Cite as Truk State v. Maeda Construction Co. Ltd. ,
3 FSM Intrm. 485 (Truk,1988)

[3 FSM Intrm. 485]




CIVIL ACTION NO. 1987-1025

Before Honorable Richard H. Benson
Associate Justice
June 2, 1988

     For the Plaintiff:          Jeanne H. Rayphand, Esq.
                                          Attorney at Law
                                          Attorney General's office
                                          Moen, Truk 96942

     For the Defendant:     Gary D. Hull, Esq.
                                          Attorney at Law
                                          Suite 903 Pac. News Bldg.
                                          238 Archbishop Flores St.
                                          Agana, Guam 96910

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[3 FSM Intrm. 486]

     A promissory note executed by a governor, not authorized by law, and for which no appropriation of funds was made, and which failed to meet the requirements of the state financial management act is unenforceable against the state.  Truk v. Maeda Constr. Co., 3 FSM Intrm. 485, 487 (Truk 1988).

     A promissory note executed by the governor which is unenforceable against the state is not ratified although the legislature appropriated funds for a state debt committee which included the amount of the note, since the committee is not required to pay the promisee of the note, and since the promisee is not the allottee of the appropriation.  Truk v. Maeda Constr. Co., 3 FSM Intrm. 485, 487 (Truk 1988).

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RICHARD H. BENSON, Associate Justice:
     On May 12, 1988 the motion of the plaintiff for summary judgment was granted in open court and the reasoning of the court announced.  Judgment was entered May 13, 1988.  The reasoning is briefly set forth herein.

     The plaintiff seeks a declaration that the promissory noted dated February 15, 1986, executed by the then Governor of Truk State on behalf of the Truk State Government, is void because it failed to conform to the Truk State Charter and the Truk Financial Management Act.  The note for $329,179.47 is for the payment of certain public works projects requested of Maeda by the then Governor and performed in 1982 and 1983.

     Through a study of all pleadings and through the oral presentation at the hearing the court concluded that there existed "no genuine issue as to any material fact."  There was no authorization of law which entitled the then Governor to incur the obligation.  This was in violation of the Truk State Charter.  In 1986 there had been no appropriation of funds by the Truk State Legislature for the projects performed by Maeda.  The promissory notetherefore failed to meet the requirements of the Truk Financial Management Act.

     The defendant's position is that the later acts of the Truk State Legislature ratified the obligation reflected by the promissory note.  In 1987 Truk State Law 6-2 appropriated $2,240,249 for "State Government Debts for CIP."  [CIP abbreviates Capital Improvement Projects.]  This sum was "allotted to the State Debt Committee to be established by the Legislature."

     Attached to the bill was a list that Maeda contended named all debts.  Maeda asserted that it could show (although it failed to make such showing in the summary judgment proceedings) that the debt to Maeda as set out in the

[3 FSM Intrm. 487]

promissory note was included in the figures used by the Legislature in arriving at the appropriation.  For the purposes of this motion, the Court assumed that Maeda could prove its assertion.

     The State Debt Committee was established in 1987 by Resolution 3-42 and was empowered "to review, analyze, investigate, renegotiate, and resolve any and all state debts for Construction Contracts involving Capital Improvement Projects to the extent of the funds appropriated by [TSL 6-2]."

     I concluded that TSL 6-2 and Resolution 3-42 do not appropriate funds for the projects performed by Maeda according to the provisions of Truk Financial Management Act.  Maeda is not the allottee, and there is no requirement that the $329,179.47 be paid.

     TSL 6-2 and Resolution 3-42 do hot constitute ratification by the Legislature of the acts of the then Governor.

     Maeda has thus not established its defense.  Truk State "is entitled to a judgment as a matter of law."