82 F.2d 634 (1st Cir. 1936), 3068, Gorbea v. Soto Gras

Docket Nº:3068.
Citation:82 F.2d 634
Case Date:February 25, 1936
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 634

82 F.2d 634 (1st Cir. 1936)




No. 3068.

United States Court of Appeals, First Circuit.

February 25, 1936

On Rehearing April 2, 1936.

J. M. Calderon, Jr., and Paul Defendini, both of San Juan, P. R., for appellant.

Philip N. Jones, of Boston, Mass. (Hurlburt, Jones & Hall, of Boston, Mass., and Henry G. Molina, of San Juan, P. R., on the brief), for appellee.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

BINGHAM, Circuit Judge.

This is an appeal from an order of August 28, 1935, of the Federal District Court for Puerto Rico, sitting as a bankruptcy court, in a debtor's proceeding under section 74 of the Bankruptcy Act, as amended (title 11 U.S.C.A. § 202). This order of August 28, 1935, vacated a prior order of March 5, 1935, enjoining the prosecution of a foreclosure suit brought by the appellee, Francisco Soto Gras, against Emilio M. Gorbea and his wife Emilia, the former being the debtor's father, in the insular District Court of San Juan, to foreclose a mortgage on certain real estate in San Juan the equity in which was, subsequent to the bringing of the suit, transferred to the debtor.

The facts are not in dispute. It appears that on January 4, 1935, the appellee Soto Gras brought a foreclosure suit in the insular District Court of San Juan against Emilio Gorbea and his wife Emilia pursuant to article 128 of the Mortgage Law

Page 635

(Revised Statutes and Codes of Puerto Rico, 1913, p. 1083, Sec. 6812) and article 168 of the Regulations (Id. p. 1140, Sec. 7265). January 5, 1935, that court entered an order as provided in article 170 (Id. p. 1141, Sec. 7267) requiring the debtor to pay the mortgage indebtedness within thirty days from the day of the service of the order. Payment not having been made as required, the court entered an order or decree of February 9, 1935, in accordance with article 172 (Id. p. 1141, Sec. 7269), directing that the mortgaged property be sold at public auction by the marshal of the court. Pursuant to the order the marshal advertised the property for sale on March 5, 1935. On February 28, 1935, the debtor, appellant, filed in the Federal District Court a petition for composition or extension under section 74 of the Bankruptcy Act, accompanied by schedules of her indebtedness and assets, and on the same day filed a petition asking that the foreclosure proceedings be enjoined. On March 1 that court entered an order approving the petition and referring the matter to the referee; also requiring the appellee, Soto Gras, on March 4 to show cause why the foreclosure proceedings should not be stayed. March 4, the appellee filed an answer to the order to show cause, the parties were heard on the petition and answer, and, on March 5, an order was entered staying the foreclosure proceedings. August 12, 1935, the appellee filed a motion for reconsideration based on a recent decision. In re Sorenson )C.C.A.) 77 F.2d 166. August 16, 1935, the debtor, appellant, filed an answer to the motion; and on August 28, 1935, the court entered the order here appealed from, vacating the injunction order of March 5, 1935, and stated as his reason for so doing the following:

'After a study of the facts of the case and the law applicable to the same, the court arrives at the conclusion that in accordance with subdivision (m), section 74 of the Bankruptcy Act (as amended by Act June 7, 1934, 11 U.S.C.A. § 202(m)), and the Mortgage Law of Puerto Rico, construed in the light of recent Federal decisions (Sorenson v. Collins (C.C.A.) 77 F.2d 166, 167, and Mitchell v. Citizens' State Bank of Chicago (C.C.A.) 77 F.2d 168) the order of sale of the District Court of San Juan in civil case No. 22178 is a final decree and therefore this court cannot stay pending proceedings after such order constituting a final decree had been entered by the local court.'

An appeal from this order was taken and allowed in the District Court on September 5, 1935.

The question sought to be raised by the assignments of error is whether the order of sale in a summary foreclosure proceeding authorized by the law of Puerto Rico was a...

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