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Trust Territory v Lopez [1976] TTLawRp 34; 7 TTR 449 (15 December 1976)

7 TTR 449

TRUST TERRITORY OF THE PACIFIC ISLANDS, Plaintiff-Appellee

v.

NAMIKO LOPEZ, Defendant-Appellant

Civil Appeal No. 150

Appellate Division of the High Court

Truk District

December 15, 1976

Appeal in foreclosure suit. The Appellate Division of the High Court, Hefner, Acting Chief Justice, held that transaction upon which foreclosure was based was not oppressive or unconscionable and that trusteeship agreement was not to be resorted to in disposition of appeal.

1. Appeal and Error—Evidence—Weight

It is not the function of the appellate division to reweigh evidence on appeal and trial court's findings will not be set aside unless there is manifest error or findings are clearly erroneous.

2. Real Property—Foreclosure—Supporting Evidence

In foreclosure case, review of documents signed by mortgagor, and of transcript of testimony, was more than sufficient to allow finding that mortgagor knew what she had signed and in fact knew that if loan was not paid, she would lose her land.

3. Contracts—Unconscionability

In foreclosure case, where appellant's husband initiated request for funds to run store and appellant joined in, purpose of loan was to assist borrowers in acquiring merchandise for their store, loan was granted, the cash paid out, and interest charged at five per cent per annum, and there was nothing in record to equate government with a loan shark preying on unsuspecting borrowers, and nothing to indicate that property which secured loan was worth significantly more than the $3,000 loaned, transaction was not oppressive or unconscionable.

4. Trusteeship—Trusteeship Agreement—Particular Cases

In foreclosure case, where transaction involving land in question was binding on appellant-mortgagor, and the legal proceedings provided appellant and government-appellee with a full hearing and judgment of court was in accordance with law and foreclosure was pursuant to terms of the mortgage, there was no deprivation of property without due process of law nor was there a taking of private property for public use without just compensation, and resort to trusteeship agreement which required the government "to protect the inhabitants against the loss of their land" was not required.

5. Trusteeship--Trusteeship Agreement—Generally

Trusteeship agreement does not create a trust capable of enforcement through the courts.

6. Trusteeship—Trusteeship Agreement—Particular Cases

The Economic Development Loan Fund, a special revolving account funded by grants from United States Congress to promote sound economic development, providing funds at low interest rates to Trust Territory citizens not able, in most cases, to obtain funds from regular commercial banks, is not a scheme by the government to make loans so it can foreclose on land given as security and government would be remiss and derelict in its duty to other Trust Territory citizens waiting for funds to become available if it did not make a bona fide effort to recover money paid out even if it meant foreclosing on land given as security; and trusteeship agreement does not create a trust of the fund capable of enforcement.

Before HEFNER, Acting Chief Justice; BROWN, Associate Justice, and PEREZ, Designated Judge

HEFNER, Acting Chief Justice

In 1970, Daniel D. Lopez applied to the Economic Development Loan Board (hereinafter referred to as the Board) for a loan of $3,000 to obtain merchandise for a store. Before the loan was granted, the Board required security for the loan. The only asset of value was the real property owned by the appellant who was the spouse of Daniel Lopez.

Consequently, various documents were prepared and taken to Fefan Island where the appellant signed them, including a mortgage on appellant's land. The entire transaction from the initial application to final payment of the money extended over some nine months.

Thereafter, the appellant and her husband operated the store with the loan proceeds. In 1972, the appellant's husband left for Ponape and the appellant continued to run the store alone until some time later when the operation ceased. Since payments were not made on the loan, the appellee commenced suit against both Mr. and Mrs. Lopez for the balance due and to foreclose on the property under the terms of the mortgage. The trial court granted the relief prayed for.

Appellant's first contention is that she did not assent to the terms of the mortgage. The trial court found that the mortgage was a valid and enforceable lien against appellant's property. Therefore, appellant is, in effect, challenging the sufficiency of the evidence to sustain the findings of the trial court.

[1] As this court has repeatedly stated, its function is not to reweigh the evidence and the Appellate Division will not set aside the findings of the trial court unless there is manifest error or the findings are clearly erroneous. Arriola v. Arriola, 4 T.T.R. 486 (App. Div. 1968); Calvo v. Trust Territory, 4 T.T.R. 506 (App. Div. 1969); 6 TTC 355 (2 ) .

[2] A review of the documents signed by the appellant and the transcript of the testimony, reveals that there was more than sufficient evidence to find that the appellant knew what she was signing and in fact knew that if the loan was not paid, she could lose her land.

Next, the appellant argues that the foreclosure should be denied on equitable principles. The cases cited by appellant state, in essence, that the courts should deny relief where the contract i unconscionable or oppressive.

[3] The transaction in this case can hardly be called oppressive or unconscionable. The appellant's husband initiated the request to the board and appellant joined in. The purpose of the loan was to assist the borrowers in acquiring merchandise for their store. The loan was granted, the cash paid out, and the interest charged (at five (5%) per cent per annum) was certainly modest. There is absolutely nothing in the record to equate the appellant with a loan shark preying on unsuspecting borrowers.

There is also nothing in the record to indicate that the property, which secures the loan, is worth significantly more than the $3,000 loaned.

Lastly, the appellant asserts that the appellee "breached its duty under the United Nations Trusteeship Agreement", citing People of Saipan v. United States Department of Interior, 502 F.2d 90 (9th Cir. 1974).

It is necessary to point out the import of People of Saipan so that it is not misunderstood. The appellant attributes much more to the implications of People of Saipan and the trusteeship agreement than is warranted. *^[1]