Cite as KICU v.Waguk, Kosrae St.(1990)

[Kos.Ct pge 1]






     This is an action to recover unpaid balance of a loan, interests, late charges, attorney's fee.

     Plaintiff Kosrae Island Credit Union (KICU) and defendant Bison Waguk entered into an agreement on March 26, 1980.

     On March 26, 1980 defendant applied for a loan in the amount of Five Thousand Dollars (5,000) for the purpose of purchasing a pick-up truck. Defendant and co-signer (Rego) who is also the wife of defendant signed an instrument which I will refer to as the "Note" (plaintiff Exhibit II), and agreed on the conditions specified in the note. On the face of the note, there are conditions which specifically reflect the duration of the loan which defendant agrees to payback the total amount and the amount of' Eighty Five Dollars (85.00) in bi weekly installments plus interests and in case payment is not made on maturity twenty 20% shall b e charged against defendant on the principal amount of the loan.

[Kos.Ct pge 2]

     The policy of loan application requires the Credit Committee to review and approve or disapprove of all loan requests.

     On April 4, 1980. one month after the submission of the application, the credit committee ( committee) approved the loan and the Promisory Note was signed by defendant and co-signer Redo, the wife. After the loan was approved, it appears that defendant made three (3) installments on the following dates:

          (1) March 8, 1984                          $ 40.00

          (2) March 26, 1984                        $ 50.00

          (3) April 18, 1984                          $200.00


     On October 19, 1988, four years after the loan was secured, defendant Rison sent a handwritten letter to Lyndon Abraham, President of KICU requesting the board to reconsider him for a temporary position as a collecting agent for credit union. The contents of the letter states the following in parts:

"As you know, I have been certified as a trial counselor to practice law within our jurisdiction for the past 16 years in both criminal and civil litigations. For this reason, I am willing to do the job for you if I could be selected for the position. My fee is 8% of the actual amount of total collection as a result of the proceedings. 50$ of my fee will go against my account at KICU and the other 50% ....I look forward to hearing from you. The sooner the better. Sincerely - Rison Waguk"

We must look at this case with a view to the intentions of

[Kos.Ct pge 3]

the parties at the time of entering into such a contract; on the part of plaintiff, it intended to loan a sum certain, and to receive the benefit of bi-weekly repayment with interest. On the part of defendant, he expressed his intent to repay the sum in bi-weekly installments in exchange for the five thousand dollars to purchase a pick up truck. According to the documents (pl Exhibit I, IT, III, IV, V, VI) it is clear that defendant received the amount of Five Thousand Dollars (5,000). Whether he purchase the vehicle, is not relevant, and shall not be discussed further, Plaintiff performed its duty by giving defendant the loan amount. However, it. appears that by defendants failure to pay for several years constitutes a breach of contract, and plaintiff will be allowed damages.
     This contract between Rison Waguk and Kosrae Island Credit Union entered on March 26, 1980. Defendant in signing the "Promissory Note" and the "Loan Application" agreed to pay Eighty Five Dollars (85.00) bi-weekly for a period of Thirty (30 ) months with promises of future performance; in case any default arose, defendant agreed to pay the specified amount in the agreement.

     Part of that agreement was that defendant would pay a reasonable attorneys' fee in case plaintiff was forced to bring an action for defendants default. This Court, in the absence of any evidence of fraud, mistake, or misrepresentation, will uphold a contractual clause regarding attorneys' fees. I find that the sum of three hundred dollars is a reasonable fee for the prosecution of this action.

[Kos.Ct pge 4]

     When there is such a strong moral and legal obligation as theie was in this case, defendant can not excused from his duty of performance by the fact that he encounters unexpected difficulty and expenses. Each case must be judged by its own circumstances as in this case. In each case one must hook at the nature of the contract, and whether both parties entered into it with their full knowledge and understanding. Tam of the opinion that since defendant has been practicing as a trial counselors for many years (16 years) he should be able comply with his obligations; thereby shielding him from this cause of action.

     The fact that defendant after the loan was approved, retained the cash on April of 1980 and never paid the balance due from the loan. Six years later plaintiff filed this action to recover the unpaid balance - plus the interest and other fees reflected in the note (Ex. II for plaintiff).


     Plaintiff is entitle to recover the amount as specified:
 Unpaid balance of Loan                $4,204.3
           Interest                               701.92
          Late Charge                          161.37
      Attorney's Fee                           300.00
                         Total                      5,367.64
[Kos.Ct pge 5]
 (2) Defendant shall pay to plaintiff's-counsel not less thin One Hundred Dollars every month
beginning on the first week of July 1990 until full amount is paid
SO ORDERED the 18th day of May, 1990.

                         Harry H. Skilling
                         Chief Justice
             Entered this 23 day of May, 1990.

                         Chief Clerk of Court, Kosrae