[ G.R. No. 30587. December 04, 1929 ] 54 Phil. 102
[ G.R. No. 30587. December 04, 1929 ]
SABINA REYES ET AL., PLAINTIFFS AND APPELLEES, VS. E. C. WELLS AS ADMINISTRATOR OF THE ESTATE OF JOHN NORTH-COTT, DECEASED, ET AL., DEFENDANTS. E. C. WELLS, APPELLANT. D E C I S I O N
VILLAMOR, J.:
On June 7, 1923, the plaintiffs filed their original complaint against John E. Rader and John Northcott, the original defendants in this cause.
Several demurrers were interposed, and in consequence the complaint was amended several times. The seventh amended complaint was filed on June 11, 1925, and was admitted by the trial court in August the" s£me year. In the meantime the defendants Rader and Northcott died, and in said seventh complaint they have been substituted by their respective administrators, E. C. Wells, administrator of the estate of John Northcott, and Alberto Suguitan, administrator of the estate of John E. Rader.
The complaint prays that the promissory notes and deeds executed by the plaintiffs in favor of said Rader and Northcott, as well as their record in the registry of deeds of Ilocos Norte, be cancelled, and that the defendants, as administrators, be ordered to pay the damages set forth in paragraph 7 of the complaint, with costs.
It is alleged in the complaint: (1) That said J. E. Rader and J. Northcott had installed a maguey stripping machine in the municipality of Burgos, Ilocos Norte, and an International truck in a shed on a lot; that J. E. Rader told plaintiff Saturnino R. Guerrero that he had purchased said articles from Macleod & Co., for the sum of P23,600, and offered to sell them to said plaintiff for P23,000 payable in installments, but that Guerrero replied that he could not do so for lack of money to operate the machine; (2) that said J. E. Rader promised to furnish said plaintiff with the amount of P12,000 for that purpose, and delivered to the latter P400 “in advance” to commence the exploitation of said machine; (3) that after said sum was delivered, the same plaintiff was required to make out two promissory notes; one for P7,000 and the other for P5,000 in favor of said Rader “guaranteed by a mortgage on certain property sufficient to cover said sum of P12,000 ;” that said mortgage shall be endorsed to some business houses in the City of Manila; that Saturnino Guerrero executed two mortgage deeds, attached to the complaint, signed by Saturnino R. Guerrero, his mother and his brothers, coowners pro indiviso of the real property mortgaged; that said mortgage deeds were recorded in the registry of deeds of this province (Ilocos Norte); (4) that J. E. Rader and Saturnino R. Guerrero went to J. Northcott, and on June 29, 1922 the former endorsed the mortgage deed for the amount of P5,000; (5) that neither said amount of P5,000 nor any part thereof was delivered to Saturnino R. Guerrero or to any of his coplaintiffs; and the aforementioned Rader and Northcott promised to pay when the latter (Northcott) received some money he had asked for from a certain firm in San Francisco, California; and in consideration of said promise, Saturnino R. Guerrero “obligated himself to pay to Macleod & Co. in installments, the price of said property, machinery, truck, shed, and lot where they are installed,” the aforesaid Rader having stated that he had not yet paid Macleod & Co. for said property; (6) that in the month of October, 1922, Saturnino R. Guerrero demanded payment of said sum of P5,000 from J. E. Rader, because the periods stipulated by Maeleod & Co. fell due, and both of them again repaired to the aforesaid Northcott to discuss the P12,000 secured by the two mortgage deeds; the latter told them that he had not yet received the agreed amount; and he again promised, for the second time, that he would pay it “as soon as he received the amount owed, from the West Coast Life Insurance Co.;” and at the same time, he asked that Saturnino R. Guerrero, in his own behalf and in behalf of his mother and brothers, renew the other mortgage, deed for P7,000 executed in favor of said Northcott, which the plaintiff Guerrero “blindly” did, whereupon Northcott gave him a check for P98 wherewith to pay the land tax; and (7) that due to the failure of J. E. Rader and J. Northcott to pay said amount of P12,000, the plaintiff sustained damages in the amount of P23,600, which is the value of the machinery and other property “attached by Maeleod & Co.” for default in the payment of the installments due, besides P10,000 which is the market value of the property of Saturnino R. Guerrero attached by a writ of the Court of First Instance of Manila in the cause instituted by said Maeleod & Co. for, foreclosure of mortgage; and the amount of P2,000 “for filing and prosecuting the complaint.”
The administrator of the estate of the deceased J. E. Rader filed an answer denying generally and specifically each and every allegation of the complaint.
The other defendant, E. C. Wells, administrator of J. Northcott’s intestate estate, generally and specifically denies the allegations contained in paragraphs 2 to 8 of said complaint, and by way of special defense sets up as a counterclaim and cross-complaint that: (a) The mortgage executed in. favor of J. Northcott, deceased, on October 23, 1922, made a part of the last amended complaint, for P7,000 has fallen due and none of the plaintiff-mortgagors has paid said amount, in whole or in part, nor the interest stipulated in the mortgage deed, “nor the additional sum equal to 20 per cent of the total due as attorney’s fees in case of litigation;” (6) that by the violation of the terms and conditions contained in the mortgage deed, which is also a part of the aforesaid complaint for the sum of P5,000, executed by said plaintiffs on June 14, 1922 in favor of J. E. Rader, and by the latter assigned on June 29, 1922, the mortgage has fallen due and the mortgagors therein have failed to pay the amount or any part thereof and the interest thereon; (c) that in said mortgage of June 14, 1922, the mortgagors bound themselves to pay to said J. Northcott, deceased, an additional sum equal to 20 per cent of the amount due as attorney’s fees in case of litigation, and the conditions of the mortgage deed not having been complied with, the mortgage should be foreclosed.
Evidence having been adduced by both parties, the trial court, after a careful examination thereof reached the conclusion that the two sums of P5,000 and P7,000 were never delivered to the plaintiffs by J. E. Rader or J. Northcott either before or after their death, and therefore held that the two realty mortgage deeds, one of which was assigned by J. E. Rader to J. Northcott, must be cancelled, being null and void, and, in consequence, the counterclaim and cross-complaint set up by administrator Wells are untenable and must be dismissed.
Wherefore, the trial court ordered the cancellation in the registry of deeds of the mortgage credit of P5,000 on the real property assigned by J. E. Rader in favor of Northcott, and the cancellation of the other mortgage deed for P7,000 executed by the plaintiffs in favor of J. Northcott.
And the court dismissed the claim for damages against the defendants, as well as the counterclaim and cross-complaint of the administrator of J. Northcott’s intestate estate. From this judgment, administrator E. C. Wells appealed.
We find from the record that Dr. John E. Rader, deceased; was a resident of the municipality of Laoag, Ilocos Norte, about the year 1922, and owned in the municipality of Burgos, of said province, a maguey stripping machine, an International truck, a shed, and a lot. In order to get rid of them, he persuaded the plaintiffs, particularly Saturnino R. Guerrero, to buy them; and as the latter pretended that he had no money with which to purchase it and to exploit the business, the former proposed to lend him P12,000 with the understanding that Guerrero would execute two promissory notes for P5,000 and P7,000 in his favor, securing said notes by two other mortgage deeds upon real property. In view of this proposal, the plaintiffs subscribed a promissory note for P5,000, dated June 14, 1922, and another in the amount of P7,000 also dated June 14, 1922.
These two promissory notes were guaranteed by two mortgage deeds exhibited herein as X, both drawn in favor of John E. Rader. These two mortgage deeds were recorded in the registry of deeds of the Province of Ilocos Norte.
After the execution of these two mortgages, it appears that John E. Rader was only able to deliver P400 to Saturnino Guerrero, saying that they could obtain the remainder as a loan from John Northcott. For this purpose, they came to Manila in the month of June, 1922, to solicit the money and also to arrange for the purchase of the machine from Macleod & Co. Saturnino Guerrero was presented by Rader to the manager of Macleod & Co. as the purchaser of the machine in question, and to this end Guerrero signed a promissory note for P20,000 payable according to the periods and conditions set forth therein.
Putting aside for the moment Saturnino Guerrero’s contract with Macleod & Co. for the purchase of the machine in question, it appears that Rader and Guerrero went to the office of the West Coast Life Insurance Company in order to ask Northcott for the money promised by Rader. But Northcott could not deliver to Guerrero more than P98 with which to pay the land tax, promising that as soon as he received the money he had asked for from San Francisco, California, he would deliver to Guerrero the P12,000 covered by the first two promissory notes subscribed by Guerrero and secured by the two above-mentioned mortgages. The plaintiffs allege that with the exception of the two amounts of P400 and P98 already mentioned, the sums in question in the promissory notes secured with mortgages have not been paid either by Rader or by Northcott, and therefore pray for the cancellation of the promissory notes and mortgage deeds executed by the plaintiffs in favor of said Rader and Northcott, and of their record in the registry of deeds of Hocos Norte.
The main contention of the appellant in this case is that the plaintiff-appellees’ allegation that the promissory notes in question have not been paid, is not supported by the evidence, inasmuch as the only witness who testified upon this point, that is, Saturnino Guerrero, is incompetent to testify upon transactions had between himself and the deceased John E. Rader and John Northcott, in accordance with section 383 of the Code of Civil Procedure.
It is true that Saturnino Guerrero, as an interested party in the case, is incompetent to testify upon transactions had between himself and the deceased Rader and Northcott but the record shows that there is another witness, Eduardo Bustamante, who has no interest in this case, and who testified that the witnessed and heard the conversations between Guerrero and Rader, and Northcott, respecting the delivery of the money represented by the promissory notes in question, and his testimony appears to be corroborated, in so far as it refers to the conversations between Guerrero and Rader, by Marcelino Benito and Apolinar Pasion. The testimony of said witness Eduardo Bustamante is admissible to prove that the defendants never delivered the money which was the con* sideration of said promissory notes.
In 28 R. C. L., 499, it is stated: “By the weight of authority statutes rendering a party to or person interested in the event of an action against the estate of a decedent or a lunatic, incompetent to testify concerning a personal transaction had with the latter, do not disqualify such party or person from testifying to communications or transactions between a deceased and a third person had in his presence or within his hearing, if he took no active part therein himself. Unless the transactions or communications are personal, and had with the deceased by the witness, either literally or in practical effect, as by participating in or influencing them, they do not fall under the prohibition of the statute.”
In Mallow vs. Walker (115 Iowa, 238), the court said: “Code, section 4604, declares that no party to an action nor one interested in the event shall be examined as a witness as to any transaction between him and one deceased against the executor, administrator, heir, next of kin, assignee, legatee, devisee, or survivor. Held, that the statute does not prevent a witness from testifying as to a conversation between deceased and another in the presence of the witness, in which the witness took no part”
And in Mollison vs. Rittgers (140 Iowa,, 365), the same court said: “The interest which disqualifies a witness from testifying.to a transaction with a decedent is that which relates to the event of the particular suit and not merely to the subject of the controversy.”
Section 4604 of the Code of Iowa provides: “No party to any action or proceeding, nor any person interested in the event thereof, nor any person from, through or under whom any such party or interested person derives any interest or title by assignment or otherwise, and no husband or wife of any said party or person, shall be examined as a witness in regard to any personal transaction or communication between such witness and a person at the commencement of such examination deceased, insane or lunatic, against the executor, administrator, heir at law, next of kin, assignee, legatee, devisee or survivor of such deceased person, or the assignee or guardian of such insane person or lunatic. But this prohibition shall not expend to any transaction or communication as to which any such executor, administrator, heir at law, next of kin, assignee, legatee, devisee, survivor or guardian shall be examined on his own behalf, or as to which the testimony of such deceased or insane person or lunatic shall be given in evidence.”
The prohibition contained in said law against a wittfess’ testifying upon any transaction or communication between himself and a deceased person, is substantially the same as that contained in section 383, No. 7, of our Code of Civil Procedure, as amended by Act No. 2P52. And therefore, we believe that the construction placed upon it by the court in the cases cited is applicable to the case at bar.
Among the evidence adduced by the plaintiffs to prove that the two sums of P5,000 and P7,000 promised have not been received by said plaintiffs, is Exhibit F, signed with the name of John E. Rader, reading as follows:
“MANILA P. I., May 20, 1928
“MR. SATURNINO GUERRERO
“Laoag, Ilocos Norte, P.I.
“DEAR SIR: I acknowledge the receipt of your letter dated the tenth instant. I immediately showed it to Mr. Northcott and he told me that you please wait for a short time as the money he borrow from the West Coast Life, Insurance Co. in San Francisco, California, is now on its way according to the cablegram received by him recently.
“After we receive it, therefore, we shall send you the sum of P12,000 so as to cover the two mortgage debts of P5,000 and P7,000 due you which, hitherto, remain unpaid.
“I went to Macleod & Co. and asked for the withdrawal of the complaint against you inasmuch as you will soon have sufficient amount to pay the Co. in the sum of P4,000 corresponding to that which is due on November, 1922, after receiving the P12,000. I was told that Mr. Forst will see to it that the complaint shall be dropped. “Yours truly,
(Sgd.) “JOHN E. RADER
“En/s”
The parties discussed the genuineness of this letter, Exhibit F, at great length, each presenting the report of its handwriting expert, the one employed by the plaintiffs maintaining that the signature on said letter is the genuine signature of the deceased John E. Rader, while that of the defendants contends the opposite.
The trial court, in turn, after examining the undisputed signatures of John E. Rader contained on Exhibits G and H of the plaintiffs and the other Exhibits 1 to 6 of the defendants, found dissimilarities between the signature on Exhibit F and that of said exhibits of both parties, as there are in those not disputed and that of Exhibit 6, which is acknowledged to be genuine by the defendants; and the court concluded with the statement “that it is difficult to make sure that the disputed signature, Exhibit F, was not written by John E. Rader, and considering that said exhibit is a reply-1 written in Manila to a letter of Saturnino Guerrero’s as to the straits in which the latter was, and his frequent insistence that the money promised by the writer said letter and John Northcott be delivered, it is more than likely that the letter, Exhibit F, was written and signed by John E. Rader.”
We have carefully examined the signature Exhibit F, comparing it with the genuine signatures admitted by both parties, and we have found dissimilarities between the signature Exhibit F and the genuine signatures, Exhibits G and H, and between said signature and the genuine signatures, Exhibits 1 to 6. But one pages 30 and 59 of his brief, the appellant, after denying that the signature Exhibit F was written by John E, Rader, suggests that the signatures on Exhibits 15, 16 and 17 indicate the probability that the signature on Exhibit F was written, not by the deceased John E. Rader, but by John E. Rader, jr. We are inclined to accept the conclusion reached by, the court below; but admitting the probability suggested by the appellant that said signature Exhibit F was written by John E. Rader, jr., we believe that if John E. Rader, jr., really signed said letter in question, he must have done it with the knowledge of his father, the deceased John E. Rader in which case the contents of said letter must be given the same effect as if it had been written by the said John E. Rader. Aside from this, the record contains something which, we believe, strongly upholds the plaintiffs’ contention that the money promised by John E. Rader and John Northcott, Which was the consideration of the aforementioned promissory notes has not been delivered by them to Saturnino R. Guerrero, except the P400 and P98 already mentioned; the mortgage, signed by Saturnino R. Guerrero in favor of Macleod & Co. to secure the payment of the maguey stripping machine, was foreclosed by Macleod & Co. by virtue of a writ of execution issued by the Court of First Instance of Manila on October 11, 1923, as a result of the complaint filed by Macleod & Co., Inc., against Saturnino R. Guerrero on March 10, 1923, for default in the payment of the first installment of said promissory note. The attached property of Saturnino R. Guerrero, valued at P47,430, was sold at public auction for only P3,862.84. We believe that Saturnino R. Guerrero, in the ordinary course of business, would not have abandoned the execution of his property for an amount relatively small, had he at that time the money which he expected to receive from Rader or Northcott.
But the appellant insists that during his lifetime, the deceased Northcott delivered to John E. Rader the sum of P5,000, on account of the P5,000 promissory note, secured by Guerrero’s mortgage. To prove this, the appellant presented Exhibit 14, and the testimony of R. P. Flood and S. H. Deebel. Flood testified that on June 30, 1922, he lent Northcott P2,000 which was paid directly to Rader by means of a check, upon the former’s request. On the other hand witness S. H. Deebel, on direct examination, testified: “On or about June 1, 1922, Mr. Northcott called me and told me that he knew somebody who would borrow money from me. Mr. Northcott told me that he had to wait until Mr. Rader arrived, because Mr. Rader was the one who would receive the mortgage money. Mr. Rader then came to Manila between June 25, and July 1, 1922, and I met him at Mr. Northcott’s office in Manila. I made out a check for two thousand seven hundred pesos in favor of Mr. Northcott. Mr. Northcott wished me to deliver said money to Mr. Rader with interest at twelve per centum, but I told him I would rather give it to him at ten per centum, and that he could charge Mr. Rader twelve per centum * * * Mr. Rader was.present, and when Mr. Northcott got the check, he told Mr. Rader: ‘Here is the check,’ and gave him the check” But on cross-examination, this witness said: “* * * I gave the check to Mr. Northcott who told Mr. Rader: ‘Here is Deebel’s check for the money’. I don’t know what Mr. Northcott did with the check, but as it was in Mr. Northcott’s name, it was he who had to cash it. I don’t know whether Mr. Northcott endorsed the check to Mr. Rader, and whether Mr. Rader cashed it or not, or whether Mr. Northcott cashed it.”
Exhibit 14 is an unsigned document, apparently a statement of account between Rader and Northcott, which mentions the names Guerrero, Flood and Deebel.
In view of the evidence adduced by the defendants, the trial court held that “it is probable that John Northcott gave. John Rader the sum of P2,000 in July, 1922, loaned by R. P. Flood for the P5,000 promissory note given to the former; and we do not know whether the other sum of P2,700 was given to J. E. Rader. And it held, furthermore, that John Northcott could not legally give Rader the sum of P2,000 on account of the P5,000 requested of him, because said sum of P2,000 was owed to the plaintiffs on account of the P5,000 promissory note given and executed with the understanding that the money would be given after the execution.”
We are of the opinion that these conclusions reached by the court below are supported by the evidence, and we are equally of the opinion that supposing John Northcott gave Rader the P2,000 loaned to the latter by Flood, the delivery of said amount to Rader did not destroy Guerrero’s right to claim the delivery of the money which is the consideration of the P5,000 promissory note endorsed by Rader to Northcott, for the reason that when Rader endorsed said note to Northcott on June 29 1922, the latter knew positively that the money represented by the endorsed note had not been actually delivered to Guerrero. His personal knowledge that the money of said note had not been delivered to Guerrero is sufficient to destroy the presumptions of section 334, Nos. 17, 19 and 36, of the Code of Civil Procedure, invoked by the appellant.
The same may be said of the P7,000 promissory note.
The appellant does not maintain that the deceased Northcott delivered to Guerrero the money of this note, but only argues that, as Guerrero executed the mortgage deed securing the payment of P7,000 in favor of Northcott on October 20, 1922, it is presumed that there was sufficient consideration.
It is to be noted that this mortgage was originally executed on June 14, 1922 in favor of Rader, but that on October 23, 1922 the latter asked the registrar of deeds of Ilocos Norte to cancel said mortgage, saying that he had received from Guerrero the amount guaranteed, which seems strange, because in such cases, it is not the mortgagee but the mortgagor who is interested in asking that the record of the mortgage be cancelled once the debt is paid. It is hard to conceive how Guerrero could consent to pay Rader the P7,000 of the promissory note, when he complains that he never received said sum. And it is observed that the cancellation of the mortgage by Rader is prior to the alleged mortgage in favor of Northcott. On the other hand, what good would it have done Guerrero to receive the P7,000 from Northcott in order to give it to Rader, when he himself wanted to use the money represented by the promissory note and secured by the mortgage? What advantage would Guerrero have derived from a change of mortgage creditors? All of which indicates that the execution of the mortgage deed in favor of Northcott was probably suggested toy Rader as a part of the plan to unite in Northcott the rights, if any, arising from his agreements with Guerrero.
Wherefore, the judgment appealed from must be, as it is hereby, affirmed, with costs against the appellant. So ordered.
Avanceña, C. J., Street, Romualdez, and Villa-Real, JJ., concur.