Villar & Co. v. Conde, 2269.

• Decision Date: 09 February 1929
• Docket Number: No. 2269.,2269.
• Citation: 30 F.2d 588
• Parties: VILLAR & CO., Inc., v. CONDE.
• Court: U.S. Court of Appeals — First Circuit

30 F.2d 588 (1929)

VILLAR & CO., Inc., v. CONDE.

No. 2269.

Circuit Court of Appeals, First Circuit.

February 9, 1929.

Leopoldo Feliu and R. Cuevas Zequeira, both of San Juan, Porto Rico, for appellant.

Nelson Gammans, of New York City (F. Soto Gras, of San Juan, Porto Rico, on the brief), for appellee.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

BINGHAM, Circuit Judge.

February 6, 1923, the plaintiff brought an action on two notes for $7,500 each, which the defendant, Conde, had given to one Mendia, who had indorsed them over to the plaintiff. The defendant filed an answer denying liability and, among other things, set up a discharge in bankruptcy. He also filed a counterclaim for $17,500 for breach of contract for personal services, he having been discharged before the term fixed in the contract had expired. He also presented a claim for damages as for libel.

In the District Court of San Juan, where the action was brought, the plaintiff obtained a judgment on the notes for $15,000 and interest, and the defendant had judgment in the sum of $17,500 for breach of the contract for services. The claim for damages as for libel was held not to have been proved. Both parties appealed to the Supreme Court of Porto Rico.

In the Supreme Court the judgment against the defendant on the notes was vacated, and the judgment against the plaintiff on the counterclaim was affirmed. It is from these judgments that the plaintiff appeals to this court.

In its assignments of error the plaintiff complains: (1) That the Supreme Court erred in reversing the judgment on the notes, but it did not assign any ground therefor; (2) that it erred in affirming the judgment for $17,500 for breach of the contract by ruling that the plaintiff, the employer, had the burden of proving that the defendant, the discharged employee, obtained employment or could have done so during the balance of the term of the contract; and (3) that it erred in failing to weigh evidence to the effect that the defendant began to act as manager for another corporation "three months after ceasing as manager of Villar & Co., Inc."

As to the action on the notes, it appeared that they were given on or about January 1, 1921, the first being payable on January 2, 1922, and the other on January 2, 1923, both without interest; that, after these notes became due, payment was demanded and liability denied on grounds unnecessary to mention; that thereafter on July 5, 1922, Conde filed a petition in bankruptcy and was adjudged a bankrupt on July 21, 1922; that the two notes were not scheduled; that Villar & Co., Inc., had actual notice of the bankruptcy proceedings during their pendency and opportunity to prove its claim, but did not; and that on November 7, 1923, Conde received his discharge in bankruptcy.

The assignment of error relating to the judgment of the Supreme Court as to the notes is too general to raise any question for the consideration of this court. The plaintiff, however, under this assignment, has argued in its brief that the Supreme Court erred in holding that the discharge in bankruptcy was a defense to the suit (1) because it spoke of the obligation on the notes as "extinguished by Conde's discharge"; and (2) because of the fact that Conde did not include the notes in his schedules in the bankruptcy proceedings.

These objections are without merit. As a defense to the notes the discharge was a valid one, for by it the plaintiff lost its remedy to enforce the notes, even though their obligation was not extinguished. As to the objection that the notes were not included in the bankruptcy schedules, the answer is that the plaintiff, the creditor, had actual knowledge or notice of the bankruptcy and might, if it had seen fit, have proved its claim therein. Bankruptcy Act July 1, 1898, § 17 (11 USCA § 35); Hill v. Smith, 260 U. S. 592, 43 S. Ct. 219, 67 L. Ed. 419.

As to the right of action under the counterclaim, it appeared that on December 3, 1920, Conde, who was then carrying on a business under the name of Villar & Co., Sucr., entered into a contract with one Mendia whereby he sold to Mendia for the benefit of a corporation to be organized certain real estate and the good will of his business, including his rights in certain agencies, and agreed to give his services at a fixed salary for five years to such corporation. The paragraph of the contract relating to this matter reads: "Carlos Conde, on his part, agrees and binds himself to render his personal services as director or manager of the corporation...