Richmond Wholesale Meat Co v Kolonia Consumer Cooperative Association (I) [1996] FMSC 41; 7 FSM Intrm. 387 (Pon. 1996) (9 February 1996)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Richmond Wholesale Meat Co v Kolonia Consumer Cooperative Association (I) , [1996] FMSC 41; 7 FSM Intrm. 387 (Pon. 1996)

RICHMOND WHOLESALE MEAT CO.,
Plaintiff,

vs.

KOLONIA CONSUMER COOPERATIVE ASSOCIATION,
Defendant.

CIVIL ACTION NO. 1995-010

ORDER AND MEMORANDUM OF DECISION

Martin Yinug
Associate Justice

Decided: February 9, 1996

APPEARANCES:

For the Plaintiff:
Fredrick L. Ramp, Esq.
P.O. Box 1480
Kolonia, Pohnpei FM 96941

For the Defendant:
Delson Ehmes, Esq.
P.O. Box 1018
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Summary Judgment
When moving for a summary adjudication of all issues of a cause of action, including affirmative defenses, a plaintiff must put forth evidence that there is no issue of material fact and that the defense is insufficient as a matter of law. Richmond Wholesale Meat Co. v. Kolonia Consumer Coop. Ass'n (I), [1996] FMSC 41; 7 FSM Intrm. 387, 389 (Pon. 1996).

Contracts - Illegality
A claim of illegality cannot be raised by a party to nullify a contract until it restores to the other party all that it has received under the contract. Richmond Wholesale Meat Co. v. Kolonia Consumer Coop. Ass'n (I), [1996] FMSC 41; 7 FSM Intrm. 387, 389 (Pon. 1996).

Contracts - Accord and Satisfaction
For there to be an accord and satisfaction, there must be an offer in full satisfaction of a debt accompanied by acts and declarations that amount to a condition that if the offer is accepted, it is in full satisfaction of the obligation. The condition must be such that the party to whom the offer is made is bound to understand that if it accepts the offer in full satisfaction, it does so subject to the condition imposed. Richmond Wholesale Meat Co. v. Kolonia Consumer Coop. Ass'n (I), [1996] FMSC 41; 7 FSM Intrm. 387, 389 (Pon. 1996).

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COURT'S OPINION

MARTIN YINUG, Associate Justice:

This is a collection action by Richmond Wholesale Meat Co., ("Richmond"), on a debt on an open account allegedly owed by the defendant, Kolonia Consumer Cooperative Association ("KCCA"). Plaintiff's Motion for Summary Judgment is pending. By this Order, the Court finds KCCA liable and enters partial summary adjudication against it in the amount of $30,874.38. In so ruling, the Court finds there is no controversy to the fact that KCCA owes Richmond the amount it admitted. The Court also finds that KCCA may not assert the contract void for illegality, and that KCCA did not submit any evidence of accord and satisfaction. The only issues remaining for trial are the amount of Invoice No. 571080, and the interest, if any, that Richmond may claim.

I. Facts

The parties submitted affidavits authenticating documents from their respective business records. Both parties attached spread sheets to explain their positions as to the amount owed, as well as other documents and letters. Neither party submitted the contract or the invoice on which the parties disagree.

A. Undisputed Material Facts

1. Richmond provided food products to KCCA on an open account, billed monthly. Answer to Amended Complaint, para. 2.

2. KCCA admits its debt to Richmond on the open account to the sum of $30,874.38. Answer to Amended Complaint para. 4.

B. Disputed Facts

The Court examined the spread sheets prepared by the parties. The invoice amounts on both are identical, except for one invoice. Plaintiff's spread sheet indicates the amount due on Invoice No. 571080 is $147.89. Defendant's spread sheet indicates the amount due on Invoice No. 571080 is $168.69, a difference of only $20.80. But as a mustard tree may grow from the tiniest seed, Mark 4:31-32, that $20 grew, thanks to compounding interest and subsequent additions to the principal amount, to the claimed difference of $1,039.99. The Court observes that the best evidence of the amount owed on Invoice No. 571080 is Invoice No. 571080 itself. Neither party submitted that invoice.

II. Legal Analysis

A. KCCA's Affirmative Defense

KCCA argues that Richmond is not entitled to summary judgment because it has not disproved all of KCCA's affirmative defenses. KCCA claims first that the contract was illegal and void, because Richmond did not have a valid foreign investment permit. The second affirmative defense was that the amount of interest Richmond charged on the open account was usurious and unenforceable. The third affirmative defense is that there was an accord and satisfaction on the contract.

When a plaintiff moves for summary judgment on all issues, including affirmative defenses, it must put forth evidence that there is no issue of material fact and that the defense is insufficient as a matter of law. FSM Dev. Bank v. Rodriguez Corp., [1985] FMSC 2; 2 FSM Intrm. 128, 130 (Pon. 1985). However, the first affirmative defense is immaterial to this Motion, and Richmond has borne its evidentiary burden to the third. The issue of the amount of interest does remain for trial.

1. Claimed Illegality is Not Material

KCCA argues that the contract is illegal and void because Richmond does not have a foreign investment permit, in violation of 32 F.S.M.C. 202. A claim of illegality cannot be raised by a party to nullify a contract until it restores to the other party all that it has received under the contract. Nanpei v. Kihara, [1995] FMSC 49; 7 FSM Intrm. 319, 325 (App. 1995). KCCA admits its owes Richmond $30,874.38. KCCA cannot claim the contract null for illegality until it returns all it has received under the contract. Thus, whether the contract is illegal for want of a foreign investment permit is not material to this Motion.

2. Accord and Satisfaction

KCCA also argues its affirmative defenses that there was an accord and satisfaction. Neither party has cited Micronesian authority regarding accord and satisfaction. The Court therefore looks for guidance to the common law of the United States. See Semens v. Continental Air Lines, Inc., [1985] FMSC 3; 2 FSM Intrm. 131, 140 (Pon. 1985). For there to be an accord and satisfaction, there must be an offer in full satisfaction of a debt accompanied by acts and declarations that amount to a condition that if the offer is accepted, it is in full satisfaction of the obligation. 1 Am. Jur. 2d Accord and Satisfaction § 1, at 301 (19The condition tion must be such that the party to whom the offer is made is bound to understand that if it accepts the offer in full satisfaction, it does so su to the condition imposed. Id.

The exhibexhibits submitted by Richmond show a partial payment of the obligation, but also show that KCCA acknowledged that the payments were partial and were not offered as full satisfaction of the debt. Exs. A, B, and C, first Aff. Dolores Ombrello. In opposition, KCCA offered no evidence that there was an accord and satisfaction. When a motion for summary judgment is made and supported by evidence, the opposing party may not rest upon mere allegations in its pleadings, but must set forth specific facts, supported by affidavits or other evidence, showing there is a genuine issue for trial. FSM Civ. R. 56(e). KCCA offered no evidence. There is no genuine controversy on this issue.

3. The Amount of Interest

Richmond asserts that Invoice No. 571080 is for the interest due for a late payment. Second Ombrello Aff. para. 7. KCCA claims that Invoice No. 571080 is larger than what Richmond claims it is. Examination of the two spread sheets shows that the difference in the sum totals stems from this disputed amount. The amount of Invoice No. 571080 and the subsequent amounts of interest charged are controverted and remain for trial.

B. Summary Adjudication

Since KCCA admitted its indebtedness to Richmond to the sum of $30,874.38, that issue, as to fact in the amount, and law as to liability, exists without controversy. The only issues that are controverted are the amount of Invoice No. 571080, and the amount of interest that Richmond may claim, if any. The interest issue includes whether Richmond is barred from claiming any interest under 34 F.S.M.C. 207.

Conclusion

By undisputed material facts, KCCA owes Richmond $30,874.38. The issues of the amount of Invoice No. 571080, and the amount of interest, if any, that Richmond may claim, remain for trial. The matter is set for trial at the Court's next setting in Pohnpei.

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