INVOLUNTARY INSOLVENCY OF UMBERTO DE POLI. G. A. CU UNJIENG, CLAIMANT AND APPELLEE, VS. ASIA BANKING CORPORATION, CHARTERED BANK OF INDIA, AUSTRALIA & CHINA, AND HONGKONG & SHAN…

STATEMENT

January 17, 1922, the appellee presented his claim against the insolvent
estate of Umberto de Poli for an alleged balance of P25,062.35 for rent of the
warehouse formerly occupied by the insolvent debtor and taken over by the
assignee at the time De Poli was declared insolvent, for and on account of
merchandise and effects therein stated, claiming that until December 31, 1921,
the insolvent was indebted to him in the sum of P51,700 for rent of the
warehouse; that payments had been made by the assignee on account until the
claim was reduced to P25,062.35; that the claim for rent constituted a lien on
the goods in the warehouse, and prayed for an order of the court that the amount
of the unpaid balance should be paid from the proceeds of the sale of
merchandise.

January 27, 1922, the Chartered Bank of India, Australia & China
presented written objections to the allowance of the lien on the merchandise,
contending that the funds in question were the proceeds of sales made by the
assignee of merchandise covered by warehouse receipts issued by the insolvent in
favor of that bank, and of the Hongkong & Shanghai Banking Corporation, the
Asia Banking Corporation and the Bank of the Philippine Islands, which had been
approved. “That whether said warehouse receipts be treated as having conveyed
said merchandise to the undersigned and other bank creditors absolutely or
merely as security, neither the merchandise still on hand, nor the proceeds of
that which has been sold can be subjected to the payment of the rents due from
the assignee to the warehouse owner for the following reasons: (a) The
assignee stands in the shoes of the insolvent debtor U. de Poli (36 Phil., 36,
54) and said warehouse receipts provide for the payment of no storage charges,
(b) The undersigned and other bank creditors have made claim for and
demand upon the said assignee for the delivery of the merchandise covered by
said warehouse receipts and said assignee has denied and resisted such claim and
has held said merchandise against the protest of the undersigned and other bank
creditors, (c) Said merchandise is not now and has not been since the
institution of insolvency proceedings the property of the insolvent estate of U.
de Poli, but on the contrary the title thereto is now and has been during said
entire period in the undersigned and the other bank creditors.”

No formal action was taken by the court upon either the claim or the
objections.

Upon December 12, 1922, the claimant presented another motion in which he
claimed that until the 30th of April, 1921, the insolvent was indebted- to him
in the sum of P59,690; that at times payments had been made amounting to
P50,267.78, leaving a balance due of P9,428.22, and he prayed for an order of
the court that his claim be paid out of the proceeds of the sale of the
merchandise.

December 15, 1922, the appellant banks filed the following written objections
to the motion of the claimant:

“Come now the undersigned by their respective attorneys and object to the
granting of the motion of the above-named claimant of December 12, 1922, unless
it be first shown to the satisfaction of the court that the assignee of the
insolvent estate has on hand a sufficient sum over and above the total amount of
the pending preferred claims of the undersigned and other preferred claimants to
pay the amount which the said claimant Cu Unjieng seeks to collect.”

The lower court rendered the following decision on the motion:

“This case is before the court on a motion in behalf of G. A. Cu Unjieng,
alleged owner of certain warehouses heretofore occupied by the assignee of this
insolvent estate for the purposes of this insolvency, asking that the balance
due as rents for said warehouses, to wit, P9,428.22 be ordered paid by the
assignee in this case.

“Mr. A. D. Gibbs, as attorney for the several bank claimants in this case, to
which banks the property stored in the warehouses has been adjudicated, subject
to the payment of storage, insurance, etc., objected to said motion upon the
ground that the rents should be paid by the assignee out of other funds than the
proceeds of the goods claimed by said banks.

“The court is of the opinion, and has heretofore held in the orders
adjudicating the property to several banks, that the property is liable for the
storage charges, and that the amount of the proceeds of said property should be
paid to the banks, less the storage charges, insurance, etc.

“The court is clearly of the opinion that the bank claimants are not entitled
to free storage or free insurance upon the property claimed by them and that
such storage and insurance upon the property claimed by the banks should not be
paid out of the proceeds of other property which may be available for payment of
the claims of ordinary creditors. In fact, in this case appears there to be
little, if any, unencumbered property.

“Therefore, the motion is granted, and the assignee is hereby ordered to pay
said rents as administrative expenses and charge same proportionately among the
bank claimants against the proceeds of the property stored in said warehouses
during the pendency of these proceedings.”

From the decision the banks appeal, specifying the following assignments of
error:

“I. The court erred in allowing the amount claimed in the second motion of
appellee for the reason that the same was in conflict with the amount claimed in
a previous motion and there was no proof presented as to the correctness
thereof.

“II. The court erred in holding that the claim of G. A. Cu Unjieng for rent
of warehouse is chargeable against the proceeds of merchandise covered by
warehouse receipts issued by the insolvent debtor to the appellant banks and
wrongfully withheld from the latter by the assignee.

“III. The court erred in attempting to confer judicial power upon the
assignee by authorizing him in effect to arbitrarily determine the amount of
storage to be paid by each appellant bank for the forcible retention and storage
of the merchandise during the pendency of the insolvency proceedings.”

JOHNS, J.:

At a previous time the same court had decided that more than thirty days
prior to his insolvency, De Poli had delivered to the banks in question certain
quedans or warehouse receipts for the goods, wares, and merchandise in question,
and that for such reason the banks were the sole and exclusive owners of the
property evidenced by the warehouse receipts. The banks, having made a demand
upon the assignee for the possession of the property evidenced by the warehouse
receipts, and the assignee, having refused to make delivery, they now contend
that they were the owners and entitled to the possession of the property or the
proceeds of the sale, free of any charge, lien or encumbrance. In other words,
that the property, for which they held the warehouse receipts, ought not to be
subjected to the payment of storage charges.

It appears that on September 7, 1921, 0. Ranft submitted a written
proposition to purchase the property in question for the prices therein
specified, in which he says:

“This offer is open until 4 p. m. on the 8th of Sept.

“Please let me have your answer as soon as possible as I must answer by cable
to London within 48 hours from date of London cable.”

Considering his proposition, the parties in interest through their respective
attorneys, on the 8th day of September, 1921, entered into the following
stipulation:

“Whereas, it is deemed necessary and to the best interest of all parties
concerned that the said maguey and hemp be sold and disposed of, so as to avoid
the expense of further insurance and storage of the same pending the final
determination of said claims by the court, and the proceeds thereof held by the
assignee in lieu of said property and subject to any claims now existing against
said property on account of insurance, storage and other property charges for
the preservation thereof up to this time;

“And, whereas, after a careful investigation as to the present market value
of said hemp, taking into consideration its present condition, the parties
hereto are agreed that the said offer received from the said 0. Ranft is a
reasonable one and should be accepted by the assignee, after first having
obtained permission of the court to do so;

“Now, therefore, it is hereby stipulated and agreed by and between the
undersigned parties, through their respective counsel, that the offer of the
said 0. Ranft for the said hemp and maguey mentioned therein, be accepted by the
assignee of the above-entitled estate, and that the said hemp and maguey be sold
at the price therein stated and the proceeds of said sale held by the assignee
subject to the final decision of the courts as to the preferred claims thereto
by the various banks of Manila, as hereinbeforestated, and whatever charges may
now be due for the storage, insurance, etc., for the preservation of said hemp
and maguey by the assignee up to this time, it being understood that this
stipulation for the sale of this property shall in no way prejudice the rights
of any of the parties in connection with the preferred claims which have been
presented to the court by the various banks for the said hemp and maguey, but
they shall continue to a final determination, and the proceeds thereof, after
deducting the charges hereinbefore stated, shall be paid and delivered to the
party or parties whom the court may finally decide is entitled thereto.

“This stipulation is made subject to the approval of the court in the
above-entitled action.”

March 16, 1923, the banks filed a motion in which they asked permission from
the court to amend their record on appeal by including the following objections
to the payment of the storage charges, dated February 24, 1922:

“Come now the undersigned secured creditors and with reference to the motion
of counsel for the assignee of February 23, 1922, setting forth the consent of
the Bank of the Philippine Islands and of the Asia Banking Corporation to the
sale of the tobacco therein described and to the deposit of the proceeds thereof
pending the final determination of their claims and without prejudice to the
rights of any of the parties, respectfully call the court’s attention to the
fact that said creditors have in no manner consented and do not now consent to
the payment of storage charges during the retention of the said tobacco by the
assignee against the will of the undersigned creditors but on the contrary
reserve the right at all times to object to the payment of any storage charges
or any other charges or expenses incurred by such retention of said tobacco
after the presentation of the claims of the undersigned therefor.”

February 27, 1922, like objections were made by the attorneys for the
Chartered Bank of India, Australia & China.

It will be noted that the stipulation for the sale of the property was made
on the 8th of September, 1921, and the property was sold under that stipulation.
The formal written objections to the payment of storage charges above quoted
were made and dated February 24, 1922. The parties, having stipulated for the
sale of the property, and the property, having been sold under the stipulation,
they are bound by the terms and provisions of the stipulation. It will be noted
that it specifically recites that the property shall be sold, “so as to avoid
the expense of further insurance and storage of the same pending the final
determination of said claims by the courts, and the proceeds thereof held by the
assignee in lieu of said property and subject to any claims now existing against
said property on account of insurance, storage and other property charges for
the preservation thereof up to this time,” and further “that the said hemp and
maguey be sold at the price therein stated and the proceeds of said sale held by
the assignee subject to the final decision of the courts as to the preferred
claims thereto by the various banks of Manila * * *, and whatever charges may
now be due for the storage, insurance, etc., for the preservation of said hemp
and maguey by the assignee up to this time * * *, and the proceeds thereof,
after deducting the charges herein before stated, shall be paid and delivered to
the party or parties whom the court may finally decide is entitled thereto.”

This clearly implies that the parties agreed to the sale of the property, so
as to avoid any further expense for insurance and storage, and that the proceeds
of the sale should be held by the assignee, subject to the final decision of the
court as to the preferred claims of the various banks and the charges then due
for storage and insurance, and that after deducting the charges for such storage
and insurance, the remaining proceeds shall be paid and delivered to the party
or parties entitled to receive it.

The hemp and maguey were then in claimant’s warehouse and could not be sold
without some provisions being made for the payment of the storage charges and
insurance, and the fact that the stipulation recites that after deducting
charges for storage and-insurance, the proceeds shall be paid to the parties
according to their respective interests, clearly implies that it was then
understood and agreed that the storage and insurance charges should be first
paid out of the proceeds of the sale before any distribution of the remaining
assets.

The stipulation also recites:

“It being understood that this stipulation for the sale of this property
shall in no way prejudice the rights of any of the parties in connection with
the preferred claims which have been presented to the court by the various banks
for the said hemp and maguey.”

This part of the stipulation provides that it shall in no way prejudice the
rights of any of the parties in connection with the preferred claims of the
banks. In other words, neither of the parties waived any rights to object that
the claims of the banks were not preferred. Construed as a whole, the
stipulation clearly implies that the banks consented to the sale of the
property, and agreed that, after deducting charges for storage and insurance,
the remaining proceeds should be paid out and delivered to the parties according
to their respective interests. The stipulation, having been made and entered
into on the 8th day of September, 1921, and the property, having been sold under
the stipulation, its terms could not be changed by any subsequent acts or
conduct of the parties.

Although the stipulation was entered into on September 7, 1921, and the
plaintiff’s first claim was presented January 17, 1922, and his second claim
December 12, 1922, and although the banks filed objections to the allowance of
the claim as preferred to be paid out of the assets of the sale of the property,
which they claimed to own, neither the banks nor any one else ever made any
objections as to its amount or that the charges were unfair, unjust or
unreasonable, and the court allowed the claim of December 12, 1922, in full.

Appellants point out that the first claim recites that after December 31,
1921, the insolvent was indebted to the claimant in the sum of P51,700 for
storage, and that the second claim recites that after April 30, 1921, the
insolvent was indebted to the claimant in the sum of P59,690 for storage. Of
course, those claims are inconsistent. The appellee contends that there was a
mistake or clerical error in the date of the second claim, and that it should
read “up to April 30, 1922, instead of April 30, 1921.” It is very apparent that
this is true. It also appears that the first proof of claim presented on January
17, 1922, was for a balance of P25,062.35, and that a number of payments were
made thereon, and that the proof of claim presented on December 12, 1922, the
one now in controversy, was for a balance of P9,428.22. That is to say, between
the respective dates of the two claims, the assignee paid the claimant the sum
of P15,634.13, and that no one has ever objected to the amount of such payments,
and that the only question now presented is the fund from and out of which the
P9,428.22 should be paid.

The stipulation of September 8, 1921, contemplates that the charges for
storage and insurance shall be paid out of the proceeds of sale before any
distribution is made, and no objections having been made to the amount of
plaintiff’s claim or that his charges were unfair, unjust or unreasonable, and
the trial court having allowed the claim in full, this court has a legal right
to assume that the amount of the claim is just.

Under this view of the case, it is not necessary to pass upon or decide the
many other and important legal questions which are discussed in the able briefs
of opposing counsel.

From what has been said, it follows that the judgment of the lower court is
affirmed, with costs. So ordered.

Street, Malcolm, Avancena, Ostrand, and Romualdez, JJ.,
concur.

Araullo, C. J., and Johnson, J., did not take part.