Succession of Serralles v. Esbri

Background

A purchaser bought an interest in a Puerto Rico plantation and gave a mortgage to the seller, an heir of the prior owner. The parties disagreed about which money must be used to pay interest and the remaining debt. The seller demanded one dollar of American money for each peso owed, while the buyer relied on an April 12, 1900 Act of Congress provision to pay in U.S. coins at sixty cents per peso. A prior municipal judgment had been entered and paid, but was treated as executory and not res judicata. The Supreme Court took the case under a federal statute that permits review of such claims.

Reasoning

The Court examined the Spanish-language deeds and found they used “centavos,” the one-hundredth of a peso, not U.S. "cents." Centavos were shown to be worth about six-tenths of a U.S. cent, making a peso roughly sixty U.S. cents. The Court rejected a literal translation that would make a centavo equal an American cent and thereby require one dollar per peso. It also held that Congress fixed the exchange for redeeming Puerto Rican coins and that the statute applied to existing debts. Applying the congressional exchange, the Court concluded the buyer could discharge the debt in U.S. coins at sixty cents per peso and reversed the lower court’s one-dollar-per-peso judgment.

Real world impact

The decision allows debtors under Puerto Rico contracts existing when Congress fixed the exchange to pay in U.S. coins at the statutory sixty-cent rate. Sellers cannot, under these facts, insist on a one-dollar-per-peso conversion that would raise the debt by over sixty percent. The case is reversed and sent back so the lower court can proceed using the congressional exchange rate.