Rivera v. Heirs of Díaz Luzunaris

Mr. Chief Justice de .Jesús delivered the opinion of the Court. Ramón Pastor Diaz Molinari died on November 4, 1939, leaving an estate of approximately $600,000. His sole and universal heirs were his legitimate son Ignacio Díaz Luzu-naris, his acknowledged natural son Ramón Diaz Rivera,1 a-nd his widow Eustacia Luciano Maldonado. On February 28, 1940 the natural son effected a contract of settlement with his brother before Notary Adolfo Porrata Doria, whereby the former settled all his rights to his share in his father’s estate for the sum of $10,000. To annul this settle — 171 — ment, on January 26, 1945, Ramón Díaz Rivera, who had been previously declared incapacitated to manage his property on the ground of insanity, brought this action, represented by his tutrix his mother Josefa Rivera, against Ignacio Díaz Luzunaris.2 He alleged that at the time the deed "of settlement was executed .he-was mentally unsound and for that reason incompetent to give the consent for the existence of a contract, required by § 1218 of the Civil Code.3 In his answer the defendant denied the mental incapacity of the plaintiff. He alleged that the complaint did not adduce facts sufficient to constitute a cause of action; that the plaintiff was estopped from invoking his incapacity because in the filiation suit, wherein he obtained judgment on the same day he settled his hereditary rights, plaintiff appeared without being represented by a guardian, which according to defendant, induced him to believe that he had the capacity 'to execute a contract. Finally, he alleged that the action was barred because at the time the complaint was filed, more than four years had elapsed from the consummation of the contract of settlement. The lower court wrote an extensive opinion overruling all the defenses advanced by the defendant. It summarized the testimony of each witness of both parties and after setting forth its findings of fact, it reached the conclusion that the consent given by the plaintiff, who was a mental weakling, — 172 — was void because of the undue influence that certain persons, among them his own attorney, had exerted upon him. On this ground it declared the settlement void and consequently rendered judgment for the plaintiff.4 We can not agree with the lower court that the, settlement is void on the ground that it was obtained by “undue influence”. The doctrine of undue influence of the common law, with the distinction that we shall shortly discuss, is encompassed within the broad range of “deceit” in the Civil Law, embodied in § 1221 of the Civil Code as follows: “There is deceit when by words or insidious machinations on the part of one of the contracting parties the other is induced to execute a contract which without them he would not have made.” (Italics ours.) Commenting on § 1269 of the Spanish Civil Code, equivalent to our § 1221 and referring to serious deceit (dolo causante),5 Manresa says: “The essence of this type of deceit is found in the fraud which obtains the consent of the deceived person, wringing it from him or at least influencing him. This is the meaning of the words 'or insidious machinations’ to which the statute refers and which encompass false promises, the exaggeration of hopes or benefits, embezzlement, misrepresentation of name, capacity or poioer, a thousand ways, in short, of deceit that may induce a contracting party, producing a vitiated consent. . .” Manresa, Comentarios al Código Civil Español, vol. 8, (2d ed. 1907), p. 657. (Italics ours.) — 173 — Let us now compare the deceit of the Civil Law with “undue influence”, as defined in II Restatement of the Law of Contracts, § 497, p. 954 et seq.: “Where one party is under the domination of another, or by virtue of the relation between them is justified in assuming that the other party will not act in a manner inconsistent with his welfare, a transaction induced by unfair persuasion of the latter, is induced by undue influence and is voidable.” It suffices to read .Manresa’s commentary in order to note that the words “or insidious machinations”, within their meaning in the Spanish Civil Law, include the undue influence of the common law. The distinction which we pointed out previously consists in that, under the Civil Law, when the deceit is exercised by a person who is not a party or does not act with the consent or at least with the knowledge, without objection, of the party benefited, the contract is perfectly valid. Naturally, the prejudiced party may claim damages from the third person who deceived him. This doctrine rests on the theory that in spch a case the two contracting parties act in good faith and there is no reason for imposing on one of them the consequences of the acts of a third person, whom the other party mistakenly trusted. Nevertheless, Manresa says that the deceit of a third person may cause the nullity of the contract when this deceit results in error by the party deceived. In this case it is the error and not the deceit that vitiates the consent. Manresa, op. and vol. cit., p. 854. But whether the consent is vitiated by deceit or by error, the contract is merely voidable. On the other hand, under the common law, the undue influence even -when caused by a third person who is in no way benefited by the contract, vitiates the consent even though without the participation or knowledge of the benefited party. See Annotation, 96 A.L.R. 613. But our discrepancy is not merely a question of semantics. Whether we adopt the name used in the doctrine — 174 — of the common law or whether we use the appellation given to it under the Civil Law, the fact is that under our Civil Code, if there is deceit, the contract is not void but voidable. And the action for its annulment prescribes four years after the consummation of the contract, as provided by § 1253 of the Civil Code. So that even if we should agree with the conclusion of the lower court that the settlement is void because of undue influence, which is one of the numerous facets of deceit as defined in § 1221 of the Civil Code,6 we would have to reverse the judgment and dismiss the complaint, for the reason that at the time it was filed more than four years had elapsed after the consummation of the contract, and for the additional reason that the court did not find that the person who exerted the undue influence acted with the knowledge or consent of the defendant. In the instant case we have seen, and it was held by the lower court, that the consideration for the settlement was “ridiculously inadequate”.7 It is clear that the isolated fact that the consideration for a contract is grossly inadequate is not in itself sufficient evidence to show that the prejudiced party lacked the necessary mental capacity to give his consent, which is an indispensable requisite for the existence of a contract. But there is no doubt that grossly inadequate consideration is an important factor in persuading the courts to examine the condition of the prejudiced party in order to determine whether in effect he is mentally incompetent as alleged in the complaint herein. Before proceeding to an examination of the evidence it is desirable-to establish the legal test for determining whether valid consent was given. Section 1215 of the Civil Code provides that lunatics or the insane can not give con — 175 — sent. It is appropriate to pose this question: Is the insane or demented person as defined in § 1215 of the Civil Code, also insane from the point of view of a psychiatrist, as understood by the lower court? This is not the test for determining contractual capacity. The rule to be followed in civil cases is to determine whether the party, mentally ill by reason of his disease, has sufficient mental capacity to understand the particular transaction before him, considered in all its aspects. The party may be insane from the standpoint of the psychiatrist, and yet be mentally competent to understand the scope of a particular transaction. Hence, § 180 of the Civil Code, .in dealing with the tutorship of insane persons, provides that a tutor shall not be appointed for insane or demented persons, when of age, without a previous declaration that they are incapable of administering their property. This logically implies that a tutor may not bé appointed for an insane person who is competent to administer his property. If the statute prohibits the appointment of a tutor for a person who is competent to administer his property, we must conclude that this is so because it recognizes his legal capacity to contract. For this reason, in commenting on § 1213 of the Spanish Civil Code, equivalent to § 180 of our Code, Manresa, says: “The exception made by this Section is perfectly logical. It must first be proved that there is need of a tutorship, and it is clear that such tutorship is not necessary unless the insanity, mental derangement or deaf-muteness is of such a degree as to render the patient incompetent to administer his property, which fact must be legally established.” Yol. 2 (3d ed. 1907), pp. 203-4. And to that same effect, Scaevola says: “The same is true of the insane person who is not violent . . ., of a monomaniac who is self-controlled and a good administrator of his property, and who only departs from the natural trend of thought or emotion when the mania exerts its influence on his intellect. Why should this person be subjected — 176 — to a permanent tutorship if he is capable of administering his affairs ? To be sure, -his relatives who are authorized by law to apply for a declaration of incapacity would, upon noticing that he squandered his money or neglected his estate because of his insanity, promptly exercise their rights. “A judicial declaration of insanity entails such transcendental consequences that a legal proceeding, with complete proof of said incapacity, has always been required.” Scaevola, Spanish Civil Code, vol. 4 (3d ,ed. 1893), p. 222. (Italics ours.) Elaborating further on this subject, in commenting on § 1263 of the Spanish Civil Code equivalent to § 1215 of our Code, Manresa contends that a contract made by a child is not merely voidable but void, because his. limited mental development does not permit him to understand the transaction. He cites with approval the decision of the Supreme Court of Spain of November 6, 1858, where it was held that it was in keeping with the law to declare void a contract executed by a person in a state of intoxication. Commenting on this decision which he regards as highly important, he says: “The Code is silent as to this particular, but since the old legislation under which this doctrine was created is also silent and since the legal grounds upon which it was framed are permanent, we believe -that in disposing of the case it would be decided in a like manner, and still more so, if it is borne in mind that the silence of the law may be explained by the convenience of not establishing an inflexible rule for a matter greatly varying in degree and influence such as intoxication. Although, of course, it will have to be distinguished according to the facts of each case, from libations, which do not deprive a person of reason without any annulment effect, to the highest degree of intoxication which completely enfeebles the faculties • and almost extinguishes the consciousness of the acts, reserving for the latter the nullity of obligations thus contracted.” Op. and vol. cited, p. 641. Therefore, if Ramón Díaz Rivera, by reason of his illness — which as we shall hereafter see began in his tender years — had his mental faculties so enfeebled that he could — 177 — not understand .such an important transaction, we must conclude, applying the aforesaid doctrine, that the consent which he gave was the same as that which would be given by an individual whose mind was enfeebled by intoxication or by lack of development due to his tender age. The same test is applied in the common law. The article entitled “Proof of Mental Incompetency and the Unexpressed Major Premise,” by Milton L>. Green, published in 53 Yale Law Journal, pp. 271, 275, says: “The operative fact to be proved is mental incompetency— not insanity. From a medical point of view a person may be mentally ill or insane. But from a legal point of view, such mental illness or insanity is immaterial, that is, not an operative fact. As an evidential fact, it may give rise to an inference of mental incompetency, depending upon the type and severity of the mental illness; but it is luell established that mere proof of mental weakness or insanity is not enough to invalidate an agreement or a will. In order to constitute mental incompetency the mental disorder must be such as to destroy the capacity of the party to understand the questioned transaction in particular.” (Italics ours.) Having established the criteria for decision, we shall now examine the findings of fact of the lower court and determine if they show whether the plaintiff’s mental capacity was sufficient to understand the important settlement he made with his brother. The lower court found: 1. That on or about the year 1938sDr. Rafael Muñoz Váz-quez examined the plaintiff at the request of his mother Josefa Rivera, in order to commit him to the Insular Insane Asylum; that as a result of the information supplied by her and from questions put to him by the doctor, the latter reached the conclusion that plaintiff’s condition was the result of syphilis of the brain; that he noticed symptoms of schizophrenia and those of a man who could be mentally unsound. — 178 — 2. That plaintiff at one time tore off all his clothes and remained naked and on another occasion bought a mare and tried to teach her to live without eating; that with the money from the settlement he began to buy automobiles and then wanted to destroy them with a frame saw; that he purchased a motorcycle and rode it for three whole days and nights, selling it later for $300 although it cost him $700; that he often went to the airport; flew in airplanes and later averred that he himself had driven them; that he was known by the nickname of “Popeye the loco”; that he constantly said that when he received the money from his inheritance he would buy a motorcycle and an airplane; that plaintiff settled his hereditary rights for the sum of $10,000 of which he received $5,000 and the other $5,000 went to his attorneys. 3. That, according to the testimony of Dr. José R. Maymi, a psychiatrist, and a graduate of Johns Hopkins University, the plaintiff suffered from oligophrenia which is a form of mental deficiency; that he was not a competent man; that .he was mentally incapable of understanding a financial transaction involving thousands of dollars, as he could not estimate the true value of money and that this condition dated from the early years of his life; that the plaintiff has the mental age of 12 years, with an intelligence quotient of 75 per cent of normal intelligence; that the United States Army requires a mental age of 12 years 8 and that Ramón Diaz Rivera was an imbecile of high degree reaching the limits of a moron, but that he can not be considered psychiatrieally insane; that he was not insane at the time of the trial, but had been so on two previous occasions; that he suffered from syphilis and gave a positive in the Wasserman test. 4. Believing the testimony of Dr. José D. Jiménez, the court found proved that the plaintiff had a mental age of 12 — 179 — years of age and one month; that he was within the range of the feeble-minded or stupid and the moron; that he is a mental weakling, a very emotional person and sensitive to any stimulus and also that he is very impressionable and of low intellect. This witness admitted, as found by the lower court, that if before losing his money he purchased automobiles in order to convert them into airplanes, he showed very poor judgment and he would presume that he was mentally ill; that as to the incident of wanting the horse to live without eating, he would say that that was entirely absurd and that the person was completely abnormal; that to attack his mother violently showed abnormality; that Ramón Díaz Rivera was a person who responded to impulses, a hasty person and that his memory was defective; that it was his opinion that he could make decisions to his disadvantage,9 5. On the other hand the lower court found that the plaintiff, while he was a boy, ran errands and loitered around the Guayama theater; that he was a very willing sort of person, and went up to the second grade in the elementary school, and after receiving the'money from the settlement, he obtained a license to drive motor vehicles in Puerto Rico, after having passed written and practical examinations in the Division of Automobiles in the Department of the' In — 180 — terior. Notwithstanding this, the court found that the plaintiff was anxious to obtain the money principally to acquire an automobile, a motorcycle or an airplane and that the day before the transaction his attorney facilitated his efforts to obtain a license to drive motor vehicles in the Island. In our opinion, the standard applied by the court is erroneous. The test should not have been whether plaintiff was insane from the standpoint of the psychiatrist. It is true that none of the witnesses for the plaintiff expressly testified that on February 28, 1940, when the deed of settlement was signed, he was insane. But we have seen from the evidence presented in this case, expert as well as opinion evidence of persons who observed the conduct of Ramón Díaz Rivera, that the court found proved that his mental illness was permanent and that his lack of capacity existed at all times from an early age. Among the witnesses for the defendant who testified as to. his mental capacity at the time he signed the deed of settlement on February 28, 1940, is Attorney Adolfo Porrata Doria. Naturally, he had a marked interest in upholding the mental capacity of the plaintiff to execute the contract which was made under his advice and from which he benefited. The best refutation of his testimony is the finding of the court that when executing the contract for professional services in the filiation suit, Attorney Porrata Doria was not satisfied for that contract to be signed by Ramón Díaz Rivera alone, but required his mother Josefa Rivera to sign it also, in spite of the fact that the plaintiff was at that time of legal age and his mother had no pecuniary interest in the result of the suit. To this effect, we repeat the question posed by the trial court: “Why did he think it was necessary for the mother of Diaz Rivera to sign the contract, in spite of the fact that he was of legal age? Who knows if he knew that Ramón was incompetent, a mental weakling.” Another of the witnesses who was present at the signing of the deed, was Attorney Ismael Anglade. He — 181 — says that the plaintiff acted like a normal person; yet he testifies that when he was going to sign the contract and Attorney Porrata Doria contended that'$10,000 was an inadequate amount, the plaintiff himself interrupted him to say that it was sufficient. We know that the amount received by him was inadequate so that, in view of the evidence set forth, the plaintiff’s attitude at that time, when any normal person would have tried to cooperate with his attorney in order to get a better offer, shows that the plaintiff was not acting, at that moment, as a normal person would have done in defense of his own interests. In our opinion, the lower court committed manifest error in not holding that the deed of settlement was void for lack of capacity of the plaintiff to give his consent. It is desirable to point out that the lower court" found that the judgment in the filiation suit was obtained on the basis of a settlement concerning civil status. It based its conclusion on the fact that on January 18, 1940 the two brothers had signed a contract by virtue of which Díaz Luzunaris obligated himself not to raise any obstacle in the filiation suit, and that it was also stated in the deed of settlement of February 28,1940 that the consideration for settling the rights of the natural son was $10,000, as well as not having raised any obstacles in the filiation suit. Before entering into a discussion of this matter, we should not lose sight of the fact that the prohibition against compromising civil status is a limitation on the right of free contracting and as such it must be strictly construed. Ex parte Santiago et al. and The People, 21 P.R.R. 359. It is significant that appellees themselves, the only ones prejudiced by the judgment of filiation, assign as an error the finding that there was a settlement concerning civil status. They maintain that there was none and explain their position in their brief, thus: — 182 — “But the bare fact in this case that Ignacio Diaz would not raise any obstacles or difficulties against the entry of a judgment was, and should be considered in law, as proof of his adherence to the statute governing the matter of filiation.”10 Indeed the judgment of filiation was not entered on a stipulation of the parties to that effect, but on the evidence offered by the plaintiff, which the court heard and weighed, entering judgment ón the merits. It is true that the "defendant in the filiation suit did not offer any evidence and that .on cross-examination counsel merely asked plaintiff’s witnesses some trivial questions. Was the defendant in any way bound to oppose the complaint of filiation? If he actually — 183 — had no probabilities of success and was convinced that the plaintiff was right, was it not more profitable for the defendant to avoid a useless contest and thereby obtain a better settlement of the hereditary rights of the natural son? It seems to us that if the testimony which was before the court— which no one has even insinuated was false — warranted the judgment and the court, in rendering judgment, was not aware, as revealed by the record, of the existence of the agreement of January 18, 1940 when it entered judgment, it could not have been influenced, in disposing of the case, by the prior settlement between the parties, but it simply acted in accordance with the evidence presented to it. In addition, we must bear in mind that the plaintiff was mentally incapacitated to execute a contract, and this being so, the alleged settlement of January 18, 1940 is not a weapon that may be brandished to the prejudice of his interest and in favor of whomever was benefited by reason of plaintiff’s incapacity. Another error assigned by the appellant is that the lower court accepted as valid the appointment of tutrix in favor of Josefa Eivera, by virtue of which she filed this action on behalf of her son. The tutorship was challenged on the grounds that the appointment had not been registered in the book of tutorship, that the incompetent was not legally notified of the proceeding and that the district attorney did not appear in defense of the alleged incompetent. But the lower court found that the incompetent was present at the hearing and was aware of the proceeding; that the statute does not require the presence of the district attorney as an indispensable requisite for the validity of the proceeding; and finally that the tutorship was registered in the appropriate book. In our opinion the court did not err in upholding the validity of the appointment of the"tutrix. The contention that the complaint is insufficient is predicated on the fact that it does not allege that the plain — 184 — tiff was willing to restore to the defendant the $10,000 which he received by virtue of the settlement whose nullity is now sought. It is true that § 1255 of the Civil Code provides that when the nullity of an obligation has been declared, the contracting parties shall restore to each other the things which have been the object of the contract with their fruits, etc., and •§ 1256 prescribes that when the nullity arises from the incapacity of one of the contracting parties, the incapacitated is not bound to make restitution except to the extent that he was enriched by the thing or the sum whenever received; but as a matter of fact the defendant at all times owed to the plaintiff, as part of his inheritance, an amount greater than the $10,000 which he received. Hence, not even after a judgment decreeing the nullity of the settlement, would the plaintiff be obligated to return any sum to tfye defendant, but, on. the contrary, he would be entitled to receive from the latter the remainder of .his legal portion. Nor did the lower court err in deciding that the action was not barred by prescription. Pursuant to the complaint and the evidence the settlement was void for lack of consent, and the action to decree nullity never prescribes. Appellant has assigned other errors of so little substance that they do not warrant discussion. Among them is the contention that the plaintiff ratified the settlement of his hereditary rights by merely accepting the $10,000 in payment of his inheritance. Although for reasons different from those set forth by the lower court, the judgment appealed from must be affirmed.11 Mr. Justice Marrero did not participate herein. Footnotes [1] The natural son was acknowledged by judgment rendered against the Heirs of Ramón Pastor Diaz Molinari on February 28, 1940. [2] The action was directed against Ignacio Diaz Luzunaris and against the widow of Pastor Díaz Molinari. As to the widow, it sought the nullity of a contract between her and Ignacio Diaz Luzunaris executed subsequent to the settlement between the two brothers and pursuant to which Ignacio Diaz Luzunaris settled with the widow her rights in her husband’s estate. As to this contract, the court dismissed the complaint. Since no appeal was taken from that portion of the judgment, it 's unnecessary to make any further reference to it. [3] Section 1213 of the Civil Code, in so far as pertinent, provides: “Section 1213. — There is no contract unless the following requisites exist: “1. The consent of the contracting parties. “2. .......” [4] Before the trial was held in the lower court Ignacio Díaz Luzunaris died. He was replaced as a party defendant by his heirs, who are his legitimate minor children and his widow Eva Lamoutte, and who have taken this appeal. After the appeal was taken Ramón Diaz Rivera, appellee herein, died and was replaced as the plaintiff by his natural mother, Josefa Rivera. [5] The commentators and even the Code itself (5 1222, 1930 ed.) distinguish between the two types of deceit: serious and incidental. The former is that which determines the consent causing, of course, the nullity of the obligation; the latter, the incidental, does not avoid the contract because it is not serious and merely gives rise to compensation for damages. Manresa, Comentarios al Código Civil Español, Vol. 8 (2d ed. 1907), p. 658. [6] Deceit includes deception, fraud, false representation and undue influence, with the limitation explained above. [7] Defendant himself, upon filing the inheritance tax return, stated that the share in the estate corresponding to the plaintiff was $76,053.21. [8] In his testimony the expert witness testified that if Ramón Díaz Rivera would have gone into the Army he would have been discharged immediately. [9] We should bear in mind that Dr. Jiménez, when testifying as expert for the defendants, testified that the psychometric test to which plaintiff was submitted revealed the notable defect that he had for remembering the months of the years; that at times he remembered them well and at other times committed errors, and that when he was asked what month preceded the other he almost always answered the following month; that his memory was defective, but defendants’ witness tried to explain this mental condition of the plaintiff on the theory that he got the impression that the plaintiff did not listen to the questions because he was not interested in living facts of his past life; that the answers which he gave were not always responsive; that the plaintiff showed no mental fatigue or slowness, but rather a tendency to be hasty in his answers; that he knew how to appraise situations at times complicated, but does not give the impression of having a profound knowledge of the matters involved; that the witness would say that the plaintiff is perfectly aware of a situation but does not like to study or analyze it. [10] It is advisable to point out that in 1911, when plaintiff was three years of age, Josefa Rivera, in her capacity as mother with patria potestas, brought' a filiation suit against Ramón Pastor Diaz Molinari, and on January 12, 1912. obtained a judgment of filiation. The jugdment was reversed by this Court and the case remanded for a new trial on the ground that the lower court erred in not admitting certain evidence offered by the defendant to the effect that the plaintiff’s mother had had relations with other men at the time the child could have been conceived. Rivera v. Díaz, 19 P.R.R. 524. For reasons unknown to us, the new trial was not held until February 28, 1940. But with regard to the evidence offered and not admitted in the first trial, it is significant that on December 12, 1912, Ramón Pastor Diaz Molinari, Pedro G. Goyco, and Attorney Luis Abella Blanco, who acted by mutual agreement, were convicted by the District Court of Guayama of the crime of conspiracy and sentenced to serve one year in jail. The offense was that Ramón Pastor Diaz Molinari, in conspiracy with Goyco and his attorney, induced a certain Ramón Jiménez, upon payment of $25, and without the latter having had any relations with Josefa Rivera, to acknowledge by public deed Ramón Diaz Rivera, at that time a minor, as his son. Ramón Jiménez and Josefa Rivera appeared as parties to said deed and stated that Ramón Díaz Rivera was their child. This deed was prepared by said attorney, in agreement with Ramón Pastor Diaz Molinari. Taking advantage of the fact that Josefa Rivera did not know how to read or write, although she knew how to sign, they deceived her by telling her that by that deed, Ramón Pastor Diaz Molinari was acknowledging her son, all of which was done with the object of making her sign the instrument, thereby depriving the child of his right to establish his status as acknowledged natural son of Ramón Pastor Diaz Molinari. By virtue of this deceit the mother signed the deed. This combined action by Ramón Pastor Diaz Molinari, Goyco and the said attorney, gave rise to the sentence on a charge of conspiracy, which was affirmed by this Court. People v. Díaz et al., 22 P.R.R. 177; In re Abella, 25 P.R.R. 694. It is not strange, therefore, that the defendant, being aware of these antecedents, should not raise any obstacles to the filiation of the plaintiff. [11] In view of the facts disclosed by the record with regard to the participation of Attorney Adolfo Porrata Doria, the Fiscal of this- Court will be ordered in due time to conduct an investigation of the professional conduct of said attorney.