§708-873 Defrauding secured creditors.

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(1)A person commits the offense of defrauding secured creditors if the person destroys, removes, conceals, encumbers, transfers, or otherwise deals with property subject to a security interest with intent to hinder enforcement of that interest.

(2)Defrauding secured creditors is a misdemeanor. [L 1972, c 9, pt of §1; gen ch 1993]

COMMENTARY ON §708-873

The sections dealing with theft are framed in terms of appropriation of property of another; however, a security interest does not make the secured party an owner and the property, by reason of the security interest alone, is not the property of another.[1] It is necessary, therefore, to provide separate penalties for "debtors or conditional vendees who dispose of property subject to a security interest in ways that may prejudice the secured creditor."[2] The requisite culpability is intent to hinder enforcement of the security interest; innocent potential hindering of such interest, such as the temporary removal of a secured chattel from the County or State, ought not to be made subject to criminal sanctions.[3]

The penalty provided is a misdemeanor, regardless of the amount involved. This differs somewhat from the theft offenses. This difference reflects the fact that generally offenders against a secured interest "are less dangerously deviated from social norms than outright thieves who take property to which they have no claim."[4] Moreover, in those cases where the actor intended, at the time the actor undertook the security obligation, to violate the terms thereof, felony penalties will be available under the theft provisions.[5]

Previous Hawaii law provided many offenses relating to defrauding secured creditors. These different offenses distinguished between the kind of property involved, i.e., whether real or personal,[6] between the mode of fraud, e.g., whether the property is concealed or sold,[7] and the type of security arrangement involved, e.g., whether a mortgage of personal property or a conditional sale.[8] The exact reason for these various provisions, sometimes with different penalties, seems unclear. The Code provides a single unified offense with a single penalty for conduct which ought to be regarded by the penal law as presenting substantially the same type of social harm.

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§708-873 Commentary:

1. §708-800.

2. M.P.C., Tentative Draft No. 11, comments at 98 (1960).

3. Id. at 99.

4. Id. It should also be noted that the circumstances which warrant the formulation of a petty misdemeanor theft offense seem generally absent in defrauding secured creditors.

5. §§708-830 to 833.

6. Compare H.R.S. §745-1 with H.R.S. §745-2.

7. Compare H.R.S. §745-2 with H.R.S. §745-3.

8. Compare H.R.S. §745-3 with H.R.S. §745-7.