Edward Douglass White

“ The holder of the mortgage on the leased property having commenced executory proceedings to foreclose, Van Syckel sued in the provisional court created by the American military authority to enjoin on the ground of an alleged fraudulent combination between the debtor and creditor by foreclosure of the paramount mortgage to wipe out the lease and impliedly, on the further ground that, having an interest, as lessee, in paying the paramount mortgage debt, he was entitled to do so and take a creditor's legal subrogation. ”

“ The inclusion among the transferred assets of the debt secured by mortgage upon the Santa Cruz property, and the dominancy of that debt as to the lease, in and of itself creates obscurity as to whether, by the transfer of the paramount right, it was not contemplated to also pass to the firm the subordinate lease right, and that ambiguity becomes more apparent when it is considered that the established business was carried on by means of the Santa Cruz property, and that possession of that property was necessarily a prerequisite to the continued conduct of the business. ”

“ So, also, unless the firm owned the lease, it would have no interest to subordinate the mortgage to the lease, and in the event the right of legal subrogation was exercised and the mortgage, by operation of law, passed to a third person, such person, unless the partnership owned the lease, would hold the mortgage as paramount to the lease, and therefore have the power to destroy it. ”

“ We say this because in the first place the property, one half of which was bought from Van Syckel by Sobrinos de Ezquiaga, and the whole of which was then put by the joint owners into the firm as its sole capital in trade, on the face of the paper appeared to be an inventory of the assets and property of a pre-existing business, which, from the nature and character of a large part of the tangible property sold, was a dairy and cattle business. ”

“ In June, 1900, before a notary, Van Syckel and the firm of Sobrinos de Ezquiaga, an established and reputable commercial firm, formed a partnership styled P. Van Syckel & Company. The act recited that Van Syckel was the owner of enumerated property, viz.: a small farm, a lot of cattle 'as per inventory,' a lot of personal property, constituting the plant of a dairy, such as cans, bottles, milk straining apparatus, carts, milk wagons, etc., etc., and besides a mortgage paper secured on the Santa Cruz plantation, inventoried at about 11,000 pesos ”

“ This leaves only for consideration the contention that the action of the court was erroneous because it gave effect to fraud and deceit, and enabled the defendants to recover by alleging their own turpitude. Before we approach that subject, however, we dispose of another matter to which considerable attention was devoted in the argument at bar. ”