First National City Bank v. Gonzalez & Co. Sucr. Corp.

• Decision Date: 30 January 1970
• Docket Number: Civ. No. 329-62.
• Citation: 308 F. Supp. 596
• Court: U.S. District Court — District of Puerto Rico
• Parties: FIRST NATIONAL CITY BANK, Plaintiff, v. GONZALEZ & CO. SUCR. CORPORATION et al., Defendants.

308 F. Supp. 596

FIRST NATIONAL CITY BANK, Plaintiff, v. GONZALEZ & CO. SUCR. CORPORATION et al., Defendants.

Civ. No. 329-62.

United States District Court D. Puerto Rico.

January 30, 1970.

Antonio M. Bird, Jr., from McConnell, Valdés, Kelley & Sifre, San Juan, P. R., for plaintiff.

Benjamín Rodríguez Ramón, from Rodríguez Ema & Rodríguez Ramón, San Juan, P. R., for defendants.

OPINION AND ORDER

CANCIO, Chief Judge.

This case is before the Court on the motion of defendants to vacate the judgment entered in favor of plaintiff, First National City Bank (hereinafter City Bank), and other related motions. City Bank initiated this mortgage foreclosure action to recover amounts due under a bearer mortgage note payable on demand for the principal sum of $175,000.00 delivered in pledge by Antonio Gonzalez to City Bank. The note was issued by Antonio Gonzalez, acting personally and on behalf of his wife, defendant Ruperta Alcover. It was secured by a mortgage encumbering properties belonging to the conjugal partnership constituted by Antonio Gonzalez and defendant Ruperta Alcover. The mortgage appears in Deed No. 35 executed by Antonio Gonzalez, acting personally and on behalf of his wife Ruperta Alcover, before notary Wallace Gonzalez Oliver, on May 13, 1960. To act on behalf of his wife, Antonio Gonzalez relied on the authority granted by a General Power of Attorney executed by Ruperta Alcover in Deed No. 72 before notary Eric Milan Muñiz on October 31, 1959.

Defendant Antonio Gonzalez died intestate in Lares, Puerto Rico, on June 28, 1962. Defendants Pedro Antonio Gonzalez Alcover, Felipe Gonzalez Alcover, Nilda Rosa Gonzalez de Paraliticci, Juan Francisco Gonzalez Alcover, María Isabel González de Vazquez Tebar, Dr. Rafael Gonzalez Alcover and José Carmelo Gonzalez Alcover were included as his heirs. The corporate defendant Gonzalez & Co. Sucr. Corporation was the original debtor who received the loan of $174,825.22 from City Bank. City Bank was induced to make the loan by two continuing letters of guaranty through which Antonio Gonzalez, Ruperta Alcover, Pedro Antonio Gonzalez Alcover, Juan Francisco Gonzalez Alcover and Felipe Gonzalez Alcover personally guaranteed the payment of all obligations owing by said corporation to City Bank. The mortgage note subject of this foreclosure action was delivered in pledge as security for the personal indebtedness of Antonio Gonzalez and Ruperta Alcover under those continuing letters of guaranty.

On February 27, 1963 judgment was entered in favor of City Bank, pursuant to a stipulation executed and signed by the attorneys for the parties and by some of the individual defendants. One of the defendants, Juan Francisco Gonzalez Alcover, signed on behalf of defendant Ruperta Alcover and on behalf of those other defendants which were not signatories. The stipulation was executed on January 30, 1963 after extensive negotiations, during a period of five months, between the parties through their attorneys. In the Stipulation and the form of judgment made a part thereof it was stated that the mortgage subject of this action was valid, and that defendants consented to the entry of a judgment against them for the full amount of the claim of City Bank. The consent of defendants was given in consideration for the consent of City Bank to a plan of payment which allowed the defendants to pay their debt by monthly installments throughout seven years. The judgment provided for the foreclosure sale of the properties in the event of a default in the plan of payment.

In August of 1965 defendants defaulted in their plan of payment. The parties through their attorneys entered again into negotiations which resulted in a second stipulation, dated March 4, 1966. This second stipulation informed the Court for the first time that defendant Ruperta Alcover had been declared an incompetent on October 19, 1962, by the Superior Court of Puerto Rico, Caguas Section, and that defendant Juan Francisco Gonzalez Alcover had been appointed her tutor by said Court, and was later substituted by defendant Rafael Gonzalez Alcover. The stipulation requested that Rafael Gonzalez Alcover, the second tutor of Ruperta Alcover, be also appointed her Guardian Ad Litem pursuant to Federal Rule 17(c). Through a document attached to the stipulation, Rafael Gonzalez Alcover consented to his appointment as Guardian Ad Litem of Ruperta Alcover. He also consented and agreed that said appointment be made retroactive to one day before the date of the first stipulation for the entry of judgment and also ratified and confirmed the action of defendant Juan Francisco Gonzalez Alcover in signing said stipulation on behalf of Ruperta Alcover as constituting an action by him as Guardian Ad Litem at the time said stipulation was signed.

The above second stipulation and document were signed by counsel for the defendants and the tutor of Ruperta Alcover in consideration for the agreement of City Bank to grant a stay of execution of judgment for a period of six months during which the defendants would attempt to sell the encumbered properties and pay their debt to City Bank with the proceeds. Said agreement was contained in a letter signed on March 11, 1966 by counsel for the parties and Rafael Gonzalez Alcover, who signed personally and as the tutor of Ruperta Alcover, and it also provided for the foreclosure sale of the properties in the event that they were not sold and City Bank was not paid in full.

A hearing was held on the second stipulation and, by order of August 1, 1966, this Court approved the said stipulation and the consent of Rafael Gonzalez Alcover. Accordingly, judgment was amended and re-entered on September 20, 1966.

Since no sale was made by the defendants during the stay of six months granted to them, City Bank arranged to proceed with execution of judgment. The foreclosure sale was scheduled for June 9, 1967. On the day before that date defendants filed a Motion to Vacate the Judgment, claiming that Ruperta Alcover was an incompetent, completely insane or demented on May 13, 1960, when the mortgage subject of this action was executed by Antonio Gonzalez, acting personally and on behalf of his wife, Ruperta Alcover, and on October 31, 1959, when she executed the Power of Attorney authorizing Antonio Gonzalez to act on her behalf. Defendants also claimed that this Court lacked jurisdiction to approve the two stipulations described above, and lacked jurisdiction over the person of Ruperta Alcover.

Upon the posting of a bond by the defendants, the Court ordered a stay of the foreclosure sale until further order by the Court. On September 4, 1969 plaintiffs filed a motion for the summary dismissal of defendants' Motion to Vacate. Defendants filed a Cross-Motion for the Summary Grant of their Motion to Vacate. For the reasons given below, the Court denies both motions.

This Court had jurisdiction to appoint the second tutor as the Guardian Ad Litem of Ruperta Alcover and approve his ratification of the action of the first tutor in executing the stipulation of January 30, 1963. These matters were incidental and ancillary to the jurisdiction of the Court over this mortgage foreclosure action under the Banking Act of 1933, 12 U.S.C.A. § 632.

We find that service of process upon Ruperta Alcover was validly made under Federal Rule 4(d) (1). Service of process upon Ruperta Alcover was made through her daughter María Isabel de Vazquez Tebar, at the home of the daughter, on August 22, 1962. At that time Ruperta Alcover was living with her daughter, at her daughter's home. Incompetency proceedings in the Caguas Superior Court were to begin one month later. Defendants contend that personal service upon the incompetent and her tutor was required under Rule 4.4(c) of Civil Procedure for Puerto Rico. Defendants rest their contention on Federal Rule 4(d) (2) which, for service of process upon an incompetent, incorporates the law of the State in which service is made. However, Puerto Rico Rule 4.4(c), by its own terms, is applicable only as to those defendants who have been judicially declared incompetent or who are confined in an institution for the treatment of mental diseases. At the time service of process was made upon Ruperta Alcover she could not be included into either of those two categories. Process could not be delivered to her tutor as required by Puerto Rico Rule 4.4(c) because she had not been judicially declared an incompetent and a tutor had not been appointed. Even if Ruperta Alcover was an incompetent at the time service of process was made upon her, since there is no law in Puerto Rico governing service of process upon a judicially undeclared incompetent, we must revert back to Federal Rule 4(d) (1). In any event, Ruperta Alcover submitted to the jurisdiction of this Court through the appearance of her attorney and first tutor in the stipulation of January 30, 1963; through the appearance of her attorney and second tutor in the stipulation of March 4, 1966 and through the appointment of her second tutor as Guardian Ad Litem. Minors and incompetents may submit to the jurisdiction of a Court in Puerto Rico through the appearance of their tutors or through their personal appearance and the appointment by the Court of a Guardian Ad Litem. Such a submission cures any defects in the service of process. Mendez vs. Sucesion of Sella González, 62 P.R.R. 327; Trueba vs. Martínez, 33 P.R.R. 446. See also O'Conner vs. Western Freight Assn., D.C.N.Y. 1962, 202 F.Supp. 561. Furthermore, any defense of insufficiency of service of process was waived under Federal Rule 12(h).

The main contentions of defendants are that Ruperta Alcover was totally demented on October 31, 1959, when she executed the Power of Attorney, and on May 13, 1960, when the mortgage was executed by Antonio Gonzalez, and consequently, that both instruments were null and void; and that the Stipulations of January 30, 1963 and March 4, 1966, and the...