. The applicable principle is just the same, in accordance with the natural reason and the general principles of law. The essential thing is that a fiduciary relation arises, both in the civil as in the mercantile order, as it happens in the instant ease, wherein according to the averments, money was delivered for a certain purpose and was disposed of for private purposes by the persons in charge of executing the will of the subscribers. For these reasons we hold that the facts set forth in the complaint state a cause of action.”'
The petitioners and appellees argue that, even conceding that the juridical relation established between the parties, as alleged in the complaint, had the fiduciary character pertaining to an agency, this court erred in applying to the controversy principles of jurisprudence which were absolutely foreign and contrary to the positive law that historically and traditionally governs the contracts of agency in Puerto Eico and Spain.
We do not agree with the argument thus put forth by the learned counsel in support of their contention regarding this *481most important question. Onr civil law would be too deficient and lacking in foresight were it to permit a person, who is in possession of property belonging to another and which was received for a certain purpose to profit by appropriating to his own nse such property and applying the same to other purposes, through acts which are penalized even under our criminal statutes. Our civil law, which is saturated with equitable principles, had its origin in the Eoman law. The-natural justice {razón natural), as embodied in the general principles of law, which the courts must take into account when there is no statute applicable to the case, is the equity defined in the Pandects that has been incorporated in section 7 of our Civil Code and outlined although less fully, in section 6 of the Spanish Civil Code. The principles of equity were first applied in England by the courts of chancery, and in ancient Rome by the praetors. An ancient philosopher defined the true nature of equity by saying that it is a correction of the law, where by reason of its universality it is deficient. In Stewart v. Jones, 219 Mo. 614, 131 Am. St. Rep. 595, 606, citation is made of the definition of Aristotle, which has been approved by so distinguished authors as G-rotius, Puffendorf,. Blackstone, and Story, and it is said that the law is frequently enlarged and enriched by borrowing equitable principles and that the maxim, “Equity follows the law,” has play in arriving at just ends in the administration of justice. Story says that this maxim may mean that equity adopts and follows the rules of law in all cases to which those rules may in terms be applicabM; or it may mean that equity, in dealing with cases of an equitable nature adopts and follows the analogies furnished by the rules of law.
It is argued that in the former opinion of this court it is repeatedly. asserted that the relation established between Messrs. González, Fabián, and Riera, and the subscribers to the fund is a fiduciary one, and that in accordance with this conclusion this court was bound to determine whether or not there had been any violation of the provisions of the Civil *482Code applicable to the agency, which, as claimed by the defendants, constitute the only legislation governing the contracts whereby fiduciary relations are created. This question was sufficiently discussed in our former opinion. We said then, and now repeat, that “It is true that section 1615 of the Civil Code, 1930 edition, provides that an agent shall be liable for interest upon any sums he may have applied to his own use, from the day on which he did so, ... . but 'this does not mean that the principal is confined to demand exclusively interest on the amounts so applied.when the agent applies funds in his possession to his own use, the principal may claim interest thereon if no profits have been made, and if there are any profits, he may choose between claiming interest or the profits received. A person who has thus wrongfully enriched himself should not be entitled to retain, against the will of the principal, the profits made. To hold the contrary would be tantamount to rewarding him for his unlawful act, which would turn into a lucrative and profitable business the wrongful act of using for his own benefit the funds belonging to his principal. According to our code,, an agent can not exceed the scope of his authority. When he exceeds his powers, to the extent of applying to Ms own use the funds wMch he received by virtue of the confidence reposed in him, he must account to the principal for any profits derived from such use.”
As we have said, a person who entrusts funds to another should not be confined to a claim for interest thereon, where such funds have been wrongfully used by the holder thereof for his own benefit, as if they belonged to him, and profits have been derived from such use. This applies to the case when the contracted relation is governed by the provisions relating to agency. But if, as claimed by the defendants, a contract of agency is not involved herein, then the limitation imposed, according to them, by section 1615 of the Civil Code should be ignored, as its provisions would be inapplicable. That the relation established between Messrs. González, Fa-*483bián, and Eiera and tbe subscribers to tbe fund is a fiduciary-one cannot be denied. A contract of agency, with all its characteristics, would not establish a relation of greater trust and confidence than that which arises from the averments of the complaint. Messrs. González, Fabián, and Eiera accepted the funds entrusted to their custody to apply them to a certain purpose. Therefore, they acted as executing agents of the owners of those funds, who placed their confidence in them. If the contracted relation was a fiduciary one, it would make no difference, for the purposes of the liability of the defendants respecting the profits made in accordance with the averments of the complaint, whether such relation be called mandate or agency, or whether it be designated by any other name.
It is urged that this court erred in holding that the action brought by the plaintiff is governed, as regards prescription, by section 1864 of the Civil Code. It is said that, as this Supreme Court has considered that the juridical and fiduciary relation existing between the parties has the character of an agency, the provisions of the Civil Code which protect the right of an aggrieved principal must be resorted to in order to determine the nature of the action exercised. “That being so, and taking into account the facts charged against the defendants in order to determine the applicable limitation period, the conclusion is unavoidable that the action brought by the plaintiff has for its sole object the recovery of damages, irrespective of the title that the plaintiff may have given to her complaint.” The defendants thus argue in maintaining that we have erred in holding that the plaintiff does not claim any indemnity for damages but the amount of a certain profit which she failed to obtain by reason of the conduct of the defendants. The error attributed to us is nonexistent. We have declared that in the instant case it is not sought to annul any contract nor is there any claim for damages made. The defendants rely on section 1078 of the Civil Code (sec. 1059, 1930 ed.), which they *484cite and which provides that indemnity for losses' and damages includes not only the amount of the loss which may have been suffered, but also that of the profit which the creditor may have failed to realize.
The profits to which the cited section refers are those which the creditor might have obtained but failed to receive in consequence of the nonfulfillment of the obligation. In the instant case, the plaintiff’s predecessor in interest has not been deprived of any profit which he might have obtained and failed to receive in consequence of the nonfulfillment of the obligation. The claim is simply for the profits made by the defendants in a transaction wherein they applied to their own use certain moneys which were entrusted to their custody, and which belonged to the subscribers to the fund. In commenting on the code provisions cited by the defendants, Scaevola and Manresa mention the positive damage (daño emergente) and the loss of prospective profits (lucro cesante), in connection with the specific applications thereof under the old law. Referring to the loss of prospective profits, Scae-vola says in part as follows:
“Lost profits as an element of damages (interés del lucro cesante) is said to be the gain which is not realized or the loss of gains which is suffered in the money or thing owed and not paid within the time agreed. This element may be either intrinsic or extrinsic, the former designation being applied to the price which the thing might have fetched at the time the obligation should have been fulfilled but was not fulfilled, and the latter being subdivided into two classes, circa reto and extra rem, which are respectively defined as that which arises from the thing itself, such as the fruits, the offspring of cattle, and the quasi fruits, as the rent on leases; and that which derives from the thing, not directly but indirectly, as the payment of interest to merchants.” 19 Scaevola 558.
The defendants conclude by saying “that the complaint wherein it is sought to recover the profits of which the plaintiff’s predecessor in interest is alleged to have been deprived, is technically and juridically a claim for damages which pre*485scribes after four years from the consummation of the contract, for it is based on deceit (dolo), fraud, or wrongful enrichment which is a deceitful act.” "We fail to see how can there be any application of section 1253 of the Civil Code, which fixes the term of four years for the prosecution of actions for the annulment of contracts, where no prayer for the annulment of any contract is made in the complaint, and where even if it were conceded that an action for damages had been brought, a fact which we have denied, the term fixed by said section for the prescription of the action for nullity of a contract; would be inapplicable. As regards the second cause of action, we rely on the conclusions stated in our former opinion.
The widow and heirs of José D. Riera defendants herein have also filed a motion for reconsideration based on questions which were decided in our former opinion, and which we do not deem it necessary to discuss further.
The reconsideration requested must be denied.