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L & T International Corp. v. Benavente (1997 MP 24)

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L & T International Corp. v. Benavente (1997 MP 24)

Citation: 1997 MP 24; Appeal No. 96-025 (Civil Action No. 95-387) · Court: Supreme Court of the Commonwealth of the Northern Mariana Islands (opinion by Villagomez, J.; Taylor, C.J., and Atalig, J.) · Argued and submitted: Sept. 29, 1997

The foundational CNMI authority that mortgage foreclosure is an equitable proceeding and that a security arrangement will be enforced as an equitable mortgage — even when it is not styled as a statutory mortgage — if its purpose was to secure a debt. It frames the equitable character of CNMI foreclosure law that later decisions (e.g., Sablan) build on.

Facts

Luis C. Benavente was given over $3,000,000 by Japanese-owned corporations (“Tokai”) to acquire land in Tanapag, Saipan, acting as their agent; he signed a promissory note and a mortgage on his two Garapan lots (010 D 22 and 010 D 23) as security. Benavente never obtained the Tanapag land, kept the money, and defaulted.

After litigation and a 1992 “Settlement Agreement and Mutual Release,” Benavente owed Tokai a payment; failing it, Tokai recorded two 55-year leases on the Garapan lots. To pay Tokai, Benavente borrowed $600,000 from L & T International Corporation (an affiliate of Century Finance), which was assigned the two Tokai leases. On the same date, L&T and Benavente signed a "Rescission Agreement" giving Benavente a right to redeem the leases if he repaid $785,000 by a set date. Benavente did not repay. L&T sued and obtained summary judgment foreclosing on the security covering Benavente’s interest in the two lots. Benavente appealed.

Holding

The Supreme Court affirmed the foreclosure. It held that:

  1. The “Rescission Agreement” created a mortgage — an equitable mortgage — because its purpose was to secure a debt, regardless of its label.
  2. The mortgage was enforceable and properly foreclosed.
  3. The usury argument did not render the arrangement void so as to defeat foreclosure.

Mortgage foreclosure in the CNMI is an equitable proceeding, and courts look to the substance of a security arrangement, enforcing it as an equitable mortgage where the intent was to secure repayment.

Reasoning

  • Substance over form. Whether an instrument is a “mortgage” turns on its securing purpose, not its caption. A “Rescission Agreement” giving the debtor a right to redeem upon repayment functions as a mortgage with an equity of redemption; the court enforced it as an equitable mortgage (citing 2 CMC §§ 4513(e), 4518).
  • Equitable proceeding. Because foreclosure is equitable, the court applies equitable principles to determine the existence and enforceability of the security interest and the debtor’s redemption rights.
  • De novo review. The case was decided on summary judgment and the three issues were questions of law, reviewed de novo (citing Rios v. MPLC, 3 N.M.I. 512 (1993)).

Practical impact

  • For lenders / investors: In the CNMI, a debt-securing arrangement will be enforced as an equitable mortgage and foreclosed even if it is not a textbook statutory mortgage — labels like “Rescission Agreement” do not defeat the security.
  • For borrowers / former owners: The equitable character of CNMI foreclosure means courts examine the true purpose of the transaction; an equity of redemption attaches to an equitable mortgage, consistent with the statutory redemption framework later construed in pacific-financial-v-sablan-2011.

Good-law status

Still good law. Decided 1997; not overruled or superseded as of last_verified 2026-06-02. It is regularly cited (including by the CNMI Supreme Court itself) for the equitable-mortgage and equitable-foreclosure principles.

Why it matters

Benavente establishes two pillars of CNMI foreclosure law that recur throughout the jurisdiction page: foreclosure is equitable, and a security arrangement is enforced as an equitable mortgage based on its debt-securing purpose, not its form. It is the doctrinal predicate for the redemption analysis in Sablan.

  • pacific-financial-v-sablan-2011 — CNMI redemption right is a non-alienable personal privilege; lien theory; equitable tolling; fraudulent-conveyance standing.

Applies in →

northern-mariana-islands — binding CNMI Supreme Court precedent. Related concepts: equitable-mortgage, right-of-redemption.

Legal information, not legal advice. This page summarizes a court decision for educational purposes and does not create an attorney-client relationship. Verify against the primary opinion and consult a licensed attorney in the relevant jurisdiction before acting. Last verified 2026-06-02.

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