Guam Hakubotan, Inc. v. Furusawa Investment Corporation, Julale Investment Corporation, and Yasuda Shoji Kk

Defendants Furusawa Investment Corporation, Julale Investment Corporation, and Yasuda Shoji KK appeal from the decision of the Appellate Division of the United States District Court for the District of Guam affirming the judgment of the Superior Court of Guam in favor of plaintiff Guam Hakubotan, Inc. (“Hakubotan”). Hakubotan had procured a loan from Yasu-da, secured by a mortgage on real property, and subsequently obtained a six-month loan extension. Pursuant to the loan extension agreement, Hakubotan executed a warranty deed in favor of Yasuda’s desig-nee, Furusawa Investment, which was authorized to record the deed if Hakubotan defaulted during the extension period. Ha-kubotan defaulted, and Furusawa Investment recorded the deed. Hakubotan then brought the present action, claiming that the deed was actually a disguised mortgage and should be voided under Guam Civ.Code § 2889, which prohibits “contracts in restraint of the right of redemption from a lien.” The superior court entered judgment for Hakubotan, and the appellate division affirmed. We reverse.

FACTS

The relevant facts, which are not in dispute, are as follows. In March 1985, Haku-botan agreed to purchase from…