*1 budget statutorily imposed responsi to obligation pay avoid for the services John re- children”). agency bilities to care for foster ceived and that More DHS the executive over, responsible family approval ensuring obligation for because the court’s this plan Accordingly, is met. the service we vacate the order of constitutes determination family requiring pay court the mental health services at DOH issue are needed, John’s mental party disputed health services and remand for neither has this determination, proceedings opin- further consistent with this emphasize family we that the ion. regarding court’s decision the need for the
particular at services issue cannot be dis Furthermore, family
turbed. because the approval plan incorpo
court’s
of the service
rating
Variety
John’s
attendance
School
IV. CONCLUSION Entities and Doe Governmental Units 1- 50, Defendants, foregoing, Based on the we hold family jurisdiction court lacked to order pay DOH to for Children’s services at issue Kida, Counterclaimant, Donald Muneo legal obligation these eases because DOH’s v. pay for the services under the Individuals Act, Hawaii, Inc., with Disabilities Education U.S.C. Counterclaim- § seq., 1400 et had not been established Defendant. through process the administrative mandated Kida, Donald Muneo Third- 1415(f)(1), § § 20 U.S.C. 302A- Party Plaintiff, 443(a), 8-56, §§ HAR 8-36 or
judicial any resulting review of administra- pursuant tive decision 20 U.S.C. Michele fka Michele Umeno 1415(f)(2)(A) 91-14(b). § Umeno, or HRS Accord- aka Michele Fukuda individual ly ingly, family Associates; we vacate the court’s order in and dba R.M. Financial R Associates, Inc., Corpora Jane’s case and remand for dismissal of her M & Hawaii case, family tion, Associates, Inc., claim. affirm John’s we Financial M.D. directly Corporation, court’s conclusions of law to the extent Hawaii and dba they independent Warehouse; establish an state-based Milburn reject argues guardian 22. We also DOH’s contention that the fam- DOH also that: John’s ad X, ily court’s order violates article section 1 of litem cannot raise a claim under the IDEA be- Constitution, the Hawai'i which states in relevant ability cause the to raise a claim under the IDEA part public appropriated funds shall not "be child, parents is limited to disabled see support for the or benefit of sectarian or 1415(0(1) supra (referring U.S.C. note 9 private argu- educational institution.” DOH’s right “parents” request of the child's a due premised relationship ment is on the between process hearing); and the Felix consent de- private John's enrollment in a impact and the school grants cree the federal court district exclusive upon that his enrollment has the State’s jurisdiction question over the whether DOH is obligation However, provide under IDEA a FAPE. obligated pay for Children’s These services. particular we discern no constitutional arguments given disposition are not material our obligation pay when concerns the Slate’s grounds. of this case on state ordinary John’s services is based on the rather proposition ultimately obligated that the State is to care for a a "ward who is state.” *2 Funding Iwai dba Pacific
Group; Funding Pacific
Group, Ltd.; Corporation; a Hawaii Naito; Corpora Holding
Elaine F. UK Group; Equity Funding
tion dba JOHN 1-10; 1-10; Does Doe Cor
DOES Jane 1-10; 1-10; Partnerships
porations Doe 1-5; Mortgage Corporations Doe
Doe 1-5; Corporations Princi
Financial Doe 1-5;
pal Mortgage Brokers Doe Govern 1-10, Third-Party
mental Entities De
fendants.
No. 22420.
Supreme of Hawai'i. Court
Aug.
Shelby Floyd, Lynne Ching, Anne Jade (of Floyd & and David A. Fisher Alston Hunt *6 briefs, Honolulu, Ing), plain- on the the tiff-appellee Beneficial Hawaii. (of Shigemura Junsuke & Harak- Otsuka briefs, al), defendant-appellant on the Donald M. Kida. C.J., LEVINSON,
MOON, and and NAKAYAMA,JJ. LEVINSON,
Opinion of Court J. defendant-appellant The Muneo Donald appeals judgment Kida from and decree court, circuit foreclosure first presiding, Marie N. Milks filed on Honorable plaintiff- March favor of the Hawaii, argues appellee Inc. Kida Beneficial (1) failing in: that the circuit court erred (the alleged mortgage invalidate an mort- gage) on a located 2532 Booth Road, City County and Honolulu (the (the property), alleged and an note note), mortgage, secured inasmuch (a) note were void and and pursuant to Hawai'i Revised unenforceable (HRS) (1993),1 (b) forged § 454-8 Statutes provides: "Penalty, punisha- chapter 1. HRS contracts void. Violation of this shall be (c) altered, negotiated Corporation, executed in favor of an to Novus Financial and/or unregistered partnership, predecessor in Beneficial Hawaii’s the chain Warehouse, (6) legal capac- which did not have and ownership; applying the doctrine (d) contract, ity unsupported by any and equitable subrogation to find Kida liable to consideration from The Ware- upon Beneficial Hawaii note and mort- (2) house; concluding that Kida ratified the (a) gage, inasmuch as Beneficial Hawaii did (a) mortgage, note an illegal and inasmuch as (b) claim, plead equitable not subrogation an (b) ratified, may contract not be Kida did not legal Beneficial did not Hawaii exhaust its know all not material facts and did have an (c) remedies, did Beneficial Hawaii not ad- opportunity to return the benefits received (d) Kida, any money vance to benefit (3) note; finding account of the entity originally funds to advanced satis- agent, purported Kida’s who drafted the note fy an property, to sell the name, his acted within appeared to have been either Novus Finan- scope alleged authority, of her inasmuch as Services, Corporation cial or Novus Credit (a) customary her actions were not (e) interest, pay did not protect its own (b) industry lending illegal; finding equitable subrogation claim is barred (a) validly assigned that the note was (f) hands, doctrine unclean the funds ad- Warehouse to Novus Finan- pursuant satisfy vanced not the note did Corporation cial and from Novus Financial prior property, (g) encumbrance on Corporation Mortgage Corpora- to Beneficial equitable subrogation doctrine of not (b) tion and transferred from Beneficial be the basis of foreclosure decree absent a Hawaii; Mortgage Corporation to Beneficial prior equitable subrogation decree (5) concluding that Hawaii Beneficial was Kida’s default under such a decree. (a) note, entitled enforce the inasmuch as We hold note and requisite conferring were endorsements pursuant void and
upon Hawaii unenforceable Beneficial the status of a holder meaning Accordingly, 454-8. within the we do not reach note HRS ch. (Uniform Code) points regarding Kida’s Commercial of error the forma- were not contract, tion supplied present purported of the loan ratifi- until after the action had his (b) loan, cation commenced and there was no Hawaii’s evidence right possession mortgage. note enforce the note and We $1,000 impris- practice ble not more fine of than A licensed to law in the State, year, Any actively engaged principally onment of more than one or both. not *7 by any person any contract into negotiating entered unli- secured business loans mortgage censed broker or solicitor shall be void properly, person real when the renders ser- added.) (Emphasis and practice person’s vices in the course of the as unenforceable.” " attorney; an (1993) provides §HRS a ’[m]ort- (4) person A licensed estate broker as a real gage person exempt means a broker’ not under State, salesperson actively or in the en- compensation gain, who for or section 454-2 or gaged negotiating in the business of loans se- gain, expectation compensation in the or ei- person property, cured real when the ren- makes, directly indirectly negotiates, ther or ac- person’s ders in. the services course make, .of quires, negotiate, acquire or or offers a practice salesperson; real or as a estate broker mortgage seeking on loan behalf of a borrower (5) negotiating, An institutional investor en- mortgage loan.” into, tering performing pur- or a loan under During present period relevant to ihe mat- agreement portfolio, chase for its for subse- ter, (1993) exempted op- §HRS 454-2 from the investors, quent to other resale institutional or following eration of HRS ch. 454 the entities: placement mortgages pools for of the into or (1) Banks, companies, building trust and packaging mortgage-backed associations, trusts, unions, them into securi- pension loan credit paragraph purchase ties. this "loan As used companies, insurance financial services loan agreement” arrange- means an or federally companies, licensed small business or bank, loan, savings which ment under and companies, any under investment authorized union, company, loan credit financial services law of or of die United States to this State do Slate; registered or other financial institution to do business in the (2) agrees making acquiring business in State of Hawaii to sell A a mort- therefor, funding gage or obtain with one’s for loans loan own funds one's own servicing rights, without resell the with or without the transfer of investment gage intent to mort- loan; to an institutional investor. wrongfully court the loan hold that circuit erred obtained diverted further and/or proceeds, applying equitable subroga- and concealed the existence of the the doctrine of present by making payments loan matter. Inasmuch as some of the re- tion quired retaining to adduce note all Hawaii failed evidence under the and corre- Beneficial spondence concerning mortgage. prove any it was his sufficient to entitled relief, third-party complaint, alleged, equitable the circuit court’s Kida inter we reverse alia, (1) Kobayashi’s as a mort- judgment and of foreclosure favor license decree Hawaii, February 12, gage on March was on' of Beneficial filed broker terminated
1992, (2) that, pursuant judg- to a consent ment, July first on filed circuit court I. BACKGROUND judg- in a 1994 and reiterated consent History A.- Procedural first court on ment filed circuit No- 24, 1995, Kobayashi agents, vember and 2, 1996, her complaint In a on December filed officers, servants, (1) employees and were en- alleged Hawaii Kida was Beneficial joined (2) providing any for which that, services July property, of the on the owner required, a mortgage broker’s license was 11, 1994, mortgaged property Kida had officer, director, Kobayashi an was em- Mortgage repay- to secure to The Warehouse ployee, agent $800,000.00 of Financial M.D. Asso- pursuant of a to a ment note and/or ciates, Kida, (3) doing that, business through signed several was not licensed to Warehouse and assignments, Beneficial Hawaii had mesne (4) that, broker, act as a and on mortgage, owner note and become the 11, 1994, made, July negotiated, that Kida had defaulted on the loan acquired $294,296.10 on Kida’s behalf. pz'incipal, plus and owed ac- relief, alia, sought Kida inter for fraud and charges. interest and late crued misrepresentation, fiduciary duty, breach of prayed Hawaii for a foreclosure sale of the deceptive practices, unfair and trade viola- proceeds property, the thereof to be used (“Mortgage tions ch. 454 of HRS Brokers obligations satisfy alleged Kida’s under Solicitors”), supra negligence, see note note. conspiracy.2 answer, January In his filed ownership February Kida admitted his On Beneficial Hawaii signing 1996 but Kida’s October denied answered counterclaim cross- and, Kobayashi, against R M either the note or the there- claimed & Associ- ates, Associates, Iwai, fore, liability payment of M.D. the sums Financial Pacific Naito, allegedly Funding Group, At due under the note. the same UK time, against Holding Kida filed Bene- March a counterclaim indemnification. On third-party complaint Mortgage Funding Hawaii Pacific ficial Iwai and Kobayashi, Group' against R defendants Michele & filed answer and cross-claim Associates, Associates, Inc., against Kobayashi, R M Financial M.D. Associ- & M Finan- ates, Inc., Iwai, Associates, Naito, Holding Pacific cial Milburn M.D. and UK *8 Ltd., Naito, Group Funding for Elaine and UK indemnification contribution. On and/or alleged May stipulation Holding Corporation. parties Kida a the the filed counterclaim, alia, complaint Kobayashi third-party that had to dismiss Kida’s inter documents, forged signature parties’ against his loan other on the cross-claims UK Hold- third-party complaint, alleged wrongfully Kida tion diverted 2. In his also were obtained and/or drafted, that, Kobayashi Kobayashi. On June the circuit on December court severing regard negotiated, acquired with loan from entered an order all claims Countrywide Financing Company property located at Road from the amount the 2526 Booth $212,000.00 home, present consolidating the that was secured matter and them with Kida’s Road, property pending located at 2526 Booth is a another action before the circuit court. adjacent property present at issue the of related cases indicates that Kida's statement case, alleged currently appeal. well cases Kida further he was not transaction, as as several other court, implicate pending of and the before the first circuit aware did not authorize signatures financing present the in the that his on the loan documents were scheme at issue appeal. forged, proceeds and that from the the transac- 29,1998, mg. July purchased On Kida filed a motion to 1991. She testified she had against dismiss claims Iwai present his and Pacific at issue matter Funding pursuant jointly way Mortgage Group agreement to a set- Kida of an (the parties; agreement) among company, tlement the cir- sale between reached her Associates, Kida, granted purchasers, cuit court the motion order en- R & M as 23,1998. seller, Choy, price tered on and Thelma for November $400,000.00. $150,000.00 Kida advanced A present bench trial com- matter payment upon signing a cash down August September menced on 1998. On agreement. According Kobayshi’s testi- 3, 1998, following evidentiary portion of mony, suggested they pur- Kida had trial, parties placed stipulations property. chase (1) regarding the record Kida’s dismissal (2) Hawaii, against counterclaim Beneficial Kobayashi that she further testified against Beneficial Hawaii’s Ko- cross-claim paying Kida had off discussed manner of bayashi entities, and her R & M Associates sale, and that Kida had (3) Associates, and Financial M.D. Beneficial Kobayashi directed her “to take care of it.” Naito, against Hawaii’s cross-claim Iwai and asserted that had Kida she informed (4) Funding Mortgage Iwai and Pacific pay off Warehouse would Group’s against Kobayashi, R cross-claim & agreement through arranged sale Associates, M and Financial M.D. Associ- by According in Kida’s name. to Koba- her following stipulations ates. The to dismiss yashi, object. Kobayashi Kida did not testi- (1) ultimately were filed on the dates listed: provided fied that Kida her with various doc- 12, 1998—stipulation November to dismiss application, she for uments needed the loan party complaint Kida’s third and Iwai and business, including bank statements of Kida’s Mortgage Funding Group’s Pacific cross- Fishing Supplies, persons,1 K. Kida Kida’s Associates, Kobayashi, claim against R & M statements, pertaining bank documents Associates; (2) and Financial M.D. Novem- divorces, prior copies Kida’s two Kida’s tax 18, 1998—stipulation to ber dismiss Kida’s returns 1991 and Kida’s driver’s Hawaii; against counterclaim Beneficial license, general tax excise license 3, 1998—stipulation to December dismiss business, Kida’s all which introduced were against Ko- Beneficial Hawaii’s cross-claim into evidence as exhibits. Associates, bayashi, R & M and Financial documents, Regarding Kobaya- the loan Associates; M.D. December that, approximately May shi testified third-par- 1998—stipulation to Kida’s dismiss signed, presence, Kida had her ty complaint and Iwai-and Pacific $300,000.00 in promissory favor of note for Group’s Funding against Naito. cross-claim Warehouse, as well as a Following stipulations, only these claim property securing on the effectively remaining present in the matter Kobayashi note. stated that these docu- original was claim Beneficial Hawaii’s stale,” “had inasmuch ments become against Kida.3 loan had not thirtw been funded within days mortgage payment of the first date Testimony B. Trial documents; therefore, specified in the new case Haivaii’s required in to com- documents were order Kobayashi a. Michele ply guidelines with “the of the lender”. trial, However, Kobayashi At Michele as to testified uncertain precise requirements “personal what “the she had had intimate relation- lender’s” *9 ship” Kobayashi and that with Kida between 1989 and 1995 had been. testified The intermittently Mortgage partnership with that cohabited Warehouse was be- she had Jerry MeGarvey, and which was Kida at 2526 Booth Road between 1989 tween her and regarding stipulation 3. filed were for indemnifica- No has been claims contribution and/or tion, they dismissal of Beneficial Hawaii’s cross-claims against are in view of dismissal of moot Kida’s Iwai, Funding Group, Mortgage Pacific against his counterclaim Beneficial Hawaii. However, and as Naito. inasmuch these cross- Kida, assign property in the financing mortgage in loans. On to its interest involved cross-examination, Kobayashi that into testified evidence. paperwork personally had delivered the she testified, spite assign- Kobayashi in of the Department of and Con- Commerce agreement, an that she had retained ment register The sumer Affairs order due to her relation- interest general a Hawaii Mortgage Warehouse as ship Kobayashi testified with Kida. further partnership but had not obtained certifi- that Kida had in- on direct examination registration. also testified that cate of She telephone calls from com- formed her Mortgage had an office The Warehouse “Novus,” entity, styled regarding col- mercial but not in Hawaii. On recross California lection of the loan at some time between examination, Kobayashi that The testified not, however, Kida had indicated and 1996. was a trade name of Warehouse she, Kobayashi, that was the that he believed Financial M.D. Associates. loan, nor had he accused her borrower on the present law- forgery until the time of the July without approximately On suit. knowledge, Kobayashi assembled a
Kida’s by replacing documents new set cross-examination, Kobayashi testified On signing and Kida’s page fh'st of the note that, 1991, merge Kida and she intended to other documents name and property with that of Kida’s residence Kobayashi to her from California.. sent develop property in antici- the combined was authorized Kida maintained she pation of their retirement. She testified sign pursuant power to a the documents and Kida had cohabited until 1993. Ko- she executed; however, attorney that Kida had negotiated bayashi that Kida had testified produce power of was unable to she Choy agreement of sale Thelma attorney, it not The had been recorded. participation without and that she had her signed original that Kida had loan documents personal guaran- was a realized she had been discarded. agreement. tor of the She further testified that, property, Choy had vacated the after that, 29, Kobayashi prior July testified company—R & M Associates—-hadmade her 1994, paid had been off sale payments Choy agreement. under closing proceeds of loan. The with the Kobayashi admitted that her bro- transaction, July statement for the dated expired in but ker’s license had assert- and his identified Kida as the borrower that, point, Finan- ed at that she had formed Kobayashi’s company, that of Fi- as address Associates, cial M.D. which was a licensed M.D. The lender was nancial Associates. broker 1994. She asserted as The Warehouse identified “R.M. fees received her or broker’s $269,400.00. Kobaya- payoff amount as name, Financial,” which was her trade loan bro- shi testified she had been the closing of Kida’s loan “would have been transaction, but, upon ker involved Associates,” payable to Financial M.D. but questioning, that Financial further she stated payable was uncertain whether a check actually M.D. had been the bro- Associates es- R.M. Financial had been issued ker, closing in the statement. identified closing company part crow July mortgage agreement, dated The Financial nor Mort- loan. Neither R.M. mortgagor Kida as the identified gage Warehouse was a licensed property. his address as in Hawaii. broker was identified Warehouse Kobayashi mortgagee, further testified on cross-exami- mortgage statement as the anyone being M.D. nation that she had not informed address of Financial Associates address, attorney, purportedly although power of mortgagee’s a Califor- about fact that mailing signed by Kida in or about the designated nia was as the address on the loan Through Kobayashi, Ha- she had written Kida’s name address. agreement, application closing documents. The assignment waii introduced attorney purportedly 25,1994, July power notarized May and recorded on dated Kobayashi’s Both purported behest. which R & M Associates *10 mother, Naito, taneously her Elaine notaries. Al- closing were as a result of the (1) though Kobayashi regarded assignment agreement claimed to have loan: between (2) Kida; mortgage herself as Kida’s in broker connec- R & M Associates and the mort- transaction, gage; tion with the loan she had not the deed in satisfaction sale; agreement informed Kida of that fact or to him assignment disclosed that either she or M.D. Associates Mortgage Financial from The Ware- would receive a or commission fee when the house Novus Financial. Based on the knowledge, procedures loan, loan closed. Without Kida’s closing Ko- utilized in the bayashi opened Meyer had an Mortgage escrow account to characterized The Ware- broker, handle the loan. house as both the lender and the but “[tjeehnically, also stated that Financial MD Admitting signed that she was the [Associates] broker.” name, agreement in Kida’s testi- signature that the fied had been notarized c. Novus Financial notary.” connection, Kobayashi “her In this Financial, Through an officer of Novus that it practice testified was her mother’s Scherschligt, Barbara in- Beneficial Hawaii signature notarize Kida’s if even he had troduced Novus Financial’s records of its ef- signed question pres- the document in in her forts to collect on the loan into evidence. Kobayashi explained July ence. application The records reflect that an M 1994 transfer of R & Associates’ interest pending July Kida’s loan was to Kida had been effected required time Novus Financial new approved because the loan had been originals documents because the had loan,” occupant “owner residential which was “expired” before the loan could be funded. subject to a lower interest rate than was an Associates, R investment loan. & M as a July On Novus Financial sent a corporation, qualify did not for such a loan. Road, “welcome” to Kida at letter 2526 Booth personally signed Kida assignment had advising Mortgage him that his “Warehouse agreement. loan” had been Fi- “transferred” Novus placed nancial. Novus Financial its first col- examination, On redirect Beneficial Hawaii September call lection to Kida on 1994. attempted precise identity establish the records, According to Novus Financial’s Kida broker Kida’s loan. Koba- told a loan collection officer “his book- yashi Mortgage stated Warehouse keeper” paying provided was loan and explained was the lender and broker. She telephone the collection with num- officer that The Warehouse was licensed Kobayashi’s ber office. The collection offi- as a “wholesale broker” California and had Kobayashi, cer was unable to reach and Kida transaction, present acted as such .in promised to check her make sure actually which was funded Novus Finan- payment by September was received cial. again
1994. Novus Financial on called Kida Margaret Meyer September b. 1994. Kida advised Novus Kobayashi; Kobayashi, Financial to contact who, Margaret Meyer, as an officer turn, promised payments to forward two company—TI of Hawaii—in escrow overnight via an earner. closing handled escrow involved approximately forty-four of sale A between Kida and total of collec- Choy. Meyer Kobayashi opened testified tion calls from Novus Financial to Kida en- September January the escrow behalf of The Ware- sued between 1994 and records, According Scherschligt quoted house. to the escrow some of the col- proceeds comments, of the loan from The all lection officers’ of which re- Kida—principal referring Wai’ehouse to amount that Kida flected the collection $269,400.00 Kobayashi, variously interest the amount of efforts to denominated $3,906.30—were “accountant,” “CPA,” Choy, “bookkeeper,” disbursed to and the as his pay closing “property manager,” Although balance was utilized various “broker.” insisting payments costs. Four documents were recorded simul- Kida was had either *11 imminently, that, been made or would be Renquinha made beginning testified on payments promised. 24, 1996, were not made as May Mortgage Beneficial had sent collection officers informed Kida letters, that including, Kida several on collection obligation, Kobayashi’s, loan was his that 4, 1996, a June notice of intent to foreclose. it, responsible paying he was and that the 16, 1996, July In a letter dated Beneficial delinquencies would affect his credit! Ac- Mortgage Kida that informed Beneficial Ha- cording records, to Novus Financial’s Kida servicing waii would commencing his loan acknowledged the collection officers’ asser- 15,1996. August on rely Kobayashi tions but to continued on to Renquinha Kobayashi was familial' with payments. make the Hawaii Beneficial broker since the time The collection officers described Kida as Renquinha had transferred to Hawaii in nonchalant, uncooperative, and unconcerned. 1994 from another of Beneficial’s At offices. Although they advised Kida that it was not request, Beneficial’s she had contacted Koba- responsibility them Kobayashi, they to call yashi regarding the loan several times before attempt did to contact her when Kida asked Beneficial’s collection efforts were trans- They usually them to do so. were to unable Thus, July 26, 1996, to ferred Hawaii. on her, reach but on the two or three occasions Renquinha telephoned Kobayashi had to re- they her, when speaking did succeed in quest appear that she at Beneficial Hawaii’s the collection officers’ comments indicated to office order execute a check in the Kobayashi them, had been terse with $2,300.00 amount of that had been received had payments insisted that had been unsigned Kobayashi. August On made, hung up telephone. and had 1996, Kobayashi contacted Beneficial Mort- In December Kida advised the collec- gage and stated she would be in touch tion refinancing officers he was loan with Renquinha. Mortgage Beneficial . through Kobayashi and that would assistance, sought Renqumha’s Renqui- Nevertheless, paid soon be off. neither Kida telephoned Kobayashi nha request pay- to Kobayashi requested nor Novus Financial to ment. quantify payoff figure. Renquinha had her first contact with Kida January payments two were made 15, 1996, August on telephoned when he to loan, on the and the account became current. documents, copies mortgage ask for of two 31, 1996, On March Novus Financial sold the one of which was the at issue in file, Mortgage. loan to Beneficial The loan present matter. including assignment the note and an 21, 1996, August Kobayashi telephoned On mortgage, was to transíerred Beneficial Renquinha, explained Kobayashi who to 30,1996. Mortgage April $5,606.00 she needed eliminate loan’s delinquency. Kobayashi stated that she had Renquinha d. Barbara mortgage closings several scheduled and Renquinha, Barbara one of Beneficial Ha- ought requested to have the funds available managers, waii’s testified that Beneficial Ha- by August Following her conversa- waii owned the note and issue Kobayashi, Renquinha telephoned tion with present matter. The note and Title, Karen Arakawa of Island an escrow July were dated 1994 and reflected that company, arrange Kobayashi’s to have original lender had been The assigned commissions to Beneficial Hawaii. Warehouse, that had been re- July corded on Renquinha’s and that the note next contact with Kida was on assigned had been August from The telephoned Ware- when she Financial, house to assigned Novus which it company inform him that he owed her over assigned loans, Mqrtgage, it to half a million dollars on two that he Beneficial Hawaii. The loan delinquent payments, documents were was in his that there transferred from Beneficial promises had been numei'ous pay, broken August Beneficial Hawaii in Kobayashi and that signatory was not a assignment was recorded on According Renquinha, October 1996. either of the loans. Kida paying inquire stated his on November 1994 to whether *12 mortgage. Renquinha informed Kida that any payments forthcoming. further would Kobayashi she had from learned that Koba- day Kida returned to the call the next state yashi trying had been to obtain a Kobayashi that he with would check about pay to agreed speak off the loans. Kida to payments. Kobayashi Renquinha with and to advise of outcome of the conversation. 2. Kida’s case day, August Renquinha next that, 1989, Kida at trial testified he and
telephoned Kida once more. Kida stated Kobayashi begun spend together had to time Kobayashi that a payment would make regularly. Kobayashi staying was at Kida’s day, payment the end of the but no was Maui, residence when she visited from O’ahu Renquinha tendered to Hawaii. residing she was a working where and real Kida informed that Beneficial Hawaii was 1990, developer. estate In broker Koba- commencing a against action foreclosure yashi part moved to 0‘ahu and lived of the properties two securing that were his loans. Kida, stayed time with but never with him on Renquinha noted that Kida did to not seem time, regular basis. At that about Kida why to her be concerned. Kida She asked Choy possibility discussed with of his Kobayashi making was payments, his loans However, purchase property. Choy’s of her responded Kobayashi to which Kida that had $400,000.00 asking price high of was for too promised to do so. Kida to afford. Kida mentioned the situation that, 10, Renquinha September testified on that, Kobayashi, to suggested who if he Yonamine, Gary Beneficial Hawaii’s pay price, pay would half the then she would manager, personally senior had visited Kida the other half and build on house at his store. Yonamine informed Kida that a property. $2,226.00 payment required was at that early signed agreement In Kida time and that a proceeding foreclosure was $200,000.00 property paid for sale promised imminent. Kida with confer Ko- arrangement. paper- his share of the bayashi. Yonamine informed that Kida Ben- prepared by Choy’s attorney. work was eficial Hawaii unshed to work with Kida di- Kida testified that he did not read the docu- rectly any without the third involvement fully or it. ment understand His under- parties. On October Beneficial Ha- standing agreement was his re- attorneys waii’s Kida a sent notice default sponsibility payment was limited to the payment, demand for both regis- $200,000.00 Kobaya- and that the rest was mail, identifying and first tered class Novem- know, responsibility. not shi’s He did payment. 1996 as the ber deadline about, any payments not was concerned that, Renquinha according testified to Ben- remained due under the sale. records, eficial Hawaii’s telephoned Kida Yo- Choy living continued on the until namine on October to in- order early part of when she moved to a Kobayashi quire payment. whether had made facility. retirement apprised attorney Kida Yonamine that Kida’s By Kobayashi was the end no not did wish Beneficial Hawaii to communi- longer living Kida. In December cate with Kida. Kida insisted that he wished wife, year, present Kida met who his moved to discuss the situation was because he con- in with within him the same month. Kida about letter cerned the demand that he had Kobayashi again not did see until March attorneys, received Beneficial Hawaii’s occupy began when she an office that, notwithstanding attorney’s on his ad- Kobayashi occasionally his near store. deliv- vice, accepted copy he had sent recip- to Kida. Kida ered lunches desserts mail. registered Yonamine advised Kida parking spaces providing rocated for her pay-' Beneficial Hawaii had received parking in his lot: $2,803.40,which, ment the amount how- ever, that, bring point, was Kida he insufficient into testified one turned good standing. telephoned general Yonamine Kida his driver’s and tax li- over excise Kobayashi per- with- his in order Kida testified he maintained
censes to her records, including $5,000.00, agreed sonal business had draw which he lend issue, in a her, documents at boxed warehouse from “time Ko- his certificate” account. adjacent he his store. bayashi possession li- remained Kobayashi permitted had to use ware- morning. part of Kida cences for re- boxes, items, including various house store authorizing Kobayashi peatedly denied bags, and furniture. had access sign his documents to obtain name store, through Kida warehouse *13 in loan name. Kida testified his employees had his to allow Koba- instructed anyone sign his that he had not authorized to yashi he not in store. access when was the in 1992 had not name either or 1994 and kept in Kida stated that the boxes which he papers signed any that would have autho- taped, but had his records were that he anyone sign did not rized to his name. He discovered, deposition, that giving his after any any money apply loan or borrow for loosened, tape suggesting that the had been during period. signing that time He denied replaced. had been later it removed and any application papers, numerous loan the that, in had generated Kobayashi which were Kida admitted in in and evidence, lending requested copies personal as truth in tax such federal his income papers in with statements, forms and divorce connection request taxpayer disclosure number, attempts to what Kida understood to be her a uniform identification residential Countrywide Novus loan” with an refinance “her application, loan estimate of settlement ac- Finance and that he had his charges, and instructed Fannie Mae affidavit attorney, respectively, countant and to re- agreement, apparent all of which bore his Kobayashi had lease documents to her. signature which and some of were notarized. allegedly Country- represented to Kida that any Kida that not insisted he had seen documents, required wide inas- Finance loan had documents in 1994 that he much as was Kida the sole owner of any legal pertain- not notices received assignment R & M after Associates’ ing to had the loan. Kida testified that he of its to Kida. interest of The not heai’d Warehouse Kida had signed also admitted that he May that 1994 and he had never had assignment agreement between himself dealings Kobayashi it. did Kida with not ask May R & M 1994. Howev- Associates borrowing any money to assist her er, note, signing the mortgage he denied paying off the Kida did sale. agreement, adjustable rider. rate pay any expenses not to mainte- related Kida, According Kobayashi had to told never property, nance of the such utilities respect him that with he was borrower taxes, and did obtain insurance for the loan. property, understanding was that because his Regarding Novus collection Financial’s Kobayashi responsible was for that. calls, having spoken Kida admitted to with given Kida testified that he had Ko- never early part and the collection officers bayashi any personal business However, those his recollection of supported records and documents many from respects conversations differed application, Hawaii had the accounts offi- recorded collection into introduced evidence. On cross-examina- affirmatively representing Kida cers. denied tion, previously Kida admitted that he had Kobayashi was collection officers deposition given testified in his had “accountant,” he “bookkeeper,” his or “CPA.” some of bank issue to statements it He insisted that was the collection officers However, Kobayashi. explained he on redi- inquired Kobayashi who had of him whether deposition capacities rect examination that his testimo- foregoing had acted in when he ny had Kobayashi based on the erroneous as- call been had directed earlier them sumption, unexpectedly when inquiries regarding confronted as to all He loan. documents, copies acquiesced that he must in the maintained that he had given Kobayashi. suggested have characterizations them because he Kobayashi embarrassed to refer to as an him for payments “ex- that he had made However, girlfriend” or Kida “ex-lover.” further her. car ex- later turned out plained protested repossessed. that he had not when have been and was Kida leased position claimed to M collection officers had taken the have been unaware that R & Financial responsibility payments loan was had resumed his because Associates he that, September on the loan in Kobayashi believed that had “was trouble” through April pay- want November 1995 complicate at the time and he did not being ments were made to Novus appearing Financial matters confrontational. Therefore, from a bank in which attempted account he and Koba- he had refer the yashi joint professed were tenants. Kida Kobayashi collection officers so that she joint had a unaware he account with directly could resolve the matters with them. Kobayashi attorney until his it confused, discovered being also testified to He inasmuch October 1996. had told him the loan was hers, why they that she did not know were Kida did not most of recall the collection *14 him, calling guys and that “those on the calls, records, reflected in Novus Financial’s really going mainland don’t know what’s on.” spanning period September from through However, April 1996. he acknowl- adopted Kida claimed to strategy have that, edged relying on information received deflecting Novus Financial’s demands with Kobayashi, from represented had he “yeah” and to have limited his involvement collection officers in December 1995 that relaying “messages” between Novus Fi- loan was about to be refinanced. He denied Kobayashi. Kida nancial recalled that stating signed any papers that he had Kobayashi typically that asserted she had purported refinancing, connection with the payments that made the the collection might but testified that have he mentioned typically that officers Novus Finan- asserted telephone pa- that a conversations lot of had not cial received them. Kida acknowl- involved, perwork had which been had been that edged the collection officers had been Kobayashi what told him. had suggesting payments that he make the him- stating but self denied that he would do so. denied, recall, receiving Kida did not also having Kida denied been advised any of the various collection from letters that had not collection officers it been their Mortgage. Beneficial Kida he testified that Kobayashi. responsibility to contact He as- begun phone had to receive collection calls they only complained that serted had that did not “Beneficial” but remember Kobayashi responding was not to then* calls. when he had the first Kida received one. having July Kida denied received the initially Kobayashi in referred callers to 1994 “welcome” Novus letter from Financial. respect he had with same manner as However, the callers from Financial. Novus Kida further that he had not testified been 8, 1996, August on the caller referred to two that R M aware & Financial Associates had responsible, loans for which Kida was one payments, made several reflected in Novus by mortgage secured on records, Sep- Financial’s on the between appeal issue this and another secured January 1994 and 1995. Kida tember did having Kida’s home. Kida testified to been admit, however, making pay- series of Although Kobayashi “shocked.” had assured personal to Novus from his ments Financial only loan, him that no there was one he February account July bank between because, longer during period trusted her explained it 1995. Kida had been his question, she had moved to a smaller understanding Kobayashi experi- was office, employees, re- had lost had not encing during period financial difficulties promptly. turned his calls of time and that had drawn the checks in he Renquinha being amounts that directed in Kida his she had order to remembered that, help during person regarding her. Kida contact the loan but also testified denied time, period Kobayashi present- providing had same her a fax number which mortgage agreements. sports response copies him with a obtain ed car his his complaint alleged telephone repaying that she had been He did not recall his con- had Renquinha with to which she 3. Hawaii’s rebuttal versations However, his he recalled testified. earlier rebuttal, Beneficial Hawaii offered Yonamine, meeting which personal after expert testimony of Howard as an C. Rile investigating attorneys’ help in sought his he witness in the area of forensic document contacting Kida Yona- matter. denied that, of examination. Rile testified nineteen on October 1996 but testified mine signatures appearing loan docu- on Kida’s day; telephoned him that
'Yonamine had on ments, eighteen were not in Kida’s handwrit- conversation, had told course of the he only actually ing signature that the writ- advice, that, attorney’s on his he Yonamine appearing on the ten Kida accept mail. Kida had refused certified on promissory opined, note. also based He directly not to communicated claimed have analysis paper comprising his with Beneficial Hawaii after October note, three-page pages the first two he, that, in his Elida testified October composed type the note were of a different attorney, Kobayashi, had and her husband signature. paper bearing than that that, during inmet her office and the course. meeting, Kobayashi had admitted Ruling C. Court’s Circuit having forged signature on the loan Kida’s circuit court filed On October having signing, Kida au- papers. denied findings of fact of law. its and conclusions deed, Kobayashi warranty sign, thorized circuit court that “Kida in- found: February 1996 and recorded dated procuring structed to take care of February purported to trans- *15 (2) loan”; that, 1994, May “Kida and the R property half of the in the to & fer interest made, Kobayashi [a and delivered executed M Associates. mortgage] Mortgage and Ware- note to The testimony, to his own Kida addition house,” which, however, “had become stale” Levi, that of who was a adduced Laurie that, 11, 1994, July Kobaya- on or about and Kobayashi’s family and was em- friend “replaced pages shi had first two of the the by Kobayashi August ployed 1993 between May newly pages 1994 note two drawn that Koba- August and Levi testified signed and Kida’s to new name had R.M. yashi’s business denominated been (3) documents”; that, “prior to the satisfac- Associates, Financial, R Financial M.D. or & sale[,] agreement Kobayashi tion of the regarded as M Associates. Levi also herself subject prop- transferred her interest working Mortgage for The Warehouse. She (4) Kida”; that, erty upon to satisfaction of organizations of all to be considered these sale, agreement responsible Kida was mortgage brokers. also testified that She repayment represent- of the indebtedness Kobayashi originating mort- engaged was (5) note; ed that Novus had informed Kobayashi gage explained to Levi loans. had obligation Kida of his loan but that under the that, by originating in 1994 loans Kida had failed to and disavow the note Mortgage processing through them The and (6) mortgage; to Ko- Kida had referred Warehouse, “get paid, she had been able to bayashi “bookkeeper” as his and had stated unquote, get quote, back end and (7) my pays mortgage”; that “she that Kida money from both sides.” Levi testified that Kobayashi provided had with documents Mortgage Warehouse had been the bro- (8) loan; refinancing effect cross-examination, for Kida’s loan. ker On Hawaii Beneficial and Beneficial Kobayashi Levi stated had brokered had informed Kida that loan was his and Financial had Kida’s loan that Novus repay obligation and Kida had failed to However, loan. reiterated funded the she (9) object; the note had been as- had brokered Warehouse signed by assignments a chain of from The loan, that it of its own to had no funds Hawaii. Warehouse lend, compensation it and that had received Id. brokerage for its She described the service. fact, arrangement upon foregoing findings transaction involved as Based (1) funding.” circuit court that Benefi- “table concluded:
305
(1998)
71, 74,
934,
cial Hawaii was
(quot
entitled to enforce the note
wai'i
951 P.2d
937
holder; (2)
Co.,
upon
ing
as a
that Kida was liable
v.
Aickin Ocean View Investments
447, 453,
992,
person
rep-
note and
as “a
who is
84 Hawai'i
935 P.2d
998
(1997)
agent
State,
representative
(quoting
resented
who
Dan v.
76 Hawai'i
instrument,”
signs
Kobaya-
423, 428,
528,
(1994))).
inasmuch as
879 P.2d
[A
533
pursuant
implied
shi had acted
to Kida’s
finding
clearly
fact]
is also
erroneous
authorization,
his
evidenced
instruction
when “the record lacks substantial evi
Kobayashi
purchase
“to
take care
support
finding.” Alejado
dence to
subject property
Honolulu,
on their behalf’ and the
City
County
89 Hawai'i
221, 225,
310,
fact that he had released documents to Koba-
(App.1998)
971 P.2d
314
loan; (3)
yashi
that,
procurement
Baker,
of a
(quoting Nishitani v.
Hawai'i
82
if
even Kida
1182,
had
authorized
921 P.2d
1188 (App.1996)).
agent,
act as his
had
Okumura,
383,
he
ratified her actions
See also State v.
78 Hawai'i
by retaining
392,
80,
(1995).
the benefits of the transaction
894 P.2d
“We have
loan;
(4) that,
failing
to disavow the
defined ‘substantial
evidence’
credible
irrespective
validity
of the note and
quality
evidence
is of sufficient
mortgage, Kida was liable to Beneficial Ha-
probative
value
enable a
of rea
equitable
waii
subroga-
under the doctrine of
support
sonable caution to
a conclusion.”
tion, inasmuch as
Marcos,
91,
the funds from the loan
Roxas v.
89 Hawai'i
proceeds
satisfy
“prior
(1998)
were used
en-
(quoting
P.2d
Kawamata
upon
Products,
cumbrance”
created
Agri
Farms v.
Haw
United
of sale. The circuit court
ai'i
948 P.2d
that,
thus ruled
inasmuch as
(quoting Takayama v. Kaiser Found.
default,
right
Beneficial Hawaii had a
fore-
Hosp., 82 Hawai'i
upon
property.
close
(citation,
quota
some internal
marks,
tion
original
brackets omit
March
On
the circuit court en-
ted))).
supplemental findings
tered
of fact and con-
judgment
the loan and
foreclosure
that said
Procedure
entered
clusions of
notice
against
Kida owed Beneficial Hawaii
[HRCP] Rule
day, the circuit court entered a decree of
On
entered as
April
pursuant
Kida,
appeal.
judgment
Beneficial Hawaii and
in favor of (HRCP)
law, in
and an
12, 1999,
directed
54(b).”
final
to Hawai'i
order of
which it
Rule
judgments pursuant
that
“expressly
decree
Kida filed a
54(b).
final
sale,
determined
*16
$359,022.60
Rules
judgment
On the same
as well as a
foreclosure
direct[ed]
of
timely
Civil
be
[State v.]
P.2d
(brackets
wrong standard. See Associates Fin.
this court
Services Co.
clusions of law de
court's answer to it.’” Estate Mar
Hawai'i [19] at
quired
cos,
swer[s] the
1228. “Under the
Hawaii
[78,]
88 Hawai'i at
in
Kotis,
87
original).
‘examine[s]
give any weight
appellate
question
(1999) (footnote omitted)
91 Hawai'i
Hawaii,
novo,
right/wrong
950 P.2d
courts review con
without
the facts and an
(citation omitted). II. STANDARDS OF REVIEW Laup Bus, Robert’s Hawaii Inc. v. School Co., [findings Inc., We review a trial court’s Transportation 91 Haw ahoehoe clearly (1999). 224, 239, fact] under the standard. erroneous ai'i 982 P.2d [finding clearly “A fact] is erroneous Tavares, Leslie v. Estate 91 Hawai'i when, despite support evidence the find (1999) (some 984 P.2d brack ing, appellate court is left original). in ets added some reviewing firm in definite and conviction interpretation the entire that a has is a evidence mistake “The statute Kane, question been committed.” State v. 87 Ha of law reviewable de novo.” Flor v. “broker,” as a was a as well Holguin, Hawai'i 999 P.2d Warehouse Arceo, “lender,” transaction, although Hawai'i in (quoting she State (brackets (1996)) Financial M.D. also denominated herself and omitted). ellipsis points having the loan. Associates as brokered Moreover, the loan had she admitted III. DISCUSSION Meyer, by Novus Financial. been funded Mortgage Are Void A. The Note And closing who of the loan as the handled Prirsuant To HRS And Mortgage agent, escrow considered The Unenforceable and the Warehouse to be both the broker § h5k-B. lender, acknowledged although that Fi she findings of fact and conclusions of its “technically” nancial M.D. Associates was law, expressly ad- the circuit court did Levi, Kobayashi’s employ broker. who and mort- Kida’s claim that the note dress during period, Ko- ee the relevant confirmed gage present matter were void issue 454-8, bayashi’s testimony Mortgage § that The pursuant to and unenforceable was, loan, supra argument was a broker of the see note Kida’s Warehouse loan, appeal, Kobayashi and mort- and that remains on the note had brokered the gage contracts with an mort- are unlicensed Novus Finan the loan had been funded gage Mortgage Warehouse— testimony broker—The Fi cial. reflects that R.M. Levi’s and, therefore, subject nancial, Associates, are to the sanctions R M Financial M.D. & prescribed in HRS 454-8. The circuit Financial, Mortgage and The Warehouse appears to have maintained the view court all utilized in were names expressed ruling denying that it its oral conducting as a bro her business Kida’s motion for directed verdict at Mortgage that The Ware ker. She stated case, ie., Mortgage that The close Kida’s of its own to lend but house had no funds and that Finan- Warehouse was the “lender” compensated it had been services M.D. cial Associates was the “broker” transaction, in the which she ex rendered issue, they transaction at inasmuch were pressly being described as “table funded.” designated in loan If such so documents. stated, foregoing trial As we have testi view, however, circuit court’s it was was the mony completely is uncontradieted. clearly light of the evidence erroneous at trial. adduced having The loan been table funded Warehouse, issue to be Kobaya- The record uncontroverted is whether' The Ware decided authorization, shi, with or without Kida’s “mortgage house as a broker” acted application papers transmitted the meaning transaction within the of HRS partner Kida’s name to her (cid:127) 454-8, supra legislature 1. The see note Warehouse, *17 arranged who with Novus Finan- (“Mortgage ch. 454 Brokers enacted HRS funding through loan cial Solicitors”) protection and aas consumer arrangement lending industry known “safeguard public intended to measure funding”—ie., Mortgage as “table The Ware respect brokerage mortgage with interest provided by Finan house used funds Novus activities,” frequent having abus there “been appeared loan and as the cial close the activities, particu documents, mortgage brokerage ines loan but nominal “lender” loan, larly through telephone solicitation” inasmuch as it immedi never owned charges hav[ing] and hidden ately assigned “[exorbitant it to Novus Financial.4 Koba- yashi unwary consumers.” herself testified that The been extracted Serv., Inc., 1266, in, (Ala. ily e.g., 626 So.2d 1269 4. Table funded transactions are described Fin. Inc., Inc., 37, 1993); Reagan Mortgage, Reagan Mortgage, 135 F.3d 38 v. Racal 715 Racal 925, (Me. 1998). (1st Cir.1998); A.2d 926 Under the Real Estate Chandler v. Norwest Bank Minne sota, 1053, Act, N.A., (8th Cir.1998); §§ 12 U.S.C. 2601- Settlement Procedures 137 F.3d 1056 Corp., Culpepper funding" at F.3d "table means "a settlement v. Inland 132 (11th Cir.1998); by contemporaneous which a is funded a 694-95 Dubose v. First Sec. loan Bank, (M.D.Ala. assignment F.Supp. and an 1427 advance of loan funds Sav. 974 Inc., Finance, 1997); advancing F.Supp. person loan to the the funds.” Noel v. Fleet 3500.2(b). (E.D.Mich.1997); § Smith v. First Fam C.F.R. Rep. given Hse. Stand. Comm. No. in 1967 careful consideration to the matter of Journal, House at 492. In recommending exemptions protec- and has concluded that public that an amended version of tion of the can the bill be enact- best be achieved ed, exempting only Ways those Senate Committee' on businesses are already adequately regulated licensed and Means stated as follows: under other State and lawsf.] Federal purpose provide The of this bill is to Rep. Sen. Stand. Comm. No. licensing regulation persons en- Journal, Senate at 1244.6 gaged in mortgage the business of brokers mortgage negotiating solicitors or firstWe observe that ch. 454 HRS is offering negotiate mortgage loans on statute, which, protection a consumer there property. real fore, interpreted broadly must be in order to purposes.7 effectuate its remedial See Ha Testimony by your considered Commit- Community waii Federal Credit Union v. tee indicates that the abuses this area Keka, 94 Hawai'i fly-by-night operators stem from who (2000). promise financing, secure
usually fees, charge excessive and often statute, interpreting produce fail to disappear results and obligation our foremost is to ascertain and paid. advance fees give legisla effect to the intention Your Committee ture, has determined that which is to primarily be obtained there are number of institutions and language from the contained the statute individuals whose broad business activities statutory itself. And we must read lan encompassed by the definition of guage in the context the entire statute 2(c) “mortgage broker” contained Sec. it in a construe manner consistent with Therefore, your this bill.5 purpose. Committee has its "mortgage 5. The enacting definition of protect broker” set forth intent in the statute was "to original provided: § in the version of HRS 454-1 consumers from 'exorbitant' fees and 'hidden ” charges.’ Dissenting opinion at 3-5. Howev- "Mortgage Broker” means a not ex- er, equally legislation it is evident empt compensa- under section 454-2 who for goal intended to serve broad remedial gain, expectation compen- tion or or in the preventing range by any person the full of abuses gain, directly indirectly sation or either makes, organization negotiates, involved in the acquires, broker- or sells or offers business, make, age negotiate, including barring mortgage acquire, or sell a loan, excluding collecting involving but transactions brokers from excessive or unearned purchase sale or precisely of notes or bonds secured commissions or fees. It is for this mortgages chapter legislature under adopted reason that the the broad 454-1(3) (1985). legislature amend- "mortgage definition of broker” contained in foregoing yield 454-1, ed the definition in 1, which, 1989 to supra §HRS see note as the quoted supra current definition in note 1. In concedes, encompasses dissent so, doing legislature "clarify” intended to Warehouse as maker of Kida’s loan. "mortgage definition of broker.” Hse. Stand. Journal, Rep. Comm. No. in 1989 House course, 7.Of HRS ch. not.limited its 1255. The Senate Committee on Consumer Pro- loans, application to "consumer" inas- emphasized tection and Commerce "[t]he "mortgage much as the definition of loan” set purpose clarify regarding of this bill tois the law in HRS forth extends to mortgage brokers and solicitors in accordance by mortgage property.” "loan secured on real Legislative with recommendations made However, legislative history of the statute *18 826, Rep. Auditor.” Sen. Stand. Comm. No. in clearly legislature's preoccupation evinces the Journal, 1989 Senate at 1116. The Auditor’s protection enacting with consumer in the statute. report "[c]larify included a recommendation to interpretation We note that the dissent’s narrow regulation mortgage that tire of brokers covers statute, spite acknowledgment in of its of relationship in brokers' activities to borrow- purposes, the statute’s remedial is inconsistent Legislative ers and investors." Auditor of statutory principle with the construction slat- Hawai'i, Report, the State of Sunset Evaluation nothing ed in the dissent’s own text. There is in Solicitors, Regulation Mortgage Brokers and suggest phrase “any the statute to tract,” that the con- (1988), Report No. 88-21 at 23. 454-8, appears § it in HRS should be narrowly Quoting portions interpreted mortgage foregoing excerpts 6. to mean "a bro- 454, legislative history kerage from the of HRS ch. contract” as characterized dissent- dissenting opinion legislature’s ing opinion asserts that the at footnote 308 Court, Gray v. argues, Administrative Dir. 84 Beneficial Hawaii howev 138, (1997) 148, 580, er, phrase
Hawai'i 931 P.2d a “on behalf of borrower 8, loan,’’ (quoting seeking mortgage a Toyomura, v. 80 Hawai'i inserted into State (1995) (citations 18-19, 893, statutory “mortgage 904 P.2d definition of 903-04 broker” omitted)). 1989, 1, supra language suggests organi § see note 454-1 HRS zations such as The defining “mortgage extremely Warehouse broker” is “represent” that do not the borrower clearly encompasses broad and are more than “middleman,” excluded the definition. simply a whose role is limited advising regarding doubt, the borrower available When there is doubleness of borrowing options, assisting meaning, the borrower or indistinctiveness or uncertain- completing application statute, papers, ty expression and oversee of an used in a an ing closing statutory ambiguity of loans. The defi exists. any “person
nition extends to
... who for
statute,
construing
ambiguous
In
an
compensation
gam,
directly
or
... either
or
meaning
ambiguous
“[t]he
words
makes,
indirectly
negotiates,
acquires
...
context,
may
sought by examining
be
a
loan on behalf of a borrow
words,
ambiguous
phrases,
with which the
er....”
may
compared,
sentences
be
order
meaning.”
ascertain them true
HRS
The statute does not define the ex
1-15(1) (1993). Moreover,
the courts
loan,” but,
pression
“to make a
may
in determining
resort
extrinsic aids
interpreting analogous
protection
consumer
legislative
intent. One avenue is the
statutes in the context of table funded trans
legislative history
interpretive
use
as an
actions, other courts
have held
“a loan is
tool.
creditor,
‘made’
the named
even when the
18-19,
Toyomura,
309
investors,
matter,
tracts
including
suppliers
subject
with
same
shall be construed with
to
funds used
make
For
the loan.
is clear in
reference
each other. What
one
reason,
legislature
same
explain
omitted the
statute
called in
what
be
aid to
definition,
(1993).
word “sell” from the
inasmuch as
§
is doubtful in another.”
1-16
HRS
regulate
statute was not
intended
argues
Beneficial Hawaii
mortgage
secondary
transactions on the
mar
1,
454-8,
§
supra
HRS
see
note
does not
Thus,
supra
ket.
1
5.
*20
fact,
licensing
urges
(holding
with
violation
Hawaii
that the
architect’s
perform
more,
contract to
party
is
did not render
out
that a
to a transaction
statute
statute,
unlicensed,
licensing
void
unenforcea
in violation of a
architectural services
statute,
itself,
ble,
provided
not,
as
which
for
the entire
inasmuch
in and
render
does
void,
respect
citing
to
illegal
penal sanctions but was silent
transaction
therefore
violators,
Ranch, Ltd.,
enforceability of
its
Haw.
contracts of
Kealakekua
Wilson v.
130-32,
intending
interpreted
not be
as
forfei
551 P.2d
529-30
could
454,”
state,
activity
mortgage lending
chapter
in the
but
key provision
mate
"the
of HRS
merely
complex mortgage
arguing
appears
that the section's
will
curb the use of
to be
dissent
schemes,
funding, by
disallowing
financing
significance
to
unlicensed
as table
is limited
such
mortgage
receiving compensation
that the
brokers
entities. We believe
result is
unlicensed
fully
dissenting opinion
legislature’s
at 317-
See
for their services.
consistent with the
intent
923-924,
enacting
presenting
at
It is true that
30 P.3d
ch.
FIRS
such schemes
454-3(a)
§
if the
person
opportunities
applied
a
not violate HRS
special
does
when
for abuse
receive,
receive,
Furthermore,
expect to
does not
or
unsophisticated
our
borrowers.
equally
could,
compensation
true
way
for his activities. It is
holding
suggests
in no
that borrowers
454-3(a) necessarily
broker,
§HRS
a violation of
through the use of an unlicensed
avoid
engaging in certain
activities
entails
enumerated
obligation
repay
We
their loans.
have
mortgage
argu-
loans. The dissent's
related
a
devoted section III.B
discussion
infra
merely emphasizes
compensation
as-
ments
equitable
party unjustly
to a
remedies'available
454-3(a).
pect
§
proscriptions
In
of the
of HRS
invalidity
facing
mortgage
due
of a
a loss
to tire
event,
"inconsistency”
any
HRS
between
made in violation of HRS ch. 454. Provid-
454-3(a)
interpretation
§
HRS
and our
public policy
pre-
do not
ed that
considerations
by
perceived
§
is that we do
454-8
the dissent
plaintiff
equitable
clude
relief and
expressly
requirement
forth a
that a con-
not
set
loss, unjust
proves its
enrichment of the borrow-
§HRS
"entered into”
tract void under
by
454-8 be
only by
prevented.
It is
virtue of
er should
mortgage
compensa-
for
an unlicensed
broker
prima
to establish a
Beneficial Flawaii’s failure
However,
gain.
requirement
is
tion or
such
right
in the
court of a
to an
facie case
circuit
acting
holding,
implied
"in
our
inasmuch as
remedy
equitable
denied a
that it has been
recov-
mortgage
capacity as
within the
their
brokers
course,
preclude
ery.
holding does not
Of
our
acting
§
meaning
"for
of HRS
454-1” means
equitable
plaintiff
claim from
some other
with an
gain,
compensation
expectation
or
or in the
against
subsequent
proceeding
Kida in a
action.
hand,
gain.”
compensation
fur-
or
On the other
third,
Finally,
perceives the
result
dissent
restricting
meaning
§
ther
of HRS 454-8
absurd,
present
reached in the
matter as
inas-
purpose
employ-
contracts "executed
"punishes"
promissory
much as it
a holder of
dissent,
broker,”
suggested by
ing
see
mortgage
illegal
note for the
activities of
bro-
n.2,
n.2,
dissenting opinion at 318
P.3d at 924
contrary,
ker. To the
Beneficial Hawaii
is
effectively
§HRS 454-8 within
would
subsume
merely
being "punished,”
suffers
conse-
but
454-3(a), making
largely
su-
HRS
the former
illegality surrounding
quences
apparent
of die
supra,
repeatedly
perfluous. As
we have
noted
loan,
may
making of
which
not be
Kida’s
statutory
any
rejected
that render
constructions
to a
limited
violation of
broker
void,
sentence,
"clause,
superfluous,
or
...
word
may
licensing requirements
implicate
also
but
legiti-
insignificant if a
can be
or
mately
construction
frauds,
§HRS
the statute of
(“No
see
pre-
give
will
force to and
found
brought
...
action shall be
and maintained
Young,
serve all words
statute." State
lands,
any
[ujpon
contract
the sale of
tene-
n.
242 n. 6
Hawai'i
93
(2000) (citations omitted).
ments,
hereditaments,
or
or of
interest
or
Second,
tire dissent
promise,
concerning them ...
con-
unless
suggests
holding provides
our
an incentive
tract,
agreement, upon which the
action is
to use
bro-
to consumers
unlicensed
thereof,
brought, or some memorandum or note
legislative
contrary
purpose
of dis-
kers
party
writing,
signed
to be
is
is
reasoning
couraging
such use. The dissent's
therewith,
charged
person thereunto
some
premised upon
assumption
that a consumer
authorized.’’),
lawfully
party writing
employing an unlicensed
broker
lending
To
well as
federal
laws.
having
mortgage,
pay the
be able to avoid
was an
fact,
the extent that Beneficial Hawaii
"inno-
holding
example.
citing Kida as an
our
note,
opportunity
it had a full
cent" holder
curtailing,
than
have the effect of
rather
should
prove
relief. See
at
its status and obtain
brokerage
encouraging, unlicensed
activities
infra
315,
3H
services, wholly
severed,
pro
agreement
ture of
for
out of
fees
broker service
is
the
portion
public
requirements
policy,
agreement
to the
of
for the sale of
estate is still
real
harm,
wholly
legal
of
quality
supported
extent of
and moral
conduct
valid
consider
I,
parties),
of
ation.
Joint
See Local No.
United Ass’n
Kona
Venture
Ltd. v.
234 of
(D.Haw.1988)
Covella,
Beckwith,
Journeymen
Henley
285
v.
&
(holding
88 B.R.
of
(contract
Inc.,
(Fla.1953)
that,
818
66 So.2d
will
when neither real estate brokers’ li
censing
illegal portion
be enforced where
does not
legislative history
nor its
in
statute
go to
of
legislature
essence
contract and where it is
dicated that
intended unenforee-
supported by
promises
still
legal
valid
on
ability of unlicensed broker’s commission
illegal portion
both
after
is
sides
eliminat
agreement, broker was
entitled
retain
ed);
Greenfield,
v.
488
Slusher
So.2d 579
paid),
commission
and United National
(Fla.
1986) (same).
4th
See also
DCA
Title
Airport
Bank Miami v.
Plaza Limited
of
(Fla.
Parker,
&
v.
(Fla.Ct.
Trust Co.
satisfied
Ben-
L.Ed.2d 144
A.
Insurance
Equitable
10.05,
Disputes §
eficial
is entitled to
at
[Hawaii]
Claims and
(5th
(1982);
Dictionary
pursuant
provi-
Black’s Law
Striet foreclosure
ed.1979).
agreement
sions of an
of sale has the effect
divesting
purchaser
equitable
of his
Peters,
at
315
injustice
Turning
question
of
erty
plaintiff.”
how
in favor
Id.
here,
may best
averted
note the
be
we
a. The
comment
Restatement articulates
plaintiffs prayed
imposition
for the
of a
pertinent principle in these
terms:
“A
constructive trust.
trust is
constructive
property
Where
of one
can
through
way]
[one
the conscience
proceeding
equity
be reached
equity
expression.
property
finds
When
security
a claim
another
on the
acquired
has
in such
been
circumstances
ground
otherwise the former would
may
legal
that the holder
not in
title
enriched,
unjustly
equitable
an
lien
good conscience retain the beneficial inter-
arises.
est,
equity [may
him
trust-
convert]
into
injustice
§ 161.
think
Id.
We
could be
Beatty
Guggenheim
ee.”
Exploration
v.
prevented
here
of a
the establishment
Co.,
380, 386,
225 N.Y.
N.E.
subject
proper
property.
lien on the
See
(1919)
J.)
omitted)
(Cardozo,
(citations
Fernandez,
v.
46 Haw.
Coelho
Scott,
quoted in 5 A.
The Law
Trusts
(1963)
(citing King Thomp-
(3d
P.2d
ed.1967). Still,
§ 462
imposition
(9
)
son,
204, 9
34 U.S.
Pet.
L.Ed. 102
may
apt
circum-
trust
not be
(1835)).
stances.
party
A
entitled
restitution
have
(brackets
638-40,
Id. at
present action.
admittedly
plain
§ 454-8 is
both
unambiguous.
absurdly
By
It is also
broad.
IV. CONCLUSION
terms,
its own
section 454-8 invalidates and
foregoing reasoning,
Based on the
re-we
“any
renders unenforceable
contract”—be it
judgment
circuit
verse the
court’s
and decree
service,
long
telephone
distance
an auto
Hawaii,
of foreclosure
favor of Beneficial
lease,
employment—if
party
mobile
one
filed on March
contract is an
“unlicensed
bro
ker or solicitor.”
RAMIL,
Dissenting Opinion of
J.
Departure from literal construction—even
respectfully
legislature
I
dissent. The
en-
statutory ambiguity—is appropriate
absent
(HRS) chap-
acted Hawai'i Revised Statutes
produce
when such construction would
an
(1993
Supp.2000)
protect
ter 464
con-
unjust
City
absurd and
result. Franks v.
sumers
excessive fees and hidden
Honolulu,
County
74 Haw.
charges imposed by unscrupulous mortgage
(1993) (citing
Hawaiian
Accordingly, I
brokers.
would hold
sec-
Co.,
Ins.
& Guar. Co. Financial Sec. Ins.
tion 454-8
renders void and unen-
(1991)).
72 Haw.
amount of made borrower, 454-3(a), indebtedness expressly § over above the disallows unlicensed mortgages. commissioner prior The as Ware persons-—such The adopt concerning full rules also may or obtaining commissions fees house—from fees, commissions, and disclosure of acquiring or making, with sell in connection charges. view, my ing mortgage In section loans. 454-3(a) list con- chapter 454 also contains a HRS 454-8 is consistent with section be suspension of a lead duct it unenforceable” cause renders “void and brokerage HRS mortgage license. See brokerage thereby mortgage contracts (1993). § includes mis- Such conduct enforcing precludes unlicensed from entities funds representation, the failure to disburse obtaining brokerage contracts fees such and the agreement, in accordance with commissions from consumers—which is or place funds in “within failure to escrow 454-3(a) what precisely section disallowed 454-4(a). § time.”1 HRS reasonable doing. The Warehouse interpret foregoing, Based on the I would 454-3(a) manner, §§ this same both HRS in a consistent with the section 454-8 manner statutory are with the and 454-8 consistent chapter that it purpose of HRS 454 and hold person as a “mortgage broker” definition any void and unenforceable -mort renders compensation gain, or “for or who brokerage a consumer gage contract between makes, compensation gam,” expectation of or With and an unlicensed broker.2 acquires or sells a loan on behalf of majority’s that the respect to the conclusion § buyer. 454-1. Pursuant this HRS “contract,” employed in 454- section term definition, if, example, mortgage bro means all contracts which receiving anticipate did not Warehouse fees capacity into their kers enter transaction, it commissions from would or 916, I brokers, Majority at see 30 P.3d “mortgage have broker” or violat not been observations. have three any provision chapter 454. ed First, majority longstand ignores the Second, majority’s is funda- conclusion materia, principle pari or ing “laws mentally express pur- with inconsistent matter, subject upon shall be con the same chapter legislature pose of HRS with reference to other.” International strued each chapter discourage 454 to enacted HRS Wiig, 82 and Loan Ass’n v. Sa v. mortgage brokers. As use of unlicensed Hawai'i P.2d expressly supra, legislature stated County (citing City Richardson fees, about “hidden Honolulu, concerned “exorbitant” 76 Hawai'i (1994)). who charges,” brokers collect majority’s Specifically, the ex disappear. The ma- pansive reading of the ren advance fees then term “contract” however, jority, interprets 454-8 to section 454-8 inconsistent the rest section ders person's provides part person’s hands not the 1. HRS 454-4 in relevant as fol- and which is properly person lows: or is not in law or which the Suspension, retain, revocation. 454-4. equity entitled and at the time which (a) may suspend a license law, The commissioner required by agreed upon, been or is has any years period exceeding for a two time, or, upon in the a fixed de- absence of following or a licensee: acts conduct of accounting mand of the entitled to the influence, promise tending Making a false delivery; or induce, persuade, pursuing a course of (5)Failure place, a reasonable within time through promises misrepresentation or false fund, check, deposit, upon receipt, money, solicitors, otherwise; agents, advertising, or *28 pursuant ... to a or draft escrow written (2) any Misrepresentation or of ma- concealment agreement, deposit or to the funds in a or trust respect any re- terial fact with transaction ... escrow bank account injury parly; sulting in (3) Failure to disburse funds in accordance "Mortgage brokerage are executed contracts agreement; an purpose employing of a broker seek for (4) any person Failure to account deliver to or development financing fund, acquisition for the and of money, any personal property such . Jr., Burke, draft, check, D. Law Real real estate.” Barlowe mortgage, deposit, or other docu- of Brokers, 1999). 14.2, (2d §§ thing ed. of value has come into Estate 14:4 ment or
319
provide
ACOBA,
Opinion
incentive to
con-
Concurring
enormous
those
of
J.
mortgage
sumers
use
who
unlicensed
bro-
by
I concur in the result
the ma-
reached
kers.
I
that
suspect
most consumers would jority for the reasons that follow.
brokers,
happily
mortgage
use unlicensed
in-
view,
my
In
this case sits at the crossroads
curring
charges
exorbitant fees and hidden
public
of
policy nullifying mortgage
loan
if,
along
way,
day,
of
the end
directly
contracts
indirectly
“either
or
they—like
pay
Kida—do not have to
their ma[d]e, negotiate^],
acquired], or
[or]
[so]
mortgage.
offer[ed,]”1 by
mortgage
unlicensed
brokers
and solicitors as
evinced Hawai'i Revised
Finally,
majority
the result reached
(HRS)
(1993)2
§§
Statutes
454-1 and 454-8
in this
dispute
case
absurd.
is no
There
and
policy favoring
negotiability
Corporation
Novus Financial
loaned
promissory
viability
notes as essential to the
$300,000.00
exchange
a promissory
for
of commercial transactions.3
by mortgage
note
prop-
secured
on Kida’s
Following
§
the command of HRS
1-16
Warehouse,
erty.
apparently
(1993)
... upon
subject
that “[l]aws
the same
purpose
for
of obtaining
fees or commis-
matter, shall be construed with reference to
sions, structured the
transaction
such a
other[,]”
plain
each
it is
that “contract” in
it
manner that
acted
through
as a conduit
§
“mortgage
HRS
454-8 means a
loan” con-
money passed
way
which the
its
to Kida and
tract,
is,
concerning
a contract
“a loan
mortgage passed on
way
and
their
the.note
by mortgage
property.”
secured
on real
that,
majority
to Novus. The
holds
because
Thus,
§
§
HRS
454-1.
454-8
HRS
directs
Warehouse structured the
procured
contracts
manner,
transaction in this
the note and
or
unlicensed brokers
solicitors shall be “void
void and
are
unenforceable.
“[n]ull;
in-
unenforceable.” Void means
words,
emphasize,
and I
majority
other
unable,
law,
...
support
effectual
punishes
promissory
holder of
note
intended[;
purpose
it
for which was
in-
a]n
because an unlicensed
broker has
wholly
strument or transaction which is
inef-
454-3(a)
precisely
what
done
disal-
fective, inoperative,
incapable
of ratifica-
lows it from doing—collecting more fees/com-
tion and which thus has no
or
force
effect so
missions.
nothing
can cure it.” Black’s Law Dic-
(6th ed.1990).
I
Accordingly,
tionary
dissent.
1573
An unenforcea-
(HRS)
barring
experience
training” by
1. Hawai'i Revised Statutes
454-1
civil
actions
contractors).
"mortgage
defines
broker” as one who
unlicensed
Wilson v. Kealak
Cf.
Ranch, Ltd.,
129,
124,
ekua
57 Haw.
performs
compensation,
551 P.2d
these activities for
525,
enforceability
(allowing
a "mortgage
engages
solicitor” as one who
in such
architect,
reasoning
contract
an unlicensed
employee
conduct
as an
of or under
direction
respect
that "where a statute is silent with
of a
broker.
enforceability
performance
aof
contract whose
prohibitum,
legislature
is malum
could not
Obayashi,
2. See
v.
71
Butler
Haw.
785
unenforceability
have
where a forfei
intended
(1990) (finding
P.2d
that a statule
ture, wholly
proportion
require
out
preventing unlicensed contractors from "recov
policy
public
appropriate
ments of
or
individual
done,
ering
supplies
or
work
materials
punishment,
solely
would result and redound
furnished,
both
on a contract or on the basis
defendant”).
die benefit of the
thereof, in
of the reasonable value
a civil action
expresses
very strong
policy
public
...
3.See,
Corp.
e.g.,
Bldg.
Complex
Manor
v. Manor
for,
apply
contractors in this state should
Assocs., Ltd.,
Pa.Super.
645 A.2d
licenses,
provisions
receive
... and the
are obvi
(1994) (“The purpose
of the Commercial
ously
produce
intended to
results in
harsh
fur
marketability
negotia
Code is to enhance the
policy”);
lipson,
therance
v. Phil
of that
Jones
9
bankers, brokers,
ble instruments and to allow
(Haw.
Hawai'i
confidence.”);
general public
and the
to trade in
(finding
App.1999)
vindicated
statute
Malphrus
Albany,
City
Sav. Bank
Home
general
purposes
"protecting]
public
(1965) (stat
Misc.2d
254 N.Y.S.2d
dishonest, fraudulent,
against
unskillful or un
ing that Article 3 of the
Code
Commercial
"was
qualified
"ensuring]
contractors” and
the health
protect persons engaged
enacted to
in business
safety
public by requiring
involving
payment
that con
transactions
instruments
expertise.
money").
possess
tractors
a minimum level of
*29
having
means
contract
no
“[a]
ble contract
unlicensed broker Hawaii, appears
Appellee Inc. Otherwise, policy place public
assert. undermined, plain
would be and the intent of legislature—to involving ban contracts
unlicensed brokers or solicitors— Likewise, legislative in light of the
defeated.
mandate, promissory those to whom notes negotiated by a should
secured are
only be to. the extent avail entitled relief able, from the transferor from whom such ‘4 See notes apply a mortgage to all contracts between legislature “clarify” undertook to borrower, but, rather, only broker and a regulate statute was intended the relation contracts,” “brokerage object the statute’s ships between brokérs and the borrowers on being preclude brokers from unlicensed whose behalf the brokers acted not the claiming brokerage fees borrowers. relationships par between brokers third points Beneficial legisla Hawaii out that the hand, ties. On the other the amended defini that, history tive suggests of the statute tion of “mortgage broker” forth in set HRS 454, enacting legislature ch. HRS § persons 454-1 continued include all en regarding motivated concerns abusive gaging in transactions with a borrower in mortgage brokerage resulting activities making mortgage connection with the aof However, brokerage charges. excessive Accordingly, loan. phrase we construe the terms, “[a]ny its the statute invalidates con borrower,” “on á behalf of set as forth tract any into person any entered 454-1, amended, §HRS as mean “in mortgage (Emphases unlicensed broker.” interest of a borrower” or “for the benefit of added.) “Departure from the literal eon- suggested by borrower.” The construction justified only struetion if statute is such Hawaii—ie., that “on behalf of the yields unjust construction an absurd and “acting borrower” means for the borrower” obviously pur result inconsistent with the or “in the name the borrower”—would poses policies of the statute.” v. Shin statutory render the terms “make” and “ac McLaughlin, 89 Hawai'i quire” surplusage, thereby violating fun (1998) (quoting Liberty 1062 v. Alvarez statutory damental canon construction House, Inc., Hawai'i P.2d give “courts are bound to effect to all (1997)). 539, 542 statute, parts clause, of a and that no sen tence, or as superflu word shall be construed that a agree hyperliteral We con ous, void, insignificant § yield if a construction struction of HRS 454-8 would result, can legitimately give found which will absurd wholly inasmuch as a contract preserve brokerage force to and all mortgage activity, words the stat unrelated to Doe, ute.” In re 90 Hawai'i notwithstanding party that a to the contract broker, (quoting mortgage P.2d is an State Kaaki is obvious unlicensed maka, 280, 289-90, ly beyond 84 Hawai'i scope P.2d the intended of the statute. (1997)). Furthermore, § Accordingly, most of the HRS 454-8 must be inter preted exemptions only detailed enumerated HRS to invalidate contracts into those 454-2, § supra mortgage see note would be unneces which unlicensed brokers enter sary merely if “mortgage capacity broker” meant a them as within brokers However, person acting § “for” or “in meaning the name of’ a of HRS 454-1. negotiate mortgage borrower to locate and more restrictive construction the term 454-2(2) financing. particular, § § HRS “contract” in HRS 454-8 is unwarranted. (exempting If making acquiring legislature merely to invali “[a] intended recovery brokerage loan with one’s own funds for one’s date the of unlicensed commissions, own without investment intent resell the it would not have needed to loan”) entirely superflu would be render contracts “void the entire themselves materia, pari ous. or upon “Laws in unenforceable.” First, holding grounds. 8. The dissent takes issue with that our our three it asserts hold- "contract,” ing § employed term HRS 454- HRS 454-8 inconsistent with the “renders chapter Dissenting opinion means all into which rest of 454.” contracts bro- HRS 454-3(a) capacity mortgage Calling kers enter in their brokers P.3d at
Notes
notes
equitable
legal
Hawaii
remedies when
reme
Strnad,
ropolitan
v.
255 Kan.
Ins. Co.
Life
dies were available.
657,
1362,
(1994);
1365
Federal
876 P.2d
general principle
equity
[T]he
will
[is]
Hennessee,
Corp.
F.2d
Deposit Ins.
v.
966
jurisdiction
complainant
not take
when the
(10th Cir.1992);
534,
&
537
American Sav.
remedy
a complete
adequate
has
at
289,
Blomquist,
v.
2d
Loan Ass’n
21 Utah
however,
apply,
law. That rule does not
1,
(1968);
4
445 P.2d
Lincoln Nat.
Ins.
Life
exceptions,
and this
when
is one
622,
906,
Kelly,
17
73 N.D.
N.W.2d
909
Co. v.
complainant
equitable
claim of
is of an
(1945).
found,
Assuming, as the circuit court
remedy
in a
nature and admits of
court
sign
Kida
authorized
equity only.
of
transac
loan documents
ratified the
and/or
Henry
King,
Trust
conduct,
Waterhouse
Co. v.
33
by
note
tion
his
(1934).
1,
Mortgage
Haw.
9
is
foreclosure
to which
issue were nevertheless contracts
proceeding equitable in
and is
nature
thus
Mortgage
party.
The
The
Warehouse was
See,
e.g.,
governed
equity.
rules of
is uncontroverted that The
record
Horwoth,
204,
Haw.
Bank
Hawaii v.
71
procured the
for com
Warehouse
documents
of
n.
213 & 213
P.2d
& 680 n.
making
787
pensation
gain by negotiating
(1990) (citing
9
Honolulu Plantation Co. v.
Accord
loan on Kida’s behalf.
Tsunoda,
(1924); Honolulu,
27 Haw.
840
ingly,
was,
Warehouse
Blackwell,
Haw.App.
Ltd. v.
7
750
“mortgage
meaning
within
broker”
(1988)) (noting
P.2d
that “[b]efore
948
§
454-1.
Inasmuch
adoption
calling
2
1952
Rule
entity,
HRCP
Warehouse was an unlicensed
we hold
for ‘one form of action
known as “civil
void
be
that the contracts were
and unenforcea
action”[,]’
authorizing
the statute
foreclo
pursuant
to HRS
454-8.
ble
Beneficial
compelled
sures
action
suits to
such
may
Hawaii
not enforce the note and mort
(some
brought
in equity”)
brackets added
gage,
if
contracts
even
were authorized
original);
and some in
Hawaii
Bank
v.
validly assigned
ratified
Kida and
and/or
Inc.,
Service,
Davis Radio
6 Haw.
Sales
Accordingly,
Hawaii.
to Beneficial
we need
469, 480-81,
(1986).
App.
points
regarding
not reach Kida’s
error
formation
and the
contract
complaint
equity
appeal
A
is
assignment
mortgage.
note and
equity
exercise of
sound
court’s
discr
etion,
Kai, Ltd.,
Napili
Fleming v.
50 Haw.
B.
Hawaii
To Es-
Has Failed
Beneficial
(1967).
Equity jurispru
notes obtained and not from mak were of the who into contract with er note entered broker solicitor. unlicensed results, foregoing while isolation harsh, merely are appealing conse- legislative quences policy em- choice statute, all parties bodied in the as to which dealing contracts and notes forewarned, and in that are viewed frame- work, unjust. are not See, (1993) (listing warranty equal e.g., an amount to the loss suffered as 490:3-416 "[a.| stating breach, transfer warranties and a result of the but not more than the ... are made who to whom the warranties expenses plus and loss amount instrument good took faith recover die instrument breach"). a result of interest incurred as damages warrantor breach of thé