W. Tin Yan v. L. Ah Chap

D. Hawaii

W. Tin Yan v. L. Ah Chap

4 D. Haw. 547

DecidedJuly 21, 1915

StatusPublished

This text of 4 D. Haw. 547 (W. Tin Yan v. L. Ah Chap) is published on Counsel Stack Legal Research, covering District Court, D. Hawaii primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

W. Tin Yan v. L. Ah Chap, 4 D. Haw. 547 (D. Haw. 1915).

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Opinion

Dole, J.

The defendant, L. Ah Chap, as Ah Chap doing business -as the American Dry Goods Company, was adjudicated a bankrupt in this court on the 15th day of April, 1914, on the petition of M. Phillips & Company, H. Hack-feld & Company, Limited, and Theo. H. Davies & Company., Limited, who in their petition alleged as an act of bankruptcy, that the said Ah Chap, within four months [549]*549preceding the filing of the said petition, to-wit, on the 18th day of'March, 1914, and being then insolvent, conveyed to his wife, Chong Meu Lan, a certain lease, with intent to hinder, delay and defraud his creditors.

The present action was brought May 23rd, 1914, by W. Tin Yan, the trustee of the estate in bankruptcy of the said L. Ah Chap, against him, the said bankrupt, and Leu Len Shin, the intermediary assignee of the said lease, and the said Chong Meu Lan, to whom the said lease was assigned by the said Leu Len Shin, as the bona fide grantee, praying that the said assignment and another previous assignment to the same effect, executed but not delivered, the consent of the lessor thereto not having been obtained, be cancelled as fraudulent and that the said leasehold estate be decreed to be vested in such trustee.

The answer of L. Ah Chap admits the transfer of the lease to his wife but denies that it was done with intent to hinder, delay and defraud.his creditors. He alleges that the improvements on the leasehold cost approximately four thousand dollars of which his wife contributed about fifteen hundred dollars, and that he had further used the rents rendered available by reason of the new buildings for payment of the debts due on account of the construction thereof. He further answers that, being in debt to Allen & Robinson, Limited, for goods, wares and merchandise sold to him and used in the said buildings, in the amount of eight hundred dollars, he bórrowed that amount from the Honolulu Dry Goods Company giving therefor four promissory notes in the amount of two hundred dollars each and with such funds paid his debt to Allen & Robinson, Limited; that the the said Chong Meu Lan, his said wife, had endorsed the said promissory notes.

The respondent contends in his answer, that by reason of such facts the said leasehold, although in his own name, was of right the property of his said wife, and that in executing the said assignment to his said wife he did not [550]*550intend thereby to hinder, delay or defraud his creditors but merely to place the property in the name of the “actual” owner thereof.

The answer further denies that the defendant Leu Len Shin acted in the matter of the said assignment with the purpose of aiding the said L. Ah Chap in the accomplishment of any fraudulent purpose; and he further denies that he had any fraudulent intent in relation to the said transaction of which the other defendants had knowledge.

The other respondents answer formally, denying any fraudulent intent in relation to the said transaction of which the other defendants had knowledge.

The other respondents answer formally, denying any fraudulent intent or any knowledge of any fraudulent quality in the assignment of said lease.

It appears that at the hearing of the petition for adjudication in bankruptcy, April 15, 1914, counsel for L. Ah Chap asked that paragraph seven in the petition be stricken; counsel for the petitioner then consented to the withdrawal of this paragraph, upon the admission by counsel for the alleged bankrupt of the other act of bankruptcy alleged in the petition and, generally, all of the other allegations. This was agreed to by the latter. The following is a copy of the paragraph so withdrawn:

“That within four months preceding the filing of this petition, namely, during the month of March, 1914, the said Ah Chap, while insolvent, committed an act of bankruptcy in that he transferred, removed and concealed and permitted to be removed, transferred and concealed, and is now attempting to transfer, remove and conceal certain of his property with intent to hinder, delay and defraud his creditors.”

The other act of bankruptcy referred to as admitted, is paragraph six of the petition, and is as follows:

“That within four months preceding the filing of this petition, viz., on or about the 18th day of March, 1914, the said Ah Chap, while insolvent, committed an act of bank[551]*551ruptcy, in that he caused to be transferred and conveyed from himself to his wife,. Chong Meu Lan, by himself conveying to one Leu Len Shin, and causing and procuring the said Leu Len Shin to convey to his said wife, Chong Meu Lan, with intent to hinder, delay and defraud the creditors of the said Ah Chap, certain of his property of great value, to-wit, that' certain leasehold from Mary P. Puuiki, dated June 17, 1911, for the term of twenty-five (25) years from said date.”

This incident is testified to by Mr. O. P. Soares, the official reporter who was acting as such upon the occasion mentioned, and is further supported by the endorsement of the presiding judge, Hon. Charles F. Clemons, upon the margin of the petition in bankruptcy, opposite the said paragraph seven. The introduction of this incident into the evidence was followed by a motion to strike which was not allowed.

Ño immediate advantage was taken of such admission by counsel for the petitioner, and the court proceeded to hear further testimony.

' The evidence introduced in behalf of the respondents was aimed, mainly, to substantiate the theory of a resultant trust to the wife or, in the alternative, to show that the assignment of the lease to her was the execution of an agreement therefor as the consideration of the money received.

It appears from the testimony of the wife that before she advanced any money on account of the lease, L. Ah Chap had procured the lease in his own name. Then after he had promised to make it over to her, “after it is complete,” referring probably to proposed improvements on the leasehold, she began to make advances; first, one hundred and fifty dollars for rent and expense, and later other amounts. The lease was executed June 17, 1911, and was to go into effect, according to its provisions, July 1, 1911. It is in evidence that on the 7th day of July, 1911, L. Ah Chap advertised the lease for sale in a Chinese newspaper. He explains that he did this “because I didn't have enough [552]*552money to build and she wouldn’t advance me the money because she said the lease wasn’t in her name. I can take the lease and go out and sell it.”

[1] There does not appear in this transaction any foundation for a resulting trust in favor of the wife. The husband took the lease in his own name. Later he advertised his lease for sale, and then when his wife agreed to make advances of money for matters relative to such lease he gave up his plan of selling it. “Such a trust must arise at the time of the purchase;1 it cannot arise by after advances.” In re Wood, 5 Fed. Cas. 443, 446; Olcott v. Bynum, 84 U. S. 44, 59; 1 Perry on Trusts, 5th ed., secs. 124, 133.

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