Federated States of Micronesia Development Bank v Nanpei [1986] FMSC 8; 2 FSM Intrm. 217 (Pon. 1986) (23 July 1986)

THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA

Cite as FSM Development Bank v. Nanpei [1986] FMSC 8; 2 FSM Intrm. 217 (Pon. 1986)

[1986] FMSC 8; [2 FSM Intrm. 217]

FEDERATED STATES OF MICRONESIA
DEVELOPMENT BANK,
Plaintiff,

vs.

ESTATE OF HENRY NANPEI,
Deceased, and SUSAN NANPEI,
Defendants.

CIVIL ACTION NO. 1984-026

OPINION
Before Edward C. King
Chief Justice
July 23, 1986

APPEARANCES:

For the Plaintiff: Maketo Robert
Attorney at Law
P.O. Box 979
Kolonia, Pohnpei 96941

For the Defendants: James Hagerstrom
(Estate of Nanpei) Attorney at Law
Kolonia, Pohnpei 96941

* * * *

HEADNOTES

Constitutional Law - interpretation
Differences in the language employed in parallel provisions of the FSM and United States Constitutions presumably reflect a conscious effort by the framers of the FSM Constitution to select a road other than that paved by the United States Constitution. FSM Dev. Bank v. Estate of Nanpei, [1986] FMSC 8; 2 FSM Intrm. 217, 219 n.1 (Pon. 1986).

[2 FSM Intrm.218]

Jurisdiction - general
Because the FSM Constitution states that the judicial power "is vested" in the Supreme Court, and the trial division "has" jurisdiction over certain cases--unlike the jurisdictional provisions of the United States Constitution, which are not self executing--determinations as to the jurisdiction of the FSM courts are based on interpretation of the Constitution rather than statutory construction, and therefore it cannot be assumed that United States court holdings will yield the correct result under FSM jurisdictional provisions. FSM Dev. Bank v. Estate of Nanpei, [1986] FMSC 8; 2 FSM Intrm. 217, 219 n.1 (Pon. 1986).

Jurisdiction - subject matter
Activities and organizations created and controlled by the national government should remain subject to FSM Const. art. XI, § 6(a), but organizations merely authorized or licensed by the national government which operate for private purposes, with little governmental involvement or control, should not be treated as a part of the national government. FSM Dev. Bank v. Estate of Nanpei, [1986] FMSC 8; 2 FSM Intrm. 217, 219-20 (Pon. 1986).

Jurisdiction - subject matter
The FSM Development Bank is an instrumentality of the national government and part of the national government for the purposes of FSM Const. art. XI, § 6(a), giving the trial division of the Supreme Court exclusive jurisdiction over cases in which the national government is a party. FSM Dev. Bank v. Estate of Nanpei, [1986] FMSC 8; 2 FSM Intrm. 217, 221 (Pon. 1986).

* * * *

COURT'S OPINION

EDWARD C. KING, Chief Justice:

Defendant's motion to dismiss presents the question whether the Federated States of Micronesia Development Bank is a part of the national government within the meaning of Article XI, Section 6(a) of the Constitution so that cases in which the bank is a party fall within the original and exclusive jurisdiction of this Court.

I find that the bank is an agency or authority of the national government and should be deemed part of the national government for jurisdictional purposes. The motion to dismiss will therefore be denied.

I. Background

This lawsuit was filed by the bank against Robert H. Nanpei, as administrator of the estate of Henry Nanpei, deceased, and Susan Nanpei, widow of Henry Nanpei, to enforce a promissory note. The amended complaint alleges that the note was executed on January 20, 1984 by Nanpei as administrator of the estate, in favor of the bank in the amount of $61,534.77. This was allegedly done pursuant to an agreement restructuring

the estate's repayment obligations under a loan originally made by the Trust Territory Economic Development Loan Fund to the late Henry Nanpei and Mrs. Nanpei on May 1, 1975. As part of a June 2, 1983 general assignment of loans, the outgoing

[2 FSM Intrm.219]

Trust Territory assigned its rights under that earlier loan to the bank.

II. Legal Analysis

The Nanpei estate's motion to dismiss asserts that the Court has no jurisdiction over this litigation.

Article XI, Section 6(a) of the Constitution states that "the trial division of the Supreme Court has original and exclusive jurisdiction in cases ... in which the national government is a party except where an interest in land is at issue." The bank argues that it is part of the national government.

Neither the Constitution nor Journals of the Constitutional Convention reveal the meaning of the term "national government" in Article XI, Section 6(a). Nor does the statute under which the bank was created show whether Congress intended the bank to be part of the national government for purposes of this Court's jurisdiction. 30 F.S.M.C. 101 et seq.

In the absence of guidance from other sources,¹ I shall proceed on the hypothesis that an agency created by national statute may or may not be a part of the national government depending on its role and characteristics.
Activities and organizations created and controlled by the national government

[2 FSM Intrm.220]

should remain subject to the constitutional provision regardless of the name given to the agency or other details of form. Conversely, organizations merely authorized or licensed by the national government but which operate for private purposes, with little if any governmental involvement or control, should not be treated as part of the national government. In each case, review of enabling legislation will be important in determining the organization's essential nature.

The public role of the Federated States of Micronesia Development Bank is suggested by the fact that it is governed by a special act at title 30 of the FSM Code, rather than by the general banking statutes at title 29.

The bank is imbued with a public purpose. The Federated States of Micronesia Development Bank Act states that the bank is a financial institution created "to provide the people of the Federated States of Micronesia with special facilities required to meet the needs of their developing economy." 30 F.S.M.C. 101. The bank is authorized to engage in "all banking functions that will assist in the economic advancement of the Federated States of Micronesia." 30 F.S.M.C. 105.

There is no private ownership or control. The statute contains no provision for issuance of stock. Instead, the bank is to be managed and its corporate powers exercised by a board of directors comprising five members, all appointed by the President of the Federated States of Micronesia with advice and consent of the Congress. 30 F.S.M.C. 107.²

Funds for the bank's operations are provided through congressional appropriations, 30 F.S.M.C. 114(1), and the President and Congress may undertake, on behalf of the national government, responsibility to pay selected obligations of the bank. 30 F.S.M.C. 117.³

The bank is also required to submit annual reports to the President and Congress concerning the amount of funds and current loans held by it, plus repayment experience and loans made in the previous year, as well as other information that the Congress or the President may require. Pub. L. No. 2-59 (2d Cong., 4th Reg. Sess. 1983).

Finally, the Act recites that the bank "shall exist and operate solely for the benefit of the public and shall be exempt from any taxes or assessments on any part of its property, operations or activities." 30 F.S.M.C. 116.⁴

[2 FSM Intrm.221]

Conclusion

Created and funded by the Congress to carry out a public purpose, with its operations controlled by persons chosen by the President with advice and consent of the Congress, and reporting annually to the President and Congress, the bank is sufficiently identified with and controlled by the President and Congress to be regarded as part of the national government for purposes of Article XI, Section 6(a) of the Constitution.

The Federated States of Micronesia Development Bank is an instrumentality of the national government and part of the national government for purposes of Article XI, Section 6(a) of the Constitution.

This Court's trial division therefore has original and exclusive jurisdiction in any case in which the bank is a party, so long as no interest in land is at issue.

Defendant's motion to dismiss for lack of jurisdiction is denied.

_____________________________

1. Application of principles of United States law for determining whether a particular agency or entity is part of the United States government would have yielded the same result as I reach in this case. See Rainwater v. United States, [1958] USSC 97; 356 U.S. 590, 591-92[1958] USSC 97; , 78 S. Ct. 946, 948[1958] USSC 97; , 2 L. Ed. 2d 996, 998 (1958) (Commodity Credit Corporation); Harlem River Produce Co. v. Aetna Cas. & Surety Co., 257 F. Supp. 160 (S.D.N.Y. 1965) (Export-Import Bank of Washington).

I have not relied on United States cases though, for there are important differences between the pertinent jurisdictional provisions of the two Constitutions. The FSM Constitution states that the judicial power "is vested" in the Supreme Court and that the trial division of the Supreme Court "has" jurisdiction over certain cases. FSM Const. art. XI, §§ 1, 6. These appear to be self-executing grants of jurisdiction calling for no action by Congress. In contrast, most jurisdictional provisions in Article III of the United States Constitution are not self-executing. C. Wright, Law of Federal Courts § 10 (4th ed. 1983). Thus, determinations of jurisdiction of United States courts are typically based on statutory construction rather than, as here, interpretation of the constitution.

Moreover, this Court's exclusive jurisdiction over cases in which the national government is a party is not paralleled in the United States Constitution.

Such differences "presumably reflect a conscious effort by the framers to select a road other than that paved by the United States Constitution." Tammow v. FSM, 2 FSM Intrm. 53, 59 (App. 1985). We therefore may not assume that United States court interpretations will yield the correct result for the constitutional provision at issue here. Id.

2. As amended by Pub. L. No. 4-35 (4th Cong., 2d Spec. Sess. 1986).

3. Changed to section 118 by Pub. L. No. 2-59 (2nd Cong., 4th Reg. Sess. 1983) and as amended by Pub. L. No. 4-26 (4th Cong., lst Reg. Sess. 1985).

4. Now changed to section 117 by Pub. L. No. 2-59 (2nd Cong., 4th Reg. Sess. 1983).