453 F.2d 911 (1st Cir. 1971), 71-1047, In re Las Colinas, Inc.

Docket Nº:71-1047, 71-1048.
Citation:453 F.2d 911
Party Name:In the Matter of LAS COLINAS, INC., et al., Debtors. Appeal of BANCO POPULAR DE PUERTO RICO. In the Matter of Las Colinas, Inc., et al., Debtors, Appellants.
Case Date:December 21, 1971
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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Page 911

453 F.2d 911 (1st Cir. 1971)

In the Matter of LAS COLINAS, INC., et al., Debtors.

Appeal of BANCO POPULAR DE PUERTO RICO.

In the Matter of Las Colinas, Inc., et al., Debtors, Appellants.

Nos. 71-1047, 71-1048.

United States Court of Appeals, First Circuit.

December 21, 1971

Heard Nov. 18, 1971.

Certiorari Denied April 17, 1972. See 92 S.Ct. 1502.

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Vicente Zayas Puig, Hato Rey, P. R. with whom Juan F. Doval and Baragano, Trias, Saldana & Francis, Hato Rey, P. R. were on brief, for Banco Popular De Puerto Rico.

Vigdor Schreibman, pro se, for Las Colinas, Inc., and others.

Before COFFIN, Circuit Judge, VAN OOSTERHOUT [*], Senior Circuit Judge, and STEPHENSON (FN*), Circuit Judge.

COFFIN, Circuit Judge.

This is the third occasion for us to consider the trials and tribulations of a residential housing development project on the eastern coast of Puerto Rico. 1 In our last review, we remanded the case to the district court to reexamine the evidence and decide whether the debtors in possession of the project, Las Colinas, Inc., and Eastern Shore Development Corporation [Las Colinas] and their bank, Banco Popular de Puerto Rico, intended credits totalling $1,750,000 to be "revolving", i. e., a maximum exposure within which proceeds of sales of houses would be paid to the bank, releasing like sums for financing of future construction, or a fixed amount to be paid at the due date in one sum. A second issue involved a $2,000,000 mortgage given by Las Colinas to the bank which we found, in view of the circumstances of its execution and the value of pre-existing security

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for the debt owing the bank, to be grossly excessive and unfair. We therefore also remanded the case for a determination of damages.

The district court, as to the first issue, reviewed the evidence and concluded that the bank had committed itself to revolve the $1,750,000 line of credit. In so doing it found that the bank had accepted a work plan or budget which contemplated the gross expenditure of funds much greater than the line of credit approved, indicating an intent that the credits be turned over as sales proceeds were received and paid to the bank; that a Federal Deposit Insurance Corporation report revealed that the scope of the bank's financing encompassed the entire project rather than the half of the project which the bank contended was its more...

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