People of Puerto Rico v. Rubert Hermanos 8212 1942, No. 96

CourtUnited States Supreme Court
Writing for the CourtBYRNES
Citation315 U.S. 637,86 L.Ed. 1081,62 S.Ct. 771
Docket NumberNo. 96
Decision Date16 March 1942
PartiesPEOPLE OF PUERTO RICO v. RUBERT HERMANOS, Inc., et al. Argued Feb. 6—9, 1942

315 U.S. 637
62 S.Ct. 771
86 L.Ed. 1081
PEOPLE OF PUERTO RICO

v.

RUBERT HERMANOS, Inc., et al.

No. 96.
Argued Feb. 6—9, 1942.
Decided March 16, 1942.

Page 638

Mr. Wm. Cattron Rigby, of Washington, D.C., for petitioner.

Mr. Henri Brown, of San Juan, P.R., for respondents.

Mr. Justice BYRNES delivered the opinion of the Court.

By Joint Resolution of May 1, 1900, the Congress provided that 'every corporation hereafter authorized to engage in agriculture (in Puerto Rico) shall by its charter be restricted to the ownership and control of not to exceed five hundred acres of land.'1 This limitation was carried over into the present Organic Act of Puerto Rico enacted on March 2, 1917.2 In 1935 the Legislative Assembly of Puerto Rico enacted two laws to provide the means of enforcing the Congressional prohibition. Act No. 33 conferred upon the Supreme Court of Puerto Rico exclusive original jurisdiction over quo warranto proceedings instituted for violations of the 500 acre law.3 Act No. 47 authorized the Attorney General of Puerto Rico or any district attorney to bring such quo warranto proceedings in the Supreme Court of Puerto Rico against any corporation violating the Organic Act, and provided further that when any corporation is 'unlawfully holding * * * real estate in Puerto Rico, the People of Puerto Rico may, at its option, through the same proceedings, institute in its behalf the confiscation of such property,

Page 639

or the alienation thereof at public auction, within a term of not more than six months counting from the date on which final sentence is rendered.'4

This is a quo warranto proceeding brought in 1937 against respondent corporation by the Attorney General of Puerto Rico under these statutes. The complaint alleged that respondent corporation was organized in 1927 under the laws of Puerto Rico for the purpose of acquiring and working sugar cane farms and plantations, that its articles of incorporation restricted it to the acquisition of 500 acres, that it nevertheless had acquired, and that it owned and was working at the time of the filing of the complaint, some 12,188 acres of land. The answer conceded that the 500 acre restriction was contained in the articles and that the respondent had nevertheless acquired the 12,188 acres, but interposed several defenses. On July 30, 1938 the Supreme Court of Puerto Rico entered judgment for the petitioner. It ordered 'the forfeiture and cancellation' of the license and articles of incorporation of respondent, 'the immediate dissolution and winding up of the affairs' of the corporation, and the payment of a $3000 fine and costs. On the same day, petitioner moved that a receiver be appointed to handle the dissolution and disposition of the respondent's property, pursuant to subsections 4 and 5 of § 182 of the Puerto Rico Code of Civil Procedure.5

Page 640

The motion for the appointment of a receiver was held in abeyance pending an appeal to the Circuit Court of Appeals for the First Circuit. That Court reversed the judgment of the Supreme Court of Puerto Rico on the ground that Acts Nos. 33 and 47 exceeded the authority of the Legislative Assembly under the Organic Act. 106 F.2d 754. We granted certiorari, 309 U.S. 642, 60 S.Ct. 467, 84 L.Ed. 996, and on March 25, 1940 reversed the judgment of the Circuit Court of Appeals and reinstated that of the Supreme Court of the Island. 309 U.S. 543, 60 S.Ct. 699, 84 L.Ed. 916.

The mandate of this Court reached the clerk of the Supreme Court of Puerto Rico on May 13. On the same day the Attorney General entered a request for a hearing on petitioner's pending motion for the appointment of a receiver. The respondent then filed its answer and briefs were submitted by both parties. In its answer and brief respondent raised numerous objections to the appointment of a receiver. Chief among these objections were: (a) that on March 28, 1940, respondent corporation had been dissolved by vote of its stockholders and its property conveyed to a partnership consisting of all the stockholders, so that nothing remained to be done; and (b)

Page 641

that the statutes applicable to this case are certain sections of the Private Corporations Law6 rather than § 182

Page 642

of the Code of Civil Procedure,7 that under the terms of the former 'the directors shall be the trustees * * * pending the liquidation' of any dissolved corporation, and that the court was consequently without jurisdiction to appoint a receiver under § 182. The insular court resolved all the issues in petitioner's favor, appointed a receiver of all the property of the respondent, and directed the receiver to handle the property as a going concern until the People of Puerto Rico should exercise the option granted to them by § 2 of Act No. 47 of August 7, 1935 either to confiscate the real estate unlawfully held by respondent or to have it sold at public auction.8

Page 643

From this order respondent took a second appeal to the Circuit Court of Appeals, making the two contentions which have been noted as well as many others which require no discussion here. The Circuit Court of Appeals disposed of several of these contentions unfavorably to the respondent. However, it reversed the judgment of the Supreme Court of Puerto Rico on the ground that the order appointing the receiver was 'improvidently issued'. In the opinion of the Circuit Court, §§ 27, 28 and 30 of the Private Corporation Law are unquestionably applicable to the dissolution of a corporation by court order as a result of a violation of its charter and the laws, although the insular court had declared them 'applicable only to a voluntary dissolution agreed upon by the shareholders of a corporation or by expiration of the term fixed for its duration.' With respect to § 182 of the Code of Civil Procedure, upon which the lower court relied, the Circuit Court of Appeals determined that it permitted the appointment of a receiver only 'upon proper showing by an interested party, agreeably to the usages of courts of equity.' It concluded that the option granted by Act No. 47 of 1935 did not afford the People of Puerto Rico an interest sufficient for this purpose. It observed that the option relates only to the excess acreage, whereas the order had sought to place the receiver in charge of all the property of the respondent, both real and personal. If the People of Puerto Rico should elect to have the land sold at public auction,9 the Circuit Court asserted, a master can be appointed for that purpose, and in the meantime a

Page 644

notice of lis pendens which was filed with the Registry of Property will prove adequate to protect the People's interest.

The Circuit Court's opinion leaves it uncertain whether it meant to hold that the insular court wholly lacked power to appoint a receiver for a judicially dissolved corporation or merely that it abused its discretion in this case. In any event, the questions for our determination seem to be these: (1) does it lie within the power of the Supreme Court of Puerto Rico to appoint a receiver for the assets of a corporation whose dissolution has been judicially ordered because it has violated its articles of incorporation and the laws of Puerto Rico and the United States; (2) did that court abuse its discretion in appointing a receiver under the circumstances of this case; and (3) did the scope of the order exceed the court's authority?

...

To continue reading

Request your trial
6 practice notes
  • De Castro v. Board of Com Rs of San Juan, No. 349
    • United States
    • United States Supreme Court
    • May 29, 1944
    ...Diaz v. Gonzales, 261 U.S. 102, 105, 43 S.Ct. 286, 287, 67 L.Ed. 550, unless 'plainly incorrect', Puerto Rico v. Rubert Hermanos, Inc., 315 U.S. 637, 646, 62 S.Ct. 771, 776, 86 L.Ed. 1081. In other cases, in affirming the decision of the local court, we have said that we will accord to its ......
  • Buscaglia v. District Court of San Juan, No. 4022.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • January 2, 1945
    ...of the highest state courts, Rubert Hermanos, Inc., v. People of Puerto Rico, 1 Cir., 118 F.2d 752, 757, reversed on other grounds 315 U.S. 637, 62 S.Ct. 771, 86 L.Ed. 1081; Cosme v. Marquez, 1 Cir., 94 F.2d 908, 910, and cases cited, and from this it follows that decisions of the Supreme C......
  • Ballester-Ripoll v. Court of Tax Appeals of PR, No. 3918.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • April 5, 1944
    ...Puerto Rico on a question of local law only if that judgment is "inescapably wrong". Puerto Rico v. Rubert Hermanos Co., 1942, 315 U.S. 637, 62 S.Ct. 771, 86 L.Ed. 1081; Bonet v. Texas Co., 1940, 308 U.S. 463, 60 S.Ct. 349, 84 L.Ed. 401; Sancho Bonet v. Yabucoa Sugar Co., 1939, 30......
  • South Porto Rico Sugar Co. v. Buscaglia, No. 4091.
    • United States
    • U.S. Court of Appeals — First Circuit
    • March 6, 1946
    ...De Castro v. Board of Commissioners of San Juan, 322 U.S. 451, 64 S.Ct. 1121, 88 L.Ed. 1384; Puerto Rico v. Rubert Hermanos Co., 315 U.S. 637, 646, 62 S.Ct. 771, 86 L.Ed. 1081; Bonet v. Texas Co., 308 U.S. 463, 60 S.Ct. 349, 84 L.Ed. 401. The Legislature of Puerto Rico might have intended t......
  • Request a trial to view additional results
6 cases
  • De Castro v. Board of Com Rs of San Juan, No. 349
    • United States
    • United States Supreme Court
    • May 29, 1944
    ...Diaz v. Gonzales, 261 U.S. 102, 105, 43 S.Ct. 286, 287, 67 L.Ed. 550, unless 'plainly incorrect', Puerto Rico v. Rubert Hermanos, Inc., 315 U.S. 637, 646, 62 S.Ct. 771, 776, 86 L.Ed. 1081. In other cases, in affirming the decision of the local court, we have said that we will accord to its ......
  • Buscaglia v. District Court of San Juan, No. 4022.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • January 2, 1945
    ...of the highest state courts, Rubert Hermanos, Inc., v. People of Puerto Rico, 1 Cir., 118 F.2d 752, 757, reversed on other grounds 315 U.S. 637, 62 S.Ct. 771, 86 L.Ed. 1081; Cosme v. Marquez, 1 Cir., 94 F.2d 908, 910, and cases cited, and from this it follows that decisions of the Supreme C......
  • Ballester-Ripoll v. Court of Tax Appeals of PR, No. 3918.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • April 5, 1944
    ...Puerto Rico on a question of local law only if that judgment is "inescapably wrong". Puerto Rico v. Rubert Hermanos Co., 1942, 315 U.S. 637, 62 S.Ct. 771, 86 L.Ed. 1081; Bonet v. Texas Co., 1940, 308 U.S. 463, 60 S.Ct. 349, 84 L.Ed. 401; Sancho Bonet v. Yabucoa Sugar Co., 1939, 30......
  • South Porto Rico Sugar Co. v. Buscaglia, No. 4091.
    • United States
    • U.S. Court of Appeals — First Circuit
    • March 6, 1946
    ...De Castro v. Board of Commissioners of San Juan, 322 U.S. 451, 64 S.Ct. 1121, 88 L.Ed. 1384; Puerto Rico v. Rubert Hermanos Co., 315 U.S. 637, 646, 62 S.Ct. 771, 86 L.Ed. 1081; Bonet v. Texas Co., 308 U.S. 463, 60 S.Ct. 349, 84 L.Ed. 401. The Legislature of Puerto Rico might have intended t......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT