FIRST
DIVISION
PEDRO
MARTINEZ,
Plaintiff-Appellant,
G.
R.
No. 7663
October
20, 1913
-versus-
MATIAS
CAVIVES,
ET AL.,
Defendants-Appellees.
ROBERT
LINEAU,
ADMINISTRATOR,
Intervener-Appellant.
D
E C I S I
O N
TRENT,
J:
Pedro Martinez, the plaintiff
in this case, seeks to recover from Matias Cavives and Severino
Cavives,
the defendants, on some promissory notes executed by them in 1896. The
first note, in the sum of $4,317.15 Mexican currency, was executed on
April
8 of that year, and was jointly signed by them and their brother,
Carlos
Cavives, now deceased. The note calls for interest at ten per cent
annum.
Matias Cavives obtained $300 on April 30 $200 on May 30 and $200 on
June
7 of that year, and Severino Cavives, $600 on June 9 [all Mexican
currency],
each of which stipulated that the sums mentioned therein had been
borrowed
under the same terms and conditions as were expressed in the joint
obligation
of the three brothers above mentioned. The due execution of all these
notes
is admitted. None of these notes were ever paid by any of the three
brothers.
On June 14, 1898, the deceased brother Carlos entered into an agreement
with the plaintiff whereby all the obligations contracted by the three
brothers during the year 1896 were liquidated and a new note was
executed
and signed by these two parties (Exhibit 4), its amount, $9,483,5
reales,
17 cuartos, purporting to include the principal and interest at the
specified
rate up to the date of its execution. The evidence of record shows that
Carlos Cavives, in executing this note, agreed to obtain the signatures
of his brothers to it, but this was never done. During the settlement
of
the estate of the deceased Carlos, an agreement was entered into by his
widow and Pedro Martinez, whereby the latter agreed to accept P3,000 in
full satisfaction of his claim against her husband's estate, a sum
considerably
less than the principal and accumulated interest of the original notes.
A note [Exhibit 5] was executed under these conditions, whereby the
widow
was to pay its face value in annual installments.
The contention of the
defendants, sustained by the Court below, was that the original
obligations
had been novated by the agreement made in 1898 between Carlos Cavives
and
Pedro Martinez. It was held that as either party to this agreement
exercised
proper diligence in securing the signatures of the other brothers,
there
was a tacit consent to permit the obligation to stand as a debt against
Carlos Cavives alone. The fact that the compromise settlement made
between
the plaintiff and the widow of Carlos Cavives made no mention of the
amounts
borrowed by Matias and Severino Cavives was deemed by the court further
proof of the intention of the plaintiff to novate the debts of the
three
brothers and hold only Carlos liable for their payment.
Article 1205 of the
Civil Code reads as follows: "Novation, consisting in the substitution
of a debtor in the place of the original one, may be made without the
knowledge
of the latter, but not without the consent of the creditor."
So far as Exhibit 4
is concerned, it cannot be presumed that the plaintiff considered the
liability
of Carlos alone as better than the liability of all three of the
brothers,
since Carlos promised, at his request, to secure the signatures of his
brothers to this document. Nor can it be presumed, in the absence of
evidence,
that there was any consideration present to induce Carlos to assume
what
was theretofore strictly a liability of his brothers. So that to
construe
Exhibit 4 to the effect that by its terms Carlos was substituted as the
sole debtor of the plaintiff would mean that the latter accepted less
security
for his loans than he originally had, and that the former assumed
liabilities
which he was under no obligation to assume and for which he was no
valid
consideration. At the time this instrument was executed, then, it was
not
the intention of either of the signers to release these defendants as
debtors
of the plaintiff. As to the subsequent silence of both parties to this
agreement, We do not consider that it was, at least so far as the
plaintiff
was concerned, of any significance. He signed Exhibit 4 at the time
Carlos
Cavives signed it on the condition that the latter would secure the
signatures
of his two brothers to it, thereby creating a joint obligation against
the three. Carlos Cavives never secured the signatures of his brothers.
The contract in question contained mutual obligations which were to be
fulfilled by each of the signers, i.e., on the part of Carlos to secure
the signatures of his brothers to the instrument, and then on the part
of the plaintiff to recognized it as a joint obligation of the three
brothers
covering their indebtedness to him.
The last paragraph
of Article 1100 of the Civil Code reads as follows: "In mutual
obligations,
none of the persons bound shall incur default if the other does not
fulfill
or does not submit to properly fulfill what is incumbent upon him. From
the time one of the persons obligated fulfills his obligation, the
default
begins for the other party."
Until Carlos obtained
the signatures of his brothers to this instrument, We cannot say that
the
plaintiff was in any way bound to acknowledge it as anything more than
an executory contract containing a condition precedent which was to be
performed by Carlos Cavives before his [the plaintiff's] obligation was
due. Mere continued silence on his part could signify nothing until the
signatures of the two brothers had been secured. As further indication
that this contract [Exhibit 4] was not considered as discharging the
original
obligation of the defendants in this case, it may be noted that the
plaintiff
has never surrendered, nor was he ever called upon to surrender so far
as this record shows, the original promissory notes executed by these
defendants.
They are still in his possession. Up to the time of the compromise
settlement
between the plaintiff and the widow of Carlos, at least, there is not a
scintilla of evidence to show that either party to the contract of 1898
considered it as a discharge of the original debtors, Severino and
Matias
Cavives. The compromise settlement with the widow of Carlos, Exhibit 5,
is relied upon to show novation. In this document, plaintiff makes the
settlement, in effect, that the whole sum of the liquidated obligation
of the brothers set forth in Exhibit 4 was a liability against the
estate
of Carlos. It is urged that this shows the plaintiff's intention to
novate
the debt by substituting Carlos as his sole debtor in lieu of the
defendants.
There is one fact which points strongly against this conclusion. That
is,
that the present action against these defendants was instituted some
months
previous to the date of the compromise settlement and has been
prosecuted
by the plaintiff with due diligence ever since its institution. But
admitting,
for the moment, that by this compromise settlement he was desirous of
so
substituting Carlos as his sole debtor in lieu of the defendants, it
does
not by any means follow that he could do so without the consent of
Carlos.
The consent of the new debtor is as essential to the novation as is
that
of the creditor. As We have seen, there is nothing to show that Carlos
ever consented to such an arrangement. Indeed, the evidence is all the
other way. A mere recital that he had so consented to accept full
liability
for the debts of his brothers, especially after his death, would not be
sufficient to establish the fact. But We cannot believe that this
statement
was intended to have any such meaning by the plaintiff in view of the
fact
that at the time it was made he was actively prosecuting a suit against
the brothers who were originally liable as his debtors, and the further
fact that the total amount due him, including interest, was greatly in
excess of the sum due him in 1898.
Furthermore, the
position
taken by these defendants in their Amended Answer is diametrically
opposed
to the defense of novation. In that Amended Answer, they say: "That
these
defendants have never refused to pay the proportion of the total amount
borrowed which they justly owe, that is, one-third of it, to Don
Francisco
Martinez, or his executor or administrator, or to all of his heirs, but
they do refuse to pay to one of the heirs what belongs to all of them."
Article 1204 of the
Civil Code reads: "In order that an obligation may be extinguished by
another
which substituted it, it is necessary that it should be so expressly
declared,
or that the old and new be incompatible in all points."
In its Decision of
December 31, 1904, the Supreme Court of Spain said: "Novation of
contracts
cannot be presumed in any case unless it is a necessary result of the
express
will of the parties, or that the old and the new obligations are
incompatible
in all points."
To the same effect
is its Decision of January 25, 1899. In its Decision of March 14, 1908,
that High Court said [quoting from the syllabus]: "It is not proper to
consider an obligation novated by unimportant modifications which do
not
alter its essence and when it is not extinguished by another which
takes
its place or substitutes the person of the debtor." To the same effect
are the Decisions of April 15, 1909, and July 8, 1910.
In Latiolais, Admrx.
vs. Citizens' Bank of Louisiana [33 La. Ann., 1444], one Duclozel
mortgaged
property to the defendant band for the triple purpose of obtaining
shares
in the capital stock of the bank, bonds which the bank was authorized
to
issue, and loans to him as a stockholder. Duclozel subsequently sold
this
mortgaged property to one Sproule, who, as one of the terms of the
sale,
assumed the liabilities of his vendor to the bank. Sproule sold part of
the property to Graff and Chalfant. The debt becoming due, the bank
brought
suit against the last two named persons and Sproule as owners. Duclozel
was not made a party. The bank discontinued these proceedings and
subsequently
brought suit against Latiolais, administratrix of Duclozel, who had
died.
The Court said:
"But the plaintiff
insists that in its petition in the proceeding first brought the bank
ratified
the sale made by Duclozel to Sproule, and by the latter to other
parties,
in treating them as owners. Be that so, but it does not follow, in the
absence of either a formal and express or of an implied consent to
novate,
which should be irresistibly inferred from surrounding circumstances,
that
it has discharged Duclozel unconditionally, and has accepted those
parties
as new delegated debtors in his place. Nemo presumitur donare.
"Novation is a
contract,
the object of which is: either to extinguish an existing obligation and
to substitute a new one in its place; or to discharge an old debtor and
substitute a new one to him; or to substitute a new creditor to an old
creditor with regard to whom the debtor is discharged.
"It is never
presumed.
The intention must clearly result from the terms of the agreement or by
a full discharge of the original debt. Novation by the substitution of
the new debtor can take place without the consent of the debtor, but
the
delegation does not operate a novation, unless the creditor has
expressly
declared that he intends to discharge with delegating debtor, and the
delegating
debtor was not in open failure or insolvency at the time. The mere
indication
by a debtor of a person who is to pay in his place does not operate a
novation. Delegatus debitor est odiosus in lege.
"The most that could
be inferred would be that the bank in the exercise of a sound
discretion,
proposed to better its condition by accepting an additional debtor to
be
and remain bound with the original one."
In
Fidelity L. & T.
Co. vs. Engleby (99 Va., 168), the Court said: "Whether or not a debt
has
been novated is a question of fact and depends entirely upon the
intention
novated. In the absence of satisfactory proof to the contrary, the
presumption
is that the debt has not been extinguished by taking the new evidence
of
indebtedness; such new evidence, in the absence of an intention
expressed
or implied, being treated as a conditional payment merely."
In Hamlin vs. Drummond
[91 Me., 175; 39 A., 551], it was said that novation is never presumed
but must always be proven. In Netterstorm vs. Gallistel [110 Ill. App.,
352], it was said that the burden of establishing a novation is on the
party who asserts its existence; that novation is not easily presumed;
and that it must clearly appear before the court will recognize it.
There is no express
stipulation in any of the documents of record that the obligation of
the
defendants was novated, and the parole evidence tending to show that it
was novated is not sufficient in law to establish that fact.
During the progress
to this case, Robert Lineau, administrator of the estate of Francisco
Martinez,
father of the plaintiff, intervened claiming that the obligations of
the
defendant were justly due to the estate of the said Francisco Martinez.
The notes themselves [Exhibit G] make no mention whatever of Francisco
Martinez, nor is there any evidence upon which the relation of
principal
and agent between Francisco Martinez and Pedro Martinez could be
predicated.
The notes must therefore be declared the sole property of the
plaintiff,
and the intervener's claim must be denied.
For the foregoing
reasons,
it is hereby ordered that the defendants Severino Cavives and Matias
Cavives,
comply with their obligations as set forth in Exhibit G, by the payment
of the principal and interest thereon at the rate of ten per cent per
annum
as called for in the said notes, from the date of their execution up to
the full satisfaction of the judgment in this case. It is understood
that
as to the first note signed by the three brothers, these defendants are
each liable for one-third of its principal and accumulated interest;
that
Matias Cavives is alone liable for the notes executed by him of April
30th,
May 30th , and June 7th, 1896, whose amounts are $300, $200, and $200,
respectively; and that Severino Cavives is alone liable for the note of
June 9, 1896, signed by him, amounting to $600.
The judgment appealed
from is reversed and in accordance with Sections 3, 4, and 5 of Act No.
1045, and the Decision of this Court in Urbano vs. Ramirez [15 Phil.
Rep.,
371], the record will be returned to the Court below and a new trial
will
be had for the sole purpose of ascertaining, after due hearing, the
present
actual value of Mexican money as compared with Philippine currency, in
order to reduce the debt to Philippine currency. Final judgment will
then
be entered against the defendant in accordance with this decisions.
Without
costs.
Arellano, C.J.,
Torres, Johnson, Carson and Moreland, JJ., concur. |