State v. Kosai, 133 Wash. 442, 234 Pac. 5 (1925).

 442    STATE v. KOSAI.
                Opinion Per HOLCOMB, J.      133 Wash.

      [No. 18948. Department Two. March 16, 1925.]
      THE STATE OF WASHINGTON, Appellant, v. CHUSKI
           KOSAI et al., Respondents. «1»

                     STATE v. KOSAI.                     443
 Mar. 1925          Opinion Per HOLCOMB, J.

ch. 70, p. 220, Laws of 1923 [Rem. 1923 Sup., SS 10582-a],
to escheat certain land alleged to have been held in
trust for aliens, contrary to the constitution and
statutes of the state. It was tried before the court without
a jury, which found in favor of the defendants, respondents
here.

The complaint alleged that Kosai and his wife were
aliens, subjects of the Empire of Japan, and had not
declared their intention to become citizens of the
United States; that they were, in truth, and in fact,
tim owners of the land described in the complaint,
which was agricultural land and capable of being used
for agricultural purposes only, and had been such
owners for a long period of time, contrary to the
constitution and statutes of the state; that the record title
to the land stood in the name of the defendants Lonergan
and Osawa, as trustees, the nature of the trust
being unknown to the pleader except that it was alleged
that the trust was, in truth and fact, for the benefit of
Kosai and wife, although it was claimed that the same
was held for the benefit of a minor child of the Kosais
named Frank Kosai. It is further alleged that the
defendant Julia Janisch held a mortgage on the land
for $7,500, to secure a note given by one Street. The
complaint prayed that the trust referred to be declared
to be for the benefit of T. K. Kosai and wife, subject
to the constitution and statutes of the state, and that
the land be escheated and forfeited to the state.

To this complaint all of the defendants except Julia
Janiseh answered, wherein it was admitted that T. K.
Kosai and wife were aliens, but alleged that Frank
Kosai was an American-born and a citizen of the
United States; that Pierce Lonergan was his guardian
ad litem; that S. Osawa was a citizen of the United
States; admitted that the land involved was in King
county, but denied that it was suitable solely for

 444    STATE v. KOSAI.
                Opinion Per HOLCOMB, J.           133 Wash.

cultural purposes; alleged that Lonergan and Osawa
held the title in trust under a declaration dated June
7, 1921, for the benefit of Frank Kosai, a minor, and
that T. K. Kosai and wife had no interest in the land
or held any title thereto, and denied that T. K. Kosai
and wife have owned the land as alleged in the complaint;
admitted the mortgage of Julia Janiseh to secure
the note described, but denied that the mortgage
was obtained by connivance of T. K. Kosai and wife,
S. Osawa and Pierce Lonergan, as was alleged in the
complaint. Julia Janisch filed a general appearance
in the case, and it was verbally agreed between her
counsel and counsel for appellant that inasmuch as
she was an innocent holder of the note and mortgage,
whatever interest the state should acquire as a result
of the action would be subject to her mortgage. Upon
these issues the case went to trial. At the trial, an
amendment was made in the prayer of respondents to
their affirmative answer for quieting title in the trustees
in and to the trust estate.

Appellant served and filed seventy-five interrogatories
on respondents, the trustees, and on Kosai,
which, together with the answers thereto, were, at the
time of trial, introduced in evidence. From the answers
to the interrogatories it appears that the land
in controversy is agricultural land and is being operated
as a dairy farm. Respondents T. K. Kosai and
wife, together with their family of five children, of
which Frank Kosai is the eldest, and is nine years of
age, reside thereon. At the time, one W. T. Behne
held title to the land for the benefit of respondent
T. K. Kosai, having acquired it by deed from one
Kleinberg. On June 7, 1921, Behne mortgaged the
land to one Bills to secure the payment of two notes
signed by T. K. Kosai, due in four and six months,
respectively, Behne having held title to the land for

                     STATE v. KOSAI.                     445
 Mar. 1925          Opinion Per HOLCOMB, J.

several years preceding, and T. K. Kosai having an
equitable beneficial interest therein. The mortgage to
Bills was satisfied and discharged by money obtained
on the mortgage to Julia Janisch by the trustee. In
their answers to interrogatories, the trustees and
Kosai denied that T. K. Kosai was in the actual occupation
of the land, but asserted that Lonergan and
Osawa, as trustees, were operating the land, conducting
a dairy farm thereon. They stated that the gross
income from the land from the date it was taken over
by the trustees, June 7, 1921, to September 12, 1923,
was $16,558.79, and that the expense of operation was
815,797.87, leaving a net balance of $706.92; that T. K.
Kosai was not running the dairy farm, but was employed
by the trustees as foreman and milker at a
monthly salary of $100; that the trustees had paid
nothing on account of the purchase price of the land,
all having been paid by T. K. Kosai prior to the date
of the formation of the alleged trust.

The declaration of trust will not be set forth, in full
herein, but recites, among other things, that the
trustees are the grantees named in a certain deed from
W. T. Behne of the same date, June 7, 1921, conveying
to the trustees in trust certain lands and buildings in
King county, Washington, and declaring and agreeing
that the trustees will, and their heirs and successors
shall, hold the granted premises, and all other funds
and property at any time transferred to and received
by the trustees, upon certain specified conditions,
among others, that they may convert the same into
money and distribute the net proceeds thereof among
the persons at the time of such conversion holding and
owning a beneficial interest therein, it being understood
and agreed that the trustees may, in their uncontrolled
discretion, defer or postpone such conversion or distribution,
but not beyond the end of twenty years from

 446    STATE v. KOSAI.
                Opinion Per HOLCOMB, J.          133 Wash.

January 6, 1916. It is also declared that the trustees,
pending final conversion and distribution of the property,
should manage and control the same for all purposes
of sale, lease, mortgage, exchange, improvement
and development or any and all arrangements contracts,
and dispositions of the trust property, or any
part thereof, with as full discretionary powers and
authority as they would have if they were themselves
the sole and absolute owners thereof in fee simple. It
is recited that T. K. Kosai and Smi Taemae Kosai,
his wife, had made an absolute, unrestricted and unqualified
gift to Frank Kosai, a minor, and therefore
the trust was declared in his favor, and for the benefit
of Frank Kosai, a minor. It is declared that the
trustees should have authority to loan and borrow
money and fix the terms of any lease and of any pledge,
mortgage or other security they might deem wise. It
is provided that the trustees should at all times keep
full and proper books of account and records of all
their proceedings and doings. It is provided that the
trustees should receive reasonable compensation for
services, not exceeding a total of one per cent reckoned
upon the gross income received by them, but in no
event to receive less than $50 per year each. It is
provided that the trustees should be entitled to reimbursement
from the trust property for all their proper
expenses and liabilities, including advice of counsel and
traveling expenses and contracts of insurance and
loans. It is provided that for convenience the title of
the trust shall be the "Frank Estate," and the term
"trustees" in the instrument shall be taken to include
the original and all successor trustees.

On the same day the declaration of trust was executed,
T. K. Kosai and wife made a deed of gift covering
the land involved herein to their minor son, Frank

                     STATE v. KOSAI.                     447
 Mar. 1925          Opinion Per HOLCOMB, J.

Kosai, which recited that W. T. Behne had been holding
the property described in the deed in trust for the
grantors, and that it was the desire of the grantors
that their minor son, Frank Kosai, have absolute, full,
equitable title to, and benefit of, the described real
estate. The consideration therefor was expressed as
mutual love and affection. It was also expressed in
the deed that Behne, the grantor, had conveyed to
Lonergan and Osawa, trustees under the declaration
of trust dated June 7, 1921, the terms of which
declaration were referred to in the deed and made a part
thereof and approved by the grantors. It was then
expressed in the deed that it was the intention and
desire of the grantors to make an absolute, free, and
unincumbered and unrestricted gift of the property
to their minor son, without condition or reservation,
according to the terms of the trust declaration.

Appellant contends that the facts shown at the trial
of the case disclose the following badges of fraud, and
a studied, deliberate plan to fraudulently evade the
alien land law:

(1) Continued possession, dominion and occupation
of the land by Kosai and wife;

(2) The immediate and continued employment of
Kosai by the trustees;

(3) Receipt from the farm in wages and otherwise,
of all the proceeds of the farming industry conducted
on the land;

(4) Other transactions with the trustees of a similar
nature at approximately the same time;

(5) Concealment and failure to record the declaration
of trust;

(6) Failure to enter in the books of the trust all
assets and liabilities at the time or prior thereto, and
other discrepancies in the bookkeeping.

 448    STATE v. KOSAI.
                Opinion Per HOLCOMB, J.           133 Wash.

The trial judge, after having seen all the witnesses
and heard them testify, made and filed the following
very able and unimpassioned memorandum opinion:

"I have examined the brief of plaintiff and defendant
submitted to me after the trial, considered the
propositions of law advanced and the respective citations
thereunder and find there is no serious difference
between counsel for plaintiff and counsel for defendant
as to principles of law governing this case.

"The burden of proof finally devolves upon plaintiff
to establish fraud as alleged in its complaint. The
statute, Chap. 70 of Laws of 1923, it is true, says that
when certain facts are proven the court may presume
fraud. This I take it to mean that by proving certain
facts unexplained that the law presumes the fact of
fraud to be established. But when evidence is given
which overcomes the prima tacit case so made, the
burden of proof shifts and is finally upon the plaintiff
to establish fraud. In the absence of fraud the things
done by defendants in the disposition of the real estate
involved was legal. Defendant Frank Kosai, to whom
the land was deeded, was born in this country and at
the time the property was deeded to him a citizen of
the United States.

"As to the legal phases of this case, the propositions
of law advanced by defendants I believe to be established
by the authorities cited, that is to say: (1) 'An
alien may transfer a good title to real estate to any
person entitled to hold it, if no proceeding has been
taken by the state for the purpose of setting aside the
deed to the alien.' (2) 'All persons born in the United
States are citizens thereof.' (3) 'The gifts being
beneficial, an acceptance is presumed.' (4) 'And the fact
that the father secured the transfer to his minor child
for the reason that he could not hold title himself on
account of being an alien, in itself is not fraudulent,
the minor being at the time a citizen.' I am led to
believe that these propositions of law are not controverted
by counsel for the state.

"The question remaining is, was the transaction,
legal on its face, bona fide. While the legal title stands

                     STATE v. KOSAI.                     449
 Mar. 1925          Opinion Per HOLCOMB, J.

in the name of defendant minor, Frank Kosai, by
declaration of trust tim management of the property
is vested in defendants S. Osawa. and Pierce Lonergan
as trustees. The father and mother of defendant
Frank Kosai, according to the evidence, have been employed
by the said trustees since the transfer was made
to farm tim land involved, and during said time have
lived upon said land and worked the same under the
supervision and direction of the trustees, and has accounted
to the trustees for any produce he may have
personally disposed of. I will state here that practically
all of the testimony given on this phase of the
case, or in fact all phases of the case, was given by
defendants, both the state and the defendants using
them.

"The state's contention being that Chuski Kosai and
wife were farming the land as their own and receiving
all revenues therefrom, and defendants contending
that they were mere employees of the trustees and
working for a fixed salary per month.

"I have considered this testimony with as much care
as possible and conclude that the authority given to
and exercised by the father and mother were no more
than is ordinarily given to the foreman of a ranch, and
that the activities of said Chuski Kosai are not
inconsistent with such character of employment.

"Counsel for the state contend that the deed of gift
from Chuski Kosai and wife to defendant Frank Kosai
not having been acknowledged and recorded, is invalid.
This contention might he considered if Chuski
Kosai and wife had held the legal title to the land.
Tim only purpose of this paper is to show that Kosai
and wife gave their consent to the transfer of the legal
title, and whether acknowledged or not, the writing
forever stops them from questioning the transfer.

"One more question is raised by counsel for the state
by which they question the bona fides of the transaction
for the reason that the deed and declaration of trust
were not filed until a few weeks before the case came
on for trial. While this is a circumstance to consider,
and which I have considered, I feel that that alone
should not stamp the transfer as fraudulent.

 450    STATE v. KOSAI.
                Opinion Per HOLCOMB, J.           133 Wash.

"'Fraud is never presumed. It must be proven by
clear and convincing testimony and it is the duty of
the court to harmonize all of the facts with honest
intention and honest conduct, if that can be done.' I
think this rule is fairly and fully established.
Testimony uncontradicted and unimpeached cannot be
disregarded by the court. Mere suspicions and speculations
without tangible evidence are not acted upon in
determining grave questions between litigants. I am
thoroughly in accord with cases of fraud cited by
counsel for the state from our own supreme court and
courts of other jurisdictions. I am also in accord with
an excerpt of a decision rendered by my distinguished
brother, Judge Hall, of the superior bench of King
County, contained in the brief of counsel for the state.
As a pronouncement of abstract law and ethics I consider
it sound and able and well worthy of such an able
and conscientious jurist. Not having the facts of that
ease before me, I cannot apply it to the instant case.

"For the foregoing reasons I find for the
defendants, and recalling the request made by counsel for
defendants, that they be permitted to amend the prayer
of their answer for a decree quieting title to the lands
in defendant Frank Kosai, I grant that request and '
direct that the decree be drawn to conform herewith."

Having had some experience in attempted evasions
of the alien land law (State v. O'Connell, 121 Wash. 542,
209 Pac. 865, and In re Fujimoto, 130 Wash. 188,
226 Pac. 505), we are naturally somewhat skeptical of
any arrangements made before the alien land law went
into effect as to the good faith thereof; but each case
must depend upon its own facts and the law applying
to those facts. It is admitted by respondents in this
case that all the moneys for the original acquisition
of the land in controversy was furnished by T. K.
Kosai, either directly or by way of a loan; that W. T.
Behne held legal title to the land up to June 7, 1921,
for the benefit of T. K. Kosai. The land law went into
effect June 10, 1921. Up to that time the state had

                    STATE v. KOSAI.                     451
 Mar. 1925          Opinion Per HOLCOMB, J.

taken no steps to escheat the land, this proceeding
having been commenced in May, 1923. It must be granted
that Kosai and wife had the right to dispose of the
property, either by gift or sale, up to the time the
state proceeded to escheat it under the alien land law.
We have so held in a number of cases. Oregon Mortgage
Co. v. Carstens, 16 Wash. 165, 47 Pac. 421, 35
L. R. A. 841; Keene v. Zindorf, 81 Wash. 152, 142 Pac.
484; Prentice v. How, 84 Wash. 136, 146 Pac. 388.

A number of other cases also decided the same
proposition between the Carstens case and the Zindorf
ease. It was thoroughly established, as stated in the
Carstens case, supra, and followed in all the other
eases, that "an alien may transfer a good title to any
person entitled to hold it, if no proceeding has been
taken by the state for the purpose of setting aside the
deed of the alien."

It is admitted that Frank Kosai, the son, was born
in this state, and is therefore a citizen of the United
States and of this state. Fourteenth Amendment U. S.
Constitution. A citizen of the United States and of
tiffs state is entitled to hold legal title to property, both
real and personal, even though his parents are Japanese
who can never become citizens. One citizen is as
much entitled to the protection of the laws, both Federal
and state, as another.

The record incontrovertibly shows that an absolute,
unrestricted and unqualified gift was made by his
alien parents to Frank Kosai, a minor. The gift being
beneficial, an acceptance may be presumed. 31 C. J.
1024.

The law is also well settled that fraud is never
presumed and must be proven by clear and convincing
evidence, and it is the duty of courts to harmonize the
facts with behest intention and honest conduct, if that
can be done. Tacoma v. Tacoma Light Water Co.,

 452    STATE v. KOSAI.
                Opinion Per HOLCOMB, J.           133 Wash.

16 Wash. 288, 47 Pac. 738; Nath v. Oregon R. & Nav.
Co., 72 Wash. 664, 131 Pac. 251; Jarvis v. Ireland,
89 Wash. 286, 154 Pac. 455; German-American Mercantile
Batik v. Illinois Surety Co., 99 Wash. 9, 168 Pac. 772.
Appellant relies largely, however, upon ch. 70, Laws of
1923, p. 220, the second section of which provides:

"If a minor child of an alien hold title to land either
heretofore or hereafter acquired, it shall be presumed
that he holds in trust for the alien." Rem. 1923 Sup.,
SS 10582-b.

Respondents, on the other hand, insist that that
provision is unconstitutional as discriminating against a
minor citizen whose parentage is alien, and that it is
in violation of the fourteenth amendment to the United
States constitution. While we have some doubt as to
the validity of that provision, it is not necessary to
pass positively upon it. The trial court having found
that the presumption so raised by the statute was
overcome by positive and credible evidence, and there being
no evidence to the contrary, we feel bound by the determination
of the trial court. The matter before us
is largely a question of fact.

While there are some suspicious circumstances existing
in this case, we cannot say that they are any more
than suspicious circumstances. Most of the testimony
given in this case was given by the trustees themselves
and Kosai and Kosai's banker, Behne. We can find
in the entire record no evidence, facts or circumstances,
sufficient to preponderate against and overcome the
determination of the trial court.

While courts should scrutinize very carefully every
arrangement like this, for the reason that the law
abhors subterfuge, not every such arrangement can
be said necessarily to be fraudulent. So far as the

                     STATE v. KOSAI.                     453
 Mar. 1925          Opinion Per HOLCOMB, J.

potentialities are concerned, the title to the land in
question has forever passed from the aliens and to
their minor son, an American citizen. The alien parents
can never revest themselves with title. They can
never become citizens of the United States.

The life of the state is theoretically perpetual, and
doubtless, at any time in the future, if it be believed
that the aliens, who are not entitled to hold land in
this state, are absorbing it or the proceeds thereof
belonging to their son, proceedings can be begun by way,
perhaps, of office found, to inquire into the conditions
surrounding this trust anti have proper action taken
in the premises.

The attorneys for the county and state have made
a vigorous and commendable effort in having this trust
investigated and judicially passed upon. Under the
alien land law of 1921, it is made the duty of the
prosecuting attorneys and of the Attorney General to do so.
The fact that they have failed upon the facts of the
case is not to their discredit.

Counsel for appellant asserts that, if this case is
affirmed, then not only the parties to this action, but
all other similar trusts created by the trustee respondents
herein at the time this law was about to take
effect, will continue to successfully evade our
constitution and statutes, and under the authority of such
decision large numbers of aliens will avail themselves
by adopting that means of owning, holding, controlling
and managing our land. We repeat that every such
case must stand upon its own facts. No arrangement
which was made after the going into effect of the alien
land law and the commencement of escheat proceedings
could be of any force, and all arrangements
made before that must be examined and investigated
by the officers charged by the law with such duty, and
proceedings begun or withheld at their discretion.

 454    STATE v. KOSAI.
                Opinion Per HOLCOMB, J.           133 Wash.

Counsel paraphrases a quotation from Shakespeare
as follows:

"'Twill be recorded for a precedent, and many an
alien, by the same example, will rush into the state
and hold the lands thereof. It cannot be."

But we rather prefer to invoke the philosophy of the
wise and just Lincoln, who was probably a better authority
than Shakespeare on law and statesmanship:

"Let us have faith that right makes might, and in that
faith let us, to the end, try to do our duty as we
understand it."

In any event, the state, although mighty, cannot insist
upon the allegiance of all its citizens unless it deals
justly with all its citizens, and it cannot deal justly if
it confiscates the property of its own citizens without
just reason.

The judgment is affirmed.

TOLMAN, C. J., FULLERTON, and MACKINTOSH, JJ.,
concur.

MITCHELL, J., dissents.