TORRES, J.:
FACTS:
In 1905, the defendants borrowed from the plaintiff 480 pesos, payable in January of said year under the agreement that if, at the expiration of the said period, said amount should not be paid it would be understood that the house and lot they owned be considered as absolutely sold to the plaintiff for the said sum. The plaintiff filed a complaint in the Court of First Instance of La Laguna, praying that judgment be rendered in his behalf ordering the defendants to deliver to him the house and lot claimed, and to pay him in addition thereto as rent the sum of pesos per month from February of that year, and to pay the costs of the action.
The defendants argued that the principal borrowed was only 200 pesos and that the interest was 280 pesos, although the amount of indebtedness was made to appear in the sum of 480 pesos; and that as their special defense defendants alleged that they offered to pay the plaintiff the sum of 480 pesos, but the plaintiff had refused to accept the same.
The trial court rendered a judgment ordering the defendants to deliver to the plaintiff the house and lot and to pay the costs of the action.
ISSUE:
Whether or not the two contracts entered into between the parties are void.
HELD:
The fact that the parties have agreed at the same time, in such a manner that the fulfillment of the promise of sale would depend upon the nonpayment or return of the amount loaned, has not produced any charge in the nature and legal conditions of either contract, or any essential defect which would tend to nullify the same.
If the promise of sale is not vitiated because, according to the agreement between the parties thereto, the price of the same is to be the amount loaned and not repaid, neither would the loan be null or illegal, for the reason that the added agreement provides that in the event of failure of payment the sale of property as agreed will take effect, the consideration being the amount loaned and not paid.
The property, the sale of which was agreed to by the debtors, does not appear mortgaged in favor of the creditor, because in order to constitute a valid mortgage it is indispensable that the instrument be registered in the Register of Property, in accordance with article 1875 of the Civil Code. In the case at bar, the transaction does not constitute a mortgage, nor could it possibly be a mortgage, for the reason of said document is not vested with the character and conditions of a public instrument. Also, the said property could not be pledged, not being personal property, and notwithstanding the said double contract the debtor continued in possession thereof and the said property has never been occupied by the creditor.
Neither was there ever any contract of antichresis by reason of the said contract of loan, inasmuch as the creditor-plaintiff has never been in possession thereof, nor has he enjoyed the said property, nor for one moment ever received its rents; therefore, there are no proper terms in law, taking into consideration the terms of the conditions contained in the aforesaid contract, whereby this court can find that the contract was null, and under no consideration whatever would it be just to apply to the plaintiff articles 1859 and 1884 of the same code.
The contract (pactum commissorium), indicates the existence of the contracts of mortgage or of pledge or that of antichresis, none of which have coincided in the loan indicated herein.
It is a principle in law, that the will of the contracting parties is the law of contracts. It was agreed between plaintiff and defendants herein that if defendants should not pay the loan of 480 pesos in January1905, the property belonging to the defendants and described in the contract should remain sold for the aforesaid sum. The document of contract has been recognized by the defendant Alinea and by the witnesses who signed same with him, being therefore an authentic and efficacious document, in accordance with article 1225 of the Civil Code; and as the amount loaned has not been paid and continues in possession of the debtor, it is only just that the promise of sale be carried into effect, and the necessary instrument be executed by the vendees.
Therefore, by virtue of the reasons given above and accepting the findings given in the judgment appealed from, we affirm the said judgment herein, with the costs against the appellants.
After expiration of twenty days from the date of the notification of this decision let judgment be entered in accordance herewith and ten days thereafter let the case be remanded to the court from whence it came for proper action.
WILLARD, J., dissenting:
This contract violates the fundamental principle of the Spanish law, which does not permit a debtor, at the time he secures a loan of money, to make an agreement whereby the mere failure to pay the loan at maturity shall divest him irrevocably or allow his interest in the specific property mentioned in the agreement without any right on his part to redeem or to have the property sold to pay the debt. (Civil Code, arts. 1859, 1872, and 1884.) I therefore dissent.
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