
    SUNG SO LIM v. T. MIYAUCHI AND T. MARUMOTO.
    No. 1035.
    Appeal prom Circuit Judge, Third Circuit. Hon. J. W. Thompson, Judge.
    Submitted December 7, 1917.
    Decided December 26, 1917.
    Robertson, C.J., Quarles and Coke, JJ.
    
      Fraud — conveyance—intent of parties.
    
    The test of a fraudulent conveyance for a valuable consideration is the mutual intent of the parties. Fraudulent intent on the part of one is not sufficient without a corresponding intent on the part of the other.
    
      Same — same—same.
    The rule is settled that a conveyance by a debtor to one of his creditors in payment of his claim is not invalidated .by the fact that it . was made with an intent on the part of the vendor to defraud other creditors, where such intent is not known to, or participated in, by the purchaser.
    
      
      Same — same—presumption of law where vendee is in possession of property.
    
    The law presumes the possession of the vendee to have been lawfully acquired, and where it appears that a sufficient consideration was paid the transfer will be upheld unless it be affirmatively shown that he purchased in bad faith.
   ■ OPINION OF THE COURT BY

COKE, J.

The complainant, appellant, brought a suit in equity to cancel and set aside a bill of sale and an assignment of lease from respondent T. Miyauchi to respondent T. Marumoto, also a lease from one J. G. Henriques to respondent Marumoto, averring that complainant was, at the time of these transfers, a creditor in a large amount of the respondent Miyauchi and that the said several transfers were fraudulent and made with the intent and purpose of preventing complainant from collecting the indebtedness due him from respondent Miyauchi. At the conclusion of the trial the circuit judge rendered a de-, cisión dismissing the bill of complaint and a decree to that effect was thereafter entered. The complainant appeals to this court. The appellant relies on three specifications of error claimed to have been committed by the circuit judge, to wit, (1) that the evidence discloses that a secret partnership existed between Miyauchi and Marumoto and that therefore the conveyance of Miyauchi to Marumoto is void as against complainant; (2) that the instruments sought to be set aside were without consideration and void as against complainant; and (3) that the transactions between Miyauchi and Marumoto relating to the bill of sale, the assignment of lease and the new lease to Marumoto are tainted with fraud.

There was unusual harmony in the evidence introduced at the trial. Briefly stated this evidence shows that in the year 1908 respondent Miyauchi was indebted to the complainant herein in the sum of $908 for which Miyauchi executed his promissory note; that in September, 1915, the complainant brought suit against Miyauchi for the recovery of the amount due, and in November, 1916, judgment was recovered by complainant in the circuit court of the third circuit. It further appears tliat in the year 1909 the respondent Miyauchi and one Umeda were co-partners conducting a draying and hauling business in the district of South Kona, Island of Hawaii, and that the firm was the owner of a number of horses, wagons and other chattels used in and about the business in which it was engaged. The firm was indebted to various parties, the largest creditor being H. Hackfeld & Co., to whom the sum of $3500' was owing. Umeda, desiring to leave for .Japan, sold his interest in the firm to Miyauchi for the sum of $2000 and in order to pay Umeda and to liquidate the outstanding indebtedness of the firm Miyauchi, in 1909, borrowed the sum of $6700 from Marumoto and executed to him a mortgage covering the property formerly owned by the copartnership firm as security. In 1911, the amount of the indebtedness having been reduced by sundry payments to the sum of $4900, the old mortgage was canceled and a new mortgage, with the same security, was given by Miyauchi to Marumoto. In January, 1915, the amount remaining due to Marumoto from Miyauchi was $3885.75. The value of the property had greatly depreciated, and 'Miyauchi having become discouraged over the outlook of the enterprise, it was agreed that he should transfer to Marumoto all the property he then possessed, which was of the value of about $2500, and which Avas to be accepted by Marumoto in full settlement of Miyauchi’s indebtedness to him, amounting at that time to $3885.75. For this purpose the transfers AAdiich the complainant now seeks to invalidate Avere made.

The evidence shows that Marumoto acquired the property of Miyauehi in January, 1915, and that the conveyances were recorded in the office of the registrar of conveyances on the 30th day of January, 1915, and that not until a long time subsequent to that date did Marumoto become aware of the existence of the indebtedness of Miyauehi to complainant. The record in this cause affirmatively discloses not merely a sufficient, but an abundant consideration for the transfer from Miyauehi to Marumoto. On the other hand, the evidence fails to establish the existence at any time of a copartnership between Miyauehi and Marumoto. Their relation, seems to have been solely that of debtor and creditor. The evidence further fails to disclose any act of fraud on the part of Marumoto. Whatever may have been Miyauchi’s motives for withholding from Marumoto information respecting his indebtedness to the complainant at the time the bill of sale was executed in January, 1915, certainly the evidence fails to connect Marumoto with any fraudulent purpose in connection with the transaction. Even after acquiring the property of Miyauehi still Marumoto would sustain almost if not quite as large a loss as the amount of the complainant’s judgment.

The test of a fraudulent conveyance in the case of a transfer of this nature made for a valuable consideration is the mutual fraudulent intent of the parties. Fraudulent intent on the part of one is not sufficient without a corresponding intent on the part of the other. See 12 R. C. L. p. 531. The rule is well settled that a conveyance by a debtor to one of his creditors in payment of his claim is. not invalidated by the fact that it was made with an intent on the part of the vendor to defraud other creditors where such intent is not known to, or participated in by, the purchaser. We can find nothing in the record in this case from which it could be fairly inferred that the respondent Marumoto was actuated other than by honest motives in his dealings with Miyauchi. The law presumes the possession of the vendee to have been lawfully acquired and where it appears that a sufficient consideration was paid the transfer will be upheld unless it be affirmatively shown that he purchased in bad faith. Bad faith-on the part, of Marumoto has not been shown.

A. G. Correa- and Light-foot £ Lightfoot for complainant.

J. W. Russell for T. Marumoto.

The judgment and decree herein by the circuit judge dismissing the bill of complaint are affirmed.  