Bank of Guam v. Raphael Dlg. Demapan

The Bank of Guam appeals a decision of the Appellate Division of the United States District Court for the Northern Mariana Islands affirming a judgment of the Commonwealth Trial Court which ordered the Bank to give a defaulting debtor credit for interest allegedly overcharged under a variable-rate note secured by a real property mortgage. The only issue before us is whether the trial and appellate courts have correctly construed local usury law.

In 1982, defendant Ralph Demapan executed a promissory note for $32,000 to the Bank of Guam. The note was secured by a mortgage on real property. The applicable rate of interest varied, but at all times was in excess of 12 percent annually. The interest rate was never greater than 24 percent annually.

In 1984, after Demapan had failed to make payments, the Bank initiated an action to foreclose the mortgage. The trial court found that Demapan was in default on the promissory note. The court held, however, that 4 C.M.C. §§ 5301-5303 prohibited the Bank from receiving interest in excess of one percent per month. After holding that Demapan could be charged no more than one percent per month on the remaining balance, the court also ordered…