Succession of Juan Serralles v. Esbri

Statement by Mr. Justice Peckham:

The appellee, plaintiff below, commenced this action, called a 'declaratory action of greater import' (Porto Rico Law Civ. Rpoc. arts. 480-482), to obtain payment of certain sums due on an indebtedness of the defendants (appellants), secured by mortgage, as stated in that instrument. She obtained judgment in her favor in the proper district court of Porto Rico, which was affirmed by the supreme court of the island, and the defendants have appealed from that judgment to this court. The sole question is whether the debt may be solved in American money at the rate of 60 cents thereof for each peso of indebtedness, or must $1 in American money be paid for each peso.

The following are the facts: One Nicholas Cartagena y Mangual desired to sell the fractional part, owned by him, of a sugar plantation, known as 'Ursula,' situated in the municipal district of Juana Diaz, in the province of Porto Rico, such fractional part being 18 per cent of the value of the whole plantation, valued at 80,000 pesos. The purchaser, Juan Serralles, agreed to pay for such share 18,000 pesos. Accordingly a deed of purchase and mortgage was made between the parties on the 1st day of September, 1894. That instrument contained the statement that the sale was effected 'in consideration of the sum of 18,000 pesos, commercial money,' which shall be paid by the purchaser in instalments, viz., '2,000 pesos on the 15th day of July, of the year 1898; 2,000 pesos on the same day and month of the year 1899; an equal sum of 2,000 pesos on the 15th day of July, 1900, and 3,000 pesos on the 15th day of July, of the years of 1901 to the year 1904, both inclusive, all of which to be paid in the money current in the commerce, whatever may be the coinage of the money that as such is in circulation or is accepted in this province, at the rate of 100 centavos (cents) of the money in circulation for each peso, excluding all kinds of paper money in circulation or to be issued, even if its eirculation should be compulsory.'

The instalments were to bear interest at the rate of 10 per cent per annum from the date of the deed, which interest was due and payable quarterly. The parties also declared 'that the price for which said sale is made is the just and true value at present of the share and interest hereby sold and conveyed,' they being 'fully aware that that is the value that shall serve as a basis in the public sale that shall be held if the obligation is not paid, and its payment should be demanded judicially.'

A few days after the execution and delivery of this instrument it was discovered that Cartagena was not the owner of all of the one-eighteenth part of the plantation, because that interest was acquired during his marriage with his first wife, and was what is termed 'conjugal partnership property,' acquired for a valuable consideration during her life. When she died, her interest went to her children, and so the seller, Cartagena, owned the above-mentioned fractional part of the plantation, with those children. It therefore became necessary to make another deed and mortgage, conveying the interest of all the owners of the fractional part of the plantation including such children. This was accordingly done, and on the 6th of October, 1894, another instrument, in the nature of a deed and mortgage, was executed by the proper parties, in ratification and extension of the first instrument, and which contains substantially the same provisions as the first instrument, and the payments were to be made to the parties conveying the premises in the proportion in which they were interested in that property. These 18,000 pesos were to be paid by the purchaser, at the same times mentioned in the former instrument, 'in current commercial money, whatever the coinage may be of money which, with such character, be in circulation or accepted in this province, at the rate of 100 cents of the circulating medium for each peso, and to the exclusion of all paper money created or to be created, even though its circulation be compulsory.'

On the 15th of September, 1900, a quarterly payment of interest became due under the terms of the mortgage, and the appellant proposed to pay it in American money then current, at an amount equivalent in value to the former provincial money, which was not then in circulation. This offer was refused. The appellee then commenced an action in a municipal court, to recover the interest due September 15, 1900, in American money, at the rate of $1 for each peso that was due. She obtained what is termed an 'executory judgment' for such payment, and that judgment (of the municipal court) was offirmed by the district court, and the appellant then paid the same. Upon quarterly instalments of interest due December 15, 1900, and March 15, 1901, the appellants made the same offer to pay in American money of equivalent value of the provincial money or peso, which was not then in circulation, and the offer was again refused, and this declaratory action of greater import was then commenced, to recover one American dollar for each peso of indebtedness due up to the date of the commencement of suit, and to obtain a declaration that the future payments should be made in the same manner. Before the commencement of this action, in 1901, the province had been ceded to the United States, which (prior to the cession) had occupied it by its troops in 1898. On the 12th day of April, 1900, Congress passed an act (31 Stat. at. L. 77, 80, chap. 191) § 11 of which (reproduced in the margin) provided for retiring the Porto Rican coins and substituting American money therefor.

In the pleading on the part of the plaintiff below the foregoing

Sec. 11. 'That for the purpose of retiring the Porto Rican coins now in circulation in Porto Rico, and substituting therefor the coins of the United States, the Secretary of the Treasury is hereby authorized to redeem, on presentation in Porto Rico, all the silver coins of Porto Rico known as the peso, and all other silver and copper Porto Rican coins now in circulation in Porto Rice, not including any such coins that may be imported into Porto Rico after the first day of February, nineteen hundred, at the present established rate of sixty cents in the coins of the United States for one peso of Porto Rican coin, and for all minor and subsidiary coins the same rate of exchange shall be applied. The Porto Rican coins so purchased or redeemed shall be recoined at the expense of the United States, under the direction of the Secretary of the Treasury, into such coins of the United States now authorized by law as he may direct, and from and after three months after the date when this act shall take effect no coins shall be a legal tender, in payment of debts thereafter contracted, for any amount in Porto Rico, except those of the United States; and whatever sum may be required to carry out the provisions hereof, and to pay all expenses that may be incurred in connection therewith, is hereby appropriated, and the Secretary of the Treasury is hereby authorized to establish such regulations and employ such agencies as may be necessary to accomplish the purposes hereof: Provided, however, That all debts owing on the date when this act shall take effect shall be payable in the coins of Porto Rico now in circulation, or in the coins of the United States at the rate of exchange above named.' facts were averred, but no averment or contention was made that the so-called 'executory judgment' which plaintiff had theretofore obtained constituted res judicata as to the question now in issue.

The defendants (appellants herein) put in an answer, setting up various facts unnecessary to be here adverted to.

They also averred that under § 11 of the act of Congress, above mentioned, they had the right to pay the instalments due on the mortgage, in American money at the established rate of 60 cents in the coin of the United States for one peso of Porto Rican coin.

The trial court, in its judgment, after reciting the existence of the executory judgment in the action above-described and also all the proceedings in the case before it, decreed the payment of the interest or instalments which might then be due, or the thereafter to grow due, to the plaintiff, in United States coin at the rate of $1 thereof for each peso of indebtedness. Basing its decree wholly upon the literal language of the contract, the court said: 'It appears that Don Juan Serralles y Colon bound himself to make the payments to said Cartagena, by virtue of the said contract of sale, in money current in commerce, of whatever coinage it may be, at the rate of 100 cents of the current money for each peso; it is plain and evident that the heirs of said Serralles are bound to pay in dollars all the instalments arising from the same contract, or the interest on the same, for dollars are the money current at present in this island.'

An appeal was taken by the defendants to the supreme court on the ground, among others, that the judgment of the district court violated articles 1281 and 1283 of the Civil Code. The articles are as follows:

'Art. 1281. If the terms of a contract are clear and leave no doubt as to the intentions of the contracting parties, the literal sense of the stipulations shall be observed.

'If the words should appear contrary to the evident intention of the contracting parties, the intention shall preyail.' 'Art. 1283. However general the terms of a contract may be, there should not be understood as included therein things and cases different from those with regard to which the persons interested intended to contract.'

Further ground of appeal was the alleged violation of the 11th section of the act of Congress above mentioned, under which appellants claimed the right to pay in United States coin at the equivalent value of 60 cents for each peso.

The supreme court, in due time, after argument, affirmed the judgment of the court below on the law, holding that the contract was clear, and its literal terms must be complied with. It did not, nor did the district court, hold the prior judgment to be res judicata.

The court also denied the right claimed by the defendants under the above-mentioned act of Congress, to pay their indebtedness at the rate of 60 cents of American money for each peso of such indebtedness, on the ground that the act did not apply to such cases as the one before the court.

Mr. James S. Harlan for appellants.

No brief was filed for appellee.

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