On May 16, 2001, the court held a three-way telephonic hearing in this matter. The court was in Yap; plaintiff's counsel was in Pohnpei; and Mr. Nakama Sana, appearing in his official capacity as the Chuuk Acting Director of Treasury, and Chuuk's counsel, Mr. Ready Johnny, were present in Chuuk.

     Two matters are now before the court: Chuuk's motion, filed on April 27, 2001, for modification of this court's order of April 9, 2001; and plaintiff Menry Davis's renewed motion for an order to show cause for contempt filed on May 7, 2001. Chuuk brings its motion pursuant to 6 F.S.M.C. 1411, which provides that "[a]ny order in aid of judgment made under this Chapter may be modified by the court as justice may require, at any time, upon application of either party and notice to the other, or on the court's own motion." The April 9, 2001, order directed Mr. Sana to pay the judgment in this case in full, including interest and attorney's fees, within 20 days of the order. [Davis v. Kutta, 10 FSM Intrm. 125, 127 (Chk. 2001).]

     In its motion to modify, Chuuk cites financial exigencies now facing Chuuk which prevent it from paying the judgment as ordered. At the hearing Chuuk, and by subsequent memorandum filed on May 17, 2001, committed itself to an alternative payment plan of $50,000 in June, 2001; $50,000 in July of 2001; $100,000 in October of 2001; and the remaining balance in November, 2001.

     The court finds Chuuk's commitment to pay in this way to be reasonable, and grants Chuuk's motion. Accordingly the court's order of April 9, 2001, is vacated. Mr. Sana, as Chuuk Acting Director of Treasury, is therefore ordered to remit to plaintiff's counsel as follows: $50,000 no later than Friday, June 29, 2001; $50,000 no later than Tuesday, July 31, 2001; $100,000 no later than Wednesday, October 31, 2001; and the remaining balance no later than Friday, November 30, 2201. In the event that any payment is not made on time, Davis will notify the court and an order to show cause will issue.

     Both the judgment and fee award in this case bear interest at the statutory rate. The court takes the opportunity to vacate the interest calculation on the judgment in this case which is found in the November 7, 2000, order at page 3, note 2. [Davis v. Kutta, 9 FSM Intrm. 565, 567 n.2 (Chk. 2000).]

[10 FSM Intrm. 226]

That calculation is based on applying the partial payments to principal first, then interest. The other way around is correct, i.e., payment should be applied first to interest, then principal. Senda v. Creditors of Mid-Pacific Constr. Co., 7 FSM Intrm. 664, 670 (App. 1996). While this manner of calculation may make relatively little difference (e.g., by the court's calculation, daily accruing interest would be $42.71 per day, versus $41.17), Chuuk will proceed on a payments-to-interest-first basis on both the judgment and fee award in calculating the final payment due in November of 2001.

     In light of the fact that the April 9, 2001, order is vacated, Davis' renewed motion for an order to show cause for contempt is denied as moot.

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