Martinez Moll v. Levitt & Sons of Puerto Rico, Inc., 77-1380

• Decision Date: 26 September 1978
• Docket Number: No. 77-1380,77-1380
• Citation: 583 F.2d 565
• Parties: Jose MARTINEZ MOLL et al., Plaintiffs, Appellees, v. LEVITT & SONS OF PUERTO RICO, INC., Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 565

583 F.2d 565

Jose MARTINEZ MOLL et al., Plaintiffs, Appellees, v. LEVITT & SONS OF PUERTO RICO, INC., Defendant, Appellant.

No. 77-1380.

United States Court of Appeals First Circuit.

Argued Feb. 13, 1978.

Decided Sept. 15, 1978.

As Amended Sept. 26, 1978.

Marshall S. Wolff, Los Angeles, Cal., with whom C. Stephen Howard, Marilyn Clare, and Tuttle & Taylor, Inc., Los Angeles, Cal., were on brief, for appellant.

Philip E. Roberts, Santurce, P. R., with whom Harry E. Woods and Woods & Woods, Santurce, P. R., were on brief, for appellees.

Before COFFIN, Chief Judge, MOORE ^* and CAMPBELL, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

Levitt & Sons of Puerto Rico, Inc. (Levitt-Puerto Rico) appeals from a judgment for $357,000 in a diversity action brought against it by plaintiffs-appellees Jose M. Martinez Moll and Inez Cartagena Latorre. Central to plaintiffs' case was section 3374 of the Civil Code of Puerto Rico, which provides in pertinent part:

"Contracts shall only be valid between the parties who execute them and their heirs, . . .

Should the contract contain any stipulation in favor of a third person, he may demand its fulfillment, provided he has given notice of his acceptance to the person bound before it may have been revoked."

P.R. Laws Ann. tit. 31 § 3374. Plaintiffs claimed that such a stipulation in their favor had been made in a contract between Levitt-Puerto Rico and Levitt & Sons of Bayamon, Inc. (Levitt-Bayamon), an affiliate of Levitt-Puerto Rico, for sale of real estate formerly owned by appellees. The jury returned a special verdict accepting this theory, and judgment was thereupon entered. Levitt-Puerto Rico has appealed.

On September 1, 1972, Levitt-Bayamon and appellees executed a public deed (Deed No. 38) for the purchase of appellees' 121 cuerda farm. ¹ Levitt-Bayamon paid part of the purchase price of $1,190,000 ² before executing the deed, and gave appellees five promissory notes secured by a mortgage on the property for the balance of the price. The notes, each in the amount of $178,500, were due on the first of September of 1973, 1974, 1975, 1976, and 1977, respectively. Each note contained the following clause:

"In case of default on the part of the undersigned under the aforementioned mortgage or under this mortgage note, The holder hereof shall have the right to look solely to the mortgaged property for the collection of any unpaid amounts due thereunder and The undersigned will not be personally liable." (Emphasis supplied.)

Levitt-Puerto Rico purchased the property from Levitt-Bayamon on February 7, 1975. The corporate affiliates made the transfer pursuant to a "Deed of Purchase and Sale and Assumption of Mortgage" (Deed No. 6), which contained the following language in its paragraph "THIRD":

"The Seller represents and warrants unto the Purchaser that the Property is completely free and clear of any and all charges, liens and encumbrances, Except for a purchase money mortgage which guarantees payment of five (5) promissory notes in the principal amount of . . . ($178,500.00), each. . . . Payments having been made of the same, the Seller obtained the originals of the first two aforesaid promissory notes and by Deed Number One . . . Seller cancelled the same and partially cancelled the mortgage which guaranteed payment of the same, thereby reducing said mortgage to the current outstanding balance of principal of . . . ($535,500.00)." ³ (Emphasis supplied.)

Paragraph "FOURTH" read:

"Having previously agreed thereon, the Seller hereby sells, transfers and conveys unto the Purchaser the Property together with all appurtenant rights . . . in fee simple absolute ("pleno dominio") under the following terms and conditions:

"A) The purchase price for the property is the sum of . . . ($1,320,798.79).

"B) The purchase price for the property is paid by the Purchaser to the Seller in the following manner: Purchaser hereby assumes the mortgage indebtedness described in paragraph THIRD above, with its present outstanding balance of principal of . . . ($535,500.00), retaining an equal amount from the purchase price to satisfy the same on its due date . . . .

"The parties hereto clarify that they have separately computed the interest due since the last payment of the principal to the date hereof and that the Seller has separately reimbursed the Purchaser for the same so that upon the due date of the next installment of principal The Purchaser will pay to the mortgagee the entire installment, including all accrued interest." (Emphasis supplied.)

Appellees maintained that, read in light of certain oral and written communications between the parties, appellant's assumption of the mortgage indebtedness and above promise to pay the mortgagee were intended to and did create personal liability on appellant's part for the remaining $535,500, despite the non-recourse provisions in the original notes between Levitt-Bayamon and appellees. Appellees styled the assumption of indebtedness in Deed No. 6 a "stipulation in favor of a third party" which appellees could enforce pursuant to the provisions of § 3374 of the Civil Code, Supra.

In August, 1975, Levitt-Puerto Rico informed appellees that it would not make payments on the last three promissory notes executed by Levitt-Bayamon, and offered to deed the remainder ⁴ of the property back to appellees. Appellees refused this offer and in October, 1975, brought an "action for collection of monies" in the district court, seeking to recover the balance of the debt from Levitt-Puerto Rico. ⁵

In a ruling on a pretrial motion, the district court held that the terms of Deed No. 6 (between Levitt-Puerto Rico and Levitt-Bayamon) were not conclusive of the existence of a stipulation to create personal liability to appellees. ⁶ Puerto Rican law therefore instructed that the intent of the contracting parties as proved by the acts of the parties should control the construction of the contract. P.R. Laws Ann. tit. 31, § 3471. ⁷ The focal inquiry at trial was thus whether Levitt-Puerto Rico "intended to increase Plaintiffs (-Appellees') original rights of payment by becoming personally liable to Plaintiffs when Defendant (-Appellant) acquired" the property from Levitt-Bayamon. The jury answered this query in the affirmative.

1. Sufficiency of the evidence

Appellant argues that there was not enough evidence to submit the question of its alleged intent to the jury. However, appellant never questioned the sufficiency of the evidence in this regard when moving for a directed verdict, on other grounds, at the close of all the evidence. ^** Fed.R.Civ.P. 50(b) therefore barred appellant's belated assertion of the question in a post-verdict motion for judgment n. o. v.; ⁸ and this court may not consider the sufficiency issue on appeal. LaForest v. Autoridad de las Fuentes Fluviales, 536 F.2d 443 (1st Cir. 1976); Sulmeyer v. Coca Cola Co., 515 F.2d 835, 846 & n. 17 (5th Cir. 1975), Cert. denied, 424 U.S. 934, 96 S.Ct. 1148, 47 L.Ed.2d 341 (1976); Gillentine v. McKeand, 426 F.2d 717, 722-23 (1st Cir. 1970); See 9 C. Wright and A. Miller, Federal Practice and Procedure: Civil § 2537 (1971).

Appellant counters that it would have been futile for it to have moved for a directed verdict on insufficiency grounds at the close of all the evidence. It describes how, after defendant-appellant rested, plaintiffs-appellees moved for a directed verdict, arguing that the evidence conclusively established Levitt-Puerto Rico's intention to assume the indebtedness and Martinez Moll's acceptance of the stipulation in his favor. In refusing to direct a verdict for plaintiffs, the court explained, "I think this a question of credibility in this case and based purely on the question of intention. . . ." Because the court's ruling on plaintiffs' motion purportedly indicated the court's intention to let the case go to the jury, appellant argues that it was unnecessary for it to make a motion for a directed verdict on the converse ground of insufficiency in order to preserve the issue for appeal. As further proof of the district court's intention to send the case to the jury, appellant refers us to the court's statement in considering its later motion for j. n. o. v.: "(S)ince the very time when the motion for summary judgment was brought before me (the case) came down to credibility issues. . . . (T)hese are classical issues for a jury and there was evidence sufficient on the record for the jury to . . . conclude . . . that there was an assumption of all the obligations (under the notes)."

However, plaintiffs' motion for directed verdict and the court's statements did not relieve appellant of the duty to file a separate motion of its own. The purpose of the Rule 50(b) requirement is to alert the opposing party to the movant's claim of insufficiency before the case goes to the jury, so that his opponent may possibly cure any deficiency in his case should the motion have merit, and also so that the judge may rule on the adequacy of the evidence without impinging on the jury's fact-finding province. See Sulmeyer v. Coca Cola Co., supra at 846 n. 17; 5A Moore's Federal Practice P 50.08 at 50-88 (1977). Defendant did nothing before verdict to alert either the plaintiffs or the court that it challenged the legal sufficiency of the evidence of intent. Plaintiffs' own motion for directed verdict did not serve this purpose, nor could the court's denial of plaintiffs' motion constitute a ruling on whether or not there was sufficient evidence to go to the jury. Whether to direct a verdict for a plaintiff is an altogether different question from whether a plaintiff's evidence is strong enough to survive a defense motion. A verdict seldom is directed for a plaintiff even on very strong evidence. The purposes of Rule 50(b) would be subverted were one party's motion for directed verdict to serve as his opponent's release from the Rule's requirement.

It is true that the court's remarks...