Fraenkl v. Cerecedo

This is an appeal from a decree of the district court of the United States for Porto Rico, upon a bill of review, vacating and annulling a decree entered by that court in an equity cause, and dismissing the bill of complaint in said cause without prejudice.

The bill in the equity cause referred to was filed in December, 1900. The present appellants were complainants. Some of them were alleged in the bill to be copartners, doing business in Dundee, scotland, as Jaffe Brothers & Company, and to be subjects of the Queen of Great Britain and Ireland. The others were averred to be copartners doing business in Berlin, Germany, as Hinne & Company, and to be subjects of the Emperor of Germany. The defendants to the bill were Demetria Bolta and Alfredo Arnaldo y Sevilla, and various other individuals alleged to be the general and special partners of a firm styled J. Fernandez & Company. Among such were Manuel, Enrique, Jose, and Francisco Cerecedo, all of whom were members of a firm styled Cerecedo Hermanos, which firm, it was charged, was a special partner in J. Fernandez & Company. All the defendants were averred to be citizens and residents of Porto Rico.

The allegations of the bill were thus summarized in an opinion rendered in the court below:

'It avers, in substance, that Fernandez & Company, of which firm Cerecedo Brothers were special partners up to the time when Fernandez & Company suspended payment, were indebted to the complainants in certain sums set forth in the bill; that fraudulently and to obtain time the lastnamed firm agreed with Jaffe Brothers & Company to transfer to them certain securities upon third parties for their debt, but thereafter proposed to turn them over in actual payment pro tanto; but when the agent of Jaffe Brothers & Company obtained authority to agree to this, said firm applied for suspension of payments; that to get this, they issued false evidences of indebtedness to Cerecedo Brothers and others; that after the suspension of payments, Fernandez, as liquidator, fraudulently transferred the securities complainant Jaffe Brothers & Company were to have to a third party, without consideration, and for half their value, Cerecedo Brothers being in fact the real purchasers; that Fernandez, after the suspension of payments, turned over to Cerecedo Brothers a large amount of property, the amount being unknown to complainants, and disposed of a large part of the assets fraudulently. Interrogatories were propounded in the bill to Fernandez. The relief sought was a specific performance of the agreement with Fernandez as to the securities; that a receiver be appointed, and the assets of Fernandez & Company be marshaled; that Fernandez & Company be enjoined from collecting said securities or interfering with the company's assets; that they be delivered to the receiver, the liens be ascertained, the property sold and distributed among the creditors, Jaffe Brothers & Company being allowed to participate in the distribution, said securities being first applied on their debt.' [1 Porto Rico Fed. Rep. 54.]

After the return of service of summons upon the firm, Herbert E. Smith, signing himself 'Solicitor for defendants,' filed a 'special appearance' in the case, 'for the purpose of moving the court for the compliance on the part of the plaintiffs with the rule of court relative to nonresidents giving security for costs, and for the purpose of opposing the motion for an injunction and receiver.' On January 14, 1901, a receiver was appointed, who, however, never qualified. It was recited in the order appointing the receiver that after due notice had been given of an application for temporary injunction, the cause had been fully argued by counsel for the respective parties. Subsequently, on January 31, 1901, by written stipulation between counsel for the plaintiffs and defendants, it was agreed 'that the defendants herein may and shall have until the 20th day of February, 1901, for the purpose of demurring to, pleading to, or answering the bill of complaint of said complainants herein.' Thereafter, on February 23, 1901, a decree pro confesso was entered against all the defendants, and complainants were given leave to proceed ex parte. On June 8 following, a final decree was entered, adjudging the general and special partners in the firm of J. Fernandez & Company to be indebted to the complainants in specified amounts, canceling and annulling, as against the rights of complainant, because fraudulent and fictitious, the alleged indebtedness of the firm of J. Fernandez & Company to the special partners, canceling and setting aside as fraudulent the transfers made to the defendant Bolta, and adjudging that the defendants composing the firm of J. Fernandez & Company pay the amounts found due to the complainants, and that, in default of so doing, execution should issue. On January 31, 1902, an execution was issued, which was levied upon the property of the firm of Cerecedo Hermanos. Thereupon, on February 6, 1902, there was filed in the court from which the execution issued, on behalf of the members of that firm, a petition praying for leave to file a bill to review and set aside the decree theretofore entered pro confesso against them. The petition recited the presentation of the bill of review, and that document was marked as 'Tendered February 6, 1902.'

Both in the petition and bill of review various errors asserted to be apparent on the face of the record were set out, which, from the view we take of the case, need not be here detailed.

While, as stated, the petition for leave was filed on February 6, 1902, leave to file was not granted until June 22, 1903, on which date the court filed an opinion. 1 Porto Rico Fed. Rep. 53. The opening paragraph of the opinion is as follows:

'This is a petition for leave to file a bill of review, which is also tendered. The decree asked to be set aside was entered June 8, 1901. This petition was presented February 6, 1902. Objection is made that it comes too late. It is claimed that the act of Congress of March 3, 1891 [26 Stat. at L. 826, chap. 517, U.S.C.omp. Stat. 1901, p. 488], relative to the United States circuit court of appeals, applies to it. The limitation for appeal, and which, by analogy, has been applied in equity to the time for filing bills of review, applicable, however, is the two years provided in § 1008 of the United States Revised Statutes (U.S.C.omp. Stat. 1901, p. 715). Clark v. Killian, 103 U.S. 766, 26 L. ed. 607; Allen v. Southern P. R. Co. 173 U.S. 479, 43 L. ed. 775, 19 Sup. Ct. Rep. 518.

The court considered two of the grounds assigned in support of the petition for leave to file. One related to the jurisdiction of the court to render the decree, and was disposed of by the statement that all the complainants were aliens. Upon the ground, however, that the averments of the bill in the main cause did not authorize the money decree which had been rendered, it was held that, in order to prevent injustice, the 'petitioners should be allowed to file their bill of review, appear, open the decree, and make defense,' upon payment of costs to date, and the execution of a bond in the sum of $15,000, conditioned to perform any judgment that might finally be rendered against them. On June 19, 1903, an order was entered permitting the filing of the bill of review, opening the decree in the original cause, and permitting the Cerecedos to appear therein and make defense, and ordering the return of the execution upon the giving of bond. The condition as to payment of costs and giving bond having been complied with, thereafter, on October 13, 1903, a demurrer was filed to the bill of review, and at the same time in the main cause a plea to the jurisdiction of the court was filed.

On October 14, 1903, an amended bill of review was filed. Nearly four years afterwards, on June 1, 1907, an opinion was filed, holding that the demurrer to the bill of review and also the plea to the jurisdiction in the main case should be overruled. On the 22d of the same month an answer was filed to the bill of review, to which a reply was filed in the following month. On the same day the Cerecedos also demurred to the bill of complaint in the main cause. On April 3, 1908, the court vacated, as improvidently made, the order opening the final decree in the main cause, and suspended further proceeding therein until the determination of the question raised by the bill of review. On October 30 following, however, the court consented to a reargument of the plea to the jurisdiction in the main cause, which had been theretofore adversely ruled upon, with the result that, on February 1, 1909, the plea to the jurisdiction was sustained. A final decree was thereupon entered upon the issues made upon the bill of review, and after reciting that it appeared upon the face of the record in the original cause that the court was without jurisdiction to entertain the same, it was decreed as follows:

'It is therefore hereby ordered, adjudged, and decreed that this bill to review the proceedings of this court in said original cause, be, and the same hereby is, sustained for the reason aforesaid; that the decree entered by this court on the 8th day of June, A. D. 1901, in the city of Mayaguez, in favor of complainants in said original suit, the same being as aforesaid No. 6 on the equity docket at Mayaguez, entitled Jaffe Bros. & Co. and Hinne & Co. v. J. Fernandez & Co. and Cerecedo Bros. be, and the same hereby is, vacated and annulled; and that said original bill of complaint be, and the same hereby is, dismissed without prejudice, with costs of this bill of review in favor of the complainants herein.'

The cause was then appealed to this court.

Messrs. N. B. K. Pettingill and George H. Lamar for appellants.

Mr. Francis H. Dexter for appellees.

Mr. Justice White, after making the foregoing statement, delivered the opinion of the court: