Berger v. State
In Berger v. State, 910 P.2d 581 (Alaska 1996), an entity purchased at a discount sellers' rights to permanent fund dividends (PFDs) payable by the state government. The sellers assigned their rights under the PFDs and made promises to repay the face value of the PFDs if the state did not pay the proceeds to the purchaser. The state raised the Alaska Small Loans Act as a defense to the purchaser's attempt to enforce payment.
In determining that the transactions were not "loans" or "disguised loans," the Alaska Supreme Court analyzed case law holding that a sale is not necessarily rendered a loan because of the presence of a repayment guarantee. The court then determined that "one constant element of a loan is that the borrower has an expectation to repay the money advanced unconditionally, and not merely in default of some other occurrence." Berger v. State, supra, 910 P.2d at 588 .