|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Supreme Court of the Federated States of Micronesia |
FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140 (Pon. 2003)
[2003] FMSC 67; [12 FSM Intrm. 140]
GOYO CORPORATION,
Plaintiff,
vs.
PETER and MAURINA CHRISTIAN, and INDAND IMPORTS, INC.,
Defendants.
CIVIL ACTION NO. 2000-041
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT AND
DENYING CROSS-MOTION
Andon L. Amaraich
Chief Justice
Hearing: May 2, 2003
Decided: October 2, 2003
APPEARANCES:
For the Plaintiff:
Daniel J. Berman, Esq.
P.O. Box 1491
Kolonia, Pohnpei FM 96941
For the Defendants:
Craig D. Reffner, Esq.
Law Office of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 96941
* * * *
HEADNOTES
Civil Procedure - Filings
When an act is required or allowed to be done at or within a specific time, the court for cause shown may at any time in its discretion
upon motion made after the expiration of the specified period, permit the act to be done where the failure to act was the result
of excusable neglect. The court will find excusable neglect and deny a motion to strike papers filed out of time when the filer did
not seek a further enlargement, but had a motion for enlargement pending, as far as he knew, until January 3, 2003, and he promptly
filed his papers as soon as he was able on January 6, 2003, and when two enlargements of time had been requested because of catastrophic
damage done to the filer’s office by a super-typhoon and the court would have granted another limited enlargement had it been
requested. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 143-44 (Pon. 2003).
Civil Procedure - Summary Judgment
A summary judgment motion will be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 145 (Pon. 2003).
Civil Procedure - Summary Judgment
Once the party moving for summary judgment presents a prima facie case of entitlement to summary judgment, the burden shifts to the
non-moving party to produce evidence showing that a genuine issue of material fact remains for resolution. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 145-46 (Pon. 2003).
Foreign Investment Laws
An isolated interest-free, unsecured loan transaction plainly is not engaging in business within the meaning of the applicable Pohnpei
law and regulations. Similarly, execution of an isolated promissory note and security agreement, to establish payment on an open
account, is not engaging in business within the meaning of the Pohnpei foreign investment laws. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 146 (Pon. 2003).
Contracts
A contract is a promise between two parties for the future performance of mutual obligations, which the law will enforce in some way.
For the promise to be enforceable, there must be an offer and an acceptance, definite terms, and consideration for the promise (that
which the performance is exchanged for). When one party fails to perform their promise, there is a breach of contract. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 146 (Pon. 2003).
Contracts
A pre-existing debt establishes sufficient consideration to support the formation of a contract. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 146 (Pon. 2003).
Contracts; Debtors’ and Creditors’ Rights - Secured Transactions
A promissory note and a security agreement are enforceable contractual agreements between the parties. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 146 (Pon. 2003).
Contracts - Interpretation
Contracts are not interpreted on the basis of subjective, uncommunicated views or secret hopes of one of the parties. Instead, courts
interpret and enforce agreements on an objective basis, according to the parties’ reasonable expectations or understanding
based upon the circumstances known to the parties and their words and actions, at the time the agreement was entered into. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 146 (Pon. 2003).
Contracts - Interpretation
Only when there is ambiguity within a contract and there are various reasonable and practical alternative constructions available
is it necessary to employ rules of interpretation. Otherwise, a party may not seek to introduce evidence that shows that the clear
and unambiguous terms of a written agreement are other than as shown on the face of the agreement. Such a prohibition preserves the
security and credibility of those who contract with the good faith belief that what they sign is what they agree to. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 146 (Pon. 2003).
Civil Procedure - Summary Judgment
A party opposing a summary judgment motion may not rely on unsubstantiated denials of liability to carry its burden, but must present
some competent evidence that would be admissible at trial which demonstrates that there is a genuine issue of material fact. When
the non-moving party fails to present competent evidence in response to a properly supported summary judgment motion, the court must
evaluate the moving party’s evidentiary submissions and any other admissible evidence to determine if the movant has presented a prima facie case of entitlement to summary judgment. If the movant has presented such a prima facie case, the movant is entitled to summary judgment. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 146-47 (Pon. 2003).
Civil Procedure - Summary Judgment; Evidence - Hearsay
Hearsay is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove
the truth of the matter asserted. Hearsay is generally not admissible, and therefore cannot be relied upon to create a material issue
of fact when opposing a summary judgment motion. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 147 (Pon. 2003).
Business Organizations - Corporations; Debtors’ and Creditors’ Rights
That a corporation is insolvent does not mean that it lacks the capacity to sue or be sued. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 147 (Pon. 2003).
Debtors’ and Creditors’ Rights
Even though the FSM does not have a bankruptcy code, the FSM Supreme Court has previously recognized the appointment of receivers
or special masters to engage in collection efforts on behalf of insolvent corporate entities. A trustee’s purpose in a bankruptcy
proceeding is similar to the appointment of a receiver or collection agent to act on behalf of an insolvent corporation, and the
fact of a corporation’s insolvency does not affect the ability of a trustee, receiver, or collection agent to proceed on a
corporation’s behalf to recover assets in the corporation’s name, and for the benefit of the corporation’s creditors
or shareholders. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 147 (Pon. 2003).
Foreign Investment Laws
A foreign owned entity’s isolated attempt to secure payment of a debt should not require that the foreign entity obtain a foreign
investment permit. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 147 (Pon. 2003).
Contracts - Illegality
A party to an illegal agreement will not be permitted to avail himself of its illegality until he restores to the other party all
that has been received from such a party on the illegal agreement, and so long as he continues to enjoy the benefits of the agreement,
he will not be allowed to set up its nullity. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 148 (Pon. 2003).
Civil Procedure - Summary Judgment; Contracts
When the argument that the defendants should not be bound in their personal capacities but that only a corporation should be bound
by the agreement, contradicts the promissory note’s plain meaning, as it is worded, and when the individuals, in their depositions,
acknowledged that they read and signed the agreement, they should not be permitted to claim that they did not understand the clear
terms. And when at the same time the individuals clearly intended to encumber their personal property and assets, not merely those
of the corporation, based upon the promissory note’s plain, unambiguous language, the plaintiff is entitled to summary judgment
as to the affirmative defense of lack of capacity. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 148 (Pon. 2003).
Contracts
Courts do not generally inquire into the sufficiency of consideration offered pursuant to a promissory note– parties to an agreement
are free to attach value to whatever is exchanged. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 148 (Pon. 2003).
Contracts; Debtors’ and Creditors’ Rights
When the plaintiff had a legal right to initiate a lawsuit against a corporate defendant for its unpaid debts at the time that the
promissory note was executed in 1994, but instead of initiating a lawsuit, it agreed to certain terms of payment, and required individuals
to personally guarantee that payment would be made, each of the parties gained something in the execution of the promissory note
and security agreement. There was thus consideration exchanged by the parties when they entered into these agreements. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 149 (Pon. 2003).
Civil Procedure - Affidavits; Civil Procedure - Summary Judgment
When defendants’ counsel supplied his own opinion that the plaintiff no longer exists based on a review of documents that were
prepared by one person and translated by a second person, neither of whom supplied affidavits signifying that the statements were
sworn and based on personal knowledge, defendants’ counsel’s affidavit clearly is not based on his personal knowledge
and cannot be considered competent evidence for purposes of opposing plaintiff’s summary judgment motion or to support defendants’
cross-motion for summary judgment and motion to dismiss. And when the plaintiff submits affidavits of its bankruptcy trustee and
its Guam representative, which are based on these individuals’ personal knowledge and clearly establish that it was not liquidated,
the defendants have not provided competent evidence to make the fact of the plaintiff’s corporate status a material dispute,
and the defendants’ summary judgment motion must be denied. Goyo Corp. v. Christian, [2003] FMSC 67; 12 FSM Intrm. 140, 149 (Pon. 2003).
* * * *
COURT’S OPINION
ANDON L. AMARAICH, Chief Justice:
This case came before the Court for hearing on all pending motions on Friday, May 2, 2003. Pending before the Court are defendants’ motion to strike, and the parties’ cross-motions for summary judgment. Defendants also have objected to certain discovery submitted by plaintiff. The Court first will address defendants’ motion to strike, as it bears on the evidence to be considered in determining the parties’ motions for summary judgment.
Plaintiff Goyo Corporation ("Goyo") filed a motion for summary judgment and motion to dismiss in October, 2002. Defendants filed an opposition, cross motion to dismiss, and their own motion for summary judgment in November, 2002. Counsel for Goyo, Dan Berman, Esq., filed two motions for enlargement of time to file an opposition to defendants’ motion and a reply brief to plaintiff’s own motion. The Court granted his second motion for enlargement on January 3, 2003, and gave Goyo until December 23, 2002 to file. No further enlargement was requested.
Goyo filed its reply to defendants’ opposition to summary judgment motion and its opposition to defendants’ motion on January 6, 2003. Defendants then filed a motion to strike, based on defendants’ failure to timely file these documents.
Rule 6(b) of the FSM Rules of Civil Procedure states that:
When by these rules or by a notice given thereunder or by order of court an act is required or allowed to be done at or within a specific time, the court for cause shown may at any time in its discretion . .;. upon motion made after fter the expiration of the specified period, permit the act to be done where the failure to act was the result of excusable neglect.
FSM Civ. R. 6(R. 6(b). The Court finds that plaintiffs’ failure to timely file its opposition and reply was a result of excusable neglect, and will deny defendants’ motion to strike. Even though plaintiff’s counsel filed out of time, and did not seek a further enlargement, he had a motion for enlargement pending, as far as he knew, until January 3, 2003, and he promptly filed his reply and opposition on January 6, 2003, as soon as he was able. The Court also notes that Mr. Berman requested two enlargements of time because of catastrophic damage done to his office by a super-typhoon, and that the Court would have granted another limited enlargement had it been requested by plaintiff’s counsel. Accordingly, the Court will not strike plaintiff’s papers, and considers them in addressing the parties’ cross-motions for summary judgment.
I. Motions for Summary Judgment
Goyo seeks summary judgment on a promissory note it executed with Peter and Maurina Christian and Indand Imports, Inc. Defendants move for summary judgment[1] and dismissal of this case based on its assertion that Goyo is a non-existent legal entity incapable of bringing or maintaining this lawsuit. The Court finds that the following facts are not in dispute:
A. Undisputed Facts
1.Maurina and Peter Christian signed and executed a promissory note with Goyo in the amount of $633,159.72 on November 27, 1994.
2. The promissory note executed by Peter and Maurina Christian states in part that:
[w]e Peter Christian, Maurina Christian, and Indand Imports, Inc., of Kolonia, Pohnpei, Federated States of Micronesia, hereby acknowledge an account stated, in the principal amount of $633,159.72 as of November 18, 1994, which we owe to Goyo Corporation.
Therefore, for value received, we promise to pay to Goyo Corporation the principal sum of $633,159.72, with interest at ten percent (10%) per annum, in monthly installment payments of at least $5,000.00 no later than the final business day of each month.
Pl. Mot. Ex. A (Oct. 16, 2002). The parties agreed that interest would accrue on the note at the rate of ten percent (10%) per annum.
3. The account stated in the principal amount of $633,159.72 was for automobiles and other equipment that the Christians imported from Goyo in Japan, through Indand Imports, Inc.
4. Goyo, a Japanese exporter, was the appointed dealer for Mitsubishi Motor Corporation (MMC) in Micronesia, and Indand Imports, Inc. was the agent for sales of MMC equipment in Pohnpei. MMC equipment included cars, motors, generators, motorcycles, tillers, and tractors, manufactured by companies including Suzuki, Isuzu, and Honda. Goyo shipped all of this equipment from Japan to Pohnpei via Kyowa or NYK shipping lines. Indand Imports, Inc. received equipment from Goyo under an agreement with Goyo that extended 90-120 days of credit for payment on each shipment.
5. The promissory note references a security agreement, also executed on the same date by Peter and Maurina Christian, and by Indand Imports, through Peter Christian as its Vice-President.
6. The security agreement grants to Goyo a secured interest in the following property:
(1) [A]ll inventory, furniture, fixtures, equipment and supplies of ABC Ohmine business now owned or subsequently owned by debtor;
(2) All present and future receivables of any kind of ABC Ohmine....
(3) All inventory, furniture, fixtures, equipment and supplies of any other present or future business venture of any kind of debtor now owned or subsequently acquired by debtor; and
(4) All present and future receivables of debtor or of any other present or future business venture of any kind of debtor ...
Ex. C to Dep. of Peter and Maurina Christian ("Christian Dep.") (June 4, 2002).
7. The Christians did not ask for translation of the promissory note into Pohnpeian, nor did they ask any questions about the provisions in the promissory note and security agreement related to their individual promise to pay the debts incurred with Goyo, although Peter Christian stated that he would not have signed the promissory note as stated, had he been paying attention. Christian Dep. at 48- 49.
8. The promissory note and security agreement were signed by the Christians because Goyo threatened to sue them if they did not sign the documents. Christian Dep. at 59-60
9. The Christians believed that they were signing the promissory note and security agreement as corporate directors of Indand Imports, not in their individual capacities. Christian Dep. at 60.
10. No payments have been made by Peter or Maurina Christian or Indand Imports, Inc. to Goyo since at least October, 1998.
11. Goyo never obtained a foreign investment permit.
12. Goyo filed for bankruptcy on November 20, 2001. Hiroko Namura is the duly appointed Bankruptcy Trustee for Goyo in Japan, and is associated with Namura & Associates in Osaka, Japan. Goyo remains under the supervision and authority of the Bankruptcy Court in Japan, and is not dissolved or liquidated. Namura Aff. (Dec. 9, 2002) Ex. to Pl. Reply (Jan. 6, 2003)
B. Conclusions of Law
1. Under FSM Civil Rule 56, a motion for summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. FSM Civ. R. 56(c); Kyowa Shipping Co. v. Wade, [1995] FMSC 15; 7 FSM Intrm. 93, 95 (Pon. 1995); Kihara Real Estate, Inc. v. Estate of Nanpei, 6 FSM Intrm. 48, 52 (Pon. 1993), aff’d[1995] FMSC 49; , 7 FSM Intrm. 319 (App. 1995). Once the party moving for summary judgment presents a prima facie case of entitlement to summary judgment, the burden shifts to the non-moving party to produce evidence showing that a genuine issue of material fact remains
for resolution. Urban v. Salvador, [1995] FMSC 8; 7 FSM Intrm. 29, 31 (Pon. 1995); Kyowa Shipping Co., 7 FSM Intrm. at 95; FSM v. Ponape Builders Constr., Inc., 2 FSM Intrm. 48, 52 (Pon. 1985).
2. An isolated interest-free unsecured loan transaction plainly is not engaging in business within the meaning of the applicable Pohnpei law and regulations. Kihara v. Pohnpei, [1992] FMSC 16; 5 FSM Intrm. 342 (Pon. 1992). Similarly, execution of an isolated promissory note and security agreement, to establish payment on an open account, is not engaging in business within the meaning of the Pohnpei foreign investment laws.
3. Goyo was not doing business in the State of Pohnpei when it executed the promissory note and security agreement with Peter and Maurina Christian and Indand Imports, Inc.
4. A contract is a promise between two parties for the future performance of mutual obligations, which the law will enforce in some way. For the promise to be enforceable, there must be an offer and an acceptance, definite terms, and consideration for the promise (that which the performance is exchanged for). When one party fails to perform their promise, there is a breach of contract. Ponape Constr. Co. v. Pohnpei, [1993] FMSC 23; 6 FSM Intrm. 114, 123 (Pon. 1993). A pre-existing debt establishes sufficient consideration to support the formation of a contract.
5. The promissory note and security agreement are enforceable contractual agreements between the parties.
6. Contracts are not interpreted on the basis of subjective, uncommunicated views or secret hopes of one of the parties. Instead, courts interpret and enforce agreements on an objective basis, according to the reasonable expectations or understanding of parties based upon the circumstances known to the parties and their words and actions, at the time the agreement was entered into. Kihara, 5 FSM Intrm. at 345.
7. Only when there is ambiguity within a contract and there are various reasonable and practical alternative constructions available is it necessary to employ rules of interpretation. Semens v. Continental Air Lines, Inc., [1985] FMSC 3; 2 FSM Intrm. 131, 147 (Pon. 1985). Otherwise, a party may not seek to introduce evidence that shows that the clear and unambiguous terms of a written agreement are other than as shown on the face of the agreement. Such a prohibition preserves the security and credibility of those who contract with the good faith belief that what they sign is what they agree to. Kihara Real Estate, Inc. v. Estate of Nanpei (I), 6 FSM Intrm. 48 (Pon. 1993).
8. The promissory note between Peter and Maurina Christian and Goyo, and the security agreement between Peter and Maurina Christian, Indand Imports, Inc., and Goyo, clearly and unambiguously make Indand Imports liable, and Peter Christian and Maurina Christian personally liable, on the debt to Goyo in the principal amount of $633,159.72, plus interest at ten percent (10%) per annum.
9. Under FSM Civil Rule 56, the party opposing a summary judgment motion may not rely on unsubstantiated denials of liability to carry its burden, but must present some competent evidence that would be admissible at trial which demonstrates that there is a genuine issue of material fact. Urban, 7 FSM Intrm. at 31; Federated Shipping Co. v. Ponape Transfer & Storage, 4 FSM Intrm. 3, 11 (Pon. 1989). When the non-moving party fails to present competent evidence in response to a properly supported motion for summary judgment, the Court must evaluate the moving party’s evidentiary submissions and any other admissible evidence to determine if the movant has presented a prima facie case of entitlement to summary judgment.
If the movant has presented such a prima facie case, the movant is entitled to summary judgment. Urban, 7 FSM Intrm. at 31.
10. Hearsay is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted. FSM Evid. R. 801(c). Hearsay is generally not admissible, and therefore cannot be relied upon to create a material issue of fact when opposing a summary judgment motion. FSM Evid. R. 802.
11. The fact that a corporation is insolvent does not mean that it lacks the capacity to sue or be sued. Even though the FSM does not have any bankruptcy code, this Court previously has recognized the appointment of receivers or special masters to engage in collection efforts on behalf of insolvent corporate entities. See, e.g., Mid-Pacific Constr. Co. v. Senda, [1996] FMSC 37; 7 FSM Intrm. 371 (Pon. 1996); In re Mid-Pacific Constr. Co.[1988] FMSC 12; , 3 FSM Intrm. 292 (Pon. 1988). The purpose of a trustee in a bankruptcy proceeding is similar to the appointment of a receiver or collection agent to act on behalf of an insolvent corporation, and the fact of a corporation’s insolvency does not affect the ability of a trustee, receiver, or collection agent to proceed on behalf of a corporation to recover assets in the name of the corporation, and for the benefit of the corporation’s creditors or shareholders.
12. Goyo does not lack the legal capacity to maintain this action against Peter and Maurina Christian and Indand Imports.
II. Discussion
As set forth above, the Court finds that Peter and Maurina Christian executed a binding contract with Goyo when they acknowledged an account stated in the principal amount of $633,159.72 as of November 18, 1994, owed to Goyo. The Christians agreed to pay to Goyo the principal sum of $633,159.72, with interest at ten percent (10%) per annum, in monthly installment payments of at least $5,000.00 no later than the final business day of each month. There is no dispute that Peter and Maurina breached this agreement, leaving the majority of the balance of the promissory note unpaid. The undisputed facts establish that the Christians and Indand Imports, Inc. are liable to Goyo under the promissory note and security agreement. Peter and Maurina Christian admitted in their depositions that they signed and executed these documents. Even though they state that they would not have signed the documents in retrospect, the contracts clearly bind the Christians personally, and the Court must grant plaintiff’s motion for summary judgment.
Plaintiff also moves for summary judgment on defendants’ affirmative defenses: illegality, lack of capacity, and lack of consideration.
A. Illegality
Defendants assert in their answer that the promissory note is illegal because Goyo does not have a foreign investment permit. Plaintiff provides in the affidavit of the Goyo manager evidence that Goyo does not do business in the FSM, and asserts that the defense of illegality is not available to defendants if they are taking advantage of the benefits of the contract.
The Court finds that Goyo was not doing business in Pohnpei under the undisputed facts presented, and that therefore there is no illegality defense available to defendants as a matter of law. Goyo engaged in the business of exporting vehicles and equipment from Japan, which was received by Indand Imports, Inc. in Pohnpei. The only contact Goyo had with Pohnpei, besides exporting
vehicles and equipment to Pohnpei, was the execution of the promissory note and security agreement at issue in this case. An isolated attempt by a foreign owned entity to secure payment of a debt should not require that the foreign entity obtain a foreign investment permit. Further, even if Goyo were doing business in Pohnpei, by executing one isolated promissory note, security agreement, and mortgage, it would not discharge defendant from liability. In Nanpei v. Kihara, the Court stated:
The appellant also contends that the bond debt should not be enforced against him because it was made illegally or for an improper purpose - it was made in violation of Pohnpei Foreign Investment laws and was made to induce improper interference with an existing contractual relationship. Appellee contends that under the Pohnpei Foreign Investment Board Regulations a single loan transaction (especially one for which no interest is charged) does not constitute doing business in Pohnpei, and that therefore the transaction was not illegal. This need not be decided because
[a] party to an illegal agreement will not be permitted to avail himself of its illegality until he restores to the other party all that has been received from such a party on the illegal agreement, and so long as he continues to enjoy the benefits of the agreement, he will not be allowed to set up its nullity.
17A Am. Jur. 2d Contracts § 315, at 317-18 (1991). Thus even if this bond of debt constitutes an illegal agreement appellant Nanpei cannot avail himself of that defense unless he returns the benefit conferred on him - the $50,000.00.
Nanpei v. Kihara, [1995] FMSC 49; 7 FSM Intrm. 319, 325 (App. 1995). Accordingly, the Court finds that plaintiff is entitled to judgment as a matter of law as to defendants’ defense of illegality.
B. Lack of Capacity
Defendants also assert that they should not be bound in their personal capacities, but that only Indand Imports, Inc. should be bound by the agreement. This argument contradicts the plain meaning of the promissory note as it is worded. In their depositions, the Christians acknowledged that they read and signed this agreement. They therefore should not be permitted to claim that they did not understand the clear terms. Goyo also notes that the Christians at the same time executed a mortgage on a number of parcels of land, and executed a personal security agreement. The Christians clearly intended to encumber their personal property and assets, not merely those of Indand Imports, Inc.
Based upon the plain, unambiguous language in the promissory note, the Court finds that plaintiff is entitled to summary judgment as to the affirmative defense of lack of capacity.
C. Lack of Consideration
Defendants also assert that there was no consideration for this agreement– that the corporation Indand Imports, Inc. already owed Goyo the amount of money set forth in the promissory note, and that the Christians did not obtain anything from Goyo when they personally guaranteed the amount of money owed.
Courts do not generally inquire into the sufficiency of consideration offered pursuant to a promissory note - parties to an agreement are free to attach value to whatever is exchanged. Goyo notes that the Christians received a large number of automobiles on credit from Goyo, and that as they became deeper in debt, the company required the Christians to execute the promissory note, mortgage,
and security agreement in order for Goyo to continue doing business with them. The Christians also claimed in their depositions that they entered into the agreements under the duress of a threatened lawsuit. Goyo had a legal right to initiate a lawsuit against Indand Imports, Inc. for its unpaid debts at the time that the promissory note was executed in 1994. Instead of initiating a lawsuit, Goyo agreed to certain terms of payment, but required the Christians to personally guarantee that payment would be made. Each of the parties gained something in the execution of the promissory note and security agreement, and the Court finds that there was consideration exchanged by the parties when they entered into these agreements. Accordingly, the Court finds that plaintiff is entitled to summary judgment on the affirmative defense of lack of consideration.
III. Defendants’ Motion for Summary Judgment
Defendants claim that they are entitled to summary judgment because Goyo "no longer exists." Defendants assert that, because Goyo is in bankruptcy, it cannot maintain this action against the defendants. Thus, defendants argue, there is no dispute "between" Goyo and defendants, and the Court should dismiss plaintiff’s claims.
In support of their motion, defendants submit an "Investigation Report," originally in Japanese, and a translated version, that state that Goyo was "dissolved" in August 2001, and "bankrupted" in November 2001. As plaintiff points out in its reply, defendants’ exhibits are not properly authenticated, and contain hearsay within hearsay. Counsel for defendants, Mr. Craig Reffner supplies his own opinion that Goyo no longer exists, based on a review of documents that were prepared by one person and translated by a second person, neither of whom supplied affidavits signifying that the statements were sworn and based on personal knowledge. The affidavit submitted by defendants’ counsel clearly is not based on his personal knowledge, and cannot be considered competent evidence for purposes of opposing plaintiff’s motion for summary judgment, or to support defendants’ cross-motion for summary judgment and motion to dismiss.
In contrast, Goyo Corporation submits affidavits of Goyo’s bankruptcy trustee Hiroko Namura,[2] and Goyo’s Guam representative Fumiyuki Takahara, which are based on the personal knowledge of these individuals and clearly establish that Goyo is not liquidated. Defendants have not provided competent evidence to make the fact of Goyo’s corporate status a material dispute in this case, and defendants’ motion for summary judgment must be denied.
Accordingly, the Court hereby grants plaintiff’s motion for summary judgment as to each of the affirmative defenses alleged by defendants, and as to the personal liability of Peter and Maurina Christian on the promissory note dated November 27, 1994. The Court hereby denies defendants’ motion for summary judgment and to dismiss. The Court hereby orders that judgment be entered jointly and severally against Indand Imports, Inc., Peter Christian, and Maurina Christian in the amount of $629,547.47 in principal, plus accrued interest in the amount of $347,764.28 to June 1, 2002, plus interest in the amount of ten percent (10%) per annum from June 1, 2002 until the date of judgment. Plaintiff shall be entitled to reasonable attorney’s fees pursuant to the terms of the promissory note, and counsel for plaintiff is hereby ordered to submit an affidavit of his reasonable attorney’s fees for Court approval not later than twenty days from the date of this Order.
* * * *
[1] Defendants also style their motion as one for dismissal based on lack of jurisdiction, but submit evidence to support this motion; accordingly, the Court will treat the motion as a motion for summary judgment under FSM Civil Rule 56.
[2] The report submitted by defendants also identifies Mr. Namura as the Bankruptcy Trustee for Goyo.
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/fm/cases/FMSC/2003/67.html