Kingzio v The Bank of Hawaii [1973] TTLawRp 39; 6 TTR 334 (4 October 1973)

6 TTR 334

HUMIKO KINGZIO, ANTONIO MARBOU and EICHI MOBE, on

behalf of themselves and other similarly situated and injured persons, Plaintiffs

v.

THE BANK OF HAWAII, KOROR BRANCH, Defendant

Civil Action No. 569

Trial Division of the High Court

Palau District

October 4, 1973

Class action alleging usury in bank loans. The Trial Division of the High Court, D. Kelly Turner, Associate Justice, held that "add on" method of computing interest on loans made by bank sued by borrowers who claimed usurious interest was charged, was in violation of usury statute limiting interest to one percent per month on the balance due, where the interest for each month's 'Payment was calculated on the entire amount of the loan without taking into account the diminishing balance due.

1. Civil Procedure-Class Actions-Maintainability

The hearing of a motion for summary judgment in favor of persons bringing a class action constitutes a determination by the court that the action is maintainable, and neither the territory nor federal rules require a prior determination that a class action is maintainable. (Rules Civil Procedure, Rule 5)

2. Contracts-Usury

"Add on" method of computing interest on loans made by bank sued by borrowers who claimed usurious interest was charged, was in violation of usury statute limiting interest to one percent per month on the balance due, where the interest for each month's payment was calculated on the entire amount of the loan without taking into account the diminishing balance due. (33 TTC § 251)

3. Evidence-Best Evidence

Where bank's loan records conflicted with deposition of bank officer, court must, in deciding motion for summary judgment, accept the records, not what officer said about the loans.

4. Contracts-Usury

Interest is not an element of usury. (33 TTC § 251)

5. Contracts-Usury

Bank intended the consequences of its acts in making usurious loans; its collection of usurious interest was the intended result. (33 TTC § 251)

6. Contracts-Usury

A right of action created by statute need not exist before usurious interest can be recovered, and where statute only allows the usurious interest as an offsetting credit when a borrower sues a lender, borrower may sue at common law for recovery of usurious interest. (33 TTC §§ 251, 252)

7. Contracts-Usury

Usury, being a criminal offense, is against public policy, and thus a usurious loan is a contract which will not be enforced; so that plaintiffs to whom bank made loans at usurious rates were entitled to recover all interest paid, since one may sue to recover that which was paid under an unenforceable contract. (33 TTC §§ 251-253)