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[February 28, 1895.
THE HONGKONG WEEKLY PRESS AND
in his evidence being that at the time they had was not only solvent but in a position which or delay oreditors, or a mere cloak to retain some not the particulars, but no property or security justified his making a voluntary settlement. And benefit or protect the property for the debtors. was at the time mentioned as set out, and the | The strongest cas on the point is I think that of In all the cases which I have read I do not find documents or titles relating to the property in In re Pearson, 3 Ch. D., 807, in which the mau one which resembles the que occupying our Hongkong were not then handed over to John was not indebted and did not go into trade till attention on this point, viz., that here there is Muray Forbes, but according to the evidence of eighteen years after, but a settlement by which no evidence of indebtedness at the time of making William Howell Forbes they were in his private the first life estate was to the settlor determinable the letter of hypothecation. All the reasoning safe and he was holding them for John Murray on his bankruptcy was held plainly fraudulent, in the cases cited has gone upon the fact that Forbes nud made no use of them until he When the deed is for valuable consideration the the settlor was heavily indebted or threat ned handed them over to Mr. Ewens. That the said burden of proof is on the plaintiff who im with process at the time, and there was some letter was not registered or in any way made peaches the transaction, and there must be some, evidence from which the Court could infer an public till it was registered at the Land Office on evidence apón which the Court can come to intoution to defraud, Do all the facts above the 10th July, 1891, Mr. Forbes's evidence on that the conclusion that the intention was to defraud; mentioned show, notwithstanding all that can point is as follows:-" The letter of hypotheca- for in cases of settlement for valuable considera-bo urged against them, that this, tainted as it is, tion after I signed it remained in Shanghai in the tion the fact that it is for such consideration was really what it purports th be, a giving of se- possession of r. Wheeler. I never know that it shows that there may be purpose in the tran.curity for money advanced, or was it merely a cloak. was registered against the land in Hongkongit suction other than the defeating or delaying of With respect to the error in the amount of the may have been agreed that it was not to creditors, and therefore the barthen of proof that trust money advanced, seo the case of Thomp- be registered. The registration in Hongkong it is fraudulent or intended to delay, defeat, or son v. Webster IV. de Gex and Jones, 600, where might have effected the firm's credit here; defraud creditors is thrown on the plaintiffs it was dong Ful whether the money had really been that at the time of the siguing of the letter of Even if the debtor does prefer on creditor to advanced so much as was stated to have been paid. hypothecation the property in question fras another, or oven if he does defeat and debty cor- It was held that the mortgage appearing to be vested in John Murray Forbes for the partiers tain creditors, the transaction will be upheld if | bonn-fide, the question, how much was due on the for the time being of Russell & Co., as the it is for good consideration and bona fide For mortgage did not affect the validity of the settle- documents I have before alluded to show that every debtor has, according to the law of the ment. In the case of Corlett v Radcliffe, 14: new Crown leases were granted in 1888 to land, a perfect right to deal with his property M., P. C. p. 135, the Court says:-"Each case John Murray Forbes and so remained until the in any way b pleases, provided he acts honestly must depend on its own circumstances and in said deed of hypothecation was registered in the disposal of it. He may dispose of it in all the question is one of fact-whether the against this property on the 10th day of July, favour of one or more of his creditors, and the transaction was bona fide or a contrivance to 189! There is no evidence to show that the firm law does not interfere with his power if it be defeat creditors. It may, however, be generally was heavily indebted at the time of making the exercised boya fide, the Statute of Elizabeth stated that a deed is void against creditors when letter of bypothecation to the plaintiff Banks has nothing to do with setting asid deeds which the debtor is in a state of insolvency, or when or some of them and to any other perso sud give a frandulent preferete to corthin creditors. the effect of the deed is to leave the debtor was about to take over the fet and property it has no regard to the question of priority without the means of paying his present debts of the China Merchants' Steam Navigation 0. or preference. The deeds that are declare vo'd In the case of ex parte Mercer, Lord Esher, at Shanghai; the allegation that the deeds were by that statute are those that are shown to be M. R., says: "In order to make this settlement dealt with in the ordinary course of the firm's bas feigned, covinous, and fraudulent, and made void under the Statute of Elizabeth we are iness here is denied by William Towell Forbes with the intent to delay, hinder, or defraud bound to find that there was an actual intent in I will first deal with the question of the on- creditors. It is not sufficient that they do delay the bankrupt's mind to defeat and delay cre stamping of the letter of hypothecation. fam or defeat creditors, but what was their intention ditors, and there is no evidence of such intent; of opinion that Section 8 of Ordinance No 16 of Was that the motive which called them into and Mr Justice Lopes says:-"The question 1886 relating to deeds or doenments executed out being? The cases of Darvill v. Terry, - H&N which I should have left to the jury is all the circum- of the colony applies to all documents whether 8TT; Pickstock v. Lyster, 3 Maule and Sel.; whether, having regard to dated before or after Ordinance No. 15 of 1884; Holbord # Anderson, 5 T. R. 235, and Allen v. stances of the case, the settlor intended to defeat: when these documents were brought into force, Harrison, L. R. 4 Ch. App 622, clearly show or hinder his creditors. That is a question of butts document having been received and this. Therefore the mere fact that this settle fact which can only be determined by the evi- registered by the Land Officer I am of opinion ment may delay or defeat creditors is not suffi. done.” Now, here, what is the evidence on this that the objection cannot now be taken. cient to set it aside. It must be fraudulent, |point P Mr. WH. Forbes has sworn: "The I am not o presume that the Land Officer re- "But can it be fraudulent unless it is shown that letter of hypothecation included most of the ceived and registered an unstamped document. there were creditors to defraud P. And that is firm's property in China and Hongkong, I do which should in my opinion have been stamp d, bot shown. It has been said. in Jenkins not know of any other property not included, ex- unless he had good reason to do so. It may be Vaughan, that if the person who excentell the cept currout moreys. Mr. J. M. Forbes had no that this question has been raised and-selected deed, although indebted at the time, has paid off security ustil the letter of hypothecation was against the view I now put forward At any rate every debt, it is very difficult to say he executed | signed; the advances must have been before this. Section 10 of the Ordinance gives me the power the settlement with the intention of defranding | That letter was the first security given. At the to direct the collector to stamp and receive the his creditors, since his subsequent payment time, the firm of Russell & Co. was in good credit duty and penalty, if any, and to remit the do shows he had no such intentio. We have on that and able to meet its engagements; our only object cument to him after it has been received in point no evidence, except the statement of Howell was to secure Mr. J. M. Forbes, as he should evidence. Accordingly I order that this documout Forbes that their credit was good. There is not have lent trust money without security." be impounded, that the duty and penalty due no evidence of their being indebted, or that any This is uucontradictod, and there is no evidence under the said Section, to be determined as there- creditors existing at the time of the letter of to show that they had any other creditors, or that in provided, be paid into Court, and that tho do. hypothecation have not been paid off. In the they were in any way embarrassed or pressed, or cument be remitted to the collector accordingly. absence of any proof, can a subsequent creditor that they contemplated undertaking any further I have carefully perused every case which has be admitted to challenge t is deed unless he liabilities; there is nothing to contradict the sup been cited before me, and the principle which proves that the grantors, were insolvent or position that as John Murray Forbes had lent draw from them is that in matters of voluntary heavily indebted at the time. If there was no the firm la: ge sums of money out of trust funds settlements all voluntary transfers by a person one to defraud, there can be no fraud, and you they wished to secure him as far as possible, and indebted are void against creditors; the mere must look at all the circumstances at the time nothing is shown that that was not their object. fact of a man indebted giving away part of his the settlement was made. In the cas of Jenkins Even if they had cra..itors they had a right to estate is by presumption a fraudulent act. Vaughan 3 Drew. 419, the V. C. said: The prefer certain of them. (Se the cases of Allen voluntary conveyance or settlement by a person Statute avoids doeds which are made with intent. Harrison, Ch Ap. 622, and others already not indebted and not meaning a fraud is good to defraud or delay creditors. The instrument against future creditors, but where there is all ex must be made with the intent to defraud credi press intention to defrand future creditors it is tors," and all his arguments are based on the bad. If a persou owing debts makes a settlement fact that at the date of the settlement the settlor which subtracts from the property the commu was indebted in considerable amounts. That was fond an amount without which the debts can- the case of a voluntary settlement, and the same not be paid, then since it is the necessary con- may be said of the case of Freeman v. Popė, 9 A. sequence that some creditors must remain uv- [Eq. C. 206. Lord J. Giffard in this latter cash paid, there would be such an inference of frand | says:-" There is one class of cases in which an as would bring the case within the statute. (Free-actual and express intent is necessary to be man v. Pope, L. R. 5, ch. 533; Taylor v. Cremer, I proved; that is in such cases as Holmes v. bankruptcy have been gone into, but none of 1 Ch. 1. 636 am munka (haulių, 26 Ch. 1. 319, Ponuey and Lloyd v. Atwood, where the argrethem seem to intimate a hopeless insolvency.. ex parte Maddener, 27 Ch. D. 526; and also ex meut sought to be set aside is founded on a They are uncontradicted. There is no evidence The case of Mid- parte Mercer, 17 Q.B.D. 290.) If it can be valuable consideration." and the proof of this whatever of insolven y. shown that the settlor at the time he made the intent is on the plaintiffs; they have sought to dleton v Pollock, 2 Ch. Div. 104, is to some settlement was indebted to the extent of in- discharge their task by calling attention to the extent similar to this one, with this dif
was proved solveroy or that be became so, by the subtraction following facts, or to the absence of esidence ference, however, that there it of the property mentioned in the settlement, on certain points, viz.:(1.) No evidence why that at the time foll ck made the settlement this will invalidate the settlement (Smitli the letter of hypothection was given. (2) Mis he was largely indebted, though whether he V. Cherrill LR. 4 Eq.) And it is not take in the amount of the debt. (3.) No schedule knew he was insolvent was doubtful, and he necessary to bring actual proof that the of the property said to be given in security. (4.) made a selection of favoured creditors, to whom debtor had in his mind An intention to Generality of the settlements. (5) Secrecy and he gavo security, in the manner described in the defeat, delay, or defraud his creditors; for if it non-registration of the document. (6.) Some of judgment, to the detriment and loss of the body appes & from all the circumstances of the case the property dealt with and no explanation giveb. of his creditors. The Master of the Rolls says :--- that the effect might be expected to be, and has I have found that this letter of hypothecation was "Assuming, therefore, that it had been proved in fact been, to do so the Court will attribute for valuable consideration. Was it bona fide? not only that he was insolvent, but also that he the fraudulent intention to the person executing it must be both for a deed may be for valuable was insolvent to his own knowledge. I think the same. It lies on the settlor to prove that he consideration and still be mala fides to defeat that looking at the statutes and the authorities
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cited.) With respect to Forbes's evidence, see what V. C. Stuart says in re Martin v. Williams, 20 L.T. ||1 350, afp. 353. There it is said that at the time of the execution of the deed the bankrupt was hopelessly insolvent. He is a witness for the plaintiff, who has examined him. He states what the condition of his affairs were He says he considered at the date of the deed. himself then to be in good circumstances. Some of his statements in his examination under the
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