July 10, 1895.Į
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CHINA OVERLAND TRADE REPORT.
Forbes, who seems, at one time, to have bold the lots as trustee for the firm and to have been so registered, surrendered the Crown leases in 1887 and obtained in 1888 fresh Crown leases in his own name (without such trust), which were so registered early in 1888. The defendants con- tended this was done the better to give effect to the letter of hypothecation, but no explicit evidence was given to prove this. Howell Forbes admitted in les evidence that registration in Hongkong "might have effected the firm's credit there" and that it might have been agreed the document should not be registered. One can understand that a business firm would not desire to make the hypothecation public, and if the pro- missory note should be subsequently paid off, the collateral security might no longer be required. However, in the absence of compulsion to regis- ter, I do not, myself, infer mala fides from non- registration at the time. Silence is not always the same as concealment.
Business men some
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Mr. Howell Forbes's evidence, that the shares and letter of hypothecation were duly handed over to Mr. Wheeler in Shanghai and remained in his possession, while the title deeds of the Hongkong properties remained in Hongkong, either in Howell Forbes's private safe or in the safe of the firm. He says, "I knew of the document. I was holding them (the title deeds) for Mr. John Murray Forbes rud I made no use of them." "I parted with the Hongkong deeds in June of this year to Mr. Ewens." He also stated that The reason why the schedule was not added at the time was that they had not, in Shanghai, all the particulars of the Hongkong lots. Mr. Howell Forb s also said, “I. went home in Decem- ber, 1885, and came back in 1887, arriving at Shanghai in March, 1887." It was urged that the omission of the schedule at the time gave an opportunity for fraud and invalidated the document, but I see nothing to make me doubt | that the document was completed between Jaun. ary, 1885, and February, 1886, and I see no times give collateral securities to banks or reason to impute fraudulent intent in the mat others. It is not usually suggested the trans- ter of the schedule. But it was contended that action is fraudulent because it is not published the sale, subsequently in June, 1828, of the two abroad. I come now to the question connected Rose Hill properties (Inland Lots 148 and 578) with the Howqua trust deed of 11th Jan. and of Marine Lot 225, showed that either the uary, 1886, to which I have not yet alluded. letter of hypothecation was then no larger in The Howqua family appear to have had the force or else not given bonâ fide. The counsel greatest confidence in Russell and Co., especially for the defendants stated that the two luland in John Murray Forbes. That gentleman was Lots 718 and 720 mentioned in the deed poll trustee for Howqua at all events as early at of 18th June, 1891, were substituted for the 177, and, in 18 6, a deed, dated 11th January, two Rose Hill lots, but there is no evidence 1886. was made between Howqua, of Canton (the as to whether that was done by agreement or, if settlor), of the first part, and John Murray so, why; nor is there any evidence as to what Forbes, of New York (trustee), of the second was done with the proceeds of the sale. The part. whereby he trusts were declared of all the promissory note has a memorandum written on assets set forth in the schedule. The total value it that all partial payments on account of it were to be endorsed on it.
of the trust estate was over Taels 800 000 The But there are no endorse- seh dule sets out the investments in the United ments of the kind. It seems strange that if the States and then the investments in China, consist plaintiffs relied on the assignment by Johning of shares and also of real estate in Shanghai, Murray Forbes to Howell Forbes of the two and then cones the last item as follows:- Rose Hill lots in June, 1888, as a mark of fraud, "Amount invested by the trustee with the firm no questions on the subject were put to Howell of Russell and Co. on security of shares and Forbes in his examination. The result is that other securities in Hongkong and China. These the Court has no evidence before it as to the investments are constantly changing." Opposite precise circumstances under which the two pro- this is stated the amount, viz., “ Taels 157,663.60" perties were assigned by John Murray Forbes, Whether the words while two other lots 7 8 and 720, fresh Crown throw any light on the alleged substitution of the
constantly changing leases of which were granted to Forbes in 18-8, Inland Lots 715 and 720 for the Rose Will lots, appear instead in the deed poll of 18th June, I am not in a position to decide in the absence 1891. I decline, in the absence of such evidence, of fuller evilence. That to say that these transactions impugn the bona
item, however, seems 10 те fides of the letter of hypothecation so that I evidence that Murray Forbes had advanced the to bear out Howell Forbes's ought to hold it to be fraudu.ut. Then it was Taels 157,000 odd out of the Howqua trast said that the schedule included, practically, all the moneys. The Ta Is 101,000 being alleged to be firm's property in China except current moneys. balance of debt from Russell and Co. to Howqua. On the other hand it was replied it did not and not advanced to them ont of trust funds, include English or American property, and that formed no part of the original trust, and unless Howell Forbes said the beadquarters of the firm that sum, which was included in the promissory were New York and before that London. We have uote, had been paid to Murray Forbes as trustee no evidence of what such properties consisted. an I retained by him as trustee for Howqua, one But we are not asked to consider the transaction with reference to bankruptcy and, as regards th would not expect to find it in the schedule as statute of Elizabeth. Lord Justice Gifford, in that the lots ought to have been set out which forming part of the trust estate. It was urged Alton v. Harrison (Law Reports, 4 Chancery formed part of the collateral security if this, Appeals, p. 626), said, “I have no hesitation in bona fide, existed at the time, but the words saying that it makes no difference with regaid “and other securities in Hongkong and China to the statute of Elizabeth whether the deed would cover them, and possibly the gentleman deals with the whole or only a part of the gran- who drew the trust deed had not the full par- tor's property. If the deed is bona fide—that is, if ticulars before him, and John Murray Forbes is it is not a mere cloak for retaining a benefit for described as of New York, while the title deeds the grantor-it is a good deed under the statute were in Hongkong in a safe. I cannot say, of Elizabeth.” The bankruptcy laws are for the however, that heard any explanation riven as Purpose of htaining an equal distribution of to why no allusion was made to the promissory the assets; the Statute of Elizabeth had no such note for 258,000 taels, to “ object. Then, it was urged th matter was
John Murray Forbes, kept secret by non-registration till 1891. But demand
trustee for Howqua." Its words were" Ọn there is no compulsion to register. Ordinance Forbes, trustee for Howqua. or order, the sum we promise to pay to John Murray 3 of 1844, section 1, only says that instruments of two hundred and fifty-eight thousand taels in writing, &o., affecting parcels of ground, &c., Shanghai sycee for valne received." Unless, in Hongkong may be en ered and registered. By section 2 non-registered instruments are
so far as the trust was concerned, that note made void against any subsequent bona fide pur-rities" for the Taels 157.000 odd, one would was treated merely as one of the "other secu- chasers or mortgagees, but the plaintiffs are neither of these. The non-registration of the deed schedule. The deed contained this recital
have expected to find it alluded to in the trust letter of hypothecation within a year" "prevented is taking priority according to its date, and money specified in the schedule, are now in the And whereas the property, assets, and its late registration only entitled it to take hands of the said Forbes, but simply as custodian priority according to its date of registration, thereof, and afe, the only property, assets, or which was, however, before the date of the money now held by the said J. M. Forbes, be- judgments obtained by the plaintiffs. defendants, moreover
The longing to the party of the first part, or for contended that the which the said Forbes is responsible to the said shares were handed over for John Murray Hosqus, in reference to any antecedent dealings Forbes to Wheeler in Shanghai, that Murray between them, and the aid property so specified Forbes was mostly in America, that Hongkong in the said schedule, at the date of the execution Doomed the natural home for Hongkong title of these presents, constitutes the entire trust deeds, and that Howell Forbes held them there fund embraced in or intended to be covered by for John Murray Forbes, and that John Murray the terms and provisions of his trust deed. I
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Howell Forbes said he had never seen any frust is on record, when read all through is not very deed nor this deed of 1886, His evidence, which clear, at all events to my mind, as to whether any part of the 258,000 tåels was pald But I cannot hold that the Hoqua trust desd off and, if so, in what manner and when, of 1886 casts any slur on the original bona fides of the letter of hypothecation of 1884. The circumstances at the time the document was urged that, as the letter of hypothecation was made are to be looked at. Then, again, it was
in evidence nor registered. I may remark it unstamped, it ought neither to have been received
amination in chief of Mr. Howell Forbes, de was examined upon by Mr. Francis in his ex- bene esse, being produced to and ider tifled by that gentleman in his evidence, and the learned trial directed the document to be imponnded and Judge below when objection was taken on the stamped and the penalty for late stamping to be paid and this appears to have been done. As kong were, so far as relevant, (1st) 12 of 1966 regards stamping, the Stamp Acts in Hong- amended by 5 of 1868; (2nd) 15 of 1884 amended by 2 of 1885; (3rd) 16 of 1886. The first did not expressly require documents execated and promissory notes, to be stamped. The out of the colony, except bills of exchange second Ordinance. 15 of 1884. came into force vious Ordinances. By section 4 all documents on 1st April, 1885, and repealed the pre- executed after 1st April, 1885, were required to be stamped in accordance with the schedule and, by section 8, when executed out of the colony all documents whatever became liable, when brought into force or registered within the colony, to be stamped as if executed in the colony. Then came Ordinance 16 of 18-6 which repealed clause. the prior Ordinances, with the usual saving Sction 4 provided that stamp duty should be paid "For every document executed after the coming into force of this Ordimatice, of the kinds specified by the schedule.” Section 4 does not therefore apply. Section 8 reads as follows:"All documents whatever executed out of the colony shall, when bronght into force or registered within the colony, be let the executed within the colony." same rates of stamp duty as if they had been forbade, except as otherwise provided by the Then section 9 Ordinance, the reception in evidence or the re- duty under this Ordinance," unless stamped ad- gistration of any document “liable to stamp cording to this Ordinance or in accordance with the law in force in the colony at the time it was executed. tion was executed on 31st March, 1884, and at Now the letter of hypotheca- Shanghai, although the schedule was not inserted till a year or more later. in 1884, out of the colony, it did not at that Executed
time require to be stamped and, if its recep- tion in evidence in Hongkong and its registra- stamped, this could only be so because of section tion, in 1891, were forbidden without its being 9 of 16 of 1886. documents liable to stamp duty under that That section only applies to
could only be liable to stamp duty under that Ordinance." But the document in question Ordinance if section 8 applied to it (the section relating to documents ex cuted out of the colony.) Assuming, as I do, section 8 to apply to a docu- ment executed so long before, what is the result P tered." I take it that means not before registra- It becomes liable to stamp duty "when régis-
tion, but immediately after registration. It seems to follow that it can be registered without a stamp, because until registered it is not liable that it cannot be given in evidence after registra- to stamp duty under Ordinance 16 of 1886, but tion without stamp, auless the Judge, dader section 10, allows stamping after execution on payment of a penalty. This is what he did and the penalty has been paid. Whether I am right aware of any express power to set aside the or wrong in my view of the Stamp law, I am not
Officer, nor do I think in the circumstances this registration which was completed by the Land ought to be done. Neither do I think, after of the document in evidence can, in the circum- what has occurred, the objection to the reception stances, be allowed. I have not forgotten that the learned counsel for the appellants asked the Court to bear in mind that even if, what he called, the badges or marks of fraud were not, individually, sufficiently convincing, yet that, when considered to show the impagned documents were frauda- in combination, their strength was most ampla leat and void. "I osa only say that ETCH