USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 93-1770
GEORGIA PACIFIC CORPORATION,
Plaintiff, Appellee,
v.
PABLO EGUIA & SONS, INC., ET AL.,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Perez-Gimenez, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Coffin, Senior Circuit Judge,
____________________
and Boudin, Circuit Judge.
_____________
____________________

Federico Lora Lopez for appellants.

___________________
Manuel Fernandez-Bared with whom
_______________________
Valdes were on brief for appellee.
______

Nestor Duran
_____________

and

McConn
______

____________________
January 31, 1994
____________________

BREYER,

Chief Judge.
____________

appeal is whether

The

a three-year, or a

sole

And,

district court
we

affirm

its

that

We agree with

fifteen-year statute

grant

of

on this

fifteen-year, statute

of limitations applies to plaintiff's claims.

the

issue

summary

applies.

judgment for

the

plaintiff.
I
Background
__________
The

parties agree

about all the

relevant facts.

In 1981, the
pay

plaintiff, Georgia Pacific Corp.,

the defendant,

finding retailers

Pablo Eguia
who would

tissue in Puerto Rico.

the

sell the

"guaranty"

for

plaintiff's bathroom

contract, promised that it

the retailers'

And, it entered into a

a commission

The defendant, as an "inducement" to

plaintiff to enter into the

would

& Sons,

promised to

consequent

"payment[s]."

Guaranty Agreement that spelled

out

the details.
Apparently, over the years,

certain retailers did

not pay for bathroom tissue that they bought.

And, in 1991,

the plaintiff brought this diversity action in Puerto Rico's

federal

district

guarantee.
statute

The

court
only

of limitations.

to

collect

meaningful

on
defense

the

defendant's

concerned

the

Defendant argued that a three-year

-22

statute of limitations applied, in which case (the plaintiff

concedes) it would bar the

plaintiff argued,

plaintiff's $214,000 claim.

however, that

statute of limitations

a different,

applied to its claim,

The

fifteen-year
in which case

(the defendant concedes) the claim is not time-barred.

The

district court, finding the fifteen-year statute applicable,

granted

summary

appeals.

judgment

for

the

plaintiff.

Defendant

We agree with the plaintiff that the fifteen-year

statute applies.
II
Analysis
________
The
primarily
Code.

upon

defendant

rests

two provisions

its
of

"three year"
Puerto

argument

Rico's Commerce

The first says:

The liability of

commercial
__________
brokers . . . in the obligations in
_______
_______________
which they take part by reason of their
________________________________________
office shall
prescribe after
three
______
years.
10 (App. I) L.P.R.A.

1904

. . .

(Article 942) (emphasis added).

The second provision says:

Actions arising

from drafts
______
years

shall

extinguish
three
after
maturity . . . .
A similar rule shall be applied to
commercial
bills
of
exchange
and
___________________________
promissory notes, checks,
stubs and
________________________________________
other instruments of draft or exchange .
______________________________________
. . .

-33

10

(App. I) L.P.R.A.

1908 (Article 946) (emphasis added).

If either of these provisions applies, the plaintiff's claim

is barred.
Unfortunately for the
provisions applies.

The

defendant, neither of these

first provision

does not

govern

because, whether or not the defendant acted as a "commercial

broker," one cannot fairly characterize the
which the

plaintiff is now suing as a "commercial broker's"

obligation.

Rather,

obligation,

that

obligation

is

guaranty
________

and the defendant, in guaranteeing the debts of

another, acts as a
31

obligation upon
__________

L.P.R.A.

surety, not as a commercial broker.

4871

(Article

(defining surety as "a person

1721

of

the

Civil

See
___
Code)

[who] binds himself to pay or

perform for a third person in case the latter should fail to

do so").

The fact that the defendant

offered the guaranty

as

an

"inducement"

to

obtain

an

representation arrangement makes no

(exclusive)

difference.

sales

One

might

offer all sorts of promises as inducements to obtain such an

arrangement -- say, a promise to sell a private home, or the
family silver,

or a

car.

But,

we should

normally expect

that the nature of the promise, not the promisor's

determines
would

the

appropriate

normally expect,

motives,

prescriptive provision.

for example, that

One

the prescription

-44

provisions
other

applicable to

real

provisions, govern

estate contracts,

a promise

irrespective of the reason why the

______
have

found nothing

in the

to

not some

sell real

estate,

owner wants to sell.

codes,

commentators, or

We

cases

suggesting the contrary.

The
"commercial

second
bills

provision
of

(referring

exchange,"

to

"promissory

"drafts,"
notes,"

"checks,"

"stubs,"

exchange")

does

not

prescription

bars

instruments."
___________

Espanol

P.R.R.

"other

instruments

apply

because

actions
R. Gay

in

94, 119

instrument"

v.

of

draft

or

its

"three-year

from

negotiable
__________

Codigo de

Commerce)

Comercio

corresponding

(translated, and

Banco Popular de Puerto Rico, 75

______________________________

(1953)) (emphasis

is

of

(1936) (describing

Spanish Code

in Portilla
________

arising

de Montella,

Comentado 503-04

provision
quoted,

and

a financial

added).

instrument

"negotiable

that, among

other

things, embodies an "unconditional promise or order to pay a

sum

certain."

19

instrument[]");

see also
___ ____

note" similarly);
similarly); id.
__
exchange).
plainly

L.P.R.A.

id.
__

id.
__

(defining

"negotiable

361 (defining

"promissory

221 (defining

exchange"

362 (defining "check" as a kind of bill of

The promise before us -not

___

"bill of

negotiable

-55

one of guaranty -- is

instrument;

it

is

neither

"unconditional"
default),

(for

it

is

conditioned

on

the debtor's

nor is it for a "sum certain" (for it promises to

pay only to the extent the debtor defaults).

What, then, is the
__
a

promise of

Circuit,

guaranty under

applying

proper prescription period for

Puerto Rico

Louisiana's civil

law?

The Fifth

law system,

that "the limitations period that applies in

tells us

a suit against

a surety is normally the same as that which applies to suits

against the principal
debt."

debtor for payment of

Browning Seed, Inc.

___________________

(5th Cir. 1987)

the same

in

v. Bayles, 812 F.2d

______

(citation omitted).

respect to

the underlying

This

Puerto Rico's

Circuit has held

law.

Consolidated Mortgage & Fin. Corp., 805

____________________________________

See FDIC
___ ____

F.2d 14,

Cir. 1986) (prescription period for guarantee

see also
___ ____

FDIC v.
____

(D.P.R. 1984) (Torruella,

Barrera,
_______

595 F.

C.J.) (same).

v.

20 (1st

of promissory

note given by prescription period for underlying

note);

999, 1002

promissory

Supp. 894,

Barrera,
_______

898

on which

Consolidated Mortgage relied, noted that Puerto Rico's Civil

_____________________
Code says

that

the

"obligation[s]"

of

surety

(or

guarantor) "expire" at the same time as those of the debtor.

31 L.P.R.A.
also
____

10

4951

(App. I)

(Article 1746 of
L.P.R.A.

1824

the Civil

Code); see
___

(Article 352

of

the

Commerce Code) ("obligations" of a surety "continue in force

-66

until

. .

the

complete

contract which is secured").

reasoned that

termination

of the

principal

And, from that fact, the court

the same prescription period normally applies

as well.
Consistent with
argument brief,

this rule, defendant, in

now seems

to acknowledge

a post-

that its

appeal

succeeds or fails depending upon whether or not an action on

the underlying debts guaranteed, those of the retailers, are
themselves

time-barred.

That being

so,

its appeal

fail.

That is because the Supreme Court of Puerto Rico

held,

at least

twice, that

the

prescription period

must
has
that

applies to
Civil

a reseller's

Code's

promise to pay

fifteen-year
____________

"catch

a supplier

all"

is the

provision

--

provision that applies to "personal" actions for which other

codes

specify

L.P.R.A.
Inc.
____

"no

term

of

prescription."

31

5294 (Article 1864); see Ramallo Bros. Printing,

___ _______________________

v.

Guillermo Ramis, 93
________________

fifteen-year "catch
that bought, for
the like
(1941)

special

all" provision

84

(1993) (applying

to advertising

resale to its clients, business

from a printer);
(same for

wholesale

J.T.S.

grocer);

Davila v. Torres, 58
______
______

retail grocer
see
___

also
____

that

-77

cards and
P.R.R. 880

bought produce

Fernando

Institutions of Business Law 448

_______________________________

company

(13th

Sanchez
ed.

from

Calero,

1988) ("The

prescriptive term of
in the

sale for

(citation

the seller's right to pay[ment]

resale is .

omitted)

Appendix);

. . fifteen

(translation supplied

. . .

years . .
in

. .")

Supplemental

Luis Diez Picazo, Prescription in the Civil Code

______________________________

214(1964)(same)(translation suppliedinSupplementalAppendix).
In reaching this conclusion, the
Puerto
that we

Rico has rejected

have not yet

one other

Supreme Court of

prescription provision

mentioned, namely a provision

in the

Civil Code that sets a three-year prescriptive term for

the payment . . . to traders for the
value of goods sold to others who are
not traders, or who, being such, are
engaged in a different trade.
31 L.P.R.A.
apply
and

5297 (Article

1867).

This provision does not

here because supplier and retailer are both "traders"

both are

trade.

engaged in

See Davila,
___ ______

specific [commodity]

the same,

58 P.R.R. at
is the

not in

a "different,"

884 ("The

same whether

trade [i]n

at wholesale

a
or

retail . . . .").
It may seem somewhat anomalous, as the Puerto Rico
Supreme

Court itself has noted, that the limitations period

applicable to

merchants

in the

same business

is so

much

longer than that applicable to those in different businesses

or to non-traders.
are dealing with

See Ramallo Bros., 93 J.T.S. at 86 ("We

___ ______________
a situation which strays from
-88

the guiding

observation

that,

as

general

prescriptive terms

are much

keeping

peculiar

with

traffic.")

the

(citations

rule,

shorter than
demands

omitted).

in the

of
It

the

the
may

mercantile
civil in
commercial

be,

as

one

commentator suggests, that same-business traders tend to pay

their bills to each other less promptly than do others.
Picazo, supra, at 215.
_____
Supreme Court

See
___

But, anomalous or not, we follow the

of Puerto Rico, which follows the language of

the Code.
For these reasons, this action is not time-barred.
There being no other significant
judgment of

the district

guaranteed amounts, is
Affirmed.
________

legal issue before us, the

court, requiring

payment of

the

-99