5ASR2d

5ASR2d

Ryan, Inc., v. Vaka




 

Before KRUSE, Associate Justice, TAUANU'U, Chief Associate Judge, and AFUOLA, Associate Judge.

 

Counsel: For Plaintiff, Aviata Fa'alevao
For Defendants, Togiola T.A. Tulafono

 

Plaintiff, a merchant, shipped on or about November 21, 1983, to one Taipe Vaka in Nukualofa, Tonga, goods invoiced at the value of $6,179.30. He has not been paid for the same. Plaintiff has attempted to collect from Vaka in Tonga, but has been without success.

 

Plaintiff has filed its complaint in American Samoa against Vaka and, in addition, against defendant Blankenship as an agent of Vaka. Vaka has not been served process and accordingly is not before the Court.

 

Blankenship contests agency, and plaintiff at trial moved to amend its complaint to the effect that Blankenship was alternatively a guarantor of [5ASR2d32] the indebtedness. The Court grants the Motion. l TCRCP Rule 15(b).

 

FACTS

 

Gebauer (the President of plaintiff Ryan Inc. , and hereafter collectively with his company referred to as "plaintiff " ) and Blankenship were at the outset very good friends. Theirs was obviously a friendship which permitted the sort of familiarity that breeds contempt, which when taken into the context of business tends to generate lawsuits and a falling out in friendships. Such was the case here.

 

Plaintiff at the time was just starting out in business as a purveyor of food products. Defendant, who was at the time established in the lumber and builder's supply business, allowed his friend Gebauer to operate provisionally out of his lumber yard at the Industrial Park. Things were fine until Mr. Vaka visits town. Vaka is taken to the lumber yard by a Tau Tafisi, another of defendant's friends who operated his business, in part; at defendant's premises.

 

Vaka, Tafisi and Defendant Blankenship meet on the possibility of doing business. Among other things, Vaka is interested in the importation of food products into Tonga, so Blankenship introduces Vaka to Gebauer. Gebauer does not know Vaka from a bar of soap and looks to the defendant for assurance of payment. Here the testimony conflicts.

 

Plaintiff testified that when he sought assurance from the defendant of payment, defendant advised him to ship the order and that he (the defendant) would stand good on payment. [[5ASR2d33]]

 

On the other hand, defendant takes the position that he never guaranteed the order. He was merely a conduit for introduction. Vaka was interested in food product and, as he did not deal in food lines, he introduced Vaka to plaintiff as one who dealt in food.

 

The Court finds that the evidence preponderates in favor of plaintiff's version. The documentary evidence received is corroborative. A delivery docket evidencing supply to a vessel at the docks designates defendant Blankenship as the source of the order. Also, plaintiff's invoice contains the same designation, as well as the transaction terms, namely "FOB --- Pago" and "Charge. " Plaintiff testified that after he showed defendant proof of delivery, defendant signed the invoice.

 

Mr. Blankenship was not new to the world of business. His acknowledging the invoice and the terms therein contained point to circumstances--- a business context ---which place him beyond being a mere conduit.

 

CONCLUSION

 

On the evidence before us it is the Court's conclusion that defendant was primarily instrumental in securing the supply of the order with assurances to plaintiff that the latter would be paid. Whether viewed as a product of agency or of surety, the defendant is liable to plaintiff.


Accordingly plaintiff shall have judgment against the defendant in the sum of $6,179.30 plus interest at the presumed rate as provided in A.S.C.A. § 1501, namely 6% per annum.

 

It is so ORDERED. [5ASR2d32]

 

______________________

1 The motion was made over the objection of counsel for defendant. At trial, the motion was taken under advisement and the Court directed counsel for briefing. To date the Court has yet to receive briefs, although the time limit set for such has lapsed. Viewing the merits of the motion, the Court is unable to conclude prejudice to the defendant by allowing the amendment, as no different factual allegations are entailed. Noting the liberality envisioned by the scope of the rules, the court allows the motion.

Nua; Mailo v.


NIUMATA LAUMEA MAILO, Plaintiff

v.

 

NUA TO'ATOLU, Defendant

High Court of American Samoa

Land & Titles Division

LT No. 13-87

July 28, 1987

Court would not issue preliminary injunction forbidding senior matai of family to interfere with ongoing construction on family land, since to do so would invade the traditional decision making powers of the matai and effect a change in the status quo in advance of trial on the merits.

Where plaintiff family member admitted that he had other living quarters, refusal of court to issue a preliminary injunction forbidding senior matai of family to interfere with ongoing construction on family land would not be likely to cause irreparable injury. A.S.C.A. § 43.1301(j).

Before KRUSE, Associate Justice, TAUANU'U, Chief Associate Judge, and OLO, Associate Judge.

Counsel: For Plaintiff, Puleleite Tufele
For Defendant, Charles Ala'ilima

On Motion for Preliminary Injunction:

This matter came on for hearing upon plaintiff's application for a preliminary injunction.

The relevant factual background to the application is as follows. Plaintiff seeks to rebuild a house on certain communal land "Suasua" of the Nua family of Ta'u, Manu'a. The structure that had existed on the lands was destroyed by the hurricane that occurred earlier this year. Plaintiff consulted defendant Nua, the senior matai of the Nua family, who refused to give his consent to the rebuilding. It is the matai's position that [5ASR2d60] defendant, who is said to have a number of other homes elsewhere in Ta'u, had abandoned the pre- existing structure sought to be rebuilt many years ago. The matai has intentions of building a support facility to the family's guest house on the location in question.

On the above, plaintiff seeks a preliminary injunction to enjoin the matai and family from interfering with his (plaintiff's) intended building plans.

The Court is of the unanimous opinion that the interlocutory order sought is inappropriate under the circumstances. Such an order would serve to preempt what is properly the matai's decision making sphere, prior to the opportunity to hear this matter on the merits, and in effect to facilitate positively a change in the status quo through judicial order.

Further, under A.S.C.A. § 43.1301 (j), plaintiff is required to demonstrate great or irreparable injury. No such showing has been made, whereas plaintiff has admitted on the stand that he is not put out of living quarters without the intended rebuilding.

The Court will accept, however, the suggestion of defendant to maintain the status quo by enjoining either party's use of the location in question for building proposes, pending final disposition hereof.

Pursuant to A.S.C.A. § 43.0303(a)(3), an order will issue accordingly.

It is hereby Ordered that both parties are enjoined, pending further order of Court, from building any structure on that portion of the communal lands " Suasua" that was the location of a structure previously occupied by plaintiff Niumata Mailo and destroyed by Hurricane Tusi in January, 1987.

Star-Kist Samoa, Inc.; Palelei v.


SIO PALELEI, Plaintiff

v.

STAR KIST SAMOA, Inc. , Defendant

High Court of American Samoa

Trial Division

CA No. 89-87

September 23, 1987

If the parties to an employment contract have neither fixed a definite term of employment nor created any contractual obstacle to the right of discretionary discharge, then the contract is for employment at will and the employer may discharge the employee without incurring liability.

The "at will" employment rule is a rule of contractual interpretation rather than a substantive right of employers; it means simply that without evidence of negotiation or agreement on duration or terms of employment, courts will assume the parties intended the contract to be terminable at will by either party.

An employer's policy manual can give rise to contractual rights and obligations if the contents of the manual and the circumstances of its distribution suggest that it was designed to give the impression that such rights and obligations existed and thereby to elicit particular conduct on the part of employees.

Employee handbook that strongly advised employees not to join a labor union, described a system of "progressive discipline" prior to termination, and required the employee to sign a statement that he has read the manual and understands its provisions, gave rise to contractual rights and obligations with regard to discipline and termination of employment.

Employer's failure to use progressive discipline sanctions provided in policy manual before terminating plaintiff was not wrongful when plaintiff had apparently committed acts explicitly [5ASR2d163] listed in the manual as justifying immediate dismissal.

On motion for summary judgment, there was no genuine issue of material fact requiring trial on the merits where the parties differed in their characterizations of the material facts but the facts themselves were undisputed.

Before REES, Chief Justice, TAUANU'U, Associate Judge, and OLO, Associate Judge.

Chief Counsel: For Plaintiff, Charles Ala'ilima
For Defendant, John Ward

Opinion and Order on Motion for Summary Judgment:

Plaintiff Sio Palelei claims that his employer Star Kist wrongfully terminated his employment in October, 1986, by failing to afford him "progressive disciplinary procedures" which he claims were his due under the employment contract. Plaintiff invokes the contents of a policy manual distributed to Star Kist employees, which plaintiff claims fixes the terms of the parties' employment agreement. Defendant Star Kist, contending that plaintiff's employment was "at will" and that the policy manual imposed no restraints on its right to terminate Palelei's employment, has moved for summary judgment.

FACTUAL BACKGROUND

While the parties differ on some peripheral factual questions and in their characterizations of the material facts, the material facts themselves are undisputed. Sio Palelei had worked for Star Kist, with one voluntary interruption, since 1981. No mutually signed document set forth the particular employment agreement between the parties, and the parties had specified no duration of the employment. Palelei had, however, like other Star Kist workers, received a commonly distributed, "Employee Handbook" .This handbook described, among other things, the progressive discipline scheme that Palelei claims was his right. The handbook also enumerates a number of transgressions that could result in the immediate dismissal of the offending employee without resort to progressive discipline. [5ASR2d164]

Star Kist hired Palelei to work in the fish cleaning segment of its operation. It was Palelei's responsibility to supply baskets of fish to employees at the fish cleaning tables. As the fish were cleaned, Palelei was to "punch" cards held by each fish cleaner, each punch representing a certain quantity of cleaned fish, On October 9, 1986, Palelei's immediate supervisor instructed him to increase the rate at which the employees at his table were producing cleaned fish. By both parties' accounts, he did not comply. Palelei asserts that he "maintained the normal routine to avoid overloading the cleaners." Defendant Star Kist, however, speaks of "overpunching" and "insubordination" . Though the parties cannot agree on the nature of Palelei's acts that day, neither party disputes that Palelei did not quicken the production pace as he had been told to do by his supervisor. Nor did the punches issued by Palelei record the fact that they were given in accordance with the slower production pace that Palelei deemed more reasonable than the pace prescribed by his supervisor.

The supervisor wrote a warning upon discovering what he perceived as the discrepancy, but Palelei refused to sign it. The supervisor thereupon suspended him and reported the incident to the Star Kist personnel department.

Palelei did not return to the cannery until about four weeks later, when he learned that the company had fired him. In doing so, Star Kist failed to follow the system of progressive discipline it set forth in the employee handbook. This system consists, for each successive offense against "Company policy, " of counseling by the employee's supervisor and a verbal warning, written warning with the possibility of a one-day suspension, and finally a "last chance," with the determination to suspend or terminate made in conjunction with the personnel manager.

Plaintiff presses the related arguments that (1) the existence of this progressive discipline scheme provides evidence that the employment relationship was not "at will" and that Defendant could not terminate the relationship without cause, and (2) even if the relationship was "at will," the distribution of an employee handbook providing such a scheme imposed an affirmative contractual restriction on Star Kist's ability to fire him: with or without "cause," defendant was required to [5ASR2d165]observe the progressive discipline p:ocedure before terminating the relationship.

CONCLUSION OF LAW

The common law principle governing termination cf an "at will" employee is that, if the parties have neither fixed a definite term of employment nor created any contractual obstacle to the right of discretionary discharge, then the employer may discharge the employee under any circumstances without incurring liability. This rule proceeds from the notion that parties to a contract should have the freedom to construct the contractual arrangement as they see fit and that the courts should not conjure any unbargained obstacles to the ability of either party to terminate the relationship.

The rule can be properly applied, however, only by reference to the understanding that it is a rule of contractual interpretation rather than a substantive "right" of employers, extant unless waived, to terminate employees for an indefinite term without cause. The terms of an employment contract, including those applicable to duration and termination, are to be determined according to the intentions of the parties as evidenced by their oral and written negotiations, the applicable customs and usages, and the circumstances of the transaction. Palelei argues that the employee handbook given to him by Star Kist recites the terms of this contractual relationship governing duration and termination.

While courts of different jurisdictions view the matter differently, there is a mass of authority establishing that the provisions contained in commonly distributed employee manuals can create contractual rights and obligations. See. e.g., Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983); Toussaint v. Blue Cross & Blue Shield of Mich. , 292 N.W. 2d 880 (Mich. 1980); Carter v. Kaskasia Community Action Agency, 322 N.E.2d 574 (Ill. App. 1974). This authority directs the court to the policy manual itself and to the circumstances of its distribution in determining whether the terms of the manual became terms of the contract.

Plaintiff suggests no particular circumstances of the distribution of the manual that would require the conclusion that it became a part of the contract between him and his employer. In [5ASR2d166] Toussaint the employer, in response to a question about job security from Toussaint during the employment interview, handed him a manual asserting the company's "policy" to terminate "for just cause only" .292 N .W. 2d at 885. No such circumstantial considerations appear here. A review of the manual itself, however, yields the impression that if ever a policy manual was meant to shape the employee's conduct, this was it. Star Kist's General Manager opens by imploring the reader to review the manual promptly, the sooner to "familiarize yourself with your privileges and responsibilities." Immediately following appears a strongly worded admonition not to join a labor union. The manual then describes the structure and rules of the operation, and the system of progressive discipline that " in appropriate cases ... will be applied." Finally, the manual contains a signature blank with which the employee, identified by badge number, acknowledges in the presence of a signatory witness that he or she has read the handbook and understands its contents. The Star Kist employee handbook strikes the Court as a careful attempt to elicit particular conduct on the part of employees. Portions of that handbook that appear in return to create rights of the employee, including the progressive discipline section, should be enforced as such.

It is that section itself, however, that defeats Palelei's claim of entitlement to progressive disciplinary measures. The handbook sets out a list of violations justifying termination without resort to progressive discipline. Two of those are (1) "[g]iving or receiving free punches or wrong punches for fish being cleaned" and (2) "[i]nsubordination or willful disobedience to an order, assignment or instruction." Palelei's evidence, viewed in the light most favorable to him, indicates that he did not follow his supervisor's instruction on October 9, 1986, to have his table clean more fish. The handbook clearly permits immediate termination for such conduct, as it does for giving wrong punches. It is one thing for plaintiff to request the Court to enforce as a promise the provision of an employee handbook that looks like a promise. It is quite another to beseech the Court to intrude upon Star Kist'5 internal operations and to determine (or permit plaintiff to determine) what shall constitute a "wrong punch." Star Kist acted within the boundaries drawn in the employee handbook. There being no genuine issue of material fact [5ASR2d167] requiring trial, defendant's motion for summary judgment is hereby granted.

It is so ordered.


S & S Contracting, Inc.; Southwest Marine of Samoa, Inc. v.


SOUTHWEST MARINE OF SAMOA, Inc. , Plaintiff

v.

S & S CONTRACTING, Inc. , Defendant

High Court of American Samoa

Trial Division

CA No. 8-87

July 28, 1987

Decision of the highest court of a jurisdiction, including a decision of the Trial Division that was not appealed, should be followed by judge deciding subsequent case in the Trial Division unless there is some compelling reason not to do so.

The fact that a trial judge would have decided an earlier case differently is not a compelling reason to disregard the principle of stare decisis and ignore the authority of the earlier case.

Prior judicial decision was not a strong precedent when: (1) the decision resulted from a summary proceeding that did not include full briefing and argument by counsel; (2) the judge sitting in the later case was the same judge who had decided the prior case, so that there was no risk of casual disregard for the reflection and deliberation leading to the first decision; (3) the first decision was itself arguably an unfounded departure from precedent; and (4) both cases involved statutory interpretation, in which case the deciding court's primary duty is one of fidelity to the enacted law.

Alleged "informal practice of the High Court" prior to a contrary decision did not divest that decision of its value as precedent, where no reported decisions or other evidence established the rationale or even the definite existence of the practice.

Territorial courts are established not under Article III of the Constitution, but by Congress pursuant to the general legislative powers granted by article I and the power granted by article IV to [5ASR2d71] make rules and regulations for the territories. U.S. Const. arts. I, III, IV.

The High Court of American Samoa exercises judicial power that can be divested only by an Act of Congress. 48 U.S.C. §§ 1662a; Rev. Const. Am. Samoa art. 111 §§ 1.

The "judicial jurisdiction of the United States" extends to American Samoa. 11 U.S.C. §§ 101(49).

Since there is neither a bankruptcy court in American Samoa nor any provision designating American Samoa as part of any district with a bankruptcy court, there exists no court with jurisdiction to entertain a bankruptcy action when the debtor's residence, domicile, principal place of business, and principal assets are in American Samoa. 11 U.S.C. §§ 101(49); 28 U.S.C. § 1472.

The automatic stay provided in the Bankruptcy Act differs from an injunction or temporary restraining order only in that the stay becomes binding without an affirmative act of the bankruptcy court. 11 U.S.C. § 362(d)&(e).

The language and history of the automatic stay provided in the Bankruptcy Act imply that Congress intended for the stay to apply wherever Congress had the power to make it apply, without limitation. 11 U.S.C. § 362.

The automatic stay in bankruptcy protects both debtor and creditor, by providing debtor a "breathing spell " during which to reorder his financial condition and by ensuring that no single creditor can drain the debtor's assets without judicial attention to the rights of other creditors. 11 U.S.C. §§ 362.

The automatic stay of any judicial, administrative, or other proceeding against a debtor who has instituted a bankruptcy reorganization extends to proceedings in the High Court of American Samoa. 11 U.S.C. § 362.

The acknowledged unfairness to a creditor in the Territory who must travel to the United States in order to pursue his claim against a debtor in bankruptcy who is otherwise amenable to suit locally is not enough to overcome the language and policy of the statute requiring the consolidation of claims against a bankrupt debtor. 11 U.S.C. § 362. [5ASR2d72]

Before REES, Chief Justice, VAIVAO, Associate Judge, and AFUOLA, Associate Judge.

Counsel: For Plaintiff, Talalelei A. Tulafono

On motion for reconsideration:

Plaintiff argues that we erred in holding the automatic stay provision of the federal Bankruptcy Act, 11 U.S.C. § 362(a), binding on the High Court of American Samoa.

Plaintiff, Southwest Marine, is an American Samoa corporation. Defendant S & S Contracting is a foreign corporation doing business in American Samoa. In January of this year Southwest Marine sued S & S for damages and other relief in connection with an alleged breach of contract. S & S did not answer and Southwest Marine moved for a default judgment. On March 18, just before the hearing on that motion, the Clerk of the High Court received a document from a Honolulu attorney for S & S. It was entitled, in pertinent part, "NOTICE OF FILING OF VOLUNTARY PETITION UNDER CHAPTER 11 AND OPERATION OF STAY. "

The default hearing was continued at the request of counsel for Southwest Marine. At the continuation of the hearing the Court expressed the opinion that the federal bankruptcy statute required a stay of this proceeding, but granted a further continuance so that counsel could assemble authorities for the contrary proposition. After a complicated series of informal discussions, more or less amounting to a ruling that the stay provision does apply, Southwest Marine filed this motion for reconsideration. l [5ASR2d73]

11 U.S.C. § 362 provides that a petition filed under Chapter 11 of the Bankruptcy Act "operates as a stay, applicable to all entities, of...the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor...." In Rainwater v. The Sea Encounter, 3 A.S.R.2d 87 (1986), we held that an action in the High Court of American Samoa is a " judicial, administrative , or other action or proceeding" within the meaning of this provision. Plaintiff urges us to overrule that decision on several grounds:

(1) that "although informal, the practice of the High Court has been to the contrary of what the court is now appearing to believe";

(2) that American Samoa is outside j"the judicial jurisdiction of the United States" ;

(3) that other provisions of the bankruptcy laws of the United States do not extend to American Samoa; and

(4) that "to require plaintiff to go to Hawaii and adjudicate its claims against S & S is inherently unfair."

I. Stare Decisis

Before addressing plaintiff's arguments on the merits we should consider whether we are bound either by our prior holding in The Sea Encounter, supra, in which we decided the precise question that is now before us, or by the contrary informal practice claimed by plaintiff.

According to the rule of stare decisis a decision of this court, even a decision of the Trial Division that was not appealed, should be followed by judges deciding subsequent cases in the

[5ASR2d74] Trial Division unless there is some compelling reason not to follow it. That the judge in the later case would have decided the earlier case differently is presumably not a "compelling reason. " We do not, however, feel very strongly bound by our decision in The Sea Encounter, for the following reasons: (1) the decision was made at the conclusion of a summary proceeding without the benefit of full briefing and argument by counsel; (2) the risk that the reflection and deliberation the earlier judge brought to bear on the issue will be casually disregarded is quite low, since the Justice who decided The Sea Encounter is also the author of the present opinion; (3) counsel argues that The Sea Encounter itself departed from precedent without explanation or analysis; and (4) in cases involving statutory or constitutional interpretation the court's primary responsibility is to apply the enacted law faithfully; the duty to follow judicial precedent is accordingly weaker than in common law cases in which judge-made rules are themselves "the law. "

For the same reasons, we do not regard the " informal practice of the High Court" prior to The Sea Encounter to be conclusive of this case. Indeed, we are still unsure about whether there was any such practice. As nearly as the Court can determine, it consisted primarily of one unreported case in which attorneys for the debtor argued that the bankruptcy stay did apply here, attorneys for the creditor argued that it did not, and Chief Justice Gardner avoided reaching the issue by granting a stay on the ground of forum non conveniens. Since the result was consistent with the proposition that the bankruptcy stay applies here and also with the proposition that it does not, it cannot be cited as authority for either proposition.

At the default hearing counsel also alluded to a case in which he himself had represented an American Samoan corporation that was the subject of Chapter 11 proceedings in Hawaii, and in which a civil action in the High Court had been allowed to proceed. Since we allowed the continuance partly in order for counsel to refresh his memory about that case, and since he does not cite it in his[5ASR2d75] memorandum, we assume the question was not decided in that case either.2[5ASR2d76]

There is, of course, no case in which it is not possible to argue that stability and predictability require adherence to precedent; the aforementioned circumstances suggest, however, that the law on this point may fairly be regarded as unsettled. Moreover, the question whether a court has assumed jurisdiction it does not have is one of those which it is not so important to have settled as to have settled right. We therefore proceed to the merits of plaintiff's arguments.

II. " The Judicial Jurisdiction of the United States

Plaintiff directs our attention to the definitional section of the Bankruptcy Act, which defines "'United States,' when used in a geographical sense" to include "all locations where the judicial jurisdiction of the United States extends, including territories and possessions of the United States." 11 U.S.C. § 101(49). Plaintiff then states that American Samoa is outside the judicial jurisdiction of the United States .

Plaintiff does not tell us why this might be. The statute tells us that when it uses the term "United States" in a "geographical sense" it means all locations within United States judicial jurisdiction, but the latter term is itself nowhere defined. The only thing we are told about the "judicial jurisdiction of the United States " is that it " includ[es] territories and possessions, "a datum that cannot be regarded as terribly helpful to the plaintiff's case Yet plaintiff's memorandum treats the assertion that American Samoa, although a "territory or possession," is outside the judicial jurisdiction of the United States as self-evident.

It is possible (although certainly not self- evident) that the cited language could denote some but not all territories and possessions. Neither the statute nor the plaintiff, however, suggests any basis on which we might conclude that American Samoa is excluded. There is, of course, no " Article III court " in this territory or in any other; territorial courts are established by Congress pursuant to the general legislative powers granted by Article I of the Constitution and the power granted by Article IV to make rules and regulations for the territories. American Insurance Co. v. Canter, 26 U.S. (1 Pet. ) 511 (1828). This argument, however, proves too much, [5ASR2d77] for the section makes it clear that at least some territories are to be regarded as within the judicial jurisdiction of the United States."

One might try to distinguish American Samoa from the other territories on the ground that. it is the only territory which is not within the jurisdiction of any federal district court. (The other territories have courts which, although established pursuant to Article I and/or Article IV, are called "district courts" and have essentially the same jurisdiction as United States District Courts established under Article III.) The statutory definition does not, however, limit itself to places where there are federal district courts. In the absence of any such limitation there is no reason to suppose that any territory into which the writ of gny court of the United States extends is without the judicial jurisdiction of the United States.

The only court physically located in this Territory is the High Court of American Samoa. The High Court was established pursuant to authority granted the President of the United States by a law of the United States.3 The commissions hanging on the walls in the chambers of the Justices purport to issue under the authority of the United States. The High Court exercises judicial power that can be divested only by an Act of Congress.4 [5ASR2d78] We need not decide, however, whether the existence of the High Court would be sufficient to put American Samoa within the judicial jurisdiction of the United States; for it is quite clear that Article III courts can and do exercise judicial power here.

In King v. Morton, 520 F.2d 1140 (D.C. Cir. 1975), the United States Court of Appeals for the District of Columbia Circuit exercised judicial power in the territory by means of a writ directed to the Secretary of the Interior. The court did not discount the possibility of a more direct exercise of federal judicial power, by writ of certiorari or other writ of review from the United States Supreme Court to the High Court of American Samoa. Id. at 1143-44 n.3; See U.S. Const. art. III § 2 ( "The judicial power shall extend to all Cases, in Law and Equity, arising under....the Laws of the United States....In all [such] Cases ..the supreme court shall have appellate [5ASR2d79] jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make. " ) ; Durousseau v. United States, 10 U.S. (6 Cranch) 307 (1810) (Supreme Court may review decisions of a territorial court).5 [5ASR2d80]

There is nothing new or paradoxical about the proposition that the "judicial jurisdiction of the United States" can extend into a territory not because a federal court of first instance sits there but because a court in Washington, D.C. , has power to review judicial or other decisions taken there. The Constitution leaves it up to Congress whether there are to be any federal courts at all other than the Supreme Court. U.S. Constitution art. III; see generally C. Wright, Handbook on the Law of Federal Courts § 1. No one argues, however, that if Congress had established no inferior tribunals the judicial jurisdiction of the United States would include only Washington, D.C. , and not Maryland or Kansas. See Martin v. Hunter's Lessee, 14 U.S. (1 Wheat. ) 304 (1816) .6

Jurisdiction is the right to wield power. For us to declare American Samoa to be without the judicial jurisdiction of the United States would [5ASR2d81] entail the assertion that there is no court of the United States, including the United States Supreme Court, whose order we would be bound to obey. We do not believe this to be true.

III. The Reach of the Bankruptcy Act

Intertwined with plaintiff's general argument that American Samoa is outside the jurisdiction of the United States is a narrower argument that the automatic stay provision of 11 U.S.C. § 362 should be construed not to apply in American Samoa because certain other provisions of the bankruptcy laws do not apply here.

Plaintiff directs our attention particularly to 11 U.S.C. § 109(a) ("[W]ho may be a debtor") which provides that only a person residing or having a domicile, a place of business, or property in "the United States" can file a bankruptcy petition. Since this provision is cited in connection with plaintiff's assumption that American Samoa is outside the judicial jurisdiction of the United States, it does not advance the inquiry. If this section and the aforementioned definition of "the United States " were the only provisions bearing on bankruptcy petitions in American Samoa, it would seem that residents of the Territory could file such petitions.7 Even more [5ASR2d82] importantly, the statute neither expresses nor implies that the places in which one must live or work in order to be a debtor are the only places in which the automatic stay applies.

Bankruptcy is generally not available to residents of American Samoa, not because of the sections cited by plaintiff but because there is generally no court in which residents may file their petitions. 28 U.S.C. § 1472 provides that such petitions must be filed in "the bankruptcy court for a district ... .in which the domicile, residence, principal place of business in the United States, or principal assets in the United States " is located. Since there is neither a bankruptcy court located here nor any provision designating American Samoa as part of any district with a bankruptcy court, there exists no court with jurisdiction to entertain a bankruptcy action when the debtor's residence, domicile, principal place of business, and principal assets are in American Samoa.

It does not follow, however, that a bankruptcy court which has acquired jurisdiction over a debtor may not issue orders concerning the debtor's property, and with his legal rights and obligations generally, that are binding in American Samoa. For the reasons we have given in our discussion of "the judicial jurisdiction of the United States, " it is clear that Congress has the power to prescribe that an extraterritorial court has the power to issue orders that are binding in the Territory. The question, therefore, is one of legislative intent: whether Congress intended to give bankruptcy courts the power to enjoin 8 actions in the High Court of [5ASR2d83] American Samoa or, more likely, whether Congress would have so intended if it had adverted to the question. While the unavailability of a forum for entertaining bankruptcy petitions is one piece of evidence that might bear on that question, it is not the only evidence or the most important.

The best evidence of what Congress intended is what it enacted. 11 U.S.C. § 362 provides that a stay is "applicable to all entities" and that it precludes the commencement or continuation of "a judicial, administrative, or other action or proceeding against the debtor." The provision contains no limitations. That the stay is effective not only against proceedings in other bankruptcy courts but against all proceedings--- including proceedings in state courts, which even more clearly than the High Court of American Samoa are not federal courts and have nothing to do with bankruptcy ---is made clear not only by the list of carefully circumscribed exceptions that follow the general statement that proceedings against the debtor are automatically stayed, but also by a legislative history which is even more emphatic than the language of the law itself. The report of the House Judiciary Committee accompanying 11 U.S.C. § 362(a) stated that:

"the scope of this paragraph is broad. All proceedings are stayed ...

Proceedings in this sense encompasses civil actions as well, and all proceedings even if they are not before governmental tribunals. "

H. Rep. No.95-595 accompanying H.R. 8200, 95th Cong., 1st Sess. (1977) p. 340, reproduced in 11 U.S.C.S. at p. 25 (emphasis added). This language seems to have been designed to make it absolutely certain that no judge in any "judicial, administrative, or other proceeding" involving a bankruptcy debtor would read it as saying anything but "This Means You."

The committee report also makes it clear why Congress wished to stop all proceedings against bankruptcy debtors as soon as the petition was filed:

The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection [5ASR2d84] efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.

The automatic stay also provides creditor protection. Without it, certain creditors would be able to pursue their own remedies against the debtor's property.

... Bankruptcy is designed to provide an orderly liquidation procedure under which all creditors are treated equally.

Id. To imply an exception for proceedings in the High Court of American Samoa would, with respect to debtors who are subject to the jurisdiction of a bankruptcy court but who are for any reason amenable to process in American Samoa, defeat the purpose of the law we are asked to construe. It would mean that such debtors were given no "breathing spell and that all their creditors were not treated equally.

The absence of a forum for bankruptcy actions in American Samoa may have been accidental or it may have been the result of a conscious legislative policy choice.9 In either case it is an[5ASR2d85] insufficient reason for implying an exception to the stay of "all proceedings " involving a debtor who is the subject of a bankruptcy action in a court that does have jurisdiction.

The one case cited by plaintiff for the proposition that the bankruptcy stay does not apply in American Samoa illustrates instead the appropriateness of construing 11 U.S.C. § 362 to stay any proceedings which Congress would have the power to regulate. In re Fotochome. Inc., 377 F. Supp. 26 (E.D.N.Y. 1974), aff'd sub nom. Fotochrome. Inc., v. Copal Co., Ltd. , 477 F.2d 512 (2d Cir. 1975), held a bankruptcy stay inapplicable to an arbitration proceeding in Japan. The decision dealt primarily with the effects of two treaties requiring the United States to give binding effect to Japanese arbitral awards. Insofar as it had anything to do with the construction of 11 U.S.C. § 362, however, it held the stay provision inapplicable "outside the territorial limits of the United States" not as a matter of statutory construction but for reasons of constitutional and international law: in "extranational matters" a United States court has no power over persons and tribunals who do not have "minimum contacts" with the forum. 377 F. Supp. at 29. The bankruptcy stay provision does not apply to Japanese tribunals, in other words, because Congress has no power to make it apply to such tribunals. [5ASR2d86]

The Fotochrome court expressly "recognize[d] that this result might somewhat disturb the draftsmen of the Bankruptcy Act. Upon a petition for bankruptcy they would have expected the court to summon all the creditors of the bankrupt to press their claims at one time and place." Id. at 31. Since Congress has no power to make rules that bind Japanese courts, a creditor who sues an American bankrupt in Japan must be accorded an advantage over other creditors even though this is clearly contrary to the central purpose of the bankruptcy law. Since Congress does have the power to bind the High Court of American Samoa, no such advantage need be afforded a creditor who sues an American bankrupt in American Samoa. Rather, the language and purpose of the statute prevail.

IV. Fairness

The short answer to the contention that it is "inherently unfair" to "require plaintiff to go to Hawaii" is that bankruptcy is unfair. Viewed from the perspective of a creditor, the whole point of the bankruptcy laws is to deprive one of what was formerly one's due. The need to file papers in a distant forum is irritating, but not nearly so irritating as the strong possibility that one will not recover at all. Neither of these burdens falls uniquely on plaintiffs who live in Samoa. If, S & S has any creditors in Maine or in Puerto Rico the bankruptcy law clearly requires them to litigate their claims in Hawaii alongside those of Southwest Marine, at even greater expense and inconvenience. The unfairness, if any, is built into the statute and the remedy must be legislative rather than .judicial.

One could argue that it is especially unfair to force a creditor to participate in his debtor's bankruptcy proceeding when the creditor himself would be ineligible for bankruptcy in the event he became insolvent. This unfairness may or may not be mitigated by the alternative remedies available in American Samoa; in any case, it is an insufficient reason for us to give the statute a construction that seems contrary to its language and purpose. The stay provision itself, however, provides that a stay may be terminated or modified "for cause" by the bankruptcy court. 11 U.S.C. § 362(d). If Southwest Marine can convince the Hawaii bankruptcy court that the equities require litigation in the High Court of American Samoa to be exempt from the stay, we will be willing and able to proceed. [5ASR2d87]

Order

The motion for reconsideration is denied. All further proceedings are stayed.

____________________

1 On June 9 counsel filed a memorandum arguing that the automatic stay provision does not apply to the High Court of American Samoa, and also moved for an expedited hearing (on June 10) on his' motion for default judgment. The motion for expedited hearing was informally denied first by the Associate Justice and then by the Chief Justice. Counsel construed the second refusal to hold an expedited hearing (which was based in part on the Chief Justice's failure to be convinced by counsel's memorandum that the stay [5ASR2d73] provision does not apply) as an "order denying further proceeding on defendant's motion for Default Judgment." He then filed this "Motion for New Trial or Reconsideration." At the hearing on the motion the Court agreed to regard the previous events as a denial of Southwest Marine's motion for default judgment so that this motion for reconsideration could be taken under advisement on its merits.

2 At oral argument on this motion for reconsideration, counsel called the Court's attention to a very recent case in which the High Court did proceed to judgment despite informal notice of a bankruptcy petition. Development Bank v. Siofele, CA No.10-86 (unreported case decided from the bench June 17, 1987). That case was decided on its most unusual facts: (1) A few minutes before the first scheduled hearing on a motion for default judgment, the Clerk of the High Court was notified by the defendant that he had filed for bankruptcy. (2) The Court announced this at the hearing and continued the matter indefinitely for the reasons we express in this opinion. (3) The attorney ££or the plaintiff subsequently learned that the defendant's bankruptcy petition had been dismissed (it was not clear whether voluntarily or involuntarily) shortly after it was filed. (4) Another hearing was scheduled on the motion for default judgment, and notice was sent to the defendant. (5) The defendant wrote from California to request a continuance on the ground that he was studying for the bar examination. (6) The Court denied the continuance, concluding that if the defendant had not filed a frivolous or meritless bankruptcy petition he would have had plenty of time to litigate his case and then study for the bar. (7) The day before the second hearing, defendant called the judge from California and told him he had filedanother bankruptcy petition "to keep this case from going to trial." The implication was that the second petition would also be dismissed as soon as it had served its immediate purpose. The Court told the defendant, and later announced at the default hearing, that the vexatious filing of multiple frivolous actions was outside the scope of the bankruptcy laws and therefore of the automatic stay provision. The Court also relied on the fact that it had no credible evidence before it that a second petition had in fact been filed. Finally, the Court made it clear that it would regard itself as bound by any contrary order of the California bankruptcy court. The case is clearly distinguishable from this one.

3 48 U.S.C. §§ 1661(c) provides:

Until Congress shall provide for the government of such islands,
all civil, judicial and military powers shall be vested in such
person or persons and shall be exercised in such manner as the
President of the United States shall direct,

See also Exec. Order No. 10264, 3 C.F.R. at 765 (delegating executive authority over American Samoa to the Secretary of the Interior); Rev. Const'n of Am. Samoa, Preamble (approval by the Secretary of the Interior of the territorial constitution); id, art. III § 1 ( " [T]he judicial power shall be vested in the High Court of American Samoa).

4 See 48 U.S.C. §§ 1662a (section added in 1984) (providing that the territorial constitution can be amended only by an Act of [5ASR2d78] Congress). The territorial constitution provides that "the judicial power" in American Samoa shall be exercised by the High Court. Rev. Const'n of Am. Samoa, art. III §§1, quoted in note 3 supra.

After the enactment of § 1662a in 1984, under which the High Court exercises its "judicial power" at the pleasure of Congress rather than of the territorial legislature or the Secretary of the Interior, it would seem clear that the territory is within " the judicial jurisdiction of the United States" even without resort to the possibility of extraterritorial judicial review. But even if --- as might be inferred fromKing v. Morton, 520 F.2d 1140 (D.C. Cir. 1975), discussed in the text infra ---the High Court originally had no real "judicial power" but was a mere administrative tribunal reporting to the Secretary of the Interior and reversible at his will, and even if this status has somehow survived the 1984 statute, the High Court would still seem to be bound by the bankruptcy stay provision. .The provision expressly applies not only to "judicial proceedings" but also to "administrative proceedings" and "other proceedings." 11 U. S. C. § 362 ( a). The Department of the Interior is certainly within the judicial jurisdiction of the United States, and by its terms § 362 would apply to the administrative tribunals of the Department.

5 Durousseau has often been cited for its strong affirmation, in dictum, of the proposition that when Congress has not expressly granted appellate jurisdiction to the Supreme Court it should be presumed to have exercised its power to make an exception to the Court's jurisdiction. See id. , 10 U.S. (6 Cranch) at 313-14. It is important to note, however, that this observation rested on what the Court took to be the intent of the Judiciary Act of 1789, as manifested in the structure of that Act: "they have described affirmatively [the Court's appellate] jurisdiction, and this affirmative description has been understood to imply a negative on the exercise of such appellate power as is not comprehended within it ."Id. at 314. The courts of American Samoa, on the other hand, were created pursuant to general power given the executive in a statute outside the parts of the United States Code dealing with the jurisdiction of courts. See authorities cited in note 3 and 4 supra. It would therefore be unrealistic to infer any intention on the part of Congress to make an implicit exception to what would otherwise be the jurisdiction of the United States Supreme Court. Indeed, there would be a certain tension between such an implied exception and the precise holding of Durousseau, which was that (despite the general presumption stated above) the appellate jurisdiction of the United States Supreme Court over the decisions of the court for the "District of Orleans" was implied although not expressed by the statute defining that court's original jurisdiction. Id. at 317. The Court had this to say in support of its holding:

The constitution here becomes all important. The constitution and the laws must be construed together. It is to be recollected that the appellate powers of the Supreme Court are defined in the constitution, subject to such exceptions as Congress may make. Congress has not expressly made any exceptions; but they [5ASR2d80] are implied from the intent manifested by the affirmative description of its powers. It would be repugnant to every principle of sound construction to imply an exception against the intent.

Id. at 318 (per Marshall, C.J. ).

6 The unhelpfulness of this line of argument is compounded by the absence of any link between § 101(49) (the section discussed above, defining "United States" ) and § 362 (the automatic stay provision). Although the definitional section tells us what is meant when the statute refers to the United States, the automatic stay provision does not refer to the United States. The effect of a § 362 stay is nowhere expressly limited to the United States, in a geographical sense or any other sense. As it happens, the automatic stay provision is ineffective outside the judicial jurisdiction of the United States unless the bankruptcy court acquires personal jurisdiction over the parties to the foreign proceeding; but this is because United States courts have no power to assert such jurisdiction, not because of any limitation contained in the statute. From what can be discerned from the statute itself, in other words, an automatic stay applies anywhere Congress has the power to make it apply. See Part III infra. [5ASR2d81]

7 Counsel for plaintiff has provided the court with a copy of an order in an unreported Hawaii bankruptcy case which relies on the section providing "who may be a debtor, " among other authorities, for the proposition that "the United States bankruptcy system has never been applied in American Samoa."In re Kava Bowl , Case No.84-00083, United States Bankruptcy Court for the District of Hawaii. The court's principal reliance, however, was on the failure of Congress to provide any forum in American Samoa for bankruptcy petitions. In any case, the Hawaii bankruptcy court was faced only with the question whether a resident of American Samoa with no substantial assets or business contacts with Hawaii could file a bankruptcy action in Hawaii. The Kava Bowlopinion did not to purport to decide the question before us; in context it is clear that when the court spoke of the "bankruptcy system" not being "applied in American Samoa" it was referring only to "who may be a debtor" and not to any other [5ASR2d82] direct or indirect effect the bankruptcy laws might have. For the reasons given in the text of this opinion, our decision in this case is fully consistent with the holding in the Kava Bowl case.

8 The automatic stay differs from an injunction in that it becomes effective without an order of the bankruptcy court. The court retains, however, the power to dissolve or modify the stay, and it is in all other respects identical to an injunction or temporary restraining order. See 11 U.S.C. § 362(d)&(e). [5ASR2d84]

9 Conditions in American Samoa differ from those in the United States proper in a number of ways that might justify a deliberate decision not to create a bankruptcy remedy here. Very few people earn a substantial enough income to make it worth their while to pay the attorneys' fees and administrative costs necessary to shield future income from creditors. Those who do have substantial income frequently have sufficient contacts with Hawaii or some other jurisdiction to avail themselves of the bankruptcy remedy in that jurisdiction. Moreover, the territorial legislature has created other remedies which serve many of the purposes of "consumer" bankruptcies. The principal asset owned by most Samoans is land, and a statute provides that the land of a Samoan is not subject to execution other than to satisfy a mortgage on the land. A.S.C.A. § 43.1528. See also A.S.C.A. § 43.1501 (judgment debtor may apply for an order in which "the court shall allow the debtor to retain such property and such [5ASR2d85] portion of his income as may be necessary to provide the reasonable living requirements of the debtor and his dependents"); A.S.C.A. § 27.1501 (limiting sales of goods on credit). On the other side of the ledger, the introduction of federal bankruptcy petitions in the Territory would entail a costly and complicated set of administrative institutions and procedures, and would be further complicated by the widespread belief that the introduction of a federal district court in the Territory would lead to the erosion of traditional institutions. While these factors are highly relevant to the question whether the remedy of a bankruptcy petition should be available in American Samoa, they have little or nothing to do with the question whether a stay or an injunction incident to a bankruptcy proceeding in another jurisdiction is or ought to be effective in the Territory.






Toleafoa v. Sioka


SOAFA TOLEAFOA and FRANCIS NANSEN, Plaintiffs

v.

TAU SIOKA, AILUA LOTONIU, and AMERICAN

UNDERWRITERS INSURANCE CO. , Defendants

High Court of American Samoa

Trial Division

CA No. 51-84

July 17, 1987

Owner's consent to another person's use of a vehicle may be inferred from a past course of conduct or relationship between the parties.

When the driver of a vehicle is a member of the vehicle owner's family or household, it is more likely that the driver has the owner's implied consent to use the vehicle.

Principle that family relationship between driver and vehicle owner suggests owner's implied consent does not apply to Samoan extended communal family.

Vehicle owner was not vicariously liable for injuries caused by another person driving his car under theory of implied consent when evidence indicated that driver acquired the owner's keys through artifice.

When a defective vehicle is driven without the express or implied consent of the owner, the owner cannot be held liable for injuries caused by the defect.

Before KRUSE, Chief Associate Justice and TAUANU'U, Associate Judge.

Counsel: For Plaintiffs, Albert Mailo
For Defendants, Roy J.D. Hall, Jr.

This is an action for damages for injuries sustained arising from an automobile collision. Plaintiffs Soafa Toleafoa and Francis Nansen were passengers riding in defendant Ailua Lotoniu's vehicle, which was driven by one Tau Sioka at the [5ASR2d19] time of the collision. Defendant American International Underwriters (A.I.U.) was at all relevant times the issuing carrier of an owner's insurance policy covering the subject vehicle, all in accordance with the Compulsory Insurance Act, A.S.C.A. § 22.2001 et. seq. A.I.U. was named as a defendant herein pursuant to the right of direct action provision of the statute.

FACTUAL BACKGROUND

Vehicle owner Ailua was, on or about February 20, 1983, involved with his matai title installation ceremony in the village of Aasu. In the course of preparing for the ceremony, he used his pickup truck to transport the required customary presentations for the village to Lualemaga's guest house, which was the venue for the occasion. At this time, the vehicle was driven exclusively by the owner.

As the ceremony commenced, Ailua had his vehicle parked to the rear of the guest house and at some time subsequent, one Setu asked Ailua for permission to use the vehicle to transport certain of the food presentations to another gathering within the village. Ailua agreed and handed his car keys to Setu.

As it turned out, Ailua's vehicle was not used, and meanwhile Setu retained the keys himself throughout most of the day.

At the conclusion of the ceremony, Ailua and others remained and slept in the guest house. Setu on the other hand went to his own home nearby to sleep and still had the car keys with him. These he placed under his bedding and he went to sleep.

Setu testified that he was later awakened by his wife, who said that Ailua had sent a young child for the keys, as he, Ailua, wanted to go home. Setu parted possession with the keys and went back to sleep.

In actuality, Ailua himself was still sleeping at this time, and it was Tau Sioka who had sent the child to get the keys. Tau Sioka took the vehicle and proceeded to drive towards the Pava'ia'i[5ASR2d20] direction l, and as he left the village and proceeded to descend the hill at Tafeta/Mapusaga Fou he stopped and offered a lift to certain pedestrians on the road, including the two plaintiffs.

Testimony had it that the vehicle continued for a distance in a usual fashion, but at a certain point on the incline it picked up speed and went out of control. Witness Apelu Soliai testified that he was one of the passengers picked up and was riding in the cab with the driver. He stated that the vehicle lurched forward and picked up speed, and he was told by the driver that the brakes had failed. The driver panicked and became stunned, so Apelu grabbed the wheel to attempt to keep the vehicle on the road while looking for an area appropriate on the roadside that would brake it. He steered towards somebody's taro plantation and was successful in bringing the vehicle to rest. In the process, plaintiffs Nansen and Toleafoa, who were riding in the bed of the pickup truck, were thrown from the vehicle and respectively suffered injuries. They were taken to the hospital with others.

Vehicle owner Ailua first learned of the whole incident when awakened towards the evening with the news that his vehicle had been involved in an accident. He testified that neither Setu nor Tau Sioka had driven the pickup truck before, nor were either of these individuals a part of his household. Testimony had it, however, that they were all members of the Lualemaga extended family. When asked why Ailua had given his keys to Setu, he testified that he knew Setu was a competent driver and he was told why and where the vehicle was needed. When he was further asked why he did not get back his keys when the vehicle was not being used, Ailua stated that at the time he was the principal at the matai installation and was entirely caught up in the whole affair. As events progressed he was unmindful of the fact that he had given his keys to Setu, and in the meanwhile the vehicle remained parked where he had left it. [5ASR2d21]

LIABILITY

Upon the foregoing facts, which were not in dispute, plaintiffs state the issue as follows: whether, if Tau Sioka was negligent, his negligence would be imputed to Ailua as the owner of the vehicle.

Restated, the central issue here is whether the driver Tau Sioka was at the time an "additional insured " from the point of view of the Compulsory Insurance Act. That is, whether he had the express or implied permission of Ailua to operate the vehicle. There was no express permission in fact and therefore the inquiry focuses on "implied permission".

Plaintiffs submit that the case comes within the standard of Te'o v. Continental Insurance Co., CA No.59-83. This was a case where implied consent was found in the following circumstances: vehicle owner, after forbidding her son from taking the family car, left the keys where the son could freely acquire it. The son took the car and got involved in an accident.

Plaintiffs here contend that, in a "family situation," the courts have been willing to more readily find "implied consent." That by not securing the vehicle keys and preventing: access by family members, the owner is responsible for ensuing damage, Plaintiffs feel that in a family setting such as was the case here, Ailua did not do enough to secure the keys from Tau.

The attempt appears to be the extension of the family or household setting to the "aiga" or communal family situation. If we accept this position, there would be no end to the extension of vicarious liability in the Samoan community, with its widely dispersed communal ties.

The family or household setting situation was never meant to be a conclusive index of "implied consent." Rather, implied consent or permission was not something which the courts have confined alone to affirmative action on the part of the vehicle owner. This consent may be inferred from a past course of conduct or relationship between the parties in which there is mutual acquiescence or lack of objection which would, under the circumstances, signify consent. See generally Am. Jur. 2d, Automobile Insurance § 252. Accordingly a family relationship, with its attendant [5ASR2d22]familiarity, lends itself to an inquiry into past conduct and circumstances likely to show acquiescence, or lack of objection, tantamount to consent. But that degree of familiarity is not necessarily the case with extended family or aiga situations.

In this case, there was no evidence of any past use of the vehicle by Tau Sioka; nor of past permission by Ailua; nor of any past relationship between Ailua and Tau Sioka that could possibly give rise to inferences of acquiescence. To mention that Ailua and Tau are both members of the Lualemaga family in order to suggest implied permission is empty reference. The statute, while extending vicarious liability beyond common law limits, requires proof of "consent. " The facts here are antithetical of consent. Tau obtained the keys through ruse and stratagem, and in fact converted the vehicle.

We do not find implied consent under the circumstances.

The Court has further explored the question whether liability should nonetheless be imposed on the vehicle owner, Ailua, for injuries arising from an accident attributed to the vehicle's faulty brakes, even though the pickup truck was being driven by Tau without Ailua's consent or control.

Those courts addressing the issue have held uniformly that liability cannot stretch as far as the owner if the owner did not expressly or implicitly sanction the injurious use. On the basis of that authority, Ailua is not liable to compensate the plaintiffs for their injuries.

The decision in Wellman v. Novak, 392 P.2d 377 (Ok. 1964), illustrates. The complaint there was levied against a railroad company and its employee. While fishing one night, the employee and a companion sought to help a motorist whose car had become stuck in sand. During the rescue mission, the employee's car also got stuck in sand, whereupon the employee got a ride to the railroad yard where he worked, took a company truck, returned to the two stranded cars, and freed them. While taking the truck back, however, the employee struck and killed the plaintiff's decedent, allegedly because of the truck's faulty brakes.

The Oklahoma Supreme Court held that the plaintiff could not recover from the railroad

[5ASR2d23] company. When even a defective vehicle is driven without the consent or knowledge of its owner and not on the owner's business, the court held, the owner cannot be made legally liable for a resulting accident. The court cited a C.J.S, entry and a number of cases to the same effect. 60A C. J .S. , Motor Vehicles § 430; Gordon v. Texas & Pacific Mercantile & Mfg Co. , 190 S.W. 748 (Tex. Civ. App. 1916); Glenn Lumber Go, v. Fisher, 84 S.W.2d 282 (Tex. Civ. App. 1935); Felshi v. Zeidman. 126 A. 794 (Pa. 1919). Whether viewed as a product of bailment, causation, or object-of-duty principles, the rule seems firmly entrenched and operates here to deny the plaintiffs recovery from Ailua, and thus from his insurer.

Judgment is entered accordingly in favor of defendants Ailua Lotoniu and American International Underwriters.


1 Tau Sioka's purpose in taking the vehicle was not made clear on the testimony, but as in most cases with auto accidents, Tau Sioka is not financially responsible and he has long departed the jurisdiction of this Court.

Te'o v. Sotoa,


UIVA TE'O, Plaintiff

v.

ESTATE OF SALOFI R. SOTOA, Defendant

High Court of American Samoa

Trial Division

LT No. 40-82

August 3, 1987

A trial court decision that was not appealed and that adjudicated ownership of a tract of land acquired the effect of res judicata and bound the court in later dispute between the same parties over the same tract of land.

Registration of land is not essential to ownership, and a party's withdrawal of an offer to register after a final judgment awarding him the land does not divest him of his title.

A proffered "settlement" of an already litigated claim, purporting to "adjust" boundaries established by the court, has no effect when it (1) was never judicially approved; (2) resulted from negotiations between a licensed legal practitioner and an adverse party represented by counsel in the absence of the latter party's counsel; (3) clearly results in disadvantage to the latter party; (4) was renounced by the latter party soon thereafter; and (5) bears a close resemblance to an earlier "settlement" asserted in court by the legal practitioner, the existence of which the adverse party denied immediately after having consulted his attorney.

Before REES, Judge, Chief Justice, and AFUOLA, Associate

Counsel: For Plaintiff, Talalelei A. Tulafono
For Defendant, Charles Ala'ilima

Plaintiff Uiva Te'o filed this action in 1982, complaining that Salofi Sotoa and his family were trespassing on his land "Etena." Sotoa responded [5ASR2d91] that the land was actually part of his property called "Kokoland. "

Te'o maintains that he has worked the disputed tract since 1935, that the Court affirmed his title to it in LT No.73-77, and that Sotoa began to occupy it in 1979 or 1980 while Te'o was on a six- month trip to the United States.

Sotoa's estate {the original defendant having died during the course of this litigation) takes the position that he and Te'o "settled their boundaries" subsequent to the court's judgment in No.73-77 and agreed that the disputed tract (which Sotoa claimed to have cleared from virgin bush in 1973) belonged to Sotoa.

Our findings and conclusions are as follows:

Findings of Fact

1) The land in dispute, with the exception of a narrow strip along the western boundary, was awarded to Te'o in LT No.73-77. It is clear from the testimony and the supporting exhibits that the tract at issue in this case includes "that small portion of the land on the southwest corner of the Fanene claim claimed by him, plus a small segment to the west of it " which was "deemed to be the property of Uiva Teo as his individually-owned land" in Te'o v. Fanene et al., LT No.73-77 (decision and judgment in consolidated cases rendered December 13, 1977) at page 37. The disputed tract also includes a strip about fifty feet wide, still further to the west, which was not at issue in the Fanene litigation.

2) Although Salofi Sotoa was a party to LT No. 73-77 and the cases consolidated with it, and although he claimed portions of the land claimed by Uiva Te'o and by Fanene, he neither claimed any part of the tract that is the subject of the present case nor objected to the claims made by Te'o and Fanene that they owned the tract.

3) The judgment in the consolidated cases was affirmed on appeal in Te'o v. Fanene, AP No.13-78 (decision rendered February 21, 1980). The portion of the trial court's judgment awarding the presently disputed land to Te'o was not appealed by any party.

4) Meanwhile, on January 12, 1979, the trial court issued an order stating that "the court, sua[5ASR2d92] sponte, has reopened the case to view once again the land which is the subject matter of the dispute." This was about a year after the judgment in the case, and some months after the appeal had been docketed in the Appellate Division.

5) After the appellate court's decision, the trial court held a conference "to carry out the judgment, more particularly, the filing of amended maps and descriptions with the court and the Territorial Registrar," Order issued April 21, 1980, at page 2.

6) At this conference Uiva Te'o was represented by his then-attorney. Salofi Sotoa, a licensed legal practitioner, was representing himself.

7) At this conference Sotoa told the Court that he and Uiva Te' o had "agreed on a change in their mutual boundaries." It appears from the memorandum order issued by the Court that Te'o's attorney knew nothing of this alleged agreement. Based upon Sotoa's representation, the Court ordered the parties to file an amended map and description of the lands awarded them in the decision. Order issued April 21, 1980, at page 3.

8) Two months later the Court held another conference. It is clear from the memorandum and order issued at the conclusion of this conference that there was (at least at this point) no "agreement" between Te' o and Sotoa for a "change in their mutual boundaries." Rather, Sotoa "presented a map which appears to include those lands in the South-West corner which have been determined to be the property of Uiva Te' o." This was described as a matter in "contention" between the parties . Order and Memorandum issued June 18, 1980, at page 2. See also Transcript of Preliminary Injunction Hearing, LT No.40-82, October 26, 1982 [hereinafter cited as 1982 Transcript], part I at page 11 (testimony of Uiva Te'o):

I remember one time I was informed by my lawyer this matter
is now before the court. I think this hearing was held upstairs.
I think one of the Samoan judges sitting on the bench right now
was sitting on that hearing, and there was onlyone question
asked by the presiding Justice, Did I agree to give Mr. Sotoa
that two and a half acres of land now in dispute? My answer to
that was No. [5ASR2d93] After that hearing I was approached
by the defendant telling me that he's going to buy the land.
Now, I think that Sotoa was not telling the truth to the presiding
Judge that I had given him the land.

The Court ordered that a hearing should be scheduled in August or September to resolve this and other disputes. There is no evidence that such a hearing was held.

9) Instead, Sotoa ordered a survey of the disputed tract with the intention of offering it for registration. Somehow Te'o got hold of a copy of this survey and offered it for registration in his own name early in 1981.

10) Sotoa filed an objection to Te'o's survey on May 5, 1981, stating that Te' o had "agreed to our boundaries as set forth with our Bob Wire and coconut trees."

11) In accordance with the statutory procedure for objections to the registration of land, the dispute was referred to the Office of Samoan Affairs. At the conclusion of a meeting held at the Office of Samoan Affairs on or about October 20, 1981, Uiva Te'o signed a statement saying that he withdrew his registration.

12) Although there is conflicting evidence about what happened at the October 1981 meeting, we do not believe that Uiva Te'o intended to acquiesce in Sotoa's claim to the land or that he manifested any such intention. He later testified that he had been informed both by his attorney and by the mediator at Samoan Affairs that if he had already been awarded the land by the Court there was no need for him to file a registration:

Throughout the four years I have been trying to do
my best to get Sotoa off my land... One time I went
and registered the land at the Office of Registration,
and I also informed my counsel, Moega Lutu, that I
had done so already. This is because I am
inexperienced and lack knowledge on the procedures
of registration of land. But my counsel informed me
no, you are not supposed to do that because you have
already won the case and that is sufficient. That
registration that I [5ASR2d94] did, Sotoa filed an
objection to my registration of the land. I was
questioned by the Secretary of Samoan Affairs
on what happened. I explained to them I thought
that all land owners who won land in the cases
have to register their portions. However, my
counsel, Moega Lutu, informed me I don't have
to do that because whatever the court decrees
I have won the case and that is sufficient. I was
scolded and advised by the Secretary of Samoan
Affairs that the action I did registering the land
was not feasible because the land was on record
based on the court decision. Sotoa tried to make
me sign withdrawal of my registration. I said it
doesn't matter. Even if I sign a withdrawal or do
sign a withdrawal, nothing changes. Because now
I understand everything after my counsel advised
me, that the land remains mine.
I told Sala [the Samoan Affairs mediator] I do
not wish to sign this paper because I am the owner
of that land. But he still urged me to sign, and I
told him repeatedly either I sign or I don't sign it
but I won the land already based on the case
mentioned.

1982 Transcript at I. 7, 1:3, 21-22.

13) This testimony, given about a year after the meeting in question, is consistent with Te'o's testimony in 1987 that he had signed a withdrawal of his registration because the Samoan Affairs official who, presented it to him told him that Sotoa had already agreed to withdraw his claim so that the matter would not go to court. In general, however, we do not believe Te'o's 1987 trial testimony to be a reliable version of what happened at the 1981 meeting. This is possibly because Te'o, who is 81, had confused the 1981 meeting at Samoan Affairs with the 1982 High Court hearing on the preliminary injunction. His 1987 testimony concerning the former seems more accurately to describe the latter.

14) Unfortunately, there is no other reliable evidence of what happened at the 1981 meeting. No transcript is available. The mediator testified in 1987 that he did not remember the details of the 1987 meeting, but referred the Court to his 1982 [5ASR2d95] testimony. His 1982 testimony was itself vague and conclusory: " I don' t recall exactly what Te' o said ...But he said something to the effect that he doesn't think his offer for registration is valid." Neither this testimony nor the withdrawal itself is inconsistent with Te'o's claim that he had stated his willingness to withdraw his registration because he believed his offer for registration to have been technically inappropriate as a means of asserting his ownership. (Later in the 1982 hearing the mediator became more definite and specific in his recollection that Te'o said he did not own the land. This testimony also lacked detail and was couched in conclusory terms, and seems to have been the product of the witness's irritation at cross-examination by Te'o's counsel. )

15) The only evidence for the contention that there was a "boundary settlement " is that on two occasions between 1979 and 1981 Te'o and Salofi Sotoa's wife encountered each other on the land and had discussions about it. Mrs. Sotoa's negotiating technique seems to have been to secure Te'o's acquiescence to broad and unobjectionable propositions, principally that all land belongs to God and that neighbors should live in peace and harmony. She would then draw detailed and self-serving conclusions from these premises and interpret Te'o's evasive answers as acquiescence. The two parties' versions of one of these discussions were as follows:

I told you Te'o the two of us are on the land. I don't want
any trouble. All I want is to help you and assist you.
What are these surveys for? And I said Te'o, the land is
God's land. There is no specific land owned by Te'o or
Sotoa. My purpose of visiting the land because this is our
barb wire with my children. This is our boundary. Where
is yours? Then you said you don't have any land in there.
You don't wish to make a survey, and the reason why you
went on the land is because your lawyer has advised you to
...Te'o said well, this is the cocoa tree, what is your opinion?
Now, I said this is my barb wire and you put your mark
right underneath the barb wire. This cocoa tree is the key
point of my verbal agreement with Mr. Te'o . That day Mr.
Lutu [Te'o's then-attorney] came on the land. I made an
agreement with Te'o already... I feel it's a [5ASR2d96]
misunderstanding between Te'o and his counsel.

1982 Transcript at I.31-32 (testimony of Iseulaolemoana Sotoa).

I told [Sotoa] to remove the crops. One day Mrs, Sotoa
and her brother came and told me this land belongs to
God. I told them that is true, even though it's God's land
but it's within the jurisdiction of the Tualauta County.
This land is where it's supposed to be and I own that land.

Id at I. 5-6 (testimony of Uiva Te'o).

16) Although Te'o was represented by counsel at all relevant times, all of the alleged agreements including the signed withdrawal of registration at the October 1981 meeting occurred when his lawyer was not present. On the day of the encounter described in (15) above, sometime in 1980, he called his attorney who came to the land to discuss the matter with the Sotoas. In her 1982 testimony Mrs. Sotoa was at pains to point out that the "verbal agreement" had "already been settled" by the time the attorney arrived. 1982 Transcript at I.33,37. This was apparently an attempt to deal with the problem that no such agreement was evident during the subsequent discussions that included the attorney. See id. at 37. The Sotoas take the position that this proves that Te' o did not. want the land but that his attorney wanted it for himself, On the contrary, we draw the inferences (from this incident and from Te'o's statements to the Sotoas that "my lawyer insists that I survey this land" ) that ( 1) Te' o was intimidated by Sotoa, an experienced legal practitioner, and did not wish to discuss the merits of the dispute without his lawyer present; and (2) Te'o was also attempting to deflect from himself to his lawyer the Sotoas' suggestions that it was unneighborly of him to survey the land.

17) On numerous occasions before and after the two alleged verbal agreements and the October 1981 meeting at Samoan affairs, Te'o asserted his ownership of the land in various ways. These included assigning people to work on the land, going on the land to supervise their work, telling the Sotoas to get off, destroying the Sotoas' crops and fences, and taking legal action several times (the 1977 lawsuit, the 1980 hearing at which he denied Sotoa's previous representation to the Court[5ASR2d97] that he had given the land to Sotoa, the attempted registration in 1981, and the filing of this lawsuit in 1982) to assert his ownership. Moreover, the October 1981 meeting was neither the first nor the last in a series of meetings or attempted meetings between the parties, and it is clear from the whole course of these meetings that the parties had a continuing disagreement. See 1982 Transcript at I.7-8.

18) There is no evidence that the Sotoas ever gave Te'o anything, not even an intangible right or asset such as the renunciation of a colorable legal claim to some other land, in exchange for his alleged renunciation of ownership.

19) We believe Te'o's 1982 testimony concerning the October 1981 meeting and associated events to be the most credible account of these events. It is the only version that is internally consistent and that makes any sense in light of other facts that are undisputed or proven. Te'o never had any reason to give up the land he was awarded in the 1977 case, he never had any intention to do so, and we do not believe that the Sotoas ever believed he had such an intention.

Conclusions of Law

1) When the award of this land to Te'o in LT No.73-77 was not appealed, the judgment acquired the effect of res judicata against the Sotoas. We are bound by that judgment, as the Court has been ever since early 1978, and we would be bound even if we concluded that Sotoa rightfully owned the land prior to 1977.

2) The trial court had no jurisdiction to " reopen " the award of the land to Te' o and did not purport to do so. The original judgment, which was ambiguous in some respects, was unambiguous with regard to this land. In April 1980 this tract was added to the list of matters that might be readjusted not because the Court thought any readjustment necessary in order to " carry out " the judgment, but because Sotoa told the Court that Te'o had agreed to let him have the land. The Court's remarks in April and June of 1980 with respect to this land could not have divested Te'o of his title and did not purport to do so.

3) Te'o never agreed to withdraw his claim of ownership. The document he signed does not in terms withdraw the claim that he owns the land, but [5ASR2d98] merely withdraws the offer of registration. Many people in American Samoa do not register land that they claim to own. Although Te'o had the legal right to register the land, and although registration is advisable for a variety of reasons, it is not essential to ownership.

4) In any case, there would have been no consideration for such a contract. Although the renunciation of a colorable claim by one party can be consideration for the renunciation of such a claim by the other party even if it is later established that one of the claims was without substance, in this case there is no evidence that Sotoa gave up such a claim or anything else.

5) Finally, a " settlement " of a claim that had already been litigated, purporting to "adjust the boundaries" set by the Court's judgment, would ordinarily have been submitted to the Court for its approval. The Court in 1980 seems to have ordered just that. If Sotoa had presented the document signed by Te'o to the Court shortly after October 1981 as a "settlement, " we believe Te'o would have renounced it as he renounced every other such alleged " settlement. " We believe no court would approve any settlement that was (1) negotiated between a licensed legal practitioner and an adverse party represented by counsel without the participation of the adverse party's counsel; (2) clearly disadvantageous to the party who was not a legal practitioner; (3) renounced by the adverse party soon thereafter; and (4) strikingly similar to an earlier "settlement" asserted in Court by the legal practitioner, the existence of which was denied by the adverse party as soon as he and his lawyer had had an opportunity to consult.

Order

The defendant estate, its agents, representatives, and those in concert with them are permanently enjoined from going onto the land, with the exception of the narrow strip on the western edge of the tract that is outside the boundaries of the tract awarded in LT No.73-77. No order is made with respect to that strip of land, neither party having proven its right to occupy said land.

Taito; Sialega v.


SIALEGA FAMILY, Plaintiff

v.

TAITO TUI, Defendant

High Court of American Samoa

Trial Division

LT. No. 19-87

August 4, 1987

Party who unsuccessfully sought title to a tract of land in previous action and failed to appeal may not later resurrect same claim to same land.

Pursuant to power to make "such order as to him may seem just" in any land case, Chief Justice or Associate Justice of High Court need not stop at denying plaintiff's meritless claim for relief, but may issue preliminary injunction restraining plaintiff from interferences with rights of defendant as delineated in earlier judgment. A.S.C.A § 43.0304.

Before REES, Chief Justice.

Counsel: For Plaintiff, Puleleite Tufele

On motions for temporary restraining order and order to show cause:

The complaint and other documents filed by the plaintiffs allege that defendant and the Taito family are building a house on "land Oneoneloa of plaintiff" without the plaintiff's permission.

Unless the Court is missing something, this is a truly remarkable complaint. Less than a year ago the Court spent many hours trying to resolve a dispute between plaintiff, defendant, and their respective families about who owned Oneoneloa. The result was a decision that Oneoneloa is the property of the Taito family. Sialega v. Taito, 3 A.S.R. 2d 40 (1986); Sialega v. Taito, 3 A.S.R.2d 78 (1986). The plaintiff had a right to appeal the judgment of the Court, but chose not to do so. It is therefore final and binding on the Court as well as on the plaintiff. [5ASR2d100]

Perhaps plaintiff believes that this land is a different tract than the one involved in the 1986 case. If so, he should amend his complaint and the defendant will have to answer. (Obviously, however, plaintiff should not do this if this is actually the same land as the Oneoneloa he claimed to own in 1986. His counsel can advise him about the legal penalties for perjury and for the filing of frivolous lawsuits.)

In the meantime, however, the temporary restraining order and the order to show cause requested by the plaintiff are denied.

Moreover, since plaintiff seems to be attempting by means of this action to deprive the defendant and his family of the rights they were adjudged to have in last year's case, it seems appropriate that they be restrained from such interference unless and until they can convince the Court that this case is somehow different from the last.

Therefore the following orders will issue:

 

    • Pursuant to the power given the Chief Justice or Associate Justice to make "such order as to him may seem just" in any land case (A.S.C.A. § 43.0304), Sialega and those in concert with him are hereby restrained from doing anything to interfere with the use and enjoyment of Oneoneloa by Taito and his family until further order of the Court.

 

    • Counsel for the plaintiffs is hereby ordered to file with the Court by Friday, August 7, all records of the proceedings in the Office of Samoan Affairs to which he refers in his "Memorandum of Points and Authorities."

 

    • Plaintiff has until Friday, August 14, to file an amended complaint if he wishes to do so. If no amended complaint is filed by then, the case will be dismissed with prejudice.

 

    • Counsel for plaintiff will serve a copy of this Opinion and Order on the defendant, Taito Tui, along with copies of all the plaintiffs' pleadings and accompanying documents, and shall file an affidavit with the Court stating the time and manner in which such service has been made no later than Friday, August 7.

It is so ordered.

Lava; Dev. Bank v.


DEVELOPMENT BANK OF AMERICAN SAMOA, Plaintiff

v.

TALO LAVA and TUVALU LAVA, Defendants

High Court of American Samoa

Trial Division

CA No. 55-87

July 20, 1987 

A defendant who has defaulted through failure to answer may nevertheless appear at the hearing of motion for default judgment to contest the amount of damages. T.C.R.C.P. Rule 55(b).

When bank making home improvement loan contrived to make disbursements to third party contractor far in excess of fair value of materials and services provided and without borrower's knowledge, bank had committed breach of contract and fraud and could recover only the fair value of what borrower actually received.

Bank could not recover attorney fees as provided in promissory notes on which borrower defaulted when bank had breached its contract and was entitled only to quantum meruit recovery. 

Before KRUSE, Associate Justice, TAUANU'U, Chief Associate Judge, VAIVAO, Associate Judge.

Counsel: For Plaintiff, Robert Dennison 
Talo and Tuvalu Lava pro se

This matter came on for hearing upon plaintiff's motion for default judgment. Defendant Talo Lava, having been noticed with hearing of the motion, appeared pro se.

The complaint seeks judgment on a promissory note made by defendant in favor of plaintiff evidencing a loan made. With interest, costs, and attorney fees, the plaintiff bank seeks judgment in the sum of some $15,298.29 plus post-judgment [5ASR2d25] interest. The note in question is for the face amount of $10,000.

Defendant contests the amount of his indebtedness to the bank l, claiming that he never received the total $10,000 purported to be loaned to him, and that the bank official who dealt with him at the time, Tamafili Suisala, allegedly in concert with a certain contractor, helped themselves to the loan proceeds without his knowledge or consent.

This story is becoming distressingly recurrent, and the bank official accused has since been removed from his position as vice president of the bank and is currently serving a jail term on a miscellany of theft-related convictions.

FACTS

Promissory Note I

Defendant's version is that he applied to the bank for a loan of $10,000 to wall in his open structure, built by the government's disaster relief agency consequent to a landslide occurring in his village. His loan request was approved initially only up to an amount of $6,000, by Suisala. A copy of a promissory note to this effect was not found in bank files, but evidence of this loan transaction is found in a chattel mortgage document dated April 13, 1981, executed by defendant to secure repayment of $6,000. Defendant says that he was disbursed some $4,000 of the loan proceeds for the purchase of materials for the project. He also contacted a builder trading under the name of "Kilipoa Construction" to close in the existing structure with cement blocks. He accepted this builder after he was given an estimate for labor of $300.

The Loan Disbursement Schedule of the bank reveals that between April 13, 1981, and May 26, 1981, the sum of $2,681.04 was disbursed for materials, and the bank's records contain corresponding receipts from various merchants to this effect. [5ASR2d26]

On the other hand, between June 16, 1981, and July 2, 1981, the sum of $3,296.46 was disbursed by the bank to Kilipoa Construction without any explaining documentation or signed approvals by the borrower. Also, an additional sum of $22.50 was disbursed to the bank on July 2, 1981, which item brought the disbursements to $6,000.

One curious document we find in the bank's file is a contract form under Kilipoa Construction letterhead, dated June 25, 1981. The document contains the notation in Samoan to the effect that: "Talo is agreeable that the agreement pertaining to his house in Se'etaga has ceased in effect. " This document also contains a notation, "Pd. Ck #10598, 6/24/81," (Cross referencing the Loan Disbursement Schedule, a payment of $1,150 was made to Kilipoa Construction on this date. ) The document purports to be signed by Talo Lava; when it was produced to the defendant, however, he denied signing the said document. He states that his agreement wi th r:ilipoa was fixed at $300.

We accept defendant's testimony on the forgery of his signature. The construction ceased after the use of the purchased material aforementioned, leaving about twelve feet of walling left to be completed. Thereupon defendant went with his contractor to draw on the balance of the loan proceeds, which defendant believed to be about $1,900. Of course there was no money there, and the contractor must have known this as he was disbursed funds without defendant's say-so. When defendant confronted the bank official Tamafili Suisala on where the loan monies went, the official countered by approving an additional $4,000 loan , which the defendant was told would finish off the enclosing plus add an extension to his house.

Promissory Note II

After dismissing defendant's complaints on the balance of the loan proceeds with the tender of an extra $4,000 credit line, Mr. Suisala had a new promissory note drawn up for the face amount of $10,000, together with a corresponding chattel mortgage, both dated July 7, 1981. These he got the defendant to sign. Additionally, in his manner of efficiency with the records, we note of the Disbursement Schedule that the $6,000 loan reference is penned out and the figure $10,000 written over holographically.[5ASR2d27]

We further find on file with the bank a Construction Contract dated July 6, 1981, under Kilipoa Construction letterhead. It is signed at the signatory block for a "Company Representative" while unsigned at the block designated for "Purchaser. " It purports to bear defendant's signature midway down the page, but defendant claims that he did not sign this document. The document further has a designation "Price, " which is filled in with the figure "3200, " and a designated heading " 10% Deposit" filled in with the amount "$2500. "

Again we accept defendant's version of this document, that it as not signed by him. The document has a carbon copy on file, and the proposed signature of defendant on the original does not appear on the carbon. It looks to the Court that the purported signature of defendant was later added on the original, after it was separated from the carbon. Further, the document is hardly at arm's length in purport. Just how the deposit sum of $2,500 equates to ten percent of $3,200 belies the ordinary in commercial transactions.

We go to the disbursement schedule again and find that on July 8th, 13th and 24th, 1981, the total sum of $3,900 ---of the $4,000 credit line- --was disbursed to Kilipoa Construction. Again the disbursement receipts reflect unilateral action by the bank without any involvement on the part of borrower.

Defendant said that hereafter the contractor dealt directly with Mr. Suisala. Work recommenced on the house, but instead of completing the wall work with cement blocks as started, the contractor finished it off in wood. The extension itself to the house was at the contractor's control. Defendant complained that the same involved a dropped floor level and was only partially extended along the breadth of the building. Defendant states that one day, without warning, the contractors failed to return, and while the resulting extension was substantially completed, the roof has leaked from the outset.

Defendant stopped paying the bank on the ground that Mr. Suisala and Kilipoa Construction were in collusion, and so advised Mr. Suisala when the latter confronted defendant on non-payment. Defendant invited Suisala to sue him. As things have turned out, Mr. Suisala is no longer able to[5ASR2d28] be involved, and the current bank officials have inherited the litigation.

One further document among the exhibits received warrants mention. This is an "Agreement" dated March 26, 1987, prepared by the Bank and signed by defendant, whereby defendant acknowledged the indebtedness on the "promissory note(s) " and in consideration of the bank's forbearance to sue, defendant agreed to repay the notes according to the payment schedule therein provided. This document also contains provisions to the effect that defendant waived all defenses. Bank employee Siao Elisara, who sat down with the defendant when this document was signed, was not able to explain to defendant what the provisions of this agreement meant, save to inform defendant that the agreement correctly reflected his indebtedness to the bank.

On the foregoing, we consider the extent of the indebtedness, if any.

Indebtedness

Our analysis of the facts leads us to the conclusion that the promissory notes executed by defendant ---for $6,000 and then for $10,000--- do not evidence indebtedness. The notes at best reflect a window-dressing exercise with the records of the bank, to disguise the underlying dealings that in fact occurred. Firstly, defendant was availed of a credit facility up to the amount of $6,000, and defendant acknowledged that he drew down on the proceeds to purchase building materials. While defendant was of the understanding that he had drawn $4,000 of the loan amount, the bank's records in fact show $2,681.04. The balance of the Line of credit ( less $22.50 paid to the bank) was disbursed by the bank, without defendant's knowledge or consent, to pay the builder, with whom defendant had contracted on the basis that labor costs would be $300.

We find that this was a breach of the loan contract by the bank. Our conclusion that there was a unilateral breach of the loan contract is affirmed by defendant's expectations that there was still available credit when he visited the bank to further draw for the purchase of additional building materials. As it happened, defendant's queries on the balance of the loan were countered by Suisala's arranging of an additional $4,000 line of credit.[5ASR2d29]

At this point, the $6,000 note was presumably withdrawn and destroyed and a new note drawn up in the face amount of $10,000. As far as records go then, for audit purposes, the bank's funds were accountable on paper.

As stated in the facts, the second $4,000 credit line was again unilaterally disbursed by the bank through its officials without the knowledge and consent of the borrower. This was clearly evident on the disbursement receipts, which were conspicuously blank in terms of borrower's acknowledgment.

Again we conclude a breach of contract by the bank through the actions of its officials. Borrower testified that he had no idea how the said $4,000 was handled and that Suisala dealt only with the builder thereafter. This testimony was corroborated by bank employee Siao Elisara. Further, the builder received $3,900 of this money notwithstanding that the asserted building contract on file, dated July 6, 1981 (and purported to be signed by defendant), stipulated a contract price of $3,200.

CONCLUSION

We conclude a breach of contract by the bank through the actions of its employees, although we could have equally found on the facts a conclusion within the realm of fraud.

This notwithstanding, our conclusions are not to say that defendant did not benefit in the matter. Although not to his entire satisfaction, his house was improved with bank funds. On the basis of the evidence, we find the defendant indebted to the bank in the following amounts: $2,681.04, being the cost of materials purchased with the proceeds of the first note; plus $300, being the defendant's understanding of labor costs; plus $3,200, being the builder's assessment of the value of labor and materials expended in completing the enclosure of defendant's house together with the added extension. This last figure we find as the reasonable value of those labor and material costs.

Plaintiff's claims for attorney fees and costs are disallowed. The cause of action provided in the terms of the promissory notes for attorney fees and costs are inappropriate for the same reasons[5ASR2d30] for which we find the said notes to be inappropriate evidence of the indebtedness.

ORDER

It is accordingly Ordered, Adjudged and Decreed that plaintiff have judgment against the defendant Talo Lava in the sum of $6,181.04 plus interest accruing to date hereof at the rate of 8% per annum, to be computed as follows: interest on $2,981.04 to accrue from April 13, 1981; interest on $3,200 to accrue from July 7, 1981.

It is further Ordered that all payments made by defendant to plaintiff to date shall be first applied to interest as above stated, and the balance, if any, to principal.

It is further Ordered that plaintiff shall have post-judgment interest at the rate of 8% per annum. 

[5ASR2d25]

Notwithstanding default, defendant may appear to contest the extent of the indebtedness. TCRCP Rule 55(b). Peitzman v. Cityof Illmo, 141 F.2d 956 (8th Cir. 1944), cert. denied 323 U.S. 718. 


Landrigan v. Opelle


KEITH LANDRIGAN and MARGARET LANDRIGAN, Plaintiffs

v.

WILLIAM R. OPELLE, FRANCES K. OPELLE, and SAMOA
BOTTLING CORPORATION OF SAMOA, Inc. , Defendants

High Court of American Samoa

Trial Division

CA No. 49-85

September 17, 1987

Where owner of mortgaged property retained the right to use and possession of the property until default, and where there was no evidence of default on the debt secured by the mortgage, garnishment by unsecured judgment creditor of rents derived from the property did not interfere with the rights of the mortgagee. A.S.C.A. § 37.1005.

Where evidence established that debtor retained most of the proceeds of property given to secure obligation to creditor rather than using the proceeds to repay the obligation, garnishment of those proceeds to satisfy debt to a third party judgment creditor would not interfere with the rights of the secured creditor.

Security agreement between close relatives would not defeat the right of a judgment creditor to the proceeds of the collateral unless evidence established that the security agreement was concluded at arm's length and was not a sham transaction to defeat the interests of other creditors.

Before REES, Chief Justice, VAIVAO, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiffs, John Ward
For Defendants, Charles Ala'ilima

Opinion and Order on Motion to Enforce Writ of Garnishment: [5ASR2d156]

Plaintiffs were awarded a judgment of $51,243.74 against defendants Frances Opelle and Samoa Bottling Corporation. William Opelle, the husband of Frances and the co-owner of the corporation, was dismissed from the case because he had received a discharge in bankruptcy. The Opelles have removed to California. Plaintiffs served a writ of garnishment on Suhayl Alai, who manages Mrs. Opelle's property in American Samoa, demanding that the rents he receives from the property be paid to them until their judgment has been satisfied.

Mr. Alai admits that he receives rents on three properties belonging to Mrs. Opelle. The rent on one property is $2000 per month, on a second property about $750 per month, and on a third property about $600 per year. He maintains, however, that all such proceeds are subject to a security agreement executed by Frances Opelle to Nettie Cressman." Mrs. Cressman is the mother of William Opelle.

Assuming that the two security agreements executed in favor of Mrs. Opelle's mother-in-law were not merely sham transactions designed to shelter income from creditors, the plaintiffs would still seem to be entitled to receive the rents in satisfaction of their judgment. A.S.C.A. § 37.1005 provides that "[i]n the absence of an agreement to the contrary, the mortgagor ... is entitled to the use or possession of it until default ." Although one of the security agreements transfers title to "the said real estate. .and the rents, issues and profits thereof " to Mrs. Cressman, this transfer of legal title was clearly intended as a security device rather than as a conveyance of the present right to possess the land and the rents. Indeed, the agreement also provides that Mrs. Opelle "may retain possession of ... and may use and employ" the land. Since Mrs. Opelle and not Mrs. Cressman has the present right to receive the rents, their garnishment by the creditors of Mrs. Opelle does not interfere with the rights of Mrs. Cressman.

Our conclusion is bolstered by the evidence of what has actually been happening to the rent money. Mr. Alai testified that he makes out the checks jointly to Mrs. Opelle and Mrs. Cressman, and mails them to Mrs. Opelle. A statement prepared by a California accountant employed by Mrs. Cressman indicates that substantially less than all of the [5ASR2d157] rent money received by Mrs. Opelle has been applied to the balance on her debt to Mrs. Cressman.

Although it is possible that Mrs. Opelle is in default on her debt to Mrs. Cressman, this has not been alleged by Mr. Alai and we have insufficient evidence from which to conclude that a default has taken place. If this were alleged, we would need to decide whether the security agreement w a fraudulent conveyance designed to defeat' 'the interests of other creditors. This would require evidence, inter alia, of the terms on which Mrs. Cressman acquired the note from the original creditor and of the consideration (if any) that she gave Mrs. Opelle in exchange for the execuion of mortgages to secure pre-existing obligations that had theretofore been unsecured.

Deciding whether Mrs. Cressman was in default on the loan would raise similar questions, principally concerning whether Mrs. Cressman has tried to collect the debt. in ways that inconvenience her daughter-in-law and not just her daughter-in-law's other creditors. If Mrs. Opelle's relations with Mrs. Cressman are to be interposed as obstacles against the collection of debts owed to third parties, they must be shown to have been conducted at arm's length. l

Accordingly, Mr. Alai should surrender to the Clerk of Courts the rent money in his possession, as well as all rents received in the future and any other property belonging to Mrs. Opelle. The clerk will transfer the funds to the plaintiffs.

It is so ordered.

1 This is of course quite possible; indeed, plaintiff Margaret Landrigan is herself a sister of Mrs. Opelle. It appears from the present record, however, that Mr. Alai, the Opelles, and Mrs. Cressman are on one side and the Landrigans on the other. Fortunately, A.S.C.A. §§ 37.1005 makes it unnecessary for us to characterize the transactions among these parties on the basis of the sketchy evidence now before us.

In re Matai Title “Tauaifaiva”,


PUNI AMOSA, Claimant

v.

FALENI TAUAI, Counter-Claimant

[ In the Matter of the Matai Title "TAUAIFAIVA "1

High Court of American Samoa

Land & Titles Division

MT No. 1-87

July 17, 1987

Rule of heredity that arose in previous trial court decision was not binding precedent when rule resulted from " judicial notice " of Samoan custom that ignored stark variation among different families' practices, rule was stipulated by the parties rather than briefed, argued, and decided, and rule had been criticized in subsequent opinions of the appellate court.

When different sides of a family reasonably differ on the identity of original titleholder. court would assess hereditary entitlement of matai title contestants according to each party's closest proven relation to a previous titleholder. A.S.C.A § 1.0409(c).

Before KRUSE, Associate Justice, LUALEMAGA, Associate Judge, VAIVAO, Associate Judge, AFUOLA. Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Claimant, Napoleone Tuiteleleapaga
The Counter-Claimant appeared pro se

The Court makes the following findings with regard to the criteria provided in A.S.C.A. § 1.0409(c).

I. Hereditary Right

The Court finds that both candidates Puni Amosa and Faleni Tauai are immediate descendants of former titleholders. In accordance with the [5ASR2d14] familiar rule, the parties are respectively fifty percent in blood ties and hereditary entitlement.

The Court was also referred to the rule in In re Matai Title "Sotoa", 2 A.S.R.2d 15 (1984), which requires hereditary considerations along descent lines to the original titleholder. The rationale in this case is that "every title holder does not start a new line of hereditary right. "... Id. at 15. The Court further held that the rule is one of general application, and it is with this attempt to state the scope of the rule that problems arise .

The so called Sotoa rule has not gone without disparaging comment from the Appellate Division on its , efficacy. See In re Matai Title "Le'iato". 3 A.S.R.2d 133 (1986); In re Matai Title, "La'apui", 4 A.S.R., 2d 7 (1987). The preeminent difficulty with the rule, noted by the Appellate Court, is borne out in the matter before us. That is, the rule does not lend itself to the situation where different sides of the family may have completely different ideas about who the original holder might be. This prompted the Appellate Division to suggest a review of alternatives, whether it be adhereing to the old rule or some other rule altogether. In re Matai Title Le'iato , supra .

The Sotoa approach, as stated, is inflexible and necessarily assumes that customs and traditions with regard to hereditary entitlement are static and may not vary from family to family. In point of fact, the source of the rule was in effect the Court's taking judicial notice of Samoan custom and tradition . The rule was unknown in the case books prior to 1984, and the present panel of Associate Judges find it difficult to accept that custom and tradition on hereditary entitlement has become so firmly and universally established as to ground a rule of general application.

This Court, in Fairholt v. Aulava, 1 A.S.R.2d 73 ( 1983), acknowledged the dynamic nature of Samoan custom and was there confronted with a legislative attempt to, codify the "pule" of the matai in a particular context. The enactment's proscriptive effect was narrowed for constitutional reasons, but in so doing, the Court found after extensive factual inquiry that that aspect of Samoan custom was not in need of legislative entrenchment. The Court's reasoning in Fairholt was compelling; the Sotoa attempt to state a rule as applying across the board in all cases, through [5ASR2d15] " judicial notice " of custom, seems less than compelling.

The hereditary rule in Sotoa, as noted in In re Matai Title "Fano", 4 A.S.R.2d 148 (1987), was not the subject of argument by any of the parties , but was presented to the Court by way of stipulation. If anything then, the facts of that case clearly pointed out that the Sotoa family had a specific and different tradition with respect to hereditary right than has been the case with the traditions of other families that have come before the court previously. But then it does not necessarily follow that the tradition of the Sotoa family is therefore the tradition of all other families.

On the facts of the case before us, there was no evidence to suggest that the customs and traditions of the Tauaifaiva family of Amanave with regard to hereditary right required the tracing of descent lines to the original titleholder.

Accordingly it is the conclusion of the Court, for reasons given earlier, that neither candidate prevails on the issue of hereditary entitlement.

II. Support of the Clans

The term " clan " remains a vexing one with respect to matai title considerations. If the cases have demonstrated anything in connection with this criterion, it is widespread dissension as to the meaning of the term "clan" in the context of custom. See, In re Matai Title "Fai'ivae", 4 A.S.R. 71 (1972). It is a term that breeds subjectivity more often than not, and while the obvious purpose of this second criterion is to determine where the weight of family opinion lies, the exercise would be that much more manageable if the enactment spoke in terms of "family" as opposed to "clan". The only clear indication from the legislature with regard to the notion of "clans" is that custom may vary from family to family, and with these comments we attempt to apply the criterion.

As typically recurs in matai cases the parties are at odds on the number of clans. Claimant Faleni Tauai makes the claim that there is only one traditional clan in the family, namely Lepuamo, said to be the one and only issue of the original titleholder, Tauai Sogimaletavai. Faleni claims the support of this clan. [5ASR2d16]

On the other hand, claimant Puni claims that traditionally, there were two clans of the family, namely Lopati and Taai. Puni claims the support of these clans.

To complicate matters, both parties seem to acknowledge a recent trend within the family, in connection with family affairs and fa'alavelave, to recognize the descendants of Tauai Amosa on the one hand as a group, of which Puni is a member, and the descendants of Tauai Esera as a group, of which Faleni is a member.

We find that the weight of the evidence preponderates in favor of Puni on this issue. If we accept Faleni's views as to the single clan of the family, the weight of family opinion (as evident by the signatories in support of Puni's registration application) is clearly in Puni's favor. Similarly, if we find the family to be comprised of two clans, these clans favor Puni on the testimony. Additionally, the evidence also suggests that, subsequent to Puni's attempts to register the title, Faleni was counseled by certain members of his supporters to withdraw his objections filed. This points also in Puni's favor.

We find for Puni accordingly.

III. Forcefulness, Character, and Knowledge of Samoan Custom

From the evidence and our observation of the parties, it is the conclusion of the Court that claimant Puni clearly prevails on this issue. In the area of custom, we find Puni more conversant and better at ease. He was deliberate and purposeful, while Faleni did little to avoid the impression that he was not very serious in his approach and attitude. He demonstrated uncertainty as to the titleholder's traditional position in the context of village and county meetings. In family and village matters, Puni was always at hand and was assertive in ensuring that family responsibilities were not left unattended.

IV. Value to Familv, Village, and Country

Faleni perhaps presents the better looking resume in terms of job background and revenue sources available to him. On the other hand, Puni, [5ASR2d17] who is now retired, presents an equally impressive record of dedicated service to the American Samoa Government. Our comparative evaluation finds Puni also prevailing on this issue.

Puni has spent much of his life in the village of Amanave and has been in daily contact with obligations to the family, in terms of tautua, and with obligations of the family to the village and county. He holds the title "Puni" in the village of Amanave and regularly participates in village council matters concerning the welfare of the village. He was appointed to Pulenu'u of Amanave and accordingly discharged faithfully his duties in connection with village responsibilities towards the government and community at large.

On the other hand, Faleni resides in the village of Amaua, Eastern District, with the family of his wife. He claims, however, that he has not faltered with respect to his family obligations and daily visits Amanave. He holds the title "Utusiva" from the village of Amanave and further claims to hold the title "Maluolefale" within his wife's family in Amaua. He renders service or tautua in both villages.

On the foregoing facts, we find Puni's situation and record to be more effective towards family and village. As stated, he is with daily familiarity on what is expected of the Tauai family, and by reason of his better rapport with the village, as well as county, Puni better enhances the dignity of family and its title, Tauaifaiva.

CONCLUSION

On the issue of hereditary right, neither party prevails, being of equal standing. Candidate Puni Amosa clearly ranks ahead of candidate Faleni Tauai on the second, third and fourth issues.

Accordingly, we hold that Puni Amosa is qualified to hold the title Tauaifaiva and the Territorial Registrar is directed to so register the title.

It is Ordered accordingly.

Ilalio ; Development Bank v. 5


DEVELOPMENT BANK OF AMERICAN SAMOA, Plaintiff

v.

PALE ILALIO and TOA'I ILALIO, Defendants

High Court of American Samoa

Trial Division

CA No. 34-87

August 12, 1987

Trial court rule that written judgment cont in separately stated findings of fact and conclusions of law does not require inflexible format or segregated, numbered, and labeled entries. T.C.R.C.P. Rule 52.

"Dismissal " of an action is an appropriate term for denial of all relief requested by the plaintiff after adjudication on the merits. T.C.R.C.P. Rule 41(b) .

High Court must construe pleadings so as to do substantial justice and therefore will occasionally permit pleadings that do not comply strictly with formal requirements. T.C.R.C.P. Rule 8(f}.

Principle that the court will construe pleadings so as to do substantial justice applies specifically to the requirements of affirmative and particular pleadings. T.C.R.C.P. Rules 8(f), 8(c), 9(b).

Pro se pleadings should be construed to state a cause of action or a valid defense unless Court can say with assurance that the litigant can prove no set of facts in support of his claim that would entitle him to relief.

Pro se defendants' pleadings describing the facts and theories of their position were fully adequate despite their failure to use the usual legal terminology.

A defense that merely negates some element of plaintiff's prima facie case need not be affirmatively pled. [5ASR2d111]

When one party signed a blank form believing that it would be filled out by the other party in the amount of $6000, and the other party instead filled the contract out in the amount of $15,164, there was no agreement between the parties on a contract obligating the signing party to pay $15,164; the other party was entitled at most to a quantum meruit recovery.

In order for a contract to be legally unenforceable under the doctrine of unconscionability it is not necessary that the court find facts sufficient to sustain a defense of duress or of failure of consideration; rather, unconscionability is a distinct equitable defense that can be established by some combination of such indicia as grossly inadequate consideration, inequality of bargaining power, sharp practice, and the absence of a real bargaining process even when none of these indicia standing alone would be sufficient to void the contract.

Forbearance from pressing a claim that is later found to be invalid may be consideration for a new promise provided that, at the time the new promise is made, the forbearing party believes in good faith that his claim is just.

In determining whether a business entity believes in good faith that its claim is just for the purpose of determining whether the claim can be consideration for a settlement, the entity is chargeable with the knowledge of its agents who participated in the transactions giving rise to the claim.

Documents purporting to be settlements of prior disputes are customarily given stricter judicial scrutiny than contracts involving more palpable consideration, especially when the party drafting and pressing for the settlement is a business entity experienced in such transactions, the other party has no such experience and is unrepresented by counsel, the more experienced party employed threats or promises to encourage the other party to sign the document with little or no deliberation, and the consideration given by the more experienced party was relatively trivial.

Contract by which defendant agreed to "waive the statute of limitations and other waiveable defenses" in exchange for plaintiff's temporary forbearance to sue should be construed as a waiver of technical defenses to the enforcement of a just [5ASR2d112] debt but not of substantive defenses concerning the validity of the underlying contract.

Plaintiff's forbearance to sue may be sufficient consideration for defendant's waiver of the statute of limitations even though it would be insufficient to supply missing essential elements of a contract that were previously absent.

Before REES, Chief Justice, AFUOLA, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiff, Robert Dennison
Pale Ilalio and Toa'i Ilalio pro se

On motion for new trial:

Plaintiff Development Bank sued Mr. and Mrs. Ilalio for the balance due on a promissory note. The Ilalios appeared Pro se . They said they had signed a blank note which they had been given to believe would be completed in an amount of about $6000, not the $15,164 that was later filled in by the Bank, and that they had agreed to sign the note in exchange for the continued use of a truck which was worth about $6000. The Bank later seized the truck and sold it for $6000. We held that the Ilalios did not owe the Bank any money. Plaintiff moves for new trial on a variety of grounds.

I. "Separate"Findings and Conclusions

Plaintiff begins by urging that there was "no effective judgment" in this case because "[n]either the Court's Opinion and Order nor the Clerk[']s Entry of Judgement contain findings of fact and conclusions of law stated separately as required by Rule 52, T.C.R.C.P. As a result, Plaintiff is unable to ascertain what legal conclusion the Judgement is based upon." (Emphasis in plaintiff's motion. )

We believe that our opinion, which was divided into sentences, paragraphs, and general areas of discussion rather than into numbered and labeled "findings" and "conclusions, " nevertheless contained findings of fact and conclusions of law that were sufficiently "separate" to comply with the rule. The opinion was written this way in the hope that it would be more informative than an opinion written by the numbers. We append,[5ASR2d113] however, a document in the form requested by plaintiff.

II. Failure to "Enter a Take-Nothing Judgement"

As a further ground for its contention that there was "no effective judgment, " plaintiff points out that "the Opinion and Judgement both purport to dismiss Plaintiff's action, as opposed to entering a take-nothing judgement."

In "purporting" to dismiss the action we were of course doing exactly what plaintiff's counsel refers to as "entering a take-nothing judgement. " We suspect that counsel's objection was grounded not in any confusion on this point but in a desire to eliminate any lingering doubt we might have had about whether he liked our opinion.

Counsel has cited no authority for the proposition that "dismissal" is an inappropriate term for a denial of all the relief requested by the plaintiff after an adjudication on the merits, and we have been unable to find any. An argument might be grounded in Rule 41 of the Territorial Court Rules of Civil Procedure, which lists a number of circumstances under which actions may be dismissed and does not refer to dismissal after adjudication on the merits. The rule specifically provides, however, that "any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under 19 T.C.R.C.P., operates as an adjudication upon the merits." T.C.R.C.P. Rule 41(b). (This provision also disposes of counsels suggestion, in response to a question from the Court at oral argument on this motion, that it is difficult to tell whether a dismissal is with or without prejudice.)

Whether to deny all relief after an adjudication on the merits by saying "the action is dismissed," "judgment is entered for the defendant, " "the defendant takes nothing, " or some other phrase seems to be a matter of style that varies from judge to judge, with one term or another possibly predominating in some regions or jurisdictions. In the first 400 pages of the most recent bound volume of the Federal Supplement, for instance, there are six cases in which the complaint or action was "dismissed " after plenary [5ASR2d114] adjudication of the merits.l The first few cases in the most recent volumes of American Samoa Reports and of American Samoa Reports {Second Series) also yield such instances.2 Even if "entering a take-nothing judgment" were the preferred form, this sort of thing is not the stuff of which successful motions for new trial are made.

III. Defective Pleadings

Plaintiff argues that the issues of fraud or mutual mistake, unconscionability, and accord and[4ASR115] satisfaction were "not tried" and furthermore that they " could [not] have been tried" because they were not "affirmatively pled" and furthermore were not "pled with particularity."

As in matters (1) and (2) above, we believe counsel would have us elevate form over substance. Moreover, the formal standards counsel believes we should have imposed on the pleading filed by this pro se defendant are stricter than those customarily observed by attorneys in this jurisdiction.

Unfortunately, the principle that a pleading must contain a succinct and informative statement of the party's claims or defenses is often honored in the breach. Pleadings too often deny things that the pleading party knows perfectly well to be true, deny "for lack of information" averments about which all the information to be had is in the possession of the party doing the denying, and recite conclusions of law rather than statements that put the opposing party on fair notice of how the pleader will try to get the Court to reach such conclusions. The Court has attempted in recent years to effect a gradual reformation of these and related practices. We have concentrated on devices by which judgments have been taken against people to whom notice was nonexistent rather than merely sketchy, but we have also freely granted motions to require the amendment of inadequate pleadings. Our efforts in this regard have met with a modest degree of success and with an even more modest degree of enthusiasm. Uninformative pleadings are still the rule rather than the exception.

In the High Court as in the federal courts, "pleadings shall be so construed as to do substantial justice." T.C.R.C.P. Rule 8(f). The practical effect of this overarching principle has been aptly stated by Professor Moore:

Litigation is not an art in writing nice pleadings. 
The pleading rules are designed to eliminate delay, 
and reduce the pleading requirement to a minimum. 
"Loose pleading" is the cry of an alarmist who 
unconsciously would punish the client because of the 
latter's unfortunate choice of a lawyer who happens 
to be a poor pleader. The real importance of the Rules 
dealing with pleadings is that they make pleadings, in 
and of themselves, relatively unimpor[5ASR2d116] tant. 
Cases are to be decided on the merits.

2A Moore's Federal Practice par. 8.02 at 8-9.

The principle of construction to do substantial justice has been held specifically to apply to the requirements of affirmative and particular pleading imposed by Rules 8(c) and 9(b) respectively. Trinity Carton Co. v. Falstaff Brewing Corp, .'767 F.2d 184, 194 (5th Cir. 1985); Machado v. McGrath, 193 F.2d 706 (D.C. Cir. 1951), cert. denied, 342 U.S. 948 (1952).

The principle of construction to do justice is at its strongest when the pleading was drafted by apro se litigant rather than by an attorney. Pro se pleadings should be construed to state a cause of action or a valid defense unless the Court "can say with assurance "that" it appears' beyond doubt that the [litigant] can prove no set of facts in support0, of his claim which would entitle him to relief. Haines b. Kerner, 404 U.S. 519, 520-21 (1972), quoting Conley v. Gibson, 355 U.S. 41, 45--46 (1957). Indeed, the very fact that "in the great run of pro se cases, the issues are faintly articulated and dimly perceived" imposes on the trier of fact

a greater burden and a correlatively greater responsibility....
to insure that constitutional deprivations are redressed and
that justice is done....Accordingly, the Court in considering 
the defendants' motion to dismiss will not permit technical 
pleading requirements to defeat the vindication of any 
constitutional rights which the plaintiff alleges, however 
inartfully, to have been infringed.

Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir. 1978), quoting Canty v. Citv of Richmond, 383 F. Supp. 1396 (E.D. Va. 1974), aff'd, 526 F.2d 587 (4th Cir. 1975), . cert. denied, 423 U.S. 1062 (1976).

Although the reported cases tend to involve pro se plaintiffs rather than defendants, the principle that generates them seems even more compelling when someone who cannot afford a lawyer is called into court against his will. (Nor do we believe our duty to construe pleadings so as to avoid the inadvertent surrender of legal rights by [5ASR2d117] a pro se litigant is limited to cases in which the rights in question are grounded in the Constitution rather than in statutory or common law.)

In any case, the pleading to which plaintiff takes exception was if anything unusually informative for a pleading filed in the High Court. It is true that the defendants did not use the fraud, mutual mistake, unconscionability, or accord and satisfaction. We doubt that the defendants know those words, and they had no obligation to use them. "Under Rule 8, a pleading must contain a short and plain statement of the claim showing that the pleader is entitled to relief. It is not necessary to set out the legal theory on which the claim is based. " Siegelman v. Cunard White Star, 221 F.2d 189 (2d Cir. 1955) (per Harlan, J. ). Rather, defendants told the plaintiff and the Court that they had executed a promissory note "only on the value of the truck which was at that time about $6,000.00" and that "[i]n the year 1983, [plaintiff] Development Bank ceased the truck from us, and sold it to another client. So we assumed that the balance owed has been cleared. " These statements put the plaintiff on fair notice (1) that the defendants denied making a contract in the amount of the note plaintiff planned to introduce as evidence; (2) that in the event the Court concluded they did sign such a note, the only value they received for it was a $6000 truck; and (3) that when the plaintiff took the truck back the defendants believed they were taking it in lieu of further payments. These three contentions--- which support, respectively, the legal conclusions called fraud or mutual mistake,3 unconscionability, [5ASR2d118]and accord and satisfaction ---were the very ones defendants made and proved at trial.4

Moreover, the reason for the affirmative and particular pleading requirements is to avoid unfair surprise. Even if we were to hold that defendants had technically failed to comply with these requirements, we should deny a motion for new trial in the absence of some plausible basis on which to conclude that plaintiff was unfairly surprised or otherwise prejudiced by the assertion of affirmative defenses at trial. See Bull's Corner [5ASR2d119]Restaurant. Inc.. v. Director of Federal Management Agency, 759 F.2d 500 (5th Cir. 1985). The only basis alleged is that "plaintiff would show that it could have produced additional documentary evidence tending to disprove any defense of fraud or mistake." We requested at the oral argument on this motion, and then requested again in writing, that plaintiff submit any such evidence so that we could consider it in deciding whether to grant a new trial. None has been forthcoming.

Finally, any defects in the pleadings were mooted by the introduction at trial of evidence on the basis of which the Court found itself compelled to conclude that defendants never signed a note for the amount in question and that in any case the contract alleged by the plaintiff was unconscionable. Plaintiff's counsel did not object to the introduction of this evidence,5 and [5ASR2d120] introduced much of the evidence for the holding of unconscionability 6 himself.

"The legal rights of the [parties] are to be determined by the law 
and the facts of the case and not by some language of the claim."...
" [P]articular legal theories of counsel yield to the court's duty to 
grant the relief to which the prevailing party is entitled, whether 
demanded or not. " , .The fact that a [party] may have erred in his 
choice of legal theory will not preclude him from obtaining relief 
under another legal theory,

2A Moore's federal Practice par. 8.14 at 8-86, quoting Kowalewski v, Pennsylvania R.R Co., 141 F, Supp. 565, 569 (D. Del. 1956) and Gins v. Mauser Plumbing Supply Co., 148 F.2d 974, 976 (2d Cir, 1945) (per Clark, J. ) .The alternative proposition ---that a court, having listened to the evidence adduced by both sides at trial and concluded on the basis of that evidence that a contract never occurred or was otherwise legally unenforceable, should enforce it anyway ---was the sort of thing Mr. Bumble had in mind when he observed that "the law is a ass, a idiot." In the present case it would tend to validate the portrayal of courts in a "bourgeois" society as operating primarily to increase the leverage that the powerful enjoy over the powerless. [4ASR121]

IV. Fraud or Mutual Mistake

Plaintiff also contends that "there was no, evidence, or insufficient evidence, to support a finding of fraud or mistake. "

Defendants' principal contention at trial was they had signed papers which were blank or nearly blank, and which they understood would be completed in an amount of about $6000. All three judges examined the documents and found them consistent with this testimony. We found Mr. Ilalio to be a credible witness, and we also took judicial notice of the fact that the Bank officers with whom the Ilalios dealt were later convicted of various fraud-related crimes whose details were quite similar to those alleged by the Ilalios in this case. The Bank did not offer any testimonial evidence to rebut the defendants' version of these events. Accordingly, the preponderance of the evidence supports the defendants' contention. In our original opinion we called this contention "fraud" ( if the Bank officials knew of the Ilalios understanding and nevertheless filled out the contract in a different amount) or "mutual mistake" the Bank officials were unaware of the Ilalios' understanding). Another way to say the same thing is that there was no agreement between the parties on an essential term of the contract and therefore there was no contract. The plaintiff was entitled to the return of what it gave the defendants; this it has received .

V. Unconscionability

We also held that the contract alleged by the Bank was unconscionable; it was a contract "such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other, " and was therefore not enforceable in a court of law and equity. Plaintiff urges that this holding was in error.

Plaintiff seems to argue that in order for a contract to be legally unenforceable under the doctrine of unconscionability it is necessary to find both "failure of consideration" and a complete lack of "voluntariness" such as would be necessary to support a defense of duress. On the contrary, either or both of these findings were necessary to the conclusion that a contract was unconscionable the doctrine of unconscionability would have no separate existence. See, however Restatement of Contracts 2d § 208 ( 1981), quoted in [5ASR2d122] footnote 2 of our original opinion. See also Lampley v. Pertuit, 199 So. 2d 452, 454 (Miss. 1967), quoting Bethea v. Mullins, 85 So. 2d 452, 456 (1956) and 16 Am. Jur. Deeds § 33:

" [I] f the inadequacy of consideration is so glaring as to stamp the 
transaction with fraud and to shock the common sense of honesty, 
a court of equity will intervene. If the consideration is grossly 
inadequate, equity in any case will lay hold of slight circumstances 
of oppression, fraud, or duress in order to rescind the conveyance. "

In the present case there was some consideration for the note the Bank says the llalio signed, but it was so grossly inadequate as to raise serious questions about the bargaining process.And the llalios, as plaintiff points out, were legally and physically free "to refrain [4ASR123] from contracting at all," just as the people in other unconscionability cases were free not to buy refrigerators, stereos, or dance lessons. There was no "legal duress" in those cases or in this one. The evidence, however, is replete with indicia of unequal bargaining power, sharp practice, and the absence of any real bargaining process. If the Ilalios had signed a $15,164 note at all (which we believe they did not) the transaction would have presented a classic case of unconscionability as defined by the cases and other authorities cited in our original opinion.

VI. The Seizure and Sale of the Truck

The plaintiff also urges that we erred in observing that if the truck had been worth $15,000 plaintiff probably would not have had the legal right to seize it without judicial foreclosure, sell it for $6000 in an unadvertised private sale without notice to the defendants, and then proceed against them for the remaining $9000 plus several thousands of dollars in interest, costs, and attorney fees. Although we believe this to be a correct statement of the law, we refrain from reiterating our reasons. The statement was obiter dictum. It was made in the hope of administering, in advance of any litigation in which the issue is unavoidable, what plaintiff characterizes as a " rude surprise " to anyone who might be planning such a transaction. (We did err in stating that the sample mortgage form contains no provision to the effect that the Bank may repossess without judicial foreclosure. It does contain such a provision. )

VII. The Subsequent "Agreement"

Finally, plaintiff urges that we erred in finding that there was no consideration for the "agreement" signed by Mr. Ilalio in 1986, by which he undertook " in consideration of the creditor's forbearance from suit on the promissory note" to pay the amount due on the note and to "waive all defenses of the statute of limitations and other waiveable defenses" in the event of a lawsuit.

We agree with plaintiff that there are circumstances in which forbearance to press an invalid claim can be consideration for a new agreement. Our statement that " [i]n fact there was no consideration for this 'agreement' and it was therefore not legally binding on the [5ASR2d124] Ilalios" was too broad in its implications if not in its application to the facts of this case.

Forbearance from pressing a claim that is later found to be invalid can be consideration for a new promise provided that, at the time the new promise is made, the forbearing party believes in good faith that his claim is just. Restatement of Contracts 2d § 74; Corbin on Contracts § 140. This does not mean, however, that courts are bound to accept and enforce at face value every piece of paper declaring itself to be a settlement. On the contrary, such documents are customarily given somewhat stricter judicial scrutiny than contracts involving more palpable consideration.8

Such scrutiny is especially appropriate when the invalidity of the initial "agreement" was due to gross inadequacy of consideration, inequality of bargaining power and sophistication, and circumstances which are not technically fraud and duress but somewhat resemble them to the naked eye. If the law gave a person or institution in possession of such a document the absolute power to dissociate it from the shameful circumstances of its birth simply by calling the "debtor" in, showing him his signature on the document, and getting him to sign another one just like it under threat of immediate legal proceedings, we would not need courts. Collection agencies would do.

We are not suggesting that the new management of the Bank operates as the old one did, or that any individual Bank officer had reason to know the circumstances under which the Ilalios signed the first document. (Indeed, from plaintiff's pleading it appears that the new management of the Bank may have believed until shortly before the trial of this case that Mr. and Mrs. Ilalio actually received the $15,164 which is the stated consideration for the promissory note.) The plaintiff in this case, however, is not any particular officer but the Bank itself. When the Bank concluded the "settlement" in 1986 it was chargeable with the knowledge and with the actions of its agents who dealt with the Ilalios in 1982.[4ASR126] It therefore cannot be said to have believed in good faith that the Ilalios owed it $13,000. Such good faith is essential for forbearance on an invalid claim to constitute consideration. See generally Corbin on Contracts § 140.9 The 1986 agreement therefore lacked consideration.

Even if the Bank were held to be in good faith (as we hold it was not) with regard to the validity of its original claim, forbearance to sue on it would not fix everything that was wrong with it. This is true for several reasons.

First, although the new management of the Bank has not engaged in the sorts of practices the old management did, the second transaction cannot fairly be described as one in which two parties[5ASR2d127] worked out a "settlement" of their differences at arm's length. The 1986 document was a contract of adhesion offered on a take-it-or-leave-it basis by one of the most powerful economic institutions in the Territory to a party who was far poorer and fa less sophisticated than the drafting party and who was unrepresented by counsel. Although he was physically free ( just as he was in 1982) "to refrain from contracting at all," the Bank threatened him with an immediate lawsuit if he did not sign. It is unfortunately the case that such a threat will often induce people, particularly poor people and people in American Samoa, to sign just about anything. When it presented Mr. Ilalio with the 1986 document the Bank knew or should have known that Mr. Ilalio would probably be far more afraid of a lawsuit than he had any good reason to be (than, for instance, the Bank itself would have been if Mr. Ilalio had been threatening to sue it on a questionable claim) and that whether he signed would have more to do with this fear than with any estimate of the validity of his defenses.10 [5ASR2d128]

Another reason the 1986 "agreement" should not constitute a bar to Mr. Ilalio's assertion of his defenses to the original promissory note is that it did not clearly purport to do so. Rather, the 1986 document was itself vague and ambiguous on what the defendants' rights would be in the event the parties eventually faced each other in litigation. It provides that in the event of such litigation Mr. Ilalio "shall waive all defenses of the statute of limitations and other waiveable defenses." This clearly implies the preservation of his right to assert either, "non-waiveable" defenses .

What might these be? At the very least they would seem to include defenses which, although they may be reconcilable with the classical premises of contract law, exist at least partly to protect the general public or the integrity of the legal system. The clearest example of such a non- waiveable defense is illegality. We would be inclined to put fraud and unconscionability on the list as well, but we need not reach those legal questions in order to construe the "waiveable defenses" clause in the 1986 "agreement." If it is not clear to the Court that fraud and unconscionability are waiveable, it certainly would not have been clear to a reasonable person in the position of Mr, Ilalio. Vague and ambiguous[4ASR129] language is to be construed against the drafter. Moreover, the phrase "the statute of limitations and other waiveable defenses" clearly connotes "the statute of limitations and other defenses like it," that is, technical barriers to the enforcement of an otherwise just debt. Accordingly, by the best reading of the "agreement" itself Mr. Ilalio preserved his right to assert substantive defenses to the validity of the original contract. (Mrs. Ilalio, who did not sign the 1986 document, has not waived any defenses. )

Yet another reason that the 1986 transaction should not be held to have accomplished everything the Bank would like it to accomplish is that the Bank gave up very, very little. There was not one penny's worth of compromise on the substance of the claim. There was no delay in foreclosing any security interest --- the truck, it will be recalled, already having been taken. And a judgment against a poor person in American Samoa is worth very little in and of itself. It does not give rise to a power to seize the debtor's real property unless it is secured by a specific mortgage on such property. A.S.C.A. § 43.1528. With regard to personal property and future income, the judgment debtor has a legal right to an order allowing him to retain whatever is necessary to support himself and his dependents and also to comply with customary obligations (often quite extensive and burdensome) to his extended family. A.S.C.A. § 43.1501. As a practical matter this exempts just about everything. The $200 per month that the Bank was to receive under the agreement (and did receive for several months) was almost certainly higher than what it would have received if it had secured a judgment and tried to execute it. The agreement was, in other words, a far better deal for the Bank than for the Ilalios even if we do not extend it beyond its most obvious meaning to include a waiver of the defenses of fraud and unconscionability. This was true, moreover, for legal and practical reasons that were well known to the Bank and almost certainly not known to the Ilalios.

All this is not to say that signatures on documents never mean anything, but only that they do not always mean everything. If the 1982 transaction had been above board and the Bank were using the 1986 agreement for the purpose for which it seems to have been designed --- to toll the statute of limitations ---its forbearance from suit would be valid consideration for Mr. Ilalio's [5ASR2d130] agreement to waive the statute. The Bank's palpably detrimental reliance on his explicit agreement to waive the statute would overwhelm the equitable arguments against enforcement.11 The document is not, however, a complete substitute for all the missing substantive elements ---a meeting of the minds or some objective manifestation thereof, considerations that were even arguably equivalent, parties of roughly comparable bargaining power and sophistication, and a bargaining process untainted by sharp practice--- in the absence of which the original transaction did not give rise to a binding contract or a just debt.

VIII. Due Process

The Bank argues that our original holding was in derogation of its right to due process of law, Since we believe the holding to have been in accordance with law and with the evidence and pleadings in the case, we conclude that it did not deprive the Bank of due process.

Order

The motion for new trial is denied.

________________

Wharton v. Abbeville School Dist. No. 60, 608 F. Supp. 70, 73 (S.D. Cal. 1984) ("the Complaint is hereby dismissed" after trial on the merits); Lary v. United States, 608 F. Supp. 258, 263 (N.D. Ala. 1985) ("an order will be entered granting the defendant summary judgment and dismissing the case in its entirety" ) ; Complaint of Tracy, 608 F. Supp. 263, 269 (D. Mass. 1985) ("the petition to limit liability is dismissed" after adjudication of the merits on motion for summary judgment); McGhan v. Ebersol, 608 F. Supp. 277, 288 (S.D.N.Y. 1985) ("The case is dismissed and the clerk is directed to enter judgment" on the merits after motion for summary judgment); Carter v. Oliver T. Carr Co., 608 F. Supp. 381, 383 (D.D.C. 1985) ("The complaint is accordingly dismissed with prejudice" after trial on the merits); Gibson v. Sullivan Trail Coal Co., 608 F. Supp. 390, 392 (D.V.I. 1985) ("Judgment will enter dismissing the complaint of the plaintiff " after summary judgment on the merits). The cited cases comprise six of the twelve cases in the 400 surveyed pages of the Federal Supplement in which the plaintiffs were denied all relief after an adjudication of the merits. Six of these cases were decided on motions for summary judgment and six after trial.

See. e.g., Folasa v. Scanlan, 4 A.S.R. 194, 198 (1961) (per Morrow, C.J. )

("Accordingly, it is ORDERED that the plaintiff Folasa's petition be and the same is hereby dismissed" after trial on the merits); Tali v. Tupeona, 4 A.S.R. 199, 206 (1961) (per Morrow, C.J.) ("This petition must be dismissed."); Tumui v. Fa'alevao, 2 A.S.R.2d 33, 35 ( 1983) ("As to all other petitioners the matter is dismissed."). [5ASR2d117]

Contrary to the plaintiff's contentions, it is far from clear that the fraud or mutual mistake alleged in this case was an affirmative defense at all. If defendants had admitted to the contract as charged by plaintiff but demanded to be relieved from it on the ground that they were induced to contract by means of extrinsic fraud, it would be an affirmative defense. In this case defendants pled and proved that the contract alleged by the Bank never occurred. Rather, defendants had agreed to a different contract and plaintiff's agents had filled in the promissory note in the wrong amount. See Part IV infra. If a defense merely negates some element of the plaintiff's prima facie case, it need not be affirmatively pled. [5ASR2d118]

Masuen v. E.L. Lien & Sons. Inc., 714 F.2d 55 (8th Cir. 1983) .

We are not sure whether the basis for plaintiff's argument that these defenses were not affirmatively pled is (a) that the names of the doctrines were not mentioned; (b) that the statements in the answer were not detailed enough to put plaintiff on notice that the defenses would be raised; or (c) that the defenses should have been pled in separate paragraphs and labeled "affirmative defenses."

The first two contentions are dealt with in the text. As for the third contention, we think the "affirmativeness" requirement was met here by the statement of the facts giving rise to the defenses of fraud and unconscionability in a "Yes, but ... format within a paragraph containing an admission. We have been unable to find any authority for the proposition that a separate paragraph is a sine qua non of the "affirmative pleading" requirement under the federal rule. In any case, we interpret our own Rule 8(c) to require only that affirmative defenses be affirmatively stated rather than subsumed in simple denials of the plaintiff's prima facie case. For instance, if defendants had answered plaintiff's allegation that they signed a $15,164 note wi th the word "Deny," they would not have complied with the rule. Instead they said, " Admit. But only on the value of the truck which was at the time about $6000." This indicated, although not artfully, the defense they planned to raise at trial.

The statement of the facts giving rise to the defense of accord and satisfaction was in a separate paragraph at the conclusion of the numbered admissions and denials. [5ASR2d119]

At oral argument on this motion, counsel for the Bank suggested that he let the Ilalios tell their story to the Court in their own way because he believes that giving such an opportunity to pro se defendants gives rise to a desirable "catharsis" : the defendants feel better about having to pay the amount demanded because the Court has listened to everything they have to say. We appreciate this sentiment, and we agree that a full and fair hearing may ease the pain of losing a case. One of the risks the Bank incurred when it opted to let the Ilalios have an unequivocal "day in court " rather than to raise technical objections at every turn, however, was that the Ilalios might win. In any case, we note that Mr. Ilalio was vigorously cross-examined by counsel for the Bank and also by the Court, and that none of the conclusions reached by the Court rested on evidence that was inconsistent with the pleadings or otherwise inadmissible. Although it is always conceivable that another trial might produce a different result, the Bank's contention that it did not really hold the Ilalios' feet to the fire at the first trial is insufficient to justify the expense and inconvenience of a second proceeding. This is particularly true in a case in which the party seeking a new trial has full-time "in-house" counsel at its disposal whereas the parties who prevailed at the first trial cannot afford [5ASR2d120] a lawyer.

Plaintiff's evidence as well as defendant's supported the conclusion that the only consideration received by the defendants for the $15,000 note was the conditional use of a $6,000 truck. This evidence was, incidentally, at variance with plaintiff's pleading, which alleged that the consideration was "the loan of DBAS funds for the purchase of a vehicle." We point this out not to criticize counsel for plaintiff, whose pleadings are generally accurate and informative, but to underscore the inappropriateness of enforcing a hyperstrict construction of the rules of pleading against Mr. and Mrs. Ilalio.

In its memorandum in support of the motion for new trial plaintiff argues that the consideration for the Ilalios' $15,000 debt was more than just the use of a $6000 truck, Plaintiff argues that the Bank forbore from suing Mr. llalio's half-brother; that the Ilalio's' situation was therefore "analogous to the situation of a co-maker or co-signer"; and that "we do not know what consideration, other than the use of the truck," defendants "may have received f rom the relative."

This argument is contrary to the evidence. The Ilalios asserted in their pleadings and at trial that their only reason for signing anything and the only thing they received was the continued use of the truck; the Bank introduced no evidence of a promise to forbear or of any discussion of forbearance against the half-brother, much less of the hypothetical "other consideration" of which " we do not know. " The evidence is overwhelming that the Ilalios contracted with the Bank only because of the Bank officials' threats to "sell the truck to "another customer" and that concern for the image and credit rating of the absent and judgment-proof half-brother was not a factor that was ever mentioned or considered by either side. The Ilalios were not, therefore, analogous to co-signors; rather, the Bank officials were analogous to used car salesmen.

See Corbin on Contracts § 140 and cases cited therein. Many of the cases in which courts have held settlements unenforceable concern accident victims who release tortfeasors or insurance companies from all liability in exchange for relatively [5ASR2d125] [footnote 8, continued]:

small sums of money. The most common rationale is that the parties were mutually mistaken about the extent of the victim's injuries; it is clear, however, that many of the cases have more to do with whether "the agreement was fairly and knowingly made."Farrington v. Harlem Savings Bank, 19 N.E.2d 657, 657 (N.Y. 1939). See also Mangini v. McClurg, 249 N.E.2d 386, 392 (N.Y. 1969) ("The requirement of an 'agreement fairly and knowingly made' has been extended ... to cover other situations [i.e., cases where there was no actual fraud] where because the releasor has had little time for investigation or deliberation, or because of the existence of overreaching or unfair circumstances, it was deemed inequitable to allow the release to serve as a bar to the claim of the injured party."); Perdikouris v. The S/S Olvmpos, 185 F. 5upp. 140 (S.D.N.Y. 1960) ("[C]onsidering the inadequacy of the consideration, the mistaken belief that libellant [an injured seaman] was cured, the circumstances surrounding the legal advice made available to libellant [a brief consultation with an attorney friendly to the shipowner], and libellant's lack of full understanding of his rights, we reach the conclusion that respondent's plea of accord and satisfaction must be overruled [and] the release set aside....").

The principles at work in the personal injury release cases apply with equal force to the present case. In both situations (1) the party that drafted and pressed for the "settlement" is a business entity experienced in and familiar with such transactions; (2) the other party is an individual who has no such experience or familiarity and who generally signs the document without benefit of legal counsel; (3) the transaction was a whirlwind settlement in which there was no evidence that the weaker party negotiated, deliberated, or fully understood what he was giving up, and in which the stronger party employed threats or promises (usually threats or promises to do things that the stronger party had a legal right to do) to encourage a quick decision; and (4) the exchange was lopsided, consisting of the surrender of potentially valuable legal rights by the weaker party in exchange for a small sum or other trivial consideration from the stronger party. [5ASR2d126]

Although courts have varied widely in their analyses of the reasons for the good faith requirement, they tend to focus not on whether the forbearing party "believe[s] his suit can be won" but on whether he has a reasonable belief "that it is just to try to enforce his claim. " Corbin on Contracts § 140 at 601-02. This is true despite the fact that there may be some benefit to the alleged debtor and some detriment to the supposed creditor even in forbearance on an obviously unjust claim. The rule that forbearance on such a claim cannot be consideration is imposed "on grounds of public policy.... [I]f it were recognized as sufficient, ill- founded claims would be infinitely increased in number and the offense that is known as blackmail would become a profitable racket. "Id. at 597-98.

In this case the Bank officials who presented Mr. Ilalio with the 1986 "agreement" probably believed they had a good chance to prevail on their claim. They might have concluded this even if they had known (as the Bank itself must be held to have known) all the facts about the original transaction; equitable defenses often depend on the discretion of the trial judge. This means only that the Bank might reasonably have believed its claim to be unjust but winnable. For the practical reason given by Corbin, and for the related reason that many judges regard blackmail enforcement as bad for their image and for their insomnia, forbearance to press such a claim cannot serve as consideration. [5ASR2d127]

10 At trial Mr. Ilalio was questioned sharply by the author of this opinion about why he signed the "agreement" if he did not in fact believe he owed the Bank any money. After listening to Mr. Ilalio's answers, observing his demeanor, and discussing the matter with the two Samoan Associate Judges who sat on the case, however, the author came to the conclusion that the "agreement" had more to do with the factors discussed in the text than with anything Mr. Ilalio believed, intended, or bargained for with respect to the Bank's original claim against him.

Courts and commentators in the United States have long remarked the ease with which people can be induced to sign adhesion contracts containing the most draconian kinds of provisions, including waivers of important substantive and procedural rights in the event of litigation. This phenomenon is particularly pronounced among people in the lower economic strata; indeed, it is the phenomenon that gave rise to the doctrine of unconscionability and other mitigating devices. It is particularly strong in this Territory.

In the Samoan culture it is considered somewhat impolite to refuse almost any request, including a request to give away large amounts of money or other property. [5ASR2d128]

Avoidance of immediate conflict , with the possibility that real agreement can be reached at some time in the future, is greatly preferred to a direct refusal. This is especially true when a request is made by someone with a claim to superior social status or to official authority .

A related phenomenon is an unusually strong desire to avoid courts, which are authoritative and powerful yet mysterious, untraditional, and somewhat foreign. A threatened lawsuit therefore has a far more vivid ad terrorem effect on a person of limited-means and sophistication in Samoa than it would have on the reasonable person in New York. It is inconceivable that an institution doing business in the Territory could remain unaware of this for very long, and the High Court cannot ignore it either. [5ASR2d130]

11 This would be true as a matter of common law and equity even in the absence of the territorial statute explicitly providing that causes of action founded in contract are revived by signed admissions. A.S.C.A. § 43,0128, This statute has no bearing on the present case. It provides only that a subsequent acknowledgment can "revive" an obligation that was formerly binding but has lapsed for some reason, It is fully consistent with our holding that an acknowledgment does not create (in the absence of non-trivial consideration and/or a process of genuine bargaining) a valid contract where there was none to "revive." 

Ilalio; Development Bank v. 5


DEVELOPMENT BANK OF AMERICAN SAMOA, Plaintiff

v.

PALE ILALIO and TOA'I ILALIO,Defendants

High Court of American Samoa

Trial Division

CA No. 34-87

July 2, 1987

Parol evidence is admissible to show that an agreement reached by the parties was incorrectly reduced to writing because of fraud or mutual mistake, or that there was no agreement at all for one of these reasons.

When a party signed a promissory note on which the line indicating the amount was left blank, with the understanding that he was agreeing to assume liability for the fair market value of a truck, and where promisee bank later filled in an amount two- and-one-half times greater than that fair market value, the note was voidable either for fraud or for mutual mistake, depending on whether the bank officials knew or did not know of the promisor's understanding.

The common law of contracts applies in American Samoa unless it conflicts with a territorial statute or is unsuitable to local conditions. A.S.C.A. § 1.0201.

A party cannot be relieved of his contractual obligations simply for having made a bad bargain.

If a contract or any of its terms is unconscionable, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable provisions, or so limit the application of the unconscionable provisions as to avoid any unconscionable result. Restatement of Contracts 2d § 208.

A radical disparity between the contract price of a good or service and its fair market value, while not alone sufficient to void the contract, raises [5ASR2d2] doubts about whether the transaction was free from fraud and coercion.

The legal importance of an unfair bargaining process diminishes when the considerations given and received by the weaker party approach what they would have been had the process been above board.

A contract is ordinarily rendered unenforceable on the ground of unconscionability only when both its substance and the bargaining process leading up to it are unconscionable.

Obligation to exercise good faith in the execution of contracts requires creditor who seizes and sells collateral to exercise due diligence to secure a fair price for it.

Creditor bank that repossessed and sold collateral under commercially unreasonable circumstances for far less than its apparent market value would be held to have done so in full payment of the debt, either under the principle of accord and satisfaction or because in the absence of circumstances ensuring a fair appraisal of its value the thing is presumed to be worth the amount paid for it.

A contract unenforceable for fraud or unconscionability cannot become enforceable simply because the institution on whose behalf the contract was made no longer employs the individuals whose misdealings tainted the contract.

Before REES, Chief Justice, AFUOLA, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiff, Robert Dennison

Pale and Toa'i Ilalio pro se

Plaintiff Development Bank sues to collect an overdue balance of $10,004.05 on a promissory note. With interest, costs, and attorney fees the amount of the requested judgment is $14,355.51. Defendants claim that their signatures on the note were obtained by fraud and that the much smaller obligation they actually incurred to the Bank has been discharged.

The undisputed facts are that the debt was originally incurred by Mr. Ilalio's half-brother in connection with the purchase of a pickup truck for [5ASR2d3] business purposes. It was the understanding of the parties that the note was secured by the truck. Although the Bank does not have copies of the documents by which this security was effected, counsel for the Bank has informed the Court that such documentation would have consisted either of "being the' legal owner' on the certificate of title" or of a written chattel mortgage agreement.

In 1981 or early 1982 the half-brother left the Territory. The truck was left in possession of Mr. Ilalio, who also used it for business purposes. He soon began receiving telephone calls from Bank officials who stated that they intended to repossess the truck unless he agreed to accept liability for his half-brother's debt. According to Mr. Ilalio, he repeatedly informed the officials that he would agree to be liable for the fair value of the truck but not for any greater amount. Finally, on June 1, 1982, he was warned that if he and his wife did not go down to the Development Bank immediately to sign the papers, it would be sold to one of the "other customers" who were "lined up waiting to buy it."

Mr. and Mrs. Ilalio did go to the Bank and sign the papers. Mr. Ilalio testified, however, that the promissory note was entirely blank when it was presented for his signature, and that on an accompanying "application" the line indicating the amount of the loan was left blank. He testified that he was told only that his monthly payments would be $165, and that the Bank would have to figure out the total amount of the loan and fill it in later. He also testified that he believed he was agreeing only to pay the Bank for the value of the truck.

A few months later, Mr. and Mrs. Ilalio themselves left the Territory, having paid $580 on the note. The truck was left with another relative. In June of 1983 two men from the bank came to this relative's house and took the truck. It was sold, apparently by private sale, for $6000.

In 1986 Mr. and Mrs. Ilalio returned to American Samoa. They were soon contacted by Development Bank officials who told them they still owed over $10,000 in principal plus accrued interest on the promissory note. Mr. and Mrs. Ilalio then went to the Development Bank and signed an agreement acknowledging this debt and agreeing to pay $200 per month on it. They made three[5ASR2d4] payments and then stopped, giving rise to this suit.

The defendants, who are not represented by counsel, make arguments that are similar to several of the traditional grounds on which courts have sometimes held contracts unenforceable:

1) Fraud or Mutual Mistake. Defendants say that they only agreed to obligate themselves for the value of the truck, which was about $6000, and that the amount of $15,164.16 was filled in by Development Bank officials without their knowledge or consent. If they are telling the truth the contract is voidable for fraud or mutual mistake, depending on whether the officials knew of the defendants' understanding. l

Although we would not usually be inclined to believe that anyone would sign a blank promissory note, in this case it may well be true. Mr. Ilalio did not impress us as an untruthful witness. The documentary evidence submitted by the Bank is not inconsistent with his story: on the "application" the amount of the loan and a few other items seem to have been written by a different hand and with a different pen than the items containing personal information on Mr. Ilalio. The Bank presented no witness to the transaction, probably because neither of the Development Bank officials with whom the defendants dealt is currently employed by the Bank, both of them having gone to jail for activities similar to those of which the Ilalios accuse them. See American Samoa Government v. To'oto'o, 2 A.S.R.2d 61 (1985) (larceny, fraud, embezzlement, making a false entry in an official record); American Samoa Government v. Suisala, CR Nos. 4-85 and 5-85 (eleven counts of embezzlement, one count of tampering with a witness). See also Filioiali'i v. Adams, CA No. 124-85, affirmed, 3 A.S.R.2d 105 (1986), documenting an attempt by these same officials, acting on behalf of the Bank, to "sell" and take a "mortgage" on property that belonged to someone else. But the strongest [5ASR2d5] argument for the credibility of Mr. Ilalio's story is the implausibility of the alternative hypothesis: that he willingly agreed to buy a $6000 truck (not the truck itself, actually, but the use of it for as long as he kept making payments and his half-brother did not return) for $15,000 plus several thousand dollars in interest.

2) Unconscionability. We need not decide which of these two improbable events took place, however, because in either case the agreement was unenforceable. If the Bank actually did sell the Ilalios the conditional use of a truck (or even the whole truck) for over twice its market value, it was a contract "such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other." Hume v. United States, 132 U.S. 406 (1889), quotingEarl of Chesterfield v. Jannsen, 28 Eng. Rep. 82, 100 (Ch. 1750). According to the common law of contracts, which applies in American Samoa except when it conflicts with territorial statutes or is unsuitable to local conditions, such a contract is unconscionable and should not be enforced.2

This is not to say that a party can be relieved of his contractual obligations simply because he made a bad bargain. Although courts have occasionally held contracts to be unconscionable on the sole ground that there was a gross disparity in value between the two considerations exchanged, this tends to substitute the court for the contracting parties as the judge of value. The essence of the right to contract is the freedom of each person to decide what he is [5ASR2d6] willing to pay for the things he wants, even if his value choices differ from those made by most other people.

And yet the idea of "fair" or "market" value is not altogether irrelevant to the determination of whether a contract should be enforced. When a person pays too much more for a thing than he could have paid by walking down the street to another place of business, it raises doubts about whether the transaction was free from fraud and coercion. By the same token, even the most serious questions about the fairness of the bargaining process become far less serious if the considerations given and received by the weaker party seem to be about what they would have been if the process had been above board. (The typical person who did business with the corrupt former management of the Development Bank, for instance, would have received $15,000 in exchange for his signature on a promise to repay $15,000 plus interest. Unlike the defendants in this case, who are being sued on a " loan " that was not a loan at all, such a person would have a difficult, time proving that he was damaged by irregularities in the bargaining process. )

Accordingly, most courts have held that a contract is unenforceable only when there is convincing evidence both of " substantive" and of "procedural" unconscionability:

[W]hen a party of little bargaining power, and hence little real 
choice, signs a commercially unreasonable contract with little 
or no knowledge of its terms, it is hardly likely that his consent, 
or even an objective manifestation of his consent, was ever given 
to all the terms. In such a case the usual rule that the terms of the 
contract are not to be questioned should be abandoned and the 
court should consider whether the terms of the contract are so 
unfair that enforcement should be withheld.

Williams v. Walker-Thomas Furniture Co. , 350 F.2d 445, 449 (D.C. Cir- 1965) (footnotes omitted).

In this case, assuming Mr. and Mrs. Ilalio actually did sign a document obligating them to pay $15,000 for the use of the truck, it was a contract of adhesion presented to them by a Bank official with vastly superior bargaining power and business [5ASR2d7] sophistication (and with a certified penchant for dishonesty, sharp practice, and self-dealing) along with a threat that an implement of their livelihood would be " sold " to " another customer " if they did not sign immediately. Assuming that the Bank had a legal right to repossess and sell the truck, a threat to do so would generally not render the resulting contract void for duress. It did, however, contribute to the "absence of meaningful choice" which requires that the court inquire into the substantive fairness of the contract before enforcing it against the defendants. Williams v. Walker-Thomas Furniture Co. , supra, 350 F.2d at 449.

The Bank soon did repossess the truck, which was the only thing it ever gave the Ilalios. It also has received about $1200 of the defendants' money, which is enough to compensate it for their use of the truck during the time between the contract and the repossession. The Bank demands that we order the Ilalios to pay another $10,000 plus interest; this we decline to do.

3) Accord and Satisfaction. The previous discussion assumes that the truck was worth about $6000. This was the uncontroverted testimony of Mr. Ilalio, who said that at the time of this transaction brand new pickup trucks were selling for $7000 or $8000. Nothing else is known about the truck except that it was a 1970's model and that it was sold by the bank in 1982 for $6000; the bank no longer has any records concerning the transaction or the truck. Accordingly, we find as a fact that it was worth between $6000 and $7000. If, however, the truck had actually been worth an amount close to the $15,000 the Ilalios allegedly agreed to pay for it,3it is not at all clear that the Bank had the right to sell it for far less than its market value and then recover the balance of the loan amount from the defendants.[5ASR2d8]

The heady days of creditor self-help unfettered by due process of law are gone now, if indeed they ever existed. At common law a mortgagee had no right to repossess without resort to judicial foreclosure unless there was a clear and explicit provision in the contract giving him the right to do so. There is no such clause in the chattel mortgage form submitted by the Bank, which may or may not have been the form signed by Mr. Ilalio's half-brother. Nor would such a provision be clearly implied by the Bank's designation as "legal owner" on the title to the truck, where the Bank led the buyer to understand that the designation was intended as a security device rather than an actual statement of who owns the vehicle. (Vagueness and ambiguity in security devices, as in other contracts, are resolved against the drafter. )

In any case there is always an obligation to exercise good faith in the execution of contracts. In the case of secured transactions one incident of this obligation is that a creditor who seizes and sells a thing to satisfy his debt must exercise due diligence to secure a fair price for it. This obligation has been codified by statute in all fifty states; where it does not require a judicial foreclosure or an advertised public sale it at least requires that the sale be conducted in accordance with commercially reasonable practices and that there be notice to the mortgagor. See, e.g., Uniform. Commercial Code §§ 9-504-07. Creditors who repossess things and dispose of them without such indicia of good faith have been held to have accepted them in full payment of the whole debt, either under the principle of accord and satisfaction (as the defendants argue in this case) or because in the absence of circumstances ensuring an accurate appraisal of its value the thing is presumed to be worth the amount of the debt. If we thought the truck had been worth $15,000 or anything close to it in 1981, we would be strongly inclined to believe that its unadvertised sale for $6000 in 1982 was a breach of the obligation of good faith which relieved the defendants of any obligation to pay the balance of the amount due on the note.4[5ASR2d9]

Accordingly, the action is dismissed.


1 Parol evidence is admissible to show that an agreement reached by the parties was improperly reduced to writing because of fraud or mutual mistake, or that there was no agreement at all for one of these reasons. See 2 Corbin on Contracts § 580 at 431-40 (rev. ed. 1960), and cases cited therein.

 

2 See A.S.C.A. § 1.0201 (reception of common law in American Samoa); Tung v. Ah Sam, 4 A.S.R. 764 (1971) (in construing the common law, court should ordinarily follow theRestatement of the Law); Restatement of Contracts 2d §208 (1981) ("If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.") See also Maua Family v. Mauga, 1 A.S.R. 587 (1938) (principles of equity are part of the law of American Samoa).

3 No evidence has been presented concerning the loan originally incurred by the half-brother. We do not know, therefore, how a truck that apparently cost no more than $8000 when it was new came to be secured by a loan with a balance of $15,000 by the time the Ilalios were required to assume it. This could have been the product of several years' accumulation of interest, or perhaps of consolidation of the truck loan with other debts owed by the half-brother to the Bank.

4 We understand that the dubious circumstances that gave rise to this case are not the fault of the current management of the Development Bank. Against innocent third [5ASR2d9] parties, however, the Bank has only those rights that were legitimately acquired at the time its contracts were made. It did not acquire any new rights simply by purging the officials whose misdealings tainted some of its contracts. This does not, of course, prevent the Bank from recovering against people who dealt with the former management but who are not shown to have been victims of their improper activities. Indeed, in cases where third parties are shown to have colluded with the former management to obtain contracts grossly disadvantageous to the Bank, the new management can presumably recover the ill-gotten gains.

One of the transactions involved in this case did take place after the new management had taken over. This was the occasion on which the defendants, having returned to American Samoa, signed a document styled an " agreement, " acknowledging the debt and promising to resume monthly payments. Asked by the Court why he signed this document if he did not really believe he owed the money, Mr. Ilalio explained that he and his wife had just returned to the island, were attempting to re- establish themselves, and did not want trouble. This explanation would not be good enough if they had actually owed the Bank any money to begin with and if the " agreement " were offered only as evidence that the statute of limitations had been waived or for some other incidental purpose. In fact, however, there was no consideration for this "agreement ., and it was therefore not legally binding on the Ilalios.

Fonoti v. Fagaima,


FONOTI AUFATA, Plaintiff

v.

FAGAIMA AFATIA, MATAESE MANUMA, and REVEREND 
PELETI and the METHODIST CHURCH, Defendants

High Court of American Samoa

Land and Titles Division

LT No. 73-83

September 18, 1987

Action by landowner, whose title to the land has recently been affirmed by trial and appellate courts, to evict persons who were not parties to the case should have been brought as a separate action rather than as a post-judgment motion in the case that adjudicated title to the land.

Occupant of land whose occupancy was by virtue of a license from the landowner, but who subsequently asserted ownership of the land, engaged in transactions purporting to sell parts of the land, and forced landowner to bring successive lawsuits to establish his ownership of land to which the landowner's title had been previously adjudicated, was a bad faith possessor who had the right upon eviction to harvest seasonal crops and to remove fixtures erected by him but was entitled to no other compensation.

Religious organization that had been permitted by landowner to build a permanent structure on the land under circumstances suggesting indefinite occupancy by the church, and which had not been shown to have acted inconsistently with any express or implied condition of its license, was a good faith possessor and would ordinarily be entitled on eviction to choose between removing the structure or leaving it upon the land and receiving compensation from the landowner.

Before REES, Chief Justice, VAIVAO, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiff, Asaua Fuimaono 
For Defendants, Aviata Fa'alevao [5ASR2d159]

Opinion and Order on Post-Trial Motions:

Plaintiff Fonoti was adjudged the owner of communal land called Alatutui in Tafuna. Fonoti v. Fagaima, LT No.73-83 (decision rendered Apri17, 1986); Fagaima v. Fonoti, AP No.12-86, 3 A.S.R.2d 112 (1986). Plaintiff has moved to evict a number of people who are currently occupying the land; these people include Mataese Manuma, who was a defendant in the case, and "Reverend Peleti and the Methodist Church, " who were not defendants. The eviction of Reverend Peleti and the Methodists should have been brought as a separate action, but since they have been served with process and have participated in the hearings on the post-trial motions we will adjudicate their rights in this action.

The Court finds the facts to be as follows:

(1) The Manuma family first came on this land as licensees of the Fonoti family during the late 1940s. Fonoti v. Manuma, No.18-1962 (per Morrow, C.J. ) .

(2) The Methodist congregation came to occupy the land on which the church now stands also during the late 1940s and also as licensees of the Fonoti family.

(3) Despite the status of the Manumas as licensees of the Fonotis and their adjudication as such in the 1962 case, defendant Mataese Manuma has for a number of years acted inconsistently with the continued ownership of the land by the Fonoti family and with his continued status as a licensee. These inconsistent actions are recounted in some detail in the opinion rendered after the trial of this case; they include the assertion in court that the Fonoti family does not own the land and the sale of parts of the land to third parties.

(4) Although Chief Fonoti was originally regarded as the "leading matai" in the Methodist congregation and had a substantial say in church decisions, in recent years Chief Fagaima has replaced Chief Fonoti in this role.

(5) Chief Fonoti contributed a substantial part, but by no means all, of the funds raised to build the present church building. It was not established, however, that there was any express or [5ASR2d160] implied agreement that he would thereby acquire a property interest in the church building.

(6) The church building is worth some amount not less than $10,000 and not greater than $50,000.

From these facts we draw the following conclusions:

(1) Mataese Manuma is entitled to remove any building and fixtures belonging to him and to harvest any crops planted before April 7, 1986. Since he has occupied the land inconsistently with the ter of his license from the Fonoti family, however, and since he is not entitled to claim (at least not since 1962) that he believed himself in good faith to be the owner of the land, he is not entitled to any compensation for such improvements as permanent plantings. (In any case, his rent- free use of the land is adequate compensation for the value of any improvements. )

(2) Although Fonoti would seem to be entitled to compensation from Manuma for the damages he suffered when Manuma sold parts of the land to third persons, we have not been presented with sufficient evidence of the amount of such damages on which to base such an award. We therefore decline to award any such damages.

(3) Although there was nothing in the original arrangement between Fonoti and the Methodists that gave him a right to terminate their license if he should ever cease to have influence in church affairs, both sides agree that the continued presence of the church on Fonoti land would be inconsistent with either side's quiet enjoyment of its property rights.

(4) Since the removal of buildings from land tends to produce economic waste, and since the irreconcilable differences between Fonoti and the Methodists have not been shown to have been brought about by the malice or bad faith of the Methodists, the law would ordinarily give the Methodist congregation a choice between removing their building from Fonoti land or leaving their building on the land and receiving fair compensation from Fonoti.

(5) Both Fonoti and the Methodists, however, have indicated a strong preference for the removal of the building rather than for an arrangement whereby Fonoti compensates the Methodists for its [5ASR2d161] fair value. Accordingly, we order that they have the right to remove the building. (If they remove any part of it , they should remove all of it including the foundation. )

(6) Both the Manumas and the Methodists should remove themselves and their property from the land within sixty days.

It is so ordered. 

Fiu; Fiu v.


FA'AlU FlU, Petitioner

v.

GAULEMALIE FlU, Respondent

High Court of American Samoa

Trial Division

DR No. 31-87

September 1, 1987

Party seeking divorce must prove entitlement under statutory criteria even when respondent does not answer or appeal. A.S.C.A. 42.0205, T.C.R.C.P. Rule 50(e).

Proof of his wife's adulterous activities entitled petitioner to divorce decree when wife's counter- allegations of adultery were not proven by credible evidence.

Before KRUSE, Associate Justice, and LUALEMAGA, Associate Judge.

Counsel: For Petitioner, Albert Mailo 
Gaulemalie Fiu pro se

Plaintiff files for divorce upon the grounds of adultery and "ill usage and habitual cruelty. " The petition does not seek ancillary relief in connection with custody of the parties' minor children, nor in connection with support responsibilities.

Respondent herein did not file an answer to the petition and, while respondent is technically in default, the Court nonetheless required petitioner to be put to proof in accordance with T.C.R.C.P. Rule 55(e), to establish his right to relief by satisfactory evidence.

At the conclusion of petitioner's evidence and examination of the petitioner by the Court in accordance with A.S.C.A. § 42.0205, the Court determined from the evidence presented that the case of the petitioner had been proven, and granted the petition. At this point, the respondent, who

[5ASR2d147] had not earlier come forward when the case was called, requested of the Court to be heard. The matter was reopened, and the Court heard from the respondent.

Respondent testified that she was not the only adulterous party, however her testimony was conflicting. At first she stated that she was seduced into an adulterous affair with the complicity of her husband and the third party involved. Later on, respondent testified that she never engaged in any adulterous relations with this third party.

Respondent's primary point, as far as the Court could gather, was to impress upon the Court that petitioner was also guilty of wrongdoing in order to mitigate her occasions of infidelity. Respondent countercharged in her testimony that petitioner was cohabiting with a fellow employee; and that this cohabitation had resulted in the fellow employee's giving birth to a child of petitioner's.

When respondent was questioned as to the source of her knowledge in connection with her allegations, she stated that her information was gained from certain members of her family. She had no direct knowledge herself save to the extent that she had seen her husband's alleged paramour driving around in her husband's pickup truck during working hours.

Petitioner, on rebuttal, testified that at the time he was Assistant Manager for Food and Beverage at the Rainmaker Hotel, and in fact his vehicle was frequently used by his subordinates to make purchases for the Hotel. The fellow employee who was accused as his cross co-respondent, was one of a number of Hotel employees who used petitioner's vehicle during working hours. He had put this explanation to his wife before and also explained to her that the woman who was the subject of her suspicions was already a happily married woman. Consistent with petitioner's responses to the Court's earlier examination, petitioner denied any wrongdoing on his part.

After weighing the testimony of both parties, the Court concludes that the evidence preponderates in favor of petitioner. After reopening the matter, the court has heard from respondent to see if there existed any legal ground for denying the petition under A.S.C.A. §§ 42.0206 and 42.0208. [5ASR2d148]

We find no such grounds, being impressed with petitioner's superior creditability while, on the obverse, we find Respondent's allegations of fault with petitioner as being premised on the shaky foundations of hearsay, as well as conjecture.

The petition for divorce is granted.

Vaka; Ryan, Inc. v.


RYAN, INCORPORATED, Plaintiff

v.

TAIPE VAKA and JAMES BLANKENSHIP, Defendants

High Court of American Samoa

Trial Division

CA No. 61-86

September 3, 1987

An agent is generally not a party to a contract made for a disclosed principal.

When a seller conditions his agreement to sell goods on an agent's proffer of his own creditworthiness on behalf of that agent's principal, the agent becomes an accountable party to the sales contract.

Consideration sufficient to support a guaranty need not flow directly to the guarantor, and may take the form of delivery of goods to a third party on the faith of the guarantor's assurance of payment.

Before KRUSE, Associate Justice, TAUANU'U, Chief Associate Judge, and AFUOLA, Associate Judge.

Counsel: For Plaintiff, Aviata Fa'alevao
For Defendants, Togiola T.A. Tulafono

Opinion and Order on Motion for New Trial: Defendant moves for a new trial in the above-entitled matter on a twofold submission:

Firstly, defendant contends that if an "agency" relationship existed between Blankenship and Taipe Vaka, the latter was a fully disclosed principal and accordingly Vaka's lack of performance on the contract may not be held against the agent Blankenship.

Secondly, defendant excepts to the Court's conclusion of a guaranty situation as being unsupported on the evidence. [5ASR2d150]

For reasons here given, the motion will be denied.

While it is correct that, in the absence of evidence to the contrary, an inference will generally arise that an agent is not a party to a contract made for a disclosed principal, the Court is here satisfied that the evidence in this case clearly showed that defendant Blankenship was a party to, and accordingly bound under, the resulting agreement for the sale of goods. Plaintiff was diffident to deal directly with Vaka and he made known this fact to Blankenship. He had no idea of Vaka's background and looked to Blankenship for assurance of payment. We found on the evidence that such assurances were given.

The documentary evidence was clearly inconsistent with Blankenship's position at trial that he was merely a conduit for introduction between plaintiff and Vaka. Why else did he sign plaintiff's invoice and thereby acknowledge the terms of the sale upon plaintiff's certification that the order had been supplied? The invoice concerned had Blankenship designated as the source of the order. The terms of the sale were on a credit basis, and the circumstances point to the conclusion that plaintiff's extension of credit was on account of Blankenship's standing with plaintiff, and not on account of Vaka's.

Having found plaintiff's testimony to have been corroborated and more credible, and being made aware of Blankenship's business background, the Court affirmed its conclusion. Defendant Blankenship had actively placed himself beyond the status of being a mere conduit, to that of a party to the transaction to be bound.

The second ground advanced by defendant to sustain a new trial is even less persuasive. The argument simply registers disagreement with the fact finder's finding of facts. The Court reaffirms the evidence as being sufficient to support its findings.

Finally, defendant's allusion to consideration, or lack thereof, as insufficient to sustain a guaranty conclusion, is cursory treatment, It is trite law that consideration moving directly to the guarantor is not essential, so that delivery of property to a third person on the faith of a guaranty of payment is sufficient consideration for [5ASR2d151] the guaranty. C.J.S., Guaranty § 26. Consideration herein was plaintiff's supplying the goods to Vaka upon Blankenship's undertaking to make good on payment.

Motion Denied. It is so ORDERED.

American Samoa Power Auth.; Fa'avae v.


FIALI'I FA'AVAE and FA'ATUPU FA'AVAE, Plaintiffs

v.

AMERICAN SAMOA POWER AUTHORITY and AMERICAN SAMOA GOVERNMENT, Defendants

High Court of American Samoa

Trial Division

CA No. 76-86

July 23, 1987 

Administrative code provision purporting to free territorial utility from liability for any damages attributable to the presence of the utility's property on consumer's premises, was inconsistent with statute providing that utility could be sued, especially in light of public policy that provisions purporting to absolve the drafting party from liability for its own negligence should be strictly construed. A.S.A.C. § 12.0207(b).

Territorial utility had a duty to maintain and operate safely its equipment situated on its customers' property, notwithstanding the special difficulties posed to such efforts in American Samoa.

Youth who suffered. electrocution while climbing a tree to knock down breadfruits with a metal pole, and who knew or should have known that there were electric wires in the immediate vicinity of the tree, was negligent and under comparative negligence statute his negligence would be evaluated as equal to that of utility that had permitted its wires to fray.

Parents suing for the wrongful death of their son were entitled to receive the present discounted value of the son's estimated annual financial benefit to them for as long as such benefit could have been expected to continue.

Wrongful death action seeks recovery for damages suffered by others when a person dies; survival action seeks recovery on behalf of the estate of whatever the deceased could have recovered had the[5ASR2d54] accident not been fatal. A.S.C.A. §§§§ 43.5001, 43.5002.

Award of funeral expenses in American Samoa should not include full cost of traditional gifts to persons attending the funeral, since the expectation according to Samoan custom is that the gifts will be reciprocated over time.

Before REES, Chief Justice, VAIVAO, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiffs, Aviata Fa'alevao 
For Defendants, Martin Yerick, Assistant Attorney General

Announcement from the Bench by REES, C.J. :

We are here to announce our judgment at this time, which is, there will be judgment for the Plaintiffs in the amount of $22,000.00. Now we'll also announce our reasons from the bench and if either side wants to provide anything in writing on some of the figures, they may be subject to correction. We're simply going to give you our best calculations at this time. Dealing with the issues one by one:

First of all, the Government asserts that ASPA is simply not liable for this sort of thing. There is a provision in the Administrative Code which if it were within the power of the ASPA Board of Directors would absolve ASPA from virtually all of the liability they could ever have had. We think that's inconsistent first with the explicit statutory provision that says that ASPA can sue and be sued, and second with the general rule that provisions that tend to absolve the person who makes them from liability for his own negligence are to be strictly construed.

If ASPA were a private company, even if they'd gotten the Plaintiffs or the Plaintiffs' decedent to sign something that says no matter what we do in the course of providing you electricity, no matter how negligent we are, we are exempt from any liability, except under the most extraordinary circumstances that provision would be invalid as contrary to public policy. So, far from the net weight of public policy being in favor of exoneration from liability for negligence, most of the jurisprudence on public policy is exactly to the contrary. I've got to believe that if public [5ASR2d55] utilities could have absolved themselves so broadly and so easily we wouldn't have any Michigan case in 1983 talking about the standards of liability for public utilities. So we don't believe that that provision operates to exonerate ASPA at least where, as here, negligence is clear.

We don't have to reach the question whether there is a stricter standard for liability for a public utility than the reasonable person standard, because in this case the reasonable person standard was violated. The reasonable person in the business of providing electric power to people would check his wires more than once every 35 years to see that they were not in need of replacement.

The tree trimming issue is a little more difficult, in light of the testimony in this case about how difficult it is to get on people's lands and trim trees. We think there was a duty at least to ask permission. If permission had been denied by the communal land owner, obviously we would have a much different situation. But in light of the industry standard (as proved by the manual that everyone seems to agree was a fair statement of industry standards) tree trimming apparently is a normal incident of maintaining power lines. While there might be special problems in American Samoa, none of the judges think that that justifies the provider in throwing up his hands and simply saying, "Well, nothing can be done. " There was a duty to make some effort.

Again, it's not necessary even to reach the tree trimming issue because whether or not they should have trimmed the tree, they should have replaced the wire and the bare wire by itself would have been enough to cause the accident. So at least there was clear negligence in not replacing that wire.

The deceased, however, was obviously contributorily negligent. We believe that it was clearly negligent for ASPA not to check the wires knowing that insulation can become frayed and that when these things are close to people's houses they can cause electrocution. While we also think that ASPA was under some duty to recognize that people do climb trees, certainly the decedent was in a position to know (at least once he had the idea that there might be some electrical current running through the tree) not to be up there. He was of sufficient age and discretion to realize that by going up that tree with a metal pole he was taking [5ASR2d56] a great risk. Our view is that each of the parties' negligence was so clear that although it's hard to come up with any precise standard, we will attribute half of the negligence that caused this accident to ASPA and half to decedent.

Now, as far as the calculation of damages is concerned, the hardest thing is to calculate future income and how much of that future income would have been given to the parents. Obviously it's very speculative that he would have been a plumber or that he would have been something else. He was obviously a bright boy who was likely to do something with his life, yet at some point how much of that money would have been given to his parents is hard to say. However, I've discussed it with the Samoan judges who have more experience than I do in evaluating what is customary here and it's pretty clear that the net financial benefit that his parents derived from him was about $1,000.00 per year. We don't know whether he would become a brain surgeon. We wouldn't know if he would have died soon in another way. The likeliest thing is to assume that that rate would have continued, that $1,000.00 or whatever the real dollar equivalent of $1,000.00 was for the rest of his life and his parents' lives would have continued to be the financial benefit they derived from him. Now a lot of things could have happened. He could have gotten married and moved away from home and begotten several children, in which case the amount might have gone down or the amount might have gone up. The Samoan judges are comfortable as I am with saying that $1,000.00 a year is about right for the amount that the parents can expect a child to give to them here in this territory. So we're going to say that it's $1,000.00.

Then there is a question of how long. Obviously it's not the decedent's life expectancy that matters because the parents are older than he was. There was no specific evidence of his parents' ages, but both the appearance of his father and the usual custom in such things leads us to say they are between 20 and 30 years older than he is. The life expectancy of a woman is slightly more than the life of a man which would be 71 years, and the parents can expect to have received that money from him for the rest of their lifetimes, which is to say 20-30 years. So we will say 25 years and we will say that $25,000.00 is the financial loss that the parents suffered; however, it's more complicated than that because you've got [5ASR2d57] to figure out the future discounted value of $25,000.00

I have checked A.L.R. Proof of Facts, which I thought would be good for something, which doesn't even turn out to be good for this; because all it tells is a whole lot of different rules about discounts depending on interest and inflation rates and depending on things like that. The figure that seems intuitively correct to me ---keeping in mind the facts that $1,000.00 isn't going to be worth $1,000.00 25 years from now and that it's not as simple as how long it takes the money to reach a certain amount at a specified interest rate--- assuming an interest rate of six percent, which is what there is now, and assuming inflation of about what there is now, our best estimate is that the present discounted value of $25,000.00 or its real dollar equivalent in the future years is about $16,000.00. So we will award $16,000.00.

Obviously, if either party has statistics suggesting this calculation is wrong he can move for reconsideration or new trial and we'll be more than ready to entertain that sort of evidence. Since there wasn't any evidence, we're going to make the estimate that it's $16,000.00.

None of the other items are very easy either. Probably the most important thing in terms of the parents' real loss isn't the financial loss that they would suffer. It's the loss of their son's moral and emotional support and companionship. That is an element of our award and the estimated amount is $20,000.00. It's not as high as in the Tedrow case or a lot of cases in the States, but it's higher than some cases in American Samoa and it's our best estimate.

The next item is the funeral. We've had a complicated discussion about the extent to which fa'a samoa obligations should be considered in connection with these kinds of awards, but in light of the obligation that a wronged party has to minimize damages, we simply don't feel comfortable with charging ASPA for sixty kegs of beef. It's well-known that in Samoan culture whatever you give is supposed to come back to you sooner or later somehow. Depending on where you are in the scale of society, you either do a little worse or a little better by the end of the year in all the fa'alavelaves, you going to other people's and others coming to you. So it's hard to calculate what the net cost of a fa'alavelave is. We think [5ASR2d58] that with the value of the casket and the necessity of preparing a body and even (aside from the giving to other people) the aspect of providing some accommodation for people at the funeral, $3,000.00 is a fair award for the funeral. Therefore we will award $3,000.00 as funeral expenses.

Now finally there is the claim for decedent's pain and suffering. Contrary to the position taken by the Government in this case, the Court believes that A.S.C.A. §§ 43.5001 and 5002 merely state the rule that prevails in most jurisdictions: that there are two separate kinds of actions. One of them is the wrongful death action, which consist of the damages that are suffered by other people when somebody dies. The other is the survival action, which consists of whatever he would have been able to recover. The representatives of the estate can sue for him. I've read § 43.5002 during the break. We think the decedent could have sued, if he had lived, for the pain and suffering that he suffered; therefore his successors in interest can sue, whoever they are. There is an allegation in the complaint that the parents are the representatives of his estate; that allegation is to be construed liberally, so we will award this item of damages to the parents in their capacity as representatives of the estate. This means that all probate rules have got to be complied with. We will award damages for pain and suffering. Again, it's terribly difficult, but in light of the damages that are usually awarded, this was a painful death but it was a painful death in which the period of consciousness lasted for 30 seconds. It wasn't as painful as in some kinds of death for which higher awards have been made. So we will award $5,000.00 as pain and suffering in the survival action.

Since we've awarded the funeral expenses not to his estate, but to the parents who paid them, the only element in the survival action is $5,000.00 for his pain and suffering.

Therefore the total is as follows: $16,000 for future income that the parents have lost; $20,000 for the loss of support, companionship, and all of those non-pecuniary elements of the wrongful death action; $3,000 for funeral expenses; and $5,000 for pain and suffering. That comes up to $44,000 divided by two which is $22,000. Now actually $2500 of that $22,000 is going to the estate, to the parents in their capacity as representatives. The other $19,500.00 is to the parents in their own capacity.

Wray v. Wray,


GEORGE A. WRAY, Petitioner

v.

PAULETTE A. WRAY, Respondent

High Court of American Samoa

Trial Division

DR No. 92-83

July 22, 1987

Party's untrue statements that his wife had been delinquent in pursuing a divorce action pending in Hawaii constituted "misrepresentation " justifying relief from territorial court decision to lift stay of local divorce proceeding that had been expressly conditioned on diligent pursuit of the Hawaii action. T.C.R.C.P. Rule 60(b).

A non-fraudulent misrepresentation may form the basis for relief from judgment within rule permitting such relief in cases of "fraud, misrepresentation, or other misconduct. " T.C.R.C.P. Rule 60(b).

A court deciding whether a party is entitled to relief from judgment should not consider objections that could have been raised in an appeal. T.C.R.C.P. Rule 60(b).

Party's failure to file a timely motion for new trial was due to " excusable neglect " when she had received no notice of the trial and, as her adversary knew, was unable to learn of the trial and the resulting judgment until after the deadline for filing had passed. T.C.R.C.P. Rule 60(b).

Motion for relief from judgment was not being used as an impermissible substitute for appeal when motion was based on facts and arguments that party opposing motion withheld from court and opposing counsel at the time of trial. T.C.R.C.P. Rule 60(b) .

Territorial court is not bound to interpret local rules in strict conformity with federal courts' interpretations of parallel federal rules. [5ASR2d35]

Whether to grant relief from a judgment is a matter within the discretion of the court, and the court should not grant relief when there is no chance that correction of the flaw in the proceedings leading to judgment would yield a different outcome on retrial. T.C.R.C.P. Rule 60(b).

Counsels' statement at trial conceding opponent's position did not bind client who, with opponent's knowledge, was not and could not have been given notice of trial and therefore could not have apprised counsel of her position or have authorized the concession.

A party seeking relief from a judgment must show a "meritorious defense, not a "defense on the merits"; a defense can be meritorious although it concerns jurisdiction, standing, forum non conveniens, or any other issue that might cause a court which had reviewed both parties' positions never to reach "the merits." T.C.R.C.P. Rule 60(b) .

Ability to litigate contested issues incident to divorce, such as custody, child care, and property division, was relevant to decision whether to vacate divorce decree even though there had been no final order with respect to those issues. T.C.R.C.P. Rule 60(b) .

Respondent in a divorce action asserted a meritorious defense, notwithstanding her own suit for a "no-fault" divorce in another jurisdiction, where her pleadings denied that she had committed any of the acts alleged by petitioner and required by territorial law as grounds for divorce. T.C.R.C.P. Rule 60(b).

Doubts about whether to grant relief from a judgment should be resolved in favor of relief when the judgment was a default or otherwise resulted from a proceeding that was not fully litigated. T.C.R.C.P. Rule 60(b)

Before REES, Chief Justice, TAUANU'U, Chief Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Petitioner, Togiola T.A. Tulafono
For Respondent, Roy J.D. Hall, Jr. [5ASR2d36]

On Motion to Reconsider:

The question before us is whether we erred in granting respondent's motion to set aside a divorce decree.

FACTS

Petitioner (Mr. Wray) filed this action on December 14, 1983, seeking a divorce on the grounds of habitual cruelty and desertion. Respondent (Mrs. Wray) answered, denying the substantive allegations of the complaint and also alleging that both parties lived in Hawaii and not in American Samoa. The respondent further pled that she had filed an action for divorce in Hawaii. She moved that the action be dismissed on the grounds that the court lacked jurisdiction and that American Samoa was an inconvenient forum.

Then-Chief Justice Gardner ordered that the American Samoa proceedings be stayed on the ground that "the ends of justice and fairness require that this action should be tried in ... Hawaii. " Justice Gardner concluded that "[a]ll the factors considered establish inconvenience of this court and convenience of the Hawaiian court." He ordered a stay rather than a dismissal " so that if obstacles develop to prompt litigation in Hawaii, the parties may resume litigation here. "

On February 9 of this year, about three years after the stay was granted, counsel for Mr. Wray filed an "Ex Parte Motion to Vacate Stay and Proceed with Hearing on Plaintiff's Complaint. "It alleged that "the action in Hawaii has been pending for about five (5) years;" that .'Paulette Wray has failed to prosecute that action wi th diligence" ; and that Mr. Wray was therefore "entitled to an immediate hearing on his petition for divorce pursuant to the order of the court dated March 30, 1984 [i.e. , Chief Justice Gardner's order staying the Samoa proceedings] ."

This ex parte motion was filed at 3:05 on a Monday afternoon. It was brought to the chambers of then-Associate Justice Murphy, who in the absence of the Chief Justice from the Territory was temporarily (until the following evening) in charge of assigning and scheduling cases. Justice Murphy scheduled a hearing on the motion for the following afternoon. [5ASR2d37]

The lawyer who had represented Mrs. Wray in the American Samoa proceedings three years earlier was notified late Monday afternoon that the case would be heard Tuesday. He appeared at the hearing and requested a ten-day continuance so that he could contact his client in Hawaii. He stated that he had attempted repeatedly to reach her by phone during the eighteen hours or so since he had been notified of the hearing and had been unsuccessful. He did not know whether his client would at that point oppose the granting of a divorce decree in American Samoa or acquiesce in such a decree. Indeed, he said that he had assumed that the proceedings had reached a final conclusion in Hawaii, and that if they had not he knew of no basis on which to oppose the lifting of the stay after three years. He simply asked for a few days in which "to contact my client and determine what her position is."

Counsel for Mr. Wray opposed a continuance on the ground that there could be no real dispute on the merits of whether to grant a divorce, since Mrs. Wray had filed for a divorce in Hawaii and Mr. Wray in Samoa. Therefore ten days could make no difference. Since his client was temporarily in the Territory from Hawaii ---where both parties do in fact reside, although they once resided in American Samoa and Mr. Wray claims his legal domicile here ---and it would be difficult for him to come to the Territory again soon, the divorce should be granted that day.

After a brief hearing (the sole evidence on the merits consisted of Mr. Wray's counsel asking him whether the allegations of habitual cruelty and desertion in his petition were true and Mr. Wray responding that they were l) Justice Murphy denied [5ASR2d38] the motion for a continuance and granted the divorce. He expressed his agreement with Mr. Wray's contention that since both parties wanted to be divorced no purpose could be served by a ten-day delay. Although the judge stated that the request for a continuance was "not unreasonable, " he assured counsel that "Mrs. Wray would have an opportunity to contact you and set it aside [in the] ten days that you are talking about ...... (This was an apparent reference to the ten days after judgment during which the losing party may file a motion for new trial. )

Mrs. Wray did not file a motion for new trial within ten days. On March 5, however, twenty-five days after the date of the decree, she filed a motion to set aside the decree in accordance with Territorial Court Rule of Civil Procedure 60(b). This rule provides that the court may grant relief[5ASR2d39] from a judgment after the expiration of the ten-day period on any of several extraordinary grounds. The grounds for her motion were "newly discovered evidence" and "fraud. " She alleged ( 1) that the decree "was based on untrue statements made by the petitioner at the time of the hearing" and (2) that Mr. Wray was aware when he moved for the expedited hearing that Mrs. Wray had just left Hawaii for a month-long trip to Europe and therefore that counsel would be unable to reach her.

Upon her return to Hawaii on March 1, Mrs. Wray had received her lawyer's messages to contact him. Her reaction upon learning that a divorce had been granted in American Samoa was one of shock and outrage; she had talked with Mr. Wray on the telephone on February 7, just before she left for Europe and he for Samoa, and he had said nothing about reopening the American Samoa proceeding. Mrs. Wray maintains, contrary to the representations that persuaded Justice Murphy to lift the stay order imposed by Chief Justice Gardner, that she has diligently pursued her Hawaii divorce action and that substantial progress has been made in that action. She further maintains that the delay in bringing those proceedings to a final conclusion has been caused partly by a serious accident suffered by Mr. Wray in 1984 and his subsequent recuperation, partly by a serious financial setback suffered in the same year and ensuing legal complications, and partly by Mr. Wray's own delaying maneuvers.

These actions on the part of Mr. Wray, of which he denies some details but which are proved by the affidavits and other exhibits submitted, included:

(1) Failure to sign a negotiated divorce settlement to which he had previously agreed. On September 24, 1984, Mr. Wray's then-counsel wrote to Mrs. Wray's counsel in order "to confirm that we have a settlement in the above-referenced matter based on my client's acceptance of Mrs. Wray's alternative counter-offer ..." It is inconceivable that Mr. Wray's lawyer would have written such a letter without authority to do so. On October 10, 1984, a document incorporating the agreement (which had already been reduced to writing when Mr. Wray's attorney had communicated his client's acceptance of it) was sent to Mr. Wray for his signature. It was never signed. [5ASR2d40]

(2) Failure to inform Mrs. Wray that he intended to renounce the settlement to which he had previously agreed. At the time Mr. Wray received the document he was in the hospital and was physically unable to sign his name. In the same month he suffered a serious financial setback, leading to corporate reorganization proceedings which are not yet resolved. Mrs. Wray maintains that Mr. Wray never told her that he would not sign the agreement, but only that he did not presently have the money to comply with it. Under the circumstances she was willing to wait until the conclusion of the corporate reorganization proceedings. She maintains that her first notice that he had finally renounced the Hawaii settlement was in March of this year when she learned of the decree he had obtained in Samoa. Mr. Wray does not deny this; indeed, the statement in his affidavit that Mrs. Wray "never brought up the proposal [i.e. , the settlement to which he had agreed] with me again" seems implicitly to admit that he never notified her of any intention to renounce it.

{3) Tenacious resistance to discovery requests. At least one controversy over Mrs. Wray's attempts to discover Mr. Wray's assets appears still to be pending in the Hawaii court.

(4) A request in mid-1986, after his Hawaii attorney had requested and been given permission to withdraw, for a continuance in order to find a new attorney. The court granted him "at least three weeks" to do so.

(5) Subsequent failure to retain new counsel in the Hawaii proceedings.

The hearing on the motion to vacate the American Samoa divorce decree was postponed twice at the request of counsel for Mr. Wray.2 The [5ASR2d41] motion was heard on May 6 and the decree was set aside. We declined at that time to decide whether Mr. Wray (a member of the bar in this Territory) had committed "fraud, misrepresentation, or other misconduct" in making an ex parte motion for a hearing at a time when he knew Mrs, Wray's counsel would be unable to reach her, and in withholding his knowledge of her whereabouts from the court even when the judge based his decision on the understanding that Mrs. Wray and her counsel would have ten days after the judgment in which to contact each other and decide whether to move for a new trial.3 We decided, however, that this was at [5ASR2d42] least the sort of " surprise" on which relief can be granted under Rule BO(b)(l). Moreover, Mrs. Wray's affidavits to the effect that substantial progress had been made in the Hawaii proceeding, and that the delays in that proceeding had been partly unavoidable and partly the result of Mr. Wray's own efforts, were "newly discovered evidence" on whether the stay in the American Samoa proceeding should have been lifted.

Mr. Wray now urges us to reverse our ruling and reinstate the divorce decree. He makes three arguments:

(1) A Rule 60(b) motion to set aside a decree " should not be used as a substitute for an appeal " ;

(2) Even if a court finds that a proceeding was tainted by fraud or unfair surprise, or that there is newly discovered evidence which counsel could not have discovered by diligent efforts in the original proceeding, the court should deny a [5ASR2d43] Rule 60(b) motion unless it further finds that the aggrieved party alleges facts which, if proved upon retrial, would result in a decision on the merits. In the case before us petitioner urges that evidence and arguments about whether the stay should have been lifted are irrelevant unless respondent also produces evidence that there is no ground for a divorce between the parties.

(3) Mr. Wray has also submitted his own affidavit contesting Mrs. Wray's version of the reasons for the delay in the Hawaii proceeding.

I. Rule 60 (b ) as a "Substitute for Appeal."

Petitioner is correct in pointing out that a court should not grant a Rule 60(b) motion on the basis of objections that could have been raised in an appeal. Although our decision to vacate the decree was based on surprise and newly discovered evidence, we did comment on other irregularities in the proceeding in which the decree was granted.

It is difficult to imagine circumstances that would justify the denial of a brief continuance requested by an attorney for a represented party who has received less than 24 hours' notice of a hearing in a matter that has lain dormant for three years, who has been unable to contact his client, and who does not know the facts of the case or his client's position on the merits. To proceed immediately to final judgment against a party who is subject to the aforementioned disadvantages would seem to constitute such a gross abuse of discretion that it should surely be reversed on appeal or on a Rule 59 motion for new trial.4 [5ASR2d44] Since objections to the judge's conduct of the proceeding could have been raised by appeal, however (or could have been so raised if Mrs. Wray's counsel had been ale to reach her within ten days of the judgment), petitioner is correct in his contention that we should not consider them on a Rule 60 (b) motion'.

The decree in this case, therefore, should not have been set aside unless the setting aside was justified by facts and arguments that were unknown to petitioner's counsel and therefore could not have been raised by appeal, or unless the failure to bring an appeal constituted "excusable neglect" within the meaning of Rule 60(b)(1). The facts and arguments unavailable to Mrs. Wray's counsel as bases for appeal were (1) the filing of an ex parte motion for an immediate trial of the divorce action at a time when Mr. Wray knew (but the judge and Mrs. Wray's counsel did not know) that Mrs. Wray would be incommunicado for about a month; (2) the representations by Mr. Wray and his counsel that Mrs. Wray had not diligently pursued the Hawaii proceedings and that the condition set by Chief Justice Gardner for lifting the stay order had therefore been met; and (3) her later submission of convincing evidence that she had in fact pursued the Hawaii action diligently, so that the stay should have remained in force.

We conclude that this course of events comprised misrepresentation, unfair surprise, and newly discovered evidence, each of which would be sufficient to justify relief under Rule 60(b). At the very least it is clear that Mrs. Wray's failure to file a motion for new trial within the requisite 10 days ---during which she was still away from home, not in communication with her lawyer, and unaware of the divorce decree, as Mr. Wray knew she would be ---as "excusable neglect" sufficient to justify relief under Rule 60(b).

II. The Likelihood of a Different Outcome on Retrial

Even on the assumption that the decree in this case was tainted by one or more of the circumstances under which a court may grant relief under Rule 60(b), petitioner argues that we had no power to grant such relief because respondent did not fulfil an additional requirement that she must assert "a meritorious defense to the facts supporting the relief granted." Although no such requirement is explicit in the rule itself, [5ASR2d45] petitioner cites numerous cases denying relief under the identical federal rule in the absence of claims or defenses which, if proved, would justify a different result on retrial.

While this court is not bound to interpret its own rules in conformity with every judicial gloss that has been written on the federal rules, we are in full agreement with the cases cited by petitioner. Whether to grant relief from a judgment is a matter of judicial discretion and should only be granted " on such terms as are just. " T.C.R.C.P. Rule 60(b). It hardly seems just to put the parties and the court through a second proceeding when there is no chance that the parties will emerge with different rights and obligations than they had as a result of the first proceeding, however badly flawed it might have been.

The setting aside of the divorce decree was anything but this sort of pointless exercise. In the first place, Mrs. Wray asserted defenses on the merits; in her answer to the petition she specifically denied the allegations of habitual cruelty and desertion. In light of the minimal and highly conclusory evidence adduced in support of these allegations, Mrs. Wray's equally conclusory denials would satisfy the requirement that there be some prospect of a different outcome on retrial.5 [5ASR2d46]

More importantly, the petitioner's insistence that there must be a defense " on the merits " misapprehends the nature of the rule he urges us to apply. A "meritorious defense" is not synonymous with a " defense on the merits ." A defense can be meritorious although it concerns jurisdiction, standing, ripeness, forum non conveniens (the principal issue in this case), or any other issue that might cause a court which had heard both sides of the story never to reach "the merits ." See e.g., Misco Leasing, Inc. .v. Vaughn, 450 F.2d 257 (lOth Cir. 1971) (trial court's decision that it has jurisdiction over the person of the defendant can be relitigated on a Rule 60(b) motion although no other defense is raised).

The application of the "meritorious defense" rule to this case is further obfuscated by petitioner's frequent reiteration of the argument that were is no dispute on the merits because Mrs. Wray also wants a divorce. The parties have been litigating against each other not because they cannot agree about whether they should be divorced, but because they have serious disagreements about what their rights and obligations should be upon dissolution of the marriage. The weight of the evidence on this motion supports Mrs. Wray's contention that Mr. Wray's recent sortie into the High Court of American Samoa was an effort to divest the Hawaii court of jurisdiction to enforce a settlement including detailed provisions for child custody, support, division of property, and assumption of liabilities, which is apparently unacceptable to him, and perhaps also to divest the court of jurisdiction to enforce an order for support pendente lite with which he has not complied. Whether or not these issues comprise[5ASR2d47] " the merits " of the divorce action, they are important questions on which the parties disagree.

We are unpersuaded by petitioner's contention that these issues are immaterial to the Rule 60(b) motion because Justice Murphy made no final order with respect to them. There is some chance Mrs. Wray could eventually obtain the post-divorce relief she seeks by coming to American Samoa to litigate these aspects of her case, but there are important reasons ---including the difficulties a court can encounter in dealing with persons and property outside its jurisdiction, differences in the law (including choice-of-Law rules) applied in different places, and logistical problems inherent in litigating 2500 miles from home ---that could substantially affect both the timing and the ultimate likelihood of any such order.

Nor is it inconsequential that the Hawaii decree would be on the ground that the marriage has been " irretrievably broken, " whereas the order summarily entered in American Samoa brands Mrs. Wray as habitually cruel and a deserter.6 Even if this were the only point of genuine dispute between[5ASR2d48] the parties, Rule 60(b) would authorize relief and the circumstances of this case would convince us that justice requires it.

In any case, Mr. Wray's actions convince us that he agrees with Mrs. Wray's assertion that it would be substantially to her disadvantage to shift jurisdiction of all remaining issues to Samoa. Chief Justice Gardner's order staying the Samoa proceedings was based on his conclusion that it would be contrary to "the ends of justice and fairness" to put her at such a disadvantage. That order was made after full briefing and argument by counsel for both parties. It was summarily vacated on Mr. Wray's explicit and unchallenged representation that Mrs, Wray had unreasonably delayed the Hawaii proceedings. We have concluded, on the basis of evidence unknown to the judge and to respondent's counsel at the time, that this representation was false and that Justice Gardner's decision that Hawaii was the fairest and most convenient forum should therefore not have been disturbed. If we were otherwise correct in this judgment, it is utterly irrelevant that each party wishes somehow and somewhere to be divorced.

The principal purpose and effect of Mr. Wray's motion in the High Court was to divest his wife of the right to proceed in Hawaii. This right is important and potentially fruitful: both parties are obviously convinced that its exercise is likely to result in the ultimate placement of dollars in the pocket of one party rather than the other. A proceeding that divests such a right without notice or the opportunity to be heard cannot be insulated from review by invocation of a rule designed only to prevent relitigation of proceedings which, although tainted, have not worked any real disadvantage on the losing party.

III. The Status of the Hawaii Proceeding

After the hearing on this Motion to Reconsider, Mr. Wray submitted an affidavit to the effect that some of the delay in the Hawaii proceeding has been caused not by himself but by Mrs. Wray. The affidavit alleges that since June of 1986 (the end of the period of "at least three weeks" that the judge gave Mr. Wray to find a new lawyer) Mrs. 'Wray has been free to press for a conclusion of the Hawaii action and has not done so. [5ASR2d49]

Mrs. Wray does not disagree with this allegation, but says she was under the impression that both parties were waiting for the conclusion of Chapter 11 bankruptcy (reorganization) proceedings involving South Pacific Island Airways, Inc. ( SPIA ) , a corporation founded by Mr. Wray which she characterizes as "the parties' principal marital asset. " She attests that "Mr. Wray as never indicated to her that he would not comply with the agreement [i.e. , the Hawaii divorce settlement]; instead he has consistently claimed that he does not currently have any money with which to do so. " She further attests that she believes the SPIA proceedings "are approaching a final disposition, " and that she "was willing to wait until SPIA's financial situation was resolved before moving to enforce the agreement," since Mr. Wray may "then have the funds necessary to implement" this agreement.

Mrs. Wray's affidavit and that of her Hawaii attorney establish that she has not been guilty of unreasonable delay. To begin with, there is a big difference between the eight months (from June 1986 until February 1987) during which she actually failed to act and the five years alleged by counsel for Mr. Wray or the three years cited by Justice Murphy. The record still reflects that most of the delay since 1984 was either unavoidable or brought about by Mr. Wray. Moreover, Mrs. Wray convincingly asserts that Mr. Wray's actions in the course of the Hawaii proceedings had led her to believe he was in no hurry.7 As Mr. Wray himself points out, his recuperation from the accident he suffered in 1984 is not yet complete. With regard to the relationship between the SPIA proceedings and the Wrays' divorce, it is quite plausible that Mrs. Wray saw no point in moving for a final order (which would have brought to a head not only the $500,000 property settlement to which Mr. Wray [5ASR2d50] seems to have agreed but also the many thousands of dollars in overdue alimony and child support which he seems not to have paid) at a time when Mr. Wray would have been unable to comply with it. Nor is it unreasonable, in the context of all the circumstances, for her to be reluctant to move for a final order at a time when the "principal marital asset" is temporarily worth far less on paper than it has been during most of the marriage and than it might be a few months from now, when "she has been informed and therefore believes that Mr. Wray may receive a substantial cash settlement for his interest and continued participation in managing SPIA."8

Finally, even if the duration and circumstances of Mrs. Wray's inaction were sufficient to give us doubts about whether Justice Gardner's order should have been lifted, such doubt should be resolved against the finality of the summary and one-sided process ---characterized by Justice Murphy as "in the nature of a default proceeding" ---that purported to dispose of these complex questions. Klapprott v. United States, 335 U.S. 601 (1948) (amendment of Rule 60(b) in 1948, providing that courts can grant relief not only for the reasons specifically listed but also for any other reason justifying relief, "vests power in courts adequate to enable them to vacate judgments whenever such action is appropriate to accomplish justice"); Tolson v. Hodge, note 5 supra, 411 F.2d at 130 ("It has been held in an extensive line of decisions that [Rule 60(b) is] to be liberally construed in order to provide relief from the onerous consequences of defaults and default judgments."); Tozer v. Charles A. Krause [5ASR2d51] Milling Co., 189 F.2d 242, 245 (1951) ("Any doubt should be resolved in favor of the petition to set aside the judgment so that cases may be decided on their merits." That a trial court applied "a standard of strictness rather than one of liberality in concluding that justice did not require that the judgment be set aside" compelled reversal.)

Conclusions

To reiterate, we find:

(1) The filing of an ex parte motion to vacate a stay in a matter that had been dormant for three years and to proceed to immediate judgement against the respondent, when petitioner (a) had talked with respondent two days before and had said nothing to her of his intention to make such a motion, (b) knew that petitioner would not be reachable by her attorney for about a month, and (c) did nothing to correct the judge's impression that counsel would be able to contact the petitioner within the ten- day period for the filing of a motion for new trial, constituted unfair surprise within the meaning of Rule 60(b).

(2) The false and misleading representations made by Mr. Wray and his counsel to the effect that Mrs. Wray had unreasonably delayed the Hawaii proceedings were misrepresentation within the meaning of Rule 60(b).

(3) The evidence now before the court, unavailable to counsel for Mrs. Wray and to the judge at the time of the summary proceeding in February, concerning the actual conduct and status of the Hawaii proceedings constitutes newly discovered evidence within the meaning of Rule 60(b).

(4) Even if the above circumstances did not establish other grounds for relief under Rule 60(b), they would establish that Mrs. Wray's failure to file a motion for new trial within ten days after the date of the divorce decree was excusable neglect within the meaning of the Rule.

(5) Mrs. Wray has asserted defenses to the allegations of habitual cruelty and desertion which, if proved upon retrial, would defeat the American Samoa divorce action. [5ASR2d52]

(6) Even if there were no dispute between the parties on the grounds alleged in the divorce petition, the question of the fairest and most convenient forum for the divorce proceeding is inextricably intertwined with matters of substance on which the parties do disagree. There is a sufficient likelihood that the summary American Samoa proceeding effected a real change in the situation of the parties that it should be vacated to allow for plenary consideration of all matters in dispute between the parties (including the threshold question of the most convenient forum) after notice and an opportunity to be heard.

The setting aside of the divorce decree leaves both parties exactly as they were on the morning of February 9, 1987. Either party is free to move at any time for an immediate conclusion of the Hawaii proceedings or, with notice to the other party and arguments sufficient to convince the Court that Hawaii is no longer the fairest and most convenient forum, for a reopening of the American Samoa proceedings.

The motion is denied.

_____________________

1 Petitioner's counsel did not even allude to the grounds for divorce in his initial direct examination. At the conclusion of this examination respondent's counsel moved to dismiss, pointing out that the grounds for divorce had not been established. The following exchange ensued:

MR. TULAFONO (counsel for petitioner): Well, Your Honor, if he hasn't cross-examined yet, I would like then to ask the Court to allow me to ask just a couple more questions of Mr. Wray just to repeat what is in his verified [5ASR2d38] petition?

THE COURT: All right, go ahead.

MR. TULAFONO: Q. Mr. Wray, you've stated during the course of the marriage Mrs. Wray has lack of interest [in the] desire[s] of petition[er] and has habitual cruelty towards yourself causing extreme and physical anguish, is that correct?

A. That's correct.

Q. And that Mrs. Wray has deserted you since July 19 of 1982, is that correct?

A. That would be correct.

Q. And then in following with that you have since lived separately as you've previously testified?

A. Yes, she wanted to go off on her own in July 1982. She summarily left the house leaving me with the kids for the better part of the month and the kids went back and forth and up to then through March of 1983 she begged me to leave the house because she wanted to have a complete mind to pursue her own career and finally in March of '83 it got to be impossible for me to remain in the same house.

THE COURT: Gentlemen, I realize that the statute of American Samoa [provides for] divorces on the bases of fault. I think fault has been established in this case... [5ASR2d39]

2 We recount the reason for our delay in hearing the Rule 60(b) motion in response to Mr. Wray's contention, made in connection with a motion filed May 28, 1987, that until the previous week he had had no reason to suspect that the February 10 decree might not be final, and that the sudden and shocking discovery that he was not really divorced was a source of acute mental anguish. In fact, a copy of Mrs. Wray's motion to set aside the divorce decree was served on Mr. Wray's counsel in early March. On March 13, [5ASR2d41] upon the first request for a continuance by Mr. Wray's counsel, this court took the unusual step of issuing a written opinion on a motion for a continuance. We granted the continuance but made it clear that the motion to set aside the divorce decree was receiving " active and serious consideration. " This was done so that nobody in Hawaii would be misled about the status of the American Samoa proceedings. That Mr. Wray apparently did not learn of the motion until two months later was due to difficulties of communication between him and his lawyer. We recount this procedural history not to criticize Mr. Wray or his lawyer but to make it clear that the Rule 60(b) proceedings have been conducted with scrupulous regard for the rights of both parties.

3 We do now decide, on the basis of the numerous affidavits and exhibits submitted by both parties, that the following false or misleading statements constituted misrepresentations:

(a} Petitioner's representation in his ex parte motion to vacate the stay order that "the action in Hawaii has been pending for about five (5) years."

(b) The representation in the same motion that "Paulette Wray has failed to prosecute that action with diligence."

(c) Mr. Wray's testimony at the February 10 hearing that he could "recall no particular request" by Mrs. Wray for a "particular property division or distribution." As the exhibits and affidavits make clear, she had requested a detailed settlement including $500,000 in cash and Mr. Wray's attorney had communicated his client's agreement to this [5ASR2d42] settlement. This misrepresentation was material because a truthful answer might have brought out important facts about the actual status of the Hawaii proceedings, thereby leading the court to conclude that Mrs. Wray had in fact pursued her action with diligence.

(d) Mr. Wray's testimony that "for the past year and a half" he had given Mrs. Wray no funds and that "she has not asked for any." Although perhaps not technically untrue, this statement was highly misleading in that it ignored the continuing effect of a court order obtained by Mrs. Wray in September 1985 (almost exactly a year and a half earlier) requiring Mr. Wray to pay support arrearages. Again, a less misleading answer might have called attention to the diligence with which Mrs. Wray has pursued the Hawaii action.

We make no finding that any of these statements constituted "fraud"; at least some of them may have been honestly believed by Mr. Wray and/or his lawyer, or may have been within the Scope of an attorney's zealous representation of his client. In specifying "fraud, misrepresentation, or other misconduct" as bases for relief from a judgment, however, Rule 60(b) clearly authorizes such relief on the basis of non- fraudulent misrepresentations when justice So requires. [5ASR2d43]

4. Indeed, in rejecting the motion for a ten-day continuance Justice Murphy relied heavily on his belief that Mrs. Wray would be able to file a motion for a new trial within ten days, making any arguments she would have made if she had received notice of the trial. Reasonable people can differ over the extent to which the possibility of a motion for new trial mitigates the unfairness of holding a trial without any notice whatever to the defendant. Justice Murphy's observation, however, underscores the injustice of allowing the February 10 decree to remain final when Mrs. Wray in fact had no reasonable opportunity to file a motion for new trial within ten days.

5 See, e.g., Tolson v. Hodge, 411 F.2d 123 (4th Cir. 1969) (allegation in party's pleading that "the sole proximate cause of the accident was defendant's decedent's negligence" met meritorious defense criterion); Feliciano v. Reliant Tooling Co. , 691 F.2d 613 (3d Cir. 1982) (affirmation by lawyer for insurance company that the law supported his client's contention that its policy did not cover the plaintiff's injury was sufficient to meet meritorious defense criterion on Rule 60(b) motion); Keegel v. Key West & Carribean Trading Co., 627 F.2d 372, 374 (D.C. Cir. 1980) (the meritorious defense criterion is met by "broad and conclusory" allegations so long as they "contain 'even a hint of a suggestion' which, proven at trial, would constitute a complete defense " ) .

At the February 10 hearing, after Mr. Wray's brief testimony concerning his wife's alleged desertion and habitual cruelty and Justice's Murphy's finding that fault had been proven, Mrs. Wray's attorney stated that "the [5ASR2d46] grounds have been established as sufficient to my needs. " If, as petitioner suggests, this should be construed as a judicial admission, it was clearly an admission that Mrs. Wray had not authorized her attorney to make and would not have authorized him to make if she had been given an opportunity to discuss the case with him prior to the hearing. It was therefore not effective as a waiver of her right to deny that she was habitually cruel or had deserted Mr. Wray. See In re Gsand, 153 F.2d 1001 (3d Cir. 1946), and authorities cited therein. [5ASR2d47]

6 The statutes of American Samoa do not provide for divorce on the ground of "irretrievable breakdown. " Unlike the statutes of Hawaii and most other states, the territorial statutes provide only for "fault- based" divorce unless the parties have been living separately for more than five years. SeeA.S.C.A. §§ 42.0201-08; Lea'e v. Lea'e, 3 A.S.R.2d 51 (1986). The territorial Senate recently debated and emphatically rejected a bill (submitted by the Governor at the suggestion of the author of the present opinion) that would have allowed "no-fault" divorce after only two years of separation. Petitioner's assertion that there is no difference "on the merits" between the "habitual cruelty and desertion" divorce he seeks here and the "irretrievable breakdown" divorce respondent seeks in Hawaii amounts to a contention that there is no difference between the law the Fono enacted and the law it rejected. Even if the court were otherwise disposed to accept the argument that "since both parties want a divorce, what's the big deal?" our responsibility to enforce the statutory law of American Samoa precludes us from so doing. [5ASR2d49]

7 Mr. Wray could easily have disabused his wife of this notion, but did not even arguably do so in time for her to have taken any action in the Hawaii proceedings before he moved to lift the stay in Samoa. On February 7, the day before Mrs. Wray left for Europe and Mr. Wray for Samoa, he mentioned the desirability of concluding a divorce in order that they could become "friends" once again. He proposed, however, no particular terms or timetable and did not mention the possibility of reopening the Samoa proceedings. [5ASR2d50]

8 We express no opinion on the merits of the substantive questions lurking behind the parties' positions on procedural matters. We cannot competently decide, on the state of the present record, who really owns the stock in SPIA or whether Mr. Wray should have signed the agreement to which his attorney agreed in 1984. If these matters are to be resolved in this court it should be at the conclusion of a trial with full briefing and argument. We merely conclude that in the context of the whole history of these proceedings Mrs. Wray's inaction for a few months during 1986, even if it was partly motivated by considerations of strategy, does not constitute unreasonable delay.

West; West v.


RORY KARL WEST, Plaintiff

v.

MATA UTU WEST, Defendant

High Court of American Samoa

Trial Division

DR No. 28-87

July 28, 1987

Territorial statute clearly prohibits court from granting divorce absent proof of "fault-based" statutory criteria, even in case where respondent had stipulated to default judgment and waived the right to contest the divorce action. A.S.C.A. §§ 42.0202, 42.0205-06.

Before KRUSE, Associate Justice, TAUANU'U, Chief Associate Judge, and OLO, Associate Judge.

Counsel: For Plaintiff, William Reardon

Petitioner seeks a decree of divorce, dissolving his marriage to the respondent on the grounds of "habitual cruelty and ill usage" under A.S.C.A § 42.0202. Petitioner appeared with counsel while respondent did not. Respondent has filed with the Clerk a document acknowledging service of the Summons and Complaint, stipulating to default judgment, and waiving any right to contest the action.

Petitioner testified that he and his wife have been separated since 1986 with the parties agreeing to go their own separate ways. For some time prior to the separation, the marital partnership had, for all intents and purposes, broken down. The reality with the parties is that they have strayed from each other with differences arising in wants, interests and social pursuits. There has been no social interaction as a family for some time; however, petitioner was quite candid in stating his reluctance to point the blame on anyone. Rather, he has viewed the degeneration of the marriage as being attributable to the parties' environment and [5ASR2d89]

social surroundings and in this regard, petitioner feels it would be unfair to assign fault to anyone. Both parties accept that with their general situation as it is, it would be intolerable for both of them to persist with the status quo.

Notwithstanding the apparent incompatibility which seems to have arisen between the parties, and notwithstanding their agreement to seek a divorce, it is the opinion of the court that no grounds have been established upon which a divorce decree may issue under the laws as existing in American Samoa.

The territorial statutes (A.S.C.A. §§ 42.0201- 08) ref lect " fault- based " divorce as opposed to the "no fault " concept used in many other jurisdictions which recognize " incompatibility" or "irreconcilable differences" as grounds to dissolve a marriage. Ah Mu v. Ah Mu, CA No.3073-75 (1975); Lea'e v. Lea'e, 3 A.S.R.2d 51 (1986). The only "no fault" based situation provided in American Samoa is continuous and voluntary separation for an extended period of five years. See A.S.C.A. § 42.0202(5).

It is the province of the Fono, and not of the Court, to decide between " fault- based " and " no fault-based" divorce. Ah Mu v. Ah Mu, supra. Irrespective of the awareness that for all practical intents and purposes a marriage may have broken down, and that continuance of the marriage may have a more negative effect on the parties than its termination, our duty is quite clear with the unambiguous enactment. As this court observed in Wray v. Wray, 5 A.S.R.2d ___ (1987), a recent legislative review opportunity resulted in the Fono turning down a bill proposing to reduce the voluntary separation period, above-mentioned, from five years to two years. Legislative policy in American Samoa on "no fault" divorce is thus made very clear.

Even though respondent has agreed not to contest the proceedings, this Court is obligated to " examine all parties and witnesses , and...take all evidence," and must dismiss the petition if the allegations thereunder have not been proven. A.S.C.A. §§ 42.0205-06; Chun v. Chun, 3 A.S.R.2d 23 (1986). See also T.C.R.C.P. Rule 55(e).

On the foregoing, the petition is dismissed.

Sataua v. Himphill


Insurance company may be sued directly for the wrongful acts of its insured, A.S.C.A. § 22.2018

Agency relationship exists between owner of vehicle and one who drives the vehicle in furtherance of the owner's interest or enterprise.

A garageman who had possession of a vehicle in order to repair it and who was outside the direction or control of the owner was an "independent contractor" for whose negligence the owner could not be held liable under a theory of agency or master/servant liability.

A vehicle owner may limit the time, place, and purpose of the use of his vehicle to which he consents and thereby assume liability only for negligence that occurs within the scope of his consent. A.S.C.A. § 22.2003.

A vehicle owner cannot restrict his consent to a particular manner of driving in order to escape liability under automobile consent statutes. A.S.C.A. § 22.2003.

Vehicle owner who took his car to a garage for repairs did not consent, either expressly or implicitly, to use of the car by the repairman or his associate for purposes totally unrelated to the repairs.

Before KRUSE, Associate Judge, Associate Justice, TAUANU'U and TUIAFONO, Associate Judge. [5ASR2d62]

Counsel: For Plaintiff, Charles Ala'ilima
For Defendants, Roy J.D. Hall

Plaintiff, Itai Sataua, while a pedestrian on the Fagasa highway, was struck from the rear by a vehicle and thereby suffered injury. Plaintiff sues the owner of the vehicle, the driver, and Continental Insurance Co. , which insured the vehicle. Service of process was not achieved on the driver and no appearance has been made on his behalf. Trial commenced on July 15, 1987, and the hearing was continued over to July 21, 1987, owing to the unavailability of witness Dr. Tuato'o, who was involved with emergency surgery. On the latter date, Dr. Tuato'o was again unable to attend court because of his medical duties and since the area of his testimony would be concerned only with the question of damages, the parties, rather than further defer the proceedings, stipulated to bifurcate trial and submit the issue of liability to the Court.

FACTUAL BACKGROUND

The registered owner of the vehicle is defendant Mrs. Esterita Himphill. She is also the named insured on a compulsory third party liability insurance policy issued by Continental Insurance Co. , in accordance with the provisions of the Compulsory Insurance Act, A.S.C.A. § 22.2001 et. seq.

While Mrs. Himphill was away on vacation, her husband had arranged for a certain garage in Fagasa to do body repair work to the vehicle. On an appointed day, Mr. Himphill had the vehicle picked up and taken to the garage for the requested repairs. He had also arranged for the vehicle to be returned to his home upon completion of repairs and in the meanwhile, he departed to Western Samoa for a few days.

Upon Mr. Himphil's return to the territory, he learned that the vehicle, while still in possession of the garage, was wrecked in an accident. The evience showed that one Tanielu Satiu had taken the vehicle, in the course of which a collision arose involving the plaintiff. It was not clear whether Tanielu was an employee of the garage or not, however he lived with the garage owner and thereby managed access to the car keys. He had taken the vehicle for his own purposes and while returning to Fagasa on a Saturday evening in [5ASR2d63] an intoxicated state, he ran the car to one side of the road, striking plaintiff, and then attempted to race off again but drove to the opposite side of the highway and ran the vehicle against a breadfruit tree.

It was clear on the testimony of eyewitnesses that Tanielu, at the time, was operating the vehicle in a negligent manner, and as a proximate result of that negligence, plaintiff suffered multiple injuries. The question before us, though, is whether the vehicle owner can be held liable under the circumstances, as well as her insurance carrier, which is properly joined pursuant to the right of direct action provision of the Compulsory Insurance Act, A.S.C.A. § 22.2018.

LIABILITY

Plaintiff urges alternative foundations for liability: firstly, on the basis of "consent" under the Compulsory Insurance Act; and secondly, on the basis of a "principal/agent" relationship between Himphill and the garage owner. On the latter alternative, plaintiff further urges the Court to be mindful of "the generally expansive interpretation of vicarious liability in Tung v. Ah Sam, 4 A.S.R. 764 (1971). "

Defendant, on the other hand, contests the existence of a "principal/agent " relationship on the reasoning that the garage owner is an "independent contractor" whose injurious acts may not be imputed to the vehicle owner. Further, defendant contends that the facts do not show the existence of "consent" necessary to sustain statutory liability.

For purposes herein, the acts of Mr. Himphill in garaging the vehicle may be attributed to Mrs. Himphill, as the registered vehicle owner, under an agency foundation. Mr. Himphill acted at all relevant times in furtherance of the vehicle owner's purpose and interest.l[5ASR2d64]

We consider plaintiff's contentions in the reverse order presented to us.

I. Agency

As stated above, plaintiff urges consideration of an "expansive" interpretation of vicarious liability said to be exemplified in Tung v. Ah Sam, supra. The Court is unclear with this reference InTung v. Ah Sam, liability of the taxi owner and his insurer for the tortious conduct of the driver employee were founded on: the familiar common law master/servant relationship and standards imposing a high degree of care on common carriers towards the safety of their passengers; and statutory liability for the injurious conduct of a driver operating a vehicle with "express or implied") consent We recognize "expansive" legislative treatment to accommodate the impact of the automobile, on society,2 as well as liberal construction of the Compulsory Insurance Act,3 but [5ASR2d65] beyond that the precedents of this Court have gone no further in extending vicarious liability.

The agency situation advanced by plaintiff is that the vehicle repairman, Ieremia Seigafo, is an employee of the Himphills, and therefore the latter are vicariously liable for the wrongful acts of "Ieremia and his people." In answer to the defendant's position that Ieremia is an "independent contractor," plaintiff argues that the facts do not establish that Ieremia is engaged in the activity of vehicle repairs, and that no evidence has been presented that Ieremia has a licensed business establishment, which would evidence independence of control.

We are unable to agree with plaintiff, and we draw different conclusions from the evidence. Mr. Himphill testified that the vehicle was delivered to a garage in Fagasa for body work, and while the testimony did not enlighten us one way or the other on the repairman's background, Ieremia is not any less an independent contractor merely because of the possibility that body work may not be his regular trade and that he may not be licensed. In Yearwood v. Peabody, 164 S.E. 901 (Ga. App. 1932), a casual repairman, who was neither a mechanic by trade nor generally engaged in the business of repairing automobiles, was nonetheless found to be an independent contractor. The Court so held since the labor or work involved was independent of the vehicle owner. See also De Loach v. Hicks, 177 S.E. 822 (Ga. App 1934). It is therefore relevant to look for control or absence of control by the vehicle owner as opposed to the background of the repairman in determining their relationship for purposes of liability questions.

At common law, it is recognized that a garageman who has possession of a vehicle for the purpose of repairing it, free from direction or[5ASR2d66] control by the owner, becomes the bailee of the vehicle as "independent contractor" and the vehicle owner therefore is not liable for injury sustained as a result of the negligent operation of the vehicle. 60A C.J.S. Motor Vehicles §§ 438, 1026 et. seq.

On the facts of the present case, there was nothing in the evidence to point to anything but an independent contractor relationship. There were no directives by Mr. Himphill to the garage to evidence control of any sort over the manner in which the repair work was to be executed. In fact, after the vehicle was turned over, Mr. Himphill went to Western Samoa for a few days, anticipating the repairs to be complete upon his return. He was merely interested in the result of the work and not how Ieremia undertook it. In these circumstances we conclude against plaintiff's agency alternative, finding a "respondeat superior" theory of liability to be inapplicable on the facts.

II. Consent

We go on then to consider whether there is statutory liability upon the basis of "express or implied consent". A.S.C.A. §§ 22.2003.

The facts point to consent inasmuch as Mr. Himphill had arranged for the vehicle to be picked up for repairs and then for redelivery to him, subsequent to repairs. But then can it be said of this manifestation of express consent the vehicle to be driven to and from the garage--- that unlimited permission therefore follows during the interim possession of the garage owner?

Plaintiff argues that it may so be said. The submission is that A.S.C.A. § 22.2003 does not distinguish between consent for a specific use on the roadway and general consent. To permit such a distinction would defeat the purposes of the statute by allowing owners the convenience of avoiding liability by imposing conditions on any grant of permission.

The argument is appealing, as it raises subjectivity on the art of defendants, and hence the statute is susceptible to being rendered nugatory. The courts have recognized that an owner cannot restrict the "manner" in which the vehicle is being operated in order to escape statutory liability. For example in Henrieta v. Evans, 75 P.2d 1051 (Cal.1938), the Court said: "... if [5ASR2d67] the owner permitted the use of the car... though he gave specific instructions as to the manner of operation, the speed and care in driving, etc. , it would not be reasonable to hold that the use was without permission if any of these detailed instructions were violated, for in such case the liability of the owner could in almost every case be defeated by some showing of violation of authority. " 75 P.2d at 1053 (citations omitted) .

On the other hand, this is not to say that "consent" may not be limited. The courts have also recognized that consent, as envisioned by the automobile consent enactments, may be limited in scope as to time, place, and purpose. Union Trust Co. v. American Commercial Car Co., 189 N.W. 23 (Mich. 1922); Heavilin v. Wendell, 241 N.W. 654 (Iowa 1938); Henrieta v. Evans, supra; Krausnick v. Haegg Roofing Co., 20 N.W.2d 432 (Iowa 1945).

In the light of the above we are unable to conclude on the evidence that Tanielu's use of the vehicle for a Saturday night excursion came within the purview of Mr. Himphilrs expressed consent for the vehicle to be driven to and from the garage. The evidence did not show any connection between Tanielu's driving of the vehicle and any referable purpose for which the vehicle was turned over to the garage by Mr. Himphill.

We next consider implied consent. Unlike express consent which is affirmative in character and directly given, the cases have spoken of "implied consent" under the statute with respect to the omnibus clause of a liability policy as involving "inference or circumstances arising from a course of conduct or relationship between the parties in which there is mutual acquiesence or lack of objection under circumstances signifying assent." Allstate Ins. Co. v. State Farm Mutual Automobile Ins. Co. , 195 S.E.2d 711, 713 (S. Car. 1973) .It "indicates a sufferance of use or a passive permission deduced from failure to object to a known past, present, or intended future use under circumstances where the use should be anticipated." Bradford v. Sargent, 27 P.2d 93, 96 (Ca. 1934).

In the present matter, the evidence showed no other relationship or course of conduct between the Himphills and Ieremia, save this instance of garaging the vehicle for body work. In such a context, the courts have found "implied consent" where the nature of the work requested is such as[5ASR2d68] to suggest or indicate to a reasonably prudent person that the car must be or will be driven to accomplish the work or repair. Zuckerman v. Parton, 184 N.E. 49 (N.Y. App. 1933). No such circumstances existed here. Mr. Himphill testified that the garage had no reason to test drive or otherwise use the vehicle. The repairs requested had nothing to do with mechanical work, it was for body repair and a paint job. Even if this factor could be conceded to plaintiff and the vehicle could somehow be expected to be on the roads consequent to repairs, the Court is not able, on the facts, to infer implied consent for use of the vehicle by Tanielu for reasons entirely unrelated to why the vehicle was with the garage in the first place. To do so in the name of liberal construction and expansive interpretation would take us into the realm of the imaginative, the speculative, and indeed the legislative. The statutory criterion is "consent" and that fact must appear on the evidence in order to bring the wrongful acts of a driver within the coverage of compulsory insurance policies.

Finally, plaintiff also suggests a theory of liability based on the owner's relaxed control over access to the vehicle and suggests a "duty" to keep or prevent his vehicle from improper or unauthorized use. The plaintiff alludes to Minute v. Hartford Fire Insurance, CA No.3260-75 (1976), and Te'o v. Continental Insurance, AP No.16-84 (1985), which cases involved the factual situation of parents leaving the car keys lying around and accessible to errant children. In the Minute case, the Court found the absence of implied consent and the result is thus inapposite to plaintiff's position. The Te'o matter is factually distinguishable, as there the evidence pointed to past conduct and a relationship which gave rise to sufficient inferences of acquiescence signifying consent. That is not the case here.

The contention, however, approaches the "special circumstances" rule applied in some states. This is a variant of the "entrustment " measure and renders an owner liable, for negligently leaving .keys in the car, to third persons injured by a thief who foreseeably steals the vehicle. See. e.g. Hoskin v. Robles, 159 Cal. Rptr. 369 (1979).

The facts here do not bear out such "special circumstances" and we leave the applicability of such rule to another day. [5ASR2d69]

CONCLUSION

On the foregoing, it is the conclusion of the Court that defendants Esterita Himphill and Continental Insurance are not liable to plaintiff. As against these defendants, the matter is dismissed and accordingly, it is so ORDERED.

_____________________

1 The vehicle was purchased by both Mr. & Mrs. Himphill for their mutual use. For practical purposes they jointly held the car, however we need not decide in this matter whether or not Mr. Himphill was an "owner" for purposes of the Compulsory Insurance Statute.

2 It has been said the liability under, 'automobile consent enactments' is purely the result of "legislative fiat in cases where no agency, master and servant or other relationship existed through which the negligence of the driver could be imputed to the owner." Lind v. Eddy, 6 N.W.2d 427, 431 (Iowa 1942). In effect an arbitrary statutory agency is created, which results in vicarious liability. Prosser & Keeton On Torts § 73, p. 527 ( 5th ed. 1984).

3 Tung v. Ah Sam, supra. Unrelated to statute, some Courts have enlarged on the doctrine of "negligent entrustment" . (Liability here is primary and not imputed. ) Notably, the Courts of Florida have categorized automobiles as "dangerous instrumentalities" for which the owner is held responsible when operated negligently by another. The "dangerous instrumentality" rule is purely policy in origin, InForemost Dairies v. Godman, 26 So. 2d 773 (Fla. 1946), the Supreme Court of Florida reasoned that while an owner's entrustment may not in itself be wrongful, he is nonetheless held liable " ... to insure his neighbor against any consequent harm not due to some cause beyond human foresight." Id. at 774. The rule has not been followed in other states and remains peculiar to Florida. Prosser, p. 524; cf. [5ASR2d65] Castillo v. Bickley, 363 So. 2d 792 (Fla. 1978) , where the court held the " dangerous instrumentality" rule to be inapplicable to a garageman who is an independent contractor. The policy behind the Florida rule is "financial responsibility," and the Fono has made such a policy statement with the enactment of the Compulsory Insurance Act. We need not therefore consider the desirability of the Florida policy.See Foma'i v. Samana, 4 A.S.R.2d 102 (1987).

American Samoa Gov’ t v. Masaniai,


AMERICAN SAMOA GOVERNMENT

v.

MALESALA TAULAGA MASANIAI, Defendants

High Court of American Samoa

Trial Division

CR No. 9-87

September 14, 1987

Prisoner serving a term of detention as a condition of probation was under the direct jurisdiction of the court, which had the power to prescribe conditions of detention.

Where court had ordered that prisoner not be allowed to leave correctional facility without permission of the court except for emergency medical treatment, prison officials had no authority to allow prisoner to appear in court for post conviction motions without requesting permission of court .

Court's purpose in imposing detention as a condition to probation, during which jurisdiction over the prisoner remains with the High Court rather than with prison officials, is to enable the court to monitor and control the extent to which prisoners are allowed to leave the correctional facility.

Before REES, Chief Justice.

Counsel: For the Government, William Van Hook, Assistant Attorney General
For Defendant, Soli Aumoeualogo, Public Defender

At the hearing on the latest of several post trial motions by Mr. Masaniai, the Court observed the presence of Mr. Masaniai in the courtroom. This was something of a surprise, since (1) his presence was unnecessary for the motion that was being heard; (2) Mr. Masaniai is serving a term in the correctional facility as a condition of [5ASR2d153] probation, is therefore under the direct jurisdiction of the Court, and is subject to a Court order "that he not be released for any reason except with the permission of the Court; and (3) the Court had reminded the Government of this on at least one prior occasion.

The Court requested an explanation from counsel for the Government. Counsel has notified the Court that the response of the warden and the Commissioner of Public Safety is that "It is their interpretation of the sentencing order that Court appearances do not constitute a release program, and as such it was not a violation of the order to allow Mr. Masaniai to come to Court for post conviction motions. "

This interpretation is incorrect. As the Court has made clear orally and in writing on a number of occasions, prisoners who are under the direct jurisdiction of the Court are not to be released for any reason without the permission of the Court. The only exception to this rule is emergency medical treatment.

The Justices of the High Court have imposed detention as a condition of probation in a number of cases, including this one, precisely in order to monitor and control the extent to which these prisoners are allowed to leave the correctional facility. Although the statute allowing the Court to impose such detention requires that such a sentence be substantially shorter than would be permissible if the prisoner were under the jurisdiction of the warden rather than the Court, the Justices have come to believe that a year or two of genuine incarceration may be a more effective punishment than a longer sentence that is not really served. Until about a year ago prisoners were being routinely released back into the community under such pretexts as "work release" and "weekend release." The abuse of these programs seems to have diminished as a result of the Court's efforts as well as those of the Governor and the Commissioner. The point of these efforts, however, is not just to require a prisoner who wants a trip into town to use a different reason than he would have used last year; it is to put criminals in jail rather than elsewhere.

This is not to say that release will never be granted by the Court. Obviously, if a prisoner's presence is necessary for the fair hearing of a post trial motion, arrangements will be made for [5ASR2d154] him to be brought to the courthouse. There are even legitimate occasions for work release and other programs that allow for a prisoner's reintegration into the community. In the case of prisoners who are within the Court's jurisdiction, however, no release will be granted until the Court is satisfied that it does not pose a threat to the community. Danger and necessity are difficult questions to judge; in the case of prisoners who have been sentenced to detention as a condition of probation, the judgment must be made by the Court rather than by prison officials or the prisoner himself.

Amerika Samoa Bank v. R. Pritchard Ground Services, Inc.,


AMERIKA SAMOA BANK, Plaintiff

v.

R. PRITCHARD GROUND SERVICES, Inc.,
INTERESTS PRITCHARD EQUIPMENT, Inc.,
PRITCHARD AIRPORT SERVICES, Inc.,
PRITCHARD TRAVEL SERVICES, Inc.,
RON PRITCHARD, JETTE PRITCHARD, V. PAUL WILLIS,
and DENVER SPENCER, Jr. , Defendants

High Court of American Samoa

Trial Division

CA No.73-86

August 11, 1987

Failure of co-signor of promissory note to appear in action on the note was "excusable neglect" justifying relief from default judgment where co- signor had always relied on her husband to manage the family's legal affairs, husband had assured her that they would be represented by counsel, and she was unaware of judgment against her until well after its entry. T.C.R.C.P. Rule 60(b).

Co-signor's allegation that bank had secured her signature on promissory note through specific material misrepresentation was a "meritorious defense" creating the possibility of a different result on retrial which, coupled with her excusable neglect to appear in lawsuit on the note, entitled her to relief from resulting default judgment. T.C.R.C.P. Rule 60(b).

Defendant seeking relief from default judgment on the ground that her failure to defend resulted from excusable neglect must not only prove that her neglect was excusable but also allege facts which, if proved upon retrial, would be likely to produce a different outcome. T.C.R.C.P. Rule 60(b).

Once a party has established a "meritorious defense" creating the possibility of a different result on retrial, court deciding whether to grant relief from judgment against that party should not assume the truth of opposing party's factual allegation that would, if proven upon retrial, [5ASR2d107] produce the same result as in the judgment from which relief is sought. T.C.R.C,P. Rule 60(b) .

Rule allowing relief from default judgments should be liberally construed; any doubt should be resolved in favor of setting aside the judgment so that the case may be decided on its merits. T.C.R.C.P. Rule 60(b).

Before REES, Chief Justice,

Counsel: For Plaintiff, William Reardon
For Defendant Jette Pritchard, Roy J.D. Hall, Jr.
For Defendants R. Pritchard Ground Services et al., Togiola T.A. Tulafono

On Motion for Relief from Judgment:

On October 17, 1986, plaintiff took a default judgment for $200,000 plus interest, attorney fees, and costs against several corporations whose president was Ron Pritchard. Default judgment was also taken against Mr. Pritchard and his then-wife, Jette Pritchard, who had co-signed the note giving rise to the claim.

On May 11, 1987, Jette Pritchard moved for relief from the judgment in accordance with Rule 60(b) of the Territorial Court Rules of Civil Procedure. She alleges that the Court never obtained jurisdiction over her because court records do not reflect that she ever received a copy of the complaint. She further alleges that she had always relied on her husband to deal with the family's legal affairs; that her husband had assured her that they would be represented by counsel in this litigation; that she was unaware that judgment had been taken against her until April 1987 when plaintiff approached her about a refinancing plan as an alternative to execution on the judgment; and that she immediately thereafter retained separate counsel to file this motion for relief from the judgment.

Assuming that the Court did obtain jurisdiction over Mrs. Pritchard notwithstanding the failure of the Court file to reflect proper service, Mrs. Pritchard has nevertheless demonstrated that her failure to appear in the action was "excusable neglect " within the meaning of Rule 60(b). She also asserts affirmative [5ASR2d108] defenses some of which, if proved at trial, would justify a result different than that of the default proceeding.1 "It has been held in an extensive line of decisions that [Rule 60(b) is] to be liberally construed in order to provide relief from the onerous consequences of defaults and default judgments." Tolson v. Hodge, 411 F.2d 123, 130 (4th Cir. 1969) . "Any doubt should be resolved in favor of the petition to set aside the judgment so that cases may be decided on their merits. "Tozer v. Charles A. Krause Milling Co. , 189 F.2d 242, 245 (3d Cir. 1951). See generally Wray v. Wray, DR No. 92-83, 5 A.S.R.2d ---(1987) (Order and Opinion on Motion to Reconsider) and authorities cited therein.

1 Aside from reiterating that the Court had no jurisdiction over her, Mrs. Pritchard says the interest rate "may be usurious " depending on information to be sought by discovery; that the contract was unenforceable against her because the plaintiff and defendant Ron Pritchard used "undue influence to obtain [Mrs. Pritchard's] execution of the said loan documents and that [she] did not fully understand the terms of the loan contract and their foreclosure remedies and further felt that under the circumstances she had no choice" ; that plaintiff made material misrepresentations to the effect that the assets of the corporate borrowers were sufficient to cover the loans; and that the plaintiff has entered into a contract with Mr. Pritchard and the corporate defendants that "operates as a novation to relieve Jette Pritchard ." Some of these allegations are vague, and the last one seems most unlikely. At the very least, however, the allegation that the Bank made a specific material misrepresentation in order to secure her signature meets the requirement that she allege a meritorious defense. It is not necessary that she prove at this stage in the proceedings that she would prevail on retrial, only that she establish the possibility. Regarding the allegations of misrepresentation and undue influence, counsel for plaintiff has responded that "this Defendant is a sophisticated business person with experience in these matters and not some naive housewife." Although this would be material in a trial, we cannot assume it for the purpose of deciding a Rule 60(b) motion. [4ASR109]

The motion is granted and the judgment against Jette Pritchard is vacated.

American Samoa Gov’t; Tevaseu v.


FATU TEVASEU and PIO TAUASOSI, Plaintiffs

v.

AMERICAN SAMOA GOVERNMENT, THE COMMISSIONER OF PUBLIC SAFETY, and TAAI GALOIA, LANU MAPU, FOTU LEUTA, TOO LEAUPEPE, MAU MAU JR. , NIKOLAO PETELO, TAUAI, and other unnamed defendants, individually and in their capacities as employees the American Samoa Government, Defendants

High Court of American Samoa

Trial Division

CA No. 88-87

July 8, 1987

Statute providing that a judgment against or payment of a claim by the territorial government bars an action by the claimant against the responsible employee merely proscribes double recovery for a single harm, not suit against the individual government employee in the first instance. A.S.C.A. § 43.1207

Territorial statute has the effect of immunizing territorial employees from personal liability for torts they commit while acting within the scope of their employment, provided that the injured person chooses to proceed against the government employer. A.S.C.A. § 43.1211(a).

Individual government employee should not be stricken as defendant in a suit against territorial government under government tort liability statute unless and until it is shown that the employee was acting within the scope of his employment at the time of the alleged injury. A.S.C.A. § 43.1211(a) .

Complaint alleging facts which could. if proved at trial, warrant statutory remedy would not be dismissed for failure to state a claim, despite alternative possibility that case could prove to be within exception to statutory remedy. T.C.R.C.P. Rule 12(b)(6); A.S.C.A. § 43.1203(b)(5).

Complaint alleging "wrongful imprisonment in violation of plaintiff's constitutional rights"
[5ASR2d11] sufficiently raises constitutional claim despite failure to cite specific provisions.

Before KRUSE, Associate Justice, AFUOLA, Associate Judge, and VAIVAO, Associate Judge.

Counsel: For Plaintiffs, Asaua Fuimaono
For Defendants, Martin Yerick, Assistant Attorney General

Plaintiffs herein have filed an action in damages against the American Samoa Government, the Commissioner of Public Safety, and several named Officers of the Department of Public Safety. Defendants have filed a motion seeking to:

(a) have the Commissioner and named officers stricken as party defendants; and

(b) to dismiss the complaint for failure to state a claim.

MOTION TO STRIKE:

The defendants argue that the complaint has been filed under the Government Tort Liability Act (GTLA) and pursuant to A.S.C.A. § 43.1207 thereof, the remedy provided against the government is exclusive so as to bar suit against employees of the government whose acts or omissions gave rise to the claim. The provision cited is not apposite l and defendants would do better to look to A.S.C.A. § 43.1211(a).

This enactment provides that the remedy by suit against the government under the provisions of GTLA, and arising by reason of the acts or omissions of a government employee, while acting under the scope of employment, shall be exclusive [5ASR2d12] of any other civil action or proceeding against such employee.

While this provision has the practical effect of rendering a government employee immune from suit if an action is availed under the GTLA, such immunity is available only in the case where the employee is "acting within the scope of his office or employment" . This is a factual question open on the pleadings for determination, and theoretically, suit against the individual government employees before the Court is available if it is the case that the said employees' acts or omissions complained of were made outside the scope of employment.

Accordingly it is concluded that a case against the individual employees is stated, and the motion to strike denied.

FAILURE TO STATE A CLAIM

Defendants' position here is that plaintiffs' claims for false arrest are barred by statute, specifically A.S.C.A. § 43.1203(b)(5). At least as it implicates the government, the statement is valid in vacuo, but defendants' characterization of plaintiffs' action as one for false arrest is far from conclusive at this stage. In the light of the liberal rules of pleadings, the complaint alleges facts which seem to admit treatment of the claim(s) as coming within the non-excepted categories of the GTLA.

Defendants further attempt to bolster argument by saying that plaintiffs have not availed themselves of a Bivens type cause of action, Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), and that no constitutional provisions are cited in the complaint. The Court is uncertain as to the intended impact of the reference, but if an alternative cause is being suggested, paragraph 13 of the complaint alleges wrongful imprisonment of plaintiff Tevaseu in violation of his constitutional rights. It would seem that the complaint sufficiently notices such cause.

The motion is denied.

It is so ORDERED.


1 This enactment speaks of " judgment " against, or payment of the claim by, the government, which bars suit against the employee. It proscribes double recovery and not suit against the individual government employee in the first instance. Moananu v. ASG, CA No.133-85 (1986), citing Henderson v. Bluemink, 511 F.2d 399 (D.C. Cir. 1974), for comparable federal experience with the corresponding provision in the Federal Tort Claims Act.

Fiu v. Fiu,


FA'AlU FlU, Petitioner

v.

GAULEMALIE FlU, Respondent

High Court of American Samoa

Trial Division

DR No. 31-87

September 1, 1987

Party seeking divorce must prove entitlement under statutory criteria even when respondent does not answer or appeal. A.S.C.A. 42.0205, T.C.R.C.P. Rule 50(e).

Proof of his wife's adulterous activities entitled petitioner to divorce decree when wife's counter- allegations of adultery were not proven by credible evidence.

Before KRUSE, Associate Justice, and LUALEMAGA, Associate Judge.

Counsel: For Petitioner, Albert Mailo
Gaulemalie Fiu pro se

Plaintiff files for divorce upon the grounds of adultery and "ill usage and habitual cruelty. " The petition does not seek ancillary relief in connection with custody of the parties' minor children, nor in connection with support responsibilities.

Respondent herein did not file an answer to the petition and, while respondent is technically in default, the Court nonetheless required petitioner to be put to proof in accordance with T.C.R.C.P. Rule 55(e), to establish his right to relief by satisfactory evidence.

At the conclusion of petitioner's evidence and examination of the petitioner by the Court in accordance with A.S.C.A. § 42.0205, the Court determined from the evidence presented that the case of the petitioner had been proven, and granted the petition. At this point, the respondent, who

[5ASR2d147] had not earlier come forward when the case was called, requested of the Court to be heard. The matter was reopened, and the Court heard from the respondent.

Respondent testified that she was not the only adulterous party, however her testimony was conflicting. At first she stated that she was seduced into an adulterous affair with the complicity of her husband and the third party involved. Later on, respondent testified that she never engaged in any adulterous relations with this third party.

Respondent's primary point, as far as the Court could gather, was to impress upon the Court that petitioner was also guilty of wrongdoing in order to mitigate her occasions of infidelity. Respondent countercharged in her testimony that petitioner was cohabiting with a fellow employee; and that this cohabitation had resulted in the fellow employee's giving birth to a child of petitioner's.

When respondent was questioned as to the source of her knowledge in connection with her allegations, she stated that her information was gained from certain members of her family. She had no direct knowledge herself save to the extent that she had seen her husband's alleged paramour driving around in her husband's pickup truck during working hours.

Petitioner, on rebuttal, testified that at the time he was Assistant Manager for Food and Beverage at the Rainmaker Hotel, and in fact his vehicle was frequently used by his subordinates to make purchases for the Hotel. The fellow employee who was accused as his cross co-respondent, was one of a number of Hotel employees who used petitioner's vehicle during working hours. He had put this explanation to his wife before and also explained to her that the woman who was the subject of her suspicions was already a happily married woman. Consistent with petitioner's responses to the Court's earlier examination, petitioner denied any wrongdoing on his part.

After weighing the testimony of both parties, the Court concludes that the evidence preponderates in favor of petitioner. After reopening the matter, the court has heard from respondent to see if there existed any legal ground for denying the petition under A.S.C.A. §§ 42.0206 and 42.0208. [5ASR2d148]

We find no such grounds, being impressed with petitioner's superior creditability while, on the obverse, we find Respondent's allegations of fault with petitioner as being premised on the shaky foundations of hearsay, as well as conjecture.

The petition for divorce is granted.

Faleafine; Moeisogi v.


MOEISOGI TUPUA, Plaintiff

v.

MUSU FALEAFINE, VILIVILI SILAFAU,
and MAKERITA SILAFAU, Defendants

MOEISOGI TUPUA, Plaintiff

v.

MUSU FALEAFINE, MISA NILO, LAINA MISA,
and the TERRITORIAL REGISTRAR OF AMERICAN SAMOA,

Defendants

High Court of American Samoa

Land & Titles Division

LT Nos. 16-86 & 39-86

August 13, 1987

A complaint may be dismissed even though the flaw in the pleading is "procedural" rather than "jurisdictional. T.C.R.C.P. Rule 12 (b)(1)- (5), (7).

When petitioner in land dispute has failed to seek relief from the Department of Samoan Affairs as required by statute prior to seeking judicial remedy, but respondent has answered and appeared before High Court, court would observe considerations of equity and convenience by staying the action pending compliance with the administrative relief requirements rather than dismissing the action altogether. A.S.C.A. §§ 3.0242, 43.0302(a).

A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. T.C.R.C.P. Rule 12(b)(6).

Complaint asserting ownership of land did not fail to state a claim because of plaintiff's failure to comply with statutory requirement of timely objection to defendant's prior registration of land, where pleadings did not establish that [5ASR2d132] defendant had complied with statutory notice requirements for registration of land. T.C.R.C.P. Rule 12(b)(6); A.S.C.A. §§ 37.0102, 37.0103.

Before KRUSE, Associate Justice, LUALEMAGA, Associate Judge, and OLO, Associate Judge.

Counsel: For Plaintiff, Albert Mailo
For Defendants Vilivili and Makerita Silafau, Charles Ala'ilima
For Defendant Musu Faleafine, Togiola T.A. Tulafono

Opinion and Order on Motion to Dismiss:

Defendants, Musu Faleafine et. al. , move for dismissal of the complaint on two grounds:

(1) That plaintiff's complaint avers a controversy concerning "communal" lands, and this action was commenced in the Lands and Titles Division of the High Court without compliance with the "mandatory" provisions of A.S.C.A. § 43.0302(a).

(2) That plaintiff's failure to timely object to defendant Faleafine's registration of land application with the Territorial Registrar, pursuant to A.S.C.A. §§ 37.0103, "estop[s]" plaintiff "from attacking the registration of this land by a collateral proceeding."

A. A.S.C.A. § 43.0302(a)

This enactment provides that " [b]efore any action relating to controversies over communal land may be commenced in the lands and titles division, each party shall file with his complaint a certificate signed and attested by the Secretary of Samoan Affairs or his deputy" certifying that the procedure set out in the enactment (requiring a prior attempt to resolve the dispute before the Office of Samoan Affairs) has been undertaken without success, and that absent such certification the controversy cannot be resolved.

Defendants argue that the complaint herein was filed in the lands and titles division without heed to this provision.

Plaintiff, complaint was while acknowledging that the filed without the requisite [5ASR2d133] certificate of irreconcilable dispute from the Secretary of Samoan Affairs, contends that the statute's requirements are " procedural " in nature and not " jurisdictional, " citing the annotations to the enactment.

The first observation that may be made of plaintiff's argument is that there is no magic in the labels "procedural " and " jurisdictional " which would in any way add to, or take away from, the very clear legislative directive that a litigant who has a dispute concerning " communal " lands must first take his dispute before the Office of Samoan Affairs, prior to going to the Courthouse. The only exception to this requirement is the emergent need for preliminary injunctive relief to avert irreparable harm. A.S.C.A. §§ 43.0302(b). Otherwise the enactment is of general application.

Secondly, the mere labeling of a defective pleading as "procedural" does not render such a pleading beyond dismissal in the proper and appropriate context. See TCRCP Rules 12(b)(1)-(5) and (7), which provide procedural grounds for dismissal.

The Court is not, however, entirely satisfied that circumstances herein necessarily warrant a dismissal of the complaint on the ground advanced. The defendants have answered the complaint and have entered appearances in open court with stipulations to consolidate. We take guidance from A.S.C.A. § 3.0242, which permits consideration of the equitable and the convenient, and we determine that the requirements of A.S.C.A. § 43.0302(a) may be secured under the circumstances by staying the action from further going forward, pending compliance with the proceedings with the Department of Samoan Affairs.

B. A.S.C.A. § 37.0103

Defendants' contention here is that the land registration procedure set out in § 37.0103 provides the exclusive manner for filing objections or adverse claims. Plaintiff did not file an objection within the sixty-day time frame provided by the enactment, and accordingly the filing of this action is tantamount to an "indirect objection" which cannot be considered. Defendants cite Puluti v. Muliufi, 4 A.S.R. 672 (1965).

While defendants have styled their motion as one to dismiss, they have done so without

[5ASR2d134] sufficient particularity to indicate the defense(s) asserted, as required under TCRCP Rule 12(b). The Court, however, views the motion as addressing. the defense of failure to state a claim under Rule 12(b)(6), as opposed to defenses of avoidance under Rules 12(b)(1)-(5) and (7). As noted above, the latter basically address procedural defects in the claim, while here, defendants' motion alludes to a statute (A.S.C.A. § 37.0103) as a basis in law, to bar relief.

The often stated standard with motions of the type before us is that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41 (1957);Scheuer v. Rhodes, 416 U.S. 232 (1974). Given this standard, it has also been said that dismissal is only proper "when some insuperable bar to relief is obvious from the face of the complaint." Battle v. Liberty Nat. Life Ins. Co., 493 F.2d 39, 44 (5th Cir. 1974), cert. denied 419 U.S. 1110 (1975).

On the above, and considering the cited enactment, as well as having perused the complaint with the required liberality, the Court concludes that the bar1 spoken of in the enactment, may only sensibly operate against an objector if in fact the proposed registrant has complied with the statutory procedures set out thereunder. See A.S.C.A. § 37.0103(c). These procedures were obviously designed to give notice to all potential objectors to a proposed registration. See §§ 37.0102(c) and 37.0103(a).

We find no insuperable bar to relief as being obvious from the face of the complaint and therefore deny the motion.

It is accordingly Ordered that the proceedings herein are stayed pending satisfactory compliance with the requirements of A.S.C.A. § 43.0302(a).

_________________

1 For purposes hereof, we do not at this stage intimate a position one way or the other on the merits of this defense.

Fagaima; Fonoti v.


FONOTI AUFATA, Plaintiff

v.

FAGAIMA AFATIA, MATAESE MANUMA, and REVEREND
PELETI and the METHODIST CHURCH, Defendants

High Court of American Samoa

Land and Titles Division

LT No. 73-83

September 18, 1987

Action by landowner, whose title to the land has recently been affirmed by trial and appellate courts, to evict persons who were not parties to the case should have been brought as a separate action rather than as a post-judgment motion in the case that adjudicated title to the land.

Occupant of land whose occupancy was by virtue of a license from the landowner, but who subsequently asserted ownership of the land, engaged in transactions purporting to sell parts of the land, and forced landowner to bring successive lawsuits to establish his ownership of land to which the landowner's title had been previously adjudicated, was a bad faith possessor who had the right upon eviction to harvest seasonal crops and to remove fixtures erected by him but was entitled to no other compensation.

Religious organization that had been permitted by landowner to build a permanent structure on the land under circumstances suggesting indefinite occupancy by the church, and which had not been shown to have acted inconsistently with any express or implied condition of its license, was a good faith possessor and would ordinarily be entitled on eviction to choose between removing the structure or leaving it upon the land and receiving compensation from the landowner.

Before REES, Chief Justice, VAIVAO, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiff, Asaua Fuimaono
For Defendants, Aviata Fa'alevao [5ASR2d159]

Opinion and Order on Post-Trial Motions:

Plaintiff Fonoti was adjudged the owner of communal land called Alatutui in Tafuna. Fonoti v. Fagaima, LT No.73-83 (decision rendered Apri17, 1986); Fagaima v. Fonoti, AP No.12-86, 3 A.S.R.2d 112 (1986). Plaintiff has moved to evict a number of people who are currently occupying the land; these people include Mataese Manuma, who was a defendant in the case, and "Reverend Peleti and the Methodist Church, " who were not defendants. The eviction of Reverend Peleti and the Methodists should have been brought as a separate action, but since they have been served with process and have participated in the hearings on the post-trial motions we will adjudicate their rights in this action.

The Court finds the facts to be as follows:

(1) The Manuma family first came on this land as licensees of the Fonoti family during the late 1940s. Fonoti v. Manuma, No.18-1962 (per Morrow, C.J. ) .

(2) The Methodist congregation came to occupy the land on which the church now stands also during the late 1940s and also as licensees of the Fonoti family.

(3) Despite the status of the Manumas as licensees of the Fonotis and their adjudication as such in the 1962 case, defendant Mataese Manuma has for a number of years acted inconsistently with the continued ownership of the land by the Fonoti family and with his continued status as a licensee. These inconsistent actions are recounted in some detail in the opinion rendered after the trial of this case; they include the assertion in court that the Fonoti family does not own the land and the sale of parts of the land to third parties.

(4) Although Chief Fonoti was originally regarded as the "leading matai" in the Methodist congregation and had a substantial say in church decisions, in recent years Chief Fagaima has replaced Chief Fonoti in this role.

(5) Chief Fonoti contributed a substantial part, but by no means all, of the funds raised to build the present church building. It was not established, however, that there was any express or [5ASR2d160] implied agreement that he would thereby acquire a property interest in the church building.

(6) The church building is worth some amount not less than $10,000 and not greater than $50,000.

From these facts we draw the following conclusions:

(1) Mataese Manuma is entitled to remove any building and fixtures belonging to him and to harvest any crops planted before April 7, 1986. Since he has occupied the land inconsistently with the ter of his license from the Fonoti family, however, and since he is not entitled to claim (at least not since 1962) that he believed himself in good faith to be the owner of the land, he is not entitled to any compensation for such improvements as permanent plantings. (In any case, his rent- free use of the land is adequate compensation for the value of any improvements. )

(2) Although Fonoti would seem to be entitled to compensation from Manuma for the damages he suffered when Manuma sold parts of the land to third persons, we have not been presented with sufficient evidence of the amount of such damages on which to base such an award. We therefore decline to award any such damages.

(3) Although there was nothing in the original arrangement between Fonoti and the Methodists that gave him a right to terminate their license if he should ever cease to have influence in church affairs, both sides agree that the continued presence of the church on Fonoti land would be inconsistent with either side's quiet enjoyment of its property rights.

(4) Since the removal of buildings from land tends to produce economic waste, and since the irreconcilable differences between Fonoti and the Methodists have not been shown to have been brought about by the malice or bad faith of the Methodists, the law would ordinarily give the Methodist congregation a choice between removing their building from Fonoti land or leaving their building on the land and receiving fair compensation from Fonoti.

(5) Both Fonoti and the Methodists, however, have indicated a strong preference for the removal of the building rather than for an arrangement whereby Fonoti compensates the Methodists for its [5ASR2d161] fair value. Accordingly, we order that they have the right to remove the building. (If they remove any part of it , they should remove all of it including the foundation. )

(6) Both the Manumas and the Methodists should remove themselves and their property from the land within sixty days.

It is so ordered.

Fa'avae v. American Samoa Power Auth.,


FIALI'I FA'AVAE and FA'ATUPU FA'AVAE, Plaintiffs

v.

AMERICAN SAMOA POWER AUTHORITY and AMERICAN SAMOA GOVERNMENT, Defendants

High Court of American Samoa

Trial Division

CA No. 76-86

July 23, 1987

Administrative code provision purporting to free territorial utility from liability for any damages attributable to the presence of the utility's property on consumer's premises, was inconsistent with statute providing that utility could be sued, especially in light of public policy that provisions purporting to absolve the drafting party from liability for its own negligence should be strictly construed. A.S.A.C. § 12.0207(b).

Territorial utility had a duty to maintain and operate safely its equipment situated on its customers' property, notwithstanding the special difficulties posed to such efforts in American Samoa.

Youth who suffered. electrocution while climbing a tree to knock down breadfruits with a metal pole, and who knew or should have known that there were electric wires in the immediate vicinity of the tree, was negligent and under comparative negligence statute his negligence would be evaluated as equal to that of utility that had permitted its wires to fray.

Parents suing for the wrongful death of their son were entitled to receive the present discounted value of the son's estimated annual financial benefit to them for as long as such benefit could have been expected to continue.

Wrongful death action seeks recovery for damages suffered by others when a person dies; survival action seeks recovery on behalf of the estate of whatever the deceased could have recovered had the[5ASR2d54] accident not been fatal. A.S.C.A. §§§§ 43.5001, 43.5002.

Award of funeral expenses in American Samoa should not include full cost of traditional gifts to persons attending the funeral, since the expectation according to Samoan custom is that the gifts will be reciprocated over time.

Before REES, Chief Justice, VAIVAO, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiffs, Aviata Fa'alevao
For Defendants, Martin Yerick, Assistant Attorney General

Announcement from the Bench by REES, C.J. :

We are here to announce our judgment at this time, which is, there will be judgment for the Plaintiffs in the amount of $22,000.00. Now we'll also announce our reasons from the bench and if either side wants to provide anything in writing on some of the figures, they may be subject to correction. We're simply going to give you our best calculations at this time. Dealing with the issues one by one:

First of all, the Government asserts that ASPA is simply not liable for this sort of thing. There is a provision in the Administrative Code which if it were within the power of the ASPA Board of Directors would absolve ASPA from virtually all of the liability they could ever have had. We think that's inconsistent first with the explicit statutory provision that says that ASPA can sue and be sued, and second with the general rule that provisions that tend to absolve the person who makes them from liability for his own negligence are to be strictly construed.

If ASPA were a private company, even if they'd gotten the Plaintiffs or the Plaintiffs' decedent to sign something that says no matter what we do in the course of providing you electricity, no matter how negligent we are, we are exempt from any liability, except under the most extraordinary circumstances that provision would be invalid as contrary to public policy. So, far from the net weight of public policy being in favor of exoneration from liability for negligence, most of the jurisprudence on public policy is exactly to the contrary. I've got to believe that if public [5ASR2d55] utilities could have absolved themselves so broadly and so easily we wouldn't have any Michigan case in 1983 talking about the standards of liability for public utilities. So we don't believe that that provision operates to exonerate ASPA at least where, as here, negligence is clear.

We don't have to reach the question whether there is a stricter standard for liability for a public utility than the reasonable person standard, because in this case the reasonable person standard was violated. The reasonable person in the business of providing electric power to people would check his wires more than once every 35 years to see that they were not in need of replacement.

The tree trimming issue is a little more difficult, in light of the testimony in this case about how difficult it is to get on people's lands and trim trees. We think there was a duty at least to ask permission. If permission had been denied by the communal land owner, obviously we would have a much different situation. But in light of the industry standard (as proved by the manual that everyone seems to agree was a fair statement of industry standards) tree trimming apparently is a normal incident of maintaining power lines. While there might be special problems in American Samoa, none of the judges think that that justifies the provider in throwing up his hands and simply saying, "Well, nothing can be done. " There was a duty to make some effort.

Again, it's not necessary even to reach the tree trimming issue because whether or not they should have trimmed the tree, they should have replaced the wire and the bare wire by itself would have been enough to cause the accident. So at least there was clear negligence in not replacing that wire.

The deceased, however, was obviously contributorily negligent. We believe that it was clearly negligent for ASPA not to check the wires knowing that insulation can become frayed and that when these things are close to people's houses they can cause electrocution. While we also think that ASPA was under some duty to recognize that people do climb trees, certainly the decedent was in a position to know (at least once he had the idea that there might be some electrical current running through the tree) not to be up there. He was of sufficient age and discretion to realize that by going up that tree with a metal pole he was taking [5ASR2d56] a great risk. Our view is that each of the parties' negligence was so clear that although it's hard to come up with any precise standard, we will attribute half of the negligence that caused this accident to ASPA and half to decedent.

Now, as far as the calculation of damages is concerned, the hardest thing is to calculate future income and how much of that future income would have been given to the parents. Obviously it's very speculative that he would have been a plumber or that he would have been something else. He was obviously a bright boy who was likely to do something with his life, yet at some point how much of that money would have been given to his parents is hard to say. However, I've discussed it with the Samoan judges who have more experience than I do in evaluating what is customary here and it's pretty clear that the net financial benefit that his parents derived from him was about $1,000.00 per year. We don't know whether he would become a brain surgeon. We wouldn't know if he would have died soon in another way. The likeliest thing is to assume that that rate would have continued, that $1,000.00 or whatever the real dollar equivalent of $1,000.00 was for the rest of his life and his parents' lives would have continued to be the financial benefit they derived from him. Now a lot of things could have happened. He could have gotten married and moved away from home and begotten several children, in which case the amount might have gone down or the amount might have gone up. The Samoan judges are comfortable as I am with saying that $1,000.00 a year is about right for the amount that the parents can expect a child to give to them here in this territory. So we're going to say that it's $1,000.00.

Then there is a question of how long. Obviously it's not the decedent's life expectancy that matters because the parents are older than he was. There was no specific evidence of his parents' ages, but both the appearance of his father and the usual custom in such things leads us to say they are between 20 and 30 years older than he is. The life expectancy of a woman is slightly more than the life of a man which would be 71 years, and the parents can expect to have received that money from him for the rest of their lifetimes, which is to say 20-30 years. So we will say 25 years and we will say that $25,000.00 is the financial loss that the parents suffered; however, it's more complicated than that because you've got [5ASR2d57] to figure out the future discounted value of $25,000.00

I have checked A.L.R. Proof of Facts, which I thought would be good for something, which doesn't even turn out to be good for this; because all it tells is a whole lot of different rules about discounts depending on interest and inflation rates and depending on things like that. The figure that seems intuitively correct to me ---keeping in mind the facts that $1,000.00 isn't going to be worth $1,000.00 25 years from now and that it's not as simple as how long it takes the money to reach a certain amount at a specified interest rate--- assuming an interest rate of six percent, which is what there is now, and assuming inflation of about what there is now, our best estimate is that the present discounted value of $25,000.00 or its real dollar equivalent in the future years is about $16,000.00. So we will award $16,000.00.

Obviously, if either party has statistics suggesting this calculation is wrong he can move for reconsideration or new trial and we'll be more than ready to entertain that sort of evidence. Since there wasn't any evidence, we're going to make the estimate that it's $16,000.00.

None of the other items are very easy either. Probably the most important thing in terms of the parents' real loss isn't the financial loss that they would suffer. It's the loss of their son's moral and emotional support and companionship. That is an element of our award and the estimated amount is $20,000.00. It's not as high as in the Tedrow case or a lot of cases in the States, but it's higher than some cases in American Samoa and it's our best estimate.

The next item is the funeral. We've had a complicated discussion about the extent to which fa'a samoa obligations should be considered in connection with these kinds of awards, but in light of the obligation that a wronged party has to minimize damages, we simply don't feel comfortable with charging ASPA for sixty kegs of beef. It's well-known that in Samoan culture whatever you give is supposed to come back to you sooner or later somehow. Depending on where you are in the scale of society, you either do a little worse or a little better by the end of the year in all the fa'alavelaves, you going to other people's and others coming to you. So it's hard to calculate what the net cost of a fa'alavelave is. We think [5ASR2d58] that with the value of the casket and the necessity of preparing a body and even (aside from the giving to other people) the aspect of providing some accommodation for people at the funeral, $3,000.00 is a fair award for the funeral. Therefore we will award $3,000.00 as funeral expenses.

Now finally there is the claim for decedent's pain and suffering. Contrary to the position taken by the Government in this case, the Court believes that A.S.C.A. §§ 43.5001 and 5002 merely state the rule that prevails in most jurisdictions: that there are two separate kinds of actions. One of them is the wrongful death action, which consist of the damages that are suffered by other people when somebody dies. The other is the survival action, which consists of whatever he would have been able to recover. The representatives of the estate can sue for him. I've read § 43.5002 during the break. We think the decedent could have sued, if he had lived, for the pain and suffering that he suffered; therefore his successors in interest can sue, whoever they are. There is an allegation in the complaint that the parents are the representatives of his estate; that allegation is to be construed liberally, so we will award this item of damages to the parents in their capacity as representatives of the estate. This means that all probate rules have got to be complied with. We will award damages for pain and suffering. Again, it's terribly difficult, but in light of the damages that are usually awarded, this was a painful death but it was a painful death in which the period of consciousness lasted for 30 seconds. It wasn't as painful as in some kinds of death for which higher awards have been made. So we will award $5,000.00 as pain and suffering in the survival action.

Since we've awarded the funeral expenses not to his estate, but to the parents who paid them, the only element in the survival action is $5,000.00 for his pain and suffering.

Therefore the total is as follows: $16,000 for future income that the parents have lost; $20,000 for the loss of support, companionship, and all of those non-pecuniary elements of the wrongful death action; $3,000 for funeral expenses; and $5,000 for pain and suffering. That comes up to $44,000 divided by two which is $22,000. Now actually $2500 of that $22,000 is going to the estate, to the parents in their capacity as representatives. The other $19,500.00 is to the parents in their own capacity.

Development Bank v. Reed;


DEVELOPMENT BANK OF AMERICAN SAMOA, Plaintiff

v.

FRANK AND LELEAGA REED, Defendants

AMERICAN SAMOA GOVERNMENT EMPLOYEES
FEDERAL CREDIT UNION, Garnishee

High Court of American Samoa

Trial Division

CA No. 110-85

August 17, 1987

Secured transactions in American Samoa are governed by common law principles except where those principles have been modified by statute or are otherwise inappropriate to local conditions. A.S.C.A. § 1.0201.

A transaction may be secured by common law pledge in American Samoa.

A common law pledge arises when a debtor transfers possession of property to a creditor in order to secure the debt but retains title to the property.

As long as a pledgee retains possession of property pledged as security, he has a lien on it superior to those of judgment creditors.

Intangibles, such as funds in a savings account, can be the subject of a pledge provided that the pledgee can demonstrate "possession" of them, either by obtaining from the pledgor an "indispensable instrument " that stands for the right to the intangible or by otherwise establishing that pledgee had actual control over the intangible to the exclusion of the pledgor.

Creditor bank had "possession" of funds in debtor's savings account sufficient to sustain a common law pledge where loan contract required the debtor to pay regular installments due on, the loan and to maintain an additional balance in the account, within the exclusive control of the bank, as security.[5ASR2d136]

Purposes of territorial statute requiring recordation of non-possessory liens are (1) to protect those who might otherwise extend credit to others in the mistaken belief that the borrowers' possessions are likely to be available as security for any unpaid debts; and (2) to foil fraudulent assertions by judgment debtors that property in their possession actually does not belong to them but has been purchased by or hypothecated to friends or relatives. A.S.C.A. § 27.1510.

Pledgee bank's unrecorded lien on pledged funds in bank account within exclusive control of bank is not invalid since, unlike non-possessory security devices such as mortgage, creditor's exclusive possession and control of the funds provide sufficient notice to third parties that debtor may not have the absolute right to dispose of them.

Pledgee bank did not give pledgor "constructive possession" of pledged funds and thereby forfeit its pledge by permitting pledgor to use those funds to payoff the loan secured by the pledge; this transaction amounted to a bookkeeping entry rather than a real transfer of assets, neither enriching the pledgor nor injuring his third-party creditors.

Pledgee bank which, after receiving notice of garnishment from third party lienholder, permitted pledgor to withdraw from his account funds that were not part of the pledge would be liable to the third party for amount of withdrawals plus remaining unpledged balance of pledgor's account.

Before REES,Chief Justice and VAIVAO, Associate Judge.

Counsel: For Plaintiff, Robert Dennison
For Garnishee, Charles Ala'ilima

On Motion for Judgment against Garnishees:

Plaintiff, the Development Bank, had judgment in the amount of $85,995.73 against defendants Frank and Leleaga Reed. On May 1, 1987, plaintiff served a notice of garnishment on the Credit Union, forbidding it to pay any debt it might owe to the Reeds and requiring it to retain any of the Reeds' property that might be in its possession. The notice also required the Credit Union either to answer a set of interrogatories propounded by the Development Bank or to appear in court to answer[5ASR2d137] questions about any property and debts of the Reeds.

The Credit Union eventually appeared in court and admitted that both of the Reeds had savings accounts in the Credit Union, but asserted that the bulk of the funds in these accounts were pledged to secure loans to the Reeds from the Credit Union itself. The Credit Union maintains that the pledge gives it a lien prior to that of the Development Bank.

The Development Bank maintains that no law of American Samoa provides for a such lien; that the Credit Union did not comply with A.S.C.A. § 27.1510(2), providing that certain security interests are ineffective unless recorded in the office of the Territorial Registrar; and that the Credit Union lost any lien it might have had by giving Mr. Reed "constructive possession" of the funds and letting him "exercise dominion" over them by using them to payoff the Credit Union loan on May 18.

No territorial statute provides for the security device known as pledge. Indeed, there are hardly any statutes in American Samoa dealing with secured transactions. This does not mean, however, that it is impossible to have any such trans- actions. Rather, they are governed by common law principles except where those principles have been modified by statute or are otherwise inappropriate to local conditions. See A.S.C.A. § 1.0201 (reception of the common law in American Samoa); Tung v. Ah Sam, 4 A.S.R. 764 (1971) (in construing the common law, the High Court should ordinarily follow theRestatement of the Law).

Pledge was an institution firmly established in the common law. The first section of theRestatement of Security (1941) provides:

A pledge is a security interest in a chattel or in an
intangible represented by a bailment for the purpose
of securing the payment of a debt or the performance
of some other duty.

As long as the pledgee retains possession of the thing pledged, he has a lien on it superior to those of judgment creditors. See Restatement of Security § 28 (1941). The essence of pledge is that the pledgor retains title to the property while transferring possession to the pledgee in order to [5ASR2d138] secure a debt. Intangibles (such as the funds in the Reeds' savings accounts) can be the subject of a pledge, but it is harder in such cases to determine who has "possession" of them. Courts have generally found sufficient possession of an intangible if the pledgor effects the transfer of an " indispensable instrument " that stands for the right to the intangible. If there is no such instrument, the pledgee must establish that he had actual control over the funds to the exclusion of the pledgor.

In this case the Credit Union has established that it had control over the pledged funds. According to the terms of its loan contracts with the Reeds and other borrowers, the borrower must deposit money into his savings account every two weeks by automatic payroll deduction. These deposits continue until the amount in the savings account is equal to half of the amount borrowed, During this time and thereafter the borrower must also make automatic payroll deposits to payoff the loan itself. All funds in the savings account are frozen ---that is, no withdrawals are allowed--- until the amount due on the loan has been reduced to an amount lower than the amount in the savings account. At that point the borrower may withdraw only the excess; funds must be left in the account that are sufficient to secure the entire remaining balance on the loan.

This procedure establishes the pledgor's dominion to our satisfaction, It is quite similar to other arrangements that have been held to create liens superior to those of judgment creditors. In Duncan Box & Lumber Co. v. Applied Energies, 270 S.E.2d 140 (W. Va. 1980), a bank made a business loan to the defendant for the purchase of a tract of land for subdivision and resale. A deed of trust served as security. When the defendant sought further financing to bankroll the actual resale, the bank required additional security in the form of a " reserve account. " Defendant would maintain a balance of at least 25% of the unpaid debt and the bank would retain exclusive control of the account. The bank filed no financing statement to memorialize this security interest. After the defendant obtained the loans and incurred debts to third parties, it went out of business. A third party judgment creditor sought to satisfy its judgment by attaching the funds in the reserve account. After finding that "[t]he agreement creating the reserve account was essentially a common law pledge," the court held the bank's [5ASR2d139]interest in the reserve account superior to that of the judgment creditors. 270 S.E.2d at 142.

The Duncan Box court noted that the pledge of a bank account is assessed under common law principles rather than the provisions of the Uniform Commercial Code or other statutes. Even though there was no "indispensable instrument," the agreement was "unmistakably intended to give the bank collateral security." Id. at 145. The defendant was required to make periodic payments into the account and had no access to deposited funds; only the bank could reach them.

The court further observed that it would be difficult if not impossible for a bank to prove a pledge interest in a bank account to which the depositor had withdrawal rights. 270 S.E.2d at 146 n.l1.Cissell v. First National Bank of Cincinnati, 476 F. Supp. 474 (S.D. Ohio 1978), also suggests this distinction. In discussing a statutory "security by possession" mechanism "akin to the common law 'pledge' ," the court found no security interest in a bank account from which the debtor freely withdrew.Id.. at 490-91. The court stated two important caveats. It stressed that its holding applied only to the facts as they existed before the parties had established a "collateral account, more like that involved in the present case, which might have fit the requirements of a common law pledge. Id.. at 491 n.9. Furthermore, the court declined to discuss the possibility of a security interest in an account containing funds alleged to be security commingled with other funds.

Duncan Box and Cissell indicate that funds held in the exclusive control of the creditor as security for a debt establish a common-law pledge even in jurisdictions in which the law of secured transactions is mostly statutory. This is part of the answer to the Bank's contention that the Credit Union's. lien is ineffective for failure to comply with the recordation statute. The rest of the answer is suggested by a perusal of the language and structure of the statute itself. A.S.C.A. §§ 27.1510 provides that no "mortgage, bill of sale, conditional sales contract, deed of trust or conveyance of personal property which is not accompanied by a permanent delivery thereof to the vendee" is valid ''as to persons who do not have actual notice" unless certain conditions are met. (Emphasis supplied.) The conditions are recordation, a writing signed in the presence of a [5ASR2d140] witness, and an accurate description of the thing sold or secured and of the consideration. Id.

The obvious purposes of the statute are (1) to protect people who might otherwise extend credit to other people in the mistaken belief that they own the things they possess and that those things are therefore likely to be available as security for any unpaid debts; and (2) to foil fraudulent assertions by judgment debtors that property in their possession actually does not belong to them but has been purchased by or hypothecated to friends or relatives. The transactions referred to in the statute are those which attempt to create non-possessory security interests. l In the case of possessory interests," the possession of the thing by the creditor is at least as effective as recordation would be in giving notice to innocent third persons that the debtor may not own the thing free and clear. It is extremely unlikely, for instance, that anyone would extend credit in the [5ASR2d141] belief that the debtor has an unencumbered interest in a bank account unless this has been confirmed by the bank itself.2

The principle of A.S.C.A. § 27.1510 is the same one that generated the distinction between the common-law institution of pledge and non-possessory devices such as mortgage: possession is essential to the former, while recordation or some other substitute for possession is essential to the latter. This distinction has survived the enactment of the secured transactions statutes in the United States, and it is still the law in American Samoa.

We also disagree with the Development Bank's contention that the Credit Union gave Mr. Reed "constructive possession" or allowed him to "exercise dominion" over the funds by allowing him to use $1873.80 in the pledged account to payoff the loan for which it was pledged. That the funds were earmarked for the payment of the loan was the very reason neither Mr. Reed nor the Development Bank had any right to them; paying off the secured loan was the only thing the Credit Union could allow Reed to do with the account that did not constitute possession or dominion. The payment of the loan with the secured funds amounted to a bookkeeping entry rather than a real transfer of assets; it did not enrich Mr. Reed and it did not injure the Bank or any other creditor. Reed's creditors had exactly the same rights against exactly the same amount of his property after the transaction as they did before it.

The Credit Union admits that it possesses, or did possess at some time after it was served with the notice of garnishment, $661.05 in unsecured funds belonging to Frank Reed. The Development Bank maintains that the correct amount is $789.94. The Bank appears to be correct: the Credit Union[5ASR2d142] allowed Mr. Reed to withdraw $400 on May 5 and $289 on May 18, and still holds $100.94.

Judgment will issue for the Development Bank against the Credit Union in the amount of $789.94.

_________________

1 Although the requirement of "permanent delivery to the vendee" seems to be explicit only in its application to the last item on the list (conveyances of personal property), the distinction is implicit with regard to the. other transactions covered by the statute. The security devices on the list (mortgage, deed of trust, and conditional sales contract) are those in which the person possessing the security interest does not possess the thing itself. The only remaining item on the list is the "bill of sale" ; since such a document would purport to embody a "conveyance, " the statute would not prevent it from being effective without recordation so long as it involved personal property and was accompanied by a transfer of possession.

2 We are not called upon to decide whether a financial institution could lose its prior lien on pledged funds by confirming the debtor's ownership of the funds without mentioning the encumbrance on them. Assuming that the person thus misled acted to his detriment on the information, such a result would seem quite consistent with the principles governing the law of secured transactions. It did not happen, however, in this case.

Development Bank v. Lava;


DEVELOPMENT BANK OF AMERICAN SAMOA, Plaintiff

v.

TALO LAVA and TUVALU LAVA, Defendants

High Court of American Samoa

Trial Division

CA No. 55-87

July 20, 1987

A defendant who has defaulted through failure to answer may nevertheless appear at the hearing of motion for default judgment to contest the amount of damages. T.C.R.C.P. Rule 55(b).

When bank making home improvement loan contrived to make disbursements to third party contractor far in excess of fair value of materials and services provided and without borrower's knowledge, bank had committed breach of contract and fraud and could recover only the fair value of what borrower actually received.

Bank could not recover attorney fees as provided in promissory notes on which borrower defaulted when bank had breached its contract and was entitled only to quantum meruit recovery.

Before KRUSE, Associate Justice, TAUANU'U, Chief Associate Judge, VAIVAO, Associate Judge.

Counsel: For Plaintiff, Robert Dennison
Talo and Tuvalu Lava pro se

This matter came on for hearing upon plaintiff's motion for default judgment. Defendant Talo Lava, having been noticed with hearing of the motion, appeared pro se.

The complaint seeks judgment on a promissory note made by defendant in favor of plaintiff evidencing a loan made. With interest, costs, and attorney fees, the plaintiff bank seeks judgment in the sum of some $15,298.29 plus post-judgment [5ASR2d25] interest. The note in question is for the face amount of $10,000.

Defendant contests the amount of his indebtedness to the bank l, claiming that he never received the total $10,000 purported to be loaned to him, and that the bank official who dealt with him at the time, Tamafili Suisala, allegedly in concert with a certain contractor, helped themselves to the loan proceeds without his knowledge or consent.

This story is becoming distressingly recurrent, and the bank official accused has since been removed from his position as vice president of the bank and is currently serving a jail term on a miscellany of theft-related convictions.

FACTS

Promissory Note I

Defendant's version is that he applied to the bank for a loan of $10,000 to wall in his open structure, built by the government's disaster relief agency consequent to a landslide occurring in his village. His loan request was approved initially only up to an amount of $6,000, by Suisala. A copy of a promissory note to this effect was not found in bank files, but evidence of this loan transaction is found in a chattel mortgage document dated April 13, 1981, executed by defendant to secure repayment of $6,000. Defendant says that he was disbursed some $4,000 of the loan proceeds for the purchase of materials for the project. He also contacted a builder trading under the name of "Kilipoa Construction" to close in the existing structure with cement blocks. He accepted this builder after he was given an estimate for labor of $300.

The Loan Disbursement Schedule of the bank reveals that between April 13, 1981, and May 26, 1981, the sum of $2,681.04 was disbursed for materials, and the bank's records contain corresponding receipts from various merchants to this effect. [5ASR2d26]

On the other hand, between June 16, 1981, and July 2, 1981, the sum of $3,296.46 was disbursed by the bank to Kilipoa Construction without any explaining documentation or signed approvals by the borrower. Also, an additional sum of $22.50 was disbursed to the bank on July 2, 1981, which item brought the disbursements to $6,000.

One curious document we find in the bank's file is a contract form under Kilipoa Construction letterhead, dated June 25, 1981. The document contains the notation in Samoan to the effect that: "Talo is agreeable that the agreement pertaining to his house in Se'etaga has ceased in effect. " This document also contains a notation, "Pd. Ck #10598, 6/24/81," (Cross referencing the Loan Disbursement Schedule, a payment of $1,150 was made to Kilipoa Construction on this date. ) The document purports to be signed by Talo Lava; when it was produced to the defendant, however, he denied signing the said document. He states that his agreement wi th r:ilipoa was fixed at $300.

We accept defendant's testimony on the forgery of his signature. The construction ceased after the use of the purchased material aforementioned, leaving about twelve feet of walling left to be completed. Thereupon defendant went with his contractor to draw on the balance of the loan proceeds, which defendant believed to be about $1,900. Of course there was no money there, and the contractor must have known this as he was disbursed funds without defendant's say-so. When defendant confronted the bank official Tamafili Suisala on where the loan monies went, the official countered by approving an additional $4,000 loan , which the defendant was told would finish off the enclosing plus add an extension to his house.

Promissory Note II

After dismissing defendant's complaints on the balance of the loan proceeds with the tender of an extra $4,000 credit line, Mr. Suisala had a new promissory note drawn up for the face amount of $10,000, together with a corresponding chattel mortgage, both dated July 7, 1981. These he got the defendant to sign. Additionally, in his manner of efficiency with the records, we note of the Disbursement Schedule that the $6,000 loan reference is penned out and the figure $10,000 written over holographically.[5ASR2d27]

We further find on file with the bank a Construction Contract dated July 6, 1981, under Kilipoa Construction letterhead. It is signed at the signatory block for a "Company Representative" while unsigned at the block designated for "Purchaser. " It purports to bear defendant's signature midway down the page, but defendant claims that he did not sign this document. The document further has a designation "Price, " which is filled in with the figure "3200, " and a designated heading " 10% Deposit" filled in with the amount "$2500. "

Again we accept defendant's version of this document, that it as not signed by him. The document has a carbon copy on file, and the proposed signature of defendant on the original does not appear on the carbon. It looks to the Court that the purported signature of defendant was later added on the original, after it was separated from the carbon. Further, the document is hardly at arm's length in purport. Just how the deposit sum of $2,500 equates to ten percent of $3,200 belies the ordinary in commercial transactions.

We go to the disbursement schedule again and find that on July 8th, 13th and 24th, 1981, the total sum of $3,900 ---of the $4,000 credit line- --was disbursed to Kilipoa Construction. Again the disbursement receipts reflect unilateral action by the bank without any involvement on the part of borrower.

Defendant said that hereafter the contractor dealt directly with Mr. Suisala. Work recommenced on the house, but instead of completing the wall work with cement blocks as started, the contractor finished it off in wood. The extension itself to the house was at the contractor's control. Defendant complained that the same involved a dropped floor level and was only partially extended along the breadth of the building. Defendant states that one day, without warning, the contractors failed to return, and while the resulting extension was substantially completed, the roof has leaked from the outset.

Defendant stopped paying the bank on the ground that Mr. Suisala and Kilipoa Construction were in collusion, and so advised Mr. Suisala when the latter confronted defendant on non-payment. Defendant invited Suisala to sue him. As things have turned out, Mr. Suisala is no longer able to[5ASR2d28] be involved, and the current bank officials have inherited the litigation.

One further document among the exhibits received warrants mention. This is an "Agreement" dated March 26, 1987, prepared by the Bank and signed by defendant, whereby defendant acknowledged the indebtedness on the "promissory note(s) " and in consideration of the bank's forbearance to sue, defendant agreed to repay the notes according to the payment schedule therein provided. This document also contains provisions to the effect that defendant waived all defenses. Bank employee Siao Elisara, who sat down with the defendant when this document was signed, was not able to explain to defendant what the provisions of this agreement meant, save to inform defendant that the agreement correctly reflected his indebtedness to the bank.

On the foregoing, we consider the extent of the indebtedness, if any.

Indebtedness

Our analysis of the facts leads us to the conclusion that the promissory notes executed by defendant ---for $6,000 and then for $10,000--- do not evidence indebtedness. The notes at best reflect a window-dressing exercise with the records of the bank, to disguise the underlying dealings that in fact occurred. Firstly, defendant was availed of a credit facility up to the amount of $6,000, and defendant acknowledged that he drew down on the proceeds to purchase building materials. While defendant was of the understanding that he had drawn $4,000 of the loan amount, the bank's records in fact show $2,681.04. The balance of the Line of credit ( less $22.50 paid to the bank) was disbursed by the bank, without defendant's knowledge or consent, to pay the builder, with whom defendant had contracted on the basis that labor costs would be $300.

We find that this was a breach of the loan contract by the bank. Our conclusion that there was a unilateral breach of the loan contract is affirmed by defendant's expectations that there was still available credit when he visited the bank to further draw for the purchase of additional building materials. As it happened, defendant's queries on the balance of the loan were countered by Suisala's arranging of an additional $4,000 line of credit. [5ASR2d29]

At this point, the $6,000 note was presumably withdrawn and destroyed and a new note drawn up in the face amount of $10,000. As far as records go then, for audit purposes, the bank's funds were accountable on paper.

As stated in the facts, the second $4,000 credit line was again unilaterally disbursed by the bank through its officials without the knowledge and consent of the borrower. This was clearly evident on the disbursement receipts, which were conspicuously blank in terms of borrower's acknowledgment.

Again we conclude a breach of contract by the bank through the actions of its officials. Borrower testified that he had no idea how the said $4,000 was handled and that Suisala dealt only with the builder thereafter. This testimony was corroborated by bank employee Siao Elisara. Further, the builder received $3,900 of this money notwithstanding that the asserted building contract on file, dated July 6, 1981 (and purported to be signed by defendant), stipulated a contract price of $3,200.

CONCLUSION

We conclude a breach of contract by the bank through the actions of its employees, although we could have equally found on the facts a conclusion within the realm of fraud.

This notwithstanding, our conclusions are not to say that defendant did not benefit in the matter. Although not to his entire satisfaction, his house was improved with bank funds. On the basis of the evidence, we find the defendant indebted to the bank in the following amounts: $2,681.04, being the cost of materials purchased with the proceeds of the first note; plus $300, being the defendant's understanding of labor costs; plus $3,200, being the builder's assessment of the value of labor and materials expended in completing the enclosure of defendant's house together with the added extension. This last figure we find as the reasonable value of those labor and material costs.

Plaintiff's claims for attorney fees and costs are disallowed. The cause of action provided in the terms of the promissory notes for attorney fees and costs are inappropriate for the same reasons[5ASR2d30] for which we find the said notes to be inappropriate evidence of the indebtedness.

ORDER

It is accordingly Ordered, Adjudged and Decreed that plaintiff have judgment against the defendant Talo Lava in the sum of $6,181.04 plus interest accruing to date hereof at the rate of 8% per annum, to be computed as follows: interest on $2,981.04 to accrue from April 13, 1981; interest on $3,200 to accrue from July 7, 1981.

It is further Ordered that all payments made by defendant to plaintiff to date shall be first applied to interest as above stated, and the balance, if any, to principal.

It is further Ordered that plaintiff shall have post-judgment interest at the rate of 8% per annum.

[5ASR2d25]

1 Notwithstanding default, defendant may appear to contest the extent of the indebtedness. TCRCP Rule 55(b). Peitzman v. Cityof Illmo, 141 F.2d 956 (8th Cir. 1944), cert. denied 323 U.S. 718.


Development Bank v. Ilalio ;


DEVELOPMENT BANK OF AMERICAN SAMOA, Plaintiff

v.

PALE ILALIO and TOA'I ILALIO, Defendants

High Court of American Samoa

Trial Division

CA No. 34-87

August 12, 1987

Trial court rule that written judgment cont in separately stated findings of fact and conclusions of law does not require inflexible format or segregated, numbered, and labeled entries. T.C.R.C.P. Rule 52.

"Dismissal " of an action is an appropriate term for denial of all relief requested by the plaintiff after adjudication on the merits. T.C.R.C.P. Rule 41(b) .

High Court must construe pleadings so as to do substantial justice and therefore will occasionally permit pleadings that do not comply strictly with formal requirements. T.C.R.C.P. Rule 8(f}.

Principle that the court will construe pleadings so as to do substantial justice applies specifically to the requirements of affirmative and particular pleadings. T.C.R.C.P. Rules 8(f), 8(c), 9(b).

Pro se pleadings should be construed to state a cause of action or a valid defense unless Court can say with assurance that the litigant can prove no set of facts in support of his claim that would entitle him to relief.

Pro se defendants' pleadings describing the facts and theories of their position were fully adequate despite their failure to use the usual legal terminology.

A defense that merely negates some element of plaintiff's prima facie case need not be affirmatively pled. [5ASR2d111]

When one party signed a blank form believing that it would be filled out by the other party in the amount of $6000, and the other party instead filled the contract out in the amount of $15,164, there was no agreement between the parties on a contract obligating the signing party to pay $15,164; the other party was entitled at most to a quantum meruit recovery.

In order for a contract to be legally unenforceable under the doctrine of unconscionability it is not necessary that the court find facts sufficient to sustain a defense of duress or of failure of consideration; rather, unconscionability is a distinct equitable defense that can be established by some combination of such indicia as grossly inadequate consideration, inequality of bargaining power, sharp practice, and the absence of a real bargaining process even when none of these indicia standing alone would be sufficient to void the contract.

Forbearance from pressing a claim that is later found to be invalid may be consideration for a new promise provided that, at the time the new promise is made, the forbearing party believes in good faith that his claim is just.

In determining whether a business entity believes in good faith that its claim is just for the purpose of determining whether the claim can be consideration for a settlement, the entity is chargeable with the knowledge of its agents who participated in the transactions giving rise to the claim.

Documents purporting to be settlements of prior disputes are customarily given stricter judicial scrutiny than contracts involving more palpable consideration, especially when the party drafting and pressing for the settlement is a business entity experienced in such transactions, the other party has no such experience and is unrepresented by counsel, the more experienced party employed threats or promises to encourage the other party to sign the document with little or no deliberation, and the consideration given by the more experienced party was relatively trivial.

Contract by which defendant agreed to "waive the statute of limitations and other waiveable defenses" in exchange for plaintiff's temporary forbearance to sue should be construed as a waiver of technical defenses to the enforcement of a just [5ASR2d112] debt but not of substantive defenses concerning the validity of the underlying contract.

Plaintiff's forbearance to sue may be sufficient consideration for defendant's waiver of the statute of limitations even though it would be insufficient to supply missing essential elements of a contract that were previously absent.

Before REES, Chief Justice, AFUOLA, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiff, Robert Dennison
Pale Ilalio and Toa'i Ilalio pro se

On motion for new trial:

Plaintiff Development Bank sued Mr. and Mrs. Ilalio for the balance due on a promissory note. The Ilalios appeared Pro se . They said they had signed a blank note which they had been given to believe would be completed in an amount of about $6000, not the $15,164 that was later filled in by the Bank, and that they had agreed to sign the note in exchange for the continued use of a truck which was worth about $6000. The Bank later seized the truck and sold it for $6000. We held that the Ilalios did not owe the Bank any money. Plaintiff moves for new trial on a variety of grounds.

I. "Separate"Findings and Conclusions

Plaintiff begins by urging that there was "no effective judgment" in this case because "[n]either the Court's Opinion and Order nor the Clerk[']s Entry of Judgement contain findings of fact and conclusions of law stated separately as required by Rule 52, T.C.R.C.P. As a result, Plaintiff is unable to ascertain what legal conclusion the Judgement is based upon." (Emphasis in plaintiff's motion. )

We believe that our opinion, which was divided into sentences, paragraphs, and general areas of discussion rather than into numbered and labeled "findings" and "conclusions, " nevertheless contained findings of fact and conclusions of law that were sufficiently "separate" to comply with the rule. The opinion was written this way in the hope that it would be more informative than an opinion written by the numbers. We append, [5ASR2d113] however, a document in the form requested by plaintiff.

II. Failure to "Enter a Take-Nothing Judgement"

As a further ground for its contention that there was "no effective judgment, " plaintiff points out that "the Opinion and Judgement both purport to dismiss Plaintiff's action, as opposed to entering a take-nothing judgement."

In "purporting" to dismiss the action we were of course doing exactly what plaintiff's counsel refers to as "entering a take-nothing judgement. " We suspect that counsel's objection was grounded not in any confusion on this point but in a desire to eliminate any lingering doubt we might have had about whether he liked our opinion.

Counsel has cited no authority for the proposition that "dismissal" is an inappropriate term for a denial of all the relief requested by the plaintiff after an adjudication on the merits, and we have been unable to find any. An argument might be grounded in Rule 41 of the Territorial Court Rules of Civil Procedure, which lists a number of circumstances under which actions may be dismissed and does not refer to dismissal after adjudication on the merits. The rule specifically provides, however, that "any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under 19 T.C.R.C.P., operates as an adjudication upon the merits." T.C.R.C.P. Rule 41(b). (This provision also disposes of counsels suggestion, in response to a question from the Court at oral argument on this motion, that it is difficult to tell whether a dismissal is with or without prejudice.)

Whether to deny all relief after an adjudication on the merits by saying "the action is dismissed," "judgment is entered for the defendant, " "the defendant takes nothing, " or some other phrase seems to be a matter of style that varies from judge to judge, with one term or another possibly predominating in some regions or jurisdictions. In the first 400 pages of the most recent bound volume of the Federal Supplement, for instance, there are six cases in which the complaint or action was "dismissed " after plenary [5ASR2d114] adjudication of the merits.l The first few cases in the most recent volumes of American Samoa Reports and of American Samoa Reports {Second Series) also yield such instances.2 Even if "entering a take-nothing judgment" were the preferred form, this sort of thing is not the stuff of which successful motions for new trial are made.

III. Defective Pleadings

Plaintiff argues that the issues of fraud or mutual mistake, unconscionability, and accord and[4ASR115] satisfaction were "not tried" and furthermore that they " could [not] have been tried" because they were not "affirmatively pled" and furthermore were not "pled with particularity."

As in matters (1) and (2) above, we believe counsel would have us elevate form over substance. Moreover, the formal standards counsel believes we should have imposed on the pleading filed by this pro se defendant are stricter than those customarily observed by attorneys in this jurisdiction.

Unfortunately, the principle that a pleading must contain a succinct and informative statement of the party's claims or defenses is often honored in the breach. Pleadings too often deny things that the pleading party knows perfectly well to be true, deny "for lack of information" averments about which all the information to be had is in the possession of the party doing the denying, and recite conclusions of law rather than statements that put the opposing party on fair notice of how the pleader will try to get the Court to reach such conclusions. The Court has attempted in recent years to effect a gradual reformation of these and related practices. We have concentrated on devices by which judgments have been taken against people to whom notice was nonexistent rather than merely sketchy, but we have also freely granted motions to require the amendment of inadequate pleadings. Our efforts in this regard have met with a modest degree of success and with an even more modest degree of enthusiasm. Uninformative pleadings are still the rule rather than the exception.

In the High Court as in the federal courts, "pleadings shall be so construed as to do substantial justice." T.C.R.C.P. Rule 8(f). The practical effect of this overarching principle has been aptly stated by Professor Moore:

Litigation is not an art in writing nice pleadings.
The pleading rules are designed to eliminate delay,
and reduce the pleading requirement to a minimum.
"Loose pleading" is the cry of an alarmist who
unconsciously would punish the client because of the
latter's unfortunate choice of a lawyer who happens
to be a poor pleader. The real importance of the Rules
dealing with pleadings is that they make pleadings, in
and of themselves, relatively unimpor[5ASR2d116] tant.
Cases are to be decided on the merits.

2A Moore's Federal Practice par. 8.02 at 8-9.

The principle of construction to do substantial justice has been held specifically to apply to the requirements of affirmative and particular pleading imposed by Rules 8(c) and 9(b) respectively. Trinity Carton Co. v. Falstaff Brewing Corp, .'767 F.2d 184, 194 (5th Cir. 1985); Machado v. McGrath, 193 F.2d 706 (D.C. Cir. 1951), cert. denied, 342 U.S. 948 (1952).

The principle of construction to do justice is at its strongest when the pleading was drafted by apro se litigant rather than by an attorney. Pro se pleadings should be construed to state a cause of action or a valid defense unless the Court "can say with assurance "that" it appears' beyond doubt that the [litigant] can prove no set of facts in support0, of his claim which would entitle him to relief. Haines b. Kerner, 404 U.S. 519, 520-21 (1972), quoting Conley v. Gibson, 355 U.S. 41, 45--46 (1957). Indeed, the very fact that "in the great run of pro se cases, the issues are faintly articulated and dimly perceived" imposes on the trier of fact

a greater burden and a correlatively greater responsibility....
to insure that constitutional deprivations are redressed and
that justice is done....Accordingly, the Court in considering
the defendants' motion to dismiss will not permit technical
pleading requirements to defeat the vindication of any
constitutional rights which the plaintiff alleges, however
inartfully, to have been infringed.

Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir. 1978), quoting Canty v. Citv of Richmond, 383 F. Supp. 1396 (E.D. Va. 1974), aff'd, 526 F.2d 587 (4th Cir. 1975), . cert. denied, 423 U.S. 1062 (1976).

Although the reported cases tend to involve pro se plaintiffs rather than defendants, the principle that generates them seems even more compelling when someone who cannot afford a lawyer is called into court against his will. (Nor do we believe our duty to construe pleadings so as to avoid the inadvertent surrender of legal rights by [5ASR2d117] a pro se litigant is limited to cases in which the rights in question are grounded in the Constitution rather than in statutory or common law.)

In any case, the pleading to which plaintiff takes exception was if anything unusually informative for a pleading filed in the High Court. It is true that the defendants did not use the fraud, mutual mistake, unconscionability, or accord and satisfaction. We doubt that the defendants know those words, and they had no obligation to use them. "Under Rule 8, a pleading must contain a short and plain statement of the claim showing that the pleader is entitled to relief. It is not necessary to set out the legal theory on which the claim is based. " Siegelman v. Cunard White Star, 221 F.2d 189 (2d Cir. 1955) (per Harlan, J. ). Rather, defendants told the plaintiff and the Court that they had executed a promissory note "only on the value of the truck which was at that time about $6,000.00" and that "[i]n the year 1983, [plaintiff] Development Bank ceased the truck from us, and sold it to another client. So we assumed that the balance owed has been cleared. " These statements put the plaintiff on fair notice (1) that the defendants denied making a contract in the amount of the note plaintiff planned to introduce as evidence; (2) that in the event the Court concluded they did sign such a note, the only value they received for it was a $6000 truck; and (3) that when the plaintiff took the truck back the defendants believed they were taking it in lieu of further payments. These three contentions--- which support, respectively, the legal conclusions called fraud or mutual mistake,3 unconscionability, [5ASR2d118]and accord and satisfaction ---were the very ones defendants made and proved at trial.4

Moreover, the reason for the affirmative and particular pleading requirements is to avoid unfair surprise. Even if we were to hold that defendants had technically failed to comply with these requirements, we should deny a motion for new trial in the absence of some plausible basis on which to conclude that plaintiff was unfairly surprised or otherwise prejudiced by the assertion of affirmative defenses at trial. See Bull's Corner [5ASR2d119] Restaurant. Inc.. v. Director of Federal Management Agency, 759 F.2d 500 (5th Cir. 1985). The only basis alleged is that "plaintiff would show that it could have produced additional documentary evidence tending to disprove any defense of fraud or mistake." We requested at the oral argument on this motion, and then requested again in writing, that plaintiff submit any such evidence so that we could consider it in deciding whether to grant a new trial. None has been forthcoming.

Finally, any defects in the pleadings were mooted by the introduction at trial of evidence on the basis of which the Court found itself compelled to conclude that defendants never signed a note for the amount in question and that in any case the contract alleged by the plaintiff was unconscionable. Plaintiff's counsel did not object to the introduction of this evidence,5 and [5ASR2d120] introduced much of the evidence for the holding of unconscionability 6 himself.

"The legal rights of the [parties] are to be determined by the law
and the facts of the case and not by some language of the claim."...
" [P]articular legal theories of counsel yield to the court's duty to
grant the relief to which the prevailing party is entitled, whether
demanded or not. " , .The fact that a [party] may have erred in his
choice of legal theory will not preclude him from obtaining relief
under another legal theory,

2A Moore's federal Practice par. 8.14 at 8-86, quoting Kowalewski v, Pennsylvania R.R Co., 141 F, Supp. 565, 569 (D. Del. 1956) and Gins v. Mauser Plumbing Supply Co., 148 F.2d 974, 976 (2d Cir, 1945) (per Clark, J. ) .The alternative proposition ---that a court, having listened to the evidence adduced by both sides at trial and concluded on the basis of that evidence that a contract never occurred or was otherwise legally unenforceable, should enforce it anyway ---was the sort of thing Mr. Bumble had in mind when he observed that "the law is a ass, a idiot." In the present case it would tend to validate the portrayal of courts in a "bourgeois" society as operating primarily to increase the leverage that the powerful enjoy over the powerless. [4ASR121]

IV. Fraud or Mutual Mistake

Plaintiff also contends that "there was no, evidence, or insufficient evidence, to support a finding of fraud or mistake. "

Defendants' principal contention at trial was they had signed papers which were blank or nearly blank, and which they understood would be completed in an amount of about $6000. All three judges examined the documents and found them consistent with this testimony. We found Mr. Ilalio to be a credible witness, and we also took judicial notice of the fact that the Bank officers with whom the Ilalios dealt were later convicted of various fraud-related crimes whose details were quite similar to those alleged by the Ilalios in this case. The Bank did not offer any testimonial evidence to rebut the defendants' version of these events. Accordingly, the preponderance of the evidence supports the defendants' contention. In our original opinion we called this contention "fraud" ( if the Bank officials knew of the Ilalios understanding and nevertheless filled out the contract in a different amount) or "mutual mistake" the Bank officials were unaware of the Ilalios' understanding). Another way to say the same thing is that there was no agreement between the parties on an essential term of the contract and therefore there was no contract. The plaintiff was entitled to the return of what it gave the defendants; this it has received .

V. Unconscionability

We also held that the contract alleged by the Bank was unconscionable; it was a contract "such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other, " and was therefore not enforceable in a court of law and equity. Plaintiff urges that this holding was in error.

Plaintiff seems to argue that in order for a contract to be legally unenforceable under the doctrine of unconscionability it is necessary to find both "failure of consideration" and a complete lack of "voluntariness" such as would be necessary to support a defense of duress. On the contrary, either or both of these findings were necessary to the conclusion that a contract was unconscionable the doctrine of unconscionability would have no separate existence. See, however Restatement of Contracts 2d § 208 ( 1981), quoted in [5ASR2d122] footnote 2 of our original opinion. See also Lampley v. Pertuit, 199 So. 2d 452, 454 (Miss. 1967), quoting Bethea v. Mullins, 85 So. 2d 452, 456 (1956) and 16 Am. Jur. Deeds § 33:

" [I] f the inadequacy of consideration is so glaring as to stamp the
transaction with fraud and to shock the common sense of honesty,
a court of equity will intervene. If the consideration is grossly
inadequate, equity in any case will lay hold of slight circumstances
of oppression, fraud, or duress in order to rescind the conveyance. "

In the present case there was some consideration for the note the Bank says the llalio signed, but it was so grossly inadequate as to raise serious questions about the bargaining process.7 And the llalios, as plaintiff points out, were legally and physically free "to refrain [4ASR123] from contracting at all," just as the people in other unconscionability cases were free not to buy refrigerators, stereos, or dance lessons. There was no "legal duress" in those cases or in this one. The evidence, however, is replete with indicia of unequal bargaining power, sharp practice, and the absence of any real bargaining process. If the Ilalios had signed a $15,164 note at all (which we believe they did not) the transaction would have presented a classic case of unconscionability as defined by the cases and other authorities cited in our original opinion.

VI. The Seizure and Sale of the Truck

The plaintiff also urges that we erred in observing that if the truck had been worth $15,000 plaintiff probably would not have had the legal right to seize it without judicial foreclosure, sell it for $6000 in an unadvertised private sale without notice to the defendants, and then proceed against them for the remaining $9000 plus several thousands of dollars in interest, costs, and attorney fees. Although we believe this to be a correct statement of the law, we refrain from reiterating our reasons. The statement was obiter dictum. It was made in the hope of administering, in advance of any litigation in which the issue is unavoidable, what plaintiff characterizes as a " rude surprise " to anyone who might be planning such a transaction. (We did err in stating that the sample mortgage form contains no provision to the effect that the Bank may repossess without judicial foreclosure. It does contain such a provision. )

VII. The Subsequent "Agreement"

Finally, plaintiff urges that we erred in finding that there was no consideration for the "agreement" signed by Mr. Ilalio in 1986, by which he undertook " in consideration of the creditor's forbearance from suit on the promissory note" to pay the amount due on the note and to "waive all defenses of the statute of limitations and other waiveable defenses" in the event of a lawsuit.

We agree with plaintiff that there are circumstances in which forbearance to press an invalid claim can be consideration for a new agreement. Our statement that " [i]n fact there was no consideration for this 'agreement' and it was therefore not legally binding on the [5ASR2d124] Ilalios" was too broad in its implications if not in its application to the facts of this case.

Forbearance from pressing a claim that is later found to be invalid can be consideration for a new promise provided that, at the time the new promise is made, the forbearing party believes in good faith that his claim is just. Restatement of Contracts 2d § 74; Corbin on Contracts § 140. This does not mean, however, that courts are bound to accept and enforce at face value every piece of paper declaring itself to be a settlement. On the contrary, such documents are customarily given somewhat stricter judicial scrutiny than contracts involving more palpable consideration.8

Such scrutiny is especially appropriate when the invalidity of the initial "agreement" was due to gross inadequacy of consideration, inequality of bargaining power and sophistication, and circumstances which are not technically fraud and duress but somewhat resemble them to the naked eye. If the law gave a person or institution in possession of such a document the absolute power to dissociate it from the shameful circumstances of its birth simply by calling the "debtor" in, showing him his signature on the document, and getting him to sign another one just like it under threat of immediate legal proceedings, we would not need courts. Collection agencies would do.

We are not suggesting that the new management of the Bank operates as the old one did, or that any individual Bank officer had reason to know the circumstances under which the Ilalios signed the first document. (Indeed, from plaintiff's pleading it appears that the new management of the Bank may have believed until shortly before the trial of this case that Mr. and Mrs. Ilalio actually received the $15,164 which is the stated consideration for the promissory note.) The plaintiff in this case, however, is not any particular officer but the Bank itself. When the Bank concluded the "settlement" in 1986 it was chargeable with the knowledge and with the actions of its agents who dealt with the Ilalios in 1982.[4ASR126] It therefore cannot be said to have believed in good faith that the Ilalios owed it $13,000. Such good faith is essential for forbearance on an invalid claim to constitute consideration. See generally Corbin on Contracts § 140.9 The 1986 agreement therefore lacked consideration.

Even if the Bank were held to be in good faith (as we hold it was not) with regard to the validity of its original claim, forbearance to sue on it would not fix everything that was wrong with it. This is true for several reasons.

First, although the new management of the Bank has not engaged in the sorts of practices the old management did, the second transaction cannot fairly be described as one in which two parties[5ASR2d127] worked out a "settlement" of their differences at arm's length. The 1986 document was a contract of adhesion offered on a take-it-or-leave-it basis by one of the most powerful economic institutions in the Territory to a party who was far poorer and fa less sophisticated than the drafting party and who was unrepresented by counsel. Although he was physically free ( just as he was in 1982) "to refrain from contracting at all," the Bank threatened him with an immediate lawsuit if he did not sign. It is unfortunately the case that such a threat will often induce people, particularly poor people and people in American Samoa, to sign just about anything. When it presented Mr. Ilalio with the 1986 document the Bank knew or should have known that Mr. Ilalio would probably be far more afraid of a lawsuit than he had any good reason to be (than, for instance, the Bank itself would have been if Mr. Ilalio had been threatening to sue it on a questionable claim) and that whether he signed would have more to do with this fear than with any estimate of the validity of his defenses.10 [5ASR2d128]

Another reason the 1986 "agreement" should not constitute a bar to Mr. Ilalio's assertion of his defenses to the original promissory note is that it did not clearly purport to do so. Rather, the 1986 document was itself vague and ambiguous on what the defendants' rights would be in the event the parties eventually faced each other in litigation. It provides that in the event of such litigation Mr. Ilalio "shall waive all defenses of the statute of limitations and other waiveable defenses." This clearly implies the preservation of his right to assert either, "non-waiveable" defenses .

What might these be? At the very least they would seem to include defenses which, although they may be reconcilable with the classical premises of contract law, exist at least partly to protect the general public or the integrity of the legal system. The clearest example of such a non- waiveable defense is illegality. We would be inclined to put fraud and unconscionability on the list as well, but we need not reach those legal questions in order to construe the "waiveable defenses" clause in the 1986 "agreement." If it is not clear to the Court that fraud and unconscionability are waiveable, it certainly would not have been clear to a reasonable person in the position of Mr, Ilalio. Vague and ambiguous[4ASR129] language is to be construed against the drafter. Moreover, the phrase "the statute of limitations and other waiveable defenses" clearly connotes "the statute of limitations and other defenses like it," that is, technical barriers to the enforcement of an otherwise just debt. Accordingly, by the best reading of the "agreement" itself Mr. Ilalio preserved his right to assert substantive defenses to the validity of the original contract. (Mrs. Ilalio, who did not sign the 1986 document, has not waived any defenses. )

Yet another reason that the 1986 transaction should not be held to have accomplished everything the Bank would like it to accomplish is that the Bank gave up very, very little. There was not one penny's worth of compromise on the substance of the claim. There was no delay in foreclosing any security interest --- the truck, it will be recalled, already having been taken. And a judgment against a poor person in American Samoa is worth very little in and of itself. It does not give rise to a power to seize the debtor's real property unless it is secured by a specific mortgage on such property. A.S.C.A. § 43.1528. With regard to personal property and future income, the judgment debtor has a legal right to an order allowing him to retain whatever is necessary to support himself and his dependents and also to comply with customary obligations (often quite extensive and burdensome) to his extended family. A.S.C.A. § 43.1501. As a practical matter this exempts just about everything. The $200 per month that the Bank was to receive under the agreement (and did receive for several months) was almost certainly higher than what it would have received if it had secured a judgment and tried to execute it. The agreement was, in other words, a far better deal for the Bank than for the Ilalios even if we do not extend it beyond its most obvious meaning to include a waiver of the defenses of fraud and unconscionability. This was true, moreover, for legal and practical reasons that were well known to the Bank and almost certainly not known to the Ilalios.

All this is not to say that signatures on documents never mean anything, but only that they do not always mean everything. If the 1982 transaction had been above board and the Bank were using the 1986 agreement for the purpose for which it seems to have been designed --- to toll the statute of limitations ---its forbearance from suit would be valid consideration for Mr. Ilalio's [5ASR2d130] agreement to waive the statute. The Bank's palpably detrimental reliance on his explicit agreement to waive the statute would overwhelm the equitable arguments against enforcement.11 The document is not, however, a complete substitute for all the missing substantive elements ---a meeting of the minds or some objective manifestation thereof, considerations that were even arguably equivalent, parties of roughly comparable bargaining power and sophistication, and a bargaining process untainted by sharp practice--- in the absence of which the original transaction did not give rise to a binding contract or a just debt.

VIII. Due Process

The Bank argues that our original holding was in derogation of its right to due process of law, Since we believe the holding to have been in accordance with law and with the evidence and pleadings in the case, we conclude that it did not deprive the Bank of due process.

Order

The motion for new trial is denied.

________________

1 Wharton v. Abbeville School Dist. No. 60, 608 F. Supp. 70, 73 (S.D. Cal. 1984) ("the Complaint is hereby dismissed" after trial on the merits); Lary v. United States, 608 F. Supp. 258, 263 (N.D. Ala. 1985) ("an order will be entered granting the defendant summary judgment and dismissing the case in its entirety" ) ; Complaint of Tracy, 608 F. Supp. 263, 269 (D. Mass. 1985) ("the petition to limit liability is dismissed" after adjudication of the merits on motion for summary judgment); McGhan v. Ebersol, 608 F. Supp. 277, 288 (S.D.N.Y. 1985) ("The case is dismissed and the clerk is directed to enter judgment" on the merits after motion for summary judgment); Carter v. Oliver T. Carr Co., 608 F. Supp. 381, 383 (D.D.C. 1985) ("The complaint is accordingly dismissed with prejudice" after trial on the merits); Gibson v. Sullivan Trail Coal Co., 608 F. Supp. 390, 392 (D.V.I. 1985) ("Judgment will enter dismissing the complaint of the plaintiff " after summary judgment on the merits). The cited cases comprise six of the twelve cases in the 400 surveyed pages of the Federal Supplement in which the plaintiffs were denied all relief after an adjudication of the merits. Six of these cases were decided on motions for summary judgment and six after trial.

2 See. e.g., Folasa v. Scanlan, 4 A.S.R. 194, 198 (1961) (per Morrow, C.J. )

("Accordingly, it is ORDERED that the plaintiff Folasa's petition be and the same is hereby dismissed" after trial on the merits); Tali v. Tupeona, 4 A.S.R. 199, 206 (1961) (per Morrow, C.J.) ("This petition must be dismissed."); Tumui v. Fa'alevao, 2 A.S.R.2d 33, 35 ( 1983) ("As to all other petitioners the matter is dismissed."). [5ASR2d117]

3 Contrary to the plaintiff's contentions, it is far from clear that the fraud or mutual mistake alleged in this case was an affirmative defense at all. If defendants had admitted to the contract as charged by plaintiff but demanded to be relieved from it on the ground that they were induced to contract by means of extrinsic fraud, it would be an affirmative defense. In this case defendants pled and proved that the contract alleged by the Bank never occurred. Rather, defendants had agreed to a different contract and plaintiff's agents had filled in the promissory note in the wrong amount. See Part IV infra. If a defense merely negates some element of the plaintiff's prima facie case, it need not be affirmatively pled. [5ASR2d118]

Masuen v. E.L. Lien & Sons. Inc., 714 F.2d 55 (8th Cir. 1983) .

4 We are not sure whether the basis for plaintiff's argument that these defenses were not affirmatively pled is (a) that the names of the doctrines were not mentioned; (b) that the statements in the answer were not detailed enough to put plaintiff on notice that the defenses would be raised; or (c) that the defenses should have been pled in separate paragraphs and labeled "affirmative defenses."

The first two contentions are dealt with in the text. As for the third contention, we think the "affirmativeness" requirement was met here by the statement of the facts giving rise to the defenses of fraud and unconscionability in a "Yes, but ... format within a paragraph containing an admission. We have been unable to find any authority for the proposition that a separate paragraph is a sine qua non of the "affirmative pleading" requirement under the federal rule. In any case, we interpret our own Rule 8(c) to require only that affirmative defenses be affirmatively stated rather than subsumed in simple denials of the plaintiff's prima facie case. For instance, if defendants had answered plaintiff's allegation that they signed a $15,164 note wi th the word "Deny," they would not have complied with the rule. Instead they said, " Admit. But only on the value of the truck which was at the time about $6000." This indicated, although not artfully, the defense they planned to raise at trial.

The statement of the facts giving rise to the defense of accord and satisfaction was in a separate paragraph at the conclusion of the numbered admissions and denials. [5ASR2d119]

5 At oral argument on this motion, counsel for the Bank suggested that he let the Ilalios tell their story to the Court in their own way because he believes that giving such an opportunity to pro se defendants gives rise to a desirable "catharsis" : the defendants feel better about having to pay the amount demanded because the Court has listened to everything they have to say. We appreciate this sentiment, and we agree that a full and fair hearing may ease the pain of losing a case. One of the risks the Bank incurred when it opted to let the Ilalios have an unequivocal "day in court " rather than to raise technical objections at every turn, however, was that the Ilalios might win. In any case, we note that Mr. Ilalio was vigorously cross-examined by counsel for the Bank and also by the Court, and that none of the conclusions reached by the Court rested on evidence that was inconsistent with the pleadings or otherwise inadmissible. Although it is always conceivable that another trial might produce a different result, the Bank's contention that it did not really hold the Ilalios' feet to the fire at the first trial is insufficient to justify the expense and inconvenience of a second proceeding. This is particularly true in a case in which the party seeking a new trial has full-time "in-house" counsel at its disposal whereas the parties who prevailed at the first trial cannot afford [5ASR2d120] a lawyer.

6 Plaintiff's evidence as well as defendant's supported the conclusion that the only consideration received by the defendants for the $15,000 note was the conditional use of a $6,000 truck. This evidence was, incidentally, at variance with plaintiff's pleading, which alleged that the consideration was "the loan of DBAS funds for the purchase of a vehicle." We point this out not to criticize counsel for plaintiff, whose pleadings are generally accurate and informative, but to underscore the inappropriateness of enforcing a hyperstrict construction of the rules of pleading against Mr. and Mrs. Ilalio.

7 In its memorandum in support of the motion for new trial plaintiff argues that the consideration for the Ilalios' $15,000 debt was more than just the use of a $6000 truck, Plaintiff argues that the Bank forbore from suing Mr. llalio's half-brother; that the Ilalio's' situation was therefore "analogous to the situation of a co-maker or co-signer"; and that "we do not know what consideration, other than the use of the truck," defendants "may have received f rom the relative."

This argument is contrary to the evidence. The Ilalios asserted in their pleadings and at trial that their only reason for signing anything and the only thing they received was the continued use of the truck; the Bank introduced no evidence of a promise to forbear or of any discussion of forbearance against the half-brother, much less of the hypothetical "other consideration" of which " we do not know. " The evidence is overwhelming that the Ilalios contracted with the Bank only because of the Bank officials' threats to "sell the truck to "another customer" and that concern for the image and credit rating of the absent and judgment-proof half-brother was not a factor that was ever mentioned or considered by either side. The Ilalios were not, therefore, analogous to co-signors; rather, the Bank officials were analogous to used car salesmen.

8 See Corbin on Contracts § 140 and cases cited therein. Many of the cases in which courts have held settlements unenforceable concern accident victims who release tortfeasors or insurance companies from all liability in exchange for relatively [5ASR2d125] [footnote 8, continued]:

small sums of money. The most common rationale is that the parties were mutually mistaken about the extent of the victim's injuries; it is clear, however, that many of the cases have more to do with whether "the agreement was fairly and knowingly made."Farrington v. Harlem Savings Bank, 19 N.E.2d 657, 657 (N.Y. 1939). See also Mangini v. McClurg, 249 N.E.2d 386, 392 (N.Y. 1969) ("The requirement of an 'agreement fairly and knowingly made' has been extended ... to cover other situations [i.e., cases where there was no actual fraud] where because the releasor has had little time for investigation or deliberation, or because of the existence of overreaching or unfair circumstances, it was deemed inequitable to allow the release to serve as a bar to the claim of the injured party."); Perdikouris v. The S/S Olvmpos, 185 F. 5upp. 140 (S.D.N.Y. 1960) ("[C]onsidering the inadequacy of the consideration, the mistaken belief that libellant [an injured seaman] was cured, the circumstances surrounding the legal advice made available to libellant [a brief consultation with an attorney friendly to the shipowner], and libellant's lack of full understanding of his rights, we reach the conclusion that respondent's plea of accord and satisfaction must be overruled [and] the release set aside....").

The principles at work in the personal injury release cases apply with equal force to the present case. In both situations (1) the party that drafted and pressed for the "settlement" is a business entity experienced in and familiar with such transactions; (2) the other party is an individual who has no such experience or familiarity and who generally signs the document without benefit of legal counsel; (3) the transaction was a whirlwind settlement in which there was no evidence that the weaker party negotiated, deliberated, or fully understood what he was giving up, and in which the stronger party employed threats or promises (usually threats or promises to do things that the stronger party had a legal right to do) to encourage a quick decision; and (4) the exchange was lopsided, consisting of the surrender of potentially valuable legal rights by the weaker party in exchange for a small sum or other trivial consideration from the stronger party. [5ASR2d126]

9 Although courts have varied widely in their analyses of the reasons for the good faith requirement, they tend to focus not on whether the forbearing party "believe[s] his suit can be won" but on whether he has a reasonable belief "that it is just to try to enforce his claim. " Corbin on Contracts § 140 at 601-02. This is true despite the fact that there may be some benefit to the alleged debtor and some detriment to the supposed creditor even in forbearance on an obviously unjust claim. The rule that forbearance on such a claim cannot be consideration is imposed "on grounds of public policy.... [I]f it were recognized as sufficient, ill- founded claims would be infinitely increased in number and the offense that is known as blackmail would become a profitable racket. "Id. at 597-98.

In this case the Bank officials who presented Mr. Ilalio with the 1986 "agreement" probably believed they had a good chance to prevail on their claim. They might have concluded this even if they had known (as the Bank itself must be held to have known) all the facts about the original transaction; equitable defenses often depend on the discretion of the trial judge. This means only that the Bank might reasonably have believed its claim to be unjust but winnable. For the practical reason given by Corbin, and for the related reason that many judges regard blackmail enforcement as bad for their image and for their insomnia, forbearance to press such a claim cannot serve as consideration. [5ASR2d127]

10 At trial Mr. Ilalio was questioned sharply by the author of this opinion about why he signed the "agreement" if he did not in fact believe he owed the Bank any money. After listening to Mr. Ilalio's answers, observing his demeanor, and discussing the matter with the two Samoan Associate Judges who sat on the case, however, the author came to the conclusion that the "agreement" had more to do with the factors discussed in the text than with anything Mr. Ilalio believed, intended, or bargained for with respect to the Bank's original claim against him.

Courts and commentators in the United States have long remarked the ease with which people can be induced to sign adhesion contracts containing the most draconian kinds of provisions, including waivers of important substantive and procedural rights in the event of litigation. This phenomenon is particularly pronounced among people in the lower economic strata; indeed, it is the phenomenon that gave rise to the doctrine of unconscionability and other mitigating devices. It is particularly strong in this Territory.

In the Samoan culture it is considered somewhat impolite to refuse almost any request, including a request to give away large amounts of money or other property. [5ASR2d128]

Avoidance of immediate conflict , with the possibility that real agreement can be reached at some time in the future, is greatly preferred to a direct refusal. This is especially true when a request is made by someone with a claim to superior social status or to official authority .

A related phenomenon is an unusually strong desire to avoid courts, which are authoritative and powerful yet mysterious, untraditional, and somewhat foreign. A threatened lawsuit therefore has a far more vivid ad terrorem effect on a person of limited-means and sophistication in Samoa than it would have on the reasonable person in New York. It is inconceivable that an institution doing business in the Territory could remain unaware of this for very long, and the High Court cannot ignore it either. [5ASR2d130]

11 This would be true as a matter of common law and equity even in the absence of the territorial statute explicitly providing that causes of action founded in contract are revived by signed admissions. A.S.C.A. § 43,0128, This statute has no bearing on the present case. It provides only that a subsequent acknowledgment can "revive" an obligation that was formerly binding but has lapsed for some reason, It is fully consistent with our holding that an acknowledgment does not create (in the absence of non-trivial consideration and/or a process of genuine bargaining) a valid contract where there was none to "revive."

Development Bank v. Ilalio;


DEVELOPMENT BANK OF AMERICAN SAMOA, Plaintiff

v.

PALE ILALIO and TOA'I ILALIO,Defendants

High Court of American Samoa

Trial Division

CA No. 34-87

July 2, 1987

Parol evidence is admissible to show that an agreement reached by the parties was incorrectly reduced to writing because of fraud or mutual mistake, or that there was no agreement at all for one of these reasons.

When a party signed a promissory note on which the line indicating the amount was left blank, with the understanding that he was agreeing to assume liability for the fair market value of a truck, and where promisee bank later filled in an amount two- and-one-half times greater than that fair market value, the note was voidable either for fraud or for mutual mistake, depending on whether the bank officials knew or did not know of the promisor's understanding.

The common law of contracts applies in American Samoa unless it conflicts with a territorial statute or is unsuitable to local conditions. A.S.C.A. § 1.0201.

A party cannot be relieved of his contractual obligations simply for having made a bad bargain.

If a contract or any of its terms is unconscionable, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable provisions, or so limit the application of the unconscionable provisions as to avoid any unconscionable result. Restatement of Contracts 2d § 208.

A radical disparity between the contract price of a good or service and its fair market value, while not alone sufficient to void the contract, raises [5ASR2d2] doubts about whether the transaction was free from fraud and coercion.

The legal importance of an unfair bargaining process diminishes when the considerations given and received by the weaker party approach what they would have been had the process been above board.

A contract is ordinarily rendered unenforceable on the ground of unconscionability only when both its substance and the bargaining process leading up to it are unconscionable.

Obligation to exercise good faith in the execution of contracts requires creditor who seizes and sells collateral to exercise due diligence to secure a fair price for it.

Creditor bank that repossessed and sold collateral under commercially unreasonable circumstances for far less than its apparent market value would be held to have done so in full payment of the debt, either under the principle of accord and satisfaction or because in the absence of circumstances ensuring a fair appraisal of its value the thing is presumed to be worth the amount paid for it.

A contract unenforceable for fraud or unconscionability cannot become enforceable simply because the institution on whose behalf the contract was made no longer employs the individuals whose misdealings tainted the contract.

Before REES, Chief Justice, AFUOLA, Associate Judge, and TUIAFONO, Associate Judge.

Counsel: For Plaintiff, Robert Dennison

Pale and Toa'i Ilalio pro se

Plaintiff Development Bank sues to collect an overdue balance of $10,004.05 on a promissory note. With interest, costs, and attorney fees the amount of the requested judgment is $14,355.51. Defendants claim that their signatures on the note were obtained by fraud and that the much smaller obligation they actually incurred to the Bank has been discharged.

The undisputed facts are that the debt was originally incurred by Mr. Ilalio's half-brother in connection with the purchase of a pickup truck for [5ASR2d3] business purposes. It was the understanding of the parties that the note was secured by the truck. Although the Bank does not have copies of the documents by which this security was effected, counsel for the Bank has informed the Court that such documentation would have consisted either of "being the' legal owner' on the certificate of title" or of a written chattel mortgage agreement.

In 1981 or early 1982 the half-brother left the Territory. The truck was left in possession of Mr. Ilalio, who also used it for business purposes. He soon began receiving telephone calls from Bank officials who stated that they intended to repossess the truck unless he agreed to accept liability for his half-brother's debt. According to Mr. Ilalio, he repeatedly informed the officials that he would agree to be liable for the fair value of the truck but not for any greater amount. Finally, on June 1, 1982, he was warned that if he and his wife did not go down to the Development Bank immediately to sign the papers, it would be sold to one of the "other customers" who were "lined up waiting to buy it."

Mr. and Mrs. Ilalio did go to the Bank and sign the papers. Mr. Ilalio testified, however, that the promissory note was entirely blank when it was presented for his signature, and that on an accompanying "application" the line indicating the amount of the loan was left blank. He testified that he was told only that his monthly payments would be $165, and that the Bank would have to figure out the total amount of the loan and fill it in later. He also testified that he believed he was agreeing only to pay the Bank for the value of the truck.

A few months later, Mr. and Mrs. Ilalio themselves left the Territory, having paid $580 on the note. The truck was left with another relative. In June of 1983 two men from the bank came to this relative's house and took the truck. It was sold, apparently by private sale, for $6000.

In 1986 Mr. and Mrs. Ilalio returned to American Samoa. They were soon contacted by Development Bank officials who told them they still owed over $10,000 in principal plus accrued interest on the promissory note. Mr. and Mrs. Ilalio then went to the Development Bank and signed an agreement acknowledging this debt and agreeing to pay $200 per month on it. They made three[5ASR2d4] payments and then stopped, giving rise to this suit.

The defendants, who are not represented by counsel, make arguments that are similar to several of the traditional grounds on which courts have sometimes held contracts unenforceable:

1) Fraud or Mutual Mistake. Defendants say that they only agreed to obligate themselves for the value of the truck, which was about $6000, and that the amount of $15,164.16 was filled in by Development Bank officials without their knowledge or consent. If they are telling the truth the contract is voidable for fraud or mutual mistake, depending on whether the officials knew of the defendants' understanding. l

Although we would not usually be inclined to believe that anyone would sign a blank promissory note, in this case it may well be true. Mr. Ilalio did not impress us as an untruthful witness. The documentary evidence submitted by the Bank is not inconsistent with his story: on the "application" the amount of the loan and a few other items seem to have been written by a different hand and with a different pen than the items containing personal information on Mr. Ilalio. The Bank presented no witness to the transaction, probably because neither of the Development Bank officials with whom the defendants dealt is currently employed by the Bank, both of them having gone to jail for activities similar to those of which the Ilalios accuse them. See American Samoa Government v. To'oto'o, 2 A.S.R.2d 61 (1985) (larceny, fraud, embezzlement, making a false entry in an official record); American Samoa Government v. Suisala, CR Nos. 4-85 and 5-85 (eleven counts of embezzlement, one count of tampering with a witness). See also Filioiali'i v. Adams, CA No. 124-85, affirmed, 3 A.S.R.2d 105 (1986), documenting an attempt by these same officials, acting on behalf of the Bank, to "sell" and take a "mortgage" on property that belonged to someone else. But the strongest [5ASR2d5] argument for the credibility of Mr. Ilalio's story is the implausibility of the alternative hypothesis: that he willingly agreed to buy a $6000 truck (not the truck itself, actually, but the use of it for as long as he kept making payments and his half-brother did not return) for $15,000 plus several thousand dollars in interest.

2) Unconscionability. We need not decide which of these two improbable events took place, however, because in either case the agreement was unenforceable. If the Bank actually did sell the Ilalios the conditional use of a truck (or even the whole truck) for over twice its market value, it was a contract "such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other." Hume v. United States, 132 U.S. 406 (1889), quotingEarl of Chesterfield v. Jannsen, 28 Eng. Rep. 82, 100 (Ch. 1750). According to the common law of contracts, which applies in American Samoa except when it conflicts with territorial statutes or is unsuitable to local conditions, such a contract is unconscionable and should not be enforced.2

This is not to say that a party can be relieved of his contractual obligations simply because he made a bad bargain. Although courts have occasionally held contracts to be unconscionable on the sole ground that there was a gross disparity in value between the two considerations exchanged, this tends to substitute the court for the contracting parties as the judge of value. The essence of the right to contract is the freedom of each person to decide what he is [5ASR2d6] willing to pay for the things he wants, even if his value choices differ from those made by most other people.

And yet the idea of "fair" or "market" value is not altogether irrelevant to the determination of whether a contract should be enforced. When a person pays too much more for a thing than he could have paid by walking down the street to another place of business, it raises doubts about whether the transaction was free from fraud and coercion. By the same token, even the most serious questions about the fairness of the bargaining process become far less serious if the considerations given and received by the weaker party seem to be about what they would have been if the process had been above board. (The typical person who did business with the corrupt former management of the Development Bank, for instance, would have received $15,000 in exchange for his signature on a promise to repay $15,000 plus interest. Unlike the defendants in this case, who are being sued on a " loan " that was not a loan at all, such a person would have a difficult, time proving that he was damaged by irregularities in the bargaining process. )

Accordingly, most courts have held that a contract is unenforceable only when there is convincing evidence both of " substantive" and of "procedural" unconscionability:

[W]hen a party of little bargaining power, and hence little real
choice, signs a commercially unreasonable contract with little
or no knowledge of its terms, it is hardly likely that his consent,
or even an objective manifestation of his consent, was ever given
to all the terms. In such a case the usual rule that the terms of the
contract are not to be questioned should be abandoned and the
court should consider whether the terms of the contract are so
unfair that enforcement should be withheld.

Williams v. Walker-Thomas Furniture Co. , 350 F.2d 445, 449 (D.C. Cir- 1965) (footnotes omitted).

In this case, assuming Mr. and Mrs. Ilalio actually did sign a document obligating them to pay $15,000 for the use of the truck, it was a contract of adhesion presented to them by a Bank official with vastly superior bargaining power and business [5ASR2d7] sophistication (and with a certified penchant for dishonesty, sharp practice, and self-dealing) along with a threat that an implement of their livelihood would be " sold " to " another customer " if they did not sign immediately. Assuming that the Bank had a legal right to repossess and sell the truck, a threat to do so would generally not render the resulting contract void for duress. It did, however, contribute to the "absence of meaningful choice" which requires that the court inquire into the substantive fairness of the contract before enforcing it against the defendants. Williams v. Walker-Thomas Furniture Co. , supra, 350 F.2d at 449.

The Bank soon did repossess the truck, which was the only thing it ever gave the Ilalios. It also has received about $1200 of the defendants' money, which is enough to compensate it for their use of the truck during the time between the contract and the repossession. The Bank demands that we order the Ilalios to pay another $10,000 plus interest; this we decline to do.

3) Accord and Satisfaction. The previous discussion assumes that the truck was worth about $6000. This was the uncontroverted testimony of Mr. Ilalio, who said that at the time of this transaction brand new pickup trucks were selling for $7000 or $8000. Nothing else is known about the truck except that it was a 1970's model and that it was sold by the bank in 1982 for $6000; the bank no longer has any records concerning the transaction or the truck. Accordingly, we find as a fact that it was worth between $6000 and $7000. If, however, the truck had actually been worth an amount close to the $15,000 the Ilalios allegedly agreed to pay for it,3 it is not at all clear that the Bank had the right to sell it for far less than its market value and then recover the balance of the loan amount from the defendants.[5ASR2d8]

The heady days of creditor self-help unfettered by due process of law are gone now, if indeed they ever existed. At common law a mortgagee had no right to repossess without resort to judicial foreclosure unless there was a clear and explicit provision in the contract giving him the right to do so. There is no such clause in the chattel mortgage form submitted by the Bank, which may or may not have been the form signed by Mr. Ilalio's half-brother. Nor would such a provision be clearly implied by the Bank's designation as "legal owner" on the title to the truck, where the Bank led the buyer to understand that the designation was intended as a security device rather than an actual statement of who owns the vehicle. (Vagueness and ambiguity in security devices, as in other contracts, are resolved against the drafter. )

In any case there is always an obligation to exercise good faith in the execution of contracts. In the case of secured transactions one incident of this obligation is that a creditor who seizes and sells a thing to satisfy his debt must exercise due diligence to secure a fair price for it. This obligation has been codified by statute in all fifty states; where it does not require a judicial foreclosure or an advertised public sale it at least requires that the sale be conducted in accordance with commercially reasonable practices and that there be notice to the mortgagor. See, e.g., Uniform. Commercial Code §§ 9-504-07. Creditors who repossess things and dispose of them without such indicia of good faith have been held to have accepted them in full payment of the whole debt, either under the principle of accord and satisfaction (as the defendants argue in this case) or because in the absence of circumstances ensuring an accurate appraisal of its value the thing is presumed to be worth the amount of the debt. If we thought the truck had been worth $15,000 or anything close to it in 1981, we would be strongly inclined to believe that its unadvertised sale for $6000 in 1982 was a breach of the obligation of good faith which relieved the defendants of any obligation to pay the balance of the amount due on the note.4[5ASR2d9]

Accordingly, the action is dismissed.


1 Parol evidence is admissible to show that an agreement reached by the parties was improperly reduced to writing because of fraud or mutual mistake, or that there was no agreement at all for one of these reasons. See 2 Corbin on Contracts § 580 at 431-40 (rev. ed. 1960), and cases cited therein.

2 See A.S.C.A. § 1.0201 (reception of common law in American Samoa); Tung v. Ah Sam, 4 A.S.R. 764 (1971) (in construing the common law, court should ordinarily follow theRestatement of the Law); Restatement of Contracts 2d §208 (1981) ("If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.") See also Maua Family v. Mauga, 1 A.S.R. 587 (1938) (principles of equity are part of the law of American Samoa).

3 No evidence has been presented concerning the loan originally incurred by the half-brother. We do not know, therefore, how a truck that apparently cost no more than $8000 when it was new came to be secured by a loan with a balance of $15,000 by the time the Ilalios were required to assume it. This could have been the product of several years' accumulation of interest, or perhaps of consolidation of the truck loan with other debts owed by the half-brother to the Bank.

4 We understand that the dubious circumstances that gave rise to this case are not the fault of the current management of the Development Bank. Against innocent third [5ASR2d9] parties, however, the Bank has only those rights that were legitimately acquired at the time its contracts were made. It did not acquire any new rights simply by purging the officials whose misdealings tainted some of its contracts. This does not, of course, prevent the Bank from recovering against people who dealt with the former management but who are not shown to have been victims of their improper activities. Indeed, in cases where third parties are shown to have colluded with the former management to obtain contracts grossly disadvantageous to the Bank, the new management can presumably recover the ill-gotten gains.

One of the transactions involved in this case did take place after the new management had taken over. This was the occasion on which the defendants, having returned to American Samoa, signed a document styled an " agreement, " acknowledging the debt and promising to resume monthly payments. Asked by the Court why he signed this document if he did not really believe he owed the money, Mr. Ilalio explained that he and his wife had just returned to the island, were attempting to re- establish themselves, and did not want trouble. This explanation would not be good enough if they had actually owed the Bank any money to begin with and if the " agreement " were offered only as evidence that the statute of limitations had been waived or for some other incidental purpose. In fact, however, there was no consideration for this "agreement ., and it was therefore not legally binding on the Ilalios.

American Samoa Gov’t v. Masaniai,


AMERICAN SAMOA GOVERNMENT

v.

MALESALA aka TAULAGA MASANIAI, Defendant

High Court of American Samoa

Trial Division

CR No. 9-87

AP No. 8-87

August 28, 1987

Evidence that members of convict's family had been having economic and psychological problems since his incarceration was insufficient to justify his release pending appeal, where the crimes of which he had been convicted were serious felonies involving sexual abuse of a minor child, his behavior in connection with the crimes and the subsequent proceedings had been characterized by violence and other revenge against family members, and the appeal schedule had been accelerated so as to minimize the period of detention between conviction and appellate review.

Before REES, Chief Justice.

Counsel: For the Government, William Van Hook, Assistant Attorney General
For Defendant, Soli Aumoeualogo, Public Defender

On motion for release pending appeal:

This motion came for hearing before the trial judge on August 28, 1987. The defendant presented a psychiatrist who testified about the condition of the defendant's 27-year old son. The son has been diagnosed as suffering from schizophrenia, has been institutionalized in Hawaii during acute phases of the disease, and is now in American Samoa residing in the home of the defendant. The psychiatrist testified that the son has not been regularly reporting for outpatient treatment, that he has been wandering the streets aimlessly and sometimes sleeping outside the Correctional Facility where[5ASR2d144] his father is incarcerated, and that he may soon become a threat to himself and others. The psychiatrist further testified that it is his expert opinion that the son's problems are partly related to his separation from his father and mother (the defendant's former wife) and to his difficulty in accepting the defendant's current wife as a stepmother.

The defense also offered the testimony of the defendant and of other family members concerning the economic and other difficulties of the family. Since the Court has already heard similar testimony on two prior occasions, we declined to hear it again and accept for the purposes of this motion the proposition that the family is suffering such difficulties.

The Court cannot grant the requested release. A major reason for the sentence imposed on this defendant --- under the terms of which the defendant was not to be released from the Correctional Facility for any reason other than emergency medical treatment without prior approval of the court --- was the Court's belief that the defendant posed a danger to other people, particularly to members of his family. Even according to the defendant's own version of the events leading up to his conviction, he is a violent man whose response to real or imagined slights from members of his family was to beat them severely or to banish them from the household. Moreover, it appears from the evidence adduced at trial that the defendant has sexually abused not just the victim in this case but all of his other daughters, including a mentally retarded teenager who now resides in the family home. The defendant shows no signs of repentance, and it is the Court's best estimate that his violent and unlawful conduct is likely to recur upon his release. By agreement of the attorneys and the Court the briefing schedule has been accelerated so that the appeal will be heard in October. The risks and hardships of incarceration are clearly outweighed by those of release pending appeal.

The Court strongly urges that the government act immediately (1) to ensure that the defendant's son receives all the care and attention that is available in the Territory, and (2) to consider taking steps to return him to the care of his natural mother in Hawaii. [5ASR2d145]

The motion for release pending appeal is denied.

American Samoa Gov’t v. Malota,


AMERICAN SAMOA GOVERNMENT

v.

FALE'UPOLU MALOTA, Defendant

High Court of American Samoa

Trial Division

CR No.24-87

August 6, 1987

Police officers' actions in taking suspect to station, questioning him about crime, and leaving him temporarily with another officer who was to ensure that he did not leave amounted to a custodial interrogation that was illegal if undertaken without probable cause to arrest.

Defendant's oral confession was not admissible at trial when it had been given during custodial interrogation, after both an oral and a written denial of criminal activity, after police indicated that a confession and the return of allegedly stolen goods would bring a legal end to the matter, and before police administered Miranda warnings.

Defendant's written confession was not admissible at trial, even though police had given Mirandawarnings, when both the warnings and the confession were immediately preceded by the unconstitutional extraction of an oral confession.

Court would suppress not only illegally obtained confessions, but also all inculpatory evidence obtained by police consequent to the confessions.

Before KRUSE, Associate Justice, TAUANU'U, Chief Associate Judge, and OLO, Associate Judge.

Counsel: For the Government, James Doherty, Assistant Attorney General
For Defendant, Michael Bennett, Assistant Public Defender [5ASR2d102]

Opinion and Order on Motion to Suppress:

Defendant moves to suppress the use of certain inculpatory statements he made to the police, as well as the introduction of certain physical evidence he turned over to the police consequent to his furnishing the referenced statements. The grounds of the motion are that the police had induced defendant to make these statements after leading him to believe "that the matter would be taken care of and settled."

The testimony was thoroughly conflicting and, based on the evidence presented, the Court makes the following findings:

1. On or about May 12, 1987, defendant was picked up by two police officers at or around 9:30 a.m. and taken to the police station for questioning in connection with a burglary complaint the officers were investigating.

2. Prior to picking up the defendant, the officers had interviewed the victim and others at the crime scene. On the basis of these interviews, the officers determined the defendant to be the primary suspect, but had also determined insufficient probable cause.

3. The defendant, a young man without prior experience with the criminal process, complied peaceably with being taken to the police station. He was without. any reservation that he had any choice in the matter.

4. On the way to the station, defendant was aware of the general reason the officers wanted to talk to him, having been apprised by the officers of the purpose of their investigation. He was also asked by one of the officers if he had been in prison before, to which he answered, "no."

5. At the station, the officers accompanied the defendant to one of their interview rooms and left him there under the supervision of a Lieutenant on watch at the time. The Lieutenant supplied the defendant a form and directed that he make a written statement. The defendant documented an "exculpatory" statement, and after completing the same, he handed the writing to the Lieutenant. Thereupon he was told to write some more, as the page was not filled with detail. Defendant did no further writing, stating that he had written all that he knew.

[4ASR103]

6. Some forty-five to sixty minutes after leaving the defendant, the two officers who had accompanied him to the station returned to the defendant. It was the testimony of one of the officers that they had initially left the defendant in order to check at the I.D. Division whether there was any record on the defendant. They found none.

7. The officers then subjected the defendant to questioning. Defendant was led to believe that the focus of the exercise was the return of stolen property to the owner; that this matter would be taken care of then and there; and that the proceedings would advance no further.

8. The defendant finally, around the hour of one o'clock p.m., orally admitted involvement in the burglary. The officers then gave the defendant the Miranda warnings. He was given a form to this effect to acknowledge by signing. He was also supplied a form to make a written statement, whereupon the defendant documented an "inculpatory" statement.

9. The officers, having completed the usual mugging procedures, drove the defendant home and the latter supplied the officers with certain items said to have been obtained from the victim.

10. Some one month later, defendant finds to his surprise and annoyance that the police did not keep their side of the agreement. He was served with an information and warrant for his arrest, giving rise to these proceedings.

CONCLUSIONS

It is the conclusion of the Court that the inculpatory statements of the defendant were obtained in the context of a "custodial interrogation." On the facts, we find that while the defendant was not formally arrested, he was unlawfully detained without probable cause.

The testifying officers' testimony to the contrary was found to be inconsistent in several instances. Firstly, it was the officers' position that the defendant volunteered a preference to be questioned at the police station, as opposed to being questioned at home. They assert that the defendant had the choice to accompany them to the station like any volunteer witness, and that the[4ASR104] defendant had the choice to depart the station at any time.

These are conclusions on the part of the officer, in retrospect. Firstly, the testifying officer had stated unequivocally that when they arrived at the station, they did not leave the defendant alone at any time, and that the defendant confessed voluntarily while looking the officer "straight in the eye." On the other hand, and as a result of cross-examination, one of the officers subsequently admitted that they had initially left the defendant to the supervision of the Lieutenant, while they first checked out the I.D. Division. When confronted with this variance in testimony, the officer attempted rehabilitation by saying that what he meant by being with the defendant all the time was that they, the officers, did not leave the police building at all, although they visited another room therein.

Secondly, the Court is not persuaded that the officers' actions in leaving the defendant in the interview room for some forty-five to sixty minutes, without any explanation to the defendant, is consistent with the situation of a volunteer witness who is expected to have something in aid of police investigation. The atmosphere set was "hostile" in nature as opposed to a cooperative exercise. An exculpatory written statement was apparently not acceptable, and the interview continued until an inculpatory one was secured.

Thirdly, the testifying officer also admitted on the stand that they had requested the Lieutenant to keep an eye on defendant in case he left the station. When confronted with the suggestion that the Lieutenant's role was thus inconsistent with any choice on the defendant's part in terms of leaving the station, the officer recanted rather poorly with the alternative that the Lieutenant was merely requested to keep the defendant company in case the latter became "bored" with the waiting. This offer of hospitality is hardly impressive in the light of the fact that the defendant was awakened from sleep when picked u by the police and presumably he missed breakfast that morning. Moreover, the interrogation overlooked the lunch hour, and there was no hint from anybody to the defendant that he was able to go to lunch, or indeed, free to go home if he wanted to.

To the contrary, it is the opinion of the Court that the officers had a predisposition on the [4ASR105] facts (the defendant was a prime suspect) and the setting of the interrogation, as well as the interrogation itself, was designed not so much to elicit the suspect's version of the situation as to elicit a confession to a preconceived .police version.

An oral confession did in fact arise, subsequent to an exculpatory written statement, without any appreciation whatsoever by the defendant that he had Miranda rights. We accept the defendant's version of the facts whereby he was lulled into taking the officers into confidence, on the belief that the matter would be resolved at the station. The attempted Miranda warning given after this confession, is, in the Court's view, meaningless in the circumstances. To advise someone, for instance, that he has a right against self-incrimination after the fact of incrimination is utterly without purpose.

Secondly, the written inculpatory statement made by the defendant after the warnings were given (the Miranda form and the written statement concerned evidenced that these forms were handed the defendant during the course of a ten to fifteen minute interval) is hopelessly tainted by the contemporaneity of occurrences, so that it may not be seen as the product of rational choice, and thus voluntary, under the circumstances.

It is the Court's conclusion that any and all inculpatory statements made by the defendant to the police, whether written or oral, should be suppressed, and that all evidence obtained by the officers from the defendant consequent to the confessions shall be inadmissible herein.

It is so ORDERED.