Page
July 10, 1895.]
Johnson when she executed the deed,” and “that, was the state of things when this instrument was exeonted," and In re Maddener (L. R. 27 Ch. D. p. 531), where Baggally, LJ., says, We can only look to the state of things at the time when the deed was executed." I now pass to consider the nature of the document which has been called a letter of hypothecation, the circum- stances and ›r which it was made, and the marks of fraud which appellants contend the document and its environment furaish. A promissory note in the following form was made.-
|Taels 258,000.00
:
Shanghai, 31st March, 1884. On demand. we promise to pay to John Murray Forbes, Jr., trustee for Howqua, or order, the sum of two hundred and fifty-eight thousand twels Shaughai sycee, for value received.
Russell and Co. Note.
Interest on the above to be paid at the rate of seven per centum per annum. All partial pay ments on above note to be endorsed on same and interest payable on balances,
R. & Co. As to this note there is the following evidence of WH. Forbes:- be promissary note was written there (i.e.. on the document) and signed at that time (ie., March, 1884)." The note purports to be made on account of a debt dne from Russell and Co. to J. M. Forbes as trustee for Howqua, is., on account of money advanced out of trust fands held by J. M. Forbes for Howqua. On the first side of the paper on which the promis- sary note was made is inscribed a letter of hypo. theostion, of which the operative portion reads
follows:-
Joku Murray Forbes, Jr., tru tee for Howqua.
Shanghai.
We hereby acknowledge to have deposited with you the documents and securities for property or money hereunder, mentioned as collateral se- curity for the payment of our promissory note to you dated this thirty-first day of March, 1854, for the sum of taels two hundred and fifty eight thousand Shanghai currency and terest there on according to the rate of taels seven per cent. charged by you and in case we shall make default in paying the said sum of taels two hundred and Afty-eight thousand to you according to the tenour of out said promissary note. There follows a power of sale without reference to the firm l.
CHINA OVERLAND TRADE REPORT.
29
* after
and the declaration of trust. The first inst: u- or his attorney, who were both out of the colony ; ment relates to a sum of 258,000 taels (which has and the evidence shows that the deeds were con- already been remɩrked on) and is between Rus-structively in the possession of the trustee, for sell and Co. and Howqua's trustee; the second whom they were kept in Hongkong by W. H. instrument relates inter alia to a sum of 157.000 Forbes. The next alleged mark of frand was ta is invested with Russell and Co., is between the secrecy of the transaction, which it was Howqua and his trustee, and, natural y, as b-songht to construe into active concealment : bat tween such parties, only refers to the trust luid est tacere aluid celare.
If the secrecy moneys l-at out; the third instrument was, so observed was mulâ fide, it must have been ob. far as can be gathered executed by the attorney served for the purpose of defeating existing or of Howqua's trustee, ho, being in possession of future creditors.
No
creditors have been the letter of hypothecation which on the face of | shown to have existed On 31st March, it made the trust moneys advanced appear to be 1984; therefore the secrecy maintained was 258,000 taels, declarefl a trust for the sum of not in order tb defeat anch creditors. 258.000 taels. If the matter is looked at in If the observance of ser-cy was for the this way, there is at duce a rovided a reasonable purpose of defeating future creditors, the explanation of the numerical variances. parties must have anticipated having future To the letter of hypothecation itself certain creditors If future creditors had been antici- objections distinct from the usual badges of pated, the advantage of priority to be gained frand were raised, such as, th incompleteness of by registration could hardly have escaped the the document by the omission of the schedul- atteution of the parties and immediate registra- and its consequent invalidity as a security. There tiou would probably have been effected in order is no doubt that the schedule was not filled in to secure priority to Howqua. But it was urged either on 31st March. [1884, or during 1884; but | that non-registration gave the firm a fotitions it is certain that it was annexed before 17th credit That was quite possible. Because, how- February, 1886. The letter in its inchoate state ever the result might have been to enhance the vested in Russell and Co. a de facto power of credit of the firm. it does not follow that, by revocation and also a poser of inseting a not registering, the firm had that result in view. schedule at any monent to the discomfiture of If creditors had not been anticipated, non- creditors. I am asked to infer from this that registration could got have been for the purpose there existed an intention to reserve to Russell of defeating creditors: if creditors had been and Co, powers of rococation and opportune anticipated, registration would have been the schedule inaking. I decline to draw the inference, politic and non registration the impolitic course because the collection of materials for the to. pursue. My conclusion, therefore, with schedule was not a work of a few days merely, respect to the letter of hypothecation is that the because, as a fact, the schedule was filled in before instrument was executed in good faith, that it an ascertained date and the power of revocation was au honest transaction, and made without any thereby annulled, and because it is unreasonable intention to defraud or delay creditors. As to place the worst interpretation upon a state of regards the validity or otherwise of the re- aff irs not proved to be incompatible with bond gistration of this document, I am of opinion Aides: in short, where is the actual and express that the registration was valid. Section 8 of intent? The validity of the letter as a security Ordinance No. 16 of 1886 provides that all cannot be successfully impeached solely because doenments whatever ex cuted out of the colony the letter was autedated. Next, as to the fraud -hall, when registered within the colony. be alleged to stigmatize the transaction and which liable to the same rates of stamp duty as if they it was sought to prove by alleging (1) generality had been executed within the colony. The of the settlement, (2) continuance in possession, orncial words are, "when registered within the and (3) secrecy or conce:Iment. These marks I colony," which, in my judgment, mean will examine, bearing in mind that actual and registration within the colony has been effected," express intent is requisite to be proved and that Liability to stamp duty therefore attached to the it is unreasonable, where there is more than one document after it had been registered and stamp- interpretation, to seiz apou that interpretationing was not a condition precedent to registration. which is most damaging. On the score of The other document which the appellants prayed generality, the worst that can be urged against to have set aside and d clared fraudulent and This instrument is that it charges all the pro- void as against them was a deed poll or declara. perty of Russell and Co. in China and Hong. tion of trust dated the 18th June, 1891. Not kong, except Inland lo's 718-720 and current a sciutilla of evidence exists to prove that that Shanghai, 31st March, 1884.
moneys. Considering that Russell and Co, were document was fraudulently made: indeed I have experienced great difficulty in arriving trading in New York and London as well as iu cannot recall a single cogent argument that at a conclusion respecting the composition of China and Hongkong, it is not clear ho gen. was advanced in support of the charge of the sum of 258,000 taels. The evidence of Mr. erality of assignment has been substantiated
fraud. All that the Court was asked to do W. B. Forbes is too indistinct to make any and if it were ubstantiated. I do not think tha
was to declare that, as defendants had shown no conclusion certain, but perhaps the interpre- it would affect the question. Compare what title to Inland Lots 718 and 720. the appellants tation which most nearly rec. aciles the evidence Thesiger. L. J., says in Ex parte Games (L.R. were entitled to possession of them under their as a whole is that adopted by the Court below, 12 Ch. D. 314). The only remaining point is writs of exe ution and to an order on Messrs. when it found that the 258.000 taels represented whether the deed, not being available as an ao Creasy wens and Ng Chow-fong directing trast money to the extent of 57,000 taels and of bankruptcy for any purpose, is void under the them to take the necessary steps and to execute an old debt of 101,000 taels. The evidence, statute of Elizabeth. We тну, I think, put the necessary documents to have the documents however, at least discloses that this sum of aside for this purpose the fact that it is an as-registered against these two lots removed from 258 000 taris was a past debt. The state of signment of the whole of the grantor's property, the register. Au incumbrance stands duly things, then, is this—that on the 31st March, 1884, present and future. For, in Alton v. Harrison registered against these two lots and until the a promissory note for an existing debt was Lord Justice Giffard said, 'I have no hesitation instrument creating that incumbrance is shown made by Russell and Co. to J. M. Forbes as in saying that it makes no difference in reward to be fraudulent, I see no grounds for setting trustee for Howqua and that by an instrument to the statute of Elizabeth whether the deed it aside. The lots included in the document purporting to be of even date, collateral security deals with the whole or only a part of the styled a letter of hypothecation were Inland for the payment of this promissory note was grantor's property. If the deed is bona fide Lots 83. 148, 578, 721 and Marine Lots 202, given. On the face of it, therefore, there is no-that is, if it is not a mere cloak for re- 203, 205. The lots included in the declaration thing suspicious in the transaction. Bat it has taining a benefit to the grantor-it is a of trust were Inland Lots 83, 718, 720, 721 and been urged against the promissory note that good deed under the statute of Elizabeth.'
'"|| Marine Lots 202, 203. It will be observed that, the con-ideration was past and falsely stated to In connection with coutinuance in possession in the later document, Inlaud Lots 148, 578 be 25 000 taels instead of 157,000 tasis. The the nature of the property is the chief point to and Marine Lot 225 bave dropped out and in answer to the first objection is that even a pre- be considered. In this case the Hongkong pro- their place appear inland Lots 718 and 720. existing debt is a good and valuable consider party charged consisted of leaseholds and of Both documents relate to the same amount, viz., ation: the auswer to the second objection is shares, both being forms of personal property. Tls. 258,000. The two lots 148 and 578 were furnished by reviewing the then and Inst. The retention of personal property is prima facie assigned to W. H. Forbes by Murray Forbes relations between Hassell and Co., Howqua, and a badge of fraud. Is there anything in the air on 5th June, 1888, and lot 225 was sold to Ewen J. M. Forbes as set forth in W. H. Forbes's oumstances of this case to rebut that pre- Cameron on 17th February, 1886. According evidence. The explanation seems to be that a sumption? A portion of the personal property to the terms of the promissory note the proceeds debt of 101,000 taels was due to Howqua per charged. to wit the shares, was not retained but of these dealings if paid towards reducing the sonally and a debt o° 158.000 taels was due to was handed over to the trustee's attorney in principal of or interest on the promissory note the trustee of Howqna, and that when security Shanghai. This affords proof of bona fides with should have been indorsed on the note. It is was taken by the trustee, there was added to regard to one portion of the charged property clear that no such indorsements were made. Is the trust money the personal debt and the Was there any reason why, consistently with there any explanation of this? I think the two amounts were lumped together in a promis- bona fides, the other portion should be differ explanation may very likely be that Inland sory note, which could not have been made to ently dealt with ? I think that there was. Tt Lots 718 and 720 were substituted for the lota A. Forbes except as in his capacity of trustee. was more appropriate and business-like that the that had fallen out: there is no evidence that Lall here interpolate an account of that which deeds of title to Hongkong leaseholds should this is the case, but the explanation seems I consider to be the relation between the so- remain in Hongkong; physical custody could to me to be not unreasonable. As regards lled lafter of hypothecation, the deed of trust not conveniently be given to either the trustee the deed of trust of 11th January, 1886, I
Russell & Co.
4
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