Benitez v. Bank of Nova Scotia

• Decision Date: 21 February 1940
• Docket Number: No. 3488,No. 3487.,3486,3488,3487.
• Parties: BENITEZ v. BANK OF NOVA SCOTIA (three cases).
• Court: U.S. Court of Appeals — First Circuit

109 F.2d 743 (1940)

BENITEZ v. BANK OF NOVA SCOTIA (three cases).

Nos. 3488, 3486, No. 3487.

Circuit Court of Appeals, First Circuit.

January 10, 1940.

Rehearing Denied February 21, 1940.

Brief for debtor, appellant.

Carlota Benitez Sampayo, pro se.

Walter L. Newsom, Jr., and Brown, Gonzalez & Newsom, all of San Juan, P. R. (Henri Brown, of San Juan, P. R., on the brief), for appellee.

Before WILSON and MAGRUDER, Circuit Judges, and McLELLAN, District Judge.

MAGRUDER, Circuit Judge.

These cases are related and will be dealt with in a single opinion.

No. 3488.

Complainant, appellee, on October 20, 1936, filed in the District Court of the United States for Puerto Rico a bill in equity against Benitez Sugar Company, a corporation, and various persons, including the present appellant, individually and as members of the "Comunidad" Jose J. Benitez e Hijos, seeking foreclosure of certain securities and of a crop lien in satisfaction of various joint and several obligations of the corporation and the Comunidad.

This Comunidad had large holdings of land on the Island of Vieques, Puerto Rico, used for growing sugar cane and for pasturage. It also owned cattle, buildings, agricultural equipment, and held the capital stock of the Benitez Sugar Company, one of the defendants. The latter corporation owned a sugar factory, agricultural land, a large number of live stock, equipment, buildings, etc., all on the Island of Vieques, and devoted to the growing of sugar cane and the manufacture of raw sugar and molasses. The operations of the Comunidad and the Benitez Sugar Company had for many years been conducted "as a single and integrated enterprise". The Comunidad had been constituted by contract between the widower and the heirs of Carlota Sampayo Guzman in 1917, and by successive renewals extended to July 30, 1935. On July 1, 1933, the Bank of Nova Scotia, under the terms of a crop loan agreement with the Comunidad, took possession of the properties and operated them for the account of the Comunidad and the Sugar Company, applying the net proceeds to the repayment of the crop loans. When the contract regulating the Comunidad expired on July 30, 1935, no partition or liquidation of the business was had, but the Bank continued the operation of the business as theretofore, until a receiver took over.

Upon the filing of the bill for foreclosure a receiver was appointed ex parte, and his appointment was subsequently confirmed after hearing. The receiver took possession of said properties and operated the enterprise under orders of the court. A final decree was rendered on August 22, 1938, in favor of complainant bank. The decree adjudged that the Comunidad and the Sugar Company were jointly and severally indebted to the bank in the principal sum of $673,569.82 with interest; that the members of the Comunidad were individually liable in proportion to their respective participations therein, that of the present appellant being a one-twelfth interest; that defendant members of the Comunidad, in proportion to their respective liabilities, and the defendant Benitez Sugar Company, must on or before September 1, 1938, pay to the bank the said sum with interest, in default of which a special master was directed to sell at public auction the various pledged and mortgaged properties. Provision was made for an eventual deficiency judgment.

On November 17, 1938, appellant, being intent upon appealing from the decree, filed in the office of the Clerk of the District Court a so-called "petition for severance" which recited that a "notice of severance" dated October 7, 1938, had theretofore been served on the other parties, and which requested the court to enter an order providing as follows:

"(a) Setting a day certain (not later than November 22nd, 1938) on which she may present to the Hon. Robert A. Cooper, Judge of this Court, her amended Notice of hearing on her Petition for Severance in the above entitled cause, together with proof of service thereof, and her Petition for Leave to Appeal.

"(b) That upon presentation of said amended notice, with proof of service thereof to the Hon. Robert A. Cooper, Judge of this Court, together with the Petition for Leave to Appeal and the Assignment of Errors, this Hon. Court enter an order severing the record and permitting your petitioner to prosecute her appeal without joining her co-parties."

An "amended notice of hearing on petition for severance", dated November 17, 1938, which was served on the other parties, read in part as follows:

"Please take notice that on November 23rd; 1938 the petition of Carlota Benitez Sampayo for severance of the record of the above entitled cause, together with her petition for leave to appeal from each and every one of the orders or decrees made or entered in the course of these proceedings and up to this date and, in particular, from the final decree entered herein on August 22, 1938 and other acts done and orders entered pursuant to said final decree, will be presented to the Hon. Robert A. Cooper, Judge of the District Court of the United States for the District of Puerto Rico."

This "petition for severance" came on for hearing on November 23, 1938, and was denied. A formal order of severance was evidently considered by the District Court not to be necessary to the perfecting of the appeal (see United States v. King & Howe, Inc., 1935, 2 Cir., 78 F. 2d 693, 695), for on the same day the court issued an order granting appellant's petition for leave to appeal and citation was served on appellee. On February 24, 1939, this order was, upon the motion of the appellee, vacated by the District Court on the ground that it had been improvidently granted, the statutory three-months' period for appeal having expired. 28 U.S.C. § 230, 28 U.S.C.A. § 230.

Appellant now appeals from this order of February 24, 1939, vacating the earlier order allowing the appeal. We believe that this vacating order is a "final decision" within the meaning of 28 U.S.C. § 225, 28 U.S.C.A. § 225, and hence appealable to this court. If allowed to stand, it would finally dispose of the controversy. It would leave the decree of August 22, 1938, in effect and immune from attack by appeal, because the lapse of the three-months' period would preclude a new application, either to the District Court or to a judge of this court, for leave to appeal. The situation is therefore distinguishable from cases where an order is entered vacating a decree pro confesso and permitting the defendant to file an answer. O'Brien v. Lashar, 1920, 2 Cir., 266 F. 215; Board of Supervisors v. Knickerbocker Ice Co., 1935, 2 Cir., 80 F.2d 248; Beighle v. Le Roy, 1938, 3 Cir., 94 F.2d 30. It is also distinguishable from orders refusing in the first instance to allow an appeal. Such orders are not reviewable as "final decisions" because they do not put an end to the controversy; the denial is not res adjudicata as to the right to appeal and an application can still be made to another judge. 28 U.S.C. § 228, 28 U.S.C.A. § 228.

In her opposition to the motion to vacate the order of November 23, 1938, allowing the appeal, appellant "admits that on November 23, 1938 she filed and presented to the Hon. Judge of this Court a Petition for Appeal from said final decree together with her assignment of errors and prayer for reversal and that on said date this Court entered the order allowing her appeal filed herein, as a matter of right, as provided by law." This application was made one day after the lapse of the statutory period. Walters v. Baltimore & Ohio Railroad Co., 1935, 3 Cir., 76 F.2d 599; Northwestern Public Service Co. v. Pfeifer, 1929, 8 Cir., 36 F. 2d 5, 7. As was said in Muckelroy v. Baldwin, 1934, 8 Cir., 70 F.2d 728, 729, "the three months' statutory period for appeal is mandatory and jurisdictional and, being such, it cannot be extended by waiver, consent, or even order of court." Accord, Robie v. Hart, Schaffner & Marx, 1930, 8 Cir., 40 F.2d 871; Vaughan v. American Insurance Co., 1926, 5 Cir., 15 F.2d 526, 527; Sprague v. Chicago B. & Q. Railroad, 1927, 8 Cir., 17 F.2d 768. See Alaska Packers Ass'n v. Pillsbury, 1937, 301 U.S. 174, 57 S.Ct. 682, 81 L. Ed. 988.

Appellant refers to what we said in Baez v. People of Puerto Rico, 1936, 1 Cir., 82 F.2d 317, 321: "An appeal is a matter of right. It is the date of presentation of the application to the court or judge that fixes the right of the applicant to his appeal, not the date of its allowance." This is true; if application is seasonably made to the judge, the appeal will not be defeated because the judge delayed in acting on it, a circumstance beyond the control of the party appealing. Cardona v. Quinones, 1916, 240 U.S. 83, 36 S.Ct. 346, 60 L.Ed. 538; J. D. Randall Co. v. Fogelsong Mach. Co., 1912, 6 Cir., 200 F. 741. But, as noted above, in the present case the application was not made until after the expiration of the three-months' period.

It is contended that the so-called "petition for severance" may be considered an application for leave to appeal. But this petition was not so regarded by appellant, who on November 23, 1938, filed a separate application for leave to appeal. The "petition for severance" gave notice of an intention to apply for leave to appeal. This, however, is not equivalent to an application. Osborn v. United States, 1931, 4 Cir., 50 F.2d 712, 714. Robie v. Hart, Schaffner & Marx, supra, 40 F.2d at page 872; Vaughan v. American Insurance Co., supra, 15 F.2d at page 527; United States v. New National Coal & Mining Co., 1934, 7 Cir., 72 F.2d 168, where the court said, "Merely declaring that he will appeal does not of itself amount to taking an appeal".

Furthermore, the "petition for severance" itself was not presented to the court until November 23, 1938. Even if we considered this petition as in effect an application for appeal, the filing of it with the clerk of the court on November 17 did not fulfill the statutory...