WHITE, MCKENNA and HOLMES, JJ., dissenting.

199 U. S.

that the spirit of the statute does not embrace transactions of that character. For the purposes of this case, however, it does not seem to me essential to say whether or not such rulings are correct, as an agreement to mortgage to repay a given sum advanced, to enable the preëmptor to improve the land, might well be held not to be within the spirit of the prohibitions of the statute, and yet such rulings would not be controlling as to an agreement like the one here in question, especially if the contract is construed as amounting to a perpetual obligation to transfer to a third person upon a sale of the land a given portion of the price. Such a contract at once puts the person in whose favor it is made in the attitude, not of a lender entitled to receive back his loan with simple interest, but in the position of a speculator who is to benefit from the enhancement in value of the land which may arise in the future, without reference to the amount of any expenditure by him made, a character of transaction which it was the express purpose of the act of Congress to forbid. Myers v. Croft, 13 Wall. 291, 295. And from another point of view such a transaction puts the preëmptor making it in a position where his plain interest is not to improve and develop the land to its full capacity, because the labor expended for that purpose would ultimately inure in case of a sale of the land to the benefit of a third person.

Deeming that the contract in question was within the prohibitions of the act of Congress and void as against public policy, I do not think the court should lend its aid to its enforcement, and I therefore dissent, and am authorized to state that MR. JUSTICE MCKENNA and MR. JUSTICE HOLMES concur therein.

199 U. S.

Syllabus.

ROYAL INSURANCE COMPANY v. MILLER.

ERROR TO THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF PORTO RICO.

No. 7. Argued October 17, 18, 1905.—Decided November 27, 1905.

The owner of an estate in Porto Rico mortgaged the property to a bank, the mortgage being granted by notarial act describing the property and the fruits thereof and declaring that it was all planted in cane except certain specified parts including the sugar manufactory and that the loan secured was to enable the borrower to develop and keep the plantation; as additional collateral the owner delivered to the bank a policy of fire insurance on "stock of sugar and molasses deposited in the sugar manufactory on the estate" which was not to take effect, however, until several months thereafter; after the policy took effect and during its life the sugar house and stock was burned; action was not brought until more than fifteen but less than twenty years thereafter. Meanwhile the bank had become bankrupt and a special master appointed with power to collect the assets thereof. In an action by the special master on the policy the company denied liability and the plaintiff's capacity to sue, also pleading prescription. The lower court permitted one of the parties claiming an after-acquired interest in the policy antagonistic to the plaintiff to be joined as party plaintiff. A verdict was rendered for both against the company. In sustaining the verdict, Held, that: Where the decree appointing a special master gave him express authority to sue to collect all assets of the bankrupt, the fact that he was merely designated as special master did not deprive him of the special powers to sue conferred on him by the decree.

Under the law in force in Porto Rico the growing crop was, by operation of

law, included in the mortgage to the bank even though it had not expressly purported to embrace the fruits growing upon the mortgaged premises.

The growing crop continued to be affected by the mortgage after its harvest or manufacture into sugar up to the time of its removal or warehousing. The rights of the mortgage creditor attached to indemnity for insurance upon the mortgaged property, including the crops, provided the loss occurred after the execution of the mortgage.

In countries governed by the civil law a mortgage is indivisible and where junior incumbrances have not acquired rights necessitating a different course a mortgagee may assert the entirety of his mortgage rights against any or all of the property affected by the mortgage.

In the absence of express Spanish legislation affecting Porto Rico the law prior to the extension of the Civil Code thereto in 1889 concerning.. limiVOL. CXCIX-23

tations of personal actions, is that generally prevailing under Spanish law and in this case the twenty-year term applied and not the fifteenyear term applicable under the Civil Code after its extension to Porto Rico.

Amendments are within the sound discretion of the trial court and not susceptible of review on error except for a clear abuse, and in this case there was no such abuse nor was there any impropriety in allowing the amendment joining the additional party plaintiff.

THE facts are stated in the opinion.

Mr. Frederic D. McKenney, with whom Mr. Wayne MacVeagh, Mr. Francis H. Dexter and Mr. John Spalding Flannery were on the brief, for plaintiff in error.

Mr. Fritz V. Briesen for defendants in error.

MR. JUSTICE WHITE delivered the opinion of the court.

Whether a judgment upon a verdict enforcing against the plaintiff in error a contract of fire insurance is erroneous, is the general question for decision. The record is confused, the pleadings involved and the errors assigned numerous. We shall, therefore, at the outset state the contracts with which the controversy is concerned, the pleadings and such uncontroverted facts as are essential to be borne in mind in order to comprehend the issues raised by the assignments of

error.

On September 15, 1884, the Royal Insurance Company issued its fire policy in favor of Antonio Amadeo, "estate owner of Quebrada Arenas Maunabo," to the amount of sixteen hundred pounds sterling, "on stock of sugar and molasses deposited in the sugar manufactory on the estate Quebrada Arenas," the risk only to begin two months and four days thereafter, viz., on November 19, 1884, and embracing the period between that date and November 19, 1885.

On September 19, 1884, four days after the taking out of the policy, Antonio Amadeo, the insured, by a notarial act acknowledged that he had received a loan from the Caja de

Ahorros, a bank of Ponce, Porto Rico, amounting to $15,036.27, which he obligated himself to repay in two instalments, due in February and March, 1885. It was recited in the act that the money was lent to enable Amadeo "to attend to the developing and keeping of a sugar plantation by him owned." The act also described the plantation as the estate of Quebrada Arenas, gave the quantity of land, which it was declared was all planted in cane, except where used for pasturage and where covered by a sugar manufactory and other appurtenant buildings. A mortgage in favor of the lender was granted by the notarial act upon all the property described "and the fruits thereof."

On the sixth of February, 1885, the sugar manufactory on the estate of Quebrada Arenas was burned, and there was destroyed in the factory sugar and molasses alleged to be equal in value to the sum of the insurance. It was shown that some of the sugar and molasses was in hogsheads and some was in pans and other apparatus going through the process of manufacture.

Prior to the year 1901, in a court of the island of Porto Rico, the Caja de Ahorros was declared a bankrupt and trustees were appointed and took charge of its assets. In the year 1901 proceedings were begun in the United States District Court for Porto Rico by creditors of the bankrupt against the trustees, and Robert A. Miller was appointed a special master with power to collect the assets of the bankrupt estate. On April 23, 1902, Miller, as special master, commenced this action on the policy. The declaration averred the appointment of Miller and the authority given him to collect the assets of the Caja de Ahorros. The execution of the policy of insurance and mortgage of the plantation was then recited, and it was averred that the Caja de Ahorros as a mortgage creditor was entitled to the avails of the policy of insurance, and therefore had a right to enforce the same.

The declaration was demurred to, first, on the ground that Miller as special master was without authority to sue; and,

second, that the action was prescribed, no reference being made to the period of limitation relied upon. A general demurrer was also filed. The court overruled the special demurrers and sustained the general demurrer because of the want of precision in some of the averments of the declaration, which was afterwards remedied by amendment.

To the declaration as amended three pleas were filed, the general issue, a prescription of six years and a prescription of fifteen years. A demurrer was sustained to the plea of six years, joinder was had on the general issue, and a replication was filed setting up various acts, which it was alleged were interruptive of the alleged bar of fifteen-year limitation. Subsequently an additional plea was filed, averring in substance that on September 3, 1884, Antonio Amadeo by way of pledge had assigned the policy of insurance in question to a bank styled the Credito Mercantil, free from any claim of the Caja de Ahorros, the alleged mortgage creditor, and that by judicial proceedings the policy had been sold and purchased by said Credito Mercantil, and as neither the Caja de Ahorros nor Miller were the transferees of the Credito Mercantil, the plaintiff was not entitled to recover. A replication was filed denying all the averments of the plea, but admitting that Antonio Amadeo, on a date not named, had deposited the policy as collateral security with the Credito Mercantil, and that that corporation had, after the fire, bought in the policy at a judicial sale by it provoked, and had subsequently transferred the policy to one Lucas Amadeo. Upon this replication issue was joined by the defendant. Subsequently the court allowed Lucas Amadeo to become a party plaintiff and permitted amendments to the declaration to accomplish this result. These amendments averred the delivery of the policy as collateral security by Antonio Amadeo to the Credito Mercantil, the date not being given, the sale, long after the fire, of the policy under judicial proceedings, and its purchase by the Credito Mercantil, and the subsequent transfer thereof by the Credito Mercantil to Lucas Amadeo. It being besides