The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1896-07-16
OPINION OF THE COURT, BY
JUDD, c. J.

OPlNlON OF The COURT, By
JUDD, c. j.
This is a bill in equity brought by
the assignee in bankruptcy of one ].
A. Alfonso to cancel q mortgage of land
which is situated in HOnokaa, Hawaii,
held by the bankrupt under Royal
Patent Grant Number 1913 and known
as the Alfonso Store Premises" The
mortgage was given to one Manoel
Branco under the following circum-
stances. Mr.. Alfonso, being a Portu-
guese store keeper at Honokaa doing
quite a large business and having be-
gun a coffee plantation, desired to
borrow some money for his business.
He learned through mutual friend
that one Manoel Branco, also a Portu-
guese, living at Laupahoehoe, some
twenty miles distant, had some money
to lend, and with this friend proceeded
there and borrowed the money, $500,
giving his receipt therefor, promising
to secure it's payment by mortgage
on his store premises at HOnokaa as
soon as he could get some person to
draft the papers. Meanwhile he de-
posted his title deeds with Mr.. Branco
and went back to his home. This was
on the II August, 1893. Alfonso was
then doing a good business; his credit
was good and his principal creditor at
Honolulu, Messrs. II. Hackfeld & Co.,
considered him one of the most res
ponsible country store keepers.
Alfonso agreed to pay 8 per cent. per
annum interest on the $500 every six
months, but BrancO preferred to leave
it to be paid at the end of two years
when the principal would be due.
After a while business became dull and
Alfonso, though he had reduced his
debt to H. Hackfeld e Co. from $4,000
to about $4,000, made less frequent re-
mlttances to them, being unable him
self to collect promptly the debts owing
him by plantation hands and home
steaders.
Alfonso says that he was also en-
barrassed by having bought out a part
ner in another store in Hamakua, and
that he sold his coffee plantation to
pay debts with the proceeds at a loss
of $1,000. In the latter part of 1894 he
was pushed by II. Hackfeld & Co. for
payment of the balance of his debt to
them; a suit and execution were threat
ened and he was advised to go into
bankruptcy by an employee of this
creditor. He went into bankruptcy on
December 81, 1894. Not long before
this he employed an attorney and no
tary to draft the mortgage in Ques-
ton to Branco to secure the sum he
had borrowed, had it dated the 18th
of August, 1898, the date of the
loan, acknowledged it on the 22d
1894, and had it recorded
and then delivered it to Branco. Bran
co says he had no notice of AffOnso's
insolvency nor any reasonable grounds
for believing him to be so. Alfonso
says he never gave Branco any reason
to think he was insolvent. This tes-
timOny is not disputed.
1t appears to us that the conveyance
was made to a bona f1de purchaser for
value, Branco, who had no reasonable
cause to believe his mortgagor to be
insolvent or bankrupt or to be in con-
temptation of insolvency or bankrupt
cy. The statutory exception is COM
piled with. See Chap. 35, Sec. H. Laws
of 1884. 1t may be that Alfonso, find
ing that he was liable to be forced into
countryman and save him from loss
by taking all these steps to secure
him, but Branco, his creditor, had no
knowledge of these circumstances.
The conveyance was to secure a bona
fde debt and was not a voluntary
though Alfonso was not
pressed to make it by Branco, who felt
himself safe and had no cause to sus-
pect that he was not secure. 1t was
executed and delivered in fulfillment
of the promise made at the time of the
loan, to wit, in August, 1898.
Assuming that the mortgage, though
dated August II, 1898, created no lien
on the property from that date and
that the deposit of the title deeds Gre
ated no lien, and treating the convey |
ance as made on the 22d November, |
1894, and establishing the lien only |
from that date, BrancO was, by all the |
evidence, a bona f1de purchaser with |
IN the exception of the statute. Even |
if Alfonso made a fraudulent prefer |
ence by the conveyance, Branco did |
not participate in it, nor was he
aware that such preference was there |
by accomplished. The evidence even /
shows, it seems to us, that he had at |
he time of the delivery of the mort !
gage every reason to believe that /
Affonso's financial condition was |
sound, and therefore his mortgage is |
good as against the complainant in this /
case.
The decree appealed from is reversed |
md the bill dismissed with costs
L. A. Dickey for complainant; L. A
ThurstOn for defendants.
Honolulu, July 9, 1896.