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combination they do not suffice to make me come to that conclusion. The most important allega tions of the petition, the heavy indebtedness to the plaintiffs and others at the time the letter of hypothecation was given and the absence of any indebtedness to Howqua, were not supported by proof. I have held the letter to have been given by a solvent firm for valuable considera tion. The exact amount of that consideration does not seem very material according to some of the authorities cited; but valuable considera. tion being established I do not think the other matters relied on by the plaintiffs are necessarily inconsistent with honesty. I, however, regret that more evidence was not given so as to clear up certain matters which may fairly give rise to some suspicion and doubt in these transactions Inew pass to the consideration of the deed poll or declaration of trust of 18th June, 1891. The defendants' counsel urged that this was made simply to put in evidence and on record what was the fact, namely, that J. Murray Forbes held the lots therein mntioned, as trustee for Howqua, to secure the debt of Taels 25.000 and interest af 7 per cent. As the document was not put in evidenc I supp se I can only gather its contents from the pleadings and admissions of counsel in their arguments, The patiffs arged it was fraudulent and fal e and made for the purpose of defeating and delaying creditors The plaintiffs, however, called no member of the Howqua family nor any other witness to show that, in June, 1891, the firm did not ow Howqua the sum mentioned, directly or i directly through his trustee, J. Murray Forbes, or both together. They did not call Wheeler, though Howell Forbes spoke of the accoun having been transferred to Shanghei. endorsements of partial payments appear on the note itself, in spite of the memorandum 1 bare quot d. Why am I to assume, therefore, in the absence of evidence, that this document is false and fraudulent because the plaintiffs allege it to be so in the petition, and why did they not ask Wheeler and Howell Forbes about lots 718 and 720 if their insertion instead of the Rose Hill property is regarded by the plaintiffs as a badge of frand P These lots formerly held by J. Murray Forbes as trustee for the firm were surrendered and a new lease granted to him in his own name in May, 1888, the month before the assignment of the Rose Hill lots. The declara tion of trust was registered before the plaintiffs began their actions, and, in my opinion, it is en- titled to priority over the judgments obtained by them. The question has been argued with regard solely to the statute of Elizabeth and the Court has not been asked to look at the matter from the standpoint of the Bankruptcy laws or give a decision from that point of view. A great many cases were cited by counsel, nearly all of which were very good authorities with reference to the circumstances under which they were decided. Most of them are mentioned in the judgment appealed from. The great majority related to voluntary settlements and not to those for valuable consideration. The law is well settled and indeed is scarcely disputed, and I see no occasion to discuss and criticise the cases referred to. In the result, the plaintiffs have not, in my opinion, discharged the difficult task they under. took, with full knowledge of Howell Forbes's evidence. The onus of proving the impugned documents to be fraudulent within the statute of Elizabeth lay upon them. I should have been glad to have had more evidence given as to some matters which are not so clear as they might have been made, but, upon the evidence before the Court, I hold the plain- tiffs have failed to prove that the impugned flocnments and transactions are inconsistent with honesty and fair dealing. that they have failed to prove to my satisfaction that the impugned documents were made with intent to defraud, defeat, or binder creditors, and I agree with the Judge from whom this appeal is made that the letter of bypothecation (as it has been called by the parties) and the deed poll are not proved to be fraudulent within the meaning of the Statute 13 Elizabeth cap 5. Although asked by the plaintiffs' counsel I do not see my way Le make any special order with regard to Inland Lots 718 and 720. They are included in the deed poll which was not proved fraudulent. In the result the appeal must be dismissed with costs
The Aoting Puisne Judge (Mr. Sercombe Smith) said:-The appellants in this case are judgment creditors of the late film of Rassell and
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THE HONGKONG WEEKLY PRESS AND
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ment
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10
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[July 10, 1895.
Co., trading in Hongkong, amongst other places, trated. The authority for this is in the ju''g. as merchants. On proceeding to levy execution ment of Giffard. L. J, in Freeman v. l'ope upon certain leaseholds in this colony alleged to (L. R. 5 Ch. 538), where be says. “I do not think be the property of their judgment debtors, the that the Vice-Chancellor need have felt any appellant Banks discovered that at least two difficulty about the case of Spirett v. Willows, incumbrances had been registered in the local but he seems to have o nsidered that in order to Land Office against such property. The first defeat a voluntary settlement there must be and chief incumbrance was in the nature of a proof of an actual and express intent to defeat so-called letter of hypothecation charging creditors. That, however, is not so. here is one certain property and shares in Hongkong and class of cases no doubt in which an actual and . China as collateral security for a debt guar-
express intent is necessary to be proved, that is, anteed by a promissory note. In an aotion in such cases as Holmes v. Penoy and Lloyd v. before Ackroyd Acting Chief Justice, it was Attwood, where the instruments sought to be | sought inter alia to have this letter of hypothe set aside were founded as valuable consideration; cation set aside as being fraudulent and void but where the settlement is voluntary, then the against the plaintiffs, judgment creditors. Judgintent may be inferred in a variety of ways.” went for the defendants, the present I take the gist of this quotation to be that, in respondents, and it is against that decision that order to defeat a voluntary settlement, an intent this appeal has beep brought. The app Hants to defeat may be inferred in various ways, but do not seek to dispute the law as laid down by that, in order to defeat a settlement for value, the Judge in the Court below, except on the one an actual and express intent must be proved. point as to whether it was necessary tat debis Counsel for appellants admitted that the proof of should have been shown to have existed at the "actual" inteût was a sine qua non, but averred time of making the letter of hypotheeation, but that the intentions of Russ. Il and Co. were to ba consider that certain of his inferences from focs deduced from the ordinary, natural, and neces-
or admitted were erroneous, more proved
sary ons.quences of their acts, As to this con• especially the inference that the letter in ques- tention compare the remarks of Fry, J., in In tion was the result of a bona fide transaction. re Johnson (L. R 20 Ch. D. at p. 396), where he Amongst the allegations coutained in the appel says. "Then it is said, and said truly, that a person. lants' petition were some to the effect that at
must generally be taken to intend the result of of the letter of the date of the making
bis acts. That is often, but by no means always, bypothecation Russell and Co. were indebted true, because, although no doubt the immediate to the appellant Banks, were not indebted and main result of our acts must be the object to Howqa, aud were about to engage in of our inteution, there are many collateral re- a barazdous enterprise by taking over the feet sults of acts which are not only not objects of Again, and property of the China Merchants Steam our intention, but against our wish.” Navigation Company. These allegations, which In ex parte Mercer (L.R. 17 Q.B.D. 290), formed the main grþund of appellants' prayer to Grantham, J., at p. 295, says, sự vì hon learned bave certain registered incumbrances set aside judges have said that if the necessary result of a as void and fraudulent, proved unfounded and settlement is to hinder creditors, it must be have been abandoned. Not being able to show taken to have been reanted with that intent, their indebtedness to the appellants and discard- this observation must be taken as applied to the ing the contentions that Russell aud Co. were character of the particular case in which it was made. In all the cases which have been referred not then indebted to Howqua and were about to enter upon a rash speculation, appellants were to the settlor bad considerable debts or liabilities. driven to more particularly scrutini e the
In all the cases which have been document itself and the circumstances accompany-cited the facts themselves suggested an inten- ing its inception for marks of mala fides. This tion (if not an actual fraudulent intention) to briefly is how matters stood at the time of this binder credit rs. In this same case Lord Esher, appeal, and it is the duty of this Court to decide M.R., says The argument was first put in whether mala fides on the part of Rassell and this way-it is necessary to prove that the bank- Co. has been shown The statute within which rupt, at the date of the voluntary settlement, appellants ask to bring the documents which intended to defeat and delay a creditor or his they allege are fraudulent and void against creditors generally; the necessary consequence them is 13 Eliz. 5. A conveyance, to be of what he did was to defeat and delay his ore- affected by that Act. must be shown to be ditors; and, therefore, as a proposition of law, feigned, covinous, and fraudulent, and made the tribunal which had to consider whether he with an intent to delay, hinder, or defraud did intend to defeat and delay his creditors WAS creditors. The 6th section of the Act provides, bound to find that he did. In support of that however, that the Act shall not extend to any proposition dicta of great and eminent judges conveyance upon good consideration and bona fide were cited. I will venture to say, as strongly as to any person not having at the time of such con- I can, that to my mind that proposition is mon- It is said that it is a necessary in- veyance any manner of notice or knowledge of strou 3.
A conveyance ference that E man intends such covin, frand, or collusion.
the natural therefore cannot be invalidated by this Act if and necessary result of his acts, there has been a bona fide purchaser. In re John. Of course, if there was nothing to the contrary, son, L.R. 20 Ch. D. 392 In the present case it is you would come to the conclusion that the man now admitted, and has been found by the Court did intend the necessary result of his acts. below, that valuable consideration for the msk. But, if other circumstances make you believe that the man did not intend to do that which ing of the letter of hypothecation existed. The effect on any document of its having been you are asked to find that he did intend, to say made for valuable consideration is very great, that, because that was the necessary result of because the fact that there is valuable considera.what he did, you must find contrary to the other tion shows at once that there may be purposes evidence that he did actually intend to do it, is in the transaction other than the defeating or to ask one to find that to be a fact which one These delaying of creditors and renders the case there really believes to be untrue in fot." fore of those who contest the deed more difficult remarks of Grantham, J., and the present M. R. (see In re Johujon, LR. 20 Ch. D. 393). concerned a case of Auutary settlement and Again, those who undertake to impeach for therefore have a fortiori application to cases mala fides a deed hich has been executed for of settlement for value where au "actual and valuable consideration have a task of great expres" intent has to be proved. I cannot difficulty to discharge (Harman v. Richards therefore accept as general the proposition on 10 Hare 89). 1 Thompson v. Webster 4this point enunciated by appellanta' counsel. Drew, 628, at p. 632), which has been quoted Before examining the letter of hypothecation with approval in the recent case of Godfrey v. itself, the facts of the case, and the nature of Poole (L.R. 18 App. Cases at p. 503). hudersby, the transaction, and b. fore discussing the badges V.-C., said with regard to the geuers' principle of fraud, I wish to clear the way by settling at of 13 Eliz e 5, I be principle noy established what time it is necessary that a fraudulent in- is this. The language of the Act being that tention should be shown to have excited. At any conveyarce of property is void against p. 15 of the second edition of May on “Fraudn- creditors if it is made with intent to defeat,lent and Voluntary Dispositions of Property” binder, or delay creditors, the Court is to decide occurs the following: Whether a disposition in each particular case whether on all the circum- of property is void as to creditors under the stances it can come to the conclusion that the in- statute 13 Eliz. c. 5, the state of circumstances tention of the settlor in taking the settlement at the time the conveyancé is ‹ xɛcnted "must was to defeat, binder, or delay his creditors.” be regardel."
The authorities for this arg There is no doubt that there valuable considera. In re Robinson (L. R. 20 Ch. 1. pp. 394, tion exists, an actual and express intention to 395), where Fry, J., says, “It is important to defeat, hinder, or delay creditors must be demons inquire what was the indebtedness of Mrs.
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