Waguk v Kosrae Island Credit Union [1993] FMSC 5; 6 FSM Intrm. 014 (App. 1993) (15 February 1993)

6 FSM Intrm. 14 (App. 1993)

FEDERATED STATES OF MICRONESIA
SUPREME COURT APPELLATE DIVISION

APPEAL CASE NO. K5-1990

RISON WAGUK,
Appellant,

vs.

KOSRAE ISLAND CREDIT UNION,
Appellee.
___________________________________

OPINION

Submitted: June 26, 1992
Decided: February 15, 1993

BEFORE:

Hon. Andon L. Amaraich, Associate Justice, FSM Supreme Court
Hon. Richard H. Benson, Associate Justice, FSM Supreme Court
Hon. Martin G. Yinug, Associate Justice, FSM Supreme Court

APPEARANCES:

For the Appellant: Delson Ehmes, Esq.
Directing Attorney
Micronesian Legal Services Corporation
P.O. Box 38
Tofol, Kosrae FM 96944

For the Appellee: (None appeared)

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HEADNOTES

Courts - Recusal
Pursuant to Kosrae Statute, judges of the Kosrae State Court are subject to the standards of the Code of Judicial Conduct approved by the American Bar Association. A trial judge who owns one or two shares in the plaintiff credit union must follow these standards in deciding whether to recuse himself. Waguk v. Kosrae Island Credit Union, 6 FSM Intrm. 14, 16-17 (App. 1993).

Statutes of Limitations
A cause of action accrues, and the statute of limitations begins to run, when a suit may be successfully maintained thereon. Where a note is payable in instalments, each instalment is a distinct cause of action and the statute of limitations begins to run against each instalment from the time it becomes due, that is, from the time when an action might be brought to recover it. Waguk v. Kosrae Island Credit Union, 6 FSM Intrm. 14, 17 (App. 1993).

Evidence
It is error for a trial court to rely on exhibits never identified, described or marked at trial. Waguk v. Kosrae Island Credit Union, 6 FSM Intrm. 14, 18 (App. 1993).

Evidence
Where exhibits are identified and marked at trial but never introduced, and where there is extensive testimony and cross examination of witnesses concerning the contents of these exhibits except for interest and late charges, an award for interest and late charges must be deleted because it is not supported by testimony. Waguk v. Kosrae Island Credit Union, 6 FSM Intrm. 14, 18 (App. 1993).

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COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

The appellant, defendant below, appeals the judgment rendered against him by the Kosrae State Court in favor of the appellee Kosrae Island Credit Union (KICU) for the unpaid balance on a loan, plus interest, late charge, and attorney's fee.

The appellee did not file a responsive brief, and the appellant waived oral argument. We therefore decide the following issues presented to us on the record and raised in the brief of appellant.

1. Is the judge who owns one or two shares of stock in the party credit union disqualified from presiding?

We remand the case to the trial court for his findings of fact and conclusion as to whether he is disqualified in light of the Code of Judicial Conduct.

2. Does the statute of limitation begin to run from the date of the filing of the complaint on an action to recover on a promissory note having repayment by instalments?

We hold that the general rule is that where a note is payable in instalments, each is a distinct cause of action, and the statute begins to run from the date each becomes due. The ruling of the trial court is accordingly reversed, and the case is remanded for further proceedings.

3. Is it error to consider in evidence exhibits which have been identified, marked, and their contents described?

Because of the particular circumstances presented, we make no holding on this matter.

I.

On November 21, 1988 KICU filed its complaint seeking a money judgment for the unpaid balance of a loan, and interest and costs. The basis of the action is a promissory note signed in 1980 with provision for repayment in periodic instalments. The defendant answered, and trial was held on January 31, 1990.

Upon the call of the case on that day, the defendant, representing himself, moved that the presiding judge disqualify himself because he is a stockholder in KICU. The judge denied the motion.

After the court denied a second motion, (that the case be dismissed as time barred) the plaintiff called two witnesses in support of the complaint. The case was then continued because of the illness of a prospective witness for the plaintiff.

Although served with notice the defendant failed to appear when the trial was reset for April 25, 1990. On that day the plaintiff rested and the court announced its decision. A judgment was thereafter entered on May 23, 1990.

II.

A. Disqualification

When the defendant made his oral motion that the trial judge disqualify himself, the judge's response included that he did own "one or even two shares" of stock in the plaintiff. In denying the motion it appears that the judge felt that as a stockholder he had no authority over the policies of the credit union. Also, no precedential authority had been furnished by the defendant.

Judges of the Kosrae State Court are subject to the standards of the Code of Judicial Conduct approved by the American Bar Association. Kosrae Code § 6.1201.

The pertinent sections of Canon 3C of the ABA code provide:

(1) A judge should disqualify himself in a proceeding in which his impartiality might reasonably be questioned, including but not limited to instances where:

. . . .

(c) he knows that he . . . hasnanciteresterest .&#16. . . in ay to roceproceeding

. . . .

(3) For the purposes of thision:

. . .

(c) "financial interest" means ownership of a legal or e or equitaquitable interest, however small . . . exchat:

. . .. . .

(iii) the proprietary interest of a policy holder in a mutual insurance company, or a deor intual savings association, or a similar proprietary interest, is a "financial inte interest"rest" in the organization only if the outcome of the proceeding could substantially affect the value of the interest. . . .

Because there is not a factual record before us, and because the provisions of the code were not addressed by the trial court, we will not undertake to decide whether Canon 3C(3)(c)(iii) would permit the judge to sit. Instead the matter is remanded for the issue to be decided by the trial court. The parties should have the opportunity to make such presentations as they wish, and legal authorities examined will include the articles and by-laws of KICU, and the statute and regulations under which KICU was established and those which now govern it.

If, as a result of this process, the trial judge recuses himself, a new trial shall be held before another judge.

If on the other hand the judge concludes he is not disqualified, he shall proceed with a new trial on the issue of the statute of limitations alone.

B. Statute of Limitation

As mentioned above, the defendant moved on January 31, 1990 prior to any testimony being received, that the case be dismissed on the ground that the six year statute of limitations had elapsed. The defendant contended that the statute began to run in 1980 when the loan was made, and the action was not commenced until 1988.

The court denied the motion holding that the court did not acquire jurisdiction over the matter until the complaint was filed in 1988, and that the statute thus began to run on that date.

In his brief the defendant puts forward another theory. Relying on 6 F.S.M.C. 807 he refers to the debt as an open account or an account on which partial payments have been made.

None of these propositions, except that the six year period governs (a point that all agree to) properly apply to the case. The applicable statute, Kosrae Code 6.2506, provides that actions must be commenced within six years after the cause of action accrues. "A cause of action 'accrues' when a suit may be maintained thereon." Black's Law Dictionary 19 (5th ed. 1979). "As a general rule where a note is payable in instalments, each instalment is a distinct cause of action and the statute begins to run against each instalment from the time it matures or becomes due, that is, from the time when an action might be brought to recover it." 12 Am. Jur. 2d Bills and Notes § 1053 (1964).

C. Admission of Evidence

The appellant contends that since exhibits were identified and marked at the trial, but never introduced into evidence, there exists no factual basis for the judgment.

At the trial on January 31, 1990 the plaintiff had four exhibits identified by witnesses and marked for identification. As to each there was extensive direct and cross examination. At neither January 31st or April 25th were the exhibits offered for admission into evidence. The exhibits were the application for the loan, the promissory note, a 1986 letter from the defendant to the plaintiff, and the share and loan ledger of the defendant's accounts.

In the court's opinion and judgment entered May 23, 1990 reference is made to the four exhibits and "Exhibits V and VI" as a basis for the decision. Nothing appears in the transcripts of January 31 or April 25 referring to V and VI.

We find it unnecessary to decide whether the court committed reversible error in relying on the four exhibits which were not introduced. Our reasons are:

1. The case is reversed and remanded on other grounds;

2. The contents of the exhibits, to the extent that they were used in the judgment (excepting late charges and interest), were described in testimony;

3. The defendant had full opportunity, and did, cross examine;

4. The defendant failed to appear on April 25, a time when he could have raised the issue by Rule 41(b),¹ or otherwise.

The remaining two exhibits present an entirely different problem. We emphasize that nowhere in the transcript of the trial is either exhibit mentioned; the only documents mentioned were the four already discussed. The problem is highlighted by noting that there is no testimony supporting the amount of interest and late charges. Perhaps these figures were derived from one of the exhibits. Perhaps they were simply copied from the complaint. We cannot tell.

We conclude that it is error for the court to rely on exhibits never identified, described or marked at trial, and that the award for interest and late charges, because unsupported by any testimony, must be deleted from the judgment award.

III.

The appellant assigns as error that the trial was not completed before the judgment was entered, and that the defendant did not have an opportunity to present his defense.

In making this assignment the appellant refers only to the trial transcript of the January 31, 1990 proceedings. The appellant ordered the preparation of the trial transcripts; the one for January 31, 1990 was prepared, that for April 25, 1990 was not. The certificate of record prepared by the clerk does set out as document numbers 43 through 46 the notices of trial for April 25, 1990 to each party and the returns of service of the notice on each party. We know this certificate was available to the appellant because he included it in the appendix to his opening brief. After the submission of the case to us for decision we observed the lack of a transcript of the April 25 proceeding, and it has been supplied by the clerk.

This situation has been called to the attention of the parties; neither has filed anything in light of the now-available proceedings on April 25, 1990.

Although the clerk did overlook transcribing a portion of the record, we are concerned by the lack of care of the appellant in assigning and arguing as error something which is unsupported by the record. Had we not made our own inquiry into the completeness of the record we would have been misled by the appellant's brief.

IV.

The judgment is reversed and the case remanded for further proceedings consistent with this opinion, namely,

1. For the trial judge to pass upon the issue of recusal.

2. If the trial judge decides he is not disqualified he shall proceed with a new trial on the issue of the statute of limitations alone. No award of late charges or interest shall be included in any judgment.

3. If the trial judge recuses himself, a new trial shall be held before another judge.

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