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July 31, 2003
Saturday, July 31, 2004 (Revised Edition)

THE CONTROVERSY OVER
LAS COLINAS PROPERTIES
(Fajardo and Ceiba, Puerto Rico, 1960-2003)

Memorandum of Law
By Vigdor Schreibman, President,
Las Colinas Development Corporation

THE CONTROVERSY OVER LAS COLINAS PROPERTIES
Chronology of Events, 1960-2003

1960 1961 1963 1964 1966 1967 1968 1970 1972 1974 1977 1978 1979 2002 2003

GETTING STARTED V. Schreibman contract for purchase of Penedo family property. A. Kalish - Banco Popular agreement to construction financing. Las Colinas, Inc. contract for purchase of Melendez family property. Las Colinas Master Plan approved in concept by PR Planning Board. San Juan Star Supplement announcing Las Colinas Master Plan. V. Schreibman contract for purchase of De Celis family property (4/5 interest). FIRST CONTROVERSY J. L. Carrion - Banco Popular repudiation of "revolving line of credit". $2,000,000 bearer mortgage note pledged for new financing. Banco Popular foreclosure action in Superior Court of Puerto Rico (Humacao). Las Colinas, Inc., bankruptcy petition under Ch. XI, B-38-64. US District Court (Puerto Rico) authorizing shift to proceedings under Ch. X. US Court of Appeals (1st Cir.) authorizing appearance of corporation pro se by its duly authorized president and attorney-in-fact. US Court of Appeals (1st Cir.) judgment for Las Colinas, Inc. overturning shift of bankruptcy proceedings to Ch. X. US District Court (Puerto Rico) judgment for Banco Popular authorizing foreclosure of Las Colinas Property. US Court of Appeals (1st Cir.) judgment for Las Colinas, Inc. overturning authority to foreclose and holding Banco Popular liable for damages. US Supreme Court denial of petition by Banco Popular for Writ of Certiorari. GETTING STARTED AGAIN Las Colinas Development Corp. - Walter E. Heller & Co. finance agreement. V. Schreibman contract for purchase of De Celis family property (1/5 interest). Las Colinas Development Corp. purchase of 783-cda Las Colinas Property. SECOND CONTROVERSY Walter E. Heller & Co. premature demand for repayment of loan and repudiation of finance contract. Deed #46 of Noel Zamot, Individualization of Property. Las Colinas Development Corp., bankruptcy petition, B-74-267. Bankruptcy Court (Puerto Rico) denying authorization for appearance of corporation pro se by its duly authorized president and attorney-in-fact. Bankruptcy Court (Puerto Rico) granting relief from stay and authorizing foreclosure action by Walter E. Heller & Company. Walter E. Heller foreclosure action in US District Court (Puerto Rico) Civil No. 77-1075. US District Court (Puerto Rico) default judgement against Las Colinas. US District Court (Puerto Rico) Order of Sale of Las Colinas Property. Auction of Las Colinas Property. Deed #10 of Jorge R. Jimenez, Deed of Judicial Sale. US Court of Appeals (1st Cir.) judgment for Walter E. Heller. US Supreme Court denial of petition by V. Schreibman and Las Colinas Development Corp. for Writ of Certiorari. THIRD CONTROVERSY Lcda Grace Monge-La Fosse fax message to Vigdor Schreibman informing of action by 200 families against Banco Popular and other institutions in re: title and construction defects involving "Terrazas Demajagua" single family housing project (formerly part of Las Colinas Property) in Superior Court of Puerto Rico (Fajardo). Contemplated action: Nullity of Foreclosure and Demand for Revendication.

The Controversy Over Las Colinas Properties - Page *i

THE CONTROVERSY OVER LAS COLINAS PROPERTIES
Memorandum of Law

Abstract I. There remains ... what only those who have experienced it for themselves can feel in their hearts: "An unjust court is worse than brigandage." A.I. Solzhenitsyn, The Gulag Archipelago Three 524 (1978). Without equal access to the law, the legal system not only robs the poor of their only protection, but it places in the hands of their oppressors the most powerful and ruthless weapon ever invented. The law itself becomes the means of extortion. R.H. Smith, Justice and Law (1919), reviewed by Conyers, Undermining Poverty Lawyers, in VERDICTS ON LAWYERS 129, 131 (R. Nader & M. Green eds. 1976). This constitutional concern (for the importance of legal standards that provide "reasonable constraints" within which "discretion is exercised"), itself harkening back to the Magna Carta, arises out of the basic unfairness of depriving citizens of life, liberty, or property, through the application, not of law and legal processes, but of arbitrary coercion ... Requiring the application of law, rather than a decision maker's caprice, does more than simply provide citizens notice of what actions may subject them to punishment; it also helps to assure the uniform treatment of similarly situated persons that is the essence of law itself. See Railway Express Agency, Inc. v. New York, 336 U.S. 106, 112 (1949) (Jackson, J, concurring) ("[T]here is no more effective practical guarantee against arbitrary and unreasonable government than to require that the principles of law which officials would impose upon a minority must be imposed generally"). BMW of North America, Inc. v. Gore, 517 U.S. 559, 578 (1996) (concurring opinion of Justice Breyer, with whom Justice O'Connor and Justice Souter join). II. La función calificador del Registrador instrumenta el principio de legalidad que gobierna nuestra ordenamiento inmobiliario registral ... Su finalidad estriba en que "sólo pueden tener acceso al Registro los titulos que reúnan los requisitos establicidos por las leyes. De otro modo--decía don Jerónimo GONZÁLEZ--los asientos sólo servirían para engañar al público, favorecir el tráfico ilícito, y provocar nuevo litigos". J.L. Lacruz Berdejo y F. Sancho Rebullida, Derecho Inmobiliario Registral, Barcelona, Librería Bosch, 1977, pág 354, quoted in Rodriguez Moralez v. Registrador, 142 D.P.R. 347, 362 (1997).

The Controversy Over Las Colinas Properties - Page *ii

THE CONTROVERSY OVER LAS COLINAS PROPERTIES
Memorandum of Law

Contents Vision Statement Legal Overview, Relief from Judgments Part I. Bankruptcy Court Proceedings, Failure of Due Process Law of the case Summary history of the case The corporation's constitutional rights The corporation's "good faith" The corporation's distressed financial condition The corporation's pro se appearance Part II. U.S. District Court, Null Foreclosure Action Jurisdiction Public notice Schedule 1. Description of Las Colinas Properties Part III. Fictitious Property Sales Prices Part IV. Conclusions Attachments: Annex 1. U.S. Court of Appeals for the First Circuit, Letter from Roger A. Stinchfield, Clerk, to Vigdor Schreibman, April 28, 1966 Annex 2.1. U.S. Court of Appeals for the First Circuit, Appeal No. 6729, Appeal No. 6730, Brief for Banco Popular de Puerto Rico (cover page) Annex 2.2. U.S. Court of Appeals for the First Circuit, Appeal No. 6729, Appeal No. 6730, Brief for Banco Popular de Puerto Rico (pertinent text)

Page 1 1 4 4 5 8 9 10 15 17 17 19 20 22 26

The Controversy Over Las Colinas Properties - Page *iii

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THE CONTROVERSY OVER LAS COLINAS PROPERTIES
Memorandum of Law (Parts I-IV)
July 31, 2003

VISION STATEMENT

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LEGAL OVERVIEW, RELIEF FROM JUDGMENTS

Las Colinas Properties were originally comprised of 12 farms totalling some 783-cds. They were first acquired by Vigdor Schreibman, and by Las Colinas, Inc. beginning in July 1960, 4-decades ago. The properties are located in Fajardo and Ceiba, Puerto Rico, fronting on the East with Bahia Demajagua, and bordering on the South with Roosevelt Roads Naval Station. They are served by the new State Road #53, going from North to South, and by State Road #982, going from East to West. All the farms were consolidated and acquired by Las Colinas Development Corporation pursuant to Deed #176 authorized by Notary Public Eduardo E. Franklin, Dec 6, 1972, including Finca #8334, recorded at page 170, volume 221 of Fajardo, and Finca #621, recorded at page 22, volume 28 of Ceiba.

The first controversy over Las Colinas Properties spanning between 1964-1972, was a successful litigation reported in Las Colinas, Inc. v. Mason, 377 F.2d 99 (1st Cir. 1967), after first remand, sub nom, In re Las Colinas, Inc., 426 F.2d 1005 (1st Cir. 1970), after second remand, 453 F.2d. 911 (1971), cert. denied, Banco Popular de Puerto Rico v. Las Colinas, Inc. 405 U.S. 1067 (1972).

The second controversy spanning between 1974-1979, was a disastrous litigation reported In re Las Colinas Development Corp., 12 COLLIER BANKR. CAS. 652 (Banr. D.P.R. 1977), appeal dismissed, 446 F.Supp. 141 (D.P.R. 1978), aff'd, 585 F.2d 7 (1st Cir. 1978), cert. denied, Vigdor Schreibman and Las Colinas Development Corp. v. Walter E. Heller & Co., No. 78-5914 (1978), 439 US 1063 (1979) (exception noted, "Mr. Justice Stewart would grant the motion" [of Las Colinas Dev. Corp. for leave to proceed in forma pauperis.]). A default judgment against Las Colinas Properties followed those decisions in a foreclosure action in the US District Court for Puerto Rico. Walter E. Heller & Co. v. Las Colinas Development Corp., et al., Civil No. 77-1075 (Apr 26, May 9, 1978).

Since the disastrous judgments of 1977-78, 25-years have passed. Las Colinas remained paralyzed, put out of action, unaware of any further aspects of these matters. But on Sept 9, 2002, Lcda Grace Monge-La Fosse, of San Juan, Puerto Rico informed me by fax of a construction and property title case in which she was engaged as counsel to hundreds of plaintiffs brought against Banco Popular de Puerto Rico and a dozen other banks, mortgage lending comnpanies, and construction companies involving Las Colinas Properties. Harold Santiago Martell, et al., v. Marina Las Gaviotas, et al, Civ. No. NSCI-2001-0378, Estado Libre Associado de Puerto Rico, Tribunal de Primera Instancio, Sala Superior de Fajardo.

Lcda Grace Monge-La Fosse requested my "assistance to discover the truth about the history" of Las Colinas Properties. She also described her research into "the large history of irregularities, illegalities, violations of laws, regulations, null execution proceedings and authorization of public instruments that lack all efficacy with respect to Finca #8334" Las Colinas Properties. The cloud of obscurity surrounding those transactions finally began to fall, giving rise to the third controversy related here concerning Las Colinas Properties.

Relief from the judgments of 1977-78 will now be sought pursuant to FED. R. CIV. P. Rule 60(b)(4) (corresponding to 32 L.P.R.A. App. III, R. 49.2(4)), based on a claim that those judgments, including all the bankruptcy proceedings responsible for authorization of the foreclosure action and judicial sale of Las Colinas Property, are absolutely null and void. The proposed rule 60(b) action provides an equitable exception to the normal rules of finality of judgments. In re Acorn Hotels, LLC, 251 B.R. 696, 700-01 (Bkrtcy. W.D. Tex 2000). The court has no discretion under Rule 60(b)4). Either the judgment is void or it is valid. 11 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2862.

A void judgment is subject to direct or collateral attack "at the instance of any person affected by it, at any time and in any proceeding in another court of equal jurisdiction." See e.g., 47 Am Jur 2d, Judgments, § 916; 50 C.J.S. Judgments § 499; Blume v. U.S. Acting Through Farmers Home Admin. 40 B.R. 551, 553 (D. South Dakota 1984). The 25-year delay between the judgments in the 1974-79 litigation over Las Colinas Property and the present proposed action is not an impediment to relief from a judgment that is void.

Where the debtor or third party owner petitions to void an ordinary mortgage foreclosure proceeding based on grounds which would absolutely nullify said proceeding (lack of personal or subject matter jurisdiction or due process violations) the action may be brought at any stage and is not affected by any prescriptive term. Atanacia Corp. v. J.M. Saldana, Inc., 133 D.P.R. 284, 305 (1993). (30-year prescriptive term).

While a motion for relief from judgment cannot be used merely to reargue a point already decided, one cannot be barred from challenging a judgment that is a legal nullity. U.S. v. One Rural Lot No. 10,356, 238 F.3d 76, 78 (1 Cir. 2001).

Rule 60(b)(4) motions cannot be denied on the procedural ground that they were not brought within a "reasonable time." Sea-Land Service, Inc. v. Ceramica Europa Il, Inc., 160 F.3d 849, 852 (1 Cir. 1998). "(I)f a judgment is void it is a nullity from the outset and any 60(b)(4) motion for relief is therefore filed within a reasonable time." V.T.A., Inc. v. Airco, Inc. 597 F.2d 220, 224, n.9 (10 Cir 1979); Cf. Figueroa v. Banco de San Juan, 108 D.P.R. 680, 688-689 (1979); 11 C. Wright & A. Miller, at § 2866. The doctrines of collateral estoppel and res judicata do not preclude a person from challenging a judgment under Rule 60(b)(4) when the judicial process was, itself, absolutely void. Kalb v. Feuerstein, 308 U.S. 433, 438-40 (1940); Kremer v. Chemical Construction Corp., 456 U.S. 461, 482 (1982); Davies v. Chevey Chase Financial Ltd., 667 F.2d 160, 172 (DC Cir. 1981); 18 Moore's Federal Practice § 131.30[1][a] (Matthew Bender 3d ed.). Similarly, "nearly overwhelming authority exists for the proposition that there are no time limits with regard to the challenge to a void judgment ... thus laches is no bar to recourse to Rule 60(b)(4)." U.S. v. One Toshiba Color Television, 213 F.3d 147, 157-158 (3 Cir. 2000). Moreover, the equitable doctrine of laches cannot properly bar the return of property rights subject to statutory restrictions. Ewert v. Bluejacket, 259 U.S. 129, 138 (1922).

Accordingly, protection of third parties by 30 L.P.R.A. § 2355, ¶ 1, does not extend to property rights that are extinguished and loose their legal effect by cancellation under § 2355, ¶ 2, and § 2451, when the nullity of a title is ordered judicially under § 2454, ¶ 4th. In a cause of action for recovery of property and the fruits produced thereby, a third party claiming proper title in good faith is not protected by § 2355, when the underlying title is affected by nullity, irrespective of his knowledge thereof. Perez-Cruz v. Estate of Fernandez-Martinez, 645 F.Supp. 1253, 1260-1261 (1986). (accent in original).

The action by Walter E. Heller & Co., in 1977, to foreclose on Las Colinas Properties, producing the third legal controversy discussed below, has two overriding fatal defects:

First, null bankruptcy court administrative proceedings: (1) by a judicial process that was entirely arbitrary, therefore, a violation of due process burdening the constitutional right of the debtor corporation to obtain access to court by the appearance of its non-lawyer officer; (2) by a judicial process that abdicated the exclusive bankruptcy court jurisdiction over Las Colinas Properties, in approving a motion for relief from the automatic stay (i) by forcing an unwilling, unprepared and incompetent lawyer upon the debtor without due process, and (ii) by an appraisal of nonexisting farms without any evidence whatsoever that the debtor had no equity in its property.

Second, null district court foreclosure proceedings: (3) by a foreclosure action authorized by a null and void bankruptcy court decision and order, therefore, without jurisdiction over Las Colinas Properties; (4) by public notice of the judicial sale of Las Colinas Property without a description of any of the specific parcels that were the subject of the auction, therefore, without due process.

These matters are described in the [four] parts:

PART I. BANKRUPCY COURT PROCEEDINGS, FAILURE OF DUE PROCESS
PART II. U.S. DISTRICT COURT, NULL FORECLOSURE ACTION
PART III. FICTITIOUS PROPERTY SALES PRICES
PART IV. CONCLUSIONS

PART I. BANKRUPCY COURT PROCEEDINGS, FAILURE OF DUE PROCESS

A. Law of the case

The Controversy Over Las Colinas Properties involves two basic issues: an ordinary business contract dispute over financing for Las Colinas real estate development; and an extraordinary judicial rule concerning the right of a corporation (or the lack thereof) to appear in court to defend its claims of right and duty, by a non-lawyer officer, when the corporation was unable to obtain a lawyer due to financial distress. This First Controversy arose out of a dispute between Las Colinas, Inc., and Banco Popular de Puerto Rico, spanning the years between 1964 and 1972, involving a breach by repudiation of an oral finance contract between the Bank and Las Colinas for a "revolving line of credit" in the amount of $1,750,000 to finance development and construction of Las Colinas.

During that judicial process a determination was made by the appellate court in a series of appeals from decisions of the US District Court for Puerto Rico, In the Matter of Las Colinas, Inc. B-38-64, in which Las Colinas, Inc., was authorized to appear in court to defend its claims of right and duty, personally, by its non-lawyer corporate officer, Mr. Vigdor Schreibman. The exception allowing Las Colinas, Inc. to appear in the appellate proceedings by its non-lawyer president, was authorized by three panels of the appellate court: Las Colinas, Inc. v. Mason, 377 F.2d 99 (1st Cir. 1967) (Aldrich, Chief Judge, Maris and McEntee, Circuit Judges) (Vigdor Schreibman, president and majority stockholder, "for appellants"), after first remand, sub nom, In re Las Colinas, Inc., 426 F.2d 1005 (1st Cir. 1970) (Aldrich, Chief Judge, McEntee and Coffin, Circuit Judges) (Vigdor Schreibman, "pro se and as attorney-in-fact for appellants"), after second remand, 453 F.2d. 911 (1971) (Coffin, Circuit Judge, Van Oosterhout, Senior Circuit Judge, and Stephenson, Circuit Judge) (Vigdor Schreibman "pro se for Las Colinas, Inc. and others").

In their briefs on appeal, and later in their Petition for a Writ of Certiorari to the Supreme Court, Banco Popular opposed representation for Las Colinas, Inc. by a non-lawyer officer, but the appellate court explicitly authorized that representation under conditions described in the below note, listing the appearance of Vigdor Schreibman for appellants in their three published opinions. The issue of law concerning corporate appearances by a non-lawyer officer under particular economic circumstances of financial distress was argued, heard and decided, clearly meeting the essential principles of stare decises, "constituting a precedent to be followed." E.E.O.C v. Trabucco, 791 F.2d 1, 4 (1st Cir. 1986).

[Note: Pursuant to the corporation's letter of request for leave to appear in the appeal by its president, because of its inability to find a lawyer due to the corpration's financial distress, instructions with regard to this corporate representation by a non-lawyer officer were issued on directions of the court by Mr. Roger A. Stinchfied, Clerk of the US Court of Appeals for the First Circuit, dated April 28, 1966 (copy attached together with opposing brief by Banco Popular). Two conditions were established by the court for that appearance: "(1) A proper showing by certified copy of corporate vote ... specifically authorizing you to represent such corporation before this court ...; and (2) An affidavit by an appropriate corporate officer that the corporations have endeavored to find counsel to handle the appeals and have been unable to do so ..." That non-lawyer representation is indubitably what made possible the court's favorable initial decision in Las Colinas, Inc. v. Mason, 377 F.2d 99 (1967). Following a trial, upon remand, on the merits of the controversy between Las Colinas, Inc. and Banco Popular in which the US District Court decided the case by merely adopting the brief of Banco Popular's attorneys, In re Las Colinas, Inc., 294 F.Supp. 582 (D. Puerto Rico, 1968) (CJ. Cancio), on October 2, 1969, Chief US District Judge Hiram R. Cancio, of the US District Court for Puerto Rico also granted Las Colinas, Inc. authority to appear in court on behalf of the debtor corporation, through their duly authorized president following the precedent of the US Court of Appeals on that matter, after yet another law firm (Geary, Brice & Lewis, of Dallas, Texas), was discharged by the debtor corporation. This crucial authorization lead to the appellate court's substantive decisions after first remand, sub nom, In re Las Colinas, Inc., 426 F.2d 1005, after second remand, 453 F.2d. 911 (1971), cert. denied, Banco Popular de Puerto Rico v. Las Colinas, Inc. 405 U.S. 1067 (1972), favorable to Las Colinas].

The Second Controversy Over Las Colinas Properties, spanning the years between 1972 and 1979, involved another finance contract, this one, between Las Colinas Development Corporation and Walter E. Heller & Company, for a $4,000,000 "revolving line of credit." While this Controversy was warming up, the appellate court commented on the original decisions authorizing Mr. Schreibman to appear for Las Colinas, Inc. In re Victor Publishers, Inc., 545 F.2d 285, 286 n.* (1st Cir. Nov 29, 1976) (Coffin, Chief Judge, Aldrich and McEntee, Circuit Judges) (determination by the appellate court that the non-lawyer officer of Las Colinas, Inc. was a person with "extraordinary legal ability").

During the Second Controversy, Las Colinas was prohibited appearing by a non-lawyer officer, by a new panel of appellate court judges, In re Las Colinas Development Corp., 585 F.2d 7, 11 (1st Cir. 1978) (Coffin, Campbell, Bownes, C.JJ), resulting in a default judgment in a foreclosure action, Walter E. Heller & Co., v. Las Colinas Development Corp., et al., Civil No. 77-1075 (D. P.R. (Apr 26, May 9, 1978). This panel abrogated the precedent in Las Colinas, Inc.: "Leaving aside the question of whether extraordinary legal ability of a layman should ever be an exception to the established rule, the precedential effect of the footnote was severely eroded by our order of January 20, 1977."

The court's order of Jan 20, denied reconsideration of the debtor's petition for mandamus seeking a ruling on the due process right of the corporation, as below summarized. The order stated in pertinent part: "The fact that this Court has on occasion departed from its normal practice and allowed the petitioner to be represented by its president, who is not a lawyer, does not mean that any other court is required to make a similar exception on another occasion." This order, which according to the decision of the 1978 panel, "severely eroded" the precedent of three prior panel decisions, was entered by then Chief Judge Frank M. Coffin, alone [General Docket, Case No. 76-1538 Original, Jan. 20, 1977].

There was no claim that the three prior panel decisions were clearly erroneous so as to overcome "the law of the case prohibition against reconsideration of issues settled by the same court." Lacy v. Gardino, 791 F.2d 980, 985 (1st Cir. 1986). Writing for the court in this opinion, Circuit Judge Bownes observed, "Uniformity of decisions within multi-panel circuit can only be achieved by strict adherence to prior circuit precedent, with the error-correcting function reserved to the court sitting en banc, 1B Moore's Federal Practice, ¶ 0.402[1] at 19-20." No en banc proceeding was held to resolve the severe conflict between the appellate panels on the issue of corporate appearances in court by their non-lawyer corporate officer under virtually identical factual conditions of economic distress. Judge Coffin's order of Jan 20, 1977, provided no basis for undermining in any way the whole line of precedents that were approved during the period from 1967 to 1971, and commented upon in a published opinion, in which Judge Coffin himself participated, less than two months prior to the Jan 20, 1977 order. This brings the line of decisions between 1975 and 1978 discussed below squarely into question. Lacy v. Gardino, 791 F.2d at 985.

B. Summary history of the case

Moreover, the disastrous default judgment followed a series of decision by the bankruptcy court, district court and appellate court that persistently disregarded the corporation's persistent plea for a proper ruling on their constitutional rights of access to the court and due process, to appear in the related court proceedings to defend their own interests, in person, by their non-lawyer corporate officer. It is, therefore, important to see how these decisions unfolded as the case wound its way through the courts.

Drawing on the record in my Petition for a Writ of Certiorari to the United States Supreme Court, Schreibman v. Heller, 440 U.S. 931 (1979), below is a summary of the relevant decisions made by the Courts in the case during seven separate proceedings, in which the following issue inter alia was raised and presented for decision: the due process right of access to court by the corporation, personally, by their non-lawyer officer.

* First Proceeding (Bankr. P.R.) "Application To Confirm Authority of Debtor's President To Appear In Their Behalf As Attorney-In-Fact," and "Motion For Reconsideration," filed April 1 and Apr 7, 1975, B-74-267. Orders (upon application and reconsideration) (Bankr. Apr. 3 and June 27, 1975) (Rivera-Cruz, B.J.), Petitioner's Record Appendix, at A1, Schreibman v. Heller, 440 U.S. 931 (order denying debtor authority to appear personally, with no findings on the corporation's inability to secure the services of a lawyer due to its financial disability, nor application of relevant constitutional principles, but see infra p. 10, for findings issued by Mr. Rivera-Cruz after his retirement from the bankruptcy court, determining inter alia, "By virtue of its distressed financial condition, ... The appearance of the debtor personally, on its own behalf, through its president, is the only manner in which it may be adequately assured of its 'day in court.'").

* Second Proceeding (D. P.R.) "Application To Confirm Authority of Debtor's President To Appear In Their Behalf As Attorney-In-Fact," filed July 3, 1975, B-74-267. Order (upon application) (D. P.R. Sept. 22 1975) (Pesquera, D.J.), Petitioner's Record Appendix, at A6, Schreibman v. Heller, 440 U.S. 931 (order denying debtor authority to appear personally, with neither findings concerning the corporation's inability to secure the services of a lawyer due to its financial disability, nor application of relevant constitutional principles).

* Third Proceeding (1st Cir.) "Petition For Writ of Mandamus," and "Motion for Reconsideration," filed Dec. 1 and Dec. 29, 1976, B-76-1538 Original. Orders (upon petition and motion) (1st Cir. Dec. 20, 1976) (Coffin, Aldrich, JJ.), and (Jan. 20, 1977) (Coffin, J.), Petitioner's Record Appendix, at A9-10, Schreibman v. Heller, 440 U.S. 931 (orders denying mandamus without considering merits of petition, ruling that "Petitioner's constitutional claims may be raised in an appeal from a final judgment in the bankruptcy proceeding, and we express no views on them at this time.").

The instant ruling conflicts with the rule followed by the majority of courts that have found the denial of an appearance pro se is subject to immediate review by appeal, Devine v. Indian River County School Bd., 121 F.3d 576, 579-80 (11 Cir 1997); C. E. Pope Equity Trust v United States, 818 F.2d 696 (9 Cir 1987); O'Reilly v New York Times, 692 F.2d 863 (2 Cir 1982), or by mandamus, Flora Constr. Co. v. Fireman's Fund Ins. Co., 307 F.2d 413 (10 Cir 1962). Here an attempted review by appeal was dismissed In re Las Colinas Development Corporation, Misc. No. 75-8103 (Dec 4, 1975), and review by mandamus was denied, Misc. No. 76-1538 Original (Dec 20, 1976); thereby, violating the corporation's autonomy while forcing it to endure the travesty of a trial with an unwanted, unprepared and incompetent attorney. Devine v. Indian River County School Bd., 121 F.3d at 580-81.

Under compulsion from the courts without a decision on their constitutional claims, the debtor hired two law firms; one was Benito Gutierrez Diaz, the other was Marco A. Rigau and Hector J. Figueroa, both of which proved to be unsuccessful. Mr. Gutierrez and the law firm of Rigau and Figuero both resigned for the reason that they were unable under the conditions present to prepare the case adequately. [Transcript of pre-trial conference, Mar 10, 1977, testimony of Vigdor Schreibman, p.54; Counsel's verified "Motion for Reconsideration of Attorney's Motion to Withdraw," filed Mar 28, 1977, at ¶ 4 a-c.].

* Fourth Proceeding (Bankr. P.R.) (Counsels') "Motion To Change Attorneys," and "Debtor's Motion To Appear Personally Through Its President," filed Nov 29, 1976 and Feb 16, 1977, B-74-267. Order (upon motions) (Bankr. P.R. Feb. 28, 1977) (Hernandez-Rodriguez, B.J.), Petitioner's Record Appendix, at A14, Schreibman v. He1ler, 440 U.S. 931 (order denying motion of debtor's former attorneys to resign from the case, and denying debtor's motion to appear personally, without any hearing and with neither findings concerning the corporation's inability to secure the services of licensed counsel due to its financial disability, nor application of corresponding constitutional principles).

* Fifth Proceeding (Bankr. P.R.): Sesssion I: "Motion For Rehearing on Withdrawal of Attorneys Rigau and Figueroa as Counsel and for Leave (of Corporation) To Appear Personally Through Its President," filed Mar. 10, 1977, B-74-267. Decision (upon motion) 12 COLLIER BANKR. CAS. 652, 660-61 (Bankr. P.R. Mar. 22, 1977) (Herzog, B.J.), Petitioner's Record Appendix, at A66, Schreibman v. Heller, 440 U.S. 931 (memorandum decision upon hearing denying relief requested by debtor's former attorneys, and by the debtor. The corporation's due process claim was recognized but this was rejected in merely conclusory form without considering the critical basis of the claim, the debtor's financial distress, which Judge Herzog concluded was of "no concern to the Court" while disregarding all the evidence that the debtor's lawyers were not prepared to provide adequate representation under present economic conditions.

Fifth Proceeding (Bankr. P.R.): Sesssion II: Adversary complaints: by Heller, seeking relief from automatic stay; by Debtor, challenging Heller's claim and seeking damages, filed March 13, 1975, and March 14, 1975, B-74-267. Decision (on complaints) (Bankr. P.R. July 7, 1977 (Herzog, B.J.), Petitioner's Record Appendix, at A116, Schreibman v. Heller, 440 U.S. 931 (granting Heller relief from stay and dismissing Debtor's complaint).

Prohibited self-representation, a default judgment was entered against Las Colinas, (Apr 26, May 9, 1978, in the US District Court foreclosure action, Walter E. Heller & Company v. Las Colinas Development Corporation, et al., Civil No. 77-1075. (Toledo, D.J.).

* Sixth Proceeding (D. P.R.) Appeal from final judgment of the bankruptcy court granting Heller's complaint for relief from stay and allowing foreclosure action, entered Mar. 22, 1977, B-74-267. Opinion (upon appeal), 446 F. Supp. 141 (D. P.R. Feb. 21, 1978) (Torruella, D.J.), Petitioner's Record Appendix, at A151, A154, Schreibman v. Heller, 440 U.S. 931 (corporate appeal dismissed without a hearing on finding by district court of "an inherent conflict of interest," when corporate president sought to represent both the corporation and himself as creditor, distinguishing In re Las Colinas, Inc., cases in which appellate court authorized the debtor to appear in court by a non-lawyer officer, 446 F. Supp. at 143-44), but see, "Notice of Appeal" in Las Colinas cases filed by Mr. Schreibman on behalf of the debtor corporation and himself as stockholder and creditor [Brief of Banco Popular, annex 2.2], and see e.g. In re Freeport Italian Bakery, Inc., 340 F.2d 50, 54 (2 Cir 1965), In re Martin, 817 F.2d 175 (1st Cir. 1987), In re BH & P Inc., 949 F.2d 1300, 1311-13 (3 Cir. 1992), 11 U.S.C. § 72(c) (1976 ed.), § 327(c) (1978 ed.) (holding no "inherent conflict of interest" exists merely because of a debtor-creditor relationship).

* Seventh Proceeding (1st Cir.) Appeal from judgment of the district court dismissing the debtor's appeal, entered Feb. 21, 1978. Memorandum Opinion (on appeal), 585 F.2d 7 (lst Cir. Sept. 21 1978) (Coffin, Cambell, Bownes, C.JJ.), Petitioner's Record Appendix, at A159, Schreibman v. Heller, 440 U.S. 931 (opinion affirming the judgment of the lower courts, finding de novo the debtor's insistence upon a ruling on their constitutional claim constituted "obstinate persistence" thus a failure to show "good faith," disqualifying the debtor from securing essential access to the court by its non-lawyer officer.

C. The corporation's constitutional rights.

This case rests upon the corporation's right of access to the court and due process, which provide a fundamental constitutional foundation for the corporation's efforts to protect its survival by an appearance in the proceedings by a nonlawyer officer. The law of the case first established by the appellate court is guided by such principles of justice.

A corporation's access to court is derived from its fundamental right "to petition the Government for a redress of grievances" protected by the First Amendment. See e.g., California Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510, 513 (1972); Matter of N.C. Trading, 586 F.2d 221, 231, n.28 (C.C.P.A 1978); Hampton Bays Connections, Inc., v. Duffy, 127 F.Supp.2d 364, 383 (E.D.N.Y. 2001); Chandler Natural Gas Corp. v. Barr, 110 F.Supp.2d 859, 867, 871-72 (S.D. Ind. 2000); Capital Mortgage Bankers, Inc. v. Cuomo, 77 F.Supp.2d 690, 697-98 (D. Md. 1999); Defendini Collazo v. E.L.A. 134 D.P.R. 28, 63-68 (1993). The Due Process Clause safeguards that right for all persons when access to court may be burdened. Boddie v. Connecticut, 401 U.S. 371 (1971) (applied to a married couple); Silver v. Cormier, 529 F.2d 161, 163 (10 Cir 1976) (applied to a businessman); Matter of N.C. Trading, 586 F.2d at 231, n.28 (applied to a corporation).

In the exercise of their authority to adjudicate specific controversies between adverse litigants over which and over whom they have jurisdiction federal courts "have a duty to decide constitutional questions when necessary to dispose of the litigation before them." Ulster County Court v. Allen, 442 U.S. 140, 154 (1979). The duty to decide constitutional questions is mandated when the constitutional issue raised by the debtor "would have entitled respondents to relief beyond that to which they were entitled on their statutory claims." Lyng v. Northwest Indian Cemetary Prot. Assn, 485 U.S. 439, 446 (1988). The debtor had a constitutional right to have that issue decided before a court may exercises its power "to dismiss an action without affording a party the opportunity for a hearing on the merits of his cause." Societe Internationale v. Rogers, 357 U.S. 197, 209 (1958).

The courts disregarded those standards of constitutional decision making during the "First Proceeding," the "Second Proceeding," the "Third Proceeding," and the "Fourth Proceeding," when they entirely failed and refused to decide the essential constitutional questions presented for decision concerning the corporation's right of access to the court and due process. During the "Fifth Proceeding," while the court recognized the corporation's due process claim this was rejected in merely conclusory form without considering the critical basis of the claim, the debtor's financial distress, which Judge Herzog concluded was of "no concern to the Court." That conclusion was an abuse of discretion. The corporation has a right of access to the court "as applied in particular circumstances." Boddie v. Connecticut, 402 U.S. at 379-380.

In the district court's adverse finding on "conflict of interest" in the "Sixth Proceeding" and the appellate court's adverse finding on "good faith" in the "Seventh Proceeding," which were determined by de novo review, both required dismissal of the corporation's action without a meaningful hearing in a judicial process raising grave problems for its legitimacy. The corporation's claims must be interpreted in light of the provisions of the Fifth Amendment that no person shall be deprived of property without due process of law. This places "Constitutional limitations upon the power of courts, even in aid of their own valid processes, to dismiss an action without affording a party the opportunity for a hearing on the merits of his cause." Societe Internationale v. Rogers, 357 U.S. at 209.

An abuse of discretion with regard to application of law and clearly erroneous factual determinations marked those decisions. For example, dismissal of the corporation's appeal by the district court because of an "inherent conflict of interest" applied the wrong legal principle. There is no "inherent conflict of interest" merely because of a debtor-creditor relationship. See e.g., In re Freeport Italian Bakery, Inc., 340 F.2d at 54; In re Martin, 817 F.2d 175; In re BH & P Inc., 949 F.2d at 1311-13. In addition, the brief of Banco Popular, annex 2.2, makes clear that no such decision was previously applied by the appellate court in Las Colinas, Inc. cases. Similarly, the appellate court finding that the debtor failed to show "good faith" was absolutely without any basis in law and fact.

D. The corporation's "good faith."

In a derisive opinion written for the appellate court, Judge Hugh Bownes found that the debtor's insistence upon a ruling regarding their constitutional claim constituted "obstinate persistence" amounting to a failure to show "good faith," disqualifying the debtor from obtaining essential access to the court by its non-lawyer officer. In re Las Colinas Development Corp., 585 F.2d at 11, following In re Holliday's Tax Services, Inc., 417 F.Supp. 182 (E.D.N.Y. 1976). This conclusion by the appellate court disregarded the lower courts' persistent failure to resolve the corporation's constitutional claims. Without a proper determination of the debtor corporation's constitutional rights, continuing advocacy to secure a resolution of its constitutional claims during the first five proceedings above summarized was clearly not barred by the doctrine of res judicata. In re Harmon, 250 F.3d 1240, 1247 (9 Cir. 2001); Commonwealth Aluminum Corp. v. U.S., 19 Cl Ct. 300, 388 (1990); Santopadre v. Pelican Homestead & Sav. Ass'n, 937 F.2d 268, 273 (5 Cir. 1991). Courts are admonished not to permit "[u]nreflective invocation" of issue preclusion to gloss over serious questions of fairness and the scope of prior litigation. See Montana v. United States, 440 U.S. 147, 162-64 & n.11 (1979). In the instant case, the appellate court failed and refused to review any of the lower court errors raised by the appellant, including an abuse of discretion with regard to application of the doctrine of res judicata.

Whether the debtor's continuing advocacy was in "good faith" raises a "subjective standard." Hyche v. Christenson, 170 F.3d 769, 770 (7 Cir. 1999). The bankruptcy court made no finding on "good faith" and the appellate court finding that the corporation failed to show "good faith" was absolutely unfounded. During the "Third Proceeding" the appellate court determined, "Petitioner's constitutional claims may be raised in an appeal from a final judgment in the bankruptcy proceeding." During the "Seventh Proceeding" the appellate court ruled, "It is important, as appellant argues, that all persons have the right of access to the courts." If indeed, "all persons have the right of access to the courts" why was that fundamental constitutional right disregarded with impunity when presented during the "First Proceeding," the "Second Proceeding," the "Third Proceeding," the "Fourth Proceeding," the "Fifth Proceeeding," and the "Sixth Proceeding"? And by what standard of constitutional logic could the corporation's insistance upon a resolution of their clear constitutional right become, during the "Seventh Proceeding," conclusive proof of the corporation's failure to show "good faith," warranting the summary deprivation of that constitutional right without any hearing?

Finding that Las Colinas failed to show "good faith" suggests that a corporate litigant must abandon its clear constitutional rights whenever judges obstinately persist in disregarding the same. This was a "denial of a defendant's full access to the judicial process," which raises "grave problems for its legitimacy." Boddie v. Connecticut, 401 U.S. at 376.

E. The corporation's distressed financial condition.

During the first six proceedings above described, the debtor corporation again claimed, as it successful had during Las Colinas, Inc. litigation, that it was in a distressed financial condition unable to obtain the services of a competent lawyer. This claim was supported by direct, positive, uncontroverted, and unimpeached testimony of the corporation's former attorney Marco A. Rigau, and two expert witness who were among the most knowledgeable legal authorities on this topic in the Commonwealth of Puerto Rico: Jaime B. Fuster, Dean of the School of Law of the University of Puerto Rico, and Rafael A. Rivera-Cruz, former Bankrupcy Judge in the case, who was also a former Assistant Secretary of Justice in charge of Litigation, and Solicitor General of the Commonwealth of Puerto Rico.

The corporation's claim that they could not afford to pay necessary attorney fees and expenses was conclusively established by the evidence. Mr. Rigau, the debtor's former attorney, testified "the debtor is in a distressed financial condition, unable to pay necessary attorney's fees and expenses" and "under the circumstances present ... counsel has been unable to prepare the case, particularly, the debtor's Complaint against HELLER, without entailing unreasonable expenses, which they are unable to sustain, and they are therefore unable to effectively represent the debtor." [Motion For Reconsideration of Attorney's Motion to Withdraw, filed March 28, 1977, ¶ 4a-c].

Mr. Fuster, Dean of the Law School at the University of Puerto Rico, testified that under the conditions present [in a very complex litigation involving a great deal of time, with no funds to pay for expenses or fees] "I believe under those circumstances, it is highly unlikely you will find competent attorneys. They usually have a lot of cases, and charge high fees. I believe it is highly unlikely." [Transcript of hearing, Mar 10, 1977].

Mr. Rivera Cruz, former Bankrupcy Judge, and the person most familiar with the case and the availability of legal services (or the lack thereof) to persons in a distressed financial conditon, offered testimony describing the debtor's litigation with HELLER. He stated:

This litigation involves exceedingly troublesome issues that will result in voluminous and protracted legal work of wide and costly dimensions. Such costs might reasonably amount, at currently accepted rates for such services, to the sum of $500,000.00 to $750,000.00, over a period of several years.... By virtue of its distressed financial condition, the debtor is not able to obtain the legal services necessary to carry out the litigation, under the ordinary course in which legal services are available in our society.... The appearance of the debtor personally, on its own behalf, through its president, is the only manner in which it may be adequately assured of its "day in court." (Accent added).

Offered testimony of Rafael A. Rivera-Cruz [Affidavit, Feb 7, 1977]. The offered testimony and affidavit were deemed "inadmissible" by the trial judge because they were "improper." That decision was an abuse of discretion. Mr. Rivera-Cruz, was a competent witness. As to a cause not on trial before him, there is general agreement that a judge is competent to testify. United States v. Cross, 516 F.Supp. 700, 707-708 (M.D. Ga. 1981), reversed on other grounds, 708 F.2d 631, 638-639 (11th Cir. 1983) (reviewing cases); See Dennis v. Sparks, 449 U.S. 24, 31 (1980). A priori, a former judge is obviously competent to testify. Indeed, by statute at the time of trial in this case, "The judge himself ... may be called as a witness by either party ..." 32 L.P.R.A. § 1736 (1968) (Repealed 1979), made applicable by FED. R. EVID. 601, 1101(b), and by FED. R. BANK. P. 917.

At the trial, Bankruptcy Judge Herzog, disregarded all the offered and admitted testimony concerning the corporation's distressed financial condition, ruling this was "no concern to the Court." 12 COLLIER BANKR. CAS. at 662. This conclusion was anotherr abuse of discretion, violating the corportation's constitutional rights "as applied in particular circumstances." Boddie v. Connecticut, 402 U.S. at 379-380. Moreover, Judge Herzog's conclusion implicitly undermined a whole series of critical related decisions inter alia:

(A) rejecting the expert testimony by Mr. Rivera-Cruz, the former bankrupcy judge in the case concerning the circumstances burdening the corporation's access to court;

(B) sustaining the repeated objections of Heller's attorney to the expert testimony of Mr. Fuster, Dean of the School of Law of the University of Puerto Rico, concerning the circumstances burdening the corporation's access to court: (i) the proportion of lawyers interested in working without ready cash to pay them; (ii) the socio-economic level of the major part of lawyers' clients; (iii) the public service practices of lawyers within their monopoly; (iv) the conclusion of Mr. Fuster's reseach that a great majority of the lawyers don't adequately respond to their public service duties; (v) the conclusion of Mr. Fuster's research that a great majority of lawyers don't adequately respond to their professional duties, except those to themselves, to make a profit; (vi) the opinion of lawyers surveyed that more than one-forth of the members of the legal profession in private practice engage in improper practices of being untruthful to their clients; and (vii) the knowledge of Mr. Fuster concerning Mr. Marco Rigau, the debtor's former attorney, who was a student of his in four courses and professionally known to the witness, of his personal trait or character of adequately preparing for cases; and

(C) disregarding all the admitted and offered evidence and expert testimony of Mr. Rigau, Mr. Rivera-Cruz, and Mr. Fuster that the debtor's lawyers were not prepared to provide adequate representation under then present economic circumstances.

Judge Herzog also found as a fact in his published decision:

The source of the trouble shines through, crystal clear, from the Applicant's testimony: he is not looking for an attorney who will exercise his own best judgment as to legal matters; he seeks a puppet-lawyer so that he can manipulate the strings and have the lawyer dance to his tune. No self- respecting attorney is willing, or should be required, to do that.

This finding discloses Judge Herzog's continuing abuses of discretion, here, (i) by a clearly erroneous finding impugning the ethical character of the debtor corporation's president, and (ii) expressing his confusion about who should be "master of the lawsuit." Compare United States v. Marshall, 488 F.2d 1169, 1192 (9 Cir. 1974) (When a person retains competent counsel, he, rather than the client becomes "(t)he master of the lawsuit."), with Faretta v. California, 422 U.S. 806, 820-22 (1975) (rejecting the role of counsel as "master" of the lawsuit and observing, "To thrust counsel upon a litigant against their considered will would sever the concept of counsel from its historical roots."); and U.S. v. Teague, 953 F.2d 1525, 1533 (11 Cir. 1992) ("(W)hile defense counsel serves as an advocate for the client, it is the client who is the master of his own defense."). Mr. Rigau, also rejected Judge Herzog's criticism of Mr. Schreibman. In a sworn statement Mr. Rigau said the court's finding, "was contrary to the true facts personally known to movant, and a grave injustice to Mr. Schreibman."

[Counsel's "Motion For Reconsideration of Attorneys' Motion To Withdraw," filed Mar 28, 1977, at ¶ 3.]. Continuing, attorney Rigau, stated:

(D)ebtor's president has always conducted himself in his relationship with movant in a highly ethical, fully cooperative and exceedingly intelligent manner, and in the best interests of the debtor, and his conduct over all the years that movant has had a professional relationship with him, has never in any manner adversely affected the attorneys willingness to carry out the required representation. Id.

Judge Herzog later amended his unreported findings to recognize Mr. Schreibman's ethical conduct and his cooperation with the debtor's attorneys. [Decision on Motion For Reconsideration of Motion Denying Permission to Withdraw as Counsel for Debtpr in Possession, p. 2, entered Mar 30, 1977]. Judge Herzog also amplified his findings:

Counsel states that he is not adequately prepared and yet, during oral argument he said that for a long time he has devoted about six (6) hours each week to this case. Thus he must be familiar with the case now before the court for determination. Moreover, the litigation presently before the court does not involve a bankruptcy question. Basically, it involves the extent and validity of a mortgage held by the Heller Companies and a valuation of the mortgaged property to determine whether or not there exists any equity over and above the mortgage and other encum- brances that can be realized for the benefit of the estate. Id at p. 2. (Accent added).

The court's ultimate finding that Mr. Rigau "must be familiar with the case now before the court for determination" is repleat with abuses of discretion. First of all, Judge Herzog's description of Mr. Rigau statement at oral argument was inaccurate. Responding, in part, to a question about fees that he had received, Mr. Rigau stated: "we have been working in this case about one year, and I have been putting in 6 to 10 hours a week." [Hearing Transcript, Mar 28, 1977, pp. 7-11]. Mr. Rigau thus did not utter the underscored words, above quoted, and his actual response was contrary to the official record. On the date of their motion to withdraw, Nov 24/Nov 29, 1976, Mr. Rigau's law office had responsibility in the case for some five months, at which time, "the file and responsibility for any further proceedings in this cause were turned over to Mr. Schreibman." [Amended motion to Change Attorneys, filed Feb 16, 1977]. Specific time Mr. Rigau devoted to the case during the period of representation is unclear. Mr. Rigau did inform the court that his partner Mr. Hector J. Figueroa Vincenty, was "the attorney in the ofice, [who] had charge of this case... and Mr. Figueroa is in the Phillppines or Hong Kong ..." [Trial trans. Mar 28, 1977].

The attempt by the court to broadly construe Mr. Rigau's oral statement at the trial as an admission about time devoted to the case was contradicted by the entire record: (A) the written record of the limited period of engagement in the case by Mr. Rigau and his partner Mr. Figueroa, (B) the stipulated testimony of Mr. Rigau's inability to prepare for the case, and (C) the oral statement by Mr. Rigau at the trial of (i) his own limited work in the case, and (ii) the absence from Puerto Rico of Mr. Figueroa who "had charge of this case."

Second, the court had no legal power to treat Mr. Rigau's informal and ambiguous statement as a binding admission on the issue of preparation in contradiction with the entire record. Mac Donald v. General Motors Corp., 110 F.3d 337, 340 (6 Cir. 1997) (positive statement of fact is required for a binding admission, not "contradictory statements"), following Oscanyan v. Arms Co., 103 U.S. 261, 263-64 (1880); Howard Industries, Inc. v. Rae Motor Corporation, 186 F.Supp. 469, 471-72 (E.D. Wisc. 1960), affd, 293 F.2d 116 (7th Cir. 1961); United States v. Carrol, 212 F.Supp. 422, 432-33

(W.D. Ark. 1962). Mr. Rigau's statement at oral argument, in which Mr. Schreibman was prohibited from participating both for himself and his corporation [Transcript of hearing, Mar. 28, 1977], was no evidence in the case. Cf. In re Stephenson, 205 B.R. 52, 55 n.2 (Bankr E.D. Pa. 1997); Cf. The Harry, 11 F. Cas. 675, 676 (E.D.N.Y. 1878) (No. 6147).

Third, Mr. Rigau's explanations about financial impediments to preparation was clear, positive, and unimpeached, supported by two expert witnesses. The court could not disregard that evidence without detailed reasons. White Glove Build. Maintenance, Inc. v. Brennan, 518 F.2d 1271, 1276 (9 Cir. 1975); Nicholas v. David, 204 F.2d 200, 202 (10 Cir. 1953), following Chesapeake & Ohio Ry. Co. v. Martin, 283 U.S. 209, 215-217 (1931). Four months prior to trial Mr. Rigau knew he was unable for justified reasons to prepare the case adequately. He then had a duty to resign ("deben renunciar") the professional representation. Cf. Fine Art Wallpaper v. Wolf, 102 P.R.R. 451, 459 (1974); 4 L.P.R.A. App. § IX, Cannons 18, 20 (1978). When Las Colinas agreed with Mr. Rigau's withdrawal he then was not subject to an order "denying his elimination as attorney in the case, or requiring him to continue his obligation towards his ex-client." People v. Jimenez, 77 P.R.R. 650, 662 (1954) (concurring opinion of Mr. Justice Negrón Fernández).

Fourth, as to the nature and complexity of the case before the court for determination, while Judge Herzog described the case in his decision on the issue of Rigau's preparation only in terms of Heller's motion for relief from the bankruptcy stay -- valuation of the mortgaged property to determine whether or not there exists any equity over and above the mortgage and other encumbrances that can be realized for the benefit of the estate -- the Judge insisted upon a consolidated trial of both Heller's motion for relief from the bankruptcy stay, and the debtor's complaint against Heller. [Decision on the merits of adversary complaints, entered July 7, 1977].

• failing to approve plans for the development and construction as required;
  
  
• failing to make advances required under the contract in a timely manner;
  
  
• prematurely declaring a default for a 1-day failure by Las Colinas to pay interest for the month of July 1974, in violation of the contract "grace" period, Garfinkle v. Chestnut Hill Mortg. Corp., 679 F.2d 276, 277-278 (1 Cir. 1982);
  
  
• prematurely accelerating payment of the entire loan of $4,000,000, and its refusal to withdraw the demand when requested to do so, so as to prevent the Las Colinas from operating its business and responding to its obligations, Garfinkle v. Chestnut Hill Mortg. Corp., 679 F.2d 277-278;
  
  
• repudiating its commitment to authorize the development company to seek financing from other sources to finance the construction of houses contemplated under the agreement, and to grant subordination of its own security for that purpose; and
  
  
• repudiating its authorization of the development company to sell incompleted properties, so as the make it impossible for the development company to operate its business.

[Hearing Transcript, testimony of Mr. Schreibman, Mar 10, 1977]. Beyond the issues involved in Heller's motion for relief from the bankruptcy stay, the debtor's complaint against Heller clearly involved a more complex set of issues that were thus "before the court for determination." [Decision on the merits of adversary complaints, entered July 7, 1977]. However, Judge Herzog went so far as to assert in his decision that the debtor was "barred by bankruptcy rule 713" from a separate trial of its complaint.

Although Judge Herzog conducted an adversary proceeding to determine whether the automatic stay should be lifted, hearings on a motion with regard to that issue were "meant to be summary in chacter," subject to, "subsequent litigation challenging the validity, priority or extent of liens or asserting other claims against the alleged lien creditor." In re Midway Airlines, 167 B.R. 880, 883 (Bkrtcy. N.D. Ill 1994), following In re Vitreous Steel Products Co., 911 F.2d 1223, 1232 (7 Cir. 1990); In re Roloff, 598 F.2d 783, 788 n. 22 (3d Cir. 1979); In re Essex Properties, Ltd., 430 F.Supp. 1112 (N.D. Cal. 1977); In re Cedar Bayou, Ltd., 456 F.Supp. 278, 283-84 (W.D. Pa. 1978). The 1978 amendment to the provisions for automatic stay by the US Congress was based on that judicial approach. 11 U.S.C.A. § 362, Historical and Statutory Notes, 1978 Acts. A consolidated adversarial trial on Heller's motion for relief from the bankruptcy stay together with the debtor's complaint against Heller, was directly contrary to "Virtually every reported decision," which "refused to permit this tactic," as correctly reported by Judge Herzog, himself, as Co-editor-in-chief of Collier. 2 HERZOG, KING, COLLIER BANKRUPTCY PRACTICE GUIDE § 38.11 (1986).

On the issue of Mr. Rigau's preparation for trial, Judge Herzog disregarded all the evidence and the official record of the case, he drew highly selective and contradictory inferences from Mr. Rigau's oral statements at the trial, he attempted to force an impossible burden on the corporation's former lawyer, while finding that the corporation's distressed financial condition, preventing preparation, was of "no concern to the Court." This treatment of a critical issue in the case, burdened access to the court, violated the applicable rules of evidence, and was directly contrary to the bankruptcy practice on motions for relief from stay. On that basis Mr. Rigau's unwilling, unprepared and incompetent representation against a well prepared adversary was imposed upon the unwilling debtor, without due process. See Brotherhood of Railroad Trainmen v. Virginia Bar, 377 U.S. 1, 4-7 (1964).

Exacerbating this violation of due process, the appellate court disregarded all the abuses of discretion and clear errors of the trial court, while supporting the bankruptcy court judgment by summary determinations of the critical facts of the case de novo, exceeding the court's limited functions. Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 574 (1985). For example, Judge Bownes found "there is no merit to Development's claim that it could not afford to retain an attorney." 585 F.2d at 11. But a "retainer" engaging the services of a lawyer, BLACK'S LAW DICTIONARY (Rev. 4th ed. 1968), does not resolve the payment of legal fees necessary for adequate preparation. It was undisputed that the debtor's former attorneys were paid $6,000 out of a fund approved by Bankruptcy Judge Rivera-Cruz but after his retirement was arbitrarily frozen by Bankruptcy Judge Hernandez. That $6000 payment must be compared to the total legal fees and costs amounting to "$500,000 to $750,000" that Mr. Rivera-Cruz estimated might reasonably be needed to pay the debtor's lawyers in a complex litigation. Heller's claim for legal fees and costs was $124,000, for preparation for the initial pre-trial hearings; 20-times the payment received by the debtor's former lawyer. Nevertheless, without any competent evidence the trial court sustained on appeal found he "should be prepared" [Hearing trans. Mar 28, 1977].

Findings by the bankruptcy court and de novo by the appellate court on the issues of (i) whether the debtor could afford counsel, and (ii) Mr. Rigau's preparation for trial, disregarded the complexity of the case that made it "absolutely impossible" for him to adequately prepare for trial on the debtor's complaint against Heller, according to Mr. Rigau's unimpeached testimony, corroberated by two expert witnesses. Those findings also disregarded the critical constitutional issue that access to court may not be burdened because the debtor could not affort to pay expected legal fees and costs, which by an abuse of discretion, Judge Herzog erroneously found to be of "no concern to the Court."

F. The corporation's pro se appearance.

In addressing the right of the debtor corporation to appear in the proceedings, personally, by their non-lawyer officer, Judge Bownes concluded: "the well publicized problem of poorly trained lawyers trying cases in federal courts would be greatly compounded if laymen were to be allowed to represent corporations." 585 F.2d at 12. This theory has no relevance to a layman who is not "poorly trained" but possesses "extraordinary legal ability"; particularly, when the due process guarantee of access to the court is a "personal right" that courts may not burden on purely threoretical grounds, Boddie v. Connecticut, 402 U.S. at 379-380. Moreover, there is nothing inherently threatening when a layman supports his corporation's survival, or his own business or partnership, in court, though the latter are authorized and the former are unauthorized. Cf. Merco Construction Engineers, Inc. v. The Municipal Court, 581 P.2d 636, 642, 643-44 (1978) (Tobriner, J., dissenting). The theoretical problem alluded to of non-lawyer representation of corporations in their own cases have been rejected by searching scholarly examination of the historical realities. See e.g., Rhode, Policing the Professional Monopoly, 34 STAN. L. REV. 1 (1981); Christensen, The Unauthorized Practice of Law, A.B. FOUND. RESEARCH J., Spring 1980, at 159; Wexler, The Right to Appear in Proper Person in the Federal Courts, 38 N.Y.U.L. REV. 753, 758 pt. II (1963).

The key issue in this case does not involve the federal court rule that a corporation may appear in court only by licensed counsel. In re Victor Publishers, Inc., 545 F.2d 285. By statute in Puerto Rico "No person not a lawyer authorized by the Supreme Court of Puerto Rico may engage in the practice of law ... except in regard to his own affairs, in any judicial or quasi-judicial matter before any court of law." 4 L.P.R.A. § 740. The statute has been interpreted to allow only a natural person to appear in court "in regard to his own affairs." Pueblo v. Santaella, 91 D.P.R. 350 (1964); B. Muñoz, Inc. v. Prod. Puertorriqueña, 109 D.P.R. 825 (1980). But neither the local rule governing the practice of law or the federal rule governing appearances in court under 28 U.S.C.A. § 1654, are based on their own statutory limitations. See e.g., Schifrim v. Chenille Mfg. Co., 117 F.2d 92, 95 (2 Cir. 1941); Reshard v. Britt, 839 F.2d 1499, 1502-1504 (11 Cir. 1988) (en banc) (Tjoflat, J., dissenting) (equally divided court); Those rules do not determine for all other cases whether a corporation can be relieved of the duty to appear by a lawyer in appropriate circumstances. In re MSD Woodworking Co., Inc. 132 B.R. 631 (Bkrtcy, D.S.D. 1991); In re Holliday's Tax Services, Inc., 417 F.Supp. 182, aff'd mem. 614 F.2d 1287 (2d Cir. 1979); In re Victor Publishers, Inc., 545 F.2d at 286, n.*; Fraas Survival Systems, Inc. v. Absentee Shawnee Economic Develop. Auth., 817 F.Supp 7, 9-11 (S.D.N.Y. 1993). The Supreme Court of Puerto Rico has premised its holding that "only natural persons may come to the tribunals in defense of their rights" with the need for attention to a "just balance" of the "particular circumstances of the case, the interests of the parties, and the efficiency in the administration of justice." Lizarribar v. Galpi, 121 D.P.R. 770, 786 (1988).

By invoking their supervisory power to control the practice of law and the conduct of the parties before them, courts could not infringe "in any way" the corporation's right of access to the court. See Brotherhood of Railroad Trainmen v. Virginia Bar, 377 U.S. at 6-7. When burdened by inability to pay for a competent lawyer, as here, the traditional rule comes into conflict with a corporation's right of access to the courts, and it is, therefore, a denial of due process. "(A)bsent a countervailing state interest of overriding significance, persons forced to settle their claims of right and duty through the judicial process must be given a meaningful opportunity to be heard." Boddie v. Connecticut, 402 U.S. at 377.

Early American common law, following English tradition, required litigants to plead in person. In re Cooper, 22 N.Y. (8 Smith) 67, 68 (1860); 1 F. POLLOCK & F. MAINTLAND, THE HISTORY OF ENGLISH LAW 211-13 (2d ed. 1898). A corporation could only appear by attorney but "Any natural person may be this attorney" leading commentators noted. 1 CRISTIAN, CHITTY, LEE, HOVENDED, AND RYLAND, COMMENTATORS ON THE LAWS OF ENGLAND, pt. II 2, Rights of Persons *475, *477, n.7 (16th American ed. New York 1832). The practices of self-representation in America arose from deep and ancient "dislikes and distrust of lawyers." Faretta v. California, 422 U.S. at 826-34. Consistent with the democratic sentiment, the text of the Judiciary Act of 1789, ch. 20, § 35, 1 Stat. 73, 92, corresponding to 28 U.S.C.A. § 1654 (1982), did not limit self-representation in court by any person, whether natural or artificial. This embodies a recognized principle of justice. Without the right of self-representation "a poor person or one who was unable to find an attorney might not be heard in court." Hernandez v. District Court, 15 P.R.R. 251, 255 (1909) (individuals); In re Holliday's Tax Services, Inc., 417 F.Supp. 182 (corporations).

The principle of justice on which corporate self-representation rests was pushed backward during the 1930s, years of the Great Depression, in jurisprudence marked by naked contradiction in which common law commentators were cited for a legal principle they had expressly rejected. Compare Brandstein v. White Lamps, Inc. 20 F.Supp. 369, 370 (S.D.N.Y. 1937), citing Chitty, vol 1 (16th Amer, Ed.) 577 (prohibiting corporate appearance in court by a non-lawyer), with COMMENTATORS ON THE LAWS OF ENGLAND, infra, *477, n.7 (sustaining corporate appearance in court by "Any natural person"). In Las Colinas, Inc., cases, infra p. 4, the court reconfirmed a principle of justice in line with common law policy supporting corporate self-representation. See e.g., A. Victor & Co. v. Sleininger, 9 N.Y.S.2d 323, 326 (Supreme Court, Appellate Division, 1939), reh'g denied 11 NYS2d 548, cited as persuasive Schifrin, v. Chenille Mfg. Co. 117 F.2d 92, 95 (2 Cir. 1941) (L. Hand, Swan, and Clark, C.JJ), quoted with approval In re Holliday's Tax Services, Inc., 417 F.Supp. at 185; In re MSD Woodworking Co., Inc. 132 B.R. 631 (Bkrtcy, D.S.D. 1991); Absentee Shawnee Economic Develop. Auth., 817 F.Supp. at 9-11.

That line of cases holds that a corporation may not be deprived of its "day in court" by prohibiting self-representation when the corporation, as here, could not afford a lawyer. Underpinning that principle of justice is not the discretion of the courts holding supervisory powers, but "constitutional guarantee." Cf. Cleveland Board of Education v. Laudermill, 470 U.S. 532, 543 (1985). The corporation's fundamental constitutional right of access to the court and due process limit the powers of courts to dismiss an action without an opportunity for a hearing on the merits of their cause. Matter of N.C. Trading, 586 F.2d at 231, n.28, following Boddie v. Connecticut, 401 U.S. at 376. Without limiting the court's own processes by the commands of due process and without giving due consideration to the critical factor of, "whether the plaintiff can afford counsel," prohibiting corporate self-representation must be considered as entirely arbitrary, and therefore a violation of due

process. Cf. Reshard v. Britt, 839 F.2d at 1502-1504, In re Ellis, 487 P.2d 286, 290 (Hawaii), reh'g denied, 406 U.S. 950 (1971); Cf. Collex, Inc. v. Walsh, 394 F.Supp. 225, 227 (E.D. Pa. 1975), following Boddie v. Connecticut, 401 U.S. at 376.

Implicitly challenging the wisdom of those controlling precedents the appellate court argues, "Corporations, despite their pervasive role in our modern society, are not human beings ... they are only creatures of the state subject to government control." 585 F.2d at 13. There is popular approval for that aphorism, arising from the greed and abuses of big business corporations supported by well prepared lawyers, but expanding judicial powers in the context intended will only secure greater abuses by impeding a debtor corporation's fight for survival guided by the democratic principle of justice based on self-representation. A judicial aristocracy discriminating against corporate persons because they "are not human beings" would limit constitutional protections for corporate persons by combined abuses of discretion that have no legitimate constitutional basis. See e.g., California Transport Co. v. Trucking Unlimited, 404 U.S. at 510-13; Societe Internationale v. Rogers, 357 U.S. at 209; First National Bank v. Bellotti, 435 U.S. 765, 779-780 & n.15 (1978).

In seven separate proceedings before three bankruptcy court judges, two district court judges, and four appellate court judges, above discussed and summarized, the courts refused to fairly consider both the critical factual issue of "whether the plaintiff can afford counsel" and the critical constitutional claims. Prohibited self-representation, Las Colinas was forced to suffer a foreclosure judgment by default, Civ. No. 77-1075 (D. P.R. (Apr 26, May 9, 1978) (Toledo, D.J.), under a judicial process that was bereft of legitimacy.

PART II. U.S. DISTRICT COURT, NULL FORECLOSURE ACTION

A. Jurisdiction.

Jurisdiction of the U.S. District Court in a foreclosure action against Las Colinas Properties was based on a decision and order of the bankruptcy court entered July 7, and Aug 2, 1977, respectively, In the Matter of Las Colinas Development Corp., B. 74-267, granting relief from automatic stay, under 11 U.S.C.A. § 362 (d)(2)(A). This decision relied upon Heller's appraisal report to show that the debtor did not have an equity in its property.

The court found Heller first made an appraisal as of March 7, 1975, for $4,903,500. That appraisal was based on "market value," [Heller's exhibit 23], a standard within the discretion of the bankruptcy judge for an evaluation under 11 U.S.C.A. § 362 (d)(2)(A) that the debtor had no equity in its property, In re Kane, 27 B.R. 902, 906 (Bkrcy. M.D. Pa. 1983). The court also found that Heller's appraisers made a second appraisal as of March 21, 1977, for $3,100,00, slashing $1,803,500 or about 36% from the first appraisal. Heller's second appraisal was based on "present worth" [Heller's exhibit 25], or forced sale.

Then Judge Herzog exercised his discretion to overcome the mutually exclusive differences in the standards of value applied in this case, with a conclusion that Heller's second appraisal, based on "present worth," was essentially the same as "market value"! [Decision of the bankruptcy court, entered July 7, 1977, at p. 20].

Measured against Heller's appraised value of Las Colinas Farm, the Court found there were two senior secured claims against Development's property, namely, the secured claims of Heller and De Celis. These two claims totalled $4,170,084.88, as of the date of the petition. The court also found that Las Colinas, Inc., owned a secured claim, subordinate to the claims of Heller and De Celis, amounting to $6,283,397.78 as of the date of filing of the petition, and that this debt must be considered in any determination of whether to lift the stay. [Decision of the bankruptcy court, entered July 7, 1977, at pp. 23-24].

Las Colinas, Inc., did not request relief from stay. Las Colinas Development Corp., which opposed relief from stay, owns sixty-five percent (65%) of the stock of Las Colinas, Inc. Asserting the security interests of the latter against their majority stockholder to serve the senior lienholders is anomalous. Without a request by Las Colinas, Inc. "relief from stay would not be in the best interests of the junior lienholders." In re Cote, 27 B.R. 510, 513 (Bkrtcy. D. Oregon 1983) (citing cases). Moreover, plaintiff "is only entitled to have its secured claim adequately protected, not those of junior claim holders." Cf. La Jolla Mortg. Fund v. Rancho El Cajon Associates, 18 B.R. 283, 289 & 291 n.7 (Bkrtcy. S.D. Cal. 1982).

In those proceedings, Las Colinas was forced to endure the travesty of a trial with an unwanted, unprepared and incompetent attorney, while being deprived of the right to immediate review, Devine v. Indian River County School Bd., 121 F.3d 576, 579-81 (11 Cir 1997); C. E. Pope Equity Trust v United States, 818 F.2d 696 (9 Cir 1987); O'Reilly v New York Times, 692 F.2d 863 (2 Cir 1982). On June 17, 1977, well prior to the court's decision, July 7, 1977, but subsequent to the hearing of Heller's motion for relief from stay, held March 28 and 29, 1977, the debtor corporation by its president supported by two independent appraisers, Luis A. Nazario and Engineer Nestor Martinez Rivera, provided the court with a rebuttal to Heller's appraisal of Las Colinas Farm. [Debtor's Motion To Change Attorneys and Reopen the Case to Admit Additional Evidence, filed June 17, 1977, together with affidavit of Engineer Nestor Martinez Rivera, and affidavit of Luis A. Nazario].

The debtor's appraisers estimated that the total "market value" of Las Colinas Farm, including improvements and structures, was $11,435,010, or $14,630 per cuerda, as of Feb 17, 1976. In their opinion, subscribed before Notary Public Marco Antonio Rigau, pursuant to affidavit numbers 1,361 and 1,362, June 10, 1977, Heller's appraisal was a fraud on the court, "predicated upon materially inaccurate and misleading data, inconsistently applied," resulting in an unconscionable value of Development's property "in an amount some $8,000,000 dollars less than its true value ... so as to reflect an entire absence of reality." Such grave charges could have been properly raised by almost anyone, even a stranger, 12 Moore's Federal Practice § 60.21[4][f] (Matther Bender 3d ed.), but the court entirely disregarded the debtor corporation's renewed appeal for justice. Instead, Judge Herzog slammed the debtor and its president and former lawyer, in his decision July 7, 1977, for their persistent refusal to abide by the court's unrelenting disregard for the debtor corporation's constitutional claims.

For a history of later market transactions involving Las Colinas Farms, see PART III. FICTITIOUS PROPERTY SALES PRICES, which vindicates Las Colinas' appraisal report.

Further investigation more recently has thrown entirely new light on those proceedings. The appraised property identified by the bankruptcy court in the decision July 7, 1977, was purchased by the debtor from Las Colinas, Inc., Dec 6, 1972, comprised of a consolidated tract of some 783-cds. [Deed #176 authorized by Notary Public Eduardo E. Franklin]. But that property was non-existant when the court granted Heller relief from stay in 1977.

Schedule 1. Description of Las Colinas Properties, shows that the original consolidated tract of some 783-cds, was radically changed by Deed #46, authorized by Notary Public Noel Zamot, and presented to the Registry of Property, Nov 29, 1974, at page 151 of daybook 300, of which all parties had knowledge. Garcia v. Durand, 114 D.P.R. 440 (1983). Las Colinas Farm was, thereby, segregated into 88 parcels of 5-cds or more, and a remnant of some 303-cds, but the court's decision did not identify appraisal evidence of the value of any those 89 individual parcels. Without evidence of the value of the debtor's actual land holdings, there was no basis for the court to find that Heller satisfied their burden of proof under 11 U.S.C.A. § 362 (d)(2)(A) that the debtor had no equity in its property. In re Camellia Court Apartments, Ltd., 117 B.R. 316, 318 (Bkrtcy. S.D. Ohio, 1990).

The order granting Heller relief from stay without any evidence of the value of the property proving that the debtor does not have an equity in such properties, was in violation of 11 U.S.C.A. § 362 (d)(2)(A), void ab inito, Kalb v. Feuerstein, 308 U.S. 433, 438-40 (1940); see In re Costa, 172 B.R. 954, 962 (Bkrtcy. E.D. Cal 1994); and subject to relief from judgment under Rule 60(b)(4). See Great American Trading Corp. v. I.C.P. Cocoa, Inc., 629 F.2d 1282, 1287-1288 (7 Cir. 1980).

B. Public notice.

An auction of Las Colinas Properties was carried out on Aug 16, 1978, pursuant to an Order of Sale of the US District Court, entered in Civil Case No. 77-1075, June 27, 1978. Public notice of the auction under the mortgage regulations then in effect required,

the names by which the properties are known, the names of the owners, the number of cuerdas of land composing them and their value and the place where the title deeds are to be found, without mentioning the boundaries and the wards, in which they are situated. 30 L.P.R.A. § 1093 (1967) (corresponding to 30 L.P.R.A. 2720 (1993)), Henna v, Saurí & Subirá, 22 P.R.R. 776, 789-790 (1915).

Public notice of the auction was published in "El Mundo" newspaper, with a description of the original consolidated property of 783-cds, purchased in 1972. At the same time Heller relied upon subsequent changes in Las Colinas Properties, described in Schedule 1, segregating 88 parcels and remnant from the original consolidated tract, for the auction of those separate parcels, as provided by the Order of Sale. However, no description was given in the public notice, of any of those 89 parcels, which were the subject of the auction, consequently, there were no public bidders at the auction. Heller failed, thereby, to provide the required details "sufficient to give notice to any person interested in the purchase of the properties to be sold." Cf. Henna v, Saurí & Subirá, 22 P.R.R. at 789-790.

Reference was made in the public notice to title descriptions contained in the court record. However, a mere implicit description in the public notice is a deficient description. This is a "fundamental defect" that is "inextricably linked to the due process of law" which "take[s] away from the judicial validity of the public notice." Concepción Dapena Quiñones v. Providencia Urrutia Vda. de Del Valle, 109 D.P.R. 138, 141-142 (1979).

Schedule 1. Description of Las Colinas Properties (Nov 29, 1974)

[Note: The consolidated Las Colinas Farm was originally aquired by Las Colinas Development Corporation pursuant to Deed #176 authorized by Notary Public Eduardo E. Franklin, Dec 6, 1972, including Finca #8334, recorded at page 170, volume 221 of Fajardo, and Finca #621, recorded at page 22, volume 28 of Ceiba. The consolidated farm was later subdivided by Deed #46, Individualization of Property, authorized by Attorney Noel Zamot and presented to the Registry of Property of Fajardo, Nov 29, 1974, at page 151 of daybook 300. Inscription data noted in marginal notes on the original Deed.]