Supreme Court of Palau

[ 8] We revie Trial Division&sion’s conclusions of law de novo and its findings of fact for clear error. Kiuluul v. Elilai Clan, 2017 Palau 14 “We may affirm or reverse a decision of the Trial Divl Division for any reason apparent in the record.” Rengiil v. Ongos, 22 ROP 48, 50 (2015).

DISCUSSION

[ 9] On appeal, Appellants make the same argument asserted at the Trial Division: The date on which they signed the Promissory Notes (July 28, 2005 for AppelGalo and September 20, 2007 for Appellant Erungel) was the date on which the cause of actioaction against them accrued, and because both dates are more than six years ago, any claims against them are barred by the statute of limitations. Appellants base their argument on the “Governing Law” section of the Amendment to the Promissory Note, which states: “This Note shall be governed and interpreted in accordance with the laws of the Republic of Palau. In the absence of Republic of Palau law, State of Hawaii law shall govern.” Galo Complaint Ex. A at 4; Erungel Complaint Ex. A at 4.
[ 10] Appellants fthis case aase as addressing whether payment by a joint debtor tolls the statute of limitations for the non-paying joint debtor. parties acknowledge that there is no Palauan statute, case law, or custom addressing this this specific issue. Appellee argues that Hawaii law therefore governs the Promissory Note and, under Hawaii law, partial payment on a defaulted loan by one debtor tolls the statute of limitations as to all debtors. Appellants concede that Ms. Basilio’s January 26, 2016 payment and Mr. Mongami’s March 24, 2016 payment restarted the statute of limitations period for Ms. Basilio and Mr. Mongami. They contend, however, that the choice of law provision states that Hawaii law only applies in the absence of Palauan law and, although there is no direct Palauan law on point, 1 PNC § 303 states thated States coes common law “shall be the rules of decision” in the absence of Palauan law. Therefore, there is applicable law in Palau that must be used in this case: United Stateson law. Appellants further ther contend that under United States common law, partial payment on a defaulted loan by one debtor does not automatically toll the statute of limitations as to other joint debtors.
[ 11]ough the parties focus tcus their arguments on whether United States common law or Hawaii law governs this case, we need not resolve this issue because the statf limitations has not run under either law. In evaluating sing statute of limitations’ claims, the Court must determine two things: (1) which statute of limitations applies and (2) when the cause of action accrued. See Isimang v. Arbedul, 11 ROP 66, 69 (2004). The parties agree that, pursuant to 14 PNC § 405, the statute of limitations that applies to this case is six years. Therefore, the only issue in dispute is when the cause of action accrued. The parties have presented only two possibtes on which the cause of action in this case could have acve accrued: (1) the date on which Appellants signed the Promissory Notes or (2) the date of the last payment made to the accounts.
[ 12] “A cause ofon accn accrues as soon as the party in whose favor it arises is entitled to maintain an action.” Isimang, 11 ROP at 74 (internal quotation marks od). For actions to recover the debt owned on a Promissory Nory Note, the cause of action accrues when the Note goes into default. Each Promissory Note here lists several ways the Note can go into default including, as relevant here, “fail[ing] to make any payment when due under this Note.” Galo Complaint Ex. A at 2; Erungel Complaint Ex. A at 2. Therefore, the cause of action accrues and Appellee is entitled to maintain an action against Appellants only after there has been a failure to make the agreed upon payments on time. For that reason, Appellants’ argument that the cause of action accrued against them on the day they signed the Promissory Notes must fail. Under Appellants’ argument, Appellee would have to file a lawsuit against a co-signer on a loan that is not in default. Such a rule would lead to the absurd requirement that parties must file a lawsuit before a cause of action accrues in order to avoid the statute of limitations on that claim. This cannot be the case.
[ 13] Having rejected Appts&#nts’ purported dates, the Court must now determine the actual dates the cause of action accrued for these claims. As discussed, the parties have cited only two potential dates on which the Notes went into default and thus, the cause of action accrued. Because the cause of action cannot, as a matter of law, have accrued on the day the Promissory Notes were signed, the Court concludes that the dates of the last payments on the accounts are the dates upon which the cause of action accrued. See 17 PNC § 407 (“In anon broughtought to recover the balance due . . . upon a cause of action upon which partial payments have been made, the cause of action shall be considered to have accrued at the time of the ltem proved in the account.&unt.”); Techitong v. Peleliu Club, 6 T.T.R. 275, 278 (1973). Therefore, the cause of action against Appellant Galo accrued on January 26, 2016, and the cause of action against Appellant Erungel accrued on March 24, 2016. Appellee’s suits against the Appellants are therefore timely. Appellant Galo is jointly and severally liable for the Stipulated Judgment against Ms. Basilio, and Appellant Erungel is jointly and severally liable for the Stipulated Judgment against Mr. Mongami.

CONCLUSION

[ 14] We A the Trial Dial Division’s judgments.

^[1] Appellee specifically requested a judgmentaring Appellant Galo and Ms. Basilio jointly and severally ally liable for “the principal sum of $1,821.75; unrecovered interest in the amount of $2,518.25; interest on the principal sum from March 18, 2017, at the rate of 16.0% per annum; late charges in the amount of $487.88; and attorney’s fees in the amount of $273.26.” Galo Complaint 6.

^[2] Appellee specifically requested a judgment declaring Appellant Erungel and Mr. Mongami joiand severally liable for “the principal sum of $19,026.54; interest thereon from Marc March 18, 2010, at the rate of 16.0% per annum; late charges in the amount of $622.64; and attorney’s fees in the amount of $2,853.98.” Erungel Complaint 6.