Mercado Riera v. Mercado Riera

• Decision Date: 23 November 1945
• Docket Number: No. 3960.,3960.
• Citation: 152 F.2d 86
• Parties: MERCADO RIERA et al. v. MERCADO RIERA et al.
• Court: U.S. Court of Appeals — First Circuit

152 F.2d 86 (1945)

MERCADO RIERA et al. v. MERCADO RIERA et al.

No. 3960.

Circuit Court of Appeals, First Circuit.

November 23, 1945.

William Cattron Rigby, of Washington, D. C., and Pedro M. Porrata, of Ponce, P. R. (Fred W. Llewellyn and Rigby, Leon & Weill, all of Washington, D. C., on the brief), for appellants.

Jose A. Poventud, of Ponce, P. R., and Celestino Iriarte, F. Fernandez Cuyar, and H. Gonzalez Blanes, all of San Juan, P. R., for appellees.

Before MAGRUDER, MAHONEY, and WOODBURY, Circuit Judges.

WOODBURY, Circuit Judge.

These are consolidated appeals taken by the executor and by the partitioner of an estate from three judgments¹ entered by the Supreme Court of Puerto Rico in three separate petitions for certiorari to the District Court of Ponce. The Supreme Court of Puerto Rico, finding that the same fundamental question was involved in each petition, disposed of all of them in a single opinion.

This litigation emerges from, and we venture to hope may prove the culmination of, an apparently bitter and certainly a protracted controversy between three of the four children and heirs of one Mario Mercado Montalvo, a widower, who died, testate, domiciled in Puerto Rico, on August 22, 1937, leaving a substantial estate. Since even the briefest summary of the salient points of this controversy, which is all that we shall attempt, will necessarily have to be lengthy and involved, a short and very general explanation of the Puerto Rican law with respect to the settlement of decedent's estates will not be out of place as an introduction.

Under the Roman Civil Law system prevalent in Spain, and also but with modifications in Puerto Rico, the principle of "universal heirship" prevails. Under this principle the heirs, upon acceptance of their inheritance, step directly and immediately into the shoes of their ancestor both as to assets and liabilities. That is to say, upon acceptance of their inheritance, heirs succeed at once to their ancestor's assets and liabilities alike and in consequence become bound for their ancestor's debts and obligations in the same manner and to the same extent that he was, even to the extent that if the liabilities prove greater than the assets, they become personally bound to the creditors for the balance. Civil Code, 1930, § 957. But the heirs are not under obligation to accept their inheritance (id. § 943) nor are they under obligation to accept or reject it immediately. Id. § 958. They may repudiate, or they may accept "under benefit of inventory" as it is called and thereby reserve decision whether to accept or to repudiate the estate until they have had an opportunity to determine its net amount. Id. § 964 et seq. In the event of repudiation by the heirs, and apparently also in the event of their acceptance under benefit of inventory, (id. § 977) creditors of an estate can look only to its assets for payment.

Naturally under such a system as this the nature of an executor's duties depends upon whether the heirs accept their inheritance "purely and simply" (id. § 952) or whether they do not. If they do so accept, and the testator has expressly conferred no additional powers upon him, apparently and executor has only the power (id. § 824):

"1. To dispose and pay the suffrages, and funeral expenses of the testator in accordance with the provisions made by him in his will and, in their absence, according to the customs of the town.

"2. To pay, with the knowledge and consent of the heir, the cash legacies.

"3. To carefully see to the execution of the other provisions of the will and maintain, when just, its validity in and out of court.

"4. To take the necessary precautions for the preservation and custody of the property with the intervention of the heirs who may be present."

But if they do not accept "purely and simply," that is, if they reject or if they accept under benefit of inventory, then the executor, to protect the assets of the estate from dissipation by the heirs to the prejudice of creditors, has powers roughly comparable to those of an executor or administrator under the legal system which prevails generally in the states of the United States.²

With this general statement of legal principles we turn to the facts, including a summary of the pertinent legal proceedings in the insular courts, and to specific provisions of the Civil Code of 1930, and the Code of Civil Procedure of 1933.

As already appears, Mario Mercado Montalvo, a widower, died testate, a resident of Puerto Rico, on August 22, 1937. By his will, after cash legacies, he left the major part of his estate to his four adult children as his sole and universal heirs (i. e., share and share alike, Civil Code, 1930, § 694) namely Mario Mercado Riera, Margarita Mercado Riera de Mandry, Maria Luisa Mercado Riera de Belaval, and Adrian Mercado Riera. He appointed his elder son, the appellant Mario, as his testamentary executor, (id. § 814) expressly conferring no special powers upon him (id. § 823) but "enlarging and extending the term of one year provided by law to all the time that may be necessary for the execution" of his trust,³ and he appointed his "intimate friend," the appellant Pedro M. Porrata, partitioner of his estate.⁴

On August 28, 1937, this will (it was holographic) was duly presented and two days later it was probated and ordered protocolized in accordance with Puerto Rican law (id. § 640 et seq.) in a proceeding numbered 764 in the District Court for the Judicial District of Ponce, and on September 1, 1937, the same court in another proceeding (No. 782) issued letters testamentary to Mario, (Code of Civil Procedure, 1933, § 597) he having duly qualified by accepting his appointment and taking the oath required. Ten days later (September 10, 1937) the district court in this latter proceeding granted the executor an extension of ninety days in which to file the inventory required of him by § 568 of the Code of Civil Procedure, and on December 6, 1937, he was given another ninety-day extension of time for the same purpose.

In still another proceeding (No. 802) the same court on September 8, 1937, issued credentials "showing" Porrata's "authority" to act as auditor partitioner of the estate, and on August 19, 1938, in the same case, it granted Porrata an extension of time to September 6, 1939, to "comply with his obligations as such."

Now we turn to still another proceeding in the District Court for the Judicial District of Ponce, No. 1213.

This began with a petition by Adrian dated January 21, 1938, in which he asked to be adjudicated "an acceptor with benefit of inventory of the inheritance left to him by the testator" and for an order requiring the executor to appear before the court upon a day to be set by the court "with a complete statement and appraisal of the hereditary assets and liabilities, as well as all other data necessary for the preparation of the aforesaid inventory of the properties of said testator." On January 24, 1938, the court granted this petition ex parte decreeing that Adrian was an acceptor of his father's estate with benefit of inventory, and ordering the executor to appear on March 11, following, with "a complete statement and appraisal of the assets and liabilities left by the testator," and with "all other data that may be necessary for the preparation of an inventory of the properties of the aforesaid deceased party." It ordered that notice of this order be given to the executor, heirs, creditors, legatees and all other interested parties.

At this point the appellant Porrata moved for leave to intervene and, there being no objection, his motion was granted. Thereupon he immediately filed two motions in which in substance he asked for a ruling that he, as testamentary partitioner, not Mario as executor, be required to prepare and file the inventory of the decedent's estate. The District Court of Ponce denied these motions and on certiorari the Supreme Court of Puerto Rico on April 29, 1938 (Porrata v. District Court, 53 P.R.R. 140) upheld this decision on the ground that the question whether under the circumstances the partitioner or the executor should prepare the inventory was "largely discretional with the (district) court," and although "it might have been more advisable to order the commissioner⁵ to make the inventory," it was not an abuse of discretion to order the executor to do so "as all the property is apparently in the custody of the executor, and maybe for other reasons." We shall have occasion later on to refer to this decision again.

In this posture of affairs, and a controversy having developed between Maria Luisa and Adrian on the one hand and the executor on the other (Margarita appears to have been neutral throughout this entire controversy) over the first quarterly accounts filed by the executor on December 7, 1937, in No. 782, all of the heirs and Porrata on September 9, 1938, optimistically attempted to settle their differences by a so called "contract of compromise." This is a long and complicated document but it is important enough in the case to warrant description in some detail.

The first two clauses of the contract itself and its preamble consisting of seven clauses have no particular bearing upon the present controversy. Only the third and last clause of the contract proper, consisting of eighteen paragraphs lettered from (a) to (r), inclusive, refer directly to the Mercado estate. These paragraphs are set out in summary form but at some length by the court below. We shall attempt to summarize them still further.

Paragraph (a) sets out that the properties etc. constituting the estate are those set forth in an attached inventory made and authorized by the four heirs, plus such other properties etc. as "may subsequently exist, appear or be discovered as belonging to aforesaid testator," which inventory is to be filed in the District Court of Ponce for the purpose of proceedings in that court numbered 782 and...