People of Puerto Rico v. Bank of Nova Scotia

• Decision Date: 18 December 1940
• Docket Number: No. 3607.,3607.
• Citation: 116 F.2d 379
• Parties: PEOPLE OF PUERTO RICO v. BANK OF NOVA SCOTIA.
• Court: U.S. Court of Appeals — First Circuit

116 F.2d 379 (1940)

PEOPLE OF PUERTO RICO v. BANK OF NOVA SCOTIA.

No. 3607.

Circuit Court of Appeals, First Circuit.

December 18, 1940.

William Cattron Rigby, of Washington, D. C. (George A. Malcolm, of San Juan, P. R., and Nathan R. Margold, of Washington, D. C., on the brief), for appellant.

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

Before MAGRUDER and MAHONEY, Circuit Judges, and PETERS, District Judge.

PER CURIAM.

This is an appeal from an order of the United States District Court for Puerto Rico approving the final report and accounting of a receiver, discharging the receiver and cancelling his bond.

The receiver had been appointed on October 20, 1936, to take over custody of, and to operate, the properties of Benitez Sugar Company and of the Comunidad Jose J. Benitez e Hijos. See Benitez v. Bank of Nova Scotia, 1 Cir., 110 F.2d 169, for the background of this somewhat complicated receivership. Pursuant to leave granted, the People of Puerto Rico, appellant herein, intervened and filed a "Proof of Secured and Priority Tax Claim". Subsequently the receivership was extended to cover two independent bills in the nature of ancillary suits, filed by the Bank of Nova Scotia, appellee herein, seeking foreclosure of mortgages on various properties of Benitez Sugar Company and of the Comunidad.

A decree in the consolidated cause was entered September 18, 1939. This decree adjudicated the specific amounts of the mortgage debts due the Bank, the amount of its mortgage lien on each piece of property, and the amount of taxes due appellant on the various parcels of land involved. The decree also determined that taxes in the amount of approximately $5,000 constituted a lien on the mortgaged property in preference to that of the mortgagee; but determined, further, that in respect to the greater part of appellant's claim for taxes, amounting to over $100,000, its lien was subordinate to that of the Bank. Payment of the mortgage debts by a date certain was ordered, in default of which it was decreed that the properties should be sold on foreclosure, free and clear of all liens, by a special master named in the decree. Provision was made for the distribution of the proceeds of this foreclosure sale. It was provided that if the Bank should be the successful bidder in this sale it could apply the mortgage debts to the payment of the purchase price; but if the amount of any accepted bid of the Bank be equal to or less than the amount of the mortgage debt on the property to which such bid referred, the Bank was required to pay in cash that part of the bid required to cover the expenses of the sale, the real estate taxes constituting a lien prior to that of the Bank, any unpaid indebtedness properly incurred by the receiver in operating the properties, and the compensation of the receiver. Paragraph O of the decree provided: "All questions, issues, matters and things not hereby disposed of are hereby reserved by the court for its further adjudication, and any party to this cause may at any time apply to the court for further relief at the foot of this decree in respect of any matters not herein specifically provided for. For the purpose of making any further order or decree in relation to any matter arising in connection with this decree, or any sale thereunder, the present term of this court is continued."

No appeal from this decree was taken by the People of Puerto Rico. Beyond question the decree was final and appealable in respect to the tax priorities asserted by the insular government. Central Trust Co. v. Grant Locomotive Works, 135 U.S. 207, 10 S.Ct. 736, 34 L.Ed. 97; Hoffman v. Knox, 4 Cir., 50 F. 484.

On December 26, 1939, which was during the next term of the District Court, the People of Puerto Rico filed a motion for reconsideration of the decree of September 18, 1939, so far as it denied the insular government the greater part of its asserted priority in respect to unpaid real estate taxes. This motion was based upon the contention that the decree in this particular was in conflict with the law as laid down in People of Puerto Rico v. Federal Land Bank, 1 Cir., 108 F.2d 275, decided by this court December 15, 1939. The District Court denied the motion for reconsideration, in an order dated January 31, 1940, on the following ground:

"Such a decree is clearly a final one for it determines the rights of the parties so that nothing is left to be done but the execution of its provisions. Affirmance of such a decree by the appellate court would end the suit and execution of the provisions thereof by this court would be all that remained to be done. The reservation in the decree for further directions simply related to such execution and cannot...