Law allowing Superior Court to tap trust funds questioned

A law enacted last year by the Legislature that allows the Superior Court to make money out of the trust funds temporarily entrusted to the judiciary is facing legal challenge in the U.S. District Court, which has forced the House of Representatives to seek repeal of some of its provisions.

A bill introduced by House Speaker Benigno R. Fitial will nullify the effectivity of questionable provisions under Public Law 11-105 in a move to comply with the ruling issued last week by District Judge Alex R. Munson.

The Legislature has until this week to act on the measure or else risk the court’s declaration of the law as unconstitutional, according to Attorney General Herb D. Soll.

“Time is of the essence in this matter,” he wrote in a letter to the presiding officers, adding that failure to repeal those provisions would result to award of attorney’s fees of $5,000 to the plaintiff which has challenged PL 11-105’s legality before the court.

James E. Hollman, guardian for Vo Minh Tan who is one of the beneficiaries of the late business tycoon Larry Hillblom’s estate, sued the CNMI government last month before the federal court involving administration of the trust funds.

In court papers submitted by his attorney, Bruce L. Jorgensen, the plaintiff criticized an earlier order issued by CNMI Superior Court Judge Pro-Tem Alex Castro that asked him to defend claim on the interests accrued from the Hillblom account.

Mr. Hollman had asked the Superior Court to immediately pay all interest accrued on some $833,334 deposited by the judiciary deprived on his ward.

During the pendency of the Hillblom probate proceeding in that court, a substantial amount was deposited in banks under “trust” accounts supervised by the CNMI judiciary. This earned interest at a rate of $4,700 a day.

As a result of PL 11-105, the court had notified the general public of its intention to transfer of the money to the Superior Court’s accounts and to claim the interests for the administration of the trusts.

During the hearing of the case, Judge Munson agreed to give grace period to the defendant, the CNMI government, to resolve the constitutional questions on the law as he noted that even the Senate legal counsel, the Attorney General’s Office and the Superior Court Presiding Judge Edward Manibusan acknowledged the deficiency.

The provisions questioned by Mr. Hollman concern the authority given to the presiding judge to establish interest-bearing accounts in banks located within the Commonwealth for the trust funds as well as the expenditure of the interests earned which will cover costs of maintaining the accounts and other administrative expenses.

Signed by Gov. Pedro P, Tenorio last October, PL 11-105 permits the local court to use the interest earned from trust funds on cases such as heirship and estate settlement while awaiting their disbursement.

Rep. Heinz S. Hofschneider, proponent of the law, said then that administering these funds, which were not kept in the banks, entailed huge costs to the government, and thus burdening taxpayers who are not recipients of these monies.