Honolulu Brewing & Malting Co. v. Bartlett

• Court: Hawaii Supreme Court
• Writing for the Court: ROBERTSON
• Citation: Honolulu Brewing & Malting Co. v. Bartlett, 23 Haw. 192 (Haw. 1916)
• Decision Date: 20 March 1916
• Docket Number: No. 917.,917.
• Parties: THE HONOLULU BREWING AND MALTING COMPANY, LIMITED, A CORPORATION, v. CHARLES G. BARTLETT AND FRED HARRISON.

23 Haw. 192

THE HONOLULU BREWING AND MALTING COMPANY, LIMITED, A CORPORATION,

v.CHARLES G. BARTLETT AND FRED HARRISON.

No. 917.

Supreme Court of the Territory of Hawai‘i.

Argued March 9, 1916.

Decided March 20, 1916.

APPEAL FROM CIRCUIT JUDGE, FIRST CIRCUIT. HON. C. W. ASHFORD, JUDGE.

Syllabus by the Court

A bill in equity to restrain the defendant from selling or otherwise disposing of his property unless he satisfies or secures the payment of an unsecured promissory note given by him, which note has not matured, wherein it is alleged that the defendant is absent from the Territory, a fugitive from justice, does not intend to return to the Territory, and is selling and disposing of his property in the Territory to evade payment of such note and to defraud the payee and other creditors, does not state facts sufficient to entitle the plaintiff to the relief sought, and a demurrer on that ground should be sustained.

A court of equity will not entertain a creditor's bill which seeks relief from a fraudulent conveyance, made or contemplated, and a discovery of assets of the debtor in the hands of others, in advance of the maturity of the creditor's demand, especially where the creditor has no lien on the property conveyed or about to be conveyed. The maturity of the creditor's claim in such case is a condition precedent to the granting of such relief.

C. S. Davis ( G. A. Davis with him on the brief) for plaintiff.

W. B. Lymer ( Lindsay & Lymer on the brief) for defendants.

ROBERTSON, C.J., WATSON AND QUARLES, JJ.

OPINION OF THE COURT BY QUARLES, J.

The plaintiff, a domestic corporation, filed in the first judicial circuit December 8, 1915, against the defendants Bartlett and Harrison, its bill in equity, wherein it alleges that on the 27th day of April, 1915, the defendant Bartlett executed and delivered a certain promissory note of that date for the sum of $1555.20 to one T. A. Marlowe, said note being payable to the order of said Marlowe two years after date; that on the 29th day of September, 1915, the said Marlowe assigned the said note to the plaintiff without recourse; that the plaintiff, for a valuable consideration, became the owner and holder of said note; that on the 8th day of May, 1915, the defendant Bartlett absconded and left the Territory of Hawaii and thereafter was indicted on six charges, four for embezzlement, one for forgery and one for uttering forged paper; that bench warrants for the arrest of the defendant Bartlett duly issued but have not been served, the said defendant being absent and a fugitive from justice and does not intend to return to Hawaii; that said defendant left without the intention of returning and did not make any provision for the payment of said note, and plaintiff verily believes that said defendant does not intend to pay said note or any part thereof; that, on information and belief, plaintiff alleges that said defendant intends to dispose of all his real and personal property in the Territory of Hawaii before said note becomes due and payable and intends to cheat and defraud this plaintiff out of the full amount of said note which the plaintiff now owns and holds and to prevent which the plaintiff has no remedy at law; that the said defendant owns certain described real property in Honolulu, mortgaged to the Bank of Honolulu to secure an indebtedness in the sum of $17,500. The bill then alleges that the defendant Bartlett, on May 5, 1915, executed and delivered to his codefendant Harrison a power of attorney containing general powers, among others, to sell and convey real estate; that on May 15, 1915, the said defendant Harrison, acting under said power of attorney, executed, with the wife of said defendant Bartlett, to one O. A. Steven, an option to purchase said real property at the sum and price of $20,000, of which purchase price the receipt of $500 was in said option acknowledged. The bill further alleges that the defendant Bartlett owns certain money and personal property in the hands of the defendant Harrison, the amount, description and value of which is unknown to the plaintiff; that said defendant Bartlett has sold and disposed of the most of his personal property, including his household furniture, and is now in the Republic of Mexico, does not intend to return to Hawaii, and intends, through his said attorney-in-fact, the defendant Harrison, to sell and dispose of all of his property in Hawaii for the purpose of cheating and defrauding the plaintiff and other creditors of their just dues, and plaintiff fears that it will lose the whole amount of said promissory note. Plaintiff in its said bill propounds a number of interrogatories to the defendant for the purpose of ascertaining and discovering the amount, description and value of all personal property in the hands of said defendant Harrison, owned by defendant Bartlett, and prays for such discovery, for an injunction restraining the defendants from selling and disposing of any property in Hawaii owned by defendant Bartlett until provision is made for the payment of said note to the plaintiff, and for general equitable relief.

Upon filing the bill a circuit judge in said circuit made an order requiring the defendants to appear on the 11th day of December, 1915, and show cause, if any they could, why said injunction prayed for should not issue, and requiring the defendant Harrison to appear before said judge on the 23rd day of December, 1915, and show cause, if any he could, why he should not answer the said interrogatories propounded in the said bill. The circuit judge made an order restraining the defendants, pendente lite, from selling, disposing or encumbering any property in Hawaii belonging to the defendant Bartlett.

To the plaintiff's bill the defendants filed their several demurrers upon the ground that said bill does not state facts sufficient to entitle the plaintiff to the relief demanded, either by injunction or by a discovery, and that the circuit judge, sitting in equity, has no power to grant the relief demanded by the plaintiff in its said bill. These demurrers were overruled by the circuit judge, and from the order overruling the said demurrers an interlocutory appeal was requested by the defendants and allowed by the circuit judge, and upon such interlocutory appeal the cause is before us. We must either affirm or reverse the order overruling the said demurrers.

The controlling question here is: Has a court of equity in this jurisdiction, under the allegations of fact contained in the bill, power to restrain a debtor from selling and disposing of his property unless he gives security for a debt not yet due? The note alleged in the bill will not be due until April, 1917. It was taken by the original promisee without security, and the obligation of payment, by agreement of the parties, postponed for a period of two years. The note is negotiable in form. In other words, the promisee impliedly agreed to wait two years for payment without security. Under the allegations of the bill the inference arises that when the plaintiff took the assignment of the note without recourse it knew that Bartlett had absconded, knew that he had been indicted for embezzlement, knew that he did not intended to return, and knew that he was selling and disposing of his property in Hawaii, as the allegations of the bill show that these things had occurred prior to the assignment of the note in question to the plaintiff, and there is no allegation in the bill that these things, or any of them, were unknown to the plaintiff. Is the plaintiff in any better condition than the original promisee? It does not claim to have a lien on the property of the defendant Bartlett in this jurisdiction. It is simply asking that the defendant Bartlett be denied by injunction the right, which is inherent in every man, to make contracts, to acquire, sell and otherwise dispose of property. Here equity is appealed to to tie up Bartlett's business; to prevent him from selling or disposing of his property; to hold it, how long? Until the plaintiff's debt matures, some eighteen months? No, not if Bartlett will give security that he will pay the debt when it matures, but to tie his property up until he does give such security....