US SUPREME COURT DECISIONS

A Porto Rican contracted, in 1894, to pay a certain amount of pesos in money current in the commerce, whatever may be the coinage in circulation at the rate of one hundred centavos of the money in circulation for each peso. Section 11 of the Foraker Act, passed April 12, 1900, provided for the retiring of Porto Rican coin and the substitution thereof of United States coin and for the payment of debts at the rate of sixty cents per peso, and thereafter the debtor offered to pay the obligation at that rate but the Supreme Court of Porto Rico held that he was entitled under the contract to one hundred cents for each peso. The creditor also claimed the matter was res judicata under a judgment which had been obtained for an installment of interest. In reversing this judgment, held that:

Appellant having claimed, and been denied, the right to pay the indebtedness at the rate fixed by § 11 of the Act of April 12, 1900, this Court has jurisdiction under § 35 of that act to review the judgment on appeal.

Under Article 1477 of the Porto Rico Code of Civil Procedure, judgments rendered in executory actions are not res judicata.

The contract only contemplated such change in coin as might occur while Porto Rico was under the same political power, and a strict and literal construction of the contract will not be entertained where it does not convey the real meaning of the parties.

The indebtedness should be paid at the rate of sixty cents per peso as fixed by the statute, and neither the provisions of the statute making United States coin the circulating medium nor the terms of the contract should be construed as making a centavo (the one-hundredth part of a peso) the equivalent of a cent in United States money.

The appellee, plaintiff below, commenced this action, called a "declaratory action of greater import" (Law of Civil Procedure, porto Rico, Arts. 480, 481-482), 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 chanrobles.com-red

Page 200 U. S. 104

to this Court. The sole question is whether the debt may be solved in American money at the rate of sixty cents thereof for each peso of indebtedness, or must one dollar 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 eighteen percent 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 first 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 installments, viz.,

"2,000 pesos on the 15th day of July, of the year 1898; two thousand pesos on the same day and month of the year 1899; an equal sum of two thousand pesos on the fifteenth day of July, 1900, and three thousand pesos on the fifteenth 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 one hundred 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 circulation should be compulsory."

The installments were to bear interest at the rate of ten percent 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, chanrobles.com-red

Page 200 U. S. 105

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 sixth 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 one hundred 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 fifteenth 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 one dollar 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 affirmed by the district court, and the appellant then paid the chanrobles.com-red

Page 200 U. S. 106

same. Upon quarterly installments 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 twelfth day of April, 1900, Congress passed an act (31 Stat. 77, 80), § 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 chanrobles.com-red

Page 200 U. S. 107

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 installments due on the mortgage, in American money at the established rate of sixty 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 installments which might then be due, or the thereafter to grow due, to the plaintiff, in United States coin at the rate of one dollar 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 one hundred 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 installments 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 prevail. "

Page 200 U. S. 108

"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 eleventh 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 sixty 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 sixty 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.