Puerto Rico v. Rubert Hermanos, Inc., 315 U.S. 637 (1942)

Puerto Rico v. Rubert Hermanos, Inc.

No. 96

Argued February 6, 9, 1942
Decided March 16, 1942
315 U.S. 637

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

1. The principle which accords great weight to the decisions of the Supreme Court of Puerto Rico in matters of local law applies where the question respects the power of that court to appoint a receiver and is dependent upon a construction of local statutes, and a fortiori where the question concerns merely the propriety of an exercise of that power. P. 646.

2. A decision of the Supreme Court of Puerto Rico affirming its power to place a receiver in control of the property of a corporation the dissolution of which it had decreed for violations of a law forbidding corporations to hold more than 500 acres of land is entitled to great weight as an exposition of the local law, and, not being plainly incorrect, should not have been reversed by the Circuit Court of Appeals, although § 182 of the local Code of Civil Procedure, upon which the insular court relied, appears to conflict with §§ 27-30 of the Private Corporation Law. P. 646.

3. The Supreme Court of Puerto Rico, having decreed the forfeiture of the charter and the dissolution and winding up of a corporation which, in violation of the law and its charter restrictions, had acquired more than 500 acres of land appointed a receiver of all its property, which was operated as a unit in the production of sugar, and directed him to manage the property as a going concern until Puerto Rico should exercise its statutory option either to confiscate the real estate unlawfully held or to have it sold at public auction.

Held:

(1) That the appointment was discretionary, for the purpose of preventing confusion and needless litigation which might result if the directors of the corporation should attempt to convey interests in the property pending the exercise of the option. P. 646.

(2) That, as the receivership was to be terminated upon the exercise of the option, it was sufficiently definite in time; nor was it too broad in not being restricted to the land in excess of the 500 acre maximum, since to separate the land from the machinery and other personalty pending the exercise of the option would have resulted in economic waste. P. 647.

118 F.2d 752 reversed.

Certiorari, 314 U.S. 589, to review the reversal of a decree of the Supreme Court of Puerto Rico appointing a receiver. For earlier phases of the litigation, see 106 F.2d 754; 309 U.S. 543.