Court Opinion

ID: 8532999
Source: CourtListenerOpinion
Date Created: 2022-11-23 11:03:24.753765+00
Date Added: 2024-06-11T16:51:46.892292
License: Public Domain

MR. Justice HutchisoN,
dissenting.
Six children, three of whom were minors, acquired by inheritance a small coffee grove. On October 23, 1926, Julia Costa, one of the elder children, purchased from José Costa, the eldest, his undivided interest in the property. The consideration was $2,000. Twelve days later the widow, on behalf of her minor children, asked the district court to authorize the execution of a mortgage by the minor children for reasons of alleged necessity and in order to protect their interest in the land.
The reasons set forth in the petition were in substance: that the eldest son, José Costa, wished to dispose of his in*685terest in the property and was unwilling to continué as a cotenant; that he had received an offer of $2,000 from a stranger; that the intrusion of a stranger would be disastrous and that in order to avoid this impending disaster it was imperative that the mortgage should be executed to raise the money needed for the purchase from José Costa of his undivided interest. Julia Costa, as well as the mother, testified at the hearing to these and other details. From this testimony it appeared that a certain Corsican had offered José $2,000 for his undivided interest, that this Corsican had already exhibited an unfriendly disposition toward the other heirs and that if he should become a eotenant the inevitable result would be most unfavorable to the best interest of the minor children.
José Costa had married and established his own residence before the date of the conveyance to his sister Julia. At the time of the hearing, Julia was still living under the same roof with her mother. The mother was an illiterate woman. Whether or not she knew that Julia had already acquired Jose’s undivided interest is immaterial. Either Julia or Julia and her mother not only concealed the truth, but deliberately misrepresented the facts and thereby perpetrated a fraud upon the court. Hence, the so-called judicial authorization was an absolute nullity and open to collateral attack. In any event, the district court did not authorize the execution of a mortgage by the minor children for the purpose of borrowing money with which to purchase from Julia the undivided interest which she had already acquired from José.
The so-called judicial authorization was dated November 10, 1926. On the next day the mortgage was executed. It stated that Julia had purchased from José his interest in the property October 23, 1926, by deed executed before the same notary who drew the mortgage. The mortgage referred to a certified copy of the judicial authorization as attached thereto. It explained that this certified copy of the judicial *686authorization was attached to the mortgage in order that it might be “inserted in the copy.” It was included in the first copy of the mortgage issued to the mortgagee on the day of its execution. By this certified copy of the judicial authorization, the mortgagee was fully informed as to the object and purpose of such authorization and as to the supposed facts upon which it was based. By the recital already mentioned, the mortgagee was fully informed that the situation which the judicial authorization was intended to meet had ceased to exist before the petition was filed. He knew that the purpose for which the execution of a mortgage had been authorized could not be accomplished because it had already been accomplished before the judicial authorization was requested. He knew that the district court had not authorized the execution of a mortgage for any other purpose. The cases which hold that a mortgagee is not bound to see that the proceeds of the mortgage are properly employed have no application to the facts in the instant case. The mortgage was unauthorized and void as far as the undivided interest of the minor children was concerned.
On December 14, 1926, Julia Costa conveyed to each of the minor children an undivided interest in the undivided interest which she had purchased from José. In this deed of conveyance she stated that she had acted on behalf of herself and the other cotenants in the acquisition of Jose’s interest.
If, as appellees now suggest, the object' of the purchase from José was to prevent a sale by José to a stranger, pending the proceeding for a judicial authorization, the most natural and effective way of insuring that result would have been to record the deed at once. See section 1362 of the Civil Code (1930 ed.). It was not recorded until after the judicial authorization had been obtained and the mortgage executed.
*687At the trial of the instant case, the notary who drew both the deed of conveyance by José to Julia and the mortgage testified as a witness for defendants concerning other matters but made no mention of any trust relationship.
The recital- as to Julia’s fiduciary capacity in her acquisition of José’s interest,came too late. There was no mention of any such capacity in the conveyance by José to Julia. The recital is in direct conflict with Julia’s testimony as to the necessity of purchasing José’s undivided interest in order to prevent him from selling the same to a stranger who had offered him $2,000. It is inconsistent with the fact that on the day following the judicial authorization, Julia had represented herself to be the owner of the undivided interest which she had acquired from José and as such owner had mortgaged the same together with her original undivided interest in the land.
In addition to all this, Julia, on December 15, within twenty-four hours after her conveyance to the minors, pur-charsed from them not only the undivided interest which she had transferred to them on the previous day, but all of their interest in the property. As pointed out in the majority opinion, she paid for this entire interest less than one half of its fair and reasonable value. Aside from the fact that these two conveyances were executed before different notaries, the transaction as a whole would have been no different if it had been embodied in a single instrument unless we are to assume that the agreement as to a sale by the minors of their entire interest in the property, for less than one half of its actual value, was reached after the execution of the first deed and before the execution of the second. We find no satisfactory basis for such a hypothesis.
The only avowed purpose of the petition for a judicial authorization was the purchase from José of his undivided interest which he was about to sell to an unfriendly stranger. The fact that Julia had already acquired José’s interest was *688carefully concealed from the court. If the truth had been told in the petition or by witnesses at the hearing it is not probable that the court would have authorized a mortgage for the purpose of enabling the minors to purchase from Julia a proportionate share in the undivided interest acquired by her from José on the understanding that the mother of the minors would thereupon convey to Julia, without judicial authorization and for an inadequate consideration, the entire interest of the minors in the mortgaged property. In any event, there was no pretense of any such purpose at the time of the proceeding nor at the time of executing the mortgage. A judicial authorization was necessary, however, if a mortgage was to be executed on the whole property for any purpose.
If we eliminate the theory of a judicial authorization to enable the minors to purchase from Julia, which for reasons already stated seems untenable, the alternative conclusion is that the judicial authorization was obtained for the undisclosed purpose of enabling Julia to become the owner of the entire property upon the terms already indicated.
If Julia had in fact purchased Jose’s undivided interest for herself and the other cotenants, including the minors, if she had no ulterior motive, if she had nothing to hide from the court, if she did not intend at that time to obtain from the mother of the minors their entire interest in the property without judicial authorization and for an inadequate consideration, then there was no need of camouflage, no need of false averments and perjured testimony, no need of a judicial authorization for the purchase from José of his undivided interest in order to prevent him from selling the same to a stranger. In the absence of any explanation as to the motive for obtaining an authorization under false pretenses, the mere formality of a conveyance to the minors by Julia of a three-fifths interest in the undivided interest previously purchased by Julia from José (as a preliminary to *689the immediate reconveyance of such three-fifths interest to Julia by the mother of the minors for less than one-half of the purchase price paid by them) stands out as the final step in a striking misuse of the procedure prescribed' by section 159 of the Civil Code (1930 ed.).
Whatever the real motive for the procuring of a judicial authorization may have been, the conveyance by Julia to the minor children did not achieve the main object of that authorization as set forth in the authorization itself. It was in fact a transparent device intended to give some color of plausibility to the theory that the primary purpose of the judicial authorization had been accomplished. The truth was, and is, as we have already shown, that the avowed object of the judicial authorization had been accomplished twelve days before the filing of the petition for such authorization.
The fact that the mortgagee was not an active participant in the fraud is not a decisive factor in the case. It is enough to say that he must be deemed to have known that the first mortgage was an absolute nullity for want of a judicial authorization.
The entire proceeds of that mortgage went directly or indirectly to Julia Costa. The contrary view can be sustained only by taking into consideration the form and ignoring the substance of the transaction as a whole.
Under the judgment of this court the minors (unless they can pay $1,500 with interest thereon at 12 per cent per an-num from November 1926) will lose their three-fifths interest in the mortgaged property notwithstanding the absolute nullity of the mortgage and notwithstanding the mortgagee’s knowledge of such nullity.
The writer therefore dissents from the first and fifth pronouncements of the judgment rendered by this court and from so much of the majority opinion as tends to support those pronouncements. He is authorized to state that Mr. Chief Justice Del Toro concurs in this dissenting opinion.