In re Estate of Yong Kyun Kim

FOR PUBLICATION IN THE SUPREME COURT OF THE COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS IN THE MATTER OF THE ESTATE OF YONG KYUN KIM, Deceased. RAN KIM and KYUNG-RAN KIM, Appellants v. HYUNG GON KIM, Appellee Cite as: In re Estate of Yong Kyun Kim, 2001 MP 22 Appeal No. 99-023/Civ. Action No. 97-1178B Argued and submitted December 12, 2000 OPINION Counsel for Appellants: Counsel for Appellee: Reynaldo O. Yana Bruce Berline P.O. Box 500052 P.O. Box 5682 CHRB Saipan, MP 96950 Saipan, MP 96950  BEFORE: MIGUEL S. DEMAP AN, Chief Justice; ALEXANDRO C. CASTRO, Associate Justice; and VIRGINIA SABLAN-ONERHEIM, Justice Pro Tempore CASTRO, Associate Justice: ~1 Ran Kim CRan") and Kyung-Ran Kim CKyung-Ran") timely appeal the Superior Court's ruling regarding the estate of their father, Yong Kyun Kim (the "decedent"). We have jurisdiction pursuant to Article IV, Section 3 ofthe Constitution ofthe Commonwealth ofthe Northern Mariana Islands, and 1 CMC § 3102(a). We affirm. ISSUE PRESENTED AND STANDARD OF REVIEW The issue before this Court is whether the trial court erred in finding that the decedent's stock was effectively transferred to his sons during his lifetime. l ~3 This is a question of fact, which we review for clear error. See Rogolofoi v. Guerrero, 2 N.M.I. 468, 476 (1992). FACTUAL AND PROCEDURAL BACKGROUND According to the trial court, Yong Kyun Kim died intestate on March 20, 1997, in Seoul, Republic of Korea, leaving assets in Saipan, Commonwealth of the Northern Mariana Islands ("CNMI"). The decedent was a resident of Saipan. He was survived by his wife, Tae-Bong Kim ("Tae-Bong"), their two sons, Hyung Gon Kim CHyung Gon") and Soo-Gon Kim ("Soo-Gon"), and the decedent's two daughters, Kyung-Ran and Ran. I The parties presented additional questions pertaining to the alternative bases for the trial court's ruling. Because we affinn on this issue, we need not reach the others. We note for the record, however, that we disapprove the lower court's alternative reasoning. Its use of 5 CMC § 8307 is unsound. Section 8307 states that if a certificated securitv is delivered without an indorsement. "against ~ - the transferor.- the transfer is complete - upon - delivery," -- a provision which bears no relevance to the present case, wherein the transferor is deceased. Furthennore, we do not ratity the trial court's implication that potential forgery is a mere technical defect. • ~5 On February 5, 1998, Hyung Gon was appointed administrator ofthe decedent's estate. On September 22, 1998, Hyung Gon filed the First Inventory of the decedent's estate and a Petition for Final Distribution and to Close the Estate. ~6 Ran objected to the First Inventory on the grounds that it did not include 378,000 shares of 2 stock in MariSai, Inc. ("MariSai"), which, she asserted, her father owned at the time of his death. As administrator, Hyung Gon maintained that the decedent had transferred the shares during the decedent's lifetime. ~7 An evidentiary hearing was held on March 16, 1999. The trial court found that, after learning he was seriously ill in December of 1996, the decedent told his wife that they should transfer all of the MariSai shares to their sons. The decedent proceeded to place a telephone call to Hyung Gon to say that both parents were transferring their MariSai stock to Hyung Gon and Soo-Gon. At his father's request, Hyung Gon drew up several documents to memorialize and record the stock transfer. The documents were delivered to the decedent in Korea, the decedent signed the documents, and the documents were delivered back to Saipan. ~8 Despite the efforts of the decedent's daughters to show otherwise, the trial court found that the decedent had indorsed his shares of MariSai stock in favor of his sons, and that the stock certificates had been delivered to Hyung Gon and Soo-Gon, thereby effecting a transfer. ANALYSIS ~9 Pursuantto Com. R. Civ. P. Rule 52(a), this Court cannot set aside the factual findings ofthe trial court unless such findings are clearly erroneous. "A finding is clearly erroneous when, even though some evidence supports it, the entire record produces the definite and firm conviction that 2 MariSai is a CNMI corporation. In 1996, the decedent and his wife were the only shareholders of MariSai, with 378.000 and 12,000 shares, respectively. • the court below committed a mistake .... The test is whether the trial court could rationally have found as it did, rather than whether the reviewing court would have ruled differently." Rogol%i v. Guerrero, 2 N.M.I. 468, 476 (1992); see also In re Estate 0/ Ro/ag, 2 N.M.I. 18, 31 (1990). The burden is on appellant to convince this court of such error. See Cabrera v. Cabrera, 3 N .M.I. 2, 8 (1991); Pangelinan v. Unknown Heirs 0/ Mangarero, 1 N.M.I. 388 (1990). ~1 0 Furthermore, Rule 52 states that "due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." As the United States Supreme Court instructs with regard to the parallel Federal Rule, "when a trial judge's finding is based on his decision to credit the testimony of one of two or more witnesses, each of whom has told a coherent and facially plausible story ... that finding, if not internally inconsistent, can virtually never be clear error." Anderson v. City o/Bessemer City, 470 U.S. 564, 575,105 S. Ct. 1504,1512 (1984). ~II Under the Uniform Commercial Code ("UCC"), which has been adopted in the CNMI, transfer of a certificated security such as the MariSai stock is effectuated by indorsement and delivery. See 5 CMC §§ 8102, 8307, 8309. Here, only indorsement is challenged. In any action on a security, "[i]fthe effectiveness of a signature is put in issue, the burden of establishing it is on the party claiming under the signature, but the signature is presumed to be genuine or authorized." 5 CMC § 8105(3)(b). ~12 By definition, such a presumption means that "the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its non- existence." 5 CMC § 120 I (31)(emphasis added). The rebuttable presumption is an evidentiary tool, "attaching to proven evidentiary facts certain procedural consequences as to the opponent's duty to come forward with other evidence." Legille v. Dann, 544 F.2d 1,5 (D.C. Cir. 1976). It does not shift the burden of proof in the sense of the risk of nonpersuasion, but only reassigns the initial • burden of production. See Com. R. Evid. Rule 301; Gay v. Waiter's and Dairy Lunchmen 's Union, 694 F.2d 531,543 n.ll (9 th CiI. 1982). Consequently, once rebuttal evidence is introduced the presumption disappears. See Nunley v. Los Angeles, 52 F.3d 792, 796 (9 th Cir. 1995)(explaining the "bursting bubble" approach, embodied in Rule 301 of the Rules of Evidence). At that juncture, the party claiming under the signature must establish its validity "by a preponderance of the total 3 evidence." Comment 1 to V.C.C. § 3-307. ~13 The strength of evidence required to rebut the presumption differs among jurisdictions. See, e.g., Bradford Trust Co. v. Merrill Lynch, 622 F.Supp. 208, 211 (S.D.N.Y. 1985); Looman v. Rockingham National Bank, 265 S.E.2d 711,712 (Va. 1980); Freeman Check Cashing, Inc. v. State, 412 N.Y.S.2d 963, 965 (1979). The Official Comment to the VCC states that the evidentiary showing by the party denying a signature's validity "need not be sufficient to require a directed verdict in his favor, but it must be enough to support his denial by permitting a finding in his favor." Comment 1 to V.C.C. § 3-307. In other words, the rebuttal evidence must be sufficient to permit, yet not require, a finding offorgery or deceipt. See First Nat 'I Bank v. A.A. Blackhurst, 345 S.E.2d 567, 572 (W. Va. 1986); Bates & Springer, Inc. v. Stallworth, 382 N.E.2d 1179, 1186 (Ohio App. 1978). ~14 Appellants contend that the decedent's signature on the MariSai stock is not genuine. A genuine signature is one which is "free of forgery or counterfeiting." See 5 CMC § 1201(18). This means that any party contesting an indorsement on a security must furnish some evidence of falsification or deceit. See United Pacific Ins. v. Idaho First Nat 'I Bank, 378 F.2d 62,69 (9th Cir. 1967)(the essence of a counterfeit is that it purports to be something which it is not). By presenting 3 Comment I to U.C.C. § 8-105, regarding securities, instructs that "the particular rules stated in section ,-,07 for the negotiable instmments governed by Article 3 are adapted to securities." Thus, to construe the "presumption" established by § 8-1 05(2)(b), the analog to 5 CMC § 81 05(3)(b), it is helpful to refer to U.C.c. § 3-307 and its comments. • signed certificates, appellees established a prima facie case of genuineness. It was, therefore, incumbent upon Ran and Kyung-Ran to convince the trial court of the possibility of a forgery or counterfeit in order to force Hyung Gon and Soo-Gon to prove the authenticity of the signatures. ~15 Appellants themselves testified, and they presented the testimony of a handwriting analyst. The trial court weighed this evidence, but reasoned that Ran and Kyung-Ran did not have first-hand knowledge of the events surrounding the stock transfer. Additionally, while the handwriting analyst demonstrated that the signatures on the stock certificates did not match the decedent's signature on earlier documents, he could not say that the signatures were forged, particularly in light of the decedent's failing health at the time. Tae-Bong, on the other hand, testified that she witnessed the decedent's indorsement of the certificates. The trial court found Tae-Bong's testimony persuasive. ~16 Notwithstanding the trial court's failure to analyze this issue within the framework of 5 CMC § 81 05(b), its decision is not in doubt. Having considered all of the evidence, the court chose to credit the testimony of Tae-Bong. Appellants may have been successful in rebutting the presumption that the decedent's indorsement of the stock certificates was genuine. Nevertheless, in the judgment of the trial court, the preponderance of the evidence showed the signatures free of forgery or counterfeiting. Therefore we must affirm. To do otherwise would be to impermissibly substitute our own findings for those of the trial court. CONCLUSION ~17 Ran and Kyung-Ran appeal the trial court's finding that the decedent indorsed the MariSai certificates, thereby effecting a transfer to Hyung Gon and Soo-Gon. The court considered appellants' evidence, but concluded that the challenged signatures were genuine. Because the trial court's findings are rational and consistent, we cannot say that the decision was clearly erroneous. • ~18 ACCORDINGLY, we AFFIRM the trial court's decision in favor of appellees. th SO ORDERED this 21J day of 2001. MIGUEL S. "", Chief Justice ~~~~----------­ RO C. CASTRO, Associate Justice IA SABLAN-ONERHEIM, Justice Pro Tempore - 1 PL·,:) - IN THE SUPREME COURT OF THE COMMONWEAL TH OF THE NORTHERN MARIANA ISLANDS IN THE MATTER OF THE ESTATE OF YONG KYUN KIM, Deceased. RAN KIM and KYUNG-RAN KIM, Appellants, v. HYUNG GON KIM, Appellee. Appeal No. 99-023 Civil Action No. 97-1178B JUDGMENT 'll 1 Pursuant to Com.R.App.P. 36, the Opinion of this Court in this matter has been issued and judgment is hereby entered. Parties are herewith served with a copy of the Opinion which AFFIRMED the lower court's decision in favor of Appellees. Entered this :;t'::.~ day of December, 2001. CRISPIN M. KAIP AT CLERK OF COURT By: _ _---: '---_ Ch lene . e Deputy Clerk